Good afternoon everyone, and welcome to Nike's Fiscal 2007 Fourth Quarter Conference Call. For those of you who need to reference today's press release, you'll find it at www.nikebiz.com. Leading today's call will be Pamela Catlett, Vice President of Investor Relations. Before I turn it 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 8-K, 10-K, and 10-Q. Some forward-looking statements concern future orders that are not necessarily indicative of changes in total revenue for subsequent periods due to the mix of futures and "at once" orders, exchange rate fluctuations, order cancellations and discounts, which may vary significantly from quarter-to-quarter. In addition, it's important to remember a significant portion of Nike Incorporated businesses, including equipment, most of Nike Retail, NIKE Golf, Converse, Cole Haan, NIKE Bauer Hockey, Hurley and Exeter Brand group are not included in these future numbers. Finally, participants may discuss non-GAAP financial measures. A presentation of comparable GAAP measures and quantitative reconciliation can also be 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 at www.nikebiz.com. Now I would like to turn the call over to Pam Catlett, Vice President of Investor Relations.

Thank you, good afternoon everyone. Thank you for joining us today to discuss Nike's fiscal 2007 fourth quarter results. We issued our results about an hour ago, if you need to reference them, you can find our press release and the reconciliation as the operator mentioned on our website, as well as the prepared remarks at the conclusion of the call. 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'll take your questions, as it is year-end we have a lot of ground to cover. So, we'd appreciate you limiting your initial questions to two, so that we could allow as many of you as possible to ask questions. In the event that you have additional questions after your first two, we'd ask that you please re-queue and we'll do our best to get back to you. Thanks for your cooperation on this, and it's my pleasure now to introduce Nike Inc. CEO, Mark Parker.

Thanks Pam, and welcome everybody to our year-end call. We just finished another strong year at Nike, and let me start with the big numbers. Net revenue for the quarter was up 9%, that's 23 consecutive quarters of year-over-year revenue growth. For the year, we added nearly $1.4 billion of incremental revenues, total of $16.3 billion, up 9% year-over-year. Global futures are up 11% on a constant dollar basis. EPS grew 34% for the quarter and 11% for the year, even as we absorbed over a $140 million of incremental expense under new stock option accounting rules. All of this is in line with our commitment to deliver consistent profitable growth. The Nike Brand had a very good year, every region saw fiscal year revenue and futures increase. More on this from Charlie in just a few minutes. The Nike subsidiary had a tremendous financial year growing revenue 16% on the year. The big story here is Converse, which continues its white hot performance. Revenue increased 23%, PTI increased 133%. Chuck Taylor, also our franchise, continues to have terrific sell-through of every model, whether we design it or consumers customize it for themselves. In fact Q4 was the biggest global sales quarter ever for Converse. We just opened a branded space on Carnaby Street in London to tremendous consumer response. And we expect the continued international expansion of Converse to be just as successful. Next year is the 100th anniversary of Converse, so you can look forward to some special concepts to pop up in celebration of the brand. Clearly, we see Converse continuing to deliver strong growth. NIKE Golf continues to perform exceptionally well. We extended our leadership as the world's number one golf apparel brand. We moved into the top three brands and drivers in the US and…

Thanks Mark. And how about those organs they deal in. Back-to-back National Championships, congratulations to one of the local teams. I wanted to start by picking up something Mark mentioned, and that's the retail environment we are in. I think the challenges of consolidation and lack of distinction are clear to everybody, but we've been talking about these issues for a while now. Our position is always been that of leadership in creating differentiation. Athletics especially had become the journalist of the industry. We think it’s especially critical to put back into athletic specialty. At the same time, we believe that the Nike brand has an opportunity to be better representative at point of sale and we've announced our intention to invest here. A big part of that leadership will come out of our category alignment. We now have these teams and leaders in place. The teams have relocated and the leadership, products, marketing and operational support are all sitting together, forming the beginnings of a portfolio of a world class team. And I have to say, this is one of the most energizing things we have done around here in quite some time, we have business plans being reworked, new consumer concepts beginning to take shape, and we've already started to create category of destination formats. An example, is our House of Hoops concept with Foot Locker stores that combine NIKE Basketball, the Jordan brand and Converse in a way that will create a new level of excitement for consumers here in the US. It's an important first step in rolling out a series of new ideas that will impact specialty retail and influence the entire industry. Let's stay with basketball for a minute. The take outside the company is that the US basketball business is underperforming compared to…

Thanks Charlie. As Mark told you earlier, we delivered another year of strong profitable growth in fiscal 2007. For the year, revenues grew 9% over $16 billion, and we delivered double digit EPS growth, even after the change in stock option accounting. Our balance sheet is stronger than it has ever been, and with futures orders up double digits, we brought great momentum in our affiliated brand businesses. The Nike portfolio is well positioned to deliver continued growth in fiscal '08 and beyond. Revenues for both the fourth quarter and fiscal year grew 9%, with two points of growth from currency changes. All three of our product business units, and all four of our geographic regions delivered revenue growth for the year. Revenues for the businesses reported as other, grew 16% for the year and contributed two points to our overall revenue growth. Futures orders scheduled for delivery from June through November 2007, grew 12% versus last year, as all regions reported strong growth. Excluding currency changes futures were up 11%. Diluted EPS for the quarter were $0.86, 34% higher than last year. As expected, EPS growth for the quarter was boosted by comparisons to prior year earnings, reduced by world cup demand creation, and the Converse arbitration ruling. For the year diluted EPS were $2.93 up 11% versus fiscal 2006. Excluding the impact of stock-option accounting and the Converse arbitration, EPS would have grown 15% for the year, within our target growth range. Gross margins for the quarter were flat to the prior year, as initiatives to improve gross margins offset higher product cost in Asia and higher closeouts. For fiscal 2007 as a whole, gross margins were slightly below last year. For the full year, reported SG&A grew 12% and as expected the timing of demand creation spending…

Thank you. (Operator Instructions). And we’ll go first to Robby Ohmes with Banc of America Securities. Please go ahead.

Thank you. Two quick questions, the first question, in the futures orders, can you give us the sort of the ASP break out for the US and for Europe? And then, my second question is, can you give us for the US futures any sort of sense on the relative strength by channel? Thanks.

Well, on the futures, Robby, we are seeing still some slightly lower ASP’s on the futures order book, and as we said earlier, most of that’s really a mix driven impact. We are seeing pretty much consistent performance out of the very top end of our price range. But we are seeing very strong growth at our products like kids and as I said our sandal business has been really strong. So, combination of those mix impacts, we are seeing a little bit of lower ASPs worldwide.

And then future?

Well, and then the other question was channel perspective.

Yeah, Robby this is Charlie. I have a channel breakdown in front of me. I would say that it's pretty relatively strong across the board. In the US, we got strong performance in every channel. So, we've got people that are continuing to grow at a great cliff and then obviously there is a few within each of the channels that are, I wouldn't say they are down, but they are not growing as fast. Pam might be able to give you some of the exact channel breakdowns after the call. I don't have anything in front of me, right now.

And just one last quick follow up, the category alignment that you guys are going through, when should we be thinking about when that would start to benefit your numbers?

Well, that's a great question and we think it's starting to benefit as we speak in the way we are approaching the business and some of the decisions that we are making. That the first full blown category led seasonal initiative will probably come to market somewhere around spring '09 or fall '08. But there, the alignment is starting to inform our decision makings literally right up the back.

Great. Thanks a lot.

We'll go next to Jeffrey Edelman from UBS. Please go ahead.

Thank you. First of all Pam, can I get the channel breakdown also--? Charlie, first for you, as we think about the orders and as Robby asked you about the channels and we think about what you are talking about the efforts to create excitement with some of the mall based retailers. Is that embedded in some of the futures growth?

Not really, not yet, because there is really nothing out there yet with other than some announcements and some directional arrows. So, nothing is being reflected in the futures numbers as of yet. We are still working on plans on as to what it represents over the next 12 to 18 months.

Okay. And then, Don could sort of give us a sense, why there is such a spread in the currency differential between your fourth quarter sales and first half futures? It is the difference in the FX impact seems to like greater than that we typically see

You mean on which one are you talking about, because we've about ten?

I am sorry, European fourth quarter sales reported constant dollars and then European futures reported constant dollars. I'm sorry I hate to ask you to do this. Can you either repeat the question for me?

Which two numbers are you trying to reconcile here? The European orders were up 12%.

Going into the fourth quarter, that's what you are saying?

I am saying at the end of the fourth quarter

Yeah, okay, 12.5% on a reported basis, right?

And on a constant dollar basis, 11% your fourth quarter revenues in Europe were up 12 and constant dollars were up 3%.

Jeff, I think I'm going to ask you to see if we can take this one to a different conversation, because I don’t think there is a fundamental principal involved here. But, I am not sure I can give you a good answer. I am not sure I entirely I understand your question.

Okay, well, we'll follow up.

Yeah. And just to make sure that we're all clear and how we do this. Obviously, the way we do report futures numbers on a go forward basis, as we use our estimate of what we think exchange rates are going to be, that's obviously subject to a lot of fluctuation based on where the exchange rates actually land, but that's our estimate at this point.

Okay. Thanks.

We'll go next to John Shanley from Susquehanna International Group. Please go ahead.

Thank you and good evening guys. Charlie, you gave us a good insight in terms of the China business, sales up in the quarter 29%. I wonder if you could give us the same level of detail from some of your other major international markets, specifically the UK, France, Germany and Japan?

Yeah, I don't have the all the revenue numbers in front of me. I think the most important part that you are trying to get out, we've consistently talked about those markets as being challenges. Let me take the UK and France, to start with. Futures for both countries are up, so that's a first force for a while and an encouraging sign. I think in France, we've got two successive quarters of revenue gains, year-on-year and so we are starting to see a little bit of movement there. Our inventory situations both at retail and obviously in Europe has improved over the last reporting period, and we feel very good about that. So we've been talking about the UK and France for a while and they take time. I feel like the French marketplace is probably in a little better shape with a little less volatility. But the UK market shape is obviously a bigger market and it has probably a little bit more volatility right now than France based on where we are at. But both markets are improving and I feel very confident in talking about that. As well as in Japan, I think in Japan the marketplace again, inventory levels are in very good shape, our sell-throughs are starting to improve. The promotional activity in the marketplace certainly around the Nike Brand, is really becoming very minimal and we really like our brand position and our business position right now going forward. So, things in Japan have never really been that bad. They just haven't been as good as we'd like them to be, and I think Japan now is starting to come back in to focus with respect to what the potential of that marketplace really is reflected.

That's great to hear.

Hi, John. Just to give you the clarification the UK was down, France and Japan were both up slightly in the fourth quarter and as Charlie said, futures for all three of those markets are up going forward.

Super. Also on the forward order questions that have come up already. Can you break down the forward order position between footwear apparel and accessories for us, at the end of the fourth quarter?

We don't usually do that John and we are not prepared to make an exception at this point.

Okay. Sometimes you do and sometimes you don't, but okay. Then the last question I had Don is, maybe if you can clarify, you mentioned the fourth quarter comps for the first quality retail stores were up 8%. Is that just Niketown or/and may be you can just give us the comps for the outlet stores if it doesn't include those retail outlets?

Okay. Well the first quality stores for Nike includes certain other concepts. For example we have got some women store concepts out there in the US. So that will be all of our first quality, but the overall majority of that is Niketown and the comp store results for the outlet stores were a little more challenging, consistent with many of the other outlet retailers I have seen. But overall, our retail business, particularly on the first quality side has been very strong, and we think that's reflective of the strength of the brand.

Well, the comps in the outlet store is negative?

It was a challenging set of comp numbers, so yeah, they were negative.

Okay, great. Thanks a lot, appreciate it.

We'll go next to Margaret Mager from Goldman Sachs. Please go ahead.

Hi, good morning or good afternoon, its Margaret Mager and congratulations on a great fiscal year Mark, your first one as CEO.

Thank you, Margaret.

I have a few questions. First if I could just focus on the US market a little bit. Is there any inventory in the channels that needs to be dealt with at all, and how do you keep that balanced when you've got clearly disappointing results at two important customers If you could speak about that. And then secondly, could you talk about your apparel business. And I know you said Sports Essentials is driving it, but what else is going on in apparels, how is the women's business doing and I know the Sports Essential is 40-60 cotton, non-cotton. What is your view of performance apparel that has cotton in it if you could talk about that? And then lastly if you would please, when will Olympic marketing start to kick-in, in a significant way? Thanks.

Okay. This is Charlie.

Hi, Charlie.

Margaret, I'm trying to go to the top, so US inventory, probably the US marketplace, is probably our best managed marketplace around the world. We've got the most resources. We have a full blown outlet store piece for the puzzle in play. And so that team has gotten pretty damn good at managing the product flow and the inventory level through the US market. I think the key thing for us now is, again, as we continue to do well here in the marketplace and may be some of the other competition starts to struggle little bit, we've got to be disciplined and up to make sure that we keep an eye on the appropriate level of product in the marketplace. And I think, it's something that we demonstrated we have the ability to do and we will certainly do as we go forward in the future. So, that would be the easiest and most simply to answer that first part of the question. I think--

How do you make sure, you don't over sell the customers, is there a component on that front?

Well, I think that's pretty much something, that's a little bit of what we call the art and the science. That's the art piece and making sure that we are gauging the appropriate level of demand in the market and putting the right amount of product in the marketplace to liquidate. I think, we've over the last six or seven years, I think we've developed a pretty good discipline around that

Seems to work

And that's something that we'll continue to stay focused on and keep an eye on. At the same time, we still believe the US market place is the growth engine for us and for the most parts it's pretty healthy right now. I mean, we got a little bit of challenge going on in the mall but overall all the channels of distribution are still pretty healthy. And I think that sometimes everybody kind of gets a little obsessed with some of the tougher information that's coming out, but overall the entire marketplace is still pretty healthy for us. So, we feel good about the US market.

Okay.

I think the apparel business. Let's go back to specifics around what's performing, I think the thing that we feel great about right now in apparel is the move forward that we've made around performance apparel. Both in Nike Pro and the compression part of the business as well as Nike Sports Essentials. And I think one of the things that we've really started to understand is this idea of franchised type items that have been always a very successful part of the footwear merchandising line plan, is now becoming a bigger and more important part of the apparel line planning as well. And Nike Pro and Nike Sport, essentials are two great examples of that type of execution.

Okay, is women’s doing well?

Yes.

Yes, Pam says, womens is doing well.

Excellent. Thank you, Pam.

And then, I think it won’t be the advertising, we will start to gear up and back half a little bit. But with the games, it will be pretty much the summer timeframe when things will really heat up around the world. So, and we don’t have all of our Olympic plans in place or confirmed just yet. So, I am not prepared to really start to get any more specific on that.

Okay, well thanks and keep up the good work, enjoy the summer.

Thanks.

Thanks, Margaret.

Thanks, bye.

We’ll go next to Virginia Genereux from Merrill Lynch. Please go ahead.

Virginia?

We lost again.

Hello. Okay, can we go to the next person please operator?

Okay, just one moment. Alright give me just one moment.

Pam?

Yes.

I am still on.

Hi, Margaret.

Hi. You could talk about gross margin and how you are going to achieve higher gross margins over the next two to three years if you care to?

You know, we’ve talked about that one on many previous occasions.

Okay.

Lean manufacturing, SKU productivity, raw material consolidation, sales SKU reduction, between footwear and apparel. Actually, we are seeing benefits in all those areas. Lean is a big story with and if you remember by about a year ago Lean, was about 19% of our footwear this past year, we jumped up to about 42%. And we see that continuing to grow in ’08, and then also being leveraged into apparel. That’s a big one.

Okay, excellent, alright. Well, I’ll hang up, maybe I am causing the problem.

And actually, what I am going to do is take the opportunity to answer Jeff Edelman’s question, I had a little bit of remedial instruction here from Pam. As I understand the question it is, there was about an 8 point spread between constant currency and real dollars in Europe for the fourth quarter revenue, but there is only a one point spread, so the future is between constant dollars and real dollars. And the key issue is actually in the base years. So the fourth quarter of '06 our average euro-dollar conversion rate was about $1.20. So, when we were comparing the fourth quarter of '07 we were at about $1.33 against the $1.20. The first quarter of '07 rate is $1.27, so we are comparing against a stronger first quarter euro in the beginning of '07 versus the beginning of '08 than we were in the fourth quarter of '07 versus the fourth quarter of '06. So, hopefully Jeff, that answers your question.

And pardon for the interruption, we are experiencing an interruption in today's conference. Please standby, while we resolve the situation. Once again please standby and we will resume the conference shortly. Once again, please standby, we will resume the conference shortly. Ladies and gentlemen, we are experiencing an interruption in today's conference. Please standby while we resolve this situation. Once again please standby, we will resume the conference shortly. Thank you for your patience. Ladies and gentlemen, we apologize for the interruption in today's conference. If you could give Pam Catlett a call at 503-671-6453 for the completion of the Q&A session. We do apologize for any inconvenience we may have caused. Once again, please call Pam Catlett at 503-671-6453. Once again, we do apologize for any inconvenience this may have caused. Thank you, and have a great day.