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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-K
ANNUAL REPORT PURSUANT TO SECTION13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FORTHEFISCALYEARENDEDMAY31,2011
OR
TRANSITION REPORT PURSUANT TO SECTION13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FORTHETRANSITIONPERIODFROM______________ TO ______________
Commission File No.1-10635
NIKE, INC.
(Exact name of Registrant as specifi ed in its charter)
OREGON 93-0584541
(State or other jurisdiction of incorporation) (IRS Employer Identifi cation No.)
One Bowerman Drive Beaverton, Oregon 97005-6453
(Address of principal executive offi ces) (Zip Code)
(503) 671-6453
(Registrant’s Telephone Number,Including Area Code)
SECURITIES REGISTERED PURSUANT TO SECTION12(B) OF THE ACT:
ClassB Common Stock New York Stock Exchange
(Title of Each Class) (Name of Each Exchange on Which Registered)
SECURITIES REGISTERED PURSUANT TO SECTION12(G) OF THE ACT:
NONE
Indicate by check mark YES NO
if the registrant is a well-known seasoned issuer, as defi ned in Rule405 of the Securities Act.
if the registrant is not required to fi le reports pursuant to Section13 or Section15(d) of the Act.
whether the Registrant (1)has fi led all reports required to be fi led by Section13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12months (or for such shorter period that the Registrant was
required to fi le such reports), and (2)has been subject to such fi ling requirements for the past 90days.
whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule405 of Regulation S-T (§229.405 of this chapter) during
the preceding 12months (or for such shorter period that the registrant was required to submit and post such fi les).
if disclosure of delinquent fi lers pursuant to Item405 of Regulation S-K (§229.405 of this chapter) is not contained
herein, and will not be contained, to the best of Registrant’s knowledge, in defi nitive proxy or information
statements incorporated by reference in PartIII of this Form10-K or any amendment to this Form10-K.
whether the Registrant is a large accelerated fi ler, an accelerated fi ler, a non-accelerated fi ler, or a smaller reporting company. See the defi nitions
of “large accelerated fi ler,” “accelerated fi ler” and “smaller reporting company” in Rule12b-2 of the Exchange Act.
Large accelerated fi ler Accelerated fi ler Non-accelerated fi ler Smaller reporting company
whether the registrant is a shell company (as defi ned in Rule12b-2 of the Act).
As of November30,2010, the aggregate market value of the Registrant’s ClassA Common Stock held by non-affi liates of the Registrant
was $2,005,831,959 and the aggregate market value of the Registrant’s ClassB Common Stock held by non-af liates of the Registrant was
$33,459,424,185.
As of July18,2011, the number of shares of the Registrant’s ClassA Common Stock outstanding was 89,989,447 and the number of shares
of the Registrant’s ClassB Common Stock outstanding was 384,840,843.
DOCUMENTS INCORPORATED BY REFERENCE:
Parts of Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on September19, 2011 are incorporated by
reference into PartIII of this Report.

Table of contents

  • Page 1
    ... OF THE ACT: Class B Common Stock (Title of Each Class) New York Stock Exchange (Name of Each Exchange on Which Registered) SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE Indicate by check mark • if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the...

  • Page 2
    ...'s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...14 Selected Financial Data ...16 Management's Discussion and Analysis of Financial Condition and Results of Operations...17 Quantitative and Qualitative Disclosures about Market Risk ...32 Financial Statements...

  • Page 3
    ... high quality footwear, apparel, equipment, and accessory products. NIKE is the largest seller of athletic footwear and athletic apparel in the world. We sell our products to retail accounts, through NIKEowned retail stores and internet sales, which we refer to as our "Direct to Consumer" operations...

  • Page 4
    ... largest customers outside of the U.S. accounted for approximately 9% of total non-U.S. sales. Our Direct to Consumer business operates the following retail outlets outside the United States: Non-U.S. Retail Stores NIKE factory stores NIKE stores NIKETOWNs NIKE employee-only stores Cole Haan stores...

  • Page 5
    ... under sports marketing contracts and other athletes wear-test and evaluate products during the design and development process. Manufacturing Virtually all of our footwear is produced by factories we contract with outside of the United States. In fiscal 2011, contract factories in Vietnam, China...

  • Page 6
    ... the world. These trends are affecting many global manufacturing and service sectors, and the footwear and apparel industries, as a whole, are not immune. Companies in our industry are facing trade protectionist challenges in many different regions, and in nearly all cases we are working together...

  • Page 7
    ..., and customer support and service are important aspects of competition in the athletic footwear, apparel, and equipment industry. To help market our products, we contract with prominent and inï¬,uential athletes, coaches, teams, colleges and sports leagues to endorse our brands and use our products...

  • Page 8
    ... for Global Sales and Marketing for Consumer Products. ITEM 1A Risk Factors Special Note Regarding Forward-Looking Statements and Analyst Reports Certain written and oral statements, other than purely historical information, including estimates, projections, statements relating to NIKE's business...

  • Page 9
    ... and at-once orders and order cancellations; the ability of NIKE to sustain, manage or forecast its growth and inventories; the size, timing and mix of purchases of NIKE's products; increases in the cost of materials and energy used to manufacture products, new product development and introduction...

  • Page 10
    ... exchange rate ï¬,uctuations, order cancellations, returns, and discounts can cause differences in the comparisons between futures orders and actual revenues. Moreover, a significant portion of our revenue is not derived from futures and advance orders, including atonce and close-out sales of NIKE...

  • Page 11
    ...with global trade and doing business abroad, which include foreign laws and regulations, varying consumer preferences across geographic regions, political unrest, disruptions or delays in cross-border shipments, and changes in economic conditions in countries in which we manufacture or sell products...

  • Page 12
    ... operate our business. We are heavily dependent on information technology systems across our supply chain, including product design, production, forecasting, ordering, manufacturing, transportation, sales, and distribution. Our ability to effectively manage and maintain our inventory and to ship...

  • Page 13
    ...leased by NIKE. The NIKE World Campus, owned by NIKE and located in Beaverton, Oregon, USA, is a 176 acre facility of 18 buildings which functions as our world headquarters and is occupied by approximately 6,000 employees engaged in management, research, design, development, marketing, finance, and...

  • Page 14
    ...Equity Securities traded but each share is convertible upon request of the holder into one share of Class B Common Stock. The following tables set forth, for each of the quarterly periods indicated, the high and low sales prices for the Class B Common Stock as reported on the New York Stock Exchange...

  • Page 15
    ...and Issuer Purchases of Equity Securities COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN AMONG NIKE, INC.; S&P 500 INDEX; S&P APPAREL, ACCESSORIES & LUXURY GOODS INDEX; AND THE DOW JONES U.S. FOOTWEAR INDEX $240 $220 $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 2006 2007 2008 2009 2010 2011 NIKE...

  • Page 16
    ... from operations Price range of common stock High Low At May 31, Cash and equivalents Short-term investments Inventories Working capital Total assets Long-term debt Redeemable Preferred Stock Shareholders' equity Year-end stock price Market capitalization Financial Ratios: Return on equity Return on...

  • Page 17
    ... high quality footwear, apparel, equipment and accessory products worldwide. We are the largest seller of athletic footwear and apparel in the world. We sell our products to retail accounts, through NIKE-owned retail stores and internet sales, which we refer to as our "Direct to Consumer" operations...

  • Page 18
    ... by increased demand in all key categories. While wholesale revenues remain the largest component of overall NIKE Brand revenues, we continue to see growth in revenue through our Direct to Consumer channels. Our NIKE Brand Direct to Consumer operations include NIKE owned in-line and factory stores...

  • Page 19
    ... costs of endorsement contracts. Fiscal 2011 Compared to Fiscal 2010 In fiscal 2011, the effect of changes in foreign currency exchange rates did not have a significant impact on selling and administrative expense. Demand creation expense increased 4% compared to the prior year, primarily...

  • Page 20
    ..., development, marketing and selling of athletic footwear, apparel, and equipment. Our reportable operating segments for the NIKE Brand are: North America, Western Europe, Central & Eastern Europe, Greater China, Japan, and Emerging Markets. Our NIKE Brand Direct to Consumer operations are managed...

  • Page 21
    ... Western Europe Central & Eastern Europe Greater China Japan Emerging Markets Global Brand Divisions Total NIKE Brand Other Businesses Corporate TOTAL CONSOLIDATED EARNINGS BEFORE INTEREST AND TAXES Interest expense (income), net TOTAL CONSOLIDATED INCOME BEFORE INCOME TAXES $ Fiscal 2011 1,750...

  • Page 22
    ... increase. The growth in the Direct to Consumer business was fueled by 6% growth in comparable store sales. Excluding changes in currency exchange rates, footwear revenue in Western Europe increased 7%, driven by double-digit percentage growth in our Running, Football (Soccer) and Action Sports...

  • Page 23
    ... Fiscal 2010 Excluding changes in currency exchange rates, Greater China revenues increased 16% for fiscal 2011, driven by expansion in the number of partnerowned stores selling NIKE products, as well as improvement in comparable store sales for partner-owned stores. For fiscal 2011, the increase...

  • Page 24
    ... of in-line product sales, lower warehousing costs and favorable year-over-year standard currency rates, which more than offset the increase in product input costs and higher full-price discounts. Fiscal 2010 Compared to Fiscal 2009 Excluding changes in currency exchange rates, fiscal 2010 revenue...

  • Page 25
    ... in China, as well as increased sales in the U.K. as we transitioned that market to a Converse owned distribution model. Revenues for Cole Haan increased 12%, driven by double-digit percentage growth in our wholesale operations as well as high single-digit percentage growth in our Direct to Consumer...

  • Page 26
    ...Discussion and Analysis of Financial Condition and Results of Operations Corporate revenues primarily consist of (1) foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments but managed through our central foreign exchange...

  • Page 27
    ... lead times as well as the growth of Direct to Consumer operations. Changes in currency exchange rates and higher product costs also contributed to the increase in dollar inventory. The increase in accounts receivable was mainly attributable to the increase in revenues during fiscal 2011. Cash used...

  • Page 28
    ... refer to the accompanying Notes to the Consolidated Financial Statements (Note 7 - Short-Term Borrowings and Credit Lines) for further description and interest rates related to the short-term debt obligations listed below. Outstanding as of May 31, 2011 187 111 (In millions) Notes payable, due...

  • Page 29
    PART II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations Recently Adopted Accounting Standards In January 2010, the Financial Accounting Standards Board ("FASB") issued guidance to amend the disclosure requirements related to recurring and nonrecurring ...

  • Page 30
    ...average cost of capital; long-term rate of growth and profitability of the reporting unit's business; and working capital effects. The market valuation approach indicates the fair value of the business based on a comparison of the reporting unit to comparable publicly traded firms in similar lines...

  • Page 31
    ... 7 Management's Discussion and Analysis of Financial Condition and Results of Operations Hedge Accounting for Derivatives We use forward and option contracts to hedge certain anticipated foreign currency exchange transactions as well as certain non-functional monetary assets and liabilities. When...

  • Page 32
    ... impact of current market rates on our consolidated financial statements dependent upon hedge horizons. We use forward exchange contracts and options to hedge certain anticipated but not yet firmly committed transactions as well as certain firm commitments and the related receivables and payables...

  • Page 33
    ..., which varies due to changes in foreign exchange rates, is recognized in accumulated other comprehensive income upon the consolidation of this subsidiary. ITEM 8 Financial Statements and Supplemental Data An Internal Audit department reviews the results of its work with the Audit Committee of...

  • Page 34
    ... as of May 31, 2011, as stated in their report herein. Donald W. Blair Chief Financial Officer Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of NIKE, Inc.: In our opinion, the consolidated financial statements listed in the index appearing...

  • Page 35
    PART II ITEM 8 Financial Statements and Supplemental Data Consolidated Statements of Income (In millions, except per share data) Revenues Cost of sales Gross margin Demand creation expense Operating overhead expense Total selling and administrative expense Restructuring charges (Note 16) Goodwill...

  • Page 36
    PART II ITEM 8 Financial Statements and Supplemental Data Consolidated Balance Sheets (In millions) May 31, 2011 2010 ASSETS Current assets: Cash and equivalents Short-term investments (Note 6) Accounts receivable, net (Note 1) Inventories (Notes 1 and 2) Deferred income taxes (Note 9) Prepaid ...

  • Page 37
    ... in accounts receivable (Increase) decrease in inventories (Increase) decrease in prepaid expenses and other current assets Increase (decrease) in accounts payable, accrued liabilities and income taxes payable Cash provided by operations Cash used by investing activities: Purchases of short-term...

  • Page 38
    ... AT MAY 31, 2009 Stock options exercised Conversion to Class B Common Stock Repurchase of Class B Common Stock Dividends on Common stock ($1.06 per share) Issuance of shares to employees Stock-based compensation (Note 11): Forfeiture of shares from employees Comprehensive income: Net income Other...

  • Page 39
    ... 8 Financial Statements and Supplemental Data Common Stock Class A Class B (In millions, except per share data) BALANCE AT MAY 31, 2010 Stock options exercised Repurchase of Class B Common Stock Dividends on Common stock ($1.20 per share) Issuance of shares to employees Stock-based compensation...

  • Page 40
    ... Intangible Assets, Goodwill and Umbro Impairment ...44 Accrued Liabilities...45 Fair Value Measurements ...45 Short-Term Borrowings and Credit Lines ...47 Long-Term Debt...47 Income Taxes ...48 Redeemable Preferred Stock...50 Common Stock and Stock-Based Compensation ...50 Earnings Per Share ...51...

  • Page 41
    ... months at the date of purchase as current assets within short-term investments on the consolidated balance sheet. See Note 6 - Fair Value Measurements for more information on the Company's short term investments. Basis of Consolidation The consolidated financial statements include the accounts...

  • Page 42
    ... in the consolidated statements of income over the vesting period using the straight-line method. See Note 11 - Common Stock and Stock-Based Compensation for more information on the Company's stock programs. Income Taxes The Company accounts for income taxes using the asset and liability method...

  • Page 43
    ... (In millions) Land Buildings Machinery and equipment Leasehold improvements Construction in process Less accumulated depreciation $ $ Capitalized interest was not material for the years ended May 31, 2011, 2010, and 2009. 2010 223 952 2,217 821 177 4,390 2,458 1,932 NIKE, INC. - Form 10-K 43

  • Page 44
    ... as our adjustment for increased market risk given current market conditions. Other significant estimates used in the discounted cash ï¬,ow analysis include the rates of projected growth and profitability of Umbro's business and working capital effects. The market valuation approach indicates the...

  • Page 45
    ... prices for similar (In millions) Balance Sheet Classification ASSETS Derivatives: Foreign exchange forwards and options Interest rate swap contracts Total derivatives Available-for-sale securities: U.S. Treasury securities Commercial paper and bonds Money market funds U.S. Treasury securities...

  • Page 46
    ... 31, 2011, 2010, and 2009 was interest income of $30 million, $30 million, and $50 million, respectively, related to cash and equivalents and short-term investments. For fair value information regarding notes payable and long-term debt, refer to Note 7 - Short-Term Borrowings and Credit Lines and...

  • Page 47
    ...at May 31, 2010. In fiscal years 2003 and 2004, the Company issued a total of $240 million in medium-term notes of which $190 million, at face value, were outstanding at May 31, 2011. The outstanding notes have coupon rates that range from 4.70% to 5.66% and maturity dates ranging from July 2012 to...

  • Page 48
    ... tax rate for the year ended May 31, 2010 of 24.2% increased from the fiscal 2009 effective rate of 24.0%. The effective tax rate for fiscal 2009 includes a tax benefit related to charges recorded for the impairment of Umbro's goodwill, intangible and other assets. 48 NIKE, INC. - Form 10...

  • Page 49
    ... (278) 517 Deferred tax assets: Allowance for doubtful accounts Inventories Sales return reserves Deferred compensation Stock-based compensation Reserves and accrued liabilities Foreign loss carry-forwards Foreign tax credit carry-forwards Hedges Undistributed earnings of foreign subsidiaries Other...

  • Page 50
    ... as follows: 2013 7 $ 2014 10 $ Year Ending May 31, 2015 2016 4 $ 10 $ 2017-2028 91 $ Indefinite 61 $ Total 183 (In millions) Net Operating Losses $ During the years ended May 31, 2011, 2010, and 2009, income tax benefits attributable to employee stock-based compensation transactions of $68...

  • Page 51
    ... period. Employees purchased 0.8 million shares during the years ended May 31, 2011 and 2010, and 1.0 million shares during the year ended May 31, 2009. From time to time, the Company grants restricted stock and unrestricted stock to key employees under the 1990 Plan. The number of shares granted...

  • Page 52
    ... purchase of inventory. NOTE 16 Restructuring Charges recognize additional costs relating to these actions. The restructuring charge is reï¬,ected in the corporate expense line in the segment presentation of earnings before interest and taxes in Note 18 - Operating Segments and Related Information...

  • Page 53
    ... how the above financial instruments are valued, Note 14 - Accumulated Other Comprehensive Income and the consolidated statements of shareholders' equity for additional information on changes in other comprehensive income for the years ended May 31, 2011, 2010 and 2009. NIKE, INC. - Form 10-K 53

  • Page 54
    ... provided by operations component of the cash ï¬,ow statement. No ineffectiveness has been recorded to net income related to interest rate swaps designated as fair value hedges for the years ended May 31, 2011, 2010, and 2009. In fiscal 2003, the Company entered into a receive-ï¬,oating, pay-fixed...

  • Page 55
    ...income before income taxes. As part of the Company's centrally managed foreign exchange risk management program, standard foreign currency rates are assigned to each NIKE Brand entity in our geographic operating segments and are used to record any nonfunctional currency revenues or product purchases...

  • Page 56
    ... & Eastern Europe Greater China Japan Emerging Markets Global Brand Divisions Total NIKE Brand Other Businesses(1) Corporate(2) Total NIKE Consolidated Earnings Before Interest and Taxes Interest expense (income), net TOTAL NIKE CONSOLIDATED EARNINGS BEFORE TAXES ADDITIONS TO LONG-LIVED ASSETS North...

  • Page 57
    ... Europe Greater China Japan Emerging Markets Global Brand Divisions Total NIKE Brand Other Businesses Corporate TOTAL PROPERTY, PLANT AND EQUIPMENT, NET $ $ $ $ $ Revenues by Major Product Lines Revenues to external customers for NIKE Brand products are attributable to sales of footwear, apparel...

  • Page 58
    ..., 2011, 2010, and 2009, respectively. The Company's largest concentrations of long-lived assets primarily consist of the Company's world headquarters and distribution facilities in the United States and distribution facilities in Japan, Belgium and China. Long-lived assets attributable to operations...

  • Page 59
    ... - Equity Compensation Plans" in the definitive Proxy Statement for our 2011 Annual Meeting of Shareholders and is incorporated herein by reference. The information required by Item 403 of Regulation S-K is included under "Election of Directors - Stock Holdings of Certain Owners and Management" in...

  • Page 60
    ...Equity for each of the three years ended May 31, 2011, May 31, 2010 and May 31, 2009 Notes to Consolidated Financial Statements 2. Financial Statement Schedule Schedule II - Valuation and Qualifying Accounts All other schedules are omitted because they are not applicable or the required information...

  • Page 61
    ... by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2009).* NIKE, Inc. Foreign Subsidiary Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended...

  • Page 62
    ...the Company's Current Report on Form 8-K filed July 20, 2010).* Computation of Ratio of Earnings to Fixed Charges. Subsidiaries of the Registrant. Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm (set forth on page 62 of this Annual Report on Form 10-K). Rule 13a...

  • Page 63
    ... and Financial Statement Schedules Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NIKE, INC. By: /s/ MARK G. PARKER Mark...

  • Page 64
    ...xed charges Interest expense(1) Interest component of leases(2) TOTAL FIXED CHARGES Earnings before income taxes and fixed charges(3) Ratio of earnings to total fixed charges $ 2011 2,133 $ 711 2,844 34 45 79 2,923 $ 37.0 Year Ended May 31, 2010 2009 1,907 $ 1,487 $ 610 470 2,517 1,957 36 42 78...

  • Page 65
    .... NIKE Dunk Holding B.V. NIKE Europe Holding B.V. NIKE European Operations Netherlands B.V. NIKE Finance Ltd. NIKE Finland OY NIKE Flight NIKE France S.A.S. NIKE Galaxy Holding B.V. NIKE Glide C.V. NIKE Global Holding B.V. NIKE GLOBAL SERVICES PTE. LTD. NIKE GLOBAL TRADING PTE. LTD. NIKE GmbH NIKE...

  • Page 66
    ...and Financial Statement Schedules Entity Name NIKE Retail Poland sp. z o. o. NIKE Retail Services, Inc. NIKE Retail Turkey NIKE Russia LLC NIKE SALES (MALAYSIA) SDN. BHD. NIKE Servicios de Mexico S. de R.L. de C.V. NIKE SINGAPORE PTE LTD NIKE Slovakia s.r.o. NIKE Sourcing India Private Limited NIKE...

  • Page 67
    ..., NIKE Brand Gary M. DeStefano President, Global Operations Trevor A. Edwards Vice President, Global Brand & Category Management Jeanne P. Jackson President, Direct to Consumer Hilary K. Krane Vice President, General Counsel & Corporate Affairs John F. Slusher Vice President, Global Sports Marketing...

  • Page 68
    ... Manufacturing Beaverton, Oregon Jonathan A. Banks Vice President, Emerging Markets, Greater China and Japan Sports Marketing Beaverton, Oregon Reenie Benziger Vice President, Apparel Sports Category Beaverton, Oregon Alexander W. Bodecker Vice President, NIKE Global Design & Action Sports Beaverton...