NIKE, Inc. reported revenues for the third quarter ended February 28, 2003 increased six percent to $2.4 billion, versus $2.3 billion for the same period last year. Third quarter net income totaled $125 million, or $0.47 per diluted share, compared to $126 million, or $0.46 per diluted share in the prior year.
Philip H. Knight, Chairman and CEO, said, “As expected, this quarter’s results reflect the growing strength of both our brand and our business around the globe. This quarter, our U.S. footwear business regained momentum in the marketplace as consumers thoroughly embraced our high-end performance product. Internationally, despite geopolitical uncertainty, our business continued to perform well. We continue to focus on profitability, as evidenced by another quarter of strong gross margin expansion. Overall, I am confident in our ability to achieve sustainable, profitable growth over the long term.” *
The Company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery between March and July 2003, totaled $4.2 billion, 5.8 percent higher than such orders reported for the same period last year. Had the U.S. dollar remained constant, futures orders would have increased 1.1 percent. *
By region, the USA was down four percent; Europe increased 18 percent; Asia Pacific grew 19 percent; and the Americas decreased nine percent. In constant dollars, futures orders for Europe increased four percent; Asia Pacific grew 14 percent; and the Americas increased two percent. *
Knight said, “As expected, our U.S. orders were down this quarter as we continue to realign our U.S. distribution. Our futures results once again demonstrate the continued strength of our international businesses as futures orders outside the U.S. are up 15 percent.” *
U.S. revenues increased three percent to $1.13 billion, compared to $1.09 billion in the same period last year. U.S. athletic footwear revenues declined one percent to $761 million. Apparel revenues grew 12 percent to $307 million. Equipment revenues increased 14 percent to $59 million.
Quarterly revenues for the European region (which includes the Middle East and Africa) grew eight percent to $646 million. Footwear revenues increased seven percent to $363 million, apparel revenues grew six percent to $239 million and equipment increased 21 percent to $43 million. Had the dollar remained constant, regional revenues would have decreased seven percent. As discussed previously, these results were affected by a shift in revenues from the third quarter to the second quarter in preparation for the successful implementation of new supply chain systems.
Quarterly revenues in the Asia Pacific region grew 17 percent to $335 million. Footwear revenues were up 17 percent to $186 million, apparel revenues increased 16 percent to $116 million and equipment grew 24 percent to $33 million. In constant dollars, regional revenues grew 12 percent.
Revenues in the Americas region decreased four percent to $107 million. Footwear revenues were down two percent to $69 million, apparel revenues decreased 12 percent to $30 million and equipment grew nine percent to $9 million. Had the dollar remained constant, revenues would have grown 11 percent.
Other revenues, which include Nike Golf, Bauer NIKE Hockey Inc., Cole Haan(R), and Hurley International LLC, grew 10 percent to $185 million.
Gross margins in the quarter were 40.7 percent compared to 39.1 percent last year. Selling and administrative expenses were 31.4 percent of third quarter revenues, compared to 30.2 percent last year. The effective tax rate for the quarter was 33.5 percent compared to 33.2 percent in the prior year.
At quarter end, global inventories totaled $1.5 billion, up six percent from February 28, 2002. Cash and short-term investments were $443 million at the end of the quarter compared to $350 million last year.
During the quarter, the Company purchased a total of 606,900 shares for approximately $27 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 FEBRUARY 28, 2003 (In millions, except per share data) INCOME QUARTER ENDING YEAR TO DATE ENDING STATEMENT 2/28/2003 2/28/2002 % Chg 2/28/2003 2/28/2002 % Chg Revenues $2,400.9 $2,260.3 6% $7,711.9 $7,210.8 7% Cost of Sales 1,424.9 1,376.8 3% 4,568.7 4,403.0 4% Gross Profit 976.0 883.5 10% 3,143.2 2,807.8 12% 40.7% 39.1% 40.8% 38.9% SG&A 753.9 682.5 10% 2,311.6 2,056.4 12% 31.4% 30.2% 30.0% 28.5% Interest Expense 10.8 12.1 -11% 32.2 37.4 -14% Other 23.9 (0.1) -- 48.3 11.8 -- Income before income taxes and cumulative effect of accounting change 187.4 189.0 -1% 751.1 702.2 7% Income Taxes 62.7 62.7 0% 257.2 242.3 6% 33.5% 33.2% 34.2% 34.5% Income before cumulative effect of accounting change 124.7 126.3 -1% 493.9 459.9 7% Cumulative effect of accounting change, net of income taxes -- -- 266.1 5.0 Net Income $124.7 $126.3 -1% $227.8 $454.9 -50%