NIKE, Inc. Reports Fiscal 2013 First Quarter Results

  NIKE, Inc. Reports Fiscal 2013 First Quarter Results

  *Revenues up 10 percent to $6.7 billion, up 15 percent excluding currency
    changes
  *Diluted earnings per share down 10 percent to $1.23
  *Worldwide futures orders up 6 percent, 8 percent growth excluding currency
    changes
  *Inventories up 10 percent

Business Wire

BEAVERTON, Ore. -- September 27, 2012

NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal 2013
first quarter ended August 31, 2012. Strong demand for NIKE, Inc. brands
propelled first quarter revenue to new record highs. As expected, diluted
earnings per share were lower due to lower gross margin, higher SG&A and an
increase in the tax rate.

“We had a strong first quarter and a great start to the fiscal year. NIKE,
Inc. delivered an amazing array of innovation across some of the biggest
moments in sport,” said Mark Parker, President and CEO, NIKE, Inc. “Innovation
is how great companies sustain growth and build competitive separation,”
Parker added. “We’ll continue to make strategic investments across our
portfolio of businesses to capture our full potential over the long term and
drive shareholder value.”*

First Quarter Income Statement Review

  *Revenues  for NIKE, Inc. increased 10 percent to $ 6.7 billion, up 15
    percent on a currency-neutral basis. Excluding the impacts of changes in
    foreign currency, NIKE Brand revenues rose 16 percent, with growth in all
    key categories and every geography except Japan. Revenues on a
    currency-neutral basis for Other Businesses increased 9 percent, while
    Businesses to be Divested grew by 6 percent.
  *Gross margin declined 80 basis points to 43.5 percent. Gross margin
    continued to benefit from pricing actions and product cost reduction
    initiatives, however, this was more than offset by higher input costs,
    primarily materials and labor. In addition, gross margin was negatively
    impacted by a shift in the Company’s mix to lower margin businesses within
    the NIKE Brand and the conversion of the China market to direct
    distribution for Converse.
  *Selling and administrative expenses grew at a faster rate than revenue, up
    18 percent to $2.2 billion. Demand creation expenses increased 29 percent
    to $891 million due to marketing support for key product initiatives, as
    well as support for the Olympics and European Football Championships.
    Operating overhead expenses increased 12 percent to $1.3 billion due to
    additional investments made in the wholesale business to support growth
    initiatives and higher Direct to Consumer costs from the addition of new
    stores over the last year.
  *Other income, net was $29 million, comprised primarily of foreign exchange
    related gains. For the quarter, the Company estimates the year-over-year
    change in foreign currency related gains and losses included in other
    income, net, combined with the impact of changes in foreign currency
    exchange rates on the translation of foreign currency-denominated profits,
    decreased pretax income by approximately $28 million.
  *The effective tax rate was 27.5 percent compared to 24.3 percent for the
    same period last year. The effective tax rate was higher due to a larger
    percentage of earnings coming from higher tax countries, primarily the
    United States, as well as a higher effective tax rate on operations
    abroad.
  *Net income decreased 12 percent to $567 million while diluted earnings per
    share decreased 10 percent to $1.23, reflecting a 3 percent decline in the
    weighted average diluted common shares outstanding. In a press release
    issued on May 31, 2012, the Company announced its intention to divest of
    the Cole Haan and Umbro businesses. Pro Forma diluted earnings per share,
    excluding the results of the Businesses to be Divested, would have been
    approximately $1.27, down 9 percent compared to the first quarter of
    fiscal 2012 on a comparable basis.**

August 31, 2012 Balance Sheet Review

  *Inventories for NIKE, Inc. were $3.4 billion, up 10 percent from August
    31, 2011, in line with revenue growth, and reflecting strong demand for
    NIKE, Inc. products.
  *Cash and short-term investments were $3.3 billion, $433 million lower than
    last year as share repurchases and dividend payments increased
    year-on-year and the Company made debt repayments.

Share Repurchases

During the first quarter, NIKE, Inc. repurchased a total of 8.2 million shares
for approximately $779 million as part of its four-year, $5 billion share
repurchase program, approved by the Board of Directors in September 2008. As
of the end of the first quarter, the Company has purchased a total of 58.5
million shares for approximately $4.9 billion under this program. On September
19, 2012, the Company announced that its Board of Directors approved a new
four-year, $8 billion program to repurchase shares of NIKE's Class B Common
Stock. During the second quarter of fiscal 2013 the Company's current $5
billion share repurchase program was completed, and the new program commenced.

Futures Orders

As of the end of the quarter worldwide futures orders for NIKE Brand athletic
footwear and apparel, scheduled for delivery from September 2012 through
January 2013, totaled $8.9 billion, 6 percent higher than orders reported for
the same period last year. Excluding currency changes, reported orders would
have increased 8 percent.*

Conference Call

NIKE management will host a conference call beginning at approximately 2:00
p.m. PT on September 27, 2012, to review first quarter results. The conference
call will be broadcast live over the Internet and can be accessed at
http://investors.nikeinc.com. For those unable to listen to the live
broadcast, an archived version will be available at the same location through
9:00 p.m. PT, October 4, 2012.

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, Inc. 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
International Limited, 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 http://investors.nikeinc.com and
individuals can follow @Nike.

* 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.

** The marked paragraph contains references to non-GAAP items. Presentations
of comparable GAAP measures and quantitative reconciliations can be found in
the tables of this press release or on NIKE’s website,
http://investors.nikeinc.com.

                          (Additional Tables Follow)

NIKE, Inc.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2012
(Dollars in millions, except per share data)
                                                                  
                                                                      
                                              QUARTER ENDED
INCOME STATEMENT                             8/31/2012  8/31/2011  % Chg
Revenues                                      $ 6,669     $ 6,081     10  %
Cost of sales                                  3,766    3,388    11  %
Gross profit                                    2,903       2,693     8   %
Gross margin                                    43.5  %     44.3  %
                                                                      
Demand creation expense                         891         692       29  %
Operating overhead expense                     1,262    1,131    12  %
Total selling and administrative expense        2,153       1,823     18  %
% of revenue                                    32.3  %     30.0  %
                                                                      
Other (income) expense, net                     (29   )     18        -
Interest (income) expense, net                 (3    )   -        -
                                                                      
Income before income taxes                      782         852       -8  %
                                                                      
Income taxes                                   215      207      4   %
Effective tax rate                              27.5  %     24.3  %
                                                                      
                                                                      
Net income                                    $ 567     $ 645      -12 %
                                                                      
Diluted EPS                                   $ 1.23      $ 1.36      -10 %
                                                                      
Basic EPS                                     $ 1.25      $ 1.39      -10 %
                                                                      
Weighted Average Common Shares Outstanding:
Diluted                                         461.4       474.3
Basic                                          452.8    465.0 
Dividends declared                            $ 0.36    $ 0.31  

NIKE, Inc.                                                        
                                                                      
BALANCE SHEET                                8/31/2012  8/31/2011  % Change
                                              (Dollars in millions)
ASSETS
Current assets:
Cash and equivalents                          $  2,165    $  1,608    35    %
Short-term investments                           1,102       2,092    -47   %
Accounts receivable, net                         3,431       3,279    5     %
Inventories                                      3,411       3,107    10    %
Deferred income taxes                            282         315      -10   %
Prepaid expenses and other current assets       745       638      17    %
                                                                      
Total current assets                             11,136      11,039   1     %
                                                                      
Property, plant and equipment                    5,359       5,034    6     %
Less accumulated depreciation                   3,068     2,868    7     %
Property, plant and equipment, net               2,291       2,166    6     %
                                                                      
Identifiable intangible assets, net              536         536      0     %
Goodwill                                         202         204      -1    %
Deferred income taxes and other assets           949         858      11    %
                                                        
Total assets                                  $  15,114  $  14,803   2     %
                                                                      
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt             $  9        $  116      -92   %
Notes payable                                    129         164      -21   %
Accounts payable                                 1,551       1,421    9     %
Accrued liabilities                              1,974       1,968    0     %
Income taxes payable                            113       91       24    %
                                                                      
Total current liabilities                        3,776       3,760    0     %
                                                                      
Long-term debt                                   226         238      -5    %
Deferred income taxes and other liabilities      1,065       906      18    %
Redeemable preferred stock                       -           -        -
Shareholders' equity                             10,047      9,899    1     %
                                                        
Total liabilities and shareholders' equity    $  15,114  $  14,803   2     %

NIKE, Inc.                                                   
                     QUARTER ENDED                                 % Change
                                                       % Change    Excluding
DIVISIONAL          8/31/2012        8/31/2011                 Currency
REVENUES^1                                                         Changes ^2
                     (Dollars in millions)
North America
Footwear             $   1,732         $  1,444        20    %     20     %
Apparel                  795              632          26    %     26     %
Equipment               179           124         44    %     44     %
Total                    2,706            2,200        23    %     23     %
                                                                   
Western Europe
Footwear                 714              731          -2    %     10     %
Apparel                  382              416          -8    %     2      %
Equipment               71            81          -12   %     -4     %
Total                    1,167            1,228        -5    %     6      %
                                                                   
Central &
Eastern Europe
Footwear                 178              180          -1    %     12     %
Apparel                  134              123          9     %     22     %
Equipment               30            31          -3    %     11     %
Total                    342              334          2     %     16     %
                                                                   
Greater China
Footwear                 356              314          13    %     12     %
Apparel                  178              177          1     %     -1     %
Equipment               38            37          3     %     0      %
Total                    572              528          8     %     7      %
                                                                   
Japan
Footwear                 106              103          3     %     1      %
Apparel                  61               72           -15   %     -15    %
Equipment               16            19          -16   %     -17    %
Total                    183              194          -6    %     -7     %
                                                                   
Emerging Markets
Footwear                 604              567          7     %     20     %
Apparel                  211              182          16    %     29     %
Equipment               52            51          2     %     16     %
Total                    867              800          8     %     22     %
                                                                   
Global Brand             27               32           -16   %     -7     %
Divisions^3
                                     
Total NIKE Brand         5,864            5,316        10    %     16     %
                                                                   
Other                    635              585          9     %     9      %
Businesses^4
Businesses to be         195              188          4     %     6      %
Divested^5
Corporate^6              (25     )        (8     )     -           -
                                     
Total NIKE, Inc.     $   6,669       $  6,081       10    %     15     %
Revenues
                                                                   
Total NIKE Brand
Footwear             $   3,690         $  3,339        11    %     16     %
Apparel                  1,761            1,602        10    %     15     %
Equipment                386              343          13    %     17     %
Global Brand             27               32           -16   %     -7     %
Divisions^3
                                                           
^1 Certain prior year amounts have been reclassified to conform to fiscal year
2013 presentation. These changes had no impact on previously reported results
of operations or shareholders' equity.
^2 Fiscal 2013 results have been restated using fiscal 2012 exchange rates for
the comparative period to enhance the visibility of the underlying business
trends excluding the impact of foreign currency exchange rate fluctuations.
^3 Global Brand Divisions primarily represent NIKE Brand licensing businesses
that are not part of a geographic operating segment.
^4 Other businesses represent activities of Converse, Hurley, and NIKE Golf.
^5 Businesses to be Divested represent the operating results for Cole Haan and
Umbro, which the Company intends to divest, along with the costs for executing
these divestitures.
^6 Corporate revenues primarily consist of intercompany revenue eliminations
and foreign currency revenue-related hedge gains and losses generated by
entities within the NIKE Brand geographic operating segments and certain Other
Businesses through our centrally managed foreign exchange risk management
program.

NIKE, Inc.                                                     
                         QUARTER ENDED                               %
EARNINGS BEFORE
INTEREST AND            8/31/2012             8/31/2011           Chg
TAXES^1,2
                         (Dollars in millions)
                                                                     
North America            $    630               $    539             17    %
Western Europe                214                    223             -4    %
Central & Eastern             61                     70              -13   %
Europe
Greater China                 164                    171             -4    %
Japan                         24                     34              -29   %
Emerging Markets              223                    190             17    %
Global Brand                 (375    )            (266    )       -41   %
Divisions^3
Total NIKE Brand              941                    961             -2    %
                                                                     
Other Businesses^4            121                    104             16    %
Businesses to be              (18     )              (18     )       0     %
Divested^5
Corporate^6                  (265    )            (195    )       -36   %
Total Earnings
Before Interest and      $    779             $    852            -9    %
Taxes^1,2
                                                                     
                                                               
^1 The Company evaluates performance of individual operating segments based on
earnings before interest and taxes (also commonly referred to as “EBIT”),
which represents net income before interest expense, net, and income taxes.
^2 Certain prior year amounts have been reclassified to conform to fiscal year
2013 presentation. These changes had no impact on previously reported results
of operations or shareholders' equity.
^3 Global Brand Divisions primarily represent NIKE Brand licensing businesses
that are not part of a geographic operating segment and general and
administrative expenses that are centrally managed for the Nike Brand.
^4 Other Businesses represent activities of Converse, Hurley, and NIKE Golf.
^5 Businesses to be Divested represent the operating results for Cole Haan and
Umbro, which the Company intends to divest, along with the costs for executing
these divestitures.
^6 Corporate consists of unallocated general and administrative expenses,
which includes expenses associated with centrally managed departments,
depreciation and amortization related to the Company’s corporate headquarters,
unallocated insurance and benefit programs, certain foreign currency gains and
losses, including certain hedge gains and losses, corporate eliminations and
other items.

NIKE, Inc.                                                      
                                                                      
SUPPLEMENTAL EBIT             QUARTER ENDED
DETAILS FOR BUSINESSES
TO BE DIVESTED - COLE        8/31/2012           8/31/2011         % Chg
HAAN AND UMBRO ^1
                              (Dollars in millions)
                                                                      
Revenues                      $    195             $   188            4    %
Cost of sales                     120              113          6    %
Gross profit                       75                  75             0    %
Gross margin                       38.5    %           39.9   %
                                                                      
Selling and                        95                  93             2    %
administrative expense
% of revenue                       48.7    %           49.5   %
                                                                      
Other (income) expense,           (2      )         -            -    
net
Earnings before interest      $    (18     )      $   (18    )      0    %
and taxes
                                                                      
                                                                
^1 The Company evaluates performance of individual businesses based on
earnings before interest and taxes (also commonly referred to as “EBIT”),
which represents net income before interest expense, net, and income taxes.

NIKE, Inc.                                                     
NET INCOME AND
DILUTED EPS                QUARTER ENDED                             %
RECONCILIATION
EXCLUDING BUSINESSES      8/31/2012            8/31/2011          Chg
TO BE DIVESTED^1
(In millions, except
per share data)
                                                                     
Net income, as             $    567              $   645             -12   %
reported
Subtract:
Net Loss from
Businesses to be               (19      )         (15     )
Divested^2
                                                                     
Net income, excluding
Businesses to be           $    586            $   660            -11   %
Divested
                                                                     
                                                                     
Diluted EPS, as            $    1.23             $   1.36            -10   %
reported
Subtract:
Net Loss per share
from Businesses to be          (0.04    )         (0.03   )
Divested^2
                                                                     
Diluted EPS,
excluding Businesses       $    1.27           $   1.39           -9    %
to be Divested
                                                                     
Diluted weighted
average common shares           461.4                474.3
outstanding
                                                                     
                                                               
^1 This schedule is intended to satisfy the quantitative reconciliation for
non-GAAP financial measures in accordance with Regulation G of the Securities
and Exchange Commission. In addition, this schedule is provided to enhance the
visibility of the underlying business trends relating to the Company's
on-going operations by excluding the results relating to the businesses the
Company intends to divest.
                                                                     
^2 In the fourth quarter of fiscal 2012, the Company announced its intention
to divest of its Cole Haan and Umbro businesses. Net loss from Businesses to
be Divested represent the operating results for these two businesses, along
with the costs for executing these divestitures.

NIKE, Inc.
                                                          
                                                          
NIKE BRAND REPORTED FUTURES    Reported Futures Orders    Excluding Currency
GROWTH BY GEOGRAPHY^1                                     Changes ^2
                                                          
North America                  13%                        13%
Western Europe                 -1%                        6%
Central & Eastern Europe       4%                         7%
Greater China                  -5%                        -6%
Japan                          5%                         7%
Emerging Markets               9%                         14%
                                                          
Total NIKE Brand Reported      6%                         8%
Futures
                                                          
                                                          
                                                        
^1 Futures orders by geography and in total for NIKE Brand athletic footwear
and apparel scheduled for delivery from September 2012 through January 2013.
                                                          
The reported futures and advance orders growth is not necessarily indicative
of our expectation of revenue growth during this period. This is due to
year-over-year changes in shipment timing and because the mix of orders can
shift between advance/futures and at-once orders and the fulfillment of
certain orders may fall outside of the schedule noted above. In addition,
exchange rate fluctuations as well as differing levels of order cancellations
and discounts can cause differences in the comparisons between advance/futures
orders and actual revenues. Moreover, a significant portion of our revenue is
not derived from futures and advance orders, including at-once and close-out
sales of NIKE Brand footwear and apparel, sales of NIKE Brand equipment, sales
from certain of our Direct to Consumer operations, sales from our Other
Businesses, and sales from our Businesses to be Divested.

^2 Reported futures restated using prior year exchange rates to enhance the
visibility of the underlying business trends excluding the impact of foreign
currency exchange rate fluctuations.

Contact:

NIKE, Inc.
Investor Contact:
Kelley Hall, 503-532-3793
or
Media Contact:
Kellie Leonard, 503-671-6171
 
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