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Item 1. Financial Statements

2025-04-03 compared with 2025-01-03 · 115 added, 93 removed, 576 unchanged (27% of the section changed)

1 unchanged sentence

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

THREE MONTHS ENDED NINE MONTHS ENDED

(In millions, except per share data)

2024 2023 2024 2023

FEBRUARY 28, 2025 FEBRUARY 29, 2024 FEBRUARY 28, 2025 FEBRUARY 29, 2024

Revenues $ 11,269 $ 12,429 $ 35,212 $ 38,756

19 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

2024 2023 2024 2023

FEBRUARY 28, 2025 FEBRUARY 29, 2024 FEBRUARY 28, 2025 FEBRUARY 29, 2024

Net income $ 794 $ 1,172 $ 3,008 $ 4,200

7 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

NOVEMBER 30, MAY 31,

FEBRUARY 28, MAY 31,

(In millions)

32 unchanged sentences

Accumulated other comprehensive income (loss) 263 53

Retained earnings 54 965

Retained earnings (deficit)

Total shareholders' equity 14,007 14,430

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED NOVEMBER 30,

NINE MONTHS ENDED

(Dollars in millions)

FEBRUARY 28, 2025 FEBRUARY 29, 2024

Cash provided (used) by operations:

10 unchanged sentences

(Increase) decrease in prepaid expenses, operating lease right-of-use assets and other current and non-current assets

( 235 ) ( 342 )

Increase (decrease) in accounts payable, accrued liabilities, operating lease liabilities and other current and non-current liabilities ( 150 ) ( 213 )

23 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

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

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

CLASS A CLASS B

1 unchanged sentence

SHARES AMOUNT SHARES AMOUNT

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

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

Stock options exercised 1 55 55

6 unchanged sentences

Other comprehensive income (loss) 61 61

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

Balance at February 28, 2025 298 $ — 1,179 $ 3 $ 13,916 $ 263 $ ( 175 ) $ 14,007

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

CLASS A CLASS B

1 unchanged sentence

SHARES AMOUNT SHARES AMOUNT

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

Stock options exercised 2 135 135

6 unchanged sentences

Other comprehensive income (loss) 4 4

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

Balance at February 29, 2024 298 $ — 1,213 $ 3 $ 13,128 $ 125 $ 970 $ 14,226

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

CLASS A CLASS B

10 unchanged sentences

Other comprehensive income (loss) 210 210

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

Balance at February 28, 2025 298 $ — 1,179 $ 3 $ 13,916 $ 263 $ ( 175 ) $ 14,007

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

CLASS A CLASS B

11 unchanged sentences

Other comprehensive income (loss) ( 106 ) ( 106 )

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

Balance at February 29, 2024 298 $ — 1,213 $ 3 $ 13,128 $ 125 $ 970 $ 14,226

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

3 unchanged sentences

NOTE 3 Fair Value Measurements

NOTE 4 Short-Term Borrowings and Credit Lines

NOTE 5 Income Taxes

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

The results of operations for the three and nine months ended February 28, 2025, are not necessarily indicative of results to be expected for the entire fiscal year.

RECENTLY ISSUED ACCOUNTING STANDARDS AND DISCLOSURE RULES

1 unchanged sentence

Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses.

The amendments will require public entities to disclose significant segment expenses regularly provided to the chief operating decision maker and included within segment profit and loss.

The amendments are effective for the Company's annual periods beginning June 1, 2024, and interim periods beginning June 1, 2025, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements.

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

The amendments require public entities to disclose significant segment expenses regularly provided to the chief operating decision maker and included within segment profit and loss.

The amendments are effective for the Company's annual periods beginning June 1, 2024, and interim periods beginning June 1, 2025.

The Company will adopt the ASU on a retrospective basis in the Annual Report on Form 10-K for the fiscal year ending May 31, 2025.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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

In March 2024, the U.S.

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 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):

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Accrued liabilities included the following:

NOVEMBER 30, MAY 31,

FEBRUARY 28, MAY 31,

(Dollars in millions) 2025 2024

7 unchanged sentences

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 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

The following tables present information about the Company's financial assets measured at fair value on a recurring basis as of February 28, 2025 and May 31, 2024, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement:

FEBRUARY 28, 2025

(Dollars in millions)

18 unchanged sentences

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

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.

As of February 28, 2025, the Company held $ 845 million of available-for-sale debt securities with maturity dates within one year and $ 947 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 $ 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.

Included in Interest expense (income), net was interest income related to the Company's investment portfolio of $ 97 million and $ 113 million for the three months ended February 28, 2025 and February 29, 2024, respectively, and $ 314 million and $ 304 million for the nine months ended February 28, 2025 and February 29, 2024, 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:

NOVEMBER 30, 2024

FEBRUARY 28, 2025

DERIVATIVE ASSETS DERIVATIVE LIABILITIES

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TOTAL $ 641 $ 491 $ 150 $ 99 $ 86 $ 13

(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.

(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 $ 99 million as of February 28, 2025.

As of that date, the Company received $ 262 million of cash collateral and $ 37 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.

No collateral was posted on the derivative liability balance as of February 28, 2025.

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 $ 7,856 million at November 30, 2024 and $ 7,631 million at May 31, 2024.

The fair value of the Company's Long-term debt was approximately $ 7,825 million at February 28, 2025 and $ 7,631 million at May 31, 2024.

In March 2025, subsequent to the end of the third quarter of fiscal 2025, the Company repaid the $ 1.0 billion aggregate principal amount outstanding of its 2.40 % notes due 2025 at maturity.

NOTE 4 — SHORT-TERM BORROWINGS AND CREDIT LINES

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

As of February 28, 2025 and May 31, 2024, the Company had no borrowings outstanding under its $ 3 billion commercial paper program.

On March 7, 2025, subsequent to the end of the third quarter of fiscal 2025, the Company entered into a 364 -day committed credit facility agreement with a syndicate of banks, which provides for up to $ 1 billion of borrowings, with an option to increase borrowings up to $ 1.5 billion in total with lender approval.

The facility matures on March 6, 2026, with an option to extend the maturity date an additional 364 days.

This facility replaces the prior $ 1 billion 364 -day credit facility agreement entered into on March 8, 2024, which matured on March 7, 2025.

Based on the Company's current long-term senior unsecured debt ratings of AA- and A1 from Standard and Poor's Corporation and Moody's Investor Services, respectively, the interest rate charged on any outstanding borrowings would be the prevailing Term Secured Overnight Financing Rate (Term SOFR) for the applicable interest period plus 0.60 %.

The facility fee is 0.02 % of the total undrawn commitment.

As of April 3, 2025, no amounts were outstanding under this committed credit facility.

On March 7, 2025, the Company also entered into a five-year committed credit facility agreement with a syndicate of banks which provides for up to $ 2 billion of borrowings, with the option to increase borrowings up to $ 3 billion in total with lender approval.

The facility matures on March 7, 2030, with options to extend the maturity date up to an additional two years .

This facility replaces the prior $ 2 billion five-year credit facility agreement entered into on March 11, 2022, which would have matured on March 11, 2027.

Based on the Company's current long-term senior unsecured debt ratings of AA- and A1 from Standard and Poor's Corporation and Moody's Investor Services, respectively, the interest rate charged on any outstanding borrowings would be the prevailing Term SOFR for the applicable interest period plus 0.60 %.

The facility fee is 0.04 % of the total undrawn commitment.

As of April 3, 2025, no amounts were outstanding under this committed credit facility.

NOTE 5 — INCOME TAXES

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.

The effective tax rate was 15.7 % and 15.6 % for the nine months ended February 28, 2025 and February 29, 2024, respectively.

The increase in the Company's effective tax rate was primarily due to decreased benefits from stock-based compensation and one-time benefits recognized in the first nine 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.

These impacts were largely offset by a one-time, non-cash deferred tax benefit recognized in the third quarter of fiscal 2025 provided by recently finalized U.S.

tax regulations.

On December 10, 2024, the U.S.

Department of Treasury published final regulations related to Internal Revenue Code ("IRC") Section 987 foreign currency gains and losses derived from translation of the operations, assets and liabilities of non-U.S.

qualified business units.

While these regulations are effective for the Company beginning June 1, 2025, they require computation of a pre-transition foreign currency gain or loss to be included in the determination of future taxable income or loss.

Based on the Company’s current analysis of the regulations and recognition of temporary differences impacting U.S.

taxation of foreign earnings under Subpart F of the Internal Revenue Code, the Company recognized a non-cash deferred income tax benefit of $ 133 million related to pre-transition foreign currency losses expected to reduce taxable income in future periods.

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 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.

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 nine months of fiscal 2025 and are not expected to for fiscal 2025.

As of February 28, 2025, total gross unrecognized tax benefits, excluding related interest and penalties, were $ 1,004 million, $ 737 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 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.

As of February 28, 2025 and May 31, 2024, accrued interest and penalties

related to uncertain tax positions were $ 363 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.

The Company is currently under audit by the U.S.

IRS for fiscal years 2017 through 2019.

Internal Revenue Service ("IRS") for fiscal years 2017 through 2023.

The Company has closed all U.S.

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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 $ 226 million within the next 12 months primarily as a result of the expected resolution with the IRS of certain U.S.

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

federal income 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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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 NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

2024 2023 2024 2023

FEBRUARY 28, 2025 FEBRUARY 29, 2024 FEBRUARY 28, 2025 FEBRUARY 29, 2024

Stock options (1)

7 unchanged sentences

STOCK OPTIONS

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.

As of February 28, 2025, the Company had $ 468 million of unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized within Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.5 years.

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

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.

As of February 28, 2025, the Company had $ 696 million of unrecognized compensation costs from restricted stock and restricted stock units, net of estimated forfeitures, to be recognized within Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.6 years.

NOTE 7 — 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 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,

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 77.1 million and 40.9 million shares of common stock outstanding for the three months ended February 28, 2025 and February 29, 2024, respectively, and 75.3 million and 42.6 million shares of common stock outstanding for the nine months ended February 28, 2025 and February 29, 2024, respectively, because the awards were assumed to be anti-dilutive.

THREE MONTHS ENDED NINE MONTHS ENDED

(In millions, except per share data)

2024 2023 2024 2023

FEBRUARY 28, 2025 FEBRUARY 29, 2024 FEBRUARY 28, 2025 FEBRUARY 29, 2024

Net income available to common stockholders $ 794 $ 1,172 $ 3,008 $ 4,200

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 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.

As of and for the three and nine months ended February 28, 2025, 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 February 28, 2025, are designated as foreign currency cash flow hedges, primarily for Euro/U.S.

Dollar, Chinese Yuan/U.S.

4 unchanged sentences

DERIVATIVE ASSETS

BALANCE SHEET LOCATION NOVEMBER 30, MAY 31,

BALANCE SHEET LOCATION FEBRUARY 28, MAY 31,

(Dollars in millions)

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DERIVATIVE LIABILITIES

BALANCE SHEET LOCATION NOVEMBER 30, MAY 31,

BALANCE SHEET LOCATION FEBRUARY 28, MAY 31,

(Dollars in millions)

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INCOME (LOSS) INTO INCOME (1)

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

THREE MONTHS ENDED LOCATION OF GAIN (LOSS)

RECLASSIFIED FROM ACCUMULATED

OTHER COMPREHENSIVE INCOME

(LOSS) INTO INCOME THREE MONTHS ENDED NOVEMBER 30,

2024 2023 2024 2023

(LOSS) INTO INCOME THREE MONTHS ENDED

FEBRUARY 28, 2025 FEBRUARY 29, 2024 FEBRUARY 28, 2025 FEBRUARY 29, 2024

Derivatives designated as cash flow hedges:

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TOTAL DESIGNATED CASH FLOW HEDGES $ 216 $ 152 $ 97 $ 111

(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.

(1) For the three months ended February 28, 2025 and February 29, 2024, 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.

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INCOME (LOSS) INTO INCOME (1)

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

NINE MONTHS ENDED LOCATION OF GAIN (LOSS)

RECLASSIFIED FROM ACCUMULATED

OTHER COMPREHENSIVE INCOME

(LOSS) INTO INCOME SIX MONTHS ENDED NOVEMBER 30,

2024 2023 2024 2023

(LOSS) INTO INCOME NINE MONTHS ENDED

FEBRUARY 28, 2025 FEBRUARY 29, 2024 FEBRUARY 28, 2025 FEBRUARY 29, 2024

Derivatives designated as cash flow hedges:

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TOTAL DESIGNATED CASH FLOW HEDGES $ 569 $ 179 $ 213 $ 347

(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.

(1) For the nine months ended February 28, 2025 and February 29, 2024, 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.

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ON DERIVATIVES

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

2024 2023 2024 2023

FEBRUARY 28, 2025 FEBRUARY 29, 2024 FEBRUARY 28, 2025 FEBRUARY 29, 2024

Derivatives not designated as hedging instruments:

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CASH FLOW HEDGES

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.

The total notional amount of outstanding foreign currency derivatives designated as cash flow hedges was approximately $ 14.7 billion and $ 16.2 billion as of February 28, 2025 and May 31, 2024, respectively.

Approximately $ 471 million of deferred net gains (net of tax) on both outstanding and matured derivatives in Accumulated other comprehensive income (loss) as of February 28, 2025, 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 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.

As of February 28, 2025, the maximum term over which the Company hedges exposures to the variability of cash flows for its forecasted transactions was 27 months.

FAIR VALUE HEDGES

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.

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 February 28, 2025 and May 31, 2024, respectively.

UNDESIGNATED DERIVATIVE INSTRUMENTS

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.

The total notional amount of outstanding undesignated derivative instruments was $ 3.3 billion and $ 4.4 billion as of February 28, 2025 and May 31, 2024, respectively.

As of February 28, 2025, 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 August 31, 2024 $ ( 118 ) $ 20 $ 115 $ ( 44 ) $ ( 27 )

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

Other comprehensive income (loss):

4 unchanged sentences

Total other comprehensive income (loss) ( 57 ) 119 — ( 1 ) 61

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

Balance at February 28, 2025 $ ( 399 ) $ 589 $ 115 $ ( 42 ) $ 263

(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.

4 unchanged sentences

CASH FLOW HEDGES NET INVESTMENT HEDGES (1)

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

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

Other comprehensive income (loss):

4 unchanged sentences

Total other comprehensive income (loss) ( 57 ) 50 — 11 4

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

Balance at February 29, 2024 $ ( 235 ) $ 292 $ 115 $ ( 47 ) $ 125

10 unchanged sentences

Total other comprehensive income (loss) ( 143 ) 342 — 11 210

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

Balance at February 28, 2025 $ ( 399 ) $ 589 $ 115 $ ( 42 ) $ 263

11 unchanged sentences

Total other comprehensive income (loss) 18 ( 139 ) — 15 ( 106 )

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

Balance at February 29, 2024 $ ( 235 ) $ 292 $ 115 $ ( 47 ) $ 125

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 NOVEMBER 30, 2024

THREE MONTHS ENDED FEBRUARY 28, 2025

(Dollars in millions)

9 unchanged sentences

TOTAL REVENUES $ 4,864 $ 2,811 $ 1,733 $ 1,470 $ 12 $ 10,890 $ 405 $ ( 26 ) $ 11,269

THREE MONTHS ENDED NOVEMBER 30, 2023

THREE MONTHS ENDED FEBRUARY 29, 2024

(Dollars in millions)

9 unchanged sentences

TOTAL REVENUES $ 5,070 $ 3,138 $ 2,084 $ 1,647 $ 9 $ 11,948 $ 495 $ ( 14 ) $ 12,429

SIX MONTHS ENDED NOVEMBER 30, 2024

NINE MONTHS ENDED FEBRUARY 28, 2025

(Dollars in millions)

9 unchanged sentences

TOTAL REVENUES $ 14,869 $ 9,257 $ 5,110 $ 4,676 $ 39 $ 33,951 $ 1,335 $ ( 74 ) $ 35,212

SIX MONTHS ENDED NOVEMBER 30, 2023

NINE MONTHS ENDED FEBRUARY 29, 2024

(Dollars in millions)

12 unchanged sentences

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 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.

As of February 28, 2025 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 11 — 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 NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

2024 2023 2024 2023

FEBRUARY 28, 2025 FEBRUARY 29, 2024 FEBRUARY 28, 2025 FEBRUARY 29, 2024

North America $ 4,864 $ 5,070 $ 14,869 $ 16,118

19 unchanged sentences

INCOME BEFORE INCOME TAXES $ 844 $ 1,404 $ 3,567 $ 4,974

NOVEMBER 30, MAY 31,

FEBRUARY 28, MAY 31,

(Dollars in millions)

19 unchanged sentences

$ 7,539 $ 7,519

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

NOVEMBER 30, MAY 31,

(1) Inventories as of February 28, 2025 and May 31, 2024, were substantially all finished goods.

FEBRUARY 28, MAY 31,

(Dollars in millions)

16 unchanged sentences

BELGIAN CUSTOMS CLAIM

The Company has received claims for certain years from Belgian Customs and other government authorities for alleged underpaid duties related to products imported beginning in fiscal 2018.

The Company has received claims for certain years from Belgian Customs for alleged underpaid duties related to products imported beginning in fiscal 2018.

The Company disputes these claims and has engaged in the appellate process.

5 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 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.

During the third quarter of fiscal 2024, the Company recognized pre-tax restructuring charges of $ 403 million, with $ 379 million primarily related to employee severance costs and $ 24 million related to accelerated stock-based compensation.

Of the $ 403 million pre-tax restructuring charges, $ 340 million was classified within Operating overhead expense and $ 63 million was classified within Cost of sales.

As of the second quarter of fiscal 2025, the restructuring initiative was substantially complete.

During the nine months ended February 28, 2025, the Company made cash payments of $ 243 million related to employee severance.

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.

3 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 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.

As of February 28, 2025 and May 31, 2024, the Company had $ 1,050 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