- Revenue $4.8 billion; up 10 percent versus prior year or up 11 percent excluding currency changes
- Diluted earnings per share up 24 percent from prior year to $0.94
- NIKE Brand futures orders up 11 percent
- Inventories up 8 percent versus prior year
BEAVERTON, Ore., Dec 21, 2010 (BUSINESS WIRE) -- NIKE, Inc.
(NYSE:NKE) today reported financial results for its fiscal 2011 second
quarter ended November 30, 2010. Earnings per share for the quarter were
up 24 percent on 10 percent higher net revenue as NIKE, Inc. brands
continued to experience strong sales in the marketplace and benefit from
clean inventory positions while better leveraging SG&A expenses.
"We had a great second quarter. Almost every brand, category and
geography delivered growth," said Mark Parker, President and CEO of
NIKE, Inc. "We continue to outperform the market thanks to our
innovative product, compelling brands and strong marketplace management.
That's good for athletes and consumers, good for our industry, and it's
good for our shareholders. Going forward, we're in the enviable
position of having far more opportunities than challenges. I'm confident
our strategies can continue to deliver sustainable, profitable
growth."*
Futures Orders
As of the end of the quarter futures orders for NIKE Brand athletic
footwear and apparel, scheduled for delivery from December 2010 through
April 2011, totaled $7.7 billion, 11 percent higher than orders reported
for the same period last year with minimal impact from changes in
foreign currency exchange rates compared to the prior year.*
By geography, futures orders were as follows:
| Geography |
Reported Futures Orders |
Excluding Currency Changes |
| North America |
+16% |
+16% |
| Western Europe |
0% |
+3% |
| Central and Eastern Europe |
+9% |
+11% |
| Greater China |
+18% |
+14% |
| Japan |
-2% |
-5% |
| Emerging Markets |
+15% |
+15% |
|
Total NIKE Brand Futures Orders |
+11% |
+11% |
| |
|
|
Second Quarter Income Statement Review
- Revenuesincreased
10 percent to $4.8 billion. Excluding the impacts of changes in foreign
currency, NIKE, Inc. revenue increased 11 percent. Revenues for the
NIKE Brand were up 9 percent, or up 10 percent on a currency neutral
basis, driven by growth in all seven NIKE Brand key categories except
Sportswear, which was down slightly compared to the prior year, and
every geography except Japan. Our Other Businesses revenues increased 13
percent, with a minimal impact from changes in foreign currency
exchange rates, as Cole Haan, Converse, Hurley, NIKE Golf and Umbro all
experienced growth during the quarter.
- Gross margins
improved 80 basis points to 45.3 percent. The improvement was due to a
higher mix of full-price sales and fewer and more profitable close-out
sales resulting from strong demand for our products and cleaner
inventory positions, as well as improved profitability from our Direct
to Consumer operations. These factors more than offset margin pressure
from higher total freight costs, including additional airfreight costs
incurred to meet strong demand for NIKE Brand products.
- Selling and administrative expenses
were up 9 percent to $1.6 billion mainly due to operating overhead,
which increased 14 percent to $1.0 billion. This increase was a result
of additional investments made in both our wholesale and Direct to
Consumer businesses, higher performance based compensation expense and
meeting and travel expense increases given comparisons to reduced levels
last year. Demand Creation spending was inline with the same period
last year at $574 million.
- Other income was $28
million, comprised largely of non-recurring items and net conversion
gains primarily on currency hedges. For the quarter, we estimate the
year over year change in foreign currency related gains included in
other income, net combined with the impact of changes in foreign
currency exchange rates on the translation of foreign
currency-denominated profits had an insignificant impact on pretax
income.
- The effective tax rate
was 25.0 percent compared to 23.6 percent for the same period last
year. The effective tax rate was higher due to a larger percentage of
pretax income coming from operations in the United States, which has a
higher effective tax rate than operations abroad.
- Net income increased 22 percent to $457 million and diluted earnings per share
increased 24 percent to $0.94, reflecting higher net income and an
approximate 1 percent decline in the number of diluted weighted average
common shares outstanding.
November 30, 2010 Balance Sheet Review
- Inventories for NIKE, Inc. were $2.3 billion, up 8 percent from November 30, 2009.
- Cash and short-term investments at period-end were $4.8 billion, 19 percent higher than last year mainly as a result of higher net income.
Share Repurchases
During the second quarter, the Company repurchased a total of 3.5
million shares for approximately $280 million as part of the Company's
four-year, $5 billion share repurchase program, approved by the Board of
Directors in September 2008. As of the end of the second quarter the
Company has purchased a total of 17.4 million shares for approximately
$1.3 billion under this program.
Conference Call
Nike management will host a conference call beginning at
approximately 2:00 p.m. PT on December 21, 2010, to review second
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 9:00 p.m. PT,
December 28, 2010.
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.
| NIKE, Inc. |
| CONSOLIDATED FINANCIAL STATEMENTS |
| FOR THE PERIOD ENDED NOVEMBER 30, 2010 |
| (In millions, except per share data) |
| |
| |
QUARTER ENDED |
YEAR TO DATE ENDED |
| INCOME STATEMENT |
11/30/2010 |
11/30/2009 |
% Chg |
11/30/2010 |
11/30/2009 |
% Chg |
| Revenues |
$ 4,842 |
$ 4,405 |
10% |
$ 10,017 |
$ 9,204 |
9% |
| Cost of sales |
2,649 |
2,445 |
8% |
5,390 |
5,028 |
7% |
| Gross margin |
2,193 |
1,960 |
12% |
4,627 |
4,176 |
11% |
| |
45.3% |
44.5% |
|
46.2% |
45.4% |
|
| |
|
|
|
|
|
|
| Demand creation expense |
574 |
573 |
0% |
1,253 |
1,127 |
11% |
| Operating overhead expense |
1,037 |
906 |
14% |
2,031 |
1,898 |
7% |
| Total selling and administrative expense |
1,611 |
1,479 |
9% |
3,284 |
3,025 |
9% |
| |
33.3% |
33.6% |
|
32.8% |
32.9% |
|
| |
|
|
|
|
|
|
| Other (income), net |
(28 ) |
(12 ) |
133% |
(21 ) |
(24 ) |
-13% |
| Interest expense, net |
1 |
2 |
-50% |
- |
3 |
-100% |
| |
|
|
|
|
|
|
| Income before income taxes |
609 |
491 |
24% |
1,364 |
1,172 |
16% |
| |
|
|
|
|
|
|
| Income taxes |
152 |
116 |
31% |
348 |
284 |
23% |
| |
25.0% |
23.6% |
|
25.5% |
24.2% |
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Net income |
$ 457 |
$ 375 |
22% |
$ 1,016 |
$ 888 |
14% |
| |
|
|
|
|
|
|
| Diluted EPS |
$ 0.94 |
$ 0.76 |
24% |
$ 2.08 |
$ 1.80 |
16% |
| |
|
|
|
|
|
|
| Basic EPS |
$ 0.96 |
$ 0.77 |
25% |
$ 2.12 |
$ 1.83 |
16% |
| |
|
|
|
|
|
|
| Weighted Average Common Shares Outstanding: |
| Diluted |
487.6 |
494.5 |
|
488.4 |
493.5 |
|
| Basic |
477.9 |
487.2 |
|
478.8 |
486.5 |
|
| Dividends declared |
$ 0.31 |
$ 0.27 |
|
$ 0.58 |
$ 0.52 |
|
| NIKE, Inc. |
| BALANCE SHEET |
11/30/2010 |
11/30/2009 |
% Change |
| |
(In millions) |
| ASSETS |
| Current assets: |
|
|
|
| Cash and equivalents |
$ 1,768 |
$ 2,035 |
-13 % |
| Short-term investments |
3,021 |
1,975 |
53 % |
| Accounts receivable, net |
2,792 |
2,717 |
3 % |
| Inventories |
2,348 |
2,176 |
8 % |
| Deferred income taxes |
267 |
220 |
21 % |
| Prepaid expenses and other current assets |
720 |
643 |
12 % |
| |
|
|
|
| Total current assets |
10,916 |
9,766 |
12 % |
| |
|
|
|
| Property, plant and equipment |
4,641 |
4,503 |
3 % |
| Less accumulated depreciation |
2,638 |
2,479 |
6 % |
| Property, plant and equipment, net |
2,003 |
2,024 |
-1 % |
| |
|
|
|
| Identifiable intangible assets, net |
469 |
473 |
-1 % |
| Goodwill |
192 |
196 |
-2 % |
| Deferred income taxes and other assets |
884 |
899 |
-2 % |
| |
|
|
|
| Total assets |
$14,464 |
$13,358 |
8 % |
| |
|
|
|
| LIABILITIES AND SHAREHOLDERS' EQUITY |
| Current liabilities: |
|
|
|
| Current portion of long-term debt |
$ 132 |
8 |
- |
| Notes payable |
128 |
103 |
24 % |
| Accounts payable |
1,225 |
1,008 |
22 % |
| Accrued liabilities |
1,685 |
1,598 |
5 % |
| Income taxes payable |
78 |
81 |
-4 % |
| |
|
|
|
| Total current liabilities |
3,248 |
2,798 |
16 % |
| |
|
|
|
| Long-term debt |
338 |
460 |
-27 % |
| Deferred income taxes and other liabilities |
929 |
876 |
6 % |
| Redeemable preferred stock |
- |
- |
- |
| Shareholders' equity |
9,949 |
9,224 |
8 % |
| |
|
|
|
| Total liabilities and shareholders' equity |
$14,464 |
$13,358 |
8 % |
| NIKE, Inc. |
|
|
QUARTER ENDED |
YEAR TO DATE ENDED |
| DIVISIONAL REVENUES1 |
11/30/2010 |
11/30/2009 |
% Change |
% Change Excluding Currency Changes 2 |
11/30/2010 |
11/30/2009 |
% Change |
% Change Excluding Currency Changes2 |
|
(In millions) |
North America |
| Footwear |
$ 1,083 |
$ 981 |
10 % |
10 % |
$ 2,372 |
$ 2,200 |
8 % |
8 % |
| Apparel |
538 |
441 |
22 % |
22 % |
1,053 |
885 |
19 % |
19 % |
| Equipment |
80 |
75 |
7 % |
4 % |
179 |
172 |
4 % |
3 % |
| Total |
1,701 |
1,497 |
14 % |
13 % |
3,604 |
3,257 |
11 % |
10 % |
| |
|
|
|
|
|
|
|
|
| Western Europe |
| Footwear |
499 |
515 |
-3 % |
6 % |
1,126 |
1,150 |
-2 % |
8 % |
| Apparel |
297 |
323 |
-8 % |
0 % |
661 |
716 |
-8 % |
2 % |
| Equipment |
47 |
64 |
-27 % |
-20 % |
112 |
141 |
-21 % |
-12 % |
| Total |
843 |
902 |
-7 % |
2 % |
1,899 |
2,007 |
-5 % |
4 % |
| |
|
|
|
|
|
|
|
|
| Central and Eastern Europe |
| Footwear |
120 |
108 |
11 % |
17 % |
266 |
247 |
8 % |
14 % |
| Apparel |
88 |
85 |
4 % |
8 % |
180 |
174 |
3 % |
9 % |
| Equipment |
15 |
15 |
0 % |
0 % |
40 |
42 |
-5 % |
-5 % |
| Total |
223 |
208 |
7 % |
12 % |
486 |
463 |
5 % |
10 % |
| |
|
|
|
|
|
|
|
|
| Greater China |
| Footwear |
264 |
210 |
26 % |
24 % |
510 |
428 |
19 % |
18 % |
| Apparel |
191 |
170 |
12 % |
11 % |
373 |
338 |
10 % |
9 % |
| Equipment |
27 |
23 |
17 % |
13 % |
59 |
53 |
11 % |
11 % |
| Total |
482 |
403 |
20 % |
18 % |
942 |
819 |
15 % |
14 % |
| |
|
|
|
|
|
|
|
|
| Japan |
| Footwear |
93 |
103 |
-10 % |
-17 % |
179 |
201 |
-11 % |
-17 % |
| Apparel |
85 |
98 |
-13 % |
-20 % |
145 |
165 |
-12 % |
-19 % |
| Equipment |
14 |
21 |
-33 % |
-38 % |
31 |
42 |
-26 % |
-31 % |
| Total |
192 |
222 |
-14 % |
-21 % |
355 |
408 |
-13 % |
-19 % |
| |
|
|
|
|
|
|
|
|
| Emerging Markets |
| Footwear |
521 |
405 |
29 % |
23 % |
925 |
704 |
31 % |
26 % |
| Apparel |
183 |
158 |
16 % |
11 % |
332 |
274 |
21 % |
15 % |
| Equipment |
51 |
44 |
16 % |
9 % |
89 |
82 |
9 % |
2 % |
| Total |
755 |
607 |
24 % |
19 % |
1,346 |
1,060 |
27 % |
21 % |
| |
|
|
|
|
|
|
|
|
| Global Brand Divisions3 |
27 |
25 |
8 % |
24 % |
59 |
56 |
5 % |
14 % |
| |
|
|
|
|
|
|
|
|
| Total NIKE Brand |
4,223 |
3,864 |
9 % |
10 % |
8,691 |
8,070 |
8 % |
9 % |
| |
|
|
|
|
|
|
|
|
| Other Businesses4 |
631 |
556 |
13 % |
13 % |
1,324 |
1,160 |
14 % |
14 % |
| Corporate5 |
(12 ) |
(15 ) |
20 % |
27 % |
2 |
(26 ) |
- |
- |
| |
|
|
|
|
|
|
|
|
| Total NIKE, Inc. Revenues |
$ 4,842 |
$ 4,405 |
10 % |
11 % |
$ 10,017 |
$ 9,204 |
9 % |
10 % |
| |
|
|
|
|
|
|
|
|
| Total NIKE Brand |
| Footwear |
$ 2,580 |
$ 2,322 |
11 % |
12 % |
$ 5,378 |
$ 4,930 |
9 % |
10 % |
| Apparel |
1,382 |
1,275 |
8 % |
9 % |
2,744 |
2,552 |
8 % |
9 % |
| Equipment |
234 |
242 |
-3 % |
-5 % |
510 |
532 |
-4 % |
-4 % |
| Global Brand Divisions3 |
27 |
25 |
8 % |
24 % |
59 |
56 |
5 % |
14 % |
| |
|
|
|
|
|
|
|
|
|
1 Certain prior year amounts have
been reclassified to conform to fiscal year 2011 presentation. These
changes had no impact on previously reported results of operations or
shareholders' equity. |
| |
|
2 Fiscal 2011 results have been
restated using fiscal 2010 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 revenues primarily consist of foreign currency revenue-related
hedge gains and losses generated by entities within the NIKE Brand
geographic operating segments through our centrally managed foreign
exchange risk management program and foreign currency gains and losses
resulting from the difference between actual foreign currency rates and
standard rates assigned to these entities, which are used to record any
non-functional currency revenues into the entity's functional currency. |
| NIKE, Inc. |
| |
|
EARNINGS BEFORE INTEREST AND TAXES1,2 |
QUARTER ENDED |
YEAR TO DATE ENDED |
| 11/30/2010 |
11/30/2009 |
%Chg |
11/30/2010 |
11/30/2009 |
%Chg |
| |
(In millions) |
| |
|
|
|
|
|
|
| North America |
$ 359 |
$ 290 |
24 % |
$ 805 |
$ 701 |
15 % |
| Western Europe |
141 |
175 |
-19 % |
420 |
464 |
-9 % |
| Central and Eastern Europe |
44 |
49 |
-10 % |
107 |
126 |
-15 % |
| Greater China |
174 |
125 |
39 % |
338 |
274 |
23 % |
| Japan |
36 |
45 |
-20 % |
63 |
80 |
-21 % |
| Emerging Markets |
194 |
171 |
13 % |
318 |
277 |
15 % |
| Global Brand Divisions3 |
(227 ) |
(175 ) |
-30 % |
(477 ) |
(356 ) |
-34 % |
| |
|
|
|
|
|
|
| Total NIKE Brand |
721 |
680 |
6 % |
1,574 |
1,566 |
1 % |
| |
|
|
|
|
|
|
| Other Businesses4 |
59 |
35 |
69 % |
168 |
122 |
38 % |
| Corporate5 |
(170 ) |
(222 ) |
23 % |
(378 ) |
(513 ) |
26 % |
| |
|
|
|
|
|
|
| Total earnings before interest and taxes1,2 |
$ 610 |
$ 493 |
24 % |
$ 1,364 |
$ 1,175 |
16 % |
|
| 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, net and
income taxes. |
|
| 2
Certain prior year amounts have been reclassified to conform to fiscal
year 2011 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 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, certain
foreign currency gains and losses, including certain hedge gains and
losses, corporate eliminations and other items. |
SOURCE: NIKE, Inc.
NIKE, Inc.
Investor Contact:
Kelley Hall, 503-532-3793
or
Media Contact:
Kellie Leonard, 503-671-6171