Nike, Inc.Nike, Inc.

2021-002Daniel CibranACG

Daniel CibranDaniel CibranACG2021 002ACG2021 002

Annual Report Project DirectionsAnnual Report Project Directions:: DURING THE CLASS THAT COVERS CHAPTER 15, GET PROFESSOR APPROVAL FOR THE COMPANY DURING THE CLASS THAT COVERS CHAPTER 15, GET PROFESSOR APPROVAL FOR THE COMPANY

YOU WANT TO ANALYZE.YOU WANT TO ANALYZE. PREPARE A POWERPOINT PRESENTATION: MPREPARE A POWERPOINT PRESENTATION: Modify and enhanceodify and enhance this powerpoint template— this powerpoint template—

replace any italicized words in this template with your own. Add images, tables, backgrounds, replace any italicized words in this template with your own. Add images, tables, backgrounds, etc. !!! THIS TEMPLATE IS BASED ON THE ANNUAL REPORT PROJECT  PARTS A-E (OPTION Cetc. !!! THIS TEMPLATE IS BASED ON THE ANNUAL REPORT PROJECT  PARTS A-E (OPTION C -exclude -exclude cash flow adequacycash flow adequacy, pages 56-58) IN  TEXT. , pages 56-58) IN  TEXT. 

SAVE YOUR PROJECT AS A WEB PAGE--NAME YOUR FILE YOUR THREE INITIALS AND YOUR COMPANY SAVE YOUR PROJECT AS A WEB PAGE--NAME YOUR FILE YOUR THREE INITIALS AND YOUR COMPANY NAME. NAME.

BE SURE YOUR WEBPAGE INCLUDES A LINK TO  THE CORPORATIONS' F/S!BE SURE YOUR WEBPAGE INCLUDES A LINK TO  THE CORPORATIONS' F/S! SEND YOUR WEB-READY PRESENTATION AS AN E-MAIL ATTACHMENT TO susan.crosson@sfcc.edu SEND YOUR WEB-READY PRESENTATION AS AN E-MAIL ATTACHMENT TO susan.crosson@sfcc.edu

BY THE DUE DATE LISTED IN COURSE CALENDAR. ALL SUBMISSIONS WILL BE POSTED ON OUR BY THE DUE DATE LISTED IN COURSE CALENDAR. ALL SUBMISSIONS WILL BE POSTED ON OUR COURSE WEBSITE.COURSE WEBSITE.

THE ANNUAL REPORT PROJECT IS WORTH 18 POINTS.  THE ANNUAL REPORT PROJECT IS WORTH 18 POINTS. 

Executive SummaryExecutive SummaryAfter my analyses of Nike, Inc. it is apparent to me

from the acquisition of other companies, divisions of the corporation in other markets besides athletic

footwear and apparel, and the growth of their earnings for their stockholders. Nike’s financial

status is excellent. In fiscal year 2005 they had a revenue growth of 12.5% to 13 million. Through

ongoing innovation and business venues Nike will be at the forefront of athletic shoes, apparel, and fashion

for years to come.

http://www.nike.com/nikebiz/nikebiz.jhtml?page=17http://www.nike.com/nikebiz/nikebiz.jhtml?page=17

IntroductionIntroduction

CEO: Mark G. ParkerCEO: Mark G. Parker Home Office: Beaverton, OregonHome Office: Beaverton, Oregon Ending date of last Fiscal Period: May 31, 2005 Ending date of last Fiscal Period: May 31, 2005 Nike began as a footwear company for track runners at the Nike began as a footwear company for track runners at the

University of Oregon, now, Nike is the largest seller of University of Oregon, now, Nike is the largest seller of athletic footwear and apparel in the world, from Golf to athletic footwear and apparel in the world, from Golf to Football, Hockey to Soccer, Nike is on the cutting edge of Football, Hockey to Soccer, Nike is on the cutting edge of design and innovation when it comes to sports.design and innovation when it comes to sports.

Nike is an International Corporation that has it’s products Nike is an International Corporation that has it’s products sold in over 160 countries worldwide. sold in over 160 countries worldwide.

Audit ReportAudit Report

Independent auditors for Nike: PricewaterhouseCoopers Independent auditors for Nike: PricewaterhouseCoopers LLPLLP

The Auditors stated that in their opinion the financial The Auditors stated that in their opinion the financial position of Nike Inc. presented “overall good”. After the position of Nike Inc. presented “overall good”. After the result from cash flow and analysis and results from result from cash flow and analysis and results from operations the company is in good standing with operations the company is in good standing with PricewaterhouseCoopers.PricewaterhouseCoopers.

Stock Market InformationStock Market Information Nike’s Stock Price: $84.47 Twelve month trading range of Nike’s stock: $75.10- $91.54 Dividend per share: $1. 24 Information Dated: February 12, 2006 Buy. Nike has shown improvement and expansion year after year

and will improving according to this financial analysis .

Industry Situation and Industry Situation and Company PlansCompany Plans

With a recent change of CEO Nike has brought a new strategy and creativity to innovate the market more than ever before.

According to Susquehanna Financial Group the company is heading in a good direction. According to the Letter to the Stockholders the acquisition of Converse, Hurley, and Cole

Haan; Nike is expanding their market from just sports apparel to get a broader range of product.

http://www.nike.com/nikebiz/investors/annual_report/ar_05/docs/2005_proxy.pdfhttp://www.nike.com/nikebiz/investors/annual_report/ar_05/docs/2005_proxy.pdf

http://www.cbsnews.com/stories/2006/01/23/business/main1228448.shtmlhttp://www.cbsnews.com/stories/2006/01/23/business/main1228448.shtml

http://www.nike.com/nikebiz/news/pressrelease.jhtml?year=2006&month=02&letthttp://www.nike.com/nikebiz/news/pressrelease.jhtml?year=2006&month=02&letter=her=h

http://www.nike.com/nikebiz/news/pressrelease.jhtml?year=2004&month=11&letthttp://www.nike.com/nikebiz/news/pressrelease.jhtml?year=2004&month=11&letter=der=d

Income StatementIncome StatementThe format is most like a Multi-step formatThe format is most like a Multi-step format

* (Chart in * (Chart in Millions)Millions)

20042004 20052005

Gross ProfitGross Profit 3561.83561.8 6115.46115.4

Net Inc.Net Inc.

OperationsOperations1585.81585.8 1859.81859.8

Net IncomeNet Income 326.8326.8 1211.61211.6

-An almost doubling of gross profit is due to increased sales.-Net Inc. Operations and Net Income also increased because of recent acquisitions.

Balance SheetBalance Sheet

*(Chart in *(Chart in millions)millions)

20042004 20052005

Total AssetsTotal Assets 8052.98052.9 8793.68793.6

Total LiabilitiesTotal Liabilities 1907.91907.9 3149.43149.4

Total Total Stockholders Stockholders

EquityEquity

61456145 5644.25644.2

-Assets increased by 740.7-Liabilities decreased by 1220.6-Stockholders Equity decreased by 500.8

Statement of Cash Flows

Cash flows from operations are more than net income for the past two years.Nike is growing from the purchases of Converse, Hurley and Cole Haan.Nike’s primary source of financing is from stock sales.Overall, cash has seen a big increase over the past two years, mainly in the past year alone.

Accounting PoliciesAccounting PoliciesSignificant Accounting Policies:-Basis of Consolidation -Recognition of revenues-Shipping & handling costs -Cash & Equivalents-Stock Based Compensation -Property, Plant, & Equipment-Earnings Per Share

•Topics of Note to Financial Statements:-Summary of Significant account policies-Inventories -Common Stock-Earnings Per Share -Identifiable Assets and Liabilities-Interest Income -Comprehensive Income-Short term borrowing and credit lines-Long Term Debt -Risk Management & Derivatives-Income Taxes -Operating segments and Related Info.-Redeemable Preferred Stock -Subsequent Event

Financial AnalysisFinancial AnalysisLiquidity RatiosLiquidity Ratios

*(Chart in millions)*(Chart in millions)

20042004 20052005

Working CapitalWorking Capital 3713.23713.2 4351.94351.9

Current RatioCurrent Ratio 2.72.7 3.23.2

Receivable TurnoverReceivable Turnover 365/5.4= 67.6 days365/5.4= 67.6 days 9893.0/1952.5= 9893.0/1952.5= 5.0 times5.0 times

Avg. Days Sales Avg. Days Sales UncollectedUncollected

365/5.4= 67.6 days365/5.4= 67.6 days 365/5.0= 73 365/5.0= 73 daysdays

Inventory TurnoverInventory Turnover 6313.6/1444.3= 4.3 6313.6/1444.3= 4.3 timestimes

6004.7/1396.4= 6004.7/1396.4= 4.3 times4.3 times

Avg. Days Inv. on HandAvg. Days Inv. on Hand 365/4.4= 82.9 times365/4.4= 82.9 times 365/4.3 =84.8 365/4.3 =84.8 timestimes

Financial AnalysisFinancial AnalysisProfitability RatiosProfitability Ratios

2004 2005

Asset Turnover 2.4 0.44

Profit Margin 4.4% 13%

Return On Assets 11.3% 14.6%

Return on Equity 18.9% 23.7%

Financial AnalysisFinancial AnalysisSolvency RatioSolvency Ratio

2004 2005

Debt the Equity Ratio 0.31 0.12

-The debt to equity change represents the ownership of the corporation.-Nike is owned by the stockholders.

Financial AnalysisFinancial AnalysisMarket Strength RatiosMarket Strength Ratios

2004 2005

Price Earnings per SharePrice Earnings per Share 21.68 18.3

Dividend YieldDividend Yield .98% .95%

-The Market strength ratio shows that there was an increase in 2005.-This is good for the stockholders of the company.