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NIKE, Inc. Reports Fiscal 2007 Earnings Per Share of US$2.93
BEAVERTON, Oregon, June 26 /PRNewswire/ -- - Revenue up 9 percent for the fiscal year and fourth quarter - Fourth quarter earnings per share up 34 percent - Worldwide futures orders up 12 percent NIKE, Inc. (NYSE: NKE) today reported financial results for the 2007 fiscal year, ended May 31, 2007. For the fiscal year, revenues grew 9 percent to US$16.3 billion, compared to US$15.0 billion last year. Net income increased 7 percent to US$1.5 billion, compared to US$1.4 billion last year, and diluted earnings per share increased 11 percent to US$2.93 versus US$2.64 last year. For the fourth quarter, revenues increased 9 percent to US$4.4 billion, compared to US$4.0 billion for the same period last year. Fourth quarter net income increased 32 percent to US$437.9 million, compared to US$332.8 million in the prior year, and diluted earnings per share increased 34 percent to US$0.86, versus US$0.64 last year. Changes in currency exchange rates increased revenue growth by 2 percentage points for the full year and fourth quarter. (Logo: http://www.newscom.com/cgi-bin/prnh/19990818/NIKELOGO ) Commenting on results, Mark Parker, Nike, Inc. President and CEO said, "Nike is a growth company, and fiscal 2007 was no exception. We delivered another record year of revenue, earnings and cash flow. The Nike brand is extremely strong worldwide, and the Nike subsidiaries continue to increase their contribution to the performance of the company." "Opportunities for growth at Nike have never been greater," Parker added. "We have a unique ability to consistently turn consumer insights into performance products and experiences. That's a big part of what distinguishes Nike as the global industry leader." Futures Orders The Company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery from June 2007 through November 2007, totaling US$7.7 billion, 12 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.(i) By region, futures orders for the U.S. increased 7 percent; Europe (which includes the Middle East and Africa) increased 12 percent; Asia Pacific grew 19 percent; and the Americas increased 15 percent. Changes in currency exchange rates increased reported futures orders growth in Europe by 1 percentage point; in the Asia Pacific region by 4 percentage points; and in the Americas region decreased reported futures orders by 1 percentage point.(i) Regional Highlights U.S. During the fourth quarter, U.S. revenues increased 10 percent to US$1.6 billion versus US$1.5 billion for the same period last year. Footwear revenues increased 9 percent to US$1.1 billion. Apparel revenues increased 11 percent to US$437.9 million. Equipment revenues increased 23 percent to US$91.5 million. U.S. pre-tax income improved 20 percent to US$415.2 million. For the full fiscal year, U.S. revenues were up 7 percent to US$6.1 billion. Footwear revenues increased 6 percent to US$4.1 billion, apparel revenues grew 8 percent to US$1.7 billion and equipment revenues increased 8 percent to US$323.8 million. U.S. pre-tax income rose 4 percent to US$1.3 billion for the fiscal year. Europe Fourth quarter revenues for the European region grew 12 percent to US$1.3 billion from US$1.2 billion for the same period last year. Changes in currency exchange rates increased revenue growth by 9 percentage points. Footwear revenues increased 13 percent to US$757.1 million. Apparel revenues grew by 10 percent to US$436.0 million and equipment revenues increased 19 percent to US$98.3 million. Fourth quarter pre-tax income increased 29 percent to US$292.9 million. Full fiscal year European revenues grew 9 percent to US$4.7 billion. Changes in currency exchange rates increased revenue growth by 6 percentage points. Footwear revenues were up 6 percent to US$2.6 billion, apparel revenues increased 13 percent to US$1.8 billion and equipment revenues grew 14 percent to US$358.1 million. European fiscal year pre-tax income increased 4 percent to US$1.0 billion. Asia Pacific Fourth quarter revenues for the Asia Pacific region grew 7 percent to US$596.9 million compared to US$558.6 million a year ago. Changes in currency exchange rates increased revenue growth by 2 percentage points. Footwear revenues were up 7 percent to US$296.4 million, apparel revenues increased 7 percent to US$240.4 million and equipment revenues grew 8 percent to US$60.1 million. Fourth quarter pre-tax income increased 37 percent to US$118.5 million. For the full fiscal year, Asia Pacific revenues increased 11 percent to US$2.3 billion, compared to US$2.1 billion last year. Changes in currency exchange rates increased revenue growth by 1 percentage point. Footwear revenues were US$1.2 billion, up 11 percent from US$1.0 billion last year. Apparel revenues increased 11 percent to US$909.3 million and equipment revenues grew by 11 percent to US$214.9 million. Pre-tax income increased 17 percent to US$483.7 million for the fiscal year. Americas Fourth quarter revenues in the Americas region were relatively flat to the prior year at US$235.0 million. Changes in currency exchange rates did not have a significant impact on revenue growth. Footwear revenues were up 8 percent to US$169.4 million, apparel revenues decreased 27 percent to US$44.7 million and equipment revenues rose 15 percent to US$20.9 million. Pre-tax income was up 20 percent to US$38.5 million for the quarter. Full fiscal year revenues for the Americas region grew 5 percent to US$952.5 million, 1 percentage point of this growth was the result of changes in currency exchange rates. Footwear revenues increased 7 percent to US$679.6 million, apparel revenues decreased 4 percent to US$193.9 million, and equipment revenues rose 17 percent to US$79.0 million. Pre-tax income increased 9 percent for the fiscal year to US$187.4 million. Other Businesses For the fourth quarter, Other business revenues, which include Cole Haan Holdings Incorporated, Converse Inc., Exeter Brands Group LLC, Hurley International LLC, NIKE Bauer Hockey Inc., and NIKE Golf, grew 9 percent to US$649.7 million and pre-tax income was up 102 percent to US$93.1 million. For the fiscal year, Other business revenues increased 16 percent to US$2.3 billion and pre-tax income increased 98 percent to US$303.7 million. Prior year fourth quarter and fiscal year pre-tax income included a one-time US$51.9 million charge related to an arbitration ruling involving Converse and a former South American licensee. In fiscal 2007 the ruling was settled for less than this amount, which resulted in a US$14.2 million benefit to Other business pre-tax income. Excluding these items, Other business pre-tax income would have decreased 5 percent for the fourth quarter and increased 41 percent for the fiscal year. Income Statement Review In the fourth quarter of fiscal 2007 gross margins were comparable to the prior year at 43.8 percent; selling and administrative expenses were 29.0 percent or revenues versus 30.8 percent last year and the effective tax rate was 33.5 percent compared to 34.9 percent last year. Fourth quarter net income included US$19.3 million, net of taxes, related to the expensing of stock options. In addition, the prior year fourth quarter net income included a one-time US$30.8 million charge, net of taxes, related to the Converse arbitration ruling. Excluding these two items fourth quarter diluted earnings per share would have increased 29 percent to US$0.90 from US$0.70 last year. For the fiscal year, gross margins were 43.9 percent compared to 44.0 percent last year; selling and administrative expenses were 30.8 percent versus 29.9 percent last year; and the effective tax rate was 32.2 percent compared to 35.0 percent last year. Net income for the fiscal year included US$96.7 million, net of taxes, related to the expensing of stock options and a US$9.6 million benefit, net of taxes, for settling the Converse arbitration ruling for less than the amount accrued in fiscal 2006. Excluding these two items diluted earnings per share for the fiscal year would have increased 15 percent to US$3.10 compared to US$2.70 last year. Balance Sheet Review At the end of the fiscal year, global inventories stood at US$2.1 billion, an increase of 2 percent from May 31, 2006. Cash and short-term investments were US$2.8 billion at the end of the fiscal year, compared to US$2.3 billion last year. Share Repurchase During the fourth quarter, the Company purchased a total of 5,255,600 shares for approximately US$281.2 million in conjunction with the Company's four-year, US$3 billion share repurchase program approved by the Board of Directors in June 2006. For the fiscal year, the Company purchased 18,063,752 shares for approximately US$812.7 million under this program and 4,017,448 shares for approximately US$162.6 million under its previous four-year US$1.5 billion share repurchase program approved by the Board of Directors in June 2004. 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. BEAVERTON, Oregon, June 26 /PRNewswire/ -- (i) 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. (Tables Follow) NIKE, Inc. CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED MAY 31, 2007 (In millions, except per share data) (All amounts in US Dollars unless otherwise specified) QUARTER ENDED YEAR ENDED INCOME STATEMENT 05/31/2007 05/31/2006 %Chg 05/31/2007 05/31/2006 %Chg Revenues $4,383.2 $4,005.4 9% $16,325.9 $14,954.9 9% Cost of sales 2,464.2 2,252.0 9% 9,165.4 8,367.9 10% Gross margin 1,919.0 1,753.4 9% 7,160.5 6,587.0 9% 43.8% 43.8% 43.9% 44.0% Selling and administrative expense 1,272.0 1,232.1 3% 5,028.7 4,477.8 12% 29.0% 30.8% 30.8% 29.9% Interest income, net (24.2) (16.3) 48% (67.2) (36.8) 83% Other (income) expense, net 12.4 26.4 -53% (0.9) 4.4 -120% Income before income taxes 658.8 511.2 29% 2,199.9 2,141.6 3% Income taxes 220.9 178.4 24% 708.4 749.6 -5% 33.5% 34.9% 32.2% 35.0% Net income $437.9 $332.8 32% $1,491.5 $1,392.0 7% Diluted EPS $0.86 $0.64 34% $2.93 $2.64 11% Basic EPS $0.87 $0.65 34% $2.96 $2.69 10% Weighted Average Common Shares Outstanding: Diluted 510.2 522.8 509.9 527.6 Basic 502.8 514.4 503.8 518.0 Dividends declared $0.185 $0.155 $0.71 $0.59 NIKE, Inc. BALANCE SHEET (i) 05/31/2007 05/31/2006 ASSETS (In millions) Current assets: Cash and equivalents $1,856.7 $954.2 Short-term investments 990.3 1,348.8 Accounts receivable, net 2,494.7 2,382.9 Inventories 2,121.9 2,076.7 Deferred income taxes 219.7 203.3 Prepaid expenses and other current assets 393.2 380.1 Total current assets 8,076.5 7,346.0 Property, plant and equipment 3,619.1 3,408.3 Less accumulated depreciation 1,940.8 1,750.6 Property, plant and equipment, net 1,678.3 1,657.7 Identifiable intangible assets, net 409.9 405.5 Goodwill 130.8 130.8 Deferred income taxes and other assets 392.8 329.6 Total assets $10,688.3 $9,869.6 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $30.5 $255.3 Notes payable 100.8 43.4 Accounts payable 1,040.3 952.2 Accrued liabilities 1,303.4 1,276.0 Income taxes payable 109.0 85.5 Total current liabilities 2,584.0 2,612.4 Long-term debt 409.9 410.7 Deferred income taxes and other liabilities 668.7 561.0 Redeemable preferred stock 0.3 0.3 Shareholders' equity 7,025.4 6,285.2 Total liabilities and shareholders' equity $10,688.3 $9,869.6 (i) 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. QUARTER ENDED YEAR ENDED DIVISIONAL REVENUES 05/31/2007 05/31/2006 %Chg 05/31/2007 05/31/2006 % Chg (In millions) U.S. Region Footwear $1,080.8 $993.7 9% $4,067.2 $3,832.2 6% Apparel 437.9 395.7 11% 1,716.1 1,591.6 8% Equipment 91.5 74.3 23% 323.8 298.7 8% Total 1,610.2 1,463.7 10% 6,107.1 5,722.5 7% EMEA Region Footwear 757.1 672.2 13% 2,608.0 2,454.3 6% Apparel 436.0 397.1 10% 1,757.2 1,559.0 13% Equipment 98.3 82.3 19% 358.1 313.3 14% Total 1,291.4 1,151.6 12% 4,723.3 4,326.6 9% Asia Pacific Region Footwear 296.4 277.2 7% 1,159.2 1,044.1 11% Apparel 240.4 225.5 7% 909.3 815.6 11% Equipment 60.1 55.9 8% 214.9 194.1 11% Total 596.9 558.6 7% 2,283.4 2,053.8 11% Americas Region Footwear 169.4 156.6 8% 679.6 635.3 7% Apparel 44.7 61.3 -27% 193.9 201.8 -4% Equipment 20.9 18.1 15% 79.0 67.8 17% Total 235.0 236.0 0% 952.5 904.9 5% 3,733.5 3,409.9 9% 14,066.3 13,007.8 8% Other businesses 649.7 595.5 9% 2,259.6 1,947.1 16% Total NIKE, Inc. revenues $4,383.2 $4,005.4 9% $16,325.9 $14,954.9 9% NIKE, Inc. PRE-TAX QUARTER ENDED % YEAR ENDED % INCOME (1),(2) 05/31/2007 05/31/2006 Chg 05/31/2007 05/31/2006 Chg (In millions) U.S. Region $ 415.2 $ 347.4 20% $1,300.3 $1,244.5 4% EMEA Region 292.9 227.6 29% 1,000.7 960.7 4% Asia Pacific Region 118.5 86.3 37% 483.7 412.5 17% Americas Region 38.5 32.1 20% 187.4 172.6 9% Other businesses 93.1 46.0 102% 303.7 153.6 98% Corporate(3) (299.4) (228.2) -31% (1,075.9) (802.3) -34% Total pre-tax income (1) $ 658.8 $ 511.2 29% $2,199.9 $2,141.6 3% (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) 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. (3) "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. NIKE, Inc. NET INCOME AND DILUTED EPS RECONCILIATION(1) QUARTER ENDED YEAR ENDED 5/31/2007 5/31/2006 % 5/31/2007 5/31/2006 % Chg Chg (In millions, except per share data) Net income, as reported $437.9 $332.8 32% $1,491.5 $1,392.0 7% Exclude: Converse arbitration, net of tax(2) - 30.8 - (9.6) 30.8 - Exclude: Stock-based compensation expense, net of tax(3) 19.3 - - 96.7 - - Net income, excluding Converse arbitration(2) and stock-based compensation expense(3) $457.2 $363.6 26% $1,578.6 $1,422.8 11% Diluted EPS, as reported $0.86 $0.64 34% $2.93 $2.64 11% Diluted EPS, excluding Converse arbitration(2) and stock-based compensation expense(3) $0.90 $0.70 29% $3.10 $2.70 15% (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) The Converse arbitration charge relates to a ruling involving a contract dispute between NIKE, Inc.'s Converse subsidiary and a former South American licensee. The dispute was settled during the first quarter ended August 31, 2006 (3) 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. Web site: http://www.nikebiz.com
