0000320187-17-000202.txt : 20171221 0000320187-17-000202.hdr.sgml : 20171221 20171221161643 ACCESSION NUMBER: 0000320187-17-000202 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20171221 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20171221 DATE AS OF CHANGE: 20171221 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NIKE INC CENTRAL INDEX KEY: 0000320187 STANDARD INDUSTRIAL CLASSIFICATION: RUBBER & PLASTICS FOOTWEAR [3021] IRS NUMBER: 930584541 STATE OF INCORPORATION: OR FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10635 FILM NUMBER: 171269627 BUSINESS ADDRESS: STREET 1: ONE BOWERMAN DR CITY: BEAVERTON STATE: OR ZIP: 97005-6453 BUSINESS PHONE: 5036713173 MAIL ADDRESS: STREET 1: ONE BOWERMAN DR CITY: BEAVERTON STATE: OR ZIP: 97005-6453 8-K 1 form8kerq2fy18.htm 8-K Document

UNITED STATES
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):
December 21, 2017
orangeswoosh2.jpg
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.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
  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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐





Item 2.02 Results of Operations and Financial Condition

Today NIKE, Inc. issued a press release disclosing financial results for the fiscal quarter ended November 30, 2017. The text of the release is furnished herewith as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

The following exhibit is furnished with this Form 8-K:

99.1 Press Release dated December 21, 2017.





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.
(Registrant)
 
 
 
 
Date:
December 21, 2017
By:
/s/   Andrew Campion
 
 
 
Andrew Campion
 
 
 
Chief Financial Officer
 
 
 
 






Exhibit Index



EX-99.1 2 exhibit991erq2fy18.htm EXHIBIT 99.1 Exhibit
blackswoosh2.jpg
Investor Contact:
 
Media Contact:
Nitesh Sharan
 
Kellie Leonard
(503) 532-2828
 
(503) 671-6171
NIKE, INC. REPORTS FISCAL 2018 SECOND QUARTER RESULTS

BEAVERTON, Ore., December 21, 2017 - NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal 2018 second quarter ended November 30, 2017. For the quarter, revenue growth was driven by international geographies and continued strength in NIKE Direct, which was partly offset by an expected decline in North America wholesale revenue.

Diluted earnings per share were $0.46, down 8 percent compared to the same period last year due primarily to a decline in gross margin and higher selling and administrative expense, which offset solid revenue growth, a lower tax rate and a lower average share count.

“This quarter, led by our Consumer Direct Offense, we accelerated international growth and built underlying momentum in our domestic business,” said Mark Parker, Chairman, President and CEO, NIKE, Inc. “For the back half of the fiscal year, NIKE’s innovation line-up is as strong as it’s ever been and we’ll continue to actively shape retail through new differentiated experiences.”*

Second Quarter Income Statement Review

Revenues for NIKE, Inc. increased 5 percent to $8.6 billion, up 3 percent on a currency-neutral basis.**
Revenues for the NIKE Brand were $8.1 billion, up 4 percent on a constant-currency basis, driven by EMEA, Greater China and APLA, including growth in the Sportswear and NIKE Basketball categories.
Revenues for Converse were $408 million, down 4 percent on a currency-neutral basis, as international growth was more than offset by declines in North America.
Gross margin declined 120 basis points to 43.0 percent, as higher average selling prices were more than offset by unfavorable changes in foreign currency exchange rates and, to a lesser extent, higher product costs per unit.
Selling and administrative expense increased 10 percent to $2.8 billion. Demand creation expense was $877 million, up 15 percent, primarily driven by higher sports marketing and advertising costs. Operating overhead expense increased 8 percent to $1.9 billion, due largely to higher administrative costs and continued investments in NIKE Direct.
Other expense, net was $18 million as net foreign currency exchange losses were partially offset by non-operating items.
The effective tax rate was 12.7 percent, compared to 24.4 percent for the same period last year, reflecting the tax benefit from stock-based compensation in the current period, as well as an increase in the mix of earnings from operations outside of the U.S., which are generally subject to a lower tax rate.
Net income decreased 9 percent to $767 million as a decline in gross margin and higher selling and administrative expense more than offset revenue growth and a lower tax rate, while diluted earnings per share decreased 8 percent from the prior year to $0.46, including a 2 percent decline in the weighted average diluted common shares outstanding.

November 30, 2017 Balance Sheet Review

Inventories for NIKE, Inc. were $5.3 billion, up 6 percent from November 30, 2016, driven primarily by changes in foreign currency exchange rates and, to a lesser extent, an increase in NIKE Brand units.
Cash and equivalents and short-term investments were $6.4 billion, $446 million higher than last year due to net income, and proceeds from debt issuance and employee exercises of stock options, which more than offset share repurchases, dividends and investments in infrastructure.

Share Repurchases

During the second quarter, NIKE, Inc. repurchased a total of 16.7 million shares for approximately $902 million as part of the four-year, $12 billion program approved by the Board of Directors in November 2015. As of November 30, 2017, a total of 111.8 million shares had been repurchased under this program for approximately $6.2 billion.

Conference Call

NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on December 21, 2017, to review fiscal second quarter results. The conference call will be broadcast live over the Internet and can be accessed at http://investors.nike.com. For those unable to listen to the live broadcast, an archived version will be available at the same location through 9:00 p.m. PT, January 4, 2018.

About NIKE, Inc.

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, Inc. subsidiary brands include Converse, which designs, markets and distributes athletic lifestyle footwear, apparel and accessories; and Hurley, which designs, markets and distributes surf and youth lifestyle footwear, apparel and accessories. For more information, NIKE, Inc.’s earnings releases and other financial information are available on the Internet at http://investors.nike.com. Individuals can also visit http://news.nike.com and follow @NIKE.

*
The marked paragraph contains 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 Securities and Exchange Commission (SEC), including Forms 8-K, 10-Q and 10-K.
**
See additional information in the accompanying Divisional Revenues table regarding this non-GAAP financial measure.

(Tables Follow)



NIKE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
 THREE MONTHS ENDED
%
SIX MONTHS ENDED
%
(Dollars in millions, except per share data)
11/30/2017
11/30/2016
Change
11/30/2017
11/30/2016
Change
Revenues
$
8,554

$
8,180

5
 %
$
17,624

$
17,241

2
 %
Cost of sales
4,876

4,564

7
 %
9,984

9,502

5
 %
Gross profit
3,678

3,616

2
 %
7,640

7,739

-1
 %
Gross margin
43.0
%
44.2
%
 
43.3
%
44.9
%
 
 
 
 
 
 
 
 
Demand creation expense
877

762

15
 %
1,732

1,803

-4
 %
Operating overhead expense
1,891

1,743

8
 %
3,892

3,599

8
 %
Total selling and administrative expense
2,768

2,505

10
 %
5,624

5,402

4
 %
% of revenues
32.4
%
30.6
%
 
31.9
%
31.3
%
 
 
 
 
 
 
 
 
Interest expense (income), net
13

15


29

22


Other expense (income), net
18

(18
)

36

(80
)

Income before income taxes
879

1,114

-21
 %
1,951

2,395

-19
 %
Income tax expense
112

272

-59
 %
234

304

-23
 %
Effective tax rate
12.7
%
24.4
%
 
12.0
%
12.7
%
 
 
 
 
 
 
 
 
NET INCOME
$
767

$
842

-9
 %
$
1,717

$
2,091

-18
 %
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
Basic
$
0.47

$
0.51

-8
 %
$
1.05

$
1.26

-17
 %
Diluted
$
0.46

$
0.50

-8
 %
$
1.03

$
1.23

-16
 %
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
Basic
1,627.0

1,659.1

 
1,633.1

1,665.6

 
Diluted
1,660.9

1,693.2

 
1,669.1

1,701.3

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.20

$
0.18

 
$
0.38

$
0.34

 



NIKE, Inc.
CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
November 30,
November 30,
% Change
(Dollars in millions)
2017
2016
ASSETS
 
 
 
Current assets:
 
 
 
Cash and equivalents
$
4,304

$
4,339

-1
 %
Short-term investments
2,085

1,604

30
 %
Accounts receivable, net
3,613

3,478

4
 %
Inventories
5,326

5,033

6
 %
Prepaid expenses and other current assets
1,254

1,557

-19
 %
Total current assets
16,582

16,011

4
 %
Property, plant and equipment, net
4,117

3,566

15
 %
Identifiable intangible assets, net
282

283

0
 %
Goodwill
139

139

0
 %
Deferred income taxes and other assets
2,935

2,653

11
 %
TOTAL ASSETS
$
24,055

$
22,652

6
 %
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt
$
10

$
44

-77
 %
Notes payable
1,229

20


Accounts payable
2,141

2,033

5
 %
Accrued liabilities
3,278

3,076

7
 %
Income taxes payable
92

52

77
 %
Total current liabilities
6,750

5,225

29
 %
Long-term debt
3,472

3,473

0
 %
Deferred income taxes and other liabilities
2,075

1,631

27
 %
Redeemable preferred stock



Shareholders' equity
11,758

12,323

-5
 %
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
24,055

$
22,652

6
 %



NIKE, Inc.
DIVISIONAL REVENUES1
 
 
 
 
% Change Excluding Currency Changes2
 
 
 
% Change Excluding Currency Changes2
 
THREE MONTHS ENDED
%
SIX MONTHS ENDED
%
(Dollars in millions)
11/30/2017
11/30/2016
Change
11/30/2017
11/30/2016
Change
North America
 
 
 
 
 
 
 
 
Footwear
$
2,070

$
2,219

-7
 %
-7
 %
$
4,504

$
4,737

-5
 %
-5
 %
Apparel
1,279

1,273

0
 %
0
 %
2,578

2,590

0
 %
-1
 %
Equipment
136

158

-14
 %
-14
 %
327

354

-8
 %
-8
 %
Total
3,485

3,650

-5
 %
-5
 %
7,409

7,681

-4
 %
-4
 %
Europe, Middle East & Africa
 
 
 
 
 
 
 
 
Footwear
1,290

1,116

16
 %
11
 %
2,761

2,573

7
 %
6
 %
Apparel
743

588

26
 %
21
 %
1,486

1,272

17
 %
15
 %
Equipment
100

88

14
 %
10
 %
230

209

10
 %
9
 %
Total
2,133

1,792

19
 %
14
 %
4,477

4,054

10
 %
9
 %
Greater China
 
 
 
 
 
 
 
 
Footwear
793

669

19
 %
17
 %
1,554

1,379

13
 %
14
 %
Apparel
397

355

12
 %
11
 %
706

624

13
 %
14
 %
Equipment
32

31

3
 %
0
 %
70

72

-3
 %
-2
 %
Total
1,222

1,055

16
 %
15
 %
2,330

2,075

12
 %
13
 %
Asia Pacific & Latin America
 
 
 
 
 
 
 
 
Footwear
873

818

7
 %
9
 %
1,700

1,605

6
 %
8
 %
Apparel
342

319

7
 %
10
 %
643

598

8
 %
10
 %
Equipment
58

69

-16
 %
-15
 %
119

134

-11
 %
-10
 %
Total
1,273

1,206

6
 %
8
 %
2,462

2,337

5
 %
7
 %
Global Brand Divisions3
23

21

10
 %
19
 %
43

36

19
 %
17
 %
TOTAL NIKE BRAND
8,136

7,724

5
 %
4
 %
16,721

16,183

3
 %
3
 %
Converse
408

416

-2
 %
-4
 %
891

990

-10
 %
-11
 %
Corporate4
10

40



12

68



TOTAL NIKE, INC. REVENUES
$
8,554

$
8,180

5
 %
3
 %
$
17,624

$
17,241

2
 %
2
 %
 
 
 
 
 
 
 
 
 
TOTAL NIKE BRAND
 
 
 
 
 
 
 
 
Footwear
$
5,026

$
4,822

4
 %
3
 %
$
10,519

$
10,294

2
 %
2
 %
Apparel
2,761

2,535

9
 %
8
 %
5,413

5,084

6
 %
6
 %
Equipment
326

346

-6
 %
-7
 %
746

769

-3
 %
-3
 %
Global Brand Divisions3
23

21

10
 %
19
 %
43

36

19
 %
17
 %
TOTAL NIKE BRAND REVENUES
$
8,136

$
7,724

5
 %
4
 %
$
16,721

$
16,183

3
 %
3
 %
1 Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation. This includes reclassified operating segment data to reflect the changes in the Company's operating structure, which became effective June 1, 2017. These changes had no impact on previously reported consolidated results of operations or shareholders' equity.
2 The percentage change has been calculated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends by excluding the impact of translation arising from foreign currency exchange rate fluctuations, which is considered a non-GAAP financial measure.
3 Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.
4 Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse but managed through our central foreign exchange risk management program.





NIKE, Inc.
EARNINGS BEFORE INTEREST AND TAXES1,2
 
 
 
 
 
 
 
THREE MONTHS ENDED
%
SIX MONTHS ENDED
%
(Dollars in millions)
11/30/2017
11/30/2016
Change
11/30/2017
11/30/2016
Change
North America
$
783

$
912

-14
 %
$
1,785

$
1,916

-7
 %
Europe, Middle East & Africa
337

313

8
 %
788

798

-1
 %
Greater China
378

375

1
 %
772

746

3
 %
Asia Pacific & Latin America
291

266

9
 %
551

475

16
 %
Global Brand Divisions3
(602
)
(619
)
3
 %
(1,277
)
(1,390
)
8
 %
TOTAL NIKE BRAND
1,187

1,247

-5
 %
2,619

2,545

3
 %
Converse
48

78

-38
 %
137

231

-41
 %
Corporate4
(343
)
(196
)
-75
 %
(776
)
(359
)
-116
 %
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES
892

1,129

-21
 %
1,980

2,417

-18
 %
Interest expense (income), net
13

15


29

22


TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES
$
879

$
1,114

-21
 %
$
1,951

$
2,395

-19
 %
1 The Company evaluates performance of individual operating segments based on earnings before interest and taxes (commonly referred to as “EBIT”), which represents net income before interest expense (income), net and income tax expense.
2 Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation. This includes reclassified operating segment data to reflect the changes in the Company's operating structure, which became effective June 1, 2017. These changes had no impact on previously reported consolidated results of operations or shareholders' equity.
3 Global Brand Divisions primarily represent demand creation, operating overhead and product creation and design expenses that are centrally managed for the NIKE Brand. Revenues for Global Brand Divisions are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.
4 Corporate consists largely of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to the Company's corporate headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses, including certain hedge gains and losses.


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