10-KPeriod: FY2009

NIKE, Inc. Annual Report, Year Ended May 31, 2009

Filed July 27, 2009For Securities:NKE

Summary

NIKE, Inc.'s 2009 10-K filing reveals a company navigating a challenging global economic climate, reporting a 3% revenue increase to $19.2 billion for the fiscal year ended May 31, 2009. Despite the revenue growth, net income saw a significant 21% decrease to $1.5 billion, 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% 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.

Financial Highlights

48 data points
Beta

Revenue

$19.18B

44.9% Gross Margin

Net Income

$1.49B

7.8% Net Margin

EPS (Diluted)

$0.76

Total Assets

$13.25B

Cash & Equivalents

$2.29B

Free Cash Flow

$1.28B

Financial Statements
Beta
Revenue$19.18B
Cost of Revenue$10.57B
Gross Profit$8.60B
SG&A Expenses$6.15B
Net Income$1.49B
EPS (Basic)$0.77
EPS (Diluted)$0.76
Shares Outstanding (Basic)1.94B
Shares Outstanding (Diluted)1.96B

Key Highlights

  • 1Revenues increased by 3% to $19.2 billion, driven by strong performance in international markets and NIKE brand footwear.
  • 2Net income decreased by 21% to $1.5 billion, impacted by significant restructuring charges ($195 million) and impairment charges related to Umbro ($401.3 million).
  • 3International sales accounted for 58% of total revenues, underscoring NIKE's global market presence.
  • 4The company underwent a significant restructuring, reducing its global workforce by approximately 5% to streamline operations and enhance consumer focus.
  • 5Futures and advance orders declined by 12% compared to the prior year, signaling potential near-term revenue challenges.
  • 6The company maintained a strong balance sheet with over $2.2 billion in cash and equivalents and over $1.1 billion in short-term investments.
  • 7NIKE continued its share repurchase program, repurchasing $639 million worth of shares during the fiscal year.

Frequently Asked Questions

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.

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.

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.

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.