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What changed in Nike, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Nike, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+380 added−429 removedSource: 10-K (2023-07-20) vs 10-K (2022-07-21)

Top changes in Nike, Inc.'s 2023 10-K

380 paragraphs added · 429 removed · 318 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

61 edited+11 added−19 removed41 unchanged
Biggest changeBoth programs are focused on rewarding employees for company performance, which we believe reinforces our culture and rewards behaviors that support collaboration and teamwork. • We provide comprehensive family care benefits in the U.S. and globally where practicable, including family planning coverage, backup care and child/elder care assistance as well as an income-based childcare subsidy for eligible employees. • Our Military Leave benefit provides up to 12 weeks of paid time off every 12 months, and we enhanced our Military Leave benefit for employees called up to serve as part of the U.S.
Biggest changeBoth programs are focused on rewarding employees for company performance, which we believe reinforces our culture and rewards behaviors that support collaboration and teamwork. • We provide comprehensive family care benefits in the U.S. and globally where practicable, including family planning coverage, backup care and child/elder care assistance as well as an income-based childcare subsidy for eligible employees. • Our Military Leave benefit provides up to 12 weeks of paid time off every 12 months. • We offer free access to our Sport Centers at our world headquarters for our full-time employees and North America store employees. • We provide employees free access to mindfulness and meditation resources, as well as live classes through our Sport Centers. • We provide all employees and their families globally with free and confidential visits with a mental health counselor through a third-party provider and our global Employee Assistance Program (EAP). • We provide support to our employees in a variety of ways during times of crisis, including pay continuity under certain circumstances, our natural disaster assistance program, and ongoing support for challenges related to the COVID-19 pandemic. • We provide a hybrid work approach for the majority of employees, as well as a Four Week Flex, which provides employees an opportunity to work from a location of their choice for up to four weeks per year. • We offer a Well-Being Week where we close our corporate offices for a full-week in the summer and Well-Being Days for our teammates in our retail stores and distribution centers, and encourage our teammates to focus on their well-being. • We provide inclusive family planning benefits and transgender healthcare coverage for eligible employees covered on the U.S.
NIKE has never experienced a material interruption of operations due to labor disagreements. DIVERSITY, EQUITY AND INCLUSION (DE&I) DE&I is a strategic priority for NIKE and we are committed to having an increasingly diverse team and culture.
NIKE has never experienced a material interruption of operations due to labor disagreements. DIVERSITY, EQUITY AND INCLUSION Diversity, equity and inclusion ("DE&I") is a strategic priority for NIKE and we are committed to having an increasingly diverse team and culture.
Foreign Corrupt Practices Act, or "FCPA", and other anti-bribery laws applicable to our operations. We source a significant portion of our products from, and have important consumer markets, outside of the United States. We have an ethics and compliance program to address compliance with the FCPA and similar laws by us, our employees, agents, suppliers and other partners.
Foreign Corrupt Practices Act (the "FCPA"), and other anti-bribery laws applicable to our operations. We source a significant portion of our products from, and have important consumer markets, outside of the United States. We have an ethics and compliance program to address compliance with the FCPA and similar laws by us, our employees, agents, suppliers and other partners.
We also offer interactive consumer services and experiences through our digital platforms. Virtually all of our products are manufactured by independent contractors. Nearly all footwear and apparel products are manufactured outside the United States, while equipment products are manufactured both in the United States and abroad.
We also offer interactive consumer services and experiences through our digital platforms. Nearly all of our products are manufactured by independent contractors. Nearly all footwear and apparel products are manufactured outside the United States, while equipment products are manufactured both in the United States and abroad.
On our NIKE corporate website, located at investors.nike.com , we post the following filings as soon as reasonably practicable after they are electronically filed with, or furnished to, the United States Securities and Exchange Commission (the “SEC”): our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended.
On our NIKE corporate website, located at investors.nike.com, we post the following filings as soon as reasonably practicable after they are electronically filed with, or furnished to, the United States Securities and Exchange Commission (the "SEC"): our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended.
We aim to foster an inclusive workplace through recruitment, development and retention of diverse talent with the goal of expanding representation across all dimensions of diversity over the long term.
We aim to foster an inclusive and accessible workplace through recruitment, development and retention of diverse talent with the goal of expanding representation across all dimensions of diversity over the long term.
For the past six years, she served as Vice President, Corporate Secretary and Chief Ethics & Compliance Officer. She previously served as Converse's General Counsel, and brings more than 20 years of legal and business expertise to her role. Prior to joining NIKE, Ms. Miller worked at the law firm Sullivan & Cromwell. Monique S.
For the past six years, she served as Vice President, Corporate Secretary and Chief Ethics & Compliance Officer. She previously served as Converse's General Counsel, and brings more than 20 years of legal and business expertise to her role. Prior to joining NIKE, Ms. Miller worked at the law firm Sullivan & Cromwell.
All references to fiscal 2022, 2021, 2020 and 2019 are to NIKE, Inc.'s fiscal years ended May 31, 2022, 2021, 2020 and 2019, respectively. Any references to other fiscal years refer to a fiscal year ending on May 31 of that year. PRODUCTS Our NIKE Brand product offerings are aligned around our consumer construct focused on Men’s, Women’s and Kids’.
All references to fiscal 2023, 2022, 2021 and 2020 are to NIKE, Inc.'s fiscal years ended May 31, 2023, 2022, 2021 and 2020, respectively. Any references to other fiscal years refer to a fiscal year ending on May 31 of that year. PRODUCTS Our NIKE Brand product offerings are aligned around our consumer construct focused on Men's, Women's and Kids'.
We sell our products through NIKE Direct operations, which are comprised of both NIKE-owned retail stores and sales through our digital platforms (also referred to as "NIKE Brand Digital"), to retail accounts and to a mix of independent distributors, licensees and sales representatives in virtually all countries around the world.
We sell our products through NIKE Direct operations, which are comprised of both NIKE-owned retail stores and sales through our digital platforms (also referred to as "NIKE Brand Digital"), to retail accounts and to a mix of independent distributors, licensees and sales representatives in nearly all countries around the world.
During fiscal 2022, Air Manufacturing Innovation, a wholly-owned subsidiary, with facilities near Beaverton, Oregon, in Dong Nai Province, Vietnam, and St. Charles, Missouri, as well as contract manufacturers in China and Vietnam, were our suppliers of NIKE Air-Sole cushioning components used in footwear.
During fiscal 2023, Air Manufacturing Innovation, a wholly-owned subsidiary, with facilities near Beaverton, Oregon, in Dong Nai Province, Vietnam, and St. Charles, Missouri, as well as contract manufacturers in China and Vietnam, were our suppliers of NIKE Air-Sole cushioning components used in footwear.
Parker , Executive Chairman — Mr. Parker, 66, is Executive Chairman of the Board of Directors and served as President and Chief Executive Officer from 2006 - January 2020. He has been employed by NIKE since 1979 with primary responsibilities in product research, design and development, marketing and brand management. Mr.
Parker , Executive Chairman — Mr. Parker, 67, is Executive Chairman of the Board of Directors and served as President and Chief Executive Officer from 2006 - January 2020. He has been employed by NIKE since 1979 with primary responsibilities in product research, design and development, marketing and brand management. Mr.
We compete internationally with a significant number of athletic and leisure footwear companies, athletic and leisure apparel companies, sports equipment companies and large companies having diversified lines of athletic and leisure footwear, apparel and equipment, including adidas, Anta, ASICS, Li Ning, lululemon athletica, Puma, Under Armour and V.F. Corporation, among others.
We compete internationally with a significant number of athletic and leisure footwear companies, athletic and leisure apparel companies, sports equipment companies and large companies having diversified lines of athletic and leisure footwear, apparel and equipment, including adidas, Anta, ASICS, Li Ning, lululemon athletica, New Balance, Puma, Under Armour and V.F. Corporation, among others.
Donahoe, 62, was appointed President and Chief Executive Officer in January 2020 and has been a director since 2014. He brings expertise in digital commerce, technology and global strategy. He previously served as President and Chief Executive Officer at ServiceNow, Inc. Prior to joining ServiceNow, Inc., he served as President and Chief Executive Officer of eBay, Inc.
Donahoe, 63, was appointed President and Chief Executive Officer in January 2020 and has been a director since 2014. He brings expertise in digital commerce, technology and global strategy. He previously served as President and Chief Executive Officer at ServiceNow, Inc. Prior to joining ServiceNow, Inc., he served as President and Chief Executive Officer of eBay, Inc.
Our Men’s and Women’s apparel products currently lead in apparel sales and we expect them to continue to do so. We often market footwear, apparel and accessories in “collections” of similar use or by category. We also market apparel with licensed college and professional team and league logos.
Our Men's and Women's apparel products currently lead in apparel sales and we expect them to continue to do so. We often market footwear, apparel and accessories in "collections" of similar use or by category. We also market apparel with licensed college and professional team and league logos.
We are also monitoring for and advocating against other impediments that may limit or delay customs clearance for imports of footwear, apparel and equipment. NIKE also advocates for trade liberalization for footwear and apparel in a number of regional and bilateral free trade agreements.
We are also monitoring for and advocating against other impediments that may limit or delay customs clearance for imports of footwear, apparel and equipment. NIKE also advocates for trade liberalization for footwear and apparel in a number of bilateral and multilateral free trade agreements.
Matheson , Executive Vice President, Chief Human Resources Officer — Ms. Matheson, 55, joined NIKE in 1998, with primary responsibilities in the human resources function. She was appointed as Vice President and Senior Business Partner in 2011 and Vice President, Chief Talent and Diversity Officer in 2012. Ms. Matheson was appointed Executive Vice President, Global Human Resources in 2017.
Matheson , Executive Vice President, Chief Human Resources Officer — Ms. Matheson, 56, joined NIKE in 1998, with primary responsibilities in the human resources function. She was appointed as Vice President and Senior Business Partner in 2011 and Vice President, Chief Talent and Diversity Officer in 2012. Ms. Matheson was appointed Executive Vice President, Global Human Resources in 2017.
In addition to NIKE-owned and Converse-owned digital commerce platforms in over 45 countries, our NIKE Direct and Converse direct to consumer businesses operate the following number of retail stores outside the United States: NON-U.S.
In addition to NIKE-owned and Converse-owned digital commerce platforms in over 40 countries, our NIKE Direct and Converse direct to consumer businesses operate the following number of retail stores outside the United States: NON-U.S.
Using market intelligence and research, our various design teams identify opportunities to leverage new technologies in existing categories to respond to consumer preferences. The proliferation of Nike Air, Zoom, Nike Free, Flywire, Dri-Fit, Flyknit, FlyEase, ZoomX, Air Max, Nike React and Nike Adapt technologies, among others, typifies our dedication to designing innovative products.
Using market intelligence and research, our various design teams identify opportunities to leverage new technologies in existing categories to respond to consumer preferences. The proliferation of Nike Air, Zoom, Free, Dri-FIT, Flyknit, FlyEase, ZoomX, Air Max, React and Forward technologies, among others, typifies our dedication to designing innovative products.
Since 1972, Sojitz Corporation of America (“Sojitz America”), a large Japanese trading company and the sole owner of our redeemable preferred stock, has performed import-export financing services for us.
Since 1972, Sojitz Corporation of America ("Sojitz America"), a large Japanese trading company and the sole owner of our redeemable preferred stock, has performed import-export financing services for us.
We sell our NIKE Brand, Jordan Brand and Converse products to thousands of retail accounts in the United States, including a mix of footwear stores, sporting goods stores, athletic specialty stores, department stores, skate, tennis and golf shops and other retail accounts. In the United States, we utilize NIKE sales offices to solicit such sales.
We sell our products to thousands of retail accounts in the United States, including a mix of footwear stores, sporting goods stores, athletic specialty stores, department stores, skate, tennis and golf shops and other retail accounts. In the United States, we utilize NIKE sales offices to solicit such sales.
Our definitive Proxy Statements are also posted on our corporate website. All such filings on our corporate website are available free of charge. Copies of these filings are also available on the SEC's website ( www.sec.gov ).
Our proxy statements are also posted on our corporate website. All such filings on our corporate website are available free of charge. Copies of these filings are also available on the SEC's website at www.sec.gov.
He was also appointed Vice President of Investor Relations in 2019. Mr. Friend was appointed as Executive Vice President and Chief Financial Officer of NIKE, Inc. in April 2020. Prior to joining NIKE, he worked in the financial industry including roles as VP of investment banking and mergers and acquisitions at Goldman Sachs and Morgan Stanley. Ann M.
He was also appointed Vice President of Investor Relations in 2019. Mr. Friend was appointed as Executive Vice President and Chief Financial Officer of NIKE, Inc. in April 2020. Prior to joining NIKE, he worked in the financial industry including roles as VP of investment banking and mergers and acquisitions at Goldman Sachs and Morgan Stanley. Monique S.
Friend, 44, joined NIKE in 2009 as Senior Director of Corporate Strategy and Development, and was appointed Chief Financial Officer of Emerging Markets in 2011. In 2014, Mr. Friend was appointed Chief Financial Officer of Global Categories, Product and Functions, and was subsequently appointed Chief Financial Officer of the NIKE Brand in 2016.
He joined NIKE as Senior Director of Corporate Strategy and Development, and was appointed Chief Financial Officer of Emerging Markets in 2011. In 2014, Mr. Friend was appointed Chief Financial Officer of Global Categories, Product and Functions, and was subsequently appointed Chief Financial Officer of the NIKE Brand in 2016.
Despite competition for certain materials during fiscal 2022, contract manufacturers were able to source sufficient quantities of raw materials for use in our footwear and apparel products. Refer to Item 1A. Risk Factors, for additional discussion of the impact of COVID-19 and sourcing risks on our business.
Despite competition for certain materials during fiscal 2023, contract manufacturers were able to source sufficient quantities of raw materials for use in our footwear and apparel products. Refer to Item 1A. Risk Factors, for additional discussion of the impact of sourcing risks on our business.
Miller , Executive Vice President, Chief Legal Officer — Ms. Miller, 48, joined NIKE in 2007 and serves as EVP, Chief Legal Officer for NIKE, Inc. In her capacity as Chief Legal Officer, she oversees all legal, compliance, government & public affairs, social community impact, security, resilience and investigation matters of the Company.
Ann M. Miller , Executive Vice President, Chief Legal Officer — Ms. Miller, 49, joined NIKE in 2007 and serves as EVP, Chief Legal Officer for NIKE, Inc. In her capacity as Chief Legal Officer, she oversees all legal, compliance, government & public affairs, social community impact, security, resilience and investigation matters of the Company.
Information contained on or accessible through our websites is not incorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 2022 FORM 10-K 7 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The executive officers of NIKE, Inc. as of July 21, 2022, are as follows: Mark G.
Information contained on or accessible through our website is not incorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only. 2023 FORM 10-K 7 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The executive officers of NIKE, Inc. as of July 20, 2023, are as follows: Mark G.
During fiscal 2022, our three largest United States customers accounted for approximately 22% of sales in the United States. Our NIKE Direct and Converse direct to consumer operations sell NIKE Brand, Jordan Brand and Converse products to consumers through various digital platforms.
During fiscal 2023, our three largest United States customers accounted for approximately 22% of sales in the United States. Our NIKE Direct and Converse direct to consumer operations sell our products to consumers through various digital platforms.
In addition, with respect to proposed trade restrictions, we work with a broad coalition of global businesses and trade associations representing a wide variety of sectors to help ensure that any legislation enacted and implemented (i) addresses 2022 FORM 10-K 4 Table of Contents legitimate and core concerns, (ii) is consistent with international trade rules and (iii) reflects and considers domestic economies and the important role they may play in the global economic community.
In addition, with respect to proposed trade restrictions, we work with a broad coalition of global businesses and trade associations representing a wide variety of sectors to help ensure that any legislation enacted and implemented (i) addresses legitimate and core concerns, (ii) is consistent with international trade rules and (iii) reflects and considers domestic economies and the important role they may play in the global economic community.
Our community investments are an important part of our culture in that we also support employees in giving back to community organizations through donations and volunteering, which are matched by the NIKE Foundation where eligible. EMPLOYEE BASE As of May 31, 2022, we had approximately 79,100 employees worldwide, including retail and part-time employees.
Our community investments are an important part of our culture in that we also support employees in giving back to community organizations through donations and volunteering, which are matched by the NIKE Foundation where eligible. EMPLOYEE BASE As of May 31, 2023, we had approximately 83,700 employees worldwide, including retail and part-time employees.
However, we believe we could abate any such disruption, and that much of the adverse impact on supply would, therefore, be of a short-term nature, although alternate sources of supply might not be as cost-effective and could have an ongoing adverse impact on profitability. Our international operations are also subject to compliance with the U.S.
However, we believe we could abate any such disruption, and that much of the adverse impact on supply would, therefore, be of a short-term nature, although alternate sources of supply might not be as cost-effective and could have an ongoing adverse impact on profitability. 2023 FORM 10-K 4 Table of Contents Our international operations are also subject to compliance with the U.S.
Our mission is aligned with our deep commitment to maintaining an environment where all NIKE employees have the opportunity to reach their full potential, to connect to our brands and to shape the culture in which they work.
Our mission is aligned with our deep commitment to maintaining an environment where all NIKE employees have the opportunity to reach their full potential, to connect to our brands and to shape our workplace culture.
However, the mix of product sales may vary considerably as a result of changes in seasonal and geographic demand for particular types of footwear, apparel and equipment, as well as other macroeconomic, strategic, operating and logistics-related factors, as evidenced by the impact of the COVID-19 pandemic.
However, the mix of product sales may vary considerably as a result of changes in seasonal and geographic demand for particular types of footwear, apparel and equipment, as well as other macroeconomic, strategic, operating and logistics-related factors.
We also continue to vigorously protect our intellectual property, including trademarks, patents and trade secrets against third-party infringement and misappropriation. HUMAN CAPITAL RESOURCES At NIKE, we consider the strength and effective management of our workforce to be essential to the ongoing success of our business.
We also continue to vigorously protect our intellectual property, including trademarks, patents and trade secrets against third-party infringement and misappropriation. 2023 FORM 10-K 5 Table of Contents HUMAN CAPITAL RESOURCES At NIKE, we consider the strength and effective management of our workforce to be essential to the ongoing success of our business.
Sales through our NIKE Direct operations are managed within each geographic operating segment. Converse is also a reportable operating segment and operates predominately in one industry: the design, marketing, licensing and selling of casual sneakers, apparel and accessories. Converse direct to consumer operations, including digital commerce, are reported within the Converse operating segment results.
Converse is also a reportable operating segment and operates predominately in one industry: the design, marketing, licensing and selling of casual sneakers, apparel and accessories. Converse direct to consumer operations, including digital commerce, are reported within the Converse operating segment results.
UNITED STATES MARKET For fiscal 2022, NIKE Brand and Converse sales in the United States accounted for approximately 40% of total revenues, compared to 39% for both fiscal 2021 and fiscal 2020.
UNITED STATES MARKET For fiscal 2023, NIKE Brand and Converse sales in the United States accounted for approximately 43% of total revenues, compared to 40% and 39% for fiscal 2022 and fiscal 2021, respectively.
As part of our commitment to make a positive impact on our communities, we maintain a goal of investing 2% of our prior fiscal year’s pre-tax income into global communities, up from 1.5% in fiscal 2021.
As part of our commitment to make a positive impact on our communities, we maintain a goal of investing 2% of our prior fiscal year's pre-tax income into global communities.
Information contained on or accessible through our website is not incorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.
Information contained on or accessible through our websites is not incorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. AVAILABLE INFORMATION AND WEBSITES Our NIKE digital commerce website is located at www.nike.com.
For fiscal 2022, two apparel contract manufacturers each accounted for more than 10% of apparel production, and the top five contract manufacturers in the aggregate accounted for approximately 54% of NIKE Brand apparel production. NIKE’s contract manufacturers buy raw materials for the manufacturing of our footwear, apparel and equipment products.
For fiscal 2023, one apparel contract manufacturer accounted for more than 10% of apparel production, and the top five contract manufacturers in the aggregate accounted for approximately 52% of NIKE Brand apparel production. NIKE's contract manufacturers buy raw materials for the manufacturing of our footwear, apparel and equipment products.
We continue to enhance our efforts to recruit diverse talent through our traditional channels and have launched new initiatives, such as partnerships with athletes and sports-related organizations to create apprenticeship programs and new partnerships with 2022 FORM 10-K 6 Table of Contents organizations, colleges and universities that serve diverse populations.
We continue to enhance our efforts to recruit diverse talent through our traditional channels and through initiatives, such as partnerships with athletes and sports-related organizations to create apprenticeship programs and new partnerships with organizations, colleges and universities that serve diverse populations.
Sales and operating results for Jordan Brand products are reported within the respective NIKE Brand geographic operating segments. Our wholly-owned subsidiary brand, Converse, headquartered in Boston, Massachusetts, designs, distributes and licenses casual sneakers, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell trademarks.
Our wholly-owned subsidiary brand, Converse, headquartered in Boston, Massachusetts, designs, distributes and licenses casual sneakers, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell trademarks. Operating results of the Converse brand are reported on a stand-alone basis.
As part of our commitment to empowering our employees to help shape our culture, we source employee feedback through our Engagement Survey program. The program provides every employee throughout the globe an opportunity to provide confidential feedback on key areas known to drive employee engagement, including their satisfaction with their managers, their work and the Company generally.
The program provides every employee throughout the globe an opportunity to provide confidential feedback on key areas known to drive employee engagement, including their satisfaction with their managers, their work and the Company generally. The program also measures our employees’ emotional commitment to NIKE as well as NIKE's culture of diversity, equity and inclusion.
ITEM 1. BUSINESS GENERAL NIKE, Inc. was incorporated in 1967 under the laws of the State of Oregon. As used in this report, the terms “we,” “us,” “NIKE” and the “Company” refer to NIKE, Inc. and its predecessors, subsidiaries and affiliates, collectively, unless the context indicates otherwise. Our NIKE digital commerce website is located at www.nike.com .
ITEM 1. BUSINESS GENERAL NIKE, Inc. was incorporated in 1967 under the laws of the State of Oregon. As used in this Annual Report on Form 10-K (this "Annual Report"), the terms "we," "us," "our," "NIKE" and the "Company" refer to NIKE, Inc. and its predecessors, subsidiaries and affiliates, collectively, unless the context indicates otherwise.
COMPENSATION AND BENEFITS NIKE’s total rewards are intended to be competitive and equitable, meet the diverse needs of our global teammates and reinforce our values. We are committed to providing comprehensive, competitive and equitable pay and benefits to our employees, and we have invested, and aim to continue to invest, in our employees through growth and development and well-being initiatives.
We are committed to providing comprehensive, competitive and equitable pay and benefits to our employees, and we have invested, and aim to continue to invest, in our employees through growth and development and holistic well-being initiatives.
SIGNIFICANT CUSTOMER No customer accounted for 10% or more of our consolidated net Revenues during fiscal 2022. PRODUCT RESEARCH, DESIGN AND DEVELOPMENT We believe our research, design and development efforts are key factors in our success.
RETAIL STORES NUMBER NIKE Brand factory stores 560 NIKE Brand in-line stores (including employee-only stores) 49 Converse stores (including factory stores) 54 TOTAL 663 SIGNIFICANT CUSTOMER No customer accounted for 10% or more of our consolidated net Revenues during fiscal 2023. PRODUCT RESEARCH, DESIGN AND DEVELOPMENT We believe our research, design and development efforts are key factors in our success.
In addition to the products we sell to our wholesale customers and directly to consumers through our NIKE Direct operations, we have also entered into license agreements that permit unaffiliated parties to manufacture and sell, using NIKE-owned trademarks, certain apparel, digital devices and applications and other equipment designed for sports activities.
In addition to the products we sell to our wholesale customers and directly to consumers through our NIKE Direct operations, we have also entered into license agreements that permit unaffiliated parties to manufacture and sell, using NIKE-owned trademarks, certain apparel, digital devices and applications and other equipment designed for sports activities. 2023 FORM 10-K 1 Table of Contents We also offer interactive consumer services and experiences as well as digital products through our digital platforms, including fitness and activity apps; sport, fitness and wellness content; and digital services and features in retail stores that enhance the consumer experience.
Historically, revenues in the first and fourth fiscal quarters have slightly exceeded those in the second and third fiscal quarters.
SALES AND MARKETING We experience moderate fluctuations in aggregate sales volume during the year. Historically, revenues in the first and fourth fiscal quarters have slightly exceeded those in the second and third fiscal quarters.
We sell a line of performance equipment and accessories under the NIKE Brand name, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment and other equipment designed for sports activities.
We sell a line of performance equipment and accessories under the NIKE Brand name, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment and other equipment designed for sports activities. We also sell small amounts of various plastic products to other manufacturers through our wholly-owned subsidiary, NIKE IHM, Inc., doing business as Air Manufacturing Innovation.
In addition, our NIKE Direct and Converse direct to consumer operations sell products through the following number of retail stores in the United States: U.S.
In addition, our NIKE Direct and Converse direct to consumer operations sell products through the following number of retail stores in the United States: U.S. RETAIL STORES NUMBER NIKE Brand factory stores 213 NIKE Brand in-line stores (including employee-only stores) 74 Converse stores (including factory stores) 82 TOTAL 369 In the United States, NIKE has eight significant distribution centers.
We are also supplied, primarily indirectly, by a number of materials, or “Tier 2,” suppliers, who provide the principal materials used in footwear and apparel finished goods products.
MANUFACTURING Nearly all of our footwear and apparel products are manufactured outside the United States by independent manufacturers ("contract manufacturers"), many of which operate multiple factories. We are also supplied, primarily indirectly, by a number of materials, or "Tier 2" suppliers, who provide the principal materials used in footwear and apparel finished goods products.
The Company's reportable operating segments for the NIKE Brand are: North America; Europe, Middle East & Africa (EMEA); Greater China; and Asia Pacific & Latin America (APLA), and include results for the NIKE and Jordan brands. The Hurley brand results, prior to its divestiture in fiscal 2020, were included in North America.
The Company's reportable operating segments for the NIKE Brand are: North America; Europe, Middle East & Africa ("EMEA"); Greater China; and Asia Pacific & Latin America ("APLA"), and include results for the NIKE and Jordan brands. Sales through our NIKE Direct operations are managed within each geographic operating segment.
We have committed to investments that aim to address racial inequality and improve diversity and representation in our communities. We also are leveraging our global scale to accelerate business diversity, including investing in business training programs for women and increasing the proportion of services supplied by minority-owned businesses.
We also are leveraging our global scale to accelerate business diversity, including investing in business training programs for women and increasing the proportion of services supplied by minority-owned businesses. COMPENSATION AND BENEFITS NIKE's total rewards are intended to be competitive and equitable, meet the diverse needs of our global teammates and reinforce our values.
We sell to thousands of retail accounts and ship products from 72 distribution centers outside of the United States. During fiscal 2022, NIKE's three largest customers outside of the United States accounted for approximately 14% of total non-U.S. sales.
Properties for further information on distribution facilities outside of the United States. During fiscal 2023, NIKE's three largest customers outside of the United States accounted for approximately 14% of total non-U.S. sales.
The largest single footwear contract factory accounted for approximately 8% of total fiscal 2022 NIKE Brand footwear production. For fiscal 2022, four footwear contract manufacturers each accounted for greater than 10% of footwear production and in the aggregate accounted for approximately 58% of NIKE Brand footwear production.
For fiscal 2023, four footwear contract manufacturers each accounted for greater than 10% of footwear production and in the aggregate accounted for approximately 58% of NIKE Brand footwear production. As of May 31, 2023, our contract manufacturers operated 291 finished goods apparel factories located in 31 countries.
We believe our success depends upon our capabilities in areas such as design, research and development, production and marketing and is supported and protected by our intellectual property rights, such as trademarks, utility and design patents, copyrights, and trade secrets, among others. 2022 FORM 10-K 5 Table of Contents We have followed a policy of applying for and registering intellectual property rights in the United States and select foreign countries on trademarks, inventions, innovations and designs that we deem valuable.
These patents expire at various times. We believe our success depends upon our capabilities in areas such as design, research and development, production and marketing and is supported and protected by our intellectual property rights, such as trademarks, utility and design patents, copyrights, and trade secrets, among others.
Additionally, we are prioritizing DE&I education so that all NIKE employees and leaders have the cultural awareness and understanding to build diverse and inclusive teams. We also have Employee Networks, collectively known as NikeUNITED, representing various employee groups. Our DE&I focus extends beyond our workforce and includes our communities, which we support in a number of ways.
We also have Employee Networks, collectively known as NikeUNITED, representing various employee groups. 2023 FORM 10-K 6 Table of Contents Our DE&I focus extends beyond our workforce and includes our communities, which we support in a number of ways. We have committed to investments that aim to address racial inequality and improve diversity and representation in our communities.
As of May 31, 2022, we were supplied by 279 finished goods apparel contract factories located in 33 countries. For fiscal 2022, contract factories in Vietnam, China and Cambodia manufactured approximately 26%, 20% and 16% of total NIKE Brand apparel, respectively. The largest single apparel contract factory accounted for approximately 10% of total fiscal 2022 NIKE Brand apparel production.
The largest single finished goods footwear factory accounted for approximately 9% of total fiscal 2023 NIKE Brand footwear production. For fiscal 2023, factories in Vietnam, Indonesia and China manufactured approximately 50%, 27% and 18% of total NIKE Brand footwear, respectively.
As of May 31, 2022, we had 139 strategic Tier 2 suppliers. 2022 FORM 10-K 3 Table of Contents As of May 31, 2022, we were supplied by 120 finished goods footwear contract factories located in 11 countries. For fiscal 2022, contract factories in Vietnam, Indonesia and China manufactured approximately 44%, 30% and 20% of total NIKE Brand footwear, respectively.
As of May 31, 2023, we had 146 strategic Tier 2 suppliers. As of May 31, 2023, our contract manufacturers operated 123 finished goods footwear factories located in 11 countries. For fiscal 2023, NIKE Brand footwear finished goods were manufactured by 15 contract manufacturers, many of which operate multiple factories.
He also held leadership roles at Bain & Company for two decades. Andrew Campion , Chief Operating Officer — Mr. Campion, 50, joined NIKE in 2007 as Vice President of Global Planning and Development, leading strategic and financial planning.
He also held leadership roles at Bain & Company for two decades. Matthew Friend , Executive Vice President and Chief Financial Officer — Mr. Friend, 45, joined NIKE in 2009 and leads the Company's finance, demand & supply management, procurement and global places & services organizations.
INTERNATIONAL MARKETS For fiscal 2022, non-U.S. NIKE Brand and Converse sales accounted for approximately 60% of total revenues, compared to 61% for fiscal 2021 and fiscal 2020. We sell our products to retail accounts through our own NIKE Direct operations and through a mix of independent distributors, licensees and sales representatives around the world.
We sell our products to retail accounts through our own NIKE Direct operations and through a mix of independent distributors, licensees and sales representatives around the world. We sell to thousands of retail accounts and ship products from 67 distribution centers outside of the United States. Refer to Item 2.
We also provide the option for employees to utilize up to two weeks of paid time off in advance of accrued balances, if needed. Additional information related to our human capital strategy can be found in our FY21 NIKE, Inc. Impact Report, which is available on the Impact section of our website.
Health Plan, including access to both restorative services and personal care. • We provide all U.S. employees with unlimited free financial coaching through a third-party provider. Additional information related to our human capital strategy can be found in our FY22 NIKE, Inc. Impact Report, which is available on the Impact section of about.nike.com.
We also sell small amounts of various plastic products to other manufacturers through our wholly-owned subsidiary, NIKE IHM, Inc., doing business as Air Manufacturing Innovation. 2022 FORM 10-K 1 Table of Contents Our Jordan Brand designs, distributes and licenses athletic and casual footwear, apparel and accessories predominantly focused on basketball performance and culture using the Jumpman trademark.
Our Jordan Brand designs, distributes and licenses athletic and casual footwear, apparel and accessories predominantly focused on basketball performance and culture using the Jumpman trademark. Sales and operating results for Jordan Brand products are reported within the respective NIKE Brand geographic operating segments.
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Operating results of the Converse brand are reported on a stand-alone basis.
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Refer to Item 2. Properties for further information. 2023 FORM 10-K 2 Table of Contents INTERNATIONAL MARKETS For fiscal 2023, non-U.S. NIKE Brand and Converse sales accounted for approximately 57% of total revenues, compared to 60% and 61% for fiscal 2022 and fiscal 2021, respectively.
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We also offer interactive consumer services and experiences as well as digital products through our digital platforms, including fitness and activity apps; sport, fitness and wellness content; and digital services and features in retail stores that enhance the consumer experience. SALES AND MARKETING We experience moderate fluctuations in aggregate sales volume during the year.
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For fiscal 2023, NIKE Brand apparel finished goods were manufactured by 55 contract manufacturers, many of which operate multiple factories. The largest single finished goods apparel factory accounted for approximately 8% of total fiscal 2023 NIKE Brand apparel production.
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RETAIL STORES NUMBER NIKE Brand factory stores 209 NIKE Brand in-line stores (including employee-only stores) 48 Converse stores (including factory stores) 87 TOTAL 344 2022 FORM 10-K 2 Table of Contents In the United States, NIKE has eight significant distribution centers. Five are located in or near Memphis, Tennessee, two of which are owned and three of which are leased.
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For fiscal 2023, factories in Vietnam, China and Cambodia manufactured approximately 29%, 18% and 16% 2023 FORM 10-K 3 Table of Contents of total NIKE Brand apparel, respectively.
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Two other distribution centers, one located in Indianapolis, Indiana and one located in Dayton, Tennessee, are leased and operated by third-party logistics providers. One distribution center for Converse is located in Ontario, California, which is leased. There are other smaller distribution facilities located in various parts of the United States, some of which are leased or operated by third parties.
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In fiscal 2023, we experienced ongoing supply chain volatility during the first part of the year, which improved gradually during the course of the year. We also experienced higher supply chain network costs primarily due to inflationary pressures during the year.
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RETAIL STORES NUMBER NIKE Brand factory stores 597 NIKE Brand in-line stores (including employee-only stores) 47 Converse stores (including factory stores) 58 TOTAL 702 International branch offices and subsidiaries of NIKE are located in Argentina, Australia, Austria, Belgium, Bermuda, Brazil, Canada, Chile, China, Croatia, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Macau, Malaysia, Mexico, the Netherlands, New Zealand, Norway, the Philippines, Poland, Portugal, Russia, Singapore, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, the United Arab Emirates, the United Kingdom, Uruguay and Vietnam.
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We have followed a policy of applying for and registering intellectual property rights in the United States and select foreign countries on trademarks, inventions, innovations and designs that we deem valuable.
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MANUFACTURING Virtually all of our footwear and apparel products are manufactured outside the United States by independent manufacturers with whom we contract and refer to as “contract manufacturers.” Many of these contract manufacturers operate multiple finished goods contract factories.
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As part of our commitment to empowering our employees to help shape our culture, we source employee feedback through our Engagement Survey program, including several corporate pulse surveys.
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In fiscal 2022, COVID-19 had impacts throughout our supply chain, including loss of production as well as production and transportation delays. However, COVID-19 has not materially impacted the number or concentration of finished goods factories, contract manufacturers, or Tier 2 suppliers in countries where we source footwear and apparel products.
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Additionally, we are prioritizing DE&I education so that all NIKE employees and leaders have the cultural awareness and understanding to lead inclusively and build diverse and inclusive teams.
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The program also measures our employees’ emotional commitment to NIKE as well as NIKE’s culture of diversity, equity and inclusion.
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Heidi O'Neill , President, Consumer, Brand & Product — Ms. O'Neill, 58, joined NIKE in 1998 and leads the integration of global Men's, Women's & Kids' consumer teams, the entire global product engine and global brand marketing and sports marketing to build deep storytelling, relationships and engagement with the brand.
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COVID-19 response. • We offer free access to our Sport Centers at our World Headquarters (WHQ) for our full-time employees and North America store employees. • We provide employees free access to mindfulness and meditation resources, including membership to Headspace as well as live classes through our Sport Centers. • Our global Employee Assistance Program (EAP) provides free and confidential counseling to all global employees and their families. • We provide transgender healthcare coverage for eligible employees covered on the U.S.
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Since joining NIKE, she has held a variety of key roles, including leading NIKE's marketplace and four geographic operating regions, leading NIKE Direct and accelerating NIKE's retail and digital-commerce business and creating and leading NIKE's Women’s business. Prior to NIKE, Ms. O'Neill held roles at Levi Strauss & Company and Foote, Cone & Belding.
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Health Plan, including access to both restorative services and personal care. COVID-19 RESPONSE Since the start of the COVID-19 pandemic, the health and safety of our employees has remained a priority.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, supply chain issues caused by factors including the COVID-19 pandemic and geopolitical conflicts have impacted and may continue to impact the availability, pricing and timing for obtaining commodities and raw materials. • If retailers of our products experience declining revenues or experience difficulty obtaining financing in the capital and credit markets to purchase our products, this could result in reduced orders for our products, order cancellations, late retailer payments, extended payment terms, higher accounts receivable, reduced cash flows, greater expense associated with collection efforts and increased bad debt expense. • If retailers of our products experience severe financial difficulty, some may become insolvent and cease business operations, which could negatively impact the sale of our products to consumers.
Biggest changeIn addition, supply chain issues caused by factors including the COVID-19 pandemic and geopolitical conflicts have impacted and may continue to impact the availability, pricing and timing for obtaining commodities and raw materials. • If retailers of our products experience declining revenues or experience difficulty obtaining financing in the capital and credit markets to purchase our products, this could result in reduced orders for our products, order cancellations, late retailer payments, extended payment terms, higher accounts receivable, reduced cash flows, greater expense associated with collection efforts and increased bad debt expense. • In the past, certain retailers of our products have experienced severe financial difficulty, become insolvent and ceased business operations, and this could occur in the future, which could negatively impact the sale of our products to consumers. • If contract manufacturers of our products or other participants in our supply chain experience difficulty obtaining financing in the capital and credit markets to purchase raw materials or to finance capital equipment and other general working capital needs, it may result in delays or non-delivery of shipments of our products.
In particular, if a natural disaster or severe weather event were to occur in an area in which we or our suppliers, manufacturers, employees, customers, distribution centers and vendors are located, our continued success would depend, in part, on the safety and availability of the relevant personnel and facilities and proper functioning of our or third parties' computer, network, telecommunication and other systems and operations.
In particular, if a natural disaster or severe weather event were to occur in an area in which we or our suppliers, manufacturers, employees, customers, distribution centers or vendors are located, our continued success would depend, in part, on the safety and availability of the relevant personnel and facilities and proper functioning of our or third parties' computer, network, telecommunication and other systems and operations.
Any failure on our part to provide attractive, effective, reliable, secure, user-friendly digital commerce platforms that offer a wide assortment of merchandise with rapid delivery options and that continually meet the changing expectations of online shoppers or any failure to provide attractive digital experiences to our customers could place us at a competitive disadvantage, result in the loss of digital commerce and other sales, harm our reputation with consumers, have a material adverse impact on the growth of our digital commerce business globally and have a material adverse impact on our business and results of operations.
Any failure on our part to provide attractive, effective, reliable, secure and user-friendly digital commerce platforms that offer a wide assortment of merchandise with rapid delivery options and that continually meet the changing expectations of online shoppers or any failure to provide attractive digital experiences to our customers could place us at a competitive disadvantage, result in the loss of digital commerce and other sales, harm our reputation with consumers, have a material adverse impact on the growth of our digital commerce business globally and have a material adverse impact on our business and results of operations.
The risks and uncertainties are detailed from time to time in reports filed by NIKE with the SEC, including reports filed on Forms 8-K, 10-Q and 10-K, and include, among others, the following: health epidemics, pandemics and similar outbreaks, including the COVID-19 pandemic; international, national and local political, civil, economic and market conditions; the size and growth of the overall athletic or leisure footwear, apparel and equipment markets; intense competition among designers, marketers, distributors and sellers of athletic or leisure footwear, apparel and equipment for consumers and endorsers; demographic changes; changes in consumer preferences; popularity of particular designs, categories of products and sports; seasonal and geographic demand for NIKE products; difficulties in anticipating or forecasting changes in consumer preferences, consumer demand for NIKE products and the various market factors described above; our ability to execute on our sustainability strategy and achieve our sustainability-related goals and targets, including sustainable product offerings; difficulties in implementing, operating and maintaining NIKE’s increasingly complex information technology systems and controls, including, without limitation, the systems related to demand and supply planning and inventory control; interruptions in data and information technology systems; consumer data security; fluctuations and difficulty in forecasting operating results, including, without limitation, the fact that advance orders may not be indicative of future revenues due to changes in shipment timing, the changing mix of orders with shorter lead times, and discounts, order cancellations and returns; the ability of NIKE to sustain, manage or forecast its growth and inventories; the size, timing and mix of purchases of NIKE’s products; increases in the cost of materials, labor and energy used to manufacture products; new product development and introduction; the ability to secure and protect trademarks, patents and other intellectual property; product performance and quality; customer service; adverse publicity and an inability to maintain NIKE’s reputation and brand image, including without limitation, through social media or in connection with brand damaging events; the loss of significant customers or suppliers; dependence on distributors and licensees; business disruptions; increased costs of freight and transportation to meet delivery deadlines; increases in borrowing costs due to any decline in NIKE’s debt ratings; changes in business strategy or development plans; general risks associated with doing business outside of the United States, including, without limitation, exchange rate fluctuations, inflation, import duties, tariffs, quotas, sanctions, political and economic instability, conflicts and terrorism; the potential impact of new and existing laws, regulations or policy, including, without limitation, tariffs, import/export, trade, wage and hour or labor and immigration regulations or policies; changes in government regulations; the impact of, including business and legal developments relating to, climate change, extreme weather conditions and natural disasters; litigation, regulatory proceedings, sanctions or any other claims asserted against NIKE; the ability to attract and retain qualified employees, and any negative public perception with respect to key personnel or our corporate culture, values or purpose; the effects of NIKE’s decision to invest in or divest of businesses or capabilities and other factors referenced or incorporated by reference in this report and other reports.
The risks and uncertainties are detailed from time to time in reports filed by NIKE with the SEC, including reports filed on Forms 8-K, 10-Q and 10-K, and include, among others, the following: international, national and local political, civil, economic and market conditions, including high, and increases in, inflation and interest rates; the size and growth of the overall athletic or leisure footwear, apparel and equipment markets; intense competition among designers, marketers, distributors and sellers of athletic or leisure footwear, apparel and equipment for consumers and endorsers; demographic changes; changes in consumer preferences; popularity of particular designs, categories of products and sports; seasonal and geographic demand for NIKE products; difficulties in anticipating or forecasting changes in consumer preferences, consumer demand for NIKE products and the various market factors described above; our ability to execute on our sustainability strategy and achieve our sustainability-related goals and targets, including sustainable product offerings; difficulties in implementing, operating and maintaining NIKE's increasingly complex information technology systems and controls, including, without limitation, the systems related to demand and supply planning and inventory control; interruptions in data and information technology systems; consumer data security; fluctuations and difficulty in forecasting operating results, including, without limitation, the fact that advance orders may not be indicative of future revenues due to changes in shipment timing, the changing mix of orders with shorter lead times, and discounts, order cancellations and returns; the ability of NIKE to sustain, manage or forecast its growth and inventories; the size, timing and mix of purchases of NIKE's products; increases in the cost of materials, labor and energy used to manufacture products; new product development and introduction; the ability to secure and protect trademarks, patents and other intellectual property; product performance and quality; customer service; adverse publicity and an inability to maintain NIKE's reputation and brand image, including without limitation, through social media or in connection with brand damaging events; the loss of significant customers or suppliers; dependence on distributors and licensees; business disruptions; increased costs of freight and transportation to meet delivery deadlines; increases in borrowing costs due to any decline in NIKE's debt ratings; changes in business strategy or development plans; general risks associated with doing business outside of the United States, including, without limitation, exchange rate fluctuations, import duties, tariffs, quotas, sanctions, political and economic instability, conflicts and terrorism; the potential impact of new and existing laws, regulations or policy, including, without limitation, tariffs, import/export, trade, wage and hour or labor and immigration regulations or policies; changes in government regulations; the impact of, including business and legal developments relating to, climate change, extreme weather conditions and natural disasters; litigation, regulatory proceedings, sanctions or any other claims asserted against NIKE; the ability to attract and retain qualified employees, and any negative public perception with respect to key personnel or our corporate culture, values or purpose; the effects of NIKE's decision to invest in or divest of businesses or capabilities; health epidemics, pandemics and similar outbreaks, including the COVID-19 pandemic; and other factors referenced or incorporated by reference in this Annual Report and other reports.
Declines in consumer spending have in the past and in the future may result in reduced demand for our products, increased inventories, reduced orders from retailers for our products, order cancellations, lower revenues, higher discounts and lower gross margins. • In the future, we may be unable to access financing in the credit and capital markets at reasonable rates in the event we find it desirable to do so. • We conduct transactions in various currencies, which creates exposure to fluctuations in foreign currency exchange rates relative to the U.S.
Declines in consumer spending have in the past resulted in and may in the future result in reduced demand for our products, increased inventories, reduced orders from retailers for our products, order cancellations, lower revenues, higher discounts and lower gross margins. • In the future, we may be unable to access financing in the credit and capital markets at reasonable rates in the event we find it desirable to do so. • We conduct transactions in various currencies, which creates exposure to fluctuations in foreign currency exchange rates relative to the U.S.
However, such provisions could discourage, delay or prevent an unsolicited merger, acquisition or other change in control of our company that some shareholders might believe to be in their best interests or in which shareholders might receive a premium for their common stock over the prevailing market price. These provisions could also discourage proxy contests for control of the Company.
However, such provisions could discourage, delay or prevent an unsolicited merger, acquisition or other change in control of the Company that some shareholders might believe to be in their best interests or in which shareholders might receive a premium for their common stock over the prevailing market price. These provisions could also discourage proxy contests for control of the Company.
If we were to experience a local or regional disaster or other business continuity event or concurrent events, we could still experience operational challenges, in particular depending upon how a local or regional event may affect our human capital across our operations or with regard to particular aspects of our operations, such as key executive officers or personnel.
If we were to experience a local or regional disaster or other business continuity event or concurrent events, we could experience operational challenges, in particular depending upon how a local or regional event may affect our human capital across our operations or with regard to particular aspects of our operations, such as key executive officers or personnel.
Our distribution facilities have in the past and could be interrupted by information technology problems, disasters such as earthquakes or fires or outbreaks of disease or government actions taken to mitigate their spread. Any significant failure in our distribution facilities could result in an adverse effect on our business.
Our distribution facilities have in the past and could in the future be interrupted by information technology problems, disasters such as earthquakes or fires or outbreaks of disease or government actions taken to mitigate their spread. Any significant failure in our distribution facilities could result in an adverse effect on our business.
We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for income taxes. Although we believe our tax provisions are adequate, the final determination of tax audits and any related disputes could be materially different from our historical income tax provisions and accruals.
We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for income taxes. Although we believe our tax provisions are adequate, the final determination of tax audits and any related disputes could be materially different from our historical income tax provisions and accruals.
Current economic and political conditions make tax laws and regulations, or their interpretation and application, in any jurisdiction subject to significant change. Proposals to reform U.S. and foreign tax laws could significantly impact how U.S. multinational corporations are taxed on foreign earnings and could increase the U.S. corporate tax rate.
Current economic and political conditions make tax laws and regulations, or their interpretation and application, in any jurisdiction subject to significant change. Proposals to reform U.S. and foreign tax laws could significantly impact how U.S. multinational corporations are taxed on global earnings and could increase the U.S. corporate tax rate.
Many factors unique to retail operations, some of which are beyond our control, pose risks and uncertainties. Risks include, but are not limited to: credit card fraud; mismanagement of existing retail channel partners; and inability to manage costs associated with store construction and operation.
Many factors unique to retail operations, some of which are beyond our control, pose risks and uncertainties. Risks include, but are not limited to: credit card fraud; mismanagement of existing retail channel partners; inability to manage costs associated with store construction and operation; and theft.
Negative claims or publicity involving us, our culture and values, our products, services and experiences, consumer data, or any of our key employees, endorsers, sponsors or suppliers could seriously damage our reputation and brand image, regardless of whether such claims are accurate.
Negative claims or publicity involving us, our culture and values, our products, services and experiences, consumer data, or any of our key employees, endorsers, sponsors, suppliers or partners could seriously damage our reputation and brand image, regardless of whether such claims are accurate.
Foreign currency fluctuations have adversely affected and could continue to have an adverse effect on our results of operations and financial condition. We may hedge certain foreign currency exposures to lessen and delay, but not to completely eliminate, the effects of foreign currency fluctuations on our financial results.
Foreign currency fluctuations have adversely affected and could continue to have an adverse effect on our results of operations and financial condition. We hedge certain foreign currency exposures to lessen and delay, but not to completely eliminate, the effects of foreign currency fluctuations on our financial results.
Any adverse effect on the quality of these decisions could impact our ability to retain real estate locations adequate to meet our targets or efficiently manage the profitability of our existing fleet of stores, which could have an adverse effect on our operating results and financial condition. 2022 FORM 10-K 17 Table of Contents The success of our business depends, in part, on high-quality employees, including key personnel as well as our ability to maintain our workplace culture and values.
Any adverse effect on the quality of these decisions could impact our ability to retain real estate locations adequate to meet our targets or efficiently manage the profitability of our existing fleet of stores, which could have an adverse effect on our operating results and financial condition. 2023 FORM 10-K 17 Table of Contents The success of our business depends, in part, on high-quality employees, including key personnel as well as our ability to maintain our workplace culture and values.
Moreover, natural disasters such as earthquakes, hurricanes, wildfires and tsunamis, whether occurring in the United States or abroad, and their related consequences and effects, including energy shortages and public health issues, have in the past temporarily disrupted, and could in the future disrupt, our operations, the operations of our vendors, manufacturers and other suppliers or have in the past resulted in, and in the future could result in, economic instability that may negatively impact our operating results and financial condition.
Moreover, natural disasters such as earthquakes, hurricanes, wildfires, tsunamis, floods or droughts, whether occurring in the United States or abroad, and their related consequences and effects, including energy shortages and public health issues, have in the past temporarily disrupted, and could in the future disrupt, our operations, the operations of our vendors, manufacturers and other suppliers or have in the past resulted in, and in the future could result in, economic instability that may negatively impact our operating results and financial condition.
RISK FACTORS Special Note Regarding Forward-Looking Statements and Analyst Reports Certain written and oral statements, other than purely historic information, including estimates, projections, statements relating to NIKE’s business plans, objectives and expected operating or financial results and the assumptions upon which those statements are based, made or incorporated by reference from time to time by NIKE or its representatives in this report, other reports, filings with the SEC, press releases, conferences or otherwise, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended.
RISK FACTORS Special Note Regarding Forward-Looking Statements and Analyst Reports Certain written and oral statements, other than purely historic information, including estimates, projections, statements relating to NIKE's business plans, objectives and expected operating or financial results and the assumptions upon which those statements are based, made or incorporated by reference from time to time by NIKE or its representatives in this Annual Report, other reports, filings with the SEC, press releases, conferences or otherwise, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended.
If our stock price is volatile for any reason, we may become involved in this type of litigation in the future. Any litigation could result in reputational damage, substantial costs and a diversion of management's attention and resources needed to successfully run our business. 2022 FORM 10-K 23 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If our stock price is volatile for any reason, we may become involved in this type of litigation in the future. Any litigation could result in reputational damage, substantial costs and a diversion of management's attention and resources needed to successfully run our business. 2023 FORM 10-K 23 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
For example, our World Headquarters are located in an active seismic zone, which is at a higher risk for earthquakes and the related consequences or effects.
For example, our world headquarters is located in an active seismic zone, which is at a higher risk for earthquakes and the related consequences or effects.
If this matter is adversely resolved, the Netherlands may be required to assess additional amounts with respect to prior periods, and the Company's income taxes related to prior periods in the Netherlands could increase. We are also subject to the examination of our tax returns by the United States Internal Revenue Service (“IRS”) and other tax authorities.
If this matter is adversely resolved, the Netherlands may be required to assess additional amounts with respect to prior periods, and the Company's income taxes related to prior periods in the Netherlands could increase. We are also subject to the examination of our tax returns by the United States Internal Revenue Service ("IRS") and other tax authorities.
Our international revenues and expenses generally are derived from sales and operations in foreign currencies, and these revenues and expenses could be affected by currency fluctuations, specifically amounts recorded in foreign currencies and translated into U.S. Dollars for consolidated financial reporting, as weakening of foreign currencies relative to the U.S. Dollar adversely affects the U.S.
Our international revenues and expenses generally are derived from sales and operations in foreign currencies, and these revenues and expenses are affected by currency fluctuations, specifically amounts recorded in foreign currencies and translated into U.S. Dollars for consolidated financial reporting, as weakening of foreign currencies relative to the U.S. Dollar adversely affects the U.S.
We believe the diversity of locations in which we operate, our operational size, disaster recovery and business continuity planning and our information technology systems and networks, including the Internet and third-party services (“Information Technology Systems”) position us well, but may not be sufficient for all or for concurrent eventualities.
We believe the diversity of locations in which we operate, our operational size, disaster recovery and business continuity planning and our information technology systems and networks, including the Internet and third-party services ("Information Technology Systems"), position us well, but may not be sufficient for all or for concurrent eventualities.
In addition, poor or non-performance by our endorsers, a failure to continue to correctly identify promising athletes, public figures or sports organizations, to use and endorse our products and brand or a failure to enter into cost-effective endorsement arrangements with prominent athletes, public figures and sports organizations could adversely affect our brand, sales and profitability.
Poor or non-performance by our endorsers, a failure to continue to correctly identify promising athletes, public figures or sports organizations, to use and endorse our products and brand or a failure to enter into cost-effective endorsement arrangements with prominent athletes, public figures and sports organizations could adversely affect our brand, sales and profitability.
For fiscal 2022, four footwear contract manufacturers each accounted for greater than 10% of footwear production and in the aggregate accounted for approximately 58% of NIKE Brand footwear production. Our ability to meet our customers' needs depends on our ability to maintain a steady supply of products from our contract manufacturers.
For fiscal 2023, four footwear contract manufacturers each accounted for greater than 10% of footwear production and in the aggregate accounted for approximately 58% of NIKE Brand footwear production. Our ability to meet our customers' needs depends on our ability to maintain a steady supply of products from our contract manufacturers.
Risks Related to Operating a Global Business Our international operations involve inherent risks which could result in harm to our business. Virtually all of our athletic footwear and apparel is manufactured outside of the United States, and the majority of our products are sold outside of the United States.
Risks Related to Operating a Global Business Our international operations involve inherent risks which could result in harm to our business. Nearly all of our athletic footwear and apparel is manufactured outside of the United States, and the majority of our products are sold outside of the United States.
We also utilize tax rulings and other agreements to obtain certainty in treatment of certain tax matters. These holidays expire from time to time and may be extended when certain conditions are met, or terminated if certain conditions are not met.
We also utilize tax rulings and other agreements to obtain certainty in treatment of certain tax matters. Tax holidays and rulings can expire from time to time and may be extended when certain conditions are met, or terminated if certain conditions are not met.
These risks and uncertainties include, but are not limited to, our ability to execute our strategies and achieve our goals within the currently projected costs and the expected timeframes; the availability and cost of raw materials and renewable energy; unforeseen production, design, operational and technological difficulties; the outcome of research efforts and future technology developments, including the ability to scale projects and technologies on a commercially competitive basis such as carbon sequestration and/or other related processes; compliance with, and changes or additions to, global and regional regulations, taxes, charges, mandates or requirements relating to greenhouse gas emissions, carbon costs or climate-related goals; adapting products to customer preferences and customer acceptance of sustainable supply chain solutions; and the actions of competitors and competitive pressures.
These risks and uncertainties include, but are not 2023 FORM 10-K 11 Table of Contents limited to, our ability to execute our strategies and achieve our goals within the currently projected costs and the expected timeframes; the availability and cost of raw materials and renewable energy; unforeseen production, design, operational and technological difficulties; the outcome of research efforts and future technology developments, including the ability to scale projects and technologies on a commercially competitive basis such as carbon sequestration and/or other related processes; compliance with, and changes or additions to, global and regional regulations, taxes, charges, mandates or requirements relating to greenhouse gas emissions, carbon costs or climate-related goals; adapting products to customer preferences and customer acceptance of sustainable supply chain solutions; and the actions of competitors and competitive pressures.
See also “ Our NIKE Direct operations have required and will continue to require a substantial investment and commitment of resources and are subject to numerous risks and uncertainties .” The sale of a large number of shares of common stock by our principal stockholder could depress the market price of our common stock.
See also " Our NIKE Direct operations have required and will continue to require a substantial investment and commitment of resources and are subject to numerous risks and uncertainties ." The sale of a large number of shares of common stock by our principal shareholder could depress the market price of our common stock.
NIKE is a consumer products company and the relative popularity of various sports and fitness activities and changing design trends affect the demand for our products, services and experiences. The athletic footwear, apparel and equipment industry is highly competitive both in the United States and worldwide.
Our products, services and experiences face intense competition. NIKE is a consumer products company and the relative popularity of various sports and fitness activities and changing design trends affect the demand for our products, services and experiences. The athletic footwear, apparel and equipment industry is highly competitive both in the United States and worldwide.
In addition, our success in maintaining, extending and expanding our brand image depends on our ability to adapt to a rapidly changing media and digital environment, including our increasing reliance on social media and digital dissemination of advertising campaigns on our digital platforms and through our digital experiences and products.
In addition, our success in maintaining, extending and expanding our brand image depends on our ability to adapt to a rapidly changing media and digital environment, including our reliance on social media and other digital advertising networks, and digital dissemination of advertising campaigns on our digital platforms and through our digital experiences and products.
If one or more of our significant suppliers were to sever their relationship with us or significantly alter the terms of our relationship, including due to changes in applicable trade policies, or be unable to perform, including as a result of the COVID-19 pandemic, we may not be able to obtain replacement products in a timely manner, which could have a material adverse effect on our business operations, sales, financial condition or results of operations.
If one or more of our significant suppliers were to sever their relationship with us or significantly alter the terms of our relationship, including due to changes in applicable trade policies, or be unable to perform, we may not be able to obtain replacement products in a timely manner, which could have a material adverse effect on our business operations, sales, financial condition or results of operations.
In addition, new products we offer, such as NFTs, may raise various novel intellectual property law considerations, including adequacy and scope of assignment, licensing, transfer, copyright and other right-of-use issues. 2022 FORM 10-K 20 Table of Contents In addition, the laws of certain countries may not protect or allow enforcement of intellectual property rights to the same extent as the laws of the United States.
In addition, new products we offer, such as virtual goods, may raise various novel intellectual property law considerations, including adequacy and scope of assignment, licensing, transfer, copyright and other right-of-use issues. 2023 FORM 10-K 20 Table of Contents In addition, the laws of certain countries may not protect or allow enforcement of intellectual property rights to the same extent as the laws of the United States.
Continued volatility in the markets and exchange rates for foreign currencies and contracts in foreign currencies could have a significant impact on our reported operating results and financial condition. • Continued volatility in the availability and prices for commodities and raw materials we use in our products and in our supply chain (such as cotton or petroleum derivatives) could have a material adverse effect on our costs, gross margins and profitability.
Continued volatility in the markets and exchange rates for foreign currencies and contracts in foreign currencies has had and could continue to have a significant impact on our reported operating results and financial condition. • Continued volatility in the availability and prices for commodities and raw materials we use in our products and in our supply chain (such as cotton or petroleum derivatives) has had and could in the future have a material adverse effect on our costs, gross margins and profitability.
This seasonality, along with other factors that are beyond our control, including economic conditions, changes in consumer preferences, weather conditions, outbreaks of disease, social or political unrest, availability of import quotas, transportation disruptions and currency exchange rate fluctuations, could adversely affect our business and cause our results of operations to fluctuate.
This seasonality, along with other factors that are beyond our control, including economic conditions, changes in consumer preferences, weather conditions, outbreaks of disease, social or political unrest, availability of import quotas, transportation disruptions and currency exchange rate fluctuations, has in the past adversely affected and could in the future adversely affect our business and cause our results of operations to fluctuate.
As of June 30, 2022, Swoosh, LLC beneficially owned approximately 77% of our Class A Common Stock. If, on June 30, 2022, all of these shares were converted into Class B Common Stock, the commensurate ownership percentage of our Class B Common Stock would be approximately 16%.
As of June 30, 2023, Swoosh, LLC beneficially owned approximately 77% of our Class A Common Stock. If, on June 30, 2023, all of these shares were converted into Class B Common Stock, Swoosh, LLC's commensurate ownership percentage of our Class B Common Stock would be approximately 16%.
It is not possible to predict with certainty the outcome of any such legal or regulatory proceedings or investigations, and we could in the future incur judgments, fines or penalties, or enter into settlements of lawsuits and claims that could have a material adverse effect on our business, financial condition and results of 2022 FORM 10-K 19 Table of Contents operations and negatively impact our reputation.
It is not possible to predict with certainty the outcome of any such legal or regulatory proceedings or investigations, and we could in the future incur judgments, fines or penalties, or enter into settlements of lawsuits and claims that could have a material adverse effect on our business, financial condition and results of operations and negatively impact our reputation.
In addition, we market our products globally through a diverse spectrum of advertising and promotional programs and campaigns, including social media, mobile applications and online advertising. If we do not successfully market our products or if advertising and promotional costs increase, these factors could have an adverse effect on our business, financial condition and results of operations.
In addition, we market our products globally through a diverse spectrum of advertising and promotional programs and campaigns, including social media and other digital advertising networks. If we do not successfully market our products or if advertising and promotional costs increase, these factors could have an adverse effect on our business, financial condition and results of operations.
In addition, the adoption of new laws or regulations, or changes in the interpretation of existing laws or regulations, may result in significant unanticipated legal and reputational risks. Moreover, the regulation of certain transactions we engage in, including those involving non-fungible tokens ("NFTs") and cryptocurrencies, remains in an early stage and subject to significant uncertainty.
In addition, the adoption of new laws or regulations, or changes in the interpretation of existing laws or regulations, may result in significant unanticipated legal and reputational risks. Moreover, the regulation of certain transactions we engage in, including those involving virtual goods and cryptocurrencies, remains in an early stage and subject to significant uncertainty.
Further, our contract manufacturers have experienced and may continue to experience in the future, unexpected closures, unexpected increases in work wages or other changes in labor standards, whether government mandated or otherwise, and increases in compliance costs due to governmental regulation concerning certain metals, fabrics or raw materials used in the manufacturing of our products.
Further, our contract manufacturers have experienced and may continue to experience in the future, unexpected closures, unexpected increases in work wages or other 2023 FORM 10-K 18 Table of Contents changes in labor standards, whether government mandated or otherwise, and increases in compliance costs due to governmental regulation concerning certain metals, fabrics or raw materials used in the manufacturing of our products.
These supply chain effects have had, and could in the future have, an adverse effect on our ability to meet consumer demand, including digital demand, and have in the past resulted in and could in the future result in extended inventory transit times and an increase in our costs of production and distribution, including increased freight and logistics costs and other expenses; • Decreased retail traffic as a result of store closures, reduced operating hours, social distancing restrictions and/or changes in consumer behavior; 2022 FORM 10-K 10 Table of Contents • Reduced consumer demand for our products if consumers seek to reduce or delay discretionary spending in response to the impacts of COVID-19, including as a result of a rise in unemployment rates, higher costs of borrowing, inflation and diminished consumer confidence; • Cancellation or postponement of sports seasons and sporting events in multiple countries, including in the United States, and bans on large public gatherings, which have reduced consumer spending on our products and could impact the effectiveness of our arrangements with key endorsers; • The risk that any safety protocols in NIKE-owned or affiliated facilities, including our offices, will not be effective or not be perceived as effective, or that any virus-related illnesses will be linked or alleged to be linked to such facilities, whether accurate or not; • Incremental costs resulting from the adoption of preventative measures and compliance with regulatory requirements, including providing facial coverings and hand sanitizer, rearranging operations to follow social distancing protocols, conducting temperature checks, COVID-19 testing and undertaking regular and thorough disinfecting of surfaces; • Bankruptcies or other financial difficulties facing our wholesale customers, which could cause them to be unable to make or delay making payments to us, or result in revised payment terms, cancellation or reduction of their orders; • Operational risk, including but not limited to cybersecurity risks, as a result of continued workforce remote work arrangements, and restrictions on employee travel; and • Significant disruption of and volatility in global financial markets, which could have a negative impact on our ability to access capital in the future.
These supply chain effects have had, and could in the future have, an adverse effect on our ability to meet consumer demand, including digital demand, and have in the past resulted in and could in the future result in extended inventory transit times and an increase in our costs of production and distribution, including increased freight and logistics costs and other expenses; • Decreased retail traffic as a result of store closures, reduced operating hours, social distancing restrictions and/or changes in consumer behavior; • Reduced consumer demand for our products, including as a result of a rise in unemployment rates, higher costs of borrowing, inflation and diminished consumer confidence; • Cancellation or postponement of sports seasons and sporting events in multiple countries, and bans on large public gatherings, which have reduced and in the future could reduce consumer spending on our products and could impact the effectiveness of our arrangements with key endorsers; • The risk that any safety protocols in NIKE-owned or affiliated facilities, including our offices, will not be effective or not be perceived as effective, or that any virus-related illnesses will be linked or alleged to be linked to such facilities, whether accurate or not; • Incremental costs resulting from the adoption of preventative measures and compliance with regulatory requirements, including providing facial coverings and hand sanitizer, rearranging operations to follow social distancing protocols, conducting temperature checks, testing and undertaking regular and thorough disinfecting of surfaces; • Bankruptcies or other financial difficulties facing our wholesale customers, which could cause them to be unable to make or delay making payments to us, or result in revised payment terms, cancellation or reduction of their orders; and • Significant disruption of and volatility in global financial markets, which could have a negative impact on our ability to access capital in the future.
Risks presented by the COVID-19 pandemic include, but are not limited to: • Deterioration in economic conditions in the United States and globally, including the effect of prolonged periods of inflation on our consumers and vendors; • Disruption to our distribution centers, contract manufacturers, finished goods contract factories and other vendors, through the effects of facility closures, increased operating costs, reductions in operating hours, labor shortages, and real time changes in operating procedures, such as additional cleaning and disinfection procedures, which have had, and could in the future again have, a significant impact on our planned inventory production and distribution, including higher inventory levels or inventory shortages in various markets; • Impacts to our distribution and logistics providers’ ability to operate, including labor and container shortages, and increases in their operating costs.
Risks presented by pandemics and other public health emergencies include, but are not limited to: • Deterioration in economic conditions in the United States and globally, including the effect of prolonged periods of inflation on our consumers and vendors; • Disruption to our distribution centers, contract manufacturers, finished goods factories and other vendors, through the effects of facility closures, increased operating costs, reductions in operating hours, labor shortages, and real time changes in operating procedures, such as additional cleaning and disinfection procedures, which have had, and could in the future again have, a significant impact on our planned inventory production and distribution, including higher inventory levels or inventory shortages in various markets; 2023 FORM 10-K 12 Table of Contents • Impacts to our distribution and logistics providers' ability to operate, including labor and container shortages, and increases in their operating costs.
However, the mix of product sales may vary considerably from time to time or in the future as a result of strategic shifts in our business, changes in COVID-19 related cancellations or postponements and seasonal or geographic demand for particular types of footwear, apparel and equipment and in connection with the timing, cancellation or postponement of significant sporting events, such as the NBA Finals, Olympics or the World Cup, among others.
However, the mix of product sales may vary considerably from time to time or in the future as a result of strategic shifts in our business and seasonal or geographic demand for particular types of footwear, apparel and equipment and in connection with the timing of significant sporting events, such as the NBA Finals, Olympics or the World Cup, among others.
The principal materials used in our apparel products — natural and synthetic fabrics, yarns and threads (both virgin and recycled), specialized performance fabrics designed to efficiently wick moisture away from the body, retain heat and repel rain and/or snow as well as plastic and metal hardware — are also available in countries where our manufacturing takes 2022 FORM 10-K 18 Table of Contents place.
The principal materials used in our apparel products — natural and synthetic fabrics, yarns and threads (both virgin and recycled), specialized performance fabrics designed to efficiently wick moisture away from the body, retain heat and repel rain and/or snow as well as plastic and metal hardware — are also available in countries where our manufacturing takes place.
The misuse of a brand by or negative publicity involving a licensee could have a material adverse effect on that brand and on us. Consolidation of retailers or concentration of retail market share among a few retailers may increase and concentrate our credit risk and impair our ability to sell products.
The misuse of a brand by or negative publicity involving a licensee could have a material adverse effect on that brand and on us. 2023 FORM 10-K 16 Table of Contents Consolidation of retailers or concentration of retail market share among a few retailers may increase and concentrate our credit risk and impair our ability to sell products.
If we are unable to maintain our current associations with professional athletes, sports teams and leagues, or other public figures, or to do so at a reasonable cost, we could lose the high visibility or 2022 FORM 10-K 14 Table of Contents on-field authenticity associated with our products, and we may be required to modify and substantially increase our marketing investments.
If we are unable to maintain our current associations with professional athletes, sports teams and leagues, or other public figures, or to do so at a reasonable cost, we could lose the high visibility or on-field authenticity associated with our products, and we may be required to modify and substantially increase our marketing investments.
We also rely on our licensees to help preserve the value of our brands. Although we attempt to protect our brands through approval rights over the design, production processes, quality, packaging, merchandising, distribution, advertising and promotion 2022 FORM 10-K 16 Table of Contents of our licensed products, we cannot completely control the use of our licensed brands by our licensees.
We also rely on our licensees to help preserve the value of our brands. Although we attempt to protect our brands through approval rights over the design, production processes, quality, packaging, merchandising, distribution, advertising and promotion of our licensed products, we cannot completely control the use of our licensed brands by our licensees.
Although we cannot predict whether or in what form these proposals will pass, several of the proposals considered, if enacted into law, could have an adverse impact on our effective tax rate, income tax expense and cash flows. Portions of our operations are subject to a reduced tax rate or are under various tax holidays.
Although we cannot predict whether or in what form these proposals will be enacted into law, these changes, if enacted into law, could have an adverse impact on our effective tax rate, income tax expense and cash flows. Portions of our operations are subject to a reduced tax rate or are under a tax holiday.
Central banks may deploy various strategies to combat inflation, including increasing interest rates, which may impact our borrowing costs. Additionally, there has been, and may continue to be, volatility in currency exchange rates including as a result of U.S. policy changes and the Russia and Ukraine conflict that impact the U.S. Dollar value relative to other international currencies.
Central banks may deploy various strategies to combat inflation, including increasing interest rates, which may impact our borrowing costs. Additionally, there has been, and may continue to be, volatility in currency exchange rates that impact the U.S. Dollar value relative to other international currencies.
As a result, we are required to exercise our judgment as to whether or how certain laws or regulations apply, or may in the future apply, and it is possible that legislators, regulators and courts may disagree with our conclusions.
As a result, we are required to exercise our judgment as to whether or how certain laws or regulations apply, or may in the future 2023 FORM 10-K 19 Table of Contents apply, and it is possible that legislators, regulators and courts may disagree with our conclusions.
The COVID-19 pandemic and preventative measures taken to contain or mitigate the pandemic have caused, and may in the future cause, business slowdown or shutdown in affected areas and significant disruption in the financial markets, both globally and in the United States.
Pandemics, including the COVID-19 pandemic, and other public health emergencies, and preventative measures taken to contain or mitigate such crises have caused, and may in the future cause, business slowdown or shutdown in affected areas and significant disruption in the financial markets, both globally and in the United States.
If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and operating results could be harmed and we could fail to meet our financial reporting obligations. 2022 FORM 10-K 22 Table of Contents If our estimates or judgments relating to our critical accounting estimates prove to be incorrect, our operating results could be adversely affected.
If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience 2023 FORM 10-K 22 Table of Contents difficulties in their implementation, our business and operating results could be harmed and we could fail to meet our financial reporting obligations.
However, as competition in our industry has increased, the costs associated with establishing and retaining such sponsorships and other relationships have increased.
However, as competition in our industry has increased, the costs associated with establishing and retaining such sponsorships and other relationships have increased, and competition to attract and retain high-quality endorsers has increased.
In addition, as use of our digital platforms continues to grow, we will need an increasing amount of technical infrastructure to continue to satisfy our consumers' needs.
In 2023 FORM 10-K 15 Table of Contents addition, as use of our digital platforms continues to grow, we will need an increasing amount of technical infrastructure to continue to satisfy our consumers' needs.
As of May 31, 2022, we were supplied by 120 finished goods footwear contract factories located in 11 countries. We rely upon contract manufacturers, which we do not own or operate, to manufacture all of the footwear products we sell.
As of May 31, 2023, our contract manufacturers operated 123 finished goods footwear factories located in 11 countries. We rely upon contract manufacturers, which we do not own or operate, to manufacture all of the footwear products we sell.
In addition, the increased use of employee-owned devices for communications as well as work-from-home arrangements, such as those implemented in response to the COVID-19 pandemic, present additional operational risks to our Information Technology Systems, including, but not limited to, increased risks of cyber-attacks.
In addition, the use of employee-owned devices for communications as well as hybrid work arrangements, present additional operational risks to our Information Technology Systems, including, but not limited to, increased risks of cyber-attacks.
Although we believe we have clearly reflected the economics of these transactions and the proper local transfer pricing documentation is in place, tax authorities may propose and sustain adjustments that could result in changes that may impact our mix of earnings in countries with differing statutory tax rates. 2022 FORM 10-K 21 Table of Contents Failure of our contractors or our licensees' contractors to comply with our code of conduct, local laws and other standards could harm our business.
Although we believe we have clearly reflected the economics of these transactions 2023 FORM 10-K 21 Table of Contents and the proper local transfer pricing documentation is in place, tax authorities may propose and sustain adjustments that could result in changes that may impact our mix of earnings in countries with differing statutory tax rates.
Since the hedging activities are designed to lessen volatility, they not only reduce the negative impact of a stronger U.S. Dollar or other trading currency, but they also reduce the positive impact of a weaker U.S. Dollar or other trading currency. Our future financial results could be significantly affected by the value of the U.S.
Since the hedging activities are designed to lessen volatility, they not only reduce the negative impact of a stronger U.S. Dollar or other trading currency, but they also reduce the positive impact of a weaker U.S. Dollar or other trading currency.
If the reputation, culture or image of any of our brands is tarnished or if we receive negative publicity, then our sales, financial condition and results of operations could be materially and adversely affected. Our business is affected by seasonality, which could result in fluctuations in our operating results. We experience moderate fluctuations in aggregate sales volume during the year.
If 2023 FORM 10-K 13 Table of Contents the reputation, culture or image of any of our brands is tarnished or if we receive negative publicity, then our sales, financial condition and results of operations could be materially and adversely affected. Our business is affected by seasonality, which could result in fluctuations in our operating results.
Our commitment to product innovation, quality and sustainability, and our continuing investment in design (including materials), marketing and sustainability measures may not have the desired impact on our brand image and reputation.
Maintaining, promoting and growing our brands will depend on our design and marketing efforts, including advertising and consumer campaigns, product innovation and product quality. Our commitment to product innovation, quality and sustainability, and our continuing investment in design (including materials), marketing and sustainability measures may not have the desired impact on our brand image and reputation.
The uncertain state of the global economy continues to impact businesses around the world. If global economic and financial market conditions deteriorate, the following factors could have a material adverse effect on our business, operating results and financial condition: • Our sales are impacted by discretionary spending by consumers.
If global economic and financial market conditions deteriorate, the following factors, among others, could have a material adverse effect on our business, operating results and financial condition: • Our sales are impacted by discretionary spending by consumers.
Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, inventory reserves, contingent payments under endorsement contracts, accounting for property, plant and equipment and definite-lived assets, hedge accounting for derivatives, income taxes and other contingencies.
Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, inventory reserves, hedge accounting for derivatives, income taxes and other contingencies.
Furthermore, we are subject to the U.S. Foreign Corrupt Practices Act as well as the anti-corruption laws of other countries in which we operate.
Furthermore, we are subject to the FCPA as well as the anti-corruption laws of other countries in which we operate.
Any negative sentiment toward the United States as a result of any such changes could also adversely affect our business. In addition, changes in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where we currently sell our products or conduct our business could adversely affect our business.
In addition, changes in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where we currently sell our products or conduct our business could adversely affect our business.
In addition, actions taken or statements made by athletes, teams or leagues, or other endorsers, associated with our products or brand that harm the reputations of those athletes, teams or leagues, or endorsers, could also seriously harm our brand image with consumers and, as a result, could have an adverse effect on our sales and financial condition.
In addition, actions taken or statements made by athletes, teams or leagues, or other endorsers, associated with our products or brand that harm the reputations of those athletes, teams or leagues, or endorsers, or our decisions to cease collaborating with certain endorsers in light of actions taken or statements made by them, have in the past harmed and could in the future seriously harm our brand image with consumers and, as a result, could have an adverse effect on 2023 FORM 10-K 14 Table of Contents our sales and financial condition.
Dollar in relation to the foreign currencies in which we conduct business. The degree to which our financial results are affected for any given time period will depend in part upon our hedging activities. We may be adversely affected by the financial health of our customers.
Our future financial results have in the past been and could in the future be significantly affected by the value of the U.S. Dollar in relation to the foreign currencies in which we conduct business. The degree to which our financial results are affected for any given time period will depend in part upon our hedging activities.
Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “project,” “will be,” “will continue,” “will likely result” or words or phrases of similar meaning.
Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words "believe," "anticipate," "expect," "estimate," "project," "will be," "will continue," "will likely result" or words or phrases of similar meaning.
Failure to comply with such covenants could result in a default, and as a result, the commitments of our lenders under our credit agreements may be terminated and the maturity of amounts owed may be accelerated. In addition, macroeconomic conditions, such as increased volatility or disruption in the credit markets, could adversely affect our ability to refinance existing debt.
Failure to comply with such covenants could result in a default, and as a result, the commitments of our lenders under our credit agreements may be terminated and the maturity of amounts owed may be accelerated.
We extend credit to our customers based on an assessment of a customer's financial condition, generally without requiring collateral. To assist in the scheduling of production and the shipping of our products, we offer certain customers the opportunity to place orders five to six months ahead of delivery under our futures ordering program.
To assist in the scheduling of production and the shipping of our products, we offer certain customers the opportunity to place orders five to six months ahead of delivery under our futures ordering program.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
If our estimates or judgments relating to our critical accounting estimates prove to be incorrect, our operating results could be adversely affected. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
If any of these or other factors make the conduct of business in a particular country undesirable or impractical, our business could be adversely affected. In addition, many of our imported products are subject to duties, tariffs or quotas that affect the cost and quantity of various types of goods imported into the United States and other countries.
In addition, many of our imported products are subject to duties, tariffs or quotas that affect the cost and quantity of various types of goods imported into the United States and other countries.
Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Investors should also be aware that while NIKE does, from time to time, communicate with securities analysts, it is against NIKE’s policy to disclose to them any material non-public information or other confidential commercial information.
Investors should also be aware that while NIKE does, from time to time, communicate with securities analysts, it is against NIKE's policy to disclose to them any material non-public information or other confidential commercial information.
Changes to our current and future office environments or adoption of a new work model that expects employees to work on-site for a specified number of days with some flexibility to work remotely on other days, may not meet the needs or expectations of our employees or may not be perceived as favorable compared to other companies' policies, which could negatively impact our ability to attract, hire and retain our employees.
Changes to our current and future work models may not meet the needs or expectations of our employees or may not be perceived as favorable compared to other companies' policies, which could negatively impact our ability to attract, hire and retain our employees.
Historically, revenues in the first and fourth fiscal quarters have slightly exceeded those in the second and third fiscal quarters.
We experience moderate fluctuations in aggregate sales volume during the year. Historically, revenues in the first and fourth fiscal quarters have slightly exceeded those in the second and third fiscal quarters.
Any of the foregoing may require us to make additional investments in facilities and equipment, may impact the availability and cost of key raw materials used in the production of our products or the demand for our products, and, in turn, may adversely impact our business, operating results and financial condition. 2022 FORM 10-K 12 Table of Contents Although we have announced sustainability-related goals and targets, there can be no assurance that our stakeholders will agree with our strategies, and any perception, whether or not valid, that we have failed to achieve, or to act responsibly with respect to, such matters or to effectively respond to new or additional legal or regulatory requirements regarding climate change, could result in adverse publicity and adversely affect our business and reputation.
Although we have announced sustainability-related goals and targets, there can be no assurance that our stakeholders will agree with our strategies, and any perception, whether or not valid, that we have failed to achieve, or to act responsibly with respect to, such matters or to effectively respond to new or additional legal or regulatory requirements regarding climate change, could result in adverse publicity and adversely affect our business and reputation.
We are increasingly using social 2022 FORM 10-K 15 Table of Contents media and proprietary mobile applications to interact with our consumers and as a means to enhance their shopping experience.
We use social media and proprietary mobile applications to interact with our consumers and as a means to enhance their shopping experience.
Negative publicity relating to a violation or an alleged violation of policies or laws by such suppliers could damage our brand image and diminish consumer trust in our brand.
For example, while we require our suppliers of our products to operate their business in compliance with applicable laws and regulations, we do not control their practices. Negative publicity relating to a violation or an alleged violation of policies or laws by such suppliers could damage our brand image and diminish consumer trust in our brand.
The market shares of these retailers may increase through acquisitions and construction of additional stores and investments in digital capacity, and as a result of attrition as struggling retailers exit the market.
The market shares of these retailers may increase through acquisitions and construction of additional stores and investments in digital capacity, and as a result of attrition as struggling retailers exit the market. Consolidation of our retailers will concentrate our credit risk with a smaller set of retailers, any of whom may experience declining sales or a shortage of liquidity.
Failure to adequately protect or enforce our intellectual property rights could adversely affect our business. We periodically discover counterfeit reproductions of our products or products that otherwise infringe our intellectual property rights.
Any such violation could result in sanctions or other penalties and have an adverse effect on our business, reputation and operating results. Failure to adequately protect or enforce our intellectual property rights could adversely affect our business. We periodically discover counterfeit reproductions of our products or products that otherwise infringe our intellectual property rights.
For example, the European Union adopted the General Data Protection Regulation (the “GDPR”), which became effective on May 25, 2018; five states in the United States (California, Virginia, Colorado, Utah, and Connecticut) passed data privacy laws in 2020 and 2021; China enacted the Data Security Law and Personal Information Protection Law, which became effective on September 1, 2021 and November 1, 2021, respectively, and additional jurisdictions have adopted or are considering proposing or adopting similar regulations.
For example, the European Union adopted the General Data Protection Regulation (the "GDPR"); the United Kingdom enacted the UK General Data Protection Regulation (which implements the GDPR into UK law); several states in the United States have passed data privacy laws; China enacted the Data Security Law and Personal Information Protection Law; and additional jurisdictions have adopted or are considering proposing or adopting similar regulations.
We have license agreements that permit independent parties to manufacture or contract for the manufacture of products using our intellectual property.
Failure of our contractors or our licensees' contractors to comply with our code of conduct, local laws and other standards could harm our business. We have license agreements that permit independent parties to manufacture or contract for the manufacture of products using our intellectual property.
In the past, some customers have experienced financial difficulties up to and including bankruptcies, which have had an adverse effect on our sales, our ability to collect on receivables and our financial condition. When the retail economy weakens or as consumer behavior shifts, retailers may be more cautious with orders.
These advance orders may be canceled under certain conditions, and the risk of cancellation increases when dealing with financially unstable retailers or retailers struggling with economic uncertainty. In the past, some customers have experienced financial difficulties up to and including bankruptcies, which have had an adverse effect on our sales, our ability to collect on receivables and our financial condition.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe most significant distribution facilities outside the United States are located in Laakdal, Belgium; Taicang, China; Tomisato, Japan and Icheon, Korea, all of which we own, as well as in Suzhou, China, which is leased and operated by a third-party logistics provider.
Biggest changeNIKE has a number of distribution facilities outside the United States, some of which are leased and operated by third-party logistics providers. The most significant distribution facilities outside the United States are located in Laakdal, Belgium; Taicang, China; Tomisato, Japan and Icheon, Korea, all of which we own.
PROPERTIES The following is a summary of principal properties owned or leased by NIKE: The NIKE World Campus, owned by NIKE and located near Beaverton, Oregon, USA, is an approximately 400-acre site consisting of over 40 buildings which, together with adjacent leased properties, functions as our world headquarters and is occupied by approximately 11,200 employees engaged in management, research, design, development, marketing, finance and other administrative functions serving nearly all of our segments.
PROPERTIES The following is a summary of principal properties owned or leased by NIKE: The NIKE World Campus, owned by NIKE and located near Beaverton, Oregon, USA, is an approximately 400-acre site consisting of over 40 buildings which, together with adjacent leased properties, functions as our world headquarters and is occupied by approximately 11,400 employees engaged in management, research, design, development, marketing, finance and other administrative functions serving nearly all of our segments.
We lease approximately 1,041 retail stores worldwide, which primarily consist of factory stores. See “United States Market” and “International Markets” for additional information regarding our retail stores. Our leases expire at various dates through the fiscal year 2043.
We lease approximately 1,027 retail stores worldwide, which primarily consist of factory stores. See "United States Market" and "International Markets" for additional information regarding our retail stores. Our leases expire at various dates through the fiscal year 2052.
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NIKE has a number of distribution facilities outside the United States, some of which are leased and operated by third-party logistics providers.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS We do not believe there are any material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we are a party or of which any of our property is the subject. Refer to Note 18 — Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for further information.
Biggest changeITEM 3. LEGAL PROCEEDINGS We do not believe there are any material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we are a party or of which any of our property is the subject. Refer to Note 16 — Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for further information.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 2022 FORM 10-K 24 Table of Contents PART II
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 2023 FORM 10-K 24 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. Mine Safety Disclosures 24 PART II 25 ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 25 ITEM 6. Selected Financial Data 27 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 28 ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk 50 ITEM 8.
Biggest changeITEM 4. Mine Safety Disclosures 24 PART II 25 ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 25 ITEM 6. Reserved 27 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 28 ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk 49 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn June 2022, the Board of Directors authorized a new four-year, $18 billion program to repurchase shares of the Company's Class B common stock. The Company's new program will replace the current $15 billion share repurchase program, which will be terminated in fiscal 2023.
Biggest changeUpon termination of the $15 billion program, the Company began purchasing shares under a new four-year, $18 billion share repurchase program authorized by the Board of Directors in June 2022.
The performance graph above is being furnished solely to accompany this Report pursuant to Item 201(e) of Regulation S-K, is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. 2022 FORM 10-K 26 Table of Contents
The performance graph above is being furnished solely to accompany this Annual Report pursuant to Item 201(e) of Regulation S-K, is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. 2023 FORM 10-K 26 Table of Contents
Footwear Index; and the Standard & Poor's Apparel, Accessories & Luxury Goods Index. The graph assumes an investment of $100 on May 31, 2017, in each of the indices and our Class B Common Stock. Each of the indices assumes that all dividends were reinvested on the day of issuance.
Footwear Index; and the Standard & Poor's Apparel, Accessories & Luxury Goods Index. The graph assumes an investment of $100 on May 31, 2018, in each of the indices and our Class B Common Stock. Each of the indices assumes that all dividends were reinvested on the day of issuance.
Footwear Index, the price and returns of NIKE stock have a substantial effect on this index. The Standard & Poor's Apparel, Accessories & Luxury Goods Index consists of PVH Corporation, Ralph Lauren Corporation, Tapestry, Inc., Under Armour, Inc. and V.F. Corporation. The Dow Jones U.S.
Footwear Index, the price and returns of NIKE stock have a substantial effect on this index. The Standard & Poor's Apparel, Accessories & Luxury Goods Index consists of Ralph Lauren Corporation, Tapestry, Inc. and V.F. Corporation. The Dow Jones U.S.
At July 8, 2022, there were 22,214 holders of record of NIKE's Class B Common Stock and 15 holders of record of NIKE's Class A Common Stock. These figures do not include beneficial owners who hold shares in nominee name.
At July 12, 2023, there were 21,813 holders of record of NIKE's Class B Common Stock and 15 holders of record of NIKE's Class A Common Stock. These figures do not include beneficial owners who hold shares in nominee name.
The following table presents a summary of share repurchases made during the quarter ended May 31, 2022: PERIOD TOTAL NUMBER OF SHARES PURCHASED AVERAGE PRICE PAID PER SHARE APPROXIMATE DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS (IN MILLIONS) March 1 — March 31, 2022 3,729,125 $ 129.76 $ 6,915 April 1 — April 30, 2022 2,645,732 $ 129.85 $ 6,571 May 1 — May 31, 2022 2,078,150 $ 112.74 $ 6,337 8,453,007 $ 125.61 2022 FORM 10-K 25 Table of Contents PERFORMANCE GRAPH The following graph demonstrates a five-year comparison of cumulative total returns for NIKE's Class B Common Stock; the Standard & Poor's 500 Stock Index; the Dow Jones U.S.
The following table presents a summary of share repurchases made during the quarter ended May 31, 2023: PERIOD TOTAL NUMBER OF SHARES PURCHASED AVERAGE PRICE PAID PER SHARE APPROXIMATE DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS (IN MILLIONS) March 1 — March 31, 2023 4,118,427 $ 120.04 $ 14,099 April 1 — April 30, 2023 3,282,288 $ 125.01 $ 13,689 May 1 — May 31, 2023 4,134,824 $ 118.30 $ 13,200 11,535,539 $ 120.83 2023 FORM 10-K 25 Table of Contents PERFORMANCE GRAPH The following graph demonstrates a five-year comparison of cumulative total returns for NIKE's Class B Common Stock; the Standard & Poor's 500 Stock Index; the Dow Jones U.S.
In June 2018, the Board of Directors approved a four-year, $15 billion share repurchase program. As of May 31, 2022, the Company had repurchased a total of 77.4 million shares at an average price of $111.98 per share for a total approximate cost of $8.7 billion under this program.
As of May 31, 2023, the Company had repurchased 43.5 million shares at an average price of $110.38 per share for a total approximate cost of $4.8 billion under the new program.
Added
In August 2022, the Company terminated the previous four-year, $15 billion share repurchase program approved by the Board of Directors in June 2018.
Added
Prior to the program's termination, the Company purchased 6.5 million shares at an average price of $109.85 per share for a total approximate cost of $710.0 million during the first quarter of fiscal 2023 and 83.8 million shares at an average price of $111.82 per share for a total approximate cost of $9.4 billion during the term of this program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

139 edited+36 added−76 removed40 unchanged
Biggest changeHigher operating overhead expense was primarily due to increases in wage-related expenses and professional services. 2022 FORM 10-K 38 Table of Contents GREATER CHINA (Dollars in millions) FISCAL 2022 FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 5,416 $ 5,748 -6 % -10 % $ 4,635 24 % 19 % Apparel 1,938 2,347 -17 % -21 % 1,896 24 % 19 % Equipment 193 195 -1 % -6 % 148 32 % 26 % TOTAL REVENUES $ 7,547 $ 8,290 -9 % -13 % $ 6,679 24 % 19 % Revenues by: Sales to Wholesale Customers $ 4,081 $ 4,513 -10 % -14 % $ 3,803 19 % 14 % Sales through NIKE Direct 3,466 3,777 -8 % -12 % 2,876 31 % 26 % TOTAL REVENUES $ 7,547 $ 8,290 -9 % -13 % $ 6,679 24 % 19 % EARNINGS BEFORE INTEREST AND TAXES $ 2,365 $ 3,243 -27 % $ 2,490 30 % FISCAL 2022 COMPARED TO FISCAL 2021 On a currency-neutral basis, Greater China revenues for fiscal 2022 decreased 13%, reflecting impacts from supply chain constraints, government restrictions due to COVID-19 as well as marketplace dynamics.
Biggest changeDemand creation expense increased primarily due to higher advertising and marketing expense, partially offset by favorable changes in foreign currency exchange rates. 2023 FORM 10-K 38 Table of Contents GREATER CHINA (Dollars in millions) FISCAL 2023 FISCAL 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 5,435 $ 5,416 0 % 8 % $ 5,748 -6 % -10 % Apparel 1,666 1,938 -14 % -7 % 2,347 -17 % -21 % Equipment 147 193 -24 % -18 % 195 -1 % -6 % TOTAL REVENUES $ 7,248 $ 7,547 -4 % 4 % $ 8,290 -9 % -13 % Revenues by: Sales to Wholesale Customers $ 3,866 $ 4,081 -5 % 2 % $ 4,513 -10 % -14 % Sales through NIKE Direct 3,382 3,466 -2 % 5 % 3,777 -8 % -12 % TOTAL REVENUES $ 7,248 $ 7,547 -4 % 4 % $ 8,290 -9 % -13 % EARNINGS BEFORE INTEREST AND TAXES $ 2,283 $ 2,365 -3 % $ 3,243 -27 % FISCAL 2023 COMPARED TO FISCAL 2022 • Greater China revenues increased 4% on a currency-neutral basis, primarily due to higher revenues in the Jordan Brand, partially offset by lower revenues in Men's and Women's.
See "Use of Non-GAAP Financial Measures" for further information. (2) Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.
For further information, see "Use of Non-GAAP Financial Measures". (2) Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.
Comparable store sales includes revenues from stores that were temporarily closed during the period as a result of COVID-19. Comparable store sales represents a performance measure that we believe is useful information for management and investors in understanding the performance of our established NIKE-owned in-line and factory stores. Management considers this metric when making financial and operating decisions.
Comparable store sales includes revenues from stores that were temporarily closed during the period as a result of COVID-19. Comparable store sales represents a performance metric that we believe is useful information for management and investors in understanding the performance of our established NIKE-owned in-line and factory stores. Management considers this metric when making financial and operating decisions.
(4) As a result of the Consumer Direct Acceleration strategy, announced in fiscal 2021, the Company is now organized around a new consumer construct of Men's, Women's and Kids'. Beginning in the first quarter of fiscal 2022, unisex products are classified within Men's, and Jordan Brand revenues are separately reported.
(4) As a result of the Consumer Direct Acceleration strategy, announced in fiscal 2021, the Company is now organized around a consumer construct of Men's, Women's and Kids'. Beginning in the first quarter of fiscal 2022, unisex products are classified within Men's, and Jordan Brand revenues are separately reported.
On March 11, 2022, we also entered into a five-year committed credit facility agreement with a syndicate of banks which provides for up to $2 billion of borrowings, with the option to increase borrowings up to $3 billion in total with lender approval.
On March 11, 2022, we entered into a five-year committed credit facility agreement with a syndicate of banks which provides for up to $2 billion of borrowings, with the option to increase borrowings up to $3 billion in total with lender approval.
To date, we have not experienced difficulty accessing the credit markets; however, future volatility in the capital markets may increase costs associated with issuing commercial paper or other debt instruments or affect our ability to access those markets.
To date, we have not experienced difficulty accessing the capital or credit markets; however, future volatility may increase costs associated with issuing commercial paper or other debt instruments or affect our ability to access those markets.
When the designated amount of anticipated or actual transactions decline below hedged levels, or if it is no longer probable a forecasted transaction will occur by the end of the originally specified time period or within an additional two-month period of time thereafter, we are required to reclassify the cumulative change in fair value of the over-hedged portion of the related hedge contract from Accumulated other comprehensive income (loss) to Other (income) expense, net during the quarter in which the decrease occurs.
When the designated amount of anticipated or actual transactions decline below hedged levels, or if it is no longer probable a forecasted transaction will occur by the end of the originally specified time period or within an additional two-month period of time thereafter, we reclassify the cumulative change in fair value of the over-hedged portion of the related hedge contract from Accumulated other comprehensive income (loss) to Other (income) expense, net during the quarter in which the decrease occurs.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NIKE designs, develops, markets and sells athletic footwear, apparel, equipment, accessories and services worldwide. We are the largest seller of athletic footwear and apparel in the world.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW NIKE designs, develops, markets and sells athletic footwear, apparel, equipment, accessories and services worldwide. We are the largest seller of athletic footwear and apparel in the world.
However, over time we expect the future operating model to have a favorable impact on our overall profitability as we reduce selling and administrative expenses, as well as lessen exposure to foreign exchange rate volatility.
However, over time we expect the future operating model to have a favorable impact on our overall profitability as we reduce selling and administrative expenses, as well as reduce exposure to foreign exchange rate volatility.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.
GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.
The facility matures on March 11, 2027, with options to extend the maturity date up to an additional two years. This facility replaces the prior $2 billion five-year credit facility agreement entered into on August 16, 2019, which would have matured on August 16, 2024. Refer to Note 7 — Short-Term Borrowings and Credit Lines for additional information.
The facility matures on March 11, 2027, with options to extend the maturity date up to an additional two years. This facility replaces the prior $2 billion five-year credit facility agreement entered into on August 16, 2019, which would have matured on August 16, 2024. Refer to Note 5 — Short-Term Borrowings and Credit Lines for additional information.
We have, in the past, hedged and may, in the future, hedge net investment positions in certain foreign subsidiaries to mitigate the effects of foreign exchange fluctuations on these net investments. These hedges are accounted for as net investment hedges in accordance with U.S. GAAP. There were no outstanding net investment hedges as of May 31, 2022 and 2021.
We have, in the past, hedged and may, in the future, hedge net investment positions in certain foreign subsidiaries to mitigate the effects of foreign exchange fluctuations on these net investments. These hedges are accounted for as net investment hedges in accordance with U.S. GAAP. There were no outstanding net investment hedges as of May 31, 2023 and 2022.
Changes in our assessment may result in the recognition of a tax benefit or an additional charge to the tax provision in the period our assessment changes. We recognize interest and penalties related to income tax matters in Income tax expense. Refer to Note 9 — Income Taxes in the accompanying Notes to the Consolidated Financial Statements for additional information.
Changes in our assessment may result in the recognition of a tax benefit or an additional charge to the tax provision in the period our assessment changes. We recognize interest and penalties related to income tax matters in Income tax expense. Refer to Note 7 — Income Taxes in the accompanying Notes to the Consolidated Financial Statements for additional information.
As of May 31, 2022, we were in full compliance with each of these covenants and believe it is unlikely we will fail to meet any of these covenants in the foreseeable future. Liquidity is also provided by our $3 billion commercial paper program.
As of May 31, 2023, we were in full compliance with each of these covenants, and we believe it is unlikely we will fail to meet any of these covenants in the foreseeable future. Liquidity is also provided by our $3 billion commercial paper program.
It is not possible to determine how much we will spend on this product on an annual basis as the amount of product provided to the endorsers will depend on many factors and the contracts generally do not stipulate a minimum amount of cash to be spent on the product. • Product Purchase Obligations — As of May 31, 2022, we had product purchase obligations of $6.6 billion, all of which are payable within the next 12 months.
It is not possible to determine how much we will spend on this product on an annual basis as the amount of product provided to the endorsers will depend on many factors and the contracts generally do not stipulate a minimum amount of cash to be spent on the product. • Product Purchase Obligations — As of May 31, 2023, we had product purchase obligations of $6.4 billion, all of which are payable within the next 12 months.
In some cases, prices are subject to change throughout the production process. • Other Purchase Obligations — As of May 31, 2022, we had $3.1 billion of other purchase obligations, with $1.7 billion payable within the next 12 months.
In some cases, prices are subject to change throughout the production process. • Other Purchase Obligations — As of May 31, 2023, we had $3.3 billion of other purchase obligations, with $1.7 billion payable within the next 12 months.
Accordingly, changes in fair value of these instruments are recognized in Other (income) expense, net and are intended to offset the foreign currency impact of the remeasurement of the related non-functional currency denominated asset or liability or the embedded derivative contract being hedged. TRANSLATIONAL EXPOSURES Many of our foreign subsidiaries operate in functional currencies other than the U.S. Dollar.
Accordingly, changes in fair value of these instruments are recognized in Other (income) expense, net and are intended to offset the foreign currency impact of the remeasurement of the related non-functional currency denominated asset or liability being hedged. TRANSLATIONAL EXPOSURES Many of our foreign subsidiaries operate in functional currencies other than the U.S. Dollar.
We sell our products through NIKE Direct operations, which is comprised of both NIKE-owned retail stores and sales through our digital platforms (also referred to as "NIKE Brand Digital"), to retail accounts and to a mix of independent distributors, licensees and sales representatives in virtually all countries around the world.
We sell our products through NIKE Direct operations, which is comprised of both NIKE-owned retail stores and sales through our digital platforms (also referred to as "NIKE Brand Digital"), to wholesale accounts and to a mix of independent distributors, licensees and sales representatives in nearly all countries around the world.
Our material cash requirements as of May 31, 2022, were as follows: • Debt Obligations — Refer to Note 7 — Short-Term Borrowings and Credit Lines and Note 8 — Long-Term Debt in the accompanying Notes to the Consolidated Financial Statements for further information. • Operating Leases — Refer to Note 19 — Leases in the accompanying Notes to the Consolidated Financial Statements for further information. • Endorsement Contracts — As of May 31, 2022, we had endorsement contract obligations of $7.6 billion, with $1.3 billion payable within 12 months, representing approximate amounts of base compensation and minimum guaranteed royalty fees we are obligated to pay athlete, public figure, sport team and league endorsers of our products.
Our material cash requirements as of May 31, 2023, were as follows: • Debt Obligations — Refer to Note 5 — Short-Term Borrowings and Credit Lines and Note 6 — Long-Term Debt in the accompanying Notes to the Consolidated Financial Statements for further information. • Operating Leases — Refer to Note 17 — Leases in the accompanying Notes to the Consolidated Financial Statements for further information. • Endorsement Contracts — As of May 31, 2023, we had endorsement contract obligations of $7.6 billion, with $1.3 billion payable within 12 months, representing approximate amounts of base compensation and minimum guaranteed royalty fees we are obligated to pay athlete, public figure, sport team and league endorsers of our products.
These balance sheet items are subject to remeasurement which may create fluctuations in Other (income) expense, net within our consolidated results of operations. MANAGING TRANSACTIONAL EXPOSURES Transactional exposures are managed on a portfolio basis within our foreign currency risk management program.
These balance sheet items are subject to remeasurement which may create fluctuations in Other (income) expense, net within our Consolidated Statements of Income. MANAGING TRANSACTIONAL EXPOSURES Transactional exposures are managed on a portfolio basis within our foreign currency risk management program.
Our goal is to deliver value to our shareholders by building a profitable global portfolio of branded footwear, apparel, equipment and accessories businesses. Our strategy is to achieve long-term revenue growth by creating innovative, “must-have” products, building deep personal consumer connections with our brands and delivering compelling consumer experiences through digital platforms and at retail.
Our goal is to deliver value to our shareholders by building a profitable global portfolio of branded footwear, apparel, equipment and accessories businesses. Our strategy is to achieve long-term revenue growth by creating innovative, "must-have" products, building deep personal consumer connections with our brands and delivering compelling consumer experiences through digital platforms and at retail.
We do not own the Converse trademarks in Japan and accordingly do not earn revenues in Japan. FISCAL 2022 COMPARED TO FISCAL 2021 On a currency-neutral basis, Converse revenues increased 7% for fiscal 2022 due to revenue growth in North America, Western Europe and licensee markets, partially offset by declines in Asia.
We do not own the Converse trademarks in Japan and accordingly do not earn revenues in Japan. FISCAL 2023 COMPARED TO FISCAL 2022 • Converse revenues increased 8% on a currency-neutral basis for fiscal 2023 due to revenue growth in North America, Western Europe and licensee markets, partially offset by declines in Asia.
Comparable store sales, which exclude NIKE Brand Digital sales, comprises revenues from NIKE-owned in-line and factory stores for which all three of the following requirements have been met: (1) the store has been open at least one year, (2) square footage has not changed by more than 15% within the past year and (3) the store has not been permanently repositioned within the past year.
COMPARABLE STORE SALES Comparable store sales : This key metric, which excludes NIKE Brand Digital sales, comprises revenues from NIKE-owned in-line and factory stores for which all three of the following requirements have been met: (1) the store has been open at least one year, (2) square footage has not changed by more than 15% within the past year and (3) the store has not been permanently repositioned within the past year.
OFF-BALANCE SHEET ARRANGEMENTS In connection with various contracts and agreements, we routinely provide indemnification relating to the enforceability of intellectual property rights, coverage for legal issues that arise and other items where we are acting as the guarantor. Currently, we have several such agreements in place.
In connection with various contracts and agreements, we routinely provide indemnification relating to the enforceability of intellectual property rights, coverage for legal issues that arise and other items where we are acting as the guarantor. Currently, we have several such agreements in place.
For more information related to our planned distributor partnership transition within APLA, see Note 20 — Acquisitions and Divestitures within the accompanying Notes to the Consolidated Financial Statements.
For more information related to our distributor partnership transition within APLA, see Note 18 — Acquisitions and Divestitures within the accompanying Notes to the Consolidated Financial Statements.
(5) Others include products not allocated to Men’s, Women’s, NIKE Kids’ and Jordan Brand, as well as certain adjustments that are not allocated to products designated by consumer. 2022 FORM 10-K 32 Table of Contents FISCAL 2022 NIKE BRAND REVENUE HIGHLIGHTS The following tables present NIKE Brand revenues disaggregated by reportable operating segment, distribution channel and major product line: FISCAL 2022 COMPARED TO FISCAL 2021 On a currency-neutral basis, NIKE, Inc.
(5) Others include products not allocated to Men's, Women's, NIKE Kids' and Jordan Brand, as well as certain adjustments that are not allocated to products designated by consumer. 2023 FORM 10-K 32 Table of Contents FISCAL 2023 NIKE BRAND REVENUE HIGHLIGHTS The following tables present NIKE Brand revenues disaggregated by reportable operating segment, distribution channel and major product line: FISCAL 2023 COMPARED TO FISCAL 2022 • NIKE, Inc.
In addition to contingent liabilities recorded for probable losses, we disclose contingent liabilities when there is a reasonable possibility the ultimate loss will materially exceed the recorded liability. Refer to Note 18 — Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for additional information. 2022 FORM 10-K 49 Table of Contents
In addition to contingent liabilities recorded for probable losses, we disclose contingent liabilities when there is a reasonable possibility the ultimate loss will materially exceed the recorded liability. Refer to Note 16 — Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for additional information. 2023 FORM 10-K 48 Table of Contents
We estimate the combination of translation of foreign currency-denominated profits from our international businesses and the year-over-year change in foreign currency related gains and losses included in Other (income) expense, net had favorable impacts of approximately $132 million and $19 million and an unfavorable impact of approximately $91 million on our Income before income taxes for the years ended May 31, 2022, 2021 and 2020, respectively.
We estimate the combination of translation of foreign currency-denominated profits from our international businesses and the year-over-year change in foreign currency related gains and losses included in Other (income) expense, net had an unfavorable impact of approximately $1,023 million and a favorable impact of approximately $132 million and $19 million on our Income before income taxes for the years ended May 31, 2023, 2022 and 2021, respectively.
Refer to Note 9 — Income Taxes and Note 13 — Benefit Plans in the accompanying Notes to the Consolidated Financial Statements for further information related to uncertain tax positions and post-retirement benefits, respectively.
Refer to Note 7 — Income Taxes and Note 11 — Benefit Plans in the accompanying Notes to the Consolidated Financial Statements for further information related to uncertain tax positions and post-retirement benefits, respectively.
As of and for the fiscal year ended May 31, 2022, we did not have any borrowings outstanding under our $3 billion program. As of May 31, 2021, we had no commercial paper outstanding. We may continue to issue commercial paper or other debt securities depending on general corporate needs.
As of and for the fiscal years ended May 31, 2023 and 2022, we did not have any borrowings outstanding under our $3 billion program. We may continue to issue commercial paper or other debt securities depending on general corporate needs.
The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a detriment of approximately $295 million, a benefit of approximately $893 million and a detriment of approximately $867 million for the years ended May 31, 2022, 2021 and 2020, respectively.
The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a detriment of approximately $2,859 million, $295 million and a benefit of approximately $893 million for the years ended May 31, 2023, 2022 and 2021, respectively.
Dollar functional currency subsidiaries creates a foreign currency exposure that qualifies for hedge accounting under U.S. GAAP. We utilize forward contracts and/or options to mitigate the variability of the forecasted future purchases and sales of these U.S. Dollar investments. The combination of the purchase and sale of the U.S.
Dollar functional currency subsidiaries creates a foreign currency exposure that qualifies for hedge accounting under generally accepted accounting principles in the United States of America ("U.S. GAAP"). We utilize forward contracts and/or options to mitigate the variability of the forecasted future purchases and sales of these U.S. Dollar investments. The combination of the purchase and sale of the U.S.
As of May 31, 2022, we had cash, cash equivalents and short-term investments totaling $13.0 billion, primarily consisting of commercial paper, corporate notes, deposits held at major banks, money market funds, U.S. government sponsored enterprise obligations, U.S. Treasury obligations and other investment grade fixed-income securities. Our fixed-income investments are exposed to both credit and interest rate risk.
As of May 31, 2023, we had Cash and equivalents and Short-term investments totaling $10.7 billion, primarily consisting of commercial paper, corporate notes, deposits held at major banks, money market funds, U.S. Treasury obligations and other investment grade fixed-income securities. Our fixed-income investments are exposed to both credit and interest rate risk.
As the fiscal year progresses, we continually refine our estimate based upon actual events and earnings by jurisdiction during the year. This continual estimation process periodically results in a change to our expected effective tax rate for the fiscal year.
As the fiscal year progresses, we continually refine our estimate based upon actual events and earnings by jurisdiction during the year. This continual estimation process periodically results in a change to our expected effective tax rate for the fiscal year. When this occurs, we adjust the income tax provision during the quarter in which the change in estimate occurs.
Through the Consumer Direct Acceleration, we are focusing on creating the marketplace of the future through more premium, consistent and seamless consumer experiences, leading with digital and our owned stores, as well as select wholesale partners that share our marketplace vision.
Through the Consumer Direct Acceleration strategy, we are focused on creating the marketplace of the future with more premium, consistent and seamless consumer experiences, leading with digital and our owned stores, as well as select wholesale partners.
As a part of the transition tax related to the Tax Cuts and Jobs Act, as of May 31, 2022, we had $730 million in estimated future cash payments, with $86 million payable within the next 12 months.
As a part of the transition tax related to the Tax Cuts and Jobs Act, as of May 31, 2023, we had $644 million in estimated future cash payments, with $161 million payable within the next 12 months.
Net income, adjusted for non-cash items, generated $6,848 million of operating cash inflow for fiscal 2022 compared to $6,612 million for fiscal 2021. The net change in working capital and other assets and liabilities resulted in a decrease to Cash provided (used) by operations of $1,660 million for fiscal 2022, compared to an increase of $45 million for fiscal 2021.
Net income, adjusted for non-cash items, generated $6,354 million of operating cash inflow for fiscal 2023, compared to $6,848 million for fiscal 2022. The net change in working capital and other assets and liabilities resulted in a decrease to Cash provided (used) by operations of $513 million for fiscal 2023 compared to a decrease of $1,660 million for fiscal 2022.
Refer also to Note 1 — Summary of Significant Accounting Policies and Note 16 — Revenues in the accompanying Notes to the Consolidated Financial Statements for additional information. INVENTORY RESERVES We make ongoing estimates relating to the net realizable value of inventories based upon our assumptions about future demand and market conditions.
Refer to Note 14 — Revenues in the accompanying Notes to the Consolidated Financial Statements for additional information. INVENTORY RESERVES We make ongoing estimates relating to the net realizable value of inventories based upon our assumptions about future demand and market conditions.
CONVERSE (Dollars in millions) FISCAL 2022 FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 2,094 $ 1,986 5 % 6 % $ 1,642 21 % 17 % Apparel 103 104 -1 % -3 % 89 17 % 13 % Equipment 26 29 -10 % -16 % 25 16 % 14 % Other (1) 123 86 43 % 42 % 90 -4 % -1 % TOTAL REVENUES $ 2,346 $ 2,205 6 % 7 % $ 1,846 19 % 16 % Revenues by: Sales to Wholesale Customers $ 1,292 $ 1,353 -5 % -4 % $ 1,154 17 % 13 % Sales through Direct to Consumer 931 766 22 % 22 % 602 27 % 24 % Other (1) 123 86 43 % 42 % 90 -4 % -1 % TOTAL REVENUES $ 2,346 $ 2,205 6 % 7 % $ 1,846 19 % 16 % EARNINGS BEFORE INTEREST AND TAXES $ 669 $ 543 23 % $ 297 83 % (1) Other revenues consist of territories serviced by third-party licensees who pay royalties to Converse for the use of its registered trademarks and other intellectual property rights.
CONVERSE (Dollars in millions) FISCAL 2023 FISCAL 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 2,155 $ 2,094 3 % 8 % $ 1,986 5 % 6 % Apparel 90 103 -13 % -7 % 104 -1 % -3 % Equipment 28 26 8 % 16 % 29 -10 % -16 % Other (1) 154 123 25 % 25 % 86 43 % 42 % TOTAL REVENUES $ 2,427 $ 2,346 3 % 8 % $ 2,205 6 % 7 % Revenues by: Sales to Wholesale Customers $ 1,299 $ 1,292 1 % 7 % $ 1,353 -5 % -4 % Sales through Direct to Consumer 974 931 5 % 8 % 766 22 % 22 % Other (1) 154 123 25 % 25 % 86 43 % 42 % TOTAL REVENUES $ 2,427 $ 2,346 3 % 8 % $ 2,205 6 % 7 % EARNINGS BEFORE INTEREST AND TAXES $ 676 $ 669 1 % $ 543 23 % (1) Other revenues consist of territories serviced by third-party licensees who pay royalties to Converse for the use of its registered trademarks and other intellectual property rights.
We estimate the combination of the translation of foreign currency-denominated profits from our international businesses, and the year-over-year change in foreign currency-related gains and losses included in Other (income) expense, net had a favorable impact on our Income before income taxes of $132 million for fiscal 2022.
We estimate the combination of the translation of foreign currency-denominated profits from our international businesses, and the year-over-year change in foreign currency-related gains and losses included in Other (income) expense, net had an unfavorable impact on our Income before income taxes of $1,023 million for fiscal 2023.
In the event we were to have any borrowings outstanding under these facilities, failed to meet any covenant and were unable to obtain a waiver from a majority of the banks in the syndicate, any borrowings would become immediately due and 2022 FORM 10-K 45 Table of Contents payable.
In the event we were to have any borrowings outstanding under these facilities, failed to meet any covenant and were unable to obtain a waiver from a majority of the banks in the applicable syndicate, any borrowings would become immediately due and payable.
See "Use of Non-GAAP Financial Measures" for further information. 2022 FORM 10-K 36 Table of Contents NORTH AMERICA (Dollars in millions) FISCAL 2022 FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 12,228 $ 11,644 5 % 5 % $ 9,329 25 % 25 % Apparel 5,492 5,028 9 % 9 % 4,639 8 % 8 % Equipment 633 507 25 % 25 % 516 -2 % -2 % TOTAL REVENUES $ 18,353 $ 17,179 7 % 7 % $ 14,484 19 % 19 % Revenues by: Sales to Wholesale Customers $ 9,621 $ 10,186 -6 % -6 % $ 9,371 9 % 9 % Sales through NIKE Direct 8,732 6,993 25 % 25 % 5,113 37 % 37 % TOTAL REVENUES $ 18,353 $ 17,179 7 % 7 % $ 14,484 19 % 19 % EARNINGS BEFORE INTEREST AND TAXES $ 5,114 $ 5,089 0 % $ 2,899 76 % FISCAL 2022 COMPARED TO FISCAL 2021 On a currency-neutral basis, North America revenues increased 7%, due primarily to higher revenues in Men's and the Jordan Brand.
See "Use of Non-GAAP Financial Measures" for further information. 2023 FORM 10-K 36 Table of Contents NORTH AMERICA (Dollars in millions) FISCAL 2023 FISCAL 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 14,897 $ 12,228 22 % 22 % $ 11,644 5 % 5 % Apparel 5,947 5,492 8 % 9 % 5,028 9 % 9 % Equipment 764 633 21 % 21 % 507 25 % 25 % TOTAL REVENUES $ 21,608 $ 18,353 18 % 18 % $ 17,179 7 % 7 % Revenues by: Sales to Wholesale Customers $ 11,273 $ 9,621 17 % 18 % $ 10,186 -6 % -6 % Sales through NIKE Direct 10,335 8,732 18 % 18 % 6,993 25 % 25 % TOTAL REVENUES $ 21,608 $ 18,353 18 % 18 % $ 17,179 7 % 7 % EARNINGS BEFORE INTEREST AND TAXES $ 5,454 $ 5,114 7 % $ 5,089 0 % FISCAL 2023 COMPARED TO FISCAL 2022 • North America revenues increased 18% on a currency-neutral basis, primarily due to higher revenues in Men's and the Jordan Brand.
TOTAL SELLING AND ADMINISTRATIVE EXPENSE (Dollars in millions) FISCAL 2022 FISCAL 2021 % CHANGE FISCAL 2020 % CHANGE Demand creation expense (1) $ 3,850 $ 3,114 24 % $ 3,592 -13 % Operating overhead expense 10,954 9,911 11 % 9,534 4 % Total selling and administrative expense $ 14,804 $ 13,025 14 % $ 13,126 -1 % % of revenues 31.7 % 29.2 % 250 bps 35.1 % (590) bps (1) Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, complimentary product, television, digital and print advertising and media costs, brand events and retail brand presentation.
TOTAL SELLING AND ADMINISTRATIVE EXPENSE (Dollars in millions) FISCAL 2023 FISCAL 2022 % CHANGE FISCAL 2021 % CHANGE Demand creation expense (1) $ 4,060 $ 3,850 5 % $ 3,114 24 % Operating overhead expense 12,317 10,954 12 % 9,911 11 % Total selling and administrative expense $ 16,377 $ 14,804 11 % $ 13,025 14 % % of revenues 32.0 % 31.7 % 30 bps 29.2 % 250 bps (1) Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, complimentary product, television, digital and print advertising and media costs, brand events and retail brand presentation.
There were no cash flows from net investment hedge settlements for the years ended May 31, 2022, 2021 and 2020. 2022 FORM 10-K 44 Table of Contents LIQUIDITY AND CAPITAL RESOURCES CASH FLOW ACTIVITY Cash provided (used) by operations was an inflow of $5,188 million for fiscal 2022 compared to $6,657 million for fiscal 2021.
There were no cash flows from net investment hedge settlements for the years ended May 31, 2023, 2022 and 2021. LIQUIDITY AND CAPITAL RESOURCES CASH FLOW ACTIVITY Cash provided (used) by operations was an inflow of $5,841 million for fiscal 2023, compared to $5,188 million for fiscal 2022.
Generally, these are accounted for as cash flow hedges, except for hedges of the embedded derivative components of the product cost exposures and other contractual agreements. 2022 FORM 10-K 43 Table of Contents Certain currency forward contracts used to manage the foreign exchange exposure of non-functional currency denominated monetary assets and liabilities subject to remeasurement, and embedded derivative contracts are not formally designated as hedging instruments.
Generally, these are accounted for as cash flow hedges. 2023 FORM 10-K 43 Table of Contents Certain currency forward contracts used to manage the foreign exchange exposure of non-functional currency denominated monetary assets and liabilities subject to remeasurement are not formally designated as hedging instruments.
REVENUES $ 46,710 $ 44,538 5 % 6 % $ 37,403 19 % 17 % (1) The percent change excluding currency changes represents a non-GAAP financial measure. See "Use of Non-GAAP Financial Measures" for further information.
REVENUES $ 51,217 $ 46,710 10 % 16 % $ 44,538 5 % 6 % (1) The percent change excluding currency changes represents a non-GAAP financial measure. For further information, see "Use of Non-GAAP Financial Measures".
MANAGING TRANSLATIONAL EXPOSURES To minimize the impact of translating foreign currency denominated revenues and expenses into U.S. Dollars for consolidated reporting, certain foreign subsidiaries use excess cash to purchase U.S. Dollar denominated available-for-sale investments. The variable future cash flows associated with the purchase and subsequent sale of these U.S. Dollar denominated investments at non-U.S.
Dollars for consolidated reporting, certain foreign subsidiaries use excess cash to purchase U.S. Dollar denominated available-for-sale investments. The variable future cash flows associated with the purchase and subsequent sale of these U.S. Dollar denominated investments at non-U.S.
Our ROIC calculation as of May 31, 2022 and 2021 is as follows: FOR THE TRAILING FOUR QUARTERS ENDED (Dollars in millions) MAY 31, 2022 MAY 31, 2021 Numerator Net income $ 6,046 $ 5,727 Add: Interest expense (income), net 205 262 Add: Income tax expense 605 934 Earnings before interest and taxes 6,856 6,923 Income tax adjustment (1) (624) (970) Earnings before interest and after taxes $ 6,232 $ 5,953 AVERAGE FOR THE TRAILING FIVE QUARTERS ENDED MAY 31, 2022 MAY 31, 2021 Denominator Total debt (2) $ 12,722 $ 12,890 Add: Shareholders' equity 14,425 10,523 Less: Cash and equivalents and Short-term investments 13,748 11,217 Total invested capital $ 13,399 $ 12,196 RETURN ON INVESTED CAPITAL 46.5 % 48.8 % (1) Equals Earnings before interest and taxes multiplied by the effective tax rate as of the respective quarter end.
Our ROIC calculation as of May 31, 2023 and 2022 is as follows: FOR THE TRAILING FOUR QUARTERS ENDED (Dollars in millions) MAY 31, 2023 MAY 31, 2022 Numerator Net income $ 5,070 $ 6,046 Add: Interest expense (income), net (6) 205 Add: Income tax expense 1,131 605 Earnings before interest and taxes 6,195 6,856 Income tax adjustment (1) (1,130) (624) Earnings before interest and after taxes $ 5,065 $ 6,232 AVERAGE FOR THE TRAILING FIVE QUARTERS ENDED MAY 31, 2023 MAY 31, 2022 Denominator Total debt (2) $ 12,491 $ 12,722 Add: Shareholders' equity 14,982 14,425 Less: Cash and equivalents and Short-term investments 11,394 13,748 Total invested capital $ 16,079 $ 13,399 RETURN ON INVESTED CAPITAL 31.5% 46.5% (1) Equals Earnings before interest and taxes multiplied by the effective tax rate as of the respective quarter end.
Currency-neutral apparel revenues increased 16% due primarily to higher revenues in Men's and Women's. Unit sales of apparel increased 9%, while higher ASP per unit contributed approximately 7 percentage points of apparel revenue growth, primarily due to higher full-price and NIKE Direct ASPs.
Unit sales of footwear increased 9%, while higher ASP per pair contributed approximately 16 percentage points of footwear revenue growth. Higher ASP per pair was primarily due to higher full-price ASP and growth in NIKE Direct. • Apparel revenues increased 14% on a currency-neutral basis, primarily due to higher revenues in Men's.
Demand creation expense increased primarily due to higher advertising and marketing expense, while operating overhead increased primarily due to higher professional services costs. 2022 FORM 10-K 41 Table of Contents CORPORATE (Dollars in millions) FISCAL 2022 FISCAL 2021 % CHANGE FISCAL 2020 % CHANGE Revenues $ (72) $ 40 — $ (11) — Earnings (Loss) Before Interest and Taxes $ (2,219) $ (2,261) 2 % $ (1,967) -15 % Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.
Demand creation expense increased as a result of higher advertising and marketing costs, partially offset by lower retail brand presentation costs. 2023 FORM 10-K 41 Table of Contents CORPORATE (Dollars in millions) FISCAL 2023 FISCAL 2022 % CHANGE FISCAL 2021 % CHANGE Revenues $ 27 $ (72) — $ 40 — Earnings (Loss) Before Interest and Taxes $ (2,840) $ (2,219) -28 % $ (2,261) 2 % Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.
Under this program, our 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.
Under this program, our 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. As an offset to the impacts of the fluctuating U.S.
Our most significant transactional foreign currency exposures are: • Product Costs — NIKE's product costs are exposed to fluctuations in foreign currencies in the following ways: 1. Product purchases denominated in currencies other than the functional currency of the transacting entity: a.
TRANSACTIONAL EXPOSURES We conduct business in various currencies and have transactions which subject us to foreign currency risk. Our most significant transactional foreign currency exposures are: • Product Costs — NIKE's product costs are exposed to fluctuations in foreign currencies in the following ways: 1. Product purchases denominated in currencies other than the functional currency of the transacting entity: a.
REVENUES $ 46,710 $ 44,538 5 % 6 % $ 37,403 19 % 17 % Supplemental NIKE Brand Revenues Details: NIKE Brand Revenues by: Sales to Wholesale Customers $ 25,608 $ 25,898 -1 % -1 % $ 23,156 12 % 10 % Sales through NIKE Direct 18,726 16,370 14 % 15 % 12,382 32 % 30 % Global Brand Divisions (2) 102 25 308 % 302 % 30 -17 % -17 % TOTAL NIKE BRAND REVENUES $ 44,436 $ 42,293 5 % 6 % $ 35,568 19 % 17 % NIKE Brand Revenues on a Wholesale Equivalent Basis: (1) Sales to Wholesale Customers $ 25,608 $ 25,898 -1 % -1 % $ 23,156 12 % 10 % Sales from our Wholesale Operations to NIKE Direct Operations 10,543 9,872 7 % 7 % 7,452 32 % 30 % TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES $ 36,151 $ 35,770 1 % 1 % $ 30,608 17 % 15 % NIKE Brand Wholesale Equivalent Revenues by: (1),(4) Men's $ 18,797 $ 18,391 2 % 3 % $ 16,430 12 % 10 % Women's 8,273 8,225 1 % 1 % 6,954 18 % 16 % NIKE Kids' 4,874 4,882 0 % 0 % 4,199 16 % 14 % Jordan Brand 5,122 4,780 7 % 7 % 3,687 30 % 27 % Others (5) (915) (508) -80 % -79 % (662) 23 % 24 % TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES $ 36,151 $ 35,770 1 % 1 % $ 30,608 17 % 15 % (1) The percent change excluding currency changes and the presentation of wholesale equivalent revenues represent non-GAAP financial measures.
REVENUES $ 51,217 $ 46,710 10 % 16 % $ 44,538 5 % 6 % Supplemental NIKE Brand Revenues Details: NIKE Brand Revenues by: Sales to Wholesale Customers $ 27,397 $ 25,608 7 % 14 % $ 25,898 -1 % -1 % Sales through NIKE Direct 21,308 18,726 14 % 20 % 16,370 14 % 15 % Global Brand Divisions (2) 58 102 -43 % -43 % 25 308 % 302 % TOTAL NIKE BRAND REVENUES $ 48,763 $ 44,436 10 % 16 % $ 42,293 5 % 6 % NIKE Brand Revenues on a Wholesale Equivalent Basis (1) : Sales to Wholesale Customers $ 27,397 $ 25,608 7 % 14 % $ 25,898 -1 % -1 % Sales from our Wholesale Operations to NIKE Direct Operations 12,730 10,543 21 % 27 % 9,872 7 % 7 % TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES $ 40,127 $ 36,151 11 % 18 % $ 35,770 1 % 1 % NIKE Brand Wholesale Equivalent Revenues by: (1),(4) Men's $ 20,733 $ 18,797 10 % 17 % $ 18,391 2 % 3 % Women's 8,606 8,273 4 % 11 % 8,225 1 % 1 % NIKE Kids' 5,038 4,874 3 % 10 % 4,882 0 % 0 % Jordan Brand 6,589 5,122 29 % 35 % 4,780 7 % 7 % Others (5) (839) (915) 8 % -3 % (508) -80 % -79 % TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES $ 40,127 $ 36,151 11 % 18 % $ 35,770 1 % 1 % (1) The percent change excluding currency changes and the presentation of wholesale equivalent revenues represent non-GAAP financial measures.
(4) Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.
(3) Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. (4) Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.
The increase in operating overhead expense was primarily due to an increase in NIKE Direct variable expenses as well as higher bad debt expense. 2022 FORM 10-K 40 Table of Contents GLOBAL BRAND DIVISIONS (Dollars in millions) FISCAL 2022 FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues $ 102 $ 25 308 % 302 % $ 30 -17 % -17 % Earnings (Loss) Before Interest and Taxes $ (4,262) $ (3,656) -17 % $ (3,468) -5 % Global Brand Divisions primarily represent demand creation and operating overhead expense, including product creation and design expenses that are centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital operations and enterprise technology.
Demand creation expense increased primarily due to higher sports marketing expense and higher advertising and marketing expense, partially offset by favorable changes in foreign currency exchange rates. 2023 FORM 10-K 40 Table of Contents GLOBAL BRAND DIVISIONS (Dollars in millions) FISCAL 2023 FISCAL 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues $ 58 $ 102 -43 % -43 % $ 25 308 % 302 % Earnings (Loss) Before Interest and Taxes $ (4,841) $ (4,262) -14 % $ (3,656) -17 % Global Brand Divisions primarily represent demand creation and operating overhead expense, including product creation and design expenses that are centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital operations and enterprise technology.
If future adjustments to estimated probable future losses or actual losses exceed our recorded liability for such claims, we would record additional charges during the period in which the actual loss or change in estimate occurred.
Recorded contingent liabilities are based on the best information available and actual losses in any future period are inherently uncertain. If future adjustments to estimated probable future losses or actual losses exceed our recorded liability for such claims, we would record additional charges during the period in which the actual loss or change in estimate occurred.
On March 11, 2022, we entered into a 364-day committed credit facility agreement with a syndicate of banks which provides for up to $1 billion of borrowings, with the option to increase borrowings up to $1.5 billion in total with lender approval.
On March 10, 2023, we entered into a 364-day committed credit facility agreement with a syndicate of banks which provides for up to $1 billion of borrowings, with the option to increase borrowings up to $1.5 billion in total with lender approval. The facility matures on March 8, 2024, with an option to extend the maturity date by 364 days.
EARNINGS BEFORE INTEREST AND TAXES (1) $ 6,856 $ 6,923 -1 % $ 2,976 133 % EBIT margin (1) 14.7 % 15.5 % 8.0 % Interest expense (income), net 205 262 — 89 — TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES $ 6,651 $ 6,661 0 % $ 2,887 131 % (1) Total NIKE Brand EBIT, Total NIKE, Inc.
EARNINGS BEFORE INTEREST AND TAXES (1) $ 6,195 $ 6,856 -10 % $ 6,923 -1 % EBIT margin (1) 12.1 % 14.7 % 15.5 % Interest expense (income), net (6) 205 — 262 — TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES $ 6,201 $ 6,651 -7 % $ 6,661 0 % (1) Total NIKE Brand EBIT, Total NIKE, Inc.
OTHER (INCOME) EXPENSE, NET (Dollars in millions) FISCAL 2022 FISCAL 2021 FISCAL 2020 Other (income) expense, net $ (181) $ 14 $ 139 Other (income) expense, net comprises foreign currency conversion gains and losses from the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, as well as unusual or non-operating transactions that are outside the normal course of business.
Changes in foreign currency exchange rates decreased Operating overhead expense by approximately 3 percentage points. 2023 FORM 10-K 34 Table of Contents OTHER (INCOME) EXPENSE, NET (Dollars in millions) FISCAL 2023 FISCAL 2022 FISCAL 2021 Other (income) expense, net $ (280) $ (181) $ 14 Other (income) expense, net comprises foreign currency conversion gains and losses from the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, as well as unusual or non-operating transactions that are outside the normal course of business.
The increase in operating overhead expense reflected higher wage-related costs as well as an increase in NIKE Direct variable costs. 2022 FORM 10-K 37 Table of Contents EUROPE, MIDDLE EAST & AFRICA (Dollars in millions) FISCAL 2022 FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 7,388 $ 6,970 6 % 9 % $ 5,892 18 % 13 % Apparel 4,527 3,996 13 % 16 % 3,053 31 % 25 % Equipment 564 490 15 % 17 % 402 22 % 19 % TOTAL REVENUES $ 12,479 $ 11,456 9 % 12 % $ 9,347 23 % 17 % Revenues by: Sales to Wholesale Customers $ 8,377 $ 7,812 7 % 10 % $ 6,574 19 % 14 % Sales through NIKE Direct 4,102 3,644 13 % 15 % 2,773 31 % 25 % TOTAL REVENUES $ 12,479 $ 11,456 9 % 12 % $ 9,347 23 % 17 % EARNINGS BEFORE INTEREST AND TAXES $ 3,293 $ 2,435 35 % $ 1,541 58 % FISCAL 2022 COMPARED TO FISCAL 2021 On a currency-neutral basis, EMEA revenues for fiscal 2022 grew 12%, due primarily to higher revenues in Men’s, the Jordan Brand and Women's.
Demand creation expense increased primarily due to higher sports marketing expense and an increase in digital marketing. 2023 FORM 10-K 37 Table of Contents EUROPE, MIDDLE EAST & AFRICA (Dollars in millions) FISCAL 2023 FISCAL 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 8,260 $ 7,388 12 % 25 % $ 6,970 6 % 9 % Apparel 4,566 4,527 1 % 14 % 3,996 13 % 16 % Equipment 592 564 5 % 18 % 490 15 % 17 % TOTAL REVENUES $ 13,418 $ 12,479 8 % 21 % $ 11,456 9 % 12 % Revenues by: Sales to Wholesale Customers $ 8,522 $ 8,377 2 % 15 % $ 7,812 7 % 10 % Sales through NIKE Direct 4,896 4,102 19 % 33 % 3,644 13 % 15 % TOTAL REVENUES $ 13,418 $ 12,479 8 % 21 % $ 11,456 9 % 12 % EARNINGS BEFORE INTEREST AND TAXES $ 3,531 $ 3,293 7 % $ 2,435 35 % FISCAL 2023 COMPARED TO FISCAL 2022 • EMEA revenues increased 21% on a currency-neutral basis, due to higher revenues in Men's, the Jordan Brand, Women's and Kids'.
Based on our historical experience and the estimated probability of future loss, we have determined that the fair value of such indemnification is not material to our financial position or results of operations. NEW ACCOUNTING PRONOUNCEMENTS We do not expect that any recently issued accounting pronouncements will have a material effect on our Consolidated Financial Statements.
Based on our historical experience and the estimated probability of future loss, we have determined that the fair value of such indemnification is not material to our financial position or results of operations.
Revenues: NIKE Brand Revenues by: Footwear $ 29,143 $ 28,021 4 % 4 % $ 23,305 20 % 18 % Apparel 13,567 12,865 5 % 6 % 10,953 17 % 15 % Equipment 1,624 1,382 18 % 18 % 1,280 8 % 7 % Global Brand Divisions (2) 102 25 308 % 302 % 30 -17 % -17 % Total NIKE Brand Revenues 44,436 42,293 5 % 6 % 35,568 19 % 17 % Converse 2,346 2,205 6 % 7 % 1,846 19 % 16 % Corporate (3) (72) 40 — — (11) — — TOTAL NIKE, INC.
Revenues: NIKE Brand Revenues by: Footwear $ 33,135 $ 29,143 14 % 20 % $ 28,021 4 % 4 % Apparel 13,843 13,567 2 % 8 % 12,865 5 % 6 % Equipment 1,727 1,624 6 % 13 % 1,382 18 % 18 % Global Brand Divisions (2) 58 102 -43 % -43 % 25 308 % 302 % Total NIKE Brand Revenues $ 48,763 $ 44,436 10 % 16 % $ 42,293 5 % 6 % Converse 2,427 2,346 3 % 8 % 2,205 6 % 7 % Corporate (3) 27 (72) — — 40 — — TOTAL NIKE, INC.
Higher ASP per pair was primarily due to higher NIKE Direct ASP, the favorable impact of growth in our NIKE Direct business, higher full-price ASP, net of discounts, on a wholesale equivalent basis, and a higher mix of full-price sales. Currency-neutral NIKE Brand apparel revenues increased 6% for fiscal 2022, driven primarily by growth in Men's.
Higher ASP was primarily due to higher full-price ASP, net of discounts, on a wholesale equivalent basis, and growth in the size of our NIKE Direct business, partially offset by lower NIKE Direct ASP. • NIKE Brand apparel revenues increased 8% on a currency-neutral basis, primarily due to higher revenues in Men's.
INCOME TAXES FISCAL 2022 FISCAL 2021 % CHANGE FISCAL 2020 % CHANGE Effective tax rate 9.1 % 14.0 % (490) bps 12.1 % 190 bps FISCAL 2022 COMPARED TO FISCAL 2021 Our effective tax rate was 9.1% for fiscal 2022, compared to 14.0% for fiscal 2021, primarily due to a shift in our earnings mix and recognition of a non-cash, one-time benefit related to the onshoring of certain non-U.S. intangible property ownership rights in the fourth quarter of fiscal 2022.
INCOME TAXES FISCAL 2023 FISCAL 2022 % CHANGE FISCAL 2021 % CHANGE Effective tax rate 18.2 % 9.1 % 910 bps 14.0 % (490) bps FISCAL 2023 COMPARED TO FISCAL 2022 Our effective tax rate was 18.2% for fiscal 2023, compared to 9.1% for fiscal 2022, primarily due to decreased benefits from stock-based compensation and a non-cash, one-time benefit in the prior year related to the onshoring of certain non-U.S. intangible property ownership rights.
In fiscal 2022, we purchased 27.3 million shares of NIKE's Class B Common Stock for $3,994 million (an average price of $146.11 per share) under the four-year, $15 billion share repurchase program approved by the Board of Directors in June 2018.
In fiscal 2023, we purchased a total of 50.0 million shares of NIKE's Class B Common Stock for $5.5 billion (an average price of $110.32 per share). In August 2022, we terminated the previous four-year, $15 billion share repurchase program approved by the Board of Directors in June 2018.
Operating overhead expense increased largely due to higher wage-related costs and higher strategic technology investments. 2022 FORM 10-K 39 Table of Contents ASIA PACIFIC & LATIN AMERICA (Dollars in millions) FISCAL 2022 FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 4,111 $ 3,659 12 % 17 % $ 3,449 6 % 8 % Apparel 1,610 1,494 8 % 12 % 1,365 9 % 10 % Equipment 234 190 23 % 28 % 214 -11 % -9 % TOTAL REVENUES $ 5,955 $ 5,343 11 % 16 % $ 5,028 6 % 8 % Revenues by: Sales to Wholesale Customers $ 3,529 $ 3,387 4 % 8 % $ 3,408 -1 % 2 % Sales through NIKE Direct 2,426 1,956 24 % 30 % 1,620 21 % 22 % TOTAL REVENUES $ 5,955 $ 5,343 11 % 16 % $ 5,028 6 % 8 % EARNINGS BEFORE INTEREST AND TAXES $ 1,896 $ 1,530 24 % $ 1,184 29 % As discussed previously, our NIKE Brand business in Brazil transitioned to a distributor operating model during fiscal 2021.
Demand creation expense decreased primarily due to lower retail brand presentation costs, lower digital marketing and favorable changes in foreign currency exchange rates, partially offset by higher advertising and marketing expense. 2023 FORM 10-K 39 Table of Contents ASIA PACIFIC & LATIN AMERICA (Dollars in millions) FISCAL 2023 FISCAL 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 4,543 $ 4,111 11 % 19 % $ 3,659 12 % 17 % Apparel 1,664 1,610 3 % 13 % 1,494 8 % 12 % Equipment 224 234 -4 % 4 % 190 23 % 28 % TOTAL REVENUES $ 6,431 $ 5,955 8 % 17 % $ 5,343 11 % 16 % Revenues by: Sales to Wholesale Customers $ 3,736 $ 3,529 6 % 14 % $ 3,387 4 % 8 % Sales through NIKE Direct 2,695 2,426 11 % 22 % 1,956 24 % 30 % TOTAL REVENUES $ 6,431 $ 5,955 8 % 17 % $ 5,343 11 % 16 % EARNINGS BEFORE INTEREST AND TAXES $ 1,932 $ 1,896 2 % $ 1,530 24 % As discussed previously, our NIKE Brand business in Brazil transitioned to a distributor operating model during fiscal 2021.
In rare circumstances, the additional period of time may exceed two months due to extenuating circumstances related to the nature of the forecasted transaction that are outside our control or influence. INCOME TAXES We are subject to taxation in the United States, as well as various state and foreign jurisdictions.
In rare circumstances, the additional period of time may exceed two months due to extenuating circumstances related to the nature of the forecasted transaction that are outside our control or influence.
Certain prior year amounts have been reclassified to conform to fiscal 2022 presentation. These changes had no impact on previously reported consolidated results of operations or shareholders' equity. For additional information about the Consumer Direct Acceleration refer to Item 7.
Certain prior year amounts were reclassified to conform to fiscal 2022 presentation. These changes had no impact on previously reported consolidated results of operations or shareholders' equity.
Higher full-price ASP, net of discounts, was largely due to strategic pricing actions, while higher product costs were primarily due to increased freight and logistics costs. Selling and administrative expense increased due to higher demand creation and operating overhead expense. Higher demand creation expense was driven by higher advertising and marketing expense.
This was partially offset by higher full-price ASP, net of discounts, largely due to strategic pricing actions and product mix. • Selling and administrative expense increased 15% due to higher operating overhead and demand creation expense.
On a currency-neutral basis, apparel revenues increased 9%, driven primarily by higher revenues in Men's. Unit sales of apparel decreased 2%, while higher ASP per unit contributed approximately 11 percentage points of apparel revenue growth. The increase in ASP per unit was primarily driven by higher full-price and NIKE Direct ASPs as well as a higher mix of full-price sales.
Higher ASP per pair was primarily due to higher full-price ASP and growth in NIKE Direct, partially offset by lower NIKE Direct ASP. • Apparel revenues increased 13% on a currency-neutral basis, primarily due to higher revenues in Men's. Unit sales of apparel increased 9%, while higher ASP per unit contributed approximately 4 percentage points of apparel revenue growth.
The breakdown of earnings before interest and taxes is as follows: (Dollars in millions) FISCAL 2022 FISCAL 2021 % CHANGE FISCAL 2020 % CHANGE North America $ 5,114 $ 5,089 0 % $ 2,899 76 % Europe, Middle East & Africa 3,293 2,435 35 % 1,541 58 % Greater China 2,365 3,243 -27 % 2,490 30 % Asia Pacific & Latin America 1,896 1,530 24 % 1,184 29 % Global Brand Divisions (4,262) (3,656) -17 % (3,468) -5 % TOTAL NIKE BRAND (1) $ 8,406 $ 8,641 -3 % $ 4,646 86 % Converse 669 543 23 % 297 83 % Corporate (2,219) (2,261) 2 % (1,967) -15 % TOTAL NIKE, INC.
The breakdown of EBIT is as follows: (Dollars in millions) FISCAL 2023 FISCAL 2022 % CHANGE FISCAL 2021 % CHANGE North America $ 5,454 $ 5,114 7 % $ 5,089 0 % Europe, Middle East & Africa 3,531 3,293 7 % 2,435 35 % Greater China 2,283 2,365 -3 % 3,243 -27 % Asia Pacific & Latin America 1,932 1,896 2 % 1,530 24 % Global Brand Divisions (4,841) (4,262) -14 % (3,656) -17 % TOTAL NIKE BRAND (1) $ 8,359 $ 8,406 -1 % $ 8,641 -3 % Converse 676 669 1 % 543 23 % Corporate (2,840) (2,219) -28 % (2,261) 2 % TOTAL NIKE, INC.
The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a detriment of approximately $87 million, a benefit of approximately $260 million and a detriment of approximately $212 million for the years ended May 31, 2022, 2021 and 2020, respectively.
The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a detriment of approximately $824 million, $87 million and a benefit of approximately $260 million for the years ended May 31, 2023, 2022 and 2021, respectively. MANAGING TRANSLATIONAL EXPOSURES To minimize the impact of translating foreign currency denominated revenues and expenses into U.S.
We believe that existing cash, cash equivalents, short-term investments and cash generated by operations, together with access to external sources of funds as described above, will be sufficient to meet our domestic and foreign capital needs in the foreseeable future.
While individual securities have varying durations, as of May 31, 2023, the weighted-average days to maturity of our cash equivalents and short-term investments portfolio was 98 days. 2023 FORM 10-K 45 Table of Contents We believe that existing Cash and equivalents, Short-term investments and cash generated by operations, together with access to external sources of funds as described above, will be sufficient to meet our domestic and foreign capital needs in the foreseeable future.
The transaction price is determined based upon the invoiced sales price, less anticipated sales returns, discounts and miscellaneous claims from customers. The provision for anticipated sales returns consists of both contractual return rights and discretionary authorized returns. Provisions for post-invoice sales discounts consist of both contractual programs and discretionary discounts that are expected to be granted at a later date.
SALES-RELATED RESERVES Provisions for anticipated sales returns consist of both contractual return rights and discretionary authorized returns. Provisions for post-invoice sales discounts consist of both contractual programs and discretionary discounts that are expected to be granted at a later date.
(2) Total debt includes the following: 1) Current portion of long-term debt, 2) Notes Payable, 3) Current portion of operating lease liabilities, 4) Long-term debt and 5) Operating lease liabilities. 2022 FORM 10-K 30 Table of Contents RESULTS OF OPERATIONS (Dollars in millions, except per share data) FISCAL 2022 FISCAL 2021 % CHANGE FISCAL 2020 % CHANGE Revenues $ 46,710 $ 44,538 5 % $ 37,403 19 % Cost of sales 25,231 24,576 3 % 21,162 16 % Gross profit 21,479 19,962 8 % 16,241 23 % Gross margin 46.0 % 44.8 % 43.4 % Demand creation expense 3,850 3,114 24 % 3,592 -13 % Operating overhead expense 10,954 9,911 11 % 9,534 4 % Total selling and administrative expense 14,804 13,025 14 % 13,126 -1 % % of revenues 31.7 % 29.2 % 35.1 % Interest expense (income), net 205 262 — 89 — Other (income) expense, net (181) 14 — 139 — Income before income taxes 6,651 6,661 0 % 2,887 131 % Income tax expense 605 934 -35 % 348 168 % Effective tax rate 9.1 % 14.0 % 12.1 % NET INCOME $ 6,046 $ 5,727 6 % $ 2,539 126 % Diluted earnings per common share $ 3.75 $ 3.56 5 % $ 1.60 123 % 2022 FORM 10-K 31 Table of Contents CONSOLIDATED OPERATING RESULTS REVENUES (Dollars in millions) FISCAL 2022 FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1) FISCAL 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1) NIKE, Inc.
As a result, our calculation of this metric may not be comparable to similarly titled metrics used by other companies. 2023 FORM 10-K 30 Table of Contents RESULTS OF OPERATIONS (Dollars in millions, except per share data) FISCAL 2023 FISCAL 2022 % CHANGE FISCAL 2021 % CHANGE Revenues $ 51,217 $ 46,710 10 % $ 44,538 5 % Cost of sales 28,925 25,231 15 % 24,576 3 % Gross profit 22,292 21,479 4 % 19,962 8 % Gross margin 43.5 % 46.0 % 44.8 % Demand creation expense 4,060 3,850 5 % 3,114 24 % Operating overhead expense 12,317 10,954 12 % 9,911 11 % Total selling and administrative expense 16,377 14,804 11 % 13,025 14 % % of revenues 32.0 % 31.7 % 29.2 % Interest expense (income), net (6) 205 — 262 — Other (income) expense, net (280) (181) — 14 — Income before income taxes 6,201 6,651 -7 % 6,661 0 % Income tax expense 1,131 605 87 % 934 -35 % Effective tax rate 18.2 % 9.1 % 14.0 % NET INCOME $ 5,070 $ 6,046 -16 % $ 5,727 6 % Diluted earnings per common share $ 3.23 $ 3.75 -14 % $ 3.56 5 % 2023 FORM 10-K 31 Table of Contents CONSOLIDATED OPERATING RESULTS REVENUES (Dollars in millions) FISCAL 2023 FISCAL 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1) FISCAL 2021 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1) NIKE, Inc.
If changes in market conditions result in reductions to the estimated net realizable value of our inventory below our previous estimate, we would increase our reserve in the period in which we made such a determination. 2022 FORM 10-K 47 Table of Contents CONTINGENT PAYMENTS UNDER ENDORSEMENT CONTRACTS A significant amount of our Demand creation expense relates to payments under endorsement contracts.
If changes in market conditions result in reductions to the estimated net realizable value of our inventory below our previous estimate, we would increase our reserve in the period in which we made such a determination.
Conversely, if our long-term debt ratings were to improve, the facility fees and interest rates would decrease. Changes in our long-term debt ratings would not trigger acceleration of maturity of any then-outstanding borrowings or any future borrowings under the committed credit facilities. Under these facilities, we have agreed to various covenants.
Changes in our long-term debt ratings would not trigger acceleration of maturity of any then-outstanding borrowings or any future borrowings under the committed credit facilities. Under these facilities, we have agreed to various covenants. These covenants include limits on the disposal of assets and the amount of debt secured by liens we may incur.
References to wholesale equivalent revenues are intended to provide context as to the total size of our NIKE Brand market footprint if we had no NIKE Direct operations.
Currency-neutral revenues are calculated using actual exchange rates in use during the comparative prior year period in place of the exchange rates in use during the current period. Wholesale equivalent revenues : References to wholesale equivalent revenues are intended to provide context as to the total size of our NIKE Brand market footprint if we had no NIKE Direct operations.
The NIKE Brand, which represents over 90% of NIKE, Inc. Revenues, increased 5% and 6% on a reported and currency-neutral basis, respectively, compared to fiscal 2021.
Revenues, respectively. • NIKE Brand revenues, which represented over 90% of NIKE, Inc. Revenues, increased 10% and 16% on a reported and currency-neutral basis, respectively.
During fiscal 2022, the net change in short-term investments (including sales, maturities and purchases) resulted in a cash outflow of $747 million compared to a cash outflow of $3,276 million in fiscal 2021.
For fiscal 2023, the net change in short-term 2023 FORM 10-K 44 Table of Contents investments (including sales, maturities and purchases) resulted in a cash inflow of $1,481 million compared to a cash outflow of $747 million for fiscal 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe average monthly change in the fair values of foreign currency forward and foreign currency option derivative instruments was $170 million and $184 million during fiscal 2022 and fiscal 2021, respectively. 2022 FORM 10-K 50 Table of Contents The instruments not included in the VaR are intercompany loans denominated in non-functional currencies and fixed interest rate U.S. Dollar denominated debt.
Biggest changeThe instruments not included in the VaR are intercompany loans denominated in non-functional currencies and fixed interest rate U.S. Dollar denominated debt. Intercompany loans and related interest amounts are eliminated in consolidation.
MARKET RISK MEASUREMENT We monitor foreign exchange risk, interest rate risk and related derivatives using a variety of techniques including a review of market value, sensitivity analysis and Value-at-Risk (“VaR”). Our market-sensitive derivative and other financial instruments are foreign currency forward contracts, foreign currency option contracts, intercompany loans denominated in non-functional currencies and fixed interest rate U.S. Dollar denominated debt.
MARKET RISK MEASUREMENT We monitor foreign exchange risk, interest rate risk and related derivatives using a variety of techniques including a review of market value, sensitivity analysis and Value-at-Risk ("VaR"). Our market-sensitive derivative and other financial instruments are foreign currency forward contracts, foreign currency option contracts, intercompany loans denominated in non-functional currencies and fixed interest rate U.S. Dollar denominated debt.
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 majority of derivatives outstanding as of May 31, 2022, are designated as foreign currency cash flow hedges, primarily for Euro/U.S.
Typically, the Company may enter into hedge contracts starting 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 majority of derivatives outstanding as of May 31, 2023, are designated as foreign currency cash flow hedges, primarily for Euro/U.S.
Dollar, British Pound/Euro, Chinese Yuan/U.S. Dollar, and Japanese Yen/U.S. Dollar currency pairs. Refer to Note 14 — Risk Management and Derivatives in the accompanying Notes to the Consolidated Financial Statements for additional information. Our earnings are also exposed to movements in short- and long-term market interest rates.
Dollar, British Pound/Euro, Chinese Yuan/U.S. Dollar, and Japanese Yen/U.S. Dollar currency pairs. Refer to Note 12 — Risk Management and Derivatives in the accompanying Notes to the Consolidated Financial Statements for additional information. Our earnings are also exposed to movements in short- and long-term market interest rates.
There are various modeling techniques that can be used in the VaR computation. Our computations are based on interrelationships between currencies and interest rates (a “variance/co-variance” technique). These interrelationships are a function of foreign exchange currency market changes and interest rate changes over the preceding one-year period.
There are various modeling techniques that can be used in the VaR computation. Our computations are based on interrelationships between currencies and interest rates (a "variance/co-variance" technique). These interrelationships are a function of foreign exchange currency market changes and interest rate changes over the preceding one-year period.
EXPECTED MATURITY DATE YEAR ENDING MAY 31, (Dollars in millions) 2023 2024 2025 2026 2027 THEREAFTER TOTAL FAIR VALUE Interest Rate Risk Long-term U.S.
EXPECTED MATURITY DATE YEAR ENDING MAY 31, (Dollars in millions) 2024 2025 2026 2027 2028 THEREAFTER TOTAL FAIR VALUE Interest Rate Risk Long-term U.S.
The estimated maximum one-day loss in fair value on our foreign currency sensitive derivative financial instruments, derived using the VaR model, was $99 million and $92 million as of May 31, 2022 and 2021, respectively. The VaR increased year-over-year as a result of an increase in foreign currency volatilities as of May 31, 2022.
The estimated maximum one-day loss in fair value on our foreign currency sensitive derivative financial instruments, derived using the VaR model, was $111 million and $99 million as of May 31, 2023 and 2022, respectively. The VaR increased year-over-year as a result of an increase in foreign currency volatilities as of May 31, 2023.
The value of foreign currency options does not change on a one-to-one basis with changes in the underlying currency rate. We adjust the potential loss in option value for the estimated sensitivity (the “delta” and “gamma”) to changes in the underlying currency rate.
The value of foreign currency options does not change on a one-to-one basis with changes in the underlying currency rate. We adjust the potential loss in option value for the estimated sensitivity (the "delta" and "gamma") to changes in the underlying currency rate.
Dollar debt — Fixed rate Principal payments $ 500 $ — $ 1,000 $ — $ 2,000 $ 6,000 $ 9,500 $ 8,933 Average interest rate 2.3 % 0.0 % 2.4 % 0.0 % 2.6 % 3.3 % 3.0 % 2022 FORM 10-K 51 Table of Contents
Dollar debt — Fixed rate Principal payments $ — $ 1,000 $ — $ 2,000 $ — $ 6,000 $ 9,000 $ 7,889 Average interest rate 0.0 % 2.4 % 0.0 % 2.6 % 0.0 % 3.3 % 3.1 % 2023 FORM 10-K 50 Table of Contents
Intercompany loans and related interest amounts are eliminated in consolidation. Furthermore, our non-functional currency intercompany loans are substantially hedged against foreign exchange risk through the use of forward contracts, which are included in the VaR calculation above.
Furthermore, our non-functional currency intercompany loans are substantially hedged against foreign exchange risk through the use of forward 2023 FORM 10-K 49 Table of Contents contracts, which are included in the VaR calculation above.
Where exposures are hedged, our program has the effect of delaying the impact of exchange rate movements on our Consolidated Financial Statements. The timing for hedging exposures, as well as the type and duration of the hedge instruments employed, are guided by our hedging policies and determined based upon the nature of the exposure and prevailing market conditions.
The timing for hedging exposures, as well as the type and duration of the hedge instruments employed, are guided by our hedging policies and determined based upon the nature of the exposure and prevailing market conditions.
We use forward and option contracts to hedge certain anticipated, but not yet firmly committed, transactions as well as certain firm commitments and the related receivables and payables, including third-party and intercompany transactions.
We use forward and option contracts to hedge certain anticipated, but not yet firmly committed, transactions as well as certain firm commitments and the related receivables and payables, including third-party and intercompany transactions. Where exposures are hedged, our program has the effect of delaying the impact of exchange rate movements on our Consolidated Financial Statements.
Such a hypothetical loss in the fair value of our derivatives would be offset by increases in the value of the underlying transactions being hedged.
Such a hypothetical loss in the fair value of our derivatives would be offset by increases in the value of the underlying transactions being hedged. The average monthly change in the fair values of foreign currency forward and foreign currency option derivative instruments was $289 million and $170 million during fiscal 2023 and fiscal 2022, respectively.
Removed
We have, in the past, and may in the future, also use forward or options contracts to hedge our investment in the net assets of certain international subsidiaries to offset foreign currency translation adjustments related to our net investment in those subsidiaries.

Other NKE 10-K year-over-year comparisons