Nike Q2 Revenues Rose 8%; Futures Up 2.4%

Nike reported revenues and earnings for the company's second quarter ended November 30, 2002. Second quarter revenues increased 8% to $2.5 billion, versus $2.3 billion for the same period last year. Second-quarter net income totaled $152 million, or $0.57 per diluted share, compared to $129 million, or $0.48 per diluted share in the prior year.

Philip Knight, COB/CEO, said, "We are pleased by the strong earnings result this quarter, the fifth consecutive quarter we have delivered solid earnings growth despite a challenging economic environment. Our global portfolio continues to deliver strong results, as each of our international regions posted outstanding growth in revenue and profits. Continued margin expansion and tight inventories further demonstrate the overall health of our global business."

The company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery between December 2002 and April 2003, totaled $3.9 billion, 2.4% higher than such orders reported for the same period last year. Had the U.S. dollar remained constant, futures orders would have been flat year over year.

By region, the USA was down 4%; Europe increased 9%; Asia Pacific grew 15%; and the Americas decreased 15%. In constant dollars, futures orders for Europe increased 2%; Asia Pacific grew 12%; and the Americas decreased 5%.

Knight said, "Our international businesses continue to show strength as futures orders outside the U.S. increased 8%. While U.S. orders were down this quarter as we expected, we are pleased with the worldwide strength of our brand and believe that the realignment of our U.S. distribution will only enhance our business and our brand going forward."

U.S. revenues decreased 8% to $1.0 billion, compared to $1.1 billion in the same period last year. U.S. athletic footwear revenues declined 13% to $596 million. Apparel revenues fell 1% to $370 million. Equipment revenues decreased 4% to $67 million.

Quarterly revenues for the European region (which includes the Middle East and Africa) grew 35% to $781 million. Footwear revenues increased 39% to $437 million, apparel revenues grew 29% to $295 million and equipment increased 33% to $50 million. Had the dollar remained constant, regional revenues would have increased 25%.

Quarterly revenues in the Asia Pacific region grew 14% to $353 million. Footwear revenues were up 6% to $171 million, apparel revenues increased 23% to $151 million and equipment grew 19% to $30 million. In constant dollars, regional revenues grew 12%.

Revenues in the Americas region decreased 13% to $134 million. Footwear revenues were down 17% to $83 million, apparel revenues decreased 11% to $41 million and equipment grew 15% to $10 million. Had the dollar remained constant, revenues would have grown 7%.

Other revenues, which include Nike Golf, Bauer NIKE Hockey Inc., Cole Haan, and Hurley International LLC, grew 28% to $215 million.

Gross margins in the quarter were 40.2% compared to 38.3% last year. Selling and administrative expenses were 30.2% of second quarter revenues, compared to 29.0% last year. The effective tax rate for the quarter was 33.8% compared to 35.0% in the prior year.

At quarter-end, global inventories totaled $1.4 billion, down 3% from November 30, 2001. Cash and short-term investments were $556 million at the end of the quarter compared to $460 million last year.