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Item 2. Management’s Discussion and Analysis

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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.

Since fiscal 2018, through the Consumer Direct Offense and our Triple Double strategy, we have focused on doubling the impact of innovation, increasing our speed and agility to market and growing our direct connections with consumers.

In June 2020, we announced a new digitally empowered phase of the Consumer Direct Offense strategy:

Consumer Direct Acceleration.

This strategic acceleration will focus on three specific areas.

First, creating the marketplace of the future through more premium, consistent and seamless consumer experiences that more closely align with what consumers want and need.

This strategy will lead with NIKE Digital and our owned stores, as well as through select strategic partners who share our marketplace vision.

Second, we will align our product creation and category organizations around a new consumer construct focused on Men’s, Women's and Kids'.

This approach is intended to allow us to create product that better meets individual consumer needs, including more specialization of our category approach, while re-aligning and simplifying our offense to accelerate our largest growth opportunities.

In particular, we expect to reinvest in our Women's and Kids' businesses and also simplify our operating model across the remainder of the Company to optimize effectiveness.

Third, we will unify investments in data and analytics, demand sensing, insight gathering, inventory management and other areas against an end-to-end technology foundation to accelerate our digital transformation.

We believe this unified approach will accelerate growth and unlock more efficiency for our business, while driving speed and responsiveness as we serve consumers globally.

As a result of our strategic acceleration, management announced on July 22, 2020, a series of leadership and operating model changes to streamline and speed up our execution.

These changes will result in a net reduction of our global workforce and we expect to incur pre-tax charges of approximately $315 million, the majority of which relate to employee termination costs and, to a lesser extent, stock-based compensation expense.

These amounts reflect the continued evaluation and variability of our original estimate of employee termination costs and required changes in assumptions used to calculate stock-based compensation expense.

For the first nine months of fiscal 2021, we incurred pre-tax charges of $248 million and expect all remaining actions to be substantially complete by the end of fiscal 2021.

We expect future annual wage-related savings will be reinvested to execute against this next phase of our strategy.

For more information related to our organizational realignment and related costs, see Note 14 — Restructuring within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

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 NIKE Digital and our owned stores, as well as select strategic partners who share our marketplace vision.

We have aligned our product creation and category organizations around a new consumer construct focused on Men’s, Women's, Kids' and the Jordan Brand and continue to invest in data and analytics, demand sensing, insight gathering, inventory management and other areas to create an end-to-end technology foundation which will further accelerate our digital transformation.

During fiscal 2021, we substantially completed a series of leadership and operating model changes to streamline and speed up strategic execution of the Consumer Direct Acceleration.

During the first quarter of fiscal 2022 and the first quarter of fiscal 2021, the Company recognized an immaterial amount of related employee termination costs and, to a lesser extent, stock-based compensation expense .

COVID-19 UPDATE

The COVID-19 pandemic continues to create volatility in our business performance.

During the third quarter of fiscal 2021, disruption in the global supply chain due to container shortages, transportation delays and U.S.

port congestion interrupted the flow of our inventory.

Specifically in North America, this caused higher in-transit inventory levels and a delay of shipments to our wholesale partners, resulting in lower than expected revenue growth.

We expect the majority of delayed shipments to our wholesale partners from the third quarter will take place in the fourth quarter of fiscal 2021.

Within EMEA, additional COVID-19 related lockdowns caused mandatory store closures of 45% of our NIKE-owned stores during the last two months of the third quarter, as well as closures for our wholesale partner stores, which contributed to the 9% decline in EMEA's currency-neutral revenues.

In Greater China, revenues increased 42% on a currency-neutral basis as we experienced growth across wholesale and NIKE Direct, in part reflecting the impacts of COVID-19 in the prior year.

Our NIKE Direct business continues to fuel our growth as we navigate through the pandemic, leveraging our digital platforms with our store footprint to connect directly with the consumer.

NIKE Brand digital revenues grew 54% and 71%, on a currency-neutral basis, for the third quarter and first nine months of fiscal 2021, respectively, with strong double-digit growth across each of our geographies.

During the quarter, we continued to experience a decline in comparable store sales in EMEA, North America and APLA primarily due to reduced physical retail traffic, in part resulting from temporary store closures and safety-related measures in response to COVID-19.

As of April 2, 2021, approximately 85% of our owned stores were open with some operating on reduced hours.

During the quarter, we continued to reduce discretionary spending while investing in our digital transformation.

As a result, total selling and administrative expense declined 7% for the third quarter and the first nine months of fiscal 2021 compared to the same periods in the prior year.

However, we expect Demand creation expense to increase in future periods as we rebuild our

investment towards pre-COVID-19 levels.

Our liquidity position remains strong and we ended the third quarter with $12.5 billion of Cash and equivalents and Short-term investments.

We continue to monitor the ongoing and evolving situation, as well as guidance from international and domestic authorities, including federal, state and local public health authorities and may take additional actions based on their recommendations.

In these circumstances, there may be developments outside our control requiring us to adjust our operating plan.

While our results over the course of fiscal 2021 have been positive to date, there remains the risk that COVID-19 could have material adverse impacts on our future revenue growth as well as our overall profitability and may lead to higher than normal inventory levels in various markets, adverse impacts on the global supply chain, revised payment terms with certain of our wholesale customers, higher sales-related reserves and a volatile effective tax rate driven by changes in the mix of earnings across the Company's jurisdictions.

THIRD QUARTER OVERVIEW

For the third quarter of fiscal 2021, NIKE, Inc.

Revenues increased 3% to $10.4 billion compared to the third quarter of fiscal 2020.

On a currency-neutral basis, Revenues decreased 1%.

Net income was $1,449 million and diluted earnings per common share was $0.90 for the third quarter of fiscal 2021, compared to Net income of $847 million and diluted earnings per common share of $0.53 for the third quarter of fiscal 2020.

Income before income taxes increased 86% compared to the third quarter of fiscal 2020, primarily due to the $400 million impairment charge recognized in the prior year related to our planned transition to a distributor operating model in Brazil, Argentina, Chile and Uruguay, as well as lower selling and administrative expense, higher revenues and gross margin expansion.

The COVID-19 pandemic continues to create volatility in our business results and operations globally, causing us to transform the way we operate in order to better serve our consumers.

During the first quarter of fiscal 2022, we continued to experience strong consumer demand with Revenues growing 16% and gross margin expanding 170 basis points compared to the prior year.

However, during the first quarter of fiscal 2022, the majority of NIKE Brand and Converse contract manufacturers in Vietnam and Indonesia were subject to government mandated shutdowns due to COVID-19.

These closures have, and are expected to continue to, significantly impact our previously planned inventory production for our upcoming holiday and spring seasons.

As a result of these closures, we have lost approximately ten weeks of production.

Although the timing remains uncertain and is subject to factors outside of our control, re-opening plans continue to be approved for factories in Vietnam and we anticipate most factories will re-open in October.

Currently, factories in Indonesia are open and operational.

Once factories re-open we expect it will take several months for them to return to full production.

For fiscal 2021, 51% of NIKE Brand footwear and 30% of NIKE Brand apparel was manufactured in Vietnam, and 24% of NIKE Brand footwear and less than 12% of NIKE Brand apparel was manufactured in Indonesia.

Additionally, the extended inventory transit times we experienced in fiscal 2021, due primarily to port congestion, transportation delays as well as labor and container shortages, worsened during the first quarter of fiscal 2022, negatively impacting our product availability, most prominently in our wholesale channel.

We also experienced higher transportation and logistics costs as a result of this dynamic environment, which negatively impacted gross margin expansion in the first quarter of fiscal 2022.

We expect the combination of factory closures and elevated transit times will continue to impact product availability leading to inventory shortages and will negatively impact revenue growth for the remainder of the fiscal year.

In addition, we expect transportation and logistics costs will continue to be elevated as we navigate these supply chain constraints throughout the fiscal year.

We expect all our geographies and Converse will continue to be impacted by these factors throughout fiscal 2022 with countries in Asia expected to be more significantly impacted in the second quarter of fiscal 2022 and others expected to experience a greater impact in the second half of fiscal 2022 due to higher levels of in-transit inventory at the end of the first quarter of fiscal 2022.

To mitigate the impact across our business, our teams are continuing to leverage our operational playbook and taking actions where we can, including shifting production capacity to other countries, strategic use of air freight and employing a seasonless approach to products.

Despite these short-term dynamics, our Consumer Direct Acceleration strategy continues to drive our business towards our long-term fiscal 2025 financial goals shared in our Annual Report on Form 10-K for the fiscal year ended May 31, 2021.

Our NIKE Direct business has continued its momentum in the first quarter, fueling our growth as we continue to navigate through the pandemic by leveraging our digital platforms with our store footprint to connect directly with the consumer.

NIKE Brand Digital revenues grew 25% on a currency-neutral basis for the first quarter of fiscal 2022, even with improved physical traffic levels in most of our geographies compared to the prior year.

During the quarter, we experienced an increase in comparable store sales in

North America, EMEA and APLA primarily due to improved physical retail traffic, partially offset by a decline in comparable store sales in Greater China, in part due to ongoing marketplace dynamics and a COVID-19 resurgence during the first quarter of fiscal 2022.

As of October 1, 2021, approximately 99% of our owned stores were open with some operating on reduced hours.

During the quarter, we continued to invest in our digital transformation and brand campaigns as the world continues its return to sport.

For the remainder of fiscal 2022, we will maintain our multi-year investment plans in order to transform our business for the future.

We continue to monitor the ongoing and dynamic impacts of COVID-19, as well as guidance from international and domestic authorities, including federal, state and local public health authorities and may take additional actions based on their recommendations.

There may be developments outside our control that require us to adjust our operating plan, such as our assumption on the pace of re-opening and return to full production of factories in Vietnam and the planned shift of production capacity to other countries following factory closures in Vietnam and Indonesia.

Such developments and other potential impacts of COVID-19, such as new or prolonged factory closures, higher inventory levels or inventory shortages in various markets, other adverse impacts on the global supply chain, revised payment terms with certain of our wholesale customers, higher sales-related reserves , factory cancellation costs and a volatile effective tax rate driven by changes in the mix of earnings across our jurisdicti ons, among other factors, could have material adverse impacts on our revenue growth as well as our overall profitability in future periods.

FIRST QUARTER OVERVIEW

For the first quarter of fiscal 2022, NIKE, Inc.

Revenues increased 16% to $12.2 billion compared to the first quarter of fiscal 2021.

On a currency-neutral basis, Revenues increased 12%.

Net income was $1,874 million and diluted earnings per common share was $1.16 for the first quarter of fiscal 2022, compared to Net income of $1,518 million and diluted earnings per common share of $0.95 for the first quarter of fiscal 2021.

Income before income taxes increased 23% compared to the first quarter of fiscal 2021, due to higher revenues and gross margin expansion, partially offset by higher selling and administrative expense.

The NIKE Brand, which represents over 90% of NIKE, Inc.

Revenues, increased 2% compared to the third quarter of fiscal 2020.

On a currency-neutral basis, NIKE Brand revenues decreased 2%, driven by lower revenues in North America, EMEA and APLA, partially offset by an increase in Greater China.

Additionally, NIKE Brand currency-neutral revenues experienced declines across footwear and apparel, as well as declines in most key categories, primarily Football (Soccer) and Running, partially offset by growth in the Jordan Brand.

Revenues for Converse increased 13% and 8% on a reported and currency-neutral basis, respectively, led by strong digital performance in North America and Europe.

Our effective tax rate was 11.4% for the third quarter of fiscal 2021, compared to 3.9% for the third quarter of fiscal 2020, primarily due to decreased benefits from discrete items, such as a modification of the treatment of certain research and development expenditures recognized in the prior year, a less favorable impact from stock based compensation, and a shift in the proportion of earnings taxed in the U.S., in part due to the impact of the COVID-19 pandemic.

During the third quarter of fiscal 2020, we entered into definitive agreements to sell our NIKE Brand businesses in Brazil, Argentina, Chile and Uruguay and to shift to a distributor operating model.

During the third quarter of fiscal 2021, the transaction with Grupo SBF S.A.

Revenues, increased 16% compared to the first quarter of fiscal 2021.

On a currency-neutral basis, NIKE Brand revenues increased 12%, primarily driven by higher revenues in North America, APLA and EMEA.

Additionally, NIKE Brand currency-neutral revenues were higher across footwear and apparel, as well as Men's, Women's, the Jordan Brand and Kids'.

Revenues for Converse increased 12% and 7% compared to the first quarter of fiscal 2021, on a reported and currency-neutral basis, respectively, led by performance in Direct to consumer in both North America and Western Europe.

Our effective tax rate was 11.0% for the first quarter of fiscal 2022, compared to 11.5% for the first quarter of fiscal 2021, primarily due to a more favorable impact from stock-based compensation and discrete items, such as the recognition of a reserve in the first quarter of fiscal 2021 related to Altera Corp.

Commissioner , partially offset by a change in the proportion of earnings taxed in the U.S.

During fiscal 2021, the transaction with Grupo SBF S.A.

to purchase substantially all of our NIKE Brand operations in Brazil closed.

Additionally, during the third quarter of fiscal 2021, we mutually agreed with Grupo Axo to terminate the sale and purchase agreement for the transition of NIKE’s businesses in Argentina, Chile and Uruguay to a distributor partnership.

However, as we remain committed to selling the legal entities in all three countries and granting distribution rights to third-party distributors, the assets and liabilities of the entities have remained classified as held-for-sale on our Unaudited Condensed Consolidated Balance Sheets.

We remain committed to selling our Argentina, Chile and Uruguay legal entities and granting distribution rights to third-party distributors.

As such, the assets and liabilities of these entities have remained classified as held-for-sale on the Unaudited Condensed Consolidated Balance Sheets.

For more information see Note 12 — Acquisitions and Divestitures within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

USE OF NON-GAAP FINANCIAL MEASURES

Throughout this Quarterly Report on Form 10-Q, we discuss non-GAAP financial measures, including references to wholesale equivalent revenues, currency-neutral revenues as well as Total NIKE Brand earnings before interest and taxes (EBIT) and Total NIKE, Inc.

EBIT, which should be considered in addition to, and not in lieu of, the financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“U.S.

Throughout this Quarterly Report on Form 10-Q, we discuss non-GAAP financial measures, including references to wholesale equivalent revenues, currency-neutral revenues, as well as Total NIKE Brand earnings before interest and taxes (EBIT), Total NIKE, Inc.

EBIT and EBIT Margin, which should be considered in addition to, and not in lieu of, the financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“U.S.

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.

NIKE Brand wholesale equivalent revenues consist of (1) sales to external wholesale customers and (2) internal sales from our wholesale operations to our NIKE Direct operations, which are charged at prices comparable to those charged to external wholesale customers.

Currency-neutral revenues are calculated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends excluding the impact of translation arising from foreign currency exchange rate fluctuations.

Additionally, currency-neutral revenues are calculated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends excluding the impact of translation arising from foreign currency exchange rate fluctuations.

EBIT is calculated as Net Income before Interest expense (income), net and Income tax expense in the Unaudited Condensed Consolidated Statements of Income.

EBIT Margin is calculated as EBIT divided by total NIKE, Inc.

Management uses these non-GAAP financial measures when evaluating the Company's performance, including when making financial and operating decisions.

Additionally, management believes these non-GAAP financial measures provide investors with additional financial information that should be considered when assessing our underlying business performance and trends.

However, references to wholesale equivalent revenues, currency-neutral revenues and EBIT should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S.

However, references to wholesale equivalent revenues, currency-neutral revenues, EBIT and EBIT margin should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S.

GAAP and may not be comparable to similarly titled non-GAAP measures used by other companies.

RESULTS OF OPERATIONS

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Revenues $ 12,248 $ 10,594 16 %

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CONSOLIDATED OPERATING RESULTS

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2021 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1)

NIKE Brand Revenues by:

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Corporate (3)

14 (18) — — 53 (7) — —

TOTAL NIKE, INC.

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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.

(2) Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.

(3) 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.

THIRD QUARTER OF FISCAL 2021 COMPARED TO THIRD QUARTER OF FISCAL 2020

FIRST QUARTER OF FISCAL 2022 COMPARED TO FIRST QUARTER OF FISCAL 2021

On a currency-neutral basis, NIKE, Inc.

Revenues decreased 1% for the third quarter of fiscal 2021, driven by lower revenues across North America, EMEA and APLA, partially offset by higher revenues in Greater China and Converse.

Lower revenues in North America, EMEA and APLA reduced NIKE, Inc.

Revenues by approximately, 4, 2 and 1 percentage points, respectively, while higher revenues in Greater China contributed approximately 6 percentage points.

On a currency-neutral basis, NIKE Brand footwear revenues decreased 1%, driven by declines in nearly all key categories, primarily Running and Football (Soccer), partially offset by growth in the Jordan Brand.

Unit sales of footwear decreased 12% while higher average selling price (ASP) per pair contributed approximately 11 percentage points, primarily due to higher full-price ASP, on a wholesale equivalent basis, as well as the favorable impact of growth in our NIKE Direct business and higher NIKE Direct ASP.

Currency-neutral NIKE Brand apparel revenues decreased 1%, reflecting lower revenues in several key categories, most notably Training, partially offset by growth in Sportswear and the Jordan Brand.

Unit sales of apparel decreased 11%, while higher ASP per unit contributed approximately 10 percentage points.

Higher ASP per unit was primarily due to higher full-price, off-price and NIKE Direct ASPs, as well as the favorable impact of growth in our NIKE Direct business.

On a reported basis, NIKE Direct revenues represented approximately 40% of our total NIKE Brand revenues for the third quarter of fiscal 2021 compared to 34% for the third quarter of fiscal 2020.

Digital sales were $2.2 billion for the third quarter of fiscal 2021 compared to $1.4 billion for the third quarter of fiscal 2020.

On a currency-neutral basis, NIKE Direct revenues increased 16%, driven by digital sales growth of 54%.

Comparable store sales declined 12% as growth in Greater China of 56% was more than offset by reductions in EMEA, North America and APLA, primarily due to reduced physical retail traffic, in part resulting from temporary store closures and safety-related measures in response to COVID-19 .

Comparable store sales, which exclude digital sales, comprises revenues from NIKE-owned in-line and factory stores for which all three of the following requirements have been met:

Revenues increased 12% for the first quarter of fiscal 2022, driven by higher revenues in both the NIKE Brand and Converse.

Higher revenues in North America, APLA, EMEA and Converse contributed approximately 6, 3, 2 and 1 percentage points to NIKE, Inc.

Revenues, respectively.

On a currency-neutral basis, NIKE Brand footwear revenues increased 10% in the first quarter of fiscal 2022, driven by higher revenue s in the Jordan Brand, Women's, Men's and Kids'.

Unit sale s of footwear increased 5%, while higher average selling price (ASP) per pair contributed approximately 5 percentage points of footwear revenue growth, primarily due to higher NIKE Direct ASP, on a wholesale equivalent basis, as well as the favorable impact of growth in our NIKE Direct business.

Currency-neutral NIKE Brand apparel revenues, for the first quarter of fiscal 2022, increased 16%, driven by higher revenues in Men's, Women's and the Jordan Brand.

Uni t sales of apparel increased 8% and higher ASP per unit contributed approximately 8 percentage points of apparel revenue growth.

Higher ASP per unit was primarily due to higher full-price and NIKE Direct ASPs.

On a reported basis, NIKE Direct revenues represented approximately 40% of our total NIKE Brand revenues for the first quarter of fiscal 2022 compared to 36% for the first quarter of fiscal 2021.

Digital commerce sales were $2.5 billion for the first quarter of fiscal 2022 compared to $1.9 billion for the first quarter of fiscal 2021.

On a currency-neutral basis, NIKE Direct revenues increased 25%, driven by digital commerce sales growth of 25%, comparable store sales growth of 22%, in part due to improved physical retail traffic, and the addition of new stores.

Comparable store sales, which exclude digital commerce 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.

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Management considers this metric when making financial and operating decisions.

The method of calculating

comparable store sales varies across the retail industry.

The method of calculating comparable

store sales varies across the retail industry.

As a result, our calculation of this metric may not be comparable to similarly titled measures used by other companies.

FIRST NINE MONTHS OF FISCAL 2021 COMPARED TO FIRST NINE MONTHS OF FISCAL 2020

On a currency-neutral basis, NIKE, Inc.

Revenues grew 2% for the first nine months of fiscal 2021, driven by growth in Greater China and EMEA, partially offset by lower revenues in North America and APLA.

Higher revenues in Greater China and EMEA contributed to NIKE, Inc.

Revenues approximately 4 and 1 percentage points, respectively.

Lower revenues in North America and APLA reduced NIKE, Inc.

Revenues approximately 2 and 1 percentage points, respectively.

On a currency-neutral basis, NIKE Brand footwear revenues increased 4%, driven by growth in several key categories, led by the Jordan Brand and Sportswear, partially offset by Running and Football (Soccer).

Unit sales of footwear decreased 3% and higher ASP per pair contributed approximately 7 percentage points of footwear revenue growth, primarily due to higher full-price ASP and the favorable impact of growth in our NIKE Direct business.

Currency-neutral NIKE Brand apparel revenues were flat as growth in several key categories, most notably Sportswear, Football (Soccer) and the Jordan Brand, was offset by declines in Training and Running.

Unit sales of apparel decreased 3%, while higher ASP per unit contributed approximately 3 percentage points.

Higher ASP per unit was primarily due to the favorable impact of growth in our NIKE Direct business and higher full-price ASP.

On a reported basis, NIKE Direct revenues represented approximately 39% of our total NIKE Brand revenues for the first nine months of fiscal 2021 compared to 33% for the first nine months of fiscal 2020.

Digital sales were $6.6 billion for the first nine months of fiscal 2021 compared to $3.8 billion for the first nine months of fiscal 2020.

On a currency-neutral basis, NIKE Direct revenues increased 20% for the first nine months of fiscal 2021, driven by digital sales growth of 71%.

This was partially offset by a 13% decline in comparable store sales, as growth in Greater China of 30% was more than offset by reductions in North America, EMEA and APLA, primarily due to reduced physical retail traffic, in part resulting from temporary store closures and safety-related measures in response to COVID-19 .

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2021 2020 % CHANGE

Gross profit $ 5,696 $ 4,741 20 %

Gross margin 45.6 % 44.3 % 130 bps 44.4 % 44.7 % (30) bps

For the third quarter of fiscal 2021, our consolidated gross margin was 130 basis points higher than the prior year period and primarily reflected the following factors:

• Higher NIKE Brand full-price product margins across both our wholesale and NIKE Direct businesses, on a wholesale equivalent basis.

Specifically, higher full-price ASP, net of discounts, (increasing gross margin approximately 270 basis points) was only partially offset by higher product costs (decreasing gross margin approximately 100 basis points);

• The favorable impact of growth in our higher margin NIKE Direct business was offset by promotional activity (impacting gross margin by 0 basis points);

• Unfavorable changes in net foreign currency exchange rates, including hedges, (decreasing gross margin approximately 50 basis points).

For the first nine months of fiscal 2021, our consolidated gross margin was 30 basis points lower than the prior year period, primarily reflecting the following factors:

• Higher NIKE Brand full-price product margins across both our wholesale and NIKE Direct businesses, on a wholesale equivalent basis.

Specifically, higher full-price ASP, net of discounts, (increasing gross margin approximately 160 basis points) was only partially offset by higher product costs (decreasing gross margin approximately 40 basis points);

• The favorable impact of growth in our higher margin NIKE Direct business was more than offset by higher promotions to reduce excess inventory as a result of COVID-19 (decreasing gross margin approximately 80 basis points);

• Lower mix of full-price sales (decreasing gross margin approximately 30 basis points);

• Unfavorable changes in net foreign currency exchange rates, including hedges, (decreasing gross margin approximately 40 basis points).

Gross margin 46.5 % 44.8 % 170 bps

For the first quarter of fiscal 2022, our consolidated gross margin was 170 basis points higher than the prior year period and primarily reflected the following factors:

• Higher margin in our NIKE Direct business, as we experienced higher promotional activity in the prior year due to COVID-19 (increasing gross margin approximately 160 basis points);

• Higher mix of full-price sales, on a wholesale equivalent basis, (increasing gross margin approximately 60 basis points);

• Favorable changes in net foreign currency exchange rates, including hedges, (increasing gross margin approximately 20 basis points);

• Higher NIKE Brand product costs, on a wholesale equivalent basis, primarily due to increased freight costs (decreasing gross margin approximately 120 basis points);

• Lower other costs, in part due to the release of factory cancellation cost accruals occurring in the prior year, which was more than offset by lower storage costs and reduced inventory obsolescence in the first quarter of fiscal 2022, among other things, (increasing gross margin approximately 50 basis points).

TOTAL SELLING AND ADMINISTRATIVE EXPENSE

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Demand creation expense (1)

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Total selling and administrative expense $ 3,572 $ 2,975 20 %

% of revenues 29.4 % 32.5 % (310) bps 28.8 % 32.0 % (320) 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.

THIRD QUARTER OF FISCAL 2021 COMPARED TO THIRD QUARTER OF FISCAL 2020

Demand creation expense decreased 18% for the third quarter of fiscal 2021 primarily due to lower advertising and marketing expense for brand events and our retail operations.

This activity was partially offset by an increase in digital marketing to support heightened digital demand.

% of revenues 29.2 % 28.1 % 110 bps

(1) Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, complimentary products, television, digital and print advertising and media costs, brand events and retail brand presentation.

FIRST QUARTER OF FISCAL 2022 COMPARED TO FIRST QUARTER OF FISCAL 2021

Demand creation expense increased 36% for the first quarter of fiscal 2022 primarily due to higher spend against brand campaigns as we experienced marketplace closures in the prior year due to COVID-19, as well as continued investments in digital marketing to support heightened digital demand.

Changes in foreign currency exchange rates increased Demand creation expense by approximately 3 percentage points.

Operating overhead expense decreased 3% primarily due to lower wage-related costs, continued disciplined expense management and lower bad debt expense, partially offset by continued investments in digital capabilities to support our Consumer Direct Acceleration strategy.

Operating overhead expense increased 15% primarily due to an increase in wage-related expenses, higher strategic technology investments and NIKE Direct variable costs.

Changes in foreign currency exchange rates increased Operating overhead expense by approximately 2 percentage points.

FIRST NINE MONTHS OF FISCAL 2021 COMPARED TO FIRST NINE MONTHS OF FISCAL 2020

Demand creation expense decreased 24% for the first nine months of fiscal 2021, driven by lower advertising and marketing expense for brand events and our retail operations, as well as lower sports marketing expense, primarily as a result of COVID-19.

This activity was partially offset by an increase in digital marketing to support heightened digital demand.

Changes in foreign currency exchange rates increased Demand creation expense by approximately 1 percentage point.

Operating overhead expense was flat, as lower travel and related expenses as well as lower wage-related costs were offset by $208 million of restructuring-related costs associated with changes to our organizational model announced in July 2020, as well as our continued investments in digital capabilities.

Changes in foreign currency exchange rates increased Operating overhead expense by approximately 1 percentage point.

OTHER (INCOME) EXPENSE, NET

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Other (income) expense, net $ (39) $ (14)

Other (income) expense, net comprises foreign currency conversion gains and losses from the re-measurement 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.

For the third quarter of fiscal 2021, Other (income) expense, net changed from $297 million of other expense to $22 million of other income in the current year, primarily due to the $400 million impairment charge incurred in the prior year associated with our planned, strategic distributor partnership transition within APLA, offset by a $102 million net detrimental change in foreign currency conversion gains and losses, including hedges.

For the first nine months of fiscal 2021, Other (income) expense, net decreased from $223 million of other expense to $18 million of other expense in the current year, primarily due to the $400 million impairment charge incurred in the prior year associated with our planned, strategic distributor partnership transition within APLA, offset by a $164 million net detrimental change in foreign currency conversion gains and losses, including hedges.

For more information related to our distributor partnership transition within APLA, see Note 13 — Acquisitions and Divestitures within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

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 favorable impacts of approximately $7 million on our Income before income taxes for the third quarter of fiscal 2021, and unfavorable impacts of approximately $21 million for the first nine months of fiscal 2021.

THREE MONTHS ENDED NINE MONTHS ENDED

FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE

Effective tax rate 11.4 % 3.9 % 750 bps 12.3 % 9.8 % 250 bps

Our effective tax rate was 11.4% for the third quarter of fiscal 2021, compared to 3.9% for the third quarter of fiscal 2020, primarily due to decreased benefits from discrete items, such as a modification of the treatment of certain research and development expenditures recognized in the prior year, a less favorable impact from stock-based compensation, and a shift in the proportion of earnings taxed in the U.S., in part due to the impact of COVID-19.

Our effective tax rate was 12.3% for the first nine months of fiscal 2021, compared to 9.8% for the first nine months of fiscal 2020, primarily due to a shift in the proportion of earnings taxed in the U.S., in part due to the impact of COVID-19, and less favorable impacts from discrete items, such as a modification of the treatment of certain research and development expenditures recognized in the prior year, as well as the recognition of a reserve in the first quarter of fiscal 2021 related to Altera Corp.

Commissioner .

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.

For the first quarter of fiscal 2022, Other (income) expense, net was relatively flat compared to the prior year.

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 favorable impacts of approximately $104 million on our Income before income taxes for the first quarter of fiscal 2022.

THREE MONTHS ENDED AUGUST 31,

2021 2020 % CHANGE

Effective tax rate 11.0 % 11.5 % (50) bps

Commissioner , partially offset by a change in the proportion of earnings taxed in the U.S.

Refer to Note 5 — Income Taxes within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for additional information.

17 unchanged sentences

The breakdown of Revenues is as follows:

THREE MONTHS ENDED NINE MONTHS ENDED

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1)

2021 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1)

North America $ 4,879 $ 4,225 15 % 15 %

2 unchanged sentences

Asia Pacific & Latin America 1,465 1,099 33 % 31 %

1,315 1,414 -7 % -8 % 3,885 4,227 -8 % -5 %

Global Brand Divisions (2)

3 unchanged sentences

Corporate (3)

14 (18) — — 53 (7) — —

TOTAL NIKE, INC.

2 unchanged sentences

See "Use of Non-GAAP Financial Measures" for further information.

(2) Refer to Note 13 — Acquisitions and Divestitures within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for additional information on the transition of our NIKE Brand business in Brazil to a third-party distributor.

(2) Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.

3 unchanged sentences

The breakdown of earnings before interest and taxes is as follows:

THREE MONTHS ENDED NINE MONTHS ENDED

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE

2021 2020 % CHANGE

North America $ 1,434 $ 1,302 10 %

6 unchanged sentences

Converse 204 168 21 %

Corporate (2)

(545) (497) -10 %

2 unchanged sentences

2,163 1,780 22 %

EBIT margin (1)

17.7 % 16.8 %

Interest expense (income), net 57 65 —

1 unchanged sentence

INCOME BEFORE INCOME TAXES $ 2,106 $ 1,715 23 %

(1) Total NIKE Brand EBIT and Total NIKE, Inc.

EBIT represent non-GAAP financial measures.

(1) Total NIKE Brand EBIT, Total NIKE, Inc.

EBIT and EBIT margin represent non-GAAP financial measures.

See "Use of Non-GAAP Financial Measures" for further information.

(2) The three and nine months ended February 29, 2020 includes a $400 million impairment charge associated with our planned, strategic distributor partnership transition within APLA.

Refer to Note 13 — Acquisitions and Divestitures within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for additional information.

NORTH AMERICA

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions) FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions) 2021 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 3,264 $ 2,957 10 % 10 %

11 unchanged sentences

Additionally, over the last three years we have significantly reduced the number of undifferentiated wholesale accounts.

During fiscal 2021, we took further steps towards account and channel consolidation by reprioritizing product allocation to benefit NIKE Direct and our differentiated strategic wholesale customers.

During fiscal 2021 and the first quarter of fiscal 2022, we took further steps towards account and channel consolidation by reprioritizing product allocation to benefit NIKE Direct and our differentiated strategic wholesale customers.

We expect over the next two fiscal years, we will more aggressively accelerate these changes as we work to reprofile the shape of the marketplace and recapture wholesale revenue declines over time.

THIRD QUARTER OF FISCAL 2021 COMPARED TO THIRD QUARTER OF FISCAL 2020

On a currency-neutral basis, North America revenues for the third quarter of fiscal 2021 decreased 11% due to declines in all key categories, primarily Sportswear and Running.

Lower revenues in North America primarily resulted from a 25% decline in sales to wholesale customers, largely due to global supply chain challenges which caused an increase in transit times of inventory supply and a delay in timing of shipments to our wholesale partners and to a lesser extent, a decrease in distribution to undifferentiated wholesale customers.

NIKE Direct revenues increased 15% as strong digital sales growth of 53% more than offset a 20% decline in comparable store sales primarily due to reduced physical retail traffic, in part resulting from safety-related measures in response to COVID-19 .

Footwear revenues decreased 9% on a currency-neutral basis, due to declines in all key categories, primarily Sportswear and Running.

Unit sales of footwear decreased 18%, while higher ASP per pair contributed approximately 9 percentage points.

Higher ASP per pair was primarily due to the favorable impact of growth in our NIKE Direct business, as well as higher NIKE Direct and full-price ASPs.

On a currency-neutral basis, apparel revenues decreased 12%, driven by lower revenues in nearly all key categories, primarily Training.

Unit sales of apparel decreased 18%, while higher ASP per unit contributed approximately 6 percentage points.

The increase in ASP per unit was primarily driven by the favorable impact of growth in our NIKE Direct business, as well as higher NIKE Direct and off-price ASPs.

Reported EBIT increased 4% as gross margin expansion and lower selling and administrative expense more than offset lower revenues.

Gross margin increased approximately 190 basis points primarily due to higher full-price ASP, net of discounts and the favorable impact of growth in our NIKE Direct business.

Selling and administrative expense decreased due to lower operating overhead and demand creation expense.

Operating overhead expense decreased primarily as a result of lower bad debt and wage-related expenses, partially offset by an increase in professional services costs.

The decrease in demand creation expense reflected lower advertising and marketing expense for brand events and our retail operations, partially offset by continued investments in digital marketing to support heightened digital demand.

FIRST NINE MONTHS OF FISCAL 2021 COMPARED TO FIRST NINE MONTHS OF FISCAL 2020

On a currency-neutral basis, North America revenues for the first nine months of fiscal 2021 decreased 4%, driven by declines in most key categories, led by Training and Running.

NIKE Direct revenues increased 17%, primarily due to strong digital sales growth of 82%, partially offset by comparable store sales declines of 23%, primarily due to reduced physical retail traffic, in part resulting from safety-related measures in response to COVID-19 .

FIRST QUARTER OF FISCAL 2022 COMPARED TO FIRST QUARTER OF FISCAL 2021

On a currency-neutral basis, North America revenues for the first quarter of fiscal 2022 increased 15%, due primarily to higher revenues in Women's, Men's, the Jordan Brand and Kids'.

NIKE Direct revenues increased 46%, driven by strong digital sales growth of 43%, comparable store sales growth of 49%, in part due to improved physical retail traffic and the addition of new stores.

Footwear revenues increased 10% on a currency-neutral basis, largely driven by significant growth in digital.

Unit sales of footwear decreased 5%, while higher ASP per pair contributed approximately 7 percentage points of footwear revenue growth.

Higher ASP per pair was primarily due to higher NIKE Direct and full-price ASPs, as well as the favorable impact of growth in our NIKE Direct business.

On a currency-neutral basis, apparel revenues decreased 12%, driven by declines in most key categories, led by Training.

Unit sales of apparel declined 13% and higher ASP per unit contributed approximately 1 percentage point.

The increase in ASP per unit was driven by the favorable impact of growth in our NIKE Direct business and higher NIKE Direct ASP, partially offset by lower full-price ASP.

Reported EBIT increased 13% driven by lower selling and administrative expense and gross margin expansion, partially offset by lower revenues.

Gross margin increased approximately 150 basis points primarily due to higher full-price ASP, net of discounts and lower other costs, partially offset by higher product costs.

The decrease in other costs was primarily a result of the favorable impact from the release of factory cancellation cost accruals due to an increase in consumer demand, as well as lower inventory obsolescence, partially offset by higher warehousing and freight costs.

Selling and administrative expense decreased due to lower demand creation and operating overhead expense.

The decrease in demand creation expense was primarily due to lower advertising and marketing expense for brand events and our retail operations, partially offset by continued investments in digital marketing to support heightened digital demand.

Operating overhead expense decreased primarily as a result of lower wage-related expense, partially offset by an increase in professional services costs.

Unit sales of footwear increased 4%, while higher ASP per pair contributed approximately 6 percentage points.

Higher ASP per pair was primarily due to the favorable impact of growth in our NIKE Direct business, as well as higher NIKE Direct ASPs, partially offset by lower full-price ASP.

On a currency-neutral basis, apparel revenues increased 27%, driven prim arily by higher revenues in Men's and Women's.

U nit sales of apparel increased 13%, while higher ASP per unit contributed approximately 14 percentage points.

The increase in ASP per unit was primarily driven by higher full-price and NIKE Direct ASPs, as well as the favorable impact of growth in our NIKE Direct business.

Reported EBIT increased 10% as higher revenues and gross margin expansion more than offset higher selling and administrative expense.

Gross margin increased approximately 60 basis points primarily due to the favorable impact of growth in our NIKE Direct business, as well as higher margins in NIKE Direct and a higher mix of full-price sales.

This activity was partially offset by higher product costs as favorable impacts from product mix were more than offset by increased freight charges, as well as lower full-price ASP, net of discounts primarily due to shifts in product mix compared to the prior year.

Selling and administrative expense increased due to higher demand creation and operating overhead expense.

Demand creation expense increased primarily as a result of higher advertising and marketing expense, as well as digital marketing investments and sports marketing costs.

The increase in operating overhead expense reflected higher wage-related costs, as well as an increase in strategic technology investments.

EUROPE, MIDDLE EAST & AFRICA

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions) FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions) 2021 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 1,983 $ 1,802 10 % 4 %

6 unchanged sentences

EARNINGS BEFORE INTEREST AND TAXES $ 875 $ 692 26 %

THIRD QUARTER OF FISCAL 2021 COMPARED TO THIRD QUARTER OF FISCAL 2020

On a currency-neutral basis, EMEA revenues for the third quarter of fiscal 2021 decreased 9%, driven by lower revenues across nearly all territories, led by Southern Europe and Central Europe, which declined 25% and 13%, respectively.

Revenues decreased in most key categories, led by Sportswear and Football (Soccer).

NIKE Direct revenues were flat as strong digital sales growth of 60% was offset by declines in comparable store sales of 44%, primarily due to reduced physical retail traffic, in part resulting from temporary store closures and safety-related measures in response to COVID-19 .

Currency-neutral footwear revenues decreased 11%, driven by lower revenues in nearly all key categories, led by Sportswear and Football (Soccer).

Unit sales of footwear decreased 22%, while higher ASP per pair contributed approximately 11 percentage points.

Higher ASP per unit was primarily due to higher NIKE Direct and full-price ASPs, as well as the favorable impact of growth in our NIKE Direct business.

Currency-neutral apparel revenues decreased 4% due to declines in several key categories, led by Football (Soccer) and Training, partially offset by growth in the Jordan Brand.

Unit sales of apparel decreased 11%, while higher ASP per unit contributed approximately 7 percentage points, primarily due to higher full-price ASP, in part reflecting lower discounts.

Reported EBIT decreased 7% as lower revenues and a decline in gross margin more than offset lower selling and administrative expense.

Gross margin decreased approximately 110 basis points primarily due to lower margin in our NIKE Direct business, unfavorable changes in standard foreign currency exchange rates, higher other costs and a lower mix of full-price sales, partially offset by higher full-price ASP, net of discounts.

The increase in other costs was primarily a result of higher inventory obsolescence.

Lower margin in our NIKE Direct business was driven by higher promotions to reduce excess inventory due to COVID-19.

Selling and administrative expense decreased due to lower demand creation and operating overhead expense.

Lower demand creation expense was driven by lower advertising and marketing expense for brand events and our retail operations, partially offset by higher sports marketing expense.

Lower operating overhead expense was primarily due to lower travel and related expenses, partially offset by increases in professional services costs.

FIRST NINE MONTHS OF FISCAL 2021 COMPARED TO FIRST NINE MONTHS OF FISCAL 2020

On a currency-neutral basis, EMEA revenues for the first nine months of fiscal 2021 grew 2%, driven by higher revenues across most territories, led by UK & Ireland, which grew 22%, partially offset by a 17% decline in Southern Europe.

Revenues increased in nearly all key categories, led by the Jordan Brand and Sportswear.

NIKE Direct revenues increased 17% driven by strong digital sales growth of 88%, partially offset by a 24% decline in comparable store sales primarily due to reduced physical retail traffic, in part resulting from temporary store closures and safety-related measures in response to COVID-19 .

Currency-neutral footwear revenues decreased 1%, driven by lower revenues in several key categories, led by Football (Soccer) and Sportswear, partially offset by growth in the Jordan Brand.

Unit sales of footwear decreased 7% and higher ASP per pair contributed approximately 6 percentage points, resulting from higher full-price ASP and the favorable impact of growth in our NIKE Direct business.

Currency-neutral apparel revenues increased 8% due to growth in nearly all key categories, led by Football (Soccer) and Sportswear.

Unit sales of apparel increased 6% and higher ASP per unit contributed approximately 2 percentage points of apparel revenue growth.

Higher ASP per unit was primarily due to higher full-price ASP, in part reflecting lower discounts.

Reported EBIT increased 11% as higher revenues and lower selling and administrative expense more than offset a decline in gross margin.

Gross margin decreased approximately 230 basis points primarily due to lower NIKE Direct margins driven by

higher promotions to reduce excess inventory due to COVID-19, unfavorable changes in standard foreign currency exchange rates and a lower mix of full-price sales, which more than offset lower product costs and higher full-price ASP, net of discounts.

Selling and administrative expense decreased due to lower demand creation and operating overhead expense.

The decrease in demand creation expense was driven by lower advertising and marketing expense for brand events and our retail operations, as well as lower sports marketing expense.

Lower operating overhead expense was primarily due to lower travel and related expenses, partially offset by increases in professional services costs.

FIRST QUARTER OF FISCAL 2022 COMPARED TO FIRST QUARTER OF FISCAL 2021

On a currency-neutral basis, EMEA revenues for the first quarter of fiscal 2022 increased 8%, due primarily to higher revenues in Men’s, Women’s and the Jordan Brand.

NIKE Direct revenues increased 10% primarily due to comparable store sales growth of 16%, in part due to improved physical retail traffic, the addition of new stores and digital sales growth of 2%.

Currency-neutral footwear revenues increased 4%, driven primarily by higher revenues in the Jordan Brand and Men's, partially offset by a decline in Women's.

Unit sales of footwear increased 2%, while higher ASP per pair contributed approximately 2 percentage points.

Higher ASP per pair was primarily due to lower off-price ASP, which was more than offset by higher full-price and NIKE Direct ASPs.

Currency-neutral apparel revenues increased 13% due primarily to higher revenues in Men's and Women's.

Unit sales of apparel increased 7%, while higher ASP per unit contributed approximately 6 percentage points, primarily due to higher full-price and NIKE Direct ASPs.

Reported EBIT increased 26% due to higher revenues, gross margin expansion and lower selling and administrative expense as a percent of revenues.

Gross margin increased approximately 260 basis points primarily due to higher NIKE Direct margins, favorable changes in standard foreign currency exchange rates and a higher mix of full-price sales, partially offset by higher product costs primarily due to increased freight charges.

Selling and administrative expense increased due to higher operating overhead and demand creation expense.

Higher operating overhead expense was primarily due to higher wage-related expenses.

Higher demand creation expense was driven by higher advertising and marketing expenses.

GREATER CHINA

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions) FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions) 2021 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 1,449 $ 1,251 16 % 6 %

6 unchanged sentences

EARNINGS BEFORE INTEREST AND TAXES $ 701 $ 688 2 %

THIRD QUARTER OF FISCAL 2021 COMPARED TO THIRD QUARTER OF FISCAL 2020

On a currency-neutral basis, Greater China revenues for the third quarter of fiscal 2021 increased 42% driven by higher revenues in all key categories, led by Sportswear and the Jordan Brand.

NIKE Direct revenues increased 52% due to comparable store sales growth of 56%, digital sales growth of 44% and the addition of new stores.

Revenue growth in Greater China also reflects the impacts of COVID-19 in the prior year, which included temporary store closures and stores operating on reduced hours.

Currency-neutral footwear revenues increased 41% for the third quarter of fiscal 2021 driven by higher revenues in all key categories, primarily Sportswear and the Jordan Brand.

Unit sales of footwear increased 39%, while higher ASP per pair contributed approximately 2 percentage points of footwear revenue growth, driven by higher full-price ASP, in part reflecting lower discounts, partially offset by an unfavorable full-price mix.

Currency-neutral apparel revenues grew 44% for the third quarter of fiscal 2021 due to higher revenues in all key categories, led by Sportswear and the Jordan Brand.

Unit sales of apparel increased 52%, while lower ASP per unit reduced apparel revenues by approximately 8 percentage points, due to lower NIKE Direct and full-price ASPs.

Reported EBIT increased 75% as higher revenues and selling and administrative expense leverage more than offset a decline in gross margin.

Gross margin decreased approximately 140 basis points reflecting unfavorable changes in standard foreign currency exchange rates and a lower mix of full-price sales, partially offset by higher full-price ASP, primarily due to lower discounts, and lower other costs.

A lower mix of full-price sales was primarily due to comparisons with the prior year when our factory stores were temporarily closed due to COVID-19.

Lower other costs were primarily due to the favorable rate impact of warehousing and freight costs on a higher volume of sales.

Selling and administrative expense increased due to higher operating overhead expense, partially offset by lower demand creation expense.

Growth in operating overhead expense was driven by higher investments within our NIKE Direct operations.

Demand creation expense decreased primarily due to lower advertising and marketing expenses.

FIRST NINE MONTHS OF FISCAL 2021 COMPARED TO FIRST NINE MONTHS OF FISCAL 2020

On a currency-neutral basis, Greater China revenues for the first nine months of fiscal 2021 increased 22%, driven by higher revenues in all key categories, led by Sportswear and the Jordan Brand.

NIKE Direct revenues increased 34%, driven by digital sales growth of 37%, comparable store sales growth of 30% and the addition of new stores.

Currency-neutral footwear revenues increased 23%, driven by growth in all key categories, led by Sportswear and the Jordan Brand.

Unit sales of footwear increased 27%, while lower ASP per pair reduced footwear revenues by approximately 4 percentage points, driven by lower NIKE Direct ASP and unfavorable full-price mix.

Currency-neutral apparel revenue growth of 20% was fueled by higher revenues in nearly all key categories, most notably Sportswear.

Unit sales of apparel increased 24%, while lower ASP per unit reduced apparel revenues by approximately 4

percentage points.

Lower ASP was driven by lower NIKE Direct ASP and unfavorable full-price mix, partially offset by higher off-price ASP.

Reported EBIT increased 33% as higher revenues and lower selling and administrative expense more than offset a decline in gross margin.

Gross margin decreased approximately 300 basis points primarily due to unfavorable changes in standard foreign currency exchange rates, lower margin in our NIKE Direct business and higher product costs.

Selling and administrative expense decreased due to lower demand creation expense, partially offset by higher operating overhead expense.

Demand creation expense decreased primarily due to lower advertising and marketing expenses.

Growth in operating overhead expense was driven by higher investments within our NIKE Direct operations.

FIRST QUARTER OF FISCAL 2022 COMPARED TO FIRST QUARTER OF FISCAL 2021

On a currency-neutral basis, Greater China revenues for the first quarter of fiscal 2022 increased 1%, reflecting impacts from a COVID-19 resurgence and ongoing marketplace dynamics.

The increase in revenues was primarily due to higher revenues in the Jordan Brand and Men’s, partially offset by declines in Women's and Kids'.

NIKE Direct revenues decreased 3% due to comparable store sales declines of 6% in part due to reduced physical retail traffic, as well as digital sales declines of 6%, partially offset by the addition of new stores.

Currency-neutral footwear revenues increased 6% for the first quarter of fiscal 2022, driven primarily by higher revenues in Men's and the Jordan Brand.

Unit sales of footwear increased 5%, while higher ASP per pair contributed approximately 1 percentage point of footwear revenue growth, driven by higher full-price ASP.

Currency-neutral apparel revenues decreased 9% for the first quarter of fiscal 2022 due primarily to lower revenues in Women's.

Unit sales of apparel decreased 4%, while lower ASP per unit reduced apparel revenues by approximately 5 percentage points, primarily due to lower NIKE Direct ASP.

Reported EBIT increased 2% as higher revenues more than offset gross margin contraction and higher selling and administrative expense.

Gross margin decreased approximately 150 basis points reflecting higher product costs and lower off-price margin, which more than offset higher full-price ASP, net of discounts.

Selling and administrative expense increased due to higher operating overhead and demand creation expense.

Growth in operating overhead expense was primarily driven by higher wage-related and other administrative costs.

Demand creation expense increased primarily due to higher advertising and marketing expense.

ASIA PACIFIC & LATIN AMERICA

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions) 2021 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 1,022 $ 758 35 % 33 %

5 unchanged sentences

TOTAL REVENUES $ 1,465 $ 1,099 33 % 31 %

EARNINGS BEFORE

INTEREST AND TAXES $ 408 $ 387 5 % $ 1,112 $ 1,105 1 %

As discussed previously, our NIKE Brand business in Brazil transitioned to a distributor operating model during the third quarter of fiscal 2021 and our NIKE Brand businesses in Argentina, Chile and Uruguay have remained classified as held-for-sale.

The impacts of closing the Brazil transaction as well as entering into agreements to transition these entities in the prior year are included within Corporate and are not reflected in the APLA operating segment results.

EARNINGS BEFORE INTEREST AND TAXES $ 481 $ 280 72 %

As discussed previously, our NIKE Brand business in Brazil transitioned to a distributor operating model during fiscal 2021 and our NIKE Brand businesses in Argentina, Chile and Uruguay have remained classified as held-for-sale.

The impacts of closing the Brazil transaction as well as classifying the Argentina, Chile, and Uruguay entities as held -for-sale in fiscal 2020 are included within Corporate and are not reflected in the APLA operating segment results.

For more information see Note 12 — Acquisitions and Divestitures within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

THIRD QUARTER OF FISCAL 2021 COMPARED TO THIRD QUARTER OF FISCAL 2020

On a currency-neutral basis, APLA revenues decreased 8% for the third quarter of fiscal 2021.

The decrease was primarily due to the transition of our NIKE Brand business in Brazil to a third-party distributor operating model during the third quarter, which reduced APLA revenues by approximately 6 percentage points.

Additionally, revenues decreased due to declines in nearly all key categories, primarily Running, Football (Soccer) and Sportswear.

NIKE Direct revenues were flat, as strong digital sales growth of 66%, was offset by comparable store sales declines of 23% primarily due to reduced physical retail traffic, in part resulting from safety-related measures in response to COVID-19 .

Currency-neutral footwear revenues decreased 7% for the third quarter of fiscal 2021 due to lower revenues in nearly all key categories, primarily Running, Football (Soccer) and Sportswear.

Unit sales of footwear decreased 23%, while higher ASP per pair contributed approximately 16 percentage points.

Higher ASP per pair was driven by higher full-price and NIKE Direct ASPs, in part reflecting inflationary conditions in our SOCO territory.

Currency-neutral apparel revenues decreased 8% for the third quarter of fiscal 2021 due to lower revenues in nearly all key categories, primarily Running and Training.

Unit sales of apparel decreased 22%, and higher ASP per unit contributed approximately 14 percentage points, driven by higher full-price ASP, in part reflecting inflationary conditions in our SOCO territory.

Reported EBIT increased 5% for the third quarter of fiscal 2021 as lower selling and administrative expense and gross margin expansion more than offset lower revenues.

Gross margin increased approximately 180 basis points as higher full-price ASP, in part reflecting inflationary conditions in our SOCO territory, and higher off-price margin were partially offset by higher product costs and unfavorable changes in standard foreign currency exchange rates.

Selling and administrative expense decreased due to lower operating overhead expense and demand creation expense.

Lower operating overhead expense was primarily due to lower wage-related expense, as well as lower travel and related costs.

The decrease in demand creation expense was primarily due to lower advertising and marketing expense for brand events and our retail operations.

FIRST NINE MONTHS OF FISCAL 2021 COMPARED TO FIRST NINE MONTHS OF FISCAL 2020

On a currency-neutral basis, APLA revenues decreased 5% for the first nine months of fiscal 2021.

The decline was due to lower revenues across most territories, led by a 56% decline in our Latin America third-party distributor business and a 15% decline in Mexico, partially offset by higher revenues in Korea, which increased 9%.

The decrease was also due to the transition of our NIKE Brand business in Brazil to a third-party distributor operating model during the third quarter, which reduced APLA revenues by approximately 2 percentage points.

Revenues decreased in nearly all key categories, led by Running and Football (Soccer).

NIKE Direct revenues increased 11%, primarily fueled by strong digital sales growth of 82%, partially offset by comparable store sales declines of 18% largely due to reduced physical retail traffic, in part resulting from safety-related measures in response to COVID-19 .

Currency-neutral footwear revenues decreased 5% for the first nine months of fiscal 2021 due to lower revenues in nearly all key categories, primarily Running and Football (Soccer), partially offset by growth in the Jordan Brand.

Unit sales of footwear decreased 17%, while higher ASP per pair contributed approximately 12 percentage points, driven by higher full-price ASP, in part reflecting inflationary conditions in our SOCO territory, as well as the favorable impact of growth in our NIKE Direct business.

Currency-neutral apparel revenues decreased 2% for the first nine months of fiscal 2021 due to lower revenues in most key categories, led by Running, which was partially offset by growth in Sportswear.

Unit sales of apparel decreased 9%, while higher ASP per unit contributed approximately 7 percentage points.

Higher ASP per unit was primarily driven by higher full-price ASP, in part reflecting inflationary conditions in our SOCO territory.

Reported EBIT increased 1% for the first nine months of fiscal 2021 as lower selling and administrative expense and gross margin expansion more than offset lower revenues.

Gross margin increased approximately 20 basis points as higher full-price ASP, net of discounts, in part reflecting inflationary conditions in our SOCO territory, was partially offset by higher product costs, unfavorable standard foreign currency exchange rates and lower margin in our NIKE Direct business.

Selling and administrative expense decreased due to lower demand creation and operating overhead expense.

The decrease in demand creation expense was primarily due to lower advertising and marketing expense, as well as a decline in sports marketing costs.

Lower operating overhead expense was primarily due to lower travel and related costs, as well as lower wage-related expenses.

FIRST QUARTER OF FISCAL 2022 COMPARED TO FIRST QUARTER OF FISCAL 2021

On a currency-neutral basis, APLA revenues increased 31% for the first quarter of fiscal 2022.

Territory revenue growth was led by a 144% increase in SOCO (which comprises Argentina, Chile and Uruguay), a 24% increase in Japan, a 86% increase in Mexico and a 26% increase in Korea.

Revenues increased primarily due to higher revenues in Men’s and Women’s.

NIKE Direct revenues increased 36%, primarily due to digital sales growth of 62% and comparable store sales growth of 18%, in part due to improved physical retail traffic.

Currency-neutral footwear revenues increased 33% for the first quarter of fiscal 2022 due primarily to higher revenues in Men's and Women's.

Unit sales of footwear increased 19%, while higher ASP per pair contributed approximately 14 percentage points.

Higher ASP per pair was driven by higher NIKE Direct ASP as well as higher full-price ASPs, due to lower discounts, and a higher mix of full-price sales.

Higher ASPs, in part, reflect inflationary conditions in our SOCO territory.

Currency-neutral apparel revenues increased 26% for the first quarter of fiscal 2022 due primarily to higher revenues in Men's and Women's.

Unit sales of apparel increased 12%, and higher ASP per unit contributed approximately 14 percentage points, driven by higher full-price ASP, reflecting lower discounts, and higher NIKE Direct ASP partially offset by a lower mix of NIKE Direct sales.

Higher ASPs, in part, reflect inflationary conditions in our SOCO territory.

Reported EBIT increased 72% for the first quarter of fiscal 2022 due to higher revenues, gross margin expansion and lower selling and administrative expense as a percent of revenues.

Gross margin increased approximately 560 basis points primarily due to lower other costs, higher NIKE Direct margins, higher full-price ASP, primarily due to lower discounts, and a higher mix of full-price sales.

The decrease in other costs was primarily due to the favorable rate impact of fixed supply chain costs on a higher volume of wholesale shipments, as well as lower inventory obsolescence.

Selling and administrative expense increased due to higher demand creation and operating overhead expense.

Higher demand creation expense was primarily due to higher digital marketing investments to support heightened digital demand.

The increase in operating overhead expense was primarily due to an increase in NIKE Direct strategic technology investments, as well as higher wage-related expenses.

GLOBAL BRAND DIVISIONS

THREE MONTHS ENDED NINE MONTHS ENDED

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

2021 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Revenues $ 7 $ 4 75 % 38 %

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Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.

THIRD QUARTER OF FISCAL 2021 COMPARED TO THIRD QUARTER OF FISCAL 2020

Global Brand Divisions' loss before interest and taxes decreased 5% for the third quarter of fiscal 2021 driven by lower total selling and administrative expense as lower demand creation expense was partially offset by higher operating overhead expense.

Lower demand creation expense was primarily due to lower advertising and marketing costs, while operating overhead expense increased primarily due to our continued investment in digital capabilities, partially offset by lower wage-related costs and lower travel and related expenses.

FIRST NINE MONTHS OF FISCAL 2021 COMPARED TO FIRST NINE MONTHS OF FISCAL 2020

Global Brand Divisions' loss before interest and taxes decreased 3% for the first nine months of fiscal 2021 driven by lower total selling and administrative expense.

Lower demand creation expense was primarily due to lower sports marketing costs, as well as lower advertising and marketing expense.

The decrease in operating overhead expense was primarily due to lower travel and related expenses as well as lower wage-related costs, partially offset by our continued investment in digital capabilities.

THREE MONTHS ENDED NINE MONTHS ENDED

FIRST QUARTER OF FISCAL 2022 COMPARED TO FIRST QUARTER OF FISCAL 2021

Global Brand Divisions' loss before interest and taxes increased 16% for the first quarter of fiscal 2022 driven by higher operating overhead and higher demand creation expense.

Higher operating overhead expense was primarily due to an increase in strategic technology investments.

Higher demand creation expense was primarily due to higher advertising and marketing expense.

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

2021 2020 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 567 $ 513 11 % 6 %

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TOTAL REVENUES $ 629 $ 563 12 % 7 %

EARNINGS BEFORE

INTEREST AND TAXES $ 150 $ 96 56 % $ 405 $ 324 25 %

EARNINGS BEFORE INTEREST AND TAXES $ 204 $ 168 21 %

(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 do not own the Converse trademarks in Japan and accordingly do not earn revenues in Japan.

THIRD QUARTER OF FISCAL 2021 COMPARED TO THIRD QUARTER OF FISCAL 2020

On a currency-neutral basis, Converse revenues increased 8% for the third quarter of fiscal 2021.

The increase in revenues was driven by revenue growth across all geographies.

Wholesale revenues increased 5%, in part due to the impacts of COVID-19 in the prior year, partially offset by wholesale revenue declines primarily in North America.

Direct to consumer revenues increased 16%, as strong digital sales growth across North America and Western Europe more than offset declines from Converse owned stores, reflecting the ongoing impact of COVID-19.

Combined unit sales within the wholesale and direct to consumer channels decreased 5%, while ASP increased 14%, primarily due to growth in digital sales.

Reported EBIT increased 56%, driven by higher revenues and lower selling and administrative expense, partially offset by lower gross margin.

Gross margin decreased approximately 50 basis points as higher product costs due to product mix, lower revenues in our licensing business, and unfavorable changes in standard foreign currency exchange rates were partially offset by higher full-price ASP, in part reflecting lower discounts.

Selling and administrative expense decreased due to lower operating overhead and demand creation expense.

Operating overhead expense decreased primarily due to lower wage-related expenses, as well as lower travel and related costs.

Demand creation expense decreased as a result of lower advertising and marketing expense.

FIRST NINE MONTHS OF FISCAL 2021 COMPARED TO FIRST NINE MONTHS OF FISCAL 2020

On a currency-neutral basis, Converse revenues increased 2% for the first nine months of fiscal 2021, primarily driven by higher revenues in Asia and Western Europe, partially offset by declines in North America.

Wholesale revenues declined 1%, in part a result of supply chain management and strategic distribution shifts in North America, while direct to consumer revenues increased 12%, as strong digital sales growth across all geographies more than offset declines from Converse owned stores, reflecting the ongoing impact of COVID-19.

Combined unit sales within the wholesale and direct to consumer channels decreased 4%, while ASP increased 7%, primarily due to growth in digital sales.

Reported EBIT increased 25%, driven by lower selling and administrative expense and higher revenues, partially offset by lower gross margin.

Gross margin decreased approximately 160 basis points as higher product costs due to product mix, lower margin in our direct to consumer channel and our licensing business as well as unfavorable changes in standard foreign currency exchange rates were partially offset by higher full-price ASP, net of discounts.

Lower margin in our direct to consumer channel was driven by higher promotions in Asia to reduce excess inventory due to COVID-19.

Selling and administrative expense decreased due to lower operating overhead and demand creation expense.

Operating overhead expense decreased primarily due to lower administrative costs and wage-related expenses.

Demand creation expense decreased primarily due to lower advertising and marketing expenses.

THREE MONTHS ENDED NINE MONTHS ENDED

FIRST QUARTER OF FISCAL 2022 COMPARED TO FIRST QUARTER OF FISCAL 2021

On a currency-neutral basis, Converse revenues increased 7% for the first quarter of fiscal 2022 driven by revenue growth in North America and licensee markets, partially offset by declines in Asia and Western Europe.

Wholesale revenues decreased 6%, in part due to supply chain constraints, while Direct to consumer revenues increased 32%, as strong direct to consumer sales growth across North America and Western Europe more than offset declines in Asia.

Combined unit sales within the wholesale and direct to consumer channels decreased 8%, while ASP increased 14%, primarily due to higher full-price ASP, due to lower discounts and growth in direct to consumer.

Reported EBIT increased 21%, driven by higher revenues and gross margin expansion, partially offset by higher selling and administrative expense.

Gross margin increased approximately 340 basis points as higher product costs due to increased duty and freight charges were more than offset by higher margins in our direct to consumer business, lower other costs and growth in licensee revenues.

Selling and administrative expense increased due to higher demand creation and operating overhead expense.

Demand creation expense increased primarily due to higher advertising and marketing expense.

Operating overhead expense increased primarily due to higher administrative expenses.

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE FEBRUARY 28, 2021 FEBRUARY 29, 2020 % CHANGE

2021 2020 % CHANGE

Revenues $ (21) $ 13 —

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related foreign currency hedge results;

conversion gains and losses arising from re-measurement of monetary assets and liabilities in non-functional currencies;

conversion gains and losses arising from remeasurement of monetary assets and liabilities in non-functional currencies;

and certain other foreign currency derivative instruments.

THIRD QUARTER OF FISCAL 2021 COMPARED TO THIRD QUARTER OF FISCAL 2020

Corporate's loss before interest and taxes decreased $281 million for the third quarter of fiscal 2021, primarily due to the following:

• a favorable change of $373 million in part due the $400 million charge in the prior year related to our planned, strategic distributor partnership transition within APLA;

• an unfavorable change in net foreign currency gains and losses of $102 million related to the re-measurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, reported as a component of consolidated Other (income) expense, net;

• a favorable change of $10 million related to the difference between actual foreign currency exchange rates and standard foreign currency exchange rates assigned to the NIKE Brand geographic operating segments and Converse, net of hedge gains and losses;

these results are reported as a component of consolidated gross margin.

FIRST NINE MONTHS OF FISCAL 2021 COMPARED TO FIRST NINE MONTHS OF FISCAL 2020

Corporate's loss before interest and taxes increased $97 million for the first nine months of fiscal 2021, primarily due to the following:

• an unfavorable change in net foreign currency gains and losses of $164 million related to the re-measurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, reported as a component of consolidated Other (income) expense, net;

• a favorable change of $110 million related to the difference between actual foreign currency exchange rates and standard foreign currency exchange rates assigned to the NIKE Brand geographic operating segments and Converse, net of hedge gains and losses;

FIRST QUARTER OF FISCAL 2022 COMPARED TO FIRST QUARTER OF FISCAL 2021

Corporate's loss before interest and taxes increased $48 million for the first quarter of fiscal 2022, primarily due to the following:

• an unfavorable change of $33 million, primarily due to higher operating overhead expense driven by higher wage-related costs;

• an unfavorable change in net foreign currency gains and losses of $13 million related to the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, reported as a component of consolidated Other (income) expense, net;

• an unfavorable change of $2 million related to the difference between actual foreign currency exchange rates and standard foreign currency exchange rates assigned to the NIKE Brand geographic operating segments and Converse, net of hedge gains and losses;

these results are reported as a component of consolidated gross margin.

• an unfavorable change of $43 million in part due to restructuring-related costs associated with changes to our organizational model announced in July 2020, partially offset by the $400 million charge in the prior year related to our planned distributor transition within APLA.

For more information related to our distributor partnership transition within APLA, as well as more information related to our organizational realignment and related costs, see Note 13 — Acquisitions and Divestitures and Note 14 — Restructuring, respectively, within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

FOREIGN CURRENCY EXPOSURES AND HEDGING PRACTICES

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We do not hold or issue derivative instruments for trading or speculative purposes.

As of and for the nine months ended February 28, 2021, there have been no material changes to the Company's hedging program or strategy from what was disclosed within the Annual Report on Form 10-K.

As of and for the three months ended August 31, 2021, there have been no material changes to the Company's hedging program or strategy from what was disclosed within the Annual Report on Form 10-K.

Refer to Note 4 — Fair Value Measurements and Note 8 — Risk Management and Derivatives in the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for additional description of outstanding derivatives at each reported period end.

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• Other Costs — Non-functional currency denominated costs, such as endorsement contracts, also generate foreign currency risk, though to a lesser extent.

• Non-Functional Currency Denominated Monetary Assets and Liabilities — Our global subsidiaries have various assets and liabilities, primarily receivables and payables, including intercompany receivables and payables, denominated in currencies other than their functional currencies.

These balance sheet items are subject to re-measurement which may create fluctuations in Other (income) expense, net within our consolidated results of operations.

• Non-Functional Currency Denominated Monetary Assets and Liabilities — Our global subsidiaries have various monetary assets and liabilities, primarily receivables and payables, including intercompany receivables and payables, denominated in currencies other than their functional currencies.

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

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We manage these exposures by taking advantage of natural offsets and currency correlations that exist within the portfolio and may also elect to use currency forward and option contracts to hedge the remaining effect of exchange rate fluctuations on probable forecasted future cash flows, including certain product cost exposures, non-functional currency denominated external sales and other costs described above.

Certain currency forward contracts used to manage the foreign exchange exposure of non-functional currency denominated monetary assets and liabilities subject to re-measurement and embedded derivative contracts are not formally designated as hedging instruments and are recognized in Other (income) expense, net.

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.

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 and are recognized in Other (income) expense, net.

TRANSLATIONAL EXPOSURES

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Dollars for consolidated reporting results in a cumulative translation adjustment to Accumulated other comprehensive income (loss) within Shareholders' equity.

The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a benefit of approximately $357 million and $430 million for the three and nine months ended February 28, 2021, respectively, and a detriment of approximately $152 million and $698 million for the three and nine months ended February 29, 2020, respectively.

The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a benefit of approximately $109 million and $143 million for the three and nine months ended February 28, 2021, respectively, and a detriment of approximately $43 million and $195 million for the three and nine months ended February 29, 2020, respectively.

The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a benefit of approximately $382 million for the three months ended August 31, 2021 and a detriment of approximately $111 million for the three months ended August 31, 2020.

The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a benefit of approximately $117 million for the three months ended August 31, 2021 and a detriment of approximately $29 million for the three months ended August 31, 2020.

Management generally identifies hyper-inflationary markets as those markets whose cumulative inflation rate over a three-year period exceeds 100%.

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As a result, beginning in the second quarter of fiscal 2019, the functional currency of our Argentina subsidiary changed from the local currency to the U.S.

As of and for the three and nine months ended February 28, 2021,

this change did not have a material impact on our results of operations or financial condition and we do not anticipate it will have a material impact in future periods based on current rates.

As of and for the three months ended August 31, 2021, this change did not have a material impact on our results of operations or financial condition and we do not anticipate it will have a material impact in future periods based on current rates.

MANAGING TRANSLATIONAL EXPOSURES

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Dollar denominated available-for-sale investments are accounted for as cash flow hedges.

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 a favorable impact of approximately $7 million and an unfavorable impact of approximately $21 million on our Income before income taxes for the three months and nine months ended February 28, 2021, 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 a favorable impact of approximately $104 million on our Income before income taxes for the three months ended August 31, 2021.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW ACTIVITY

Cash provided (used) by operations was an inflow of $4,645 million for the first nine months of fiscal 2021, compared to $2,486 million for the first nine months of fiscal 2020.

Net income, adjusted for non-cash items, generated $4,840 million of operating cash inflow for the first nine months of fiscal 2021, compared to $4,107 million for the first nine months of fiscal 2020.

The net change in working capital and other assets and liabilities resulted in a decrease to Cash provided (used) by operations of $195 million for the first nine months of fiscal 2021 compared to a decrease of $1,621 million for the first nine months of fiscal 2020.

This favorable impact on Cash provided (used) by operations was primarily the result of a $1,129 million decrease in Inventories driven by our intentional supply and demand management, as well as strong digital sales growth.

Cash provided (used) by investing activities was an outflow of $3,987 million for the first nine months of fiscal 2021, compared to $758 million for the first nine months of fiscal 2020, primarily driven by the net change in short-term investments.

For the first nine months of fiscal 2021, the net change in short-term investments (including sales, maturities and purchases) resulted in a cash outflow of $3,650 million compared to a cash inflow of $9 million for the first nine months of fiscal 2020.

Cash provided (used) by financing activities was an outflow of $612 million for the first nine months of fiscal 2021 compared to $3,310 million for the first nine months of fiscal 2020, with the decrease from the prior period driven by our election to temporarily suspend share repurchases, resulting in no share repurchases for the first nine months of fiscal 2021 compared to $2,865 million in the first nine months of fiscal 2020.

As of February 28, 2021, we had repurchased 45.2 million shares at a cost of approximately $4.0 billion (an average price of $89.00 per share) under the four-year, $15 billion share repurchase program approved by the Board of Directors in June 2018.

To enhance our liquidity position in response to COVID-19, during the fourth quarter of fiscal 2020, we elected to temporarily suspend share repurchases under our existing share repurchase program.

As such, there were no share repurchases made during the nine months ended February 28, 2021.

The existing program remains authorized by the Board of Directors and we expect to resume share repurchases in the fourth quarter of fiscal 2021.

Cash provided (used) by operations was an inflow of $1,111 million for the first three months of fiscal 2022, compared to $882 million for the first three months of fiscal 2021.

Net income, adjusted for non-cash items, generated $2,076 million of operating cash inflow for the first three months of fiscal 2022, compared to $1,606 million for the first three months of fiscal 2021.

The net change in working capital and other assets and liabilities resulted in a decrease to Cash provided (used) by operations of $965 million for the first three months of fiscal 2022 compared to a decrease of $724 million for the first three months of fiscal 2021.

The net change in working capital compared to the prior year was driven by changes in Accounts payable and Inventories for the first three months of fiscal 2022, in part due to supply chain constraints which caused higher levels of in-transit inventory.

This activity was partially offset by a $1,026 million change in Accounts receivable, primarily due to the timing of marketplace recovery from store closures and resumption of wholesale shipments in the prior year due to COVID-19.

Cash provided (used) by investing activities was an inflow of $501 million for the first three months of fiscal 2022, compared to an outflow of $889 million for the first three months of fiscal 2021, primarily driven by the net change in short-term investments.

For the first three months of fiscal 2022, the net change in short-term investments (including sales, maturities and purchases) resulted in a cash inflow of $583 million compared to a cash outflow of $715 million for the first three months of fiscal 2021.

Cash provided (used) by financing activities was an outflow of $743 million for the first three months of fiscal 2022 compared to $248 million for the first three months of fiscal 2021.

The increased outflow in the first three months of fiscal 2022 was driven by our resumption of the share repurchase program in the fourth quarter of fiscal 2021, resulting in $752 million share repurchases for the first three months of fiscal 2022 compared to no share repurchases in the first three months of fiscal 2021.

During the first three months of fiscal 2022, we repurchased 4.8 million shares of NIKE's Class B Common Stock for $742.3 million (an average price of $155.30 per share) under the four-year, $15 billion share repurchase program approved by the Board of Directors in June 2018.

As of August 31, 2021, we had repurchased 54.8 million shares at a cost of approximately $5.4 billion (an average price of $98.74 per share) under this program.

We continue to expect funding of share repurchases will come from operating cash flows and excess cash.

The timing and the amount of share repurchases will be dictated by our capital needs and stock market conditions.

CAPITAL RESOURCES

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The Shelf expires on July 23, 2022.

As of February 28, 2021, our committed credit facilities were unchanged from the information previously reported on Form 10-K for the fiscal year ended May 31, 2020.

As of August 31, 2021, our committed credit facilities were unchanged from the information previously reported on Form 10-K for the fiscal year ended May 31, 2021.

We currently have long-term debt ratings of AA- and A1 from Standard and Poor's Corporation and Moody's Investor Services, respectively.

Any changes to these ratings could result in interest rate and facility fee changes.

As of February 28, 2021, we were in full compliance with the covenants under our facilities and believe it is unlikely we will fail to meet any of the covenants in the foreseeable future.

As of February 28, 2021 and May 31, 2020, no amounts were outstanding under our committed credit facilities.

On March 15, 2021, subsequent to the end of the third quarter of fiscal 2021, we entered into a committed credit facility agreement with a syndicate of banks which provides for up to $1 billion of borrowings, with the option to increase borrowings up to $1.5 billion in total upon lender approval.

The facility matures on March 14, 2022, with a

364-day extension option up to 30 days prior to the existing termination date, provided that in no event shall it extend beyond March 13, 2023.

This facility replaces the prior $2 billion credit facility agreement entered into on April 6, 2020, which would have matured on April 5, 2021.

Refer to Note 5 — Short-Term Borrowings and Credit Lines for additional information.

As of August 31, 2021, we were in full compliance with the covenants under our facilities and believe it is unlikely we will fail to meet any of the covenants in the foreseeable future.

As of August 31, 2021 and May 31, 2021, no amounts were outstanding under our committed credit facilities.

Liquidity was also provided by our $3 billion commercial paper program.

During the three months ended February 28, 2021, the maximum amount of commercial paper borrowings outstanding at any point was $23 million.

As of February 28, 2021, we had no borrowings outstanding under our $4 billion program.

As of May 31, 2020, we had $248 million of borrowings outstanding at a weighted average interest rate of 1.65%.

Additionally, we decreased our $4 billion commercial paper program to $3 billion in connection with the new credit facility agreement entered into on March 15, 2021, as described above.

As of and for the three months ended August 31, 2021, 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.

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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.

As of February 28, 2021, we had cash, cash equivalents and short-term investments totaling $12.5 billion, primarily consisting of commercial paper, corporate notes, deposits held at major banks, money market funds, U.S.

As of August 31, 2021, we had cash, cash equivalents and short-term investments totaling $13.7 billion, primarily consisting of commercial paper, corporate notes, deposits held at major banks, money market funds, U.S.

government sponsored enterprise obligations, U.S.

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All of our investments are investment grade to minimize our credit risk.

While individual securities have varying durations, as of February 28, 2021, the weighted-average days to maturity of our cash equivalents and short-term investments portfolio was 62 days.

While individual securities have varying durations, as of August 31, 2021, the weighted average days to maturity of our cash equivalents and short-term investments portfolio was 55 days.

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.

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OFF-BALANCE SHEET ARRANGEMENTS

As of February 28, 2021, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

As of August 31, 2021, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

CONTRACTUAL OBLIGATIONS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis