really about only one shoe or one technology. Our potential is the same as the dreams of the young athletes all over the world – infinite.



Mark Parker

President and Chief Executive Officer

NIKE, Inc.



Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

NIKE designs, develops and markets high quality footwear, apparel, equipment and accessory products worldwide. We are the largest seller of athletic footwear and apparel in the world and sell our products primarily through a combination of retail accounts, NIKE−owned retail, including stores and e−commerce, independent distributors, franchisees and licensees worldwide. Our goal is to deliver value to our shareholders by building a profitable global portfolio of branded footwear, apparel, equipment and accessories businesses. Our strategy is to achieve long−term revenue growth by creating innovative, “must have” products, building deep personal consumer connections with our brands, and delivering compelling retail presentation and experiences.

Aside from achieving long−term revenue growth, we continue to strive to deliver shareholder value by driving operating excellence in several key areas:

Making our supply chain a competitive advantage, through operational discipline,

Reducing product costs through a continued focus on lean manufacturing and product design that strives to eliminate waste,

Improving selling and administrative expense productivity by focusing on investments that drive economic returns in the form of incremental revenue and gross margin, and leveraging existing infrastructure across our portfolio of brands to eliminate duplicative costs,

Improving working capital efficiency, and

Deploying capital effectively to create value for our shareholders.

Through execution of this strategy, our long−term financial goals continue to be:

High single−digit revenue growth,

Mid−teens earnings per share growth,

Increased return on invested capital and accelerated cash flows, and

Consistent results through effective management of our diversified portfolio of businesses.

Since the adoption of this long−term strategy in 2001, NIKE, Inc.’s revenues and earnings per share have grown 8% and 14%, respectively, on an annual compounded basis. During the same period, our return on invested capital has increased from 14% to 21%. While macroeconomic conditions in fiscal 2010 continued to remain challenging, putting significant pressure on consumer spending in most markets worldwide, we have continued to focus on achieving appropriate financial performance, while extending our market leadership and positioning ourselves for sustainable, profitable growth over the long term.

NIKE, Inc.’s fiscal 2010 revenues declined 1% to $19.0 billion, net income increased 28% to $1.9 billion, and we delivered diluted earnings per share of $3.86, a 27% increase versus fiscal 2009. Our fiscal 2009 reported results contain significant non−comparable transactions, including an after−tax charge of $145 million for restructuring activities, recorded in the fourth quarter of fiscal 2009, and an after−tax charge of $241 million for the impairment of goodwill,