The FINANCIAL -- NIKE, Inc. (NYSE:NKE) on March 17 reported financial results for its fiscal 2010 third quarter ended February 28, 2010.

Third quarter revenues increased 7 percent, from $4.4 billion last year to $4.7 billion in the current year. Excluding changes in currency exchange rates, net revenue was up 2 percent compared to the same quarter last year.

"Third quarter net income was $496 million or $1.01 per diluted share, compared to $244 million or $0.50 per diluted share in the same period last year. Results from last year included a $241 million, after-tax non-cash charge related to the impairment of goodwill, intangible and other assets of the Company’s Umbro subsidiary. Excluding this charge, net income and diluted earnings per share both would have increased 2 percent," NIKE, Inc. reported.

“We had a great quarter,” said Mark Parker, NIKE, Inc. President and Chief Executive Officer. “Today’s results reinforce our belief that when we connect with consumers in deep and meaningful ways from product concepts to how they experience our brands, we win in the marketplace and drive sustainable, profitable growth.”

Futures Orders

The Company reported worldwide futures orders for NIKE Brand athletic footwear and apparel, scheduled for delivery from March through July 2010, totaling $7.1 billion, 9 percent higher than orders reported for the same period last year. Excluding currency changes, orders would have increased 6 percent.

North America

During the third quarter, revenue for North America increased 1 percent to $1.7 billion. Footwear revenues of $1.2 billion were down 1 percent compared to last year, apparel revenues grew 6 percent to $409 million and equipment revenues increased 8 percent to $85 million. Earnings before interest and taxes (EBIT) for North America improved 4 percent to $402 million.

Western Europe

Third quarter revenue for Western Europe increased 4 percent to $929 million. Compared to the same period last year, footwear revenue increased 8 percent to $577 million, apparel revenue declined 1 percent to $300 million and equipment revenue decreased 4 percent to $52 million. Third quarter EBIT was flat to last year at $199 million.

Central and Eastern Europe

In the third quarter, revenue for Central and Eastern Europe declined 8 percent to $272 million. Footwear revenue decreased 2 percent to $159 million, apparel revenue was down 17 percent to $94 million and equipment revenue dropped 15 percent to $19 million. Compared to the same period last year, EBIT was down 47 percent to $50 million.

Greater China

Revenue for Greater China during the third quarter was up 10 percent to $458 million. Footwear revenue grew 12 percent to $279 million, apparel revenue increased 8 percent to $154 million, and equipment revenue was up 13 percent to $26 million. Third quarter EBIT improved 21 percent to $176 million.

Japan

Japan’s third quarter revenue was down 7 percent to $213 million. Compared to the prior year, footwear revenue declined 6 percent to $103 million, apparel revenue dropped 9 percent to $87 million and equipment revenue decreased 9 percent to $23 million. EBIT declined 16 percent in the third quarter to $40 million.

Emerging Markets

In the Emerging Markets revenue was up 43 percent to $509 million for the third quarter. Footwear revenue increased 53 percent to $352 million, apparel revenue rose 32 percent to $119 million and equipment revenue increased 10 percent to $38 million. EBIT for the Emerging Markets in the third quarter improved 72 percent to $122 million.

Other Businesses

Revenue in the third quarter for Other Businesses, which includes Cole Haan, Converse Inc., Hurley International LLC, NIKE Golf, and Umbro Ltd. increased 13 percent to $656 million. Third quarter EBIT was $105 million versus a loss of $343 million last year. Last year’s results included a $401 million pre-tax non-cash impairment charge to reduce the carrying value of Umbro’s goodwill, intangible and other assets. Excluding this charge, EBIT increased 80 percent compared to the same period last year.

Income Statement Review

In the third quarter of fiscal 2010 gross margins were 46.9 percent compared to 43.9 percent for the same period last year. Gross margins for the quarter were higher than the prior year primarily due to improved in-line product margins, less discounted close-out sales and favorable changes in product mix.

Third quarter selling and administrative expenses grew 16 percent to $1.6 billion. Selling and administrative expenses for the quarter were higher than the same period last year mainly due to the timing of demand creation spending, investments in Company owned retail and higher costs for performance-based compensation.

The effective tax rate for the third quarter was 25.0 percent compared to a negative 3.6 percent for the same period last year. Excluding the tax effect of the charge for the impairment of Umbro assets, the effective tax rate for the third quarter of fiscal 2009 would have been 23.9 percent.

Balance Sheet Review

At the end of the third quarter, global inventories stood at $2.2 billion, down 13 percent from February 28, 2009. Cash and short-term investments at February 28, 2010 were $4.0 billion, $1.4 billion or 55 percent higher than last year.

Share Repurchase

During the third quarter, the Company repurchased a total of 5,134,092 shares for approximately $329 million. These purchases concluded the Company’s previous four-year, $3 billion share repurchase program, approved by the Board of Directors in June 2006. During this program, the Company purchased a total of 53.9 million shares.

Having completed the previous program, the Company began repurchases under the four-year, $5 billion program approved in September 2008. Of the total shares repurchased during the third quarter 3.7 million shares for approximately $239 million were purchased under this program.

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