01—Abstract
Summary
Summary of the 10-K filed July 28, 2006. Cited figures are marked; the original filing is the authoritative source.
NIKE, Inc.'s 2006 10-K filing reveals a company experiencing robust revenue growth, reaching $14.95 billiona, a 9% increase year-over-year.
This growth was driven by strong performance in the U.S. and international markets, with sales in the U.S. accounting for 47% of total revenues. The company maintained its position as the world's largest seller of athletic footwear and apparel, emphasizing innovation and aggressive marketing. Net income grew by 15% to $1.39 billionb, translating to diluted earnings per share of $5.28, demonstrating effective cost management and operational leverage.
Key financial highlights include a gross margin of 44.0%c, slightly down from the previous year, primarily due to increased product costs influenced by oil prices and higher sales incentives. However, improved selling and administrative expense leverage and higher interest income helped offset this.
NIKE continued to focus on returning value to shareholders through increased dividends and significant share repurchases, underscoring financial strength and confidence in future performance. The company also highlighted its strategic focus on deepening consumer relationships, delivering innovative products, optimizing its supply chain, and accelerating growth.
02—Key points
Key Highlights
- Revenues increased by 9% to $14.95 billion, demonstrating strong top-line growth.
- Net income rose by 15% to $1.39 billion, resulting in diluted EPS of $5.28, up 18% from the prior year.
- The U.S. market contributed significantly, representing 47% of total revenues.
- Gross margin remained healthy at 44.0%, with slight pressure from increased product costs and sales incentives.
- Selling and administrative expenses as a percentage of revenue decreased by 80 basis points due to operating overhead leverage.
- The company returned substantial capital to shareholders through dividends and share repurchases, with a new $3.0 billion repurchase program authorized.
- NIKE continues to invest in product research and development to maintain its competitive edge and drive innovation.
03—Questions
Frequently Asked Questions
What was NIKE's revenue and net income for the fiscal year ended May 31, 2006?
For the fiscal year ended May 31, 2006, NIKE reported revenues of $14.95 billion and net income of $1.39 billion.
How did NIKE's various geographic regions perform?
The U.S. market accounted for 47% of total revenues, showing strong performance. International markets collectively represented 53% of revenues, with all international regions posting higher revenues. The EMEA region showed a 1% revenue increase, Asia Pacific grew 8%, and the Americas region saw a significant 30% increase.
What is NIKE's strategy for future growth?
NIKE's strategy is focused on four key areas: deepening consumer relationships, delivering superior and innovative products, making its supply chain a competitive advantage, and accelerating growth through focused execution. The company aims for long-term goals of high single-digit revenue growth and mid-teens earnings per share growth.
How is NIKE managing its costs and expenses?
NIKE achieved selling and administrative expense leverage, with these expenses decreasing as a percentage of revenue by 80 basis points due to operating overhead efficiencies. While gross margin faced some pressure from higher product costs, the company actively managed its operating overhead to maintain profitability.
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