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.

Related Foolishness:

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Fool contributor Anders Bylund had no position in any company mentioned. He did profit handsomely from that Reebok deal once upon a time, though. Fool rules are here.