NIKE INC, 10-K filed on 7/20/2017
Annual Report
Document and Entity Information (USD $)
12 Months Ended
May 31, 2017
Nov. 30, 2016
Jul. 17, 2017
Class A Convertible Common Stock
Nov. 30, 2016
Class A Convertible Common Stock
Jul. 17, 2017
Class B Common Stock
Nov. 30, 2016
Class B Common Stock
Document Information [Line Items]
 
 
 
 
 
 
Document Type
10-K 
 
 
 
 
 
Amendment Flag
false 
 
 
 
 
 
Document Period End Date
May 31, 2017 
 
 
 
 
 
Document Fiscal Year Focus
2017 
 
 
 
 
 
Document Fiscal Period Focus
FY 
 
 
 
 
 
Trading Symbol
NKE 
 
 
 
 
 
Entity Registrant Name
NIKE INC 
 
 
 
 
 
Entity Central Index Key
0000320187 
 
 
 
 
 
Current Fiscal Year End Date
--05-31 
 
 
 
 
 
Entity Well-known Seasoned Issuer
No 
 
 
 
 
 
Entity Current Reporting Status
Yes 
 
 
 
 
 
Entity Voluntary Filers
No 
 
 
 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
 
 
 
Entity Public Float (In Dollars)
 
$ 69,943,500,503 
 
$ 3,617,645,223 
 
$ 66,325,855,280 
Entity Common Stock Shares Outstanding (In Shares)
 
 
329,245,752 
 
1,313,949,313 
 
Consolidated Statements of Income (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Income Statement [Abstract]
 
 
 
Revenues
$ 34,350 
$ 32,376 
$ 30,601 
Cost of sales
19,038 
17,405 
16,534 
Gross profit
15,312 
14,971 
14,067 
Demand creation expense
3,341 
3,278 
3,213 
Operating overhead expense
7,222 
7,191 
6,679 
Total selling and administrative expense
10,563 
10,469 
9,892 
Interest expense (income), net
59 
19 
28 
Other (income) expense, net
(196)
(140)
(58)
Income before income taxes
4,886 
4,623 
4,205 
Income tax expense
646 
863 
932 
NET INCOME
$ 4,240 
$ 3,760 
$ 3,273 
Earnings per common share:
 
 
 
Basic (in dollars per share)
$ 2.56 
$ 2.21 
$ 1.90 
Diluted (in dollars per share)
$ 2.51 
$ 2.16 
$ 1.85 
Dividends declared per common share (in dollars per share)
$ 0.70 
$ 0.62 
$ 0.54 
Consolidated Statements of Comprehensive Income (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
Net income
$ 4,240 
$ 3,760 
$ 3,273 
Other comprehensive income (loss), net of tax:
 
 
 
Change in net foreign currency translation adjustment
16 
(176)
(20)
Change in net gains (losses) on cash flow hedges
(515)
(757)
1,188 
Change in net gains (losses) on other
(32)
5 
(7)
Total other comprehensive income (loss), net of tax
(531)
(928)
1,161 
TOTAL COMPREHENSIVE INCOME
$ 3,709 
$ 2,832 
$ 4,434 
Consolidated Balance Sheets (USD $)
May 31, 2017
May 31, 2016
Current assets:
 
 
Cash and equivalents
$ 3,808,000,000 
$ 3,138,000,000 
Short-term investments
2,371,000,000 
2,319,000,000 
Accounts receivable, net
3,677,000,000 
3,241,000,000 
Inventories
5,055,000,000 
4,838,000,000 
Prepaid expenses and other current assets
1,150,000,000 
1,489,000,000 
Total current assets
16,061,000,000 
15,025,000,000 
Property, plant and equipment, net
3,989,000,000 
3,520,000,000 
Identifiable intangible assets, net
283,000,000 
281,000,000 
Goodwill
139,000,000 
131,000,000 
Deferred income taxes and other assets
2,787,000,000 
2,422,000,000 
TOTAL ASSETS
23,259,000,000 
21,379,000,000 
Current liabilities:
 
 
Current portion of long-term debt
6,000,000 
44,000,000 
Notes payable
325,000,000 
1,000,000 
Accounts payable
2,048,000,000 
2,191,000,000 
Accrued liabilities
3,011,000,000 
3,037,000,000 
Income taxes payable
84,000,000 
85,000,000 
Total current liabilities
5,474,000,000 
5,358,000,000 
Long-term debt
3,471,000,000 
1,993,000,000 
Deferred income taxes and other liabilities
1,907,000,000 
1,770,000,000 
Commitments and contingencies
   
   
Redeemable preferred stock
0 
0 
Shareholders’ equity:
 
 
Capital in excess of stated value
8,638,000,000 
7,786,000,000 
Accumulated other comprehensive (loss) income
(213,000,000)
318,000,000 
Retained earnings
3,979,000,000 
4,151,000,000 
Total shareholders’ equity
12,407,000,000 
12,258,000,000 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
23,259,000,000 
21,379,000,000 
Class A Convertible Common Stock
 
 
Shareholders’ equity:
 
 
Common stock at stated value
0 
0 
Class B Common Stock
 
 
Shareholders’ equity:
 
 
Common stock at stated value
$ 3,000,000 
$ 3,000,000 
Consolidated Balance Sheets (Parenthetical)
In Millions, unless otherwise specified
May 31, 2017
May 31, 2016
Class A Convertible Common Stock
 
 
Common Stock, shares outstanding
329 
353 
Class B Common Stock
 
 
Common Stock, shares outstanding
1,314 
1,329 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Cash provided by operations:
 
 
 
Net income
$ 4,240 
$ 3,760 
$ 3,273 
Income charges (credits) not affecting cash:
 
 
 
Depreciation
706 
649 
606 
Deferred income taxes
(273)
(80)
(113)
Stock-based compensation
215 
236 
191 
Amortization and other
10 
13 
43 
Net foreign currency adjustments
(117)
98 
424 
Changes in certain working capital components and other assets and liabilities:
 
 
 
(Increase) decrease in accounts receivable
(426)
60 
(216)
(Increase) in inventories
(231)
(590)
(621)
(Increase) in prepaid expenses and other current assets
(120)
(161)
(144)
(Decrease) increase in accounts payable, accrued liabilities and income taxes payable
(364)
(889)
1,237 
Cash provided by operations
3,640 
3,096 
4,680 
Cash used by investing activities:
 
 
 
Purchases of short-term investments
(5,928)
(5,367)
(4,936)
Maturities of short-term investments
3,623 
2,924 
3,655 
Sales of short-term investments
2,423 
2,386 
2,216 
Investments in reverse repurchase agreements
0 
150 
(150)
Additions to property, plant and equipment
(1,105)
(1,143)
(963)
Disposals of property, plant and equipment
13 
10 
3 
Other investing activities
(34)
6 
0 
Cash used by investing activities
(1,008)
(1,034)
(175)
Cash used by financing activities:
 
 
 
Net proceeds from long-term debt issuance
1,482 
981 
0 
Long-term debt payments, including current portion
(44)
(106)
(7)
Increase (decrease) in notes payable
327 
(67)
(63)
Payments on capital lease and other financing obligations
(17)
(7)
(19)
Proceeds from exercise of stock options and other stock issuances
489 
507 
514 
Excess tax benefits from share-based payment arrangements
177 
281 
218 
Repurchase of common stock
(3,223)
(3,238)
(2,534)
Dividends — common and preferred
(1,133)
(1,022)
(899)
Cash used by financing activities
(1,942)
(2,671)
(2,790)
Effect of exchange rate changes on cash and equivalents
(20)
(105)
(83)
Net increase (decrease) in cash and equivalents
670 
(714)
1,632 
Cash and equivalents, beginning of year
3,138 
3,852 
2,220 
CASH AND EQUIVALENTS, END OF YEAR
3,808 
3,138 
3,852 
Cash paid during the year for:
 
 
 
Interest, net of capitalized interest
98 
70 
53 
Income taxes
703 
748 
1,262 
Non-cash additions to property, plant and equipment
266 
252 
206 
Dividends declared and not paid
$ 300 
$ 271 
$ 240 
Consolidated Statements of Shareholders' Equity (USD $)
In Millions, unless otherwise specified
Total
USD ($)
Capital in Excess of Stated Value
USD ($)
Accumulated Other Comprehensive Income
USD ($)
Retained Earnings
USD ($)
Class A Common Stock
Class A Common Stock
Common Stock
USD ($)
Class B Common Stock
Class B Common Stock
Common Stock
USD ($)
Beginning balance at May. 31, 2014
$ 10,824 
$ 5,865 
$ 85 
$ 4,871 
 
$ 0 
 
$ 3 
Beginning Balance (in shares) at May. 31, 2014
 
 
 
 
 
355 
 
1,385 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Stock options exercised (in shares)
 
 
 
 
 
 
 
27.0 
Stock options exercised
639 
639 
 
 
 
 
 
 
Repurchase of Class B Common Stock (in shares)
 
 
 
 
 
 
 
(58)
Repurchase of Class B Common Stock
(2,534)
(9)
 
(2,525)
 
 
 
 
Dividends on common stock and preferred stock
(931)
 
 
(931)
 
 
 
 
Issuance of shares to employees, net of shares withheld for employee taxes (in shares)
 
 
 
 
 
 
 
3 
Issuance of shares to employees, net of shares withheld for employee taxes
84 
87 
 
(3)
 
 
 
 
Stock-based compensation
191 
191 
 
 
 
 
 
 
Net income
3,273 
 
 
3,273 
 
 
 
 
Other comprehensive income (loss)
1,161 
 
1,161 
 
 
 
 
 
Ending balance at May. 31, 2015
12,707 
6,773 
1,246 
4,685 
 
0 
 
3 
Ending Balance (in shares) at May. 31, 2015
 
 
 
 
 
355 
 
1,357 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Stock options exercised (in shares)
 
 
 
 
 
 
 
22.0 
Stock options exercised
680 
680 
 
 
 
 
 
 
Conversion to Class B Common Stock (in shares)
 
 
 
 
 
(2)
 
2 
Conversion to Class B Common Stock
0 
 
 
 
 
 
 
 
Repurchase of Class B Common Stock (in shares)
 
 
 
 
 
 
 
(55)
Repurchase of Class B Common Stock
(3,238)
(8)
 
(3,230)
 
 
 
 
Dividends on common stock and preferred stock
(1,053)
 
 
(1,053)
 
 
 
 
Issuance of shares to employees, net of shares withheld for employee taxes (in shares)
 
 
 
 
 
 
 
3 
Issuance of shares to employees, net of shares withheld for employee taxes
94 
105 
 
(11)
 
 
 
 
Stock-based compensation
236 
236 
 
 
 
 
 
 
Net income
3,760 
 
 
3,760 
 
 
 
 
Other comprehensive income (loss)
(928)
 
(928)
 
 
 
 
 
Ending balance at May. 31, 2016
12,258 
7,786 
318 
4,151 
 
0 
 
3 
Ending Balance (in shares) at May. 31, 2016
 
 
 
 
353 
353 
1,329 
1,329 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Stock options exercised (in shares)
 
 
 
 
 
 
 
17.0 
Stock options exercised
525 
525 
 
 
 
 
 
 
Conversion to Class B Common Stock (in shares)
 
 
 
 
 
(24)
 
24 
Conversion to Class B Common Stock
0 
 
 
 
 
 
 
 
Repurchase of Class B Common Stock (in shares)
 
 
 
 
 
 
 
(60)
Repurchase of Class B Common Stock
(3,249)
(9)
 
(3,240)
 
 
 
 
Dividends on common stock and preferred stock
(1,159)
 
 
(1,159)
 
 
 
 
Issuance of shares to employees, net of shares withheld for employee taxes (in shares)
 
 
 
 
 
 
 
4 
Issuance of shares to employees, net of shares withheld for employee taxes
108 
121 
 
(13)
 
 
 
 
Stock-based compensation
215 
215 
 
 
 
 
 
 
Net income
4,240 
 
 
4,240 
 
 
 
 
Other comprehensive income (loss)
(531)
 
(531)
 
 
 
 
 
Ending balance at May. 31, 2017
$ 12,407 
$ 8,638 
$ (213)
$ 3,979 
 
$ 0 
 
$ 3 
Ending Balance (in shares) at May. 31, 2017
 
 
 
 
329 
329 
1,314 
1,314 
Consolidated Statements of Shareholders' Equity (Parenthetical)
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Statement of Stockholders' Equity [Abstract]
 
 
 
Dividends declared per common share (in dollars per share)
$ 0.70 
$ 0.62 
$ 0.54 
Dividends declared per preferred share (in dollars per share)
$ 0.10 
$ 0.10 
$ 0.10 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
NOTE 1 — Summary of Significant Accounting Policies
 
Description of Business
NIKE, Inc. is a worldwide leader in the design, development and worldwide marketing and selling of athletic footwear, apparel, equipment, accessories and services. NIKE, Inc. portfolio brands include the NIKE Brand, Jordan Brand, Hurley and Converse. The NIKE Brand is focused on performance athletic footwear, apparel, equipment, accessories and services across a wide range of sport categories, amplified with sport-inspired sportswear products carrying the Swoosh trademark as well as other NIKE Brand trademarks. The Jordan Brand is focused on athletic and casual footwear, apparel and accessories using the Jumpman trademark. Sales and operating results of Jordan Brand products are reported within the respective NIKE Brand geographic operating segments. The Hurley brand is focused on surf and action sports and youth lifestyle footwear, apparel and accessories, using the Hurley trademark. Sales and operating results of Hurley brand products are reported within the NIKE Brand’s North America geographic operating segment. Converse designs, distributes, markets and sells casual sneakers, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell trademarks. In some markets outside the U.S., these trademarks are licensed to third parties who design, distribute, market and sell similar products. Operating results of the Converse brand are reported on a stand-alone basis.
Basis of Consolidation
The Consolidated Financial Statements include the accounts of NIKE, Inc. and its subsidiaries (the “Company”). All significant intercompany transactions and balances have been eliminated.
On November 19, 2015, the Company announced a two-for-one split of both NIKE Class A and Class B Common Stock. The stock split was in the form of a 100 percent stock dividend payable on December 23, 2015 to shareholders of record at the close of business on December 9, 2015. Common stock began trading at the split-adjusted price on December 24, 2015. All share and per share amounts presented reflect the stock split.
Reclassifications
Certain prior year amounts have been reclassified to conform to fiscal 2017 presentation.
Revenue Recognition
Wholesale revenues are recognized when title and the risks and rewards of ownership have passed to the customer, based on the terms of sale. This occurs upon shipment or upon receipt by the customer depending on the country of the sale and the agreement with the customer. Retail store revenues are recorded at the time of sale and online store revenues are recorded upon delivery to the customer. Provisions for post-invoice sales discounts, returns and miscellaneous claims from customers are estimated and recorded as a reduction to revenue at the time of sale. Post-invoice sales discounts consist of contractual programs with certain customers or discretionary discounts that are expected to be granted to certain customers at a later date. Estimates of discretionary discounts, returns and claims are based on (1) historical rates, (2) specific identification of outstanding claims and outstanding returns not yet received from customers and (3) estimated discounts, returns and claims expected, but not yet finalized with customers. As of May 31, 2017 and 2016, the Company’s reserve balances for post-invoice sales discounts, returns and miscellaneous claims were $643 million and $789 million, respectively.
Cost of Sales
Cost of sales consists primarily of inventory costs, as well as warehousing costs (including the cost of warehouse labor), third-party royalties, certain foreign currency hedge gains and losses and research, design and development costs. Outbound shipping and handling costs are expensed as incurred and included in Cost of sales.
Demand Creation Expense
Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, television, digital and print advertising, brand events and retail brand presentation. Advertising production costs are expensed the first time an advertisement is run. Advertising communication costs are expensed when the advertisement appears. Costs related to brand events are expensed when the event occurs. Costs related to retail brand presentation are expensed when the presentation is completed and delivered.
A significant amount of the Company’s promotional expenses result from payments under endorsement contracts. Accounting for endorsement payments is based upon specific contract provisions. Generally, endorsement payments are expensed on a straight-line basis over the term of the contract after giving recognition to periodic performance compliance provisions of the contracts. Prepayments made under contracts are included in Prepaid expenses and other current assets or Deferred income taxes and other assets depending on the period to which the prepayment applies.
Certain contracts provide for contingent payments to endorsers based upon specific achievements in their sports (e.g., winning a championship). The Company records demand creation expense for these amounts when the endorser achieves the specific goal.
Certain contracts provide for variable payments based upon endorsers maintaining a level of performance in their sport over an extended period of time (e.g., maintaining a specified ranking in a sport for a year). When the Company determines payments are probable, the amounts are reported in Demand creation expense ratably over the contract period based on the Company’s best estimate of the endorser’s performance. In these instances, to the extent that actual payments to the endorser differ from the Company’s estimate due to changes in the endorser’s performance, increased or decreased demand creation expense may be recorded in a future period.
Certain contracts provide for royalty payments to endorsers based upon a predetermined percent of sales of particular products. The Company expenses these payments in Cost of sales as the related sales occur. In certain contracts, the Company offers minimum guaranteed royalty payments. For contracts for which the Company estimates it will not meet the minimum guaranteed amount of royalty fees through sales of product, the Company records the amount of the guaranteed payment in excess of that earned through sales of product in Demand creation expense uniformly over the contract period.
Through cooperative advertising programs, the Company reimburses customers for certain costs of advertising the Company’s products. The Company records these costs in Demand creation expense at the point in time when it is obligated to its customers for the costs. This obligation may arise prior to the related advertisement being run.
Total advertising and promotion expenses were $3,341 million, $3,278 million and $3,213 million for the years ended May 31, 2017, 2016 and 2015, respectively. Prepaid advertising and promotion expenses totaled $558 million and $540 million at May 31, 2017 and 2016, respectively, of which $311 million and $272 million, respectively, was recorded in Prepaid expenses and other current assets, and $247 million and $268 million, respectively, was recorded in Deferred income taxes and other assets, depending on the period to which the prepayment applies.
Operating Overhead Expense
Operating overhead expense consists primarily of wage and benefit-related expenses as well as other administrative costs, such as rent, depreciation and amortization, professional services and meetings and travel.
Cash and Equivalents
Cash and equivalents represent cash and short-term, highly liquid investments, that are both readily convertible to known amounts of cash, and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates, including commercial paper, U.S. Treasury, U.S. Agency, money market funds, time deposits and corporate debt securities with maturities of 90 days or less at the date of purchase.
Short-Term Investments
Short-term investments consist of highly liquid investments, including commercial paper, U.S. Treasury, U.S. Agency, time deposits and corporate debt securities, with maturities over 90 days at the date of purchase. Debt securities that the Company has the ability and positive intent to hold to maturity are carried at amortized cost. At May 31, 2017 and 2016, the Company did not hold any short-term investments that were classified as trading or held-to-maturity.
At May 31, 2017 and 2016, Short-term investments consisted of available-for-sale securities. Available-for-sale securities are recorded at fair value with unrealized gains and losses reported, net of tax, in Accumulated other comprehensive income, unless unrealized losses are determined to be other than temporary. Realized gains and losses on the sale of securities are determined by specific identification. The Company considers all available-for-sale securities, including those with maturity dates beyond 12 months, as available to support current operational liquidity needs and therefore classifies all securities with maturity dates beyond 90 days at the date of purchase as current assets within Short-term investments on the Consolidated Balance Sheets.
Refer to Note 6 — Fair Value Measurements for more information on the Company’s short-term investments.
Allowance for Uncollectible Accounts Receivable
Accounts receivable, net consist primarily of amounts receivable from customers. The Company makes ongoing estimates relating to the collectability of its accounts receivable and maintains an allowance for estimated losses resulting from the inability of its customers to make required payments. In determining the amount of the allowance, the Company considers historical levels of credit losses and makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations. Accounts receivable with anticipated collection dates greater than 12 months from the balance sheet date and related allowances are considered non-current and recorded in Deferred income taxes and other assets. The allowance for uncollectible accounts receivable was $19 million and $43 million at May 31, 2017 and 2016, respectively.
Inventory Valuation
Inventories are stated at lower of cost or market and valued on either an average or specific identification cost basis. For inventories in transit that represent direct shipments to customers, the related inventory and cost of sales are recognized on a specific identification basis. Inventory costs primarily consist of product cost from the Company's suppliers, as well as inbound freight, import duties, taxes, insurance and logistics and other handling fees.
Property, Plant and Equipment and Depreciation
Property, plant and equipment are recorded at cost. Depreciation is determined on a straight-line basis for land improvements, buildings and leasehold improvements over 2 to 40 years and for machinery and equipment over 2 to 15 years.
Depreciation and amortization of assets used in manufacturing, warehousing and product distribution are recorded in Cost of sales. Depreciation and amortization of all other assets are recorded in Operating overhead expense.
Software Development Costs
Internal Use Software: Expenditures for major software purchases and software developed for internal use are capitalized and amortized over a 2 to 12 year period on a straight-line basis. The Company’s policy provides for the capitalization of external direct costs of materials and services associated with developing or obtaining internal use computer software. In addition, the Company also capitalizes certain payroll and payroll-related costs for employees who are directly associated with internal use computer software projects. The amount of capitalizable payroll costs with respect to these employees is limited to the time directly spent on such projects. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred.
Computer Software to be Sold, Leased or Otherwise Marketed: Development costs of computer software to be sold, leased or otherwise marketed as an integral part of a product are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company’s products are released soon after technological feasibility has been established. Therefore, software development costs incurred subsequent to achievement of technological feasibility are usually not significant, and generally most software development costs have been expensed as incurred.
Impairment of Long-Lived Assets
The Company reviews the carrying value of long-lived assets or asset groups to be used in operations whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Factors that would necessitate an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or the business climate that could affect the value of the asset or a significant decline in the observable market value of an asset, among others. If such facts indicate a potential impairment, the Company would assess the recoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life of the primary asset in the asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable, the Company will estimate the fair value of the asset group using appropriate valuation methodologies, which would typically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the asset group’s carrying amount and its estimated fair value.
Goodwill and Indefinite-Lived Intangible Assets
The Company performs annual impairment tests on goodwill and intangible assets with indefinite lives in the fourth quarter of each fiscal year or when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit or an intangible asset with an indefinite life below its carrying value. Events or changes in circumstances that may trigger interim impairment reviews include significant changes in business climate, operating results, planned investments in the reporting unit, planned divestitures or an expectation that the carrying amount may not be recoverable, among other factors. The Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company determines that it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, the two-step impairment test is unnecessary. The two-step impairment test first requires the Company to estimate the fair value of its reporting units. If the carrying value of a reporting unit exceeds its fair value, the goodwill of that reporting unit is potentially impaired and the Company proceeds to step two of the impairment analysis. In step two of the analysis, the Company measures and records an impairment loss equal to the excess of the carrying value of the reporting unit's goodwill over its implied fair value, if any.
Indefinite-lived intangible assets primarily consist of acquired trade names and trademarks. The Company may first perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, the Company determines that it is more likely than not that the indefinite-lived intangible asset is not impaired, no quantitative fair value measurement is necessary. If a quantitative fair value measurement calculation is required for these intangible assets, the Company utilizes the relief-from-royalty method. This method assumes that trade names and trademarks have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method requires the Company to estimate the future revenue for the related brands, the appropriate royalty rate and the weighted average cost of capital.
Operating Leases
The Company leases retail store space, certain distribution and warehouse facilities, office space and other non-real estate assets under operating leases. Operating lease agreements may contain rent escalation clauses, renewal options, rent holidays or certain landlord incentives, including tenant improvement allowances. Rent expense for non-cancelable operating leases with scheduled rent increases or landlord incentives are recognized on a straight-line basis over the lease term, beginning with the effective lease commencement date, which is generally the date in which the Company takes possession of or controls the physical use of the property. Certain leases also provide for contingent rent, which is generally determined as a percent of sales in excess of specified levels. A contingent rent liability is recognized together with the corresponding rent expense when specified levels have been achieved or when the Company determines that achieving the specified levels during the period is probable.
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 a three-level hierarchy established by the Financial Accounting Standards Board (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 or similar 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 a majority of 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.
Level 1 investments include U.S. Treasury securities. Assets and liabilities included within Level 2 include commercial paper, U.S. Agency securities, money market funds, time deposits, corporate debt securities and derivative contracts. Level 3 investments are valued using internally developed models with unobservable inputs and are an immaterial portion of our portfolio.
The Company’s fair value measurement process includes comparing fair values to another independent pricing vendor to ensure appropriate fair values are recorded.
Refer to Note 6 — Fair Value Measurements for additional information.
Foreign Currency Translation and Foreign Currency Transactions
Adjustments resulting from translating foreign functional currency financial statements into U.S. Dollars are included in the foreign currency translation adjustment, a component of Accumulated other comprehensive income in Total shareholders’ equity.
The Company’s global subsidiaries have various assets and liabilities, primarily receivables and payables, which are denominated in currencies other than their functional currency. These balance sheet items are subject to re-measurement, the impact of which is recorded in Other (income) expense, net, within the Consolidated Statements of Income.
Accounting for Derivatives and Hedging Activities
The Company uses derivative financial instruments to reduce its exposure to changes in foreign currency exchange rates and interest rates. All derivatives are recorded at fair value on the Consolidated Balance Sheets and changes in the fair value of derivative financial instruments are either recognized in Accumulated other comprehensive income (a component of Total shareholders’ equity), Long-term debt or Net income depending on the nature of the underlying exposure, whether the derivative is formally designated as a hedge and, if designated, the extent to which the hedge is effective. The Company classifies the cash flows at settlement from derivatives in the same category as the cash flows from the related hedged items. For undesignated hedges and designated cash flow hedges, this is primarily within the Cash provided by operations component of the Consolidated Statements of Cash Flows. For designated net investment hedges, this is within the Cash used by investing activities component of the Consolidated Statements of Cash Flows. For the Company’s fair value hedges, which are interest rate swaps used to mitigate the change in fair value of its fixed-rate debt attributable to changes in interest rates, the related cash flows from periodic interest payments are reflected within the Cash provided by operations component of the Consolidated Statements of Cash Flows. Refer to Note 16 — Risk Management and Derivatives for more information on the Company’s risk management program and derivatives.
Stock-Based Compensation
The Company estimates the fair value of options and stock appreciation rights granted under the NIKE, Inc. Stock Incentive Plan and employees’ purchase rights under the Employee Stock Purchase Plans (ESPPs) using the Black-Scholes option pricing model. The Company recognizes this fair value, net of estimated forfeitures, as Operating overhead expense in the Consolidated Statements of Income over the vesting period using the straight-line method.
Refer to Note 11 — Common Stock and Stock-Based Compensation for more information on the Company’s stock-based compensation programs.
Income Taxes
The Company accounts for income taxes using the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The Company records a valuation allowance to reduce deferred tax assets to the amount management believes is more likely than not to be realized. United States income taxes are provided currently on financial statement earnings of non-U.S. subsidiaries that are expected to be repatriated. The Company determines annually the amount of undistributed non-U.S. earnings to invest indefinitely in its non-U.S. operations.
The Company recognizes a tax benefit from uncertain tax positions in the financial statements only when it is more likely than not that the position will be sustained upon examination by relevant tax authorities. The Company recognizes interest and penalties related to income tax matters in Income tax expense.
Refer to Note 9 — Income Taxes for further discussion.
Earnings Per Share
Basic earnings per common share is calculated by dividing Net income by the weighted average number of common shares outstanding during the year. Diluted earnings per common share is calculated by adjusting weighted average outstanding shares, assuming conversion of all potentially dilutive stock options and awards.
Refer to Note 12 — Earnings Per Share for further discussion.
Management Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, including estimates relating to assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Recently Adopted Accounting Standards
In April 2015, the 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 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 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 process of evaluating 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 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
Inventories
NOTE 2 — Inventories
Inventory balances of $5,055 million and $4,838 million at May 31, 2017 and 2016, respectively, were substantially all finished goods.
Property, Plant and Equipment
Property, Plant and Equipment
NOTE 3 — Property, Plant and Equipment
Property, plant and equipment, net included the following:
 
 
As of May 31,
(In millions)
 
2017
 
2016
Land and improvements
 
$
285

 
$
286

Buildings
 
1,564

 
1,467

Machinery, equipment and internal-use software
 
3,867

 
3,510

Leasehold improvements
 
1,484

 
1,338

Construction in process
 
758

 
437

Total property, plant and equipment, gross
 
7,958

 
7,038

Less accumulated depreciation
 
3,969

 
3,518

TOTAL PROPERTY, PLANT AND EQUIPMENT, NET
 
$
3,989

 
$
3,520


Capitalized interest was not material for the years ended May 31, 2017, 2016 and 2015.
Identifiable Intangible Assets and Goodwill
Identifiable Intangible Assets and Goodwill
NOTE 4 — Identifiable Intangible Assets and Goodwill

Identifiable intangible assets, net consist of indefinite-lived trademarks, which are not subject to amortization, and acquired trademarks and other intangible assets, which are subject to amortization. Indefinite-lived trademarks were $281 million at May 31, 2017 and 2016. Gross acquired trademarks and other intangible assets were $19 million and $16 million at May 31, 2017 and 2016, respectively, and the related accumulated amortization was $17 million and $16 million, respectively. Goodwill was $139 million and $131 million at May 31, 2017 and 2016, respectively, of which $65 million was included in the Converse segment for each of the respective periods. The remaining amounts were included in Global Brand Divisions for segment reporting purposes. There were no accumulated impairment balances for goodwill as of either period end.
Accrued Liabilities
Accrued Liabilities
NOTE 5 — Accrued Liabilities
Accrued liabilities included the following:
 
 
As of May 31,
(In millions)
 
2017
 
2016
Compensation and benefits, excluding taxes
 
$
871

 
$
943

Endorsement compensation
 
396

 
393

Dividends payable
 
300

 
271

Import and logistics costs
 
257

 
198

Taxes other than income taxes payable
 
196

 
159

Fair value of derivatives
 
168

 
162

Advertising and marketing
 
125

 
119

Collateral received from counterparties to hedging instruments
 
—

 
105

Other(1)
 
698

 
687

TOTAL ACCRUED LIABILITIES
 
$
3,011

 
$
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 May 31, 2017 and 2016.
Fair Value Measurements
Fair Value Measurements
NOTE 6 — Fair Value Measurements
The following tables present information about the Company's financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2017 and 2016, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. Refer to Note 1 — Summary of Significant Accounting Policies for additional detail regarding the Company’s fair value measurement methodology.
 
 
As of May 31, 2017
(In millions)
 
Assets at Fair Value
 
Cash Equivalents
 
Short-term Investments
 
Other Long-term Assets
Cash
 
$
505

 
$
505

 
$
—

 
$
—

Level 1:
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
1,545

 
159

 
1,386

 
—

Level 2:
 
 
 
 
 
 
 
 
Time deposits
 
813

 
769

 
44

 
—

U.S. Agency securities
 
522

 
150

 
372

 
—

Commercial paper and bonds
 
820

 
251

 
569

 
—

Money market funds
 
1,974

 
1,974

 
—

 
—

Total level 2
 
4,129

 
3,144

 
985

 
—

Level 3:
 
 
 
 
 
 
 
 
Non-marketable preferred stock
 
10

 
—

 
—

 
10

TOTAL
 
$
6,189

 
$
3,808

 
$
2,371

 
$
10

 
 
 
As of May 31, 2016
(In millions)
 
Assets at Fair Value
 
Cash 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 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 16 — 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 16 — 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 Consolidated Statements of Cash Flows. Any amounts of non-cash collateral received, such as securities, are not recorded on the 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 May 31, 2017 and 2016, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.
 
 
As of May 31, 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)
 
$
231

 
$
216

 
$
15

 
$
246

 
$
166

 
$
80

Embedded derivatives
 
10

 
1

 
9

 
8

 
2

 
6

Interest rate swaps
 
—

 
—

 
—

 
—

 
—

 
—

TOTAL
 
$
241

 
$
217

 
$
24

 
$
254

 
$
168

 
$
86

(1)
If the foreign exchange derivative instruments had been netted in the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $187 million as of May 31, 2017. As of that date, no amount of cash collateral had been received or posted on the derivative asset and liability balances related to these foreign exchange derivative instruments.
 
 
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 in the 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 and liability balances related to its 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 on both active markets (Level 1) and less active markets (Level 2). As of May 31, 2017, the Company held $2,125 million of available-for-sale securities with maturity dates within one year and $246 million with maturity dates over one year and less than five years within Short-term investments on the Consolidated Balance Sheets. The gross realized gains and losses on sales of available-for-sale securities were immaterial for the fiscal years ended May 31, 2017 and 2016. Unrealized gains and losses on available-for-sale securities included in Accumulated other comprehensive income were immaterial as of May 31, 2017 and 2016. The Company regularly reviews its available-for-sale securities for other-than-temporary impairment. For the years ended May 31, 2017 and 2016, the Company did not consider its securities to be other-than-temporarily impaired and accordingly, did not recognize any impairment losses.
Included in Interest expense (income), net was interest income related to the Company's available-for-sale securities of $27 million, $12 million and $6 million for the years ended May 31, 2017, 2016 and 2015, 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 years ended May 31, 2017 and 2016.
No transfers among the levels within the fair value hierarchy occurred during the years ended May 31, 2017 or 2016.
Derivative financial instruments include foreign exchange forwards and options, embedded derivatives and interest rate swaps. Refer to Note 16 — Risk Management and Derivatives for additional detail. For fair value information regarding Notes payable and Long-term debt, refer to Note 7 — Short-Term Borrowings and Credit Lines and Note 8 — Long-Term Debt, respectively. The carrying amounts of other current financial assets and other current financial liabilities approximate fair value.
As of May 31, 2017 and 2016, assets or liabilities that were required to be measured at fair value on a non-recurring basis were immaterial.
Short-Term Borrowings and Credit Lines
Short-Term Borrowings and Credit Lines
NOTE 7 — Short-Term Borrowings and Credit Lines
Notes payable and interest-bearing accounts payable to Sojitz Corporation of America (“Sojitz America”) as of May 31, 2017 and 2016 are summarized below:
 
 
As of May 31,
 
 
 
2017
 
2016
(Dollars in millions)
 
Borrowings

 
Interest Rate
 
Borrowings

 
Interest Rate
Notes payable:
 
 
 
 
 
 
 
 
 
 
Commercial paper
 
$
325

 
0.86
%
 
 
$
—

 
0.00
%
 
U.S. operations
 
—

 
0.00
%
(1) 
 
—

 
0.00
%
(1) 
Non-U.S. operations
 
—

 
0.00
%
(1) 
 
1

 
13.00
%
(1) 
TOTAL NOTES PAYABLE
 
$
325

 
 
 
 
$
1

 
 
 
Interest-bearing accounts payable:
 
 
 
 
 
 
 
 
 
 
Sojitz America
 
$
51

 
1.78
%
 
 
$
39

 
1.27
%
 
(1)
Weighted average interest rate includes non-interest bearing overdrafts.
The carrying amounts reflected in the Consolidated Balance Sheets for Notes payable approximate fair value.
The Company purchases through Sojitz America certain NIKE Brand products it acquires from non-U.S. suppliers. These purchases are for products sold in certain countries in the Company's Emerging Markets geographic operating segment and Canada, excluding products produced and sold in the same country. Accounts payable to Sojitz America are generally due up to 60 days after shipment of goods from the foreign port. The interest rate on such accounts payable is the 60-day London Interbank Offered Rate (“LIBOR”) as of the beginning of the month of the invoice date, plus 0.75%.
As of May 31, 2017, the Company had $325 million outstanding under its $2 billion commercial paper program at a weighted average interest rate of 0.86%. No borrowings were outstanding at May 31, 2016.
On August 28, 2015, the Company entered into a committed credit facility agreement with a syndicate of banks which provides for up to $2 billion of borrowings. The facility matures August 28, 2020, with a one year extension option prior to any anniversary of the closing date, provided that in no event shall it extend beyond August 28, 2022. Based on the Company’s current long-term senior unsecured debt ratings of AA- and A1 from Standard and Poor’s Corporation and Moody’s Investor Services, respectively, the interest rate charged on any outstanding borrowings would be the prevailing LIBOR plus 0.455%. The facility fee is 0.045% of the total commitment. Under this committed credit facility, the Company must maintain certain financial ratios, among other things, with which the Company was in compliance at May 31, 2017. No amounts were outstanding under the committed credit facility as of May 31, 2017 or 2016.
Long-Term Debt
Long-Term Debt
NOTE 8 — Long-Term Debt
Long-term debt, net of unamortized premiums, discounts and debt issuance costs, comprises the following: 
 
 
 
 
 
 
 
 
Book Value Outstanding
as of May 31,
Scheduled Maturity (Dollars and Yen in millions)
 
Original
Principal
 
Interest
Rate
 
Interest
Payments
 
2017
 
2016
Corporate Bond Payables:(1)(2)
 
 
 
 
 
 
 
 
 
 
May 1, 2023
 
$
500

 
2.25
%
 
Semi-Annually
 
497

 
497

November 1, 2026
 
$
1,000

 
2.38
%
 
Semi-Annually
 
993

 
—

May 1, 2043
 
$
500

 
3.63
%
 
Semi-Annually
 
495

 
494

November 1, 2045
 
$
1,000

 
3.88
%
 
Semi-Annually
 
981

 
981

November 1, 2046
 
$
500

 
3.38
%
 
Semi-Annually
 
490

 
—

Promissory Notes:
 
 
 
 
 
 
 
 
 
 
April 1, 2017
 
$
40

 
6.20
%
 
Monthly
 
—

 
38

Japanese Yen Notes:(3)
 
 
 
 
 
 
 
 
 
 
August 20, 2001 through November 20, 2020
 
¥
9,000

 
2.60
%
 
Quarterly
 
14

 
18

August 20, 2001 through November 20, 2020
 
¥
4,000

 
2.00
%
 
Quarterly
 
7

 
9

Total
 
 
 
 
 
 
 
3,477

 
2,037

Less current maturities
 
 

 
 

 
 
 
6

 
44

TOTAL LONG-TERM DEBT
 
 
 
 
 
 
 
$
3,471

 
$
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 up to three months prior to the scheduled maturity date for the bonds maturing in 2023 and 2026, and up to six months prior to the scheduled maturity date for the bonds maturing in 2043, 2045 and 2046, at a price equal to the greater of (i) 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. Within three and six months to scheduled maturity, 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)
NIKE Logistics YK assumed a total of ¥13.0 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 years ending May 31, 2018 through 2022 are $6 million, $6 million, $6 million, $3 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 $3,401 million at May 31, 2017 and $2,125 million at May 31, 2016.
Income Taxes
Income Taxes
NOTE 9 — Income Taxes
Income before income taxes is as follows:
 
 
Year Ended May 31,
(In millions)
 
2017
 
2016
 
2015
Income before income taxes:
 
 
 
 
 
 
United States
 
$
1,240

 
$
956

 
$
1,967

Foreign
 
3,646

 
3,667

 
2,238

TOTAL INCOME BEFORE INCOME TAXES
 
$
4,886

 
$
4,623

 
$
4,205


The provision for income taxes is as follows:
 
 
Year Ended May 31,
(In millions)
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
 
United States
 
 
 
 
 
 
Federal
 
$
398

 
$
304

 
$
596

State
 
82

 
71

 
80

Foreign
 
439

 
568

 
369

Total
 
919

 
943

 
1,045

Deferred:
 
 
 
 
 
 
United States
 
 
 
 
 
 
Federal
 
(279
)
 
(57
)
 
(66
)
State
 
(9
)
 
(16
)
 
(11
)
Foreign
 
15

 
(7
)
 
(36
)
Total
 
(273
)
 
(80
)
 
(113
)
TOTAL INCOME TAX EXPENSE
 
$
646

 
$
863

 
$
932


A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows:
 
 
Year Ended May 31,
  
 
2017
 
2016
 
2015
Federal income tax rate
 
35.0
 %
 
35.0
 %
 
35.0
 %
State taxes, net of federal benefit
 
1.1
 %
 
1.1
 %
 
0.9
 %
Foreign earnings
 
-20.7
 %
 
-18.2
 %
 
-14.8
 %
Resolution of a U.S. tax matter
 
-3.2
 %
 
—
 %
 
—
 %
Other, net
 
1.0
 %
 
0.8
 %
 
1.1
 %
EFFECTIVE INCOME TAX RATE
 
13.2
 %
 
18.7
 %
 
22.2
 %

The effective tax rate for the year ended May 31, 2017 was 550 basis points lower than the effective tax rate for the year ended May 31, 2016 primarily due to a one-time benefit in the first quarter of the fiscal year related to the resolution with the U.S. Internal Revenue Service (IRS) of a foreign tax credit matter and a decrease in foreign earnings taxed in the United States.
The effective tax rate for the year ended May 31, 2016 was 350 basis points lower than the effective tax rate for the year ended May 31, 2015 primarily due to an increase in the proportion of earnings from operations outside of the United States, which are generally subject to a lower tax rate.
Deferred tax assets and liabilities comprise the following: 
 
 
As of May 31,
(In millions)
 
2017
 
2016
Deferred tax assets:
 
 
 
 
Allowance for doubtful accounts
 
$
4

 
$
5

Inventories
 
90

 
88

Sales return reserves
 
130

 
182

Deferred compensation
 
348

 
274

Stock-based compensation
 
225

 
206

Reserves and accrued liabilities
 
84

 
78

Net operating loss carry-forwards
 
84

 
44

Foreign tax credit carry-forwards
 
208

 
—

Undistributed earnings of foreign subsidiaries
 
173

 
179

Other
 
106

 
72

Total deferred tax assets
 
1,452

 
1,128

Valuation allowance
 
(82
)
 
(52
)
Total deferred tax assets after valuation allowance
 
1,370

 
1,076

Deferred tax liabilities:
 
 
 
 
Property, plant and equipment
 
(254
)
 
(268
)
Intangibles
 
(90
)
 
(92
)
Other
 
(2
)
 
(4
)
Total deferred tax liability
 
(346
)
 
(364
)
NET DEFERRED TAX ASSET
 
$
1,024

 
$
712


The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits:
 
 
As of May 31,
(In millions)
 
2017
 
2016
 
2015
Unrecognized tax benefits, beginning of the period
 
$
506

 
$
438

 
$
506

Gross increases related to prior period tax positions
 
31

 
49

 
32

Gross decreases related to prior period tax positions
 
(163
)
 
(20
)
 
(123
)
Gross increases related to current period tax positions
 
115

 
81

 
82

Gross decreases related to current period tax positions
 
—

 
—

 
(9
)
Settlements
 
(12
)
 
(13
)
 
(27
)
Lapse of statute of limitations
 
(21
)
 
(17
)
 
(10
)
Changes due to currency translation
 
5

 
(12
)
 
(13
)
UNRECOGNIZED TAX BENEFITS, END OF THE PERIOD
 
$
461

 
$
506

 
$
438


As of May 31, 2017, total gross unrecognized tax benefits, excluding related interest and penalties, were $461 million, $230 million of which would affect the Company's effective tax rate if recognized in future periods.
The Company recognizes interest and penalties related to income tax matters in Income tax expense. The liability for payment of interest and penalties decreased by $38 million during the year ended May 31, 2017, increased by $45 million during the year ended May 31, 2016 and decreased by $3 million during the year ended May 31, 2015. As of May 31, 2017 and 2016, accrued interest and penalties related to uncertain tax positions were $171 million and $209 million, respectively (excluding federal benefit).
The Company is subject to taxation in the United States as well as various state and foreign jurisdictions. As previously disclosed, the Company received statutory notices of deficiency from the IRS 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. In the current period, the Company closed all U.S. federal income tax matters for fiscal years 2013 and 2014, with the exception of certain transfer pricing adjustments. The Company is currently under audit by the IRS for fiscal years 2015 and 2016.
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 $69 million within the next 12 months.
The Company provides for U.S. income taxes on the undistributed earnings of foreign subsidiaries unless they are considered indefinitely reinvested outside the United States. At May 31, 2017, the indefinitely reinvested earnings in foreign subsidiaries upon which United States income taxes have not been provided were approximately $12.2 billion. If these undistributed earnings were repatriated to the United States or if the shares of the relevant foreign subsidiaries were sold or otherwise transferred, they would generate foreign tax credits that would reduce the federal tax liability associated with the foreign dividend or the otherwise taxable transaction. Assuming a full utilization of the foreign tax credits, the potential net deferred tax liability associated with these temporary differences of undistributed earnings would be approximately $4.1 billion at May 31, 2017.
A portion of the Company's foreign operations are benefiting from a tax holiday, which is set to expire in 2021. This tax holiday may be extended when certain conditions are met or may be terminated early if certain conditions are not met. The tax benefit attributable to this tax holiday was $187 million, $173 million and $174 million for the fiscal years ended May 31, 2017, 2016 and 2015, respectively. The benefit of the tax holiday on diluted earnings per common share was $0.11, $0.10 and $0.10 for the fiscal years ended May 31, 2017, 2016 and 2015, respectively.
Deferred tax assets at May 31, 2017 and 2016 were reduced by a valuation allowance primarily relating to tax benefits of certain entities with operating losses. There was a $30 million net increase in the valuation allowance for the year ended May 31, 2017, compared to a net increase of $43 million for the year ended May 31, 2016 and no net change for the year ended May 31, 2015.
The Company has recorded deferred tax assets of $208 million at May 31, 2017 for foreign tax credit carry-forwards which expire in 2027.
The Company has available domestic and foreign loss carry-forwards of $266 million at May 31, 2017. Such losses will expire as follows: 
 
 
Year Ending May 31,
(In millions)
 
2018
 
2019
 
2020
 
2021
 
2022-2035
 
Indefinite

 
Total

Net operating losses
 
$
5

 
$
1

 
$
1

 
$
1

 
$
62

 
$
196

 
$
266


During the years ended May 31, 2017, 2016 and 2015, income tax benefits attributable to employee stock-based compensation transactions of $177 million, $281 million and $224 million, respectively, were allocated to Total shareholders’ equity.
Redeemable Preferred Stock
Redeemable Preferred Stock
NOTE 10 — Redeemable Preferred Stock
Sojitz America is the sole owner of the Company’s authorized redeemable preferred stock, $1 par value, which is redeemable at the option of Sojitz America or the Company at par value aggregating $0.3 million. A cumulative dividend of $0.10 per share is payable annually on May 31 and no dividends may be declared or paid on the common stock of the Company unless dividends on the redeemable preferred stock have been declared and paid in full. There have been no changes in the redeemable preferred stock in the three years ended May 31, 2017, 2016 and 2015. As the holder of the redeemable preferred stock, Sojitz America does not have general voting rights, but does have the right to vote as a separate class on the sale of all or substantially all of the assets of the Company and its subsidiaries, on merger, consolidation, liquidation or dissolution of the Company or on the sale or assignment of the NIKE trademark for athletic footwear sold in the United States. The redeemable preferred stock has been fully issued to Sojitz America and is not blank check preferred stock. The Company's articles of incorporation do not permit the issuance of additional preferred stock.
Common Stock and Stock-Based Compensation
Common Stock and Stock-Based Compensation
NOTE 11 — 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.
The following table summarizes the Company’s total stock-based compensation expense recognized in Operating overhead expense: 
 
 
Year Ended May 31,
(In millions)
 
2017
 
2016
 
2015
Stock options(1)
 
$
145

 
$
171

 
$
136

ESPPs
 
36

 
31

 
24

Restricted stock
 
34

 
34

 
31

TOTAL STOCK-BASED COMPENSATION EXPENSE
 
$
215

 
$
236

 
$
191

(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 $14 million, $30 million and $19 million for the years ended May 31, 2017, 2016 and 2015, respectively.
As of May 31, 2017, the Company had $201 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 1.9 years.
The weighted average fair value per share of the options granted during the years ended May 31, 2017, 2016 and 2015, computed as of the grant date using the Black-Scholes pricing model, was $9.38, $12.66 and $8.48, respectively. The weighted average assumptions used to estimate these fair values are as follows:
 
 
Year Ended May 31,
  
 
2017
 
2016
 
2015
Dividend yield
 
1.1
%
 
1.0
%
 
1.2
%
Expected volatility
 
17.4
%
 
23.6
%
 
23.6
%
Weighted average expected life (in years)
 
6.0

 
5.8

 
5.8

Risk-free interest rate
 
1.3
%
 
1.7
%
 
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.
The following summarizes the stock option transactions under the plan discussed above: 
 
 
Shares(1)
 
Weighted Average
Option Price
  
 
(In millions)
 
  
Options outstanding May 31, 2014
 
127.1

 
$
19.64

Exercised
 
(27.2
)
 
15.39

Forfeited
 
(2.1
)
 
29.51

Granted
 
18.4

 
38.84

Options outstanding May 31, 2015
 
116.2

 
23.50

Exercised
 
(22.5
)
 
17.75

Forfeited
 
(2.3
)
 
39.96

Granted
 
20.6

 
56.41

Options outstanding May 31, 2016
 
112.0

 
30.38

Exercised
 
(17.1
)
 
20.42

Forfeited
 
(2.3
)
 
49.47

Granted
 
12.2

 
57.81

Options outstanding May 31, 2017
 
104.8

 
$
34.79

Options exercisable at May 31,
 
 
 
 
2015
 
68.6

 
$
18.26

2016
 
66.5

 
21.48

2017
 
67.9

 
26.03

(1)
Includes stock appreciation rights transactions.
The weighted average contractual life remaining for options outstanding and options exercisable at May 31, 2017 was 5.7 years and 4.5 years, respectively. The aggregate intrinsic value for options outstanding and exercisable at May 31, 2017 was $2,027 million and $1,846 million, respectively. The aggregate intrinsic value was the amount by which the market value of the underlying stock exceeded the exercise price of the options. The total intrinsic value of the options exercised during the years ended May 31, 2017, 2016 and 2015 was $594 million, $946 million and $795 million, respectively.
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. Employees purchased 3.1 million, 2.5 million and 2.7 million shares during each of the three years ended May 31, 2017, 2016 and 2015, respectively.
From time to time, the Company grants restricted stock and restricted stock units to key employees under the Stock Incentive Plan. The number of shares underlying such awards granted to employees during the years ended May 31, 2017, 2016 and 2015 were 0.4 million, 1.0 million and 0.5 million, respectively, with weighted average values per share of $57.59, $54.87 and $39.69, respectively. Recipients of restricted stock are entitled to cash dividends and to vote their respective shares throughout the period of restriction. Recipients of restricted stock units are entitled to dividend equivalent cash payments upon vesting. The value of all grants of restricted stock and restricted stock units was established by the market price on the date of grant. During the years ended May 31, 2017, 2016 and 2015, the aggregate fair value of restricted stock and restricted stock units vested was $60 million, $49 million and $20 million, respectively, determined as of the date of vesting. As of May 31, 2017, the Company had $43 million of unrecognized compensation costs from restricted stock and restricted stock units to be recognized in Operating overhead expense over a weighted average period of 2.4 years.
Earnings Per Share
Earnings Per Share
NOTE 12 — 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, to purchase an additional 30.5 million, 0.2 million and 1.7 million shares of common stock outstanding for the years ended May 31, 2017, 2016 and 2015, respectively, because the options were anti-dilutive.
 
 
Year Ended May 31,
(In millions, except per share data)
 
2017
 
2016
 
2015
Determination of shares:
 
 
 
 
 
 
Weighted average common shares outstanding
 
1,657.8

 
1,697.9

 
1,723.5

Assumed conversion of dilutive stock options and awards
 
34.2

 
44.6

 
45.3

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
 
1,692.0

 
1,742.5

 
1,768.8

 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
Basic
 
$
2.56

 
$
2.21

 
$
1.90

Diluted
 
$
2.51

 
$
2.16

 
$
1.85

Benefit Plans
Benefit Plans
NOTE 13 — Benefit Plans
The Company has a qualified 401(k) Savings and Profit Sharing Plan, in which all U.S. employees are able to participate. The Company matches a portion of employee contributions to the savings plan. Company contributions to the savings plan were $75 million, $72 million and $58 million and included in Operating overhead expense for the years ended May 31, 2017, 2016 and 2015, respectively. The terms of the plan also allow for annual discretionary profit sharing contributions, as determined by the Board of Directors, to the accounts of eligible U.S. employees who work at least 1,000 hours in a year. Profit sharing contributions of $68 million, $64 million and $58 million were made to the plan and included in Operating overhead expense for the years ended May 31, 2017, 2016 and 2015, respectively.
The Company also has a Long-Term Incentive Plan (LTIP) that was adopted by the Board of Directors and approved by shareholders in September 1997 and later amended and approved in fiscal 2007 and fiscal 2012. The Company recognized $21 million, $85 million and $68 million of Operating overhead expense related to cash awards under the LTIP during the years ended May 31, 2017, 2016 and 2015, respectively.
The Company allows certain highly compensated employees and non-employee directors of the Company to defer compensation under a nonqualified deferred compensation plan. Deferred compensation plan liabilities were $569 million and $475 million at May 31, 2017 and 2016, respectively, and primarily classified as long-term in Deferred income taxes and other liabilities.
The Company has pension plans in various countries worldwide. The pension plans are only available to local employees and are generally government mandated. The liability related to the unfunded pension liabilities of the plans was $107 million and $93 million at May 31, 2017 and 2016, respectively, and primarily classified as long-term in Deferred income taxes and other liabilities.
Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income
NOTE 14 — Accumulated Other Comprehensive Income
The changes in Accumulated other comprehensive income, net of tax, were as follows:
(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)
 
15

 
118

 
—

 
(14
)
 
119

Reclassifications to net income of previously deferred (gains) losses(3)
 
1

 
(633
)
 
—

 
(18
)
 
(650
)
Other comprehensive income (loss)
 
16

 
(515
)
 
—

 
(32
)
 
(531
)
Balance at May 31, 2017
 
$
(191
)
 
$
(52
)
 
$
115

 
$
(85
)
 
$
(213
)
(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, $3 million and $27 million, respectively.
(3)
Net of tax (benefit) expense of $0 million, $(3) million, $0 million, $(3) million and $(6) 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)
 
(178
)
 
(47
)
 
—

 
6

 
(219
)
Reclassifications to net income of previously deferred (gains) losses(3)
 
2

 
(710
)
 
—

 
(1
)
 
(709
)
Other comprehensive income (loss)
 
(176
)
 
(757
)
 
—

 
5

 
(928
)
Balance at May 31, 2016
 
$
(207
)
 
$
463

 
$
115

 
$
(53
)
 
$
318

(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, $28 million, $0 million, $(2) million and $26 million, respectively.
(3)
Net of tax (benefit) expense of $0 million, $7 million, $0 million, $2 million and $9 million, respectively.
The following table summarizes the reclassifications from Accumulated other comprehensive income to the 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
 
 
 
 
Year Ended May 31,
(In millions)
 
2017
 
2016
Gains (losses) on foreign currency translation adjustment
 
(1
)
 
(2
)
Other (income) expense, net
Total before tax
 
(1
)
 
(2
)
 
Tax (expense) benefit
 
—

 
—

 
Gain (loss) net of tax
 
(1
)
 
(2
)
 
Gains (losses) on cash flow hedges:
 
 
 
 
 
Foreign exchange forwards and options
 
96

 
(88
)
Revenues
Foreign exchange forwards and options
 
339

 
586

Cost of sales
Foreign exchange forwards and options
 
—

 
—

Total selling and administrative expense
Foreign exchange forwards and options
 
199

 
219

Other (income) expense, net
Interest rate swaps
 
(4
)
 
—

Interest expense (income), net
Total before tax
 
630

 
717

 
Tax (expense) benefit
 
3

 
(7
)
 
Gain (loss) net of tax
 
633

 
710

 
Gains (losses) on other
 
15

 
3

Other (income) expense, net
Total before tax
 
15

 
3

 
Tax (expense) benefit
 
3

 
(2
)
 
Gain (loss) net of tax
 
18

 
1

 
Total net gain (loss) reclassified for the period
 
$
650

 
$
709

 

Refer to Note 16 — Risk Management and Derivatives for more information on the Company's risk management program and derivatives.
Commitments and Contingencies
Commitments and Contingencies
NOTE 15 — Commitments and Contingencies
The Company leases retail store space, certain distribution and warehouse facilities, and office space and other non-real estate assets under operating leases expiring from 1 to 17 years after May 31, 2017. Rent expense was $731 million, $661 million and $594 million for the years ended May 31, 2017, 2016 and 2015, respectively. Amounts of minimum future annual commitments under non-cancelable operating and capital leases are as follows (in millions):
 
 
2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
 
Total
Operating leases
 
$
537

 
$
509

 
$
438

 
$
399

 
$
350

 
$
1,672

 
$
3,905

Capital leases and other financing obligations(1)
 
$
34

 
$
32

 
$
28

 
$
25

 
$
26

 
$
225

 
$
370


(1)
Capital leases and other financing obligations include payments related to build-to-suit lease arrangements.
As of May 31, 2017 and 2016, the Company had letters of credit outstanding totaling $152 million and $157 million, respectively. These letters of credit were generally issued for the purchase of inventory and guarantees of the Company’s performance under certain self-insurance and other programs.
In connection with various contracts and agreements, the Company provides routine indemnification relating to the enforceability of intellectual property rights, coverage for legal issues that arise and other items where the Company is acting as the guarantor. Currently, the Company has several such agreements in place. However, based on the Company’s historical experience and the estimated probability of future loss, the Company has determined that the fair value of such indemnification is not material to the Company’s financial position or results of operations.
In the ordinary course of its business, the Company is involved in various legal proceedings involving contractual and employment relationships, product liability claims, trademark rights and a variety of other matters. While the Company cannot predict the outcome of its pending legal matters with certainty, the Company does not believe any currently identified claim, proceeding or litigation, either individually or in aggregate, will have a material impact on the Company’s results of operations, financial position or cash flows.
Risk Management and Derivatives
Risk Management and Derivatives
NOTE 16 — 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 the accounting standards for derivatives and hedging. 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 May 31, 2017 are designated as foreign currency cash flow hedges, primarily for Euro/U.S. Dollar, British Pound/Euro and Japanese Yen/U.S. Dollar currency pairs. All derivatives are recognized on the 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 Consolidated Balance Sheets as of May 31, 2017 and 2016: 
 
 
Asset Derivatives
 
Liability Derivatives
(In millions)
 
Balance Sheet
Location
 
2017
 
2016
 
Balance Sheet 
Location
 
2017
 
2016
Derivatives formally designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
Prepaid expenses and other current assets
 
$
113

 
$
447

 
Accrued liabilities
 
$
59

 
$
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
 
13

 
90

 
Deferred income taxes and other liabilities
 
73

 
12

Interest rate swaps
 
Deferred income taxes and other assets
 
—

 
—

 
Deferred income taxes and other liabilities
 
—

 
—

Total derivatives formally designated as hedging instruments
 
 
 
126

 
544

 
 
 
132

 
95

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
Prepaid expenses and other current assets
 
103

 
40

 
Accrued liabilities
 
107

 
76

Embedded derivatives
 
Prepaid expenses and other current assets
 
1

 
2

 
Accrued liabilities
 
2

 
2

Foreign exchange forwards and options
 
Deferred income taxes and other assets
 
2

 
26

 
Deferred income taxes and other liabilities
 
7

 
19

Embedded derivatives
 
Deferred income taxes and other assets
 
9

 
5

 
Deferred income taxes and other liabilities
 
6

 
7

Total derivatives not designated as hedging instruments
 
 
 
115

 
73

 
 
 
122

 
104

TOTAL DERIVATIVES
 
 
 
$
241

 
$
617

 
 
 
$
254

 
$
199


The following tables present the amounts affecting the Consolidated Statements of Income for the years ended May 31, 2017, 2016 and 2015:

(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)
Year Ended May 31,
 
Location of Gain (Loss) Reclassified From 
Accumulated Other Comprehensive Income into Income
 
Year Ended May 31,
 
 
 
 
 
 
 
 
 
 
 
 
2017
 
2016
 
2015
 
 
2017
 
2016
 
2015
Derivatives designated as cash flow hedges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
$
72

 
$
90

 
$
(202
)
 
Revenues
 
$
96

 
$
(88
)
 
$
(95
)
Foreign exchange forwards and options
 
43

 
(57
)
 
1,109

 
Cost of sales
 
339

 
586

 
220

Foreign exchange forwards and options
 
(4
)
 
—

 
—

 
Total selling and administrative expense
 
—

 
—

 
—

Foreign exchange forwards and options
 
37

 
(25
)
 
497

 
Other (income) expense, net
 
199

 
219

 
136

Interest rate swaps
 
(54
)
 
(83
)
 
76

 
Interest expense (income), net
 
(4
)
 
—

 
—

Total designated cash flow hedges
 
94

 
(75
)
 
1,480

 
 
 
630

 
717

 
261

(1)
For the years ended May 31, 2017, 2016 and 2015, 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
 
 
Year Ended May 31,
 
(In millions)
 
2017
 
2016
 
2015
 
Derivatives designated as fair value hedges:
 
 
 
 
 
 
 
 
Interest rate swaps(1)
 
$
—

 
$
2

 
$
5

 
Interest expense (income), net
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
(44
)
 
(68
)
 
611

 
Other (income) expense, net
Embedded derivatives
 
$
(2
)
 
$
(2
)
 
$
(1
)
 
Other (income) expense, net
(1)
All interest rate swaps designated as fair value hedges meet the shortcut method requirements under the accounting standards for derivatives and hedging. 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 6 — Fair Value Measurements for a description of how the above financial instruments are valued and Note 14 — Accumulated Other Comprehensive Income and the Consolidated Statements of Shareholders’ Equity for additional information on changes in Accumulated other comprehensive income for the years ended May 31, 2017, 2016 and 2015.
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 products in two ways: (1) Certain NIKE entities purchase product from the NIKE Trading Company (“NTC”), a wholly owned sourcing hub that buys NIKE branded products 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 place formally designated 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 $11.1 billion as of May 31, 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 8 - 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. During the second quarter of fiscal 2016, the Company terminated certain forward-starting interest rate swaps with a total notional amount of $1 billion in connection with the October 29, 2015 debt issuance (refer to Note 8 — Long-Term Debt). Upon termination of these forward-starting swaps, the Company received cash payments from the related counterparties of $34 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 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 and sales 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 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 years ended May 31, 2017, 2016 and 2015.
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 Consolidated Balance Sheets, recognizing future changes in the fair value in Other (income) expense, net. For the years ended May 31, 2017, 2016 and 2015, the amounts recorded in Other (income) expense, net as a result of the discontinuance of cash flow hedging because the forecasted transaction was no longer probable of occurring were immaterial.
As of May 31, 2017, $100 million of deferred net gains (net of tax) on both outstanding and matured derivatives in Accumulated other comprehensive income are 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 May 31, 2017, the maximum term over which the Company is hedging exposures to the variability of cash flows for its forecasted transactions was 24 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 Consolidated Statements of Cash Flows. The Company recorded no ineffectiveness from its interest rate swaps designated as fair value hedges for the years ended May 31, 2017, 2016 or 2015. On October 15, 2015, the Company repaid the long-term debt which had previously been hedged with these interest rate swaps. Accordingly, as of May 31, 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 Consolidated Statements of Cash Flows. The Company assesses hedge effectiveness based on changes in forward rates. The Company recorded no ineffectiveness from net investment hedges for the years ended May 31, 2017, 2016 or 2015. The Company had no outstanding net investment hedges as of May 31, 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 Consolidated Balance Sheets and/or the 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 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, primarily within the Cash provided by operations component of the Consolidated Statements of Cash Flows. The total notional amount of outstanding undesignated derivative instruments was $10.5 billion as of May 31, 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 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 Consolidated Balance Sheets with their corresponding changes in fair value recognized in Other (income) expense, net until each payment is settled.
At May 31, 2017, the total notional amount of all embedded derivatives outstanding was approximately $265 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 May 31, 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 $59 million. However, no derivative instruments with credit risk-related contingent features in a net liability position were greater than $50 million by counterparty. Accordingly, the Company was not required to post any collateral as a result of these contingent features. Further, as of May 31, 2017, the Company had received no cash collateral from various counterparties to its derivative contracts (refer to Note 6 — Fair Value Measurements). Given the considerations described above, the Company considers the impact of the risk of counterparty default to be immaterial.
Schedule II - Valuation and qualifying accounts
SCHEDULE II - Valuation and qualifying accounts
SCHEDULE II — Valuation and Qualifying Accounts
(In millions)
 
Balance at
Beginning of Period
 
Charged to Costs
and Expenses
 
Charged to Other Accounts(1)
 
Write-Offs, Net
 
Balance at End
of Period
Sales returns reserve
 
 
 
 
 
 
 
 
 

For the year ended May 31, 2015
 
$
308

 
$
726

 
$
(35
)
 
$
(620
)
 
$
379

For the year ended May 31, 2016
 
379

 
788

 
(15
)
 
(708
)
 
444

For the year ended May 31, 2017
 
444

 
696

 
3

 
(800
)
 
343

Allowance for doubtful accounts(2)
 
 
 
 
 
 
 
 
 
 
For the year ended May 31, 2015
 
$
78

 
$
35

 
$
(15
)
 
$
(20
)
 
$
78

For the year ended May 31, 2016
 
78

 
52

 
(2
)
 
(85
)
 
43

For the year ended May 31, 2017
 
43

 
16

 
—

 
(40
)
 
19

(1)
Amounts included in this column primarily relate to foreign currency translation.
(2)
Includes both current and non-current portions of the allowance for doubtful accounts. The non-current portion is included in Deferred income taxes and other assets on the Consolidated Balance Sheets.
Summary of Significant Accounting Policies (Policies)
Basis of Consolidation 
Basis of Consolidation
The Consolidated Financial Statements include the accounts of NIKE, Inc. and its subsidiaries (the “Company”). All significant intercompany transactions and balances have been eliminated.
On November 19, 2015, the Company announced a two-for-one split of both NIKE Class A and Class B Common Stock. The stock split was in the form of a 100 percent stock dividend payable on December 23, 2015 to shareholders of record at the close of business on December 9, 2015. Common stock began trading at the split-adjusted price on December 24, 2015. All share and per share amounts presented reflect the stock split.
Reclassifications 
Reclassifications
Certain prior year amounts have been reclassified to conform to fiscal 2017 presentation.
Revenue Recognition 
Revenue Recognition
Wholesale revenues are recognized when title and the risks and rewards of ownership have passed to the customer, based on the terms of sale. This occurs upon shipment or upon receipt by the customer depending on the country of the sale and the agreement with the customer. Retail store revenues are recorded at the time of sale and online store revenues are recorded upon delivery to the customer. Provisions for post-invoice sales discounts, returns and miscellaneous claims from customers are estimated and recorded as a reduction to revenue at the time of sale. Post-invoice sales discounts consist of contractual programs with certain customers or discretionary discounts that are expected to be granted to certain customers at a later date. Estimates of discretionary discounts, returns and claims are based on (1) historical rates, (2) specific identification of outstanding claims and outstanding returns not yet received from customers and (3) estimated discounts, returns and claims expected, but not yet finalized with customers.
Cost of Sales 
Cost of Sales
Cost of sales consists primarily of inventory costs, as well as warehousing costs (including the cost of warehouse labor), third-party royalties, certain foreign currency hedge gains and losses and research, design and development costs. Outbound shipping and handling costs are expensed as incurred and included in Cost of sales.
Demand Creation Expense 
Demand Creation Expense
Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, television, digital and print advertising, brand events and retail brand presentation. Advertising production costs are expensed the first time an advertisement is run. Advertising communication costs are expensed when the advertisement appears. Costs related to brand events are expensed when the event occurs. Costs related to retail brand presentation are expensed when the presentation is completed and delivered.
A significant amount of the Company’s promotional expenses result from payments under endorsement contracts. Accounting for endorsement payments is based upon specific contract provisions. Generally, endorsement payments are expensed on a straight-line basis over the term of the contract after giving recognition to periodic performance compliance provisions of the contracts. Prepayments made under contracts are included in Prepaid expenses and other current assets or Deferred income taxes and other assets depending on the period to which the prepayment applies.
Certain contracts provide for contingent payments to endorsers based upon specific achievements in their sports (e.g., winning a championship). The Company records demand creation expense for these amounts when the endorser achieves the specific goal.
Certain contracts provide for variable payments based upon endorsers maintaining a level of performance in their sport over an extended period of time (e.g., maintaining a specified ranking in a sport for a year). When the Company determines payments are probable, the amounts are reported in Demand creation expense ratably over the contract period based on the Company’s best estimate of the endorser’s performance. In these instances, to the extent that actual payments to the endorser differ from the Company’s estimate due to changes in the endorser’s performance, increased or decreased demand creation expense may be recorded in a future period.
Certain contracts provide for royalty payments to endorsers based upon a predetermined percent of sales of particular products. The Company expenses these payments in Cost of sales as the related sales occur. In certain contracts, the Company offers minimum guaranteed royalty payments. For contracts for which the Company estimates it will not meet the minimum guaranteed amount of royalty fees through sales of product, the Company records the amount of the guaranteed payment in excess of that earned through sales of product in Demand creation expense uniformly over the contract period.
Through cooperative advertising programs, the Company reimburses customers for certain costs of advertising the Company’s products. The Company records these costs in Demand creation expense at the point in time when it is obligated to its customers for the costs. This obligation may arise prior to the related advertisement being run.
Operating Overhead Expense 
Operating Overhead Expense
Operating overhead expense consists primarily of wage and benefit-related expenses as well as other administrative costs, such as rent, depreciation and amortization, professional services and meetings and travel.
Cash and Equivalents 
Cash and Equivalents
Cash and equivalents represent cash and short-term, highly liquid investments, that are both readily convertible to known amounts of cash, and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates, including commercial paper, U.S. Treasury, U.S. Agency, money market funds, time deposits and corporate debt securities with maturities of 90 days or less at the date of purchase.
Short-Term Investments 
Short-Term Investments
Short-term investments consist of highly liquid investments, including commercial paper, U.S. Treasury, U.S. Agency, time deposits and corporate debt securities, with maturities over 90 days at the date of purchase. Debt securities that the Company has the ability and positive intent to hold to maturity are carried at amortized cost. At May 31, 2017 and 2016, the Company did not hold any short-term investments that were classified as trading or held-to-maturity.
At May 31, 2017 and 2016, Short-term investments consisted of available-for-sale securities. Available-for-sale securities are recorded at fair value with unrealized gains and losses reported, net of tax, in Accumulated other comprehensive income, unless unrealized losses are determined to be other than temporary. Realized gains and losses on the sale of securities are determined by specific identification. The Company considers all available-for-sale securities, including those with maturity dates beyond 12 months, as available to support current operational liquidity needs and therefore classifies all securities with maturity dates beyond 90 days at the date of purchase as current assets within Short-term investments on the Consolidated Balance Sheets.
Allowance for Uncollectible Accounts Receivable 
Allowance for Uncollectible Accounts Receivable
Accounts receivable, net consist primarily of amounts receivable from customers. The Company makes ongoing estimates relating to the collectability of its accounts receivable and maintains an allowance for estimated losses resulting from the inability of its customers to make required payments. In determining the amount of the allowance, the Company considers historical levels of credit losses and makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations. Accounts receivable with anticipated collection dates greater than 12 months from the balance sheet date and related allowances are considered non-current and recorded in Deferred income taxes and other assets.
Inventory Valuation 
Inventory Valuation
Inventories are stated at lower of cost or market and valued on either an average or specific identification cost basis. For inventories in transit that represent direct shipments to customers, the related inventory and cost of sales are recognized on a specific identification basis. Inventory costs primarily consist of product cost from the Company's suppliers, as well as inbound freight, import duties, taxes, insurance and logistics and other handling fees.
Property, Plant and Equipment and Depreciation 
Property, Plant and Equipment and Depreciation
Property, plant and equipment are recorded at cost. Depreciation is determined on a straight-line basis for land improvements, buildings and leasehold improvements over 2 to 40 years and for machinery and equipment over 2 to 15 years.
Depreciation and amortization of assets used in manufacturing, warehousing and product distribution are recorded in Cost of sales. Depreciation and amortization of all other assets are recorded in Operating overhead expense.
Software Development Costs 
Software Development Costs
Internal Use Software: Expenditures for major software purchases and software developed for internal use are capitalized and amortized over a 2 to 12 year period on a straight-line basis. The Company’s policy provides for the capitalization of external direct costs of materials and services associated with developing or obtaining internal use computer software. In addition, the Company also capitalizes certain payroll and payroll-related costs for employees who are directly associated with internal use computer software projects. The amount of capitalizable payroll costs with respect to these employees is limited to the time directly spent on such projects. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred.
Computer Software to be Sold, Leased or Otherwise Marketed 
Computer Software to be Sold, Leased or Otherwise Marketed: Development costs of computer software to be sold, leased or otherwise marketed as an integral part of a product are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company’s products are released soon after technological feasibility has been established. Therefore, software development costs incurred subsequent to achievement of technological feasibility are usually not significant, and generally most software development costs have been expensed as incurred.
Impairment of Long-Lived Assets 
Impairment of Long-Lived Assets
The Company reviews the carrying value of long-lived assets or asset groups to be used in operations whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Factors that would necessitate an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or the business climate that could affect the value of the asset or a significant decline in the observable market value of an asset, among others. If such facts indicate a potential impairment, the Company would assess the recoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life of the primary asset in the asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable, the Company will estimate the fair value of the asset group using appropriate valuation methodologies, which would typically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the asset group’s carrying amount and its estimated fair value.
Goodwill and Indefinite-Lived Intangible Assets 
Goodwill and Indefinite-Lived Intangible Assets
The Company performs annual impairment tests on goodwill and intangible assets with indefinite lives in the fourth quarter of each fiscal year or when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit or an intangible asset with an indefinite life below its carrying value. Events or changes in circumstances that may trigger interim impairment reviews include significant changes in business climate, operating results, planned investments in the reporting unit, planned divestitures or an expectation that the carrying amount may not be recoverable, among other factors. The Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company determines that it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, the two-step impairment test is unnecessary. The two-step impairment test first requires the Company to estimate the fair value of its reporting units. If the carrying value of a reporting unit exceeds its fair value, the goodwill of that reporting unit is potentially impaired and the Company proceeds to step two of the impairment analysis. In step two of the analysis, the Company measures and records an impairment loss equal to the excess of the carrying value of the reporting unit's goodwill over its implied fair value, if any.
Indefinite-lived intangible assets primarily consist of acquired trade names and trademarks. The Company may first perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, the Company determines that it is more likely than not that the indefinite-lived intangible asset is not impaired, no quantitative fair value measurement is necessary. If a quantitative fair value measurement calculation is required for these intangible assets, the Company utilizes the relief-from-royalty method. This method assumes that trade names and trademarks have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method requires the Company to estimate the future revenue for the related brands, the appropriate royalty rate and the weighted average cost of capital.
Operating Leases 
Operating Leases
The Company leases retail store space, certain distribution and warehouse facilities, office space and other non-real estate assets under operating leases. Operating lease agreements may contain rent escalation clauses, renewal options, rent holidays or certain landlord incentives, including tenant improvement allowances. Rent expense for non-cancelable operating leases with scheduled rent increases or landlord incentives are recognized on a straight-line basis over the lease term, beginning with the effective lease commencement date, which is generally the date in which the Company takes possession of or controls the physical use of the property. Certain leases also provide for contingent rent, which is generally determined as a percent of sales in excess of specified levels. A contingent rent liability is recognized together with the corresponding rent expense when specified levels have been achieved or when the Company determines that achieving the specified levels during the period is probable.
Fair Value Measurements 
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 a three-level hierarchy established by the Financial Accounting Standards Board (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 or similar 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 a majority of 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.
Level 1 investments include U.S. Treasury securities. Assets and liabilities included within Level 2 include commercial paper, U.S. Agency securities, money market funds, time deposits, corporate debt securities and derivative contracts. Level 3 investments are valued using internally developed models with unobservable inputs and are an immaterial portion of our portfolio.
The Company’s fair value measurement process includes comparing fair values to another independent pricing vendor to ensure appropriate fair values are recorded.
Foreign Currency Translation and Foreign Currency Transactions 
Foreign Currency Translation and Foreign Currency Transactions
Adjustments resulting from translating foreign functional currency financial statements into U.S. Dollars are included in the foreign currency translation adjustment, a component of Accumulated other comprehensive income in Total shareholders’ equity.
The Company’s global subsidiaries have various assets and liabilities, primarily receivables and payables, which are denominated in currencies other than their functional currency. These balance sheet items are subject to re-measurement, the impact of which is recorded in Other (income) expense, net, within the Consolidated Statements of Income.
Accounting for Derivatives and Hedging Activities 
Accounting for Derivatives and Hedging Activities
The Company uses derivative financial instruments to reduce its exposure to changes in foreign currency exchange rates and interest rates. All derivatives are recorded at fair value on the Consolidated Balance Sheets and changes in the fair value of derivative financial instruments are either recognized in Accumulated other comprehensive income (a component of Total shareholders’ equity), Long-term debt or Net income depending on the nature of the underlying exposure, whether the derivative is formally designated as a hedge and, if designated, the extent to which the hedge is effective. The Company classifies the cash flows at settlement from derivatives in the same category as the cash flows from the related hedged items. For undesignated hedges and designated cash flow hedges, this is primarily within the Cash provided by operations component of the Consolidated Statements of Cash Flows. For designated net investment hedges, this is within the Cash used by investing activities component of the Consolidated Statements of Cash Flows. For the Company’s fair value hedges, which are interest rate swaps used to mitigate the change in fair value of its fixed-rate debt attributable to changes in interest rates, the related cash flows from periodic interest payments are reflected within the Cash provided by operations component of the Consolidated Statements of Cash Flows.
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 Consolidated Balance Sheets, recognizing future changes in the fair value in Other (income) expense, net.
Stock-Based Compensation 
Stock-Based Compensation
The Company estimates the fair value of options and stock appreciation rights granted under the NIKE, Inc. Stock Incentive Plan and employees’ purchase rights under the Employee Stock Purchase Plans (ESPPs) using the Black-Scholes option pricing model. The Company recognizes this fair value, net of estimated forfeitures, as Operating overhead expense in the Consolidated Statements of Income over the vesting period using the straight-line method.
Income Taxes 
Income Taxes
The Company accounts for income taxes using the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The Company records a valuation allowance to reduce deferred tax assets to the amount management believes is more likely than not to be realized. United States income taxes are provided currently on financial statement earnings of non-U.S. subsidiaries that are expected to be repatriated. The Company determines annually the amount of undistributed non-U.S. earnings to invest indefinitely in its non-U.S. operations.
The Company recognizes a tax benefit from uncertain tax positions in the financial statements only when it is more likely than not that the position will be sustained upon examination by relevant tax authorities. The Company recognizes interest and penalties related to income tax matters in Income tax expense.
Earnings Per Share 
Earnings Per Share
Basic earnings per common share is calculated by dividing Net income by the weighted average number of common shares outstanding during the year. Diluted earnings per common share is calculated by adjusting weighted average outstanding shares, assuming conversion of all potentially dilutive stock options and awards.
Management Estimates 
Management Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, including estimates relating to assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Recently Adopted and Recently Issued Accounting Standards 
Recently Adopted Accounting Standards
In April 2015, the 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 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 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 process of evaluating 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 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.
Property, Plant and Equipment (Tables)
Schedule of Property, Plant and Equipment
Property, plant and equipment, net included the following:
 
 
As of May 31,
(In millions)
 
2017
 
2016
Land and improvements
 
$
285

 
$
286

Buildings
 
1,564

 
1,467

Machinery, equipment and internal-use software
 
3,867

 
3,510

Leasehold improvements
 
1,484

 
1,338

Construction in process
 
758

 
437

Total property, plant and equipment, gross
 
7,958

 
7,038

Less accumulated depreciation
 
3,969

 
3,518

TOTAL PROPERTY, PLANT AND EQUIPMENT, NET
 
$
3,989

 
$
3,520

Accrued Liabilities (Tables)
Schedule of Accrued Liabilities
Accrued liabilities included the following:
 
 
As of May 31,
(In millions)
 
2017
 
2016
Compensation and benefits, excluding taxes
 
$
871

 
$
943

Endorsement compensation
 
396

 
393

Dividends payable
 
300

 
271

Import and logistics costs
 
257

 
198

Taxes other than income taxes payable
 
196

 
159

Fair value of derivatives
 
168

 
162

Advertising and marketing
 
125

 
119

Collateral received from counterparties to hedging instruments
 
—

 
105

Other(1)
 
698

 
687

TOTAL ACCRUED LIABILITIES
 
$
3,011

 
$
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 May 31, 2017 and 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 and liabilities measured at fair value on a recurring basis as of May 31, 2017 and 2016, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. Refer to Note 1 — Summary of Significant Accounting Policies for additional detail regarding the Company’s fair value measurement methodology.
 
 
As of May 31, 2017
(In millions)
 
Assets at Fair Value
 
Cash Equivalents
 
Short-term Investments
 
Other Long-term Assets
Cash
 
$
505

 
$
505

 
$
—

 
$
—

Level 1:
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
1,545

 
159

 
1,386

 
—

Level 2:
 
 
 
 
 
 
 
 
Time deposits
 
813

 
769

 
44

 
—

U.S. Agency securities
 
522

 
150

 
372

 
—

Commercial paper and bonds
 
820

 
251

 
569

 
—

Money market funds
 
1,974

 
1,974

 
—

 
—

Total level 2
 
4,129

 
3,144

 
985

 
—

Level 3:
 
 
 
 
 
 
 
 
Non-marketable preferred stock
 
10

 
—

 
—

 
10

TOTAL
 
$
6,189

 
$
3,808

 
$
2,371

 
$
10

 
 
 
As of May 31, 2016
(In millions)
 
Assets at Fair Value
 
Cash 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 May 31, 2017 and 2016, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.
 
 
As of May 31, 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)
 
$
231

 
$
216

 
$
15

 
$
246

 
$
166

 
$
80

Embedded derivatives
 
10

 
1

 
9

 
8

 
2

 
6

Interest rate swaps
 
—

 
—

 
—

 
—

 
—

 
—

TOTAL
 
$
241

 
$
217

 
$
24

 
$
254

 
$
168

 
$
86

(1)
If the foreign exchange derivative instruments had been netted in the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $187 million as of May 31, 2017. As of that date, no amount of cash collateral had been received or posted on the derivative asset and liability balances related to these foreign exchange derivative instruments.
 
 
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 in the 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 and liability balances related to its interest rate swap
The following table presents the fair values of derivative instruments included within the Consolidated Balance Sheets as of May 31, 2017 and 2016: 
 
 
Asset Derivatives
 
Liability Derivatives
(In millions)
 
Balance Sheet
Location
 
2017
 
2016
 
Balance Sheet 
Location
 
2017
 
2016
Derivatives formally designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
Prepaid expenses and other current assets
 
$
113

 
$
447

 
Accrued liabilities
 
$
59

 
$
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
 
13

 
90

 
Deferred income taxes and other liabilities
 
73

 
12

Interest rate swaps
 
Deferred income taxes and other assets
 
—

 
—

 
Deferred income taxes and other liabilities
 
—

 
—

Total derivatives formally designated as hedging instruments
 
 
 
126

 
544

 
 
 
132

 
95

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
Prepaid expenses and other current assets
 
103

 
40

 
Accrued liabilities
 
107

 
76

Embedded derivatives
 
Prepaid expenses and other current assets
 
1

 
2

 
Accrued liabilities
 
2

 
2

Foreign exchange forwards and options
 
Deferred income taxes and other assets
 
2

 
26

 
Deferred income taxes and other liabilities
 
7

 
19

Embedded derivatives
 
Deferred income taxes and other assets
 
9

 
5

 
Deferred income taxes and other liabilities
 
6

 
7

Total derivatives not designated as hedging instruments
 
 
 
115

 
73

 
 
 
122

 
104

TOTAL DERIVATIVES
 
 
 
$
241

 
$
617

 
 
 
$
254

 
$
199

Short-Term Borrowings and Credit Lines (Tables)
Schedule of Short-term Debt
Notes payable and interest-bearing accounts payable to Sojitz Corporation of America (“Sojitz America”) as of May 31, 2017 and 2016 are summarized below:
 
 
As of May 31,
 
 
 
2017
 
2016
(Dollars in millions)
 
Borrowings

 
Interest Rate
 
Borrowings

 
Interest Rate
Notes payable:
 
 
 
 
 
 
 
 
 
 
Commercial paper
 
$
325

 
0.86
%
 
 
$
—

 
0.00
%
 
U.S. operations
 
—

 
0.00
%
(1) 
 
—

 
0.00
%
(1) 
Non-U.S. operations
 
—

 
0.00
%
(1) 
 
1

 
13.00
%
(1) 
TOTAL NOTES PAYABLE
 
$
325

 
 
 
 
$
1

 
 
 
Interest-bearing accounts payable:
 
 
 
 
 
 
 
 
 
 
Sojitz America
 
$
51

 
1.78
%
 
 
$
39

 
1.27
%
 
(1)
Weighted average interest rate includes non-interest bearing overdrafts.
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: 
 
 
 
 
 
 
 
 
Book Value Outstanding
as of May 31,
Scheduled Maturity (Dollars and Yen in millions)
 
Original
Principal
 
Interest
Rate
 
Interest
Payments
 
2017
 
2016
Corporate Bond Payables:(1)(2)
 
 
 
 
 
 
 
 
 
 
May 1, 2023
 
$
500

 
2.25
%
 
Semi-Annually
 
497

 
497

November 1, 2026
 
$
1,000

 
2.38
%
 
Semi-Annually
 
993

 
—

May 1, 2043
 
$
500

 
3.63
%
 
Semi-Annually
 
495

 
494

November 1, 2045
 
$
1,000

 
3.88
%
 
Semi-Annually
 
981

 
981

November 1, 2046
 
$
500

 
3.38
%
 
Semi-Annually
 
490

 
—

Promissory Notes:
 
 
 
 
 
 
 
 
 
 
April 1, 2017
 
$
40

 
6.20
%
 
Monthly
 
—

 
38

Japanese Yen Notes:(3)
 
 
 
 
 
 
 
 
 
 
August 20, 2001 through November 20, 2020
 
¥
9,000

 
2.60
%
 
Quarterly
 
14

 
18

August 20, 2001 through November 20, 2020
 
¥
4,000

 
2.00
%
 
Quarterly
 
7

 
9

Total
 
 
 
 
 
 
 
3,477

 
2,037

Less current maturities
 
 

 
 

 
 
 
6

 
44

TOTAL LONG-TERM DEBT
 
 
 
 
 
 
 
$
3,471

 
$
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 up to three months prior to the scheduled maturity date for the bonds maturing in 2023 and 2026, and up to six months prior to the scheduled maturity date for the bonds maturing in 2043, 2045 and 2046, at a price equal to the greater of (i) 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. Within three and six months to scheduled maturity, 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)
NIKE Logistics YK assumed a total of ¥13.0 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.
Income Taxes (Tables)
Schedule of Income before Income Tax, Domestic and Foreign 
Income before income taxes is as follows:
 
 
Year Ended May 31,
(In millions)
 
2017
 
2016
 
2015
Income before income taxes:
 
 
 
 
 
 
United States
 
$
1,240

 
$
956

 
$
1,967

Foreign
 
3,646

 
3,667

 
2,238

TOTAL INCOME BEFORE INCOME TAXES
 
$
4,886

 
$
4,623

 
$
4,205

Schedule of Components of Income Tax Expense (Benefit) 
The provision for income taxes is as follows:
 
 
Year Ended May 31,
(In millions)
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
 
United States
 
 
 
 
 
 
Federal
 
$
398

 
$
304

 
$
596

State
 
82

 
71

 
80

Foreign
 
439

 
568

 
369

Total
 
919

 
943

 
1,045

Deferred:
 
 
 
 
 
 
United States
 
 
 
 
 
 
Federal
 
(279
)
 
(57
)
 
(66
)
State
 
(9
)
 
(16
)
 
(11
)
Foreign
 
15

 
(7
)
 
(36
)
Total
 
(273
)
 
(80
)
 
(113
)
TOTAL INCOME TAX EXPENSE
 
$
646

 
$
863

 
$
932


Schedule of Effective Income Tax Rate Reconciliation 
A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows:
 
 
Year Ended May 31,
  
 
2017
 
2016
 
2015
Federal income tax rate
 
35.0
 %
 
35.0
 %
 
35.0
 %
State taxes, net of federal benefit
 
1.1
 %
 
1.1
 %
 
0.9
 %
Foreign earnings
 
-20.7
 %
 
-18.2
 %
 
-14.8
 %
Resolution of a U.S. tax matter
 
-3.2
 %
 
—
 %
 
—
 %
Other, net
 
1.0
 %
 
0.8
 %
 
1.1
 %
EFFECTIVE INCOME TAX RATE
 
13.2
 %
 
18.7
 %
 
22.2
 %
Schedule of Deferred Tax Assets and Liabilities 
Deferred tax assets and liabilities comprise the following: 
 
 
As of May 31,
(In millions)
 
2017
 
2016
Deferred tax assets:
 
 
 
 
Allowance for doubtful accounts
 
$
4

 
$
5

Inventories
 
90

 
88

Sales return reserves
 
130

 
182

Deferred compensation
 
348

 
274

Stock-based compensation
 
225

 
206

Reserves and accrued liabilities
 
84

 
78

Net operating loss carry-forwards
 
84

 
44

Foreign tax credit carry-forwards
 
208

 
—

Undistributed earnings of foreign subsidiaries
 
173

 
179

Other
 
106

 
72

Total deferred tax assets
 
1,452

 
1,128

Valuation allowance
 
(82
)
 
(52
)
Total deferred tax assets after valuation allowance
 
1,370

 
1,076

Deferred tax liabilities:
 
 
 
 
Property, plant and equipment
 
(254
)
 
(268
)
Intangibles
 
(90
)
 
(92
)
Other
 
(2
)
 
(4
)
Total deferred tax liability
 
(346
)
 
(364
)
NET DEFERRED TAX ASSET
 
$
1,024

 
$
712

Unrecognized Tax Benefits Reconciliation 
The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits:
 
 
As of May 31,
(In millions)
 
2017
 
2016
 
2015
Unrecognized tax benefits, beginning of the period
 
$
506

 
$
438

 
$
506

Gross increases related to prior period tax positions
 
31

 
49

 
32

Gross decreases related to prior period tax positions
 
(163
)
 
(20
)
 
(123
)
Gross increases related to current period tax positions
 
115

 
81

 
82

Gross decreases related to current period tax positions
 
—

 
—

 
(9
)
Settlements
 
(12
)
 
(13
)
 
(27
)
Lapse of statute of limitations
 
(21
)
 
(17
)
 
(10
)
Changes due to currency translation
 
5

 
(12
)
 
(13
)
UNRECOGNIZED TAX BENEFITS, END OF THE PERIOD
 
$
461

 
$
506

 
$
438


Summary of Operating Loss Carryforwards 
The Company has available domestic and foreign loss carry-forwards of $266 million at May 31, 2017. Such losses will expire as follows: 
 
 
Year Ending May 31,
(In millions)
 
2018
 
2019
 
2020
 
2021
 
2022-2035
 
Indefinite

 
Total

Net operating losses
 
$
5

 
$
1

 
$
1

 
$
1

 
$
62

 
$
196

 
$
266

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: 
 
 
Year Ended May 31,
(In millions)
 
2017
 
2016
 
2015
Stock options(1)
 
$
145

 
$
171

 
$
136

ESPPs
 
36

 
31

 
24

Restricted stock
 
34

 
34

 
31

TOTAL STOCK-BASED COMPENSATION EXPENSE
 
$
215

 
$
236

 
$
191

(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 $14 million, $30 million and $19 million for the years ended May 31, 2017, 2016 and 2015, respectively.
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions 
The weighted average assumptions used to estimate these fair values are as follows:
 
 
Year Ended May 31,
  
 
2017
 
2016
 
2015
Dividend yield
 
1.1
%
 
1.0
%
 
1.2
%
Expected volatility
 
17.4
%
 
23.6
%
 
23.6
%
Weighted average expected life (in years)
 
6.0

 
5.8

 
5.8

Risk-free interest rate
 
1.3
%
 
1.7
%
 
1.7
%
Schedule of Share-based Compensation, Stock Options, Activity 
The following summarizes the stock option transactions under the plan discussed above: 
 
 
Shares(1)
 
Weighted Average
Option Price
  
 
(In millions)
 
  
Options outstanding May 31, 2014
 
127.1

 
$
19.64

Exercised
 
(27.2
)
 
15.39

Forfeited
 
(2.1
)
 
29.51

Granted
 
18.4

 
38.84

Options outstanding May 31, 2015
 
116.2

 
23.50

Exercised
 
(22.5
)
 
17.75

Forfeited
 
(2.3
)
 
39.96

Granted
 
20.6

 
56.41

Options outstanding May 31, 2016
 
112.0

 
30.38

Exercised
 
(17.1
)
 
20.42

Forfeited
 
(2.3
)
 
49.47

Granted
 
12.2

 
57.81

Options outstanding May 31, 2017
 
104.8

 
$
34.79

Options exercisable at May 31,
 
 
 
 
2015
 
68.6

 
$
18.26

2016
 
66.5

 
21.48

2017
 
67.9

 
26.03

(1)
Includes stock appreciation rights transactions.
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, to purchase an additional 30.5 million, 0.2 million and 1.7 million shares of common stock outstanding for the years ended May 31, 2017, 2016 and 2015, respectively, because the options were anti-dilutive.
 
 
Year Ended May 31,
(In millions, except per share data)
 
2017
 
2016
 
2015
Determination of shares:
 
 
 
 
 
 
Weighted average common shares outstanding
 
1,657.8

 
1,697.9

 
1,723.5

Assumed conversion of dilutive stock options and awards
 
34.2

 
44.6

 
45.3

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
 
1,692.0

 
1,742.5

 
1,768.8

 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
Basic
 
$
2.56

 
$
2.21

 
$
1.90

Diluted
 
$
2.51

 
$
2.16

 
$
1.85

Accumulated Other Comprehensive Income (Tables)
Schedule of Accumulated Other Comprehensive Income 
The changes in Accumulated other comprehensive income, net of tax, were as follows:
(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)
 
15

 
118

 
—

 
(14
)
 
119

Reclassifications to net income of previously deferred (gains) losses(3)
 
1

 
(633
)
 
—

 
(18
)
 
(650
)
Other comprehensive income (loss)
 
16

 
(515
)
 
—

 
(32
)
 
(531
)
Balance at May 31, 2017
 
$
(191
)
 
$
(52
)
 
$
115

 
$
(85
)
 
$
(213
)
(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, $3 million and $27 million, respectively.
(3)
Net of tax (benefit) expense of $0 million, $(3) million, $0 million, $(3) million and $(6) 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)
 
(178
)
 
(47
)
 
—

 
6

 
(219
)
Reclassifications to net income of previously deferred (gains) losses(3)
 
2

 
(710
)
 
—

 
(1
)
 
(709
)
Other comprehensive income (loss)
 
(176
)
 
(757
)
 
—

 
5

 
(928
)
Balance at May 31, 2016
 
$
(207
)
 
$
463

 
$
115

 
$
(53
)
 
$
318

(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, $28 million, $0 million, $(2) million and $26 million, respectively.
(3)
Net of tax (benefit) expense of $0 million, $7 million, $0 million, $2 million and $9 million, respectively.
Reclassification out of Accumulated Other Comprehensive Income 
The following table summarizes the reclassifications from Accumulated other comprehensive income to the 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
 
 
 
 
Year Ended May 31,
(In millions)
 
2017
 
2016
Gains (losses) on foreign currency translation adjustment
 
(1
)
 
(2
)
Other (income) expense, net
Total before tax
 
(1
)
 
(2
)
 
Tax (expense) benefit
 
—

 
—

 
Gain (loss) net of tax
 
(1
)
 
(2
)
 
Gains (losses) on cash flow hedges:
 
 
 
 
 
Foreign exchange forwards and options
 
96

 
(88
)
Revenues
Foreign exchange forwards and options
 
339

 
586

Cost of sales
Foreign exchange forwards and options
 
—

 
—

Total selling and administrative expense
Foreign exchange forwards and options
 
199

 
219

Other (income) expense, net
Interest rate swaps
 
(4
)
 
—

Interest expense (income), net
Total before tax
 
630

 
717

 
Tax (expense) benefit
 
3

 
(7
)
 
Gain (loss) net of tax
 
633

 
710

 
Gains (losses) on other
 
15

 
3

Other (income) expense, net
Total before tax
 
15

 
3

 
Tax (expense) benefit
 
3

 
(2
)
 
Gain (loss) net of tax
 
18

 
1

 
Total net gain (loss) reclassified for the period
 
$
650

 
$
709

 
Commitments and Contingencies (Tables)
Schedule of Future Minimum Lease Payments for Capital Leases 
Amounts of minimum future annual commitments under non-cancelable operating and capital leases are as follows (in millions):
 
 
2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
 
Total
Operating leases
 
$
537

 
$
509

 
$
438

 
$
399

 
$
350

 
$
1,672

 
$
3,905

Capital leases and other financing obligations(1)
 
$
34

 
$
32

 
$
28

 
$
25

 
$
26

 
$
225

 
$
370


(1)
Capital leases and other financing obligations include payments related to build-to-suit lease arrangements.
Schedule of Future Minimum Lease Payments for Operating Leases 
Amounts of minimum future annual commitments under non-cancelable operating and capital leases are as follows (in millions):
 
 
2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
 
Total
Operating leases
 
$
537

 
$
509

 
$
438

 
$
399

 
$
350

 
$
1,672

 
$
3,905

Capital leases and other financing obligations(1)
 
$
34

 
$
32

 
$
28

 
$
25

 
$
26

 
$
225

 
$
370


(1)
Capital leases and other financing obligations include payments related to build-to-suit lease arrangements.
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 May 31, 2017 and 2016, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.
 
 
As of May 31, 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)
 
$
231

 
$
216

 
$
15

 
$
246

 
$
166

 
$
80

Embedded derivatives
 
10

 
1

 
9

 
8

 
2

 
6

Interest rate swaps
 
—

 
—

 
—

 
—

 
—

 
—

TOTAL
 
$
241

 
$
217

 
$
24

 
$
254

 
$
168

 
$
86

(1)
If the foreign exchange derivative instruments had been netted in the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $187 million as of May 31, 2017. As of that date, no amount of cash collateral had been received or posted on the derivative asset and liability balances related to these foreign exchange derivative instruments.
 
 
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 in the 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 and liability balances related to its interest rate swap
The following table presents the fair values of derivative instruments included within the Consolidated Balance Sheets as of May 31, 2017 and 2016: 
 
 
Asset Derivatives
 
Liability Derivatives
(In millions)
 
Balance Sheet
Location
 
2017
 
2016
 
Balance Sheet 
Location
 
2017
 
2016
Derivatives formally designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
Prepaid expenses and other current assets
 
$
113

 
$
447

 
Accrued liabilities
 
$
59

 
$
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
 
13

 
90

 
Deferred income taxes and other liabilities
 
73

 
12

Interest rate swaps
 
Deferred income taxes and other assets
 
—

 
—

 
Deferred income taxes and other liabilities
 
—

 
—

Total derivatives formally designated as hedging instruments
 
 
 
126

 
544

 
 
 
132

 
95

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
Prepaid expenses and other current assets
 
103

 
40

 
Accrued liabilities
 
107

 
76

Embedded derivatives
 
Prepaid expenses and other current assets
 
1

 
2

 
Accrued liabilities
 
2

 
2

Foreign exchange forwards and options
 
Deferred income taxes and other assets
 
2

 
26

 
Deferred income taxes and other liabilities
 
7

 
19

Embedded derivatives
 
Deferred income taxes and other assets
 
9

 
5

 
Deferred income taxes and other liabilities
 
6

 
7

Total derivatives not designated as hedging instruments
 
 
 
115

 
73

 
 
 
122

 
104

TOTAL DERIVATIVES
 
 
 
$
241

 
$
617

 
 
 
$
254

 
$
199

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance 
The following tables present the amounts affecting the Consolidated Statements of Income for the years ended May 31, 2017, 2016 and 2015:

(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)
Year Ended May 31,
 
Location of Gain (Loss) Reclassified From 
Accumulated Other Comprehensive Income into Income
 
Year Ended May 31,
 
 
 
 
 
 
 
 
 
 
 
 
2017
 
2016
 
2015
 
 
2017
 
2016
 
2015
Derivatives designated as cash flow hedges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
$
72

 
$
90

 
$
(202
)
 
Revenues
 
$
96

 
$
(88
)
 
$
(95
)
Foreign exchange forwards and options
 
43

 
(57
)
 
1,109

 
Cost of sales
 
339

 
586

 
220

Foreign exchange forwards and options
 
(4
)
 
—

 
—

 
Total selling and administrative expense
 
—

 
—

 
—

Foreign exchange forwards and options
 
37

 
(25
)
 
497

 
Other (income) expense, net
 
199

 
219

 
136

Interest rate swaps
 
(54
)
 
(83
)
 
76

 
Interest expense (income), net
 
(4
)
 
—

 
—

Total designated cash flow hedges
 
94

 
(75
)
 
1,480

 
 
 
630

 
717

 
261

(1)
For the years ended May 31, 2017, 2016 and 2015, 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
 
 
Year Ended May 31,
 
(In millions)
 
2017
 
2016
 
2015
 
Derivatives designated as fair value hedges:
 
 
 
 
 
 
 
 
Interest rate swaps(1)
 
$
—

 
$
2

 
$
5

 
Interest expense (income), net
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
(44
)
 
(68
)
 
611

 
Other (income) expense, net
Embedded derivatives
 
$
(2
)
 
$
(2
)
 
$
(1
)
 
Other (income) expense, net
(1)
All interest rate swaps designated as fair value hedges meet the shortcut method requirements under the accounting standards for derivatives and hedging. 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.
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
0 Months Ended 12 Months Ended
Nov. 19, 2015
May 31, 2017
May 31, 2016
May 31, 2015
Dec. 23, 2015
Significant Accounting Policies [Line Items]
 
 
 
 
 
Stock split ratio for 100 percent of stock dividend declared
2 
 
 
 
 
Dividend payable as result of stock split (as a percent)
 
 
 
 
100.00% 
Reserve balances for sales discounts, returns and miscellaneous claims
 
$ 643 
$ 789 
 
 
Total advertising and promotion expenses
 
3,341 
3,278 
3,213 
 
Prepaid advertising and promotion expenses
 
558 
540 
 
 
Allowance for uncollectible accounts receivable
 
19 
43 
 
 
Increase in non-current assets
 
2,787 
2,422 
 
 
Minimum |
Building
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Property, plant and equipment, minimum useful life (in years)
 
2 years 
 
 
 
Minimum |
Leasehold improvements
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Property, plant and equipment, minimum useful life (in years)
 
2 years 
 
 
 
Minimum |
Machinery and Equipment
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Property, plant and equipment, minimum useful life (in years)
 
2 years 
 
 
 
Minimum |
Software and Software Development Costs
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Property, plant and equipment, minimum useful life (in years)
 
2 years 
 
 
 
Minimum |
Land Improvements [Member]
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Property, plant and equipment, minimum useful life (in years)
 
2 years 
 
 
 
Maximum |
Building
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Property, plant and equipment, minimum useful life (in years)
 
40 years 
 
 
 
Maximum |
Leasehold improvements
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Property, plant and equipment, minimum useful life (in years)
 
40 years 
 
 
 
Maximum |
Machinery and Equipment
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Property, plant and equipment, minimum useful life (in years)
 
15 years 
 
 
 
Maximum |
Software and Software Development Costs
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Property, plant and equipment, minimum useful life (in years)
 
12 years 
 
 
 
Maximum |
Land Improvements [Member]
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Property, plant and equipment, minimum useful life (in years)
 
40 years 
 
 
 
Class B Common Stock
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Stock split ratio for 100 percent of stock dividend declared
2 
 
 
 
 
Class A Convertible Common Stock
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Stock split ratio for 100 percent of stock dividend declared
2 
 
 
 
 
Prepaid expenses and other current assets
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Prepaid advertising and promotion expenses
 
311 
272 
 
 
Deferred income taxes and other assets
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Prepaid advertising and promotion expenses
 
247 
268 
 
 
Accounting Standards Update 2015-03 |
Deferred income taxes and other assets
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Debt issuance costs
 
 
(17)
 
 
Accounting Standards Update 2015-03 |
Long-term debt
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Debt issuance costs
 
$ 17 
 
 
 
Inventories - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2017
May 31, 2016
Inventory Disclosure [Abstract]
 
 
Inventory balances, were substantially all finished goods
$ 5,055 
$ 4,838 
Property Plant and Equipment (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2017
May 31, 2016
Property, Plant and Equipment [Line Items]
 
 
Total property, plant and equipment, gross
$ 7,958 
$ 7,038 
Less accumulated depreciation
3,969 
3,518 
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET
3,989 
3,520 
Land and Land Improvements [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, plant and equipment, gross
285 
286 
Buildings
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, plant and equipment, gross
1,564 
1,467 
Machinery, equipment and internal-use software
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, plant and equipment, gross
3,867 
3,510 
Leasehold improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, plant and equipment, gross
1,484 
1,338 
Construction in process
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, plant and equipment, gross
$ 758 
$ 437 
Identifiable Intangible Assets and Goodwill - Additional Information (Detail) (USD $)
May 31, 2017
May 31, 2016
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
Indefinite-lived trademarks
$ 281,000,000 
$ 281,000,000 
Goodwill
139,000,000 
131,000,000 
Goodwill, impaired, accumulated impairment loss
0 
0 
Converse
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
Goodwill
65,000,000 
65,000,000 
Acquired Trademarks and Other Intangibles
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
Finite-lived intangible assets, gross
19,000,000 
16,000,000 
Finite-lived intangible assets, accumulated amortization
$ 17,000,000 
$ 16,000,000 
Accrued Liabilities (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2017
May 31, 2016
Accrued Liabilities, Current [Abstract]
 
 
Compensation and benefits, excluding taxes
$ 871 
$ 943 
Endorsement compensation
396 
393 
Dividends payable
300 
271 
Import and logistics costs
257 
198 
Accrual for Taxes Other than Income Taxes, Current
196 
159 
Taxes other than income taxes payable
168 
162 
Advertising and marketing
125 
119 
Collateral received from counterparties to hedging instruments
0 
105 
Other
698 
687 
TOTAL ACCRUED LIABILITIES
$ 3,011 
$ 3,037 
Maximum percent of accrued liabilities to be included in Other
5.00% 
5.00% 
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
May 31, 2017
May 31, 2016
Assets, Fair Value Disclosure [Abstract]
 
 
Cash
$ 505 
$ 774 
Assets at Fair Value
6,189 
5,467 
Cash Equivalents
3,808 
3,138 
Short-term Investments
2,371 
2,319 
Other Long-term Assets
10 
10 
Fair Value, Inputs, Level 1 |
U.S. Treasury securities
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
1,545 
1,265 
Cash Equivalents
159 
100 
Short-term Investments
1,386 
1,165 
Other Long-term Assets
0 
0 
Fair Value, Inputs, Level 2
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
4,129 
3,418 
Cash Equivalents
3,144 
2,264 
Short-term Investments
985 
1,154 
Other Long-term Assets
0 
0 
Fair Value, Inputs, Level 2 |
Time deposits
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
813 
831 
Cash Equivalents
769 
827 
Short-term Investments
44 
4 
Other Long-term Assets
0 
0 
Fair Value, Inputs, Level 2 |
U.S. Agency securities
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
522 
679 
Cash Equivalents
150 
0 
Short-term Investments
372 
679 
Other Long-term Assets
0 
0 
Fair Value, Inputs, Level 2 |
Commercial paper and bonds
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
820 
733 
Cash Equivalents
251 
262 
Short-term Investments
569 
471 
Other Long-term Assets
0 
0 
Fair Value, Inputs, Level 2 |
Money market funds
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
1,974 
1,175 
Cash Equivalents
1,974 
1,175 
Short-term Investments
0 
0 
Other Long-term Assets
0 
0 
Fair Value, Inputs, Level 3 |
Non-marketable preferred stock
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
10 
10 
Cash Equivalents
0 
0 
Short-term Investments
0 
0 
Other Long-term Assets
$ 10 
$ 10 
Fair Value Measurements - Derivative Assets and Liabilities at Fair Value (Detail) (USD $)
12 Months Ended
May 31, 2017
May 31, 2016
Derivatives, Fair Value [Line Items]
 
 
Accrued Liabilities
$ 168,000,000 
$ 162,000,000 
Collateral received from counterparties to hedging instruments
0 
105,000,000 
Fair value transfers between fair value hierarchy levels
0 
0 
Fair Value, Measurements, Recurring
 
 
Derivatives, Fair Value [Line Items]
 
 
Reduction In derivative asset if netted
187,000,000 
136,000,000 
Fair Value, Measurements, Recurring |
Foreign exchange forwards and options
 
 
Derivatives, Fair Value [Line Items]
 
 
Reduction in derivative liabilities if netted
187,000,000 
136,000,000 
Fair Value, Inputs, Level 2 |
Fair Value, Measurements, Recurring
 
 
Derivatives, Fair Value [Line Items]
 
 
Assets at Fair Value
241,000,000 
617,000,000 
Other Current Assets
217,000,000 
496,000,000 
Other Long-term Assets
24,000,000 
121,000,000 
Liabilities at Fair Value
254,000,000 
199,000,000 
Accrued Liabilities
168,000,000 
162,000,000 
Other Long-term Liabilities
86,000,000 
37,000,000 
Fair Value, Inputs, Level 2 |
Fair Value, Measurements, Recurring |
Foreign exchange forwards and options
 
 
Derivatives, Fair Value [Line Items]
 
 
Assets at Fair Value
231,000,000 
603,000,000 
Other Current Assets
216,000,000 
487,000,000 
Other Long-term Assets
15,000,000 
116,000,000 
Liabilities at Fair Value
246,000,000 
145,000,000 
Accrued Liabilities
166,000,000 
115,000,000 
Other Long-term Liabilities
80,000,000 
30,000,000 
Fair Value, Inputs, Level 2 |
Fair Value, Measurements, Recurring |
Embedded derivatives
 
 
Derivatives, Fair Value [Line Items]
 
 
Assets at Fair Value
10,000,000 
7,000,000 
Other Current Assets
1,000,000 
2,000,000 
Other Long-term Assets
9,000,000 
5,000,000 
Liabilities at Fair Value
8,000,000 
9,000,000 
Accrued Liabilities
2,000,000 
2,000,000 
Other Long-term Liabilities
6,000,000 
7,000,000 
Fair Value, Inputs, Level 2 |
Fair Value, Measurements, Recurring |
Interest rate swaps
 
 
Derivatives, Fair Value [Line Items]
 
 
Assets at Fair Value
0 
7,000,000 
Other Current Assets
0 
7,000,000 
Other Long-term Assets
0 
0 
Liabilities at Fair Value
0 
45,000,000 
Accrued Liabilities
0 
45,000,000 
Other Long-term Liabilities
0 
0 
Cash and Cash Equivalents
 
 
Derivatives, Fair Value [Line Items]
 
 
Collateral received from counterparties to hedging instruments
0 
 
Cash and Cash Equivalents |
Foreign exchange forwards and options
 
 
Derivatives, Fair Value [Line Items]
 
 
Collateral received from counterparties to hedging instruments
0 
105,000,000 
Derivative liability, fair value of collateral
0 
0 
Cash and Cash Equivalents |
Interest rate swaps
 
 
Derivatives, Fair Value [Line Items]
 
 
Collateral received from counterparties to hedging instruments
 
0 
Derivative liability, fair value of collateral
 
$ 0 
Fair Value Measurements - Additional Information (Detail) (USD $)
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
Fair value transfers between fair value hierarchy levels
$ 0 
$ 0 
 
Short-term Investments
 
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
Available-for-sale securities with maturity dates within one year from purchase date
2,125,000,000 
 
 
Available-for-sale securities with maturity dates over one year and less than five years from purchase date
246,000,000 
 
 
Interest (income) expense, net
 
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
Interest income related to cash and equivalents and short-term investments
$ 27,000,000 
$ 12,000,000 
$ 6,000,000 
Short-Term Borrowings and Credit Lines - Notes Payable to Banks and Interest Bearing Accounts Payable to Sojitz Corporation of America (Detail) (USD $)
May 31, 2017
May 31, 2016
Notes payable:
 
 
TOTAL NOTES PAYABLE
$ 325,000,000 
$ 1,000,000 
Sojitz America
 
 
Interest-bearing accounts payable:
 
 
Sojitz America
51,000,000 
39,000,000 
Sojitz America - interest rate
1.78% 
1.27% 
Commercial paper
 
 
Notes payable:
 
 
TOTAL NOTES PAYABLE
325,000,000 
0 
Notes payable - interest rate
0.86% 
0.00% 
Notes Payable
 
 
Notes payable:
 
 
TOTAL NOTES PAYABLE
325,000,000 
1,000,000 
Notes Payable |
UNITED STATES
 
 
Notes payable:
 
 
TOTAL NOTES PAYABLE
0 
0 
Notes payable - interest rate
0.00% 
0.00% 
Notes Payable |
Non-U.S. operations
 
 
Notes payable:
 
 
TOTAL NOTES PAYABLE
$ 0 
$ 1,000,000 
Notes payable - interest rate
0.00% 
13.00% 
Short Term Borrowings and Credit Lines - Additional Information (Detail) (USD $)
12 Months Ended
May 31, 2017
May 31, 2016
Aug. 28, 2015
Short-term Debt [Line Items]
 
 
 
Notes payable
$ 325,000,000 
$ 1,000,000 
 
Commercial paper
 
 
 
Short-term Debt [Line Items]
 
 
 
Notes payable
325,000,000 
0 
 
Borrowing capacity
2,000,000,000 
 
 
Notes payable - interest rate
0.86% 
0.00% 
 
Revolving Credit Facility
 
 
 
Short-term Debt [Line Items]
 
 
 
Borrowing capacity
 
 
2,000,000,000 
Line of credit facility extension period after maturity
1 year 
 
 
Revolving credit facility, fee
0.045% 
 
 
Line of credit facility, amount outstanding
$ 0 
$ 0 
 
Sojitz America |
Interest Bearing Accounts Payable
 
 
 
Short-term Debt [Line Items]
 
 
 
Accounts payable, due date period (in days)
60 days 
 
 
60-day London Interbank Offered Rate (LIBOR) |
Interest Bearing Accounts Payable
 
 
 
Short-term Debt [Line Items]
 
 
 
Basis spread on variable rate, above LIBOR
0.75% 
 
 
London Interbank Offered Rate (LIBOR) |
Revolving Credit Facility
 
 
 
Short-term Debt [Line Items]
 
 
 
Basis spread on variable rate, above LIBOR
0.455% 
 
 
Long-Term Debt - Net of Unamortized Premiums and Discounts and Swap Fair Value Adjustments (Detail)
12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
May 31, 2017
USD ($)
May 31, 2016
USD ($)
May 31, 2017
Corporate Bond Payables
2.25% Corporate bond, payable May 1, 2023
USD ($)
May 31, 2016
Corporate Bond Payables
2.25% Corporate bond, payable May 1, 2023
USD ($)
May 31, 2017
Corporate Bond Payables
2.38% Corporate bond, payable November 1, 2026
USD ($)
May 31, 2016
Corporate Bond Payables
2.38% Corporate bond, payable November 1, 2026
USD ($)
May 31, 2017
Corporate Bond Payables
3.63% Corporate bond, payable May 1, 2043
USD ($)
May 31, 2016
Corporate Bond Payables
3.63% Corporate bond, payable May 1, 2043
USD ($)
May 31, 2017
Corporate Bond Payables
3.88% Corporate bond, payable November 1, 2045
USD ($)
May 31, 2016
Corporate Bond Payables
3.88% Corporate bond, payable November 1, 2045
USD ($)
May 31, 2017
Corporate Bond Payables
3.38% Corporate bond, payable November 1, 2046
USD ($)
May 31, 2016
Corporate Bond Payables
3.38% Corporate bond, payable November 1, 2046
USD ($)
May 31, 2017
Notes Payable
6.20% Promissory note, payable April 1, 2017
USD ($)
May 31, 2016
Notes Payable
6.20% Promissory note, payable April 1, 2017
USD ($)
May 31, 2017
Notes Payable
2.60% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
USD ($)
May 31, 2017
Notes Payable
2.60% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
JPY (¥)
May 31, 2016
Notes Payable
2.60% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
USD ($)
May 31, 2017
Notes Payable
2.00% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
USD ($)
May 31, 2017
Notes Payable
2.00% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
JPY (¥)
May 31, 2016
Notes Payable
2.00% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
USD ($)
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt, 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 
 
Long-term debt, interest rate
 
 
2.25% 
 
2.375% 
 
3.625% 
 
3.875% 
 
3.375% 
 
6.20% 
 
2.60% 
2.60% 
 
2.00% 
2.00% 
 
Long-term debt, interest payment
 
 
Semi-Annually 
 
Semi-Annually 
 
Semi-Annually 
 
Semi-Annually 
 
Semi-Annually 
 
Monthly 
 
Quarterly 
Quarterly 
 
Quarterly 
Quarterly 
 
Long Term Debt
3,477,000,000 
2,037,000,000 
497,000,000 
497,000,000 
993,000,000 
0 
495,000,000 
494,000,000 
981,000,000 
981,000,000 
490,000,000 
0 
0 
38,000,000 
14,000,000 
 
18,000,000 
7,000,000 
 
9,000,000 
Less current maturities
6,000,000 
44,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL LONG-TERM DEBT
$ 3,471,000,000 
$ 1,993,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-Term Debt - Narrative (Detail)
12 Months Ended
May 31, 2017
2.6% and 2.0% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
JPY (¥)
May 31, 2017
Corporate Bond Payables
May 31, 2017
Corporate Bond Payables
2.25% Corporate bond, payable May 1, 2023
USD ($)
May 31, 2017
Corporate Bond Payables
3.63% Corporate bond, payable May 1, 2043
USD ($)
May 31, 2017
Corporate Bond Payables
3.88% Corporate bond, payable November 1, 2045
USD ($)
May 31, 2017
Notes Payable
6.20% Promissory note, payable April 1, 2017
USD ($)
May 31, 2017
Notes Payable
2.60% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
JPY (¥)
May 31, 2017
Notes Payable
2.00% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
JPY (¥)
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
Long-term debt, original principal
¥ 13,000,000,000 
 
$ 500,000,000 
$ 500,000,000 
$ 1,000,000,000 
$ 40,000,000 
¥ 9,000,000,000 
¥ 4,000,000,000 
Percent of aggregate principal amount of the notes to be redeemed
 
100.00% 
 
 
 
 
 
 
Long-Term Debt - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2017
May 31, 2016
Debt Instrument [Line Items]
 
 
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
3 
 
Maturity of long-term debt in year five
0 
 
Fair Value, Inputs, Level 2
 
 
Debt Instrument [Line Items]
 
 
Fair value of long term debt
$ 3,401 
$ 2,125 
Income Taxes - Income before Income Taxes (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Income before income taxes:
 
 
 
United States
$ 1,240 
$ 956 
$ 1,967 
Foreign
3,646 
3,667 
2,238 
Income before income taxes
$ 4,886 
$ 4,623 
$ 4,205 
Income Taxes - Provision for Income Taxes (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Current:
 
 
 
Federal
$ 398 
$ 304 
$ 596 
State
82 
71 
80 
Foreign
439 
568 
369 
Total
919 
943 
1,045 
Deferred:
 
 
 
Federal
(279)
(57)
(66)
State
(9)
(16)
(11)
Foreign
15 
(7)
(36)
Total
(273)
(80)
(113)
Income tax expense
$ 646 
$ 863 
$ 932 
Income Taxes - Reconciliation from United States Statutory Federal Income Tax Rate to Effective Income Tax Rate (Detail)
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Income Tax Disclosure [Abstract]
 
 
 
Federal income tax rate
35.00% 
35.00% 
35.00% 
State taxes, net of federal benefit
1.10% 
1.10% 
0.90% 
Foreign earnings
(20.70%)
(18.20%)
(14.80%)
Resolution of a U.S. tax matter
(3.20%)
0.00% 
0.00% 
Other, net
1.00% 
0.80% 
1.10% 
EFFECTIVE INCOME TAX RATE
13.20% 
18.70% 
22.20% 
Income Taxes - Deferred Tax Assets and Liabilities (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2017
May 31, 2016
Deferred tax assets:
 
 
Allowance for doubtful accounts
$ 4 
$ 5 
Inventories
90 
88 
Sales return reserves
130 
182 
Deferred compensation
348 
274 
Stock-based compensation
225 
206 
Reserves and accrued liabilities
84 
78 
Net operating loss carry-forwards
84 
44 
Foreign tax credit carry-forwards
208 
0 
Undistributed earnings of foreign subsidiaries
173 
179 
Other
106 
72 
Total deferred tax assets
1,452 
1,128 
Valuation allowance
(82)
(52)
Total deferred tax assets after valuation allowance
1,370 
1,076 
Deferred tax liabilities:
 
 
Property, plant and equipment
(254)
(268)
Intangibles
(90)
(92)
Other
(2)
(4)
Total deferred tax liability
(346)
(364)
NET DEFERRED TAX ASSET
$ 1,024 
$ 712 
Income Taxes - Reconciliation of Changes in Gross Balance of Unrecognized Tax Benefits (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
 
Unrecognized tax benefits, as of the beginning of the period
$ 506 
$ 438 
$ 506 
Gross increases related to prior period tax positions
31 
49 
32 
Gross decreases related to prior period tax positions
(163)
(20)
(123)
Gross increases related to current period tax positions
115 
81 
82 
Gross decreases related to current period tax positions
0 
0 
(9)
Settlements
(12)
(13)
(27)
Lapse of statute of limitations
(21)
(17)
(10)
Increase due to currency translation
5 
 
 
Decrease due to currency translation
 
(12)
(13)
UNRECOGNIZED TAX BENEFITS, AS OF THE END OF THE PERIOD
$ 461 
$ 506 
$ 438 
Income Taxes - Additional Information (Detail) (USD $)
12 Months Ended 12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
May 31, 2014
May 31, 2016
Tax Year 2012
Domestic Tax Authority
Aug. 31, 2016
Tax Year 2012
Domestic Tax Authority
Income Tax Contingency [Line Items]
 
 
 
 
 
 
Effective tax rate, change from prior period
(5.50%)
(3.50%)
 
 
 
 
Total gross unrecognized tax benefits, excluding related interest and penalties
$ 461,000,000 
$ 506,000,000 
$ 438,000,000 
$ 506,000,000 
 
 
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
230,000,000 
 
 
 
 
 
Increase (decrease) in liability for payment of interest and penalties
(38,000,000)
45,000,000 
(3,000,000)
 
 
 
Accrued interest and penalties related to uncertain tax positions (excluding federal benefit)
171,000,000 
209,000,000 
 
 
 
 
Proposed increase in tax related to the foreign tax credit matter
 
 
 
 
254,000,000 
 
Adjustment from settlement with taxing authority
 
 
 
 
 
0 
Estimated decrease in total gross unrecognized tax benefits as a result of resolutions of global tax examinations and expiration of applicable statutes of limitations
69,000,000 
 
 
 
 
 
Reinvestment of the cumulative undistributed earnings of certain foreign subsidiaries
12,200,000,000 
 
 
 
 
 
Unrecognized deferred tax liability associated with the indefinitely reinvested undistributed earnings
4,100,000,000 
 
 
 
 
 
Tax holiday, expiration period
2021 
 
 
 
 
 
Decrease in income tax expense related to tax holiday
187,000,000 
173,000,000 
174,000,000 
 
 
 
Decrease in income tax expense related to tax holiday per diluted share, (in dollars per share)
$ 0.11 
$ 0.10 
$ 0.10 
 
 
 
Valuation allowance increase (decrease) related to tax benefits of certain subsidiaries with operating losses
30,000,000 
43,000,000 
0 
 
 
 
Available domestic and foreign loss carry-forwards
266,000,000 
 
 
 
 
 
Foreign tax credit carry-forwards
208,000,000 
0 
 
 
 
 
Income tax benefits attributable to employee stock-based compensation
$ 177,000,000 
$ 281,000,000 
$ 224,000,000 
 
 
 
Income Taxes - Available Domestic and Foreign Loss Carryforwards (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2017
Income Tax Disclosure [Abstract]
 
2018
$ 5 
2019
1 
2020
1 
2021
1 
2022-2035
62 
Indefinite
196 
Net Operating Losses
$ 266 
Redeemable Preferred Stock - Additional Information (Detail) (Non-marketable preferred stock, USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
May 31, 2017
Non-marketable preferred stock
 
Temporary Equity [Line Items]
 
Redeemable preferred stock, par value
$ 1 
Redeemable preferred stock, redeemable value (in dollars)
$ 0.3 
Redeemable preferred stock, dividends payable annually per share
$ 0.1 
Common Stock and Stock-Based Compensation - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Class A Convertible Common Stock
 
 
 
Common Stock and Share Based Compensation [Line Items]
 
 
 
Common stock, no par value
$ 0 
 
 
Common stock, number of shares authorized (in shares)
400,000,000 
 
 
Common stock conversion
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
 
 
 
Common Stock and Share Based Compensation [Line Items]
 
 
 
Common stock, no par value
$ 0 
 
 
Common stock, number of shares authorized (in shares)
2,400,000,000 
 
 
Stock Incentive Plan |
Class B Common Stock
 
 
 
Common Stock and Share Based Compensation [Line Items]
 
 
 
Shares available for grant (in shares)
718,000,000 
 
 
Stock options vesting period (in years)
4 years 
 
 
Stock options expiration from the date of grant (in years)
10 years 
 
 
Minimum term of market traded options for estimates of expected volatility (in years)
1 year 
 
 
Weighted average remaining contractual life for options outstanding (in years)
5 years 8 months 12 days 
 
 
Weighted average remaining contractual life for options exercisable (in years)
4 years 6 months 
 
 
Aggregate intrinsic value for options outstanding
$ 2,027 
 
 
Aggregate intrinsic value for options exercisable
1,846 
 
 
Total intrinsic value of options exercised
594 
946 
795 
Stock options |
Stock Incentive Plan
 
 
 
Common Stock and Share Based Compensation [Line Items]
 
 
 
Unrecognized compensation costs from stock options, net of estimated forfeitures
201 
 
 
Unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized as operating overhead expense over a weighted average period (in years)
1 year 10 months 24 days 
 
 
Stock options |
Stock Incentive Plan |
Class B Common Stock
 
 
 
Common Stock and Share Based Compensation [Line Items]
 
 
 
Weighted average fair value per share of the options granted (in dollars per share)
$ 9.38 
$ 12.66 
$ 8.48 
Employee Stock |
Class B Common Stock
 
 
 
Common Stock and Share Based Compensation [Line Items]
 
 
 
Employee stock purchase plans, payroll deductions
10.00% 
 
 
Employee stock purchase plan offering period
6 months 
 
 
Shares purchased, price as percentage of lower of the fair market value
85.00% 
 
 
Purchase of shares by employee (in shares)
3,100,000 
2,500,000 
2,700,000 
Restricted stock |
Stock Incentive Plan
 
 
 
Common Stock and Share Based Compensation [Line Items]
 
 
 
Unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized as operating overhead expense over a weighted average period (in years)
2 years 4 months 24 days 
 
 
Unrecognized compensation costs from restricted stock, net of estimated forfeitures
43 
 
 
Restricted stock |
Stock Incentive Plan |
Class B Common Stock
 
 
 
Common Stock and Share Based Compensation [Line Items]
 
 
 
Restricted and unrestricted stock granted to key employees under 1990 Plan, number of shares (in shares)
400,000 
1,000,000 
500,000 
Restricted stock granted to key employees under 1990 Plan, weighted average values per share (in dollars per shares)
$ 57.59 
$ 54.87 
$ 39.69 
Restricted stock vested, fair value
$ 60 
$ 49 
$ 20 
Common Stock and Stock-Based Compensation - Total Stock-Based Compensation Expense (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Stock-based compensation expense
$ 215 
$ 236 
$ 191 
Accelerated stock option expense
14 
30 
19 
Class B Common Stock
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Stock-based compensation expense
215 
236 
191 
Class B Common Stock |
Stock options
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Stock-based compensation expense
145 
171 
136 
Class B Common Stock |
ESPPs
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Stock-based compensation expense
36 
31 
24 
Class B Common Stock |
Restricted stock
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Stock-based compensation expense
$ 34 
$ 34 
$ 31 
Common Stock and Stock-Based Compensation - Weighted Average Assumptions Used to Estimate Fair Values (Detail) (Stock options)
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Stock options
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Dividend yield
1.10% 
1.00% 
1.20% 
Expected volatility
17.40% 
23.60% 
23.60% 
Weighted average expected life
6 years 
5 years 9 months 18 days 
5 years 9 months 18 days 
Risk-free interest rate
1.30% 
1.70% 
1.70% 
Common Stock and Stock-Based Compensation - Stock Option Transactions Under Plan (Detail) (Stock Incentive Plan, USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Stock Incentive Plan
 
 
 
Options Outstanding - Shares
 
 
 
Beginning Balance (in shares)
112.0 
116.2 
127.1 
Exercised (in shares)
(17.1)
(22.5)
(27.2)
Forfeited (in shares)
(2.3)
(2.3)
(2.1)
Granted (in shares)
12.2 
20.6 
18.4 
Ending Balance (in shares)
104.8 
112.0 
116.2 
Options exercisable (in shares)
67.9 
66.5 
68.6 
Options Outstanding - Weighted-Average Option Price
 
 
 
Beginning Balance (in dollars per share)
$ 30.38 
$ 23.50 
$ 19.64 
Exercised (in dollars per share)
$ 20.42 
$ 17.75 
$ 15.39 
Forfeited (in dollars per share)
$ 49.47 
$ 39.96 
$ 29.51 
Granted (in dollars per share)
$ 57.81 
$ 56.41 
$ 38.84 
Ending Balance (in dollars per share)
$ 34.79 
$ 30.38 
$ 23.50 
Options exercisable (in dollars per share)
$ 26.03 
$ 21.48 
$ 18.26 
Earnings Per Share - Additional Information (Detail) (Stock options)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Stock options
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive options not included in the computation of diluted earnings per share
30.5 
0.2 
1.7 
Earnings Per Share - Reconciliation from Basic Earnings Per Share to Diluted Earnings Per Share (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Determination of shares:
 
 
 
Weighted average common shares outstanding
1,657.8 
1,697.9 
1,723.5 
Assumed conversion of dilutive stock options and awards
34.2 
44.6 
45.3 
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
1,692.0 
1,742.5 
1,768.8 
Earnings per common share:
 
 
 
Basic (in dollars per share)
$ 2.56 
$ 2.21 
$ 1.90 
Diluted (in dollars per share)
$ 2.51 
$ 2.16 
$ 1.85 
Benefit Plans - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Deferred income taxes and other long-term liabilities
 
 
 
Defined Contribution Plan Disclosure [Line Items]
 
 
 
Deferred compensation plan liabilities
$ 569 
$ 475 
 
Liability related to the unfunded pension plan
107 
93 
 
General and Administrative Expense
 
 
 
Defined Contribution Plan Disclosure [Line Items]
 
 
 
401(k) employee savings plans, expenses
75 
72 
58 
General and Administrative Expense |
Profit Sharing Plan
 
 
 
Defined Contribution Plan Disclosure [Line Items]
 
 
 
Contribution and cash award expenses included in selling and administrative expenses
68 
64 
58 
General and Administrative Expense |
Long Term Incentive Plan
 
 
 
Defined Contribution Plan Disclosure [Line Items]
 
 
 
Contribution and cash award expenses included in selling and administrative expenses
$ 21 
$ 85 
$ 68 
Accumulated Other Comprehensive Income - Changes in AOCI (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
Beginning balance
$ 12,258 
$ 12,707 
$ 10,824 
Other comprehensive gains (losses) before reclassifications, net of tax
119 
(219)
 
Reclassifications to net income of previously deferred (gains) losses, net of tax
(650)
(709)
 
Total other comprehensive income (loss), net of tax
(531)
(928)
1,161 
Ending balance
12,407 
12,258 
12,707 
Other comprehensive income, before reclassification, tax benefit (expense)
27 
26 
 
Reclassification from AOCI, current period, tax expense (benefit)
(6)
9 
 
Foreign Currency Translation Adjustment
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
Beginning balance
(207)
(31)
 
Other comprehensive gains (losses) before reclassifications, net of tax
15 
(178)
 
Reclassifications to net income of previously deferred (gains) losses, net of tax
1 
2 
 
Total other comprehensive income (loss), net of tax
16 
(176)
 
Ending balance
(191)
(207)
 
Other comprehensive income, before reclassification, tax benefit (expense)
0 
0 
 
Reclassification from AOCI, current period, tax expense (benefit)
0 
0 
 
Cash Flow Hedges
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
Beginning balance
463 
1,220 
 
Other comprehensive gains (losses) before reclassifications, net of tax
118 
(47)
 
Reclassifications to net income of previously deferred (gains) losses, net of tax
(633)
(710)
 
Total other comprehensive income (loss), net of tax
(515)
(757)
 
Ending balance
(52)
463 
 
Other comprehensive income, before reclassification, tax benefit (expense)
24 
28 
 
Reclassification from AOCI, current period, tax expense (benefit)
(3)
7 
 
Net Investment Hedges
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
Beginning balance
115 
115 
 
Other comprehensive gains (losses) before reclassifications, net of tax
0 
0 
 
Reclassifications to net income of previously deferred (gains) losses, net of tax
0 
0 
 
Total other comprehensive income (loss), net of tax
0 
0 
 
Ending balance
115 
115 
 
Other comprehensive income, before reclassification, tax benefit (expense)
0 
0 
 
Reclassification from AOCI, current period, tax expense (benefit)
0 
0 
 
Other
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
Beginning balance
(53)
(58)
 
Other comprehensive gains (losses) before reclassifications, net of tax
(14)
6 
 
Reclassifications to net income of previously deferred (gains) losses, net of tax
(18)
(1)
 
Total other comprehensive income (loss), net of tax
(32)
5 
 
Ending balance
(85)
(53)
 
Other comprehensive income, before reclassification, tax benefit (expense)
3 
(2)
 
Reclassification from AOCI, current period, tax expense (benefit)
(3)
2 
 
Total
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
Ending balance
$ (213)
$ 318 
$ 1,246 
Accumulated Other Comprehensive Income - Reclassification out of AOCI (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
Other expense (income), net
$ 196 
$ 140 
$ 58 
Interest expense (income), net
(59)
(19)
(28)
Revenues
34,350 
32,376 
30,601 
Cost of sales
(19,038)
(17,405)
(16,534)
Selling and administrative expense
(10,563)
(10,469)
(9,892)
Income before income taxes
4,886 
4,623 
4,205 
Tax benefit (expense)
(646)
(863)
(932)
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
 
 
 
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
Gain (loss), net of tax
650 
709 
 
Gains (losses) on foreign currency translation adjustment |
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
 
 
 
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
Other expense (income), net
(1)
(2)
 
Income before income taxes
(1)
(2)
 
Tax benefit (expense)
0 
0 
 
Gain (loss), net of tax
(1)
(2)
 
Gain (losses) on cash flow hedges |
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
 
 
 
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
Income before income taxes
630 
717 
 
Tax benefit (expense)
3 
(7)
 
Gain (loss), net of tax
633 
710 
 
Gain (losses) on cash flow hedges |
Foreign exchange forwards and options |
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
 
 
 
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
Other expense (income), net
199 
219 
 
Revenues
96 
(88)
 
Cost of sales
339 
586 
 
Selling and administrative expense
0 
0 
 
Gain (losses) on cash flow hedges |
Interest rate swaps |
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
 
 
 
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
Interest expense (income), net
(4)
0 
 
Other |
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
 
 
 
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
Other expense (income), net
15 
3 
 
Income before income taxes
15 
3 
 
Tax benefit (expense)
3 
(2)
 
Gain (loss), net of tax
$ 18 
$ 1 
 
Commitments and Contingencies - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Commitments and Contingencies Disclosure [Abstract]
 
 
 
Expiration date of operating lease, lower limit
1 year 
 
 
Expiration date of operating lease, upper limit
17 years 
 
 
Rent expense
$ 731 
$ 661 
$ 594 
Minimum rental commitments, operating leases, 2018
537 
 
 
Minimum rental commitments, operating leases, 2019
509 
 
 
Minimum rental commitments, operating leases, 2020
438 
 
 
Minimum rental commitments, operating leases, 2021
399 
 
 
Minimum rental commitments, operating leases, 2022
350 
 
 
Minimum rental commitments, operating leases, thereafter
1,672 
 
 
Operating leases
3,905 
 
 
Minimum commitments, capital leases, 2018
34 
 
 
Minimum commitments, capital leases, 2019
32 
 
 
Minimum commitments, capital leases, 2020
28 
 
 
Minimum commitments, capital leases, 2021
25 
 
 
Minimum commitments, capital leases, 2022
26 
 
 
Minimum commitments, capital leases, thereafter
225 
 
 
Capital leases and other financing obligations(1)
370 
 
 
Letters of credit outstanding
$ 152 
$ 157 
 
Risk Management and Derivatives - Additional Information (Detail) (USD $)
12 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
May 31, 2017
Not designated as derivative instrument
May 31, 2017
Embedded derivatives
May 31, 2017
Minimum
May 31, 2017
Derivatives designated as cash flow hedges
May 31, 2017
Derivatives designated as cash flow hedges
Minimum
May 31, 2017
Derivatives designated as cash flow hedges
Maximum
Oct. 21, 2016
Derivatives designated as cash flow hedges
Designated as Hedging Instrument
Interest rate swaps
Oct. 29, 2015
Derivatives designated as cash flow hedges
Designated as Hedging Instrument
Interest rate swaps
May 31, 2017
Derivatives designated as cash flow hedges
Designated as Hedging Instrument
Interest rate swaps
Nov. 30, 2015
Derivatives designated as cash flow hedges
Designated as Hedging Instrument
Interest rate swaps
May 31, 2017
Derivatives designated as fair value hedges
Interest rate swaps
May 31, 2017
Derivatives designated as net investment hedges
Foreign Exchange Contract
May 31, 2017
Cash and Cash Equivalents
May 31, 2016
Cash and Cash Equivalents
Interest rate swaps
May 31, 2017
Cash and Cash Equivalents
Foreign Exchange Contract
May 31, 2016
Cash and Cash Equivalents
Foreign Exchange Contract
Derivative Instruments and Hedging Activities Disclosures [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 
$ 265,000,000 
 
$ 11,100,000,000 
 
 
 
 
$ 1,500,000,000 
 
$ 0 
 
 
 
 
 
Derivative, notional amount, terminated
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000,000 
 
 
 
 
 
 
Payments for derivative instrument
 
 
 
 
 
 
 
 
 
92,000,000 
34,000,000 
 
 
 
 
 
 
 
 
Ineffectiveness for cash flow hedges
 
0 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative assets (liabilities), at fair value, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 
 
 
 
 
Additional period for forecasted transaction expected to occur
2 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum term over which the Company is hedging exposures to the variability of cash flows for its forecasted and recorded transactions (in months)
24 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value hedge ineffectiveness
 
0 
0 
 
 
 
 
 
 
 
 
 
 
0 
 
 
 
 
 
Ineffectiveness on net investment hedges
0 
0 
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
59,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Collateral received from counterparties to hedging instruments
$ 0 
$ 105,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 0 
$ 0 
$ 0 
$ 105,000,000 
Risk Management and Derivatives - FV of Derivative Instruments Included within Consolidated Balance Sheet (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2017
May 31, 2016
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
$ 241 
$ 617 
Liability Derivatives
254 
199 
Designated as Hedging Instrument
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
126 
544 
Liability Derivatives
132 
95 
Designated as Hedging Instrument |
Foreign Exchange Contract |
Prepaid expenses and other current assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
113 
447 
Designated as Hedging Instrument |
Foreign Exchange Contract |
Deferred income taxes and other assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
13 
90 
Designated as Hedging Instrument |
Foreign Exchange Contract |
Accrued liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
59 
38 
Designated as Hedging Instrument |
Foreign Exchange Contract |
Deferred income taxes and other liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
73 
12 
Designated as Hedging Instrument |
Interest rate swaps |
Prepaid expenses and other current assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
0 
7 
Designated as Hedging Instrument |
Interest rate swaps |
Deferred income taxes and other assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
0 
0 
Designated as Hedging Instrument |
Interest rate swaps |
Accrued liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
0 
45 
Designated as Hedging Instrument |
Interest rate swaps |
Deferred income taxes and other liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
0 
0 
Derivatives not designated as hedging instruments
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
115 
73 
Liability Derivatives
122 
104 
Derivatives not designated as hedging instruments |
Foreign Exchange Contract |
Prepaid expenses and other current assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
103 
40 
Derivatives not designated as hedging instruments |
Foreign Exchange Contract |
Deferred income taxes and other assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
2 
26 
Derivatives not designated as hedging instruments |
Foreign Exchange Contract |
Accrued liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
107 
76 
Derivatives not designated as hedging instruments |
Foreign Exchange Contract |
Deferred income taxes and other liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
7 
19 
Derivatives not designated as hedging instruments |
Embedded derivatives |
Prepaid expenses and other current assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
1 
2 
Derivatives not designated as hedging instruments |
Embedded derivatives |
Deferred income taxes and other assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
9 
5 
Derivatives not designated as hedging instruments |
Embedded derivatives |
Accrued liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
2 
2 
Derivatives not designated as hedging instruments |
Embedded derivatives |
Deferred income taxes and other liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
$ 6 
$ 7 
Risk Management and Derivatives - Amounts Affecting Consolidated Statements of Income (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Foreign Exchange Contract |
Other (income) expense, net |
Derivatives not designated as hedging instruments
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Income on Derivatives
$ (44)
$ (68)
$ 611 
Embedded derivatives |
Other (income) expense, net |
Derivatives not designated as hedging instruments
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Income on Derivatives
(2)
(2)
(1)
Derivatives designated as cash flow hedges
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
94 
(75)
1,480 
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
630 
717 
261 
Derivatives designated as cash flow hedges |
Foreign Exchange Contract |
Revenue
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
72 
90 
(202)
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
96 
(88)
(95)
Derivatives designated as cash flow hedges |
Foreign Exchange Contract |
Cost of sales
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
43 
(57)
1,109 
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
339 
586 
220 
Derivatives designated as cash flow hedges |
Foreign Exchange Contract |
Selling and administrative expense
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
(4)
0 
0 
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
0 
0 
0 
Derivatives designated as cash flow hedges |
Foreign Exchange Contract |
Other (income) expense, net
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
37 
(25)
497 
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
199 
219 
136 
Derivatives designated as cash flow hedges |
Interest rate swaps |
Interest (income) expense, net
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
(54)
(83)
76 
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
(4)
0 
0 
Derivatives designated as fair value hedges |
Interest rate swaps |
Interest (income) expense, net
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Income on Derivatives
$ 0 
$ 2 
$ 5 
Operating Segments and Related Information - Information by Operating Segments (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
$ 34,350 
$ 32,376 
$ 30,601 
Earnings Before Interest and Taxes
4,945 
4,642 
4,233 
Interest expense (income), net
59 
19 
28 
Income before income taxes
4,886 
4,623 
4,205 
Additions to Long-lived Assets
1,201 
1,191 
1,003 
Depreciation
706 
649 
606 
Corporate
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
75 
(86)
(82)
Earnings Before Interest and Taxes
(724)
(1,173)
(1,097)
Additions to Long-lived Assets
387 
312 
144 
Depreciation
91 
84 
75 
NIKE Brand
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
32,233 
30,507 
28,701 
Earnings Before Interest and Taxes
5,192 
5,328 
4,813 
Additions to Long-lived Assets
784 
840 
790 
Depreciation
587 
538 
513 
NIKE Brand |
Global Brand Divisions
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
73 
73 
115 
Earnings Before Interest and Taxes
(2,677)
(2,596)
(2,267)
Additions to Long-lived Assets
278 
258 
225 
Depreciation
233 
230 
210 
NIKE Brand |
North America
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
15,216 
14,764 
13,740 
Earnings Before Interest and Taxes
3,875 
3,763 
3,645 
Additions to Long-lived Assets
223 
242 
208 
Depreciation
140 
133 
121 
NIKE Brand |
Western Europe
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
6,211 
5,884 
5,705 
Earnings Before Interest and Taxes
1,203 
1,434 
1,275 
Additions to Long-lived Assets
162 
215 
216 
Depreciation
91 
72 
75 
NIKE Brand |
Central & Eastern Europe
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
1,487 
1,431 
1,421 
Earnings Before Interest and Taxes
244 
289 
249 
Additions to Long-lived Assets
10 
17 
20 
Depreciation
13 
12 
12 
NIKE Brand |
Greater China
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
4,237 
3,785 
3,067 
Earnings Before Interest and Taxes
1,507 
1,372 
993 
Additions to Long-lived Assets
51 
44 
69 
Depreciation
54 
48 
46 
NIKE Brand |
Japan
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
1,014 
869 
755 
Earnings Before Interest and Taxes
224 
174 
100 
Additions to Long-lived Assets
21 
13 
15 
Depreciation
18 
18 
22 
NIKE Brand |
Emerging Markets
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
3,995 
3,701 
3,898 
Earnings Before Interest and Taxes
816 
892 
818 
Additions to Long-lived Assets
39 
51 
37 
Depreciation
38 
25 
27 
Converse
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
2,042 
1,955 
1,982 
Earnings Before Interest and Taxes
477 
487 
517 
Additions to Long-lived Assets
30 
39 
69 
Depreciation
$ 28 
$ 27 
$ 18 
Operating Segments and Related Information - Revenues by Major Product Line (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Revenue from External Customer [Line Items]
 
 
 
Revenues
$ 34,350 
$ 32,376 
$ 30,601 
Footwear
 
 
 
Revenue from External Customer [Line Items]
 
 
 
Revenues
21,081 
19,871 
18,318 
Apparel
 
 
 
Revenue from External Customer [Line Items]
 
 
 
Revenues
9,654 
9,067 
8,637 
Equipment
 
 
 
Revenue from External Customer [Line Items]
 
 
 
Revenues
1,425 
1,496 
1,631 
Other
 
 
 
Revenue from External Customer [Line Items]
 
 
 
Revenues
$ 2,190 
$ 1,942 
$ 2,015 
Operating Segments and Related Information - Accounts Receivable Net Inventories and Property Plant and Equipment Net by Operating Segments (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2017
May 31, 2016
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
$ 3,677 
$ 3,241 
Inventories
5,055 
4,838 
Property, Plant and Equipment, net
3,989 
3,520 
Corporate
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
11 
22 
Inventories
(1)
(4)
Property, Plant and Equipment, net
1,238 
937 
NIKE Brand
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
3,369 
2,949 
Inventories
4,770 
4,536 
Property, Plant and Equipment, net
2,626 
2,458 
NIKE Brand |
Global Brand Divisions
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
86 
76 
Inventories
68 
35 
Property, Plant and Equipment, net
533 
511 
NIKE Brand |
North America
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
1,798 
1,689 
Inventories
2,218 
2,363 
Property, Plant and Equipment, net
819 
742 
NIKE Brand |
Western Europe
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
410 
378 
Inventories
1,035 
929 
Property, Plant and Equipment, net
658 
589 
NIKE Brand |
Central & Eastern Europe
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
228 
194 
Inventories
251 
210 
Property, Plant and Equipment, net
48 
50 
NIKE Brand |
Greater China
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
102 
74 
Inventories
463 
375 
Property, Plant and Equipment, net
225 
234 
NIKE Brand |
Japan
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
151 
129 
Inventories
127 
146 
Property, Plant and Equipment, net
223 
223 
NIKE Brand |
Emerging Markets
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
594 
409 
Inventories
608 
478 
Property, Plant and Equipment, net
120 
109 
Converse
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
297 
270 
Inventories
286 
306 
Property, Plant and Equipment, net
$ 125 
$ 125 
Operating Segments and Related Information - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
customer
May 31, 2016
customer
May 31, 2015
customer
Sales Revenue, Net
 
 
 
Regional Reporting Disclosure [Line Items]
 
 
 
Number of customers exceeding risk threshold
0 
0 
0 
Concentration risk percentage
10.00% 
 
 
UNITED STATES
 
 
 
Regional Reporting Disclosure [Line Items]
 
 
 
Revenue
$ 15,778 
$ 15,304 
$ 14,180 
Long-lived assets attributable to operations (Domestic)
2,629 
2,241 
 
Japan
 
 
 
Regional Reporting Disclosure [Line Items]
 
 
 
Long-lived assets attributable to operations (Domestic)
223 
223 
 
BELGIUM
 
 
 
Regional Reporting Disclosure [Line Items]
 
 
 
Long-lived assets attributable to operations (Domestic)
390 
348 
 
CHINA
 
 
 
Regional Reporting Disclosure [Line Items]
 
 
 
Long-lived assets attributable to operations (Domestic)
$ 232 
$ 240 
 
Schedule II - Valuation and Qualifying Accounts (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2017
May 31, 2016
May 31, 2015
Allowance for Sales Returns
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Balance at Beginning of Period
$ 444 
$ 379 
$ 308 
Charged to Costs and Expenses
696 
788 
726 
Charged to Other Accounts
3 
(15)
(35)
Write-Offs, Net
(800)
(708)
(620)
Balance at End of Period
343 
444 
379 
Allowance for Doubtful Accounts
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Balance at Beginning of Period
43 
78 
78 
Charged to Costs and Expenses
16 
52 
35 
Charged to Other Accounts
0 
(2)
(15)
Write-Offs, Net
(40)
(85)
(20)
Balance at End of Period
$ 19 
$ 43 
$ 78