adidas Group: First Half Year 2008 Results

Second quarter adidas Group currency-neutral sales grow 14%

   During the second quarter of 2008, Group revenues grew 14% on a
currency-neutral basis. All brand segments contributed to this
development with currency-neutral sales increasing 19% at adidas, 2%
at Reebok and 6% at TaylorMade-adidas Golf. Currency movements
negatively impacted Group sales in euro terms. Group revenues grew 5%
in euro terms to EUR 2.521 billion in the second quarter of 2008 from
EUR 2.400 billion in 2007.

   Second quarter EPS increases 15%

   The Group's gross margin increased 2.7 percentage points to a new
record level of 50.1% (2007: 47.4%) in the second quarter as a result
of an improving regional and product mix, further own-retail expansion
and favorable currency movements. Group gross profit increased 11% to
EUR  1.263 billion (2007: EUR  1.138 billion). As a result of the
strong gross margin increase in all brand segments and operating
profit growth in the HQ/Consolidation segment, the Group's operating
margin increased 0.4 percentage points to 8.2% in the second quarter
of 2008 versus 7.8% in the prior year. These effects more than offset
higher operating expenses as a percentage of sales primarily as a
result of the phasing of this year's marketing expenses in the adidas
segment. Operating profit grew 10% to EUR  208 million versus EUR
 188 million in 2007. In the second quarter of 2008, the Group's net
income attributable to shareholders increased 12% to EUR  116 million
(2007: EUR  104 million) due to the higher operating profit as well as
a lower tax rate. As a result of the lower weighted average number of
shares due to the share buyback program, earnings per share increased
at an even stronger rate. Basic EPS for the second quarter grew 15% to
EUR 0.59.

   adidas Group currency-neutral sales grow 12% in the first half of
2008

   During the first six months of 2008, Group revenues increased 12%
on a currency-neutral basis, driven by double-digit sales growth in
the adidas and TaylorMade-adidas Golf segments. The adidas segment
grew 16%, the Reebok segment decreased 2% and TaylorMade-adidas Golf
segment sales increased 11%. Currency movements negatively impacted
Group sales in euro terms. Group revenues grew 4% in euro terms to EUR
5.142 billion in the first half of 2008 from EUR 4.938 billion in
2007.

   "We are proud to report a strong set of financial results for the
first half of 2008. Our performance is nothing short of exceptional,
particularly in light of the tougher macroeconomic environment,"
commented adidas CEO and Chairman Herbert Hainer. "adidas and
TaylorMade-adidas Golf continue to show strong momentum and we have
laid the foundation at Reebok for continued improvement in the second
half of the year."

-0-
*T
                                1st Half  1st Half  Change Change y-
                                  Year      Year     y-o-y    o-y
                                   2008      2007     in    currency-
                                                     euro    neutral
                                                     terms
                                -------------------------------------
                                EUR  in   EUR  in    in %     in %
                                 millions  millions
---------------------------------------------------------------------
adidas                              3,787     3,454    10         16
---------------------------------------------------------------------
Reebok                                923     1,038   (11)        (2)
---------------------------------------------------------------------
TaylorMade-adidas Golf                417       419    (0)        11
---------------------------------------------------------------------
HQ/Consolidation                       16        28   (44)       (38)
---------------------------------------------------------------------
Total                               5,142     4,938     4         12
---------------------------------------------------------------------

First half year net sales growth by segment
*T

   Strong sales increase in nearly all regions

   adidas Group sales grew at double-digit rates in all regions
except North America where revenues declined. First half Group sales
in Europe grew 16% on a currency-neutral basis as a result of strong
increases in nearly all countries. In North America, Group revenues
declined by 8% on a currency-neutral basis due to lower adidas and
Reebok sales in the USA. Sales for the Group in Asia increased 25% on
a currency-neutral basis in the first half of 2008, driven by
particularly strong growth in China. In Latin America,
currency-neutral sales grew 29% in the first half of the year, with
double-digit increases coming from all of the region's major markets.
The development was supported by the first-time consolidation of
Reebok's joint ventures in the region. Currency translation effects
negatively impacted sales in euro terms in all regions. Sales in
Europe increased 11% in euro terms to EUR 2.352 billion in 2008 from
EUR 2.116 billion in 2007. Revenues in North America decreased 19% to
EUR 1.160 billion in 2008 from EUR 1.429 billion in the prior year. In
euro terms, revenues in Asia grew 17% to EUR 1.214 billion in 2008
from EUR  1.036 billion in 2007. Sales in Latin America grew 23% to
EUR 381 million in 2008 from EUR 310 million in the prior year.

-0-
*T
                                1st Half  1st Half  Change Change y-
                                  Year      Year     y-o-y    o-y
                                   2008      2007     in    currency-
                                                     euro    neutral
                                                     terms
                                -------------------------------------
                                EUR  in   EUR  in    in %     in %
                                 millions  millions
---------------------------------------------------------------------
Europe                              2,352     2,116    11         16
---------------------------------------------------------------------
North America                       1,160     1,429   (19)        (8)
---------------------------------------------------------------------
Asia                                1,214     1,036    17         25
---------------------------------------------------------------------
Latin America                         381       310    23         29
---------------------------------------------------------------------
Total(1)                            5,142     4,938     4         12
---------------------------------------------------------------------

First half year net sales growth by region

(1) Including HQ/Consolidation.
*T

   Record group gross margin

   The gross margin of the adidas Group increased by 2.5 percentage
points to 49.6% of sales in the first half of 2008 (2007: 47.1%),
driven by improvements in all brand segments. This highest-ever first
half year rate was related to an improving regional and product mix,
increased own-retail activities as well as favorable currency
movements. Cost synergies resulting from the Reebok integration into
the adidas Group also continued to have a positive impact. Input price
increases had only a modest negative impact on the cost of sales
development in the first half of 2008. As a result of the Group's
strong top-line growth and gross margin improvement, gross profit for
the adidas Group rose 10% in the first half of 2008 to reach EUR 2.552
billion versus EUR 2.326 billion in the prior year.

   Operating margin increases by 1.1 percentage points

   The Group's operating margin increased 1.1 percentage points to
9.5% in the first half of 2008 (2007: 8.5%). This is the highest first
half operating margin since the acquisition of Reebok. Operating
expenses as a percentage of sales increased by 1.3 percentage points
to 40.9% in the first half of 2008 from 39.6% in 2007. This
development was primarily driven by higher marketing expenses as a
percentage of sales in the adidas segment in connection with this
year's major sporting events. Increased expenses to support growth in
emerging markets such as Russia in both the adidas and Reebok segments
also impacted this development. Operating profit for the adidas Group
increased 17% in the first half of 2008 to reach EUR 490 million
versus EUR  417 million in 2007.

   Net financial expenses decrease 3%

   Net financial expenses decreased 3% to EUR 71 million in the first
half of 2008 from EUR 73 million in the prior year as a result of
lower average borrowings in 2008 compared to the first half of the
prior year.

   Income before taxes increases by 22%

   As a result of the Group's operating margin increase as well as
lower net financial expenses, income before taxes (IBT) as a
percentage of sales increased by 1.2 percentage points to 8.1% in 2008
from 7.0% in 2007. Income before taxes for the adidas Group grew 22%
to EUR 419 million in the first half of 2008 from EUR 344 million in
2007.

   Net income attributable to shareholders up 23%

   The Group's net income attributable to shareholders increased 23%
to EUR  286 million in the first half of 2008 from EUR 232 million in
2007. The Group's tax rate decreased by 0.5 percentage points to 31.5%
in the first half of 2008 (2007: 32.0%) and thus also contributed to
this development. The Group's minority interests declined by 16% to
EUR 1 million in the first half of 2008 from EUR 2 million during the
same period in the prior year.

   Earnings per share increase 25%

   Basic earnings per share increased 25% to EUR 1.42 in the first
half of 2008 versus EUR 1.14 in the prior year. The weighted average
number of shares used in the calculation of basic earnings per share
was 200,415,758 (2007 average: 203,565,047). Diluted earnings per
share in 2008 increased 24% to EUR 1.35 from EUR 1.09 in the prior
year. The weighted average number of shares used in the calculation of
diluted earnings per share was 216,211,434 (2007 average:
219,446,886).

   3.3 million shares repurchased in the second quarter

   On January 29, 2008, adidas AG announced the launch of a share
buyback program to repurchase up to 5% of the company's stock capital
until November 2008. During the second quarter, adidas AG purchased
over 3.3 million shares at an average price of EUR 41.99. The buyback
volume amounted to EUR 139 million in the second quarter. Over the
entire buyback period, since January 30 to date, adidas AG bought back
almost 7.7 million shares at an average price of EUR 41.35. The total
buyback volume amounted to EUR  318 million.

   Working capital development supports further growth

   Group inventories grew 5% to EUR 1.806 billion at the end of the
first half of 2008 versus EUR 1.716 billion in 2007. On a
currency-neutral basis, this represents an increase of 16%. This
development is due to business expansion in emerging markets and
inventories related to the newly established Reebok joint ventures in
Latin America. Group receivables decreased 3% to EUR 1.641 billion at
the end of the first half of 2008 versus EUR 1.689 billion in the
prior year. On a currency-neutral basis, receivables increased 5%,
which is well below net sales growth for the second quarter. This
reflects ongoing strict discipline in the Group's trade terms
management and concerted collection efforts in all segments.

   Net borrowings reduced by EUR 134 million

   Net borrowings at June 30, 2008 were EUR 2.260 billion, down 6% or
EUR  134 million versus EUR 2.395 billion in the prior year. Strong
bottom-line profitability and currency effects positively impacted
this development and more than offset cash outflows related to the
share buyback program.

   adidas backlogs grow 8% on a currency-neutral basis

   Backlogs for the adidas brand at the end of the second quarter of
2008 increased 8% versus the prior year on a currency-neutral basis.
This improvement was supported by adidas' strength in most major
categories. In euro terms, adidas backlogs grew 1%. Footwear backlogs
grew 9% in currency-neutral terms (+2% in euros) with increases in all
regions. Apparel backlogs grew 9% on a currency-neutral basis (+2% in
euros), driven by strong double-digit increases in Asia and
high-single-digit growth in Europe. Hardware backlogs decreased due to
the non-recurrence of prior year orders related to the UEFA EURO
2008(TM).

-0-
*T
                            Footwear       Apparel        Total(2)
                        ---------------------------------------------
                         in   currency- in   currency- in   currency-
                          EUR  neutral   EUR  neutral   EUR  neutral
---------------------------------------------------------------------
Europe                     1          5   2         7    0          4
---------------------------------------------------------------------
North America             (9)         6 (23)      (10) (14)         0
---------------------------------------------------------------------
Asia                      14         21  17        25   13         21
---------------------------------------------------------------------
Total                      2          9   2         9    1          8
---------------------------------------------------------------------

Year-over-year development of adidas order backlogs by product
 category and region as at June 30, 2008
(in %)

(2) Includes hardware backlogs.
*T

   Reebok backlogs decline

   Currency-neutral Reebok backlogs at the end of the second quarter
of 2008 decreased 13% versus the prior year on a currency-neutral
basis. In euro terms, this represents a decline of 21%. Footwear
backlogs decreased 13% in currency-neutral terms (-21% in euros).
Apparel backlogs declined by 20% on a currency-neutral basis (-28% in
euros). Both of these developments reflect the short-term impact of
strategic initiatives to revitalize the Reebok brand in the USA, the
UK and Japan. Hardware backlogs were up at a double-digit rate due to
increases in the hockey category. Due to the exclusion of the
own-retail business and the high share of at-once business in Reebok's
sales mix, order backlogs in this segment are not indicative of the
expected 2008 sales development.

-0-
*T
                            Footwear       Apparel        Total(3)
                        ---------------------------------------------
                         in   currency- in   currency- in   currency-
                          EUR  neutral   EUR  neutral   EUR  neutral
---------------------------------------------------------------------
Europe                   (13)       (9) (27)      (22) (15)      (10)
---------------------------------------------------------------------
North America            (39)      (29) (32)      (21) (32)      (21)
---------------------------------------------------------------------
Asia                        2         8  (1)         3    1         6
---------------------------------------------------------------------
Total                    (21)      (13) (28)      (20) (21)      (13)
---------------------------------------------------------------------

Year-over-year development of Reebok order backlogs by product
 category and region as at June 30, 2008 (in %)

(3) Includes hardware backlogs.
*T

   Gross and operating margin full year guidance increased

   adidas Group sales in 2008 are expected to grow at a
high-single-digit rate on a currency-neutral basis. Currency-neutral
sales for brand adidas in 2008 are now forecasted to increase at a
low-double-digit rate (previously: high-single-digit rate). Sales
guidance for the Reebok and TaylorMade-adidas Golf segments remains
unchanged. Currency-neutral Reebok segment sales are projected to grow
at a mid- to high-single-digit rate in 2008. At TaylorMade-adidas
Golf, full year currency-neutral sales are forecasted to increase at a
mid-single-digit rate. As a result of the Group's strong gross margin
improvement during the first half of the year, the full year gross
margin is now expected to exceed 48.0% (previously: 47.5 to 48.0%),
driven by improvements in all three brand segments. The operating
margin is now also projected to be higher than originally forecasted.
Group operating margin is expected to approach 10.0% in 2008
(previously: at least 9.5%). Full year net income attributable to
shareholders is projected to grow by at least 15% in 2008 versus the
2007 level of EUR 551 million. This will represent the eighth
consecutive year of double-digit net income growth for the Group.

   Herbert Hainer stated: "Our performance in the first half of the
year puts us firmly on track to achieve all of our financial targets
for 2008. We even expect to exceed some of our original goals and at
the upcoming Olympic Games we are ready to showcase the power of our
brands to audiences around the world."
  
    
  
  
    
      Second quarter adidas Group currency-neutral sales grow 14%
    
    
      During the second quarter of 2008, Group revenues grew 14% on a 
      currency-neutral basis. All brand segments contributed to this 
      development with currency-neutral sales increasing 19% at adidas, 2% at 
      Reebok and 6% at TaylorMade-adidas Golf. Currency movements negatively 
      impacted Group sales in euro terms. Group revenues grew 5% in euro terms 
      to € 2.521 billion in the second quarter of 
      2008 from € 2.400 billion in 2007.
    
    
      Second quarter EPS increases 15%
    
    
      The Group’s gross margin increased 2.7 
      percentage points to a new record level of 50.1% (2007: 47.4%) in the 
      second quarter as a result of an improving regional and product mix, 
      further own-retail expansion and favorable currency movements. Group 
      gross profit increased 11% to € 1.263 
      billion (2007: € 1.138 billion). As a result 
      of the strong gross margin increase in all brand segments and operating 
      profit growth in the HQ/Consolidation segment, the Group’s 
      operating margin increased 0.4 percentage points to 8.2% in the second 
      quarter of 2008 versus 7.8% in the prior year. These effects more than 
      offset higher operating expenses as a percentage of sales primarily as a 
      result of the phasing of this year’s 
      marketing expenses in the adidas segment. Operating profit grew 10% to € 208 
      million versus € 188 million in 2007. In the 
      second quarter of 2008, the Group’s net 
      income attributable to shareholders increased 12% to € 116 million 
      (2007: € 104 million) due to the higher 
      operating profit as well as a lower tax rate. As a result of the lower 
      weighted average number of shares due to the share buyback program, 
      earnings per share increased at an even stronger rate. Basic EPS for the 
      second quarter grew 15% to € 0.59.
    
    
      adidas Group currency-neutral sales grow 12% in the first half of 2008
    
    
      During the first six months of 2008, Group revenues increased 12% on a 
      currency-neutral basis, driven by double-digit sales growth in the adidas 
      and TaylorMade-adidas Golf segments. The adidas segment 
      grew 16%, the Reebok segment decreased 2% and TaylorMade-adidas 
      Golf segment sales increased 11%. Currency movements negatively 
      impacted Group sales in euro terms. Group revenues grew 4% in euro terms 
      to € 5.142 billion in the first half of 2008 
      from € 4.938 billion in 2007.
    
    
      “We are proud to report a strong set of 
      financial results for the first half of 2008. Our performance is nothing 
      short of exceptional, particularly in light of the tougher macroeconomic 
      environment,” commented adidas CEO and 
      Chairman Herbert Hainer. “adidas and 
      TaylorMade-adidas Golf continue to show strong momentum and we have laid 
      the foundation at Reebok for continued improvement in the second half of 
      the year.”
    
    
      
        
        
        
           
        
        
          1st Half Year 2008
        
        
           
        
        
          1st Half Year 2007
        
        
           
        
        
          Change y-o-y in euro terms
        
        
           
        
        
          Change y-o-y currency-neutral
        
        
        
      
      
        
           
        
        
           
        
        
          € in millions
        
        
           
        
        
          € in millions
        
        
           
        
        
          in %
        
        
           
        
        
          in %
        
        
        
      
      
        
          adidas
        
        
           
        
        
          3,787
        
        
           
        
        
          3,454
        
        
           
        
        
          10
        
        
           
        
        
           
        
        
          16
        
        
           
        
        
        
      
      
        
          Reebok
        
        
           
        
        
          923
        
        
           
        
        
          1,038
        
        
           
        
        
          (11
        
        
          )
        
        
           
        
        
          (2
        
        
          )
        
        
        
      
      
        
          TaylorMade-adidas Golf
        
        
           
        
        
          417
        
        
           
        
        
          419
        
        
           
        
        
          (0
        
        
          )
        
        
           
        
        
          11
        
        
           
        
        
        
      
      
        
          HQ/Consolidation
        
        
           
        
        
          16
        
        
           
        
        
          28
        
        
           
        
        
          (44
        
        
          )
        
        
           
        
        
          (38
        
        
          )
        
        
        
      
      
        
          Total
        
        
           
        
        
          5,142
        
        
           
        
        
          4,938
        
        
           
        
        
          4
        
        
           
        
        
           
        
        
          12
        
        
           
        
        
        
      
      
        
        
        
        
        
        
        
           
        
        
        
        
           
        
        
        
        
        
        
           
        
        
        
        
        
        
        
      
      
        
          
            First half year net sales growth by segment
          
        
      
    
    
      Strong sales increase in nearly all regions
    
    
      adidas Group sales grew at double-digit rates in all regions except 
      North America where revenues declined. First half Group sales in Europe 
      grew 16% on a currency-neutral basis as a result of strong increases in 
      nearly all countries. In North America, Group revenues declined 
      by 8% on a currency-neutral basis due to lower adidas and Reebok sales 
      in the USA. Sales for the Group in Asia increased 25% on a 
      currency-neutral basis in the first half of 2008, driven by particularly 
      strong growth in China. In Latin America, currency-neutral sales 
      grew 29% in the first half of the year, with double-digit increases 
      coming from all of the region’s major 
      markets. The development was supported by the first-time consolidation 
      of Reebok’s joint ventures in the region. 
      Currency translation effects negatively impacted sales in euro terms in 
      all regions. Sales in Europe increased 11% in euro terms to € 
      2.352 billion in 2008 from € 2.116 billion 
      in 2007. Revenues in North America decreased 19% to € 
      1.160 billion in 2008 from € 1.429 billion 
      in the prior year. In euro terms, revenues in Asia grew 17% 
      to € 1.214 billion in 2008 from € 1.036 billion 
      in 2007. Sales in Latin America grew 23% to € 
      381 million in 2008 from € 310 million 
      in the prior year.
    
    
      
        
        
        
           
        
        
          1st Half Year 2008
        
        
           
        
        
          1st Half Year 2007
        
        
           
        
        
          Change y-o-y in euro terms
        
        
           
        
        
          Change y-o-y currency-neutral
        
        
        
      
      
        
           
        
        
           
        
        
          € in millions
        
        
           
        
        
          € in millions
        
        
           
        
        
          in %
        
        
           
        
        
          in %
        
        
        
      
      
        
          Europe
        
        
           
        
        
          2,352
        
        
           
        
        
          2,116
        
        
           
        
        
          11
        
        
           
        
        
           
        
        
          16
        
        
           
        
        
        
      
      
        
          North America
        
        
           
        
        
          1,160
        
        
           
        
        
          1,429
        
        
           
        
        
          (19
        
        
          )
        
        
           
        
        
          (8
        
        
          )
        
        
        
      
      
        
          Asia
        
        
           
        
        
          1,214
        
        
           
        
        
          1,036
        
        
           
        
        
          17
        
        
           
        
        
           
        
        
          25
        
        
           
        
        
        
      
      
        
          Latin America
        
        
           
        
        
          381
        
        
           
        
        
          310
        
        
           
        
        
          23
        
        
           
        
        
           
        
        
          29
        
        
           
        
        
        
      
      
        
          
            Total1
          
        
        
           
        
        
          5,142
        
        
           
        
        
          4,938
        
        
           
        
        
          4
        
        
           
        
        
           
        
        
          12
        
        
           
        
        
        
      
      
        
        
        
        
        
        
        
           
        
        
        
        
           
        
        
        
        
        
        
           
        
        
        
        
        
        
        
      
      
        
          
            First half year net sales growth by region
          
        
      
      
        
           
        
      
      
        
          
            1 Including HQ/Consolidation.
          
        
      
    
    
      Record group gross margin
    
    
      The gross margin of the adidas Group increased by 2.5 percentage points 
      to 49.6% of sales in the first half of 2008 (2007: 47.1%), driven by 
      improvements in all brand segments. This highest-ever first half year 
      rate was related to an improving regional and product mix, increased 
      own-retail activities as well as favorable currency movements. Cost 
      synergies resulting from the Reebok integration into the adidas Group 
      also continued to have a positive impact. Input price increases had only 
      a modest negative impact on the cost of sales development in the first 
      half of 2008. As a result of the Group’s 
      strong top-line growth and gross margin improvement, gross profit for 
      the adidas Group rose 10% in the first half of 2008 to reach € 
      2.552 billion versus € 2.326 billion in the 
      prior year.
    
    
      Operating margin increases by 1.1 percentage points
    
    
      The Group’s operating margin increased 1.1 
      percentage points to 9.5% in the first half of 2008 (2007: 8.5%). This 
      is the highest first half operating margin since the acquisition of 
      Reebok. Operating expenses as a percentage of sales increased by 1.3 
      percentage points to 40.9% in the first half of 2008 from 39.6% in 2007. 
      This development was primarily driven by higher marketing expenses as a 
      percentage of sales in the adidas segment in connection with this year’s 
      major sporting events. Increased expenses to support growth in emerging 
      markets such as Russia in both the adidas and Reebok segments also 
      impacted this development. Operating profit for the adidas Group 
      increased 17% in the first half of 2008 to reach € 
      490 million versus € 417 million in 2007.
    
    
      Net financial expenses decrease 3%
    
    
      Net financial expenses decreased 3% to € 71 
      million in the first half of 2008 from € 73 
      million in the prior year as a result of lower average borrowings in 
      2008 compared to the first half of the prior year.
    
    
      Income before taxes increases by 22%
    
    
      As a result of the Group’s operating margin 
      increase as well as lower net financial expenses, income before taxes 
      (IBT) as a percentage of sales increased by 1.2 percentage points to 
      8.1% in 2008 from 7.0% in 2007. Income before taxes for the adidas Group 
      grew 22% to € 419 million in the first half 
      of 2008 from € 344 million in 2007.
    
    
      Net income attributable to shareholders up 23%
    
    
      The Group’s net income attributable to 
      shareholders increased 23% to € 286 million 
      in the first half of 2008 from € 232 million 
      in 2007. The Group’s tax rate decreased by 
      0.5 percentage points to 31.5% in the first half of 2008 (2007: 32.0%) 
      and thus also contributed to this development. The Group’s 
      minority interests declined by 16% to € 
      1 million in the first half of 2008 from € 2 
      million during the same period in the prior year.
    
    
      Earnings per share increase 25%
    
    
      Basic earnings per share increased 25% to € 
      1.42 in the first half of 2008 versus € 1.14 
      in the prior year. The weighted average number of shares used in the 
      calculation of basic earnings per share was 200,415,758 (2007 average: 
      203,565,047). Diluted earnings per share in 2008 increased 24% to € 
      1.35 from € 1.09 in the prior year. The 
      weighted average number of shares used in the calculation of diluted 
      earnings per share was 216,211,434 (2007 average: 219,446,886).
    
    
      3.3 million shares repurchased in the second quarter
    
    
      On January 29, 2008, adidas AG announced the launch of a share buyback 
      program to repurchase up to 5% of the company’s 
      stock capital until November 2008. During the second quarter, adidas AG 
      purchased over 3.3 million shares at an average price of € 
      41.99. The buyback volume amounted to € 139 
      million in the second quarter. Over the entire buyback period, since 
      January 30 to date, adidas AG bought back almost 7.7 million shares at 
      an average price of € 41.35. The total 
      buyback volume amounted to € 318 million.
    
    
      Working capital development supports further growth
    
    
      Group inventories grew 5% to € 1.806 billion 
      at the end of the first half of 2008 versus € 
      1.716 billion in 2007. On a currency-neutral basis, this represents an 
      increase of 16%. This development is due to business expansion in 
      emerging markets and inventories related to the newly established Reebok 
      joint ventures in Latin America. Group receivables decreased 3% to € 
      1.641 billion at the end of the first half of 2008 versus € 
      1.689 billion in the prior year. On a currency-neutral basis, 
      receivables increased 5%, which is well below net sales growth for the 
      second quarter. This reflects ongoing strict discipline in the Group’s 
      trade terms management and concerted collection efforts in all segments.
    
    
      Net borrowings reduced by € 134 million
    
    
      Net borrowings at June 30, 2008 were € 2.260 
      billion, down 6% or € 134 million versus € 
      2.395 billion in the prior year. Strong bottom-line profitability and 
      currency effects positively impacted this development and more than 
      offset cash outflows related to the share buyback program.
    
    
      adidas backlogs grow 8% on a currency-neutral basis
    
    
      Backlogs for the adidas brand at the end of the second quarter of 2008 
      increased 8% versus the prior year on a currency-neutral basis. This 
      improvement was supported by adidas’ 
      strength in most major categories. In euro terms, adidas backlogs grew 
      1%. Footwear backlogs grew 9% in currency-neutral terms (+2% in euros) 
      with increases in all regions. Apparel backlogs grew 9% on a 
      currency-neutral basis (+2% in euros), driven by strong double-digit 
      increases in Asia and high-single-digit growth in Europe. Hardware 
      backlogs decreased due to the non-recurrence of prior year orders 
      related to the UEFA EURO 2008™.
    
    
      
        
        
        
           
        
        
          Footwear
        
        
           
        
        
          Apparel
        
        
           
        
        
          
            Total2
          
        
        
        
      
      
        
           
        
        
           
        
        
          in €
        
        
           
        
        
          currency-neutral
        
        
           
        
        
          in €
        
        
           
        
        
          currency-neutral
        
        
           
        
        
          in €
        
        
           
        
        
          currency-neutral
        
        
        
      
      
        
          Europe
        
        
           
        
        
          1
        
        
           
        
        
           
        
        
          5
        
        
           
        
        
          2
        
        
           
        
        
           
        
        
          7
        
        
           
        
        
           
        
        
          0
        
        
           
        
        
           
        
        
          4
        
        
        
      
      
        
          North America
        
        
           
        
        
          (9
        
        
          )
        
        
           
        
        
          6
        
        
           
        
        
          (23
        
        
          )
        
        
           
        
        
          (10
        
        
          )
        
        
           
        
        
          (14
        
        
          )
        
        
           
        
        
          0
        
        
        
      
      
        
          Asia
        
        
           
        
        
          14
        
        
           
        
        
           
        
        
          21
        
        
           
        
        
          17
        
        
           
        
        
           
        
        
          25
        
        
           
        
        
           
        
        
          13
        
        
           
        
        
           
        
        
          21
        
        
        
      
      
        
          Total
        
        
           
        
        
          2
        
        
           
        
        
           
        
        
          9
        
        
           
        
        
          2
        
        
           
        
        
           
        
        
          9
        
        
           
        
        
           
        
        
          1
        
        
           
        
        
           
        
        
          8
        
        
        
      
      
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
        
      
      
        
          
            Year-over-year development of adidas order backlogs by product 
            category and region as at June 30, 2008
          
          
            (in %)
          
        
        
        
      
      
        
        
        
           
        
      
      
        
          
            2 Includes hardware backlogs.
          
        
        
        
      
    
    
      Reebok backlogs decline
    
    
      Currency-neutral Reebok backlogs at the end of the second quarter of 
      2008 decreased 13% versus the prior year on a currency-neutral basis. In 
      euro terms, this represents a decline of 21%. Footwear backlogs 
      decreased 13% in currency-neutral terms (-21% in euros). Apparel 
      backlogs declined by 20% on a currency-neutral basis (-28% in euros). 
      Both of these developments reflect the short-term impact of strategic 
      initiatives to revitalize the Reebok brand in the USA, the UK and Japan. 
      Hardware backlogs were up at a double-digit rate due to increases in the 
      hockey category. Due to the exclusion of the own-retail business and the 
      high share of at-once business in Reebok’s 
      sales mix, order backlogs in this segment are not indicative of the 
      expected 2008 sales development.
    
    
      
        
        
        
           
        
        
          Footwear
        
        
           
        
        
          Apparel
        
        
           
        
        
          
            Total3
          
        
        
        
      
      
        
           
        
        
           
        
        
          in €
        
        
           
        
        
          currency-neutral
        
        
           
        
        
          in €
        
        
           
        
        
          currency-neutral
        
        
           
        
        
          in €
        
        
           
        
        
          currency-neutral
        
        
        
      
      
        
          Europe
        
        
           
        
        
          (13)
        
        
           
        
        
          (9)
        
        
           
        
        
          (27)
        
        
           
        
        
          (22)
        
        
           
        
        
          (15)
        
        
           
        
        
          (10)
        
        
        
      
      
        
          North America
        
        
           
        
        
          (39)
        
        
           
        
        
          (29)
        
        
           
        
        
          (32)
        
        
           
        
        
          (21)
        
        
           
        
        
          (32)
        
        
           
        
        
          (21)
        
        
        
      
      
        
          Asia
        
        
           
        
        
          2
        
        
           
        
        
          8
        
        
           
        
        
          (1)
        
        
           
        
        
          3
        
        
           
        
        
          1
        
        
           
        
        
          6
        
        
        
      
      
        
          Total
        
        
           
        
        
          (21)
        
        
           
        
        
          (13)
        
        
           
        
        
          (28)
        
        
           
        
        
          (20)
        
        
           
        
        
          (21)
        
        
           
        
        
          (13)
        
        
        
      
      
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
        
      
      
        
          
            Year-over-year development of Reebok order backlogs by product 
            category and region as at June 30, 2008 (in %)
          
          
             
          
        
        
        
      
      
        
        
        
           
        
      
      
        
          
            3 Includes hardware backlogs.
          
        
        
        
      
    
    
      Gross and operating margin full year guidance increased
    
    
      adidas Group sales in 2008 are expected to grow at a high-single-digit 
      rate on a currency-neutral basis. Currency-neutral sales for brand 
      adidas in 2008 are now forecasted to increase at a low-double-digit rate 
      (previously: high-single-digit rate). Sales guidance for the Reebok and 
      TaylorMade-adidas Golf segments remains unchanged. Currency-neutral 
      Reebok segment sales are projected to grow at a mid- to 
      high-single-digit rate in 2008. At TaylorMade-adidas Golf, full year 
      currency-neutral sales are forecasted to increase at a mid-single-digit 
      rate. As a result of the Group’s strong 
      gross margin improvement during the first half of the year, the full 
      year gross margin is now expected to exceed 48.0% (previously: 47.5 to 
      48.0%), driven by improvements in all three brand segments. The 
      operating margin is now also projected to be higher than originally 
      forecasted. Group operating margin is expected to approach 10.0% in 2008 
      (previously: at least 9.5%). Full year net income attributable to 
      shareholders is projected to grow by at least 15% in 2008 versus the 
      2007 level of € 551 million. This will 
      represent the eighth consecutive year of double-digit net income growth 
      for the Group.
    
    
      Herbert Hainer stated: “Our performance in 
      the first half of the year puts us firmly on track to achieve all of our 
      financial targets for 2008. We even expect to exceed some of our 
      original goals and at the upcoming Olympic Games we are ready to 
      showcase the power of our brands to audiences around the world.”