Worldwide Futures Orders Up 11 Percent
View the release with financial tables
BEAVERTON, Ore.--(BUSINESS WIRE)--March 19, 2008--NIKE, Inc.
(NYSE:NKE) today reported financial results for the third quarter
ended February 29, 2008. For the quarter, revenue grew 16 percent to
$4.5 billion, compared to $3.9 billion for the same period last year.
Changes in currency exchange rates increased revenue growth by 6
percentage points for the quarter. Third quarter net income grew 32
percent to $463.8 million, compared to $350.8 million in the prior
year and diluted earnings per share increased 35 percent to $0.92,
versus $0.68 last year.
"A year ago we established the goal of reaching $23 billion in
revenues by our fiscal year 2011 and outlined our strategy for
achieving that goal while continuing to deliver profitable,
sustainable growth and outstanding returns to our shareholders," said
Mark Parker, NIKE, Inc. President and Chief Executive Officer. "Our
strong third quarter results, driven by sales gains across our
diversified portfolio of categories, geographies, and brands, are a
clear indication that our strategy is working and that we're on track
to achieve our financial goals for this fiscal year and beyond."(a)
Parker continued, "Over the past twelve months we've taken a
number of important strategic steps to strengthen the performance and
potential of our portfolio of products and brands, steps we believe
create stronger platforms for growth and allow us to connect even
deeper with consumers. More than ever, the consumer is at the
epicenter of everything we do, and delivering the most innovative
products and the most exciting consumer experiences is the key to our
future growth."(a)
Futures Orders
The Company reported worldwide futures orders for athletic
footwear and apparel, scheduled for delivery from March 2008 through
July 2008, totaling $6.9 billion, 11 percent higher than such orders
reported for the same period last year. Changes in currency exchange
rates increased reported orders growth by 2 percentage points.(a)
By region, futures orders for the U.S. increased 1 percent; Europe
(which includes the Middle East and Africa) increased 12 percent; Asia
Pacific grew 32 percent; and the Americas increased 20 percent.
Changes in currency exchange rates increased reported futures orders
growth in Europe by 3 percentage points and by 7 percentage points in
Asia Pacific. In the Americas region changes in currency exchange
rates did not have a significant impact on futures growth.(a)
Regional Highlights
U.S.
During the third quarter, U.S. revenues increased 5 percent to
$1.6 billion versus $1.5 billion for the third quarter of fiscal 2007.
U.S. athletic footwear revenues increased 5 percent to $1.1 billion;
apparel revenues increased 10 percent to $407.8 million; and equipment
revenues decreased 12 percent to $68.7 million. U.S. pre-tax income
increased 17 percent to $347.3 million from $296.4 million a year ago.
Europe
Third quarter revenues for the Company's European region grew 23
percent to $1.4 billion from $1.1 billion for the same period last
year. Changes in currency exchange rates increased revenue growth by
13 percentage points. Footwear revenues were up 25 percent to $784.8
million. Apparel revenues increased 21 percent to $499.5 million and
equipment revenues increased 23 percent to $100.0 million. Pre-tax
income increased 31 percent to $334.3 million.
Asia Pacific
In the third quarter, revenues in the Asia Pacific region grew 27
percent to $748.3 million compared to $589.9 million a year ago.
Changes in currency exchange rates increased revenue growth by 7
percentage points. Footwear revenues were up 29 percent to $411.3
million, apparel revenues increased 25 percent to $272.6 million and
equipment revenues grew 21 percent to $64.4 million. Pre-tax income
increased 46 percent to $193.0 million.
Americas
Revenues in the Americas region increased 20 percent to $254.4
million from $212.5 million in the third quarter of fiscal 2007.
Currency exchange rates contributed 10 percentage points to this
growth rate. Footwear revenues were up 16 percent to $177.9 million,
apparel revenues increased 30 percent to $55.0 million and equipment
revenues grew 24 percent to $21.5 million. Pre-tax income increased 23
percent to $51.9 million.
Other Businesses
For the third quarter, Other business revenues, which include
Converse Inc., NIKE Golf, Cole Haan Holdings Incorporated, NIKE Bauer
Hockey Corp., Hurley International LLC, and Exeter Brands Group LLC,
grew 15 percent to $600.9 million from $522.7 million last year in the
same period. Pre-tax income increased 16 percent to $77.5 million for
the quarter.
On December 17, 2007, the Company completed its sale of the
Starter brand to Iconix Brand Group, Inc. resulting in a gain of $29
million which is included in third quarter other income.
On February 21, 2008, the Company announced it had reached a
definitive agreement to sell Bauer Hockey to an investor group led by
Kohlberg & Company and Canadian businessman W. Graeme Roustan for $200
million in cash. This transaction is expected to be completed before
the end of the fiscal year.
On January 31, 2008, Nike's GBP 285 million, all-cash offer for
the acquisition of 100 percent of the shares of Umbro plc was approved
by Umbro shareholders. The United Kingdom's Office of Fair Trade gave
regulatory approval on February 6, 2008 and on March 3, 2008 the
acquisition was completed by Nike's wholly-owned subsidiary, NIKE
Vapor Ltd.
Commenting on these developments, Parker said, "Our focus on prime
growth opportunities extends throughout our portfolio of brands. We
are confident that our divestiture decisions are the right ones for
Bauer Hockey, Starter, and Nike. Our most recent acquisition, Umbro,
is a brand that has tremendous heritage and respect in global
football. This acquisition represents an opportunity to create value
for shareholders and consumers by applying our product, brand-building
and operational capabilities to a business with enormous growth
potential around the world."(a)
Income Statement Review
Third quarter gross margins were 45.1 percent compared to 44.2
percent for the same period last year. Selling and administrative
expenses were 30.9 percent of third quarter revenues, compared to 31.7
percent last year. The effective tax rate for the quarter was 30.6
percent compared to 32.3 percent for the same period last year.
Balance Sheet Review
At quarter end, global inventories stood at $2.4 billion, an
increase of 10 percent from February 28, 2007. Cash and short-term
investments were $2.9 billion at the end of the quarter, compared to
$2.3 billion last year.
Share Repurchase
During the third quarter, the Company purchased a total of
5,570,300 shares for approximately $343.9 million in conjunction with
the Company's four-year $3 billion share repurchase program approved
by the Board of Directors in June 2006. As of the end of the third
quarter the Company has repurchased a total of 34.2 million shares for
approximately $1.8 billion under this program.
NIKE, Inc. based near Beaverton, Oregon, is the world's leading
designer, marketer and distributor of authentic athletic footwear,
apparel, equipment and accessories for a wide variety of sports and
fitness activities. Wholly owned Nike subsidiaries include Converse
Inc., which designs, markets and distributes athletic footwear,
apparel and accessories; Cole Haan Holdings Incorporated, which
designs, markets and distributes luxury shoes, handbags, accessories
and coats; Umbro Ltd., a leading United Kingdom-based global football
(soccer) brand; and Hurley International LLC, which designs, markets
and distributes action sports and youth lifestyle footwear, apparel
and accessories.
Nike's earnings releases and other financial information are
available on the Internet at www.nikebiz.com/investors.
(a) The marked paragraphs contain forward-looking statements that
involve risks and uncertainties that could cause actual results to
differ materially. These risks and uncertainties are detailed from
time to time in reports filed by NIKE with the S.E.C., including Forms
8-K, 10-Q, and 10-K. Some forward-looking statements in this release
concern changes in futures orders that are not necessarily indicative
of changes in total revenues for subsequent periods due to the mix of
futures and "at once" orders, exchange rate fluctuations, order
cancellations and discounts, which may vary significantly from quarter
to quarter, and because a significant portion of the business does not
report futures orders.
(Tables Follow)
NIKE, Inc.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED FEBRUARY 29, 2008
(In millions, except per share data)
QUARTER ENDED YEAR TO DATE ENDED
% %
INCOME STATEMENT 2/29/2008 2/28/2007 Chg 2/29/2008 2/28/2007 Chg
============================================ =========================
Revenues $4,544.4 $3,926.9 16% $13,539.0 $11,942.7 13%
Cost of sales 2,496.5 2,191.7 14% 7,483.0 6,701.2 12%
------------------- -------------------
Gross margin 2,047.9 1,735.2 18% 6,056.0 5,241.5 16%
45.1% 44.2% 44.7% 43.9%
Selling and
administrative
expense 1,403.2 1,243.3 13% 4,267.4 3,756.7 14%
30.9% 31.7% 31.5% 31.5%
Interest income,
net 18.7 15.8 18% 66.4 43.0 54%
Other income
(expense), net 5.3 10.3 -49% (0.4) 13.3 -103%
------------------- -------------------
Income before
income taxes 668.7 518.0 29% 1,854.6 1,541.1 20%
Income taxes 204.9 167.2 23% 461.7 487.5 -5%
------------------- -------------------
30.6% 32.3% 24.9% 31.6%
Net income $463.8 $350.8 32% $1,392.9 $1,053.6 32%
=================== ===================
Diluted EPS(1) $0.92 $0.68 35% $2.76 $2.07 33%
Basic EPS(1) $0.94 $0.69 36% $2.80 $2.09 34%
Weighted Average
Common Shares
Outstanding:
Diluted 502.5 510.8 505.4 509.6
Basic 493.9 504.5 497.0 504.1
=================== ===================
Dividends declared $0.23 $0.185 $0.645 $0.525
=================== ===================
(1) Diluted and basic earnings per common share for the three months
ended February 28, 2007 do not recalculate due to rounding
NIKE, Inc.
BALANCE SHEET (b) 2/29/2008 2/28/2007
======================================================================
ASSETS (In millions)
Current assets:
Cash and equivalents $2,242.4 $1,879.2
Short-term investments 684.2 390.5
Accounts receivable, net 2,775.5 2,520.7
Inventories 2,390.9 2,167.8
Deferred income taxes 245.0 184.4
Prepaid expenses and other current assets 566.7 486.2
-------------------
Total current assets 8,904.7 7,628.8
Property, plant and equipment 4,009.7 3,568.9
Less accumulated depreciation 2,189.7 1,914.3
-------------------
Property, plant and equipment, net 1,820.0 1,654.6
Identifiable intangible assets, net 384.4 406.1
Goodwill 130.8 130.8
Deferred income taxes and other assets 548.3 398.3
-------------------
Total assets $11,788.2 $10,218.6
===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $6.3 $30.6
Notes payable 205.6 96.0
Accounts payable 1,004.7 800.9
Accrued liabilities 1,630.2 1,305.5
Income taxes payable 96.4 74.7
-------------------
Total current liabilities 2,943.2 2,307.7
Long-term debt 446.7 419.4
Deferred income taxes and other liabilities 784.8 643.2
Redeemable preferred stock 0.3 0.3
Shareholders' equity 7,613.2 6,848.0
-------------------
Total liabilities and shareholders' equity $11,788.2 $10,218.6
===================
(b) Certain prior year amounts have been reclassified to conform to
fiscal year 2008 presentation. These changes had no impact on
previously reported results of operations or shareholders' equity.
NIKE, Inc.
QUARTER ENDED YEAR TO DATE ENDED
DIVISIONAL % %
REVENUES 2/29/2008 2/28/2007 Chg 2/29/2008 2/28/2007 Chg
======================================================================
(In millions)
U.S. Region
Footwear $ 1,080.0 $ 1,027.9 5% $ 3,183.2 $ 2,986.4 7%
Apparel 407.8 371.3 10% 1,297.2 1,278.2 1%
Equipment 68.7 77.8 -12% 227.9 232.3 -2%
--------------------- ---------------------
Total 1,556.5 1,477.0 5% 4,708.3 4,496.9 5%
EMEA Region
Footwear 784.8 630.0 25% 2,223.4 1,850.9 20%
Apparel 499.5 413.2 21% 1,552.4 1,321.2 17%
Equipment 100.0 81.6 23% 310.4 259.8 19%
--------------------- ---------------------
Total 1,384.3 1,124.8 23% 4,086.2 3,431.9 19%
Asia Pacific
Region
Footwear 411.3 319.4 29% 1,077.5 862.8 25%
Apparel 272.6 217.4 25% 802.3 668.9 20%
Equipment 64.4 53.1 21% 173.9 154.8 12%
--------------------- ---------------------
Total 748.3 589.9 27% 2,053.7 1,686.5 22%
Americas Region
Footwear 177.9 152.8 16% 590.6 510.2 16%
Apparel 55.0 42.3 30% 186.5 149.2 25%
Equipment 21.5 17.4 24% 70.4 58.1 21%
--------------------- ---------------------
Total 254.4 212.5 20% 847.5 717.5 18%
3,943.5 3,404.2 16% 11,695.7 10,332.8 13%
--------------------- ---------------------
Other 600.9 522.7 15% 1,843.3 1,609.9 14%
--------------------- ---------------------
Total NIKE, Inc.
revenues $ 4,544.4 $ 3,926.9 16% $ 13,539.0 $ 11,942.7 13%
--------------------- ---------------------
NIKE, Inc.
QUARTER ENDED YEAR TO DATE ENDED
PRE-TAX % %
INCOME(1)(2) 2/29/2008 2/28/2007 Chg 2/29/2008 2/28/2007 Chg
======================================================================
(in millions)
U.S. Region $ 347.3 $ 296.4 17% $ 1,001.2 $ 934.2 7%
EMEA Region 334.3 255.7 31% 940.0 734.0 28%
Asia Pacific
Region 193.0 132.1 46% 526.6 382.8 38%
Americas
Region 51.9 42.1 23% 178.5 152.9 17%
Other 77.5 67.0 16% 243.5 208.5 17%
Corporate(3) (335.3) (275.3) -22% (1,035.2) (871.3) -19%
----------------------- -----------------------
Total pre-
tax
income(1) $ 668.7 $ 518.0 29% $ 1,854.6 $ 1,541.1 20%
======================= =======================
------------------------------------
(1) The Company evaluates performance of individual operating segments
based on pre-tax income. Total pre-tax income equals Income before
income taxes as shown on the Consolidated Income Statement.
(2) Certain prior year amounts have been reclassified to conform to
fiscal year 2008 presentation. These changes had no impact on
previously reported results of operations or shareholders' equity.
(3) "Corporate" represents items necessary to reconcile to total pre-
tax income, which includes corporate costs that are not allocated to
the operating segments for management reporting and intercompany
eliminations for specific items in the Consolidated Income Statement.
CONTACT: NIKE, Inc.
MEDIA CONTACT
Alan Marks, 503-671-4235
or
INVESTOR CONTACT
Pamela Catlett, 503-671-4589
SOURCE: NIKE, Inc.