EXHIBIT 99 - EARNINGS RELEASE PRESS RELEASE
Published on
Exhibit 99.1
FOR
IMMEDIATE RELEASE
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Investor Contact:
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Media Contact:
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Pamela
Catlett
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Kellie
Leonard
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(503)
671-4589
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(503)
671-6171
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NIKE
REPORTS FIRST QUARTER EARNINGS PER SHARE OF $1.03
Revenue
up 17 percent; Worldwide Futures Orders Up 10 Percent
BEAVERTON, Ore., Sept. 24,
2008 – NIKE, Inc. (NYSE: NKE) today announced financial results for its
fiscal 2009 first quarter ended August 31, 2008. Revenue grew 17 percent to $5.4
billion, compared to $4.7 billion for the same period last year. Changes in
currency exchange rates increased revenue growth by 7 percentage points for the
quarter. First quarter net income decreased 10 percent to $510.5 million,
compared to $569.7 million in the prior year. Diluted earnings per share
decreased 8 percent to $1.03, versus $1.12 last year. In the prior year’s first
quarter, the Company received a one-time tax benefit of $105.4 million, which
contributed $0.20 per diluted share. Adjusted for this prior year benefit,
net income and earnings per share would have grown 10% and 12%,
respectively.
“NIKE’s
first-quarter results reflect the strength of our brands and our global
business,” said NIKE, Inc. President and CEO Mark Parker. “Our relentless focus
on product innovation and premium consumer experiences generated balanced growth
across every region and market share gains in key categories.”
Parker
concluded, “NIKE is able to connect with consumers and energize the market like
nobody else. As we combine that with running a strong and smart business, we
generate new growth, deliver strong cash flows, and create greater value for our
shareholders.”*
Futures
Orders
The
Company reported worldwide futures orders for athletic footwear and apparel,
scheduled for delivery from September 2008 through January 2009, totaling $6.8
billion, 10 percent higher than such orders reported for the same period last
year. Changes in currency exchange rates increased reported orders growth by 1
percentage point.*
By
region, futures orders for the U.S. were up 3 percent; Europe (which includes
the Middle East and Africa) increased 4 percent; and Asia Pacific and the
Americas each grew 27 percent. Changes in currency exchange rates did not have a
significant impact on reported futures orders growth in Europe, but did increase
reported futures orders growth by 3 percentage points in the Asia Pacific and
Americas regions.
Regional
Highlights
U.S.
During
the first quarter, U.S. revenues increased 8 percent to $1.8 billion versus $1.6
billion for same period last year. U.S. athletic footwear revenues increased 9
percent to $1.2 billion. Apparel revenues increased 9 percent to $464.4 million.
Equipment revenues were flat with last year at $97.7 million. U.S. pre-tax
income increased 1 percent to $351.9 million.
Europe
First
quarter revenues for the European region grew 20 percent to $1.8 billion from
$1.5 billion for the same period last year. Changes in currency
exchange rates increased revenue growth by 15 percentage points. Footwear
revenues increased 24 percent to $982.4 million. Apparel revenues grew by 15
percent to $649.7 million and equipment revenues increased 20 percent to $146.6
million. Pre-tax income increased 17 percent to $442.4 million.
Asia
Pacific
In the
first quarter, revenues in the Asia Pacific region grew 36 percent to $860.6
million compared to $633.7 million a year ago. Changes in currency exchange
rates increased revenue growth by 10 percentage points. Footwear revenues were
up 37 percent to $454.0 million, apparel revenues increased 38 percent to $332.7
million and equipment revenues grew 21 percent to $73.9 million. Pre-tax income
increased 15 percent to $185.5 million.
Americas
Revenues
in the Americas region increased 26 percent to $355.7 million, an improvement
from $282.0 million for the same period last year. Currency exchange rates
contributed 7 percentage points to this growth rate. Footwear revenues were up
24 percent to $245.8 million, apparel revenues increased 36 percent to $79.4
million and equipment revenues grew 21 percent to $30.5 million. Pre-tax income
was up 18 percent to $69.1 million.
Other
Businesses
For the
first quarter, Other business revenues, which include Cole Haan, Converse Inc.,
Hurley International LLC, NIKE Golf, and Umbro Ltd, which was acquired in the
fourth quarter of last year, grew 7 percent to $655.3 million from $612.8
million last year and pre-tax income decreased 9 percent to $86.3
million.
Current
year amounts are not directly comparable to the prior year due to changes in the
Company’s affiliate brands portfolio. In the first quarter of last year the
Company’s Other business segment included Converse Inc., NIKE Golf, Cole Haan,
Hurley International LLC, the Starter Brand and NIKE Bauer Hockey. Following a
corporate strategic review the Starter Brand and NIKE Bauer Hockey were sold in
the third and fourth quarter of fiscal 2008, respectively. . First
quarter revenues and pretax income for the continuing Other businesses (Converse
Inc., NIKE Golf, Cole Haan and Hurley International LLC) grew 20% and 19%,
respectively.
Income
Statement Review
In the
first quarter of fiscal 2009 gross margins were 47.2 percent compared to 44.8
percent for the same period last year. The increase in gross margin versus the
prior year quarter reflects an improved sales mix of higher margin footwear
products in the Company’s U.S. and EMEA regions, favorable hedge results,
sourcing cost initiatives and higher margins in our Other businesses, partially
offset by higher input costs and lower apparel margins in the
U.S.
As anticipated, selling and administrative expenses were 34.2 percent of first quarter revenue compared to 30.8 percent for the same period last year due to demand creation spend in support of the European Championships and the Olympic games in Beijing. The effective tax rate for the first quarter was 28.5 percent compared to 15.0 percent for the same period last year. The prior year tax rate was significantly lower due to the one-time utilization of past foreign losses, which contributed $0.20 per diluted share to last year’s results.
Balance
Sheet Review
At
quarter end, global inventories stood at $2.5 billion, an increase of 14 percent
from August 31, 2007. Cash and short-term investments were $2.6
billion at the end of the quarter, compared to $2.8 billion at the end of the
first quarter last year.
Share
Repurchase Program
During
the first quarter, the Company repurchased a total of 7,068,980 shares for
approximately $429.8 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 repurchased
a total of 45.7 million shares for approximately $2.5 billion under this
program. On September 22, the Company also announced a new, four-year $5 billion
share repurchase program to commence upon the completion of its current $3
billion program.
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.
(Tables
Follow)
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NIKE,
Inc.
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CONSOLIDATED
FINANCIAL STATEMENTS
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FOR
THE PERIOD ENDED AUGUST 31, 2008
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(In
millions, except per share data)
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QUARTER
ENDED
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INCOME
STATEMENT
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08/31/2008
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08/31/2007
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%
Chg
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Revenues
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$ | 5,432.2 | $ | 4,655.1 | 17 | % | ||||||
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Cost
of sales
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2,870.1 | 2,568.1 | 12 | % | ||||||||
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Gross
margin
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2,562.1 | 2,087.0 | 23 | % | ||||||||
| 47.2 | % | 44.8 | % | |||||||||
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Selling
and administrative expense
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1,856.4 | 1,434.7 | 29 | % | ||||||||
| 34.2 | % | 30.8 | % | |||||||||
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Interest
income, net
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10.1 | 24.6 | -59 | % | ||||||||
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Other
expense, net
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(1.6 | ) | (6.6 | ) | 76 | % | ||||||
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Income
before income taxes
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714.2 | 670.3 | 7 | % | ||||||||
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Income
taxes
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203.7 | 100.6 | 102 | % | ||||||||
| 28.5 | % | 15.0 | % | |||||||||
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Net
income
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$ | 510.5 | $ | 569.7 | -10 | % | ||||||
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Diluted
EPS
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$ | 1.03 | $ | 1.12 | -8 | % | ||||||
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Basic
EPS
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$ | 1.05 | $ | 1.14 | -8 | % | ||||||
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Weighted
Average Common Shares Outstanding:
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Diluted
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494.9 | 507.3 | ||||||||||
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Basic
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487.2 | 499.4 | ||||||||||
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Dividends
declared
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$ | 0.23 | $ | 0.185 | ||||||||
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NIKE,
Inc.
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BALANCE
SHEET
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08/31/2008
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08/31/2007
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(In
millions)
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ASSETS
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Current
assets:
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Cash
and equivalents
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$ | 1,625.6 | $ | 1,973.9 | ||||
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Short-term
investments
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966.1 | 817.4 | ||||||
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Accounts
receivable, net
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3,035.4 | 2,774.1 | ||||||
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Inventories
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2,453.9 | 2,154.9 | ||||||
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Deferred
income taxes
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175.8 | 220.3 | ||||||
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Prepaid
expenses and other current assets
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687.8 | 400.9 | ||||||
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Total
current assets
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8,944.6 | 8,341.5 | ||||||
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Property,
plant and equipment
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4,111.0 | 3,732.5 | ||||||
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Less
accumulated depreciation
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2,236.2 | 2,014.9 | ||||||
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Property,
plant and equipment, net
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1,874.8 | 1,717.6 | ||||||
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Identifiable
intangible assets, net
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712.4 | 409.5 | ||||||
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Goodwill
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425.1 | 130.8 | ||||||
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Deferred
income taxes and other assets
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637.9 | 414.1 | ||||||
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Total
assets
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$ | 12,594.8 | $ | 11,013.5 | ||||
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LIABILITIES
AND SHAREHOLDERS' EQUITY
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Current
liabilities:
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Current
portion of long-term debt
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$ | 31.5 | $ | 5.8 | ||||
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Notes
payable
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220.1 | 140.2 | ||||||
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Accounts
payable
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1,205.9 | 971.5 | ||||||
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Accrued
liabilities
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1,639.8 | 1,313.9 | ||||||
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Income
taxes payable
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214.3 | 184.0 | ||||||
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Total
current liabilities
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3,311.6 | 2,615.4 | ||||||
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Long-term
debt
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407.3 | 420.9 | ||||||
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Deferred
income taxes and other liabilities
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843.0 | 622.3 | ||||||
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Redeemable
preferred stock
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0.3 | 0.3 | ||||||
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Shareholders'
equity
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8,032.6 | 7,354.6 | ||||||
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Total
liabilities and shareholders' equity
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$ | 12,594.8 | $ | 11,013.5 | ||||
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NIKE,
Inc.
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QUARTER
ENDED
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DIVISIONAL
REVENUES1
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08/31/2008
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08/31/2007
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%
Chg
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(In
millions)
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U.S.
Region
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Footwear
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$ | 1,219.8 | $ | 1,119.9 | 9 | % | ||||||
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Apparel
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464.4 | 428.0 | 9 | % | ||||||||
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Equipment
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97.7 | 97.5 | 0 | % | ||||||||
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Total
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1,781.9 | 1,645.4 | 8 | % | ||||||||
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EMEA
Region
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Footwear
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982.4 | 791.9 | 24 | % | ||||||||
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Apparel
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649.7 | 567.0 | 15 | % | ||||||||
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Equipment
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146.6 | 122.3 | 20 | % | ||||||||
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Total
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1,778.7 | 1,481.2 | 20 | % | ||||||||
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Asia
Pacific Region
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Footwear
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454.0 | 332.1 | 37 | % | ||||||||
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Apparel
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332.7 | 240.5 | 38 | % | ||||||||
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Equipment
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73.9 | 61.1 | 21 | % | ||||||||
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Total
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860.6 | 633.7 | 36 | % | ||||||||
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Americas
Region
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Footwear
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245.8 | 198.4 | 24 | % | ||||||||
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Apparel
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79.4 | 58.3 | 36 | % | ||||||||
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Equipment
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30.5 | 25.3 | 21 | % | ||||||||
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Total
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355.7 | 282.0 | 26 | % | ||||||||
| 4,776.9 | 4,042.3 | 18 | % | |||||||||
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Other
businesses
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655.3 | 612.8 | 7 | % | ||||||||
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Total
NIKE, Inc. revenues
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$ | 5,432.2 | $ | 4,655.1 | 17 | % | ||||||
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1
Certain prior year amounts have been reclassified to conform to
fiscal year 2009 presentation. These changes had no impact on
previously reported results of operations or shareholders'
equity.
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NIKE,
Inc.
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QUARTER
ENDED
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%
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PRE-TAX
INCOME1,2
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08/31/2008
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08/31/2007
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Chg
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(In
millions)
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U.S.
Region
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$ | 351.9 | $ | 348.2 | 1 | % | ||||||
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EMEA
Region
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442.4 | 379.2 | 17 | % | ||||||||
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Asia
Pacific Region
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185.5 | 160.9 | 15 | % | ||||||||
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Americas
Region
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69.1 | 58.8 | 18 | % | ||||||||
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Other
businesses
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86.3 | 95.2 | -9 | % | ||||||||
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Corporate3
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(421.0 | ) | (372.0 | ) | -13 | % | ||||||
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Total
pre-tax income1
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$ | 714.2 | $ | 670.3 | 7 | % | ||||||
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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.
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2
Certain prior year amounts have been reclassified to conform to fiscal
year 2009 presentation. These changes had no impact on previously
reported results of operations or shareholders' equity.
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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 inter-company eliminations for specific items
in the Consolidated Income Statement.
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