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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