Nike 2016 Annual Report Download - page 4

PART I
PART I
ITEM 1. Business
General
NIKE, Inc. was incorporated in 1967 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, collectively, unless
the context indicates otherwise. Our NIKE e-commerce website is located at
www.nike.com. On our NIKE corporate website, located at news.nike.com,
we post the following filings as soon as reasonably practicable after they are
electronically filed with or furnished to the United States Securities and
Exchange Commission (the “SEC”): 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. Our definitive
Proxy Statements are also posted on our corporate website. All such filings
on our corporate website are available free of charge. Copies of these filings
may also be obtained by visiting the Public Reference Room of the SEC at
100 F Street, NE, Washington, D.C. 20549, or by calling the SEC at 1-800-
SEC-0330. In addition, the SEC maintains a website (www.sec.gov)that
contains current, quarterly and annual reports, proxy and information
statements and other information regarding issuers that file electronically. Also
available on our corporate website 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 athletic footwear, apparel, equipment, accessories
and services. NIKE is the largest seller of athletic footwear and apparel in the
world. We sell our products to retail accounts, through NIKE-owned retail
stores and internet websites (which we refer to collectively as our “Direct to
Consumer” or “DTC” operations), and through a mix of independent
distributors and licensees throughout the world. Virtually all of our products
are manufactured by independent contractors. Nearly 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 NIKE Brand product offerings in nine key categories: Running,
NIKE Basketball, the Jordan Brand, Football (Soccer), Men’s Training,
Women’s Training, Action Sports, Sportswear (our sports-inspired lifestyle
products) and Golf. Men’s Training includes our baseball and American
football product offerings. We also market products designed for kids, as well
as for other athletic and recreational uses such as cricket, lacrosse, tennis,
volleyball, wrestling, walking and outdoor activities.
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 innovation and high-quality
construction in our products. Sportswear, Running, the Jordan Brand and
Football (Soccer) are currently our top-selling footwear categories and we
expect them to continue to lead in footwear sales.
We also sell sports apparel covering the above-mentioned categories, which
feature the same trademarks and are sold predominantly through the same
marketing and distribution channels as athletic footwear. Our sports apparel,
similar to our athletic footwear products, is designed primarily for athletic use
and exemplifies our commitment to innovation and high-quality construction.
Sportswear, Men’s Training, Running, Football (Soccer) and Women’s
Training are currently our top-selling apparel categories, and we expect them
to continue to lead in apparel sales. 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 and accessories 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.
Our Jordan Brand designs, distributes and licenses athletic and casual
footwear, apparel and accessories predominantly focused on basketball
using the Jumpman trademark. Sales and operating results for the Jordan
Brand are reported as a separate category and within the NIKE Brand
geographic operating segments, respectively.
One of our wholly-owned subsidiary brands, Hurley, headquartered in Costa
Mesa, California, designs and distributes a line of action sports and youth
lifestyle apparel and accessories under the Hurley trademark. Sales and
operating results for Hurley are included within the NIKE Brand Action Sports
category and within the NIKE Brand’s North America geographic operating
segment, respectively.
Another of our wholly-owned subsidiary brands, Converse, headquartered in
Boston, Massachusetts, designs, distributes and licenses casual sneakers,
apparel and accessories under the Converse, Chuck Taylor, All Star, One
Star, Star Chevron and Jack Purcell trademarks. Operating results of the
Converse brand are reported on a stand-alone basis.
In addition to the products we sell to our wholesale customers and directly to
consumers through our DTC operations, we have also entered into license
agreements that permit unaffiliated parties to manufacture and sell, using
NIKE-owned trademarks, certain apparel, digital devices and applications
and other equipment designed for sports activities.
NIKE, INC. 2016 Annual Report and Notice of Annual Meeting 57
FORM 10-K