Security_Analysis_Report_Nike_Inc

Running head: Nike Security Analysis Report For Nike To: Professor Ilk Strayer University FIN 534 March 9, 2011 Table of Contents Abstract 3 History of Nike 4 Time Line of Nike…………………………………………………………………………………6 Mission Statement 8 Products and Services 9 Organization of Nike 10 Financial Analysis 12 Financial Ratios 12 Financial Statements 17 Industry Standards 23 Strategic and Future Performance 24 Conclusion 31 References 32 Abstract NIKE, Inc. based near Beaverton, Oregon, is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly-owned Nike subsidiaries include Cole Haan, which designs, markets and distributes luxury shoes, handbags, accessories and coats. This analysis will explain the history of Nikes growth, how they have become an industry leader and have been able to maintain that position over time. The analysis will also show why Nike Inc is a favorable company for someone to invest in. History of Nike The start of Nike began in the 1950’s with Bill Bowerman, track and field coach, at the University of Oregon and Phil Knight, a middle-distance runner who enrolled to the University of Oregon in 1955 and competed for the University’s track and field. Bill was always experimenting with different ways to help give his athletes a more competitive edge. His experimenting involved different track surfaces, sports drinks and most importantly running shoes. Bowerman had ideas for better running shoes. However, the established footwear manufactures did not pay any attention to the ideas that Bowerman sent in. As a result of, this he began cobbling, repairing and creating his own shoes for his runners. Phil Knight graduated from the University of Oregon and enrolled in Stanford University’s MBA program. While working on his MBA Knight wrote a paper proposing that better quality running shoes could be manufactured in Japan while creating competition with the more established German brands. Knight also tried to contact these manufactures with this proposal however his letters went unanswered. Knight did not give up on his pursuit to create a better running shoe. He made contact with the Onitsuka Co, located in Kobe, Japan. Onitsuka was the manufacturer of Tiger running shoes. Knight wanted to become a distributor of Tiger running shoes in the United States. Onitsuka agreed to this and the first set of Tiger shoes was sent to Knight. Knight then sent several pair to Bowerman in hopes to makes some sales. Bowerman was more than interested in making a purchase, he offered to become Knight’s partner and provide his footwear design to Tiger. Knight and Bowerman shook hands on the deal and both invested $500 of their own money to start their own company called Blue Ribbon Sports. This first initial investment enabled them to purchase 300 pairs of Tiger running shoes. Knight was selling the shoes out of the trunk of his car, while Bowerman was at home taking the shoes apart to figure out a way to make them lighter and better for the runners who purchased them. He began testing out his ideas on his track team. This would now become the foundation for what we know as Nike today. Both Bowerman and Knight had full time jobs that they needed to be at, so they were in need of someone to manage their new growing business. Knight has meet Jeff Johnson while attending Stanford. Johnson was also a runner and was now Blue Ribbon Sports first full time employee. Hired in 1965 Johnson would become an invaluable source for Blue Ribbon Sports. Johnson would become the driving force that would become Nike. He created the first brochures to present their product. As we as, the first print ads, marketing materials and hot the pictures for the catalogues. He also established a mail order system along with opening the first Blue Ribbon Sports Retail Store. The name for the company was something that Johnson also came up with. He also took part in the design of a lot of the early Nike shoes. Nike Inc was incorporated under Oregon state law in 1968. It was at this same time that Blue Ribbon and Onitsuka’s relationship began to fall apart. However, this was a positive aspect for Nike. Knight and Bowerman were ready to begin a footwear distributor that would design as well as manufacture their own brand of athletic shoes. This is when the “swoosh” trademark was created. Keeping with the brand of Nike the “swoosh” was also created by a student at Portland State University. The first line of Nike footwear debuted in 1972. This was just in time for the U.S Track and Field Trails there were being held in Eugene Ore. The shoes made an impression on the runners that tried them. Bowerman created a new innovation that he discovered from his wife’s waffle iron. The sneakers had an outsole that had waffle type nubs for traction. Another innovation with Nike footwear is that the sneakers were made much lighter than traditional training shoes. This new design was able to help enhance the runner’s natural ability to gain more speed. During this time Nike was also able to enlist the help of Steve Prefontaine (Pre). Pre was an athlete from the small coastal town of Coos Bay Ore. This again fitting since Ore is the home of Nike. Pre was an electrifying runner that would always excite the packed stands at Oregon’s Hayward Field throughout his college career from 1969-1973. Pre had never lost a race at home in the over 1 mile distance. Due to cover stories featured in Sports Illustrated Pre gained national exposure. Bowermen and Johnson were challenged by Pre to stretch their creative talents. As a result of this Pre became a very powerful ambassador for Blue Ribbon Sports and Nike. All of these factors are what was able to help push Nike ahead as an industry leader, a position that they still hold today. Time Line of Nike 1971- Nike is created 1972 – First line of footwear is debuted 1969-1973 Pre endorses Nike and pushes them to become industry leaders 1979 – Launch of Air Nike technology in the Tailwind running shoe 1980- IPO completed Nike becomes a publicly traded company 1980 – Also a period of transition several early pioneers move to other pursuits 1983-1984 Phil Knight steps down as president for more than a year but remains Chairman of the board and CEO Mid -80’s – Nike slips from industry leader due to miscalculation of the aerobics boom, thus creating an open field for competition 1985- New signature shoe debuts by NBA rookie Michael Jordan, helping bolster Nikes bottom line 1987- Readied major product and marketing campaign to regain industry lead and set Nike apart from the competition the focus here was on the Nike Air Max – footwear that featured visible Nike Air bags and the use of the Beatles song “Revolution” became the soundtrack for the campaign 1988 – Building off the “Revolution” campaign they launched a broad of empowering series of the now famous “Just Do It” slogan. This was done with the help of Bo Jackson. Jackson was featured in a three ad series to show the benefits of the new cross training shoes. 1989- “Bo Knows” ad campaign helps Nike’s cross training business explode By the end of the decade Nike regained its position of industry leader. This was the first time an athletic footwear/appeal company ever accomplished such a feat. Nike has not lost this spot since then. 1990- world headquarters opens in suburban Portland Ore 1990- Portland becomes home to first new retail-as-theater experience called Niketown. Earing numerous architectural design and retail awards Mid-1990’s- deeper commitment to excel in the sports of golf and soccer 1994-signed several individual players from what became the world cup winning Braziliam National Team 1995- Nike Golf landed Eldrick “Tiger” Woods for a $5 million per year to endorse Nike. The competition thought this was funny since Tiger was a talented but yet-as-unproved young golfer. They said that Nike was “folly” for this 1997- Tiger wins the masters by 12 strokes At this time Nike also began to invest in cycling including sponsoring a promising young cyclist name Lance Armstrong. However once he was diagnosed with cancer most of his sponsors backed out but Nike stayed 2000- debuts new footwear system called Nike Shox creating a 15 year perseverance and dedication Nikes designers stayed with until technology could catch up 2002- “Secret Tournament” campaign starts this is the first nontraditional ad no big athlete, big ad or big product. Instead they created a multi-facated consumer experience supporting the world cup. The result of this campaign was the creation of ad, internet, PR, retail and consumer events all driven to create excitement for Nikes soccer products and athletes. This is something no other ad was able to achieve. Today, Nike continues to seek new and innovative ways to develop superior athletic products, and creative methods to communicate directly with our consumers. Nike Free, Nike+ and Nike Sphere are just three examples of this approach. Mission Statement The Nike mission: To bring inspiration and innovation to every athlete in the world. Our goal is to carry on his (Bill Bowerman) legacy of innovative thinking, whether to develop products that help athletes of every level of ability reach their potential, or to create business opportunities that set Nike apart from the competition and provide value for our shareholders. Customer service mission: To represent the highest service standard within and beyond our industry, building loyal consumer relationships around the world. Products and Services Taken from the 2010 10-K report Nike states its products and services are as follows: NIKE’s athletic footwear products are designed primarily for specific athletic use, although a large percentage of the products are worn for casual or leisure purposes. We place considerable emphasis on high quality construction and innovation in products designed for men, women and children. Running, training, basketball, soccer, sport-inspired casual shoes, and kids’ shoes are currently our top-selling footwear categories and we expect them to continue to lead in product sales in the near future. We also market footwear designed for aquatic activities, baseball, cheerleading, football, golf, lacrosse, outdoor activities, skateboarding, tennis, volleyball, walking, wrestling, and other athletic and recreational uses. We sell sports apparel and accessories covering most of the above categories, sports-inspired lifestyle apparel, as well as athletic bags and accessory items. NIKE apparel and accessories feature the same trademarks and are sold through the same marketing and distribution channels. We often market footwear, apparel and accessories in “collections” of similar design or for specific purposes. We also market apparel with licensed college and professional team and league logos. We sell a line of performance equipment under the NIKE Brand name, including bags, socks, sport balls, eyewear, timepieces, electronic devices, bats, gloves, protective equipment, golf clubs, and other equipment designed for sports activities. We also sell small amounts of various plastic products to other manufacturers through our wholly-owned subsidiary, NIKE IHM, Inc. In addition to the products we sell directly to customers, we have entered into license agreements that permit unaffiliated parties to manufacture and sell certain apparel, electronic devices and other equipment designed for sports activities. Our wholly-owned subsidiary, Cole Haan (“Cole Haan”), headquartered in Yarmouth, Maine, designs and distributes dress and casual footwear, apparel and accessories for men and women under the Cole Haan® trademark. Our wholly-owned subsidiary, Converse Inc. (“Converse”), headquartered in North Andover, Massachusetts, designs, distributes and licenses athletic and casual footwear, apparel and accessories under the Converse®, Chuck Taylor®, All Star®, One Star®, Star Chevron and Jack Purcell® trademarks. Our wholly-owned subsidiary, Hurley International LLC (“Hurley”), headquartered in Costa Mesa, California, designs and distributes a line of action sports and youth lifestyle apparel and accessories under the Hurley® trademark. Our wholly-owned subsidiary, Umbro Ltd. (“Umbro”), headquartered in Cheadle, England, designs, distributes and licenses athletic and casual footwear, apparel and equipment, primarily for the sport of football (soccer), under the Umbro® trademark. The executive officers of NIKE as of July 16, 2010 are as follows: Philip H. Knight, Chairman of the Board — Mr. Knight, 72, a director since 1968, is a co-founder of NIKE Mark G. Parker, Chief Executive Officer and President — Mr. Parker, 54, was appointed CEO and President in January 2006. He has been employed by NIKE since 1979 with primary responsibilities in product research, design and development, marketing, and brand management. David J. Ayre, Vice President, Global Human Resources — Mr. Ayre, 50, joined NIKE as Vice President, Global Human Resources in July 2007 head of Talent and Performance Rewards Donald W. Blair, Vice President and Chief Financial Officer — Mr. Blair, 52, joined NIKE in November 1999 Mr. Blair was a certified public accountant with Deloitte, Haskins, and Sells. Charles D. Denson, President of the NIKE Brand — Mr. Denson, 54, has been employed by NIKE since 1979 Mr. Denson held several management positions within the Company, including his appointments as Director of USA Apparel Sales in 1994, divisional Vice President, Gary M. DeStefano, President, Global Operations — Mr. DeStefano, 53, has been employed by NIKE since 1982, with primary responsibilities in sales and regional administration Trevor Edwards, Vice President, Global Brand and Category Management — Mr. Edwards, 47, joined NIKE in 1992. He was appointed Marketing Manager, Strategic Accounts, Foot Locker Jeanne P. Jackson, President, Direct to Consumer — Ms. Jackson, 58, served as a member of the NIKE, Inc. Board of Directors from 2001 through March 2009, when she resigned from our Board and was appointed President, Direct to Consumer.  Hilary K. Krane, Vice President and General Counsel — Ms. Krane, 46, joined NIKE as Vice President and General Counsel in April 2010 P. Eunan McLaughlin, President, Affiliates — Mr. McLaughlin, 52, joined NIKE as Director of Sales Bernard F. Pliska, Vice President, Corporate Controller — Mr. Pliska, 48, joined NIKE as Corporate Controller in 1995 John F. Slusher, Vice President, Global Sports Marketing — Mr. Slusher, 41, has been employed by NIKE since 1998 with primary responsibilities in global sports marketing Eric D. Sprunk, Vice President, Merchandising and Product — Mr. Sprunk, 46, joined NIKE in 1993. He was appointed Finance Director and General Manager of the Americas Hans van Alebeek, Vice President, Global Operations and Technology — Mr. van Alebeek, 44, joined NIKE as Director of Operations of Europe in 1999 Financial Analysis Financial Ratios Nike's Current Ratio |   |   |   |   |   | (in Millions) | | | | | |   |   | | 2010 | 2009 | 2008 | 2007 | 2006 | Current Assets | 10,959.2 | 9,734.0 | 8,839.3 | 8,076.5 | 7,359.0 | Current Liabilities | 3,364.2 | 3,277.0 | 3,321.5 | 2,584.0 | 2,623.3 | Current Ratio | 3.26 | 2.97 | 2.66 | 3.13 | 2.81 | Nike’s is continuing to maintain steady growth throughout the years and is able to continue to do so due to strong marketing and a continuous growth in sales. As well as maintaining a healthy liquidity. Working Capital |   |   |   |   |   | (in Millions) | | | | | |   |   | | 2010 | 2009 | 2008 | 2007 | 2006 | Current Assets | 10,959.2 | 9,734.0 | 8,839.3 | 8,076.5 | 7,359.0 | Current Liabilities | 3,364.2 | 3,277.0 | 3,321.5 | 2,584.0 | 2,623.3 | Working Capital | $7,595 | $6,457 | $5,518 | $5,493 | $4,736 | The amount of working capital that Nike has maintained is very healthy and shows positive growth over the past five years. The amount of working capital continues to increase showing a positive outlook for the future of Nike. Nike's Quick Ratio |   |   |   |   |   | (in Millions) | | | | |   |   | | 2010 | 2009 | 2008 | 2007 | 2006 | Cash | | 3,079.1 | 2,291.1 | 2,133.9 | 1,856.7 | 954.2 | Accounts Receivable | 2,649.8 | 2,883.9 | 2,795.3 | 2,494.7 | 2,395.9 | Current Liabilities | 3,364.2 | 3,277.0 | 3,321.5 | 2,584.0 | 2,623.3 | Quick Ratio | 1.70 | 1.58 | 1.48 | 1.68 | 1.28 | Additional analysis with the quick ratio shows that Nike has continued to have high liquidity and steady growth over the past three years. This also shows that Nike’s competition does not have a high liquidity rate giving Nike more of the advantage of its competition. DSO |   |   |   |   |   |   | (in Millions) | | | | | |   |   | | 2010 | 2009 | 2008 | 2007 | 2006 | Accounts Receivable | 2,649.8 | 2,883.9 | 2,795.3 | 2,494.7 | 2,395.9 | Revenue | | 19,014.0 | 19,176.1 | 18,627.0 | 16,325.9 | 14,954.9 | DSO |   | 50 | 54 | 54 | 55 | 58 | It is encouraging to see that Nikes DSO stays steady or is slowly decreasing. Therefore the days spent waiting to be paid has slowly been decreasing while cash flow has been increasing. Payable Payment Period |   |   |   |   | (in Millions) | | | | | |   |   | | 2010 | 2009 | 2008 | 2007 | 2006 | Accounts Payable | 1,254.5 | 1,031.9 | 1,287.6 | 1,040.3 | 952.2 | COGS | | 10,213.6 | 10,571.7 | 10,239.6 | 9,165.4 | 8,367.9 | PPP |   | 44 | 35 | 45 | 41 | 41 | The current payable period of approximately 44 days is positive for Nike. This reflects what the chart about has shown that there is a steady cash flow. With today’s economy it is good to see a company with a steady cash flow. Gross Margin |   |   |   |   |   | (in Millions) | | | | |   |   | 2010 | 2009 | 2008 | 2007 | 2006 | Gross Profit | 8,800.4 | 8,604.4 | 8,387.4 | 7,160.5 | 6,587.0 | Revenue | 19,014.0 | 19,176.1 | 18,627.0 | 16,325.9 | 14,954.9 | Gross Margin | 46.28% | 44.87% | 45.03% | 43.86% | 44.05% | Net Margin |   |   |   |   |   | (in Millions) | | | | |   |   | 2010 | 2009 | 2008 | 2007 | 2006 | Net Income | 1,906.7 | 1,486.7 | 1,883.4 | 1,491.5 | 1,392.0 | Revenue | 19,014.0 | 19,176.1 | 18,627.0 | 16,325.9 | 14,954.9 | Net Margin | 10.03% | 7.75% | 10.11% | 9.14% | 9.31% | The gross margin and net margin both show steady growth over the past years. In 2009 there was higher overhead causing the net margin to decease. However with the reduction of overhead in 2010 the net margin has continued to increase making Nike a strong company for one to invest in. With this chart above you can see that Nike was able to maintain a steady cost of goods sold. However Nike might want to find new ways to help lower their over head costs. By comparison to Adidas Nike’s overhead cost were lower by 12%. Days Liquidity on Hand Ratio |   |   |   |   |   | (in Millions) | | | | |   |   | 2010 | 2009 | 2008 | 2007 | 2006 | Cash | 3,079.1 | 2,291.1 | 2,133.9 | 1,856.7 | 954.2 | Accounts Receivable | 2,649.8 | 2,883.9 | 2,795.3 | 2,494.7 | 2,395.9 | Liquid Assets | 5,729 | 5,175 | 4,929 | 4,351 | 3,350 | COGS | 10,213.6 | 10,571.7 | 10,239.6 | 9,165.4 | 8,367.9 | Daily Cash Operating Exp. | 28 | 29 | 28 | 25 | 23 | Days Liquidity on Hand Ratio | 202 | 176 | 173 | 171 | 144 | The day’s liquidity ratio shows consistency over the past five years. There has been a growth of 26 days liquidity from the last year. This shows that Nike is still able to continue to stay strong in an ever changing market. Earnings per share |   |   |   |   |   | (in millions except shares outstanding) | | | |   |   | 2010 | 2009 | 2008 | 2007 | 2006 | Net Income | 1,906.7 | 1,486.7 | 1,883.4 | 1,491.5 | 1,392.0 | Common Shares Outstanding | 494 | 491 | 504 | 510 | 528 | Earnings per share | 3.86 | 3.03 | 3.74 | 2.93 | 2.64 | Percent Earned on Equity |   |   |   |   |   |   | (in millions except shares outstanding) | | | | |   |   | | 2010 | 2009 | 2008 | 2007 | 2006 | Current Assets | | 10,959.2 | 9,734.0 | 8,839.3 | 8,076.5 | 7,359.0 | Current Liabilities | | 3,364.2 | 3,277.0 | 3,321.5 | 2,584.0 | 2,623.3 | Common Shares Outstanding | 494 | 491 | 504 | 510 | 528 | Percent Earned on Equity |   | 1537.76% | 1315.88% | 1094.58% | 1077.17% | 897.59% | Financial Statements NIKE, INC. CONSOLIDATED STATEMENTS OF INCOME   | | | | | | | | | | | | |   |    | Year Ended May 31, |   |   |    | 2010 |   |   | 2009 |   |   | 2008 |   |   |    | (In millions, except per share data) |   | Revenues |    | $ | 19,014.0 |    |   | $ | 19,176.1 |    |   | $ | 18,627.0 |    | Cost of sales |    |   | 10,213.6 |    |   |   | 10,571.7 |    |   |   | 10,239.6 |    | |    |   |   |   |   |   |   |   |   |   |   |   | Gross margin |    |   | 8,800.4 |    |   |   | 8,604.4 |    |   |   | 8,387.4 |    | Selling and administrative expense |    |   | 6,326.4 |    |   |   | 6,149.6 |    |   |   | 5,953.7 |    | Restructuring charges (Note 16) |    |   | — |    |   |   | 195.0 |    |   |   | — |    | Goodwill impairment (Note 4) |    |   | — |    |   |   | 199.3 |    |   |   | — |    | Intangible and other asset impairment (Note 4) |    |   | — |    |   |   | 202.0 |    |   |   | — |    | Interest expense (income), net (Notes 6, 7 and 8) |    |   | 6.3 |    |   |   | (9.5 | )  |   |   | (77.1 | )  | Other (income) expense, net (Notes 17 and 18) |    |   | (49.2 | )  |   |   | (88.5 | )  |   |   | 7.9 |    | |    |   |   |   |   |   |   |   |   |   |   |   | Income before income taxes |    |   | 2,516.9 |    |   |   | 1,956.5 |    |   |   | 2,502.9 |    | Income taxes (Note 9) |    |   | 610.2 |    |   |   | 469.8 |    |   |   | 619.5 |    | |    |   |   |   |   |   |   |   |   |   |   |   | Net income |    | $ | 1,906.7 |    |   | $ | 1,486.7 |    |   | $ | 1,883.4 |    | |    |   |   |   |   |   |   |   |   |   |   |   | Basic earnings per common share (Notes 1 and 12) |    | $ | 3.93 |    |   | $ | 3.07 |    |   | $ | 3.80 |    | |    |   |   |   |   |   |   |   |   |   |   |   | Diluted earnings per common share (Notes 1 and 12) |    | $ | 3.86 |    |   | $ | 3.03 |    |   | $ | 3.74 |    | |    |   |   |   |   |   |   |   |   |   |   |   | Dividends declared per common share |    | $ | 1.06 |    |   | $ | 0.98 |    |   | $ | 0.875 |    | |    |   |   |   |   |   |   |   |   |   |   |   | NIKE, INC. CONSOLIDATED BALANCE SHEETS | | | | | | |   |    | May 31, |   |    | 2010 |    | 2009 |   |    | (In millions) | ASSETS |    | | |    | | | Current assets: |    | | |    | | | Cash and equivalents |    | $ | 3,079.1 |    | $ | 2,291.1 | Short-term investments (Note 6) |    |   | 2,066.8 |    |   | 1,164.0 | Accounts receivable, net (Note 1) |    |   | 2,649.8 |    |   | 2,883.9 | Inventories (Notes 1 and 2) |    |   | 2,040.8 |    |   | 2,357.0 | Deferred income taxes (Note 9) |    |   | 248.8 |    |   | 272.4 | Prepaid expenses and other current assets |    |   | 873.9 |    |   | 765.6 | |    |   |   |    |   |   | Total current assets |    |   | 10,959.2 |    |   | 9,734.0 | |    |   |   |    |   |   | Property, plant and equipment, net (Note 3) |    |   | 1,931.9 |    |   | 1,957.7 | Identifiable intangible assets, net (Note 4) |    |   | 467.0 |    |   | 467.4 | Goodwill (Note 4) |    |   | 187.6 |    |   | 193.5 | Deferred income taxes and other assets (Notes 9 and 18) |    |   | 873.6 |    |   | 897.0 | |    |   |   |    |   |   | Total assets |    | $ | 14,419.3 |    | $ | 13,249.6 | |    |   |   |    |   |   | LIABILITIES AND SHAREHOLDERS' EQUITY |    | | |    | | | Current liabilities: |    | | |    | | | Current portion of long-term debt (Note 8) |    | $ | 7.4 |    | $ | 32.0 | Notes payable (Note 7) |    |   | 138.6 |    |   | 342.9 | Accounts payable (Note 7) |    |   | 1,254.5 |    |   | 1,031.9 | Accrued liabilities (Notes 5 and 18) |    |   | 1,904.4 |    |   | 1,783.9 | Income taxes payable (Note 9) |    |   | 59.3 |    |   | 86.3 | |    |   |   |    |   |   | Total current liabilities |    |   | 3,364.2 |    |   | 3,277.0 | |    |   |   |    |   |   | Long-term debt (Note 8) |    |   | 445.8 |    |   | 437.2 | Deferred income taxes and other liabilities (Notes 9 and 18) |    |   | 855.3 |    |   | 842.0 | Commitments and contingencies (Note 15) |    |   | — |    |   | — | Redeemable Preferred Stock (Note 10) |    |   | 0.3 |    |   | 0.3 | Shareholders' equity: |    | | |    | | | Common stock at stated value (Note 11): |    | | |    | | | Class A convertible — 90.0 and 95.3 shares outstanding |    |   | 0.1 |    |   | 0.1 | Class B — 394.0 and 390.2 shares outstanding |    |   | 2.7 |    |   | 2.7 | Capital in excess of stated value |    |   | 3,440.6 |    |   | 2,871.4 | Accumulated other comprehensive income (Note 14) |    |   | 214.8 |    |   | 367.5 | Retained earnings |    |   | 6,095.5 |    |   | 5,451.4 | |    |   |   |    |   |   | Total shareholders' equity |    |   | 9,753.7 |    |   | 8,693.1 | |    |   |   |    |   |   | Total liabilities and shareholders' equity |    | $ | 14,419.3 |    | $ | 13,249.6 | |    |   |   |    |   |   |   NIKE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS   | | | | | | | | | | | | |   |    | Year Ended May 31, |   |   |    | 2010 |   |   | 2009 |   |   | 2008 |   |   |    | (In millions) |   | Cash provided by operations: |    | | | |   | | | |   | | | | Net income |    | $ | 1,906.7 |    |   | $ | 1,486.7 |    |   | $ | 1,883.4 |    | Income charges (credits) not affecting cash: |    | | | |   | | | |   | | | | Depreciation |    |   | 323.7 |    |   |   | 335.0 |    |   |   | 303.6 |    | Deferred income taxes |    |   | 8.3 |    |   |   | (294.1 | )  |   |   | (300.6 | )  | Stock-based compensation (Note 11) |    |   | 159.0 |    |   |   | 170.6 |    |   |   | 141.0 |    | Impairment of goodwill, intangibles and other assets (Note 4) |    |   | — |    |   |   | 401.3 |    |   |   | — |    | Gain on divestitures (Note 17) |    |   | — |    |   |   | — |    |   |   | (60.6 | )  | Amortization and other |    |   | 71.8 |    |   |   | 48.3 |    |   |   | 17.9 |    | Changes in certain working capital components and other assets and liabilities excluding the impact of acquisition and divestitures: |    | | | |   | | | |   | | | | Decrease (increase) in accounts receivable |    |   | 181.7 |    |   |   | (238.0 | )  |   |   | (118.3 | )  | Decrease (increase) in inventories |    |   | 284.6 |    |   |   | 32.2 |    |   |   | (249.8 | )  | (Increase) decrease in prepaid expenses and other current assets |    |   | (69.6 | )  |   |   | 14.1 |    |   |   | (11.2 | )  | Increase (decrease) in accounts payable, accrued liabilities and income taxes payable |    |   | 298.0 |    |   |   | (220.0 | )  |   |   | 330.9 |    | |    |   |   |   |   |   |   |   |   |   |   |   | Cash provided by operations |    |   | 3,164.2 |    |   |   | 1,736.1 |    |   |   | 1,936.3 |    | |    |   |   |   |   |   |   |   |   |   |   |   | Cash used by investing activities: |    | | | |   | | | |   | | | | Purchases of short-term investments |    |   | (3,724.4 | )  |   |   | (2,908.7 | )  |   |   | (1,865.6 | )  | Maturities and sales of short-term investments |    |   | 2,787.6 |    |   |   | 2,390.0 |    |   |   | 2,246.0 |    | Additions to property, plant and equipment |    |   | (335.1 | )  |   |   | (455.7 | )  |   |   | (449.2 | )  | Disposals of property, plant and equipment |    |   | 10.1 |    |   |   | 32.0 |    |   |   | 1.9 |    | Increase in other assets, net of other liabilities |    |   | (11.2 | )  |   |   | (47.0 | )  |   |   | (21.8 | )  | Settlement of net investment hedges |    |   | 5.5 |    |   |   | 191.3 |    |   |   | (76.0 | )  | Acquisition of subsidiary, net of cash acquired (Note 4) |    |   | — |    |   |   | — |    |   |   | (571.1 | )  | Proceeds from divestitures (Note 17) |    |   | — |    |   |   | — |    |   |   | 246.0 |    | |    |   |   |   |   |   |   |   |   |   |   |   | Cash used by investing activities |    |   | (1,267.5 | )  |   |   | (798.1 | )  |   |   | (489.8 | )  | |    |   |   |   |   |   |   |   |   |   |   |   | Cash used by financing activities: |    | | | |   | | | |   | | | | Reductions in long-term debt, including current portion |    |   | (32.2 | )  |   |   | (6.8 | )  |   |   | (35.2 | )  | (Decrease) increase in notes payable |    |   | (205.4 | )  |   |   | 177.1 |    |   |   | 63.7 |    | Proceeds from exercise of stock options and other stock issuances |    |   | 364.5 |    |   |   | 186.6 |    |   |   | 343.3 |    | Excess tax benefits from share-based payment arrangements |    |   | 58.5 |    |   |   | 25.1 |    |   |   | 63.0 |    | Repurchase of common stock |    |   | (741.2 | )  |   |   | (649.2 | )  |   |   | (1,248.0 | )  | Dividends — common and preferred |    |   | (505.4 | )  |   |   | (466.7 | )  |   |   | (412.9 | )  | |    |   |   |   |   |   |   |   |   |   |   |   | Cash used by financing activities |    |   | (1,061.2 | )  |   |   | (733.9 | )  |   |   | (1,226.1 | )  | |    |   |   |   |   |   |   |   |   |   |   |   | Effect of exchange rate changes |    |   | (47.5 | )  |   |   | (46.9 | )  |   |   | 56.8 |    | |    |   |   |   |   |   |   |   |   |   |   |   | Net increase in cash and equivalents |    |   | 788.0 |    |   |   | 157.2 |    |   |   | 277.2 |    | Cash and equivalents, beginning of year |    |   | 2,291.1 |    |   |   | 2,133.9 |    |   |   | 1,856.7 |    | |    |   |   |   |   |   |   |   |   |   |   |   | Cash and equivalents, end of year |    | $ | 3,079.1 |    |   | $ | 2,291.1 |    |   | $ | 2,133.9 |    | |    |   |   |   |   |   |   |   |   |   |   |   | Supplemental disclosure of cash flow information: |    | | | |   | | | |   | | | | Cash paid during the year for: |    | | | |   | | | |   | | | | Interest, net of capitalized interest |    | $ | 48.4 |    |   | $ | 46.7 |    |   | $ | 44.1 |    | Income taxes |    |   | 537.2 |    |   |   | 765.2 |    |   |   | 717.5 |    | Dividends declared and not paid |    |   | 130.7 |    |   |   | 121.4 |    |   |   | 112.9 |    | NIKE, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | |   |   | Common Stock |   | Capital in Excess of Stated Value |   |   | Accumulated Other Comprehensive Income |   |   | Retained Earnings |   |   | Total |   |   |   | Class A |   | Class B |   | | |   | | |   | | |   | | |   |   | Shares |   |   | Amount |   | Shares |   |   | Amount |   | | |   | | |   | | |   | | |   |   | (In millions, except per share data) |   | Balance at May 31, 2007 |   | 117.6 |    |   | $ | 0.1 |   | 384.1 |    |   | $ | 2.7 |   | $ | 1,960.0 |    |   | $ | 177.4 |    |   | $ | 4,885.2 |    |   | $ | 7,025.4 |    | Stock options exercised |   | | |   | | |   | 9.1 |    |   | | |   |   | 372.2 |    |   | | | |   | | | |   |   | 372.2 |    | Conversion to Class B Common Stock |   | (20.8 | )  |   | | |   | 20.8 |    |   | | |   | | | |   | | | |   | | | |   |   | — |    | Repurchase of Class B Common Stock |   | | |   | | |   | (20.6 | )  |   | | |   |   | (12.3 | )  |   | | | |   |   | (1,235.7 | )  |   |   | (1,248.0 | )  | Dividends on Common stock ($0.875 per share) |   | | |   | | |   | | |   | | |   | | | |   | | | |   |   | (432.8 | )  |   |   | (432.8 | )  | Issuance of shares to employees |   | | |   | | |   | 1.0 |    |   | | |   |   | 39.2 |    |   | | | |   | | | |   |   | 39.2 |    | Stock-based compensation (Note 11): |   | | |   | | |   | | |   | | |   |   | 141.0 |    |   | | | |   | | | |   |   | 141.0 |    | Forfeiture of shares from employees |   | | |   | | |   | (0.1 | )  |   | | |   |   | (2.3 | )  |   | | | |   |   | (1.1 | )  |   |   | (3.4 | )  | Comprehensive income (Note 14): |   | | |   | | |   | | |   | | |   | | | |   | | | |   | | | |   | | | | Net income |   | | |   | | |   | | |   | | |   | | | |   | | | |   |   | 1,883.4 |    |   |   | 1,883.4 |    | Other comprehensive income: |   | | |   | | |   | | |   | | |   | | | |   | | | |   | | | |   | | | | Foreign currency translation and other (net of tax expense of $101.6) |   | | |   | | |   | | |   | | |   | | | |   |   | 211.9 |    |   | | | |   |   | 211.9 |    | Realized foreign currency translation gain due to divestiture (Note 17) |   | | |   | | |   | | |   | | |   | | | |   |   | (46.3 | )  |   | | | |   |   | (46.3 | )  | Net loss on cash flow hedges (net of tax benefit of $67.7) |   | | |   | | |   | | |   | | |   | | | |   |   | (175.8 | )  |   | | | |   |   | (175.8 | )  | Net loss on net investment hedges (net of tax benefit of $25.1) |   | | |   | | |   | | |   | | |   | | | |   |   | (43.5 | )  |   | | | |   |   | (43.5 | )  | Reclassification to net income of previously deferred losses related to hedge derivatives (net of tax benefit of $49.6) |   | | |   | | |   | | |   | | |   | | | |   |   | 127.7 |    |   | | | |   |   | 127.7 |    | |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Total Comprehensive income |   | | |   | | |   | | |   | | |   | | | |   |   | 74.0 |    |   |   | 1,883.4 |    |   |   | 1,957.4 |    | Adoption of FIN 48 (Note 1 and 9) |   | | |   | | |   | | |   | | |   | | | |   | | | |   |   | (15.6 | )  |   |   | (15.6 | )  | Adoption of EITF 06-2 Sabbaticals (net of tax benefit of $6.2) |   | | |   | | |   | | |   | | |   | | | |   | | | |   |   | (10.1 | )  |   |   | (10.1 | )  | |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Balance at May 31, 2008 |   | 96.8 |    |   | $ | 0.1 |   | 394.3 |    |   | $ | 2.7 |   | $ | 2,497.8 |    |   | $ | 251.4 |    |   | $ | 5,073.3 |    |   | $ | 7,825.3 |    | |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Stock options exercised |   | | |   | | |   | 4.0 |    |   | | |   |   | 167.2 |    |   | | | |   | | | |   |   | 167.2 |    | Conversion to Class B Common Stock |   | (1.5 | )  |   | | |   | 1.5 |    |   | | |   | | | |   | | | |   | | | |   |   | — |    | Repurchase of Class B Common Stock |   | | |   | | |   | (10.6 | )  |   | | |   |   | (6.3 | )  |   | | | |   |   | (632.7 | )  |   |   | (639.0 | )  | Dividends on Common stock ($0.98 per share) |   | | |   | | |   | | |   | | |   | | | |   | | | |   |   | (475.2 | )  |   |   | (475.2 | )  | Issuance of shares to employees |   | | |   | | |   | 1.1 |    |   | | |   |   | 45.4 |    |   | | | |   | | | |   |   | 45.4 |    | Stock-based compensation (Note 11): |   | | |   | | |   | | |   | | |   |   | 170.6 |    |   | | | |   | | | |   |   | 170.6 |    | Forfeiture of shares from employees |   | | |   | | |   | (0.1 | )  |   | | |   |   | (3.3 | )  |   | | | |   |   | (0.7 | )  |   |   | (4.0 | )  | Comprehensive income (Note 14): |   | | |   | | |   | | |   | | |   | | | |   | | | |   | | | |   | | | | Net income |   | | |   | | |   | | |   | | |   | | | |   | | | |   |   | 1,486.7 |    |   |   | 1,486.7 |    | Other comprehensive income: |   | | |   | | |   | | |   | | |   | | | |   | | | |   | | | |   | | | | Foreign currency translation and other (net of tax benefit of $177.5) |   | | |   | | |   | | |   | | |   | | | |   |   | (335.3 | )  |   | | | |   |   | (335.3 | )  | Net gain on cash flow hedges (net of tax expense of $167.5) |   | | |   | | |   | | |   | | |   | | | |   |   | 453.6 |    |   | | | |   |   | 453.6 |    | Net gain on net investment hedges (net of tax expense of $55.4) |   | | |   | | |   | | |   | | |   | | | |   |   | 106.0 |    |   | | | |   |   | 106.0 |    | Reclassification to net income of previously deferred net gains related to hedge derivatives (net of tax expense of $39.6) |   | | |   | | |   | | |   | | |   | | | |   |   | (108.2 | )  |   | | | |   |   | (108.2 | )  | |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Total Comprehensive income |   | | |   | | |   | | |   | | |   | | | |   |   | 116.1 |    |   |   | 1,486.7 |    |   |   | 1,602.8 |    | |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Balance at May 31, 2009 |   | 95.3 |    |   | $ | 0.1 |   | 390.2 |    |   | $ | 2.7 |   | $ | 2,871.4 |    |   | $ | 367.5 |    |   | $ | 5,451.4 |    |   | $ | 8,693.1 |    | |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Stock options exercised |   | | |   | | |   | 8.6 |    |   | | |   |   | 379.6 |    |   | | | |   | | | |   |   | 379.6 |    | Conversion to Class B Common Stock |   | (5.3 | )  |   | | |   | 5.3 |    |   | | |   | | | |   | | | |   | | | |   |   | — |    | Repurchase of Class B Common Stock |   | | |   | | |   | (11.3 | )  |   | | |   |   | (6.8 | )  |   | | | |   |   | (747.5 | )  |   |   | (754.3 | )  | Dividends on Common stock ($1.06 per share) |   | | |   | | |   | | |   | | |   | | | |   | | | |   |   | (514.8 | )  |   |   | (514.8 | )  | Issuance of shares to employees |   | | |   | | |   | 1.3 |    |   | | |   |   | 40.0 |    |   | | | |   | | | |   |   | 40.0 |    | Stock-based compensation (Note 11): |   | | |   | | |   | | |   | | |   |   | 159.0 |    |   | | | |   | | | |   |   | 159.0 |    | Forfeiture of shares from employees |   | | |   | | |   | (0.1 | )  |   | | |   |   | (2.6 | )  |   | | | |   |   | (0.3 | )  |   |   | (2.9 | )  | Comprehensive income (Note 14): |   | | |   | | |   | | |   | | |   | | | |   | | | |   | | | |   | | | | Net income |   | | |   | | |   | | |   | | |   | | | |   | | | |   |   | 1,906.7 |    |   |   | 1,906.7 |    | Other comprehensive income: |   | | |   | | |   | | |   | | |   | | | |   | | | |   | | | |   | | | | Foreign currency translation and other (net of tax benefit of $71.8) |   | | |   | | |   | | |   | | |   | | | |   |   | (159.2 | )  |   | | | |   |   | (159.2 | )  | Net gain on cash flow hedges (net of tax expense of $27.8) |   | | |   | | |   | | |   | | |   | | | |   |   | 87.1 |    |   | | | |   |   | 87.1 |    | Net gain on net investment hedges (net of tax expense of $21.2) |   | | |   | | |   | | |   | | |   | | | |   |   | 44.8 |    |   | | | |   |   | 44.8 |    | Reclassification to net income of previously deferred net gains related to hedge derivatives (net of tax expense of $41.7) |   | | |   | | |   | | |   | | |   | | | |   |   | (121.6 | )  |   | | | |   |   | (121.6 | )  | Reclassification of ineffective hedge gains to net income (net of tax expense of $1.4) |   | | |   | | |   | | |   | | |   | | | |   |   | (3.8 | )  |   | | | |   |   | (3.8 | )  | |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Total Comprehensive income |   | | |   | | |   | | |   | | |   | | | |   |   | (152.7 | )  |   |   | 1,906.7 |    |   |   | 1,754.0 |    | |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Balance at May 31, 2010 |   | 90.0 |    |   | $ | 0.1 |   | 394.0 |    |   | $ | 2.7 |   | $ | 3,440.6 |    |   | $ | 214.8 |    |   | $ | 6,095.5 |    |   | $ | 9,753.7 |    | |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   Industry Standards Nike has created The Corporate Responsibility Committee. This committee is composed of f at least two members of the Board of Directors. The Committee review’s NIKE's significant activities and policies regarding labor and environmental practices, community affairs, charitable and foundation activities, diversity and equal opportunity, and environmental and sustainability initiatives, and make recommendations to the Board of Directors. The responsibility of the committee is: “1. Review the activities of the NIKE Foundation and community involvement by NIKE on a regular basis. 2. Review and provide guidance to management on environmental impact, and sustainability issues. 3. Review, provide guidance to management, and report to the Board of Directors on NIKE's labor practices, and review reports of the NIKE's internal labor and environmental compliance audits. 4. Review, provide guidance to management, and report to the Board of Directors regarding the involvement of significant corporate responsibility issues in major business decisions, to protect NIKE's valuable goodwill, and human and intellectual capital. (http://invest.nike.com/phoenix.zhtml'c=100529&p=irol-govCommittee&Committee=7452)” 5. Review and report to the Board of Directors regarding NIKE's engagement of environmental or labor auditors, and NIKE's work with industry organizations and non-governmental organizations concerning corporate responsibility. 6. Review and make recommendations to management on reporting to shareholders and other communities regarding corporate responsibility activities. 7. Perform such other duties and functions as may, from time to time, be assigned to the Committee by the Board. Another standard that Nike has come up with is Environmental Apparel Design Tool. This environmental apparel design tool was designed and built by Nike over seven years with a six million dollar investment. This software-based Environmental Apparel Design Tool helps designers to make real time choices that will help to decrease the environmental impacts of their work. Hannah Jones, Vice President of Nike Sustainable Business and Innovation says, “By releasing the tool we want others to improve on it and we hope to inspire further collaboration to create global industry standards for a level playing field, encourage widespread industry adoption of sustainable design practices and have more sustainable products available for the consumer (www.businesswire.com).” Strategic and Future Performance Industry Information: | CONSUMER NON-DURABLES - Textile - Apparel Footwear | |  Price  |  Day Change  |  Bid  |  Ask  |  Open  |  High  |  Low  |  Volume  |  88.94 |   -0.25 |  88.94 |  88.96 |  88.76 |  89.67 |  88.83 |  566327 |  Market Cap (mil) |  Shares Outstanding (mil) |  Beta |  EPS |  DPS |  P/E |  Yield |  52-Wks-Range |  42,557.8 |  478.5 |  0.91 |  3.86 |  1.04 |  21.5 |  1.4 |  92.49 - 66.34 | | KEY FIGURES (Latest Twelve Months - LTM) | Yesterday's Close | 89.19 | $ | PE Ratio - LTM | 21.5 | | Market Capitalisation | 42,557.8 | mil | Latest Shares Outstanding | 478.5 | mil | Earnings pS (EPS) | 3.86 | $ | Dividend pS (DPS) | 1.04 | ¢ | Dividend Yield | 1.4 | % | Dividend Payout Ratio | 27 | % | Revenue per Employee | 552,733 | $ | Effective Tax Rate | 24.2 | % | Float | 295.5 | mil | Float as % of Shares Outstanding | 75.6 | % | Foreign Sales | 12,318 | mil | Domestic Sales | 6,696 | mil | Selling, General & Adm/tive (SG&A) as % of Revenue | 33.20 | % | Research & Devlopment (R&D) as % of Revenue | 0.00 | % | Gross Profit Margin | 48.7 | % | EBITDA Margin | 15.4 | % | Pre-Tax Profit Margin | 13.7 | % | Assets Turnover | 1.4 | % | Return on Assets (ROA) | 14.1 | % | Return on Equity (ROE) | 20.4 | % | Return on Capital Invested (ROCI) | 19.8 | % | Current Ratio | 3.4 | | Leverage Ratio (Assets/Equity) | 1.5 | | Interest Cover | 616.6 | | Total Debt/Equity (Gearing Ratio) | 0.06 | | LT Debt/Total Capital | 3.0 | % | Working Capital pS | 16.03 | $ | Cash pS | 3.69 | $ | Book-Value pS | 20.79 | $ | Tangible Book-Value pS | 19.41 | $ | Cash Flow pS | 5.08 | $ | Free Cash Flow pS | 3.26 | $ | | KEY FIGURES (LTM): Price info | Price/Book Ratio | 4.29 | | Price/Tangible Book Ratio | 4.59 | | Price/Cash Flow | 17.6 | | Price/Free Cash Flow | 27.4 | | P/E as % of Industry Group | 92.0 | % | P/E as % of Sector Segment | 86.0 | % | |   | Balance Sheet (at a glance) in Millions | | | | | | DIVIDEND INFO | Dividend Declared Date | 02/17/2011 | Dividend Ex-Date | 03/02/2011 | Dividend Record Date | 03/06/2011 | Dividend Pay Date | 03/31/2011 | Dividend Amount | 310 | Type of Payment | Cash Payment | Dividend Rate | 1.24 | Current Dividend Yield | 1.4 | 5-Y Average Dividend Yield | 1.8 | Payout Ratio | 27.0 | 5-Y Average Payout Ratio | 25.0 | | | Share price performance previous 3 years | | | | Share price performance intraday | | | |   | | | PRICE/VOLUME | High | Low | Close | % Price Chg | % Price Chg vs. Mkt. | Avg. Daily Vol | Total Vol | 1 Week | - | - | - | -0.8 | 99 | 27,395 | 64,555 | 4 Weeks | 91.12 | 84.40 | 86.21 | 3.5 | 104 | 26,813 | 429,004 | 13 Weeks | 92.49 | 81.01 | 87.80 | 1.6 | 95 | 24,953 | 1,472,213 | 26 Weeks | 92.49 | 74.37 | 73.75 | 20.9 | 102 | 25,776 | 3,170,471 | 52 Weeks | 92.49 | 66.34 | 69.90 | 27.6 | 111 | 28,827 | 7,177,874 | YTD | 91.12 | 81.01 | - | 4.4 | 99 | 23,800 | 1,071,001 | Moving Average | 5-Days | 10-Days | 10-Weeks | 30-Weeks | 200-Days | Beta (60-Mnth) | Beta (36-Mnth) | | 89.23 | 88.36 | 85.40 | 82.37 | 79.26 | 0.91 | 0.92 | |   | | | GROWTH RATES | 5-Year Growh | R² of 5-Year Growth | 3-Year Growth | Revenue | 6.10 | 87.8 | 2.64 | Income | 8.40 | 73.6 | 4.04 | Dividend | 14.87 | 96.8 | 10.58 | Capital Spending | 6.86 | NA | -3.25 | R&D | 0.00 | NA | 0.00 | Normalized Inc. | 10.33 | NA | 4.19 | |   | CHANGES | YTD vs. Last YTD | Curr Qtr vs. Qtr 1-Yr ago | Annual vs. Last Annual | Revenue % | 8.8 | 9.9 | -0.8 | Earnings % | 14.4 | 21.7 | 28.3 | EPS % | 15.6 | 23.7 | 27.4 | EPS $ | 0.28 | 0.18 | 0.83 | |   | | | SOLVENCY RATIOS | SHORT-TERM SOLVENCY RATIOS (LIQUIDITY) | Net Working Capital Ratio | 52.67 | Current Ratio | 3.3 | Quick Ratio (Acid Test) | 2.3 | Liquidity Ratio (Cash) | 1.53 | Receivables Turnover | 6.9 | Average Collection Period | 52 | Working Capital/Equity | 77.9 | Working Capital pS | 15.69 | Cash-Flow pS | 4.76 | Free Cash-Flow pS | 4.80 | FINANCIAL STRUCTURE RATIOS | Altman's Z-Score Ratio | 7.20 | Financial Leverage Ratio (Assets/Equity) | 1.5 | Debt Ratio | 32.4 | Total Debt/Equity (Gearing Ratio) | 0.06 | LT Debt/Equity | 0.05 | LT Debt/Capital Invested | 12.8 | LT Debt/Total Liabilities | 9.6 | Interest Cover | 400.5 | Interest/Capital Invested | 0.06 | |   | VALUATION RATIOS | MULTIPLES | PQ Ratio | 9.25 | Tobin's Q Ratio | 2.40 | Current P/E Ratio - LTM | 21.50 | Enterprise Value (EV)/EBITDA | 11.91 | Enterprise Value (EV)/Free Cash Flow | 20.88 | Dividend Yield | 1.4 | Price/Tangible Book Ratio - LTM | 4.59 | Price/Book Ratio - LTM | 4.29 | Price/Cash Flow Ratio | 17.6 | Price/Free Cash Flow Ratio - LTM | 27.4 | Price/Sales Ratio | 2.15 | P/E Ratio (1 month ago) - LTM | 20.9 | P/E Ratio (26 weeks ago) - LTM | 19.1 | P/E Ratio (52 weeks ago) - LTM | 23.3 | 5-Y High P/E Ratio | 23.2 | 5-Y Low P/E Ratio | 12.6 | 5-Y Average P/E Ratio | 18.1 | Current P/E Ratio as % of 5-Y Average P/E | 119 | P/E as % of Industry Group | 92.0 | P/E as % of Sector Segment | 86.0 | Current 12 Month Normalized P/E Ratio - LTM | 21.5 | PER SHARE FIGURES | LT Debt pS | 0.92 | Current Liabilities pS | 6.95 | Tangible Book Value pS - LTM | 19.41 | Book Value pS - LTM | 20.79 | Capital Invested pS | 21.32 | Cash pS - LTM | 3.69 | Cash Flow pS - LTM | 5.08 | Free Cash Flow pS - LTM | 3.26 | Earnings pS (EPS) | 3.86 | |   | OPERATING RATIOS | PROFITABILITY RATIOS | Free Cash Flow Margin | 12.22 | Free Cash Flow Margin 5YEAR AVG | 6.99 | Net Profit Margin | 10.0 | Net Profit Margin - 5YEAR AVRG. | 9.3 | Equity Productivity | 1.95 | Return on Equity (ROE) | 19.5 | Return on Equity (ROE) - 5YEAR AVRG. | 20.6 | Capital Invested Productivity | 1.86 | Return on Capital Invested (ROCI) | 18.7 | Return on Capital Invested (ROCI) - 5YEAR AVRG. | 19.6 | Assets Productivity | 1.40 | Return on Assets (ROA) | 13.2 | Return on Assets (ROA) - 5YEAR AVRG. | 13.5 | Gross Profit Margin | 48.7 | Gross Profit Margin - 5YEAR AVRG. | 46.8 | EBITDA Margin - LTM | 15.4 | EBIT Margin - LTM | 13.7 | Pre-Tax Profit Margin | 13.2 | Pre-Tax Profit Margin - 5YEAR AVRG. | 12.8 | Effective Tax Rate | 24.2 | Effective Tax Rate - 5YEAR AVRG. | 28.0 | EFFICIENCY RATIOS | Cash Conversion Cycle | 131 | Revenue per Employee | 552,733 | Net Income per Employee | 55,427 | Average Collection Period | 50 | Receivables Turnover | 6.9 | Day's Inventory Turnover Ratio | 81 | Inventory Turnover | 4.5 | Inventory/Sales | 10.7 | Accounts Payble/Sales | 7.33 | Assets/Revenue | 0.71 | Net Working Capital Turnover | 2.50 | Fixed Assets Turnover | 5.50 | Total Assets Turnover | 1.4 | Revenue per $ Cash | 6.18 | Revenue per $ Plant | 9.84 | Revenue per $ Common Equity | 1.95 | Revenue per $ Capital Invested | 1.86 | Selling, General & Adm/tive (SG&A) as % of Revenue | 33.3 | SG&A Expense as % of Revenue - 5YEAR AVRG. | 31.7 | Research & Devlopment (R&D) as % of Revenue | 0.0 | R&D Expense as % of Revenue - 5YEAR AVRG. | 0.0 | | | |    | | | | | | | | * The above information was obtained from http://www.advfn.com/p.php'pid=financials&symbol=NYSE%3ANKE | | In the past five years Nike has put up pat EPS growth rates of 10.3%. While most analysts expect the future growth rates to be 11.9%. For the future Nike has already held a meeting in NY to express their plans to continue to grow. As stated on their web site Nikebiz.com “During its investor meeting in New York, the Company announced a revenue target of $27 billion by the end of fiscal 2015 based on growth expectations across its portfolio, which includes the NIKE Brand, Cole Haan, Converse, Hurley, Jordan Brand, NIKE Golf and Umbro. Additionally, the Company believes it can generate over $12 billion of cumulative free cash flow from operations through 2015. Both goals extend NIKE, Inc.’s long-term financial model of high single-digit revenue growth, mid-teens earnings per share growth, and expanding returns on capital.” Also stated in this meeting was, “NIKE Brand President Charlie Denson provided an overview of how NIKE’s consumer-focused category strategy is driving growth through increased market place capacity and penetration, “NIKE is the most connected, authentic and distinctive brand in the industry.” Denson continued, “Our consumer focused strategy enhances our ability to deliver great product and elevated consumer experiences which will help grow the NIKE Brand to approximately $23 billion by the end of fiscal 2015.” Conclusion As shown throughout the report Nike has continued to be the leader in their industry. The company is able to stay consistent and has been able to add more growth over the years. To help continue to stay as an industry leader Nike has acquired contacts with the World Cup Soccer teams to create all the uniforms as well as starting in 2012 Nike will be the official uniform maker for the NFL. With constant growth and new ways to outdo the competition Nike has had consistent profits and good growth for elevated price multiples. Analysts are forecasting earnings growth of 1.1% over the last year and going forward into the new years. Now would be the best time to invest into an ever growing company that can still continue to bring in profits in an unpredictable struggling economy. References Nike Furthers Its Commitment to Open Innovation and Sustainability by Releasing Environmental Apparel Design Tool to Industry (30 November 2010) retrieved on February 5 2011 from :http://www.businesswire.com/news/home/20101130006787/en/Nike-Furthers-Commitment-Open-Innovation-Sustainability-Releasing Charter of the Corporate Responsibility Committee retrieved on February 5, 2011 from: http://invest.nike.com/phoenix.zhtml'c=100529&p=irol-govCommittee&Committee=7452 Adidas Group.com retrieved on February 5, 2011 from: http://www.adidasgroup.com/en/investorrelations/assets/pdf/annual_reports/2008/GB_2008_En.pdf ADVFN Nike retrieved on February 5, 2011 from http://www.advfn.com/p.php'pid=financials&symbol=NYSE%3ANKE Is Nike’s Stock Cheap by the Numbers' (5 March2011) Chokkavelu, Anand, CFA retrieved on February 5, 2011 from: http://www.fool.com/investing/general/2011/03/05/is-nikes-stock-cheap-by-the-numbers.aspx'source=isesitlnk0000001&mrr=1.00 History of Nike, company overview, retrieved on February 5, 2011 from: http://www.nikebiz.com/ Nike 10-K retrieved from: http://www.sec.gov Nike, Inc. (NKE) Forecasting Earnings growth retrieved on March 1, 2011 from: http://www.nasdaq.com/earnings/earnings_growth.asp'symbol=NKE&selected=NKE