NKE · 10-K · 2026A · Full report

Hedge Accounting and FX Exposure

NIKE, Inc. · 2026-07-15 · Importance 31 · Surprise 6

NIKE describes multiple foreign-exchange exposures: product purchase and factory input cost exposures (including a factory currency exposure index), non-functional currency external sales, non-functional currency denominated costs (e.g., endorsement contracts), and remeasurement of non-functional currency monetary assets and liabilities. Management hedges exposures on a portfolio basis using forwards and options (generally cash flow hedges), leverages natural offsets (including the NIKE Trading Company and a factory foreign currency adjustment program), and had no outstanding net investment hedges as of May 31, 2026. For the year ended May 31, 2026 foreign exchange translation benefited consolidated Revenues by approximately $1,023 million and benefited Income before income taxes by approximately $184 million, while NIKE estimates the combination of translation and year-over-year FX gains/losses had an unfavorable impact of approximately $1 million on Income before income taxes for the year.

Key facts

• Other (income) expense, net for fiscal 2026 was $(53) million versus $(76) million in fiscal 2025. source
• The impact of foreign exchange rate fluctuations on the translation of consolidated Revenues was a benefit of approximately $1,023 million for the year ended May 31, 2026. source
• When designated notional value of hedge derivative contracts is in excess of anticipated transactions or forecasted transactions decline below designated hedged levels and are no longer probable to occur within the originally specified time period or within an additional two-month period, NIKE reclassifies the cumulative change in fair value of the over-hedged portion from Accumulated other comprehensive income (loss) to Other (income) expense, net during the quarter in which the decrease occurs. source
• Favorable changes in net foreign currency exchange rates, including hedges, increased gross margin approximately 20 basis points. source
• NIKE uses derivative contracts to hedge certain anticipated foreign currency and interest rate transactions as well as certain non-functional currency monetary assets and liabilities. source
• The impact of foreign exchange rate fluctuations on the translation of Income before income taxes was a benefit of approximately $184 million for the year ended May 31, 2026. source
• The impact of translation of foreign currency-denominated profits and year-over-year change in foreign currency related gains and losses had an unfavorable impact of approximately $1 million on Income before income taxes for the year ended May 31, 2026. source