Key questions and answers from the first quarter earnings call conducted by Nike Inc. (NKE: chart) on September 20, 2007.

Kate McShane (Citigroup): Can you explain the growth in the U.S. footwear market and how much is being driven by market share gains?

Charlie Denson: The overall running business has grown at an accelerated rate though we continue to see some challenges in basketball.

Our women's business continues to perform well and we feel good about where we are at with both women's fitness and some of the women's training specific products. We have had a good fall in the cleated business, in American football and the soccer product as well.

Kate McShane (Citigroup): Are there any details on the new licensing agreement with Dick's Sporting Goods for the ACG brand?

Charlie Denson: We haven't actually branded any ACG apparel here in the United States so we still do retain the rights to the sub-brand. It is a test and not something that we are looking at on a broader scale, but it is certainly something that we are exploring and it will be exclusive to the Dick's group for right now.

Bob Drbul (Lehman Brothers): On the U.S. business, when you think about the inventory at retail with the challenges that are in the athletic specialty area, did you have significant cancellations?

Mark Parker: We are not seeing any uptick in cancellation rates but an improvement in cancellation rates in the U.S. in the last couple of quarters.

Bob Drbul (Lehman Brothers): What is the U.S. inventory position and how long will it take to get through the product at the retail level to get that very clean?

Charlie Denson: We continue to feel good about our retail inventory position. Back to school came later in the U.S., and we saw some of that pile up at the end of July and first of August but things moved through towards the end of August and have continued to move through in September.

Bob Drbul (Lehman Brothers): Can you provide a U.S. number within the Nike, Inc., on your U.S. inventory position?

Charlie Denson: It is up low single-digits.

Omar Saad (Credit Suisse): On the Nike Bauer announcement, can you elaborate on the process you went through to arrive at the conclusion?

Mark Parker: We are aggressively evaluating the makeup and the performance potential of our Inc. portfolio. So we have taken a hard look over the last 9 to 12 months particularly, and we are still in the middle of that process.

Through that we felt that there is other entities within the portfolio that need more focus and can deliver longer term growth potential for the portfolio and this is all about maximizing the overall portfolio over the longer term.

As we explore the sale, we will discuss with any prospective buyers the appropriate length of a transition period to remove the Nike name from future Bauer products, so we don't see that as being a long-term prospect.

Omar Saad (Credit Suisse): You made some changes to some of the women's stores and are testing some new concepts. Where do you stand on that?

Charlie Denson: There is a huge opportunity around this idea of community, whether it is digital or virtual as well as tangible, even in store. I think there is an opportunity to increase the accessibility to the expanse of the Nike product line. Some of those are things that we are working on right now and we are starting to test. Some of the transition stores we are testing include one in Woodfield Mall in Chicago and The Grove in Los Angeles.

We are getting ready to launch a new Nike ID studio and consumer experience in London which is coming in November as well as House of Hoops specifically with Foot Locker. We are also in conversations and actually format and concept development with some of the other partners, not only here but around the world. We have five new Jordan stores open in China as another example of something going on outside the United States. We have got some golf only executions running and we are working with some of the major sporting goods guys around the world as well.

Omar Saad (Credit Suisse): Where do you stand on new store roll outs?