NIKE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS ENDED | % | ||||
(In millions, except per share data) | 8/31/2020 | 8/31/2019 | Change | ||
Revenues | $ | 10,594 | $ | 10,660 | -1% |
Cost of sales | 5,853 | 5,789 | 1% | ||
Gross profit | 4,741 | 4,871 | -3% | ||
Gross margin | 44.8 % | 45.7 % | |||
Demand creation expense | 677 | 1,018 | -33% | ||
Operating overhead expense | 2,298 | 2,310 | -1% | ||
Total selling and administrative expense | 2,975 | 3,328 | -11% | ||
% of revenues | 28.1 % | 31.2 % | |||
Interest expense (income), net | 65 | 15 | - | ||
Other (income) expense, net | (14) | (33) | - | ||
Income before income taxes | 1,715 | 1,561 | 10% | ||
Income tax expense | 197 | 194 | 2% | ||
Effective tax rate | 11.5 % | 12.4 % | |||
NET INCOME | $ | 1,518 | $ | 1,367 | 11% |
Earnings per common share: | |||||
Basic | $ | 0.97 | $ | 0.87 | 11% |
Diluted | $ | 0.95 | $ | 0.86 | 10% |
Weighted average common shares outstanding: | |||||
Basic | 1,561.8 | 1,562.4 | |||
Diluted | 1,593.3 | 1,597.5 | |||
Dividends declared per common share | $ | 0.245 | $ | 0.22 |
NIKE, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
August 31, | August 31, | ||||
(Dollars in millions) | 2020 | 2019 | % Change | ||
ASSETS | |||||
Current assets: | |||||
Cash and equivalents | $ | 8,148 | $ | 3,446 | 136% |
Short-term investments | 1,332 | 198 | 573% | ||
Accounts receivable, net | 3,813 | 4,656 | -18% | ||
Inventories | 6,705 | 5,835 | 15% | ||
Prepaid expenses and other current assets | 1,939 | 2,093 | -7% | ||
Total current assets | 21,937 | 16,228 | 35% | ||
Property, plant and equipment, net | 4,969 | 4,615 | 8% | ||
Operating lease right-of-use assets, net | 3,158 | 2,832 | 12% | ||
Identifiable intangible assets, net | 272 | 279 | -3% | ||
Goodwill | 223 | 224 | 0% | ||
Deferred income taxes and other assets | 2,699 | 2,071 | 30% | ||
TOTAL ASSETS | $ | 33,258 | $ | 26,249 | 27% |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current liabilities: | |||||
Current portion of long-term debt | $ | 1 | $ | 6 | -83% |
Notes payable | 137 | 250 | -45% | ||
Accounts payable | 1,983 | 2,716 | -27% | ||
Current portion of operating lease liabilities | 459 | 427 | 7% | ||
Accrued liabilities | 5,742 | 4,455 | 29% | ||
Income taxes payable | 297 | 216 | 38% | ||
Total current liabilities | 8,619 | 8,070 | 7% | ||
Long-term debt | 9,408 | 3,463 | 172% | ||
Operating lease liabilities | 2,961 | 2,675 | 11% | ||
Deferred income taxes and other liabilities | 3,046 | 2,841 | 7% | ||
Redeemable preferred stock | - | - | - | ||
Shareholders' equity | 9,224 | 9,200 | 0% | ||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 33,258 | $ | 26,249 | 27% |
NIKE, Inc.
DIVISIONAL REVENUES
(Unaudited)
% Change | ||||||
THREE MONTHS ENDED | % | Excluding | ||||
Currency | ||||||
(Dollars in millions) | 8/31/2020 | 8/31/2019 | Change | |||
Changes1 | ||||||
North America | ||||||
Footwear | $ | 2,957 | $ | 2,669 | 11% | 11% |
Apparel | 1,125 | 1,431 | -21% | -21% | ||
Equipment | 143 | 193 | -26% | -26% | ||
Total | 4,225 | 4,293 | -2% | -1% | ||
Europe, Middle East & Africa | ||||||
Footwear | 1,802 | 1,758 | 3% | 2% | ||
Apparel | 971 | 869 | 12% | 11% | ||
Equipment | 137 | 146 | -6% | -6% | ||
Total | 2,910 | 2,773 | 5% | 5% | ||
Greater China | ||||||
Footwear | 1,251 | 1,164 | 7% | 10% | ||
Apparel | 478 | 465 | 3% | 5% | ||
Equipment | 51 | 50 | 2% | 3% | ||
Total | 1,780 | 1,679 | 6% | 8% | ||
Asia Pacific & Latin America | ||||||
Footwear | 758 | 930 | -18% | -12% | ||
Apparel | 301 | 356 | -15% | -10% | ||
Equipment | 40 | 59 | -32% | -28% | ||
Total | 1,099 | 1,345 | -18% | -12% | ||
Global Brand Divisions2 | 4 | 6 | -33% | -31% | ||
TOTAL NIKE BRAND | 10,018 | 10,096 | -1% | 0% | ||
Converse | 563 | 555 | 1% | 2% | ||
Corporate3 | 13 | 9 | - | - | ||
TOTAL NIKE, INC. REVENUES | $ | 10,594 | $ | 10,660 | -1% | 0% |
TOTAL NIKE BRAND | ||||||
Footwear | $ | 6,768 | $ | 6,521 | 4% | 5% |
Apparel | 2,875 | 3,121 | -8% | -7% | ||
Equipment | 371 | 448 | -17% | -16% | ||
Global Brand Divisions2 | 4 | 6 | -33% | -31% | ||
TOTAL NIKE BRAND REVENUES | $ | 10,018 | $ | 10,096 | -1% | 0% |
- The percent change has been calculated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends by excluding the impact of translation arising from foreign currency exchange rate fluctuations, which is considered a non-GAAP financial measure.
- Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.
- Corporate revenues consist primarily of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse but managed through the Company's central foreign exchange risk management program.
NIKE, Inc.
EARNINGS BEFORE INTEREST AND TAXES1
(Unaudited)
THREE MONTHS ENDED | % | ||||
(Dollars in millions) | 8/31/2020 | 8/31/2019 | Change | ||
North America | $ | 1,302 | $ | 1,100 | 18% |
Europe, Middle East & Africa | 692 | 609 | 14% | ||
Greater China | 688 | 669 | 3% | ||
Asia Pacific & Latin America | 280 | 341 | -18% | ||
Global Brand Divisions2 | (853) | (857) | 0% | ||
TOTAL NIKE BRAND1 | 2,109 | 1,862 | 13% | ||
Converse | 168 | 138 | 22% | ||
Corporate3 | (497) | (424) | -17% | ||
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES1 | 1,780 | 1,576 | 13% | ||
Interest expense (income), net | 65 | 15 | - | ||
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES | $ | 1,715 | $ | 1,561 | 10% |
- The Company evaluates the performance of individual operating segments based on earnings before interest and taxes (commonly referred to as "EBIT"), which represents net income before interest expense (income), net and income tax expense. Total NIKE Brand EBIT and Total NIKE, Inc. EBIT are considered non-GAAP financial measures and are being provided as management believes this additional information should be considered when assessing the Company's underlying business performance and trends. References to EBIT should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled non-GAAP measures used by other companies.
- Global Brand Divisions primarily represent demand creation, operating overhead and product creation and design expenses that are centrally managed for the NIKE Brand. Revenues for Global Brand Divisions are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.
- Corporate consists primarily of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to the Company's corporate headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses, including certain hedge gains and losses. For the three months ended August 31, 2020, Corporate included non-recurring employee termination and related costs associated with the previously announced leadership and operating model changes.
NIKE, Inc.
RETURN ON INVESTED CAPITAL1
(Unaudited)
FOR THE TRAILING FOUR | ||||
QUARTERS ENDED | ||||
(Dollars in millions) | 8/31/2020 | 5/31/2020 | ||
Numerator | ||||
Net income | $ | 2,690 | $ | 2,539 |
Add: Interest expense (income), net | 139 | 89 | ||
Add: Income tax expense | 351 | 348 | ||
Earnings before interest and taxes | 3,180 | 2,976 | ||
Income tax adjustment2 | (362) | (352) | ||
Earnings before interest and after taxes | $ | 2,818 | $ | 2,624 |
AVERAGE FOR THE TRAILING | ||||
FIVE QUARTERS ENDED | ||||
8/31/2020 | 5/31/2020 | |||
Denominator | ||||
Total debt3,4 | $ | 9,276 | $ | 8,022 |
Add: Shareholders' equity | 8,975 | 8,938 | ||
Less: Cash and equivalents and Short-term investments | 5,719 | 4,756 | ||
Total invested capital | $ | 12,532 | $ | 12,204 |
RETURN ON INVESTED CAPITAL | 22.5 % | 21.5 % |
- ROIC represents a performance measure that management believes is useful information in understanding the Company's ability to effectively manage invested capital. ROIC is considered a non-GAAP financial measure and should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled non-GAAP measures used by other companies.
- Equals Earnings before interest and taxes multiplied by the effective tax rate as of the respective quarter end.
- Total debt includes the following: 1) Current portion of long-term debt, 2) Notes Payable, 3) Current portion of operating lease liabilities, 4) Long-term debt and 5) Operating lease liabilities.
- The Company adopted Accounting Standards Codification No. 842, Leases, on June 1, 2019. For comparability, total debt for each quarter prior to adoption includes approximately $3.2 billion, which represents the current and long-term portion of the Company's operating lease liabilities as of June 1, 2019.
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Nike Inc. published this content on 22 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 September 2020 21:44:07 UTC