I certainly wouldn’t bet against us.



While we see glimmers of economic recovery, we still have a challenging road ahead. We are well-positioned for the future, with our fundamentals as strong as they’ve ever been – deep consumer connections, innovative and compelling product, powerful brands, operational excellence, and a strong balance sheet. We’re moving forward with confidence in hand and opportunity in mind.



Thanks,

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.

We strive to convert revenue growth to 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

Deploying capital effectively to create value for our shareholders

Through execution of this strategy, our long-term financial goal is to achieve:

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, on an annual compounded basis, NIKE, Inc.’s revenues and earnings per share have grown 9% and 14%, respectively. During the same period, our return on invested capital increased from 14% to 18%. In fiscal 2009, deteriorating macroeconomic conditions caused significant volatility in global financial markets and put significant pressure on discretionary consumer spending worldwide. NIKE’s fiscal 2009 revenues grew 3% to $19.2 billion, net income decreased 21% to $1.5 billion, and we delivered diluted earnings per share of $3.03, a 19% decrease versus fiscal 2008. Our fiscal 2009 reported results also contain significant non-comparable transactions, including after-tax charges of $144.5 million for our restructuring activities, which were completed in the fourth quarter of fiscal 2009,