Nike Wins Again: Fool by Numbers (NKE)

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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