NIKE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share data)
Revenues
Cost of sales
Gross profit
Gross margin
THREE MONTHS ENDED
8/31/2013 1
8/31/2014
$
7,982 $
6,971
4,261
3,839
3,721
3,132
46.6%
44.9%
%
Change
15%
11%
19%
Demand creation expense
Operating overhead expense
Total selling and administrative expense
% of revenue
897
1,583
2,480
31.1%
731
1,327
2,058
29.5%
23%
19%
21%
Interest expense (income), net
Other expense (income), net
Income before income taxes
Income taxes
Effective tax rate
9
3
1,229
267
21.7%
8
28
1,038
259
25.0%
18%
3%
NET INCOME
$
962
$
779
23%
Earnings per common share:
Basic
Diluted
$
$
1.11
1.09
$
$
0.88
0.86
26%
27%
Weighted average common shares outstanding:
Basic
Diluted
864.9
886.2
889.4
910.7
Dividends declared per common share
$
0.24 $
0.21
Prior year amounts have been revised to correctly expense internally developed patent and trademark costs as
incurred.
1
NIKE, Inc.
CONSOLIDATED BALANCE SHEETS
August 31,
(Dollars in millions)
2014
ASSETS
Current assets:
Cash and equivalents
$
2,303
Short-term investments
2,276
Accounts receivable, net
3,587
Inventories
4,030
Deferred income taxes
348
Prepaid expenses and other current assets
996
Total current assets
13,540
Property, plant and equipment
6,371
Less accumulated depreciation
3,476
Property, plant and equipment, net
2,895
Identifiable intangible assets, net
282
Goodwill
131
Deferred income taxes and other assets
1,673
TOTAL ASSETS
$
18,521
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
$
6
Notes payable
146
Accounts payable
1,970
Accrued liabilities
2,441
Income taxes payable
250
Liabilities of discontinued operations
Total current liabilities
4,813
Long-term debt
1,195
Deferred income taxes and other liabilities
1,408
Redeemable preferred stock
Shareholders' equity
11,105
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
18,521
1
Prior year amounts have been revised to correct immaterial misstatements.
August 31,
20131
$
$
$
$
% Change
2,661
2,917
3,207
3,521
308
947
13,561
5,684
3,127
2,557
288
131
1,094
17,631
-13%
-22%
12%
14%
13%
5%
0%
12%
11%
13%
-2%
0%
53%
5%
57
94
1,576
1,962
195
12
3,896
1,207
1,322
11,206
17,631
-89%
55%
25%
24%
28%
24%
-1%
7%
-1%
5%
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 Divisions2
Total NIKE Brand
Converse
Corporate3
Total NIKE, Inc. Revenues
Total NIKE Brand
Footwear
Apparel
Equipment
2
Global Brand Divisions
%
Change
% Change
Excluding
Currency
1
Changes
1,904
1,009
222
3,135
15%
10%
1%
12%
15%
10%
1%
12%
1,127
498
89
1,714
829
399
73
1,301
36%
25%
22%
32%
29%
18%
17%
25%
223
134
35
392
193
139
34
366
16%
-4%
3%
7%
17%
-1%
7%
9%
440
202
37
679
341
197
36
574
29%
3%
3%
18%
31%
4%
4%
20%
100
46
14
160
88
53
17
158
14%
-13%
-18%
1%
17%
-10%
-19%
4%
628
252
54
934
624
226
52
902
1%
12%
4%
4%
7%
18%
14%
10%
29
7,421
575
(14)
7,982 $
32
6,468
494
9
6,971
-9%
15%
16%
-17%
15%
16%
15%
15%
4,701
2,237
454
3,979
2,023
434
18%
11%
5%
18%
11%
5%
32
-9%
-17%
THREE MONTHS ENDED
8/31/2014
8/31/2013
$
$
$
2,183
1,105
225
3,513
29
$
$
1
Fiscal 2015 results have been restated using fiscal 2014 exchange rates for the comparative period to enhance the
visibility of the underlying business trends excluding the impact of foreign currency exchange rate fluctuations.
2
Global Brand Divisions primarily represent NIKE Brand licensing businesses that are not part of a geographic operating
segment.
3
Corporate revenues primarily consist of foreign currency revenue-related hedge gains and losses generated by entities
within the NIKE Brand geographic operating segments and Converse through our centrally managed foreign exchange risk
management program.
NIKE, Inc.
1
EARNINGS BEFORE INTEREST AND TAXES
(Dollars in millions)
North America
Western Europe
Central & Eastern Europe
Greater China
Japan
Emerging Markets
Global Brand Divisions3
TOTAL NIKE BRAND
Converse
Corporate4
TOTAL EARNINGS BEFORE INTEREST AND TAXES
%
THREE MONTHS ENDED
8/31/20132 Change
8/31/2014
19%
$
970 $
813
52%
404
265
-16%
68
81
28%
218
170
-54%
11
24
-26%
156
210
(533)
(466)
-14%
1,294
1,097
18%
10%
186
169
(242)
(220)
-10%
$
1,238
$
1,046
18%
1
The Company evaluates performance of individual operating segments based on earnings before
interest and taxes (also commonly referred to as “EBIT”), which represents net income before interest
expense (income), net, and income taxes.
2
Prior year amounts have been revised to correctly expense internally developed patent and trademark
costs as incurred.
3
Global Brand Divisions primarily represent demand creation, operating overhead, information
technology, 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 of unallocated general and administrative expenses, which includes expenses
associated with centrally managed departments, depreciation and amortization related to the Company’s
corporate headquarters, unallocated insurance and benefit programs, certain foreign currency gains and
losses, including certain hedge gains and losses, corporate eliminations and other items.
NIKE, Inc.
1
NIKE BRAND REPORTED FUTURES GROWTH BY GEOGRAPHY
As of August 31, 2014
North America
Western Europe
Central & Eastern Europe
Greater China
Japan
Emerging Markets
Total NIKE Brand Reported Futures
Reported Futures
Orders
15%
17%
11%
5%
-5%
3%
11%
Excluding Currency
Changes 2
15%
20%
17%
6%
0%
9%
14%
1
Futures orders by geography and in total for NIKE Brand athletic footwear and apparel scheduled for
delivery from September 2014 through January 2015, excluding NIKE Golf and Hurley.
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 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, NIKE Brand equipment, DTC operation sales and sales
from Converse, NIKE Golf and Hurley.
2
Reported futures have been restated using prior year exchange rates to enhance the visibility of the
underlying business trends excluding the impact of foreign currency exchange rate fluctuations.
NIKE, Inc.
FREE CASH FLOW CALCULATION
(Dollars in millions)
Cash provided by operations
Cash provided (used) by investing activities
Excluding: Purchases of investments
Sales and maturities of investments
Investments in reverse repurchase agreements
Less: Adjusted cash used by investing activities
FREE CASH FLOW
THREE MONTHS ENDED
8/31/20131
588 $
618
8/31/2014
$
$
280
1,296
(1,836)
(260)
328 $
(694)
1,417
(1,068)
100
(245)
373
Note: Cash used by financing activities was $882 million and $592 million during the three months
ended August 31, 2014 and August 31, 2013, respectively. The effect of exchange rate changes on
cash was a source of cash of $97 million and a use of cash of $8 million for the three months ended
August 31, 2014 and August 31, 2013, respectively. The total net change in cash and equivalents was
an increase of $83 million and a decrease of $676 million during the three months ended August 31,
2014 and August 31, 2013, respectively.
1
Prior year amounts have been revised to correct immaterial misstatements.
Nike, Inc. Return on Invested Capital Calculation1
(Dollars in millions)
Continuing operations:
Revenues
Q1'10
Q2'10
Q3'10
Q4'10
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
4,799
4,405
4,733
5,077
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
2,583
1,547
669
2,445
1,481
479
2,515
1,566
652
2,671
1,741
665
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
Other income (expense), net*
12
12
8
17
28
17
Earnings before interest and taxes
681
491
660
682
752
609
704
773
849
24.7%
23.5%
24.9%
23.7%
26.0%
25.0%
26.1%
23.1%
168
434
115
421
164
593
162
609
196
637
152
674
184
694
-
-
-
-
-
-
513
1,485
376
1,476
496
1,726
520
1,905
556
1,948
Q1'10
13,150
Q2'10
13,315
Q3'10
13,530
Q4'10
14,382
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
3,630
962
1,643
140
804
-
4,010
1,008
1,598
74
876
-
4,039
994
1,648
80
848
-
Plus:
Net debt adjustment*****
3,085
3,439
Invested capital
Trailing 5 quarters invested capital***
9,056
8,524
Return on invested capital****
17.4%
Operating expenses:
Cost of sales
Selling and administrative expense*
Restructuring charges
Goodwill impairment
Intangible and other asset impairment
Net operating profit
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
(7)
(5)
(18)
(9)
11
(38)
29
17
(17)
(13)
619
766
738
776
708
853
898
24.4%
24.2%
27.3%
26.2%
27.6%
26.8%
22.8%
179
711
207
722
150
720
209
745
193
759
214
766
190
806
-
-
-
-
-
-
-
518
(137)
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
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
5,146
1,255
1,915
52
855
-
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
-
3,470
4,554
4,105
4,191
3,852
3,875
3,182
2,894
2,828
3,372
9,188
8,761
9,391
8,964
9,713
9,202
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
16.8%
19.3%
20.7%
20.7%
21.2%
21.2%
21.8%
22.6%
22.6%
(28)
(13)
(45)
(17)
(3)
1,046
722
889
920
1,238
22.9%
25.0%
25.2%
22.5%
23.5%
21.7%
195
792
206
805
262
853
182
845
200
850
216
860
269
867
658
204
692
(28)
784
-
540
-
689
-
704
-
969
-
664
2,469
784
2,691
540
2,850
689
2,677
704
2,717
969
2,902
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
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
-
2,903
3,197
3,721
4,577
4,203
3,799
3,702
3,769
3,232
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
22.9%
22.2%
21.3%
20.4%
23.1%
23.8%
25.5%
26.3%
24.2%
24.5%
26.2%
3,197
3,757
3,267
3,525
4,042
5,965
5,578
5,187
5,029
5,142
4,579
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
* 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
3,630
4,010
4,039
5,146
4,688
4,789
4,465
4,538
3,700
3,365
Less:
Long-term debt
443
460
452
446
342
338
276
276
238
234
Notes payable
95
103
109
139
109
128
139
187
164
123
Current portion of long-term debt
7
8
8
7
132
132
198
200
116
114
Net debt adjustment
3,085
3,439
3,470
4,554
4,105
4,191
3,852
3,875
3,182
2,894
1
Prior year amounts have been revised to recognize certain inventories held at third parties and to properly expense internally developed patent and trademark costs as incurred.