Breaking News

Tweet TWEET

NIKE, Inc. Reports Fiscal 2014 First Quarter Results

  NIKE, Inc. Reports Fiscal 2014 First Quarter Results

  *Revenues from continuing operations up 8 percent to $7.0 billion
  *Diluted earnings per share from continuing operations up 37 percent to
    $0.86
  *Worldwide futures orders up 8 percent, 10 percent growth excluding
    currency changes
  *Inventories as of August 31, 2013 up 6 percent

Business Wire

BEAVERTON, Ore. -- September 26, 2013

NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal 2014
first quarter ended August 31, 2013. Strong demand for NIKE, Inc. brands
propelled revenue growth, and diluted earnings per share grew faster than
revenue due to gross margin expansion, SG&A leverage, a lower tax rate and a
lower average share count.

“We had a great first quarter driven by our unrelenting commitment to
delivering innovative products and services to athletes around the world,”
said Mark Parker, President and CEO of NIKE, Inc. “Our powerful portfolio of
businesses combined with unmatched leadership and resources allows us to
capitalize on opportunities that drive long-term value for our shareholders. I
am more excited than ever about our potential to continue to innovate with
purpose, and fuel NIKE’s growth.”*

First Quarter Continuing Operations Income Statement Review

Starting in the first quarter of fiscal 2014, the Company changed the
reporting structure for what was historically identified as Other Businesses.
Hurley and NIKE Golf have been included in the overall financial results for
the NIKE Brand and for individual geographies, reflecting the operational
integration of these businesses into the NIKE Brand category offense. Converse
will now be reported as a separate segment, reflecting the ongoing operation
of this brand as a stand-alone business.

  *Revenues  for NIKE, Inc. increased 8 percent to $7.0 billion. Changes in
    foreign currency exchange rates did not have a significant impact on total
    reported revenue growth.

       *Revenues for the NIKE Brand were $6.5 billion, up 7 percent on a
         currency neutral basis, with growth in every product type and every
         geography except Greater China. For the first quarter, NIKE Brand
         revenues were higher in Running, Basketball, Football (Soccer) and
         Men’s Training, offsetting a slight decline in Sportswear.
       *Revenues for Converse were $494 million, up 16 percent on a currency
         neutral basis, driven by strong performance in our largest owned
         markets: the United Kingdom, North America and China.

  *Gross margin increased 120 basis points to 44.9 percent. Gross margin
    benefitted from easing raw material costs, a shift in the mix of the
    Company’s revenues to higher margin products, lower discounts and growth
    in the higher margin Direct to Consumer business. These benefits were
    partially offset by higher labor costs and unfavorable changes in foreign
    exchange rates.
  *Selling and administrative expense was in line with the same period last
    year at $2.1 billion. Demand creation expense was $731 million, down 16
    percent versus the prior year, which included higher spending supporting
    key product initiatives, as well as the Olympics and European Football
    Championships. Operating overhead expense increased 12 percent to $1.3
    billion due to investments in digital innovation and other growth
    businesses, as well as higher Direct to Consumer costs driven by growth
    and new store openings.
  *Other expense, net was $28 million, comprised primarily of foreign
    currency exchange losses. For the quarter, the Company estimates the
    year-over-year change in foreign currency related gains and losses
    included in other expense (income), net, combined with the impact of
    changes in currency exchange rates on the translation of foreign
    currency-denominated profits, decreased pretax income by approximately $38
    million.
  *The effective tax rate was 25.0 percent, compared to 26.9 percent for the
    same period last year, an improvement due primarily to a lower effective
    tax rate on operations outside the United States.
  *Net income increased 33 percent to $780 million while diluted earnings per
    share increased 37 percent to $0.86, reflecting a 1 percent decline in the
    weighted average diluted common shares outstanding.

August 31, 2013 Balance Sheet Review for Continuing Operations

  *Inventories for NIKE, Inc. were $3.5 billion, up 6 percent from August 31,
    2012. NIKE Brand wholesale unit inventories increased 8 percent to support
    future demand. Changes in foreign currency exchange rates and product cost
    drove approximately a 2 percentage point decline in NIKE, Inc. inventory
    growth.
  *Cash and short-term investments were $5.6 billion, $2.3 billion higher
    than last year mainly as a result of proceeds from the issuance of debt
    and sale of the Umbro and Cole Haan businesses in the prior fiscal year,
    in addition to higher net income and continued focus on working capital
    productivity.

Share Repurchases

During the first quarter, NIKE, Inc. repurchased a total of 8.4 million shares
for approximately $526 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
first quarter, a total of 23.7 million shares had been repurchased under this
program at a cost of approximately $1.3 billion.

Futures Orders

As of the end of the quarter, worldwide futures orders for NIKE Brand athletic
footwear and apparel scheduled for delivery from September 2013 through
January 2014 were 8 percent higher than orders reported for the same period
last year. Excluding currency changes, reported orders would have increased 10
percent.*

Conference Call

NIKE management will host a conference call beginning at approximately 2:00
p.m. PT on September 26, 2013, 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 3, 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 August 31, 2013
                                                                        
                                THREE MONTHS ENDED                      %
(Dollars in millions,        8/31/2013      8/31/2012     Change
except per share data)
Income from continuing
operations:
Revenues                        $ 6,971             $ 6,474             8%
Cost of sales                3,839          3,646         5%
Gross profit                      3,132               2,828             11%
Gross margin                      44.9%               43.7%
                                                                        
Demand creation expense           731                 871               -16%
Operating overhead           1,325          1,188         12%
expense
Total selling and                 2,056               2,059             0%
administrative expense
% of revenue                      29.5%               31.8%
                                                                        
Interest expense                  8                   (3)               -
(income), net
Other expense (income),      28             (28)          -
net
Income before income              1,040               800               30%
taxes
Income taxes                 260            215           21%
Effective tax rate                25.0%               26.9%
                                                         
NET INCOME FROM              780            585           33%
CONTINUING OPERATIONS
NET (LOSS) INCOME FROM       -              (18)          -
DISCONTINUED OPERATIONS
NET INCOME                  $ 780           $ 567           38%
                                                                        
Earnings per share from
continuing operations:
Basic earnings per              $ 0.88              $ 0.65              35%
common share
Diluted earnings per            $ 0.86              $ 0.63              37%
common share
                                                                        
Earnings per share from
discontinued
operations:
Basic earnings per              $ -                 $ (0.03)            -
common share
Diluted earnings per            $ -                 $ (0.02)            -
common share
                                                                        
Weighted average common
shares outstanding:
Basic                             889.4               905.6
Diluted                           910.7               922.8
                                                                        
Dividends declared per      $ 0.21          $ 0.18          
common share
                                                                        

                                                      
NIKE, Inc.
CONSOLIDATED BALANCE SHEETS
As of August 31, 2013
                                                                       
                                 August 31,         August 31,
(Dollars in              2013           2012           %
millions)                                                              Change
ASSETS
Current assets:
Cash and                         $  2,936           $  2,165           36%
equivalents
Short-term                          2,642              1,102           140%
investments
Accounts                            3,207              3,291           -3%
receivable, net
Inventories                         3,472              3,263           6%
Deferred income                     308                270             14%
taxes
Prepaid expenses
and other                           1,053              720             46%
current assets
Assets of
discontinued               -             636         -
operations
Total current                       13,618             11,447          19%
assets
Property, plant                     5,684              5,175           10%
and equipment
Less accumulated           3,127         2,951       6%
depreciation
Property, plant
and equipment,                      2,557              2,224           15%
net
Identifiable
intangible                          383                372             3%
assets, net
Goodwill                            131                131             0%
Deferred income
taxes and other            985           940         5%
assets
TOTAL ASSETS             $  17,674      $  15,114      17%
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Current
liabilities:
Current portion
of long-term                     $  57              $  9               533%
debt
Notes payable                       111                129             -14%
Accounts payable                    1,559              1,492           4%
Accrued                             1,913              1,864           3%
liabilities
Income taxes                        211                114             85%
payable
Liabilities of
discontinued               12            151         -92%
operations
Total current                       3,863              3,759           3%
liabilities
Long-term debt                      1,207              226             434%
Deferred income
taxes and other                     1,322              1,082           22%
liabilities
Redeemable                          -                  -               -
preferred stock
Shareholders'              11,282        10,047      12%
equity
TOTAL
LIABILITIES AND          $  17,674      $  15,114      17%
SHAREHOLDERS'
EQUITY
                                                                       

                                                                   
NIKE, Inc.
DIVISIONAL REVENUES^1
For the period ended August 31, 2013
                                                                   
                                                                   % Change
                                                                   Excluding
                     THREE MONTHS ENDED                  %         Currency
(Dollars in              8/31/2013        8/31/2012    Change    Changes^2
millions)
North America
Footwear             $    1,904        $    1,745        9%        9%
Apparel                   1,009             924          9%        9%
Equipment                222              197          13%       13%
Total                     3,135             2,866        9%        9%
Western Europe
Footwear                  829               716          16%       12%
Apparel                   399               388          3%        1%
Equipment                73               72           1%        -3%
Total                     1,301             1,176        11%       8%
Central & Eastern
Europe
Footwear                  193               168          15%       13%
Apparel                   139               129          8%        6%
Equipment                34               30           13%       14%
Total                     366               327          12%       10%
Greater China
Footwear                  341               357          -4%       -7%
Apparel                   197               181          9%        6%
Equipment                36               39           -8%       -11%
Total                     574               577          -1%       -3%
Japan
Footwear                  88                108          -19%      2%
Apparel                   53                67           -21%      -1%
Equipment                17               22           -23%      1%
Total                     158               197          -20%      1%
Emerging Markets
Footwear                  624               617          1%        5%
Apparel                   226               223          1%        6%
Equipment                52               57           -9%       -6%
Total                     902               897          1%        5%
Global Brand             32               27           19%       12%
Divisions^3
Total NIKE Brand         6,468            6,067        7%        7%
Converse                  494               418          18%       16%
Corporate^4              9                (11)         -         -
Total NIKE, Inc.
Revenues From        $    6,971        $    6,474        8%        8%
Continuing
Operations
                                                                   
Total NIKE Brand
Footwear             $    3,979        $    3,711        7%        8%
Apparel                   2,023             1,912        6%        6%
Equipment                 434               417          4%        5%
Global Brand             32               27           19%       12%
Divisions^3
^1 Certain prior year amounts have been reclassified to conform to fiscal year
2014 presentation. These changes had no impact on previously reported results
of operations or shareholders' equity.
^2 Fiscal 2014 results have been restated using fiscal 2013 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 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 Converse
through our centrally managed foreign exchange risk management program.


                                                                    
NIKE, Inc.
EARNINGS BEFORE INTEREST AND TAXES^1,2
For the period ended August 31, 2013
                                                                    
                        THREE MONTHS ENDED                          %
(Dollars in millions)         8/31/2013            8/31/2012      Change
North America           $      813            $      645            26%
Western Europe                 265                   212            25%
Central & Eastern              81                    54             50%
Europe
Greater China                  170                   165            3%
Japan                          24                    23             4%
Emerging Markets               210                   221            -5%
Global Brand                  (466)                (456)          -2%
Divisions^3
TOTAL NIKE BRAND              1,097                864            27%
Converse                       169                   124            36%
Corporate^4                   (218)                (191)          -14%
TOTAL EARNINGS BEFORE   $      1,048          $      797            31%
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 (income), net, and income
taxes.
^2 Certain prior year amounts have been reclassified to conform to fiscal year
2014 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 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 August 31, 2013
                                                       
                                Reported Futures       Excluding Currency
                               Orders                 Changes(2)
North America                   11%                    12%
Western Europe                  12%                    12%
Central & Eastern Europe        25%                    27%
Greater China                   3%                     2%
Japan                           -19%                   1%
Emerging Markets                1%                     7%
Total NIKE Brand Reported       8%                     10%
Futures
^1 Futures orders by geography and in total for NIKE Brand athletic footwear
and apparel scheduled for delivery from September 2013 through January 2014,
excluding NIKE Golf and Hurley.
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,
discounts and returns 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 Converse, NIKE Golf and Hurley.
^2 Reported futures have been 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
 
Press spacebar to pause and continue. Press esc to stop.