Welcome to Nike's fiscal 2009 third quarter conference call. For those 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 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 mix of future 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. The presentation of comparable GAAP measures and quantitative reconciliations are found at Nike's Web site. 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 the call over to Pamela Catlett, Vice President of Investor Relations.

Thank you and thank you everyone for joining us today to discuss Nike's fiscal 2009 third quarter results. As the operator indicated, participants on today's call may discuss non-GAAP financial measures. You will find the appropriate reconciliations in our press release which was issued about an hour ago and at our website www.Nikebiz.com. Joining us on today's call will be NIKE, Inc. CEO and President, 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. I will now turn the call over to NIKE Inc. President and CEO, Mark Parker.

Thanks Pam and good afternoon everybody. I see our third quarter as a snapshot of how to deliver value in a volatile economy. Today’s results have a lot of parts, but underlying all of them are excellent operating results driven by healthy revenue growth, share gains for the Nike brand and flexible and prudent business management. In tough times having strong brands and sound business principles is just the beginning. We’ve had the same simple and powerful strategy for years; stay close to the consumer, drive innovation into the marketplace, operate with excellence and manage with financial discipline. Q3 proves that Nike can be opportunistic in the short-term and position the company to deliver consistent, long-term value to shareholders. I feel very good about our performance and our potential. It’s good to be in the business of sports, especially now when core values and passions gain so much importance. Because we are the leader and the innovator in this business we are positioned to catalyze and expand growth. It’s not enough to be a legacy player in today’s global economy. A company’s history is not nearly as important as its potential. There’s a new premium being defined and it is based on trust, authenticity, innovation and a deep connection with the consumer. These are the things that people value and the things that Nike delivers consistently. Q3 illustrates more than our performance over the last three months, it shows how we’ve managed the business and executed our growth strategy over the last three years. We consistently leverage our portfolio to grow the market, we gain share, outperform the industry and position ourselves for long-term growth. A big part of that strategy is aimed at being a better, more responsive organization. You’ve all asked yourselves the question, “Can Nike really cut…

Thanks Mark. Good afternoon everybody. The bottom line is, the strength of the Nike brand has never been more obvious or more valuable. As Mark said, we are on the offense when it comes to leveraging that strength. Q3 shows that when consumer confidence dips, trust in authentic brands rise and that is a solid foundation for growing the business in a skittish economy. Looking at our results, on a constant dollar basis, the Nike Brand generated revenue of $3.8 billion, up 2%. Global footwear was up 6% to a new Q3 revenue record of $2.6 billion with revenue gains in the U.S., China, Japan and the U.K. Global apparel was down 4%. More about that in a minute. Year-to-date revenues are up in every region and across nearly every category led by revenue and market share gains in running, basketball and sportswear. By the way, when we said there was potential for Nike in action sports, it showed itself in Q3. Nike SB is now number one in core skate shops and Nike 6.0 was the fastest growing footwear brand in the action sports space. I want to expand on something Mark mentioned about accelerating our innovation agenda. At the top of that agenda is product. For the current season, spring 2009, it is the first time we’ve taken product that was created completely inside the new category offense and delivered to the consumer. Consumers are responding. Basketball and running, two of our largest global categories, are leading the way. Let’s go to basketball first. There is a lot of energy in this category right now. It is hard to believe that just two years ago people were saying the business had peaked. We looked at it differently. We knew that the gold medal game in Beijing was an…

Thanks Charlie. Today’s environment challenges every company to adapt quickly to maintain profitability and preserve capital. Some companies also have the opportunity to increase competitive separation and create long term value. We are convinced that for Nike the current environment represents both a challenge and an opportunity. To meet the challenge, we are maintaining our financial discipline and making the difficult decisions to maintain profitability and position Nike for sustainable, long-term growth. To realize the opportunity, we are sharpening our focus on our consumers, delivering innovation to the marketplace and raising the bar on operating excellence. I believe that our third quarter results begin to demonstrate our ability to both meet the challenge and realize the opportunity. Reported third quarter revenues declined 2% to $4.4 billion but currency neutral revenue increased 2%. Excluding currency changes, Nike Brand revenues grew 2% while revenues for our other businesses which include Converse, Cole Haan, Hurley, Nike Golf and Umbro grew 3%. In a tough retail environment, our products out performed the market on both sell in and sell through as consumers moved to the leading brands and we gained market share. Third quarter diluted earnings per share declined 46% to $0.50 but included in our results is a $241 million after-tax, non-cash charge for impairment of the assets of Umbro which reduced Q3 diluted earnings per share by $0.49. Excluding the impairment charge, diluted earnings per share would have increased 8% to $0.99. Although we expect Umbro’s financial performance for fiscal 2009 to be slightly better than previous guidance, projected future cash flows have fallen below the levels we expected at the time of the acquisition. This erosion is a result of both the unprecedented decline in global consumer markets, particularly in the U.K., and our decision to adjust the level of investment…

(Operator Instructions) The first question comes from the line of Bob Drbul - Barclay’s Capital. Bob Drbul - Barclay’s Capital: First, on the SG&A can you give us, I’m not sure if you did on this quarter’s demand creation dollars versus overhead?

What I did say was the growth rate for both demand creation and operating overhead were both up 1% in constant dollars and they were both down low to mid single digits in reported dollars. Overall we were down 4% for total SG&A. Bob Drbul - Barclay’s Capital: Some questions on the international business. Can you elaborate a little bit more on the European trends? United Kingdom, Russia and could you give us some more color on China as well in terms of the business there?

Let’s just start with Europe. Europe is a challenging environment. The most challenging markets are Spain or Iberia, Italy and France. The U.K. we are holding our own. It is a tough market place as we all know but the overall year-over-year business comparisons are relatively flat. Actually we are seeing some nice growth right now in Germany. We feel good about the brand’s position going through and looking at Germany. We are gaining share we feel and we are, as Don and I both pointed out, anniversarying some pretty big numbers in Europe last year as we started to ramp up towards the European Championships. In China, again a little bit of softness coming out of the holiday period. I think everybody has talked about that and everybody is pretty much up to speed. Starting to anniversary some of the significant ramp up for Beijing. I think we have talked about that over the last quarter or two. That being said I think our brand strength continues to be very strong. We have a very good position in that marketplace competitively speaking with regard to brand strength. We feel really good about that. As we sort through some of the overhang from Beijing we are very optimistic as we look at China as a growth vehicle going forward. Bob Drbul - Barclay’s Capital: When you look at oil and where you are when will we start to see a benefit from the lower sourcing costs in the business?

I think you will probably start to see that more significantly as we move into fiscal 2010. You may recall that when oil was spiking in the spring and early summer of 2008 we were not seeing significant flow through impact. We talked about the delay at that point and our ability to negotiate with factories. When the oil price came down we are going to see the benefit a little more slowly as well. We definitely see improvements in oil prices coming into our fall and holiday seasons.

The next question comes from Omar Saad - Credit Suisse.

I am hoping you can talk a little bit more about the structuring you alluded to on the call Mark and how it fits in with prior realignment you have announced with respect to focusing more on sports categories. Can you give us a little more color on how you are thinking about proceeding with that process?

First of all, a lot of this work that we have started with the restructuring goes back to 2007. As you mentioned with our focus one elevating the categories you mentioned in the organization and trying to make NIKE more consumer connected, more competitive in each of the segments of our business. This work we are in the middle of right now is really following the same line of thinking. First of all you have to recognize our success and our potential is based primarily on our ability to build our brand strength, innovative and compelling products and experiences, really connecting more deeply with consumers. The work we are doing to re-engineer the company is focused on doing all of those things better. That is really the driving force behind all this. It is creating more responsive, more effective, more competitive and again a more consumer focused organization. As we like to say it is absolutely the case. It is not just about cutting costs. As we all know this is a period of time where it is not business as usual. It is about adapting, changing and evolving to be a better company. I think personally to allow the great talent we have here, the passion and the competitive drive of the people here at NIKE to really realize its greatest potential we are doing some things to streamline the organization, flatten the organization and de-layer in some cases, minimize any redundancy in positions and really make NIKE a faster, more nimble and efficient company overall. That really falls very much in line with the work that started in bringing more focus to the categories you mentioned in the business.

Don you mentioned the re-tooling in the supply chain and that process could last over 18 months. A lot of the expense is going to be running through the P&L in the next quarter. Did I understand that correctly?

Actually if you think about what we are doing on the factor base the impact in terms of charges is going to be minimal. The cost, if any, will really be in terms of how it flows through our logistics costs and margins. So at this point we are working very hard with our sourcing partners to make this an orderly transition. We have planned this very carefully but one of the things that happens when you work through a process like this is that there will be some uncertainty involved. We are very confident we have done the planning properly and we are hopeful we will be able to make this minimally impactful with business but this is not going to be an up-front charge issue. This is going to be something that if it does happen will flow through margin.

Mark and Charlie, I wanted to ask you about the concept that we might have been in a sports bubble the last ten years. People were so crazy about sports and corporations were chasing dollars to be involved in sports and landmark multi-billion dollar stadiums were being put up and huge athlete contracts to play professional sports. Now you are seeing stadiums with unsold seats. Stadiums can’t sell the seats. NBA franchises that are running into liquidity issues. Do you think…how do you think in this kind of new paradigm we are in the role that sports plays in society and how does it impact you from a cost and marketing perspective and from the demand side do you see there being an impact at the consumer level and how people view sports?

First of all I think we remain very bullish on the power of sports and its role in the economy. The interest in sports from a consumer standpoint, some of the assets that are in and around the world of sports might be changing or resetting in terms of value in some cases but overall the robust interest in sports and the commercial opportunities around it we are as bullish about that now as we have been. Setting aside the recession we are in right now. Looking at just sports itself and its popularity and consumer interest and the participation levels we see that not dwindling at all. If anything we are seeing more of an appetite for what we are doing. We are not seeing dramatic decreases in average selling prices in our products. We are not seeing any real fall off in terms of the opportunities we see in front of us. I wouldn’t say there has been a dramatic shift of late. If anything I think the interest in sports is strong and healthy. Again, I think you might be seeing some of the assets that are around sports, properties, event sponsorships and that sort of thing…some of that value being reset in these times.

I’ll just jump in. It is an interesting thing, a sports bubble that you mentioned. You mentioned a couple of things. Attendance may be down in some cases but I think viewer-ship is actually up. So I think that is something you have to think about a little bit. You talk about traditional access to events which has been a metric that most people use, versus really what maybe a new access is which is really more like immersion. We are seeing kids online anywhere from 20 minutes to 2-3 hours as they immerse themselves in the new access points to sports whether it is through the athletes, through communities that are talking about it and it is 24 hours a day. So that has changed incredibly. I think the other thing you think about too is the traditional sports, the stick and ball sports versus the new action sports and the different communities and environments that are being created around some of these and some of the things we have talked about as we build our brand in some of these new areas. For us it is all about a focused effort around each one of these sports and their communities. I think we have talked a lot about that consumer experience and how we continue to build the brand and reinvent the brand, connecting with these kids. I think the bubble may not be as much a bubble. Maybe if you are in the old and not transitioning to the new you may feel like you are in a bubble and it is about ready to burst. But if you are part of the new it is really almost an infinite landscape from which to engage with consumer in new and energetic ways.

The next question comes from Robert Ulm - Merrill Lynch.

First, I just wanted to follow-up on Bob’s question at the beginning on China. You have broken out China futures the last couple of quarters. I was just wondering if you would do that for us today. Also, are there any changes in your plans for store growth in China this coming quarter and into next year? Then my second question would be on the futures window. When you look at the futures you put out today the sort of three month forward versus the six month forward so when you look at the fiscal first quarter and you come up against the Olympics is there a dramatic shift or weighting where you are down really big in futures in the forward three month period? If you have time for a third, I would love any quick comment on Jean Jackson and sort of expected changes in D to C as she is heading that up?

I didn’t even ask for them to issue reprimand on questions so we would like to cover all three. I just want to make sure we have them straight. You want China?

China just to follow up on Bob’s the futures and store growth plans in China? Second is just the futures orders given the second half of the window of the futures is up Beijing Olympics, is the minus 10 consistent or very weighted to that second half of the window? Then just Jean Jackson taking over the D to C business, any changes expected there?

I was ready to go. Pam was just getting everything cleared up here. As far as retail expansion goes, we have slowed down a little bit in China as you would expect with conditions the way they are. We still will continue to grow our retail footprint in China through our partnership door program. Maybe not quite as an accelerated rate as you have seen over the last 18 months. That is where that is. With regards to the future window the actual bigger number comparisons are against the first half of this reporting window on the futures piece because there was really a ramp up going into the fall, not necessarily all hitting in the fall holiday piece. We did see some softness in those numbers but we have actually seen those numbers improve as we start to move towards the holiday booking period next year. That is really where the China business sits right now which is what gives me some optimism as we look out in the future based on our brand strength and our continued pursuit to the Chinese consumer.

I’ll take the question on Jean Jackson. First of all I just want to take the opportunity to reiterate our commitment to making our direct to consumer business a real competency that we can better leverage to a healthy and profitable marketplace. We are going to continue to invest prudently during these periods but invest in formats that will lead the market. We will stay focused on intensifying our commitment to this real critical piece of our business so that is not wavering one bit. In fact I think the recent appointment of Jean to lead our overall NIKE, Inc. direct to consumer business is another big step in that direction. It is another big commitment we are making to that competency for NIKE across the portfolio, not just in the NIKE brand. Certainly in the physical stores as well as the e-commerce opportunities we have in front of us. I have worked with Jean closely on the board. She has been on the NIKE board for eight years. I am very close to Jean and know what she comes in here with tremendous retail experience and I think her leadership will again add a great deal to our commitment to that direct to consumer business. We are very excited about that.

The next question comes from Kate McShane – Citigroup.

Just very quickly, how much of the SG&A guidance declines for the fourth quarter you gave today is being driven by a reduction in media rates and how much is being driven by just a reduction in spend?

I don’t have this analytically. My sense would be this is really a spend issue. There are two reasons I would say that. Number one is last year we were doing a tremendous amount of marketing around the European Championships and the Olympics so you have a fairly heavy calendar. We are also evolving away as we talked about in the prepared remarks from more traditional media to more online and digital. We still are on air to some degree but that is not as big a driver as you might think.

I know this has been asked before in many conference calls over the years but I was wondering if you could talk about futures and if they are becoming even less relevant as a way of assessing top line future growth in the context of the environment? I think one of your competitors recently said they are not reporting backlog numbers any longer because of the amount of at-once they are seeing. Can you comment on that?

I would say first of all that futures are an important part of our business model so that is something that is going to continue. They have always been directional indicators. I don’t think you can be literal about futures growth. We certainly have a large part of our business that is not on futures. I think they are still a useful directional indicator but you have to take them in context of the broader business. That is why we give you some pretty good indication of where we think the trends are going. That is why we continue to report them.

The next question comes from Jim Duffy - Thomas Weisel Partners.

A couple of questions, one on SG&A and one on hedging. Don, regarding the restructuring you often talk about the many levers that you have. I’m trying to get a feel for your strategic approach to SG&A. You mentioned an objective from the restructuring to keep SG&A flat. How did you pick flat and is that a reflection of gross margin expectations and certain operating margin targets or a return on invested capital objectives? Some color there would be helpful.

When we started down the road of looking at where we wanted to position the company for the future we actually started with directional indications financially but our main thrust was how do we position the company to grow in the long-term? How do we be faster to market? How do we drive innovation? How do we eliminate layers? So, we put a set of financial guard rails around the process and our main focus was making sure we were in the right place for the long haul because we are very confident in our long-term business prospects and this was an opportunity for us to put the infrastructure in place to get there. What I would tell you is the process was bottom up. We are designing the organization we think positioning us for the future. As Mark said our guidance here is around flat. We are going to do what we think is the right thing for the business. The key is making sure we are deploying the resources against the highest potential opportunities and that is what we are doing.

Can you provide an update on your hedge positioning? What are the other income expectations in the fourth quarter? How far out are you hedged? Are there any dynamics in the FX movements where you are feeling particularly exposed?

One of the things I expect to pattern for the fourth quarter is going to be the same as what we have seen for the last couple of quarters which is the nature of our hedging program when you have a strengthening dollar situation we are going to see weaker translation of international profits and we are going to get an offset back in the other income expense line. So whenever you have that sort of pattern in currency you are going to see other income and expense perform as it did in the third quarter. Our hedge positions are actually out into fiscal 2010. We have some positions out into fiscal 2011 that were put on some time ago. It is obviously a very complex portfolio of hedges but as you can see from the results in the third quarter as well as year-to-date it has been very effective for us.

The next question comes from Chris Svezia – Susquehanna Financial Group. Chris Svezia – Susquehanna Financial Group: My first question here is just on the futures. Just to be clear I think you mentioned the footwear piece of the futures was stronger than the apparel and secondly maybe you could just talk a little bit about ASP trends and the overall order book globally?

Actually I don’t have that one just at hand. I’m just going to look that one up here but generally… Chris Svezia – Susquehanna Financial Group: Is it fair to say generally speaking ASP has continued to see some level of improvement in the order book?

I’m sorry, say again? Chris Svezia – Susquehanna Financial Group: Are you saying you continue to see some level of ASP improvement in the overall order book? A continuing trend of what you had been seeing in the past?

What we have been seeing over the last couple of quarters is the impact of some price increases we took over the last year or so. So those have had a beneficial impact on ASP’s. We now have started anniversarying that so we have seen increases. Going forward I think we are going to see more stability in the ASP piece. Chris Svezia – Susquehanna Financial Group: If you could just talk about on the U.S. futures position, it is declining sequentially and I guess I was just curious…is that just because retailers may be just working down inventory levels, being more cautious as they went through January and closed out their fiscal year? Because it seems like we are seeing very significant growth in your footwear business in the U.S. as we have gone through February. I was just wondering if you could just talk about your thoughts as we go through the quarter in terms of what might unfold on the footwear piece of your business in the U.S. relative to what you are seeing in futures?

Right now most of the retailers closed their fiscal year out either calendar year or January. So some of that softness that you mentioned is correct. I think at retail our sell through has continued to be very strong and we feel great about our performance in February and right now I am certainly not going to sit in a position where I am going to start predicting the future in these conditions. So, with that we feel very good about our brand strength. We do seem to be somewhat of a safe haven in turbulent times. That seems to be playing out in the early parts of calendar year 2009. Chris Svezia – Susquehanna Financial Group: You look to U.S. and European markets, you have a very fluid operating structure in terms of bringing product to market and then if necessary moving product and moving inventory through your outlet business. As we look to China and just kind of curious given what is going on there in trying to move and flow inventory can you talk about the opportunities to maybe improve how you are operating and moving product in China? I believe you are opening up a new facility some time in the next year or so to improve facilities. So it looks like there is an opportunity. I was wondering if you could just talk about that?

As that business matures and goes into its next phase of growth we have announced a new distribution center which will, to your point, aid us in managing the business and fulfilling demand at the appropriate level in a timely fashion. We are also building an outlet program, a factory store outlet program, in China as well. I think we have some stores in place today. I am not prepared to go into specific numbers. We also have some partners with stores. So we are building that circulatory system that is giving us the ability to manage the brand in mature markets like the United States and Western Europe and putting ourselves in the same position in that market place we call China which is still going to be one of the fastest growing markets for us over certainly the next couple of years.

The next question comes from Michelle Tan – Goldman Sachs. Michelle Tan – Goldman Sachs: First, on the SG&A side just to clarify the goal of flat applies to fiscal 2010?

That’s right. Michelle Tan – Goldman Sachs: Can you elaborate a little bit on some of the opportunities and the bigger buckets the environment is creating that you are looking to reinvest some of those savings towards? Just big picture?

We still believe there are tremendous opportunities for us in a lot of our international markets. We are obviously going to be mindful of the environment that is there but building our brands and our businesses in places like China that is a long-term play and so that is a place where we are going to continue to be aggressive. We talked about developing our action sports business. Charlie talked about the success we have had so far. We think there is a lot of additional opportunity there. We really consistently talked about how we build more compelling marketplaces, an integrated offense of owned retail and partner retail. We are going continue to invest in places like that. So the investment portfolio is a lot of the areas we have been talking to you about the last couple of years. As Mark said this is an opportunity for us to accelerate the execution of our strategies, not to reinvent them. We are being very mindful of the current environment and making sure we are putting the resources where we think they can do the most good in today’s world.

I’ll just add we are looking at being more surgical in terms of product best-category based opportunities as well. As we like to say, staying on the offense, so we are very keenly aware of some of the upside opportunities from a product and category standpoint in the key geographies around the world. So we are going to be taking advantage of those opportunities with some demand creation spend against that in the year ahead as well. So we are not saving our weight of prosperity here. We are going to be investing where we think, as Don said, the return is the greatest. Michelle Tan – Goldman Sachs: On the gross margin side, any sense of the magnitude of impact of markdowns versus currency? Does currency impact the inventory number on the balance sheet?

Do you want to rephrase that one for me? Michelle Tan – Goldman Sachs: The first question on the gross margin expectation. Magnitude of the hit from currency versus mark downs? Is one bigger than the other in the fourth quarter?

I think both of those will be key drivers of the merchandise. I can’t tell you what the exact portion is but certainly from a currency standpoint the hedging program we have has been very, very helpful for us over the last three or four quarters. We are going to see a little more flow through in the fourth quarter of that dollar strength. Yes, it does affect the value of the inventory on the balance sheet both in terms of when you buy it, it turns into for example more Peso’s. Then when you translate it back into dollars there is another piece of delta. That is why inventory, as we say to you when we look on it on a unit basis and we look at it country by country and category by category we feel very good about where our inventory is right now.

Thank you for listening. We will speak with you soon.