NIKE INC, 10-K filed on 7/23/2015
Annual Report
Document and Entity Information (USD $)
12 Months Ended
May 31, 2015
Jul. 17, 2015
Nov. 30, 2014
Document Information [Line Items]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
May 31, 2015 
 
 
Document Fiscal Year Focus
2015 
 
 
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
Yes 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Public Float (In Dollars)
 
 
$ 72,392,307,327 
Entity Common Stock Shares Outstanding (In Shares)
 
855,351,589 
 
Class A Convertible Common Stock
 
 
 
Document Information [Line Items]
 
 
 
Entity Public Float (In Dollars)
 
 
4,394,312,083 
Entity Common Stock Shares Outstanding (In Shares)
 
177,457,876 
 
Class B Common Stock
 
 
 
Document Information [Line Items]
 
 
 
Entity Public Float (In Dollars)
 
 
$ 67,997,995,244 
Entity Common Stock Shares Outstanding (In Shares)
 
677,893,713 
 
Consolidated Statements Of Income (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Revenues
$ 30,601 
$ 27,799 
$ 25,313 
Cost of sales
16,534 
15,353 
14,279 
Gross profit
14,067 
12,446 
11,034 
Demand creation expense
3,213 
3,031 
2,745 
Operating overhead expense
6,679 
5,735 
5,051 
Total selling and administrative expense
9,892 
8,766 
7,796 
Interest expense (income), net (Notes 6, 7 and 8)
28 
33 
(3)
Other (income) expense, net (Note 17)
(58)
103 
(15)
Income before income taxes
4,205 
3,544 
3,256 
Income tax expense (Note 9)
932 
851 
805 
NET INCOME FROM CONTINUING OPERATIONS
3,273 
2,693 
2,451 
NET INCOME FROM DISCONTINUED OPERATIONS
0 
0 
21 
NET INCOME
$ 3,273 
$ 2,693 
$ 2,472 
Earnings per common share from continuing operations:
 
 
 
Basic (Notes 1 and 12) (in dollars per share)
$ 3.80 
$ 3.05 
$ 2.74 
Diluted (Notes 1 and 12) (in dollars per share)
$ 3.70 
$ 2.97 
$ 2.68 
Earnings per common share from discontinued operations:
 
 
 
Basic (Notes 1 and 12) (in dollars per share)
$ 0.00 
$ 0.00 
$ 0.02 
Diluted (Notes 1 and 12) (in dollars per share)
$ 0.00 
$ 0.00 
$ 0.02 
Dividends declared per common share (in dollars per share)
$ 1.08 
$ 0.93 
$ 0.81 
Consolidated Statements of Comprehensive Income (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Net income
$ 3,273 
$ 2,693 
$ 2,472 
Other comprehensive income (loss), net of tax:
 
 
 
Change in net foreign currency translation adjustment
(20)1
(32)1
38 1
Change in net gains (losses) on cash flow hedges
1,188 2
(161)2
12 2
Change in net gains (losses) on other
7 3
(4)3
8 3
Change in release of cumulative translation loss related to Umbro
0 4
0 4
83 4
Total other comprehensive income (loss), net of tax
1,161 
(189)
125 
TOTAL COMPREHENSIVE INCOME
$ 4,434 
$ 2,504 
$ 2,597 
Consolidated Statements of Comprehensive Income (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Foreign currency translation and other, tax benefit (expense)
$ 0 
$ 0 
$ (13)
Net gain (loss) on cash flow hedges, tax benefit (expense)
(31)
18 
(22)
Net gain (loss) on other, tax benefit (expense)
0 
0 
1 
Release of cumulative translation loss related to Umbro, tax expense
$ 0 
$ 0 
$ 47 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
May 31, 2015
May 31, 2014
Current assets:
 
 
Cash and equivalents (Note 6)
$ 3,852 
$ 2,220 
Short-term investments (Note 6)
2,072 
2,922 
Accounts receivable, net (Note 1)
3,358 
3,434 
Inventories (Notes 1 and 2)
4,337 
3,947 
Deferred income taxes (Note 9)
389 
355 
Prepaid expenses and other current assets (Notes 6 and 17)
1,968 
818 
Total current assets
15,976 
13,696 
Property, plant and equipment, net (Note 3)
3,011 
2,834 
Identifiable intangible assets, net (Note 4)
281 
282 
Goodwill (Note 4)
131 
131 
Deferred income taxes and other assets (Notes 6, 9 and 17)
2,201 
1,651 
TOTAL ASSETS
21,600 
18,594 
Current liabilities:
 
 
Current portion of long-term debt (Note 8)
107 
7 
Notes payable (Note 7)
74 
167 
Accounts payable (Note 7)
2,131 
1,930 
Accrued liabilities (Notes 5, 6 and 17)
3,951 
2,491 
Income taxes payable (Note 9)
71 
432 
Total current liabilities
6,334 
5,027 
Long-term debt (Note 8)
1,079 
1,199 
Deferred income taxes and other liabilities (Notes 6, 9, 13 and 17)
1,480 
1,544 
Commitments and contingencies (Note 16)
   
   
Redeemable preferred stock (Note 10)
0 
0 
Shareholders’ equity:
 
 
Capital in excess of stated value
6,773 
5,865 
Accumulated other comprehensive income (Note 14)
1,246 
85 
Retained earnings
4,685 
4,871 
Total shareholders’ equity
12,707 
10,824 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
21,600 
18,594 
Class A Convertible Common Stock
 
 
Shareholders’ equity:
 
 
Common stock
0 
0 
Class B Common Stock
 
 
Shareholders’ equity:
 
 
Common stock
$ 3 
$ 3 
Consolidated Balance Sheets (Parenthetical)
In Millions, unless otherwise specified
May 31, 2015
May 31, 2014
Class A Convertible Common Stock
 
 
Common Stock, shares outstanding
178 
178 
Class B Common Stock
 
 
Common Stock, shares outstanding
679 
692 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Cash provided by operations:
 
 
 
Net income
$ 3,273 
$ 2,693 
$ 2,472 
Income charges (credits) not affecting cash:
 
 
 
Depreciation
606 
518 
438 
Deferred income taxes
(113)
(11)
20 
Stock-based compensation (Note 11)
191 
177 
174 
Amortization and other
43 
68 
64 
Net foreign currency adjustments
424 
56 
66 
Net gain on divestitures
0 
0 
(124)
Changes in certain working capital components and other assets and liabilities:
 
 
 
(Increase) decrease in accounts receivable
(216)
(298)
142 
(Increase) in inventories
(621)
(505)
(219)
(Increase) in prepaid expenses and other current assets
(144)
(210)
(28)
Increase in accounts payable, accrued liabilities and income taxes payable
1,237 
525 
27 
Cash provided by operations
4,680 
3,013 
3,032 
Cash used by investing activities:
 
 
 
Purchases of short-term investments
(4,936)
(5,386)
(4,133)
Maturities of short-term investments
3,655 
3,932 
1,663 
Sales of short-term investments
2,216 
1,126 
1,330 
Investments in reverse repurchase agreements
(150)
0 
0 
Additions to property, plant and equipment
(963)
(880)
(598)
Disposals of property, plant and equipment
3 
3 
14 
Proceeds from divestitures
0 
0 
786 
(Increase) in other assets, net of other liabilities
0 
(2)
(2)
Cash used by investing activities
(175)
(1,207)
(940)
Cash used by financing activities:
 
 
 
Net proceeds from long-term debt issuance
0 
0 
986 
Long-term debt payments, including current portion
(7)
(60)
(49)
(Decrease) increase in notes payable
(63)
75 
10 
Payments on capital lease obligations
(19)
(17)
0 
Proceeds from exercise of stock options and other stock issuances
514 
383 
313 
Excess tax benefits from share-based payment arrangements
218 
132 
72 
Repurchase of common stock
(2,534)
(2,628)
(1,674)
Dividends — common and preferred
(899)
(799)
(703)
Cash used by financing activities
(2,790)
(2,914)
(1,045)
Effect of exchange rate changes on cash and equivalents
(83)
(9)
36 
Net increase (decrease) in cash and equivalents
1,632 
(1,117)
1,083 
Cash and equivalents, beginning of year
2,220 
3,337 
2,254 
CASH AND EQUIVALENTS, END OF YEAR
3,852 
2,220 
3,337 
Cash paid during the year for:
 
 
 
Interest, net of capitalized interest
53 
53 
20 
Income taxes
1,262 
856 
702 
Non-cash additions to property, plant and equipment
206 
167 
137 
Dividends declared and not paid
$ 240 
$ 209 
$ 188 
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, 2012
$ 10,319 
$ 4,641 
$ 149 
$ 5,526 
 
$ 0 
 
$ 3 
Beginning Balance (in shares) at May. 31, 2012
 
 
 
 
 
180 
 
736 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Stock options exercised (in shares)
 
 
 
 
 
 
 
10.0 
Stock options exercised
322 
322 
 
 
 
 
 
 
Conversion to Class B Common Stock (in shares)
 
 
 
 
 
(2)
 
 
Conversion of Stock, Shares Issued
 
 
 
 
 
 
 
2 
Conversion to Class B Common Stock
0 
 
 
 
 
 
 
 
Stock Repurchased During Period, Shares
 
 
 
 
 
 
 
(34)
Stock Repurchased During Period, Value
(1,657)
(10)
 
(1,647)
 
 
 
 
Dividends on Common stock
(727)
 
 
(727)
 
 
 
 
Issuance of shares to employees (in shares)
 
 
 
 
 
 
 
2 
Issuance of shares to employees
65 
65 
 
 
 
 
 
 
Stock-based compensation (Note 11)
174 
174 
 
 
 
 
 
 
Forfeiture of shares from employees (in shares)
 
 
 
 
 
 
 
0 
Forfeiture of shares from employees
(12)
(8)
 
(4)
 
 
 
 
Net income
2,472 
 
 
2,472 
 
 
 
 
Other comprehensive income (loss)
125 
 
125 
 
 
 
 
 
Ending Balance at May. 31, 2013
11,081 
5,184 
274 
5,620 
 
0 
 
3 
Ending Balance (in shares) at May. 31, 2013
 
 
 
 
 
178 
 
716 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Stock options exercised (in shares)
 
 
 
 
 
 
 
11.0 
Stock options exercised
445 
445 
 
 
 
 
 
 
Stock Repurchased During Period, Shares
 
 
 
 
 
 
 
(37)
Stock Repurchased During Period, Value
(2,628)
(11)
 
(2,617)
 
 
 
 
Dividends on Common stock
(821)
 
 
(821)
 
 
 
 
Issuance of shares to employees (in shares)
 
 
 
 
 
 
 
2 
Issuance of shares to employees
78 
78 
 
 
 
 
 
 
Stock-based compensation (Note 11)
177 
177 
 
 
 
 
 
 
Forfeiture of shares from employees (in shares)
 
 
 
 
 
 
 
0 
Forfeiture of shares from employees
(12)
(8)
 
(4)
 
 
 
 
Net income
2,693 
 
 
2,693 
 
 
 
 
Other comprehensive income (loss)
(189)
 
(189)
 
 
 
 
 
Ending Balance at May. 31, 2014
10,824 
5,865 
85 
4,871 
 
0 
 
3 
Ending Balance (in shares) at May. 31, 2014
 
 
 
 
178 
178 
692 
692 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Stock options exercised (in shares)
 
 
 
 
 
 
 
14.0 
Stock options exercised
639 
639 
 
 
 
 
 
 
Stock Repurchased During Period, Shares
 
 
 
 
 
 
 
(29)
Stock Repurchased During Period, Value
(2,534)
(9)
 
(2,525)
 
 
 
 
Dividends on Common stock
(931)
 
 
(931)
 
 
 
 
Issuance of shares to employees (in shares)
 
 
 
 
 
 
 
2 
Issuance of shares to employees
92 
92 
 
 
 
 
 
 
Stock-based compensation (Note 11)
191 
191 
 
 
 
 
 
 
Forfeiture of shares from employees (in shares)
 
 
 
 
 
 
 
0 
Forfeiture of shares from employees
(8)
(5)
 
(3)
 
 
 
 
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
 
 
 
 
178 
178 
679 
679 
Consolidated Statements of Shareholders' Equity (Parenthetical)
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Statement of Stockholders' Equity [Abstract]
 
 
 
Dividends declared per common share (in dollars per share)
$ 1.08 
$ 0.93 
$ 0.81 
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 of Jordan Brand products are included within the NIKE Brand Basketball category. The Hurley brand is focused on surf and action sports and youth lifestyle footwear, apparel and accessories, using the Hurley trademark. Sales of Hurley brand products are included within the NIKE Brand Action Sports category. 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.
The Company completed the sale of Cole Haan during the third quarter ended February 28, 2013 and completed the sale of Umbro during the second quarter ended November 30, 2012. As a result, the Company reports the operating results of Cole Haan and Umbro in the Net income from discontinued operations line in the Consolidated Statements of Income for all applicable periods presented. There were no assets or liabilities of discontinued operations as of May 31, 2015 and May 31, 2014 (refer to Note 15 — Discontinued Operations). Unless otherwise indicated, the disclosures accompanying the Consolidated Financial Statements reflect the Company’s continuing operations.
On November 15, 2012, the Company announced a two-for-one split of both NIKE Class A and Class B Common shares. The stock split was a 100 percent stock dividend payable on December 24, 2012 to shareholders of record at the close of business on December 10, 2012. Common stock began trading at the split-adjusted price on December 26, 2012. All share numbers and per share amounts presented reflect the stock split.
Reclassifications
Certain prior year amounts have been reclassified to conform to fiscal 2015 presentation.
Revisions
During the third quarter of fiscal 2015, management determined it had incorrectly reflected unrealized gains and losses from re-measurement of non-functional currency intercompany balances between certain of its foreign wholly-owned subsidiaries in its Consolidated Statements of Cash Flows. These unrealized gains and losses should have been classified as non-cash reconciling items from Net income to Cash provided by operations, but were instead reported on the Effect of exchange rate changes on cash and equivalents line of the Consolidated Statements of Cash Flows. This resulted in an understatement of Cash provided by operations reported on the Consolidated Statements of Cash Flows for certain prior periods; there was no impact for any period to Net increase (decrease) in cash and equivalents reported on the Consolidated Statements of Cash Flows, or Cash and equivalents reported on the Consolidated Statements of Cash Flows and Balance Sheets. The Company assessed the materiality of the misclassifications on prior periods' financial statements in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99, Materiality, codified in Accounting Standards Codification (“ASC”) 250, Presentation of Financial Statements, and concluded that these misstatements were not material to any prior annual or interim periods. Accordingly, in accordance with ASC 250 (SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements), the amounts have been revised in the applicable Consolidated Statements of Cash Flows. For the three and six months ended August 31, 2014 and November 30, 2014 of fiscal 2015, the revisions increased Cash provided by operations and decreased Effect of exchange rate changes on cash and equivalents by $95 million and $312 million, respectively. For the fiscal years ended May 31, 2014 and 2013, the revisions increased Cash provided by operations and decreased Effect of exchange rate changes on cash and equivalents by $10 million and $64 million, respectively. These amounts have been reflected in the applicable tables below. As part of the revision to the Consolidated Statements of Cash Flows, the Company has updated its presentation to separately report Net foreign currency adjustments, which was previously included within Amortization and other.
The following are selected line items from the Company's Unaudited Condensed Consolidated Statements of Cash Flows illustrating the effect of these corrections:
 
 
NIKE, Inc. Unaudited Condensed Consolidated Statements of Cash Flows
 
 
Three Months Ended August 31, 2014
 
Six Months Ended November 30, 2014
(In millions)
 
As Reported
 
Adjustment
 
As Revised
 
As Reported
 
Adjustment
 
As Revised
Cash provided by operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
962

 
$
—

 
$
962

 
$
1,617

 
$
—

 
$
1,617

Income charges (credits) not affecting cash:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization and other
 
(34
)
 
42

 
8

 
(54
)
 
69

 
15

Net foreign currency adjustments
 
—

 
53

 
53

 
—

 
243

 
243

Cash provided by operations
 
588

 
95

 
683

 
1,235

 
312

 
1,547

Effect of exchange rate changes on cash and equivalents
 
97

 
(95
)
 
2

 
288

 
(312
)
 
(24
)
Net increase (decrease) in cash and equivalents
 
83

 
—

 
83

 
53

 
—

 
53

Cash and equivalents, beginning of period
 
2,220

 
—

 
2,220

 
2,220

 
—

 
2,220

CASH AND EQUIVALENTS, END OF PERIOD
 
$
2,303

 
$
—

 
$
2,303

 
$
2,273

 
$
—

 
$
2,273

The following are selected line items from the Company's Consolidated Statements of Cash Flows illustrating the effect of these corrections on the amounts previously reported in the Company's fiscal 2014 Annual Report on Form 10-K:
 
 
NIKE, Inc. Consolidated Statements of Cash Flows
 
 
Year Ended May 31, 2014
 
Year Ended May 31, 2013
(In millions)
 
As Reported
 
Adjustment
 
As Revised
 
As Reported
 
Adjustment
 
As Revised
Cash provided by operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
2,693

 
$
—

 
$
2,693

 
$
2,472

 
$
—

 
$
2,472

Income charges (credits) not affecting cash:
 

 

 

 

 

 

Amortization and other
 
114

 
(46
)
 
68

 
66

 
(2
)
 
64

Net foreign currency adjustments
 
—

 
56

 
56

 
—

 
66

 
66

Cash provided by operations
 
3,003

 
10

 
3,013

 
2,968

 
64

 
3,032

Effect of exchange rate changes on cash and equivalents
 
1

 
(10
)
 
(9
)
 
100

 
(64
)
 
36

Net increase (decrease) in cash and equivalents
 
(1,117
)
 
—

 
(1,117
)
 
1,083

 
—

 
1,083

Cash and equivalents, beginning of year
 
3,337

 
—

 
3,337

 
2,254

 
—

 
2,254

CASH AND EQUIVALENTS, END OF YEAR
 
$
2,220

 
$
—

 
$
2,220

 
$
3,337

 
$
—

 
$
3,337


Recognition of Revenues
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 historical rates, specific identification of outstanding claims and outstanding returns not yet received from customers and estimated discounts, returns and claims expected, but not yet finalized with customers. As of May 31, 2015 and 2014, the Company’s reserve balances for post-invoice sales discounts, returns and miscellaneous claims were $724 million and $610 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.
Shipping and Handling Costs
Outbound shipping and handling costs are expensed as incurred and included in Cost of sales.
Operating Overhead Expense
Operating overhead expense consists primarily of payroll and benefit related costs, rent, depreciation and amortization, professional services and meetings and travel.
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 our 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 guarantee period.
Through cooperative advertising programs, the Company reimburses retail 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 $3,213 million, $3,031 million and $2,745 million for the years ended May 31, 2015, 2014 and 2013, respectively. Prepaid advertising and promotion expenses totaled $455 million and $516 million at May 31, 2015 and 2014, respectively, and were recorded in Prepaid expenses and other current assets and Deferred income taxes and other assets depending on the period to which the prepayment applies.
Cash and Equivalents
Cash and equivalents represent cash and short-term, highly liquid investments, 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 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, 2015 and 2014, the Company did not hold any short-term investments that were classified as trading or held-to-maturity.
At May 31, 2015 and 2014, 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 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 consists 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 $78 million and $78 million at May 31, 2015 and 2014, respectively, of which $24 million and $37 million, respectively, was classified as long-term and recorded in Deferred income taxes and other assets.
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 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 other assets are recorded in Total selling and administrative 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 10 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.
The Company generally bases its measurement of the fair value of a reporting unit on a blended analysis of the present value of future discounted cash flows and the market valuation approach. The discounted cash flows model indicates the fair value of the reporting unit based on the present value of the cash flows that the Company expects the reporting unit to generate in the future. The Company's significant estimates in the discounted cash flows model include: its weighted average cost of capital; long-term rate of growth and profitability of the reporting unit's business; and working capital effects. The market valuation approach indicates the fair value of the business based on a comparison of the reporting unit to comparable publicly traded companies in similar lines of business. Significant estimates in the market valuation approach model include identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment and assessing comparable revenue and operating income multiples in estimating the fair value of the reporting unit.
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, 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 rents, which are 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 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 certain Level 1 and Level 2 investments. These vendors either provide a quoted market price in an active market or use observable inputs without applying significant adjustments in their pricing. Observable inputs include broker quotes, interest rates and yield curves observable at commonly quoted intervals, volatilities and credit risks. The fair value of derivative contracts is determined using observable market inputs such as the daily market foreign currency rates, forward pricing curves, currency volatilities, currency correlations and interest rates and considers nonperformance risk of the Company and that of its counterparties.
The Company’s fair value processes include controls that are designed to ensure appropriate fair values are recorded. These controls include a comparison of fair values to another independent pricing vendor.
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 Statement 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 17 — 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. 1990 Stock Incentive Plan (the “1990 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 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 July 2013, the FASB issued an accounting standards update intended to provide guidance on the presentation of unrecognized tax benefits, reflecting the manner in which an entity would settle, at the reporting date, any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses or tax credit carryforwards exist. This accounting standard was effective for the Company beginning June 1, 2014 and early adoption was permitted. Management early adopted this guidance and the adoption did not have a material impact on the Company's consolidated financial position or results of operations.
In July 2012, the FASB issued an accounting standards update intended to simplify how an entity tests indefinite-lived intangible assets other than goodwill for impairment by providing entities with an option to perform a qualitative assessment to determine whether further impairment testing is necessary. This accounting standards update was effective for the Company beginning June 1, 2013. The adoption of this standard did not have a material impact on the Company's consolidated financial position or results of operations.
In December 2011, the FASB issued guidance enhancing disclosure requirements surrounding the nature of an entity’s right to offset and related arrangements associated with its financial instruments and derivative instruments. This new guidance requires companies to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to master netting arrangements. This new guidance was effective for the Company beginning June 1, 2013. As this guidance only requires expanded disclosures, the adoption had no impact on the Company's consolidated financial position or results of operations.
Recently Issued Accounting Standards
In May 2014, the FASB issued an accounting standards update 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. Based on the FASB's decision in July 2015 to defer the effective date and to allow more flexibility with implementation, the Company anticipates the new standard will be effective for the Company beginning June 1, 2018. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company has not yet selected a transition method and is currently evaluating the effect the guidance will have on the Consolidated Financial Statements.
Inventories
Inventories
NOTE 2 — Inventories
Inventory balances of $4,337 million and $3,947 million at May 31, 2015 and 2014, 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)
 
2015
 
2014
Land
 
$
273

 
$
270

Buildings
 
1,250

 
1,261

Machinery, equipment and internal-use software
 
3,329

 
3,376

Leasehold improvements
 
1,150

 
1,066

Construction in process
 
350

 
247

Total property, plant and equipment, gross
 
6,352

 
6,220

Less accumulated depreciation
 
3,341

 
3,386

TOTAL PROPERTY, PLANT AND EQUIPMENT, NET
 
$
3,011

 
$
2,834


Capitalized interest was not material for the years ended May 31, 2015, 2014 and 2013. The Company had $5 million and $74 million in capital lease obligations as of May 31, 2015 and May 31, 2014, respectively, included in machinery, equipment and internal-use software. During the fiscal year ended May 31, 2015, the Company restructured the terms of certain capital leases, which now qualify as operating leases.
Identifiable Intangible Assets and Goodwill
Identifiable Intangible Assets and Goodwill
NOTE 4 — Identifiable Intangible Assets and Goodwill

Identifiable intangible assets, net consists of indefinite-lived trademarks, which are not subject to amortization, and acquired trademarks and other intangible assets, which are subject to amortization. At May 31, 2015 and 2014, indefinite-lived trademarks were $281 million and $282 million, respectively. Acquired trademarks and other intangible assets at May 31, 2015 and 2014 were $17 million and $39 million, respectively, and were fully amortized at the end of both periods. Goodwill was $131 million at May 31, 2015 and 2014 of which $65 million and $64 million were included in the Converse segment in 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)
 
2015
 
2014
Compensation and benefits, excluding taxes
 
$
997

 
$
782

Collateral received from counterparties to hedging instruments
 
968

 
—

Endorsement compensation
 
388

 
328

Dividends payable
 
240

 
209

Import and logistics costs
 
207

 
127

Taxes other than income taxes
 
174

 
204

Fair value of derivatives
 
162

 
85

Advertising and marketing
 
117

 
133

Other(1)
 
698

 
623

TOTAL ACCRUED LIABILITIES
 
$
3,951

 
$
2,491

(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, 2015 and 2014.
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, 2015 and 2014 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, 2015
(In millions)
 
Assets at Fair Value
 
Cash and Cash Equivalents
 
Short-term Investments
 
Other Long-term Assets
Cash
 
$
615

 
$
615

 
$
—

 
$
—

Level 1:
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
869

 
225

 
644

 
—

Level 2:
 
 
 
 
 
 
 
 
Time deposits
 
684

 
684

 
—

 
—

U.S. Agency securities
 
976

 
110

 
866

 
—

Commercial paper and bonds
 
914

 
352

 
562

 
—

Money market funds
 
1,866

 
1,866

 
—

 
—

Total level 2
 
4,440

 
3,012

 
1,428

 
—

Level 3:
 
 
 
 
 
 
 
 
Non-marketable preferred stock
 
8

 
—

 
—

 
8

TOTAL
 
$
5,932

 
$
3,852

 
$
2,072

 
$
8

 
 
 
As of May 31, 2014
(In millions)
 
Assets at Fair Value
 
Cash and Cash Equivalents
 
Short-term Investments
 
Other Long-term Assets
Cash
 
$
780

 
$
780

 
$
—

 
$
—

Level 1:
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
1,137

 
151

 
986

 
—

Level 2:
 
 
 
 
 
 
 
 
Time deposits
 
227

 
227

 
—

 
—

U.S. Agency securities
 
1,027

 
25

 
1,002

 
—

Commercial paper and bonds
 
959

 
25

 
934

 
—

Money market funds
 
1,012

 
1,012

 
—

 
—

Total level 2
 
3,225

 
1,289

 
1,936

 
—

Level 3:
 
 
 
 
 
 
 
 
Non-marketable preferred stock
 
7

 
—

 
—

 
7

TOTAL
 
$
5,149

 
$
2,220

 
$
2,922

 
$
7


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 17 — Risk Management and Derivatives). Cash collateral received related to the Company's credit related contingent features is presented in the Cash provided by operations component of the Consolidated Statement of Cash Flows. Any amounts of non-cash collateral received, such as securities, are not recorded on the Consolidated Balance Sheets pursuant to the accounting standards for non-cash collateral received.
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, 2015 and May 31, 2014, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.
 
 
As of May 31, 2015
 
 
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)
 
$
1,554

 
$
1,034

 
$
520

 
$
164

 
$
160

 
$
4

Embedded derivatives
 
7

 
2

 
5

 
11

 
2

 
9

Interest rate swaps(2)
 
78

 
78

 
—

 
—

 
—

 
—

TOTAL
 
$
1,639

 
$
1,114

 
$
525

 
$
175

 
$
162

 
$
13

(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 $161 million as of May 31, 2015. As of that date, the Company had received $900 million of cash collateral and $74 million of securities 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, 2015.
(2)
As of May 31, 2015, the Company had received $68 million of cash collateral related to its interest rate swaps.
 
 
As of May 31, 2014
 
 
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)
 
$
127

 
$
101

 
$
26

 
$
85

 
$
84

 
$
1

Interest rate swaps
 
6

 
—

 
6

 
—

 
—

 
—

TOTAL
 
$
133

 
$
101

 
$
32

 
$
85

 
$
84

 
$
1

(1)
If the foreign exchange derivative financial instruments had been netted in the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $63 million as of May 31, 2014. No amounts of collateral were received or posted on the Company’s derivative assets and liabilities as of May 31, 2014.
Available-for-sale securities comprise investments in U.S. Treasury and Agency securities, 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). The gross realized gains and losses on sales of available-for-sale securities were immaterial for the fiscal years ended May 31, 2015 and 2014. Unrealized gains and losses on available-for-sale securities included in Other comprehensive income were immaterial as of May 31, 2015 and 2014.
The Company regularly reviews its available-for-sale securities for other-than-temporary impairment. For the years ended May 31, 2015 and 2014, the Company did not consider its securities to be other-than-temporarily impaired and accordingly, did not recognize any impairment losses.
As of May 31, 2015, the Company held $1,808 million of available-for-sale securities with maturity dates within one year and $264 million with maturity dates over one year and less than five years within Short-term investments on the Consolidated Balance Sheets.
Included in Interest expense (income), net was interest income related to the Company's available-for-sale securities of $6 million, $5 million and $4 million for the years ended May 31, 2015, 2014 and 2013, 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, 2015 and 2014.
Derivative financial instruments include foreign exchange forwards and options, embedded derivatives and interest rate swaps. Refer to Note 17 — Risk Management and Derivatives for additional detail.
No transfers among the levels within the fair value hierarchy occurred during the years ended May 31, 2015 or 2014.
As of May 31, 2015 and 2014, the Company had no assets or liabilities that were required to be measured at fair value on a non-recurring basis.
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.
At May 31, 2015, the Company had $150 million of outstanding receivables related to its investments in reverse repurchase agreements recorded within Prepaid expenses and other current assets on the Consolidated Balance Sheet. The carrying amount of these agreements approximates their fair value based upon observable inputs other than quoted prices (Level 2). The reverse repurchase agreements are fully collateralized.
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, 2015 and 2014 are summarized below:
 
 
As of May 31,
 
 
 
2015
 
2014
(Dollars in millions)
 
Borrowings

 
Interest Rate
 
Borrowings

 
Interest Rate
Notes payable:
 
 
 
 
 
 
 
 
 
 
U.S. operations
 
$
—

 
0.00
%
(1) 
 
$
—

 
0.00
%
(1) 
Non-U.S. operations
 
74

 
12.39
%
(1) 
 
167

 
10.04
%
(1) 
TOTAL NOTES PAYABLE
 
$
74

 
 
 
 
$
167

 
 
 
Interest-bearing accounts payable:
 
 
 
 
 
 
 
 
 
 
Sojitz America
 
$
78

 
0.98
%
 
 
$
60

 
0.94
%
 
(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, 2015 and 2014, the Company had no amounts outstanding under its commercial paper program.
On November 1, 2011, the Company entered into a committed credit facility agreement with a syndicate of banks which provides for up to $1 billion of borrowings with the option to increase borrowings to $1.5 billion with lender approval. Following an extension agreement on September 17, 2013 between the Company and the syndicate of banks, the facility matures November 1, 2017. 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 0.445%. The facility fee is 0.055% of the total commitment. Under this committed credit facility, the Company must maintain, among other things, certain minimum specified financial ratios with which the Company was in compliance at May 31, 2015. No amounts were outstanding under this facility as of May 31, 2015 or 2014.
Long-Term Debt
Long-Term Debt
NOTE 8 — Long-Term Debt
Long-term debt, net of unamortized premiums and discounts and swap fair value adjustments, comprises the following: 
 
 
 
 
 
 
 
 
Book Value Outstanding
As of May 31,
Scheduled Maturity (Dollars and Yen in millions)
 
Original
Principal
 
Interest
Rate
 
Interest
Payments
 
2015
 
2014
Corporate Bond Payables:(4)
 
 
 
 
 
 
 
 
 
 
October 15, 2015(1)
 
$
100

 
5.15
%
 
Semi-Annually
 
$
101

 
$
108

May 1, 2023(5)
 
$
500

 
2.25
%
 
Semi-Annually
 
499

 
499

May 1, 2043(5)
 
$
500

 
3.63
%
 
Semi-Annually
 
499

 
499

Promissory Notes:
 
 
 
 
 
 
 
 
 
 
April 1, 2017(2)
 
$
40

 
6.20
%
 
Monthly
 
39

 
39

January 1, 2018(2)
 
$
19

 
6.79
%
 
Monthly
 
19

 
19

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

 
2.60
%
 
Quarterly
 
20

 
29

August 20, 2001 through November 20, 2020(3)
 
¥
4,000

 
2.00
%
 
Quarterly
 
9

 
13

Total
 
 
 
 
 
 
 
1,186

 
1,206

Less current maturities
 
 

 
 

 
 
 
107

 
7

TOTAL LONG-TERM DEBT
 
 
 
 
 
 
 
$
1,079

 
$
1,199

(1)
The Company has entered into interest rate swap agreements whereby the Company receives fixed interest payments at the same rate as the note and pays variable interest payments based on the six-month LIBOR plus a spread. The swaps have the same notional amount and maturity date as the corresponding note. At May 31, 2015, the interest rates payable on these swap agreements ranged from approximately 0.3% to 0.5%.
(2)
The Company assumed a total of $59 million in bonds payable as part of its agreement to purchase certain Corporate properties; this was treated as a non-cash financing transaction. The property serves as collateral for the debt. The purchase of these properties was accounted for as a business combination where the total consideration of $85 million was allocated to the land and buildings acquired; no other tangible or intangible assets or liabilities resulted from the purchase. The bonds mature in 2017 and 2018 and the Company does not have the ability to re-negotiate the terms of the debt agreements and would incur significant financial penalties if the notes were paid-off prior to maturity.
(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.
(4)
These senior unsecured obligations rank equally with the Company's other unsecured and unsubordinated indebtedness.
(5)
The bonds are redeemable at the Company's option prior to February 1, 2023 and November 1, 2042, respectively, at a price equal to the greater of (i) 100% of the aggregate principal amount of the notes to be redeemed, and (ii) the sum of the present values of the remaining scheduled payments, plus in each case, accrued and unpaid interest. Subsequent to February 1, 2023 and November 1, 2042, respectively, the bonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to 100% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest.
The scheduled maturity of Long-term debt in each of the years ending May 31, 2016 through 2020 are $106 million, $44 million, $24 million, $6 million and $6 million, respectively, at face value.
The fair value of the Company’s Long-term debt, including the current portion, was approximately $1,160 million at May 31, 2015 and $1,154 million at May 31, 2014. The fair value of Long-term debt is estimated based upon quoted prices of similar instruments (level 2).
Income Taxes
Income Taxes
NOTE 9 — Income Taxes
Income before income taxes is as follows:
 
 
Year Ended May 31,
(In millions)
 
2015
 
2014
 
2013
Income before income taxes:
 
 
 
 
 
 
United States
 
$
1,967

 
$
3,066

 
$
1,231

Foreign
 
2,238

 
478

 
2,025

TOTAL INCOME BEFORE INCOME TAXES
 
$
4,205

 
$
3,544

 
$
3,256


The provision for income taxes is as follows:
 
 
Year Ended May 31,
(In millions)
 
2015
 
2014
 
2013
Current:
 
 
 
 
 
 
United States
 
 
 
 
 
 
Federal
 
$
596

 
$
259

 
$
378

State
 
80

 
104

 
79

Foreign
 
369

 
499

 
442

Total
 
1,045

 
862

 
899

Deferred:
 
 
 
 
 
 
United States
 
 
 
 
 
 
Federal
 
(66
)
 
19

 
(4
)
State
 
(11
)
 
(3
)
 
(4
)
Foreign
 
(36
)
 
(27
)
 
(86
)
Total
 
(113
)
 
(11
)
 
(94
)
TOTAL INCOME TAX EXPENSE
 
$
932

 
$
851

 
$
805


A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows:
 
 
Year Ended May 31,
  
 
2015
 
2014
 
2013
Federal income tax rate
 
35.0
 %
 
35.0
 %
 
35.0
 %
State taxes, net of federal benefit
 
0.9
 %
 
1.8
 %
 
1.4
 %
Foreign earnings
 
-15.7
 %
 
2.2
 %
 
-11.8
 %
Deferred charge
 
0.9
 %
 
-14.6
 %
 
0.0
 %
Other, net
 
1.1
 %
 
-0.4
 %
 
0.1
 %
EFFECTIVE INCOME TAX RATE
 
22.2
 %
 
24.0
 %
 
24.7
 %

The effective tax rate from continuing operations for the year ended May 31, 2015 was 180 basis points lower than the effective tax rate from continuing operations for the year ended May 31, 2014 primarily due to the favorable resolution of audits in several jurisdictions. 
The effective tax rate from continuing operations for the year ended May 31, 2014 was 70 basis points lower than the effective tax rate from continuing operations for the year ended May 31, 2013 primarily due to an increase in the amount of earnings from lower tax rate jurisdictions.
During the fourth quarter of the fiscal year ended May 31, 2014, the Company reached a resolution with the IRS on a U.S. Unilateral Advanced Pricing Agreement that covers intercompany transfer pricing for fiscal years 2011 through 2020. This agreement resulted in an increase in the effective tax rate due to a reduction in the Company’s permanently reinvested foreign earnings, which was partially offset by a reduction in previously unrecognized tax benefits. It also resulted in a decrease in the effective tax rate due to the recognition of a deferred tax charge. The net result of the agreement did not have a material impact on the Company’s effective income tax rate in fiscal 2014.
Deferred tax assets and (liabilities) comprise the following: 
 
 
As of May 31,
(In millions)
 
2015
 
2014
Deferred tax assets:
 
 
 
 
Allowance for doubtful accounts
 
$
11

 
$
11

Inventories
 
59

 
49

Sales return reserves
 
143

 
113

Deferred compensation
 
258

 
211

Stock-based compensation
 
179

 
162

Reserves and accrued liabilities
 
92

 
95

Net operating loss carry-forwards
 
10

 
16

Undistributed earnings of foreign subsidiaries
 
149

 
194

Other
 
76

 
51

Total deferred tax assets
 
977

 
902

Valuation allowance
 
(9
)
 
(9
)
Total deferred tax assets after valuation allowance
 
968

 
893

Deferred tax liabilities:
 
 
 
 
Property, plant and equipment
 
(220
)
 
(237
)
Intangibles
 
(93
)
 
(94
)
Other
 
(38
)
 
(2
)
Total deferred tax liability
 
(351
)
 
(333
)
NET DEFERRED TAX ASSET
 
$
617

 
$
560


The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits:
 
 
As of May 31,
(In millions)
 
2015
 
2014
 
2013
Unrecognized tax benefits, beginning of the period
 
$
506

 
$
447

 
$
285

Gross increases related to prior period tax positions(1)
 
32

 
814

 
77

Gross decreases related to prior period tax positions(1)
 
(123
)
 
(166
)
 
(3
)
Gross increases related to current period tax positions
 
82

 
125

 
130

Gross decreases related to current period tax positions
 
(9
)
 
(30
)
 
(9
)
Settlements(1)
 
(27
)
 
(676
)
 
—

Lapse of statute of limitations
 
(10
)
 
(4
)
 
(21
)
Changes due to currency translation
 
(13
)
 
(4
)
 
(12
)
UNRECOGNIZED TAX BENEFITS, END OF THE PERIOD
 
$
438

 
$
506

 
$
447


(1)
During the fourth quarter of the fiscal year ended May 31, 2014, the Company reached a resolution with the IRS on a U.S. Unilateral Advanced Pricing Agreement that covers intercompany transfer pricing for fiscal years 2011 through 2020. As a result, the Company recorded a gross increase in unrecognized tax benefits related to prior period tax positions, a gross decrease in unrecognized tax benefits related to prior period tax positions and a settlement. The net impact of these items resulted in a decrease to unrecognized tax benefits.
As of May 31, 2015, total gross unrecognized tax benefits, excluding related interest and penalties, were $438 million, $260 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 $3 million during the year ended May 31, 2015, and increased $55 million and $4 million during the years ended May 31, 2014 and 2013, respectively. As of May 31, 2015 and 2014, accrued interest and penalties related to uncertain tax positions were $164 million and $167 million, respectively (excluding federal benefit).
The Company incurs tax liabilities primarily in the United States, China and the Netherlands, as well as various state and other foreign jurisdictions. The Company is currently under audit by the U.S. Internal Revenue Service (IRS) for the 2012 through 2014 tax years. The Company has closed all U.S. federal income tax matters through fiscal 2011, with the exception of the validation of foreign tax credits utilized. As previously disclosed, the Company received a statutory notice of deficiency for fiscal 2011 proposing an increase in tax of $31 million, subject to interest, related to the foreign tax credit matter. This notice also reported a decrease in foreign tax credit carryovers for fiscal 2010 and 2011. The Company has contested this deficiency notice by filing a petition with the U.S Tax Court in April 2015. The Company does not expect the outcome of this matter to have a material impact on the financial statements. No payments on the assessment would be required until the dispute is definitively resolved. Based on the information currently available, the Company does not anticipate a significant increase or decrease to its unrecognized tax benefits for this matter within the next 12 months.
The Company’s major foreign jurisdictions, China, the Netherlands and Brazil, have concluded substantially all income tax matters through calendar 2005, fiscal 2009 and calendar 2008, 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 $63 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, 2015, the indefinitely reinvested earnings in foreign subsidiaries upon which United States income taxes have not been provided were approximately $8.3 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 $2.7 billion at May 31, 2015.
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 impact of this tax holiday decreased foreign taxes by $174 million, $138 million and $108 million for the fiscal years ended May 31, 2015, 2014 and 2013, respectively. The benefit of the tax holiday on diluted earnings per common share was $0.20, $0.15 and $0.12 for the fiscal years ended May 31, 2015, 2014 and 2013, respectively.
Deferred tax assets at May 31, 2015 and 2014 were reduced by a valuation allowance relating to tax benefits of certain subsidiaries with operating losses. There was no net change in the valuation allowance for the year ended May 31, 2015 compared to a net increase of $4 million and a net decrease of $22 million for the years ended May 31, 2014 and 2013, respectively.
The Company has available domestic and foreign loss carry-forwards of $36 million at May 31, 2015. Such losses will expire as follows: 
 
 
Year Ending May 31,
(In millions)
 
2016
 
2017
 
2018
 
2019
 
2020-2035
 
Indefinite

 
Total

Net operating losses
 
$
—

 
$
—

 
$
4

 
$
1

 
$
17

 
$
14

 
$
36


During the years ended May 31, 2015, 2014 and 2013, income tax benefits attributable to employee stock-based compensation transactions of $224 million, $135 million and $76 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, 2015, 2014 and 2013. 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 200 million and 1,200 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 Class A and Class B common shareholders.
In 1990, the Board of Directors adopted, and the shareholders approved, the NIKE, Inc. 1990 Stock Incentive Plan (the “1990 Plan”). The 1990 Plan, as amended, provides for the issuance of up to 326 million previously unissued shares of Class B Common Stock in connection with stock options and other awards granted under the plan. The 1990 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 1990 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 1990 Plan were granted in the first quarter of each fiscal year, vest ratably over four years and expire 10 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)
 
2015
 
2014
 
2013
Stock options(1)
 
$
136

 
$
125

 
$
123

ESPPs
 
24

 
22

 
19

Restricted stock
 
31

 
30

 
32

TOTAL STOCK-BASED COMPENSATION EXPENSE
 
$
191

 
$
177

 
$
174

(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 for the years ended May 31, 2015, 2014 and 2013 was $19 million, $15 million and $22 million, respectively.
As of May 31, 2015, the Company had $180 million of unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized in Operating overhead expense over a weighted average period of 1.9 years.
The weighted average fair value per share of the options granted during the years ended May 31, 2015, 2014 and 2013, as computed using the Black-Scholes pricing model, was $16.95, $14.89 and $12.71, respectively. The weighted average assumptions used to estimate these fair values are as follows:
 
 
Year Ended May 31,
  
 
2015
 
2014
 
2013
Dividend yield
 
1.2
%
 
1.3
%
 
1.5
%
Expected volatility
 
23.6
%
 
27.9
%
 
35.0
%
Weighted average expected life (in years)
 
5.8

 
5.3

 
5.3

Risk-free interest rate
 
1.7
%
 
1.3
%
 
0.6
%

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, 2012
 
64.3

 
$
30.59

Exercised
 
(9.9
)
 
24.70

Forfeited
 
(1.3
)
 
40.14

Granted
 
14.6

 
46.55

Options outstanding May 31, 2013
 
67.7

 
$
34.72

Exercised
 
(11.0
)
 
28.29

Forfeited
 
(1.3
)
 
48.33

Granted
 
8.1

 
63.54

Options outstanding May 31, 2014
 
63.5

 
$
39.28

Exercised
 
(13.6
)
 
30.78

Forfeited
 
(1.0
)
 
59.02

Granted
 
9.2

 
77.68

Options outstanding May 31, 2015
 
58.1

 
$
47.00

Options exercisable at May 31,
 
 
 
 
2013
 
35.9

 
$
27.70

2014
 
37.0

 
31.42

2015
 
34.3

 
36.53

(1)
Includes stock appreciation rights transactions.
The weighted average contractual life remaining for options outstanding and options exercisable at May 31, 2015 was 6.0 years and 4.7 years, respectively. The aggregate intrinsic value for options outstanding and exercisable at May 31, 2015 was $3,178 million and $2,235 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, 2015, 2014 and 2013 was $795 million, $474 million and $293 million, respectively.
In addition to the 1990 Plan, the Company gives employees the right to purchase shares at a discount to the market price under employee stock purchase plans (“ESPPs”). 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 1.4 million, 1.4 million and 1.6 million shares during each of the three years ended May 31, 2015, 2014 and 2013, respectively.
From time to time, the Company grants restricted stock and restricted stock units to key employees under the 1990 Plan. The number of shares underlying such awards granted to employees during the years ended May 31, 2015, 2014 and 2013 were 0.3 million, 0.3 million and 1.6 million, respectively, with weighted average values per share of $79.38, $63.89 and $46.86, 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, 2015, 2014 and 2013, the aggregate fair value of restricted stock and restricted stock units vested was $20 million, $28 million and $25 million, respectively, determined as of the date of vesting. As of May 31, 2015, the Company had $48 million of unrecognized compensation costs from restricted stock units to be recognized in Operating overhead expense over a weighted average period of 1.5 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 computation of Diluted earnings per common share omitted options to purchase an additional 0.1 million, 0.1 million and 0.1 million shares of common stock outstanding for the years ended May 31, 2015, 2014 and 2013, respectively, because the options were anti-dilutive.
 
 
Year Ended May 31,
(In millions, except per share data)
 
2015
 
2014
 
2013
Determination of shares:
 
 
 
 
 
 
Weighted average common shares outstanding
 
861.7

 
883.4

 
897.3

Assumed conversion of dilutive stock options and awards
 
22.7

 
22.4

 
19.1

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
 
884.4

 
905.8

 
916.4

 
 
 
 
 
 
 
Earnings per common share from continuing operations:
 
 
 
 
 
 
Basic
 
$
3.80

 
$
3.05

 
$
2.74

Diluted
 
$
3.70

 
$
2.97

 
$
2.68

 
 
 
 
 
 
 
Earnings per common share from discontinued operations:
 
 
 
 
 
 
Basic
 
$
—

 
$
—

 
$
0.02

Diluted
 
$
—

 
$
—

 
$
0.02

 
 
 
 
 
 
 
Basic earnings per common share for NIKE, Inc.
 
$
3.80

 
$
3.05

 
$
2.76

Diluted earnings per common share for NIKE, Inc.
 
$
3.70

 
$
2.97

 
$
2.70

Benefit Plans
Benefit Plans
NOTE 13 — Benefit Plans
The Company has a qualified 401(k) Savings and Profit Sharing Plan to which all U.S. employees who work at least 1,000 hours in a year are able to participate. The Company matches a portion of employee contributions. Company contributions to the savings plan were $58 million, $51 million and $46 million for the years ended May 31, 2015, 2014 and 2013, respectively, and are included in Operating overhead expense. The terms of the plan also allow for annual discretionary profit sharing contributions to the accounts of eligible employees by the Company as determined by the Board of Directors. Contributions of $58 million, $49 million and $47 million were made to the plan and are included in Operating overhead expense for the years ended May 31, 2015, 2014 and 2013, 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 in fiscal 2007. The Company recognized $68 million, $46 million and $50 million of Operating overhead expense related to cash awards under the LTIP during the years ended May 31, 2015, 2014 and 2013, 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 $443 million and $390 million at May 31, 2015 and 2014, 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 $98 million and $100 million at May 31, 2015 and May 31, 2014, respectively, which was 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, 2014
 
$
9

 
$
32

 
$
95

 
$
(51
)
 
$
85

Other comprehensive gains (losses) before reclassifications(2)
 
(20
)
 
1,447

 
—

 
33

 
1,460

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

 
(259
)
 
—

 
(40
)
 
(299
)
Other comprehensive income (loss)
 
(20
)
 
1,188

 
—

 
(7
)
 
1,161

Balance at May 31, 2015
 
$
(11
)
 
$
1,220

 
$
95

 
$
(58
)
 
$
1,246

(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, $(33) million, $0 million, $0 million and $(33) million, respectively.
(3)
Net of tax (benefit) expense of $0 million, $2 million, $0 million, $0 million and $2 million, respectively.
(In millions)
 
Foreign Currency Translation Adjustment(1)
 
Cash Flow Hedges
 
Net Investment Hedges(1)
 
Other
 
Total
Balance at May 31, 2013
 
$
41

 
$
193

 
$
95

 
$
(55
)
 
$
274

Other comprehensive gains (losses) before reclassifications(2)
 
(32
)
 
(134
)
 
—

 
—

 
(166
)
Reclassifications to net income of previously deferred (gains) losses(3)
 
—

 
(27
)
 
—

 
4

 
(23
)
Other comprehensive income (loss)
 
(32
)
 
(161
)
 
—

 
4

 
(189
)
Balance at May 31, 2014
 
$
9

 
$
32

 
$
95

 
$
(51
)
 
$
85

(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, $9 million, $0 million, $0 million and $9 million, respectively.
(3)
Net of tax (benefit) expense of $0 million, $9 million, $0 million, $0 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)
 
2015
 
2014
Gains (losses) on cash flow hedges:
 
 
 
 
 
Foreign exchange forwards and options
 
$
(95
)
 
$
14

Revenues
Foreign exchange forwards and options
 
220

 
12

Cost of sales
Foreign exchange forwards and options
 
—

 
—

Total selling and administrative expense
Foreign exchange forwards and options
 
136

 
10

Other (income) expense, net
Total before tax
 
261

 
36

 
Tax expense
 
(2
)
 
(9
)
 
Gain, net of tax
 
259

 
27

 
Gains (losses) on other
 
40

 
(4
)
Other (income) expense, net
Total before tax
 
40

 
(4
)
 
Tax expense
 
—

 
—

 
Gain (loss), net of tax
 
40

 
(4
)
 
Total net gain reclassified for the period
 
$
299

 
$
23

 

Refer to Note 17 — Risk Management and Derivatives for more information on the Company's risk management program and derivatives.
Discontinued Operations
Discontinued Operations
NOTE 15 — Discontinued Operations
During the year ended May 31, 2013, the Company divested of Umbro and Cole Haan, allowing it to focus its resources on driving growth in the NIKE, Jordan, Converse and Hurley brands.
On February 1, 2013, the Company completed the sale of Cole Haan to Apax Partners for an agreed upon purchase price of $570 million and received at closing $561 million, net of $9 million of purchase price adjustments. The transaction resulted in a gain on sale of $231 million, net of $137 million in Income tax expense; this gain is included in the Net income from discontinued operations line item on the Consolidated Statements of Income. There were no adjustments to these recorded amounts as of May 31, 2015. Beginning November 30, 2012, the Company classified the Cole Haan disposal group as held-for-sale and presented the results of Cole Haan's operations in the Net income from discontinued operations line item on the Consolidated Statements of Income. From this date until the sale, the assets and liabilities of Cole Haan were recorded in the Assets of discontinued operations and Liabilities of discontinued operations line items on the Consolidated Balance Sheets, respectively. Previously, these amounts were reported in the Company's operating segment presentation as “Other Businesses.”
Under the sale agreement, the Company agreed to provide certain transition services to Cole Haan for an expected period of 3 to 9 months from the date of sale. These services were essentially complete as of May 31, 2013 and the Company has had no significant involvement with Cole Haan beyond the transition services. The Company has also licensed NIKE proprietary Air and Lunar technologies to Cole Haan for a transition period. The continuing cash flows related to these items are not significant to Cole Haan. Additionally, preexisting guarantees of certain Cole Haan lease payments remained in place after the sale; the maximum exposure under the guarantees is $23 million at May 31, 2015. The fair value of the guarantees is not material.
On November 30, 2012, the Company completed the sale of certain assets of Umbro to Iconix Brand Group (“Iconix”) for $225 million. The Umbro disposal group was classified as held-for-sale as of November 30, 2012 and the results of Umbro's operations are presented in the Net income from discontinued operations line item on the Consolidated Statements of Income. The liabilities of Umbro were recorded in the Liabilities of discontinued operations line items on the Consolidated Balance Sheets. Previously, these amounts were reported in the Company's operating segment presentation as “Other Businesses.” Upon meeting the held-for-sale criteria, the Company recorded a loss of $107 million, net of tax, on the sale of Umbro and the loss is included in the Net income from discontinued operations line item on the Consolidated Statements of Income. The loss on sale was calculated as the net sales price less Umbro assets of $248 million, including intangibles, goodwill and fixed assets, other miscellaneous charges of $22 million and the release of the associated cumulative translation adjustment of $129 million. The tax benefit on the loss was $67 million. There were no adjustments to these recorded amounts as of May 31, 2015.
Summarized results of the Company's discontinued operations are as follows:
 
 
Year Ended May 31,
(In millions)
 
2015
 
2014
 
2013
Revenues
 
$
—

 
$
—

 
$
523

Income before income taxes
 
—

 
—

 
108

Income tax expense
 
—

 
—

 
87

NET INCOME FROM DISCONTINUED OPERATIONS
 
$
—

 
$
—

 
$
21


There were no assets or liabilities of discontinued operations as of May 31, 2015 and May 31, 2014.
Commitments and Contingencies
Commitments and Contingencies
NOTE 16 — Commitments and Contingencies
The Company leases space for certain of its offices, warehouses and retail stores under leases expiring from 1 to 19 years after May 31, 2015. Rent expense was $594 million, $533 million and $482 million for the years ended May 31, 2015, 2014 and 2013, respectively. Amounts of minimum future annual commitments under non-cancelable operating and capital leases are as follows (in millions):
 
 
2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
 
Total
Operating leases
 
$
447

 
$
423

 
$
371

 
$
311

 
$
268

 
$
1,154

 
$
2,974

Capital leases
 
$
2

 
$
2

 
$
1

 
$
—

 
$
—

 
$
—

 
$
5


As of May 31, 2015 and 2014, the Company had letters of credit outstanding totaling $165 million and $135 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 17 — 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, 2015 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, 2015 and 2014: 
 
 
Asset Derivatives
 
Liability Derivatives
(In millions)
 
Balance Sheet
Location
 
2015
 
2014
 
Balance Sheet 
Location
 
2015
 
2014
Derivatives formally designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
Prepaid expenses and other current assets
 
$
825

 
$
76

 
Accrued liabilities
 
$
140

 
$
57

Interest rate swaps
 
Prepaid expenses and other current assets
 
78

 
—

 
Accrued liabilities
 
—

 
—

Foreign exchange forwards and options
 
Deferred income taxes and other assets
 
520

 
26

 
Deferred income taxes and other liabilities
 
4

 
1

Interest rate swaps
 
Deferred income taxes and other assets
 
—

 
6

 
Deferred income taxes and other liabilities
 
—

 
—

Total derivatives formally designated as hedging instruments
 
 
 
1,423

 
108

 
 
 
144

 
58

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
Prepaid expenses and other current assets
 
209

 
25

 
Accrued liabilities
 
20

 
27

Embedded derivatives
 
Prepaid expenses and other current assets
 
2

 
—

 
Accrued liabilities
 
2

 
—

Embedded derivatives
 
Deferred income taxes and other assets
 
5

 
—

 
Deferred income taxes and other liabilities
 
9

 
—

Total derivatives not designated as hedging instruments
 
 
 
216

 
25

 
 
 
31

 
27

TOTAL DERIVATIVES
 
 
 
$
1,639

 
$
133

 
 
 
$
175

 
$
85


The following tables present the amounts affecting the Consolidated Statements of Income for years ended May 31, 2015, 2014 and 2013:

(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(1)
 
Year Ended May 31,
2015
 
2014
 
2013
 
2015
 
2014
 
2013
Derivatives designated as cash flow hedges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
$
(202
)
 
$
(48
)
 
$
42

 
Revenues
 
$
(95
)
 
$
14

 
$
(19
)
Foreign exchange forwards and options
 
1,109

 
(78
)
 
67

 
Cost of sales
 
220

 
12

 
113

Foreign exchange forwards and options
 
—

 
4

 
(3
)
 
Total selling and administrative expense
 
—

 
—

 
2

Foreign exchange forwards and options
 
497

 
(21
)
 
33

 
Other (income) expense, net
 
136

 
10

 
9

Interest rate swaps
 
76

 
—

 
—

 
Interest expense (income), net
 
—

 
—

 
—

Total designated cash flow hedges
 
$
1,480

 
$
(143
)
 
$
139

 
 
 
$
261

 
$
36

 
$
105

Derivatives designated as net investment hedges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
$
—

 
$
—

 
$
—

 
Other (income) expense, net
 
$
—

 
$
—

 
$
—

(1)
For the years ended May 31, 2015, 2014 and 2013, 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)
 
2015
 
2014
 
2013
 
Derivatives designated as fair value hedges:
 
 
 
 
 
 
 
 
Interest rate swaps(1)
 
$
5

 
$
5

 
$
5

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

 
$
(75
)
 
$
51

 
Other (income) expense, net
Embedded derivatives
 
$
(1
)
 
$
(1
)
 
$
(4
)
 
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 Other comprehensive income for the years ended May 31, 2015, 2014 and 2013.
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, including those supporting the Company's North America, Greater China, Japan and European geographies, 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 products 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, and their accounting treatment is described further 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 $14.4 billion as of May 31, 2015.
During the year ended May 31, 2015, the Company entered into a series of forward-starting interest rate swap agreements with a total notional amount of $1 billion. These instruments were designated as cash flow hedges of the variability in the expected cash outflows of interest payments on future debt due to changes in benchmark interest rates.
All changes in fair value of derivatives designated as cash flow hedges, excluding any ineffective portion, are recorded in Other comprehensive income until Net income is affected by the variability of cash flows of the hedged transaction. In most cases, amounts recorded in 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, with the results of hedges of non-functional currency denominated revenues and product cost exposures, excluding embedded derivatives as described below, 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 Other comprehensive income related to forward-starting interest rate swaps will be released through Interest expense (income), net 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 on options are initially recorded as deferred charges. The Company assesses the effectiveness of options based on the total cash flows method and records total changes in the options’ fair value to 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, 2015, 2014 and 2013.
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 accumulated in 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, 2015, 2014 and 2013, 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, 2015, $685 million of 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 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, 2015, the maximum term over which the Company is hedging exposures to the variability of cash flows for its forecasted transactions was 36 months.
Fair Value Hedges
The Company is also exposed to the risk of changes in the fair value of certain fixed-rate debt attributable to changes in interest rates. Derivatives currently 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 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. 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, 2015, 2014 or 2013. As of May 31, 2015, interest rate swaps designated as fair value hedges had a total notional amount of $100 million.
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 as a component of 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 Statement of Cash Flows. The Company assesses hedge effectiveness based on changes in forward rates. The Company recorded no ineffectiveness from its net investment hedges for the years ended May 31, 2015, 2014 or 2013. The Company had no outstanding net investment hedges as of May 31, 2015.
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 balance sheet and/or the embedded derivative contracts explained below. These forwards are not designated as hedging instruments under the accounting standards for derivatives and hedging. 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 within the Cash provided by operations component of the Consolidated Statements of Cash Flows. The total notional amount of outstanding undesignated derivative instruments was $4.4 billion as of May 31, 2015.
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, 2015, the notional amount of all embedded derivatives outstanding was approximately $205 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, 2015, 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 $4 million. Accordingly, the Company was not required to post any collateral as a result of these contingent features. Further, as of May 31, 2015, the Company had received $968 million of cash collateral and $74 million of securities 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, 2013
 
$
173

 
$
538

 
$
1

 
$
(471
)
 
$
241

For the year ended May 31, 2014
 
241

 
619

 
(3
)
 
(549
)
 
308

For the year ended May 31, 2015
 
308

 
726

 
(35
)
 
(620
)
 
379

Allowance for doubtful accounts(2)
 
 
 
 
 
 
 
 
 
 
For the year ended May 31, 2013
 
$
91

 
$
31

 
$
1

 
$
(19
)
 
$
104

For the year ended May 31, 2014
 
104

 
13

 
(2
)
 
(37
)
 
78

For the year ended May 31, 2015
 
78

 
35

 
(15
)
 
(20
)
 
78

(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)
Reclassifications 
Reclassifications
Certain prior year amounts have been reclassified to conform to fiscal 2015 presentation.
Revisions 
Revisions
During the third quarter of fiscal 2015, management determined it had incorrectly reflected unrealized gains and losses from re-measurement of non-functional currency intercompany balances between certain of its foreign wholly-owned subsidiaries in its Consolidated Statements of Cash Flows. These unrealized gains and losses should have been classified as non-cash reconciling items from Net income to Cash provided by operations, but were instead reported on the Effect of exchange rate changes on cash and equivalents line of the Consolidated Statements of Cash Flows. This resulted in an understatement of Cash provided by operations reported on the Consolidated Statements of Cash Flows for certain prior periods; there was no impact for any period to Net increase (decrease) in cash and equivalents reported on the Consolidated Statements of Cash Flows, or Cash and equivalents reported on the Consolidated Statements of Cash Flows and Balance Sheets. The Company assessed the materiality of the misclassifications on prior periods' financial statements in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99, Materiality, codified in Accounting Standards Codification (“ASC”) 250, Presentation of Financial Statements, and concluded that these misstatements were not material to any prior annual or interim periods. Accordingly, in accordance with ASC 250 (SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements), the amounts have been revised in the applicable Consolidated Statements of Cash Flows. For the three and six months ended August 31, 2014 and November 30, 2014 of fiscal 2015, the revisions increased Cash provided by operations and decreased Effect of exchange rate changes on cash and equivalents by $95 million and $312 million, respectively. For the fiscal years ended May 31, 2014 and 2013, the revisions increased Cash provided by operations and decreased Effect of exchange rate changes on cash and equivalents by $10 million and $64 million, respectively. These amounts have been reflected in the applicable tables below. As part of the revision to the Consolidated Statements of Cash Flows, the Company has updated its presentation to separately report Net foreign currency adjustments, which was previously included within Amortization and other.
The following are selected line items from the Company's Unaudited Condensed Consolidated Statements of Cash Flows illustrating the effect of these corrections:
 
 
NIKE, Inc. Unaudited Condensed Consolidated Statements of Cash Flows
 
 
Three Months Ended August 31, 2014
 
Six Months Ended November 30, 2014
(In millions)
 
As Reported
 
Adjustment
 
As Revised
 
As Reported
 
Adjustment
 
As Revised
Cash provided by operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
962

 
$
—

 
$
962

 
$
1,617

 
$
—

 
$
1,617

Income charges (credits) not affecting cash:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization and other
 
(34
)
 
42

 
8

 
(54
)
 
69

 
15

Net foreign currency adjustments
 
—

 
53

 
53

 
—

 
243

 
243

Cash provided by operations
 
588

 
95

 
683

 
1,235

 
312

 
1,547

Effect of exchange rate changes on cash and equivalents
 
97

 
(95
)
 
2

 
288

 
(312
)
 
(24
)
Net increase (decrease) in cash and equivalents
 
83

 
—

 
83

 
53

 
—

 
53

Cash and equivalents, beginning of period
 
2,220

 
—

 
2,220

 
2,220

 
—

 
2,220

CASH AND EQUIVALENTS, END OF PERIOD
 
$
2,303

 
$
—

 
$
2,303

 
$
2,273

 
$
—

 
$
2,273

The following are selected line items from the Company's Consolidated Statements of Cash Flows illustrating the effect of these corrections on the amounts previously reported in the Company's fiscal 2014 Annual Report on Form 10-K:
 
 
NIKE, Inc. Consolidated Statements of Cash Flows
 
 
Year Ended May 31, 2014
 
Year Ended May 31, 2013
(In millions)
 
As Reported
 
Adjustment
 
As Revised
 
As Reported
 
Adjustment
 
As Revised
Cash provided by operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
2,693

 
$
—

 
$
2,693

 
$
2,472

 
$
—

 
$
2,472

Income charges (credits) not affecting cash:
 

 

 

 

 

 

Amortization and other
 
114

 
(46
)
 
68

 
66

 
(2
)
 
64

Net foreign currency adjustments
 
—

 
56

 
56

 
—

 
66

 
66

Cash provided by operations
 
3,003

 
10

 
3,013

 
2,968

 
64

 
3,032

Effect of exchange rate changes on cash and equivalents
 
1

 
(10
)
 
(9
)
 
100

 
(64
)
 
36

Net increase (decrease) in cash and equivalents
 
(1,117
)
 
—

 
(1,117
)
 
1,083

 
—

 
1,083

Cash and equivalents, beginning of year
 
3,337

 
—

 
3,337

 
2,254

 
—

 
2,254

CASH AND EQUIVALENTS, END OF YEAR
 
$
2,220

 
$
—

 
$
2,220

 
$
3,337

 
$
—

 
$
3,337

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.
The Company completed the sale of Cole Haan during the third quarter ended February 28, 2013 and completed the sale of Umbro during the second quarter ended November 30, 2012. As a result, the Company reports the operating results of Cole Haan and Umbro in the Net income from discontinued operations line in the Consolidated Statements of Income for all applicable periods presented. There were no assets or liabilities of discontinued operations as of May 31, 2015 and May 31, 2014 (refer to Note 15 — Discontinued Operations). Unless otherwise indicated, the disclosures accompanying the Consolidated Financial Statements reflect the Company’s continuing operations.
On November 15, 2012, the Company announced a two-for-one split of both NIKE Class A and Class B Common shares. The stock split was a 100 percent stock dividend payable on December 24, 2012 to shareholders of record at the close of business on December 10, 2012. Common stock began trading at the split-adjusted price on December 26, 2012. All share numbers and per share amounts presented reflect the stock split.
Recognition of Revenues 
Recognition of Revenues
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 historical rates, specific identification of outstanding claims and outstanding returns not yet received from customers and estimated discounts, returns and claims expected, but not yet finalized with customers. As of May 31, 2015 and 2014, the Company’s reserve balances for post-invoice sales discounts, returns and miscellaneous claims were $724 million and $610 million, respectively.
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.
Shipping and Handling Costs 
Shipping and Handling Costs
Outbound shipping and handling costs are expensed as incurred and included in Cost of sales.
Operating Overhead Expense 
Operating Overhead Expense
Operating overhead expense consists primarily of payroll and benefit related costs, rent, depreciation and amortization, professional services and meetings and travel.
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 our 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 guarantee period.
Through cooperative advertising programs, the Company reimburses retail 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 $3,213 million, $3,031 million and $2,745 million for the years ended May 31, 2015, 2014 and 2013, respectively. Prepaid advertising and promotion expenses totaled $455 million and $516 million at May 31, 2015 and 2014, respectively, and were recorded in Prepaid expenses and other current assets and Deferred income taxes and other assets depending on the period to which the prepayment applies.
Cash and Equivalents 
Cash and Equivalents
Cash and equivalents represent cash and short-term, highly liquid investments, 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 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, 2015 and 2014, the Company did not hold any short-term investments that were classified as trading or held-to-maturity.
At May 31, 2015 and 2014, 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 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 
Allowance for Uncollectible Accounts Receivable
Accounts receivable consists 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 $78 million and $78 million at May 31, 2015 and 2014, respectively, of which $24 million and $37 million, respectively, was classified as long-term 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 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 other assets are recorded in Total selling and administrative 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 10 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.
Identifiable Intangible Assets and Goodwill 
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.
The Company generally bases its measurement of the fair value of a reporting unit on a blended analysis of the present value of future discounted cash flows and the market valuation approach. The discounted cash flows model indicates the fair value of the reporting unit based on the present value of the cash flows that the Company expects the reporting unit to generate in the future. The Company's significant estimates in the discounted cash flows model include: its weighted average cost of capital; long-term rate of growth and profitability of the reporting unit's business; and working capital effects. The market valuation approach indicates the fair value of the business based on a comparison of the reporting unit to comparable publicly traded companies in similar lines of business. Significant estimates in the market valuation approach model include identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment and assessing comparable revenue and operating income multiples in estimating the fair value of the reporting unit.
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, 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 rents, which are 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 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 certain Level 1 and Level 2 investments. These vendors either provide a quoted market price in an active market or use observable inputs without applying significant adjustments in their pricing. Observable inputs include broker quotes, interest rates and yield curves observable at commonly quoted intervals, volatilities and credit risks. The fair value of derivative contracts is determined using observable market inputs such as the daily market foreign currency rates, forward pricing curves, currency volatilities, currency correlations and interest rates and considers nonperformance risk of the Company and that of its counterparties.
The Company’s fair value processes include controls that are designed to ensure appropriate fair values are recorded. These controls include a comparison of fair values to another independent pricing vendor.
Refer to Note 6 — Fair Value Measurements for additional information.
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 Statement 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 17 — Risk Management and Derivatives for more information on the Company’s risk management program and derivatives.
Stock-Based Compensation 
Stock-Based Compensation
The Company estimates the fair value of options and stock appreciation rights granted under the NIKE, Inc. 1990 Stock Incentive Plan (the “1990 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 programs.
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.
Refer to Note 9 — Income Taxes for further discussion.
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.
Refer to Note 12 — Earnings Per Share for further discussion.
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 Accounting Standards 
Recently Adopted Accounting Standards
In July 2013, the FASB issued an accounting standards update intended to provide guidance on the presentation of unrecognized tax benefits, reflecting the manner in which an entity would settle, at the reporting date, any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses or tax credit carryforwards exist. This accounting standard was effective for the Company beginning June 1, 2014 and early adoption was permitted. Management early adopted this guidance and the adoption did not have a material impact on the Company's consolidated financial position or results of operations.
In July 2012, the FASB issued an accounting standards update intended to simplify how an entity tests indefinite-lived intangible assets other than goodwill for impairment by providing entities with an option to perform a qualitative assessment to determine whether further impairment testing is necessary. This accounting standards update was effective for the Company beginning June 1, 2013. The adoption of this standard did not have a material impact on the Company's consolidated financial position or results of operations.
In December 2011, the FASB issued guidance enhancing disclosure requirements surrounding the nature of an entity’s right to offset and related arrangements associated with its financial instruments and derivative instruments. This new guidance requires companies to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to master netting arrangements. This new guidance was effective for the Company beginning June 1, 2013. As this guidance only requires expanded disclosures, the adoption had no impact on the Company's consolidated financial position or results of operations.
Summary of Significant Accounting Policies (Tables)
Schedule of Error Corrections and Prior Period Adjustments
The following are selected line items from the Company's Unaudited Condensed Consolidated Statements of Cash Flows illustrating the effect of these corrections:
 
 
NIKE, Inc. Unaudited Condensed Consolidated Statements of Cash Flows
 
 
Three Months Ended August 31, 2014
 
Six Months Ended November 30, 2014
(In millions)
 
As Reported
 
Adjustment
 
As Revised
 
As Reported
 
Adjustment
 
As Revised
Cash provided by operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
962

 
$
—

 
$
962

 
$
1,617

 
$
—

 
$
1,617

Income charges (credits) not affecting cash:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization and other
 
(34
)
 
42

 
8

 
(54
)
 
69

 
15

Net foreign currency adjustments
 
—

 
53

 
53

 
—

 
243

 
243

Cash provided by operations
 
588

 
95

 
683

 
1,235

 
312

 
1,547

Effect of exchange rate changes on cash and equivalents
 
97

 
(95
)
 
2

 
288

 
(312
)
 
(24
)
Net increase (decrease) in cash and equivalents
 
83

 
—

 
83

 
53

 
—

 
53

Cash and equivalents, beginning of period
 
2,220

 
—

 
2,220

 
2,220

 
—

 
2,220

CASH AND EQUIVALENTS, END OF PERIOD
 
$
2,303

 
$
—

 
$
2,303

 
$
2,273

 
$
—

 
$
2,273

The following are selected line items from the Company's Consolidated Statements of Cash Flows illustrating the effect of these corrections on the amounts previously reported in the Company's fiscal 2014 Annual Report on Form 10-K:
 
 
NIKE, Inc. Consolidated Statements of Cash Flows
 
 
Year Ended May 31, 2014
 
Year Ended May 31, 2013
(In millions)
 
As Reported
 
Adjustment
 
As Revised
 
As Reported
 
Adjustment
 
As Revised
Cash provided by operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
2,693

 
$
—

 
$
2,693

 
$
2,472

 
$
—

 
$
2,472

Income charges (credits) not affecting cash:
 

 

 

 

 

 

Amortization and other
 
114

 
(46
)
 
68

 
66

 
(2
)
 
64

Net foreign currency adjustments
 
—

 
56

 
56

 
—

 
66

 
66

Cash provided by operations
 
3,003

 
10

 
3,013

 
2,968

 
64

 
3,032

Effect of exchange rate changes on cash and equivalents
 
1

 
(10
)
 
(9
)
 
100

 
(64
)
 
36

Net increase (decrease) in cash and equivalents
 
(1,117
)
 
—

 
(1,117
)
 
1,083

 
—

 
1,083

Cash and equivalents, beginning of year
 
3,337

 
—

 
3,337

 
2,254

 
—

 
2,254

CASH AND EQUIVALENTS, END OF YEAR
 
$
2,220

 
$
—

 
$
2,220

 
$
3,337

 
$
—

 
$
3,337

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)
 
2015
 
2014
Land
 
$
273

 
$
270

Buildings
 
1,250

 
1,261

Machinery, equipment and internal-use software
 
3,329

 
3,376

Leasehold improvements
 
1,150

 
1,066

Construction in process
 
350

 
247

Total property, plant and equipment, gross
 
6,352

 
6,220

Less accumulated depreciation
 
3,341

 
3,386

TOTAL PROPERTY, PLANT AND EQUIPMENT, NET
 
$
3,011

 
$
2,834

Accrued Liabilities (Tables)
Schedule of Accrued Liabilities
Accrued liabilities included the following:
 
 
As of May 31,
(In millions)
 
2015
 
2014
Compensation and benefits, excluding taxes
 
$
997

 
$
782

Collateral received from counterparties to hedging instruments
 
968

 
—

Endorsement compensation
 
388

 
328

Dividends payable
 
240

 
209

Import and logistics costs
 
207

 
127

Taxes other than income taxes
 
174

 
204

Fair value of derivatives
 
162

 
85

Advertising and marketing
 
117

 
133

Other(1)
 
698

 
623

TOTAL ACCRUED LIABILITIES
 
$
3,951

 
$
2,491

(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, 2015 and 2014.
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, 2015 and 2014 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, 2015
(In millions)
 
Assets at Fair Value
 
Cash and Cash Equivalents
 
Short-term Investments
 
Other Long-term Assets
Cash
 
$
615

 
$
615

 
$
—

 
$
—

Level 1:
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
869

 
225

 
644

 
—

Level 2:
 
 
 
 
 
 
 
 
Time deposits
 
684

 
684

 
—

 
—

U.S. Agency securities
 
976

 
110

 
866

 
—

Commercial paper and bonds
 
914

 
352

 
562

 
—

Money market funds
 
1,866

 
1,866

 
—

 
—

Total level 2
 
4,440

 
3,012

 
1,428

 
—

Level 3:
 
 
 
 
 
 
 
 
Non-marketable preferred stock
 
8

 
—

 
—

 
8

TOTAL
 
$
5,932

 
$
3,852

 
$
2,072

 
$
8

 
 
 
As of May 31, 2014
(In millions)
 
Assets at Fair Value
 
Cash and Cash Equivalents
 
Short-term Investments
 
Other Long-term Assets
Cash
 
$
780

 
$
780

 
$
—

 
$
—

Level 1:
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
1,137

 
151

 
986

 
—

Level 2:
 
 
 
 
 
 
 
 
Time deposits
 
227

 
227

 
—

 
—

U.S. Agency securities
 
1,027

 
25

 
1,002

 
—

Commercial paper and bonds
 
959

 
25

 
934

 
—

Money market funds
 
1,012

 
1,012

 
—

 
—

Total level 2
 
3,225

 
1,289

 
1,936

 
—

Level 3:
 
 
 
 
 
 
 
 
Non-marketable preferred stock
 
7

 
—

 
—

 
7

TOTAL
 
$
5,149

 
$
2,220

 
$
2,922

 
$
7


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, 2015 and May 31, 2014, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.
 
 
As of May 31, 2015
 
 
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)
 
$
1,554

 
$
1,034

 
$
520

 
$
164

 
$
160

 
$
4

Embedded derivatives
 
7

 
2

 
5

 
11

 
2

 
9

Interest rate swaps(2)
 
78

 
78

 
—

 
—

 
—

 
—

TOTAL
 
$
1,639

 
$
1,114

 
$
525

 
$
175

 
$
162

 
$
13

(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 $161 million as of May 31, 2015. As of that date, the Company had received $900 million of cash collateral and $74 million of securities 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, 2015.
(2)
As of May 31, 2015, the Company had received $68 million of cash collateral related to its interest rate swaps.
 
 
As of May 31, 2014
 
 
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)
 
$
127

 
$
101

 
$
26

 
$
85

 
$
84

 
$
1

Interest rate swaps
 
6

 
—

 
6

 
—

 
—

 
—

TOTAL
 
$
133

 
$
101

 
$
32

 
$
85

 
$
84

 
$
1

(1)
If the foreign exchange derivative financial instruments had been netted in the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $63 million as of May 31, 2014. No amounts of collateral were received or posted on the Company’s derivative assets and liabilities as of May 31, 2014.
The following table presents the fair values of derivative instruments included within the Consolidated Balance Sheets as of May 31, 2015 and 2014: 
 
 
Asset Derivatives
 
Liability Derivatives
(In millions)
 
Balance Sheet
Location
 
2015
 
2014
 
Balance Sheet 
Location
 
2015
 
2014
Derivatives formally designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
Prepaid expenses and other current assets
 
$
825

 
$
76

 
Accrued liabilities
 
$
140

 
$
57

Interest rate swaps
 
Prepaid expenses and other current assets
 
78

 
—

 
Accrued liabilities
 
—

 
—

Foreign exchange forwards and options
 
Deferred income taxes and other assets
 
520

 
26

 
Deferred income taxes and other liabilities
 
4

 
1

Interest rate swaps
 
Deferred income taxes and other assets
 
—

 
6

 
Deferred income taxes and other liabilities
 
—

 
—

Total derivatives formally designated as hedging instruments
 
 
 
1,423

 
108

 
 
 
144

 
58

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
Prepaid expenses and other current assets
 
209

 
25

 
Accrued liabilities
 
20

 
27

Embedded derivatives
 
Prepaid expenses and other current assets
 
2

 
—

 
Accrued liabilities
 
2

 
—

Embedded derivatives
 
Deferred income taxes and other assets
 
5

 
—

 
Deferred income taxes and other liabilities
 
9

 
—

Total derivatives not designated as hedging instruments
 
 
 
216

 
25

 
 
 
31

 
27

TOTAL DERIVATIVES
 
 
 
$
1,639

 
$
133

 
 
 
$
175

 
$
85

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, 2015 and 2014 are summarized below:
 
 
As of May 31,
 
 
 
2015
 
2014
(Dollars in millions)
 
Borrowings

 
Interest Rate
 
Borrowings

 
Interest Rate
Notes payable:
 
 
 
 
 
 
 
 
 
 
U.S. operations
 
$
—

 
0.00
%
(1) 
 
$
—

 
0.00
%
(1) 
Non-U.S. operations
 
74

 
12.39
%
(1) 
 
167

 
10.04
%
(1) 
TOTAL NOTES PAYABLE
 
$
74

 
 
 
 
$
167

 
 
 
Interest-bearing accounts payable:
 
 
 
 
 
 
 
 
 
 
Sojitz America
 
$
78

 
0.98
%
 
 
$
60

 
0.94
%
 
(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 and discounts and swap fair value adjustments, comprises the following: 
 
 
 
 
 
 
 
 
Book Value Outstanding
As of May 31,
Scheduled Maturity (Dollars and Yen in millions)
 
Original
Principal
 
Interest
Rate
 
Interest
Payments
 
2015
 
2014
Corporate Bond Payables:(4)
 
 
 
 
 
 
 
 
 
 
October 15, 2015(1)
 
$
100

 
5.15
%
 
Semi-Annually
 
$
101

 
$
108

May 1, 2023(5)
 
$
500

 
2.25
%
 
Semi-Annually
 
499

 
499

May 1, 2043(5)
 
$
500

 
3.63
%
 
Semi-Annually
 
499

 
499

Promissory Notes:
 
 
 
 
 
 
 
 
 
 
April 1, 2017(2)
 
$
40

 
6.20
%
 
Monthly
 
39

 
39

January 1, 2018(2)
 
$
19

 
6.79
%
 
Monthly
 
19

 
19

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

 
2.60
%
 
Quarterly
 
20

 
29

August 20, 2001 through November 20, 2020(3)
 
¥
4,000

 
2.00
%
 
Quarterly
 
9

 
13

Total
 
 
 
 
 
 
 
1,186

 
1,206

Less current maturities
 
 

 
 

 
 
 
107

 
7

TOTAL LONG-TERM DEBT
 
 
 
 
 
 
 
$
1,079

 
$
1,199

(1)
The Company has entered into interest rate swap agreements whereby the Company receives fixed interest payments at the same rate as the note and pays variable interest payments based on the six-month LIBOR plus a spread. The swaps have the same notional amount and maturity date as the corresponding note. At May 31, 2015, the interest rates payable on these swap agreements ranged from approximately 0.3% to 0.5%.
(2)
The Company assumed a total of $59 million in bonds payable as part of its agreement to purchase certain Corporate properties; this was treated as a non-cash financing transaction. The property serves as collateral for the debt. The purchase of these properties was accounted for as a business combination where the total consideration of $85 million was allocated to the land and buildings acquired; no other tangible or intangible assets or liabilities resulted from the purchase. The bonds mature in 2017 and 2018 and the Company does not have the ability to re-negotiate the terms of the debt agreements and would incur significant financial penalties if the notes were paid-off prior to maturity.
(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.
(4)
These senior unsecured obligations rank equally with the Company's other unsecured and unsubordinated indebtedness.
(5)
The bonds are redeemable at the Company's option prior to February 1, 2023 and November 1, 2042, respectively, at a price equal to the greater of (i) 100% of the aggregate principal amount of the notes to be redeemed, and (ii) the sum of the present values of the remaining scheduled payments, plus in each case, accrued and unpaid interest. Subsequent to February 1, 2023 and November 1, 2042, respectively, the bonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to 100% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest.
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)
 
2015
 
2014
 
2013
Income before income taxes:
 
 
 
 
 
 
United States
 
$
1,967

 
$
3,066

 
$
1,231

Foreign
 
2,238

 
478

 
2,025

TOTAL INCOME BEFORE INCOME TAXES
 
$
4,205

 
$
3,544

 
$
3,256

Schedule of Components of Income Tax Expense (Benefit) 
The provision for income taxes is as follows:
 
 
Year Ended May 31,
(In millions)
 
2015
 
2014
 
2013
Current:
 
 
 
 
 
 
United States
 
 
 
 
 
 
Federal
 
$
596

 
$
259

 
$
378

State
 
80

 
104

 
79

Foreign
 
369

 
499

 
442

Total
 
1,045

 
862

 
899

Deferred:
 
 
 
 
 
 
United States
 
 
 
 
 
 
Federal
 
(66
)
 
19

 
(4
)
State
 
(11
)
 
(3
)
 
(4
)
Foreign
 
(36
)
 
(27
)
 
(86
)
Total
 
(113
)
 
(11
)
 
(94
)
TOTAL INCOME TAX EXPENSE
 
$
932

 
$
851

 
$
805


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,
  
 
2015
 
2014
 
2013
Federal income tax rate
 
35.0
 %
 
35.0
 %
 
35.0
 %
State taxes, net of federal benefit
 
0.9
 %
 
1.8
 %
 
1.4
 %
Foreign earnings
 
-15.7
 %
 
2.2
 %
 
-11.8
 %
Deferred charge
 
0.9
 %
 
-14.6
 %
 
0.0
 %
Other, net
 
1.1
 %
 
-0.4
 %
 
0.1
 %
EFFECTIVE INCOME TAX RATE
 
22.2
 %
 
24.0
 %
 
24.7
 %
Schedule of Deferred Tax Assets and Liabilities 
Deferred tax assets and (liabilities) comprise the following: 
 
 
As of May 31,
(In millions)
 
2015
 
2014
Deferred tax assets:
 
 
 
 
Allowance for doubtful accounts
 
$
11

 
$
11

Inventories
 
59

 
49

Sales return reserves
 
143

 
113

Deferred compensation
 
258

 
211

Stock-based compensation
 
179

 
162

Reserves and accrued liabilities
 
92

 
95

Net operating loss carry-forwards
 
10

 
16

Undistributed earnings of foreign subsidiaries
 
149

 
194

Other
 
76

 
51

Total deferred tax assets
 
977

 
902

Valuation allowance
 
(9
)
 
(9
)
Total deferred tax assets after valuation allowance
 
968

 
893

Deferred tax liabilities:
 
 
 
 
Property, plant and equipment
 
(220
)
 
(237
)
Intangibles
 
(93
)
 
(94
)
Other
 
(38
)
 
(2
)
Total deferred tax liability
 
(351
)
 
(333
)
NET DEFERRED TAX ASSET
 
$
617

 
$
560

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)
 
2015
 
2014
 
2013
Unrecognized tax benefits, beginning of the period
 
$
506

 
$
447

 
$
285

Gross increases related to prior period tax positions(1)
 
32

 
814

 
77

Gross decreases related to prior period tax positions(1)
 
(123
)
 
(166
)
 
(3
)
Gross increases related to current period tax positions
 
82

 
125

 
130

Gross decreases related to current period tax positions
 
(9
)
 
(30
)
 
(9
)
Settlements(1)
 
(27
)
 
(676
)
 
—

Lapse of statute of limitations
 
(10
)
 
(4
)
 
(21
)
Changes due to currency translation
 
(13
)
 
(4
)
 
(12
)
UNRECOGNIZED TAX BENEFITS, END OF THE PERIOD
 
$
438

 
$
506

 
$
447


(1)
During the fourth quarter of the fiscal year ended May 31, 2014, the Company reached a resolution with the IRS on a U.S. Unilateral Advanced Pricing Agreement that covers intercompany transfer pricing for fiscal years 2011 through 2020. As a result, the Company recorded a gross increase in unrecognized tax benefits related to prior period tax positions, a gross decrease in unrecognized tax benefits related to prior period tax positions and a settlement. The net impact of these items resulted in a decrease to unrecognized tax benefits.
Summary of Operating Loss Carryforwards 
The Company has available domestic and foreign loss carry-forwards of $36 million at May 31, 2015. Such losses will expire as follows: 
 
 
Year Ending May 31,
(In millions)
 
2016
 
2017
 
2018
 
2019
 
2020-2035
 
Indefinite

 
Total

Net operating losses
 
$
—

 
$
—

 
$
4

 
$
1

 
$
17

 
$
14

 
$
36

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)
 
2015
 
2014
 
2013
Stock options(1)
 
$
136

 
$
125

 
$
123

ESPPs
 
24

 
22

 
19

Restricted stock
 
31

 
30

 
32

TOTAL STOCK-BASED COMPENSATION EXPENSE
 
$
191

 
$
177

 
$
174

(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 for the years ended May 31, 2015, 2014 and 2013 was $19 million, $15 million and $22 million, 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,
  
 
2015
 
2014
 
2013
Dividend yield
 
1.2
%
 
1.3
%
 
1.5
%
Expected volatility
 
23.6
%
 
27.9
%
 
35.0
%
Weighted average expected life (in years)
 
5.8

 
5.3

 
5.3

Risk-free interest rate
 
1.7
%
 
1.3
%
 
0.6
%
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, 2012
 
64.3

 
$
30.59

Exercised
 
(9.9
)
 
24.70

Forfeited
 
(1.3
)
 
40.14

Granted
 
14.6

 
46.55

Options outstanding May 31, 2013
 
67.7

 
$
34.72

Exercised
 
(11.0
)
 
28.29

Forfeited
 
(1.3
)
 
48.33

Granted
 
8.1

 
63.54

Options outstanding May 31, 2014
 
63.5

 
$
39.28

Exercised
 
(13.6
)
 
30.78

Forfeited
 
(1.0
)
 
59.02

Granted
 
9.2

 
77.68

Options outstanding May 31, 2015
 
58.1

 
$
47.00

Options exercisable at May 31,
 
 
 
 
2013
 
35.9

 
$
27.70

2014
 
37.0

 
31.42

2015
 
34.3

 
36.53

(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 computation of Diluted earnings per common share omitted options to purchase an additional 0.1 million, 0.1 million and 0.1 million shares of common stock outstanding for the years ended May 31, 2015, 2014 and 2013, respectively, because the options were anti-dilutive.
 
 
Year Ended May 31,
(In millions, except per share data)
 
2015
 
2014
 
2013
Determination of shares:
 
 
 
 
 
 
Weighted average common shares outstanding
 
861.7

 
883.4

 
897.3

Assumed conversion of dilutive stock options and awards
 
22.7

 
22.4

 
19.1

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
 
884.4

 
905.8

 
916.4

 
 
 
 
 
 
 
Earnings per common share from continuing operations:
 
 
 
 
 
 
Basic
 
$
3.80

 
$
3.05

 
$
2.74

Diluted
 
$
3.70

 
$
2.97

 
$
2.68

 
 
 
 
 
 
 
Earnings per common share from discontinued operations:
 
 
 
 
 
 
Basic
 
$
—

 
$
—

 
$
0.02

Diluted
 
$
—

 
$
—

 
$
0.02

 
 
 
 
 
 
 
Basic earnings per common share for NIKE, Inc.
 
$
3.80

 
$
3.05

 
$
2.76

Diluted earnings per common share for NIKE, Inc.
 
$
3.70

 
$
2.97

 
$
2.70

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, 2014
 
$
9

 
$
32

 
$
95

 
$
(51
)
 
$
85

Other comprehensive gains (losses) before reclassifications(2)
 
(20
)
 
1,447

 
—

 
33

 
1,460

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

 
(259
)
 
—

 
(40
)
 
(299
)
Other comprehensive income (loss)
 
(20
)
 
1,188

 
—

 
(7
)
 
1,161

Balance at May 31, 2015
 
$
(11
)
 
$
1,220

 
$
95

 
$
(58
)
 
$
1,246

(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, $(33) million, $0 million, $0 million and $(33) million, respectively.
(3)
Net of tax (benefit) expense of $0 million, $2 million, $0 million, $0 million and $2 million, respectively.
(In millions)
 
Foreign Currency Translation Adjustment(1)
 
Cash Flow Hedges
 
Net Investment Hedges(1)
 
Other
 
Total
Balance at May 31, 2013
 
$
41

 
$
193

 
$
95

 
$
(55
)
 
$
274

Other comprehensive gains (losses) before reclassifications(2)
 
(32
)
 
(134
)
 
—

 
—

 
(166
)
Reclassifications to net income of previously deferred (gains) losses(3)
 
—

 
(27
)
 
—

 
4

 
(23
)
Other comprehensive income (loss)
 
(32
)
 
(161
)
 
—

 
4

 
(189
)
Balance at May 31, 2014
 
$
9

 
$
32

 
$
95

 
$
(51
)
 
$
85

(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, $9 million, $0 million, $0 million and $9 million, respectively.
(3)
Net of tax (benefit) expense of $0 million, $9 million, $0 million, $0 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)
 
2015
 
2014
Gains (losses) on cash flow hedges:
 
 
 
 
 
Foreign exchange forwards and options
 
$
(95
)
 
$
14

Revenues
Foreign exchange forwards and options
 
220

 
12

Cost of sales
Foreign exchange forwards and options
 
—

 
—

Total selling and administrative expense
Foreign exchange forwards and options
 
136

 
10

Other (income) expense, net
Total before tax
 
261

 
36

 
Tax expense
 
(2
)
 
(9
)
 
Gain, net of tax
 
259

 
27

 
Gains (losses) on other
 
40

 
(4
)
Other (income) expense, net
Total before tax
 
40

 
(4
)
 
Tax expense
 
—

 
—

 
Gain (loss), net of tax
 
40

 
(4
)
 
Total net gain reclassified for the period
 
$
299

 
$
23

 
Discontinued Operations (Tables)
Summarized results from discontinued operations
Summarized results of the Company's discontinued operations are as follows:
 
 
Year Ended May 31,
(In millions)
 
2015
 
2014
 
2013
Revenues
 
$
—

 
$
—

 
$
523

Income before income taxes
 
—

 
—

 
108

Income tax expense
 
—

 
—

 
87

NET INCOME FROM DISCONTINUED OPERATIONS
 
$
—

 
$
—

 
$
21

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):
 
 
2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
 
Total
Operating leases
 
$
447

 
$
423

 
$
371

 
$
311

 
$
268

 
$
1,154

 
$
2,974

Capital leases
 
$
2

 
$
2

 
$
1

 
$
—

 
$
—

 
$
—

 
$
5

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):
 
 
2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
 
Total
Operating leases
 
$
447

 
$
423

 
$
371

 
$
311

 
$
268

 
$
1,154

 
$
2,974

Capital leases
 
$
2

 
$
2

 
$
1

 
$
—

 
$
—

 
$
—

 
$
5

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, 2015 and May 31, 2014, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.
 
 
As of May 31, 2015
 
 
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)
 
$
1,554

 
$
1,034

 
$
520

 
$
164

 
$
160

 
$
4

Embedded derivatives
 
7

 
2

 
5

 
11

 
2

 
9

Interest rate swaps(2)
 
78

 
78

 
—

 
—

 
—

 
—

TOTAL
 
$
1,639

 
$
1,114

 
$
525

 
$
175

 
$
162

 
$
13

(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 $161 million as of May 31, 2015. As of that date, the Company had received $900 million of cash collateral and $74 million of securities 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, 2015.
(2)
As of May 31, 2015, the Company had received $68 million of cash collateral related to its interest rate swaps.
 
 
As of May 31, 2014
 
 
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)
 
$
127

 
$
101

 
$
26

 
$
85

 
$
84

 
$
1

Interest rate swaps
 
6

 
—

 
6

 
—

 
—

 
—

TOTAL
 
$
133

 
$
101

 
$
32

 
$
85

 
$
84

 
$
1

(1)
If the foreign exchange derivative financial instruments had been netted in the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $63 million as of May 31, 2014. No amounts of collateral were received or posted on the Company’s derivative assets and liabilities as of May 31, 2014.
The following table presents the fair values of derivative instruments included within the Consolidated Balance Sheets as of May 31, 2015 and 2014: 
 
 
Asset Derivatives
 
Liability Derivatives
(In millions)
 
Balance Sheet
Location
 
2015
 
2014
 
Balance Sheet 
Location
 
2015
 
2014
Derivatives formally designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
Prepaid expenses and other current assets
 
$
825

 
$
76

 
Accrued liabilities
 
$
140

 
$
57

Interest rate swaps
 
Prepaid expenses and other current assets
 
78

 
—

 
Accrued liabilities
 
—

 
—

Foreign exchange forwards and options
 
Deferred income taxes and other assets
 
520

 
26

 
Deferred income taxes and other liabilities
 
4

 
1

Interest rate swaps
 
Deferred income taxes and other assets
 
—

 
6

 
Deferred income taxes and other liabilities
 
—

 
—

Total derivatives formally designated as hedging instruments
 
 
 
1,423

 
108

 
 
 
144

 
58

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
Prepaid expenses and other current assets
 
209

 
25

 
Accrued liabilities
 
20

 
27

Embedded derivatives
 
Prepaid expenses and other current assets
 
2

 
—

 
Accrued liabilities
 
2

 
—

Embedded derivatives
 
Deferred income taxes and other assets
 
5

 
—

 
Deferred income taxes and other liabilities
 
9

 
—

Total derivatives not designated as hedging instruments
 
 
 
216

 
25

 
 
 
31

 
27

TOTAL DERIVATIVES
 
 
 
$
1,639

 
$
133

 
 
 
$
175

 
$
85

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance 
The following tables present the amounts affecting the Consolidated Statements of Income for years ended May 31, 2015, 2014 and 2013:

(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(1)
 
Year Ended May 31,
2015
 
2014
 
2013
 
2015
 
2014
 
2013
Derivatives designated as cash flow hedges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
$
(202
)
 
$
(48
)
 
$
42

 
Revenues
 
$
(95
)
 
$
14

 
$
(19
)
Foreign exchange forwards and options
 
1,109

 
(78
)
 
67

 
Cost of sales
 
220

 
12

 
113

Foreign exchange forwards and options
 
—

 
4

 
(3
)
 
Total selling and administrative expense
 
—

 
—

 
2

Foreign exchange forwards and options
 
497

 
(21
)
 
33

 
Other (income) expense, net
 
136

 
10

 
9

Interest rate swaps
 
76

 
—

 
—

 
Interest expense (income), net
 
—

 
—

 
—

Total designated cash flow hedges
 
$
1,480

 
$
(143
)
 
$
139

 
 
 
$
261

 
$
36

 
$
105

Derivatives designated as net investment hedges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards and options
 
$
—

 
$
—

 
$
—

 
Other (income) expense, net
 
$
—

 
$
—

 
$
—

(1)
For the years ended May 31, 2015, 2014 and 2013, 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)
 
2015
 
2014
 
2013
 
Derivatives designated as fair value hedges:
 
 
 
 
 
 
 
 
Interest rate swaps(1)
 
$
5

 
$
5

 
$
5

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

 
$
(75
)
 
$
51

 
Other (income) expense, net
Embedded derivatives
 
$
(1
)
 
$
(1
)
 
$
(4
)
 
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 $)
0 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
Nov. 15, 2012
Aug. 31, 2014
Nov. 30, 2014
May 31, 2015
May 31, 2014
May 31, 2013
Dec. 24, 2012
May 31, 2012
Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
Assets of disposal group, including intangibles, goodwill and fixed assets
 
 
 
$ 0 
$ 0 
 
 
 
Liabilities of disposal group
 
 
 
0 
0 
 
 
 
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
 
 
 
724,000,000 
610,000,000 
 
 
 
Total advertising and promotion expenses
 
 
 
3,213,000,000 
3,031,000,000 
2,745,000,000 
 
 
Prepaid advertising and promotion expenses
 
 
 
455,000,000 
516,000,000 
 
 
 
Allowance for uncollectible accounts receivable
 
 
 
78,000,000 
78,000,000 
 
 
 
Net increase (decrease) in cash and equivalents
 
83,000,000 
53,000,000 
1,632,000,000 
(1,117,000,000)
1,083,000,000 
 
 
Cash and equivalents (Note 6)
 
2,303,000,000 
2,273,000,000 
3,852,000,000 
2,220,000,000 
3,337,000,000 
 
2,254,000,000 
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 
 
 
 
 
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)
 
 
 
10 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 
 
 
 
 
 
 
 
Other Noncurrent Assets
 
 
 
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
Allowance for uncollectible accounts receivable
 
 
 
24,000,000 
37,000,000 
 
 
 
Prior Period Revisions to Foreign Currency Adjustments
 
 
 
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
Net increase (decrease) in cash and equivalents
 
 
 
0 
0 
 
 
 
Scenario, Adjustment |
Prior Period Revisions to Foreign Currency Adjustments
 
 
 
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
Net increase (decrease) in cash and equivalents
 
0 
0 
 
0 
0 
 
 
Cash and equivalents (Note 6)
 
$ 0 
$ 0 
$ 0 
$ 0 
$ 0 
 
$ 0 
Summary of Significant Accounting Policies - Revisions (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended 12 Months Ended
Aug. 31, 2014
Nov. 30, 2014
May 31, 2015
May 31, 2014
May 31, 2013
Cash provided by operations:
 
 
 
 
 
Net income
$ 962 
$ 1,617 
$ 3,273 
$ 2,693 
$ 2,472 
Amortization and other
8 
15 
43 
68 
64 
Net foreign currency adjustments
53 
243 
424 
56 
66 
Cash provided by operations
683 
1,547 
4,680 
3,013 
3,032 
Cash used by investing activities:
 
 
 
 
 
Effect of exchange rate changes on cash and equivalents
2 
(24)
(83)
(9)
36 
Cash used by financing activities:
 
 
 
 
 
Net increase (decrease) in cash and equivalents
83 
53 
1,632 
(1,117)
1,083 
Cash and equivalents, beginning of year
2,220 
2,220 
2,220 
3,337 
2,254 
CASH AND EQUIVALENTS, END OF YEAR
2,303 
2,273 
3,852 
2,220 
3,337 
As Reported
 
 
 
 
 
Cash provided by operations:
 
 
 
 
 
Net income
962 
1,617 
 
2,693 
2,472 
Amortization and other
(34)
(54)
 
114 
66 
Net foreign currency adjustments
0 
0 
 
0 
0 
Cash provided by operations
588 
1,235 
 
3,003 
2,968 
Cash used by investing activities:
 
 
 
 
 
Effect of exchange rate changes on cash and equivalents
97 
288 
 
1 
100 
Cash used by financing activities:
 
 
 
 
 
Net increase (decrease) in cash and equivalents
83 
53 
 
(1,117)
1,083 
Cash and equivalents, beginning of year
2,220 
2,220 
2,220 
3,337 
2,254 
CASH AND EQUIVALENTS, END OF YEAR
2,303 
2,273 
 
2,220 
3,337 
Prior Period Revisions to Foreign Currency Adjustments
 
 
 
 
 
Cash used by financing activities:
 
 
 
 
 
Net increase (decrease) in cash and equivalents
 
 
0 
0 
 
Prior Period Revisions to Foreign Currency Adjustments |
Scenario, Adjustment
 
 
 
 
 
Cash provided by operations:
 
 
 
 
 
Net income
0 
0 
 
0 
0 
Amortization and other
42 
69 
 
(46)
(2)
Net foreign currency adjustments
53 
243 
 
56 
66 
Cash provided by operations
95 
312 
 
10 
64 
Cash used by investing activities:
 
 
 
 
 
Effect of exchange rate changes on cash and equivalents
(95)
(312)
 
(10)
(64)
Cash used by financing activities:
 
 
 
 
 
Net increase (decrease) in cash and equivalents
0 
0 
 
0 
0 
Cash and equivalents, beginning of year
0 
0 
0 
0 
0 
CASH AND EQUIVALENTS, END OF YEAR
$ 0 
$ 0 
$ 0 
$ 0 
$ 0 
Inventories - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2015
May 31, 2014
Inventory Disclosure [Abstract]
 
 
Inventory balances, were substantially all finished goods
$ 4,337 
$ 3,947 
Property Plant and Equipment (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2015
May 31, 2014
Property, Plant and Equipment [Line Items]
 
 
Total property, plant and equipment, gross
$ 6,352 
$ 6,220 
Less accumulated depreciation
3,341 
3,386 
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET
3,011 
2,834 
Land
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, plant and equipment, gross
273 
270 
Buildings
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, plant and equipment, gross
1,250 
1,261 
Machinery, equipment and internal-use software
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, plant and equipment, gross
3,329 
3,376 
Capital lease obligations
5 
74 
Leasehold improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, plant and equipment, gross
1,150 
1,066 
Construction in process
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, plant and equipment, gross
$ 350 
$ 247 
Identified Intangible Assets and Goodwill - Additional Information (Detail) (USD $)
May 31, 2015
May 31, 2014
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
Indefinite-lived trademarks
$ 281,000,000 
$ 282,000,000 
Goodwill
131,000,000 
131,000,000 
Goodwill, Impaired, Accumulated Impairment Loss
0 
0 
Converse
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
Goodwill
65,000,000 
64,000,000 
Acquired Trademarks and Other Intangibles
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
Finite-Lived Intangible Assets, Gross
$ 17,000,000 
$ 39,000,000 
Accrued Liabilities (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2015
May 31, 2014
Accrued Liabilities, Current [Abstract]
 
 
Compensation and benefits, excluding taxes
$ 997 
$ 782 
Collateral received from counterparties to hedging instruments
968 
0 
Endorsement compensation
388 
328 
Dividends payable
240 
209 
Import and logistics costs
207 
127 
Taxes other than income taxes
174 
204 
Fair value of derivatives
162 
85 
Advertising and marketing
117 
133 
Other
698 1
623 1
TOTAL ACCRUED LIABILITIES
$ 3,951 
$ 2,491 
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, 2015
May 31, 2014
Assets, Fair Value Disclosure [Abstract]
 
 
Cash
$ 615 
$ 780 
Assets at Fair Value
5,932 
5,149 
Cash and Cash Equivalents
3,852 
2,220 
Short-term Investments
2,072 
2,922 
Other Long-term Assets
8 
7 
Fair Value, Inputs, Level 1 [Member] |
U.S. Treasury securities
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
869 
1,137 
Cash and Cash Equivalents
225 
151 
Short-term Investments
644 
986 
Other Long-term Assets
0 
0 
Fair Value, Inputs, Level 2 [Member]
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
4,440 
3,225 
Cash and Cash Equivalents
3,012 
1,289 
Short-term Investments
1,428 
1,936 
Other Long-term Assets
0 
0 
Fair Value, Inputs, Level 2 [Member] |
Time deposits
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
684 
227 
Cash and Cash Equivalents
684 
227 
Short-term Investments
0 
0 
Other Long-term Assets
0 
0 
Fair Value, Inputs, Level 2 [Member] |
U.S. Agency securities
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
976 
1,027 
Cash and Cash Equivalents
110 
25 
Short-term Investments
866 
1,002 
Other Long-term Assets
0 
0 
Fair Value, Inputs, Level 2 [Member] |
Commercial paper and bonds
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
914 
959 
Cash and Cash Equivalents
352 
25 
Short-term Investments
562 
934 
Other Long-term Assets
0 
0 
Fair Value, Inputs, Level 2 [Member] |
Money market funds
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
1,866 
1,012 
Cash and Cash Equivalents
1,866 
1,012 
Short-term Investments
0 
0 
Other Long-term Assets
0 
0 
Fair Value, Inputs, Level 3 [Member] |
Non-marketable preferred stock
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Assets at Fair Value
8 
7 
Cash and Cash Equivalents
0 
0 
Short-term Investments
0 
0 
Other Long-term Assets
$ 8 
$ 7 
Fair Value Measurements Derivative Assets and Liabilities at Fair Value (Detail) (USD $)
12 Months Ended
May 31, 2015
May 31, 2014
Derivatives, Fair Value [Line Items]
 
 
Accrued Liabilities
$ 162,000,000 
$ 85,000,000 
Collateral received from counterparties to hedging instruments
968,000,000 
0 
Fair Value Transfers Between Fair Value Hierarchy Levels
0 
0 
Assets, Fair Value Disclosure, Nonrecurring
0 
0 
Liabilities, Fair Value Disclosure, Nonrecurring
0 
0 
Fair Value, Measurements, Recurring
 
 
Derivatives, Fair Value [Line Items]
 
 
Reduction in derivative liabilities if netted
161,000,000 
63,000,000 
Fair Value, Inputs, Level 2 [Member] |
Fair Value, Measurements, Recurring
 
 
Derivatives, Fair Value [Line Items]
 
 
Assets at Fair Value
1,639,000,000 
133,000,000 
Other Current Assets
1,114,000,000 
101,000,000 
Other Long-term Assets
525,000,000 
32,000,000 
Liabilities at Fair Value
175,000,000 
85,000,000 
Accrued Liabilities
162,000,000 
84,000,000 
Other Long-term Liabilities
13,000,000 
1,000,000 
Fair Value, Inputs, Level 2 [Member] |
Fair Value, Measurements, Recurring |
Foreign Exchange Contract [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Assets at Fair Value
1,554,000,000 1
127,000,000 2
Other Current Assets
1,034,000,000 1
101,000,000 2
Other Long-term Assets
520,000,000 1
26,000,000 2
Liabilities at Fair Value
164,000,000 1
85,000,000 2
Accrued Liabilities
160,000,000 1
84,000,000 2
Other Long-term Liabilities
4,000,000 1
1,000,000 2
Fair Value, Inputs, Level 2 [Member] |
Fair Value, Measurements, Recurring |
Embedded derivatives
 
 
Derivatives, Fair Value [Line Items]
 
 
Assets at Fair Value
7,000,000 
 
Other Current Assets
2,000,000 
 
Other Long-term Assets
5,000,000 
 
Liabilities at Fair Value
11,000,000 
 
Accrued Liabilities
2,000,000 
 
Other Long-term Liabilities
9,000,000 
 
Fair Value, Inputs, Level 2 [Member] |
Fair Value, Measurements, Recurring |
Interest rate swaps
 
 
Derivatives, Fair Value [Line Items]
 
 
Assets at Fair Value
78,000,000 3
6,000,000 
Other Current Assets
78,000,000 3
0 
Other Long-term Assets
0 3
6,000,000 
Liabilities at Fair Value
0 3
0 
Accrued Liabilities
0 3
0 
Other Long-term Liabilities
0 3
0 
Cash and Cash Equivalents
 
 
Derivatives, Fair Value [Line Items]
 
 
Collateral received from counterparties to hedging instruments
968,000,000 
 
Cash and Cash Equivalents |
Foreign Exchange Contract [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Collateral received from counterparties to hedging instruments
900,000,000 
0 
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
68,000,000 
 
Securities Pledged as Collateral
 
 
Derivatives, Fair Value [Line Items]
 
 
Collateral received from counterparties to hedging instruments
74,000,000 
 
Securities Pledged as Collateral |
Interest rate swaps
 
 
Derivatives, Fair Value [Line Items]
 
 
Collateral received from counterparties to hedging instruments
$ 74,000,000 
 
Fair Value Measurements - Additional Information (Detail) (USD $)
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
Fair Value Transfers Between Fair Value Hierarchy Levels
$ 0 
$ 0 
 
Assets, Fair Value Disclosure, Nonrecurring
0 
0 
 
Short-term Investments [Member]
 
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
Available-for-sale securities with maturity dates within one year from purchase date
1,808,000,000 
 
 
Available-for-sale securities with maturity dates over one year and less than five years from purchase date
264,000,000 
 
 
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
6,000,000 
5,000,000 
4,000,000 
Fair Value, Inputs, Level 2 [Member] |
Estimate of Fair Value Measurement [Member] |
Prepaid expenses and other current assets
 
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
Outstanding receivables
$ 150,000,000 
 
 
Short-Term Borrowings and Credit Lines - Notes Payable to Banks and Interest Bearing Accounts Payable to Sojitz Corporation of America (Detail) (USD $)
May 31, 2015
May 31, 2014
Short-term Debt [Line Items]
 
 
Commercial Paper
$ 0 
$ 0 
Notes payable:
 
 
TOTAL NOTES PAYABLE
74,000,000 
167,000,000 
Interest-bearing accounts payable:
 
 
Line of credit facility, amount outstanding
 
0 
Notes Payable
 
 
Notes payable:
 
 
TOTAL NOTES PAYABLE
74,000,000 
167,000,000 
UNITED STATES |
Notes Payable
 
 
Notes payable:
 
 
TOTAL NOTES PAYABLE
0 
0 
Notes payable - interest rate
0.00% 1
0.00% 1
Non-U.S. operations |
Notes Payable
 
 
Notes payable:
 
 
TOTAL NOTES PAYABLE
74,000,000 
167,000,000 
Notes payable - interest rate
12.39% 1
10.04% 1
Sojitz America
 
 
Interest-bearing accounts payable:
 
 
Sojitz America
$ 78,000,000 
$ 60,000,000 
Sojitz America - interest rate
0.98% 
0.94% 
Short Term Borrowings and Credit Lines - Additional Information (Detail) (USD $)
12 Months Ended 12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2015
Interest Bearing Accounts Payable
60-day London Interbank Offered Rate (LIBOR)
May 31, 2015
Sojitz America
Interest Bearing Accounts Payable
May 31, 2015
Revolving Credit Facility
Nov. 1, 2011
Revolving Credit Facility
May 31, 2015
Revolving Credit Facility
London Interbank Offered Rate (LIBOR)
Short-term Debt [Line Items]
 
 
 
 
 
 
 
Accounts payable, due date period (in days)
 
 
 
60 days 
 
 
 
Basis spread on variable rate, above LIBOR
 
 
0.75% 
 
 
 
0.445% 
Revolving credit facility, borrowing capacity
 
 
 
 
 
$ 1,000,000,000 
 
Revolving credit facility, optional maximum borrowing capacity
 
 
 
 
 
1,500,000,000.0 
 
Revolving credit facility, fee
 
 
 
 
0.055% 
 
 
Amounts outstanding under commercial paper program
0 
0 
 
 
 
 
 
Line of credit facility, amount outstanding
 
$ 0 
 
 
$ 0 
 
 
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
May 31, 2015
USD ($)
May 31, 2014
USD ($)
May 31, 2015
Corporate Bond Payables
5.15% Corporate bond, payable October 15, 2015
USD ($)
May 31, 2014
Corporate Bond Payables
5.15% Corporate bond, payable October 15, 2015
USD ($)
May 31, 2015
Corporate Bond Payables
2.25% Corporate bond, payable May 1, 2023
USD ($)
May 31, 2014
Corporate Bond Payables
2.25% Corporate bond, payable May 1, 2023
USD ($)
May 31, 2015
Corporate Bond Payables
3.63% Corporate bond, payable May 1, 2043
USD ($)
May 31, 2014
Corporate Bond Payables
3.63% Corporate bond, payable May 1, 2043
USD ($)
May 31, 2015
Notes Payable
6.20% Promissory note, payable April 1, 2017
USD ($)
May 31, 2014
Notes Payable
6.20% Promissory note, payable April 1, 2017
USD ($)
May 31, 2015
Notes Payable
6.79% Promissory note, payable January 1, 2018
USD ($)
May 31, 2014
Notes Payable
6.79% Promissory note, payable January 1, 2018
USD ($)
May 31, 2015
Notes Payable
2.60% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
USD ($)
May 31, 2015
Notes Payable
2.60% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
JPY (¥)
May 31, 2014
Notes Payable
2.60% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
USD ($)
May 31, 2015
Notes Payable
2.00% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
USD ($)
May 31, 2015
Notes Payable
2.00% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
JPY (¥)
May 31, 2014
Notes Payable
2.00% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
USD ($)
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt, original principal
 
 
$ 100,000,000 1 2
 
$ 500,000,000 1 3
 
$ 500,000,000 1 3
 
$ 40,000,000 4
 
$ 19,000,000 4
 
 
¥ 9,000,000,000 5
 
 
¥ 4,000,000,000 5
 
Long-term debt, interest rate
 
 
5.15% 1 2
 
2.25% 1 3
 
3.63% 1 3
 
6.20% 4
 
6.79% 4
 
2.60% 5
2.60% 5
 
2.00% 5
2.00% 5
 
Long-term debt, interest payment
 
 
Semi-Annually 1 2
 
Semi-Annually 1 3
 
Semi-Annually 1 3
 
Monthly 4
 
Monthly 4
 
Quarterly 5
Quarterly 5
 
Quarterly 5
Quarterly 5
 
Long Term Debt
1,186,000,000 
1,206,000,000 
101,000,000 1 2
108,000,000 1 2
499,000,000 1 3
499,000,000 1 3
499,000,000 1 3
499,000,000 1 3
39,000,000 4
39,000,000 4
19,000,000 4
19,000,000 4
20,000,000 5
 
29,000,000 5
9,000,000 5
 
13,000,000 5
Less current maturities
107,000,000 
7,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL LONG-TERM DEBT
$ 1,079,000,000 
$ 1,199,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long Term Debt - Narrative (Detail)
0 Months Ended 12 Months Ended 12 Months Ended
May 30, 2013
USD ($)
May 31, 2015
May 31, 2015
5.15% Corporate bond, payable October 15, 2015
May 31, 2015
2.25% Corporate bond, payable May 1, 2023
May 31, 2015
3.63% Corporate bond, payable May 1, 2043
May 31, 2015
6.20% Promissory note, payable April 1, 2017
May 31, 2015
6.79% Promissory note, payable January 1, 2018
May 30, 2013
6.2% and 6.79% Promissory notes, payable April 1, 2017 and January 1, 2018
USD ($)
May 31, 2015
2.60% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
May 31, 2015
2.00% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
May 31, 2015
2.6% and 2.0% Japanese Yen note, maturing August 20, 2001 through November 20, 2020
JPY (¥)
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, maturity date
 
 
Oct. 15, 2015 
May 01, 2023 
May 01, 2043 
Apr. 01, 2017 
Jan. 01, 2018 
 
Nov. 20, 2020 
Nov. 20, 2020 
 
Interest rate swap, lower range of variable interest rate payable
 
0.30% 
 
 
 
 
 
 
 
 
 
Interest rate swap, higher range of variable interest rate payable
 
0.50% 
 
 
 
 
 
 
 
 
 
Long-term debt, original principal
 
 
 
 
 
 
 
$ 59,000,000 
 
 
¥ 13,000,000,000 
Purchase of properties
$ 85,000,000 
 
 
 
 
 
 
 
 
 
 
Debt instrument, minimum maturity date
 
 
 
 
 
 
 
 
 
 
Aug. 20, 2001 
Debt instrument, maximum maturity date
 
 
 
 
 
 
 
 
 
 
Nov. 20, 2020 
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, 2015
May 31, 2014
Long-term Debt Disclosure [Abstract]
 
 
Maturity of long-term debt in 2016
$ 106 
 
Maturity of long-term debt in 2017
44 
 
Maturity of long-term debt in 2018
24 
 
Maturity of long-term debt in 2019
6 
 
Maturity of long-term debt in 2020
6 
 
Fair value of long term debt
$ 1,160 
$ 1,154 
Income Taxes - Income before Income Taxes (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Income before income taxes:
 
 
 
United States
$ 1,967 
$ 3,066 
$ 1,231 
Foreign
2,238 
478 
2,025 
Income before income taxes
$ 4,205 
$ 3,544 
$ 3,256 
Income Taxes - Provision for Income Taxes (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Current:
 
 
 
Federal
$ 596 
$ 259 
$ 378 
State
80 
104 
79 
Foreign
369 
499 
442 
Total
1,045 
862 
899 
Deferred:
 
 
 
Federal
(66)
19 
(4)
State
(11)
(3)
(4)
Foreign
(36)
(27)
(86)
Total
(113)
(11)
(94)
Income tax expense
$ 932 
$ 851 
$ 805 
Income Taxes - Reconciliation from United States Statutory Federal Income Tax Rate to Effective Income Tax Rate (Detail)
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Income Tax Disclosure [Abstract]
 
 
 
Federal income tax rate
35.00% 
35.00% 
35.00% 
State taxes, net of federal benefit
0.90% 
1.80% 
1.40% 
Foreign earnings
(15.70%)
2.20% 
(11.80%)
Deferred charge
0.90% 
(14.60%)
0.00% 
Other, net
1.10% 
(0.40%)
0.10% 
EFFECTIVE INCOME TAX RATE
22.20% 
24.00% 
24.70% 
Income Taxes - Deferred Tax Assets and Liabilities (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2015
May 31, 2014
Deferred tax assets:
 
 
Allowance for doubtful accounts
$ 11 
$ 11 
Inventories
59 
49 
Sales return reserves
143 
113 
Deferred compensation
258 
211 
Stock-based compensation
179 
162 
Reserves and accrued liabilities
92 
95 
Net operating loss carry-forwards
10 
16 
Undistributed earnings of foreign subsidiaries
149 
194 
Other
76 
51 
Total deferred tax assets
977 
902 
Valuation allowance
(9)
(9)
Total deferred tax assets after valuation allowance
968 
893 
Deferred tax liabilities:
 
 
Property, plant and equipment
(220)
(237)
Intangibles
(93)
(94)
Other
(38)
(2)
Total deferred tax liability
(351)
(333)
NET DEFERRED TAX ASSET
$ 617 
$ 560 
Income Taxes - Reconciliation of Changes in Gross Balance of Unrecognized Tax Benefits (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
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 
$ 447 
$ 285 
Gross increases related to prior period tax positions
32 1
814 1
77 1
Gross decreases related to prior period tax positions
(123)1
(166)1
(3)1
Gross increases related to current period tax positions
82 
125 
130 
Gross decreases related to current period tax positions
(9)
(30)
(9)
Settlements
(27)1
(676)1
0 1
Lapse of statute of limitations
(10)
(4)
(21)
Changes due to currency translation
(13)
(4)
(12)
UNRECOGNIZED TAX BENEFITS, AS OF THE END OF THE PERIOD
$ 438 
$ 506 
$ 447 
Income Taxes - Additional Information (Detail) (USD $)
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
May 31, 2012
Income Tax Contingency [Line Items]
 
 
 
 
Effective tax rate, change from prior period
(180.00%)
(70.00%)
 
 
Total gross unrecognized tax benefits, excluding related interest and penalties
$ 438,000,000 
$ 506,000,000 
$ 447,000,000 
$ 285,000,000 
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
260,000,000 
 
 
 
Increase in liability for payment of interest and penalties
(3,000,000)
55,000,000 
4,000,000 
 
Accrued interest and penalties related to uncertain tax positions (excluding federal benefit)
164,000,000 
167,000,000 
 
 
Estimated decrease in total gross unrecognized tax benefits as a result of resolutions of global tax examinations and expiration of applicable statutes of limitations
63,000,000 
 
 
 
Reinvestment of the cumulative undistributed earnings of certain foreign subsidiaries
8,300,000,000 
 
 
 
Unrecognized deferred tax liability associated with the indefinitely reinvested undistributed earnings
2,700,000,000 
 
 
 
Tax holiday, expiration period (year)
2021 
 
 
 
Decrease in income tax expense related to tax holiday
174,000,000 
138,000,000 
108,000,000 
 
Decrease in income tax expense related to tax holiday per diluted share, (in dollars per share)
$ 0.20 
$ 0.15 
$ 0.12 
 
Valuation allowance increase (decrease) related to tax benefits of certain subsidiaries with operating losses
0 
4,000,000 
(22,000,000)
 
Available domestic and foreign loss carry-forwards
36,000,000 
 
 
 
Income tax benefits attributable to employee stock-based compensation
224,000,000 
135,000,000 
76,000,000 
 
Tax Year 2011 |
Domestic Tax Authority
 
 
 
 
Income Tax Contingency [Line Items]
 
 
 
 
Proposed increase in tax related to the foreign tax credit matter
$ 31,000,000 
 
 
 
Income Taxes - Available Domestic and Foreign Loss Carryforwards (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2015
Income Tax Disclosure [Abstract]
 
2016
$ 0 
2017
0 
2018
4 
2019
1 
2020-2035
17 
Indefinite
14 
Net Operating Losses
$ 36 
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, 2015
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, 2015
May 31, 2014
May 31, 2013
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)
200,000,000 
 
 
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)
1,200,000,000 
 
 
Stock Incentive Plan 1990 |
Class B Common Stock
 
 
 
Common Stock and Share Based Compensation [Line Items]
 
 
 
Shares available for grant (in shares)
326,000,000 
 
 
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)
6 years 
 
 
Weighted average remaining contractual life for options exercisable (in years)
4 years 8 months 12 days 
 
 
Aggregate intrinsic value for options outstanding
$ 3,178 
 
 
Aggregate intrinsic value for options exercisable
2,235 
 
 
Total intrinsic value of options exercised
795 
474 
293 
Stock Options |
Stock Incentive Plan 1990
 
 
 
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)
1 year 10 months 24 days 
 
 
Stock Options |
Stock Incentive Plan 1990 |
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)
$ 16.95 
 
 
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)
1,400,000 
1,400,000 
1,600,000 
Employee Stock |
Stock Incentive Plan 1990 |
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)
 
$ 14.89 
$ 12.71 
Restricted Stock |
Stock Incentive Plan 1990 |
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)
300,000 
300,000 
1,600,000 
Restricted stock granted to key employees under 1990 Plan, weighted average values per share (in dollars per shares)
$ 79.38 
$ 63.89 
$ 46.86 
Restricted stock vested, fair value
20 
28 
25 
Restricted Stock Units (RSUs) |
Stock Incentive Plan 1990
 
 
 
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)
1 year 6 months 
 
 
Unrecognized compensation costs from restricted stock, net of estimated forfeitures
48 
 
 
General and Administrative Expense |
Stock Options |
Stock Incentive Plan 1990
 
 
 
Common Stock and Share Based Compensation [Line Items]
 
 
 
Unrecognized compensation costs from stock options, net of estimated forfeitures
$ 180 
 
 
Common Stock and Stock-Based Compensation - Total Stock-Based Compensation Expense (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award Accelerated Compensation Cost
$ 19 
$ 15 
$ 22 
Stock-based compensation expense
191 
177 
174 
General and Administrative Expense
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Stock-based compensation expense
191 
177 
174 
General and Administrative Expense |
Stock Options
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Stock-based compensation expense
136 1
125 1
123 1
General and Administrative Expense |
Restricted Stock
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Stock-based compensation expense
31 
30 
32 
General and Administrative Expense |
Employee Stock
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Stock-based compensation expense
$ 24 
$ 22 
$ 19 
Common Stock and Stock-Based Compensation - Weighted Average Assumptions Used to Estimate Fair Values (Detail) (Stock Options)
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Stock Options
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Dividend yield
1.20% 
1.30% 
1.50% 
Expected volatility
23.60% 
27.90% 
35.00% 
Weighted average expected life (in years)
5 years 9 months 
5 years 3 months 
5 years 3 months 
Risk-free interest rate
1.70% 
1.30% 
0.60% 
Common Stock and Stock-Based Compensation - Stock Option Transactions Under Plan (Detail) (Stock Incentive Plan 1990, USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Stock Incentive Plan 1990
 
 
 
Options Outstanding - Shares
 
 
 
Beginning Balance (in shares)
63.5 1
67.7 1
64.3 1
Exercised (in shares)
(13.6)1
(11.0)1
(9.9)1
Forfeited (in shares)
(1.0)1
(1.3)1
(1.3)1
Granted (in shares)
9.2 1
8.1 1
14.6 1
Ending Balance (in shares)
58.1 1
63.5 1
67.7 1
Options exercisable (in shares)
34.3 1
37.0 1
35.9 1
Options Outstanding - Weighted-Average Option Price
 
 
 
Beginning Balance (in dollars per share)
$ 39.28 
$ 34.72 
$ 30.59 
Exercised (in dollars per share)
$ 30.78 
$ 28.29 
$ 24.70 
Forfeited (in dollars per share)
$ 59.02 
$ 48.33 
$ 40.14 
Granted (in dollars per share)
$ 77.68 
$ 63.54 
$ 46.55 
Ending Balance (in dollars per share)
$ 47.00 
$ 39.28 
$ 34.72 
Options exercisable (in dollars per share)
$ 36.53 
$ 31.42 
$ 27.70 
Earnings Per Share - Additional Information (Detail) (Stock Options)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
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
0.1 
0.1 
0.1 
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, 2015
May 31, 2014
May 31, 2013
Determination of shares:
 
 
 
Weighted average common shares outstanding (in shares)
861.7 
883.4 
897.3 
Assumed conversion of dilutive stock options and awards (in shares)
22.7 
22.4 
19.1 
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (in shares)
884.4 
905.8 
916.4 
Earnings per common share from continuing operations:
 
 
 
Basic (in dollars per share)
$ 3.80 
$ 3.05 
$ 2.74 
Diluted (in dollars per share)
$ 3.70 
$ 2.97 
$ 2.68 
Earnings per common share from discontinued operations:
 
 
 
Basic (in dollars per share)
$ 0.00 
$ 0.00 
$ 0.02 
Diluted (in dollars per share)
$ 0.00 
$ 0.00 
$ 0.02 
Basic earnings per common share for NIKE, Inc. (in dollars per share)
$ 3.80 
$ 3.05 
$ 2.76 
Diluted earnings per common share for NIKE, Inc. (in dollars per share)
$ 3.70 
$ 2.97 
$ 2.70 
Benefit Plans - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Deferred income taxes and other long-term liabilities
 
 
 
Defined Contribution Plan Disclosure [Line Items]
 
 
 
Deferred compensation plan liabilities
$ 443 
$ 390 
 
Liability related to the unfunded pension plan
98 
100 
 
General and Administrative Expense
 
 
 
Defined Contribution Plan Disclosure [Line Items]
 
 
 
401(k) employee savings plans, expenses
58 
51 
46 
General and Administrative Expense |
Profit Sharing Plan
 
 
 
Defined Contribution Plan Disclosure [Line Items]
 
 
 
Contribution and cash award expenses included in selling and administrative expenses
58 
49 
47 
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
$ 68 
$ 46 
$ 50 
Accumulated Other Comprehensive Income - Changes in AOCI (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
Accumulated other comprehensive income balance at the beginning of the period
$ 85 
$ 274 
Other comprehensive gains (losses) before reclassifications, net of tax
1,460 1
(166)2
Reclassifications to net income of previously deferred (gains) losses, net of tax
(299)3
(23)4
Other comprehensive income (loss)
1,161 
(189)
Accumulated other comprehensive income balance at the end of the period
1,246 
85 
Other comprehensive income, before reclassification, tax benefit (expense)
(33)
9 
Reclassification from accumulated other comprehensive income, tax (benefit) expense
2 
9 
Foreign Currency Translation Adjustment
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
Accumulated other comprehensive income balance at the beginning of the period
9 5
41 5
Other comprehensive gains (losses) before reclassifications, net of tax
(20)1 5
(32)2 5
Reclassifications to net income of previously deferred (gains) losses, net of tax
0 3 5
0 4 5
Other comprehensive income (loss)
(20)5
(32)5
Accumulated other comprehensive income balance at the end of the period
(11)5
9 5
Other comprehensive income, before reclassification, tax benefit (expense)
0 
0 
Reclassification from accumulated other comprehensive income, tax (benefit) expense
0 
0 
Cash Flow Hedges
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
Accumulated other comprehensive income balance at the beginning of the period
32 
193 
Other comprehensive gains (losses) before reclassifications, net of tax
1,447 1
(134)2
Reclassifications to net income of previously deferred (gains) losses, net of tax
(259)3
(27)4
Other comprehensive income (loss)
1,188 
(161)
Accumulated other comprehensive income balance at the end of the period
1,220 
32 
Other comprehensive income, before reclassification, tax benefit (expense)
(33)
9 
Reclassification from accumulated other comprehensive income, tax (benefit) expense
2 
9 
Net Investment Hedges
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
Accumulated other comprehensive income balance at the beginning of the period
95 5
95 5
Other comprehensive gains (losses) before reclassifications, net of tax
0 1 5
0 2 5
Reclassifications to net income of previously deferred (gains) losses, net of tax
0 3 5
0 4 5
Other comprehensive income (loss)
0 5
0 5
Accumulated other comprehensive income balance at the end of the period
95 5
95 5
Other comprehensive income, before reclassification, tax benefit (expense)
0 
0 
Reclassification from accumulated other comprehensive income, tax (benefit) expense
0 
0 
Other
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
Accumulated other comprehensive income balance at the beginning of the period
(51)
(55)
Other comprehensive gains (losses) before reclassifications, net of tax
33 1
0 2
Reclassifications to net income of previously deferred (gains) losses, net of tax
(40)3
4 4
Other comprehensive income (loss)
(7)
4 
Accumulated other comprehensive income balance at the end of the period
(58)
(51)
Other comprehensive income, before reclassification, tax benefit (expense)
0 
0 
Reclassification from accumulated other comprehensive income, tax (benefit) expense
$ 0 
$ 0 
Accumulated Other Comprehensive Income - Reclassification out of AOCI (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
Revenues
$ 30,601 
$ 27,799 
$ 25,313 
Cost of sales
16,534 
15,353 
14,279 
Selling and administrative expense
9,892 
8,766 
7,796 
Other expense (income), net
58 
(103)
15 
Income before income taxes
4,205 
3,544 
3,256 
Tax benefit (expense)
(932)
(851)
(805)
Gain (loss), net of tax
3,273 
2,693 
2,451 
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
299 
23 
 
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
261 
36 
 
Tax benefit (expense)
(2)
(9)
 
Gain (loss), net of tax
259 
27 
 
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]
 
 
 
Revenues
(95)
14 
 
Cost of sales
220 
12 
 
Selling and administrative expense
0 
0 
 
Other expense (income), net
136 
10 
 
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
40 
(4)
 
Income before income taxes
40 
(4)
 
Tax benefit (expense)
0 
0 
 
Gain (loss), net of tax
$ 40 
$ (4)
 
Discontinued Operations (Details) (USD $)
12 Months Ended 0 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Feb. 1, 2013
Cole Haan
Feb. 1, 2013
Cole Haan
Minimum
Feb. 1, 2013
Cole Haan
Maximum
Nov. 30, 2012
Umbro
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
 
 
 
 
 
 
 
Agreed upon purchase price from discontinued operations
 
 
 
$ 570,000,000 
 
 
 
Proceeds from divestiture of businesses
0 
0 
786,000,000 
561,000,000 
 
 
225,000,000 
Purchase price adjustments
 
 
 
9,000,000 
 
 
 
Net gain (loss) on divestitures
0 
0 
124,000,000 
231,000,000 
 
 
(107,000,000)
Tax (benefit) expense on sale of discontinued operations
 
 
 
137,000,000 
 
 
(67,000,000)
Period of transition service (in months)
 
 
 
 
3 months 
9 months 
 
Lease guarantee
 
 
 
23,000,000 
 
 
 
Assets of disposal group, including intangibles, goodwill and fixed assets
0 
0 
 
 
 
 
248,000,000 
Other miscellaneous charges
 
 
 
 
 
 
22,000,000 
Release of cumulative translation adjustment related to Umbro, pre-tax
 
 
 
 
 
 
$ 129,000,000 
Discontinued Operations - Summarized Results (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Discontinued Operations and Disposal Groups [Abstract]
 
 
 
Revenues
$ 0 
$ 0 
$ 523 
Income before income taxes
0 
0 
108 
Income tax expense
0 
0 
87 
NET INCOME FROM DISCONTINUED OPERATIONS
$ 0 
$ 0 
$ 21 
Commitments and Contingencies - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Commitments and Contingencies Disclosure [Abstract]
 
 
 
Expiration date of operating lease, lower limit (in years)
1 year 
 
 
Expiration date of operating lease, upper limit (in years)
19 years 
 
 
Rent expense
$ 594 
$ 533 
$ 482 
Minimum rental commitments, operating leases, 2016
447 
 
 
Minimum rental commitments, operating leases, 2017
423 
 
 
Minimum rental commitments, operating leases, 2018
371 
 
 
Minimum rental commitments, operating leases, 2019
311 
 
 
Minimum rental commitments, operating leases, 2020
268 
 
 
Minimum rental commitments, operating leases, thereafter
1,154 
 
 
Operating leases
2,974 
 
 
Minimum commitments, capital leases, 2016
2 
 
 
Minimum commitments, capital leases, 2017
2 
 
 
Minimum commitments, capital leases, 2018
1 
 
 
Minimum commitments, capital leases, 2019
0 
 
 
Minimum commitments, capital leases, 2020
0 
 
 
Minimum commitments, capital leases, thereafter
0 
 
 
Capital leases
5 
 
 
Letters of credit outstanding
$ 165 
$ 135 
 
Risk Management and Derivatives - Additional Information (Detail) (USD $)
12 Months Ended
May 31, 2015
May 31, 2014
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Percentage of anticipated exposures hedged (percent)
100.00% 
 
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
$ 685,000,000 
 
Maximum term over which the Company is hedging exposures to the variability of cash flows for its forecasted and recorded transactions (in months)
36 months 
 
Aggregate fair value of derivative instruments in net liability position
4,000,000 
 
Collateral received from counterparties to hedging instruments
968,000,000 
0 
Not designated as derivative instrument
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Total notional amount of outstanding derivatives
4,400,000,000 
 
Embedded derivatives
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Total notional amount of outstanding derivatives
205,000,000 
 
Minimum
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Typical time period that anticipated exposures are hedged against (in months)
12 months 
 
Minimum fair value of outstanding derivative above which the credit related contingent features require the derivative party to post collateral
50,000,000 
 
Maximum
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Typical time period that anticipated exposures are hedged against (in months)
24 months 
 
Derivatives designated as cash flow hedges
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Total notional amount of outstanding derivatives
14,400,000,000 
 
Derivatives designated as cash flow hedges |
Designated as Hedging Instrument |
Interest rate swaps
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Total notional amount of outstanding derivatives
1,000,000,000 
 
Derivatives designated as fair value hedges |
Interest rate swaps
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Total notional amount of outstanding derivatives
100,000,000 
 
Derivatives designated as net investment hedges |
Foreign Exchange Contract [Member]
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Derivative Assets (Liabilities), at Fair Value, Net
0 
 
Cash and Cash Equivalents
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Collateral received from counterparties to hedging instruments
968,000,000 
 
Cash and Cash Equivalents |
Interest rate swaps
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Collateral received from counterparties to hedging instruments
68,000,000 
 
Cash and Cash Equivalents |
Foreign Exchange Contract [Member]
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Collateral received from counterparties to hedging instruments
900,000,000 
0 
Securities pledged as collateral
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Collateral received from counterparties to hedging instruments
74,000,000 
 
Securities pledged as collateral |
Interest rate swaps
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Collateral received from counterparties to hedging instruments
$ 74,000,000 
 
Risk Management and Derivatives - FV of Derivative Instruments Included within Consolidated Balance Sheet (Detail) (USD $)
In Millions, unless otherwise specified
May 31, 2015
May 31, 2014
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
$ 1,639 
$ 133 
Liability Derivatives
175 
85 
Designated as Hedging Instrument
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
1,423 
108 
Liability Derivatives
144 
58 
Designated as Hedging Instrument |
Foreign Exchange Contract [Member] |
Prepaid expenses and other current assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
825 
76 
Designated as Hedging Instrument |
Foreign Exchange Contract [Member] |
Deferred income taxes and other assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
520 
26 
Designated as Hedging Instrument |
Foreign Exchange Contract [Member] |
Accrued liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
140 
57 
Designated as Hedging Instrument |
Foreign Exchange Contract [Member] |
Deferred income taxes and other liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
4 
1 
Designated as Hedging Instrument |
Interest rate swaps |
Prepaid expenses and other current assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
78 
0 
Designated as Hedging Instrument |
Interest rate swaps |
Deferred income taxes and other assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
0 
6 
Designated as Hedging Instrument |
Interest rate swaps |
Accrued liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
0 
0 
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
216 
25 
Liability Derivatives
31 
27 
Derivatives not designated as hedging instruments |
Foreign Exchange Contract [Member] |
Prepaid expenses and other current assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
209 
25 
Derivatives not designated as hedging instruments |
Foreign Exchange Contract [Member] |
Accrued liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
20 
27 
Derivatives not designated as hedging instruments |
Embedded derivatives |
Prepaid expenses and other current assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
2 
0 
Derivatives not designated as hedging instruments |
Embedded derivatives |
Deferred income taxes and other assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Asset Derivatives
5 
0 
Derivatives not designated as hedging instruments |
Embedded derivatives |
Accrued liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
2 
0 
Derivatives not designated as hedging instruments |
Embedded derivatives |
Deferred income taxes and other liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Liability Derivatives
$ 9 
$ 0 
Risk Management and Derivatives - Amounts Affecting Consolidated Statements of Income (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Foreign Exchange Contract [Member] |
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
$ 611 
$ (75)
$ 51 
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
(1)
(1)
(4)
Derivatives designated as cash flow hedges
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
1,480 1
(143)1
139 1
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
261 1
36 1
105 1
Derivatives designated as cash flow hedges |
Foreign Exchange Contract [Member] |
Revenue
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
(202)1
(48)1
42 1
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
(95)1
14 1
(19)1
Derivatives designated as cash flow hedges |
Foreign Exchange Contract [Member] |
Cost of sales
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
1,109 1
(78)1
67 1
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
220 1
12 1
113 1
Derivatives designated as cash flow hedges |
Foreign Exchange Contract [Member] |
Selling and administrative expense
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
0 1
4 1
(3)1
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
0 1
0 1
2 1
Derivatives designated as cash flow hedges |
Foreign Exchange Contract [Member] |
Other (income) expense, net
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
497 1
(21)1
33 1
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
136 1
10 1
9 1
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
76 1
0 1
0 1
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
0 1
0 1
0 1
Derivatives designated as net investment hedges |
Foreign Exchange Contract [Member] |
Other (income) expense, net
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
0 1
0 1
0 1
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
0 1
0 1
0 1
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
$ 5 2
$ 5 2
$ 5 2
Operating Segments and Related Information - Information by Operating Segments (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
$ 30,601 
$ 27,799 
$ 25,313 
Interest expense (income), net
28 
33 
(3)
Income before income taxes
4,205 
3,544 
3,256 
Depreciation
606 
518 
438 
Operating Segments
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
30,601 
27,799 
25,313 
Earnings Before Interest and Taxes
4,233 
3,577 
3,253 
Income before income taxes
4,205 
3,544 
3,256 
Additions to Long-lived Assets
1,003 
922 
781 
Depreciation
606 
518 
418 
Operating Segments |
NIKE Brand
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
28,701 
26,112 
23,881 
Earnings Before Interest and Taxes
4,817 
4,117 
3,737 
Additions to Long-lived Assets
790 
731 
608 
Depreciation
513 
448 
365 
Operating Segments |
NIKE Brand |
North America
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
13,740 
12,299 
11,158 
Earnings Before Interest and Taxes
3,645 
3,077 
2,639 
Additions to Long-lived Assets
208 
240 
132 
Depreciation
121 
109 
92 
Operating Segments |
NIKE Brand |
Western Europe
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
5,709 
4,979 
4,193 
Earnings Before Interest and Taxes
1,277 
855 
643 
Additions to Long-lived Assets
216 
120 
75 
Depreciation
75 
71 
68 
Operating Segments |
NIKE Brand |
Central & Eastern Europe
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
1,417 
1,387 
1,229 
Earnings Before Interest and Taxes
247 
279 
234 
Additions to Long-lived Assets
20 
19 
22 
Depreciation
12 
11 
9 
Operating Segments |
NIKE Brand |
Greater China
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
3,067 
2,602 
2,478 
Earnings Before Interest and Taxes
993 
816 
813 
Additions to Long-lived Assets
69 
63 
52 
Depreciation
46 
38 
32 
Operating Segments |
NIKE Brand |
Japan
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
755 
771 
876 
Earnings Before Interest and Taxes
100 
131 
139 
Additions to Long-lived Assets
15 
9 
7 
Depreciation
22 
19 
22 
Operating Segments |
NIKE Brand |
Emerging Markets
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
3,898 
3,949 
3,832 
Earnings Before Interest and Taxes
818 
952 
985 
Additions to Long-lived Assets
37 
55 
50 
Depreciation
27 
25 
20 
Operating Segments |
NIKE Brand |
Global Brand Divisions
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
115 
125 
115 
Earnings Before Interest and Taxes
(2,263)
(1,993)
(1,716)
Additions to Long-lived Assets
225 
225 
270 
Depreciation
210 
175 
122 
Operating Segments |
Converse
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
1,982 
1,684 
1,449 
Earnings Before Interest and Taxes
517 
496 
425 
Additions to Long-lived Assets
69 
30 
20 
Depreciation
18 
16 
15 
Operating Segments |
Corporate
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Net Revenue
(82)
3 
(17)
Earnings Before Interest and Taxes
(1,101)
(1,036)
(909)
Additions to Long-lived Assets
144 
161 
153 
Depreciation
75 
54 
38 
Segment Reconciling Items
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Interest expense (income), net
$ 28 
$ 33 
$ (3)
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, 2015
May 31, 2014
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
$ 3,358 
$ 3,434 
Inventories
4,337 
3,947 
Property, Plant and Equipment, net
3,011 
2,834 
Operating Segments
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
3,358 
3,434 
Inventories
4,337 
3,947 
Property, Plant and Equipment, net
3,011 
2,834 
Operating Segments |
NIKE Brand
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
3,090 
3,246 
Inventories
3,978 
3,706 
Property, Plant and Equipment, net
2,176 
2,122 
Operating Segments |
NIKE Brand |
North America
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
1,737 
1,505 
Inventories
2,207 
1,758 
Property, Plant and Equipment, net
632 
545 
Operating Segments |
NIKE Brand |
Western Europe
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
344 
341 
Inventories
699 
711 
Property, Plant and Equipment, net
451 
384 
Operating Segments |
NIKE Brand |
Central & Eastern Europe
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
242 
280 
Inventories
169 
271 
Property, Plant and Equipment, net
47 
51 
Operating Segments |
NIKE Brand |
Greater China
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
84 
68 
Inventories
249 
221 
Property, Plant and Equipment, net
254 
232 
Operating Segments |
NIKE Brand |
Japan
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
134 
162 
Inventories
94 
94 
Property, Plant and Equipment, net
205 
258 
Operating Segments |
NIKE Brand |
Emerging Markets
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
461 
819 
Inventories
528 
633 
Property, Plant and Equipment, net
103 
115 
Operating Segments |
NIKE Brand |
Global Brand Divisions
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
88 
71 
Inventories
32 
18 
Property, Plant and Equipment, net
484 
537 
Operating Segments |
Converse
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
258 
171 
Inventories
237 
261 
Property, Plant and Equipment, net
122 
70 
Operating Segments |
Corporate
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Accounts Receivable, net
10 
17 
Inventories
122 
(20)
Property, Plant and Equipment, net
$ 713 
$ 642 
Operating Segments and Related Information - Revenues by Major Product Line (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Revenue from External Customer [Line Items]
 
 
 
Revenues
$ 30,601 
$ 27,799 
$ 25,313 
Footwear
 
 
 
Revenue from External Customer [Line Items]
 
 
 
Revenues
18,318 
16,208 
14,635 
Apparel
 
 
 
Revenue from External Customer [Line Items]
 
 
 
Revenues
8,636 
8,109 
7,491 
Equipment
 
 
 
Revenue from External Customer [Line Items]
 
 
 
Revenues
1,632 
1,670 
1,640 
Other
 
 
 
Revenue from External Customer [Line Items]
 
 
 
Revenues
$ 2,015 
$ 1,812 
$ 1,547 
Operating Segments and Related Information - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
customer
May 31, 2014
customer
May 31, 2013
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
$ 14,180 
$ 12,711 
$ 11,385 
Long-lived assets attributable to operations (Domestic)
1,877 
1,652 
 
Japan
 
 
 
Regional Reporting Disclosure [Line Items]
 
 
 
Long-lived assets attributable to operations (Domestic)
205 
258 
 
BELGIUM
 
 
 
Regional Reporting Disclosure [Line Items]
 
 
 
Long-lived assets attributable to operations (Domestic)
234 
175 
 
CHINA
 
 
 
Regional Reporting Disclosure [Line Items]
 
 
 
Long-lived assets attributable to operations (Domestic)
$ 267 
$ 234 
 
SCHEDULE II - Valuation and Qualifying Accounts (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
May 31, 2015
May 31, 2014
May 31, 2013
Allowance for Sales Returns
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Balance at Beginning of Period
$ 308 
$ 241 
$ 173 
Charged to Costs and Expenses
726 
619 
538 
Charged to Other Accounts
(35)1
(3)1
1 1
Write-Offs, Net
(620)
(549)
(471)
Balance at End of Period
379 
308 
241 
Allowance for Doubtful Accounts
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Balance at Beginning of Period
78 2
104 2
91 2
Charged to Costs and Expenses
35 2
13 2
31 2
Charged to Other Accounts
(15)1 2
(2)1 2
1 1 2
Write-Offs, Net
(20)2
(37)2
(19)2
Balance at End of Period
$ 78 2
$ 78 2
$ 104 2