NIKE Reports Third Quarter Fiscal 1999 Earnings; Worldwide Futures Orders Decrease 4 Percent
PR Newswire, Thursday, March 18, 1999 at 16:34
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) 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(R), 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.
-0- 03/18/99
/CONTACT: media, Lee Weinstein, 503-671-3080, or investors, Rick
Anguilla, 503-671-3139, both of NIKE/
/Company News On-Call: prnewswire.com or fax,
800-758-5804, ext. 622104/
/Web site: nikebiz.com./
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