2010



CEO Letter to Shareholders



To Our Shareholders,



In the challenging economic environment of the last year we saw opportunity. We chose to rebuild the company to leverage our strengths and pursue our potential. We elevated our category offense, as that keeps us close to consumers. We created six new, strategic geographies to focus our efforts where the passion and culture of sport are strongest. We pushed forward with an aggressive retail agenda in-store and online, knowing that’s where people vote on our products. And we doubled our innovation agenda, because that’s what we do best. Today NIKE, Inc. is a stronger company than ever before.



Our revenue at $19 billion is down 1 percent from last year – but we’ve never been more profitable. EPS and futures orders are up. Inventories are in great shape.

Our affiliate brands, Cole Haan, Converse, Hurley, NIKE Golf and Umbro, contributed more than $2.5 billion in revenue, an increase of 5 percent over last year – that’s a record.

Revenue from direct to consumer – our NIKE-owned stores and online business – increased 12 percent to nearly $2.5 billion – that’s a record.

Gross margins came in at 46.3 percent for the year – that’s a record.

And we generated $2.8 billion in free cash flow from operations and now have over $5 billion in cash and short-term investments on our balance sheet – yes, two more records.

But wait, there’s more. What the full-year numbers don’t show is the tremendous acceleration we generated in the back half of fiscal 2010. In most key markets around the world our business strengthened while our major competitors weakened. That’s a trend we intend to accelerate.



Nowhere is this trend more apparent than what we did for World Cup. Write the Future is the most creative, complete and integrated campaign we’ve ever done – our lightest, most sustainable performance product, new traction technology, an online community that numbers in the tens of millions and fully immersive and interactive consumer experiences online and at retail. This helped NIKE generate more excitement and leadership than anybody else in the game.



Another trend we’re committed to is sustainability. Few areas of the global economy show as much potential and we’ve become a leader in this space. In fiscal 2010 we expanded our Considered Design ethos by launching an open source community for patents and intellectual properties called The GreenXchange. The NIKE Foundation expanded The Girl Effect – a powerful social and economic collaboration with the NoVo Foundation to combat inter-generational poverty. And we launched Lace Up, Save Lives with (RED) and The Global Fund to leverage the power of NIKE, Inc. and global football in the fight against HIV/AIDS in Africa. I firmly believe it is more than a responsibility to invest in the common good; it is an opportunity to become a better company and to create genuine shareholder value.



I know that shareholders are totally focused on our results. But inside NIKE we’re equally focused on the reasons for our success. So much of what we achieve is tied to the universal appeal of sports. And we saw some amazing moments for NIKE and fans