NIKE (NKE) 10-K risk factor changes: FY2020 vs FY2019

[removed: Special] [added: Special] Note Regarding Forward-Looking Statements and Analyst [removed: Reports][added: Reports]

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: [added: health epidemics, pandemics and similar outbreaks, including the COVID-19 pandemic;] international, national and local [removed: general] [added: political, civil,] 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 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 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 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 [removed: impact of 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 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 [removed: personnel;] [added: personnel or our corporate culture, values or purpose;] 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.

[removed: Our products] [added: Our products, services and experiences] face intense [removed: competition.][added: competition.]

We compete internationally with a significant number of athletic and leisure footwear companies, athletic and leisure apparel companies, sports equipment [removed: companies] [added: companies, private labels] and large companies [removed: having] [added: that have] diversified lines of athletic and leisure footwear, apparel and equipment.

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

Product offerings, technologies, marketing expenditures (including expenditures for advertising and endorsements), pricing, costs of production, customer service, digital commerce [removed: platforms] [added: platforms, digital services] and [added: experiences and] social media presence are areas of intense competition.

This, in addition to [added: ongoing] rapid changes in [removed: technology] [added: technology, a reduction in barriers to the creation of new footwear] and [added: apparel companies and] consumer preferences in the markets for athletic and leisure footwear and [removed: apparel and] [added: apparel,] athletic equipment, [added: services and experiences,] constitute significant risk factors in our operations.

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

If we do not adequately and timely anticipate and respond to our competitors, our costs may [removed: increase or the consumer] [added: increase,] demand for our products may [removed: decline significantly.][added: decline, possibly significantly, or we may need to reduce wholesale or suggested retail prices for our products.]

[removed: Failure] [added: Failure] to maintain our [removed: reputation and] [added: reputation,] brand image [added: and culture] could negatively impact our [removed: business.][added: business.]

In addition, our success in maintaining, extending and expanding our brand image depends on our ability to adapt to a rapidly changing media environment, including our increasing reliance on social media and digital dissemination of advertising [removed: campaigns.][added: campaigns on our digital platforms and through our digital experiences.]

Our brand value also depends on our ability to maintain a positive consumer perception of our corporate [removed: integrity] [added: integrity, purpose] and brand culture.

Negative claims or publicity involving us, our [added: culture and values, our] products, [added: services and experiences,] 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.

Negative publicity relating to a violation or an alleged violation of policies or laws by such suppliers could damage our brand [removed: image.][added: image and diminish consumer trust in our brand.]

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

[removed: If] [added: If] we are unable to anticipate consumer preferences and develop new products, we may not be able to maintain or increase our revenues and [removed: profits.][added: profits.]

[removed: We] [added: We] rely on technical innovation and high-quality products to compete in the market for our [removed: products.][added: products.]

We rely upon specialists in the fields of biomechanics, chemistry, exercise physiology, engineering, [added: digital technologies,] industrial design, sustainability and related fields, as well as research committees and advisory boards made up of athletes, coaches, trainers, equipment managers, orthopedists, podiatrists and other experts to develop and test cutting-edge performance products.

While we strive to produce products that help to enhance athletic performance, reduce injury and maximize comfort, if we fail to introduce technical innovation in our products, consumer demand for our products could decline, and if we experience problems with the quality of our products, we may incur substantial expense to remedy the [removed: problems.][added: problems and loss of consumer confidence.]

[removed: Failure] [added: Failure] to continue to obtain or maintain high-quality endorsers of our products could harm our [removed: business.][added: business.]

[added: 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, actions taken [added: or statements made] by athletes, teams or leagues, or other endorsers, associated with our products that harm the reputations of those athletes, teams or leagues, or endorsers, could also seriously harm our brand image with consumers and, as a result, could have an adverse effect on our sales and financial condition.

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

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

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 [removed: increases our] [added: creates] exposure to the volatility of global economic conditions, including fluctuations in inflation and foreign currency exchange rates.

Additionally, there has been, and may continue to be, volatility in currency exchange rates as a result of the United Kingdom's [removed: impending] exit from the European Union, commonly referred to as “Brexit” or new or proposed U.S. policy changes that impact the U.S. Dollar value relative to other international currencies.

[removed: Global] [added: Global] economic conditions could have a material adverse effect on our business, operating results and financial [removed: condition.][added: condition.]

The uncertain state of the global economy continues to impact businesses around the [removed: world, most acutely in emerging markets and developing economies.][added: world.]

If global economic and financial market conditions [added: further deteriorate or] do not [removed: improve or deteriorate,] [added: improve,] the following factors could have a material adverse effect on our business, operating results and financial condition:

| • | [removed: Slower] [added: Our sales are impacted by discretionary spending by consumers. Declines in] consumer spending may result in reduced demand for our products, [added: increased inventories,] reduced orders from retailers for our products, order cancellations, lower revenues, higher [removed: discounts, increased inventories] [added: discounts] and lower gross margins. |

| • | We conduct transactions in various currencies, which [removed: increases our] [added: creates] 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 [removed: currencies, including in response to certain policies advocated or implemented by the U.S. presidential administration,] [added: currencies] could have a significant impact on our reported operating results and financial condition. |

[removed: | • |] If contract manufacturers of our products or other participants in our supply chain experience difficulty obtaining financing in the capital and credit markets to purchase raw materials or to finance capital equipment and other general working capital needs, it may result in delays or non-delivery of shipments of our products. [removed: |]

[removed: Our] [added: Our] business is affected by seasonality, which could result in fluctuations in our operating [removed: results.][added: results.]

However, the mix of product sales may vary considerably from time to time as a result of changes in seasonal [added: or COVID-19 related cancellations or postponements] and geographic demand for particular types of footwear, apparel and equipment and in connection with the timing of significant sporting events, such as the NBA Finals, Olympics or the World Cup, among others.

This seasonality, along with other factors that are beyond our control, including [removed: general] economic conditions, changes in consumer preferences, weather conditions, [added: outbreaks of disease, social or political unrest,] availability of import quotas, transportation disruptions and currency exchange rate fluctuations, could adversely affect our business and cause our results of operations to fluctuate.

[removed: We] [added: We] may be adversely affected by the financial health of our [removed: customers.][added: customers.]

[removed: Failure] [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 [removed: business.][added: business.]

[removed: Consolidation] [added: Consolidation] of retailers or concentration of retail market share among a few retailers may increase and concentrate our credit risk and impair our ability to sell [removed: products.][added: products.]

The athletic footwear, apparel and equipment retail markets in some countries are dominated by a few large athletic footwear, apparel and equipment retailers with many [removed: stores.][added: stores and accelerating digital commerce capabilities.]

In addition, increasing market share concentration among [removed: one or] a few retailers in a particular country or region increases the risk that if any one of them substantially reduces their purchases of our products, we may be unable to find [removed: a] sufficient [removed: number of other] retail outlets for our products to sustain the same level of sales and revenues.

Risk Factors

Our financial condition and results of operations have been and are expected to continue to be adversely affected by the coronavirus pandemic.

A novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by the World Health Organization.

To date, this pandemic and preventative measures taken to contain or mitigate the pandemic have caused, and are expected to continue to cause, business slowdown or shutdown in affected areas and significant disruption in the

2020 FORM 10-K 8

financial markets, both globally and in the United States.

These events have led to and could continue to lead to a decline in discretionary spending by consumers, and in turn materially impact, our business, sales, financial condition and results of operations.

We have experienced a negative impact on our sales, operations and financial results, and we cannot predict the degree to, or the time period over, which our sales, operations and financial results will continue to be affected by the pandemic and preventative measures.

Risks presented by the COVID-19 pandemic include, but are not limited to:

| • | Deterioration in economic conditions in the United States and globally; |

| • | Reduced consumer demand for our products as consumers seek to reduce or delay discretionary spending in response to the impacts of COVID-19, including as a result of a rise in unemployment rates and diminished consumer confidence; |

| • | Cancellation or postponement of sports seasons and sporting events in multiple countries, including in the United States, and bans on large public gatherings, which have reduced consumer spending on our products and could impact the effectiveness of our arrangements with key endorsers; |

| • | Decreased retail traffic as a result of store closures, reduced operating hours, social distancing restrictions and/or changes in consumer behavior; |

| • | The risk that any safety protocols in NIKE-owned or affiliated facilities will not be effective or not be perceived as effective, or that any virus-related illnesses will be linked or alleged to be linked to such facilities, whether accurate or not; |

| • | Incremental costs resulting from the adoption of preventative measures, including providing facial coverings and hand sanitizer, rearranging operations to follow social distancing protocols, conducting temperature checks and undertaking regular and thorough disinfecting of surfaces; |

| • | Disruption to our distribution centers and our third-party manufacturing partners and other vendors, including through the effects of facility closures, reductions in operating hours, labor shortages, and real time changes in operating procedures, including for additional cleaning and disinfection procedures; |

| | |

| --- | --- |

| • | Bankruptcies or other financial difficulties facing our wholesale customers, which could cause them to be unable to make or delay making payments to us, or result in cancellation or reduction of their orders; |

| | |

| --- | --- |

| • | Operational risk, including but not limited to cybersecurity risks, as a result of extended workforce remote work arrangements, and restrictions on employee travel; |

| | |

| --- | --- |

| • | Impacts to our distribution and logistics providers' ability to operate or increases in their operating costs. These supply chain effects may have an adverse effect on our ability to meet consumer demand, including digital demand, and could result in an increase in our costs of production and distribution, including increased freight and logistics costs and other expenses; and |

| | |

| --- | --- |

| • | Significant disruption of and volatility in global financial markets, which could have a negative impact on our ability to access capital in the future. |

We continue to monitor the latest developments regarding the pandemic and have made certain assumptions regarding the pandemic for purposes of our operating, financial and tax planning projections, including assumptions regarding the duration and severity of the pandemic and the global macroeconomic impacts of the pandemic.

However, we are unable to accurately predict the extent of the impact of the pandemic on our business, operations and financial condition due to the uncertainty of future developments.

In particular, we believe the ultimate impacts on our business, results of operations, cash flows and financial condition will depend on, among other things, the further spread and duration of COVID-19, the requirements to take action to help limit the spread of the illness, the availability, safety and efficacy of a vaccine and treatments for COVID-19 and the economic impacts of the pandemic.

Even in those regions where we are beginning to experience business recovery should those regions fail to fully contain COVID-19 or suffer a COVID-19 relapse, those markets may not recover as quickly or at all, which could have a material adverse effect on our business and results of operations.

The pandemic may also affect our business, operations or financial condition in a manner that is not presently known to us or that we currently do not consider to present significant risks.

In addition, the impact of COVID-19 may also exacerbate other risks discussed in this Item 1A.

Risk Factors, any of which could have a material effect on us.

| | |

| --- | --- |

| | |

| --- | --- |

2020 FORM 10-K 9

8 NIKE, INC.

If we are unable to maintain our current associations with professional

2019 FORM 10-K 9

10 NIKE, INC.

These retailers have in the past increased their market share by expanding through acquisitions and construction of additional stores.

These situations concentrate our credit risk with a relatively small number of retailers, and, if any of these retailers were to experience a shortage of liquidity or consumer behavior shifts away from traditional retail, it would increase the risk that their outstanding payables to us may not be paid.

2019 FORM 10-K 11

Hackers and data thieves are increasingly sophisticated and operate social

12 NIKE, INC.

2019 FORM 10-K 13

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.

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.

14 NIKE, INC.

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

2019 FORM 10-K 15

In addition, Sojitz America performs significant import-export financing services for the Company.

During fiscal 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.

Such a disruption could result in canceled orders that would adversely affect sales and profitability.

16 NIKE, INC.

economics, demographics and other factors.

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

The sale or prospect of a sale of a substantial

2019 FORM 10-K 17

18 NIKE, INC.

[removed: Through] [added: Since fiscal 2018, through] the Consumer Direct [removed: Offense, we are focusing on] [added: Offense and] our Triple Double strategy, [removed: with the objective of] [added: we have focused on] doubling the impact of innovation, increasing our speed [added: and agility] to market and growing our direct connections with consumers.

As [removed: a result of the execution of this strategy,] [added: such,] our long-term financial goals [removed: through fiscal 2023,] on average, per year, [added: remain the same and] are [removed: as follows:][added: outlined below:]

[removed: On a currency-neutral basis,] NIKE [removed: Brand revenues] [added: Direct] grew [removed: 11%,] [added: 8% on a currency-neutral basis] driven by [added: 49%] growth [removed: across all geographies, NIKE Direct and wholesale, nearly] [added: in digital, with] all [removed: key categories and double-digit growth across footwear and apparel.][added: geographies growing strong double digits, while wholesale revenues declined 7%.]

Revenues for Converse [removed: increased 1% and] [added: declined] 3% [added: and 1%,] on a reported and currency-neutral basis, respectively, [removed: primarily driven by double-digit] [added: as revenue] growth in Asia [removed: and digital, which] was [removed: partially] [added: more than] offset by declines in [removed: the U.S.] [added: North America, Europe] and [removed: Europe.][added: licensee markets.]

These [removed: benefits] [added: decreases] were partially offset by higher [removed: product] [added: digital brand marketing] costs.

[removed: Selling and administrative] [added: The increase in operating overhead] expense was [added: primarily driven by] higher [removed: as a percent of revenues, reflecting] [added: wage-related and administrative costs resulting from] investments in data and analytics capabilities, digital commerce platforms and [removed: an initial] [added: our continued] investment in a new enterprise resource planning [removed: tool] [added: tool, all of which are in an effort] to accelerate our end-to-end digital transformation.

While foreign currency markets remain volatile, in part due to geopolitical dynamics leading to a stronger U.S. Dollar, we continue to see opportunities to drive future growth and [removed: 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.][added: profitability.]

[removed: 24 NIKE, INC.][added: | NIKE, Inc. Revenues: | | | | | | | | | | | | | | | | | |]

For discussion related to the results of operations and changes in financial condition for fiscal [removed: 2018] [added: 2019] compared to fiscal [removed: 2017] [added: 2018] refer to Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal [removed: 2018] [added: 2019] Form 10-K, which was filed with the United States Securities and Exchange Commission on July [removed: 25, 2018.][added: 23, 2019.]

[removed: USE] [added: USE] OF NON-GAAP FINANCIAL [removed: MEASURES][added: MEASURES]

Throughout this Annual Report on Form 10-K, we discuss non-GAAP financial measures, including references to wholesale equivalent [removed: revenues and] [added: revenues,] currency-neutral revenues, [added: as well as Total NIKE Brand earnings before interest and taxes (EBIT) and Total NIKE, Inc. EBIT,] which should be considered in addition to, and not in lieu of, the financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

However, references to wholesale equivalent [removed: revenues and] [added: revenues,] currency-neutral revenues [added: and EBIT] should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled non-GAAP measures used by other companies.

[removed: RESULTS] [added: RESULTS] OF [removed: OPERATIONS][added: OPERATIONS]

| [removed: (Dollars] [added: *(Dollars] in millions, except per share [removed: data)] [added: data)*] | [removed: FISCAL 2019] [added: FISCAL 2020] | | | [removed: FISCAL 2018(1)] [added: FISCAL 2019] | | | [removed: % CHANGE] [added: % CHANGE] | | [removed: FISCAL 2017] [added: FISCAL 2018] | | | [removed: % CHANGE] [added: % CHANGE] | |

| [removed: Revenues] [added: Revenues(1)] | $ | [removed: 39,117] [added: 37,403] | | $ | [removed: 36,397] [added: 39,117] | | [removed: 7] [added: \-4] | % | $ | [removed: 34,350] [added: 36,397] | | [removed: 6] [added: 7] | % |

| Cost of sales | [removed: 21,643] [added: 21,162] | | | [removed: 20,441] [added: 21,643] | | | [removed: 6] [added: \-2] | % | [removed: 19,038] [added: 20,441] | | | [removed: 7] [added: 6] | % |

| Gross profit | [removed: 17,474] [added: 16,241] | | | [removed: 15,956] [added: 17,474] | | | [removed: 10] [added: \-7] | % | [removed: 15,312] [added: 15,956] | | | [removed: 4] [added: 10] | % |

| [removed: Gross margin] [added: *Gross margin(1)*] | [removed: 44.7] [added: *43.4*] | | [removed: %] [added: *%*] | [removed: 43.8] [added: *44.7*] | | [removed: %] [added: *%*] | | | [removed: 44.6] [added: *43.8*] | | [removed: %] [added: *%*] | | |

| Demand creation expense | [removed: 3,753] [added: 3,592] | | | [removed: 3,577] [added: 3,753] | | | [removed: 5] [added: \-4] | % | [removed: 3,341] [added: 3,577] | | | [removed: 7] [added: 5] | % |

| Operating overhead expense | [removed: 8,949] [added: 9,534] | | | [removed: 7,934] [added: 8,949] | | | [removed: 13] [added: 7] | % | [removed: 7,222] [added: 7,934] | | | [removed: 10] [added: 13] | % |

| Total selling and administrative expense | [removed: 12,702] [added: 13,126] | | | [removed: 11,511] [added: 12,702] | | | [removed: 10] [added: 3] | % | [removed: 10,563] [added: 11,511] | | | [removed: 9] [added: 10] | % |

| [removed: %] [added: *%] of [removed: revenues] [added: revenues*] | [removed: 32.5] [added: *35.1*] | | [removed: %] [added: *%*] | [removed: 31.6] [added: *32.5*] | | [removed: %] [added: *%*] | | | [removed: 30.8] [added: *31.6*] | | [removed: %] [added: *%*] | | |

| Interest expense (income), net | [removed: 49] [added: 89] | | | [removed: 54] [added: 49] | | | — | | [removed: 59] [added: 54] | | | — | |

[removed: | Other (income) expense, net | (78 | | ) | 66 | | | — | | (196 | | ) | — | |][added: OTHER (INCOME) EXPENSE, NET]

| Income before income taxes | [removed: 4,801] [added: 2,887] | | | [removed: 4,325] [added: 4,801] | | | [removed: 11] [added: \-40] | % | [removed: 4,886] [added: 4,325] | | | [removed: \-11] [added: 11] | % |

| Income tax [removed: expense] [added: expense(2)] | [removed: 772] [added: 348] | | | [removed: 2,392] [added: 772] | | | [removed: \-68] [added: \-55] | % | [removed: 646] [added: 2,392] | | | [removed: 270] [added: \-68] | % |

| [removed: Effective] [added: *Effective] tax [removed: rate] [added: rate*] | [removed: 16.1] [added: *12.1*] | | [removed: %] [added: *%*] | [removed: 55.3] [added: *16.1*] | | [removed: %] [added: *%*] | | | [removed: 13.2] [added: *55.3*] | | [removed: %] [added: *%*] | | |

| [removed: NET INCOME] [added: NET INCOME(1)] | [removed: $] [added: $] | [removed: 4,029] [added: 2,539] | | [removed: $] [added: $] | [removed: 1,933] [added: 4,029] | | [removed: 108] [added: \-37] | [removed: %] [added: %] | [removed: $] [added: $] | [removed: 4,240] [added: 1,933] | | [removed: \-54] [added: 108] | [removed: %] [added: %] |

| Diluted earnings per common share | $ | [removed: 2.49] [added: 1.60] | | $ | [removed: 1.17] [added: 2.49] | | [removed: 113] [added: \-36] | % | $ | [removed: 2.51] [added: 1.17] | | [removed: \-53] [added: 113] | % |

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

[removed: CONSOLIDATED] [added: CONSOLIDATED] OPERATING [removed: RESULTS][added: RESULTS]

[removed: REVENUES][added: REVENUES]

| [removed: (Dollars] [added: *(Dollars] in [removed: millions)] [added: millions)*] | [removed: FISCAL 2019] [added: FISCAL 2020] | | | [removed: FISCAL 2018(1)] [added: FISCAL 2019] | | | [removed: % CHANGE] [added: % CHANGE] | | [removed: %] [added: %] CHANGE EXCLUDING CURRENCY [removed: CHANGES(2)] [added: CHANGES(1)] | | [removed: FISCAL 2017(1)] [added: FISCAL 2018] | | | [removed: % CHANGE] [added: % CHANGE] | | [removed: %] [added: %] CHANGE EXCLUDING CURRENCY [removed: CHANGES(2)] [added: CHANGES(1)] | |

| [removed: NIKE, Inc. Revenues:] [added: NIKE Brand Revenues by:] | | | | | | | | | | | | | | | | | |

| [removed: NIKE] [added: NIKE] Brand Revenues [removed: by:] [added: by:] | | | | | | | | | | | | | | | | | |

| Footwear | $ | [removed: 24,222] [added: 23,305] | | $ | [removed: 22,268] [added: 24,222] | | [removed: 9] [added: \-4] | % | [removed: 12] [added: \-2] | % | $ | [removed: 21,081] [added: 22,268] | | [removed: 6] [added: 9] | % | [removed: 4] [added: 12] | % |

| Apparel | [removed: 11,550] [added: 10,953] | | | [removed: 10,733] [added: 11,550] | | | [removed: 8] [added: \-5] | % | [removed: 11] [added: \-3] | % | [removed: 9,654] [added: 10,733] | | | [removed: 11] [added: 8] | % | [removed: 9] [added: 11] | % |

| Equipment | [removed: 1,404] [added: 1,280] | | | [removed: 1,396] [added: 1,404] | | | [removed: 1] [added: \-9] | % | [removed: 4] [added: \-6] | % | [removed: 1,425] [added: 1,396] | | | [removed: \-2] [added: 1] | % | [removed: \-4] [added: 4] | % |

| Global Brand [removed: Divisions(3)] [added: Divisions(2)] | [removed: 42] [added: 30] | | | [removed: 88] [added: 42] | | | [removed: \-52] [added: \-29] | % | [removed: \-53] [added: \-26] | % | [removed: 73] [added: 88] | | | [removed: 21] [added: \-52] | % | [removed: 12] [added: \-53] | % |

In June 2020, we announced a new digitally empowered phase of the Consumer Direct Offense strategy: Consumer Direct Acceleration.

This strategic acceleration will focus on three specific areas.

First, creating the marketplace of the future through more premium, consistent and seamless consumer experiences that more closely align with what consumers want and need.

This strategy will lead with NIKE Digital and our own stores, as well as through select strategic partners who share our marketplace vision.

Second, we will align our product creation and category organizations around a new consumer construct focused on Men’s, Women’s and Kids'.

This approach allows us to create product that better meets individual consumer needs, including more specialization of our category approach, while re-aligning and simplifying our offense to accelerate our largest growth opportunities.

In particular, we’ll be reinvesting in our Women’s and Kids’ businesses and will also simplify our operating model across the remainder of the company to optimize effectiveness.

Third, we will unify investments in data and analytics, demand sensing, insight gathering, inventory management and other areas against an end-to-end technology foundation to accelerate our digital transformation.

We believe this unified approach will accelerate growth and unlock more efficiency for our business, while driving speed and responsiveness as we serve consumers globally.

On July 22, 2020, management announced a series of leadership and operating model changes to streamline and speed up strategic execution.

These changes are expected to lead to a net loss of jobs, resulting in pre-tax, one-time employee termination costs of approximately $200 million to $250 million, which is expected to be incurred primarily during the first half of fiscal 2021, in the form of cash expenditures.

These amounts are subject to change until such time as all details are finalized.

This next phase of our Consumer Direct Offense is expected to drive sustainable growth and profitability as we accelerate NIKE to a digital-first company.

We are committed to the execution of this strategy, despite the short-term adverse impacts to our business from a novel strain of coronavirus (COVID-19).

COVID-19 UPDATE

COVID-19 was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by the World Health Organization.

To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas.

As a result, COVID-19 has impacted our business globally, including through store closures, reduced operating hours and decreased retail traffic.

In particular, the outbreak and preventive measures taken to help curb the spread had material adverse impacts on our operations and business results in Greater China during the third quarter of fiscal 2020, following the temporary closure of, or reduced operating hours in, approximately 75% of NIKE-owned and partner stores within the region.

During the fourth quarter of fiscal 2020, our results of operations were further impacted as approximately 90% of our NIKE Brand stores across North America, EMEA and APLA, excluding Korea, were closed for approximately 8 weeks.

The majority of Converse direct to consumer stores were also closed for a significant portion of the fourth quarter.

Additionally, certain of our wholesale partners closed stores or reduced operating hours during the fourth quarter, resulting in lower than expected sales and a slowing of receipt of shipments of our products.

The combined effect of store closures and reduced wholesale shipments caused higher than normal inventory levels at May 31, 2020, as *Inventories* grew 31% compared to the prior year.

In order to manage future inventory growth and ensure a return to normalized levels we are modifying our buying plans and canceling certain pre-COVID-19 factory purchases, shifting product offer dates to meet near-term demand, as well as shifting available inventory into our digital channel and increasing digital fulfillment capacity specifically in

2020 FORM 10-K 27

North America and EMEA.

Additionally, we are investing in targeted promotions and markdowns to accelerate liquidation of excess inventory while continuing to protect the long-term health of our product franchises.

COVID-19 also impacted our distribution centers, our third-party manufacturing partners and other vendors, including through the effects of facility closures, reductions in operating hours, labor shortages and real time changes in operating procedures to accommodate social distancing guidelines and additional cleaning and disinfection procedures.

In response to the uncertainty of the pandemic described above, we enhanced our liquidity position during the fourth quarter through the issuance of $6 billion in senior unsecured notes, the temporary suspension of our share repurchase program and by entering into a new committed credit facility agreement, which provides for an additional $2 billion of borrowings.

Refer to Liquidity and Capital Resources for additional discussion*.*

Throughout the third and fourth quarter of fiscal 2020, our digital commerce remained open, supported by the employees in the distribution centers.

During the fourth quarter, NIKE Brand digital remained our fastest growing channel, growing 79% on a currency-neutral basis with each of our geographies growing over 50%.

Beginning in mid-May, stores within our NIKE Direct operations gradually began reopening.

As of July 17, 2020, over 90% of our NIKE Direct stores have reopened across the globe, with 100% open in Greater China, over 90% open in both EMEA and North America, and APLA open over 70%.

As of July 17, 2020, substantially all Converse direct to consumer stores have reopened to serve consumers.

We continue to monitor the rapidly evolving situation and guidance from international and domestic authorities, including federal, state and local public health authorities and may take additional actions based on their recommendations.

In these circumstances, there may be developments outside our control requiring us to adjust our operating plan.

As such, given the dynamic nature of this situation, the Company cannot reasonably estimate the impacts of COVID-19 on our future financial condition, results of operations or cash flows.

However, we do expect they will have a material adverse impact on our future revenue growth as well as our overall profitability and may continue to lead to higher than normal inventory levels in various markets, revised payment terms with certain of our wholesale customers, higher sales-related reserves, factory cancellation costs and a volatile effective tax rate driven by changes in the mix of earnings across the Company's jurisdictions.

On March 27, 2020, in response to COVID-19, the United States government enacted the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").

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 to fuel our next phase of long-term growth and profitability.

We achieved record revenues in fiscal 2019, growing 7% to $39.1 billion.

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

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

Income before income taxes increased 11% for fiscal 2019, as revenue growth and gross margin expansion were partially offset by higher selling and administrative expense.

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.

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

2019 FORM 10-K 25

26 NIKE, INC.

| (1) | Certain prior year amounts have been reclassified to conform to fiscal 2019 presentation. These changes had no impact on previously reported consolidated results of operations or shareholders' equity. |

2019 FORM 10-K 27

On a currency-neutral basis, NIKE, Inc. Revenues grew 11% for fiscal 2019, driven by growth in both the NIKE Brand and Converse.

All NIKE Brand geographies delivered higher revenues for fiscal 2019 as our Consumer Direct Offense continued to deliver innovative products, deep brand connections and compelling retail experiences to consumers through NIKE.com and related mobile applications, digital partner platforms, NIKE-owned and partner stores, as well as through our wholesale customers.

On a currency-neutral basis, NIKE Brand footwear and apparel revenues increased 12% and 11%, respectively, for fiscal 2019, while NIKE Brand equipment revenues grew 4%.

On a wholesale equivalent and currency-neutral basis, fiscal 2019 NIKE Brand Men's and Women's revenues increased 10% and 11%, respectively, both driven by growth in nearly all key categories, led by Sportswear.

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.

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

Higher NIKE Brand product costs are primarily due to shifts in mix to higher-cost products and an increase in labor rates compared to fiscal 2018.

Additionally, gross margin was favorably impacted by growth in our higher-margin NIKE Direct business.

Demand creation expense increased 5% for fiscal 2019 compared to fiscal 2018, due to sports marketing investments, as well as higher advertising and marketing expenses to support global brand campaigns, key sports moments and new product launches.

2019 FORM 10-K 29

| | | | | | | | | | |

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

These decreases were partially offset by an increase in U.S. tax on foreign earnings due to the impact of global intangible low-taxed income (GILTI).

30 NIKE, INC.

The decline in comparable store sales was primarily due to higher sales in NIKE Brand in-line stores being more than offset by declines in NIKE Brand Factory Stores ("NFS"), as growth in our full-price channel has impacted the availability and composition of off-price inventory for sale within NFS.

2019 FORM 10-K 31

On a currency-neutral basis, apparel revenues increased 7% for fiscal 2019, driven by higher revenues in all key categories, led by Sportswear, followed by NIKE Basketball.

On a currency-neutral basis, EMEA revenues for fiscal 2019 grew 11%, reflecting balanced growth across all territories.

NIKE Direct revenues increased 15%, driven by strong digital commerce sales growth of 28%, comparable store sales growth of 10% and the addition of new stores.

For fiscal 2019, currency-neutral apparel revenues increased 9% due to growth in most key categories, led by Sportswear.

Reported EBIT increased 26% for fiscal 2019, primarily due to strong revenue growth, gross margin expansion and selling and administrative expense leverage.

Growth in operating overhead expense was primarily due to higher wage-related and administrative costs, including investments in our NIKE Direct operations.

The increase in demand creation expense was primarily driven by higher advertising and marketing expenses, as well as higher sports marketing costs.

The growth in demand creation and operating overhead expense was favorably impacted by changes in foreign currency exchange rates, specifically the Euro.

32 NIKE, INC.

NIKE Direct revenues increased 33%, driven by strong digital commerce sales growth of 47%, comparable store sales growth of 23% and the addition of new stores.

Gross margin increased 210 basis points as higher full-price ASP, in part reflecting lower discounts, as well as favorable standard foreign currency exchange rates and higher NIKE Direct margins more than offset higher product costs.

The majority of derivatives outstanding as of May 31, [removed: 2019] [added: 2020] are designated as foreign currency cash flow hedges, primarily for Euro/U.S. Dollar, British Pound/Euro, [removed: Chinese Yuan/U.S. Dollar and] Japanese Yen/U.S. Dollar [added: and Chinese Yuan/U.S. Dollar] currency pairs.

[removed: MARKET] [added: MARKET] RISK [removed: MEASUREMENT][added: MEASUREMENT]

Our market-sensitive derivative and other financial instruments are foreign currency forward contracts, foreign currency option contracts, [removed: interest rate swaps,] intercompany loans denominated in non-functional currencies, fixed interest rate U.S. Dollar denominated debt and fixed interest rate Japanese Yen denominated debt.

The estimated maximum one-day loss in fair value on our foreign currency sensitive derivative financial instruments, derived using the VaR model, was [removed: $34] [added: $48] million and [removed: $93] [added: $34] million at May 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively.

The [removed: VAR decreased] [added: VaR increased] year-over-year as a result of [removed: a decrease] [added: an increase] in foreign currency volatilities at May 31, [removed: 2019.][added: 2020.]

The average monthly change in the fair values of foreign currency forward and foreign currency option derivative instruments was [removed: $83] [added: $126] million and [removed: $260] [added: $83] million during fiscal [removed: 2019] [added: 2020] and fiscal [removed: 2018,] [added: 2019,] respectively.

The instruments not included in the VaR are intercompany loans denominated in non-functional currencies, fixed interest rate Japanese Yen denominated debt, [added: and] fixed interest rate U.S. Dollar denominated [removed: debt and interest rate swaps.][added: debt.]

Therefore, we consider the interest rate and foreign currency market risks associated with our non-functional currency intercompany loans to be immaterial to our consolidated financial position, results [removed: from] [added: of] operations and cash flows.

| | [removed: EXPECTED] [added: EXPECTED] MATURITY DATE YEAR ENDING MAY [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | | | | | | |

| [removed: (Dollars] [added: *(Dollars] in [removed: millions)] [added: millions)*] | [removed: 2020] [added: 2021] | | | [removed: 2021] [added: 2022] | | | [removed: 2022] [added: 2023] | | | [removed: 2023] [added: 2024] | | | [removed: 2024] [added: 2025] | | | [removed: THEREAFTER] [added: THEREAFTER] | | | [removed: TOTAL] [added: TOTAL] | | | [removed: FAIR VALUE] [added: FAIR VALUE] | | |

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

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

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

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

| Principal payments | $ | — | | $ | — | | $ | [removed: —] [added: 500] | | $ | [removed: 500] [added: —] | | $ | [removed: —] [added: 1,000] | | $ | [removed: 3,000] [added: 8,000] | | $ | [removed: 3,500] [added: 9,500] | | $ | [removed: 3,515] [added: 10,642] | |

| Average interest rate | 0.0 | | % | 0.0 | | % | [removed: 0.0] [added: 2.3] | | % | [removed: 2.3] [added: 0.0] | | % | [removed: 0.0] [added: 2.4] | | % | [removed: 3.3] [added: 3.1] | | % | [removed: 3.1] [added: 3.0] | | % | | | |

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

2020 FORM 10-K 50

| Principal payments | $ | 3 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 3 | | $ | 3 | |

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

2020 FORM 10-K 51

44 NIKE, INC.

2019 FORM 10-K 45

[removed: GENERAL][added: GENERAL]

Our NIKE digital commerce website is located at [removed: www.nike.com.][added: *www.nike.com*.]

On our NIKE corporate website, located at [removed: investors.nike.com,] [added: *investors.nike.com*,] we post the following filings as soon as reasonably practicable after they are electronically filed with, or furnished to, the United States Securities and Exchange Commission (the “SEC”): our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended.

Copies of these filings are also available on the SEC's website [removed: (www.sec.gov).][added: (*www.sec.gov*).]

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

[removed: PRODUCTS][added: PRODUCTS]

Sportswear, [removed: Running and] the Jordan Brand [added: and Running] are currently our top-selling footwear categories and we expect them to continue to lead in footwear sales.

Our sports apparel, similar to our athletic footwear products, is designed primarily for athletic use and [removed: exemplifies] [added: also demonstrates] our commitment to innovation and high-quality construction.

[removed: One of our] [added: Our] wholly-owned subsidiary [removed: brands,] [added: brand,] 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.

[removed: SALES] [added: SALES] AND [removed: MARKETING][added: MARKETING]

However, the mix of product sales may vary considerably as a result of changes in seasonal and geographic demand for particular types of footwear, apparel and equipment, as well as other macroeconomic, operating and logistics-related [removed: factors.][added: factors, as evidenced by the impact of the COVID-19 pandemic.]

Because NIKE is a consumer products company, the relative popularity [added: and availability] of various sports and fitness [removed: activities and] [added: activities, as well as] changing design [removed: trends] [added: trends,] affect the demand for our products.

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 [removed: NIKE, Jordan] [added: NIKE] and [removed: Hurley] [added: Jordan] brands.

[removed: UNITED] [added: UNITED] STATES [removed: MARKET][added: MARKET]

For fiscal [removed: 2019,] [added: 2020,] NIKE Brand and Converse sales in the United States accounted for approximately [removed: 41%] [added: 39%] of total revenues, compared to [removed: 42%] [added: 41%] and [removed: 46%] [added: 42%] for fiscal [removed: 2018] [added: 2019] and fiscal [removed: 2017,] [added: 2018,] respectively.

We sell our NIKE Brand, Jordan [removed: Brand, Hurley] [added: Brand] and Converse products to thousands of retail accounts in the United States, including a mix of footwear stores, sporting goods stores, athletic specialty stores, department stores, skate, tennis and golf shops and other retail accounts.

During fiscal [removed: 2019,] [added: 2020,] our three largest United States customers accounted for approximately 24% of sales in the United States.

Our NIKE Direct and Converse direct to consumer operations sell NIKE Brand, Jordan [removed: Brand, Hurley] [added: Brand] and Converse products to consumers through various digital platforms.

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

| [removed: U.S.] [added: U.S.] RETAIL [removed: STORES] [added: STORES] | [removed: NUMBER] [added: NUMBER] | |

| NIKE Brand factory stores | [removed: 217] [added: 212] | |

| NIKE Brand in-line stores (including employee-only stores) | [removed: 29] [added: 28] | |

| Converse stores (including factory stores) | [removed: 109] [added: 98] | |

| [removed: Hurley] [added: NIKE Brand in-line] stores (including [removed: factory and] employee-only stores) | [removed: 29] [added: 52] | |

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

[removed: Smaller leased and third-party leased and operated] [added: There are other smaller] distribution facilities [removed: are] located in various parts of the United [removed: States.][added: States, some of which are leased or operated by third-parties.]

[removed: INTERNATIONAL MARKETS][added: INTERNATIONAL MARKETS]

For fiscal [removed: 2019,] [added: 2020,] non-U.S. NIKE Brand and Converse sales accounted for approximately [removed: 59%] [added: 61%] of total revenues, compared to [removed: 58%] [added: 59%] and [removed: 54%] [added: 58%] for fiscal [removed: 2018] [added: 2019] and fiscal [removed: 2017,] [added: 2018,] respectively.

We sell to thousands of retail accounts and ship products from [removed: 67] [added: 74] distribution centers outside of the United States.

During fiscal [removed: 2019,] [added: 2020,] NIKE's three largest customers outside of the United States accounted for approximately [removed: 14%] [added: 15%] of total non-U.S. sales.

| [removed: NON-U.S.] [added: NON-U.S.] RETAIL [removed: STORES] [added: STORES] | [removed: NUMBER] [added: NUMBER] | |

| NIKE Brand factory stores | [removed: 648] [added: 643] | |

[removed: SIGNIFICANT CUSTOMER][added: SIGNIFICANT CUSTOMER]

No customer accounted for 10% or more of our [removed: worldwide] [added: consolidated] net [removed: revenues] [added: *Revenues*] during fiscal [removed: 2019.][added: 2020.]

[removed: PRODUCT] [added: PRODUCT] RESEARCH, DESIGN AND [removed: DEVELOPMENT][added: DEVELOPMENT]

In addition to our own staff of specialists in the areas of biomechanics, chemistry, exercise physiology, engineering, [added: digital technologies,] industrial design, sustainability and related fields, we also utilize research committees and advisory boards made up of athletes, coaches, trainers, equipment managers, orthopedists, [removed: podiatrists] [added: podiatrists, physicians] and other experts who consult with us and review designs, materials, concepts for product and manufacturing process improvements and compliance with product safety regulations around the world.

As we continue to develop new technologies, we are simultaneously focused on the design of innovative products [added: and experiences] incorporating such technologies throughout our product [removed: categories.][added: categories and consumer applications.]

Using market intelligence and research, our various design teams identify opportunities to leverage new technologies in existing categories [removed: responding] to [added: respond to] consumer preferences.

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

[removed: MANUFACTURING][added: MANUFACTURING]

We also offer interactive consumer experiences through our digital platforms.

2020 FORM 10-K 1

The Hurley brand results, prior to its divestiture in the beginning of the third quarter of fiscal 2020, are included in North America.

| TOTAL | 338 | |

One distribution center for Converse is located in Ontario, California, which is leased.

2020 FORM 10-K 2

| TOTAL | 758 | |

2020 FORM 10-K 3

Vietnam, were our suppliers of materials and cushioning components used in footwear.

Air Manufacturing Innovation also manufactures and sells small amounts of various other plastic products to other manufacturers.

2020 FORM 10-K 4

2020 FORM 10-K 5

2020 FORM 10-K 6

|  | | | John J. Donahoe II, President and Chief Executive Officer — Mr. Donahoe, 60, was appointed President and Chief Executive Officer in January 2020 and has been a director since 2014. He brings expertise in digital commerce, technology and global strategy. He previously served as President and Chief Executive Officer at ServiceNow, Inc. Prior to joining ServiceNow, Inc., he served as President and Chief Executive Officer of eBay, Inc. He also held leadership roles at Bain & Company for two decades. |

|  | | | Matthew Friend, Executive Vice President and Chief Financial Officer — Mr. Friend, 42, joined NIKE in 2009 as Senior Director of Corporate Strategy and Development, and was appointed Chief Financial Officer of Emerging Markets in 2011. In 2014, Mr. Friend was appointed Chief Financial Officer of Global Categories, Product and Functions, and was subsequently appointed Chief Financial Officer of the NIKE Brand in 2016. He was also appointed Vice President of Investor Relations in 2019. Mr. Friend was appointed as Executive Vice President and Chief Financial Officer of NIKE, Inc. in April 2020. Prior to joining NIKE, he worked in the financial industry including roles as VP of investment banking and mergers and acquisitions at Goldman Sachs and Morgan Stanley. |

|  | | | Heidi O'Neill, President of Consumer and Marketplace — Ms. O'Neill, 55, joined NIKE in 1998, and held a variety of leadership roles, including President of NIKE Direct, where she was responsible for NIKE's connection to its consumer globally through the Company's retail and digital-commerce business. She also led NIKE's women's business for seven years, growing it into a multi-billion dollar business, and leading the Company's North America apparel business as VP/GM. Ms. O'Neill was appointed as President of Consumer and Marketplace in April 2020 and is responsible for NIKE's Direct business, including all stores, e-commerce and apps globally. |

2020 FORM 10-K 7

2019 FORM 10-K 1

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 Brand's North America geographic operating segment.

2 NIKE, INC.

| TOTAL | 384 | |

NIKE Brand apparel and equipment are also shipped from our Foothill Ranch, California distribution center, which we lease.

| NIKE Brand in-line stores (including employee-only stores) | 57 | |

| TOTAL | 768 | |

2019 FORM 10-K 3

4 NIKE, INC.

2019 FORM 10-K 5

6 NIKE, INC.

|  | | | 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. |

|  | | | John F. Slusher, Executive Vice President, Global Sports Marketing — Mr. Slusher, 50, joined NIKE in 1998, with primary responsibilities in global sports marketing. Mr. Slusher was appointed Director of Sports Marketing for Asia Pacific and Americas in 2006, divisional Vice President of Asia Pacific & Americas Sports Marketing in September 2007 and Vice President, Global Sports Marketing in November 2007. 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, 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

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

[removed: þ ANNUAL] [added: ☑ ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934]

[removed: FOR] [added: FOR] THE FISCAL YEAR [removed: ENDED MAY] [added: ENDED MAY] 31, [removed: 2019][added: 2020]

[removed: ¨ TRANSITION] [added: ☐ TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934]

[removed: FOR] [added: FOR] THE TRANSITION PERIOD FROM TO [removed: .][added: .]

[removed: Commission] [added: Commission] File [removed: No. 1-10635][added: No. 1-10635]

[removed: ][added: ]

[removed: NIKE, Inc.][added: NIKE, Inc.]

[removed: (Exact] [added: (Exact] name of Registrant as specified in its [removed: charter)][added: charter)]

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

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

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

[removed: | (Address] [added: *(Address] of principal executive [removed: offices) | | (Zip Code) | |][added: offices and zip code)*]

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

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

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

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

| [removed: NONE] [added: NONE] | | | |

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

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

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

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

| As of November 30, [removed: 2018,] [added: 2019,] the aggregate market values of the Registrant's Common Stock held by non-affiliates were: | | | |

| As of July [removed: 19, 2019,] [added: 17, 2020,] the number of shares of the Registrant's Common Stock outstanding were: | | |

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE:][added: REFERENCE:]

Parts of Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held on September [removed: 19, 2019] [added: 17, 2020] are incorporated by reference into Part III of this Report.

| | | [removed: PAGE] [added: PAGE] |

| [removed: [ITEM 1.](#s959972247509586382772CAE6006E7DD)] [added: [ITEM 1.](#sD89DC7C02F1F54B8A91DC95BF7A3AAE4)] | [removed: [Business](#s959972247509586382772CAE6006E7DD)] [added: [Business](#sD89DC7C02F1F54B8A91DC95BF7A3AAE4)] | [removed: [1](#s959972247509586382772CAE6006E7DD)] [added: [1](#sD89DC7C02F1F54B8A91DC95BF7A3AAE4)] |

| | [Sales and [removed: Marketing](#sB73FDD22B2A757D9BEA93A011DB1AEE2)] [added: Marketing](#s469D33D05F93598DA072ED4ACE54C159)] | [removed: [2](#sB73FDD22B2A757D9BEA93A011DB1AEE2)] [added: [2](#s469D33D05F93598DA072ED4ACE54C159)] |

| | [United States [removed: Market](#s0388C03160275F00863E4246140C21EC)] [added: Market](#s7D3DF993CF685776B8147B6815E134D1)] | [removed: [2](#s0388C03160275F00863E4246140C21EC)] [added: [2](#s7D3DF993CF685776B8147B6815E134D1)] |

| | [International [removed: Markets](#sCCA29F8FD4A45032B2E76C2AA2A57744)] [added: Markets](#sE5B0829BF5AD544FBC8FB1A5D09CED05)] | [removed: [3](#sCCA29F8FD4A45032B2E76C2AA2A57744)] [added: [2](#sE5B0829BF5AD544FBC8FB1A5D09CED05)] |

| | [Significant [removed: Customer](#s8D0ADB54192059E7AA91871132AD9CF7)] [added: Customer](#s7F17298CECB85E068ADF957100436783)] | [removed: [3](#s8D0ADB54192059E7AA91871132AD9CF7)] [added: [3](#s7F17298CECB85E068ADF957100436783)] |

| | [Product Research, Design and [removed: Development](#sA5469D87ADFC5760858923CBD3398888)] [added: Development](#s88A76BAE21D45760B568BF80BFBEFEDA)] | [removed: [4](#sA5469D87ADFC5760858923CBD3398888)] [added: [3](#s88A76BAE21D45760B568BF80BFBEFEDA)] |

| | [International Operations and [removed: Trade](#s8F621CB5D1F0512EA9B017172B722985)] [added: Trade](#s79565740E63F5F1F8F4BD4D5DC3F4CCA)] | [removed: [5](#s8F621CB5D1F0512EA9B017172B722985)] [added: [5](#s79565740E63F5F1F8F4BD4D5DC3F4CCA)] |

| | [Trademarks and [removed: Patents](#s3EFB43079CEF5F848CDCFF69DF98B914)] [added: Patents](#s44FE5646EDE756649F179DCDEE5362EA)] | [removed: [6](#s3EFB43079CEF5F848CDCFF69DF98B914)] [added: [6](#s44FE5646EDE756649F179DCDEE5362EA)] |

| | [Information about our Executive [removed: Officers](#s17D566AC9D945D58A818EAB88AB7D7D4)] [added: Officers](#sAA68A421C6DA5922B8546CCC20FAF99D)] | [removed: [7](#s17D566AC9D945D58A818EAB88AB7D7D4)] [added: [7](#sAA68A421C6DA5922B8546CCC20FAF99D)] |

| [removed: [ITEM 1A.](#s5BB2AAED853A56E09A89321695FEFB94)] [added: [ITEM 1A.](#sCADDFB5CBF7D50FC903BF8883560BAAD)] | [Risk [removed: Factors](#s5BB2AAED853A56E09A89321695FEFB94)] [added: Factors](#sCADDFB5CBF7D50FC903BF8883560BAAD)] | [removed: [8](#s5BB2AAED853A56E09A89321695FEFB94)] [added: [8](#sCADDFB5CBF7D50FC903BF8883560BAAD)] |

OR

| • | whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. | | | | | | | | þ | | |

| | | | |

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

| | | | |

| Class A | $ | 7,387,322,889 | |

| Class B | 116,456,809,401 | | |

| | $ | 123,844,132,290 | |

| Class A | 315,017,252 | |

| Class B | 1,244,871,297 | |

| | 1,559,888,549 | |

| [PART I](#s0EA7C99B7051513184A5A6E541F1B0D5) | | [1](#s0EA7C99B7051513184A5A6E541F1B0D5) |

| | [General](#s1E3EEC22E94F597E8F174354201FD2E4) | [1](#s1E3EEC22E94F597E8F174354201FD2E4) |

| | [Products](#sA221AB8EF9785080A45D4571FAD1B286) | [1](#sA221AB8EF9785080A45D4571FAD1B286) |

| | [Manufacturing](#s469AC298CC1C5266910E53D73E7F3CB9) | [3](#s469AC298CC1C5266910E53D73E7F3CB9) |

| | [Competition](#s5B16F6849AFF501DA619A4D918F8E54D) | [5](#s5B16F6849AFF501DA619A4D918F8E54D) |

| | [Employees](#sDBFD25E4EC285269BECD3ED5B08A3892) | [6](#sDBFD25E4EC285269BECD3ED5B08A3892) |

| [PART II](#sC5307BBD9C1C5C05B902BE0BB31245B2) | | [23](#sC5307BBD9C1C5C05B902BE0BB31245B2) |

| [PART IV](#s2E9C227ACF645B3CBBA82E6F790EEECD) | | [97](#s2E9C227ACF645B3CBBA82E6F790EEECD) |

| | [Signatures](#s971A78976A215DF6BBA90D55BCA6E482) | [103](#s971A78976A215DF6BBA90D55BCA6E482) |

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

OR

| 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) |

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

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

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

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: 12,600] [added: 12,800] employees engaged in management, research, design, development, marketing, finance and other administrative functions serving nearly all of our segments.

We lease a similar, but smaller, administrative facility in Hilversum, the Netherlands, which serves as the headquarters for [removed: the] [added: our] Europe, Middle East & 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 [added: our] Greater [removed: China,] [added: China geography,] occupied by employees focused on implementing our wholesale, NIKE Direct and merchandising strategies in the region, among other functions.

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

NIKE has [removed: several] [added: a number of] distribution facilities outside the United States, some of which are leased and operated by third-party logistics providers.

The most significant distribution facilities outside the United States are located in Laakdal, Belgium; Taicang, China; Tomisato, Japan and Incheon, Korea, all of which we [removed: own.][added: own, as well as in Suzhou, China, which is leased and operated by a third-party logistics provider.]

Air Manufacturing Innovation manufactures [removed: Air-Sole] cushioning components [added: used in footwear] at NIKE-owned [removed: facilities] and [removed: one] leased [removed: facility] [added: facilities] located near Beaverton, [removed: Oregon] [added: Oregon,] and in [added: Dong Nai Province, Vietnam, as well as at NIKE-owned facilities in] St. Charles, Missouri.

We lease [removed: 1,147] [added: 1,091] retail stores worldwide, which primarily consist of factory stores.

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

One distribution center for Converse is located in Ontario, California, which is leased.

NIKE Brand apparel and equipment are also shipped from our Foothill Ranch, California distribution center, which we lease.

Air Manufacturing Innovation also manufactures and sells small amounts of various other plastic products to other manufacturers.

2020 FORM 10-K 22

2019 FORM 10-K 19

At July [removed: 19, 2019,] [added: 17, 2020,] there were [removed: 23,305] [added: 23,114] holders of record of NIKE's Class B Common Stock and [removed: 13] [added: 14] holders of record of NIKE's Class A Common Stock.

[removed: Upon completion of this program, the Company began purchasing shares under] [added: In June 2018,] the [removed: new] [added: Board of Directors approved a] four-year, $15 billion share repurchase [removed: program authorized by the Board of Directors in June 2018.][added: program.]

As of May 31, [removed: 2019,] [added: 2020,] the Company had repurchased [removed: 11.6] [added: 45.2] million shares at an average price of [removed: $84.72] [added: $89.00] per share for a total approximate cost of [removed: $986 million] [added: $4.0 billion] under this [removed: new] program.

The following table presents a summary of share repurchases made during the quarter ended May 31, [removed: 2019:][added: 2020:]

| [removed: PERIOD] [added: PERIOD] | [removed: TOTAL] [added: TOTAL] NUMBER OF SHARES [removed: PURCHASED] [added: PURCHASED] | | [removed: AVERAGE] [added: AVERAGE] PRICE PAID PER [removed: SHARE] [added: SHARE] | | | [removed: APPROXIMATE] [added: APPROXIMATE] DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS (IN [removed: MILLIONS)] [added: MILLIONS)] | | |

[removed: PERFORMANCE GRAPH][added: PERFORMANCE GRAPH]

The graph assumes an investment of $100 on May 31, [removed: 2014] [added: 2015] in each of the indices and our Class B Common Stock.

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

| [removed: ] [added: ] |

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

| March 1 — March 31, 2020 | 1,872,265 | | $ | 85.08 | | $ | 10,981 | |

| April 1 — April 30, 2020 | — | | $ | — | | $ | 10,981 | |

| May 1 — May 31, 2020 | — | | $ | — | | $ | 10,981 | |

| | 1,872,265 | | $ | 85.08 | | | | |

2020 FORM 10-K 23

2020 FORM 10-K 24

During the third quarter of fiscal 2019, the Company completed the previous four-year, $12 billion share repurchase program authorized by the Board of Directors in November 2015.

Throughout this program the Company purchased a total of

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

| 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.

2019 FORM 10-K 21

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

| [removed: 2019] [added: 2020] | | | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | | |

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

| [removed: Revenues] [added: Revenues(1)] | $ | [removed: 39,117] [added: 37,403] | | $ | [removed: 36,397] [added: 39,117] | | $ | [removed: 34,350] [added: 36,397] | | $ | [removed: 32,376] [added: 34,350] | | $ | [removed: 30,601] [added: 32,376] | |

| Gross profit | [added: 16,241 | | |] 17,474 | | | 15,956 | | | 15,312 | | | 14,971 | | | [removed: 14,067 | | |]

| Gross [removed: margin] [added: margin(1)] | [removed: 44.7] [added: 43.4] | | % | [removed: 43.8] [added: 44.7] | | % | [removed: 44.6] [added: 43.8] | | % | [removed: 46.2] [added: 44.6] | | % | [removed: 46.0] [added: 46.2] | | % |

| Net [removed: income(1)] [added: income(1)(2)] | [added: 2,539 | | |] 4,029 | | | 1,933 | | | 4,240 | | | 3,760 | | | [removed: 3,273 | | |]

| Earnings per common [removed: share:(1)] [added: share:(2)] | | | | | | | | | | | | | | | |

| Basic | [added: 1.63 | | |] 2.55 | | | 1.19 | | | 2.56 | | | 2.21 | | | [removed: 1.90 | | |]

| Diluted | [added: 1.60 | | |] 2.49 | | | 1.17 | | | 2.51 | | | 2.16 | | | [removed: 1.85 | | |]

| Weighted average common shares outstanding | [added: 1,558.8 | | |] 1,579.7 | | | 1,623.8 | | | 1,657.8 | | | 1,697.9 | | | [removed: 1,723.5 | | |]

| Diluted weighted average common shares outstanding | [added: 1,591.6 | | |] 1,618.4 | | | 1,659.1 | | | 1,692.0 | | | 1,742.5 | | | [removed: 1,768.8 | | |]

| Cash dividends declared per common share | [added: 0.955 | | |] 0.86 | | | 0.78 | | | 0.70 | | | 0.62 | | | [removed: 0.54 | | |]

| Cash provided [added: (used)] by [removed: operations] [added: operations(1)] | [added: 2,485 | | |] 5,903 | | | 4,955 | | | 3,846 | | | 3,399 | | | [removed: 4,906 | | |]

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

| Cash and [removed: equivalents] [added: equivalents(3)] | $ | [removed: 4,466] [added: 8,348] | | $ | [removed: 4,249] [added: 4,466] | | $ | [removed: 3,808] [added: 4,249] | | $ | [removed: 3,138] [added: 3,808] | | $ | [removed: 3,852] [added: 3,138] | |

| Short-term investments | [added: 439 | | |] 197 | | | 996 | | | 2,371 | | | 2,319 | | | [removed: 2,072 | | |]

| [removed: Inventories] [added: Inventories(1)] | [added: 7,367 | | |] 5,622 | | | 5,261 | | | 5,055 | | | 4,838 | | | [removed: 4,337 | | |]

| Working capital | [added: 12,272 | | |] 8,659 | | | 9,094 | | | 10,587 | | | 9,667 | | | [removed: 9,255 | | |]

| Total [removed: assets(2)(3)] [added: assets(4)(5)(6)] | [added: 31,342 | | |] 23,717 | | | 22,536 | | | 23,259 | | | 21,379 | | | [removed: 21,590 | | |]

| Long-term [removed: debt] [added: debt(3)] | [added: 9,406 | | |] 3,464 | | | 3,468 | | | 3,471 | | | 1,993 | | | [removed: 1,072 | | |]

| Shareholders' [removed: equity(3)] [added: equity(6)] | [added: 8,055 | | |] 9,040 | | | 9,812 | | | 12,407 | | | 12,258 | | | [removed: 12,707 | | |]

| Market capitalization | [added: 153,553 | | |] 120,951 | | | 114,983 | | | 87,084 | | | 92,867 | | | [removed: 87,044 | | |]

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

| Return on [removed: equity(1)(3)] [added: equity(2)(6)] | [removed: 42.7] [added: 29.7] | | % | [removed: 17.4] [added: 42.7] | | % | [removed: 34.4] [added: 17.4] | | % | [removed: 30.1] [added: 34.4] | | % | [removed: 27.8] [added: 30.1] | | % |

| Return on [removed: assets(1)(2)(3)] [added: assets(2)(3)(4)(5)(6)] | [removed: 17.4] [added: 9.2] | | % | [removed: 8.4] [added: 17.4] | | % | [removed: 19.0] [added: 8.4] | | % | [removed: 17.5] [added: 19.0] | | % | [removed: 16.3] [added: 17.5] | | % |

| Inventory turns | [removed: 4.0] [added: 3.3] | | | 4.0 | | | [removed: 3.8] [added: 4.0] | | | 3.8 | | | [removed: 4.0] [added: 3.8] | | |

| Current ratio at May [removed: 31] [added: 31(3)(4)] | [added: 2.5 | | |] 2.1 | | | 2.5 | | | 2.9 | | | 2.8 | | | [removed: 2.5 | | |]

| Price/Earnings ratio at May [removed: 31(1)] [added: 31(2)] | [added: 61.6 | | |] 31.0 | | | 61.4 | | | 21.1 | | | 25.6 | | | [removed: 27.5 | | |]

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

| [removed: (2)] [added: *(5)*] | [removed: Fiscal] [added: *Fiscal] 2019 reflects the impact from the [removed: adoption] [added: adoption] of [removed: Accounting Standards Update (ASU)] [added: ASU] No. 2014-09, Revenue from Contracts with Customers (Topic 606). Refer [removed: to Note] [added: to* *Note] 1 — Summary of Significant Accounting [removed: Policies in] [added: Policies* *in] the accompanying Notes to the Consolidated Financial Statements [removed: for] [added: for] additional [removed: information.] [added: information.*] |

| [removed: (3)] [added: *(6)*] | [removed: Fiscal] [added: *Fiscal] 2019 reflects the impact from the adoption [removed: of ASU] [added: of* *ASU] No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. Refer [removed: to Note] [added: to* *Note] 1 — Summary of Significant Accounting [removed: Policies in] [added: Policies* *in] the accompanying Notes to the Consolidated Financial Statements for additional [removed: information.] [added: information.*] |

[removed: SELECTED] [added: SELECTED] QUARTERLY FINANCIAL [removed: DATA][added: DATA]

| [removed: (UNAUDITED)] [added: (UNAUDITED)] | [removed: 1ST QUARTER] [added: 1ST QUARTER] | | | | | | | [removed: 2ND QUARTER] [added: 2ND QUARTER] | | | | | | | [removed: 3RD QUARTER] [added: 3RD QUARTER] | | | | | | | [removed: 4TH QUARTER] [added: 4TH QUARTER] | | | | | |

| [removed: (In] [added: *(In] millions, except per share [removed: data)] [added: data)*] | [removed: 2019] [added: 2020] | | | [removed: 2018] [added: 2019] | | | | [removed: 2019] [added: 2020] | | | [removed: 2018] [added: 2019] | | | | [removed: 2019] [added: 2020] | | | [removed: 2018(1)] [added: 2019] | | | | [removed: 2019] [added: 2020] | | | [removed: 2018] [added: 2019] | | |

| Gross profit | [added: 4,871 | | |] 4,397 | | | [removed: 3,962] | [added: 4,544] | | | 4,105 | | | [removed: 3,678] | [added: 4,473] | | | 4,339 | | | [removed: 3,938] | [added: 2,353] | | | 4,633 | | | [removed: 4,378 | | |]

| Gross [removed: margin] [added: margin(1)] | [removed: 44.2] [added: 45.7] | | % | [removed: 43.7] [added: 44.2] | | % | | [removed: 43.8] [added: 44.0] | | % | [removed: 43.0] [added: 43.8] | | % | | [removed: 45.1 %] [added: 44.3] | | [added: %] | [removed: 43.8] [added: 45.1] % | | | | [removed: 45.5] [added: 37.3] | | % | [removed: 44.7] [added: 45.5] | | % |

| Net income [removed: (loss)] [added: (loss)(1)] | [added: 1,367 | | |] 1,092 | | | [removed: 950] | [added: 1,115] | | | 847 | | | [removed: 767] | [added: 847] | | | 1,101 | | | [removed: (921] | [added: (790] | [removed: )] | [added: )] | 989 | | | [removed: 1,137 | | |]

| Basic | [added: 0.87 | | |] 0.69 | | | [removed: 0.58] | [added: 0.71] | | | 0.54 | | | [removed: 0.47] | [added: 0.54] | | | 0.70 | | | [removed: (0.57] | [added: (0.51] | [removed: )] | [added: )] | 0.63 | | | [removed: 0.71 | | |]

| Diluted | [added: 0.86 | | |] 0.67 | | | [removed: 0.57] | [added: 0.70] | | | 0.52 | | | [removed: 0.46] | [added: 0.53] | | | 0.68 | | | [removed: (0.57] | [added: (0.51] | [removed: )] | [added: )] | 0.62 | | | [removed: 0.69 | | |]

| Operating lease right-of-use assets, net(4) | 3,097 | | | — | | | — | | | — | | | — | | |

| Total operating lease liabilities(4) | 3,358 | | | — | | | — | | | — | | | — | | |

| *(1)* | *Fiscal 2020 reflects the impacts of COVID-19 on our results of operations and financial condition. Refer to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information.* |

| *(3)* | *During the fourth quarter of fiscal 2020, the Company issued $6 billion of senior unsecured notes. Refer to* *Note 8 — Long-Term Debt* *in the accompanying Notes to the Consolidated Financial Statements for additional information.* |

| *(4)* | *Fiscal 2020 reflects the impact from the adoption* *of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). Refer to* *Note 1 — Summary of Significant Accounting Policies* *in the accompanying Notes to the Consolidated Financial Statements for additional information.* |

| | |

| --- | --- |

| | |

| --- | --- |

2020 FORM 10-K 25

| Revenues(1) | $ | 10,660 | | $ | 9,948 | | | $ | 10,326 | | $ | 9,374 | | | $ | 10,104 | | $ | 9,611 | | | $ | 6,313 | | $ | 10,184 | |

| | |

| --- | --- |

| *(1)* | *The third and fourth quarters of fiscal 2020 reflect the impacts of COVID-19 on our results of operations and financial condition. Refer to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information.* |

2020 FORM 10-K 26

| Capital lease obligations | 60 | | | 75 | | | 27 | | | 15 | | | 5 | | |

22 NIKE, INC.

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

| (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 in the accompanying Notes to the Consolidated Financial Statements for additional information. |

2019 FORM 10-K 23

[removed: MANAGEMENT'S] [added: MANAGEMENT'S] ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL [removed: REPORTING][added: REPORTING]

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in [removed: Internal] [added: *Internal] Control — Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on the results of our evaluation, our management concluded that our internal control over financial reporting was effective as of May 31, [removed: 2019.][added: 2020.]

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: 2019,] [added: 2020,] as stated in their report herein.

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

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

[removed: Opinions] [added: Opinions] on the Financial Statements and Internal Control over Financial [removed: Reporting][added: Reporting]

We have audited the accompanying consolidated balance sheets of NIKE, Inc. and its subsidiaries (the “Company”) as of May 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the related consolidated statements of income, [added: of] comprehensive income, [removed: shareholders’] [added: of shareholders'] equity and [added: of] cash flows for each of the three years in the period ended May 31, [removed: 2019,] [added: 2020,] 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 Company's internal control over financial reporting as of May 31, [removed: 2019,] [added: 2020,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated [removed: Framework] [added: 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: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the three years in the period ended May 31, [removed: 2019] [added: 2020] 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: 2019,] [added: 2020,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated [removed: Framework] [added: Framework*] (2013) issued by the COSO.

[removed: Change] [added: *Changes] in Accounting [removed: Principles][added: Principles*]

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for [added: leases as of June 1, 2019 and the manner in which it accounts for] 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, [removed: 2018 and the manner in which it accounts for share-based payment awards to employees as of June 1, 2017.][added: 2018.]

[removed: Basis] [added: Basis] for [removed: Opinions][added: Opinions]

[removed: Definition] [added: Definition] and Limitations of Internal Control over Financial [removed: Reporting][added: Reporting]

| | [removed: YEAR] [added: YEAR] ENDED MAY [removed: 31,] [added: 31,] | | | | | | | | |

| [removed: (In] [added: *(In] millions, except per share [removed: data)] [added: data)*] | [removed: 2019] [added: 2020] | | | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | |