01—Abstract
Summary
Summary of the 10-K filed July 27, 2009. Cited figures are marked; the original filing is the authoritative source.
NIKE, Inc.'s 2009 10-K filing reveals a company navigating a challenging global economic climate, reporting a 3% revenue increase to $19.2 billiona for the fiscal year ended May 31, 2009.
Despite the revenue growth, net income saw a significant 21% decrease to $1.5 billionb, impacted by $401.3 million in restructuring and impairment charges, primarily related to the Umbro brand. The company implemented a restructuring plan to streamline operations and reduce its global workforce by 5%. International sales represented a substantial 58% of total revenues, highlighting the company's global reach.
Looking ahead, NIKE focused on cost management, operational efficiency, and strategic investments in growth areas. The company's futures orders showed a decline of 12%c year-over-year, indicating potential headwinds in the coming periods.
Management emphasized its commitment to long-term shareholder value through revenue and earnings per share growth, despite the current economic pressures. The company also continued its share repurchase program, demonstrating confidence in its financial position.
02—Key points
Key Highlights
- Revenues increased by 3% to $19.2 billion, driven by strong performance in international markets and NIKE brand footwear.
- Net income decreased by 21% to $1.5 billion, impacted by significant restructuring charges ($195 million) and impairment charges related to Umbro ($401.3 million).
- International sales accounted for 58% of total revenues, underscoring NIKE's global market presence.
- The company underwent a significant restructuring, reducing its global workforce by approximately 5% to streamline operations and enhance consumer focus.
- Futures and advance orders declined by 12% compared to the prior year, signaling potential near-term revenue challenges.
- The company maintained a strong balance sheet with over $2.2 billion in cash and equivalents and over $1.1 billion in short-term investments.
- NIKE continued its share repurchase program, repurchasing $639 million worth of shares during the fiscal year.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed July 27, 2009Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $19.18B$18.63B | +2.9% |
| Cost of Revenue | $10.57B$10.24B | +3.2% |
| Gross Profit | $8.60B$8.39B | +2.6% |
| SG&A Expenses | $6.15B$5.95B | +3.3% |
| Net Income | $1.49B$1.88B | −21.0% |
| EPS (Basic) | $0.77$0.95 | −19.2% |
| EPS (Diluted) | $0.76$0.94 | −19.0% |
| Shares Outstanding (Basic) | 1.94B— | — |
| Shares Outstanding (Diluted) | 1.96B— | — |
05—Questions
Frequently Asked Questions
What was NIKE's financial performance in fiscal year 2009?
NIKE reported a 3% increase in revenues to $19.2 billion. However, net income decreased by 21% to $1.5 billion. This decrease was primarily due to restructuring charges of $195 million and impairment charges of $401.3 million related to the Umbro brand, which impacted overall profitability.
How did the global economic conditions affect NIKE's business?
The filing indicates that deteriorating macroeconomic conditions caused significant volatility in global financial markets and put pressure on discretionary consumer spending worldwide. This led to slower consumer spending, potentially reduced demand for NIKE products, and challenges for retailers, as reflected in longer collection cycles for accounts receivable and increased discounts to manage inventory.
What strategic actions did NIKE take in response to the economic environment?
NIKE implemented a restructuring plan aimed at streamlining management, enhancing consumer focus, accelerating innovation, and establishing a more scalable cost structure. This included a 5% reduction in its global workforce, a hiring freeze, reductions in discretionary spending, and tighter inventory and working capital management. The company also consolidated production with its strongest manufacturing contractors.
What is the outlook for future revenues based on the filing?
The filing notes a 12% decline in worldwide futures and advance orders for footwear and apparel scheduled for delivery from June through November 2009 compared to the same period in the prior year. This suggests potential headwinds for revenue growth in the near term, with lower apparel orders being a primary driver of the decline.
06—Continue