We thought now might be a good time to talk about corporate responsibility, here in the back of the book, last but certainly not least. Some of this information may surprise even the most ardent Nike observer. A good reason to relay a few facts, some big and some small, about what we do off the field.

Nike has consolidated the efforts of the Community Affairs, Environmental Action Team and Labor Practices groups into the Corporate Responsibility Division. This combined focus increases Nike's effectiveness in the implementation of practices and investment in programs that will bring increased value to our shareholders, business partners, customers, employees and the communities where we do business.

RESPONSIBLE LABOR PRACTICES

On May 12, 1998, Phil Knight announced six new initiatives to improve factory working conditions and increase opportunities for people who manufacture Nike products. They are:

Expanding Independent Monitoring: Working with NGO (non-government organization) participation, Nike will initially focus on Vietnam, Indonesia and China. The ultimate goal is to establish a global system of independent certification of the company's labor practices, much the same way financial information in this annual report is certified.

Raising Minimum Age Requirements: Nike has increased the minimum age of footwear factory workers to 18 and the minimum age for all other light manufacturing workers (apparel, accessories, equipment) to 16. There is no tolerance for exception.

Strengthening Environmental, Health and Safety Standards: Nike launched the Environmental, Health and Safety Management System (EHSMS) in June of '98. The program, developed with two consultant groups (The Guantlett Group and Environmental Resources Management), will provide every factory where Nike footwear is made the tools and training to effectively manage and ensure continuous improvement throughout their environmental, health and safety programs. The program helps each factory develop a fully functioning EHSMS by June 2001.

KEY ENVIRONMENTAL, HEALTH AND SAFETY INITIATIVES:

a) Indoor air testing of all footwear factories, and the monitoring of any necessary corrective measures to bring air quality to OSHA levels.

b) Accelerated replacement of petroleum-based, organic solvents with safer water-based compounds. In an average month, nine of ten Nike shoes are made with water-based adhesives, with parallel substitutions underway for primers, degreasers and cleaners used in traditional footwear production.

Expanded Worker Education: The Jobs + Education program offers footwear factory workers educational opportunities, such as middle school and high school equivalency courses. The classes will be free and scheduled during non-work hours. Factory participation is voluntary, but by 2002 Nike will order only from footwear factories that offer some form of after-hours education.

Increasing Support of the Micro-enterprise Loan Program: The Jobs + Micro-enterprise Program will provide loans to women to create small businesses. Building on a successful program already responsible for 1000 loans in Vietnam, Nike will expand the program to reach an equal number of families in Indonesia, Thailand and Pakistan.

Building understanding: Through the Rising Tides program, Nike is providing research grants and logistical support to universities and colleges to expand the academic body of knowledge on corporate responsibility, contract manufacturing and development issues involving Nike and other companies. Nike will also convene a series of open forums to foster dialogue with factory workers and partners, academics, NGOs and others interested in these issues.

OUR COMMITMENT TO COMMUNITIES

RESPONSIBLE P.L.A.Y.

Nike's P.L.A.Y. (Participate in the Lives of America's Youth) initiative provides under-served kids access to inspirational coaches, organized activities and safe places to play. P.L.A.Y. supports sports clinics, summer camps, and non-profit community health and sports programs through the P.L.A.Y. Foundation.

P.L.A.Y. CORPS: Launched in April of 1996, Nike's national program identifies and trains college students to coach kids in city and town youth leagues across the country. Currently there are 700 P.L.A.Y. CORPS coaches in 35 states coaching kids in a wide range of sport and fitness activities. After 100 hours of coaching, students receive a one-time $500 stipend towards their tuition.

P.L.A.Y. Sports: In the fall of 1996 Nike made a $5 million commitment to the Boys & Girls Clubs of America. The five-year grant funds the P.L.A.Y. Sports Program, a comprehensive plan to train 40,000 volunteer coaches, to develop leadership skills in 13 to 18 year olds, to expand the Sports Leadership Camps, to triple girl's club participation and to increase overall participation at Boys & Girls clubs around the country from 1 million to 2 million.

RESPONSIBLE DIVERSITY

There is no doubt that diversity creates a broader, richer environment for creativity and success. As a member of the global community, Nike seeks people of every race, age, religion, economic status and gender. We try to create a company of opportunity internally, and a world of opportunity externally.
    Included in Nike partnerships are:
100 Black Men of America: Nike is funding a $3 million partnership with 100 Black Men of America to support youth mentor programs across the country that develop education and economic opportunities for young adults.

Jackie Robinson Foundation: In partnership with the Jackie Robinson Foundation, Nike established the Ennis Cosby Scholarship Fund with an endowment of $100,000. Nike continues to sponsor four Jackie Robinson Foundation scholars each year.

Tiger P.L.A.Y. Golf: Nike is investing $2.3 million over the next five years to help Tiger Woods teach and inspire kids to play golf. Tiger will host six golf clinics each year for under-served kids. Nike will also donate $20,000 per clinic to help the National Minority Golf Foundation with local youth golf programs.

Diversity Retailer Loan Program: Nike committed $250,000 and partnered with the Development Credit Fund and the state of Maryland in an effort to increase the number of women and minority-owned athletic businesses. Retail outlets funded by the program are successfully operating in Baltimore, Maryland and Washington, D.C.

Self Enhancement, Inc.: Life has options. Nike made a 3-year, $750,000 commitment to support SEI in their efforts to provide inner-city youth with a sanctuary for constructive activity; a place for education, relationship building and personal growth.

Wings of America: Nike is the first corporate sponsor of Wings of America running clubs. Wings uses running as a catalyst to enhance the quality of life for American Indian Youth. By 2000, Nike and Wings plan to reach 15,000 young athletes in Native American communities across the country.

The Johns Hopkins University-Nanjing University Center for Chinese American Studies: Nike supports the Hopkins-Nanjing Center with student aid and the establishment of a Nike Fellow. The Center provides insight into the Chinese and American cultures.

HEAD START: Nike and the National Head Start Association have partnered to create Start Line, a program which will place computer software and hardware in selected Head Start programs in California, Oregon and Washington. Nike will invest $2.6 million over the next three years.

RESPONSIBLE ENVIRONMENTAL PRACTICES

Now in its fifth year, the Nike Environmental Action Team (N.E.A.T.) conceives and develops programs that incorporate the notion of sustainability into all Nike business practices by innovating products and processes that are resource-efficient and create no waste throughout their life cycle. A sustainable business is one that is profitable, contributes to quality of life for current and future generations, and does so without degrading the ecosystem on which it depends. Nike recently adopted a corporate policy outlining our commitment to sustainability:

Through the adoption of sustainable business practices, Nike is committed to securing intergenerational quality of life, restoring the environment and increasing value for our customers, shareholders and business partners.

In addition to the environmental footwear manufacturing programs mentioned previously, N.E.A.T. is driving many advances within the industry.

Starting at first base - Design
Working with McDonough Braungart Design Chemistry (MBDC), a world-renowned leader in sustainable design, we are seeking to develop Positive Lists� of materials and process chemicals that eliminate commonly used substances known or suspected of being harmful to human and/or ecological systems. The ultimate goal is MBDC's cradle-to-cradle approach that will allow Nike customers to know their products are returning to natural cycles safely, or to industrial cycles perpetually. By using the MBDC sustainable design protocol, Nike is continuing its development of the highest caliber athletic performance products while establishing itself as a world leader in sustainable product design. Organic Cotton: Nike is now incorporating 3% of organic cotton into 75% of all T-shirts with plans to include other cotton garments. There is not enough organic cotton grown to meet all Nike's cotton needs as well as those of other companies who rely on organic companies. We publicly support farmers moving from conventional to organic cotton, thus ensuring that we grow the supply without undermining the efforts of other companies to pursue this organic alternative. Water Quality: One of the largest potential environmental impacts of the textile industry is the contamination of water from dyeing and finishing processes. Nike joined the Business for Social Responsibility Apparel Industry Working Group and contributed to the development of water quality guidelines for garment laundries and textile mills. These guidelines, together with comprehensive training on how to meet the standards, have been rolled out to Nike's major textile suppliers worldwide.

Packaging: In May 1998, new machine technology was applied in the manufacture of all Nike corporate boxes including the shoe, skate, eyewear and timing boxes. These boxes are now 10% lighter but still deliver the same strength. This means a reduction of 4,000 tons of raw material fiber (which is already 100% post-consumer recycled material and made in a closed-loop system) used to make Nike's boxes.

Reuse-A-Shoe: The ultimate goal of our Reuse-a-Shoe program is to close the loop on our product lifecycle. One way we do this is by taking used or unwanted athletic shoes, grinding them up and giving them new life as playgrounds and sport surfaces. This program has successfully kept more than 7.5 million athletic shoes out of landfills. Reuse-a-Shoe's donation of sport surfaces to under-served communities across the country has provided thousands of kids safe spaces to play.

Outdoor Stewardship: Nike has a responsibility to help preserve our outdoor playgrounds. We support athletes and programs committed to responsible outdoor education and stewardship. These programs include:

Leave No Trace: Nike is continuing its partnership with Leave No Trace (LNT), a Colorado-based, non-profit organization that promotes outdoor ethics and responsible recreation practices. Nike and LNT are working with federal forest and park service agencies to direct a national education campaign to increase awareness of environmental issues and the benefits of minimal-impact outdoor activity.

Nike Karakoram Environmental Institute: Nike sponsored elite climber Brent Bishop's expedition to the Karakoram climbing region. Bishop implemented responsible environmental practices consistent with the clean-up efforts he pioneered on Mt. Everest, which Nike also sponsored. Bishop conducted environmental training seminars for 251 Balti mountain guides to educate them in environmental ethics and safety practices. Together, the team removed 1,770 pounds of garbage from the Karakoram basecamp.