Greetings, ladies and gentlemen, and welcome to Nike's fiscal 2009 second 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 is 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 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 Forms10-K, 8-K, and 10-Q. Some forward-looking statements concern future orders that are not necessarily indicative of changes in total revenues 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 Inc.’s business, including equipment, most of Nike Retail, Nike Golf, Cole Haan, Converse, Hurley, and Umbro are not included in these futures numbers. Finally, participants may discuss non-GAAP financial measures. A presentation of comparable GAAP measures and quantitative reconciliations are found at Nike’s website. This call might 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 over the call to Pamela Catlett, Vice President of Investor Relations.

Thank you and happy holidays, everyone. Thank you for joining us today to discuss our Nike's fiscal 2009 second quarter results. As the operator indicated, participants on today’s call may discuss non-GAAP financial measures, a comparative presentation of reconciliations between GAAP and non-GAAP reported items can be found in our press release, which was issued about an hour ago and can be found at 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 be happy to take your questions. Now I will turn it over to NIKE Inc. CEO Mark Parker.

Thanks, Pam and good afternoon, everybody. Happy holidays as well. Today you are going to hear a lot from us, so I will jump right in. You will hear that we’ll be pleased with our second quarter results and you will hear caution about the external environment and confidence in our ability to extend our leadership. What you will not hear is business as usual, which is fine with us because Nike's really been on the other side of business as usual since we started. It’s also true that strong companies who are able to navigate and leverage tough times come out even stronger. Our performance in Q2 shows that Nike's nature and strengths are enviable and competitive advantages. We all know that no one, including Nike, is immune to macroeconomic forces. I also know that Q2 proved we continue to perform even during the compressed adversity that has surfaced in our global economy over the last few months. I will leave the discussion of how we delivered today’s results to Charlie and Don. I’m going to focus on two key questions. First up, what’s Nike's outlook and how do we intend to continue to be successful? I believe that successful companies do a few things exceptionally well. They know their consumer better than anyone and they connect with them in authentic and meaningful ways. They create great products that’s differentiated by its innovation, quality, and craftsmanship. They create compelling retail presentations that bring energy and freshness to the consumer experience, and they execute with financial discipline and an unwavering focus on creating long-term value. These qualities have been at the core of Nike's success for over 30 years. Today only magnifies the opportunity we see in front of us to achieve our true potential. Does this mean that nothing…

Thanks, Mark. Happy holidays to everyone. I think Q2 shows you how important it is to have a strong and compelling brand. If you don’t have superior products and a meaningful relationship with consumers, you are probably hurting right about now. I’ve always felt good about the investments we make to create innovative products and build the brand and I’m feeling especially good about that now. The more consistent we are at leveraging these long-term competitive advantages, the more effective we’ll be at managing through the challenging conditions that we face today. So what does that -- what do the numbers look like? Well, on a constant dollar basis, the Nike brand generated record revenue of $4 billion, up 6%. Global footwear was up 7%, global apparel was up 6%. Our largest categories, running, basketball, and sportswear, were all up on the quarter. We plan to gain share and keep -- excuse me, we continue to gain share in key markets and categories. It was a very strong quarter where consumer confidence continues to be a concern around the world. I am very confident that our strength and flexibility will allow us to create even bigger and sharper separation for the Nike brand, and we are going to be very strategic about that. Mark mentioned three important words -- confidence, caution, and command. I am going to add a couple of my own -- connected and competitive. Somebody asked me the other day what’s the biggest change Nike needs to make to continue to grow, and I told them the most important thing we can do is something we did 18 months ago, and that was to realign the brand into a consumer-driven, category-based offense. Categories keep us connected to consumers, who respect innovative products and superior service. They respect…

Thanks, Charlie, and good afternoon. As my colleagues said to you earlier, we are pleased by the performance of our businesses in the second quarter of fiscal 2009. Revenues for the quarter grew 6% to $4.6 billion, with currency changes contributing about one point of that growth. Earnings per share grew 13% to $0.80. Excluding currency changes, Nike brand revenues grew 6% while revenues for our continuing other businesses, which include Converse, Cole Haan, Hurley, and Nike Golf grew 3%. The net result of the divestiture of Bauer and Starter and the acquisition of Umbro was to reduce NIKE Inc. currency neutral revenue growth by about one percentage point. On a currency neutral basis, Nike brand footwear and apparel futures orders scheduled for delivery from December 2008 through April 2009 grew 6%. We expect real dollar futures for the period will be down slightly as the U.S. dollar has strengthened significantly versus most world currencies. Gross margin for the quarter improved 40 basis points to 44.7%. The growth was primarily due to foreign exchange hedge gains, product pricing, and mix changes, partially offset by higher apparel closeouts, as well as the lag effect of higher input costs. SG&A growth for the quarter slowed to 8%, with only a minimal impact from currency. This was below the low- to mid-teens growth we projected at the beginning of the quarter, as we took actions to reduce spending. For the quarter, demand creation grew 5% while operating overhead grew 10%, due largely to infrastructure investment supporting owned retail, emerging markets, and our fast-growing non-Nike businesses. Net interest income in the first quarter was $5 million, $18 million below last year, due primarily to lower interest rates. I am pleased to say that we have not sustained any significant investment losses as a result…

(Operator Instructions) Our first question comes from the line of Robert [Ulm] from Merrill Lynch.

Thank you. Hi, everybody and great job in a really tough environment. Just a couple of quick questions -- the first is can you give us a little help understanding what the ASPs look like in the sneaker business, both for the quarter you just reported and then the component of futures orders, maybe overall globally constant currency, if possible? And then on the U.S. side of the business. And then the second question was just in terms of understanding the China outlook and comparisons and sort of how you are growing the business over there, and I think last quarter you mentioned opening some outlet stores over in China, can you just give us a little more detail on sort of how China makes out within this more cautious back-half? Thanks.

Robbie, could you -- your first question, I heard three -- could you just ask that first one again?

Sorry, the first question was just the ASP component to the U.S. sneaker business in the quarter and also in the futures outlook, and I guess specifically I was sort of maybe rough numbers on the sort of the global ASP outlook for your footwear business and separately for the U.S. business.

So right now, Robbie, on the quarter and for the futures window, U.S. ASPs up slightly for us and futures, same way. And then for the global numbers, the ASPs are down slightly for both the quarter and the forward futures orders. And that’s basically reflecting a lot of the pricing and value, price value actions we’ve taken over the last year-and-a-half or so primarily in the U.S. And your second question was about China?

Yes, that’s right.

Talking a little bit about just inventory management and the way we see China, right now I think we are continuing -- we’ve got a few more outlet stores going in to help us assist in the inventory management. It was pretty much a planned exercise and we are on plan right now with regard to how we see it. I think that post Beijing, you’ve heard a lot about that, as we referenced in the prepared remarks. We feel pretty confident and comfortable with where we are at. We have great transparency into our retail inventories, as well as our wholesale inventories. And I feel really good about the China business right now. I call out one other thing that I continue to emphasize is I believe we have the best team on the ground in China and they have the best command of the marketplace than anybody else, competitively speaking. So we are still -- we still feel very good about China and it’s growth potential.

Is there a change in your plans for the Nike mono brand store rollouts and approach to tier two cities?

No, the plan will continue pretty much on pace. We have slowed it a little bit, given the current conditions. We thought that that was a prudent thing to do. We are not pushing that number as hard but I think we’ll still see upwards of 800-plus locations going in this year.

And Robbie, just to clarify on the first one, I gave you a wrong number -- on the quarter, U.S. was up. The global number was down slightly, so the futures window is actually both up.

Great. Thank you very much.

Thank you. Our next question comes from the line of John Shanley with Susquehanna International Group.

Thank you and good afternoon, everybody. I wonder if you can give me an update on the current promotional environment in Europe, both footwear and apparel, particularly Western Europe. Are you experiencing promotions that are basically stronger than what you had at this time last year? Are promotions likely to continue to be a factor going forward?

Well yes, the answer to the question would be yes, the promotional conditions are certainly a little bit more robust than they were at this time last year. We’ve seen that primarily across southern Europe, southern France, Italy, Spain. We have seen some increased activities in the U.K. and I think you are pretty much well aware of that. I would expect this promotional activity to continue through the first half of calendar ’09.

Okay. Is it more intense, Charlie, than what you have had in the past or is it basically just the current tempo of business?

Well, it’s a little bit more intense. I think we’ve been -- we’ve seen it start in Southern Europe. You know, we talked a little bit about it, I think, on the last call where Spain and Italy had softened a little bit and you started to see it. And then I think things in the U.K. have certainly gotten a lot more promotional in the last 90 days.

The other part of the question in terms of Europe is the [inaudible] region, particularly Russia -- is there growth in those markets and is the level of promotional activity increasing there as well?

Well, Russia had a very strong quarter, extremely strong, and we feel really good about the brand position in Russia. I think as everybody knows, the Russia financial circumstances have been as dramatic as any and so we are keeping a cautious watch on what’s going on with regard to both consumer confidence and buying trends. So overall, still very, very bullish on the long-term outlook but certainly as we’ve seen some of the deterioration in the financial markets, Russia has been hard hit and we haven’t -- we don’t -- we really don’t know consumer wise how that’s going to be affected as we look forward into the next few quarters.

How is the inventory level in Russia, Charlie?

Well right now, Europe overall is still probably our biggest challenge inventory-wise. I think we called that out also in the prepared remarks. We feel confident that we are able to maintain the management of that. That would be pretty consistent with Russia as well, and I think that when you think about the overall European landscape, it’s a little bit of a tale of two cities. Western Europe, certainly a little bit more impacted currently, and the emerging markets continue to provide some pretty good growth for us.

Okay. Thank you very much, appreciate it.

Operator, do we have another question?

Thank you. Our next question comes from the line of Kate McShane with Citigroup.

Thank you. Just going back to China quickly, are you hearing about excess inventories needing to be cleared out at any of your competitors, and if so are you starting to see more competitive pricing in the market? And of that build, if there is any build, is it more Olympics related product?

Well, the answer is yes and yes, that we have started to see additional and hear of additional inventory and we are starting to see a little bit more of a promotional environment. I think some of it is related to Olympic product but I think it’s also a carryover just in overall inventory situation coming out of Olympics, and I think it’s something that we were actually very sensitive and conscious to. Like I said earlier, the transparency we have into our retail inventories is probably as strong in China as it is anywhere else in the world because of the mono brand retail format, and we feel very good about our ability to manage through it. We’ve been building our outlet network in China, much as we have in the rest of the world and we think that that gives us a great vehicle to move this product in a profitable and brand accretive way.

Okay, thank you and you may have answered this in John Shanley’s last question but I just want to make sure I didn’t miss it -- did you quantify the share gains that you saw in Europe during the quarter?

No, we did not and they vary from market to market, so overall we feel comfortable that we are seeing some share gain but we did not quantify it specifically.

Do you think it could be as much as what you saw in the U.S. over the last nine months?

Didn’t quantify it.

Okay. Thank you.

Thank you. Our next question comes from the line of Bob Drbul from Barclay’s Capital. Bob Drbul - Barclay’s Capital: Good evening. Happy holidays, you guys. I guess the first question for Mark, when you look at the overall trend of the business and trend of the futures, I guess can you talk a little bit about your expectation in terms of the deceleration? Is this the start of what you see as a major deceleration for the industry? And I guess can you elaborate a little bit more on is the trend from November into December around the business and were there major inventory cancellations that you guys had?

Well we -- I get this question probably a few times a day from people inside, outside the company, is how long is this going to last, where are we in this cycle -- really hard to say. And I think though that I wouldn’t say the worst is behind us and we are certainly not planning with that assumption in mind. As Don said, I tried to cover in some of my opening remarks, is we are much more cautious just about where we are in terms of managing and scenario planning around the business. So we’re pulling in expenses, expense management, tightening up where we think it’s appropriate but also trying to balance that out with being appropriately opportunistic and really leaning on the things that we look at as important competitive advantages. So how do we leverage and amplify those at this time? But I wouldn’t say -- I’m not going to sit here -- I think it would be cavalier of me to say that this is a short-term situation. On the other hand, how long it is, I really don’t know. I mean, I can’t say and I’m not sure anybody is going to put themselves out there and try to predict any sort of data on this. We’re moving forward and planning our business as if the situation is going to be around for a while, and planning and managing expenses and investments appropriately.

And November -- Bob, your question about November, could you ask that again? Bob Drbul - Barclay’s Capital: I guess the question I have is the trend of the business in November and sort of what you have seen thus far in December -- you know, maybe the Nike town trends but also are you seeing or have you seen any major inventory cancellations throughout the various regions of the business?

No, we haven’t seen a worsening situation as we look at November going into December, maintaining somewhat of a balance I think from the November period into December. Certainly not a -- you know, and it’s a week-by-week situation and we look at this every day but we are not seeing any major cancellations in the business, no major red flags or signs that this situation is worsening. But obviously it’s something that we are going to continue to keep a very close reign on and again manage the business appropriately. But I’m sitting here today not seeing a worsening situation as we move from November to December. But again, that said we’re going to be managing very cautiously and conservatively as we move through the next two quarters.

And Bob, just to make one other point that Mark mentioned as well, this is a day-by-day market unit by market unit type of activity here. One of the things that I think we’re all seeing is tremendous volatility and very uneven sort of aspects to this. I mean, we’ve got markets that are still continuing to grow very strongly. We’ve got markets that are under more pressure and the way we need to manage that, as we always do, is market-by-market, day-by-day, account-by-account and I think we feel very confident that we’ve got the teams in place that can do that.

I’ll just add quickly -- one of the competitive advantages that we look at and try to amplify, particularly in periods and times like this, is marketplace management. We’ve got a very close handle on some of the key measures that really are important to the business. Obviously inventory management, margin management, cancellations, sell-throughs, any debt issues, accounts receivable and how we manage that. We have a very strong, tight relationship with our key accounts and we manage those, you know, look at those numbers and that dashboard very carefully day-in, day-out, week-in, week-out. And again, I feel like we are in a better position there than most -- great cash position, good liquidity, strong balance sheet and that’s what we intend to continue to see for the business. Bob Drbul - Barclay’s Capital: Great, and then the second part of my question is on inventory -- would it be possible to give us inventory by regions, Don? And I guess the question that I have specifically asked another way on China is can you give us an inventory increase number in China at the end of the quarter?

I don’t have it that way, Bob, top of mind but what I can tell you is the DII, the days in inventory in China, is actually 62 days, so our average days in inventory for the company is around 100, plus or minus. China actually is about 62 right now and that’s not the highest DII we’ve seen in that market in the last 12 months. There’s been an ebb and flow in the market place. We’ve seen some improvement over a couple of months and it pops up and down a little bit but at an aggregate level, it’s a lot lower in China. That’s one of our most efficient markets from an inventory standpoint that we have in the company. Bob Drbul - Barclay’s Capital: Thank you very much. Good luck.

Thank you. Our next question comes from the line of Jim Duffy with Thomas Weisel Partners.

Thank you. Happy holidays. So 2Q sales in the U.S. were softer than the futures out of first quarter would have foreshadowed. What’s the dynamic there? Was it order cancellations, retailers delaying receipts? Don, I think you also mentioned some shipping delays related to new distribution centers -- can you shed a little more light on that, please?

We have had some increase in delays in shipping related to the opening of our new distribution center in Memphis, so that was one of the components. Certainly retail was an element that affected the growth rate, as I had discussed on my prepared remarks. Retail was up 1%, so the rest of the business was up more. We did see a little bit higher cancellation rate; on the other hand, there were offsetting factors in the other direction, so the biggest drivers on that I would say is probably the retail piece and the footwear deliveries.

Okay. Any way to quantify the revenue impact for the footwear deliveries?

No, I wouldn’t want to do that at this point. I don’t have that number in my head and we feel pretty confident where we are now in terms of the ramp-up.

Okay. And then a potential bright side to this whole slow-down here, we’ve seen easing commodity costs; from a product costing standpoint, can you speak to the timing and magnitude of any potential benefits from that?

Sure. First of all, I want to put it in the context that we’ve talked about many times -- there’s a tremendous number of moving parts in our gross margin equation -- currencies, commodities, product mix, designs -- any number of different factors. There is a lag effect for a lot of these. We talk about roughly a 12-month lag on foreign exchange. On the product cost/commodity cost front, it’s probably more like a two quarter, six-month or so lag. So one of the things that you should also bear in mind is neither of these is a direct translation of spot rates into product cost. We hedge currency. We don’t hedge commodities but there’s a negotiation that goes on with factories in terms of who bears what portion of the cost changes. So what I would tell you is you are on about a six-month lag or so on commodity prices and it’s not a direct translation into product costs. But the context I want to make sure I put around this is we have a lot of levers that we do control. We can’t necessarily dictate the price of oil or the Euro/dollar exchange rate but there’s a lot of levers we have in terms of how we design product, how we run our supply chain, and our goal is to continue to try to maximize margin to the extent we can and deal with the macros as they come.

Very good. Thanks very much.

Thank you. Our next question comes from the line of Omar Saad with Credit Suisse.

Thanks. Good afternoon. Mark, I wanted to follow-up on some of your comments at the beginning -- it seems it was pretty interesting to hear you kind of open up with some discussions around expense management and maybe thinking about some of those line items more strategically and surgically, I think you used that word. I wanted to kind of get you to maybe elaborate on that flat plus term you through out there, but also just in the context philosophically thinking about your business globally, how you create demand, how you invest, how you decide which opportunities to invest in and which ones may not be as high return opportunity -- is there a little bit of a shift there in terms of the way management is thinking about it? We are kind of under the assumption that these are unprecedented times. And also are you seeing any changes in terms of the pricing out there for some of these marketing assets, just given the global slowdown? A lot of corporations that have been heavily invested in sports seem to be pulling back. Any thoughts around there too would be helpful.

First of all, I thought really putting the emphasis, more emphasis than normal on expense management here is particularly appropriate at this time and I don’t need to explain why that is. I think we are being appropriately cautious in our spending. This outlook for the next couple of quarters and going into fiscal ’10 is probably less clear for everybody at this stage, so it’s really important for us I think to manage our expenses even more sharply than I think we have. And I’ve said many times before that the opportunity we have is to make sure that we are focused on the biggest return, highest impact opportunities and that means both top line in terms of where we focus on revenue generating opportunities but also in our expenses and how we manage our expenses -- you know, where can we cut back and not see a significant increase or impact on the business in a negative way. And frankly, that’s something that I think any company should be doing anytime anyway. This is -- like I said, an opportunity to get even sharper in that respect and as I said, we’re not going to miss that opportunity. So there’s a lot of scrutiny and surgical was a word I used and I do use that word a lot off these calls too internally. Anybody can tell you that. I think our -- where we are at this stage is to really make sure that both top line and expenses moving to bottom line that we are surgical and appropriately opportunistic as possible so that certainly includes our expense management piece. And I feel like we’re as tightly managing our financial situation as we ever have in our history as a company, and I mean that in a…

Great. In terms of being surgical, is it fair to say you are looking to get the same bang for less buck or to get more bang with the same buck?

I would say more bang for less buck, so neither one of the two that you mentioned, so I would go to C.

Perfect. Thanks.

Thank you, Omar. We have time for one more question.

Our final question comes from the line of Sam Poser with Sterne, Agee & Leach. Sam Poser - Sterne, Agee & Leach: Good afternoon. Happy holidays, everybody. A couple of questions -- number one, when you spoke about the SG&A, when the gross margins equal to last year, is that going to be on a full-year basis or for the last -- equal to last year in the last two quarters?

That’s a full-year basis for gross margin. Sam Poser - Sterne, Agee & Leach: Okay. Thank you. And then on --

Sam, to make sure I understood your question, the guidance we gave on SG&A was balance of year guidance. We said flat to down for the balance of the year on SG&A and on gross margin, we said for the full year roughly in line with last year and that means the second half would be down. Sam Poser - Sterne, Agee & Leach: Correct. Understood. Okay, and then on your balance sheet, you showed a large increase on the prepaid expense and other. Can you tell us or give us a little more -- some detail on why that jumped so much and --

Sure. There’s a couple of line items on the balance sheet, that’s one of them, that reflect the gains and losses on our derivative portfolio, which is the hedges on currency. And that prepaid increase relates to that and one of the things we had said on an earlier call was that we had taken the opportunity before the significant weakening of the Euro to push our hedging timelines out further, and so what you are seeing on the balance sheet now is a reflection of that strategy. Sam Poser - Sterne, Agee & Leach: Thank you, and then one last question -- Mark or Charlie, have you ever seen a time in the past where the visibility has been as poor as it is today? I mean, because clearly the caution, it sounds like it is coming from lack of visibility?

Well, it’s kind of funny -- I think the visibility we have to what is going on in the marketplace in terms of our relationships with our retailers and what not has actually never been better. The larger macro global economic visibility is really the big question, obviously and I have never seen a time where it’s been as muddy as it is today. We are seeing lots of ripple effects coming in. What’s the last ripple to start to turn the corner? We don’t know. I think that’s the big question of the day.

Yeah, and I would just add a couple of things to that, in the sense that you know, I’ve been around this thing for a long time. I think to Mark’s point, the external macro conditions are certainly significant and probably as big as anything we’ve ever seen but our goal has always been to outperform those macro conditions, and I think that’s something that we continue to be committed to. I think with our brand strength, our product pipeline, the consumer connectivity that we have, we have an opportunity to really leverage those as competitive advantages in a marketplace like this. So the -- I guess the clarity of vision is not as much concern to us as much as the excitement that we have around our ability to operate even in these conditions and the advantages we have, and I think those are advantages that we’ve been able to build over the last several years, as well as ever since we’ve been around. So I think it’s a -- we sound cautious but we also sound optimistic and we may look back on this year as being maybe even one of the most satisfying years we’ve actually had because we feel the way that the tools that we have to operate in these types of conditions, we may be better equipped.

I’ll just add quickly that the tone around here at Nike is one of this is an opportunity, and I don’t mean that we are cavalier about what’s going on or feel immune to the situation -- by no means is that the case. But I think there’s a true feeling like this is an opportunity for Nike to be even a better company and to leverage some of those things that we’ve built as competitive strengths through our history as a company. So this is an opportunity I think for us in the months ahead, the quarters ahead, to get even better. Sam Poser - Sterne, Agee & Leach: Thank you very much.

Thank you, Sam and thank you, everyone, for listening. Happy holidays to everyone and we will speak soon.

Thank you. Ladies and gentlemen, this concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.