SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 24, 1995
NIKE, INC.
(Exact name of registrant as specified in its charter)
Oregon 1-10635 93-0584541
(State of incorporation) (Commission File (IRS Employer
Number) Identification
No.)
One Bowerman Drive, Beaverton, Oregon 97005-6453
(Address of principal executive offices) (Zip Code)
(503) 671-6453
(Registrant's telephone number, including area code)
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
NIKE, Inc. ("NIKE") has consummated the purchase of the
outstanding shares of common stock (the "Shares") of Canstar Sports
Inc., a Canadian corporation ("Canstar"). The purchase was effected
through an offer by NIKE to the shareholders of Canstar to purchase
all of the 20,470,991 outstanding Shares at a price of US$19.88
(Can.$27.50) cash per share, for an aggregate purchase price of
US$409 million including estimated acquisition related costs. The
source of the funds used for the acquisition was cash held by NIKE.
Canstar manufactures and distributes skating and hockey equipment,
and will continue to do so.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Financial statements for Canstar Sports Inc. for the fiscal
year ended December 31, 1993 are incorporated by reference from
Form 40-F Annual Report of Canstar Sports Inc. filed with the
Securities Exchange Commission on or about June 30, 1994 and Form
6-K filed on June 23, 1994.
(b) Pro Forma Financial Information
(1) Introductory Note to Unaudited Pro Forma
Financial Information
(2) Pro Forma Condensed Combined Balance Sheet
(Unaudited) as of November 30, 1994
(3) Footnotes to Pro Forma Condensed
Combined Balance Sheet (Unaudited)
(4) Pro Forma Combined Statement of Income
(Unaudited) for the six months ended
November 30, 1994
(5) Pro Forma Combined Statement of Income
(Unaudited) for the year ended May 31, 1994
(6) Footnotes to Pro Forma Combined Statements
of Income (Unaudited)
(c) Exhibits.
2.1 Business Combination Agreement dated January 5,
1995 between NIKE, Inc. and Canstar Sports Inc.
incorporated by reference from Item 7 of the
Registrant's report on Form 8-K filed with the SEC on
January 20, 1995.
2.2 Lock Up Agreement dated December 15, 1994
between NIKE, Inc. and certain shareholders of
Canstar Sports Inc. incorporated by reference from
Item 7 of the Registrant's report on Form 8-K filed
with the SEC on January 20, 1995.
2.3 Amendment to Lock Up Agreement dated February 10,
1995 between NIKE, Inc. and certain shareholders
of Canstar Sports, Inc. incorporated by reference
from Item 7 of the Registrant's report on Form 8-K
filed with the SEC on February 24, 1995.
2.4 Take Over Bid Offer and Circular dated January 6,
1995, incorporated by reference from Schedule
14D-1F filed with the SEC on or about January 6, 1995.
Introductory Note to Unaudited Pro Forma Combined Financial
Information
The following unaudited pro forma combined financial information
should be read in conjunction with historical financial statements
of NIKE, Inc. contained in their Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q and the historical financial
statements of Canstar Sports Inc. contained in their Annual Reports
on Form 40-F and Quarterly Reports on Form 6-K. The pro forma
information is presented for illustrative purposes only and is not
necessarily indicative of the operating results or financial position
that would have occurred had the acquisition been consummated in
accordance with the assumptions set forth below, nor is it
necessarily indicative of future operating results or financial
position.
Basis of Presentation
The unaudited pro forma combined income statements for the year
ended May 31, 1994 and for the six months ended November 30, 1994
present the combined results of operations assuming that the
acquisition had been consummated as of June 1, 1993. Canstar's previous
year end was December 31. To facilitate the preparation of the pro forma
combined financial information, Canstar results included in the pro
forma for the six months ended November 30, 1994 are for the six months
ended December 31, 1994; and for the year ended May 31, 1994 are for the
period July 1, 1993 through June 30, 1994. Canstar's
results for the full year ended June 30, 1994 and the six months
ended December 31, 1994 have been derived from Canstar's annual
and quarterly reports. The financial information for Canstar
contains certain reclassifications made to conform to NIKE's
classification.
Assets and liabilities of Canstar are translated into U.S. Dollars
at current exchange rates at the combined balance sheet date.
Income and expense accounts are translated into U.S. Dollars at
average rates of exchange prevailing during the respective periods.
Unallocated Purchase Price and Nonrecurring Charges
The unaudited pro forma combined financial information reflects
preliminary allocations of the purchase price and is subject to
revision after additional studies and appraisals are completed.
The pro forma income statements do not reflect any material
nonrecurring charges or credits which may result directly from the
acquisition. Nonrecurring items of this nature, if any, would be
separately disclosed in the financial statements within the
twelve months following the acquisition.
Pro Forma Condensed Combined Balance Sheet (Unaudited)
as of November 30, 1994
[/TABLE]
[CAPTION]
Total (1) Combined
NIKE Canstar Adjustments Totals
[S] [C] [C] [C] [C]
Assets
Current Assets:
Cash and equivalents 546,105 0 (408,700) 137,405
Accounts receivable 776,952 59,613 13,127 849,692
Inventories 459,276 52,162 511,438
Deferred income taxes 46,106 1,291 47,397
Prepaid expenses 53,808 2,747 56,555
_________ ________ ________ __________
1,882,247 115,813 (395,573) 1,602,487
Property, plant
and equipment (net) 441,901 32,597 14,103 488,601
Goodwill and other
intangibles 163,210 4,679 332,212 500,101
Other assets 40,397 6,076 (2,815) 43,658
___________ _______ _______ _________
2,527,755 159,165 (52,073) 2,634,847
=========== ======= ======= =========
Liabilities and
Shareholder's Equity
Current Liabilities:
Current portion of
long-term debt 2,534 2,941 5,475
Notes Payable 133,710 7,499 141,209
Accounts Payable 196,921 20,359 217,280
Accrued Liabilities 228,377 7,171 10,398 245,946
Income taxes payable 25,807 0 25,807
__________ _______ ______ _________
587,349 37,970 10,398 635,717
Long-term debt 14,299 54,205 68,504
Non-current deferred
income taxes 21,159 2,598 23,757
Other long term
liabilities 43,397 1,921 45,318
_________ ________ _______ __________
78,855 58,724 137,579
Redeemable Preferred
Stock 300 0 300
Shareholder's equity:
Common stock at
stated value: 17,257 (17,257) 0
Class A convertible 159 159
Class B 2,699 2,699
Capital in excess of
stated value 107,840 107,840
Foreign currency trans-
lation adjustment 5,176 (768) 768 5,176
Retained earnings 1,745,377 45,982 (45,982) 1,745,377
_________ _______ _______ _________
1,861,251 62,471 (62,471) 1,861,251
_________ _______ _______ _________
2,527,755 159,165 (52,073) 2,634,847
========== ======= ======== =========
[/TABLE]
See footnotes to the Condensed Combined Balance Sheet.
Footnotes to Pro Forma Condensed Combined Balance Sheet (Unaudited)
(1) To reflect the purchase of all of the 20,470,991 outstanding
shares at a price of US$19.98 (Can.$27.50) cash per share, for
an aggregate purchase price of US$409 million including estimated
acquisition related costs. The purchase of shares includes out-
standing stock options for which a receivable has been recorded
to reflect the estimated cash receipts of approximately US$13 million
due Canstar upon exercise of the stock options.
The acquisition has been accounted for under the purchase method
and, accordingly, the purchase price has been allocated to the
assets acquired and liabilities assumed based on their estimated
fair values. The excess of the purchase price above the fair
value of the identifiable tangible and intangible assets has been
assigned to goodwill and is being amortized over 40 years.
For purposes of the pro forma balance sheet, allocation of the
purchase price resulted in:
(a) Accounts receivable and inventories were recorded at
their net book values which reasonably approximated
fair value.
(b) Other assets not representing future economic
benefit were written off.
(c) Property, plant and equipment were recorded at fair
values as determined by preliminary independent appraisals,
with consideration given to the continued use by the
Company.
(d) Recording debt and liabilities assumed at net book
carrying values which reasonably approximates present value.
The Company did not require additional debt obligations
for the purpose of consummating the transaction.
(e) Accrual of contingent and other liabilities primarily
related to legal and other matters.
(f) Record fair value of intangible assets with estimated
economic lives ranging from 10 to 40 years. Intangible
assets include a trained work force, patents and
technologies, tradenames and trademarks.
(g) Recording goodwill of approximately $100 million representing
the excess of cost over values assigned to the acquired
assets less liabilities assumed and recorded.
Pro Forma Combined Statement of Income (Unaudited)
for the Six Months Ended November 30, 1994
Total (1) Combined
NIKE Canstar Adjustments Totals
Revenues 2,224,101 109,802 0 2,333,903
Costs and expenses:
Cost of sales 1,340,478 70,883 470 (2) 1,411,831
Selling & administrative 561,167 21,581 (500)(4) 582,248
Interest 8,698 2,818 8,149 (5) 19,665
Other expense (income) 832 281 5,200 (3) 6,313
_________ _______ ______ _________
1,911,175 95,563 13,319 2,020,057
Income before income taxes 312,926 14,239 (13,319) 313,846
Income Taxes 122,000 5,599 (5,268)(6) 122,331
_________ _______ ______ _________
Net Income 190,926 8,640 (8,051) 191,515
========== ======= ====== =========
Net income per common share 2.59 2.60
========== =========
Average number of common and
common equivalent shares (7) 73,798 73,798
========== =========
See footnotes to Pro Forma Combined Statement of Income
Pro Forma Combined Statement of Income (Unaudited)
For the Year Ended May 31, 1994
[/TABLE]
[CAPTION]
Combined
Total (1) Pro Forma
NIKE Canstar Adjustments Financials
[S] [C] [C] [C] [C]
Revenues 3,789,668 176,877 0 3,966,545
Costs and expenses:
Cost of sales 2,301,423 116,385 940 (2) 2,418,748
Selling and administrative 974,099 34,637 (1,000)(4) 1,007,736
Interest 15,282 5,002 14,320 (5) 34,604
Other expense (income) 8,270 651 10,400 (3) 19,321
_________ _______ ______ _________
3,299,074 156,675 24,660 3,480,409
Income before income taxes 490,594 20,202 (24,660) 486,136
Income Taxes 191,800 9,111 (10,717)(6) 190,194
_________ _______ ______ _________
Net Income before extra-
ordinary Item 298,794 11,091 (13,943) 295,942
Extraordinary item 1,493 (1,493)(1) 0
_________ ________ ______ _________
Net Income 298,794 12,584 (15,436) 295,942
========= ======== ====== =========
Net income per common share 3.96 3.92
Average number of common ========= =========
and common equivalent
shares (7) 75,456 75,456
========== ==========
See footnotes to Pro Forma Combined Statement of Income.
[/TABLE]
Footnotes to Pro Forma Combined Statements of Income (Unaudited)
(1) To exclude the impact of the extraordinary non-recurring
item recognized by Canstar during the twelve month period in
accordance with pro forma requirements.
(2) To include estimated incremental depreciation of the fair
value of acquired property, plant and equipment on a straight
line basis over the estimated economic lives of the underlying
fixed assets ranging from 3 to 40 years.
(3) To amortize the estimated fair value of goodwill and other
intangible assets acquired over economic lives ranging from 10
to 40 years.
(4) To recognize a minimum level of savings anticipated by the
synergies resulting from the combination of the two companies.
(5) To recognize interest foregone on cash used to purchase
Canstar. The interest rate used was the weighted average
interest rate for domestic investments during the respective periods.
(6) Estimated income tax effect for the pro forma adjustments.
(7) Earnings per share from continuing operation presented both
on a historical and pro forma basis were computed using NIKE
historical weighted average shares outstanding for the respective
periods as no common shares nor convertible securities were issued
or exchanged in connection with this transaction.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto
duly authorized.
NIKE, Inc.
An Oregon Corporation
By: /s/ Robert S. Falcone
_______________________
Dated: April 24, 1995
Vice President, Chief
Financial Officer