Item 1. FINANCIAL STATEMENTS

NIKE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

			THREE MONTHS ENDED AUGUST 31,
(In millions, except per share data)			2023			2022
Revenues			$	12,939		$	12,687
Cost of sales			7,219			7,072
Gross profit			5,720			5,615
Demand creation expense			1,069			943
Operating overhead expense			3,047			2,977
Total selling and administrative expense			4,116			3,920
Interest expense (income), net			(34)			13
Other (income) expense, net			(10)			(146)
Income before income taxes			1,648			1,828
Income tax expense			198			360
NET INCOME			$	1,450		$	1,468
Earnings per common share:
Basic			$	0.95		$	0.94
Diluted			$	0.94		$	0.93
Weighted average common shares outstanding:
Basic			1,528.4			1,567.1
Diluted			1,543.3			1,585.8

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

NIKE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

			THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)			2023			2022
Net income			$	1,450		$	1,468
Other comprehensive income (loss), net of tax:
Change in net foreign currency translation adjustment			36			(226)
Change in net gains (losses) on cash flow hedges			(134)			555
Change in net gains (losses) on other			3			(11)
Total other comprehensive income (loss), net of tax			(95)			318
TOTAL COMPREHENSIVE INCOME			$	1,355		$	1,786

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

NIKE, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

			AUGUST 31,						MAY 31,
(In millions)			2023						2023
ASSETS
Current assets:
Cash and equivalents			$	6,178					$	7,441
Short-term investments			2,612						3,234
Accounts receivable, net			4,749						4,131
Inventories			8,698						8,454
Prepaid expenses and other current assets			2,013						1,942
Total current assets			24,250						25,202
Property, plant and equipment, net			5,109						5,081
Operating lease right-of-use assets, net			2,939						2,923
Identifiable intangible assets, net			272						274
Goodwill			281						281
Deferred income taxes and other assets			3,935						3,770
TOTAL ASSETS			$	36,786					$	37,531
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt			$	—					$	—
Notes payable			6						6
Accounts payable			2,738						2,862
Current portion of operating lease liabilities			435						425
Accrued liabilities			4,987						5,723
Income taxes payable			295						240
Total current liabilities			8,461						9,256
Long-term debt			8,929						8,927
Operating lease liabilities			2,807						2,786
Deferred income taxes and other liabilities			2,618						2,558
Commitments and contingencies (Note 11)
Redeemable preferred stock			—						—
Shareholders' equity:
Common stock at stated value:
Class A convertible — 298 and 305 shares outstanding			—						—
Class B — 1,226 and 1,227 shares outstanding			3						3
Capital in excess of stated value			12,590						12,412
Accumulated other comprehensive income (loss)			136						231
Retained earnings			1,242						1,358
Total shareholders' equity			13,971						14,004
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			$	36,786					$	37,531

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

NIKE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

			THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)			2023			2022
Cash provided (used) by operations:
Net income			$	1,450		$	1,468
Adjustments to reconcile net income to net cash provided (used) by operations:
Depreciation			191			169
Deferred income taxes			(68)			(43)
Stock-based compensation			196			170
Amortization, impairment and other			(5)			(9)
Net foreign currency adjustments			(7)			16
Changes in certain working capital components and other assets and liabilities:
(Increase) decrease in accounts receivable			(621)			(415)
(Increase) decrease in inventories			(263)			(1,363)
(Increase) decrease in prepaid expenses, operating lease right-of-use assets and other current and non-current assets			(225)			(128)
Increase (decrease) in accounts payable, accrued liabilities, operating lease liabilities and other current and non-current liabilities			(714)			492
Cash provided (used) by operations			(66)			357
Cash provided (used) by investing activities:
Purchases of short-term investments			(1,144)			(2,469)
Maturities of short-term investments			778			1,432
Sales of short-term investments			1,038			948
Additions to property, plant and equipment			(253)			(264)
Other investing activities			(1)			139
Cash provided (used) by investing activities			418			(214)
Cash provided (used) by financing activities:
Increase (decrease) in notes payable, net			—			(1)
Proceeds from exercise of stock options and other stock issuances			99			82
Repurchase of common stock			(1,133)			(983)
Dividends — common and preferred			(524)			(480)
Other financing activities			(41)			(22)
Cash provided (used) by financing activities			(1,599)			(1,404)
Effect of exchange rate changes on cash and equivalents			(16)			(87)
Net increase (decrease) in cash and equivalents			(1,263)			(1,348)
Cash and equivalents, beginning of period			7,441			8,574
CASH AND EQUIVALENTS, END OF PERIOD			$	6,178		$	7,226
Supplemental disclosure of cash flow information:
Non-cash additions to property, plant and equipment			$	148		$	124
Dividends declared and not paid			519			482

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

NIKE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

			COMMON STOCK															CAPITAL IN EXCESS OF STATED VALUE			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)			RETAINED EARNINGS			TOTAL
			CLASS A									CLASS B
(In millions, except per share data)			SHARES			AMOUNT						SHARES			AMOUNT
Balance at May 31, 2023			305			$	—					1,227			$	3		$	12,412		$	231		$	1,358		$	14,004
Stock options exercised												2						106									106
Conversion to Class B Common Stock			(7)									7															—
Repurchase of Class B Common Stock												(10)						(85)						(1,047)			(1,132)
Dividends on common stock ($0.340 per share) and preferred stock $0.10 per share)																								(519)			(519)
Issuance of shares to employees, net of shares withheld for employee taxes																		(39)						—			(39)
Stock-based compensation																		196									196
Net income																								1,450			1,450
Other comprehensive income (loss)																					(95)						(95)
Balance at August 31, 2023			298			$	—					1,226			$	3		$	12,590		$	136		$	1,242		$	13,971

			COMMON STOCK															CAPITAL IN EXCESS OF STATED VALUE			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)			RETAINED EARNINGS			TOTAL
			CLASS A									CLASS B
(In millions, except per share data)			SHARES			AMOUNT						SHARES			AMOUNT
Balance at May 31, 2022			305			$	—					1,266			$	3		$	11,484		$	318		$	3,476		$	15,281
Stock options exercised												2						80									80
Repurchase of Class B Common Stock												(9)						(66)						(925)			(991)
Dividends on common stock ($0.305 per share) and preferred stock ($0.10 per share)																								(482)			(482)
Issuance of shares to employees, net of shares withheld for employee taxes																		(20)						(2)			(22)
Stock-based compensation																		170									170
Net income																								1,468			1,468
Other comprehensive income (loss)																					318						318
Balance at August 31, 2022			305			$	—					1,259			$	3		$	11,648		$	636		$	3,535		$	15,822

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1			Summary of Significant Accounting Policies			7
NOTE 2			Accrued Liabilities			7
NOTE 3			Fair Value Measurements			8
NOTE 4			Income Taxes			9
NOTE 5			Stock-Based Compensation			10
NOTE 6			Earnings Per Share			11
NOTE 7			Risk Management and Derivatives			11
NOTE 8			Accumulated Other Comprehensive Income (Loss)			15
NOTE 9			Revenues			17
NOTE 10			Operating Segments			18
NOTE 11			Contingencies			20

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Unaudited Condensed Consolidated Financial Statements include the accounts of NIKE, Inc. and its subsidiaries (the "Company" or "NIKE") and reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of the results of operations for the interim period. The year-end Condensed Consolidated Balance Sheet data as of May 31, 2023, was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). The interim financial information and notes thereto should be read in conjunction with the Company's latest Annual Report on Form 10-K for the fiscal year ended May 31, 2023 (the "Annual Report"). The results of operations for the three months ended August 31, 2023, are not necessarily indicative of results to be expected for the entire fiscal year.

RECENTLY ADOPTED ACCOUNTING STANDARDS

In September 2022, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. The new guidance requires qualitative and quantitative disclosure sufficient to enable users of the financial statements to understand the nature, activity during the period, changes from period to period and potential magnitude of such programs. The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal periods, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. The Company adopted the required guidance in the first quarter of fiscal 2024.

Certain financial institutions offer voluntary supplier finance programs facilitated through a third-party platform that provide participating suppliers the option to finance valid payment obligations from the Company. The Company is not a party to agreements negotiated between participating suppliers and third-party financial institutions. The Company's obligations to its suppliers, including amounts due and payment terms, are not affected by a supplier's decision to participate in these programs and the Company does not provide guarantees to third parties in connection with these programs. As of August 31, 2023 and May 31, 2023, the Company had $953 million and $834 million, respectively, of outstanding supplier obligations confirmed as valid under these programs. These amounts are included within Accounts payable on the Unaudited Condensed Consolidated Balance Sheets.

NOTE 2 — ACCRUED LIABILITIES

Accrued liabilities included the following:

			AUGUST 31,			MAY 31,
(Dollars in millions)			2023			2023
Compensation and benefits, excluding taxes			$	1,133		$	1,737
Sales-related reserves			1,003			994
Dividends payable			526			529
Import and logistics			439			370
Endorsement compensation			303			552
Other			1,583			1,541
TOTAL ACCRUED LIABILITIES			$	4,987		$	5,723

NOTE 3 — FAIR VALUE MEASUREMENTS

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including derivatives, equity securities and available-for-sale debt securities. For additional information about the Company's fair value policies, refer to Note 1 — Summary of Significant Accounting Policies within the Annual Report.

The following tables present information about the Company's financial assets measured at fair value on a recurring basis as of August 31, 2023 and May 31, 2023, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement:

			AUGUST 31, 2023
(Dollars in millions)			ASSETS AT FAIR VALUE			CASH AND EQUIVALENTS			SHORT-TERM INVESTMENTS
Cash			$	1,432		$	1,432		$	—
Level 1:
U.S. Treasury securities			2,022			4			2,018
Level 2:
Commercial paper and bonds			549			13			536
Money market funds			4,154			4,154			—
Time deposits			581			575			6
U.S. Agency securities			52			—			52
Total Level 2			5,336			4,742			594
TOTAL			$	8,790		$	6,178		$	2,612

			MAY 31, 2023
(Dollars in millions)			ASSETS AT FAIR VALUE			CASH AND EQUIVALENTS			SHORT-TERM INVESTMENTS
Cash			$	1,767		$	1,767		$	—
Level 1:
U.S. Treasury securities			2,655			—			2,655
Level 2:
Commercial paper and bonds			543			15			528
Money market funds			5,157			5,157			—
Time deposits			507			502			5
U.S. Agency securities			46			—			46
Total Level 2			6,253			5,674			579
TOTAL			$	10,675		$	7,441		$	3,234

As of August 31, 2023, the Company held $1,945 million of available-for-sale debt securities with maturity dates within one year and $667 million with maturity dates greater than one year and less than five years in Short-term investments on the Unaudited Condensed Consolidated Balance Sheets. The fair value of the Company's available-for-sale debt securities approximates their amortized cost.

Included in Interest expense (income), net was interest income related to the Company's investment portfolio of $99 million and $65 million for the three months ended August 31, 2023 and 2022, respectively.

The following tables present information about the Company's derivative assets and liabilities measured at fair value on a recurring basis and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement:

			AUGUST 31, 2023
			DERIVATIVE ASSETS												DERIVATIVE LIABILITIES
(Dollars in millions)			ASSETS AT FAIR VALUE			OTHER CURRENT ASSETS			OTHER LONG-TERM ASSETS						LIABILITIES AT FAIR VALUE			ACCRUED LIABILITIES			OTHER LONG-TERM LIABILITIES
Level 2:
Foreign exchange forwards and options(1)			$	491		$	420		$	71					$	235		$	177		$	58

*(1)*If the foreign exchange derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $233 million as of August 31, 2023. As of that date, the Company received $7 million of cash collateral from counterparties related to foreign exchange derivative instruments. No amount of collateral was posted on the derivative liability balance as of August 31, 2023.

			MAY 31, 2023
			DERIVATIVE ASSETS												DERIVATIVE LIABILITIES
(Dollars in millions)			ASSETS AT FAIR VALUE			OTHER CURRENT ASSETS			OTHER LONG-TERM ASSETS						LIABILITIES AT FAIR VALUE			ACCRUED LIABILITIES			OTHER LONG-TERM LIABILITIES
Level 2:
Foreign exchange forwards and options(1)			$	557		$	493		$	64					$	180		$	128		$	52

*(1)*If the foreign exchange derivative instruments had been netted on the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $178 million as of May 31, 2023. As of that date, the Company received $36 million of cash collateral from counterparties related to foreign exchange derivative instruments. No amount of collateral was posted on the derivative liability balance as of May 31, 2023.

For additional information related to the Company's derivative financial instruments and credit risk, refer to Note 7 — Risk Management and Derivatives.

The carrying amounts of other current financial assets and other current financial liabilities approximate fair value.

FINANCIAL ASSETS AND LIABILITIES NOT RECORDED AT FAIR VALUE

The Company's Long-term debt is recorded at adjusted cost, net of unamortized premiums, discounts and debt issuance costs. The fair value of long-term debt is estimated based upon quoted prices for similar instruments or quoted prices for identical instruments in inactive markets (Level 2). The fair value of the Company's Long-term debt, including the current portion, was approximately $7,768 million at August 31, 2023 and $7,889 million at May 31, 2023.

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

NOTE 4 — INCOME TAXES

The effective tax rate was 12.0% and 19.7% for the three months ended August 31, 2023 and 2022, respectively. The decrease in the Company's effective tax rate was primarily due to the impact of temporary relief provided by the Internal Revenue Service ("IRS") relating to U.S. foreign tax credit regulations. On July 21, 2023, the IRS issued Notice 2023-55 which specifically delayed the application of certain U.S. foreign tax credit regulations that had previously limited the Company's ability to claim credits on certain foreign taxes for the fiscal year ended May 31, 2023. As a result of this new guidance, the Company recognized a one-time tax benefit related to prior year tax positions in the first three months of fiscal 2024.

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 that included, among other provisions, changes to the U.S. corporate income tax system, including a fifteen percent minimum tax based on "adjusted financial statement income," which was effective for the Company beginning June 1, 2023. Based on the Company's current analysis of the provisions, these tax law changes are not expected to have a material impact on the Company's financial statements for fiscal 2024.

As of August 31, 2023, total gross unrecognized tax benefits, excluding related interest and penalties, were $931 million, $644 million of which would affect the Company's effective tax rate if recognized in future periods. The majority of the total gross unrecognized tax benefits are long-term in nature and included within Deferred income taxes and other liabilities on the Unaudited Condensed Consolidated Balance Sheets. As of May 31, 2023, total gross unrecognized tax benefits, excluding related interest and penalties, were $936 million. As of August 31, 2023 and May 31, 2023, accrued interest and penalties related

to uncertain tax positions were $274 million and $268 million, respectively, (excluding federal benefit) and included within Deferred income taxes and other liabilities on the Unaudited Condensed Consolidated Balance Sheets.

The Company is subject to taxation in the U.S., as well as various state and foreign jurisdictions. The Company is currently under audit by the U.S. IRS for fiscal years 2017 through 2019. The Company has closed all U.S. federal income tax matters through fiscal 2016, with the exception of certain transfer pricing adjustments.

Tax years after 2011 remain open in certain major foreign jurisdictions. Although the timing of resolution of audits is not certain, the Company evaluates all domestic and foreign audit issues in the aggregate, along with the expiration of applicable statutes of limitations, and estimates that it is reasonably possible the total gross unrecognized tax benefits could decrease by up to $20 million within the next 12 months. In January 2019, the European Commission opened a formal investigation to examine whether the Netherlands has breached State Aid rules when granting certain tax rulings to the Company. The Company believes the investigation is without merit. 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.

NOTE 5 — STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

The NIKE, Inc. Stock Incentive Plan (the "Stock Incentive Plan") provides for the issuance of up to 798 million previously unissued shares of Class B Common Stock in connection with equity awards granted under the Stock Incentive Plan. The Stock Incentive Plan authorizes the grant of non-statutory stock options, incentive stock options, stock appreciation rights and stock awards, including restricted stock and restricted stock units. Restricted stock units include both time-vesting restricted stock units ("RSUs") as well as performance-based restricted stock units ("PSUs"). In addition to the Stock Incentive Plan, the Company gives employees the right to purchase shares at a discount from the market price under employee stock purchase plans ("ESPPs"). For additional information, refer to Note 9 — Common Stock and Stock-Based Compensation within the Annual Report.

The following table summarizes the Company's total stock-based compensation expense recognized in Cost of sales or Operating overhead expense, as applicable:

			THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)			2023			2022
Stock options(1)			$	76		$	75
ESPPs			21			15
Restricted stock and restricted stock units(1)(2)			99			80
TOTAL STOCK-BASED COMPENSATION EXPENSE			$	196		$	170

*(1)*Expense for stock options includes the expense associated with stock appreciation rights. Accelerated stock option expense is primarily recorded for employees meeting certain retirement eligibility requirements.

*(2)*Restricted stock units include RSUs and PSUs.

The income tax benefit related to stock-based compensation expense was $17 million and $20 million for the three months ended August 31, 2023 and 2022, respectively, and reported within Income tax expense.

STOCK OPTIONS

The weighted average fair value per share of stock options granted during the three months ended August 31, 2023 and 2022, computed as of the grant date using the Black-Scholes pricing model, was $34.79 and $32.13, respectively. The weighted average assumptions used to estimate these fair values were as follows:

			THREE MONTHS ENDED AUGUST 31,
			2023			2022
Dividend yield			1.1		%	0.8		%
Expected volatility			29.2		%	27.0		%
Weighted average expected life (in years)			5.8			5.8
Risk-free interest rate			4.2		%	2.7		%

Expected volatilities are based on an analysis of the historical volatility of the Company's common stock, the implied volatility in market-traded options on the Company's common stock with a term greater than one year, as well as other factors. The weighted average expected life of stock options is based on an analysis of historical and expected future exercise patterns. The interest

rate is based on the U.S. Treasury (constant maturity) risk-free rate in effect at the date of grant for periods corresponding with the expected term of the stock options.

As of August 31, 2023, the Company had $387 million of unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized in Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.4 years.

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

The weighted average fair value per share of restricted stock and restricted stock units granted for the three months ended August 31, 2023 and 2022, computed as of the grant date, was $106.85 and $127.16, respectively.

As of August 31, 2023, the Company had $676 million of unrecognized compensation costs from restricted stock and restricted stock units, net of estimated forfeitures, to be recognized in Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.3 years.

NOTE 6 — EARNINGS PER SHARE

The following is a reconciliation from basic earnings per common share to diluted earnings per common share. The computations of diluted earnings per common share exclude restricted stock, restricted stock units and options, including shares under ESPPs, to purchase an estimated additional 33.7 million and 23.8 million shares of common stock outstanding for the three months ended August 31, 2023 and 2022, respectively, because the awards were assumed to be anti-dilutive.

			THREE MONTHS ENDED AUGUST 31,
(In millions, except per share data)			2023			2022
Net income available to common stockholders			$	1,450		$	1,468
Determination of shares:
Weighted average common shares outstanding			1,528.4			1,567.1
Assumed conversion of dilutive stock options and awards			14.9			18.7
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING			1,543.3			1,585.8
Earnings per common share:
Basic			$	0.95		$	0.94
Diluted			$	0.94		$	0.93

NOTE 7 — RISK MANAGEMENT AND DERIVATIVES

The Company is exposed to global market risks, including the effect of changes in foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. As of and for the three months ended August 31, 2023, there have been no material changes to the Company's hedging program or strategy from what was disclosed within the Annual Report. For additional information about the Company's derivatives and hedging policies, refer to Note 1 — Summary of Significant Accounting Policies and Note 12 — Risk Management and Derivatives within the Annual Report.

The majority of derivatives outstanding as of August 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. All derivatives are recognized on the Unaudited Condensed Consolidated Balance Sheets at fair value and classified based on the instrument's maturity date.

The following tables present the fair values of derivative instruments included within the Unaudited Condensed Consolidated Balance Sheets:

			DERIVATIVE ASSETS
			BALANCE SHEET LOCATION			AUGUST 31,						MAY 31,
(Dollars in millions)			2023						2023
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and options			Prepaid expenses and other current assets			$	406					$	480
Foreign exchange forwards and options			Deferred income taxes and other assets			71						64
Total derivatives formally designated as hedging instruments						477						544
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options			Prepaid expenses and other current assets			14						13
Total derivatives not designated as hedging instruments						14						13
TOTAL DERIVATIVE ASSETS						$	491					$	557
			DERIVATIVE LIABILITIES
			BALANCE SHEET LOCATION			AUGUST 31,						MAY 31,
(Dollars in millions)			2023						2023
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and options			Accrued liabilities			$	142					$	93
Foreign exchange forwards and options			Deferred income taxes and other liabilities			58						52
Total derivatives formally designated as hedging instruments						200						145
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options			Accrued liabilities			35						35
Total derivatives not designated as hedging instruments						35						35
TOTAL DERIVATIVE LIABILITIES						$	235					$	180

The following tables present the amounts in the Unaudited Condensed Consolidated Statements of Income in which the effects of cash flow hedges are recorded and the effects of cash flow hedge activity on these line items:

			THREE MONTHS ENDED AUGUST 31,
			2023									2022
(Dollars in millions)			TOTAL			AMOUNT OF GAIN (LOSS) ON CASH FLOW HEDGE ACTIVITY						TOTAL			AMOUNT OF GAIN (LOSS) ON CASH FLOW HEDGE ACTIVITY
Revenues			$	12,939		$	1					$	12,687		$	(9)
Cost of sales			7,219			86						7,072			109
Demand creation expense			1,069			—						943			(1)
Other (income) expense, net			(10)			35						(146)			82
Interest expense (income), net			(34)			(2)						13			(2)

The following tables present the amounts affecting the Unaudited Condensed Consolidated Statements of Income:

(Dollars in millions)			AMOUNT OF GAIN (LOSS) RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) ON DERIVATIVES**(1)**									AMOUNT OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME**(1)**
THREE MONTHS ENDED AUGUST 31,									LOCATION OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME						THREE MONTHS ENDED AUGUST 31,
2023			2022									2023			2022
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options			$	(18)		$	25					Revenues						$	1		$	(9)
Foreign exchange forwards and options			(2)			487						Cost of sales						86			109
Foreign exchange forwards and options			—			(5)						Demand creation expense						—			(1)
Foreign exchange forwards and options			(10)			293						Other (income) expense, net						35			82
Interest rate swaps(2)			—			—						Interest expense (income), net						(2)			(2)
TOTAL DESIGNATED CASH FLOW HEDGES			$	(30)		$	800											$	120		$	179

*(1)*For the three months ended August 31, 2023 and 2022, the amounts recorded in Other (income) expense, net as a result of the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.

*(2)*Gains and losses associated with terminated interest rate swaps, which were previously designated as cash flow hedges and recorded in Accumulated other comprehensive income (loss), will be released through Interest expense (income), net over the term of the issued debt.

			AMOUNT OF GAIN (LOSS) RECOGNIZED IN INCOME ON DERIVATIVES						LOCATION OF GAIN (LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
			THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)			2023			2022
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options and embedded derivatives			$	(27)		$	61		Other (income) expense, net

CASH FLOW HEDGES

All changes in fair value of derivatives designated as cash flow hedge instruments are recorded in Accumulated other comprehensive income (loss) until Net income is affected by the variability of cash flows of the hedged transaction. Effective hedge results are classified in the Unaudited Condensed Consolidated Statements of Income in the same manner as the underlying exposure. When it is no longer probable the forecasted hedged transaction will occur in the initially identified time period, hedge accounting is discontinued and the Company accounts for the associated derivative as an undesignated instrument as discussed below. Additionally, the gains and losses associated with derivatives no longer designated as cash flow hedge instruments in Accumulated other comprehensive income (loss) are recognized immediately in Other (income) expense, net, if it is probable the forecasted hedged transaction will not occur by the end of the initially identified time period or within an additional two-month period thereafter. 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 the control or influence of the Company.

The total notional amount of outstanding foreign currency derivatives designated as cash flow hedges was approximately $18.3 billion as of August 31, 2023. Approximately $313 million of deferred net gains (net of tax) on both outstanding and matured derivatives in Accumulated other comprehensive income (loss) as of August 31, 2023, are expected to be reclassified to Net income during the next 12 months concurrent with the underlying hedged transactions also being recorded in Net income. Actual amounts ultimately reclassified to Net income are dependent on the exchange rates in effect when derivative contracts currently outstanding mature. As of August 31, 2023, the maximum term over which the Company hedges exposures to the variability of cash flows for its forecasted transactions was 27 months.

UNDESIGNATED DERIVATIVE INSTRUMENTS

The Company may elect to enter into foreign exchange forwards to mitigate the change in fair value of specific assets and liabilities on the Unaudited Condensed Consolidated Balance Sheets. These undesignated instruments are recorded at fair value as a derivative asset or liability on the Unaudited Condensed Consolidated Balance Sheets with their corresponding change in fair value recognized in Other (income) expense, net, together with the remeasurement gain or loss from the hedged balance sheet position. The total notional amount of outstanding undesignated derivative instruments was $3.7 billion as of August 31, 2023.

CREDIT RISK

The Company's bilateral credit-related contingent features generally require the owing entity, either the Company or the derivative counterparty, to post collateral for the portion of the fair value in excess of $50 million should the fair value of outstanding derivatives per counterparty be greater than $50 million. Additionally, a certain level of decline in credit rating of either the Company or the counterparty could trigger collateral requirements. As of August 31, 2023, the Company was in compliance with all credit risk-related contingent features, and derivative instruments with such features were in a net asset position of approximately $256 million. Accordingly, the Company was not required to post cash collateral as a result of these contingent features. Further, $7 million of collateral was received on the Company's derivative asset balance as of August 31, 2023. The Company considers the impact of the risk of counterparty default to be immaterial.

For additional information related to the Company's derivative financial instruments and collateral, refer to Note 3 — Fair Value Measurements.

NOTE 8 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in Accumulated other comprehensive income (loss), net of tax, were as follows:

(Dollars in millions)			FOREIGN CURRENCY TRANSLATION ADJUSTMENT**(1)**			CASH FLOW HEDGES			NET INVESTMENT HEDGES**(1)**			OTHER			TOTAL
Balance at May 31, 2023			$	(253)		$	431		$	115		$	(62)		$	231
Other comprehensive income (loss):
Other comprehensive gains (losses) before reclassifications(2)			36			(23)			—			—			13
Reclassifications to net income of previously deferred (gains) losses(3)			—			(111)			—			3			(108)
Total other comprehensive income (loss)			36			(134)			—			3			(95)
Balance at August 31, 2023			$	(217)		$	297		$	115		$	(59)		$	136

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

*(2)*Net of tax benefit (expense) of $0 million, $7 million, $0 million, $0 million and $7 million, respectively.

*(3)*Net of tax (benefit) expense of $0 million, $9 million, $0 million, $(1) million and $8 million, respectively.

(Dollars in millions)			FOREIGN CURRENCY TRANSLATION ADJUSTMENT**(1)**			CASH FLOW HEDGES			NET INVESTMENT HEDGES**(1)**			OTHER			TOTAL
Balance at May 31, 2022			$	(520)		$	779		$	115		$	(56)		$	318
Other comprehensive income (loss):
Other comprehensive gains (losses) before reclassifications(2)			(272)			716			—			(3)			441
Reclassifications to net income of previously deferred (gains) losses(3)			46			(161)			—			(8)			(123)
Total other comprehensive income (loss)			(226)			555			—			(11)			318
Balance at August 31, 2022			$	(746)		$	1,334		$	115		$	(67)		$	636

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

*(2)*Net of tax benefit (expense) of $0 million, $(84) million, $0 million, $1 million and $(83) million, respectively.

*(3)*Net of tax (benefit) expense of $0 million, $18 million, $0 million, $3 million and $21 million, respectively.

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

			AMOUNT OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME						LOCATION OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME
			THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)			2023			2022
Gains (losses) on foreign currency translation adjustment			$	—		$	(46)		Other (income) expense, net
Total before tax			—			(46)
Tax (expense) benefit			—			—
Gain (loss) net of tax			—			(46)
Gains (losses) on cash flow hedges:
Foreign exchange forwards and options			1			(9)			Revenues
Foreign exchange forwards and options			86			109			Cost of sales
Foreign exchange forwards and options			—			(1)			Demand creation expense
Foreign exchange forwards and options			35			82			Other (income) expense, net
Interest rate swaps			(2)			(2)			Interest expense (income), net
Total before tax			120			179
Tax (expense) benefit			(9)			(18)
Gain (loss) net of tax			111			161
Gains (losses) on other			(4)			11			Other (income) expense, net
Total before tax			(4)			11
Tax (expense) benefit			1			(3)
Gain (loss) net of tax			(3)			8
Total net gain (loss) reclassified for the period			$	108		$	123

NOTE 9 — REVENUES

DISAGGREGATION OF REVENUES

The following tables present the Company's Revenues disaggregated by reportable operating segment, major product line and distribution channel:

			THREE MONTHS ENDED AUGUST 31, 2023
(Dollars in millions)			NORTH AMERICA			EUROPE, MIDDLE EAST & AFRICA			GREATER CHINA			ASIA PACIFIC & LATIN AMERICA			GLOBAL BRAND DIVISIONS			TOTAL NIKE BRAND			CONVERSE			CORPORATE			TOTAL NIKE, INC.
Revenues by:
Footwear			$	3,733		$	2,260		$	1,287		$	1,141		$	—		$	8,421		$	522		$	—		$	8,943
Apparel			1,479			1,137			401			371			—			3,388			20			—			3,408
Equipment			211			213			47			60			—			531			11			—			542
Other			—			—			—			—			13			13			35			(2)			46
TOTAL REVENUES			$	5,423		$	3,610		$	1,735		$	1,572		$	13		$	12,353		$	588		$	(2)		$	12,939
Revenues by:
Sales to Wholesale Customers			$	2,772		$	2,379		$	895		$	937		$	—		$	6,983		$	329		$	—		$	7,312
Sales through Direct to Consumer			2,651			1,231			840			635			—			5,357			224			—			5,581
Other			—			—			—			—			13			13			35			(2)			46
TOTAL REVENUES			$	5,423		$	3,610		$	1,735		$	1,572		$	13		$	12,353		$	588		$	(2)		$	12,939

			THREE MONTHS ENDED AUGUST 31, 2022
(Dollars in millions)			NORTH AMERICA			EUROPE, MIDDLE EAST & AFRICA			GREATER CHINA			ASIA PACIFIC & LATIN AMERICA			GLOBAL BRAND DIVISIONS			TOTAL NIKE BRAND			CONVERSE			CORPORATE			TOTAL NIKE, INC.
Revenues by:
Footwear			$	3,805		$	2,012		$	1,233		$	1,064		$	—		$	8,114		$	577		$	—		$	8,691
Apparel			1,494			1,153			374			413			—			3,434			20			—			3,454
Equipment			211			168			49			58			—			486			8			—			494
Other			—			—			—			—			14			14			38			(4)			48
TOTAL REVENUES			$	5,510		$	3,333		$	1,656		$	1,535		$	14		$	12,048		$	643		$	(4)		$	12,687
Revenues by:
Sales to Wholesale Customers			$	3,027		$	2,203		$	839		$	914		$	—		$	6,983		$	344		$	—		$	7,327
Sales through Direct to Consumer			2,483			1,130			817			621			—			5,051			261			—			5,312
Other			—			—			—			—			14			14			38			(4)			48
TOTAL REVENUES			$	5,510		$	3,333		$	1,656		$	1,535		$	14		$	12,048		$	643		$	(4)		$	12,687

For the three months ended August 31, 2023 and 2022, Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. Converse Other revenues were primarily attributable to licensing businesses. Corporate revenues primarily consisted 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 the Company's central foreign exchange risk management program.

As of August 31, 2023 and May 31, 2023, the Company did not have any contract assets and had an immaterial amount of contract liabilities recorded in Accrued liabilities on the Unaudited Condensed Consolidated Balance Sheets.

NOTE 10 — OPERATING SEGMENTS

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

Each NIKE Brand geographic segment operates predominantly in one industry: the design, development, marketing and selling of athletic footwear, apparel and equipment. The Company's reportable operating segments for the NIKE Brand are: North America; Europe, Middle East & Africa ("EMEA"); Greater China; and Asia Pacific & Latin America ("APLA"), and include results for the NIKE and Jordan brands.

The Company's NIKE Direct operations are managed within each NIKE Brand geographic operating segment. Converse is also a reportable segment for the Company and operates in one industry: the design, marketing, licensing and selling of athletic lifestyle sneakers, apparel and accessories.

Global Brand Divisions is included within the NIKE Brand for presentation purposes to align with the way management views the Company. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. Global Brand Divisions costs represent demand creation and operating overhead expense that include product creation and design expenses centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital operations and enterprise technology.

Corporate consists primarily of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to the Company's headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses, including certain hedge gains and losses.

The primary financial measure used by the Company to evaluate performance of individual operating segments is earnings before interest and taxes ("EBIT"), which represents Net income before Interest expense (income), net, and Income tax expense in the Unaudited Condensed Consolidated Statements of Income.

As part of the Company's centrally managed foreign exchange risk management program, standard foreign currency rates are assigned twice per year to each NIKE Brand entity in the Company's geographic operating segments and to Converse. These rates are set approximately nine and twelve months in advance of the future selling seasons to which they relate (specifically, for each currency, one standard rate applies to the fall and holiday selling seasons, and one standard rate applies to the spring and summer selling seasons) based on average market spot rates in the calendar month preceding the date they are established. Inventories and Cost of sales for geographic operating segments and Converse reflect the use of these standard rates to record non-functional currency product purchases in the entity's functional currency. Differences between assigned standard foreign currency rates and actual market rates are included in Corporate, together with foreign currency hedge gains and losses generated from the Company's centrally managed foreign exchange risk management program and other conversion gains and losses.

Accounts receivable, net, Inventories and Property, plant and equipment, net for operating segments are regularly reviewed by management and are therefore provided below.

			THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)			2023						2022
REVENUES
North America			$	5,423					$	5,510
Europe, Middle East & Africa			3,610						3,333
Greater China			1,735						1,656
Asia Pacific & Latin America			1,572						1,535
Global Brand Divisions			13						14
Total NIKE Brand			12,353						12,048
Converse			588						643
Corporate			(2)						(4)
TOTAL NIKE, INC. REVENUES			$	12,939					$	12,687
EARNINGS BEFORE INTEREST AND TAXES
North America			$	1,434					$	1,377
Europe, Middle East & Africa			930						975
Greater China			525						541
Asia Pacific & Latin America			414						500
Global Brand Divisions			(1,205)						(1,187)
Converse			167						209
Corporate			(651)						(574)
Interest expense (income), net			(34)						13
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES			$	1,648					$	1,828

			AUGUST 31,						MAY 31,
(Dollars in millions)			2023						2023
ACCOUNTS RECEIVABLE, NET
North America			$	1,932					$	1,653
Europe, Middle East & Africa			1,562						1,197
Greater China			161						162
Asia Pacific & Latin America			687						700
Global Brand Divisions			84						96
Total NIKE Brand			4,426						3,808
Converse			240						235
Corporate			83						88
TOTAL ACCOUNTS RECEIVABLE, NET			$	4,749					$	4,131
INVENTORIES
North America			$	3,761					$	3,806
Europe, Middle East & Africa			2,220						2,167
Greater China			1,182						973
Asia Pacific & Latin America			1,072						894
Global Brand Divisions			222						232
Total NIKE Brand			8,457						8,072
Converse			300						305
Corporate			(59)						77
TOTAL INVENTORIES**(1)**			$	8,698					$	8,454

*(1)*Inventories as of August 31, 2023 and May 31, 2023, were substantially all finished goods.

			AUGUST 31,						MAY 31,
(Dollars in millions)			2023						2023
PROPERTY, PLANT AND EQUIPMENT, NET
North America			$	792					$	794
Europe, Middle East & Africa			1,043						1,009
Greater China			276						292
Asia Pacific & Latin America			275						279
Global Brand Divisions			889						840
Total NIKE Brand			3,275						3,214
Converse			36						38
Corporate			1,798						1,829
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET			$	5,109					$	5,081

NOTE 11 — CONTINGENCIES

In the ordinary course of business, the Company is subject to various legal proceedings, claims and government investigations relating to its business, products and actions of its employees and representatives, including contractual and employment relationships, product liability, antitrust, customs, tax, intellectual property and other matters. The outcome of these legal matters is inherently uncertain, and the Company cannot predict the eventual outcome of currently pending matters, the timing of their ultimate resolution or the eventual losses, fines, penalties or consequences relating to those matters. When a loss related to a legal proceeding or claim is probable and reasonably estimable, the Company accrues its best estimate for the ultimate resolution of the matter. If one or more legal matters were to be resolved against the Company in a reporting period for amounts above management's expectations, the Company's financial position, operating results and cash flows for that reporting period could be materially adversely affected. In the opinion of management, based on its current knowledge and after consultation with counsel, the Company does not believe any currently pending legal matters will have a material adverse impact on the Company's results of operations, financial position or cash flows, except as described below.

BELGIAN CUSTOMS CLAIM

The Company has received claims for certain years from Belgian Customs and other government authorities for alleged underpaid duties related to products imported beginning in fiscal 2018. The Company disputes these claims and has engaged in the appellate process. The Company has issued bank guarantees in order to appeal the claims. At this time, the Company is unable to estimate the range of loss and cannot predict the final outcome as it could take several years to reach a resolution on this matter. If this matter is ultimately resolved against the Company, the amounts owed, including fines, penalties and other consequences relating to the matter, could have a material adverse effect on the Company's results of operations, financial position and cash flows.