NIKE, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Management of NIKE, Inc. is responsible for the information and representations contained in this Annual Report. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") and include certain amounts based on our best estimates and judgments. Other financial information in this Annual Report is consistent with these financial statements. Our accounting systems include controls designed to reasonably assure assets are safeguarded from unauthorized use or disposition and provide for the preparation of financial statements in conformity with U.S. GAAP. These systems are supplemented by the selection and training of qualified financial personnel and an organizational structure providing for appropriate segregation of duties. An internal corporate audit department reviews the results of its work with the Audit & Finance Committee of the Board of Directors, presently comprised of three outside, independent directors. The Audit & Finance Committee is responsible for the appointment of the independent registered public accounting firm and reviews, with the independent registered public accounting firm, management and the internal corporate audit staff, the scope and the results of the annual audit, the effectiveness of the accounting control system and other matters relating to the financial affairs of NIKE as the Audit & Finance Committee deems appropriate. The independent registered public accounting firm and the internal corporate auditors have full access to the Audit & Finance Committee, with and without the presence of management, to discuss any appropriate matters. 2025 FORM 10-K 52 Table of Contents MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13(a) - 15(f) and Rule 15(d) - 15(f) of the Securities Exchange Act of 1934, as amended. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets of the Company that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the results of our evaluation, our management concluded that our internal control over financial reporting was effective as of May 31, 2025. PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited (1) the Consolidated Financial Statements and (2) the effectiveness of our internal control over financial reporting as of May 31, 2025, as stated in their report herein. Elliott Hill Matthew Friend President and Chief Executive Officer Executive Vice President and Chief Financial Officer 2025 FORM 10-K 53 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of NIKE, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of NIKE, Inc. and its subsidiaries (the "Company") as of May 31, 2025 and 2024, and the related consolidated statements of income, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended May 31, 2025, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of May 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of May 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended May 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate . 2025 FORM 10-K 54 Table of Contents Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Accounting for Income Taxes As described in Notes 1 and 7 to the consolidated financial statements, the Company is subject to taxation in the United States, as well as various state and foreign jurisdictions. The Company accounts for income taxes using the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. As disclosed by management, the determination of the provision for income taxes by management requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Furthermore, as part of determining its provision for income taxes, management evaluates the probability a tax position will be effectively sustained and the appropriateness of the amount recognized for uncertain tax positions based on factors including changes in facts or circumstances, changes in tax law, settled audit issues and new audit activity. The Company recognizes a tax benefit from uncertain tax positions in the consolidated financial statements only when it is more likely than not the position will be sustained upon examination by relevant tax authorities. 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 consolidated balance sheets. The Company recorded income tax expense of $666 million for the year ended May 31, 2025. As of May 31, 2025, total gross unrecognized tax benefits, excluding related interest and penalties, were $1,026 million, of which $738 million would affect the Company's effective tax rate if recognized in future periods. The principal considerations for our determination that performing procedures relating to the accounting for income taxes is a critical audit matter are (i) the significant judgment by management when determining the provision for income taxes and interpreting and applying complex tax laws as it relates to determining the provision for income taxes and uncertain tax positions; (ii) a high degree of auditor judgment and effort in performing procedures and evaluating audit evidence related to management’s interpretation and application of complex tax laws as it relates to the determination of the provision for income taxes and the assessment of whether tax positions are more likely than not to be sustained; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to income taxes. These procedures also included, among others (i) testing the provision for income taxes, which included the effective tax rate reconciliation and assessing management’s interpretation and application of complex tax laws; (ii) evaluating the completeness of management’s identification of uncertain tax positions by considering changes in facts or circumstances, changes in and compliance with tax laws, settled audit issues, new authoritative cases, or new audit activity, where applicable; and (iii) for certain tax positions, evaluating management’s assessment of the technical merits of the tax positions by obtaining and inspecting third party income tax documentation. Professionals with specialized skill and knowledge were used to assist in evaluating (i) changes in and compliance with the tax laws; (ii) management’s interpretation and application of certain complex tax laws as it relates to the determination of the provision for income taxes; and (iii) the reasonableness of management's assessment of whether certain tax positions are more likely than not of being sustained. /s/ PricewaterhouseCoopers LLP Portland, Oregon July 17, 2025 We have served as the Company's auditor since 1974. 2025 FORM 10-K 55 Table of Contents NIKE, INC. CONSOLIDATED STATEMENTS OF INCOME YEAR ENDED MAY 31, (In millions, except per share data) 2025 2024 2023 Revenues $ 46,309 $ 51,362 $ 51,217 Cost of sales 26,519 28,475 28,925 Gross profit 19,790 22,887 22,292 Demand creation expense 4,689 4,285 4,060 Operating overhead expense 11,399 12,291 12,317 Total selling and administrative expense 16,088 16,576 16,377 Interest expense (income), net ( 107 ) ( 161 ) ( 6 ) Other (income) expense, net ( 76 ) ( 228 ) ( 280 ) Income before income taxes 3,885 6,700 6,201 Income tax expense 666 1,000 1,131 NET INCOME $ 3,219 $ 5,700 $ 5,070 Earnings per common share: Basic $ 2.17 $ 3.76 $ 3.27 Diluted $ 2.16 $ 3.73 $ 3.23 Weighted average common shares outstanding: Basic 1,484.9 1,517.6 1,551.6 Diluted 1,487.6 1,529.7 1,569.8 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. 2025 FORM 10-K 56 Table of Contents NIKE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEAR ENDED MAY 31, (Dollars in millions) 2025 2024 2023 Net income $ 3,219 $ 5,700 $ 5,070 Other comprehensive income (loss), net of tax: Change in net foreign currency translation adjustment 142 ( 3 ) 267 Change in net gains (losses) on cash flow hedges ( 454 ) ( 184 ) ( 348 ) Change in net gains (losses) on other 1 9 ( 6 ) Total other comprehensive income (loss), net of tax ( 311 ) ( 178 ) ( 87 ) TOTAL COMPREHENSIVE INCOME $ 2,908 $ 5,522 $ 4,983 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. 2025 FORM 10-K 57 Table of Contents NIKE, INC. CONSOLIDATED BALANCE SHEETS MAY 31, (In millions) 2025 2024 ASSETS Current assets: Cash and equivalents $ 7,464 $ 9,860 Short-term investments 1,687 1,722 Accounts receivable, net 4,717 4,427 Inventories 7,489 7,519 Prepaid expenses and other current assets 2,005 1,854 Total current assets 23,362 25,382 Property, plant and equipment, net 4,828 5,000 Operating lease right-of-use assets, net 2,712 2,718 Identifiable intangible assets, net 259 259 Goodwill 240 240 Deferred income taxes and other assets 5,178 4,511 TOTAL ASSETS $ 36,579 $ 38,110 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ — $ 1,000 Notes payable 5 6 Accounts payable 3,479 2,851 Current portion of operating lease liabilities 502 477 Accrued liabilities 5,911 5,725 Income taxes payable 669 534 Total current liabilities 10,566 10,593 Long-term debt 7,961 7,903 Operating lease liabilities 2,550 2,566 Deferred income taxes and other liabilities 2,289 2,618 Commitments and contingencies (Note 16) Redeemable preferred stock — — Shareholders' equity: Common stock at stated value: Class A convertible — 290 and 298 shares outstanding — — Class B — 1,186 and 1,205 shares outstanding 3 3 Capital in excess of stated value 14,195 13,409 Accumulated other comprehensive income (loss) ( 258 ) 53 Retained earnings (deficit) ( 727 ) 965 Total shareholders' equity 13,213 14,430 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 36,579 $ 38,110 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. 2025 FORM 10-K 58 Table of Contents NIKE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS YEAR ENDED MAY 31, (Dollars in millions) 2025 2024 2023 Cash provided (used) by operations: Net income $ 3,219 $ 5,700 $ 5,070 Adjustments to reconcile net income to net cash provided (used) by operations: Depreciation and amortization 775 796 703 Deferred income taxes ( 288 ) ( 497 ) ( 117 ) Stock-based compensation 709 804 755 Impairment and other 33 48 156 Net foreign currency adjustments 37 ( 138 ) ( 213 ) Changes in certain working capital components and other assets and liabilities: (Increase) decrease in accounts receivable ( 257 ) ( 329 ) 489 (Increase) decrease in inventories 120 908 ( 133 ) (Increase) decrease in prepaid expenses, operating lease right-of-use assets and other current and non-current assets ( 224 ) ( 260 ) ( 644 ) Increase (decrease) in accounts payable, accrued liabilities, operating lease liabilities and other current and non-current liabilities ( 426 ) 397 ( 225 ) Cash provided (used) by operations 3,698 7,429 5,841 Cash provided (used) by investing activities: Purchases of short-term investments ( 3,234 ) ( 4,767 ) ( 6,059 ) Maturities of short-term investments 319 2,269 3,356 Sales of short-term investments 3,062 4,219 4,184 Additions to property, plant and equipment ( 430 ) ( 812 ) ( 969 ) Other investing activities 8 ( 15 ) 52 Cash provided (used) by investing activities ( 275 ) 894 564 Cash provided (used) by financing activities: Increase (decrease) in notes payable, net ( 1 ) — ( 4 ) Repayment of borrowings ( 1,000 ) — ( 500 ) Proceeds from exercise of stock options and other stock issuances 551 667 651 Repurchase of common stock ( 2,985 ) ( 4,250 ) ( 5,480 ) Dividends — common and preferred ( 2,300 ) ( 2,169 ) ( 2,012 ) Other financing activities ( 85 ) ( 136 ) ( 102 ) Cash provided (used) by financing activities ( 5,820 ) ( 5,888 ) ( 7,447 ) Effect of exchange rate changes on cash and equivalents 1 ( 16 ) ( 91 ) Net increase (decrease) in cash and equivalents ( 2,396 ) 2,419 ( 1,133 ) Cash and equivalents, beginning of year 9,860 7,441 8,574 CASH AND EQUIVALENTS, END OF YEAR $ 7,464 $ 9,860 $ 7,441 Supplemental disclosure of cash flow information: Cash paid during the year for: Interest, net of capitalized interest $ 389 $ 381 $ 347 Income taxes 1,226 1,299 1,517 Non-cash additions to property, plant and equipment 184 160 211 Dividends declared and not paid 593 558 524 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. 2025 FORM 10-K 59 Table of Contents NIKE, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY COMMON STOCK CAPITAL IN EXCESS OF STATED VALUE ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) RETAINED EARNINGS (DEFICIT) TOTAL CLASS A CLASS B (In millions, except per share data) SHARES AMOUNT SHARES AMOUNT Balance at May 31, 2022 305 $ — 1,266 $ 3 $ 11,484 $ 318 $ 3,476 $ 15,281 Stock options exercised 8 421 421 Conversion to Class B Common Stock — — — Repurchase of Class B Common Stock ( 51 ) ( 378 ) ( 5,131 ) ( 5,509 ) Dividends on common stock ($ 1.325 per share) and preferred stock ($ 0.10 per share) ( 2,059 ) ( 2,059 ) Issuance of shares to employees, net of shares withheld for employee taxes 4 130 2 132 Stock-based compensation 755 755 Net income 5,070 5,070 Other comprehensive income (loss) ( 87 ) ( 87 ) Balance at May 31, 2023 305 $ — 1,227 $ 3 $ 12,412 $ 231 $ 1,358 $ 14,004 Stock options exercised 7 432 432 Conversion to Class B Common Stock ( 7 ) 7 — Repurchase of Class B Common Stock ( 41 ) ( 347 ) ( 3,907 ) ( 4,254 ) Dividends on common stock ($ 1.450 per share) and preferred stock ($ 0.10 per share) ( 2,203 ) ( 2,203 ) Issuance of shares to employees, net of shares withheld for employee taxes 5 108 17 125 Stock-based compensation 804 804 Net income 5,700 5,700 Other comprehensive income (loss) ( 178 ) ( 178 ) Balance at May 31, 2024 298 $ — 1,205 $ 3 $ 13,409 $ 53 $ 965 $ 14,430 Stock options exercised 6 315 315 Conversion to Class B Common Stock ( 8 ) 8 — Repurchase of Class B Common Stock ( 38 ) ( 342 ) ( 2,613 ) ( 2,955 ) Dividends on common stock ($ 1.570 per share) and preferred stock ($ 0.10 per share) ( 2,337 ) ( 2,337 ) Issuance of shares to employees, net of shares withheld for employee taxes 5 104 39 143 Stock-based compensation 709 709 Net income 3,219 3,219 Other comprehensive income (loss) ( 311 ) ( 311 ) Balance at May 31, 2025 290 $ — 1,186 $ 3 $ 14,195 $ ( 258 ) $ ( 727 ) $ 13,213 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. 2025 FORM 10-K 60 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 Summary of Significant Accounting Policies 62 Note 2 Property, Plant and Equipment 68 Note 3 Accrued Liabilities 68 Note 4 Fair Value Measurements 69 Note 5 Short-Term Borrowings and Credit Lines 70 Note 6 Long-Term Debt 71 Note 7 Income Taxes 72 Note 8 Redeemable Preferred Stock 75 Note 9 Common Stock and Stock-Based Compensation 75 Note 10 Earnings Per Share 77 Note 11 Benefit Plans 77 Note 12 Risk Management and Derivatives 78 Note 13 Accumulated Other Comprehensive Income (Loss) 81 Note 14 Revenues 82 Note 15 Segment Information 84 Note 16 Commitments and Contingencies 87 Note 17 Leases 87 Note 18 Restructuring 88 Note 19 Supplier Finance Pr ograms 88 2025 FORM 10-K 61 Table of Contents NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF BUSINESS NIKE, Inc. is a worldwide leader in the design, development and worldwide marketing and selling of athletic footwear, apparel, equipment, accessories and services. NIKE, Inc. portfolio brands include the NIKE Brand, Jordan Brand and Converse. The NIKE Brand is focused on performance athletic footwear, apparel, equipment, accessories and services across Men's, Women's and Kids', amplified with sport-inspired lifestyle products carrying the Swoosh trademark, as well as other NIKE Brand trademarks. The Jordan Brand is focused on athletic and casual footwear, apparel and accessories using the Jumpman trademark. Sales and operating results of Jordan Brand products are reported within the respective NIKE Brand geographic operating segments. Converse designs, distributes, licenses and sells casual sneakers, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell trademarks. In some markets outside the U.S., these trademarks are licensed to third parties who design, distribute, market and sell similar products. Operating results of the Converse brand are reported on a stand-alone basis. BASIS OF CONSOLIDATION The Consolidated Financial Statements include the accounts of NIKE, Inc. and its subsidiaries (the "Company" or "NIKE"). All significant intercompany transactions and balances have been eliminated. MANAGEMENT ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, including estimates relating to assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. REVENUE RECOGNITION Revenue transactions associated with the sale of NIKE Brand footwear, apparel and equipment, as well as Converse products, comprise a single performance obligation, which consists of the sale of products to customers either through wholesale or direct to consumer channels. The Company satisfies the performance obligation and records revenues when transfer of control to the customer has occurred, based on the terms of sale. A customer is considered to have control once they are able to direct the use and receive substantially all of the benefits of the product. Control is transferred to wholesale customers upon shipment or upon receipt depending on the country of the sale and the arrangement with the customer. Control transfers to retail store customers at the time of sale and to substantially all digital commerce customers upon shipment. The transaction price is determined based upon the invoiced sales price, less anticipated sales returns, discounts and claims from customers. Payment terms for wholesale transactions depend on the agreement with the customer, which may be governed by the country of sale, and payment is generally required within 90 days or less of shipment to or receipt by the wholesale customer. Payment is due at the time of sale for retail store and digital commerce transactions. Consideration for trademark licensing contracts is earned through sales-based or usage-based royalty arrangements, and the associated revenues are recognized over the license period as earned. Taxes assessed by governmental authorities that are both imposed on and concurrent with a specific revenue-producing transaction, and are collected by the Company from a customer, are excluded from Revenues and Cost of sales in the Consolidated Statements of Income. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in Cost of sales when the related revenues are recognized. SALES-RELATED RESERVES Consideration promised in the Company's contracts with customers is variable due to anticipated reductions, such as sales returns, discounts and claims from customers. The Company estimates the most likely amount it will be entitled to receive and records an anticipated reduction against Revenues, with an offsetting increase to Accrued liabilities at the time revenues are recognized. The related estimated cost of inventory for product returns is recorded as a reduction to Cost of sales with an offsetting increase to Prepaid expenses and other current assets. The provision for anticipated sales returns consists of both contractual return rights and discretionary authorized returns. Provisions for post-invoice sales discounts consist of both contractual programs and discretionary discounts that are expected to be granted at a later date. 2025 FORM 10-K 62 Table of Contents Estimates of discretionary authorized returns, discounts and claims are based on (1) historical rates, (2) specific identification of outstanding returns not yet received from customers and outstanding discounts and claims and (3) estimated returns, discounts and claims expected but not yet finalized with customers. Actual returns, discounts and claims in any future period are inherently uncertain and thus may differ from estimates recorded. If actual or expected future returns, discounts or claims are significantly greater or lower than the reserves established, a reduction or increase to net Revenues is recorded in the period in which such determination is made. COST OF SALES Cost of sales consists primarily of inventory costs, as well as warehousing costs (including the cost of warehouse labor), shipping and handling costs, third-party royalties, certain foreign currency hedge gains and losses and product design costs. DEMAND CREATION EXPENSE Demand creation expense consists of brand marketing expense and sports marketing expense. Brand marketing expense includes advertising and promotion costs such as production and media costs, digital marketing expense, brand events and retail brand presentation costs. Advertising production costs are expensed the first time an advertisement is run. Advertising media costs are expensed when the advertisement appears. Costs related to brand events are expensed when the event occurs. Costs related to retail brand presentation are expensed when the presentation is complete and delivered. Sports marketing expense includes expenses related to endorsement contracts, complimentary product and sports marketing events. A significant amount of the Company's promotional expenses result from payments under endorsement contracts. In general, endorsement payments are expensed on a straight-line basis over the term of the contract. However, certain contracts contain elements that may be accounted for differently based upon the facts and circumstances of each individual contract. Prepayments made under contracts are included in Prepaid expenses and other current assets or Deferred income taxes and other assets depending on the period to which the prepayment applies. Certain contracts provide for contingent payments to endorsers based upon specific achievements in their sport (e.g., winning a championship). The Company records Demand creation expense for these amounts when the endorser achieves the specific goal. Certain contracts provide for variable payments based upon endorsers maintaining a level of performance in their sport over an extended period of time (e.g., maintaining a specified ranking in a sport for a year). When the Company determines payments are probable, the amounts are reported in Demand creation expense ratably over the contract period based on the Company's best estimate of the endorser's performance. In these instances, to the extent actual payments to the endorser differ from the Company's estimate due to changes in the endorser's performance, adjustments to Demand creation expense may be recorded in a future period. Certain contracts provide for royalty payments to endorsers based upon a predetermined percent of sales of particular products, which the Company records in Cost of sales as the related sales occur. For contracts containing minimum guaranteed royalty payments, the Company records the amount of any guaranteed payment in excess of that earned through sales of product within Demand creation expense. Through cooperative advertising programs, the Company reimburses its wholesale customers for certain costs of advertising the Company's products. To the extent the Company receives a distinct good or service in exchange for consideration paid to the customer that does not exceed the fair value of that good or service, the amounts reimbursed are recorded in Demand creation expense. Total Demand creation expense was $ 4,689 million, $ 4,285 million and $ 4,060 million for the years ended May 31, 2025, 2024 and 2023, respectively. Prepaid demand creation expenses totaled $ 1,333 million and $ 814 million at May 31, 2025 and 2024, respectively, of which $ 498 million and $ 420 million, respectively, were recorded in Prepaid expenses and other current assets, and $ 835 million and $ 394 million, respectively, were recorded in Deferred income taxes and other assets. OPERATING OVERHEAD EXPENSE Operating overhead expense consists primarily of wage and benefit-related expenses and other administrative expenses, such as research and development costs, bad debt expense, rent, depreciation and amortization and costs related to professional services, certain technology investments, meetings and travel. 2025 FORM 10-K 63 Table of Contents CASH AND EQUIVALENTS Cash and equivalents represent cash and short-term, highly liquid investments, that are both readily convertible to known amounts of cash and so near their maturity they present insignificant risk of changes in value because of changes in interest rates, with maturities three months or less at the date of purchase. SHORT-TERM INVESTMENTS Short-term investments consist of highly liquid investments with maturities over three months at the date of purchase. At May 31, 2025 and 2024, Short-term investments consisted of available-for-sale debt securities, which are recorded at fair value with unrealized gains and losses reported, net of tax, in Accumulated other comprehensive income (loss), unless unrealized losses are determined to be unrecoverable. Realized gains and losses on the sale of securities are determined by specific identification. The Company considers all available-for-sale debt securities, including those with maturity dates beyond 12 months, as available to support current operational liquidity needs and, therefore, classifies all securities with maturity dates beyond three months at the date of purchase as current assets within Short-term investments on the Consolidated Balance Sheets. Refer to Note 4 — Fair Value Measurements for more information on the Company's Short-term investments. ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS RECEIVABLE Accounts receivable, net consist primarily of amounts due from customers. The Company makes ongoing estimates relating to the collectability of its accounts receivable and maintains an allowance for expected losses resulting from the inability of its customers to make required payments. In addition to judgments about the creditworthiness of significant customers based on ongoing credit evaluations, the Company considers historical levels of credit losses, as well as macroeconomic and industry trends to determine the amount of the allowance. The allowance for uncollectible accounts receivable was $ 27 million and $ 35 million as of May 31, 2025 and 2024, respectively. INVENTORY VALUATION Inventory costs primarily consist of product cost from the Company's suppliers, as well as inbound freight, import duties, taxes, insurance, logistics and other handling fees. Inventories, substantially all of which are finished goods, are stated at lower of cost and net realizable value and valued on either an average or a specific identification cost basis. In some instances, the Company ships products directly from its suppliers to the customer, with the related inventory and cost of sales recognized on a specific identification basis. If the net realizable value of inventory is estimated to be less than the cost of the inventory, a reserve is recorded equal to the difference between the cost of the inventory and the estimated net realizable value. This reserve is recorded as a charge to Cost of sales. As of May 31, 2025, the Company's inventory reserve was $ 233 million compared to $ 155 million as of May 31, 2024. PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION Property, plant and equipment are recorded at cost. Depreciation is determined on a straight-line basis for land improvements, buildings and leasehold improvements over 2 to 40 years and for machinery and equipment over 2 to 15 years. Depreciation of assets used in manufacturing, warehousing and product distribution are recorded in Cost of sales. Depreciation of all other assets are recorded in Operating overhead expense. SOFTWARE DEVELOPMENT COSTS Expenditures for major software purchases and software developed for internal use are capitalized and amortized over 2 to 12 years on a straight-line basis, once ready for their intended use. The Company's policy provides for the capitalization of external direct costs associated with developing or obtaining internal use computer software. The Company also capitalizes certain payroll and payroll-related costs for employees who are directly associated with internal use computer software projects. The amount of capitalizable payroll costs with respect to these employees is limited to the time directly spent on such projects. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred. 2025 FORM 10-K 64 Table of Contents IMPAIRMENT OF LONG-LIVED ASSETS The Company reviews the carrying value of long-lived assets or asset groups to be used in operations whenever events or changes in circumstances indicate the carrying amount of the assets might not be recoverable. Factors that would necessitate an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or the business climate that could affect the value of the asset or a significant decline in the observable market value of an asset, among others. If such facts indicate a potential impairment, the Company would assess the recoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life of the primary asset in the asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable, the Company will estimate the fair value of the asset group using appropriate valuation methodologies, which would typically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the asset group's carrying amount and its estimated fair value. GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS The Company performs annual impairment tests on goodwill and intangible assets with indefinite lives in the fourth quarter of each fiscal year or when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit or an intangible asset with an indefinite life below its carrying value. For purposes of testing goodwill for impairment, the Company allocates goodwill across its reporting units, which are considered the Company's operating segments. For both goodwill and indefinite-lived intangible assets, which primarily consist of acquired trade names and trademarks, the Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit or an intangible asset with an indefinite life is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company determines it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is greater than its carrying amount, an impairment test is unnecessary. If an impairment test is necessary, the Company will estimate the fair value of the related reporting unit or indefinite-lived intangible asset. If the carrying value of a reporting unit or indefinite-lived intangible asset exceeds its fair value, the goodwill of that reporting unit or indefinite-lived intangible asset is determined to be impaired and the Company will record an impairment charge equal to the excess of the carrying value over the related fair value. There were no impairment losses for the year ended May 31, 2025, and an immaterial amount of accumulated impairment losses as of May 31, 2024. OPERATING LEASES The Company primarily leases retail store space, certain distribution and warehouse facilities, office space, equipment and other non-real estate assets. The Company determines if an arrangement is a lease at inception and begins recording lease activity at the commencement date, which is generally the date in which the Company takes possession of or controls the physical use of the asset. Lease components are not separated from non-lease components for real estate leases within the Company's lease portfolio. Right-of-use ("ROU") assets and lease liabilities are recognized based on the present value of lease payments over the lease term with lease expense recognized on a straight-line basis. The Company's incremental borrowing rate is used to determine the present value of future lease payments unless the implicit rate is readily determinable. Lease agreements may contain rent escalation clauses, renewal or termination options, rent holidays or certain landlord incentives, including tenant improvement allowances. ROU assets include amounts for scheduled rent increases and are reduced by the amount of lease incentives. The lease term includes the non-cancelable period of the lease and options to extend or terminate the lease when it is reasonably certain the Company will exercise those options. The Company does not record leases with an initial term of 12 months or less on the Consolidated Balance Sheets and recognizes related lease payments in the Consolidated Statements of Income on a straight-line basis over the lease term. Certain lease agreements include variable lease payments, which are based on a percent of retail sales over specified levels or adjust periodically for inflation as a result of changes in a published index, primarily the Consumer Price Index, and are expensed as incurred. FAIR VALUE MEASUREMENTS The Company measures certain financial assets and liabilities at fair value on a recurring basis, including derivatives, equity securities and available-for-sale debt securities. Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. The Company uses a three-level hierarchy that prioritizes fair value measurements based on the types of inputs used, as follows: 2025 FORM 10-K 65 Table of Contents • Level 1: Quoted prices in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. • Level 3: Unobservable inputs with little or no market data available, which require the reporting entity to develop its own assumptions. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Financial assets and liabilities are classified in their entirety based on the most conservative level of input that is significant to the fair value measurement. Pricing vendors are utilized for a majority of Level 1 and Level 2 investments. These vendors either provide a quoted market price in an active market or use observable inputs without applying significant adjustments in their pricing. Observable inputs include broker quotes, interest rates and yield curves observable at commonly quoted intervals, volatilities and credit risks. The fair value of derivative contracts is determined using observable market inputs such as the daily market foreign currency rates, forward pricing curves, currency volatilities, currency correlations and interest rates and considers nonperformance risk of the Company and its counterparties. The Company's fair value measurement process includes comparing fair values to another independent pricing vendor to ensure appropriate fair values are recorded. Refer to Note 4 — Fair Value Measurements for additional information. FOREIGN CURRENCY TRANSLATION AND FOREIGN CURRENCY TRANSACTIONS Adjustments resulting from translating foreign functional currency financial statements into U.S. Dollars are included in the foreign currency translation adjustment, a component of Accumulated other comprehensive income (loss). The Company's global subsidiaries have various monetary assets and liabilities, primarily receivables and payables, which are denominated in currencies other than their functional currency. These balance sheet items are subject to remeasurement, the impact of which is recorded in Other (income) expense, net, within the Consolidated Statements of Income. ACCOUNTING FOR DERIVATIVES AND HEDGING ACTIVITIES The Company uses derivative financial instruments to reduce its exposure to changes in foreign currency exchange rates and interest rates. All derivatives are recorded at fair value on the Consolidated Balance Sheets and changes in the fair value of derivative financial instruments are either recognized in Accumulated other comprehensive income (loss), Long-term debt or Net income depending on the nature of the underlying exposure, whether the derivative is formally designated as a hedge and, if designated, the extent to which the hedge is effective. The Company classifies the cash flows at settlement from derivatives in the same category as the cash flows from the related hedged items. For undesignated hedges, designated cash flow hedges and fair value hedges, this is primarily within the Cash provided (used) by operations component of the Consolidated Statements of Cash Flows. For designated net investment hedges, this is within the Cash provided (used) by investing activities component of the Consolidated Statements of Cash Flows. Refer to Note 12 — Risk Management and Derivatives for additional information on the Company's risk management program and derivatives. STOCK-BASED COMPENSATION The Company accounts for stock-based compensation by estimating the fair value, net of estimated forfeitures, of equity awards and recognizing the related expense as Cost of sales or Operating overhead expense, as applicable, in the Consolidated Statements of Income on a straight-line basis over the vesting period. Substantially all awards vest ratably over four years of continued employment, with stock options expiring 10 years from the date of grant. Performance-based restricted stock units vest based on the Company's achievement of certain performance criteria throughout the three-year performance period and continued employment through the vesting date. The fair value of options, stock appreciation rights and employees' purchase rights under the employee stock purchase plans ("ESPPs") is determined using the Black-Scholes option pricing model. The fair value of restricted stock and time-vesting restricted stock units is established by the market price on the date of grant. The fair value of performance-based restricted stock units is estimated as of the grant date using a Monte Carlo simulation. Refer to Note 9 — Common Stock and Stock-Based Compensation for additional information on the Company's stock-based compensation programs. 2025 FORM 10-K 66 Table of Contents INCOME TAXES The Company accounts for income taxes using the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The Company records a valuation allowance to reduce deferred tax assets to the amount management believes is more likely than not to be realized. Realization of deferred tax assets is dependent on future taxable earnings and is therefore uncertain. At least quarterly, the Company assesses taxable income in prior carryback periods, the scheduled reversal of deferred tax liabilities, projected future taxable income and available tax planning strategies. The Company uses forecasts of taxable income and considers foreign tax credit utilization in making this assessment of realization, which are inherently uncertain and can result in variation between estimated and actual results. To the extent the Company believes that recovery is not likely, a valuation allowance is established against the net deferred tax asset, which increases the Company's income tax expense in the period when such determination is made. The Company recognizes a tax benefit from uncertain tax positions in the consolidated financial statements only when it is more likely than not the position will be sustained upon examination by relevant tax authorities. The Company recognizes interest and penalties related to income tax matters in Income tax expense. Refer to Note 7 — Income Taxes for further discussion. EARNINGS PER SHARE Basic earnings per common share is calculated by dividing Net income by the weighted average number of common shares outstanding during the year. Diluted earnings per common share is calculated by adjusting weighted average outstanding shares, assuming conversion of all potentially dilutive stock options and awards. Refer to Note 10 — Earnings Per Share for further discussion. RECENT ACCOUNTING PRONOUNCEMENTS In November 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): 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 that are regularly provided to the chief operating decision maker and included within segment profit and loss. The Company adopted this ASU for fiscal 2025 and the related disclosures are included in Note 15 — Segment Information. The amendments were effective for the Company's annual periods beginning June 1, 2024, and interim periods beginning June 1, 2025 and have been applied retrospectively to all prior periods presented in the financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company's annual periods beginning June 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the ASU 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. 2025 FORM 10-K 67 Table of Contents NOTE 2 — PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, net included the following: MAY 31, (Dollars in millions) 2025 2024 Land and improvements $ 334 $ 329 Buildings 3,510 3,439 Machinery and equipment 2,954 3,123 Internal-use software 1,693 1,807 Leasehold improvements 2,037 2,023 Construction in process 404 193 Total property, plant and equipment, gross 10,932 10,914 Less accumulated depreciation and amortization 6,104 5,914 TOTAL PROPERTY, PLANT AND EQUIPMENT, NET $ 4,828 $ 5,000 Capitalized interest was not material for the fiscal years ended May 31, 2025, 2024 and 2023. NOTE 3 — ACCRUED LIABILITIES Accrued liabilities included the following: MAY 31, (Dollars in millions) 2025 2024 Sales-related reserves $ 1,834 $ 1,282 Compensation and benefits, excluding taxes 1,245 1,291 Dividends payable 598 563 Endorsement compensation 481 578 Other 1,753 2,011 TOTAL ACCRUED LIABILITIES $ 5,911 $ 5,725 2025 FORM 10-K 68 Table of Contents NOTE 4 — FAIR VALUE MEASUREMENTS The following tables present information about the Company's financial assets measured at fair value on a recurring basis as of May 31, 2025 and 2024, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement. MAY 31, 2025 (Dollars in millions) ASSETS AT FAIR VALUE CASH AND EQUIVALENTS SHORT-TERM INVESTMENTS Cash $ 1,221 $ 1,221 $ — Level 1: U.S. Treasury securities 1,046 — 1,046 Level 2: Commercial paper and bonds 675 45 630 Money market funds 5,902 5,902 — Time deposits 297 295 2 U.S. Agency securities 10 1 9 Total Level 2 6,884 6,243 641 TOTAL $ 9,151 $ 7,464 $ 1,687 MAY 31, 2024 (Dollars in millions) ASSETS AT FAIR VALUE CASH AND EQUIVALENTS SHORT-TERM INVESTMENTS Cash $ 1,222 $ 1,222 $ — Level 1: U.S. Treasury securities 1,175 155 1,020 Level 2: Commercial paper and bonds 591 17 574 Money market funds 8,119 8,119 — Time deposits 440 347 93 U.S. Agency securities 35 — 35 Total Level 2 9,185 8,483 702 TOTAL $ 11,582 $ 9,860 $ 1,722 As of May 31, 2025, the Company held $ 776 million of available-for-sale debt securities with maturity dates within one year and $ 911 million with maturity dates over one year and less than five years in Short-term investments on the 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 $ 404 million, $ 430 million and $ 297 million for the years ended May 31, 2025, 2024 and 2023, respectively. The Company records the assets and liabilities of its derivative financial instruments on a gross basis on the Consolidated Balance Sheets. The Company's derivative financial instruments are subject to master netting arrangements that allow for the offset of assets and liabilities in the event of default or early termination of the contract. Any amounts of cash collateral received related to these instruments associated with the Company's credit-related contingent features are recorded in Cash and equivalents and Accrued liabilities, the latter of which would further offset against the Company's derivative asset balance. Any amounts of cash collateral posted related to these instruments associated with the Company's credit-related contingent features are recorded in Prepaid expenses and other current assets, which would further offset against the Company's derivative liability balance. Cash collateral received or posted related to the Company's credit-related contingent features is presented in the Cash provided (used) by operations component of the Consolidated Statements of Cash Flows. The Company does not recognize amounts of non-cash collateral received, such as securities, on the Consolidated Balance Sheets. For additional information related to credit risk, refer to Note 12 — Risk Management and Derivatives. 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: 2025 FORM 10-K 69 Table of Contents MAY 31, 2025 DERIVATIVE ASSETS DERIVATIVE LIABILITIES (Dollars in millions) ASSETS AT FAIR VALUE OTHER CURRENT ASSETS OTHER LONG-TERM ASSETS LIABILITIES AT FAIR VALUE ACCRUED LIABILITIES OTHER LONG-TERM LIABILITIES Level 2: Foreign exchange forwards and options (1) $ 107 $ 85 $ 22 $ 368 $ 226 $ 142 Interest rate swaps (1) 24 — 24 3 — 3 TOTAL $ 131 $ 85 $ 46 $ 371 $ 226 $ 145 (1) If the foreign exchange and interest rate swap derivative instruments had been netted on the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $ 131 million as of May 31, 2025. As of that date, the Company posted $ 166 million cash collateral to various counterparties on the derivative liability balance and no amount of collateral was received from counterparties on the derivative asset balance. MAY 31, 2024 DERIVATIVE ASSETS DERIVATIVE LIABILITIES (Dollars in millions) ASSETS AT FAIR VALUE OTHER CURRENT ASSETS OTHER LONG-TERM ASSETS LIABILITIES AT FAIR VALUE ACCRUED LIABILITIES OTHER LONG-TERM LIABILITIES Level 2: Foreign exchange forwards and options (1) $ 343 $ 299 $ 44 $ 120 $ 115 $ 5 Interest rate swaps (1) — — — 31 — 31 TOTAL $ 343 $ 299 $ 44 $ 151 $ 115 $ 36 (1) If the foreign exchange and interest rate swap derivative instruments had been netted on the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $ 142 million as of May 31, 2024. As of that date, the Company received $ 112 million of cash collateral from various counterparties on the derivative asset balance and posted $ 10 million cash collateral on the derivative liability balance. For additional information related to the Company's derivative financial instruments, refer to Note 12 — Risk Management and Derivatives. For fair value information regarding Notes payable and Long-term debt, refer to Note 5 — Short-Term Borrowings and Credit Lines and Note 6 — Long-Term Debt, respectively. The carrying amounts of other current financial assets and other current financial liabilities approximate fair value. NOTE 5 — SHORT-TERM BORROWINGS AND CREDIT LINES The carrying amounts reflected on the Consolidated Balance Sheets for Notes payable approximate fair value. On March 7, 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. In July 2025, Standard and Poor's Corporation downgraded the Company's senior unsecured debt rating from AA- to A+. Based on the Company's current long-term senior unsecured debt ratings of A+ 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 0.725 %. The facility fee is 0.04 % of the total undrawn commitment. On March 7, 2025, the Company 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. In July 2025, Standard and Poor's Corporation downgraded the Company's senior unsecured debt rating from AA- to A+. Based on the Company's current long-term senior unsecured debt ratings of A+ 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 0.725 %. The facility fee is 0.05 % of the total undrawn commitment. As of and for the periods ended May 31, 2025 and 2024, no amounts were outstanding under any of the Company's committed credit facilities. 2025 FORM 10-K 70 Table of Contents NOTE 6 — LONG-TERM DEBT Long-term debt, net of unamortized premiums, discounts, debt issuance costs, and interest rate swap fair value adjustments comprises the following: BOOK VALUE OUTSTANDING AS OF MAY 31, Scheduled Maturity (Dollars in millions) ORIGINAL PRINCIPAL INTEREST RATE INTEREST PAYMENTS 2025 2024 Corporate Term Debt: (1)(2) March 27, 2025 1,000 2.40 % Semi-Annually $ — $ 999 November 1, 2026 1,000 2.38 % Semi-Annually 999 998 March 27, 2027 1,000 2.75 % Semi-Annually 999 998 March 27, 2030 1,500 2.85 % Semi-Annually 1,495 1,494 March 27, 2040 (3) 1,000 3.25 % Semi-Annually 993 966 May 1, 2043 (3) 500 3.63 % Semi-Annually 502 488 November 1, 2045 (3) 1,000 3.88 % Semi-Annually 997 986 November 1, 2046 500 3.38 % Semi-Annually 493 492 March 27, 2050 1,500 3.38 % Semi-Annually 1,483 1,482 Total 7,961 8,903 Less Current Portion of Long-Term Debt — 1,000 TOTAL LONG-TERM DEBT $ 7,961 $ 7,903 (1) These senior unsecured obligations rank equally with the Company's other unsecured and unsubordinated indebtedness. (2) The bonds are redeemable at the Company's option at a price equal to the greater of (i) 100 % of the aggregate principal amount of the notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments, plus in each case, accrued and unpaid interest. However, the bonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to 100 % of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest on or after the Par Call Date, which can range from one to six months prior to the scheduled maturity, as defined in the respective notes. (3) The Company entered into interest rate swap agreements pursuant to which the Company receives fixed interest payments at the same rate as the term debt and pays variable interest payments based on SOFR plus a fixed spread. At May 31, 2025, the notional amount outstanding of these swaps was $ 2.4 billion and had interest rates payable that ranged from 3.6 % to 4.5 %. These swaps mature during fiscal 2034 and 2035. The scheduled maturity of Long-term debt in each of the years ending May 31, 2026 through 2030, is $ 0 million, $ 2,000 million, $ 0 million, $ 0 million and $ 1,500 million, respectively, at face value. The Company's Long-term debt is recorded at adjusted cost, net of unamortized premiums, discounts, debt issuance costs, and interest rate swap fair value adjustments. The fair value of long-term debt is estimated based upon quoted prices for similar instruments or quoted prices for identical instruments in inactive markets (Level 2). The fair value of the Company's Long-term debt, including the current portion but excluding interest rate swap fair value adjustments, was approximately $ 6,673 million and $ 7,631 million as of May 31, 2025 and 2024, respectively. 2025 FORM 10-K 71 Table of Contents NOTE 7 — INCOME TAXES Income before income taxes is as follows: YEAR ENDED MAY 31, (Dollars in millions) 2025 2024 2023 Income before income taxes: United States $ 3,220 $ 5,588 $ 4,663 Foreign 665 1,112 1,538 TOTAL INCOME BEFORE INCOME TAXES $ 3,885 $ 6,700 $ 6,201 The provision for income taxes is as follows: YEAR ENDED MAY 31, (Dollars in millions) 2025 2024 2023 Current: United States Federal $ 358 $ 782 $ 430 State 121 201 184 Foreign 475 514 634 Total Current 954 1,497 1,248 Deferred: United States Federal ( 135 ) ( 422 ) ( 162 ) State ( 12 ) ( 61 ) ( 25 ) Foreign ( 141 ) ( 14 ) 70 Total Deferred ( 288 ) ( 497 ) ( 117 ) TOTAL INCOME TAX EXPENSE $ 666 $ 1,000 $ 1,131 A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows: YEAR ENDED MAY 31, 2025 2024 2023 Federal income tax rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit 2.0 % 1.4 % 1.5 % Foreign earnings 1.1 % - 2.5 % 1.7 % U.S. tax regulations - foreign currency losses - 3.4 % 0.0 % 0.0 % Foreign-derived intangible income benefit - 5.3 % - 4.8 % - 6.1 % Stock-based compensation 1.5 % - 0.5 % - 1.1 % Income tax audits and contingency reserves 2.7 % 1.8 % 1.0 % U.S. research and development tax credit - 2.1 % - 2.1 % - 1.2 % Other, net - 0.4 % 0.6 % 1.4 % EFFECTIVE INCOME TAX RATE 17.1 % 14.9 % 18.2 % The increase in the Company's effective tax rate for the fiscal year ended May 31, 2025 compared to the fiscal year ended May 31, 2024 was primarily due to changes in the Company's earnings mix, decreased benefits from stock-based compensation and one-time benefits recognized in fiscal 2024 including the impact of temporary relief provided by the Internal Revenue Service ("IRS") relating to U.S. foreign tax credit regulations. These impacts were partially offset by a one-time, non-cash deferred tax benefit recognized in the third quarter of fiscal 2025 provided by 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-US 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 analysis of the regulations and recognition of temporary differences impacting U.S. taxation of foreign earnings under Subpart F of the Internal 2025 FORM 10-K 72 Table of Contents Revenue Code, the Company recognized a non-cash deferred income tax benefit of $ 133 million in the third quarter of fiscal 2025 related to pre-transition foreign currency losses. The decrease in the Company's effective tax rate for the fiscal year ended May 31, 2024 compared to the fiscal year ended May 31, 2023 was primarily due to changes in the Company's earning mix and one-time benefits including the impact of temporary relief provided by the IRS relating to U.S. foreign tax credit regulations. On July 21, 2023, the IRS issued Notice 2023-55 which specifically delayed the application of certain U.S. foreign tax credit regulations that had previously limited the Company's ability to claim credits on certain foreign taxes for the fiscal year ended May 31, 2023. As a result of this new guidance, the Company recognized a one-time tax benefit related to fiscal 2023 tax positions in the first three months 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. Several countries in which the Company operates, including several European Union member states, have adopted domestic legislation to implement the Inclusive Framework's global corporate minimum tax rate of fifteen percent. This legislation became effective for the Company beginning June 1, 2024. Based on the Company's analysis of Pillar Two provisions, these tax law changes did not have a material impact on the Company's financial statements for fiscal 2025. Deferred income tax assets and liabilities comprise the following as of: MAY 31, (Dollars in millions) 2025 2024 Deferred tax assets: Inventories $ 98 $ 69 Sales return reserves 205 125 Deferred compensation 387 347 Stock-based compensation 285 290 Reserves and accrued liabilities 143 113 Operating lease liabilities 458 474 Intangibles 217 236 Capitalized research and development expenditures 923 878 Net operating loss carry-forwards 75 21 Subpart F deferred tax 315 409 Other 212 214 Total deferred tax assets 3,318 3,176 Valuation allowance ( 51 ) ( 29 ) Total deferred tax assets after valuation allowance 3,267 3,147 Deferred tax liabilities: Foreign withholding tax on undistributed earnings of foreign subsidiaries ( 119 ) ( 131 ) Property, plant and equipment ( 225 ) ( 290 ) Right-of-use assets ( 377 ) ( 397 ) Other ( 4 ) ( 9 ) Total deferred tax liabilities ( 725 ) ( 827 ) NET DEFERRED TAX ASSET (1) $ 2,542 $ 2,320 (1) Of the total $ 2,542 million net deferred tax asset for the period ended May 31, 2025, $ 2,668 million was included within Deferred income taxes and other assets and $( 126 ) million was included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets. Of the total $ 2,320 million net deferred tax asset for the period ended May 31, 2024, $ 2,465 million was included within Deferred income taxes and other assets and $( 145 ) million was included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets. Deferred tax assets as of May 31, 2025 and 2024, were reduced by a valuation allowance provided for U.S. capital loss carryforwards and on tax benefits generated by certain entities with operating losses. The Company has available pre-tax effected domestic and foreign loss carry-forwards of $ 261 million as of May 31, 2025. If not utilized, $ 135 million of losses will expire in the periods between fiscal 2028 and 2044. Approximately $ 126 million of losses do not expire. 2025 FORM 10-K 73 Table of Contents On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions are effective for the Company beginning fiscal 2026. The Company is evaluating the future impact of these tax law changes on its financial statements. The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits as of: MAY 31, (Dollars in millions) 2025 2024 2023 Unrecognized tax benefits, beginning of the period $ 990 $ 936 $ 848 Gross increases related to prior period tax positions 11 35 95 Gross decreases related to prior period tax positions ( 10 ) ( 13 ) ( 17 ) Gross increases related to current period tax positions 81 77 50 Settlements ( 5 ) ( 22 ) ( 18 ) Lapse of statute of limitations ( 45 ) ( 24 ) ( 7 ) Changes due to currency translation 4 1 ( 15 ) UNRECOGNIZED TAX BENEFITS, END OF THE PERIOD $ 1,026 $ 990 $ 936 As of May 31, 2025, total gross unrecognized tax benefits, excluding related interest and penalties, were $ 1,026 million, of which $ 738 million would affect the Company's effective tax rate if recognized in future periods. The majority of the total gross unrecognized tax benefits were long-term in nature and were included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets. The Company recognizes interest and penalties related to income tax matters in Income tax expense. As of May 31, 2025 and 2024, accrued interest and penalties related to uncertain tax positions were $ 376 million and $ 332 million, respectively (excluding federal benefit) and were included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets. As of May 31, 2024, long-term income taxes payable unrelated to unrecognized tax benefits were $ 266 million and were included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets. As of May 31, 2025 these amounts were included within Income taxes payable on the Consolidated Balance Sheets. The Company is subject to taxation in the U.S., as well as various state and foreign jurisdictions. The Company is currently under audit by the U.S. IRS for fiscal years 2017 through 2019. The Company has closed all U.S. federal income tax matters through fiscal 2016, with the exception of certain transfer pricing adjustments. In certain major foreign jurisdictions, tax years after 2011 remain subject to examination. 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 $ 249 million within the next 12 months primarily as a result of the expected resolution with the IRS of certain U.S. 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. The Company believes the investigation is without merit. If this matter is adversely resolved, the Netherlands may be required to assess additional amounts with respect to prior periods, and the Company's income taxes related to prior periods in the Netherlands could increase. A portion of the Company's foreign operations benefit from a tax holiday, which is set to expire in 2031. This tax holiday may be extended when certain conditions are met or may be terminated early if certain conditions are not met. The tax benefit attributable to this tax holiday, before taking into consideration other U.S. indirect tax provisions, was $ 271 million, $ 338 million and $ 263 million for the fiscal years ended May 31, 2025, 2024 and 2023, respectively. The benefit of the tax holiday on diluted earnings per common share, before taking into consideration other U.S. indirect tax provisions, was $ 0.18 , $ 0.22 and $ 0.17 for the fiscal years ended May 31, 2025, 2024 and 2023, respectively. 2025 FORM 10-K 74 Table of Contents NOTE 8 — REDEEMABLE PREFERRED STOCK Sojitz America is the sole owner of the Company's authorized redeemable preferred stock, $ 1 par value, which is redeemable at the option of Sojitz America or the Company at par value aggregating $ 0.3 million. A cumulative dividend of $ 0.10 per share is payable annually on May 31, and no dividends may be declared or paid on the common stock of the Company unless dividends on the redeemable preferred stock have been declared and paid in full. There have been no changes in the redeemable preferred stock in the fiscal years ended May 31, 2025, 2024 and 2023. As the holder of the redeemable preferred stock, Sojitz America does not have general voting rights but does have the right to vote as a separate class on the sale of all or substantially all of the assets of the Company and its subsidiaries; on merger, consolidation, liquidation or dissolution of the Company; or on the sale or assignment of the NIKE trademark for athletic footwear sold in the United States. The redeemable preferred stock has been fully issued to Sojitz America and is not blank check preferred stock. The Company's articles of incorporation do not permit the issuance of additional preferred stock. NOTE 9 — COMMON STOCK AND STOCK-BASED COMPENSATION COMMON STOCK The authorized number of shares of Class A Common Stock, no par value, and Class B Common Stock, no par value, are 400 million and 2,400 million, respectively. Each share of Class A Common Stock is convertible into one share of Class B Common Stock. Voting rights of Class B Common Stock are limited in certain circumstances with respect to the election of directors. There are no differences in the dividend and liquidation preferences or participation rights of the holders of Class A and Class B Common Stock. From time to time, the Company's Board of Directors authorizes share repurchase programs for the repurchase of Class B Common Stock. The value of repurchased shares is deducted from Total shareholders' equity through allocation to Capital in excess of stated value and Retained earnings (deficit). STOCK-BASED COMPENSATION The NIKE, Inc. Stock Incentive Plan (the "Stock Incentive Plan") provides for the issuance of up to 798 million previously unissued shares of Class B Common Stock in connection with equity awards granted under the Stock Incentive Plan. The Stock Incentive Plan authorizes the grant of non-statutory stock options, incentive stock options, stock appreciation rights, and stock awards, including restricted stock and restricted stock units. Restricted stock units include both time-vesting restricted stock units ("RSUs") as well as performance-based restricted stock units ("PSUs"). A committee of the Board of Directors administers the Stock Incentive Plan and has the authority to determine the employees to whom awards will be made, the amount of the awards and the other terms and conditions of the awards. The Company generally grants stock options, restricted stock and restricted stock units on an annual basis. The exercise price for stock options and stock appreciation rights may not be less than the fair market value of the underlying shares on the date of grant. Substantially all awards under the Stock Incentive Plan vest ratably over 4 years of continued employment, with stock options expiring 10 years from the date of grant. The following table summarizes the Company's total stock-based compensation expense recognized in Cost of sales or Operating overhead expense, as applicable: YEAR ENDED MAY 31, (Dollars in millions) 2025 2024 2023 Stock options (1) $ 292 $ 336 $ 311 ESPPs 69 69 72 Restricted stock and restricted stock units (1)(2) 348 399 372 TOTAL STOCK-BASED COMPENSATION EXPENSE $ 709 $ 804 $ 755 (1) Expense for stock options includes the expense associated with stock appreciation rights. (2) For the fiscal years ended May 31, 2025, 2024 and 2023, expense for restricted stock units includes an immaterial amount of expense for PSUs. 2025 FORM 10-K 75 Table of Contents STOCK OPTIONS The weighted average fair value per share of stock options granted during the fiscal years ended May 31, 2025, 2024 and 2023, computed as of the grant date using the Black-Scholes pricing model, was $ 25.90 , $ 32.78 and $ 31.31 , respectively. The weighted average assumptions used to estimate these fair values were as follows: YEAR ENDED MAY 31, 2025 2024 2023 Dividend yield 1.6 % 1.2 % 0.9 % Expected volatility 31.1 % 29.3 % 27.1 % Weighted average expected life (in years) 6.0 5.8 5.8 Risk-free interest rate 3.8 % 4.3 % 3.3 % Expected volatilities are based on an analysis of the historical volatility of the Company's common stock, the implied volatility in market traded options on the Company's common stock with a term greater than one year , as well as other factors. The weighted average expected life of options is based on an analysis of historical and expected future exercise patterns. The interest rate is based on the U.S. Treasury (constant maturity) risk-free rate in effect at the date of grant for periods corresponding with the expected term of the options. The following summarizes the stock option transactions under the plan discussed above: SHARES (1) WEIGHTED AVERAGE OPTION PRICE (In millions) Options outstanding as of May 31, 2024 73.7 $ 98.10 Exercised ( 5.4 ) 58.50 Forfeited ( 6.5 ) 101.93 Granted 13.3 83.20 Options outstanding as of May 31, 2025 75.1 $ 97.99 (1) Includes stock appreciation rights transactions. Options exercisable as of May 31, 2025 were 49.8 million and had a weighted average option price of $ 98.00 per share. The aggregate intrinsic value for options outstanding and exercisable as of May 31, 2025 was $ 20 million and $ 20 million, respectively. The total intrinsic value of the options exercised during the years ended May 31, 2025, 2024 and 2023 was $ 120 million, $ 305 million and $ 438 million, respectively. The intrinsic value is the amount by which the market value of the underlying stock exceeds the exercise price of the options. The weighted average contractual life remaining for options outstanding and options exercisable as of May 31, 2025 was 5.4 years and 3.9 years, respectively. As of May 31, 2025, the Company had $ 400 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. EMPLOYEE STOCK PURCHASE PLANS In addition to the Stock Incentive Plan, the Company gives employees the right to purchase shares at a discount from the market price under ESPPs. Subject to the annual statutory limit, employees are eligible to participate through payroll deductions of up to 10 % of their compensation. At the end of each six-month offering period, shares are purchased by the participants at 85 % of the lower of the fair market value at the beginning or the end of the offering period. Employees purchased 3.6 million, 3.1 million and 3.0 million shares during each of the fiscal years ended May 31, 2025, 2024 and 2023, respectively. RESTRICTED STOCK AND RESTRICTED STOCK UNITS Recipients of restricted stock are entitled to cash dividends and to vote their respective shares throughout the period of restriction. Recipients of restricted stock units, which includes RSUs and PSUs, are entitled to dividend equivalent cash payments upon vesting. The number of shares of restricted stock and restricted stock units vested includes shares of common stock withheld by the Company on behalf of employees to satisfy the minimum statutory tax withholding requirements. The following summarizes the restricted stock and restricted stock units transactions under the plan discussed above: 2025 FORM 10-K 76 Table of Contents SHARES (1) WEIGHTED AVERAGE GRANT DATE FAIR VALUE (In millions) Nonvested as of May 31, 2024 9.1 $ 117.52 Vested ( 3.3 ) 116.76 Forfeited ( 1.7 ) 105.68 Granted 6.6 82.32 Nonvested as of May 31, 2025 10.7 $ 94.29 (1) Includes an immaterial amount of PSU transactions The weighted average fair value per share of restricted stock and restricted stock units granted for the fiscal years ended May 31, 2025, 2024 and 2023, computed as of the grant date, was $ 82.32 , $ 103.13 and $ 115.56 , respectively. During the fiscal years ended May 31, 2025, 2024 and 2023, the aggregate fair value of vested restricted stock and restricted stock units was $ 221 million, $ 340 million and $ 250 million, respectively, computed as of the date of vesting. As of May 31, 2025, the Company had $ 631 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 2.5 years. NOTE 10 — 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 75.5 million, 41.0 million and 31.7 million shares of common stock outstanding for the fiscal years ended May 31, 2025, 2024 and 2023, respectively, because the awards were assumed to be anti-dilutive. YEAR ENDED MAY 31, (In millions, except per share data) 2025 2024 2023 Net income available to common stockholders $ 3,219 $ 5,700 $ 5,070 Determination of shares: Weighted average common shares outstanding 1,484.9 1,517.6 1,551.6 Assumed conversion of dilutive stock options and awards 2.7 12.1 18.2 DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 1,487.6 1,529.7 1,569.8 Earnings per common share: Basic $ 2.17 $ 3.76 $ 3.27 Diluted $ 2.16 $ 3.73 $ 3.23 NOTE 11 — BENEFIT PLANS The Company has a qualified 401(k) Savings and Profit Sharing Plan, in which all U.S. employees are able to participate. The Company matches a portion of employee contributions to the savings plan. Company contributions to the savings plan were $ 151 million, $ 153 million and $ 136 million and included in Cost of sales or Operating overhead expense, as applicable, for the fiscal years ended May 31, 2025, 2024 and 2023, respectively. The Company allows certain highly compensated employees and non-employee directors of the Company to defer compensation under a nonqualified deferred compensation plan. A rabbi trust was established to fund the Company's nonqualified deferred compensation plan obligation. The assets in the rabbi trust of approximately $ 1,123 million and $ 1,037 million as of May 31, 2025 and 2024, respectively, primarily consist of company owned life insurance policies recorded at their cash surrender value and are classified in Deferred income taxes and other assets on the Consolidated Balance Sheets. Deferred compensation plan liabilities were $ 1,102 million and $ 1,063 million as of May 31, 2025 and 2024, respectively, and primarily classified in Deferred income taxes and other liabilities on the Consolidated Balance Sheets. 2025 FORM 10-K 77 Table of Contents NOTE 12 — RISK MANAGEMENT AND DERIVATIVES The Company is exposed to global market risks, including the effect of changes in foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for trading or speculative purposes. The Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP. The Company formally documents all relationships between designated hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking hedge transactions. This process includes linking all derivatives designated as hedges to either recognized assets or liabilities or forecasted transactions and assessing, both at inception and on an ongoing basis, the effectiveness of the hedging relationships. The majority of derivatives outstanding as of May 31, 2025, 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. All derivatives are recognized on the Consolidated Balance Sheets at fair value and classified based on the instrument's maturity date. The following tables present the fair values of derivative instruments included within the Consolidated Balance Sheets: DERIVATIVE ASSETS BALANCE SHEET LOCATION MAY 31, (Dollars in millions) 2025 2024 Derivatives formally designated as hedging instruments: Foreign exchange forwards and options Prepaid expenses and other current assets $ 75 $ 269 Foreign exchange forwards and options Deferred income taxes and other assets 22 44 Interest rate swaps Deferred income taxes and other assets 24 — Total derivatives formally designated as hedging instruments 121 313 Derivatives not designated as hedging instruments: Foreign exchange forwards and options Prepaid expenses and other current assets 10 30 Total derivatives not designated as hedging instruments 10 30 TOTAL DERIVATIVE ASSETS $ 131 $ 343 DERIVATIVE LIABILITIES BALANCE SHEET LOCATION MAY 31, (Dollars in millions) 2025 2024 Derivatives formally designated as hedging instruments: Foreign exchange forwards and options Accrued liabilities $ 216 $ 110 Foreign exchange forwards and options Deferred income taxes and other liabilities 142 5 Interest rate swaps Deferred income taxes and other liabilities 3 31 Total derivatives formally designated as hedging instruments 361 146 Derivatives not designated as hedging instruments: Foreign exchange forwards and options Accrued liabilities 10 5 Total derivatives not designated as hedging instruments 10 5 TOTAL DERIVATIVE LIABILITIES $ 371 $ 151 2025 FORM 10-K 78 Table of Contents The following tables present the amounts affecting the Consolidated Statements of Income for the years ended May 31, 2025, 2024 and 2023: (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) YEAR ENDED MAY 31, LOCATION OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME YEAR ENDED MAY 31, 2025 2024 2023 2025 2024 2023 Derivatives designated as cash flow hedges: Foreign exchange forwards and options $ ( 67 ) $ ( 66 ) $ 16 Revenues $ ( 93 ) $ ( 24 ) $ 26 Foreign exchange forwards and options ( 55 ) 231 305 Cost of sales 295 294 581 Foreign exchange forwards and options 1 3 ( 1 ) Demand creation expense 1 2 ( 5 ) Foreign exchange forwards and options ( 6 ) 102 207 Other (income) expense, net 145 204 338 Interest rate swaps (2) — — — Interest expense (income), net ( 8 ) ( 8 ) ( 8 ) TOTAL DESIGNATED CASH FLOW HEDGES $ ( 127 ) $ 270 $ 527 $ 340 $ 468 $ 932 (1) For the fiscal years ended May 31, 2025, 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. AMOUNT OF GAIN (LOSS) RECOGNIZED IN INCOME ON DERIVATIVES LOCATION OF GAIN (LOSS) RECOGNIZED IN INCOME ON DERIVATIVES YEAR ENDED MAY 31, (Dollars in millions) 2025 2024 2023 Derivatives not designated as hedging instruments: Foreign exchange forwards and options and embedded derivatives $ 2 $ 24 $ 28 Other (income) expense, net CASH FLOW HEDGES All changes in fair value of derivatives designated as cash flow hedge instruments are recorded in Accumulated other comprehensive income (loss) until Net income is affected by the variability of cash flows of the hedged transaction. Effective hedge results are classified in the Consolidated Statements of Income in the same manner as the underlying exposure. When it is no longer probable the forecasted hedged transaction will occur in the initially identified time period, hedge accounting is discontinued and the Company accounts for the associated derivative as an undesignated instrument as discussed below. Additionally, the gains and losses associated with derivatives no longer designated as cash flow hedge instruments in Accumulated other comprehensive income (loss) are recognized immediately in Other (income) expense, net, if it is probable the forecasted hedged transaction will not occur by the end of the initially identified time period or within an additional two-month period thereafter. In rare circumstances, the additional period of time may exceed two months due to extenuating circumstances related to the nature of the forecasted transaction that are outside the control or influence of the Company. The purpose of the Company's foreign exchange risk management program is to lessen both the positive and negative effects of currency fluctuations on the Company's consolidated results of operations, financial position and cash flows. Foreign currency exposures the Company may elect to hedge in this manner include product costs, non-functional currency denominated revenues, intercompany revenues, demand creation expenses, investments in U.S. Dollar denominated available-for-sale debt securities and certain other intercompany transactions. Product cost foreign currency exposures are primarily generated through non-functional currency denominated product purchases. NIKE entities primarily purchase product in two ways: (1) Certain NIKE entities purchase product from the NIKE Trading Company ("NTC"), a wholly-owned sourcing hub that buys NIKE branded products from third-party factories, predominantly in U.S. Dollars. The NTC, whose functional currency is the U.S. Dollar, then sells the product to NIKE entities in their respective functional currencies. NTC sales to a NIKE entity with a different functional currency result in a foreign currency 2025 FORM 10-K 79 Table of Contents exposure for the NTC. (2) Other NIKE entities purchase product directly from third-party factories in U.S. Dollars. These purchases generate a foreign currency exposure for those NIKE entities with a functional currency other than the U.S. Dollar. The Company's policy permits the utilization of derivatives to reduce its foreign currency exposures where internal netting or other strategies cannot be effectively employed. Typically, the Company may enter into hedge contracts starting up to 12 to 24 months in advance of the forecasted transaction and may place incremental hedges up to 100 % of the exposure by the time the forecasted transaction occurs. The total notional amount of outstanding foreign currency derivatives designated as cash flow hedges was $ 18.4 billion and $ 16.2 billion as of May 31, 2025 and 2024, respectively. As of May 31, 2025, approximately $ 24 million of deferred net losses (net of tax) on both outstanding and matured derivatives in Accumulated other comprehensive income (loss) 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 May 31, 2025, the maximum term over which the Company hedges exposures to the variability of cash flows for its forecasted transactions was 30 months. FAIR VALUE HEDGES The Company is exposed to the risk of changes in the fair value of certain fixed-rate debt attributable to changes in interest rates. Derivatives used by the Company to hedge this risk are receive-fixed, pay-variable interest rate swaps which are designated as fair value hedges of the related long-term debt. Changes in the fair values of the interest rate swaps are recorded in Long-term debt or Current portion of long-term debt. The total notional amount of outstanding interest rate swaps designated as fair value hedges was $ 2.4 billion and $ 1.8 billion as of May 31, 2025 and 2024, respectively. UNDESIGNATED DERIVATIVE INSTRUMENTS The Company may elect to enter into foreign exchange forwards to mitigate the change in fair value of specific assets and liabilities on the Consolidated Balance Sheets. These undesignated instruments are recorded at fair value as a derivative asset or liability on the Consolidated Balance Sheets with their corresponding change in fair value recognized in Other (income) expense, net, together with the remeasurement gain or loss from the hedged balance sheet position. The total notional amount of outstanding undesignated derivative instruments was $ 4.0 billion and $ 4.4 billion as of May 31, 2025 and 2024, respectively. CREDIT RISK The Company is exposed to credit-related losses in the event of nonperformance by counterparties to hedging instruments. The counterparties to all derivative transactions are major financial institutions with investment grade credit ratings; however, this does not eliminate the Company's exposure to credit risk with these institutions. This credit risk is limited to the unrealized gains in such contracts should any of these counterparties fail to perform as contracted. To manage this risk, the Company has established strict counterparty credit guidelines that are continually monitored. The Company's derivative contracts contain credit risk-related contingent features designed to protect against significant deterioration in counterparties' creditworthiness and their ultimate ability to settle outstanding derivative contracts in the normal course of business. The Company's bilateral credit-related contingent features generally require the owing entity, either the Company or the derivative counterparty, to post collateral for the fair value of outstanding derivatives per counterparty. For certain counterparties, collateral would only be posted for the fair value of outstanding derivatives per counterparty greater than $ 50 million. Additionally, for those counterparties, a certain level of decline in credit rating of either the Company or the counterparty could trigger collateral requirements. As of May 31, 2025, the Company was in compliance with all credit risk-related contingent features. The Company considers the impact of the risk of counterparty default to be immaterial. For additional information related to the Company's derivative financial instruments and collateral, refer to Note 4 — Fair Value Measurements. 2025 FORM 10-K 80 Table of Contents NOTE 13 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The changes in Accumulated other comprehensive income (loss), net of tax, were as follows: (Dollars in millions) FOREIGN CURRENCY TRANSLATION ADJUSTMENT (1) CASH FLOW HEDGES NET INVESTMENT HEDGES (1) OTHER TOTAL Balance at May 31, 2024 $ ( 256 ) $ 247 $ 115 $ ( 53 ) $ 53 Other comprehensive income (loss): Other comprehensive gains (losses) before reclassifications 142 ( 132 ) — ( 5 ) 5 Reclassifications to net income of previously deferred (gains) losses (2) — ( 322 ) — 6 ( 316 ) Total other comprehensive income (loss) 142 ( 454 ) — 1 ( 311 ) Balance at May 31, 2025 $ ( 114 ) $ ( 207 ) $ 115 $ ( 52 ) $ ( 258 ) (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) 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) OTHER TOTAL Balance at May 31, 2023 $ ( 253 ) $ 431 $ 115 $ ( 62 ) $ 231 Other comprehensive income (loss): Other comprehensive gains (losses) before reclassifications ( 4 ) 239 — 15 250 Reclassifications to net income of previously deferred (gains) losses (2) 1 ( 423 ) — ( 6 ) ( 428 ) Total other comprehensive income (loss) ( 3 ) ( 184 ) — 9 ( 178 ) Balance at May 31, 2024 $ ( 256 ) $ 247 $ 115 $ ( 53 ) $ 53 (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) 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. For additional information related to the Company's cash flow hedges refer to Note 12 — Risk Management and Derivatives. 2025 FORM 10-K 81 Table of Contents NOTE 14 — REVENUES DISAGGREGATION OF REVENUES The following tables present the Company's Revenues disaggregated by reportable operating segment, major product line and distribution channel: YEAR ENDED MAY 31, 2025 (Dollars in millions) NORTH AMERICA EUROPE, MIDDLE EAST & AFRICA GREATER CHINA ASIA PACIFIC & LATIN AMERICA GLOBAL BRAND DIVISIONS TOTAL NIKE BRAND CONVERSE CORPORATE TOTAL NIKE, INC. Revenues by: Footwear $ 12,684 $ 7,569 $ 4,805 $ 4,452 $ — $ 29,510 $ 1,457 $ — $ 30,967 Apparel 5,837 3,971 1,616 1,541 — 12,965 80 — 13,045 Equipment 1,051 717 165 258 — 2,191 32 — 2,223 Other — — — — 48 48 123 ( 97 ) 74 TOTAL REVENUES $ 19,572 $ 12,257 $ 6,586 $ 6,251 $ 48 $ 44,714 $ 1,692 $ ( 97 ) $ 46,309 Revenues by: Sales to Wholesale Customers $ 10,484 $ 8,022 $ 3,699 $ 3,678 $ — $ 25,883 $ 875 $ — $ 26,758 Sales through Direct to Consumer 9,088 4,235 2,887 2,573 — 18,783 694 — 19,477 Other — — — — 48 48 123 ( 97 ) 74 TOTAL REVENUES $ 19,572 $ 12,257 $ 6,586 $ 6,251 $ 48 $ 44,714 $ 1,692 $ ( 97 ) $ 46,309 YEAR ENDED MAY 31, 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. Revenues by: Footwear $ 14,537 $ 8,473 $ 5,552 $ 4,865 $ — $ 33,427 $ 1,800 $ — $ 35,227 Apparel 5,953 4,380 1,828 1,614 — 13,775 93 — 13,868 Equipment 906 754 165 250 — 2,075 37 — 2,112 Other — — — — 45 45 152 ( 42 ) 155 TOTAL REVENUES $ 21,396 $ 13,607 $ 7,545 $ 6,729 $ 45 $ 49,322 $ 2,082 $ ( 42 ) $ 51,362 Revenues by: Sales to Wholesale Customers $ 11,004 $ 8,562 $ 4,262 $ 3,930 $ — $ 27,758 $ 1,098 $ — $ 28,856 Sales through Direct to Consumer 10,392 5,045 3,283 2,799 — 21,519 832 — 22,351 Other — — — — 45 45 152 ( 42 ) 155 TOTAL REVENUES $ 21,396 $ 13,607 $ 7,545 $ 6,729 $ 45 $ 49,322 $ 2,082 $ ( 42 ) $ 51,362 2025 FORM 10-K 82 Table of Contents YEAR ENDED MAY 31, 2023 (Dollars in millions) NORTH AMERICA EUROPE, MIDDLE EAST & AFRICA GREATER CHINA ASIA PACIFIC & LATIN AMERICA GLOBAL BRAND DIVISIONS TOTAL NIKE BRAND CONVERSE CORPORATE TOTAL NIKE, INC. Revenues by: Footwear $ 14,897 $ 8,260 $ 5,435 $ 4,543 $ — $ 33,135 $ 2,155 $ — $ 35,290 Apparel 5,947 4,566 1,666 1,664 — 13,843 90 — 13,933 Equipment 764 592 147 224 — 1,727 28 — 1,755 Other — — — — 58 58 154 27 239 TOTAL REVENUES $ 21,608 $ 13,418 $ 7,248 $ 6,431 $ 58 $ 48,763 $ 2,427 $ 27 $ 51,217 Revenues by: Sales to Wholesale Customers $ 11,273 $ 8,522 $ 3,866 $ 3,736 $ — $ 27,397 $ 1,299 $ — $ 28,696 Sales through Direct to Consumer 10,335 4,896 3,382 2,695 — 21,308 974 — 22,282 Other — — — — 58 58 154 27 239 TOTAL REVENUES $ 21,608 $ 13,418 $ 7,248 $ 6,431 $ 58 $ 48,763 $ 2,427 $ 27 $ 51,217 Global Brand Divisions revenues included NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. Converse Other revenues were primarily attributable to licensing businesses. Corporate revenues primarily consisted of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse but managed through the Company's central foreign exchange risk management program. As of May 31, 2025 and 2024, the Company did not have any contract assets and had an immaterial amount of contract liabilities recorded in Accrued liabilities on the Consolidated Balance Sheets. SALES-RELATED RESERVES As of May 31, 2025 and 2024, the Company's sales-related reserve balance, which includes returns, post-invoice sales discounts and claims, was $ 1,834 million and $ 1,282 million, respectively, recorded in Accrued liabilities on the Consolidated Balance Sheets. As of May 31, 2025 and 2024, the Company's sales returns reserve balance, included within sales-related reserves, was $ 1,277 million and $ 799 million, respectively. The related estimated cost of inventory for expected product returns was $ 528 million and $ 331 million as of May 31, 2025 and 2024, respectively, and was recorded in Prepaid expenses and other current assets on the Consolidated Balance Sheets. 2025 FORM 10-K 83 Table of Contents NOTE 15 — SEGMENT INFORMATION The Company's reportable operating segments reflect the structure of the Company's internal organization and the financial information the Chief Operating Decision Maker ("CODM"), the Company's Chief Executive Officer, regularly reviews to assess Company performance and allocate resources. The CODM evaluates the performance of the Company's segments and allocates resources based on earnings before interest and taxes ("EBIT"), which represents Net income before Interest expense (income), net and Income tax expense in the Consolidated Statements of Income. The Company's segments are defined as follows: NIKE BRAND The NIKE Brand reportable segments are: North America; Europe, Middle East & Africa ("EMEA"); Greater China; and Asia Pacific & Latin America ("APLA"), and include results for the NIKE and Jordan brands. Each NIKE Brand segment represents a geographic region operating predominantly in one industry: the design, development, marketing and selling of athletic footwear, apparel and equipment. Global Brand Divisions is included within the NIKE Brand for presentation purposes to align with the way management views the Company. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. Global Brand Divisions primarily represents costs, including product creation and design expenses, that are centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital operations and enterprise technology. CONVERSE Converse operates in one industry: the design, marketing, licensing and selling of casual sneakers, apparel and accessories. CORPORATE Corporate consists primarily of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to the Company's headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses, including certain hedge gains and losses. As part of the Company's centrally managed foreign exchange risk management program, standard foreign currency rates are assigned twice per year to each NIKE Brand entity in the Company's geographic segments and to Converse. Inventories and Cost of sales for geographic segments and Converse reflect the use of these standard rates to recognize non-functional currency product purchases in the entity's functional currency. Differences between these standard rates and actual market rates are included in Corporate, together with foreign currency hedge gains and losses and other conversion gains and losses. 2025 FORM 10-K 84 Table of Contents YEAR ENDED MAY 31, 2025 (Dollars in millions) NORTH AMERICA EUROPE, MIDDLE EAST & AFRICA GREATER CHINA ASIA PACIFIC & LATIN AMERICA GLOBAL BRAND DIVISIONS TOTAL NIKE BRAND CONVERSE CORPORATE TOTAL NIKE, INC. Revenues $ 19,572 $ 12,257 $ 6,586 $ 6,251 $ 48 $ 44,714 $ 1,692 $ ( 97 ) $ 46,309 Cost of Sales 11,056 6,967 3,558 3,502 634 25,717 868 ( 66 ) 26,519 Gross profit 8,516 5,290 3,028 2,749 ( 586 ) 18,997 824 ( 31 ) 19,790 Demand creation expense 1,633 1,222 529 421 716 4,521 156 12 4,689 Operating overhead expense 2,150 1,479 973 804 3,401 8,807 430 2,162 11,399 Total selling and administrative expense 3,783 2,701 1,502 1,225 4,117 13,328 586 2,174 16,088 Other segment items (1) ( 2 ) 14 ( 76 ) ( 3 ) ( 4 ) ( 71 ) ( 2 ) ( 3 ) ( 76 ) EARNINGS (LOSS) BEFORE INTEREST AND TAXES $ 4,735 $ 2,575 $ 1,602 $ 1,527 $ ( 4,699 ) $ 5,740 $ 240 $ ( 2,202 ) Interest expense (income), net ( 107 ) TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES $ 3,885 Supplemental information: Depreciation and amortization (2) $ 157 143 49 50 237 636 14 125 $ 775 Inventories $ 3,198 2,042 951 905 148 7,244 272 ( 27 ) $ 7,489 (1) At the NIKE Brand segments and Converse, other segment items consist of unusual or non-operating transactions that occur outside the normal course of business. At Corporate, this also includes 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. (2) The amounts of depreciation and amortization disclosed by segment are included within Cost of sales and Operating overhead expense, as applicable. YEAR ENDED MAY 31, 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. Revenues $ 21,396 $ 13,607 $ 7,545 $ 6,729 $ 45 $ 49,322 $ 2,082 $ ( 42 ) $ 51,362 Cost of Sales 11,899 7,589 3,761 3,639 602 27,490 989 ( 4 ) 28,475 Gross profit 9,497 6,018 3,784 3,090 ( 557 ) 21,832 1,093 ( 38 ) 22,887 Demand creation expense 1,495 1,114 519 407 596 4,131 140 14 4,285 Operating overhead expense 2,189 1,517 1,019 801 3,534 9,060 485 2,746 12,291 Total selling and administrative expense 3,684 2,631 1,538 1,208 4,130 13,191 625 2,760 16,576 Other segment items (1) ( 9 ) ( 1 ) ( 63 ) ( 3 ) 33 ( 43 ) ( 6 ) ( 179 ) ( 228 ) EARNINGS (LOSS) BEFORE INTEREST AND TAXES $ 5,822 $ 3,388 $ 2,309 $ 1,885 $ ( 4,720 ) $ 8,684 $ 474 $ ( 2,619 ) Interest expense (income), net ( 161 ) TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES $ 6,700 Supplemental information: Depreciation and amortization (2) $ 152 146 56 51 236 641 17 138 $ 796 Inventories $ 3,134 2,028 1,070 810 166 7,208 296 15 $ 7,519 (1) At the NIKE Brand segments and Converse, other segment items consist of unusual or non-operating transactions that occur outside the normal course of business. At Corporate, this also includes 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. (2) The amounts of depreciation and amortization disclosed by segment are included within Cost of sales and Operating overhead expense, as applicable. 2025 FORM 10-K 85 Table of Contents YEAR ENDED MAY 31, 2023 (Dollars in millions) NORTH AMERICA EUROPE, MIDDLE EAST & AFRICA GREATER CHINA ASIA PACIFIC & LATIN AMERICA GLOBAL BRAND DIVISIONS TOTAL NIKE BRAND CONVERSE CORPORATE TOTAL NIKE, INC. Revenues $ 21,608 $ 13,418 $ 7,248 $ 6,431 $ 58 $ 48,763 $ 2,427 $ 27 $ 51,217 Cost of Sales 12,497 7,340 3,552 3,337 516 27,242 1,121 562 28,925 Gross profit 9,111 6,078 3,696 3,094 ( 458 ) 21,521 1,306 ( 535 ) 22,292 Demand creation expense 1,455 1,050 499 373 511 3,888 138 34 4,060 Operating overhead expense 2,207 1,500 1,012 789 3,881 9,389 499 2,429 12,317 Total selling and administrative expense 3,662 2,550 1,511 1,162 4,392 13,277 637 2,463 16,377 Other segment items (1) ( 5 ) ( 3 ) ( 98 ) — ( 9 ) ( 115 ) ( 7 ) ( 158 ) ( 280 ) EARNINGS (LOSS) BEFORE INTEREST AND TAXES $ 5,454 $ 3,531 $ 2,283 $ 1,932 $ ( 4,841 ) $ 8,359 $ 676 $ ( 2,840 ) Interest expense (income), net ( 6 ) TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES $ 6,201 Supplemental information: Depreciation and amortization (2) $ 128 120 54 42 211 555 17 131 $ 703 Inventories $ 3,806 2,167 973 894 232 8,072 305 77 $ 8,454 (1) At the NIKE Brand segments and Converse, other segment items consist of unusual or non-operating transactions that occur outside the normal course of business. At Corporate, this also includes 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. (2) The amounts of depreciation and amortization by segment are included within Cost of sales and Operating overhead expense, as applicable. REVENUES AND LONG-LIVED ASSETS BY GEOGRAPHIC AREA After allocation of revenues for Global Brand Divisions, Converse and Corporate to geographical areas based on the location where the sales originated, revenues by geographical area are similar to that as reported above for the NIKE Brand operating segments with the exception of the United States. Revenues derived in the United States were $ 19,725 million, $ 21,551 million and $ 22,007 million for the fiscal years ended May 31, 2025, 2024 and 2023, respectively. The Company's largest concentrations of long-lived assets primarily consist of the Company's corporate headquarters, retail locations and distribution facilities in the United States, China and the United Kingdom, as well as distribution facilities in Belgium. Long-lived assets attributable to operations in these countries, which consist of property, plant and equipment, net and operating lease ROU assets, net, were as follows: MAY 31, (Dollars in millions) 2025 2024 United States $ 4,467 $ 4,837 Belgium 774 757 China 488 501 United Kingdom 422 324 Other 1,389 1,299 TOTAL LONG-LIVED ASSETS $ 7,540 $ 7,718 2025 FORM 10-K 86 Table of Contents NOTE 16 — COMMITMENTS AND CONTINGENCIES As of May 31, 2025 and 2024, the Company had bank guarantees and letters of credit outstanding totaling $ 884 million and $ 768 million, respectively, issued primarily for real estate agreements, self-insurance programs, other general business obligations and legal matters. In connection with various contracts and agreements, the Company provides routine indemnification relating to the enforceability of intellectual property rights, coverage for legal issues that arise and other items where the Company is acting as the guarantor. Currently, the Company has several such agreements in place. However, based on the Company's historical experience and the estimated probability of future loss, the Company has determined the fair value of such indemnification is not material to the Company's financial position or results of operations. In the ordinary course of business, the Company is subject to various legal proceedings, claims and government investigations relating to its business, products and actions of its employees and representatives, including contractual and employment relationships, product liability, antitrust, customs, tax, intellectual property and other matters. The outcome of these legal matters is inherently uncertain, and the Company cannot predict the eventual outcome of currently pending matters, the timing of their ultimate resolution or the eventual losses, fines, penalties or consequences relating to those matters. When a loss related to a legal proceeding or claim is probable and reasonably estimable, the Company accrues its best estimate for the ultimate resolution of the matter. If one or more legal matters were to be resolved against the Company in a reporting period for amounts above management's expectations, the Company's financial position, operating results and cash flows for that reporting period could be materially adversely affected. In the opinion of management, based on its current knowledge and after consultation with counsel, the Company does not believe any currently pending legal matters will have a material adverse impact on the Company's results of operations, financial position or cash flows, except as described below. BELGIAN CUSTOMS CLAIM The Company has received claims for certain years from Belgian Customs for alleged underpaid duties related to products imported beginning in fiscal 2018. The Company disputes these claims and has engaged in the appellate process. The Company has issued bank guarantees in order to appeal the claims. At this time, the Company is unable to estimate the range of loss and cannot predict the final outcome as it could take several years to reach a resolution on this matter. If this matter is ultimately resolved against the Company, the amounts owed, including fines, penalties and other consequences relating to the matter, could have a material adverse effect on the Company's results of operations, financial position and cash flows. NOTE 17 — LEASES Lease expense is recognized in Cost of sales or Operating overhead expense within the Consolidated Statements of Income, based on the underlying nature of the leased asset. For the fiscal years ended May 31, 2025, 2024 and 2023, lease expense primarily consisted of operating lease costs of $ 663 million, $ 618 million and $ 585 million, respectively, as well as $ 432 million, $ 433 million and $ 403 million, respectively, primarily related to variable lease costs. As of and for the fiscal years ended May 31, 2025 and 2024 and 2023, finance leases were not a material component of the Company's lease portfolio. The undiscounted cash flows for future maturities of the Company's operating lease liabilities and the reconciliation to the Operating lease liabilities recognized in the Company's Consolidated Balance Sheets are as follows: (Dollars in millions) AS OF MAY 31, 2025 (1) Fiscal 2026 $ 565 Fiscal 2027 575 Fiscal 2028 487 Fiscal 2029 437 Fiscal 2030 389 Thereafter 885 Total undiscounted future cash flows related to lease payments $ 3,338 Less interest 286 PRESENT VALUE OF LEASE LIABILITIES $ 3,052 (1) Excludes $ 482 million as of May 31, 2025, of future operating lease payments for lease agreements signed but not yet commenced. 2025 FORM 10-K 87 Table of Contents The following table includes supplemental information used to calculate the present value of Operating lease liabilities: AS OF MAY 31, 2025 2024 Weighted-average remaining lease term (in years) 6.6 6.9 Weighted-average discount rate 3.1 % 2.9 % The following table includes supplemental cash and non-cash information related to operating leases: YEAR ENDED MAY 31, (Dollars in millions) 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 647 $ 613 $ 575 Operating lease right-of-use assets obtained in exchange for new operating lease liabilities $ 607 $ 458 $ 602 NOTE 18 — RESTRUCTURING During the third quarter of fiscal 2024, management streamlined the organization which resulted in a net reduction in the Company's global workforce. In fiscal 2024, the Company recognized pre-tax restructuring charges of $ 443 million, primarily associated with $ 392 million related to employee severance costs and $ 51 million related to accelerated stock-based compensation expense. Of the $ 443 million pre-tax restructuring charges, $ 379 million was classified in Operating overhead expense and $ 64 million was classified in Cost of sales . The related cash payments during fiscal 2024 were $ 123 million. As of May 31, 2024, restructuring charges of $ 267 million were reflected within Accrued liabilities on the Consolidated Balance Sheets. As of the second quarter of fiscal 2025, the fiscal 2024 restructuring was substantially complete and there was an immaterial amount of restructuring charges recognized in fiscal 2025. The Company made cash payments of $ 247 million during fiscal 2025, and the remaining immaterial amounts are to be settled in fiscal 2026. NOTE 19 — SUPPLIER FINANCE PROGRAMS Certain financial institutions offer voluntary supplier finance programs facilitated through a third-party platform that provide participating suppliers the option to finance valid payment obligations from the Company. The Company is not a party to agreements negotiated between participating suppliers and third-party financial institutions. The Company's obligations to its suppliers, including amounts due and payment terms, are not affected by a supplier's decision to participate in these programs and the Company does not provide guarantees to third parties in connection with these programs. As of May 31, 2025 and May 31, 2024, the Company had $ 1,101 million and $ 840 million, respectively, of outstanding supplier obligations confirmed as valid under these programs. These amounts are included within Accounts payable on the Consolidated Balance Sheets. (Dollars in millions) Confirmed obligations outstanding as of May 31, 2024 $ 840 Invoices confirmed during the year 11,741 Confirmed invoices paid during the year ( 11,480 ) Confirmed obligations outstanding as of May 31, 2025 $ 1,101 2025 FORM 10-K 88 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There has been no change of accountants nor any disagreements with accountants on any matter of accounting principles or practices or financial statement disclosure required to be reported under this Item.