adidas Group: First Quarter 2008 Results

Business Wire, May 6, 2008

Income before taxes increases by 31%

As a result of the Group's operating margin increase as well as lower net financial expenses, income before taxes as a percentage of sales increased by 2.0 percentage points to 9.6% in 2008 from 7.5% in 2007. Income before taxes for the adidas Group increased 31% to EU 250 million in the first quarter of 2008 from EU 191 million in 2007.

Net income attributable to shareholders up 32%

The Group's net income attributable to shareholders increased 32% to EU 169 million in the first quarter of 2008 from EU 128 million in 2007. This development is a result of the Group's strong operating margin improvement and lower net financial expenses. In addition, the Group's tax rate, which decreased by 0.4 percentage points to 32.0% in the first quarter of 2008 from 32.4% in the prior year, contributed to this development. The Group's minority interests declined by 23% to EU 1 million in the first quarter of 2008 from EU 1 million during the same period in the prior year.

Basic and diluted earnings per share increase 33 and 32%

Basic earnings per share increased 33% to EU 0.84 in the first quarter of 2008 versus EU 0.63 in the prior year. Diluted earnings per share in 2008 grew 32% to EU 0.79 from EU 0.60 in the prior year.

Over 3.2 million shares repurchased in the first quarter

On January 29, 2008, adidas AG announced the launch of a share buyback program to repurchase up to 5% of the company's stock capital until November 2008. During the first quarter, the Group purchased over 3.2 million shares at an average price of EU 42.03. The buyback volume amounted to EU 134.8 million in the first quarter. Over the entire buyback period, since January 30 to date, adidas AG bought back 5.5 million shares at an average price of EU 41.73. The total buyback volume amounted to EU 229.9 million.

Group inventories grow in line with business expectations

Group inventories increased 3% to EU 1.578 billion at the end of the first quarter of 2008 versus EU 1.536 billion in 2007. On a currency-neutral basis, this represents an increase of 13%. This increase is in line with the Group's business expectations. It mainly reflects business expansion in emerging markets as well as preparation for deliveries of UEFA EURO 2008[TM] related products in the second quarter. Group receivables decreased 7% to EU 1.645 billion at the end of the first quarter of 2008 versus EU 1.777 billion in the prior year. On a currency-neutral basis, receivables were stable.

Net borrowings reduced by EU 446 million

Net borrowings at March 31, 2008 were EU 2.073 billion, down 18% or EU 446 million versus EU 2.519 billion in the prior year. Strong bottom-line profitability and continued tight working capital management more than offset the financing of the adidas AG share buyback program. Currency effects also positively impacted this development.

adidas backlogs grow strongly

Backlogs for the adidas brand at the end of the first quarter of 2008 increased 13% versus the prior year on a currency-neutral basis. This improvement was supported by adidas' strength in all major categories. In euro terms, adidas backlogs grew 5%. Footwear backlogs increased 14% in currency-neutral terms ( 6% in euros). Double-digit growth in both Asia and Europe more than offset a decline in North America. Apparel backlogs grew 13% on a currency-neutral basis ( 5% in euros), driven by strong double-digit increases in Asia and Europe. Hardware backlogs grew largely due to increases in the football category.