Long Pitch:

Nike, Inc. (NYSE: NKE)Nike, Inc. (NYSE: NKE)

Prepared by Bini KronenbergApril 20th, 2010

� Business Overview

� Stock Overview

Presentation Overview

� Thesis Points

� Competitive Advantage

� Operations

� Risks

� Value Added Research

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Business Overview

� A major publicly traded sportswear and equipment supplier based in the United States.

� The company is headquartered near Beaverton, Oregon, which is part of the

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the Portland metropolitan area.

� Operates 700 stores in 46 different countries

� According to a New England-based environmental organization Clean Air-Cool Planet, Nike ranks among the top 3 companies (out of 56) on a survey conducted about climate-friendly companies

�Nike's Trash Talk Shoe & Nike's Reuse-A-Shoe program� Low environmental foot-print 2010 World Cup Kits

Business Overview

� Since its establishment in 1964 Nike has shown continuous substantial growth as a corporation both domestically and globally

�With sound financial practices and innovation strategies, it is likely that Nike will continue to grow between 10-15% annually.that Nike will continue to grow between 10-15% annually.

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Nike's Revenue

� Leads the global sports wear industry, even after Adidas’

recent acquisition of Reebok

� Increases Market share through M&A’s such as Cole Haan and Hurley

Business Overview

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Stock Overview

� Incredible track record

� Consistently outperforms the S&P 500

� Shows resilience even during periods of economic recession

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Nike’s 2 year stock returns compared to

Adidas and S&P 500 shows recession recovery

Stock Overview

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Thesis Points

� Strong historical growth and opportunities

for future growth

� Healthy cash flows and operations

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� Healthy cash flows and operations

� Interests aligned with shareholders

� Ability to sell athletes on its products

� Highly innovative

Growth Attitude and Opportunities

� “There is no finish line” –the internal ethos of Nike� “endless possibilities for human potential”� “sports are a universal language”� largest growth opportunities: action sports, basketball, football (soccer), men’s training, running, sportswear, and women’s training

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(soccer), men’s training, running, sportswear, and women’s training

�Possible acquisition of Lululemon Athletica (high quality Yoga wear)

� 2010 World Cup in Africa

� currently has only 4 factories in South Africa

Healthy operations and Cashflows

� Current Ratio: 2.97

� Quick Ratio: 2.23

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� Cash to Debt ratio: 1.19

� “Cash is King”—part of its growth strategy

� ROI: 22%

� ROA: 1.3

� “Over the past 10 years, Nike has returned $5.5 billion to shareholders through stock repurchases and dividends.”

Interests aligned with shareholders

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� “From FY05 to the end of FY09 we averaged 9% growth in revenue, 12% growth in EPS, and delivered a 60% increase in stock price while the S&P 500 averaged down 18%.”

Competitive Advantage

� Sponsors some of sports most renowned athlethes:

� Roger Federer, Pete Sampras & Rafa Nadal� Michael Jordan� Tiger Woods� Tiger Woods� Serina Williams & Maria Sherapova � Lance Armstrong� Ronaldo & Ronaldinho� Steve Prefontain� New York Yankees & Boston Red Sox� 86 top athletic colleges

� Huge aspect of their competitive advantage and global emergence

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Competitive Advantage Cont.

� Has strategically diversified itself

�Cole Haan, Hurley, NIKE Golf, Nike+, Jordan, Converse, Bauer, Umbro, Exeter

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� Market leader in innovation and quality

� Globally recognized brand name, logo, and motto

Innovation at its finest

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Risks

� If unable to anticipate consumer preferences and develop new products, it may not be able to maintain or increase net revenues and profits

� Relies on technical innovation and high quality products for

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� Relies on technical innovation and high quality products for competitive advantage

� Failing to obtain high quality endorsers

� Failure of contractors to abide by regulations

� Reductions in consumer confidence spending

� Dependent upon global distribution

Value Added Research

Herbert Heiner—CEO of Adidas

Jim Howard—Category Director at Reebok, Global Business Unit Jim Howard—Category Director at Reebok, Global Business Unit

Manager at Adidas, Director Apparel Marketing Services at Nike, Global Apparel Manager at New Balance

Ellyn Moulton—Cashier at a Nike store (Leesburg Premium Outlets, VA)

Tennis on Campus—Received feedback from sponsored athletes

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Technical Analysis Chart

Last Trade: 76.36

Trade Time: 4:00PM ET

Change: 0.78 (1.03%)

Day's Range: 75.90 - 76.58

52wk Range: 48.76 - 76.58

Volume: 2,396,130

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Change: 0.78 (1.03%)

Prev Close: 75.58

Open: 76.02

Bid: N/A

Ask: N/A

1y Target Est: 79.77

Volume: 2,396,130

Avg Vol (3m): 2,551,760

Market Cap: 37.09B

P/E (ttm): 21.77

EPS (ttm): 3.51

Div & Yield: 1.08 (1.40%)

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