NIKE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share data)
Revenues
Cost of sales
Gross profit
Gross margin
THREE MONTHS ENDED
%
8/31/2015
8/31/2014 Change
$
8,414 $
7,982
5%
4,419
4,261
4%
3,995
3,721
7%
47.5%
46.6%
Demand creation expense
Operating overhead expense
Total selling and administrative expense
% of revenue
832
1,745
2,577
30.6%
897
1,583
2,480
31.1%
-7%
10%
4%
Interest expense (income), net
Other (income) expense, net
Income before income taxes
Income tax expense
Effective tax rate
4
(31)
1,445
266
18.4%
9
3
1,229
267
21.7%
18%
0%
NET INCOME
$
1,179
$
962
23%
Earnings per common share:
Basic
Diluted
$
$
1.38
1.34
$
$
1.11
1.09
24%
23%
Weighted average common shares outstanding:
Basic
Diluted
Dividends declared per common share
854.5
877.3
$
0.28
864.9
886.2
$
0.24
NIKE, Inc.
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
ASSETS
Current assets:
Cash and equivalents
Short-term investments
Accounts receivable, net
Inventories
Deferred income taxes
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net
Identifiable intangible assets, net
Goodwill
Deferred income taxes and other assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
Notes payable
Accounts payable
Accrued liabilities
Income taxes payable
Total current liabilities
Long-term debt
Deferred income taxes and other liabilities
Redeemable preferred stock
Shareholders' equity
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
August 31,
2015
$
$
$
$
3,246
2,162
3,288
4,414
377
1,751
15,238
3,112
281
131
2,004
20,766
106
23
1,933
3,139
75
5,276
1,079
1,517
12,894
20,766
August 31,
2014
$
$
$
$
% Change
2,303
2,276
3,587
4,030
348
996
13,540
2,895
282
131
1,673
18,521
41%
-5%
-8%
10%
8%
76%
13%
7%
0%
0%
20%
12%
6
146
1,970
2,441
250
4,813
1,195
1,408
11,105
18,521
1,667%
-84%
-2%
29%
-70%
10%
-10%
8%
16%
12%
NIKE, Inc.
DIVISIONAL REVENUES
(Dollars in millions)
North America
Footwear
Apparel
Equipment
Total
Western Europe
Footwear
Apparel
Equipment
Total
Central & Eastern Europe
Footwear
Apparel
Equipment
Total
Greater China
Footwear
Apparel
Equipment
Total
Japan
Footwear
Apparel
Equipment
Total
Emerging Markets
Footwear
Apparel
Equipment
Total
Global Brand Divisions3
Total NIKE Brand
Converse
Corporate4
Total NIKE, Inc. Revenues
THREE MONTHS ENDED
8/31/2015
8/31/20141
$
$
2,366
1,247
186
3,799
$
%
Change
% Change
Excluding
Currency
Changes2
2,183
1,104
226
3,513
8%
13%
-18%
8%
9%
13%
-17%
9%
1,128
434
79
1,641
1,127
497
89
1,713
0%
-13%
-11%
-4%
19%
3%
4%
14%
238
133
30
401
223
135
35
393
7%
-1%
-14%
2%
32%
22%
7%
26%
599
246
41
886
440
202
37
679
36%
22%
11%
30%
36%
22%
11%
30%
122
43
14
179
100
46
14
160
22%
-7%
0%
12%
47%
12%
27%
35%
628
252
54
934
29
7,421
575
(14)
7,982
7%
-6%
7%
3%
-10%
6%
-3%
5%
23%
9%
24%
19%
5%
15%
3%
14%
670
238
58
966
26
7,898
555
(39)
8,414 $
Total NIKE Brand
Footwear
$
5,123 $
4,701
9%
18%
Apparel
2,341
2,236
5%
12%
Equipment
408
455
-10%
-3%
Global Brand Divisions3
26
29
-10%
5%
1
Certain prior year amounts have been reclassified to conform to fiscal 2016 presentation. These changes had
no impact on previously reported results of operations or shareholders' equity.
2
Fiscal 2016 results have been restated using fiscal 2015 exchange rates for the comparative period to enhance
the visibility of the underlying business trends excluding the impact of translation arising from foreign currency
exchange rate fluctuations.
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
THREE MONTHS ENDED
%
(Dollars in millions)
8/31/2015 8/31/20142 Change
North America
7%
$
1,042 $
970
Western Europe
20%
485
404
Central & Eastern Europe
42%
98
69
Greater China
51%
330
218
Japan
227%
36
11
Emerging Markets
65%
258
156
3
(624)
(534)
Global Brand Divisions
-17%
TOTAL NIKE BRAND
1,625
1,294
26%
Converse
-21%
147
186
(323)
(242)
Corporate4
-33%
TOTAL EARNINGS BEFORE INTEREST AND TAXES
$
1,449 $
1,238
17%
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 taxes.
2
Certain prior year amounts have been reclassified to conform to fiscal 2016 presentation. These
changes had no impact on previously reported 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.
NIKE, Inc.
NIKE BRAND REPORTED FUTURES GROWTH BY GEOGRAPHY1
As of August 31, 2015
North America
Western Europe
Central & Eastern Europe
Greater China
Japan
Emerging Markets
Total NIKE Brand Reported Futures
1
Reported Futures
Orders
14%
6%
-3%
22%
12%
-11%
9%
Excluding Currency
Changes2
15%
22%
16%
27%
26%
6%
17%
Futures orders for NIKE Brand footwear and apparel scheduled for delivery from September 2015
through January 2016. The U.S. Dollar futures orders amount is calculated based upon our internal
forecast of the currency exchange rates under which our revenues will be translated during this period.
The reported futures 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, changes in the mix of
orders between futures and at-once orders and because the fulfillment of certain orders may fall outside
of the schedule noted above. In addition, exchange rate fluctuations as well as differing levels of order
cancellations, discounts and returns can cause differences in the comparisons between futures orders
and actual revenues. Moreover, a portion of our revenue is not derived from futures orders, including
sales of at-once and closeout NIKE Brand footwear and apparel, sales of NIKE Brand equipment, sales
from our DTC operations and sales from Converse, NIKE Golf and Hurley.
2
Reported futures have been restated using prior year exchange rates for the comparative period to
enhance the visibility of the underlying business trends excluding the impact of foreign currency
exchange rate fluctuations.
Nike, Inc. Return on Invested Capital Calculation
(Dollars in millions)
Continuing operations:
Revenues
Operating expenses:
Cost of sales
Selling and administrative expense*
Restructuring charges
Goodwill impairment
Intangible and other asset impairment
Net operating profit
Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15
Q2'15
Q3'15
Q4'15
Q1'16
5,175
4,842
5,079
5,766
6,081
5,731
5,846
6,470
6,669
5,955
6,187
6,697
6,971
6,431
6,972
7,425
7,982
7,380
7,460
7,779
8,414
2,741
1,675
759
2,649
1,612
581
2,752
1,640
687
3,212
1,776
778
3,388
1,826
867
3,281
1,822
628
3,285
1,806
755
3,703
1,991
776
3,766
2,156
747
3,425
1,839
691
3,451
1,866
870
3,757
2,029
911
3,839
2,058
1,074
3,605
2,091
735
3,869
2,169
934
4,040
2,448
937
4,261
2,480
1,241
4,053
2,438
889
4,034
2,379
1,047
4,186
2,595
998
4,419
2,577
1,418
5
18
9
Other (income) expense, net*
7
(11)
38
(29)
(17)
17
13
28
13
45
17
3
2
Earnings before interest and taxes
619
766
738
776
708
853
898
1,046
722
889
920
1,238
887
1,052
1,056
1,449
24.4%
24.2%
27.3%
26.2%
27.6%
26.8%
22.8%
22.9%
25.0%
25.2%
22.5%
23.5%
21.7%
25.4%
24.4%
17.8%
18.4%
179
711
207
722
150
720
209
745
193
759
214
766
190
806
195
792
206
805
262
853
182
845
200
850
216
860
269
867
225
910
256
966
188
938
267
936
-
-
-
-
-
-
-
518
(137)
658
204
692
(28)
784
-
540
-
689
-
704
-
969
-
662
-
796
-
868
-
1,182
-
457
2,029
520
2,053
594
2,127
642
2,213
469
2,225
557
2,262
545
2,213
562
2,133
381
2,045
862
2,350
664
2,469
784
2,691
540
2,850
689
2,677
704
2,717
969
2,902
662
3,024
796
3,131
868
3,295
1,182
3,508
Q1'11
14,000
Q2'11
14,412
Q3'11
14,423
Q4'11
14,958
Q1'12
14,740
Q2'12
14,499
Q3'12
14,724
Q4'12
15,419
Q1'13
15,035
Q2'13
15,090
Q3'13
15,530
Q4'13
17,545
Q1'14
17,582
Q2'14
17,724
Q3'14
17,703
Q4'14
18,594
Q1'15
18,521
Q2'15
19,167
Q3'15
20,541
Q4'15
21,600
Q1'16
20,766
Less:
Cash and equivalents and short-term investments
Accounts payable
Accrued liabilities
Income taxes payable
Deferred income taxes and other liabilities
Liabilities of discontinued operations
4,688
1,101
1,696
96
907
-
4,789
1,225
1,685
70
929
-
4,465
1,147
1,745
105
958
-
4,538
1,469
2,004
108
921
-
3,700
1,421
1,968
81
906
-
3,365
1,411
1,834
70
925
-
3,197
1,298
1,913
47
979
-
3,757
1,588
2,082
54
991
-
3,267
1,551
1,974
99
1,065
-
3,525
1,519
1,879
31
1,188
198
4,042
1,241
1,899
122
1,287
62
5,965
1,646
2,036
84
1,292
18
5,578
1,559
1,913
195
1,322
12
5,187
1,612
2,005
30
1,424
-
5,029
1,480
2,303
27
1,515
-
5,142
1,930
2,491
432
1,544
-
4,579
1,970
2,441
250
1,408
-
4,713
2,074
2,622
38
1,446
-
5,361
1,821
3,563
33
1,505
-
5,924
2,131
3,951
71
1,480
-
5,408
1,933
3,139
75
1,517
-
Plus:
Net debt adjustment*****
4,105
4,191
3,852
3,875
3,182
2,894
2,828
3,372
2,903
3,197
3,721
4,577
4,203
3,799
3,702
3,769
3,232
3,426
4,110
4,664
4,200
Invested capital
Trailing 5 quarters invested capital***
9,617
9,393
9,905
9,563
9,855
9,696
9,793
9,777
9,846
9,803
9,788
9,837
10,118
9,880
10,319
9,973
9,982
10,011
9,947
10,031
10,598
10,193
11,081
10,385
11,206
10,563
11,265
10,819
11,051
11,040
10,824
11,085
11,105
11,090
11,700
11,189
12,368
11,410
12,707
11,741
12,894
12,155
Return on invested capital****
20.7%
21.2%
21.2%
21.8%
22.6%
22.6%
22.9%
22.2%
21.3%
20.4%
23.1%
23.8%
25.5%
26.3%
24.2%
24.5%
26.2%
27.0%
27.4%
28.1%
28.9%
Tax rate
Taxes calculated
Trailing 4 quarters taxes**
Earnings before interest and after taxes from continuing operations
Earnings before interest and after taxes from discontinued operations
Earnings before interest and after taxes
Trailing 4 quarters earnings before interest and after taxes**
Total NIKE Inc. assets
(28)
(17)
752
609
704
773
849
26.0%
25.0%
26.1%
23.1%
196
637
152
674
184
694
-
-
556
1,948
(5)
(58)
(31)
* Reclassifications have been made to conform to current-year presentation
** Equals the sum of the current quarter and previous three quarters
*** Equals the simple average of the current and previous four quarters
**** Equals the trailing 4 quarters earnings before interest and after taxes divided by trailing 5 quarters average invested capital
***** See calculation of Net debt adjustment below
Cash and equivalents and short-term investments
Less:
Long-term debt
Notes payable
Current portion of long-term debt
Net debt adjustment
4,688
4,789
4,465
4,538
3,700
3,365
3,197
3,757
3,267
3,525
4,042
5,965
5,578
5,187
5,029
5,142
4,579
4,713
5,361
5,924
5,408
342
109
132
4,105
338
128
132
4,191
276
139
198
3,852
276
187
200
3,875
238
164
116
3,182
234
123
114
2,894
229
91
49
2,828
228
108
49
3,372
226
129
9
2,903
170
100
58
3,197
161
103
57
3,721
1,210
121
57
4,577
1,207
111
57
4,203
1,201
180
7
3,799
1,201
119
7
3,702
1,199
167
7
3,769
1,195
146
6
3,232
1,084
93
110
3,426
1,082
61
108
4,110
1,079
74
107
4,664
1,079
23
106
4,200