Good afternoon, everyone. Welcome to NIKE, Inc.’s Fiscal 2017 Third Quarter Conference Call. For those who need to reference today’s press release, you’ll find it at investors.NIKE.com. Leading today’s call is Nitesh Sharan, Vice President, Investor Relations and Treasurer. Before I turn the call over to Mr. Sharan, 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 our Annual Report filed on Form 10-K. 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, changes in the timing of shipments, discounts and returns, which may vary significantly from quarter-to-quarter. In addition, it is important to remember a significant portion of NIKE, Inc.’s continuing operations including equipment; Converse, Hurley, and NIKE Golf are not included in these futures numbers. Following the conference call, the futures order schedule will be posted through financial schedules on the NIKE Investor Relations website. Finally, participants may discuss non-GAAP financial measures, including references to wholesale equivalent sales and constant dollar revenue. References to 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 results. Similarly, references to constant dollar revenue are intended to provide context as to the performance of the business eliminating foreign exchange fluctuations. Participants may also make references to other non-public financial and statistical information and non-GAAP financial measures. To the extent non-public financial and statistical information is discussed, presentations of comparable GAAP measures and quantitative reconciliations will be available at NIKE’s website, investors.NIKE.com. Now, I would like to turn the call over to Nitesh Sharan, Vice President, Investor Relations and Treasurer.

Thank you, operator. Hello, everyone and thank you for joining us today to discuss NIKE, Inc.’s fiscal 2017 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 or at our website, investors.NIKE.com. Joining us on today’s call will be NIKE, Inc’s Chairman, President and CEO, Mark Parker, followed by Trevor Edwards, President of the NIKE Brand, and finally you will hear from our Chief Financial Officer, Andy Campion, 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’ll now turn the call over to NIKE, Inc. Chairman, President and CEO, Mark Parker.

Thanks, Nitesh and good afternoon, everyone. We had a solid third quarter, delivering revenue growth of 5% for NIKE, Inc. to $8.4 billion. On a currency, neutral basis, NIKE, Inc. revenue grew 7%. Gross margin declined 140 basis points to 44.5%. Earnings per share increased 24% to $0.68, and we delivered ROIC of 33%. Q3 saw NIKE sustain our positive momentum. Let’s start with highlights from an amazing quarter for our athletes. Serena won her 23rd Grand Slam, Roger took the Australian open against Rafael to extend their great rivalry; and both NIKE and Jordan continued to dominate basketball’s biggest movements. At the NBA, All-Star was 20 of the 25 players on the roster, and in March madness with 12 of the teams advancing to the Sweet 16. This quarter, we also raised the voice of our athletes with the equality campaign, showing yet again that NIKE stands up for our believes, our message spreads far and can be a catalyst for true positive change. With wide spread energy behind the athletic industry right now, NIKE is aggressively competing in every market, and we are creating our own opportunities using our combined power and scale. Last quarter, I talked about our relationships with consumers, and how we're getting sharper and moving faster to serve them. That sense of focus has only accelerated over the last 90 days. The consumer has decided digital isn’t a just part of the shopping experience. Digital is the foundation of it. This and other factors have shifted consumer patterns, especially in North America, impacting traffic, the economics of brick-and-mortar retail and is driving a more promotional environment in the near term. While we are mindful of these near-term dynamics, we remain focused on the long term. The current backdrop represents a tremendous opportunity for NIKE,…

Thank you, Mark. Hello, everyone. In Q3, the NIKE brand delivered another solid quarter of growth. As always, my remarks are on a constant currency basis. NIKE brand revenue grew 7%, led by continued double-digit growth in Western Europe, Greater China, and our emerging markets' geographies. NIKE brand DTC revenue increased 13%, driven by 18% growth in digital commerce, new store expansion and 6% comp store growth. Today NIKE is in a familiar place on the offence. Mark said, we are doubling our direct connections with consumers, an approach that will be seen at retail as we ramp up how we serve our consumers through digital commerce and membership. And as always, we work to create brand energy across performance and lifestyle, connecting consumers to the products they want and love, and we bring it all to life through our geographies, a global portfolio that provides NIKE unrivaled agility and scale. Now, let’s get into a bit more detail on these three areas. Our deep relationships with consumers drives us. We built the NIKE brand by serving consumers. It is our central promise. And as we grow in scale and reach, we continue to serve our athletes personally. Mark spoke about the power of personalized service and seamless commerce in North America, particularly in our Soho and Miami stores. Let me just add that we’re seeing the same success around the world as well. In January, we opened a NIKE and Jordan store in Beijing, our largest basketball-focused store in China. There, a NIKE+ Basketball Trial experience and t-shirt customization offers seamless links between NIKE’s physical and digital platforms. As we roll out more experiences like these, consumers see that retail is more than a series of transactions. We believe it should be personal and full of energy. For us,…

Thanks, Mark and Trevor, and hello to everyone on the call. We are pleased with the results that we delivered in Q3, and, at the same time, we are not satisfied. We are pleased, because we continue to strengthen the fundamental drivers of NIKE’s long-term revenue growth and earnings potential. Our financial strategy has three pillars; delivering strong revenue growth; expanding profitability, and generating high returns on invested capital. In Q3, we delivered revenue growth in line with the guidance that we communicated 90-days ago. We drove strong double-digit currency-neutral growth in aggregate across our international markets, which now represent more than half of our global portfolio, and we re-positioned NIKE for sustainable, profitable growth in North America long-term. We also expanded profitability, well in excess of our guidance, with EPS growing 24%. Finally, we delivered return on invested capital of over 33%, and at the high end of our targeted range, by continuing to edit within our core spending, to amplify more focused strategic investment in areas such as product innovation, digital commerce and membership, while also more tightly managing inventory. Over the past several years, NIKE has become even more fit for growth. On a currency neutral basis, we have built a more efficient and profitable business model. We have sustained momentum in the drivers of full-price gross margin expansion. We have systematically reduced SG&A as a percent of revenue. And we have significantly expanded our currency neutral EBIT return on sales. But, we are not satisfied. We are clear-eyed with respect to the challenges we have faced and opportunities we have not fully capitalized upon in the short-term. We have and we will continue to attack those opportunities with urgency. We are also obsessing over the triple-double that Mark referenced: doubling the cadence and impact of innovation,…

[Operator Instructions]. Your first question is from Bob Drbul from Guggenheim.

I guess, if you can spend a few minutes on basketball, in terms of what you delivered this quarter and the expectation going forward as a driver. And then just, if you could spend a little bit more time elaborating on China in terms of the futures versus the revenue outlook, and what exactly changed with some of the shipments timings that you’ve talked about?

Okay. Bob, I’ll take the first one. So on basketball, we continue to see the basketball business strengthen. And there is no doubt that we’re obviously the leader of basketball, and there is incredible energy with our athletes. We see a really strong pipeline of products and we have the ability to continue to grow the game around the world. When we think of basketball, we always think about it as a portfolio NIKE basketball, NIKE Sportswear and the Jordan Brand. What we've seen is great momentum really across all those dimensions. First on the sportswear side, just to give you a one dimension, the Air Force 1 franchise is doing exceptionally well in the marketplace, and we’re seeing new stuff, like this special field Air Force 1 really become an icon and continue to grow. The Air Jordan Space Jam 11 which I mentioned earlier broke launch records. Then you have the you have the Kyrie 3, which is now the top selling performance basketball shoe in the marketplace. When you speak about performance, then you go specifically into the KD9, the LeBron Soldier to handed the Kyrie 3, are all driving double-digit market share gains in the $100 and $150 price zone. And then we’ve added the Paul George and then the LeBron 14. So all-in-all, we have really brought, a really strong focus around basketball. We are clearly focused. We’re on the offense, and we are incredibly excited about the products that we have come in in addition to the NBA partnership that we have on the horizon. So all-in-all, basketball really is just starting to go from strength-to-strength.

And Bob, I’ll take the China question. The short answer is, the China futures in a low-single-digit range reflects purely timing impacts. As we continue to optimize our management of supply and demand and inventory, one of the opportunities we’ve identified is with the respect to the flow across the three months that comprise a season. And so we’ve made some changes that help us better identify opportunities and capitalize on being in stock in the marketplace. It also has a benefit to us from an inventory management and capital management perspective. We see continued strong double-digit growth in China. In no way do the futures reflect any change in our very bullish view with respect to the tremendous performance that we’ve had, and we continue to expect in China.

Operator, we’ll take the next question please.

The next question is from Kate McShane from Citi.

Thank you. My question – my first question was on the cushioning platforms. I know we typically see these innovations around the Olympics. I was curious about why they’re coming out now instead, and how quickly do you expect to scale these?

Yes, well, these cushioning systems, all three of them, and in fact there’s four. If you listen carefully, there’s a fourth comfort cushioning system in the works. These have been in development for the past two or three, in some cases, four or five years. This is part of our double the investment in R&D, and we’re really seeing that investment paying off. One of the most important outputs of performance innovation for NIKE is in the area of cushioning. So we see – some of this work actually led up to Rio. The top three finishers in the marathon were all wearing the Zoom X technology, and also in the Olympic trials leading up to the Olympics. So you’ve seeing bits and pieces of some of this but not out in the market at scale. So we’re basically ready to launch the product, excited about every one of the cushioning systems. They not only create a new level of performance and incredible breakthroughs in the case of the Zoom X, but they also create a whole new aesthetic, which is translatable not only into performance product, but also to the street. So the leveragability and the scalability of these technologies is tremendous. The challenge we have frankly is to make sure that we’re – the focus is on these and we scale these in a way that we can really tell the stories independently. But together, they form what is truly – and I mentioned it, a cushioning revolution for NIKE and the industry. As a product geek, I am incredibly excited about what’s coming in the next six months.

Okay. Great. And then if I could follow up with your commentary on the North American dynamic, are we really talking about what’s happening in the department store channel? I’m just curious what negative trends continue to persist here when we’re starting to approach the lapping of some of the bankruptcies, and just what’s driving the level of promotion that you’re seeing?

Yes, well, let me just start at a little broader level. The retail landscape is particularly in the U.S. is not – is in a steady state. I think that’s obvious, undergoing some significant shifts. And those shifts really create some big opportunities and some challenges at the same time. I think the important thing to point out is that these changes are really being driven by the consumer, and consumer demand at the same time remains quite strong. But we know that consumer expectations are quite high in terms of product, the type of product they want, the innovation, the style. They want the product fast, they want it easy, they want personal service. So these are all things that are driving some of these shifts in the marketplace. And that's why we're focused on doubling the output or the cadence of innovation or speed to market so we can be that much more responsive to consumer needs, deliver innovation more quickly, and then doubling our direct connection, to consumers in the marketplace, using or leveraging the power of digital. So again, it's a market that's undergoing a lot of shift and change, but again, I wouldn't trade you our position with anybody. I think we're in a strong position to leverage our strength as a brand, as a Company and we expect to do that.

Operator, we'll take the next question please?

The next question is from Omar Saad from Evercore ISI.

Thank you, thanks for taking my question. I wanted to first ask about the Triple Double initiative, especially the speed and pace to market innovation frequency. Maybe help us put this in context, and help us understand the impetus behind this. From an external perspective, it seems to a lot of people in the market that the kind of steeper market shifted in the last couple of years, maybe a little bit away from some of the performance, styles and looks and products that have been the market and maybe a little more towards that street and fashion element. Do these initiatives help you kind of directly address that, and what's the timeframe I think for getting the inventory balance right, along what the market is looking for as you implement some of those initiatives? Or is that not the right way to think about it?

Well yes. The reason we're putting so much emphasis on this Triple Double strategy is it's going to get us closer to the consumer, and put us in a better position to serve the consumer with the innovation that we're creating, do a better job of editing that product selection and really calling out the key stories. The good news on a macro level is that the consumer appetite for active and sport based products is I think at an all-time high around the world. It's just sort of part of the fabric of everyday active lifestyle. And so the demand for the product is definitely there. People want more, they want product that obviously performs at a high level, but also looks incredible. It's not an either/or. It's an and proposition. And then want that product fast and they want it easy, at easy access to the product. So our whole initiative is about getting that direct connection strengthened to the consumer and making sure we're in the best position to keep that cadence of innovation moving out to the market as quickly as we can. It also puts us in a position to be more responsive. When we see product that's hot, we can turn that product around a lot quicker and get it to the retailers and to our own -- for our own DTC, to the consumer a lot quicker. So overall, it's just making us more competitive and more responsive to where the consumers are at. The Express Lane, let me just touch on that, because you asked about speed specifically. There's really three different components of the Express Lane. Fulfill is one, and that means getting product more quickly, restocking product more quickly based on what consumers want, and that's real-time, and that's through sell-through based insights. Another dimension is what we called update, and that meaning editing materials or colors on popular or existing styles for models based on consumer feedback or insight that we gather. And then the third dimension of it is create, and this is basically creating new products from scratch and bringing them to market with much greater speed. Again, that’s in half the time that we’ve done it traditionally. So that whole end-to-end process is basically being cut in half today from six months down to roughly three months or less. And I think that’s again, it’s going to put us in a much more competitive position.

Mark. I’ll just add couple of other things. I would just say that what we see from the marketplace is consumers want both great performance, and they want style, and they want those two things together. And I think a great example of that is the product that we’re actually just launching, which is the Air VaporMax, which you’ll see that there are actually different variations to that product; one which is a very clear high performance product, the running shoe and we’ve also got a laceless version, which actually appeals to more of a style perspective. But the shoe in and of itself is both great performance and it’s also superiorly stylish. And so that is what we believe the consumer wants. So when we bring new platforms, you will see us bring more variations, that gives the consumers more choice on the thing that they actually love all the time. Go ahead.

Sorry, I appreciate that. I appreciate those answers. I also wanted to ask a question about SG&A, if it’s okay. It's been down kind of in dollar terms the last couple of quarters. You guys obviously have had a track record of really over investing to fuel long-term growth. Should we be thinking about the SG&A line differently? Is there something about this era that we're in, where maybe this requires the same spend levels or is that really just lapping kind of the year-over-year Olympics and other activities?

It’s a great question Omar. To be clear our top priority is investing to fuel long-term growth. So that’s where the dialogue with respect to SG&A or capital expenditure starts at NIKE. But we’ve identified is in over time, our growth has allowed us to invest appropriately, and in some cases in a very ample, maybe even a little more than we necessarily needed to. And I would think about this way. We have existing and new truly differentiating capabilities or competitive advantages in NIKE. Those include things like product innovation, design, digital, brand marketing, including sports marketing and our supply chain, especially the elements of the supply chain that Mark spoke too, the ones that we're looking to get greater speed out of, in service to the consumer. That’s where our focus is on investment. The other functions that we have within the Company are certainly important, but they’re not differentiate capabilities for NIKE and we look at those other functions as functions where we can optimize our spending, not just for purposes of saving expense, but it actually makes us more streamlined and nimble as an organization. So in some cases, our editing is aligned with shifting business priorities, or with existing business priorities, and in other cases our editing is really a form of zero basing in areas where we believe, we have the opportunity. And that’s what I would call from the financial perspective, my version of Mark's Edit-to-Amplify initiative from a product and business perspective. And we believe that we continue to have opportunity in this regard. Again, if you exclude FX, we've made ourselves much more efficient and profitable over the last couple of years. And we still see opportunity ahead in that regard.

Operator. We’ll take the next question please.

The next question is from Lindsay Drucker Mann from Goldman Sachs. Lindsay Drucker Mann.

I wanted to ask on North America, and maybe a follow-up to Shane’s question. I think a couple of quarters ago, you had talked about the need to de-stock and cleanup the channel, and that as we sort move through that, you had expected revenue in U.S. to accelerate. I’m just curious if you’re – given the commentary on the U.S., specifically on your fourth quarter, how you’re thinking about the timeline to U.S. sales acceleration?

Hi, Lindsay. It’s Andy. I’ll start on that one. The first part of your question was about what we’ve been talking about over the last several quarters, and we have made great progress in that regard. You obviously saw revenue growth and margin expansion in the quarter with inventories declining. That is pretty squarely in the zone of effective and efficient supply and demand management. So we have re-solidified our foundation in that regard. As Trevor and I think Mark to some extent touched upon, we’ve also solidified the fundamental drivers of growth in North America. Trevor talked about all of the work we’ve done to reignite momentum in Basketball. We have continued momentum in Sportswear. So what we’re referring to when we talk about being measured in the short term in Q4 is the recognition and reality that it’s a promotional marketplace, particularly in North America is, in light of some of the digital disruption that’s going on. I think Kate earlier referred to there, select channels that are more challenged than others. What we’re most excited about is there are dimensions of the market that are tremendous opportunities. And so as we move into fiscal year 2018, what we’re really focused on is creating a springboard for accelerated growth in North America, again, through the triple double. And in the marketplace, obviously, one of those -- the three doubles is doubling our direct connection to consumers through DTC and our wholesale strategic partners.

Got it. So to the degree that the environment is disruptive, how do you think about your ability to achieve the long-term revenue growth algorithm in North America that you laid out in your Investor Day? Does the market dynamic make that harder to do?

Frankly, we’re probably more bullish than ever on the long-term growth projection in North America. And why I say that is it’s becoming even more crystal clear to us that the strategies we’ve been employing to elevate the experience, the personal service of consumers in the market, digital, we’ve been leading the NIKE.com but also membership, we’re seeing much stronger growth in the dimensions of the market where NIKE is connecting with consumers. Of course, we connect with consumers in our Direct-to-Consumer business. We do it through concepts like House of Hoops, with Foot Locker. And as we said, in each of those dimensions, and when you get down to purely digital membership, we’re just seeing the growth outpace or the sales per transaction outpace. And so we see our way to incredibly strong growth in North America long term. There will be puts and takes in the short term. Clearly with innovation and disruption, comes both puts and takes. I think by analogy, you might look to greater China. Greater China is a market with extraordinary growth, by really focusing on aligning product, a NIKE-branded environment, both owned and through partners and digital to fuel sustainable sustained growth.

And one other things too I’d just say, that the brand is extremely strong in North America and consumer’s appetite for our brand continues to really be almost unsatisfied. So what we continue to is make sure that we line up the right products in the right environment, and as Andy spoke about, especially when we can do that more direct, and we can connect with the consumers more personally, we find that that continues to really allow us to continue to expand the market and expand our position in the marketplace. So we do feel very confident about North America in the long-term, and we certainly feel that the brand is very strong.

Thank you, Lindsay. Operator, we'll take our last question please.

The last question is from Jim Duffy from Stifel.

Thank you. Andy follow up for you. Your FX kind a [indiscernible] around those hedge contracts have, but we said the most significant impact in fiscal 2018. Can you elaborate on that please? Maybe help us make sure how much of the $1.6 billion to $2 billion you've referenced will have been absorbed by year end fiscal '17?

Sure. So as you probably know Jim, and for others, we can't eliminate the impact of foreign exchange. And as you know, over two years ago, we saw significant strengthening of the dollar pretty dramatically and quickly against a lot of international currencies, particularly the euro. And we've seen a lot of volatility over the last couple of years. But largely dollar strengthening. Our hedging strategy is largely using longer dated. So 12 to 24 months out forward hedging to mitigate and delay that impact. So when I spoke to the $1.6 billion to $2 billion of impact over two years, on a rate basis you see those moves happened in the foreign currency impacts immediately. Our hedging strategy essentially steps us down or frankly in the opposite would steps us out, but steps us down to that impact. The largest single annual impact will be in fiscal year 2018. That said, it hasn't been insignificant in fiscal year 2016 or 2017, it is actually -- the FX impact has been a double-digit negative headwind on EPS growth. So while we continue to deliver strong EPS growth, what we're actually most proud of is that excluding foreign currency, that would be double-digit higher in terms of our growth. So that hopefully gives you a little bit more dimension, but we're not providing a specific forecast as to the impact of FX on fiscal year 2018 today.

Fair enough. Considering the headwinds you are facing from FX, are there other areas in the P&L that you hope to use to mitigate that as you look out to fiscal '18?

Absolutely. And we have certainly done that over fiscal year 2016 and 2017. First and foremost is growth. We are obviously a growth company and in fact with attacking compelling growth opportunities in the market. Long-term obviously is our focus but in the short term as well. I'd say from a margin perspective, the underlying drivers of gross margin expansion are very strong and we see those being very strong in fiscal year 2018 versus fiscal year 2017, again on a currency neutral basis. I mentioned that we continue to see opportunity to become even more fit for growth from an SG&A perspective through Editing to Amplify. And what I would say is most importantly for us in the short term is how we're executing against our long-term strategy. And that's what we’re going to be most focused on as we finalize our plans for 2018 and as we move through 2018, as executing against Triple Double that Mark referenced.

Thank you, Jim. Okay, I think that’s all the time we have for today. Thank you, guys, for joining us. We’ll speak with you soon.

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