Strategic Issues

• Corporate embrace of sustainability• Continued image recovery• Outpace competition• Just doing what we do best – athletic gear

Growth

• Historical Sales Growth

• Forecasted Sales Growth

  2011 2012 2013

Internal Growth Rate (IGR) 12.1% 11.9% 11.1%

Sustainable Growth Rate (SGR) 19.7% 18.9% 18.7%

Historical Revenue Growth Rate (%) 5.8% 16.0% 8.5%

     FY 2014    FY 2015 FY 2016

Best 17.60% 17.60% 17.60%

Base 10.10% 10.10% 10.10%

Worst 5.20% 5.20% 5.20%

Competitor Benchmarks

Benchmark - Under Armour 2011 2012 2013

Historical Revenue ($) 1473 1835 2322

Historical Revenue Growth ($) 409 362 487

Historical Revenue Growth Rate (%) 38.4% 24.6% 26.5%

Benchmark - Adidas (also owns Reebok) 2011 2012 2013

Historical Revenue ($) 13322 14883 14492

Historical Revenue Growth ($) 1,332 1561 -391

Historical Revenue Growth Rate (%) 11.1% 11.7% -2.6%

External Financing

• No current need for External Financing (EFN) into 2014– Pension funds– Internal financing– Growth rate proposal– Unlevered organization

External Financing

• Growth rates exceeding internal financing capabilities

• Sensitivity Analysis– FY2015 requires EFN

with growth rate > 42%– FY2016 requires EFN

with growth rate > 36%

Capital ProjectSustainU “Repreve” Jerseys

Nike, Inc.Sustainable Business & Innovation Lab

SustainU "Repreve" ProjectProjected Capital Requirements

New Equipment $ 1,500,000 Fabric/Supplies $ 50,000 Employee Training (On equipment, handling of fabric) $ 10,000 Retrofitting of Facilities $ 40,000 Total $ 1,600,000

Jersey is made from recycled bottles!

Nike‘s ApproachBelow is an actual Nike Supplier scorecard

Risks and Benefits

• No employee buy-in• Businesses don’t align• Sunk costs due to lack

of knowledge

• Good public image• Good corporate citizen• Environmentally

friendly products and processes

Risks Benefits

Weighted Average Cost of Capital

Capital Budgeting ScenariosBest Case   (10% of sales)

Net Present Value  $                          463,651 

Internal Rate of Return 128%

Profitability Index  $                                 4.82 

Payback Period During year 1

Discounted Payback Period During year 1

Base Case   (7.5% of sales)

Net Present Value  $                      (23,096)

Internal Rate of Return 94%

Profitability Index  $                             3.49 

Payback Period During year 2

Discounted Payback Period During year 2

Worst Case   (5% of sales)

Net Present Value  $        (489,130)

Internal Rate of Return 59%

Profitability Index  $                  2.25 

Payback Period During year 2

Discounted Payback Period During year 2

Industry Risks • Counterfeit Products• Supply Chain theft/piracy• Supply Chain disruption from natural disasters

and extreme weather• Global climate change (water shortages)

Environmental Focus• Nike uses eco-friendly materials for athletic

apparel• Nike helps preserve natural resources by using

a waterless dyeing process (uses CO2 instead)• Collaborates with NASA and other

organizations to encourage social and environmental innovation

Waterless Dyeing process!

Our Recommendation• Cautiously invest in more venture capital start-

ups for “green” products initiative if positive results are seen from SustainU launch (as seen on “best case” scenario)

Thank You