29 june 2016 nike inc. equity research

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29 June 2016Americas/United States

Equity ResearchFootwear

Nike Inc. (NKE)

DECREASE TARGET PRICE Rating OUTPERFORMPrice (28-Jun-16,US$) 53.09Target price (US$) (from 68.00) 63.0052-week price range 67.16 - 51.76Market cap (US$ m) 89,441.88Enterprise value (US$ m) 85,918.55*Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector.¹Target price is for 12 months.

Research AnalystsChristian Buss

212 325 [email protected]

Sara Shuler212 325 7643

[email protected]

Pallavi Bakshi212 538 8434

[email protected]

Global On Track, North America Deceleration Concerns Getting Priced InNike reported slightly choppy 4Q results and futures, with international strength overshadowed by a deceleration in North America futures to 6% (our estimate for 8%, prior quarter futures of 10%) which highlights some market share and category challenges in the region. In particular, concerns about ASP pressure in basketball look to be well-founded, with the category only up 2% in FY16 (versus total Nike brand growth of 13%.) Concerns about strength at adidas (up 31% Y/Y in North America last quarter) and Under Armour (footwear up 64% Y/Y last quarter) are also likely to weigh on expectations for growth at Nike in FY17. This is the bad news that we had been expecting and we expect near-term pressure on shares as a result. Our scenario analysis suggests modest 3-6% downside risk to FY17 consensus earnings, and potential for shares to approach a trough multiple of 18x CY17 PE on $2.60-2.70, suggesting a trough stock price of $47. With shares approaching this level, we believe that investors are set to benefit from continued global revenue growth in the high-single digits, and margin expansion opportunities with mix shift to DTC and roll out of the category offense and integrated marketplace in Europe and China. As a result, we reiterate our Outperform rating, adjust our estimates, and lower our Target Price to $63 from $68.

■ Futures A Disappointment In North America, Solid In International Markets. Nike reported healthy global futures, with strength in China (up 24% c.c.), Japan (up 15% c.c.) Emerging Markets (up 14% c.c.), and Western Europe (up 11% c.c.) offsetting further deceleration in North America (up 6% c.c.) and Eastern Europe (up 7% c.c.) While focus is likely to be placed on North American futures as a bellwether for other

Share price performance

N KE.N S& P 5 0 0 IN D EX

Ju l - 1 5 O ct - 1 5 Jan - 1 6 A p r - 1 6 Ju l - 1 64 55 05 56 06 57 0

On 28-Jun-2016 the S&P 500 INDEX closed at 2036.09Daily Jun29, 2015 - Jun28, 2016, 06/29/15 = US$53.835

Quarterly EPS Q1 Q2 Q3 Q42016A 0.67 0.45 0.55 0.492017E 0.55 0.54 0.68 0.652018E 0.66 0.59 0.74 0.73

Financial and valuation metricsYear 5/16A 5/17E 5/18E 5/19EEPS (CS adj.) (US$) 2.16 2.41 2.71 3.09Prev. EPS (US$) 2.13 - 2.77 -P/E (x) 24.6 22.0 19.6 17.2P/E rel. (%) 137.9 124.6 125.8 124.3Revenue (US$ m) 32,376.0 34,828.8 37,149.8 39,820.3EBITDA (US$ m) 5,649.5 6,205.0 6,827.2 7,481.3OCFPS (US$) 1.95 3.20 3.54 4.03P/OCF (x) 28.4 16.6 15.0 13.2EV/EBITDA (current) 15.2 13.9 12.6 11.5Net debt (US$ m) -3,403 -3,523 -3,596 -3,814ROIC (%) 41.35 42.26 43.58 44.50

Number of shares (m) 1,684.72 IC (current, US$ m) 8,855.00Net debt (Next Qtr., US$ m) -2,736.1 EV/IC (x) 9.3Net debt/tot eq (Next Qtr.,%) -22.8 Dividend (current, US$) 0.64Source: Company data, Thomson Reuters, Credit Suisse estimates

29 June 2016

Nike Inc. (NKE) 2

international markets, we continue to view the company's global diversification as a key differentiator and would place focus on the maintenance of double-digit futures growth for the 12th quarter in a row.

■ Highlighting The Basketball Pressure Point. Annual reported category sales growth suggests one of the key areas of underperformance for the year is in basketball product, a category generating 15% of sales, but one where Nike has >70% market share and likely outsized margins. Growth in this category was underwhelming outside of Jordan product (up 21% c.c.), with sales up a modest 2% in FY17. This brought total basketball category sales to 11%, the slowest basketball category growth in five years.

■ DTC Mix Shift Underway, Providing Support For Our Margin Expansion Thesis. Nike's DTC business continued to lead the way for the company, with the business expanding to 25.8% of total sales, up from 23.1% in FY15, representing 260bp of share shift Y/Y. For us, the opportunity for Nike to shift mix away from traditional channels remains a compelling investment consideration for the business. Our long-term model is for DTC expansion to 30%-plus of overall sales, helping contribute meaningfully to our long-term margin expansion thesis (to 16% from 13.9%)

■ Margins Ahead Of Expectations In Spite Of Gross Margin Shortfall. Total operating margin of 12.4% came in ahead of our expectations for 12.0% (consensus 12.3%) in spite of gross margin that came in down 26bp Y/Y to 45.9%, below guidance for flat to slightly expanding gross margin and our model for 46.7% (consensus 46.8%.) Margin pressure came about in part due to inventory clearance initiatives in North America, highlighting some of the competitive challenges in the market.

■ Inventories Remain Elevated. Nike inventories came in above our expectations with growth of 12% to $4.84B, ahead of guidance for F1Q sales growth of 5%, and our prior model for $4.59B and consensus for $4.61B. We will be monitoring development of inventories closely going forwards, and look for inventory alignment starting in F2Q17.

■ Adjusting Estimates And Lowering Target Price To $63 From $68. We are adjusting our FY17 revenue and EPS estimates to $34,828M and $2.41 from $34,930M and $2.41. Our FY18 revenue and EPS estimates go to $37,149M and $2.71 from $37,844M and $2.77. Our Target Price is based on an equal-weighted average of: 1) peer group multiples ($61); 2) a five year discounted cash flow (DCF) model ($61); and 3) a long-term growth model ($67).

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4Q16 ResultsFigure 1: Results Overview

Nike, IncY/Y and CS Est vs Actual Comparisons($ in millions except per share data)

Actual CS Estimates Prior Year4Q16A 4Q16A Variance % Variance 4Q15A Variance Y/Y growth

Net sales $8,244 $8,360 -116 -1.4% $7,779 465 6.0%

Cost of Goods Sold 4,458 4,456 2 0.0% 4,186 272 6.5%Gross profit 3,786 3,904 -118 -3.0% 3,593 193 5.4%

Demand Creation 873 964 -91 -9.4% 819 54 6.6%Salaries and Benefits 1,893 1,934 -41 -2.1% 1,776 117 6.6%Total SG&A Expense 2,766 2,898 -132 -4.5% 2,595 171 6.6%Operating income 1,020 1,007 13 1.3% 998 22 2.2%

D&A 667 667 0 0.0% 620 47 7.5%EBITDA 1,687 1,673 13 0.8% 1,618 69 4.2%

Interest Income (Expense) -5 -5 0 NA -4 -1 NAOther Income (Expense) 58 40 18 NA 58 0 0.0%Pre-tax income 1,073 1,042 31 3.0% 1,052 21 2.0%Provision for income taxes 227 237 -10 -4.2% 187 40 21.4%Tax Rate 21.2% 22.8% -1.6% -7.0% 17.8% 3.4% 19.0%Net Income 846 805 41 5.1% 865 -19 -2.2%

Diluted EPS $0.49 $0.47 0 5.4% $0.49 $0.00 -0.1%

Basic Shares Outstanding 1682 1685 -3 -0.2% 1715 -33 -1.9%Diluted Shares Outstanding 1723 1729 -6 -0.3% 1760 -37 -2.1%

Source: Company data, Credit Suisse estimates, Thomson Reuters Datastream

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MarginsFigure 2: Margin Comparisons


Actual CS Estimates Prior Year4Q16A 4Q16A Variance % Variance 4Q15A Y/Y change

Gross Margin 45.9% 46.7% -78bps -1.7% 46.2% -26bps

Demand Creation 10.6% 11.5% -94bps -8.1% 10.5% 6bpsSalaries and Benefits 23.0% 23.1% -17bps -0.7% 22.8% 13bpsSG&A as a % of Revenue 33.6% 34.7% -111bps -3.2% 33.4% 19bps

Operating Margin 12.4% 12.0% 33bps 2.8% 12.8% -46bps

Pretax Income 13.0% 12.5% 55bps 4.4% 13.5% -51bpsEffective Tax Rate 21.2% 22.8% -159bps -7.0% 17.8% 338bpsNet Margin 10.3% 9.6% 63bps 6.6% 11.1% -86bps


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FuturesFigure 3: Future Orders Comparisons


Actual Prior Quarter Prior Year4Q16A 3Q16A Q/Q change 4Q15A Y/Y change

Futures Orders (Constant Currency)Global 11.0% 17.0% -6% 13% -2%North America 6.0% 10.0% -4% 13% -7%Western Europe 11.0% 23.0% -12% 14% -3%Eastern Europe 7.0% 14.0% -7% 17% -10%Greater China 24.0% 36.0% -12% 22% 2%Japan 15.0% 24.0% -9% 20% -5%Emerging Markets 13.0% 14.0% -1% 2% 11%

Futures Orders (Reported)Global 8.0% 12.0% -4% 2% 6%North America 6.0% 10.0% -4% 13% -7%Western Europe 8.0% 16.0% -8% -11% 19%Eastern Europe 3.0% 5.0% -2% -9% 12%Greater China 19.0% 28.0% -9% 20% -1%Japan 24.0% 23.0% 1% 1% 23%Emerging Markets 3.0% -3.0% 6% -14% 17%


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Divisional ResultsFigure 4: Divisional Revenue Breakdown (Constant Currency)

Nike, IncRevenue Breakdown (Constant Currency)Y/Y and CS Est vs Actual Comparisons($ in millions except per share data)

Actual CS Estimates Prior Year4Q16A 4Q16A Variance % Variance 4Q15A Variance Y/Y growth

Divisional Revenues (constant currency)North America 3735 4017 -282 -7.0% 3,732 3 0.1%Footwear 2367 2502 -135 -5.4% 2,317 50 2.2%Apparel 1163 1282 -119 -9.3% 1,187 (24) -2.0%Equipment 205 233 -28 -11.9% 228 (23) -10.1%

Western Europe 1502 1401 101 7.2% 1,267 235 18.5%Footwear 1027 990 37 3.7% 900 127 14.1%Apparel 411 350 61 17.3% 310 101 32.6%Equipment 64 60 4 5.9% 57 7 12.3%

Central and Eastern Europe 345 400 -55 -13.8% 360 (15) -4.2%Footwear 224 261 -37 -14.1% 237 (13) -5.5%Apparel 102 116 -14 -12.2% 102 - 0.0%Equipment 19 23 -4 -18.9% 21 (2) -9.5%

Greater China 979 992 -12 -1.3% 829 150 18.1%Footwear 681 661 20 3.0% 551 130 23.6%Apparel 268 294 -26 -8.8% 245 23 9.4%Equipment 30 36 -6 -17.4% 33 (3) -9.1%

Japan 280 258 22 8.6% 230 50 21.7%Footwear 187 167 20 12.1% 145 42 29.0%Apparel 70 68 2 2.9% 63 7 11.1%Equipment 23 23 0 -0.4% 22 1 4.5%

Emerging Markets 872 1019 -147 -14.4% 934 (62) -6.6%Footwear 596 688 -92 -13.3% 631 (35) -5.5%Apparel 226 274 -48 -17.5% 249 (23) -9.2%Equipment 50 57 -7 -12.6% 54 (4) -7.4%

Total 8238 8554 -316 -3.7% 7,817 421 5.4%Footwear 5082 5269 -187 -3.5% 4,781 301 6.3%Apparel 2240 2384 -144 -6.1% 2,156 84 3.9%Equipment 391 433 -42 -9.7% 415 (24) -5.8%Global Brands 12 32 -20 -63.0% 30 (18) -60.0%Other Brands 513 435 78 17.9% 435 78 17.9%


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Nike Inc. (NKE) 7

Balance Sheet & Cash FlowFigure 5: Balance Sheet & Cash Flow


Actual CS Estimates Prior Year4Q16A 4Q16A Variance % Variance 4Q15A Y/Y change

Balance SheetInventories 4838.0 4591.9 246.1 5.4% 4,337.0 11.6%Days Inventory 97.7 92.7 4.9 5.3% 93.2 4

Receivables 3241.0 3608.8 -367.8 -10.2% 3,358.0 -3.5%DSO 35.4 38.9 -3.5 -8.9% 38.9 -3

Payables 2191.0 2268.4 -77.4 -3.4% 2,131.0 2.8%DPOs 44.2 45.8 -1.6 -3.5% 45.8 -2

Cash Flow Net Cash 3402.0 4006.7 -604.7 -15.1% 4,664.0 -27.1%Net Cash/Share 2.0 2.3 -0.3 -14.8% 2.7 -25.5%


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Guidance1Q17■ Revenue: up MSD Y/Y reported revenue growth,

o Roughly 3 points below reported futures growth■ Gross margin: down 100bp Y/Y

o Due to F/X, including Y/Y changes in hedge rates■ SG&A: Mid to high teens Y/Y growth

o Due to strategic investments in demand creation around key sporting events

■ Other Income: $20-30M

FY17■ Revenue: up HSD Y/Y reported, up HSD-LDD Y/Y constant currency

o More heavily impacted by F/X in 1H17 due to developing market currencies

■ Gross margin: up 30-50bp Y/Yo Reflects higher ASP, productivity initiatives, and growth in the DTC

business as well as favourable impact of lower oil on material costs■ SG&A: expected to grow at a HSD rate Y/Y■ Other Income: $20-30M per quarter■ Tax rate: 19 -21%■ EPS: up low teens; weighted to 2H17

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Nike Inc. (NKE) 9

Figure 6: Income Statement

Nike Inc.Income Statement($ in millions except per share data)

FY16 FY171Q16A 2Q16A 3Q16A 4Q16A 1Q17E 2Q17E 3Q17E 4Q17EAug-15 Nov-15 Feb-16 May-16 2016A Aug-16 Nov-16 Feb-17 May-17 2017E 2014A 2015A 2016A 2017E 2018E 2019E 2020E 2021E

Footwear 5,123.0 4,592.0 5,074.0 5,082.0 19,871.0 5,430.8 4,969.0 5,566.3 5,476.0 21,442.1 16,208.0 18,319.0 19,871.0 21,442.1 22,827.9 24,431.9 26,154.6 28,005.2 Apparel 2,341.0 2,362.0 2,124.0 2,240.0 9,067.0 2,416.9 2,538.4 2,326.4 2,415.7 9,697.4 8,109.0 8,636.0 9,067.0 9,697.4 10,353.4 11,107.1 11,880.2 12,713.7 Equipment and Other 408.0 345.0 352.0 391.0 1,496.0 428.0 371.3 382.7 413.8 1,595.9 1,670.0 1,632.0 1,496.0 1,595.9 1,711.8 1,848.5 1,997.1 2,158.9 Global Brands Division 26.0 18.0 17.0 12.0 73.0 27.3 18.9 17.9 12.6 76.7 125.0 114.0 73.0 76.7 80.5 84.5 88.7 93.2 Other Brands 555.0 398.0 489.0 513.0 1,955.0 599.4 429.8 528.1 554.0 2,111.4 1,684.0 1,982.0 1,955.0 2,111.4 2,280.3 2,462.7 2,659.8 2,872.5 Corporate -39.0 -29.0 -24.0 6.0 -86.0 -42.9 -31.9 -26.4 6.6 -94.6 3.0 -82.0 -86.0 -94.6 -104.1 -114.5 -125.9 -138.5Total Revenue 8,414.0 7,686.0 8,032.0 8,244.0 32,376.0 8,859.4 8,295.6 8,795.1 8,878.7 34,828.8 27,799.0 30,601.0 32,376.0 34,828.8 37,149.8 39,820.3 42,654.6 45,705.0

Cost of Goods Sold 4,419.0 4,185.0 4,343.0 4,458.0 17,405.0 4,741.5 4,475.5 4,689.6 4,712.4 18,619.1 15,353.0 16,534.0 17,405.0 18,619.1 19,785.4 21,128.1 22,546.6 24,067.6Gross Profit 3,995.0 3,501.0 3,689.0 3,786.0 14,971.0 4,117.9 3,820.2 4,105.4 4,166.3 16,209.8 12,446.0 14,067.0 14,971.0 16,209.8 17,364.4 18,692.2 20,108.0 21,637.4

SG&A Demand Creation 832.0 769.0 804.0 873.0 3,278.0 1,119.7 796.8 805.6 829.2 3,551.3 3,031.0 3,213.0 3,278.0 3,551.3 3,740.1 4,028.9 4,337.0 4,670.0 Salaries and Benefits 1,745.0 1,791.0 1,762.0 1,893.0 7,191.0 1,850.7 1,912.3 1,907.4 2,016.5 7,686.9 5,735.0 6,679.0 7,191.0 7,686.9 8,123.2 8,607.6 9,113.7 9,651.2SG&A Total 2,577.0 2,560.0 2,566.0 2,766.0 10,469.0 2,970.3 2,709.1 2,713.0 2,845.8 11,238.3 8,766.0 9,892.0 10,469.0 11,238.3 11,863.3 12,636.5 13,450.6 14,321.2Operating Income 1,418.0 941.0 1,123.0 1,020.0 4,502.0 1,147.5 1,111.0 1,392.4 1,320.5 4,971.5 3,680.0 4,175.0 4,502.0 4,971.5 5,501.1 6,055.8 6,657.3 7,316.2

D&A 197.0 125.0 159.0 666.5 1,147.5 211.8 134.4 170.9 716.5 1,233.6 642.0 1,073.0 1,147.5 1,233.6 1,326.1 1,425.5 1,532.5 1,647.4EBITDA 1,615.0 1,066.0 1,282.0 1,686.5 5,649.5 1,359.3 1,245.4 1,563.3 2,037.0 6,205.0 4,322.0 5,248.0 5,649.5 6,205.0 6,827.2 7,481.3 8,189.8 8,963.6EBITDA Margin 19.2% 13.9% 16.0% 20.5% 17.4% 15.3% 15.0% 17.8% 22.9% 17.8% 15.5% 17.1% 17.4% 17.8% 18.4% 18.8% 19.2% 19.6%

Interest Income (Expense) - Model Driver -4.0 -5.0 -5.0 -5.0 -18.2 -5.0 -5.6 -5.9 -6.1 -22.6 -33.0 -28.0 -18.2 -22.6 -30.4 -42.5 -60.6 -60.6 Other Income (Expense) 31.0 34.0 17.0 58.0 140.0 30.0 30.0 30.0 30.0 120.0 -103.0 58.0 140.0 120.0 0.0 0.0 0.0 0.0Total Non-Operating Income (Expense) 27.0 29.0 12.0 53.0 121.8 25.0 24.4 24.1 23.9 97.4 -136.0 30.0 121.8 97.4 -30.4 -42.5 -60.6 -60.6Pretax Income 1,445.0 970.0 1,135.0 1,073.0 4,623.8 1,172.5 1,135.5 1,416.5 1,344.4 5,068.8 3,544.0 4,205.0 4,623.8 5,068.8 5,470.7 6,013.2 6,596.7 7,255.5Provision for Taxes 266.0 185.0 185.0 227.0 863.0 228.6 221.4 276.2 262.2 988.4 851.0 932.0 863.0 988.4 1,039.4 1,142.5 1,253.4 1,378.6

Tax Rate 18.4% 19.1% 16.3% 21.2% 18.7% 19.5% 19.5% 19.5% 19.5% 19.5% 24.0% 22.2% 18.7% 19.5% 19.0% 19.0% 19.0% 19.0%

Adjusted Net Income 1,179.0 785.0 950.0 846.0 3760.8 943.9 914.0 1,140.3 1,082.2 4080.4 2,693.0 3,273.0 3,760.8 4,080.4 4,431.3 4,870.7 5,343.3 5,877.0Pro Forma EPS 0.67 0.45 0.55 0.49 2.16 0.55 0.54 0.68 0.65 2.41 1.49 1.85 2.16 2.41 2.71 3.09 3.51 3.99

1X Charge (net) 0.0 0.0 0 0 0 0 0 0 0 0GAAP Net Income 1179.0 785.0 950.0 846.0 3760.8 943.9 914.0 1140.3 1082.2 4080.4 2693.0 3273.0 3760.8 4080.4 4431.3 4870.7 5343.3 5877.0GAAP EPS 0.67 0.45 0.55 0.49 2.16 0.55 0.54 0.68 0.65 2.41 1.49 1.85 2.16 2.41 2.71 3.09 3.51 3.99

Dividend 0.28 0.32 0.16 0.16 0.92 0.16 0.18 0.18 0.18 0.69 0.92 1.08 0.92 0.69 0.76 0.83 0.92 1.01

Basic Shares Outstanding 1,709.0 1,706.6 1,693.8 1,682.4 1,698.0 1,673.4 1,665.5 1,636.7 1,624.3 1,650.0 1,766.7 1,723.5 1,698.0 1,650.0 1,592.1 1,535.7 1,481.7 1,430.6Diluted Shares Outstanding 1,754.6 1,751.4 1,737.3 1,723.1 1,741.6 1,714.1 1,706.2 1,677.4 1,665.0 1,690.7 1,810.7 1,767.3 1,741.6 1,690.7 1,632.8 1,576.4 1,522.4 1,471.3

MarginsGross Margin 47.5% 45.6% 45.9% 45.9% 46.2% 46.5% 46.1% 46.7% 46.9% 46.5% 44.8% 46.0% 46.2% 46.5% 46.7% 46.9% 47.1% 47.3%Y/Y Growth 86bp 47bp 0bp -26bp 27bp -100bp 50bp 75bp 100bp 30bp 118bp 120bp 27bp 30bp 20bp 20bp 20bp 20bpEBITDA 19.2% 13.9% 16.0% 20.5% 17.4% 15.3% 15.0% 17.8% 22.9% 17.8% 15.5% 17.1% 17.4% 17.8% 18.4% 18.8% 19.2% 19.6%Pretax Income 17.2% 12.6% 14.1% 13.0% 14.3% 13.2% 13.7% 16.1% 15.1% 14.6% 12.7% 13.7% 14.3% 14.6% 14.7% 15.1% 15.5% 15.9%Effective Tax Rate 18.4% 19.1% 16.3% 21.2% 18.7% 19.5% 19.5% 19.5% 19.5% 19.5% 24.0% 22.2% 18.7% 19.5% 19.0% 19.0% 19.0% 19.0%Net Margin 14.0% 10.2% 11.8% 10.3% 11.6% 10.7% 11.0% 13.0% 12.2% 11.7% 9.7% 10.7% 11.6% 11.7% 11.9% 12.2% 12.5% 12.9%

% of RevenueFootwear 60.9% 59.7% 63.2% 61.6% 61.4% 61.3% 59.9% 63.3% 61.7% 61.6% 58.3% 59.9% 61.4% 61.6% 61.4% 61.4% 61.3% 61.3% Apparel 27.8% 30.7% 26.4% 27.2% 28.0% 27.3% 30.6% 26.5% 27.2% 27.8% 29.2% 28.2% 28.0% 27.8% 27.9% 27.9% 27.9% 27.8% Equipment and Other 4.8% 4.5% 4.4% 4.7% 4.6% 4.8% 4.5% 4.4% 4.7% 4.6% 6.0% 5.3% 4.6% 4.6% 4.6% 4.6% 4.7% 4.7% Other Brands 6.6% 5.2% 6.1% 6.2% 6.0% 6.8% 5.2% 6.0% 6.2% 6.1% 6.1% 6.5% 6.0% 6.1% 6.1% 6.2% 6.2% 6.3%

COGS 52.5% 54.4% 54.1% 54.1% 53.8% 53.5% 53.9% 53.3% 53.1% 53.5% 55.2% 54.0% 53.8% 53.5% 53.3% 53.1% 52.9% 52.7%

Demand Creation 9.9% 10.0% 10.0% 10.6% 10.1% 12.6% 9.6% 9.2% 9.3% 10.2% 10.9% 10.5% 10.1% 10.2% 10.1% 10.1% 10.2% 10.2%Y/Y Growth -135bp -37bp 21bp 6bp -37bp 275bp -40bp -85bp -125bp 7bp 6bp -40bp -37bp 7bp -13bp 5bp 5bp 5bp

Salaries and Benefits 20.7% 23.3% 21.9% 23.0% 22.2% 20.9% 23.1% 21.7% 22.7% 22.1% 20.6% 21.8% 22.2% 22.1% 21.9% 21.6% 21.4% 21.1%Y/Y Growth 91bp 65bp -15bp 13bp 38bp 15bp -25bp -25bp -25bp -14bp 71bp 120bp 38bp -14bp -20bp -25bp -25bp -25bp

SG&A Total 30.6% 33.3% 31.9% 33.6% 32.3% 33.5% 32.7% 30.8% 32.1% 32.3% 31.5% 32.3% 32.3% 32.3% 31.9% 31.7% 31.5% 31.3%Y/Y Growth -44bp 27bp 6bp 19bp 1bp 290bp -65bp -110bp -150bp -7bp 77bp 79bp 1bp -7bp -33bp -20bp -20bp -20bp

Operating Margin 16.9% 12.2% 14.0% 12.4% 13.9% 13.0% 13.4% 15.8% 14.9% 14.3% 13.2% 13.6% 13.9% 14.3% 14.8% 15.2% 15.6% 16.0%Y/Y Growth 131bp 20bp -5bp -46bp 26bp -390bp 115bp 185bp 250bp 37bp 41bp 41bp 26bp 37bp 53bp 40bp 40bp 40bp

Y/Y GrowthFootwear 9.0% 7.6% 11.0% 6.3% 8.5% 6.0% 8.2% 9.7% 7.8% 7.9% 10.7% 13.0% 8.5% 7.9% 6.5% 7.0% 7.1% 7.1% Apparel 4.7% 3.4% 8.4% 3.9% 5.0% 3.2% 7.5% 9.5% 7.8% 7.0% 8.2% 6.5% 5.0% 7.0% 6.8% 7.3% 7.0% 7.0% Equipment and Other -10.3% -9.2% -7.9% -5.8% -8.3% 4.9% 7.6% 8.7% 5.8% 6.7% 1.8% -2.3% -8.3% 6.7% 7.3% 8.0% 8.0% 8.1% Other Brands -3.5% -8.3% -9.1% 17.9% -1.4% 8.0% 8.0% 8.0% 8.0% 8.0% 16.2% 17.7% -1.4% 8.0% 8.0% 8.0% 8.0% 8.0%Total Revenue 5.4% 4.1% 7.7% 6.0% 5.8% 5.3% 7.9% 9.5% 7.7% 7.6% 9.8% 10.1% 5.8% 7.6% 6.7% 7.2% 7.1% 7.2% Demand Creation -7.2% 0.4% 10.0% 6.6% 2.0% 34.6% 3.6% 0.2% -5.0% 8.3% 10.4% 6.0% 2.0% 8.3% 5.3% 7.7% 7.6% 7.7% Salaries and Benefits 10.2% 7.1% 6.9% 6.6% 7.7% 6.1% 6.8% 8.3% 6.5% 6.9% 13.7% 16.5% 7.7% 6.9% 5.7% 6.0% 5.9% 5.9%SG&A Total 3.9% 5.0% 7.9% 6.6% 5.8% 15.3% 5.8% 5.7% 2.9% 7.3% 12.6% 12.8% 5.8% 7.3% 5.6% 6.5% 6.4% 6.5%Operating Income 14.3% 5.8% 7.3% 2.2% 7.8% -19.1% 18.1% 24.0% 29.5% 10.4% 13.3% 13.5% 7.8% 10.4% 10.7% 10.1% 9.9% 9.9%

Net Income 22.6% 19.8% 20.1% -2.2% 14.9% -19.9% 16.4% 20.0% 27.9% 8.5% 9.6% 21.5% 14.9% 8.5% 8.6% 9.9% 9.7% 10.0%EBITDA 19.3% 4.2% 2.3% 4.2% 7.7% -15.8% 16.8% 21.9% 20.8% 9.8% 17.3% 21.4% 7.7% 9.8% 10.0% 9.6% 9.5% 9.4%EPS 23.8% 21.1% 22.2% -0.1% 16.6% -18.0% 19.5% 24.3% 32.4% 11.8% 10.8% 24.5% 16.6% 11.8% 12.4% 13.8% 13.6% 13.8%


29 June 2016

Nike Inc. (NKE) 10

Figure 7: Divisional Revenue

Nike Inc.Divisional Revenue($ in millions except per share data)


North America Footwear 2,366.0 2,162.0 2,404.0 2,367.0 9,299.0 2,413.3 2,226.9 2,512.2 2,497.2 9,649.5 7,495.0 8,506.0 9,299.0 9,649.5 10,228.5 10,842.2 11,492.8 12,182.3 Apparel 1,247.0 1,221.0 1,115.0 1,163.0 4,746.0 1,247.0 1,269.8 1,181.9 1,244.4 4,943.2 3,937.0 4,409.0 4,746.0 4,943.2 5,239.7 5,554.1 5,887.4 6,240.6 Equipment and Other 186.0 164.0 164.0 205.0 719.0 197.2 173.8 173.8 217.3 762.1 867.0 825.0 719.0 762.1 838.4 922.2 1,014.4 1,115.8Total 3,799.0 3,547.0 3,683.0 3,735.0 14,764.0 3,857.5 3,670.5 3,867.9 3,958.9 15,354.8 12,299.0 13,740.0 14,764.0 15,354.8 16,306.6 17,318.5 18,394.5 19,538.8

Western Europe Footwear 1,128.0 845.0 985.0 1,027.0 3,985.0 1,268.0 944.0 1,105.5 1,114.3 4,431.8 3,299.0 3,877.0 3,985.0 4,431.8 4,631.7 4,909.6 5,204.2 5,516.4 Apparel 434.0 391.0 392.0 411.0 1,628.0 483.5 432.8 435.9 443.9 1,796.1 1,427.0 1,554.0 1,628.0 1,796.1 1,894.8 2,027.4 2,128.8 2,235.2 Equipment and Other 79.0 63.0 65.0 64.0 271.0 84.0 66.5 69.6 66.6 286.7 253.0 277.0 271.0 286.7 293.9 305.7 317.9 330.6Total 1,641.0 1,299.0 1,442.0 1,502.0 5,884.0 1,835.5 1,443.3 1,611.1 1,624.7 6,514.6 4,979.0 5,708.0 5,884.0 6,514.6 6,820.4 7,242.7 7,650.9 8,082.3

Eastern Europe Footwear 238.0 183.0 237.0 224.0 882.0 243.3 192.7 263.6 246.4 946.0 763.0 827.0 882.0 946.0 1,019.4 1,100.9 1,189.0 1,284.1 Apparel 133.0 126.0 102.0 102.0 463.0 137.3 133.9 114.5 111.2 496.8 532.0 497.0 463.0 496.8 536.9 579.9 626.3 676.4 Equipment and Other 30.0 17.0 20.0 19.0 86.0 30.7 17.7 21.8 20.0 90.2 92.0 95.0 86.0 90.2 96.2 102.4 109.1 116.2Total 401.0 326.0 359.0 345.0 1,431.0 411.3 344.3 399.9 377.5 1,533.0 1,387.0 1,419.0 1,431.0 1,533.0 1,652.5 1,783.2 1,924.3 2,076.6

0.0 0.0 0.0 0.0 0.0 0.0China Footwear 599.0 600.0 719.0 681.0 2,599.0 678.5 663.9 812.7 766.1 2,921.3 1,600.0 2,016.0 2,599.0 2,921.3 3,232.7 3,523.7 3,840.8 4,186.5 Apparel 246.0 306.0 235.0 268.0 1,055.0 257.6 329.6 259.7 294.8 1,141.7 876.0 925.0 1,055.0 1,141.7 1,253.3 1,353.6 1,461.9 1,578.8 Equipment and Other 41.0 32.0 28.0 30.0 131.0 42.5 34.2 30.7 32.7 140.1 126.0 126.0 131.0 140.1 155.6 169.6 184.9 201.6Total 886.0 938.0 982.0 979.0 3,785.0 978.6 1,027.6 1,103.1 1,093.6 4,203.0 2,602.0 3,067.0 3,785.0 4,203.0 4,641.7 5,046.9 5,487.6 5,966.9

Japan Footwear 122.0 128.0 133.0 187.0 570.0 147.2 146.6 143.6 196.4 633.8 409.0 452.0 570.0 633.8 632.3 663.9 697.1 731.9 Apparel 43.0 63.0 52.0 70.0 228.0 50.9 71.5 55.6 72.8 250.8 276.0 230.0 228.0 250.8 247.5 257.4 267.7 278.4 Equipment and Other 14.0 14.0 20.0 23.0 71.0 16.3 15.7 21.1 23.6 76.6 86.0 73.0 71.0 76.6 74.8 76.7 78.6 80.6Total 179.0 205.0 205.0 280.0 869.0 214.5 233.7 220.4 292.7 961.2 771.0 755.0 869.0 961.2 954.6 998.0 1,043.4 1,090.9

Emerging Markets Footwear 670.0 674.0 596.0 596.0 2,536.0 680.3 795.1 728.7 655.6 2,859.7 2,642.0 2,641.0 2,536.0 2,859.7 3,083.3 3,391.6 3,730.8 4,103.9 Apparel 238.0 255.0 228.0 226.0 947.0 240.6 300.8 278.8 248.6 1,068.8 1,061.0 1,021.0 947.0 1,068.8 1,181.2 1,334.7 1,508.2 1,704.3 Equipment and Other 58.0 55.0 55.0 50.0 218.0 57.3 63.4 65.7 53.8 240.2 246.0 236.0 218.0 240.2 252.9 271.8 292.2 314.1Total 966.0 984.0 879.0 872.0 3,701.0 978.3 1,159.3 1,073.1 958.0 4,168.7 3,949.0 3,898.0 3,701.0 4,168.7 4,517.3 4,998.2 5,531.2 6,122.3

Worldwide Total Footwear 5,123.0 4,592.0 5,074.0 5,082.0 19,871.0 5,430.8 4,969.0 5,566.3 5,476.0 21,442.1 16,208.0 18,319.0 19,871.0 21,442.1 22,827.9 24,431.9 26,154.6 28,005.2 Apparel 2,341.0 2,362.0 2,124.0 2,240.0 9,067.0 2,416.9 2,538.4 2,326.4 2,415.7 9,697.4 8,109.0 8,636.0 9,067.0 9,697.4 10,353.4 11,107.1 11,880.2 12,713.7 Equipment and Other 408.0 345.0 352.0 391.0 1,496.0 428.0 371.3 382.7 413.8 1,595.9 1,670.0 1,632.0 1,496.0 1,595.9 1,711.8 1,848.5 1,997.1 2,158.9

Global Brand Divisions 26.0 18.0 17.0 12.0 73.0 27.3 18.9 17.9 12.6 76.7 125.0 114.0 73.0 76.7 80.5 84.5 88.7 93.2

Other Brands (Converse from 1Q13 On) 555.0 398.0 489.0 513.0 1,955.0 599.4 429.8 528.1 554.0 2,111.4 1,684.0 1,982.0 1,955.0 2,111.4 2,280.3 2,462.7 2,659.8 2,872.5

Corporate -39.0 -29.0 -24.0 6.0 -86.0 -42.9 -31.9 -26.4 6.6 -94.6 3.0 -82.0 -86.0 -94.6 -104.1 -114.5 -125.9 -138.5Total 8,414.0 7,686.0 8,032.0 8,244.0 32,376.0 8,859.4 8,295.6 8,795.1 8,878.7 34,828.8 27,799.0 30,601.0 32,376.0 34,828.8 37,149.8 39,820.3 42,654.6 45,705.0


29 June 2016

Nike Inc. (NKE) 11

Figure 8: Balance Sheet

Nike Inc.Balance Sheet($ in millions except per share data)


AssetsCurrent Assets: Cash and Equivalents 5,408.0 6,116.0 5,106.0 5,457.0 5,457.0 4,790.1 4,673.2 3,762.1 5,577.3 5,577.3 5,142.0 5,924.0 5,457.0 5,577.3 5,650.2 5,868.5 6,276.8 6,939.1 Accounts Receivable 3,288.0 3,437.0 3,368.0 3,241.0 3,241.0 3,462.1 3,709.6 3,688.0 3,490.5 3,490.5 3,434.0 3,358.0 3,241.0 3,490.5 3,739.4 4,007.1 4,291.3 4,597.0 Inventories 4,414.0 4,600.0 4,590.0 4,838.0 4,838.0 4,999.6 5,118.2 4,904.2 5,009.4 5,009.4 3,947.0 4,337.0 4,838.0 5,009.4 5,318.4 5,647.8 5,993.5 6,362.0 Deferred Income Taxes 377.0 405.0 410.0 471.7 471.7 457.1 491.1 497.2 572.0 572.0 355.0 389.0 471.7 572.0 693.5 841.0 1,019.7 1,236.5 Prepaid Expenses and Other 1,751.0 2,197.0 1,782.0 1,017.3 1,017.3 1,017.3 1,017.3 1,017.3 1,017.3 1,017.3 818.0 1,968.0 1,017.3 1,017.3 1,017.3 1,017.3 1,017.3 1,017.3Total Current Assets 15,238.0 16,755.0 15,256.0 15,025.0 15,025.0 14,726.2 15,009.4 13,868.8 15,666.5 15,666.5 13,696.0 15,976.0 15,025.0 15,666.5 16,418.8 17,381.7 18,598.6 20,151.9

PP&E 3,112.0 3,235.0 3,329.0 3,520.0 3,520.0 3,651.6 3,819.6 3,949.0 3,497.1 3,497.1 2,834.0 3,011.0 3,520.0 3,497.1 3,442.2 3,351.4 3,220.4 3,044.6 Identifiable Intangible Assets 281.0 281.0 281.0 281.0 281.0 281.0 281.0 281.0 281.0 281.0 282.0 281.0 281.0 281.0 281.0 281.0 281.0 281.0 Goodwill 131.0 131.0 131.0 131.0 131.0 131.0 131.0 131.0 131.0 131.0 131.0 131.0 131.0 131.0 131.0 131.0 131.0 131.0 Deferred Taxes and Other Assets 2,004.0 2,181.0 1,990.0 2,439.0 2,439.0 2,220.7 2,416.8 2,205.2 2,702.7 2,702.7 1,651.0 2,201.0 2,439.0 2,702.7 2,995.0 3,318.8 3,677.7 4,075.4

0.0 0.0 0.0 0.0 0.0 0.0Total Assets 20,766.0 22,583.0 20,987.0 21,396.0 21,396.0 21,010.5 21,657.8 20,434.9 22,278.3 22,278.3 18,594.0 21,600.0 21,396.0 22,278.3 23,268.0 24,463.9 25,908.8 27,683.9

Liabilities and Shareholders EquityCurrent Liabilities: Current Long-term Debt 106.0 5.0 7.0 44.0 44.0 44.0 44.0 44.0 44.0 44.0 7.0 107.0 44.0 44.0 44.0 44.0 44.0 44.0 Notes Payable 23.0 99.0 0.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 167.0 74.0 1.0 1.0 1.0 1.0 1.0 1.0 Accounts Payable 1,933.0 1,915.0 1,714.0 2,191.0 2,191.0 2,074.1 2,047.9 1,850.8 2,316.0 2,316.0 1,930.0 2,131.0 2,191.0 2,316.0 2,471.8 2,638.8 2,815.2 3,004.2 Accrued Liabilities 3,139.0 3,451.0 3,224.0 3,037.0 3,037.0 3,037.0 3,037.0 3,037.0 3,037.0 3,037.0 2,491.0 3,951.0 3,037.0 3,037.0 3,037.0 3,037.0 3,037.0 3,037.0 Income Taxes Payable, Other 75.0 41.0 35.0 85.0 85.0 60.9 48.0 43.7 106.5 106.5 432.0 71.0 85.0 106.5 114.0 125.2 137.2 150.7Total Current Liabilities 5,276.0 5,511.0 4,980.0 5,358.0 5,358.0 5,216.9 5,177.9 4,976.5 5,504.5 5,504.5 5,027.0 6,334.0 5,358.0 5,504.5 5,667.9 5,846.0 6,034.3 6,237.0

0.0 0.0 0.0 0.0 0.0 0.0 Long-term Debt 1,079.0 2,067.0 2,048.0 2,010.0 2,010.0 2,010.0 2,010.0 2,010.0 2,010.0 2,010.0 1,199.0 1,079.0 2,010.0 2,010.0 2,010.0 2,010.0 2,010.0 2,010.0 Deferred Taxes and Other 1,517.0 1,600.0 1,659.0 1,770.0 1,770.0 1,770.0 1,770.0 1,770.0 1,770.0 1,770.0 1,544.0 1,480.0 1,770.0 1,770.0 1,770.0 1,770.0 1,770.0 1,770.0 Commitments and Contingencies 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Redeemable Preferred Stock 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total Shareholders Equity 12,894.0 13,405.0 12,300.0 12,258.0 12,258.0 12,013.5 12,699.9 11,678.4 12,993.8 12,993.8 10,824.0 12,707.0 12,258.0 12,993.8 13,820.1 14,837.9 16,094.4 17,666.9

Total Liabilities and Equity 20,766.0 22,583.0 20,987.0 21,396.0 21,396.0 21,010.5 21,657.8 20,434.9 22,278.3 22,278.3 18,594.0 21,600.0 21,396.0 22,278.3 23,268.0 24,463.9 25,908.8 27,683.9

0 0 0 0 0 0Operating Ratios Receivables Turnover 10.2 8.9 9.5 10.2 9.8 10.2 8.9 9.5 10.2 10.3 8.5 9.0 9.8 10.3 10.3 10.3 10.3 10.3 DSO 35.2 40.2 37.7 35.4 37.2 35.2 40.2 37.7 35.4 35.3 43.0 40.5 37.2 35.3 35.5 35.5 35.5 35.5

Inventory Turnover 4.0 3.7 3.8 3.8 3.8 3.9 3.5 3.7 3.8 3.7 4.1 4.0 3.8 3.7 3.8 3.8 3.8 3.8 Days Inventory (backwards) 89.9 98.9 95.1 97.7 96.5 94.9 102.9 94.1 95.7 97.6 89.0 92.2 96.5 97.6 96.9 96.3 95.8 95.3Days Inventory (forwards) 94.9 95.3 92.7 91.8 100.5 98.2 93.7 87.9 0.0 0.0

Payables Turnover 9.1 8.7 10.1 8.1 8.6 9.1 8.7 10.1 8.1 8.7 9.0 8.2 8.6 8.7 8.7 8.7 8.7 8.7 Days Payables Outstanding 39.4 41.2 35.5 44.2 42.2 39.4 41.2 35.5 44.2 41.8 40.5 44.4 42.2 41.8 41.8 41.8 41.8 41.8

Cash Cycle (in Days) 85.7 98.0 97.3 88.8 91.5 90.7 102.0 96.3 86.8 91.1 91.5 88.3 91.5 91.1 90.6 90.0 89.5 89.0


29 June 2016

Nike Inc. (NKE) 12

Figure 9: Statement Of Cash Flows

Nike Inc.Cash Flows($ in millions except per share data)


Operating Net Income 1179.0 785.0 950.0 846.0 3760.0 943.9 914.0 1140.3 1082.2 4080.4 2693.0 3273.0 3760.0 4080.4 4431.3 4870.7 5343.3 5877.0 Depreciation and Amortization 197.0 125.0 159.0 666.5 1147.5 211.8 134.4 170.9 716.5 1233.6 642.0 1073.0 1147.5 1233.6 1326.1 1425.5 1532.5 1647.4 Deferred Taxes and Investment Tax Credit -31.0 -8.0 33.0 510.7 504.7 -232.9 230.1 -205.6 572.4 364.0 -11.0 -113.0 504.7 364.0 413.8 471.3 537.6 614.5 Tax benefit from options and other 54.0 62.0 270.0 -951.7 -565.7 0.0 0.0 0.0 0.0 0.0 177.0 191.0 -565.7 0.0 0.0 0.0 0.0 0.0 Decrease (Inc) in A/R 52.0 -191.0 15.0 127.0 3.0 -221.1 -247.5 21.6 197.4 -249.5 -298.0 -216.0 3.0 -249.5 -248.9 -267.7 -284.1 -305.7 Decrease (Inc) in Inv -100.0 -254.0 -5.0 -248.0 -607.0 -161.6 -118.6 213.9 -105.2 -171.4 -505.0 -621.0 -607.0 -171.4 -309.0 -329.4 -345.7 -368.6 Decrease (Inc) in prepaid and other -73.0 -41.0 -35.0 50.0 -99.0 -24.1 -12.9 -4.3 62.8 21.5 -210.0 -144.0 -99.0 21.5 7.5 11.2 12.0 13.6 Decrease (Inc) in AP -787.0 -7.0 -437.0 477.0 -754.0 -116.9 -26.2 -197.1 465.2 125.0 525.0 1237.0 -754.0 125.0 155.8 167.0 176.4 189.1 Net Change in Working Capital -908.0 -493.0 -462.0 406.0 -1457.0 -523.7 -405.2 34.2 620.3 -274.4 -488.0 256.0 -1457.0 -274.4 -394.6 -419.0 -441.5 -471.6

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Net Cash Flow From Operations 491.0 471.0 950.0 1,477.5 3,389.5 399.1 873.3 1,139.8 2,991.4 5,403.6 3,013.0 4,680.0 3,389.5 5,403.6 5,776.6 6,348.5 6,972.0 7,667.2

Investing Purchase of Investments -1,188.0 -1663.0 -908.0 0.0 -3,759.0 0.0 0.0 0.0 0.0 0.0 -5386.0 -4936.0 -3759.0 0.0 0.0 0.0 0.0 0.0 Sale of Investments 1,171.0 79.0 689.0 0.0 1,939.0 0.0 0.0 0.0 0.0 0.0 1126.0 2216.0 1939.0 0.0 0.0 0.0 0.0 0.0 Capital Expenditure -327.0 -288.0 -286.0 -252.0 -1,153.0 -343.4 -302.4 -300.3 -264.6 -1,210.7 -880.0 -963.0 -1153.0 -1210.7 -1271.2 -1334.7 -1401.5 -1471.6 Acquisition of Subsidiary 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Sale of PP&E 9.0 0.0 0.0 3.0 12.0 3.0 3.0 3.0 3.0 12.0 3.0 3.0 12.0 12.0 12.0 12.0 12.0 12.0 Other investing -50.0 1560.0 658.0 0.0 2,168.0 0.0 0.0 0.0 0.0 0.0 3930.0 3505.0 2168.0 0.0 0.0 0.0 0.0 0.0

Net Cash Flow from Investing -385.0 -312.0 153.0 -249.0 -793.0 -340.4 -299.4 -297.3 -261.6 -1,198.7 -1,207.0 -175.0 -793.0 -1,198.7 -1,259.2 -1,322.7 -1,389.5 -1,459.6

Financing 0 0 0 0 0 0 0 0 Change in Current Debt -48.0 81.0 -101.0 38.0 -30.0 0.0 0.0 0.0 0.0 0.0 75.0 -63.0 -30.0 0.0 0.0 0.0 0.0 0.0 Change in LT Debt -1.0 879.0 -1.0 0.0 877.0 0.0 0.0 0.0 0.0 0.0 -60.0 -7.0 877.0 0.0 0.0 0.0 0.0 0.0 Share Repurchases -588.0 -652.0 -1458.0 -779.0 -3,477.0 -668.0 -732.0 -1,538.0 -859.0 -3,797.0 -2628.0 -2534.0 -3477.0 -3797.0 -4117.0 -4437.0 -4757.0 -5077.0 Proceeds from exercise of options, other 203.0 323.0 70.0 222.5 818.5 210.1 334.3 72.5 230.3 847.2 498.0 713.0 818.5 847.2 876.8 907.5 939.3 972.2 Cash Dividends -240.0 -239.0 -273.0 -269.2 -1,021.2 -267.7 -293.1 -288.1 -285.9 -1,134.8 -799.0 -899.0 -1021.2 -1134.8 -1204.5 -1278.0 -1356.4 -1440.5

Net Cash Flow from Financing -674.0 392.0 -1,763.0 -787.7 -2,832.7 -725.6 -690.8 -1,753.6 -914.6 -4,084.6 -2,914.0 -2,790.0 -2,832.7 -4,084.6 -4,444.6 -4,807.5 -5,174.1 -5,545.4

Exchange Rate Effect -38.0 -20.0 -73.0 -131.0 0.0 1.0 -83.0 -131.0 0.0 0.0 0.0 0.0 0.00.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Increase (Dec) in Cash and ST Investments -606.0 531.0 -733.0 440.8 -367.2 -666.9 -116.9 -911.1 1,815.2 120.3 -1,107.0 1,632.0 -367.2 120.3 72.8 218.3 408.4 662.2


29 June 2016

Nike Inc. (NKE) 13

Companies Mentioned (Price as of 28-Jun-2016)Adidas AG (ADSGn.F, €122.901)Nike Inc. (NKE.N, $53.09, OUTPERFORM, TP $63.0)Under Armour, Inc. (UA.N, $37.52)

Disclosure AppendixImportant Global Disclosures I, Christian Buss, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for Nike Inc. (NKE.N)

NKE.N Closing Price Target Price Date (US$) (US$) Rating 28-Jun-13 31.84 33.00 N 27-Sep-13 36.82 36.00 20-Mar-14 39.64 40.00 29-Sep-14 44.56 50.00 O 10-Dec-14 48.83 52.50 20-Jan-15 46.80 51.00 16-Mar-15 48.22 49.50 20-Mar-15 50.99 53.00 26-Jun-15 54.86 55.00 25-Sep-15 62.50 63.00 23-Dec-15 64.36 67.00 23-Mar-16 62.44 68.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price NKE.N

1- Jan- 14 1- Jul- 14 1- Jan- 15 1- Jul- 15 1- Jan- 16 1- Jul- 1630

40

50

60

70

N EU T RA LO U T PERFO RM

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activitiesAs of December 10, 2012 Analysts’ stock rating are defined as follows:Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months.Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011.Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

29 June 2016

Nike Inc. (NKE) 14

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings DistributionRating Versus universe (%) Of which banking clients (%)Outperform/Buy* 56% (39% banking clients)Neutral/Hold* 34% (18% banking clients)Underperform/Sell* 10% (40% banking clients)Restricted 0%*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

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Target Price and RatingValuation Methodology and Risks: (12 months) for Nike Inc. (NKE.N)

Method: Our 12-month price target of $63 is a weighted average of 1) a comparable valuation ($61), 2) a 5-year DCF ($61), 3) a long term growth analysis ($67). We believe the stock will continue to Outperform the peer group long-term.

Risk: Risks to our $63 price target and Outperform rating on Nike are risk to consumer discretionary spending, foreign currency risk, channel conflict, and accounting risk.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names As of the date of this report, Credit Suisse makes a market in the following subject companies (NKE.N).Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events.Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit-suisse.com/sites/disclaimers-ib/en/canada-research-policy.html.As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.Principal is not guaranteed in the case of equities because equity prices are variable.Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

29 June 2016

Nike Inc. (NKE) 15

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29 june 2016 nike inc. equity research

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