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Nine Months Report 2009


adidas Group Nine Months Report 2009 02

adidas Group segmental information

€ in millions

Nine months 2009 Nine months 2008 Change 3rd quarter 2009 3rd quarter 2008 Change

adidas Net sales 5,779 6,004 (3.8%) 2,111 2,218 (4.8%)Gross profit 2,708 2,947 (8.1%) 995 1,104 (9.9%)Gross margin 46.9% 49.1% (2.2pp) 47.1% 49.8% (2.7pp)Operating profit 789 951 (17.1%) 373 439 (15.0%)Operating margin 13.7% 15.8% (2.2pp) 17.7% 19.8% (2.1pp)

Reebok Net sales 1,497 1,587 (5.7%) 591 665 (11.1%)Gross profit 487 603 (19.2%) 205 242 (15.4%)Gross margin 32.6% 38.0% (5.5pp) 34.7% 36.4% (1.8pp)Operating profit (130) 2 — 17 25 (34.0%)Operating margin (8.7%) 0.1% (8.8pp) 2.8% 3.8% (1.0pp)

TaylorMade-adidas Golf Net sales 633 614 3.2% 184 197 (6.2%)Gross profit 249 278 (10.6%) 72 84 (14.6%)Gross margin 39.3% 45.3% (6.0pp) 39.0% 42.9% (3.8pp)Operating profit (23) 54 (142.0%) (4) 11 (137.7%)Operating margin (3.6%) 8.8% (12.4pp) (2.3%) 5.7% (8.0pp)

Table of Contents Financial Highlights Operational and Sporting Highlights Interview with the CEO Our Share Interim Group Management ReportGroup Business Performance— Economic and Sector Development— Income Statement— Balance Sheet and Cash Flow StatementadidasReebokTaylorMade-adidas GolfSubsequent Events and Outlook Interim Consolidated Financial Statements(IFRS)Consolidated Balance SheetConsolidated Income StatementConsolidated Statement of Comprehensive IncomeConsolidated Statement of Changes in EquityConsolidated Statement of Cash FlowsNotes to Interim Consolidated Financial Statements Segmental InformationSegmental Information by BrandSegmental Information by Region Management Boards Financial Calendar 2009/2010 Contact

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353536 37 38 39


adidas Group Nine Months Report 2009 03 To Our Shareholders Financial Highlights

Financial highlights (IFRS)


Operating highlights (€ in millions) Net sales 7,923 8,225 (3.7%) 2,888 3,083 (6.3%)Operating profit 465 963 (51.7%) 336 473 (29.0%)Net income attributable to shareholders 226 588 (61.6%) 213 302 (29.7%)

Key ratios (%) Gross margin 45.1% 49.4% (4.3pp) 45.3% 49.0% (3.7pp)Other operating expenses as a percentage of net sales

41.0%

39.1%

1.8pp

35.1%

34.9%

0.2pp

Operating margin 5.9% 11.7% (5.8pp) 11.6% 15.3% (3.7pp)Effective tax rate 34.2% 30.5% 3.7pp 30.3% 29.6% 0.7ppNet income attributable to shareholders as a percentage of net sales

2.9%

7.1%

(4.3pp)

7.4%

9.8%

(2.5pp)

Operating working capital as a percentage of net sales 1)

25.6%

24.5%

1.2pp

25.6%

24.5%

1.2pp

Equity ratio 35.9% 35.0% 0.9pp 35.9% 35.0% 0.9ppFinancial leverage 70.2% 78.5% (8.3pp) 70.2% 78.5% (8.3pp)

Balance sheet and cash flow data (€ in millions) Total assets 9,105 9,456 (3.7%) 9,105 9,456 (3.7%)Inventories 1,652 1,812 (8.8%) 1,652 1,812 (8.8%)Receivables and other current assets 2,544 2,829 (10.1%) 2,544 2,829 (10.1%)Working capital 2) 1,530 2,105 (27.3%) 1,530 2,105 (27.3%)Net borrowings 2,294 2,593 (11.5%) 2,294 2,593 (11.5%)Shareholders’ equity 3,268 3,306 (1.1%) 3,268 3,306 (1.1%)Capital expenditure 156 238 (34.3%) 40 106 (62.2%)Net cash provided by/(used in) operating activities 122 (100) 222.4%

Per share of common stock (€) Basic earnings 1.17 2.96 (60.5%) 1.10 1.54 (28.9%)Diluted earnings 1.13 2.78 (59.4%) 1.03 1.44 (28.5%)Operating cash flow 0.63 (0.50) 225.8% Share price at end of period 36.17 37.70 (4.2%) 36.17 37.70 (4.2%)

Other (at end of period) Number of employees 39,524 37,485 5.4% 39,524 37,485 5.4%Number of shares outstanding 193,515,512 198,178,337 3) (2.4%) 193,515,512 198,178,337 3) (2.4%)Average number of shares 193,515,512 198,868,061 4) (2.7%) 193,515,512 195,806,311 4) (1.2%)

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 restated due to reclassification of long-term to short-term borrowings.3) All shares except treasury shares carry full dividend rights.4) After deduction of treasury shares.

Nine months net sales

€ in millions

2005 1) 5,115

2006 2) 7,836

2007 7,879

2008 8,225

2009 7,923

1) Figure reflects continuing operations as a result of the divestiture of the Salomon business segment in 2005.

2) Including Reebok business segment from February 1, 2006 onwards. Including Greg Norman apparel business from February 1, 2006 to November 30, 2006.

Nine months net income attributable to shareholders

€ in millions

2005 1) 386

2006 2) 469

2007 530

2008 588

2009 226

1) Includes continuing and discontinued operations. 2) Including Reebok business segment from February 1, 2006 onwards. Including

Greg Norman apparel business from February 1, 2006 to November 30, 2006.


adidas Group Nine Months Report 2009 04 To Our Shareholders Operational and Sporting Highlights

Operational and Sporting Highlights

Third quarter 2009

15.07. Picture 01 Reebok and supermodel Bar Rafaeli launch Reebok’s highlight shoe EasyTone™ throughout Europe. 24.07. adidas and UEFA announce the extension of their long-term partnership for the UEFA Champions League and also an agreement for the newly created UEFA Europa League as well as for the UEFA Super Cup. 13.08. Picture 02 adidas celebrates its greatest moments to mark its 60th anniversary. Adi Dassler registered his company “Adolf Dassler adidas Sportschuhfabrik” in August 1949. 15.08. The IAAF Athletic World Championships in Berlin begin. adidas and Reebok are highly visible throughout the whole event. 16.08. Picture 03 TaylorMade-adidas Golf Tour Staff professional Y. E. Yang wins the US PGA Championship. 16.08. R&B superstar MC Fabolous and Reebok team up to debut the Reebok Classic Remix footwear collection, sold exclusively at select Foot Locker locations throughout the USA. 21.08. Reebok Russia celebrates the launch of Alexander Ovechkin’s Reebok apparel line called the Ovechkin Signature Collection. 02.09. Picture 04 TaylorMade Golf introduces Penta TP, a new tour ball designed to deliver a superior

balance of performance in five key shot categories. 02.09. adidas Group is awarded No. 2 in the DAX-30 category and No. 3 overall in the Manager Magazin’s “Best Annual Reports 2009” ranking. 04.09. For the tenth consecutive time, adidas AG is selected to join the Dow Jones Sustainability Group Indexes. 10.09. Picture 05 The adidas sponsored German women’s football team celebrates its fifth straight continental title at the UEFA WOMEN’S EURO 2009™ in Helsinki. 21.09. adidas and UEFA announce the extension of their long-term partnership for UEFA EURO 2012™ and UEFA EURO 2016™. 21.09. Picture 06 In support of the peace initiative PEACE ONE DAY adidas and PUMA shake hands for the first time after six decades. As a sign of amicable cooperation, employees as well as the CEOs of both companies, Herbert Hainer and Jochen Zeitz, play football together. 28.09. adidas announces its partnership with the European Rugby Cup, the organiser of both the Heineken Cup and the Amlin Challenge Cup.

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adidas Group Nine Months Report 2009 05 To Our Shareholders Interview with the CEO

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

Interview with the CEO

Despite the difficult economic environment, the adidas Group has made significant progress in improving its financial position in 2009. A strong reduction in Group inventories and receivables has led to a decrease in net borrowings of 12% compared to the prior year. Although consumer and retail conditions remain challenging, the backdrop of the forth-coming major sports event year and a promising product pipeline lead to cautious optimism for the future.

Herbert Haineradidas Group CEO



Herbert, you expected to see improvements in your financial performance in the third quarter compared to the first half of the year. Are you happy with the development and can you outline where you have seen progress?

This year, our industry and our Group – like so many others – have faced unprecedented challenges. However, we have tackled the challenges head-on. We have successfully adapted to our surroundings, and our drive for operational excellence has meant that despite these challenges we have moved forward. And as a consequence I am happy to report that during the third quarter we have significantly strengthened our overall financial position. While our top-line development has not materially altered since the first half, declining 7% currency-neutral both for the quarter and for the nine months, we have seen a significant improvement in profitability. Despite persisting headwinds such as impacts from clearance activities, higher input costs and currency devaluation effects, tight control of operating expenses has led to a much stronger profit for the quarter compared to the first half of this year. Diluted earnings per share in the third quarter were down 29% to € 1.03 which compares to the 93% decline witnessed in the first six months. Although this is still below where we would like, I believe we have shown tremendous progress on balance sheet management. Inventories and receivables are now down 8% and 7% currency-neutral, respectively. This has led to a 12% reduction in net borrowings year-on-year and a 20% decline since the highs of the first quarter. Therefore, I believe we can be satisfied with our achievements so far this year.

Now that the greater part of the year is behind us – do you believe the worst is over? What is your perception of the current consumer environment around the globe?

In terms of our Group’s financial results development – yes, I strongly believe the worst is over. The results I just outlined are clear evidence of the stability of our business model. But let’s make no mistake: We continue to feel the pressure on the top and bottom line as retailers and consumers safeguard their cash. This is particularly so in North America and Western Europe. Retail customers are taking a cautious stance on the upcoming holiday period – keeping inventory levels in check as consumers delay purchases and stay value-conscious. Eastern European markets still remain challenged. In Russia, while sales in roubles continue to be positive for the first nine months, we did see some deceleration in the third quarter. And the weaker rouble remains an issue. Alone this year, the rouble devaluation has reduced our Group revenue performance by two percentage points. Moving to Asia, we continue to see mixed developments as declines in Japan and China are being partly offset by solid growth in the rest of the region. In China, while we are making good progress in managing through the inventory bubble, we have not seen a major upswing in consumer demand yet. Finally, the consumer environment in Latin America continues to be the most robust. While we expect this to continue, like the rest of our international competitors, we will have to find an answer to the import duties currently being implemented by governments in Brazil and Argentina. In the short term, this will undoubtedly affect our business in this region.



The adidas segment saw an improvement in its revenue trend in the third quarter. What have been the main highlights for the brand in the past few months?

Currency-neutral sales declined 6% in the quarter but despite the decrease we have definitely taken market and mind share in several categories. At the beginning of the year, I told you that while being diligent on cost in times of crisis, it is also imperative not to lose sight of the principles that have built our success. These include staying innovative, engaging the consumer and investing in future growth opportunities. Let’s take running as an example, which was a very active category this summer. adidas had a great IAAF World Track & Field Championships in Berlin, with our athletes capturing 41 medals. This was the first event that highlighted our new long-term partnership with the IAAF. A month later, at the Berlin Marathon, adidas capped off another successful event with a spectacular win by Haile Gebrselassie. With this type of validation, runners are more and more choosing adidas, and our performance running business has reaped the benefits, increasing at a high-single-digit rate even in this tough retail environment. Our innovation pipeline in running has never been

stronger as we drive our ambition to be the most personalised of all running brands. A few weeks ago we introduced the next generation of miCoach products including the miCoach Pacer and miCoach Zone as well as enhancements to our web services. The realtime coaching

works in sync with the personalised training plans created by specialist coaches. And you will hear lots more from us on this front in the coming year. In terms of other successes during the quarter, our Sport Style business remains on track for a record year, growing 7% currency-neutral in the quarter. On the profitability side, the brand maintained a healthy operating margin of 17.7% for the quarter, and inventories are also in much better shape, down in all regions except for Latin America. Based on all of these facts, I think it is fair to say adidas has made the most out of the difficult environment.

You mentioned in the summer that you are convinced Reebok is turning the corner. Are you still confident this is the case?

Absolutely. I am convinced we are really starting to hit the mark this year with Reebok. The brand is on a good path to claim ownership in the evolving muscle toning category. After the initial success in the US and Japan in the first half, EasyTone™ is now a worldwide phenomenon. And to support our drive in this area, Reebok is making a statement with its first major television effort in the US since 2007. JUKARI Fit to Fly™ has also established a global presence with 17 locations across four continents and more launches planned before year-end. Even though all these initiatives are starting to bite, 2009 has seen considerable challenges for Reebok, and these unfortunately still dominate our financial results. Nevertheless, we are making progress. Although currency-neutral sales declined 12% in the third quarter, improvements in our product mix are starting to kick in. This is visible as the segment returned to profitability in the third quarter after heavy losses in the first half. Of particular note is that gross margin declined at the lowest rate of all our segments as our efforts to reduce and eliminate unprofitable price points begin to bear fruit. Looking forward, our product pipeline and creative platform for 2010 will drive momentum. In toning for example, we will expand the product offering beyond walking and women’s and support the entire initiative through a holistic communications approach. In addition, we will already start priming the pump this month for the next JUKARI™ workout installation, which is slated to debut worldwide next spring. Select gym chains from around Europe will get a sneak preview of how the unique blend of Cirque du Soleil’s artistry and Reebok’s fitness expertise has resulted in yet another amazing workout. And as a final teaser, in early 2010, Reebok will launch a new marketing campaign showing how the brand redefines sport to bring back the fun in everything it does. Through a fun, bold and provocative feel, I believe this will be a catalyst to bring a very fresh and differentiating Reebok voice to the industry.



One of your priorities this year has been to increase market share in the golf category. Given that your sales are down, has TaylorMade-adidas Golf been successful in this regard? And do you see room for further improvement?

The golf industry is challenged more than most by the economic downturn. Our sales are down 5% currency-neutral in the first nine months, and profits have also suffered significantly as we have moved quickly to adjust price points to retail conditions. But taken in context, this is a solid performance considering the golf market is projected to decline in the mid teens this year. As you have just alluded to, a core tenet of our long-term strategy for TaylorMade-adidas Golf is to create strong positions across all golf product categories in which we compete, similar to those we hold in metalwoods. Therefore, it is with great pleasure that I can share the news with you today that TaylorMade has achieved the status as the No. 1 selling iron brand in golf in the US – a position our major competitor had held for more than a decade. This is a truly groundbreaking accomplishment. The success comes in the wake of the Burner irons’ remarkable momentum at retail, both on and off course, where it has stood as the No. 1 iron model for several months. To be a leader in our industry and in any sports category, understanding the needs of the athlete and demands of the sport are of the utmost importance. And this is where TaylorMade-adidas Golf excels, with the richest and deepest connection to tour pros all around the world. When I look forward, I only see potential for further market share improvements, all similar to before – driven by innovation. In footwear we have launched our newest and most stable golf shoe to date, the TOUR360 4.0. This shoe incorporates adidas Golf’s Advanced THiNTech low-profile technology which brings golfers 32% lower to the ground than conventional cleat systems. After three years of research and development, TaylorMade also just recently introduced the Penta TP golf ball, designed to deliver a superior balance of performance in the five key shot categories. We have proven time and time again that with an intense belief, proper planning, and unmatched effort in the marketplace, anything is possible. Our success in the iron category is only another chapter in our rich history as we continue to push to become the best performing, most complete and leading company in golf.

With the qualification round for the 2010 FIFA World Cup™ almost complete, are you still convinced that you will generate a new record level of sales in football next year?

There is always great anticipation before a World Cup year. We have mastered the art of exploiting the potential of big football events not only as meaningful revenue generators, but also as long-term innovation and brand recognition drivers. From today’s standpoint, I have no hesitation in reconfirming that 2010 will yet again be a record year for our football business. We will have the most comprehensive representation of any brand in South Africa. Already, we know we will have at least 10 teams competing for honours, far in excess of the six teams sporting adidas in Germany in 2006. And there is still potential for this number to grow in November. From a product and communication perspective our approach will have the same vigour as always, launching new products and marketing initiatives every month from now until June. We have already started with a bang, introducing the PREDATOR®_X, a new football boot designed with French football legend Zinedine Zidane, that achieves the highest ball power, swerve and control ever found in any PREDATOR®. These are exactly the attributes we will bring to the competition as we continue to stretch our lead in the football category around the globe.



What’s your outlook on the rest of the year and where do you see things moving in 2010?

I believe we have an exciting fourth quarter ahead of us. We will start teasing the market with some important new products across all brands, and I expect football fever will start to grip the consumer in advance of next year’s mega event. This should also become visible in our financial results in the form of positive top-line

stimulus. But don’t forget we will increase marketing to ensure our initiatives get off to a fast start. In summary, we will not be able to beat last year’s record earnings in the fourth quarter, but we expect to generate at least a small profit. In terms of 2010, it is still a little premature to give

concrete guidance. Consumers and retailers are still hovering between fear and optimism. Frankly, although I am cautiously optimistic, I still see challenges for some key markets such as the US and China persisting into the first half of next year. However, we do have reasonable clarity on a few factors that have been significantly negative for our profitability this year. Relief on input costs and improvements in operating expenses following our cost-saving initiatives are factors that will support enhanced profitability next year. But still there will also be some headwinds like currency effects and import duties that will temper our performance. Nevertheless, we are well prepared to face any challenges thrown our way. With a firm grip on inventories, a better financial position and a leaner organisation, we turn into the 2010 event year with innovative products, exciting concepts and clear focus on the tasks at hand.

Herbert, thank you for this interview.


adidas Group Nine Months Report 2009 10 To Our Shareholders Our Share

Our Share

In the third quarter, international stock mar-kets continued to gain momentum. The main drivers for this development were economic indicators signalling the financial and eco-nomic crisis had passed its trough. Investor confidence improved strongly, which resulted in significant increases across all global indi-ces. Towards the end of the quarter, however, concerns about the sustainability of the eco-nomic recovery weighed on market sentiment. The DAX-30 gained 18% and the Dow Jones increased 15% compared to the end of June. The adidas AG share outperformed both indices over the three-month period and rose by 34%.

Global stock markets driven by expectation of upcoming economic recoveryIn the third quarter, international stock markets sustained the upward trend from the previous quarter and gained sub-stantially. This was mainly due to major economic indicators signalling that the economic and financial crisis had passed its trough and to rising expectations of an approaching recovery. Better than expected corporate results and news flow during the Q2 earnings season supported the positive trend. However, towards the end of the quarter, increasing doubts concern-ing the magnitude and the speed of an economic recovery weighed on market sentiment. More and more investors feared that recent share price increases were a result of fiscal and monetary stimuli rather than of fundamental economic improvement. Due to the strong performance in the third quar-ter, the DAX-30 increased 18% during the first nine months to 5,675 points. The adidas AG share closed the nine-month period up 33% at € 36.17 (December 31, 2008: € 27.14). The MSCI World Textiles, Apparel & Luxury Goods Index, which comprises the Group’s main competitors, gained 44% during the same period.

The adidas AG share

Number of shares outstanding third quarter average 193,515,512 at September 30 1) 193,515,512Type of share No-par-value shareFree float 100%Initial Public Offering November 17, 1995Share split June 6, 2006 (in a ratio of 1: 4)

Stock exchange All German stock exchangesStock registration number (ISIN) DE0005003404Stock symbol ADS, ADSG.DEImportant indices DAX-30

MSCI World Textiles, Apparel & Luxury GoodsDeutsche Börse Prime ConsumerDow Jones STOXXDow Jones EURO STOXXDow Jones SustainabilityFTSE4Good EuropeEthibel Index Excellence GlobalEthibel Index Excellence Europe

ASPI Eurozone Index

1) All shares carry full dividend rights.

Historical performance of the adidas AG share

and important indices at September 30, 2009 in %

YTD 1 year 3 years 5 years since IPO

adidas AG 33 (4) (3) 29 274DAX-30 18 (3) (5) 46 158MSCI World Textiles, Apparel & Luxury Goods

44

8

1

44

124


adidas Group Nine Months Report 2009 11 To Our Shareholders Our Share

adidas AG share price increases strongly in third quarter In line with general market conditions, our share price decreased at the beginning of the third quarter. On August 5, the adidas Group announced its results for the first half year, which were well received by investors and analysts due to better than anticipated operating margin and inventory devel-opment. Our share price gained 6% on the day of the earnings release. Several broker recommendation upgrades and price target revisions continued to support the adidas AG share price on the days immediately following the results. From the second half of August onwards, the adidas AG share performed in line with the market until further analysts’ upgrades and positive comments on the German retail sector caused the share price to gain strongly and outperform the market in mid- September. Accordingly, the adidas AG share finished the quarter at € 36.17, representing an increase of 34% compared to the end of June 2009. During the three-month period, the DAX-30 gained 18%, whereas the MSCI World Textiles, Apparel & Luxury Goods Index improved by 29%.

Number of ADRs increasesThe number of Level 1 ADRs (American Depository Receipts) increased during the three-month period compared to the end of the second quarter. At September 30, 2009, 5.2 million ADRs were outstanding (June 30, 2009: 4.8 million). Nevertheless, this represents a decline compared to the year-end 2008 level of 8.9 million. The Level 1 ADR closed the quarter at US$ 26.65, reflecting a 38% increase versus the end of December 2008, and an increase of 40% compared to the end of the second quarter.

adidas AG again included in Dow Jones Sustainability IndexesFor the 10th consecutive time, adidas AG has been selected to join the Dow Jones Sustainability Indexes (DJSI), the world’s first global sustainability index family tracking the perform-ance of the leading sustainability-driven companies worldwide. In the category “Clothing, Accessories & Footwear”, adidas AG was rated as industry leader in sustainability issues and corporate responsibility for the seventh time in a row. In addi-tion, the adidas Group was named “Global Supersector Leader” 2009/2010, being identified as the top company for the sector “Personal & Household Goods” for the second consecutive time.

No changes in shareholder baseIn the third quarter of 2009, the Group received no voting rights notifications according to article 21, section 1 of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG).

Directors’ dealings reported on corporate websiteThe purchase or sale of adidas AG shares (ISIN DE0005003404) or related financial instruments, as defined by article 15a WpHG, conducted by members of our Executive or Supervisory Boards, by key executives or by any person in close relation-ship with these persons, is reported on our website www.

adidas-Group.com/directors_dealings. In the third quarter of 2009, adidas AG received notification that Christian Tourres, member of the adidas AG Supervisory Board, had sold 50,000 shares on August 5, 2009.

Share price development in 2009 1)

Dec. 31, 2008 September 30, 2009

150

125

100

75

50

adidas AG DAX-30 MSCI World Textiles, Apparel & Luxury Goods

1) Index: December 31, 2008 = 100.


adidas Group Nine Months Report 2009 12 Interim Group Management Report Group Business Performance — Economic and Sector Development

Group Business Performance

In the first nine months of 2009, the adidas Group results were negatively impacted by significantly slowing consumer demand and high levels of promotional activity due to the adverse macroeconomic climate. Currency-neutral Group sales decreased 7% as a result of declines in all segments. In euro terms, adidas Group revenues decreased 4% to € 7.923 billion from € 8.225 billion in 2008. Group gross margin declined 4.3 percentage points to 45.1% (2008: 49.4%), mainly driven by higher clear-ance sales, higher input costs and currency devaluation effects. Consequently, the Group’s gross profit declined 12% to € 3.576 billion in the first nine months of 2009 versus € 4.062 bil-lion in 2008. Group operating margin decreased 5.8 percentage points to 5.9% from 11.7% in 2008, due to the lower gross margin as well as higher other operating expenses as a percent-age of sales. Group operating profit declined 52% to € 465 million in the first nine months of 2009 versus € 963 million in 2008. Group net income attributable to shareholders decreased 62% to € 226 million from € 588 million in 2008. Diluted earnings per share decreased 59% to € 1.13 in the first nine months of 2009 versus € 2.78 in 2008.

Quarterly consumer confidence development by region

Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009

USA 1) 61.4 38.6 26.9 49.3 53.1Euro Zone 2) (19) (31) (34) (25) (19)Japan 3) 31.4 26.2 28.9 37.6 40.7

1) Source: Conference Board.2) Source: European Commission.3) Source: Economic and Social Research Institute, Government of Japan.

Exchange rate development 1)

€ 1 equals

Average rate 2008

Q4 2008

Q1 2009

Q2 2009

Q3 2009

Average rate 2009 2)

USD 1.4702 1.3917 1.3308 1.4134 1.4643 1.3650GBP 0.7956 0.9525 0.9308 0.8521 0.9093 0.8868JPY 152.39 126.14 131.17 135.51 131.07 129.42

1) Spot rates at quarter-end.2) Average rate for the first nine months.

Economic and sector development

Global economy shows first signs of stabilisationAfter a strong decrease in the first half of 2009, the decline in global economic activity moderated significantly in the third quarter. However, towards the end of the three-month period some economic indicators signalled that recent growth momentum was primarily built upon fiscal and monetary stimuli rather than a fundamental recovery. In Europe, indus-trial output for the region was stable to slightly up, while consumer confidence brightened only moderately from low levels. Economic indicators for the European emerging mar-kets suggested a lower rate of GDP declines than in previous quarters. In the USA, GDP returned to growth after almost two years of recession. This was mainly due to a rebound in private consumption, an increase in residential investments and a slower decrease of business inventories. Nevertheless, unem-ployment rates approached new record highs, which fuelled concerns about the long-term recovery of the US economy. In Asia, signs of an improving economic environment continued to prevail. Japan benefited from increasing public investment and exports, although private consumption remained relatively weak. In China, government stimulus supporting domestic demand offset a persistent weakness in exports and resulted in accelerated GDP growth in the quarter. In Latin America, the most recent data suggests that economic activity recovered during the quarter, however without positive spill over effects on the region’s labour markets.

Sporting goods industry still affected by low levels of consumer confidenceDuring the third quarter of 2009, the sporting goods industry continued to be affected by low levels of consumer confi-dence. Private consumption remained subdued due to rising unemployment rates in many regions of the world. In Europe, sporting goods sales declined due to consumers trading off higher price point purchases for cheaper buys as a conse-quence of increasing unemployment. In the USA, sporting goods sales continued to decline year-over-year as retailers focused on keeping inventory levels low amid lacklustre consumer demand. In Asia, the industry’s growth engine over the last couple of years, industry sales continued to be weak. In China, retailers made further progress in the clearance of excess inventories although consumer demand remained subdued. In Japan, industry sales continued to be negatively affected by weak private consumption. In Latin America, the industry continued to grow solidly, even though momentum slowed slightly owing to more cautious consumer spending.


adidas Group Nine Months Report 2009 13 Interim Group Management Report Group Business Performance — Income Statement

Nine months net sales

€ in millions

2005 1) 5,115

2006 2) 7,836

2007 7,879

2008 8,225

2009 7,923

1) Figure reflects continuing operations as a result of the divestiture of the Salomon business segment in 2005.

2) Including Reebok business segment from February 1, 2006 onwards. Including Greg Norman apparel business from February 1, 2006 to November 30, 2006.

Nine months net sales by segment 1)

1) HQ /Consolidation accounts for less than 1% of sales.

adidas 73%

TaylorMade- adidas Golf 8%

Reebok 19%

Income Statement

Consolidation of new businesses impacts Reebok and TaylorMade-adidas Golf results In the first nine months of 2009, the performance of the adidas Group was impacted by the consolidation of new companies in Latin America in the Reebok segment and of Ashworth, Inc. in the TaylorMade-adidas Golf segment. Effective April 1, 2008, the adidas Group acquired 99.99% of the shares of Reebok Pro-ductos Esportivos Brazil Ltda. (formerly Comercial Vulcabras Ltda.), the distribution company for Reebok products in Brazil and Paraguay. Effective June 2, 2008, Reebok also founded a new company in Argentina, in which the adidas Group holds 99.99% of the shares. Ashworth, Inc., a leader in cotton casual golf apparel, has been consolidated within the adidas Group since November 20, 2008.

Third quarter adidas Group currency-neutral sales decrease 7% During the third quarter of 2009, Group sales declined 7% on a currency-neutral basis. Currency movements positively impacted Group sales in euro terms. Group revenues decreased 6% in euro terms to € 2.888 billion in the third quarter of 2009 from € 3.083 billion in 2008.

Third quarter adidas Group currency-neutral sales decline in all segmentsIn the third quarter of 2009, adidas Group currency-neutral sales declined in all segments. Currency-neutral adidas seg-ment revenues decreased 6%. Double-digit growth in Latin America was offset by declines in all other regions. Currency-neutral sales in the Reebok segment decreased 12% in the third quarter of 2009 versus the prior year due to declines in all regions. At TaylorMade-adidas Golf, currency-neutral revenues decreased 12%, driven by declines in North America and Asia. Sales recorded in the HQ/Consolidation segment, which reflect revenues not attributable to the adidas, Reebok or TaylorMade-adidas Golf segments, decreased 53% currency-neutral in the third quarter. HQ/Consolidation accounts for less than 1% of Group sales.

In euro terms, adidas sales decreased 5% in the third quarter of 2009 to € 2.111 billion from € 2.218 billion in 2008. Sales at Reebok declined 11% to € 591 million versus € 665 million in the prior year. TaylorMade-adidas Golf sales in euro terms decreased 6% to € 184 million from € 197 million in 2008. HQ/Consolidation sales decreased 55% to € 2 million from € 4 mil-lion in the prior year.

adidas Group currency-neutral sales decline 7% in first nine months In the first nine months of 2009, Group revenues decreased 7% on a currency-neutral basis, as a result of lower sales in all business segments. The adidas segment decreased 7%, the Reebok segment 9% and the TaylorMade-adidas Golf segment 5%. Currency translation effects positively impacted sales in euro terms. Group revenues in euro terms declined 4% to € 7.923 billion in the first nine months of 2009 from € 8.225 bil-lion in 2008.

Currency-neutral revenues decline in all product categories Currency-neutral Group sales declined in all categories in the first nine months of 2009. Currency-neutral footwear sales decreased 5% during the period driven by declines in all seg-ments. First nine months apparel sales decreased 6% on a currency-neutral basis, due to declines in the adidas and Reebok segments. Apparel sales in the TaylorMade-adidas Golf segment grew as a result of the consolidation of the Ashworth business. Currency-neutral hardware sales declined 19% compared to the prior year, due to decreases in all segments. In euro terms, footwear sales decreased 2% to € 3.660 billion in the first nine months of 2009 (2008: € 3.741 billion). Apparel sales declined 2% to € 3.498 billion (2008: € 3.582 billion). Hardware sales decreased 15% to € 766 million in the first nine months of 2009 from € 902 million in 2008.



Nine months currency-neutral net sales growth 1)

by segment and region in %

Europe

North America

Asia

Latin America

Total

adidas (8) (12) (8) 17 (7)Reebok (9) (15) (8) 25 (9)TaylorMade- adidas Golf

19

(2)

(16)

22

(5)

Total (8) (11) (9) 19 (7)

1) Versus the prior year.

Nine months net sales growth in € 1)

by segment and region in %

Europe

North America

Asia

Latin America

Total

adidas (9) (3) 3 8 (4)Reebok (10) (7) (5) 17 (6)TaylorMade- adidas Golf

7

7

(5)

20

3

Total (9) (3) 1 10 (4)

1) Versus the prior year.

Nine months net sales by region 1)

1) Excluding HQ /Consolidation.

Europe 44%

Asia 24%

Latin America 9%

North America 23%

Currency-neutral sales decrease in nearly all regions Currency-neutral adidas Group sales declined in all regions except Latin America in the first nine months of 2009. Group sales in Europe decreased 8% on a currency-neutral basis, due to declines in most major markets impacted by the non-recurrence of strong prior year sales related to the UEFA EURO 2008™. In North America, Group sales decreased 11% on a currency-neutral basis due to declines in both the USA and Canada. Sales for the adidas Group in Asia decreased 9% on a currency-neutral basis, mainly as a result of declines in Japan and China. In Latin America, sales grew 19% on a currency-neutral basis, with double-digit increases in most of the region’s major markets, supported by the new Reebok companies in Brazil/Paraguay and Argentina.

In euro terms, sales in Europe decreased 9% to € 3.442 bil-lion in the first nine months of 2009 from € 3.776 billion in 2008. Sales in North America declined 3% to € 1.822 billion from € 1.871 billion in 2008. Revenues in Asia grew 1% to € 1.894 billion in the first nine months of 2009 from € 1.875 bil-lion in 2008. Sales in Latin America grew 10% to € 713 million from € 647 million in the prior year.

Gross margin negatively impacted by higher clearance sales The gross margin of the adidas Group decreased 4.3 percent-age points to 45.1% in the first nine months of 2009 (2008: 49.4%). This development was mainly due to higher clearance sales, higher input costs and currency devaluation effects, in particular related to the Russian rouble. As a result, gross profit for the adidas Group declined 12% in the first nine months of 2009 to € 3.576 billion versus € 4.062 billion in the prior year.

Currency-neutral royalty and commission income decreases 8% Royalty and commission income for the adidas Group decreased 8% on a currency-neutral basis mainly due to the non-recurrence of royalties from distribution part-ners in the Reebok segment in Brazil/Paraguay and Argen-tina. The distribution partnerships in these countries were replaced by own companies whose sales were consolidated for the first time effective April and June 2008, respectively. In euro terms, royalty and commission income decreased 2% to € 63 million in the first nine months of 2009 from € 64 million in the prior year.

Other operating income grows 33% Other operating income increased 33% to € 72 million in the first nine months of 2009 from € 54 million in 2008. This develop ment was mainly due to the release of accruals for personnel costs from 2008.



Nine months gross profit

€ in millions

2008 4,062

2009 3,576

Nine months operating profit

€ in millions

2008 963

2009 465

Nine months other operating income

€ in millions

2008 54

2009 72

Nine months other operating expenses

€ in millions

2008 3,217

2009 3,246

Moderate growth of other operating expenses Other operating expenses as a percentage of sales increased 1.8 percentage points to 41.0% in the first nine months of 2009 from 39.1% in 2008. In euro terms, other operating expenses increased 1% to € 3.246 billion in the first nine months of 2009 from € 3.217 billion in the prior year, mainly as a result of higher expenses to support the Group’s development in emerg-ing markets. Costs related to reorganisation, higher allow-ances for doubtful debts and the integration of the Ashworth business also contributed to this development.

Global employee base grows due to own-retail expansion On September 30, 2009, the Group had 39,524 employees, which represents an increase of 5% versus 37,485 in the previous 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, an increase in the number of employees in own retail more than offset the effects of reorganisation initiatives at Reebok and TaylorMade-adidas Golf and the implementation of a hiring freeze throughout the adidas Group.

Operating margin declines 5.8 percentage points The operating margin of the adidas Group decreased 5.8 per-centage points to 5.9% in the first nine months of 2009 (2008: 11.7%). The decline was due to the decrease in Group gross margin as well as higher other operating expenses as a per-centage of sales. As a result, Group operating profit decreased 52% to € 465 million versus € 963 million in 2008.

Financial income down 37% Financial income decreased 37% to € 15 million in the first nine months of 2009 from € 23 million in the prior year, mainly due to changes in the fair value of financial instruments.

Financial expenses increase 1% Financial expenses increased 1% to € 137 million in the first nine months of 2009 (2008: € 136 million). Negative exchange rate variances were partly offset by a decline in interest expenses.



Nine months net income attributable to shareholders

€ in millions

2005 1) 386

2006 2) 469

2007 530

2008 588

2009 226

1) Includes continuing and discontinued operations. 2) Including Reebok business segment from February 1, 2006 onwards. Including

Greg Norman apparel business from February 1, 2006 to November 30, 2006.

Nine months income before taxes

€ in millions

2008 850

2009 343

Income before taxes decreases 60% Income before taxes (IBT) as a percentage of sales decreased 6.0 percentage points to 4.3% in the first nine months of 2009 from 10.3% in 2008. This was mainly a result of the Group’s operating margin decrease. IBT for the adidas Group declined 60% to € 343 million from € 850 million in 2008.

Net income attributable to shareholders declines 62% The Group’s net income attributable to shareholders decreased 62% to € 226 million in the first nine months of 2009 from € 588 million in 2008. The Group’s lower operating profit was the primary reason for this development. The Group’s tax rate increased 3.7 percentage points to 34.2% in the first nine months of 2009 (2008: 30.5%), mainly due to a less favourable regional earnings mix.

Minority interests down The Group’s minority interests decreased to negative € 1 mil-lion in the first nine months of 2009 from positive € 2 million in 2008. The decline was primarily due to the buyout of the Reebok joint venture partner in Spain, effective January 2009.

Basic and diluted earnings per share decrease 61% and 59% respectively Basic earnings per share decreased 61% to € 1.17 in the first nine months of 2009 versus € 2.96 in 2008. The weighted aver-age number of shares used in the calculation of basic earnings per share decreased to 193,515,512 in the first nine months of 2009 (2008 average: 198,868,061) due to the share buyback programme from January to October 2008. Diluted earnings per share in the first nine months of 2009 decreased 59% to € 1.13 from € 2.78 in the prior year. The weighted average number of shares used in the calculation of diluted earnings per share was 209,247,568 (2008 average: 214,671,394). The dilutive effect largely results from approximately sixteen mil-lion additional potential shares that could be created in relation to our convertible bond.


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

Balance sheet structure 1)

in % of total liabilities and equity

Liabilities and equity Sep. 30, 2009 Sep. 30, 2008

Total liabilities and equity (€ in millions)

9,105

9,456

1) For absolute figures see Consolidated Balance Sheet, p. 28.

Balance sheet structure 1)

in % of total assets

Assets Sep. 30, 2009 Sep. 30, 2008

Total assets (€ in millions)

9,105

9,456

1) For absolute figures see Consolidated Balance Sheet, p. 28.

Total equity 36.0

Other liabilities 24.7

Long-term borrowings 22.9

Accounts payable 9.8

Short-term borrowings 6.6

Other assets 14.9

Fixed assets 42.8

Inventories 18.2

Accounts receivable 20.5

Cash and cash equivalents 3.6

35.1

26.0

26.5

8.2 4.2

15.2

41.2

19.2

21.7

2.7

Balance Sheet and Cash Flow Statement

Total assets decrease 4%At the end of September 2009, total assets decreased 4% to € 9.105 billion versus € 9.456 billion in the prior year. An increase in non-current assets was more than offset by a decrease in current assets. Compared to December 31, 2008, total assets also decreased 4%.

Group inventories down 9%Group inventories decreased 9% to € 1.652 billion at the end of September 2009 versus € 1.812 billion in 2008. On a currency-neutral basis, inventories were down 8%. This development was mainly due to reduced production volumes as well as clearance of excess inventories at all brands, partly offset by higher inventories in Latin America.

Accounts receivable decrease 9%At the end of September 2009, Group receivables decreased 9% to € 1.866 billion (2008: € 2.055 billion). On a currency-neutral basis, receivables were down 7%. This decrease reflects the decline in sales as well as strict discipline in the Group’s trade terms management despite the difficult economic situation in most markets.

Other current financial assets down 8%Other current financial assets decreased 8% to € 136 million at the end of September 2009 from € 147 million at the end of September 2008. This development was mainly due to lower fair values of financial instruments.

Other current assets down 21%Other current assets decreased 21% to € 456 million at the end of September 2009 from € 579 million in 2008, mainly as a result of a decrease in prepayments.


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

Fixed assets remain stableFixed assets remained stable at € 3.893 billion at the end of September 2009 versus € 3.897 billion at the end of September 2008. Additions of € 405 million were related to continued own-retail expansion, investment into the Group’s IT infrastructure as well as the acquisition of Ashworth, Inc. and Textronics, Inc. Additions were partly offset by depreciation and amortisation of € 277 million as well as disposals in an amount of € 64 million. In addition, negative currency translation effects in an amount of € 68 million on fixed assets denominated in currencies other than the euro impacted this development. Compared to December 31, 2008, fixed assets decreased 4%.

Assets held-for-sale decrease 68%At the end of September 2009, assets held-for-sale decreased 68% to € 18 million (2008: € 57 million). The decline was mainly due to the transfer of assets held-for-sale which are no longer in the scope of a sale to fixed assets. At the end of September 2009, assets held-for-sale mainly related to the planned sale of land and buildings in Herzogenaurach, Germany.

Accounts payable grow 15%Accounts payable increased 15% to € 892 million at the end of September 2009 versus € 775 million at the end of September 2008. On a currency-neutral basis, accounts payable were also up 15%. This development was mainly due to improved terms with our suppliers.

Other current financial liabilities increase 175%Other current financial liabilities increased 175% to € 149 mil-lion at the end of September 2009 from € 54 million at the end of September 2008, primarily due to an increase in the fair value of hedging instruments.

Accrued liabilities decrease 17%Accrued liabilities decreased 17% to € 612 million at the end of September 2009 compared to € 733 million at the end of September 2008, due to timing of payments. In addition, liabilities in connection with promotion partnership contracts decreased.

Shareholders’ equity decreases 1% Shareholders’ equity declined 1% to € 3.268 billion at the end of September 2009 versus € 3.306 billion at the end of Septem-ber 2008. Negative currency translation effects in an amount of € 88 million, the buyback of adidas AG shares and a net loss on cash flow hedges more than offset the net income gener-ated during the last twelve months. Compared to December 31, 2008, shareholders’ equity decreased 3%.

Cash flow development reflects decreased working capital needsIn the first nine months of 2009, cash inflow from operating activities was € 122 million (2008: outflow of € 100 million). The increase in cash provided by operating activities compared to the prior year was primarily due to lower working capital needs. Cash outflow for investing activities was € 58 mil-lion (2008: € 220 million) and was mainly related to spend-ing for property, plant and equipment such as investments in the furnishing and fitting of adidas and Reebok own-retail stores and in IT systems. Cash inflows from financing activi-ties were mainly related to proceeds from the issue of a five-year Eurobond in an amount of € 500 million. Cash outflow in an amount of € 404 million led to a corresponding change in short-term borrowings. Dividends paid in an amount of € 97 million also impacted this development. Consequently, net cash provided by financing activities totalled € 11 million (2008: € 281 million). As a result of this development, cash and cash equivalents increased by € 82 million to € 326 million at the end of September 2009 (December 31, 2008: € 244 million).

Net borrowings down € 299 millionNet borrowings at September 30, 2009 amounted to € 2.294 bil-lion, which represents a decrease of € 299 million, or 12%, versus € 2.593 billion at the end of September 2008. Lower working capital requirements were the main reason for the net debt decline. This positive effect more than offset cash outflows in an amount of € 32 million in relation to the meanwhile com-pleted share buyback programme as well as negative currency translation effects in an amount of € 5 million. Consequently, the Group’s financial leverage decreased to 70.2% at the end of September 2009 versus 78.5% in the prior year.

Inventories 1)

€ in millions

2008 1,812

2009 1,652

1) At September 30.

Receivables 1)

€ in millions

2008 2,055

2009 1,866

1) At September 30.

Accounts payable 1)

€ in millions

2008 775

2009 892

1) At September 30.

Net borrowings 1)

€ in millions

2008 2,593

2009 2,294

1) At September 30.

Shareholders’ equity 1)

€ in millions

2008 3,306

2009 3,268

1) At September 30, excluding minority interests.


adidas Group Nine Months Report 2009 19 Interim Group Management Report adidas Business Performance

adidas at a glance

€ in millions

Nine months 2009

Nine months 2008

Change

Net sales 5,779 6,004 (4%)Gross profit 2,708 2,947 (8%)Gross margin 46.9% 49.1% (2.2pp)Operating profit 789 951 (17%)Operating margin 13.7% 15.8% (2.2pp)

Nine months adidas net sales

€ in millions

2005 4,545

2006 5,248

2007 5,465

2008 6,004

2009 5,779

adidas Business Performance

In the first nine months of 2009, currency- neutral sales in the adidas segment decreased 7%. In euro terms, segment sales declined 4% to € 5.779 billion from € 6.004 billion in the prior year. Gross margin decreased 2.2 per-centage points to 46.9% (2008: 49.1%). This was mainly a result of higher input costs, currency devaluation effects as well as higher clearance sales. Gross profit decreased 8% to € 2.708 billion in the first nine months of 2009 from € 2.947 billion in the prior year period. As a result of the decline in gross margin, operating margin decreased 2.2 per-centage points to 13.7% (2008: 15.8%). Operating profit declined 17% to € 789 million in the first nine months of 2009 versus € 951 million in 2008.

Third quarter currency-neutral sales down 6% In the third quarter of 2009, revenues for the adidas segment decreased 6% on a currency-neutral basis. Growth in the Sport Style division could not offset declines in major sports catego-ries in the Sport Performance division. Currency movements positively impacted sales in euro terms. Sales were down 5% in euro terms to € 2.111 billion from € 2.218 billion in the prior year.

Nine months currency-neutral segment sales decline 7% Revenues for the adidas segment declined 7% on a currency-neutral basis in the first nine months of 2009. This develop-ment was a consequence of the challenging macroeconomic environment which negatively affected retailer and consumer demand. Currency-neutral footwear, apparel and hardware sales all decreased compared to the prior year. Currency movements positively impacted sales in euro terms. Segment sales declined 4% in euro terms to € 5.779 billion in the first nine months of 2009 from € 6.004 billion in 2008.

Currency-neutral adidas sales decline in nearly all regions Currency-neutral sales for the adidas segment in the first nine months of 2009 decreased in all regions except Latin America. Revenues in Europe decreased 8% on a currency-neutral basis, mainly due to the non-recurrence of strong prior year sales related to the UEFA EURO 2008™ and difficult market condi-tions in most major European countries. Currency-neutral adidas sales in North America decreased 12% as a result of declines in both the USA and Canada. Sales in Asia decreased 8% on a currency-neutral basis due to declines in China and Japan. In Latin America, currency-neutral sales grew 17%, driven by double-digit increases in most major markets.

In euro terms, sales in Europe decreased 9% to € 2.874 billion in the first nine months of 2009 from € 3.159 billion in 2008. Revenues in North America decreased 3% to € 814 million in 2009 from € 843 million in 2008. Sales in Asia increased 3% to € 1.507 billion in the first nine months of 2009 from € 1.467 bil-lion in 2008, and revenues in Latin America improved 8% to € 538 million in 2009 versus € 497 million in the prior year.

Sport Performance declines 10% on a currency-neutral basis Sales in the Sport Performance division decreased 10% on a currency-neutral basis in the first nine months of 2009. While revenues declined in all major sports categories, outdoor sales increased. The football category was strongly impacted by the non-recurrence of strong prior year sales in connection with the UEFA EURO 2008™. In euro terms, Sport Performance sales declined 7% in the first nine months of 2009 to € 4.495 billion from € 4.813 billion in the prior year.


adidas Group Nine Months Report 2009 20 Interim Group Management Report adidas Business Performance

adidas net sales by quarter

€ in millions

Q1 2008

Q1 2009

1,968

1,917

Q2 2008

Q2 2009

1,818

1,750

Q3 2008

Q3 2009

2,218

2,111

Q4 2008

Q4 2009

1,817

adidas operating profit by quarter

€ in millions

Q1 2008

Q1 2009

336

228

Q2 2008

Q2 2009

175

188

Q3 2008

Q3 2009

439

373

Q4 2008

Q4 2009

147

adidas net sales by region

€ in millions

Nine months

2009

Nine months

2008

Change

Change currency-

neutral

Europe 2,874 3,159 (9%) (8%)North America 814 843 (3%) (12%)Asia 1,507 1,467 3% (8%)Latin America 538 497 8% 17%

Currency-neutral Sport Style sales increase 11% Sales in the Sport Style division increased 11% on a currency-neutral basis in the first nine months of 2009. The increase was driven by strong momentum in the recently launched Style Essentials collection, as well as sales growth in all other Sport Style categories. In euro terms, Sport Style sales grew 12% to € 1.300 billion in the first nine months of 2009 (2008: € 1.158 billion).

Currency-neutral own-retail sales up 5% In the first nine months of 2009, adidas own-retail sales increased 5% on a currency-neutral basis. In euro terms, revenues grew 11% to € 1.164 billion from € 1.051 billion in 2008. This increase was due to new store openings. Comparable store sales declined at a high-single-digit rate during the period. adidas own-retail activities made up 20% of adidas brand sales in the first nine months of 2009, up from 18% in the prior year.

Gross margin negatively impacted by higher input costs The adidas segment gross margin decreased 2.2 percentage points to 46.9% in the first nine months of 2009 from 49.1% in 2008. This was mainly due to higher input costs, currency devaluation effects, in particular related to the Russian rouble, as well as higher clearance sales. As a result, adidas gross profit declined 8% to € 2.708 billion in the first nine months of 2009 versus € 2.947 billion in 2008.

Royalty and commission income increases 6% In the first nine months of 2009, adidas royalty and commission income grew 6% in euro terms to € 63 million (2008: € 59 mil-lion). This was mainly a result of higher licensee sales. Royalty and commission income relates to items such as cosmetics, watches and eyewear.

Net other operating expenses and income decrease Net other operating expenses and income as a percentage of sales in the adidas segment increased slightly to 34.3% (2008: 34.2%). In euro terms, however, net other operating expenses and income decreased 4% to € 1.982 billion in the first nine months of 2009 from € 2.055 billion in 2008. The timing of marketing spending and cost reduction measures offset higher expenses to support the segment’s development in emerging markets, in particular the expansion of own retail.

Operating margin decreases to 13.7% In the first nine months of 2009, the adidas operating margin decreased 2.2 percentage points to 13.7% (2008: 15.8%). This was mainly a result of the gross margin decline. Operating profit for the adidas segment decreased 17% to € 789 million in the first nine months of 2009 versus € 951 million during the same period in the prior year.


adidas Group Nine Months Report 2009 21 Interim Group Management Report Reebok Business Performance

Reebok at a glance

€ in millions

Nine months 2009

Nine months 2008

Change

Net sales 1,497 1,587 (6%)Gross profit 487 603 (19%)Gross margin 32.6% 38.0% (5.5pp)Operating profit (130) 2 —Operating margin (8.7%) 0.1% (8.8pp)

Nine months Reebok net sales

€ in millions

2006 1) 1,828

2007 1,765

2008 1,587

2009 1,497

1) Only includes eight months of the nine-month period.

Reebok Business Performance

In the first nine months of 2009, currency- neutral sales for the Reebok segment decreased 9%. In euro terms, segment sales were down 6% to € 1.497 billion from € 1.587 billion in the prior year. The gross margin declined 5.5 percentage points to 32.6% in the first nine months of 2009 from 38.0% in 2008. This was mainly a result of higher clearance sales, higher input costs as well as currency devaluation effects. Gross profit decreased 19% to € 487 million in the first nine months of 2009 versus € 603 mil-lion in 2008. Reebok’s operating margin declined 8.8 percentage points to negative 8.7% in the first nine months of 2009 from positive 0.1% in the prior year. This was due to the decline in gross margin and an increase in net other operating expenses and income as a percentage of sales. The development was also impacted by reorganisation charges of € 29 million. As a result, Reebok’s operating profit decreased to negative € 130 million in the first nine months of 2009 versus positive € 2 million in the prior year.

Consolidation of new businesses impacts Reebok results In the first nine months of 2009, the performance of the Reebok segment was supported by the consolidation of new companies in Latin America. Effective April 1, 2008, the adidas Group acquired 99.99% of the shares of Reebok Productos Esportivos Brazil Ltda. (formerly Comercial Vulcabras Ltda.), the distri-bution company for Reebok products in Brazil and Paraguay. Effective June 2, 2008, Reebok also founded a new company in Argentina, in which the adidas Group holds 99.99% of the shares.

Third quarter currency-neutral sales decline 12% In the third quarter of 2009, revenues for the Reebok segment decreased 12% on a currency-neutral basis, due to declines in all divisions. Currency movements positively impacted segment sales in euro terms. In euro terms, sales decreased 11% to € 591 million from € 665 million in the prior year.

First nine months sales decrease 9% on a currency-neutral basis In the first nine months of 2009, sales for the Reebok segment declined 9% on a currency-neutral basis. This development was a consequence of the challenging macroeconomic environ-ment which negatively affected retailer and consumer demand as well as ongoing initiatives to reposition the brand for future growth. Currency-neutral footwear, apparel and hardware sales all decreased compared to the prior year. Currency move-ments positively impacted segment sales in euro terms. Sales in euro terms decreased 6% to € 1.497 billion in the first nine months of 2009 from € 1.587 billion in 2008.

Currency-neutral sales decline in nearly all regions Currency-neutral Reebok segment sales decreased in all regions except Latin America in the first nine months of 2009. In Europe, currency-neutral sales declined 9%, as increases in the UK and Italy were offset by declines in most other major markets. Currency-neutral revenues in North America decreased 15% as a result of declines in both the USA and Canada. In Asia, currency-neutral sales decreased 8%. Growth in Japan and India was more than offset by a sales decline in China due to the rationalisation of Reebok’s business in that market. Currency-neutral sales in Latin America increased 25% due to the consolidation of Reebok’s new companies.

In euro terms, segment sales in Europe decreased 10% to € 482 million in the first nine months of 2009 from € 537 mil-lion in 2008. In North America, revenues declined 7% to € 666 million in 2009 from € 715 million in 2008. Sales in Asia decreased 5% to € 180 million in 2009 (2008: € 190 million), and in Latin America revenues increased 17% to € 169 million in 2009 (2008: € 145 million).


adidas Group Nine Months Report 2009 22 Interim Group Management Report Reebok Business Performance

Reebok operating profit by quarter

€ in millions

Q1 2008

Q1 2009

(13)

(96)

Q2 2008

Q2 2009

(11)

(51)

Q3 2008

Q3 2009

25

17

Q4 2008

Q4 2009

(9)

Reebok net sales by quarter

€ in millions

Q1 2008

Q1 2009

454

458

Q2 2008

Q2 2009

469

449

Q3 2008

Q3 2009

665

591

Q4 2008

Q4 2009

561

Reebok net sales by region

€ in millions

Nine months

2009

Nine months

2008

Change

Change currency-

neutral

Europe 482 537 (10%) (9%)North America 666 715 (7%) (15%)Asia 180 190 (5%) (8%)Latin America 169 145 17% 25%

Currency-neutral sales of brand Reebok decline 9% Brand Reebok sales decreased 9% in the first nine months of 2009 on a currency-neutral basis. Growth in the women’s foot-wear and walking categories was more than offset by declines in most other categories. In euro terms, sales declined 6% to € 1.192 billion (2008: € 1.272 billion).

Currency-neutral sales of Reebok-CCM Hockey decrease 6% Sales of Reebok-CCM Hockey declined 6% on a currency- neutral basis in the first nine months of 2009 mainly due to lower licensed apparel sales. In euro terms, sales decreased 5% to € 127 million in the first nine months of 2009 versus € 134 million in the prior year.

Rockport sales decrease 8% on a currency-neutral basis Rockport sales decreased 8% on a currency-neutral basis in the first nine months of 2009. Growth in Europe was offset by declines in North America, mainly due to sales decreases in department stores. In euro terms, Rockport revenues decreased 2% to € 178 million in the first nine months of 2009 (2008: € 181 million).

Currency-neutral own-retail sales grow 4% In the first nine months of 2009, Reebok own-retail sales grew 4% on a currency-neutral basis. In euro terms, revenues increased 11% to € 304 million from € 275 million in 2008. The increase was driven by new store openings in emerging markets, especially Russia. Comparable store sales declined at a high-single-digit rate during the period. Reebok own-retail activities made up 20% of Reebok segment sales in the first nine months of 2009, up from 17% in the prior year. The share of own-retail activities as a percentage of brand sales at Rockport continues to be above the segment average.

Reebok segment gross margin declines 5.5 percentage points The gross margin of the Reebok segment decreased 5.5 per-centage points to 32.6% in the first nine months of 2009 from 38.0% in 2008. The segment gross margin was nega-tively affected by higher clearance sales, higher input costs as well as currency devaluation effects, in particular related to the Russian rouble. Reebok gross profit decreased 19% to € 487 million in the first nine months of 2009 versus € 603 mil-lion in 2008.

Royalty and commission income decreases In the first nine months of 2009, Reebok royalty and commis-sion income declined 10% to € 18 million from € 21 million in the prior year. The decline was mainly due to the non- recurrence of royalties from distribution partners in Brazil/Paraguay and Argentina. The distribution partnerships in these countries were replaced by own companies whose sales were consolidated for the first time in the second quarter of 2008. Reebok’s royalty and commission income primarily relates to royalty income for fitness equipment.

Net other operating expenses and income increase Net other operating expenses and income as a percentage of sales increased by 3.3 percentage points to 42.5% in the first nine months of 2009 versus 39.2% in 2008. In euro terms, Reebok’s net other operating expenses and income increased 2% to € 636 million in the first nine months of 2009 from € 622 million in the prior year. This development was mainly due to reorganisation charges of € 29 million and continued own-retail expansion that could not be offset by cost reduc-tion measures. Reorganisation charges in the first nine months were related to personnel reductions in several regions and costs in connection with the implementation of joint operating models for adidas and Reebok in Europe and Latin America.

Lower operating margin In the first nine months of 2009, the operating margin of the Reebok segment decreased by 8.8 percentage points to nega-tive 8.7% from positive 0.1% in the prior year. This was due to the lower gross margin and higher net other operating expenses and income as a percentage of sales. As a result, Reebok’s operating profit decreased to negative € 130 million in the first nine months of 2009 versus positive € 2 million in the prior year.


adidas Group Nine Months Report 2009 23 Interim Group Management Report TaylorMade-adidas Golf Business Performance

TaylorMade-adidas Golf at a glance

€ in millions

Nine months 2009

Nine months 2008

Change

Net sales 633 614 3%Gross profit 249 278 (11%)Gross margin 39.3% 45.3% (6.0pp)Operating profit (23) 54 (142%)Operating margin (3.6%) 8.8% (12.4pp)

Nine months TaylorMade-adidas Golf net sales

€ in millions

2005 528

2006 1) 658

2007 609

2008 614

2009 633

1) Including Greg Norman apparel business from February 1, 2006 to November 30, 2006.

TaylorMade- adidas Golf Business Performance

In the first nine months of 2009, TaylorMade- adidas Golf revenues decreased 5% on a currency-neutral basis. In euro terms, segment sales increased 3% to € 633 million from € 614 million in the prior year. The segment’s gross margin decreased 6.0 percentage points to 39.3% (2008: 45.3%). This was mainly a result of price repositioning initiatives related to the highly competitive environment as well as higher clearance sales. The consolidation of the Ashworth business, which carries lower margins, also contributed to this development. Gross profit declined 11% to € 249 million (2008: € 278 million). The segment’s operating margin decreased 12.4 percentage points to negative 3.6% (2008: positive 8.8%). This was due to the lower gross margin and higher net other operating expenses and income as a percentage of sales. As a result, operating profit decreased to negative € 23 million from positive € 54 million in the first nine months of 2008.

Consolidation of Ashworth impacts results In the first nine months 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.

Third quarter currency-neutral sales decrease 12%In the third quarter of 2009, revenues for the TaylorMade- adidas Golf segment decreased 12% on a currency-neutral basis. This was mainly due to the challenging macroeco-nomic environment and the non-recurrence of sales related to several new product launches in the hardware and soft-goods categories in the prior year period. Currency move-ments positively affected segment sales in euro terms. Sales declined 6% in euro terms to € 184 million from € 197 million in the prior year. Sales from the consolidation of Ashworth contributed € 7 million.

First nine months currency-neutral sales decrease 5%In the first nine months of 2009, currency-neutral sales at TaylorMade- adidas Golf decreased 5%. This develop-ment reflects lower consumer demand as a result of the challenging macroeconomic environment. Declines in all major categories could not be offset by the positive impact of the consolidation of Ashworth. Currency movements posi-tively affected segment sales in euro terms. Sales increased 3% in euro terms to € 633 million in the first nine months of 2009 from € 614 million in 2008. Sales from the consolidation of Ashworth contributed € 45 million.

Currency-neutral revenues grow in Europe and Latin America TaylorMade- adidas Golf currency-neutral sales increased at double-digit rates in Europe and Latin America, whereas sales in North America and in Asia decreased in the first nine months of 2009. Sales in Europe increased 19% on a currency-neutral basis, driven by growth in most major markets, in par-ticular the UK, and supported by the first-time consolidation of Ashworth. In North America, sales declined 2% on a currency-neutral basis due to declines in both the USA and Canada. TaylorMade- adidas Golf currency-neutral sales in Asia declined 16%. A decline in Japan was only partly offset by increases in Korea and China. Sales in Latin America increased 22% on a currency-neutral basis, driven by growth in all major markets.

In euro terms, sales in Europe increased 7% to € 86 million in the first nine months of 2009 (2008: € 80 million). Revenues in North America increased 7% to € 335 million in 2009 from € 311 million in 2008. In Asia, sales decreased 5% to € 207 mil-lion in the first nine months of 2009 (2008: € 217 million), and in Latin America revenues grew 20% to € 6 million in 2009 (2008: € 5 million).


adidas Group Nine Months Report 2009 24 Interim Group Management Report TaylorMade-adidas Golf Business Performance

TaylorMade-adidas Golf net sales by quarter

€ in millions

Q1 2008

Q1 2009

191

194

Q2 2008

Q2 2009

226

255

Q3 2008

Q3 2009

197

184

Q4 2008

Q4 2009

198

TaylorMade-adidas Golf net sales by region

€ in millions

Nine months

2009

Nine months

2008

Change

Change currency-

neutral

Europe 86 80 7% 19%North America 335 311 7% (2%)Asia 207 217 (5%) (16%)Latin America 6 5 20% 22%

TaylorMade-adidas Golf operating profit by quarter

€ in millions

Q1 2008

Q1 2009

23

(21)

Q2 2008

Q2 2009

19

2

Q3 2008

Q3 2009

11

(4)

Q4 2008

Q4 2009

24

Gross margin negatively impacted by price repositioning TaylorMade- adidas Golf gross margin decreased 6.0 percent-age points to 39.3% in the first nine months of 2009 (2008: 45.3%). The decrease was mainly a result of price repositioning initiatives due to the promotional environment in all regions, clearance sales as well as the first-time consolidation of the Ashworth business, which carries a lower gross margin. Gross profit decreased 11% to € 249 million (2008: € 278 million).

Royalty and commission expenses increase In the first nine months of 2009, royalty and commission expenses at TaylorMade- adidas Golf increased 17% to € 18 million (2008: € 16 million). This was due to higher average royalty rates and an increase in adidas Golf sales. Royalty and commission expenses at TaylorMade- adidas Golf mainly comprise intra-Group royalty payments to the adidas segment related to adidas Golf sales.

Consolidation of Ashworth increases net other operating expenses and incomeNet other operating expenses and income as a percentage of sales at TaylorMade- adidas Golf increased 6.0 percentage points to 40.0% in the first nine months of 2009 from 34.0% in 2008. In euro terms, net other operating expenses and income increased 21% to € 253 million in the first nine months of 2009 from € 208 million in 2008. This development was mainly due to integration costs of € 17 million related to the Ashworth acquisition. Higher marketing expenses to support new product launches as well as the non-recurrence of a one-time book gain from the Maxfli divestiture in the prior year also contributed to this development.

Operating margin declinesThe TaylorMade- adidas Golf operating margin decreased 12.4 percentage points to negative 3.6% in the first nine months of 2009 from positive 8.8% in 2008. This was mainly a result of the lower gross margin and higher net other operating expenses and income as a percentage of sales. Consequently, operating profit for TaylorMade- adidas Golf decreased to negative € 23 million in the first nine months of 2009 versus positive € 54 million in 2008.


adidas Group Nine Months Report 2009 25 Interim Group Management Report Subsequent Events and Outlook

Subsequent Events and Outlook

In 2009, recessionary pressures in most key global markets are expected to have a negative impact on overall consumer demand and the sporting goods industry. Despite our strong positions in most major markets, a regionally balanced sales mix and our strength in innova-tion, we expect these developments to have a negative impact on the adidas Group’s financial results in 2009. We forecast adidas Group sales to decline at a low- to mid-single-digit rate on a currency-neutral basis versus the prior year. Full year diluted earnings per share are expected to reach a level between € 1.15 and € 1.30.

Subsequent Events

adidas AG announces early redemption of convertible bond 2003/2018On October 8, 2009, adidas International Finance B.V. pre-maturely terminated its € 400 million convertible bond (ISIN DE0009038968). The 2.5% convertible bond with conversion rights into adidas AG shares, unconditionally and irrevocably guaranteed by adidas AG, was issued on October 8, 2003 with a maturity until October 8, 2018. On November 23, 2009, the bonds will be redeemed at the total principal amount plus interest on the principal amount accrued until (but excluding) this day as far as bondholders do not exercise their conversion rights by the end of November 9, 2009. The Company expects that most or all bondholders will exercise their conversion rights, resulting in up to 15,684,313 new shares being issued from the Company’s Contingent Capital 2003/II. As far as the conversion rights are exercised, adidas AG will reduce its net debt and increase its equity, bringing the Company closer to its declared goal of financial leverage below 50%.

Management stock options exercisedEffective October 5, 2009, the number of outstanding adidas AG shares increased by 16,400 as a result of stock options exer-cised as part of the Management Share Option Plan (MSOP) of adidas AG. At this day, the total number of shares outstanding amounted to 193,531,912.

No other subsequent eventsSince the end of the first nine months of 2009, there have been no significant organisation, management, macroeconomic, sociopolitical or legal changes which we expect to influence our business materially going forward.

Outlook

Global economic decline forecasted for 2009In 2009, the global economy is projected to decline due to the real-economy side effects of the financial crisis. After a steep downturn of economic activity in the first half of the year, the global economy is forecasted to stabilise in the second half, supported by extensive fiscal and monetary stimuli. In Europe, GDP in the Euro Zone is expected to decline around 4% in 2009 against a background of ongoing low export activity, con-strained bank lending and rising unemployment. Although first signs of improvement are visible, the turnaround of the eco-nomic climate will be slow and volatile in this region. In Euro-pean emerging markets, an economic upswing is not expected until the end of 2009. In North America, GDP is projected to decline approximately 2.5% versus the prior year. However, the US economy is forecasted to show signs of further stabilisation towards year-end due to unprecedented monetary and fiscal policy intervention. In Asia, excluding Japan, growth is likely to slow slightly versus the prior year to a level of around 5% in 2009, the weakest since 2001. China and India are forecasted to be affected by lower industrial production growth and a slowdown of exports. Japan’s economy is forecasted to decline around 6% in 2009 versus 2008. In Latin America, recent data suggests that the region will also show GDP declines of between 2% and 3% in 2009.



Global sporting goods industry faces tough challenges with cautious consumer spending in light of global economic downturnThe outlook for the global sporting goods industry has not changed significantly during the third quarter compared to the first half of the year. Although the first signs of stabilisation from an economic standpoint have emerged, unemployment rates are forecasted to increase further with adverse effects on consumer spending. Due to the non-recurrence of positive effects related to the UEFA EURO 2008™ in the first half of the year, and ongoing difficult market conditions in major Western European markets, we expect the European sporting goods industry to decline in 2009. Nevertheless, the 2010 FIFA World Cup™ is expected to trigger positive momentum in the sector towards the end of this year. In North America, owing to rising unemployment and tight credit markets, demand for sporting goods products is expected to be weaker in 2009 as consumers either delay or become more selective and price sensitive in their purchases. After a more difficult than expected first half of the year, the Asian sporting goods market is projected to decline in 2009. In China, industry growth is likely to moderate significantly, due to the exceptionally high rate of retail expan-sion in 2008, and high sell-in rates by sporting goods manu-facturers around the Beijing 2008 Olympic Games. In Japan, we expect the sporting goods industry to decline, in line with private consumption expectations for that market. In Latin America, although the sporting goods industry has remained more resilient than in other regions, concerns related to increasing trade barriers in certain key markets could dampen growth prospects for the remainder of the year.

Group business outlook affected by negative global macroeconomic development The recessionary development of the global economy and the sporting goods industry is forecasted to have a severe nega-tive impact on Group financial results in 2009. Rising unem-ployment as well as lower consumer confidence and demand are expected to adversely affect Group sales development. Exchange rate volatility is forecasted to result in negative effects on gross margin and financial expenses, mainly as a consequence of the devaluation of the Russian rouble as well as the revaluation of subsidiary balance sheet positions denominated in foreign currencies depreciating against the respective functional currencies.

Increase of regulatory risksThe principles of our risk management system as well as an overview of risks identified for our Group can be found in our 2008 annual report on page 107. In addition to the risks described therein, we have not identified any other risks that could have a material adverse financial impact on our Group. adidas Group Management also does not foresee any individual or aggregate risks which could materially jeopardise the viabil-ity of the Group as a going concern. However, compared to our assessment at year-end 2008, regulatory risks have increased significantly due to a growing number of countries consider-ing restrictions on imports from Asia. Brazil and Argentina recently introduced higher import duties on footwear imports from China on a preliminary basis. Final decisions on the anti-dumping investigations are expected at the end of 2009 or during the first half of 2010. We estimate this development to have a negative impact on Group gross profit annually going forward.

Consolidation of new businesses supports TaylorMade-adidas Golf and Reebok salesSales recorded in the TaylorMade-adidas Golf segment will be supported by the consolidation of Ashworth revenues for the full twelve-month period. Ashworth, a leader in cotton casual golf apparel, has been consolidated within the adidas Group since November 20, 2008. In addition, sales in the Reebok seg-ment will be positively influenced by the consolidation of sales from the brand’s new companies in Latin America for the full twelve-month period.

adidas Group sales to decrease in 2009We expect adidas Group sales to decline at a low- to mid-single-digit rate on a currency-neutral basis in 2009. Sales development will be negatively impacted by weaker consumer demand due to low levels of consumer confidence and rising unemployment in many major markets.

Revenues to decline in all segmentsWe project a low- to mid-single-digit sales decline on a currency-neutral basis for the adidas brand in 2009. Higher sales in the adidas Sport Style division will not offset revenue declines in the adidas Sport Performance division. Reebok seg-ment sales are expected to decline at a low- to mid-single-digit rate compared to the prior year on a currency-neutral basis in 2009. While the Women’s Fitness category is expected to grow strongly as a result of several new product launches through-out the year, the Classics and Men’s Training categories are forecasted to decline. Currency-neutral sales at TaylorMade-adidas Golf are now projected to decline at a low- to mid- single-digit rate despite the consolidation of Ashworth for the full twelve-month period. This will be a result of the challeng-ing market situation in the global golf market.



adidas Group earnings per share to decrease in 2009In 2009, the adidas Group gross margin is forecasted to decline to a level between 45.0% and 45.5%. Higher sourcing costs due to increased raw material and labour costs, in particular in the first half of the year, as well as currency devaluation effects, primarily from the depreciation of the Russian rouble, will contribute to this development. Higher clearance sales in connection with a promotional environment in mature markets are expected to also have a negative impact on gross margin development in 2009. The Group’s other operating expenses as a percentage of sales are expected to increase in 2009. Higher expenses for controlled space initiatives in the adidas and Reebok segments as well as costs related to reorganisation activities will drive this development, partially compensated by positive effects from efficiency improvements throughout our organisation. Marketing working budget expenses as a per-centage of sales are forecasted to be below the prior year level. Other operating income is expected to decline. This will mainly be driven by the non-recurrence of book gains from acquisi-tions and disposals in the TaylorMade-adidas Golf segment in the prior year. As a result of the expected Group gross margin decline and the projected increase in other operating expenses as a percentage of sales, we expect the operating margin for the adidas Group to decline to a level around 5.0%. Financial expenses are projected to be lower compared to the prior year as a result of lower interest expenses following the planned reduction of net borrowings, more than offsetting negative exchange rate variances. As a result of these developments and an increase in the Group’s tax rate compared to the prior year, net income attributable to shareholders and earnings per share are projected to decline in 2009. Due to a more moderate increase of input costs and positive impetus ahead of the 2010 FIFA World Cup™, Group profitability will be significantly better in the second half compared to the first half of the year. Full year diluted earnings per share are expected to reach a level between € 1.15 and € 1.30.

adidas Group 2009 outlook

Currency-neutral sales low- to mid-single-digit declineGross margin 45.0% to 45.5% Operating margin around 5.0% Diluted earnings per share € 1.15 to € 1.30

Working capital management to improve balance sheetOperating working capital management is a major focus of our efforts to improve the Group’s balance sheet. We expect operating working capital to be a source of cash for our Group in 2009. Inventory management is forecasted to primarily contribute to this goal. Group inventories are expected to be significantly below the prior year level at the end of 2009 as a result of the clearance of excess inventories and a signifi-cant reduction of sourcing volumes in the second half of 2009. Group receivables are expected to be around the prior year level following slower receipt of payments due to the difficult economic situation in most markets, partly compensated by a lower sales level.

Excess cash to be used to reduce net debt In 2009, we expect continued strong cash flows from operat-ing activities. Cash flows from operating activities are 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 approach € 300 million. We intend to largely use excess cash to reduce net borrowings, which we forecast to be below the prior year level at year-end. The announced redemption of the Group’s convertible bond (see Subsequent Events) is expected to also contribute to this target. As a result, we expect to make progress towards achiev-ing our medium-term financial leverage target of below 50%.


adidas Group Nine Months Report 2009 28 Interim Consolidated Financial Statements (IFRS) Consolidated Balance Sheet

Consolidated balance sheet

€ in millions

Sep. 30, 2009 Sep. 30, 2008 Change in % Dec. 31, 2008

Cash and cash equivalents 326 257 26.8 244Short-term financial assets 63 56 12.1 141Accounts receivable 1,866 2,055 (9.2) 1,624Other current financial assets 136 147 (8.0) 287Inventories 1,652 1,812 (8.8) 1,995Income tax receivables 86 48 79.8 110Other current assets 456 579 (21.2) 502Assets classified as held for sale 18 57 (68.1) 31Total current assets 4,603 5,011 (8.1) 4,934Property, plant and equipment 837 802 4.4 886Goodwill 1,465 1,462 0.2 1,499Trademarks 1,320 1,306 1.1 1,390Other intangible assets 178 228 (21.9) 204Long-term financial assets 92 99 (7.3) 96Other non-current financial assets 47 73 (36.2) 60Deferred tax assets 438 378 16.0 344Other non-current assets 125 97 29.0 120Total non-current assets 4,502 4,445 1.3 4,599Total assets 9,105 9,456 (3.7) 9,533

Short-term borrowings 598 394 51.6 797Accounts payable 892 775 15.1 1,218Other current financial liabilities 149 54 174.8 79Income taxes 271 341 (20.4) 321Provisions 335 349 (4.3) 324Accrued liabilities 612 733 (16.5) 684Other current liabilities 217 257 (15.7) 216Liabilities classified as held for sale 0 3 (100.0) 6Total current liabilities 3,074 2,906 5.8 3,645Long-term borrowings 2,086 2,512 (17.0) 1,776Other non-current financial liabilities 34 23 44.2 23Pensions and similar obligations 136 134 1.2 132Deferred tax liabilities 423 463 (8.6) 463Non-current provisions 26 31 (14.8) 28Non-current accrued liabilities 21 40 (46.9) 37Other non-current liabilities 32 28 20.2 29Total non-current liabilities 2,758 3,231 (14.6) 2,488Share capital 194 195 (0.6) 194Reserves (257) (36) — (10)Retained earnings 3,331 3,147 5.9 3,202Shareholders’ equity 3,268 3,306 (1.1) 3,386Minority interests 5 13 (63.9) 14Total equity 3,273 3,319 (1.4) 3,400Total liabilities and equity 9,105 9,456 (3.7) 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.


adidas Group Nine Months Report 2009 29 Interim Consolidated Financial Statements (IFRS) Consolidated Income Statement

Consolidated income statement

€ in millions


Net sales 7,923 8,225 (3.7%) 2,888 3,083 (6.3%)Cost of sales 4,347 4,163 4.4% 1,581 1,572 0.6% Gross profit 3,576 4,062 (12.0%) 1,307 1,511 (13.5%) (% of net sales) 45.1% 49.4% (4.3pp) 45.3% 49.0% (3.7pp)Royalty and commission income 63 64 (2.4%) 19 23 (19.4%)Other operating income 72 54 32.7% 24 15 55.1% Other operating expenses 3,246 3,217 0.9% 1,014 1,076 (5.8%) (% of net sales) 41.0% 39.1% 1.8pp 35.1% 34.9% 0.2ppOperating profit 465 963 (51.7%) 336 473 (29.0%) (% of net sales) 5.9% 11.7% (5.8pp) 11.6% 15.3% (3.7pp)Financial income 15 23 (37.3%) 9 7 32.3% Financial expenses 137 136 0.9% 39 49 (19.5%)Income before taxes 343 850 (59.7%) 306 431 (29.1%) (% of net sales) 4.3% 10.3% (6.0pp) 10.6% 14.0% (3.4pp)Income taxes 118 260 (54.9%) 93 128 (27.4%) (% of income before taxes) 34.2% 30.5% 3.7pp 30.3% 29.6% 0.7pp Net income 225 590 (61.8%) 213 303 (29.8%) (% of net sales) 2.8% 7.2% (4.3pp) 7.4% 9.8% (2.5pp)Net income attributable to shareholders 226 588 (61.6%) 213 302 (29.7%) (% of net sales) 2.9% 7.1% (4.3pp) 7.4% 9.8% (2.5pp)Net income attributable to minority interests (1) 2 (117.7%) 0 1 (39.9%)

Basic earnings per share (in €) 1.17 2.96 (60.5%) 1.10 1.54 (28.9%)Diluted earnings per share (in €) 1.13 2.78 (59.4%) 1.03 1.44 (28.5%)

Rounding differences may arise in percentages and totals.


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

Consolidated statement of comprehensive income

€ in millions

Nine months 2009 Nine months 2008

Net income after taxes 225 590

Net (loss)/gain on cash flow hedges, net of tax (166) 86 Actuarial gains of defined benefit plans, net of tax 1 0 Currency translation (83) 84 Other comprehensive income (248) 170

Total comprehensive income (22) 761

Attributable to shareholders of adidas AG (21) 758 Attributable to minority interests (1) 2



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

Consolidated statement of changes in equity

€ in millions

Share capital

Capital reserve

Cumulative translation

adjustments

Hedging reserve

Other

reserves 1)

Retained earnings

Total shareholders’

equity

Minority

interests

Total equity

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

Total comprehensive income 84 86 0 588 758 2 761

Dividend payment (99) (99) (0) (99)Exercised share options 0 0 0 Repurchase of adidas AG shares (9) (368) (377) (377)Reclassifications of minorities in accordance with IAS 32 0 0 0

Balance at September 30, 2008 195 369 (426) 28 (7) 3,147 3,306 13 3,319

Balance at December 31, 2008 194 338 (432) 91 (6) 3,202 3,386 14 3,400

Total comprehensive income (83) (166) 1 226 (21) (1) (22)

Dividend payment (97) (97) 0 (97)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 September 30, 2009 194 338 (515) (75) (5) 3,331 3,268 5 3,273

Rounding differences may arise in percentages and totals. 1) Reserves for actuarial gains /losses and share option plans.


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

Consolidated statement of cash flows

€ in millions

Nine months 2009 Nine months 2008

Operating activities: Income before taxes 343 850 Adjustments for: Depreciation and amortisation 205 162 Unrealised foreign exchange losses/(gains), net 21 (6) Interest income (13) (23) Interest expense 107 124 Losses/(gains) on sale of property, plant and equipment, net 10 (4)Operating profit before working capital changes 673 1,103 (Increase) in receivables and other current assets (141) (684) Decrease/(Increase) in inventories 367 (146) (Decrease)/Increase in accounts payable and other current liabilities (458) 12 Cash provided by operating activities before interest and taxes 441 285 Interest paid (106) (129) Income taxes paid (213) (256)Net cash provided by/(used in) operating activities 122 (100)

Investing activities: Purchase of trademarks and other intangible assets (32) (36) Proceeds from sale of other intangible assets 5 6 Purchase of property, plant and equipment (128) (198) Proceeds from sale of property, plant and equipment 17 8 Acquisition of further investments in subsidiaries (13) (6) Acquisition of subsidiaries and other business units net of cash acquired (4) (29) Proceeds from sale of short-term financial assets 73 33 Proceeds from sale/(Purchase) of investments and other long-term assets 11 (21) Interest received 13 23 Net cash used in investing activities (58) (220)

Financing activities: Increase in long-term borrowings 12 943 Proceeds from issue of a Eurobond 500 — Dividend to shareholders of adidas AG (97) (99) Dividend to minority shareholders — (0) Exercised share options — 0 Repurchase of adidas AG shares — (377) Cash repayments of short-term borrowings (404) (186)Net cash provided by financing activities 11 281

Effect of exchange rates on cash 7 1

Increase/(Decrease) in cash and cash equivalents 82 (38)Cash and cash equivalents at beginning of year 244 295 Cash and cash equivalents at end of period 326 257



adidas Group Nine Months Report 2009 33 Interim Consolidated Financial Statements (IFRS) Notes to Interim Consolidated Financial Statements

Notes to Interim Consolidated Financial Statements (IFRS)As at September 30, 2009

1 Basis of preparationThe interim consolidated financial statements of adidas AG and its subsidiaries (collectively the “Group”) for the first nine months ending September 30, 2009 are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The Group applied all International Financial Reporting Standards and Interpretations of the International Financial Reporting Interpretations Committee effective as at September 30, 2009, with the exception of IFRS 7, which is not obligatory for interim financial reporting.

The accounting policies used in the preparation of the interim financial statements are consist-ent with those in the annual consolidated financial statements for the year ending December 31, 2008 and are in line with IAS 34 “International Accounting Standard No. 34 – Interim Financial Reporting”. The interim financial statements also comply with GAS 16 “German Accounting Standard No. 16 – Interim Financial Reporting”. The interim financial statements and the interim management report have not been audited in accordance with section 317 German Commercial Code (Handelsgesetzbuch – HGB) or reviewed by an auditor.

The Group believes that the application of new/revised standards and interpretations which are effective from January 1, 2009 does not have a material impact on the Group’s financial position, results of operations or cash flows. The Group is currently analysing the potential impacts of new/revised standards and interpretations that will be effective for financial years after Decem-ber 31, 2009.

Costs that are incurred unevenly during the financial year are anticipated or deferred in the interim financial statements only if it would be also appropriate to anticipate or defer such costs at the end of the financial year.

These interim consolidated financial statements should be read in conjunction with the 2008 annual consolidated financial statements. The notes contained therein also apply to the quarterly financial statements for 2009 and are not repeated unless explicit reference is made to certain changes. The results of operations for the first nine months ending September 30, 2009 are not necessarily indicative of results to be expected for the entire year.

2 SeasonalityThe 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 of particular product categories, brands or the regional composition may occur throughout the year.

3 Acquisitions of subsidiariesEffective January 1, 2009, adidas International B.V. acquired 51% of the shares of Life Sport Ltd. for a purchase price in the amount of ILS 25.6 million. Based in Holon (Israel), Life Sport Ltd. is a marketing company for adidas products in Israel. The purchase price allocation has yet to be finalised.

Effective January 1, 2009, adidas International B.V. acquired the outstanding 25% of the shares of Reebok’s subsidiary in Spain, Reebok Spain S.A., Alicante.

Effective January 23, 2009, adidas AG acquired the remaining 5% of the shares of its subsidiary in Greece, adidas Hellas A.E., Thessaloniki.

On February 16, 2009, adidas International, Inc. acquired assets of Bones in Motion, Inc. as part of an asset deal for a purchase price in the amount of USD 5 million. Based in Austin/Texas (USA), Bones in Motion, Inc. is engaged in developing, manufacturing and selling sports- and fitness-specific location-aware software applications and web-based services. The purchase price allocation has yet to be finalised.

4 Assets/liabilities classified as held-for-saleWith the exception of an Ashworth warehouse in the USA which was classified as held-for-sale due to the intention to sell and the existence of a purchase offer and was subsequently sold during the third quarter, the composition of assets/liabilities classified as held-for-sale is unchanged versus June 30, 2009.

5 Shareholders’ equityIn the period from January 1, 2009 to September 30, 2009, the nominal capital of adidas AG did not change. Consequently, on September 30, 2009, the nominal capital of adidas AG amounted to € 193,515,512, divided into 193,515,512 no-par-value bearer shares (“shares”).


adidas Group Nine Months Report 2009 34 Interim Consolidated Financial Statements (IFRS) Notes to Interim Consolidated Financial Statements

6 Other operating income and other operating expensesOther operating income mainly includes income from the release of accruals and provisions and other revenues.

Other operating expenses include expenses for marketing, sales and research and development, as well as for logistics and central finance and administration. In addition, they include deprecia-tion on tangible and amortisation on intangible assets, with the exception of other depreciation and amortisation which is included in the cost of sales. In the first nine months of 2009, depre-ciation and amortisation amounted to € 192 million (2008: € 156 million).

7 Earnings per shareBasic earnings per share are calculated by dividing net income by the weighted average number of outstanding shares during the period after deduction of treasury shares.

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 criteria at the balance sheet date, dilutive potential shares have arisen.

Earnings per share

Nine months 2009

Nine months 2008

Net income attributable to shareholders (€ in millions) 226 588Weighted average number of shares 193,515,512 198,868,061 1)

Basic earnings per share (in €) 1.17 2.96Net income attributable to shareholders (€ in millions) 226 588Interest expense on convertible bond, net of taxes (€ in millions) 10 9Net income used to determine diluted earnings per share (€ in millions) 236 597Weighted average number of shares 193,515,512 198,868,061 1)

Weighted share options 47,741 119,018Weighted assumed conversion convertible bond 15,684,315 15,684,315Weighted average number of shares for diluted earnings per share 209,247,568 214,671,394 1)

Diluted earnings per share (in €) 1.13 2.78

1) After deduction of treasury shares.

8 Segmental reportingThe Group is currently managed by brand segments, namely adidas, Reebok and TaylorMade-adidas Golf.

The Reebok segment includes the brands Reebok, Reebok-CCM Hockey and Rockport.

The TaylorMade-adidas Golf segment includes the brands TaylorMade, adidas Golf and Ashworth.

The Global Sourcing function together with other central functions such as Group Treasury and Global IT is included in HQ/Consolidation.

Financial information in accordance with the management approach is presented on pages 35 – 36 of this report.

9 Subsequent eventsThe nominal capital of adidas AG increased by a further € 16,400 as a result of the exercise of 4,100 stock options and the issuance of 16,400 shares associated with the Company’s Manage-ment Share Option Plan (MSOP). Therefore, on October 5, 2009, the nominal capital of adidas AG amounted to € 193,531,912 and was divided into 193,531,912 no-par-value bearer shares (“shares”).

On October 8, 2003, adidas International Finance B.V. issued a 2.5% convertible bond with con-version rights into adidas AG shares, absolutely and irrevocably guaranteed by adidas AG, in the aggregate principal amount of € 400,000,000 and with a term ending on October 8, 2018. On October 8, 2009, adidas International Finance B.V. prematurely terminated the convertible bond effective November 23, 2009. On November 23, 2009, the bonds will be redeemed at the total principal amount plus interest on the principal amount accrued until (but excluding) this day as far as the bondholders do not exercise their conversion rights up to and including November 9, 2009. Following the exercise of conversion rights, a total of 8,419,585 new shares with a pro-rata amount in the nominal capital of € 8,419,585 have been issued up to and including November 3, 2009. The new shares are entitled to a dividend payment as of the beginning of the financial year 2009. The Contingent Capital 2003/II of adidas AG amounts to € 27,578,455 as at November 3, 2009. At this time, the nominal capital of adidas AG amounts to € 201,951,497 and is divided into 201,951,497 shares.

Between the end of the first nine months of 2009 and the publication of this report on Novem-ber 4, 2009, there were no other major Group-specific matters which we expect to influence our business materially going forward.

Herzogenaurach, November 4, 2009The Executive Board of adidas AG


adidas Group Nine Months Report 2009 35 Interim Consolidated Financial Statements (IFRS) Segmental Information

Segmental information by brand

€ in millions


adidas Net sales 5,779 6,004 (3.8%) 2,111 2,218 (4.8%)Gross profit 2,708 2,947 (8.1%) 995 1,104 (9.9%)Gross margin 46.9% 49.1% (2.2pp) 47.1% 49.8% (2.7pp)Operating profit 789 951 (17.1%) 373 439 (15.0%)Operating margin 13.7% 15.8% (2.2pp) 17.7% 19.8% (2.1pp)

Reebok Net sales 1,497 1,587 (5.7%) 591 665 (11.1%)Gross profit 487 603 (19.2%) 205 242 (15.4%)Gross margin 32.6% 38.0% (5.5pp) 34.7% 36.4% (1.8pp)Operating profit (130) 2 — 17 25 (34.0%)Operating margin (8.7%) 0.1% (8.8pp) 2.8% 3.8% (1.0pp)

TaylorMade-adidas Golf Net sales 633 614 3.2% 184 197 (6.2%)Gross profit 249 278 (10.6%) 72 84 (14.6%)Gross margin 39.3% 45.3% (6.0pp) 39.0% 42.9% (3.8pp)Operating profit (23) 54 (142.0%) (4) 11 (137.7%)Operating margin (3.6%) 8.8% (12.4pp) (2.3%) 5.7% (8.0pp)

HQ/Consolidation Net sales 13 20 (32.5%) 2 4 (55.1%)Gross profit 132 234 (43.4%) 35 80 (55.9%)Operating profit (171) (44) (288.7%) (50) (3) —

Total Net sales 7,923 8,225 (3.7%) 2,888 3,083 (6.3%)Gross profit 3,576 4,062 (12.0%) 1,307 1,511 (13.5%)Gross margin 45.1% 49.4% (4.3pp) 45.3% 49.0% (3.7pp)Operating profit 465 963 (51.7%) 336 473 (29.0%)Operating margin 5.9% 11.7% (5.8pp) 11.6% 15.3% (3.7pp)



adidas Group Nine Months Report 2009 36 Interim Consolidated Financial Statements (IFRS) Segmental Information

Segmental information by region

€ in millions

Nine months 2009 Nine months 2008 Change in % 3rd quarter 2009 3rd quarter 2008 Change in %

Europe Net sales 3,442 3,776 (8.8) 1,299 1,423 (8.7)

North America Net sales 1,822 1,871 (2.6) 649 711 (8.8)

Asia Net sales 1,894 1,875 1.0 649 661 (1.7)

Latin America Net sales 713 647 10.2 270 266 1.5

HQ/Consolidation Net sales 52 56 (8.3) 21 21 (0.8)

Total Net sales 7,923 8,225 (3.7) 2,888 3,083 (6.3)




Management Boards

Executive Board

Herbert HainerChief Executive Officer

Glenn BennettGlobal Operations

Robin J. StalkerFinance

Erich StammingerGlobal Brands

Supervisory Board

Igor LandauChairman

Sabine Bauer 1)

Deputy Chairwoman

Willi SchwerdtleDeputy Chairman

Dieter Hauenstein 1)

Dr. Wolfgang Jäger 1)

Dr. Stefan Jentzsch

Herbert Kauffmann

Roland Nosko 1)

Alexander Popov

Hans Ruprecht 1)

Heidi Thaler-Veh 1)

Christian Tourres

1) Employee representative.

Biographical information on our Executive Board members as well as on mandates of the members of the Executive Board and the members of the Supervisory Board is avail-able at www.adidas-Group.com/executive-board and

www.adidas-Group.com/supervisory-board.



Financial Calendar 2009/2010

November 4, 2009Nine Months 2009 ResultsPress release, conference call and webcast

March 3, 20102009 Full Year ResultsAnalyst and press conferences in Herzogenaurach, GermanyPress release, conference call and webcast

May 4, 2010 First Quarter 2010 Results Press release, conference call and webcast

May 6, 2010 Annual General Meeting in Fürth (Bavaria), Germany Webcast

May 7, 2010Dividend paid(Subject to Annual General Meeting approval)

August 4, 2010First Half 2010 ResultsPress release, conference call and webcast

November 4, 2010Nine Months 2010 ResultsPress release, conference call and webcast



Contact

adidas AGAdi-Dassler-Str. 1 91074 HerzogenaurachGermany

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

Investor RelationsTel: + 49 (0) 91 32 84 – 29 20 / 21 87 Fax: + 49 (0) 91 32 84 – 31 27email: [email protected] / 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 Designhäfelinger + wagner design, Munich

©2009 adidas AG.adidas is a registered trademark of the adidas Group.

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