CORRESP: Correspondence
Published on
July 10, 2006
Cecilia D. Blye, Chief
James Lopez
Office of Global Security Risk
Division of Corporation Finance
Securities and Exchange Commission
Washington, D.C. 20549-5546
Re: Review of NIKE, Inc. Form 10-K for fiscal year ended May 31,
____________________________________________________________
2005, filed July 29, 2005, File No. 1-10635
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Dear Ms. Blye:
This letter will respond to your letter commenting on the above-
referenced filing, and requesting additional information regarding
disclosures relating to our contacts with Cuba and Iran.
To the best of our knowledge, NIKE, Inc. ("NIKE") does not engage
in any business operations in or sales of products to Cuba or Iran.
NIKE derives no income from sales to those countries. In addition, NIKE
prohibits independent distributors from selling its products to Cuba or
Iran.
We were unable to find accounts in the mainstream media of NIKE
products appearing in those countries. However, we understand from a
telephone conversation with Mr. Lopez that the Staff has found a few
internet websites that contain anecdotal descriptions regarding NIKE
products appearing in those countries. He asked us to address those
reports in this response. Based on our internal investigation, we have
determined that such reports are erroneous, the result of counterfeit
products, or unauthorized, non-retail shipments from other countries.
Cuba
____
One internet website identified by Mr. Lopez indicated that the
author observed people in Cuba wearing NIKE apparel. The author also
claimed that a company named Cidesport was NIKE's distributor in Cuba.
In fact, Cidesport is not and has never been a NIKE distributor. NIKE
has been involved in extensive litigation over a number of years
regarding the misappropriation by Cidesport of NIKE trademarks in Spain
and elsewhere. If the account is true, it is possible that Cidesport
may have claimed rights to the NIKE name and trademarks in Cuba and is
distributing its own products there bearing the NIKE name and trademarks,
without the consent or authorization of NIKE.
NIKE's authorized independent distributor in Central America and
the Caribbean is prohibited from selling NIKE products to Cuba, or other
countries outside of its exclusive territory. It has confirmed to us
that no such sales have occurred. We have also periodically reviewed
the distributor's customer account lists to confirm that assertion.
Iran
____
Another internet web page identified by Mr. Lopez appears to
indicate that NIKE products were being sold in Iran. We suspected that
in past years a former independent distributor of NIKE products in Saudi
Arabia shipped products to Iran without NIKE's authorization or
knowledge, and in violation of our distribution agreement. Independent
distributors are prohibited by agreement from distributing products
outside of their exclusive territory, in this case, Saudi Arabia.
Accordingly, we terminated our distribution agreement with that
distributor in 2005, and replaced it with a different independent
distributor effective January 2006.
Periodically, we receive requests from companies desiring the right
to distribute NIKE products in Iran. NIKE has denied all such requests.
Although NIKE does not distribute or sell products in Iran, last
year we provided three Iranian-born soccer players who reside and play
soccer professionally outside of Iran (in Germany and the United Arab
Emirates) not more than three pairs of soccer shoes upon their request.
No compensation or remuneration was provided to these athletes, and NIKE
has no sponsorship, endorsement, or other agreements with such athletes.
Moreover, NIKE has no sponsorship, endorsement, or other agreements with
any sports leagues, teams or athletes in Iran or Cuba.
Other Sources of Product
________________________
There are numerous persons in other countries who produce and sell
counterfeit NIKE products which infringe on NIKE's trademarks. While we
have an active counterfeit enforcement program, regrettably we are
unable to find and stop all counterfeit manufacturers and shipments.
Thus it is quite possible that counterfeit products are being shipped to
Cuba and Iran from countries without trade sanctions against Cuba or
Iran.
Moreover, individuals or companies may purchase NIKE products in
other countries that have no trade sanctions against Cuba and Iran, and
transport the products to Cuba and Iran legally. NIKE does not
authorize or endorse such shipments, gifts, or re-sales, and has no
ability to track NIKE products once they have been legitimately
purchased by retailers or consumers who take them elsewhere. It is
possible that genuine NIKE products could enter Cuba and Iran in this
fashion.
Conclusion
__________
Because NIKE has no direct or indirect operations in, ties to, or
trade with, Cuba or Iran, and NIKE has no plans to engage in any such
activities in the future, we have determined that such matters do not
constitute a material investment risk to our security holders.
Accordingly, we do not believe any disclosure regarding these matters is
required in our annual report on Form 10-K.
As you requested, the Company hereby acknowledges that the Company
is responsible for the adequacy and accuracy of the disclosure in the
filing; staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action with
respect to the filing; and the Company may not assert staff comments as
a defense in any proceeding initiated by the Commission or any person
under the federal securities laws of the United States.
If you have any questions, you may contact John Coburn, Secretary
and Senior Governance Counsel, at 503-671-3167.
Sincerely,
/S/ DONALD W. BLAIR
Donald W. Blair
Vice President and
Chief Financial Officer
copy: Mark G. Parker, President and Chief Executive Officer