Nike Fiscal Q2 Net Up 46%; U.S. Futures Increase 10%

NIKE, Inc. reported second quarter revenues increased 11% to $3.1 billion, versus $2.8 billion for the same period last year. Second quarter net income totaled $261.9 million, or 97 cents per diluted share, compared to $179.1 million, or 66 cents per diluted share in the prior year.

“We posted another quarter of record results,” said Philip H. Knight, Chairman and CEO. “Nike’s second quarter revenues and earnings per share reached all-time high levels as a result of solid performance across our global portfolio. Our businesses in the United States and emerging markets such as China, Russia and Turkey, combined with favorable European exchange rates, helped drive much of this growth.”

Knight added, “With the first half of our fiscal year in the books, we remain confident that our business strategy and consistent execution will allow us to deliver on our goals of healthy, profitable growth.”

Futures Orders

The Company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery from December 2004 through April 2005, totaling $4.9 billion, 9.1% higher than such orders reported for the same period last year. Currency exchange rates had no net impact to this growth.

By region, futures orders for the U.S. were up 10%; Europe increased 6%; Asia Pacific grew 14%; and the Americas increased 15%. In Europe, one point of the increase was due to currency exchange rates. Currency exchange reduced the growth in Asia Pacific and the Americas by approximately one point and three points, respectively.

Knight continued, “Consumer demand for Nike products continues to grow, as evidenced by our sixth consecutive quarter of strong futures results. The U.S. market has been particularly robust, reporting futures growth of 10%. The Nike brand is healthier than ever and our innovative products continue to excite consumers around the world.”

Regional Highlights

U.S.

During the second quarter, U.S. revenues increased 5% to $1.13 billion versus $1.08 billion for the second quarter of fiscal 2004. U.S. athletic footwear revenues increased 9% to $680.0 million. Apparel revenues decreased 3% to $384.7 million. This decline was due predominantly to the expiration of Nike’s license agreement with the NBA. Equipment revenues increased 11% to $67.3 million. U.S. pre-tax income increased 21% to $232.6 million.

EMEA

Revenues for the Europe, Middle East and Africa region grew 13% to $961.1 million, up from $847.8 million for the same period last year. Eight points of this growth were the result of changes in currency exchange rates. Footwear revenues increased 13% to $531.8 million, apparel revenues increased 14% to $370.0 million and equipment revenues increased 18% to $59.3 million. Pre-tax income rose 43% to $197.6 million.

Asia Pacific

Revenues in the Asia Pacific region grew 17% to $483.5 million compared to $412.0 million a year ago. Three points of this growth were the result of changes in currency exchange rates. Footwear revenues were up 15% to $236.6 million, apparel revenues increased 19% to $207.8 million and equipment grew 23% to $39.1 million. Pre-tax income was up 14% to $112.0 million.

Americas

Revenues in the Americas region increased 23% to $189.3 million, an improvement from $154.3 million in the second quarter of fiscal 2004. Currency exchange rates resulted in a one-percentage point increase in this growth rate. Footwear revenues were up 25% to $129.8 million, apparel revenues increased 14% to $46.9 million and equipment improved 34% to $12.6 million. Pre-tax income grew 43% to $44.5 million.

Other Revenues

Other revenues, which include Converse Inc., NIKE Golf, Bauer NIKE Hockey Inc., Cole Haan, Hurley International LLC and Exeter Brands Group LLC, grew 12% to $382.4 million from $340.0 million last year. Pre-tax income increased 210% to $20.8 million.

Gross margins were 44.1% compared to 42.3% last year. Selling and administrative expenses were 30.9% of second quarter revenues, compared to 31.8% last year. The effective tax rate for the second quarter was 35.0%.

At quarter end, global inventories stood at $1.7 billion, an increase of six% from November 30, 2003. Cash and short-term investments were $1.7 billion at the end of the quarter, compared to $968.9 million last year

Share Repurchase

During the quarter, the Company purchased a total of 626,300 shares for approximately $48.6 million in conjunction with the Company’s four-year, $1.5 billion share repurchase program that was approved by the Board of Directors in June 2004. To date, the Company has repurchased a total of 2,768,900 shares under this program.

                                NIKE, Inc.
                    CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE PERIOD ENDED NOVEMBER 30, 2004
                   (In millions, except per share data)


   INCOME               QUARTER ENDING         YEAR-TO-DATE ENDING
   STATEMENT   11/30/2004  11/30/2003 % Chg  11/30/2004 11/30/2003 % Chg

  Revenues       $3,148.3   $2,837.1   11%     $6,710.1  $5,862.0    14%
  Cost of Sales   1,760.2    1,637.5    7%      3,736.2   3,360.9    11%
  Gross Margin    1,388.1    1,199.6   16%      2,973.9   2,501.1    19%
                    44.1%      42.3%              44.3%     42.7%

  SG&A              973.2      902.5    8%      2,046.8   1,772.1    16%
                    30.9%      31.8%              30.5%     30.2%

  Interest
   Expense, net       3.7        8.1  -54%          8.5      15.6   -46%
  Other               8.2       14.3  -43%         10.1      38.1   -73%


  Income Before
   Income Taxes     403.0      274.7   47%        908.5     675.3    35%

  Income Taxes      141.1       95.6   48%        319.8     235.0    36%
                    35.0%       34.8%              35.2%    34.8%


  Net Income        $261.9     $179.1  46%        $588.7    $440.3   34%

  Diluted EPS        $0.97      $0.66  47%         $2.18     $1.64   33%

  Basic EPS          $0.99      $0.68  46%         $2.24     $1.67   34%