Nike Breaks $10 Billion Barrier in Fiscal Year; Profits Up 13%

NIKE, Inc. reported fourth quarter revenues increased 11 percent to $3.0 billion, versus $2.7 billion for the same period last year. Fourth quarter net income totaled $246.2 million, or $0.92 per diluted share, compared to $208.4 million, or $0.77 per diluted share in the prior year.

For the fiscal year ended May 31, 2003, revenues increased eight percent to $10.7 billion, compared to $9.9 billion in fiscal year 2002. Full year income before accounting change totaled $740.1 million, or $2.77 per diluted share, versus $668.3 million, or $2.46 per diluted share, in 2002. After a one-time charge from the cumulative effect of implementing Financial Accounting Standards Board Statement 142 (Accounting for Goodwill and Other Intangible Assets), the Company posted net income of $474.0 million, or $1.77 per diluted share versus $663.3 million in 2002.

Philip H. Knight, Chairman and CEO, said, “Nike’s performance during fiscal year 2003 was one for the record books, a year that positions the company well for fiscal 2004. We surpassed the $10 billion revenue mark and delivered record earnings per share despite a challenging geopolitical and economic environment. This year’s results are a testament to the strong connection that the Nike brand has with consumers around the world and our ability to drive profitable growth across our diverse portfolio of businesses. We are optimistic that the combination of our global brand momentum, superior product offerings and worldwide operating capability will generate continued long-term growth.”

Futures Orders

The Company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery between June and November 2003, totaling $4.9 billion, 4.4 percent higher than such orders reported for the same period last year. Five points of this growth were due to changes in currency exchange rates.

By region, the USA was down 10 percent; Europe increased 17 percent; Asia Pacific grew 20 percent; and the Americas increased 4 percent. Of the growth in Europe, 13 points were due to currency exchange rates. Changes in currency exchange rates did not affect the Asia Pacific growth rate. The Americas had a one point decline due to currency exchange rates.

Knight said, “Our international futures orders were up 16%, driven by great brand momentum around the world in football, running, and basketball. While our USA futures orders declined, we remain optimistic about the U.S. market. Our brand presentation at retail is improving and the USA region delivered its most profitable year in our history.”

USA

During the fourth quarter, U.S. revenues increased two percent to $1.2 billion. U.S. athletic footwear revenues declined three percent to $797.0 million. Apparel revenues grew 16 percent to $345.7 million. Equipment revenues increased nine percent to $72.6 million.

For the full fiscal year, USA revenues were flat at $4.7 billion. Footwear revenues decreased four percent to $3.0 billion; apparel revenues grew eight percent to $1.4 billion; and equipment revenues grew three percent to $287.9 million.

Europe

Quarterly revenues for the European region (which includes the Middle East and Africa) grew 24 percent to $945.3 million. Twenty-two points of this growth were the result of changes in currency exchange rates. Footwear revenues increased 30 percent to $603.5 million, apparel revenues increased 14 percent to $288.0 million and equipment revenues increased 14 percent to $53.8 million.

For the full year, European revenues grew 20 percent to $3.2 billion, compared to $2.7 billion last year. Fifteen points of this growth were the result of changes in currency exchange rates. Footwear revenues were up 23 percent to $1.9 billion. Apparel and equipment increased 16 percent and 22 percent respectively to $1.1 billion and $212.6 million.

Asia Pacific

Quarterly revenues in the Asia Pacific region grew 22 percent to $362.6 million. Ten points of this growth were the result of changes in currency exchange rates. Footwear revenues were up 23 percent to $194.7 million; apparel revenues increased 14 percent to $133.0 million and equipment grew 47 percent to $34.9 million.

Full-year Asia Pacific revenues increased 19 percent to $1.4 billion, compared to $1.1 billion last year. Five points of this growth were the result of changes in currency exchange rates. Footwear revenues increased 14 percent to $732.4 million. Apparel revenues were up 24 percent to $499.3 million. Equipment revenues increased 29 percent to $127.1 million.

Americas

Quarterly revenues in the Americas region increased one percent to $143.8 million. This growth rate reflected a 10 point decline due to changes in currency exchange rates. Footwear revenues were up one percent to $92.2 million, apparel revenues increased four percent to $39.2 million and equipment declined one percent to $12.4 million.

For the full year, Americas revenues decreased seven percent to $527.0 million, compared to $568.1 million last year. This growth rate reflected a 15 point decline due to changes in currency exchange rates. Footwear revenues decreased six percent to $337.3 million, apparel revenues decreased 11 percent to $148.1 million and equipment revenues declined one percent to $41.6 million.

Other Revenues

In the fourth quarter, other revenues, which include Nike Golf, Bauer NIKE Hockey Inc., Cole Haan(R), and Hurley International LLC, grew nine percent to $318.1 million. For the full year, other revenues climbed 12 percent to $911.1 million.

In the fourth quarter, gross margins were 41.5 percent compared to 40.3 percent last year. For the full year, gross margins were 41.0 percent of revenues compared to 39.3 percent last year. Selling and administrative expenses were 27.7 percent of fourth quarter revenues, compared to 28.5 percent last year. The effective tax rate for the fourth quarter was 33.8 percent, and for the full year was 34.1 percent.

At fiscal year-end, global inventories stood at $1.5 billion, an increase of 10 percent from last year. Cash and short-term investments were $634.0 million at fiscal year-end, compared to $575.5 million last year.

Share Repurchase

During the quarter, the Company purchased a total of 1,425,000 shares for approximately $76 million in conjunction with the Company’s second four-year, $1 billion share repurchase program that was approved by the Board of Directors in June 2000.

                 NIKE, INC. CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE QUARTER ENDED MAY 31, 2003
                     (In millions, except per share data)

    INCOME                    QUARTER ENDING        YEAR TO DATE ENDING
    STATEMENT          5/31/     5/31/             5/31/     5/31/
                       2003       2002    % Chg    2003      2002     % Chg

    Revenues        $2,985.1   $2,682.2     11%$10,697.0  $9,893.0       8%
    Cost of Sales    1,744.9    1,601.6      9%  6,313.6   6,004.7       5%
    Gross Profit     1,240.2    1,080.6     15%  4,383.4   3,888.3      13%
    % of revenue      41.5 %     40.3 %           41.0 %    39.3 %

    SG&A               826.0      764.0      8%  3,137.6   2,820.4      11%
    % of revenue      27.7 %     28.5 %            29.3%    28.5 %

    Interest Expense    10.7       10.3      4%     42.9      47.6     -10%
    Other               31.6      (8.8)      --     79.9       3.0       --

    Income before
     income taxes
     and cumulative
     effect of
     accounting
     change            371.9      315.1     18%  1,123.0   1,017.3      10%
    Income Taxes       125.7      106.7     18%    382.9     349.0      10%
                      33.8 %     33.9 %           34.1 %    34.3 %
    Income before
     cumulative
     effect of
     accounting
     change            246.2      208.4     18%    740.1     668.3      11%
    Cumulative
     effect of
     accounting
     change, net
     of income taxes      --         --            266.1       5.0
    Net Income        $246.2     $208.4     18%   $474.0    $663.3     -29%