What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-07-15 compared with 2025-07-17 · 185 added, 161 removed, 1068 unchanged (24% of the section changed)

94 unchanged sentences

Total selling and administrative expense 16,114 16,088 16,576

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

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

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

41 unchanged sentences

Current portion of long-term debt $ 2,000 $ —

Notes payable 5 6

Accounts payable 3,600 3,479

45 unchanged sentences

Cash provided (used) by financing activities:

Increase (decrease) in notes payable, net ( 1 ) — ( 4 )

Repayment of borrowings — ( 1,000 ) —

11 unchanged sentences

Interest, net of capitalized interest $ 323 $ 389 $ 381

Income taxes 1,226 1,299 1,517

Non-cash additions to property, plant and equipment 174 184 160

55 unchanged sentences

Commitments and Contingencies

Restructuring

Supplier Finance Pr ograms

Severance , Restructuring and Other Employee Costs

Supplier Finance Programs

2026 FORM 10-K 60

3 unchanged sentences

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 NIKE Brand is focused on performance athletic footwear, apparel, equipment, accessories and services, 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.

10 unchanged sentences

Actual results could differ from these estimates.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current year presentation.

These reclassifications did not have a material impact on the previously reported Consolidated Financial Statements.

CHANGES IN LAWS AND REGULATIONS

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, the Company deemed recovery of those tariffs to be probable.

Accordingly, the Company 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, the Company 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, the Company received substantially all of the remaining IEEPA tariff receivable.

REVENUE RECOGNITION

8 unchanged sentences

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.

2026 FORM 10-K 61

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.

6 unchanged sentences

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

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.

If actual or expected future returns, discounts or claims are significantly greater or lower than the reserves established, a reduction or increase to Revenues is recorded in the period in which such determination is made.

COST OF SALES

17 unchanged sentences

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.

Certain contracts provide for royalty payments to endorsers based upon a predetermined percentage 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.

2026 FORM 10-K 62

Through cooperative advertising programs, the Company reimburses its wholesale customers for certain costs of advertising the Company's products.

4 unchanged sentences

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

CASH AND EQUIVALENTS

1 unchanged sentence

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.

Short-term investments consist of highly liquid investments with maturities over three months at the date of purchase and are classified as available-for-sale debt securities.

These securities are recorded at fair value, with unrealized gains and losses reported, net of tax, in Accumulated other comprehensive income (loss), unless such 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.

Refer to Note 4 — Fair Value Measurements for additional information on the Company's Short-term investments.

ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS RECEIVABLE

2 unchanged sentences

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

8 unchanged sentences

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.

Depreciation of assets used in warehousing and product distribution is recorded in Cost of sales.

Depreciation of all other assets is recorded in Operating overhead expense.

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SOFTWARE DEVELOPMENT COSTS

4 unchanged sentences

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

IMPAIRMENT OF LONG-LIVED ASSETS

11 unchanged sentences

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.

There were no accumulated impairment losses as of May 31, 2026 and 2025.

OPERATING LEASES

9 unchanged sentences

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.

2026 FORM 10-K 64

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.

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including derivatives 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

Quoted prices in active markets for identical assets or liabilities.

1 unchanged sentence

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.

Unobservable inputs with little or no market data available, which require the reporting entity to develop its own assumptions.

Unobservable inputs with little or no market data available, which require the Company 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.

18 unchanged sentences

Refer to Note 12 — Risk Management and Derivatives for additional information on the Company's risk management program and derivatives.

2026 FORM 10-K 65

STOCK-BASED COMPENSATION

1 unchanged sentence

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.

Substantially all 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.

2 unchanged sentences

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

The Company accounts for income taxes using the asset and liability method.

7 unchanged sentences

The Company recognizes interest and penalties related to income tax matters in Income tax expense.

Refer to Note 7 — Income Taxes for further discussion.

Refer to Note 7 — Income Taxes for additional information.

EARNINGS PER SHARE

1 unchanged sentence

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):

In December 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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.

The Company adopted this ASU in fiscal 2026 and the related disclosures are included in Note 7 — Income Taxes.

The amendments were effective for the Company's annual periods beginning June 1, 2025 and have been applied prospectively.

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

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

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements, which includes amendments to more closely align hedge accounting with the economics of an entity’s risk management activities.

The amendments are effective for the Company’s annual periods beginning June 1, 2027 and interim periods within those fiscal years, with early adoption permitted, and should be applied prospectively.

The Company is currently evaluating the ASU to determine its impact on the Company’s financial statements and related disclosures.

2026 FORM 10-K 66

11 unchanged sentences

TOTAL PROPERTY, PLANT AND EQUIPMENT, NET $ 4,796 $ 4,828

Capitalized interest was not material for the fiscal years ended May 31, 2025, 2024 and 2023.

NOTE 3 — ACCRUED LIABILITIES

4 unchanged sentences

Dividends payable 618 598

Endorsement compensation 481 578

Other 2,316 2,239

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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.

Included in Interest (income) expense, net was interest income related to the Company's investment portfolio of $ 278 million, $ 404 million and $ 430 million for the years ended May 31, 2026, 2025 and 2024, respectively.

The Company records the assets and liabilities of its derivative financial instruments on a gross basis on the Consolidated Balance Sheets.

8 unchanged sentences

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

(Dollars in millions)

ASSETS AT FAIR VALUE OTHER CURRENT ASSETS OTHER LONG-TERM ASSETS LIABILITIES AT FAIR VALUE ACCRUED LIABILITIES OTHER LONG-TERM LIABILITIES

Foreign exchange forwards and options (1)

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(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 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.

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.

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.

For fair value information regarding Long-term debt, refer to Note 6 — Long-Term Debt.

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 6, 2026, 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 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.

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 %.

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

Based on the Company's current long-term senior unsecured debt ratings of A+ and A2 from S&P Global Ratings and Moody's Ratings, 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 0.625 %.

The facility fee is 0.03 % of the total undrawn commitment.

1 unchanged sentence

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 %.

Based on the Company's current long-term senior unsecured debt ratings of A+ and A2 from S&P Global Ratings and Moody's Ratings, 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.

8 unchanged sentences

Corporate Term Debt:

March 27, 2025 1,000 2.40 % Semi-Annually $ — $ 999

November 1, 2026 1,000 2.38 % Semi-Annually 1,000 999

18 unchanged sentences

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 scheduled maturity of long-term debt in each of the years ending May 31, 2027 through 2031 is $ 2 billion, $ 0 billion, $ 0 billion, $ 1.5 billion and $ 0 billion, 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.

The fair value of the Company's long-term debt, including the current portion but excluding interest rate swap fair value adjustments, was approximately $ 6.8 billion and $ 6.7 billion as of May 31, 2026 and 2025, respectively.

2026 FORM 10-K 70

23 unchanged sentences

TOTAL INCOME TAX EXPENSE $ 792 $ 666 $ 1,000

A reconciliation from the U.S.

statutory federal income tax rate to the effective income tax rate is as follows:

2026 FORM 10-K 71

The Company adopted ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, on a prospective basis beginning with fiscal 2026.

The following table presents a reconciliation from the U.S.

statutory federal income tax rate to the effective income tax rate pursuant to ASU 2023-09:

(Dollars in millions)

YEAR ENDED MAY 31, 2026

2025 2024 2023

federal statutory tax rate $ 819 21.0 %

State and local income taxes, net of federal income tax effects (1)

Foreign tax effects

Withholding taxes

Mexico 59 1.5 %

Other foreign jurisdictions

Effect of cross-border tax laws

Foreign-derived intangible income benefit ( 113 ) - 2.9 %

Current Subpart F income 179 4.6 %

Deferred Subpart F income, including foreign tax credits ( 120 ) - 3.1 %

Foreign tax credits ( 353 ) - 9.1 %

Research and development tax credits ( 65 ) - 1.7 %

Other credits

Nontaxable or nondeductible items

Stock-based compensation 44 1.1 %

Other ( 28 ) - 0.7 %

Changes in unrecognized tax benefits

Other adjustments

EFFECTIVE INCOME TAX RATE $ 792 20.3 %

(1) The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include Pennsylvania, New York, California, New York City and Georgia for fiscal 2026.

The following table presents the required disclosures prior to the Company's adoption of ASU 2023-09 and reconciles the U.S.

statutory federal income tax rate to the effective income tax rate as follows:

YEAR ENDED MAY 31,

Federal income tax rate 21.0 % 21.0 %

10 unchanged sentences

EFFECTIVE INCOME TAX RATE 17.1 % 14.9 %

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.

The increase in the Company's effective tax rate for fiscal 2026 compared to fiscal 2025 was primarily due to a one-time, non-cash deferred tax benefit recognized in the third quarter of fiscal 2025 provided by finalized U.S.

tax regulations.

On December 10, 2024, the U.S.

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

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

qualified business units.

These regulations required a pre-transition foreign currency gain or loss to be included in the determination of future taxable income or loss.

During the third quarter of fiscal 2025, the Company recognized a non-cash deferred income tax benefit of $ 133 million related to pre-transition foreign currency losses expected to reduce taxable income in future periods.

2026 FORM 10-K 72

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.

The increase in the Company's effective tax rate for fiscal 2025 compared to fiscal 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.

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.

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 related to IRC Section 987 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 were effective for the Company beginning June 1, 2025.

These tax law changes did not have a material impact on the Company's Consolidated Financial Statements for fiscal 2026.

Deferred income tax assets and liabilities comprise the following as of:

24 unchanged sentences

Deferred tax assets as of May 31, 2026 and 2025, 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.

federal capital loss carryforwards and other tax attributes, certain state deferred tax assets, and other tax benefits generated by certain foreign entities with operating losses.

The total valuation allowance increased to $ 192 million as of May 31, 2026 from $ 51 million as of May 31, 2025 as a result of valuation allowances established on certain foreign net operating loss carryforwards, specific state deferred tax assets, and an increase in the U.S.

federal capital loss carryforward, which is subject to a full valuation allowance.

The Company has available tax-effected state and foreign loss carry-forwards of $ 96 million as of May 31, 2026.

If not utilized, $ 89 million of tax-effected losses will expire in the periods between fiscal 2028 and 2045.

Approximately $ 7 million of tax-effected losses do not expire.

2026 FORM 10-K 73

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.

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:

14 unchanged sentences

As of May 31, 2026 and 2025, accrued interest and penalties related to uncertain tax positions were $ 438 million and $ 376 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.

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In certain major foreign jurisdictions, tax years after 2015 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.

Although the timing and outcome of resolution of the U.S.

federal income tax audit for fiscal years 2017 through 2019 is uncertain, the Company estimates total gross unrecognized tax benefits could decrease by up to $ 184 million as a result of the expected resolution with the IRS of certain previously agreed U.S.

federal income tax matters related to transfer pricing adjustments, research and development credits and other items.

The Company will continue to monitor developments of its U.S.

federal income tax audit for fiscal years 2017 through 2019.

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

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The 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.

indirect tax provisions, was $ 0.17 , $ 0.18 and $ 0.22 for fiscal 2026, 2025 and 2024, respectively.

2026 FORM 10-K 74

A summary of cash paid for income taxes (net of refunds received) in fiscal 2026 pursuant to ASU 2023-09 is as follows:

YEAR ENDED MAY 31,

(Dollars in millions)

Netherlands 77

TOTAL CASH PAID FOR INCOME TAXES

(1) Of the $ 642 million cash paid for U.S.

federal income taxes, $ 268 million related to the final installment of transition tax on deemed repatriation of undistributed earnings of foreign subsidiaries related to the Tax Cuts and Jobs Act and $ 260 million related to estimated payments for the expected resolution with the IRS of certain U.S.

federal income tax matters for fiscal years 2017 through 2019.

Cash paid for income taxes (net of refunds received) was $ 1,226 million and $ 1,299 million in fiscal 2025 and 2024, respectively.

NOTE 8 — REDEEMABLE PREFERRED STOCK

23 unchanged sentences

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.

2026 FORM 10-K 75

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

3 unchanged sentences

Stock options $ 278 $ 292 $ 336

$ 292 $ 336 $ 311

ESPPs 58 69 69

1 unchanged sentence

TOTAL STOCK-BASED COMPENSATION EXPENSE $ 715 $ 709 $ 804

(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

STOCK OPTIONS

16 unchanged sentences

Exercised ( 2.7 ) 57.18

Forfeited ( 6.5 ) 101.93

Expired or forfeited ( 6.7 ) 97.96

Granted 11.1 77.30

1 unchanged sentence

(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.

Options exercisable as of May 31, 2026 were 52.8 million and had a weighted average option price of $ 101.19 per share and no aggregate intrinsic value for options outstanding and exercisable.

The total intrinsic value of the options exercised during the years ended May 31, 2026, 2025 and 2024 was $ 33 million, $ 120 million and $ 305 million, respectively.

2 unchanged sentences

As of May 31, 2026, the Company had $ 336 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.

2026 FORM 10-K 76

EMPLOYEE STOCK PURCHASE PLANS

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The following summarizes the restricted stock and restricted stock units transactions under the plan discussed above:

2025 FORM 10-K 76

WEIGHTED AVERAGE GRANT DATE

SHARES WEIGHTED AVERAGE GRANT DATE

(In millions)

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Nonvested as of May 31, 2026 12.5 $ 81.20

(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, 2026, 2025 and 2024, computed as of the grant date, was $ 74.45 , $ 82.32 and $ 103.13 , respectively.

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Diluted $ 2.10 $ 2.16 $ 3.73

2026 FORM 10-K 77

NOTE 11 — BENEFIT PLANS

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The assets in the rabbi trust of approximately $ 1,347 million and $ 1,123 million as of May 31, 2026 and 2025, 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

Deferred compensation plan liabilities were $ 1,253 million and $ 1,102 million as of May 31, 2026 and 2025, respectively, and are primarily classified in Deferred income taxes and other liabilities on the Consolidated Balance Sheets.

NOTE 12 — RISK MANAGEMENT AND DERIVATIVES

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TOTAL DERIVATIVE ASSETS $ 190 $ 131

2026 FORM 10-K 78

DERIVATIVE LIABILITIES

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TOTAL DERIVATIVE LIABILITIES $ 343 $ 371

2025 FORM 10-K 78

The following tables present the amounts affecting the Consolidated Statements of Income for the years ended May 31, 2026, 2025 and 2024:

23 unchanged sentences

Interest rate swaps (2)

— — — Interest expense (income), net ( 8 ) ( 8 ) ( 8 )

— — — Interest (income) expense, net ( 6 ) ( 8 ) ( 8 )

TOTAL DESIGNATED CASH FLOW HEDGES

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(1) For the fiscal years ended May 31, 2026, 2025 and 2024, the amounts recorded in Other (income) expense, net as a result of the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.

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

(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 (income) expense, net over the term of the issued debt.

AMOUNT OF GAIN (LOSS) RECOGNIZED

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Foreign exchange forwards and options and embedded derivatives $ ( 35 ) $ 2 $ 24 Other (income) expense, net

2026 FORM 10-K 79

CASH FLOW HEDGES

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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

exposure for the NTC.

NTC sales to a NIKE entity with a different functional currency result in a foreign currency exposure for the NTC.

(2) Other NIKE entities purchase product directly from third-party factories in U.S.

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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.

The total notional amount of outstanding interest rate swaps designated as fair value hedges was $ 2.4 billion as of May 31, 2026 and 2025.

UNDESIGNATED DERIVATIVE INSTRUMENTS

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To manage this risk, the Company has established strict counterparty credit guidelines that are continually monitored.

2026 FORM 10-K 80

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.

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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

NOTE 13 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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(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.

2026 FORM 10-K 81

(Dollars in millions)

FOREIGN CURRENCY TRANSLATION ADJUSTMENT (1)

CASH FLOW HEDGES NET INVESTMENT HEDGES (1)

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.

For additional information related to the Company's cash flow hedges, refer to Note 12 — Risk Management and Derivatives.

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(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.

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

Footwear $ 13,317 $ 7,643 $ 4,188 $ 4,377 $ — $ 29,525 $ 1,013 $ — $ 30,538

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(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.

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

Footwear $ 12,684 $ 7,569 $ 4,805 $ 4,452 $ — $ 29,510 $ 1,457 $ — $ 30,967

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(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.

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

Footwear $ 14,537 $ 8,473 $ 5,552 $ 4,865 $ — $ 33,427 $ 1,800 $ — $ 35,227

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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.

Corporate revenues primarily consisted of foreign currency 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, 2026 and 2025, 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.

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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 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 (income) expense, net and Income tax expense in the Consolidated Statements of Income.

The Company's segments are defined as follows:

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Greater China;

and Asia Pacific & Latin America ("APLA"), and include results for the NIKE and Jordan brands.

and Asia Pacific & Latin America, and include results for the NIKE and Jordan brands.

Each NIKE Brand segment represents a geographic region operating predominantly in one industry:

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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.

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

Converse operates in one industry:

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(Dollars in millions)

NORTH AMERICA

EUROPE, MIDDLE EAST & AFRICA

GREATER CHINA

ASIA PACIFIC & LATIN AMERICA

GLOBAL BRAND DIVISIONS

TOTAL NIKE BRAND

TOTAL NIKE, INC.

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

$ 20,511 $ 12,572 $ 5,847 $ 6,243 $ 49 $ 45,222 $ 1,174 $ 2 $ 46,398

Cost of sales 11,160 7,313 3,177 3,619 653 25,922 660 ( 95 ) 26,487

11,056 6,967 3,558 3,502 634 25,717 868 ( 66 ) 26,519

8,516 5,290 3,028 2,749 ( 586 ) 18,997 824 ( 31 ) 19,790

Gross profit (loss) 9,351 5,259 2,670 2,624 ( 604 ) 19,300 514 97 19,911

Demand creation expense

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$ 5,376 $ 2,417 $ 1,278 $ 1,387 $ ( 4,603 ) $ 5,855 $ 18 $ ( 2,023 )

Interest expense (income), net

Interest (income) expense, net ( 50 )

TOTAL NIKE, INC.

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$ 145 153 44 54 231 627 8 112 $ 747

Inventories (3)

$ 3,320 2,253 793 964 166 7,496 171 ( 166 ) $ 7,501

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(2) The amounts of depreciation and amortization disclosed by segment are included within Cost of sales and Operating overhead expense, as applicable.

(3) Corporate inventories represent the difference between actual foreign currency exchange rates and the standard foreign currency rates used to record non-functional currency denominated product purchases within the geographic segments and Converse.

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

TOTAL NIKE, INC.

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

$ 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

11,899 7,589 3,761 3,639 602 27,490 989 ( 4 ) 28,475

9,497 6,018 3,784 3,090 ( 557 ) 21,832 1,093 ( 38 ) 22,887

Gross profit (loss) 8,516 5,290 3,028 2,749 ( 586 ) 18,997 824 ( 31 ) 19,790

Demand creation expense

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$ 4,735 $ 2,575 $ 1,602 $ 1,527 $ ( 4,699 ) $ 5,740 $ 240 $ ( 2,202 )

Interest expense (income), net

Interest (income) expense, net ( 107 )

TOTAL NIKE, INC.

4 unchanged sentences

Inventories (3)

$ 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.

1 unchanged sentence

(2) The amounts of depreciation and amortization disclosed by segment are included within Cost of sales and Operating overhead expense, as applicable.

2026 FORM 10-K 86

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

TOTAL NIKE, INC.

(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 9,111 6,078 3,696 3,094 ( 458 ) 21,521 1,306 ( 535 ) 22,292

Gross profit (loss) 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

5 unchanged sentences

$ 5,822 $ 3,388 $ 2,309 $ 1,885 $ ( 4,720 ) $ 8,684 $ 474 $ ( 2,619 )

Interest expense (income), net ( 6 )

Interest (income) expense, net ( 161 )

TOTAL NIKE, INC.

3 unchanged sentences

$ 152 146 56 51 236 641 17 138 $ 796

Inventories (3)

$ 3,134 2,028 1,070 810 166 7,208 296 15 $ 7,519

2 unchanged sentences

(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

1 unchanged sentence

Revenues derived in the United States were $ 20,358 million, $ 19,725 million and $ 21,551 million for the fiscal years ended May 31, 2026, 2025 and 2024, 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.

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, United Kingdom, and China 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:

1 unchanged sentence

United States 4,101 4,467

United Kingdom 838 422

Belgium 745 774

China 472 488

United Kingdom

TOTAL LONG-LIVED ASSETS

2 unchanged sentences

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.

As of May 31, 2026 and 2025, the Company had outstanding bank guarantees and letters of credit of approximately $ 1.3 billion and $ 0.9 billion, 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.

7 unchanged sentences

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

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

5 unchanged sentences

For the fiscal years ended May 31, 2026, 2025 and 2024, lease expense primarily consisted of operating lease costs of $ 693 million, $ 663 million and $ 618 million, respectively, as well as $ 453 million, $ 432 million and $ 433 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.

As of and for the fiscal years ended May 31, 2026, 2025 and 2024, 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:

22 unchanged sentences

Operating cash flows from operating leases $ 668 $ 647 $ 613

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.

Operating lease right-of-use assets obtained in exchange for operating lease liabilities $ 849 $ 607 $ 458

NOTE 18 — SEVERANCE, RESTRUCTURING AND OTHER EMPLOYEE COSTS

Employee severance costs are recognized when a future related expense is considered probable and reasonably estimable.

The expected charges are estimates that are subject to a number of assumptions, and actual results may vary from the estimates provided.

2026 SEVERANCE

In fiscal 2026, the Company recognized $ 385 million of estimated employee severance costs related to organizational changes, of which $ 231 million were classified within Operating overhead expense and $ 154 million were classified within Cost of sales on the Consolidated Statements of Income.

The majority of these charges were classified within Global Brand Divisions, North America and EMEA.

During fiscal 2026, the Company made cash payments related to employee severance costs of $ 142 million.

As of May 31, 2026, the remaining severance and other employee costs of $ 243 million are reflected within Accrued liabilities on the Consolidated Balance Sheets, classified within Compensation and benefits, excluding taxes in Note 3 — Accrued Liabilities.

2024 RESTRUCTURING

During fiscal 2024, management streamlined the organization which resulted in a net reduction in the Company's global workforce.

In fiscal 2024, the Company recognized restructuring charges of $ 443 million, all within Corporate, of which $ 379 million were classified in Operating overhead expense and $ 64 million were classified in Cost of sales on the Consolidated Statements of Income.

The related cash payments were $ 123 million during fiscal 2024 and $ 247 million during fiscal 2025.

NOTE 19 — SUPPLIER FINANCE PROGRAMS

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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

Invoices confirmed during the year

Confirmed invoices paid during the year

Confirmed obligations outstanding as of May 31, 2025

The Company’s obligations confirmed under the voluntary supplier finance programs are included within Accounts payable on the Consolidated Balance Sheets.

As of May 31, 2026, 2025 and 2024, the Company had approximately $ 1.1 billion, $ 1.1 billion and $ 0.8 billion, respectively, of confirmed outstanding supplier obligations.

During fiscal 2026 and 2025, the Company confirmed invoices of approximately $ 11.5 billion and $ 11.8 billion, respectively, and paid confirmed invoices of approximately $ 11.5 billion and $ 11.5 billion, respectively.

2026 FORM 10-K 89

2 unchanged sentences

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 8. Financial Statements and Supplementary Data