Date of Report (Date of earliest event reported):
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December 20, 2011
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NIKE, Inc.
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(Exact name of registrant as specified in charter)
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||
OREGON
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1-10635
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93-0584541
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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ONE BOWERMAN DRIVE
BEAVERTON, OR
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97005-6453
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
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(503) 671-6453
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NO CHANGE
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||
(Former name or former address, if changed since last report.)
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r
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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r
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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r
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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r
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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NIKE, Inc.
(Registrant)
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|||
Date: December 20, 2011
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By:
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/s/ Donald W. Blair | |
Donald W. Blair | |||
Chief Financial Officer | |||
Investor Contact:
Kelley Hall
(503) 532-3793
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Media Contact:
Kellie Leonard
(503) 671-6171
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·
|
Revenues up 18 percent to $5.7 billion, up 16 percent excluding currency changes
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·
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Diluted earnings per share up 6 percent to $1.00
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·
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Worldwide futures orders up 13 percent
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·
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Inventories up 35 percent
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•
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Revenues for NIKE, Inc. increased 18 percent to $5.7 billion, up 16 percent on a currency-neutral basis. Excluding the impacts of changes in foreign currency, NIKE Brand revenues rose 18 percent with growth in every geography except Japan and in all key categories except Action Sports. Revenues for Other Businesses increased 5 percent with minimal impact from changes in currency exchange rates, as growth at Converse more than offset lower revenues at NIKE Golf, Cole Haan, Hurley and Umbro.
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•
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Gross margin declined 260 basis points to 42.7 percent due primarily to higher product costs, which more than offset the positive effects of growing sales in our Direct to Consumer operations, price increases and ongoing product cost reduction initiatives.
|
•
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Selling and administrative expenses grew at a lower rate than revenue, up 13 percent to $1.8 billion. Demand creation expenses increased 12 percent to $644 million driven by marketing support for key product initiatives and investments in consumer events for the NIKE Brand. Operating overhead expenses increased 13 percent to $1.2 billion due to additional investments made in our wholesale and Direct to Consumer businesses.
|
•
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Other expense, net was $9 million, primarily comprised of net foreign exchange losses, partially offset by non-recurring items. For the quarter, we estimate the year-over-year change in foreign currency related gains and 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 Income before income taxes by approximately $17 million.
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•
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The Effective tax rate was 24.1 percent compared to 25.0 percent for the same period last year, an improvement due primarily to a reduction in the effective tax rate on operations outside the United States.
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•
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Net income increased 3 percent to $469 million and Diluted earnings per share increased 6 percent to $1.00, reflecting a 4 percent decline in the weighted average diluted common shares outstanding.
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•
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Inventories for NIKE, Inc. were $3.2 billion, up 35 percent from November 30, 2010. Inventories were higher compared to a year ago due to significantly higher average unit product cost and growth in total units. NIKE Brand inventories were up 39 percent. Approximately 20 percentage points of the increase was due to higher wholesale unit inventories as a result of strong demand and more timely deliveries from our product suppliers. The remaining 19 percentage points of the increase in NIKE Brand inventories were primarily a result of significantly higher product input costs. Relative to revenues and futures, current unit inventories remain broadly consistent with levels reported prior to the 2009 – 2010 economic downturn.
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•
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Cash and short-term investments were $3.4 billion, $1.4 billion lower than last year as higher working capital investments reduced free cash flow from operations, while share repurchases, dividend payments and long-term debt payments also increased year-on-year.
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*
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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.
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NIKE, Inc.
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||||||||||||||||||||||||
CONSOLIDATED FINANCIAL STATEMENTS
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||||||||||||||||||||||||
FOR THE PERIOD ENDED NOVEMBER 30, 2011
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||||||||||||||||||||||||
(In millions, except per share data)
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||||||||||||||||||||||||
QUARTER ENDED
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YEAR TO DATE ENDED
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|||||||||||||||||||||||
INCOME STATEMENT
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11/30/2011
|
11/30/2010
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% Chg
|
11/30/2011
|
11/30/2010
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% Chg
|
||||||||||||||||||
Revenues
|
$ | 5,731 | $ | 4,842 | 18 | % | $ | 11,812 | $ | 10,017 | 18 | % | ||||||||||||
Cost of sales
|
3,281 | 2,649 | 24 | % | 6,669 | 5,390 | 24 | % | ||||||||||||||||
Gross profit
|
2,450 | 2,193 | 12 | % | 5,143 | 4,627 | 11 | % | ||||||||||||||||
Gross margin
|
42.7 | % | 45.3 | % | 43.5 | % | 46.2 | % | ||||||||||||||||
Demand creation expense
|
644 | 574 | 12 | % | 1,336 | 1,253 | 7 | % | ||||||||||||||||
Operating overhead expense
|
1,176 | 1,037 | 13 | % | 2,307 | 2,031 | 14 | % | ||||||||||||||||
Total selling and administrative expense
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1,820 | 1,611 | 13 | % | 3,643 | 3,284 | 11 | % | ||||||||||||||||
% of revenue
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31.8 | % | 33.3 | % | 30.8 | % | 32.8 | % | ||||||||||||||||
Other expense (income), net
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9 | (28 | ) | - | 27 | (21 | ) | - | ||||||||||||||||
Interest expense, net
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3 | 1 | - | 3 | - | - | ||||||||||||||||||
Income before income taxes
|
618 | 609 | 1 | % | 1,470 | 1,364 | 8 | % | ||||||||||||||||
Income taxes
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149 | 152 | -2 | % | 356 | 348 | 2 | % | ||||||||||||||||
Effective tax rate
|
24.1 | % | 25.0 | % | 24.2 | % | 25.5 | % | ||||||||||||||||
Net income
|
$ | 469 | $ | 457 | 3 | % | $ | 1,114 | $ | 1,016 | 10 | % | ||||||||||||
Diluted EPS
|
$ | 1.00 | $ | 0.94 | 6 | % | $ | 2.36 | $ | 2.08 | 13 | % | ||||||||||||
Basic EPS
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$ | 1.02 | $ | 0.96 | 6 | % | $ | 2.41 | $ | 2.12 | 14 | % | ||||||||||||
Weighted Average Common Shares Outstanding:
|
||||||||||||||||||||||||
Diluted
|
468.5 | 487.6 | 471.5 | 488.4 | ||||||||||||||||||||
Basic
|
459.2 | 477.9 | 462.1 | 478.8 | ||||||||||||||||||||
Dividends declared
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$ | 0.36 | $ | 0.31 | $ | 0.67 | $ | 0.58 |
NIKE, Inc.
|
|||||||||||
BALANCE SHEET
|
11/30/2011
|
11/30/2010
|
% Change
|
||||||||
(In millions)
|
|||||||||||
ASSETS
|
|||||||||||
Current assets:
|
|||||||||||
Cash and equivalents
|
$ | 1,929 | $ | 1,768 | 9 | % | |||||
Short-term investments
|
1,436 | 3,021 | -52 | % | |||||||
Accounts receivable, net
|
3,103 | 2,792 | 11 | % | |||||||
Inventories
|
3,164 | 2,348 | 35 | % | |||||||
Deferred income taxes
|
298 | 267 | 12 | % | |||||||
Prepaid expenses and other current assets
|
795 | 720 | 10 | % | |||||||
Total current assets
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10,725 | 10,916 | -2 | % | |||||||
Property, plant and equipment
|
5,064 | 4,641 | 9 | % | |||||||
Less accumulated depreciation
|
2,887 | 2,638 | 9 | % | |||||||
Property, plant and equipment, net
|
2,177 | 2,003 | 9 | % | |||||||
Identifiable intangible assets, net
|
532 | 469 | 13 | % | |||||||
Goodwill
|
201 | 192 | 5 | % | |||||||
Deferred income taxes and other assets
|
930 | 884 | 5 | % | |||||||
Total assets
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$ | 14,565 | $ | 14,464 | 1 | % | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|||||||||||
Current liabilities:
|
|||||||||||
Current portion of long-term debt
|
$ | 114 | $ | 132 | -14 | % | |||||
Notes payable
|
123 | 128 | -4 | % | |||||||
Accounts payable
|
1,411 | 1,225 | 15 | % | |||||||
Accrued liabilities
|
1,834 | 1,685 | 9 | % | |||||||
Income taxes payable
|
81 | 78 | 4 | % | |||||||
Total current liabilities
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3,563 | 3,248 | 10 | % | |||||||
Long-term debt
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234 | 338 | -31 | % | |||||||
Deferred income taxes and other liabilities
|
925 | 929 | 0 | % | |||||||
Redeemable preferred stock
|
- | - | - | ||||||||
Shareholders' equity
|
9,843 | 9,949 | -1 | % | |||||||
Total liabilities and shareholders' equity
|
$ | 14,565 | $ | 14,464 | 1 | % |
NIKE, Inc.
|
||||||||
QUARTER ENDED
|
YEAR TO DATE ENDED
|
|||||||
DIVISIONAL REVENUES1
|
11/30/2011
|
11/30/2010
|
% Change
|
% Change Excluding Currency Changes 2
|
11/30/2011
|
11/30/2010
|
% Change
|
% Change Excluding Currency Changes 2
|
(In millions)
|
(In millions)
|
|||||||
North America
|
||||||||
Footwear
|
$ 1,306
|
$ 1,083
|
21%
|
20%
|
$ 2,749
|
$ 2,372
|
16%
|
16%
|
Apparel
|
661
|
538
|
23%
|
23%
|
1,293
|
1,053
|
23%
|
23%
|
Equipment
|
99
|
80
|
24%
|
27%
|
224
|
179
|
25%
|
26%
|
Total
|
2,066
|
1,701
|
21%
|
21%
|
4,266
|
3,604
|
18%
|
18%
|
Western Europe
|
||||||||
Footwear
|
538
|
502
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7%
|
2%
|
1,269
|
1,134
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12%
|
2%
|
Apparel
|
324
|
305
|
6%
|
1%
|
740
|
682
|
9%
|
-1%
|
Equipment
|
53
|
46
|
15%
|
7%
|
134
|
113
|
19%
|
7%
|
Total
|
915
|
853
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7%
|
2%
|
2,143
|
1,929
|
11%
|
1%
|
Central & Eastern Europe
|
||||||||
Footwear
|
135
|
121
|
12%
|
14%
|
315
|
270
|
17%
|
12%
|
Apparel
|
111
|
88
|
26%
|
28%
|
234
|
183
|
28%
|
24%
|
Equipment
|
15
|
15
|
0%
|
4%
|
46
|
40
|
15%
|
10%
|
Total
|
261
|
224
|
17%
|
19%
|
595
|
493
|
21%
|
16%
|
Greater China
|
||||||||
Footwear
|
353
|
264
|
34%
|
27%
|
667
|
510
|
31%
|
24%
|
Apparel
|
268
|
191
|
40%
|
34%
|
445
|
373
|
19%
|
13%
|
Equipment
|
29
|
27
|
7%
|
6%
|
66
|
59
|
12%
|
7%
|
Total
|
650
|
482
|
35%
|
28%
|
1,178
|
942
|
25%
|
19%
|
Japan
|
||||||||
Footwear
|
99
|
93
|
6%
|
-3%
|
202
|
179
|
13%
|
2%
|
Apparel
|
83
|
85
|
-2%
|
-11%
|
153
|
145
|
6%
|
-4%
|
Equipment
|
15
|
14
|
7%
|
-10%
|
33
|
31
|
6%
|
-8%
|
Total
|
197
|
192
|
3%
|
-7%
|
388
|
355
|
9%
|
-1%
|
Emerging Markets
|
||||||||
Footwear
|
660
|
521
|
27%
|
27%
|
1,227
|
925
|
33%
|
28%
|
Apparel
|
233
|
183
|
27%
|
27%
|
415
|
332
|
25%
|
20%
|
Equipment
|
55
|
51
|
8%
|
10%
|
105
|
89
|
18%
|
15%
|
Total
|
948
|
755
|
26%
|
26%
|
1,747
|
1,346
|
30%
|
25%
|
Global Brand Divisions3
|
25
|
24
|
4%
|
1%
|
58
|
45
|
29%
|
20%
|
Total NIKE Brand
|
5,062
|
4,231
|
20%
|
18%
|
10,375
|
8,714
|
19%
|
15%
|
Other Businesses4
|
673
|
639
|
5%
|
5%
|
1,446
|
1,342
|
8%
|
7%
|
Corporate5
|
(4)
|
(28)
|
86%
|
-
|
(9)
|
(39)
|
77%
|
-
|
Total NIKE, Inc. Revenues
|
$ 5,731
|
$ 4,842
|
18%
|
16%
|
$ 11,812
|
$ 10,017
|
18%
|
14%
|
Total NIKE Brand
|
||||||||
Footwear
|
$ 3,091
|
$ 2,584
|
20%
|
18%
|
$ 6,429
|
$ 5,390
|
19%
|
15%
|
Apparel
|
1,680
|
1,390
|
21%
|
18%
|
3,280
|
2,768
|
18%
|
14%
|
Equipment
|
266
|
233
|
14%
|
13%
|
608
|
511
|
19%
|
14%
|
Global Brand Divisions3
|
25
|
24
|
4%
|
1%
|
58
|
45
|
29%
|
20%
|
NIKE, Inc.
|
||||||||||||||||||||||||
QUARTER ENDED
|
%
|
YEAR TO DATE ENDED
|
%
|
|||||||||||||||||||||
EARNINGS BEFORE INTEREST AND TAXES1,2
|
11/30/2011
|
11/30/2010
|
Chg
|
11/30/2011
|
11/30/2010
|
Chg
|
||||||||||||||||||
|
(In millions)
|
(In millions)
|
||||||||||||||||||||||
North America
|
$ | 418 | $ | 356 | 17 | % | $ | 952 | $ | 799 | 19 | % | ||||||||||||
Western Europe
|
92 | 142 | -35 | % | 315 | 425 | -26 | % | ||||||||||||||||
Central & Eastern Europe
|
33 | 48 | -31 | % | 103 | 118 | -13 | % | ||||||||||||||||
Greater China
|
220 | 174 | 26 | % | 391 | 338 | 16 | % | ||||||||||||||||
Japan
|
35 | 36 | -3 | % | 69 | 63 | 10 | % | ||||||||||||||||
Emerging Markets
|
247 | 194 | 27 | % | 437 | 318 | 37 | % | ||||||||||||||||
Global Brand Divisions3
|
(273 | ) | (221 | ) | -24 | % | (534 | ) | (466 | ) | -15 | % | ||||||||||||
Total NIKE Brand
|
772 | 729 | 6 | % | 1,733 | 1,595 | 9 | % | ||||||||||||||||
Other Businesses4
|
57 | 59 | -3 | % | 143 | 168 | -15 | % | ||||||||||||||||
Corporate5
|
(208 | ) | (178 | ) | -17 | % | (403 | ) | (399 | ) | -1 | % | ||||||||||||
Total earnings before interest and taxes1,2
|
$ | 621 | $ | 610 | 2 | % | $ | 1,473 | $ | 1,364 | 8 | % |
NIKE, Inc.
|
||||||||
NIKE BRAND REPORTED FUTURES GROWTH BY GEOGRAPHY1
|
Reported Futures Orders
|
Excluding Currency Changes 2
|
||||||
|
||||||||
North America
|
16 | % | 16 | % | ||||
Western Europe
|
5 | % | 4 | % | ||||
Central & Eastern Europe
|
12 | % | 15 | % | ||||
Greater China
|
31 | % | 27 | % | ||||
Japan
|
-5 | % | -8 | % | ||||
Emerging Markets
|
12 | % | 17 | % | ||||
Total NIKE Brand Reported Futures
|
13 | % | 13 | % |