FINANCIAL HISTORY

(in millions, except per share data and financial ratios)

YEAR 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
ENDED
MAY 31,
Revenues $8,776.9 $9,553. $9,186.5 $6,470.6 $4,760.8 $3,789.7 $3,931.0 $3,405.2 $3,003.6 $2,235.2 $1,710.8
1
Gross 3,283.4 3,487.6 3,683.5 2,563.9 1,895.6 1,488.2 1,544.0 1,316.1 1,153.1 851.1 636.0
margin
Gross 37.4% 36.5% 40.1% 39.6% 39.8% 39.3% 39.3% 38.7% 38.4% 38.1% 37.2%
margin %
Restructuri 45.1 129.9 - - - - - - - - -
ng charge
Net income 451.4 399.6 795.8 553.2 399.7 298.8 365.0 329.2 287.0 243.0 167.0
Basic 1.59 1.38 2.76 1.93 1.38 1.00 1.20 1.09 0.96 0.81 0.56
earnings
per
common
share
Diluted 1.57 1.35 2.68 1.88 1.36 0.99 1.18 1.07 0.94 0.80 0.56
earnings
per
common
share
Average 283.3 288.7 288.4 286.6 289.6 298.6 302.9 301.7 300.4 299.1 297.7
common
shares
outstandin
g
Diluted 288.3 295.0 297.0 293.6 294.0 301.8 308.3 306.4 304.3 302.7 300.6
average
common
shares
outstandin
g
Cash 0.48 0.46 0.38 0.29 0.24 0.20 0.19 0.15 0.13 0.10 0.07
dividends
declared
per
common
share
Cash flow 961.0 517.5 323.1 339.7 254.9 576.5 265.3 435.8 11.1 127.1 169.4
from
operations
Price range of common stock
High 65.500 64.125 76.375 52.063 20.156 18.688 22.563 19.344 13.625 10.375 4.969
Low 31.750 37.750 47.875 19.531 14.063 10.781 13.750 8.781 6.500 4.750 2.891
MAY 31,
Cash and $198.1 $108.6 $445.4 $262.1 $216.1 $518.8 $291.3 $260.1 $119.8 $90.4 $85.7
equivalents
Inventories 1,199.3 1,396.6 1,338.6 931.2 629.7 470.0 593.0 471.2 586.6 309.5 222.9
Working 1,818.0 1,828.8 1,964.0 1,259.9 938.4 1,208.4 1,165.2 964.3 662.6 561.6 419.6
capital
Total 5,247.7 5,397.4 5,361.2 3,951.6 3,142.7 2,373.8 2,186.3 1,871.7 1,707.2 1,093.4 824.2
assets
Long-term 386.1 379.4 296.0 9.6 10.6 12.4 15.0 69.5 30.0 25.9 34.1
debt
Redeemab 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
le
Preferred
Stock
Sharehold 3,334.6 3,261.6 3,155.9 2,431.4 1,964.7 1,740.9 1,642.8 1,328.5 1,029.6 781.0 558.6
ers' equity
Year-end 60.938 46.000 57.500 50.188 19.719 14.750 18.125 14.500 9.938 9.813 4.750
stock price
Market 17,202.2 13,201. 16,633.0 14,416.8 5,635.2 4,318.8 5,499.3 4,379.6 2,993.0 2,942.7 1,417.4
capitalizati 1
on
FINANCIAL RATIOS
Return on 13.7% 12.5% 28.5% 25.2% 21.6% 17.7% 24.5% 27.9% 31.7% 36.3% 34.5%
equity
Return on 8.5% 7.4% 17.1% 15.6% 14.5% 13.1% 18.0% 18.4% 20.5% 25.3% 21.8%
assets
Inventory 4.2 4.4 4.8 5.0 5.2 4.3 4.5 3.9 4.1 5.2 5.1
turns
Current 2.3 2.1 2.1 1.9 1.8 3.2 3.6 3.3 2.1 3.1 2.9
ratio at
May 31
Price/ 38.8 34.1 21.5 26.6 14.5 14.9 15.3 13.5 10.5 12.2 8.6
Earnings
ratio at
May 31
(Diluted)
GEOGRAPHIC REVENUES
United $5,042.6 $5,460. $5,538.2 $3,964.7 $2,997.9 $2,432.7 $2,528.8 $2,270.9 $2,141.5 $1,755.5 $1,362.2
States 0
Europe 2,255.8 2, 096.1 1,789.8 1,334.3 980.4 927.3 1,085.7 919.8 664.7 334.3
241.4
Asia 844.5 1,253.9 1,241.9 735.1 515.6 283.4 178.2 75.7 56.2 29.3 32.0
Pacific
Americas 634.0 743.1 616.6 436.5 266.9 146.3 138.3 138.8 141.2 116.1 75.2
(exclusive
of United
States)
Total $8,776.9 $9,553. $9,186.5 $6,470.6 $4,760.8 $3,789.7 $3,931.0 $3,405.2 $3,003.6 $2,235.2 $1,710.8
Revenues 1

All per common share data has been adjusted to reflect the 2-for-1 stock splits paid October 23, 1996,
October 30, 1995 and October 5, 1990. The Company's Class B Common Stock is listed on the New York
and Pacific Exchanges and trades under the symbol NKE. At May 31, 1999, there were approximately
170,000 shareholders.
FINANCIAL HIGHLIGHTS
(in millions, except per share data and financial ratios)
YEAR ENDED MAY 31, 1999 1998 % CHG
Revenues $8,776.9 $9,553.1 (8.1)%
Gross margin 3,283.4 3,487.6 (5.9)%
Gross margin % 37.4% 36.5%
Restructuring charge 45.1 129.9 (65.3)%
Net income 451.4 399.6 13.0%
Basic earnings per common 1.59 1.38 15.2%
share
Diluted earnings per common 1.57 1.35 16.3%
share
Return on equity 13.7% 12.5%
Stock price at May 31 60.938 46.000 32.5%

SELECTED QUARTERLY FINANCIAL DATA (unaudited)

(in millions, except per share data)
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
1999 1998 1999 1998 1999 1998 1999 1998
Revenues $2,504.8 $2,766.1 $1,913.0 $2,255.3 $2,176.8 $2,224.0 $2,182.3 $2,307.7
Gross 942.2 1,100.6 683.4 845.8 811.9 795.1 845.9 746.1
margin
Gross 37.6% 39.8% 35.7% 37.5% 37.3% 35.8% 38.8% 32.3%
margin %
Restructurin - - 20.9 - 0.8 - 23.4 129.9
g charge
Net income 163.8 253.1 68.9 141.1 124.2 73.1 94.5 (67.7)
Basic 0.57 0.87 0.24 0.49 0.44 0.25 0.33 (0.23)
earnings
per
common
share
Diluted 0.56 0.85 0.24 0.48 0.44 0.25 0.33 (0.23)
earnings
per
common
share
Average 286.7 289.9 283.0 290.3 281.3 287.6 282.1 287.1
common
shares
outstanding
Diluted 292.0 297.5 287.7 296.7 286.1 293.2 287.3 292.6
average
common
shares
outstanding
Cash 0.12 0.10 0.12 0.12 0.12 0.12 0.12 0.12
dividends
declared
per
common
share
Price range of common stock
High 52.250 64.125 46.000 56.500 54.063 50.063 65.500 48.750
Low 34.688 52.688 31.750 45.000 35.938 37.750 50.750 42.750
MANAGEMENT DISCUSSION AND ANALYSIS

HIGHLIGHTS

· In fiscal year 1999, net income increased 13% to $451.4 million, or $1.57 per diluted share. Net income
included a net pre-tax restructuring charge of $45.1 million, $27.3 million after taxes, or $0.10 per
diluted share.
· Excluding fiscal years 1999 and 1998 restructuring charges, fiscal 1999 net income remained constant
with the prior year.
· Fiscal year 1999 revenues declined for the first time in five years, dropping 8% to $8.78 billion.
· Gross margins as percentage of revenues improved to 37.4%, compared to 36.5% in the prior year.
· Selling and administrative expenses dropped by nearly $200 million or 7.5%, and were 27.6% of
revenues compared with 27.5% in the prior year.

RESULTS OF OPERATION

Fiscal 1999 Compared To Fiscal 1998

Despite an overall revenue decline, net income increased 13% over the prior year. An improved gross
margin percentage, reduced selling and administrative expenses, along with a lower net restructuring charge
in fiscal 1999 compared to the prior year, primarily drove this increase. Excluding both the 1999 and 1998
restructuring charges, our net income was relatively flat year on year. Continued cost control activities and
the effect of improved inventory levels on our margins were key factors that offset the effects of reduced
revenues. Revenues decreased for the first time in five years. In the United States, revenues declined by
8%, Asia Pacific's revenues reduced by over a third compared to last year, while Europe revenues
increased 8%. We put a considerable amount of effort into improving product buying patterns and, as a
result, the composition and levels of inventory resulted in improved gross margins relative to a year ago.
The activities associated with the fiscal 1998 restructuring charge helped to reduce selling and
administrative expenses in fiscal 1999 by nearly $200 million. We continue to evaluate our cost structure in
light of existing and planned revenue levels. In fiscal 1999, we took specific action to improve operating
efficiencies and reduce costs. Some of these actions resulted in a restructuring charge in fiscal year 1999
(see below and Note 13 for a more complete analysis of this charge).

Total NIKE brand revenues decreased 8% compared to fiscal 1998. Had this decrease been measured in
dollars constant with that of the prior year, the net decrease would not have been materially different. The
U.S., which represents our largest market segment, experienced the largest dollar reduction, decreasing
$415.7 million, or 8%. Sales of U.S. footwear decreased 7.3%, representing a decrease in pairs sold of
6.3% and a decrease in average selling price of 2.6%. The reduction in sales was primarily attributable to
the continued soft retail environment as retailers adjusted their buying patterns to avoid inventory build-ups.
Revenues from nearly all customer accounts and distribution channels were down. However, certain product
categories improved over the prior year. Running, which is the largest U.S. footwear category, increased
3%, and Brand Jordan improved by 23%. Basketball and Training (which together with Running and Brand
Jordan comprise over 56% of the total U.S. footwear business) decreased 30% and 26%, respectively.
Apparel revenues in the U.S. decreased 11%. Three of the top five apparel categories experienced revenue
decreases, including: Branded Athletic (down 20%); Accessories (down 30%); and Special Make-Up product
(down 12%). Tee shirt revenues increased 5%, while Kids remained flat with last year.

Non-U.S. NIKE brand revenues decreased $341.6 million, or 8.7%, an 8.0% decrease had the dollar
remained constant with that of the prior year. Sales outside the USA now represent 43% of total NIKE brand
revenues. Revenues in Europe increased 8% (6% in constant dollars), driven by a 26% increase in Apparel.
Apparel sales in Europe surpassed the $1 billion mark for the first time. During the last four years, Europe
has experienced a 23% compounded annual revenue growth rate. Asia Pacific declined 33% in total
revenues (29% in constant dollars), due to the continued weak market conditions in that region. However,
as discussed further below, increasing futures orders in that region, compared with the previous year, would
indicate an improvement in this trend. The Americas region, including the start up operations of the Africa
region, decreased 15%, (10% in constant dollars).
The countries outside the U.S. that represent the largest percentage of our total international businesses
are: the United Kingdom, which increased 4% in real and constant dollars; Japan, which decreased 37% in
real and constant dollars; France, which increased 16% (14% in constant dollars); Italy, which increased
13% (11% in constant dollars); Spain, which increased 8% (6% in constant dollars); Canada, which
decreased 22%, (16% in constant dollars); and Germany, which increased 7% (4% in constant dollars).

The decrease in other brands is predominately due to reduced sales of in-line skating and roller hockey
categories at Bauer NIKE Hockey. Other brands include Cole Haan, Bauer NIKE Hockey Inc., (formerly
Bauer Inc.), Sports Specialties Corp., (NIKE Team Sports Inc. effective June 1, 1999), and NIKE IHM, Inc.
(formerly Tetra Plastics, Inc.).

We currently expect that revenues in fiscal year 2000 will be up slightly compared to fiscal 1999. Futures
orders (see further discussion below) is one indication of revenue trends over the next two quarters.
Footwear futures orders are trending up in every region, and are positive in every region except the
Americas. Apparel futures orders are mixed. In the U.S., apparel futures have trended down for seven
straight quarters. In Europe apparel futures orders are strong, and they are significantly improved in Asia
Pacific.
The breakdown of revenues follows:
(in millions)
MAY 31, 1999 1998 % CHG 1997 % CHG
USA Region
Footwear $3,244.6 $3,498.7 (7.3)% $3,753.6 (6.8)%
Apparel 1,385.3 1,556.3 (11.0)% 1,406.6 10.6%
Equipment and 93.8 84.4 11.1% 41.4 103.9%
other
Total USA 4,723.7 5,139.4 (8.1)% 5,201.6 (1.2)%
Europe Region
Footwear 1,182.7 1,266.6 (6.6)% 1,197.1 5.8%
Apparel 1,005.1 795.9 26.3% 592.0 34.4%
Equipment and 68.0 33.6 102.4% 0.7 4700.0%
other
Total Europe 2,255.8 2,096.1 7.6% 1,789.8 17.1%
Asia Pacific Region
Footwear 455.3 790.7 (42.4)% 859.0 (8.0)%
Apparel 366.0 453.4 (19.3)% 382.8 18.4%
Equipment and 23.2 9.8 136.7% 0.1 9700.0%
other
Total Asia Pacific 844.5 1,253.9 (32.7)% 1,241.9 1.0%
Americas Region
Footwear 335.8 403.0 (16.7)% 334.9 20.3%
Apparel 158.4 186.2 (14.9)% 112.2 66.0%
Equipment and 12.9 9.8 31.6% 2.1 366.7%
other
Total Americas 507.1 599.0 (15.3)% 449.2 33.3%

Total Nike brand 8,331.1 9,088.4 (8.3)% 8,682.5 4.7%

Other brands 445.8 464.7 (4.1)% 504.0 (7.8)%
Total Revenues $8,776.9 $9,553.1 (8.1)% $9,186.5 4.0%

Gross margins increased to 37.4% of revenues in fiscal 1999, up 90 basis points from the previous year.
The increase over the prior year can be attributed to reduced levels of closeout product sales. In addition,
we are selling a much greater percentage of our closeout product through our own factory outlets, which has
resulted in improved gross margins on close-out sales and lower reserves against our overall inventory.
While sales of in-line product decreased 7%, our closeout sales decreased by 14%. As a result, despite the
decline in our in-line business in fiscal 1999, in-line sales increased to 92.2% of our overall business, an
increase of 60 basis points over the prior year. Reducing our inventory levels was a key initiative for NIKE in
fiscal year 1999. Our finished goods inventory decreased in all regions, most notably in Asia Pacific, which
decreased 31%, Europe, which decreased 26%, and the U.S., which decreased 4%. Aggressive selling of
U.S. apparel closeout inventories, and the effects of the foreign exchange rates on non-U.S. sales,
predominately in Europe, negatively affected gross margins. Gross margins as a percentage of revenues
should improve slightly in fiscal 2000, primarily due to a much improved inventory position going into the
year compared with the same period last year.

Selling and administrative expenses decreased nearly $200 million compared to fiscal year 1998, and
totaled 27.6% of revenues, up slightly from 27.5% in the prior year. Key drivers of this reduction were the
actions taken in fiscal year 1998 to reduce our overall cost structure, which resulted in a restructuring
charge in quarter four of fiscal year 1998. Although total NIKE brand salaries and wages increased 2% over
the prior year, wholesale business salaries and wages decreased 7%, driven by the headcount reductions
which occurred as part of the restructuring activities. Offsetting this were increases in salaries and wages of
Retail operations, given the addition of 44 NIKE factory stores and 5 Niketowns over the last two years.
Other significant reductions to selling and administrative expenses were advertising costs, which were down
19%, and sports marketing expenses, which were down 4%. As a percentage of revenues, selling and
administrative costs in fiscal 2000 should be consistent with that of fiscal 1999. Although we have taken
action to further align our costs with expected revenue levels, (see Fiscal 1999 Restructuring Charge
below), expenses in fiscal year 2000 will be affected by investments in a new company-wide system
development project, planned start up activities around new NIKE Retail stores, increased spending for
demand creation, and the transition into expanded headquarters in Oregon.
The reduction in interest expense of $15.9 million (or 26.5%) compared to last year is due primarily to lower
levels of short term borrowings given decreased working capital throughout the year. See further discussion
under Liquidity and Capital Resources below.

Other income/expense was a net expense of $21.5 million in fiscal 1999. Included in this amount is a credit
of $15.0 million related to the change in accounting for substantially all inventories in the U.S. from the last-
in, first-out (LIFO) method to the first-in, first-out (FIFO) method. The change was effected in the fourth
quarter of fiscal 1999 and was not considered significant to show the cumulative effect or to restate
comparable income statements as dictated by Accounting Principles Board Opinion No. 20. This change
was predicated on the fact that the LIFO method no longer matches the realities of how we do business.
Exclusive of this credit, other income/expense was a net expense of $36.5 million, an increase over the prior
year of $20.9 million. The increase is primarily attributable to the losses incurred on the disposal of assets of
$14.3 million, most significantly related to production and planning software development costs that were
abandoned. The majority of the remainder of other income/expense is comprised of interest income, profit
sharing expense, foreign exchange conversion gains and losses, and the amortization of goodwill, which
remained relatively consistent with prior year amounts.

Worldwide futures and advance orders for NIKE brand athletic footwear and apparel scheduled for delivery
from June through November 1999 totaled $4.2 billion, 4% higher than such orders booked in the
comparable period of fiscal 1999. The orders and percentage growth in these orders is not necessarily
indicative of our expectation of revenue growth in subsequent periods. This is because the mix of orders can
shift between advance/futures and at-once orders. In addition, exchange rate fluctuations as well as differing
levels of order cancellations can cause differences in the comparisons between futures orders and actual
revenues.

Fiscal 1998 Compared To Fiscal 1997

Decreasing revenue growth, a lower gross margin percentage and higher selling and administrative
expenses, as well as a fourth quarter restructuring charge, all contributed to fiscal 1998's decrease in net
income compared to the prior year. The Asian economic crisis and declining revenues in the United States
were the primary reasons for the lower earnings. Consumer spending declined considerably in Asia during
fiscal 1998 as a result of macroeconomic issues facing that region. As a result, revenue growth in the Asia
Pacific region fell well short of our expectations, resulting in excess inventory levels and increased levels of
discounted product sales, both having a negative impact on that region's gross margin percentage.
Additionally, spending did not adjust as quickly as the sudden decline in revenue growth, resulting in
significantly higher selling and administrative costs as a percentage of revenues in that region.

Revenues increased 4% over fiscal 1997, and would have increased 7% had the dollar remained constant
with that of the prior year. Despite the economic issues facing the Asian markets, total non-U.S. revenues
increased 12%, 21% on a constant dollar basis, and represented 43% of total NIKE revenues. Revenue
increases were experienced in every region except the U.S.

The countries outside the U.S. that represented the largest percent of our total international business were:
Japan, which increased 4% (13% in constant dollars); the United Kingdom, which increased 11% (10% in
constant dollars); Canada which increased 32% (36% in constant dollars); France, which increased 15%
(25% in constant dollars); Italy, which increased 35% in both real and constant dollars; and Spain, which
increased 40% (54% in constant dollars). Notable countries that experienced revenue reductions were
Korea which decreased 29% (7% in constant dollars) and Germany, which decreased 6% (but increased 7%
in constant dollars).

U.S. revenues decreased 1% compared to the prior year. U.S. footwear and apparel revenues decreased
2% compared to the prior year. U.S. footwear, representing NIKE's largest market segment, decreased over
$255 million in sales, or 7%, representing a decrease in pairs sold of 3%, and a decrease of 4% in average
selling price. The reduction in sales was primarily attributable to the glut of inventory at retail, which reduced
customer order volumes and increased order cancellation rates. The decrease in average selling price was
due to increased mix of lower priced product, given the higher volume of close-out sales. U.S. apparel
increased $150 million, or 11%, over the prior year. Nearly all categories experienced revenue increases,
the largest individual categories being Training (up 10%), Accessories (up 6%), Kids (up 41%), Tee-shirts
(up 5%) and Golf (up 57%).

Gross margins declined to 36.5% of revenues in fiscal 1998, down 360 basis points from the previous year.
Significant to this decline were the increased levels of close-out sales at greatly reduced selling prices, and
increased levels of inventory reserves against higher close-out inventory levels, particularly in the U.S. and
Asia. The combination of these two factors reduced annual margins by more than 200 basis points. Other
reasons for the reduced gross margin percentage were the strengthening of the U.S. dollar, which can
inhibit our ability to price products competitively in international markets, fixed costs associated with
distribution facilities, increasing royalty costs associated with athlete endorsement contracts, and increased
levels of research and development costs.

Selling and administrative expenses increased $320.1 million over the prior year, representing 27.5% of
revenues compared to 25.1% in the prior year. The most significant increases were in the wage base, which
was up 14% overall, led principally by the U.S. and Asia Pacific, endorsement contract-related costs, which
were up 47% primarily as a result of significant new contracts in Soccer and Golf categories, along with
enhanced arrangements with the NFL, WNBA, and NBA, and rent and depreciation, which were up 54%
and 33%, respectively, relating principally to expanded Retail outlets and Niketown stores, along with capital
projects in the distribution and computer infrastructure areas.

Interest expense increased $7.7 million, or 14.6%, compared to the prior year. The increase was due to the
addition of long-term debt of approximately $100 million in June 1997, to fund capital projects, offset by
lower levels of short-term borrowings.

Other income/expense was a net expense of $20.9 million in fiscal year 1998, compared with $32.3 million
in 1997. The majority of the decrease is attributable to an $18.1 million restructuring charge incurred in 1997
with corresponding amounts in 1998 included in the 1998 restructuring charge. Other amounts include profit
share expense, which decreased due to lower earnings, interest income, which decreased compared with
the prior year given the lower average levels of cash on hand throughout the year, and foreign exchange
conversion gains and losses.

As further explained in Note 1 to the Consolidated Financial Statements, prior to fiscal year 1997, certain of
our non-U.S. operations reported their results of operations on a one month lag which allowed more time to
compile results. Beginning in the first quarter of fiscal year 1997, the one month lag was eliminated and the
May 1996 charge from operations for these entities of $4.1 million was recorded to retained earnings. This
change did not have a material effect on the annual results of operations.

Fiscal 1999 Restructuring Charge

During fiscal 1999, a $60.1 million restructuring charge was incurred as a result of certain actions taken to
better align our cost structure with expected revenue growth rates. As a result of the plans detailed below,
we expect to remove approximately $36 million from our cost structure in future years. Some of the savings
will not be experienced for one to two years as personnel transitions are scheduled to occur over time.

The charge (shown below in tabular format) was primarily for costs of severing employees, including
severance packages, lease abandonments and the write down of assets no longer in use. Two major areas
that were affected by the reduction in force include our information technology functions, primarily in the
U.S., as we shifted to an outsource agreement for certain areas, and European customer service and
accounting, where we are in the process of consolidating functions from individual countries to our European
headquarters. Outside of these two areas, employees were terminated from various other areas around the
Company, including our Asia Pacific region. The total number of employees terminated was 1,291, with 630
having left NIKE as of May 31, 1999.

The second major component of the 1999 charge was a write-off of certain equipment, hardware and
software development costs at one of our U.S. distribution centers due to a change in strategy around how
we flow product for a specific type of business.
There are no significant costs that have not been recognized with relation to the above plans. Future cash
outlays are anticipated to be completed by early fiscal year 2001.

(in millions)
Description Cash/Non-Cash FY99 Activity Reserve Balance at
Restructuring Charge 5/31/99
Elimination of Job Responsibilities
Company-Wide $(39.9) $21.9 $(18.0)
Severance packages cash (28.0) 11.7 (16.3)
Lease cancellations & cash (2.4) 1.6 (0.8)
commitments
Write-down of assets non-cash (7.8) 7.8 -
Other cash/non-cash (1.7) 0.8 (0.9)
Change in warehouse (20.2) 20.2 -
distribution strategy
Write-down of assets non-cash (20.2) 20.2 -
Effect of foreign - 0.1 0.1
currency translation
Total $(60.1) $42.2 $(17.9)

Fiscal 1998 Restructuring Charge

During the fourth quarter of fiscal 1998, we recorded a restructuring charge of $129.9 million as a result of
certain of our actions to better align our overall cost structure and organization with planned revenue levels.
As a result of the specific plans described below, we were able to remove approximately $100 million from
our cost structure in fiscal 1999 and beyond. These savings were predominately due to reduced wage-
related costs, reduced carrying cost of property, plant and equipment, reduced rent charges (associated
with office and expatriate housing) and other miscellaneous savings.

During fiscal 1999, it was determined that a total of $15 million of the restructuring accrual was not required
due to changes in estimates related to severance payments of $4 million, a $3.6 million change in estimated
vendor software costs related to Japan's software development, lease commitments of $3 million due to
changes in sub-leasing arrangements, and other changes of $4 million. The $15 million is included as an
offset in the restructuring charge on the income statement. The restructuring activities (shown below in
tabular format) primarily related to the following:

The elimination of job responsibilities company-wide. Employees were terminated from all regions and
almost all areas of NIKE, including marketing, sales and administrative areas. Related charges include
severance packages, both cash payments made directly to terminated employees as well as outplacement
services, lease cancellations and commitments, for both excess office space and expatriate employee
housing, and write-down of assets no longer in use. Such assets, which include office equipment and
expatriate employee housing and furniture have been sold or abandoned as of May 31, 1999. A total of
1,039 employees were terminated as part of the plan, of which 1,034 have been paid and have left NIKE as
of May 31, 1999. The remaining five will receive their severance packages and leave during the first quarter
of fiscal year 2000.

Downsizing of the Asia Pacific Headquarters in Hong Kong. We made the decision to reduce the size
of the Asia Pacific headquarters' operations and to relocate the regional headquarter responsibilities to our
worldwide headquarters in the U.S. Included in the restructuring charge are costs associated with the
termination of employees, lease cancellations and commitments and the write-down of assets no longer in
use. Such assets have been sold or abandoned as of May 31, 1999. A total of 118 employees were
terminated as part of the plan. All of them have left and been paid their severance as of May 31, 1999.

Downsizing of the Japan distribution center. We are in the process of constructing a new distribution
center in Japan. Due to the economic downturn in the Asia Pacific region and the impact on our business in
Japan, the forecasted volume of inventories and product flow decreased significantly from the original plans.
Because of this, we redesigned the distribution center to efficiently accommodate new forecasted volumes
of inventories and product flow. The remaining amount of the accrual is a payment due to the software
vendor involved and payment is expected to be made during the first quarter of fiscal year 2000.

Cancellation of endorsement contracts. As a result of the downturn in our business, we have refocused
our marketing along core product categories. We went through a process of reviewing all endorsement
contracts in non-core product categories and the charge included the final settlements for those contracts
where termination agreements with endorsees were reached, releasing the endorsees from all contractual
obligations. The final outstanding payment is expected to be made in the first quarter of fiscal year 2000.

Exiting certain manufacturing operations at Bauer NIKE Hockey subsidiary. The charge related to the
decision to exit certain manufacturing operations at Bauer NIKE Hockey and consisted of machinery and
equipment that has been sold or abandoned as of May 31, 1999, as well as the disposal of two operating
plants. The two operating plants have been disposed of as of May 31, 1999. As a result of the reduced level
of manufacturing operations, 51 employees were terminated, all of which have left as of May 31, 1999,
however some severance payments have yet to be made and are expected to be paid in the first quarter of
fiscal year 2000.
(in millions)
Description Cash/Non-Cash FY98 Restructuring Activity Reserve Balance at
Charge 5/31/99
Elimination of Job Responsibilities Company-Wide $(49.8) $46.5 $(3.3)
Severance packages cash (29.1) 28.2 (0.9)
Lease cancellations & cash (10.8) 8.4 (2.4)
commitments
Write-down of assets non-cash (9.6) 9.6 -
Other cash (0.3) 0.3 -
Downsizing the Asia Pacific Headquarters In Hong (13.1) 13.0 (0.1)
Kong
Severance packages cash (4.6) 4.6 -
Lease cancellations & cash (5.5) 5.4 (0.1)
commitments
Write-down of assets non-cash (3.0) 3.0 -
Downsizing the Japan (31.6) 30.5 (1.1)
Distribution Center
Write-off of assets non-cash (12.5) 12.5 -
Software development cash/non-cash (19.1) 18.0 (1.1)
costs
Cancellation of cash (5.6) 5.3 (0.3)
Endorsement Contracts
Exiting Certain Manufacturing Operations at Bauer (22.7) 21.7 (1.0)
NIKE Hockey
Write-down of assets non-cash (14.7) 14.7 -
Divestiture of non-cash (5.2) 5.2 -
manufacturing facilities
Lease cancellations & cash (1.6) 0.9 (0.7)
commitments
Severance packages cash (1.2) 0.9 (0.3)
Other (7.1) 6.4 (0.7)
Cash cash (0.6) 0.6 -
Non-cash non-cash (6.5) 5.8 (0.7)
Effect of foreign currency translation - 0.2 0.2
Total $(129.9) $123.6 $ (6.3)

Euro Conversion
On January 1, 1999, eleven of the fifteen member countries of the European Union established permanent,
fixed conversion rates between their existing currencies and the European Union's new common currency,
the euro. During the transition period ending December 31, 2001, public and private parties may pay for
goods and services using either the euro or the participating country's legacy currency. Beginning January
1, 2002, euro denominated bills and coins will be issued, with the legacy currencies being completely
withdrawn from circulation on June 30, 2002.

We have had a dedicated project team working on euro strategy since January 1998. We are in the process
of making modifications to information technology systems including marketing, order management,
purchasing, invoicing, payroll, and cash management. Many of our systems are already euro compliant. Our
plan is to have most systems converted to euro compliance by the end of calendar year 2000, well ahead of
the end of the transitional period.

We believe the introduction of the euro may create a move towards a greater level of price harmonization
although differing country costs and value added tax rates will continue to result in price differences at a
retail level. We have a process in place to analyze price trends among countries. Currency exchange and
hedging costs will typically be reduced, due to the introduction of the euro.

The costs of implementing the euro are generally related to modification of existing systems, and are
estimated to be approximately $14 million. These costs will be expensed as incurred. NIKE believes that the
conversion to the euro will not be material to our financial condition or results of operations.
Year 2000
The Year 2000 issue (the "Year 2000" or "Y2K" issue) is the result of computer programs using two digits
rather than four to define the applicable year. Such software may recognize a date using "00" as the year
1900 or some other year, rather than the year 2000. This could result in system failures or miscalculations
leading to disruptions in NIKE's activities and operations. If we, our significant suppliers or customers fail to
make necessary modifications, conversions and contingency plans on a timely basis, the Year 2000 issue
could have a material adverse effect on our financial condition, results of operations or liquidity.

State of Readiness. Project Categories. In May 1997, NIKE established a corporate-wide project team to
oversee, monitor and coordinate the Company-wide Year 2000 effort. Our Year 2000 project focuses on
three areas: (1) information technology (IT) systems, such as application software, mainframes, PCs,
networks and production control systems; (2) non-IT systems, such as equipment, machinery, climate
control and security systems, which may contain microcontrollers with embedded technology; and (3)
suppliers and customers.

NIKE uses a four-phase approach to fix or replace non-compliant IT systems:

(1) inventory, assessment of risks and impact and prioritization of projects:
Tier 1-critical (vital to business operations)
Tier 2-high priority (important to business operations)
Tier 3-moderate priority (minor disruption to operations expected if non-compliant)
Tier 4-low priority (will not disrupt operations even if non-compliant)
(2) remediation (fix, replace or develop contingency plans for non-compliant systems)
(3) testing (validation) and implementation; and
(4) completion and auditing results where appropriate.

When appropriate, we have engaged the services of independent consultants to analyze and develop
testing standards, quality assurance and contingency plans. We use our internal auditing department to
review Year 2000 compliance and have consulted with external independent consultants to evaluate and
review those results.
IT projects. By early 1999, we had identified 148 major internal IT remediation projects worldwide. We have
completed our assessment and prioritization of all of our IT projects. Of the 148 projects, we have
completed and tested 125 as Year 2000 compliant as of May 31, 1999. Of the remaining 23 projects, we
have classified four as Tier 1, 11 as Tier 2, and eight as Tier 3. We expect that all Tier 3 projects will be
completed as Year 2000 compliant by July 31, 1999, all Tier 1 by August 31, 1999, and all Tier 2 by October
31, 1999. NIKE plans to continue integrated testing through the end of the year. In addition, we will halt (or
"freeze") new installations and upgrades of all operational systems beginning on October 1, 1999 and
continuing through January 2000 or until we determine the risk for system failure has passed.

Non-IT Projects. By early 1999, we had identified 27 major internal non-IT remediation projects worldwide.
We have completed our assessment and prioritization of all of our major non-IT systems. We have
designated all 27 of these projects as high priority. These include facilities that are critical to NIKE's
business operations, potentially including equipment, machinery, climate control and security systems at
regional headquarters, key distribution centers, and in countries with significant sales. We are currently
remediating these priority non-IT projects and expect to complete them all as Year 2000 compliant by
August 31, 1999. All other non-IT projects are classified as non-priority non-IT projects, which include
climate control, security and mechanical systems in all other facilities. To the extent that these non-priority,
non-IT projects may not be completed by December 31, 1999, we do not expect that any non-compliance or
failure of these systems, individually or in the aggregate, will have a material adverse effect on NIKE's
manufacturing, distribution, inventory control or the management and collection of our accounts receivable.
For this reason, we have not set a completion date for remediation of the remaining non-priority non-IT
systems.

Suppliers and Customers. We have focused our Year 2000 compliance efforts on our significant suppliers
and customers-those that are material to our business-and are assessing the Year 2000 readiness of these
significant suppliers and customers. We have assessed the Year 2000 readiness of 469 of our suppliers,
163 of which we consider to be significant suppliers. We have also assessed the Year 2000 readiness of
151 customers, 59 of which we consider to be significant customers. We have relationships with significant
suppliers and customers in most of the locations in which we operate. The level of preparedness of our
significant suppliers and customers varies greatly from operation to operation and country to country. NIKE
relies on suppliers to timely deliver a broad range of goods and services worldwide, including raw materials,
footwear, apparel, accessories, equipment, advertising, transportation services, banking services,
telecommunications and utilities. Moreover, our suppliers rely on countless other suppliers, over which we
may have little or no influence regarding Year 2000 compliance.

We have sent surveys to all of our significant suppliers and customers to determine the extent to which we
may be affected by those third parties' Y2K preparedness plans. A substantial majority of our significant
suppliers and customers have not responded to our surveys, have not provided assurance of their Year
2000 readiness, or have not responded with sufficient detail for us to determine their Year 2000 readiness.
In the absence of adequate responses, we are making independent assessments of our significant suppliers
and customers and the countries in which they operate. These assessments include direct contact and
discussions with persons coordinating Y2K compliance efforts for our significant suppliers and customers.
We also research regulatory filings and other public information available to NIKE provided by our significant
suppliers and customers and, in general, countries in which they operate. We have identified as higher risk
many of the countries that have been widely identified by government agencies and public reports as being
significantly behind in their Y2K status.

Contingency Plans. Having completed our identification and assessment of major projects, our "worst-
case scenario" would be a failure of multiple significant suppliers to supply merchandise or services for a
prolonged period of time that would materially impair our ability to ship product in a timely and reliable
manner to our customers. Although the occurrence of this scenario could have a material adverse effect on
NIKE, we do not have a basis to determine at this time whether such a scenario is reasonably likely to
occur. We believe that suppliers and customers present the area of greatest risk to disruption of our
operations because of our limited ability to influence actions of third parties or to estimate the level and
impact of their noncompliance throughout the extended supply chain.
We are currently developing contingency plans for our significant suppliers and customers, which we expect
to finalize by September 30, 1999. In addition, we are developing contingency plans that assume some
estimated level of non-compliance by, or business disruption to, certain other suppliers and customers on a
case-by-case basis. We will continue to develop on an as-needed basis throughout 1999. We are also
developing contingency plans for our Tier 1 IT systems, which we expect to finalize by August 31, 1999.

The contingency plans for our suppliers and customers include, where appropriate, (1) booking orders and
manufacturing and shipping products before anticipated business disruptions, (2) shifting production
capacity from facilities that NIKE determines to be at high risk of noncompliance or business disruption, (3)
consolidating finance vendors and (4) temporarily discontinuing business with suppliers determined to be
high risk of noncompliance or business disruption and finding alternative suppliers.

The contingency plans for our Tier 1 IT systems include, where appropriate, (1) manual work processes, (2)
storing additional sets of backup data before critical process dates, (3) off-site system recovery, and (4)
temporarily shifting production software from one hardware system to another. In addition, personnel we
deem essential to system operation and recovery are scheduled to be available during high-risk periods.

We continually update our assessments and revise our contingency plans for our significant suppliers and
customers as we receive additional information from them concerning their Y2K preparedness. However,
judgments regarding contingency plans-such as how to develop them and to what extent-are subject to
many variables and uncertainties. There can be no assurance that NIKE will correctly anticipate the level,
impact or duration of noncompliance by its suppliers and customers. As a result, there is no certainty that
our contingency plans will be sufficient to mitigate the impact of noncompliance by suppliers and customers
and some material adverse effect to NIKE may result from one or more third parties regardless of our
contingency plans. The failure of any contingency plans could have a material adverse effect on NIKE's
financial condition, results of operations or liquidity.

Cost. Costs associated with our efforts around Year 2000 issues are expensed as incurred, unless they
relate to the purchase of hardware and software, and software development, in which case they are
capitalized. As of May 31, 1999, NIKE estimates that total costs related to the Year 2000 issue will be
approximately $110 to $120 million, of which approximately $91 million have been incurred. Of the $91
million, approximately $34 million are external expenses, $15 million internal costs and $42 million
replacement projects. Approximately $10 million of the non-replacement expenses will be capitalized; the
remainder has been expensed as incurred. NIKE funds Year 2000 costs through operating cash flows. We
presently believe that the total cost of achieving Year 2000 compliant systems will not be material to our
financial condition, liquidity or results of operations.

Estimates of time, cost and risk estimates are based on currently available information. Developments that
could affect estimates include, but are not limited to: the availability and cost of trained personnel; the ability
to locate and correct all relevant computer code and systems; cooperation and Year 2000 readiness of our
suppliers and customers (and their suppliers and customers); and the ability to correctly anticipate risks and
implement suitable contingency plans in the event of system failures at NIKE or with our suppliers and
customers (and their suppliers and customers).

The above section, even if incorporated by reference into other documents or disclosures, is a Year 2000
Readiness Disclosure as defined under the Year 2000 Information and Readiness Disclosure Act of 1998.

Recently Issued Accounting Standard

In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (FAS 133). In May 1999,
the Financial Accounting Standards Board delayed the required implementation date by one year, making it
effective for all fiscal quarters of fiscal years beginning after June 15, 2000 (June 1, 2001 for NIKE). This
statement will require us to recognize all derivatives on the balance sheet at fair value. Changes in the fair
value of derivatives will be recorded in current earnings or other comprehensive income, depending on the
intended use of the derivative and the resulting designation. The ineffective portion of all hedges will be
recognized in current-period earnings. Management has not yet determined the impact that the adoption of
FAS 133 will have on NIKE's results from operations or financial position.

LIQUIDITY AND CAPITAL RESOURCES

NIKE's financial position remains strong at May 31, 1999. Shareholders' equity increased $73 million and
remained at $3.3 billion. Compared to May 31, 1998 total assets decreased 3%, or $149.7 million. Working
capital decreased $10.8 million to remain at $1.8 billion, and NIKE's current ratio was 2.26:1 at May 31,
1999 compared to 2.07:1 at May 31, 1998.

Cash provided by operations reached nearly $1 billion, an increase of $443.5 million over the prior year,
primarily due to increased net income and a significant reduction in working capital. Inventories decreased
$197 million, or 14%, as we focused on reducing the levels of excess and slow-moving inventory relative to
a year ago. Accounts receivable decreased $134 million, or 8%, primarily due to lower revenue levels as
well as a slight improvement in our receivable collection days. Additions to property, plant and equipment for
fiscal year 1999 were $384 million compared to $506 million for fiscal year 1998. The largest single project
was the expansion of our world headquarters. Other expenditures in the U.S. were for warehouse
expansions, retail store additions and ongoing investments in systems infrastructure. Approximately $144
million of the total additions occurred outside of the U.S. and were due mostly to warehouse and retail
expansions. We expect fiscal year 2000 capital expenditures to be approximately $200 million more than
fiscal year 1999 levels, primarily due to the fact that we have, subsequent to the date of the financial
statements, consummated a purchase of a distribution facility in Japan. Until recently we had intended to
lease the facility. As part of the purchase, certain long-term debt obligations were assumed in the amount of
approximately $106 million. The remainder of the purchase was financed by short term borrowings.

Long term debt levels have remained consistent with that of prior year. In fiscal year 1997, we filed a shelf
registration with the Securities and Exchange Commission (SEC) for the sale of up to $500 million of debt
securities. Under this program, we have issued $300 million of medium-term notes, $200 million in fiscal
1997, maturing December 1, 2003, and $100 million in fiscal year 1998, maturing in three to five years. The
proceeds were swapped into Dutch Guilders to obtain medium-term fixed rate financing to support the
growth of our European operations. In February of 1999, we filed a shelf registration with the SEC for again,
the sale of up to $500 million in debt securities, of which $200 million had been previously registered but not
issued under the fiscal year 1997 registration discussed above.

In addition, during fiscal year 1999 we have used cash to reduce notes payable, fund property, plant and
equipment additions, repurchase stock, and pay dividends.

Management believes that significant funds generated by operations, together with access to sufficient
sources of funds, will adequately meet our anticipated operating, global infrastructure expansion, and capital
needs. Significant short- and long-term lines of credit are maintained with banks which, along with cash on
hand, provide adequate operating liquidity. Our commercial paper program, under which there was $179
million and $92 million outstanding at May 31, 1999 and 1998, respectively, also provides liquidity.

Dividends per share of common stock for fiscal 1999 rose $.02 over Fiscal 1998 to $.48 per share. Dividend
declaration in all four quarters has been consistent since February 1984. Based upon current projected
earnings and cash flow requirements, we anticipate continuing a dividend and reviewing its amount at the
November Board of Directors meeting. Our policy continues to target an annual dividend in the range of
15% to 25% of trailing twelve-month earnings.

In the fourth quarter, NIKE purchased a total of 0.6 million shares of our Class B common stock for
approximately $37 million under the $1 billion four-year program approved in December 1997. During all of
fiscal 1999, we purchased 7.4 million shares for a total of $302 million. Funding has, and is expected to
continue to, come from operating cash flow in conjunction with short-term borrowings. The timing and the
amount of shares purchased will be dictated by working capital needs and stock market conditions.
MARKET RISK

We are exposed to the impact of foreign currency fluctuations and interest rate changes due to our
international sales, production, and funding requirements. In the normal course of business, we employ
established policies and procedures to manage exposure to fluctuations in the value of foreign currencies
and interest rates using a variety of financial instruments. It is our policy to utilize financial instruments to
reduce risks where internal netting and other strategies cannot be effectively employed. Foreign currency
and interest rate transactions are used only to the extent considered necessary to meet our objectives and
we do not enter into foreign currency or interest rate transactions for speculative purposes.

In addition to product sales and costs, we have foreign currency risk related to debt that is denominated in
currencies other than the U.S. dollar. Our foreign currency risk management objective is to protect cash
flows resulting from sales, purchases and other costs from the adverse impact of exchange rate
movements. Foreign exchange risk is managed by using forward exchange contracts and purchased
options to hedge certain firm commitments and the related receivables and payables, including third party or
intercompany transactions. Purchased currency options are used to hedge certain anticipated but not yet
firmly committed transactions expected to be recognized within one year. By policy, we maintain hedge
coverage between minimum and maximum percentages. Cross-currency swaps are used to hedge foreign
currency denominated payments related to intercompany loan agreements. Hedged transactions are
denominated primarily in European currencies, Japanese yen and Canadian dollar.

We are exposed to changes in interest rates primarily as a result of our long-term debt used to maintain
liquidity and fund capital expenditures and international expansion. Our interest rate risk management
objective is to limit the impact of interest rate changes on earnings and cash flows and to reduce overall
borrowing costs. To achieve our objectives we maintain fixed rate debt as a percentage of aggregate debt
and finance working capital needs through our payables agreement with Nissho Iwai American Corporation,
various bank loans, and commercial paper.

Market Risk Measurement

We monitor foreign exchange risk and related derivatives use using a variety of techniques including a
review of market value, sensitivity analysis, and Value-at-Risk (VaR). The VaR determines the maximum
potential one-day loss in the fair value of foreign exchange rate-sensitive financial instruments. The VaR
model estimates assume normal market conditions and a 95% confidence level. There are various modeling
techniques that can be used in the VaR computation. Our computations are based on interrelationships
between currencies and interest rates (a "variance/co-variance"technique). We determined these
interrelationships by observing foreign currency market changes and interest rate changes over the
preceding 90 days. The value of foreign currency options does not change on a one-to-one basis with
changes in the underlying currency rate. We adjusted the potential loss in option value for the estimated
sensitivity (the "delta" and "gamma") to changes in the underlying currency rate. The model includes all of
our forwards, options, cross-currency swaps and yen-denominated debt (i.e., our market-sensitive derivative
and other financial instruments as defined by the SEC). Anticipated transactions, firm commitments and
accounts receivable and payable denominated in foreign currencies, which certain of these instruments are
intended to hedge, were excluded from the model.

The VaR model is a risk analysis tool and does not purport to represent actual losses in fair value that we
will incur, nor does it consider the potential effect of favorable changes in market rates. It also does not
represent the maximum possible loss that may occur. Actual future gains and losses will differ from those
estimated because of changes or differences in market rates and interrelationships, hedging instruments
and hedge percentages, timing and other factors.

The estimated maximum one-day loss in fair value on NIKE's foreign currency sensitive financial
instruments, derived using the VaR model, was $10.9 million and $11.7 million at May 31, 1999 and May 31,
1998, respectively. We believe that this amount is immaterial and that such a hypothetical loss in fair value
of our derivatives would be offset by increases in the value of the underlying transactions being hedged.
Our interest rate risk is also monitored using a variety of techniques. Notes 5 and 14 to the Consolidated
Financial Statements outline the principal amounts, weighted average interest rates, fair values and other
terms required to evaluate the expected cash flows and sensitivity to interest rate changes.

Special Note Regarding Forward-Looking Statements and Analyst Reports. Certain written and oral statements 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 ("the Act"). Forward-looking statements include, without limitation, and 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 S.E.C., including Forms 8-K, 10-Q, and 10-K, and include
among others, the following: international, national and local general economic and market conditions (including the current Asian
economic problems); 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; the size, timing and mix of purchases of NIKE's products; 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 the changing mix
of futures and at-once orders; the ability of NIKE to sustain, manage or forecast its growth and inventories; 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; business disruptions
increased costs of freight and transportation to meet delivery deadlines; changes in business strategy or development plans; general risks
associated with doing business outside the United States, including, without limitation, import duties, tariffs, quotas and political and
economic instability; changes in government regulations; liability and other claims asserted against NIKE; the ability to attract and retain
qualified personnel; 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 impact
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.

FINANCIAL REPORTING

Management of NIKE, Inc. is responsible for the information and representations contained in this report.
The financial statements have been prepared in conformity with the generally accepted accounting
principles we considered appropriate in the circumstances and include some amounts based on our best
estimates and judgments. Other financial information in this report is consistent with these financial
statements.

Our accounting systems include controls designed to reasonably assure that assets are safeguarded from
unauthorized use or disposition and which provide for the preparation of financial statements in conformity
with generally accepted accounting principles. These systems are supplemented by the selection and
training of qualified financial personnel and an organizational structure providing for appropriate segregation
of duties.

An Internal Audit department reviews the results of its work with the Audit Committee of the Board of
Directors, presently consisting of three outside directors. The Audit Committee is responsible for
recommending to the Board of Directors the appointment of the independent accountants and reviews with
the independent accountants, management and the internal audit staff, the scope and the results of the
annual examination, the effectiveness of the accounting control system and other matters relating to the
financial affairs of NIKE as they deem appropriate. The independent accountants and the internal auditors
have full access to the Committee, with and without the presence of management, to discuss any
appropriate matters.

REPORT OF INDEPENDENT ACCOUNTANTS

Portland, Oregon
June 29, 1999
To the Board of Directors and
Shareholders of NIKE, Inc.

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of
income, of cash flows and of shareholders' equity present fairly, in all material respects, the financial
position of NIKE, Inc. and its subsidiaries at May 31, 1999 and 1998, and the results of their operations and
their cash flows for each of the three years in the period ended May 31, 1999, in conformity with generally
accepted accounting principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits of these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers, LLP
NIKE, Inc. Consolidated Statement of Income

(in millions, except per share data)

YEAR ENDED MAY 31, 1999 1998 1997
Revenues $8,776.9 $9,553.1 $9,186.5
Costs and expenses:
Costs of sales 5,493.5 6,065.5 5,503.0
Selling and administrative 2,426.6 2,623.8 2,303.7
Interest expense (Notes 4 and 5) 44.1 60.0 52.3
Other income/expense, net (Notes 1, 21.5 20.9 32.3
10 and 11)
Restructuring charge, net (Note 13) 45.1 129.9 -
8,030.8 8,900.1 7,891.3
Income before income taxes 746.1 653.0 1,295.2
Income taxes (Note 6) 294.7 253.4 499.4
Net income $451.4 $399.6 $795.8
Basic earnings per common share $1.59 $1.38 $2.76
(Notes 1 and 9)
Diluted earnings per common share $1.57 $1.35 $2.68
(Notes 1 and 9)
The accompanying notes to consolidated financial statements are an integral part of this statement.

NIKE, Inc. Consolidated Balance Sheet

(in millions)
MAY 31, 1999 1998
Assets
Current Assets:
Cash and equivalents $198.1 $108.6
Accounts receivable, less allowance for 1,540.1 1,674.4
doubtful accounts of $73.2 and $71.4
Inventories (Note 2) 1,199.3 1,396.6
Deferred income taxes (Notes 1 and 6) 120.6 156.8
Income taxes receivable 15.9 -
Prepaid expenses (Note 1) 190.9 196.2
Total current assets 3,264.9 3,532.6
Property, plant and equipment, net (Note 3) 1,265.8 1,153.1
Identifiable intangible assets and goodwill 426.6 435.8
(Note 1)
Deferred income taxes and other assets 290.4 275.9
(Notes 1 and 6)
Total assets $5,247.7 $5,397.4
Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of long-term debt (Note 5) $1.0 $1.6
Notes payable (Note 4) 419.1 480.2
Accounts payable (Note 4) 373.2 584.6
Accrued liabilities 653.6 608.5
Income taxes payable - 28.9
Total current liabilities 1,446.9 1,703.8
Long-term debt (Notes 5 and 14) 386.1 379.4
Deferred income taxes and other liabilities 79.8 52.3
(Notes 1 and 6)
Commitments and contingencies (Notes 12 - -
and 15)
Redeemable Preferred Stock (Note 7) 0.3 0.3
Shareholders' equity:
Common Stock at stated value (Note 8):
Class A convertible - 100.7 and 101.5 0.2 0.2
shares outstanding
Class B - 181.6 and 185.5 shares 2.7 2.7
outstanding
Capital in excess of stated value 334.1 262.5
Accumulated other comprehensive income (68.9) (47.2)
Retained earnings 3,066.5 3,043.4
Total shareholders' equity 3,334.6 3,261.6
Total liabilities and shareholders' equity $5,247.7 $5,397.4
The accompanying notes to consolidated financial statements are an integral part of this statement.
NIKE, Inc. Consolidated Statement of Cash Flows
(in millions)
YEAR ENDED MAY 31, 1999 1998 1997
Cash provided (used) by operations:
Net income $451.4 $399.6 $795.8
Income charges (credits) not affecting cash:
Depreciation 198.2 184.5 138.0
Non-cash portion of 28.0 59.3 -
restructuring charge
Deferred income taxes 37.9 (113.9) (47.1)
Amortization and other 30.6 49.0 30.3
Changes in certain working capital components:
Decrease (increase) in 197.3 (58.0) (416.7)
inventories
Decrease (increase) in 134.3 79.7 (485.6)
accounts receivable
Decrease (increase) in other 53.7 (12.6) (56.9)
current assets and income
taxes
receivable
(Decrease) increase in (170.4) (70.1) 365.3
accounts payable, accrued
liabilities and
income taxes payable
Cash provided by operations 961.0 517.5 323.1
Cash provided (used) by investing activities:
Additions to property, plant and (384.1) (505.9) (465.9)
equipment
Disposals of property, plant and 27.2 16.8 24.3
equipment
Increase in other assets (60.8) (87.4) (43.8)
Increase (decrease) in other 1.2 (18.5) (10.8)
liabilities
Cash used by investing (416.5) (595.0) (496.2)
activities
Cash provided (used) by financing activities:
Additions to long-term debt - 101.5 300.5
Reductions in long-term debt (1.5) (2.5) (5.2)
including current portion
(Decrease) increase in notes (61.0) (73.0) 92.9
payable
Proceeds from exercise of 54.4 32.2 26.3
options
Repurchase of stock (299.8) (202.3) -
Dividends - common and (136.2) (127.3) (100.9)
preferred
Cash (used) provided by (444.1) (271.4) 313.6
financing activities
Effect of exchange rate (10.9) 12.1 (0.2)
changes on cash
Effect of May 1996 cash flow - - 43.0
activity for certain subsidiaries
(Note 1)
Net increase (decrease) in cash 89.5 (336.8) 183.3
and equivalents
Cash and equivalents, 108.6 445.4 262.1
beginning of year
Cash and equivalents, end of $198.1 $108.6 $445.4
year
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $47.1 $52.2 $44.0
Income taxes 231.9 360.5 543.1
The accompanying notes to consolidated financial statements are an integral part of this statement.
NIKE, Inc. Consolidated Statement of SHAREHOLDERS' EQUITY
(in millions)
Common Stock Capital In Accumulate Retained Total
Excess Of dOtherCom Earnings
Stated prehensive
Value Income
Class A Class B
Shares Amount Shares Amount
Balance at 51.1 $0.2 92.5 $2.7 $154.8 $(16.5) $2,290.2 $2,431.4
May 31,
1996
Stock 1.5 55.8 55.8
options
exercised
Conversion (0.3) 0.3 -
to Class B
Common
Stock
Two-for-one 50.9 93.3
Stock Split
October 23,
1996
Dividends (108.2) (108.2)
on Common
Stock
Comprehensive income:
Net income 795.8 795.8
Net income for the month ended May 1996, due to the change in fiscal year-end of certain non-U.S
operations (4.1) (4.1)
(Note 1)
Foreign currency translation (net of tax
benefit of (14.8) (14.8)
$4.1)
Comprehen (14.8) 791.7 776.9
sive income
Balance at 101.7 0.2 187.6 2.7 210.6 (31.3) 2,973.7 3,155.9
May 31,
1997
Stock 2.1 57.2 57.2
options
exercised
Conversion (0.2) 0.2 -
to Class B
Common
Stock
Repurchase (4.4) (5.3) (197.0) (202.3)
of Class B
Common
Stock
Dividends (132.9) (132.9)
on Common
Stock
Comprehensive income:
Net income 399.6 399.6
Foreign (15.9) (15.9)
currency
translation
(net of tax
benefit of
$4.4)
Comprehen (15.9) 399.6 383.7
sive income
Balance at 101.5 0.2 185.5 2.7 262.5 (47.2) 3,043.4 3,261.6
May 31,
1998
Stock 2.7 80.5 80.5
options
exercised
Conversion (0.8) 0.8 -
to Class B
Common
Stock
Repurchase (7.4) (8.9) (292.7) (301.6)
of Class B
Common
Stock
Dividends (135.6) (135.6)
on Common
Stock
Comprehensive income:
Net income 451.4 451.4
Foreign (21.7) (21.7)
currency
translation
(net of tax
benefit of
$6.1)
Comprehen (21.7) 451.4 429.7
sive income
Balance at 100.7 $0.2 181.6 $2.7 $334.1 $(68.9) $3,066.5 $3,334.6
May 31,
1999
The accompanying notes to consolidated financial statements are an integral part of this statement.