presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /S/ PRICEWATERHOUSECOOPERS LLP Portland, Oregon July 25, 2014 43 Report of Independent Registered Public Accounting Firm
Table of Contents The accompanying Notes to Consolidated Financial Statements are an integral part of this statement. 44 NIKE, Inc. Consolidated Statements of Income Year Ended May 31, (In millions, except per share data) 2014 2013 2012 Income from continuing operations: Revenues $ 27,799 $ 25,313 $ 23,331 Cost of sales 15,353 14,279 13,183 Gross profit 12,446 11,034 10,148 Demand creation expense 3,031 2,745 2,607 Operating overhead expense 5,735 5,051 4,472 Total selling and administrative expense 8,766 7,796 7,079 Interest expense (income), net (Notes 6, 7, and 8) 33 (3) 4 Other expense (income), net (Note 17) 103 (15 ) 54 Income before income taxes 3,544 3,256 3,011 Income tax expense (Note 9) 851 805 754 NET INCOME FROM CONTINUING OPERATIONS 2,693 2,451 2,257 NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS — 21 (46 ) NET INCOME $ 2,693 $ 2,472 $ 2,211 Earnings per share from continuing operations: Basic earnings per common share (Notes 1 and 12) $ 3.05 $ 2.74 $ 2.45 Diluted earnings per common share (Notes 1 and 12) $ 2.97 $ 2.68 $ 2.40 Earnings per share from discontinued operations: Basic earnings per common share (Notes 1 and 12) $ — $ 0.02 $ (0.05 ) Diluted earnings per common share (Notes 1 and 12) $ — $ 0.02 $ (0.05) Dividends declared per common share $ 0.93 $ 0.81 $ 0.70
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