EXHIBIT 99 - EARNINGS RELEASE PRESS RELEASE
Published on
FOR
IMMEDIATE RELEASE
Investor Contact: Media Contact:
Pamela Catlett Kellie Leonard
(503) 671-4589 (503) 671-6171
NIKE
REPORTS RECORD SECOND QUARTER REVENUE AND
EARNINGS
PER SHARE
Revenue
Up 6 percent to $4.6 Billion; Diluted Earnings per Share Up 13% to
$0.80
BEAVERTON, Ore., Dec. 17, 2008
– NIKE, Inc. (NYSE: NKE) today announced financial results for its fiscal 2009
second quarter ended November 30, 2008. Revenue grew 6 percent to $4.6 billion,
compared to $4.3 billion for the same period last year. Changes in currency
exchange rates increased revenue growth by 1 percentage point for the
quarter. Second quarter net income increased 9 percent to $391.0 million,
compared to $359.4 million in the prior year. Diluted earnings per share
increased 13 percent to $0.80, versus $0.71 last year.
“Our
second quarter results demonstrate the power of the Nike brand and the diversity
of the Nike, Inc. portfolio,” said Mark Parker, NIKE, Inc. President and CEO.
“In challenging times like these it’s especially important to stay focused on
what we do best – delivering the most innovative and relevant product,
strengthening our relationship with consumers and driving excellence into every
area of our business. That’s how we continue to lead the industry, take market
share from competitors and grow our business.”*
Parker
concluded, “I see the current state of our industry and the world as an
incredible opportunity for Nike to be a better and stronger leader, and we’re
going to seize that opportunity.”*
Futures
Orders
The
Company reported worldwide futures orders for athletic footwear and apparel,
scheduled for delivery from December 2008 through April 2009, totaling $6.7
billion, 1 percent lower than such orders reported for the same period last
year. Excluding the effect of changes in foreign currency exchange rates,
reported orders grew 6 percent.*
By
region, futures orders for the U.S. were up 6 percent; EMEA (which includes
Europe, the Middle East and Africa) decreased 13 percent; Asia Pacific increased
11 percent and the Americas grew 6 percent. By region, changes in currency
exchange rates decreased reported futures orders growth by 12 percentage points
in Europe; by 1 percentage point in Asia Pacific; and by 20 percentage points in
the Americas region.
Regional
Highlights
U.S.
During
the second quarter, U.S. revenues decreased 1 percent to $1.51 billion versus
$1.53 billion for same period last year. U.S. footwear revenues increased 1
percent to $993.5 billion. Apparel revenues decreased 3 percent to $449.8
million. Equipment revenues decreased 17 percent to $70.1 million. U.S. pre-tax
income decreased 18 percent to $253.3 million due to lower gross margins and
higher selling and administrative expenses, primarily related to Nike-owned
retail expansion.
Europe
Second
quarter revenues for the European region grew 6 percent to $1.3 billion from
$1.2 billion for the same period last year. Changes in currency exchange rates
increased revenue growth by 2 percentage points. Footwear revenues
increased 6 percent to $688.3 million. Apparel revenues grew by 7 percent to
$521.6 million and equipment revenues increased 1 percent to $96.3 million.
Pre-tax income increased 19 percent to $276.5 million.
Asia
Pacific
In the
second quarter, revenues in the Asia Pacific region grew 22 percent to $821.4
million compared to $675.6 million a year ago. Changes in currency exchange
rates increased revenue growth by 5 percentage points. Footwear revenues were up
20 percent to $400.1 million, apparel revenues increased 23 percent to $356.9
million and equipment revenues grew 23 percent to $64.4 million. Pre-tax income
increased 25 percent to $216.0 million.
Americas
Revenues
in the Americas region increased 21 percent to $384.6 million, an improvement
from $316.9 million for the same quarter last year. Currency exchange rates
reduced this growth rate by 2 percentage points. Footwear revenues were up 23
percent to $264.1 million, apparel revenues increased 20 percent to $88.2
million and equipment revenues grew 10 percent to $32.3 million. Pre-tax income
was up 34 percent to $93.1 million.
Other
Businesses
For the
second quarter, Other business revenue, which includes Cole Haan, Converse Inc.,
Hurley International LLC, NIKE Golf, and Umbro Ltd., decreased 4 percent to
$564.5 million from $589.7 million last year and pre-tax income decreased 71
percent to $20.5 million.
Current
year amounts are not directly comparable to the prior year due to changes in the
Company’s affiliate brands portfolio. In the second quarter of fiscal 2008 the
Company’s Other business segment included Converse Inc., NIKE Golf, Cole Haan,
Hurley International LLC, NIKE Bauer Hockey, and the Starter
Brand. Following a corporate strategic review the Starter Brand and NIKE
Bauer Hockey were sold in the third and fourth quarter of fiscal 2008,
respectively, while Umbro was acquired in the fourth quarter of fiscal 2008. For
the continuing Other businesses (Converse Inc., NIKE Golf, Cole Haan and Hurley
International LLC) second quarter revenues grew 3% while pretax income declined
51%. Pretax income was lower than the prior year, mainly due to gross margin
declines within Nike Golf and Cole Haan, reflecting the weaker retail
environment, and investments in demand creation and growth initiatives at
Converse.
Income
Statement Review
Second
quarter gross margins were 44.7 percent compared to 44.3 percent for the same
period last year. Gross margins were better due to favorable hedge results,
price increases, and improved product and regional mix.
Selling
and administrative expenses were 33.7 percent of second quarter revenue compared
to 32.9 percent for the same period last year. Selling and administrative
expenses for the period were higher than last year due to a 5 percent increase
in demand creation and a 10 percent increase in operating overhead spending as
the Company committed funds to support growth initiatives such as owned retail,
emerging markets and Other businesses.
The
effective tax rate for the second quarter was 24.9 percent compared to 30.3
percent for the same period last year. The tax rate was lower than prior year
mainly due to U.S. Congressional action to extend the research and development
tax credit and a one time foreign tax refund.
Balance
Sheet Review
At
quarter end, global inventories stood at $2.4 billion, an increase of 9 percent
from November 30, 2007. Cash and short-term investments were $2.7 billion at the
end of the quarter, compared to $3.1 billion at the end of the second quarter
last year.
Share
Repurchase Program
During
the second quarter, the Company repurchased a total of 3,497,100 shares for
approximately $209.3 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 repurchased a total of
49.2 million shares for approximately $2.7 billion under this program. On
September 22, the Company announced a new, four-year $5 billion share repurchase
program to commence upon the completion of its current $3 billion
program.
Conference
Call
NIKE
management will host a conference call beginning at approximately 2:00 p.m. PT
on December 17, 2008 to review the 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,
December 24, 2008.
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)
|
NIKE,
Inc.
|
|||||||
|
CONSOLIDATED
FINANCIAL STATEMENTS
|
|||||||
|
FOR
THE PERIOD ENDED NOVEMBER 30, 2008
|
|||||||
|
(In
millions, except per share data)
|
|||||||
|
|
QUARTER
ENDED
|
YEAR-TO-DATE
ENDED
|
|||||
|
INCOME
STATEMENT
|
11/30/2008
|
11/30/2007
|
%
Chg
|
11/30/2008
|
11/30/2007
|
%
Chg
|
|
|
Revenues
|
$4,590.1
|
$4,339.5
|
6%
|
$10,022.3
|
$8,994.6
|
11%
|
|||
|
Cost
of sales
|
2,540.1
|
2,418.4
|
5%
|
5,410.2
|
4,986.5
|
8%
|
|||
|
Gross
margin
|
2,050.0
|
1,921.1
|
7%
|
4,612.1
|
4,008.1
|
15%
|
|||
|
44.7%
|
44.3%
|
46.0%
|
44.6%
|
||||||
|
Selling
and administrative expense
|
1,546.8
|
1,429.5
|
8%
|
3,403.2
|
2,864.2
|
19%
|
|||
|
33.7%
|
32.9%
|
34.0%
|
31.8%
|
||||||
|
Interest
income, net
|
5.0
|
23.1
|
-78
%
|
15.1
|
47.7
|
-68
%
|
|||
|
Other
income (expense), net
|
12.4
|
0.9
|
1278
%
|
10.8
|
(5.7)
|
289%
|
|||
|
Income
before income taxes
|
520.6
|
515.6
|
1%
|
1,234.8
|
1,185.9
|
4%
|
|||
|
Income
taxes
|
129.6
|
156.2
|
-17%
|
333.3
|
256.8
|
30%
|
|||
|
24.9%
|
30.3%
|
27.0%
|
21.7%
|
||||||
|
Net
income
|
$391.0
|
$359.4
|
9%
|
$901.5
|
$929.1
|
-3%
|
|||
|
Diluted
EPS
|
$0.80
|
$0.71
|
13%
|
$1.83
|
$1.83
|
0%
|
|||
|
Basic
EPS
|
$0.81
|
$0.72
|
13%
|
$1.86
|
$1.86
|
0%
|
|||
|
Weighted
Average Common Shares Outstanding:
|
|||||||||
|
Diluted
|
489.8
|
506.2
|
492.4
|
506.8
|
|||||
|
Basic
|
483.7
|
497.6
|
485.5
|
498.5
|
|||||
|
Dividends
declared
|
$0.25
|
$0.23
|
$0.48
|
$0.415
|
|||||
|
NIKE,
Inc.
|
||||||||
|
BALANCE
SHEET
|
11/30/2008
|
11/30/2007
|
||||||
|
(In
millions)
|
||||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and equivalents
|
$1,721.5
|
$2,470.5
|
||||||
|
Short-term
investments
|
1,008.0
|
601.0
|
||||||
|
Accounts
receivable, net
|
2,737.2
|
2,617.1
|
||||||
|
Inventories
|
2,419.1
|
2,223.7
|
||||||
|
Deferred
income taxes
|
89.7
|
253.9
|
||||||
|
Prepaid
expenses and other current assets
|
947.9
|
521.2
|
||||||
|
Total
current assets
|
8,923.4
|
8,687.4
|
||||||
|
Property,
plant and equipment
|
4,109.4
|
3,907.8
|
||||||
|
Less
accumulated depreciation
|
2,208.5
|
2,119.7
|
||||||
|
Property,
plant and equipment, net
|
1,900.9
|
1,788.1
|
||||||
|
Identifiable
intangible assets, net
|
650.2
|
409.7
|
||||||
|
Goodwill
|
376.8
|
130.8
|
||||||
|
Deferred
income taxes and other assets
|
783.4
|
438.6
|
||||||
|
Total
assets
|
$12,634.7
|
$11,454.6
|
||||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Current
portion of long-term debt
|
$32.4
|
$6.1
|
||||||
|
Notes
payable
|
316.0
|
119.5
|
||||||
|
Accounts
payable
|
1,124.1
|
1,053.5
|
||||||
|
Accrued
liabilities
|
1,499.7
|
1,501.4
|
||||||
|
Income
taxes payable
|
117.4
|
108.4
|
||||||
|
Total
current liabilities
|
3,089.6
|
2,788.9
|
||||||
|
Long-term
debt
|
445.5
|
436.3
|
||||||
|
Deferred
income taxes and other liabilities
|
983.1
|
736.9
|
||||||
|
Redeemable
preferred stock
|
0.3
|
0.3
|
||||||
|
Shareholders'
equity
|
8,116.2
|
7,492.2
|
||||||
|
Total
liabilities and shareholders' equity
|
12,634.7
|
$11,454.6
|
||||||
|
NIKE,
Inc.
|
||||||||||||||||||||||||
|
QUARTER
ENDED
|
YEAR-TO-DATE
ENDED
|
|||||||||||||||||||||||
|
DIVISIONAL
REVENUES1
|
11/30/2008
|
11/30/2007
|
%
Chg
|
11/30/2008
|
11/30/2007
|
%
Chg
|
||||||||||||||||||
|
(in
millions)
|
||||||||||||||||||||||||
|
U.S.
Region
|
||||||||||||||||||||||||
|
Footwear
|
$ | 993.5 | $ | 983.3 | 1 | % | $ | 2,213.3 | $ | 2,103.2 | 5 | % | ||||||||||||
|
Apparel
|
449.8 | 461.4 | -3 | % | 914.2 | 889.4 | 3 | % | ||||||||||||||||
|
Equipment
|
70.1 | 84.9 | -17 | % | 167.8 | 182.4 | -8 | % | ||||||||||||||||
|
Total
|
1,513.4 | 1,529.6 | -1 | % | 3,295.3 | 3,175.0 | 4 | % | ||||||||||||||||
|
EMEA
Region
|
||||||||||||||||||||||||
|
Footwear
|
688.3 | 646.7 | 6 | % | 1,670.7 | 1,438.6 | 16 | % | ||||||||||||||||
|
Apparel
|
521.6 | 485.9 | 7 | % | 1,171.3 | 1,052.9 | 11 | % | ||||||||||||||||
|
Equipment
|
96.3 | 95.1 | 1 | % | 242.9 | 217.4 | 12 | % | ||||||||||||||||
|
Total
|
1,306.2 | 1,227.7 | 6 | % | 3,084.9 | 2,708.9 | 14 | % | ||||||||||||||||
|
Asia
Pacific Region
|
||||||||||||||||||||||||
|
Footwear
|
400.1 | 334.1 | 20 | % | 854.1 | 666.2 | 28 | % | ||||||||||||||||
|
Apparel
|
356.9 | 289.2 | 23 | % | 689.6 | 529.7 | 30 | % | ||||||||||||||||
|
Equipment
|
64.4 | 52.3 | 23 | % | 138.3 | 113.4 | 22 | % | ||||||||||||||||
|
Total
|
821.4 | 675.6 | 22 | % | 1,682.0 | 1,309.3 | 28 | % | ||||||||||||||||
|
Americas
Region
|
||||||||||||||||||||||||
|
Footwear
|
264.1 | 214.3 | 23 | % | 509.9 | 412.7 | 24 | % | ||||||||||||||||
|
Apparel
|
88.2 | 73.2 | 20 | % | 167.6 | 131.5 | 27 | % | ||||||||||||||||
|
Equipment
|
32.3 | 29.4 | 10 | % | 62.8 | 54.7 | 15 | % | ||||||||||||||||
|
Total
|
384.6 | 316.9 | 21 | % | 740.3 | 598.9 | 24 | % | ||||||||||||||||
| 4,025.6 | 3,749.8 | 7 | % | 8,802.5 | 7,792.1 | 13 | % | |||||||||||||||||
|
Other
|
564.5 | 589.7 | -4 | % | 1,219.8 | 1,202.5 | 1 | % | ||||||||||||||||
|
Total
NIKE, Inc. revenues
|
$ | 4,590.1 | $ | 4,339.5 | 6 | % | $ | 10,022.3 | $ | 8,994.6 | 11 | % | ||||||||||||
|
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.
|
||||||||||||||||||||||||
|
QUARTER
ENDED
|
%
|
YEAR-TO-DATE
ENDED
|
%
|
|||||||||||||||||||||
|
PRE-TAX
INCOME1,2
|
11/30/2008
|
11/30/2007
|
Chg
|
11/30/2008
|
11/30/2007
|
Chg
|
||||||||||||||||||
|
(in
millions)
|
||||||||||||||||||||||||
|
U.S.
Region
|
$ | 253.3 | $ | 308.0 | -18 | % | $ | 605.2 | $ | 656.2 | -8 | % | ||||||||||||
|
EMEA
Region
|
276.5 | 233.1 | 19 | % | 718.9 | 612.3 | 17 | % | ||||||||||||||||
|
Asia
Pacific Region
|
216.0 | 173.1 | 25 | % | 401.5 | 334.0 | 20 | % | ||||||||||||||||
|
Americas
Region
|
93.1 | 69.4 | 34 | % | 162.2 | 128.2 | 27 | % | ||||||||||||||||
|
Other
|
20.5 | 70.8 | -71 | % | 106.8 | 166.0 | -36 | % | ||||||||||||||||
|
Corporate3
|
(338.8 | ) | (338.8 | ) | 0 | % | (759.8 | ) | (710.8 | ) | -7 | % | ||||||||||||
|
Total
pre-tax income1
|
$ | 520.6 | $ | 515.6 | 1 | % | $ | 1,234.8 | $ | 1,185.9 | 4 | % | ||||||||||||
|
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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|
|
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|
2
Certain prior year amounts have been reclassified to conform to fiscal
year 2008 presentation. These changes had no impact on previously reported
results of operations or shareholders' equity.
|
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|
|
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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 intercompany eliminations
for specific items in the Consolidated Income Statement.
|
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