Select Second Quarter Results: Revenue
$4.4 billion; down 4 percent versus prior year Diluted EPS down 5
percent from prior year to $0.76 Worldwide futures orders up 4 percent,
down 1 percent excluding currency changes Inventories down 10 percent
versus prior year
BEAVERTON, Ore., Dec 17, 2009 (BUSINESS WIRE) -- NIKE, Inc.
(NYSE:NKE) today reported financial results for its fiscal 2010 second
quarter ended November 30, 2009. Second quarter revenues decreased 4
percent, from $4.6 billion last year to $4.4 billion in the current
year; changes in currency exchange rates had a minimal impact on
reported revenue results. Second quarter net income declined 4 percent,
from $391 million last year to $375 million in the current year; diluted
earnings per share decreased 5 percent to $0.76.
"Nike is at its best when we deliver superior innovative product,
connect with consumers through premium experiences and operate with
discipline and efficiency. Our second quarter results are another
demonstration of our strategy at work," said Mark Parker, NIKE, Inc.
President and Chief Executive Officer. "Our laser-sharp focus across our
portfolio of brands, businesses, categories and geographies gives us
the flexibility we need in this economy to gain share, lead the
industry, and leverage the power of global sports."*
Futures Orders
The Company reported worldwide futures orders for Nike brand athletic
footwear and apparel, scheduled for delivery from December 2009 through
April 2010, totaling $7.0 billion, 4 percent higher than orders
reported for the same period last year. Excluding currency changes,
reported orders would have decreased 1 percent.*
By geography, futures orders were as follows:
| Geography |
Reported Futures Orders |
Excluding Currency Changes |
| North America |
-4% |
-4% |
| Western Europe |
+12% |
0% |
| Central and Eastern Europe |
-15% |
-20% |
| Greater China |
+4% |
+4% |
| Japan |
-10% |
-9% |
| Emerging Markets |
+38% |
+27% |
Geography Highlights
North America
During the second quarter, revenues in North America decreased 4
percent to $1.5 billion. Footwear revenues declined 4 percent to $981
million, apparel revenues decreased 6 percent to $441 million and
equipment revenues were up 1 percent to $74 million. Earnings before
interest and taxes (commonly referred to as "EBIT") for North America
increased 9 percent to $291 million due to lower selling and
administrative expenses and improved gross margins.
Western Europe
Second quarter revenue for Western Europe was down 6 percent to $902
million. Footwear revenue was flat compared to last year at $515
million, apparel revenue was down 15 percent to $323 million and
equipment revenue declined 11 percent to $63 million. Second quarter
EBIT decreased 5 percent to $175 million as the impact of lower revenue
was partially offset by a reduction in selling and administrative
expenses.
Central and Eastern Europe
In the second quarter, revenue for Central and Eastern Europe
declined 24 percent to $260 million. Footwear revenue decreased 18
percent to $144 million, apparel revenue was down 30 percent to $99
million and equipment revenue declined 32 percent to $17 million. EBIT
decreased 36 percent in the second quarter to $64 million due to lower
revenue and gross margins, partially offset by reductions in sales and
administrative expenses.
Greater China
Revenue for Greater China during the second quarter was down 3
percent to $404 million. Footwear revenue was down 1 percent to $210
million, apparel revenue declined 7 percent to $170 million, and
equipment revenue decreased 2 percent to $25 million. Second quarter
EBIT decreased 7 percent to $126 million as lower revenues and higher
selling and administrative expenses offset improved gross margins.
Japan
Japan second quarter revenues declined 2 percent to $222 million.
Footwear revenue was up 6 percent to $104 million, apparel revenue
dropped 10 percent to $98 million and equipment revenue was flat
compared to the prior year at $21 million. EBIT decreased 19 percent in
the second quarter to $45 million mainly due to lower revenues and
higher selling and administrative expenses that offset better gross
margins.
Emerging Markets
In the Emerging Markets revenue was up 8 percent to $555 million for
the second quarter compared to $512 million last year. Footwear revenue
increased 12 percent to $370 million, apparel revenue rose 7 percent to
$143 million and equipment revenue decreased 13 percent to $41 million.
Second quarter EBIT for the Emerging Markets rose 29 percent to $156
million as a result of revenue growth, gross margin improvement and
better leverage of selling and administrative expenses.
Other Businesses
For the second quarter, revenue for Other Businesses, which includes
Cole Haan, Converse Inc., Hurley International LLC, NIKE Golf, and Umbro
Ltd. increased 1 percent to $556 million. EBIT for the second quarter
was up 65 percent at $35 million due to lower selling and administrative
expenses which more than offset lower gross margin results.
Income Statement Review
In the second quarter of fiscal 2010 gross margins were 44.5 percent
compared to 44.7 percent for the same period last year. Gross margins
for the quarter were lower than the prior year primarily due to
unfavorable year over year foreign exchange impacts and higher discounts
related to inventory management efforts.
Second quarter selling and administrative expenses were down 4
percent to $1.5 billion and dropped as a percent of revenue to 33.6
percent compared to 33.7 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.
The effective tax rate for the second quarter was 23.5 percent
compared to 24.9 percent for the same period last year. The decrease was
primarily due to the impact from settlements of uncertain tax positions
as well as the reduction in our on-going effective tax rate on
operations outside the United States.
Balance Sheet Review
At the end of the second quarter, global inventories stood at $2.2
billion, down 10 percent from November 30, 2008. Cash and short-term
investments at period-end were $4.0 billion, 47 percent higher than $2.7
billion last year.
Share Repurchase
During the second quarter, the Company repurchased a total of
3,025,000 shares for approximately $194 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 second quarter
the Company has purchased a total of 52.5 million shares for
approximately $2.9 billion under this program. Once the Company
completes its current $3 billion program it will commence a four-year,
$5 billion share repurchase program approved by the Board of Directors
in September 2008.
Conference Call
Nike management will host a conference call beginning at
approximately 2:00 p.m. PT on December 17, 2009, to review second
quarter results. The conference call will be broadcast live over the
Internet and can be accessed here.
For those unable to listen to the live broadcast, an archived version
will be available at the same location through midnight, December 24,
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 http://invest.nike.com.
* 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, Inc. 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 NOVEMBER 30, 2009 |
| (In millions, except per share data) |
| |
| |
| |
QUARTER ENDED |
YEAR TO DATE ENDED |
| INCOME STATEMENT |
11/30/2009 |
11/30/2008 |
% Chg |
11/30/2009 |
11/30/2008 |
% Chg |
| Revenues |
$ 4,405.6 |
$ 4,590.1 |
-4% |
$ 9,204.1 |
$ 10,022.3 |
-8% |
| Cost of sales |
2,444.9 |
2,540.1 |
-4% |
5,027.9 |
5,410.2 |
-7% |
| Gross margin |
1,960.7 |
2,050.0 |
-4% |
4,176.2 |
4,612.1 |
-9% |
| |
44.5% |
44.7% |
|
45.4% |
46.0% |
|
| |
|
|
|
|
|
|
| Selling and administrative expense |
1,478.6 |
1,546.8 |
-4% |
3,024.7 |
3,403.2 |
-11% |
| |
33.6% |
33.7% |
|
32.9% |
34.0% |
|
| |
|
|
|
|
|
|
| Other income, net |
10.5 |
12.4 |
-15% |
23.6 |
10.8 |
119% |
| Interest (expense) income, net |
(1.6 ) |
5.0 |
-132% |
(2.9 ) |
15.1 |
-119% |
| |
|
|
|
|
|
|
| Income before income taxes |
491.0 |
520.6 |
-6% |
1,172.2 |
1,234.8 |
-5% |
| |
|
|
|
|
|
|
| Income taxes |
115.6 |
129.6 |
-11% |
283.8 |
333.3 |
-15% |
| |
23.5% |
24.9% |
|
24.2% |
27.0% |
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Net income |
$ 375.4 |
$ 391.0 |
-4% |
$ 888.4 |
$ 901.5 |
-1% |
| |
|
|
|
|
|
|
| Diluted EPS |
$ 0.76 |
$ 0.80 |
-5% |
$ 1.80 |
$ 1.83 |
-2% |
| |
|
|
|
|
|
|
| Basic EPS |
$ 0.77 |
$ 0.81 |
-5% |
$ 1.83 |
$ 1.86 |
-2% |
| |
|
|
|
|
|
|
| Weighted Average Common Shares Outstanding: |
|
|
|
|
|
|
| Diluted |
494.5 |
489.8 |
|
493.5 |
492.4 |
|
| Basic |
487.2 |
483.7 |
|
486.5 |
485.5 |
|
| Dividends declared |
$ 0.27 |
$ 0.25 |
|
$ 0.52 |
$ 0.48 |
|
| NIKE, Inc. |
|
|
| |
|
|
| BALANCE SHEET 1 |
11/30/2009 |
11/30/2008 |
| |
(In millions) |
| ASSETS |
|
|
| Current assets: |
|
|
| Cash and equivalents |
$ 2,035.2 |
$ 1,721.5 |
| Short-term investments |
1,974.8 |
1,008.0 |
| Accounts receivable, net |
2,716.5 |
2,737.2 |
| Inventories |
2,176.3 |
2,419.1 |
| Deferred income taxes |
220.0 |
89.7 |
| Prepaid expenses and other current assets |
642.8 |
947.9 |
| Total current assets |
9,765.6 |
8,923.4 |
| |
|
|
| Property, plant and equipment |
4,502.5 |
4,109.4 |
| Less accumulated depreciation |
2,478.6 |
2,208.5 |
| Property, plant and equipment, net |
2,023.9 |
1,900.9 |
| |
|
|
| Identifiable intangible assets, net |
472.5 |
650.2 |
| Goodwill |
196.2 |
376.8 |
| Deferred income taxes and other assets |
900.2 |
958.4 |
| Total assets |
$13,358.4 |
$12,809.7 |
| |
|
|
| LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
| Current liabilities: |
|
|
| Current portion of long-term debt |
$ 7.6 |
$ 32.4 |
| Notes payable |
103.1 |
316.0 |
| Accounts payable |
1,008.7 |
1,124.1 |
| Accrued liabilities |
1,597.7 |
1,499.7 |
| Income taxes payable |
81.2 |
117.4 |
| Total current liabilities |
2,798.3 |
3,089.6 |
| |
|
|
| Long-term debt |
459.6 |
445.5 |
| Deferred income taxes and other liabilities |
876.1 |
870.1 |
| Redeemable preferred stock |
0.3 |
0.3 |
| Shareholders' equity |
9,224.1 |
8,404.2 |
| Total liabilities and shareholders' equity |
$13,358.4 |
$12,809.7 |
| |
|
|
| 1
Certain amounts have been revised in the NIKE, Inc. 11/30/2008 Balance
Sheet to properly reflect long-term deferred income tax assets,
long-term deferred income tax liabilities and other comprehensive
income. These revisions resulted in an increase in long-term deferred
income taxes and other assets of $175.0 million, a decrease in long-term
deferred income taxes and other liabilities of $113.0 million and an
increase in shareholders' equity of $288.0 million in NIKE, Inc.'s
11/30/2008 Balance Sheet. These revisions had no effect on the Company's
liquidity or results of operations. |
| NIKE, Inc. |
| |
QUARTER ENDED |
YEAR TO DATE ENDED |
| DIVISIONAL REVENUES1 |
11/30/2009 |
11/30/2008 |
% Change |
% Change Excluding Currency Changes 2 |
11/30/2009 |
11/30/2008 |
% Change |
% Change Excluding Currency Changes 2 |
| |
(Amounts in millions) |
| North America |
| Footwear |
$ 981.2 |
$ 1,018.9 |
-4 % |
-4 % |
$ 2,199.8 |
$ 2,286.7 |
-4 % |
-4 % |
| Apparel |
440.9 |
469.9 |
-6 % |
-6 % |
884.8 |
956.8 |
-8 % |
-7 % |
| Equipment |
74.3 |
73.6 |
1 % |
1 % |
171.9 |
176.4 |
-3 % |
-2 % |
| Total |
1,496.4 |
1,562.4 |
-4 % |
-4 % |
3,256.5 |
3,419.9 |
-5 % |
-5 % |
| |
|
|
|
|
|
|
|
|
| Western Europe |
|
|
|
|
|
|
|
|
| Footwear |
514.8 |
512.8 |
0 % |
-1 % |
1,150.2 |
1,262.3 |
-9 % |
-3 % |
| Apparel |
323.4 |
379.8 |
-15 % |
-16 % |
716.0 |
874.6 |
-18 % |
-13 % |
| Equipment |
63.4 |
71.3 |
-11 % |
-12 % |
140.6 |
176.0 |
-20 % |
-15 % |
| Total |
901.6 |
963.9 |
-6 % |
-8 % |
2,006.8 |
2,312.9 |
-13 % |
-8 % |
| |
|
|
|
|
|
|
|
|
| Central and Eastern Europe |
|
|
|
|
|
|
|
|
| Footwear |
144.0 |
175.5 |
-18 % |
-16 % |
302.9 |
408.5 |
-26 % |
-18 % |
| Apparel |
99.4 |
141.8 |
-30 % |
-27 % |
196.8 |
296.7 |
-34 % |
-27 % |
| Equipment |
16.9 |
25.0 |
-32 % |
-28 % |
46.8 |
66.9 |
-30 % |
-20 % |
| Total |
260.3 |
342.3 |
-24 % |
-21 % |
546.5 |
772.1 |
-29 % |
-22 % |
| |
|
|
|
|
|
|
|
|
| Greater China |
|
|
|
|
|
|
|
|
| Footwear |
209.5 |
211.1 |
-1 % |
-1 % |
427.9 |
473.3 |
-10 % |
-10 % |
| Apparel |
169.8 |
182.1 |
-7 % |
-7 % |
337.9 |
381.9 |
-12 % |
-12 % |
| Equipment |
24.6 |
25.1 |
-2 % |
-2 % |
53.6 |
59.5 |
-10 % |
-10 % |
| Total |
403.9 |
418.3 |
-3 % |
-3 % |
819.4 |
914.7 |
-10 % |
-11 % |
| |
|
|
|
|
|
|
|
|
| Japan |
|
|
|
|
|
|
|
|
| Footwear |
103.8 |
98.0 |
6 % |
-8 % |
201.3 |
191.4 |
5 % |
-7 % |
| Apparel |
97.9 |
108.5 |
-10 % |
-21 % |
164.6 |
180.7 |
-9 % |
-19 % |
| Equipment |
20.7 |
20.7 |
0 % |
-13 % |
42.5 |
41.5 |
2 % |
-9 % |
| Total |
222.4 |
227.2 |
-2 % |
-14 % |
408.4 |
413.6 |
-1 % |
-12 % |
| |
|
|
|
|
|
|
|
|
| Emerging Markets |
|
|
|
|
|
|
|
|
| Footwear |
369.9 |
329.7 |
12 % |
17 % |
648.8 |
625.8 |
4 % |
14 % |
| Apparel |
143.4 |
134.4 |
7 % |
13 % |
250.6 |
252.0 |
-1 % |
11 % |
| Equipment |
41.3 |
47.4 |
-13 % |
-8 % |
77.0 |
91.5 |
-16 % |
-6 % |
| Total |
554.6 |
511.5 |
8 % |
14 % |
976.4 |
969.3 |
1 % |
12 % |
| |
|
|
|
|
|
|
|
|
| Global Brand Divisions3 |
25.0 |
16.0 |
56 % |
59 % |
55.7 |
38.2 |
46 % |
58 % |
| |
|
|
|
|
|
|
|
|
| Total NIKE Brand |
3,864.2 |
4,041.6 |
-4 % |
-4 % |
8,069.7 |
8,840.7 |
-9 % |
-6 % |
| |
|
|
|
|
|
|
|
|
| Other Businesses4 |
555.6 |
548.5 |
1 % |
1 % |
1,159.5 |
1,181.6 |
-2 % |
-1 % |
| Corporate5 |
(14.2 ) |
- |
- |
- |
(25.1 ) |
- |
- |
- |
| |
|
|
|
|
|
|
|
|
| Total NIKE, Inc. Revenues |
$ 4,405.6 |
$ 4,590.1 |
-4 % |
-4 % |
$ 9,204.1 |
$ 10,022.3 |
-8 % |
-6 % |
| |
|
|
|
|
|
|
|
|
| Total NIKE Brand |
|
|
|
|
|
|
|
|
| Footwear |
$ 2,323.2 |
$ 2,346.0 |
-1 % |
-1 % |
$ 4,930.9 |
$ 5,248.0 |
-6 % |
-3 % |
| Apparel |
1,274.8 |
1,416.5 |
-10 % |
-10 % |
2,550.7 |
2,942.7 |
-13 % |
-11 % |
| Equipment |
241.2 |
263.1 |
-8 % |
-8 % |
532.4 |
611.8 |
-13 % |
-10 % |
| Global Brand Divisions4 |
25.0 |
16.0 |
56 % |
59 % |
55.7 |
38.2 |
46 % |
58 % |
| |
|
|
|
|
|
|
|
|
| 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 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 |
YEAR TO DATE ENDED |
| EARNINGS BEFORE INTEREST AND TAXES1,2 |
11/30/2009 |
11/30/2008 |
% Chg |
11/30/2009 |
11/30/2008 |
% Chg |
| |
(In millions) |
|
|
|
|
| |
|
|
|
|
|
|
| North America |
$ 290.5 |
$ 265.7 |
9 % |
$ 701.1 |
$ 639.3 |
10 % |
| Western Europe |
175.3 |
183.7 |
-5 % |
463.9 |
506.7 |
-8 % |
| Central and Eastern Europe |
64.4 |
100.3 |
-36 % |
146.6 |
227.1 |
-35 % |
| Greater China |
125.6 |
135.5 |
-7 % |
274.4 |
274.3 |
0 % |
| Japan |
44.7 |
55.2 |
-19 % |
79.8 |
93.1 |
-14 % |
| Emerging Markets |
156.1 |
121.2 |
29 % |
257.1 |
194.1 |
32 % |
| Global Brand Divisions3 |
(176.0 ) |
(177.3 ) |
1 % |
(356.5 ) |
(376.0 ) |
5 % |
| |
|
|
|
|
|
|
| Total NIKE Brand |
680.6 |
684.3 |
-1 % |
1,566.4 |
1,558.6 |
1 % |
| |
|
|
|
|
|
|
| Other Businesses4 |
35.2 |
21.3 |
65 % |
121.8 |
107.9 |
13 % |
| Corporate5 |
(223.2 ) |
(190.0 ) |
-17 % |
(513.1 ) |
(446.8 ) |
-15 % |
| |
|
|
|
|
|
|
| Total earnings before interest and taxes1,2 |
$ 492.6 |
$ 515.6 |
-4 % |
$ 1,175.1 |
$ 1,219.7 |
-4 % |
| |
|
|
|
|
|
|
| 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 expense 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 Contact:
Pamela Catlett, 503-671-4589
or
Media Contact:
Kellie Leonard, 503-671-6171