2007'03.30.Fri
NIKE, Inc. Reports Third Quarter Earnings Per Share of $1.37
March 23, 2007
Revenue up 9 Percent
Worldwide Futures Orders up 9 Percent
BEAVERTON, Ore., March 23 /Xinhua-PRNewswire/ -- NIKE,
Inc. (NYSE: NKE) today reported financial results for the
third quarter ended February 28, 2007. For the quarter,
revenue grew 9 percent to $3.9 billion, compared to $3.6
billion for the same period last year. Changes in currency
exchange rates increased revenue growth by 3 percentage
points for the quarter. Third quarter net income grew 8
percent to $350.8 million, compared to $325.8 million in
the prior year and diluted earnings per share increased 10
percent to $1.37, versus $1.24 last year.
( Logo:
http://www.newscom.com/cgi-bin/prnh/19990818/NIKELOGO)
"We had a strong third quarter. Our mix of
compelling product and premium consumer experiences drove a
meaningful acceleration of futures orders," said Mark
Parker, Nike, Inc. president and chief executive officer.
"We continue to grow because we're innovative,
disciplined, and connected to our consumers."
Futures Orders
The Company reported worldwide futures orders for
athletic footwear and apparel, scheduled for delivery from
March 2007 through July 2007, totaling $6.0 billion, 9
percent higher than such orders reported for the same
period last year. Changes in currency exchange rates
increased reported orders growth by 1 percentage point.*
By region, futures orders for the U.S. increased 8
percent; Europe (which includes the Middle East and Africa)
increased 9 percent; Asia Pacific grew 14 percent; and the
Americas increased 2 percent. Changes in currency exchange
rates increased the reported futures orders growth in
Europe and Asia Pacific by 2 percentage points; and in the
Americas region decreased reported futures growth by 1
percentage point.*
Regional Highlights
U.S.
During the third quarter, U.S. revenues increased 2
percent to $1.5 billion versus $1.4 billion for the third
quarter of fiscal 2006. U.S. athletic footwear revenues
increased 2 percent to $1.0 billion, apparel revenues
increased 1 percent to $371.3 million and equipment
revenues increased 11 percent to $77.8 million. U.S.
pre-tax income decreased 2 percent to $280.2 million from
$286.2 million a year ago.
Europe
Third quarter revenues for the European region grew 15
percent to $1.1 billion from $980.1 million for the same
period last year. Changes in currency exchange rates
increased revenue growth by 9 percentage points. Footwear
revenues increased 12 percent to $630.0 million, apparel
revenues increased 19 percent to $413.2 million and
equipment revenues increased 18 percent to $81.6 million.
Pre-tax income increased 18 percent to $246.5 million.
Asia Pacific
In the third quarter revenues in the Asia Pacific
region grew 11 percent to $589.9 million compared to $532.3
million a year ago. Changes in currency exchange rates
increased revenue by 3 percentage points. Footwear revenues
increased 12 percent to $319.4 million, apparel revenues
increased 9 percent to $217.4 million and equipment
revenues grew 8 percent to $53.1 million.
Pre-tax income increased 6 percent to $126.4 million.
Americas
Revenues in the Americas region increased 5 percent to
$212.5 million compared to $203.1 million in the third
quarter of fiscal 2006. Changes in currency exchange rates
did not have a significant impact on revenue growth.
Footwear revenues were up 6 percent to $152.8 million,
apparel revenues declined 5 percent to $42.3 million and
equipment revenues grew 16 percent to $17.4 million.
Pre-tax income was up 6 percent to $40.7 million.
Other Businesses
For the third quarter, Other business revenues, which
are comprised of results from Cole Haan Holdings
Incorporated, Converse Inc., Exeter Brands Group LLC,
Hurley International LLC, NIKE Bauer Hockey Inc. and NIKE
Golf, grew 15 percent to $522.7 million from $454.5 million
last year. Pre-tax income increased 53 percent to $68.4
million for the quarter.
Income Statement Review
Gross margins were 44.2 percent during the third
quarter compared to 43.6 percent for the same period in the
prior year.
Selling and administrative expenses were 31.7 percent
of third quarter revenues, compared to 30.1 percent last
year. Results for the third quarter included $17.8 million,
net of taxes, related to the expensing of stock options,
which reduced diluted earnings per share by $0.07.
Excluding stock option expense third quarter net income
increased 13 percent and diluted earnings per share
increased 16 percent to $1.44.
The effective tax rate for the third quarter declined
to 32.3 percent mainly due to a European tax agreement,
which was finalized in the second quarter of fiscal 2007
and the retroactive reinstatement of the U.S. research and
development tax credit signed into law in December.
Balance Sheet Review
At quarter end, global inventories stood at $2.2
billion, an increase of 7 percent from February 28, 2006.
Cash and short-term investments were $2.3 billion at the
end of the quarter, compared to $2.0 billion last year.
Share Repurchase
During the third quarter, the Company purchased a total
of 906,700 shares for approximately $91 million in
conjunction with the Company's four-year $3 billion share
repurchase program approved by the Board of Directors in
June 2006.
Stock Split
On February 15, 2007, the Board declared a two-for-one
stock split of the Company's Class A and Class B common
stock to be effected in the form of a 100 percent common
stock dividend. All shareholders of record at the close of
business on March 12, 2007, will receive one additional
share of common stock for each share held on that date. The
additional share of common stock will be distributed on
April 2, 2007. Information pertaining to shares and
earnings per share does not reflect this split. Information
reflecting the stock split will be presented after the stock
dividend is distributed.
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 subsidiaries include Cole Haan Holdings Incorporated,
a leading designer and marketer of luxury shoes, handbags,
accessories and coats; Converse Inc., which designs,
markets and distributes athletic footwear, apparel and
accessories; Exeter Brands Group LLC, which designs and
markets athletic footwear and apparel for the value retail
channel; Hurley International LLC, which designs, markets
and distributes action sports and youth lifestyle footwear,
apparel and accessories and NIKE Bauer Hockey Inc., a
leading designer and distributor of hockey equipment.
NIKE's earnings releases and other financial
information are available on the Internet at
http://www.nikebiz.com/invest .
* The marked paragraphs contain forward-looking
statements that involve risks and uncertainties that could
cause actual results to differ materially. These risks and
uncertainties are detailed from time to time in reports
filed by NIKE with the S.E.C., including Forms 8-K, 10-Q,
and 10-K. Some forward-looking statements in this release
concern changes in futures orders that are not necessarily
indicative of changes in total revenues for subsequent
periods due to the mix of futures and "at once"
orders, exchange rate fluctuations, order cancellations and
discounts, which may vary significantly from quarter to
quarter, and because a significant portion of the business
does not report futures orders.
NIKE, Inc.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED FEBRUARY 28, 2007
(In millions, except per share data)
YEAR
TO DATE
QUARTER ENDED
ENDED
2/28/2007 2/28/2006 % Chg
2/28/2007 2/28/2006 % Chg
INCOME STATEMENT
Revenues $3,926.9 $3,612.8 9%
$11,942.7 $10,949.5 9%
Cost of sales 2,191.7 2,038.7 8%
6,701.2 6,115.9 10%
Gross margin 1,735.2 1,574.1 10%
5,241.5 4,833.6 8%
44.2% 43.6%
43.9% 44.1%
Selling and
administrative
expense 1,243.3 1,086.6 14%
3,756.7 3,245.7 16%
31.7% 30.1%
31.5% 29.6%
Interest income, net (15.8) (8.4) 88%
(43.0) (20.5) 110%
Other income, net (10.3) (10.7) -4%
(13.3) (22.0) -40%
Income before income
taxes 518.0 506.6 2%
1,541.1 1,630.4 -5%
Income taxes 167.2 180.8 -8%
487.5 571.2 -15%
32.3% 35.7%
31.6% 35.0%
Net income $350.8 $325.8 8%
$1,053.6 $1059.2 -1%
Diluted EPS $1.37 $1.24 10%
$4.14 $4.00 4%
Basic EPS $1.39 $1.26 10%
$4.18 $4.08 2%
Weighted Average Common Shares Outstanding:
Diluted 255.4 263.4
254.8 264.6
Basic 252.3 258.9
252.1 259.6
Dividends declared $0.37 $0.31
$1.05 $0.87
NIKE, Inc.
BALANCE SHEET
2/28/2007 2/28/2006
ASSETS (In
millions)
Current assets:
Cash and equivalents
$1,879.2 $1,472.1
Short-term investments
390.5 535.0
Accounts receivable, net
2,532.0 2,351.6
Inventories
2,167.8 2,034.2
Deferred income taxes
184.4 115.0
Prepaid expenses and other current
assets
486.2 536.8
Total current assets
7,640.1 7,044.7
Property, plant and equipment
3,568.9 3,283.2
Less accumulated depreciation
1,914.3 1,684.8
Property, plant and equipment, net
1,654.6 1,598.4
Identifiable intangible assets,
net
406.1 406.2
Goodwill
130.8 135.3
Deferred income taxes and other
assets
387.0 333.6
Total assets
$10,218.6 $9,518.2
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term debt
$30.6 $254.7
Notes payable
96.0 79.3
Accounts payable
800.9 785.8
Accrued liabilities
1,310.5 1,128.9
Income taxes payable
74.7 55.5
Total current liabilities
2,312.7 2,304.2
Long-term debt
419.4 411.3
Deferred income taxes and other
liabilities
638.2 540.8
Redeemable preferred stock
0.3 0.3
Shareholders' equity
6,848.0 6,261.6
Total liabilities and
shareholders' equity
$10,218.6 $9,518.2
NIKE, Inc.
DIVISIONAL QUARTER ENDED YEAR TO
DATE ENDED
REVENUES 2/28/2007 2/28/2006 % Chg 2/28/2007
2/28/2006 % Chg
(In millions)
U.S. Region
Footwear $1,027.9 $1,005.9 2% $2,986.4
$2,838.5 5%
Apparel 371.3 366.6 1% 1,278.2
1,195.9 7%
Equipment 77.8 70.3 11% 232.3
224.4 4%
Total 1,477.0 1,442.8 2% 4,496.9
4,258.8 6%
EMEA Region
Footwear 630.0 563.8 12% 1,850.9
1,782.1 4%
Apparel 413.2 347.1 19% 1,321.2
1,161.9 14%
Equipment 81.6 69.2 18% 259.8
231.0 12%
Total 1,124.8 980.1 15% 3,431.9
3,175.0 8%
Asia Pacific Region
Footwear 319.4 284.1 12% 862.8
766.9 13%
Apparel 217.4 199.0 9% 668.9
590.1 13%
Equipment 53.1 49.2 8% 154.8
138.2 12%
Total 589.9 532.3 11% 1,686.5
1,495.2 13%
Americas Region
Footwear 152.8 143.7 6% 510.2
478.7 7%
Apparel 42.3 44.4 -5% 149.2
140.5 6%
Equipment 17.4 15.0 16% 58.1
49.7 17%
Total 212.5 203.1 5% 717.5
668.9 7%
3,404.2 3,158.3 8% 10,332.8
9,597.9 8%
Other 522.7 454.5 15% 1,609.9
1,351.6 19%
Total NIKE, Inc.
revenues $3,926.9 $3,612.8 9% $11,942.7
$10,949.5 9%
QUARTER ENDED YEAR TO
DATE ENDED
PRE-TAX 2/28/2007 2/28/2006 % Chg 2/28/2007
2/28/2006 % Chg
INCOME(1),*
(In millions)
U.S. Region $280.2 $286.2 -2% $885.1
$897.1 -1%
EMEA Region 246.5 208.7 18% 707.8
733.1 -3%
Asia Pacific
Region 126.4 119.6 6% 365.2
326.2 12%
Americas Region 40.7 38.5 6% 148.9
140.5 6%
Other 68.4 44.6 53% 210.6
107.6 96%
Corporate(2) (244.2) (191.0) -28% (776.5)
(574.1) -35%
Total pre-tax
income(1) $518.0 $506.6 2% $1,541.1
$1,630.4 -5%
(1) The Company evaluates performance of individual
operating segments
based on pre-tax income. Total pre-tax income
equals income before
income taxes as shown on the Consolidated Income
Statement.
(2) "Corporate" represents items necessary to
reconcile to total pre-tax
income, which includes corporate costs that are not
allocated to the
operating segments for management reporting and
intercompany
eliminations for specific items in the Consolidated
Income Statement.
* Certain prior year amounts have been reclassified
to conform to
fiscal year 2007 presentation. These changes had
no impact on
previously reported results of operations or
shareholders' equity.
NIKE, Inc.
YEAR TO DATE
NET INCOME AND DILUTED QUARTER ENDED
ENDED
EPS RECONCILIATION(1) 2/28/2007 2/28/2006 % Chg
2/28/2007 2/28/2006 % Chg
(In millions, except per
share data)
Net income, as reported $350.8 $325.8 8%
$1,053.6 $1,059.2 -1%
Exclude: Stock-based
compensation
expense, net of tax(2) 17.8 -- --
78.1 -- --
Net income, excluding
stock-based compensation
expense(2) $368.6 $325.8 13%
$1,131.7 $1,059.2 7%
Diluted EPS, as reported $1.37 $1.24 10%
$4.14 $4.00 4%
Diluted EPS, excluding
stock-based compensation
expense(2) $1.44 $1.24 16%
$4.44 $4.00 11%
(1) This schedule is intended to satisfy the
quantitative reconciliation
for non-GAAP financial measures in accordance with
Regulation G of the
Securities and Exchange Commission.
(2) This charge relates to stock-based compensation
associated with stock
options and ESPP shares issued to employees and
expensed in accordance
with SFAS 123(R) "Share Based Payment",
which was adopted by the
Company during its first fiscal quarter ended
August 31, 2006.
For more information, please contact:
Media:
Alan Marks
NIKE, Inc.
Tel: +1-503-671-4235
Investors:
Pamela Catlett
NIKE, Inc.
Tel: +1-503-671-4589
PR
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