2008



CEO Letter to Shareholders



To Our Shareholders,



When I stepped into the CEO role 2½ years ago, the leadership team reaffirmed a simple concept that I knew was true from my nearly 30 years of experience here –

NIKE is a growth company. That fact shaped the long-term financial goals we outlined more than seven years ago. It also inspired our goal of reaching $23 billion in revenue by the end of fiscal 2011. Fiscal 2008 illustrated the power of that financial model, the strength of our team, and the ability of NIKE to bring innovative products and excitement to the marketplace.



Our unique role as the innovator and leader in our industry enables us to drive consistent, long-term profitable growth. In 2008 we added $2.3 billion of incremental revenue to reach $18.6 billion – up 14 percent year over year with growth in every region and every business unit. Gross margins improved more than a percentage point to a new record high of 45%, and earnings per share grew 28 percent. We increased our return on invested capital by 250 basis points1, increased dividends by 23%, and bought back $1.2 billion in stock.



2008 was a very good year.



As we enter fiscal 2009 we are well-positioned for the future. The NIKE brand continues to grow in relevance and influence. We’re focused on six key categories – running, basketball, football, men’s training, women’s training and sportswear. Each category team is immersed in its sport’s culture, connecting with consumers and building deep relationships. These connections are the source of insights we use to create the innovative products that fill our pipeline. NIKE is a premium brand, and we earn that reputation by delivering experiences that surpass the expectations of our consumers.



Our portfolio of brands also continues to grow. Converse is mid-way through its 100th anniversary celebration. This brand delivered its best year ever in fiscal 2008 and continues to grow in the U.S. and in the key emerging markets of China, Russia and Brazil. Hurley and Cole Haan also had record years for revenue and pre-tax income. And NIKE Golf increased revenue and pre-tax income as we continue to deliver innovation and widen our lead as the largest apparel brand in the golf industry.



Growth in our portfolio of brands is only half the story. The other half is change.

Our portfolio is based on three things – pursuing the greatest growth opportunities; leveraging NIKE resources and capabilities; and serving consumers with premium products and experiences. In applying these three principles we saw opportunities to take action in 2008. We sold the Starter and Bauer businesses, and we acquired Umbro, one of the world’s great football brands and a source of tremendous growth potential for NIKE, Inc. as we continue to expand our position as the biggest football presence on the planet.



After all the work we have done this year, I’m very pleased with how we have enhanced the position, performance, and potential of all the brands and categories in the NIKE, Inc. family. They illustrate the commitment we have to athletes and the unique role we play in sports and the cultures that surround our consumers.



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