Good afternoon, everyone. Welcome to Nike's Fiscal 2012 First Quarter Conference Call. For those who need to reference today's press release, you'll find it at www.nikebiz.com. Leading today's call is Kelley Hall, Vice President, Treasury and Investor Relations. Before I turn the call over to Ms. Hall, let me remind you that participants on 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 revenues for subsequent periods due to 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, NIKE Golf, Cole Haan, Converse, Hurley and Umbro are not included in these futures numbers. Finally, participants may discuss non-GAAP financial measures including references to total wholesale equivalent sales for NIKE, Inc. businesses that have license sales. Wholesale equivalent sales include those reported revenue and estimations of sales by licensees based on the royalties paid. References to total wholesale equivalent sales are only intended to provide context as to the overall current market footprint of the brands owned by NIKE, Inc. and should not be relied upon as a financial measure of actual result. Participants may also make references to other non-public financial and statistical information and non-GAAP financial measures. Discussion of nonpublic, financial and statistical information and presentation of comparable GAAP measures and quantitative reconciliation can be found at Nike's website, www.nikebiz.com. Now, I would like to turn the call over to Kelley Hall, Vice President, Treasury and Investor Relations

Thank you, operator. Hello, everyone, and thank you for joining us today to discuss Nike's fiscal 2012 first 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, nikebiz.com. Joining us on today's call will be NIKE, Inc. President and 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 will take your questions. 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 initial questions to 2. 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. Thanks for your cooperation on this. I'll turn the call over to NIKE, Inc.'s President and CEO, Mark Parker.

Thanks, Kelley, and welcome everybody you to our first call of the new fiscal year. At our Investor Day in June, we outlined some exciting opportunities and goals for our brands and the company. Reaching those goals starts with our relentless focus on creating innovative and compelling products for our consumers everyday and Q1 shows how we're delivering on our commitments. NIKE, Inc. revenues for the first quarter were up 18% to $6.1 billion. In line with our expectations, gross margins were down 270 basis points to 44.3%. And in spite of that, diluted earnings per share of $1.36 were up 19%. Those numbers do a great job of reinforcing that NIKE, Inc. is a growth company and our growth is accelerated. We all know that the economic uncertainty that we're seeing in the world today is putting pressure on consumers around the world. Yet in most countries, we continue to see solid growth in Footwear and Apparel sales, which tells me the growing middle class in developing markets is increasing consumption and that consumers everywhere are ready to buy when they feel good about what they get for their money. At the same time, some countries face slow or no growth, while others work to avoid overheating. Some consumers have returned to higher end goods, while others are trading down or cutting back. These conditions place a premium on companies like NIKE, Inc. with broadly diversified businesses that are not over reliant on any one market, one price point for one consumer demographic. And as always, our strength starts with the consumer. We connect with them in truly deep and meaningful ways. They want authentic brands, innovative products and powerful experiences in store, online and out in the world. And that's what we deliver and we do it through…

Thanks, Mark, and hello, everybody. When I look at Q1, I see the power of the NIKE Brand leveraging opportunity in local markets, as well as in the global economy. Let's look at how that translates into results on a constant dollar basis. Our revenues grew 12% and our futures are up 13%. We grew in every geography except Western Europe, which was flat and 6 of our 7 key sport categories. NIKE Brand DTC was up over 20%, including over 30% growth in our online business. And comp store revenue growth was strong at both factory and in-line locations. Pretty impressive results, and I point out, that our category offense is a driving force, harnessing the power of the NIKE Brand to serve athletes. That is what we do best, help athletes compete, train and express themselves, and of course, generate growth. Running and Basketball are 2 great examples. Let's look at Running first. As you know, we grew the category 30% in fiscal year '11 and that momentum continued in Q1, with revenue in futures up strong double digits. Running is one of our most important innovation engines. Lunar Technology, dynamic support, the Tempo Short and Nike Free all came out of the Running category. During Q1 alone, we launched the LunarGlide 3 to expand our leadership position in dynamic sport and lightweight running and sell through has been very strong. Nike+ added a new smartphone app and grew membership 50% to reach 5 million runners. And we connected with over 30,000 runners in key cities across China during our Lunar run events. Running is a tremendous global opportunity for the NIKE Brand. It's a bedrock category, a strong driver of our Women's business and a highly accessible and relevant sport, whether you're a cross-country athlete in Pennsylvania,…

Thanks, Charlie. On today's call, I want to focus on 3 key themes that are driving our financial results and outlook. First, that our category offense is driving sustainable, profitable growth. Second, that the strength of our portfolio positions us to outperform in a volatile environment. And third, that we remain focused on delivering long-term shareholder value. So let me expand on each of those themes. The first theme is driving sustainable profitable growth with our category offense. The strength of our Q1 revenues and futures demonstrates that our category offense is powering growth even against the backdrop of weak global economies. Since inception, the category offense has enabled us to connect our brands more deeply with consumers and deliver more innovative, differentiated products. In recent quarters, we've also gained momentum along a third dimension, transforming the retail marketplace. In our Direct to Consumer operations and with our wholesale partners, we're delivering compelling category experiences in-store and online. The combination of category-focused brand, product and retail experiences is driving extraordinary growth even in an uncertain environment. The second theme is the power of the portfolio that Mark spoke to earlier. The scale and diversification of NIKE, Inc. gives us confidence that we can deliver on our financial goals even in the face of ongoing market volatility. In this environment, companies need to operate efficiently and manage risk. They also need to invest to drive growth. The power of the NIKE portfolio lets us do both. Macroeconomic uncertainty is the new normal and companies like NIKE with financial strength, diversified businesses and experience managing a global business under a variety of conditions will have the edge. The third theme is our ongoing focus on creating long-term shareholder value. Investments we've made over time in product innovation, brand building and marketplace transformation…

[Operator Instructions] Your first question comes from the line of Kate McShane with Citi.

I was wondering if you could give a little bit more detail around the initiatives you're taking with your Apparel business in China and why it's being done now and when we can expect the declines in Apparel to subside?

Kate, this is Charlie. As we said in the prepared remarks, I think we feel pretty good about what we're trying to do and the results are maybe, a little bit expected and some unexpected, but we're moving quickly to align the Apparel business with what we call, the amplified sport strategy, and we feel pretty good about where we're headed and when we're going to get there. And I think I'll just point to the Apparel futures for China as we look forward in repositioning, we feel pretty good with up strong double-digit growth in Apparel. So still some work to be done. But definitely feel like we're on the right path and very comfortable with the strength of the overall business in China. As you can see, the Footwear business continues to be extremely strong and our brand strength continues to position ourselves for long-term success.

Okay, great. Thank you. And then my second question is on capacity. You had previously stated that you thought capacity would reach a favorable tipping point in the second half of this fiscal year. I wondered if you could update us -- update us on that comment.

Are you talking specifically about Footwear and worldwide?

Yes.

Yes. We feel very good about the progress that we're making as our supply chain continues to catch up with demand, especially in some of the hotter product types the Lunar platform as well as Nike Free. And I think you'll start to see some of that starting to ease in the second half.

Specifically, holiday is better than fall and we expect spring to be better than holiday and summer better than spring, so it's getting sequentially better by season.

The next question comes from the line of Bob Drbul with Barclays.

I guess the first question that I have is a lot of focus these days on Europe, and I was just wondering if you could sort of elaborate a little bit more, Southern Europe and what you're seeing in Italy or Spain or anymore just in terms of that market, elaborate a little more versus what you've done already?

Yes, this is Charlie, Bob. I think as we talked about it in the prepared remarks, the bad part is obviously is that it's a tougher economic situation. We hurt ourselves a little bit this past quarter with some of our deliveries and we are obviously anniversary-ing the World Cup. The good news is, our DTC division reported very strong growth and we're very happy to hear and see that. We feel really good about our business in Germany and France. They had good quarters. And France obviously, the launch of the national team is the start of a very long and prosperous relationship there, and we feel very good about our performance in Germany. Challenging in Southern Europe. Unemployment figures, economic woes, I think consumer confidence permeates that region. And the U.K. marketplace continues to be a bit of a challenge. Running is one of our strong suits as is performance Apparel so we feel very good about that. I think some of the things that we can get better on, and I referred that in my comments, is just our overall execution, on-time deliveries and doing a better job there. The development of the category offense, specifically in Football, is a focal point for us and we feel good about our direction there. And like I said, we're really looking forward to this summer with the Olympics and the Euro Champs, both happening within literally 60 days of each other. We have an amazing pipeline of innovation that we're looking forward to and I'm still pretty bullish on Europe long term. We got some work to do but I'm very bullish in the long term.

Okay. My second question is Don, on the inventory levels, when you look at the dollar number of where NIKE is today, I guess when you look at the industry, you appear to be very comfortable with where you are with this dollar increase and you gave us a little bit more on what to expect. But when you look closely at the industry in terms of the supply-demand piece of across the board globally, how comfortable are you with where retail inventories are or planned and where the competitive set is today versus where the NIKE dollars are today?

Yes, Bob, I'm going to let Charlie answer that with respect to what he's seeing on the commercial market place. And I'll come out a little bit after.

So I think Bob, your question is a good one and something that we pay a lot of attention to. One of the things that we've talked to about a lot is, the only thing we really control is our own destination, our own future. And that's when we feel very comfortable with, our closeout business continues to be very much in line with growth. And then if you look at the overall numbers, in units versus value right now, the value is much higher than the units, some of it because of the success we're having at the premium end of the business and other than that, some of it is around some of the Apparel figures, which relies or reverts back to a much higher commitment to the outerwear business, which is a higher price point business this fall but we're actually looking very much forward to. I think when you look at the overall industry, it's certainly -- as the numbers have been released over the last couple of weeks and months, it's certainly something that's on our radar screen and we're very, very sensitive to and we're watching very, very closely.

Yes, so just putting in some numeric lines under that, Bob, the data we're looking at in terms of key customers and so on says that their inventory of our products is very clean. And I think at this point, we've got very differentiated product in the marketplace. The brand is very strong. As Charlie mentioned in his prepared remarks, we have great visibility into the supply chain and our outlet store network has never been more productive as a vehicle for managing the marketplace. So in terms of the tools we have, the visibility we have and just the overall level of confidence in the product and the brand, we feel like we're in really good shape.

Your next question comes from the line of Michelle Tan of Goldman Sachs.

Hey, guys. I was wondering if you could elaborate a little bit, you talked about the success that you're seeing in North America, particularly I think on some of the retail presentation initiatives, and that market being ahead of where you are in Europe and in Asia. Can you talk about some of the things that you can do or thinking about in Europe, and Asia when it comes to affecting retail presentation and when we should think about those changes starting to roll in?

Hi, Michelle. This is Charlie. I think in Europe, you're starting to see some of the new brand presentation stores rollout. We've got a new Running store in London that we're extremely excited about down in the Soho area. And so you're starting to see a couple of those executions in Europe. As far as China goes, I guess Mark just mentioned to me also, the House of Hoops program, which we're rolling out in Europe has seen -- actually, we were bullish going in and it's outperformed our expectations. And I'll move back over to Asia now. I think what you're seeing in Asia, we've got the new store in Hong Kong -- I mean in Tokyo, good store. Still a challenging marketplace that we're dealing with there, I think again, we remain bullish long term but it's got some short-term issues coming off of the disasters that we saw there last spring. And then when you look at China, the biggest opportunity there is continuing to define the most productive size of the space and what it represents. And we're working with the China team and some of our major customers there to better define our productivity levels and to continue to maintain our ability to grow the brand and the business in China. So you will start to see more and more of it in Europe over the next 6 to 12 months. And China will be an evolution of the space that we currently really worked together with our partners to control in the mono-brand environment.

Great, and I was wondering if you guys could also dig a little bit more into some of the regional profitably differences with the U.S. seeing such strong leverage and emerging markets seeing such strong leverage and then still some pressure in Europe and in China from a profit perspective this quarter. What are the differences in the investments you're making by region that are creating these differences?

Well, Michelle, it's not always something you can read on a quarter-by-quarter basis. For example, as you were referencing both Western Europe and Central and Eastern Europe, we're under some pressure from a profitability standpoint this quarter. But some of that relates to currency that if you recall, run about a one-year lag on currency. So a lot of that product is coming through in euros. And so as the euro changed over time, those markets were under some pressure. If you go to China, we've made decisions to continue to make investments in China. As you know, as Charlie just said, we have a little bit of a temporary slowdown in revenue for this quarter, but in the long run, we're very confident in the growth in that market. So these are really more quarter-to-quarter noise, I would say, as opposed to really long-term changes in profitability. All of the markets that you mentioned, for example, China and North America, very, very profitable on an absolute basis.

And I'll jump in here just to take the opportunity to kind of trumpet the execution versus the investment. I think obviously, our investments are made against our biggest growth opportunities but I would go back to that category offense and our ability to execute at a very high level right now in North America, even though I don't think we're at maximum capacity or efficiency, I think we're really starting to find our stride. And I think the upside is to continue to see that develop in some of the other geographies.

The next question comes from the line of Eric Tracy with FBR and Company. Eric B. Tracy - FBR Capital Markets & Co., Research Division: So I guess Mark or Charlie, if you can maybe talk about the planned price increases coming through? Obviously, a bit here in holiday but more broad in spring of '12. Relative to since the last time we got together, macro seemingly deteriorating a bit here, particularly, in developed U.S. and Europe. Just against that backdrop, how you think about the price increases? Are you shifting any of that maybe more towards the developing regions?

Well, I would say that we're confident in our position on pricing, not cavalier but confident. We have, as Don pointed out very well, that our brand strength, the strength of our product that's in the pipeline coming for spring, what we're going to see the bulk of those price increases to take effect, really feel like we're in a great position to cover those price increases, really better than anybody else in the industry. So I'm not overly concerned but we are keeping a close eye on that, as we are with the rest of the industry. But I think we're in the best position to really take on those price increases at this point in time.

Yes, I would just add from an NIKE perspective, because we're seeing that type of price increase across the entire portfolio. But from a NIKE perspective, as we've gone into spring bookings, we have not seen any big price resistance at all as we've moved into the selling period. So we're still feeling pretty comfortable and confident that we have the price value relationship in the product itself and the innovation that we're bringing to the market that so far, certainly in the buying process, we're not seeing any material impact. Eric B. Tracy - FBR Capital Markets & Co., Research Division: Okay. Fair enough. And maybe just a follow on to G&A sort of cadence as we think about the year. Obviously, it starts to pick up in the Feb and May quarters ahead of the London Olympics from a demand creation standpoint. But with those higher price increases coming through higher top line, is there a potential that you're able to flex the model, get a little bit more leverage on that relative to perhaps these platforms in the past? Or is this how we should think about the G&A build as we move through the year?

Well, I think we gave pretty specific guidance on growth rates and we used the term modest leverage. And at this point as you put your finger on it, we have strategies that are really resonating in the marketplace. We feel terrific about the momentum in our business. And at this point, we think that's a great investment to make to continue to drive the growth so we do believe we're going to get some leverage. We've talked about that. But at this stage, we think we've got the balance right.

Your next question comes from the line of Jim Duffy with Stifel, Nicolaus. Jim Duffy - Stifel, Nicolaus & Co., Inc., Research Division: Charlie, question for you. With the NBA strike, there's a lot of concerns in the investment community about the Basketball business. What are some of the opportunities you see to keep some of the marquee-sponsored athletes visible to the consumer base, particularly in the U.S.?

Yes, we're working those guys pretty good right now. As Mark mentioned, I think we had our biggest contingent, I guess, in China this summer as we've ever had. And the excitement and the fuel that it's bringing to the brand is something we're continuing to leverage well. As we speak, I think Kobe is headed back out again next week. He's going to spend some time in Europe. We still have plans right now to be confirmed, but I think LeBron may go back out and spend some more time in Europe as we start to prepare that marketplace for the Olympic event this summer. And so we're pretty excited about that. And then the college game isn't going away by the way either. And what's going on in the NCAA right now with all the talk on conference realignment and what its impact is. I think the NCAA tournament this year could be as good as ever and we're very excited about that. So between NCAA, the buildup globally to the Olympics surround the international team play. And then I think the anticipation of hopefully, that the NBA does work out and get's a season in, we still think Basketball, we're very, very bullish on Basketball as you would expect. Jim Duffy - Stifel, Nicolaus & Co., Inc., Research Division: And recognizing you'll need to use some discretion how you respond to this, are the contracts with those athletes written as such that if they don't play or don't remain active, you're not obliged to pay them?

Well, you're right. I'm going to exercise that discretion and probably, leave that question unanswered at this point in time. Jim Duffy - Stifel, Nicolaus & Co., Inc., Research Division: And then if I could squeeze another quick one in, Don, can you offer some direction on the other income expense line?

That one is, as we've talked about many times before, very, very hard to forecast it. Basically, it's exchange rate driven. I would say it's something that will be broadly consistent with what you've seen over the last quarter or so, but that's always going to be some volatility in there related to small points in the business.

Your next question comes from the line of Chris Svezia with Susquehanna.

I guess my first question is, just Charlie, going back to a comment you made earlier, when you talked about spring bookings and how you had not seen any resistance to price increases, I was wondering if you could talk a little bit about anything as it pertains to units, either by geography or category? And within the actual backlog number you've put up, up 30% currency neutral, within that number, can you break out between price and unit as it stands today?

Well, the prices do kick in a little bit in fall, a little bit more in holiday and then, a little more substantial for spring. Right now, we are seeing in our futures, a low to mid single-digit growth in average selling price on both the Footwear and Apparel side. And if you look at our numbers for the Q1, we just reported in revenue, it was up marginally. So as you would expect, the math is showing that there is an increasing level of expansion in average selling price.

And then just going back to Basketball for one second, when you guys think about the Jordan Brand, domestically, and the launch schedule, any thoughts at all to how that might change whether the NBA is playing or not? Or is that completely independent of itself? Just any thoughts about how you're thinking about Basketball launches, going through fall and into the holiday, domestically?

We're actually -- we're preparing several different scenarios depending on how it will all plays out. So you may see some of the NBA players signature models maybe show up on some college teams where maybe you wouldn't have seen that if we were launching with the player himself. But other than that, no material changes in the strategy with regards to the new product. Actually, I think, I'm not sure if you've seen any of it but it's great stuff and we can't wait to get it into the marketplace. So we'll find the best vehicle that exists depending on how this whole thing plays itself out.

We see -- we have a fair amount of flexibility. We're big but we're flexible and you'll see a few surprises.

We have time for one more question.

Your final question will come from the line of Mitch Kummetz with Robert Baird. Mitchel J. Kummetz - Robert W. Baird & Co. Incorporated, Research Division: I may have to ask a few questions then. I just want to follow-up on Basketball. I'm curious, I mean, when you when you look at your futures orders, Charlie, I think you said that they're up double digits in Basketball at the end of the first quarter. But I'm curious how that might break out by geography? And I don't know if you can give us any help there because it doesn't sound like your customers are backing away from the category. And I'm guessing it's just a more global game today than it was for you guys back in '99 during the last lockout. And I'm wondering if you're seeing, maybe some pull back from customers in North America, but that's being offset by continued momentum in let's say, China or Europe or Latin America?

Yes -- no, the North American consumer is definitely not backing off at all. In fact they're actually amping up. And so -- and obviously, that's the biggest piece of the business, so it drives a good chunk of the number itself. But China is continuing to do very well and what we're actually probably the most excited about, albeit very small at this point, is the increasing level of interest around Basketball in Europe. I think I mentioned in the prepared remarks or one of the earlier questions, it continues to out-index most of the stores that we're putting in. And the success of the House of Hoops program with Foot Locker continues to be very exciting. I think we're looking at a couple of new locations in Central and Eastern Europe, which I think Kobe may even have an opportunity to show up in the next couple of weeks. Mitchel J. Kummetz - Robert W. Baird & Co. Incorporated, Research Division: That's very helpful. I appreciate that. And then just futures in general, you guys have referenced spring orders, I think a couple of times on this call. I'm just kind of wondering how the spring order portion of the futures looks compared to the balance? Or maybe you could talk about the futures sort of first half versus second half of the window, what side of that is stronger.

They're slightly stronger in the first half of the window, but we've only got 1 month of spring in at this point in time, it's at the very tail end of the futures window. That's not necessarily going to give you the complete picture on spring. Mitchel J. Kummetz - Robert W. Baird & Co. Incorporated, Research Division: And then last question, Don, on the margins, you mentioned some markdowns on the first quarter that was a bit of a drag on gross margin. Could you tell us how much of a drag that was? And if there's any expectation that markdowns are going to be a drag on gross margin Q2?

No. When you say markdowns were a drag, that's not -- basically, last year, we had very low levels of closeout, and we saw a return to a little bit more normalized level of closeouts. I wouldn't characterize it as a drag. I think that what we're seeing now in a lot of parts of the business is just a little bit more of a normalization as the growth returns.

Before we go to the next question, I just want to clarify the answer I gave to Jim Duffy on other income and expense. I said we expected the future on other income expense to be roughly about the average of the last couple of quarters, I just wanted to make sure that people heard it that way. The last 3 quarters, we've had the number some up, some down. It's basically plus or minus around 0. So the point I'm trying to make here is, it's not a big driver of the income and it's plus or minus around 0. So I just wanted to clarify that answer.

Great. Right, I think that's it. Thank you, everybody, and we'll talk to you next quarter.

Ladies and gentlemen, this does conclude today's conference call. Thank you, all, for participating and you may now disconnect.