Good afternoon, everyone and welcome to the Nike fiscal 2007 third quarter conference call. For those of you who need to reference today's press release, you will find it at www.nikebiz.com. Leading today's call will be Pamela Catlett, Vice President of Investor Relations. Before I turn the call over to Ms. Catlett, let me remind you that participants of this call will make forward-looking statements based on current expectations and those statements are subject to certain risk and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in the reports filed with the SEC including Forms 8-K, 10-K, and 10-Q. Some forward-looking statements concern future orders that are not necessarily indicative of change in total revenue for subsequent periods due to the mix of futures and at-once orders, exchange rate fluctuations, order cancellations and discounts which may vary significantly from quarter to quarter. In addition, it is important to remember a significant portion of Nike's business, including equipment, most of Nike Retail, Nike Golf, Converse, Cole Haan, Nike Bauer Hockey, Hurley and Exeter Brand groups are not including in these future numbers. Finally, participants may discuss non-GAAP financial measures. A presentation of comparable GAAP measures and quantitative reconciliations can also be found at Nike's website. This call may also include discussion of non-public financial and statistical information which is also publicly available on that site, www.nikebiz.com. Now I would like to turn the call over to Ms. Pam Catlett, Vice President of Investor Relations. Please go ahead, ma'am.

Thank you and good afternoon, everyone. Thank you for joining us today to discuss Nike's fiscal 2007 third quarter results. We issued our results about an hour ago. If you need to reference them, you can find our press release -- which includes the reconciliations the operator mentioned between GAAP and non-GAAP reported items -- at our website at www.nikebiz.com. Joining us on today's call are Nike Inc. CEO, Mark Parker; Nike Brand President, Charlie Denson; and Nike Inc. Chief Financial Officer, Don Blair. Both Mark and Don have brief prepared remarks, and Charlie will be on hand for the question period to give you his perspective and insight on the Nike Brand. Now it is my pleasure to introduce Nike Inc. CEO, Mark Parker.Mark Parker : Thanks, Pam. Thank you all for joining the call today. When I took this job 15 months ago, I said Nike's focus was on generating top line revenue and profitability. Our third quarter performance shows that we're keeping that promise. Net revenue was up 9% over third quarter last year, the 22nd consecutive quarter of year-over-year revenue growth. We're able to deliver that kind of consistent performance because we create the most innovative and compelling product in the industry. For example, Nike Plus runners have logged more than 10 million miles, and all of our performance running shoes will be Plus-enabled by holiday. Bauer Mint Performance running shoes grew 11% in Q3; the Air Jordan XXII launched at the All-Star Game in Las Vegas. Nike Pro is growing from its U.S. roots across Europe and Asia. 10R, our Ronaldinho signature line, is seeing very solid sell-through. March Madness is setting the stage for our new Nike Pro-inspired basketball uniforms. Air Force One is white hot. Converse launched the new Wade 2.0 footwear and…

Thank you, Mark. Overall, we're very pleased with our financial results for the third quarter. We delivered good revenue and earnings per share growth, our futures growth accelerated, and our inventory position continued to improve. With three quarters of the year on the books, we believe we're well positioned to deliver strong growth in revenue and earnings per share for the full year. Reported revenues for the quarter grew 9%, as once again all three of our product business units and all four of our geographic regions delivered revenue growth for the quarter. Excluding the impact of the weaker dollar, revenues grew 6%. On a constant currency basis, footwear increased 4%, apparel was up 5%, and equipment grew 9% versus the prior year. In addition, reported revenue from our other businesses grew 15% and contributed 2 points to our overall revenue growth. Futures orders scheduled for delivery from March through July 2007 grew 9% versus the prior year, with the growth concentrated in the back half of the futures window, driven by strong growth for the fall season. Excluding the impact of currency, futures orders were up 8%. Consolidated gross margins for the quarter increased 60 basis points over last year's third quarter, continuing the trend of sequential improvement in our quarterly comparisons. Changes in currency exchange rates added about 30 basis points to consolidated gross margins for the quarter. SG&A increased 14% for the quarter. Excluding the effects of currency changes and stock option expenses, SG&A increased 10%, driven in part by investments against our strategic growth priorities. Earnings per share for the third quarter increased 10% as growth in revenues and gross margins, combined with a lower tax rate and share count, more than offset investments in SG&A. Excluding the change in accounting for stock options, diluted EPS…

(Operator Instructions) Your first question comes from Robbie Ohmes - Banc of America. Robbie Ohmes - Banc of America: Thank you. Everybody, nice quarter. Just a couple of really quick questions. First, I was hoping we could get a little more detail on Europe. How much is it turning, just the overall environment out there, footwear versus apparel, technical product versus lower price point non-technical product; just more detail would be terrific. The other question I had was just a little more on the retail side. When we were out at your Investor Day, you talked about partnering with key people in the U.S. Foot Locker was at our conference last week, and they mentioned that they were going to be doing some special things with you guys. If you could comment on that, that would be terrific, as well. Thanks. Charlie Denson: I will take the European first, and I might ask you to repeat the second part of that question just to make sure I am clear on what you want to know and what I am going to tell you. But for Europe, you talked a little bit about the technical versus non-technical, and we're obviously very excited about the numbers that we're releasing here against the European futures picture. Like Don said in his prepared remarks, we're not ready to announce a complete turnaround, but we're very optimistic about what we've done to date and the quality of the business and where the brand sits. I think with that, when you breakdown Western Europe versus Central Europe, Central Europe continues to be a great growth engine for us. Our Northern European business is very strong, and we're seeing some good growth out of Italy, Spain and Germany, as well. The U.K. and France, as Don stated,…

Your next question comes from Jeff Edelman - UBS. Jeff Edelman - UBS: I have been visiting a lot of retailers here in Europe this weekend. It appears as if the trend towards athletic or let's say the performance seems to be picking up a little more than I guess all of us would have thought. Is this what we're seeing in your orders and is this something which has staying power? I also got the sense that the average selling price is also starting to lift. Charlie Denson: Jeff, I would agree with your comments and your observations, that we're starting to see a lift in some of the performance product overall, and I think that's encouraging for us. Along with that, we've actually made some significant progress in that low profile area that we've talked about for the past year-and-a-half. So that part of the business is up considerably year-on-year, and we're pretty excited about that. I would agree that we are starting to see a little bit more emphasis on the true performance product. Jeff Edelman - UBS: Shifting back to the U.S., if we think a little about the increase in sales vis-à-vis the orders and what you talked about in terms of gross margin for the upcoming quarter in terms of increased closeout inventory, is this a function of channel-specific? Is it trying to get something more in balance? Could you give us a little more insight there, please? Charlie Denson: Yes, I think it is not channel-specific, because we don't spend a lot of time and efforts around segmenting the business across the channels maybe as much as we used to five or six years ago. What I would say is that we feel very confident about both our inventory positions especially in footwear, as well as our inventory positions at all of our major retail partners. I think with the numbers that we're releasing today going into fall, we feel like right now there is an opportunity to take advantage of the marketplace for early summer and make sure we're very clean and we're very healthy going into what we think is one of our best product lines ever for next fall. Jeff Edelman - UBS: Is the closeout inventory more than it was last year, same, less, or what have you? Mark Parker: We're not in a problem position with closeout inventory here. As Charlie said, what we're really trying to do is make sure we've got clean channels and clean inventory on our books. Really it is a question of how fast we move through it. So we're really trying to make sure we've got good turns in the fourth quarter, and we're ready to go for fall. Jeff Edelman - UBS: Great. Thank you.

Your next question comes from Bob Drbul - Lehman Brothers. Bob Drbul - Lehman Brothers: Can you quantify the impacts on the overhead and the factors that you talked about, just like what were the biggest ones and maybe just put a numbers around some of those factors on the overhead increase this quarter? Don Blair: Well, I would rather not have to do a reconciliation here, but if you want to talk about the major elements of this, certainly the currency and the options are two very large pieces of the equation. About a third of the balance is investments in some of the growth areas I spoke to, which is emerging markets, our non-Nike brands and Nike Retail. There is about a third of it that would be some timing issues and then I would say the remaining third is more like normal inflationary aspects of operating overhead. So the way to think about it is take the currency and the options off the top, and then you have got three main drivers of the balance. Bob Drbul - Lehman Brothers: On the gross margin outlook, can you talk a little bit about the trends around labor pressures and wage pressures in China, and is that at all changing for you guys on the outlook? Mark Parker: We are continuing to see some headwind out of labor costs in Asia. We are certainly seeing the pressure of oil fees. The major headwinds would be labor and currency exchange rates in Asia. Balancing against that are some of the initiatives that we talked about at the investor call, which is things like lean manufacturing, raw material consolidation. So if we look at what we saw in the third quarter and what we expect to see going forward, it is very similar to what we discussed at the investor meeting. We have got some continued headwind, but we have got some arrows in the quiver that we continue to push, and that way we want to come out in the right spot. Bob Drbul - Lehman Brothers: Thank you.

Your next question comes from Omar Saad - Credit Suisse. Omar Saad - Credit Suisse: I wanted to ask, looks like you've kind of slowed down the share repurchase here a little bit this past quarter and the cash is building a little bit more. Given that context, I wanted to see if we could get any update on your strategies for the cash? Mark Parker: There really isn't a significant change in the strategy. As we've always said, we have a balanced approach to this. We want to make sure we invest appropriately in our existing business to drive growth. We want to make sure that we are opportunistic around good acquisitions, should they appear on the horizon, and we're going to return cash to shareholders in a planned way on both dividends and repurchase. The repurchase side, we run an evaluation grid and we have a target on how much cash we're going to deploy. We usually execute that in concert with market conditions, and that's really what drives our share buyback. So I think as we said at the last investor meeting, we think over the next couple of years you'll see consistent growth in dividends, you will see growth in share buyback, you will see investment in our existing business and so it is really a balanced approach to how we use the cash. Omar Saad - Credit Suisse: If we could get a quick update on the realignment, where you are in that process; it is something you've been working on for awhile. It sounds like you're making a lot of progress in terms of the investment and a lot of the changes and how things are going with that. Mark Parker: You're talking about the category alignment, right? Omar Saad - Credit Suisse: Absolutely,…

Your next question comes from John Shanley - Susquehanna Financial. John Shanley - Susquehanna Financial: Thank you and good afternoon. The company's difficulties in the U.K. and France have been going on for some time. I wonder if you could comment in terms of what seems to be the central issue in terms of the difficulties in that market and why you feel optimistic that the situation is going to turnaround in the next six months or so? Charlie Denson: A lot of things we've been talking about is the overall brand presentation, the promotional nature of the marketplace and what's been going on. Obviously, it's a little bit tougher to implement change there as it is in the United States, and so we have a new distribution policy in place today. It has taken longer to get that implemented than maybe it would have taken in some other markets around the world. So I think that's challenging, but it is starting to take effect. I think if you do spend some time in the U.K. marketplace over the next couple of months, you will actually start to see some of the effects of that change in place. I think the other thing is, is when I think about France we have a significant amount of business at Decathlon and we made some changes there. And I think that when we look out over the horizon, that business is now in a position to start to grow at a much healthier rate in a much healthier way. So those two things I would add to the mix. I think the third piece, which is again cautious optimism, is the role that Foot Locker may play in both those countries and their opportunities for growth, whether it is in the U.K.,…

Your next question comes from Virginia Genereux - Merrill Lynch. Virginia Genereux - Merrill Lynch: My first question, if I may, is on other brands. Don, you talked Golf, Converse, Hurley, Exeter were all up in excess of 20%. I feel like they're most of it. Was Hockey down? Not only in the quarter, which I am not so concerned about, but how should we think about the growth rates there going forward? Which of the portfolio, what is sort of the growth opportunity still there? Secondly, margins there have been up over 500 bips year-to-date, but they still run below the Nike brand, obviously. Can margins in other brands sort of approach the mothership level? Don Blair: Let me take the granular part of the question, and then I think Mark can speak to some of the growth opportunities we see in the other brands. But with respect to the third quarter, the Hockey business was comparing against an Olympic year last year where we did quite a few jerseys around the international hockey teams. So if you look at the core equipment business, year in year out, we're having a tremendous year at Nike Bauer Hockey. We have got some great new products in the skate space. As Mark said, we've taken over leadership of the stick business, which is a very important element of that hockey equipment business. So we feel great about where Nike Bauer Hockey is going right now from a business standpoint. Obviously, there are some businesses of different sizes in that portfolio. The Hockey business is relatively small, Converse, Cole Haan, Nike Golf, those are the bigger entities in that pool. I think in terms of the margin opportunity, these businesses are all significantly smaller scale than the mothership. And so as they…

Your next question comes from Margaret Mager - Goldman Sachs. Margaret Mager - Goldman Sachs: Nice quarter. I would like to focus on the U.S. market where the orders were up 7% last quarter and the revenues came in up 2% and now your orders are still up 8%. Can you talk to those numbers, please? Would we expect the revenues in the U.S. to once again be in the low to mid single-digit it range despite the high single-digit orders? What's the disconnect there? If you could also talk about what's your perspective regarding the issues in the mall-based athletic channel? Why is it soft and what do you think is the growth rate for the U.S. market since you made it clear you do not think it is a 2% growth market? I would like to focus on your perspective on the U.S. as number one question. And then, Don, I would also like to hear from you. You talked about a more consistent earnings per share growth rate by quarter going forward. Just want to make sure I understand that comment, especially in the context of fiscal '08 as you progress through the four quarters of that fiscal year, you will start to approach spending for the Beijing Olympics. Can you talk about the historic lumpiness of demand creation spending that has always been a big factor in the lumpiness of your quarterly earnings growth, and why would that be changing? Thanks. Don Blair: Okay. There's a lot in there. There were some timing elements of the U.S., Margaret, that I don't think is something that you should extrapolate. I think what I would expect to see is just a more normal level of volatility between futures and revenue. As you know, there is really not always…

Your final question comes from Jim Duffy - Thomas Weisel. Jim Duffy - Thomas Weisel: Thanks for taking my call. In Don's prepared remarks, I think there was some mention of moderation in average selling prices in the U.S. market. Can you speak to the factors behind that? Is it a channel mix shift, or is there some fashion element driving that? Charlie Denson: It is really a product mix change. There's an ebb and flow to average selling price normally with seasons, but in terms of which product categories and which models are selling is what's driving the ASP. This is not an across-the-board reduction in price. It is not a change in target price points. It is really a mix change. Jim Duffy - Thomas Weisel: Would you expect that mix to continue, mix shift? Charlie Denson: At this point, I don't have a perspective out beyond the futures window. Jim Duffy - Thomas Weisel: Nice improvement on the inventory, as you had advertised. Can you speak to the geographic specifics of that? Was the improvement concentrated in one particular geographic market? Or was it more balanced across all regions? Charlie Denson: All of our regions are making great progress on inventory and so we saw improvements pretty much across the board. Jim Duffy - Thomas Weisel: Very good. Well done. Pamela Catlett : Thank you everyone, for joining us. We look forward to speaking with you again soon.