NIKE, Inc. Reports Fiscal 2014 Fourth Quarter and Full Year Results

  NIKE, Inc. Reports Fiscal 2014 Fourth Quarter and Full Year Results

  *Fourth quarter revenues from continuing operations up 11 percent to $7.4
    billion
  *Fourth quarter diluted earnings per share from continuing operations up 3
    percent to $0.78
  *Fiscal 2014 revenues from continuing operations up 10 percent to $27.8
    billion
  *Fiscal 2014 diluted earnings per share from continuing operations up 11
    percent to $2.97
  *Worldwide futures orders up 11 percent; 12 percent growth excluding
    currency changes
  *Inventories as of May 31, 2014 up 13 percent

Business Wire

BEAVERTON, Ore. -- June 26, 2014

NIKE, Inc. (NYSE:NKE) today reported fiscal 2014 financial results for its
fourth quarter and full year ended May 31, 2014. Despite the negative impact
of changes in foreign exchange rates, diluted earnings per share for the
quarter increased 3 percent as revenue growth, gross margin expansion and a
lower average share count more than offset increased SG&A investments and a
higher tax rate.

Fiscal 2014 diluted earnings per share rose 11 percent to $2.97, reflecting 10
percent revenue growth, gross margin expansion, a lower tax rate and a lower
average share count, which more than offset the impacts of higher SG&A
investments and foreign exchange headwinds.

“These results demonstrate the energy and excitement NIKE brings to the
market,” said President and CEO Mark Parker. “Our ability to relentlessly
innovate for consumers drove our growth in FY14, and will continue to fuel it
for years to come. And as we grow, we remain focused on managing all areas of
our business to drive sustainable, profitable growth for our shareholders.”*

Fourth Quarter Continuing Operations Income Statement Review

  *Revenues  for NIKE, Inc. rose 11 percent to $7.4 billion, up 13 percent on
    a currency neutral basis.

       *Revenues for the NIKE Brand were $7.0 billion, up 13 percent on a
         currency neutral basis powered by growth in every key category and
         geography except Japan, where revenues were in line with the fourth
         quarter last year.
       *Revenues for Converse were $410 million, up 15 percent on a currency
         neutral basis, mainly driven by strong performance in our largest
         direct distribution markets: the United States, China and the United
         Kingdom.

  *Gross margin expanded 170 basis points to 45.6 percent. The increase was
    primarily attributable to higher average selling prices and continued
    growth in the higher margin Direct to Consumer (DTC) business, partially
    offset by higher product input costs and unfavorable foreign exchange
    rates.
  *Selling and administrative expense increased 21 percent to $2.4 billion.
    Demand creation expense was $876 million, up 36 percent, driven by
    marketing support for the World Cup and key product initiatives. Operating
    overhead expense increased 13 percent to $1.6 billion due to higher costs
    for the expanding DTC business, as well as investments in infrastructure
    and digital innovation.
  *Other expense, net was $17 million, comprised primarily of foreign
    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 $30 million.
  *The effective tax rate was 23.5 percent, compared to 22.9 percent for the
    fourth quarter last year. The effective tax rate for the prior period was
    lower due to a reduction in tax reserves related to foreign operations.
  *Net income increased 1 percent to $698 million while diluted earnings per
    share increased 3 percent to $0.78, reflecting a decrease in the weighted
    average diluted common shares outstanding.

Fiscal 2014 Continuing Operations Income Statement Review

  *Revenues  for NIKE, Inc. rose 10 percent to $27.8 billion, up 11 percent
    on a currency neutral basis.

       *Revenues for the NIKE Brand were $26.1 billion, up 11 percent
         excluding the impact of changes in foreign currency.
       *NIKE Brand wholesale revenues increased 8 percent on a currency
         neutral basis while DTC revenues grew to $5.3 billion, up 22 percent
         excluding the impact of changes in foreign currency, driven by 10
         percent growth in comparable store sales, new store expansion and a
         42 percent increase in e-commerce sales. As of May 31, 2014, the NIKE
         Brand had 768 DTC stores in operation as compared to 678 a year ago.
       *On a currency neutral basis, NIKE Brand revenue growth was driven by
         growth in every geography, key category and across the Brand’s Men’s,
         Women’s and Young Athletes’ (Kids’) businesses.
       *Revenues for Converse were $1.7 billion, up 15 percent on a currency
         neutral basis, mainly driven by strong performance in our largest
         direct distribution markets: the United States, China and the United
         Kingdom.

  *Gross margin expanded 120 basis points to 44.8 percent. The increase was
    primarily due to higher average selling prices and continued growth in the
    higher margin Direct to Consumer business, partially offset by higher
    product input costs and unfavorable foreign exchange rates.
  *Selling and administrative expense grew 12 percent to $8.8 billion. Demand
    creation expense was $3.0 billion, up 10 percent, due to an increase in
    sports marketing expense, as well as marketing support for the World Cup
    and key product launches. Operating overhead expense increased 14 percent
    to $5.7 billion due to higher costs for the expanding DTC business,
    investments in digital innovation and operational infrastructure.
  *Other expense, net was $103 million for the fiscal year, mainly comprised
    of foreign exchange losses. For the year, 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
    $139 million.
  *The effective tax rate was 24.0 percent, lower than the effective tax rate
    of 24.7 percent last year primarily due to an increase in earnings from
    low tax jurisdictions.
  *Net income increased 10 percent to $2.7 billion while diluted earnings per
    share increased 11 percent to $2.97, reflecting a decline in the weighted
    average diluted common shares outstanding.

May 31, 2014 Balance Sheet Review for Continuing Operations

  *Inventories for NIKE, Inc. were $3.9 billion, up 13 percent from May 31,
    2013. NIKE Brand wholesale unit inventories increased 12 percent. Changes
    in the average product cost per unit, combined with the impact of changes
    in foreign currency exchange rates, drove approximately 1 percentage point
    of net NIKE Brand wholesale inventory growth.
  *Cash and short-term investments were $5.1 billion, $823 million lower than
    last year as growth in net income was more than offset by share
    repurchases and higher dividends, as well as capital investments in the
    business.

Share Repurchases

During the fourth quarter, NIKE, Inc. repurchased a total of 12.3 million
shares for approximately $912 million as part of the four-year, $8 billion
program approved by the Board of Directors in September 2012. As of the end of
fiscal 2014, a total of 51.9 million shares had been repurchased under this
program for approximately $3.4 billion, at an average cost of $65.83 per
share.

Futures Orders

As of the end of the quarter, worldwide futures orders for NIKE Brand athletic
footwear and apparel scheduled for delivery from June through November 2014
totaled $13.3 billion, 11 percent higher than orders reported for the same
period last year, and 12 percent higher on a currency neutral basis.*

Conference Call

NIKE management will host a conference call beginning at approximately 2:00
p.m. PT on June 26, 2014, to review fiscal fourth quarter and full year
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, July 3, 2014.

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, changes in the timing of shipments,
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 May 31, 2014
                                                                                  
               THREE MONTHS ENDED            %      TWELVE MONTHS ENDED           %
(Dollars in
millions,       5/31/2014   5/31/2013^1  Change  5/31/2014   5/31/2013^1  Change
except per
share data)
Income from
continuing
operations:
Revenues       $ 7,425       $ 6,697         11  %  $ 27,799      $ 25,313        10  %
Cost of sales   4,040       3,757        8   %   15,353      14,279       8   %
Gross profit     3,385         2,940         15  %    12,446        11,034        13  %
Gross margin     45.6      %   43.9        %          44.8      %   43.6        %
                                                                                  
Demand
creation         876           642           36  %    3,031         2,745         10  %
expense
Operating
overhead        1,572       1,387        13  %   5,735       5,051        14  %
expense
Total selling
and              2,448         2,029         21  %    8,766         7,796         12  %
administrative
expense
% of revenue     33.0      %   30.3        %          31.5      %   30.8        %
                                                                                  
Interest
expense          8             3             -        33            (3          ) -
(income), net
Other expense   17          13           -      103         (15         ) -   
(income), net
Income before    912           895           2   %    3,544         3,256         9   %
income taxes
Income taxes    214         205          4   %   851         805          6   %
Effective tax    23.5      %   22.9        %          24.0      %   24.7        %
rate
                                                                            
NET INCOME
FROM            698         690          1   %   2,693       2,451        10  %
CONTINUING
OPERATIONS
NET (LOSS)
INCOME FROM     -           (28         ) -      -           21           -   
DISCONTINUED
OPERATIONS
NET INCOME     $ 698        $ 662          5   %  $ 2,693      $ 2,472        9   %
                                                                                  
Earnings per
share from
continuing
operations:
Basic earnings
per common     $ 0.80        $ 0.77          4   %  $ 3.05        $ 2.74          11  %
share
Diluted
earnings per   $ 0.78        $ 0.76          3   %  $ 2.97        $ 2.68          11  %
common share
                                                                                  
Earnings per
share from
discontinued
operations:
Basic earnings
per common     $ -           $ (0.03       ) -      $ -           $ 0.02          -
share
Diluted
earnings per   $ -           $ (0.03       ) -      $ -           $ 0.02          -
common share
                                                                                  
Weighted
average common
shares
outstanding:
Basic            873.7         892.6                  883.4         897.3
Diluted          895.2         913.4                  905.8         916.4
                                                                                  
Dividends
declared per   $ 0.24       $ 0.21               $ 0.93       $ 0.81         
common share
^1 Prior year amounts have been revised to properly expense internally developed patent
and trademark costs as incurred.


                                                                  
NIKE, Inc.
CONSOLIDATED BALANCE SHEETS
As of May 31, 2014
                                                                  
                              May 31,            May 31,
(Dollars in millions)         2014               2013^1           % Change
ASSETS
Current assets:
Cash and equivalents          $      2,220       $     3,337      -33%
Short-term investments               2,922             2,628      11%
Accounts receivable, net             3,434             3,117      10%
Inventories                          3,947             3,484      13%
Deferred income taxes                355               308        15%
Prepaid expenses and other           818               756        8%
current assets
Assets of discontinued              -                -          -
operations
Total current assets                 13,696            13,630     0%
Property, plant and equipment        6,220             5,500      13%
Less accumulated depreciation       3,386            3,048      11%
Property, plant and                  2,834             2,452      16%
equipment, net
Identifiable intangible              282               289        -2%
assets, net
Goodwill                             131               131        0%
Deferred income taxes and           1,651            1,043      58%
other assets
TOTAL ASSETS                  $      18,594      $     17,545     6%
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term  $      7           $     57         -88%
debt
Notes payable                        167               98         70%
Accounts payable                     1,930             1,669      16%
Accrued liabilities                  2,491             2,036      22%
Income taxes payable                 432               84         414%
Liabilities of discontinued         -                18         -
operations
Total current liabilities            5,027             3,962      27%
Long-term debt                       1,199             1,210      -1%
Deferred income taxes and            1,544             1,292      20%
other liabilities
Redeemable preferred stock           -                 -          -
Shareholders' equity                10,824           11,081     -2%
TOTAL LIABILITIES AND         $      18,594      $     17,545     6%
SHAREHOLDERS' EQUITY
^1 Prior year amounts have been revised to recognize certain inventories held
at third parties and to properly expense internally developed patent and
trademark costs as incurred.


                                                                                    
NIKE, Inc.
DIVISIONAL REVENUES^1
For the period ended May 31, 2014
                                                                                    
                                           % Change                                 % Change
                                           Excluding                                Excluding
            THREE MONTHS ENDED      %      Currency  TWELVE MONTHS ENDED     %      Currency
(Dollars in  5/31/2014  5/31/2013 Change Changes    5/31/2014  5/31/2013 Change Changes
millions)                                  ^2                                       ^2
North
America
Footwear    $ 2,036     $ 1,818     12%    12%       $ 7,495     $ 6,751     11%    11%
Apparel       1,017       934       9%     9%          3,937       3,591     10%    10%
Equipment    241        239       1%     1%         867        816       6%     6%
Total         3,294       2,991     10%    10%         12,299      11,158    10%    10%
Western
Europe
Footwear      884         699       26%    20%         3,299       2,657     24%    20%
Apparel       366         290       26%    19%         1,427       1,289     11%    7%
Equipment    62         63        -2%    -4%        253        247       2%     -1%
Total         1,312       1,052     25%    18%         4,979       4,193     19%    14%
Central &
Eastern
Europe
Footwear      219         212       3%     8%          763         672       14%    15%
Apparel       129         110       17%    25%         532         468       14%    17%
Equipment    22         25        -12%   -7%        92         89        3%     7%
Total         370         347       7%     12%         1,387       1,229     13%    15%
Greater
China
Footwear      434         404       7%     6%          1,600       1,495     7%     5%
Apparel       235         236       0%     -2%         876         844       4%     1%
Equipment    33         38        -13%   -12%       126        139       -9%    -11%
Total         702         678       4%     2%          2,602       2,478     5%     3%
Japan
Footwear      128         124       3%     12%         409         439       -7%    11%
Apparel       75          90        -17%   -11%        276         337       -18%   -2%
Equipment    23         30        -23%   -17%       86         100       -14%   2%
Total         226         244       -7%    0%          771         876       -12%   5%
Emerging
Markets
Footwear      701         673       4%     19%         2,642       2,621     1%     10%
Apparel       313         249       26%    44%         1,061       962       10%    21%
Equipment    66         72        -8%    8%         246        249       -1%    9%
Total         1,080       994       9%     25%         3,949       3,832     3%     13%
Global
Brand        36         31        16%    10%        125        115       9%     6%
Divisions^3
Total NIKE   7,020      6,337     11%    13%        26,112     23,881    9%     11%
Brand
Converse      410         354       16%    15%         1,684       1,449     16%    15%
Corporate^4  (5)        6         -      -          3          (17)      -      -
Total NIKE,
Inc.
Revenues    $ 7,425     $ 6,697     11%    13%       $ 27,799    $ 25,313    10%    11%
From
Continuing
Operations
                                                                                    
Total NIKE
Brand
Footwear    $ 4,402     $ 3,930     12%    14%       $ 16,208    $ 14,635    11%    12%
Apparel       2,135       1,909     12%    14%         8,109       7,491     8%     10%
Equipment     447         467       -4%    -1%         1,670       1,640     2%     4%
Global
Brand        36         31        16%    10%        125        115       9%     6%
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 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.
SUPPLEMENTAL NIKE BRAND REVENUE DETAILS^1
For the period ended May 31, 2014
                                                                  % Change
                                                                  Excluding
                          YEAR ENDED                    %         Currency
(Dollars in              5/31/2014      5/31/2013      Change    Changes ^2
millions)
NIKE Brand Revenues
by:
Sales to Wholesale        $    20,683    $    19,401    7%        8%
Customers
Sales Direct to                5,304          4,365     22%       22%
Consumers
Global Brand                 125           115       9%        6%
Divisions
Total NIKE Brand         $    26,112    $    23,881    9%        11%
Revenues
                                                                  
NIKE Brand Revenues
on a Wholesale
Equivalent Basis:^3
Sales to Wholesale        $    20,683    $    19,401    7%        8%
Customers
Sales from our
Wholesale
Operations to                3,107         2,499     24%       25%
Direct to Consumer
Operations
Total NIKE Brand
Wholesale                $    23,790    $    21,900    9%        10%
Equivalent Revenues
                                                                  
NIKE Brand
Wholesale
Equivalent Revenues
by:^3
Men's                     $    14,001    $    13,073    7%        9%
Women’s                        4,971          4,494     11%       12%
Young Athletes'                3,737          3,251     15%       16%
Others^4                     1,081         1,082     0%        1%
Total NIKE Brand
Wholesale                $    23,790    $    21,900    9%        10%
Equivalent Revenues
                                                                  
NIKE Brand
Wholesale
Equivalent Revenues
by:^3
Running                   $    4,623     $    4,274     8%        10%
Basketball                     3,119          2,629     19%       19%
Football (Soccer)              2,270          1,930     18%       21%
Men’s Training                 2,479          2,391     4%        5%
Women’s Training               1,149          1,067     8%        10%
Action Sports                  738            683       8%        9%
Sportswear                     5,877          5,569     6%        7%
Golf                           789            792       0%        1%
Others^5                     2,746         2,565     7%        8%
Total NIKE Brand
Wholesale                $    23,790    $    21,900    9%        10%
Equivalent Revenues
^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 by excluding the impact of translation arising from foreign currency
exchange rate fluctuations.

^3 References to NIKE Brand wholesale equivalent revenues are intended to
provide context as to the total size of our NIKE Brand market footprint if we
had no Direct to Consumer operations. NIKE Brand wholesale equivalent revenues
consist of 1) sales to external wholesale customers, and 2) internal sales
from our wholesale operations to our Direct to Consumer operations which are
charged at prices that are comparable to prices charged to external wholesale
customers.

^4 Others include all unisex products, equipment, and other products not
allocated to Men's, Women's, and Young Athletes', as well as certain
adjustments that are not allocated to products designated by Gender-Age.

^5 Others include all other categories and certain adjustments that are not
allocated at the category level.
                    

                                                                           
NIKE, Inc.
EARNINGS BEFORE INTEREST AND TAXES^1,2
For the period ended May 31, 2014
                                                                           
            THREE MONTHS ENDED          %      TWELVE MONTHS ENDED         %
(Dollars in  5/31/2014   5/31/2013^3 Change  5/31/2014   5/31/2013^3 Change
millions)
North       $ 887         $ 778         14   % $ 3,075       $ 2,641       16   %
America
Western       192           142         35   %   855           643         33   %
Europe
Central &
Eastern       71            79          -10  %   279           234         19   %
Europe
Greater       215           243         -12  %   816           813         0    %
China
Japan         39            47          -17  %   131           139         -6   %
Emerging      273           253         8    %   955           988         -3   %
Markets
Global
Brand        (560      )  (466    )   -20  %  (2,021    )  (1,746   )  -16  %
Divisions^4
TOTAL NIKE   1,117       1,076      4    %  4,090       3,712      10   %
BRAND
Converse      94            89          6    %   496           425         17   %
Corporate^5  (291      )  (267    )   -9   %  (1,009    )  (884     )  -14  %
TOTAL
EARNINGS
BEFORE      $ 920        $ 898        2    % $ 3,577      $ 3,253      10   %
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 Prior year amounts have been revised to properly expense internally developed
patent and trademark costs as incurred.

^4 Global Brand Divisions primarily represent demand creation, operating
overhead, information technology, and product creation and design expenses that
are centrally managed for the NIKE Brand. Revenues for Global Brand Divisions are
primarily attributable to NIKE Brand licensing businesses that are not part of a
geographic operating segment.

^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 May 31, 2014
                                                       
                                Reported Futures       Excluding Currency
                               Orders                 Changes ^2
North America                   11%                    11%
Western Europe                  25%                    22%
Central & Eastern Europe        10%                    14%
Greater China                   6%                     6%
Japan                           -6%                    0%
Emerging Markets                2%                     9%
Total NIKE Brand Reported       11%                    12%
Futures
^1 Futures orders by geography and in total for NIKE Brand athletic footwear
and apparel scheduled for delivery from June 2014 through November 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
 
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