What was the main driver of revenue growth in this quarter?

Revenue growth was primarily driven by strong performance in NIKE's international regions, specifically Europe, the Middle East, and Africa (EMEA) and the Asia Pacific region. Changes in currency exchange rates, particularly the strengthening euro, also contributed positively to revenue figures.

How did the adoption of new accounting standards affect the financial results?

NIKE adopted SFAS 142, which led to a significant impairment charge of $266.1 million in the prior fiscal year related to goodwill and intangible assets of its Bauer NIKE Hockey and Cole Haan businesses. This charge was recorded as a cumulative effect of an accounting change. While this impacted prior year net income comparisons, it means goodwill and certain other intangibles are no longer amortized, but tested for impairment annually. For the current period, goodwill and intangible asset amortization was avoided, positively impacting income before the cumulative effect of accounting change.

What challenges is NIKE facing in the U.S. market, particularly in footwear?

In the U.S. market, footwear sales experienced declines compared to the prior year. This was attributed to lower sales volumes to a major customer, Foot Locker, and limitations imposed on that customer's purchases. Additionally, a shift in the sales mix towards lower-priced classic and kids' models, rather than higher-priced adult performance models, reduced the average price per pair sold.

How is NIKE managing its debt and liquidity?

NIKE generated $428.8 million in cash from operations during the first nine months of fiscal 2003. The company has a $1 billion share repurchase program, of which $509.7 million has been utilized to date. They also have access to debt financing, with $410.0 million available under their medium-term note program and $1.0 billion available under committed credit facilities. The company believes its cash flow and access to funding are sufficient to meet future needs.

NKE 10-Q Quarterly Report Q3 FY2003 — Revenue, Net Income, EPS

Summary

NIKE, Inc.'s fiscal third quarter report for the period ending February 28, 2003, indicates a slight increase in consolidated revenues, driven primarily by strong performance in international markets, particularly Europe, the Middle East, and Africa, and the Asia Pacific region. This growth was partially offset by a decline in the Americas region and the U.S. market. While overall revenues showed moderate growth, profitability was impacted by increased selling and administrative expenses, including higher demand creation costs and operational overhead. The company adopted new accounting standards, notably SFAS 142, which resulted in a significant one-time impairment charge related to goodwill and trademarks of its Bauer NIKE Hockey and Cole Haan businesses in the prior fiscal year, impacting year-over-year net income comparisons. Looking ahead, NIKE expressed confidence in its ability to meet future financial obligations through operational cash flow and available credit facilities, despite broader economic uncertainties.

Key Highlights

1Consolidated revenues increased by 6% to $2.4 billion for the third quarter, driven by international growth, particularly in EMEA and Asia Pacific.
2Europe, Middle East, and Africa (EMEA) and Asia Pacific regions showed strong revenue growth of 8% and 17% respectively, benefiting from currency tailwinds.
3U.S. revenues saw a modest 3% increase in the third quarter, though year-to-date performance was down 1%. U.S. footwear sales declined due to lower sales to Foot Locker and a shift in product mix.
4Gross margin improved by 1.6 percentage points in the third quarter compared to the prior year, primarily due to higher apparel margins.
5Selling and administrative expenses increased as a percentage of revenue, driven by higher demand creation costs (including new endorsement deals) and operating overhead.
6The adoption of SFAS 142 led to a significant cumulative effect accounting charge in the prior year due to goodwill and intangible asset impairment, impacting year-over-year net income comparisons. The current period's net income was $124.7 million.
7Worldwide futures and advance orders for footwear and apparel were up 5.8% for the upcoming season, indicating positive demand signals.

NIKE, Inc. Quarterly Report for Q3 Ended Feb 28, 2003

Summary

Key Highlights

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