SEC 10-K annual report for Nike Inc Essay Example | Topics and Well Written Essays - 1750 words

SEC 10-K annual report for Nike Inc - Essay ExampleThe caller-up adopted its Swoosh logo in 1971. Dramatic surfaceth of the company started with the signing of Michael Jordan and the launch of the zephyr Jordan brand in 1985. The company revenues have boastful at 8.2% CAGR in the last 10 geezerhood while the profits have grown at 23.1% CAGR (Gibbs, 2012). acrobatic footwear made up 64% of Nikes products business in 2012 and sports apparel 30%. Branded equipment made up the remaining 6%. The global footwear industry is projected to grow from $ 185 billion in 2011 to $ 211 billion in 2018. Athletic footwear is expected to be about one-third of this market (PR Web, 2012). The sports apparel market is expected to grow in the same period from $ 122 billion to $ 190 billion (TREFIS, 2010). Nikes market share in both markets is expected to grow over the next five geezerhood as shown in the charts under which should make Nike an even stronger market leader in its industry (Guenette, 2013). 2. Analysis of Nike Financial Reports The iii find financial reports to be examined are the Income tilt, the Balance Sheet and the Cash Flow statement. A summary of these three statements made from the companys 10-K filing for the fiscal year ended 31 May 2012 has been include in this report. 2.1 Analysis of the Income Statement A summary of the Income Statement is shown below (Nike yearbook Report, 2012, p 41). Income Statement ( in $ million) 2012 2011 2010 Revenues 24,128 20,862 19,014 Cost of Sales 13,657 11,354 10,214 Gross Profit 10,471 9,508 8,800 Gross Margin % 43.4% 45.6% 46.3% Marketing Expense 2,711 2,448 2,356 different overheads 4,720 4,245 3,970 Total SG & A 7,431 6,693 6,326 SGA / Revenue % 30.8% 32.1% 33.3% Interest expense 3 4 6 Other expenses/ (income) 54 (33) (49) Income before Tax 2,983 2,844 2,517 Tax expense 760 711 610 Net Income 2,223 2,133 1,907 Net Income / Revenue % 9.2% 10.2% 10.0% The company revenues have grown 16% in 2012 over 2011 which w ere 10% high than the previous year (Nike Annual Report, 2012, pp 18-20). This growth shows that Nike is gaining market share as the total markets are only growing at around 2% a year. Nikes main competitor Adidas had revenues of 11.88 million ($ 15.6 billion) in 2012, a growth of 11.7% over 2011 (Adidas Annual Report, 2012, p 190). The Gross Margin has decreased by about 300 basis points over the two years to 43.4% and this has been attributed by the company management to increases in input be, higher import taxes in some countries and discounts on close-out sales (Nike Annual Report, 2012, p 21). Adidas has had significantly higher gross margins at 47.7% in 2012 and 47.5% in 2011 (Adidas Annual Report, 2012, p 190). The decline in gross margin for Nike has been offset by reduced SG&A costs and the net income in 2012 has only declined 80 basis points compared to 2010. For Adidas the SG&A costs are much higher than Nike at 41.3% in 2012 and 41.8% in 2011 resulting in a net income of 5.3 % in 2012 9 (excluding 265 million blessing write-off) compared to 4.6 % in 2011. 2.2 Analysis of the Balance Sheet The Nike balance sheet as of 31 May is accustomed only for two years 2011 and 2012 in their Annual Report and is summarized below. a) Return on Capital utilise (ROCE) The Capital Employed in Nikes operations is the total of the non-current assets in the balance sheet and the works capital made up of inventories and accounts receivables less