Nike 2012 Annual Report Download - page 9

PART I
ITEM 1A. Risk Factors
Special Note Regarding Forward-Looking Statements and
Analyst Reports
Certain written and oral statements, other than purely historical information,
including estimates, projections, statements relating to NIKE’s business
plans, objectives and expected operating results, and the assumptions upon
which those statements are based, made or incorporated by reference from
time to time by NIKE or its representatives in this report, other reports, filings
with the Securities and Exchange Commission, press releases, conferences,
or otherwise, are “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995 and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking statements
include, without limitation, any statement that may predict, forecast, indicate,
or imply future results, performance, or achievements, and may contain the
words “believe”, “anticipate”, “expect”, “estimate”, “project”, “will be”, “will
continue”, “will likely result”, or words or phrases of similar meaning. Forward-
looking statements involve risks and uncertainties which may cause actual
results to differ materially from the forward-looking statements. The risks and
uncertainties are detailed from time to time in reports filed by NIKE with the
Securities and Exchange Commission, including Forms 8-K, 10-Q, and 10-K,
and include, among others, the following: international, national and local
general economic and market conditions; the size and growth of the overall
athletic footwear, apparel, and equipment markets; intense competition
among designers, marketers, distributors and sellers of athletic footwear,
apparel, and equipment for consumers and endorsers; demographic
changes; changes in consumer preferences; popularity of particular designs,
categories of products, and sports; seasonal and geographic demand for
NIKE products; difficulties in anticipating or forecasting changes in consumer
preferences, consumer demand for NIKE products, and the various market
factors described above; difficulties in implementing, operating, and
maintaining NIKE’s increasingly complex information systems and controls,
including, without limitation, the systems related to demand and supply
planning, and inventory control; interruptions in data and information
technology systems; data security; fluctuations and difficulty in forecasting
operating results, including, without limitation, the fact that advance “futures”
orders may not be indicative of future revenues due to changes in shipment
timing, and the changing mix of futures and at-once orders and order
cancellations; 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 and energy used to manufacture products,
new product development and introduction; the ability to secure and protect
trademarks, patents, and other intellectual property; performance and
reliability of products; customer service; adverse publicity; 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 our debt
ratings; changes in business strategy or development plans; general risks
associated with doing business outside the United States, including, without
limitation, exchange rate fluctuations, import duties, tariffs, quotas, political
and economic instability, and terrorism; changes in government regulations;
the impact of, including business and legal developments relating to, climate
change; liability and other claims asserted against NIKE; the ability to attract
and retain qualified personnel; the effects of our decision to divest of the Cole
Haan and Umbro businesses; and other factors referenced or incorporated
by reference in this report and other reports.
The risks included here are not exhaustive. Other sections of this report may
include additional factors which could adversely affect NIKE’s business and
financial performance. Moreover, NIKE operates in a very competitive and
rapidly changing environment. New risk factors emerge from time to time and
it is not possible for management to predict all such risk factors, nor can it
assess the impact of all such risk factors on NIKE’s business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements. Given
these risks and uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results.
Investors should also be aware that while NIKE does, from time to time,
communicate with securities analysts, it is against NIKE’s policy to disclose to
them any material non-public information or other confidential commercial
information. Accordingly, shareholders should not assume that NIKE agrees
with any statement or report issued by any analyst irrespective of the content
of the statement or report. Furthermore, NIKE has a policy against issuing or
confirming financial forecasts or projections issued by others. Thus, to the
extent that reports issued by securities analysts contain any projections,
forecasts or opinions, such reports are not the responsibility of NIKE.
Our products face intense competition.
NIKE is a consumer products company and the relative popularity of various
sports and fitness activities and changing design trends affect the demand for
our products. The athletic footwear, apparel, and equipment industry is
keenly competitive in the United States and on a worldwide basis. We
compete internationally with a significant number of athletic and leisure shoe
companies, athletic and leisure apparel companies, sports equipment
companies, and large companies having diversified lines of athletic and leisure
shoes, apparel, and equipment. We also compete with other companies for
the production capacity of independent manufacturers that produce our
products and for import quota capacity.
Our competitors’ product offerings, technologies, marketing expenditures
(including expenditures for advertising and endorsements), pricing, costs of
production, and customer service are areas of intense competition. This, in
addition to rapid changes in technology and consumer preferences in the
markets for athletic and leisure footwear and apparel, and athletic equipment,
constitute significant risk factors in our operations. If we do not adequately
and timely anticipate and respond to our competitors, our costs may increase
or the consumer demand for our products may decline significantly.
Failure to maintain our reputation and brand image could
negatively impact our business.
Our iconic brands have worldwide recognition, and our success depends on
our ability to maintain and enhance our brand image and reputation.
Maintaining, promoting and growing our brands will depend on our design
and marketing efforts, including advertising and consumer campaigns, as well
as product innovation. We could be adversely impacted if we fail to achieve
any of these objectives or if the reputation or image of any of our brands is
tarnished or receives negative publicity. In addition, adverse publicity about
regulatory or legal action against us could damage our reputation and brand
image, undermine our customers’ confidence in us and reduce long-term
demand for our products, even if the regulatory or legal action is unfounded or
not material to our operations.
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 online
dissemination of advertising campaigns. Negative posts or comments about
us on social networking web sites could seriously damage our reputation and
brand image. If we do not maintain, extend and expand our brand image,
then our product sales, financial condition and results of operations could be
materially and adversely affected.
If we are unable to anticipate consumer preferences and
develop new products, we may not be able to maintain or
increase our net revenues and profits.
Our success depends on our ability to identify, originate and define product
trends as well as to anticipate, gauge and react to changing consumer
demands in a timely manner. All of our products are subject to changing
consumer preferences that cannot be predicted with certainty. Our new
products may not receive consumer acceptance as consumer preferences
could shift rapidly to different types of performance or other sports apparel or
away from these types of products altogether, and our future success
depends in part on our ability to anticipate and respond to these changes. If
NIKE, INC. Š2012 Form 10-K 9