2011



CEO Letter to Shareholders



To Our Shareholders,



NIKE, Inc. is about innovation. That’s the role of a leader. That’s how we serve the athlete, reward our shareholders, and continue to lead our industry. And we’ve done a pretty good job of that. In the last 10 years we more than doubled our revenue. We increased our gross margin more than five percentage points and grew diluted EPS at a compounded rate of 15 percent. We nearly tripled our cash flow from operations, paid out over $3 billion in dividends and repurchased over $7 billion in stock. In that same time our market cap more than tripled, driving a 17 percent average annual return to shareholders.1

At the beginning of fiscal 2011, we committed to amplifying our innovation agenda and driving growth at the category, brand and country level. And we did just that:

NIKE, Inc. Revenue was up 10% to a record $20.9 billion.

NIKE Brand Revenue was up 10% to a record $18.1 billion.

Our Other Businesses grew 9% to a record $2.7 billion.

NIKE Brand Futures orders are up 15%.

And Earnings Per Share grew 14%, coming in at $4.39 – also a new record.

The last 12 months also revealed many changes in our world. The global economy continues to recover but as we’ve seen, it’s a slow and volatile recovery. Consumers, particularly youth, face nagging unemployment. Governments are wrestling with high levels of debt. And rising costs for raw materials, energy and labor are sparking inflation in world economies. We’re not immune to these factors and expect them to exert pressure on our gross margins in the first half of fiscal 2012.

But external forces do not control our destiny. We do. We are well resourced and positioned to navigate the global economy, create competitive separation, and deliver profitable growth. The developing markets hold enormous opportunity for NIKE, Inc. Within the next 20 years, as much as 65 percent of the world’s population could be middle class – most of that in China, India and Brazil. We’re performing very well in these markets, and we’re ideally positioned to capitalize on their potential. In our more mature developed markets, the economies are recovering at a slower pace. But the strength of our products and brands should enable us to continue to outgrow the market, as we’ve consistently done in North America.

The key for NIKE, Inc. in any market is to drive innovation at every level – brand, product, retail, operations, events, and communications. That’s at the core of our growth strategy. In May 2010, I stated a goal for NIKE, Inc. to deliver $27 billion of revenue in fiscal 2015. I’m excited to tell you that we’re ahead of schedule, so we’re revising that number. When I look at the strengths of our company and the opportunity we have going forward, I believe we can exceed that goal and reach $28-30 billion in revenue by fiscal 2015.

Today we have seven distinct, high-energy brands – each with a powerful connection to its consumers. Those connections give us the insights we need to create amazing products and experiences. That’s the fundamental cycle that continually drives growth. And while each brand has enormous potential in its own right, the real