Good afternoon everyone. Welcome to NIKE’s fiscal 2008 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 Investor Relations. Before I turn the call over to Ms. Catlett let me remind you that portions of this call we will make forward-looking statements based on current expectation and those statements are subject to certain risks 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 8K, 10K and 10Q. Some forward-looking statements concern future orders that are not necessarily indicative of changes in total revenues for subsequent periods due to the mix in 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 that a significant portion of Nike, Inc. business including equipment, most of NIKE retail, NIKE Golf, Converse, Cole Haan, NIKE Bauer Hockey, Hurley and Exeter Brands Group are not included in these futures numbers. Finally, participants may discuss non-GAAP financial measures. The presentation of comparable GAAP measures and quantitative reconciliation’s can also be found at NIKE’s website. This call might also include discussion of non-public financial and fiscal information which is also publicly available on that site www.NIKEbiz.com. Now I’d like to turn the call over to Pam Catlett, Vice President Investor Relations.

Thank you. And good afternoon everyone. Thank you for joining us today to discuss NIKE’s fiscal 2008 third quarter results. As the operator said we issued our results about an hour ago and if you need to reference them you can find our press release which includes the reconciliation’s on our website at www.Nikebiz.com. Joining us on today’s call will be NIKE, Inc. CEO Mark Parker followed by Charlie Denson, President of the NIKE brand and finally you will hear from our Chief Financial Officer, Don Blair, who will give you an in-depth review of our financial results. Following their prepared remarks we will take your questions. As many of you know, for questions we would like to allow as many of you to ask questions as possible in our allotted time so we would appreciate your focusing your initial questions to two and in the event you have additional questions that are not covered by others please do feel free to re-queue and we will do our best to come back to you. Thank you very much for your cooperation on this and now it is my pleasure to introduce NIKE, Inc.’s CEO Mark Parker.

Thanks Pam and welcome every body to our third quarter call. Q3 shows that NIKE continues to be a strong, consistent performer that delivers shareholder value and long-term growth opportunity. Net revenue for the quarter was up 16% with increased in every NIKE brand region and each of our other businesses. Diluted earnings per share grew 35%. Our return on invested capital grew 340 basis points to 24.3%. Worldwide futures were up 9% on a constant dollar basis. Don will detail the numbers in just a minute. As we finished Q3 as our industry’s most relevant choice for consumers, retail markets in some parts of the world are uncertain as consumers and retailers wrestle with higher energy prices and fears of recession. In this environment the strength of brands and the product offerings is even more powerful. We also finished Q3 as the industry’s most relevant choice for investors. We all know that the financial markets are in flux and that makes having a strong brand, a diverse portfolio and solid growth strategy to drive cash flow especially valuable. It has been one year since we shared our goal of reaching $23 billion in revenue by fiscal 2011. Our Q3 results validate once again that we are delivering on that growth strategy. We remain confident but we don’t take anything for granted. As we move into Q4 and beyond, we are completely focused on growing revenue in our key businesses and geographies and on leveraging our resources to create opportunities for the future. One example of a key business is football. This business has been a key driver for the NIKE brand over the last decade and it shows no sign of slowing down. During the third quarter our NIKE Brand in the football business grew at a double-digit rate…

Thanks Mark. Good afternoon every body. Okay, so Q3 we saw a lot of solid performance around the brand and around the world. We talk a lot about the NIKE brand being more than just a brand. It is a global portfolio of businesses. This quarter demonstrates again how geographic reach and diversity can drive sustainable, profitable growth. The U.S. economic environment is top of mind for all of us and I’ll talk about that in a minute but I’d like to start with our international business. First of all think of this. NIKE’s international business accounts are roughly 60% of brand revenues. That international business grew 24% over last year. International futures for the next five months grew at a mid-teens constant dollar rate. So we feel pretty good about the health of the business around the world. In our European business, football leads the way. Revenue was up 10% on a constant dollar basis. Footwear and apparel increased in both revenue and margins to drive very healthy profit growth. This also yielded market share gains in footwear and apparel in all of the big five Western European countries. I said football leads the way and it does. We launched our newest and most innovative football boot ever, the Mercurio Vapor 4. It is the lead product in our Mercurio franchise and it has led to great sell throughs throughout the campaign. In July we will follow that up with the Mercurio SL, the lightest football boot ever made. We signed the French national team last month, which is just the latest in a long string of relationships with key players, teams and organizations throughout the world. Starting in 2011, this addition represents yet another confirmation that NIKE is the number one brand in football. Within the EMEA region…

Thanks Charlie. I agree completely with my colleagues and am very pleased with the results of our fiscal third quarter. We have continued to deliver against our financial goals in the face of market uncertainty. Here is a recap of NIKE, Inc. results for the third quarter. Revenues for NIKE, Inc. and the NIKE brand grew 16% for the quarter with 6 points of growth from the weaker dollar driven by growth across all four regional businesses. The businesses reported as “other” reported revenue growth of 15%. Futures orders scheduled for delivery from March 2008 through July 2008 grew over 11% versus last year driven by robust growth in each of our international regions. U.S. futures grew 1%. Excluding currency changes futures were up about 9%. For the quarter, diluted earnings per share grew 35% to 92 cents driven by strong revenue growth, expanding operating profit margin, a lower tax rate and fewer outstanding shares. Earnings per share for the third quarter were somewhat higher than anticipated as we elected to shift demand creation spending from the third to the fourth quarter to invest more heavily in integrated marketing programs behind the European Football Championships and the Beijing Olympics. EPS for the third quarter also included a 4 cent gain from the sale of Starter. Third quarter gross margins expanded 90 basis points versus the prior year driven primarily by improved in line pricing and margins in footwear and better off price margins. The impact of currency on gross margins was minimal. Over the first three quarters of fiscal 2008 we have delivered $1 billion in free cash flow from operations, paid out $300 million in dividends and repurchased $952 million of NIKE stock. Our balance of cash and short-term investment totaled nearly $3 billion as of February 29, or…

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question please press *1 on your telephone keypad. Confirmation tone will indicate your line is in the question queue. You may press *2 if you’d like to remove your question from the queue. If you are using speaker equipment it may be necessary to pick up your handset before pressing the * key. One moment please while we poll for questions. Our first question today comes from the line of Kate McShane with Citigroup.

Hello? Hi. Can you hear me? I’m sorry I’m saying Hi a couple of times. For the fourth quarter you have indicated that the growth in demand creation then would be over 1/3 and I may have missed it but did you guys comment on how much you expect overhead to be up in the fourth quarter and can you remind us what break down is between demand creation to overhead and your SG&A?

We did not provide guidance directly on operating overhead and with respect to demand creation operating overhead let me look through some pages here and I’ll give you that number in a second. But it is roughly 2/3, 1/3. Roughly 1/3 demand creation and 2/3 operating overhead.

And my follow-up question is on the NIKE Spark. You just announced earlier in March the advertising you’d be doing around the launch of these new products. Have you seen the spending in the third quarter for that or will that also be a fourth quarter impact in SG&A?

Kate this is Charlie. That’s going to be a fourth quarter impact.

Kate just some numbers here. Demand creation for the quarter was about $500 million and operational SG&A was $895 million.

I appreciate that. Thank you.

The next question comes from the line of Brad Cragin of Goldman Sachs.

Yes hello. I was wondering if you could talk about what you are seeing in the U.S. market. Clearly some pretty impressive results given the U.S. market. Can you address the price value equation that you guys have referred to in some of the other markets and just talk about what your comfort level is with some of the ASP increases that you have there and whether you guys continue seeing any upward movement in that going forward?

Brad this is Charlie. Right now…well I’ll talk about the U.S. market place in general first. I think that is the best way to approach it. I think what we are seeing and is something we are comfortable with and have seen before is in uncertain times people tend to go with the things that they know best and feel most comfortable with and we’ve seen some of our market shares start to increase. I think you’ve seen some of the quarterly numbers come through recently and we’ve benefited. We’ve had some great product in the market place and it continues to do well especially on the footwear side of things. So we feel very good about the overall health of the business. I referred to it in my prepared remarks as well that the discipline around inventory management and even in times of uncertainty making sure that we don’t put too much product in the market place and that we are continuing to maintain that pull market that we so often refer to. As far as average selling price in footwear specifically I think it is up a small amount but somewhat inconsequential in the overall numbers.

And as far as the price value relationship is concerned, we did take some what I call surgical price increases in the United States. As we discussed before we looked at this on a style by style basis and we have monitored the sell throughs very carefully and we feel very good about where we are in terms of the pricing and the demand curve.

Great. I would imagine that part of that is a function of the premium consumer experiences that you guys have been making incremental progress on. Could you just address your sports culture and women’s fitness category and just talk about what may be coming down the pipe in terms of continuing to build those experiences forward?

Yeah. I think the sportswear piece right now…I’ll start with footwear…is a very strong part of our business. We have a lot of high performing what we call icon styles, Air Force One, The Dunk, a couple of them that are being worked on now and will be launched over the next year; Cortez specifically. It has been a very successful formula for us and we feel very good about that in the future as well and you will see even more of that. The other idea is as we continue to build out this category emphasis throughout the organization and actually into the market place I keep reminding people that we haven’t actually delivered our first product line generated from that organizational shift. So you’ll start to see some of that as we move into this fall and then on to next year. I’m very excited about some of the things that are starting to percolate within the category organizations here both from a product standpoint and a consumer standpoint.

Great. Thank you.

The next question comes from the line of Robert Drbul with Lehman Brothers.

Hi. Good afternoon. The first question that I have is just on Asia and on China specifically. In terms of the sustainability of the business or sort of if you had to look over the next 6-9 months how do you really see that playing out from a top line perspective? When you look at how good those numbers are, just how long can that continue?

Robert this is Charlie. We have spent a lot of time talking about this internally. I think as we gear up for Beijing one of the things that we have been focused on for two years plus is the idea that we are going to be there when everything else leaves. We have positioned ourselves in the market place and with the Chinese consumer with that specific intent. I think you are pretty familiar with some of the campaigns that we have been running. We have been running a “Just Do It” message in China now for two years plus and I expect that to continue through the Olympics and well into next year. So we really feel good about where we are at in China. We are keeping an eye on the inventories both at retail and wholesale. I think the team there has done a fantastic job of managing the opportunity and the challenges that has come at them. One of the other things I really feel good about is the team we have on the ground. They continue to deliver on expectations and beyond and I think we are in great shape going through there. Then I think as you move through to broader Asia to your point, we still feel very bullish on Japan long term and we are starting to see the quality of the business improve. It has been a slower journey than we had anticipated or quite frankly are comfortable with, but we still see the long term opportunities there. Post Beijing Japan is going to be well positioned for an acceleration of growth.

Great. Thank you very much. Good luck.

The next question comes from the line of Robert Samuels with JP Morgan.

Hi good afternoon. Just talking…going back to the question about the domestic business. What are you currently seeing with regards to inventory at retail and what are your retailers telling you about their expectations for the consumer for the remainder of the year?

It is something we have actually gotten a lot better at over the last 3 or 4 years, just our connectivity with most of our major retailers and having a much higher level of transparency into the inventory of that retail. Again, we watch it very, very close and probably even closer today than we have ever watched it because of the level of uncertainty I think that everybody has in the U.S. market. So I feel very good about where we are at. We continue to take share and our sell throughs are strong and we are gaining ground on every body. So we’re not going to take the pedal off and we are going to keep the pressure on. We’ve got some great product coming down the pike that Mark referenced in his notes. I think that some of the performance product that we’re coming out with this summer around Beijing and the European Championships is not some of, I think it is the greatest performance product offering this company may have ever had.

Great. Could you just talk a little bit about trends you are currently seeing in your full price stores as well as the outlet stores?

Overall trends….our in line stores are reflective actually. Those are reflective of the general market. I think on the in line stuff we are actually outperforming some of the trends that you see. I think that is based on a lot of what we are doing with respect to some of the consumer experiences that we talked about. The NIKE Town Running experience has been very popular and successful. NIKE ID launched in NIKE Town New York and NIKE Town London and we’ve seen great response to that as well. So we’ve increased service levels and again as we continue to build out our own retail plan like I said in the prepared remarks it is more than just about a format. It is about that entire consumer experience. Some of the things that we are continuing to explore and learn are already paying dividends in the market place.

And Robert I would also just go back to the comment I made that both in line and factory outlet store comps in the U.S. were up 3% for the quarter so we are up on both concepts.

Great. Thank you.

The next question comes from the line of John Shanley of Susquehanna Financial Group.

Thank you very much and good evening folks. Charlie I wonder if you could comment on the promotional environment that is going on in the U.S.? Do you see that as stabilizing? And you mentioned that you are building more outlet stores. Is that helping to stabilize the NIKE product versus some of the competitors out there which seem to be promoted a little bit more heavily than the NIKE brand is currently being?

Yeah. I think it certainly puts us in a much better position to manage that. We feel good about the strategy of expanding our outlet footprint over the last 18 months. It is something we talked about a year or year-and-a-half ago and I think the timing now is going to be even maybe better than expected. Our sell throughs throughout both in line and factory outlet stores continue to be strong. Some of that is based on again being the go-to brand in times of uncertainty and part of it is I think attributed to just the product assortments we have in the market place. With respect to the promotional activity us versus the rest of the market place we are going to stay above the fray.

That’s good to hear. Charlie where are you in terms of the number of stores specifically in the U.S. that you currently operate? Both outlet as well as in line regular stores?

I don’t have that number. Pam’s got it.

Total NIKE Brand stores, John…this is not U.S. specific we will have to break that down separately but you can presume the majority are in the U.S. as are the factory outlets. 331 is the total number of stores. We did not add any net new factory stores in the quarter. We’ve added 14 factory stores in total since the end of last fiscal year.

You should not presume that most of those are in the U.S. About half of those are in the U.S. We’ll get the exact number to you.

Half of the 331?

Yes. Approximately.

Great. Thank you very much.

The next question comes from the line of Brian [McGoth] with Morgan Stanley. Brian [McGoth] - Morgan Stanley: Yeah great thanks. Hey guys. I just have one question for Don. Don I was hoping you could just talk for a minute about the trade off between margins and your cash cycle. So in this quarter you had gross margins up. Your cash cycle was up about 9 days at least how I calculate it. So your operating asset turns improved while the gross margins improved. I think that made NIKE the only one anywhere near the industry that did that. But in a rising cost environment you have your payables which are near peak. You have your receivables which have gone down a lot over the past two years and I’m just wondering if you can keep your gross margins heading higher without having to flex on your balance sheet as we head into the next year or two?

Brian I think it is always tempting in a tough financial environment to use the balance sheet and let the receivables string out and let your payables head out. What we would obviously prefer to do is make sure that our factory partners maintain profitability and our accounts maintain profitability the old fashioned way of running a tight supply chain and running product that sells through a slow margin. So one of the things that we have resisted even at a time when money was cheap was letting the balance sheet grow. So we’re going to stay focused on keeping the supply chain tight, the inventories tight and making sure that the payment terms both with our suppliers and our customers stay in the line with our policies. Brian [McGoth] - Morgan Stanley: Is there anything else you can do or are doing to help your partners over in Asia continue to stay profitable even at a time when they are continually being hit with increased labor costs and raw material increases?

Absolutely. A lot of the things we do in terms of manufacturing practices and how we design and develop products and how we run our supply chain have benefits both for us and for them. So the strategy is really make the whole pie bigger and then every body’s slice gets bigger; not redistribute the same pie. So we’re always trying to make sure the business itself is more efficient and that is how every body is better off. Brian [McGoth] - Morgan Stanley: Great. Thanks a lot.

The next question comes from the line of Omar Saad with Credit Suisse.

Hi thanks. Want to just follow-up on the last question if I could. In terms of cost inflation, commodity prices rising, wage inflation in the Far East, can you talk about from taking a longer term perspective what you think the impact will be, how you are planning for it and how we should think about it given just how broad your sourcing base is and the kind of products you source?

Well I think that certainly as we have discussed before there are macro economic factors and ebb and flow and to some degree you can’t control those. You can manage them. Oil and labor costs and so on fall into that category. I certainly think over time we are going to see long term increases in labor costs in Asia and energy costs I think are going to go up and down but generally I don’t think we’d expect to see major reductions that last for long periods of time. So the way we operate our model is we work the levers we can control. There are several broad areas. One is reducing product costs through things like lean manufacturing and raw material consolidation and style productivity. Those things help us drive the profitability of our products by making sure that we are buying raw materials in larger quantities which improves our leverage in negotiations, that we are amortizing tooling more effectively and that we are using less labor in the product through lean manufacturing techniques. So that is one approach that we take. A second approach that we take is keeping the supply chain tight. That means we have less working capital tied up and the factory does as well and every body sells products through a full margin and maximizes profitability. There is also obviously managing mix and making sure that we are taking price increases at the right spot. So we’re going to work out levers. We’re going to deal with the macro economics as they come and our goal is to keep moving the gross margin higher.

Okay. Philosophically you talked a little bit about surgical price increases and in a long term inflationary environment especially with respect to wages which I think a lot of us are pretty comfortable with. Obviously a lot of the commodity costs are going to be more volatile over time. Do you think we should be thinking about a rising cost environment that aligns with the rising cost environment we might see over the next few years…is that apparel and footwear has historically been a pretty deflationary segment of this market. Do you think you could see a change over time?

I think it has to be focused on specific consumer proposition. If the product is absolutely compelling and you have got great product and value is about what you pay and what you get, so it really has to be specifically targeted to styles and consumers and we would never assume that you could take inflationary increases across the board. We just think it needs to be much more surgical.

Heavy emphasis on the word surgical in this case.

Thank you.

The next question comes from the line of Virginia Genereux of Merrill Lynch.

Thank you. Let me ask first if I could about some of these soccer endorsements guys and the sort of somebody characterized it as sort of a scorched earth policy of bid increases that you guys are sort of leading. How do you think about sort of paying a lot more for some of these National team endorsements? I mean obviously you can certainly looking at the financial model but what are the benefits to that in your all’s view to securing some of these teams and maybe some of the more mature markets and paying a big price for them?

Hi Virginia. This is Charlie. Hey, well I think one of the cornerstones of this brand has always been our ability to show up, I guess is a way to say it, on the field of play. What it does from a credibility standpoint, authenticity standpoint, and even in exposure and marketing standpoint has always been a pointed to base since I think Bill Knight gave his first pair of shoes away. We continue to believe in it. We continue to see the benefits of it. It does move the market place. Especially I think you are probably referring to our latest signing of the French National team. What it means to us…to have one of the big five national teams down in the brand is a monumental defining moment in our ongoing pursuit and our ability to claim the number one position in the biggest global sport in the world. For us it is not just about looking at it in a very specific focused way. It has multiple direct and indirect benefits to the brand. That being said we don’t just go about it with a scorched earth approach. We do look at the benefits of the commercial opportunity in regards to the French situation I think I am very excited with regards to that one because not only does it give us access to the French National team but it gives us access to the entire French amateur football academy and operation throughout the country which we do not have today. So it has a big commercial upside with respect to that opportunity. So overall it is a big brand plan and is something we obviously feel very confident and very comfortable with.

Virginia this is Mark. I just wanted to add that the word surgical here is maybe relevant again. We are being on the offense I think in terms of the key sports marketing assets that we are looking at. Better leveraging by the way. We’re really trying to be sure that we are dialed in on which ones we are looking at and more dialed in on how to best leverage those opportunities both on a brand and commercial sense. As Charlie said, our connection to the world’s top athletes and teams remains a fundamental platform that we lean on to grow our business and our brand.

Thank you Mark. If I may, maybe for Don, Mark and any body else. On sort of overhead and your comment a couple of years ago that other overhead was going to grow past the rate of sales and there was a very lean year in fiscal 2006 and I know currencies are obviously inflating things pretty big here but as we look forward Don how should we think about other overhead? I know investing in loss of initiatives, but is it possible that other overhead the rate of growth there can sort of come back to half the rate of revenues? Is that still something we should be thinking about?

Well I appreciate your good memory Virginia. That was probably about seven years ago and the business was a very different structure then. We actually are leveraging a lot of our wholesale overhead. One of the things that Mark has talked about pretty consistently is focusing resources. We have been really focused on making sure we are investing in strategic initiatives and that is things like emerging markets and development of retail and those things have had a tangible impact on revenues and gross margins. So what I would say to you is we still believe that it is important for us to make sure that we are driving productivity in overhead type functions so that we can invest in our strategic priorities and so we are going to continue to do that. So as I called out in the script, we are seeing much slower growth than revenue in our core wholesale businesses but we are investing very heavily in some other parts of the business.

That’s great. Don the areas that are requiring a little more, and I understand the mix point makes a lot of sense, the areas that are requiring a little more SG&A investment are obviously direct to consumer.

Right.

What else would you say?

Emerging markets. Also the other businesses that we reported. Mark talked about the growth at Converse. We think that business still has tremendous growth opportunity and we are investing pretty heavily in it. So that is another example. While I have the floor real quickly I just wanted to say with respect to sports marketing the strategy is definitely not scorched earth and we don’t see ourselves as leading the market higher here. What we are doing, as Mark said, is surgically looking for the things that are going to drive the business.

That’s all fine. I didn’t mean to….I was trying to goad you with scorched earth…

That’s alright Virginia. Operator we have time for one last question.

Our final is a follow-up from Brian [McGoth] at Morgan Stanley. Brian [McGoth] - Morgan Stanley: Great. Thanks a lot. I don’t want to beat this whole sourcing thing in the head, but I’m going to ask anyway. I’m going to assume that the companies that are going to do best in a rising China cost environment are those that ultimately have a sales organization that is greater than a sourcing organization. China, I think is less than 1/3 of sourcing for Nike overall. I think that the industry is closer to 85%. We know how fast China is growing for you, I think at a rate of 3 or 4 times the rate of your sourcing organization. So I guess is this the right way to look at it and as time goes by and as we see your local sales organization in China continue to ramp that spread will just continue to compress?

I think there is a couple of pieces that are the best and accurate analogy. One of them is currency. The RMB strengthens that makes product more costly but it also means that sales in China are more valuable. So there definitely is a benefit as we get a natural hedge. The second thing is clearly the economic growth in China not only drives labor costs but also fuels the growth of our business. So yes the bigger footprint we have in China that certainly helps offset the pressure that comes out of the sourcing side. At the same time we are going to continue to work a diversified sourcing base and work the gross margin levers.

I will add Brian I think when we talk about our business in China we usually talk about the NIKE brand. We actually have a significantly larger footprint there with Converse, and now Umbro added, in addition to NIKE Golf, of course. So the footprint we have in China is actually quite large so we can leverage that on both sides in both sourcing and the revenue potential. Brian [McGoth] - Morgan Stanley: Great. Thank you both.

Thanks everyone for joining us.