Good afternoon, everyone. Welcome to Nike’s fiscal 2008 first quarter conference call. For those of you who need to reference today’s press release, you will find it at www.nikebiz.com. Leading today’s call will be Pamela Catlett, Vice President of Investor Relations. Before I turn the call over to Ms. Catlett, let me remind you that participants of this call will make forward-looking statements based on current expectations and those statements are subject to certain 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 futures orders that are not necessarily indicative of change -- 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, 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. A presentation of comparable GAAP measures and quantitative reconciliations can also be found at Nike’s website. This call may also include discussion of non-public financial and statistical information, which is also publicly available on that site, www.nikebiz.com. Now I would like to turn over the call to Pam Catlett, Vice President of Investor Relations.

Thank you. Good afternoon, everyone and thank you for joining us today to discuss our first quarter results for fiscal 2008. As the operator mentioned, we issued them about 30 minutes ago and if you need to reference our results, you can find our press release and the reconciliations between GAAP and non-GAPP reported items 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’ll 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 for questions, we really would like to answer them and presuming we successfully address the technical difficulties from last quarter, we would like to allow as many of you to ask questions as possible in our allotted time. So we would appreciate you limiting your questions to two. In the event you have additional questions that are not covered by others, please feel free to re-queue and we will do our best to come back to you. Thank you for your help with this and now, it is my pleasure to introduce NIKE, Inc. CEO, Mark Parker.

Thanks, Pam, and welcome, everybody, to our first-quarter call. When I spoke at year-end, I opened with the news that revenue was up, earnings were up, futures were up, and every region was up, and we can say the same thing today as we close the first quarter of fiscal year ‘08. Net revenue for the quarter was up 11% -- that’s 24 consecutive quarters of year-over- year revenue growth. For the quarter, we added $461 million of incremental revenue to reach $4.7 billion. Global Futures are up 10% on a constant dollar basis and EPS grew 24% for the quarter, excluding our one-time tax benefit; and 51% with the benefit. Q1 is another validation of the financial model we introduced in 2001, and that’s to deliver high single-digit revenue growth and mid-teens EPS. You’ll hear more from Charlie and Don on the brand and financials in a moment, but first I want to tee up some topics that I know are important to all of us. Over the last few months, we’ve seen some volatility in the global markets. It’s a very dynamic environment, nothing we haven’t seen before. Nike has a track record of leading and growing through up and down market cycles by staying true to our strengths, and that’s innovative products, relevant brands, and premium consumer experiences at retail. And we’re well positioned to drive these strengths into the marketplace going forward. I want to touch on two more competitive advantages that we have at Nike that are particularly important today. First, we have a solid growth plan, a plan we created specifically to leverage our unique strengths as a brand and as a company. Our first step was realigning the company into key categories. We did that for three reasons: to get closer to the…

Thanks, Mark. Good afternoon, everyone. I am going to touch on some of the stories from around the regions but first I want to revisit the strengths that enables Nike to compete at the highest level. As Mark said, we have a clear growth plan. At the center of the plan is that category focus. We realigned the company based on consumers and how they live and play in the real world. Young athletes are focused on their sport of choice year-round and that’s how we’re connecting with them. Our category focus helps us dive deeper to get better insights and transform those insights into innovative product and concepts. This is not something Nike has come into the last 30 days. We’ve spent the last 14 months getting out in front of this enhanced relationship with the consumer and it’s given us a much sharper focus on how we prioritize the business. We’re able to bring innovative product, brand strength, and premium experiences to every category and that gives us tremendous flexibility in how we manage our portfolio of businesses around the world. Let’s take a look at Europe first. We’ve invested a lot of time and discipline in the EMEA region, cleaning up the marketplace, reducing inventories, building category focus and it’s creating the momentum we anticipated. Fundamentals are improving throughout the region. Inventory is down, close-outs are down, and revenue is up. Growth in our key categories made July a record month for revenue and then August beat July. The growth was led by football, or soccer, running sportswear and women’s training. In fact, Q1 set a record for revenue across the region and most of that growth came out of Western Europe. We are seeing a lot of product momentum. The big story in Europe right now…

Thanks, Charlie. Well, we are indeed off to a great start for fiscal 2008. We delivered double digit revenue growth as each of the businesses in our global portfolio reported higher sales for the quarter. Earnings per share grew 51%, driven by the strong operating performance and a one-time tax benefit, and free cash flow from operations grew 47% as our cash conversion cycle improved by 9 days. Now, on to the details; as Mark said, worldwide revenues for the quarter grew 11%, with three points of growth from the weaker dollar. All three of our product business units and all four of our geographic regions delivered revenue growth for the quarter, while revenues for the businesses reported as “Other” grew 12%. Futures orders scheduled for delivery from September 2007 through January 2008 grew over 11% versus last year, driven by high teens growth in each of our international regions. Excluding currency changes, futures were up 10%. Diluted earnings per share for the quarter grew 51% to $1.12, due in part to a one-time tax benefit worth about $0.20 a share. Excluding the impact of the one-time benefit, EPS would still have grown 24% for the quarter. First quarter gross margins expanded 70 basis points versus the prior year, driven by lower air freight costs, faster revenue growth in high margin businesses and currency changes, which accounted for about 30 basis points of the improvement. SG&A expenses for the quarter grew in line with revenue. For the first quarter, we also posted strong cash flows and continued improvements in capital productivity. For the quarter, free cash flow from operations was $227 million and our trailing twelve month return on invested capital reached 24%, up 2.7 points versus the comparable prior year period. With that recap of our consolidated performance, let…

Our first question comes from Kate McShane - Citigroup. Kate McShane - Citigroup: Could you go into a little bit more detail about the growth that you did see in the U.S. footwear market and how much is really being driven by market share gains? Charlie Denson: I'll go at it more from a category standpoint than anything else. I think our running business in the performance area, our high end performance running is, like I said in the prepared comments, is one area that we're really excited about. The overall running business has grown to some degree, if not an accelerated rate. We continue to see some challenges in basketball and I don't think that's a secret that's out there in the marketplace and everything that we've talked about over the last couple of sessions. Our women's business continues to perform pretty well and we feel pretty good about where we're at with both women's fitness and some of the women's training specific products and especially what's coming here over the next six to 12 months. We've had a pretty good fall in the cleated business. We've had a great run in American football or football, I guess, talking about the U.S. business as well as the soccer product performing here in the U.S. as well. So that's a quick run-through of the different categorical perspectives on footwear. Kate McShane - Citigroup: An unrelated question. Is there any more detail that you can provide us with the new licensing agreement with Dick's Sporting Goods for the ACG brand? What type of products will you be selling there initially and how much do you think this could expand? And if it is a purely exclusive relationship with Dick's Sporting Goods, is there any ACG product remaining in other stores and how would that inventory be liquidated? Charlie Denson: Yes, no, there isn't. We haven't actually branded any ACG apparel here in the United States for a while so we still do retain the rights obviously to the sub-brand. It's a test. It's not something that we're looking at on a broader scale at this point in time, but it's certainly something that we're exploring and it will be exclusive to the Dick's group for right now. It's apparel only as well, it doesn't reach out into footwear either.

Your next question comes from Bob Drbul - Lehman Brothers. Bob Drbul - Lehman Brothers: A couple of questions on the U.S. business -- or one question, Pam. When you think about the inventory at retail with the challenges that are in the athletic specialty area, did you have significant cancellations? Can you give us the U.S. inventory position and how long do you think it will take to get through the product at the retail level to get that very clean? Mark Parker: Bob, I'm going let Charlie talk to retail inventories, but we have seen cancellation rates actually improve a little bit in the U.S. in the last couple of quarters. So we're not seeing any uptick in cancellation rates. Charlie Denson: I think as far as what we see out there retail, Bob, we still continue to feel very good about our retail inventory position. We monitor it very closely. I'm sure you have spent a little bit of time at retail during back to school. We have performed at retail through all of our channels very, very strongly and feel very, very good about the performance. Back to school came a little bit later here in the U.S., and we saw some of that kind of pile up at the end of July and first of August but things moved through towards the end of August and have continued to move through in September. So we feel pretty good about where we're at. Bob Drbul - Lehman Brothers: Is there a U.S. number you could give us within the Nike, Inc., your U.S. inventory position? Charlie Denson: It's up low single-digits.

Your next question comes from Omar Saad - Credit Suisse. Omar Saad - Credit Suisse: I wanted to follow up on the Nike Bauer announcement. If you could elaborate on the process you went through. It sounds like you did a review of the different businesses. How you arrived at the conclusion and does the Nike Bauer, do both names go if there's a divestiture or is it just the Bauer name that goes? Mark Parker: Let me take that. As I said back in February, we're aggressively evaluating the makeup and the performance potential of our Inc. portfolio. So we've taken a hard look over the last 9 to 12 months particularly, and we're still in the middle of that process. In fact, I guess I could say it's a never ending process. Through that we felt that there's other entities within the portfolio that need yet more focus and can deliver more longer term growth potential for the portfolio and this is all about maximizing the overall portfolio over the longer term. That said, the timing I think is particularly good for Bauer. They've had a tremendous past year and first quarter of this year, so we think there's good timing on that. As far as the Nike Bauer name, I think first of all, in the next few seasons you'll see Nike Bauer Hockey on the ice. As we explore the sale, we'll discuss with any prospective buyers the appropriate length of a transition period to remove the Nike name from future Bauer products, so we don't see that as being a long-term prospect. Over the longer term it will be the Bauer brand, not the Nike Bauer brand. Omar Saad - Credit Suisse: Shifting gears just quickly a bit, Charlie had talked a little bit about…

Your next question comes from Robby Ohmes - Banc of America Securities. Robert Ohmes - Banc of America Securities: First the UK acceleration that you guys saw, if you could tell us a little more about that. I think some of your competitors and customers over there haven't been seeing great business. The second question is can you update us on the outlet stores? I think you gave us the first quality store comps, can you tell us how your outlet stores have been comping and how business trends are there? Charlie Denson: Robby, I'll take the UK piece. We're excited. We've been working hard in the UK around cleaning up distribution, getting the right product into the right places. I think you're starting to see some of that pay off. I think we're starting to grab some significant market share there as well and I think that I'm not going to undersell or I may overpromote a little bit, but the success that we're having in soccer right now is a big piece of what's driving some of the success in the UK. The Total 90 business that we're seeing and some of the things that are going on in the world of football. Of course, again it's not just in the UK. It goes well beyond. I think Iberia, Spain and Portugal had a fantastic quarter. We're starting to see France firm up a little bit and so Western Europe, I can sit here and talk about the upside of Western Europe here for quite some time if you want me to, but I'm pretty excited about it because we put a lot of work into that. I think it just goes to show you we have a good handle on what it takes to fix some of these markets and what we need to do. Sometimes it may take a little longer than others, but at the end of the day I think we've demonstrated our ability to get these things turned around and get them back on a growth schedule again. Robert Ohmes - Banc of America Securities: Is this the beginning of the buildup to Euro Cup or is it just a firming up of the core business? Charlie Denson: In fact, Euro Cup hasn't really even kicked in yet. This is definitely a firming up of the core business. Robert Ohmes - Banc of America Securities: Great, and on the outlet stores? Donald Blair: 4% comps up in the U.S.

Your next question comes from John Shanley - Susquehanna.

Don, can you give us a little bit more color on the really nice 600 basis points improvement in the Asian operating profit margin? Was that primarily driven by that 50% increase in sales in China or were there also a contribution from Japan despite the 5% sales decline in that market? Donald Blair: Well as far as the overall region is concerned, the revenue growth came from China because Japan was down slightly. Also Korea had a terrific month as well and then the margins were up across the region. So Japan was down slightly on revenue. The profitability of that business is improving but the big drivers are still China and Korea. We think Japan is going to come on stream a little bit later on in the year, but right now it's China and Korea are the main drivers.

Were operating profits in Japan up or down in the quarter? Donald Blair: I'm not going to get into that level of detail, John.

Charlie, you referenced some of the difficulties that the mall-based athletic specialty guys are having in the U.S. Can you give us some insight in terms of where you see the Nike growth currently occurring? Particularly in the footwear sector, obviously your revenue were up 4% and your forward orders are up 3% in total. I don't know what the break is between footwear and apparel but are you really getting nice market share growth in other channels whether it's the general merchandise, the family footwear, the big box sporting goods? Maybe you can give us some color in terms of where the growth of the brand is occurring in the U.S. marketplace. Charlie Denson: I anticipated this question actually, John. Actually I went through all of our major account numbers and everything. I would say that we were up in every major account across all channels with the exception of the mall guys for the quarter. So we're performing throughout the marketplace with the balance of the account portfolio. We have an organization that we call a geography-based group that really deals with a lot of the urban independent sporting goods and their business outperformed for the quarter as well. So we still see a pretty strong marketplace out there. Certainly we've all talked about some of the challenges that we face in the malls and quite frankly, I feel great about the conversations and the work that's being done with respect to change and what's going on there. I don't think anybody thinks that we're going to continue to operate the way we have and it's going to get better. Again, I'm still pretty optimistic here. I think that the U.S. marketplace can continue to perform and across the board we're still having pretty good success.

Are there any markets other than the mall-based guys that you're really seeing stellar performance in terms of market share or just revenue gains, Charlie? Charlie Denson: Again, people talk about tough economic times or choppy waters. I mean hey, music to my ears. Nike has always been kind of a little bit of a safe harbor during tough times because I think people go back to what they feel confident and comfortable placing bets on. I think we're a less risky brand to bet on when times get a little bit tough. So we maybe don't reflect some of the macro sound bites that are going on right now.

Your next question comes from Jeff Edelman - UBS. Jeff Edelman - UBS: Charlie, this quarter really showed how the international drove the company sales. Could you gander a guess where you think non-U.S. business might be for the year, and maybe a couple of years out as a percentage of the total? Charlie Denson: I don't have my crystal ball shined up quite that bright, Jeff. As you can tell, I'm pretty excited about the trajectory that we've been able to report both this quarter and the last couple of quarters. I think you can sense our emerging enthusiasm around the opportunities that are starting to come into play around there, but I think the international business is going to continue to grow for the balance of the year. Jeff Edelman - UBS: Secondly, this is the first quarter where your non-performance apparel really dragged you down. Did something else occur that had not prevailed earlier? Was it a bigger decline in the non-performance, less of a growth in the performance or is it related to the whole retail softness? Could you give us some color there, please? Charlie Denson: Well, we certainly had a lot of focus on the performance side; again, I think that's paying off. One of the things that we've talked about quite a bit around here is the opportunity to have access to what we call the other side of the closet, the sportswear side of the closet. I think the influence that the athletic environment has now on the overall closet is a huge opportunity for us going forward and we talked about that quite a bit over the last couple years. One of the things that we're focused on is resetting the price value relationship in that sportswear zone and I think that if you go into the international markets, you can see some of that. You can see where we play in a premium basics level product presentation at a much higher level and a much higher percentage of total of that sportswear market than we do here in the U.S. I think that you've seen a couple executions so far. Nike Sports Essentials and I think you're going to see more of those types of programs coming down the road here around some of the basic fundamental items like fleece, some premium separates programs and we're pretty excited about the success that we've had with Nike Sports Essentials. I think it provides us with a little bit of an insight on what's coming down the road.

Our next question comes from the line of Virginia Genereux - Merrill Lynch. Virginia Genereux - Merrill Lynch: Great job as always. Don, Charlie and Mark, you had some very nice acceleration in China. That had sort of been running up I think 30%, you were up 50%. Can you comment on what's driving that? Secondly, Don, am I right to assume that you get some nice margin benefit from higher ASPs there and also maybe lower shipping costs? Is China your highest margin market? That would be my assumption. That's one. Donald Blair: I'll take the second half of the question. Charlie can deal with the first piece, but as far as the profitability of the Chinese market it's really broadly consistent with profitability in other markets. The price points are pretty consistent; the margin structures are pretty consistent. So it's not necessarily a margin play, but certainly from the volume growth and the revenue that we're getting, we're getting great leverage on the P&L. So that's really a big plus. As far as the drivers of growth, I mean Charlie can speak to this a bit as well, but it's really door expansion and same-store sales growth both driving that market. Charlie Denson: I would just add one other thing. I think we're starting to put a little bit of space between us and the competition specifically in footwear. We saw this last quarter. We've seen some very positive numbers in market share reports. We don't put a lot of stock in those things, they're good indicator for us in China because the numbers aren't as specific, but I think the fact that we're putting some space between us both not only in performance, but also on the sportswear side of the closet, so to speak, and so…

Your next question comes from Jim Duffy - Thomas Weisel Partners. Jim Duffy - Thomas Weisel Partners: Mark, you'd mentioned embarking on a strategic view of Exeter. Can you give us an update with where you are with Exeter and some of the things you'll be examining in the review? Mark Parker: As I said, we're evaluating our approach as a company to serving that value consumer and that's first and foremost in that review and obviously Exeter brands group is one of the key players there. We have other levers we can pull, levers that exist in the portfolio as well as the potential for other movement within the portfolio in terms of acquisition. So we're looking at every angle we can in terms of optimizing that part of our business. We are not far enough through the review process to really comment any more at this point, but rest assured we are looking diligently at how to make sure that we are optimizing that piece of our business. Jim Duffy - Thomas Weisel Partners: When you say there are other levers within the portfolio that could be pulled, would that mean possibly taking the Nike brand down into those channels? Mark Parker: Absolutely not.

Your final question comes from Margaret Mager - Goldman Sachs. Margaret Mager - Goldman Sachs: Congrats on six years of consistent growth. Good job. I wanted to ask about your e-commerce since you spoke about it with so much enthusiasm. Is it a notable contributor at this point to any one of the regions? How does it look across the regions? Is the commercial impact greatest in the U.S. or how does it work from a commercial perspective? If you could talk about that and any metrics around percent contribution would be helpful. Then on your strategic assessment or your decision that Nike Bauer Hockey would be a sale candidate, what were the parameters around which you made that judgment? Is it growth, profit margin currently or the long run potential of the margin? Or is it like the capital investment required, is there something about the needs of the business? Just curious what are the things, the criteria, that would make that the sale candidate. And if you wouldn't mind just giving us some sense of how Cole Haan is doing within the other brands business. Thanks. Mark Parker: That's a big one. Let me start back where you started and that's with Bauer. Margaret Mager - Goldman Sachs: E-com. Mark Parker: E-commerce, I'm going to have to really dial it back. E-commerce today is a small percentage of our business relative to what we think it could or should be, and as I said, we sort of woke up a year ago and said we want to move this from, to speak candidly a bit of a hobby to a real commitment to pursuing the full potential of one of the fastest growing channels on the planet. The focus for us is in the U.S. market first and…