NIKE (NKE) 10-K risk factor changes: FY2019 vs FY2018

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 [removed: NIKE’s] [added: NIKE's] increasingly complex information 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 orders may not be indicative of future revenues due to changes in shipment timing, the changing mix of 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 [removed: NIKE’s] [added: 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 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 [removed: NIKE’s] [added: 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, inflation, import duties, tariffs, quotas, political and economic instability and terrorism; the impact of [removed: recent] U.S. tax reform legislation on our results of operations; the potential impact of new laws, regulations or policy, including, without limitation, tariffs, import/export, trade and 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 [removed: proceedings and] [added: proceedings, sanctions or any] other claims asserted against NIKE; the ability to attract and retain qualified employees, and any negative public perception with respect to key personnel; the effects of [removed: NIKE’s] [added: NIKE's] decision to invest in or divest of businesses and other factors referenced or incorporated by reference in this report and other reports.

Furthermore, NIKE has a policy against [removed: issuing or] confirming financial forecasts or projections issued by others.

Negative claims or publicity involving us, our [removed: products] [added: products, consumer data,] 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.

If the reputation or image of any of our brands is tarnished or if we receive negative publicity, then our [removed: product] sales, financial condition and results of operations could be materially and adversely affected.

We establish relationships with professional athletes, sports teams and leagues, as well as other public figures, [added: including artists, designers and influencers,] to develop, evaluate and promote our products, as well as establish product authenticity with consumers.

[removed: If we are unable to maintain our current associations with professional] athletes, sports teams and leagues, or other public figures, or to do so at a reasonable cost, we could lose the high visibility or on-field authenticity associated with our products, and we may be required to modify and substantially increase our marketing investments.

In addition, poor performance by our endorsers, a failure to continue to correctly identify promising athletes, [removed: or] public [removed: figures,] [added: figures or sports organizations,] to use and endorse our products or a failure to enter into cost-effective endorsement arrangements with prominent athletes, public figures, and sports organizations could adversely affect our brand, sales and profitability.

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” [removed: and] [added: or] new or proposed U.S. policy [removed: changes.][added: changes that impact the U.S. Dollar value relative to other international currencies.]

If the technology-based systems that give our [removed: customers] [added: consumers] the ability to shop with us online do not function effectively, our operating results, as well as our ability to grow our digital commerce business globally, could be materially adversely affected.

Many of our [removed: customers] [added: consumers] shop with us through our digital platforms.

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

We are increasingly using social media and proprietary mobile applications to interact with our [removed: customers] [added: consumers] and as a means to enhance their shopping experience.

Any failure on our part to provide attractive, effective, reliable, user-friendly digital commerce platforms that offer a wide assortment of merchandise with rapid delivery options and that continually meet the changing expectations of online shoppers could place us at a competitive disadvantage, result in the loss of digital commerce and other sales, harm our reputation with [removed: customers,] [added: consumers,] have a material adverse impact on the growth of our digital commerce business globally and could have a material adverse impact on our business and results of operations.

For example, confidential information related to business strategy, new technologies, mergers and acquisitions, unpublished financial results or personal data could be [removed: prematurely] [added: prematurely, inadvertently,] or [removed: inadvertently] [added: improperly] 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.

In addition to our own sensitive and proprietary business information, we [removed: collect] [added: handle] transactional and personal information about our customers and users of our digital experiences, which include online distribution channels and product [removed: engagement] [added: engagement, adaptive products] and personal fitness applications.

Hackers and data thieves are increasingly sophisticated and operate [removed: large-scale and complex automated attacks.][added: social]

For example, the European Union adopted the General Data Protection Regulation (the “GDPR”), which became effective on May 25, [removed: 2018.][added: 2018; and California passed the California Consumer Privacy Act (the "CCPA") which will go into effect in 2020.]

[removed: The GDPR imposes] [added: These laws impose] additional obligations on companies regarding the handling of personal data and provides certain individual privacy rights to persons whose data is stored.

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

Portions of our operations are subject to a reduced tax rate or are free of tax under various tax holidays and [removed: rulings that expire in whole or in part from time to time.][added: rulings.]

These [removed: tax] holidays and rulings [added: expire in whole or in part from time to time and] may be extended when certain conditions are met, or terminated if certain conditions are not met.

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, particularly in light of the enactment of the Tax Act.][added: accruals.]

For example, we and our subsidiaries are [added: also] engaged in a number of intercompany transactions across multiple tax jurisdictions.

Changes to U.S. trade policy, tariff and import/export regulations [added: or our failure to comply with such regulations] may have a material adverse effect on our [added: reputation,] business, financial condition and results of operations.

The new tariffs and other changes in U.S. trade policy [added: has in the past and] could [added: continue to] trigger retaliatory actions by affected countries, and certain foreign governments have instituted [removed: or are considering imposing trade sanctions on certain U.S. goods.]

NIKE is supplied by [removed: 124] [added: 112] footwear factories located in [removed: 13] [added: 12] countries.

In fiscal [removed: 2018, five] [added: 2019, four] footwear contract manufacturers each accounted for greater than 10% of fiscal [removed: 2018] [added: 2019] footwear production and in aggregate accounted for approximately [removed: 69%] [added: 61%] of NIKE Brand footwear production in fiscal [removed: 2018.][added: 2019.]

During fiscal [removed: 2018,] [added: 2019,] Sojitz America provided financing and purchasing services for NIKE Brand products sold in certain NIKE markets including Argentina, Brazil, Canada, India, South Africa and Uruguay (collectively the “Sojitz Markets”), excluding products produced and sold in the same country.

The failure of these systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes, or failure to properly maintain, protect, repair or upgrade systems, or problems with transitioning to upgraded or replacement systems could cause delays in product fulfillment and reduced efficiency of our operations, could require significant capital investments to remediate the [removed: problem,] [added: problem which may not be sufficient to cover all eventualities,] and may have an adverse effect on our reputation, results of operations and financial condition.

Our ability to effectively obtain real estate to open new retail stores and otherwise conduct our operations, both domestically and internationally, depends on the availability of real estate that meets our criteria for traffic, square footage, co-tenancies, lease [removed: economics, demographics and other factors.]

Extreme weather conditions in the areas in which our retail stores, suppliers, customers, distribution [removed: centers] [added: centers, headquarters] and vendors are located could adversely affect our operating results and financial condition.

We are subject to [added: a complex array of laws and regulations and] litigation and other legal and regulatory proceedings, which could have an adverse effect on our business, financial condition and results of operations.

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

The global nature of our business means legal and compliance [removed: risks] [added: risks, such as anti-bribery, anti-corruption, fraud, trade, environmental, competition, privacy and other regulatory matters,] will continue to exist and additional legal proceedings and other contingencies will arise from time to time, which could adversely affect us.

As of June 30, [removed: 2018,] [added: 2019,] Swoosh, LLC beneficially owned [removed: more than 77%] [added: approximately 78%] of our Class A Common Stock.

If, on June 30, [removed: 2018,] [added: 2019,] all of these shares were converted into Class B Common Stock, the commensurate ownership percentage of our Class B Common Stock would be approximately [removed: 17%.][added: 16%.]

[removed: The sale or prospect of a sale of a substantial] number of these shares could have an adverse effect on the market price of our common stock.

Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, [removed: allowance for uncollectible accounts receivable,] inventory reserves, contingent payments under endorsement contracts, accounting for property, plant and equipment and definite-lived assets, hedge accounting for derivatives, stock-based compensation, income taxes and other contingencies.

These reports include information about our historical financial results as well as [removed: analysts’ estimates] [added: analysts' opinions] of our future [removed: performance.][added: performance, which may, in part, be based upon any guidance we have provided.]

[removed: Analysts’] [added: Analysts'] estimates are [removed: based upon their own opinions and are] often different from our estimates or expectations.

8 NIKE, INC.

For example, while we require our suppliers of our products to operate their business in compliance with applicable laws and regulations, we do not control their practices.

Negative publicity relating to a violation or an alleged violation of policies or laws by such suppliers could damage our brand image.

If we are unable to maintain our current associations with professional

2019 FORM 10-K 9

10 NIKE, INC.

2019 FORM 10-K 11

12 NIKE, INC.

engineering, such as phishing, and large-scale, complex automated attacks that can evade detection for long periods of time.

2019 FORM 10-K 13

We completed our analysis of the Tax Act in the second quarter of fiscal 2019 and no adjustments were made to the provisional amounts recorded.

We also utilize tax rulings and other agreements to obtain certainty in treatment of certain tax matters.

The impact of any changes in conditions would be the loss of certainty in treatment thus potentially impacting our effective income tax rate.

For example, in January 2019, the European Commission opened a formal investigation to examine whether the Netherlands has breached State Aid rules when granting certain tax rulings to the Company.

If this matter is adversely resolved, the Netherlands may be required to assess additional amounts with respect to current and prior periods and the Company's Netherlands income taxes in the future could increase.

14 NIKE, INC.

or are considering imposing retaliatory measures on certain U.S. goods.

2019 FORM 10-K 15

16 NIKE, INC.

economics, demographics and other factors.

If we or our employees, agents, suppliers, and other partners fail to comply with any of these laws or regulations, such failure could subject us to fines, sanctions or other penalties that could negatively affect our reputation, business, financial condition and results of operations.

The sale or prospect of a sale of a substantial

2019 FORM 10-K 17

18 NIKE, INC.

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.

If the tax holidays and rulings are not extended, or if we fail to satisfy the conditions of the reduced tax rate, our effective income tax rate would increase in the future.

We sell our products through NIKE-owned retail stores and through digital platforms (which we refer to collectively as our “NIKE Direct” operations), to retail accounts and [added: to] 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, [removed: “must have”] [added: “must-have”] products, building deep personal consumer connections with our brands and delivering compelling consumer experiences through digital platforms and at retail.

[removed: As a result of this organizational realignment, beginning in fiscal 2018, the Company’s] [added: 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 [removed: (APLA).][added: (APLA), and include results for the NIKE, Jordan and Hurley brands.]

[removed: Our fiscal 2018] [added: Fiscal 2019 was our first full year executing against our new strategy and our] results demonstrated the power of the NIKE, Inc. portfolio to generate revenue growth, while investing in capabilities [removed: in support of our Triple Double strategy] to fuel our next phase of long-term growth and profitability.

We achieved record revenues [removed: for] [added: in] fiscal [removed: 2018,] [added: 2019,] growing [removed: 6%] [added: 7%] to [removed: $36.4] [added: $39.1] billion.

The NIKE Brand, which represents over 90% of NIKE, Inc. Revenues, delivered [removed: 7%] [added: 8%] revenue [removed: growth.][added: growth fueled by investments in innovative products and digital platforms.]

On a currency-neutral basis, NIKE Brand revenues grew [removed: 5%,] [added: 11%,] driven by [removed: strong revenue] growth across all [removed: international geographies and] [added: geographies,] NIKE [removed: Direct, as well as growth in footwear, apparel] [added: Direct] and [removed: most] [added: wholesale, nearly all] key [removed: categories.][added: categories and double-digit growth across footwear and apparel.]

[removed: Revenue growth was more than offset by] [added: Reported EBIT for Converse decreased 2% for fiscal 2019 as] higher selling and administrative [removed: expense,] [added: expense more than offset] gross margin [removed: contraction,] [added: expansion] and [removed: a shift to other expense, net from other income, net for fiscal 2017.][added: revenue growth.]

While foreign currency markets remain volatile, [added: in part due to geopolitical dynamics leading to a stronger U.S. Dollar,] we continue to see opportunities to drive future growth and profitability, and remain committed to effectively managing our business to achieve our financial goals over the long-term by executing against the operational strategies outlined above.

[removed: | Results of Operations |][added: RESULTS OF OPERATIONS]

| (Dollars in millions, except per share data) | [removed: | Fiscal 2018 | |] [added: FISCAL 2019] | | [removed: Fiscal 2017] | [added: FISCAL 2018(1)] | | | % [removed: Change | |] [added: CHANGE] | [removed: Fiscal 2016] | [added: FISCAL 2017] | | | % [removed: Change] [added: CHANGE] | |

| Revenues | [removed: |] $ | [removed: 36,397 |] [added: 39,117] | | $ | [removed: 34,350 |] [added: 36,397] | | [removed: 6] [added: 7] | % | [removed: |] $ | [removed: 32,376 |] [added: 34,350] | | 6 | % |

| Cost of sales | [removed: | 20,441 | |] [added: 21,643] | | [removed: 19,038] | [added: 20,441] | | | [removed: 7] [added: 6] | % | [removed: | 17,405 |] [added: 19,038] | | | [removed: 9] [added: 7] | % |

| Gross profit | [removed: | 15,956 | |] [added: 17,474] | | [removed: 15,312] | [added: 15,956] | | | [removed: 4] [added: 10] | % | [removed: | 14,971 |] [added: 15,312] | | | [removed: 2] [added: 4] | % |

| Gross margin | [removed: | 43.8] [added: 44.7] | | % | [removed: | 44.6] [added: 43.8] | | % | | | [removed: | | 46.2] [added: 44.6] | | % | | | [removed: |]

| Demand creation expense | [removed: | 3,577 | |] [added: 3,753] | | [removed: 3,341] | [added: 3,577] | | | [removed: 7] [added: 5] | % | [removed: | 3,278 |] [added: 3,341] | | | [removed: 2] [added: 7] | % |

| Operating overhead expense | [removed: | 7,934 | |] [added: 8,949] | | [removed: 7,222] | [added: 7,934] | | | [removed: 10] [added: 13] | % | [removed: | 7,191 |] [added: 7,222] | | | [removed: 0] [added: 10] | % |

| Total selling and administrative expense | [removed: | 11,511 | |] [added: 12,702] | | [removed: 10,563] | [added: 11,511] | | | [removed: 9] [added: 10] | % | [removed: | 10,469 |] [added: 10,563] | | | [removed: 1] [added: 9] | % |

| % of revenues | [removed: | 31.6] [added: 32.5] | | % | [removed: | 30.8] [added: 31.6] | | % | | | [removed: | | 32.3] [added: 30.8] | | % | | | [removed: |]

| Interest expense (income), net | [removed: | 54 | |] [added: 49] | | [removed: 59] | [added: 54] | | | — | | [removed: | 19 |] [added: 59] | | | — | |

| Other [removed: expense (income),] [added: (income) expense,] net | [removed: | 66 | |] [added: (78] | | [removed: (196] [added: )] | [added: 66] | [removed: )] | | — | | [removed: | (140] [added: (196] | | ) | [removed: |] — | |

| Income before income taxes | [removed: | 4,325 | |] [added: 4,801] | | [removed: 4,886] | [added: 4,325] | | | [removed: \-11] [added: 11] | % | [removed: | 4,623 |] [added: 4,886] | | | [removed: 6] [added: \-11] | % |

| Income tax expense | [removed: | 2,392 | |] [added: 772] | | [removed: 646] | [added: 2,392] | | | [removed: 270] [added: \-68] | % | [removed: | 863 |] [added: 646] | | | [removed: \-25] [added: 270] | % |

| Effective tax rate | [removed: | 55.3] [added: 16.1] | | % | [removed: | 13.2] [added: 55.3] | | % | | | [removed: | | 18.7] [added: 13.2] | | % | | | [removed: |]

| NET INCOME | [removed: |] $ | [removed: 1,933 |] [added: 4,029] | | $ | [removed: 4,240 |] [added: 1,933] | | [removed: \-54] [added: 108] | % | [removed: |] $ | [removed: 3,760 |] [added: 4,240] | | [removed: 13] [added: \-54] | % |

| Diluted earnings per common share | [removed: |] $ | [removed: 1.17 |] [added: 2.49] | | $ | [removed: 2.51 |] [added: 1.17] | | [removed: \-53] [added: 113] | % | [removed: |] $ | [removed: 2.16 |] [added: 2.51] | | [removed: 16] [added: \-53] | % |

[removed: | Consolidated Operating Results |][added: CONSOLIDATED OPERATING RESULTS]

| (Dollars in millions) | [removed: Fiscal 2018] [added: FISCAL 2019] | | | [removed: Fiscal 2017(1)] [added: FISCAL 2018(1)] | | | % [removed: Change] [added: CHANGE] | | % [removed: Change Excluding Currency Changes(2)] [added: CHANGE EXCLUDING CURRENCY CHANGES(2)] | | [removed: Fiscal 2016(1)] [added: FISCAL 2017(1)] | | | % [removed: Change] [added: CHANGE] | | % [removed: Change Excluding Currency Changes(2)] [added: CHANGE EXCLUDING CURRENCY CHANGES(2)] | |

| Footwear | $ | [removed: 22,268] [added: 24,222] | | $ | [removed: 21,081] [added: 22,268] | | [removed: 6] [added: 9] | % | [removed: 4] [added: 12] | % | $ | [removed: 19,871] [added: 21,081] | | 6 | % | [removed: 8] [added: 4] | % |

| Apparel | [removed: 10,733] [added: 11,550] | | | [removed: 9,654] [added: 10,733] | | | [removed: 11] [added: 8] | % | [removed: 9] [added: 11] | % | [removed: 9,067] [added: 9,654] | | | [removed: 6] [added: 11] | % | 9 | % |

| Equipment | [removed: 1,396] [added: 1,404] | | | [removed: 1,425] [added: 1,396] | | | [removed: \-2] [added: 1] | % | [removed: \-4] [added: 4] | % | [removed: 1,496] [added: 1,425] | | | [removed: \-5] [added: \-2] | % | [removed: \-3] [added: \-4] | % |

| Global Brand Divisions(3) | [removed: 88] [added: 42] | | | [removed: 73] [added: 88] | | | [removed: 21] [added: \-52] | % | [removed: 12] [added: \-53] | % | 73 | | | [removed: 0] [added: 21] | % | [removed: 2] [added: 12] | % |

| Total NIKE Brand Revenues | [removed: 34,485] [added: 37,218] | | | [removed: 32,233] [added: 34,485] | | | [removed: 7] [added: 8] | % | [removed: 5] [added: 11] | % | [removed: 30,507] [added: 32,233] | | | [removed: 6] [added: 7] | % | [removed: 8] [added: 5] | % |

| Converse | [removed: 1,886] [added: 1,906] | | | [removed: 2,042] [added: 1,886] | | | [removed: \-8] [added: 1] | % | [removed: \-11] [added: 3] | % | [removed: 1,955] [added: 2,042] | | | [removed: 4] [added: \-8] | % | [removed: 6] [added: \-11] | % |

| Corporate(4) | [removed: 26] [added: (7] | | [added: )] | [removed: 75] [added: 26] | | | — | | — | | [removed: (86] [added: 75] | | [removed: )] | — | | — | |

| TOTAL NIKE, INC. REVENUES | $ | [removed: 36,397] [added: 39,117] | | $ | [removed: 34,350] [added: 36,397] | | [removed: 6] [added: 7] | % | [removed: 4] [added: 11] | % | $ | [removed: 32,376] [added: 34,350] | | 6 | % | [removed: 8] [added: 4] | % |

| Sales to Wholesale Customers | $ | [removed: 23,969] [added: 25,423] | | $ | [removed: 23,078] [added: 23,969] | | [removed: 4] [added: 6] | % | [removed: 2] [added: 10] | % | $ | [removed: 22,577] [added: 23,078] | | [removed: 2] [added: 4] | % | [removed: 5] [added: 2] | % |

| Sales through NIKE Direct | [removed: 10,428] [added: 11,753] | | | [removed: 9,082] [added: 10,428] | | | [removed: 15] [added: 13] | % | [removed: 12] [added: 16] | % | [removed: 7,857] [added: 9,082] | | | [removed: 16] [added: 15] | % | [removed: 18] [added: 12] | % |

| TOTAL NIKE BRAND REVENUES | $ | [removed: 34,485] [added: 37,218] | | $ | [removed: 32,233] [added: 34,485] | | [removed: 7] [added: 8] | % | [removed: 5] [added: 11] | % | $ | [removed: 30,507] [added: 32,233] | | [removed: 6] [added: 7] | % | [removed: 8] [added: 5] | % |

| NIKE Brand Revenues on a Wholesale Equivalent [removed: Basis:(5)] [added: Basis:(2)] | | | | | | | | | | | | | | | | | |

Within our NIKE Direct business, digital outpaced all other channels, growing at 35% in fiscal 2019.

Revenues for Converse increased 1% and 3% on a reported and currency-neutral basis, respectively, primarily driven by double-digit growth in Asia and digital, which was partially offset by declines in the U.S. and Europe.

NIKE, Inc. gross margin increased 90 basis points primarily due to higher full-price average selling price (ASP), on a wholesale equivalent basis, favorable changes in foreign currency exchange rates and growth in NIKE Direct.

These benefits were partially offset by higher product costs.

Selling and administrative expense was higher as a percent of revenues, reflecting investments in data and analytics capabilities, digital commerce platforms and an initial investment in a new enterprise resource planning tool to accelerate our end-to-end digital transformation.

Additionally, we prioritized investments in global brand campaigns aimed at deepening our connection with consumers.

24 NIKE, INC.

For discussion related to the results of operations and changes in financial condition for fiscal 2018 compared to fiscal 2017 refer to Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2018 Form 10-K, which was filed with the United States Securities and Exchange Commission on July 25, 2018.

2019 FORM 10-K 25

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| (1) | Fiscal 2018 reflects the impact from the enactment of the Tax Cuts and Jobs Act. Refer to Note 9 — Income Taxes in the accompanying Notes to the Consolidated Financial Statements for additional information. |

26 NIKE, INC.

| Sales to Wholesale Customers | $ | 25,423 | | $ | 23,969 | | 6 | % | 10 | % | $ | 23,078 | | 4 | % | 2 | % |

| Men's | $ | 17,737 | | $ | 16,698 | | 6 | % | 10 | % | $ | 15,819 | | 6 | % | 4 | % |

| Women's | 7,380 | | | 6,913 | | | 7 | % | 11 | % | 6,637 | | | 4 | % | 2 | % |

| NIKE Kids' | 5,283 | | | 4,906 | | | 8 | % | 11 | % | 4,838 | | | 1 | % | \-1 | % |

| Others(5) | 2,150 | | | 1,784 | | | 21 | % | 25 | % | 1,400 | | | 27 | % | 14 | % |

| TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES | $ | 32,550 | | $ | 30,301 | | 7 | % | 11 | % | $ | 28,694 | | 6 | % | 4 | % |

| NIKE Brand Wholesale Equivalent Revenues by:(2) | | | | | | | | | | | | | | | | | |

| Running | $ | 4,488 | | $ | 4,496 | | 0 | % | 4 | % | $ | 4,576 | | \-2 | % | \-4 | % |

| Sportswear | 12,442 | | | 10,720 | | | 16 | % | 21 | % | 9,272 | | | 16 | % | 13 | % |

| TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES | $ | 32,550 | | $ | 30,301 | | 7 | % | 11 | % | $ | 28,694 | | 6 | % | 4 | % |

| (2) | The percent change excluding currency changes and the presentation of wholesale equivalent revenues represent non-GAAP financial measures. See "Use of Non-GAAP Financial Measures" for further information. |

2019 FORM 10-K 27

FISCAL 2019 NIKE BRAND REVENUE HIGHLIGHTS

The following tables present NIKE Brand revenues disaggregated by reportable operating segment, distribution channel and major product line:

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Digital commerce sales were $3.8 billion for fiscal 2019 compared to $2.8 billion for fiscal 2018.

During fiscal 2019, the growth in Women's was fueled by our focus on compelling design, creating female-focused brand campaigns globally and a shift towards digital-led distribution.

Revenues for our NIKE Kids' business increased 11%, as all key categories, except Football (Soccer), experienced growth.

28 NIKE, INC.

FISCAL 2019 COMPARED TO FISCAL 2018

For fiscal 2019, our consolidated gross profit increased 10% to $17,474 million compared to $15,956 million for fiscal 2018.

Gross margin increased 90 basis points to 44.7% for fiscal 2019 compared to 43.8% for fiscal 2018 due to the following:

In June 2017, we announced the Consumer Direct Offense, a new company alignment designed to allow NIKE to better serve the consumer personally, at scale.

Leveraging the power of digital, NIKE 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.

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Over the past ten years, we have achieved strong growth in many of these metrics.

During this time, revenues for NIKE, Inc. have grown 7% on an annual compounded 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%.

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.

NIKE, Inc. gross margin decreased 80 basis points primarily due to foreign currency exchange rate headwinds.

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.

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| Men’s | $ | 17,114 | | $ | 16,041 | | 7 | % | 5 | % | $ | 15,410 | | 4 | % | 6 | % |

| Women’s | 6,915 | | | 6,644 | | | 4 | % | 2 | % | 6,296 | | | 6 | % | 8 | % |

| Young Athletes’ | 4,906 | | | 4,838 | | | 1 | % | \-1 | % | 4,560 | | | 6 | % | 8 | % |

| Others(6) | 1,366 | | | 1,171 | | | 17 | % | 13 | % | 983 | | | 19 | % | 21 | % |

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

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

| (2) | The percent change has been calculated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends by excluding the impact of translation arising from foreign currency exchange rate fluctuations, which is considered a non-GAAP financial measure. |

| (5) | References to NIKE Brand wholesale equivalent revenues, which are considered non-GAAP financial measures, are intended to provide context as to the total size of our NIKE Brand market footprint if we had no NIKE Direct operations. NIKE Brand wholesale equivalent revenues consist of (1) sales to external wholesale customers and (2) internal sales from our wholesale operations to our NIKE Direct operations, which are charged at prices comparable to those charged to external wholesale customers. |

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

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 2017 Compared to Fiscal 2016

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

On a currency-neutral basis, NIKE Brand footwear and apparel revenues increased 8% and 9%, respectively, for fiscal 2017, while NIKE Brand equipment revenues decreased 3%.

On a category basis, the increase in NIKE Brand footwear revenues was driven by strong growth in Sportswear, Running and the Jordan Brand.

For fiscal 2017, NIKE Direct revenues represented approximately 28% of our total NIKE Brand revenues compared to 26% for fiscal 2016.

On a reported basis, digital commerce sales, which are not included in comparable store sales, were $2.2 billion for fiscal 2017 compared to $1.7 billion for fiscal 2016 and represented approximately 24% of our total NIKE Direct revenues for fiscal 2017 compared to 22% for fiscal 2016.

Revenues for our Young Athletes’ business increased 8%, with growth across multiple categories, most notably the Jordan Brand.

| Gross profit | | $ | 15,956 | | | $ | 15,312 | | | 4 | % | | $ | 14,971 | | | 2 | % |

| Gross margin | | 43.8 | | % | | 44.6 | | % | | (80 | ) bps | | 46.2 | | % | | (160 | ) bps |

For fiscal 2018, our consolidated gross margin was 80 basis points lower than fiscal 2017, primarily reflecting the following factors:

| • | Unfavorable changes in net foreign currency exchange rates, including hedges (decreasing gross margin approximately 90 basis points); |

| • | 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 |

The majority of derivatives outstanding as of May 31, [removed: 2018] [added: 2019] are designated as foreign currency cash flow hedges, primarily for Euro/U.S. Dollar, British [removed: Pound/Euro] [added: Pound/Euro, Chinese Yuan/U.S. Dollar] and Japanese Yen/U.S. Dollar currency pairs.

Refer to Note [removed: 16] [added: 14] — Risk Management and Derivatives in the accompanying Notes to the Consolidated Financial Statements for additional information.

[removed: | Market Risk Measurement |][added: MARKET RISK MEASUREMENT]

The estimated maximum one-day loss in fair value on our foreign currency sensitive derivative financial instruments, derived using the VaR model, was [removed: $93] [added: $34] million and [removed: $97] [added: $93] million at May 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

The VAR decreased year-over-year as a result of a decrease in foreign currency volatilities at May 31, [removed: 2018.][added: 2019.]

The average monthly change in the fair values of foreign currency forward and foreign currency option derivative instruments was [removed: $260] [added: $83] million and [removed: $161] [added: $260] million during fiscal [removed: 2018] [added: 2019] and fiscal [removed: 2017,] [added: 2018,] respectively.

| | [removed: | Expected Maturity Date Year Ending May] [added: EXPECTED MATURITY DATE YEAR ENDING MAY] 31, | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | |]

| (Dollars in millions) | [removed: | 2019 | | | |] 2020 | | | [removed: |] 2021 | | | [removed: |] 2022 | | | [removed: |] 2023 | | | [added: 2024] | [removed: Thereafter] | | [added: THEREAFTER] | | [removed: Total] | [added: TOTAL] | | | [removed: Fair Value] [added: FAIR VALUE] | | |

| Foreign Exchange Risk | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | |]

| Japanese Yen Functional Currency | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | |]

| Long-term Japanese Yen debt — Fixed rate | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | |]

| Principal payments | [removed: |] $ | 6 | | [removed: |] $ | [removed: 6 |] [added: 3] | | $ | [removed: 3 |] [added: —] | | $ | — | | [removed: |] $ | — | | [removed: |] $ | — | | [removed: |] $ | [removed: 15 |] [added: 9] | | $ | [removed: 16] [added: 9] | |

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

| Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | |]

| U.S. Dollar Functional Currency | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | |]

| Long-term U.S. Dollar debt — Fixed rate | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | |]

| Principal payments | [removed: |] $ | — | | [removed: |] $ | — | | [removed: |] $ | — | | [removed: |] $ | [removed: — |] [added: 500] | | $ | [removed: 500 |] [added: —] | | $ | 3,000 | | [removed: |] $ | 3,500 | | [removed: |] $ | [removed: 3,279] [added: 3,515] | |

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

Accordingly, the monthly translation of these instruments, which varies due to changes in foreign exchange rates, is recognized in Accumulated other comprehensive income [added: (loss)] upon consolidation of this subsidiary.

44 NIKE, INC.

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| Japanese Yen Functional Currency | | | | | | | | | | | | | | | | | | | | | | | | |

| Long-term Japanese Yen debt — Fixed rate | | | | | | | | | | | | | | | | | | | | | | | | |

| Principal payments | $ | 6 | | $ | 3 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 9 | | $ | 9 | |

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

2019 FORM 10-K 45

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[removed: | General |][added: GENERAL]

Copies of these filings [removed: may also be obtained by visiting the Public Reference Room of the SEC at 100 F Street, NE, Washington, D.C. 20549, or by calling the SEC at 1-800-SEC-0330 and] are [added: also] available on the [removed: SEC’s] [added: SEC's] website (www.sec.gov).

[removed: | Products |][added: PRODUCTS]

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

[removed: | Sales and Marketing |][added: SALES AND MARKETING]

[removed: As a result of this organizational realignment, the Company’s] [added: 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), and include results for the NIKE, Jordan and Hurley brands.

Converse is also a reportable [added: operating] segment and operates [added: predominately] in one industry: the design, marketing, licensing and selling of casual sneakers, apparel and accessories.

[removed: | United States Market |][added: UNITED STATES MARKET]

For fiscal [removed: 2018,] [added: 2019,] NIKE Brand and Converse sales in the United States accounted for approximately [removed: 42%] [added: 41%] of total revenues, compared to [removed: 46%] [added: 42%] and [removed: 47%] [added: 46%] for fiscal [removed: 2017] [added: 2018] and fiscal [removed: 2016,] [added: 2017,] respectively.

During fiscal [removed: 2018,] [added: 2019,] our three largest [added: United States] customers accounted for approximately [removed: 21%] [added: 24%] of sales in the United States.

| NIKE Brand factory stores | [removed: 220] [added: 217] | |

| NIKE Brand in-line stores (including employee-only stores) | [removed: 31] [added: 29] | |

| Converse stores (including factory stores) | [removed: 112] [added: 63] | |

| Hurley stores (including factory and [removed: employee] [added: employee-only] stores) | 29 | |

In the United States, NIKE has [removed: seven] [added: six] significant distribution centers.

[removed: Five] [added: Four] are located in Memphis, Tennessee, two of which are owned and [removed: three] [added: two] of which are leased.

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

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

[removed: | International Markets |][added: INTERNATIONAL MARKETS]

For fiscal [removed: 2018,] [added: 2019,] non-U.S. NIKE Brand and Converse sales accounted for approximately [removed: 58%] [added: 59%] of total revenues, compared to [removed: 54%] [added: 58%] and [removed: 53%] [added: 54%] for fiscal [removed: 2017] [added: 2018] and fiscal [removed: 2016,] [added: 2017,] respectively.

We sell to thousands of retail accounts and ship products from [removed: 62] [added: 67] distribution centers outside of the United States.

During fiscal [removed: 2018, NIKE’s] [added: 2019, NIKE's] three largest customers outside of the United States accounted for approximately [removed: 13%] [added: 14%] of total non-U.S. sales.

| NIKE Brand factory stores | [removed: 664] [added: 648] | |

| NIKE Brand in-line stores (including employee-only stores) | [removed: 65] [added: 57] | |

| Converse stores (including factory stores) | [removed: 61] [added: 109] | |

[removed: | Significant Customer |][added: SIGNIFICANT CUSTOMER]

No customer accounted for 10% or more of our worldwide net revenues during fiscal [removed: 2018.][added: 2019.]

[removed: | Product Research, Design and Development |][added: PRODUCT RESEARCH, DESIGN AND DEVELOPMENT]

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

[removed: | Manufacturing |][added: MANUFACTURING]

We are supplied by [removed: 124] [added: 112] footwear factories located in [removed: 13] [added: 12] countries.

The largest single footwear factory accounted for approximately 9% of total fiscal [removed: 2018] [added: 2019] NIKE Brand footwear production.

For fiscal [removed: 2018,] [added: 2019,] contract factories in Vietnam, China and Indonesia manufactured approximately [removed: 47%, 26%] [added: 49%, 23%] and 21% of total NIKE Brand footwear, respectively.

We also have manufacturing agreements with independent contract manufacturers in [removed: Argentina, India, Brazil, Mexico] [added: Argentina] and [removed: Italy] [added: India] to manufacture footwear for sale primarily within those countries.

For fiscal [removed: 2018, five] [added: 2019, four] footwear contract manufacturers each accounted for greater than 10% of footwear production and in the aggregate accounted for approximately [removed: 69%] [added: 61%] of NIKE Brand footwear production.

We are supplied by [removed: 328] [added: 334] apparel factories located in [removed: 37] [added: 36] countries.

The largest single apparel factory accounted for approximately [removed: 13%] [added: 14%] of total fiscal [removed: 2018] [added: 2019] NIKE Brand apparel production.

For fiscal [removed: 2018,] [added: 2019,] contract factories in China, Vietnam and Thailand produced approximately [removed: 26%, 18%] [added: 27%, 22%] and 10% of total NIKE Brand apparel, respectively.

For fiscal [removed: 2018,] [added: 2019,] one apparel contract manufacturer accounted for more than 10% of apparel production, and the top five contract manufacturers in the aggregate accounted for approximately [removed: 47%] [added: 49%] of NIKE Brand apparel production.

During fiscal [removed: 2018,] [added: 2019,] Air Manufacturing Innovation, [added: a wholly-owned subsidiary,] with facilities near Beaverton, Oregon and in St. Charles, Missouri, as well as independent contractors in China and Vietnam, were our suppliers of the Air-Sole cushioning components used in footwear.

2019 FORM 10-K 1

2 NIKE, INC.

| TOTAL | 384 | |

| TOTAL | 768 | |

2019 FORM 10-K 3

4 NIKE, INC.

2019 FORM 10-K 5

6 NIKE, INC.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

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|  | | | Andrew Campion, Executive Vice President and Chief Financial Officer — Mr. Campion, 47, joined NIKE in 2007 as Vice President of Global Planning and Development, leading strategic and financial planning. He was appointed Chief Financial Officer of the NIKE Brand in 2010, responsible for leading all aspects of financial management for the Company's flagship brand. In 2014, he was appointed Senior Vice President, Strategy, Finance and Investor Relations in addition to his role as Chief Financial Officer of NIKE Brand. Mr. Campion assumed the role of Executive Vice President and Chief Financial Officer in August 2015. Prior to joining NIKE, he held leadership roles in strategic planning, mergers and acquisitions, financial planning and analysis, operations and planning, investor relations and tax at The Walt Disney Company from 1996 to 2007. |

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|  | | | Elliott Hill, President, Consumer and Marketplace — Mr. Hill, 55, 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 2018. |

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|  | | | Eric D. Sprunk, Chief Operating Officer — Mr. Sprunk, 55, joined NIKE in 1993. He was appointed Finance Director and General Manager of the Americas in 1994, Finance Director for NIKE Europe in 1995, Regional General Manager of NIKE Europe Footwear in 1998 and Vice President & General Manager of the Americas in 2000. Mr. Sprunk was appointed Vice President of Global Footwear in 2001, Vice President of Merchandising and Product in 2009 and Chief Operating Officer in 2013. Prior to joining NIKE, Mr. Sprunk was a certified public accountant with Price Waterhouse from 1987 to 1993. |

2019 FORM 10-K 7

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Financial information about geographic and segment operations appears in Note 17 — Operating Segments and Related Information of the accompanying Notes to the Consolidated Financial Statements.

In June 2017, we announced a new company alignment designed to allow NIKE to better serve the consumer personally, at scale.

| TOTAL | 392 | |

| TOTAL | 790 | |

Our current agreements with Sojitz America expire on May 31, 2019.

We own patents and have a license under other patents, which facilitate our use of “Air” technologies.

| Executive Officers of the Registrant |

Mark G.

Parker, Chairman, President and Chief Executive Officer — Mr. Parker, 62, was appointed President and Chief Executive Officer in January 2006 and named Chairman of the Board in June 2016.

He has been employed by NIKE since 1979 with primary responsibilities in product research, design and development, marketing and brand management.

Chris L.

Abston, Vice President and Corporate Controller — Mr. Abston, 55, joined NIKE in 2015 from Wal-Mart Stores, Inc., where he served as Vice President, Global Controls and Governance since February 2015.

Prior to that he was Vice President and Controller of Walmart International from February 2013 to January 2015, responsible for the oversight of international accounting and reporting, and Vice President and Assistant Controller of Wal-Mart Stores, Inc. from May 2011 to January 2013.

Before joining Wal-Mart, Mr. Abston spent 25 years in public accounting with Ernst & Young LLP, most recently leading its Strategic Growth Markets practice as a Partner in the Dallas office.

Andrew Campion, Executive Vice President and Chief Financial Officer — Mr. Campion, 46, joined NIKE in 2007 as Vice President of Global Planning and Development, leading strategic and financial planning.

He was appointed Chief Financial Officer of the NIKE Brand in 2010, responsible for leading all aspects of financial management for the Company’s flagship brand.

In 2014, he was appointed Senior Vice President, Strategy, Finance and Investor Relations in addition to his role as Chief Financial Officer of NIKE Brand.

Mr. Campion assumed the role of Executive Vice President and Chief Financial Officer in August 2015.

Prior to joining NIKE, he held leadership roles in strategic planning, mergers and acquisitions, financial planning and analysis, operations and planning, investor relations and tax at The Walt Disney Company from 1996 to 2007.

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.

Hilary K.

Krane, Executive Vice President, Chief Administrative Officer and General Counsel — Ms. Krane, 54, joined NIKE as Vice President and General Counsel in April 2010.

In 2011, her responsibilities expanded, and she became Vice President, General Counsel and Corporate Affairs.

Ms. Krane was appointed Executive Vice President, Chief Administrative Officer and General Counsel in 2013.

From 1996 to 2006, she was a Partner and Assistant General Counsel at PricewaterhouseCoopers LLP.

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.

John F.

Slusher, Executive Vice President, Global Sports Marketing — Mr. Slusher, 49, joined NIKE in 1998, with primary responsibilities in global sports marketing.

Prior to joining NIKE, Mr. Slusher was an attorney at the law firm of O’Melveny & Myers from 1995 to 1998.

Eric D.

Sprunk, Chief Operating Officer — Mr. Sprunk, 54, joined NIKE in 1993.

He was appointed Finance Director and General Manager of the Americas in 1994, Finance Director for NIKE Europe in 1995, Regional General Manager of NIKE Europe Footwear in 1998 and Vice President & General Manager of the Americas in 2000.

Mr. Sprunk was appointed Vice President of Global Footwear in 2001, Vice President of Merchandising and Product in 2009 and Chief Operating Officer in 2013.

FOR THE FISCAL YEAR ENDED [removed: May] [added: MAY] 31, [removed: 2018][added: 2019]

[removed: ][added: ]

| OREGON | [added: |] 93-0584541 | [added: |]

| (State or other jurisdiction of incorporation) | [added: |] (IRS Employer Identification No.) | [added: |]

| One Bowerman Drive, Beaverton, Oregon | [added: |] 97005-6453 | [added: |]

| (Address of principal executive offices) | [added: |] (Zip Code) | [added: |]

| (503) 671-6453 | | [added: | |]

[removed: (Registrant’s] [added: | (Registrant's] telephone number, including area code) [added: | | | |]

| SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: | | [added: | |]

| Class B Common Stock | [added: NKE | |] New York Stock Exchange |

| (Title of each class) | [added: (Trading symbol) | |] (Name of each exchange on which registered) |

| SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: | | | [added: |]

| NONE | | | [added: |]

| Indicate by check mark: | | | | | [added: | | | |] YES | NO | [added: |]

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

| • | if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. | | | | [added: | | | |] ¨ | þ | [added: |]

| • | whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | | | | [added: | | | |] þ | ¨ | [added: |]

| • | whether the registrant has submitted electronically [removed: and posted on its corporate Website, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files). | | | | [added: | | | |] þ | ¨ | [added: |]

| • | whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | | | | | | [added: | | | | |]

| | Large accelerated filer [added: |] þ | Accelerated filer [added: |] ¨ | Non-accelerated filer [added: |] ¨ | Smaller reporting company [added: |] ¨ | Emerging growth company [removed: ¨] | | [added: ¨ |]

| • | if an emerging growth company, if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | | | | [added: | | | |] ¨ | | [added: |]

| • | whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). | | | | [added: | | | |] ¨ | þ | [added: |]

| As of November 30, [removed: 2017,] [added: 2018,] the aggregate market values of the [removed: Registrant’s] [added: Registrant's] Common Stock held by non-affiliates were: | | | | [removed: |]

| As of July [removed: 20, 2018,] [added: 19, 2019,] the number of shares of the [removed: Registrant’s] [added: Registrant's] Common Stock outstanding were: | | | [removed: |]

Parts of [removed: Registrant’s] [added: Registrant's] Proxy Statement for the Annual Meeting of Shareholders to be held on September [removed: 20, 2018] [added: 19, 2019] are incorporated by reference into Part III of this Report.

| [removed: ITEM 1.] [added: [ITEM 1.](#s959972247509586382772CAE6006E7DD)] | [removed: [Business](#s8F1515FDF1E04962C75EE66924C5B89F)] [added: [Business](#s959972247509586382772CAE6006E7DD)] | [removed: [1](#s8F1515FDF1E04962C75EE66924C5B89F)] [added: [1](#s959972247509586382772CAE6006E7DD)] |

| | [Sales and [removed: Marketing](#s25AF80260E26FA15E7ACE66925383782)] [added: Marketing](#sB73FDD22B2A757D9BEA93A011DB1AEE2)] | [removed: [2](#s25AF80260E26FA15E7ACE66925383782)] [added: [2](#sB73FDD22B2A757D9BEA93A011DB1AEE2)] |

| | [United States [removed: Market](#sDFA1C9ADA92ABA2F28CAE66923461B26)] [added: Market](#s0388C03160275F00863E4246140C21EC)] | [removed: [2](#sDFA1C9ADA92ABA2F28CAE66923461B26)] [added: [2](#s0388C03160275F00863E4246140C21EC)] |

| | [International [removed: Markets](#s92AC5D68E8981BDC3E82E6692322751C)] [added: Markets](#sCCA29F8FD4A45032B2E76C2AA2A57744)] | [removed: [2](#s92AC5D68E8981BDC3E82E6692322751C)] [added: [3](#sCCA29F8FD4A45032B2E76C2AA2A57744)] |

| | [Significant [removed: Customer](#s6D58AC4EC845E867BCABE66925BF8862)] [added: Customer](#s8D0ADB54192059E7AA91871132AD9CF7)] | [removed: [3](#s6D58AC4EC845E867BCABE66925BF8862)] [added: [3](#s8D0ADB54192059E7AA91871132AD9CF7)] |

| | [Product Research, Design and [removed: Development](#sABA105ECE1038987837CE66926107BE8)] [added: Development](#sA5469D87ADFC5760858923CBD3398888)] | [removed: [3](#sABA105ECE1038987837CE66926107BE8)] [added: [4](#sA5469D87ADFC5760858923CBD3398888)] |

| | [International Operations and [removed: Trade](#s7464DECE41AD2DC781D2E66926664C6A)] [added: Trade](#s8F621CB5D1F0512EA9B017172B722985)] | [removed: [3](#s7464DECE41AD2DC781D2E66926664C6A)] [added: [5](#s8F621CB5D1F0512EA9B017172B722985)] |

| | [Trademarks and [removed: Patents](#sD5ED6AFE8039D1D46310E66926BA7A52)] [added: Patents](#s3EFB43079CEF5F848CDCFF69DF98B914)] | [removed: [4](#sD5ED6AFE8039D1D46310E66926BA7A52)] [added: [6](#s3EFB43079CEF5F848CDCFF69DF98B914)] |

| [removed: ITEM 1A.] [added: [ITEM 1A.](#s5BB2AAED853A56E09A89321695FEFB94)] | [Risk [removed: Factors](#sEB248FFA9F1A49C55B7DE669272C0AF1)] [added: Factors](#s5BB2AAED853A56E09A89321695FEFB94)] | [removed: [6](#sEB248FFA9F1A49C55B7DE669272C0AF1)] [added: [8](#s5BB2AAED853A56E09A89321695FEFB94)] |

| [removed: ITEM 1B.] [added: [ITEM 1B.](#s1297B48C477A5D6290D331559B38D7A7)] | [Unresolved Staff [removed: Comments](#s8070ACDDA8E74F123D06E669275F4B3C)] [added: Comments](#s1297B48C477A5D6290D331559B38D7A7)] | [removed: [15](#s8070ACDDA8E74F123D06E669275F4B3C)] [added: [19](#s1297B48C477A5D6290D331559B38D7A7)] |

| [removed: ITEM 2.] [added: [ITEM 2.](#s4852D85539895267B7DBBD4C6D083185)] | [removed: [Properties](#s8B3A18FE622CC0EFCF24E669277F61B5)] [added: [Properties](#s4852D85539895267B7DBBD4C6D083185)] | [removed: [15](#s8B3A18FE622CC0EFCF24E669277F61B5)] [added: [19](#s4852D85539895267B7DBBD4C6D083185)] |

| [removed: ITEM 3.] [added: [ITEM 3.](#sC5EC0DAA0CD3501A9F0C4E84B912B5FE)] | [Legal [removed: Proceedings](#sFC4A8701EFD572588EC0E66927B256AF)] [added: Proceedings](#sC5EC0DAA0CD3501A9F0C4E84B912B5FE)] | [removed: [15](#sFC4A8701EFD572588EC0E66927B256AF)] [added: [19](#sC5EC0DAA0CD3501A9F0C4E84B912B5FE)] |

| [removed: ITEM 4.] [added: [ITEM 4.](#sB15933EE587957508A13BE8D14484F68)] | [Mine Safety [removed: Disclosures](#sE8D359E217765FACD87DE66927D28A88)] [added: Disclosures](#sB15933EE587957508A13BE8D14484F68)] | [removed: [15](#sE8D359E217765FACD87DE66927D28A88)] [added: [19](#sB15933EE587957508A13BE8D14484F68)] |

| [removed: ITEM 5.] [added: [ITEM 5.](#s813BC58602755514A42FCBE261553C11)] | [Market for [removed: Registrant’s] [added: Registrant's] Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s2A242F04AAEFE9F339FDE6692827B41A)] [added: Securities](#s813BC58602755514A42FCBE261553C11)] | [removed: [16](#s2A242F04AAEFE9F339FDE6692827B41A)] [added: [20](#s813BC58602755514A42FCBE261553C11)] |

| [removed: ITEM 6.] [added: [ITEM 6.](#s1D0392843FB855B0863DA34733FDD2EB)] | [Selected Financial [removed: Data](#s9FEB0869174C9AE4DC69E669285C75A5)] [added: Data](#s1D0392843FB855B0863DA34733FDD2EB)] | [removed: [18](#s9FEB0869174C9AE4DC69E669285C75A5)] [added: [22](#s1D0392843FB855B0863DA34733FDD2EB)] |

10-K 1 nke-531201910k.htm 10-K

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| | | | |

| --- | --- | --- | --- |

| | | | |

| Class A | $ | 5,260,259,370 | |

| Class B | 94,690,612,760 | | |

| | $ | 99,950,872,130 | |

| Class A | 315,024,752 | |

| Class B | 1,251,863,621 | |

| | 1,566,888,373 | |

| [PART I](#s433C10FD974D57F1BEB56B45C4E3A2D0) | | [1](#s433C10FD974D57F1BEB56B45C4E3A2D0) |

| | [General](#sA8664C3C40EB59F48B6C7131CF887ECF) | [1](#sA8664C3C40EB59F48B6C7131CF887ECF) |

| | [Products](#sC0B420A70539540E9960A9793925622C) | [1](#sC0B420A70539540E9960A9793925622C) |

| | [Manufacturing](#s8207F0F69EA65B89BA7B54DABFC26091) | [4](#s8207F0F69EA65B89BA7B54DABFC26091) |

| | [Competition](#s5781BC85269A5D5C935E5CE6FA570AB4) | [5](#s5781BC85269A5D5C935E5CE6FA570AB4) |

| | [Employees](#s7E125EB7A6005CCBBD71AB76AA17F113) | [6](#s7E125EB7A6005CCBBD71AB76AA17F113) |

| | [Information about our Executive Officers](#s17D566AC9D945D58A818EAB88AB7D7D4) | [7](#s17D566AC9D945D58A818EAB88AB7D7D4) |

| [PART II](#s967F66F1F8ED59FD90F868114069DB31) | | [20](#s967F66F1F8ED59FD90F868114069DB31) |

| [PART IV](#s05FE93D2960E5FDFB8BC00A8CF55F414) | | [87](#s05FE93D2960E5FDFB8BC00A8CF55F414) |

| | [Signatures](#sE52CF6AE6F485E2ABFFAEDE3FF4BEC8C) | [92](#sE52CF6AE6F485E2ABFFAEDE3FF4BEC8C) |

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

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| --- | --- | --- | --- | --- | --- | --- |

| • | if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. | | | | þ | |

| | | | | |

| --- | --- | --- | --- | --- |

| | 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) |

| | [Executive Officers of the Registrant](#s1AC40DF7C579032B38B3E669270DD9CE) | [5](#s1AC40DF7C579032B38B3E669270DD9CE) |

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

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

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

The NIKE World Campus, owned by NIKE and located near Beaverton, Oregon, USA, is 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: 11,200] [added: 12,600] employees engaged in management, research, design, development, marketing, finance and other administrative functions serving nearly all of our [removed: divisions.][added: segments.]

In the United States, NIKE has [removed: seven] [added: six] significant distribution centers.

[removed: Five] [added: Four] are located in Memphis, Tennessee, two of which are owned and [removed: three] [added: two] of which are leased.

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

We lease [removed: 1,181] [added: 1,147] retail stores worldwide, which primarily consist of factory stores.

See “United States Market” and “International Markets” in Part I of this [removed: Report.][added: Report for additional information regarding our retail stores.]

Our leases expire at various dates through the year [removed: 2035.][added: 2043.]

We also lease various office facilities in the surrounding metropolitan area.

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

2019 FORM 10-K 19

At July [removed: 20, 2018,] [added: 19, 2019,] there were [removed: 22,271] [added: 23,305] holders of record of [removed: our] [added: NIKE's] Class B Common Stock and [removed: 15] [added: 13] holders of record of [removed: our] [added: NIKE's] Class A Common Stock.

Refer to Selected Quarterly Financial Data in Part II, Item 6 of this Report for [removed: 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 for] dividends declared on the Class A and Class B Common Stock.

[removed: In November 2015,] [added: During] the [removed: Board] [added: third quarter] of [removed: Directors approved a] [added: fiscal 2019, the Company completed the previous] four-year, $12 billion share repurchase [removed: program.][added: program authorized by the Board of Directors in November 2015.]

As of May 31, [removed: 2018,] [added: 2019,] the Company had repurchased [removed: 149.4] [added: 11.6] million shares at an average price of [removed: $58.25] [added: $84.72] per share for a total approximate cost of [removed: $8.7 billion] [added: $986 million] under this [added: new] program.

The following table presents a summary of share repurchases made [removed: by NIKE under this program] during the quarter ended May 31, [removed: 2018:][added: 2019:]

| [removed: Period | | Total Number of Shares Purchased | | | Average Price Paid per Share |] [added: PERIOD] | [added: TOTAL NUMBER OF SHARES PURCHASED] | | [removed: Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs] [added: AVERAGE PRICE PAID PER SHARE] | | | [removed: Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (In millions)] [added: APPROXIMATE DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS (IN MILLIONS)] | | |

[removed: | Performance Graph |][added: PERFORMANCE GRAPH]

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

[removed: ][added: |  |]

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

Throughout this program the Company purchased a total of

192.1 million shares at an average price of $62.47 per share.

Upon completion of this program, the Company began purchasing shares under the new four-year, $15 billion share repurchase program authorized by the Board of Directors in June 2018.

All share repurchases were made under NIKE's publicly announced program and there are no other programs under which the Company repurchases shares.

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| March 1 — March 31, 2019 | 2,939,869 | | $ | 85.33 | | $ | 14,660 | |

| April 1 — April 30, 2019 | 3,303,884 | | $ | 86.53 | | $ | 14,374 | |

| May 1 — May 31, 2019 | 4,346,128 | | $ | 82.85 | | $ | 14,014 | |

| | 10,589,881 | | $ | 84.69 | | | | |

20 NIKE, INC.

The graph assumes an investment of $100 on May 31, 2014 in each of the indices and our Class B Common Stock.

2019 FORM 10-K 21

The Company intends to use excess cash, future cash from operations and/or proceeds from debt to fund repurchases.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 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 | | | | | |

| |

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

| (In millions, except per share data and financial ratios) | [removed: Financial History | | | |] [added: FINANCIAL HISTORY] | | | | | | | | | | | | | | |

| [removed: 2018] [added: 2019] | | | [added: 2018] | [removed: 2017] | | [added: 2017] | | [removed: 2016] | [added: 2016] | | | 2015 | | | | [removed: 2014 | | | |]

| Year Ended May 31, | | | | | | | | | | | | | | | | [removed: | | | |]

| Revenues | $ | [removed: 36,397 |] [added: 39,117] | | $ | [removed: 34,350 |] [added: 36,397] | | $ | [removed: 32,376 |] [added: 34,350] | | $ | [removed: 30,601 |] [added: 32,376] | | $ | [removed: 27,799] [added: 30,601] | |

| Gross profit | [removed: 15,956] [added: 17,474] | | | [added: 15,956] | [removed: 15,312] | | [added: 15,312] | | [removed: 14,971] | [added: 14,971] | | | 14,067 | | | [removed: | 12,446 | | |]

| Gross margin | [removed: 43.8] [added: 44.7] | | % | [removed: | 44.6] [added: 43.8] | | % | [removed: | 46.2] [added: 44.6] | | % | [removed: | 46.0] [added: 46.2] | | % | [removed: | 44.8] [added: 46.0] | | % |

| Net [removed: income] [added: income(1)] | [removed: 1,933] [added: 4,029] | | | [added: 1,933] | [removed: 4,240] | | [added: 4,240] | | [removed: 3,760] | [added: 3,760] | | | 3,273 | | | [removed: | 2,693 | | |]

| Earnings per common [removed: share: | | | |] [added: share:(1)] | | | | | | | | | | | | | | | |

| Basic | [removed: 1.19] [added: 2.55] | | | [added: 1.19] | [removed: 2.56] | | [added: 2.56] | | [removed: 2.21] | [added: 2.21] | | | 1.90 | | | [removed: | 1.52 | | |]

| Diluted | [removed: 1.17] [added: 2.49] | | | [added: 1.17] | [removed: 2.51] | | [added: 2.51] | | [removed: 2.16] | [added: 2.16] | | | 1.85 | | | [removed: | 1.49 | | |]

| Weighted average common shares outstanding | [removed: 1,623.8] [added: 1,579.7] | | | [added: 1,623.8] | [removed: 1,657.8] | | [added: 1,657.8] | | [removed: 1,697.9] | [added: 1,697.9] | | | 1,723.5 | | | [removed: | 1,766.7 | | |]

| Diluted weighted average common shares outstanding | [removed: 1,659.1] [added: 1,618.4] | | | [added: 1,659.1] | [removed: 1,692.0] | | [added: 1,692.0] | | [removed: 1,742.5] | [added: 1,742.5] | | | 1,768.8 | | | [removed: | 1,811.6 | | |]

| Cash dividends declared per common share | [removed: 0.78] [added: 0.86] | | | [added: 0.78] | [removed: 0.70] | | [added: 0.70] | | [removed: 0.62] | [added: 0.62] | | | 0.54 | | | [removed: | 0.47 | | |]

| Cash [removed: flow from operations(1)] [added: provided by operations] | [removed: 4,955] [added: 5,903] | | | [added: 4,955] | [removed: 3,846] | | [added: 3,846] | | [removed: 3,399] | [added: 3,399] | | | 4,906 | | | [removed: | 3,158 | | |]

| At May 31, | | | | | | | | | | | | | | | | [removed: | | | |]

| Cash and equivalents | $ | [removed: 4,249 |] [added: 4,466] | | $ | [removed: 3,808 |] [added: 4,249] | | $ | [removed: 3,138 |] [added: 3,808] | | $ | [removed: 3,852 |] [added: 3,138] | | $ | [removed: 2,220] [added: 3,852] | |

| Short-term investments | [removed: 996] [added: 197] | | | [added: 996] | [removed: 2,371] | | [added: 2,371] | | [removed: 2,319] | [added: 2,319] | | | 2,072 | | | [removed: | 2,922 | | |]

| Inventories | [removed: 5,261] [added: 5,622] | | | [added: 5,261] | [removed: 5,055] | | [added: 5,055] | | [removed: 4,838] | [added: 4,838] | | | 4,337 | | | [removed: | 3,947 | | |]

| Working capital | [removed: 9,094 | | | | 10,587] [added: 8,659] | | | [added: 9,094] | [removed: 9,667] | | [added: 10,587] | | [removed: 9,225] | [added: 9,667] | | | [removed: 8,319] [added: 9,255] | | |

| Total [removed: assets] [added: assets(2)(3)] | [removed: 22,536] [added: 23,717] | | | [added: 22,536] | [removed: 23,259] | | [added: 23,259] | | [removed: 21,379] | [added: 21,379] | | | 21,590 | | | [removed: | 18,579 | | |]

| Long-term debt | [removed: 3,468] [added: 3,464] | | | [added: 3,468] | [removed: 3,471] | | [added: 3,471] | | [removed: 1,993] | [added: 1,993] | | | 1,072 | | | [removed: | 1,191 | | |]

| Capital lease obligations | [removed: 75] [added: 60] | | | [added: 75] | [removed: 27] | | [added: 27] | | [removed: 15] | [added: 15] | | | 5 | | | [removed: | 74 | | |]

| Redeemable preferred stock | 0.3 | | | [removed: |] 0.3 | | | [removed: |] 0.3 | | | [removed: |] 0.3 | | | [removed: |] 0.3 | | |

| [removed: Shareholders’ equity] [added: Shareholders' equity(3)] | [removed: 9,812] [added: 9,040] | | | [added: 9,812] | [removed: 12,407] | | [added: 12,407] | | [removed: 12,258] | [added: 12,258] | | | 12,707 | | | [removed: | 10,824 | | |]

| Market capitalization | [removed: 114,983] [added: 120,951] | | | [added: 114,983] | [removed: 87,084] | | [added: 87,084] | | [removed: 92,867] | [added: 92,867] | | | 87,044 | | | [removed: | 66,921 | | |]

| Financial Ratios: | | | | | | | | | | | | | | | | [removed: | | | |]

| Return on [removed: equity(2)] [added: equity(1)(3)] | [removed: 17.4] [added: 42.7] | | % | [removed: | 34.4] [added: 17.4] | | % | [removed: | 30.1] [added: 34.4] | | % | [removed: | 27.8] [added: 30.1] | | % | [removed: | 24.6] [added: 27.8] | | % |

| Return on [removed: assets(2)] [added: assets(1)(2)(3)] | [removed: 8.4] [added: 17.4] | | % | [removed: | 19.0] [added: 8.4] | | % | [removed: | 17.5] [added: 19.0] | | % | [removed: | 16.3] [added: 17.5] | | % | [removed: | 14.9] [added: 16.3] | | % |

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

| Current ratio at May 31 | [removed: 2.5] [added: 2.1] | | | [added: 2.5] | [removed: 2.9] | | [added: 2.9] | | [removed: 2.8] | [added: 2.8] | | | 2.5 | | | [removed: | 2.7 | | |]

| Price/Earnings ratio at May [removed: 31(2)] [added: 31(1)] | [removed: 61.4] [added: 31.0] | | | [added: 61.4] | [removed: 21.1] | | [added: 21.1] | | [removed: 25.6] | [added: 25.6] | | | 27.5 | | | [removed: | 25.9 | | |]

| [removed: (2)] [added: (1)] | [removed: Certain fiscal] [added: Fiscal] 2018 [removed: financial ratios reflect] [added: reflects] the impact [added: from the enactment] of the Tax Cuts and Jobs Act. Refer to Note 9 — Income Taxes [added: in the accompanying Notes to the Consolidated Financial Statements] for additional information. |

[removed: | Selected Quarterly Financial Data |][added: SELECTED QUARTERLY FINANCIAL DATA]

| [removed: (Unaudited) (In millions, except per share data) | | 1st Quarter | | |] [added: (UNAUDITED)] | [added: 1ST QUARTER] | | | | [removed: 2nd Quarter] | | | [added: 2ND QUARTER] | | | | | [removed: 3rd Quarter] | | [added: 3RD QUARTER] | | | | | | [removed: 4th Quarter] | [added: 4TH QUARTER] | | | | | |

| Gross profit | [added: 4,397] | [removed: 3,962] | | [added: 3,962] | | [removed: 4,123] | | [added: 4,105] | | [removed: 3,678] | [added: 3,678] | | | [removed: 3,616] | [added: 4,339] | | | 3,938 | | | | [removed: 3,750 |] [added: 4,633] | | | 4,378 | | | [removed: | 3,823 | | |]

| Gross margin | [added: 44.2] | [added: | % |] 43.7 | | % | | [removed: 45.5] [added: 43.8] | | % | [removed: |] 43.0 | | % | | [removed: 44.2 | |] [added: 45.1] % | | [removed: 43.8] | [removed: |] [added: 43.8] % | | [removed: 44.5] | | [removed: % | | 44.7] [added: 45.5] | | % | [removed: | 44.1] [added: 44.7] | | % |

| Net income (loss) | [added: 1,092] | [removed: 950] | | [added: 950] | | [removed: 1,249] | | [added: 847] | | [removed: 767] | [added: 767] | | | [removed: 842] | [added: 1,101] | | | (921 | | ) | | [removed: 1,141 |] [added: 989] | | | 1,137 | | | [removed: | 1,008 | | |]

| Earnings (loss) per common share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | |]

| Basic | [added: 0.69] | [removed: 0.58] | | [added: 0.58] | | [removed: 0.75] | | [added: 0.54] | | [removed: 0.47] | [added: 0.47] | | | [removed: 0.51] | [added: 0.70] | | | (0.57 | | ) | | [removed: 0.69 |] [added: 0.63] | | | 0.71 | | | [removed: | 0.61 | | |]

| Diluted | [added: 0.67] | [removed: 0.57] | | [added: 0.57] | | [removed: 0.73] | | [added: 0.52] | | [removed: 0.46] | [added: 0.46] | | | [removed: 0.50] | [added: 0.68] | | | (0.57 | | ) | | [removed: 0.68 |] [added: 0.62] | | | 0.69 | | | [removed: | 0.60 | | |]

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| (2) | Fiscal 2019 reflects the impact from the adoption of Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). Refer to Note 1 — Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements for additional information. |

| (3) | Fiscal 2019 reflects the impact from the adoption of ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. Refer to Note 1 — Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements for additional information. |

22 NIKE, INC.

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| (In millions, except per share data) | 2019 | | | 2018 | | | | 2019 | | | 2018 | | | | 2019 | | | 2018(1) | | | | 2019 | | | 2018 | | |

| Revenues | $ | 9,948 | | $ | 9,070 | | | $ | 9,374 | | $ | 8,554 | | | $ | 9,611 | | $ | 8,984 | | | $ | 10,184 | | $ | 9,789 | |

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2019 FORM 10-K 23

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| Price range of common stock: | | | | | | | | | | | | | | | | | | | |

| High | 73.49 | | | | 60.33 | | | | 68.19 | | | | 52.75 | | | | 40.13 | | |

| Low | 50.35 | | | | 49.01 | | | | 47.25 | | | | 36.57 | | | | 29.56 | | |

| Year-end stock price | 71.80 | | | | 52.99 | | | | 55.22 | | | | 50.84 | | | | 38.46 | | |

| (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. |

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| 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 | |

| Price range of common stock: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 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 | | |

[removed: | Management’s Annual Report on Internal Control Over Financial Reporting |][added: MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING]

Because of its inherent limitations, internal control over financial reporting may not prevent or detect [removed: every misstatement and instance of fraud.][added: misstatements.]

Based on the results of our evaluation, our management concluded that our internal control over financial reporting was effective as of May 31, [removed: 2018.][added: 2019.]

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: 2018,] [added: 2019,] as stated in their report herein.

| Chairman, President and Chief Executive Officer | [added: Executive Vice President and] Chief Financial Officer |

[removed: |] Report of Independent Registered Public Accounting Firm [removed: |]

We have audited the accompanying consolidated balance sheets of NIKE, Inc. and its subsidiaries [added: (the “Company”)] as of May 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended May 31, [removed: 2018,] [added: 2019,] including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We also have audited the [removed: Company’s] [added: Company's] internal control over financial reporting as of May 31, [removed: 2018,] [added: 2019,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of May 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the three years in the period ended May 31, [removed: 2018] [added: 2019] 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: 2018,] [added: 2019,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting [removed: Principle][added: Principles]

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for [added: revenue from contracts with customers and the manner in which it accounts for income taxes related to intra-entity transfers other than inventory as of June 1, 2018 and the manner in which it accounts for] share-based payment awards to employees as of June 1, 2017.

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

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) [removed: (“PCAOB”)] [added: (PCAOB)] and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

[removed: | NIKE, Inc. Consolidated Statements of Income |][added: CONSOLIDATED STATEMENTS OF INCOME]

| | [removed: | Year Ended May] [added: YEAR ENDED MAY] 31, | | | | | | | | | [removed: | |]

| (In millions, except per share data) | [removed: | 2018 | |] [added: 2019] | | [removed: 2017] | [added: 2018] | | | [removed: 2016] [added: 2017] | | |