NIKE (NKE) 10-K risk factor changes: FY2018 vs FY2017

The risks and uncertainties are detailed from time to time in reports filed by NIKE with the SEC, including reports filed on Forms 8-K, 10-Q and 10-K, and include, among others, the following: international, national and local general economic and market conditions; the size and growth of the overall athletic footwear, apparel and equipment markets; intense competition among designers, marketers, distributors and sellers of athletic footwear, apparel and equipment for consumers and endorsers; demographic changes; changes in consumer preferences; popularity of particular designs, categories of products and sports; seasonal and geographic demand for NIKE products; difficulties in anticipating or forecasting changes in consumer preferences, consumer demand for NIKE products and the various market factors described above; difficulties in implementing, operating and maintaining NIKE’s increasingly complex information [added: technology] systems and controls, including, without limitation, the systems related to demand and supply planning and inventory control; interruptions in data and information technology systems; consumer data security; fluctuations and difficulty in forecasting operating results, including, without limitation, the fact that advance [removed: futures] orders may not be indicative of future revenues due to changes in shipment timing, the changing mix of [removed: futures and] orders with shorter lead times, and discounts, order cancellations and returns; the ability of NIKE to sustain, manage or forecast its growth and inventories; the size, timing and mix of purchases of NIKE’s products; increases in the cost of materials, labor and energy used to manufacture products; new product development and introduction; the ability to secure and protect trademarks, patents and other intellectual property; product performance and quality; customer service; adverse [removed: publicity;] [added: publicity, including without limitation, through social media or in connection with brand damaging events;] the loss of significant customers or suppliers; dependence on distributors and licensees; business disruptions; increased costs of freight and transportation to meet delivery deadlines; increases in borrowing costs due to any decline in NIKE’s debt ratings; changes in business strategy or development plans; general risks associated with doing business outside of the United States, including, without limitation, exchange rate fluctuations, [added: inflation,] import duties, tariffs, quotas, political and economic instability and terrorism; [removed: proposed changes to] [added: the impact of recent] U.S. tax [removed: laws] [added: reform legislation on our results of operations; the potential impact of new laws, regulations] or policy, [removed: tariff] [added: including, without limitation, tariffs, import/export, trade] and [removed: import/export regulations;] [added: immigration regulations or policies;] changes in government regulations; the impact of, including business and legal developments relating to, climate change and natural disasters; litigation, regulatory proceedings and other claims asserted against NIKE; the ability to attract and retain qualified [added: employees, and any negative public perception with respect to key] personnel; the effects of NIKE’s decision to invest in or divest of businesses and other factors referenced or incorporated by reference in this report and other reports.

Our [removed: DTC] [added: NIKE Direct] operations, both through our digital commerce operations and retail stores, also compete with multi-brand retailers selling our products.

In addition, the competitive nature of retail including shifts in the ways in which consumers are shopping, and the rising trend of digital commerce, constitutes a risk factor implicating our [removed: DTC] [added: NIKE Direct] and wholesale operations.

[removed: In addition, adverse] [added: Adverse] publicity about regulatory or legal action against us, or by us, could [added: also] damage our reputation and brand image, undermine consumer confidence in us and reduce long-term demand for our products, even if the regulatory or legal action is unfounded or not material to our operations.

If [removed: we do not maintain, extend and expand] [added: the reputation or image of any of] our [removed: brand image,] [added: brands is tarnished or if we receive negative publicity,] then our product sales, financial condition and results of operations could be materially and adversely affected.

If we fail to anticipate accurately and respond to trends and shifts in consumer preferences by adjusting the mix of existing product offerings, developing new products, designs, styles and categories, and influencing sports and fitness preferences through [removed: aggressive] [added: extensive] marketing, we could experience lower sales, excess inventories or lower profit margins, any of which could have an adverse effect on our results of operations and financial condition.

[removed: Currency exchange rate] [added: General economic factors beyond our control, and changes in the global economic environment, including] fluctuations [added: in inflation and currency exchange rates,] could result in lower revenues, higher costs and decreased margins and earnings.

[removed: As a result,] [added: A majority of our products are manufactured and sold outside of the United States, and] we conduct purchase and sale transactions in various currencies, which increases our exposure to [added: the volatility of global economic conditions, including] fluctuations in [added: inflation and] foreign currency exchange [removed: rates globally.][added: rates.]

Additionally, there has been, and may continue to be, volatility in currency exchange rates as a result of the United [removed: Kingdom's] [added: Kingdom’s] impending exit from the European Union, commonly referred to as “Brexit” and [removed: current] [added: new or proposed] U.S. policy [removed: proposals.][added: changes.]

| • | We conduct transactions in various currencies, which increases our exposure to fluctuations in foreign currency exchange rates relative to the U.S. Dollar. Continued volatility in the markets and exchange rates for foreign currencies and contracts in foreign currencies, including in response to certain policies advocated [added: or implemented] by the U.S. presidential administration, could have a significant impact on our reported operating results and financial condition. |

However, the mix of product sales may vary considerably from time to time as a result of changes in seasonal and geographic demand for particular types of footwear, apparel and equipment and in connection with the timing of significant sporting events, such as the [added: NBA Finals,] Olympics or the [removed: European Football Championship,] [added: World Cup,] among others.

[removed: Our futures ordering program does not prevent] [added: Failure to accurately forecast consumer demand could lead to] excess inventories or inventory shortages, which could result in decreased operating margins, reduced cash flows and harm to our business.

[removed: We] [added: To meet anticipated demand for our products, we] purchase products from manufacturers outside of our futures ordering program and in advance of customer orders, which we hold in inventory and resell to customers.

Our [added: NIKE] Direct [removed: to Consumer] operations have required and will continue to require a substantial investment and commitment of resources and are subject to numerous risks and uncertainties.

Our [added: NIKE] Direct [removed: to Consumer] stores have required substantial fixed investment in equipment and leasehold improvements, information [removed: systems, inventory] [added: systems] and personnel.

Due to the high fixed-cost structure associated with our [added: NIKE] Direct [removed: to Consumer] operations, a decline in sales, a shift in consumer behavior away from brick-and-mortar retail, or the closure or poor performance of individual or multiple stores could result in significant lease termination costs, write-offs of equipment and leasehold improvements and employee-related costs.

Many of our customers shop with us through our digital [removed: commerce website and mobile applications.][added: platforms.]

Increasingly, customers are using [removed: tablets] [added: mobile-based devices] and [removed: smart phones] [added: applications] to shop online with us and with our [removed: competitors] [added: competitors,] and to do comparison shopping.

We periodically discover [removed: products that are] counterfeit reproductions of our products or [added: products] that otherwise infringe our intellectual property rights.

If we are unsuccessful in enforcing our intellectual [removed: property,] [added: property rights,] continued sales of these products could adversely affect our sales and our brand and could result in a shift of consumer preference away from our products.

We may be subject to liability if third parties successfully claim [removed: that] we infringe [added: on] their intellectual property rights.

[removed: Such] [added: These] actions include contractual measures such as entering into non-disclosure and non-compete agreements and agreements relating to our collaborations with third [removed: parties,] [added: parties] and providing confidential information awareness training.

For example, confidential information [removed: that is] related to business strategy, new technologies, mergers and acquisitions, unpublished financial results or personal data could be prematurely or inadvertently used and/or disclosed, resulting in a loss of reputation, a decline in our stock price and/or a negative impact on our market position, and could lead to damages, fines, penalties or injunctions.

We are subject to the risk [removed: that] our licensees may not generate expected sales or maintain the value of our brands.

The misuse of a brand by [added: or negative publicity involving] a licensee could have a material adverse effect on that brand and on us.

Any breach of our [added: or our service providers’] network, or [added: other] vendor systems, may result in the loss of confidential business and financial data, misappropriation of our consumers’, [removed: users'] [added: users’] or employees’ personal information or a disruption of our business.

Any of these outcomes could have a material adverse effect on our business, [removed: including,] [added: including] unwanted media attention, impairment of our consumer and customer relationships, damage to our [removed: reputation and result] [added: reputation; resulting] in lost sales and consumers, fines, [added: lawsuits,] or [removed: lawsuits.][added: significant legal and remediation expenses.]

In addition, we must comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal [removed: data.][added: data in the U.S., Europe and elsewhere.]

Compliance with [removed: existing and] [added: existing,] proposed [added: and recently enacted] laws [added: (including implementation of the privacy] and [added: process enhancements called for under GDPR) and] regulations can be [removed: costly, and] [added: costly;] any failure to comply with these regulatory standards could subject us to legal and reputational risks.

This includes, for example, the uncertainty surrounding the effect of Brexit, including changes to the legal and regulatory framework that apply to the United Kingdom and its relationship with the European Union, as well as [removed: the current proposals] [added: new and proposed changes] affecting [added: tax laws and] trade policy in the U.S. [added: and elsewhere as further described below under “We could be subject to changes in tax rates, adoption of new tax laws, additional tax liabilities or increased volatility in our effective tax rate” and “Changes to U.S. trade policy, tariff and import/export regulations may have a material adverse effect on our business, financial condition and results of operations.”] The U.S. presidential administration has indicated a focus on policy reforms that discourage U.S. corporations from outsourcing manufacturing and production activities to foreign jurisdictions, including through [removed: potential] tariffs or penalties on goods manufactured outside the [removed: U.S. If any of these reforms are implemented, it] [added: U.S., which] may [removed: become necessary for] [added: require] us to change the way we conduct business [removed: which may] [added: and] adversely affect our results of operations.

We could be subject to changes in tax rates, adoption of new tax [removed: laws or] [added: laws,] additional tax [removed: liabilities.][added: liabilities or increased volatility in our effective tax rate.]

Current economic and political conditions make tax [removed: rules] [added: laws and regulations, or their interpretation and application,] in any [removed: jurisdiction, including the United States,] [added: jurisdiction] subject to significant change.

There have been proposals to reform [removed: U.S. and] foreign tax laws that could significantly impact how U.S. multinational corporations are taxed on foreign earnings.

Although we believe our tax provisions are adequate, the final determination of tax audits and any related disputes could be materially different from our historical income tax provisions and [removed: accruals.][added: accruals, particularly in light of the enactment of the Tax Act.]

[removed: Proposed changes] [added: Changes] to U.S. [removed: tax law or] [added: trade] policy, tariff and import/export regulations may have a material adverse effect on our business, financial condition and results of operations.

The Company, similar to many other multinational corporations, does a significant amount of business that would be impacted by [removed: these changes.][added: changes to the trade policies of the U.S. and foreign countries (including governmental action related to tariffs, international trade agreements, or economic sanctions).]

[removed: If any new legislation and/or regulations are implemented, or if existing trade agreements are renegotiated, it] [added: It] may be time-consuming and expensive for us to alter our business operations in order to adapt to or comply with [added: any] such changes.

Such [removed: operational] changes [added: have the potential to adversely impact the U.S. economy or certain sectors thereof, our industry and the global demand for our products, and as a result,] could have a material adverse effect on our business, financial condition and results of operations.

If one of our counterparties were to become insolvent or file for bankruptcy, our ability to recover losses incurred as a result of [removed: default] [added: default,] or our assets [removed: that are] deposited or held in accounts with such [removed: counterparty] [added: counterparty,] may be limited by the counterparty’s liquidity or the applicable laws governing the insolvency or bankruptcy proceedings.

NIKE is supplied by [removed: approximately 127] [added: 124] footwear factories located in [removed: 15] [added: 13] countries.

We could be adversely impacted if we fail to achieve any of these objectives.

Our brand value also depends on our ability to maintain a positive consumer perception of our corporate integrity and brand culture.

Negative claims or publicity involving us, our products or any of our key employees, endorsers, sponsors or suppliers could seriously damage our reputation and brand image, regardless of whether such claims are accurate.

Social media, which accelerates and potentially amplifies the scope of negative publicity, can increase the challenges of responding to negative claims.

For example, the European Union adopted the General Data Protection Regulation (the “GDPR”), which became effective on May 25, 2018.

The GDPR imposes additional obligations on companies regarding the handling of personal data and provides certain individual privacy rights to persons whose data is stored.

Negative publicity regarding production methods, alleged practices or workplace or related conditions of any of our suppliers, manufacturers or licensees could adversely affect our brand image and sales and force us to locate alternative suppliers, manufacturers or licenses.

On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”), which includes a number of significant changes to previous U.S. tax laws that impact us, including provisions for a one-time transition tax on deemed repatriation of undistributed foreign earnings, and a reduction in the corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017, among other changes.

The Tax Act also transitions U.S. international taxation from a worldwide system to a modified territorial system and includes base erosion prevention measures on non-U.S. earnings, which has the effect of subjecting certain earnings of our foreign subsidiaries to U.S. taxation.

Implementation of the Tax Act required us to record incremental provisional tax expense in fiscal 2018, which increased our effective tax rate in fiscal 2018.

Adjustments to the incremental provisional tax expense may be made in future periods as actual amounts may differ due to, among other factors, a change in interpretation of the applicable revisions to the U.S. tax code and related tax accounting guidance, changes in assumptions made in developing these estimates, regulatory guidance that may be issued with respect to the applicable revisions to the U.S. tax code, and state tax implications.

As we complete our analysis of the Tax Act, we may make adjustments to provisional amounts we have recorded, which could negatively impact our business, results of operations or financial condition.

Changes or challenges to or the repeal of the Tax Act cannot be predicted with certainty and could have a material impact on our future tax expense.

Changes in U.S. or international social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where we currently sell our products or conduct our business, as well as any negative sentiment toward the U.S. as a result of such changes, could adversely affect our business.

The U.S. presidential administration has instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S., economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S. and other countries where we conduct our business.

As a result of recent policy changes of the U.S. presidential administration and recent U.S. government proposals, there may be greater restrictions and economic disincentives on international trade.

The new tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries, and certain foreign governments have instituted or are considering imposing trade sanctions on certain U.S. goods.

As a multinational corporation with operations and distribution channels throughout the world, we are subject to extensive laws and regulations in the U.S. and other jurisdictions in which we have operations and distribution channels.

In addition, the adoption of new laws or regulations, or changes in the interpretation of existing laws or regulations, may result in significant unanticipated legal and reputational risks.

The success of our business depends, in part, on high-quality employees, including key personnel.

In addition, shifts in U.S. immigration policy could negatively impact our ability to attract, hire and retain highly skilled employees who are from outside the U.S.

We could be adversely impacted if we fail to achieve any of these objectives or if the reputation or image of any of our brands is tarnished or receives negative publicity.

Negative posts or comments about us on social networking applications or websites could seriously damage our reputation and brand image.

A majority of our products are manufactured and sold outside of the United States.

Futures orders may not be an accurate indication of our future revenues.

We utilize a futures ordering program, which allows retailers to order five to six months in advance of delivery with the commitment that their orders will be delivered within a set period of time at a fixed price.

Our futures ordering program allows us to minimize the amount of products we hold in inventory, purchasing costs, the time necessary to fill customer orders and the risk of non-delivery.

We currently report changes in futures orders in our periodic financial reports.

Reported futures orders are not necessarily indicative of our expectation of revenues for any future period, and the relationship between reported futures and reported revenues in a given period has become less correlated over time based on our evolving business model.

Differences are also due to year-over-year changes in shipment timing, changes in the mix of orders between futures and orders with shorter lead times and because the fulfillment of certain orders may fall outside of the schedule noted above.

In addition, foreign currency exchange rate fluctuations, as well as differing levels of order cancellations, discounts and returns can cause differences in the comparisons between futures orders and actual revenues.

Moreover, a portion of our revenue is not derived from futures orders, including sales with short lead times, closeout NIKE Brand footwear and apparel, all sales of NIKE Brand equipment, the difference between retail sales and internal orders from our Direct to Consumer in-line stores and digital commerce operations, and sales from Converse, NIKE Golf and Hurley.

If our capital or financing needs in the United States require us to repatriate earnings from foreign jurisdictions above our current levels, our effective income tax rates for the affected periods could be negatively impacted.

During, and following, the recent U.S. presidential election, there has been discussion and commentary regarding potential significant changes to U.S. trade policies, legislation, treaties and tariffs, including NAFTA and trade policies and tariffs affecting China.

There have also been discussions of a disallowance of tax deductions for imported merchandise or the imposition of unilateral tariffs on imported products.

It is unknown at this time whether and to what extent new legislation will be passed into law, pending or new regulatory proposals will be adopted, international trade agreements will be negotiated, or the effect that any such action would have, either positively or negatively, on our industry, or on us.

We believe cost-effective investments are essential to business growth and profitability.

We depend on key personnel, the loss of whom would harm our business.

We sell our products [removed: to retail accounts,] through NIKE-owned [removed: in-line and factory] retail stores and [removed: NIKE-owned internet websites and mobile applications] [added: through digital platforms] (which we refer to collectively as our [removed: “Direct to Consumer” or “DTC”] [added: “NIKE Direct”] operations), [added: to retail accounts] and [removed: through] a mix of independent distributors, licensees and sales representatives in virtually all countries around the world.

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 [removed: at retail, online and] through [removed: mobile applications.][added: digital platforms and at retail.]

Leveraging the power of digital, NIKE [removed: will] [added: plans to] drive growth — by accelerating innovation and product creation, moving even closer to the consumer through key cities, and deepening one-to-one connections.

| • | [removed: Optimizing] [added: Slight] selling and administrative expense [removed: by focusing on:] [added: leverage;] |

[removed: Through] [added: As a result of the] execution of this strategy, our long-term financial goals through fiscal [removed: 2020,] [added: 2023,] on [removed: average] [added: average,] per year, are as follows:

| • | High single-digit [removed: to low double-digit] revenue growth; |

| • | Mid-teens earnings per share growth; [added: and] |

| • | [removed: High-twenties to low-thirties] [added: Low-thirties] percentage rate of return on invested [removed: capital;] [added: capital.] |

Over the past ten years, we have achieved [added: strong growth in] many of [removed: our financial goals.][added: these metrics.]

During this time, revenues [removed: and diluted earnings per common share] for NIKE, [removed: Inc., inclusive of both continuing and discontinued operations,] [added: Inc.] have grown [removed: 8% and 13%, respectively,] [added: 7%] on an annual compounded [removed: basis.][added: basis, annual gross margin has ranged from 43.5% to 46.4%, diluted earnings per common share has grown steadily and our return on invested capital has been as high as 34.7%.]

[removed: Earnings before interest and income taxes (“EBIT”)] [added: Reported EBIT] increased [removed: 7%] [added: 5%] for fiscal [removed: 2017, driven by] [added: 2018 due to] revenue growth and [added: slight] selling and administrative expense leverage, [added: which was] partially offset by gross margin contraction.

[removed: The increase in] [added: On a currency-neutral basis, NIKE Brand] revenues [removed: was] [added: grew 5%,] driven by [added: strong revenue] growth across all [removed: NIKE Brand] [added: international] geographies and [removed: Converse, footwear and apparel,] [added: NIKE Direct, as well as growth in footwear, apparel] and [removed: several] [added: most] key categories.

[removed: NIKE, Inc. gross] [added: Gross] margin decreased [removed: 160] [added: 300] basis points [removed: primarily due to] [added: as] higher [removed: product costs and foreign currency exchange rate headwinds, which] [added: full-price ASP was] more than offset [added: by unfavorable standard foreign currency exchange rates and] higher [removed: full-price average selling price (ASP).][added: product costs, primarily due to a shift in mix to lower margin products.]

Diluted earnings per common share [removed: grew at a higher rate than Net income due to] [added: reflects] a [removed: 3% decrease] [added: 2% decline] in the weighted average diluted common shares outstanding, driven by our share repurchase program.

References to wholesale equivalent revenues are intended to provide context as to the total size of our NIKE Brand market footprint if we had no [added: NIKE] Direct [removed: to Consumer] operations.

NIKE Brand wholesale equivalent revenues consist of (1) sales to external wholesale customers and (2) internal sales from our wholesale operations to our [added: NIKE] Direct [removed: to Consumer] operations, which are charged at prices [removed: that are] comparable to [removed: prices] [added: those] charged to external wholesale customers.

| (Dollars in millions, except per share data) | | Fiscal [removed: 2017] [added: 2018] | | | | Fiscal [removed: 2016] [added: 2017] | | | | % Change | | | Fiscal [removed: 2015] [added: 2016] | | | | % Change | |

| Revenues | | $ | [removed: 34,350] [added: 36,397] | | | $ | [removed: 32,376] [added: 34,350] | | | 6 | % | | $ | [removed: 30,601] [added: 32,376] | | | 6 | % |

| Cost of sales | | [removed: 19,038] [added: 20,441] | | | | [removed: 17,405] [added: 19,038] | | | | [removed: 9] [added: 7] | % | | [removed: 16,534] [added: 17,405] | | | | [removed: 5] [added: 9] | % |

| Gross profit | | [removed: 15,312] [added: 15,956] | | | | [removed: 14,971] [added: 15,312] | | | | [removed: 2] [added: 4] | % | | [removed: 14,067] [added: 14,971] | | | | [removed: 6] [added: 2] | % |

| Gross margin | | [removed: 44.6] [added: 43.8] | | % | | [removed: 46.2] [added: 44.6] | | % | | | | | [removed: 46.0] [added: 46.2] | | % | | | |

| Demand creation expense | | [removed: 3,341] [added: 3,577] | | | | [removed: 3,278] [added: 3,341] | | | | [removed: 2] [added: 7] | % | | [removed: 3,213] [added: 3,278] | | | | 2 | % |

| Operating overhead expense | | [removed: 7,222] [added: 7,934] | | | | [removed: 7,191] [added: 7,222] | | | | [removed: 0] [added: 10] | % | | [removed: 6,679] [added: 7,191] | | | | [removed: 8] [added: 0] | % |

| Total selling and administrative expense | | [removed: 10,563] [added: 11,511] | | | | [removed: 10,469] [added: 10,563] | | | | [removed: 1] [added: 9] | % | | [removed: 9,892] [added: 10,469] | | | | [removed: 6] [added: 1] | % |

| % of revenues | | [removed: 30.8] [added: 31.6] | | % | | [removed: 32.3] [added: 30.8] | | % | | | | | 32.3 | | % | | | |

| Interest expense (income), net | | [removed: 59] [added: 54] | | | | [removed: 19] [added: 59] | | | | — | | | [removed: 28] [added: 19] | | | | — | |

| Other [removed: (income) expense,] [added: expense (income),] net | | [removed: (196] [added: 66] | | [removed: )] | | [removed: (140] [added: (196] | | ) | | — | | | [removed: (58] [added: (140] | | ) | | — | |

| Income before income taxes | | [removed: 4,886] [added: 4,325] | | | | [removed: 4,623] [added: 4,886] | | | | [removed: 6] [added: \-11] | % | | [removed: 4,205] [added: 4,623] | | | | [removed: 10] [added: 6] | % |

| Income tax expense | | [removed: 646] [added: 2,392] | | | | [removed: 863] [added: 646] | | | | [removed: \-25] [added: 270] | % | | [removed: 932] [added: 863] | | | | [removed: \-7] [added: \-25] | % |

| Effective tax rate | | [removed: 13.2] [added: 55.3] | | % | | [removed: 18.7] [added: 13.2] | | % | | | | | [removed: 22.2] [added: 18.7] | | % | | | |

| NET INCOME | | $ | [removed: 4,240] [added: 1,933] | | | $ | [removed: 3,760] [added: 4,240] | | | [removed: 13] [added: \-54] | % | | $ | [removed: 3,273] [added: 3,760] | | | [removed: 15] [added: 13] | % |

| Diluted earnings per common share | | $ | [removed: 2.51] [added: 1.17] | | | $ | [removed: 2.16] [added: 2.51] | | | [removed: 16] [added: \-53] | % | | $ | [removed: 1.85] [added: 2.16] | | | [removed: 17] [added: 16] | % |

| (Dollars in millions) | Fiscal [removed: 2017] [added: 2018] | | | Fiscal [removed: 2016(1)] [added: 2017(1)] | | | % Change | | % Change Excluding Currency Changes(2) | | Fiscal [removed: 2015(1)] [added: 2016(1)] | | | % Change | | % Change Excluding Currency Changes(2) | |

| Footwear | $ | [removed: 21,081] [added: 22,268] | | $ | [removed: 19,871] [added: 21,081] | | 6 | % | [removed: 8] [added: 4] | % | $ | [removed: 18,318] [added: 19,871] | | [removed: 8] [added: 6] | % | [removed: 15] [added: 8] | % |

| Apparel | [removed: 9,654] [added: 10,733] | | | [removed: 9,067] [added: 9,654] | | | [removed: 6] [added: 11] | % | 9 | % | [removed: 8,637] [added: 9,067] | | | [removed: 5] [added: 6] | % | [removed: 11] [added: 9] | % |

| Equipment | [removed: 1,425] [added: 1,396] | | | [removed: 1,496] [added: 1,425] | | | [removed: \-5] [added: \-2] | % | [removed: \-3] [added: \-4] | % | [removed: 1,631] [added: 1,496] | | | [removed: \-8] [added: \-5] | % | [removed: \-2] [added: \-3] | % |

| Global Brand Divisions(3) | [removed: 73] [added: 88] | | | 73 | | | [removed: 0] [added: 21] | % | [removed: 2] [added: 12] | % | [removed: 115] [added: 73] | | | [removed: \-37] [added: 0] | % | [removed: \-30] [added: 2] | % |

| Total NIKE Brand Revenues | [removed: 32,233] [added: 34,485] | | | [removed: 30,507] [added: 32,233] | | | [removed: 6] [added: 7] | % | [removed: 8] [added: 5] | % | [removed: 28,701] [added: 30,507] | | | 6 | % | [removed: 13] [added: 8] | % |

| Converse | [removed: 2,042] [added: 1,886] | | | [removed: 1,955] [added: 2,042] | | | [removed: 4] [added: \-8] | % | [removed: 6] [added: \-11] | % | [removed: 1,982] [added: 1,955] | | | [removed: \-1] [added: 4] | % | [removed: 2] [added: 6] | % |

| Corporate(4) | [removed: 75] [added: 26] | | | [removed: (86] [added: 75] | | [removed: )] | — | | — | | [removed: (82] [added: (86] | | ) | — | | — | |

As a result of this organizational realignment, beginning in fiscal 2018, the Company’s reportable operating segments for the NIKE Brand are: North America; Europe, Middle East & Africa (EMEA); Greater China; and Asia Pacific & Latin America (APLA).

Through the Consumer Direct Offense, we are focusing on our Triple Double strategy, with the objective of doubling the impact of innovation, increasing our speed to market and growing our direct connections with consumers.

| • | Gross margin expansion of as much as 50 basis points; |

Our fiscal 2018 results demonstrated the power of the NIKE, Inc. portfolio to generate revenue growth, while investing in capabilities in support of our Triple Double strategy to fuel our next phase of long-term growth and profitability.

We achieved record revenues for fiscal 2018, growing 6% to $36.4 billion.

The NIKE Brand, which represents over 90% of NIKE, Inc. Revenues, delivered 7% revenue growth.

Revenues for Converse decreased 8% and 11% on a reported and currency-neutral basis, respectively, primarily driven by lower revenues in North America.

Income before income taxes decreased 11% for fiscal 2018, in part reflecting the negative impact of weakening foreign currency exchange rates.

Revenue growth was more than offset by higher selling and administrative expense, gross margin contraction, and a shift to other expense, net from other income, net for fiscal 2017.

Selling and administrative expense was higher as a percent of revenues, reflecting investments in digital capabilities, consumer experiences and product and brand marketing to drive long-term growth under the Consumer Direct Offense.

| Sales to Wholesale Customers | $ | 23,969 | | $ | 23,078 | | 4 | % | 2 | % | $ | 22,577 | | 2 | % | 5 | % |

| TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES | $ | 30,301 | | $ | 28,694 | | 6 | % | 4 | % | $ | 27,249 | | 5 | % | 8 | % |

| Running | $ | 5,198 | | $ | 4,860 | | 7 | % | 5 | % | $ | 4,401 | | 10 | % | 13 | % |

| Training | 3,126 | | | 3,080 | | | 1 | % | 0 | % | 3,150 | | | \-2 | % | \-1 | % |

| Sportswear | 10,018 | | | 8,988 | | | 11 | % | 8 | % | 8,129 | | | 11 | % | 14 | % |

| Others(7) | 5,463 | | | 5,392 | | | 1 | % | 0 | % | 5,295 | | | 2 | % | 3 | % |

| TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES | $ | 30,301 | | $ | 28,694 | | 6 | % | 4 | % | $ | 27,249 | | 5 | % | 8 | % |

Revenue growth was broad-based, as Greater China, EMEA and APLA each contributed approximately 2 percentage points of the increase in NIKE, Inc. Revenues.

For fiscal 2018, lower revenues from North America and Converse each reduced NIKE, Inc. Revenues by approximately 1 percentage point.

On a category basis, the increase in NIKE Brand footwear revenues was due to strong growth in Sportswear and Running, which was partially offset by lower revenues in several other categories, most notably the Jordan Brand.

On a reported basis, digital commerce sales, which are not included in comparable store sales, were $2.8 billion for fiscal 2018 compared to $2.2 billion for fiscal 2017, and represented approximately 27% of our total NIKE Brand NIKE Direct revenues for fiscal 2018 compared to 24% for fiscal 2017.

On a wholesale equivalent and currency-neutral basis, fiscal 2018 NIKE Brand Men’s revenues increased 5%, as growth in Sportswear, Running and NIKE Basketball more than offset lower Football (Soccer) and Jordan Brand revenues.

Women’s revenues increased 2%, led by growth in Sportswear, partially offset by a decline in Training.

Revenues for our Young Athletes’ business decreased 1%, as growth in Football (Soccer), was more than offset by lower revenues in the Jordan Brand.

Fiscal 2018 Compared to Fiscal 2017

| • | Lower NIKE Direct margin (decreasing gross margin approximately 10 basis points) reflecting higher mix of off-price sales in the first half of fiscal 2018, which was partially offset by margin expansion in the second half of fiscal 2018; |

| • | NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis, which was flat for fiscal 2018 as higher discounts in the first half of fiscal 2018 were offset by higher full-price ASP in the second half of the year; and |

| • | NIKE Brand product costs, on a wholesale equivalent basis, which were flat. |

| (Dollars in millions) | | Fiscal 2018 | | | | Fiscal 2017 | | | | % Change | | | Fiscal 2016 | | | | % Change | |

| Operating overhead expense | | 7,934 | | | | 7,222 | | | | 10 | % | | 7,191 | | | | 0 | % |

Fiscal 2018 Compared to Fiscal 2017

Demand creation expense increased 7% for fiscal 2018 compared to fiscal 2017, driven by higher sports marketing costs.

Operating overhead expense increased 10% compared to fiscal 2017, due to higher administrative costs, continued investments in our growing NIKE Direct business and one-time wage-related costs associated with the Consumer Direct Offense organizational realignment.

Fiscal 2018 Compared to Fiscal 2017

Other expense (income), net changed from $196 million of other income, net for fiscal 2017 to $66 million of other expense, net for fiscal 2018, primarily due to a $287 million net detrimental change in foreign currency conversion gains and losses, including hedges.

Fiscal 2018 Compared to Fiscal 2017

Our effective tax rate was 55.3% for fiscal 2018, reflecting the impact of the Tax Cuts and Jobs Act (the “Tax Act”).

The impact of the Tax Act primarily reflects provisional expense of $1,875 million for the one-time transition tax on the deemed repatriation of undistributed foreign earnings and $158 million resulting from the remeasurement of deferred tax assets and liabilities.

The remaining provisions of the Tax Act, which were a net benefit to the effective tax rate, did not have a material impact on our Consolidated Financial Statements during fiscal 2018.

The increase in the effective tax rate resulting from the Tax Act was partially offset by the tax benefit from stock-based compensation in the current period as a result of the adoption of Accounting Standards Update (ASU) 2016-09 in the first quarter of fiscal 2018.

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 balanced price-to-value equation for consumers;

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

\- Making our supply chain a competitive advantage by investing in new technologies that increase automation, help reduce waste and have long-term potential to increase both customization of our products and speed to market; and

\- Driving growth in our higher gross margin DTC business, led by digital commerce, as part of an integrated marketplace growth strategy across our DTC and wholesale operations.

\- Investments in consumer engagement that drive economic returns in the form of incremental revenue and gross profit;

\- Infrastructure investments that improve the efficiency and effectiveness of our operations; and

\- Investments in key areas of future growth, including our DTC business.

| • | Managing working capital efficiency; and |

| • | Deploying capital effectively. |

| • | Free cash flow growing faster than net income; and |

| • | Sustainable, profitable, long-term growth through effective management of our diversified portfolio of businesses. |

We expanded gross margin by approximately 70 basis points, and our return on invested capital has increased from 21.9% to 34.7%.

On November 19, 2015, we announced a two\-for-one split of both NIKE Class A and Class B Common Stock.

The stock split was in the form of a 100 percent stock dividend payable on December 23, 2015 to shareholders of record at the close of business on December 9, 2015.

Common stock began trading at the split-adjusted price on December 24, 2015.

All share and per share amounts presented reflect the stock split.

Our fiscal 2017 results demonstrated the power of the NIKE, Inc. portfolio to deliver continued growth and expanding profitability.

Despite foreign currency headwinds, we achieved record revenues and earnings per share for fiscal 2017.

NIKE, Inc. Revenues grew 6% to $34.4 billion, Net income increased 13% and diluted earnings per common share grew 16% to $2.51.

We also delivered strong cash returns to shareholders while investing for long-term growth.

This broad-based growth was primarily fueled by:

| • | Innovative performance and sportswear products, incorporating proprietary technology platforms such as NIKE Air, Free, Zoom, Lunar, Flywire, Dri-Fit and Flyknit; |

| • | Deep brand connections with consumers through our category offense, reinforced by investments in endorsements by high-profile athletes, sports teams and leagues, high-impact marketing around global sporting events and digital marketing; and |

| • | Strong category retail presentation through digital commerce and NIKE-owned and retail partner stores. |

At current rates, we anticipate foreign currency exchange rate headwinds will continue to negatively impact gross margin and Net income in fiscal 2018.

Converse revenues increased 4% and EBIT declined 2%, as growth in direct distribution markets and lower selling and administrative expense were more than offset by lower gross margin, primarily a result of the negative impact of changes in foreign currency exchange rates and higher product costs, as well as the unfavorable impact of lower licensing revenues primarily due to market transitions.

For fiscal 2017, the growth in Net income was positively affected by a year-over-year decrease in our effective tax rate of 550 basis points primarily due to a one-time benefit in the first quarter of the fiscal year related to the resolution with the U.S. Internal Revenue Service (IRS) of a foreign tax credit matter and a decrease in foreign earnings taxed in the United States.

| Running | $ | 5,278 | | $ | 5,017 | | 5 | % | 8 | % | $ | 4,863 | | 3 | % | 10 | % |

| Men’s Training | 2,617 | | | 2,611 | | | 0 | % | 1 | % | 2,545 | | | 3 | % | 6 | % |

| Women’s Training | 1,265 | | | 1,344 | | | \-6 | % | \-4 | % | 1,281 | | | 5 | % | 11 | % |

| Action Sports | 596 | | | 655 | | | \-9 | % | \-7 | % | 667 | | | \-2 | % | 3 | % |

| Sportswear | 8,587 | | | 7,513 | | | 14 | % | 17 | % | 6,604 | | | 14 | % | 22 | % |

| Golf | 579 | | | 706 | | | \-18 | % | \-18 | % | 769 | | | \-8 | % | \-6 | % |

| Others(7) | 3,394 | | | 3,129 | | | 8 | % | 11 | % | 3,140 | | | 0 | % | 6 | % |

While wholesale revenues remain the largest component of overall NIKE Brand revenues, we continue to expand our DTC businesses in each of our geographies.

Our NIKE Brand DTC operations include NIKE-owned in-line and factory stores, as well as NIKE-owned digital commerce.

The majority of derivatives outstanding as of May 31, [removed: 2017] [added: 2018] are designated as foreign currency cash flow hedges, primarily for Euro/U.S. Dollar, British Pound/Euro and Japanese Yen/U.S. Dollar currency pairs.

Refer to Note 16 — Risk Management and Derivatives in the accompanying Notes to the Consolidated Financial Statements for additional [removed: detail.][added: information.]

These interrelationships are a function of foreign exchange currency market changes and interest rate changes over the preceding [removed: one year] [added: one-year] period.

The VaR model is a risk analysis tool and does not purport to represent actual losses in fair value [removed: that] we will incur nor does it consider the potential effect of favorable changes in market rates.

The estimated maximum one-day loss in fair value on our foreign currency sensitive derivative financial instruments, derived using the VaR model, was [removed: $97] [added: $93] million and [removed: $109] [added: $97] million at May 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively.

The VAR decreased year-over-year as a result of a decrease in foreign currency volatilities at May 31, [removed: 2017.][added: 2018.]

The average monthly change in the fair values of foreign currency forward and foreign currency option derivative instruments was [removed: $161] [added: $260] million and [removed: $209] [added: $161] million during fiscal [removed: 2017] [added: 2018] and fiscal [removed: 2016,] [added: 2017,] respectively.

| (Dollars in millions) | | [removed: 2018 | | | |] 2019 | | | | 2020 | | | | 2021 | | | | 2022 | | | | [added: 2023 | | | |] Thereafter | | | | Total | | | | Fair Value | | |

| Principal payments | | $ | 6 | | | $ | 6 | | | $ | [removed: 6] [added: 3] | | | $ | [removed: 3] [added: —] | | | $ | — | | | $ | — | | | $ | [removed: 21] [added: 15] | | | $ | [removed: 22] [added: 16] | |

| Average interest rate | | 2.4 | | % | | 2.4 | | % | | 2.4 | | % | | [removed: 2.4] [added: 0.0] | | % | | 0.0 | | % | | 0.0 | | % | | 2.4 | | % | | | | |

| Principal payments | | $ | [removed: —] [added: 6] | | | $ | [removed: —] [added: 6] | | | $ | [removed: —] [added: 3] | | | $ | — | | | $ | — | | | $ | [removed: 3,500] [added: —] | | | $ | [removed: 3,500] [added: 15] | | | $ | [removed: 3,379] [added: 16] | |

| Average interest rate | | 0.0 | | % | | 0.0 | | % | | 0.0 | | % | | 0.0 | | % | | [removed: 0.0] [added: 2.3] | | % | | [removed: 3.1] [added: 3.3] | | % | | 3.1 | | % | | | | |

| Average interest rate | | 2.4 | | % | | 2.4 | | % | | 2.4 | | % | | 0.0 | | % | | 0.0 | | % | | 0.0 | | % | | 2.4 | | % | | | | |

| Principal payments | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 500 | | | $ | 3,000 | | | $ | 3,500 | | | $ | 3,279 | |

As used in this report, the terms “we,” “us,” [removed: “NIKE,”] [added: “NIKE”] and the “Company” refer to NIKE, Inc. and its predecessors, subsidiaries and affiliates, collectively, unless the context indicates otherwise.

We sell our products [removed: to retail accounts,] through NIKE-owned retail [removed: stores, internet websites,] [added: stores] and [removed: mobile applications] [added: through digital platforms] (which we refer to collectively as our [removed: “Direct to Consumer” or “DTC”] [added: “NIKE Direct”] operations), [added: to retail accounts] and [removed: through] a mix of independent [removed: distributors and] [added: distributors,] licensees [removed: throughout] [added: and sales representatives in virtually all countries around] the world.

We focus our NIKE Brand product offerings in [removed: nine] [added: six] key categories: Running, NIKE Basketball, the Jordan Brand, Football (Soccer), [removed: Men’s Training, Women’s Training, Action Sports,] [added: Training and] Sportswear (our sports-inspired lifestyle [removed: products) and Golf.][added: products).]

We also market products designed for kids, as well as for other athletic and recreational uses such as [added: American football, baseball,] cricket, lacrosse, [added: skateboarding,] tennis, volleyball, wrestling, walking and outdoor activities.

Sportswear, [removed: Men’s] Training and Running are currently our top-selling apparel categories and we expect them to continue to lead in apparel sales.

[removed: One] [added: Another] of our wholly-owned subsidiary brands, Hurley, headquartered in Costa Mesa, California, designs and distributes a line of action sports and youth lifestyle apparel and accessories under the Hurley trademark.

Sales and operating results for Hurley products are included within the NIKE [removed: Brand's] [added: Brand’s] North America geographic operating [removed: segment with sales reported within the Action Sports category.][added: segment.]

[removed: Another] [added: One] of our wholly-owned subsidiary brands, Converse, headquartered in Boston, Massachusetts, designs, distributes and licenses casual sneakers, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell trademarks.

In addition to the products we sell to our wholesale customers and directly to consumers through our [removed: DTC] [added: NIKE Direct] operations, we have also entered into license agreements that permit unaffiliated parties to manufacture and sell, using NIKE-owned trademarks, certain apparel, digital devices and applications and other equipment designed for sports activities.

Each NIKE Brand [removed: geography] [added: geographic segment] operates predominantly in one industry: the design, development, marketing and selling of athletic footwear, [removed: apparel, equipment, accessories] [added: apparel] and [removed: services.][added: equipment.]

As a result of this organizational realignment, [removed: beginning in fiscal 2018,] the [removed: Company's] [added: Company’s] reportable operating segments for the NIKE Brand [removed: will be:] [added: are:] North America; Europe, Middle East [removed: and Africa;] [added: & Africa (EMEA);] Greater China; and Asia Pacific [removed: and] [added: &] Latin [removed: America.][added: America (APLA), and include results for the NIKE, Jordan and Hurley brands.]

[removed: Our] [added: Sales through our] NIKE [removed: Brand] Direct [removed: to Consumer] operations [removed: are, and will continue to be,] [added: are] managed within each geographic operating segment.

Converse [removed: is, and will continue to be,] [added: is also] a reportable segment and operates in one industry: the design, marketing, licensing and selling of casual sneakers, apparel and accessories.

For fiscal [removed: 2017,] [added: 2018,] NIKE Brand and Converse sales in the United States accounted for approximately [removed: 46%] [added: 42%] of total revenues, compared to [removed: 47% and] 46% [added: and 47%] for fiscal [removed: 2016] [added: 2017] and fiscal [removed: 2015,] [added: 2016,] respectively.

During fiscal [removed: 2017,] [added: 2018,] our three largest customers accounted for approximately [removed: 23%] [added: 21%] of sales in the United States.

Our [added: NIKE] Direct [added: and Converse direct] to [removed: Consumer] [added: consumer] operations sell NIKE Brand, Jordan Brand, Hurley and Converse products to consumers through [removed: our] [added: various] digital [removed: commerce website, www.nike.com and through mobile applications.][added: platforms.]

In addition, our [added: NIKE] Direct [added: and Converse direct] to [removed: Consumer] [added: consumer] operations sell through the following number of retail stores in the United States:

| NIKE Brand factory stores | [removed: 209] [added: 220] | |

| NIKE Brand in-line stores (including employee-only stores) | [removed: 34] [added: 31] | |

[removed: In the United States, NIKE has six significant distribution centers] [added: Five are] located in Memphis, Tennessee, two of which are owned and [removed: four] [added: three] of which are leased.

NIKE Brand apparel and equipment [removed: products] are also shipped from our [removed: leased] Foothill Ranch, California distribution [removed: center.][added: center, which we lease.]

Smaller [added: leased, and third-party] leased [added: and operated,] distribution facilities are located in various parts of the United States.

For fiscal [removed: 2017,] [added: 2018,] non-U.S. NIKE Brand and Converse sales accounted for [removed: 54%] [added: approximately 58%] of total revenues, compared to [removed: 53% and] 54% [added: and 53%] for fiscal [removed: 2016] [added: 2017] and fiscal [removed: 2015,] [added: 2016,] respectively.

We sell our products to retail accounts, through our own [added: NIKE] Direct [removed: to Consumer] operations and through a mix of independent distributors, licensees and sales representatives around the world.

We sell to thousands of retail accounts and ship products from [removed: 60] [added: 62] distribution centers outside of the United States.

During fiscal [removed: 2017,] [added: 2018,] NIKE’s three largest customers outside of the United States accounted for approximately [removed: 12%] [added: 13%] of total non-U.S. sales.

In addition to NIKE and Converse owned digital commerce [removed: websites] [added: platforms] in over 45 countries, our [added: NIKE] Direct [added: and Converse direct] to [removed: Consumer business operates] [added: consumer businesses operate] the following number of retail stores outside the United States:

| NIKE Brand factory stores | [removed: 642] [added: 664] | |

| NIKE Brand in-line stores (including employee-only stores) | [removed: 71] [added: 65] | |

| Converse stores (including factory stores) | [removed: 45] [added: 61] | |

No customer accounted for 10% or more of our worldwide net revenues during fiscal [removed: 2017.][added: 2018.]

Technical innovation in the design and manufacturing process of footwear, apparel and athletic equipment [removed: receive] [added: receives] continued emphasis as we strive to produce products that help to enhance athletic performance, reduce injury and maximize [removed: comfort] [added: comfort,] while reducing waste.

The proliferation of NIKE Air, Lunar, Zoom, Free, Flywire, Dri-Fit, Flyknit, Flyweave, ZoomX, React and NIKE+ technologies throughout our Running, NIKE Basketball, [removed: the] Jordan Brand, Football (Soccer), [removed: Men's Training, Women's] Training and Sportswear categories, among others, typifies our dedication to designing innovative products.

We are supplied by [removed: approximately 127] [added: 124] footwear factories located in [removed: 15] [added: 13] countries.

The largest single footwear factory accounted for approximately [removed: 8%] [added: 9%] of total fiscal [removed: 2017] [added: 2018] NIKE Brand footwear production.

Virtually all of our footwear is manufactured outside of the United States by independent contract manufacturers [removed: who] [added: which] often operate multiple factories.

For fiscal [removed: 2017,] [added: 2018,] contract factories in Vietnam, China and Indonesia manufactured approximately [removed: 46%, 27%] [added: 47%, 26%] and 21% of total NIKE Brand footwear, respectively.

For fiscal [removed: 2017,] [added: 2018,] five footwear contract manufacturers each accounted for greater than 10% of footwear production and in the aggregate accounted for approximately 69% of NIKE Brand footwear production.

We are supplied by [removed: approximately 363] [added: 328] apparel factories located in 37 countries.

The largest single apparel factory accounted for approximately 13% of total fiscal [removed: 2017] [added: 2018] NIKE Brand apparel production.

| TOTAL | 392 | |

In the United States, NIKE has seven significant distribution centers.

Two other distribution centers, one located in Indianapolis, Indiana, and one located in Dayton, Tennessee, are leased and operated by third-party logistics providers.

| TOTAL | 790 | |

There have also been discussions and commentary regarding retaliatory actions by countries affected by the new tariffs and other changes in U.S. trade policy, and certain foreign governments have instituted or are considering imposing trade sanctions on certain U.S. goods, which could negatively affect U.S. corporations with business operations and/or consumer markets in those countries.

Our international operations are also subject to compliance with the U.S. Foreign Corrupt Practices Act, or FCPA, and other anti-bribery laws applicable to our operations.

We source a significant portion of our products from, and have important consumer markets, outside of the United States, and we have policies and procedures to address compliance with the FCPA and similar laws by us, our employees, agents, suppliers and other partners.

Management is committed to maintaining an environment where all NIKE employees have the opportunity to reach their full potential.

Elliott Hill, President, Consumer and Marketplace — Mr. Hill, 54, joined NIKE in 1988, with primary responsibilities in sales and retail.

He has served as Apparel Sales Director in Europe, Retail Development Director in Europe, Vice President of Sales and Retail in EMEA, General Manager of US Retail, Vice President of US Sales, Retail and NIKE.com, and Vice President of Global Retail.

Most recently, Mr. Hill served as President of Geographies and Sales and Vice President and General Manager of North America.

Mr. Hill was appointed President, Consumer and Marketplace in March 2018.

Monique S.

She was appointed as Vice President and Senior Business Partner in 2011 and Vice President, Chief Talent and Diversity Officer in 2012.

Ms. Matheson was appointed Executive Vice President, Global Human Resources in July 2017.

| |

| --- |

Men's Training includes our baseball and American football product offerings.

For fiscal 2017, our reportable operating segments for the NIKE Brand are: North America, Western Europe, Central & Eastern Europe, Greater China, Japan and Emerging Markets.

| TOTAL | 384 | |

Converse and Hurley products are shipped primarily from leased facilities in Ontario, California, as well as from Memphis, Tennessee.

We also operate a futures ordering program, which allows retailers to order five to six months in advance of delivery with the commitment that their orders will be delivered within a set time period at a fixed price.

For fiscal 2017, orders under the futures program represented 83% of our U.S. wholesale footwear revenues, compared to 84% for fiscal 2016 and 87% for fiscal 2015.

For fiscal 2017, futures orders represented 66% of our U.S. wholesale apparel revenues, compared to 66% for fiscal 2016 and 67% for fiscal 2015.

In many countries and regions, including Canada, Asia, Europe and some Latin American countries, we have a futures ordering program for retailers similar to the United States futures ordering program described above.

| TOTAL | 758 | |

| Orders |

Futures orders for NIKE Brand footwear and apparel scheduled for delivery from June through November 2017 were $14.7 billion compared to $15.0 billion for the same period last year.

NIKE Brand futures orders include (1) orders from external wholesale customers and (2) internal orders from our DTC in-line stores and digital commerce operations which are reflected at prices that are comparable to prices charged to external wholesale customers.

The U.S. Dollar futures orders amount is calculated based upon our internal forecast of the actual currency exchange rates under which our revenues will be translated during this period.

Reported futures orders are not necessarily indicative of our expectation of revenues for this period and have become less correlated due to our evolving business model.

This is due to year-over-year changes in shipment timing, changes in the mix of orders between futures and orders with shorter lead times, and because the fulfillment of certain orders may fall outside of the schedule noted above.

In addition, foreign currency exchange rate fluctuations as well as differing levels of order cancellations, discounts and returns can cause differences in the comparisons between futures orders and actual revenues.

A portion of our revenue is not derived from futures orders, including sales with short lead times, closeout NIKE Brand footwear and apparel, all sales of NIKE Brand equipment, the difference between retail sales and internal orders from our DTC in-line stores and digital commerce operations, and sales from Converse, NIKE Golf and Hurley.

There have also been discussions and commentary regarding potential changes to U.S. trade policies.

Management considers its relationship with employees to be excellent.

David J.

Prior to joining NIKE, he held a number of senior human resource positions with PepsiCo, Inc. since 1990, most recently as head of Talent and Performance Rewards.

Trevor A.

Edwards, President, NIKE Brand — Mr. Edwards, 54, joined NIKE in 1992.

He was appointed Marketing Manager, Strategic Accounts for Foot Locker in 1993, Director of Marketing for the Americas in 1995, Director of Marketing for Europe in 1997, Vice President, Marketing for Europe, Middle East and Africa in 1999 and Vice President, U.S. Brand Marketing in 2000.

Mr. Edwards was appointed corporate Vice President, Global Brand Management in 2002, Vice President, Global Brand and Category Management in 2006 and President, NIKE Brand in 2013.

Prior to NIKE, Mr. Edwards was with the Colgate-Palmolive Company.

As recently announced by the Company, Mr. Ayre will retire at the end of the calendar year.

Succeeding Mr. Ayre as Executive Vice President, Global Human Resources, will be Monique Matheson.

Ms. Matheson, 50, has been employed by NIKE since 1998, with primary responsibilities in the human resources function and most recently serving as Vice President, Chief Talent and Diversity Officer.

FOR THE FISCAL YEAR ENDED May 31, [removed: 2017][added: 2018]

[removed: ][added: ]

| • | if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | | | | [removed: ¨ |] þ | [added: ¨ |]

| As of November 30, [removed: 2016,] [added: 2017,] the aggregate market values of the Registrant’s Common Stock held by non-affiliates were: | | | | |

| As of July [removed: 17, 2017,] [added: 20, 2018,] the number of shares of the Registrant’s Common Stock outstanding were: | | | |

Parts of Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on September [removed: 21, 2017] [added: 20, 2018] are incorporated by reference into Part III of this Report.

| ITEM 1. | [removed: [Business](#s3C61437FE0FD7FBEF52DB1AD7B9CD7B2)] [added: [Business](#s8F1515FDF1E04962C75EE66924C5B89F)] | [removed: [1](#s3C61437FE0FD7FBEF52DB1AD7B9CD7B2)] [added: [1](#s8F1515FDF1E04962C75EE66924C5B89F)] |

| | [Sales and [removed: Marketing](#s17CB28ABE4C15F9316C9B1AD7C117189)] [added: Marketing](#s25AF80260E26FA15E7ACE66925383782)] | [removed: [2](#s17CB28ABE4C15F9316C9B1AD7C117189)] [added: [2](#s25AF80260E26FA15E7ACE66925383782)] |

| | [United States [removed: Market](#sEF6C4D196A035BEED31CB1AD649421CE)] [added: Market](#sDFA1C9ADA92ABA2F28CAE66923461B26)] | [removed: [2](#sEF6C4D196A035BEED31CB1AD649421CE)] [added: [2](#sDFA1C9ADA92ABA2F28CAE66923461B26)] |

| | [International [removed: Markets](#s9FDA2412CC185772466DB1AD6C594725)] [added: Markets](#s92AC5D68E8981BDC3E82E6692322751C)] | [removed: [2](#s9FDA2412CC185772466DB1AD6C594725)] [added: [2](#s92AC5D68E8981BDC3E82E6692322751C)] |

| | [Significant [removed: Customer](#s65A04A39C100BA96DEEFB1AD7C7D6348)] [added: Customer](#s6D58AC4EC845E867BCABE66925BF8862)] | [removed: [3](#s65A04A39C100BA96DEEFB1AD7C7D6348)] [added: [3](#s6D58AC4EC845E867BCABE66925BF8862)] |

| | [Product Research, Design and [removed: Development](#sF38A172B39E9633E1B11B1AD7CD1BF7D)] [added: Development](#sABA105ECE1038987837CE66926107BE8)] | [removed: [3](#sF38A172B39E9633E1B11B1AD7CD1BF7D)] [added: [3](#sABA105ECE1038987837CE66926107BE8)] |

| | [International Operations and [removed: Trade](#sD3DB29C0348EE6FB5EA8B1AD7D3D2F65)] [added: Trade](#s7464DECE41AD2DC781D2E66926664C6A)] | [removed: [4](#sD3DB29C0348EE6FB5EA8B1AD7D3D2F65)] [added: [3](#s7464DECE41AD2DC781D2E66926664C6A)] |

| | [Trademarks and [removed: Patents](#sEBEFAC1A48550A995BB9B1AD7D91A868)] [added: Patents](#sD5ED6AFE8039D1D46310E66926BA7A52)] | [removed: [5](#sEBEFAC1A48550A995BB9B1AD7D91A868)] [added: [4](#sD5ED6AFE8039D1D46310E66926BA7A52)] |

| | [Executive Officers of the [removed: Registrant](#s716216076306CB7ECB9CB1AD7DE41D50)] [added: Registrant](#s1AC40DF7C579032B38B3E669270DD9CE)] | [removed: [5](#s716216076306CB7ECB9CB1AD7DE41D50)] [added: [5](#s1AC40DF7C579032B38B3E669270DD9CE)] |

| ITEM 1A. | [Risk [removed: Factors](#s63E70C90DD8A0D42FBB8B1AD7DEC8A6D)] [added: Factors](#sEB248FFA9F1A49C55B7DE669272C0AF1)] | [removed: [7](#s63E70C90DD8A0D42FBB8B1AD7DEC8A6D)] [added: [6](#sEB248FFA9F1A49C55B7DE669272C0AF1)] |

| ITEM 1B. | [Unresolved Staff [removed: Comments](#s8B8B074E5ED16FADA5C5B1AD7E1E63D4)] [added: Comments](#s8070ACDDA8E74F123D06E669275F4B3C)] | [removed: [16](#s8B8B074E5ED16FADA5C5B1AD7E1E63D4)] [added: [15](#s8070ACDDA8E74F123D06E669275F4B3C)] |

| ITEM 2. | [removed: [Properties](#s22A05DEC9AED305E2E08B1AD7E40A13E)] [added: [Properties](#s8B3A18FE622CC0EFCF24E669277F61B5)] | [removed: [16](#s22A05DEC9AED305E2E08B1AD7E40A13E)] [added: [15](#s8B3A18FE622CC0EFCF24E669277F61B5)] |

| ITEM 3. | [Legal [removed: Proceedings](#sC13503F50D6A3DE97338B1AD7E852381)] [added: Proceedings](#sFC4A8701EFD572588EC0E66927B256AF)] | [removed: [16](#sC13503F50D6A3DE97338B1AD7E852381)] [added: [15](#sFC4A8701EFD572588EC0E66927B256AF)] |

| ITEM 4. | [Mine Safety [removed: Disclosures](#s238ECF529276DAF6DB05B1AD7E93632B)] [added: Disclosures](#sE8D359E217765FACD87DE66927D28A88)] | [removed: [16](#s238ECF529276DAF6DB05B1AD7E93632B)] [added: [15](#sE8D359E217765FACD87DE66927D28A88)] |

| ITEM 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sE9AD93F5ABC20A473BD3B1AD7EE6348E)] [added: Securities](#s2A242F04AAEFE9F339FDE6692827B41A)] | [removed: [17](#sE9AD93F5ABC20A473BD3B1AD7EE6348E)] [added: [16](#s2A242F04AAEFE9F339FDE6692827B41A)] |

| ITEM 6. | [Selected Financial [removed: Data](#s9C2CAACDC86638B1B554B1AD7F18D169)] [added: Data](#s9FEB0869174C9AE4DC69E669285C75A5)] | [removed: [19](#s9C2CAACDC86638B1B554B1AD7F18D169)] [added: [18](#s9FEB0869174C9AE4DC69E669285C75A5)] |

| ITEM 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s7F6CCA86FDCDD0EA2563B1AD7F617A11)] [added: Operations](#s598FABAB75E207C36C88E6692880F13E)] | [removed: [21](#s7F6CCA86FDCDD0EA2563B1AD7F617A11)] [added: [20](#s598FABAB75E207C36C88E6692880F13E)] |

| ITEM 7A. | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#s79A0EFF04F9F6E548CE1B1AD8160893B)] [added: Risk](#s94E6948428C69A1BE627E66929C6F83A)] | [removed: [42](#s79A0EFF04F9F6E548CE1B1AD8160893B)] [added: [40](#s94E6948428C69A1BE627E66929C6F83A)] |

| ITEM 8. | [Financial Statements and Supplementary [removed: Data](#s6108B95C44B70D82F2F7B1AD8193668A)] [added: Data](#s94BF491D577D6C2986E4E66929FEE532)] | [removed: [43](#s6108B95C44B70D82F2F7B1AD8193668A)] [added: [41](#s94BF491D577D6C2986E4E66929FEE532)] |

| ITEM 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s0727A0D900FD8DF79AE3B1AD87FC1973)] [added: Disclosure](#s5C7FDA1CFFCAD38E44CAE6692FF7644B)] | [removed: [74](#s0727A0D900FD8DF79AE3B1AD87FC1973)] [added: [73](#s5C7FDA1CFFCAD38E44CAE6692FF7644B)] |

| ITEM 9A. | [Controls and [removed: Procedures](#sBBE4DCA1BC06DEEA48B2B1AD8803AB80)] [added: Procedures](#s727891AB98B5592E9C48E66930292D4E)] | [removed: [74](#sBBE4DCA1BC06DEEA48B2B1AD8803AB80)] [added: [73](#s727891AB98B5592E9C48E66930292D4E)] |

| ITEM 9B. | [Other [removed: Information](#s03C9D75AE6244180C8EEB1AD8836BF9D)] [added: Information](#s4491C2748F113A4AEA81E669304B91EA)] | [removed: [74](#s03C9D75AE6244180C8EEB1AD8836BF9D)] [added: [73](#s4491C2748F113A4AEA81E669304B91EA)] |

| [PART [removed: III](#s79F302BB12007D317C39B1AD8855FC4B)] [added: III](#sFD9B8DF435FCEBD40227E669307B1519)] | | [removed: [75](#s79F302BB12007D317C39B1AD8855FC4B)] [added: [74](#sFD9B8DF435FCEBD40227E669307B1519)] |

| | (Except for the information set forth under “Executive Officers of the Registrant” in Item 1 above, Part III is incorporated by reference from the Proxy Statement for the NIKE, Inc. [removed: 2017] [added: 2018] Annual Meeting of Shareholders.) | |

| ITEM 10. | [Directors, Executive Officers and Corporate [removed: Governance](#sDFEF6CC0FD20115C781BB1AD8888BF6A)] [added: Governance](#s9D2B390A80DF7F9FB4F2E669309B7514)] | [removed: [75](#sDFEF6CC0FD20115C781BB1AD8888BF6A)] [added: [74](#s9D2B390A80DF7F9FB4F2E669309B7514)] |

| ITEM 11. | [Executive [removed: Compensation](#s8D95309D12CB92C2EA81B1AD88AAA305)] [added: Compensation](#s41E20FA76CFF8381A29FE66930CF0F18)] | [removed: [75](#s8D95309D12CB92C2EA81B1AD88AAA305)] [added: [74](#s41E20FA76CFF8381A29FE66930CF0F18)] |

| ITEM 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s8467F71DE3B1D16787A4B1AD88DBD2DB)] [added: Matters](#s13C7D40F164C2DA36AD3E66930EF2462)] | [removed: [75](#s8467F71DE3B1D16787A4B1AD88DBD2DB)] [added: [74](#s13C7D40F164C2DA36AD3E66930EF2462)] |

| ITEM 13. | [Certain Relationships and Related Transactions and Director [removed: Independence](#s839FC03105F94573EEB4B1AD88FD8B1D)] [added: Independence](#sE286924578B536830F61E669312B42B8)] | [removed: [75](#s839FC03105F94573EEB4B1AD88FD8B1D)] [added: [74](#sE286924578B536830F61E669312B42B8)] |

| ITEM 14. | [Principal Accountant Fees and [removed: Services](#s7C9887B23B9655A1567EB1AD892F9841)] [added: Services](#sDA5BED40FB0FD3C775E9E6693143CA25)] | [removed: [75](#s7C9887B23B9655A1567EB1AD892F9841)] [added: [74](#sDA5BED40FB0FD3C775E9E6693143CA25)] |

| ITEM 15. | [Exhibits and Financial Statement [removed: Schedules](#s60BA99075E88414A935FB1AD8983AEB1)] [added: Schedules](#sAD78B2D999E50EC9413DE6693197C064)] | [removed: [76](#s60BA99075E88414A935FB1AD8983AEB1)] [added: [75](#sAD78B2D999E50EC9413DE6693197C064)] |

| ITEM 16. | [Form 10-K [removed: Summary](#s98b30b2319a548cf84c747ca41e119e6)] [added: Summary](#s7ECEBD5028322DB6EF8EE66931C7E4DE)] | [removed: [78](#s98b30b2319a548cf84c747ca41e119e6)] [added: [78](#s7ECEBD5028322DB6EF8EE66931C7E4DE)] |

10-K 1 nke-5312018x10k.htm 10-K

| | Class A | $ | 4,475,052,736 | |

| | Class B | 78,093,099,655 | | |

| | | $ | 82,568,152,391 | |

| | Class A | 320,065,752 | |

| | Class B | 1,280,488,786 | |

| | | 1,600,554,538 | |

| [PART I](#sD90015B99674D84E5C94E6692490F6C4) | | [1](#sD90015B99674D84E5C94E6692490F6C4) |

| | [General](#sBAE04114D48BA3B84E60E66924E46469) | [1](#sBAE04114D48BA3B84E60E66924E46469) |

| | [Products](#s32FD8CA8CB8D46130171E6692519364C) | [1](#s32FD8CA8CB8D46130171E6692519364C) |

| | [Manufacturing](#sC8884DEE413CB4DBD100E66926331340) | [3](#sC8884DEE413CB4DBD100E66926331340) |

| | [Competition](#s8A5333A5309605B5C6ABE66926874970) | [4](#s8A5333A5309605B5C6ABE66926874970) |

| | [Employees](#sFDFA721112F63A93A01AE66926D9E40D) | [5](#sFDFA721112F63A93A01AE66926D9E40D) |

| [PART II](#s6D194CBCD633B7E1DA07E6692805C877) | | [16](#s6D194CBCD633B7E1DA07E6692805C877) |

| [PART IV](#sCA77FCCE79910AE2F995E6693175D67E) | | [75](#sCA77FCCE79910AE2F995E6693175D67E) |

| | [Signatures](#s5812FFBDD87A968757A9E6693247B7B2) | [80](#s5812FFBDD87A968757A9E6693247B7B2) |

10-K 1 nke-5312017x10k.htm 10-K

| | Class A | $ | 3,617,645,223 | |

| | Class B | 66,325,855,280 | | |

| | | $ | 69,943,500,503 | |

| | Class A | 329,245,752 | |

| | Class B | 1,313,949,313 | |

| | | 1,643,195,065 | |

| [PART I](#s5220763D59E6BB7716F4B1AD7B56706D) | | [1](#s5220763D59E6BB7716F4B1AD7B56706D) |

| | [General](#s868C9C4B0FADEA8D1380B1AD7BA84BDA) | [1](#s868C9C4B0FADEA8D1380B1AD7BA84BDA) |

| | [Products](#s0F28647A0E8708EDE85DB1AD7BD67714) | [1](#s0F28647A0E8708EDE85DB1AD7BD67714) |

| | [Orders](#s37EAF795D2BB32AE07A2B1AD7CB85474) | [3](#s37EAF795D2BB32AE07A2B1AD7CB85474) |

| | [Manufacturing](#sFD708B4BCE3C29979172B1AD7CF2FCE7) | [3](#sFD708B4BCE3C29979172B1AD7CF2FCE7) |

| | [Competition](#sD6988BF64D20D1AE079BB1AD7D46E76E) | [4](#sD6988BF64D20D1AE079BB1AD7D46E76E) |

| | [Employees](#s1A7E28BE71CECCD57CD0B1AD7D98F4AF) | [5](#s1A7E28BE71CECCD57CD0B1AD7D98F4AF) |

| [PART II](#s2EEA4C48D4437ED2B252B1AD7EDFE888) | | [17](#s2EEA4C48D4437ED2B252B1AD7EDFE888) |

| [PART IV](#s901BC7E0B01E55EC2DE6B1AD895001BD) | | [76](#s901BC7E0B01E55EC2DE6B1AD895001BD) |

| | [Signatures](#s0B4617AA40176ED52586B1AD89F78600) | [81](#s0B4617AA40176ED52586B1AD89F78600) |

The NIKE World Campus, owned by NIKE and located near Beaverton, Oregon, USA, is [removed: a] [added: an approximately] 400-acre site consisting of over 40 buildings which, together with adjacent leased properties, functions as our world headquarters and is occupied by approximately [removed: 10,800] [added: 11,200] employees engaged in management, research, design, development, marketing, finance and other administrative functions serving nearly all of our divisions.

We lease a similar, but smaller, administrative facility in Hilversum, the Netherlands, which serves as the headquarters for the [removed: Western Europe and Central] [added: Europe, Middle East] & [removed: Eastern Europe geographies] [added: Africa geography] and management of certain brand functions for our non-U.S. operations.

We also lease an office complex in Shanghai, China, our headquarters for Greater China, occupied by employees focused on implementing our wholesale, [removed: DTC] [added: NIKE Direct] and merchandising strategies in the region, among other functions.

[removed: In the United States, NIKE has six significant distribution centers] [added: Five are] located in Memphis, Tennessee, two of which are owned and [removed: four] [added: three of which] are leased.

Smaller [added: leased, and third-party] leased [added: and operated,] distribution facilities are located in various parts of the United States.

The most significant [removed: are the] distribution facilities [added: outside the United States are] located in Laakdal, Belgium; Taicang, China; Tomisato, Japan and Incheon, Korea, all of which we own.

We lease [removed: approximately 1,141] [added: 1,181] retail stores worldwide, which [removed: consist] primarily [added: consist] of factory [removed: outlet] stores.

Our leases expire at various dates through the year [removed: 2033.][added: 2035.]

In the United States, NIKE has seven significant distribution centers.

Two other distribution centers, one located in Indianapolis, Indiana, and one located in Dayton, Tennessee, are leased and operated by third-party logistics providers.

NIKE has several distribution facilities outside the United States, some of which are leased and operated by third-party logistics providers.

We also own or lease distribution and customer service facilities outside the United States.

At July [removed: 17, 2017,] [added: 20, 2018,] there were [removed: 22,698] [added: 22,271] holders of record of our Class B Common Stock and 15 holders of record of our Class A Common Stock.

The Class A Common Stock is not publicly [removed: traded] [added: traded,] but each share is convertible upon request of the holder into one share of Class B Common Stock.

Refer to Selected Quarterly Financial Data in Part II, Item 6 of this Report for information regarding quarterly high and low sales prices for the Class B Common Stock as reported on the New York Stock Exchange Composite Tape, and [added: for] dividends declared on the Class A and Class B Common Stock.

As of May 31, [removed: 2017,] [added: 2018,] the Company had repurchased [removed: 79.8] [added: 149.4] million shares at an average price of [removed: $55.63] [added: $58.25] per share for a total approximate cost of [removed: $4.4] [added: $8.7] billion under this program.

[removed: We intend] [added: The Company intends] to use excess cash, future cash from operations and/or proceeds from debt to fund repurchases.

The following table presents a summary of share repurchases made by NIKE under this program during the quarter ended May 31, [removed: 2017:][added: 2018:]

The following graph demonstrates a five-year comparison of cumulative total returns for NIKE’s Class B Common [removed: Stock,] [added: Stock;] the Standard & Poor’s 500 Stock [removed: Index,] [added: Index;] the Standard & Poor’s Apparel, Accessories & Luxury Goods [removed: Index] [added: Index;] and the Dow Jones U.S. Footwear Index.

The graph assumes an investment of $100 on May 31, [removed: 2012] [added: 2013] in each of our Class B Common [removed: Stock,] [added: Stock] and the stocks comprising the Standard & Poor’s 500 Stock [removed: Index,] [added: Index;] the Standard & Poor’s Apparel, Accessories & Luxury Goods [removed: Index] [added: Index;] and the Dow Jones U.S. Footwear Index.

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN AMONG NIKE, INC.; S&P 500 INDEX; S&P APPAREL, ACCESSORIES & LUXURY GOODS [removed: INDEX] [added: INDEX;] AND THE DOW JONES U.S. FOOTWEAR INDEX

[removed: ][added: ]

The Dow Jones U.S. Footwear Index consists of NIKE, Deckers Outdoor [removed: Corp.,] [added: Corporation, Skechers U.S.A., Inc., Steven Madden, Ltd. and] Wolverine World Wide, [removed: Inc., Skechers U.S.A.,] Inc. [added: Because NIKE is part of the Dow Jones U.S. Footwear Index, the price] and [removed: Steven Madden, Ltd., among other companies.][added: returns of NIKE stock have a substantial effect on this index.]

The Standard & Poor’s Apparel, Accessories & Luxury Goods Index consists of [removed: V.F. Corporation, Coach, Inc.,] [added: Michael Kors Holdings Limited,] Ralph Lauren Corporation, [added: Tapestry, Inc.,] Under Armour, Inc. and [removed: Michael Kors Holdings Limited,] [added: V.F. Corporation,] among other companies.

The performance graph above is being furnished solely to accompany this Report pursuant to Item 201(e) of Regulation S-K, [removed: and] is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

| March 1 — March 31, 2018 | | 8,602,814 | | | $ | 65.94 | | | 8,602,814 | | | $ | 4,282 | |

| April 1 — April 30, 2018 | | 7,823,991 | | | $ | 67.08 | | | 7,823,991 | | | $ | 3,757 | |

| May 1 — May 31, 2018 | | 6,625,000 | | | $ | 69.63 | | | 6,625,000 | | | $ | 3,296 | |

| | | 23,051,805 | | | $ | 67.39 | | | 23,051,805 | | | | | |

| March 1 — March 31, 2017 | | 3,450,000 | | | $ | 56.87 | | | 3,450,000 | | | $ | 8,186 | |

| April 1 — April 30, 2017 | | 4,628,851 | | | $ | 55.68 | | | 4,628,851 | | | $ | 7,929 | |

| May 1 — May 31, 2017 | | 6,829,025 | | | $ | 53.61 | | | 6,829,025 | | | $ | 7,563 | |

| | | 14,907,876 | | | $ | 55.00 | | | 14,907,876 | | | | | |

Because NIKE is part of the Dow Jones U.S. Footwear Index, the price and returns of NIKE stock have a substantial effect on this index.

All share and per share amounts are reflective of the two-for-one stock [removed: splits] [added: split] that began trading at [added: the] split-adjusted [removed: prices] [added: price] on December 24, [removed: 2015 and December 26, 2012.][added: 2015.]

| [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | |

| Revenues | $ | [removed: 34,350] [added: 36,397] | | | $ | [removed: 32,376] [added: 34,350] | | | $ | [removed: 30,601] [added: 32,376] | | | $ | [removed: 27,799] [added: 30,601] | | | $ | [removed: 25,313] [added: 27,799] | |

| Gross profit | [removed: 15,312] [added: 15,956] | | | | [removed: 14,971] [added: 15,312] | | | | [removed: 14,067] [added: 14,971] | | | | [removed: 12,446] [added: 14,067] | | | | [removed: 11,034] [added: 12,446] | | |

| Gross margin | [removed: 44.6] [added: 43.8] | | % | | [removed: 46.2] [added: 44.6] | | % | | [removed: 46.0] [added: 46.2] | | % | | [removed: 44.8] [added: 46.0] | | % | | [removed: 43.6] [added: 44.8] | | % |

| Net income [removed: from continuing operations] | [removed: 4,240] [added: 1,933] | | | | [removed: 3,760] [added: 4,240] | | | | [removed: 3,273] [added: 3,760] | | | | [removed: 2,693] [added: 3,273] | | | | [removed: 2,451] [added: 2,693] | | |

| Earnings per common [removed: share from continuing operations:] [added: share:] | | | | | | | | | | | | | | | | | | | |

| Basic | [removed: 2.56] [added: 1.19] | | | | [removed: 2.21] [added: 2.56] | | | | [removed: 1.90] [added: 2.21] | | | | [removed: 1.52] [added: 1.90] | | | | [removed: 1.37] [added: 1.52] | | |

| Diluted | [removed: 2.51] [added: 1.17] | | | | [removed: 2.16] [added: 2.51] | | | | [removed: 1.85] [added: 2.16] | | | | [removed: 1.49] [added: 1.85] | | | | [removed: 1.34] [added: 1.49] | | |

| Earnings [added: (loss)] per common [removed: share from discontinued operations:] [added: share:] | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | |]

| Weighted average common shares outstanding | [removed: 1,657.8] [added: 1,623.8] | | | | [removed: 1,697.9] [added: 1,657.8] | | | | [removed: 1,723.5] [added: 1,697.9] | | | | [removed: 1,766.7] [added: 1,723.5] | | | | [removed: 1,794.6] [added: 1,766.7] | | |

| Diluted weighted average common shares outstanding | [removed: 1,692.0] [added: 1,659.1] | | | | [removed: 1,742.5] [added: 1,692.0] | | | | [removed: 1,768.8] [added: 1,742.5] | | | | [removed: 1,811.6] [added: 1,768.8] | | | | [removed: 1,832.9] [added: 1,811.6] | | |

| Cash dividends declared per common share | [removed: 0.70] [added: 0.78] | | | | [removed: 0.62] [added: 0.70] | | | | [removed: 0.54] [added: 0.62] | | | | [removed: 0.47] [added: 0.54] | | | | [removed: 0.41] [added: 0.47] | | |

| High | [removed: 60.33] [added: 73.49] | | | | [removed: 68.19] [added: 60.33] | | | | [removed: 52.75] [added: 68.19] | | | | [removed: 40.13] [added: 52.75] | | | | [removed: 32.96] [added: 40.13] | | |

| Low | [removed: 49.01] [added: 50.35] | | | | [removed: 47.25] [added: 49.01] | | | | [removed: 36.57] [added: 47.25] | | | | [removed: 29.56] [added: 36.57] | | | | [removed: 21.95] [added: 29.56] | | |

| Cash and equivalents | $ | [removed: 3,808] [added: 4,249] | | | $ | [removed: 3,138] [added: 3,808] | | | $ | [removed: 3,852] [added: 3,138] | | | $ | [removed: 2,220] [added: 3,852] | | | $ | [removed: 3,337] [added: 2,220] | |

| Short-term investments | [removed: 2,371] [added: 996] | | | | [removed: 2,319] [added: 2,371] | | | | [removed: 2,072] [added: 2,319] | | | | [removed: 2,922] [added: 2,072] | | | | [removed: 2,628] [added: 2,922] | | |

| Inventories | [removed: 5,055] [added: 5,261] | | | | [removed: 4,838] [added: 5,055] | | | | [removed: 4,337] [added: 4,838] | | | | [removed: 3,947] [added: 4,337] | | | | [removed: 3,484] [added: 3,947] | | |

| Working [removed: capital, excluding assets and liabilities of discontinued operations(1)] [added: capital] | [removed: 10,587] [added: 9,094] | | | | [removed: 9,667] [added: 10,587] | | | | [removed: 9,225] [added: 9,667] | | | | [removed: 8,319] [added: 9,225] | | | | [removed: 9,391] [added: 8,319] | | |

| Total [removed: assets, excluding] assets [removed: of discontinued operations(1)(2)] | [removed: 23,259] [added: 22,536] | | | | [removed: 21,379] [added: 23,259] | | | | [removed: 21,590] [added: 21,379] | | | | [removed: 18,579] [added: 21,590] | | | | [removed: 17,531] [added: 18,579] | | |

| Long-term [removed: debt(2)] [added: debt] | [removed: 3,471] [added: 3,468] | | | | [removed: 1,993] [added: 3,471] | | | | [removed: 1,072] [added: 1,993] | | | | [removed: 1,191] [added: 1,072] | | | | [removed: 1,201] [added: 1,191] | | |

| Capital lease [removed: obligations(3)] [added: obligations] | [removed: 27] [added: 75] | | | | [removed: 15] [added: 27] | | | | [removed: 5] [added: 15] | | | | [removed: 74] [added: 5] | | | | [removed: 81] [added: 74] | | |

| Shareholders’ equity | [removed: 12,407] [added: 9,812] | | | | [removed: 12,258] [added: 12,407] | | | | [removed: 12,707] [added: 12,258] | | | | [removed: 10,824] [added: 12,707] | | | | [removed: 11,081] [added: 10,824] | | |

| Year-end stock price | [removed: 52.99] [added: 71.80] | | | | [removed: 55.22] [added: 52.99] | | | | [removed: 50.84] [added: 55.22] | | | | [removed: 38.46] [added: 50.84] | | | | [removed: 30.83] [added: 38.46] | | |

| Market capitalization | [removed: 87,084] [added: 114,983] | | | | [removed: 92,867] [added: 87,084] | | | | [removed: 87,044] [added: 92,867] | | | | [removed: 66,921] [added: 87,044] | | | | [removed: 55,124] [added: 66,921] | | |

| Return on [removed: equity] [added: equity(2)] | [removed: 34.4] [added: 17.4] | | % | | [removed: 30.1] [added: 34.4] | | % | | [removed: 27.8] [added: 30.1] | | % | | [removed: 24.6] [added: 27.8] | | % | | [removed: 23.1] [added: 24.6] | | % |

| Return on assets(2) | [removed: 19.0] [added: 8.4] | | % | | [removed: 17.5] [added: 19.0] | | % | | [removed: 16.3] [added: 17.5] | | % | | [removed: 14.9] [added: 16.3] | | % | | [removed: 15.3] [added: 14.9] | | % |

| Inventory turns | [removed: 3.8] [added: 4.0] | | | | 3.8 | | | | [removed: 4.0] [added: 3.8] | | | | [removed: 4.1] [added: 4.0] | | | | [removed: 4.2] [added: 4.1] | | |

| Current ratio at May 31 | [removed: 2.9] [added: 2.5] | | | | [removed: 2.8] [added: 2.9] | | | | [removed: 2.5] [added: 2.8] | | | | [removed: 2.7] [added: 2.5] | | | | [removed: 3.4] [added: 2.7] | | |

| Price/Earnings ratio at May [removed: 31] [added: 31(2)] | [removed: 21.1] [added: 61.4] | | | | [removed: 25.6] [added: 21.1] | | | | [removed: 27.5] [added: 25.6] | | | | [removed: 25.9] [added: 27.5] | | | | [removed: 22.8] [added: 25.9] | | |

| Gross profit | | [removed: 4,123] [added: 3,962] | | | | [removed: 3,995] [added: 4,123] | | | | [removed: 3,616] [added: 3,678] | | | | [removed: 3,501] [added: 3,616] | | | | [removed: 3,750] [added: 3,938] | | | | [removed: 3,689] [added: 3,750] | | | | [removed: 3,823] [added: 4,378] | | | | [removed: 3,786] [added: 3,823] | | |

| Gross margin | | [removed: 45.5] [added: 43.7] | | % | | [removed: 47.5] [added: 45.5] | | % | | [removed: 44.2] [added: 43.0] | | % | | [removed: 45.6] [added: 44.2] | | % | | [removed: 44.5] [added: 43.8] | | % | | [removed: 45.9] [added: 44.5] | | % | | [removed: 44.1] [added: 44.7] | | % | | [removed: 45.9] [added: 44.1] | | % |

| Net income [added: (loss)] | | [removed: 1,249] [added: 950] | | | | [removed: 1,179] [added: 1,249] | | | | [removed: 842] [added: 767] | | | | [removed: 785] [added: 842] | | | | [removed: 1,141] [added: (921] | | [added: )] | | [removed: 950] [added: 1,141] | | | | [removed: 1,008] [added: 1,137] | | | | [removed: 846] [added: 1,008] | | |

| Basic | | [removed: 0.75] [added: 0.58] | | | | [removed: 0.69] [added: 0.75] | | | | [removed: 0.51] [added: 0.47] | | | | [removed: 0.46] [added: 0.51] | | | | [removed: 0.69] [added: (0.57] | | [added: )] | | [removed: 0.56] [added: 0.69] | | | | [removed: 0.61] [added: 0.71] | | | | [removed: 0.50] [added: 0.61] | | |

| Diluted | | [removed: 0.73] [added: 0.57] | | | | [removed: 0.67] [added: 0.73] | | | | [removed: 0.50] [added: 0.46] | | | | [removed: 0.45] [added: 0.50] | | | | [removed: 0.68] [added: (0.57] | | [added: )] | | [removed: 0.55] [added: 0.68] | | | | [removed: 0.60] [added: 0.69] | | | | [removed: 0.49] [added: 0.60] | | |

| Weighted average common shares outstanding | | [removed: 1,672.0] [added: 1,639.1] | | | | [removed: 1,709.0] [added: 1,672.0] | | | | [removed: 1,659.1] [added: 1,627.0] | | | | [removed: 1,706.5] [added: 1,659.1] | | | | [removed: 1,653.1] [added: 1,623.5] | | | | [removed: 1,693.8] [added: 1,653.1] | | | | [removed: 1,646.9] [added: 1,605.7] | | | | [removed: 1,682.4] [added: 1,646.9] | | |

| Diluted weighted average common shares outstanding | | [removed: 1,708.9] [added: 1,676.9] | | | | [removed: 1,754.5] [added: 1,708.9] | | | | [removed: 1,693.2] [added: 1,660.9] | | | | [removed: 1,751.4] [added: 1,693.2] | | | | [removed: 1,686.3] [added: 1,623.5] | | | | [removed: 1,737.3] [added: 1,686.3] | | | | [removed: 1,678.6] [added: 1,641.2] | | | | [removed: 1,723.1] [added: 1,678.6] | | |

| Cash dividends declared per common share | | [removed: 0.16] [added: 0.18] | | | | [removed: 0.14] [added: 0.16] | | | | [removed: 0.18] [added: 0.20] | | | | [removed: 0.16] [added: 0.18] | | | | [removed: 0.18] [added: 0.20] | | | | [removed: 0.16] [added: 0.18] | | | | [removed: 0.18] [added: 0.20] | | | | [removed: 0.16] [added: 0.18] | | |

| Cash flow from operations(1) | 4,955 | | | | 3,846 | | | | 3,399 | | | | 4,906 | | | | 3,158 | | |

| (1) | Prior year amounts have been updated to reflect the adoption of Accounting Standards Update No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. As a result of adoption, the Company reclassified cash inflows of $177 million, $281 million, $218 million and $132 million for the years ended May 31, 2017, 2016, 2015 and 2014, respectively, related to excess tax benefits from share-based payment awards, from Cash used by financing activities to Cash provided by operations. Additionally, the Company reclassified cash outflows of $29 million, $22 million, $8 million and $13 million for the years ended May 31, 2017, 2016, 2015 and 2014, respectively, related to tax payments for the net settlement of share-based payment awards, from Cash provided by operations to Cash used by financing activities within the Consolidated Statements of Cash Flows. Refer to Note 1 — Summary of Significant Accounting Policies for additional information. |

| (2) | Certain fiscal 2018 financial ratios reflect the impact of the Tax Cuts and Jobs Act. Refer to Note 9 — Income Taxes for additional information. |

| 2018 | | | | 2017 | | | | 2018 | | | | 2017 | | | | 2018(1) | | | | 2017 | | | | 2018 | | | | 2017 | | | | |

| Revenues | | $ | 9,070 | | | $ | 9,061 | | | $ | 8,554 | | | $ | 8,180 | | | $ | 8,984 | | | $ | 8,432 | | | $ | 9,789 | | | $ | 8,677 | |

| High | | 60.53 | | | | 60.33 | | | | 61.21 | | | | 59.18 | | | | 70.25 | | | | 58.42 | | | | 73.49 | | | | 59.00 | | |

| Low | | 50.79 | | | | 51.48 | | | | 50.35 | | | | 49.01 | | | | 59.24 | | | | 50.06 | | | | 63.21 | | | | 50.81 | | |

| (1) | The third quarter of fiscal 2018 reflects the impact from the enactment of the Tax Cuts and Jobs Act. Refer to Note 9 — Income Taxes for additional information. |

Unless otherwise indicated, the following disclosures reflect the Company’s continuing operations.

| Net income (loss) from discontinued operations | — | | | | — | | | | — | | | | — | | | | 21 | | |

| Net income | 4,240 | | | | 3,760 | | | | 3,273 | | | | 2,693 | | | | 2,472 | | |

| Basic | — | | | | — | | | | — | | | | — | | | | 0.01 | | |

| Diluted | — | | | | — | | | | — | | | | — | | | | 0.01 | | |

| Cash flow from operations, inclusive of discontinued operations | 3,640 | | | | 3,096 | | | | 4,680 | | | | 3,013 | | | | 3,032 | | |

| (1) | Liabilities of discontinued operations were $0 million, $0 million, $0 million, $0 million and $18 million for the years ended May 31, 2017, 2016, 2015, 2014 and 2013, respectively. There were no assets of discontinued operations for the years presented. |

| (2) | Prior year amounts have been updated to reflect the adoption of Accounting Standards Update No. 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires all debt issuance costs to be presented as a direct deduction from the carrying amount of the corresponding debt liability on the balance sheet. Refer to Recently Adopted Accounting Standards in Note 1 — Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements. |

| (3) | During the fiscal year ended May 31, 2015, the Company restructured the terms of certain capital leases, which subsequently qualified as operating leases. |

| 2017 | | | | 2016 | | | | 2017 | | | | 2016 | | | | 2017 | | | | 2016 | | | | 2017 | | | | 2016 | | | | |

| Revenues | | $ | 9,061 | | | $ | 8,414 | | | $ | 8,180 | | | $ | 7,686 | | | $ | 8,432 | | | $ | 8,032 | | | $ | 8,677 | | | $ | 8,244 | |

| Earnings per common share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| High | | 60.33 | | | | 58.86 | | | | 59.18 | | | | 67.65 | | | | 58.42 | | | | 68.19 | | | | 59.00 | | | | 65.44 | | |

| Low | | 51.48 | | | | 47.25 | | | | 49.01 | | | | 54.01 | | | | 50.06 | | | | 53.64 | | | | 50.81 | | | | 55.17 | | |

An internal [removed: Corporate Audit] [added: corporate audit] department reviews the results of its work with the Audit [added: & Finance] Committee of the Board of Directors, presently comprised of [removed: four] [added: three] outside, independent directors.

The Audit [added: & Finance] Committee is responsible for the appointment of the independent registered public accounting firm and reviews, with the independent registered public accounting firm, management and the internal [added: corporate] audit staff, the scope and the results of the annual audit, the effectiveness of the accounting control system and other matters relating to the financial affairs of NIKE as the Audit [added: & Finance] Committee deems appropriate.

The independent registered public accounting firm and the internal [added: corporate] auditors have full access to the Audit [added: & Finance] Committee, with and without the presence of management, to discuss any appropriate matters.

Based on the results of our evaluation, our management concluded that our internal control over financial reporting was effective as of May 31, [removed: 2017.][added: 2018.]

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited (1) the Consolidated Financial Statements and (2) the effectiveness of our internal control over financial reporting as of May 31, [removed: 2017,] [added: 2018,] as stated in their report herein.

To the Board of Directors and Shareholders of NIKE, [removed: Inc.:][added: Inc.]

In our opinion, the consolidated financial statements [removed: listed in the index appearing under Item 15(a)(1)] [added: referred to above] present fairly, in all material respects, the financial position of [removed: NIKE, Inc. and its subsidiaries] [added: the Company] as of May 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the results of their operations and their cash flows for each of the three years in the period ended May 31, [removed: 2017] [added: 2018] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control [removed: —] [added: -] Integrated Framework (2013) issued by the [removed: Committee of Sponsoring Organizations of the Treadway Commission (COSO).][added: COSO.]

The Company’s management is responsible for these [removed: financial statements and] [added: consolidated] financial [removed: statement schedule,] [added: statements,] for maintaining effective internal control over financial [removed: reporting] [added: reporting,] and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 8.

Our responsibility is to express opinions on [removed: these financial statements, on] the [added: Company’s consolidated] financial [removed: statement schedule] [added: statements] and on the Company’s internal control over financial reporting based on our [removed: integrated] audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the [added: consolidated] financial statements are free of material [removed: misstatement] [added: misstatement, whether due to error or fraud,] and whether effective internal control over financial reporting was maintained in all material respects.

Our audits [removed: of the financial statements] [added: also] included [removed: examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing] [added: evaluating] the accounting principles used and significant estimates made by [removed: management and] [added: management, as well as] evaluating the overall [added: presentation of the consolidated] financial [removed: statement presentation.][added: statements.]

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness [removed: exists] [added: exists,] and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

| (In millions, except per share data) | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |