adidas Group Full Year 2007 Results

Business Wire, March 5, 2008

Q4 currency-neutral sales up 14% with increases in all regions

Q4 net income grows 63%

Currency-neutral adidas backlogs at highest level in almost 10 years

* Currency-neutral sales grow 7% in 2007

* Full year net income attributable to shareholders up 14%

* Net borrowings reduced by nearly EU 500 million to EU 1.766 billion

* Currency-neutral adidas backlogs grow 17%

* Reebok backlogs decrease 8% on a currency-neutral basis

HERZOGENAURACH, Germany -- Fourth quarter adidas Group (FWB:ADS) currency-neutral sales grow 14%

Fourth quarter Group revenues grew 14% on a currency-neutral basis. This development was driven by strong sales increases at both adidas and TaylorMade-adidas Golf. Reebok sales, however, declined. On a regional basis, sales grew by double-digit rates in all regions except North America, where sales increased at a low-single-digit rate. Currency movements negatively impacted revenues in euro terms. Group sales in euro terms increased 8% to EU 2.419 billion in the fourth quarter of 2007 (2006: EU 2.248 billion).

Fourth quarter net income attributable to shareholders up 63%

Fourth quarter gross margin increased 3.2 percentage points to 46.6% (2006: 43.4%) as a result of underlying improvements in all segments. Cost synergies resulting from the combination of adidas and Reebok sourcing activities and, to a lesser extent, the non-recurrence of negative impacts from purchase price allocation in the Reebok segment also positively impacted gross margin development. Group gross profit increased 15% to EU 1.127 billion (2006: EU 976 million). Operating expenses as a percentage of sales increased mainly due to higher marketing expenses in the adidas segment. As a result of the strong gross margin increase, which more than offset the increase in operating expenses, the Group's operating margin increased 0.2 percentage points to 2.5% in the fourth quarter of 2007 versus 2.3% in the prior year. Operating profit grew 18% to EU 61 million versus EU 52 million in 2006. The Group's net income attributable to shareholders increased 63% to EU 21 million (2006: EU 13 million) due to higher operating profit and lower net financial expenses. Net financial expenses decreased following the strong reduction of net borrowings. These positive effects more than offset a higher tax rate.

adidas Group currency-neutral sales grow 7% in 2007

In 2007, Group revenues increased 7% on a currency-neutral basis, mainly as a result of sales growth in the adidas segment. Currency movements negatively impacted Group sales in euro terms. Group revenues grew 2% to EU 10.299 billion in 2007 from EU 10.084 billion in 2006.

"Our Group made big strides in 2007," commented adidas AG Chairman and CEO Herbert Hainer. "Our focus on performance and executional excellence was a big contributor to our success. I am extremely proud that all our hard work has helped the Group achieve new record sales and net income levels - and all this despite conditions that got tougher in some important markets as the year went on."

adidas segment drives top-line growth

The adidas segment set the pace for the Group's sales growth in 2007. Currency-neutral adidas segment revenues increased 12% during the period, representing the brand's third consecutive year of double-digit growth. Currency-neutral sales in the Reebok segment were stable as a result of the consolidation of twelve months of Reebok's revenues in 2007 versus only eleven months in the prior year. On a like-for-like basis1, Reebok segment sales declined by 5% in 2007. At TaylorMade-adidas Golf, currency-neutral revenues increased 1%, negatively impacted by the divestiture of the Greg Norman Collection wholesale business. On a like-for-like basis, TaylorMade-adidas Golf sales increased 9%. Sales in the HQ/Consolidation segment decreased by 60% on a currency-neutral basis, mainly due to the expiration of the Salomon footwear sourcing cooperation agreement. Currency translation effects negatively impacted sales in all segments in euro terms. adidas sales increased 7% to EU 7.113 billion in 2007 from EU 6.626 billion in 2006. Sales at Reebok decreased 6% to EU 2.333 billion versus EU 2.473 billion in the prior year. TaylorMade-adidas Golf sales declined 6% to EU 804 million in 2007 from EU 856 million in 2006. HQ/Consolidation sales decreased 62% to EU 48 million from EU 129 million in the prior year.

1 This like-for-like comparison of Reebok segment revenues reflects sales for the full twelve-month periods of both years. It also includes GNC retail sales which were transferred from the TaylorMade-adidas Golf segment to the Reebok segment, effective January 1, 2007. However, it excludes sales related to the NBA and Liverpool licensed businesses. These were transferred to brand adidas in the first half of 2006.

Sales increase in nearly all regions

adidas Group sales grew in all regions except North America in 2007. Group sales in Europe grew 7% on a currency-neutral basis as a result of strong growth in the region's emerging markets. In North America, Group sales declined 2% on a currency-neutral basis due to lower Reebok sales in the USA. Sales for the adidas Group in Asia increased 18% on a currency-neutral basis, driven in particular by strong growth in China. In Latin America, sales grew 38% on a currency-neutral basis, with increases coming from all of the region's major markets. Currency translation effects negatively impacted sales in euro terms in all regions. In euro terms, sales in Europe increased 5% to EU 4.369 billion in 2007 from EU 4.162 billion in 2006. Sales in North America decreased 9% to EU 2.929 billion in 2007 from EU 3.234 billion in the prior year. Revenues in Asia grew 12% to EU 2.254 billion in 2007 from EU 2.020 billion in 2006. Sales in Latin America grew 32% to EU 657 million in 2007 from EU 499 million in the prior year.