Nike 2012 Annual Report Download - page 3

PART I
PART I
ITEM 1. Business
General
NIKE, Inc. was incorporated in 1968 under the laws of the state of Oregon. As
used in this report, the terms “we”, “us”, “NIKE” and the “Company” refer to
NIKE, Inc. and its predecessors, subsidiaries and affiliates, unless the context
indicates otherwise. Our internet address is www.nike.com. On our NIKE
Corporate web site, located at www.nikeinc.com, we post the following filings
as soon as reasonably practicable after they are electronically filed with or
furnished to the Securities and Exchange Commission: 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. All such filings on our NIKE Corporate web site are available free of
charge. Also available on the NIKE Corporate web site are the charters of the
committees of our board of directors, as well as our corporate governance
guidelines and code of ethics; copies of any of these documents will be
provided in print to any shareholder who submits a request in writing to NIKE
Investor Relations, One Bowerman Drive, Beaverton, Oregon 97005-6453.
Our principal business activity is the design, development and worldwide
marketing and selling of high quality footwear, apparel, equipment,
accessories and services. NIKE is the largest seller of athletic footwear and
athletic apparel in the world. We sell our products to retail accounts, through
NIKE-owned retail stores and internet sales, which we refer to as our “Direct
to Consumer” operations, and through a mix of independent distributors and
licensees, in approximately 190 countries around the world. Virtually all of our
products are manufactured by independent contractors. Virtually all footwear
and apparel products are produced outside the United States, while
equipment products are produced both in the United States and abroad.
Products
We focus our product offerings in seven key categories: Running, Basketball,
Football (Soccer), Men’s Training, Women’s Training, NIKE Sportswear (our
sports-inspired products), and Action Sports. We also market products
designed for kids, as well as for other athletic and recreational uses such as
baseball, cricket, golf, lacrosse, outdoor activities, football (American), tennis,
volleyball, walking and wrestling.
NIKE’s athletic footwear products are designed primarily for specific athletic
use, although a large percentage of the products are worn for casual or leisure
purposes. We place considerable emphasis on high quality construction and
innovation in products designed for men, women and children. NIKE
Sportswear, Running, Basketball, Football (Soccer) and kids’ shoes are
currently our top-selling footwear categories and we expect them to continue
to lead in product sales in the near future.
We sell sports apparel and accessories covering most of the above
categories, as well as athletic bags and accessory items. NIKE apparel and
accessories feature the same trademarks and are sold through the same
marketing and distribution channels. We often market footwear, apparel and
accessories in “collections” of similar use or by category. We also market
apparel with licensed college and professional team and league logos.
We sell a line of performance equipment under the NIKE Brand name,
including bags, socks, sport balls, eyewear, timepieces, digital devices, bats,
gloves, protective equipment, golf clubs, and other equipment designed for
sports activities. We also sell small amounts of various plastic products to
other manufacturers through our wholly-owned subsidiary, NIKE IHM, Inc.
In addition to the products we sell directly to customers through our Direct to
Consumer operations, we have entered into license agreements that permit
unaffiliated parties to manufacture and sell certain apparel, digital devices and
applications and other equipment designed for sports activities.
Our wholly-owned subsidiary, Cole Haan (“Cole Haan”), headquartered in
New York, New York, designs and distributes dress and casual footwear,
apparel and accessories for men and women under the Cole Haan®
trademark.
Our wholly-owned subsidiary, Converse Inc. (“Converse”), headquartered in
North Andover, Massachusetts, designs, distributes and licenses athletic and
casual footwear, apparel and accessories under the Converse®, Chuck
Taylor®,AllStar
®,OneStar ®,StarChevron ®and Jack Purcell®trademarks.
Our wholly-owned subsidiary, Hurley International LLC (“Hurley”),
headquartered in Costa Mesa, California, designs and distributes a line of
action sports and youth lifestyle apparel and accessories under the Hurley®
trademark.
Our wholly-owned subsidiary, Umbro International Limited (“Umbro”),
headquartered in Cheadle, United Kingdom, designs, distributes and licenses
athletic and casual footwear, apparel and equipment, primarily for the sport of
football (soccer), under the Umbro®trademark.
As part of our long-term growth strategy, we continually evaluate our existing
portfolio of businesses to ensure we are investing in those businesses that are
accretive to the NIKE Brand, and with the largest growth potential and highest
returns. On May 31, 2012, we announced our intention to divest of the Cole
Haan and Umbro businesses, which will allow us to focus our resources on
driving growth in the NIKE, Jordan, Converse and Hurley brands. Refer to the
“Other Businesses” section under Item 7— Management Discussion and
Analysis of Financial Condition and Results of Operations for additional
information.
NIKE, INC. Š2012 Form 10-K 3