Nike 2009 Annual Report Download - page 13

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cutting edge performance products. While we strive to produce products that help to reduce injury, enhance
athletic performance and maximize comfort, if we fail to introduce technical innovation in our products the
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 problems.
Failure to continue to obtain high quality endorsers of our products could harm our business.
We establish relationships with professional athletes, sports teams and leagues to evaluate, promote, and
establish product authenticity with consumers. If certain endorsers were to stop using our products contrary to
their endorsement agreements, our business could be adversely affected. In addition, actions taken by athletes,
teams or leagues associated with our products that harm the reputations of those athletes, teams or leagues could
also 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 to use and endorse our products, or a failure to enter into cost effective endorsement
arrangements with prominent athletes and sports organizations could adversely affect our brand and result in
decreased sales of our products.
Failure of our contractors to comply with our code of conduct, local laws, and other standards could harm our
business.
We contract with hundreds of contractors outside of the United States to manufacture our products, and we
impose on those contractors a code of conduct and other environmental, health, and safety standards for the
benefit of workers. However, from time to time contractors may not comply with such standards or applicable
local law. Significant or continuing noncompliance with such standards and laws by one or more contractors
could harm our reputation and, as a result, could have an adverse effect on our sales and financial condition.
Global capital and credit market conditions, and resulting declines in consumer confidence and spending,
could have a material adverse effect on our business, operating results, and financial condition.
Volatility and disruption in the global capital and credit markets in 2008 and 2009 have led to a tightening
of business credit and liquidity, a contraction of consumer credit, business failures, higher unemployment, and
declines in consumer confidence and spending in the United States and internationally. If global economic and
financial market conditions deteriorate or remain weak for an extended period of time, the following factors
could have a material adverse effect on our business, operating results, and financial condition:
• Slower consumer spending may result in reduced demand for our products, reduced orders from
retailers for our products, order cancellations, lower revenues, increased inventories, and lower gross
margins.
• We may be unable to find suitable investments that are safe, liquid, and provide a reasonable
return. This could result in lower interest income or longer investment horizons. Disruptions to capital
markets or the banking system may also impair the value of investments or bank deposits we currently
consider safe or liquid.
• We may be unable to access financing in the credit and capital markets at reasonable rates in the event
we find it desirable to do so.
• The failure of financial institution counterparties to honor their obligations to us under credit and
derivative instruments could jeopardize our ability to rely on and benefit from those instruments. Our
ability to replace those instruments on the same or similar terms may be limited under poor market
conditions.
• We conduct transactions in various currencies, which increases our 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 currencies could have a significant impact on our
reported financial results and condition.
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