net investment in working capital increased $43.2 million as compared to an increase of $13.0 million in fiscal 2005. This increased investment in working capital was largely attributable to a larger increase in inventories and prepaid expenses and other current assets, partially offset by increases in accounts payable and accrued liabilities. The increase in inventories reflects higher in-transit inventories (due primarily to growth in reported futures and other orders, and earlier product ordering compared to last year) and higher inventories to support the expansion of NIKE-owned retail stores. Prepaid expenses and other current assets increased in fiscal 2006 compared to a decrease in the prior year, primarily due to the timing of payments, including earlier payments of income taxes in certain foreign locations. The increase in accounts payable and accrued liabilities is primarily due to the timing of payments and inventory receipts compared to the prior year.

Cash used by investing activities during fiscal 2006 was $1.3 billion, compared to $360.4 million invested during fiscal 2005. The increase over the prior year was primarily due to a higher net increase in short-term investments (purchases net of maturities), which increased from $35.3 million in fiscal 2005 to $909.9 million in fiscal 2006, and increased net additions to property, plant and equipment. The additions to property, plant and equipment primarily reflect capital expenditures on computer equipment and software (to support both normal business operations and our supply chain systems upgrade), and continued investment in NIKE-owned retail stores.

In fiscal 2006, we purchased approximately 9.5 million shares of NIKE’s Class B Common Stock for $781.2 million. The share repurchases were part of a four-year, $1.5 billion share repurchase program that was approved by the Board of Directors in June 2004. Since the inception of this program, we have repurchased 16.4 million shares, at a total cost of $1.3 billion. In June 2006, the Board of Directors approved a new four-year, $3.0 billion share repurchase program, to commence upon completion of the $1.5 billion share repurchase program. We expect to fund share repurchases from operating cash flow, excess cash, and/or debt. The timing and the ultimate amount of shares purchased under the programs will be dictated by our capital needs and stock market conditions.

Dividends declared per share of common stock for fiscal 2006 were $1.18, compared to $0.95 in fiscal 2005. We have paid a dividend every quarter since February 1984. Our current dividend policy is to provide an annual dividend equal to 20% to 30% of the trailing twelve-months’ earnings per share, paid out on a quarterly basis. We review our dividend policy from time to time, and based upon current projected earnings and cash flow requirements, we anticipate continuing to pay a quarterly dividend in the foreseeable future.

Off-Balance Sheet Arrangements

In connection with various contracts and agreements, we provide routine indemnifications relating to the enforceability of intellectual property rights, coverage for legal issues that arise and other items that fall