What was the primary driver of revenue growth in this period?

Revenue growth was driven by strong performance across international regions, particularly EMEA and Asia Pacific, as well as the recent acquisition of Converse Inc. Changes in currency exchange rates, especially the Euro, also positively impacted international revenue.

How did the acquisition of Converse Inc. impact the financial results?

The acquisition of Converse Inc. on September 4, 2003, contributed to consolidated revenue growth, adding 2 percentage points in the second quarter and 1 percentage point for the six-month period. The acquisition was accounted for under the purchase method, with identifiable intangible assets and goodwill recorded.

What is the outlook for future revenue and profitability based on advance orders?

Worldwide futures and advance orders for footwear and apparel scheduled for delivery from December 2003 through April 2004 were 9.7% higher than the comparable period in the prior year. However, the company cautions that this growth rate is not necessarily indicative of future revenue growth due to potential shifts in order mix (futures vs. at-once), currency fluctuations, and cancellations. A significant portion of revenue also comes from sources not captured by futures orders.

How has NIKE managed its liquidity and capital resources?

NIKE demonstrated strong liquidity, with cash provided by operations increasing significantly. The company also has access to external funding through a $750 million revolving credit facility and an existing shelf registration for debt securities. During the period, NIKE continued its share repurchase program and paid dividends, indicating confidence in its cash generation capabilities.

NKE 10-Q Quarterly Report Q2 FY2004 — Revenue, Net Income, EPS

Summary

NIKE, Inc. reported robust financial performance for the second quarter and the first six months of fiscal year 2004, ending November 30, 2003. Revenue increased by 13% to $2.8 billion for the quarter and 10% to $5.9 billion for the six-month period, driven by strong international sales, particularly in EMEA and Asia Pacific, and the recent acquisition of Converse Inc. Gross margin improved significantly to 42.3% in the quarter and 42.7% year-to-date, benefiting from reduced closeout sales, improved product mix, and favorable currency movements. Net income saw a substantial increase of 18% for the quarter, reaching $179.1 million, and a 19% rise for the six-month period (before the prior year's accounting adjustment), totaling $440.3 million. Diluted earnings per share also showed healthy growth. The company successfully managed its operating expenses, with strategic investments in demand creation and operating overhead supporting growth. Liquidity remains strong, with significant cash generated from operations and access to credit facilities, enabling continued share repurchases and dividend payments.

Key Highlights

1Revenue grew 13% to $2.8 billion for the second quarter and 10% to $5.9 billion for the six months ended November 30, 2003.
2Gross margin improved to 42.3% for the quarter and 42.7% for the six months, up from 40.2% and 40.8% respectively in the prior year.
3Net income increased 18% to $179.1 million for the quarter and 19% to $440.3 million for the six months (excluding prior year accounting charge).
4Diluted earnings per share rose 16% to $0.66 for the quarter and 19% to $1.64 for the six months (excluding prior year accounting charge).
5The acquisition of Converse Inc. on September 4, 2003, contributed to revenue growth.
6Cash provided by operations significantly increased to $769.1 million for the first six months of fiscal 2004, compared to $400.0 million in the prior year.
7The company repurchased $190.0 million of its stock in the first six months of fiscal 2004 under its share repurchase program.

NIKE, Inc. Quarterly Report for Q2 Ended Nov 30, 2003

Summary

Key Highlights

Frequently Asked Questions