Nike Hits $12 Billion Mark in Fiscal 2004; Futures Up 10.7%

NIKE, Inc. reported revenues for the fiscal fourth quarter ended May 31 increased 17 percent to $3.5 billion, versus $3.0 billion for the same period last year. Seven percentage points of this growth were the result of changes in currency exchange rates. Fourth quarter net income totaled $305.0 million, or $1.13 per diluted share, compared to $246.2 million, or $0.92 per diluted share in the prior year.

For the fiscal year ended May 31, 2004, revenues increased 15 percent to $12.3 billion, compared to $10.7 billion in fiscal year 2003. Changes in currency exchange rates contributed seven percentage points of this growth. Full year net income totaled $945.6 million, or $3.51 per diluted share, versus $740.1 million before accounting change, or $2.77 per diluted share, in 2003. After a one-time charge from the cumulative effect of implementing Financial Accounting Standards Board Statement 142 (Goodwill and Other Intangible Assets), the Company posted net income of $474.0 million, or $1.77 per diluted share in 2003.

Philip H. Knight, Chairman and Chief Executive Officer said, “It was a great year for the Nike brand around the world, complemented by outstanding results across our brand portfolio and the acquisition of Converse. We managed the business well, recording our highest gross margins ever and generating tremendous cash flow. But, most importantly,” Knight added, “we focused on doing what we do best: creating energy and excitement through innovative new products and strong connections with consumers. As a result, Nike, Inc. posted its strongest revenue and earnings per share growth in five years, delivering 15 and 27* percent increases, respectively.”

Knight continued, “It was also a great year for Nike shareholders. Nike's stock price increased 27 percent for fiscal year 2004. During the year we raised our quarterly dividend over 40 percent, and in the fourth quarter, we completed our four- year $1 billion share repurchase program. Over the past four years, Nike has returned $1.6 billion to shareholders through share repurchases and dividends. And I'm pleased to announce that our Board has authorized a new four-year, $1.5 billion share repurchase program, reflecting confidence in our ability to continue to deliver strong cash flows in the future.”**

Futures Orders

The Company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery between June and November 2004, totaling $5.5 billion, 10.7 percent higher than such orders reported for the same period last year. One point of this growth was due to changes in currency exchange rates.**

By region, U.S. futures were up 10 percent; Europe increased nine percent; Asia Pacific grew 21 percent; and the Americas increased four percent. Changes in currency exchange rates had a favorable impact of three percentage points in Europe and two percentage points in Asia Pacific. The Americas orders included a six percentage point decline due to changes in currency exchange rates.**

Knight said, “Nike's brand momentum was clearly evident in our futures results, which reached their highest level in seven years. All of our regions posted healthy futures increases in both footwear and apparel, but we're particularly encouraged by results in the U.S. The region reported its strongest footwear futures growth in eight years.”**

Regional Highlights

USA

During the fourth quarter, U.S. revenues increased six percent to $1.3 billion. U.S. athletic footwear revenues increased seven percent to $851.2 million. Apparel revenues grew four percent to $359.4 million. Equipment revenues increased two percent to $74.1 million.

For the full fiscal year, USA revenues were up three percent to $4.8 billion. Footwear revenues increased two percent to $3.1 billion; apparel revenues grew six percent to $1.4 billion; and equipment revenues grew one percent to $289.8 million.

Europe

Quarterly revenues for the European region (which includes the Middle East and Africa) grew 16 percent to $1.1 billion. Fourteen percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues increased five percent to $632.0 million, apparel revenues increased 33 percent to $382.9 million and equipment revenues increased 43 percent to $77.1 million.

For the full year, European revenues grew 18 percent to $3.8 billion, compared to $3.2 billion last year. Sixteen percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues were up 18 percent to $2.2 billion. Apparel revenues increased 18 percent to $1.3 billion and equipment revenues rose 26 percent to $268.4 million.

Asia Pacific

In the Asia Pacific Region, quarterly revenues grew 25 percent to $450.0 million. Ten percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues were up 20 percent to $232.7 million; apparel revenues increased 32 percent to $174.4 million and equipment revenues grew 30 percent to $42.9 million.

Full-year Asia Pacific revenues increased 20 percent to $1.6 billion, compared to $1.3 billion last year. Eight percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues increased 17 percent to $855.3 million. Apparel revenues were up 23 percent to $612.3 million. Equipment revenues increased 21 percent to $145.8 million.

Americas

Quarterly revenues in the Americas region increased 25 percent to $180.0 million. This growth rate reflected a nine percentage point increase due to changes in currency exchange rates. Footwear revenues were up 26 percent to $116.0 million, apparel revenues increased 24 percent to $48.5 million and equipment revenues increased 25 percent to $15.5 million.

For the full year, Americas revenues increased 19 percent to $624.8 million, compared to $527.0 million last year. Eight percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues increased 22 percent to $412.0 million, apparel revenues grew 12 percent to $165.8 million and equipment revenues increased 13 percent to $47.0 million.

Other Revenues

In the fourth quarter, other revenues, which include Nike Golf, Converse, Inc., Bauer NIKE Hockey Inc., Cole Haan(R), and Hurley International LLC, grew 50 percent to $480.4 million. For the full year, other revenues increased 51 percent to $1.4 billion. The acquisition of Converse accounted for 28 and 24 percentage points of this increase for the quarter and year, respectively.

In the fourth quarter, gross margins were 43.8 percent of revenue compared to 41.5 percent last year. For the full year, gross margins were 42.9 percent compared to 41.0 percent last year. Selling and administrative expenses were 29.8 percent of fourth quarter revenues, compared to 27.8 percent last year. For the full year, selling and administrative expenses were 30.2 percent of full year revenues versus 29.5 percent last year. The effective tax rate was 34.8 percent for the fourth quarter and the full year.

At fiscal year-end, global inventories stood at $1.6 billion, an increase of 8 percent from last year. Cash and short-term investments were $1.2 billion at fiscal year-end, compared to $634.0 million last year.

During the quarter, the Company purchased a total of 2,282,692 shares for approximately $171 million, completing the $1 billion share repurchase program that was approved by the Board of Directors in June 2000. Effective today, the Board authorized a new four-year, $1.5 billion program.

                 NIKE, INC. CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE QUARTER ENDED MAY 31, 2004
                     (In millions, except per share data)

  INCOME                QUARTER ENDING           YEAR TO DATE ENDING
  STATEMENT *     5/31/04   5/31/03  % Chg   5/31/04    5/31/03  % Chg
  Revenues       $3,487.1   $2,985.1   17%  $12,253.1  $10,697.0   15%
  Cost of Sales   1,958.4    1,744.9   12%    7,001.4    6,313.6   11%
  Gross Margin    1,528.7    1,240.2   23%    5,251.7    4,383.4   20%
                   43.8 %     41.5 %            42.9%     41.0 %

  SG&A            1,037.9      829.5   25%    3,702.0    3,154.1   17%
                   29.8 %     27.8 %            30.2%     29.5 %

  Interest Expense,
   net                3.9        7.4  -47%       25.0       28.8  -13%
  Other              19.4       31.4  -38%       74.7       77.5   -4%

  Income before
   income taxes
   and cumulative
   effect of
   accounting
   change           467.5      371.9   26%    1,450.0    1,123.0   29%

  Income Taxes      162.5      125.7   29%      504.4      382.9   32%
                    34.8%     33.8 %           34.8 %     34.1 %
  Income before
   cumulative effect
   of accounting
   change           305.0      246.2   24%      945.6      740.1   28%
  Cumulative effect
   of accounting
   change, net of
   income taxes        --         --               --      266.1
  Net Income       $305.0     $246.2   24%     $945.6     $474.0   99%

  Diluted EPS -
   before accounting
   change           $1.13      $0.92   23%      $3.51      $2.77   27%
  Cumulative effect
   of accounting
   change              --         --               --     (1.00)
                    $1.13      $0.92   23%      $3.51      $1.77   98%
  Basic EPS -
   before accounting
   change           $1.16      $0.93   25%      $3.59      $2.80   28%
  Cumulative effect
   of accounting
   change              --         --               --     (1.01)
                    $1.16      $0.93   25%      $3.59      $1.79  101%