EXHIBIT 99
FOR IMMEDIATE RELEASE
MEDIA CONTACT: INVESTOR CONTACT:
Alan Marks Pamela Catlett
503.671.4235 503.671.4589
NIKE INC. REPORTS SECOND QUARTER EARNINGS PER SHARE OF $1.28
Revenue up 10 percent; worldwide futures orders up 7 percent
Improved tax rate contributes $0.13 to earnings per share
BEAVERTON, Ore. (December 20, 2006) - NIKE, Inc. (NYSE:NKE) today reported
financial results for the second quarter ended November 30, 2006. For the
quarter, revenue grew 10 percent to $3.8 billion, compared to $3.5 billion
for the same period last year. Changes in currency exchange rates increased
revenue growth by 1 percentage point for the quarter. Second quarter net
income grew 8 percent to $325.6 million, compared to $301.1 million in the
prior year and diluted earnings per share increased 12 percent to $1.28,
versus $1.14 last year.
During the quarter, the company also finalized a new long-term tax agreement
with the Dutch government, which included a retroactive tax benefit for
fiscal 2006 and the first half of fiscal 2007, contributing $0.13 per
diluted share to results for the quarter.
Mark Parker, Nike, Inc. President and Chief Executive Officer, said, "The
Nike brand and our Nike Inc. portfolio continued to be strong worldwide,
driving double-digit top line growth for the quarter. Nike+, Lebron IV, Nike
Pro Revolution, Converse's Wade 1.3 and Cole Haan's Dress Air for women were
some of the product introductions creating consumer excitement and
marketplace energy. At the same time, we delivered strong earnings growth
and a significant 19 percent increase in our dividend for shareholders. Our
brands are strong, the company is growing revenues and profits, and we are
delivering on our commitment to lead the industry with sharper focus,
greater competitiveness and deeper influence through ongoing product
innovation and consumer connections."*
Futures Orders
The Company reported worldwide futures orders for athletic footwear and
apparel, scheduled for delivery from December 2006 through April 2007,
totaling $5.6 billion, 7 percent higher than such orders reported for the
same period last year. Changes in currency exchange rates increased reported
orders growth by 2 percentage points.*
By region, futures orders for the U.S. increased 7 percent; Europe (which
includes the Middle East and Africa) increased 7 percent; Asia Pacific grew
9 percent; and the Americas increased 5 percent. Changes in currency
exchange rates increased the reported futures orders growth in Europe by 5
percentage points; in Asia Pacific by 2 percentage points; and in the
Americas region decreased reported futures growth by 2 percentage points.*
Regional Highlights
U.S.
____
During the second quarter, U.S. revenues increased 8 percent to $1.4 billion
versus $1.3 billion for the second quarter of fiscal 2006. U.S. athletic
footwear revenues increased 8 percent to $879.4 million; apparel revenues
increased 10 percent to $475.4 million; and equipment revenues increased 2
percent to $63.2 million. U.S. pre-tax income increased slightly to $266.0
million from $265.7 million a year ago.
Europe
______
Second quarter revenues for the European region grew 6 percent to $1.0
billion from $977.4 million for the same period last year. Changes in
currency exchange rates increased revenue growth by 3 percentage points.
Footwear revenues were up 2 percent to $541.4 million from $533.2 million
last year. Apparel revenues increased 11 percent to $421.0 million and
equipment revenues increased 14 percent to $73.8 million. Pre-tax income
declined 18 percent to $158.8 million, reflecting lower gross margins and
increased demand creation spending versus relatively low levels in the prior
year.
Asia Pacific
____________
In the second quarter revenues in the Asia Pacific region grew 15 percent to
$578.2 million compared to $503.3 million a year ago. Changes in currency
exchange rates did not have a significant impact on revenue growth. Footwear
revenues were up 13 percent to $277.4 million, apparel revenues increased 17
percent to $250.6 million and equipment revenues grew 16 percent to $50.2
million. Pre-tax income increased 21 percent to $139.9 million.
Americas
________
Revenues in the Americas region increased 4 percent to $262.5 million, an
improvement from $252.1 million in the second quarter of fiscal 2006.
Currency exchange rates contributed 1 percentage point to this growth rate.
Footwear revenues were up 4 percent to $185.1 million, apparel revenues
increased 1 percent to $55.7 million and equipment revenues grew 17 percent
to $21.7 million. Pre-tax income was up 4 percent to $59.8 million.
Other Businesses
________________
For the second 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 21 percent to $526.8 million from $434.8 million last year. Pre-tax
income increased 136 percent to $54.3 million for the quarter.
Income Statement Review
Gross margins were 43.4 percent during the second quarter compared to 43.5
percent for the same period in the prior year.
Selling and administrative expenses were 32.0 percent of second quarter
revenues, compared to 30.4 percent last year. Results for the second quarter
included an $18.8 million expense, net of taxes, related to the expensing of
stock options, which reduced diluted earnings per share by $0.08. Excluding
stock option expense second quarter net income increased 14 percent and
diluted earnings per share increased 19 percent to $1.36.
The effective tax rate for the second quarter declined significantly to 27.2
percent. During the second quarter, the Company finalized a tax agreement
with the Dutch government that is effective for fiscal years 2006 through
2015. As a result of this new agreement the Company realized a tax benefit,
which increased the Company's diluted earnings per share for the second
quarter by $0.13.
Balance Sheet Review
At quarter end, global inventories stood at $2.2 billion, an increase of 15
percent from November 30, 2005. Cash and short-term investments were $1.9
billion at the end of the quarter, compared to $2.1 billion last year.
Share Repurchase
During the second quarter, the Company purchased a total of 1,478,800 shares
for approximately $126 million in conjunction with the Company's four-year
$3 billion share repurchase program approved by the Board of Directors in
June 2006.
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 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.
(Tables Follow)
NIKE, INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED NOVEMBER 30, 2006
(In millions, except per share data)
INCOME QUARTER ENDING YEAR-TO-DATE ENDING
STATEMENT 11/30/2006 11/30/2005 %Chg 11/30/2006 11/30/2005 %Chg
======================================================= ============================
Revenues $3,821.7 $3,474.7 10% $8,015.8 $7,336.7 9%
Cost of sales 2,164.6 1,963.3 10% 4,509.5 4,077.2 11%
_______________________ ______________________
Gross margin 1,657.1 1,511.4 10% 3,506.3 3,259.5 8%
43.4 % 43.5 % 43.7 % 44.4 %
Selling and administrative
expense 1,223.7 1,054.7 16% 2,513.4 2,159.1 16%
32.0 % 30.4 % 31.4 % 29.4 %
Interest (income) expense, net (14.1) (5.7) 147% (27.2) (12.1) 125%
Other (income) expense, net 0.2 (1.4) -114% (3.0) (11.3) -73%
----------------------- ----------------------
Income before income taxes 447.3 463.8 -4% 1,023.1 1,123.8 -9%
Income taxes 121.7 162.7 -25% 320.3 390.4 -18%
----------------------- ----------------------
27.2 % 35.1 % 31.3 % 34.7 %
Net income $325.6 $301.1 8% $702.8 $733.4 -4%
========================= ======================
Diluted EPS $1.28 $1.14 12% $2.76 $2.77 0%
======================= ======================
Basic EPS $1.30 $1.16 12% $2.79 $2.82 -1%
======================= ======================
Weighted Average Common Shares Outstanding:
Diluted 253.7 263.7 254.4 265.0
Basic 251.2 259.0 252.0 260.0
======================= =======================
Dividends declared $0.37 $0.31 $0.68 $0.56
======================= =======================
NIKE, Inc.
BALANCE SHEET* 11/30/2006 11/30/2005
=========================================================================
ASSETS
Current assets:
Cash and equivalents $1,102.9 $1,134.5
Short-term investments 804.4 920.0
Accounts receivable, net 2,387.6 2,166.2
Inventories 2,167.2 1,892.7
Deferred income taxes 186.2 86.9
Prepaid expenses and other
current assets 561.3 496.2
Total Current Assets 7,209.6 6,696.5
Property, plan and equipment 3,548.4 3,216.6
Less accumulated depreciation 1,875.4 1,630.8
Property, plant and equipment, net 1,673.0 1,585.8
Identifiable intangible assets, net 406.7 403.9
Goodwill 130.8 135.4
Deferred income taxes and other assets 402.1 322.5
------------------------
Total Assets $9,822.2 $9,144.1
========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 30.6 $254.5
Notes payable 59.2 79.2
Accounts payable 880.3 744.2
Accrued liabilities 1,244.1 1,012.1
Income taxes payable 71.0 71.1
Total Current Liabilities 2,285.2 2,161.1
Long-term debt 383.5 408.3
Deferred income taxes and other liabilities 615.1 492.9
Redeemable preferred stock 0.3 0.3
Shareholders' equity 6,538.1 6,081.5
------------------------
Total Liabilities and Shareholders' Equity $9,822.2 $9,144.1
========================
*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 ENDING YEAR-TO-DATE ENDING
Divisional Revenues 11/30/2006 11/30/2005 %Chg 11/30/2006 11/30/2005 %Chg
===================================================== ============================
U.S. Region
Footwear $879.4 $811.5 8% $1,958.5 $1,832.6 7%
Apparel 475.4 433.8 10% 906.9 829.3 9%
Equipment 63.2 61.8 2% 154.5 154.1 0%
---------------------- ----------------------
Total 1,418.0 1,307.1 8% 3,019.9 2,816.0 7%
EMEA Region
Footwear 541.4 533.2 2% 1,220.9 1,218.3 0%
Apparel 421.0 379.6 11% 908.0 814.8 11%
Equipment 73.8 64.6 14% 178.2 161.8 10%
---------------------- ----------------------
Total 1,036.2 977.4 6% 2,307.1 2,194.9 5%
Asia Pacific Region
Footwear 277.4 245.4 13% 543.4 482.8 13%
Apparel 250.6 214.6 17% 451.5 391.1 15%
Equipment 50.2 43.3 16% 101.7 89.0 14%
---------------------- ----------------------
Total 578.2 503.3 15% 1,096.6 962.9 14%
Americas Region
Footwear 185.1 178.1 4% 357.4 335.0 7%
Apparel 55.7 55.4 1% 106.9 96.1 11%
Equipment 21.7 18.6 17% 40.7 34.7 17%
---------------------- ----------------------
Total 262.5 252.1 4% 505.0 465.8 8%
3,294.9 3,039.9 8% 6,928.6 6,439.6 8%
Other 526.8 434.8 21% 1,087.2 897.1 21%
Total NIKE, Inc. revenues $3,821.7 $3,474.7 10% $8,015.8 $7,336.7 9%
NIKE, INC
QUARTER ENDING YEAR-TO-DATE ENDING
Pre-tax Income1,* 11/30/06 11/30/05 %Chg 11/30/06 11/30/05 %Chg
===================================================================================
USA Region $ 266.0 $ 265.7 0% $ 604.9 $ 610.9 -1%
EMEA Region 158.8 194.2 -18% 461.3 524.4 -12%
Asia Pacific Region 139.9 115.2 21% 238.8 206.6 16%
Americas Region 59.8 57.4 4% 108.2 102.0 6%
Other 54.3 23.0 136% 142.2 63.0 126%
Corporate2 (231.5) (191.7) -21% (532.3) (383.1) -39%
______________________ _____________________
Total Pre-tax Income1 $ 447.3 $ 463.8 -4% $1,023.1 $1,123.8 -9%
====================== =====================
_____________________
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.
NIKE, INC
NET INCOME AND DILUTED QUARTER ENDING YEAR TO DATE ENDING
EPS RECONCILIATION1 11/30/2006 11/30/2005 %Chg 11/30/2006 11/30/2005 %Chg
===================================================================================
Net income, as reported $ 325.6 $ 301.1 8% $ 702.8 $ 733.4 -4%
Exclude: Stock-based compensation
expense, net of tax2 18.8 -- - 59.6 -- -
____________________________ ____________________________
Net income, excluding stock-based
compensation expense2 $ 344.4 $ 301.1 14% $ 762.4 $ 733.4 4%
============================= ============================
Diluted EPS, as reported $ 1.28 $ 1.14 12% $ 2.76 $ 2.77 0%
Diluted EPS, excluding
stock-based compensation
expense2 $ 1.36 $ 1.14 19% $ 3.00 $ 2.77 8%
_____________________
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 compensation expensed in accordance with stock
options and ESPP purchase rights 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.