Nike Inc. (NKE) Slight Delay As We Taxi For Takeoff. 21 March 2017 Americas/United States Equity Research Footwear

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1 Americas/United States Equity Research Footwear Rating OUTPERFORM Price (21-Mar-17, US$) Target price (US$) week price range (US$) Market cap (US$ m) 95, Target price is for 12 months. Research Analysts Share price performance Christian Buss christian.buss@credit-suisse.com Sara Shuler sara.shuler@credit-suisse.com Pallavi Bakshi pallavi.bakshi@credit-suisse.com Christine Lee christine.lee@credit-suisse.com A p r Ju l O c t Ja n N K E.N S& P IN D EX On 21-Mar-2017 the S&P 500 INDEX closed at Daily Mar21, Mar21, 2017, 03/21/16 = US$64.72 Quarterly EPS Q1 Q2 Q3 Q4 2016A E E Nike Inc. (NKE) EARNINGS Slight Delay As We Taxi For Takeoff Nike reported a tepid 3Q17 and guided for more of the same in the fourth quarter, suggesting that investments in brand building and innovation are taking longer to take hold than we had previously hoped. That said, the "Triple Double" initiative a focus on 1) doubling investments in innovation; 2) doubling speed to market; and 3) doubling direct to consumer sales supports our long-term thesis that Nike can return to high-single digit revenue growth and teens EPS growth as the company benefits from mix-shift towards higher-margin DTC sales. Even with some operational delay, we continue to see Nike as a true standout in the softlines space. We adjust estimates and maintain our Outperform rating and Target Price of $67. Model Changes Revenue Acceleration Pushed-Out To FY18. We adjust our 4Q17 total revenue assumption to up 5.5% Y/Y (prior up 6.5% Y/Y), as we moderate our 4Q North America growth assumption to up 2% Y/Y (prior up 5% Y/Y) in light of the challenging environment. We expect FY18 revenues to now be up 8.7% Y/Y (prior up 7.2% Y/Y) given our conviction in the product innovation pipeline and moderating currency headwinds. Adjusting Estimates And Maintaining Target Price Of $67. We are adjusting our FY17 revenue and EPS estimates to $34,375M and $2.44 from $34,636M and $2.37. Our FY18 revenue and EPS estimates go to $37,361M and $2.64 from $37,146M and $2.70. Our Target Price is based on an equalweighted average of: 1) peer group multiples ($68); 2) a five year discounted cash flow (DCF) model ($68); and 3) a long-term growth model ($64). Risks to our estimates include changes in consumer spending preference for athletic apparel and elevated competitive headwinds. Financial and valuation metrics Year 5/16A 5/17E 5/18E 5/19E EPS (CS adj.) (US$) Prev. EPS (US$) P/E (x) P/E rel. (%) Revenue (US$ m) 32, , , ,232.9 EBITDA (US$ m) 5, , , ,764.4 OCFPS (US$) P/OCF (x) EV/EBITDA (current) Net debt (US$ m) -3,403-4,004-4,209-5,249 ROIC (%) Number of shares (m) 1, IC (current, US$ m) 8, BV/share (Next Qtr., US$) 8.5 EV/IC (x) 8.9 Net debt (Next Qtr., US$ m) -4,003.5 Dividend (current, US$) 0.72 Net debt/tot eq (Next Qtr.,%) Dividend yield (%) - Source: Company data, Thomson Reuters, Credit Suisse estimates DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

2 Nike Inc. (NKE) Price (21 Mar 2017): US$58.01; Rating: OUTPERFORM; Target Price: US$67.00; Analyst: Christian Buss Income Statement 5/16A 5/17E 5/18E 5/19E Revenue (US$ m) 32, , , ,232.9 EBITDA 5,262 5,523 6,120 6,764 Depr. & amort. (760) (829) (891) (958) EBIT (US$) 4,502 4,694 5,228 5,807 Net interest exp (18) (23) (30) (43) PBT (US$) 4,624 4,860 5,198 5,764 Income taxes (863) (732) (884) (980) Profit after tax 3,761 4,128 4,314 4,784 Other NPAT adjustments Cash Flow 5/16A 5/17E 5/18E 5/19E Cash flow from operations 3,096 5,118 6,390 7,647 CAPEX (1,143) (1,066) (1,120) (1,176) Free cashflow to the firm 1,953 4,052 5,270 6,471 Cash flow from investments (1,034) (312) (1,108) (1,164) Net share issue(/repurchase) (3,238) (4,112) (4,432) (4,752) Dividends paid (1,022) (1,130) (1,239) (1,306) Cashflow from financing activities (3,292) (4,166) (5,077) (5,443) Changes in Net Cash/Debt (1,335) ,040 Balance Sheet (US$) 5/16A 5/17E 5/18E 5/19E Cash & cash equivalents 5,457 7,482 7,687 8,727 Account receivables 3,241 3,421 3,713 3,994 Other current assets 1,489 1,458 1,875 2,530 Total fixed assets 3,520 3,747 3,976 4,194 Investment securities Total assets 21,396 25,179 27,955 32,239 Total current liabilities 5,358 5,722 5,916 6,110 Shareholder equity 12,258 14,298 16,880 20,970 Total liabilities and equity 21,396 25,179 27,955 32,239 Net debt (3,403) (4,004) (4,209) (5,249) Per share 5/16A 5/17E 5/18E 5/19E No. of shares (wtd avg) 1,742 1,692 1,635 1,568 CS adj. EPS Prev. EPS (US$) Dividend (US$) Free cash flow per share Earnings 5/16A 5/17E 5/18E 5/19E Sales growth (%) EBIT growth (%) Net profit growth (%) EPS growth (%) EBITDA margin (%) EBIT margin (%) Pretax margin (%) Net margin (%) Valuation 5/16A 5/17E 5/18E 5/19E EV/EBITDA (x) P/E (x) Returns 5/16A 5/17E 5/18E 5/19E ROIC (%) Gearing 5/16A 5/17E 5/18E 5/19E Net debt/equity (%) (27.8) (28.0) (24.9) (25.0) Quarterly EPS 2016A Q Q Q Q E E Source: Company data, Thomson Reuters, Credit Suisse estimates Company Background Nike is the world's largest designer, marketer, and distributor of athletic footwear, apparel, equipment, and accessories. Blue/Grey Sky Scenario Our Blue Sky Scenario (US$) (from 74.00) Our blue sky scenario is based on an improvement in revenue growth to 11%, operating margin approaching 14.8%, and an FY18 EPS of $2.84. Based on a 27x forward P/E multiple this would warrant a 12-month stock price of $77. Our Grey Sky Scenario (US$) (from 58.00) Our grey sky scenario is based on a slowing of revenue growth to 7%, operatng margin approaching 13.2%, and an FY19 EPS of $2.54. Based on a 23x forward P/E multiple this would warrant a 12- month stock price of $ Share price performance 4 0 A p r Ju l O c t Ja n N K E.N S& P IN D EX On 21-Mar-2017 the S&P 500 INDEX closed at Daily Mar21, Mar21, 2017, 03/21/16 = US$64.72 Nike Inc. (NKE) 2

3 Near-Term Gross Margin Contraction. We model for gross margin to be down 150bp Y/Y (prior down 50bp Y/Y) in 4Q16. We expect a moderation in gross margin contraction in 1H18, with an inflection for gross margin expansion in 2Q18 from the company lapping choppy promotional activity from excess inventories and the flowthrough of benefits from the company's 'manufacturing revolution.' 3Q17 Results Figure 1: Results Overview Nike, Inc Y/Y and CS Est vs Actual Comparisons Actual CS Estimates Prior Year 3Q17A 3Q17A Variance % Variance 3Q16A Variance Y/Y growth Net sales $8,432 $8, % $8, % Cost of Goods Sold 4,682 4, % 4, % Gross profit 3,750 3, % 3, % Demand Creation % % Salaries and Benefits 1,747 1, % 1, % Total SG&A Expense 2,496 2, % 2, % Operating income 1,254 1, % 1, % D&A % % EBITDA 1,425 1, % 1, % Interest Income (Expense) NA NA Other Income (Expense) NA % Pre-tax income 1,323 1, % 1, % Provision for income taxes % % Tax Rate 13.8% 18.0% -4.2% -23.6% 16.3% -2.5% -15.6% Net Income % % Diluted EPS $0.68 $0.56 $ % $0.55 $ % Basic Shares Outstanding % % Diluted Shares Outstanding % % Nike Inc. (NKE) 3

4 Figure 2: Margin Comparisons Nike, Inc Margins Y/Y and CS Est vs Actual Comparisons Actual CS Estimates Prior Year 3Q17A 3Q17A Variance % Variance 3Q16A Y/Y change Gross Margin 44.5% 44.9% -46bps -1.0% 45.9% -146bps Demand Creation 8.9% 10.4% -148bps -14.3% 10.0% -113bps Salaries and Benefits 20.7% 21.3% -62bps -2.9% 21.9% -122bps SG&A as a % of Revenue 29.6% 31.7% -210bps -6.6% 31.9% -235bps Operating Margin 14.9% 13.2% 164bps 12.4% 14.0% 89bps Pretax Income 15.7% 13.2% 253bps 19.2% 14.1% 156bps Effective Tax Rate 13.8% 18.0% -424bps -23.6% 16.3% -254bps Net Margin 13.5% 10.8% 274bps 25.4% 11.8% 170bps Futures Figure 3: Futures Orders Comparisons Nike, Inc Y/Y and CS Est vs Actual Comparisons Futures Orders (Constant Currency) Actual Prior Quarter Prior Year 3Q17A 2Q17A Q/Q change 3Q16A Y/Y change Global -1.0% 2.0% -3% 17% -18% North America -9.0% -4.0% -5% 10% -19% Western Europe 4.0% 2.0% 2% 23% -19% Eastern Europe -2.0% 6.0% -8% 14% -16% Greater China 3.0% 12.0% -9% 36% -33% Japan 2.0% 5.0% -3% 24% -22% Emerging Markets 14.0% 10.0% 4% 14% 0% Futures Orders (Reported) Global -4.0% 0.0% -4% 12% -16% North America -9.0% -4.0% -5% 10% -19% Western Europe -5.0% -4.0% -1% 16% -21% Eastern Europe -6.0% 4.0% -10% 5% -11% Greater China -2.0% 6.0% -8% 28% -30% Japan -3.0% 10.0% -13% 23% -26% Emerging Markets 12.0% 9.0% 3% -3% 15% Nike Inc. (NKE) 4

5 Divisional Results Figure 4: Divisional Revenue Breakdown (Constant Currency) Nike, Inc Revenue Breakdown (Constant Currency) Y/Y and CS Est vs Actual Comparisons Actual CS Estimates Prior Year 3Q17A 3Q17A Variance % Variance 3Q16A Variance Y/Y growth Divisional Revenues (constant currency) North America % 3, % Footwear % 2, % Apparel % 1, % Equipment % 164 (26) -15.9% Western Europe % 1, % Footwear % % Apparel % % Equipment % 65 (1) -1.5% Central and Eastern Europe % % Footwear % 237 (5) -2.1% Apparel % % Equipment % % Greater China % % Footwear % % Apparel % % Equipment % % Japan % % Footwear % % Apparel % % Equipment % 20 (4) -20.0% Emerging Markets % % Footwear % % Apparel % 228 (6) -2.6% Equipment % % Total % 8, % Footwear % 5, % Apparel % 2, % Equipment % 352 (31) -8.8% Global Brands % % Other Brands % % Nike Inc. (NKE) 5

6 Figure 5: Balance Sheet & Cash Flow Results Nike, Inc Y/Y and CS Est vs Actual Comparisons Balance Sheet Balance Sheet & Cash Flow Actual CS Estimates Prior Year 3Q17A 3Q17A Variance % Variance 3Q16A Y/Y change Inventories % 4, % Days Inventory % Receivables % 3, % DSO % Payables % 1, % DPOs % Cash Flow Net Cash % 3, % Net Cash/Share % % Guidance 4Q17 Revenue: Up mid-single digits Y/Y reported; up high-single digits Y/Y in constant currency Gross Margin: Down 175bp Y/Y due to F/X headwinds and delays in operational benefits SG&A Rate: Flat Y/Y Other Income: $15M Tax rate: 22% FY18 Expecting revenue growth in all geographies Operating leverage and increasing profitability Greatest F/X impact due to contract hedges rolling off Nike Inc. (NKE) 6

7 Figure 6: Blue Sky/Grey Sky Scenarios Blue Sky/Grey Sky Scenarios Blue Sky/Grey Sky Scenarios ($M, except EPS) 2017E Grey Sky 2018E Blue Sky Revenue $34,374.5 $36,673.8 $37,361.2 $38,048.7 Gross Profit $15,354.6 $16, $16,722.1 $17,220.1 SG&A $10,660.9 $11, $11,493.7 $11, Operating Profit $4,693.7 $4,843.2 $5,228.5 $5,620.7 Non-operating Income $166.4 $ $30.4 -$30.4 Pre-Tax Income $4,860.1 $5,009.5 $5,198.1 $5,590.3 Tax Rate 15.1% 17.0% 17.0% 17.0% After-Tax Income $4,128.2 $4,157.9 $4,314.4 $4,639.9 Net income $4,128.2 $4,157.9 $4,314.4 $4,639.9 EPS $2.44 $2.54 $2.64 $2.84 Share Count Y/Y Growth Rev. 6.7% 8.7% 10.7% Y/Y Growth EPS 4.2% 8.2% 16.3% Gross Margin 44.7% 44.3% 44.8% 45.3% SG&A % 31.0% 31.1% 30.8% 30.5% Operating Margin 13.7% 13.2% 14.0% 14.8% P/E Multiple 23.0x 25.3x 27.0x 12-Month Stock price $59 $67 $77 Nike Inc. (NKE) 7

8 Financial Models Figure 7: Income Statement Nike Inc. Income Statement FY16 FY17 FY18 1Q16A 2Q16A 3Q16A 4Q16A 1Q17A 2Q17A 3Q17A 4Q17E 1Q18E 2Q18E 3Q18E 4Q18E Aug-15 Nov-15 Feb-16 May A Aug-16 Nov-16 Feb-17 May E Aug-17 Nov-17 Feb-18 May E 2014A 2015A 2016A 2017E 2018E 2019E 2020E 2021E 2022E Footwear 5, , , , , , , , , , , , , , , , , , , , , , , ,010.4 Apparel 2, , , , , , , , , , , , , , , , , , , , , , , ,328.4 Equipment and Other , , , , , , , , , , , ,977.6 Global Brands Division Other Brands , , , , , , , , , , , ,968.7 Corporate Total Revenue 8, , , , , , , , , , , , , , , , , , , , , , , , Cost of Goods Sold 4, , , , , , , , , , , , , , , , , , , , , , , ,937.2 Gross Profit 3, , , , , , , , , , , , , , , , , , , , , , , ,576.1 SG&A Demand Creation , , , , , , , , , , , , , ,902.0 Salaries and Benefits 1, , , , , , , , , , , , , , , , , , , , , , , ,933.9 SG&A Total 2, , , , , , , , , , , , , , , , , , , , , , , ,836.0 Operating Income 1, , , , , , , , , , , , , , , , , , , , , , ,740.1 D&A , , , ,189.9 EBITDA 1, , , , , , , , , , , , , , , , , , , , , , , ,930.0 EBITDA Margin 19.2% 13.9% 16.0% 15.8% 16.3% 15.5% 15.8% 16.9% 16.1% 16.1% 15.8% 16.0% 17.2% 16.5% 16.4% 15.5% 17.1% 16.3% 16.1% 16.4% 16.8% 17.2% 17.6% 18.0% Interest Income (Expense) Calculations Interest Income (Expense) - Model Driver Other Income (Expense) Total Non-Operating Income (Expense) Pretax Income 1, , , , , , , , , , , , , , , , , , , , , , ,679.5 Provision for Taxes , , ,305.5 Tax Rate 18.4% 19.1% 16.3% 21.2% 18.7% 2.5% 24.4% 13.8% 22.0% 15.1% 17.0% 17.0% 17.0% 17.0% 17.0% 24.0% 22.2% 18.7% 15.1% 17.0% 17.0% 17.0% 17.0% 17.0% Adjusted Net Income 1, , , , , , , , , , , , , , , ,374.0 Pro Forma EPS X Charge (net) GAAP Net Income GAAP EPS Dividend Basic Shares Outstanding 1, , , , , , , , , , , , , , , , , , , , , , , ,357.2 Diluted Shares Outstanding 1, , , , , , , , , , , , , , , , , , , , , , , ,390.4 Margins Gross Margin 47.5% 45.6% 45.9% 45.9% 46.2% 45.5% 44.2% 44.5% 44.4% 44.7% 45.0% 44.4% 44.8% 44.8% 44.8% 44.8% 46.0% 46.2% 44.7% 44.8% 45.0% 45.2% 45.4% 45.6% Y/Y Growth 86bp 47bp 0bp -26bp 27bp -198bp -134bp -146bp -150bp -157bp -50bp 20bp 30bp 40bp 9bp 118bp 120bp 27bp -157bp 9bp 24bp 20bp 20bp 20bp EBITDA 19.2% 13.9% 16.0% 15.8% 16.3% 15.5% 15.8% 16.9% 16.1% 16.1% 15.8% 16.0% 17.2% 16.5% 16.4% 15.5% 17.1% 16.3% 16.1% 16.4% 16.8% 17.2% 17.6% 18.0% Pretax Income 17.2% 12.6% 14.1% 13.0% 14.3% 14.1% 13.6% 15.7% 12.8% 14.1% 13.8% 13.7% 15.1% 13.0% 13.9% 12.7% 13.7% 14.3% 14.1% 13.9% 14.3% 14.7% 15.1% 15.5% Effective Tax Rate 18.4% 19.1% 16.3% 21.2% 18.7% 2.5% 24.4% 13.8% 22.0% 15.1% 17.0% 17.0% 17.0% 17.0% 17.0% 24.0% 22.2% 18.7% 15.1% 17.0% 17.0% 17.0% 17.0% 17.0% Net Margin 14.0% 10.2% 11.8% 10.3% 11.6% 13.8% 10.3% 13.5% 10.0% 12.0% 11.4% 11.4% 12.6% 10.8% 11.5% 9.7% 10.7% 11.6% 12.0% 11.5% 11.9% 12.2% 12.5% 12.9% % of Revenue Footwear 60.9% 59.7% 63.2% 61.6% 61.4% 60.4% 58.9% 63.0% 61.4% 60.9% 60.4% 58.1% 62.4% 61.0% 60.5% 58.3% 59.9% 61.4% 60.9% 60.5% 60.5% 60.5% 60.6% 60.6% Apparel 27.8% 30.7% 26.4% 27.2% 28.0% 28.1% 31.0% 26.9% 27.8% 28.4% 28.5% 32.1% 27.7% 28.3% 29.1% 29.2% 28.2% 28.0% 28.4% 29.1% 29.2% 29.1% 29.0% 28.9% Equipment and Other 4.8% 4.5% 4.4% 4.7% 4.6% 4.7% 4.2% 3.8% 4.4% 4.3% 4.4% 4.1% 3.7% 4.3% 4.1% 6.0% 5.3% 4.6% 4.3% 4.1% 4.1% 4.0% 4.0% 4.0% Other Brands 6.6% 5.2% 6.1% 6.2% 6.0% 6.3% 5.1% 5.9% 6.2% 5.9% 6.3% 5.0% 5.8% 6.2% 5.8% 6.1% 6.5% 6.0% 5.9% 5.8% 5.9% 5.9% 6.0% 6.0% COGS 52.5% 54.4% 54.1% 54.1% 53.8% 54.5% 55.8% 55.5% 55.6% 55.3% 55.0% 55.6% 55.2% 55.2% 55.2% 55.2% 54.0% 53.8% 55.3% 55.2% 55.0% 54.8% 54.6% 54.4% Demand Creation 9.9% 10.0% 10.0% 10.6% 10.1% 11.5% 9.3% 8.9% 9.6% 9.9% 10.8% 9.4% 8.9% 9.6% 9.7% 10.9% 10.5% 10.1% 9.9% 9.7% 9.8% 9.8% 9.9% 9.9% Y/Y Growth -135bp -37bp 21bp 6bp -37bp 160bp -69bp -113bp -100bp -27bp -70bp 5bp 5bp 5bp -15bp 6bp -40bp -37bp -27bp -15bp 5bp 5bp 5bp 5bp Salaries and Benefits 20.7% 23.3% 21.9% 23.0% 22.2% 20.5% 21.3% 20.7% 22.2% 21.2% 20.4% 21.2% 20.6% 22.1% 21.1% 20.6% 21.8% 22.2% 21.2% 21.1% 20.8% 20.6% 20.3% 20.1% Y/Y Growth 91bp 65bp -15bp 13bp 38bp -26bp -199bp -122bp -80bp -105bp -10bp -10bp -10bp -10bp -10bp 71bp 120bp 38bp -105bp -10bp -25bp -25bp -25bp -25bp SG&A Total 30.6% 33.3% 31.9% 33.6% 32.3% 32.0% 30.6% 29.6% 31.8% 31.0% 31.2% 30.6% 29.6% 31.7% 30.8% 31.5% 32.3% 32.3% 31.0% 30.8% 30.6% 30.4% 30.2% 30.0% Y/Y Growth -44bp 27bp 6bp 19bp 1bp 134bp -268bp -235bp -180bp -132bp -80bp -5bp -5bp -5bp -25bp 77bp 79bp 1bp -132bp -25bp -20bp -20bp -20bp -20bp Operating Margin 16.9% 12.2% 14.0% 12.4% 13.9% 13.5% 13.6% 14.9% 12.7% 13.7% 13.8% 13.8% 15.2% 13.1% 14.0% 13.2% 13.6% 13.9% 13.7% 14.0% 14.4% 14.8% 15.2% 15.6% Y/Y Growth 131bp 20bp -5bp -46bp 26bp -332bp 134bp 89bp 30bp -25bp 30bp 25bp 35bp 45bp 34bp 41bp 41bp 26bp -25bp 34bp 44bp 40bp 40bp 40bp Y/Y Growth Footwear 9.0% 7.6% 11.0% 6.3% 8.5% 6.8% 5.0% 4.7% 5.0% 5.4% 7.8% 8.0% 8.0% 7.9% 7.9% 10.7% 13.0% 8.5% 5.4% 7.9% 7.7% 7.2% 7.2% 7.3% Apparel 4.7% 3.4% 8.4% 3.9% 5.0% 8.9% 7.3% 6.8% 8.0% 7.8% 9.0% 13.4% 12.5% 10.4% 11.3% 8.2% 6.5% 5.0% 7.8% 11.3% 7.8% 6.9% 6.9% 7.0% Equipment and Other -10.3% -9.2% -7.9% -5.8% -8.3% 3.7% 0.3% -8.8% -2.8% -1.7% 0.6% 5.5% 5.5% 6.0% 4.2% 1.8% -2.3% -8.3% -1.7% 4.2% 6.6% 6.6% 6.6% 6.6% Other Brands -3.5% -8.3% -9.1% 17.9% -1.4% 3.4% 4.5% 1.8% 6.0% 3.9% 6.6% 7.0% 8.0% 8.0% 7.4% 16.2% 17.7% -1.4% 3.9% 7.4% 8.0% 8.0% 8.0% 8.0% Total Revenue 5.4% 4.1% 7.7% 6.0% 5.8% 7.7% 6.4% 5.0% 5.5% 6.2% 7.7% 9.5% 9.1% 8.5% 8.7% 9.8% 10.1% 5.8% 6.2% 8.7% 7.7% 7.1% 7.2% 7.2% Demand Creation -7.2% 0.4% 10.0% 6.6% 2.0% 25.1% -0.9% -6.8% -4.4% 3.3% 1.2% 10.1% 9.7% 9.1% 7.0% 10.4% 6.0% 2.0% 3.3% 7.0% 8.2% 7.7% 7.7% 7.7% Salaries and Benefits 10.2% 7.1% 6.9% 6.6% 7.7% 6.4% -2.7% -0.9% 1.9% 1.2% 7.2% 9.0% 8.6% 8.1% 8.2% 13.7% 16.5% 7.7% 1.2% 8.2% 6.4% 5.8% 5.9% 5.9% SG&A Total 3.9% 5.0% 7.9% 6.6% 5.8% 12.4% -2.1% -2.7% -0.1% 1.8% 5.1% 9.3% 8.9% 8.4% 7.8% 12.6% 12.8% 5.8% 1.8% 7.8% 7.0% 6.4% 6.5% 6.5% Operating Income 14.3% 5.8% 7.3% 2.2% 7.8% -13.5% 18.1% 11.7% 8.1% 4.3% 10.1% 11.5% 11.6% 12.4% 11.4% 13.3% 13.5% 7.8% 4.3% 11.4% 11.1% 10.1% 10.1% 10.0% Net Income 22.6% 19.8% 20.1% -2.2% 14.9% 5.9% 7.3% 20.1% 3.0% 9.8% -10.7% 21.4% 1.3% 17.2% 4.5% 9.6% 21.5% 14.9% 9.8% 4.5% 10.9% 9.9% 10.1% 10.1% EBITDA 19.3% 4.2% 2.3% -19.7% 0.3% -12.9% 20.9% 11.1% 8.0% 5.0% 9.8% 10.9% 11.1% 11.4% 10.8% 17.3% 21.4% 0.3% 5.0% 10.8% 10.5% 9.7% 9.7% 9.7% EPS 23.8% 21.1% 22.2% -0.1% 16.6% 8.8% 10.9% 23.7% 5.8% 13.0% -8.1% 24.8% 5.4% 22.1% 8.2% 10.8% 24.5% 16.6% 13.0% 8.2% 15.6% 14.5% 14.7% 14.4% Nike Inc. (NKE) 8

9 Figure 8: Divisional Revenue (Constant Currency) Nike Inc. Divisional Revenue - Constant Currency FY16 FY17 FY18 2Q16A 1Q16A 3Q16A 4Q16A 1Q17A 2Q17A 3Q17A 4Q17E 1Q18E 2Q18E 3Q18E 4Q18E Aug-15 Nov-15 Feb-16 May A Aug-16 Nov-16 Feb-17 May E Aug-17 Nov-17 Feb-18 May E 2014A 2015A 2016A 2017E 2018E 2019E 2020E 2021E 2022E North America Footwear 2, , , , , , , , , , , , , , , , , , , , , , , ,208.3 Apparel 1, , , , , , , , , , , , , , , , , , , , , , , ,984.5 Equipment and Other Total 3, , , , , , , , , , , , , , , , , , , , , , , ,100.6 Western Europe Footwear 1, , , , , , , , , , , , , , , , , , ,730.1 Apparel , , , , , , , , , , , ,612.1 Equipment and Other Total 1, , , , , , , , , , , , , , , , , , , , , , , ,684.8 Eastern Europe. Footwear , , , ,326.7 Apparel Equipment and Other Total , , , , , , , , , , , ,135.6 China Footwear , , , , , , , , , , , ,535.7 Apparel , , , , , , , , , ,928.1 Equipment and Other Total , , , , , , , , , , , , , , , , , , , ,665.7 Japan Footwear Apparel Equipment and Other Total , , , , , , , ,281.5 Emerging Markets Footwear , , , , , , , , , , , ,354.3 Apparel , , , , , , , ,782.7 Equipment and Other Total , , , , , , , , , , , , , , , , ,448.2 Worldwide Total Footwear 5, , , , , , , , , , , , , , , , , , , , , , , ,010.4 Apparel 2, , , , , , , , , , , , , , , , , , , , , , , ,328.4 Equipment and Other , , , , , , , , , , , ,977.6 Global Brand Divisions Other Brands , , , , , , , , , , , ,968.7 Total 8, , , , , , , , , , , , , , , , , , , , , , , ,375.5 Figure 9: Balance Sheet Nike Inc. Balance Sheet FY16 FY17 FY18 2Q16A 1Q16A 3Q16A 4Q16A 1Q17A 2Q17A 3Q17A 4Q17E 1Q18E 2Q18E 3Q18E 4Q18E Aug-15 Nov-15 Feb-16 May A Aug-16 Nov-16 Feb-17 May E Aug-17 Nov-17 Feb-18 May E 2014A 2015A 2016A 2017E 2018E 2019E 2020E 2021E 2022E Assets Current Assets: Cash and Equivalents 5, , , , , , , , , , , , , , , , , , , , , , , ,716.0 Accounts Receivable 3, , , , , , , , , , , , , , , , , , , , , , , ,915.2 Inventories 4, , , , , , , , , , , , , , , , , , , , , , , ,264.5 Deferred Income Taxes , , , , , , , ,950.9 Prepaid Expenses and Other 1, , , , , , , Total Current Assets 15, , , , , , , , , , , , , , , , , , , , , , , ,565.7 PP&E 3, , , , , , , , , , , , , , , , , , , , , , , ,759.0 Identifiable Intangible Assets Goodwill Deferred Taxes and Other Assets 2, , , , , , , , , , , , , , , , , , , , , , , , Total Assets 20, , , , , , , , , , , , , , , , , , , , , , , ,076.3 Liabilities and Shareholders Equity Current Liabilities: Current Long-term Debt Notes Payable Accounts Payable 1, , , , , , , , , , , , , , , , , , , , , , , ,341.2 Accrued Liabilities 3, , , , , , , , , , , , , , , , , , , , , , , ,228.0 Income Taxes Payable, Other Total Current Liabilities 5, , , , , , , , , , , , , , , , , , , , , , , , Long-term Debt 1, , , , , , , , , , , , , , , , , , , , , , , ,472.0 Deferred Taxes and Other 1, , , , , , , , , , , , , , , , , , , , , , , ,687.0 Commitments and Contingencies Redeemable Preferred Stock Total Shareholders Equity 12, , , , , , , , , , , , , , , , , , , , , , , ,174.7 Total Liabilities and Equity 20, , , , , , , , , , , , , , , , , , , , , , , , Operating Ratios Receivables Turnover DSO Inventory Turnover Days Inventory (backwards) Days Inventory (forwards) Payables Turnover Days Payables Outstanding Cash Cycle (in Days) Nike Inc. (NKE) 9

10 Figure 10: Statement Of Cash Flows Nike Inc. Cash Flows FY16 FY17 FY18 2Q16A 1Q16A 3Q16A 4Q16A 1Q17A 2Q17A 3Q17A 4Q17E 1Q18E 2Q18E 3Q18E 4Q18E Aug-15 Nov-15 Feb-16 May A Aug-16 Nov-16 Feb-17 May E Aug-17 Nov-17 Feb-18 May E 2014A 2015A 2016A 2017E 2018E 2019E 2020E 2021E 2022E Operating Net Income Depreciation and Amortization Deferred Taxes and Investment Tax Credit Tax benefit from options and other Decrease (Inc) in A/R Decrease (Inc) in Inv Decrease (Inc) in prepaid and other Decrease (Inc) in AP Net Change in Working Capital Net Cash Flow From Operations , , , , , , , , , , , , , , , , , ,980.0 Investing Purchase of Investments -1, , , , Sale of Investments 1, , , , Capital Expenditure , , , Acquisition of Subsidiary Sale of PP&E Other investing , , Net Cash Flow from Investing , , , , , , , , ,349.0 Financing Change in Current Debt Change in LT Debt , Share Repurchases , , , , , , , Proceeds from exercise of options, other Cash Dividends , , , Net Cash Flow from Financing , , , , , , , , , , , , , , , , , ,567.9 Exchange Rate Effect Increase (Dec) in Cash and ST Investments , , , , , , , , , , ,063.1 Nike Inc. (NKE) 10

11 Companies Mentioned (Price as of 21-Mar-2017) Nike Inc. (NKE.N, $58.01, OUTPERFORM, TP $67.0) Disclosure Appendix Analyst Certification I, Christian Buss, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. 3-Year Price and Rating History for Nike Inc. (NKE.N) NKE.N Closing Price Target Price Date (US$) (US$) Rating 09-May N 29-Sep O 10-Dec Jan Mar Mar Jun Sep Dec Mar Jun Sep Mar N EU T RA L O U T PERFO RM Target Price Closing Price NKE.N 01- Jan Jan Jan * Asterisk signifies initiation or assumption of coverage. The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities As of December 10, 2012 Analysts stock rating are defined as follows: Outperform (O) : The stock s total return is expected to outperform the relevant benchmark* over the next 12 months. Neutral (N) : The stock s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-japan Asia stocks, ratings are based on a stock s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock s absolute total return potential to its current share price and (2) the relative attractiveness of a stock s total return potential within an analyst s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time. Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products. Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts sector weightings are distinct from analysts stock ratings and are based on the analyst s expectations for the fundamentals and/or valuation of the sector* relative to the group s historic fundamentals and/or valuation: Overweight : The analyst s expectation for the sector s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst s expectation for the sector s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst s expectation for the sector s fundamentals and/or valuation is cautious over the next 12 months. *An analyst s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors. Nike Inc. (NKE) 11

12 Credit Suisse's distribution of stock ratings (and banking clients) is: Global Ratings Distribution Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 45% (64% banking clients) Neutral/Hold* 39% (61% banking clients) Underperform/Sell* 14% (53% banking clients) Restricted 2% *For purposes of the NYSE and FINRA ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors. Important Global Disclosures Credit Suisse s research reports are made available to clients through our proprietary research portal on CS PLUS. Credit Suisse research products may also be made available through third-party vendors or alternate electronic means as a convenience. Certain research products are only made available through CS PLUS. The services provided by Credit Suisse s analysts to clients may depend on a specific client s preferences regarding the frequency and manner of receiving communications, the client s risk profile and investment, the size and scope of the overall client relationship with the Firm, as well as legal and regulatory constraints. To access all of Credit Suisse s research that you are entitled to receive in the most timely manner, please contact your sales representative or go to Credit Suisse s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties. Target Price and Rating Valuation Methodology and Risks: (12 months) for Nike Inc. (NKE.N) Method: Our 12-month price target of $67 is a weighted average of 1) a comparable valuation ($68), 2) a 5-year DCF ($68), 3) a long term growth analysis ($64). We believe the stock will continue to Outperform the peer group long-term. Risk: Risks to our $67 price target and Outperform rating on Nike are risk to consumer discretionary spending, foreign currency risk, channel conflict, and accounting risk. Please refer to the firm's disclosure website at for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within the past 12 months, please refer to the link: Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events. Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit Principal is not guaranteed in the case of equities because equity prices are variable. Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that. This research report is authored by: Credit Suisse Securities (USA) LLC...Christian Buss ; Sara Shuler ; Pallavi Bakshi ; Christine Lee Important disclosures regarding companies or other issuers that are the subject of this report are available on Credit Suisse s disclosure website at or by calling +1 (877) Nike Inc. (NKE) 12