NIKE, Inc. Reports Fiscal 2013 Second Quarter Results

  NIKE, Inc. Reports Fiscal 2013 Second Quarter Results

  *Revenues from continuing operations up 7 percent to $6.0 billion, up 10
    percent excluding currency changes
  *Diluted earnings per share from continuing operations up 11 percent to
    $1.14
  *Worldwide futures orders up 6 percent, 7 percent growth excluding currency
    changes
  *Inventories up 9 percent

Business Wire

BEAVERTON, Ore. -- December 20, 2012

NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal 2013
second quarter ended November 30, 2012. For continuing operations, strong
demand for NIKE, Inc. brands propelled double-digit revenue growth on a
currency neutral basis, and diluted earnings per share grew faster than
revenue due to SG&A leverage, an increase in other income and a lower average
share count, which more than offset the impact of a slightly lower gross
margin and an increase in the effective tax rate.

“Our strong second quarter results show that our growth strategies are
working, even under challenging macroeconomic conditions,” said Mark Parker,
President and CEO, NIKE, Inc. “Wehave a focused and flexible portfolio that
allows us to target the biggest growth opportunities at all levels – brand,
category and product. We stay connected with our consumers and that enables us
to deliver innovations that excite the marketplace, grow the business and
deliver more value to shareholders.”*

Second Quarter Continuing Operations Income Statement Review

  *Revenues  for NIKE, Inc. increased 7 percent to $6.0 billion, up 10
    percent on a currency-neutral basis. Excluding the impact of changes in
    foreign currency, NIKE Brand revenues rose 11 percent, with growth in all
    key categories, product types and geographies except Greater China.
    Revenues for Other Businesses increased 6 percent on a currency-neutral
    basis, as Converse, Hurley and NIKE Golf all increased revenues during the
    quarter.
  *Gross margin declined 30 basis points to 42.5 percent. Gross margin
    benefitted from pricing actions and easing material costs; however, these
    benefits were more than offset by higher labor costs and unfavorable
    changes in foreign exchange rates. Additionally, gross margin was
    negatively impacted by a shift in the mix of the Company’s revenues to
    lower margin products and businesses.
  *Selling and administrative expenses grew at a slower rate than revenue, up
    6 percent to $1.8 billion. Demand creation expenses were $613 million,
    relatively unchanged from the prior year. Operating overhead expenses
    increased 10 percent to $1.2 billion due to additional investments made in
    the wholesale business to support growth initiatives and higher Direct to
    Consumer costs as a result of higher volume driven expenses in existing
    NIKE-owned stores and the cost of new stores opened in the last year.
  *Other income, net was $17 million, comprised primarily of foreign exchange
    gains and other non-operating items. For the quarter, the Company
    estimates the year-over-year change in currency related gains and losses
    included in other income, net, combined with the impact of changes in
    currency exchange rates on the translation of foreign currency-denominated
    profits, increased pretax income by approximately $10 million.
  *The effective tax rate was 26.8 percent, compared to 24.1 percent for the
    same period last year. The increase was largely as a result of an increase
    in our effective tax rate on foreign operations.
  *Net income from continuing operations increased 9 percent to $521 million
    while diluted earnings per share increased 11 percent to $1.14, reflecting
    a 3 percent decline in the weighted average diluted common shares
    outstanding.

November 30, 2012 Balance Sheet Review for Continuing Operations

  *Inventories for NIKE, Inc. were $3.3 billion, up 9 percent from November
    30, 2011. NIKE Brand inventories increased 8 percent; of which 6
    percentage points of growth were due to higher NIKE Brand wholesale unit
    inventories to support future demand and 2 percentage points of growth
    were due to higher average product cost per unit.
  *Cash and short-term investments were $3.5 billion, $160 million higher
    than last year mainly as a result of higher net income and proceeds from
    the sale of the Umbro brand.

Share Repurchases

During the second quarter, NIKE, Inc. repurchased a total of 4.0 million
shares for approximately $384 million and concluded the Company’s previous
four-year, $5 billion share repurchase program approved by the Board of
Directors in September 2008. During this program the Company purchased a total
of 59.4 million shares at an average price of $84.16.

Following the completion of the previous program, the Company began
repurchases under the four-year, $8 billion program approved in September
2012. Of the total shares repurchased during the second quarter, 3.1 million
shares were purchased under this program at a cost of approximately $294
million.

Futures Orders

As of the end of the quarter worldwide futures orders for NIKE Brand athletic
footwear and apparel, scheduled for delivery from December 2012 through April
2013 totaled $9.3 billion, 6 percent higher than orders reported for the same
period last year. Excluding currency changes, reported orders would have
increased 7 percent.*

Discontinued Operations

The Company continually evaluates its existing portfolio of businesses to
ensure resources are invested in those businesses that are accretive to the
NIKE Brand, and represent the largest growth potential and highest returns. On
May31, 2012, the Company announced its intention to divest of the Umbro and
Cole Haan businesses, which will allow it to focus resources on driving growth
in the NIKE, Jordan, Converse and Hurley brands.

On November 30, 2012, the Company completed the sale of certain assets of the
Umbro brand to Iconix Brand Group for $225 million. For the second quarter
ended November 30, 2012, the Company recorded a loss of $107 million, net of
tax, on the sale of these assets, representing the sale price less the value
of the Umbro assets sold, the release of the associated cumulative translation
adjustment, and other miscellaneous charges, offset by a tax benefit on the
loss. This loss is included in the Net Loss from Discontinued Operations.

On November 16, 2012, the Company announced it had reached a definitive
agreement to sell Cole Haan to Apax Partners for $570 million. As of November
30, 2012, the Company classified Cole Haan as an asset held-for-sale and
included the results of Cole Haan’s operations in the Net Loss from
Discontinued Operations. The Company expects to complete the sale of Cole Haan
in the third quarter of fiscal 2013, and to record a gain on the sale at that
time.

For the second fiscal quarter of 2013, the Company’s Net Loss from
Discontinued Operations was $137 million. This includes the loss recorded for
the sale of the Umbro brand of $107 million, net of tax, in addition to net
operating losses and divesture transaction costs for Umbro and Cole Haan
during the period, net of tax.

Conference Call

NIKE management will host a conference call beginning at approximately 2:00
p.m. PT on December 20, 2012, to review second 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, December 27, 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 Converse Inc., which designs,
markets and distributes athletic footwear, apparel and accessories and Hurley
International LLC, which designs, markets and distributes action sports and
youth lifestyle footwear, apparel and accessories. 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, discounts and returns, which may vary
significantly from quarter to quarter, and because a significant portion of
the business does not report futures orders.


NIKE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
For the period ended November 30, 2012

                THREE MONTHS ENDED       %       SIX MONTHS ENDED         %
(Dollars in
millions,       11/30/2012  11/30/2011  Change  11/30/2012  11/30/2011  Change
except per
share data)
Income from
continuing                                                    
operations:
Revenues         $  5,955     $  5,546     7    %   $ 12,429     $ 11,439     9    %
Cost of sales     3,425     3,170   8    %   7,071     6,445    10   %
Gross profit        2,530        2,376     6    %     5,358        4,994      7    %
Gross margin        42.5  %      42.8  %              43.1   %     43.7   %
                                                                              
Demand
creation            613          616       0    %     1,484        1,280      16   %
expense
Operating
overhead          1,223     1,115   10   %   2,411     2,181    11   %
expense
Total selling
and                 1,836        1,731     6    %     3,895        3,461      13   %
administrative
expense
% of revenue        30.8  %      31.2  %              31.3   %     30.3   %
                                                                              
Interest
(income)            (1    )      3         -          (4     )     3          -
expense, net
Other (income)    (17   )    10      -       (45    )   27       -    
expense, net
Income before       712          632       13   %     1,512        1,503      1    %
income taxes
Income taxes      191       152     26   %   406       362      12   %
Effective tax       26.8  %      24.1  %              26.9   %     24.1   %
rate
                                                                  
NET INCOME
FROM              521       480     9    %   1,106     1,141    -3   %
CONTINUING
OPERATIONS
NET LOSS FROM
DISCONTINUED      (137  )    (11   )  -       (155   )   (27    )  -    
OPERATIONS
NET INCOME      $  384     $  469     -18  %  $ 951      $ 1,114    -15  %
                                                                              
Earnings per
share from
continuing
operations:
Basic earnings
per common       $  1.16      $  1.05      10   %   $ 2.45       $ 2.47       -1   %
share
Diluted
earnings per     $  1.14      $  1.03      11   %   $ 2.41       $ 2.42       0    %
common share
                                                                              
Earnings per
share from
discontinued
operations:
Basic earnings
per common       $  (0.30 )   $  (0.03 )   -        $ (0.34  )   $ (0.06  )   -
share
Diluted
earnings per     $  (0.30 )   $  (0.03 )   -        $ (0.34  )   $ (0.06  )   -
common share
                                                                              
Weighted
Average Common
Shares
Outstanding:
Basic               448.5        459.2                450.7        462.1
Diluted             456.6        468.5                459.2        471.5
                                                                              
Dividends
declared per    $  0.42    $  0.36           $ 0.78     $ 0.67     
common share



NIKE, Inc.
CONSOLIDATED BALANCE SHEETS
As of November 30, 2012

                                     November 30,  November 30, 
(Dollars in millions)                2012          2011          % Change 
ASSETS
Current assets:
Cash and equivalents                  $   2,291      $   1,929      19       %
Short-term investments                    1,234          1,436      -14      %
Accounts receivable, net                  3,188          3,016      6        %
Inventories                               3,318          3,035      9        %
Deferred income taxes                     327            289        13       %
Prepaid expenses and other current        733            768        -5       %
assets
Assets of discontinued operations       344          576       -40      %
Total current assets                      11,435         11,049     3        %
Property, plant and equipment             5,310          4,883      9        %
Less accumulated depreciation           3,052        2,780     10       %
Property, plant and equipment, net        2,258          2,103      7        %
Identifiable intangible assets, net       374            364        3        %
Goodwill                                  131            131        0        %
Deferred income taxes and other         973          918       6        %
assets
TOTAL ASSETS                         $   15,171    $   14,565    4        %
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term debt     $   58         $   114        -49      %
Notes payable                             100            123        -19      %
Accounts payable                          1,519          1,370      11       %
Accrued liabilities                       1,879          1,727      9        %
Income taxes payable                      45             81         -44      %
Liabilities of discontinued             198          181       9        %
operations
Total current liabilities                 3,799          3,596      6        %
Long-term debt                            170            234        -27      %
Deferred income taxes and other           1,188          892        33       %
liabilities
Redeemable preferred stock                -              -          -
Shareholders' equity                    10,014       9,843     2        %
TOTAL LIABILITIES AND SHAREHOLDERS'  $   15,171    $   14,565    4        %
EQUITY



NIKE, Inc.
DIVISIONAL REVENUES^1
For the period ended November 30, 2012

                                               % Change                                    % Change
                                                  Excluding                                      Excluding
               THREE MONTHS ENDED        %        Currency    SIX MONTHS ENDED          %        Currency
(Dollars in   11/30/2012  11/30/2011  Change  Changes    11/30/2012  11/30/2011  Change  Changes
millions)                                         ^2                                             ^2
North                                                                   
America
Footwear       $  1,471     $  1,305     13   %   13    %     $ 3,203      $ 2,749      17   %   17    %
Apparel           788          661       19   %   19    %       1,583        1,293      22   %   23    %
Equipment       162       100     62   %  61    %     341       224      52   %  52    %
Total             2,421        2,066     17   %   17    %       5,127        4,266      20   %   20    %
Western
Europe
Footwear          545          538       1    %   8     %       1,259        1,269      -1   %   9     %
Apparel           301          324       -7   %   -1    %       683          740        -8   %   1     %
Equipment       51        53      -4   %  4     %     122       134      -9   %  -1    %
Total             897          915       -2   %   4     %       2,064        2,143      -4   %   6     %
Central &
Eastern
Europe
Footwear          134          135       -1   %   4     %       312          315        -1   %   9     %
Apparel           117          111       5    %   10    %       251          234        7    %   17    %
Equipment       15        15      0    %  5     %     45        46       -2   %  9     %
Total             266          261       2    %   7     %       608          595        2    %   12    %
Greater
China
Footwear          324          353       -8   %   -9    %       680          667        2    %   1     %
Apparel           224          268       -16  %   -17   %       402          445        -10  %   -11   %
Equipment       29        29      0    %  -2    %     67        66       2    %  -1    %
Total             577          650       -11  %   -12   %       1,149        1,178      -2   %   -4    %
Japan
Footwear          107          100       7    %   10    %       213          203        5    %   6     %
Apparel           98           83        18   %   19    %       159          155        3    %   3     %
Equipment       14        15      -7   %  -6    %     30        34       -12  %  -12   %
Total             219          198       11   %   13    %       402          392        3    %   3     %
Emerging
Markets
Footwear          718          660       9    %   16    %       1,322        1,227      8    %   18    %
Apparel           273          233       17   %   24    %       484          415        17   %   27    %
Equipment       61        55      11   %  16    %     113       106      7    %  16    %
Total             1,052        948       11   %   18    %       1,919        1,748      10   %   20    %
Global Brand    27        25      8    %  15    %     54        57       -5   %  2     %
Divisions^3
Total NIKE      5,459     5,063   8    %  11    %     11,323    10,379   9    %  13    %
Brand
Other             518          488       6    %   6     %       1,153        1,073      7    %   8     %
Businesses^4
Corporate^5     (22   )    (5    )  -      -          (47    )   (13    )  -      -     
Total NIKE,
Inc.
Revenues      $  5,955   $  5,546   7    %  10    %    $ 12,429   $ 11,439   9    %  13    %
From
Continuing
Operations
                                                                                                 
Total NIKE
Brand
Footwear       $  3,299     $  3,091     7    %   10    %     $ 6,989      $ 6,430      9    %   13    %
Apparel           1,801        1,680     7    %   10    %       3,562        3,282      9    %   12    %
Equipment         332          267       24   %   27    %       718          610        18   %   22    %
Global Brand    27        25      8    %  15    %     54        57       -5   %  2     %
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 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.
EARNINGS BEFORE INTEREST AND TAXES^1,2
For the period ended November 30, 2012

              THREE MONTHS ENDED       %       SIX MONTHS ENDED         %
(Dollars in   11/30/2012  11/30/2011  Change  11/30/2012  11/30/2011  Change
millions)
North          $ 556       $ 426        31%      $ 1,186     $ 965        23%
America
Western        113          92           23%      327          315          4%
Europe
Central &
Eastern        43           33           30%      104          103          1%
Europe
Greater        185          220          -16%     349          391          -11%
China
Japan          43           35           23%      67           69           -3%
Emerging       305          247          23%      528          437          21%
Markets
Global Brand  (324)       (281)       -15%    (699)       (547)       -28%
Divisions^3
TOTAL NIKE    921         772         19%     1,862       1,733       7%
BRAND
Other          80           71           13%      201          176          14%
Businesses^4
Corporate^5   (290)       (208)       -39%    (555)       (403)       -38%
TOTAL
EARNINGS
BEFORE        $ 711       $ 635       12%     $ 1,508     $ 1,506     0%
INTEREST AND
TAXES
^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 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.
NIKE BRAND REPORTED FUTURES GROWTH BY GEOGRAPHY^1
As of November 30, 2012

                             Reported Futures         Excluding Currency
                               Orders                    Changes ^2
North America                 14%                      14%
Western Europe                 -1%                       0%
Central & Eastern              10%                       11%
Europe
Greater China                  -6%                       -7%
Japan                          -3%                       4%
Emerging Markets              7%                       11%
Total NIKE Brand              6%                       7%
Reported Futures
^1 Futures orders by geography and in total for NIKE Brand athletic footwear
and apparel scheduled for delivery from December 2012 through April 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, and sales from our Other
Businesses.

^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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