Summary
NIKE, Inc. reported its second quarter fiscal year 2007 results, demonstrating continued revenue growth and profitability. Revenues increased by 10% to $3.8 billion, driven by broad-based demand across all geographic regions and product categories, with particular strength in apparel and equipment. Net income rose 8% to $325.6 million, and diluted earnings per share (EPS) saw a 12% increase to $1.28. A significant positive development for the company is the finalization of a new ten-year tax agreement with Dutch tax authorities, which is expected to improve cash flows and reduce the effective tax rate in future years, and provided a retroactive tax benefit in the current quarter. The adoption of new accounting standards, specifically SFAS No. 123R for stock-based compensation, resulted in a quarterly charge of $18.8 million ($0.08 per diluted share). Despite higher demand creation spending compared to the prior year, which benefited from the timing of World Cup-related expenses, NIKE's EPS growth outpaced net income growth due to ongoing share repurchase programs. The company also announced a new $1 billion credit facility and continued its share repurchase activity, signaling confidence in its financial position and commitment to shareholder returns.
Key Highlights
- 1Revenues increased 10% year-over-year to $3.8 billion for the second quarter of fiscal 2007.
- 2Net income grew 8% to $325.6 million, with diluted EPS up 12% to $1.28.
- 3A favorable ten-year tax agreement with Dutch tax authorities was finalized, expected to reduce the effective tax rate and provide a retroactive tax benefit.
- 4The company adopted SFAS No. 123R, resulting in a $18.8 million stock-based compensation expense for the quarter.
- 5Worldwide futures and advance orders were up 7% for deliveries from December 2006 through April 2007.
- 6NIKE entered into a new $1 billion multi-year credit facility.
- 7The company repurchased 1.5 million shares for $126 million during the quarter under its new $3 billion repurchase program.