Nike Wins Again: Fool by Numbers

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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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• Foolish Forecast: Nike Ready to Run
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