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Item 1. Financial Statements

2025-01-03 compared with 2024-10-07 · 183 added, 66 removed, 486 unchanged (34% of the section changed)

1 unchanged sentence

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

THREE MONTHS ENDED AUGUST 31,

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(In millions, except per share data)

2024 2023 2024 2023

Revenues $ 12,354 $ 13,388 $ 23,943 $ 26,327

7 unchanged sentences

Income before income taxes

1,416 1,922 2,723 3,570

Income tax expense

253 344 509 542

$ 1,163 $ 1,578 $ 2,214 $ 3,028

Earnings per common share:

6 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

THREE MONTHS ENDED AUGUST 31,

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions)

2024 2023 2024 2023

Net income $ 1,163 $ 1,578 $ 2,214 $ 3,028

7 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

AUGUST 31, MAY 31,

NOVEMBER 30, MAY 31,

(In millions)

37 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED AUGUST 31,

SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions)

40 unchanged sentences

SHARES AMOUNT SHARES AMOUNT

Balance at May 31, 2024 298 $ — 1,205 $ 3 $ 13,409 $ 53 $ 965 $ 14,430

Balance at August 31, 2024 298 $ — 1,193 $ 3 $ 13,557 $ ( 27 ) $ 411 $ 13,944

Stock options exercised 1 95 95

Repurchase of Class B Common Stock ( 13 ) ( 119 ) ( 942 ) ( 1,061 )

Dividends on common stock ($ 0.370 per share) and preferred stock at $ 0.10 per share

Dividends on common stock ($ 0.400 per share)

( 597 ) ( 597 )

3 unchanged sentences

Other comprehensive income (loss) 229 229

Balance at November 30, 2024 298 $ — 1,184 $ 3 $ 13,778 $ 202 $ 54 $ 14,037

COMMON STOCK CAPITAL IN EXCESS OF STATED VALUE ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) RETAINED EARNINGS TOTAL

CLASS A CLASS B

(In millions, except per share data)

SHARES AMOUNT SHARES AMOUNT

Balance at August 31, 2023 298 $ — 1,226 $ 3 $ 12,590 $ 136 $ 1,242 $ 13,971

Stock options exercised 2 106 106

Repurchase of Class B Common Stock ( 12 ) ( 99 ) ( 1,110 ) ( 1,209 )

Dividends on common stock ($ 0.370 per share)

( 565 ) ( 565 )

Issuance of shares to employees, net of shares withheld for employee taxes 3 68 6 74

Stock-based compensation 206 206

Net income 1,578 1,578

Other comprehensive income (loss) ( 15 ) ( 15 )

Balance at November 30, 2023 298 $ — 1,219 $ 3 $ 12,871 $ 121 $ 1,151 $ 14,146

COMMON STOCK CAPITAL IN EXCESS OF STATED VALUE ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) RETAINED EARNINGS TOTAL

4 unchanged sentences

Stock options exercised 4 219 219

Repurchase of Class B Common Stock ( 28 ) ( 251 ) ( 2,003 ) ( 2,254 )

Dividends on common stock ($ 0.770 per share) and preferred stock ($ 0.10 per share)

( 1,151 ) ( 1,151 )

Issuance of shares to employees, net of shares withheld for employee taxes 3 26 29 55

Stock-based compensation 375 375

Net income 2,214 2,214

Other comprehensive income (loss) 149 149

Balance at November 30, 2024 298 $ — 1,184 $ 3 $ 13,778 $ 202 $ 54 $ 14,037

COMMON STOCK CAPITAL IN EXCESS OF STATED VALUE ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) RETAINED EARNINGS TOTAL

CLASS A CLASS B

(In millions, except per share data)

SHARES AMOUNT SHARES AMOUNT

Balance at May 31, 2023 305 $ — 1,227 $ 3 $ 12,412 $ 231 $ 1,358 $ 14,004

Stock options exercised 4 212 212

Conversion to Class B Common Stock ( 7 ) 7 —

Repurchase of Class B Common Stock ( 22 ) ( 184 ) ( 2,157 ) ( 2,341 )

Dividends on common stock ($ 0.340 per share) and preferred stock at $ 0.10 per share

Dividends on common stock ($ 0.710 per share) and preferred stock ($ 0.10 per share)

( 1,084 ) ( 1,084 )

3 unchanged sentences

Other comprehensive income (loss) ( 110 ) ( 110 )

Balance at August 31, 2023 298 $ — 1,226 $ 3 $ 12,590 $ 136 $ 1,242 $ 13,971

Balance at November 30, 2023 298 $ — 1,219 $ 3 $ 12,871 $ 121 $ 1,151 $ 14,146

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

19 unchanged sentences

The interim financial information and notes thereto should be read in conjunction with the Company's latest Annual Report on Form 10-K for the fiscal year ended May 31, 2024 (the "Annual Report").

The results of operations for the three months ended August 31, 2024, are not necessarily indicative of results to be expected for the entire fiscal year.

The results of operations for the three and six months ended November 30, 2024, are not necessarily indicative of results to be expected for the entire fiscal year.

RECENTLY ISSUED ACCOUNTING STANDARDS AND DISCLOSURE RULES

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In March 2024, the U.S.

Securities and Exchange Commission ("SEC") adopted the final rule under SEC Release No.

Securities and Exchange Commission (the "SEC") adopted the final rule under SEC Release No.

33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors.

This rule would require registrants to disclose certain climate-related information in registration statements and annual reports.

In April 2024, the SEC voluntarily stayed the final rule as a result of pending and legal challenges.

In April 2024, the SEC voluntarily stayed the final rule as a result of pending legal challenges.

The disclosure requirements would apply to the Company's fiscal year beginning June 1, 2025, pending resolution of the stay.

The Company is currently evaluating the final rule to determine its impact on the Company's disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement.

The new disclosure requirements are effective for the Company's annual periods beginning June 1, 2027, and interim periods beginning June 1, 2028, with early adoption permitted, and may be applied either prospectively or retrospectively.

The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.

NOTE 2 — ACCRUED LIABILITIES

Accrued liabilities included the following:

AUGUST 31, MAY 31,

NOVEMBER 30, MAY 31,

(Dollars in millions) 2024 2024

Compensation and benefits, excluding taxes

$ 1,073 $ 1,291

Sales-related reserves $ 1,560 $ 1,282

Compensation and benefits, excluding taxes 1,119 1,291

Dividends payable 599 563

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The Company measures certain financial assets and liabilities at fair value on a recurring basis, including derivatives, equity securities and available-for-sale debt securities.

The following tables present information about the Company's financial assets measured at fair value on a recurring basis as of August 31, 2024 and May 31, 2024, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement:

AUGUST 31, 2024

The following tables present information about the Company's financial assets measured at fair value on a recurring basis as of November 30, 2024 and May 31, 2024, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement:

NOVEMBER 30, 2024

(Dollars in millions)

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TOTAL $ 11,582 $ 9,860 $ 1,722

As of August 31, 2024, the Company held $ 1,038 million of available-for-sale debt securities with maturity dates within one year and $ 771 million with maturity dates greater than one year and less than five years in Short-term investments on the Unaudited Condensed Consolidated Balance Sheets.

As of November 30, 2024, the Company held $ 847 million of available-for-sale debt securities with maturity dates within one year and $ 935 million with maturity dates greater than one year and less than five years in Short-term investments on the Unaudited Condensed Consolidated Balance Sheets.

The fair value of the Company's available-for-sale debt securities approximates their amortized cost.

Included in Interest expense (income), net was interest income related to the Company's investment portfolio of $ 120 million and $ 99 million for the three months ended August 31, 2024 and 2023, respectively.

Included in Interest expense (income), net was interest income related to the Company's investment portfolio of $ 97 million and $ 92 million for the three months ended November 30, 2024 and 2023, respectively, and $ 217 million and $ 191 million for the six months ended November 30, 2024 and 2023, respectively.

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

AUGUST 31, 2024

NOVEMBER 30, 2024

DERIVATIVE ASSETS DERIVATIVE LIABILITIES

5 unchanged sentences

36 — 36 — — —

$ 238 $ 165 $ 73 $ 198 $ 167 $ 31

(1) If the derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $ 141 million as of August 31, 2024.

As of that date, the Company received $ 34 million of cash collateral and $ 12 million of securities from various counterparties on the derivative asset balance and posted $ 45 million cash collateral on the derivative liability balance.

TOTAL $ 593 $ 434 $ 159 $ 106 $ 99 $ 7

(1) If the derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $ 106 million as of November 30, 2024.

As of that date, the Company received $ 311 million of cash collateral and $ 38 million of securities from various counterparties on the derivative asset balance.

No collateral was posted on the derivative liability balance as of November 30, 2024.

DERIVATIVE ASSETS DERIVATIVE LIABILITIES

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The fair value of long-term debt is estimated based upon quoted prices for similar instruments or quoted prices for identical instruments in inactive markets (Level 2).

The fair value of the Company's Long-term debt was approximately $ 7,932 million at August 31, 2024 and $ 7,631 million at May 31, 2024.

The fair value of the Company's Long-term debt was approximately $ 7,856 million at November 30, 2024 and $ 7,631 million at May 31, 2024.

NOTE 4 — INCOME TAXES

The effective tax rate was 19.6 % and 12.0 % for the three months ended August 31, 2024 and 2023, respectively.

The increase in the Company's effective tax rate was primarily due to a one-time benefit recognized in the first three months of fiscal 2024 from the impact of temporary relief provided by the Internal Revenue Service ("IRS") relating to U.S.

The effective tax rate was 18.7 % and 15.2 % for the six months ended November 30, 2024 and 2023, respectively.

The increase in the Company's effective tax rate was primarily due to one-time benefits recognized in the first six months of fiscal 2024 including the impact of temporary relief provided by the Internal Revenue Service ("IRS") relating to U.S.

foreign tax credit regulations.

2 unchanged sentences

As a result of this guidance, the Company recognized a one-time tax benefit related to fiscal 2023 tax positions in the first three months of fiscal 2024.

Other prior year one-time benefits included a reduction in accrued withholding taxes on undistributed foreign earnings recognized in the second quarter of fiscal 2024.

The Organization for Economic Co-operation and Development (OECD) and the G20 Inclusive Framework on Base Erosion and Profit Shifting (the "Inclusive Framework") have put forth Pillar Two proposals that ensure a minimal level of taxation.

1 unchanged sentence

This legislation became effective for the Company beginning June 1, 2024.

Based on the Company’s current analysis of Pillar Two provisions, these tax law changes did not have a material impact on the Company's financial statements for the first three months of fiscal 2025 and are not expected to for fiscal 2025.

As of August 31, 2024, total gross unrecognized tax benefits, excluding related interest and penalties, were $ 999 million, $ 709 million of which would affect the Company's effective tax rate if recognized in future periods.

Based on the Company's current analysis of Pillar Two provisions, these tax law changes did not have a material impact on the Company's financial statements for the first six months of fiscal 2025 and are not expected to for fiscal 2025.

As of November 30, 2024, total gross unrecognized tax benefits, excluding related interest and penalties, were $ 995 million, $ 724 million of which would affect the Company's effective tax rate if recognized in future periods.

The majority of the total gross unrecognized tax benefits are long-term in nature and included within Deferred income taxes and other liabilities on the Unaudited Condensed Consolidated Balance Sheets.

As of May 31, 2024, total gross unrecognized tax benefits, excluding related interest and penalties, were $ 990 million.

As of August 31, 2024 and May 31, 2024, accrued interest and penalties related to uncertain tax positions were $ 346 million and $ 332 million, respectively, (excluding federal benefit) and included within Deferred income taxes and other liabilities on the Unaudited Condensed Consolidated Balance Sheets.

As of November 30, 2024 and May 31, 2024, accrued interest and penalties related to uncertain tax positions were $ 347 million and $ 332 million, respectively, (excluding federal benefit) and included within Deferred income taxes and other liabilities on the Unaudited Condensed Consolidated Balance Sheets.

The Company is subject to taxation in the U.S., as well as various state and foreign jurisdictions.

4 unchanged sentences

Tax years after 2011 remain open in certain major foreign jurisdictions.

Although the timing of resolution of audits is not certain, the Company evaluates all domestic and foreign audit issues in the aggregate, along with the expiration of applicable statutes of limitations, and estimates that it is reasonably possible the total gross unrecognized tax benefits could decrease by up to $ 20 million within the next 12 months.

federal tax matters for fiscal years 2017 through 2019 related to transfer pricing adjustments, research and development credits and other items.

In January 2019, the European Commission opened a formal investigation to examine whether the Netherlands has breached State Aid rules when granting certain tax rulings to the Company.

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The Stock Incentive Plan authorizes the grant of non-statutory stock options, incentive stock options, stock appreciation rights and stock awards, including restricted stock and restricted stock units.

Restricted stock units include both time-vesting restricted stock units ("RSUs") as well as performance-based restricted stock units ("PSUs").

Restricted stock units include both time-vesting restricted stock units as well as performance-based restricted stock units ("PSUs").

In addition to the Stock Incentive Plan, the Company gives employees the right to purchase shares at a discount from the market price under employee stock purchase plans ("ESPPs").

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

THREE MONTHS ENDED AUGUST 31,

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions)

2024 2023 2024 2023

Stock options (1)

$ 82 $ 88 $ 153 $ 164

ESPPs 23 17 36 38

Restricted stock and restricted stock units (2)

87 101 186 200

TOTAL STOCK-BASED COMPENSATION EXPENSE $ 192 $ 206 $ 375 $ 402

2 unchanged sentences

STOCK OPTIONS

As of August 31, 2024, the Company had $ 324 million of unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized in Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.4 years.

As of November 30, 2024, the Company had $ 560 million of unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized in Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.7 years.

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

As of August 31, 2024, the Company had $ 517 million of unrecognized compensation costs from restricted stock and restricted stock units, net of estimated forfeitures, to be recognized in Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.3 years.

As of November 30, 2024, the Company had $ 815 million of unrecognized compensation costs from restricted stock and restricted stock units, net of estimated forfeitures, to be recognized in Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.7 years.

NOTE 6 — EARNINGS PER SHARE

The following is a reconciliation from basic earnings per common share to diluted earnings per common share.

The computations of diluted earnings per common share exclude restricted stock, restricted stock units and options, including shares under ESPPs, to purchase an estimated additional 61.1 million and 33.7 million shares of common stock outstanding for the three months ended August 31, 2024 and 2023, respectively, because the awards were assumed to be anti-dilutive.

THREE MONTHS ENDED AUGUST 31,

The computations of diluted earnings per common share exclude restricted stock, restricted stock units and options, including shares under ESPPs, to purchase an estimated additional 81.4 million and 46.2 million shares of common stock outstanding for the three months ended November 30, 2024 and 2023, respectively, and 77.9 million and 43.5 million shares of common stock outstanding for the six months ended November 30, 2024 and 2023, respectively, because the awards were assumed to be anti-dilutive.

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(In millions, except per share data)

2024 2023 2024 2023

Net income available to common stockholders $ 1,163 $ 1,578 $ 2,214 $ 3,028

8 unchanged sentences

The Company is exposed to global market risks, including the effect of changes in foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business.

As of and for the three months ended August 31, 2024, there have been no material changes to the Company's hedging program or strategy from what was disclosed within the Annual Report.

The majority of derivatives outstanding as of August 31, 2024, are designated as foreign currency cash flow hedges, primarily for Euro/U.S.

Dollar, British Pound/Euro, Chinese Yuan/U.S.

Dollar and Japanese Yen/U.S.

As of and for the three and six months ended November 30, 2024, there have been no material changes to the Company's hedging program or strategy from what was disclosed within the Annual Report.

The majority of derivatives outstanding as of November 30, 2024, are designated as foreign currency cash flow hedges, primarily for Euro/U.S.

Dollar, Chinese Yuan/U.S.

Dollar, British Pound/Euro and Japanese Yen/U.S.

Dollar currency pairs.

2 unchanged sentences

DERIVATIVE ASSETS

BALANCE SHEET LOCATION AUGUST 31, MAY 31,

BALANCE SHEET LOCATION NOVEMBER 30, MAY 31,

(Dollars in millions)

10 unchanged sentences

DERIVATIVE LIABILITIES

BALANCE SHEET LOCATION AUGUST 31, MAY 31,

BALANCE SHEET LOCATION NOVEMBER 30, MAY 31,

(Dollars in millions)

17 unchanged sentences

INCOME (LOSS) INTO INCOME (1)

THREE MONTHS ENDED AUGUST 31, LOCATION OF GAIN (LOSS)

THREE MONTHS ENDED NOVEMBER 30, LOCATION OF GAIN (LOSS)

RECLASSIFIED FROM ACCUMULATED

OTHER COMPREHENSIVE INCOME

(LOSS) INTO INCOME THREE MONTHS ENDED AUGUST 31,

(LOSS) INTO INCOME THREE MONTHS ENDED NOVEMBER 30,

2024 2023 2024 2023

7 unchanged sentences

TOTAL DESIGNATED CASH FLOW HEDGES $ 524 $ 57 $ 39 $ 116

(1) For the three months ended August 31, 2024 and 2023, the amounts recorded in Other (income) expense, net as a result of the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.

(1) For the three months ended November 30, 2024 and 2023, the amounts recorded in Other (income) expense, net as a result of the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.

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

(Dollars in millions)

AMOUNT OF GAIN (LOSS) RECOGNIZED IN OTHER

COMPREHENSIVE INCOME (LOSS) ON DERIVATIVES (1)

AMOUNT OF GAIN (LOSS)

RECLASSIFIED FROM ACCUMULATED

OTHER COMPREHENSIVE

INCOME (LOSS) INTO INCOME (1)

SIX MONTHS ENDED NOVEMBER 30, LOCATION OF GAIN (LOSS)

RECLASSIFIED FROM ACCUMULATED

OTHER COMPREHENSIVE INCOME

(LOSS) INTO INCOME SIX MONTHS ENDED NOVEMBER 30,

2024 2023 2024 2023

Derivatives designated as cash flow hedges:

Foreign exchange forwards and options $ ( 73 ) $ ( 23 ) Revenues $ ( 45 ) $ 3

Foreign exchange forwards and options 298 19 Cost of sales 120 151

Foreign exchange forwards and options — 2 Demand creation expense — —

Foreign exchange forwards and options 128 29 Other (income) expense, net 45 86

Interest rate swaps (2)

— — Interest expense (income), net ( 4 ) ( 4 )

TOTAL DESIGNATED CASH FLOW HEDGES $ 353 $ 27 $ 116 $ 236

(1) For the six months ended November 30, 2024 and 2023, the amounts recorded in Other (income) expense, net as a result of the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.

AMOUNT OF GAIN (LOSS) RECOGNIZED

2 unchanged sentences

ON DERIVATIVES

THREE MONTHS ENDED AUGUST 31,

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions)

2024 2023 2024 2023

Derivatives not designated as hedging instruments:

Foreign exchange forwards and options

$ — $ ( 27 ) Other (income) expense, net

Foreign exchange forwards and options $ 6 $ 17 $ 6 $ ( 10 ) Other (income) expense, net

CASH FLOW HEDGES

The total notional amount of outstanding foreign currency derivatives designated as cash flow hedges was appr oximately $ 16.6 billion and $ 16.2 billion as of August 31, 2024 and May 31, 2024, respectively.

Approxima tely $ 63 million of def erred net gains (net of tax) on both outstanding and matured derivatives in Accumulated other comprehensive income (loss) as of August 31, 2024, are expected to be reclassified to Net income during the next 12 months concurrent with the underlying hedged transactions also being recorded in Net income.

The total notional amount of outstanding foreign currency derivatives designated as cash flow hedges was approximately $ 16.2 billion as of November 30, 2024 and May 31, 2024.

Approximately $ 357 million of deferred net gains (net of tax) on both outstanding and matured derivatives in Accumulated other comprehensive income (loss) as of November 30, 2024, are expected to be reclassified to Net income during the next 12 months concurrent with the underlying hedged transactions also being recorded in Net income.

Actual amounts ultimately reclassified to Net income are dependent on the exchange rates in effect when derivative contracts currently outstanding mature.

As of August 31, 2024, the maximum term over which the Company hedges exposures to the variability of cash flows for its forecasted transactions was 27 months.

As of November 30, 2024, the maximum term over which the Company hedges exposures to the variability of cash flows for its forecasted transactions was 29 months.

FAIR VALUE HEDGES

The total notional amount of outstanding interest rate swap contracts designated as fair value hedges was $ 1.8 billion as of August 31, 2024 and May 31, 2024.

The total notional amount of outstanding interest rate swap contracts designated as fair value hedges was $ 2.4 billion and $ 1.8 billion as of November 30, 2024 and May 31, 2024, respectively.

UNDESIGNATED DERIVATIVE INSTRUMENTS

The total notional amount of outstanding undesignated derivative instruments was $ 3.8 billion and $ 4.4 billion as of August 31, 2024 and May 31, 2024, respectively.

As of August 31, 2024, the Company was in compliance with all credit risk-related contingent features and considers the impact of the risk of counterparty default to be immaterial.

The total notional amount of outstanding undesignated derivative instruments was $ 3.3 billion and $ 4.4 billion as of November 30, 2024 and May 31, 2024, respectively.

As of November 30, 2024, the Company was in compliance with all credit risk-related contingent features and considers the impact of the risk of counterparty default to be immaterial.

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

4 unchanged sentences

CASH FLOW HEDGES NET INVESTMENT HEDGES (1)

Balance at May 31, 2024 $ ( 256 ) $ 247 $ 115 $ ( 53 ) $ 53

Balance at August 31, 2024 $ ( 118 ) $ 20 $ 115 $ ( 44 ) $ ( 27 )

Other comprehensive income (loss):

4 unchanged sentences

Total other comprehensive income (loss) ( 224 ) 450 — 3 229

Balance at November 30, 2024 $ ( 342 ) $ 470 $ 115 $ ( 41 ) $ 202

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

(2) Net of immaterial tax impact.

(3) Reclassifications to net income of previously deferred (gains) losses are recorded within Other (income) expense, net for foreign currency translation adjustment, net investment hedges, and other.

(Dollars in millions)

FOREIGN CURRENCY TRANSLATION ADJUSTMENT (1)

CASH FLOW HEDGES NET INVESTMENT HEDGES (1)

Balance at August 31, 2023 $ ( 217 ) $ 297 $ 115 $ ( 59 ) $ 136

Other comprehensive income (loss):

Other comprehensive gains (losses) before reclassifications (2)

37 48 — 11 96

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

2 ( 103 ) — ( 10 ) ( 111 )

Total other comprehensive income (loss) 39 ( 55 ) — 1 ( 15 )

Balance at November 30, 2023 $ ( 178 ) $ 242 $ 115 $ ( 58 ) $ 121

1 unchanged sentence

(Dollars in millions) FOREIGN CURRENCY TRANSLATION ADJUSTMENT (1)

CASH FLOW HEDGES NET INVESTMENT HEDGES (1)

Balance at May 31, 2024 $ ( 256 ) $ 247 $ 115 $ ( 53 ) $ 53

Other comprehensive income (loss):

Other comprehensive gains (losses) before reclassifications (2)

( 86 ) 341 — 10 265

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

— ( 118 ) — 2 ( 116 )

Total other comprehensive income (loss) ( 86 ) 223 — 12 149

Balance at November 30, 2024 $ ( 342 ) $ 470 $ 115 $ ( 41 ) $ 202

(2) Net of immaterial tax impact.

(Dollars in millions)

8 unchanged sentences

Total other comprehensive income (loss) 75 ( 189 ) — 4 ( 110 )

Balance at August 31, 2023 $ ( 217 ) $ 297 $ 115 $ ( 59 ) $ 136

Balance at November 30, 2023 $ ( 178 ) $ 242 $ 115 $ ( 58 ) $ 121

5 unchanged sentences

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

THREE MONTHS ENDED AUGUST 31, 2024

THREE MONTHS ENDED NOVEMBER 30, 2024

(Dollars in millions)

9 unchanged sentences

TOTAL REVENUES $ 5,179 $ 3,303 $ 1,711 $ 1,744 $ 13 $ 11,950 $ 429 $ ( 25 ) $ 12,354

THREE MONTHS ENDED AUGUST 31, 2023

THREE MONTHS ENDED NOVEMBER 30, 2023

(Dollars in millions)

9 unchanged sentences

TOTAL REVENUES $ 5,625 $ 3,567 $ 1,863 $ 1,805 $ 12 $ 12,872 $ 519 $ ( 3 ) $ 13,388

SIX MONTHS ENDED NOVEMBER 30, 2024

(Dollars in millions)

NORTH AMERICA EUROPE, MIDDLE EAST & AFRICA GREATER CHINA ASIA PACIFIC & LATIN AMERICA GLOBAL BRAND DIVISIONS TOTAL NIKE BRAND CONVERSE CORPORATE TOTAL NIKE, INC.

Footwear $ 6,448 $ 3,934 $ 2,449 $ 2,286 $ — $ 15,117 $ 800 $ — $ 15,917

Apparel 3,024 2,129 832 785 — 6,770 43 — 6,813

Equipment 533 383 96 135 — 1,147 18 — 1,165

Other — — — — 27 27 69 ( 48 ) 48

TOTAL REVENUES $ 10,005 $ 6,446 $ 3,377 $ 3,206 $ 27 $ 23,061 $ 930 $ ( 48 ) $ 23,943

Sales to Wholesale Customers $ 5,341 $ 4,194 $ 1,875 $ 1,920 $ — $ 13,330 $ 488 $ — $ 13,818

Sales through Direct to Consumer 4,664 2,252 1,502 1,286 — 9,704 373 — 10,077

Other — — — — 27 27 69 ( 48 ) 48

TOTAL REVENUES $ 10,005 $ 6,446 $ 3,377 $ 3,206 $ 27 $ 23,061 $ 930 $ ( 48 ) $ 23,943

SIX MONTHS ENDED NOVEMBER 30, 2023

(Dollars in millions)

NORTH AMERICA EUROPE, MIDDLE EAST & AFRICA GREATER CHINA ASIA PACIFIC & LATIN AMERICA GLOBAL BRAND DIVISIONS TOTAL NIKE BRAND CONVERSE CORPORATE TOTAL NIKE, INC.

Footwear $ 7,490 $ 4,446 $ 2,648 $ 2,444 $ — $ 17,028 $ 964 $ — $ 17,992

Apparel 3,147 2,337 870 808 — 7,162 50 — 7,212

Equipment 411 394 80 125 — 1,010 18 — 1,028

Other — — — — 25 25 75 ( 5 ) 95

TOTAL REVENUES $ 11,048 $ 7,177 $ 3,598 $ 3,377 $ 25 $ 25,225 $ 1,107 $ ( 5 ) $ 26,327

Sales to Wholesale Customers $ 5,674 $ 4,517 $ 1,922 $ 1,988 $ — $ 14,101 $ 586 $ — $ 14,687

Sales through Direct to Consumer 5,374 2,660 1,676 1,389 — 11,099 446 — 11,545

Other — — — — 25 25 75 ( 5 ) 95

TOTAL REVENUES $ 11,048 $ 7,177 $ 3,598 $ 3,377 $ 25 $ 25,225 $ 1,107 $ ( 5 ) $ 26,327

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

1 unchanged sentence

Corporate revenues primarily consisted of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through the Company's central foreign exchange risk management program.

As of August 31, 2024 and May 31, 2024, the Company did no t have any contract assets and had an immaterial amount of contract liabilities recorded in Accrued liabilities on the Unaudited Condensed Consolidated Balance Sheets.

As of November 30, 2024 and May 31, 2024, the Company did no t have any contract assets and had an immaterial amount of contract liabilities recorded in Accrued liabilities on the Unaudited Condensed Consolidated Balance Sheets.

NOTE 10 — OPERATING SEGMENTS

24 unchanged sentences

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

THREE MONTHS ENDED AUGUST 31,

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions)

2024 2023 2024 2023

North America $ 5,179 $ 5,625 $ 10,005 $ 11,048

19 unchanged sentences

INCOME BEFORE INCOME TAXES $ 1,416 $ 1,922 $ 2,723 $ 3,570

AUGUST 31, MAY 31,

NOVEMBER 30, MAY 31,

(Dollars in millions)

19 unchanged sentences

$ 7,981 $ 7,519

(1) Inventories as of August 31, 2024 and May 31, 2024, were substantially all finished goods.

AUGUST 31, MAY 31,

(1) Inventories as of November 30, 2024 and May 31, 2024, were substantially all finished goods.

NOVEMBER 30, MAY 31,

(Dollars in millions)

24 unchanged sentences

As part of this initiative, management streamlined the organization which resulted in a net reduction in the Company's global workforce.

During the three months ended August 31, 2024, the Company recognized an immaterial amount of pre-tax restructuring charges and made cash payments, primarily related to employee severance, of $ 217 million.

Cash payments related to the restructuring are expected to be substantially paid by the end of the first half of fiscal 2025.

As of August 31, 2024 and May 31, 2024, the amounts within Accrued liabilities on the Unaudited Condensed Consolidated Balance Sheets related to the pre-tax restructuring charges were $ 56 million and $ 267 million, respectively .

During the three and six months ended November 30, 2024, the Company recognized an immaterial amount of pre-tax restructuring charges and made cash payments related to employee severance of $ 22 million and $ 239 million, respectively.

As of November 30, 2024, cash payments related to the restructuring initiative are substantially complete.

As of May 31, 2024, $ 267 million of related pre-tax restructuring charges were reflected within Accrued liabilities on the Unaudited Condensed Consolidated Balance Sheets.

NOTE 13 — SUPPLIER FINANCE PROGRAMS

2 unchanged sentences

The Company's obligations to its suppliers, including amounts due and payment terms, are not affected by a supplier's decision to participate in these programs and the Company does not provide guarantees to third parties in connection with these programs.

As of August 31, 2024 and May 31, 2024, the Company had $ 970 million and $ 840 million, respectively, of outstanding supplier obligations confirmed as valid under these programs.

As of November 30, 2024 and May 31, 2024, the Company had $ 1,009 million and $ 840 million, respectively, of outstanding supplier obligations confirmed as valid under these programs.

These amounts are included within Accounts payable on the Unaudited Condensed Consolidated Balance Sheets.

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 1. Financial Statements