First Quarter Report 2009 02

2009 eport rter R t Qua Firs

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 01 - ad09Q1_En.indd adidas Group segmental information Table of Contents € in millions 03 Financial Highlights First quarter 2009 First quarter 2008 Change

04 Operational and Sporting Highlights adidas

Net sales 1,917 1,968 (2.6%) Interview with the CEO 05 Gross profit 901 964 (6.6%) Gross margin 47.0% 49.0% (2.0pp) 10 Our Share Operating profit 228 336 (32.2%) Operating margin 11.9% 17.1% (5.2pp) 12 Interim Group Management Report 12 Group Business Performance Reebok 12 — Economic and Sector Development Net sales 458 454 0.9% 13 — Income Statement Gross profit 135 168 (20.0%) Gross margin 29.4% 37.1% (7.7pp) 17 — Balance Sheet and Cash Flow Statement Operating profit (96) (13) (661.9%) 19 adidas Operating margin (20.9%) (2.8%) (18.2pp) 21 Reebok 23 TaylorMade-adidas Golf TaylorMade-adidas Golf 25 Subsequent Events and Outlook Net sales 194 191 1.6% Gross profit 77 89 (13.1%) 28 Interim Consolidated Financial Statements Gross margin 39.8% 46.6% (6.8pp) (IFRS) Operating profit (21) 23 (188.9%) 28 Consolidated Balance Sheet Operating margin (10.7%) 12.3% (23.0pp) 29 Consolidated Income Statement 30 Consolidated Statement of Comprehensive Income 31 Consolidated Statement of Changes in Equity 32 Consolidated Statement of Cash Flows 33 Notes to Interim Consolidated Financial Statements

35 Segmental Information 35 Segmental Information by Brand 36 Segmental Information by Region

37 Management Boards

38 Financial Calendar 2009

39 Contact

adidas Group First Quarter Report 2009 02

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 02 - ad09Q1_En.indd First quarter net sales Financial highlights (IFRS) € in millions

1) 2005 1,674 First quarter 2009 First quarter 2008 Change 2006 2) 2,459 Operating highlights (€ in millions) 2007 2,538 Net sales 2,577 2,621 (1.7%) 2008 2,621 Operating profit 58 282 (79.5%) Net income attributable to shareholders 5 169 (97.2%) 2009 2,577

Key ratios (%) 1) Figure reflects continuing operations as a result of the divestiture of the Salomon business segment in 2005. Gross margin 45.2% 49.1% (4.0pp) 2) Including Reebok business segment from February 1, 2006 onwards. Including Other operating expenses as a percentage of net sales 44.7% 40.0% 4.7pp Greg Norman apparel business from February 1, 2006 to November 30, 2006. Operating margin 2.2% 10.8% (8.5pp) Effective tax rate 51.7% 32.0% 19.7pp Net income attributable to shareholders as a percentage of net sales 0.2% 6.5% (6.3pp) First quarter net income attributable to shareholders Operating working capital as a percentage of net sales 1) 25.6% 24.7% 0.9pp Equity ratio 35.6% 33.8% 1.8pp € in millions Financial leverage 81.8% 72.9% 8.9pp 2005 105 Balance sheet and cash flow data(€ in millions) 1) 2006 144 Total assets 9,904 8,406 17.8% 2007 128 Inventories 2,016 1,578 27.8% Receivables and other current assets 2,733 2,300 18.8% 2008 169 Working capital 2) 1,977 1,659 19.2% 2009 5 Net borrowings 2,883 2,073 39.1% Shareholders’ equity 3,525 2,843 24.0% 1) Including Reebok business segment from February 1, 2006 onwards. Including Capital expenditure 56 54 3.9% Greg Norman apparel business from February 1, 2006 to November 30, 2006. Net cash used in operating activities (617) (107) 476.3%

Per share of common stock (€) Basic earnings 0.02 0.84 (97.0%) Diluted earnings 0.04 0.79 (95.1%) Operating cash flow (3.19) (0.53) (502.5%) Share price at end of period 25.06 42.11 (40%)

Other (at end of period) Number of employees 38,227 33,214 15.1% Number of shares outstanding 193,515,512 200,437,960 (3.5%) Average number of shares 193,515,512 202,443,070 (4.4%) Rounding differences may arise in percentages and totals. All Group figures comprise the brand segments and HQ/Consolidation. 1) Twelve-month trailing average. 2) 2008 figure restated due to reclassification of long-term to short-term borrowings.

To Our Shareholders Financial Highlights adidas Group First Quarter Report 2009 03

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 03 - ad09Q1_En.indd Operational and Sporting Highlights

01 04 05

02 06

03 07

First quarter 2009

12.01. TaylorMade-adidas Golf signs 17 new players to use TaylorMade equipment on the PGA Tour 15.02. Picture 04 On the occasion of the New York Fashion Week, adidas opens its first adidas SLVR for the 2009 season. 19.01. TaylorMade introduces the R9™ and R9™ TP drivers, which combine the Label store. 25.02. Picture 05 Reebok and Cirque du Soleil launch JUKARI Fit to Fly™, a new workout well-proven Movable Weight Technology™ with Flight Control Technology. 30.01. Reebok unveils for women. 01.03. Picture 07 Reebok launches EasyTone™, an innovative technology that helps tone SmoothFit™ SelectRide™, an innovative two-in-one shoe that can be changed from a running shoe key leg muscles. 10.03. Picture 06 adidas Golf introduces FitRX and FitRX SPORT, two new shoes into a training shoe at the push of a button. 01.02. Picture 01 In an all-adidas final, the French national featuring custom footbed technology to enhance support and provide personalised comfort. 16.03. handball team wins the Handball World Championship title, beating host nation Croatia. 01.02. adidas Numerous celebrities such as Mischa Barton and Jenny Garth experience Reebok’s newly launched Originals and MTV Europe start a pan-European collaboration, including a contest through Facebook JUKARI Fit to Fly™ in Los Angeles. 18.03. Reebok-CCM Hockey presents its 2009 product line at the and a TV and online campaign. 01.02. Picture 02 Reebok sponsored football player Santonio Holmes “Let’s Play Hockey Expo” in St. Paul, Minnesota, with more than 30,000 visitors. 19.03. adidas is named Most Valuable Player after catching the decisive touchdown pass for the Pittsburgh Outdoor launches the “Outdoor is everything” campaign featuring extreme climbers Alexander and Steelers in the Super Bowl XLIII. 14.02. Picture 03 adidas Basketball sponsors the NBA All-Star Thomas Huber, also known as the “Huberbuam”. 25.03. adidas and the Russian Football Union weekend watched by millions of viewers in more than 200 countries. unveil the new jersey of the Russian National Football Team in Moscow.

To Our Shareholders Operational and Sporting Highlights adidas Group First Quarter Report 2009 04

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 04 - ad09Q1_En.indd Interview with the CEO With the economic crisis clearly impacting the consumer, the sporting goods industry and the adidas Group are also seeing the effects as currency-neutral adidas Group sales decreased by 6% in the first quarter. While 2009 will be a challenging year, the Group continues to be well positioned with strong recognisable brands and is moving forward with operational measures to mitigate the effects of the crisis. This will position the Group to be leaner and more efficient to more effectively seize future growth opportunities. Herbert Hainer CEO and Chairman of the Executive Board

In the following interview, Herbert Hainer, adidas Group CEO and Chairman, reviews the first quarter of 2009 and discusses the Group’s strategic and financial outlook.

To Our Shareholders Interview with the CEO adidas Group First Quarter Report 2009 05

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 05 - ad09Q1_En.indd Herbert, the first quarter of 2009 has been a challenge for many companies as Group profitability was down significantly in the first quarter. Can you outline the global recession is strongly impacting the consumer. Are you disappointed the major impacts, in particular those you believe are one-off in nature? with the first quarter results? You just have to read the papers today to see the significant burden on corpo- Before going into more detail, let me briefly put things into perspective: 2008 rate profitability from the economic climate and we have to accept that this is an was an extremely successful year for the Group – especially for the adidas and unavoidable consequence of downturns. However, I believe that fundamentally the TaylorMade-adidas Golf segments. We not only profited from the UEFA EURO profitability of our business is solid and you will see the effect lessen considerably 2008™ and the Beijing 2008 Olympic Games, but also operated – at least in the as we work our way through the year. There were various factors that impacted first half of 2008 – in a healthy economic environment. All these factors make our results in the quarter. First of all, higher input prices and currency devaluation comparisons with this year’s first quarter extremely hard. So on a deeper look effects weighed heavily on our gross margin, accounting for over three quarters and being mindful of all that is going on around us during this difficult period, of the decline in the first quarter. Unfortunately, the highly promotional retail I believe the adidas Group has shown a lot of resilience and, more importantly, environment did not allow us to mitigate these factors. In addition, when we look discipline and consistency with our long-term strategies. Therefore, although I at our operating expenses, we had several charges in the first quarter related to am not satisfied with these results, we have to accept them given the current restructuring expenses at Reebok and TaylorMade-adidas Golf and costs associ- economic climate. As I told you in March, there was no doubt that the consumer ated with the integration of Ashworth. We also increased allowances for doubt- would spend less in 2009 and we expected our sales and earnings to decline. But ful debts to reflect the economic downturn and we suffered currency losses on the strength of our brands is apparent and we continue to win over new consum- balance sheet items due to the high volatility of foreign exchange rates in some ers with the concept and product firepower which is at the heart of our organisa- emerging markets. If you take all these items together, that’s another € 100 mil- tion. At brand adidas, we continue to connect with more and more consumers, lion impact we had to absorb in our first quarter result. Although some of these highlighted by double-digit sales increases in the Sport Style division. At Reebok, items will recur again as we go through the balance of the year, I am convinced we are making solid progress on rebuilding our connection to the female con- we will put most of these effects behind us in 2009. sumer with the women’s segment up at double-digit rates during the quarter. And at TaylorMade-adidas Golf, our market share has increased significantly in several categories including metalwoods and irons.

To Our Shareholders Interview with the CEO adidas Group First Quarter Report 2009 06

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 06 - ad09Q1_En.indd Do you think the adidas brand can use the weak environment to take market At Reebok, the first quarter results suggest there is still a long way to go before share from others? Did you see any areas of growth in the first quarter? the segment is a meaningful contributor to the Group. Are you confident you Absolutely. adidas is a powerful brand built on a rich heritage and passion for can make Reebok a success? the impossible. And even despite the crisis the amazing bond this brand has with Although we are still somewhat away from the financial performance we had consumers around the world continues to grow. Although sales were down 6% expected to be delivering three years after the acquisition of Reebok, I believe we currency-neutral in the first quarter, we have certainly strengthened our posi- have taken considerable steps to recalibrate the brand. The last few years have tion in several markets and categories around the world. Some of the highlights been tough. The damage that had been done to the brand after years of careless include our performance-enhancing TECHFIT™ apparel, which is growing strongly. distribution was higher than we expected. However that being said, I have never In outdoor, we had double-digit increases in a category we doubted the potential of the Reebok brand. And today, I really believe we are in are putting more and more resources behind for the long the midst of a step change at Reebok. We’ve had a lot on the drawing board, and term. And in basketball, we are making big strides in Asia, now I am seeing that with consistency of approach we can indeed turn our ideas where in markets like China this sport is the most viewed into commercial success. and most played. Our strongest development however this Let’s look at our Women’s initiatives. Reebok’s partnership with Cirque du quarter has been in the Sport Style division where sales are up 12% currency- Soleil was brought to life in February with the launch of JUKARI Fit to Fly™, a neutral in the first quarter. In an economic downturn the lifestyle segment is more new workout experience especially designed for women. The response has been exposed as the consumer tends to be more selective when spending is curtailed. nothing short of phenomenal. Another key product initiative, the EasyTone™, This result therefore underpins just how desirable the adidas brand is today to the which helps tone key leg muscles, has been a hit at retail, with extremely high young trendy consumer. And we will continue to energise this space throughout sell-through rates. With a price point above US $ 100, this kind of result is excep- the year as we celebrate our 60th birthday under the banner of “60 Years of Soles tional in the current economic climate when consumers are tending to trade and Stripes” and with unique collections like Originals by Originals and new lines down. Both these concepts are leading to commercial success with sales in the such as Style Essentials. I am convinced we will take market share but, as I have Women’s segment up at double-digit rates in the quarter. often mentioned, we want to do this in a controlled and consistent way. We also Innovations like these, whether concepts or products, are our most impor- intend to use this period of economic weakness to position ourselves correctly tant tools for rebuilding the connection to the consumer and getting Reebok back for the long term, ensuring our inventories and distribution channels are clean onto retailers’ shelves. We are creating a lot of positive energy right now with to secure the type of profitable growth you have come to expect from the adidas customers and consumers alike. In markets like Germany, Scandinavia, Japan brand. and India, we are harnessing elements from all three pillars of our brand strategy, driving positive momentum. In terms of Reebok’s contribution to the Group, like our other divisions, this year the segment will be hit by one-time effects and the repercussions of the tough environment on profitability I already outlined. Never- theless, I believe Reebok will be a meaningful contributor to our Group’s financial performance in the medium to long term.

To Our Shareholders Interview with the CEO adidas Group First Quarter Report 2009 07

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 07 - ad09Q1_En.indd The international golf market is reported to be highly promotional. How does Can you give us a quick update on your outlook and financial priorities for the this affect TaylorMade-adidas Golf, and what are your strategies to deal with remainder of the year? the environment? Our performance in the first quarter highlights the challenges we outlined back The golf industry is off to a very weak start in 2009, with most major markets in March. At the moment I do not see any material indication that the environ- around the world contracting at double-digit rates. Consumers are hesitating ment is going to improve in the short term. We continue to forecast that full to buy new equipment or even postponing their purchase decisions indefinitely. year sales will decline at a low- to mid-single-digit rate currency-neutral and Therefore standing out from the competition is critical in this environment. And earnings per share is also expected to decline. Although you can be assured that our results prove we are on the right course, as we have gained significant market we are working at full steam on internal measures to cut back costs, higher input share in several categories and regions throughout the quarter. TaylorMade- prices, currency devaluation effects and costs related to restructuring activities adidas Golf continues to significantly outperform its competitors and with sales as well as other one-time costs will hurt our profitability. We forecast earnings down only 6% on a currency-neutral basis we are pleased with what we have per share to be around breakeven in the first six months of 2009. However, we will achieved so far this year. Our recipe for success at TaylorMade is threefold: 1) hav- generate significantly positive earnings per share again in the second half of the ing the right product, 2) building early demand and 3) launching at the right time. year, albeit at lower levels compared to the prior year. This will be a consequence And we executed flawlessly in the first quarter. The launch of our R9™ driver is a of a moderation of input cost increases and positive impetus ahead of the 2010 great example of this and contributed to TaylorMade’s strongest March sales in its FIFA World Cup™. In 2009, reduction of net borrowings will continue to be a key history in the USA. The R9™ is already the top-selling driver at retail in the USA priority. Tight working capital management, particularly through working down and is the number one played driver on the major worldwide golf tours. We also our inventories, and controlled investment activities will help optimise the Group’s set a new market share record for TaylorMade in irons, adding four percentage free cash flow and contribute to this goal. points during the quarter. Now entering the important golf playing months of the year, we continue to follow this formula. And I fully expect that we will stay on top of the leaderboard as all three of our golf brands, TaylorMade, adidas Golf and Ashworth, continue to resonate with the golf consumer.

To Our Shareholders Interview with the CEO adidas Group First Quarter Report 2009 08

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 08 - ad09Q1_En.indd You have talked about doing what is necessary to face the downturn. Can you Herbert, thank you for this interview. give us a more concrete idea of what measures you will take? I promised you in March that we would do everything possible to position our Group to emerge from the crisis stronger and more efficient. And we are delivering on that promise. We have already implemented a joint operating model between adidas and Reebok in Europe and Latin America. We trimmed headcount at Reebok, Rockport and TaylorMade-adidas Golf. And we continue to refine and reduce complexity in the product creation process. Our efforts, though, are not purely about reacting to the crisis and reducing cost. They are more about finding the structural direction we need to follow in order to satisfy our major guiding principle: to bring the adidas Group’s brands and products closer to the consumer. And I believe we are now in a position to make a real game-changing structural refinement that will propel our business forward for the long-term sustainable success of our Group. Since 2000, the adidas Group has grown significantly in complexity from 95 companies to 190 represented in all regions of the world. Our business has also evolved from predominantly a wholesale model to include a far more significant retail component. With over € 1.8 billion in own-retail sales, we are on a growth path that will take us into the top 250 global retailers in the medium term. So firstly, as a consequence of the increased organisational complexity, we have decided to take out one complete level of management – the regional offices. This means that, going forward, the Group will no longer operate regional head- quarters in Europe and Asia. Instead, we will strengthen the direct interaction between the global organisation and the local markets. In addition, the wholesale part of our business, where products are sold and distributed via retail partners, will be consolidated under a new Chief Sales Officer. And to support the growing own-retail business, which is an integral part of our controlled space strategy, a dedicated Global Retail organisation will be set up under the leadership of a Chief Retail Officer. Although all details of the measures we are working on have yet to be finalised, it is our goal that upon completion these will lead to annual cost savings of more than € 100 million as well as a significant contribution to the top line. I’ll keep you posted on our progress further down the line, but let me assure you we are creating the right platform to ensure a healthy company and solid business foundation for the good of all our stakeholders.

To Our Shareholders Interview with the CEO adidas Group First Quarter Report 2009 09

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 09 - ad09Q1_En.indd Our Share adidas AG share price recovers in March The adidas AG share In line with general market conditions, our share price declined In the first quarter, the global economy contin- at the beginning of January mainly due to weak economic data. ued to suffer from the effects of the economic As a response to cost savings initiatives announced at Reebok Number of shares outstanding and TaylorMade-adidas Golf, the adidas share started to rise crisis. The negative international stock market first quarter average 193,515,512 again in mid-January, outperforming the rest of the stock at March 31 1) 193,515,512 development reflected lower consumer confi- market. This positive momentum continued into early Febru- Type of share No-par-value share dence levels, high unemployment rates as well ary as market confidence grew in expectation that our Group Free float 100% as decreasing retail sales. Interest rates of would meet our 2008 guidance. While sustaining our market Initial Public Offering November 17, 1995 outperformance, our share price declined sharply in February major central banks at record low levels have Share split June 6, 2006 (in a ratio of 1: 4) as investor sentiment worsened. Weak retail sales data and the Stock exchange All German stock exchanges not yet had a positive effect on the economy. lack of catalysts for a quick economic recovery led to a market Stock registration number (ISIN) DE0005003404 The DAX-30 lost 15% while the adidas share revaluation. At the beginning of March, the publication of our Stock symbol ADS, ADSG.DE 2008 annual results, which exceeded analysts’ expectations, Important indices DAX-30 declined 8% in the first quarter. improved our share price notably. Many investors and analysts MSCI World Textiles, expressed their belief that the adidas Group remains positioned Apparel & Luxury Goods for future growth beyond the current crisis. Nonetheless, Deutsche Börse Prime Consumer Global stock indices decline in first quarter potential negative effects from foreign currency movements Dow Jones STOXX International stock markets declined in the first quarter of and Reebok’s financial performance remain issues of con- Dow Jones EURO STOXX 2009, continuing the negative trend of the prior year. Major cern for investors. Accordingly, the adidas AG share closed the Dow Jones Sustainability FTSE4Good Europe economic indicators signalling falling industrial output and quarter at € 25.06, representing a decrease of 8% compared to Ethibel Index Excellence Global orders, record low consumer confidence, decreasing retail the end of 2008. Our share thereby outperformed the DAX-30, Ethibel Index Excellence Europe sales and rising unemployment weighed on market senti- which lost 15% over the period, as well as the MSCI, which ASPI Eurozone Index ment. In addition, gloomy earnings outlooks added to weak declined 10% in the first quarter. 1) All shares carry full dividend rights. investor sentiment typified by low trading volumes throughout the quarter as investors took a watchful stance. In particular, difficulties in the financial sector highlighted by further losses Historical performance of the adidas AG share as well as increasing government intervention burdened markets throughout the quarter. The DAX-30 decreased 15% and important indices at March 31, 2009 in % and closed the first quarter at 4,084 points. The MSCI World Textiles, Apparel and Luxury Goods Index, which comprises the YTD 1 year 3 years 5 years since IPO Group’s main competitors, declined 10%. adidas AG (8) (40) (39) 6 159 DAX-30 (15) (37) (32) 6 86 MSCI World Textiles, Apparel & Luxury Goods (10) (43) (35) (9) 41

To Our Shareholders Our Share adidas Group First Quarter Report 2009 10

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 10 - ad09Q1_En.indd Number of ADRs remains stable Share price development in 2009 1) Changes in shareholder base The number of Level 1 ADRs (American Depository Receipts) In the first quarter of 2009, the Group received seven voting remained stable in the first quarter, underlining the continued rights notifications according to § 21, section 1 of the German support from North American investors. At March 31, 2009, Securities Trading Act (Wertpapierhandelsgesetz – WpHG) Dec. 31, 2008 Mar. 31, 2009 8.9 million ADRs were outstanding. In comparison to March 31, listed in the adjacent table. 2008, when 12.7 million ADRs were outstanding, the number of ADRs decreased significantly. The Level 1 ADR closed the Directors’ dealings reported on corporate website quarter at US $ 16.56, reflecting a decrease of 14% compared 120 The purchase or sale of adidas AG shares (ISIN DE0005003404) to the end of December 2008. or related financial instruments, as defined by § 15a WpHG, conducted by members of our Executive or Supervisory Boards, Stable dividend proposed by key executives or by any person in close relationship with 100 The adidas AG Executive and Supervisory Boards will recom- these persons, is reported on our website www.adidas-Group. mend paying a stable dividend of € 0.50 (2007: € 0.50) per com/directors_dealings. No directors’ dealings notifications were share for the financial year 2008. Subject to approval by our received in the first quarter of 2009. shareholders at the Annual General Meeting on May 7, 2009, 80 the dividend will be paid on May 8, 2009. Management has decided to maintain the dividend level in light of the tough business environment and our focus on reducing net borrowings. Based on the number of shares outstanding at the end of this 60 quarter, this represents a dividend payout of € 97 million (2007: adidas AG € 99 million). The decrease is mainly due to the reduction of DAX-30 MSCI World Textiles, Apparel & Luxury Goods shares outstanding after last year’s share buyback. This represents a payout ratio of 15% versus 18% in 2007 and follows our 1) Index: December 31, 2008 = 100. dividend policy, under which the adidas Group intends to pay out between 15 and 25% of consolidated net income. Shareholder rights notifications received in first quarter 2009

Date of Notifying Threshold Voting rights of total Date of notification party crossed shares outstanding change

Jan. 05, Capital Research and > 5% 9,695,127 Dec. 19, 2009 Management Company (5.01%) 2008 Jan. 19, Euro Pacific Growth > 3% 6,021,253 Jan. 13, 2009 Fund (3.11%) 2009 Feb. 03, The Bank of New York > 3% 5,901,424 Jan. 14, 2009 Mellon Group (3.05%) 2009 Mar. 03, UBS AG > 3% 6,525,021 Feb. 25, 2009 (3.37%) 2009 Mar. 04, FMR LLC < 3% 5,700,013 Feb. 26, 2009 (2.95%) 2009 Mar. 04, UBS AG < 3% 2,010,607 Feb. 26, 2009 (1.04%) 2009 Mar. 27, Invesco Ltd. < 3% 5,894,813 Sep. 30, 2009 (2.97%) 2008 The above information is based on notifications in accordance with § 21 German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) received and published by adidas AG in the first quarter of 2009. Voting rights notifications published by adidas AG can be viewed on our corporate website at www/adidas-Group.com/en/investor/statutory_publications/.

To Our Shareholders Our Share adidas Group First Quarter Report 2009 11

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 11 - ad09Q1_En.indd Group Business Performance Economic and Sector Development Quarterly consumer confidence development by region

In the first quarter of 2009, theadidas Group GDP declines in all regions results were negatively impacted by significantly The sharp downturn in global economic activity continued in Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 slowing consumer demand and high levels of the first quarter of 2009. Steep declines in manufacturing and industrial output were the primary contributor to declining 1) promotional activity due to the adverse macro USA 65.9 51.0 61.4 38.6 26.0 global GDP. Restrained corporate investment activity leading to Euro Zone 2) (12) (17) (19) (30) (34) economic climate. Currency-neutral Group rising unemployment in the first quarter resulted in consumer Japan 3) 37.0 32.9 31.8 26.7 29.6 confidence reaching new lows. In Europe, interest rate reduc- sales decreased 6% as a result of declines in 1) Source: Conference Board. tions had little impact on improving sentiment. The region’s 2) Source: European Commission. all segments. In euro terms, adidas Group emerging markets also showed signs of more significant eco- 3) Source: Economic and Social Research Institute, Government of Japan. revenues decreased 2% to € 2.577 billion from nomic weakness. In Russia, industrial production decreased at double-digit rates, leading to rising unemployment and sharp € 2.621 billion in 2008. The Group’s gross 1) declines in retail sales growth. In the USA, consumer confi- Exchange rate development margin declined 4.0 percentage points to 45.2% dence plunged again to new all-time lows. Manufacturing and € 1 equals (2008: 49.1%), mainly driven by higher input construction activity declines intensified, contributing to unem- costs, currency devaluation effects as well as a ployment reaching its highest point since October 1983. In Asia, Average Average the economic environment also worsened. In Japan, the fall rate 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 rate 2009 2) highly promotional retail environment. Conse- in external demand sustained the country’s deep recession. quently, the Group’s gross profit declined 10% to In China, although exports continue to weaken, government USD 1.4702 1.5764 1.4303 1.3917 1.3308 1.3047 GBP 0.7956 0.7923 0.7903 0.9525 0.9308 0.9086 stimulus has solidified domestic demand, resulting in GDP € 1.164 billion in the first quarter of 2009 versus JPY 152.39 166.44 150.47 126.14 131.17 121.90 growth of 6% in the quarter. In Latin America, the region re- € 1.288 billion in 2008. The Group’s operating coupled to the trends seen in other markets as several major 1) Spot rates at quarter-end. 2) Average rate for the first quarter. margin decreased 8.5 percentage points to countries entered recession. Lower commodity prices, falling 2.2% from 10.8% in 2008, due to the lower gross domestic and external demand as well as growing unemployment contributed to declining GDP in the region. margin as well as higher other operating expenses as a percentage of sales. The Group’s Weak development of global sporting goods industry operating profit declined 79% to € 58 million in High levels of promotional activity, focus on inventory management by retailers and slowing consumer demand impacted the the first quarter of 2009 versus € 282 million development of the global sporting goods industry in the first in 2008. The Group’s net income attributable to quarter of 2009. In Europe, sporting goods sales declined, as shareholders decreased 97% to € 5 million consumers postponed or cancelled their purchases in the face of heightened unemployment fears. Sporting goods apparel from € 169 million in 2008. Diluted earnings and footwear declined more than equipment in the region dur- per share decreased 95% to € 0.04 in the first ing the quarter, as equipment sales were boosted by the best quarter of 2009 versus € 0.79 in 2008. winter sports conditions in several years. In the USA, sporting goods sales declined in line with the challenging retail climate and slowing consumer traffic. Higher price point equipment items such as golf clubs were the most affected as consumers were reluctant to change or upgrade their equipment. In Asia, after years of solid growth, the sporting goods industry showed signs of decline even in the emerging markets. In China, sporting goods sales growth slowed considerably, negatively impacted by the weakening labour markets and higher inventories. The Japanese sporting goods market was also affected by the steep economic recession the country is faced with. Momentum in Latin America also slowed, however the sporting goods industry remains more resilient than in other markets.

Interim Group Management Report Group Business Performance — Economic and Sector Development adidas Group First Quarter Report 2009 12

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 12 - ad09Q1_En.indd Income Statement Currency translation effects positively impacted sales in First quarter net sales all segments in euro terms. adidas sales in euro terms € in millions Consolidation of new businesses impacts Reebok and decreased 3% to € 1.917 billion in the first quarter of 2009 from TaylorMade-adidas Golf results € 1.968 billion in 2008. Sales at Reebok grew 1% to € 458 mil- 2005 1) 1,674 In the first quarter of 2009, the performance of the adidas lion versus € 454 million in the prior year. TaylorMade-adidas 2006 2) 2,459 Group was impacted by the consolidation of new companies Golf sales increased 2% to € 194 million in the first quarter in Latin America in the Reebok segment and of Ashworth, of 2009 from € 191 million in 2008. HQ/Consolidation sales 2007 2,538 Inc. in the TaylorMade-adidas Golf segment. Effective April 1, decreased 2% to € 8 million from € 8 million in the prior year. 2008 2,621 2008, the adidas Group acquired 99.99% of the shares of 2009 2,577 Reebok Productos Esportivos Brazil Ltda. (formerly Comercial Currency-neutral revenues decline in all product categories Vulcabras Ltda.), the distribution company for Reebok prod- Currency-neutral Group sales declined in all categories 1) Figure reflects continuing operations as a result of the divestiture of the Salomon ucts in Brazil and Paraguay. Effective June 2, 2008, Reebok in the first quarter of 2009. Currency-neutral footwear business segment in 2005. also founded a new company in Argentina, in which the adidas sales decreased 2% during the period. An increase in the 2) Including Reebok business segment from February 1, 2006 onwards. Including Group holds 99.99% of the shares. Ashworth Inc., a leader in Reebok segment could not offset declines in the adidas and Greg Norman apparel business from February 1, 2006 to November 30, 2006. cotton casual golf apparel, has been consolidated within the TaylorMade-adidas Golf segments. First quarter apparel sales adidas Group since November 20, 2008. decreased 4% on a currency-neutral basis, driven by declines 1) in the adidas and Reebok segments. The TaylorMade-adidas First quarter net sales by segment adidas Group currency-neutral sales decline 6% Golf segment grew due to the consolidation of the Ashworth

In the first quarter of 2009, Group revenues decreased 6% business. Currency-neutral hardware sales declined 32% on a currency-neutral basis, as a result of lower sales in all compared to the prior year, due to decreases in all segments. TaylorMade- adidas Golf 8% business segments. Currency translation effects positively impacted sales in euro terms. Group revenues in euro terms Currency translation positively impacted sales in euro terms. declined 2% to € 2.577 billion in the first quarter of 2009 from In euro terms, footwear sales increased 2% to € 1.244 billion in adidas 74% € 2.621 billion in 2008. the first quarter of 2009 (2008: € 1.221 billion). Apparel sales grew 1% to € 1.129 billion from € 1.114 billion in 2008. Hard- Currency-neutral sales decline in all segments ware sales decreased 29% to € 205 million in the first quarter Reebok 18% Currency-neutral adidas segment revenues decreased 6% in of 2009 from € 287 million in 2008. the first quarter of 2009, driven in particular by a decrease in the football category resulting from the non-recurrence 1) HQ /Consolidation accounts for less than 1% of sales. of strong prior year sales related to the UEFA EURO 2008™. Currency-neutral sales in the Reebok segment declined 4% versus the prior year. Double-digit growth in the women’s category was more than offset by declines in most other categories. The consolidation of the new companies in Latin America positively impacted this development. At TaylorMade-adidas Golf, currency-neutral revenues decreased 6%, due to declines in all major categories. However, this development was partly offset by the consolidation of Ashworth revenues. Sales recorded in the HQ/Consolidation segment, which reflect revenues not attributable to theadidas, Reebok or TaylorMade-adidas Golf segments, decreased 10% on a currency-neutral basis. The sales decrease related to the expiration of our sourcing cooperation agreement with Amer Sports Corporation in February 2008 was partly offset by Gekko Brands sales. Acquired with Ashworth in November 2008, Gekko Brands was divested in March 2009.

Interim Group Management Report Group Business Performance — Income Statement adidas Group First Quarter Report 2009 13

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 13 - ad09Q1_En.indd Currency-neutral sales decrease in nearly all regions First quarter currency-neutral net sales growth 1) Gross margin negatively impacted by higher input costs Currency-neutral adidas Group sales declined in all regions by segment and region in % The gross margin of the adidas Group decreased 4.0 percent- except Latin America in the first quarter of 2009. Group sales age points to 45.2% in the first quarter of 2009 (2008: 49.1%). in Europe decreased 5% on a currency-neutral basis, due This development was mainly due to higher input costs, cur- North Latin to declines in most major countries impacted by the non- Europe America Asia America Total rency devaluation effects, in particular related to the Russian recurrence of strong prior year sales related to the UEFA rouble, as well as a highly promotional retail environment. As EURO 2008™. In North America, Group sales declined 17% on adidas (6) (25) (4) 16 (6) a result, gross profit for the adidas Group declined 10% in the a currency-neutral basis due to lower consumer demand and Reebok (3) (16) (8) 148 (4) first quarter of 2009 to € 1.164 billion versus € 1.288 billion in retailer destocking in the USA. Sales for the adidas Group in TaylorMade- the prior year. Asia decreased 6% on a currency-neutral basis, as a result of adidas Golf 11 (1) (17) (17) (6) declines in Japan and China. In Latin America, sales grew 31% Total (5) (17) (6) 31 (6) Royalty and commission income decreases on a currency-neutral basis, with double-digit increases com- 1) Versus the prior year. Royalty and commission income for the adidas Group decreased ing from most of the region’s major markets, supported by the 11% on a currency-neutral basis. This development is mainly new Reebok companies in Brazil/Paraguay and Argentina. due to the non-recurrence of royalties from distribution part- First quarter net sales growth in € 1) ners in the Reebok segment in Brazil/Paraguay and Argentina. In euro terms, sales in Europe decreased 6% to € 1.175 billion by segment and region in % The distribution partnerships in these countries were replaced in the first quarter of 2009 from € 1.249 billion in 2008. Sales by own companies whose sales were consolidated for the first in North America declined 7% to € 538 million from € 578 mil- North Latin time effective April and June 2008, respectively. In euro terms, lion in 2008. Revenues in Asia grew 6% to € 628 million in the Europe America Asia America Total royalty and commission income decreased 4% to € 20 million first quarter of 2009 from € 594 million in 2008. Sales in Latin in the first quarter of 2009 from € 21 million in the prior year. America grew 23% to € 218 million from € 177 million in the adidas (6) (16) 9 8 (3) prior year. Reebok (4) (6) (5) 146 1 Other operating income grows 22% TaylorMade- Other operating income increased 22% to € 27 million in the adidas Golf (6) 10 (6) (12) 2 first quarter of 2009 from € 22 million in 2008. This develop- Total (6) (7) 6 23 (2) ment is mainly due to the release of accruals for personnel 1) Versus the prior year. costs from 2008.

First quarter net sales by region 1)

Europe 46% Latin America 8%

North America 21% Asia 24%

1) Excluding HQ /Consolidation.

Interim Group Management Report Group Business Performance — Income Statement adidas Group First Quarter Report 2009 14

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 14 - ad09Q1_En.indd Higher other operating expenses as a percentage of sales First quarter gross profit Financial income up 8% Other operating expenses as a percentage of sales increased € in millions Financial income increased 8% to € 6 million in the first quar- 4.7 percentage points to 44.7% in the first quarter of 2009 ter of 2009 from € 6 million in the prior year. from 40.0% in 2008 mainly as a result of higher expenses to 2008 1,288 support the Group’s development in emerging markets. Costs Financial expenses increase 48% 2009 1,164 related to restructuring at Reebok, higher allowances for Financial expenses increased 48% to € 56 million in the doubtful debts and the integration of the Ashworth business first quarter of 2009 (2008: € 38 million). This development also contributed to this development. In absolute terms, other was primarily due to net foreign currency exchange losses operating expenses increased 10% to € 1.153 billion in the in an amount of € 19 million resulting from the revaluation first quarter of 2009 from € 1.050 billion in the prior year. First quarter other operating income of balance sheet positions in foreign currencies other than € in millions functional currencies. Global employee base continues to grow On March 31, 2009, the Group had 38,227 employees, which 2008 22 represents an increase of 15% versus 33,214 in the previous 2009 27 year. This development is primarily related to new employees in adidas and Reebok own retail, mainly on a part-time basis. Compared to the end of 2008, the number of employees declined 2%, mainly driven by restructuring initiatives at First quarter other operating expenses Reebok and TaylorMade-adidas Golf and the effects of the implementation of a hiring freeze throughout the adidas € in millions

Group. 2008 1,050 Operating margin declines 8.5 percentage points 2009 1,153 The operating margin of the adidas Group decreased 8.5 percentage points to 2.2% in the first quarter of 2009 (2008: 10.8%). The operating margin decline was due to the decrease in Group gross margin as well as higher other operating First quarter operating profit expenses as a percentage of sales. As a result, Group operating € in millions profit decreased 79% to € 58 million versus € 282 million in 2008. 2008 282

2009 58

Interim Group Management Report Group Business Performance — Income Statement adidas Group First Quarter Report 2009 15

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 15 - ad09Q1_En.indd First quarter income before taxes Income before taxes decreases 97% Minority interests down € in millions Income before taxes (IBT) as a percentage of sales decreased The Group’s minority interests decreased to negative € 1 mil- 9.2 percentage points to 0.3% in the first quarter of 2009 lion in the first quarter of 2009 from positive € 1 million in 2008 250 from 9.6% in 2008. This was a result of the Group’s operating 2008. The decline was primarily due to the buyout of the margin decrease and higher net financial expenses. IBT for the Reebok joint venture partner in Spain, effective January 2009. 2009 9 adidas Group declined 97% to € 9 million from € 250 million in 2008. Basic and diluted earnings per share decrease

97% and 95% respectively Net income attributable to shareholders declines 97% Basic earnings per share decreased 97% to € 0.02 in the first First quarter net income attributable to shareholders The Group’s net income attributable to shareholders decreased quarter of 2009 versus € 0.84 in 2008. The weighted average € in millions 97% to € 5 million in the first quarter of 2009 from € 169 mil- number of shares used in the calculation of basic earnings lion in 2008. The Group’s lower operating profit was the per share decreased to 193,515,512 in the first quarter of 2005 105 primary reason for this development. The Group’s tax rate 2009 (2008 average: 202,443,070) due to the share buyback 2006 1) 144 increased 19.7 percentage points to 51.7% in the first quarter programme from January to October 2008. Diluted earnings of 2009 (2008: 32.0%), mainly due to a less favourable regional per share in the first quarter of 2009 decreased 95% to € 0.04 2007 128 earnings mix throughout the Group. from € 0.79 in the prior year. The weighted average number 2008 169 of shares used in the calculation of diluted earnings per share 2009 5 was 209,260,662 (2008 average: 218,240,051). The dilutive effect largely results from approximately sixteen million addi-

1) Including Reebok business segment from February 1, 2006 onwards. Including tional potential shares that could be created in relation to our Greg Norman apparel business from February 1, 2006 to November 30, 2006. outstanding convertible bond, for which conversion criteria were first met at the end of the fourth quarter of 2004.

Interim Group Management Report Group Business Performance — Income Statement adidas Group First Quarter Report 2009 16

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 16 - ad09Q1_En.indd Balance Sheet and Cash Flow Statement Balance sheet structure 1) Balance sheet structure 1) in % of total assets in % of total liabilities and equity Total assets increase 18% At the end of March 2009, total assets increased 18% to Assets March 31, 2009 March 31, 2008 Liabilities and equity March 31, 2009 March 31, 2008 € 9.904 billion versus € 8.406 billion in the prior year. This was the result of an increase in both current and non- Cash and cash equivalents 2.4 current assets. Compared to December 31, 2008, total assets Short-term borrowings 7.4 increased 4%. Accounts receivable 19.0 Accounts payable 8.9 3.4 2.8 7.8 Group inventories up 28% 19.6 Long-term borrowings 25.4 Inventories 20.4 Group inventories increased 28% to € 2.016 billion at the end 26.3 of March 2009 versus € 1.578 billion in 2008. On a currency- 18.8 neutral basis, inventories grew 18%. This was mainly a result Other liabilities 22.7 of lower customer demand compared to our expectations when Fixed assets 42.3 29.1 planning production for the first half of 2009. In addition, the 42.3 new Reebok companies in Latin America as well as the consolidation of the Ashworth business acquired in November Total equity 35.6 34.0 2008 contributed to the increase. Other assets 15.9 15.9

Accounts receivable increase 15% At the end of March 2009, Group receivables increased 15% to Total assets Total liabilities and € 1.884 billion (2008: € 1.645 billion). On a currency-neutral (€ in millions) 9,904 8,406 equity (€ in millions) 9,904 8,406 basis, receivables grew 11%. This increase reflects slower 1) For absolute figures see Consolidated Balance Sheet, p. 28. 1) For absolute figures see Consolidated Balance Sheet, p. 28. receipt of payments due to the difficult economic situation in some markets. The new Reebok companies in Latin America as well as the consolidation of the Ashworth business acquired in November 2008 also contributed to this increase.

Other current financial assets up 186% Other current financial assets increased 186% to € 263 million at the end of March 2009 from € 92 million at the end of March 2008. This development was mainly due to higher fair values of financial instruments.

Other current assets up 4% Other current assets increased 4% to € 508 million at the end of March 2009 from € 488 million in 2008, mainly as a result of increased prepaid expenses related to newly opened own-retail stores, as well as prepayments for promotional contracts.

Interim Group Management Report Group Business Performance — Balance Sheet and Cash Flow Statement adidas Group First Quarter Report 2009 17

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 17 - ad09Q1_En.indd Inventories 1) Fixed assets increase 18% Accrued liabilities decrease 12% € in millions Fixed assets increased 18% to € 4.194 billion at the end of Accrued liabilities decreased 12% to € 634 million at the end of March 2009 versus € 3.553 billion at the end of March 2008. March compared to € 720 million at the end of March 2008, due 2008 1,578 This was mainly the result of positive currency translation to timing of payments. effects in an amount of € 424 million on fixed assets denomi- 2009 2,016 nated in currencies other than the euro. Continued own-retail Equity grows due to increase in net income expansion, investment into the Group’s IT infrastructure, the Shareholders’ equity rose 24% to € 3.525 billion at the end of 1) At March 31. transfer of assets held-for-sale to fixed assets as well as the March 2009 versus € 2.843 billion at the end of March 2008. acquisition of Ashworth, Inc. and Textronics, Inc. also impacted The net income generated during the last twelve months and this development. Additions of € 527 million were partly offset positive currency translation effects in an amount of € 358 mil- Receivables 1) by depreciation and amortisation of € 257 million as well as lion more than offset the buyback of adidas AG shares. Com- € in millions disposals in an amount of € 53 million. Compared to Decem- pared to December 31, 2008, shareholders’ equity increased

ber 31, 2008, fixed assets increased 3%. 4%. 2008 1,645 2009 1,884 Assets held-for-sale decrease 68% Cash flow development reflects increased At the end of March 2009, assets held-for-sale decreased 68% working capital needs 1) At March 31. to € 23 million (2008: € 71 million). In the second quarter of In the first quarter of 2009, cash outflow from operating activi- 2008, land and buildings in Herzogenaurach, Germany, which ties was € 617 million (2008: € 107 million). The increase in are no longer in the scope of a sale, were transferred to fixed cash used in operating activities compared to the prior year Accounts payable 1) assets. At the end of March 2009, assets held-for-sale mainly was primarily due to higher working capital needs. Cash out- € in millions related to warehouses for sale in the UK and in the USA, and flow for investing activities was € 53 million (2008: € 58 mil- property in Herzogenaurach. lion) and was mainly related to spending for property, plant and 2008 656 equipment such as investments in the furnishing and fitting of Accounts payable grow 34% adidas and Reebok own-retail stores and in IT systems. Cash 2009 880 Accounts payable increased 34% to € 880 million at the end of inflows from financing activities were related to an increase March 2009 versus € 656 million at the end of March 2008. On in long-term borrowings in an amount of € 891 million, which 1) At March 31. a currency-neutral basis, accounts payable were up 18%. This was partly offset by the repayment of short-term borrowings in development was mainly a result of a higher volume of inven- an amount of € 228 million. Consequently, net cash provided by tories at the end of the first quarter of 2009. The new Reebok financing activities totalled € 663 million (2008: € 158 million). Shareholders’ equity 1) companies in Latin America as well as the consolidation of the As a result of this development, cash and cash equivalents € in millions Ashworth business acquired in November also contributed to decreased by € 8 million to € 236 million at the end of March the increase. 2009 (December 31, 2008: € 244 million). 2008 2,843

2009 3,525 Other current financial liabilities decrease 73% Net borrowings up by € 810 million Other current financial liabilities decreased 73% to € 44 mil- Net borrowings at March 31, 2009 amounted to € 2.883 billion, 1) At March 31, excluding minority interests. lion at the end of March 2009 from € 162 million at the end which represents an increase of € 810 million, or 39%, versus of March 2008, primarily due to a decrease in the fair value of € 2.073 billion at the end of March 2008. Higher working capital hedging instruments. requirements were the main reason for the net debt increase. Net borrowings 1) Since March 31, 2008, cash in an amount of € 275 million € in millions has been used for the meanwhile completed share buyback programme. Currency translation effects negatively impacted 2008 2,073 net borrowings by an amount of € 136 million. Consequently, the Group’s financial leverage increased to 81.8% at the end of 2009 2,883 March 2009 versus 72.9% in the prior year.

1) At March 31.

Interim Group Management Report Group Business Performance — Balance Sheet and Cash Flow Statement adidas Group First Quarter Report 2009 18

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 18 - ad09Q1_En.indd adidas Business Performance adidas at a glance Currency-neutral adidas sales decline in nearly all regions € in millions Currency-neutral sales for the adidas segment in the first In the first quarter of 2009, currency-neutral quarter of 2009 decreased in all regions except Latin America. sales in the adidas segment decreased 6%. In Revenues in Europe decreased 6% on a currency-neutral basis, First quarter First quarter euro terms, segment sales declined 3% to 2009 2008 Change mainly due to the non-recurrence of strong prior year sales related to the UEFA EURO 2008™ and difficult conditions in € 1.917 billion from € 1.968 billion in the prior Net sales 1,917 1,968 (3%) some Western European countries. Currency-neutral adidas year. Gross margin decreased 2.0 percentage Gross profit 901 964 (7%) sales in North America declined 25% due to lower consumer points to 47.0% (2008: 49.0%). This was mainly Gross margin 47.0% 49.0% (2.0pp) demand and retailer destocking in the USA. Sales in Asia Operating profit 228 336 (32%) decreased 4% on a currency-neutral basis, driven by declines a result of higher input costs, currency devalua- Operating margin 11.9% 17.1% (5.2pp) in Japan and China. In Latin America, currency-neutral sales tion effects as well as a highly promotional grew 16%, driven by double-digit increases in almost all retail environment. Gross profit decreased 7% markets. adidas first quarter net sales to € 901 million in the first quarter of 2009 from € in millions In euro terms, sales in Europe decreased 6% to € 986 mil- € 964 million in 2008. As a result of the decline lion in the first quarter of 2009 from € 1.050 billion in 2008. in gross margin and higher net other operating 2005 1,512 Revenues in North America decreased 16% to € 237 million in the first quarter of 2009 from € 281 million in 2008. Sales in 2006 1,776 expenses and income as a percentage of sales, Asia increased 9% to € 508 million in the first quarter of 2009 operating margin decreased 5.2 percentage 2007 1,819 from € 466 million in 2008, and revenues in Latin America points to 11.9% (2008: 17.1%). Operating profit 2008 1,968 improved 8% to € 169 million in the first quarter of 2009 versus € 157 million in the prior year. declined 32% to € 228 million in the first quar- 2009 1,917 ter of 2009 versus € 336 million in 2008. Sport Performance declines 9% on a currency-neutral basis

Sales in the Sport Performance division decreased 9% on a currency-neutral basis in the first quarter of 2009. The foot- Currency-neutral segment sales decline 6% ball category was notably impacted by the non-recurrence Revenues for the adidas segment declined 6% on a currency- of strong prior year sales in connection with the UEFA EURO neutral basis in the first quarter of 2009. Currency-neutral 2008™. This development was partially offset by a double-digit footwear, apparel and hardware sales all decreased com- increase in outdoor and a stable performance in running. In pared to the prior year. Currency translation effects positively euro terms, Sport Performance sales declined 5% in the first impacted segment revenues in euro terms. In euro terms, quarter of 2009 to € 1.497 billion from € 1.569 billion in the segment sales declined 3% to € 1.917 billion in the first quar- prior year. ter of 2009 from € 1.968 billion in 2008.

Interim Group Management Report adidas Business Performance adidas Group First Quarter Report 2009 19

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 19 - ad09Q1_En.indd Currency-neutral Sport Style sales increase 12% adidas net sales by region Royalty and commission income increases 7% Sales in the Sport Style division increased 12% on a currency- € in millions In the first quarter of 2009, adidas royalty and commission neutral basis in the first quarter of 2009. The increase was income grew 7% to € 20 million (2008: € 19 million) due to a driven by strong momentum in the recently launched Style higher average royalty rate. Royalty and commission income Change Essentials business, as well as an increase in Originals. In euro First quarter First quarter currency- relates to items such as cosmetics, watches and eyewear. terms, Sport Style sales grew 13% to € 435 million in the first 2009 2008 Change neutral quarter of 2009 (2008: € 385 million). Net other operating expenses and income up Europe 986 1,050 (6%) (6%) 3.3 percentage points North America 237 281 (16%) (25%) Currency-neutral own-retail sales up 3% Net other operating expenses and income as a percentage of Asia 508 466 9% (4%) In the first quarter of 2009,adidas own-retail sales increased sales in the adidas segment increased 3.3 percentage points Latin America 169 157 8% 16% 3% on a currency-neutral basis. In euro terms, revenues grew to 36.1% (2008: 32.8%). This was mainly a result of increased

10% to € 334 million from € 303 million in 2008. This increase expenses to support the segment’s development in emerging was driven by new store openings. Comparable store sales markets, in particular related to the expansion of own retail. In declined at a double-digit rate during the period. adidas own- adidas net sales by quarter euro terms, net other operating expenses and income grew 7% retail activities made up 17% of adidas brand sales in the first € in millions to € 692 million in the first quarter of 2009 from € 646 million quarter of 2009, up from 16% in the prior year. in 2008. Q1 2008 1,968 Gross margin negatively impacted by higher input costs Q1 2009 1,917 Operating margin decreases to 11.9% The adidas segment gross margin decreased 2.0 percent- In the first quarter of 2009, the adidas operating margin Q2 2008 1,818 age points to 47.0% in the first quarter of 2009 from 49.0% in decreased 5.2 percentage points to 11.9% (2008: 17.1%). This Q2 2009 2008. This was mainly a result of higher input costs, currency was a result of the gross margin decline and higher net other devaluation effects, in particular related to the Russian rouble, Q3 2008 2,218 operating expenses and income as a percentage of sales. as well as a highly promotional retail environment. As a result, Q3 2009 Operating profit for the adidas segment decreased 32% to adidas gross profit declined 7% to € 901 million in the first € 228 million in the first quarter of 2009 versus € 336 million quarter of 2009 versus € 964 million in 2008. Q4 2008 1,817 during the same period in the prior year. Q4 2009

adidas operating profit by quarter € in millions

Q1 2008 336 Q1 2009 228

Q2 2008 175 Q2 2009

Q3 2008 439 Q3 2009

Q4 2008 147 Q4 2009

Interim Group Management Report adidas Business Performance adidas Group First Quarter Report 2009 20

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 20 - ad09Q1_En.indd Reebok Business Performance Reebok at a glance Segment sales decline 4% on a currency-neutral basis € in millions In the first quarter of 2009, sales for the Reebok segment In the first quarter of 2009, currency-neutral decreased 4% on a currency-neutral basis. Currency-neutral sales for the Reebok segment decreased 4%. In footwear sales increased strongly, but apparel and hardware First quarter First quarter euro terms, segment sales increased 1% to 2009 2008 Change sales decreased compared to the prior year. Currency translation effects positively impacted segment revenues in euro € 458 million from € 454 million in the prior Net sales 458 454 1% terms. Sales in euro terms increased 1% to € 458 million in the year. The gross margin of the Reebok segment Gross profit 135 168 (20%) first quarter of 2009 from € 454 million in 2008. declined 7.7 percentage points to 29.4% in the Gross margin 29.4% 37.1% (7.7pp) Operating profit (96) (13) (662%) Currency-neutral sales decline in nearly all regions first quarter of 2009 from 37.1% in 2008. This Operating margin (20.9%) (2.8%) (18.2pp) Currency-neutral Reebok segment sales decreased in all was mainly a result of higher input costs, regions except Latin America in the first quarter of 2009. In currency devaluation effects as well as a highly Europe, currency-neutral sales declined 3%, primarily due Reebok first quarter net sales to weakness in Spain. Currency-neutral revenues in North promotional retail environment. Gross profit € in millions America decreased 16% as a result of declines in both the decreased 20% to € 135 million in the first USA and Canada. In Asia, currency-neutral sales decreased quarter of 2009 versus € 168 million in 2008. 2006 1) 454 8%. Growth in Japan and India was more than offset by a sales decline in China due to the rationalisation of Reebok’s busi- 2007 524 Reebok’s operating margin declined by ness in that market. Currency-neutral sales in Latin America 18.2 percentage points to negative 20.9% in 2008 454 increased 148% due to the consolidation of Reebok’s new the first quarter of 2009 from negative 2.8% in 2009 458 companies. the prior year. This was due to the decline in 1) Only includes two months of the three-month period. In euro terms, segment sales in Europe decreased 4% to gross margin and the increase in net other € 160 million in the first quarter of 2009 from € 167 million in operating expenses and income as a percent- 2008. In North America, revenues declined 6% to € 193 million in the first quarter of 2009 from € 206 million in 2008. age of sales. This development was also Sales in Asia decreased 5% to € 59 million in the first quarter impacted by restructuring charges of € 21 mil- of 2009 (2008: € 62 million), and in Latin America revenues lion. As a result, Reebok’s operating profit increased 146% to € 47 million in the first quarter of 2009 (2008: € 19 million). decreased to negative € 96 million in the first quarter of 2009 versus negative € 13 million Currency-neutral sales of brand Reebok decline 5% in the prior year. Brand Reebok sales decreased 5% in the first quarter of 2009 on a currency-neutral basis. Double-digit growth in the women’s category was more than offset by declines in most other categories. In euro terms, sales were stable at € 374 mil- Consolidation of new businesses impacts Reebok results lion (2008: € 375 million). In the first quarter of 2009, the performance of the Reebok segment was supported by the consolidation of new compa- Currency-neutral sales of Reebok-CCM Hockey improve 11% nies in Latin America. Effective April 1, 2008, the adidas Group Sales of Reebok-CCM Hockey grew 11% on a currency-neutral acquired 99.99% of the shares of Reebok Productos Esportivos basis in the first quarter of 2009 due to timing of product Brazil Ltda. (formerly Comercial Vulcabras Ltda.), the distri- launches. In euro terms, sales also increased 11% to € 24 mil- bution company for Reebok products in Brazil and Paraguay. lion in the first quarter of 2009 versus € 22 million in the prior Effective June 2, 2008, Reebok also founded a new company year. in Argentina, in which the adidas Group holds 99.99% of the shares.

Interim Group Management Report Reebok Business Performance adidas Group First Quarter Report 2009 21

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 21 - ad09Q1_En.indd Rockport sales decrease 2% on a currency-neutral basis Reebok net sales by region Royalty and commission income decreases Rockport sales decreased 2% on a currency-neutral basis € in millions In the first quarter of 2009, Reebok royalty and commission in the first quarter of 2009. Growth in Europe was offset income decreased 28% to € 6 million from € 8 million in the by declines in North America, mainly due to the high level prior year. The decline was largely due to the non-recurrence Change of inventories at retail. In euro terms, Rockport revenues First quarter First quarter currency- of royalties from distribution partners in Brazil/Paraguay and increased 5% to € 60 million in the first quarter of 2009 (2008: 2009 2008 Change neutral Argentina. The distribution partnerships in these countries

€ 57 million). were replaced by own companies whose sales were consoli- Europe 160 167 (4%) (3%) dated for the first time in the second quarter of 2008.Reebok’s North America 193 206 (6%) (16%) Currency-neutral own-retail sales grow 7% royalty and commission income primarily relates to royalty Asia 59 62 (5%) (8%) In the first quarter of 2009,Reebok own-retail sales grew 7% income for fitness equipment. Latin America 47 19 146% 148% on a currency-neutral basis. In euro terms, revenues increased

15% to € 82 million from € 71 million in 2008. The increase Net other operating expenses and income increase was driven by new store openings in emerging markets, espe- Net other operating expenses and income as a percentage of cially Russia. Comparable store sales declined at a low-single- Reebok net sales by quarter sales increased by 10.0 percentage points to 51.6% in the first digit rate during the period. Reebok own-retail activities made € in millions quarter of 2009 versus 41.6% in 2008. This development was up 18% of Reebok segment sales in the first quarter of 2009, mainly due to restructuring charges of € 21 million, continued up from 16% in the prior year. The share of own-retail activities Q1 2008 454 own-retail expansion, as well as higher marketing expendi- as a percentage of brand sales at Rockport continues to be Q1 2009 458 tures, primarily related to the introduction of JUKARI Fit to above the segment average. Fly™. Restructuring charges in the first quarter were related Q2 2008 469 to headcount reductions in several regions and costs in con- Q2 2009 Reebok segment gross margin declines 7.7 percentage points nection with the implementation of joint operating models for The gross margin of the Reebok segment decreased 7.7 per- Q3 2008 665 adidas and Reebok in Europe and Latin America. On an abso- centage points to 29.4% in the first quarter of 2009 from 37.1% Q3 2009 lute basis, Reebok’s net other operating expenses and income in 2008. The segment gross margin was negatively affected by increased 25% to € 236 million in the first quarter of 2009 from higher input costs, currency devaluation effects, in particular Q4 2008 561 € 189 million in the prior year. related to the Russian rouble, as well as a highly promotional Q4 2009 retail environment. Reebok gross profit decreased 20% to Lower operating margin € 135 million in the first quarter of 2009 versus € 168 million In the first quarter of 2009, the operating margin of theReebok in 2008. segment decreased by 18.2 percentage points to negative Reebok operating profit by quarter 20.9% from negative 2.8% in the prior year. This was due to the lower gross margin and higher net other operating expenses € in millions and income as a percentage of sales. As a result, Reebok’s Q1 2008 (13) operating profit decreased to negative € 96 million in the first quarter of 2009 versus negative € 13 million in the prior year. Q1 2009 (96)

Q2 2008 (11) Q2 2009

Q3 2008 25 Q3 2009

Q4 2008 (9) Q4 2009

Interim Group Management Report Reebok Business Performance adidas Group First Quarter Report 2009 22

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 22 - ad09Q1_En.indd TaylorMade-adidas Golf Business TaylorMade-adidas Golf at a glance Currency-neutral sales decrease 6% In the first quarter of 2009, currency-neutral sales at Performance € in millions TaylorMade-adidas Golf decreased 6%. A decline in all major In the first quarter of 2009,TaylorMade- adidas categories could not be offset by the positive impact of the con- First quarter First quarter Golf revenues decreased 6% on a currency- 2009 2008 Change solidation of Ashworth and new product launches toward the end of the first quarter. Segment sales in euro terms increased neutral basis. In euro terms, segment sales Net sales 194 191 2% 2% to € 194 million in the first quarter of 2009 from € 191 mil- increased 2% to € 194 million from € 191 mil- Gross profit 77 89 (13%) lion in 2008. Sales from the consolidation of Ashworth contrib- lion in the prior year. The segment’s gross Gross margin 39.8% 46.6% (6.8pp) uted € 15 million. Operating profit (21) 23 (189%) margin decreased 6.8 percentage points to Operating margin (10.7%) 12.3% (23.0pp) Currency-neutral revenues decline in all regions 39.8% (2008: 46.6%). This was mainly a result except Europe of price repositioning related to the highly TaylorMade-adidas Golf currency-neutral sales declined in TaylorMade-adidas Golf first quarter net sales all regions except Europe in the first quarter of 2009. Sales in competitive environment. The consolidation of € in millions Europe increased 11% on a currency-neutral basis, driven by the Ashworth business, which carries lower growth in all major countries, in particular the UK. In North margins, also contributed to this development. 2005 149 America, sales decreased 1% on a currency-neutral basis as weak market conditions were only partly offset by the first-time 2006 1) 201 Gross profit declined 13% to € 77 million (2008: consolidation of Ashworth. TaylorMade-adidas Golf sales in € 89 million). The segment’s operating margin 2007 180 Asia and Latin America both decreased 17% on a currency- decreased 23.0 percentage points to negative 2008 191 neutral basis, driven by double-digit declines in most major markets. 10.7% (2008: positive 12.3%). This was due to 2009 194 the lower gross margin and higher net other In euro terms, sales in Europe in the first quarter of 2009 1) Including Greg Norman apparel business from February 1, 2006 operating expenses and income as a percent- to November 30, 2006. declined 6% to € 30 million (2008: € 32 million). Revenues in North America increased 10% to € 102 million in the first quar- age of sales. As a result, operating profit ter of 2009 from € 92 million in 2008. In Asia, sales decreased decreased to negative € 21 million from posi- 6% to € 61 million in the first quarter of 2009 (2008: € 65 mil- tive € 23 million in the first quarter of 2008. lion), and in Latin America revenues declined 12% to € 1 million in the first quarter of 2009 (2008: € 2 million).

Consolidation of Ashworth impacts results In the first quarter of 2009, the operational performance of the TaylorMade-adidas Golf segment was impacted by the consolidation of Ashworth, Inc. A leader in cotton casual golf apparel, Ashworth has been consolidated within the adidas Group since November 20, 2008.

Interim Group Management Report TaylorMade-adidas Golf Business Performance adidas Group First Quarter Report 2009 23

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 23 - ad09Q1_En.indd Gross margin negatively impacted by price repositioning TaylorMade-adidas Golf net sales by region Consolidation of Ashworth increases net other TaylorMade-adidas Golf gross margin decreased 6.8 percent- € in millions operating expenses and income age points to 39.8% in the first quarter of 2009 (2008: 46.6%). Net other operating expenses and income as a percentage The decrease was mainly a result of price repositioning due of sales at TaylorMade-adidas Golf increased 15.6 percent- Change to the promotional environment in all regions, as well as the First quarter First quarter currency- age points to 47.0% in the first quarter of 2009 from 31.4% in first-time consolidation of the Ashworth business, which carries 2009 2008 Change neutral 2008. This development was mainly due to integration costs of a lower gross margin, and purchase price allocation expenses € 5 million related to the Ashworth acquisition and headcount Europe 30 32 (6%) 11% in an amount of € 2 million. However, this was partly offset reductions at Ashworth. Higher marketing expenses to support North America 102 92 10% (1%) by a margin increase in putters. Gross profit decreased 13% to new product launches as well as the non-recurrence of a one- Asia 61 65 (6%) (17%) € 77 million (2008: € 89 million). time book gain from the Maxfli divestiture in the prior year also Latin America 1 2 (12%) (17%) contributed to this development. In absolute terms, net other

Royalty and commission expenses increase operating expenses and income increased 52% to € 91 million Royalty and commission expenses at TaylorMade-adidas in the first quarter of 2009 from € 60 million in 2008. Golf increased 22% to € 7 million in the first quarter of 2009 TaylorMade-adidas Golf net sales by quarter (2008: € 6 million). Royalty and commission expenses at € in millions Operating margin declines 23.0 percentage points TaylorMade-adidas Golf mainly comprise intra-Group royalty The TaylorMade-adidas Golf operating margin decreased payments to the adidas segment related to adidas Golf sales. Q1 2008 191 23.0 percentage points to negative 10.7% in the first quarter Q1 2009 194 of 2009 from positive 12.3% in 2008. This was mainly a result of the lower gross margin and higher net other operating Q2 2008 226 expenses and income as a percentage of sales. Consequently, Q2 2009 operating profit for TaylorMade-adidas Golf decreased to nega- Q3 2008 197 tive € 21 million in the first quarter of 2009 versus positive Q3 2009 € 23 million in 2008.

Q4 2008 198 Q4 2009

TaylorMade-adidas Golf operating profit by quarter € in millions

Q1 2008 23 Q1 2009 (21)

Q2 2008 19 Q2 2009

Q3 2008 11 Q3 2009

Q4 2008 24 Q4 2009

Interim Group Management Report TaylorMade-adidas Golf Business Performance adidas Group First Quarter Report 2009 24

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 24 - ad09Q1_En.indd Subsequent Events and Outlook Group business outlook affected by uncertain global Global economic slowdown projected to intensify in 2009 macroeconomic development In 2009, the global economy is projected to decline due to the In 2009, recessionary pressures in most key Expectations for the development of the global economy and real-economy side effects of the banking crisis. Although sev- global markets are expected to have a negative the sporting goods industry in 2009 continue to be subject to eral governments around the world have adopted policies to impact on overall consumer demand and the a high degree of uncertainty. The unprecedented slowdown in combat recessionary pressures, an outright global recession is economic activity recorded during past months has conse- expected to continue into the second half of the year. In Europe, sporting goods industry. Despite our strong quences currently not fully foreseeable. As a result, macroeco- GDP in the Euro Zone is expected to decline around 3.3% in positions in most major markets, a regionally nomic forecasts for 2009 given by various government bodies 2009, driven by weakness in domestic consumption, a deterio- balanced sales mix and strength in innovation, and research institutes differ widely in their assessment of rating export outlook as well as the impact of tighter financing how long and deep the expected economic downturn will be. In conditions on investment. European emerging markets are also we expect these developments to have a nega- addition, the effect rising unemployment and lower consumer forecasted to decline in 2009, driven in particular by Russia. In tive impact on the development of the adidas confidence could have on private consumption cannot be fully North America, GDP is also projected to decline approximately Group’s financial results in 2009. Consequently, assessed. Consequently, the effect global macroeconomic 2.5% versus the prior year. With consumer confidence at record developments could have on the adidas Group’s business out- lows and expected increases in unemployment throughout the we forecast adidas Group sales and earnings look continues to be difficult to forecast, especially with regard year, lower consumer spending is forecasted to lead to a sharp per share to decline in 2009. to the second half of the year. Our outlook is hence based solely decline in GDP, particularly in the first half of 2009. In Asia, on the scenario of economic and sector development laid down excluding Japan, compared to 2008, growth is likely to slow in this report, acknowledging actual developments might sig- slightly to a level of around 5% in 2009, the weakest since 2001. No subsequent events nificantly differ from this scenario. In addition, it continues to China and India are forecasted to be affected by lower indus- Since the end of the first quarter of 2009, there have been no be difficult to quantify the impact negative currency transla- trial production growth and a slowdown of exports. Japan’s significant macroeconomic, sociopolitical, legal, organisation effects could have on the Group’s top- and bottom-line economy is forecasted to decline around 6% in 2009 versus tional or financing changes which we expect to influence our performance. Due to the fact that many currencies such as the 2008. In Latin America, recent data suggests that the region business materially going forward. In addition, there have Russian rouble, the British pound and several currencies in will also show GDP declines of between 1% and 2% in 2009. been no management changes since the end of the first quar- Latin America have significantly depreciated against the euro ter of 2009. towards the end of 2008 and at the beginning of 2009, we forecast these effects to have a significant negative impact on our Group’s financial performance.

Interim Group Management Report Subsequent Events and Outlook adidas Group First Quarter Report 2009 25

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 25 - ad09Q1_En.indd Lower consumer spending to negatively impact the adidas Group sales to decrease in 2009 adidas Group earnings per share to decrease in 2009 development of the global sporting goods industry We expect adidas Group sales to decline at a low- to mid-single- In 2009, the adidas Group gross margin is forecasted to decline. In 2009, we expect the global sporting goods industry to digit rate on a currency-neutral basis in 2009. Sales develop- A promotional environment in mature markets, as well as decline. Due to the non-recurrence of positive effects related ment will be negatively impacted by weaker consumer demand expected higher sourcing costs due to increased raw material to the UEFA EURO 2008™ in the first half of the year, and on- due to low levels of consumer confidence and rising unemploy- and wage costs, in particular in the first half of the year, will going difficult market conditions in major Western European ment in many major markets. Group currency-neutral sales in contribute to this development. Currency devaluation effects, markets, we expect the sporting goods industry to decline in the emerging markets of Europe, Asia and Latin America are in particular from the depreciation of the Russian rouble, are Europe in 2009. In the USA, we expect lower overall consumer forecasted to develop better relative to mature markets such as expected to also have a significant negative impact on gross spending and potential shifts in consumption patterns away Western Europe and North America. margin development in 2009. from discretionary products to negatively impact the sporting goods industry. Although we expect the sporting goods mar- Heterogeneous sales expectations by segment The Group’s other operating expenses as a percentage of sales ket in Asia to continue to grow in 2009, we anticipate growth We project a low- to mid-single-digit sales decline on a are expected to increase in 2009. Higher expenses for con rates to moderate considerably compared to the prior year. currency-neutral basis for the adidas brand in 2009. Revenues trolled space initiatives in the adidas and Reebok segments as In China, industry growth is likely to moderate significantly in in both the adidas Sport Performance and adidas Sport Style well as costs related to restructuring activities will drive this 2009, due to the exceptionally high rate of retail expansion in divisions are forecasted to decrease. Reebok segment sales development, partially compensated by positive effects from 2008, and high sell-in rates by sporting goods manufacturers are expected to be at least stable compared to the prior year efficiency improvements throughout our organisation. Market- ahead of the Beijing 2008 Olympic Games. In Japan, we expect on a currency-neutral basis in 2009. The brand’s key focus ing working budget expenses as a percentage of sales are fore- the sporting goods industry to decline, in line with private categories, Women’s Fitness and Men’s Sport, are expected to casted to be at or below the prior year level. Other operating consumption expectations in that market. With a majority of develop better compared to other categories due to new prod- income is expected to decline. This will mainly be driven by sporting goods in Latin America being purchased in US dollars, uct launches and campaigns in 2009. Currency-neutral sales the non-recurrence of book gains from acquisitions and dis- we expect demand for sporting goods to be negatively affected at TaylorMade-adidas Golf are forecasted to increase at a low- posals in the TaylorMade-adidas Golf segment in the prior year. by the recent depreciation of currencies in the major countries single-digit rate, supported by the consolidation of Ashworth As a result of the expected Group gross margin decline and the of the region. In addition, there are currently concerns related for the full twelve-month period. On a comparable basis, how- projected increase in other operating expenses as a percentage to increasing trade barriers being potentially implemented in ever, excluding Ashworth, sales are projected to decline. This of sales, we expect the operating margin for the adidas Group certain markets such as Brazil and Argentina. will be a result of the challenging market situation in the global to decline. golf market. Consolidation of new businesses supports Lower financial expenses due to reduced interest expenses TaylorMade-adidas Golf and Reebok sales resulting from the planned reduction of net borrowings will Sales recorded in the TaylorMade-adidas Golf segment will be only partly offset the decline. As a result of these develop- supported by the consolidation of Ashworth revenues for the ments and an increase in the Group’s tax rate compared to full twelve-month period. Ashworth, a leader in cotton casual the prior year, net income attributable to shareholders is golf apparel, has been consolidated within the adidas Group projected to decline in 2009. Basic and diluted earnings per since November 20, 2008. In addition, sales in the Reebok share are expected to decrease at a lower rate than net income segment are expected to be positively influenced by the con- attributable to shareholders due to a lower weighted average solidation of sales from the brand’s new companies in Latin number of shares outstanding compared to the prior year. America for the full twelve-month period.

Interim Group Management Report Subsequent Events and Outlook adidas Group First Quarter Report 2009 26

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 26 - ad09Q1_En.indd Earnings per share to be negative in first half of 2009 adidas Group 2009 outlook As a result of higher input costs, currency devaluation effects and one-time costs associated with measures to improve corporate efficiency in light of challenging economic and retail Currency-neutral sales low- to mid-single-digit decline conditions, the adidas Group expects earnings per share to be Gross margin decline around breakeven in the first six months of 2009. However, the Operating margin decline Group will generate significantly positive earnings per share Earnings per share decline again in the second half of the year, albeit at lower levels compared to the prior year. This will be a result of a moderation of input cost increases and positive impetus ahead of the 2010 FIFA World Cup™.

Excess cash to be used to reduce net debt In 2009, we expect continued strong cash flows from operating activities. Cash flows from operating activities will be used to finance working capital needs, investment activities, as well as dividend payments. Tight working capital management and disciplined investment activities are expected to help optimise the Group’s free cash flow in 2009. Investments in tangible and intangible assets are expected to amount to between € 300 million and € 400 million. Investments will focus primarily on controlled space initiatives. We intend to largely use excess cash to reduce net borrowings, which we forecast to be below the prior year level. As a result, we expect to make progress towards achieving our medium-term financial leverage target of below 50% (2008: 64.6%).

Interim Group Management Report Subsequent Events and Outlook adidas Group First Quarter Report 2009 27

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 27 - ad09Q1_En.indd Consolidated balance sheet € in millions

Mar. 31, 2009 Mar. 31, 2008 Change in % Dec. 31, 2008

Cash and cash equivalents 236 288 (18.1) 244 Short-term financial assets 121 80 50.3 141 Accounts receivable 1,884 1,645 14.5 1,624 Other current financial assets 263 92 186.0 287 Inventories 2,016 1,578 27.8 1,995 Income tax receivables 78 75 3.0 110 Other current assets 508 488 4.1 502 Assets classified as held for sale 23 71 (67.7) 31 Total current assets 5,129 4,317 18.8 4,934 Property, plant and equipment 907 673 34.8 886 Goodwill 1,540 1,391 10.7 1,499 Trademarks 1,452 1,201 20.9 1,390 Other intangible assets 198 184 7.8 204 Long-term financial assets 97 104 (7.1) 96 Other non-current financial assets 65 42 54.4 60 Deferred tax assets 387 369 4.8 344 Other non-current assets 129 125 3.8 120 Total non-current assets 4,775 4,089 16.8 4,599 Total assets 9,904 8,406 17.8 9,533

Short-term borrowings 729 231 214.8 797 Accounts payable 880 656 34.1 1,218 Other current financial liabilities 44 162 (73.1) 79 Income taxes 305 335 (8.8) 321 Provisions 319 328 (2.7) 324 Accrued liabilities 634 720 (11.9) 684 Other current liabilities 241 223 8.1 216 Liabilities classified as held for sale 0 3 (100.0) 6 Total current liabilities 3,152 2,658 18.6 3,645 Long-term borrowings 2,511 2,210 13.6 1,776 Other non-current financial liabilities 17 56 (69.9) 23 Pensions and similar obligations 133 126 4.9 132 Deferred tax liabilities 475 426 11.7 463 Non-current provisions 30 29 2.3 28 Non-current accrued liabilities 24 23 5.2 37 Other non-current liabilities 32 23 39.3 29 Total non-current liabilities 3,222 2,893 11.4 2,488 Share capital 194 200 (3.5) 194 Reserves 126 (185) (168.2) (10) Retained earnings 3,205 2,828 13.4 3,202 Shareholders’ equity 3,525 2,843 24.0 3,386 Minority interests 5 12 (61.4) 14 Total equity 3,530 2,855 23.7 3,400 Total liabilities and equity 9,904 8,406 17.8 9,533 Rounding differences may arise in percentages and totals. From 2009, other (non-)current financial assets/liabilities are shown separately from other (non-)current assets/liabilities.

Interim Consolidated Financial Statements (IFRS) Consolidated Balance Sheet adidas Group First Quarter Report 2009 28

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 28 - ad09Q1_En.indd Consolidated income statement € in millions

First quarter 2009 First quarter 2008 Change

Net sales 2,577 2,621 (1.7%) Cost of sales 1,414 1,333 6.0 % Gross profit 1,164 1,288 (9.7%) (% of net sales) 45.2% 49.1% (4.0pp) Royalty and commission income 20 21 (4.1%) Other operating income 27 22 22.5 % Other operating expenses 1,153 1,050 9.9 % (% of net sales) 44.7% 40.0% 4.7 pp Operating profit 58 282 (79.5%) (% of net sales) 2.2% 10.8% (8.5pp) Financial income 6 6 8.1 % Financial expenses 56 38 48.3 % Income before taxes 9 250 (96.6%) (% of net sales) 0.3% 9.6% (9.2pp) Income taxes 4 80 (94.5%) (% of income before taxes) 51.7% 32.0% 19.7 pp Net income 4 170 (97.6%) (% of net sales) 0.2% 6.5% (6.3pp) Net income attributable to shareholders 5 169 (97.2%) (% of net sales) 0.2% 6.5% (6.3pp) Net income attributable to minority interests (1) 1 (164.2%)

Basic earnings per share (in €) 0.02 0.84 (97.0%) Diluted earnings per share (in €) 0.04 0.79 (95.1%) Rounding differences may arise in percentages and totals.

Interim Consolidated Financial Statements (IFRS) Consolidated Income Statement adidas Group First Quarter Report 2009 29

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 29 - ad09Q1_En.indd Consolidated statement of comprehensive income € in millions

First quarter 2009 First quarter 2008

Net income after taxes 4 170

Net gain/(loss) on cash flow hedges, net of tax 19 (50) Actuarial gain of defined benefit plans, net of tax 1 1 Currency translation 114 (166) Other comprehensive income 134 (215)

Total comprehensive income 138 (45)

Attributable to shareholders of adidas AG 139 (46) Attributable to minority interests (1) 1 Rounding differences may arise in percentages and totals.

Interim Consolidated Financial Statements (IFRS) Consolidated Statement of Comprehensive Income adidas Group First Quarter Report 2009 30

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 30 - ad09Q1_En.indd Consolidated statement of changes in equity € in millions

Cumulative Total Capital translation Hedging Other Retained shareholders’ Minority Share capital reserve adjustments reserve reserves 1) earnings equity interests Total equity

Balance at December 31, 2007 204 737 (510) (58) (8) 2,659 3,023 11 3,034

Total comprehensive income (166) (50) 1 169 (46) 1 (45)

Exercised share options 0 0 0 0 Repurchase of adidas AG shares (3) (132) (135) (135) Reclassifications of minorities in accordance with IAS 32 0 0 0

Balance at March 31, 2008 200 606 (676) (108) (7) 2,828 2,843 12 2,855

Balance at December 31, 2008 194 338 (432) 91 (5) 3,201 3,386 14 3,400

Total comprehensive income 114 19 1 5 139 (1) 138

Acquisition of shares from minority shareholders 0 (11) (11) Newly created minority interests 0 3 3 Reclassifications of minorities in accordance with IAS 32 (0) (0) (0)

Balance at March 31, 2009 194 338 (318) 110 (4) 3,205 3,525 5 3,530 Rounding differences may arise in percentages and totals. 1) Reserves for actuarial gains /losses and share option plans.

Interim Consolidated Financial Statements (IFRS) Consolidated Statement of Changes in Equity adidas Group First Quarter Report 2009 31

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 31 - ad09Q1_En.indd Consolidated statement of cash flows € in millions

First quarter 2009 First quarter 2008

Operating activities: Income before taxes 9 250 Adjustments for: Depreciation and amortisation 69 50 Unrealised foreign exchange losses, net 13 16 Interest income (6) (6) Interest expense 37 35 Gains on sale of property, plant and equipment, net (2) (5) Operating profit before working capital changes 120 340 Increase in receivables and other current assets (259) (295) Increase in inventories (25) (17) Decrease in accounts payable and other current liabilities (364) (1) Cash used in/provided by operations before interest and taxes (528) 27 Interest paid (48) (50) Income taxes paid (41) (84) Net cash used in operating activities (617) (107)

Investing activities: Purchase of trademarks and other intangible assets (8) (6) Proceeds from sale of other intangible assets 0 6 Purchase of property, plant and equipment (46) (47) Proceeds from sale of property, plant and equipment 5 8 Acquisition of further investments in subsidiaries (13) (6) Acquisition of subsidiaries and other business units net of cash acquired (4) (2) Proceeds from sale of short-term financial assets 20 5 Purchase of investments and other long-term assets (13) (22) Interest received 6 6 Net cash used in investing activities (53) (58)

Financing activities: Proceeds from long-term borrowings 891 452 Repurchase of adidas AG shares — (135) Cash repayments of short-term borrowings (228) (159) Net cash provided by financing activities 663 158

Effect of exchange rates on cash (1) (0)

Decrease in cash and cash equivalents (8) (7) Cash and cash equivalents at beginning of year 244 295 Cash and cash equivalents at end of period 236 288 Rounding differences may arise in percentages and totals.

Interim Consolidated Financial Statements (IFRS) Consolidated Statement of Cash Flows adidas Group First Quarter Report 2009 32

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 32 - ad09Q1_En.indd Notes to Interim Consolidated Financial Statements 2 Seasonality As at March 31, 2009 The sales of the Group in certain product categories are seasonal and therefore revenues and attributable earnings may vary within the fiscal year. As adidas and Reebok brand sales account for over 90% of the Group’s net sales, sales and earnings tend to be strongest in the first and third quarters of the fiscal year. However, shifts in the share of sales and attributable earnings 1 Basis of preparation of particular product categories, brands or the regional composition may occur throughout the The interim consolidated financial statements of adidas AG and its subsidiaries (collectively year. the “Group”) for the first three months ending March 31, 2009 are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The Group 3 Acquisitions of subsidiaries applied all International Financial Reporting Standards and Interpretations of the International Effective January 1, 2009, adidas International B.V. acquired 51% of the shares of Life Sport Ltd. Financial Reporting Interpretations Committee effective as at March 31, 2009, with the exception for a purchase price in the amount of ILS 25.6 million. Based in Holon (Israel), Life Sport Ltd. is of IFRS 7, which is not obligatory for interim financial reporting. a marketing company for adidas products in Israel. The purchase price allocation has yet to be finalised. The accounting policies used in the preparation of the interim financial statements are consis tent with those in the annual consolidated financial statements for the year ending December 31, Effective January 1, 2009, adidas International B.V. acquired the outstanding 25% of the shares 2008 and are in line with IAS 34 “International Accounting Standard No. 34 – Interim Financial of Reebok’s subsidiary in Spain, Reebok Spain S.A., Alicante. Reporting”. The interim financial statements also comply with GAS 16 “German Accounting Standard No. 16 – Interim Financial Reporting”. The interim financial statements and the Effective January 23, 2009, adidas AG acquired the remaining 5% of the shares of its subsidiary interim management report have not been audited in accordance with section 317 German in Greece, adidas Hellas A.E., Thessaloniki. Commercial Code (Handelsgesetzbuch – HGB) or reviewed by an auditor. On February 16, 2009, adidas International, Inc. acquired assets of Bones in Motion, Inc. as part The Group believes that the application of new/revised standards and interpretations which are of an asset deal for a purchase price in the amount of USD 5 million. Based in Austin/Texas effective from January 1, 2009 does not have a material impact on the Group’s financial position, (USA), Bones in Motion, Inc. is engaged in developing, manufacturing and selling sports- and results of operations or cash flows. The Group is currently analysing the potential impacts of fitness-specific location-aware software applications and web-based services. The purchase new/revised standards and interpretations that will be effective for financial years after Decem- price allocation has yet to be finalised. ber 31, 2009. 4 Assets/liabilities classified as held-for-sale Costs that are incurred unevenly during the financial year are anticipated or deferred in the With the exception of Gekko Brands, LLC which was sold in March 2009, the composition of interim financial statements only if it would be also appropriate to anticipate or defer such costs assets/liabilities classified as held-for-sale is unchanged versus December 31, 2008. at the end of the financial year. 5 Shareholders’ equity These interim consolidated financial statements should be read in conjunction with the 2008 In the period from January 1, 2009 to March 31, 2009, the nominal capital of adidas AG did annual consolidated financial statements. The notes contained therein also apply to the quarterly not change. Consequently, on March 31, 2009, the nominal capital of adidas AG amounted to financial statements and are not repeated unless explicit reference is made to certain changes. € 193,515,512, divided into 193,515,512 no-par-value bearer shares (“shares”). The results of operations for the first three months ending March 31, 2009 are not necessarily indicative of results to be expected for the entire year.

Interim Consolidated Financial Statements (IFRS) Notes to Interim Consolidated Financial Statements adidas Group First Quarter Report 2009 33

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 33 - ad09Q1_En.indd 6 Other operating income and other operating expenses 8 Segmental reporting Other operating income mainly includes income from the release of accruals and provisions and The Group is currently managed by brand segments, namely adidas, Reebok and other revenues. TaylorMade-adidas Golf.

Other operating expenses include expenses for marketing, sales and research and development, The Reebok segment includes the brands Reebok, Reebok-CCM Hockey and Rockport. as well as for logistics and central finance and administration. In addition, they include depreciation on tangible and amortisation on intangible assets, with the exception of other depreciation The TaylorMade-adidas Golf segment includes the brands TaylorMade, adidas Golf and and amortisation which is included in the cost of sales. In the first three months of 2009, depre- Ashworth. ciation and amortisation amounted to € 67 million (2008: € 50 million). The Global Sourcing function together with other central functions such as Group Treasury 7 Earnings per share and Global IT is included in HQ/Consolidation. Basic earnings per share are calculated by dividing net income by the weighted average number of outstanding shares during the period. Financial information in accordance with the management approach is presented on pages 35 – 36 of this report. As a result of the Management Share Option Plan of adidas AG (MSOP), which was introduced in 1999, and the convertible bond issued in October 2003, which met the required conversion 9 Subsequent events criteria at the balance sheet date, dilutive potential shares have arisen. Between the end of the first quarter of 2009 and the publication of this report on May 5, 2009, there were no major Group-specific matters which we expect to influence our business materially going forward. Earnings per share Herzogenaurach, May 5, 2009 The Executive Board of adidas AG

First quarter First quarter 2009 2008

Net income attributable to shareholders (€ in millions) 5 169 Weighted average number of shares 193,515,512 202,443,070 Basic earnings per share (in €) 0.02 0.84 Net income attributable to shareholders (€ in millions) 5 169 Interest expense on convertible bond, net of taxes (€ in millions) 3 3 Net income used to determine diluted earnings per share (€ in millions) 8 172 Weighted average number of shares 193,515,512 202,443,070 Weighted share options 60,835 112,666 Weighted assumed conversion convertible bond 15,684,315 15,684,315 Weighted average number of shares for diluted earnings per share 209,260,662 218,240,051 Diluted earnings per share (in €) 0.04 0.79

Interim Consolidated Financial Statements (IFRS) Notes to Interim Consolidated Financial Statements adidas Group First Quarter Report 2009 34

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 34 - ad09Q1_En.indd Segmental information by brand € in millions

First quarter 2009 First quarter 2008 Change adidas Net sales 1,917 1,968 (2.6%) Gross profit 901 964 (6.6%) Gross margin 47.0% 49.0% (2.0pp) Operating profit 228 336 (32.2%) Operating margin 11.9% 17.1% (5.2pp)

Reebok Net sales 458 454 0.9% Gross profit 135 168 (20.0%) Gross margin 29.4% 37.1% (7.7pp) Operating profit (96) (13) (661.9%) Operating margin (20.9%) (2.8%) (18.2pp)

TaylorMade-adidas Golf Net sales 194 191 1.6% Gross profit 77 89 (13.1%) Gross margin 39.8% 46.6% (6.8pp) Operating profit (21) 23 (188.9%) Operating margin (10.7%) 12.3% (23.0pp)

HQ/Consolidation Net sales 8 8 (1.7%) Gross profit 52 67 (23.5%) Operating profit (54) (65) 17.6%

Total Net sales 2,577 2,621 (1.7%) Gross profit 1,164 1,288 (9.7%) Gross margin 45.2% 49.1% (4.0pp) Operating profit 58 282 (79.5%) Operating margin 2.2% 10.8% (8.5pp) Rounding differences may arise in percentages and totals.

Interim Consolidated Financial Statements (IFRS) Segmental Information adidas Group First Quarter Report 2009 35

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 35 - ad09Q1_En.indd Segmental information by region € in millions

First quarter 2009 First quarter 2008 Change in %

Europe Net sales 1,175 1,249 (5.9)

North America Net sales 538 578 (7.0)

Asia Net sales 628 594 5.8

Latin America Net sales 218 177 22.7

HQ/Consolidation Net sales 19 23 (16.7)

Total Net sales 2,577 2,621 (1.7) Rounding differences may arise in percentages and totals.

Interim Consolidated Financial Statements (IFRS) Segmental Information adidas Group First Quarter Report 2009 36

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 36 - ad09Q1_En.indd Management Boards

Executive Board Supervisory Board

Herbert Hainer Dr. Hans Friderichs The term in office of all members of the Supervisory Board CEO and Chairman Chairman will expire with the end of the Annual General Meeting on May 7, 2009. The six shareholder representatives are to Glenn Bennett Fritz Kammerer 1) be elected by the Annual General Meeting, the six future Global Operations Deputy Chairman employee representatives were elected by the employees on March 30/31, 2009 already. Robin J. Stalker Igor Landau Finance Deputy Chairman For further information on the shareholder representatives standing for election, please see the Annual General Erich Stamminger Sabine Bauer 1) Meeting Agenda, Item 5. The Agenda of the Annual President and General Meeting as well as a short introduction of the CEO of the adidas Brand Dr. iur. Manfred Gentz shareholder representatives to be elected and of the employee representatives elected already can be found at Dr. Stefan Jentzsch www.adidas-Group.com/en/investor/events/agm/.

Roland Nosko 1) Biographical information on our Executive Board members as well as on mandates of the members of the Executive Hans Ruprecht 1) and the Supervisory Boards is available in the 2008 Annual Report and at www.adidas-Group.com. Willi Schwerdtle

Heidi Thaler-Veh 1)

Christian Tourres

Klaus Weiß 1)

1) Employee representative.

adidas Group First Quarter Report 2009 37

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May 5, 2009 First Quarter 2009 Results Press release, conference call and webcast

May 7, 2009 Annual General Meeting in Fürth/Bavaria, Germany Webcast

May 8, 2009 Dividend paid (Subject to Annual General Meeting approval)

August 5, 2009 First Half 2009 Results Press release, conference call and webcast

November 4, 2009 Nine Months 2009 Results Press release, conference call and webcast

adidas Group First Quarter Report 2009 38

version: Tue, 09-05-05, 09:20 AM 1st corr 2nd corr 3rd corr 4th corr 5th corr page 38 - ad09Q1_En.indd Contact adidas AG Adi-Dassler-Str. 1 91074 Herzogenaurach Germany

Tel: + 49 (0) 91 32 84 – 0 Fax: + 49 (0) 91 32 84 – 22 41 www.adidas-Group.com

Investor Relations Tel: + 49 (0) 91 32 84 – 29 20 / 21 87 Fax: + 49 (0) 91 32 84 – 31 27 email: [email protected] www.adidas-Group.com / investors adidas Group is a member of DAI (German Share Institute), DIRK (German Investor Relations Association) and NIRI (National Investor Relations Institute, USA).

This report is also available in German. For further adidas Group publications, please see our corporate website.

Concept and Design häfelinger + wagner design, Munich

adidas Group First Quarter Report 2009 39

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