NIKE Reports Third Quarter Fiscal 1999 Earnings;
Worldwide Futures Orders Decrease 4 Percent
March 18, 1999
Highlights: * Earnings per share increased 76 percent $0.44 versus $0.25 * Worldwide Futures Orders
decreased 4 percent * Revenues for the quarter decreased 2 percent to $2.18 billion * Global footwear
revenues down 4 percent; global apparel down 1 percent * U.S. Footwear revenues increased 4 percent
BEAVERTON, Ore., March 18 /PRNewswire/ -- NIKE, Inc. (NYSE: NKE - news) today reported revenues and earnings for
the Company's third quarter ended February 28, 1999. Third quarter net income totaled $124.2 million or $0.44 per diluted
share compared to $73.1 million, or $0.25 per diluted share. The increase in net income and earnings per share was 70
percent and 76 percent, respectively. Third quarter revenues were $2.18 billion, down 2 percent from $2.22 billion last year.
Philip H. Knight, Chairman and CEO, said, ''Despite continued softness in the U.S. athletic footwear and apparel retail
market, we are beginning to see signs of increased consumer demand for our footwear. While we are encouraged by these
early indicators, we remain cautious on our prospects for near-term growth. Our focus continues to be on driving consumer
demand and growing our profitability through higher gross margins and a lower expense base.''*
Futures Orders
The Company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery between March
and July 1999 total $3.8 billion, 4 percent lower than such orders for the same period last year. The impact of exchange rates
on worldwide futures orders was not materially significant.
Looking at futures orders by region, the USA region was down 6 percent, Europe increased 8 percent, Asia Pacific was
down 16 percent and the Americas was down 23 percent. In constant dollars, futures orders for Europe increased 6 percent,
Asia Pacific decreased 20 percent and Americas was down 19 percent.*
Regional Highlights
USA
U.S. athletic footwear revenues increased 4 percent to $828.5 million, compared to $800.4 million in the same period last
year. U.S. athletic apparel revenues declined 8 percent in the quarter to $304.3 million. Total Nike brand U.S. revenues
increased 1 percent to $1.16 billion in the quarter. Mr. Knight noted, ''Our U.S. running business increased 28 percent in the
quarter and the decline in basketball slowed considerably. Our footwear business appears to be gaining momentum but our
U.S. apparel business remains very sluggish.''*
Europe
European revenues in the quarter increased 5 percent to $599.8 million. Had the dollar remained constant at year-ago levels,
revenues would have decreased 3 percent. Revenues in Italy rose 33 percent and France saw a sales gain of 19 percent. Italy
and France grew 21 percent and 11 percent respectively in constant dollars. Mr. Knight added, ''We are encouraged by the
continued strength in European futures orders, in particular the balance between footwear and apparel which had previously
been skewed heavily toward apparel.''
Asia Pacific
Revenues in the Asia Pacific region declined 19 percent to $222.5 million. In constant dollars, regional revenues decreased 24
percent. Revenues in Japan declined 26 percent and 33 percent in constant dollars. Mr. Knight said, ''We are increasingly
confident that we have seen the bottom in our business in Asia Pacific and maintain our belief that this region holds great
potential for Nike.''*
Americas
Revenues in the Americas region declined 22 percent to $104.7 million. Had the dollar remained constant, revenues would
have decreased 18 percent.
Income Statement Review
In the third quarter, consolidated revenues decreased 2 percent. Other brand revenues, which include Bauer Nike Hockey,
Cole Haan®, Nike IHM, Inc. and Nike Team Sports, decreased 5 percent to $90.4 million. Gross margins in the quarter were
37.3 percent compared to 35.8 percent last year. Selling and administrative expenses were 26.2 percent of third quarter
revenues, compared to 29.3 percent last year.
Balance Sheet Review
Cash and short-term investments decreased to $127.9 in the third quarter. Inventories totaled $1.1 billion, down 27 percent
from February 28, 1998. Total U.S. footwear inventory units ended the quarter up 8 percent compared to November 30,
1998, and down 27 percent from February 28, 1998.
Share Repurchase
As of February 28, 1998, the Company had purchased a total of 8,046,200 shares of Nike's Class B Common Stock for
approximately $318 million in the open market in conjunction with the $1 billion share repurchase program approved in
December 1997. During the third quarter, the Company purchased a total of 1,635,400 shares for approximately $66 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
Nike Hockey 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 Nike Team Sports (formerly Sports Specialties), which markets licensed
team products. Total revenues for the trailing twelve months ending February 28, 1999, were $8.90 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 cancellations and 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.
NIKE, INC QUARTER ENDING
2/28/1999 2/28/1998 % Chg
REVENUES $2,176.8 $2,224.0 -2%
COST OF SALES 1,364.9 1,428.8 -4%
GROSS PROFIT 811.9 795.2 2%
37.3% 35.8%
SG&A 569.8 651.4 -13%
26.2% 29.3%
INTEREST EXP 10.4 13.2 -21%
OTHER 26.3 8.0 229%
PRE TAX 205.4 122.6 68%
TAXES 81.2 49.5 64%
39.5% 40.4%
NET INCOME $124.2 $73.1 70%
DILUTED EPS $0.44 $0.25 76%
BASIC EPS $0.44 $0.25 76%
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
DILUTED 286.1 293.2
BASIC 281.3 287.6
DIVIDEND $0.12 $0.12
BALANCE SHEET
ASSETS
CASH & ST INVEST $127.9 $150.3
ACCOUNTS REC 1,737.7 1,809.8
INVENTORY 1,147.4 1,566.1
DEFERRED TAXES 178.1 138.0
PREPAID EXPENSES 151.1 228.8
CURRENT ASSETS 3,342.2 3,893.0
FIXED ASSETS 2,006.9 1,710.1
DEPRECIATION 762.6 618.6
NET FIXED ASSETS 1,244.3 1,091.5
IDENTIFIABLE INTANGIBLE
ASSETS AND GOODWILL 431.4 449.7
OTHER ASSETS 274.3 203.9
TOTAL ASSETS $5,292.2 $5,638.1
LIAB AND EQUITY
CURRENT LT DEBT $0.9 $2.0
NOTES PAYABLE 556.0 629.7
ACCOUNTS PAYABLE 329.9 471.4
ACCRUED LIAB 670.2 674.2
INC TAXES PAYABLE 34.0 59.4
CURRENT LIAB 1,591.0 1,836.7
LONG TERM DEBT 388.7 385.3
DEF INC TAXES & OTH LIAB 54.1 41.2
PREFERRED STOCK 0.3 0.3
COMMON EQUITY 3,258.1 3,374.6
TOTAL LIAB & EQTY $5,292.2 $5,638.1
SOURCE: NIKE, Inc.
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