NIKE, Inc. Reports Third Quarter Earnings Per Share Up 36 Percent; Worldwide Futures Orders Increase 9.6 Percent
Beaverton, Oregon (ots/PRNewswire)
Highlights:
- Record third quarter earnings per diluted share increased 36 percent to
US$1.01 versus US$0.74 per diluted share a year ago
- Highest third quarter revenues, up 14 percent to US$3.3 billion
- Gross margin improved 2.0 points to 44.1 percent
- Worldwide futures orders increased 9.6 percentNIKE, Inc. (NYSE: NKE) today reported revenues and earnings for the Company's third quarter ended February 28, 2005. Third quarter revenues increased 14 percent to US$3.3 billion, versus US$2.9 billion for the same period last year. Third quarter net income totaled US$273.4 million, or US$1.01 per diluted share, compared to US$200.3 million, or US$0.74 per diluted share in the prior year.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990818/NIKELOGO )
"Today's results mark another terrific quarter for Nike, Inc.," said William D. Perez, Nike, Inc. President and Chief Executive Officer. "This was our sixth consecutive quarter of double-digit revenue and earnings per share growth. These consistently strong results were driven by excellent performance across geographies and brands, coupled with favorable trends in foreign exchange rates. In addition to another strong quarter for our U.S. business, emerging international markets such as China, Russia and Brazil produced significant growth. While the core Nike Brand fueled the majority of our growth, Nike Golf, Converse and Cole Haan were also major contributors to our positive results."(i)
Futures Orders
The Company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery from March 2005 through July 2005, totaling US$5.2 billion, 9.6 percent higher than such orders reported for the same period last year. Approximately one point of this growth was due to changes in currency exchange rates.(i)
By region, futures orders for the U.S. were up nine percent; Europe increased seven percent; Asia Pacific grew 14 percent; and the Americas increased 22 percent. In Europe, two points of the increase were due to currency exchange rates. Currency exchange rates contributed to the growth in Asia Pacific and the Americas by approximately two points and one point, respectively.(i)
Perez continued, "Global consumer demand for Nike brand footwear and apparel continues to be strong, as evidenced by the growth in futures orders. Demand in the U.S. market remains particularly robust, as Nike product innovation continues to drive the trend toward performance footwear and apparel in this market."(i)
Regional Highlights
U.S.
During the third quarter, U.S. revenues increased nine percent to US$1.3 billion versus US$1.2 billion for the third quarter of fiscal 2004. U.S. athletic footwear revenues increased 10 percent to US$849.6 million. Apparel revenues increased five percent to US$345.8 million. Equipment revenues increased 12 percent to US$72.8 million. U.S. pre-tax income increased 10 percent to US$259.5 million.
EMEA
Revenues for the Europe, Middle East and Africa region grew 18 percent to US$1.0 billion, up from US$878.6 million for the same period last year. Nine points of this growth were the result of changes in currency exchange rates. Footwear revenues increased 14 percent to US$615.3 million, apparel revenues increased 24 percent to US$351.3 million and equipment revenues increased 18 percent to US$67.3 million. Pre-tax income rose 28 percent to US$219.3 million.
Asia Pacific
Revenues in the Asia Pacific region grew 18 percent to US$472.8 million compared to US$402.2 million a year ago. Five points of this growth were the result of changes in currency exchange rates. Footwear revenues were up 11 percent to US$237.9 million, apparel revenues increased 25 percent to US$188.3 million and equipment grew 23 percent to US$46.6 million. Pre-tax income was up 16 percent to US$100.4 million.
Americas
Revenues in the Americas region increased 10 percent to US$143.7 million, an improvement from US$131.1 million in the third quarter of fiscal 2004. Currency exchange rates resulted in a three-percentage point increase in this growth rate. Footwear revenues were up 13 percent to US$99.6 million, apparel revenues decreased five percent to US$33.5 million and equipment improved 34 percent to US$10.6 million. Pre-tax income grew 49 percent to US$23.2 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 20 percent to US$389.6 million from US$325.1 million last year. Pre-tax income increased 724 percent to US$23.9 million.
Income Statement Review
Gross margins were 44.1 percent compared to 42.1 percent last year. Selling and administrative expenses were 31.3 percent of third quarter revenues, compared to 30.7 percent last year. The effective tax rate for the third quarter was 33.9 percent.
Balance Sheet Review
At quarter end, global inventories stood at US$1.7 billion, an increase of four percent from February 29, 2004. Cash and short-term investments were US$1.6 billion at the end of the quarter, compared to US$914.7 million last year.
Share Repurchase
During the quarter, the Company purchased a total of 2,302,000 shares for approximately US$199.8 million in conjunction with the Company's four-year, US$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 5,070,900 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.
(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 FEBRUARY 28, 2005
(In millions, except per share data)
(All figures in USD)
INCOME QUARTER ENDING YEAR-TO-DATE ENDING
STATEMENT 02/28/2005 02/29/2004 % Chg 02/28/2005 02/29/2004 % Chg
Revenues $3,308.2 $2,904.0 14% $10,018.3 $8,766.0 14%
Cost of Sales 1,849.4 1,682.1 10% 5,585.6 5,043.0 11%
Gross Margin 1,458.8 1,221.9 19% 4,432.7 3,723.0 19%
44.1% 42.1% 44.2% 42.5%
SG&A 1,035.7 892.0 16% 3,082.5 2,664.1 16%
31.3% 30.7% 30.8% 30.4%
Interest Expense,
net (0.1) 5.5 -- 8.4 21.1 (60%)
Other 9.8 17.2 (43%) 19.9 55.3 (64%)
Income Before
Income Taxes 413.4 307.2 35% 1,321.9 982.5 35%
Income Taxes 140.0 106.9 31% 459.8 341.9 34%
33.9% 34.8% 34.8% 34.8%
Net Income $273.4 $200.3 36% $862.1 $640.6 35%
Diluted EPS $1.01 $0.74 36% $3.18 $2.38 34%
Basic EPS $1.04 $0.76 37% $3.28 $2.43 35%
Weighted Average
Common Shares
Outstanding:
Diluted 271.7 271.1 270.9 269.3
Basic 263.3 263.5 263.1 263.2
Dividends Declared $0.25 $0.20 $0.70 $0.54
NIKE, Inc.
BALANCE SHEET (i) 02/28/2005 02/29/2004
ASSETS
Cash & Equivalents $1,222.5 $914.7
Short-term Investments 418.3 --
Accounts Receivable 2,304.9 2,017.9
Inventory 1,727.0 1,667.6
Deferred Taxes 170.5 218.5
Prepaid Expenses and Other Curr Assets 355.5 435.6
Current Assets 6,198.7 5,254.3
Fixed Assets 3,305.5 3,213.4
Depreciation 1,680.0 1,576.5
Net Fixed Assets 1,625.5 1,636.9
Identifiable Intangible
Assets and Goodwill 538.6 500.7
Other Assets 289.3 292.6
Total Assets $8,652.1 $7,684.5
LIAB AND EQUITY
Current Long-term Debt $6.4 $6.2
Payable to Banks 101.3 165.2
Accounts Payable 684.2 567.0
Accrued Liabilities 1,091.4 1,024.0
Income Taxes Payable 182.7 194.1
Current Liabilities 2,066.0 1,956.5
Long-term Debt 691.4 694.3
Def Inc Taxes & Other Liabilities 467.3 470.2
Preferred Stock 0.3 0.3
Common Equity 5,427.1 4,563.2
Total Liab. & Equity $8,652.1 $7,684.5(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) 02/28/2005 02/29/2004 % Chg 02/28/2005 02/29/2004 % Chg
U.S. Region
Footwear $849.6 $772.8 10% $2,451.0 $2,219.2 10%
Apparel 345.8 329.3 5% 1,121.8 1,074.1 4%
Equipment 72.8 64.9 12% 229.1 205.7 11%
Total 1,268.2 1,167.0 9% 3,801.9 3,499.0 9%
EMEA Region
Footwear 615.3 537.7 14% 1,810.4 1,600.2 13%
Apparel 351.3 284.1 24% 1,131.0 950.9 19%
Equipment 67.3 56.8 18% 211.5 186.9 13%
Total 1,033.9 878.6 18% 3,152.9 2,738.0 15%
Asia Pacific Region
Footwear 237.9 214.2 11% 693.1 622.6 11%
Apparel 188.3 150.1 25% 544.9 437.9 24%
Equipment 46.6 37.9 23% 124.3 101.7 22%
Total 472.8 402.2 18% 1,362.3 1,162.2 17%
Americas Region
Footwear 99.6 88.0 13% 344.2 294.5 17%
Apparel 33.5 35.2 (5%) 115.9 115.1 1%
Equipment 10.6 7.9 34% 34.6 26.9 29%
Total 143.7 131.1 10% 494.7 436.5 13%
2,918.6 2,578.9 13% 8,811.8 7,835.7 12%
Other 389.6 325.1 20% 1,206.5 930.3 30%
Total NIKE Inc.
Revenues $3,308.2 $2,904.0 14% $10,018.3 $8,766.0 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) 02/28/05 02/29/04(i) % Chg 02/28/05 02/29/04(i) % Chg
U.S. Region $259.5 $236.2 10% $814.0 $722.0 13%
EMEA Region 219.3 171.4 28% 663.3 512.4 29%
Asia Pacific Region 100.4 86.7 16% 275.8 261.2 6%
Americas Region 23.2 15.6 49% 88.4 71.1 24%
Other 23.9 2.9 724% 85.0 5.3 1504%
Corporate(2) (212.9) (205.6) (4%) (604.6) (589.5) (3%)
Total Pre-tax
Income(1) $413.4 $307.2 35% $1,321.9 $982.5 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.
(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.
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:
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