- Revenue $5.2 billion; up 8 percent versus prior year or up 10 percent excluding currency changes
- Diluted earnings per share up 10 percent from prior year to $1.14
- Worldwide futures orders up 10 percent, up 13 percent excluding currency changes
- Inventories down 3 percent versus prior year
BEAVERTON, Ore., Sep 23, 2010 (BUSINESS WIRE) -- NIKE, Inc.
(NYSE:NKE) today reported financial results for its fiscal 2011 first
quarter ended August 31, 2010. Earnings per share for the quarter were
up 10 percent on 8 percent higher net revenue as a result of gross
margin expansion driven by the strength of the NIKE, Inc. brands in the
marketplace and continued clean inventory positions.
"We had a great first quarter. It demonstrates the power of our
growth strategy, which is to create innovative products, amazing brand
experiences, and premium retail destinations wherever consumers connect
with NIKE," said Mark Parker, President and CEO, NIKE, Inc. "Going
forward we'll continue to maximize the flexibility, balance and
alignment that we have built into our portfolio of brands and
categories. Those strengths will help us navigate the continued
uncertainty in the macro-economic picture. More importantly they help us
leverage the global appetite for sports and innovation, which has never
been stronger. That's how we continue to grow our businesses,
strengthen our balance sheet and increase our returns to shareholders
over the long term."*
Futures Orders
As of the end of the quarter worldwide futures orders for NIKE Brand
athletic footwear and apparel, scheduled for delivery from September
2010 through January 2011, totaled $7.1 billion, 10 percent higher than
orders reported for the same period last year. Excluding currency
changes, reported orders would have increased 13 percent.*
By geography, futures orders were as follows:
| Geography |
Reported Futures Orders |
Excluding Currency Changes |
| North America |
+15% |
+14% |
| Western Europe |
-7% |
+6% |
| Central and Eastern Europe |
+8% |
+14% |
| Greater China |
+25% |
+23% |
| Japan |
-8% |
-14% |
| Emerging Markets |
+21% |
+24% |
| Total NIKE Brand |
+10% |
+13% |
First Quarter Income Statement Review
- Revenuesincreased
8 percent to $5.2 billion. Excluding the impacts of changes in foreign
currency, NIKE, Inc. revenue increased 10 percent. Revenues for the NIKE
Brand were up 8 percent on a currency neutral basis driven by growth in
each of the seven NIKE Brand categories: Action Sports, Athletic
Training, Basketball, Football (Soccer), Running, Sportswear and Women's
Training. Excluding currency changes, revenues for our Other Businesses
increased 16 percent as Cole Haan, Converse, Hurley, NIKE Golf and
Umbro all experienced growth during the quarter.
- Gross margins
improved 80 basis points to 47.0 percent due to growth and improved
profitability from Direct to Consumer operations, fewer and more
profitable close-out sales and improved in-line product margins. These
factors more than offset margin pressures resulting from changes in
foreign currency and higher airfreight costs to meet strong demand for
NIKE Brand products.
- Selling and administrative expenses
were up 8 percent to $1.7 billion due to planned investments in demand
creation spending, which increased 23 percent to $679 million primarily
as a result of marketing expenses incurred for the World Cup and World
Basketball Festival. Operating overhead spending was $994 million, in
line with last year, as investments in our Direct to Consumer business
and key brand events were offset by changes in stock-based compensation
expense.
- Other expense was
$7 million, comprised largely of non-recurring items which offset 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 expense (income), net combined with the impact of
changes in foreign currency exchange rates on the translation of foreign
currency-denominated profits decreased pretax income by approximately
$33 million.
- The effective tax rate
was 26.0 percent compared to 24.7 percent for the same period last year
primarily because a larger percentage of pretax income related to
operations in the United States, which has a higher effective tax rate
than operations abroad.
- Net income increased 9 percent to $559 million and diluted earnings per share
increased 10 percent to $1.14 reflecting an approximate 1 percent
decline in the number of diluted weighted average common shares
outstanding.
August 31, 2010 Balance Sheet Review
- Inventories for NIKE, Inc. were $2.2 billion, down 3 percent from August 31, 2009.
- Cash and short-term investments
at period-end were $4.7 billion, 29 percent higher than last year
mainly as a result of higher net income and continued focus on working
capital management.
Share Repurchases
During the first quarter, the Company repurchased a total of 7.3
million shares for approximately $517 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 first quarter the
Company has purchased a total of 13.9 million shares for approximately
$971 million under this program.
Conference Call
Nike management will host a conference call beginning at
approximately 2:00 p.m. PT on September 23, 2010, to review first
quarter results. The conference call will be broadcast live over the
Internet and can be accessed at http://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, September
30, 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 http://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 AUGUST 31, 2010 |
| (In millions, except per share data) |
|
|
|
|
|
QUARTER ENDED
|
| INCOME STATEMENT |
8/31/2010
|
8/31/2009
|
% Chg |
| Revenues |
$ 5,175
|
$ 4,799
|
8% |
| Cost of sales |
2,741
|
2,583
|
6% |
| Gross margin |
2,434
|
2,216
|
10% |
|
47.0% |
46.2% |
|
|
|
|
|
| Demand creation expense |
679
|
554
|
23% |
| Operating overhead expense |
994
|
992
|
0% |
| Total selling and administrative expense |
1,673
|
1,546
|
8% |
|
32.3% |
32.2% |
|
|
|
|
|
| Other expense (income), net |
7
|
(12 ) |
-
|
| Interest (income) expense, net |
(1 ) |
1
|
-
|
|
|
|
|
| Income before income taxes |
755
|
681
|
11% |
|
|
|
|
| Income taxes |
196
|
168
|
17% |
|
26.0% |
24.7% |
|
|
|
|
|
|
|
|
|
| Net income |
$ 559
|
$ 513
|
9% |
|
|
|
|
| Diluted EPS |
$ 1.14
|
$ 1.04
|
10% |
|
|
|
|
| Basic EPS |
$ 1.17
|
$ 1.06
|
10% |
|
|
|
|
| Weighted Average Common Shares Outstanding: |
|
|
| Diluted |
488.6
|
491.6
|
|
| Basic |
479.6
|
485.8
|
|
| Dividends declared |
$ 0.27
|
$ 0.25
|
|
| |
| NIKE, Inc. |
| |
| BALANCE SHEET |
8/31/2010
|
8/31/2009 |
% Change
|
|
(In millions)
|
| ASSETS |
Current assets:
|
| Cash and equivalents |
$ 2,010
|
$ 2,261 |
-11 % |
| Short-term investments |
2,678
|
1,369 |
96 % |
| Accounts receivable, net |
2,791
|
2,835 |
-2 % |
| Inventories |
2,210
|
2,288 |
-3 % |
| Deferred income taxes |
259
|
214 |
21 % |
| Prepaid expenses and other current assets |
583
|
640 |
-9% |
|
|
|
|
| Total current assets |
10,531
|
9,607 |
10 % |
| |
| Property, plant and equipment |
4,535
|
4,374 |
4 % |
| Less accumulated depreciation |
2,560
|
2,393 |
7 % |
| Property, plant and equipment, net |
1,975
|
1,981 |
0 % |
| |
|
|
|
| Identifiable intangible assets, net |
470
|
471 |
0 % |
| Goodwill |
192
|
195 |
-2 % |
| Deferred income taxes and other assets |
883
|
937 |
-6 % |
| |
| Total assets |
$14,051
|
$13,191 |
7 % |
| |
LIABILITIES AND SHAREHOLDERS' EQUITY
|
| Current liabilities: |
|
| Current portion of long-term debt |
$ 132
|
$ 7 |
-
|
| Notes payable |
109
|
95 |
15 % |
| Accounts payable |
1,101
|
962 |
14 % |
| Accrued liabilities |
1,696
|
1,643 |
3 % |
| Income taxes payable |
104
|
146 |
-29 % |
| |
|
|
|
| Total current liabilities |
3,142
|
2,853 |
10 % |
| |
| Long-term debt |
342
|
443 |
-23 % |
| Deferred income taxes and other liabilities |
907
|
804 |
13 % |
| Redeemable preferred stock |
-
|
- |
-
|
| Shareholders' equity |
9,660
|
9,091 |
6 % |
| |
| Total liabilities and shareholders' equity |
$14,051
|
$13,191 |
7 % |
| NIKE, Inc. |
|
QUARTER ENDED
|
| DIVISIONAL REVENUES1 |
8/31/2010 |
8/31/2009
|
% Change |
% Change Excluding Currency Changes 2 |
|
(In millions) |
| North America |
|
|
|
|
| Footwear |
$ 1,289 |
$ 1,219
|
6 % |
5 % |
| Apparel |
515 |
444
|
16 % |
16 % |
| Equipment |
99 |
97
|
2 % |
2 % |
| Total |
1,903 |
1,760
|
8 % |
8 % |
|
|
|
|
|
| Western Europe |
|
|
|
|
| Footwear |
627 |
635
|
-1 % |
10 % |
| Apparel |
364 |
393
|
-7 % |
3 % |
| Equipment |
65 |
77
|
-16 % |
-5 % |
| Total |
1,056 |
1,105
|
-4 % |
6 % |
|
|
|
|
|
| Central and Eastern Europe |
|
|
|
|
| Footwear |
146 |
139
|
5 % |
12 % |
| Apparel |
92 |
89
|
3 % |
10 % |
| Equipment |
25 |
27
|
-7 % |
-7 % |
| Total |
263 |
255
|
3 % |
9 % |
|
|
|
|
|
| Greater China |
|
|
|
|
| Footwear |
246 |
218
|
13 % |
12 % |
| Apparel |
182 |
168
|
8 % |
8 % |
| Equipment |
32 |
30
|
7 % |
10 % |
| Total |
460 |
416
|
11 % |
10 % |
|
|
|
|
|
| Japan |
|
|
|
|
| Footwear |
86 |
98
|
-12 % |
-17 % |
| Apparel |
60 |
67
|
-10 % |
-16 % |
| Equipment |
17 |
21
|
-19 % |
-24 % |
| Total |
163 |
186
|
-12 % |
-18 % |
|
|
|
|
|
| Emerging Markets |
|
|
|
|
| Footwear |
404 |
299
|
35 % |
29 % |
| Apparel |
149 |
116
|
28 % |
22 % |
| Equipment |
38 |
38
|
0 % |
-5 % |
| Total |
591 |
453
|
30 % |
24 % |
|
|
|
|
|
| Global Brand Divisions3 |
32 |
31 |
3 % |
6 % |
|
|
|
|
|
| Total NIKE Brand |
4,468 |
4,206
|
6 % |
8 % |
|
|
|
|
|
| Other Businesses4 |
693 |
604
|
15 % |
16 % |
| Corporate5 |
14 |
(11 )
|
-
|
-
|
|
|
|
|
|
| Total NIKE, Inc. Revenues |
$ 5,175 |
$ 4,799
|
8 % |
10 % |
|
|
|
|
|
| Total NIKE Brand |
|
|
|
|
| Footwear |
$ 2,798 |
$ 2,608
|
7 % |
9 % |
| Apparel |
1,362 |
1,277
|
7 % |
9 % |
| Equipment |
276 |
290
|
-5 % |
-3 % |
| Global Brand Divisions4 |
32 |
31
|
3 % |
6 % |
|
|
|
|
|
| 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. |
|
QUARTER ENDED |
%
|
| EARNINGS BEFORE INTEREST AND TAXES1,2 |
8/31/2010
|
8/31/2009
|
Chg
|
|
(In millions)
|
|
|
|
|
| North America |
$ 446
|
$ 411
|
9 % |
| Western Europe |
279
|
289
|
-3 % |
| Central and Eastern Europe |
63
|
77
|
-18 % |
| Greater China |
164
|
149
|
10 % |
| Japan |
27
|
35
|
-23 % |
| Emerging Markets |
124
|
106
|
17 % |
| Global Brand Divisions3 |
(250 ) |
(181 ) |
-38 % |
|
|
|
|
| Total NIKE Brand |
853
|
886
|
-4 % |
|
|
|
|
| Other Businesses4 |
109
|
87
|
25 % |
| Corporate5 |
(208 ) |
(291 ) |
29 % |
|
|
|
|
| Total earnings before interest and taxes1,2 |
$ 754
|
$ 682
|
11 % |
| |
| |
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 (income)
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