Nike Wins Again: Fool by Numbers

On Sept. 20, sporting goods giant Nike (NYSE: NKE) released 2008 earnings for the first quarter ended Aug. 31.

  • Despite tepid sales growth in the core U.S. market -- or shrinkage in some product categories -- Nike pulled out a strong overall performance thanks to results in the rest of the world. Europe, the Middle East, and Africa improved by 16% over last year's comparable period, and the Asia Pacific region vaulted to 22% higher revenue.
  • Net income was helped by a one-time tax benefit that shaved off $0.20 per share in payments to the tax collector. On a before-tax basis, earnings improved by a more modest 16% over last year.
  • That balance sheet looks mighty strong and gives the company the fiscal freedom to keep raising its dividend payout and buying back shares.
  • With financial performances like these, it's no wonder why Adidas felt the need to boost its business with that Reebok acquisition -- to the immediate joy but long-term consternation of Motley Fool Stock Advisor subscribers (Reebok was a recommendation).

(Figures in millions, except per-share data)

Income Statement Highlights

Q1 2008

Q1 2007

Change

Sales

$4,655

$4,194

11.0%

Net Profit

$570

$377

51.0%

EPS

$1.12

$0.74

51.4%

Diluted Shares

507.3

512.0

(0.9%)

Get back to basics with the income statement.

Margin Checkup

Q1 2008

Q1 2007

Change*

Gross Margin

44.8%

44.1%

0.7

Operating Margin

14.0%

13.3%

0.7

Net Margin

12.2%

9.0%

3.3

*Expressed in percentage points

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2008

Q1 2007

Change

Cash + ST Invest.

$2,791

$1,725

61.9%

Accounts Rec.

$2,774

$2,557

8.5%

Inventory

$2,155

$2,134

1.0%

Liabilities

Q1 2008

Q1 2007

Change

Accounts Payable

$972

$868

12.0%

Long-Term Debt

$421

$380

10.6%

The balance sheet reflects the company's health.

Cash Flow Highlights

Free Cash Flow

$227

$154

47.4%

Free cash flow is a Fool's best friend. Nike only gave us a tiny part of it today, and you had to tune in to its conference call for even that much.

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