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Nike, Inc.

NIKE Reports Second Quarter Earnings Per Share Up 47 Percent; Worldwide Futures Orders Increase 9.1 Percent

Beaverton, Oregon (ots/PRNewswire)

    Highlights:
    -  Record second quarter earnings per diluted share increased 47 percent
        to USD$0.97 versus USD$0.66 per diluted share a year ago
    -  Highest second quarter revenues, up 11 percent to USD$3.1 billion
    -  Gross margin improved 1.8 points to 44.1 percent
    -  Worldwide futures orders increased 9.1 percent
NIKE, Inc. (NYSE: NKE) today reported revenues and earnings for
the Company's second quarter ended November 30, 2004. Second quarter
revenues increased 11 percent to USD$3.1 billion, versus USD$2.8
billion for the same period last year. Second quarter net income
totaled USD$261.9 million, or USD$0.97 per diluted share, compared to
USD$179.1 million, or USD$0.66 per diluted share in the prior year.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990818/NIKELOGO )
"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."(i)
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."(i)
Futures Orders
The Company reported worldwide futures orders for athletic
footwear and  apparel, scheduled for delivery from December 2004
through April 2005,  totaling USD$4.9 billion, 9.1 percent higher
than such orders reported for  the same period last year. Currency
exchange rates had no net impact to this  growth.(i)
By region, futures orders for the U.S. were up 10 percent; Europe
increased six percent; Asia Pacific grew 14 percent; and the Americas
increased 15 percent. 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.(i)
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 percent. The Nike brand is healthier than ever
and our innovative products continue to excite consumers around the
world."(i)
Regional Highlights
U.S.
During the second quarter, U.S. revenues increased five percent to
USD$1.13 billion versus USD$1.08 billion for the second quarter of
fiscal 2004. U.S. athletic footwear revenues increased nine percent
to USD$680.0 million. Apparel revenues decreased three percent to
USD$384.7 million. This decline was due predominantly to the
expiration of Nike's license agreement with the NBA. Equipment
revenues increased 11 percent to USD$67.3 million. U.S. pre-tax
income increased 21 percent to USD$232.6 million.
EMEA
Revenues for the Europe, Middle East and Africa region grew 13
percent to USD$961.1 million, up from USD$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
percent to USD$531.8 million, apparel revenues increased 14 percent
to USD$370.0 million and equipment revenues increased 18 percent to
USD$59.3 million. Pre-tax income rose 43 percent to USD$197.6
million.
Asia Pacific
Revenues in the Asia Pacific region grew 17 percent to USD$483.5
million compared to USD$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 percent to USD$236.6 million, apparel
revenues increased 19 percent to USD$207.8 million and equipment grew
23 percent to USD$39.1 million. Pre-tax income was up 14 percent to
USD$112.0 million.
Americas
Revenues in the Americas region increased 23 percent to USD$189.3
million, an improvement from USD$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
percent to USD$129.8 million, apparel revenues increased 14 percent
to USD$46.9 million and equipment improved 34 percent to USD$12.6
million. Pre-tax income grew 43 percent to USD$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 percent to USD$382.4 million from USD$340.0
million last year. Pre-tax income increased 210 percent to USD$20.8
million.
Income Statement Review
Gross margins were 44.1 percent compared to 42.3 percent last
year. Selling and administrative expenses were 30.9 percent of second
quarter revenues, compared to 31.8 percent last year. The effective
tax rate for the second quarter was 35.0 percent.
Balance Sheet Review
At quarter end, global inventories stood at USD$1.7 billion, an
increase of six percent from November 30, 2003. Cash and short-term
investments were USD$1.7 billion at the end of the quarter, compared
to USD$968.9 million last year
Share Repurchase
During the quarter, the Company purchased a total of 626,300
shares for approximately USD$48.6 million in conjunction with the
Company's four-year, USD$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. based in Beaverton, Oregon is the world's leading
designer, marketer and distributor of authentic athletic footwear,
apparel, equipment and accessories for a wide variety of sports and
fitness activities. Wholly owned Nike subsidiaries include Converse
Inc., which designs, markets and distributes athletic footwear,
apparel and accessories; Bauer NIKE Hockey Inc., a leading designer
and distributor of hockey equipment; Cole Haan, a leading designer
and marketer of luxury shoes, handbags, accessories and coats; Hurley
International LLC, which designs, markets and distributes action
sports and youth lifestyle footwear, apparel and accessories and
Exeter Brands Group LLC, which designs and markets athletic footwear
and apparel for the value retail channel.
NIKE's earnings releases and other financial information are
available on the Internet at www.NikeBiz.com/invest. This quarter,
Nikebiz will feature expanded information and relevant highlights of
product and key initiatives for the reporting period.
(i) The marked paragraphs contain forward-looking statements that
involve risks and uncertainties that could cause actual results to
differ materially. These risks and uncertainties are detailed from
time to time in reports filed by NIKE with the S.E.C., including
Forms 8-K, 10-Q, and 10-K. Some forward-looking statements in this
release concern changes in futures orders that are not necessarily
indicative of changes in total revenues for subsequent periods due to
the mix of futures and "at once" orders, which may vary significantly
from quarter to quarter.
                                  NIKE, Inc.
                      CONSOLIDATED FINANCIAL STATEMENTS
                    FOR THE PERIOD ENDED NOVEMBER 30, 2004
                     (In millions, except per share data)
                            All Amounts in USD$
     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%
    Weighted Average
     Common Shares
     Outstanding:
    Diluted            271.1      269.5               270.5     268.3
    Basic              263.3      263.3               263.0     263.1
    Dividend           $0.25      $0.20               $0.45     $0.34
     NIKE, Inc.
     BALANCE SHEET (i)                             11/30/2004     11/30/2003
       ASSETS
    Cash & Equivalents                              $1,181.8         $968.9
    Short-term Investments                             476.2             --
    Accounts Receivable                              2,125.8        1,964.4
    Inventory                                        1,692.4        1,592.0
    Deferred Taxes                                     184.2          212.7
    Prepaid Expenses and Other Curr Assets             390.3          309.2
       Current Assets                                6,050.7        5,047.2
    Fixed Assets                                     3,294.5        3,082.1
    Depreciation                                     1,671.0        1,476.1
       Net Fixed Assets                              1,623.5        1,606.0
    Identifiable Intangible
       Assets and Goodwill                             543.2          500.8
    Other Assets                                       340.9          248.9
    Total Assets                                    $8,558.3       $7,402.9
       LIAB AND EQUITY
    Current Long-term Debt                              $6.5         $206.1
    Payable to Banks                                   144.4          142.4
    Accounts Payable                                   650.7          533.1
    Accrued Liabilities                              1,020.8          937.2
    Income Taxes Payable                               180.8          159.6
       Current Liabilities                           2,003.2        1,978.4
    Long-term Debt                                     699.0          649.6
    Def Inc Taxes & Other Liabilities                  513.5          407.3
    Preferred Stock                                      0.3            0.3
    Common Equity                                    5,342.3        4,367.3
    Total Liab. & Equity                            $8,558.3       $7,402.9
    (i) Certain prior year amounts have been reclassified to conform to
        fiscal year 2005 presentation.
       These changes had no impact on previously reported results of
       operations or shareholders' equity.
     NIKE, Inc.
                      QUARTER ENDING               YEAR-TO-DATE ENDING
     Divisional
      Revenues(i) 11/30/2004 11/30/2003 % Chg  11/30/2004 11/30/2003  % Chg
    U.S. Region
      Footwear      $680.0    $624.0     9%   $1,601.4   $1,446.4      11%
      Apparel        384.7     398.3    -3%      776.0      744.8       4%
      Equipment       67.3      60.7    11%      156.3      140.8      11%
        Total      1,132.0   1,083.0     5%    2,533.7    2,332.0       9%
    EMEA Region
      Footwear       531.8     472.5    13%    1,195.1    1,062.5      12%
      Apparel        370.0     324.9    14%      779.7      666.8      17%
      Equipment       59.3      50.4    18%      144.2      130.1      11%
        Total        961.1     847.8    13%    2,119.0    1,859.4      14%
    Asia Pacific
      Region
      Footwear       236.6     205.6    15%      455.2      408.4      11%
      Apparel        207.8     174.5    19%      356.6      287.8      24%
      Equipment       39.1      31.9    23%       77.7       63.8      22%
       Total         483.5     412.0    17%      889.5      760.0      17%
    Americas Region
      Footwear       129.8     103.6    25%      244.6      206.5      18%
      Apparel         46.9      41.3    14%       82.4       79.9       3%
      Equipment       12.6       9.4    34%       24.0       19.0      26%
        Total        189.3     154.3    23%      351.0      305.4      15%
                   2,765.9   2,497.1    11%    5,893.2    5,256.8      12%
    Other            382.4     340.0    12%      816.9      605.2      35%
    Total
     NIKE Inc.
     Revenues     $3,148.3  $2,837.1    11%   $6,710.1   $5,862.0      14%
    (i) Certain prior year amounts have been reclassified to conform to
        fiscal year 2005 presentation.
     These changes had no impact on previously reported results of operations
      or shareholders' equity.
     NIKE, Inc.
                              QUARTER ENDING        YEAR-TO-DATE ENDING
     Pre-tax
     Income(1)       11/30/04  11/30/03   % Chg  11/30/04  11/30/03   % Chg
    U.S. Region       $232.6    $192.4     21%   $554.5    $485.8     14%
    EMEA Region        197.6     138.2     43%    444.0     341.0     30%
    Asia Pacific
     Region            112.0      98.1     14%    175.4     174.5      1%
    Americas
     Region             44.5      31.2     43%     65.2      55.5     17%
    Other               20.8       6.7    210%     61.1       2.4   2446%
    Corporate (2)     (204.5)   (191.9)    -7%   (391.7)   (383.9)    -2%
    Total
     Pre-tax
     Income (1)       $403.0    $274.7     47%   $908.5    $675.3     35%
     (1)  The Company evaluates performance of individual operating segments
          based on pre-tax income.  Total pre-tax income equals Income before
          income taxes as shown on the Consolidated Income Statement.
     (2)  "Corporate" represents items necessary to reconcile to total pre-
          tax income, which includes corporate costs that are not allocated
          to the operating segments for management reporting and
          intercompany eliminations for specific items in the Consolidated
          Income Statement.
Web site: http://www.nikebiz.com

Contact:

investors, Pamela Catlett, +1-503-671-4589, or media, Joani Komlos,
+1-503-671-2013, both of NIKE, Inc.; Photo:
http://www.newscom.com/cgi-bin/prnh/19990818/NIKELOGO, AP Archive:
http://photoarchive.ap.org, PRN Photo Desk, photodesk@prnewswire.com

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