NIKE, Inc. Reports Fiscal 2013 Third Quarter Results

  NIKE, Inc. Reports Fiscal 2013 Third Quarter Results

  *Revenues from continuing operations up 9 percent to $6.2 billion, up 10
    percent excluding currency changes
  *Diluted earnings per share from continuing operations up 20 percent to
    $0.73
  *Worldwide futures orders up 6 percent, 7 percent growth excluding currency
    changes
  *Inventories up 4 percent

Business Wire

BEAVERTON, Ore. -- March 21, 2013

NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal 2013
third quarter ended February 28, 2013. 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 gross margin expansion, a lower tax rate and a lower average
share count.

"Our team delivered strong results in Q3. We did it with a relentless flow of
innovation into our key categories," said Mark Parker, President and CEO of
NIKE, Inc. "Given the diversity of our portfolio, we're able to capture big
opportunities that drive sustainable, profitable growth. At the same time we
continue to invest in new ways to enhance athletic performance, build strong
consumer communities, and improve how we design and manufacture our products.
That’s how we increase our potential and drive shareholder value."*

Third Quarter Continuing Operations Income Statement Review

  *Revenues  for NIKE, Inc. increased 9 percent to $6.2 billion, up 10
    percent on a currency-neutral basis. Excluding the impact of changes in
    foreign currency, NIKE Brand revenues rose 10 percent, with growth in all
    geographies except Greater China and Japan and in all key categories
    except Sportswear and Action Sports. Revenues for Other Businesses
    increased 9 percent as growth at Converse and NIKE Golf more than offset
    lower revenues at Hurley.
  *Gross margin increased 30 basis points to 44.2 percent. Gross margin
    benefitted from the combination of pricing actions and easing material
    costs, which more than offset higher labor costs. This benefit was
    partially offset by higher discounts, particularly in Greater China as the
    Company continues work to manage marketplace inventory. Additionally gross
    margin was impacted by unfavorable changes in foreign exchange rates and a
    shift in the mix of the Company’s revenues to lower margin geographies.
  *Selling and administrative expense grew at the same rate as revenue, up 9
    percent to $1.9 billion. Demand creation expense was $619 million, up 5
    percent from the prior year driven by sports marketing expense, and
    marketing support for key product initiatives and brand events. Operating
    overhead expense increased 11 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 expense, net was $17 million, comprised primarily of foreign
    exchange losses. For the quarter, the Company estimates the year-over-year
    change in currency related gains and losses included in other expense,
    net, combined with the impact of changes in currency exchange rates on the
    translation of foreign currency-denominated profits, decreased pretax
    income by approximately $19 million.
  *The effective tax rate was 22.8 percent, compared to 27.7 percent for the
    same period last year. The decrease was largely due to the benefit from
    the U.S. legislative reinstatement of the research and development tax
    credit, as well as a lower effective tax rate on foreign operations due to
    the geographical mix of earnings.
  *Net income from continuing operations increased 16 percent to $662 million
    while diluted earnings per share increased 20 percent to $0.73, reflecting
    a 2 percent decline in the weighted average diluted common shares
    outstanding.

February 28, 2013 Balance Sheet Review for Continuing Operations

  *Inventories for NIKE, Inc. were $3.3 billion, up 4 percent from February
    29, 2012. NIKE Brand inventories increased 4 percent. NIKE Brand wholesale
    unit inventories increased 7 percent to support future demand, while the
    impact of changes in foreign currency exchange rates and changes in
    product cost drove a 3 percentage point decline in NIKE Brand inventory
    growth.
  *Cash and short-term investments were $4.0 billion; $845 million higher
    than last year mainly as a result of higher net income, proceeds from the
    sale of the Umbro and Cole Haan businesses and continued focus on working
    capital management.

Share Repurchases

During the third quarter, NIKE, Inc. repurchased a total of 4.9 million shares
for approximately $253 million as part of the four-year, $8 billion program
approved by the Board of Directors in September 2012. As of the end of the
third quarter, a total of 11.1 million shares were repurchased under this
program at a cost of approximately $548 million.

Futures Orders

As of the end of the quarter, worldwide futures orders for NIKE Brand athletic
footwear and apparel, scheduled for delivery from March through July 2013
totaled $9.9 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, allowing the Company to focus resources on driving
growth in the NIKE, Jordan, Converse and Hurley brands.

As previously announced, the Company completed the sale of certain assets of
the Umbro brand during the second quarter ended November 30, 2012 and recorded
a loss on the sale of these assets of $107 million, net of tax, that was
included in the net loss from discontinued operations for the second fiscal
quarter of 2013.

On February 1, 2013, the Company completed the sale of Cole Haan to Apax
Partners for an agreed upon purchase price of $570 million and received at
closing $561 million, net of $9 million of purchase price adjustments. For the
third quarter ended February 28, 2013, the Company recorded a gain on sale of
$231 million, net of tax, representing the sales price less the asset value of
Cole Haan and other miscellaneous charges. For the third quarter of 2013, the
Company’s net income from discontinued operations was $204 million, which
includes the gain recorded for the sale of Cole Haan, net of tax, less net
operating losses and divesture transaction costs for Cole Haan and Umbro
during the period.

Under the Cole Haan sale agreement, the Company will provide certain
transition services to Cole Haan and will license NIKE proprietary
technologies for a transition period. The continuing cash flows related to
these items are not expected to be significant to Cole Haan and the Company
will have no significant continuing involvement with Cole Haan beyond the
transition services.

Conference Call

NIKE management will host a conference call beginning at approximately 2:00
p.m. PT on March 21, 2013, to review third 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, March 28, 2013.

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 lifestyle footwear, apparel and accessories
and Hurley International LLC, which designs, markets and distributes surf 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.

                          (Additional Tables Follow)


NIKE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
For the period ended February 28, 2013
                                                                                   
                 THREE MONTHS ENDED              %        NINE MONTHS ENDED               %
(Dollars in
millions,        2/28/2013    2/29/2012   Change   2/28/2013    2/29/2012   Change
except per
share data)
Income from
continuing
operations:
Revenues         $ 6,187         $ 5,656         9    %   $ 18,616        $ 17,095        9   %
Cost of sales    3,451        3,171       9    %   10,522       9,616       9   %
Gross profit       2,736           2,485         10   %     8,094           7,479         8   %
Gross margin       44.2      %     43.9      %              43.5      %     43.7      %
                                                                                          
Demand
creation           619             592           5    %     2,103           1,872         12  %
expense
Operating
overhead         1,244        1,116       11   %   3,655        3,297       11  %
expense
Total selling
and                1,863           1,708         9    %     5,758           5,169         11  %
administrative
expense
% of revenue       30.1      %     30.2      %              30.9      %     30.2      %
                                                                                          
Interest
(income)           (2        )     -             -          (6        )     3             -
expense, net
Other expense    17           (10       )  -       (28       )   17          -   
(income), net
Income before      858             787           9    %     2,370           2,290         3   %
income taxes
Income taxes     196          218         -10  %   602          580         4   %
Effective tax      22.8      %     27.7      %              25.4      %     25.3      %
rate
                                                                              
NET INCOME
FROM             662          569         16   %   1,768        1,710       3   %
CONTINUING
OPERATIONS
NET INCOME
(LOSS) FROM      204          (9        )  -       49           (36       )  -   
DISCONTINUED
OPERATIONS
NET INCOME      $ 866         $ 560         55   %  $ 1,817       $ 1,674       9   %
                                                                                          
Earnings per
share from
continuing
operations:
Basic earnings
per common       $ 0.74          $ 0.62          19   %   $ 1.97          $ 1.86          6   %
share
Diluted
earnings per     $ 0.73          $ 0.61          20   %   $ 1.93          $ 1.82          6   %
common share
                                                                                          
Earnings per
share from
discontinued
operations:
Basic earnings
per common       $ 0.23          $ (0.01     )   -        $ 0.05          $ (0.04     )   -
share
Diluted
earnings per     $ 0.22          $ (0.01     )   -        $ 0.05          $ (0.04     )   -
common share
                                                                                          
Weighted
Average Common
Shares
Outstanding:
Basic              893.9           915.1                    898.9           921.2
Diluted            911.7           934.6                    916.5           940.3
                                                                                          
Dividends
declared per    $ 0.21        $ 0.18               $ 0.60        $ 0.52        
common share


Nike, Inc.
CONSOLIDATED BALANCE SHEETS
As of February 28, 2013
                                                                  
                                        February 28,   February 29,
(Dollars in millions)                  2013          2012          % Change
ASSETS
Current assets:
Cash and equivalents                    $   2,557      $   2,021      27    %
Short-term investments                      1,485          1,176      26    %
Accounts receivable, net                    3,232          3,199      1     %
Inventories                                 3,329          3,206      4     %
Deferred income taxes                       275            302        -9    %
Prepaid expenses and other current          882            745        18    %
assets
Assets of discontinued operations         29           602       -95   %
Total current assets                        11,789         11,251     5     %
Property, plant and equipment               5,370          4,988      8     %
Less accumulated depreciation             3,110        2,855     9     %
Property, plant and equipment, net          2,260          2,133      6     %
Identifiable intangible assets, net         376            366        3     %
Goodwill                                    131            131        0     %
Deferred income taxes and other           1,059        913       16    %
assets
TOTAL ASSETS                           $   15,615    $   14,794    6     %
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt       $   57         $   49         16    %
Notes payable                               103            91         13    %
Accounts payable                            1,241          1,255      -1    %
Accrued liabilities                         1,899          1,798      6     %
Income taxes payable                        138            59         134   %
Liabilities of discontinued               62           175       -65   %
operations
Total current liabilities                   3,500          3,427      2     %
Long-term debt                              161            229        -30   %
Deferred income taxes and other             1,287          962        34    %
liabilities
Redeemable preferred stock                  -              -          -
Shareholders' equity                      10,667       10,176    5     %
TOTAL LIABILITIES AND SHAREHOLDERS'    $   15,615    $   14,794    6     %
EQUITY



NIKE, Inc.
DIVISIONAL REVENUES^1
For the period ended February 28, 2013
                                                                                      
                                              % Change                                     % Change
                                                Excluding                                      Excluding
               THREE MONTHS ENDED      %        Currency    NINE MONTHS ENDED         %        Currency
(Dollars in   2/28/2013  2/29/2012  Change  Changes^2  2/28/2013   2/29/2012   Change  Changes^2
millions)
North
America
Footwear       $ 1,691     $ 1,470     15   %   15     %    $ 4,894      $ 4,219      16   %   16     %
Apparel          697         573       22   %   22     %      2,280        1,866      22   %   22     %
Equipment      158      106     49   %  51     %    499       330      51   %  51     %
Total            2,546       2,149     18   %   18     %      7,673        6,415      20   %   20     %
Western
Europe
Footwear         692         606       14   %   14     %      1,951        1,875      4    %   10     %
Apparel          298         305       -2   %   -3     %      981          1,045      -6   %   0      %
Equipment      50       51      -2   %  -3     %    172       185      -7   %  -1     %
Total            1,040       962       8    %   8      %      3,104        3,105      0    %   6      %
Central &
Eastern
Europe
Footwear         179         161       11   %   8      %      491          476        3    %   9      %
Apparel          119         96        24   %   21     %      370          330        12   %   18     %
Equipment      20       18      11   %  10     %    65        64       2    %  9      %
Total            318         275       16   %   13     %      926          870        6    %   12     %
Greater
China
Footwear         410         449       -9   %   -11    %      1,090        1,116      -2   %   -4     %
Apparel          196         221       -11  %   -13    %      598          666        -10  %   -11    %
Equipment      29       24      21   %  22     %    96        90       7    %  5      %
Total            635         694       -9   %   -10    %      1,784        1,872      -5   %   -6     %
Japan
Footwear         96          108       -11  %   -4     %      309          311        -1   %   3      %
Apparel          65          79        -18  %   -10    %      224          234        -4   %   -1     %
Equipment      14       15      -7   %  -1     %    44        49       -10  %  -8     %
Total            175         202       -13  %   -6     %      577          594        -3   %   0      %
Emerging
Markets
Footwear         590         553       7    %   9      %      1,912        1,780      7    %   15     %
Apparel          195         187       4    %   6      %      679          602        13   %   20     %
Equipment      54       53      2    %  5      %    167       159      5    %  13     %
Total            839         793       6    %   8      %      2,758        2,541      9    %   16     %
Global Brand   30       27      11   %  11     %    84        84       0    %  5      %
Divisions^3
Total NIKE     5,583    5,102   9    %  10     %    16,906    15,481   9    %  12     %
Brand
Other            615         563       9    %   9      %      1,768        1,636      8    %   8      %
Businesses^4
Corporate^5    (11   )   (9    )  -      -          (58    )   (22    )  -      -      
Total NIKE,
Inc.
Revenues      $ 6,187   $ 5,656   9    %  10     %   $ 18,616   $ 17,095   9    %  12     %
From
Continuing
Operations
                                                                                               
Total NIKE
Brand
Footwear       $ 3,658     $ 3,347     9    %   9      %    $ 10,647     $ 9,777      9    %   12     %
Apparel          1,570       1,461     7    %   8      %      5,132        4,743      8    %   11     %
Equipment        325         267       22   %   23     %      1,043        877        19   %   22     %
Global Brand   30       27      11   %  11     %    84        84       0    %  5      %
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 February 28, 2013
                                                                       
               THREE MONTHS ENDED          %        NINE MONTHS ENDED         %
(Dollars in   2/28/2013   2/29/2012   Change   2/28/2013  2/29/2012  Change
millions)
North          $  625        $   503       24   %   $ 1,811       $ 1,468     23   %
America
Western           178            149       19   %     505           464       9    %
Europe
Central &
Eastern           71             60        18   %     175           163       7    %
Europe
Greater           218            273       -20  %     567           664       -15  %
China
Japan             24             24        0    %     91            93        -2   %
Emerging          221            215       3    %     749           652       15   %
Markets
Global Brand    (324   )     (299  )  -8   %   (1,023  )   (846  )  -21  %
Divisions^3
TOTAL NIKE      1,013       925     10   %   2,875      2,658   8    %
BRAND
Other             128            104       23   %     329           280       18   %
Businesses^4
Corporate^5     (285   )     (242  )  -18  %   (840    )   (645  )  -30  %
TOTAL
EARNINGS
BEFORE        $  856      $   787     9    %  $ 2,364     $ 2,293   3    %
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 selling 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 February 28, 2013
                                                  
                          Reported Futures           Excluding Currency
                            Orders                      Changes ^2
North America               11          %               11          %
Western Europe              -5          %               -5          %
Central & Eastern           11          %               11          %
Europe
Greater China               4           %               3           %
Japan                       -8          %               5           %
Emerging Markets           12          %              16          %
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 March 2013 through July 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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