Nike 2003 Annual Report Download - page 60

NIKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 17 — Operating Segments and Related Information
Operating Segments. The Company’s operating segments are evidence of the structure of the Company’s
internal organization. The major segments are defined by geographic regions with operations participating in
NIKE brand sales activity. Each NIKE brand geographic segment operates predominantly in one industry: the
design, production, marketing and selling of sports and fitness footwear, apparel, and equipment. The “Other”
category shown below represents activities of Cole Haan Holdings, Inc., Bauer NIKE Hockey, Inc., Hurley
International LLC, NIKE Golf, and NIKE IHM, Inc., which are considered immaterial for individual disclosure.
In prior years, operating activity for NIKE Golf was classified within each region. Effective June 1, 2002,
NIKE Golf revenues and income from the Company’s largest golf markets have been reclassified to the Other
category, as a result that the Company has begun managing these operations separately from the regional
businesses. Certain NIKE Golf inventories, receivables, and property, plant, and equipment continue to be
managed by the regions, and as a result, no reclassifications for these balances have been made. NIKE Golf
information for the years ended May 31, 2002 and 2001 have been reclassified to conform to the current year
presentation.
Where applicable, “Corporate” represents items necessary to reconcile to the consolidated financial
statements, which generally include corporate activity and corporate eliminations. Certain miscellaneous
operating activities have been reclassified between Corporate and the applicable regional operating segment as of
June 1, 2002, reflecting a change in the management of these activities. With respect to these classifications, the
applicable prior year periods have been reclassified to conform to the current year presentation.
Net revenues as shown below represent sales to external customers for each segment. Intercompany
revenues have been eliminated and are immaterial for separate disclosure. The Company evaluates performance
of individual operating segments based on pre-tax income. On a consolidated basis, this amount represents
Income before income taxes and cumulative effect of accounting change as shown in the Consolidated
Statements of Income. Reconciling items for pre-tax income represent corporate costs that are not allocated to the
operating segments for management reporting including certain currency exchange rate gains and losses on
transactions, amortization of indefinite-lived intangible assets and goodwill, and intercompany eliminations for
specific income statement items in the Consolidated Statements of Income.
Additions to long-lived assets as presented following represent capital expenditures and additions to
identifiable intangibles and goodwill. Generally, additions to identifiable intangible assets and goodwill are
considered corporate costs and are not attributable to any specific operating segment. See Note 4 for further
discussion on identifiable intangible assets and goodwill. Additions to other long-lived assets are not significant
and are comprised of additions to miscellaneous corporate assets not attributable to any specific operating
segment.
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