---

---

 

 

 

 

Date of Report (Date of earliest event reported):		June 28, 2012
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.)

 

r	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

r	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

r	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

r	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

	NIKE, Inc. (Registrant)
Date:  June 28, 2012	By:	/s/ Donald W. Blair
		Donald W. Blair
		Chief Financial Officer

---

---

 

---

---

 

 

 

Investor Contact: Kelley Hall (503) 532-3793

Media Contact: Kellie Leonard (503) 671-6171

 

·	Fourth quarter revenues up 12 percent to $6.5 billion, up 14 percent excluding currency changes

·	Fourth quarter diluted earnings per share down 6 percent to $1.17

·	Fiscal 2012 revenues of $24.1 billion, up 16 percent, up 14 percent excluding currency changes

·	Fiscal year diluted earnings per share up 8 percent to $4.73

·	NIKE Brand futures orders up 7 percent, up 12 percent excluding currency changes

·	Inventories as of May 31, 2012 were up 23 percent versus the prior year

Fourth Quarter Income Statement Review

•

Revenues for NIKE, Inc. increased 12 percent to $6.5 billion, or up 14 percent on a currency neutral basis. Excluding the impact of changes in foreign currency, NIKE Brand revenues rose 14 percent driven by growth in all geographies, key categories and product types. Revenues for Other Businesses grew 16 percent, with no significant impact from changes in currency exchange rates, as all businesses increased revenues during the quarter.

•

Gross margin declined 150 basis points to 42.8 percent due primarily to higher product costs, increased investments in our digital business and an unanticipated customs assessment in an Emerging Markets territory related to imports that occurred during four previous fiscal years. These factors more than offset the positive effects of price increases, lower air freight due to improved factory deliveries, as well as ongoing product cost reduction initiatives.

•

Selling and administrative expenses grew at the same rate as revenue, up 12 percent to $2 billion. Demand creation expenses increased 23 percent to $760 million driven by marketing support for key product launches, the European Football Championships and the Summer Olympics. Operating overhead expenses increased 6 percent to $1.2 billion due to additional investments in our Direct to Consumer and wholesale businesses.

•

Other expense, net was $38 million, primarily comprised of a $24 million charge related to NIKE Brand’s Western Europe restructuring. The remaining $14 million was primarily comprised of foreign currency exchange losses. For the quarter, we estimate the year-over-year change in foreign currency related losses included in other expense, net combined with the impact of changes in foreign currency exchange rates on the translation of foreign currency-denominated profits decreased pretax income by approximately $16 million.

•	The effective tax rate was 26.1 percent compared to 23.2 percent for the same period last year primarily due to year-on-year changes in tax reserves, partially offset by a reduction in the effective tax rate on operations outside the United States.

•	Net Income decreased 8 percent to $549 million and Diluted earnings per share decreased 6 percent to $1.17, reflecting a 2 percent decline in the number of weighted average diluted common shares outstanding.

·	Revenues for NIKE, Inc. were up 16 percent to $24.1 billion, up 14 percent on a currency neutral basis.

o

NIKE Brand revenues rose 15 percent excluding the impact of changes in foreign currency, driven by growth in all geographies, key categories and product types. NIKE Brand wholesale revenues increased to $17.4 billion, 14 percent higher than the same period last year on a currency neutral basis. NIKE Brand Direct to Consumer revenues grew 21 percent to $3.5 billion due to 13 percent growth in same store sales and new door expansion. As of May 31, 2012 the NIKE Brand had 557 stores in operation as compared to 487 a year ago.

o	Revenues for Other Businesses grew 11 percent with no significant impact from changes in currency exchange rates, driven by growth across most businesses.

•

Gross margin declined 220 basis points to 43.4 percent, primarily driven by higher product costs, as well as investments in our digital business, an unanticipated customs assessment in an Emerging Markets territory related to imports that occurred during four previous fiscal years, and higher discounts on close-out sales. These factors more than offset the positive effects of price increases, lower air freight costs, growing sales in our Direct to Consumer operations and ongoing product cost reduction initiatives.

•

Selling and administrative expenses grew at a slower rate than revenue, up 11 percent to $7.4 billion. Demand creation expenses were up 11 percent to $2.7 billion due to an increase in sports marketing expense, marketing support for key product initiatives, investments in retail product presentation for wholesale accounts and marketing support for the European Football Championships and Summer Olympics. Operating overhead expenses increased 11 percent to $4.7 billion due to additional investments made in our wholesale and Direct to Consumer businesses.

•

Other expense, net was $54 million for the fiscal year, primarily comprised of net foreign currency exchange losses and a $24 million charge related to NIKE Brand’s Western Europe restructuring, partially offset by certain non-operating items. For the year, we estimate the year-over-year change in currency related gains and losses included in other expense, net, combined with the impact of changes in currency exchange rates on the translation of foreign currency-denominated profits, did not have a significant impact on pretax income.

•	The effective tax rate was 25.5 percent compared to 25 percent for the same period last year. The increase was due to changes in tax reserves, partially offset by a reduction in the effective tax rate on operations outside of the United States.

•	Net Income increased 4 percent to $2.2 billion and Diluted earnings per share increased 8 percent to $4.73, reflecting higher net income and a 3 percent decline in the number of weighted average diluted common shares outstanding.

•

Inventories for NIKE, Inc. were $3.4 billion, up 23 percent from May 31, 2011. NIKE Brand inventories increased 19 percent; 17 percentage points of growth were due to higher product cost per unit, as input cost inflation and a higher proportion of Footwear versus Apparel more than offset the favorable impact of changes in currency exchange rates. NIKE Brand unit inventories grew 10 percent.

•	Cash and short-term investments at period-end were $3.8 billion, $781 million lower than last year due to higher working capital investments, long-term debt repayments and dividend payments compared to the prior year.

 
 

*

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, Inc. 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 MAY 31, 2012
(Dollars in millions, except per share data)
		QUARTER ENDED												YEAR TO DATE ENDED
INCOME STATEMENT		05/31/2012				05/31/2011				% Chg				05/31/2012				05/31/2011				% Chg
Revenues		$	6,470			$	5,766				12	%		$	24,128			$	20,862				16	%
Cost of sales			3,703				3,212				15	%			13,657				11,354				20	%
Gross profit			2,767				2,554				8	%			10,471				9,508				10	%
Gross margin			42.8	%			44.3	%							43.4	%			45.6	%
Demand creation expense			760				617				23	%			2,711				2,448				11	%
Operating overhead expense			1,226				1,155				6	%			4,720				4,245				11	%
Total selling and administrative expense			1,986				1,772				12	%			7,431				6,693				11	%
% of revenue			30.7	%			30.7	%							30.8	%			32.1	%
Other expense (income), net			38				5				-				54				(33	)			-
Interest expense, net			-				4				-				3				4				-25	%
Income before income taxes			743				773				-4	%			2,983				2,844				5	%
Income taxes			194				179				8	%			760				711				7	%
Effective tax rate			26.1	%			23.2	%							25.5	%			25.0	%
Net income		$	549			$	594				-8	%		$	2,223			$	2,133				4	%
Diluted EPS		$	1.17			$	1.24				-6	%		$	4.73			$	4.39				8	%
Basic EPS		$	1.20			$	1.27				-6	%		$	4.83			$	4.48				8	%
Weighted Average Common Shares Outstanding:
Diluted			468.1				478.7								469.8				485.7
Basic			458.1				469.3								460.0				475.5
Dividends declared		$	0.36			$	0.31							$	1.39			$	1.20

 

 

 

---

---

 

 

 

 

 

---

---

 

---

 

1 Certain prior year amounts have been reclassified to conform to fiscal year 2012 presentation. These changes had no impact on previously reported results of operations or shareholders' equity.
2 Fiscal 2012 results have been restated using fiscal 2011 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 Other businesses represent activities of Cole Haan, Converse, Hurley, NIKE Golf and Umbro.
5 Corporate revenues primarily consist of intercompany revenue eliminations and foreign currency revenue-related hedge gains and losses generated by entities within the NIKE Brand geographic operating segments and certain Other Businesses through our centrally managed foreign exchange risk management program.

 

 

---

---

 

 

---

---

 

 

 

NIKE, Inc.
		FISCAL YEAR ENDED
SUPPLEMENTAL NIKE BRAND REVENUE DETAILS		05/31/2012				05/31/2011				% Change				% Change Excluding Currency Changes 1
		(Dollars in millions)
NIKE Brand Revenues by:
Sales to Wholesale Customers		$	17,431			$	15,173				15	%			14	%
Sales Direct to Consumers			3,530				2,876				23	%			21	%
Global Brand Divisions			111				96				16	%			13	%
Total NIKE Brand Revenues as Reported		$	21,072			$	18,145				16	%			15	%
NIKE Brand Revenues on a Wholesale Equivalent Basis:2
Sales to Wholesale Customers		$	17,431			$	15,173				15	%			14	%
Sales from our Wholesale Operations to Direct to Consumer Operations			1,978				1,598				24	%			22	%
NIKE Brand Wholesale Equivalent Revenues		$	19,409			$	16,771				16	%			14	%
NIKE Brand Wholesale Equivalent Revenues by Category:3
Running		$	3,702			$	2,795				32	%			31	%
Basketball			2,230				1,908				17	%			16	%
Football (Soccer)			2,006				1,765				14	%			12	%
Men’s Training			2,007				1,698				18	%			17	%
Women’s Training			1,015				842				21	%			19	%
Action Sports			499				470				6	%			5	%
Sportswear			5,560				5,150				8	%			6	%
Others4			2,390				2,143				12	%			10	%
Total NIKE Brand Wholesale Equivalent Revenues		$	19,409			$	16,771				16	%			14	%