it is today; there is absolutely no shortage of growth opportunities for NIKE. Our product pipeline is full of incredible innovations. Our brands have never been stronger, and we’ve never had greater competitive separation in the marketplace.



We will remain focused on our potential; obsessed with delivering world-class products and experiences for athletes and consumers; and fully committed to driving sustainable, profitable growth for you, our shareholders.



We will continue to show the world there is no limit to how far NIKE can go.



Thanks,



Mark Parker

President and Chief Executive Officer

NIKE, Inc.



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

NIKE designs, develops, markets, and sells athletic footwear, apparel, equipment, accessories, and services worldwide. We are the largest seller of athletic footwear and apparel in the world. We sell our products to retail accounts, as well as through NIKE-owned in-line and factory retail stores and NIKE-owned internet websites (which we refer to as our “Direct to Consumer” or “DTC” operations), and through a mix of independent distributors, licensees, and sales representatives in virtually all countries around the world. 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 consumer experiences at retail and online. 

In addition to achieving long-term, sustainable revenue growth, we continue to strive to deliver shareholder value by driving operational excellence in several key areas: 

Expanding gross margin by: 

–  Delivering innovative, premium products that command higher prices 

while maintaining a strong consumer price-to-value proposition; 

–  Reducing product costs through a continued focus on manufacturing efficiency, product design, and innovation; and 

–  Making our supply chain a competitive advantage. 

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

Improving working capital efficiency; and 

Deploying capital effectively. 

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

High single-digit revenue growth, 

Mid-teens earnings per share growth, 

Consistent return on invested capital and accelerated cash flows, and 

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

Over the past ten years, we have achieved many of these financial goals. During this time, revenues and diluted earnings per common share for NIKE, Inc., inclusive of both continuing and discontinued operations, have grown 9% and 13%, respectively, on an annual compounded basis. Our return on invested capital has increased from 22% to 25% and we expanded gross margins by