Nike 2009 Annual Report Download - page 7

wholly-owned subsidiaries of NIKE, and independent contractors in China and Taiwan, were our largest
suppliers of the Air-Sole cushioning components used in footwear. The principal materials used in our apparel
products are natural and synthetic fabrics and threads, plastic and metal hardware, and specialized performance
fabrics designed to repel rain, retain heat, or efficiently transport body moisture. NIKE’s contractors and
suppliers buy raw materials in bulk. Most raw materials are available in the countries where manufacturing takes
place. We have thus far experienced little difficulty in satisfying our raw material requirements.
Since 1972, Sojitz Corporation of America (“Sojitz America”), a large Japanese trading company, has
performed significant import-export financing services for us. During fiscal 2009, Sojitz America provided
financing and purchasing services for NIKE brand products sold in Argentina, Uruguay, Canada, Chile, Brazil,
India, Indonesia, the Philippines, Malaysia, South Africa, China, Korea, and Thailand, excluding products
produced and sold in the same country. Approximately 16% of NIKE brand sales occurred in those countries.
Any failure of Sojitz America to provide these services or any failure of Sojitz America’s banks could disrupt our
ability to acquire products from our suppliers and to deliver products to our customers outside of the United
States, EMEA and Japan. Such a disruption could result in cancelled orders that would adversely affect sales and
profitability. However, we believe that any such disruption would be short-term in duration due to the ready
availability of alternative sources of financing at competitive rates. Our current agreements with Sojitz America
expire in 2011.
International Operations and Trade
Our international operations and sources of supply are subject to the usual risks of doing business abroad,
such as possible revaluation of currencies, export and import duties, anti-dumping measures, quotas, safeguard
measures, trade restrictions, restrictions on the transfer of funds and, in certain parts of the world, political
instability and terrorism. We have not, to date, been materially affected by any such risk, but cannot predict the
likelihood of such developments occurring.
The global economic crisis has resulted in a significant slow down in international trade and a sharp rise in
protectionist actions around the world. These trends are affecting many global manufacturing and service sectors,
and the footwear and apparel industries, as a whole, are not immune. Companies in our industry are facing trade
protectionist challenges in many different regions, and in nearly all cases we are working together to address
trade issues to reduce the impact to the industry, while observing applicable competition laws. Notwithstanding
our efforts, such actions, if implemented, could result in increases in the cost of our products, which could
adversely affect our sales or profitability and the imported footwear and apparel industry as a whole.
Accordingly, we are actively monitoring the developments described below.
Footwear Imports into the European Union
In 2005, at the request of the European domestic footwear industry, the European Commission (“EC”)
initiated investigations into leather footwear imported from China and Vietnam. Together with other companies
in our industry, we took the position that Special Technology Athletic Footwear (STAF) (i) should not be within
the scope of the investigation, and (ii) does not meet the legal requirements of injury and price in an anti-
dumping investigation. Our arguments were successful and the EU agreed in October 2006 on definitive duties of
16.5% for China and 10% for Vietnam for non-STAF leather footwear, but excluded STAF from the final
measures. Prior to the scheduled expiration in October 2008 of the measures imposed on the non-STAF footwear,
the domestic industry requested and the EC agreed to review a petition to extend these restrictions on non-STAF
leather footwear. We are working in broad coalition with other companies in our industry to challenge this
request for extension, and we expect a decision by the end of calendar year 2009 or early 2010.
Footwear Imports into Brazil and Argentina
At the request of certain domestic footwear industries, both Brazil and Argentina have initiated independent
anti-dumping investigations against footwear made in China. We are working in broad coalition with other
companies in our industry to challenge these cases on the basis that the athletic footwear being imported from
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