What was the impact of foreign currency exchange rates on NIKE's fiscal year 2004 results?

Foreign currency exchange rates had a significant positive impact, accounting for almost seven percentage points of the 15% consolidated revenue growth for the year. Currency changes also contributed about 70 basis points to the consolidated gross margin improvement and positively impacted pre-tax income through favorable translation of foreign currency-denominated profits.

How did the acquisition of Converse affect NIKE's financial performance?

The acquisition of Converse contributed approximately two percentage points to consolidated revenue growth for the full year. It also added to SG&A expenses and operating overhead, and contributed to the overall increase in other businesses' revenues and pre-tax profit.

What is NIKE's outlook for fiscal year 2005, and what are the key expectations regarding revenue and margins?

For fiscal year 2005, NIKE is targeting high single-digit revenue growth, with expectations for stronger growth in the first half due to the Converse acquisition benefiting the first quarter comparison. The company anticipates gross margin expansion driven by better foreign exchange hedge rates, with the most significant improvements expected in the second and third quarters. SG&A leverage is targeted for the full year, though not in the first quarter, due to front-loaded investments in demand creation and operating overhead.

What were the key drivers for the strong performance in the U.S. market, especially considering recent retail challenges?

Despite challenges like the bankruptcy of a major customer (Footstar), the U.S. market finished fiscal 2004 with strong revenue growth in the fourth quarter. U.S. futures orders were up 10%, and pre-tax income for the year increased five percent. Gross margins in the U.S. advanced 140 basis points, driven by improvements in inline footwear, closeout footwear, apparel, and retail sales. The acquisition of Footstar's stores by Foot Locker also contributed positively to U.S. futures growth.

NKE 8-K SEC Disclosure — Jun 28, 2004

Summary

NIKE, Inc. (NKE) reported strong financial results for the fourth quarter and full fiscal year 2004, exceeding revenue and profit expectations. The company announced revenues surpassed $12 billion for the year, marking a 15% increase driven by favorable foreign currency exchange rates and the acquisition of Converse. Gross margin reached a historical high of 42.9%, up 190 basis points, attributed to cost initiatives, tighter supply chains, and currency benefits. Key financial highlights include a 27% increase in diluted earnings per share to $3.51 and a return on invested capital of 22%. NIKE also demonstrated strong capital efficiency, generating nearly $1 billion in free cash flow and returning significant capital to shareholders through a 43% dividend increase and the completion of a $1 billion share repurchase program, with a new $1.5 billion program authorized. The company highlighted robust growth across its international regions, particularly in Europe and Asia Pacific, and a solid performance in the Americas, including significant improvements in the U.S. retail strategy.

Key Highlights

1Fiscal 2004 revenues exceeded $12 billion, a 15% increase year-over-year, with foreign currency and the Converse acquisition contributing significantly.
2Consolidated gross margin reached a record 42.9%, up 190 basis points from the prior year, driven by cost initiatives, supply chain improvements, and favorable currency.
3Diluted earnings per share (EPS) grew 27% to $3.51 for the full year.
4Return on Invested Capital (ROIC) improved to 22%, a 4-point increase.
5Generated nearly $1 billion in free cash flow from operations.
6Announced a new $1.5 billion share repurchase program, extending its commitment to returning capital to shareholders.
7Europe and Asia Pacific regions showed strong revenue growth (18% and 20% respectively for the full year), with China being a standout performer in Asia.

NIKE, Inc. 8-K Report (Jun 28, 2004)

Summary

Key Highlights

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