Dear Fellow Shareholders: A year ago, Phil Knight asked us to take on a new challenge; serve as co-Presidents of the Nike Brand…the “sales guy” and the “product guy”… the “businessman” and the “designer”…each with 23 years inside the company. Though we came to the role from different histories, we immediately agreed upon a fresh focus. Nike needed to do two things: focus and change. Focus is all about doing what we do best, doing it more often, with greater energy serving bigger goals. We needed to organize around a more specific set of priorities. There’s no question that Nike can innovate in many diverse areas and markets. We have a unique combination of attributes to work with: product excellence, consumer insight, strong customer relationships, and a near genetic attachment to authenticity, competitiveness, and innovation. Our immediate challenge was to focus that power where we stand to gain the most. For Nike, that means competing in any market where we can earn the number-one or number-two market position. So, in fiscal 2002 we focused on what we did well in the past, regaining market share in core Nike categories, such as running and basketball. And we set out to gain more insight and credibility in the women’s and outdoor markets. The Nike Golf division focused on extending its reach into the whole of the game, launching the Nike Driver and wedges, with a full set of irons in the pipeline. We focused on footwear in the U.S., where we reestablished our competitiveness in the middle price points of $70 - $90, closing out the second half of the year with our U.S. footwear business up four percent over last year. Apparel is also up for the year, with our women’s business delivering a new level of connectivity to consumers at retail. In communicating with consumers, we focused on emotional expressions of the Nike personality. The Freestyle basketball campaign, Secret Tournament soccer campaign, and our women’s campaign each captured different facets of the universal appeal of sports – the simple joy of competing and winning and being active. Now for change. Every day we see more innovation, ideas and performance coming from outside the U.S., including 48 percent of Nike revenue for FY ‘02. We expect that figure to exceed 50 percent within the near future. We have the chance today to drive that shift forward to higher levels of brand success around the world. We saw double-digit growth in the key markets of Germany, France and the United Kingdom, and today Nike is the market share leader in athletic footwear and apparel on the Continent. The Americas region delivered an amazing performance, meeting their growth and revenue targets despite the social crisis and economic meltdown in their number-four market, Argentina. Brand awareness continues to escalate in Brazil, Mexico and Canada which remain solid performers with great momentum. It’s a market rich in passion for sports, and that means great opportunities for growth. Our Asia Pacific region grew revenues in every business segment, a clear statement about Nike’s growing role as an authentic sports brand, expressed with unprecedented power to coincide with this year’s World Cup in Japan and Korea. With China now a member of the World Trade Organization, and Bejing the setting for the 2008 Olympics, the opportunities in that country are huge. Finally, let’s look more closely at the effort surrounding World Cup 2002. Inside Nike we called it Football Zero Two, or simply FZT. But, that’s where simplicity ends. It’s the most integrated global effort in our brand’s history. It represents a change we have made in our approach to knowing and evolving sports. Three years ago, we committed to creating a new generation of performance product that would take Nike to a new level of play to coincide with this year’s Cup. The European design team took the lead on apparel. Footwear design came out of Oregon. A four-phase marketing campaign created in Amsterdam spread over the face of the world over three months. The Scorpion, symbol of the quick and deadly style of play that defines Nike football, showed up in hot zones of youth soccer worldwide. At nikefootball.com, visitors from around the world played digital knockout tournaments amidst a site rich in design and information offered in twelve languages. Add to that all the kids who flocked to 13 Nike Parks around the world, and the number of one-to-one connections exceeds 30 million. Closer to the tournament, Nike’s presence in the host countries took a leadership role in matching the energy of the world’s most important sporting event. The effect has been beyond our best predictions. Sales of the South Korean team jersey, expected to top out at 14,000, approached 150,000. At mid-tournament, the U.S. jersey was the #1-selling shirt of any national team. Perhaps the oddest win of all? The remix of Elvis Presley’s “A Little Less Conversation, a Little More Action” from the Nike Secret Tournament ad campaign went to the top of the charts in Europe and the United States. But the most telling anecdote of Nike occurred forty-nine minutes into the World Cup game between Brazil and Turkey. Ronaldo scored the winning goal to send Brazil to the final. He did it wearing a special chrome edition of the Mercurial Vapor. Ronaldo saw the shoe for the first time a couple of days before. When Nike Football pulled it out of their bag of tricks during a practice session, Ronaldo went nuts. Had to have it. It worked. That’s Nike. Always thinking, experimenting, taking risks. Always ready. That’s how we create opportunity. That’s how we win. Today, Nike’s global football business is poised to exceed $500 million on the strength of great product, the best athletes and the right message. This is the kind of collective success that ignites everyone inside Nike, every department, country and region around the world. We all feel the momentum, the buzz of a fight fought well and won. And it drives us. Just as we’ve enjoyed some big success stories around the world, the last year was also a challenge. We were reminded, in the most horrifying way, that life offers no guarantees. We have to live our values in everything that we do, because everything can and will change in an instant. Our response was to reconnect with who we are, to be true to what we stand for. We debate, perhaps too much, inside Nike about how to get after this or that opportunity. But in times like these we take great strength from each other, and in that we are enlivened. This is our job, stewardship of a brand deeply rooted in Bill Bowerman’s declaration that “If you have a body, you’re an athlete.” This is who we serve, the athlete, everybody. To do so with success and meaning is to enter a game of focus and change. It is a game we intend to win. Thank you, Mark Parker Presidents, Nike Brand Charlie Denson