NIKE Reports Second Quarter Earnings Per Share Up 47 Percent; Worldwide Futures Orders Increase 9.1 Percent
Beaverton, Oregon (ots/PRNewswire)
Highlights:
- Record second quarter earnings per diluted share increased 47 percent
to USD$0.97 versus USD$0.66 per diluted share a year ago
- Highest second quarter revenues, up 11 percent to USD$3.1 billion
- Gross margin improved 1.8 points to 44.1 percent
- Worldwide futures orders increased 9.1 percentNIKE, Inc. (NYSE: NKE) today reported revenues and earnings for the Company's second quarter ended November 30, 2004. Second quarter revenues increased 11 percent to USD$3.1 billion, versus USD$2.8 billion for the same period last year. Second quarter net income totaled USD$261.9 million, or USD$0.97 per diluted share, compared to USD$179.1 million, or USD$0.66 per diluted share in the prior year.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990818/NIKELOGO )
"We posted another quarter of record results," said Philip H. Knight, Chairman and CEO. "Nike's second quarter revenues and earnings per share reached all-time high levels as a result of solid performance across our global portfolio. Our businesses in the United States and emerging markets such as China, Russia and Turkey, combined with favorable European exchange rates, helped drive much of this growth."(i)
Knight added, "With the first half of our fiscal year in the books, we remain confident that our business strategy and consistent execution will allow us to deliver on our goals of healthy, profitable growth."(i)
Futures Orders
The Company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery from December 2004 through April 2005, totaling USD$4.9 billion, 9.1 percent higher than such orders reported for the same period last year. Currency exchange rates had no net impact to this growth.(i)
By region, futures orders for the U.S. were up 10 percent; Europe increased six percent; Asia Pacific grew 14 percent; and the Americas increased 15 percent. In Europe, one point of the increase was due to currency exchange rates. Currency exchange reduced the growth in Asia Pacific and the Americas by approximately one point and three points, respectively.(i)
Knight continued, "Consumer demand for Nike products continues to grow, as evidenced by our sixth consecutive quarter of strong futures results. The U.S. market has been particularly robust, reporting futures growth of 10 percent. The Nike brand is healthier than ever and our innovative products continue to excite consumers around the world."(i)
Regional Highlights
U.S.
During the second quarter, U.S. revenues increased five percent to USD$1.13 billion versus USD$1.08 billion for the second quarter of fiscal 2004. U.S. athletic footwear revenues increased nine percent to USD$680.0 million. Apparel revenues decreased three percent to USD$384.7 million. This decline was due predominantly to the expiration of Nike's license agreement with the NBA. Equipment revenues increased 11 percent to USD$67.3 million. U.S. pre-tax income increased 21 percent to USD$232.6 million.
EMEA
Revenues for the Europe, Middle East and Africa region grew 13 percent to USD$961.1 million, up from USD$847.8 million for the same period last year. Eight points of this growth were the result of changes in currency exchange rates. Footwear revenues increased 13 percent to USD$531.8 million, apparel revenues increased 14 percent to USD$370.0 million and equipment revenues increased 18 percent to USD$59.3 million. Pre-tax income rose 43 percent to USD$197.6 million.
Asia Pacific
Revenues in the Asia Pacific region grew 17 percent to USD$483.5 million compared to USD$412.0 million a year ago. Three points of this growth were the result of changes in currency exchange rates. Footwear revenues were up 15 percent to USD$236.6 million, apparel revenues increased 19 percent to USD$207.8 million and equipment grew 23 percent to USD$39.1 million. Pre-tax income was up 14 percent to USD$112.0 million.
Americas
Revenues in the Americas region increased 23 percent to USD$189.3 million, an improvement from USD$154.3 million in the second quarter of fiscal 2004. Currency exchange rates resulted in a one-percentage point increase in this growth rate. Footwear revenues were up 25 percent to USD$129.8 million, apparel revenues increased 14 percent to USD$46.9 million and equipment improved 34 percent to USD$12.6 million. Pre-tax income grew 43 percent to USD$44.5 million.
Other Revenues
Other revenues, which include Converse Inc., NIKE Golf, Bauer NIKE Hockey Inc., Cole Haan, Hurley International LLC and Exeter Brands Group LLC, grew 12 percent to USD$382.4 million from USD$340.0 million last year. Pre-tax income increased 210 percent to USD$20.8 million.
Income Statement Review
Gross margins were 44.1 percent compared to 42.3 percent last year. Selling and administrative expenses were 30.9 percent of second quarter revenues, compared to 31.8 percent last year. The effective tax rate for the second quarter was 35.0 percent.
Balance Sheet Review
At quarter end, global inventories stood at USD$1.7 billion, an increase of six percent from November 30, 2003. Cash and short-term investments were USD$1.7 billion at the end of the quarter, compared to USD$968.9 million last year
Share Repurchase
During the quarter, the Company purchased a total of 626,300 shares for approximately USD$48.6 million in conjunction with the Company's four-year, USD$1.5 billion share repurchase program that was approved by the Board of Directors in June 2004. To date, the Company has repurchased a total of 2,768,900 shares under this program.
NIKE, Inc. based in Beaverton, Oregon is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly owned Nike subsidiaries include Converse Inc., which designs, markets and distributes athletic footwear, apparel and accessories; Bauer NIKE Hockey Inc., a leading designer and distributor of hockey equipment; Cole Haan, a leading designer and marketer of luxury shoes, handbags, accessories and coats; Hurley International LLC, which designs, markets and distributes action sports and youth lifestyle footwear, apparel and accessories and Exeter Brands Group LLC, which designs and markets athletic footwear and apparel for the value retail channel.
NIKE's earnings releases and other financial information are available on the Internet at www.NikeBiz.com/invest. This quarter, Nikebiz will feature expanded information and relevant highlights of product and key initiatives for the reporting period.
(i) The marked paragraphs contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed from time to time in reports filed by NIKE with the S.E.C., including Forms 8-K, 10-Q, and 10-K. Some forward-looking statements in this release concern changes in futures orders that are not necessarily indicative of changes in total revenues for subsequent periods due to the mix of futures and "at once" orders, which may vary significantly from quarter to quarter.
NIKE, Inc.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED NOVEMBER 30, 2004
(In millions, except per share data)
All Amounts in USD$
INCOME QUARTER ENDING YEAR-TO-DATE ENDING
STATEMENT 11/30/2004 11/30/2003 % Chg 11/30/2004 11/30/2003 % Chg
Revenues $3,148.3 $2,837.1 11% $6,710.1 $5,862.0 14%
Cost of Sales 1,760.2 1,637.5 7% 3,736.2 3,360.9 11%
Gross Margin 1,388.1 1,199.6 16% 2,973.9 2,501.1 19%
44.1% 42.3% 44.3% 42.7%
SG&A 973.2 902.5 8% 2,046.8 1,772.1 16%
30.9% 31.8% 30.5% 30.2%
Interest
Expense, net 3.7 8.1 -54% 8.5 15.6 -46%
Other 8.2 14.3 -43% 10.1 38.1 -73%
Income Before
Income Taxes 403.0 274.7 47% 908.5 675.3 35%
Income Taxes 141.1 95.6 48% 319.8 235.0 36%
35.0% 34.8% 35.2% 34.8%
Net Income $261.9 $179.1 46% $588.7 $440.3 34%
Diluted EPS $0.97 $0.66 47% $2.18 $1.64 33%
Basic EPS $0.99 $0.68 46% $2.24 $1.67 34%
Weighted Average
Common Shares
Outstanding:
Diluted 271.1 269.5 270.5 268.3
Basic 263.3 263.3 263.0 263.1
Dividend $0.25 $0.20 $0.45 $0.34
NIKE, Inc.
BALANCE SHEET (i) 11/30/2004 11/30/2003
ASSETS
Cash & Equivalents $1,181.8 $968.9
Short-term Investments 476.2 --
Accounts Receivable 2,125.8 1,964.4
Inventory 1,692.4 1,592.0
Deferred Taxes 184.2 212.7
Prepaid Expenses and Other Curr Assets 390.3 309.2
Current Assets 6,050.7 5,047.2
Fixed Assets 3,294.5 3,082.1
Depreciation 1,671.0 1,476.1
Net Fixed Assets 1,623.5 1,606.0
Identifiable Intangible
Assets and Goodwill 543.2 500.8
Other Assets 340.9 248.9
Total Assets $8,558.3 $7,402.9
LIAB AND EQUITY
Current Long-term Debt $6.5 $206.1
Payable to Banks 144.4 142.4
Accounts Payable 650.7 533.1
Accrued Liabilities 1,020.8 937.2
Income Taxes Payable 180.8 159.6
Current Liabilities 2,003.2 1,978.4
Long-term Debt 699.0 649.6
Def Inc Taxes & Other Liabilities 513.5 407.3
Preferred Stock 0.3 0.3
Common Equity 5,342.3 4,367.3
Total Liab. & Equity $8,558.3 $7,402.9
(i) Certain prior year amounts have been reclassified to conform to
fiscal year 2005 presentation.
These changes had no impact on previously reported results of
operations or shareholders' equity.
NIKE, Inc.
QUARTER ENDING YEAR-TO-DATE ENDING
Divisional
Revenues(i) 11/30/2004 11/30/2003 % Chg 11/30/2004 11/30/2003 % Chg
U.S. Region
Footwear $680.0 $624.0 9% $1,601.4 $1,446.4 11%
Apparel 384.7 398.3 -3% 776.0 744.8 4%
Equipment 67.3 60.7 11% 156.3 140.8 11%
Total 1,132.0 1,083.0 5% 2,533.7 2,332.0 9%
EMEA Region
Footwear 531.8 472.5 13% 1,195.1 1,062.5 12%
Apparel 370.0 324.9 14% 779.7 666.8 17%
Equipment 59.3 50.4 18% 144.2 130.1 11%
Total 961.1 847.8 13% 2,119.0 1,859.4 14%
Asia Pacific
Region
Footwear 236.6 205.6 15% 455.2 408.4 11%
Apparel 207.8 174.5 19% 356.6 287.8 24%
Equipment 39.1 31.9 23% 77.7 63.8 22%
Total 483.5 412.0 17% 889.5 760.0 17%
Americas Region
Footwear 129.8 103.6 25% 244.6 206.5 18%
Apparel 46.9 41.3 14% 82.4 79.9 3%
Equipment 12.6 9.4 34% 24.0 19.0 26%
Total 189.3 154.3 23% 351.0 305.4 15%
2,765.9 2,497.1 11% 5,893.2 5,256.8 12%
Other 382.4 340.0 12% 816.9 605.2 35%
Total
NIKE Inc.
Revenues $3,148.3 $2,837.1 11% $6,710.1 $5,862.0 14%
(i) Certain prior year amounts have been reclassified to conform to
fiscal year 2005 presentation.
These changes had no impact on previously reported results of operations
or shareholders' equity.
NIKE, Inc.
QUARTER ENDING YEAR-TO-DATE ENDING
Pre-tax
Income(1) 11/30/04 11/30/03 % Chg 11/30/04 11/30/03 % Chg
U.S. Region $232.6 $192.4 21% $554.5 $485.8 14%
EMEA Region 197.6 138.2 43% 444.0 341.0 30%
Asia Pacific
Region 112.0 98.1 14% 175.4 174.5 1%
Americas
Region 44.5 31.2 43% 65.2 55.5 17%
Other 20.8 6.7 210% 61.1 2.4 2446%
Corporate (2) (204.5) (191.9) -7% (391.7) (383.9) -2%
Total
Pre-tax
Income (1) $403.0 $274.7 47% $908.5 $675.3 35%
(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.
(2) "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.Web site: http://www.nikebiz.com
Contact:
investors, Pamela Catlett, +1-503-671-4589, or media, Joani Komlos,
+1-503-671-2013, both of NIKE, Inc.; Photo:
http://www.newscom.com/cgi-bin/prnh/19990818/NIKELOGO, AP Archive:
http://photoarchive.ap.org, PRN Photo Desk, photodesk@prnewswire.com