Good afternoon, everyone. Welcome to Nike’s Fiscal 2014 Third Quarter Conference Call. For those who need to reference today’s press release, you will find it at https://investors.nikeinc.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 within 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 the mix of futures and at-once orders, exchange rate fluctuations, order cancellations, discounts and returns, which may vary significantly from quarter-to-quarter. In addition, it is important to remember a significant portion of Nike Incorporated’s continuing operations include equipment; Nike Golf, Converse and Hurley are not included in these futures numbers. Finally, participants may discuss non-GAAP financial measures, including references to wholesale equivalent sales. 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 Incorporated and should not be relied upon as a financial measure of actual results. Participants may also make references to other non-public, financial and statistical information and non-GAAP financial measures. Discussion of non-public financial and statistical information and presentations of comparable GAAP measures and quantitative reconciliations can be found at Nike’s website, https://investors.nikeinc.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 2014 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, investors.nikeinc.com. Joining us on today’s call will be Nike, Inc. President and CEO, Mark Parker, followed by Trevor Edwards, President of the Nike Brands 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. 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 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. Thanks for your cooperation on this. I will now turn the call over to Nike, Inc. President and CEO, Mark Parker.

Thank you, Kelley and hello everybody. Q3 was a strong quarter for Nike. Even in the face of challenging macroeconomic conditions, we delivered robust growth and we did so in a well-balanced way across our entire portfolio. By the numbers here are the highlights. Nike, Inc. revenues grew 13% to $7 billion. Gross margins increased 30 basis points to 44.5%. SG&A rose 16% reflecting strategic investments in our brands and our operations. And despite currency pressure, diluted EPS rose 4% to $0.76. We delivered these results because of the breadth and depth of the Nike, Inc. portfolio. For a company that does business in more than 190 countries, volatility is a fact of life. Although Nike, Inc.’s global reach increases the complexity of our business, it also presents us with the opportunities to leverage strength in certain areas while we continue to invest in others. Because our portfolio includes a diverse set of categories, geographies, products, brands and distribution channels, we are best positioned to manage through an ever-changing macro environment. Our deep connection with the consumers ensures we focused our innovation on products and services that consumers expect and also on those that they never thought possible and our commitment to operational excellence and our supply chain and our financial management and then our resource allocation ensures we remain laser-focused on driving profitable sustainable growth. While we are not immune to the macroeconomic environment, we certainly have a management team that knows the terrain and can effectively drive growth in various conditions. And that is why I am so confident in Nike’s ability to create shareholder value. While the Nike portfolio is diverse, there is a common theme. It’s powered by innovation. We don’t innovate just for the sake of change. We do it with a clear purpose and…

Thank you, Mark. The Nike Brand delivered another strong quarter as our innovative products compelling consumer connections and effective marketplace management continue to drive growth. On a constant currency basis Nike Brand global revenue increased 14% with growth across all geographies and key categories including double-digit growth in our largest categories of sportswear, running and basketball. Nike Brand DTC grew 23% driven by 10% comp store growth and an impressive 57% growth in online sales as our digital investments and sharper merchandising increased traffic, conversion and average order on Nike.com. And finally global futures grew a robust 14%. These strong results are driven as always by our relentless focus on the consumer. Consumers worldwide expect and demand cutting-edge products, engaging consumer experiences and powerful retail presentations. Nike’s ability to deliver on all three strengthens our position as the brand of choice with consumers and builds our business around the world. To see these dynamics in action let’s first take a look at running. Running is our heritage and our largest performance category. But as we like to say at Nike there is no finish line and that is certainly true of the running business which continue to deliver strong results with revenue growing at a double-digit rate in Q3. That growth is fueled by our steadfast focused on bringing innovation to the market. In running footwear we expanded our breakthrough Flyknit platform. The new Flyknit Air Max combines Flyknit with an improved Max Air to create lightweight well conditioned, a well cushioned running shoe. Also resonating with consumers it’s the resilient ultra-light Flyknit Lunar2 with its supportive Lunarlon cushioning. And in running apparel which is fueling growth in the category, we continue to gain share with our new Dri-FIT Knit products. The running shirts with their softer, high stretch knit…

Thank you, Trevor. As Mark and Trevor both discussed our Q3 and year-to-date growth was strong and well balanced driven by expansion across nearly every dimension of our global portfolio. These results were particularly noteworthy given this stiff currency headwinds we faced and our significant investments in future growth. It’s the strength and diversity of our portfolio expanding multiple brands, categories, geographies, products and channels, which enables us to consistently deliver growth and manage risk. As always, our growth is to deliver profitable growth in the near term while continuing to make the investments that will sustain that growth into the future. Striking this balance puts us in a best position to continue to create shareholder value over the long-term despite the volatility that’s an inherent aspect of a global business. With that introduction I’ll now recap our Q3 results. Third quarter reported revenue for Nike, Inc. increased 13%. On a currency neutral basis both Nike, Inc. and Nike Brand revenues increased 14%. This was above our expectations as strong demand particularly in North America pulled some Q4 futures orders into Q3. Converse revenues increased 16% on a constant currency basis. Also on a currency neutral basis, Nike brand futures orders increased 14% driven by a 9% increase in units and a 5% increase in average selling price. The increase was led by extraordinary growth in the emerging markets and Western Europe as well as double-digit growth in the football, basketball and women’s training categories. On a reported basis, futures grew 12%, reflecting weaker developing market currencies. Third quarter diluted EPS increased 4% to $0.76 driven by revenue growth in gross margin expansion partially offset by higher year-over-year SG&A investments and headwinds from weaker developing market currencies. We estimate changes in currency exchange rates reduced our EPS growth by 6…

(Operator Instructions) Our first question comes from the line of Kate McShane with Citigroup. Your line is open.

Thank you. Good afternoon. My first question is on China, one of your biggest distributors had reported that, they are regaining a reasonable profit margin by lowering the cost of purchases and there is new consideration for their performance on new metrics. And I wondered if you could help me understand how this may impact Nike’s profit margins in China if at all?

Well, first of all, we have seen as I said earlier some improving performance in our retail stores and also our wholesale partners are doing better. And I think when we get more productive and profitable in those retail spaces that raises profitability for everybody. So our objective here is to make sure that the marketplace is as compelling for the consumers as possible and that we are generating productivity and profitability at the retail space and we are confident that when we do that both we and our retailers will be making more money.

Okay, thank you. And then my second question is on basketball, if you could walk us through how you are thinking about managing the launch product as the basketball category grows globally and why you think there seems to be more of an acceptance of basketball in Europe now versus other periods of time?

Yes, it’s great question. Basketball clearly is continuing to become much more of global sport. I think the fact that more people have a chance to see the sport all around the world obviously watch the NBA with the great players that we have from Kobe, LeBron, KD, I think people are having the chance to really experience how those players are just keeping the excitement in the marketplace. In terms of how we continue to manage the launch, we manage everything pretty much from a global perspective we will sometimes put in very specific products in some local markets like in China, which we will launch in specials in China. But across the board we tend to run the – our offense globally. In terms of in the future we continue to feel that the consumers are becoming increasingly excited about the sport and we look at basketball as a tremendous growth opportunity and all the work that we’re doing with Foot Locker, the House of Hoops, the work that we’re doing in our DTC stores are really helping to solidify the marketplace.

I would also add that the technology and the style that we’re bringing to basketball both in Nike and Jordan are really resonating with consumers around the world. So we’re just seeing an uptake in popularity in the category for all the reasons that Trevor mentioned, but also I think from a design and innovation standpoint.

Thank you.

The next question comes from Omar Saad with ISI Group. Your line is open.

Thanks. Great quarter guys.

Thanks, Omar.

Hey, I’d love to hear an update on two of the topics you guys talked about at the Investor Day last year, price and premiumization. Price how are you sing kind of price strategically relative to the cost inflation, I remember you talked about some new systems and processes to think about how to optimize pricing. And then on the premiumization question, could you elaborate or if you’re willing to give some numbers around how the mix is shifting to more premium products? It seems the consumers increasingly willing to pay more for better products and what does that mean for your lower end offerings? Thanks guys.

Yes. On the pricing strategy I think we talked about this once before where we continue to say that our pricing strategy really centers on ensuring that we have the right price value relationship with the consumer. One of the things that our focus on innovation really does is it gives us great credence as we bring more products into the marketplace and have new innovations. You also have the strength of our brand which allows us to command a premium price and so we continue to drive the business from that perspective. The third zone that we continue to do is we continue to really look at pricing within the context of a particular marketplace and make sure that we’re managing based on the market dynamics. What we’re seeing is an increase in move towards premium products, a lot of our consumers are seeing our premium lines and they’ve been very excited about them. So certainly what we’ve seen in the sportswear Tech Pack in our sportswear lines, what we’ve seen in our performance lines is the same thing. So we’ve really seen limited resistance towards continue to bring premium into the marketplace but it’s really based on given that consumer clear value.

I think there is also an opportunity to actually take that premium product in that position and that style and that innovation down in the product line as well to create that we like to call are complete offense. So we’re setting the tone I think at the top. We’re not seeing any resistance at all from consumers, I think the product is really resonating and I think we can continue to do a better job of actually leveraging some of that style and innovation down throughout the whole product line.

Thanks. That’s really helpful.

The next question comes from Bob Drbul with Nomura. Your line is open.

Hi, good afternoon guys.

Hey Bob.

Just the first question that I have is for Don. On the foreign exchange losses how should we model that sort of in Q4 and in FY ‘15 knowing what you know today from your hedge position?

Well, first of all, one thing to bear in mind is there is three things that drive the FX impact on the company, one of them is gross margin. As you know we sell product in many currencies around the world. We buy product in a variety of currencies now probably about two-thirds U.S. dollar, about a third other currencies at this point, but that’s one area of FX exposure. And we did have headwinds in Q3, we actually think the headwinds in Q4 a little stronger, but at this stage we’ve been doing a really good job I think of putting as Trevor said earlier premium products in the marketplace taking price on a surgical basis. So we think we can continue to expand margin but the headwinds are actually getting a little stronger in Q4. The second impact is on translation of profitability. And at this stage we’re even if we stay where we’re today on exchange rates we’re going to have a built-in devaluation versus where we were for the fourth quarter last year. So there will be ongoing pressure for translation and that will continue until we anniversary the major devaluation. So for most of FY ’15 we’ll see that headwind as well. And then the third piece has to do with translation of balance sheet items in various countries around the world. And certainly the Argentine peso and the ruble were fairly significant drags from that this year. I think that as long as the currency stays roughly where they are that one should over time ease off but at this stage it’s hard to tell. But I guess what I would step back from the whole question of currency and go back to one of Mark’s comments which is when you operate in 190 countries this sort of volatility is something that goes with the territory. We have a large number of levers in our business to manage that helps us offset the pieces of the equation we can’t manage. And I think our track record of delivering consistent growth even in periods of time where we’ve got macroeconomic headwinds tells you that we can continue to do that.

Great, thank you. And then my second question is on the basketball category, how many teams does Nike have this year in March Madness versus last year and who do you guys project to be the winner?

I’ll take the last part of that question, first. Your guess is as good as mine. No, no, I say that in a respect way, I think we have around 49 teams out of the 68 teams. So we’re obviously – that continues to shift as the tournament goes on. But clearly the great thing about March Madness in those movements is that they provide an incredible platform to create excitement in the marketplace and drive demand. So to the earlier question actually those are some of the things that I think that continue to create excitement and allow us to continue to leverage our opportunity. And we’re seeing those things continue to go global. So yes we’ll – I hate to try and bet on exactly who wins, but as I would say the more hope the more business so we’ll take it from that perspective.

And I think Warren Buffett’s billion dollars are probably safe. I don’t know if anybody is going to get the brackets exactly right.

Already lost. Thanks very much guys.

Thanks Bob.

The next question comes from Robby Ohmes with Bank of America Merrill Lynch. Your line is open.

Thanks. Great quarter guys.

Thanks, Robby.

Thank you.

I think a question maybe this is for Trevor. I was hoping you could maybe talk about Nike’s youth business, you call out women’s on the call, but maybe how the youth business is doing particularly in apparel relative to women’s and maybe men’s and maybe particularly in North America? And then my second smaller question was I apologize if I missed it, but I know that you mentioned Russia did well but is there any change to the outlook for Russia and maybe Don remind us percent of sales Russia is for Nike? Thanks.

Yes. First on – just on young athletes, our young athletes business actually is doing incredibly well. We’re just seeing an increase of consumers and certainly working with our retail partners, have just clear access to young athlete’s products. Part of that strategy also comes very much in line with what we’re seeing around our basketball category and our performance categories, where the consumers are so they find similar products. So we’re seeing an incredible growth really coming from the same sort of statement items that we’ve created in the adult category. So our ability to leverage those great items makes the difference. Also in the United States we’re also working specifically around with the Kids Foot Locker around the Nike Fly Zone where we’re able to bring new concepts into the marketplace that gives the consumers more access. And then the third zone would be dotcom business we’re seeing a continued growth of consumers coming to dotcom and looking for young athlete products. So all-in-all it’s been a very strong quarter but going forward we’re very bullish about the young athletes business because it just continues to grow not only in North America but really around the world.

And with respect to Russia, Robby, I mean right now we have not yet seen any impact to our business. Obviously we’re hoping that, that solution, that a resolution comes to that situation peacefully and right now we’re focused on the things we can control which is making sure we connect with our consumers and make sure we provide them with innovative products. I think in terms of that business for us it’s less than 25% of our CEE business. So at this stage we think that whatever happens there we’ll obviously be able to manage it across our portfolio.

Great. Thanks and congrats again on the quarter.

Thank you.

Thank you.

The next question comes from Lindsay Drucker Mann with Goldman Sachs. Your line is open.

Thanks. Good afternoon everyone. I just had a couple of quick ones. Number one just to clarify your guidance? Number one, can you tell us whether your operating margin, your gross margin contemplates sorry your earnings guidance contemplates gross margin expansion and Don thanks for the clarification on EPS impacts from currency. How much of that is embedded into the FY ‘15 preliminary review?

I’m sorry so the first question was I’m sorry can you repeat the question…

Is you guidance for next year contemplate gross margin improvements and how much is – what is the EPS drag for ForEx?

Okay. So with respect to broad outline we’re really at this stage at the preliminary stages. We would expect to see over time expansion of gross margin, how much of it, obviously depends upon a lot of variables many of which are not sales yet including FX. So at this stage I’m not ready to tell you a number of points that I think FX would be, what I can tell you is that when we look at the devaluation we saw in FY ‘14 and the fact that you have to anniversary that in FY ‘15 it will be a drag. The question of how much is going to depend upon where the numbers actually fall out by geography, by territory and where the currency exchange rates go.

Okay. Then maybe this is a follow-up on the gross margin side. Is there anything specific on your supply chain initiatives, manufacturing revolution that you can call out as a meaningful driver to your P&L for next year? Thanks.

Yes. I wouldn’t want to get into that level of granularity just yet. What I would say is just to go back to the conversations we had at the Analyst Day and what we talked about in our last few calls we do believe that this is manufacturing revolution is going to be both impactful from a consumer standpoint in terms of the products and innovations we deliver to the market and how responsive we are as well as the cost. At this point I’m not ready to talk about an impact for FY ‘15.

Okay. Thank you.

Yes.

The next question comes from Jim Duffy with Stifel. Your line is open.

Thank you. Hello everyone.

Hi, Jim.

Hi, Jim.

Clearly it’s been a terrific great execution across the global business and I’m sure it’s frustrating to not to see the full impact of that flow-through to reported earnings.

Yes.

Couple of questions. The currency volatility in recent devaluation of some of these currencies how does that change strategy for capital allocation at all?

Well I think it depends on your outlook for what you think the economy is going. I mean certainly as we talked about earlier we manage these individual businesses, we’re looking at the consumer value equation. So we’re focused on the inflation in a particular market. We obviously are looking at our deployments of demand creation and so on. But in general terms if we believe that the market over the long-haul is going to be healthy and in most of these markets we believe well and we’re going to see expansion of the middle class. We’re going to be continuing to build our business and connect with consumers and deliver innovative product. Certainly from a financial management standpoint we’re going to try to minimize the amount of cash relieved in those markets, we’re going to minimize the level of receivables and so on. So financial management absolutely is driven by where we see the currency is going. From a business standpoint sometimes these difficult times in emerging markets there are opportunities for us to gain ground. I mean the last time Argentina went through a financial issue number of years ago we actually remained committed to that market, we built our business and we took a lot of market share.

Great. Makes sense. Second question there’s been a lot of discussion in the investment community around how World Cup orders benefit the futures. Clearly you’ve sponsored some of the important European and Latin American teams. Is it possible to put some shape around the impact of World Cup orders to the futures and how much of the growth that we’re seeing today is from sponsorships, things like the kits etcetera?

Well there’s certainly is an impact, but what I would direct you to is the conversation we had about where the growth and revenue is coming from as well as the growth in futures, we are seeing growth across categories around the world. So running is up, women’s training is up, we are seeing great results as Trevor said earlier from basketball. So certainly, global football is a major driver here as it always is for this sort of event, but we are seeing growth very broadly across categories.

And I would just say that we feel obviously great about our football business and the potential as we head into the World Cup. Futures are up double-digits, revenues up double-digits, we are launching a great array of products into the marketplace. So we are super excited about the opportunity that the World Cup represents, but not only in markets like Brazil or just the emerging markets, but really all around the world. It’s a tremendous platform for us to continue to grow the business.

Thank you.

Operator, we have time for one more question.

The next question comes from Dave Weiner with Deutsche Bank. Your line is open.

Yes, good morning or good afternoon. It’s Dave Weiner from Deutsche Bank. So I wanted to ask a question about China if I could and specifically kind of a two-parter. So one, it looks from what we can tell that the kind of macro environment for apparel, athletic apparel and footwear specifically is improving. So, I was wondering if you could talk a little bit about what you are seeing in the overall marketplace. And then secondly, I think you made a comment that your own stores that have been reset saw a significant margin improvement, could you just drill down a little bit on that? Is that based on gross margin and kind of the mix of product that you are selling maybe the premiumization thesis or something else? Thanks a lot.

Yes. On China, I think the part that we clearly can say is that the reset strategy that we have put in place is working and we are obviously very encouraged by the results that we are seeing in the marketplace. As I think Don sort of pointed to we are very focused on driving both profitability and productivity at retail. What we have been able to do in our own stores is to continue to drive a premium position in the marketplace that is based on performance and then amplified through our sportswear lines. And that combination is driving a better mix in the stores that is leading to a much more profitable business. We are also across the marketplace we are narrowing the amount of categories that we focused on, which is allowing us to go deeper to make sure that we have the right size curves in the marketplace. So the team is working very specifically down to the granular details to really help us build a better foundation for long-term growth in the marketplace by making sure that we are driving against the right operational metrics, but also delivering against the consumers specifically around what the consumer wants in China.

Yes. It’s really a case of focusing on the fundamentals, executing the merchandising, the product flow, the assortment planning and then the storytelling at retail. Some of the retail executions in those reset doors that we have in China, I would say, are some of the best we have in the world. And then the response from the consumer is obviously quite positive. The Chinese consumer as I will just say as a general point is more and more sophisticated and discriminating in terms of their choice in product and price is not a limiting factor, in the end, the product and the brand are really resonating. And we are definitely seeing that in China as we are in other parts of the world.

Great, thanks. Do you have time for me to squeeze maybe one more in, quick one?

Sure, yes.

Sure, thanks. So someone asked earlier about kind of the payback schedule for some of your initiatives, 3D printing, Flyknit and kind of your other supply chain and manufacturing efficiencies and I understand you don’t want to talk about next year, but could you at least comment if from the investment side if you have already kind of well on your way to kind of starting to apply the some of these initiatives broadly so that at least from an investment point of view, you have already started that to some degree?

Yes. I will jump into say that there is two factors that are really driving a lot of our priorities in this manufacturing revolution space. One is to create the capability to create new innovation and product that the consumers can experience. Flyknit is a great example of a process. And 3D printing as you mentioned, processes that allow us to do things that conventional shoemaking or product manufacturing process won’t allow us to do. So there is breakthroughs in performance innovation that come. We are also very discriminating when it comes to making sure that we are focused on things that can really affect the bottom line, the product cost. So we are prioritizing our investments. And this is a great example of we have lots of opportunities and we need to make choices, but we are making choices against things that can help us innovate the product as well as actually reduce our product cost and our speed to market. So we actually have a very strong and deep view over the next three to five year period and that’s expanding on the impact that these investments are making. And again, we are prioritizing where we think we can have the greatest impact. It’s one of the areas frankly as an innovation geek I am most excited about.

Yes, great. Thanks.

And Dave, I would say from an investment standpoint I just wanted to make the point that I think to the conversation that we just had from Mark, there is a lot more opportunity and we are not even close to the end of this. And what I would also point out is that a lot of this investment will be made in partnership with our factory group. So you won’t see all of this investment on our books. In fact, in many cases, the factory partners are going to make most of this investment. We are really the drivers of the innovation, the catalyst for this, so where – we have got a long list of opportunities ahead of us.

Perfect. Thanks for the color.

Thank you.

Well, thank you everyone for joining us this quarter and we will talk to you next time. Bye.

This concludes today’s conference call. You may now disconnect.