v2.4.0.6
Operating Segments
 6 Months Ended
Nov. 30, 2012
Operating Segments

NOTE 11 — Operating Segments

 

The Company’s operating segments are evidence of the structure of the Company’s internal organization. The major segments are defined by geographic regions for operations participating in NIKE Brand sales activity excluding NIKE Golf. Each NIKE Brand geographic segment operates predominantly in one industry: the design, development, marketing and selling of athletic footwear, apparel, and equipment. The Company’s reportable operating segments for the NIKE Brand are: North America, Western Europe, Central & Eastern Europe, Greater China, Japan, and Emerging Markets. The Company’s NIKE Brand Direct to Consumer operations are managed within each geographic segment.

The Company’s “Other” category is broken into two components for presentation purposes to align with the way management views the Company. The “Global Brand Divisions” category primarily represents NIKE Brand licensing businesses that are not part of a geographic operating segment, demand creation and operating overhead expenses that are centrally managed for the NIKE Brand, and costs associated with product development and supply chain operations. The “Other Businesses” category consists of the activities of Converse Inc., Hurley International LLC, and NIKE Golf. Activities represented in the “Other” category are considered immaterial for individual disclosure.

Corporate consists of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to the Company’s headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; certain foreign currency gains and losses, including certain hedge gains and losses; corporate eliminations and other items.

The primary financial measure used by the Company to evaluate performance of individual operating segments is earnings before interest and taxes (commonly referred to as “EBIT”), which represents net income before interest (income) expense, net and income taxes in the consolidated statements of income. Reconciling items for EBIT represent corporate expense items that are not allocated to the operating segments for management reporting.

As part of the Company’s centrally managed foreign exchange risk management program, standard foreign currency rates are assigned twice per year to each NIKE Brand entity in our geographic operating segments and certain Other Businesses. These rates are set approximately nine months in advance of the future selling season based on average market spot rates in the calendar month preceding the date they are established. Inventories and cost of sales for geographic operating segments and certain Other Businesses reflect use of these standard rates to record non-functional currency product purchases in the entity’s functional currency. Differences between assigned standard foreign currency rates and actual market rates are included in Corporate, together with foreign currency hedge gains and losses generated from the Company’s centrally managed foreign exchange risk management program and other conversion gains and losses.

 

Accounts receivable, inventories and property, plant and equipment for operating segments are regularly reviewed by management and are therefore provided below.

Certain prior year amounts have been reclassified to conform to fiscal 2013 presentation.

 

     Three Months Ended
November 30,		          Six Months Ended
November 30,		  
(In millions)    2012     2011           2012     2011  

REVENUE

                                      

North America

    $             2,421      $             2,066           $ 5,127      $ 4,266   

Western Europe

      897        915             2,064        2,143   

Central & Eastern Europe

      266        261             608        595   

Greater China

      577        650             1,149        1,178   

Japan

      219        198             402        392   

Emerging Markets

      1,052        948             1,919        1,748   

Global Brand Divisions

      27        25             54        57   

Total NIKE Brand

      5,459        5,063             11,323        10,379   

Other Businesses

      518        488             1,153        1,073   

Corporate

      (22 )      (5 )           (47 )      (13 ) 

TOTAL NIKE CONSOLIDATED REVENUES

    $ 5,955      $ 5,546           $         12,429      $         11,439   

EARNINGS BEFORE INTEREST AND TAXES

                                      

North America

    $ 556      $ 426           $ 1,186      $ 965   

Western Europe

      113        92             327        315   

Central & Eastern Europe

      43        33             104        103   

Greater China

      185        220             349        391   

Japan

      43        35             67        69   

Emerging Markets

      305        247             528        437   

Global Brand Divisions

      (324 )      (281 )           (699 )      (547 ) 

Total NIKE Brand

      921        772             1,862        1,733   

Other Businesses

      80        71             201        176   

Corporate

      (290 )      (208 )           (555 )      (403 ) 

Total NIKE Consolidated Earnings Before Interest and Taxes

      711        635             1,508        1,506   

Interest (income) expense, net

      (1 )      3             (4 )      3   

TOTAL NIKE CONSOLIDATED EARNINGS BEFORE TAXES

    $ 712      $ 632           $ 1,512      $ 1,503   

 

     November 30,      May 31,  
(In millions)    2012      2012  

ACCOUNTS RECEIVABLE, NET

                  

North America

    $             1,286       $             1,149   

Western Europe

      362         420   

Central & Eastern Europe

      273         261   

Greater China

      102         221   

Japan

      139         152   

Emerging Markets

      639         476   

Global Brand Divisions

      28         30   

Total NIKE Brand

      2,829         2,709   

Other Businesses

      329         401   

Corporate

      30         22   

TOTAL ACCOUNTS RECEIVABLE, NET

    $ 3,188       $ 3,132   

INVENTORIES

                  

North America

    $ 1,328       $ 1,272   

Western Europe

      510         488   

Central & Eastern Europe

      161         180   

Greater China

      260         217   

Japan

      87         83   

Emerging Markets

      530         521   

Global Brand Divisions

      43         35   

Total NIKE Brand

      2,919         2,796   

Other Businesses

      382         384   

Corporate

      17         42   

TOTAL INVENTORIES

    $ 3,318       $ 3,222   

PROPERTY, PLANT AND EQUIPMENT, NET

                  

North America

    $ 383       $ 378   

Western Europe

      323         314   

Central & Eastern Europe

      38         30   

Greater China

      204         191   

Japan

      336         359   

Emerging Markets

      74         59   

Global Brand Divisions

      220         205   

Total NIKE Brand

      1,578         1,536   

Other Businesses

      74         76   

Corporate

      606         597   

TOTAL PROPERTY, PLANT AND EQUIPMENT, NET

    $ 2,258       $ 2,209