Key questions from the second quarter earnings call conducted by NIKE Inc. on December 19, 2007.

Jeff Edelman (UBS): The retail component of the domestic footwear added about 2.5 point of your US sales increase. Your sales to your customers were up faster than futures. If that is the case then you did not have that much of the shift in timing of shipments to account for the slower rate of growth in the futures. Is there anything else in there?

Don Blair: There are a couple of things that are driving the differences between the futures growth and the revenue growth as they have historically. Our own retail is additive to the business. We are growing our retail business in the mid teens. That is helping. We are also seeing faster growth in some of the at-once businesses, including things like auto replenishment. The thing that we do caution people on here is that, as we have seen with our US revenue numbers in the last few quarters, there is some volatility on timings across quarters. Generally what we are saying is: we think this is a mid single-digit growing market for us. We think that is the underlying business trend and that is what we would expect to see for this fiscal year.

Jeff Edelman (UBS): How much of the apparel business in the US is positioned where you want it and how much of it is still work-in-process?

Charlie Denson: The performance side of the business is starting to pick up momentum and we are pleased with the progress we are making, both using NIKE Pro as an example, the Sport Essentials and our placement in the authentic performance oriented retail channels. We feel good about that. One other thing that we feel is still a big opportunity for us is getting the sportswear or the sports culture side of the business better positioned. We have spend time working on that over the last year as we moved into the category orientation from an organizational standpoint, and you will see a launch of a new position for the brand around sportswear in apparel and footwear late next summer, early fall.

Brian McGough (Morgan Stanley): There has been a lot of strategic change at the company over the past six months, you had sale of Starter, and you had the Bauer announcement, acquiring Umbro. It seems like the portfolio is getting a lot more focused as it relates to growth in higher ROI businesses. Are the divestitures done?

Mark Parker: We are making some bold or more aggressive moves with the overall portfolio than you might have seen in recent years. It is all designed to optimize and leverage our overall potential as the company. It is not just about performance now it is about potential as well. That is driving how we are evolving our portfolio and the sales of Starter brand and then Bauer, the acquisition of Umbro. The focus we have on the bigger growth opportunities within the remaining brands in the portfolio is where we are focused on, on optimizing our growth potential. We do not see any other specific divestitures on the horizon with current NIKE Inc. portfolio. We feel good about the performance of the other brands in the portfolio as evidenced by the second quarter performances led by Converse and Cole Haan. We also feel good about Hurley, NIKE Golf, and then the Jordan brand and the NIKE brand, all performing well, but this is all driven by our fixation and trying to optimize the overall performances of the portfolio. This year we are going to intensify our focus on being a better NIKE Inc. and that is looking at better leveraging opportunities, investments and competencies across the portfolio. It is not just about divesting and acquiring, it is about leveraging better what we have. We have significant assets and competencies to leverage better over the overall portfolio.

Brian McGough (Morgan Stanley): When you look at the consumer trends: are there any areas where you see the consumer that you do not currently touch with the NIKE brands, but where you are thinking acquisition can help?

Mark Parker: I do not see any radical shift in consumer trends these days that are dramatically affecting our strategy. The intensified focus on categories is being critical.

Brian McGough (Morgan Stanley): If you see another brand that comes along that you want to buy: do you think you could handle two acquisitions at once, i.e., Umbro and another one?

Mark Parker: That is not in the plans right now. We have got a lot to take advantage of right now, with the Umbro acquisition assuming that goes through, as we do lots of upside opportunity there, and all the opportunity we are focused on within the other existing brands in the portfolio. There is opportunity beyond what exists today for NIKE Inc. from the acquisition standpoint. I am not going to speculate today as what those are specifically. But we do see acquisition opportunities going forward. I do not think you are going to see anything in the near future in terms of other acquisitions though.

Brian McGough (Morgan Stanley): The retail square footage is still growing quickly, not yours but the overall industries, about twice the rate it should. What is your overall level of comfort with the state of the U.S. market?

Charlie Denson: The U.S. market from an economy standpoint is a headwind. When you think about over the next couple of years, we have learned some valuable lessons back in the late 90s and when this industry specifically domestically went through a radical consolidation and was over billed. We are starting to evolve now, before we hit that time period and some of the things that we are talking about and we talk about this internally is where does the US market head and how do we continue to grow and I think, this evolution into a more category specific set as destinations, enables us to get into a new and a more positive growth mode for the industry, here in United States. We are in the early days of that shift in that transition. It is going to take some time, but I think I will use this analogy all the time when I am talking both internally and to our retail partners that 25 years ago everybody thought, athletic footwear was part of the family footwear portfolio. There was a couple of people that had the vision that it could turn into an entire industry, and I think today if you think of the basketball consumer, or the running consumer, or even the training, or the team athlete consumer. Those are all opportunities to continue to grow businesses that exist today and when you start to look at it that way that has become more exponential.

John Shanley (Susquehanna): With the US futures up 1% versus the 7% of growth in futures in the year ago period: are you likely to see a continued growth in at-once business, that may change your whole way of looking at futures as a indication in your models of how you anticipate NIKE sales results in this domestic market particular?

Charlie Denson: No I do not think so. I think when we look at the US business right now. The weakness is on the apparel side of the business. I do not think it is going to dramatically change any of the way we are operating currently. We continue to use the future's program as a great indicator, but not without the specific or exact barometer and it is a great planning tool for both us and the retail community and it allows us to produce the right amount of product to put them in a marketplace and continue to manage the marketplace and the inventory levels, so that everybody is in a good place.

John Shanley (Susquehanna): How much of the business is future driven versus at-once in the footwear category in particular?

Charlie Denson: I do not have specific numbers, but it is still primarily a futures driven formula for us and we see it continuing in the near term and we would hope in the long-term. As long as we can continue to create the demand for the brand and sell into demand, which has always been our approach and the formula that we have run. We have to maintain a discipline at managing the marketplace and making sure that we do keep that demand curve in the right place. We do not see any big changes.

John Shanley (Susquehanna): What retail channels help drive that strong 12% gain in the domestic footwear side of the business that the company was able to generate in the second quarter?

Charlie Denson: We were up with nine out of ten accounts and that is across the board in all channels and so we had a great quarter in the US. We are pleased with the performance across all of the channels and so we do not feel compelled to look outside the current channels that we are operating in. We can continue evolve those channels. Specifically into some of this category destination work that we talk so specifically about and feel good about the distribution network, that we have and the availability of the NIKE brand both at price points and even as high as to the level of the collector. We feel good about the distribution and the strategies you have got in place.

Mark Parker: We are still seeing good growth on the footwear side. The weak spot for us in the US has been a piece of the apparel business. The performance apparel has done well; the top end of our sportswear line has done well. It has been that sport inspired part of the business that has been more challenging.