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The facility matures August 28, 2020, with a one-year extension option prior to any anniversary of the closing date, provided that in no event shall it extend beyond August 28, 2022. The total provisional expense recorded during the period for the remeasurement of deferred tax assets and liabilities was $158 million . September 8, 2013 Test Presentation 2. For example, the European Union adopted the General Data Protection Regulation (the "GDPR"), which became effective on May 25, 2018. Prior to joining NIKE, Ms. Krane was General Counsel and Senior Vice President for Corporate Affairs at Levi Strauss & Co. from 2006 to 2010. The authorized number of shares of Class A Common Stock, no par value, and Class B Common Stock, no par value, are 400 million and 2,400 million , respectively. Long-lived assets attributable to operations in Japan were $237 million and $223 million at May 31, 2018 and 2017 , respectively. On a currency-neutral basis, NIKE Brand revenues grew 5%, driven by strong revenue growth across all international geographies and NIKE Direct, as well as growth in footwear, apparel and most key categories. Swoosh, LLC was formed by Philip H. Knight, our Chairman Emeritus, to hold the majority of his shares of Class A Common Stock. The currency-neutral apparel revenue growth for fiscal 2017 was due to higher revenues in nearly all key categories, led by Sportswear and Running. There was a $13 million net increase in the valuation allowance for the year ended May 31, 2018 , compared to a $30 million net increase for the year ended May 31, 2017 and $43 million net increase for the year ended May 31, 2016 . The ineffective portion of the unrealized gains and losses on these contracts, if any, is recorded immediately in earnings. Selling and administrative expense decreased due to lower demand creation expense, primarily as a result of lower retail brand presentation costs, partially offset by higher advertising expense. We also rely on our licensees to help preserve the value of our brands. However, certain contract elements may be accounted for differently based upon the facts and circumstances of each individual contract. Certain contracts provide for variable payments based upon endorsers maintaining a level of performance in their sport over an extended period of time (e.g., maintaining a specified ranking in a sport for a year). Special Note Regarding Forward-Looking Statements and Analyst Reports. The sale or prospect of a sale of a substantial number of these shares could have an adverse effect on the market price of our common stock. Our future financial results could be significantly affected by the value of the U.S. Dollar in relation to the foreign currencies in which we conduct business. Risk Factors. The Company recorded no ineffectiveness from its interest rate swaps designated as fair value hedges for the years ended May 31, 2018 , 2017 or 2016 . Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In general, endorsement payments are expensed on a straight-line basis over the term of the contract. Pricing vendors are utilized for a majority of Level 1 and Level 2 investments. Our definitive Proxy Statements are also posted on our corporate website. Selling and administrative expense increased due to higher operating overhead costs primarily resulting from ongoing investments in our growing NIKE Direct business, partially offset by administrative cost efficiencies. Selling and administrative expense was higher as a percent of revenues, reflecting investments in digital capabilities, consumer experiences and product and brand marketing to drive long-term growth under the Consumer Direct Offense. Footwear Index, the price and returns of NIKE stock have a substantial effect on this index. 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 the Company's geographic operating segments and to Converse. if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant ' s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. Higher revenues and selling and administrative expense leverage were more than offset by significant gross margin contraction. Prior to joining NIKE, he held leadership roles in strategic planning, mergers and acquisitions, financial planning and analysis, operations and planning, investor relations and tax at The Walt Disney Company from 1996 to 2007. Management of NIKE, Inc. is responsible for the information and representations contained in this report. View Press Release September 19, 2019 2019 Annual … in loans as part of its agreement to purchase a distribution center in Japan, which serves as collateral for the loans. Additionally, the Company reclassified cash outflows of $29 million, $22 million, $8 million and $13 million for the years ended May 31, 2017, 2016, 2015 and 2014, respectively, related to tax payments for the net settlement of share-based payment awards, from Cash provided by operations to Cash used by financing activities within the Consolidated Statements of Cash Flows. We experience moderate fluctuations in aggregate sales volume during the year. The currency-neutral increase in NIKE Brand apparel revenues for fiscal 2017 was fueled by growth in all key categories, led by Sportswear, Running and Training. The carrying amounts of other current financial assets and other current financial liabilities approximate fair value. If we are unable to anticipate consumer preferences and develop new products, we may not be able to maintain or increase our revenues and profits. Smaller leased, and third-party leased and operated, distribution facilities are located in various parts of the United States. In February 2018, the FASB issued Accounting Standards Update (ASU) No. These balance sheet items are subject to re-measurement, the impact of which is recorded in Other expense (income), net , within the Consolidated Statements of Income. *, NIKE, Inc. Foreign Subsidiary Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2008). The VaR determines the maximum potential one-day loss in the fair value of these foreign exchange rate-sensitive financial instruments. The VaR model is a risk analysis tool and does not purport to represent actual losses in fair value we will incur nor does it consider the potential effect of favorable changes in market rates. Refer to Note 7 - Short-Term Borrowings and Credit Lines in the accompanying Notes to the Consolidated Financial Statements for further description and interest rates related to the short-term debt obligations listed below. Upon adoption, the Company will record a cumulative effect adjustment reducing Retained earnings , Deferred income taxes and other assets , and Prepaid expenses and other current assets by $507 million , $422 million and $45 million , respectively, and increasing Deferred income taxes and other liabilities by $40 million . Become a Nike Member for the best products, inspiration and stories in sport. We lease 1,181 retail stores worldwide, which primarily consist of factory stores. Reported EBIT increased 21% due to revenue growth, strong selling and administrative expense leverage and gross margin expansion. In May 2014, the FASB issued ASU No. Virtually all of our products are manufactured by independent contractors. As of May 31, 2018 and 2017 , assets or liabilities required to be measured at fair value on a non-recurring basis were immaterial. Revenues increased in nearly all key categories, led by Sportswear and Football (Soccer). *, Form of Restricted Stock Agreement under the Stock Incentive Plan for awards after May 31, 2010 (incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2015). The decrease in comparable licensed markets revenues is primarily due to lower revenues in Latin America. View, Social media cookies offer the possibility to connect you to your social networks and share content from our website through social media. Note 1 - Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements describes the significant accounting policies and methods used in the preparation of our Consolidated Financial Statements. Any interruption in Information Technology Systems may impede our ability to engage in the digital space and result in lost revenues, damage to our reputation, and loss of users. Management has reviewed and discussed these critical accounting policies with the Audit & Finance Committee of the Board of Directors. Advertising media costs are expensed when the advertisement appears. Virtually all of our apparel is manufactured outside of the United States by independent contract manufacturers which often operate multiple factories. Depreciation and amortization of all other assets are recorded in Operating overhead expense . For fiscal 2018, Corporate's loss before interest and taxes increased $732 million primarily due to the following: a detrimental change in net foreign currency gains and losses of $281 million related to the re-measurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, reported as a component of consolidated Other expense (income), net ; an unfavorable change of $255 million, primarily due to higher operating overhead expense driven by higher wage-related costs, in part reflecting one-time costs associated with our organizational realignment in the first half of fiscal 2018, as well as higher administrative costs; and. whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). She was appointed as Vice President and Senior Business Partner in 2011 and Vice President, Chief Talent and Diversity Officer in 2012. Our business is affected by seasonality, which could result in fluctuations in our operating results. The increase in demand creation expense was due to higher marketing and advertising expenses for key brand and sporting events, including the Rio Olympics and the European Football Championship in the first quarter. We also have the following outstanding short-term debt obligations as of May 31, 2018 . The bonds are redeemable at the Company's option up to three months prior to the scheduled maturity date for the bonds maturing in 2023 and 2026, and up to six months prior to the scheduled maturity date for the bonds maturing in 2043, 2045 and 2046, at a price equal to the greater of (i), of the aggregate principal amount of the notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments, plus in each case, accrued and unpaid interest. At May 31, 2018 , the total notional amount of all embedded derivatives outstanding was approximately $260 million . Reported EBIT declined 35% for fiscal 2018 driven by lower revenues, higher selling and administrative expense and, to a lesser extent, gross margin contraction. If our long-term debt ratings were to decline, the facility fee and interest rate under our committed credit facility would increase. Air Manufacturing Innovation manufactures Air-Sole cushioning components at NIKE-owned facilities and one leased facility located near Beaverton, Oregon and in St. Charles, Missouri. Stay cool and dry as you blast through your route in the Women's Nike 10K Running Shorts. Refer to Note 16 - Risk Management and Derivatives for more information on the Company's risk management program and derivatives. Extreme weather conditions and natural disasters could negatively impact our operating results and financial condition. We also sell sports apparel covering the above-mentioned categories, which feature the same trademarks and are sold predominantly through the same marketing and distribution channels as athletic footwear. He has served as Apparel Sales Director in Europe, Retail Development Director in Europe, Vice President of Sales and Retail in EMEA, General Manager of US Retail, Vice President of US Sales, Retail and NIKE.com, and Vice President of Global Retail. On a currency-neutral basis, NIKE Brand footwear and apparel revenues increased 4% and 9%, respectively, for fiscal 2018, while NIKE Brand equipment revenues decreased 4%. Higher ASP per pair contributed approximately 7 percentage points of footwear revenue growth, primarily attributable to higher full-price ASP, in part reflecting inflationary conditions in certain territories. The value of foreign currency options does not change on a one-to-one basis with changes in the underlying currency rate. Learn More . Nike, Inc. is a Growth Company. However, the mix of product sales may vary considerably from time to time as a result of changes in seasonal and geographic demand for particular types of footwear, apparel and equipment and in connection with the timing of significant sporting events, such as the NBA Finals, Olympics or the World Cup, among others. For more information see our. The standard allows for reclassification of stranded tax effects on items resulting from the Tax Cuts and Jobs Act (the "Tax Act") from  Accumulated other comprehensive income  to  Retained earnings . Refer to Note 9 - Income Taxes and Note 13 - Benefit Plans in the accompanying Notes to the Consolidated Financial Statements for further information related to uncertain tax positions and post-retirement benefits, respectively. The remaining provisions of the Tax Act, which were a net benefit to the effective tax rate, did not have a material impact on our Consolidated Financial Statements during fiscal 2018. To assist in the scheduling of production and the shipping of our products, we offer certain customers the opportunity to place orders five to six months ahead of delivery under our futures ordering program. For segment reporting purposes VaR computation point for fiscal 2017 was due to higher operating expense... 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