Global Strength of Nike Portfolio Drives Record Financial Performance
Beaverton, Oregon (ots/PRNewswire)
Nike, Inc. reports double-digit revenue growth for fiscal 2005;
EPS up 28 percent to US$4.48;
Worldwide futures orders increase 9.5 percent
Highlights:
- Fiscal 2005 revenues up 12 percent to US$13.7 billion, earnings
per diluted share up 28 percent to US$4.48
- Fourth quarter revenues up 7 percent; earnings per diluted share
up 15 percent to US$1.30
- Full-year revenue growth across all Nike brand regions and
product lines; All regions post record revenues and profits
- Nike, Inc. Other business full-year revenues grew 22 percent,
exceeding US$1.7 billion
- Full-year gross margin percentage grew 160 basis points to
44.5 percent
- Balance sheet strengthens as cash and short term investments
rise to US$1.8 billionNike, Inc. (NYSE: NKE) today reported record financial results for the 2005 fiscal year, ended May 31, 2005. Earnings per diluted share for the year grew 28 percent to US$4.48, supported by double digit revenue growth and record gross margins.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990818/NIKELOGO )
For the fiscal year ended May 31, 2005, revenues increased 12 percent to US$13.7 billion, compared to US$12.3 billion in fiscal year 2004. Changes in currency exchange rates contributed three percentage points of this growth, while the acquisition of Converse and Starter added one point. Full year net income was up 28 percent to US$1.2 billion, or US$4.48 per diluted share, versus US$945.6 million, or US$3.51 per diluted share, in 2004.
Fourth quarter revenues increased seven percent to US$3.7 billion, versus US$3.5 billion for the same period last year. Three percentage points of this growth were the result of changes in currency exchange rates. Fourth quarter net income was up 15 percent to US$349.5 million, or US$1.30 per diluted share, compared to US$305.0 million, or US$1.13 per diluted share in the prior year.
Commenting on the company's results, William D. Perez, Nike, Inc. President and Chief Executive Officer said, "Fiscal 2005 was a great year. The strength of the Nike brand around the world, the breadth of our Nike, Inc. portfolio, and the quality of our management team contributed to another year of consistent, profitable growth for our shareholders. The Nike brand is exceptionally strong, driving full-year revenue gains across all regions and product lines, while Converse and Cole Haan led the growth in our portfolio of other businesses. Today's record earnings were driven by healthy revenue growth and the highest gross margin in the company's history."
Perez continued, "Looking ahead, our worldwide futures orders for athletic footwear and apparel are strong, up 9.5 percent, with all regions posting increases and U.S. footwear remaining particularly healthy. We're very pleased with the brand strength reflected in these futures results and we see continued potential for profitable expansion across our portfolio of businesses."(a)
Futures Orders
The Company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery from June through November 2005, totaling US$6.3 billion, 9.5 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.(a)
By region, U.S. futures were up nine percent; Europe increased seven percent; Asia Pacific grew 11 percent; and the Americas increased 25 percent. Changes in currency exchange rates had a favorable impact of two percentage points in Europe and Asia Pacific. Changes in currency exchange rates had no impact on futures orders growth for the Americas.(a)
Regional Highlights
U.S.
During the fourth quarter, U.S. revenues increased three percent to US$1.3 billion. U.S. athletic footwear revenues increased seven percent to US$907.2 million. Apparel revenues declined seven percent to US$335.9 million. Equipment revenues increased 17 percent to US$84.3 million. Pre-tax income for the quarter rose nine percent to US$311.8 million.
For the full fiscal year, U.S. revenues were up seven percent to US$5.1 billion. Footwear revenues increased nine percent to US$3.4 billion; apparel revenues grew two percent to US$1.5 billion; and equipment revenues grew 13 percent to US$313.4 million. U.S. pre-tax income improved 12 percent to US$1.1 billion.
Europe, Middle East and Africa (EMEA)
Fourth quarter revenues for the EMEA region grew four percent to US$1.1 billion. Seven percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues increased nine percent to US$689.6 million, apparel revenues declined four percent to US$366.1 million and equipment revenues declined two percent to US$73.0 million. Pre-tax income rose 10 percent to US$254.2 million.
For the full year, EMEA revenues grew 12 percent to US$4.3 billion, compared to US$3.8 billion last year. Seven percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues were up 12 percent to US$2.5 billion. Apparel revenues increased 12 percent to US$1.5 billion and equipment revenues rose nine percent to US$284.5 million. Pre-tax income increased 23 percent for the full-year to US$917.5 million.
Asia Pacific
In the Asia Pacific Region, quarterly revenues grew 19 percent to US$535.0 million. Three percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues were up 16 percent to US$269.8 million; apparel revenues increased 21 percent to US$210.6 million and equipment revenues grew 32 percent to US$54.6 million. Fourth quarter pre-tax income was up 36 percent to US$124.0 million.
Full-year Asia Pacific revenues increased 18 percent to US$1.9 billion, compared to US$1.6 billion last year. Four percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues increased 13 percent to US$962.9 million. Apparel revenues were up 23 percent to US$755.5 million. Equipment revenues increased 25 percent to US$178.9 million. Pre-tax income increased 13 percent to US$399.8 million.
Americas
Quarterly revenues in the Americas region increased 20 percent to US$201.1 million. This growth rate reflected a six percentage point increase due to changes in currency exchange rates. Footwear revenues were up 18 percent to US$134.4 million, apparel revenues increased 20 percent to US$53.2 million and equipment revenues increased 36 percent to US$13.5 million. Pre-tax income was up 11 percent to US$29.2 million.
For the full year, Americas revenues increased 15 percent to US$695.8 million, compared to US$604.5 million last year. One percentage point of this growth was the result of changes in currency exchange rates. Footwear revenues increased 17 percent to US$478.6 million, apparel revenues grew six percent to US$169.1 million and equipment revenues increased 31 percent to US$48.1 million. Pre-tax income rose 21 percent for the full year, to US$117.6 million.
Other Revenues
In the fourth quarter, Other revenues, which include results for Bauer NIKE Hockey, Inc., Cole Haan(R), Converse Inc., Exeter Brands Group LLC, Hurley International LLC and NIKE Golf, grew six percent to US$529.2 million. For the full year, other revenues increased 22 percent to US$1.7 billion. Pre-tax income declined two percent for the fourth quarter and increased 104 percent for the full year.
Income Statement Review
In the fourth quarter, gross margins were 45.2 percent of revenue compared to 43.8 percent last year. For the full year, gross margins were 44.5 percent compared to 42.9 percent last year. Selling and administrative expenses were 30.6 percent of fourth quarter revenues, compared to 29.8 percent last year. For the full year, selling and administrative expenses were 30.7 percent of full year revenues versus 30.2 percent last year. The effective tax rate was 35.0 percent for the fourth quarter and 34.9 percent for the full year. The tax provision for the fourth quarter reflected a charge related to the Company's decision to repatriate US$500 million of foreign earnings under the American Jobs Creation Act during fiscal 2006. The net impact of this charge was not material to our effective tax rate for the quarter or the full year.
Balance Sheet Review
At fiscal year-end, global inventories stood at US$1.8 billion, an increase of 10 percent from last year. Cash and short-term investments were US$1.8 billion at fiscal year-end, compared to US$1.2 billion last year.
Share Repurchase
During the quarter, the Company purchased a total of 1,853,500 shares for approximately US$152.7 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 6,924,400 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.
(a) 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 exchange rate fluctuations as well as the mix of futures and "at once" orders, which may vary significantly from quarter to quarter.
All figures in US dollars
NIKE, Inc.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2005
(In millions, except per share data)
INCOME QUARTER ENDING YEAR ENDING
STATEMENT 05/31/2005 05/31/2004 % Chg 05/31/2005 05/31/2004 % Chg
Revenues $3,721.4 $3,487.1 7% $13,739.7 $12,253.1 12%
Cost of
Sales 2,038.7 1,958.4 4% 7,624.3 7,001.4 9%
Gross
Margin 1,682.7 1,528.7 10% 6,115.4 5,251.7 16%
45.2% 43.8% 44.5% 42.9%
SG&A 1,139.2 1,037.9 10% 4,221.7 3,702.0 14%
30.6% 29.8% 30.7% 30.2%
Interest
(Income)
Expense, net (3.6) 3.9 -- 4.8 25.0 (81%)
Other
Expense, net 9.2 19.4 (53%) 29.1 74.7 (61%)
Income Before
Income Taxes 537.9 467.5 15% 1,859.8 1,450.0 28%
Income Taxes 188.4 162.5 16% 648.2 504.4 29%
35.0% 34.8% 34.9% 34.8%
Net Income $349.5 $305.0 15% $1,211.6 $945.6 28%
Diluted EPS $1.30 $1.13 15% $4.48 $3.51 28%
Basic EPS $1.34 $1.16 16% $4.61 $3.59 28%
Weighted Average
Common Shares
Outstanding:
Diluted 268.5 270.8 270.3 269.7
Basic 261.1 263.2 262.6 263.2
Dividends
Declared $0.25 $0.20 $0.95 $0.74
NIKE, Inc.
BALANCE SHEET (b)
05/31/2005 05/31/2004
ASSETS
Cash & Equivalents $1,388.1 $828.0
Short-term Investments 436.6 400.8
Accounts Receivable 2,262.1 2,120.2
Inventory 1,811.1 1,650.2
Deferred Taxes 110.2 165.0
Prepaid Expenses and Other Curr Assets 343.0 364.4
Current Assets 6,351.1 5,528.6
Fixed Assets 3,179.2 3,183.4
Depreciation 1,573.4 1,571.6
Net Fixed Assets 1,605.8 1,611.8
Identifiable Intangible
Assets and Goodwill 541.5 501.7
Other Assets 295.2 266.6
Total Assets $8,793.6 $7,908.7
LIAB AND EQUITY
Current Long-term Debt $6.2 $6.6
Payable to Banks 69.8 146.0
Accounts Payable 843.9 780.4
Accrued Liabilities 984.3 979.3
Income Taxes Payable 95.0 118.2
Current Liabilities 1,999.2 2,030.5
Long-term Debt 687.3 682.4
Def Inc Taxes & Other Liabilities 462.6 413.8
Preferred Stock 0.3 0.3
Common Equity 5,644.2 4,781.7
Total Liab. & Equity $8,793.6 $7,908.7
(b) 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.
Divisional Revenues(b)
QUARTER ENDING YEAR ENDING
05/31/2005 05/31/2004 % Chg 05/31/2005 05/31/2004 % Chg
U.S. Region
Footwear $907.2 $851.2 7% $3,358.2 $3,070.4 9%
Apparel 335.9 359.4 (7%) 1,457.7 1,433.5 2%
Equipment 84.3 72.2 17% 313.4 277.9 13%
Total 1,327.4 1,282.8 3% 5,129.3 4,781.8 7%
EMEA Region
Footwear 689.6 632.0 9% 2,500.0 2,232.2 12%
Apparel 366.1 382.9 (4%) 1,497.1 1,333.8 12%
Equipment 73.0 74.8 (2%) 284.5 261.7 9%
Total 1,128.7 1,089.7 4% 4,281.6 3,827.7 12%
Asia Pacific Region
Footwear 269.8 232.7 16% 962.9 855.3 13%
Apparel 210.6 174.4 21% 755.5 612.3 23%
Equipment 54.6 41.5 32% 178.9 143.2 25%
Total 535.0 448.6 19% 1,897.3 1,610.8 18%
Americas Region
Footwear 134.4 113.7 18% 478.6 408.2 17%
Apparel 53.2 44.4 20% 169.1 159.5 6%
Equipment 13.5 9.9 36% 48.1 36.8 31%
Total 201.1 168.0 20% 695.8 604.5 15%
3,192.2 2,989.1 7% 12,004.0 10,824.8 11%
Other 529.2 498.0 6% 1,735.7 1,428.3 22%
Total
NIKE, Inc.
Revenues $3,721.4 $3,487.1 7% $13,739.7 $12,253.1 12%
(b) 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.
Pre-tax Income(1),(b)
QUARTER ENDING YEAR ENDING
05/31/2005 05/31/2004 % Chg 05/31/2005 05/31/2004 % Chg
U.S. Region $311.8 $285.3 9% $1,125.8 $1,007.3 12%
EMEA Region 254.2 231.6 10% 917.5 744.0 23%
Asia Pacific
Region 124.0 91.1 36% 399.8 352.3 13%
Americas
Region 29.2 26.3 11% 117.6 97.4 21%
Other 68.9 70.0 (2%) 153.9 75.3 104%
Corporate(2) (250.2) (236.8) (6%) (854.8) (826.3) (3%)
Total Pre-tax
Income(1) $537.9 $467.5 15% $1,859.8 $1,450.0 28%
(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.
(b) 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:
media, Alan Marks, +1-503-671-4235; or investor, Pamela Catlett,
+1-503-671-4589, both for NIKE, Inc./ Photo:
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