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) March 18, 1998
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 5. OTHER EVENTS
Commencing with these quarterly results, NIKE will be showing more detail by
providing international revenues on a regional basis. To facilitate prior-
year comparisons, the table below breaks out financial results by region for
Fiscal Years 1997 and 1998:
Divisional Revenues Q1 97 Q2 97 Q3 97 Q4 97 FY97 Q1 98 Q2 98 Q3 98 Q4 98 FY98
USA Region
Footwear 1,001,593 814,861 980,369 956,749 3,753,572 1,056,032 787,635 800,410 854,607 3,498,684
Apparel 346,201 372,571 348,702 339,112 1,406,586 425,241 418,260 330,958 381,887 1,556,346
Equipment & Other 6,694 6,721 9,411 18,640 41,466 19,049 17,671 16,325 31,337 84,382
------------------------------------------------------------------------------------------------------------
Total 1,354,488 1,194,153 1,338,482 1,314,501 5,201,624 1,500,322 1,223,566 1,147,693 1,267,831 5,139,412
Europe Region
Footwear 304,769 241,888 371,530 278,929 1,197,116 384,051 245,550 329,017 307,998 1,266,616
Apparel 151,310 129,717 177,237 133,690 591,954 218,288 143,046 239,004 195,525 795,863
Equipment 0 0 0 696 696 7,466 7,886 3,259 14,961 33,572
------------------------------------------------------------------------------------------------------------
Total 456,079 371,605 548,767 413,315 1,789,766 609,805 396,482 571,280 518,484 2,096,051
Asia Pacific Region
Footwear 161,503 203,220 237,141 257,099 858,963 264,083 208,397 175,033 143,159 790,672
Apparel 56,608 102,868 92,310 130,988 382,774 102,982 151,732 98,236 100,449 453,399
Equipment 0 0 0 156 156 442 2,547 2,816 3,995 9,800
____________________________________________________________________________________________________________
Total 218,111 306,088 329,451 388,243 1,241,893 367,507 362,676 276,085 247,603 1,253,871
Americas Region
Footwear 82,266 72,121 80,393 100,116 334,896 121,487 91,213 91,385 98,951 403,036
Apparel 24,421 29,436 24,274 34,056 112,187 45,582 50,752 41,681 48,194 186,209
Equipment 0 0 0 2,097 2,097 3,290 1,277 1,113 4,131 9,811
______________________________________________________________________________________________________________
Total 106,687 101,557 104,667 136,269 449,180 170,359 143,242 134,179 151,276 599,056
Total NIKE Brand 2,135,365 1,973,403 2,321,367 2,252,328 8,682,463 2,647,993 2,125,966 2,129,237 2,185,194 9,088,390
Revenue
Other Brands 146,561 133,631 102,281 121,603 504,076 118,106 129,306 94,758 122,566 464,736
Total NIKE Inc. 2,281,926 2,107,034 2,423,648 2,373,931 9,186,539 2,766,099 2,255,272 2,223,995 2,307,760 9,553,126
Revenues
On September 17, 1998, NIKE, Inc. issued the following press release regarding
financial results for the first fiscal quarter ended August 31, 1998:
DRAFT 09/17/98 9:57 AM
----------------------
FOR IMMEDIATE RELEASE
MEDIA CONTACT: INVESTOR CONTACT:
Lee Weinstein Rick Anguilla
503.671.3080 503.671.3139
NIKE REPORTS FIRST QUARTER 1999 EARNINGS;
WORLDWIDE FUTURES ORDERS DECREASE 15 PERCENT;
WORKFORCE REDUCTION SET FOR ASIA PACIFIC OPERATIONS
Highlights:
Revenues for the quarter decreased 9% to $2.50 billion; Earnings per share
$0.56 versus $0.85
Global footwear revenues down 19 percent; global apparel up 6 percent
Worldwide Futures Orders decreased 15 percent; down 13 percent in constant
dollars
Approximately 300 positions to be eliminated in Asia Pacific operations
Beaverton, OR (September 17, 1998) -- NIKE, Inc. (NYSE:NKE) today reported
revenues and earnings for the Company's first quarter ended August 31, 1998.
First quarter net income totaled $163.8 million or $0.56 per diluted share
compared to $253.1 million, or $0.85 per diluted share. First quarter revenues
were $2.50 billion, down 9 percent from $2.77 billion last year.
The Company also announced that it plans to eliminate approximately 300
positions throughout its Asia Pacific operations to better align its overall
cost structure and organization with planned revenue levels. This represents a
workforce reduction of approximately 15 percent in the region.*
Philip H. Knight, Chairman and CEO, said, "Our results were helped by lower
than expected spending in the first quarter. While we expect that spending
will reach more normal levels beginning in the second quarter of this year, we
remain focused on effectively managing our cost structure going forward, as
evidenced by the actions we announced today regarding our Asia Pacific
operations. Our goal in this region is to create a profitable business model
in the near-term while building the appropriate infrastructure for long-term
growth.*
Futures Orders
The Company reported worldwide futures orders for athletic footwear and apparel,
scheduled for delivery between September 1998 and January 1999 total $3.2
billion, 15 percent lower than such orders for the same period last year. Had
the U.S. dollar remained constant at year-ago levels, worldwide futures orders
would have decreased 13 percent.*
Looking at futures orders by region, the USA region was down 7 percent, Europe
decreased 1 percent, Asia Pacific was down 56 percent and the Americas was down
24 percent. In constant dollars, futures orders for Europe decreased
4 percent, Asia Pacific decreased 45 percent and Americas was down 9 percent.*
Regional Highlights
USA
U.S. athletic footwear revenues declined 13 percent to $917.4 million,
compared to $1,056.0 million in the same period last year. U.S. athletic
apparel revenues declined 5 percent in the quarter to $405.2 million. Despite
the lower revenues, the reduced level of close-out revenues in footwear
resulted in higher gross margins relative to the last few quarters. Mr.
Knight noted, "In the U.S., the recent promotional nature in some segments of
the athletic retail market is challenging perceptions about our industry's
pricing paradigm. In this environment, our focus is on generating profitable
growth for NIKE and our retail partners who remain committed to the athletic
market."
Europe
European revenues in the quarter increased 12 percent to $680.9 million. Had
the dollar remained constant at year-ago levels, revenues would have increased
9 percent. France, Italy, Spain and Germany all posted strong double digit
revenue increases in the quarter. Mr. Knight added, "While our futures orders
indicate a continued slowdown in the rate of growth in Europe, our focus is on
maintaining profitability in a slowing top-line environment through inventory
management and cost containment."
Asia Pacific
Revenues in the Asia Pacific region declined 46 percent to $199.1 million. In
constant dollars, regional revenues decreased 35 percent. Revenues in Japan
declined 53 percent and 45 percent in constant dollars.
Americas
Revenues in the Americas region declined 15 percent to $144.9 million. Had
the dollar remained constant, revenues would have decreased 10 percent.
Income Statement Review
In the first quarter, consolidated revenues decreased 9 percent and would have
decreased 8 percent had the dollar remained constant. Other brand revenues,
which include Bauer, Cole Haan-Registered Trademark-, Tetra Plastics and Sports
Specialties,increased 12 percent to $132.1 million. Gross margins in the quarter
were 37.6percent compared to 39.8 percent last year. Selling and administrative
expenses were 26.1 percent of first quarter revenues, compared to 23.8 percent
last year.
Balance Sheet Review
Cash and short-term investments decreased to $167.8 in the first quarter. The
current ratio as of August 31, 1998 was 2.2 to 1. Inventories totaled $1.16
billion, a decrease of 17 percent compared to May 31, 1998, and down 10 percent
from August 31, 1997. Total U.S. footwear inventory units ended the quarter
down 35 percent compared to May 31, 1998, and down 29 percent from
August 31, 1997.
Share Repurchase
As of August 31, 1998, the Company had purchased a total of 2,506,000 shares
of NIKE's Class B Common Stock for approximately $106 million in the open
market in conjunction with the $1 billion share repurchase program approved in
December 1997. During the first quarter, the
Company purchased a total of 1,265,000 shares for approximately $52 million.
NIKE, Inc., based in Beaverton, Oregon, is the world's leading designer and
marketer of authentic athletic footwear, apparel, equipment and accessories
for a wide variety of sports and fitness activities. Wholly-owned NIKE
subsidiaries include Bauer Inc., the world's leading manufacturer of hockey
equipment; Cole Haan, which markets a line of high-quality men's and women's
dress and casual shoes; and Sports Specialties Corporation, which markets a
full line of licensed headwear. Total revenues for the trailing twelve months
ending August 31, 1998, were $9.3 billion.
* 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, which may vary significantly
from quarter to quarter.
NIKE's earnings releases and other financial information are available on the
Internet at NikeBiz.com.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED AUGUST 31, 1998
(In millions, except per share data)
INCOME QUARTER ENDING
STATEMENT 8/31/98 8/31/97 % Chg
=====================================================================
Revenues $2,504.8 $2,766.1 -9%
Cost of Sales 1,562.6 1,665.5 -6%
Gross Profit 942.2 1,100.6 -14%
37.6% 39.8%
SG&A 652.6 658.9 -1%
26.1% 23.8%
Interest Expense 14.2 16.9 -16%
Other 4.6 13.2 -65%
---------------------------
Pre-tax Income 270.8 411.6 -34%
Income Taxes 107.0 158.5 -32%
39.5% 38.5%
---------------------------
Net Income $ 163.8 $ 253.1 -35%
=========================================
Diluted EPS $ 0.56 $ 0.85 -34%
Basic EPS $ 0.57 $ 0.87 -34%
=========================================
Weighted Average Common Shares Outstanding:
Diluted 292.0 297.5
Basic 286.7 289.9
=========================================
Dividend $0.12 $0.10
=========================================
======================================================
BALANCE SHEET 8/31/98 8/31/97
======================================================
ASSETS
Cash & Investments $ 167.8 $403.1
Accounts Receivable 1,755.0 1,992.4
Inventory 1,160.1 1,293.6
Deferred Taxes 158.2 129.4
Prepaid Expenses 168.0 184.3
Current Assets 3,409.1 4,002.8
Fixed Assets 1,879.3 1,513.5
Depreciation 702.1 541.2
Net Fixed Assets 1,177.2 972.3
Identifiable Intangible
Assets and Goodwill 436.5 459.3
Other Assets 281.8 191.0
Total Assets $5,304.6 $5,625.4
============================
LIAB AND EQUITY
Current Long-Term Debt $ 1.3 $ 2.8
Payable to Banks 348.3 428.7
Accounts Payable 432.5 534.7
Accrued Liabilities 638.5 662.3
Income Taxes Payable 112.3 167.1
Current Liabilities 1,532.9 1,795.6
Long-term Debt 375.7 393.2
Def Inc Taxes & Oth Liab 46.6 50.8
Preferred Stock 0.3 0.3
Common Equity 3,349.1 3,385.5
--------------------------
Total Liab. & Equity $5,304.6 $5,625.4
==========================
QUARTER ENDING
Divisional Revenues 8/31/98 8/31/97 % Chg
=================================================================
USA Region
Footwear $ 917.4 $1,056.0 -13%
Apparel 405.2 425.2 -5%
Equipment 25.2 19.1 32%
-------------------------
Total 1,347.8 1,500.3 -10%
Europe Region
Footwear 354.2 384.0 -8%
Apparel 310.8 218.3 42%
Equipment 15.9 7.5 112%
------------------------
Total 680.9 609.8 12%
Asia Pacific Region
Footwear 111.1 264.1 -58%
Apparel 82.0 103.0 -20%
Equipment 6.0 0.4 1400%
------------------------
Total 199.1 367.5 -46%
Americas Region
Footwear 97.8 121.5 -20%
Apparel 44.3 45.6 -3%
Equipment 2.8 3.3 -15%
------------------------
Total 144.9 170.4 -15%
Total NIKE Brand Revenues 2,372.7 2,648.0 -10%
Other Brands 132.1 118.1 12%
Total NIKE Inc. Revenues $2,504.8 $2,766.1 -9%
SIGNATURES
Pursuant to the requirements of the Securities and 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.
(Registrant)
Date: September 17, 1998
By /s/ Robert E. Harold
Chief Financial Officer