Document and Entity Information

9 Months Ended

Feb. 28, 2017

Mar. 31, 2017

Class A Convertible Common Stock

Mar. 31, 2017

Class B Common Stock

Entity Listings [Line Items]

Document Type

10-Q

Amendment Flag

false

Document Period End Date

Feb. 28, 2017

Document Fiscal Year Focus

2017

Document Fiscal Period Focus

Q3

Trading Symbol

NKE

Entity Registrant Name

NIKE INC

Entity Central Index Key

0000320187

Current Fiscal Year End Date

--05-31

Entity Filer Category

Large Accelerated Filer

Entity Common Stock Shares Outstanding (In Shares)

329,245,752

1,321,520,800

Unaudited Condensed Consolidated Balance Sheets (USD $)

In Millions, unless otherwise specified

Feb. 28, 2017

May 31, 2016

Current assets:

Cash and equivalents

$ 4,021

$ 3,138

Short-term investments

2,139

2,319

Accounts receivable, net

3,752

3,241

Inventories

4,932

4,838

Prepaid expenses and other current assets

1,361

1,489

Total current assets

16,205

15,025

Property, plant and equipment, net

3,793

3,520

Identifiable intangible assets, net

283

281

Goodwill

139

131

Deferred income taxes and other assets

2,732

2,422

TOTAL ASSETS

23,152

21,379

Current liabilities:

Current portion of long-term debt

6

44

Notes payable

23

1

Accounts payable

1,938

2,191

Accrued liabilities

3,228

3,037

Income taxes payable

76

85

Total current liabilities

5,271

5,358

Long-term debt

3,472

1,993

Deferred income taxes and other liabilities

1,687

1,770

Commitments and contingencies

Redeemable preferred stock

0

Shareholders’ equity:

Capital in excess of stated value

8,395

7,786

Accumulated other comprehensive income

229

318

Retained earnings

4,095

4,151

Total shareholders’ equity

12,722

12,258

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

23,152

21,379

Class A Convertible Common Stock

Shareholders’ equity:

Common stock at stated value: Class A convertible - 329 and 353 shares outstanding, Class B - 1,323 and 1,329 shares outstanding

0

Class B Common Stock

Shareholders’ equity:

Common stock at stated value: Class A convertible - 329 and 353 shares outstanding, Class B - 1,323 and 1,329 shares outstanding

$ 3

Unaudited Condensed Consolidated Balance Sheets (Parenthetical)

In Millions, unless otherwise specified

Feb. 28, 2017

May 31, 2016

Class A Convertible Common Stock

Common Stock, shares outstanding

329

353

Class B Common Stock

Common Stock, shares outstanding

1,323

1,329

Unaudited Condensed Consolidated Statements of Income (USD $)

In Millions, except Per Share data, unless otherwise specified

3 Months Ended

9 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Feb. 28, 2017

Feb. 29, 2016

Income Statement [Abstract]

Revenues

$ 8,432

$ 8,032

$ 25,673

$ 24,132

Cost of sales

4,682

4,343

14,184

12,947

Gross profit

3,750

3,689

11,489

11,185

Demand creation expense

749

804

2,552

2,405

Operating overhead expense

1,747

1,762

5,346

5,298

Total selling and administrative expense

2,496

2,566

7,898

7,703

Interest expense (income), net

19

5

41

14

Other (income) expense, net

(88)

(17)

(168)

(82)

Income before income taxes

1,323

1,135

3,718

3,550

Income tax expense

182

185

486

636

NET INCOME

$ 1,141

$ 950

$ 3,232

$ 2,914

Earnings per common share:

Basic (in dollars per share)

$ 0.69

$ 0.56

$ 1.95

$ 1.71

Diluted (in dollars per share)

$ 0.68

$ 0.55

$ 1.91

$ 1.67

Dividends declared per common share (in dollars per share)

$ 0.18

$ 0.16

$ 0.52

$ 0.46

Unaudited Condensed Consolidated Statements of Comprehensive Income (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Feb. 28, 2017

Feb. 29, 2016

Statement of Comprehensive Income [Abstract]

Net income

$ 1,141

$ 950

$ 3,232

$ 2,914

Other comprehensive income (loss), net of tax:

Change in net foreign currency translation adjustment

12

(111)

1

(221)

Change in net gains (losses) on cash flow hedges

(175)

(350)

(92)

(389)

Change in net gains (losses) on other

(7)

(1)

2

9

Total other comprehensive income (loss), net of tax

(170)

(462)

(89)

(601)

TOTAL COMPREHENSIVE INCOME

$ 971

$ 488

$ 3,143

$ 2,313

Unaudited Condensed Consolidated Statements of Cash Flows (USD $)

In Millions, unless otherwise specified

9 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Cash provided by operations:

Net income

$ 3,232

$ 2,914

Income charges (credits) not affecting cash:

Depreciation

521

481

Deferred income taxes

(199)

(6)

Stock-based compensation

162

176

Amortization and other

7

18

Net foreign currency adjustments

(90)

192

Changes in certain working capital components and other assets and liabilities:

(Increase) in accounts receivable

(546)

(124)

(Increase) in inventories

(157)

(359)

(Increase) in prepaid expenses and other current assets

(152)

(149)

(Decrease) in accounts payable, accrued liabilities and income taxes payable

(27)

(1,231)

Cash provided by operations

2,751

1,912

Cash used by investing activities:

Purchases of short-term investments

(4,029)

(3,759)

Maturities of short-term investments

2,433

2,021

Sales of short-term investments

1,905

1,939

Investments in reverse repurchase agreements

0

150

Additions to property, plant and equipment

(776)

(901)

Disposals of property, plant and equipment

13

9

Other investing activities

(34)

(3)

Cash used by investing activities

(488)

(544)

Cash used by financing activities:

Net proceeds from long-term debt issuance

1,482

981

Long-term debt payments, including current portion

(43)

(104)

Increase (decrease) in notes payable

24

(68)

Payments on capital lease obligations

(14)

(5)

Proceeds from exercise of stock options and other stock issuances

339

370

Excess tax benefits from share-based payment arrangements

125

231

Repurchase of common stock

(2,429)

(2,698)

Dividends — common and preferred

(834)

(752)

Cash used by financing activities

(1,350)

(2,045)

Effect of exchange rate changes on cash and equivalents

(30)

(131)

Net increase (decrease) in cash and equivalents

883

(808)

Cash and equivalents, beginning of period

3,138

3,852

CASH AND EQUIVALENTS, END OF PERIOD

4,021

3,044

Supplemental disclosure of cash flow information:

Non-cash additions to property, plant and equipment

248

100

Dividends declared and not paid

$ 303

$ 270

Summary of Significant Accounting Policies

Note 1 — Summary of Significant Accounting Policies

Basis of Presentation

The Unaudited Condensed Consolidated Financial Statements include the accounts of NIKE, Inc. and its subsidiaries (the “Company”) and reflect all normal adjustments which are, in the opinion of management, necessary for a fair statement of the results of operations for the interim period. The year-end Condensed Consolidated Balance Sheet data as of May 31, 2016 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). The interim financial information and notes thereto should be read in conjunction with the Company’s latest Annual Report on Form 10-K. The results of operations for the three and nine months ended February 28, 2017 are not necessarily indicative of results to be expected for the entire year.

Reclassifications

Certain prior year amounts have been reclassified to conform to fiscal 2017 presentation.

Recently Adopted Accounting Standards

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The updated guidance requires debt issuance costs to be presented as a direct deduction from the carrying amount of the corresponding debt liability on the balance sheet. The Company adopted the standard on a retrospective basis in the first quarter of fiscal 2017. The adoption of this standard reduced both Deferred income taxes and other assets and Long-term debt by $17 million on the Unaudited Condensed Consolidated Balance Sheet as of May 31, 2016.

Recently Issued Accounting Standards

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The updated guidance requires companies to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Income tax effects of intra-entity transfers of inventory will continue to be deferred until the inventory has been sold to a third party. The ASU is effective for the Company beginning June 1, 2018, using a modified retrospective approach, with the cumulative effect recognized through retained earnings at the date of adoption. Early adoption is permitted as of the beginning of an annual reporting period for which interim or annual financial statements have not been issued. The Company is evaluating the impact this update will have on its existing accounting policies and the Consolidated Financial Statements. The Company anticipates the updated guidance could have a material impact on the Consolidated Financial Statements at adoption through the recognition of a cumulative-effect adjustment to retained earnings of previously deferred charges.

In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which changes how companies account for certain aspects of share-based payment awards to employees. The updated guidance requires excess tax benefits and deficiencies from share-based payment awards to be recorded in income tax expense in the income statement. Currently, excess tax benefits and deficiencies are recognized in shareholders’ equity on the balance sheet. This change is required to be applied prospectively. In addition, the updated guidance also changes the accounting for statutory tax withholding requirements, classification in the statement of cash flows and provides an option to continue to estimate forfeitures or account for forfeitures as they occur. The Company will adopt the standard on June 1, 2017 and will elect to continue to estimate forfeitures. The Company continues to evaluate the impact this update will have on its existing accounting policies and the Consolidated Financial Statements. The ASU is expected to result in increased volatility to the Company’s income tax expense in future periods dependent upon, among other variables, the price of its common stock and the timing and volume of share-based payment award activity, such as employee exercises of stock options and vesting of restricted stock awards.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), that replaces existing lease accounting guidance. The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. The new guidance will require the Company to continue to classify leases as either operating or financing, with classification affecting the pattern of expense recognition in the income statement. The Company will adopt the standard on June 1, 2019. The ASU is required to be applied using a modified retrospective approach at the beginning of the earliest period presented, with optional practical expedients. The Company is in the preliminary stages of the assessment of the effect the guidance will have on its existing accounting policies and the Consolidated Financial Statements, but expects there will be an increase in assets and liabilities on the Consolidated Balance Sheets at adoption due to the recording of right-of-use assets and corresponding lease liabilities, which may be material. Refer to Note 15 — Commitments and Contingencies of the Annual Report on Form 10-K for the fiscal year ended May 31, 2016 for information about the Company’s lease obligations.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The updated guidance enhances the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation and disclosure. The update to the standard is effective for the Company beginning June 1, 2018. The Company does not expect the adoption to have a material impact on the Consolidated Financial Statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), that replaces existing revenue recognition guidance. The updated guidance requires companies to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company will adopt the standard on June 1, 2018 using a modified retrospective approach with the cumulative effective of initially applying the new standard recognized in retained earnings at the date of initial application. The Company is in the process of evaluating the new standard against its existing accounting policies, including the timing of revenue recognition, and its contracts with customers, to determine the effect the guidance will have on the Consolidated Financial Statements.

Inventories

Note 2 — Inventories

Inventory balances of $4,932 million and $4,838 million at February 28, 2017 and May 31, 2016, respectively, were substantially all finished goods.

Accrued Liabilities

Note 3 — Accrued Liabilities

Accrued liabilities included the following:



	As of February 28,		As of May 31,
(In millions)	2017		2016
Compensation and benefits, excluding taxes	$	831	$	943
Endorsement compensation	338		393
Dividends payable	303		271
Collateral received from counterparties to hedging instruments	293		105
Import and logistics costs	257		198
Taxes other than income taxes	189		159
Advertising and marketing	137		119
Fair value of derivatives	118		162
Other⁽¹⁾	762		687
TOTAL ACCRUED LIABILITIES	$	3,228	$	3,037


(1)	Other consists of various accrued expenses with no individual item accounting for more than 5% of the total Accrued liabilities balance at February 28, 2017 and May 31, 2016.

Fair Value Measurements

Note 4 — Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including derivatives and available-for-sale securities. Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. The Company uses the three-level hierarchy established by the FASB that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach).

The levels of the fair value hierarchy are described below:


•	Level 1: Quoted prices in active markets for identical assets or liabilities.


•	Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical assets or liabilities in markets that are not active.


•	Level 3: Unobservable inputs for which there is little or no market data available, which require the reporting entity to develop its own assumptions.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Financial assets and liabilities are classified in their entirety based on the most conservative level of input that is significant to the fair value measurement.

Pricing vendors are utilized for certain Level 1 and Level 2 investments. These vendors either provide a quoted market price in an active market or use observable inputs without applying significant adjustments in their pricing. Observable inputs include broker quotes, interest rates and yield curves observable at commonly quoted intervals, volatilities and credit risks. The fair value of derivative contracts is determined using observable market inputs such as the daily market foreign currency rates, forward pricing curves, currency volatilities, currency correlations and interest rates, and considers nonperformance risk of the Company and that of its counterparties.

The Company’s fair value processes include controls that are designed to ensure appropriate fair values are recorded. These controls include a comparison of fair values to another independent pricing vendor.

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis as of February 28, 2017 and May 31, 2016, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.



	As of February 28, 2017
(In millions)	Assets at Fair Value		Cash and Equivalents		Short-term Investments		Other Long-term Assets
Cash	$	610	$	610	$	—	$	—
Level 1:
U.S. Treasury securities	1,195		150		1,045		—
Level 2:
Time deposits	839		812		27		—
U.S. Agency securities	633		260		373		—
Commercial paper and bonds	854		160		694		—
Money market funds	2,029		2,029		—		—
Total Level 2:	4,355		3,261		1,094		—
Level 3:
Non-marketable preferred stock	10		—		—		10
TOTAL	$	6,170	$	4,021	$	2,139	$	10



	As of May 31, 2016
(In millions)	Assets at Fair Value		Cash and Equivalents		Short-term Investments		Other Long-term Assets
Cash	$	774	$	774	$	—	$	—
Level 1:
U.S. Treasury securities	1,265		100		1,165		—
Level 2:
Time deposits	831		827		4		—
U.S. Agency securities	679		—		679		—
Commercial paper and bonds	733		262		471		—
Money market funds	1,175		1,175		—		—
Total Level 2:	3,418		2,264		1,154		—
Level 3:
Non-marketable preferred stock	10		—		—		10
TOTAL	$	5,467	$	3,138	$	2,319	$	10

The Company elects to record the gross assets and liabilities of its derivative financial instruments on the Unaudited Condensed Consolidated Balance Sheets. The Company’s derivative financial instruments are subject to master netting arrangements that allow for the offset of assets and liabilities in the event of default or early termination of the contract. Any amounts of cash collateral received related to these instruments associated with the Company's credit-related contingent features are recorded in Cash and equivalents and Accrued liabilities, the latter of which would further offset against the Company’s derivative asset balance (refer to Note 9 — Risk Management and Derivatives). Any amounts of cash collateral posted related to these instruments associated with the Company's credit-related contingent features are recorded in Prepaid expenses and other current assets, which would further offset against the Company’s derivative liability balance (refer to Note 9 — Risk Management and Derivatives). Cash collateral received or posted related to the Company's credit-related contingent features is presented in the Cash provided by operations component of the Unaudited Condensed Consolidated Statements of Cash Flows. Any amounts of non-cash collateral received, such as securities, are not recorded on the Unaudited Condensed Consolidated Balance Sheets pursuant to U.S. GAAP.

The following tables present information about the Company’s derivative assets and liabilities measured at fair value on a recurring basis as of February 28, 2017 and May 31, 2016, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.



	As of February 28, 2017
	Derivative Assets						Derivative Liabilities
(In millions)	Assets at Fair Value		Other Current Assets		Other Long-term Assets		Liabilities at Fair Value		Accrued Liabilities		Other Long-term Liabilities
Level 2:
Foreign exchange forwards and options⁽¹⁾	$	607	$	493	$	114	$	116	$	114	$	2
Embedded derivatives	9		1		8		10		4		6
TOTAL	$	616	$	494	$	122	$	126	$	118	$	8

(1)

If the foreign exchange derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $114 million as of February 28, 2017. As of that date, the Company had received $293 million of cash collateral from various counterparties related to these foreign exchange derivative instruments. No amount of collateral was posted on the Company's derivative liability balance as of February 28, 2017.



	As of May 31, 2016
	Derivative Assets						Derivative Liabilities
(In millions)	Assets at Fair Value		Other Current Assets		Other Long-term Assets		Liabilities at Fair Value		Accrued Liabilities		Other Long-term Liabilities
Level 2:
Foreign exchange forwards and options⁽¹⁾	$	603	$	487	$	116	$	145	$	115	$	30
Embedded derivatives	7		2		5		9		2		7
Interest rate swaps⁽²⁾	7		7		—		45		45		—
TOTAL	$	617	$	496	$	121	$	199	$	162	$	37

(1)

If the foreign exchange derivative instruments had been netted on the Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $136 million as of May 31, 2016. As of that date, the Company had received $105 million of cash collateral from various counterparties related to these foreign exchange derivative instruments. No amount of collateral was posted on the Company’s derivative liability balance as of May 31, 2016.


(2)	As of May 31, 2016, no amount of cash collateral had been received or posted on the derivative asset or liability balance related to the Company's interest rate swaps.

Available-for-sale securities comprise investments in U.S. Treasury and Agency securities, time deposits, money market funds, corporate commercial paper and bonds. These securities are valued using market prices in both active markets (Level 1) and less active markets (Level 2). As of February 28, 2017, the Company held $1,915 million of available-for-sale securities with maturity dates within one year and $224 million with maturity dates over one year and less than five years within Short-term investments on the Unaudited Condensed Consolidated Balance Sheets. The gross realized gains and losses on sales of available-for-sale securities were immaterial for the three and nine months ended February 28, 2017 and February 29, 2016. Unrealized gains and losses on available-for-sale securities included in Accumulated other comprehensive income were immaterial as of February 28, 2017 and May 31, 2016. The Company regularly reviews its available-for-sale securities for other-than-temporary impairment. For the nine months ended February 28, 2017 and February 29, 2016, the Company did not consider any of its securities to be other-than-temporarily impaired and, accordingly, did not recognize any impairment losses.

Included in Interest expense (income), net for the three months ended February 28, 2017 and February 29, 2016 was interest income related to the Company's available-for-sale securities of $8 million and $4 million, respectively, and $17 million and $8 million for the nine months ended February 28, 2017 and February 29, 2016, respectively.

The Company’s Level 3 assets comprise investments in certain non-marketable preferred stock. These Level 3 investments are an immaterial portion of the Company's portfolio. Changes in Level 3 investment assets were immaterial during the nine months ended February 28, 2017 and the fiscal year ended May 31, 2016.

No transfers among levels within the fair value hierarchy occurred during the nine months ended February 28, 2017 and the fiscal year ended May 31, 2016.

Derivative financial instruments include foreign exchange forwards and options, embedded derivatives and interest rate swaps. Refer to Note 9 — Risk Management and Derivatives for additional detail.

As of February 28, 2017 and May 31, 2016, assets or liabilities that were required to be measured at fair value on a non-recurring basis were immaterial.

Financial Assets and Liabilities Not Recorded at Fair Value

For fair value information regarding Long-term debt, refer to Note 5 — Long-Term Debt.

The carrying amounts reflected on the Unaudited Condensed Consolidated Balance Sheets for Notes payable approximate fair value.

Long-Term Debt

Note 5 — Long-Term Debt

Long-term debt, net of unamortized premiums, discounts and debt issuance costs, comprises the following:



	Original Principal		Interest Rate		Interest Payments	Book Value Outstanding as of
Scheduled Maturity (Dollars and Yen in millions)	Original Principal		Interest Rate		Interest Payments	February 28, 2017		May 31, 2016
Corporate Bond Payables:⁽¹⁾
May 1, 2023⁽²⁾	$	500	2.25	%	Semi-Annually	$	497	$	497
November 1, 2026⁽³⁾	$	1,000	2.38	%	Semi-Annually	993		—
May 1, 2043⁽²⁾	$	500	3.63	%	Semi-Annually	495		494
November 1, 2045⁽⁴⁾	$	1,000	3.88	%	Semi-Annually	981		981
November 1, 2046⁽³⁾	$	500	3.38	%	Semi-Annually	490		—
Promissory Notes:
April 1, 2017⁽⁵⁾	$	40	6.20	%	Monthly	—		38
Japanese Yen Notes:
August 20, 2001 through November 20, 2020⁽⁶⁾	¥	9,000	2.60	%	Quarterly	15		18
August 20, 2001 through November 20, 2020⁽⁶⁾	¥	4,000	2.00	%	Quarterly	7		9
Total						3,478		2,037
Less current maturities						6		44
TOTAL LONG-TERM DEBT						$	3,472	$	1,993


(1)	These senior unsecured obligations rank equally with the Company's other unsecured and unsubordinated indebtedness.

(2)

The bonds are redeemable at the Company's option prior to February 1, 2023 and November 1, 2042, respectively, at a price equal to the greater of (i) 100% 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. Subsequent to February 1, 2023 and November 1, 2042, respectively, the bonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to 100% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest.

(3)

The bonds are redeemable at the Company's option prior to August 1, 2026 and May 1, 2046, respectively, at a price equal to the greater of (i) 100% 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. Subsequent to August 1, 2026 and May 1, 2046, respectively, the bonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to 100% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest.

(4)

The bonds are redeemable at the Company's option prior to May 1, 2045, at a price equal to the greater of (i) 100% 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. Subsequent to May 1, 2045, the bonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to 100% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest.


(5)	During the three months ended February 28, 2017, the Company repaid the notes due April 1, 2017 pursuant to the terms of the debt agreement.


(6)	NIKE Logistics YK assumed a total of ¥13 billion in loans as part of its agreement to purchase a distribution center in Japan, which serves as collateral for the loans. These loans mature in equal quarterly installments during the period August 20, 2001 through November 20, 2020.

The scheduled maturity of Long-term debt in each of the twelve month periods ending February 28, 2018 through 2022 are $6 million, $6 million, $6 million, $4 million and $0 million, respectively, at face value.

The Company’s Long-term debt is recorded at adjusted cost, net of unamortized premiums, discounts and debt issuance costs. The fair value of Long-term debt is estimated based upon quoted prices for similar instruments or quoted prices for identical instruments in inactive markets (Level 2). The fair value of the Company’s Long-term debt, including the current portion, was approximately $3,355 million at February 28, 2017 and $2,125 million at May 31, 2016.

Income Taxes

Note 6 — Income Taxes

The effective tax rate was 13.1% and 17.9% for the nine months ended February 28, 2017 and February 29, 2016, respectively. The decrease in the Company's effective tax rate was primarily due to a discrete benefit related to the resolution of a foreign tax credit matter with the U.S. Internal Revenue Service (IRS). The Company also benefited from a reduction in tax reserves related to foreign operations.

As of February 28, 2017, total gross unrecognized tax benefits, excluding related interest and penalties, were $421 million, $183 million of which would affect the Company’s effective tax rate if recognized in future periods. As of May 31, 2016, total gross unrecognized tax benefits, excluding related interest and penalties, were $506 million. The liability for payment of interest and penalties decreased $36 million during the nine months ended February 28, 2017. As of February 28, 2017 and May 31, 2016, accrued interest and penalties related to uncertain tax positions were $173 million and $209 million, respectively (excluding federal benefit).

The Company incurs tax liabilities primarily in the United States, China and the Netherlands, as well as various state and other foreign jurisdictions. The Company is currently under audit by the IRS for fiscal years 2013 through 2016. As previously disclosed, the Company received statutory notices of deficiency for fiscal 2011 and fiscal 2012 proposing a total increase in tax of $254 million, subject to interest, related to a foreign tax credit matter. The Company contested these deficiencies by filing petitions with the U.S. Tax Court. During the three months ended August 31, 2016, the Company reached a resolution with the IRS on this matter. Decisions were subsequently filed in U.S. District Tax Court stating there is no deficiency in income tax due from the Company. The Company has now resolved all U.S. federal income tax matters through fiscal 2012.

The Company’s major foreign jurisdictions, China and the Netherlands, have concluded substantially all income tax matters through calendar 2006 and fiscal 2010, respectively. Although the timing of resolution of audits is not certain, the Company evaluates all domestic and foreign audit issues in the aggregate, along with the expiration of applicable statutes of limitations, and estimates that it is reasonably possible the total gross unrecognized tax benefits could decrease by up to $168 million within the next 12 months.

Common Stock and Stock-Based Compensation

Note 7 — Common Stock and Stock-Based Compensation

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. Each share of Class A Common Stock is convertible into one share of Class B Common Stock. Voting rights of Class B Common Stock are limited in certain circumstances with respect to the election of directors. There are no differences in the dividend and liquidation preferences or participation rights of the holders of Class A and Class B Common Stock.

The NIKE, Inc. Stock Incentive Plan (the “Stock Incentive Plan”) provides for the issuance of up to 718 million previously unissued shares of Class B Common Stock in connection with stock options and other awards granted under the Stock Incentive Plan. The Stock Incentive Plan authorizes the grant of non-statutory stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and performance-based awards. The exercise price for stock options and stock appreciation rights may not be less than the fair market value of the underlying shares on the date of grant. A committee of the Board of Directors administers the Stock Incentive Plan. The committee has the authority to determine the employees to whom awards will be made, the amount of the awards and the other terms and conditions of the awards. Substantially all stock option grants outstanding under the Stock Incentive Plan are granted in the first quarter of each fiscal year, vest ratably over four years and expire ten years from the date of grant.

In addition to the Stock Incentive Plan, the Company gives employees the right to purchase shares at a discount to the market price under employee stock purchase plans (ESPPs). Subject to the annual statutory limit, employees are eligible to participate through payroll deductions of up to 10% of their compensation. At the end of each six month offering period, shares are purchased by the participants at 85% of the lower of the fair market value at the beginning or the end of the offering period.

The Company accounts for stock-based compensation by estimating the fair value of options granted under the Stock Incentive Plan and employees’ purchase rights under the ESPPs using the Black-Scholes option pricing model. The Company recognizes this fair value as Operating overhead expense over the vesting period using the straight-line method.

The following table summarizes the Company’s total stock-based compensation expense recognized in Operating overhead expense:



	Three Months Ended				Nine Months Ended
(In millions)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016
Stock options⁽¹⁾	$	35	$	44	$	110	$	128
ESPPs	7		7		27		22
Restricted stock	9		9		25		26
TOTAL STOCK-BASED COMPENSATION EXPENSE	$	51	$	60	$	162	$	176

(1)

Expense for stock options includes the expense associated with stock appreciation rights. Accelerated stock option expense is recorded for employees eligible for accelerated stock option vesting upon retirement. Accelerated stock option expense was $3 million and $8 million for the three months ended February 28, 2017 and February 29, 2016, respectively, and $11 million and $22 million for the nine months ended February 28, 2017 and February 29, 2016, respectively.

As of February 28, 2017, the Company had $236 million of unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized in Operating overhead expense over a weighted average remaining period of 2.2 years.

The weighted average fair value per share of the options granted during the nine months ended February 28, 2017 and February 29, 2016, computed as of the grant date using the Black-Scholes pricing model, was $9.38 and $12.67, respectively. The weighted average assumptions used to estimate these fair values were as follows:



	Nine Months Ended
	February 28, 2017		February 29, 2016
Dividend yield	1.1	%	1.0	%
Expected volatility	17.4	%	23.6	%
Weighted average expected life (in years)	6.0		5.8
Risk-free interest rate	1.3	%	1.7	%

The Company estimates the expected volatility based on the implied volatility in market traded options on the Company’s common stock with a term greater than one year, along with other factors. The weighted average expected life of options is based on an analysis of historical and expected future exercise patterns. The interest rate is based on the U.S. Treasury (constant maturity) risk-free rate in effect at the date of grant for periods corresponding with the expected term of the options.

Earnings Per Share

Note 8 — Earnings Per Share

The following is a reconciliation from basic earnings per common share to diluted earnings per common share. The computations of diluted earnings per common share excluded options, including shares under employee stock purchase plans (ESPPs), to purchase an additional 31.1 million and 20.1 million shares of common stock outstanding for the three months ended February 28, 2017 and February 29, 2016, respectively, and 31.0 million and 1.1 million shares of common stock outstanding for the nine months ended February 28, 2017 and February 29, 2016, respectively, because the options were anti-dilutive.



	Three Months Ended				Nine Months Ended
(In millions, except per share data)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016
Determination of shares:
Weighted average common shares outstanding	1,653.1		1,693.8		1,661.5		1,703.2
Assumed conversion of dilutive stock options and awards	33.2		43.5		34.9		45.3
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	1,686.3		1,737.3		1,696.4		1,748.5

Earnings per common share:
Basic	$	0.69	$	0.56	$	1.95	$	1.71
Diluted	$	0.68	$	0.55	$	1.91	$	1.67

Risk Management and Derivatives

Note 9 — Risk Management and Derivatives

The Company is exposed to global market risks, including the effect of changes in foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for trading or speculative purposes.

The Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP. The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. This process includes linking all derivatives designated as hedges to either recognized assets or liabilities or forecasted transactions.

The majority of derivatives outstanding as of February 28, 2017 are designated as foreign currency cash flow hedges, primarily for Euro/U.S. Dollar, Japanese Yen/U.S. Dollar and British Pound/Euro currency pairs. All derivatives are recognized on the Unaudited Condensed Consolidated Balance Sheets at fair value and classified based on the instrument’s maturity date.

The following table presents the fair values of derivative instruments included within the Unaudited Condensed Consolidated Balance Sheets as of February 28, 2017 and May 31, 2016:



	Derivative Assets					Derivative Liabilities
(In millions)	Balance Sheet Location	February 28, 2017		May 31, 2016		Balance Sheet Location	February 28, 2017		May 31, 2016
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	$	366	$	447	Accrued liabilities	$	35	$	38
Interest rate swaps	Prepaid expenses and other current assets	—		7		Accrued liabilities	—		45
Foreign exchange forwards and options	Deferred income taxes and other assets	100		90		Deferred income taxes and other liabilities	2		12
Total derivatives formally designated as hedging instruments		466		544			37		95
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	127		40		Accrued liabilities	79		76
Embedded derivatives	Prepaid expenses and other current assets	1		2		Accrued liabilities	4		2
Foreign exchange forwards and options	Deferred income taxes and other assets	14		26		Deferred income taxes and other liabilities	—		19
Embedded derivatives	Deferred income taxes and other assets	8		5		Deferred income taxes and other liabilities	6		7
Total derivatives not designated as hedging instruments		150		73			89		104
TOTAL DERIVATIVES		$	616	$	617		$	126	$	199

The following tables present the amounts affecting the Unaudited Condensed Consolidated Statements of Income for the three and nine months ended February 28, 2017 and February 29, 2016:



(In millions)	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives⁽¹⁾						Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income⁽¹⁾
	Three Months Ended						Location of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income	Three Months Ended
	February 28, 2017			February 29, 2016				February 28, 2017			February 29, 2016
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options	$	5		$	107		Revenues	$	24		$	(24	)
Foreign exchange forwards and options	(5		)	(142		)	Cost of sales	87			153
Foreign exchange forwards and options	(3		)	—			Total selling and administrative expense	—			—
Foreign exchange forwards and options	4			(91		)	Other (income) expense, net	67			73
Interest rate swaps	—			(49		)	Interest expense (income), net	(2		)	—
Total designated cash flow hedges	$	1		$	(175	)		$	176		$	202


(1)	For the three months ended February 28, 2017 and February 29, 2016, the amounts recorded in Other (income) expense, net as a result of hedge ineffectiveness and the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.



(In millions)	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives⁽¹⁾						Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income⁽¹⁾
	Nine Months Ended						Location of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income	Nine Months Ended
	February 28, 2017			February 29, 2016				February 28, 2017			February 29, 2016
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options	$	45		$	97		Revenues	$	96		$	(99	)
Foreign exchange forwards and options	244			63			Cost of sales	260			451
Foreign exchange forwards and options	(1		)	—			Total selling and administrative expense	—			—
Foreign exchange forwards and options	149			31			Other (income) expense, net	141			173
Interest rate swaps	(54		)	(99		)	Interest expense (income), net	(2		)	—
Total designated cash flow hedges	$	383		$	92			$	495		$	525


(1)	For the nine months ended February 28, 2017 and February 29, 2016, the amounts recorded in Other (income) expense, net as a result of hedge ineffectiveness and the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.



	Amount of Gain (Loss) Recognized in Income on Derivatives												Location of Gain (Loss) Recognized in Income on Derivatives
	Three Months Ended						Nine Months Ended
(In millions)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016
Derivatives designated as fair value hedges:
Interest rate swaps⁽¹⁾	$	—		$	—		$	—		$	2		Interest expense (income), net
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	(66		)	(30		)	101			4			Other (income) expense, net
Embedded derivatives	(1		)	(3		)	(2		)	(3		)	Other (income) expense, net


(1)	All interest rate swaps designated as fair value hedges meet the shortcut method requirements under U.S. GAAP. Accordingly, changes in the fair values of the interest rate swaps are considered to exactly offset changes in the fair value of the underlying long-term debt. Refer to “Fair Value Hedges” in this note for additional detail.

Refer to Note 3 — Accrued Liabilities for derivative instruments recorded in Accrued liabilities, Note 4 — Fair Value Measurements for a description of how the above financial instruments are valued and Note 10 — Accumulated Other Comprehensive Income for additional information on changes in Accumulated other comprehensive income for the three and nine months ended February 28, 2017 and February 29, 2016.

Cash Flow Hedges

The purpose of the Company's foreign exchange risk management program is to lessen both the positive and negative effects of currency fluctuations on the Company's consolidated results of operations, financial position and cash flows. Foreign currency exposures that the Company may elect to hedge in this manner include product cost exposures, non-functional currency denominated external and intercompany revenues, selling and administrative expenses, investments in U.S. Dollar-denominated available-for-sale debt securities and certain other intercompany transactions.

Product cost exposures are primarily generated through non-functional currency denominated product purchases and the foreign currency adjustment program described below. NIKE entities primarily purchase product in two ways: (1) Certain NIKE entities purchase product from the NIKE Trading Company (NTC), a wholly-owned sourcing hub that buys NIKE branded product from third-party factories, predominantly in U.S. Dollars. The NTC, whose functional currency is the U.S. Dollar, then sells the product to NIKE entities in their respective functional currencies. When the NTC sells to a NIKE entity with a different functional currency, the result is a foreign currency exposure for the NTC. (2) Other NIKE entities purchase product directly from third-party factories in U.S. Dollars. These purchases generate a foreign currency exposure for those NIKE entities with a functional currency other than the U.S. Dollar.

The Company operates a foreign currency adjustment program with certain factories. The program is designed to more effectively manage foreign currency risk by assuming certain of the factories’ foreign currency exposures, some of which are natural offsets to the Company's existing foreign currency exposures. Under this program, the Company’s payments to these factories are adjusted for rate fluctuations in the basket of currencies (“factory currency exposure index”) in which the labor, materials and overhead costs incurred by the factories in the production of NIKE branded products (“factory input costs”) are denominated. For the portion of the indices denominated in the local or functional currency of the factory, the Company may elect to enter into derivative contracts formally designated as cash flow hedges. For all currencies within the indices, excluding the U.S. Dollar and the local or functional currency of the factory, an embedded derivative contract is created upon the factory’s acceptance of NIKE’s purchase order. Embedded derivative contracts are separated from the related purchase order, as further described within the Embedded Derivatives section below.

The Company’s policy permits the utilization of derivatives to reduce its foreign currency exposures where internal netting or other strategies cannot be effectively employed. Typically, the Company may enter into hedge contracts starting up to 12 to 24 months in advance of the forecasted transaction and may place incremental hedges up to 100% of the exposure by the time the forecasted transaction occurs. The total notional amount of outstanding foreign currency derivatives designated as cash flow hedges was $10.5 billion as of February 28, 2017.

During the second quarter of fiscal 2017, the Company terminated all forward-starting interest rate swap agreements with a total notional amount of $1.5 billion in connection with the October 21, 2016 debt issuance (refer to Note 5 — Long-Term Debt). Upon termination of these forward-starting swaps, the Company made cash payments to the related counterparties of $92 million, which was recorded in Accumulated other comprehensive income and will be released through Interest expense (income), net as interest expense is incurred over the term of the issued debt.

All changes in fair value of derivatives designated as cash flow hedges, excluding any ineffective portion, are recorded in Accumulated other comprehensive income until Net income is affected by the variability of cash flows of the hedged transaction. In most cases, amounts recorded in Accumulated other comprehensive income will be released to Net income in periods following the maturity of the related derivative, rather than at maturity. Effective hedge results are classified within the Unaudited Condensed Consolidated Statements of Income in the same manner as the underlying exposure. The results of hedges of non-functional currency denominated revenues and product cost exposures, excluding embedded derivatives, are recorded in Revenues or Cost of sales when the underlying hedged transaction affects consolidated Net income. Results of hedges of selling and administrative expense are recorded together with those costs when the related expense is recorded. Amounts recorded in Accumulated other comprehensive income related to forward-starting interest rate swaps will be released through Interest expense (income), net as interest expense is incurred over the term of the issued debt. Results of hedges of anticipated purchases of U.S. Dollar-denominated available-for-sale securities are recorded in Other (income) expense, net when the securities are sold. Results of hedges of certain anticipated intercompany transactions are recorded in Other (income) expense, net when the transaction occurs. The Company classifies the cash flows at settlement from these designated cash flow hedge derivatives in the same category as the cash flows from the related hedged items, primarily within the Cash provided by operations component of the Unaudited Condensed Consolidated Statements of Cash Flows.

Premiums paid or received on options are initially recorded as deferred charges or deferred credits, respectively. The Company assesses the effectiveness of options based on the total cash flows method and records total changes in the options’ fair value to Accumulated other comprehensive income to the degree they are effective.

The Company formally assesses, both at a hedge’s inception and on an ongoing basis, whether the derivatives that are used in the hedging transaction have been highly effective in offsetting changes in the cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. Effectiveness for cash flow hedges is assessed based on changes in forward rates. Ineffectiveness was immaterial for the three and nine months ended February 28, 2017 and February 29, 2016.

The Company discontinues hedge accounting prospectively when: (1) it determines that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item (including hedged items such as firm commitments or forecasted transactions); (2) the derivative expires or is sold, terminated or exercised; (3) it is no longer probable that the forecasted transaction will occur; or (4) management determines that designating the derivative as a hedging instrument is no longer appropriate.

When the Company discontinues hedge accounting because it is no longer probable that the forecasted transaction will occur in the originally expected period, but is expected to occur within an additional two-month period of time thereafter, the gain or loss on the derivative remains in Accumulated other comprehensive income and is reclassified to Net income when the forecasted transaction affects consolidated Net income. However, if it is probable that a forecasted transaction will not occur by the end of the originally specified time period or within an additional two-month period of time thereafter, the gains and losses that were in Accumulated other comprehensive income will be recognized immediately in Other (income) expense, net. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company will carry the derivative at its fair value on the Unaudited Condensed Consolidated Balance Sheets, recognizing future changes in the fair value in Other (income) expense, net. For the three and nine months ended February 28, 2017 and February 29, 2016, the amounts recorded in Other (income) expense, net as a result of the discontinuance of cash flow hedging because the forecasted transactions were no longer probable of occurring were immaterial.

As of February 28, 2017, $312 million of deferred net gains (net of tax) on both outstanding and matured derivatives in Accumulated other comprehensive income were expected to be reclassified to Net income during the next 12 months concurrent with the underlying hedged transactions also being recorded in Net income. Actual amounts ultimately reclassified to Net income are dependent on the exchange rates in effect when derivative contracts that are currently outstanding mature. As of February 28, 2017, the maximum term over which the Company was hedging exposures to the variability of cash flows for its forecasted transactions was 27 months.

Fair Value Hedges

The Company has, in the past, been exposed to the risk of changes in the fair value of certain fixed-rate debt attributable to changes in interest rates. Derivatives used by the Company to hedge this risk are receive-fixed, pay-variable interest rate swaps. All interest rate swaps designated as fair value hedges of the related long-term debt meet the shortcut method requirements under U.S. GAAP. Accordingly, changes in the fair values of the interest rate swaps are considered to exactly offset changes in the fair value of the underlying long-term debt. The cash flows associated with the Company’s fair value hedges are periodic interest payments while the swaps are outstanding, which are reflected within the Cash provided by operations component of the Unaudited Condensed Consolidated Statements of Cash Flows. The Company recorded no ineffectiveness from its interest rate swaps designated as fair value hedges for the three and nine months ended February 28, 2017 or February 29, 2016. On October 15, 2015, the Company repaid the long-term debt which had previously been hedged with these interest rate swaps. Accordingly, as of February 28, 2017, the Company had no interest rate swaps designated as fair value hedges.

Net Investment Hedges

The Company has, in the past, hedged and may, in the future, hedge the risk of variability in foreign-currency-denominated net investments in wholly-owned international operations. All changes in fair value of the derivatives designated as net investment hedges, except ineffective portions, are reported in Accumulated other comprehensive income along with the foreign currency translation adjustments on those investments. The Company classifies the cash flows at settlement of its net investment hedges within the Cash used by investing activities component of the Unaudited Condensed Consolidated Statements of Cash Flows. The Company assesses hedge effectiveness based on changes in forward rates. The Company recorded no ineffectiveness from its net investment hedges for the three and nine months ended February 28, 2017 or February 29, 2016. The Company had no outstanding net investment hedges as of February 28, 2017.

Undesignated Derivative Instruments

The Company may elect to enter into foreign exchange forwards to mitigate the change in fair value of specific assets and liabilities on the Unaudited Condensed Consolidated Balance Sheets and/or embedded derivative contracts. These forwards are not designated as hedging instruments under U.S. GAAP. Accordingly, these undesignated instruments are recorded at fair value as a derivative asset or liability on the Unaudited Condensed Consolidated Balance Sheets with their corresponding change in fair value recognized in Other (income) expense, net, together with the re-measurement gain or loss from the hedged balance sheet position or embedded derivative contract. The Company classifies the cash flows at settlement from undesignated instruments in the same category as the cash flows from the related hedged items, generally within the Cash provided by operations component of the Unaudited Condensed Consolidated Statements of Cash Flows. The total notional amount of outstanding undesignated derivative instruments was $6.6 billion as of February 28, 2017.

Embedded Derivatives

As part of the foreign currency adjustment program described above, an embedded derivative contract is created upon the factory’s acceptance of NIKE’s purchase order for currencies within the factory currency exposure indices that are neither the U.S. Dollar nor the local or functional currency of the factory. Embedded derivative contracts are treated as foreign currency forward contracts that are bifurcated from the related purchase order and recorded at fair value as a derivative asset or liability on the Unaudited Condensed Consolidated Balance Sheets with their corresponding change in fair value recognized in Other (income) expense, net from the date a purchase order is accepted by a factory through the date the purchase price is no longer subject to foreign currency fluctuations.

In addition, the Company has entered into certain other contractual agreements which have payments that are indexed to currencies that are not the functional currency of either substantial party to the contracts. These payment terms expose NIKE to variability in foreign exchange rates and create embedded derivative contracts that must be bifurcated from the related contract and recorded at fair value as derivative assets or liabilities on the Unaudited Condensed Consolidated Balance Sheets with their corresponding changes in fair value recognized in Other (income) expense, net until each payment is settled.

At February 28, 2017, the total notional amount of embedded derivatives outstanding was approximately $283 million.

Credit Risk

The Company is exposed to credit-related losses in the event of nonperformance by counterparties to hedging instruments. The counterparties to all derivative transactions are major financial institutions with investment grade credit ratings. However, this does not eliminate the Company’s exposure to credit risk with these institutions. This credit risk is limited to the unrealized gains in such contracts should any of these counterparties fail to perform as contracted. To manage this risk, the Company has established strict counterparty credit guidelines that are continually monitored.

The Company’s derivative contracts contain credit risk-related contingent features designed to protect against significant deterioration in counterparties’ creditworthiness and their ultimate ability to settle outstanding derivative contracts in the normal course of business. The Company’s bilateral credit-related contingent features generally require the owing entity, either the Company or the derivative counterparty, to post collateral for the portion of the fair value in excess of $50 million should the fair value of outstanding derivatives per counterparty be greater than $50 million. Additionally, a certain level of decline in credit rating of either the Company or the counterparty could also trigger collateral requirements. As of February 28, 2017, the Company was in compliance with all credit risk-related contingent features and had derivative instruments with credit risk-related contingent features in a net liability position of $2 million. Accordingly, the Company was not required to post any collateral as a result of these contingent features. Further, as of February 28, 2017, the Company had received $293 million of cash collateral from various counterparties to its derivative contracts (refer to Note 4 — Fair Value Measurements). The Company considers the impact of the risk of counterparty default to be immaterial.

Accumulated Other Comprehensive Income

Note 10 — Accumulated Other Comprehensive Income

The changes in Accumulated other comprehensive income, net of tax, for the three and nine months ended February 28, 2017 were as follows:



(In millions)	Foreign Currency Translation Adjustment⁽¹⁾			Cash Flow Hedges			Net Investment Hedges⁽¹⁾		Other			Total
Balance at November 30, 2016	$	(218	)	$	546		$	115	$	(44	)	$	399
Other comprehensive gains (losses) before reclassifications⁽²⁾	13			2			—		—			15
Reclassifications to net income of previously deferred (gains) losses⁽³⁾	(1		)	(177		)	—		(7		)	(185		)
Other comprehensive income (loss)	12			(175		)	—		(7		)	(170		)
Balance at February 28, 2017	$	(206	)	$	371		$	115	$	(51	)	$	229


(1)	The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.


(2)	Net of tax benefit (expense) of $0 million, $1 million, $0 million, $(1) million and $0 million, respectively.


(3)	Net of tax (benefit) expense of $0 million, $(1) million, $0 million, $2 million and $1 million, respectively.



(In millions)	Foreign Currency Translation Adjustment⁽¹⁾			Cash Flow Hedges			Net Investment Hedges⁽¹⁾		Other			Total
Balance at May 31, 2016	$	(207	)	$	463		$	115	$	(53	)	$	318
Other comprehensive gains (losses) before reclassifications⁽²⁾	2			406			—		18			426
Reclassifications to net income of previously deferred (gains) losses⁽³⁾	(1		)	(498		)	—		(16		)	(515		)
Other comprehensive income (loss)	1			(92		)	—		2			(89		)
Balance at February 28, 2017	$	(206	)	$	371		$	115	$	(51	)	$	229


(1)	The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.


(2)	Net of tax benefit (expense) of $0 million, $23 million, $0 million, $0 million and $23 million, respectively.


(3)	Net of tax (benefit) expense of $0 million, $(3) million, $0 million, $1 million and $(2) million, respectively.

The changes in Accumulated other comprehensive income, net of tax, for the three and nine months ended February 29, 2016 were as follows:



(In millions)	Foreign Currency Translation Adjustment⁽¹⁾			Cash Flow Hedges			Net Investment Hedges⁽¹⁾		Other			Total
Balance at November 30, 2015	$	(141	)	$	1,181		$	115	$	(48	)	$	1,107
Other comprehensive gains (losses) before reclassifications⁽²⁾	(113		)	(151		)	—		3			(261		)
Reclassifications to net income of previously deferred (gains) losses⁽³⁾	2			(199		)	—		(4		)	(201		)
Other comprehensive income (loss)	(111		)	(350		)	—		(1		)	(462		)
Balance at February 29, 2016	$	(252	)	$	831		$	115	$	(49	)	$	645


(1)	The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.


(2)	Net of tax benefit (expense) of $0 million, $24 million, $0 million, $(1) million and $23 million, respectively.


(3)	Net of tax (benefit) expense of $0 million, $3 million, $0 million, $0 million and $3 million, respectively.



(In millions)	Foreign Currency Translation Adjustment⁽¹⁾			Cash Flow Hedges			Net Investment Hedges⁽¹⁾		Other			Total
Balance at May 31, 2015	$	(31	)	$	1,220		$	115	$	(58	)	$	1,246
Other comprehensive gains (losses) before reclassifications⁽²⁾	(223		)	132			—		14			(77		)
Reclassifications to net income of previously deferred (gains) losses⁽³⁾	2			(521		)	—		(5		)	(524		)
Other comprehensive income (loss)	(221		)	(389		)	—		9			(601		)
Balance at February 29, 2016	$	(252	)	$	831		$	115	$	(49	)	$	645


(1)	The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.


(2)	Net of tax benefit (expense) of $0 million, $40 million, $0 million, $(3) million and $37 million, respectively.


(3)	Net of tax (benefit) expense of $0 million, $4 million, $0 million, $0 million and $4 million, respectively.

The following table summarizes the reclassifications from Accumulated other comprehensive income to the Unaudited Condensed Consolidated Statements of Income:



	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income												Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	Three Months Ended						Nine Months Ended
(In millions)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016
Gains (losses) on foreign currency translation adjustment	$	1		$	(2	)	$	1		$	(2	)	Other (income) expense, net
Total before tax	1			(2		)	1			(2		)
Tax (expense) benefit	—			—			—			—
Gain (loss) net of tax	1			(2		)	1			(2		)
Gains (losses) on cash flow hedges:
Foreign exchange forwards and options	$	24		$	(24	)	$	96		$	(99	)	Revenues
Foreign exchange forwards and options	87			153			260			451			Cost of sales
Foreign exchange forwards and options	—			—			—			—			Total selling and administrative expense
Foreign exchange forwards and options	67			73			141			173			Other (income) expense, net
Interest rate swaps	(2		)	—			(2		)	—			Interest expense (income), net
Total before tax	176			202			495			525
Tax (expense) benefit	1			(3		)	3			(4		)
Gain (loss) net of tax	177			199			498			521
Gains (losses) on other	9			4			17			5			Other (income) expense, net
Total before tax	9			4			17			5
Tax (expense) benefit	(2		)	—			(1		)	—
Gain (loss) net of tax	7			4			16			5
Total net gain (loss) reclassified for the period	$	185		$	201		$	515		$	524

Operating Segments

Note 11 — Operating Segments

The Company’s operating segments are evidence of the structure of the Company's internal organization. The NIKE Brand segments are defined by geographic regions for operations participating in NIKE Brand sales activity.

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, and include results for the NIKE, Jordan and Hurley brands. The Company’s NIKE Brand Direct to Consumer (DTC) operations are managed within each geographic operating segment. Converse is also a reportable segment for the Company, and operates in one industry: the design, marketing, licensing and selling of casual sneakers, apparel and accessories.

Global Brand Divisions is included within the NIKE Brand for presentation purposes to align with the way management views the Company. Global Brand Divisions primarily represents NIKE Brand licensing businesses that are not part of a geographic operating segment, and demand creation, operating overhead and product creation and design expenses that are centrally managed for the NIKE Brand.

Corporate consists largely 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; and certain foreign currency gains and losses, including certain hedge gains and losses.

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 expense (income), net and Income tax expense in the Unaudited Condensed Consolidated Statements of Income.

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. These rates are set approximately nine and twelve months in advance of the future selling seasons to which they relate (specifically, for each currency, one standard rate applies to the fall and holiday selling seasons and one standard rate applies to the spring and summer selling seasons) 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 Converse reflect the 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, net, Inventories and Property, plant and equipment, net for operating segments are regularly reviewed by management and are therefore provided below.



	Three Months Ended						Nine Months Ended
(In millions)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016
REVENUES
North America	$	3,782		$	3,683		$	11,463		$	11,029
Western Europe	1,499			1,442			4,647			4,382
Central & Eastern Europe	362			359			1,130			1,086
Greater China	1,075			982			3,150			2,806
Japan	236			205			719			589
Emerging Markets	950			879			2,942			2,829
Global Brand Divisions	19			17			55			61
Total NIKE Brand	7,923			7,567			24,106			22,782
Converse	498			489			1,488			1,442
Corporate	11			(24		)	79			(92		)
TOTAL NIKE, INC. REVENUES	$	8,432		$	8,032		$	25,673		$	24,132
EARNINGS BEFORE INTEREST AND TAXES
North America	$	980		$	903		$	2,896		$	2,827
Western Europe	290			334			918			1,126
Central & Eastern Europe	57			69			196			243
Greater China	381			358			1,127			1,015
Japan	49			36			147			119
Emerging Markets	193			202			601			701
Global Brand Divisions	(598		)	(625		)	(1,988		)	(1,874		)
Total NIKE Brand	1,352			1,277			3,897			4,157
Converse	109			127			340			359
Corporate	(119		)	(264		)	(478		)	(952		)
Total NIKE, Inc. Earnings Before Interest and Taxes	1,342			1,140			3,759			3,564
Interest expense (income), net	19			5			41			14
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES	$	1,323		$	1,135		$	3,718		$	3,550



	As of February 28,		As of May 31,
(In millions)	2017		2016
ACCOUNTS RECEIVABLE, NET
North America	$	1,860	$	1,689
Western Europe	416		378
Central & Eastern Europe	273		194
Greater China	101		74
Japan	106		129
Emerging Markets	604		409
Global Brand Divisions	92		76
Total NIKE Brand	3,452		2,949
Converse	283		270
Corporate	17		22
TOTAL ACCOUNTS RECEIVABLE, NET	$	3,752	$	3,241
INVENTORIES
North America	$	2,127	$	2,363
Western Europe	992		929
Central & Eastern Europe	213		210
Greater China	431		375
Japan	166		146
Emerging Markets	616		478
Global Brand Divisions	68		35
Total NIKE Brand	4,613		4,536
Converse	309		306
Corporate	10		(4		)
TOTAL INVENTORIES	$	4,932	$	4,838
PROPERTY, PLANT AND EQUIPMENT, NET
North America	$	784	$	742
Western Europe	617		589
Central & Eastern Europe	46		50
Greater China	210		234
Japan	213		223
Emerging Markets	122		109
Global Brand Divisions	513		511
Total NIKE Brand	2,505		2,458
Converse	121		125
Corporate	1,167		937
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET	$	3,793	$	3,520

Commitments and Contingencies

Note 12 — Commitments and Contingencies

At February 28, 2017, the Company had letters of credit outstanding totaling $152 million. These letters of credit were issued primarily for the purchase of inventory and guarantees of the Company’s performance under certain self-insurance and other programs.

There have been no other significant subsequent developments relating to the commitments and contingencies reported on the Company's latest Annual Report on Form 10-K.

Summary of Significant Accounting Policies (Policies)

Basis of Presentation

The Unaudited Condensed Consolidated Financial Statements include the accounts of NIKE, Inc. and its subsidiaries (the “Company”) and reflect all normal adjustments which are, in the opinion of management, necessary for a fair statement of the results of operations for the interim period. The year-end Condensed Consolidated Balance Sheet data as of May 31, 2016 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). The interim financial information and notes thereto should be read in conjunction with the Company’s latest Annual Report on Form 10-K. The results of operations for the three and nine months ended February 28, 2017 are not necessarily indicative of results to be expected for the entire year.

Reclassifications

Certain prior year amounts have been reclassified to conform to fiscal 2017 presentation.

Recently Issued Accounting Standards

Recently Adopted Accounting Standards

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The updated guidance requires debt issuance costs to be presented as a direct deduction from the carrying amount of the corresponding debt liability on the balance sheet. The Company adopted the standard on a retrospective basis in the first quarter of fiscal 2017. The adoption of this standard reduced both Deferred income taxes and other assets and Long-term debt by $17 million on the Unaudited Condensed Consolidated Balance Sheet as of May 31, 2016.

Recently Issued Accounting Standards

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The updated guidance requires companies to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Income tax effects of intra-entity transfers of inventory will continue to be deferred until the inventory has been sold to a third party. The ASU is effective for the Company beginning June 1, 2018, using a modified retrospective approach, with the cumulative effect recognized through retained earnings at the date of adoption. Early adoption is permitted as of the beginning of an annual reporting period for which interim or annual financial statements have not been issued. The Company is evaluating the impact this update will have on its existing accounting policies and the Consolidated Financial Statements. The Company anticipates the updated guidance could have a material impact on the Consolidated Financial Statements at adoption through the recognition of a cumulative-effect adjustment to retained earnings of previously deferred charges.

In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which changes how companies account for certain aspects of share-based payment awards to employees. The updated guidance requires excess tax benefits and deficiencies from share-based payment awards to be recorded in income tax expense in the income statement. Currently, excess tax benefits and deficiencies are recognized in shareholders’ equity on the balance sheet. This change is required to be applied prospectively. In addition, the updated guidance also changes the accounting for statutory tax withholding requirements, classification in the statement of cash flows and provides an option to continue to estimate forfeitures or account for forfeitures as they occur. The Company will adopt the standard on June 1, 2017 and will elect to continue to estimate forfeitures. The Company continues to evaluate the impact this update will have on its existing accounting policies and the Consolidated Financial Statements. The ASU is expected to result in increased volatility to the Company’s income tax expense in future periods dependent upon, among other variables, the price of its common stock and the timing and volume of share-based payment award activity, such as employee exercises of stock options and vesting of restricted stock awards.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), that replaces existing lease accounting guidance. The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. The new guidance will require the Company to continue to classify leases as either operating or financing, with classification affecting the pattern of expense recognition in the income statement. The Company will adopt the standard on June 1, 2019. The ASU is required to be applied using a modified retrospective approach at the beginning of the earliest period presented, with optional practical expedients. The Company is in the preliminary stages of the assessment of the effect the guidance will have on its existing accounting policies and the Consolidated Financial Statements, but expects there will be an increase in assets and liabilities on the Consolidated Balance Sheets at adoption due to the recording of right-of-use assets and corresponding lease liabilities, which may be material. Refer to Note 15 — Commitments and Contingencies of the Annual Report on Form 10-K for the fiscal year ended May 31, 2016 for information about the Company’s lease obligations.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The updated guidance enhances the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation and disclosure. The update to the standard is effective for the Company beginning June 1, 2018. The Company does not expect the adoption to have a material impact on the Consolidated Financial Statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), that replaces existing revenue recognition guidance. The updated guidance requires companies to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company will adopt the standard on June 1, 2018 using a modified retrospective approach with the cumulative effective of initially applying the new standard recognized in retained earnings at the date of initial application. The Company is in the process of evaluating the new standard against its existing accounting policies, including the timing of revenue recognition, and its contracts with customers, to determine the effect the guidance will have on the Consolidated Financial Statements.

Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including derivatives and available-for-sale securities. Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. The Company uses the three-level hierarchy established by the FASB that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach).

The levels of the fair value hierarchy are described below:


•	Level 1: Quoted prices in active markets for identical assets or liabilities.


•	Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical assets or liabilities in markets that are not active.


•	Level 3: Unobservable inputs for which there is little or no market data available, which require the reporting entity to develop its own assumptions.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Financial assets and liabilities are classified in their entirety based on the most conservative level of input that is significant to the fair value measurement.

Pricing vendors are utilized for certain Level 1 and Level 2 investments. These vendors either provide a quoted market price in an active market or use observable inputs without applying significant adjustments in their pricing. Observable inputs include broker quotes, interest rates and yield curves observable at commonly quoted intervals, volatilities and credit risks. The fair value of derivative contracts is determined using observable market inputs such as the daily market foreign currency rates, forward pricing curves, currency volatilities, currency correlations and interest rates, and considers nonperformance risk of the Company and that of its counterparties.

The Company’s fair value processes include controls that are designed to ensure appropriate fair values are recorded. These controls include a comparison of fair values to another independent pricing vendor.

Hedging Derivatives

The Company elects to record the gross assets and liabilities of its derivative financial instruments on the Unaudited Condensed Consolidated Balance Sheets. The Company’s derivative financial instruments are subject to master netting arrangements that allow for the offset of assets and liabilities in the event of default or early termination of the contract. Any amounts of cash collateral received related to these instruments associated with the Company's credit-related contingent features are recorded in Cash and equivalents and Accrued liabilities, the latter of which would further offset against the Company’s derivative asset balance (refer to Note 9 — Risk Management and Derivatives). Any amounts of cash collateral posted related to these instruments associated with the Company's credit-related contingent features are recorded in Prepaid expenses and other current assets, which would further offset against the Company’s derivative liability balance (refer to Note 9 — Risk Management and Derivatives). Cash collateral received or posted related to the Company's credit-related contingent features is presented in the Cash provided by operations component of the Unaudited Condensed Consolidated Statements of Cash Flows. Any amounts of non-cash collateral received, such as securities, are not recorded on the Unaudited Condensed Consolidated Balance Sheets pursuant to U.S. GAAP.

All changes in fair value of derivatives designated as cash flow hedges, excluding any ineffective portion, are recorded in Accumulated other comprehensive income until Net income is affected by the variability of cash flows of the hedged transaction. In most cases, amounts recorded in Accumulated other comprehensive income will be released to Net income in periods following the maturity of the related derivative, rather than at maturity. Effective hedge results are classified within the Unaudited Condensed Consolidated Statements of Income in the same manner as the underlying exposure. The results of hedges of non-functional currency denominated revenues and product cost exposures, excluding embedded derivatives, are recorded in Revenues or Cost of sales when the underlying hedged transaction affects consolidated Net income. Results of hedges of selling and administrative expense are recorded together with those costs when the related expense is recorded. Amounts recorded in Accumulated other comprehensive income related to forward-starting interest rate swaps will be released through Interest expense (income), net as interest expense is incurred over the term of the issued debt. Results of hedges of anticipated purchases of U.S. Dollar-denominated available-for-sale securities are recorded in Other (income) expense, net when the securities are sold. Results of hedges of certain anticipated intercompany transactions are recorded in Other (income) expense, net when the transaction occurs. The Company classifies the cash flows at settlement from these designated cash flow hedge derivatives in the same category as the cash flows from the related hedged items, primarily within the Cash provided by operations component of the Unaudited Condensed Consolidated Statements of Cash Flows.

Premiums paid or received on options are initially recorded as deferred charges or deferred credits, respectively. The Company assesses the effectiveness of options based on the total cash flows method and records total changes in the options’ fair value to Accumulated other comprehensive income to the degree they are effective.

Net Investment Hedges

The Company has, in the past, hedged and may, in the future, hedge the risk of variability in foreign-currency-denominated net investments in wholly-owned international operations. All changes in fair value of the derivatives designated as net investment hedges, except ineffective portions, are reported in Accumulated other comprehensive income along with the foreign currency translation adjustments on those investments. The Company classifies the cash flows at settlement of its net investment hedges within the Cash used by investing activities component of the Unaudited Condensed Consolidated Statements of Cash Flows. The Company assesses hedge effectiveness based on changes in forward rates.

Fair Value Hedges

The Company has, in the past, been exposed to the risk of changes in the fair value of certain fixed-rate debt attributable to changes in interest rates. Derivatives used by the Company to hedge this risk are receive-fixed, pay-variable interest rate swaps. All interest rate swaps designated as fair value hedges of the related long-term debt meet the shortcut method requirements under U.S. GAAP. Accordingly, changes in the fair values of the interest rate swaps are considered to exactly offset changes in the fair value of the underlying long-term debt. The cash flows associated with the Company’s fair value hedges are periodic interest payments while the swaps are outstanding, which are reflected within the Cash provided by operations component of the Unaudited Condensed Consolidated Statements of Cash Flows.

Cash Flow Hedges

The purpose of the Company's foreign exchange risk management program is to lessen both the positive and negative effects of currency fluctuations on the Company's consolidated results of operations, financial position and cash flows. Foreign currency exposures that the Company may elect to hedge in this manner include product cost exposures, non-functional currency denominated external and intercompany revenues, selling and administrative expenses, investments in U.S. Dollar-denominated available-for-sale debt securities and certain other intercompany transactions.

Product cost exposures are primarily generated through non-functional currency denominated product purchases and the foreign currency adjustment program described below. NIKE entities primarily purchase product in two ways: (1) Certain NIKE entities purchase product from the NIKE Trading Company (NTC), a wholly-owned sourcing hub that buys NIKE branded product from third-party factories, predominantly in U.S. Dollars. The NTC, whose functional currency is the U.S. Dollar, then sells the product to NIKE entities in their respective functional currencies. When the NTC sells to a NIKE entity with a different functional currency, the result is a foreign currency exposure for the NTC. (2) Other NIKE entities purchase product directly from third-party factories in U.S. Dollars. These purchases generate a foreign currency exposure for those NIKE entities with a functional currency other than the U.S. Dollar.

The Company operates a foreign currency adjustment program with certain factories. The program is designed to more effectively manage foreign currency risk by assuming certain of the factories’ foreign currency exposures, some of which are natural offsets to the Company's existing foreign currency exposures. Under this program, the Company’s payments to these factories are adjusted for rate fluctuations in the basket of currencies (“factory currency exposure index”) in which the labor, materials and overhead costs incurred by the factories in the production of NIKE branded products (“factory input costs”) are denominated. For the portion of the indices denominated in the local or functional currency of the factory, the Company may elect to enter into derivative contracts formally designated as cash flow hedges. For all currencies within the indices, excluding the U.S. Dollar and the local or functional currency of the factory, an embedded derivative contract is created upon the factory’s acceptance of NIKE’s purchase order. Embedded derivative contracts are separated from the related purchase order, as further described within the Embedded Derivatives section below.

The Company’s policy permits the utilization of derivatives to reduce its foreign currency exposures where internal netting or other strategies cannot be effectively employed. Typically, the Company may enter into hedge contracts starting up to 12 to 24 months in advance of the forecasted transaction and may place incremental hedges up to 100% of the exposure by the time the forecasted transaction occurs.

Hedge Effectiveness

The Company formally assesses, both at a hedge’s inception and on an ongoing basis, whether the derivatives that are used in the hedging transaction have been highly effective in offsetting changes in the cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. Effectiveness for cash flow hedges is assessed based on changes in forward rates.

Hedge Discontinuances

The Company discontinues hedge accounting prospectively when: (1) it determines that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item (including hedged items such as firm commitments or forecasted transactions); (2) the derivative expires or is sold, terminated or exercised; (3) it is no longer probable that the forecasted transaction will occur; or (4) management determines that designating the derivative as a hedging instrument is no longer appropriate.

When the Company discontinues hedge accounting because it is no longer probable that the forecasted transaction will occur in the originally expected period, but is expected to occur within an additional two-month period of time thereafter, the gain or loss on the derivative remains in Accumulated other comprehensive income and is reclassified to Net income when the forecasted transaction affects consolidated Net income. However, if it is probable that a forecasted transaction will not occur by the end of the originally specified time period or within an additional two-month period of time thereafter, the gains and losses that were in Accumulated other comprehensive income will be recognized immediately in Other (income) expense, net. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company will carry the derivative at its fair value on the Unaudited Condensed Consolidated Balance Sheets, recognizing future changes in the fair value in Other (income) expense, net.

Undesignated Derivative Instruments

The Company may elect to enter into foreign exchange forwards to mitigate the change in fair value of specific assets and liabilities on the Unaudited Condensed Consolidated Balance Sheets and/or embedded derivative contracts. These forwards are not designated as hedging instruments under U.S. GAAP. Accordingly, these undesignated instruments are recorded at fair value as a derivative asset or liability on the Unaudited Condensed Consolidated Balance Sheets with their corresponding change in fair value recognized in Other (income) expense, net, together with the re-measurement gain or loss from the hedged balance sheet position or embedded derivative contract. The Company classifies the cash flows at settlement from undesignated instruments in the same category as the cash flows from the related hedged items, generally within the Cash provided by operations component of the Unaudited Condensed Consolidated Statements of Cash Flows.

Embedded Derivatives

As part of the foreign currency adjustment program described above, an embedded derivative contract is created upon the factory’s acceptance of NIKE’s purchase order for currencies within the factory currency exposure indices that are neither the U.S. Dollar nor the local or functional currency of the factory. Embedded derivative contracts are treated as foreign currency forward contracts that are bifurcated from the related purchase order and recorded at fair value as a derivative asset or liability on the Unaudited Condensed Consolidated Balance Sheets with their corresponding change in fair value recognized in Other (income) expense, net from the date a purchase order is accepted by a factory through the date the purchase price is no longer subject to foreign currency fluctuations.

In addition, the Company has entered into certain other contractual agreements which have payments that are indexed to currencies that are not the functional currency of either substantial party to the contracts. These payment terms expose NIKE to variability in foreign exchange rates and create embedded derivative contracts that must be bifurcated from the related contract and recorded at fair value as derivative assets or liabilities on the Unaudited Condensed Consolidated Balance Sheets with their corresponding changes in fair value recognized in Other (income) expense, net until each payment is settled.

Accrued Liabilities (Tables)

Schedule of Accrued Liabilities

Accrued liabilities included the following:



	As of February 28,		As of May 31,
(In millions)	2017		2016
Compensation and benefits, excluding taxes	$	831	$	943
Endorsement compensation	338		393
Dividends payable	303		271
Collateral received from counterparties to hedging instruments	293		105
Import and logistics costs	257		198
Taxes other than income taxes	189		159
Advertising and marketing	137		119
Fair value of derivatives	118		162
Other⁽¹⁾	762		687
TOTAL ACCRUED LIABILITIES	$	3,228	$	3,037


(1)	Other consists of various accrued expenses with no individual item accounting for more than 5% of the total Accrued liabilities balance at February 28, 2017 and May 31, 2016.

Fair Value Measurements (Tables)

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis as of February 28, 2017 and May 31, 2016, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.



	As of February 28, 2017
(In millions)	Assets at Fair Value		Cash and Equivalents		Short-term Investments		Other Long-term Assets
Cash	$	610	$	610	$	—	$	—
Level 1:
U.S. Treasury securities	1,195		150		1,045		—
Level 2:
Time deposits	839		812		27		—
U.S. Agency securities	633		260		373		—
Commercial paper and bonds	854		160		694		—
Money market funds	2,029		2,029		—		—
Total Level 2:	4,355		3,261		1,094		—
Level 3:
Non-marketable preferred stock	10		—		—		10
TOTAL	$	6,170	$	4,021	$	2,139	$	10



	As of May 31, 2016
(In millions)	Assets at Fair Value		Cash and Equivalents		Short-term Investments		Other Long-term Assets
Cash	$	774	$	774	$	—	$	—
Level 1:
U.S. Treasury securities	1,265		100		1,165		—
Level 2:
Time deposits	831		827		4		—
U.S. Agency securities	679		—		679		—
Commercial paper and bonds	733		262		471		—
Money market funds	1,175		1,175		—		—
Total Level 2:	3,418		2,264		1,154		—
Level 3:
Non-marketable preferred stock	10		—		—		10
TOTAL	$	5,467	$	3,138	$	2,319	$	10

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following tables present information about the Company’s derivative assets and liabilities measured at fair value on a recurring basis as of February 28, 2017 and May 31, 2016, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.



	As of February 28, 2017
	Derivative Assets						Derivative Liabilities
(In millions)	Assets at Fair Value		Other Current Assets		Other Long-term Assets		Liabilities at Fair Value		Accrued Liabilities		Other Long-term Liabilities
Level 2:
Foreign exchange forwards and options⁽¹⁾	$	607	$	493	$	114	$	116	$	114	$	2
Embedded derivatives	9		1		8		10		4		6
TOTAL	$	616	$	494	$	122	$	126	$	118	$	8

(1)

If the foreign exchange derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $114 million as of February 28, 2017. As of that date, the Company had received $293 million of cash collateral from various counterparties related to these foreign exchange derivative instruments. No amount of collateral was posted on the Company's derivative liability balance as of February 28, 2017.



	As of May 31, 2016
	Derivative Assets						Derivative Liabilities
(In millions)	Assets at Fair Value		Other Current Assets		Other Long-term Assets		Liabilities at Fair Value		Accrued Liabilities		Other Long-term Liabilities
Level 2:
Foreign exchange forwards and options⁽¹⁾	$	603	$	487	$	116	$	145	$	115	$	30
Embedded derivatives	7		2		5		9		2		7
Interest rate swaps⁽²⁾	7		7		—		45		45		—
TOTAL	$	617	$	496	$	121	$	199	$	162	$	37

(1)

If the foreign exchange derivative instruments had been netted on the Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $136 million as of May 31, 2016. As of that date, the Company had received $105 million of cash collateral from various counterparties related to these foreign exchange derivative instruments. No amount of collateral was posted on the Company’s derivative liability balance as of May 31, 2016.


(2)	As of May 31, 2016, no amount of cash collateral had been received or posted on the derivative asset or liability balance related to the Company's interest rate swaps.

The following table presents the fair values of derivative instruments included within the Unaudited Condensed Consolidated Balance Sheets as of February 28, 2017 and May 31, 2016:



	Derivative Assets					Derivative Liabilities
(In millions)	Balance Sheet Location	February 28, 2017		May 31, 2016		Balance Sheet Location	February 28, 2017		May 31, 2016
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	$	366	$	447	Accrued liabilities	$	35	$	38
Interest rate swaps	Prepaid expenses and other current assets	—		7		Accrued liabilities	—		45
Foreign exchange forwards and options	Deferred income taxes and other assets	100		90		Deferred income taxes and other liabilities	2		12
Total derivatives formally designated as hedging instruments		466		544			37		95
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	127		40		Accrued liabilities	79		76
Embedded derivatives	Prepaid expenses and other current assets	1		2		Accrued liabilities	4		2
Foreign exchange forwards and options	Deferred income taxes and other assets	14		26		Deferred income taxes and other liabilities	—		19
Embedded derivatives	Deferred income taxes and other assets	8		5		Deferred income taxes and other liabilities	6		7
Total derivatives not designated as hedging instruments		150		73			89		104
TOTAL DERIVATIVES		$	616	$	617		$	126	$	199

Long-Term Debt (Tables)

Schedule of Long-term Debt Instruments

Long-term debt, net of unamortized premiums, discounts and debt issuance costs, comprises the following:



	Original Principal		Interest Rate		Interest Payments	Book Value Outstanding as of
Scheduled Maturity (Dollars and Yen in millions)	Original Principal		Interest Rate		Interest Payments	February 28, 2017		May 31, 2016
Corporate Bond Payables:⁽¹⁾
May 1, 2023⁽²⁾	$	500	2.25	%	Semi-Annually	$	497	$	497
November 1, 2026⁽³⁾	$	1,000	2.38	%	Semi-Annually	993		—
May 1, 2043⁽²⁾	$	500	3.63	%	Semi-Annually	495		494
November 1, 2045⁽⁴⁾	$	1,000	3.88	%	Semi-Annually	981		981
November 1, 2046⁽³⁾	$	500	3.38	%	Semi-Annually	490		—
Promissory Notes:
April 1, 2017⁽⁵⁾	$	40	6.20	%	Monthly	—		38
Japanese Yen Notes:
August 20, 2001 through November 20, 2020⁽⁶⁾	¥	9,000	2.60	%	Quarterly	15		18
August 20, 2001 through November 20, 2020⁽⁶⁾	¥	4,000	2.00	%	Quarterly	7		9
Total						3,478		2,037
Less current maturities						6		44
TOTAL LONG-TERM DEBT						$	3,472	$	1,993


(1)	These senior unsecured obligations rank equally with the Company's other unsecured and unsubordinated indebtedness.

(2)

The bonds are redeemable at the Company's option prior to February 1, 2023 and November 1, 2042, respectively, at a price equal to the greater of (i) 100% 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. Subsequent to February 1, 2023 and November 1, 2042, respectively, the bonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to 100% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest.

(3)

The bonds are redeemable at the Company's option prior to August 1, 2026 and May 1, 2046, respectively, at a price equal to the greater of (i) 100% 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. Subsequent to August 1, 2026 and May 1, 2046, respectively, the bonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to 100% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest.

(4)

The bonds are redeemable at the Company's option prior to May 1, 2045, at a price equal to the greater of (i) 100% 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. Subsequent to May 1, 2045, the bonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to 100% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest.


(5)	During the three months ended February 28, 2017, the Company repaid the notes due April 1, 2017 pursuant to the terms of the debt agreement.


(6)	NIKE Logistics YK assumed a total of ¥13 billion in loans as part of its agreement to purchase a distribution center in Japan, which serves as collateral for the loans. These loans mature in equal quarterly installments during the period August 20, 2001 through November 20, 2020.

Common Stock and Stock-Based Compensation (Tables)

Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan

The following table summarizes the Company’s total stock-based compensation expense recognized in Operating overhead expense:



	Three Months Ended				Nine Months Ended
(In millions)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016
Stock options⁽¹⁾	$	35	$	44	$	110	$	128
ESPPs	7		7		27		22
Restricted stock	9		9		25		26
TOTAL STOCK-BASED COMPENSATION EXPENSE	$	51	$	60	$	162	$	176

(1)

Expense for stock options includes the expense associated with stock appreciation rights. Accelerated stock option expense is recorded for employees eligible for accelerated stock option vesting upon retirement. Accelerated stock option expense was $3 million and $8 million for the three months ended February 28, 2017 and February 29, 2016, respectively, and $11 million and $22 million for the nine months ended February 28, 2017 and February 29, 2016, respectively.

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The weighted average assumptions used to estimate these fair values were as follows:



	Nine Months Ended
	February 28, 2017		February 29, 2016
Dividend yield	1.1	%	1.0	%
Expected volatility	17.4	%	23.6	%
Weighted average expected life (in years)	6.0		5.8
Risk-free interest rate	1.3	%	1.7	%

Earnings Per Share (Tables)

Schedule of Earnings Per Share, Basic and Diluted

The following is a reconciliation from basic earnings per common share to diluted earnings per common share. The computations of diluted earnings per common share excluded options, including shares under employee stock purchase plans (ESPPs), to purchase an additional 31.1 million and 20.1 million shares of common stock outstanding for the three months ended February 28, 2017 and February 29, 2016, respectively, and 31.0 million and 1.1 million shares of common stock outstanding for the nine months ended February 28, 2017 and February 29, 2016, respectively, because the options were anti-dilutive.



	Three Months Ended				Nine Months Ended
(In millions, except per share data)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016
Determination of shares:
Weighted average common shares outstanding	1,653.1		1,693.8		1,661.5		1,703.2
Assumed conversion of dilutive stock options and awards	33.2		43.5		34.9		45.3
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	1,686.3		1,737.3		1,696.4		1,748.5

Earnings per common share:
Basic	$	0.69	$	0.56	$	1.95	$	1.71
Diluted	$	0.68	$	0.55	$	1.91	$	1.67

Risk Management and Derivatives (Tables)

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following tables present information about the Company’s derivative assets and liabilities measured at fair value on a recurring basis as of February 28, 2017 and May 31, 2016, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.



	As of February 28, 2017
	Derivative Assets						Derivative Liabilities
(In millions)	Assets at Fair Value		Other Current Assets		Other Long-term Assets		Liabilities at Fair Value		Accrued Liabilities		Other Long-term Liabilities
Level 2:
Foreign exchange forwards and options⁽¹⁾	$	607	$	493	$	114	$	116	$	114	$	2
Embedded derivatives	9		1		8		10		4		6
TOTAL	$	616	$	494	$	122	$	126	$	118	$	8

(1)

If the foreign exchange derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $114 million as of February 28, 2017. As of that date, the Company had received $293 million of cash collateral from various counterparties related to these foreign exchange derivative instruments. No amount of collateral was posted on the Company's derivative liability balance as of February 28, 2017.



	As of May 31, 2016
	Derivative Assets						Derivative Liabilities
(In millions)	Assets at Fair Value		Other Current Assets		Other Long-term Assets		Liabilities at Fair Value		Accrued Liabilities		Other Long-term Liabilities
Level 2:
Foreign exchange forwards and options⁽¹⁾	$	603	$	487	$	116	$	145	$	115	$	30
Embedded derivatives	7		2		5		9		2		7
Interest rate swaps⁽²⁾	7		7		—		45		45		—
TOTAL	$	617	$	496	$	121	$	199	$	162	$	37

(1)

If the foreign exchange derivative instruments had been netted on the Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $136 million as of May 31, 2016. As of that date, the Company had received $105 million of cash collateral from various counterparties related to these foreign exchange derivative instruments. No amount of collateral was posted on the Company’s derivative liability balance as of May 31, 2016.


(2)	As of May 31, 2016, no amount of cash collateral had been received or posted on the derivative asset or liability balance related to the Company's interest rate swaps.

The following table presents the fair values of derivative instruments included within the Unaudited Condensed Consolidated Balance Sheets as of February 28, 2017 and May 31, 2016:



	Derivative Assets					Derivative Liabilities
(In millions)	Balance Sheet Location	February 28, 2017		May 31, 2016		Balance Sheet Location	February 28, 2017		May 31, 2016
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	$	366	$	447	Accrued liabilities	$	35	$	38
Interest rate swaps	Prepaid expenses and other current assets	—		7		Accrued liabilities	—		45
Foreign exchange forwards and options	Deferred income taxes and other assets	100		90		Deferred income taxes and other liabilities	2		12
Total derivatives formally designated as hedging instruments		466		544			37		95
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	127		40		Accrued liabilities	79		76
Embedded derivatives	Prepaid expenses and other current assets	1		2		Accrued liabilities	4		2
Foreign exchange forwards and options	Deferred income taxes and other assets	14		26		Deferred income taxes and other liabilities	—		19
Embedded derivatives	Deferred income taxes and other assets	8		5		Deferred income taxes and other liabilities	6		7
Total derivatives not designated as hedging instruments		150		73			89		104
TOTAL DERIVATIVES		$	616	$	617		$	126	$	199

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

The following tables present the amounts affecting the Unaudited Condensed Consolidated Statements of Income for the three and nine months ended February 28, 2017 and February 29, 2016:



(In millions)	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives⁽¹⁾						Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income⁽¹⁾
	Three Months Ended						Location of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income	Three Months Ended
	February 28, 2017			February 29, 2016				February 28, 2017			February 29, 2016
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options	$	5		$	107		Revenues	$	24		$	(24	)
Foreign exchange forwards and options	(5		)	(142		)	Cost of sales	87			153
Foreign exchange forwards and options	(3		)	—			Total selling and administrative expense	—			—
Foreign exchange forwards and options	4			(91		)	Other (income) expense, net	67			73
Interest rate swaps	—			(49		)	Interest expense (income), net	(2		)	—
Total designated cash flow hedges	$	1		$	(175	)		$	176		$	202


(1)	For the three months ended February 28, 2017 and February 29, 2016, the amounts recorded in Other (income) expense, net as a result of hedge ineffectiveness and the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.



(In millions)	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives⁽¹⁾						Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income⁽¹⁾
	Nine Months Ended						Location of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income	Nine Months Ended
	February 28, 2017			February 29, 2016				February 28, 2017			February 29, 2016
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options	$	45		$	97		Revenues	$	96		$	(99	)
Foreign exchange forwards and options	244			63			Cost of sales	260			451
Foreign exchange forwards and options	(1		)	—			Total selling and administrative expense	—			—
Foreign exchange forwards and options	149			31			Other (income) expense, net	141			173
Interest rate swaps	(54		)	(99		)	Interest expense (income), net	(2		)	—
Total designated cash flow hedges	$	383		$	92			$	495		$	525


(1)	For the nine months ended February 28, 2017 and February 29, 2016, the amounts recorded in Other (income) expense, net as a result of hedge ineffectiveness and the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.



	Amount of Gain (Loss) Recognized in Income on Derivatives												Location of Gain (Loss) Recognized in Income on Derivatives
	Three Months Ended						Nine Months Ended
(In millions)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016
Derivatives designated as fair value hedges:
Interest rate swaps⁽¹⁾	$	—		$	—		$	—		$	2		Interest expense (income), net
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	(66		)	(30		)	101			4			Other (income) expense, net
Embedded derivatives	(1		)	(3		)	(2		)	(3		)	Other (income) expense, net


(1)	All interest rate swaps designated as fair value hedges meet the shortcut method requirements under U.S. GAAP. Accordingly, changes in the fair values of the interest rate swaps are considered to exactly offset changes in the fair value of the underlying long-term debt. Refer to “Fair Value Hedges” in this note for additional detail.

Accumulated Other Comprehensive Income (Tables)

Schedule of Accumulated Other Comprehensive Income

The changes in Accumulated other comprehensive income, net of tax, for the three and nine months ended February 28, 2017 were as follows:



(In millions)	Foreign Currency Translation Adjustment⁽¹⁾			Cash Flow Hedges			Net Investment Hedges⁽¹⁾		Other			Total
Balance at November 30, 2016	$	(218	)	$	546		$	115	$	(44	)	$	399
Other comprehensive gains (losses) before reclassifications⁽²⁾	13			2			—		—			15
Reclassifications to net income of previously deferred (gains) losses⁽³⁾	(1		)	(177		)	—		(7		)	(185		)
Other comprehensive income (loss)	12			(175		)	—		(7		)	(170		)
Balance at February 28, 2017	$	(206	)	$	371		$	115	$	(51	)	$	229


(1)	The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.


(2)	Net of tax benefit (expense) of $0 million, $1 million, $0 million, $(1) million and $0 million, respectively.


(3)	Net of tax (benefit) expense of $0 million, $(1) million, $0 million, $2 million and $1 million, respectively.



(In millions)	Foreign Currency Translation Adjustment⁽¹⁾			Cash Flow Hedges			Net Investment Hedges⁽¹⁾		Other			Total
Balance at May 31, 2016	$	(207	)	$	463		$	115	$	(53	)	$	318
Other comprehensive gains (losses) before reclassifications⁽²⁾	2			406			—		18			426
Reclassifications to net income of previously deferred (gains) losses⁽³⁾	(1		)	(498		)	—		(16		)	(515		)
Other comprehensive income (loss)	1			(92		)	—		2			(89		)
Balance at February 28, 2017	$	(206	)	$	371		$	115	$	(51	)	$	229


(1)	The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.


(2)	Net of tax benefit (expense) of $0 million, $23 million, $0 million, $0 million and $23 million, respectively.


(3)	Net of tax (benefit) expense of $0 million, $(3) million, $0 million, $1 million and $(2) million, respectively.

The changes in Accumulated other comprehensive income, net of tax, for the three and nine months ended February 29, 2016 were as follows:



(In millions)	Foreign Currency Translation Adjustment⁽¹⁾			Cash Flow Hedges			Net Investment Hedges⁽¹⁾		Other			Total
Balance at November 30, 2015	$	(141	)	$	1,181		$	115	$	(48	)	$	1,107
Other comprehensive gains (losses) before reclassifications⁽²⁾	(113		)	(151		)	—		3			(261		)
Reclassifications to net income of previously deferred (gains) losses⁽³⁾	2			(199		)	—		(4		)	(201		)
Other comprehensive income (loss)	(111		)	(350		)	—		(1		)	(462		)
Balance at February 29, 2016	$	(252	)	$	831		$	115	$	(49	)	$	645


(1)	The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.


(2)	Net of tax benefit (expense) of $0 million, $24 million, $0 million, $(1) million and $23 million, respectively.


(3)	Net of tax (benefit) expense of $0 million, $3 million, $0 million, $0 million and $3 million, respectively.



(In millions)	Foreign Currency Translation Adjustment⁽¹⁾			Cash Flow Hedges			Net Investment Hedges⁽¹⁾		Other			Total
Balance at May 31, 2015	$	(31	)	$	1,220		$	115	$	(58	)	$	1,246
Other comprehensive gains (losses) before reclassifications⁽²⁾	(223		)	132			—		14			(77		)
Reclassifications to net income of previously deferred (gains) losses⁽³⁾	2			(521		)	—		(5		)	(524		)
Other comprehensive income (loss)	(221		)	(389		)	—		9			(601		)
Balance at February 29, 2016	$	(252	)	$	831		$	115	$	(49	)	$	645


(1)	The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.


(2)	Net of tax benefit (expense) of $0 million, $40 million, $0 million, $(3) million and $37 million, respectively.


(3)	Net of tax (benefit) expense of $0 million, $4 million, $0 million, $0 million and $4 million, respectively.

Reclassification out of Accumulated Other Comprehensive Income

The following table summarizes the reclassifications from Accumulated other comprehensive income to the Unaudited Condensed Consolidated Statements of Income:



	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income												Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	Three Months Ended						Nine Months Ended
(In millions)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016
Gains (losses) on foreign currency translation adjustment	$	1		$	(2	)	$	1		$	(2	)	Other (income) expense, net
Total before tax	1			(2		)	1			(2		)
Tax (expense) benefit	—			—			—			—
Gain (loss) net of tax	1			(2		)	1			(2		)
Gains (losses) on cash flow hedges:
Foreign exchange forwards and options	$	24		$	(24	)	$	96		$	(99	)	Revenues
Foreign exchange forwards and options	87			153			260			451			Cost of sales
Foreign exchange forwards and options	—			—			—			—			Total selling and administrative expense
Foreign exchange forwards and options	67			73			141			173			Other (income) expense, net
Interest rate swaps	(2		)	—			(2		)	—			Interest expense (income), net
Total before tax	176			202			495			525
Tax (expense) benefit	1			(3		)	3			(4		)
Gain (loss) net of tax	177			199			498			521
Gains (losses) on other	9			4			17			5			Other (income) expense, net
Total before tax	9			4			17			5
Tax (expense) benefit	(2		)	—			(1		)	—
Gain (loss) net of tax	7			4			16			5
Total net gain (loss) reclassified for the period	$	185		$	201		$	515		$	524

Operating Segments (Tables)

Schedule of Segment Reporting Information, by Segment



	Three Months Ended						Nine Months Ended
(In millions)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016
REVENUES
North America	$	3,782		$	3,683		$	11,463		$	11,029
Western Europe	1,499			1,442			4,647			4,382
Central & Eastern Europe	362			359			1,130			1,086
Greater China	1,075			982			3,150			2,806
Japan	236			205			719			589
Emerging Markets	950			879			2,942			2,829
Global Brand Divisions	19			17			55			61
Total NIKE Brand	7,923			7,567			24,106			22,782
Converse	498			489			1,488			1,442
Corporate	11			(24		)	79			(92		)
TOTAL NIKE, INC. REVENUES	$	8,432		$	8,032		$	25,673		$	24,132
EARNINGS BEFORE INTEREST AND TAXES
North America	$	980		$	903		$	2,896		$	2,827
Western Europe	290			334			918			1,126
Central & Eastern Europe	57			69			196			243
Greater China	381			358			1,127			1,015
Japan	49			36			147			119
Emerging Markets	193			202			601			701
Global Brand Divisions	(598		)	(625		)	(1,988		)	(1,874		)
Total NIKE Brand	1,352			1,277			3,897			4,157
Converse	109			127			340			359
Corporate	(119		)	(264		)	(478		)	(952		)
Total NIKE, Inc. Earnings Before Interest and Taxes	1,342			1,140			3,759			3,564
Interest expense (income), net	19			5			41			14
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES	$	1,323		$	1,135		$	3,718		$	3,550

Reconciliation of Assets from Segment to Consolidated



	As of February 28,		As of May 31,
(In millions)	2017		2016
ACCOUNTS RECEIVABLE, NET
North America	$	1,860	$	1,689
Western Europe	416		378
Central & Eastern Europe	273		194
Greater China	101		74
Japan	106		129
Emerging Markets	604		409
Global Brand Divisions	92		76
Total NIKE Brand	3,452		2,949
Converse	283		270
Corporate	17		22
TOTAL ACCOUNTS RECEIVABLE, NET	$	3,752	$	3,241
INVENTORIES
North America	$	2,127	$	2,363
Western Europe	992		929
Central & Eastern Europe	213		210
Greater China	431		375
Japan	166		146
Emerging Markets	616		478
Global Brand Divisions	68		35
Total NIKE Brand	4,613		4,536
Converse	309		306
Corporate	10		(4		)
TOTAL INVENTORIES	$	4,932	$	4,838
PROPERTY, PLANT AND EQUIPMENT, NET
North America	$	784	$	742
Western Europe	617		589
Central & Eastern Europe	46		50
Greater China	210		234
Japan	213		223
Emerging Markets	122		109
Global Brand Divisions	513		511
Total NIKE Brand	2,505		2,458
Converse	121		125
Corporate	1,167		937
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET	$	3,793	$	3,520

Summary of Significant Accounting Policies (Details) (Accounting Standards Update 2015-03, USD $)

In Millions, unless otherwise specified

May 31, 2016

Deferred income taxes and other assets

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Debt issuance costs

$ (17)

Long-term debt

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Debt issuance costs

$ 17

Inventories (Detail) (USD $)

In Millions, unless otherwise specified

Feb. 28, 2017

May 31, 2016

Inventory Disclosure [Abstract]

Inventory balances (substantially all finished goods)

$ 4,932

$ 4,838

Accrued Liabilities (Detail) (USD $)

In Millions, unless otherwise specified

Feb. 28, 2017

May 31, 2016

Accrued Liabilities, Current [Abstract]

Compensation and benefits, excluding taxes

$ 831

$ 943

Endorsement compensation

338

393

Dividends payable

303

271

Collateral received from counterparties to hedging instruments

293

105

Import and logistics costs

257

198

Taxes other than income taxes

189

159

Advertising and marketing

137

119

Fair value of derivatives

118

162

Other

762

687

TOTAL ACCRUED LIABILITIES

$ 3,228

$ 3,037

Fair Value Measurements - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (Fair Value, Measurements, Recurring, USD $)

In Millions, unless otherwise specified

Feb. 28, 2017

May 31, 2016

Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]

Cash

$ 610

$ 774

Assets at Fair Value

6,170

5,467

Cash and Equivalents

4,021

3,138

Short-term Investments

2,139

2,319

Other Long-term Assets

10

Fair Value Measurements Using Level 1 |
U.S. Treasury securities

Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]

Assets at Fair Value

1,195

1,265

Cash and Equivalents

150

100

Short-term Investments

1,045

1,165

Other Long-term Assets

0

Fair Value Measurements Using Level 2

Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]

Assets at Fair Value

4,355

3,418

Cash and Equivalents

3,261

2,264

Short-term Investments

1,094

1,154

Other Long-term Assets

0

Fair Value Measurements Using Level 2 |
Time deposits

Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]

Assets at Fair Value

839

831

Cash and Equivalents

812

827

Short-term Investments

27

4

Other Long-term Assets

0

Fair Value Measurements Using Level 2 |
U.S. Agency securities

Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]

Assets at Fair Value

633

679

Cash and Equivalents

260

0

Short-term Investments

373

679

Other Long-term Assets

0

Fair Value Measurements Using Level 2 |
Commercial paper and bonds

Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]

Assets at Fair Value

854

733

Cash and Equivalents

160

262

Short-term Investments

694

471

Other Long-term Assets

0

Fair Value Measurements Using Level 2 |
Money market funds

Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]

Assets at Fair Value

2,029

1,175

Cash and Equivalents

2,029

1,175

Short-term Investments

0

Other Long-term Assets

0

Fair Value Measurements Using Level 3 |
Non-marketable preferred stock

Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]

Assets at Fair Value

10

Cash and Equivalents

0

Short-term Investments

0

Other Long-term Assets

$ 10

Fair Value Measurements - Derivative Assets and Liabilities at Fair Value (Detail) (USD $)

Feb. 28, 2017

May 31, 2016

Derivatives, Fair Value [Line Items]

Accrued Liabilities

$ 118,000,000

$ 162,000,000

Collateral received on derivative assets

293,000,000

105,000,000

Fair Value, Measurements, Recurring |
Foreign exchange forwards and options

Derivatives, Fair Value [Line Items]

Reduction in derivative assets if netted

114,000,000

136,000,000

Reduction in derivative liabilities if netted

114,000,000

136,000,000

Fair Value Measurements Using Level 2 |
Fair Value, Measurements, Recurring

Derivatives, Fair Value [Line Items]

Assets at Fair Value

616,000,000

617,000,000

Other Current Assets

494,000,000

496,000,000

Other Long-term Assets

122,000,000

121,000,000

Liabilities at Fair Value

126,000,000

199,000,000

Accrued Liabilities

118,000,000

162,000,000

Other Long-term Liabilities

8,000,000

37,000,000

Fair Value Measurements Using Level 2 |
Fair Value, Measurements, Recurring |
Foreign exchange forwards and options

Derivatives, Fair Value [Line Items]

Assets at Fair Value

607,000,000

603,000,000

Other Current Assets

493,000,000

487,000,000

Other Long-term Assets

114,000,000

116,000,000

Liabilities at Fair Value

116,000,000

145,000,000

Accrued Liabilities

114,000,000

115,000,000

Other Long-term Liabilities

2,000,000

30,000,000

Fair Value Measurements Using Level 2 |
Fair Value, Measurements, Recurring |
Embedded derivatives

Derivatives, Fair Value [Line Items]

Assets at Fair Value

9,000,000

7,000,000

Other Current Assets

1,000,000

2,000,000

Other Long-term Assets

8,000,000

5,000,000

Liabilities at Fair Value

10,000,000

9,000,000

Accrued Liabilities

4,000,000

2,000,000

Other Long-term Liabilities

6,000,000

7,000,000

Fair Value Measurements Using Level 2 |
Fair Value, Measurements, Recurring |
Interest rate swaps

Derivatives, Fair Value [Line Items]

Assets at Fair Value

7,000,000

Other Current Assets

7,000,000

Other Long-term Assets

0

Liabilities at Fair Value

45,000,000

Accrued Liabilities

45,000,000

Other Long-term Liabilities

0

Cash and Cash Equivalents |
Foreign exchange forwards and options

Derivatives, Fair Value [Line Items]

Collateral posted on derivative liabilities

0

Collateral received on derivative assets

293,000,000

105,000,000

Cash and Cash Equivalents |
Interest rate swaps

Derivatives, Fair Value [Line Items]

Collateral received on derivative assets

$ 0

Fair Value Measurements - Additional Information (Detail) (USD $)

3 Months Ended

9 Months Ended

12 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Feb. 28, 2017

Feb. 29, 2016

May 31, 2016

Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]

Interest income

$ 8,000,000

$ 4,000,000

$ 17,000,000

$ 8,000,000

Fair value transfers between fair value hierarchy levels

0

Available-for-sale Securities

Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]

Available-for-sale securities with maturity dates within one year from purchase date

1,915,000,000

Available-for-sale securities with maturity dates over one year and less than five years from purchase date

$ 224,000,000

Long-Term Debt - Net of Unamortized Premiums and Discounts and Swap Fair Value Adjustments (Detail)

9 Months Ended

Feb. 28, 2017

USD ($)

May 31, 2016

USD ($)

Feb. 28, 2017

Corporate Bond Payables

2.25% Corporate bond, payable May 1, 2023

USD ($)

May 31, 2016

Corporate Bond Payables

2.25% Corporate bond, payable May 1, 2023

USD ($)

Feb. 28, 2017

Corporate Bond Payables

2.38% Corporate bond, payable November 1, 2026

USD ($)

May 31, 2016

Corporate Bond Payables

2.38% Corporate bond, payable November 1, 2026

USD ($)

Feb. 28, 2017

Corporate Bond Payables

3.63% Corporate bond, payable May 1, 2043

USD ($)

May 31, 2016

Corporate Bond Payables

3.63% Corporate bond, payable May 1, 2043

USD ($)

Feb. 28, 2017

Corporate Bond Payables

3.88% Corporate bond, payable November 1, 2045

USD ($)

May 31, 2016

Corporate Bond Payables

3.88% Corporate bond, payable November 1, 2045

USD ($)

Feb. 28, 2017

Corporate Bond Payables

3.38% Corporate bond, payable November 1, 2046

USD ($)

May 31, 2016

Corporate Bond Payables

3.38% Corporate bond, payable November 1, 2046

USD ($)

Feb. 28, 2017

Notes Payable

6.20% Promissory note, payable April 1, 2017

USD ($)

May 31, 2016

Notes Payable

6.20% Promissory note, payable April 1, 2017

USD ($)

Feb. 28, 2017

Notes Payable

2.60% Japanese Yen note, maturing August 20, 2001 through November 20, 2020

USD ($)

Feb. 28, 2017

Notes Payable

2.60% Japanese Yen note, maturing August 20, 2001 through November 20, 2020

JPY (¥)

May 31, 2016

Notes Payable

2.60% Japanese Yen note, maturing August 20, 2001 through November 20, 2020

USD ($)

Feb. 28, 2017

Notes Payable

2.00% Japanese Yen note, maturing August 20, 2001 through November 20, 2020

USD ($)

Feb. 28, 2017

Notes Payable

2.00% Japanese Yen note, maturing August 20, 2001 through November 20, 2020

JPY (¥)

May 31, 2016

Notes Payable

2.00% Japanese Yen note, maturing August 20, 2001 through November 20, 2020

USD ($)

Debt Instrument [Line Items]

Original Principal

$ 500,000,000

$ 1,000,000,000

$ 500,000,000

$ 1,000,000,000

$ 500,000,000

$ 40,000,000

¥ 9,000,000,000

¥ 4,000,000,000

Interest Rate

2.25%

2.375%

3.63%

3.875%

3.375%

6.20%

2.60%

2.00%

Interest Payments

Semi-Annually

Monthly

Quarterly

Long Term Debt

3,478,000,000

2,037,000,000

497,000,000

993,000,000

0

495,000,000

494,000,000

981,000,000

490,000,000

0

38,000,000

15,000,000

18,000,000

7,000,000

9,000,000

Less current maturities

6,000,000

44,000,000

TOTAL LONG-TERM DEBT

$ 3,472,000,000

$ 1,993,000,000

Long-Term Debt - Narrative (Detail)

9 Months Ended

Feb. 28, 2017

Corporate Bond Payables

Corporate bonds, 2.25% due May 1, 2023 and 3.63% due May 1, 2043

Feb. 28, 2017

Corporate Bond Payables

Corporate Bonds, 2.38% due November 1, 2026 and 3.38% due November 1, 2046

Feb. 28, 2017

Corporate Bond Payables

2.25% Corporate bond, payable May 1, 2023

USD ($)

Feb. 28, 2017

Corporate Bond Payables

3.63% Corporate bond, payable May 1, 2043

USD ($)

Feb. 28, 2017

Corporate Bond Payables

3.88% Corporate bond, payable November 1, 2045

USD ($)

Feb. 28, 2017

Notes Payable

6.20% Promissory note, payable April 1, 2017

USD ($)

Feb. 28, 2017

Notes Payable

2.60% Japanese Yen note, maturing August 20, 2001 through November 20, 2020

JPY (¥)

Feb. 28, 2017

Notes Payable

2.00% Japanese Yen note, maturing August 20, 2001 through November 20, 2020

JPY (¥)

Feb. 28, 2017

Notes Payable

2.6% and 2.0% Japanese Yen note, maturing August 20, 2001 through November 20, 2020

JPY (¥)

Debt Instrument [Line Items]

Long-term debt, original principal

$ 500,000,000

$ 1,000,000,000

$ 40,000,000

¥ 9,000,000,000

¥ 4,000,000,000

¥ 13,000,000,000

Percent of aggregate principal amount of the notes to be redeemed

100.00%

Long-Term Debt - Maturity of Debt (Detail) (USD $)

In Millions, unless otherwise specified

Feb. 28, 2017

May 31, 2016

Debt Disclosure [Abstract]

Maturity of long-term debt next fiscal year

$ 6

Maturity of long-term debt in year two

6

Maturity of long-term debt in year three

6

Maturity of long-term debt in year four

4

Maturity of long-term debt in year five

0

Fair value of long term debt

$ 3,355

$ 2,125

Income Taxes (Detail) (USD $)

In Millions, unless otherwise specified

9 Months Ended

Feb. 28, 2017

Feb. 29, 2016

May 31, 2016

Income Tax Contingency [Line Items]

Effective tax rate on continuing operations (percent)

13.10%

17.90%

Total gross unrecognized tax benefits, excluding related interest and penalties

$ 421

$ 506

Total gross unrecognized tax benefits, excluding related interest and penalties, amount which would affect the Company's effective tax rate if recognized in future periods

183

Change in income tax penalties and interest accrued

36

Accrued interest and penalties related to uncertain tax positions (excluding federal benefit)

173

209

Estimated decrease in total gross unrecognized tax benefits as a result of resolutions of global tax examinations and expiration of applicable statutes of limitations

168

Tax Year 2011 |
Domestic Tax Authority

Income Tax Contingency [Line Items]

Proposed increase in tax related to the foreign tax credit matter

$ 254

Common Stock and Stock-Based Compensation - Additional Information (Detail) (USD $)

In Millions, except Share data, unless otherwise specified

9 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Class A Convertible Common Stock

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Common stock, no par value (in dollars per share)

$ 0

Common stock, shares authorized (in shares)

400,000,000

Common stock, conversion basis

Each share of Class A Common Stock is convertible into one share of Class B Common Stock.

Common stock, Class A conversion ratio to Class B (in shares)

1

Class B Common Stock

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Common stock, no par value (in dollars per share)

$ 0

Common stock, shares authorized (in shares)

2,400,000,000

Shares available for grant (in shares)

718,000,000

Employee Stock Option |
Class B Common Stock

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock options vesting period

4 years

Stock options expiration from the date of grant

10 years

Unrecognized compensation costs from stock options, net of estimated forfeitures

$ 236

Unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized as operating overhead expense over a weighted average period

2 years 2 months 12 days

Weighted average fair value per share of the options granted (in dollars per share)

$ 9.38

$ 12.67

Minimum term of market traded options for estimates of expected volatility

1 year

ESPPs |
Class B Common Stock

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Employee stock purchase plans, payroll deductions

10.00%

Employee stock purchase plan offering period

6 months

Common Stock and Stock-Based Compensation - Total Stock-Based Compensation Expense (Detail) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Feb. 28, 2017

Feb. 29, 2016

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Stock-based compensation expense

$ 162

$ 176

Class B Common Stock

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Stock-based compensation expense

51

60

162

176

Class B Common Stock |
Employee Stock Option

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Stock-based compensation expense

35

44

110

128

Accelerated stock option expense

3

8

11

22

Class B Common Stock |
Employee Stock

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Stock-based compensation expense

7

27

22

Class B Common Stock |
Restricted stock

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Stock-based compensation expense

$ 9

$ 25

$ 26

Common Stock and Stock-Based Compensation - Weighted Average Assumptions Used to Estimate Fair Values (Detail) (Employee Stock Option, Class B Common Stock)

9 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Employee Stock Option |
Class B Common Stock

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Dividend yield

1.10%

1.00%

Expected volatility

17.40%

23.60%

Weighted average expected life

6 years

5 years 9 months 18 days

Risk-free interest rate

1.30%

1.70%

Earnings Per Share - Additional Information (Detail)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Feb. 28, 2017

Feb. 29, 2016

Earnings Per Share [Abstract]

Anti-dilutive options not included in the computation of diluted earnings per share

31.1

20.1

31.0

1.1

Earnings Per Share - Reconciliation from Basic to Diluted Earnings Per Share (Detail) (USD $)

In Millions, except Per Share data, unless otherwise specified

3 Months Ended

9 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Feb. 28, 2017

Feb. 29, 2016

Determination of shares:

Weighted average common shares outstanding

1,653.1

1,693.8

1,661.5

1,703.2

Assumed conversion of dilutive stock options and awards

33.2

43.5

34.9

45.3

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

1,686.3

1,737.3

1,696.4

1,748.5

Earnings per common share:

Basic (in dollars per share)

$ 0.69

$ 0.56

$ 1.95

$ 1.71

Diluted (in dollars per share)

$ 0.68

$ 0.55

$ 1.91

$ 1.67

Risk Management and Derivatives - Additional Information (Detail) (USD $)

3 Months Ended

9 Months Ended

0 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Feb. 28, 2017

Feb. 29, 2016

May 31, 2016

Feb. 28, 2017

Minimum

Feb. 28, 2017

Derivatives designated as cash flow hedges

Feb. 28, 2017

Derivatives designated as cash flow hedges

Minimum

Feb. 28, 2017

Derivatives designated as cash flow hedges

Maximum

Feb. 28, 2017

Embedded derivatives

May 31, 2016

Interest rate swaps

Cash and Cash Equivalents

Feb. 28, 2017

Interest rate swaps

Derivatives designated as fair value hedges

Feb. 28, 2017

Foreign exchange forwards and options

Cash and Cash Equivalents

May 31, 2016

Foreign exchange forwards and options

Cash and Cash Equivalents

Feb. 28, 2017

Foreign exchange forwards and options

Derivatives designated as net investment hedges

Feb. 28, 2017

Undesignated derivative instruments

Oct. 21, 2016

Derivatives formally designated as hedging instruments

Interest rate swaps

Derivatives designated as cash flow hedges

Nov. 30, 2016

Derivatives formally designated as hedging instruments

Interest rate swaps

Derivatives designated as cash flow hedges

Derivative Instruments and Hedging Activities Disclosure [Line Items]

Typical time period that anticipated exposures are hedged against (in months)

12 months

24 months

Percentage of anticipated exposures hedged (percent)

100.00%

Total notional amount of outstanding derivatives

$ 10,500,000,000

$ 283,000,000

$ 0

$ 6,600,000,000

$ 1,500,000,000.0

Derivative, cash received on hedge

92,000,000

Deferred net gains (net of tax) on both outstanding and matured derivatives accumulated in other comprehensive income are expected to be reclassified to net income during the next twelve months as a result of underlying hedged transactions also being recorded in net income

312,000,000

Maximum term over which the Company is hedging exposures to the variability of cash flows for its forecasted and recorded transactions (in months)

27 months

Gain (loss) on fair value hedge ineffectiveness, net

0

Amount of ineffectiveness on net investment hedges

0

Derivative assets (liabilities), at fair value, net

0

Minimum fair value of outstanding derivative above which the credit related contingent features require the derivative party to post collateral

50,000,000

Aggregate fair value of derivative instruments in net liability position

2,000,000

Collateral received on derivative assets

$ 293,000,000

$ 105,000,000

$ 0

$ 293,000,000

$ 105,000,000

Risk Management and Derivatives - FV of Derivative Instruments Included within Consolidated Balance Sheet (Detail) (USD $)

In Millions, unless otherwise specified

Feb. 28, 2017

May 31, 2016

Derivatives, Fair Value [Line Items]

Derivative Assets

$ 616

$ 617

Derivative Liabilities

126

199

Derivatives formally designated as hedging instruments

Derivatives, Fair Value [Line Items]

Derivative Assets

466

544

Derivative Liabilities

37

95

Derivatives formally designated as hedging instruments |
Foreign exchange forwards and options |
Prepaid expenses and other current assets

Derivatives, Fair Value [Line Items]

Derivative Assets

366

447

Derivatives formally designated as hedging instruments |
Foreign exchange forwards and options |
Deferred income taxes and other assets

Derivatives, Fair Value [Line Items]

Derivative Assets

100

90

Derivatives formally designated as hedging instruments |
Foreign exchange forwards and options |
Accrued liabilities

Derivatives, Fair Value [Line Items]

Derivative Liabilities

35

38

Derivatives formally designated as hedging instruments |
Foreign exchange forwards and options |
Deferred income taxes and other liabilities

Derivatives, Fair Value [Line Items]

Derivative Liabilities

2

12

Derivatives formally designated as hedging instruments |
Interest rate swaps |
Prepaid expenses and other current assets

Derivatives, Fair Value [Line Items]

Derivative Assets

0

7

Derivatives formally designated as hedging instruments |
Interest rate swaps |
Accrued liabilities

Derivatives, Fair Value [Line Items]

Derivative Liabilities

0

45

Derivatives not designated as hedging instruments

Derivatives, Fair Value [Line Items]

Derivative Assets

150

73

Derivative Liabilities

89

104

Derivatives not designated as hedging instruments |
Foreign exchange forwards and options |
Prepaid expenses and other current assets

Derivatives, Fair Value [Line Items]

Derivative Assets

127

40

Derivatives not designated as hedging instruments |
Foreign exchange forwards and options |
Deferred income taxes and other assets

Derivatives, Fair Value [Line Items]

Derivative Assets

14

26

Derivatives not designated as hedging instruments |
Foreign exchange forwards and options |
Accrued liabilities

Derivatives, Fair Value [Line Items]

Derivative Liabilities

79

76

Derivatives not designated as hedging instruments |
Foreign exchange forwards and options |
Deferred income taxes and other liabilities

Derivatives, Fair Value [Line Items]

Derivative Liabilities

0

19

Derivatives not designated as hedging instruments |
Embedded derivatives |
Prepaid expenses and other current assets

Derivatives, Fair Value [Line Items]

Derivative Assets

1

2

Derivatives not designated as hedging instruments |
Embedded derivatives |
Deferred income taxes and other assets

Derivatives, Fair Value [Line Items]

Derivative Assets

8

5

Derivatives not designated as hedging instruments |
Embedded derivatives |
Accrued liabilities

Derivatives, Fair Value [Line Items]

Derivative Liabilities

4

2

Derivatives not designated as hedging instruments |
Embedded derivatives |
Deferred income taxes and other liabilities

Derivatives, Fair Value [Line Items]

Derivative Liabilities

$ 6

$ 7

Risk Management and Derivatives - Amounts Affecting Consolidated Statements of Income (Detail) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Feb. 28, 2017

Feb. 29, 2016

Derivatives not designated as hedging instruments |
Foreign exchange forwards and options |
Other (income) expense, net

Derivative Instruments, Gain (Loss) [Line Items]

Amount of Gain (Loss) Recognized in Income on Derivatives

$ (66)

$ (30)

$ 101

$ 4

Derivatives not designated as hedging instruments |
Embedded derivatives |
Other (income) expense, net

Derivative Instruments, Gain (Loss) [Line Items]

Amount of Gain (Loss) Recognized in Income on Derivatives

(1)

(3)

(2)

(3)

Derivatives designated as cash flow hedges

Derivative Instruments, Gain (Loss) [Line Items]

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives

1

(175)

383

92

Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income

176

202

495

525

Derivatives designated as cash flow hedges |
Foreign exchange forwards and options |
Revenues

Derivative Instruments, Gain (Loss) [Line Items]

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives

5

107

45

97

Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income

24

(24)

96

(99)

Derivatives designated as cash flow hedges |
Foreign exchange forwards and options |
Cost of sales

Derivative Instruments, Gain (Loss) [Line Items]

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives

(5)

(142)

244

63

Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income

87

153

260

451

Derivatives designated as cash flow hedges |
Foreign exchange forwards and options |
Total selling and administrative expense

Derivative Instruments, Gain (Loss) [Line Items]

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives

(3)

0

(1)

0

Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income

0

Derivatives designated as cash flow hedges |
Foreign exchange forwards and options |
Other (income) expense, net

Derivative Instruments, Gain (Loss) [Line Items]

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives

4

(91)

149

31

Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income

67

73

141

173

Derivatives designated as cash flow hedges |
Interest rate swaps |
Interest expense (income), net

Derivative Instruments, Gain (Loss) [Line Items]

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives

0

(49)

(54)

(99)

Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income

(2)

0

(2)

0

Derivatives designated as fair value hedges |
Interest rate swaps |
Interest expense (income), net

Derivative Instruments, Gain (Loss) [Line Items]

Amount of Gain (Loss) Recognized in Income on Derivatives

$ 0

$ 2

Accumulated Other Comprehensive Income - Changes in AOCI (Detail) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

3 Months Ended

9 Months Ended

3 Months Ended

9 Months Ended

3 Months Ended

9 Months Ended

3 Months Ended

9 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Feb. 28, 2017

Feb. 29, 2016

Feb. 28, 2017

Foreign Currency Translation Adjustment

Feb. 29, 2016

Foreign Currency Translation Adjustment

Feb. 28, 2017

Foreign Currency Translation Adjustment

Feb. 29, 2016

Foreign Currency Translation Adjustment

Feb. 28, 2017

Cash Flow Hedges

Feb. 29, 2016

Cash Flow Hedges

Feb. 28, 2017

Cash Flow Hedges

Feb. 29, 2016

Cash Flow Hedges

Feb. 28, 2017

Net Investment Hedges

Feb. 29, 2016

Net Investment Hedges

Feb. 28, 2017

Net Investment Hedges

Feb. 29, 2016

Net Investment Hedges

Feb. 28, 2017

Other

Feb. 29, 2016

Other

Feb. 28, 2017

Other

Feb. 29, 2016

Other

Feb. 28, 2017

Total

Nov. 30, 2016

Total

May 31, 2016

Total

Feb. 29, 2016

Total

Nov. 30, 2015

Total

May 31, 2015

Total

AOCI Including Portion Attributable to Noncontrolling, Net of Tax [Roll Forward]

Beginning balance

$ 12,258

$ (218)

$ (141)

$ (207)

$ (31)

$ 546

$ 1,181

$ 463

$ 1,220

$ 115

$ (44)

$ (48)

$ (53)

$ (58)

$ 229

$ 399

$ 318

$ 645

$ 1,107

$ 1,246

Other comprehensive gains (losses) before reclassifications, net of tax

15

(261)

426

(77)

13

(113)

2

(223)

2

(151)

406

132

0

3

18

14

Reclassifications to net income of previously deferred (gains) losses, net of tax

(185)

(201)

(515)

(524)

(1)

2

(1)

2

(177)

(199)

(498)

(521)

0

(7)

(4)

(16)

(5)

Total other comprehensive income (loss), net of tax

(170)

(462)

(89)

(601)

12

(111)

1

(221)

(175)

(350)

(92)

(389)

0

(7)

(1)

2

9

Ending balance

12,722

(206)

(252)

(206)

(252)

371

831

371

831

115

(51)

(49)

(51)

(49)

229

399

318

645

1,107

1,246

Other comprehensive income, before reclassification, tax benefit (expense)

0

23

37

0

1

24

23

40

0

(1)

0

(3)

Reclassification from accumulated other comprehensive income, tax (benefit) expense

$ 1

$ 3

$ (2)

$ 4

$ 0

$ (1)

$ 3

$ (3)

$ 4

$ 0

$ 2

$ 0

$ 1

$ 0

Accumulated Other Comprehensive Income - Reclassification out of AOCI (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Feb. 28, 2017

Feb. 29, 2016

Reclassification out of Accumulated Other Comprehensive Income [Line Items]

Other (income) expense, net

$ 88

$ 17

$ 168

$ 82

Revenues

8,432

8,032

25,673

24,132

Cost of sales

(4,682)

(4,343)

(14,184)

(12,947)

Total selling and administrative expense

(2,496)

(2,566)

(7,898)

(7,703)

Interest expense (income), net

(19)

(5)

(41)

(14)

Income before income taxes

1,323

1,135

3,718

3,550

Tax (expense) benefit

(182)

(185)

(486)

(636)

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income

Reclassification out of Accumulated Other Comprehensive Income [Line Items]

NET INCOME

185

201

515

524

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income |
Foreign Currency Translation Adjustment

Reclassification out of Accumulated Other Comprehensive Income [Line Items]

Other (income) expense, net

1

(2)

1

(2)

Income before income taxes

1

(2)

1

(2)

Tax (expense) benefit

0

NET INCOME

1

(2)

1

(2)

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income |
Gain (losses) on cash flow hedges

Reclassification out of Accumulated Other Comprehensive Income [Line Items]

Income before income taxes

176

202

495

525

Tax (expense) benefit

1

(3)

3

(4)

NET INCOME

177

199

498

521

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income |
Gain (losses) on cash flow hedges |
Foreign exchange forwards and options

Reclassification out of Accumulated Other Comprehensive Income [Line Items]

Other (income) expense, net

67

73

141

173

Revenues

24

(24)

96

(99)

Cost of sales

87

153

260

451

Total selling and administrative expense

0

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income |
Gain (losses) on cash flow hedges |
Interest rate swaps

Reclassification out of Accumulated Other Comprehensive Income [Line Items]

Interest expense (income), net

(2)

0

(2)

0

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income |
Other

Reclassification out of Accumulated Other Comprehensive Income [Line Items]

Other (income) expense, net

9

4

17

5

Income before income taxes

9

4

17

5

Tax (expense) benefit

(2)

0

(1)

0

NET INCOME

$ 7

$ 4

$ 16

$ 5

Operating Segments - Information by Operating Segments (Detail) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Feb. 28, 2017

Feb. 29, 2016

Feb. 28, 2017

Feb. 29, 2016

Segment Reporting, Revenue Reconciling Item [Line Items]

Revenues

$ 8,432

$ 8,032

$ 25,673

$ 24,132

EARNINGS BEFORE INTEREST AND TAXES

1,342

1,140

3,759

3,564

Interest expense (income), net

19

5

41

14

Income before income taxes

1,323

1,135

3,718

3,550

Corporate

Segment Reporting, Revenue Reconciling Item [Line Items]

Revenues

11

(24)

79

(92)

EARNINGS BEFORE INTEREST AND TAXES

(119)

(264)

(478)

(952)

NIKE Brand

Segment Reporting, Revenue Reconciling Item [Line Items]

Revenues

7,923

7,567

24,106

22,782

EARNINGS BEFORE INTEREST AND TAXES

1,352

1,277

3,897

4,157

NIKE Brand |
North America

Segment Reporting, Revenue Reconciling Item [Line Items]

Revenues

3,782

3,683

11,463

11,029

EARNINGS BEFORE INTEREST AND TAXES

980

903

2,896

2,827

NIKE Brand |
Western Europe

Segment Reporting, Revenue Reconciling Item [Line Items]

Revenues

1,499

1,442

4,647

4,382

EARNINGS BEFORE INTEREST AND TAXES

290

334

918

1,126

NIKE Brand |
Central & Eastern Europe

Segment Reporting, Revenue Reconciling Item [Line Items]

Revenues

362

359

1,130

1,086

EARNINGS BEFORE INTEREST AND TAXES

57

69

196

243

NIKE Brand |
Greater China

Segment Reporting, Revenue Reconciling Item [Line Items]

Revenues

1,075

982

3,150

2,806

EARNINGS BEFORE INTEREST AND TAXES

381

358

1,127

1,015

NIKE Brand |
Japan

Segment Reporting, Revenue Reconciling Item [Line Items]

Revenues

236

205

719

589

EARNINGS BEFORE INTEREST AND TAXES

49

36

147

119

NIKE Brand |
Emerging Markets

Segment Reporting, Revenue Reconciling Item [Line Items]

Revenues

950

879

2,942

2,829

EARNINGS BEFORE INTEREST AND TAXES

193

202

601

701

NIKE Brand |
Global Brand Divisions

Segment Reporting, Revenue Reconciling Item [Line Items]

Revenues

19

17

55

61

EARNINGS BEFORE INTEREST AND TAXES

(598)

(625)

(1,988)

(1,874)

Converse

Segment Reporting, Revenue Reconciling Item [Line Items]

Revenues

498

489

1,488

1,442

EARNINGS BEFORE INTEREST AND TAXES

$ 109

$ 127

$ 340

$ 359

Operating Segments - Accounts Receivable Net Inventories and Property, Plant and Equipment Net (Detail) (USD $)

In Millions, unless otherwise specified

Feb. 28, 2017

May 31, 2016

Segment Reporting, Asset Reconciling Item [Line Items]

Accounts receivable, net

$ 3,752

$ 3,241

Inventories

4,932

4,838

Property, plant and equipment, net

3,793

3,520

Corporate

Segment Reporting, Asset Reconciling Item [Line Items]

Accounts receivable, net

17

22

Inventories

10

(4)

Property, plant and equipment, net

1,167

937

NIKE Brand

Segment Reporting, Asset Reconciling Item [Line Items]

Accounts receivable, net

3,452

2,949

Inventories

4,613

4,536

Property, plant and equipment, net

2,505

2,458

NIKE Brand |
North America

Segment Reporting, Asset Reconciling Item [Line Items]

Accounts receivable, net

1,860

1,689

Inventories

2,127

2,363

Property, plant and equipment, net

784

742

NIKE Brand |
Western Europe

Segment Reporting, Asset Reconciling Item [Line Items]

Accounts receivable, net

416

378

Inventories

992

929

Property, plant and equipment, net

617

589

NIKE Brand |
Central & Eastern Europe

Segment Reporting, Asset Reconciling Item [Line Items]

Accounts receivable, net

273

194

Inventories

213

210

Property, plant and equipment, net

46

50

NIKE Brand |
Greater China

Segment Reporting, Asset Reconciling Item [Line Items]

Accounts receivable, net

101

74

Inventories

431

375

Property, plant and equipment, net

210

234

NIKE Brand |
Japan

Segment Reporting, Asset Reconciling Item [Line Items]

Accounts receivable, net

106

129

Inventories

166

146

Property, plant and equipment, net

213

223

NIKE Brand |
Emerging Markets

Segment Reporting, Asset Reconciling Item [Line Items]

Accounts receivable, net

604

409

Inventories

616

478

Property, plant and equipment, net

122

109

NIKE Brand |
Global Brand Divisions

Segment Reporting, Asset Reconciling Item [Line Items]

Accounts receivable, net

92

76

Inventories

68

35

Property, plant and equipment, net

513

511

Converse

Segment Reporting, Asset Reconciling Item [Line Items]

Accounts receivable, net

283

270

Inventories

309

306

Property, plant and equipment, net

$ 121

$ 125

Commitments and Contingencies (Detail) (USD $)

In Millions, unless otherwise specified

Feb. 28, 2017

Commitments and Contingencies Disclosure [Abstract]

Letters of credit outstanding

$ 152