Nike Inc. reported sales grew 8% in the fourth quarter ended May 31, to $5.1 billion from $4.7 billion for the same period last year. Excluding changes in currency exchange rates, net revenues were up 4% compared to the same period last year.

For the full year, revenues declined 1% to $19.0 billion, compared to $19.2 billion last year. Excluding currency changes, net revenues were down 2% for the year. Fourth quarter net income increased 53% to $522 million and diluted earnings per share increased 51% to $1.06. Fiscal 2010 net income increased 28% to $1.9 billion and diluted earnings per share increased 27% to $3.86.

In fiscal 2009, NIKE, Inc. incurred a $145 million after-tax restructuring charge in the fourth quarter, and third quarter results included a $241 million, after-tax non-cash charge related to the impairment of goodwill, intangible and other assets of the Company's Umbro subsidiary. Excluding these charges, fourth quarter net income and diluted earnings per share both increased 7%. For the full-year, comparable net income increased 2% and diluted earnings per share increased 1%.

“We finished strong with a great quarter and accelerating momentum across the business,” said Mark Parker, President and Chief Executive Officer of NIKE, Inc. “During tough economic times our goal is to deliver solid financial performance and create competitive separation in the marketplace. We did that in 2010.”

“Nike is at its best when we focus on our two core values: innovation and inspiration,” Parker continued, 'Going forward you can expect to see more game-changing products, more compelling experiences wherever consumers touch our brands, and a laser focus on operational and financial excellence. These are the things that allow us to accelerate first and faster than everybody else.”

Futures Orders

The Company reported worldwide futures orders for NIKE Brand athletic footwear and apparel, scheduled for delivery from June through November 2010, totaling $8.8 billion, 7% higher than orders reported for the same period last year. Excluding currency changes, orders would have increased 10%.*

By geography and in total for the NIKE Brand, futures orders were as follows:

By geography and in total for the NIKE Brand, futures orders were as follows:

Geography   Reported Futures Orders   Excluding Currency Changes
North America   8%   7%
Western Europe   -2%   11%
Central and Eastern Europe   -2%   3%
Greater China   19%   16%
Japan   -17%   -16%
Emerging Markets   30%   30%
Total NIKE Brand   7%   10%



Geography Highlights


North America


During the fourth quarter, revenue for North America increased 4% to $1.8 billion. Footwear revenue was up 1% to $1.2 billion, apparel revenue increased 13% to $447 million and equipment revenue was essentially flat at $90 million. Earnings before interest and taxes (EBIT) for North America improved 8% to $435 million.

North America revenue for the full fiscal year was down 1% to $6.7 billion. Footwear revenue decreased 2% to $4.6 billion, apparel revenue was flat at $1.7 billion and equipment revenue increased 1% to $346 million. North America EBIT grew 8% to $1.5 billion for the fiscal year.

Western Europe

During the fourth quarter, revenue for Western Europe increased 2% to $956 million. Footwear revenue increased 1% to $593 million, apparel revenue was up 8% to $309 million and equipment declined 12% to $54 million. EBIT for Western Europe decreased 17% to $193 million.

For the full fiscal year, revenue for Western Europe was down 6% to $3.9 billion. Footwear revenue decreased 3% to $2.3 billion, apparel revenue declined 9% to $1.3 billion and equipment revenue dropped 15% to $247 million. Compared to last year, EBIT decreased 9% to $856 million.

Central and Eastern Europe

In the fourth quarter, revenue for Central and Eastern Europe was 9% better than the same period last year at $332 million. Footwear increased 9% to $199 million, apparel revenue grew 10% to $109 million and equipment improved 2% to $25 million. EBIT for Central and Eastern Europe decreased 9% to $84 million.

Revenue for Central and Eastern Europe declined 16% for the fiscal year to $1.1 billion. Footwear revenue decreased 12% to $660 million, apparel revenue dropped 21% to $399 million and equipment revenue declined 20% to $91 million. Compared to last year, EBIT decreased 32% to $281 million.

Greater China

Fourth quarter revenue for Greater China grew 12% to $464 million. Footwear revenue increased 14% to $246 million, apparel was up 10% to $193 million and equipment improved 17% to $25 million. EBIT for Greater China increased 20% to $187 million.

For fiscal 2010 Greater China revenue was essentially flat to the prior year at $1.7 billion. Footwear revenue grew 1% to $953 million, apparel revenue declined 2% to $684 million and equipment revenue improved 1% to $105 million. Fiscal 2010 EBIT for Greater China grew 11% to $637 million.

Japan

Japan's fourth quarter revenue declined 8% to $261 million. Compared to the prior year, footwear revenue was basically flat at $129 million, apparel revenue was down 13% at $105 million and equipment revenue dropped 17% to $27 million. EBIT declined 6% in the fourth quarter to $61 million.

Fiscal 2010 revenue for Japan declined 5% to $882 million. Compared to last year, footwear revenue increased 1% while apparel and equipment revenue declined 10% and 7% respectively. EBIT for Japan was down 12% for the year at $180 million.

Emerging Markets

In the Emerging Markets, revenue was up 47% to $556 million for the fourth quarter. Footwear revenue increased 42% to $355 million, apparel revenue rose 70% to $162 million and equipment revenue increased 19% to $39 million. EBIT for the Emerging Markets in the fourth quarter improved 46% to $114 million.

Full fiscal year revenue for the Emerging Markets was up 20% to $2.0 billion. Footwear revenue was up 23% to $1.4 billion, apparel revenue increased 22% to $532 million and equipment revenue declined 3% to $154 million. EBIT for the Emerging Markets improved 44% to $493 million for the year.

Other Businesses

Revenue in the fourth quarter for Other Businesses, which includes Cole Haan, Converse Inc., Hurley International LLC, NIKE Golf, and Umbro Ltd., increased 9% to $714 million while EBIT improved 71% to $73 million.

For the full fiscal year Other Businesses revenue increased 5% to $2.5 billion. EBIT for the fiscal year was $299 million versus a loss of $193 million last year. Last year's results included a $401 million pre-tax non-cash impairment charge to reduce the carrying value of Umbro's goodwill, intangible and other assets. Excluding this charge, EBIT increased 43% compared to the same period last year.

Income Statement Review

For both the fourth quarter and full fiscal year, gross margins improved. In the fourth quarter of fiscal 2010 gross margins were 47.4% compared to 43.4% for the same period last year. For the fiscal year, gross margins were 46.3% compared to 44.9% last year. Gross margins for the fourth quarter and fiscal year were higher than the prior year primarily due to improved in-line product margins, fewer close-out sales, and growth and improved profitability of owned retail and Other Businesses.

Fourth quarter selling and administrative expenses grew 25% to $1.7 billion. Selling and administrative expenses for the quarter were higher than the same period last year mainly due to higher demand creation spending, which increased 43% to $666 million, and increasing operational overhead spending that rose 16% to $1.1 billion reflecting investments in Company owned retail and higher costs for performance-based compensation. For the full fiscal year, selling and administrative expenses were up 3% to $6.3 billion. Full fiscal year demand creation spending was relatively flat to the prior year at $2.4 billion while operational overhead spending increased 5% to $4.0 billion mainly due to investments in Company owned retail and higher costs for performance-based compensation.

The effective tax rate for the fourth quarter was 23.6% compared to 29.8% for the same period last year. For the fiscal year, our effective tax rate was 24.2% compared to 24.0% last year. Excluding the tax effect of the charge for the impairment of Umbro assets, the effective tax rate for fiscal 2009 would have been 26.5%.

Balance Sheet Review

At the end of the fiscal year, global inventories stood at $2.0 billion, down 13% from May 31, 2009. Cash and short-term investments at year-end were $5.1 billion, $1.7 billion or 49% higher than last year.

Share Repurchase

During the fourth quarter, the Company repurchased a total of 2,884,008 shares for approximately $216 million under the Company's four-year, $5 billion program approved in September 2008. For the fiscal year, the Company repurchased a total of 11.3 million shares for approximately $754 million.

Repurchases for the fiscal year were made in conjunction with two approved repurchase programs. In the third quarter of fiscal 2010 the Company completed its previous four-year, $3 billion share repurchase program approved by the Board of Directors in June 2006 under which the Company purchased a total of 53.9 million shares. Having completed the previous program, the Company began repurchases under the four-year, $5 billion program approved in September 2008. Of the total shares repurchased during the fiscal year, 6.6 million shares for approximately $454 million were purchased under this program.