BEAVERTON, Ore.--(BUSINESS WIRE)--Sep. 29, 2009--
NIKE, Inc. (NYSE:NKE):
Select First Quarter Results:
-
Revenue $4.8 billion; down 12 percent versus prior year or down 7
percent excluding currency changes
-
Diluted EPS up 1 percent from prior year to $1.04
-
Worldwide futures orders down 6 percent, down 4 percent excluding
currency changes
-
Inventories down 7 percent versus prior year
NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal
2010 first quarter ended August 31, 2009. First quarter revenues
decreased 12 percent to $4.8 billion, compared to $5.4 billion for the
same period last year. Excluding changes in currency exchange rates, net
revenue was down 7 percent compared to the same period last year. First
quarter net income was flat compared to the prior year at $513 million
and diluted earnings per share increased 1 percent to $1.04.
"We delivered a good start to the fiscal year," said Mark Parker, NIKE,
Inc. President and Chief Executive Officer. "These results illustrate
that the emotion of sports, combined with innovative product, strong
brands and premium retail experiences can make powerful connections to
consumers even in challenging times."
Parker concluded, "Leveraging these powerful consumer connections with a
laser focus on operational excellence will enable Nike to deliver
consistent long-term profitable growth. We're on the right track, moving
forward with confidence in hand and opportunity in mind."*
Futures Orders
The Company reported worldwide futures orders for Nike brand athletic
footwear and apparel, scheduled for delivery from September 2009 through
January 2010, totaling $6.2 billion, 6 percent lower than orders
reported for the same period last year. Excluding currency changes,
reported orders would have declined 4 percent.*
By geography, futures orders were as follows:
|
Geography
|
Reported Futures Orders
|
Excluding Currency Changes
|
|
North America
|
-4%
|
-4%
|
|
Western Europe
|
-8%
|
-6%
|
|
Central and Eastern Europe
|
-28%
|
-24%
|
|
Greater China
|
-6%
|
-7%
|
|
Japan
|
-3%
|
-5%
|
|
Emerging Markets
|
+10%
|
+18%
|
|
|
|
|
Geography Highlights
North America
During the first quarter, revenues in North America decreased 5 percent
to $1.8 billion. Footwear revenues declined 4 percent to $1.2 billion,
apparel revenues decreased 9 percent to $444 million and equipment
revenues were down 5 percent to $98 million. Excluding changes in
currency, revenues for North America declined 5 percent with footwear
down 3 percent, apparel decreasing 8 percent and equipment dropping 5
percent. North America earnings before interest and taxes (commonly
referred to as "EBIT") increased 10 percent to $411 million due to lower
selling and administrative expenses and improved gross margins.
Western Europe
First quarter revenue for Western Europe was down 18 percent to $1.1
billion. Footwear revenue decreased 15 percent to $635 million, apparel
revenue was down 21 percent to $393 million and equipment revenue
declined 26 percent to $77 million. Revenue for Western Europe,
excluding currency changes, was down 8 percent with footwear declining 5
percent, apparel dropping 11 percent and equipment decreasing 17
percent. First quarter EBIT decreased 11 percent to $289 million.
Central and Eastern Europe
In the first quarter, revenue for Central and Eastern Europe declined 33
percent to $286 million. Footwear revenue decreased 32 percent to $159
million, apparel revenue was down 37 percent to $97 million and
equipment revenue declined 29 percent to $30 million. Excluding currency
changes, revenue in Central and Eastern Europe was down 23 percent
compared to the same period last year with footwear declining 21
percent, apparel dropping 28 percent and equipment down 16 percent.
First quarter EBIT decreased 35 percent to $82 million.
Greater China
Revenue for Greater China during the first quarter was down 16 percent
to $416 million compared to $496 million last year. Footwear revenue was
down 17 percent to $218 million, apparel revenue declined 16 percent to
$168 million, and equipment revenue decreased 16 percent to $29 million.
Excluding currency changes, revenue for Greater China was down 17
percent from last year with footwear down 17 percent and both apparel
and equipment declining 16 percent. First quarter EBIT increased 7
percent to $149 million mainly driven by lower demand creation spending.
Last year's first quarter demand creation spending was higher in support
of the Olympic Games in Beijing.
Japan
Japan first quarter revenues were essentially flat compared to the prior
year at $186 million. Footwear revenue was up 4 percent to $98 million,
apparel revenue dropped 8 percent to $67 million and equipment revenue
increased 5 percent to $22 million. Excluding currency changes, Japan
first quarter revenues were 10 percent lower than last year with
footwear down 6 percent, apparel down 17 percent and equipment dropping
5 percent. First quarter EBIT decreased 7 percent to $35 million.
Emerging Markets
In the Emerging Markets revenue decreased 8 percent to $422 million for
the first quarter compared to $458 million last year. Footwear revenue
was down 6 percent to $279 million, apparel revenue dropped 9 percent to
$107 million and equipment revenue decreased 19 percent to $36 million.
Excluding currency changes, revenue in the Emerging Markets increased 9
percent compared to last year with 11 percent growth in footwear, a 9
percent increase of in apparel and a 4 percent drop in equipment.
Despite declining reported revenue, first quarter EBIT rose 39 percent
to $101 million due to lower selling and administrative expenses.
Other Businesses
For the first quarter, Other business revenue, which includes Cole Haan,
Converse Inc., Hurley International LLC, NIKE Golf, and Umbro Ltd.
decreased 5 percent to $604 million. Excluding currency changes revenue
was down 3 percent. EBIT was flat to last year at $87 million.
Income Statement Review
In the first quarter of fiscal 2010 gross margins were 46.2 percent
compared to 47.2 percent for the same period last year. Gross margins
for the quarter were lower than the prior year primarily due to
unfavorable exchange rates and product markdowns taken to manage
inventories.
First quarter selling and administrative expenses were down 17 percent
to $1.5 billion and dropped as a percent of revenue to 32.2 percent
compared to 34.2 percent for the same period last year. Selling and
administrative expenses for the quarter were lower than the same period
last year due to lower demand creation spending and lower personnel
costs following restructuring efforts completed last fiscal year. Demand
creation expenses were higher last year due to expenses incurred to
support the Olympic Games in Beijing and the European Championships.
The effective tax rate for the first quarter was 24.7 percent compared
to 28.5 percent for the same period last year. The first quarter tax
rate benefitted from our lower on-going tax rate on operations outside
the United States.
Balance Sheet Review
At the end of the first quarter, global inventories stood at $2.3
billion, down 7 percent from August 31, 2008. Cash and short-term
investments at period-end were $3.6 billion, 40 percent higher than $2.6
billion last year.
Share Repurchase
During the first quarter, the Company repurchased a total of 289,250
shares for approximately $15 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 first quarter the Company
has purchased a total of 49.5 million shares for approximately $2.7
billion under this program.
Conference Call
Nike management will host a conference call beginning at approximately
2:00 p.m. PT on September 29, 2009, to review first quarter results. The
conference call will be broadcast live over the Internet and can be
accessed at www.nikebiz.com/investors.
For those unable to listen to the live broadcast, an archived version
will be available at the same location through midnight, October 6, 2009.
About NIKE, Inc.
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 Cole Haan,
which designs, markets and distributes luxury shoes, handbags,
accessories and coats; Converse Inc., which designs, markets and
distributes athletic footwear, apparel and accessories; Hurley
International LLC, which designs, markets and distributes action sports
and youth lifestyle footwear, apparel and accessories; and Umbro Ltd., a
leading United Kingdom-based global football (soccer) brand. For more
information, NIKE's earnings releases and other financial information
are available on the Internet at www.nikebiz.com/investors.
* 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.
(Additional Tables Follow)
|
|
|
NIKE, Inc.
|
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
FOR THE PERIOD ENDED AUGUST 31, 2009
|
|
(In millions, except per share data)
|
|
|
|
|
QUARTER ENDED
|
|
INCOME STATEMENT
|
08/31/2009
|
08/31/2008
|
% Chg
|
|
Revenues
|
$4,798.5
|
$5,432.2
|
-12%
|
|
Cost of sales
|
2,583.0
|
2,870.1
|
-10%
|
|
Gross margin
|
2,215.5
|
2,562.1
|
-14%
|
|
|
46.2%
|
47.2%
|
|
|
|
|
|
|
|
Selling and administrative expense
|
1,546.1
|
1,856.4
|
-17%
|
|
|
32.2%
|
34.2%
|
|
|
|
|
|
|
|
Other income (expense), net
|
13.1
|
(1.6)
|
919%
|
|
Interest (expense) income, net
|
(1.3)
|
10.1
|
-113%
|
|
|
|
|
|
|
Income before income taxes
|
681.2
|
714.2
|
-5%
|
|
|
|
|
|
|
Income taxes
|
168.2
|
203.7
|
-17%
|
|
|
24.7%
|
28.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$513.0
|
$510.5
|
0%
|
|
|
|
|
|
|
Diluted EPS
|
$1.04
|
$1.03
|
1%
|
|
|
|
|
|
|
Basic EPS
|
$1.06
|
$1.05
|
1%
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding:
|
|
Diluted
|
491.6
|
494.9
|
|
|
Basic
|
485.8
|
487.2
|
|
|
Dividends declared
|
$0.25
|
$0.23
|
|
|
|
|
NIKE, Inc.
|
|
BALANCE SHEET
|
08/31/2009
|
08/31/2008
|
|
|
(In millions)
|
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash and equivalents
|
$2,260.6
|
$1,625.6
|
|
Short-term investments
|
1,369.2
|
966.1
|
|
Accounts receivable, net
|
2,835.3
|
3,035.4
|
|
Inventories
|
2,288.4
|
2,453.9
|
|
Deferred income taxes
|
214.1
|
175.8
|
|
Prepaid expenses and other current assets
|
639.3
|
687.8
|
|
|
|
|
|
Total current assets
|
9,606.9
|
8,944.6
|
|
|
|
|
|
Property, plant and equipment
|
4,373.8
|
4,111.0
|
|
Less accumulated depreciation
|
2,393.0
|
2,236.2
|
|
Property, plant and equipment, net
|
1,980.8
|
1,874.8
|
|
|
|
|
|
Identifiable intangible assets, net
|
471.2
|
712.4
|
|
Goodwill
|
194.9
|
425.1
|
|
Deferred income taxes and other assets
|
936.8
|
637.9
|
|
|
|
|
|
Total assets
|
$13,190.6
|
$12,594.8
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
Current portion of long-term debt
|
$7.1
|
$ 31.5
|
|
Notes payable
|
94.7
|
220.1
|
|
Accounts payable
|
961.9
|
1,205.9
|
|
Accrued liabilities
|
1,643.4
|
1,639.8
|
|
Income taxes payable
|
145.7
|
214.3
|
|
|
|
|
|
Total current liabilities
|
2,852.8
|
3,311.6
|
|
|
|
|
|
Long-term debt
|
443.2
|
407.3
|
|
Deferred income taxes and other liabilities
|
803.6
|
843.0
|
|
Redeemable preferred stock
|
0.3
|
0.3
|
|
Shareholders' equity
|
9,090.7
|
8,032.6
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
$13,190.6
|
$12,594.8
|
|
|
|
NIKE, Inc.
|
|
|
|
|
|
|
QUARTER ENDED |
|
DIVISIONAL REVENUES1
|
8/31/2009
|
8/31/2008
|
% Change
|
% Change Excluding Currency Changes2
|
|
|
(In millions)
|
|
North America
|
|
Footwear
|
$
1,218.6
|
$
1,267.8
|
-4
%
|
-3
%
|
|
Apparel
|
443.9
|
486.9
|
-9
%
|
-8
%
|
|
Equipment
|
97.6
|
102.8
|
-5
%
|
-5
%
|
|
Total
|
1,760.1
|
1,857.5
|
-5
%
|
-5
%
|
|
|
|
|
|
|
|
Western Europe
|
|
|
|
|
|
Footwear
|
635.4
|
749.5
|
-15
%
|
-5
%
|
|
Apparel
|
392.6
|
494.8
|
-21
%
|
-11
%
|
|
Equipment
|
77.2
|
104.7
|
-26
%
|
-17
%
|
|
Total
|
1,105.2
|
1,349.0
|
-18
%
|
-8
%
|
|
|
|
|
|
|
|
Central and Eastern Europe
|
|
Footwear
|
158.9
|
233.0
|
-32
%
|
-21
%
|
|
Apparel
|
97.4
|
154.9
|
-37
%
|
-28
%
|
|
Equipment
|
29.9
|
41.9
|
-29
%
|
-16
%
|
|
Total
|
286.2
|
429.8
|
-33
%
|
-23
%
|
|
|
|
|
|
|
|
Greater China
|
|
Footwear
|
218.4
|
262.2
|
-17
%
|
-17
%
|
|
Apparel
|
168.1
|
199.8
|
-16
%
|
-16
%
|
|
Equipment
|
29.0
|
34.4
|
-16
%
|
-16
%
|
|
Total
|
415.5
|
496.4
|
-16
%
|
-17
%
|
|
|
|
|
|
|
|
Japan
|
|
Footwear
|
97.5
|
93.4
|
4
%
|
-6
%
|
|
Apparel
|
66.7
|
72.2
|
-8
%
|
-17
%
|
|
Equipment
|
21.8
|
20.8
|
5
%
|
-5
%
|
|
Total
|
186.0
|
186.4
|
0
%
|
-10
%
|
|
|
|
|
|
|
|
Emerging Markets
|
|
Footwear
|
278.9
|
296.1
|
-6
%
|
11
%
|
|
Apparel
|
107.2
|
117.6
|
-9
%
|
9
%
|
|
Equipment
|
35.7
|
44.1
|
-19
%
|
-4
%
|
|
Total
|
421.8
|
457.8
|
-8
%
|
9
%
|
|
|
|
|
|
|
|
Global Brand Divisions3
|
30.7
|
22.2
|
38
%
|
57
%
|
|
|
|
|
|
|
|
Total NIKE Brand
|
4,205.5
|
4,799.1
|
-12
%
|
-7
%
|
|
|
|
|
|
|
|
Other Businesses4
|
603.9
|
633.1
|
-5
%
|
-3
%
|
|
Corporate5
|
(10.9
)
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Total NIKE, Inc. Revenues
|
$
4,798.5
|
$
5,432.2
|
-12
%
|
-7
%
|
|
|
|
|
|
|
|
Total NIKE Brand
|
|
|
|
|
|
Footwear
|
$
2,607.7
|
$
2,902.0
|
-10
%
|
-5
%
|
|
Apparel
|
1,275.9
|
1,526.2
|
-16
%
|
-11
%
|
|
Equipment
|
291.2
|
348.7
|
-16
%
|
-11
%
|
|
Global Brand Divisions4
|
30.7
|
22.2
|
38
%
|
57
%
|
|
|
|
|
|
|
|
1 Certain prior year amounts have been reclassified to
conform to fiscal year 2010 presentation. These changes had no
impact on previously reported results of operations or shareholders'
equity.
|
|
|
|
2 Fiscal 2010 results have been restated using fiscal
2009 exchange rates for the comparative period to enhance the
visibility of the underlying business trends excluding the impact of
foreign currency exchange rate fluctuations.
|
|
|
|
3 Global Brand Divisions primarily represent NIKE Brand
licensing businesses that are not part of a geographic operating
segment.
|
|
|
|
4 Other businesses represent activities of Cole Haan,
Converse, Hurley, NIKE Golf and Umbro.
|
|
|
|
5 Corporate primarily consists of results from our
centrally managed foreign currency hedging program and foreign
currency gains and losses resulting from the difference between
actual foreign currency rates and standard rates assigned to our
geographic operating segments. In the first quarter of fiscal 2010,
foreign currency gains and losses generated by all our geographic
operating segments are included in Corporate, with the exception of
those generated by Other Businesses which are reported within their
respective operating results.
|
|
|
|
NIKE, Inc.
|
|
|
QUARTER ENDED
|
|
EARNINGS BEFORE INTEREST AND TAXES1,2
|
08/31/2009
|
08/31/2008
|
% Chg
|
|
|
(In millions)
|
|
|
|
|
|
|
|
North America
|
$
410.6
|
$
373.6
|
10
%
|
|
Western Europe
|
288.6
|
323.0
|
-11
%
|
|
Central and Eastern Europe
|
82.2
|
126.8
|
-35
%
|
|
Greater China
|
148.8
|
138.8
|
7
%
|
|
Japan
|
35.1
|
37.9
|
-7
%
|
|
Emerging Markets
|
101.0
|
72.9
|
39
%
|
|
Global Brand Divisions3
|
(180.5
)
|
(198.7
)
|
9
%
|
|
|
|
|
|
|
Total NIKE Brand
|
885.8
|
874.3
|
1
%
|
|
|
|
|
|
|
Other Businesses4
|
86.6
|
86.6
|
0
%
|
|
Corporate5
|
(289.9
)
|
(256.8
)
|
-13
%
|
|
|
|
|
|
|
Total earnings before interest and taxes1,2
|
$
682.5
|
$
704.1
|
-3
%
|
|
|
|
|
|
|
1 The Company evaluates performance of
individual operating segments based on earnings before interest
and taxes (also commonly referred to as "EBIT"), which represents
net income before interest (expense) income, net, and income taxes.
|
|
|
|
2 Certain prior year amounts have been
reclassified to conform to fiscal year 2010 presentation. These
changes had no impact on previously reported results of operations
or shareholders' equity.
|
|
|
|
3 Global Brand Divisions primarily represent
NIKE Brand licensing businesses that are not part of a geographic
operating segment and general and administrative expenses that are
centrally managed for the NIKE Brand.
|
|
|
|
4 Other Businesses represent activities of Cole
Haan, Converse, Hurley, NIKE Golf and Umbro.
|
|
|
|
5 Corporate expenses primarily consists of
unallocated general and administrative expenses, which includes
expenses associated with centrally managed departments,
depreciation and amortization related to the Company's corporate
headquarters, unallocated insurance and benefit programs, foreign
currency gains and losses, including hedge gains and losses,
corporate eliminations and other items.
|
Source: NIKE, Inc.
NIKE, Inc.
Investor Relations:
Pamela Catlett, Vice President,
Nike Investor Relations: +1 (503) 671-4589
or
Media:
Kellie
Leonard, 503-671-6171