UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
FOR
QUARTERLY REPORTS UNDER SECTION 13 OR 15(d) OF
THE
SECURITIES AND EXCHANGE ACT OF 1934
For the
Quarter Ended August 31, 2008
Commission
file number - 1-10635
NIKE,
Inc.
(Exact
name of registrant as specified in its charter)
OREGON
|
93-0584541
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
One
Bowerman Drive, Beaverton, Oregon 97005-6453
(Address
of principal executive
offices) (Zip Code)
Registrant’s
telephone number, including area code (503) 671-6453
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes ý No
¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in rule 12b-2 of the Exchange Act.
Large
accelerated filer ý
Accelerated filer ¨
Non-accelerated
filer ¨ Smaller
Reporting Company ¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).Yes ¨No ý
Common Stock
shares outstanding as of August 31, 2008 were:
Class
A
|
96,181,844
|
Class
B
|
389,040,003
|
|
485,221,847
|
PART
1 - FINANCIAL INFORMATION
Item
1. FINANCIAL STATEMENTS
NIKE,
Inc.
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
August
31,
2008
|
|
|
May
31,
2008
|
|
|
|
(in
millions)
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
and equivalents
|
|
$ |
1,625.6 |
|
|
$ |
2,133.9 |
|
Short-term
investments
|
|
|
966.1 |
|
|
|
642.2 |
|
Accounts
receivable, net
|
|
|
3,035.4 |
|
|
|
2,795.3 |
|
Inventories
(Note 2)
|
|
|
2,453.9 |
|
|
|
2,438.4 |
|
Deferred
income taxes
|
|
|
175.8 |
|
|
|
227.2 |
|
Prepaid
expenses and other current assets
|
|
|
687.8 |
|
|
|
602.3 |
|
Total
current assets
|
|
|
8,944.6 |
|
|
|
8,839.3 |
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
4,111.0 |
|
|
|
4,103.0 |
|
Less
accumulated depreciation
|
|
|
2,236.2 |
|
|
|
2,211.9 |
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, net
|
|
|
1,874.8 |
|
|
|
1,891.1 |
|
|
|
|
|
|
|
|
|
|
Identifiable
intangible assets, net (Note 3)
|
|
|
712.4 |
|
|
|
743.1 |
|
Goodwill
(Note 3)
|
|
|
425.1 |
|
|
|
448.8 |
|
Deferred
income taxes and other long-term assets
|
|
|
637.9 |
|
|
|
520.4 |
|
Total
assets
|
|
$ |
12,594.8 |
|
|
$ |
12,442.7 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current
portion of long-term debt
|
|
$ |
31.5 |
|
|
$ |
6.3 |
|
Notes
payable
|
|
|
220.1 |
|
|
|
177.7 |
|
Accounts
payable
|
|
|
1,205.9 |
|
|
|
1,287.6 |
|
Accrued
liabilities (Note 4)
|
|
|
1,639.8 |
|
|
|
1,761.9 |
|
Income
taxes payable (Note 6)
|
|
|
214.3 |
|
|
|
88.0 |
|
Total
current liabilities
|
|
|
3,311.6 |
|
|
|
3,321.5 |
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
407.3 |
|
|
|
441.1 |
|
Deferred
income taxes and other long-term liabilities (Note 6)
|
|
|
843.0 |
|
|
|
854.5 |
|
Commitments
and contingencies (Note 11)
|
|
|
-- |
|
|
|
-- |
|
Redeemable
preferred stock
|
|
|
0.3 |
|
|
|
0.3 |
|
Shareholders’
equity:
|
|
|
|
|
|
|
|
|
Common
stock at stated value:
|
|
|
|
|
|
|
|
|
Class
A convertible-96.2 and 96.8 million shares outstanding
|
|
|
0.1 |
|
|
|
0.1 |
|
Class
B convertible-389.0 and 394.3 million shares outstanding
|
|
|
2.7 |
|
|
|
2.7 |
|
Capital
in excess of stated value
|
|
|
2,622.9 |
|
|
|
2,497.8 |
|
Accumulated
other comprehensive income (Note 7)
|
|
|
361.0 |
|
|
|
251.4 |
|
Retained
earnings
|
|
|
5,045.9 |
|
|
|
5,073.3 |
|
Total
shareholders' equity
|
|
|
8,032.6 |
|
|
|
7,825.3 |
|
Total
liabilities and shareholders' equity
|
|
$ |
12,594.8 |
|
|
$ |
12,442.7 |
|
The
accompanying Notes to Unaudited Condensed Consolidated Financial Statements are
an integral part of this statement.
NIKE,
Inc.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
Three
Months Ended
August
31,
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
(in
millions, except per share data)
|
|
|
|
|
|
|
|
Revenues
|
$ |
5,432.2 |
|
|
$ |
4,655.1 |
|
Cost
of sales
|
|
2,870.1 |
|
|
|
2,568.1 |
|
|
|
|
|
|
|
|
|
Gross
Margin
|
|
2,562.1 |
|
|
|
2,087.0 |
|
Selling
and administrative expense
|
|
1,856.4 |
|
|
|
1,434.7 |
|
Interest
income, net
|
|
10.1 |
|
|
|
24.6 |
|
Other
expense, net
|
|
(1.6 |
) |
|
|
(6.6 |
) |
|
|
|
|
|
|
|
|
Income
before income taxes
|
|
714.2 |
|
|
|
670.3 |
|
|
|
|
|
|
|
|
|
Income
taxes (Note 6)
|
|
203.7 |
|
|
|
100.6 |
|
|
|
|
|
|
|
|
|
Net
income
|
$ |
510.5 |
|
|
$ |
569.7 |
|
|
|
|
|
|
|
|
|
Basic
earnings per common share (Note 9)
|
$ |
1.05 |
|
|
$ |
1.14 |
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share (Note 9)
|
$ |
1.03 |
|
|
$ |
1.12 |
|
|
|
|
|
|
|
|
|
Dividends
declared per common share
|
$ |
0.23 |
|
|
$ |
0.185 |
|
The
accompanying Notes to Unaudited Condensed Consolidated Financial Statements are
an integral part of this statement.
NIKE,
Inc.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Three Months Ended
August 31,
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
Cash
provided by operations:
|
|
|
|
|
Net
income
|
$ |
510.5 |
|
$ |
569.7 |
|
Income
charges (credits) not affecting cash:
|
|
|
|
|
|
|
Depreciation
|
|
78.5 |
|
|
70.0 |
|
Deferred
income taxes
|
|
(73.0 |
) |
|
(104.8 |
) |
Stock-based
compensation
|
|
78.2 |
|
|
63.8 |
|
Amortization
and other
|
|
6.8 |
|
|
1.6 |
|
Changes
in certain working capital components and other
assets
and liabilities:
|
|
|
|
|
|
|
Increase
in accounts receivable
|
|
(292.9 |
) |
|
(257.3 |
) |
Increase
in inventories
|
|
(57.0 |
) |
|
(20.0 |
) |
Decrease
(increase) in prepaid expenses and other
assets
|
|
49.2 |
|
|
(1.9 |
) |
Increase
(decrease) in accounts payable, accrued
liabilities
and income taxes payable
|
|
57.3 |
|
|
(1.6 |
) |
|
|
|
|
|
Cash
provided by operations
|
|
357.6 |
|
|
319.5 |
|
|
|
|
|
|
Cash
(used) provided by investing activities:
|
|
|
|
|
|
|
Purchases
of investments
|
|
(791.7 |
) |
|
(155.9 |
) |
Maturities
of investments
|
|
203.4 |
|
|
333.4 |
|
Sales
of investments
|
|
266.4 |
|
|
4.0 |
|
Additions
to property, plant and equipment
|
|
(106.7 |
) |
|
(91.8 |
) |
Proceeds
from the sale of property, plant and equipment
|
|
13.1 |
|
|
0.2 |
|
Increase
in other assets and liabilities, net
|
|
(15.2 |
) |
|
(1.2 |
) |
Settlement
of net investment hedges
|
|
2.6 |
|
|
-- |
|
|
|
|
|
|
Cash
(used) provided by investing activities
|
|
(428.1 |
) |
|
88.7 |
|
|
|
|
|
|
Cash
used by financing activities:
|
|
|
|
|
|
|
Reduction
in long-term debt, including current portion
|
|
(1.6 |
) |
|
(26.4 |
) |
Increase
in notes payable
|
|
45.0 |
|
|
38.3 |
|
Proceeds
from exercise of stock options and other
stock
issuances
|
|
45.8 |
|
|
96.7 |
|
Excess
tax benefits from share-based payment arrangements
|
|
8.7 |
|
|
14.9 |
|
Repurchase
of common stock
|
|
(418.8 |
) |
|
(318.3 |
) |
Dividends
on common stock
|
|
(113.0 |
) |
|
(92.8 |
) |
|
|
|
|
|
Cash
used by financing activities
|
|
(433.9 |
) |
|
(287.6 |
) |
|
|
|
|
|
Effect
of exchange rate changes on cash
|
|
(3.9 |
) |
|
(3.4 |
) |
|
|
|
|
|
Net
(decrease) increase in cash and equivalents
|
|
(508.3 |
) |
|
117.2 |
|
Cash
and equivalents, beginning of period
|
|
2,133.9 |
|
|
1,856.7 |
|
|
|
|
|
|
Cash
and equivalents, end of period
|
$ |
1,625.6 |
|
$ |
1,973.9 |
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared and not paid
|
$ |
111.7 |
|
$ |
92.3 |
|
The
accompanying Notes to Unaudited Condensed Consolidated Financial Statements are
an integral part of this statement.
NIKE,
Inc.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 - Summary of
Significant Accounting Policies:
Basis
of presentation:
The
accompanying unaudited condensed consolidated financial statements reflect all
adjustments (consisting of normal recurring accruals) which are, in the opinion
of management, necessary for a fair statement of the results of operations for
the interim period. The year-end condensed consolidated balance sheet
data as of May 31, 2008 was derived from audited financial statements, but does
not include all disclosures required by accounting principles generally accepted
in the United States of America. The interim financial information
and notes thereto should be read in conjunction with the Company’s latest Annual
Report on Form 10-K. The results of operations for the three months
ended August 31, 2008 are not necessarily indicative of results to be expected
for the entire year.
Recently
Adopted Accounting Standards:
On June
1, 2008, the Company adopted Statement of Financial Accounting Standard ("SFAS")
No. 157, "Fair Value Measurements" ("FAS 157") for financial assets and
liabilities, which clarifies the meaning of fair value, establishes a framework
for measuring fair value and expands disclosures about fair value
measurements. Fair value is defined under FAS 157 as the exchange
price that would be received for an asset or paid to transfer a liability in the
principal or most advantageous market for the assets or liabilities in an
orderly transaction between market participants on the measurement
date. Subsequent changes in fair value of these financial assets and
liabilities are recognized in earnings or other comprehensive income when they
occur. The effective date of the provisions of FAS 157 for non-financial assets
and liabilities, except for items recognized at fair value on a recurring basis,
was deferred by Financial Accounting Standards Board ("FASB") Staff Position FAS
157-2 (FSP FAS 157-2) and are effective for the fiscal year beginning June 1,
2009. The Company is currently evaluating the impact of the
provisions for non-financial assets and liabilities. The adoption of
FAS 157 for financial assets and liabilities did not have an impact on the
Company's consolidated financial position or results of
operations. For additional information on the fair value of financial
assets and liabilities, see Note 5 – Fair Value Measurements.
Also
effective June 1, 2008, the Company adopted SFAS No. 159 "The Fair Value Option
for Financial Assets and Financial Liabilities" ("FAS 159") which allows an
entity the irrevocable option to elect fair value for the initial and subsequent
measurement for certain financial assets and liabilities on a
contract-by-contract basis. As of August 31, 2008, the company has
not elected the fair value option for any additional financial assets and
liabilities beyond those already prescribed by accounting principles generally
accepted in the United States.
Recently
Issued Accounting Standards:
In
December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations" ("FAS 141(R)") and SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements" ("FAS 160"). These standards aim to improve,
simplify, and converge internationally the accounting for business combinations
and the reporting of noncontrolling interests in consolidated financial
statements. The provisions of FAS 141(R) and FAS 160 are effective
for the fiscal year beginning June 1, 2009. The Company is currently
evaluating the impact of the provisions of FAS 141(R) and FAS 160.
In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
and Hedging Activities” (“FAS 161”). FAS 161 is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity's financial position, financial performance, and cash
flows. The provisions of FAS 161 are effective for the quarter ending February
28, 2009. The Company does not expect that the adoption will have a
material impact on the Company’s consolidated financial position or results of
operations.
NOTE
2 - Inventories:
Inventory
balances of $2,453.9 million and $2,438.4 million at August 31, 2008 and May 31,
2008, respectively, were substantially all finished goods.
NOTE
3 - Identifiable
Intangible Assets and Goodwill:
The
following table summarizes the Company’s identifiable intangible assets and
goodwill balances as of August 31, 2008 and May 31, 2008.
|
|
August
31, 2008
|
|
|
May
31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Carrying Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying Amount
|
|
|
Gross
Carrying Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
|
Amortized
intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents
|
|
$ |
49.7 |
|
|
$ |
(15.2 |
) |
|
$ |
34.5 |
|
|
$ |
47.5 |
|
|
$ |
(14.4 |
) |
|
$ |
33.1 |
|
Trademarks
|
|
|
13.0 |
|
|
|
(7.8 |
) |
|
|
5.2 |
|
|
|
13.2 |
|
|
|
(7.8 |
) |
|
|
5.4 |
|
Other
|
|
|
58.0 |
|
|
|
(16.0 |
) |
|
|
42.0 |
|
|
|
65.2 |
|
|
|
(19.7 |
) |
|
|
45.5 |
|
Total
|
|
$ |
120.7 |
|
|
$ |
(39.0 |
) |
|
$ |
81.7 |
|
|
$ |
125.9 |
|
|
$ |
(41.9 |
) |
|
$ |
84.0 |
|
Unamortized
intangible assets – Trademarks
|
|
|
$ |
630.7 |
|
|
|
|
|
|
|
|
|
|
$ |
659.1 |
|
Identifiable
intangible assets, net
|
|
|
$ |
712.4 |
|
|
|
|
|
|
|
|
|
|
$ |
743.1 |
|
Goodwill
|
|
|
$ |
425.1 |
|
|
|
|
|
|
|
|
|
|
$ |
448.8 |
|
The
effect of foreign exchange fluctuations for the three-month period ended August
31, 2008 reduced goodwill by $23.7 million resulting from the strengthening of
the U.S. dollar in relation to the British pound sterling.
Amortization expense, which is included
in selling and administrative expense, was $2.2 million and $2.7 million for the
three-month periods ended August 31, 2008 and 2007, respectively. The
estimated amortization expense for intangible assets subject to amortization for
each of the years ending May 31, 2009 through May 31, 2013 are as
follows: 2009: $8.1 million; 2010: $8.5 million; 2011: $8.1 million;
2012: $7.4 million; 2013: $5.6 million.
NOTE
4 - Accrued
Liabilities:
Accrued
liabilities include the following:
|
|
August 31, 2008
|
|
|
May 31, 2008
|
|
|
|
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
Compensation
and benefits, excluding taxes
|
|
$ |
353.5 |
|
|
$ |
538.0 |
|
Endorser
compensation
|
|
|
226.8 |
|
|
|
203.5 |
|
Taxes
other than income taxes
|
|
|
217.0 |
|
|
|
147.6 |
|
Advertising
and marketing
|
|
|
181.0 |
|
|
|
121.4 |
|
Dividends
payable
|
|
|
111.6 |
|
|
|
112.9 |
|
Fair
value of derivatives
|
|
|
84.7 |
|
|
|
173.3 |
|
Import
and logistics costs
|
|
|
80.7 |
|
|
|
78.8 |
|
Other1
|
|
|
384.5 |
|
|
|
386.4 |
|
|
|
|
|
|
|
|
Total
accrued liabilities
|
|
$ |
1,639.8 |
|
|
$ |
1,761.9 |
|
1 Other
consists of various accrued expenses and no individual item accounted for more
than 5% of the balance at August 31, 2008 and May 31, 2008.
NOTE
5 – Fair Value
Measurements:
Effective
June 1, 2008, the Company adopted SFAS No. 157, "Fair Value Measurements" ("FAS
157") for financial assets and liabilities. FAS 157 establishes a
hierarchy that prioritizes fair value measurements based on the types of inputs
used for the various valuation techniques (market approach, income approach, and
cost approach). FAS 157 is applied under existing accounting pronouncements that
require or permit fair value measurements and, accordingly, does not require any
new fair value measurements.
The
levels of hierarchy are described below:
-
|
Level 1: Observable inputs
such as quoted prices in active markets for identical assets or
liabilities.
|
-
|
Level 2: Inputs other than
quoted prices that are observable for the asset or liability, either
directly or indirectly; these include quoted prices for similar assets or
liabilities in active markets and quoted prices for identical or similar
assets or liabilities in markets that are not
active.
|
-
|
Level 3: Unobservable inputs
in which there is little or no market data available, which require the
reporting entity to develop its own
assumptions.
|
The
Company's assessment of the significance of a particular input to the fair value
measurement in its entirety requires judgment, and considers factors specific to
the asset or liability. Financial assets and liabilities are
classified in their entirety based on the most stringent level of input that is
significant to the fair value measurement.
The
following table presents information about the Company's financial assets and
liabilities measured at fair value on a recurring basis as of August 31, 2008
and indicates the fair value hierarchy of the valuation techniques utilized by
the Company to determine such fair value.
August
31, 2008
|
|
Fair
Value Measurements Using
|
|
|
|
Level 1
|
Level 2
|
Level
3
|
Assets/Liabilities
at
Fair Value
|
Balance
Sheet Classification
|
(in
millions)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
$ |
-- |
|
|
$ |
413.4 |
|
|
$ |
-- |
|
|
$ |
413.4 |
|
Other
current assets and other long-term assets
|
Available-for-sale
securities
|
|
|
91.7 |
|
|
|
427.4 |
|
|
|
-- |
|
|
|
519.1 |
|
Cash
equivalents
|
Available-for-sale
securities
|
|
|
248.8 |
|
|
|
687.3 |
|
|
|
-- |
|
|
|
936.1 |
|
Short-term
investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
340.5 |
|
|
$ |
1,528.1 |
|
|
$ |
-- |
|
|
$ |
1,868.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
$ |
-- |
|
|
$ |
86.6 |
|
|
$ |
-- |
|
|
$ |
86.6 |
|
Accrued
liabilities and other long-term liabilities
|
Total
|
|
$ |
-- |
|
|
$ |
86.6 |
|
|
$ |
-- |
|
|
$ |
86.6 |
|
|
Derivative
financial instruments include foreign currency forwards, option contracts and
interest rate swaps. The fair value of these derivatives contracts is
determined using observable market inputs such as the forward pricing curve,
currency volatilities, currency correlations, and interest rates, and considers
nonperformance risk of the Company and that of its counterparties. Adjustments
relating to these risks were not material for the period ending August 31,
2008.
Available-for-sale
securities are primarily comprised of investments in U.S. Treasury and agency
securities, corporate commercial paper and bonds. These securities
are valued using market prices on both active markets (level 1) and less active
markets (level 2). Level 1 instrument valuations are obtained from
real-time quotes for transactions in active exchange markets involving identical
assets. Level 2 instrument valuations are obtained from
readily-available pricing sources for comparable instruments.
The
Company had no material level three measurements for the quarter ending August
31, 2008.
NOTE
6 – Income
Taxes:
The
effective tax rate was 28.5% and 15% for the three months ended August 31, 2008
and August 31, 2007, respectively. The tax rate for the three month period ended
August 31, 2007 included the realization of a one-time tax
benefit. In the years prior to fiscal 2008, several of our
international entities generated losses for which we did not recognize
offsetting tax benefits because the realization of those benefits was uncertain.
The necessary steps to realize these benefits were taken in the first quarter of
fiscal 2008, resulting in a one-time tax benefit of $105.4 million.
As of
August 31, 2008, total gross unrecognized tax benefits, excluding related
interest and penalties were $296.7 million, $65.7 of which would affect the
Company’s effective tax rate if recognized in future periods. Total gross
unrecognized tax benefits, excluding interest and penalties, as of May 31, 2008
were $251.1 million, $60.6 million of which would affect the Company’s effective
tax rate if recognized in future periods. The liability for payment
of interest and penalties increased $13.1 million during the quarter ended
August 31, 2008. As of August 31, 2008, accrued interest and
penalties related to uncertain tax positions was $88.4 million (excluding
federal benefit).
The
Company is subject to taxation primarily in the U.S., China and the Netherlands
as well as various state and other foreign jurisdictions. The Company has
concluded substantially all U.S. federal income tax matters through fiscal year
2004. The Company is currently under audit by the Internal Revenue Service for
the 2005 and 2006 tax years. The Company’s major foreign jurisdictions, China
and the Netherlands, have concluded substantially all income tax matters through
calendar 1997 and fiscal 2002, respectively. It is reasonably possible that the
Internal Revenue Service audit for the 2005 and 2006 tax years will be completed
during the next twelve months, which could result in a decrease in our balance
of unrecognized tax benefits. An estimate of the range cannot be made
at this time; however, we do not anticipate that total gross unrecognized tax
benefits will change significantly as a result of full or partial settlement of
audits within the next 12 months.
NOTE
7 - Comprehensive
Income:
Comprehensive
income, net of taxes, is as follows:
|
|
Three Months Ended
August
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(in millions)
|
|
Net
income
|
|
$ |
510.5 |
|
|
$ |
569.7 |
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income:
|
|
|
|
|
|
|
|
|
Changes
in cumulative translation
adjustment
and other
|
|
|
(162.9 |
) |
|
|
25.8 |
|
Changes
due to cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
Net
gain (loss) on hedge derivatives
|
|
|
172.4 |
|
|
|
(13.2 |
) |
Reclassification
to net income of previously
deferred
losses related to hedge
derivative instruments
|
|
|
37.1 |
|
|
|
14.2 |
|
Changes
due to net investment hedges:
|
|
|
|
|
|
|
|
|
Net gain
in hedge derivatives
|
|
|
63.0 |
|
|
|
-- |
|
Other
comprehensive income
|
|
|
109.6 |
|
|
|
26.8 |
|
Total
comprehensive income
|
|
$ |
620.1 |
|
|
$ |
596.5 |
|
NOTE
8 - Stock-Based
Compensation:
A
committee of the Board of Directors grants stock options and restricted stock
under the NIKE, Inc. 1990 Stock Incentive Plan (the “1990 Plan”). The committee
has granted substantially all stock options at 100% of the market price on the
date of grant. Substantially all stock option grants outstanding under the 1990
Plan were granted in the first quarter of each fiscal year, vest ratably over
four years, and expire 10 years from the date of grant. In addition
to the 1990 Plan, the Company gives employees the right to purchase shares at a
discount to the market price under employee stock purchase plans (“ESPPs”).
The
Company accounts for stock-based compensation in accordance with SFAS No. 123R
“Share-Based Payment” (“FAS 123R”). Under FAS 123R, the Company
estimates the fair value of options granted under the 1990 Plan and employees’
purchase rights under the ESPPs using the Black-Scholes option pricing
model. The Company recognizes this fair value as selling and
administrative expense over the vesting period using the straight-line
method.
The
following table summarizes the Company’s total stock-based compensation
expense:
|
|
Three Months
Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
Stock
Options1
|
|
$ |
73.3 |
|
|
$ |
60.7 |
|
ESPPs
|
|
|
3.0 |
|
|
|
1.6 |
|
Restricted
Stock
|
|
|
1.9 |
|
|
|
1.5 |
|
Total
stock-based compensation expense
|
|
$ |
78.2 |
|
|
$ |
63.8
|
|
1 In
accordance with FAS 123R, expense related to stock options reported during the
three months ended August 31, 2008 and 2007, includes $55.3 and $38.5 million,
respectively, of accelerated stock option expense recorded for employees
eligible for accelerated stock option vesting upon retirement. Because the
Company usually grants the majority of stock options in a single grant in the
first three months of each fiscal year, under FAS 123R, accelerated vesting will
normally result in higher expense in the first three
months of
the fiscal year.
As of
August 31, 2008, the Company had $135.5 million of unrecognized compensation
costs from stock options, net of estimated forfeitures, to be recognized as
selling and administrative expense over a weighted average period of 2.7
years.
The
weighted average fair value per share of the options granted during the three
months ended August 31, 2008 and 2007 as computed using the Black-Scholes
pricing model was $17.11 and $13.87, respectively. The weighted
average assumptions used to estimate these fair values are as
follows:
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Dividend
yield
|
|
|
1.5 |
% |
|
|
1.4 |
% |
Expected
volatility
|
|
|
32.4 |
% |
|
|
20.4 |
% |
Weighted-average
expected life (in years)
|
|
|
5.0 |
|
|
|
5.0 |
|
Risk-free
interest rate
|
|
|
3.4 |
% |
|
|
4.9 |
% |
Expected volatility is estimated based
on the implied volatility in market traded options on the Company’s common stock
with a term greater than one year, along with other factors. The weighted
average expected life of options is based on an analysis of historical and
expected future exercise patterns. The interest rate is based on the
U.S. Treasury (constant maturity) risk-free rate in effect at the date of grant
for periods corresponding with the expected term of the
options.
NOTE
9 - Earnings Per
Common Share:
The
following represents a reconciliation from basic earnings per share to diluted
earnings per share. Options to purchase an additional 13.9 million
and 6.8 million shares of common stock were outstanding at August 31, 2008 and
2007, respectively, but were not included in the computation of diluted earnings
per share because the options were antidilutive.
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(in
millions, except per share data)
|
|
Determination
of shares:
|
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
|
487.2 |
|
|
|
499.4 |
|
Assumed
conversion of dilutive stock options and awards
|
|
|
7.7 |
|
|
|
7.9 |
|
Diluted
weighted average common shares outstanding
|
|
|
494.9 |
|
|
|
507.3 |
|
Basic
earnings per common share
|
|
$ |
1.05 |
|
|
$ |
1.14 |
|
Diluted
earnings per common share
|
|
$ |
1.03 |
|
|
$ |
1.12 |
|
NOTE
10 - Operating
Segments:
The
Company’s operating segments are evidence of the structure of the Company’s
internal organization. The major segments are defined by geographic regions for
operations participating in NIKE brand sales activity excluding NIKE Golf and
NIKE Bauer Hockey. Each NIKE brand geographic segment operates predominantly in
one industry: the design, production, marketing and selling of sports and
fitness footwear, apparel, and equipment. The “Other” category shown below
represents activities of Cole Haan, Converse Inc., Hurley International LLC,
NIKE Golf and Umbro Ltd. in the first quarter of fiscal 2009 and Cole Haan,
Converse Inc., Exeter Brands Group LLC (whose primary business was the Starter
brand business which was sold on December 17, 2007), Hurley International LLC,
NIKE Bauer Hockey (which was sold on April 17, 2008) and NIKE Golf in the first
quarter of fiscal 2008. Activities represented in the "Other" category are
considered immaterial for individual disclosure based on the aggregation
criteria in SFAS No. 131 “Disclosures about Segments of an Enterprise and
Related Information”.
Where
applicable, “Corporate” represents items necessary to reconcile to the
consolidated financial statements, which generally include corporate activity
and corporate eliminations.
Net
revenues, as shown below, represent sales to external customers for each
segment. Intercompany revenues have been eliminated and are
immaterial for separate disclosure. The Company evaluates performance
of individual operating segments based on pre-tax income. On a
consolidated basis, this amount represents income before income taxes as shown
in the Unaudited Condensed Consolidated Statements of
Income. Reconciling items for pre-tax income represent corporate
costs that are not allocated to the operating segments for management reporting
including corporate activity, stock-based compensation expense, certain currency
exchange rate gains and losses on transactions, and intercompany eliminations
for specific income statement items in the Unaudited Condensed Consolidated
Statements of Income.
Accounts
receivable, net, inventories, and property, plant and equipment, net for
operating segments are regularly reviewed and therefore provided
below.
Certain
prior year amounts have been re-classed to conform to fiscal 2009
presentation.
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(in millions)
|
|
Net
Revenue
|
|
|
|
|
|
|
U.S.
|
|
$ |
1,781.9 |
|
|
$ |
1,645.4 |
|
EUROPE,
MIDDLE EAST, AFRICA
|
|
|
1,778.7 |
|
|
|
1,481.2 |
|
ASIA
PACIFIC
|
|
|
860.6 |
|
|
|
633.7 |
|
AMERICAS
|
|
|
355.7 |
|
|
|
282.0 |
|
OTHER
|
|
|
655.3 |
|
|
|
612.8 |
|
|
|
$ |
5,432.2 |
|
|
$ |
4,655.1 |
|
|
|
|
|
|
|
|
|
|
Pre-tax
Income
|
|
|
|
|
|
|
|
|
U.S.
|
|
$ |
351.9 |
|
|
$ |
348.2 |
|
EUROPE,
MIDDLE EAST, AFRICA
|
|
|
442.4 |
|
|
|
379.2 |
|
ASIA
PACIFIC
|
|
|
185.5 |
|
|
|
160.9 |
|
AMERICAS
|
|
|
69.1 |
|
|
|
58.8 |
|
OTHER
|
|
|
86.3 |
|
|
|
95.2 |
|
CORPORATE
|
|
|
(421.0 |
) |
|
|
(372.0 |
) |
|
|
$ |
714.2 |
|
|
$ |
670.3 |
|
|
|
August 31,
2008
|
|
|
May 31,
2008
|
|
|
|
(in millions)
|
|
Accounts
receivable, net
|
|
|
|
|
|
|
U.S.
|
|
$ |
850.8 |
|
|
$ |
823.9 |
|
EUROPE,
MIDDLE EAST, AFRICA
|
|
|
1,025.3 |
|
|
|
843.0 |
|
ASIA
PACIFIC
|
|
|
450.7 |
|
|
|
406.1 |
|
AMERICAS
|
|
|
274.9 |
|
|
|
246.0 |
|
OTHER
|
|
|
378.7 |
|
|
|
424.0 |
|
CORPORATE
|
|
|
55.0 |
|
|
|
52.3 |
|
|
|
$ |
3,035.4 |
|
|
$ |
2,795.3 |
|
Inventories
|
|
|
|
|
|
|
|
|
U.S.
|
|
$ |
830.4 |
|
|
$ |
834.0 |
|
EUROPE,
MIDDLE EAST, AFRICA
|
|
|
665.0 |
|
|
|
705.7 |
|
ASIA
PACIFIC
|
|
|
299.1 |
|
|
|
280.9 |
|
AMERICAS
|
|
|
221.3 |
|
|
|
181.1 |
|
OTHER
|
|
|
406.7 |
|
|
|
396.6 |
|
CORPORATE
|
|
|
31.4 |
|
|
|
40.1 |
|
|
|
$ |
2,453.9 |
|
|
$ |
2,438.4 |
|
Property,
plant and equipment, net
|
|
|
|
|
|
|
|
|
U.S.
|
|
$ |
328.6 |
|
|
$ |
318.4 |
|
EUROPE,
MIDDLE EAST, AFRICA
|
|
|
353.4 |
|
|
|
370.5 |
|
ASIA
PACIFIC
|
|
|
361.3 |
|
|
|
375.6 |
|
AMERICAS
|
|
|
19.6 |
|
|
|
20.4 |
|
OTHER
|
|
|
130.9 |
|
|
|
126.9 |
|
CORPORATE
|
|
|
681.0 |
|
|
|
679.3 |
|
|
|
$ |
1,874.8 |
|
|
$ |
1,891.1 |
|
NOTE
11 - Commitments and
Contingencies:
At August
31, 2008, the Company had letters of credit outstanding totaling $182.6
million. These letters of credit were issued primarily for the
purchase of inventory.
There
have been no other significant subsequent developments relating to the
commitments and contingencies reported on the Company’s latest Annual Report on
Form 10-K.
NOTE
12 — Acquisition and
Divestitures:
Acquisition:
On March
3, 2008 the Company completed its acquisition of 100% of the outstanding shares
of Umbro, a leading United Kingdom-based global soccer brand, for a purchase
price of 290.5 million British pounds sterling in cash (approximately $576.4
million), inclusive of direct transaction costs. The acquisition of Umbro was
accounted for as a purchase business combination in accordance with SFAS No. 141
“Business Combinations.” The purchase price was allocated to tangible
and identifiable intangible assets acquired and liabilities assumed based on
their respective estimated fair values on the date of acquisition, with the
remaining purchase price recorded as goodwill. The valuation of these tangible
and identifiable intangible assets and liabilities may be adjusted in future
periods, subject to the availability of additional information during the
allocation period regarding a pre-acquisition legal contingency.
Divestitures:
On
December 17, 2007, the Company completed the sale of the Starter brand business
to Iconix Brand Group, Inc. for $60.0 million in cash. This
transaction resulted in a gain of $28.6 million during the year ended May 31,
2008.
On April
17, 2008, the Company completed the sale of NIKE Bauer Hockey Corp. for $189.2
million in cash to a group of private investors (“the Buyer”). The
sale resulted in a net gain of $32.0 million recorded during the year ended May
31, 2008. This gain included the recognition of a $46.3 million
cumulative foreign currency translation adjustment previously included in
accumulated other comprehensive income. As part of the terms of the sale
agreement, the Company granted the Buyer a royalty free limited license for the
use of certain NIKE trademarks for a transitional period of approximately two
years. The Company deferred $41.0 million of the sale proceeds related to this
license agreement, to be recognized over the license period.
Item
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
In the
first quarter of fiscal 2009, our revenues grew 17% to $5.4 billion, net income
decreased 10% to $510.5 million and we delivered diluted earnings per share of
$1.03, an 8% decrease compared to the first quarter of fiscal 2008.
Net
income and diluted earnings per share for the first quarter of fiscal 2009 as
compared to the same period in the prior year was negatively affected by a
year-over-year increase in our effective tax rate from 15.0% to 28.5%. The prior
year rate reflected a $105.4 million one-time tax benefit associated with past
foreign losses.
Income
before income taxes grew 7% for the first quarter, driven by revenue growth and
a 2.4 percentage point improvement in gross margins, partially offset by an
increase in selling and administrative expenses driven by investments in
marketing around the Beijing Olympics and the European Football Championship,
athlete and team endorsements, company owned retail and rapidly growing emerging
market and non-Nike branded businesses. Increases in the value of
stock based compensation and normal wage inflation also contributed to the
increase.
Results
of Operations
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
%
change
|
|
(dollars in millions, except per share data)
|
|
Revenues
|
|
$ |
5,432.2 |
|
|
$ |
4,655.1 |
|
|
|
17 |
% |
Cost
of sales
|
|
|
2,870.1 |
|
|
|
2,568.1 |
|
|
|
12 |
% |
Gross
margin
|
|
|
2,562.1 |
|
|
|
2,087.0 |
|
|
|
23 |
% |
Gross
margin %
|
|
|
47.2 |
% |
|
|
44.8 |
% |
|
|
|
|
Selling
and administrative
|
|
|
1,856.4 |
|
|
|
1,434.7 |
|
|
|
29 |
% |
%
of revenue
|
|
|
34.2 |
% |
|
|
30.8 |
% |
|
|
|
|
Income
before income taxes
|
|
|
714.2 |
|
|
|
670.3 |
|
|
|
7 |
% |
Net
income
|
|
|
510.5 |
|
|
|
569.7 |
|
|
|
(10 |
)% |
Diluted
earnings per share
|
|
$ |
1.03 |
|
|
$ |
1.12 |
|
|
|
(8 |
)% |
Consolidated
Operating Results
Revenues
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
%
change
|
|
(dollars in millions)
|
|
Revenues
|
|
$ |
5,432.2 |
|
|
$ |
4,655.1 |
|
|
|
17 |
% |
During the first quarter of fiscal
2009, changes in foreign currency exchange rates contributed 7 percentage points
of consolidated revenue growth. All three of our product groups, all four of our
geographic regions, and our businesses reported in “Other” delivered revenue
growth. Excluding the effects of changes in currency exchange rates, our
international regions contributed over 6 percentage points and the U.S. Region
contributed nearly 3 percentage points of the consolidated revenue growth for
the quarter. Our Other businesses were comprised primarily of results from Cole
Haan, Converse Inc., Hurley International LLC, NIKE Golf and Umbro Ltd. in the
first quarter of fiscal 2009 and Cole Haan, Converse Inc., Exeter Brands Group
LLC (whose primary business was the Starter brand business which was sold on
December 17, 2007), Hurley International LLC, Nike Bauer Hockey Corp. (which was
sold on April 17, 2008) and NIKE Golf in the first quarter of fiscal 2008. These
businesses contributed the balance of the revenue growth.
By product group, our worldwide
footwear business reported revenue growth of 19% and contributed $460 million of
incremental revenue for the first quarter of fiscal 2009. Our
worldwide apparel and equipment businesses grew 18% and 14%, respectively,
during the first quarter of fiscal 2009, and combined added $275 million of
incremental revenue.
Gross
Margin
|
|
Three Months Ended
August
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
%
change
|
|
(dollars in millions)
|
|
Gross
margin
|
|
$ |
2,562.1 |
|
|
$ |
2,087.0 |
|
|
|
23 |
% |
Gross
margin %
|
|
|
47.2 |
% |
|
|
44.8 |
% |
|
240 bps
|
|
For the
first quarter of fiscal 2009, the primary factors contributing to the increase
in gross margins versus the prior year period were an improved sales mix of
higher margin footwear products, most notably in the U.S. and the Europe, Middle
East and Africa ("EMEA") regions, improved year-on-year hedge rates, sourcing
cost initiatives and higher gross margins in our other
businesses. These factors were partially offset by higher input costs
due primarily to cost inflation in Asia, and lower apparel gross margins in the
U.S. region due to higher mix of close-out product sales.
Selling
and Administrative Expense
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
%
change
|
|
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
overhead expense
|
|
$ |
1,042.3 |
|
|
$ |
881.6 |
|
|
|
18 |
% |
Demand
creation expense1
|
|
|
814.1 |
|
|
|
553.1 |
|
|
|
47 |
% |
Selling
and administrative expense
|
|
$ |
1,856.4 |
|
|
$ |
1,434.7 |
|
|
|
29 |
% |
%
of revenues
|
|
|
34.2 |
% |
|
|
30.8 |
% |
|
340
bps
|
|
1 Demand
creation consists of advertising and promotion expenses, including costs of
endorsement contracts.
In the
first quarter of fiscal 2009, currency exchange rates increased selling and
administrative expense by 5 percentage points versus the prior year’s first
quarter.
Excluding changes in exchange rates,
operating overhead increased 14% during the first quarter of fiscal 2009 versus
the comparable prior year period. This increase was primarily attributable to
investments in growth drivers such as NIKE-owned retail, infrastructure for
emerging markets and non-NIKE brand businesses, and on the ground costs to
support the Beijing Olympics and European Football Championship
marketing. Increases in the value of stock based compensation and
normal wage inflation also contributed to the growth.
On a
constant-currency basis, demand creation expense increased 39% during the first
quarter of fiscal 2009 compared to the same period in the prior year. The
increase was primarily attributable to strategic investments in demand creation,
including spending around the 2008 Olympics in Beijing, the European Football
Championships and increased investments in athlete and team
endorsements.
For the
year, we believe selling and administrative expenses will grow at a faster rate
than revenue growth as we continue to invest in demand creation to drive growth
in our core product lines.
Other Expense,
net
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
%
change
|
|
(dollars
in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense, net
|
|
$ |
(1.6 |
) |
|
$ |
(6.6 |
) |
|
|
76 |
% |
Other
expense, net is comprised primarily of gains and losses associated with the
conversion of non-functional currency receivables and payables, the
re-measurement of foreign currency derivative instruments, disposals of fixed
assets, as well as other unusual or non-recurring transactions that are outside
the normal course of business. For both the first quarter of fiscal 2009 and
fiscal 2008, Other expense, net was primarily comprised of foreign currency
hedge losses.
Foreign
currency hedge gains and losses reported in Other expense, net are reflected in
the Corporate line in our segment presentation of pre-tax income in the Notes to Unaudited Condensed
Consolidated Financial Statements (Note 10 — Operating
Segments).
In the
first quarter of fiscal 2009, we estimate that the combination of foreign
currency hedge losses in Other expense, net and the favorable translation of
foreign currency-denominated profits from our international businesses resulted
in a year-over-year increase in consolidated income before income taxes of
approximately $71 million.
Income
Taxes
|
|
Three Months Ended
August 31,
|
|
|
2008
|
|
|
2007
|
|
change
|
|
|
|
|
|
|
|
|
Effective
tax rate
|
|
|
28.5 |
% |
|
|
15.0 |
% |
1,350 bps
|
Our effective tax rate for the first
quarter of fiscal 2009 was 13.5 percentage points higher than the prior year
period, due primarily to a one-time tax benefit realized in the first quarter of
fiscal 2008. In the years prior to fiscal 2008, several of our
international entities generated losses for which we did not recognize the
corresponding tax benefits, as the realization of those benefits was uncertain.
In the first quarter of fiscal 2008, we took the steps necessary to realize
these benefits, resulting in a one-time tax benefit of $105.4
million. We estimate that our ongoing effective tax rate for the
remainder of fiscal year 2009 will be at or below 28.5%.
Futures
Orders
Worldwide futures and advance orders
for our footwear and apparel, scheduled for delivery from September 2008 through
January 2009, were 10% higher than such orders reported for the comparable
period of fiscal 2008. This futures growth rate is calculated based
upon our forecasts of the actual exchange rates under which our revenues will be
translated during this period, which approximate current spot
rates. The net effect of changes in foreign currency exchange rates
contributed approximately 1 percentage point to futures growth versus the same
period in the prior year. Excluding this currency impact, unit sales volume
increases for both footwear and apparel drove the growth in overall futures and
advance orders. The reported futures and advance orders growth is not
necessarily indicative of our expectation of revenue growth during this period.
This is due to year-over-year changes in shipment timing, and because the mix of
orders can shift between advance/futures and at-once orders. In addition,
exchange rate fluctuations as well as differing levels of order cancellations
and discounts can cause differences in the comparisons between advance/futures
orders and actual revenues. Moreover, a significant portion of our revenue is
not derived from futures and advance orders, including at-once and closeout
sales of NIKE footwear and apparel, wholesale sales of equipment, Cole Haan,
Converse, Hurley, Umbro, NIKE Golf and retail sales across all
brands.
Operating
Segments
The
breakdown of revenues is as follows:
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
%
change
|
|
(dollars in millions)
|
|
U.S.
REGION
|
|
|
|
|
|
|
|
|
|
FOOTWEAR
|
|
$ |
1,219.8 |
|
|
$ |
1,119.9 |
|
|
|
9 |
% |
APPAREL
|
|
|
464.4 |
|
|
|
428.0 |
|
|
|
9 |
% |
EQUIPMENT
|
|
|
97.7 |
|
|
|
97.5 |
|
|
|
0 |
% |
TOTAL
U.S.
|
|
|
1,781.9 |
|
|
|
1,645.4 |
|
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
REGION
|
|
|
|
|
|
|
|
|
|
|
|
|
FOOTWEAR
|
|
|
982.4 |
|
|
|
791.9 |
|
|
|
24 |
% |
APPAREL
|
|
|
649.7 |
|
|
|
567.0 |
|
|
|
15 |
% |
EQUIPMENT
|
|
|
146.6 |
|
|
|
122.3 |
|
|
|
20 |
% |
TOTAL
EMEA
|
|
|
1,778.7 |
|
|
|
1,481.2 |
|
|
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
ASIA PACIFIC
REGION
|
|
|
|
|
|
|
|
|
|
|
|
|
FOOTWEAR
|
|
|
454.0 |
|
|
|
332.1 |
|
|
|
37 |
% |
APPAREL
|
|
|
332.7 |
|
|
|
240.5 |
|
|
|
38 |
% |
EQUIPMENT
|
|
|
73.9 |
|
|
|
61.1 |
|
|
|
21 |
% |
TOTAL
ASIA PACIFIC
|
|
|
860.6 |
|
|
|
633.7 |
|
|
|
36 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERICAS
REGION
|
|
|
|
|
|
|
|
|
|
|
|
|
FOOTWEAR
|
|
|
245.8 |
|
|
|
198.4 |
|
|
|
24 |
% |
APPAREL
|
|
|
79.4 |
|
|
|
58.3 |
|
|
|
36 |
% |
EQUIPMENT
|
|
|
30.5 |
|
|
|
25.3 |
|
|
|
21 |
% |
TOTAL
AMERICAS
|
|
|
355.7 |
|
|
|
282.0 |
|
|
|
26 |
% |
|
|
|
|
|
|
|
|
|
|
|
TOTAL
NIKE BRAND REVENUES
|
|
|
4,776.9 |
|
|
|
4,042.3 |
|
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
|
|
|
655.3 |
|
|
|
612.8 |
|
|
|
7 |
% |
TOTAL
NIKE, INC. REVENUES
|
|
$ |
5,432.2 |
|
|
$ |
4,655.1 |
|
|
|
17 |
% |
The
breakdown of income before income taxes (“pre-tax income”) is as
follows:
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
%
change
|
|
(dollars
in millions)
|
|
U.S.
Region
|
|
$ |
351.9 |
|
|
$ |
348.2 |
|
|
|
1 |
% |
EMEA
Region
|
|
|
442.4 |
|
|
|
379.2 |
|
|
|
17 |
% |
Asia
Pacific Region
|
|
|
185.5 |
|
|
|
160.9 |
|
|
|
15 |
% |
Americas
Region
|
|
|
69.1 |
|
|
|
58.8 |
|
|
|
18 |
% |
Other
|
|
|
86.3 |
|
|
|
95.2 |
|
|
|
(9 |
)% |
Corporate
|
|
|
(421.0 |
) |
|
|
(372.0 |
) |
|
|
(13 |
)% |
|
|
|
|
|
|
|
|
|
|
|
Total
pre-tax income
|
|
$ |
714.2 |
|
|
$ |
670.3 |
|
|
|
7 |
% |
The
following discussion includes disclosure of pre-tax income for our operating
segments. We have reported pre-tax income for each of our operating segments in
accordance with Statement of Financial Accounting Standards (“SFAS”) No. 131,
“Disclosures about Segments of an Enterprise and Related Information.” As
discussed in Note 10 —
Operating Segments in the accompanying Notes to Unaudited Condensed
Consolidated Financial Statements, certain corporate costs are not
included in pre-tax income of our operating segments.
U.S. Region
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
%
change
|
|
(dollars
in millions)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Footwear
|
|
$ |
1,219.8 |
|
|
$ |
1,119.9 |
|
|
|
9 |
% |
Apparel
|
|
|
464.4 |
|
|
|
428.0 |
|
|
|
9 |
% |
Equipment
|
|
|
97.7 |
|
|
|
97.5 |
|
|
|
0 |
% |
Total
revenues
|
|
$ |
1,781.9 |
|
|
$ |
1,645.4 |
|
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
income
|
|
$ |
351.9 |
|
|
$ |
348.2 |
|
|
|
1 |
% |
For the
first quarter of fiscal 2009, the increase in U.S. footwear revenue was
attributable to low-single digit percentage growth in unit sales and average
selling price per pair. The growth in unit sales versus the comparable prior
year period was driven by higher demand for our Brand Jordan and NIKE brand
sportswear products. The increase in average selling price per pair compared to
the prior year quarter was attributable to strategic price increases, increased
sales mix of higher priced NIKE brand sportswear, running and Brand Jordan
products, and improved pricing on close-out products.
The
year-over-year increase in U.S. apparel revenues during the first quarter of
fiscal 2009 reflected an increase in unit sales, partially offset by lower
average selling prices. The increase in unit sales was driven by an
increase in demand for our NIKE brand running and basketball performance
products as well as higher close-out sales. Average selling prices
decreased primarily as a result of a higher mix of close-out sales.
Pre-tax
income for the U.S. Region grew at a slower rate than revenue in the first
quarter of fiscal 2009 as result of higher demand creation and operating
overhead expenses, partially offset by higher footwear gross
margins. The increase in demand creation was driven by brand events,
investments in retail presentation at our key wholesale customers and higher
sports marketing expenses. The increase in operating overhead was
primarily attributable to investments in NIKE-owned retail, normal wage
inflation and performance based compensation.
EMEA Region
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
%
change
|
|
(dollars
in millions)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Footwear
|
|
$ |
982.4 |
|
|
$ |
791.9 |
|
|
|
24 |
% |
Apparel
|
|
|
649.7 |
|
|
|
567.0 |
|
|
|
15 |
% |
Equipment
|
|
|
146.6 |
|
|
|
122.3 |
|
|
|
20 |
% |
Total
revenues
|
|
$ |
1,778.7 |
|
|
$ |
1,481.2 |
|
|
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
income
|
|
$ |
442.4 |
|
|
$ |
379.2 |
|
|
|
17 |
% |
For the
EMEA Region, changes in currency exchange rates contributed 15 percentage points
of the revenue growth during the first quarter of fiscal 2009. Excluding changes
in currency exchange rates, most markets within the region increased revenues
during the quarter. The U.K. grew 5% and the emerging markets in the
region grew 39%, driven by strong results in Russia and Turkey, more than
offsetting softer results in Italy, France and Spain.
Excluding
changes in exchange rates, footwear revenues increased 8% during the first
quarter of fiscal 2009 compared to the same period in the prior year. The
increase in footwear revenue was attributable to double-digit percentage growth
in unit sales, partially offset by a slight decrease in average selling price
per pair. The increase in unit sales was primarily driven by higher
demand for our NIKE brand sportswear and kids products. The slight decrease in
average selling price per pair resulted from a shift in product mix from higher
priced to lower priced models, most notably within kids and NIKE brand
sportswear products.
Excluding
changes in exchange rates, apparel revenue for the first quarter of fiscal 2009
was flat versus the prior year quarter.
In the
first quarter of fiscal 2009, pre-tax income for EMEA grew at a slower rate than
revenue as result of higher selling and administrative expenses, partially
offset by higher footwear gross margins. The increase in
selling and administrative expenses was primarily attributable to spending
around the European Football Championship and the Beijing Olympics, as well as
investments in NIKE-owned retail and normal wage inflation. The increase in
footwear gross margins was primarily attributable to price increase initiatives
and year-over-year improvement in hedge rates.
Asia Pacific Region
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
%
change
|
|
(dollars
in millions)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Footwear
|
|
$ |
454.0 |
|
|
$ |
332.1 |
|
|
|
37 |
% |
Apparel
|
|
|
332.7 |
|
|
|
240.5 |
|
|
|
38 |
% |
Equipment
|
|
|
73.9 |
|
|
|
61.1 |
|
|
|
21 |
% |
Total
revenues
|
|
$ |
860.6 |
|
|
$ |
633.7 |
|
|
|
36 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
income
|
|
$ |
185.5 |
|
|
$ |
160.9 |
|
|
|
15 |
% |
In the
Asia Pacific Region, changes in currency exchange rates contributed 10
percentage points of revenue growth for the first quarter of fiscal 2009. While
all countries within the region reported revenue growth on a currency-neutral
basis versus the prior year’s first quarter, China continues to be the primary
driver of growth, as revenues increased 53% on a currency-neutral basis. The
revenue growth in China was primarily due to expansion in both the number of
stores selling NIKE products and sales through existing retail
stores. On a currency neutral basis, revenue in Japan was up 2%
versus the first quarter of fiscal 2008.
Footwear
and apparel revenue growth for the first quarter of fiscal 2009 were driven
largely by increased unit sales, most notably in China.
The
increase in Asia Pacific pre-tax income during the first quarter of fiscal 2009
was the result of revenue growth, expanding gross margins and favorable foreign
currency translation, which more than offset higher selling and administrative
expenses. The gross margin improvement for the quarter was primarily driven by
favorable hedge results and reduced warehousing costs. The increase in selling
and administrative expenses was primarily attributable to spending around the
Beijing Olympics, retail expansion, normal wage inflation and performance based
compensation.
Americas Region
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
%
change
|
|
(dollars
in millions)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Footwear
|
|
$ |
245.8 |
|
|
$ |
198.4 |
|
|
|
24 |
% |
Apparel
|
|
|
79.4 |
|
|
|
58.3 |
|
|
|
36 |
% |
Equipment
|
|
|
30.5 |
|
|
|
25.3 |
|
|
|
21 |
% |
Total
revenues
|
|
$ |
355.7 |
|
|
$ |
282.0 |
|
|
|
26 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
income
|
|
$ |
69.1 |
|
|
$ |
58.8 |
|
|
|
18 |
% |
In the
Americas Region, changes in currency exchange rates contributed 7 percentage
points of revenue growth for the first quarter of fiscal
2009. Excluding the changes in foreign currency exchange rates, all
markets in the region reported revenue growth, led by Argentina, Brazil and
Mexico.
The
increase in pre-tax income versus the first quarter of fiscal 2008 was primarily
the result of higher revenues and operating overhead leverage combined with
favorable foreign currency translation. These factors were partially
offset by higher demand creation spending primarily attributable to spending
around brand events.
Other Businesses
|
|
Three Months Ended
August 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
%
change
|
|
(dollars in millions)
|
|
Revenues
|
|
$ |
655.3 |
|
|
$ |
612.8 |
|
|
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
income
|
|
$ |
86.3 |
|
|
$ |
95.2 |
|
|
|
(9 |
)% |
In the
first quarter of 2009, our Other businesses included Cole Haan, Converse,
Hurley, NIKE Golf and Umbro (which was acquired on March 3, 2008). In the first
quarter of fiscal 2008, our Other businesses were comprised of Cole Haan,
Converse, Exeter (whose primary business was the Starter brand business which
was sold on December 17, 2007), Hurley, NIKE Bauer Hockey Corp. (which was sold
on April 17, 2008) and NIKE Golf.
The
year-over-year increase in Other business revenues for the first quarter of
fiscal 2009 was driven primarily by revenue growth at Converse, Cole Haan and
Hurley, which increased revenues 32%, 12% and 38%, respectively, and the
addition of Umbro. These factors more than offset the year-over-year
loss of revenue from NIKE Bauer Hockey and the Starter brand
business.
The
reduction in Other business pre-tax income for the first quarter of fiscal 2009
versus the comparable prior year period was primarily due to the loss of profits
from NIKE Bauer Hockey.
Liquidity
and Capital Resources
Cash
Flow Activity
Cash provided by operations was
$357.6 million for the first quarter of fiscal 2009, compared to $319.5 million
for the first quarter of fiscal 2008. Our primary source of operating cash flow
for the first quarter of 2009 was net income of $510.5 million offset by
investments in working capital to support the growth in the
business. Our investments in working capital increased during the
first quarter of fiscal 2009 as compared to the same period in the prior year
primarily due to an increase in accounts receivable as a result of higher sales
revenue in the first quarter of fiscal 2009 and an increase in inventory
receipts to support the continued growth of the business.
Cash used
by investing activities was $428.1 million for the first quarter of fiscal 2009,
compared to cash provided by investing activities of $88.7 million for the first
quarter of fiscal 2008. The year-over-year decrease was primarily due
to a net purchase of short-term investments of $321.9 million (purchases net of
sales and maturities) in the first quarter of fiscal 2009, compared to net sales
and maturities of $181.5 million in short-term investments during the first
quarter of fiscal 2008. The net increase in short-term investments was the
result of a strategic shift to instruments with higher returns than
cash.
Cash used
in financing activities was $433.9 million for the first quarter of fiscal 2009,
compared to $287.6 million used in the first quarter of fiscal
2008. The increase over the fiscal 2009 amount was primarily due to
increased share repurchases, as discussed below, and higher dividends
paid.
In the
first quarter of fiscal 2009, we purchased 7.1 million shares of NIKE’s Class B
common stock for $429.8 million. As of the end of the first quarter of fiscal
2009, we have now repurchased 45.7 million shares for $2.5 billion under the $3
billion program approved by our Board of Directors in
June
2006. In September 2008, our Board of Directors approved a new $5 billion share
repurchase program. The new program will commence upon completion of
our current $3 billion share repurchase program. We expect to fund share
repurchases from operating cash flow, excess cash, and/or debt. The timing and
the amount of shares purchased will be dictated by our capital needs and stock
market conditions.
Dividends
declared per share of common stock for the first quarter of fiscal 2009 were
$0.23, compared to $0.185 in the first quarter of fiscal 2008.
Contractual
Obligations
There
have been no significant changes to the contractual obligations reported in our
Annual Report on Form 10-K as of May 31, 2008 except as follows:
The total
long-term liability for uncertain tax positions was $296.7 million, excluding
related interest and penalties, at August 31, 2008. We are not able to
reasonably estimate when or if cash payments of the long-term liability for
uncertain tax positions will occur.
Capital
Resources
We have a
shelf registration statement with the Securities and Exchange Commission for
$1.0 billion. We have a medium-term note program under this shelf
registration statement that allows us to issue $500.0 million in medium-term
notes as our capital needs dictate. Since commencement of the program
we have issued $240.0 million in medium-term notes. As of August 31, 2008,
$215.0 million in medium-term notes remain outstanding.
We also
have a committed $1.0 billion revolving credit facility in place with a group of
banks that is scheduled to mature in December 2012. As of August 31,
2008, no amounts were outstanding under this facility.
Our
long-term senior unsecured debt ratings remain at A+ and A1 from Standard and
Poor's Corporation and Moody's Investor Services, respectively.
Liquidity
is also provided by our $1.0 billion commercial paper program. As of
August 31, 2008, $100.0 million was outstanding under our commercial paper
program at an interest rate of 2.15%. This borrowing was subsequently
repaid in September 2008. No amount was outstanding under the program
at May 31, 2008.
We
currently have short-term debt ratings of A1 and P1 from Standard and Poor's
Corporation and Moody's Investor Services, respectively.
The credit markets, including the commercial paper markets in the United States,
have recently experienced adverse conditions. Continuing volatility in the
capital markets may increase costs associated with issuing commercial paper or
other debt instruments due to increased spreads over relevant interest rate
benchmarks or affect our ability to access those markets. Notwithstanding these
adverse market conditions, we currently believe that current cash and short-term
investment balances and cash generated by operations, together with access to
external sources of funds as described above and in our Annual Report on Form
10-K for the fiscal year ended May 31, 2008, will be sufficient to meet our
operating and capital needs in the foreseeable future.
Recently
Adopted Accounting Standards:
On June
1, 2008, the Company adopted SFAS No. 157, "Fair Value Measurements" ("FAS 157")
for financial assets and liabilities, which clarifies the meaning of fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Fair value is defined under FAS 157 as the
exchange price that would be received for an asset or paid to transfer a
liability in the principal or most advantageous market for the assets or
liability in an orderly transaction between market participants on the
measurement date. Subsequent changes in fair value of these financial
assets and liabilities are recognized in earnings or other comprehensive income
when they occur. The effective date of the provisions of FAS 157 for
non-financial assets and liabilities, except for items recognized at fair value
on a recurring basis, was deferred by FASB Staff Position FAS 157-2 (FSP FAS
157-2) and are effective for the fiscal year beginning June 1,
2009. The Company is currently evaluating the impact of the
provisions for non-financial assets and liabilities. The adoption of
FAS 157 for financial assets and liabilities did not have an impact on the
Company's consolidated financial position or results of
operations. See Note 5 in the accompanying Notes to Unaudited
Condensed Consolidated Financial Statements for further discussion.
Also
effective June 1, 2008, the Company adopted SFAS No. 159 "The Fair Value Option
for Financial Assets and Financial Liabilities" ("FAS 159") which allows an
entity the irrevocable option to elect fair value for the initial and subsequent
measurement for certain financial assets and liabilities on a
contract-by-contract basis. As of August 31, 2008, the company has
not elected the fair value option for any additional financial assets and
liabilities beyond those already prescribed by accounting principles generally
accepted in the United States.
Recently
Issued Accounting Standards:
In
December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations" ("FAS 141(R)") and SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements" ("FAS 160"). These standards aim to improve,
simplify, and converge internationally the accounting for business combinations
and the reporting of noncontrolling interests in consolidated financial
statements. The provisions of FAS 141(R) and FAS 160 are effective
for the fiscal year beginning June 1, 2009. The Company is currently
evaluating the impact of the provisions of FAS 141(R) and FAS 160.
In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
and Hedging Activities” (“FAS 161”). FAS 161 is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on and entity's financial position, financial performance, and cash
flows. The provisions of FAS 161 are effective for the quarter ending February
28, 2009. The Company does not expect that the adoption will have a
material impact on the Company’s consolidated financial position or results of
operations.
Critical
Accounting Policies
Our
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities.
We
believe that the estimates, assumptions and judgments involved in the accounting
policies described in the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” section of our most recent Annual Report on
Form 10-K have the greatest potential impact on our financial statements, so we
consider these to be our critical accounting policies. Actual results could
differ from the estimates we use in applying our critical accounting policies.
We are not currently aware of any reasonably likely events or circumstances that
would result in materially different amounts being reported.
Item
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
There
have been no material changes from the information previously reported under
Item 7A of our Annual Report on Form 10-K for the fiscal year ended May 31,
2008.
Item
4. CONTROLS AND PROCEDURES
We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms and that such information
is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow for timely
decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
is required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
We carry
out a variety of on-going procedures under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief
Financial Officer, to evaluate the effectiveness of the design and operation of
our disclosure controls and procedures. Based on the foregoing, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective at the reasonable assurance level as of
August 31, 2008.
There has
been no change in our internal control over financial reporting during our most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
Special
Note Regarding Forward-Looking Statements
and
Analyst Reports
Certain
written and oral statements, other than purely historical information including
estimates, projections, statements relating to NIKE’s business plans, objectives
and expected operating results, and the assumptions upon which those statements
are based, made or incorporated by reference from time to time by NIKE or its
representatives in this report, other reports, filings with the Securities and
Exchange Commission, press releases, conferences, or otherwise, are
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of
1934, as amended. Forward-looking statements include, without limitation, any
statement that may predict, forecast, indicate, or imply future results,
performance, or achievements, and may contain the words “believe,” “anticipate,”
“expect,” “estimate,” “project,” “will be,” “will continue,” “will likely
result,” or words or phrases of similar meaning. Forward-looking statements
involve risks and uncertainties which may cause actual results to differ
materially from the forward-looking statements. The risks and uncertainties are
detailed from time to time in reports filed by NIKE with the Securities and
Exchange Commission, including Forms 8-K, 10-Q, and 10-K, and include, among
others, the following: international, national and local general economic and
market conditions; the size and growth of the overall athletic footwear,
apparel, and equipment markets; intense competition among designers, marketers,
distributors and sellers of athletic footwear, apparel, and equipment for
consumers and endorsers; demographic changes; changes in consumer preferences;
popularity of particular designs, categories of products, and sports; seasonal
and geographic demand for NIKE products; difficulties in anticipating or
forecasting changes in consumer preferences, consumer demand for NIKE products,
and the various market factors described above; difficulties in implementing,
operating, and maintaining NIKE’s increasingly complex information systems and
controls, including, without limitation, the systems related to demand and
supply planning, and inventory control; fluctuations and difficulty in
forecasting operating results, including, without limitation, the fact that
advance “futures” orders may not be indicative of future revenues due to changes
in shipment timing, and the changing mix of futures and at-once orders; the
ability of NIKE to sustain, manage or forecast its growth and inventories; the
size, timing and mix of purchases of NIKE’s products; new product development
and introduction; the ability to secure and protect trademarks, patents, and
other intellectual property performance and reliability of products; customer
service; adverse publicity; the loss of significant customers or suppliers;
dependence on distributors; business disruptions; increased costs of freight and
transportation to meet delivery deadlines; changes in business strategy or
development plans; general risks associated with doing business outside the
United States, including, without limitation, exchange rate fluctuations, import
duties, tariffs, quotas and political and economic instability; changes in
government regulations; liability and other claims asserted against NIKE; the
ability to attract and retain qualified personnel; and other factors referenced
or incorporated by reference in this report and other reports.
The risks
included here are not exhaustive. Other sections of this report may include
additional factors which could adversely affect NIKE’s business and financial
performance. Moreover, NIKE operates in a very competitive and rapidly changing
environment. New risk factors emerge from time to time and it is not possible
for management to predict all such risk factors, nor can it assess the impact of
all such risk factors on NIKE’s business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements. Given these risks and
uncertainties, investors should not place undue reliance on forward-looking
statements as a prediction of actual results.
Investors
should also be aware that while NIKE does, from time to time, communicate with
securities analysts, it is against NIKE’s policy to disclose to them any
material non-public information or other confidential commercial information.
Accordingly, shareholders should not assume that NIKE agrees with any statement
or report issued by any analyst irrespective of the content of the statement or
report. Furthermore, NIKE has a policy against issuing or confirming financial
forecasts or projections issued by others. Thus, to the extent that reports
issued by securities analysts contain any projections, forecasts or opinions,
such reports are not the responsibility of NIKE.
Part
II - Other Information
Item
1. Legal Proceedings
There
have been no significant developments with respect to the information previously
reported under Part I, Item 3 of our Annual Report on Form 10-K for the fiscal
year ended May 31, 2008.
Item
1A. Risk Factors
There
have been no material changes in our risk factors from those disclosed in Part
I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended May 31,
2008.
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
The
following table presents a summary of share repurchases made by NIKE during the
quarter ended August 31, 2008.
Period
|
|
Total
Number of Shares Purchased
_____________
|
|
|
Average
Price Paid Per Share
_____________
|
|
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
_______________
|
|
|
Maximum
Dollar Value of Shares that May Yet Be Purchased Under the Plans or
Programs
______________
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
|
June
1 – 30, 2008
|
|
|
1,583,000 |
|
|
$ |
66.45 |
|
|
|
1,583,000 |
|
|
$ |
834.1 |
|
July
1 – 31, 2008
|
|
|
3,095,000 |
|
|
$ |
57.74 |
|
|
|
3,095,000 |
|
|
$ |
655.4 |
|
August
1 – 31, 2008
|
|
|
2,390,980 |
|
|
$ |
61.01 |
|
|
|
2,390,980 |
|
|
$ |
509.5 |
|
Total
|
|
|
7,068,980 |
|
|
$ |
60.79 |
|
|
|
7,068,980 |
|
|
|
|
|
Item
6. Exhibits
(a) EXHIBITS:
|
3.1
|
Restated
Articles of Incorporation, as amended (incorporated by reference to
Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal
quarter ended August 31, 2005).
|
|
3.2
|
Third
Restated Bylaws, as amended (incorporated by reference from Exhibit 3.2 to
the Company’s Current Report on Form 8-K filed February 16,
2007).
|
|
4.1
|
Restated
Articles of Incorporation, as amended (see Exhibit
3.1).
|
|
4.2
|
Third
Restated Bylaws, as amended (see Exhibit
3.2).
|
|
31.1
|
Rule
13(a)-14(a) Certification of Chief Executive
Officer.
|
|
31.2
|
Rule
13(a)-14(a) Certification of Chief Financial
Officer.
|
|
32.1
|
Section
1350 Certificate of Chief Executive
Officer.
|
|
32.2
|
Section
1350 Certificate of Chief Financial
Officer.
|
_______________________
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 thereunto
duly authorized.
NIKE,
Inc.
an Oregon
Corporation
/s/Donald
W. Blair
________________________
Donald W.
Blair
Chief
Financial Officer
DATED: October
3, 2008