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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Nike Inc | NYSE:NKE | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-1.80 | -1.91% | 92.26 | 93.51 | 92.25 | 92.90 | 6,488,123 | 22:39:28 |
Date of Report (Date of earliest event reported): | September 24, 2015 |
NIKE, Inc. | ||
(Exact name of registrant as specified in charter) | ||
OREGON | 1-10635 | 93-0584541 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
ONE BOWERMAN DRIVE BEAVERTON, OR | 97005-6453 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: | (503) 671-6453 | |
NO CHANGE | ||
(Former name or former address, if changed since last report.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
NIKE, INC. (Registrant) By: /s/ Andrew Campion |
Andrew Campion Chief Financial Officer |
Investor Contact: | Media Contact: | |
Kelley Hall | Kellie Leonard | |
(503) 532-3793 | (503) 671-6171 |
• | Revenues up 5 percent to $8.4 billion; 14 percent growth excluding currency changes |
• | Diluted earnings per share up 23 percent to $1.34 |
• | Worldwide futures orders up 9 percent; 17 percent growth excluding currency changes |
• | Inventories as of August 31, 2015 up 10 percent |
• | Revenues for NIKE, Inc. increased 5 percent to $8.4 billion, up 14 percent on a currency-neutral basis. |
◦ | Revenues for the NIKE Brand were $7.9 billion, up 15 percent on a currency-neutral basis driven by growth in every geography and nearly every key category. |
◦ | Revenues for Converse were $555 million, up 3 percent on a currency-neutral basis, mainly driven by strong growth in the United States, partially offset by a decline in the United Kingdom. |
• | Gross margin expanded 90 basis points to 47.5 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 and warehousing costs. |
• | Selling and administrative expense increased 4 percent to $2.6 billion. Demand creation expense was $832 million, down 7 percent, reflecting favorable comparisons against higher investment in support of the World Cup in the first quarter of fiscal 2015. Operating overhead expense increased 10 percent to $1.7 billion, reflecting continued growth in the DTC business and targeted investments in infrastructure and consumer-focused digital capabilities. |
• | Other income, net was $31 million, comprised primarily of net foreign currency exchange gains. For the quarter, the Company estimates the year-over-year change in foreign currency-related gains and losses included in other income, net, combined with the impact of changes in exchange rates on the translation of foreign currency-denominated profits, decreased pretax income by approximately $151 million. |
• | The effective tax rate was 18.4 percent, compared to 21.7 percent for the same period last year, primarily due to an increase in the proportion of earnings from operations outside of the United States, which are generally subject to a lower tax rate, as well as certain non-recurring items recognized in the quarter. |
• | Net income increased 23 percent to $1.2 billion while diluted earnings per share increased 23 percent to $1.34, reflecting strong revenue growth, gross margin expansion, selling and administrative expense leverage, a lower tax rate and a decrease in the weighted average diluted common shares outstanding. |
• | Inventories for NIKE, Inc. were $4.4 billion, up 10 percent from August 31, 2014, driven primarily by an 8 percent increase in NIKE Brand wholesale unit inventories. Increases in average product cost per unit, as well as higher inventories associated with growth in DTC, were largely offset by changes in foreign currency rates. |
• | Cash and short-term investments were $5.4 billion, $829 million higher than last year primarily as a result of growth in net income and collateral received from counterparties as a result of hedging activities more than offsetting share repurchases and higher dividends. |
* | 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 Securities and Exchange Commission (SEC), 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 portion of the business does not report futures orders. |
NIKE, Inc. | |||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||
THREE MONTHS ENDED | % | ||||||
(Dollars in millions, except per share data) | 8/31/2015 | 8/31/2014 | Change | ||||
Revenues | $ | 8,414 | $ | 7,982 | 5% | ||
Cost of sales | 4,419 | 4,261 | 4% | ||||
Gross profit | 3,995 | 3,721 | 7% | ||||
Gross margin | 47.5 | % | 46.6 | % | |||
Demand creation expense | 832 | 897 | -7% | ||||
Operating overhead expense | 1,745 | 1,583 | 10% | ||||
Total selling and administrative expense | 2,577 | 2,480 | 4% | ||||
% of revenue | 30.6 | % | 31.1 | % | |||
Interest expense (income), net | 4 | 9 | — | ||||
Other (income) expense, net | (31 | ) | 3 | — | |||
Income before income taxes | 1,445 | 1,229 | 18% | ||||
Income tax expense | 266 | 267 | 0% | ||||
Effective tax rate | 18.4 | % | 21.7 | % | |||
NET INCOME | $ | 1,179 | $ | 962 | 23% | ||
Earnings per common share: | |||||||
Basic | $ | 1.38 | $ | 1.11 | 24% | ||
Diluted | $ | 1.34 | $ | 1.09 | 23% | ||
Weighted average common shares outstanding: | |||||||
Basic | 854.5 | 864.9 | |||||
Diluted | 877.3 | 886.2 | |||||
Dividends declared per common share | $ | 0.28 | $ | 0.24 |
NIKE, Inc. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
August 31, | August 31, | % Change | |||||
(Dollars in millions) | 2015 | 2014 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and equivalents | $ | 3,246 | $ | 2,303 | 41% | ||
Short-term investments | 2,162 | 2,276 | -5% | ||||
Accounts receivable, net | 3,288 | 3,587 | -8% | ||||
Inventories | 4,414 | 4,030 | 10% | ||||
Deferred income taxes | 377 | 348 | 8% | ||||
Prepaid expenses and other current assets | 1,751 | 996 | 76% | ||||
Total current assets | 15,238 | 13,540 | 13% | ||||
Property, plant and equipment, net | 3,112 | 2,895 | 7% | ||||
Identifiable intangible assets, net | 281 | 282 | 0% | ||||
Goodwill | 131 | 131 | 0% | ||||
Deferred income taxes and other assets | 2,004 | 1,673 | 20% | ||||
TOTAL ASSETS | $ | 20,766 | $ | 18,521 | 12% | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 106 | $ | 6 | 1,667% | ||
Notes payable | 23 | 146 | -84% | ||||
Accounts payable | 1,933 | 1,970 | -2% | ||||
Accrued liabilities | 3,139 | 2,441 | 29% | ||||
Income taxes payable | 75 | 250 | -70% | ||||
Total current liabilities | 5,276 | 4,813 | 10% | ||||
Long-term debt | 1,079 | 1,195 | -10% | ||||
Deferred income taxes and other liabilities | 1,517 | 1,408 | 8% | ||||
Redeemable preferred stock | — | — | — | ||||
Shareholders' equity | 12,894 | 11,105 | 16% | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 20,766 | $ | 18,521 | 12% | ||
NIKE, Inc. | ||||||||
DIVISIONAL REVENUES | ||||||||
% Change Excluding Currency Changes2 | ||||||||
THREE MONTHS ENDED | % | |||||||
(Dollars in millions) | 8/31/2015 | 8/31/20141 | Change | |||||
North America | ||||||||
Footwear | $ | 2,366 | $ | 2,183 | 8% | 9% | ||
Apparel | 1,247 | 1,104 | 13% | 13% | ||||
Equipment | 186 | 226 | -18% | -17% | ||||
Total | 3,799 | 3,513 | 8% | 9% | ||||
Western Europe | ||||||||
Footwear | 1,128 | 1,127 | 0% | 19% | ||||
Apparel | 434 | 497 | -13% | 3% | ||||
Equipment | 79 | 89 | -11% | 4% | ||||
Total | 1,641 | 1,713 | -4% | 14% | ||||
Central & Eastern Europe | ||||||||
Footwear | 238 | 223 | 7% | 32% | ||||
Apparel | 133 | 135 | -1% | 22% | ||||
Equipment | 30 | 35 | -14% | 7% | ||||
Total | 401 | 393 | 2% | 26% | ||||
Greater China | ||||||||
Footwear | 599 | 440 | 36% | 36% | ||||
Apparel | 246 | 202 | 22% | 22% | ||||
Equipment | 41 | 37 | 11% | 11% | ||||
Total | 886 | 679 | 30% | 30% | ||||
Japan | ||||||||
Footwear | 122 | 100 | 22% | 47% | ||||
Apparel | 43 | 46 | -7% | 12% | ||||
Equipment | 14 | 14 | 0% | 27% | ||||
Total | 179 | 160 | 12% | 35% | ||||
Emerging Markets | ||||||||
Footwear | 670 | 628 | 7% | 23% | ||||
Apparel | 238 | 252 | -6% | 9% | ||||
Equipment | 58 | 54 | 7% | 24% | ||||
Total | 966 | 934 | 3% | 19% | ||||
Global Brand Divisions3 | 26 | 29 | -10% | 5% | ||||
Total NIKE Brand | 7,898 | 7,421 | 6% | 15% | ||||
Converse | 555 | 575 | -3% | 3% | ||||
Corporate4 | (39 | ) | (14 | ) | — | — | ||
Total NIKE, Inc. Revenues | $ | 8,414 | $ | 7,982 | 5% | 14% | ||
Total NIKE Brand | ||||||||
Footwear | $ | 5,123 | $ | 4,701 | 9% | 18% | ||
Apparel | 2,341 | 2,236 | 5% | 12% | ||||
Equipment | 408 | 455 | -10% | -3% | ||||
Global Brand Divisions3 | 26 | 29 | -10% | 5% | ||||
1 Certain prior year amounts have been reclassified to conform to fiscal 2016 presentation. These changes had no impact on previously reported results of operations or shareholders' equity. | ||||||||
2 Fiscal 2016 results have been restated using fiscal 2015 exchange rates for the comparative period to enhance the visibility of the underlying business trends excluding the impact of translation arising from foreign currency exchange rate fluctuations. | ||||||||
3 Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment. | ||||||||
4 Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse but managed through our central foreign exchange risk management program. |
NIKE, Inc. | |||||||
EARNINGS BEFORE INTEREST AND TAXES1 | |||||||
THREE MONTHS ENDED | % | ||||||
(Dollars in millions) | 8/31/2015 | 8/31/20142 | Change | ||||
North America | $ | 1,042 | $ | 970 | 7% | ||
Western Europe | 485 | 404 | 20% | ||||
Central & Eastern Europe | 98 | 69 | 42% | ||||
Greater China | 330 | 218 | 51% | ||||
Japan | 36 | 11 | 227% | ||||
Emerging Markets | 258 | 156 | 65% | ||||
Global Brand Divisions3 | (624 | ) | (534 | ) | -17% | ||
TOTAL NIKE BRAND | 1,625 | 1,294 | 26% | ||||
Converse | 147 | 186 | -21% | ||||
Corporate4 | (323 | ) | (242 | ) | -33% | ||
TOTAL EARNINGS BEFORE INTEREST AND TAXES | $ | 1,449 | $ | 1,238 | 17% | ||
1 The Company evaluates performance of individual operating segments based on earnings before interest and taxes (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 2016 presentation. These changes had no impact on previously reported results of operations or shareholders' equity. | |||||||
3 Global Brand Divisions primarily represent demand creation, operating overhead 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. | |||||||
4 Corporate consists largely of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to the Company’s corporate headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses, including certain hedge gains and losses. |
NIKE, Inc. | ||
NIKE BRAND REPORTED FUTURES GROWTH BY GEOGRAPHY1 | ||
As of August 31, 2015 | ||
Reported Futures Orders | Excluding Currency Changes2 | |
North America | 14% | 15% |
Western Europe | 6% | 22% |
Central & Eastern Europe | -3% | 16% |
Greater China | 22% | 27% |
Japan | 12% | 26% |
Emerging Markets | -11% | 6% |
Total NIKE Brand Reported Futures | 9% | 17% |
1 Futures orders for NIKE Brand footwear and apparel scheduled for delivery from September 2015 through January 2016. The U.S. Dollar futures orders amount is calculated based upon our internal forecast of the currency exchange rates under which our revenues will be translated during this period. | ||
The reported futures 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, changes in the mix of orders between futures and at-once orders and because 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 futures orders and actual revenues. Moreover, a portion of our revenue is not derived from futures orders, including sales of at-once and closeout NIKE Brand footwear and apparel, sales of NIKE Brand equipment, sales from our DTC operations and sales from Converse, NIKE Golf and Hurley. | ||
2 Reported futures have been restated using prior year exchange rates for the comparative period to enhance the visibility of the underlying business trends excluding the impact of foreign currency exchange rate fluctuations. |
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