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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 | |
---|---|---|---|---|---|---|---|---|
-0.07 | -0.08% | 92.34 | 93.65 | 91.87 | 93.08 | 5,784,714 | 01:00:00 |
Date of Report (Date of earliest event reported): | December 22, 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 4 percent to $7.7 billion; 12 percent growth excluding currency changes |
• | Diluted earnings per share up 22 percent to $0.90 |
• | Worldwide futures orders up 15 percent; 20 percent growth excluding currency changes |
• | Inventories as of November 30, 2015 up 11 percent |
• | Revenues for NIKE, Inc. increased 4 percent to $7.7 billion, up 12 percent on a currency neutral basis. |
◦ | Revenues for the NIKE Brand were $7.3 billion, up 13 percent on a currency neutral basis, driven by double-digit growth in every geography and most key categories. |
◦ | Revenues for Converse were $398 million, down 5 percent on a currency neutral basis, as strong growth in North America was more than offset by a decline in Europe. |
• | Gross margin increased 50 basis points to 45.6 percent, primarily due to higher average selling prices, partially offset by higher product input costs and unfavorable changes in foreign exchange rates. |
• | Selling and administrative expense increased 5 percent to $2.6 billion. Demand creation expense was $769 million, flat versus the prior year. Operating overhead expense increased 7 percent to $1.8 billion, reflecting continued growth in the Direct To Consumer (DTC) business, as well as investments in operational infrastructure and consumer-focused digital capabilities. |
• | Other income, net was $34 million comprised primarily of net foreign currency exchange gains, and a favorable settlement of a legal judgment related to a bankruptcy case in Western Europe. 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 currency exchange rates on the translation of foreign currency-denominated profits, decreased pretax income by approximately $109 million. |
• | The effective tax rate was 19.1 percent, compared to 25.4 percent for the same period last year, primarily due to adjustments in the prior year to tax expense on intercompany transactions and an increase in earnings from operations outside the U.S. in the current period, which are generally subject to a lower tax rate. These factors were partially offset by the resolution of tax audits across multiple jurisdictions in the prior year period. |
• | Net income increased 20 percent to $785 million, while diluted earnings per share increased 22 percent to $0.90, reflecting revenue growth, gross margin expansion, a lower tax rate and a one percent decline in the weighted average diluted common shares outstanding. |
• | Inventories for NIKE, Inc. were $4.6 billion, up 11 percent from November 30, 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 the value of inventories due to foreign currency exchange rates. |
• | Cash and short-term investments were $6.1 billion, $1.4 billion higher than last year mainly as a result of proceeds from the issuance of debt in the second quarter, collateral received from counterparties to foreign currency hedging instruments and growth in net income, which more than offset share repurchases, investments in working capital 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 | % | SIX MONTHS ENDED | % | |||||||||||
(Dollars in millions, except per share data) | 11/30/2015 | 11/30/2014 | Change | 11/30/2015 | 11/30/2014 | Change | ||||||||
Revenues | $ | 7,686 | $ | 7,380 | 4% | $ | 16,100 | $ | 15,362 | 5% | ||||
Cost of sales | 4,185 | 4,053 | 3% | 8,604 | 8,314 | 3% | ||||||||
Gross profit | 3,501 | 3,327 | 5% | 7,496 | 7,048 | 6% | ||||||||
Gross margin | 45.6 | % | 45.1 | % | 46.6 | % | 45.9 | % | ||||||
Demand creation expense | 769 | 766 | 0% | 1,601 | 1,663 | -4% | ||||||||
Operating overhead expense | 1,791 | 1,672 | 7% | 3,536 | 3,255 | 9% | ||||||||
Total selling and administrative expense | 2,560 | 2,438 | 5% | 5,137 | 4,918 | 4% | ||||||||
% of revenue | 33.3 | % | 33.0 | % | 31.9 | % | 32.0 | % | ||||||
Interest expense (income), net | 5 | 9 | — | 9 | 18 | — | ||||||||
Other (income) expense, net | (34 | ) | 2 | — | (65 | ) | 5 | — | ||||||
Income before income taxes | 970 | 878 | 10% | 2,415 | 2,107 | 15% | ||||||||
Income taxes | 185 | 223 | -17% | 451 | 490 | -8% | ||||||||
Effective tax rate | 19.1 | % | 25.4 | % | 18.7 | % | 23.3 | % | ||||||
NET INCOME | $ | 785 | $ | 655 | 20% | $ | 1,964 | $ | 1,617 | 21% | ||||
Earnings per common share: | ||||||||||||||
Basic | $ | 0.92 | $ | 0.76 | 21% | $ | 2.30 | $ | 1.87 | 23% | ||||
Diluted | $ | 0.90 | $ | 0.74 | 22% | $ | 2.24 | $ | 1.83 | 22% | ||||
Weighted average common shares outstanding: | ||||||||||||||
Basic | 853.3 | 863.1 | 853.9 | 864.0 | ||||||||||
Diluted | 875.7 | 884.8 | 876.7 | 885.8 | ||||||||||
Dividends declared per common share | $ | 0.32 | $ | 0.28 | $ | 0.60 | $ | 0.52 |
NIKE, Inc. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
November 30, | November 30, | % Change | |||||
(Dollars in millions) | 2015 | 2014 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and equivalents | $ | 3,851 | $ | 2,273 | 69% | ||
Short-term investments | 2,265 | 2,440 | -7% | ||||
Accounts receivable, net | 3,437 | 3,457 | -1% | ||||
Inventories | 4,600 | 4,150 | 11% | ||||
Deferred income taxes | 405 | 334 | 21% | ||||
Prepaid expenses and other current assets | 2,197 | 1,379 | 59% | ||||
Total current assets | 16,755 | 14,033 | 19% | ||||
Property, plant and equipment, net | 3,235 | 2,927 | 11% | ||||
Identifiable intangible assets, net | 281 | 281 | 0% | ||||
Goodwill | 131 | 131 | 0% | ||||
Deferred income taxes and other assets | 2,181 | 1,795 | 22% | ||||
TOTAL ASSETS | $ | 22,583 | $ | 19,167 | 18% | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 5 | $ | 110 | -95% | ||
Notes payable | 99 | 93 | 6% | ||||
Accounts payable | 1,915 | 2,074 | -8% | ||||
Accrued liabilities | 3,451 | 2,622 | 32% | ||||
Income taxes payable | 41 | 38 | 8% | ||||
Total current liabilities | 5,511 | 4,937 | 12% | ||||
Long-term debt | 2,067 | 1,084 | 91% | ||||
Deferred income taxes and other liabilities | 1,600 | 1,446 | 11% | ||||
Redeemable preferred stock | — | — | — | ||||
Shareholders' equity | 13,405 | 11,700 | 15% | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 22,583 | $ | 19,167 | 18% | ||
NIKE, Inc. | ||||||||||||||||
DIVISIONAL REVENUES | ||||||||||||||||
% Change Excluding Currency Changes2 | % Change Excluding Currency Changes2 | |||||||||||||||
THREE MONTHS ENDED | % | SIX MONTHS ENDED | % | |||||||||||||
(Dollars in millions) | 11/30/2015 | 11/30/20141 | Change | 11/30/2015 | 11/30/20141 | Change | ||||||||||
North America | ||||||||||||||||
Footwear | $ | 2,162 | $ | 1,925 | 12% | 13% | $ | 4,528 | $ | 4,108 | 10% | 11% | ||||
Apparel | 1,221 | 1,131 | 8% | 8% | 2,468 | 2,235 | 10% | 11% | ||||||||
Equipment | 164 | 185 | -11% | -12% | 350 | 411 | -15% | -15% | ||||||||
Total | 3,547 | 3,241 | 9% | 10% | 7,346 | 6,754 | 9% | 9% | ||||||||
Western Europe | ||||||||||||||||
Footwear | 845 | 864 | -2% | 11% | 1,973 | 1,991 | -1% | 15% | ||||||||
Apparel | 391 | 384 | 2% | 15% | 825 | 881 | -6% | 8% | ||||||||
Equipment | 63 | 64 | -2% | 11% | 142 | 153 | -7% | 7% | ||||||||
Total | 1,299 | 1,312 | -1% | 12% | 2,940 | 3,025 | -3% | 13% | ||||||||
Central & Eastern Europe | ||||||||||||||||
Footwear | 183 | 180 | 2% | 23% | 421 | 403 | 4% | 28% | ||||||||
Apparel | 126 | 149 | -15% | 5% | 259 | 284 | -9% | 13% | ||||||||
Equipment | 17 | 18 | -6% | 19% | 47 | 53 | -11% | 11% | ||||||||
Total | 326 | 347 | -6% | 15% | 727 | 740 | -2% | 21% | ||||||||
Greater China | ||||||||||||||||
Footwear | 600 | 463 | 30% | 34% | 1,199 | 903 | 33% | 35% | ||||||||
Apparel | 306 | 266 | 15% | 19% | 552 | 468 | 18% | 20% | ||||||||
Equipment | 32 | 29 | 10% | 14% | 73 | 66 | 11% | 12% | ||||||||
Total | 938 | 758 | 24% | 28% | 1,824 | 1,437 | 27% | 29% | ||||||||
Japan | ||||||||||||||||
Footwear | 128 | 108 | 19% | 36% | 250 | 208 | 20% | 41% | ||||||||
Apparel | 63 | 75 | -16% | -4% | 106 | 121 | -12% | 2% | ||||||||
Equipment | 14 | 16 | -13% | -7% | 28 | 30 | -7% | 8% | ||||||||
Total | 205 | 199 | 3% | 17% | 384 | 359 | 7% | 25% | ||||||||
Emerging Markets | ||||||||||||||||
Footwear | 674 | 727 | -7% | 12% | 1,344 | 1,355 | -1% | 17% | ||||||||
Apparel | 255 | 280 | -9% | 10% | 493 | 532 | -7% | 10% | ||||||||
Equipment | 55 | 68 | -19% | 4% | 113 | 122 | -7% | 13% | ||||||||
Total | 984 | 1,075 | -8% | 11% | 1,950 | 2,009 | -3% | 15% | ||||||||
Global Brand Divisions3 | 18 | 27 | -33% | -26% | 44 | 56 | -21% | -11% | ||||||||
Total NIKE Brand | 7,317 | 6,959 | 5% | 13% | 15,215 | 14,380 | 6% | 14% | ||||||||
Converse | 398 | 434 | -8% | -5% | 953 | 1,009 | -6% | -1% | ||||||||
Corporate4 | (29 | ) | (13 | ) | — | — | (68 | ) | (27 | ) | — | — | ||||
Total NIKE, Inc. Revenues | $ | 7,686 | $ | 7,380 | 4% | 12% | $ | 16,100 | $ | 15,362 | 5% | 13% | ||||
Total NIKE Brand | ||||||||||||||||
Footwear | $ | 4,592 | $ | 4,267 | 8% | 16% | $ | 9,715 | $ | 8,968 | 8% | 17% | ||||
Apparel | 2,362 | 2,285 | 3% | 10% | 4,703 | 4,521 | 4% | 11% | ||||||||
Equipment | 345 | 380 | -9% | -1% | 753 | 835 | -10% | -2% | ||||||||
Global Brand Divisions3 | 18 | 27 | -33% | -26% | 44 | 56 | -21% | -11% | ||||||||
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 | % | SIX MONTHS ENDED | % | |||||||||||
(Dollars in millions) | 11/30/2015 | 11/30/20142 | Change | 11/30/2015 | 11/30/20142 | Change | ||||||||
North America | $ | 882 | $ | 785 | 12% | $ | 1,924 | $ | 1,755 | 10% | ||||
Western Europe | 307 | 261 | 18% | 792 | 665 | 19% | ||||||||
Central & Eastern Europe | 76 | 57 | 33% | 174 | 126 | 38% | ||||||||
Greater China | 327 | 258 | 27% | 657 | 476 | 38% | ||||||||
Japan | 47 | 29 | 62% | 83 | 40 | 108% | ||||||||
Emerging Markets | 241 | 236 | 2% | 499 | 392 | 27% | ||||||||
Global Brand Divisions3 | (625 | ) | (554 | ) | -13% | (1,249 | ) | (1,088 | ) | -15% | ||||
TOTAL NIKE BRAND | 1,255 | 1,072 | 17% | 2,880 | 2,366 | 22% | ||||||||
Converse | 85 | 88 | -3% | 232 | 274 | -15% | ||||||||
Corporate4 | (365 | ) | (273 | ) | -34% | (688 | ) | (515 | ) | -34% | ||||
TOTAL EARNINGS BEFORE INTEREST AND TAXES | $ | 975 | $ | 887 | 10% | $ | 2,424 | $ | 2,125 | 14% | ||||
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 November 30, 2015 | ||
Reported Futures Orders | Excluding Currency Changes2 | |
North America | 14% | 14% |
Western Europe | 17% | 25% |
Central & Eastern Europe | 3% | 13% |
Greater China | 31% | 34% |
Japan | 26% | 32% |
Emerging Markets | 0% | 14% |
Total NIKE Brand Reported Futures | 15% | 20% |
1 Futures orders for NIKE Brand footwear and apparel scheduled for delivery from December 2015 through April 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. |
1 Year Nike Chart |
1 Month Nike Chart |
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