10-K

The 10-K filed by Nike Inc. in July, 1996. This is an example of a file accessed using the SEC's Edgar Database of Corporate Information. Much of the formating is lost, which makes reading tables difficult, but formating problems are a small price to pay for the ease and speed of access!

CONFORMED PERIOD OF REPORT: 19960531

FILED AS OF DATE: 19960830

SROS: NYSE

SROS: PSE

FILER:

COMPANY DATA:

COMPANY CONFORMED NAME: NIKE INC

CENTRAL INDEX KEY: 0000320187

STANDARD INDUSTRIAL CLASSIFICATION: RUBBER & PLASTICS FOOTWEAR [3021]

IRS NUMBER: 930584541

STATE OF INCORPORATION: OR

FISCAL YEAR END: 0531

FILING VALUES:

FORM TYPE: 10-K

SEC ACT: 1934 Act

SEC FILE NUMBER: 001-10635

FILM NUMBER: 96623847

BUSINESS ADDRESS:

STREET 1: ONE BOWERMAN DR

CITY: BEAVERTON

STATE: OR

ZIP: 97005-6453

BUSINESS PHONE: 5036416453

- ----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

----------------

FORM 10-K

(MARK ONE)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

FOR THE FISCAL YEAR ENDED MAY 31, 1996

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NO. 1-10635

----------------

NIKE, INC.

(Exact name of Registrant as specified in its charter)

OREGON 93-0584541

(State or other jurisdiction of (IRS Employer Identification No.)

incorporation)

ONE BOWERMAN DRIVE

BEAVERTON, OREGON 97005-6453

(Address of principal executive offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (503) 671-6453

----------------

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

(Title of each class) (Name of each exchange on which

Class B Common Stock registered)

New York Stock Exchange

Pacific Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

None

Indicate by check mark whether the Registrant (1) has filed all reports

required to be filed by Section 13 or 15(d) of the Securities Exchange Act of

1934 during the preceding 12 months (or for such shorter period that the

Registrant was required to file such reports), and (2) has been subject to such

filing requirements for the past 90 days. Yes [ X ] No [ ]

As of July 22, 1996, the aggregate market value of the Registrant's Class A

Common Stock held by nonaffiliates of the Registrant was $232,368,900 and the

aggregate market value of the Registrant's Class B Common Stock held by

nonaffiliates of the Registrant was $9,097,477,000.

As of July 22, 1996, the number of shares of the Registrant's Class A Common

Stock outstanding was 51,119,985 and the number of shares of the Registrant's

Class B Common Stock outstanding was 92,676,298

DOCUMENTS INCORPORATED BY REFERENCE:

Parts of Registrant's Proxy Statement dated August 12, 1996 for the annual

meeting of shareholders to be held on September 16, 1996 are incorporated by

reference into Part III of this Report.

Indicate by check mark if disclosure of delinquent filers pursuant to Item

405 of Regulation S-K (229.405 of this chapter) is not contained herein, and

will not be contained to the best of Registrant's knowledge, in definitive

proxy or information statements incorporated by reference in Part III of this

Form 10-K or any amendment to this Form 10-K. [ ]

<PAGE>

- --------------------------------------------------------------------------

NIKE, INC.

ANNUAL REPORT

ON FORM 10-K

TABLE OF CONTENTS

PART I

ITEM 1. BUSINESS

General....................................................... 1

Products...................................................... 1

Sales and Marketing........................................... 2

United States Market.......................................... 2

International Markets......................................... 3

Significant Customers......................................... 3

Orders........................................................ 3

Product Research and Development.............................. 3

Manufacturing................................................. 3

Trade Legislation............................................. 4

Competition................................................... 5

Trademarks and Patents........................................ 5

Employees..................................................... 6

Executive Officers of the Registrant.......................... 6

ITEM 2. PROPERTIES.................................................... 8

ITEM 3. LEGAL PROCEEDINGS............................................. 8

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........... 8

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER

MATTERS....................................................... 9

ITEM 6. SELECTED FINANCIAL DATA....................................... 10

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS..................................... 11

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.................... 15

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE...................................... 32

PART III (Except for the information set forth under "Executive

Officers of the Registrant" in Item I above, Part III is

incorporated by reference from the Proxy Statement for the

NIKE, Inc. 1995 annual meeting of shareholders.).............. 32

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-

K............................................................. 32

SIGNATURES............................................................... S-1

</TABLE>

<PAGE>

PART I

ITEM 1. BUSINESS

GENERAL

NIKE, Inc. was incorporated in 1968 under the laws of the state of Oregon.

As used herein, the terms "NIKE" and the "Company" refer to NIKE, Inc. and

its predecessors, subsidiaries and affiliates, unless the context indicates

otherwise.

The Company's principal business activity involves the design, development

and worldwide marketing of high quality footwear, apparel, and accessory

products. The Company sells its products to approximately 18,000 retail

accounts in the United States and through a mix of independent distributors,

licensees and subsidiaries in approximately 110 countries around the world.

Virtually all of the Company's products are manufactured by independent

contractors. Most footwear products are produced outside the United States,

while apparel products are produced both in the United States and abroad.

PRODUCTS

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. The Company places considerable emphasis on high

quality construction and innovative design. Basketball, cross-training,

running, and children's shoes are currently the top-selling product categories

and are expected to continue to lead in product sales in the near future.

However, the Company also markets shoes designed for outdoor activities,

tennis, golf, soccer, baseball, football, bicycling, volleyball,

wrestling, cheerleading, aquatic activities and other athletic and

recreational uses.

The Company sells active sports apparel covering each of the above

categories, as well as athletic bags and accessory items. NIKE apparel and

accessories are designed to complement the Company's athletic footwear

products, feature the same trademarks and are sold through the same marketing

and distribution channels. The Company often markets footwear, apparel and

accessories in "collections" of similar design or for specific purposes.

The Company sells a line of dress and casual footwear and

accessories for men, women and children under the brand name Cole Haan(R)

through its wholly-owned subsidiary, Cole Haan Holdings Incorporated.

The Company markets a line of headwear with licensed team logos under

the brand name "Sports Specialties", through its wholly-owned

subsidiary, Sports Specialties Corporation. The Company also sells

small amounts of various plastic products to other manufacturers through

its wholly-owned subsidiary, Tetra Plastics, Inc.

In February 1995 the Company acquired Bauer Inc., formerly Canstar Sports

Inc., the world's largest hockey equipment manufacturer. Bauer manufactures

and distributes ice skates, skate blades, in-line roller skates, protective

gear, hockey sticks, and hockey jerseys and accessories under the Bauer(R)

brand name. Bauer also offers a full selection of products for

street, roller and field hockey.

<PAGE>

SALES AND MARKETING

The table below sets forth certain information regarding the Company's

United States and international (non-U.S.) revenues for the last three

fiscal years.

<TABLE>

Year Ended May 31, 1996 %CHG 1995 %CHG 1994 % CHG

United States Footwear $2,772,500 20% $2,309,400 24% $1,868,900 (5)%

United States Apparel 842,500 99 423,900 25 338,500 (6)

Total United States 3,615,000 32 2,733,300 24 2,207,400 (5)

International Footwear 1,682,300 35 1,244,300 25 998,200 (5)

International Apparel 651,400 38 472,700 32 358,800 2

Total International 2,333,700 36 1,717,000 27 1,357,000 (3)

Other Brands 521,900 68 310,600 38 225,300 13

Total NIKE $6,470,600 36% $4,760,900 26% $3,789,700 (4)%

</TABLE>

Financial information about United States and international operations

appears in Note 15 of the consolidated financial statements on page 31.

The Company experiences moderate fluctuations in aggregate sales volume

during the year. However, the mix of product sales may vary considerably

from time to time as a result of changes in seasonal and geographic

demand for particular types of footwear and apparel.

Because NIKE is a consumer products company, the relative popularity of

various sports and fitness activities and changing design trends affect

the demand for the Company's products and, consequently, the types of

products the Company offers. The Company must therefore respond

to trends and shifts in consumer preferences by

adjusting the mix of existing product offerings, developing new products,

styles, and categories, and influencing sports and fitness preferences

through agressive marketing.

UNITED STATES MARKET

During fiscal 1996, sales to the Company's approximately 18,000

retail accounts in the United States accounted for approximately 64

percent of total revenues. The domestic retail account base includes a mix

of department stores, footwear stores, sporting goods stores, skating,

tennis and golf shops, and other retail accounts. During fiscal year

1996, NIKE's three largest customers accounted for approximately 24

percent of sales in the United States.

NIKE makes substantial use of its innovative "futures" ordering program,

which allows retailers to order five to six months in advance of delivery

with the guarantee that 90 percent of their orders will be delivered within

a set time period at a fixed price. In fiscal year 1996, 88 percent of the

Company's domestic footwear shipments (excluding Cole Haan(R) and Bauer (R))

were made under the futures program, compared to 88 percent in fiscal 1995 and

81 percent in fiscal 1994. The Company is implementing a similar futures

program for apparel.

The Company utilizes 18 NIKE sales offices for the solicitation

of sales in the United States. The Company also utilizes 10 independent

sales representatives for the sale of specialty products, such as golf,

cycling, water sports and outdoor wear. In addition, the Company

operates 78 wholly-owned retail outlets, 33 of which carry primarily

B-grade and close-out merchandise, 31 of which are Cole Haan(R) stores, 5

of which are high-profile NIKETOWN stores designed to showcase the

Company's products, and 5 of which are employee-only stores.

The Company's domestic distribution centers for footwear are located in

Beaverton, Oregon, Wilsonville, Oregon, Memphis, Tennessee, Greenland, New

Hampshire, and Yarmouth, Maine. Apparel products are shipped from the Memphis

distribution center and from Greenville, North Carolina. Cole Haan footwear

and Bauer Inc. products are distributed primarily from Greenland, New

Hampshire, and Sports Specialties headwear is shipped from Irvine, California.

<PAGE>

INTERNATIONAL MARKETS

The Company currently markets its products in approximately 110 countries

outside of the United States through independent distributors, licensees,

subsidiaries and branch offices. NIKE operates 28 distribution centers in

Europe, Asia, Canada, Latin America, and Australia, and also distributes

through independent distributors and licensees. The Company estimates that

its products are sold through approximately 34,000 retail accounts outside

the United States. International (non-U.S.) sales accounted for 36 percent

of total revenues in fiscal 1996, compared to 37 percent in fiscal 1995 and

36 percent in fiscal 1994. The Company has a futures ordering program for

European retailers similar to the United States futures program described

above. Outside of the United States, NIKE's three largest customers

accounted for approximately 6 percent of international sales.

International branch offices and subsidiaries of NIKE are located in

Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Costa Rica,

Denmark, Finland, France, Germany, Hong Kong, Indonesia, Italy, Japan,

Korea, Malaysia, Mexico, New Zealand, The Netherlands, Norway, Peoples

Republic of China, The Philippines, Singapore, Spain, Sweden, Switzerland,

Taiwan, Thailand, the United Kingdom, and Vietnam. The Company operates

12 wholly-owned retail outlets outside the United States, two of which are

employee-only stores.

SIGNIFICANT CUSTOMERS

Foot Locker, a chain of retail stores specializing in athletic footwear and

apparel, accounted for approximately 12 percent of global net sales of NIKE

brand products during fiscal 1996. No other customer accounted for 10 percent

or more of net sales during fiscal 1996.

ORDERS

As of May 31, 1996, the Company's worldwide orders for athletic footwear

and apparel totaled $3.9 billion, compared to $2.5 billion as of

May 31, 1995. Such orders are scheduled for delivery from June through

November of 1996. Based upon historical data, the Company expects that

approximately 95 percent of these orders will be filled in that time period,

although the orders may be cancelable.

PRODUCT RESEARCH AND DEVELOPMENT

The Company believes that its research and development efforts are a

key factor in its past and future success. Technical innovation in the

design of footwear, apparel, and athletic equipment receive continued

emphasis as NIKE strives to produce products that reduce or eliminate

injury, aid athletic performance and maximize comfort.

In addition to its own staff of specialists in the areas of biomechanics,

exercise physiology, engineering, industrial design and related fields,

NIKE also utilizes research committees and advisory boards made up of

athletes, coaches, trainers, equipment managers, orthopedists, podiatrists

and other experts who consult with the Company and review designs, materials

and concepts for product improvement. Employee athletes wear-test and

evaluate products during the design and development process.

In fiscal 1996, NIKE spent approximately $46.8 million on product research,

development and evaluation, compared to $28.8 million in 1995, and $24.6

million in 1994.

MANUFACTURING

In fiscal 1996, approximately 56 percent of the Company's total apparel

production for sale to the United States market was manufactured in the

United States by independent contract manufacturers, most of which are

located in the southern states. The remainder was manufactured by

independent contractors in Asia and South America, most of which are

located in Bangladesh, Hong Kong, Indonesia, Malaysia, The Philippines,

Singapore, Sri Lanka, Taiwan, and Thailand. Substantially all of NIKE's

apparel production for sale to the international market was manufactured

outside the U.S.

<PAGE>

Virtually all of the Company's footwear (exclusive of Cole Haan(R))

is produced outside of the United States. In fiscal 1996, contract suppliers

in Indonesia, the People's Republic of China, South Korea, Taiwan, Thailand,

and Vietnam accounted for approximately 38 percent, 34 percent, 11 percent,

5 percent, 10 percent, and 2 percent, respectively, of total NIKE brand

footwear production. The Company also has manufacturing agreements

with independent factories in Argentina, Brazil, Italy and Mexico.

The largest single supplier accounted for approximately 9 percent of

total 1996 footwear production.

The principal materials used in the Company's footwear products are

natural and synthetic rubber, vinyl and plastic compounds, foam cushioning

materials, nylon, leather, canvas, and a polyurethane film used to make

AIR-SOLE(R) cushioning components. NIKE and its contractors and suppliers

buy raw materials in bulk. Most raw materials are available in the

countries where manufacturing takes place. NIKE has thus far experienced

little difficulty in satisfying its raw material requirements. Tetra

Plastics, Inc., a wholly-owned subsidiary of NIKE, is the Company's sole

supplier of the material from which the AIR-SOLE(R) cushioning components

used in footwear are made.

The Company's international operations are subject to the usual risks

of doing business abroad, such as possible revaluation of currencies,

export duties, quotas, restrictions on the transfer of funds and, in

certain parts of the world, political instability. See "Trade Legislation"

below. NIKE has not, to date, been materially affected by any such risk,

but cannot predict the likelihood of such developments occurring. The

Company believes that it has the ability to develop, over a period of

time, adequate alternative sources of supply for the products obtained

from its present suppliers outside of the United States. If events

prevented the Company from acquiring products from its suppliers in a

particular country, the Company's footwear operations could be

temporarily disrupted and the Company could experience an adverse financial

impact. However, the Company believes that it could eliminate any such

disruption within a period of no more than 12 months, and that any adverse

impact would, therefore, be of a short-term nature. The Company believes that

its principal competitors are subject to similar risks.

All Company products manufactured overseas and imported into the United

States are subject to duties collected by the United States Customs Service.

Customs information submitted by the Company is routinely subject to review

by the Customs Service. The Company is unable to predict whether additional

United States customs duties, quotas or other restrictions may be imposed on

the importation of its products in the future. The enactment of any such

duties, quotas or restrictions could result in increases in the cost of such

products generally and might adversely affect the sales or profitability of

the Company and the imported footwear and apparel industry as a whole.

Since 1972, Nissho Iwai American Corporation ("NIAC"), a subsidiary of

Nissho Iwai Corporation, a large Japanese trading company, has performed

significant financing and export-import services for the Company. The

Company purchases through NIAC substantially all of the athletic footwear

and apparel it acquires from overseas suppliers. The Company's agreements

with NIAC extend through 2000, and the Company expects that the relationship

will be continued beyond that date.

TRADE LEGISLATION

In May 1996, President Clinton extended to June 1997, "most favored nation"

(MFN), non-discriminatory trading status to the People's Republic of China

(China). Under U.S. law, MFN status for China is extended annually.

The United States has extended MFN status to China each year since 1980.

China is a material source of footwear production for the Company.

A revocation of MFN status would result in a substantial increase in

tariff rates on goods imported from China, and, therefore could adversely

affect the Company's operations. While the United States continues to

have foreign policy as well as human rights concerns with China, the Clinton

Administration and the Congress have opposed using China's MFN status as

a means of addressing these concerns. However, even if NIKE's Chinese

sources were affected by a change in China's MFN status, the Company

believes that the impact of such change would not have a long term,

material adverse impact on the Company's business.

<PAGE>

Certain countries within the European Community have for some time main-

tained quotas restricting the importation of footwear manufactured in

China. With respect to such quotas, see the discussion in Item 7 below.

In 1994, the United States, Mexico, and Canada implemented the North America

Free Trade Agreement (NAFTA). Benefits to the Company include a phased

elimination of duties on footwear and apparel produced and imported from

Mexico, and the implementation and enforcement of new Mexican laws pro-

tecting the intellectual property rights of United States companies doing

business in Mexico. While the Company currently purchases no apparel

and a portion of its Cole Haan(R) shoes from Mexico, NAFTA may permit

NIKE to economically source some products from Mexico.

In April 1994, the 125 member nations of the General Agreement on Tariffs

and Trade (GATT), including the United States, signed a new pact to govern

world trade. The new agreement, which was approved by Congress in December

1995 and became effective January 1, 1995 for most countries, should provide

better international market access opportunities for U.S. goods and services.

The agreement, among other things, significantly cuts global tariffs on many

products, reduces or eliminates numerous non-tariff measures (such as quotas

and discriminatory product standards), establishes stronger rules on the

imposition of duties relating to the anti-dumping and subsidies codes,

provides greater protection for intellectual property rights, and creates a

strengthened dispute settlement procedure. NIKE believes that the

new agreement, once fully implemented by all countries, will reduce many

of the obstacles to international trade and benefit the Company.

In July 1995, President Clinton officially restored diplomatic relations

between the United States and Vietnam. The President's action is a step

toward restoration of full trade relations including the United

States granting non-discriminatory MFN trading status to Vietnam which

would result in lower tariffs between the two countries. The Company

is currently sourcing some footwear products from factories in

Vietnam. MFN trading status for Vietnam could expand production and

marketing opportunities for NIKE in Vietnam.

COMPETITION

The athletic footwear and apparel industry is keenly competitive in

the United States and on a worldwide basis. NIKE competes internationally

with an increasing number of specialized athletic shoe companies, apparel

companies, and large companies having diversified lines of athletic shoes

and apparel, including Reebok, Adidas and others. The intense competition

and the rapid changes in technology and consumer preferences in the

athletic footwear and apparel markets constitute significant risk factors in

the Company's operations.

NIKE is the largest supplier of athletic footwear in the world. Perfor-

mance and reliability of shoes and apparel, new product development, price,

product identity through marketing and promotion, and customer support

and service are important aspects of competition in the athletic footwear

and apparel industry. The Company believes that it is competitive in all

of these areas.

TRADEMARKS AND PATENTS

NIKE utilizes trademarks on nearly all of its products and believes that

having distinctive marks that are readily identifiable is an important

factor in creating a market for its goods, in identifying the Company and

in distinguishing its goods from the goods of others. The Company considers

its NIKE(R) and Swoosh(R) design trademarks to be among its most valuable

assets and has registered these trademarks in over 100 countries. In

addition, the Company owns other trademarks which it utilizes in marketing

its products. NIKE continues to vigorously protect its trademarks against

infringement.

<PAGE>

The Company has an exclusive, worldwide license to make and sell footwear

using patented "Air" technology. The process utilizes pressurized gas

encapsulated in polyurethane. Some of the early NIKE Air patents will expire

in 1997, enabling competitors to use certain types of NIKE Air technology.

The Company also has a number of patents covering components and features

used in various athletic and leisure shoes. Management believes that NIKE's

success depends upon skills in design, research and development, production

and marketing rather than upon its patent position. However, it has

followed a policy of filing applications for United States and foreign

patents on inventions, designs and improvements that it deems valuable.

EMPLOYEES

The Company had approximately 17,200 employees at May 31, 1996.

Management considers its relationship with its employees to be excellent.

With the exception of Bauer Inc., the Company's employees are not

represented by a union. Of Bauer's North American employees, approximately

50 percent or fewer than 1,200, are covered by four union collective

bargaining agreements with four separate bargaining units, and all of

Bauer's approximately 200 employees in Italy are covered by one of two

union collective bargaining agreements. The collective bargaining agreements

expire on various dates in 1996 and 1997. There has never been a material

interruption of operations due to labor disagreements.

EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of the Company as of July 31, 1996 are as follows:

Philip H. Knight, Chief Executive Officer--Mr. Knight, 58, a director

since 1968, is Chief Executive Officer and Chairman of the Board of

Directors of NIKE. Mr. Knight is a co-founder of the Company and, except

for the period from June 1983 through September 1984, served as its

President from 1968 to 1990. Prior to 1968, Mr. Knight was a certified

public accountant with Price Waterhouse LLP and Coopers & Lybrand and was an

Assistant Professor of Business Administration at Portland State University.

Harry C. Carsh, Vice President and General Manager, Sports and

Fitness--Mr. Carsh, 57, joined the Company in 1977, and was elected

Vice President in 1984 and appointed General Manager in 1993. Mr. Carsh

has held executive positions in accounting, manufacturing and European

marketing. He has served as Vice President in charge of the International

Division, Vice President of Operations, and is currently Vice President and

General Manager, Sports and Fitness. Prior to joining the Company, he

served for four years as Vice President of Finance for Lancet Medical

Industries. Mr. Carsh is a certified public accountant.

Thomas E. Clarke, President and Chief Operating Officer--Dr.Clarke, 45,

a director since 1994, joined the Company in 1980 . Dr. Clarke has held

various positions with the Company, primarily in research, design,

development and marketing. He was appointed divisional vice president in

charge of marketing in 1987. He was elected Vice President in 1989 and

appointed General Manager in 1990. Dr. Clarke holds a Doctorate degree in

biomechanics.

Gary DeStefano, Vice President, Sales--Mr. DeStefano, 39, has been

employed by the Company since 1982, with primary responsibilities in

sales and customer service. Mr. DeStefano was appointed Director of

Domestic Sales in 1990, divisional Vice President in charge of domestic

sales in 1992, and Vice President of Sales in June 1996.

Elizabeth G. Dolan, Vice President, Corporate Communications and

Marketing--Ms. Dolan, 39, has been employed by the Company since 1988,

when she joined the Company as Director of Public Relations. Ms. Dolan

was appointed Vice President of Corporate Communications in 1990 and was

elected Vice President of Marketing in 1994. Prior to joining the Company,

Ms. Dolan was Director of Public Relations at Cartier, Inc. in New York.

<PAGE>

Robert S. Falcone, Vice President and Chief Financial Officer--Mr.

Falcone, 49, has been employed by the Company since 1990. Mr. Falcone joined

the Company as Director of Acquisitions. From May, 1991 through November,

1991, he also served as interim Director of Human Resources, and he was

elected Vice President and Chief Financial Officer in 1992. Prior to

joining the Company, Mr. Falcone worked for 21 years as a certified public

accountant for Price Waterhouse LLP.

Stephen D. Gomez, Vice President, Apparel - Mr. Gomez, 41 has been

employed by the Company since 1981, with primary responsibilities in

apparel. He was appointed General Manager of European Apparel in 1987,

and Apparel Marketing Director in 1989. Mr. Gomez was appointed

divisional Vice President in charge of Appparel in 1992, and was

elected Vicce President of Apparel in June 1996.

David Kottkamp, Vice President and General Manager, International

Division--Mr. Kottkamp, 54, has been employed by the Company since 1978.

He has held positions in the areas of apparel, Canadian operations and

European operations. He was appointed divisional Vice President in 1988,

and General Manager in 1992.

Mark G. Parker, Vice President and General Manager, Consumer Product

Marketing--Mr. Parker, 40, has been employed by the Company since 1979

with primary responsibilities in product research, design and development.

Mr. Parker was appointed divisional Vice President in charge of development

in 1987, elected Vice President in 1989, and appointed General Manager in 1993.

Lindsay D. Stewart, Vice President Legal and Corporate Affairs and

Assistant Secretary--Mr. Stewart, 49, joined the Company as Assistant

Corporate Counsel in 1981. Mr. Stewart became Corporate Counsel in 1983.

He was elected Vice President and General Counsel in 1991. Prior to joining

the Company, Mr. Stewart was in private practice and an attorney for

Georgia-Pacific Corporation.

David B. Taylor, Vice President--Mr. Taylor, 41, has been employed by

the Company since 1977, with primary responsibilities in production. Mr.

Taylor was appointed divisional Vice President in charge of production in

1988, and was elected Vice President in 1989.

<PAGE>

ITEM 2. PROPERTIES

Following is a summary of principal properties owned or leased by the

Company. The Company's leases expire at various dates throughout the

year 2009.

U.S. ADMINISTRATIVE OFFICES:

Beaverton, Oregon (13 locations)-- SALES OFFICES AND SHOWROOMS:

one owned and 12 leased

United States (22 locations)--2

Wilsonville, Oregon--owned owned and 20 leased

Greenland, New Hampshire (2 locations) Toronto, Ontario--leased

-- 1 owned and 1 leased Europe (20 locations)--1 owned

Memphis, Tennessee (2 locations)- and 19 leased

- 1 owned and 1 leased Asia and Australia (10 locations)

Yarmouth, Maine--owned --leased

Charlotte, North Carolina--leased Latin America (3 locations)--leased

Irvine, California--leased Africa (2 locations)--leased

INTERNATIONAL ADMINISTRATIVE OFFICES: DISTRIBUTION FACILITIES:

Mississauga, Ontario--leased Greenland, New Hampshire--owned

Thornhill, Ontario--leased Wilsonville, Oregon (2 locations)--1

Montreal, Quebec--leased owned and 1 leased

Europe (14 locations)--leased Memphis, Tennessee (2 locations)--1

Asia and Australia (9 locations) owned and 1 leased

--leased Yarmouth, Maine--owned

Latin America (3 locations)--leased Irvine, California -- leased

Canada (8 locations)--2 owned and

6 leased

Latin America (4 locations)--leased

Europe (9 locations)--3 owned and

6 leased

Asia and Australia (16 locations)

--leased

INTERNATIONAL PRODUCTION OFFICES:

Asia (9 locations)--leased

South America (3 locations)--

leased

Florence, Italy--leased

MANUFACTURING FACILITIES:

Beaverton, Oregon (2 locations)

--leased

Greenville, North Carolina

(2 locations)--leased

Livermore Falls, Maine--owned

Sanford, Maine--owned

Cambridge, Ontario (2 locations)

--1 owned and 1 leased

Toronto, Ontario--leased

Vars, Ontario--leased

Granby, Quebec--leased

St. Jerome, Quebec--leased

Montebelluna, Italy--owned

Zdar nad Sazavou, Czech

Republic--owned

Earth City, Missouri--leased

Chesterfield, Missouri--leased

RETAIL OUTLETS:

United States (78 locations)--75 leased and 3 owned

Toronto, Ontario--leased

Europe (7 locations)--leased

Asia and Australia (4 locations)--leased

ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings, other than ordinary

routine litigation incidental to the Company's business, to which the

Company is a party or of which any of its property is the subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted during the fourth quarter of the 1996 fiscal

year to a vote of security holders, through the solicitation of proxies or

otherwise.

<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER

MATTERS

The Company's Class B Common Stock is listed on the New York Stock

Exchange and the Pacific Stock Exchange and trades under the symbol NKE.

At July 22, 1996 there were 8,225 holders of record of the Company's

Class B Common Stock and 31 holders of record of the Company's Class A

Common Stock. These figures do not include beneficial owners who hold

shares in nominee name. The Class A Common Stock is not publicly

traded but each share is convertible upon request of the holder into

one share of Class B Common Stock.

Reference is made to the table entitled "Selected Quarterly Financial

Data" in Item 6, which sets forth, for the periods indicated, the range

of high and low closing sales prices on the New York Stock Exchange, as

adjusted to reflect the 2-for-1 stock split that became effective in

October of 1990, and the 2-for-1 stock split that became effective in

October of 1995. Such table also sets forth the amount and frequency of all

cash dividends declared on the Company's common stock for the 1995 and 1996

fiscal years.

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>

SELECTED FINANCIAL DATA

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

1996 1995 1994 1993 1992 1991 1990 1989 1988

Year Ended May 31:

Revenues $6,470,625 $4,760,834 $3,789,668 $3,930,984 $3,405,211 $3,003,610 $2,235,244 $1,710,803 $1,203,440

Gross margin 2,563,879 1,895,554 1,488,245 1,543,991 1,316,122 1,153,080 851,072 635,972 400,060

Gross margin % 39.6% 39.8% 39.3% 39.3% 38.7% 38.4% 38.1% 37.2% 33.2%

Net income 553,190 399,664 298,794 365,016 329,218 287,046 242,958 167,047 101,695

Net income per common share 3.77 2.72 1.98 2.37 2.15 1.89 1.61 1.11 0.68

Average number of common and

common equivalent shares 146,804 147,006 150,912 154,126 153,204 152,134 151,336 150,288 150,556

Cash dividends declared per

common share 0.58 0.48 0.40 0.38 0.30 0.26 0.19 0.14 0.10

Cash flow from operations 330,021 254,913 576,463 265,292 435,838 11,122 127,075 169,441 19,019

Price range of common stock

High 104-1/8 40-5/16 37-3/8. 45-1/8 38-11/16 27-1/4 20-3/4 9-15/16. 6-5/8

Low 39-1/16 28-1/8 21-9/16 27-1/2 17-9/16. 13 9-1/2 5-25/32 3-1/2

At May 31

Cash and equivalents $ 262,117 $ 216,071 $ 518,816 $ 291,284 $ 260,050 $ 119,804 $ 90,449 $ 85,749 $ 75,357

Inventories 931,151 629,742 470,023 592,986 471,202 586,594 309,476 222,924 198,470

Working capital 1,259,881 938,393 1,208,444 1,165,204 964,291 662,645 561,642 419,599 295,937

Total assets 3,951,628 3,142,745 2,373,815 2,186,269 1,871,667 1,707,236 1,093,358 824,216 707,901

Long-term debt 9,584 10,565 12,364 15,033 69,476 29,992 25,941 34,051 30,306

Redeemable Preferred Stock 300 300 300 300 300 300 300 300 300

Common shareholders'

equity 2,431,400 1,964,689 1,740,949 1,642,819 1,328,488 1,029,582 781,012 558,597

408,567

Year-end stock price 100-3/8 39-7/16 29-1/2 36-1/4 29 19-7/8 19-5/8 9-1/2 6-1/16

Market capitalization 14,416,792 5,635,190 4,318,800 5,499,273 4,379,574 2,993,020 2,942,679 1,417,381 899,741

Financial Ratios:

Return on equity 25.2% 21.6% 17.7% 24.5% 27.9% 31.7% 36.3% 34.5% 27.4%

Return on assets 15.6% 14.5% 13.1% 18.0% 18.4% 20.5% 25.3% 21.8% 16.7%

Inventory turns 5.0 5.2 4.3 4.5 3.9 4.1 5.2 5.1 5.0

Current ratio at May 31 1.9 1.8 3.2 3.6 3.3 2.1 3.1 2.9 2.2

Price/Earnings ratio at May 31 26.6 14.5 14.9 15.3 13.5 10.5 12.2 8.6 9.0

Geographic Revenues:

United States $3,964,662 $2,997,864 $2,432,684 $2,528,848 $2,270,880 $2,141,461 $1,755,496 $1,362,148 $ 900,417

Europe 1,334,340 980,444 927,269 1,085,683 919,763 664,747 334,275 241,380 233,402

Asia/Pacific 735,094 515,652 283,421 178,196 75,732 56,238 29,332 32,027 21,058

Canada, Latin America,

and other 436,529 266,874 146,294 138,257 138,836 141,164 116,141 75,248 48,563

Total Revenues $6,470,625 $4,760,834 $3,789,668 $3,930,984 $3,405,211 $3,003,610 $2,235,244 $1,710,803 $1,203,440

</TABLE>

All per common share data has been adjusted to reflect the 2-for-1

stock splits paid October 30, 1995 and October 5, 1990. The Company's

Class B Common Stock is listed on the New York and Pacific Stock

Exchanges and trades under the symbol NKE. At May 31, 1996, there were

approximately 77,000 shareholders. Years 1993 and prior have been re-

stated to reflect the implementation of Statement and Financial Accounting

Standard No. 109 - Accounting for Income Taxes (see Notes 1 and 6 to the

Consolidated Financial Statements).

<TABLE>

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

(in thousands, except per share data)

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

1996 1995 1996 1995 1996 1995 1996 1995

Revenues $1,614,649 $1,170,355 $1,443,027 $1,053,746 $1,491,611 $1,124,697 $1,921,338 $1,412,036

Gross Margin 647,127 469,908 567,581 413,715 589,235 446,293 759,936 565,638

Gross Margin % 40.1% 40.2% 39.3% 39.3% 39.5% 39.7% 39.6% 40.1%

Net Income 164,781 105,987 118,216 84,939 113,749 95,349 156,444 113,389

Net Income per

Common Share 1.13 0.71 0.80 0.58 0.78 0.65 1.06 0.78

Dividends Declared per

Common Share 0.125 0.10 0.15 0.125 0.15 0.125 0.15 0.125

Price Range of Common Stock

High 48-3/8 33-5/16 62-5/8 33-3/16 71-3/8 38-1/4 104-1/8 40-5/16

Low 39-1/16 28-1/8 45-5/16 29-1/16 57-7/8 31-13/16 65-3/8 35-7/16

ADJUSTED*

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

1996 1995 1996 1995 1996 1995 1996 1995

Revenues $1,700,020 $1,253,532 $1,356,758 $ 976,016 $1,582,039 $1,207,934 $1,852,067 $1,351,132

Gross Margin 686,641 506,618 528,629 376,631 628,723 487,386 731,514 534,364

Gross Margin % 40.4% 40.4% 39.0% 38.6% 39.7% 40.3% 39.5% 39.5%

Net Income 182,098 121,367 97,812 69,331 133,874 119,746 133,727 91,184

Net Income per

Common Share 1.25 0.82 0.67 0.47 0.91 0.81 0.91 0.63

</TABLE>

*Quarterly figures have been adjusted to reflect the Company's operations

reported on a same-month basis for certain international entities which

were previously consolidated using an April 30 year end. See further

discussion in Note 1 to the Consolidated Financial Statements.

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS.

Highlights

Fiscal year 1996 was a record year for the Company and demonstrated the

continuing strength of the NIKE brand on a global scale:

- - Net income increased to $553.2 million, an increase of 38.4% over the

previous year's record $399.7 million.

- Revenues increased 35.9% to a record and industry leading $6.5 billion.

Fourth quarter revenues reached $1.9 billion, an increase of 36% over the

prior year and 19% over the previous record quarter, which was established

in the first quarter of this fiscal year.

- Gross margins remained strong at 39.6% of revenues, compared with the

previous year's NIKE record of 39.8%.

- Selling and administrative costs decreased 0.8% as a percent of revenues

from the previous year.

- The strength of the brand continues with advance and futures orders

scheduled for delivery over the next six months up a record 55% over the

same period last year.*

RESULTS OF OPERATIONS

Significant growth in worldwide revenues and improved leverage of selling and

administrative costs were the primary factors contributing to record earnings

for fiscal year 1996 as compared to 1995. Fiscal 1995 also experienced record

results, driven primarily by increased revenues, improved gross margins, and a

reduced percentage of revenues in selling and administrative costs, compared

with fiscal year 1994. Revenues and net income have now increased nine and

seven consecutive quarters, respectively. During fiscal 1996, the Company

continued to gain market share in United States footwear, in spite of a rather

mature market. Industry sources expected only moderate market growth rates of

5 to 7%. U.S. apparel experienced significant revenue growth during a

sluggish period for the industry and marketplace. Outside the U.S., the

markets in which the Company operates are less mature and offer tremendous

potential for growth.* The Company continues to invest in infrastructure and

local marketing to capitalize on these opportunities and balance the strength

of the global NIKE brand. Through its aggressive worldwide marketing efforts

and global infrastructure spending, the Company is positioning itself to

continue to expand markets and gain market share on a worldwide basis.*

The Company experienced revenue growth in fiscal 1996 in all breakout

categories (see chart). The most significant increase in absolute dollars was

U.S. footwear, which grew $463.2 million, or 20.1%, as a result of 19% more

pairs shipped and a 0.9% increase in average selling price per pair. Men's

basketball, women's fitness and men's training comprise approximately half of

the U.S. footwear category in terms of total revenues, and individually

increased 7%, 29% and 25%, respectively, over the prior year. The men's

running and kids' categories increased significantly over the prior year,

improving 28% and 26%, respectively. U.S. apparel increased $418.6 million,

or 99%, experiencing growth in all categories and demonstrating the strength

of the NIKE brand. International (non-U.S.) brand revenues also increased

significantly, growing $616.7 million, or 35.9%, as a result of increases of

$438.0 million (35.2%) and $178.7 million (37.8%) in footwear and apparel,

respectively, over the prior year. International revenues were increased 1.2%

as a result of the foreign currency translation impact. All NIKE regions

outside the U.S. experienced revenue increases greater than 30%. Europe

increased 33%, Asia Pacific, 41%, and the Americas, 35%. The most significant

increases were in Japan, Italy, United Kingdom, Korea and Canada. Other

brands which include Cole Haan(R), Tetra Plastics, Inc., Sports Specialties

Corp., and Bauer Inc. (formerly Canstar Sports Inc.) increased $211.3

million, or 68%, over the prior year. Bauer, which was acquired at the end of

the Company's third quarter of the prior year, contributed $173.7 million of

the increase.

<PAGE>

During fiscal 1995, the Company experienced revenue growth over 1994 in all

categories, with the most significant increase in U.S. footwear, which grew

$440.5 million, or 24%, as a result of 22% more pairs shipped at a 2% increase

in average selling price per pair. Men's basketball continued to dominate the

category with revenues up 12% for the year. Women's fitness grew 26%, women's

sport was up 45% and outdoor increased 48% over 1994. International brand

revenues also increased significantly, growing $360 million, or 27%, as a

result of a $246.1 million (25%) increase in footwear revenues and a $113.9

million (32%) increase in apparel. International revenues were increased 7%

as a result of the foreign currency translation impact. While European

revenues remained relatively constant, in spite of decreases in France and

Germany, the Asia Pacific and Americas regions were up substantially with 81%

and 61% increases, respectively. Asia Pacific growth was primarily a result

of Japan and Korea, for which NIKE acquired the distribution operations in

fiscal 1995, while the Americas region was up primarily as a result of

Argentina, also acquired in fiscal 1995, and improved revenues in Canada.

U.S. apparel rebounded strongly in 1995, up $85.4 million (25%), and other

brands grew $85.3 million, primarily due to the acquisition of Bauer.

The breakdown of revenues follows:

(in thousands)

<TABLE>

Year Ended May 31, 1996 %CHG 1995 %CHG 1994 % CHG

United States Footwear $2,772,500 20% $2,309,400 24% $1,868,900 (5)%

United States Apparel 842,500 99 423,900 25 338,500 (6)

Total United States 3,615,000 32 2,733,300 24 2,207,400 (5)

International Footwear 1,682,300 35 1,244,300 25 998,200 (5)

International Apparel 651,400 38 472,700 32 358,800 2

Total International 2,333,700 36 1,717,000 27 1,357,000 (3)

Other Brands 521,900 68 310,600 38 225,300 13

Total NIKE $6,470,600 36% $4,760,900 26% $3,789,700 (4)%

</TABLE>

Gross margins were 39.6% in fiscal 1996 compared to 39.8% in 1995 and 39.3% in

1994. Gross margins remained strong in fiscal 1996 and, similar to 1995, can

be attributed to the high demand for NIKE products, internally controlled

close-out distribution, a solid inventory position along with strong inventory

management, and the Company's innovative advance futures order program. The

slight reduction in gross margins compared with 1995 was primarily driven by

increased costs of air freight to meet delivery dates on increasing customer

orders, and increased footwear product costs not fully recovered through the

selling price. These higher expenses were partially offset by improved

apparel margins due to significant increases in revenues and a reduction in

close-outs as a percentage of total revenues.

Total selling and administrative expenses as a percentage of revenues

decreased to 24.6% as compared to 25.4% in 1995 and 25.7% in 1994. The

reduction can be attributed primarily to the significant increase in

revenues. The increase in absolute dollars was $378.9 million, or 31%. U.S.

operations increased $160.5 million and international increased $176.3

million, largely a result of increased sales and marketing spending as well as

infrastructure to support growth outside the U.S. Bauer accounted for $33

million of the increase. The increase of $235.7 million in 1995 over 1994 was

attributed to the acquisition of formerly independent international operations

and planned growth in international infrastructure. The Company intends to

continue to invest in growth opportunities and worldwide marketing and

advertising in order to ensure the successful sell-through of the high level

of orders discussed below.*

Interest expense increased $15.3 million due primarily to the higher levels of

short term borrowings needed to fund current operations. In 1995, average

cash and equivalents were higher, as available cash was used to fund the

acquisition of Bauer. Interest expense during 1995 increased $9 million over

1994 as a result of significant operational and investment cash needs financed

with short term borrowings, lower net cash position compared with 1994, and

the reduction of long-term debt with the repayment of $50 million in long-term

notes which occurred at the beginning of fiscal 1994.

<PAGE>

Other income/expense rose $25 million in expense over 1995, primarily as a

result of increased goodwill amortization from the acquisition of Bauer, a

reduction in interest income due to a net lower cash position compared with

the prior year, and increased profit share expense due to increased earnings.

These were partially offset by the absence of non-recurring specific

obligations which occurred in the prior year related to the shutdown of

certain facilities in conjunction with the consolidation of European

warehouses. In the prior year, other income/expense rose $3.5 million in

expense over 1994, primarily as a result of increased goodwill amortization

and additional non-recurring charges discussed above, offset partially by

increased interest income resulting from higher interest rates and excess cash

in the first half of the year.

The fiscal 1996 effective tax rate remained constant with 1995 at 38.5%, and

was 39.1% in 1994. In 1996, the rate was affected by a non-recurring state

tax credit offset by increased taxes on foreign earnings. The decrease in

1995 compared with 1994 was primarily the result of lower taxes provided on

non-U.S. earnings. Fiscal 1994's effective tax rate increased due to the U.S.

federal tax increase of 1%, which was applied retroactively, and the Company's

subsequent implementation of Financial Accounting Standards Board Statement

109, which required the application of the 1% increase to deferred taxes.

This increase was partially offset by the Company's decision to permanently

reinvest more foreign earnings overseas, reducing tax expense by the U.S. tax

previously recognized. The Company anticipates the effective tax rate for

fiscal 1997 to approximate the rate for 1996.*

Worldwide futures and advance orders for NIKE brand athletic footwear and

apparel scheduled for delivery from June through November, 1996, were

approximately $3.9 billion, 55% higher than such orders booked in the

comparable period of the prior year.* These orders and the percentage growth

in these orders are not necessarily indicative of the growth in revenues which

the Company will experience for the subsequent periods. This is because the

mix of advance futures and "at once" orders has shifted significantly toward

futures orders as the NIKE brand became more established in all areas,

specifically in the U.S. apparel business and in international regions. The

mix of advance orders to "at once" orders will continue to vary as the U.S.

apparel business and international operations continue to account for a

greater percentage of total revenues and place a greater emphasis on futures

programs.* Finally, exchange rates can cause differences in the comparisons.

Since the Company operates globally, it is exposed to market risks from

changes in foreign currency exchange rates. In order to minimize the effect

of fluctuations on the Company's foreign currency transactions, the Company

uses highly liquid foreign currency spot, forward and purchased options with

high credit quality financial institutions.* The Company only transacts

foreign exchange contracts to hedge underlying economic exposures and does not

transact in derivatives for trading or speculative purposes.* Where possible,

the Company nets its foreign exchange exposures to take advantage of natural

offsets that occur in the normal course of business.* Firmly committed

transactions and the related receivables and payables may be hedged with

forward exchange contracts or purchased options.* Anticipated, but not yet

firmly committed transactions, may be hedged through the use of purchased

options.* Additional information concerning the Company's hedging activities

is presented in Note 14 to the Consolidated Financial Statements.

Generally, a weaker U.S. dollar in comparison to foreign currencies, will

result in higher translation of operating results in these financial

statements than would a stronger U.S. dollar. The net effect of translations

on the 1996 results of operations was minimal while its effect on 1995 was

favorable.

The Company's international operations are subject to the usual risks of doing

business abroad, such as the imposition of import quotas or anti-dumping

duties.* In February, 1995, the EU Commission, at the request of the European

footwear manufacturers, initiated two anti-dumping investigations covering

certain footwear imported from the People's Republic of China (the "PRC"),

Indonesia and Thailand. The investigations expressly exclude certain types of

sports footwear (as defined in the Notices of Initiation of Anti-Dumping

Proceedings). The Company believes that most of its footwear sourced in the

target countries for sale in the EU fits within these exclusions and,

therefore, that it will not be materially affected by the results of these

anti-dumping investigations.* However, the above mentioned exclusions are

subject to interpretation and/or amendment by the EU customs authorities

(e.g., as to the meaning of terms such as "footwear designed for a sporting

activity").

As of the end of the 1996 fiscal year, the Company is unable to estimate the

likelihood that the EU Commission will ultimately impose anti-dumping duties

on any of the footwear covered by the investigations, or the amount of any

such duties. However, the most recent information obtained by the Company

concerning this matter suggests that provisional anti-dumping measures will

probably be imposed by late 1996 and that, in the case of China and Indonesia,

these may entail the imposition of substantial duties.

In the event that any of the Company's footwear were deemed to not be covered

by the above mentioned exclusions and hence, were affected by such duties, the

Company could consider, in addition to its possible legal remedies, shifting

the production of such footwear to other countries in order to maintain

competitive pricing.* The Company believes that it is prepared to deal

effectively with any such anti-dumping measures that may arise and that any

adverse impact would be of a short-term nature.* The Company continues to

closely monitor international trade restrictions and to adopt its multi-

country sourcing strategy and contingency plans. The Company believes that its

major competitors would be similarly impacted by any such restrictions.*

<PAGE>

As discussed further in Note 1 to the Consolidated Financial Statements,

beginning in fiscal year 1997, the Company will eliminate the one month lag in

reporting of certain international operations, in order to coincide with the

consolidated fiscal year end. This change will not have a material effect on

the annual results of operations, however, quarterly results will change as

certain reporting periods will shift one month.* The Selected Quarterly Data

section includes adjusted quarterly data as if the change had been in effect

in fiscal years 1996 and 1995.

LIQUIDITY AND CAPITAL RESOURCES

The Company's financial position remains extremely strong at May 31, 1996.

Total assets grew over $800 million to approximately $3.9 billion and

shareholder's equity increased $467 million to approximately $2.4 billion.

Cash and equivalents increased $46 million (21%). Working capital increased

$321 million as a result of higher levels of all current assets, offset by

increased notes payable, accounts payable, and accrued liabilities, primarily

a result of the increases in operations. The Company's current ratio

increased only slightly compared to May 31, 1995.

Inventory levels have increased $301 million since May 31, 1995, primarily due

to increases in U.S. apparel and international inventories to support the high

level of futures orders for the next quarter.* Accounts receivable increased

$293 million (28%) due to the high level of fourth quarter revenues (36%

higher than the previous year). Prepaid expenses have increased $20 million

primarily due to advance payments relating to the July 1996 summer Olympics.

Net deferred tax assets increased by $73.2 million from $54.9 million at May

31, 1995 to $128.1 million at May 31, 1996. The increase is primarily

attributable to a reduction of $14.9 million of deferred tax liabilities

associated with undistributed earnings of foreign subsidiaries, and increases

in deferred tax assets related to: foreign loss carry forwards ($19.2

million), reserves and accrued liabilities ($12.5 million) and deferred

compensation ($7.4 million). The change related to undistributed earnings of

foreign subsidiaries is attributable to a net increase in unremitted foreign

earnings from subsidiaries in higher taxed jurisdictions. The increase in

deferred tax assets related to foreign loss carry forwards is due to tax

losses in certain individual jurisdictions incurred as a result of initial

investments required to centralize the Company's European operations. (See

Note 6 to the Consolidated Financial Statements for a further breakdown of the

Company's deferred tax balances.) Other assets were also increased by

prepayments on certain long-term endorsement contracts.

Current liabilities increased $360 million, with the most significant

increases occurring in accounts payable ($157 million) and accrued liabilities

($135 million). The increase in accounts payable relates to higher levels of

operations and inventory purchases. Accrued liabilities increased due to

higher levels of employee benefit accruals and other accruals relating to the

higher level of operations.

Additions to property, plant and equipment for fiscal 1996 were $216 million,

with the most significant components related to the continued consolidation of

European footwear warehouses and the expansion of NIKE Town retail locations

in the U.S. Additions to property, plant and equipment of $154 million and

$95 million in fiscal 1995 and 1994, respectively, related to the expansion of

international warehouse facilities to satisfy increased capacity needs, along

with investments in management information systems and new NIKE retail

locations. Anticipated capital expenditures for fiscal 1997 approximate $400

million, with the primary components consisting of the expansion of existing

world headquarters, new NIKE Town retail locations, expanded warehousing in

the U.S. and other countries and improved information systems.* Funding is

expected to be provided by operations, short term borrowing capacity and long-

term debt.* Additional investing activities in 1995 included the acquisition

of Bauer and certain international distributors, including Korea.

During fiscal 1994, the Company announced that the Executive Committee of its

Board of Directors, acting within limits set by the Board, authorized a plan

to repurchase a maximum of $450 million NIKE Class B Common Stock over a

period of up to three years. During fiscal 1996, the Board of Directors voted

to extend the program until July 1, 1999. Funding has, and is expected to

continue to, come from operating cash flow in combination with occasional

short or medium-term borrowings.* The timing and the amount of shares

purchased will be dictated by working capital needs and stock market

conditions. As of May 31, 1996, the Company had repurchased 5.1 million

shares at a total cost of $301.7 million.

<PAGE>

Dividends per share of common stock for fiscal 1996 rose $.10 over fiscal 1995

to $.58 per share. Dividend declaration in all four quarters has been

consistent since February 1984. Based upon current projected earnings and

cash flow requirements, the Company anticipates continuing a dividend and

reviewing its amount during the second fiscal quarter board meeting.* The

Company's policy continues to target an annual dividend in the range of 15% to

25% of trailing twelve-month earnings.*

The Company's commercial paper program requires the support of committed and

uncommitted lines of credit. There was $0 and $118 million outstanding under

this program at May 31, 1996 and 1995, respectively. Additionally, no amounts

were outstanding at May 31, 1996 and 1995, under unsecured multiple option

credit facilities of $500 million and $300 million, respectively. See Note 4

to the Consolidated Financial Statements for further details concerning the

Company's short-term borrowing. NIKE's debt-to-equity ratio at May 31, 1996

was consistent with May 31, 1995 at .6:1, and was .4:1 at May 31, 1994.

Management believes that funds generated by operations, together with

currently available resources and anticipated long-term debt arrangements,

will adequately finance anticipated fiscal 1997 expenditures.*

*The marked items are forward-looking statements that involve risks and

uncertainties detailed from time to time in reports filed by NIKE with the

S.E.C., including Forms 8-K, 10-Q, and 10-K.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

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.

The Company's 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 of the company. 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 the Company 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.

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

Portland, Oregon

July 3, 1996

To the Board of Directors and

Shareholders of NIKE, Inc.

In our opinion, the consolidated financial statements listed in the index

appearing under Item 14(a)(1) and (2) on page 32 present fairly, in all

material respects, the financial position of NIKE, Inc. and its

subsidiaries at May 31, 1996 and 1995, and the results of their operations

and their cash flows for each of the three years in the period ended

May 31, 1996, 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.

Price Waterhouse LLP

<PAGE>

NIKE, INC.

CONSOLIDATED STATEMENT OF INCOME

<TABLE>

YEAR ENDED MAY 31,

--------------------------------

1996 1995 1994

---------- ---------- ------------

(IN THOUSANDS, EXCEPT PER SHARE DATA)

Revenues $6,470,625 $4,760,834 $3,789,668

Costs and expenses:

Costs of sales 3,906,746 2,865,280 2,301,423

Selling and administrative 1,588,612 1,209,760 974,099

Interest expense (Notes 4 and 5) 39,498 24,208 15,282

Other income/expense, net (Notes 1, 9 and 10) 36,679 11,722 8,270

5,571,535 4,110,970 3,299,074

Income before income taxes 899,090 649,864 490,594

Income taxes (Note 6) 345,900 250,200 191,800

Net income $ 553,190 $ 399,664 $ 298,794

Net income per common share (Note 1) $ 3.77 $ 2.72 $ 1.98

Average number of common and common

equivalent shares (Note 1) 146,804 147,006 150,912

The accompanying notes to consolidated financial statements are an integral part of this statement.

</TABLE>

<PAGE>

NIKE, INC.

CONSOLIDATED BALANCE SHEET

<TABLE>

MAY 31,

---------------------

1996 1995

---------- ----------

(IN THOUSANDS)

ASSETS

------

Current Assets:

Cash and equivalents $ 262,117 $ 216,071

Accounts receivable, less allowance for doubtful accounts

of $43,372 and $32,663 1,346,125 1,053,237

Inventories (Note 2) 931,151 629,742

Deferred income taxes (Note 6) 93,120 72,657

Prepaid expenses 94,427 74,221

Total current assets 2,726,940 2,045,928

Property, plant and equipment, net (Notes 3 and 5) 643,459 554,879

Identifiable intangible assets and goodwill (Note 1) 474,812 495,907

Deferred income taxes and other assets 106,417 46,031

Total assets $3,951,628 $3,142,745

LIABILITIES AND SHAREHOLDERS' EQUITY

------------------------------------

<C> <C>

Current Liabilities:

Current portion of long-term debt (Note 5) $ 7,301 $ 31,943

Notes payable (Note 4) 445,064 397,100

Accounts payable (Note 4) 455,034 297,656

Accrued liabilities 480,407 345,224

Income taxes payable 79,253 35,612

Total current liabilities 1,467,059 1,107,535

Long-term debt (Notes 5 and 13) 9,584 10,565

Deferred income taxes (Note 6) 1,883 17,789

Other liabilities (Note 1) 41,402 41,867

Commitments and contingencies (Notes 11 and 14) -- --

Redeemable Preferred Stock (Note 7) 300 300

Shareholders' equity (Note 8):

Common Stock at stated value:

Class A convertible 51,120, and 51,790 shares outstanding 153 155

Class B 92,509 and 91,100 shares outstanding 2,702 2,698

Capital in excess of stated value 154,833 122,436

Foreign currency translation adjustment (16,501) 1,585

Retained earnings 2,290,213 1,837,815

Total shareholders' equity 2,431,400 1,964,689

Total liabilities and shareholders' equity $3,951,628 $3,142,745

</TABLE>

The accompanying notes to consolidated financial statements are

an integral part of this statement.

<PAGE>

NIKE, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>

YEAR ENDED MAY 31,

-----------------------------

1996 1995 1994

--------- --------- ---------

(IN THOUSANDS)

Cash provided (used) by operations:

Net income $553,190 $399,664 $298,794

Income charges (credits) not affecting cash:

Depreciation 97,179 71,113 64,531

Deferred income taxes and purchased tax benefits (73,279) (24,668) (23,876)

Other liabilities (465) (1,359) (3,588)

Amortization and other 35,199 19,125 8,067

Changes in certain working capital components:

(Increase) decrease in inventory (301,409) (69,676) 160,823

(Increase) decrease in accounts receivable (292,888) (301,648) 23,979

(Increase) decrease in other current assets (20,054) (10,276) 6,888

Increase (decrease) in accounts payable, accrued

liabilities and income taxes payable 332,548 172,638 40,845

Cash provided by operations 330,021 254,913 576,463

Cash provided (used) by investing activities:

Additions to property, plant and equipment (216,384) (154,125) (95,266)

Disposals of property, plant and equipment 12,775 9,011 12,650

Additions to other assets (26,376) (6,260) (5,450)

Acquisition of subsidiaries:

Identifiable intangible assets and goodwill -- (345,901) (2,185)

Net assets acquired -- (84,119) (1,367)

Cash used by investing activities (229,985) (581,394) (91,618)

Cash provided (used) by financing activities:

Additions to long-term debt 5,044 2,971 6,044

Reductions in long-term debt including current portion (30,352) (39,804) (56,986)

Increase (decrease) in notes payable 47,964 263,874 (2,939)

Proceeds from exercise of options 21,150 6,154 4,288

Repurchase of stock (18,756) (142,919) (140,104)

Dividends common and preferred (78,834) (65,418) (60,282)

Cash provided (used) by financing activities (53,784) 24,858 (249,979)

Effect of exchange rate changes on cash (206) (1,122) (7,334)

Net (decrease) increase in cash and equivalents 46,046 (302,745) 227,532

Cash and equivalents, beginning of year 216,071 518,816 291,284

Cash and equivalents, end of year $262,117 $216,071 $518,816

Supplemental disclosure of cash flow of information:

Cash paid during the year for:

Interest (net of amount capitalized) $ 32,800 $ 20,200 $ 11,300

Income taxes 359,300 285,400 189,800

Supplemental schedule of non-cash investing activities:

The Company had a like-kind exchange of certain

equipment during the year as follows:

Cost of old equipment --- --- $ 24,057

Accumulated depreciation --- --- (14,502)

Cash received --- --- 652

Book value of new asset --- --- $ 10,207

The Company acquired new NIKE subsidiaries

during the year as follows:

Assets acquired --- --- $124,966

Less: cash paid --- --- (3,552)

Liabilities assumed --- --- $121,414

The accompanying notes to consolidated financial statements are an integral part of this

statement.

</TABLE>

<PAGE>

NIKE, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>

CAPITAL

COMMON STOCK IN

--------------------------- EXCESS FOREIGN

CLASS A CLASS B OF CURRENCY

------------- ------------- STATED TRANSLATION RETAINED

SHARES AMOUNT SHARES AMOUNT VALUE ADJUSTMENT EARNINGS TOTAL

------ ------ ------ ------ -------- ----------- ---------- ----------

(IN THOUSANDS)

Balance at May 31, 1993 26,691 $159 49,161 $2,720 $108,451 $(7,790) $1,539,279 $1,642,819

Stock options exercised 167 1 6,287 6,288

Conversion to Class B Common Stock (12) --- 12 --- ---

Repurchase of Class B Common Stock (2,819) (17) (6,454) (133,633) (140,104)

Translation of statements of

international operations (7,333) (7,333)

Net income 298,794 298,794

Dividends on Redeemable Preferred Stock (30) (30)

Dividends on Common Stock (59,485) (59,485)

Balance at May 31, 1994 26,679 159 46,521 2,704 108,284 (15,123) 1,644,925 1,740,949

Stock options exercised 241 2 8,954 8,956

Conversion to Class B Common Stock (784) (4) 784 4 __

Repurchase of Class B Common Stock (2,130) (13) (4,801) (138,106) (142,920)

Stock issued pursuant to

contractual obligations 134 1 9,999 10,000

Translation of statements of

international operations 16,708 16,708

Net income 399,664 399,664

Dividends on Redeemable Preferred Stock (30) (30)

Dividends on Common Stock (68,638) (68,638)

Balance at May 31,1995 25,895 155 45,550 2,698 122,436 1,585 1,837,815 1,964,689

Stock options exercised 756 3 32,848 32,851

Conversion to Clas B Common Stock (655) (2) 655 2 ---

Repurchase of Class B Common Stock (200) (1) (451) (18,304) (18,756)

Two-for-one Stock Split

October 30, 1995 25,880 45,748

Translation of statements of

international operations (18,086) (18,086)

Net Income 553,190 553,190

Dividends on Redeemable

Preferred Stock (30) (30)

Dividends on Common Stock (82,458) (82,458)

Balance at May 31, 1996 51,120 $153 92,509 $2,702 $154,833 $(16,501) $2,290,213 $2,431,400

</TABLE>

The accompanying notes to consolidated financial statements are an

integral part of this statement.

<PAGE>

NIKE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of consolidation:

The consolidated financial statements include the accounts of the Company and

its subsidiaries. All significant intercompany transactions and balances have

been eliminated. To facilitate the timely preparation of the consolidated

financial statements, the accounts of certain international operations have

been consolidated for fiscal years ending in April. The consolidated

financial statements in fiscal 1997 will eliminate the one month lag in

reporting for these international operations. The results of operations of

May 1996 of these entities, which would have previously been reported in

results of fiscal 1997, will be recorded as an adjustment to beginning

retained earnings for fiscal 1997.

Recognition of revenues:

Revenues recognized include sales plus fees earned on sales by licensees.

Advertising:

Advertising production costs are expensed the first time the advertisement is

run. Media (TV and print) placement costs are expensed in the month the

advertising appears. Total advertising and promotion expenses were

$642,500,000, $495,000,000 and $373,100,000 for the years ended May 31, 1996,

1995 and 1994, respectively. Included in prepaid expenses and other assets

was $69,300,000 and $24,300,000 at May 31, 1996 and 1995, respectively,

relating to prepaid advertising and promotion expenses.

Cash and equivalents:

Cash and equivalents represent cash and short-term, highly liquid investments

with original maturities three months or less.

Inventory valuation:

Inventories are stated at the lower of cost or market. Cost is determined

using the last-in, first-out (LIFO) method for substantially all U.S.

inventories. International inventories are valued on a first-in, first-out

(FIFO) basis.

Property, plant and equipment and depreciation:

Property, plant and equipment are recorded at cost. Depreciation for

financial reporting purposes is determined on a straight-line basis for

buildings and leasehold improvements and principally on a declining balance

basis for machinery and equipment, based upon estimated useful lives ranging

from three to thirty-two years.

Identifiable intangible assets and goodwill:

At May 31, 1996 and 1995, the Company had patents, trademarks and other

identifiable intangible assets with a value of $209,586,000 and $209,203,000,

respectively. The Company's excess of purchase cost over the fair value of

net assets of businesses acquired (goodwill) was $327,555,000 and $329,726,000

at May 31, 1996 and 1995, respectively.

Identifiable intangible assets and goodwill are being amortized over their

estimated useful lives on a straight-line basis over five to forty years.

Accumulated amortization was $62,329,000 and $43,022,000 at May 31, 1996 and

1995, respectively. Amortization expense, which is included in other

income/expense, was $21,772,000, $13,176,000 and $8,409,000 for the years

ended May 31, 1996, 1995 and 1994, respectively. Intangible assets are

periodically reviewed by the Company for impairments where the fair value is

less than the carrying value.

<PAGE>

Other liabilities:

Other liabilities include amounts with settlement dates beyond one year, and

are primarily composed of long-term deferred endorsement payments of

$21,674,000 and $26,893,000 at May 31, 1996 and 1995, respectively. Deferred

payments to endorsers relate to amounts due beyond contract termination, which

are discounted at various interest rates and accrued over the contract period.

Endorsement contracts:

Accounting for endorsement contracts is based upon specific contract

provisions. Generally, endorsement payments are expensed uniformly over the

term of the contract after giving recognition to periodic performance

compliance provisions of the contracts. Contracts requiring prepayments are

included in prepaid expenses or other assets depending on the length of the

contract.

Foreign currency translation:

Adjustments resulting from translating foreign functional currency financial

statements into U.S. dollars are included in the currency translation

adjustment in shareholders' equity.

Derivatives:

The Company enters into foreign currency contracts in order to reduce the

impact of certain foreign currency fluctuations. Firmly committed

transactions and the related receivables and payables may be hedged with

forward exchange contracts or purchased options. Anticipated, but not yet

firmly committed, transactions may be hedged through the use of purchased

options. Premiums paid on purchased options and any gains are included in

accrued liabilities and are recognized in earnings when the transaction being

hedged is recognized. See Note 14 for further discussion.

Income taxes:

Income taxes are provided currently on financial statement earnings of

international subsidiaries expected to be repatriated. The Company intends to

determine annually the amount of undistributed international earnings to

invest indefinitely in its international operations.

In June 1993, the Company adopted Statement of Financial Accounting Standards

No. 109, Accounting for Income Taxes (FAS 109). The adoption of FAS 109

changes the Company's method of accounting for income taxes from the deferred

method (APB 11) to an asset and liability approach. Previously, the Company

deferred the past tax effects of timing differences between financial

reporting and taxable income. The asset and liability approach requires the

recognition of deferred tax liabilities and assets for the expected future tax

consequences of temporary differences between the carrying amounts and the tax

bases of other assets and liabilities. See Note 6 for further discussion.

Net income per common share:

Net income per common share is computed based on the weighted average number

of common and common equivalent (stock option) shares outstanding for the

periods reported.

On October 30, 1995, the Company issued additional shares in connection with a

two-for-one stock split effected in the form of a 100% stock dividend on

outstanding Class A and Class B common stock. The per common share amounts in

the Consolidated Financial Statements and accompanying notes have been

adjusted to reflect this stock split.

Management estimates:

The preparation of financial statements in conformity with generally accepted

accounting principles requires management to make estimates, including

estimates relating to assumptions that affect the reported amounts of assets

and liabilities and disclosure of contingent assets and liabilities at the

date of financial statements and the reported amounts of revenues and expenses

during the reporting period. Actual results could differ from these

estimates.

Reclassifications:

Certain prior year amounts have been reclassified to conform to fiscal 1996

presentation. These changes had no impact on previously reported results of

operations or shareholders' equity.

<PAGE>

NOTE 2 - INVENTORIES

<TABLE>

Inventories by major classification are as follows:

(in thousands)

May 31 1996 1995

Finished goods $906,943 $618,521

Work-in-progress 20,002 9,064

Raw materials 4,206 2,157

$931,151 $629,742

</TABLE>

The excess of replacement cost over LIFO cost was $16,023,000 at

May 31, 1996, and $19,512,000 at May 31, 1995.

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment includes the following:

<TABLE>

(in thousands)

May 31 1996 1995

Land $ 75,369 $ 68,102

Buildings 246,602 224,586

Machinery and equipment 572,396 470,422

Leasehold improvements 83,678 63,716

Construction in process 69,660 64,387

1,047,705 891,213

Less accumulated depreciation 404,246 336,334

$ 643,459 $554,879

</TABLE>

NOTE 4 - SHORT-TERM BORROWINGS AND CREDIT LINES

Notes payable to banks and interest bearing accounts payable

to Nissho Iwai American Corporation (NIAC) are summarized below:

<TABLE>

(in thousands)

May 31 1996 1995

Borrowings Interest Rate Borrowings Interest Rate

Banks:

U.S. Operations $ --- ---% $118,609 6%

International Operations 445,064 4-3/8 278,491 5

$445,064 $397,100

NIAC $237,413 5-4/5% $129,480 6%

</TABLE>

<PAGE>

At May 31, 1995, the Company had no outstanding borrowings under its $300

million unsecured multiple option facility with sixteen banks. On September

15, 1995, the Company terminated this facility and entered into a new $500

million unsecured multiple-option facility with eleven banks, which matures on

October 31, 2000. This agreement contains optional borrowing alternatives

consisting of a committed revolving loan facility and a competitive bid

facility. The interest rate charged on this agreement is determined by the

borrowing option and, under the committed revolving loan facility, is either

the London Interbank Offered Rate (LIBOR) plus .19% or the higher of the Fed

Funds rate plus .50% or the Prime Rate. The agreement provides for annual

fees of .07% of the total commitment. Under the agreement, the Company must

maintain among other things certain minimum specified financial ratios with

which the Company was in compliance at May 31, 1996. At May 31, 1996, there

were no outstanding borrowings under this facility.

Ratings for the Company to issue commercial paper, which is required to be

supported by committed and uncommitted lines of credit, are A1 by Standard and

Poor's Corporation and P1 by Moody's Investor Service. At May 31, 1996 there

were no amounts outstanding and at May 31, 1995 there was $118,609,000

outstanding under these arrangements.

The Company has outstanding loans at interest rates at various spreads above

the banks' cost of funds for financing international operations. Certain of

these loans can be secured by accounts receivable and inventory.

The Company purchases through Nissho Iwai American Corporation(NIAC)

substantially all of the athletic footwear and apparel it acquires from non-

U.S. suppliers. Accounts payable to NIAC are generally due up to 120 days

after shipment of goods from the foreign port. Interest on such accounts

payable accrues at the ninety day LIBOR rate as of the beginning of the month

of the invoice date, plus .30%.

NOTE 5 - LONG-TERM DEBT

Long-term debt includes the following:

(in thousands)

May 31 1996 1995

10.4% senior secured note $ --- $22,244

9.43% capital warehouse lease, payable in

quarterly installments through 2007 7,485 9,078

Other 9,400 11,186

Total 16,885 42,508

Less current maturities 7,301 31,943

$ 9,584 $10,565

The senior secured note was acquired in connection with the acquisition

of Bauer and was liquidated subsequent to May 31, 1995. Amounts of long-term

maturities in each of the five fiscal years 1997 through 2001 respectively,

are $7,301,000, $2,407,000, $2,338,000, $863,000 and $800,000. As of

June 27, 1996, the Company's Japanese subsidiary borrowed 10.5 billion

Japanese yen in a private placement (approximately $100 million) with a

maturity of June 26, 2011. Interest is paid semi-annually at 4.3%. The

agreement provides for early retirement after year ten.

<PAGE>

NOTE 6 - INCOME TAXES:

Income before income taxes and the provision for income

taxes are as follows:

<TABLE>

(in thousands)

Year Ended May 31 1996 1995 1994

Income before income taxes:

United States $644,755 $467,548 $318,367

Foreign 254,335 182,316 172,227

$899,090 $649,864 $490,594

Provision for income taxes:

Current:

United States

Federal $247,526 $172,127 $121,892

State 42,622 34,764 23,832

Foreign 127,345 75,964 64,034

417,493 282,855 209,758

Deferred:

United States

Federal (33,003) (25,689) (12,931)

State ( 7,657) (2,430) (1,868)

Foreign (30,933) (4,536) (3,159)

(71,593) (32,655) (17,958)

$345,900 $250,200 $191,800

</TABLE>

During fiscal 1994 the Company permanently reinvested approximately

$56,000,000 of its undistributed international earnings in certain

international subsidiaries. This resulted in a reduction of $12,800,000

in the 1994 provision for deferred income taxes.

On August 10, 1993, the Omnibus Budget Reconciliation Act of 1993 was

signed into law, raising corporate rates 1%. This resulted in an increase

of approximately $7,200,000 in tax expense, computed as the impact of the

1% applied retroactively to earnings from January 1, 1993, and also to

deferred taxes in accordance with FAS 109.

The Company adopted FAS 109 during the first quarter of fiscal 1994.

The Company has elected to report the cumulative effect of the FAS 109

adoption as of May 31, 1987. The cumulative effect of $3,207,000 has

been recorded as a reduction in common shareholder's equity for each of

the years subsequent to 1987.

A benefit has been recognized for foreign loss carry forwards of

$96,600,000 and $32,700,000 at May 31, 1996 and 1995 respectively, which

have no expiration. As of May 31, 1996, the Company has utilized all

foreign tax credits.

<PAGE>

Deferred tax liabilities (assets) are comprised of the following:

<TABLE>

(in thousands)

May 31 1996 1995

Undistributed earnings of foreign subsidiaries $ 3,220 $ 18,164

Other 12,040 15,213

Gross deferred tax liabilities 15,260 33,377

Allowance for doubtful accounts (9,050) (7,952)

Inventory reserves (20,796) (15,645)

Deferred compensation (17,583) (10,221)

Reserves and accrued liabilities (42,870) (30,335)

Tax basis inventory adjustment (12,363) (8,852)

Depreciation (2,594) (1,796)

Foreign loss carry forwards (25,162) (6,000)

Other (12,978) (7,444)

Gross deferred tax assets (143,396) (88,245)

Net deferred tax assets $(128,136) $(54,868)

</TABLE>

A reconciliation from the U.S. statutory federal income tax rate to the

effective income tax rate follows:

<TABLE>

Year ended May 31, 1996 1995 1994

U.S. Federal statutory 35.0% 35.0% 35.0%

State income taxes, net of federal benefit 2.6 3.2 3.2

Tax benefit from permanent reinvestment

of foreign earnings -- -- (2.6)

Impact of rate increase -- -- 1.5

Other, net .9 .3 2.0

Effective income tax rate 38.5% 38.5% 39.1%

</TABLE>

During 1982, the Company purchased future tax benefits for

$15,277,000. Tax benefits of $2,697,000 in excess of the purchase

price have been recognized as of May 31, 1996 and are classified in

non-current deferred income taxes.

NOTE 7 - REDEEMABLE PREFERRED STOCK

NIAC is the sole owner of the Company's authorized Redeemable Preferred Stock,

$1 par value, which is redeemable at the option of NIAC at par value

aggregating $300,000. A cumulative dividend of $.10 per share is payable

annually on May 31 and no dividends may be declared or paid on the Common

Stock of the Company unless dividends on the Redeemable Preferred Stock have

been declared and paid in full. There have been no changes in the Redeemable

Preferred Stock in the three years ended May 31, 1996. As the holder of the

Redeemable Preferred Stock, NIAC does not have general voting rights but does

have the right to vote as a separate class on the sale of all or substantially

all of the assets of the Company and its subsidiaries, on merger,

consolidation, liquidation or dissolution of the Company or on the sale or

assignment of the NIKE trademark for athletic footwear sold in the United

States.

<PAGE>

NOTE 8 - COMMON STOCK

The authorized number of shares of Class A Common Stock no par value and Class

B Common Stock no par value are 110,000,000 and 350,000,000, respectively.

The Company announced a two-for-one stock split which was effected in the form

of a 100% stock dividend on outstanding Class A and Class B Common Stock, paid

October 30, 1995. Each share of Class A common Stock is convertible into one

share of Class B Common Stock. Voting rights of Class B Common Stock are

limited in certain circumstances with respect to the election of directors.

The Company's Employee Incentive Compensation Plan (the "1980 Plan") was

adopted in 1980 and expired on December 31, 1990. The 1980 Plan provided for

the issuance of up to 6,720,000 shares of the Company's Class B Common Stock

in connection with the exercise of stock options granted under such plan. No

further grants will be made under the 1980 Plan.

In 1990, the Board of Directors adopted, and the shareholders approved, the

NIKE, Inc. 1990 Stock Incentive Plan (the "1990 Plan"). The 1990 Plan

provides for the issuance of up to 8,000,000 shares of Class B Common Stock in

connection with stock options and other awards granted under such plan. The

1990 Plan authorizes the grant of incentive stock options, non-statutory stock

options, stock appreciation rights, stock bonuses, and the sale of restricted

stock. The exercise price for incentive stock options may not be less than the

fair market value of the underlying shares on the date of grant. The exercise

price for non-statutory stock options and stock appreciation rights, and the

purchase price of restricted stock, may not be less than 75% of the fair

market value of the underlying shares on the date of grant. No consideration

will be paid for stock bonuses awarded under the 1990 Plan. The 1990 Plan is

administered by a committee of the Board of Directors. The committee has the

authority to determine the employees to whom awards will be made, the amount

of the awards, and the other terms and conditions of the awards. As of May

31, 1996, the committee has granted substantially all non-statutory stock

options at 100% of fair market value on the date of grant under the 1990 Plan.

The Financial Accounting Standards Board has issued Statement of Financial

Accounting Standards No. 123 "Accounting for Stock-Based Compensation" (SFAS

No. 123), which is effective for years beginning after December 15, 1995. SFAS

No. 123 encourages, but does not require, companies to recognize compensation

expense for grants of common stock, stock options, and other equity

instruments to employees based upon the fair value of the instruments when

issued. Companies electing not to recognize compensation expense are required

to disclose what net income and earnings per share would have been if the

expense were recognized. At this time, the Company expects to elect the

disclosure option of SFAS No. 123 rather than recognition of compensation

expense.

The following summarizes the stock option transactions under the 1980 and 1990

Plans:

<TABLE>

Shares Option Price

(in thousands) Per Share($)

<S> <C> <C.

Options outstanding May 31, 1994: 2,354 4-3/4 to 56-7/8

Exercised (223) 4-3/4 to 60-1/2

Surrendered (24) 37-5/8 to 59-3/4

Granted 581 58-7/8 to 74-7/8

Options outstanding May 31, 1995: 2,688 11-17/32 to 74-7/8

Exercised (623) 5-49/64 to 42

Surrendered (50) 26-7/16 to 42

Granted 647 42 to 96-3/8

Stock Split 2,991 5-49/64 to 42

Options outstanding May 31, 1996 5,653 6-9/32 to 96-3/8

Options exercisable at May 31

1995 1,018 11-17/32 to 60-1/2

1996 4,676 6-9/32 to 37-7/16

</TABLE>

In addition to the option plans discussed previously, the Company

has several agreements outside of the plans with certain directors,

endorsers and employees. As of May 31, 1996, 3,867,000 options with exercise

prices ranging from $.417 per share to $46.31 per share had been granted.

The aggregate compensation expenses related to these agreements is $8,133,000

and is being amortized over vesting periods from October 1980 through October

1998. The outstanding agreements expire from February 1998 through September

2005.

<PAGE>

The following summarizes transactions outside the option plans for the

three years ended May 31, 1996:

<TABLE>

Shares Option Price

(in thousands) Per Share($)

Options outstanding May 31, 1994: 269 4-3/4 to 51

Exercised (18) 4-3/4 to 38-1/4

Surrendered -- --

Granted -- --

Options outstanding May 31, 1995: 251 4-3/4 to 56-1/4

Exercised (133) 4-3/4 to 43-1/4

Surrendered -- --

Granted 95 46-5/16 to 84

Stock Split 198 6-1/4 to 46-5/16

Options outstanding May 31, 1996: 411 6-1/4 to 46-5/16

Options exercisable at May 31:

1995 207 4-3/4 to 56-1/4

1996 160 6-1/4 to 28-3/8

</TABLE>

NOTE 9 - BENEFIT PLANS:

The Company has a profit sharing plan available to substantially all

employees. The terms of the plan call for annual contributions by the Company

as determined by the Board of Directors. Contributions of $15,500,000,

$11,200,000 and $8,500,000 to the plan are included in other expense in the

consolidated financial statements for the years ended May 31, 1996, 1995 and

1994, respectively.

The Company has a voluntary 401(k) employee savings plan. The Company matches

with Common Stock a portion of employee contributions, vesting that portion

over 5 years. Company contributions to the savings plan were $4,660,000,

$3,363,000 and $3,503,000 for the years ended May 31, 1996, 1995 and 1994,

respectively.

NOTE 10 - OTHER INCOME/EXPENSE, NET

Included in other income/expense for the years ended May 31, 1996, 1995 and

1994, is interest income of $16,083,000, $26,094,000 and $19,064,000,

respectively. The Company recognized $11,412,000 and $7,060,000 in non-

recurring specific obligations associated with the shutdown of certain

facilities in conjunction with the consolidation of European warehouses for

the years ended May 31, 1995 and 1994, respectively.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

The Company leases space for its offices, warehouses and retail stores under

leases expiring from one to twenty-one years after May 31, 1996. Rent expense

aggregated $52,483,000, $43,506,000 and $37,677,000 for the years ended May

31, 1996, 1995 and 1994, respectively. Amounts of minimum future annual

rental commitments under non-cancellable operating leases in each of the five

fiscal years 1997 through 2001 are $55,196,000, $54,189,000, $44,196,000,

$40,049,000, $37,025,000, respectively, and $247,320,000 in later years.

Lawsuits arise during the normal course of business. In the opinion of

management, none of the pending lawsuits will result in a significant impact

on the consolidated results of operations or financial position.

<PAGE>

NOTE 12 - ACQUISITION OF BAUER INC.

During the third quarter of fiscal 1995, NIKE acquired all the outstanding

shares of Bauer Inc. (formerly Canstar Sports Inc.), the world's largest

hockey equipment manufacturer. The acquisition was accounted for using the

purchase method of accounting. The cash purchase price, including acqusition

costs, was approximately $409 million.

Bauer's assets and liabilities have been recorded in the Company's

consolidated balance sheet at their fair values at the acquisition date.

Identifiable intangible assets and goodwill relating to the purchase

approximated $336 million with estimated useful lives ranging from 5 to 40

years. The amortization period is based on the Company's belief that the

combined company has substantial potential for achieving long-term

appreciation of the fully integrated global company. Bauer will permit the

continued expansion of the current lines of business, as well as the

development of new businesses, which can be used to strategically exploit the

companies' brand names and products on an accelerated basis. NIKE believes

that the combined company will benefit from the acquisition for an

indeterminable period of time of at least 40 years and that therefore a 40-

year amortization period is appropriate. The proforma effect of the

acquisition on the combined results of operations in fiscal 1995 was not

significant.

NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reflected in the consolidated balance sheet for cash and

equivalents and notes payable approximate fair value as reported in the

balance sheet because of their short maturities. The fair value of long-term

debt is estimated using discounted cash flow analyses, based on the Company's

incremental borrowing rates for similar types of borrowing arrangements. The

fair value of the Company's long-term debt at May 31, 1996, is approximately

$9,539,000, compared to a carrying value $9,584,000. See Note 14 for

discussion of derivatives.

NOTE 14 - FINANCIAL RISK MANAGEMENT AND DERIVATIVES

The purpose of the Company's foreign currency hedging activities is to protect

the Company from the risk that the eventual dollar cash flows resulting from

the sale and purchase of products in foreign currencies will be adversely

affected by changes in exchange rates. The Company does not hold or issue

financial instruments for trading purposes. It is the Company's policy to

utilize derivative financial instruments to reduce foreign exchange risks

where internal netting strategies cannot be effectively employed.

Fluctuations in the value of hedging instruments are offset by fluctuations in

the value of the underlying exposures being hedged.

The Company uses forward exchange contracts and purchased options to hedge

certain firm purchases and sales commitments and the related receivables and

payables. Purchased currency options are used to hedge certain anticipated

but not yet firmly committed transactions expected to be recognized within one

year. Hedged transactions are denominated primarily in European currencies,

Japanese yen and Canadian dollar. Premiums paid on purchased options and any

realized gains are included in accrued liabilities and recognized in earnings

when the transaction being hedged is recognized. Deferred option premiums,

net of realized gains, were a liability of $5.1 million and $0.9 million at

May 31, 1996 and 1995, respectively. Gains and losses related to hedges of

firmly committed transactions and the related receivables and payables are

deferred and are recognized in income or as adjustments of carrying amounts

when the offsetting gains and losses are recognized on the hedged transaction.

Net realized and unrealized gains (losses) on forward contracts deferred at

May 31, 1996 and 1995 were $20.7 million and ($11.8) million, respectively.

The estimated fair values of derivatives used to hedge the Company's risks

will fluctuate over time. The fair value of the forward exchange contracts is

estimated by obtaining quoted market prices. The fair value of option

contracts is estimated using option pricing models widely used in the

financial markets. These fair value amounts should not be viewed in

isolation, but rather in relation to the fair values of the underlying hedged

transactions and the overall reduction in the Company's exposure to adverse

fluctuations in foreign exchange rates. The notional amounts of derivatives

summarized below do not necessarily represent amounts exchanged by the parties

and, therefore, are not a direct measure of the exposure to the Company

through its use of derivatives. The amounts exchanged are calculated on the

basis of the notional amounts and the other terms of the derivatives, which

relate to interest rates, exchange rates or other financial indices.

<PAGE>

The following table presents the aggregate notional principal amount,

carrying values and fair values of the Company's derivative financial

instruments outstanding at May 31, 1996 and 1995.

(in millions)

<TABLE>

May 31, 1996 May 31, 1995

Notional Notional

Principal Carrying Fair Principal Carrying Fair

Amounts Values Values Amounts Values Values

Forward Contracts: $1,422.8 ($2.1) $14.5 $706.2 ($ 1.4) ($13.8)

Purchased Options 280.2 2.6 .5 62.5 1.4 1.3

Total $1,703.0 $ .5 $15.0 $768.7 -- ($12.5)

</TABLE>

At May 31, 1996 and May 31, 1995, the Company had no contracts outstanding

with maturities beyond one year. All realized gains/losses deferred at May

31, 1996 will be recognized within one year.

The counterparties to derivative transactions are major financial institutions

with investment grade or better credit ratings; however, this does not

eliminate the Company's exposure to credit risk with these institutions. This

credit risk is generally limited to the unrealized gains in such contracts

should any of these counterparties fail to perform as contracted and is

immaterial to any one institution at May 31, 1996 and 1995. To manage this

risk, the Company has established strict counterparty credit guidelines which

are continually monitored and reported to Senior Management according to

prescribed guidelines. Additionally, the Company utilizes a portfolio of

financial institutions either headquartered or operating in the same countries

the Company conducts its business. As a result, the Company considers the

risk of counterparty default to be minimal.

<PAGE>

NOTE 15 - INDUSTRY SEGMENT AND OPERATIONS BY GEOGRAPHIC AREAS

The Company operates predominantly in one industry segment, that

being the design, production, marketing and selling of sports and

fitnes footwear, apparel and accessories. During 1996, 1995 and 1994,

sales to one major customer amounted to approximately 12%, 14% and 14%

of total sales, respectively. The geographic distribution of the

Company's identifiable assets, operating income and revenues are

summarized in the following table:

<TABLE>

(in thousands)

Year ended May 31, 1996 1995 1994

Revenues from unrelated entities:

United States $3,964,662 $2,997,864 $2,432,684

Europe 1,334,340 980,444 927,269

Asia/Pacific 735,094 515,652 283,421

Latin America/Canada and other 436,529 266,874 146,294

$6,470,625 $4,760,834 $3,789,668

Inter-geographic revenues:

United States $ 8,153 $ 6,396 $ 3,590

Europe 7,398 5,438 6,514

Asia/Pacific -- -- --

Latin America/Canada and other 67,062 31,449 9,872

$ 82,613 $ 43,283 $ 19,976

Total revenues:

United States $3,972,815 $3,004,260 $2,436,274

Europe 1,341,738 985,882 933,783

Asia/Pacific 735,094 515,652 283,421

Latin America/Canada and other 503,591 298,323 156,166

Less inter-geographic revenues (82,613) (43,283) (19,976)

$6,470,625 $4,760,834 $3,789,668

Operating income:

United States $ 697,094 $ 501,685 $ 344,632

Europe 145,722 113,800 124,242

Asia/Pacific 123,585 64,168 46,753

Latin America/Canada and other 55,851 37,721 19,141

Less corporate, interest and other income

(expense) and eliminations (123,162) (67,510) (44,174)

$ 899,090 $ 649,864 $ 490,594

Assets:

United States $2,371,991 $1,425,932 $1,171,948

Europe 941,522 831,468 487,085

Asia/Pacific 386,485 306,390 197,067

Latin America/Canada and other 188,839 383,263 79,549

Total identifiable assets 3,888,837 2,947,053 1,935,649

Corporate cash and eliminations 62,791 195,692 438,166

Total assets $3,951,628 $3,142,745 $2,373,815

</TABLE>

<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

There has been no change of accountants nor any disagreements with

accountants on any matter of accounting principles or practices or

financial statement disclosure required to be reported under this Item.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Company has filed with the Securities and Exchange Commission its

definitive proxy statement dated August 12, 1996 for the annual meeting

of shareholders to be held on September 16, 1996. The information

required by this Item with respect to the Company's directors is

incorporated herein by reference from pages 3 through 6, 10 and

11 of such proxy statement. Information called for by this Item with

respect to the Company's executive officers is set forth under "Executive

Officers of the Registrant" in Item 1 of this Report.

The information required by Items 11-13 of Part III is incorporated

herein by reference from the indicated pages of the Company's definitive

Proxy Statement dated August 12, 1996 for its 1996 annual meeting of

shareholders.

<TABLE>

PROXY

STATEMENT

PAGE NO.

---------

<S> <C>

ITEM 11. EXECUTIVE COMPENSATION..................................... 7-8, 11-21

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGE-

MENT....................................................... 8-11

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............. 20-21

</TABLE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:

<TABLE>

FORM 10-K

PAGE NO.

---------

<S> <C>

1. FINANCIAL STATEMENTS:

Report of Independent Accountants................................ 16

Consolidated Statement of Income for each of the three years

ended May 31, 1996.............................................. 17

Consolidated Balance Sheet at May 31, 1996 and 1995.............. 18

Consolidated Statement of Cash Flows for each of

the three years ended May 31, 1996.............................. 19

Consolidated Statement of Shareholders' Equity for each of the

three years ended May 31, 1996.................................. 20

Notes to Consolidated Financial Statements....................... 21-31

2. FINANCIAL STATEMENT SCHEDULES:

VIII--Valuation and Qualifying Accounts.......................... F-1

IX--Short-Term Borrowings........................................ F-2

X--Supplementary Income Statement Information.................... F-3

</TABLE>

All other schedules are omitted because they are not applicable or the

required information is shown in the financial statements or notes

thereto.

<PAGE>

3. EXHIBITS:

3.1 Restated Articles of Incorporation, as amended (incorporated by

reference from Exhibit 3.1 to the Company's Quarterly Report on

Form 10-Q for the fiscal quarter ended August 31, 1995).

3.2 Third Restated Bylaws, as amended (incorporated by reference

from Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for

the fiscal quarter ended August 31, 1995).

4.1 Restated Articles of Incorporation, as amended (see Exhibit 3.1).

4.2 Third Restated Bylaws, as amended (see Exhibit 3.2).

10.1 Credit Agreement dated as of September 15, 1995 among NIKE, Inc.,

Bank of America National Trust & Savings Association,

individually and as Agent, and the other banks party thereto

(incorporated by reference from the Company's Quarterly Report

on Form 10-Q for the fiscal quarter ended August 31, 1995).

10.2 Form of non-employee director Stock Option Agreement (incorporated

by refernce from Exhibit 10.3 to the Company's Annual Report on

Form 10-K for the fiscal year ended May 31, 1993).*

10.3 Form of Indemnity Agreement entered into between the Company and

each of its officers and directors (incorporated by reference from

the Company's definitive proxy statement filed in connection with

its annual meeting of shareholders held on September 21, 1987).

10.4 NIKE, Inc. Restated Employee Incentive Compensation Plan

(incorporated by reference from Registration Statement No. 33-29262

on Form S-8 filed by the Company on June 16, 1989).*

10.5 NIKE, Inc. 1990 Stock Incentive Plan (incorporated by reference

from the Company's definitive proxy statement filed in connection

with its annual meeting of shareholders held on September 17, 1990).*

10.6 Collateral Assignment Split-Dollar Agreement between NIKE, Inc.

and Philip H. Knight dated March 10, 1994 (incorporated by

reference from Exhibit 10.7 to the Company's Annual Report on

Form 10-K for he fiscal year ended May 31, 1994).*

10.7 NIKE, Inc. Executive Performance Sharing Plan (incorporated

by reference from the Company's definitive proxy statement filed

in connection with its annual meeting of shareholders held on

September 18, 1995).*

21 Subsidiaries of the Registrant.

23 Consent of Price Waterhouse, independent certified public accountants

(set forth on page F-4 of this Annual Report on Form 10-K).

*Management contract or compensatory plan or arrangement.

Upon written request to Investor Relations, NIKE, Inc., One Bowerman

Drive, Beaverton, Oregon 97005-6453, the Company will furnish share-

holders with a copy of any Exhibit upon payment of $.10 per page, which

represents the Company's reasonable expenses in furnishing such Exhibits.

(B) The following reports on Form 8-K were filed by the Company during

the last quarter of fiscal 1995:

March 29, 1996 Item 5. Other Events Press Release regarding

third quarter earnings

release.

<PAGE>

<TABLE>

SCHEDULE VIII

VALUATION AND QUALIFYING ACCOUNTS

(IN THOUSANDS)

BALANCE CHARGED BALANCE

AT TO COSTS CHARGED WRITE-OFFS AT END

BEGINNING AND TO OTHER NET OF OF

DESCRIPTION OF PERIOD EXPENSES ACCOUNTS RECOVERIES PERIOD

----------- --------- -------- -------- ---------- -------

For the year ended May 31,

1994

Allowance for doubtful

accounts................... $19,447 $16,321 $ (23) $ 7,454 $28,291

..Other assets................ 0 0

.............................. ------- ------- --------- ------- -------

.............................. $19,447 $16,321 $ (23) $ 7,454 $28,291

======= ======= ========= ======= =======

For the year ended May 31,

1995

Allowance for doubtful

accounts................... $28,291 $12,544 $ 3,122 $11,294 $32,663

Other assets................ 0 0

.............................. ------- ------- ------- ------- -------

.................................$28,291 $12,544 $ 3,122 $11,294 $32,633

======= ======= ======= ======= =======

For the year ended May 31,

1996

Allowance for doubtful

accounts................... $32,663 $20,527 ($ 1,144) $ 8,674 $43,372

Other assets................ 0 0

.............................. ------- ------- ------- ------- -------

.................................$32,663 $20,527 ($ 1,144) $ 8,674 $43,372

======= ======= ======= ======= =======

</TABLE>

- --------

F-1

<PAGE>

SCHEDULE IX

SHORT-TERM BORROWINGS(1)

(IN THOUSANDS)

<TABLE>

CAPTION>

WEIGHTED

AVERAGE

MAXIMUM AVERAGE INTEREST

BALANCE WEIGHTED AMOUNT AMOUNT RATE

AT END AVERAGE OUTSTANDING OUTSTANDING DURING

OF INTEREST DURING THE DURING THE THE

PERIOD RATE PERIOD(2) PERIOD(3) PERIOD(3)

-------- -------- ----------- ----------- ---------

For the year ended May 31,

1994:

Notes Payable to banks:

U.S. Operations $ 6,462 4 7/8% $115,505 $ 32,944 3-1/3%

International Operations 120,916 4 3/4 127,299 76,831 4-3/4

------- ------- -------

$127,378 $242,804 $109,775

======= ======= =======

Interest bearing accounts

payable to NIAC $118,274 4 2/3% $118,274 $ 71,856 3-7/8%

======= ======= =======

For the year ended May 31,

1995:

Notes payable to banks:

U.S. Operations $118,609 6% $217,212 $ 49,277 6-1/2%

International Operations 278,491 5 278,491 157,941 5-1/8

------- ------- -------

$397,100 $495,703 $207,218

======= ======= =======

Interest bearing accounts

payable to NIAC $129,480 6% $142,483 $118,032 6%

======= ======= =======

For the year ended May 31,

1996:

Noted payable to banks:

U.S. Operations $ -- --% $138,479 $ 64,554 6-1/3%

International Operations 445,064 4-3/8 481,344 356,822 3-6/7

------- ------- -------

$445,064 $619,823 $421,376

======= ======= =======

Interest bearing accounts

payable to NIAC $237,413 5-4/5% $237,413 $186,161 6%

======= ======= =======

</TABLE>

- --------

Notes:

(1) For information pertaining to the general terms of short-term

borrowings, see Note 4 to the Consolidated Financial Statements.

(2) Represents the maximum amount of short-term borrowing outstanding at a

month-end during the respective period.

(3) The average amount outstanding during the period is calculated by

dividing the total of principal outstanding at each month-end by 12.

The weighted average interest rate during the period is calculated by

dividing the interest expense for the year by the average amount

outstanding.

(4) NIAC refers to Nissho Iwai American Corporation, a subsidiary of

Nissho Iwai Corporation, a Japanese trading company.

F-2

<PAGE>

SCHEDULE X

SUPPLEMENTARY INCOME STATEMENT INFORMATION

(IN THOUSANDS)

<TABLE>

YEAR ENDED MAY 31

--------------------------

1994 1995 1996

-------- -------- --------

Charged to costs and expenses:

Advertising and promotions........................ $373,126 $495,006 $642,499

</TABLE>

The other required categories of expenses have not been shown because

they do not exceed one percent of revenues.

F-3

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the documents

listed below, of our report dated July 3, 1996, which appears on Page 15

of this Annual Report on Form 10-K:

1. Prospectus constituting part of the NIKE, Inc. Registration Statement

on Form S-8 (No. 2-81419);

2. Prospectus constituting part of the NIKE, Inc. Registration Statement

on Form S-8 (No. 33-29262);

3. Prospectus constituting part of the NIKE, Inc. Registration Statement

on Form S-3 (No. 33-43205).

4. Prospectus constituting part of the NIKE, Inc. Registration Statement

on Form S-3 (No. 33-48977); and

5. Prospectus constituting part of the NIKE, Inc. Registration Statement

on Form S-3 (No. 33-41842).

6. Prospectus constituting part of the NIKE, Inc. Registration Statement

on Form S-8 (No. 33-63995).

Price Waterhouse LLP

Portland, Oregon

August 29, 1996

F-4

<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES

EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE

SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

NIKE, Inc.

Date: August 29, 1996

/s/ Philip H. Knight

By _______________________________

Philip H. Knight,

Chairman of the Board and

Chief Executive Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS

REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE

REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

Principal Executive Officer and

Director:

Date: August 29, 1996 /s/ Philip H. Knight

By _______________________________

Philip H. Knight

Chairman of the Board and

Chief Executive Officer

Principal Financial and

Accounting Officer:

Date: August 29, 1996 /s/ Robert S. Falcone

By _______________________________

Robert S. Falcone

Vice President and Chief Financial

Officer

DIRECTORS:

Date: August 29, 1996

By /s/ William J. Bowerman

William J. Bowerman

Director

Date: August 29, 1996

By /s/ Jill K. Conway

Jill K. Conway

Director

Date: August 29, 1996

By /s/ Ralph D. DeNunzio

Ralph D. DeNunzio

Director

S-1

<PAGE>

Date: August 29, 1996

By /s/ Richard K. Donahue

Richard K. Donahue

Director

Date: August 29, 1996

By /s/ Delbert J. Hayes

Delbert J. Hayes

Director

Date: August 29, 1996

By /s/ Douglas G. Houser

Douglas G. Houser

Director

Date: August 29, 1996

By /s/ John E. Jaqua

John E. Jaqua

Director

Date: August 29, 1996

By Ralph A. Pfeiffer, Jr.

Ralph A. Pfeiffer, Jr.

Director

Date: August 29, 1996

By /s/ Charles W. Robinson

Charles W. Robinson

Director

Date: August 29, 1996

By /s/ John R. Thompson, Jr.

John R. Thompson, Jr.

Director

S-2

<PAGE>

</TEXT>

</DOCUMENT>

<TYPE>EX-21

<SEQUENCE>2

<DESCRIPTION>SUBSIDIARIES OF THE REGISTRANT

<TEXT>

Exhibit 21

Subsidiaries of the Registrant.

NIKE, Inc. has 32 wholly-owned subsidiaries, four of which operate in the

United States, and 28 of which operate in foreign countries. All of the

subsidiaries, except for Tetra Plastics, Inc., carry on the same line of

business, namely the design, marketing, distribution and sale of athletic

and leisure footwear, apparel, accessories, and related equipment. Tetra

Plastics, Inc., a Missouri corporation, manufactures and sells various

types of plastics.

</TEXT>

</DOCUMENT>

<TYPE>EX-27

<SEQUENCE>3

<DESCRIPTION>ART. 5 FDS FOR 10-K

<TEXT>

<ARTICLE> 5

THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM

THE MAY 31, 1996 FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY

REFERENCE TO SUCH FINANCIAL STATEMENTS.

</LEGEND>

<MULTIPLIER> 1,000

<S> <C>

<PERIOD-TYPE> YEAR

<FISCAL-YEAR-END> MAY-31-1996

<PERIOD-END> MAY-31-1996

<CASH> 262,117

<SECURITIES> 0

<RECEIVABLES> 1,346,125

<ALLOWANCES> 43,372

<INVENTORY> 931,151

<CURRENT-ASSETS> 2,726,940

<PP&E> 1,047,705

<DEPRECIATION> 404,246

<TOTAL-ASSETS> 3,951,628

<CURRENT-LIABILITIES> 1,467,059

<BONDS> 9,584

<COMMON> 2,855

<PREFERRED-MANDATORY> 0

<PREFERRED> 300

<OTHER-SE> 2,428,545

<TOTAL-LIABILITY-AND-EQUITY> 3,951,628

<SALES> 6,470,625

<TOTAL-REVENUES> 6,470,625

<CGS> 3,906,746

<TOTAL-COSTS> 3,906,746

<OTHER-EXPENSES> 1,604,764

<LOSS-PROVISION> 20,527

<INTEREST-EXPENSE> 39,498

<INCOME-PRETAX> 899,090

<INCOME-TAX> 345,900

<INCOME-CONTINUING> 553,190

<DISCONTINUED> 0

<EXTRAORDINARY> 0

<CHANGES> 0

<NET-INCOME> 553,190

<EPS-PRIMARY> 3.77

<EPS-DILUTED> 3.77

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