What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-07-15 compared with 2025-07-17 · 218 added, 231 removed, 514 unchanged (47% of the section changed)

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FISCAL 2026 FINANCIAL HIGHLIGHTS

Revenues for fiscal 2025 were $46.3 billion compared to $51.4 billion for fiscal 2024

• NIKE Direct revenues declined 13% from $21.5 billion in fiscal 2024 to $18.8 billion in fiscal 2025, and represented approximately 42% of total NIKE Brand revenues for fiscal 2025

• NIKE Brand wholesale revenues decreased 7% on a reported basis and 6% on a currency-neutral basis

• Gross margin decreased 190 basis points to 42.7%, primarily due to higher discounts, changes in channel mix and higher inventory obsolescence reserves, partially offset by lower product costs

• Inventories as of May 31, 2025 were $7.5 billion, flat compared to the prior year

• We returned $5.3 billion to our shareholders in fiscal 2025 through share repurchases and dividends

Revenues were $46.4 billion in fiscal 2026 compared to $46.3 billion in fiscal 2025, flat on a reported basis and down 2% on a currency-neutral basis.

• NIKE Brand wholesale revenues were $27.5 billion in fiscal 2026 compared to $25.9 billion in fiscal 2025.

The increase on a currency-neutral basis was driven by higher revenues in North America, primarily offset by lower revenues in Greater China.

• NIKE Direct revenues were $17.7 billion in fiscal 2026 compared to $18.8 billion in fiscal 2025, primarily driven by a decrease in traffic.

• Gross margin in fiscal 2026 increased 20 basis points to 42.9%.

• Inventories as of May 31, 2026 were $7.5 billion, flat compared to the prior year, primarily reflecting an increase in units, offset by product mix.

• We returned approximately $2.5 billion to our shareholders in fiscal 2026 primarily through dividends.

• Return on Invested Capital ("ROIC") was 18.7% as of May 31, 2026, compared to 20.2% as of May 31, 2025.

ROIC is considered a non-GAAP financial measure, see "Use of Non-GAAP Financial Measures" for additional information.

Our results for fiscal 2025 reflected a decrease in traffic across NIKE Direct and our actions to reduce supply of certain footwear products in the marketplace through increased markdowns across NIKE Direct and discounts and higher sales returns with our wholesale partners, which negatively impacted our Revenues and gross margin.

For discussion related to the results of operations and changes in financial condition for fiscal 2024 compared to fiscal 2023 refer to Part II, Item 7.

For discussion related to the results of operations and changes in financial condition in fiscal 2025 compared to fiscal 2024, refer to Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2025 Form 10-K, which was filed with the United States Securities and Exchange Commission on July 17, 2025.

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FACTORS IMPACTING OUR BUSINESS

We are navigating through several external factors that create uncertainty and volatility in the operating environment including, but not limited to, geopolitical dynamics, tax regulation, fluctuating foreign exchange rates and new tariffs.

As a result of the new tariffs, we expect to incur a material gross incremental increase to Cost of sales.

Over the next several quarters, we are taking actions to mitigate the impact of the new tariffs, however for fiscal 2026, we expect a negative impact on gross margin.

We will continue to monitor changes to the import and export policies of the U.S.

and other countries that could require us to change the way in which we do business.

We are navigating through several external factors that create uncertainty and volatility in the operating environment, including, but not limited to, geopolitical dynamics, tax regulation, fluctuating foreign currency exchange rates and evolving tariff policies.

These factors, and any changes to these factors, among others, could have a material adverse impact on consumer behavior and on our future Revenues and overall profitability.

For a discussion of these factors and other risks, refer to Item 1A.

Risk Factors.

Despite these factors, we are focused on driving distinction within key sports, building a complete product portfolio, creating stories to inspire and emotionally connect with consumers, and elevating and growing the entire marketplace as we continue to take actions across the following areas:

• Product Management:

Reducing the supply of certain footwear products in the marketplace as we shift to new and innovative products and rebalance the mix of our footwear portfolio.

Accelerating product innovation and reducing the supply of certain footwear products in the marketplace to rebalance the mix of our footwear portfolio.

• Marketplace Management:

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This includes liquidating inventory through increased markdowns across NIKE Direct, and higher sales returns and discounts with our wholesale partners to reduce inventory and create capacity for new product.

We are also making investments to elevate the presentation of our brands in physical retail.

• Brand Management:

Increasing investment in demand creation including brand marketing and sports marketing, to support key product launches and sports moments.

These actions have had, and in the future could have, a negative impact on our Revenues and gross margin as well as higher Demand creation expense.

However, we believe these actions will reignite brand momentum and reposition our business to drive long-term shareholder value.

For more information refer to Item 1A Risk Factors, within Part 1, Item 1, Business.

Our reportable operating segments are at different stages of progress, and we expect to complete these actions by the end of December 2026.

The timing of financial impacts has varied and will continue to vary by segment.

North America has made the most progress against these actions, while Greater China and Converse will take more time.

Additionally, in Greater China, a trend of declining store traffic, elevated promotional activity and higher levels of inventory across the marketplace are negatively impacting revenues and overall profitability, while Converse is in the midst of a strategic reset of the brand and marketplace.

We expect negative impacts from Greater China and Converse to continue throughout fiscal 2027.

While these product, marketplace and brand management actions taken across our portfolio have had, and in the future may have, a negative impact on our Revenues and overall profitability, we believe they will reignite brand momentum and reposition our business to drive long-term shareholder value.

We have also taken steps to operate more efficiently and profitably, primarily through realigning costs across our supply chain and technology to serve an integrated marketplace.

In fiscal 2026, we recognized charges of $385 million associated with employee severance costs.

We continue to evaluate opportunities across the Company and may take additional actions which could lead to additional charges in future quarters.

For additional information, refer to Note 18 — Severance, Restructuring and Other Employee Costs within the accompanying Notes to the Consolidated Financial Statements.

OTHER MATTERS

On February 20, 2026, the U.S.

Supreme Court ruled that U.S.

tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") on goods imported into the U.S.

were unauthorized.

During the fourth quarter of fiscal 2026, we deemed the recovery of IEEPA tariffs paid to be probable.

Accordingly, we recognized a benefit of $986 million in Cost of sales within the Consolidated Statements of Income for the recovery of IEEPA tariffs paid, for which $965 million and $21 million of the benefit was classified within North America and Converse, respectively, largely offsetting the impact of the IEEPA tariffs recognized during fiscal 2026.

As of May 31, 2026, we received $302 million and recorded $684 million of outstanding IEEPA tariff receivables reflected within Accounts receivable, net on the Consolidated Balance Sheets.

Subsequent to May 31, 2026, we received substantially all of the remaining IEEPA tariff receivable.

We will continue to monitor developments pertaining to the import and export policies of the U.S.

and other countries, as well as those pertaining to tariff refunds and litigation, that could impact our financial position, results of operations and cash flows.

USE OF NON-GAAP FINANCIAL MEASURES

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

Earnings Before Interest and Taxes ("EBIT") :

Calculated as Net income before Interest expense (income), net and Income tax expense in the Consolidated Statements of Income.

2026 FORM 10-K 30

Earnings Before Interest and Taxes ("EBIT") and EBIT margin :

Calculated as Net income before Interest (income) expense, net and Income tax expense in the Consolidated Statements of Income and total NIKE, Inc.

EBIT divided by total NIKE, Inc.

Revenues in the Consolidated Statements of Income, respectively.

Total NIKE, Inc.

EBIT for fiscal 2025, 2024 and 2023 are as follows:

EBIT and EBIT margin calculations in fiscal 2026, 2025 and 2024 are as follows:

YEAR ENDED MAY 31,

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Net income $ 3,108 $ 3,219 $ 5,700

Interest expense (income), net (107) (161) (6)

Income tax expense 666 1,000 1,131

EARNINGS BEFORE INTEREST AND TAXES

$ 3,778 $ 6,539 $ 6,195

EBIT Margin :

Calculated as total NIKE, Inc.

EBIT divided by total NIKE, Inc.

Our EBIT Margin calculation for fiscal 2025, 2024 and 2023 are as follows:

YEAR ENDED MAY 31,

(Dollars in millions)

Interest (income) expense, net

(50) (107) (161)

Earnings before interest and taxes $ 3,778 $ 6,539 $ 6,195

Income tax expense 792 666 1,000

EBIT $ 3,850 $ 3,778 $ 6,539

Total NIKE, Inc.

Revenues 46,398 46,309 51,362

8.2% 12.7% 12.1%

2025 FORM 10-K 30

Net income margin 6.7% 7.0% 11.1%

EBIT margin 8.3% 8.2% 12.7%

Return on Invested Capital ("ROIC") :

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FOR THE TRAILING FOUR QUARTERS ENDED

(Dollars in millions) MAY 31, 2025 MAY 31, 2024

(Dollars in millions)

MAY 31, 2026 MAY 31, 2025

Net income $ 3,108 $ 3,219

Interest expense (income), net (107) (161)

Interest (income) expense, net

Income tax expense 792 666

Earnings before interest and taxes 3,778 6,539

EBIT 3,850 3,778

Income tax adjustment (1)

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AVERAGE FOR THE TRAILING FIVE QUARTERS ENDED

(Dollars in millions)

MAY 31, 2026 MAY 31, 2025

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Total invested capital $ 16,426 $ 15,504

RETURN ON INVESTED CAPITAL 20.2% 34.9%

(1) Equals Earnings before interest and taxes multiplied by the effective tax rate as of each of the respective quarter ends.

ROIC 18.7% 20.2%

(1) Equals EBIT multiplied by the effective tax rate as of each of the respective quarter ends.

(2) Total debt includes the following:

1) Current portion of long-term debt, 2) Notes Payable, 3) Current portion of operating lease liabilities, 4) Long-term debt and 5) Operating lease liabilities.

1) Current portion of long-term debt, 2) Current portion of operating lease liabilities, 3) Long-term debt and 4) Operating lease liabilities.

Currency-neutral revenues :

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% of revenues 34.7 % 34.7 % 32.3 %

Interest expense (income), net (107) (161) — (6) —

Interest (income) expense, net (50) (107) — (161) —

Other (income) expense, net (53) (76) — (228) —

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Diluted earnings per common share $ 2.10 $ 2.16 -3 % $ 3.73 -42 %

2025 FORM 10-K 32

CONSOLIDATED OPERATING RESULTS

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TOTAL NIKE BRAND REVENUES (3)

Supplemental NIKE Brand Revenue Details:

NIKE Brand Revenues by:

Men's $ 23,216 $ 24,785 -6 % -6 % $ 24,445 1 % 2 %

Women's 9,719 10,366 -6 % -5 % 10,274 1 % 2 %

$ 45,222 $ 44,714 1 % -1 % $ 49,322 -9 % -9 %

Jordan Brand 7,270 8,701 -16 % -16 % 8,460 3 % 3 %

(1,234) (594) -108 % -106 % (363) -64 % -67 %

Global Brand Divisions (2)

48 45 7 % 10 % 58 -22 % -25 %

TOTAL NIKE BRAND REVENUES

$ 44,714 $ 49,322 -9 % -9 % $ 48,763 1 % 1 %

(1) The percent change excluding currency changes represents a non-GAAP financial measure.

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

(3) Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.

(4) Beginning in fiscal 2025, with the continued rollout of a new Enterprise Resource Planning Platform, we have removed the non-GAAP financial measure of wholesale equivalent revenues.

There is no change to our reported revenues or gross margin.

Prior year amounts have been recast to conform to fiscal 2025 presentation.

(5) Others include products not allocated to Men's, Women's, Kids' and Jordan Brand, as well as certain adjustments that are not allocated to products designated by consumer.

(3) Included in NIKE Brand revenues are sales of Jordan Brand products of $7,034 million, $7,270 million and $8,701 million in fiscal 2026, 2025 and 2024, respectively, decreasing 3% and 16% on a reported basis and decreasing 5% and 16% on a currency-neutral basis, for fiscal 2026 and 2025, respectively.

(4) Corporate revenues primarily consist of foreign currency gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.

2026 FORM 10-K 32

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FISCAL 2026 COMPARED TO FISCAL 2025

Revenues were $46.3 billion in fiscal 2025 compared to $51.4 billion for fiscal 2024, which decreased 10% and 9% on a reported and currency-neutral basis, respectively.

On a currency-neutral basis, the decrease was primarily due to lower revenues in North America, Europe, Middle East & Africa ("EMEA") and Greater China which each decreased NIKE, Inc.

Revenues by 4, 3 and 2 percentage points, respectively.

• NIKE Brand revenues, which represented over 90% of NIKE, Inc.

Revenues, decreased 9% on both a reported and currency-neutral basis.

The decrease, on a currency-neutral basis, was due to lower revenues in Men's, the Jordan Brand, Women's and Kids'.

• NIKE Brand footwear revenues decreased 11% on a currency-neutral basis.

Unit sales of footwear decreased 8%, while lower average selling price ("ASP") per pair reduced footwear revenues by approximately 3 percentage points.

Lower ASP per pair was primarily due to higher discounts and changes in channel mix, partially offset by strategic pricing actions.

• NIKE Brand apparel revenues decreased 5% on a currency-neutral basis.

Unit sales of apparel decreased 5%, while ASP per unit was flat as strategic pricing actions were offset by changes in channel mix and higher discounts.

• NIKE Brand wholesale revenues decreased 7% on a reported basis and 6% on a currency-neutral basis, compared to fiscal 2024.

The decrease, on a currency-neutral basis, was driven by lower revenues across all geographies.

• NIKE Direct revenues were $18.8 billion in fiscal 2025 compared to $21.5 billion in fiscal 2024.

On a currency-neutral basis, NIKE Direct revenues decreased 12% due to declines in NIKE Brand Digital sales of 20% from $12.1 billion in fiscal 2024 to $9.6 billion in fiscal 2025, while NIKE store sales were flat.

Revenues were $46.4 billion in fiscal 2026 compared to $46.3 billion in fiscal 2025.

On a currency-neutral basis, NIKE, Inc.

Revenues decreased 2%, primarily due to lower revenues in Greater China, Converse and Europe, Middle East & Africa ("EMEA"), which decreased NIKE, Inc.

Revenues by approximately 2, 1 and 1 percentage points, respectively.

Higher revenues in North America increased NIKE, Inc.

Revenues by approximately 2 percentage points.

• NIKE Brand revenues were $45.2 billion in fiscal 2026 compared to $44.7 billion in fiscal 2025, an increase of 1% and a decrease of 1% on a reported and currency-neutral basis, respectively.

• NIKE Brand footwear revenues were $29.5 billion in fiscal 2026 compared to $29.5 billion in fiscal 2025.

On a currency-neutral basis, NIKE Brand footwear revenues decreased 2%.

Unit sales of footwear decreased 1%, while lower average selling price ("ASP") per pair reduced footwear revenues by approximately 1 percentage point.

Lower ASP per pair was primarily due to channel mix, partially offset by product mix and strategic pricing.

• NIKE Brand apparel revenues were $13.4 billion in fiscal 2026 compared to $13.0 billion in fiscal 2025.

On a currency-neutral basis, NIKE Brand apparel revenues increased 2%.

Unit sales of apparel increased 1%, while higher ASP per unit contributed approximately 1 percentage point of apparel revenue growth.

Higher ASP per unit was primarily due to product mix, partially offset by higher discounts and channel mix.

• NIKE Brand wholesale revenues were $27.5 billion in fiscal 2026 compared to $25.9 billion in fiscal 2025, up 6% on a reported basis and up 4% on a currency-neutral basis.

The increase on a currency-neutral basis was driven by higher revenues in North America, primarily offset by lower revenues in Greater China.

• NIKE Direct revenues were $17.7 billion in fiscal 2026 compared to $18.8 billion in fiscal 2025, down 6% on a reported basis.

On a currency-neutral basis, NIKE Direct revenues were down 8% due to declines in NIKE Brand Digital sales of 12% and declines in NIKE store sales of 4%.

NIKE Brand Digital sales were $8.6 billion in fiscal 2026 compared to $9.6 billion in fiscal 2025, with declines primarily due to reduced traffic.

NIKE store sales were $9.1 billion in fiscal 2026 compared to $9.2 billion in fiscal 2025.

Comparable store sales decreased 4%.

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FISCAL 2026 COMPARED TO FISCAL 2025

For fiscal 2025, our consolidated gross profit decreased 14% to $19,790 million compared to $22,887 million for fiscal 2024.

Gross margin decreased 190 basis points to 42.7% for fiscal 2025 compared to 44.6% for fiscal 2024 due to the following:

• Lower NIKE Brand ASP (decreasing gross margin approximately 180 basis points), primarily due to higher discounts and changes in channel mix, partially offset by strategic pricing actions;

• Higher other costs (decreasing gross margin approximately 90 basis points), including higher inventory obsolescence reserves;

• Lower gross margin from Converse (decreasing gross margin approximately 20 basis points);

• Unfavorable changes in net foreign currency exchange rates, including hedges (decreasing gross margin approximately 10 basis points).

For fiscal 2026, our consolidated gross profit increased 1% to $19.9 billion compared to $19.8 billion for fiscal 2025.

Gross margin increased 20 basis points to 42.9% for fiscal 2026 compared to 42.7% for fiscal 2025 due to the following:

• Lower warehousing and logistics costs (increasing gross margin approximately 20 basis points), primarily due to channel mix;

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

• Lower other costs (increasing gross margin approximately 20 basis points).

This was partially offset by:

• Lower NIKE Brand product costs (increasing gross margin approximately 80 basis points);

• Lower warehousing and logistics costs (increasing gross margin approximately 20 basis points);

• Restructuring charges in the prior year (increasing gross margin approximately 10 basis points).

• Lower gross margin from Converse (decreasing gross margin approximately 20 basis points);

• Higher NIKE Brand product costs (decreasing gross margin approximately 20 basis points).

TOTAL SELLING AND ADMINISTRATIVE EXPENSE

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Sports marketing expense includes expenses related to endorsement contracts, complimentary product and sports marketing events.

(2) 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.

(2) Operating overhead expense consists primarily of wage and benefit-related expenses and other administrative costs, 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.

FISCAL 2026 COMPARED TO FISCAL 2025

Demand creation expense increased 9%, due to higher brand marketing expense, reflecting investment in key sports events, and higher sports marketing expense.

Changes in foreign currency exchange rates did not have a material impact on Demand creation expense.

Operating overhead expense decreased 7%, due to restructuring charges in the prior year, lower wage-related expenses and lower other administrative costs.

Changes in foreign currency exchange rates did not have a material impact on Operating overhead expense.

Demand creation expense increased 1% due to higher sports marketing expense and unfavorable changes in foreign currency exchange rates, partially offset by lower brand marketing expense, reflecting higher investment in key sports events in the prior year.

Changes in foreign currency exchange rates increased Demand creation expense by approximately 2 percentage points.

Operating overhead expense was flat as lower other administrative costs were offset by higher wage-related expense, driven by employee severance costs, and unfavorable changes in foreign currency exchange rates.

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

2026 FORM 10-K 34

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FISCAL 2026 COMPARED TO FISCAL 2025

Other (income) expense, net decreased from $228 million of other income, net, to $76 million of other income, net, primarily due to a net unfavorable change in foreign currency conversion gains and losses, including hedges.

Other (income) expense, net decreased from $76 million of other income, net, to $53 million of other income, net, primarily due to an unfavorable net change in foreign currency conversion gains and losses, including hedges, partially offset by settlements of legal matters.

FISCAL 2026 FISCAL 2025 % CHANGE FISCAL 2024 % CHANGE

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FISCAL 2026 COMPARED TO FISCAL 2025

Our effective tax rate was 17.1% for fiscal 2025, compared to 14.9% for fiscal 2024, primarily due to changes in earnings mix, decreased benefits from stock-based compensation and non-recurring one-time benefits in fiscal 2024 including the impact of the delay of the effective date of certain U.S.

foreign tax credit regulations.

These impacts were partially offset by a one-time, non-cash deferred tax benefit in fiscal 2025 provided by US tax regulations related to foreign currency gains and losses.

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 NIKE beginning fiscal 2026.

We are evaluating the future impact of these tax law changes on our financial statements.

Our effective tax rate increased from 17.1% to 20.3%, primarily due to a prior year one-time, non-cash deferred tax benefit provided by U.S.

tax regulations related to foreign currency gains and losses.

2026 FORM 10-K 35

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The primary financial measure used by the Company to evaluate performance of its segments is EBIT.

For additional information on our segments, refer to Note 15 — Segment Information in the accompanying Notes to the Consolidated Financial Statements.

The Company uses EBIT as the primary financial measure to evaluate performance of its segments.

The breakdown of EBIT is as follows:

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TOTAL NIKE, INC.

EARNINGS BEFORE INTEREST AND TAXES (1)

$ 3,850 $ 3,778 2 % $ 6,539 -42 %

Interest (income) expense, net (50) (107) — (161) —

Income tax expense 792 666 19 % 1,000 -33 %

NET INCOME $ 3,108 $ 3,219 -3 % $ 5,700 -44 %

Total NIKE, Inc.

Revenues $ 46,398 $ 46,309 0 % $ 51,362 -10 %

Net income margin 6.7 % 7.0 % 11.1 %

EBIT margin (1)

8.3 % 8.2 % 12.7 %

Interest expense (income), net (107) (161) — (6) —

TOTAL NIKE, INC.

INCOME BEFORE INCOME TAXES $ 3,885 $ 6,700 -42 % $ 6,201 8 %

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

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9,351 8,516 10 % 9,497 -10 %

8,516 9,497 -10 % 9,111 4 %

45.6% 43.5% 210 bps 44.4% -90 bps

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FISCAL 2026 COMPARED TO FISCAL 2025

• North America revenues decreased 8% on a currency-neutral basis primarily due to lower revenues in the Jordan Brand, Men's and Women's.

Wholesale revenues decreased 5%.

NIKE Direct revenues decreased 12% due to declines in digital sales of 19% and store sales of 1%.

• North America revenues increased 5% on a currency-neutral basis.

Wholesale revenues increased 14% including expanded distribution, higher shipments to existing partners and fewer marketplace management actions taken in the current year.

NIKE Direct revenues decreased 6% due to declines in digital sales of 10% and declines in store sales of 2%.

Comparable store sales decreased 2%.

• Footwear revenues decreased 13% on a currency-neutral basis.

Unit sales of footwear decreased 10%, while lower ASP per pair reduced footwear revenues by approximately 3 percentage points.

Lower ASP per pair was primarily due to higher discounts and changes in channel mix, partially offset by product mix.

• Apparel revenues decreased 2% on a currency-neutral basis.

Unit sales of apparel decreased 1%, while lower ASP per unit reduced apparel revenues by approximately 1 percentage point.

Lower ASP per unit was primarily due to higher discounts and changes in channel mix, partially offset by product mix.

Reported EBIT decreased 19% reflecting lower revenues and the following:

• Gross margin contraction of 90 basis points primarily due to lower ASP and higher inventory obsolescence reserves, partially offset by lower product costs.

Lower ASP primarily reflects higher discounts and changes in channel mix.

• Demand creation expense increased 9% primarily due to higher brand marketing expense, reflecting investment in key sports events.

• Operating overhead expense decreased 2% due to lower wage-related expenses and lower other administrative costs.

• Footwear revenues increased 5% on a currency-neutral basis.

Unit sales of footwear increased 6%, while lower ASP per pair reduced footwear revenues by approximately 1 percentage point.

Lower ASP per pair was primarily due to channel mix, partially offset by product mix and strategic pricing.

• Apparel revenues increased 4% on a currency-neutral basis.

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

Higher ASP per unit was primarily due to product mix, partially offset by channel mix.

Reported EBIT increased 14% reflecting higher reported revenues and the following:

• Gross margin expansion of 210 basis points primarily due to lower product costs, lower warehousing and logistics costs driven by channel mix, and higher ASP.

Higher ASP primarily reflects strategic pricing and product mix, partially offset by channel mix.

• Demand creation expense increased 6% primarily due to higher sports marketing expense.

• Operating overhead expense increased 5% primarily due to higher wage-related expense.

2026 FORM 10-K 37

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Other segment items

14 (1) — (3) —

EARNINGS BEFORE INTEREST AND TAXES $ 2,417 $ 2,575 -6 % $ 3,388 -24 %

FISCAL 2026 COMPARED TO FISCAL 2025

• EMEA revenues decreased 10% on a currency-neutral basis due to lower revenues in Men's, the Jordan Brand, Kids' and Women's.

Wholesale revenues decreased 6%.

NIKE Direct revenues decreased 16% due to a decline in digital sales of 30%, partially offset by an increase in store sales of 5%.

Comparable store sales increased 5%.

• EMEA revenues decreased 3% on a currency-neutral basis.

Wholesale revenues were flat.

NIKE Direct revenues decreased 9% due to declines in digital sales of 10% and declines in store sales of 8%.

Comparable store sales decreased 7%.

• Footwear revenues decreased 5% on a currency-neutral basis.

Unit sales of footwear decreased 2%, while lower ASP per pair reduced footwear revenues by approximately 3 percentage points.

Lower ASP per pair was primarily due to changes in channel mix and higher discounts, partially offset by strategic pricing actions and product mix.

• Apparel revenues decreased 9% on a currency-neutral basis.

Unit sales of apparel decreased 6%, while lower ASP per unit reduced apparel revenues by approximately 3 percentage points.

Lower ASP per unit was primarily due to changes in channel mix, product mix and higher discounts.

Reported EBIT decreased 24% reflecting lower revenues and the following:

• Gross margin contraction of 100 basis points primarily due to lower ASP, partially offset by lower warehousing, logistics and product costs.

Lower ASP primarily reflects changes in channel mix and higher discounts, partially offset by strategic pricing actions.

• Demand creation expense increased 10% primarily due to higher brand marketing expense, reflecting investment in key sports events, and higher sports marketing expense.

• Operating overhead expense decreased 3% primarily due to lower wage-related expenses.

Lower ASP per pair was primarily due to higher discounts, partially offset by product mix.

• Apparel revenues were flat on a currency-neutral basis.

Unit sales of apparel increased 1%, while lower ASP per unit reduced apparel revenues by approximately 1 percentage point.

Lower ASP per unit was primarily due to higher discounts, partially offset by product mix.

Reported EBIT decreased 6% reflecting higher reported revenues and the following:

• Gross margin contraction of 140 basis points primarily due to lower ASP, reflecting higher discounts, and unfavorable changes in standard foreign currency exchange rates.

• Demand creation expense increased 5% due to unfavorable changes in foreign currency exchange rates and higher sports marketing expense, partially offset by lower brand marketing expense, reflecting higher investment in key sports events in the prior year.

• Operating overhead expense increased 5% primarily due to unfavorable changes in foreign currency exchange rates, partially offset by lower other administrative costs.

2026 FORM 10-K 38

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FISCAL 2026 COMPARED TO FISCAL 2025

• Greater China revenues decreased 12% on a currency-neutral basis due to lower revenues in Men's, the Jordan Brand, Women's and Kids'.

Wholesale revenues decreased 13%.

NIKE Direct revenues decreased 12% due to declines in digital sales of 22% and store sales of 6%.

• Greater China revenues decreased 13% on a currency-neutral basis.

Wholesale revenues decreased 14%, reflecting our actions to prioritize marketplace health.

NIKE Direct revenues decreased 12% due to declines in digital sales of 29% and declines in store sales of 4%.

Comparable store sales decreased 6%.

• Footwear revenues decreased 15% on a currency-neutral basis.

Unit sales of footwear decreased 11%, while lower ASP per pair reduced footwear revenues by approximately 2 percentage points.

Lower ASP per pair was primarily due to higher discounts and changes in channel mix, partially offset by strategic pricing actions.

Unit sales of footwear decreased 14%, while lower ASP per pair reduced footwear revenues by approximately 1 percentage point.

Lower ASP per pair was primarily due to channel mix and product mix, partially offset by lower discounts.

• Apparel revenues decreased 7% on a currency-neutral basis.

Unit sales of apparel decreased 17%, while higher ASP per unit contributed approximately 5 percentage points of apparel revenue growth.

Higher ASP per unit was primarily due to strategic pricing actions, partially offset by higher discounts.

Reported EBIT decreased 31% reflecting lower revenues and the following:

• Gross margin contraction of approximately 420 basis points, primarily due to unfavorable changes in standard foreign currency exchange rates and higher inventory obsolescence reserves, partially offset by higher ASP.

Higher ASP primarily reflects strategic pricing actions, partially offset by higher discounts.

• Demand creation expense increased 2% primarily due to higher sports marketing expense and higher brand marketing expense.

• Operating overhead expense decreased 5% primarily due to lower wage-related expenses and lower other administrative costs.

Unit sales of apparel decreased 8%, while higher ASP per unit contributed approximately 1 percentage point of apparel revenue growth.

Higher ASP per unit was primarily due to product mix, partially offset by channel mix.

Reported EBIT decreased 20% reflecting lower reported revenues and the following:

• Gross margin contraction of 30 basis points primarily due to unfavorable changes in standard foreign currency exchange rates.

• Demand creation expense decreased 14% primarily due to lower brand marketing expense.

• Operating overhead expense increased 2% due to higher wage-related expense and unfavorable changes in foreign currency exchange rates, partially offset by lower other administrative costs.

2026 FORM 10-K 39

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FISCAL 2026 COMPARED TO FISCAL 2025

• Asia Pacific & Latin America ("APLA") revenues decreased 3% on a currency-neutral basis primarily due to lower revenues in Southeast Asia & India and Korea, partially offset by higher revenues in Mexico.

Revenues decreased primarily due to lower revenues in the Jordan Brand and Men's.

Wholesale revenues decreased 3%.

NIKE Direct revenues decreased 3% due to a decline in digital sales of 9%, partially offset by an increase in store sales of 4%.

Comparable store sales increased 1%.

• Asia Pacific & Latin America revenues decreased 1% on a currency-neutral basis primarily due to lower revenues in Southeast Asia & India, Japan and Korea, partially offset by higher revenues in Central & South America and Pacific.

Wholesale revenues increased 2%.

NIKE Direct revenues decreased 6% due to declines in digital sales of 9% and declines in store sales of 1%.

Comparable store sales decreased 4%.

• Footwear revenues decreased 3% on a currency-neutral basis.

Unit sales of footwear decreased 2%, while lower ASP per pair reduced footwear revenues by approximately 2 percentage points.

Lower ASP per pair was primarily due to higher discounts and changes in channel mix.

• Apparel revenues decreased 1% on a currency-neutral basis.

Unit sales of apparel decreased 3%, while higher ASP per unit contributed approximately 2 percentage points of apparel revenue growth.

Higher ASP per unit was primarily due to strategic pricing actions, partially offset by higher discounts.

Reported EBIT decreased 19% reflecting lower revenues and the following:

• Gross margin contraction of approximately 190 basis points primarily due to unfavorable changes in standard foreign currency exchange rates, lower ASP and higher warehousing and logistics costs.

Lower ASP reflects product mix, higher discounts and changes in channel mix, partially offset by strategic pricing actions.

• Demand creation expense increased 3%, due to higher brand marketing expense and higher sports marketing expense, partially offset by favorable changes in foreign currency exchange rates.

• Operating overhead expense was flat due to higher wage-related expenses and higher other administrative costs, offset by favorable changes in foreign currency exchange rates.

Unit sales of footwear decreased 3%, while ASP per pair was flat as product mix and strategic pricing were offset primarily by higher discounts and channel mix.

• Apparel revenues increased 5% on a currency-neutral basis.

Unit sales of apparel increased 5%, while ASP per unit was flat as product mix and strategic pricing were offset primarily by higher discounts and channel mix.

Reported EBIT decreased 9% reflecting flat reported revenues and the following:

• Gross margin contraction of 200 basis points primarily due to unfavorable changes in standard foreign currency exchange rates.

• Demand creation expense decreased 1% primarily due to lower brand marketing expense, partially offset by higher sports marketing expense.

• Operating overhead expense increased 3% due to higher wage-related expense and unfavorable changes in foreign currency exchange rates, partially offset by lower other administrative costs.

2026 FORM 10-K 40

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Cost of sales 653 634 3 % 602 5 %

(586) (557) -5 % (458) -22 %

Gross profit (loss) (604) (586) -3 % (557) -5 %

Demand creation expense 763 716 7 % 596 20 %

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FISCAL 2026 COMPARED TO FISCAL 2025

Global Brand Divisions' loss before interest and taxes was flat primarily due to lower Operating overhead expense, offset by higher Demand creation expense.

Lower Operating overhead expense was primarily due to lower wage-related expenses.

Higher Demand creation expense was primarily due to higher brand marketing expense and higher sports marketing expense.

(Dollars in millions) FISCAL 2025 FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Global Brand Divisions' loss before interest and taxes decreased 2% primarily due to lower Operating overhead expense, partially offset by higher Demand creation expense.

Demand creation expense increased 7% primarily due to higher brand marketing expense and higher sports marketing expense.

Operating overhead expense decreased 5% primarily due to lower other administrative costs, partially offset by higher wage-related expense, driven by employee severance costs.

(Dollars in millions)

FISCAL 2026 FISCAL 2025 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 1,013 $ 1,457 -30 % -32 % $ 1,800 -19 % -19 %

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Demand creation expense 95 156 -39 % 140 11 %

156 140 11 % 138 1 %

Operating overhead expense

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(1) Other revenues consist of territories serviced by third-party licensees who pay royalties to Converse for the use of its registered trademarks and other intellectual property rights.

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

2026 FORM 10-K 41

FISCAL 2026 COMPARED TO FISCAL 2025

• Converse revenues decreased 18% on a currency-neutral basis driven by revenue declines across all territories.

Unit sales decreased 12%, while lower ASP reduced revenues by approximately 6 percentage points.

Lower ASP per unit primarily reflects higher discounts in direct to consumer.

• Wholesale revenues decreased 20% on a currency-neutral basis, as declines in Western Europe and Asia were partially offset by growth in North America.

• Direct to consumer revenues decreased 17% on a currency-neutral basis due to reduced traffic in all territories and lower ASP due to higher discounts.

Reported EBIT decreased 49% reflecting lower revenues and the following:

• Gross margin contraction of approximately 380 basis points due to lower ASP and higher warehousing and logistics costs, partially offset by lower product costs.

Lower ASP primarily reflects higher discounts.

• Demand creation expense increased 11% primarily due to higher brand marketing expense.

• Operating overhead expense decreased 11% primarily due to lower wage-related expenses and lower other administrative costs.

• Converse revenues decreased 32% on a currency-neutral basis driven by declines in all territories.

Unit sales decreased 31%, while lower ASP reduced revenues by approximately 1 percentage point.

• Wholesale revenues decreased 33% on a currency-neutral basis, driven by declines in all territories.

• Direct to consumer revenues decreased 33% on a currency-neutral basis, reflecting reduced traffic in all territories.

Reported EBIT decreased 93% reflecting lower reported revenues and the following:

• Gross margin contraction of 490 basis points primarily due to lower ASP, as well as the brand and marketplace reset costs, including higher inventory obsolescence reserves and employee severance costs.

Lower ASP primarily reflects higher discounts and channel mix.

• Demand creation expense decreased 39% primarily due to lower brand marketing expense.

• Operating overhead expense decreased 7% primarily due to lower other administrative costs, partially offset by employee severance costs.

(Dollars in millions)

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Cost of sales (95) (66) — (4) —

(31) (38) — (535) —

Gross profit (loss) 97 (31) — (38) —

Demand creation expense 9 12 -25 % 14 -14 %

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and certain foreign currency gains and losses.

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

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

In addition to the foreign currency gains and losses recognized in Corporate revenues, foreign currency results in Corporate include gains and losses resulting from the difference between actual foreign currency exchange rates and standard rates used to record non-functional currency denominated product purchases within the NIKE Brand geographic operating segments and Converse;

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Corporate's loss before interest and taxes decreased $179 million, primarily due to the following:

• a favorable change of $443 million related to restructuring charges in the prior year, $379 million reported as a component of consolidated Operating overhead expense and $64 million reported as a component of consolidated Gross profit;

• a favorable change of $205 million primarily related to lower wage-related expenses and lower other administrative costs, reported as a component of consolidated Operating overhead expense;

• an unfavorable change of $92 million related to the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, reported as a component of consolidated Other (income) expense, net;

• an unfavorable change in net foreign currency gains and losses of $88 million related to the difference between actual foreign currency exchange rates and standard foreign currency exchange rates assigned to the NIKE Brand geographic operating segments and Converse, net of hedge gains and losses;

• a favorable change in net foreign currency gains and losses of $147 million related to the difference between actual foreign currency exchange rates and standard foreign currency exchange rates assigned to the NIKE Brand geographic operating segments and Converse, net of hedge gains and losses;

these results are reported as a component of consolidated Gross profit;

• a favorable change of $79 million primarily related to lower other administrative costs, partially offset by higher wage-related expense, reported as a component of consolidated Operating overhead expense;

• an unfavorable change of $31 million primarily related to the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, partially offset by settlements of legal matters, reported as a component of consolidated Other (income) expense, net.

2026 FORM 10-K 42

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Dollar reduces our consolidated earnings.

The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a detriment of approximately $419 million for the year ended May 31, 2025.

The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a detriment of approximately $97 million for the year ended May 31, 2025.

The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a benefit of approximately $1,023 million for the year ended May 31, 2026.

The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a benefit of approximately $184 million for the year ended May 31, 2026.

MANAGING TRANSLATIONAL EXPOSURES

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We utilize forward contracts and/or options to mitigate the variability of the forecasted future purchases and sales of these U.S.

Dollar investments.

The combination of the purchase and sale of the U.S.

Dollar investment and the hedging instrument has the effect of partially offsetting the year-over-year foreign currency translation impact on net earnings in the period the investments are sold.

Hedges of the purchase of U.S.

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

Dollar investments and to mitigate exposure to forecasted future cash flows of certain intercompany transactions.

The combination of these foreign currency exposures and the related hedging instruments has the effect of partially offsetting the year-over-year foreign currency translation impact on net earnings.

These hedges are generally accounted for as cash flow hedges.

We estimate the combination of translation of foreign currency-denominated profits from our international businesses and the year-over-year change in foreign currency related gains and losses included in Other (income) expense, net had an unfavorable impact of approximately $1 million on our Income before income taxes for the year ended May 31, 2026.

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(Dollars in millions)

FISCAL 2025 FISCAL 2024 $ CHANGE

FISCAL 2026 FISCAL 2025

Cash provided (used by):

Operating activities

$ 3,698 $ 7,429 $ (3,731)

Operations $ 2,868 $ 3,698

Investing activities

(275) 894 (1,169)

Financing activities

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$ 99 $ (2,396)

Cash provided by operating activities decreased $3,731 million.

This was driven by a decrease of $2,228 million in Net income, adjusted for non-cash items, and changes in certain working capital components and other assets and liabilities, which decreased $1,503 million.

The change in working capital was impacted by changes to Inventories, primarily due to reduced inventory purchases in the prior year as well as unfavorable changes in standard foreign currency exchange rates in the current year.

Cash used by investing activities increased $1,169 million, from an inflow in fiscal 2024 to an outflow in fiscal 2025, primarily driven by the net change in short-term investments (including sales, maturities and purchases).

Cash used by financing activities decreased $68 million, primarily driven by lower share repurchases, largely offset by a $1.0 billion bond repayment and slightly higher dividend payments.

In fiscal 2025, we purchased a total of 37.6 million shares of NIKE's Class B Common Stock for $3.0 billion (an average price of $78.50 per share) under the four-year, $18 billion share repurchase plan authorized by the Board of Directors in June 2022.

As of May 31, 2025, we had repurchased 122.6 million shares at a cost of approximately $12.0 billion (an average price of $98.00 per share) under this program.

We have moderated, and intend to continue moderating, share repurchases.

The timing and the amount of share repurchases will be dictated by our liquidity, capital needs and operating cash flows.

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

In fiscal 2026, cash provided by operations was $2,868 million.

This was driven by Net income of $3,108 million, adjusted for non-cash items of $1,438 million, and a net change in certain working capital components and other assets and liabilities that decreased cash provided by operations by $1,678 million.

The net change in certain working capital components and other assets and liabilities was primarily driven by an increase in Accounts receivable and a decrease in Income taxes payable.

The increase in Accounts receivable was primarily due to the outstanding IEEPA tariff receivable, as well as higher wholesale revenues and the timing of receipts in the normal course of business.

The decrease in Income taxes payable was primarily due to U.S.

federal income tax payments.

In fiscal 2025, cash provided by operations was $3,698 million.

This was driven by Net income of $3,219 million, adjusted for non-cash items of $1,266 million, and a net change in certain working capital components and other assets and liabilities that decreased cash provided by operations by $787 million.

The net change in certain working capital components and other assets and liabilities was primarily driven by an increase in Accounts receivable and an increase in Prepaid expenses and other current assets.

The increase in Accounts receivable was primarily due to the timing of wholesale shipments and the increase in Prepaid expenses and other current assets was primarily due to prepayments related to endorsement contracts.

INVESTING ACTIVITIES:

In fiscal 2026, cash used by investing activities was $488 million, primarily driven by additions to Property, plant and equipment, partially offset by the net change in short-term investments (including purchases, sales and maturities).

In fiscal 2025, cash used by investing activities was $275 million, primarily driven by additions to Property, plant and equipment, partially offset by the net change in short-term investments (including purchases, sales and maturities).

FINANCING ACTIVITIES:

In fiscal 2026, cash used by financing activities was $2,292 million, primarily driven by dividend payments.

In fiscal 2025, cash used by financing activities was $5,820 million, primarily driven by share repurchases, dividend payments and a $1 billion bond repayment.

In fiscal 2026, we purchased a total of 1.8 million shares of NIKE's Class B Common Stock for $122.4 million (an average price of $67.63 per share) under the four-year, $18 billion share repurchase program approved by the Board of Directors in June 2022.

In June 2026, the Board of Directors reapproved the current program to continue without a fixed expiration date and without increasing the aggregate amount authorized for repurchase.

As of May 31, 2026, we had repurchased 124.4 million shares at a cost of approximately $12.1 billion (an average price of $97.57 per share) under this $18 billion share repurchase program.

We paused repurchases under this program during the first quarter of fiscal 2026 and no shares were repurchased during the quarter ended May 31, 2026.

We may resume share repurchases in the future at any time, depending upon market conditions, operating cash flows and our liquidity and capital needs.

We continue to expect funding of any future share repurchases to come from operating cash flows.

CAPITAL RESOURCES

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Securities and Exchange Commission (the "SEC") which permits us to issue an unlimited amount of debt securities from time to time.

The Shelf expires on July 21, 2025, and we plan to file a new shelf registration with the SEC in July 2025.

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

The Shelf expires on July 17, 2028.

On March 6, 2026, we 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 5, 2027, 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.

This facility replaced the prior $1 billion 364-day credit facility agreement entered into on March 7, 2025, which matured on March 6, 2026.

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

2026 FORM 10-K 45

On March 7, 2025, we 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.

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

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

As it relates to our committed credit facilities entered into on March 7, 2025, if our long-term debt ratings were to decline, the facility fees and interest rates would increase.

Conversely, if our long-term debt ratings were to improve, the facility fees and interest rates would decrease.

In July 2025, Standard and Poor's Corporation downgraded our debt rating from AA- to A+, and, as a result, our facility fees and interest rates will increase compared to what they were prior to the downgrade.

We currently have long-term debt ratings of A+ and A2 from S&P Global Ratings and Moody's Ratings, respectively.

As it relates to our committed credit facilities entered into on March 6, 2026 and March 7, 2025, if our long-term debt ratings were to decline, the facility fees and interest rates may increase.

Conversely, if our long-term debt ratings were to improve, the facility fees and interest rates may decrease.

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

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As of May 31, 2026, we were in full compliance with each of these covenants, and we believe it is unlikely we will fail to meet any of these covenants in the foreseeable future.

2025 FORM 10-K 46

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

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• Operating Leases — Refer to Note 17 — Leases in the accompanying Notes to the Consolidated Financial Statements for additional information.

• Endorsement Contracts — As of May 31, 2025, we had endorsement contract obligations, including associated marketing commitments, of $16.2 billion, with $1.6 billion payable within 12 months, primarily representing approximate amounts of base compensation and minimum guaranteed royalty fees we are obligated to pay athlete, public figure, sport team and league endorsers of our products.

• Endorsement Contracts — As of May 31, 2026, we had endorsement contract obligations, including associated marketing commitments, of approximately $15.5 billion, with approximately $1.7 billion payable within 12 months, primarily representing approximate amounts of base compensation and minimum guaranteed royalty fees we are obligated to pay athlete, public figure, sport team and league endorsers of our products.

Actual payments under some contracts may be higher than these amounts as these contracts provide for bonuses to be paid to the endorsers based upon athletic achievements and/or royalties on product sales in future periods.

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It is not possible to determine how much we will spend on this product on an annual basis as the amount of product provided to the endorsers will depend on many factors and the contracts generally do not stipulate a minimum amount of cash to be spent on the product.

• Product Purchase Obligations — As of May 31, 2025, we had product purchase obligations of $7.9 billion, all of which are payable within the next 12 months.

• Product Purchase Obligations — As of May 31, 2026, we had product purchase obligations of approximately $4.9 billion, with approximately $4.7 billion payable within the next 12 months.

Product purchase obligations represent agreements (including open purchase orders) to purchase products in the ordinary course of business that are enforceable and legally binding and specify all significant terms.

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In some cases, prices are subject to change throughout the production process.

• Other Purchase Obligations — As of May 31, 2025, we had $3.1 billion of other purchase obligations, with $1.9 billion payable within the next 12 months.

Other purchase obligations primarily include technology investments, construction, service and marketing commitments made in the ordinary course of business.

The amounts represent the minimum payments required by legally binding contracts and agreements that specify all significant terms, and may include open purchase orders for non-product purchases.

As of May 31, 2025, we had approximately $260 million in estimated future income tax obligations payable within 12 months related to expected resolution with the Internal Revenue Service 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.

As a part of the transition tax related to the Tax Cuts and Jobs Act, as of May 31, 2025, we had $268 million in estimated future cash payments payable within the next 12 months.

These amounts represent the transition tax on deemed repatriation of undistributed earnings of foreign subsidiaries, which are reflected net of foreign tax credits we utilized.

• Other Purchase Obligations — As of May 31, 2026, we had other purchase obligations of approximately $2.4 billion, with approximately $1.6 billion payable within the next 12 months.

Other purchase obligations primarily include technology investments, external service and marketing commitments made in the ordinary course of business.

2026 FORM 10-K 46

amounts represent the minimum payments required by legally binding contracts and agreements that specify all significant terms, and may include open purchase orders for non-product purchases.

In addition to the above, we have long-term obligations for uncertain tax positions and various post-retirement benefits for which we are not able to reasonably estimate when cash payments will occur.

Refer to Note 7 — Income Taxes and Note 11 — Benefit Plans in the accompanying Notes to the Consolidated Financial Statements for additional information related to uncertain tax positions and post-retirement benefits, respectively.

Refer to Note 16 — Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for additional information related to our off-balance sheet arrangements, bank guarantees and letters of credit.

2025 FORM 10-K 47

OFF-BALANCE SHEET ARRANGEMENTS

As of May 31, 2025, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our current and future financial condition, results of operations, liquidity, capital expenditures or capital resources.

In connection with various contracts and agreements, we routinely provide indemnification relating to the enforceability of intellectual property rights, coverage for legal issues that arise and other items where we are acting as the guarantor.

Currently, we have several such agreements in place.

Based on our historical experience and the estimated probability of future loss, we have determined that the fair value of such indemnification is not material to our financial position or results of operations.

As of May 31, 2026, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our current and future financial condition, results of operations, liquidity, capital expenditures or capital resources.

Refer to Note 16 — Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for additional information related to our bank guarantees and letters of credit.

RECENT ACCOUNTING PRONOUNCEMENTS

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The preparation of our Consolidated Financial Statements in accordance with U.S.

GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.

We believe the assumptions and judgments involved in the accounting estimates described below have the greatest potential impact on our Consolidated Financial Statements, so we consider these to be our critical accounting estimates.

GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities.

The accounting estimates described below involve assumptions and judgments with a significant level of uncertainty that we believe have the greatest potential impact on our Consolidated Financial Statements, so we consider these to be our critical accounting estimates.

Management has reviewed and discussed these critical accounting estimates with the Audit & Finance Committee of the Board of Directors.

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Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.

During fiscal 2025, we have not made any material changes to the accounting methodologies used to develop the estimates discussed below.

During fiscal 2026, we did not make any material changes to the accounting methodologies used to develop the estimates discussed below.

For a description of our significant accounting policies and methods used in the preparation of our Consolidated Financial Statements, refer to Note 1 — Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements.

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Actual returns, discounts and claims in any future period are inherently uncertain and may differ from estimates recorded.

If actual or expected future returns, discounts or claims were significantly different than reserves established, a reduction or increase to net revenues would be recorded in the period in which such determination was made.

For fiscal 2025, any variances between actual and expected sales-related reserves were not material to reported Revenues.

If actual or expected future returns, discounts or claims were significantly different than reserves established, a reduction or increase to Revenues would be recorded in the period in which such determination was made.

In fiscal 2026, any variances between actual and expected sales-related reserves were not material to reported Revenues.

Refer to Note 14 — Revenues in the accompanying Notes to the Consolidated Financial Statements for additional information.

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If changes in market conditions result in reductions to the estimated net realizable value of our inventory below our previous estimate, we would increase our reserve in the period in which such a determination is made.

Refer to Inventory Valuation within Note 1 — Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements for additional information.

2026 FORM 10-K 47

Refer to Inventory Valuation within Note 1 — Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements for additional information.

HEDGE ACCOUNTING FOR DERIVATIVES

We use derivative contracts to hedge certain anticipated foreign currency and interest rate transactions as well as certain non-functional currency monetary assets and liabilities.

When the specific criteria to qualify for hedge accounting has been met, changes in the fair value of contracts hedging probable forecasted future cash flows are recorded in Accumulated other comprehensive income (loss), rather than Net income, until the underlying hedged transaction affects Net income.

When the specific criteria to qualify for hedge accounting have been met, changes in the fair value of contracts hedging probable forecasted future cash flows are recorded in Accumulated other comprehensive income (loss), rather than Net income, until the underlying hedged transaction affects Net income.

In most cases, this results in gains and losses on hedge derivatives being released from Accumulated other comprehensive income (loss) into Net income sometime after the maturity of the derivative.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis