Nike Q4 Earnings Up 15% on 7% FX Rate-Aided Sales Gain

Nike, Inc. reported earnings per diluted share for the year fiscal year, ended May 31 grew 28% to $4.48, supported by double digit revenue growth and record gross margins.

For the fiscal year ended May 31, 2005, revenues increased 12% to $13.7 billion, compared to $12.3 billion in fiscal year 2004. Changes in currency exchange rates contributed three percentage points of this growth, while the acquisition of Converse and Starter added one point. Full year net income was up 28% to $1.2 billion, or $4.48 per diluted share, versus $945.6 million, or $3.51 per diluted share, in 2004.

Fourth quarter revenues increased 7% to $3.7 billion, versus $3.5 billion for the same period last year. Three percentage points of this growth were the result of changes in currency exchange rates. Fourth quarter net income was up 15% to $349.5 million, or $1.30 per diluted share, compared to $305.0 million, or $1.13 per diluted share in the prior year.

Commenting on the company's results, William D. Perez, Nike, Inc. President and Chief Executive Officer said, “Fiscal 2005 was a great year. The strength of the Nike brand around the world, the breadth of our Nike, Inc. portfolio, and the quality of our management team contributed to another year of consistent, profitable growth for our shareholders. The Nike brand is exceptionally strong, driving full-year revenue gains across all regions and product lines, while Converse and Cole Haan led the growth in our portfolio of other businesses. Today's record earnings were driven by healthy revenue growth and the highest gross margin in the company's history.”

Perez continued, “Looking ahead, our worldwide futures orders for athletic footwear and apparel are strong, up 9.5%, with all regions posting increases and U.S. footwear remaining particularly healthy. We're very pleased with the brand strength reflected in these futures results and we see continued potential for profitable expansion across our portfolio of businesses.”*

Futures Orders

The Company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery from June through November 2005, totaling $6.3 billion, 9.5% higher than such orders reported for the same period last year. Approximately one point of this growth was due to changes in currency exchange rates.*

By region, U.S. futures were up 9%; Europe increased 7%; Asia Pacific grew 11%; and the Americas increased 25%. Changes in currency exchange rates had a favorable impact of two percentage points in Europe and Asia Pacific. Changes in currency exchange rates had no impact on futures orders growth for the Americas.*

Regional Highlights

U.S.

During the fourth quarter, U.S. revenues increased 3% to $1.3 billion. U.S. athletic footwear revenues increased 7% to $907.2 million. Apparel revenues declined 7% to $335.9 million. Equipment revenues increased 17% to $84.3 million. Pre-tax income for the quarter rose 9% to $311.8 million.

For the full fiscal year, U.S. revenues were up 7% to $5.1 billion. Footwear revenues increased 9% to $3.4 billion; apparel revenues grew 2% to $1.5 billion; and equipment revenues grew 13% to $313.4 million. U.S. pre-tax income improved 12% to $1.1 billion.

Europe, Middle East and Africa (EMEA)

Fourth quarter revenues for the EMEA region grew 4% to $1.1 billion. Seven percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues increased 9% to $689.6 million, apparel revenues declined 4% to $366.1 million and equipment revenues declined 2% to $73.0 million. Pre-tax income rose 10% to $254.2 million.

For the full year, EMEA revenues grew 12% to $4.3 billion, compared to $3.8 billion last year. Seven percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues were up 12% to $2.5 billion. Apparel revenues increased 12% to $1.5 billion and equipment revenues rose 9% to $284.5 million. Pre-tax income increased 23% for the full-year to $917.5 million.

Asia Pacific

In the Asia Pacific Region, quarterly revenues grew 19% to $535.0 million. Three percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues were up 16% to $269.8 million; apparel revenues increased 21% to $210.6 million and equipment revenues grew 32% to $54.6 million. Fourth quarter pre-tax income was up 36% to $124.0 million.

Full-year Asia Pacific revenues increased 18% to $1.9 billion, compared to $1.6 billion last year. Four percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues increased 13% to $962.9 million. Apparel revenues were up 23% to $755.5 million. Equipment revenues increased 25% to $178.9 million. Pre-tax income increased 13% to $399.8 million.

Americas

Quarterly revenues in the Americas region increased 20% to $201.1 million. This growth rate reflected a six percentage point increase due to changes in currency exchange rates. Footwear revenues were up 18% to $134.4 million, apparel revenues increased 20% to $53.2 million and equipment revenues increased 36% to $13.5 million. Pre-tax income was up 11% to $29.2 million.

For the full year, Americas revenues increased 15% to $695.8 million, compared to $604.5 million last year. One percentage point of this growth was the result of changes in currency exchange rates. Footwear revenues increased 17% to $478.6 million, apparel revenues grew 6% to $169.1 million and equipment revenues increased 31% to $48.1 million. Pre-tax income rose 21% for the full year, to $117.6 million.

Other Revenues

In the fourth quarter, Other revenues, which include results for Bauer NIKE Hockey, Inc., Cole Haan(R), Converse Inc., Exeter Brands Group LLC, Hurley International LLC and NIKE Golf, grew 6% to $529.2 million. For the full year, other revenues increased 22% to $1.7 billion. Pre-tax income declined 2% for the fourth quarter and increased 104% for the full year.

Income Statement Review

In the fourth quarter, gross margins were 45.2% of revenue compared to 43.8% last year. For the full year, gross margins were 44.5% compared to 42.9% last year. Selling and administrative expenses were 30.6% of fourth quarter revenues, compared to 29.8% last year. For the full year, selling and administrative expenses were 30.7% of full year revenues versus 30.2% last year. The effective tax rate was 35.0% for the fourth quarter and 34.9% for the full year. The tax provision for the fourth quarter reflected a charge related to the Company's decision to repatriate $500 million of foreign earnings under the American Jobs Creation Act during fiscal 2006. The net impact of this charge was not material to our effective tax rate for the quarter or the full year.

Balance Sheet Review

At fiscal year-end, global inventories stood at $1.8 billion, an increase of 10% from last year. Cash and short-term investments were $1.8 billion at fiscal year-end, compared to $1.2 billion last year.

                                 NIKE, Inc.
                      CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE PERIOD ENDED MAY 31, 2005
                     (In millions, except per share data)

  INCOME          QUARTER ENDING                 YEAR ENDING
  STATEMENT  05/31/2005  05/31/2004  % Chg 05/31/2005  05/31/2004  % Chg

  Revenues     $3,721.4    $3,487.1     7%  $13,739.7   $12,253.1    12%
  Cost of
   Sales        2,038.7     1,958.4     4%    7,624.3     7,001.4     9%
  Gross
   Margin       1,682.7     1,528.7    10%    6,115.4     5,251.7    16%
                  45.2%       43.8%             44.5%       42.9%

  SG&A          1,139.2     1,037.9    10%    4,221.7     3,702.0    14%
                  30.6%       29.8%             30.7%       30.2%

  Interest
   (Income)
   Expense, net   (3.6)         3.9     --        4.8        25.0  (81%)
  Other
   Expense, net     9.2        19.4  (53%)       29.1        74.7  (61%)


  Income Before
   Income Taxes   537.9       467.5    15%    1,859.8     1,450.0    28%

  Income Taxes    188.4       162.5    16%      648.2       504.4    29%
                  35.0%       34.8%             34.9%       34.8%


  Net Income     $349.5      $305.0    15%   $1,211.6      $945.6    28%

  Diluted EPS     $1.30       $1.13    15%      $4.48       $3.51    28%

  Basic EPS       $1.34       $1.16    16%      $4.61       $3.59    28%