This is a summary of the fourth quarter fiscal 2007 earnings call conducted by Nike Inc. (NKE: chart) on June 26th, 2007.

Management:
Chief Executing Officer: Mark Parker
Chief Financial Officer: Don Blair
VP of IR: Pamela Catlett
President of the Nike Brand: Charlie Denson

Key Investor Issues

- Fourth-quarter net income rose 32%.
- Quarterly profit rose to $437.9 million, or 86 cents a share, up from $332.8 million, or 64 cents a share, a year ago.
- Net revenue for the quarter rose 9% to $4.38 billion from $4 billion a year earlier.
- Gross margins for the quarter were flat to the prior year.

Fiscal 2007 highlights

- Revenues grew 9% to over $16 billion.
- Revenues for the businesses reported as other, grew 16% and contributed two points to the overall revenue growth.
- Diluted EPS jumped 11% to $2.93 versus fiscal 2006.
- Futures orders scheduled for delivery from June through November 2007 grew 12% versus last year, as all regions reported strong growth.
- For fiscal 2007, gross margins were slightly below last year.

For the year, incremental revenues climbed 9%, or $1.4 billion.

Nike absorbed over a $140 million of incremental expense under new stock option accounting rules.

The Nike subsidiary revenue grew 16% on the year.

For the year revenues at Converse grew 23% to $564 million, driven by strong consumer demand particularly outside the US. NIKE Golf continued to perform exceptionally well, with annual revenue up 12% and pre-tax income increase of 33%. In total, the company’s six subsidiaries delivered combined annual revenue of $2.3 billion, and PTI essentially doubled to $304 million. Revenues at Cole Haan grew 8% to $471 million, while NIKE Bauer Hockey, Hurley and Exeter, each grew revenues at a double digit rate, fuelled by great product and brand momentum.

Nike delivered $1.6 billion in free cash flow from operations last year, up almost $300 million versus prior year.

The company increased dividends 20%, bought back 975 million stocks and increased ROIC 80 basis points, excluding the expense of stock-option. Quarterly inventory growth was 2%, a decrease from the 15% growth last year and far below the rate of revenue growth. A big part of the company’s growth strategy is focus on retail- moving ahead with Nike-owned concepts. It is expanding its digital brand to innovate, entertain elite consumers to products that only Nike can create. Moving into the New Year, the brand is being reorganized into high growth category, with intensified focus in high growth cities, countries and regions.

As far as the power of the Nike brand is concerned, the company’s position has always been that of leadership in creating differentiation. A big part of that leadership is expected to come out of the category alignment- the teams have relocated and the leadership, products, marketing and operational support are all sitting together, forming the beginnings of a portfolio of a world class team.

Basketball - An example is the House of Hoops concept with Foot Locker stores that combine NIKE Basketball, the Jordan brand and Converse in a way that will create a new level of excitement for consumers in the US. The potential of basketball is huge as the game and the business have gone global and there is nobody more entrenched in the power and future of basketball than Nike.

Soccer is a category where footwear innovation drives competitive success. Nike launched the fourth generation of Total 90 boot which generated great response from both consumers and retailers. A carbon composite chassis and upper concept was brought to the Mercurial Vapor III to make the shoes lighter. On average, over a distance of 10 meters, the Vapor III was 500th of a second faster than competitors’ shoes. To the player at this level, the difference means an advantage of the length of one football shoe, which is huge in soccer.

In running, Nike Plus continued to expand beyond expectations. The Bowerman Series advanced 20% globally from a year ago. T Mercurial was one of the top selling shoes in running specialty shops in June. On behalf of the running business on the continent, Nike is the fastest growing performance brand in running in Germany.

Pre-tax income for the US region grew 20% in the fourth quarter. Fourth quarter revenue for the region grew 10%.

Sales at Nike-owned retail stores in the USA grew 16% for the quarter and comp store sales at Nike first quality stores increased 8%. Revenue for US footwear grew 9% in the fourth quarter reflecting double-digit growth in units and the mid single-digit decline in average price per pair. US Equipment posted fourth quarter revenue growth of 23%,

For the full year, pre-tax income climbed 4% to $1.3 billion. Revenues for the region grew 7%. Futures orders also increased 7% versus a year ago. For the year, US footwear revenues grew 6%. Apparel rose 8% to pass the $1.7 billion mark for the first time. US Equipment posted 8% revenue growth for fiscal 2007.

Asia-Pacific pre-tax income grew 37% for the fourth quarter.