What were the main drivers of revenue growth in this quarter?

Revenue growth was primarily driven by strong performance in international markets, especially the EMEA and Asia Pacific regions, where currency exchange rates, particularly a stronger euro, played a significant role. The recent acquisition of Converse Inc. also contributed positively to revenue growth. Strategic timing of deliveries and an earlier start to the selling season in EMEA also impacted revenue recognition.

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

The acquisition of Converse Inc., completed in the second quarter of fiscal 2004 for approximately $310 million, added $246.2 million in identifiable intangible assets (trademarks) and $69.1 million in goodwill to the balance sheet. Converse contributed 3 percentage points to consolidated revenue growth in the third quarter and 2 percentage points for the first nine months. Its results are now included in the 'Other' operating segment.

What factors contributed to the improvement in gross margin percentage?

The company saw significant improvements in gross margin percentage, with the third quarter reaching 42.1%. Key drivers included favorable changes in currency hedge rates (primarily the euro), improved profitability on closeout sales, and higher in-line pricing margins. Benefits from lower air freight costs and reduced product manufacturing costs also contributed to the margin expansion.

How is NIKE managing its liquidity and capital resources?

NIKE maintained strong liquidity, with cash and equivalents increasing to $914.7 million. Operating cash flow was robust, supplemented by proceeds from debt issuances and stock option exercises. The company continued its share repurchase program and paid dividends, demonstrating a commitment to returning capital to shareholders. A new $750 million revolving credit facility was established, and the company currently has no outstanding borrowings under this facility.

NKE 10-Q Quarterly Report Q3 FY2004 — Revenue, Net Income, EPS

Summary

NIKE, Inc.'s Q3 FY2004 report shows robust revenue growth driven by strong international performance, particularly in EMEA and Asia Pacific, and the impactful acquisition of Converse. Revenue increased by 21% year-over-year for the quarter, reaching $2.9 billion, and by 14% for the nine-month period to $8.77 billion. This growth was fueled by favorable currency exchange rates, strategic shifts in delivery timing, and strong consumer demand in key international markets, partially offset by a slowdown in U.S. footwear unit volume. The company also demonstrated significant improvements in gross margin, up 1.4% for the quarter to 42.1%, attributed to better hedge rates, improved closeout sale profitability, and higher in-line pricing margins. Net income saw a substantial increase of 61% for the quarter, reaching $200.3 million, and a 181% surge for the nine-month period to $640.6 million. This strong financial performance reflects effective cost management, strategic acquisitions, and a favorable global economic environment for the brand. The balance sheet highlights a significant increase in cash and equivalents, up to $914.7 million from $634.0 million at the end of the previous fiscal year, indicating strong cash generation. Long-term debt also saw a reduction in its current portion, though overall long-term debt increased. The acquisition of Converse Inc. for approximately $310 million significantly boosted intangible assets and goodwill, reflecting the company's strategic expansion efforts. The company continued its share repurchase program, underscoring its commitment to returning value to shareholders. Overall, NIKE presented a compelling financial picture characterized by strong top-line growth, margin expansion, and robust profitability, supported by a solid cash position and ongoing strategic investments.

Key Highlights

1Revenue increased by 21% year-over-year for the third quarter to $2.9 billion, and by 14% for the first nine months to $8.77 billion, driven by international markets and the Converse acquisition.
2Gross margin improved by 1.4% in the third quarter to 42.1% and by 1.7% for the nine-month period to 42.5%, due to favorable currency hedges, better closeout sales, and pricing.
3Net income surged by 61% for the third quarter to $200.3 million and by 181% for the first nine months to $640.6 million.
4Cash and equivalents increased significantly to $914.7 million from $634.0 million at the prior year-end, reflecting strong operating cash flow.
5The acquisition of Converse Inc. for approximately $310 million during the second quarter contributed significantly to revenue growth and intangible assets.
6The company continued its share repurchase program, buying back $245.6 million worth of stock in the first nine months of the fiscal year.
7International segments, particularly EMEA and Asia Pacific, showed robust revenue growth, outpacing the U.S. market.

NIKE, Inc. Quarterly Report for Q3 Ended Apr 8, 2004

Summary

Key Highlights

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