JUNE 26, 2003 CONFERENCE CALL TRANSCRIPT

NIKE, Inc.
Q4 '03 and Fiscal '03 Earnings Transcript
June 26, 2003


PAMELA CATLETT
Director of Investor Relations

Good afternoon, everyone. We're pleased you're joining us this afternoon
to discuss Nike's fiscal 2003 fourth quarter and full-year results. This
quarter, in lieu of my usual recitation of the results contained in our
press release, we'd like to streamline things a bit and have Don Blair
cover most of those results in his remarks. For those of you who need to
reference our release, you'll find it on our website,
www.nikebiz.com/investor. This quarter you'll also find expanded
information on the website about some of the highlights we'll be
discussing today.

Participants in today's call are Charlie Denson and Mark Parker,
Co-Presidents of the Nike Brand, and Don Blair, our Chief Financial
Officer. Each of today's participants will provide brief prepared
remarks and then we'll answer your questions. A comment about Q&A: We're
streamlining to try to allow more time for questions, so please limit
your initial questions to two. If you have additional questions, please
plan to re-queue and we'll do our best to cover them. And remember,
violators will be prosecuted.

Before I turn it over to Don Blair, let me remind you that on this call
we're going to make forward-looking statements based on our current
expectations, and these 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 we file with
the SEC, including Forms 8-K, 10-Q, and the 10-K. Some forward-looking
statements concern futures orders that are not necessarily indicative of
total revenues for subsequent periods due to cancellations and the mix
of futures and at-once orders, which may vary significantly from quarter
to quarter. In addition, it's important to remember a significant
portion of our business including equipment; most of Nike Retail, Nike
Golf, Cole Haan, Bauer, and Hurley are not included in these futures
numbers.

During this conference call we may discuss non-GAAP financial measures.
A presentation of comparable GAAP measures and quantitative
re-conciliations can also be found at Nike's website, again
www.nikebiz.com under the Investors heading. In this call we may also
discuss non-public financial and statistical information, which is also
publicly available on that site.

Now here's Don.


DONALD W. BLAIR
Vice President and Chief Financial Officer

Thanks, Pam. Runners like Pam often speak of striving for their personal
best. In many ways, fiscal 2003 was a year of many personal bests for
Nike.

PERSONAL BESTS

- - In fiscal 2003 we broke the $10 billion dollar revenue mark, as we
posted full-year revenues of $10.7 billion, up 8% versus the prior
year.

- - Our consolidated gross margin of 41% was up 170 basis points versus
fiscal 2002 and the highest in our history.

- - On a comparable basis, diluted earnings per share for the fourth
quarter at $.92 represent our largest quarterly earnings ever. On the
strength of this finishing kick, our full-year diluted earnings per
share before accounting changes were $2.77, making fiscal 2003 the
most profitable year in our history.

- - We raised our return on invested capital to over 20%, the highest
level since 1997, and continued to generate strong cash flows.

- - We delivered a lot of that cash back to the shareholders, buying
back $196 million of stock during the year and raising our quarterly
dividend by 17%.

CLEARING HURDLES

What makes these achievements even more exciting for us are the hurdles
we had to clear in order to deliver those results:

- - During the year we significantly changed our distribution in the U.S.
region, requiring us to offset a significant reduction in sales to
our largest customer.

- - We wrestled with delivery issues created by the temporary closure of
the West Coast ports and by changes in our apparel sourcing.

- - We watched the retail environment soften as consumers turned cautious
in the face of a weak global economy, a war in the Middle East, and
SARS in Asia.

Despite all of those challenges, we seamlessly implemented our new
systems footprint in twenty-three countries in Europe and incidentally
delivered the best financial results in our history.

REPORT ON FISCAL '03

Before we discuss fiscal 2004, let me talk a little bit about the year
we just concluded.

Our consolidated revenues advanced 8% for the year, inline with our
long-term goal of high single-digit revenue growth. This was the year
that we finally saw the full impact of the last three years of robust
growth in our international businesses. For the year, our non-U.S.
regions delivered over 16% revenue growth versus the prior year and for
the first time reported more revenue than the U.S. region.

Results by Region

Europe/Middle East/Africa
In our EMEA region, revenues grew 24% in Q4, with all but two points of
the growth coming from the stronger euro. For the year, the EMEA
revenues increased 20%, with fifteen points of growth coming from more
favorable exchange rates. For the year, footwear revenues grew 23% and
apparel revenues posted a 16% increase, while equipment revenues
advanced 22%.

We're also very pleased with our gross margin performance in Europe,
where our gross margins expanded by 190 basis points for the year,
accounting for sixty basis points of our consolidated margin
improvement. Better inline pricing margins and lower levels of
closeouts, driven by cleaner inventories, drove about two-thirds of the
improvement, while currency changes accounted for the balance. Although
we did see a modest improvement in gross margin in the EMEA region due
to the strength of the euro, this benefit was offset by weaker exchange
rates in the Asia Pacific and Americas regions. Overall fiscal 2003
pretax income for the EMEA region advanced 26% to $533 million.
Incidentally, our segment disclosure of regional pretax income is
currently available on our website.

Asia Pacific
In the Asia Pacific region, our business continued to grow strongly in
the fourth quarter. Revenues increased 22% for the quarter and 19% for
the year. While five points of the full-year increase came from stronger
currencies in the region, most of the growth came the old-fashioned way:
by selling more product. For the year, footwear reported 14% growth,
while apparel grew 24% and equipment advanced 29%. Revenues advanced in
nearly every country in the region.

For the year, our Asia Pacific gross margins advanced 220 basis points,
accounting for thirty basis points of the gross margin improvement for
Nike, Inc. The Asia Pacific margin increase was a result of higher
inline margins and cost leverage in our Japanese and Korean distribution
facilities, more than offsetting weaker hedge rates across the region.
Reported fiscal 2003 pretax income for the Asia Pacific region grew 36%
to $295 million.

Americas
Our Americas region delivered a solid year in fiscal 2003, delivering
$96 million of pretax income for the year, up 5% versus the prior year.
Reported revenues grew only 1% in the fourth quarter and declined 7% for
the year as a result of weaker currencies in Latin America, which
reduced reported revenues by ten points in the fourth quarter and
fifteen points for the full year. Gross margins for the year increased
300 basis points, due largely to higher inline margins and lower levels
of closeout sales. The Americas gross margin increase accounted for ten
basis points of the gross margin expansion at the Nike, Inc. level.


USA
Of all of our regions, the U.S. faced the most difficult challenges in
fiscal 2003 and still managed to deliver $958 million in pretax profits
for the year, a new record. Our regional management team did a
tremendous job maintaining our revenue base, despite a significant
reduction in sales to Foot Locker and delivery challenges created by the
West Coast port stoppage and apparel sourcing issues. Revenues for the
fourth quarter grew 2%, while sales for the year were essentially flat.
Despite higher air freight costs incurred to minimize delivery delays,
gross margins for the year reached a record 40.7%, up 130 basis points
versus fiscal 2002 and translating to a sixty-basis-point improvement in
Nike, Inc.'s gross margin. Two-thirds of the region's gross margin
expansion came from higher footwear margins, with the balance coming
from apparel.


- - Footwear. For the year, our wholesale footwear revenues in the U.S.
declined 4%. However, total footwear units sold actually increased
over 2% for the year. Perhaps most encouraging, wholesale gross
profit dollars were essentially flat versus the prior year, as gross
margin increased 140 basis points.

- - Apparel. For the year, U.S. apparel revenues rose 8%, reflecting
strong sales of both branded performance apparel and licensed prod
uct. At the same time, we delivered a second consecutive year of
double-digit growth in gross profit dollars as wholesale gross mar
gins rose 140 basis points.

- - Equipment. U.S. equipment revenues grew 9% in the fourth quarter and
3% for the year, reflecting strong growth in socks and team sports
equipment, partially offset by lower revenues following the licensing
of our timing and vision businesses.

Nike-owned retail was also a bright spot in the U.S., as the strength of
the brand and improving store operations drove a 12% comp-store increase
of sales in May and over a 10% increase in comp-store sales in the
fiscal fourth quarter.

Revenues from our subsidiaries grew 9% for the fourth quarter and 12%
for the full year. Revenue growth at Nike Golf and Cole Haan combined
with a full year of revenue from Hurley, and that more than offset lower
revenues at Bauer Nike Hockey. For the year, our subsidiaries in total
earned a small pretax profit, down significantly versus last year.
Erosion of profitability at Nike Golf more than offset a strong rebound
in pretax income at Cole Haan.

P&L LINE ITEMS

Consolidated SG&A spending grew 8% in the fourth quarter. Six points of
that increase were due to changes in exchange rates. For the year, SG&A
grew 11%, with over three points of the increase due to currency
translation.

Demand creation spending increased 2% in the fourth quarter due to the
effect of stronger foreign currencies. For the year, demand creation
spending increased 14%, with five points of the increase due to currency
translation. Two-thirds of the remaining increase was spent outside the
U.S. as we invested behind the World Cup and our new partnership with
the English football club Manchester United.

Operating overhead increased 12% for the quarter and 10% for the full
year. Key drivers of the full-year growth were currency movement, which
accounted for three points of growth, and investments in our supply
chain initiative, international factory outlet stores, Hurley, and Nike
Golf.

Other expense for the quarter was $32 million versus other income of $9
million in the fourth quarter of the prior year. For the full year,
other expense was $80 million, a $77 million increase versus the prior
year. Three-quarters of this year's other expense was due to foreign
currency losses, mostly from Europe. These losses were offset by
favorable translation of foreign currency denominated profits reported
by our international regions. Therefore, the full effect of netting
these foreign currency losses and the favorable translation of foreign
currency denominated profits was $13 million of additional pretax
income.

Our effective tax rate for the quarter was 33.8%, as we trued-up our
full-year rate to 34.1%. This full-year rate is twenty basis points
below last year's full-year rate. As we discussed earlier this year, the
lower rate is largely the result of a lower tax provision on earnings
permanently reinvested outside the U.S. The fourth quarter adjustment is
the result of differences between actual results and quarterly
estimates.
BALANCE SHEET

As of May 31st, worldwide inventories were 10% higher than the prior
year. Six points of the increase was due to the stronger euro. Inventory
in our U.S. region rose 4%, as we accelerated receipt of fall product to
improve on last year's delivery performance.

As of May 31st, accounts receivable increased 16% or about $300 million
versus the prior year. $228 million of the increase came in Europe,
where the strength of the euro accounted for about $160 million of the
incremental balance.

We generated $913 million of cash flow from operations for the year.
Cash used by investing activities, including capital expenditures of
$186 million, totaled $211 million for the year. Cash used by financing
activities, including $196 million of share repurchases and $315 million
of net debt retirements, totaled $605 million. As a result, our year-end
cash balance increased by $58 million.

EPS GROWTH

Some time ago we articulated a long-term financial model intended to
produce mid-teens earnings per share growth, and over the last four
years we've delivered. Before accounting changes, we've averaged 14%
growth in diluted earnings per share. It's true that every line item of
our P&L hasn't played out exactly as we drew it on the chalkboard. But
to quote that well-known strategic thinker, Mike Tyson, "Everybody's got
plans . . . until they get hit." Under some of the most difficult
business conditions in decades, with dramatic strengthening and then
weakening of the dollar, we've managed our portfolio of businesses to
deliver increases in current earnings and cash flows while investing in
our brand and our operating capability for the future.

EXPECTATIONS FOR FISCAL '04

As we enter fiscal 2004, the retail environment remains highly uncertain
in the U.S. and the developed economies in Europe. While we're
encouraged by our progress in implementing our new distribution strategy
in the U.S. and are committed to stay the course, U.S. futures orders
for the next six months certainly indicate that our job isn't yet done.
On the plus side of the ledger, we expect to see a significant benefit
from stronger foreign currencies in fiscal 2004. While we have made a
number of investments in our brand, we still expect to drive some SG&A
leverage in fiscal 2004, although not at the level we targeted for the
long term.

As a result, we expect to report full-year results broadly in line with
the financial model we've articulated before: high single-digit revenue
growth, expanding gross margins, and mid-teens earnings per share
growth. This growth will be concentrated in the second half of the year
as we face challenging comparisons in the first half.


So in summary, we're very pleased with our results in fiscal 2003 and we
feel we're in a great position to continue to deliver solid profit
growth in fiscal 2004. And with that, I'll turn the floor over to Mark
Parker.


MARK PARKER
President, Nike Brand

Thanks, Don. The results Don just reviewed with you are a testament to
many of our successes as a company during the past twelve months. Today
I'd like to give you a little deeper insight to some of the brand and
product efforts from the past year that really helped to fuel those
financial results and set the stage for fiscal '04, which should be
helpful in broadening your understanding of how we think about our
brand, our priorities as a company, and the opportunities we see ahead.

For those of you who have followed us for a while, you know that build
ing and managing our brand is one of the most important priorities for
our company. In 2003 we made great strides in solidifying our premium
brand position through the strength and diversity of our product
offerings, the quality of our presentation at retail, the evolution of
our connection and relationship with consumers, and the exciting
partnerships we've made in sports marketing.

PRODUCT SUCCESS

Footwear

Shox
One of the highlights of our year occurred in the past six months with
the fantastic launch of our latest generation of Shox product. We
introduced it for spring '03 and it completely energized the market. The
success of Shox reaffirmed our belief that by delivering superior,
innovative, and diverse product that surpasses consumer expectations, we
can drive momentum for our brand and our business. Shox did that, and
going into fall and holiday '03 we think Shox product will continue to
generate a great buzz in the marketplace.


Performance
But Nike's success this year was a lot more than a single product. We
added more than $300 million in global footwear revenue by executing our
complete offense and delivering great product across the performance and
sport categories, into active life and classic product, and up and down
the price spectrum. We know that better managing the depth and breadth
of our product offering is essential to our ongoing success.


During the year we gained ground in many of our core categories. In
addition to Shox, our running business is growing, with the Bowerman
Series and great performance product like the Air Pegasus and the Air
Max Moto helping to drive the growth. In fact, Nike Running experienced
revenue gains across all regions this year.

Advanced Fit
This spring we introduced Advanced Fit in Japan to phenomenal results.
Advanced Fit is a breakthrough concept that provides better fit
appropriate to the Asian athlete's foot. We launched the concept in five
categories: running, basketball, soccer, baseball, and tennis. It
certainly contributed to some of the impressive results and futures
you've seen from our Asia Pacific region this quarter.


Basketball
Nike Basketball delivered a good year in footwear, apparel, and
equipment. We enjoyed some success with both the men's and women's NCAA
tournaments. In the men's tournament the Elite Eight, the Final Four,
and Syracuse, the national champion, all wore the Swoosh.


In the U.S. according to NPD data for the trailing eleven months ending
April 2003, Nike is the number-one selling footwear brand in all price
points.

Active Life
I should also mention the significant increases we've seen in our highly
profitable active lifestyle footwear business. We continue to cultivate
highly successful franchise models through color, fabrication,
detailing, and select distribution: models like the Air Force 1, the
Dunk, Air Max, Cortez, Ace '83, and Jordan retro styles, to name a few.

Beyond the retro franchise business, we're highly focused on expanding
our boot and sandal business and creating energy around new sport-based
lifestyle product such as the City Knife and Presto collections, all
creating a more diverse portfolio of active life product. This is a
strong and synergistic relationship between our active lifestyle and
performance sport footwear business, which we see as a real competitive
advantage. A great example of this would be the design of the Air Total
Max 2003, which you can see on the Nike website.

I'm most encouraged by the fact that we drove profitable footwear growth
in a challenging year. A lot of credit goes to our product team, which
identified some key opportunities for margin expansion within the
footwear process and delivered in fiscal '03. Two areas I would cite as
important in helping us deliver profitable growth. First, we
re-engineered a number of our key active lifestyle products, updating
the molds, developing new patterns and improved material management, and
reduced our product costs by over $1.00 on a number of key top-selling
shoes. The other area was in better managing the mix of full-price to
off-price revenues in some regions which helped drive our net pricing
margins on footwear up a full percentage point for the year. I think
these are two good examples of where we understand what drives
profitable growth and got after them in a meaningful way in fiscal '03.

Apparel

While we had some good success in footwear this year, I am as excited
about the innovation and product offerings in apparel as I am for
anything in the company.

New Launches
2003 was definitely a year of innovation for Nike Apparel, starting with
the global launch of our Sphere technology last fall. What started as a
marathon singlet three years ago at the Sydney Olympics is now a
significant global business. The consumer is embracing this technology
and sell-throughs continue to get stronger each season.

We experienced dynamic growth with the introduction of our Black Label
Hoop Tech and Battlegrounds apparel. Nike's Team Sport business, Rewind
collections and NBA player product added to the dominance. Jordan
Basketball also posted significant increases, giving the combined Nike
footwear and apparel businesses dominant market share in this important
category of basketball.

Partnerships
You've heard us talk a lot about our partnership with Manchester United,
the most popular football club in the world. Over the next few months
there will be unprecedented exposure for the game in the U.S., with
international matches between Manchester United, Juventus, Barcelona,
Celtic, and Club America in several cities, along with the Women's World
Cup. Women's World Cup starts here in September. While Nike's global
football business continued its great run with footwear revenues growing
56% for fiscal '03, we had equally impressive results in apparel,
selling over one million Man United home jerseys.

The consumer's passion is not limited to Manchester United. During the
year Nike's Brazilian national team jersey sold over 400,000 units and
the Mexico national team jersey sales topped 75,000 units just in the
first three months.

Cool Motion
The apparel launch of our Cool Motion technology at the 2002 World Cup
was a huge contributor to the Nike Football success story. That success
extends beyond a single category. Cool Motion technology also helped our
tennis athletes at the French Open, Wimbledon, and the U.S. Open. At
this year's upcoming tennis events you'll see new Cool Motion and Sphere
combinations on Nike athletes.

Over this past year Nike's Black Label performance apparel grew to 36%
of total apparel sales, contributing to a higher average price and gross
margin performance for Nike Apparel.

Equipment

We also saw strong growth in our various equipment businesses, led this
year by an incredible effort from Nike's Team Sports and Fitness
equipment division, which posted record revenue and PTI results. The
World Cup investment last summer, along with the current "Mi Futbol"
campaign in Latin America, has continued to push our performance in
soccer football equipment, where revenue growth continues to be upwards
of 50% worldwide. Another key growth area has been baseball equipment,
where we're experiencing solid growth and strong sell-throughs on a full
head-to-toe product range, which was well represented at this year's
College World Series.

BRAND MOMENTUM

As we move into this next fiscal year, we're energized and optimistic
about the possibilities for our brand momentum to drive results. We're
excited about the brand-building efforts we've undertaken: our signing
of three of the most dynamic basketball players in the market today,
Kobe Bryant, LeBron James, and Carmelo Anthony. These signings have
generated great energy here at Nike and much anticipation in the market.
With marquee athletes, new on-court and off-court product concepts, and
a strong marketing campaign, we're well positioned to generate real
excitement in the basketball category and the industry.

This summer we'll launch our Speed initiative followed by Shadow, our
global advertising campaign in fall and holiday. Over the next ninety
days you'll see a steady stream of Nike product innovations and
communications at the World Swim Championships in Barcelona, the 100th
Tour de France, Wimbledon, the World Track & Field Championships in
Paris, and the Women's Soccer World Cup. The first ad, teasing our Speed
initiative, starts tomorrow night, and will break in over 10,000 movie
screens in theaters across the United States.

CONSUMER CONNECTION

Some of the best examples of where we're connecting with consumers in a
more intimate manner are in our regional brand initiatives. Since most
of you are based here in the U.S. market, you're likely not to see these
campaigns, so I thought we could just provide a quick glimpse into some
of these efforts:

- - In Latin America we recently launched a very successful integrated
campaign called "Mi Futbol," with a number of our top footballers
talking about how they developed their skills playing in the streets.

- - In Asia there was a major campaign around Presto where we collabo
rated with a number of artists.

- - In Europe we ran the "Creativity in Sport" campaign, again focused on
self-expression in sport. You can take a look at the "Creativity in
Sport" ads on the website.

RESONATING COMMUNICATIONS

We talk about our complete offense strategy on the product front, but I
think it's an appropriate description of the healthy balance we've
achieved on our brand communication work. Whether it's at the regional
campaigns I just mentioned or our presence at the events like the Boston
and London marathons or our own Battlegrounds basketball events, we're
connecting with a range of participants and influencers in a way that
only Nike can.

As a brand I feel our communications are more cohesive globally while
maintaining the distinct flavor that's needed to connect with consumers
on a very local basis. All around the world we're fighting for share
against some very focused competitors, and the power of locally relevant
communications supporting our great product is a distinct competitive
advantage for us.

IN CLOSING

I'm very pleased with the health of our brand and the depth and strength
of our product offering in each of the regions around the world. Every
day we're connecting with consumers in large and small ways, in ways
that inspire us to stay focused on delivering great product, telling
compelling stories, and helping to create a more exciting retail
experience.

With that, here's Charlie Denson.


CHARLES D. DENSON
President, Nike Brand

Thanks, Mark. Good afternoon, everyone. Usually we talk about
performance in the context of serving an athlete or a specific consumer
need with innovation and technical product break-throughs. You just
heard Mark talk about some of the success stories we've seen from the
past year. Today I'd like to take a little bit of time and talk about
performance in a broader context, as it relates to this company, our
company, and a commitment to our shareholders.

EXCELLENT PERFORMANCE

Without a doubt, fiscal 2003 was a remarkable year for Nike. We faced
and overcame some significant obstacles during the year. You've heard
that list before. Some were unexpected: port closures, war, a volatile
global economy, a Supreme Court case, and SARS. Others were more Nike
specific: redirecting our U.S. distribution, our apparel deliveries,
continued implementation of our supply chain initiative, and an
aggressive pursuit of a golf business that was in an unstable market.

If there was ever a year that tested us in our ability to manage our
portfolio through one curve ball after another, it was this year. Yet
around, through, and in spite of them all, we were able to accomplish a
number of feats. It is our fifth straight year of EPS growth. It's our
highest revenue performance in the history of the company, adding over
$800 million to our top-line alone. It's our highest earnings per share
number that we've ever hit in our company's history; our highest annual
gross margin performance; the most profitable year ever for our USA
business. It marked a year where our international business exceeded
domestic in revenue and also afforded us the opportunity to see our
biggest year ever in both pretax and revenue out of both our European
and Asia Pacific divisions. As Don said, our strongest ROIC performance
since 1997. Our focus on generating profitable growth, particularly
during a challenging global economy, has paid off, with all four of our
regions delivering a strong pretax result for this year.

I'd like to take the next few minutes to talk about some of the ways we
did it and give you a glimpse into some of the opportunities and
challenges that we see ahead.

INTERNATIONAL GROWTH

Once again, our international business delivered solid growth.
International revenue grew 16% for the year, as we stated earlier, led
by strong results from both European and Asia Pacific regions.

Asia Pacific

The highlights from Asia are the same ones you heard over the past
several quarters: Japan, Korea, and China, each delivering impressive
results.

Japan
Japan's 17% growth for the year was fueled by performance product in
both footwear and apparel, and an improving brand position as an
authentic athletic sports brand. The recently introduced Advanced Fit
initiative that Mark talked about has had a significant effect on our
performance footwear results. This, combined with a strong showing in
performance apparel and driven categorically by running, soccer, and our
most recent introduction of a full line of baseball footwear and
equipment, gives us great confidence that we can continue to grow both
the authentic athletic business along with our traditionally strong
position in active life. Also, the new Manchester United product
introduced and the Air Jordan 3 retro product have been great additions
to the excitement in the Japanese marketplace.

Korea
Korea's revenue grew 44% for the year, and we've talked a lot about the
impact of last summer's World Cup and that impact on the Korean sports
culture. We're continuing to see strong growth and participation numbers
out of this market and expect this to continue through fiscal year '04.


China
China's business increased 39% for the year and has now exceeded the
$100 million level. We continue to see an expanding infrastructure, both
from a consumer demand perspective and a retail development point of
view. The world of sport is growing, with participation levels up in
many core sport activities. The loss of the Women's World Cup was a
disappointment for our China team, but it hasn't dampened the enthusiasm
for sport throughout the country. The Chinese sporting goods market will
continue to expand toward the Beijing Olympics in the year 2008.

Fiscal year '04 should be our biggest year ever in Asia as we continue
to build our competencies and our capabilities, implement our supply
chain initiatives, and build an even stronger authentic brand position.


Europe

On to Europe, it's has been our most consistent growth performer over
the last five years, finishing with its biggest year ever at $3.2
billion. The team did an excellent job managing a myriad of issues,
including the new supply chain implementation and the persistently
challenging macro economic environment. Highlights for the year include
growth in Spain, Portugal, France, and our emerging central European
countries.

We've talked on the past couple of calls about the concerns we've seen
in both the U.K. and the Italian markets. We've started to see some
indication that we are back on a growth path with both of these
countries, with a strong brand position and futures orders going into
the holiday season. We're not prepared to declare victory here yet, but
we're very encouraged by the trend lines that we're seeing.

Four of the last five years, this region delivered consistent growth in
revenues, margins, and profits, despite the significant negative impact
of a weaker euro. In 2003 we finally began to feel the full impact of
all that growth, as the euro turned in our favor. For fiscal year '04,
Europe remains an integral piece of our corporate growth strategy as we
continue to build our business and face a more favorable currency
environment.

Americas

In the Americas region, it's amazing what a little economic stability
can bring: very good results this quarter and for the entire fiscal
year, with growth from Mexico, Brazil, and Argentina. The "Mi Futbol"
campaign that we talked about earlier and the signing of the Mexican
national team have really energized the marketplace there, and we have
been very pleased with the efforts of our Argentine team and their
ability to recapture some of the losses incurred last year during that
country's severe political crisis.

USA

Finally, that brings us back to the USA. Many of the issues I mentioned
earlier were issues that we of course encountered here at home.
Nonetheless, the USA team had what was arguably one of the most
difficult yet successful years in our entire history, achieving its
highest pretax results ever. They have done an impressive job executing
our distribution realignment strategy, building a sustainable long-term
business model, and most importantly focusing on profitability and
execution.

THE STAGE FOR '04

Futures

Last quarter we told you we expected to see some improvement in our U.S.
futures going into the holiday season, and in fact they have not
improved. Our business levels with Foot Locker have not stabilized as we
expected, and we continue to see a downtrend in our numbers with them.
In addition, the value segment of the market is also suffering from some
softness. While we are in very good shape with all of our value partners
from an inventory position, we had anticipated a little stronger futures
orders going into the holiday booking period. This softness in the
segment is due largely to a significant inventory of other vendors'
products and is inhibiting our projected growth forecasts for the short
term. We feel good about our own inventory levels and we believe that
the current environment plays to our strengths long term.

As we look forward to fiscal year '04, our futures numbers are not as
strong as we'd like it to be in the U.S. But remember, that was before
the signings of LeBron, Carmelo, and Kobe. The basketball category
hasn't had this much excitement since we saw Michael Jordan, Magic
Johnson, and Larry Bird in the NBA, and now we have the top three
stories for the foreseeable future. The second half will see prominent
ad campaigns, and more importantly product introductions that will lead
the basketball category and energize this industry.

Footwear Strategy

We've talked a lot over the last nine months about our U.S. footwear
distribution strategy and the decision to redirect our prioritization
and distribution of high-end footwear product. We are extremely pleased
with the progress and results we've seen within both the athletic
specialty and sporting goods channels. It is creating confidence in the
industry, and our business is as healthy and profitable as it's been for
some time, with products like the Shox NZ and Air Force 1, performance
apparel and accessories, and our licensed business all performing very
well. We are optimistic about the U.S. market and are confident in our
direction and execution. We feel very good about the improving
profitability and presentation of our business here in the USA.


Progress in Golf

Golf is going to be the last area I'll comment on today. We're very
pleased with our progress and market share improvement over the last
couple of years, but this year was not our best in terms of
profitability. We were a little too aggressive in a downtrending market
and performed poorly in terms of overall financial results. That said
we're very enthusiastic about the upcoming year. Tiger has launched his
new four-piece ball with better than expected results, a strong apparel
and footwear business continues, and some new club innovations that will
be introduced in the spring give us great confidence about our position
long term.

Looking Back

By now, our satisfaction with fiscal year 2003 performance is probably
evident. We are extremely pleased and excited about our results. Over
eighteen months ago we had talked about what we saw then as a very
challenging road ahead, and that was without all the surprises thrown
in. We've demonstrated our ability to execute the vision we laid out
just over two years ago. We have talked about this company in terms of
becoming a great global company, no longer dependent on just the U.S.
footwear business. Our international business exceeded the domestic
business for the first time in our history, and it's just a start.

Looking Forward

Fiscal year '04 will bring us the Women's World Cup, Lance Armstrong and
his fifth attempt at the Tour de France, the World Track & Field
Championships, the World Swimming Championships where we'll launch Nike
Swimwear, Rugby World Cup, the International Football Tour that Mark
mentioned this summer, along with the countless annual competitions
around the world. It will also be a run-up to an exciting summer next
year with the Athens Olympics, and the European Football Championships
hosted by the Nike sponsored Portugal national team. We have a strong
experienced management team in place, and great people throughout the
world committed to growing the Nike business. This year has been a
challenging but rewarding one. Next year should be flat-out fun!

With that, we'll open it up for questions.


QUESTION AND ANSWER SESSION

Robert Drbul with Lehman Brothers: Good afternoon. Got to start with the
U.S. futures number. Can you elaborate a little bit more
maybe around if you have any major cancellations? Can you
maybe give us some numbers on channel, maybe some numbers
ex-Foot Locker, and give us an idea of sort of footwear
versus apparel on the U.S. futures?

Denson: Hi, Bob. I'll take a couple whacks at the information and
then some of it we'll have to get back to you on in a more
detailed perspective I think. Let's start with just footwear
and apparel first. Relatively the same level of disappoint-
ment in both footwear and apparel, so the numbers are pretty
equal with respect to the percentages that were released. I
think overall ex-Foot Locker our business is still up in the
U.S. marketplace. I don't have the specific number in front
of me, but we feel pretty confident about where we're going
still. I think we had expected to see a little bit more of a
turnaround for holiday and are a little bit disappointed
with this. But overall we still look at the U.S. numbers for
the year being up 2% in units and flat on total gross
profit, and feel very comfortable with where we're headed
and our ability to execute the numbers going forward.

Drbul: Then the second question, Don, on the other income line, the
$31 million. What we've seen in terms of the trend, that
number's higher than we've seen in the last few quarters, a
little bit higher. Can you discuss that? What should we
expect going forward on that line now from a currency
perspective?

Blair: Let me answer the question by talking more broadly about
currency, Bob, because you can't just look at one line item
in the P&L. Just to bring you up to date, as you recall we
hedge a lot of our exposures in advance, which means that we
sometimes will take a loss on hedging instruments. That
shows up in the other income and expense line, but that's
balanced by benefits up in the top of the P&L through
translation of better results. So the net impact, which we
talked about, for the year was about $13 million of positive
benefit from translation year over year in fiscal '03. You
can't just look at that other income and expense line.
Really in terms of a net position, it was a little bit of an
upside for us in '03 and we're expecting it to be a little
bit more of an upside in '04. But that one line will be a
reflection of the impact of our hedging instruments.

Drbul: Without risking prosecution, I'll turn it back to you.


Virginia S. Genereux with Merrill Lynch & Co.: Can you all say-you used
to elaborate a little bit I think on, you would say I think
lastly-this was a couple years ago that two-thirds of our
business was in futures. Can you say how much of your
business now is not reflected in futures, and can you
elaborate by region, if possible? That's one.

Blair: Overall, Virginia, about 25% of our business at this point
is not on futures, and I would not be able to elaborate on
that by region.

Denson: Virginia, it is a seasonal number that will vary from season
to season as well obviously.

Genereux: Then let me ask you all too secondly. Are you saying
compares you think will be easier in the back half of fiscal
'04, and that's where you expect more of the growth, the
earnings growth? Won't you be spending more then maybe
against European Soccer Championships and the Olympics? Then
I was feeling like this year for May you have the easier
World Cup spend compares in May and August. Would you might
be needing to spend more as you head into next summer?

Blair: There will be some demand creation starting at the very end
of this fiscal year, but most of that, Virginia, is going to
fall into the next fiscal year. So it's really not that
significant an impact in fiscal '04 for the Olympics and the
European Championships. The biggest impact really on the
front half/back half comparisons has to do with the revenue
line. The two biggest components of that are that our U.S.
distribution activities are going to have the most
significant overlap period in the first half, so we're up
against tougher comparisons in the first half in the U.S.
footwear business. Then the second element is the European
supply chain implementation in fiscal '03 in which we pulled
revenue forward from Q3 into Q2. So our toughest revenue
comparisons are in the first half. We think that's going to
get easier in the second half, and that's why the profits
will fall out that way.

Genereux: Okay. Thanks a lot.


Jeffrey B. Edelman with UBS Warburg: I wondered if you could talk a
little bit about the average price per unit in the futures
over the next six months. Is this showing any improvement or
stabilization?

Parker: Yeah. I'll respond to that question. Actually during the
futures period we're seeing the average price stabilize. In
fact at the back half of the futures period we're seeing
some signs of average price coming back up again, in the USA
particularly. Then average price has definitely been on the
higher side outside the U.S. But in the USA we're seeing
stabilization and in fact improvement again as you look
toward the latter half of that six-month futures period.

Edelman: Then secondly, a lot of the retailers have been very
enthusiastic about the Shox at $99. I guess more out of
curiosity, have you been able to maintain the margin on
this? Have you been able to take costs out of the product
or is this a different product than what you initiated with
originally to be able to bring the price down so much?

Parker: Performance-wise, we haven't compromised the product. As we
mentioned in the prepared remarks, we've made a major effort
to better manage our product costs. We've seen some good
reduction on product costs that have helped the margin, and
Shox is a good example of that. The technology is real
authentic Shox technology, but it's really the pricing there
is really a factor of really watching the product costs and
working with our factories to get the price down there
without affecting our margins.

Edelman: Okay, thank you.


Brian McGough with Morgan Stanley: I have a couple questions. One is
that there's been a lot of chatter out there recently as it
relates to a shift over to brown shoe. I think it's way
overdone personally, but I was hoping you could give us your
take on what the incremental changes have been out there on
the margin in the footwear space and how that might be
impacting your orders. Then secondly, as you mentioned, you
endorsed a couple of high-profile athletes this past
quarter. I'm wondering which of them were actually fourth
quarter events to the SG&A line and which are first quarter
events. Were there any kind of upfront payments that we saw
in this past quarter's number?

Parker: Let me take the brown shoe part. We've heard some of the
chatter as well and I also feel, would agree that it's
overstated. In fact we're not seeing this trend, this shift.
There is a shift, as you well know, towards this more active
lifestyle, sport-influenced active lifestyle product, and we
feel we're well positioned to take advantage of that trend.
In fact, that trend is influencing some of what we're doing
on the performance side. As I mentioned, we see a great
relationship between performance and active life, but we
don't see any major shift towards "brown shoe." It's really
more of a continued excitement around the active life
retro/classic type product. As you know, this is one of the
fastest-growing segments of the industry and as well for Nike.

Blair: Brian, as far as the sports marketing commitments, there
wasn't any impact in fourth quarter.

McGough: Are there any kind of upfront, kind of one-time payments to
start these contracts off that we might see in 1Q?

Blair: First of all, we don't talk about individual contracts. But
our accounting for sports marketing contracts normally would
spread the cost of the contract over the life of the
contract. Unless it was an unusual circumstance, you
wouldn't see a big upfront plug.

McGough: Good. Okay thanks, Don.


John T. Shanley with Wells Fargo Securities: Good afternoon. Charlie,
I wonder if you could clarify your comments on the U.S.
futures a little bit more for us. Were the U.S. futures
excluding Foot Locker down in the 10% range or were they
considerably better than that? Also, what's happening with
apparel? I thought that has been one of your growth
strategies. Is there something going on in terms of a
fashion shift or something that's causing retailers to shy
away from placing orders of the magnitude you just described
to us? I wonder if you can just give us that, and I've got
one other follow-up question.

Denson: Okay yeah, John. In fact I think I might have said
something. But the futures orders ex-Foot Locker were up I
think 3% or 4%. We'd have to double-check the number, but we
were up. Again, one of the reasons why we feel confident
with our distribution policy and where we're headed is both
the results from this year, the profitability of the
business and the improvement in our presentation at retail
and the overall improvement of our profitability in the
brand throughout the industry. We're also starting to see an
average price increase I think, as Mark alluded to earlier.
So we feel really good about the health of our U.S. footwear
business.

I think that with respect to your question around apparel,
we are a little disappointed with our apparel futures. I
think two reasons. The first one is probably a cause of our
own delivery issues that we've talked about over the last
two calls. We feel very confident that we've got them fixed.
But I think as you know, the retailers are going to want to
see that first before they believe us. I think we're going
to be able to satisfy that curiosity and we're really
looking forward to the second half of the year with respect
to apparel. Then I think some of the pieces, some of the
different categories within the apparel line admittedly we
may not have been as strong as we've wanted to be. We've
just come out of sales meetings for the spring time period
and are feeling very confident about our apparel business
going forward.


Shanley: So it's more internal rather than seeing a shift within the
overall market for athletic apparel. Is that correct?

Denson: Yeah, I think so. That's the way I feel about it certainly
and I think Mindy Grossman and our apparel division here in
the U.S. certainly would reflect that attitude as well.

Shanley: Okay, great. Then Charlie, you gave us the numbers on what's
happening in a couple of the European countries. I wonder if
you could talk about some of the three big guys. What's
going on in Germany, U.K., and Italy? Are you gaining,
holding your own, or what's happening there in terms of
marketing position?

Denson: I'd say from a share position we're holding our own. We're
seeing some deflationary numbers coming out of the entire
U.K. market. We've got some retail consolidation that
continues to go on. The JD merger with First Sport I think
is still working itself out. JJB is working their issues out
as well with their own inventory problems. So we've seen a
little bit of consolidation there. So from a share
standpoint, we feel pretty confident that we're maintaining
and in fact some cases even gaining share despite the loss
of some of the revenue growth. It's been a great growth
market for us for many, many years, as you well know. We
think that's starting to subside and stabilize. Like I said
in my prepared remarks, we're starting to see some first
indications from a positive standpoint that are making us
feel better. Italy, we're starting to feel a lot better
about and are actually starting to see a pretty strong trend
line on our Italian futures and feel like we've got
ourselves back in the right position with respect to our
product line to be much more competitive in the Italian
market. So I'm pretty excited about Italy right now going forward.

Shanley: And Germany?

Denson: And Germany, we're holding our own. It's the competition's
backyard. They outnumber us about five to one. We're playing
a pretty good game there. We're not losing any share. It's
not growing right now the way we think it can ultimately
long term. We're looking forward to World Cup '06, and
Germany will certainly be the battleground, as we get closer
to that World Cup tournament.

Shanley: Super. Thanks a lot. Appreciate it.


Margaret M. Mager with Goldman Sachs & Co.: Good '03, but it's always
what do you do for me tomorrow, right? My questions are a
couple things. First of all, I guess I kind of have three,
but maybe you can answer them really fast. One is what
should we be thinking about U.S. growth in the first half? I
know you have the outlet stores that can offset the futures
orders, so should we be thinking down mid single digit for
the U.S.? Then you're obviously making that up
internationally. With regard to your rollout plans for your
new endorsement athletes, Mark or Charlie, one of you
alluded to the fact that they're not in the futures orders
yet. What are the rollout plans there and could they impact
the holiday futures orders next time you report? With regard
to one other comment you made on the value channel being
oversupplied, excess inventory, not Nike, can you elaborate
on that? First of all, what kind of customers are we talking
about, Kohl's and Penney? Just help us understand the excess
inventory comment.

Blair: Let me speak first to the futures and the revenue trends,
Margaret. I'd rather not get into this with specific
business units. There's a lot of volatility if you look at
it that way. But I think generally with respect to the
overall futures number of 4.4%, we would expect that
revenues would be in the mid single digit. A couple of the
things that are driving some differences there: Last year in
the first and second quarter, particularly the second
quarter, we had some delivery issues, which we've talked
about quite a bit, and we also had some related to port
strikes. So as a result of that we had some fairly high
cancellation numbers last year versus what we would
certainly expect to see this year. So I think we'll get a
little bit of a benefit, a little bit of a pickup there on
revenue, but I think mid single digits is probably where
we'll be on revenue in the first half. As I say,
cancellations is one of the big differences between futures
and revenue.

Denson: Margaret, congratulations on asking three questions in the
space of one and avoiding Ms. Catlett's wrath.

Catlett: No, no, no. I want to tell all of Margaret's competitors
that she will be punished.

Mager: I thought maybe you could answer them really fast. If you
talk really fast, we can get more done.

Denson: All right. I think for the sports marketing impact, because
of the timing of the signings and obviously with the draft
tonight, it appears to be that we know where most of the
players will be beginning this season. But we will really
look to the second half of the year to unveil some of the
product work and the advertising work that we're working on
right now. So I don't anticipate seeing any impact on the
first half of the year.

With respect to the value discussion, it's really the
Kohl's, the J.C. Penney, the Sears of the world where
consumer spending has affected their overall inventory
levels a little bit. We're seeing that impacting us with
respect to our futures orders and our discussions with them
overall. As I said, though, we feel very good about our
inventory levels. Obviously we talked about this in the
past. We have not been up a high percentage with this group
over the last couple of years, so we do not have a lot of
exposure here, but it is inhibiting some of our growth plans
going forward.

Mager: Are you saying it's athletic inventory that's piling up or
is it just inventory in general, so retailers have to make
trade-offs in their open-to-buy. It could be completely not
related to athletic.

Denson: I think it's a little bit of both.

Mager: That's helpful. Thank you.


Noelle V. Grainger with JPMorgan Chase: I'll behave. Two questions. The
first is on your relationship with Foot Locker. I guess
maybe relative to your expectation coming into the period,
what's changed? What's your perspective now in terms of when
do you feel like this business stabilizes? I'll leave it up
to you in terms of how much you might want to quantify it.
That's my first question.

Denson: Hi, Noelle. Really nothing's changed. We're status quo. As
we've said time and time again, I think it's not really a
Foot Locker conversation. In a broader sense it's a U.S.
distribution strategy shift. I would just reiterate with our
comfort levels with both brand momentum and presentation in
the marketplace. Coupled with the overall profitability of
the U.S. business that we're seeing, we're very comfortable
with where we're going.

Grainger: What you're saying is that your business is continuing to
decline with them, right?

Denson: It is right now, at least that's what we're seeing compared
to what we anticipated right now.

Grainger: Is there any visibility on the horizon that it is going to
stabilize?

Denson: Well not really any visibility other than we are in ongoing
conversations with them all the time. We certainly haven't
accepted any futures orders for spring yet, so we aren't
anticipating anything any further than that.

Grainger: My second question is also related to the futures. Is there
any significant change in the savings of the U.S. futures
growth over the course of the period? Did it actually
decelerate?

Blair: Yes. The first quarter growth is actually a touch higher
than the second quarter.

Grainger: What about on an ex-Foot Locker basis?

Blair: Don't have that number.

Catlett: Yeah, couldn't say.

Grainger: All right. Thanks a lot.


Robby Ohmes with Banc of America Securities: Actually just two
follow-ups on questions other people asked, the first one
a follow-up on Brian's question. Can you just comment on
demand creation expense for fiscal '04 and how it should
trend versus '03 in relation to the endorsement agreements
that you guys have signed and whether there will be offsets
on other things in marketing expense to keep it at a certain
level as a percent of sales? Then the other question, I'm
still a little confused on the apparel futures. I kind of
understand the footwear futures with Foot Locker, but can
you tell us a little bit more about apparel and the timing
of when you think those futures orders should improve on a
relative basis to what you guys have just put out today?

Blair: With respect to the demand creation, Robby, the way we look
at this is we've pretty consistently spent around 11%, a
little under that, over the last several years on demand
creation, and that's pretty much where we expect it to be
going forward. These new signings are not-you should not
look at these as add-ons to the rest of the demand creation
spend. I think what we've done pretty well over the last
several years is really deploy our demand creation spending
against the growth initiatives that are driving the
business. So for example, football in international zones is
where we've deployed it historically and we're heavying up a
little bit now on basketball because we have some exciting
prospects there.

Denson: Hi, Robby. The other thing, I'll just take the apparel
futures. I think, as I said before, we're excited about the
spring line. We know we've got our delivery issues addressed
and we're already seeing an improved delivery environment
right now for the retailers here in the U.S. We think both
of those impacts or factors will take effect for spring, and
we're pretty confident for spring apparel futures right now.
Trying to quantify it is a tough thing to do, just like we
talked about the Foot Locker numbers. We don't have any real
visibility into that just yet.

Ohmes: And there was no link between the futures disappointment in
footwear and the futures disappointment in apparel?

Denson: No, I don't think so.

Ohmes: So just two totally separate issues.

Denson: Yes.

Ohmes: All right, great. Thanks a lot, guys.


Dennis S. Rosenberg with Credit Suisse First Boston: Hi, guys. First
question. I assume when you were talking about mid
single-digit growth in the first half you're talking about
company-wide, not the U.S. If that is the case, why should
we not be concerned about a 4% increase in U.S. inventories
going into a period of likely lower sales?

Blair: Well first of all I am talking about corporate revenue
numbers in the mid single digits. With respect to the
inventory, the point that I made earlier is that we made a
conscious decision this year to accelerate the delivery of
fall product. That's really been touched on a couple of
times on the call today. Last year we didn't deliver
particularly well, with the combination of the port strike
and some of the issues around apparel sourcing. So as a
result, we made a decision that we were going to deliver
better this year and we pulled in the fall product a little
bit earlier. If you look at our inventory levels in the
U.S., a significantly larger portion of the inventory is
fall product as opposed to spring or summer product. We're
not concerned about the freshness of the inventory. It just
was a decision made to serve our customers better.

Rosenberg: You commented about mid single-digit top line in the first
half. What can we expect in terms of margin comparisons in
the first half?

Blair: I think that we're going to get some benefit from the euro.
We do have some currencies that are actually on the negative
side of the ledger, but obviously not as large as the euro,
so we do expect some benefit there. I think that as Mark
talked about, we've done some real good things on the
fundamental product side of the equation, which I think
should also boost margins. So I expect them to be better in
'04 than in '03, and I think the first couple of quarters
will be true of that as well.

Rosenberg: Does that include improved operating expense ratios or are
you just talking about the gross margin?

Blair: I'm talking about the gross margin.

Rosenberg: What about SG&A?

Blair: Well at this point, Dennis, I'm not sure exactly how that's
going to fall out. I think for the full year, as I said, we
expect to get leverage out of the year, but at this point
I'd rather not give you a number for the first couple of
quarters.

Rosenberg: Let me simplify it then; it's still the same question. Do
you expect first and second quarter earnings to be up year
over year?

Blair: Yes, I do.

Rosenberg: Okay, Thank you.


PAMELA CATLETT

Thank you, everyone. We will talk to you soon.