Nike 2009 Annual Report Download - page 37

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The increase in pre-tax income for fiscal 2008 versus the prior year was primarily attributable to higher
revenues, improved gross margins and operating overhead leverage, combined with favorable foreign currency
translation. These factors were partially offset by higher demand creation spending as a percentage of revenue.
The gross margin improvement was driven primarily by higher in-line net pricing margins resulting from a better
mix of products sold and fewer discounts offered in fiscal 2008 compared to fiscal 2007. The increase in demand
creation spending during fiscal 2008 was primarily attributable to investments in sports marketing, most notably
in soccer, brand events and investments in our retail presentation.
Other Businesses
Fiscal 2009 Fiscal 2008
FY09 vs.
FY08
% Change Fiscal 2007
FY08 vs.
FY07
% Change
(In millions)
Revenues
Converse ................... $ 915.3 $ 729.0 26% $ 563.8 29%
NIKE Golf ................. 648.3 725.2 -11% 646.3 12%
Cole Haan .................. 471.6 496.2 -5% 468.6 6%
Hurley ..................... 202.9 171.1 19% 150.6 14%
Umbro ..................... 174.0 53.9 223% — —
Bauer ...................... — 201.9 -100% 166.1 22%
Exeter ..................... — 35.1 -100% 67.7 -48%
Other ...................... 102.2 118.6 -14% 104.6 13%
Revenues ....................... $2,514.3 $2,531.0 -1% $2,167.7 17%
Pre-tax Income .................. $ (196.7) $ 364.9 -154% $ 299.7 22%
Fiscal 2009 Compared to Fiscal 2008
For fiscal 2009, our Other businesses were primarily comprised of Cole Haan, Converse, Hurley, NIKE
Golf and Umbro. For fiscal 2008, our Other businesses were primarily comprised of Cole Haan, Converse,
Exeter (whose primary business was the Starter brand business which was sold on December 17, 2007), Hurley,
NIKE Bauer Hockey (which was sold on April 17, 2008), NIKE Golf and Umbro (which was acquired on
March 3, 2008).
The slight decrease in Other businesses revenues for fiscal 2009 was primarily attributable to the loss of
revenue from NIKE Bauer Hockey and the Starter brand business. Excluding the loss of revenue from NIKE
Bauer Hockey and the Starter brand business and the addition of Umbro, Other businesses revenues for fiscal
2009 would have increased 5%, driven by the strong performance from Converse and Hurley, offset by sales
decreases at NIKE Golf and Cole Haan, due to reductions in consumer discretionary spending in their respective
markets.
Pre-tax income for Other businesses declined for fiscal 2009 primarily as a result of a $401.3 million pre-tax
non-cash impairment charge to reduce the carrying value of Umbro’s goodwill, intangible and other assets.
Excluding the impairment charge, the loss of income from NIKE Bauer Hockey and the Starter brand business
along with the dilutive impact of Umbro, pre-tax income for Other businesses would have decreased by 28%,
driven by declines in operating results at NIKE Golf and Cole Haan.
For additional information about our impairment charges, see Note 4 — Acquisition, Identifiable Intangible
Assets, Goodwill and Umbro Impairment in the accompanying notes to the consolidated financial statements.
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