NiNe MoNths RepoRt 2008

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NiNe MoNths RepoRt 2008

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02 02

Financial Highlights 03 Operational and Sporting Highlights 04

Interview with the CEO 05 Our Share 10 Group Management Report 12 - Group Business performance 12 -- economic and sector Development 12

-- income statement 13 -- Balance sheet and Cash Flow 17

- adidas 19 - Reebok 21 - taylorMade-adidas Golf 23

- subsequent events 25 - outlook 26

Consolidated Financial Statements 29 - Consolidated Balance sheet 29 - Consolidated income statement 30 - Consolidated statement of Cash Flows 31

- Consolidated statement of Recognized income and expense 32

Notes 33 Segmental Information 37 - segmental information by Brand 37 - segmental information by Region 38

Management Boards 39 Financial Calendar 2008 / 2009 40

Contact 41

aDiDas GRoup seGMeNtal iNFoRMatioN

€ in millions

Nine Months Nine Months 3rd Quarter 3rd Quarter

2008 2007 Change 2008 2007 Change

adidas Net sales Gross profit Gross margin operating profit operating margin Reebok Net sales Gross profit Gross margin operating profit operating margin taylorMade-adidas Golf Net sales

Gross profit Gross margin operating profit operating margin

6,004 5,465 9.9% 2,218 2,012 10.2%

2,947 2,605 13.1% 1,104 992 11.4%

49.1% 47.7% 1.4pp 49.8% 49.3% 0.5pp

951 856 11.2% 439 395 11.2%

15.8% 15.7% 0.2pp 19.8% 19.6% 0.2pp

1,587 1,765 (10.1%) 665 728 (8.7%)

603 686 (12.1%) 242 293 (17.3%) 38.0% 38.9% (0.9pp) 36.4% 40.2% (3.8pp)

2 89 (98.3%) 25 84 (69.9%)

0.1% 5.0% (4.9pp) 3.8% 11.6% (7.8pp)

614 609 0.8% 197 190 3.5%

278 270 3.1% 84 84 0.2%

45.3% 44.3% 1.0pp 42.9% 44.3% (1.4pp)

54 42 30.0% 11 15 (24.1%)

8.8% 6.8% 2.0pp 5.7% 7.8% (2.1pp)

NINE MONtHS 2008

NiNe MoNths RepoRt 2008 --- adidas Group to ouR shaReholDeRs - segmental information

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NiNe MoNths RepoRt 2008 --- adidas Group FiNaNCial hiGhliGhts (iFRs)

Nine Months Nine Months 3rd Quarter 3rd Quarter

2008 2007 Change 2008 2007 Change

operating highlights (€ in millions) Net sales

operating profit

Net income attributable to shareholders Key Ratios (%)

Gross margin

operating expenses as a percentage of net sales operating margin

effective tax rate

Net income attributable to shareholders as a percentage of net sales operating working capital as a percentage of net sales¹⁾

equity ratio Financial leverage

Balance sheet and Cash Flow Data (€ in millions) total assets

inventories

Receivables and other current assets Working capital

Net borrowings shareholders’ equity Capital expenditure

Net cash used in/provided by operating activities per share of Common stock (€)

Basic earnings Diluted earnings operating cash flow share price at end of period other (at end of period) Number of employees Number of shares outstanding²⁾ average number of shares³⁾

Rounding differences may arise in percentages and totals.

all Group figures comprise the brand segments and hQ/Consolidation.

1) twelve-month trailing average.

2) all shares except treasury shares carry full dividend rights.

3) after deduction of treasury shares.

8,225 7,879 4.4% 3,083 2,941 4.8%

963 889 8.3% 473 471 0.3%

588 530 10.9% 302 298 1.5%

49.4% 47.7% 1.7pp 49.0% 48.6% 0.4pp

38.5% 37.3% 1.2pp 34.4% 33.4% 1.0pp

11.7% 11.3% 0.4pp 15.3% 16.0% (0.7pp)

30.5% 32.0% (1.5pp) 29.6% 32.0% (2.4pp)

7.1% 6.7% 0.4pp 9.8% 10.1% (0.3pp)

24.5% 25.7% (1.2pp) 24.5% 25.7% (1.2pp) 35.0% 35.4% (0.5pp) 35.0% 35.4% (0.5pp)

78.5% 71.1% 7.3pp 78.5% 71.1% 7.3pp

9,456 8,738 8.2% 9,456 8,738 8.2%

1,812 1,596 13.6% 1,812 1,596 13.6%

2,829 2,471 14.5% 2,829 2,471 14.5%

2,499 2,126 17.6% 2,499 2,126 17.6%

2,593 2,201 17.8% 2,593 2,201 17.8%

3,306 3,096 6.8% 3,306 3,096 6.8%

238 154 53.9% 106 62 69.9%

(100) 246 (140.5%)

2.96 2.60 13.6% 1.54 1.46 5.6%

2.78 2.46 13.3% 1.44 1.37 5.3%

(0.50) 1.21 (141.3%)

37.70 46.00 (18.0%) 37.70 46.00 (18.0%)

37,485 29,529 27% 37,485 29,529 27%

198,178,337 203,625,060 (2.7%) 198,178,337 203,625,060 (2.7%) 198,868,061 203,583,762 (2.3%) 195,806,311 203,621,193 (3.8%)

to ouR shaReholDeRs - Financial highlights 2004¹⁾

2005¹⁾ 2006²⁾ 2007 2008

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

€ in millions

5,115

7,836 7,879

8,225 4,664

NiNe MoNths Net iNCoMe attRiButaBle to shaReholDeRs

€ in millions

2004¹⁾ 2005¹⁾ 2006²⁾ 2007 2008

1) including continuing and discontinued operations.

386 469

530 588 295

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06 02 01

03

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NiNe MoNths RepoRt 2008 --- adidas Group to ouR shaReholDeRs - operational and sporting highlights third Quarter 2008

opeRatioNal aND spoRtiNG hiGhliGhts thiRD QuaRteR 2008

-July-

01.07. taylorMade-adidas Golf equipment once again contributes prominently to victories at major golf tournaments.

the winners of the Buick open, Commerce Bank Championship and the us Women’s open all rely on taylorMade-adidas Golf. 01.07. Picture 01 Reebok and driving ace lewis hamilton announce a multi-year partnership and at the same time unveil Reebok’s new smoothFit training and apparel range. 05.07. Picture 02 the world’s biggest adidas store opens in Beijing, China, taking the adidas retail experience to a new level. 23.07. adidas and record

German Champion FC Bayern München present new jerseys for the Bundesliga season 2008/2009.

-AuGuSt-

06.08. Picture 03 taylorMade Golf launches www.mytpball.com, a program that gives golfers the opportunity to design and order their own golf balls. 08.08. Picture 04 the Beijing 2008 olympic Games begin. as the official sportswear partner adidas celebrates its olympic heritage and underlines its leading position in the fastest-growing sportswear market in the world. in total, more than 3,000 athletes compete in adidas products and adidas provides products for 27 out of the 28 olympic sports. 18.08. adidas sponsored pole vault athlete Yelena isinbayeva improves her world record

to 5.05m one day after adidas swimmer Britta steffen wins her second Gold Medal and sets another olympic record.

28.08. at the draw for the ueFa Champions league™ group stages in Monaco adidas unveils the adidas “FiNale 8”, the official match ball of the competition. 29.08. Reebok hockey announces its partnership with the National hockey league

(Nhl) for the 2008 Nhl premiere series in europe and unveils its 2009 global hockey product line.

-SEPtEMBER-

03.09. the adidas Group annual report “united by sport” is awarded “Best annual Report 2008” by ‘manager magazin’.

04.09. the new homepage www.adidas.com highlights different campaigns and products and offers an individualizable appearance for every country. 08.09. adidas and the Russian Football union (RFu) announce a long-term partnership

under which adidas supplies all RFu national teams. 15.09. For the ninth consecutive time, adidas is selected to join the Dow Jones sustainability Group indexes. in addition, adidas is named “super sector leader” 2008/2009 within

our industry. 20.09. Picture 05 adidas originals, Y-3 and adidas by stella McCartney present their spring/summer ’09 collections during the Fashion Week in Milan, New York and london, respectively. 28.09. Picture 06 adidas sponsors

the 35th Berlin Marathon where haile Gebrselassie again breaks his own world record.

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NiNe MoNths RepoRt 2008 --- adidas Group to ouR shaReholDeRs - interview with the Ceo

iNteRvieW With the Ceo the adidas Group has taken full advantage of this year’s major sporting events. this has resulted in double-digit increases in both the top and bottom line for the first nine months of 2008. Based on this development, and despite challenging market conditions, the Group has reconfirmed its full year financial guidance.

herbert hainer

Ceo and Chairman of the executive Board

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NiNe MoNths RepoRt 2008 --- adidas Group

iN the FolloWiNG iNteRvieW, heRBeRt haiNeR, aDiDas GRoup Ceo aND ChaiRMaN, RevieWs the FiRst NiNe MoNths oF 2008, aND DisCusses the GRoup’s stRateGiC aND FiNaNCial outlooK.

heRBeRt, has the aDiDas GRoup’s FiNaNCial peRFoRMaNCe FoR the FiRst NiNe MoNths liveD up to YouR expeCtatioNs?

I am proud to report that the adidas Group has again delivered a strong set of financial results. Momentum in the adidas and TaylorMade-adidas Golf segments has clearly continued. And this is despite mounting pressure on retail markets and consumer spending around the globe. Sales for the Group are up 11% on a currency-neutral basis in both the third quarter and year-to-date. All regions with the exception of North America grew at double-digit rates, underlining the Group’s diverse global platform. Our gross margin is up over one and a half percentage points to 49.4%. And despite continued investment in our brands, we have been able to improve our operating margin to 11.7%. As a result, net income for the first nine months grew 11%. The progress made on our share buyback program during the period means earnings per share grew even faster – increasing 14%. These results demonstrate the health of our business and place us on a clear path to achieving the goals we set for the full year.

the suMMeR oF spoRts CaMe to a speCtaCulaR CoNClusioN With the BeiJiNG 2008 olYMpiCs. hoW has this eveNt iMpaCteD YouR BusiNess, paRtiCulaRlY iN ChiNa?

One of our Group’s competitive advantages is maximizing brand presence and positioning around major sporting events.

Earlier this year we used the UEFA EURO 2008™ in Austria and Switzerland to grow our football leadership, and at the Olympic Games the adidas brand was again the most prominent and recognized sporting goods brand all over the world.

As Official Sportswear Partner of the Beijing 2008 Olympic Games, adidas supplied more than three million products to federations, volunteers, officials and others. By outfitting 16 National Olympic Committees, including the most successful nation, China, plus three other top ranked Olympic teams, Great Britain, Germany and Australia, adidas underlined its posi- tion as the true Olympic brand. In total, more than 3,000 athletes competed in adidas products and adidas provided products for 27 out of the 28 Olympic sports. According to a survey of Chinese consumers, recognition of the brand after the Games was double that of our major competitor. On the commercial side, the Olympics also represented a big win for the Group.

Sales in China increased over 50% on a currency-neutral basis in the first nine months of 2008 making it the second-largest market for the adidas Group after the USA. Although growth rates in China will slow somewhat in coming quarters due to the magnitude of our development in the last several years and the tougher overall retail environment, we are well on track to reach our sales target of more than € 1 billion for the adidas Group in China by 2010. And, I am convinced that we will continue to achieve dynamic growth in this market for years to come.

“Momentum in the adidas and taylorMade-adidas Golf segments has clearly continued.”

“according to a survey of Chinese consumers, recognition of the brand after the Games was double that of our major competitor.”

to ouR shaReholDeRs - interview with the Ceo

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BRaND aDiDas sales have CoNtiNueD to GRoW at DouBle-DiGit CuRReNCY-NeutRal Rates iN 2008. WheRe is the GRoWth CoMiNG FRoM aND What aCtioNs aRe You taKiNG to eNsuRe the FutuRe suCCess oF the BRaND?

The adidas segment has clearly exceeded the ambitious top-line goals we outlined for the brand at the beginning of the year.

With currency-neutral sales up 16%, we recorded the highest nine-month top-line growth rate in more than 10 years. We clearly seized all the opportunities presented by this year’s major sporting events and cemented our leadership as the sport performance brand. All of our core Sport Performance categories running, football, training and basketball increased at double-digit rates. During the quarter, we also took several important steps to ensure we sustain the long-term health and desirability of the brand. For example, we signed the Russian Football Union – adding to our already enviable roster of promotion partners. In addition, we acquired US-based Textronics, Inc., which has the most advanced technology to integrate electronics into apparel. This acquisition will help to strengthen our leading position in the intelligent product category.

With initiatives like these, we continue the legacy inspired by our founder Adi Dassler – to provide athletes with the best equipment to help them in their efforts to push the limits of performance. And I am convinced that this winning formula will ensure we increase the momentum of the adidas brand well into the future.

ReeBoK sales aND BaCKloGs ReMaiN suBDueD. aRe You liKelY to ReaCh YouR taRGets FoR the YeaR?

The Reebok segment has not performed to our expectations this year. Sales have declined 2% on a currency-neutral basis in the first nine months. Although we continue to expect increases in several emerging markets – especially through our newly consolidated joint venture activities in Brazil and Argentina – we will come up short on our original guidance for the full year. In more mature markets, however, we do see that our product collections are getting better and our positioning in the women’s and training segments is getting stronger.

But we all know the markets are tough and highly unpredictable these days and that’s the environment where brands in transition are hit hardest. My biggest priority for the immediate future is to ensure we continue to do the right things to improve the brand’s positioning in these markets. But an even higher priority has to be making the segment more efficient and considerably more profitable. We are working diligently on all these things, and when we speak again in March I expect to have a lot more to tell you on this front.

“With currency-neutral sales up 16%, we recorded the highest nine-month top-line growth rate in more than 10 years.”

“We all know the markets are tough and highly unpredictable these days and that’s the environment where brands in transition are hit hardest.”

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tayloRMade-adidas Golf had a ReMaRkable thiRd quaRteR, cleaRly outpeRfoRMiNG youR MajoR coMpetitoRs iN a touGh Golf MaRket. What is dRiviNG this peRfoRMaNce aNd What is the defiNiNG stRateGy of the seGMeNt?

TaylorMade-adidas Golf is committed to continuously developing and commercializing innovative and technologically advanced products. This is what differentiates us from the rest of the pack and enables our golf business to navigate through difficult waters so successfully. In a highly challenging environment, the brand is gaining market share in the US, which is critical for shaping industry trends around the globe. In our largest category metalwoods, for example, we now control over 30% of the market.

A core tenet of our long-term strategy for TaylorMade-adidas Golf is to create similarly strong positions across all the other golf product categories in which we compete. This year, we have made solid gains in categories like balls and putters with the highly successful launch of our TP Tour ball and the Spider family of putters. With the intended acquisition of Ashworth, we now plan to take our apparel offering to the next level. This highly complementary acquisition augments adidas Golf’s existing strength in synthetic high-tech apparel with the best cotton product on the market. Add to this Ashworth’s much stronger distribution presence at the green grass level and the potential for future cost synergies as part of the adidas Group, and you will understand the logic for this acquisition. With this strategy as a backbone, I am confident our golf business is well positioned to expand on our achievements to date, building strong brand equity and appeal to golfers everywhere.

afteR youR stRoNG fiNaNcial peRfoRMaNce iN the fiRst NiNe MoNths of the yeaR, aRe you coNfideNt iN ReachiNG youR full yeaR GuidaNce?

This financial performance puts us firmly on track to achieve our full year targets. The Group’s top line will grow at a high- single-digit currency-neutral rate. All brand segments will contribute to this development. Brand adidas revenues will grow at a low-double-digit rate for the fourth consecutive year. In fact, TaylorMade-adidas Golf is now anticipated to grow faster than we originally expected at a high-single-digit rate. Reebok sales, however, are now forecasted to remain stable compared to the prior year, which is below our previous expectations. As outlined in August, gross margin will exceed 48.0%. Our operating margin will also expand over the prior year and approach 10%. And for the eighth consecutive year this will result in our net earnings growing at a double-digit rate which we expect to be at least 15%.

“i am confident our golf business is well positioned to expand on our achievements to date, building strong brand equity and appeal to golfers everywhere.”

“for the eighth consecutive year this will result in our net earnings growing at a double-digit rate which we expect to be at least 15%.”

to ouR shaReholdeRs - interview with the ceo

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the GloBal FiNaNCial CRisis is CleaRlY ChaNGiNG MaRKets aND CoNsuMeR BehavioR. hoW Will the aDiDas GRoup FaCe these ChalleNGes?

The financial crisis is clearly having a negative impact on economic development and consumer sentiment around the world and poses an immediate threat to our business. But we are all committed to responding to these challenges proactively in order to emerge even stronger from these tough times. In Chinese, the word crisis is made up of two elements: risk and opportunity. First and foremost, we must be disciplined and adjust to consumer demand in the best interest of our brands.

We also have to be proactive and adapt our structures in order to become leaner, faster, more effective and more flexible.

I recently challenged all of our employees to intensify our efforts to reduce all costs that do not contribute directly to our business success.

But, we should not lose sight of the value of investing in our business even in difficult times. While the economic downturn will impact personal consumption and our industry as a result – we continue to be well positioned to drive our business forward. This is demonstrated by our strong brands, diversified global platform, and our high exposure to fast-growing emerging markets. Now is the time to build on these strengths. Investments in our controlled space initiatives and infra- structure expansion in emerging markets all remain key drivers to securing sustainable long-term growth. The adidas Group is highly cash flow generative and financially strong. And while managing our risk sensibly, we will actively use this crisis as an opportunity to safeguard and ensure our Group’s future success.

heRBeRt, thaNK You FoR this iNteRvieW.

“While managing our risk sensibly, we will actively use this crisis as an opportunity to safeguard and ensure our Group’s future success.”

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NiNe MoNths RepoRt 2008 --- adidas Group to ouR shaReholDeRs - our share

ouR shaRe turbulence on international stock markets related to the crisis in the financial sector continued in the third quarter of 2008.

During the period, several high-profile institutions went bankrupt or were rescued at the last minute by governmental intervention.

investor uncertainty and lack of transparency on the situation resulted in a sharp downturn across all global indices during september.

the Dow Jones decreased by 4% and the Dax-30 lost 9% in the third quarter. Despite solid first half year results, the adidas aG share declined 6% over the three-month period.

the aDiDas aG shaRe FINANCIAl SECtOR CRISIS HEAvIly IMPACtS INtER-

NAtIONAl StOCk MARkEtS ANd MACROECONOMIC dEvElOPMENt IN FIRSt NINE MONtHS OF 2008 all major international stock indices, the Dax-30 and the adidas aG share declined in the first nine months of 2008. a deteriorat- ing macroeconomic outlook, recessionary concerns and the ongoing crisis in the financial sector contributed to this development. Due to high inflation rates in the first half of 2008, the european Central Bank raised interest rates by 0.25% to 4.25% at the beginning of July. Nevertheless, inflation in the euro Zone hit a record high annualized rate of 4.0% in July, while us inflation increased to 5.6%. the oil price reached a new all-time record at us $ 147 per barrel in mid-July. in the subsequent weeks, the oil price dropped considerably and the inflation rate in the euro Zone and the usa moderated slightly. Fears that the crisis in the financial sector might last longer than originally expected overshadowed the stock markets’ upturn in July and august. Negative news flow from several international banks and severe liquidity problems at one of the world’s biggest insurance companies drove a sharp downturn of international stock markets in mid- to late september. on september 19, the us government proposed a massive bailout of financial institutions, which had yet to win Congress approval by the quarter-end. the Dax-30 declined 28% during the first nine months to 5,831 points. the adidas aG share developed similarly, down 27% over the same period. the MsCi World textiles, apparel & luxury Goods index, which comprises the Group’s main competitors, lost 23% in this period.

AdIdAS AG SHARE PRICE dEClINES IN tHIRd QuARtER Due to the global economic downward trend, high inflation rates and newly aroused fears concerning the financial crisis, our share price declined at the beginning of July in line with develop ments in our industry but did regain some ground in the second half of the month. in early august, the adidas Group published its results for the first half year, which were well received by investors and analysts due to the increased full year guidance for our gross and operating margins. our share price increased 8% on the day of the earnings release.

histoRiCal peRFoRMaNCe oF the aDiDas aG shaRe

and important indices at september 30, 2008 in %

(27) (18) 4 101 290

(28) (26) 16 79 166

(23) (25) 11 72 108

Number of shares outstanding

nine months average ¹⁾ 198,868,061 at september 30 ²⁾ 198,178,337

type of share No-par-value share

Free float 100%

initial public offering November 17, 1995 share split June 6, 2006 (in a ratio of 1:4)

stock exchange all German stock exchanges

stock registration number (isiN) De0005003404

stock symbol aDs, aDsG.De

important indices Dax-30

MsCi World textiles, apparel & luxury Goods Deutsche Börse prime Consumer Dow Jones stoxx Dow Jones euRo stoxx Dow Jones sustainability Ftse4Good europe ethibel excellence ethibel pioneer vigeo aspi eurozone 1) after deduction of treasury shares.

2) all shares except treasury shares carry full dividend rights.

YtD 1 year 3 years 5 years since ipo adidas aG

Dax-30

MsCi World textiles, apparel & luxury Goods

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With the onset of a downward trend on the stock markets in the second half of august, the adidas aG share price declined over the course of august and september. as a result, our share price finished the quarter at € 37.70, down 6% compared to June 30, 2008. Nevertheless, our share outperformed the MsCi World textiles, apparel & luxury Goods index which decreased by 11% during the period. the adidas aG share also outperformed the Dax-30 index, which declined 9% during the third quarter.

AdIdAS AGAIN INCludEd IN dOw JONES SuStAINABIlIty INdExES For the ninth consecutive time, adidas has been included in the Dow Jones sustainability Group indexes (DJsGi), the world’s first global sustainability index family.

the index, which analyzes and tracks the social, environ- mental and financial performance of more than 300 companies worldwide, rated adidas for the sixth time in a row as industry leader in sustainability issues and corporate responsibility in the category “Clothing, accessories & Footwear”. in addition, adidas was named “super sector leader” 2008/2009 in the sector “personal & household Goods” and thus ranks among the most sustainable companies worldwide.

SHARE BuyBACk PROGRAM CONtINuEd adidas aG initiated a share buyback program on January 29, 2008, under which adidas shares totaling up to 5% of the company’s stock capital with an aggregate value of up to € 420 million can be repurchased via the stock exchange between January and Novem- ber 2008. During the third quarter, adidas aG purchased 2.7 million shares at an average price of € 38.20 per share.

the total buyback volume in this period amounted to

€ 103 million. Between the start of the program on January 30 and september 30, 2008, adidas aG repurchased 9.2 million shares in total, at an average price of € 40.89 per share. this represents a total buyback volume of € 377 million. 5.5 million of the shares repurchased prior to the end of the third quarter have already been cancelled. the share buyback program has meanwhile been completed see Subsequent Events.

shaReholDeR RiGhts NotiFiCatioNs ReCeiveD iN Q3 2008

to ouR shaReholDeRs - our share

AdRS dEvElOP ROuGHly IN lINE wItH COMMON StOCk IN FIRSt NINE MONtHS on september 30, 2008, 11.7 million level 1 aDRs (american Depositary Receipts) were outstanding. this figure is higher compared to December 31, 2007 when 11.1 million aDRs were outstanding and 2% lower compared to the prior year level of 11.9 million. the level 1 aDR closed the quarter at us $ 26.54, reflecting a decrease of 29%

compared to the end of December 2007, roughly in line with our common stock development in this period.

CHANGES IN SHAREHOldER BASE in the third quarter of 2008, the Group received five voting rights notifications in accordance with article 21, section 1 of the German securities trading act (Wertpapierhandelsgesetz – WphG) listed in the adjoining table.

dIRECtORS’ dEAlINGS REPORtEd ON CORPORAtE wEBSItE the 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 relationship with these persons, is reported on our website

www.adidas-Group.com/directors_dealings. in the third quarter of 2008, adidas aG received notification that Fritz Kammerer, Deputy Chairman of the adidas aG supervisory Board, had bought 256 shares on august 25, 2008.

FuRtHER INvEStOR RElAtIONS ACtIvItIES ANd NEwS in the third quarter of 2008, we again presented at road shows in europe and the usa as well as at several investor confer- ences. Further, the adidas Group was awarded “Best annual Report 2008” by ‘manager magazin’ in september, winning the competition against 200 rated annual reports from the Dax-30, the M-Dax, s-Dax, tec-Dax and the european stocks segment stoxx 50. three expert teams independently evalu- ated the reports according to almost 500 review criteria in the sections content, layout and language.

shaRe pRiCe DevelopMeNt iN 2008 ¹⁾

Dec. 31, 2007 sep. 30, 2008

100

80

60

— adidas aG

— Dax-30

— MsCi World textiles, apparel & luxury Goods 1) index: December 31, 2007 = 100

Date of threshold voting rights (in % of Date of

notification Notifying party crossed total shares outstanding) change Jul. 29/ iNvesCo < 5% 10,150,612 Dec. 21,

aug. 14, limited (4.983%) 2007

2008

aug. 21, the Bank of > 3% 5,966,756 aug. 20,

2008 New York Mellon (3.01%) 2008

Corporation

aug. 22, the Bank of < 3% 5,923,816 aug. 21,

2008 New York Mellon (2.99%) 2008

Corporation

aug. 27, iNvesCo < 5% 10,150,612 Dec. 21,

2008 limited (4.985%) 2007

(Correction)

sep. 19, the Bank of > 3% 6,034,481 sep. 18,

2008 New York Mellon (3.04%) 2008

Corporation

50 130

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NiNe MoNths RepoRt 2008 --- adidas Group GRoup MaNaGeMeNt RepoRt -- Group Business performance - economic and sector Development

eCoNoMiC aND seCtoR DevelopMeNt

GlOBAl ECONOMy ON tHE vERGE OF RECESSION IN tHE tHIRd QuARtER OF 2008 the continuation of the financial crisis played a more profound role in global economic development in the third quarter of 2008. inflation continued to be of major concern in europe despite increasing interest rates.

Consumer confidence reached its lowest level since the creation of the euro Zone. Consumer confidence in the usa improved modestly in the third quarter, despite higher unem- ployment and inflation rates. a slowdown in export growth rates led to a reduction in economic growth rates in many of the major asian markets. after five years of robust growth, latin america also began showing signs of a slowdown, with declining consumer confidence.

GlOBAl SPORtING GOOdS INduStRy PERFORMANCE AFFECtEd By lOw CONSuMER CONFIdENCE During the third quarter of 2008, growth in the sporting goods industry slowed in all regions of the world. Growth rates in europe decreased compared to the first half of the year as the positive impetus provided by ueFa euRo 2008™ subsided. Retail conditions in the uK and iberia remained the most challenging, while emerging markets continued to grow strongly. in the usa, back-to-school sales grew moderately, although most retailers complained of a strong slowdown towards the end of the quarter. positive inventory, margin and average selling price trends were offset by lower volumes. in China, the olympic Games encouraged high involvement in sports but led to mixed develo pment for retailers, resulting in excess inventories for several brands after the Games. after two years of industry decline, the Japanese sporting goods industry appears to have bottomed out, although it continues to face a challenging promotional environment. in latin america, despite concerns regarding spillover effects from slowdowns in other regions, the industry grew solidly, in line with the overall economic development in the region.

GRoup BusiNess peRFoRMaNCe in the first nine months of 2008, the adidas Group deliv- ered strong financial performance. Currency- neutral adidas Group sales increased 11%, driven by double-digit growth in the adidas and taylorMade-adidas Golf segments. in euro terms, revenues of the adidas Group grew 4% to € 8.225 billion from € 7.879 billion in 2007. the Group’s gross margin increased 1.7 percentage points to 49.4% in 2008 (2007:

47.7%). Consequently, the Group’s gross profit increased 8% to reach € 4.062 billion in 2008 versus € 3.755 billion in 2007. the Group’s operating margin grew 0.4 percentage points to 11.7% in 2008 from 11.3% in 2007. improve- ments in the Group’s gross margin more than offset an operating expense increase as a per- centage of sales. operating profit improved 8%

to € 963 million in 2008 versus € 889 million in 2007. the Group’s net income attributable to shareholders grew 11% to € 588 million in 2008 from € 530 million in 2007, largely as a result of the Group’s strong operational development. Basic earnings per share grew 14% to € 2.96 in 2008, versus € 2.60 in 2007.

similarly, diluted earnings per share increased 13% to € 2.78 (2007: € 2.46).

exChaNGe Rate DevelopMeNt¹⁾

€ 1 equals

average Q4 Q1 Q2 Q3 Average

rate 2007 2007 2008 2008 2008 rate 2008 ²⁾

usD GBp JpY

1) spot rates at quarter-end.

2) average rate for the first nine months.

Q3 Q4 Q1 Q2 Q3

2007 2007 2008 2008 2008

usa¹⁾ euro Zone²⁾ Japan³⁾

1) source: Conference Board.

2) source: european Commission.

3) source: economic and social Research institute, Government of Japan.

1.3709 1.4721 1.5812 1.5764 1.4303 1.5222 0.6845 0.7334 0.7958 0.7923 0.7903 0.7816 161.19 164.93 157.37 166.44 150.47 161.04

99.5 90.6 65.9 51.0 59.8

(5.7) (8.7) (12.1) (16.7) (18.9)

44.1 38.3 37.0 32.9 31.8

QuaRteRlY CoNsuMeR CoNFiDeNCe DevelopMeNt

by region

(13)

13

NiNe MoNths RepoRt 2008 --- adidas Group 2004¹⁾

2005¹⁾ 2006²⁾ 2007 2008

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

iNCoMe stateMeNt

MAJOR IMPACtS ON OPERAtIONAl PERFORMANCE the operational performance of the adidas and Reebok segments in the first nine months of 2008 was positively impacted by the realization of revenue and cost synergies resulting from the integration of the Reebok business into the adidas Group.

incremental revenue was mainly realized in the Reebok segment, in particular in countries for which Reebok had purchased the distribution rights effective January 1, 2007, such as Russia and China. Revenue synergies also had a small positive impact on the adidas segment due to increased revenues related to the NBa license business, which was transferred from Reebok to the adidas brand in 2006. Cost synergies resulting from the combination of adidas and Reebok sourcing activities also continued to have a positive impact on the cost of sales. these were partly offset by integration costs at adidas and Reebok which negatively impacted the Group’s operating expenses. this development is in line with our expectations for the Group to realize full year revenue synergies of around € 250 million (2007: around € 100 million) and net cost synergies of around € 105 million (2007: around

€ 20 million).

AdIdAS GROuP CuRRENCy-NEutRAl SAlES INCREASE By 11% IN Q3 During the third quarter of 2008, Group sales grew 11% on a currency-neutral basis. this represents the fourth consecutive quarter of double-digit sales growth for the Group. Currency movements negatively impacted Group sales in euro terms. Group revenues grew 5% in euro terms to

€ 3.083 billion in the third quarter of 2008 from € 2.941 billion in 2007.

SAlES IN AdIdAS ANd tAylORMAdE-AdIdAS GOlF SEG- MENtS GROw At dOuBlE-dIGIt RAtES IN Q3 the adidas segment showed the highest segmental growth within the Group in the third quarter of 2008. Currency-neutral adidas segment revenues increased 15%, driven by double-digit growth in all major performance categories. Currency-neutral sales in the Reebok segment decreased 1% versus the prior year. strong growth in emerging markets was largely offset by negative developments in North america and Western europe. at taylorMade-adidas Golf, currency-neutral revenues increased 12%, due to growth in most major categories.

sales recorded in the hQ/Consolidation segment, which reflect revenues not attributable to the adidas, Reebok or taylorMade-adidas Golf segments, decreased 64% on a currency-neutral basis in the third quarter mainly due to the expiration of our sourcing cooperation agreement with amer sports Corporation earlier this year.

Currency translation effects negatively impacted sales in all segments in euro terms in the third quarter of 2008.

adidas sales in euro terms increased 10% to € 2.218 billion from € 2.012 billion in 2007. sales at Reebok decreased 9%

to € 665 million versus € 728 million in the prior year.

taylorMade-adidas Golf sales in euro terms increased 4%

to € 197 million from € 190 million in 2007. hQ/Consolidation sales decreased 66% to € 4 million from € 12 million in the prior year.

GRoup MaNaGeMeNt RepoRt -- Group Business performance - income statement

NiNe MoNths Net sales

€ in millions

5,115

7,836 7,879

8,225 4,664

NiNe MoNths Net sales BY seGMeNt¹⁾

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

Reebok 19%

taylorMade-

adidas Golf 8% 73% adidas

(14)

14

1) excluding hQ / Consolidation.

StRONG REvENuE GROwtH IN All CAtEGORIES in the first nine months of 2008, sales increased in all product categories.

Currency-neutral footwear sales grew 7%. this development was driven by the adidas segment, with particularly strong sales increases in the football, running, training and basketball categories. the taylorMade-adidas Golf segment also grew in footwear while the Reebok segment was down. Currency- neutral apparel revenues grew 16% during the first nine months of 2008, driven by gains in the adidas and taylorMade- adidas Golf segments, in particular adidas soccer and training apparel. hardware sales increased 13% on a currency-neutral basis in the first nine months, driven by improvements in the adidas and taylorMade-adidas Golf segments. Currency translation effects negatively impacted sales in all categories in euro terms. Footwear revenues increased slightly in euro terms to € 3.741 billion in the first nine months of 2008 from

€ 3.730 billion in 2007. apparel sales in euro terms grew 9%

to € 3.582 billion in the first nine months of 2008 from

€ 3.274 billion in the prior year. hardware revenues in euro terms increased 3% to € 902 million in 2008 from € 876 million in 2007.

AdIdAS GROuP CuRRENCy-NEutRAl SAlES GROw 11%

IN tHE FIRSt NINE MONtHS OF 2008 During the first nine months of the year, Group revenues increased 11% on a currency-neutral basis, driven by double-digit sales growth in the adidas and taylorMade-adidas Golf segments. the adidas segment grew 16%, the Reebok segment decreased 2% and taylorMade-adidas Golf segment sales increased 11%.

Currency movements negatively impacted Group sales in euro terms. Group revenues grew 4% in euro terms to € 8.225 billion in the first nine months of 2008 from € 7.879 billion in 2007.

SAlES INCREASE StRONGly IN NEARly All REGIONS adidas Group sales grew at double-digit rates in all regions except North america where revenues declined. Group sales in europe grew 13% on a currency-neutral basis in the first nine months of 2008 as a result of strong increases in most countries. in North america, Group revenues declined by 7% on a currency-neutral basis due to lower sales in the usa. sales for the Group in asia increased 23% on a currency- neutral basis in the first nine months of 2008, driven by particularly strong growth in China. in latin america, currency- neutral sales grew 39% in the first nine months of the year, with double-digit increases coming from all of the region’s major markets. this development was also supported by the first-time consolidation of Reebok’s joint ventures in the region.

Currency translation effects negatively impacted sales in euro terms in all regions. sales in europe increased 9% in euro terms to € 3.776 billion in 2008 from € 3.455 billion in 2007.

Revenues in North america decreased 17% to € 1.871 billion in 2008 from € 2.248 billion in the prior year. in euro terms, revenues in asia grew 16% to € 1.875 billion in 2008 from

€ 1.616 billion in 2007. sales in latin america grew 34% to

€ 647 million in 2008 from € 484 million in the prior year.

GRoup MaNaGeMeNt RepoRt -- Group Business performance - income statement NiNe MoNths Net sales GRoWth (CuRReNCY-NeutRal) ¹⁾

by segment and region in %

NiNe MoNths Net sales GRoWth ¹⁾

by segment and region in %

North latin

europe america asia america total

adidas Reebok

taylorMade-adidas Golf total

1) versus the prior year.

North latin

europe america asia america total

adidas Reebok

taylorMade-adidas Golf total

1) versus the prior year.

17 (4) 25 23 16

(4) (14) 16 152 (2)

21 6 16 38 11

13 (7) 23 39 11

13 (14) 19 19 10

(8) (23) 4 130 (10)

5 (6) 10 25 1

9 (17) 16 34 4

NiNe MoNths Net sales BY ReGioN¹⁾

latin america 8% 46% europe

23% asia North america

23%

(15)

15

RECORd GROuP GROSS MARGIN the Group gross margin increased by 1.7 percentage points to 49.4% during the first nine months of 2008 (2007: 47.7%), driven by improvements in the adidas and taylorMade-adidas Golf segments. this highest-ever first nine months rate was related to an improving regional and product mix, increased own-retail activities as well as favorable currency movements. Cost synergies resulting from the Reebok integration into the adidas Group also continued to have a positive impact. input price increases had only a modest negative impact on the cost of sales development in the first nine months of 2008. as a result of the Group’s strong top-line growth and gross margin improvement, gross profit for the adidas Group rose 8% in the first nine months of 2008 to reach € 4.062 billion versus € 3.755 billion in the prior year.

CuRRENCy-NEutRAl ROyAlty ANd COMMISSION INCOME dECREASES 2% Royalty and commission income for the adidas Group decreased 2% compared to the prior year on a currency- neutral basis. this is mainly due to the Reebok segment where royalty and commission income declined due to the repurchase of distribution rights in latin america. in euro terms, Group royalty and commission income decreased by 9% to € 64 million in the first nine months of 2008 from € 71 million in the prior year.

GRoup MaNaGeMeNt RepoRt -- Group Business performance - income statement

OPERAtING ExPENSES INCREASE operating expenses as a percentage of sales increased by 1.2 percentage points to 38.5% in the first nine months of 2008 from 37.3% in 2007.

this development was primarily driven by higher marketing expenses as a percentage of sales in the adidas segment related to this year’s major sporting events. increased expenses to support the Group’s growth in emerging markets such as Russia also impacted this development. in absolute terms, operating expenses for the adidas Group increased by 8% to € 3.163 billion in the first nine months of 2008 from

€ 2.937 billion in the prior year.

NuMBER OF EMPlOyEES INCREASES at the end of september 2008, the adidas Group employed 37,485 people. this represents an increase of 27% versus the previous year’s level of 29,529 and a 20% increase since the end of 2007 when the Group employed 31,344 people. this increase is primarily related to new employees at adidas and Reebok own retail, mainly on a part-time basis.

OPERAtING MARGIN IMPROvES By 0.4 PERCENtAGE POINtS the Group’s operating margin increased 0.4 percentage points to 11.7% in the first nine months of 2008 (2007: 11.3%). Gross margin improvements more than offset higher operating expenses as a percentage of sales. operating profit for the Group increased 8% in the first nine months of 2008 to reach

€ 963 million versus € 889 million in 2007.

2007 2008

3,755 4,062

2007 2008

2,937

889 3,163

963 NiNe MoNths GRoss pRoFit

€ in millions

NiNe MoNths opeRatiNG expeNses

€ in millions

NiNe MoNths opeRatiNG pRoFit

€ in millions

(16)

16

NEt INCOME AttRIButABlE tO SHAREHOldERS uP 11%

the Group’s net income attributable to shareholders increased 11% to € 588 million in the first nine months of 2008 from

€ 530 million in 2007. this development was supported by a lower tax rate and lower minority interests. the Group’s tax rate decreased by 1.5 percentage points to 30.5% in the first nine months of 2008 (2007: 32.0%). additionally, the Group’s minority interests declined by 31% to € 2 million in the first nine months of 2008 from € 4 million in the prior year.

BASIC ANd dIlutEd EARNINGS PER SHARE INCREASE 14%

ANd 13% Basic earnings per share increased 14% to € 2.96 in the first nine months of 2008 versus € 2.60 in the prior year.

the weighted average number of shares used in the calculation of basic earnings per share decreased to 198,868,061 (2007 average: 203,583,762) due to the share buyback program which was initiated in January 2008 see Our Share. Diluted earnings per share in 2008 increased 13% to € 2.78 from

€ 2.46 in the prior year. the weighted average number of shares used in the calculation of diluted earnings per share was 214,671,394 (2007 average: 219,456,361). the dilutive effect largely results from approximately sixteen million addi- tional potential shares that could be created in relation to our outstanding convertible bond, for which conversion criteria were first met at the end of the fourth quarter of 2004.

NEt FINANCIAl ExPENSES INCREASE 9% Net financial expenses increased 9% to € 113 million in the first nine months of 2008 from € 104 million in the prior year. the increase was primarily due to exchange rate variances.

FINANCIAl INCOME dOwN 8% Financial income decreased by 8% to € 23 million in the first nine months of 2008 from

€ 25 million in the prior year as a result of lower average cash and cash equivalents due to our improving cash management during the first nine months of 2008.

FINANCIAl ExPENSES INCREASE 5% Financial expenses increased 5% to € 136 million in the first nine months of 2008 (2007: € 129 million). this development was due to exchange rate variances that negatively impacted the financial expenses.

interest expenses for the first nine months of 2008 were lower than the prior year due to lower average net debt despite the share buyback.

INCOME BEFORE tAxES INCREASES By 8% Despite higher net financial expenses, income before taxes (iBt) as a percentage of sales increased by 0.4 percentage points to 10.3% in 2008 from 10.0% in 2007 as a result of the Group’s operating margin increase. income before taxes for the adidas Group grew 8% to

€ 850 million in the first nine months of 2008 from € 785 million in 2007.

GRoup MaNaGeMeNt RepoRt -- Group Business performance - income statement 2007 2008

785 850 NiNe MoNths iNCoMe BeFoRe taxes

€ in millions

NiNe MoNths Net iNCoMe attRiButaBle to shaReholDeRs

€ in millions

2004¹⁾ 2005¹⁾ 2006²⁾ 2007 2008

1) including continuing and discontinued operations.

386 469

530 588 295

(17)

17

BalaNCe sheet aND Cash FloW stateMeNt tOtAl ASSEtS INCREASE 8% at the end of the first nine months of 2008, total assets increased 8% to € 9.456 billion versus € 8.738 billion in the prior year. this is mainly a result of an increase in current assets. Compared to the 2007 year- end level, total assets increased by 14%.

INvENtORIES GROw 14% Group inventories grew 14% to

€ 1.812 billion at the end of the first nine months of 2008 versus € 1.596 billion in 2007. on a currency-neutral basis, this represents an increase of 15%. this development is due to business expansion in emerging markets and the inventories related to the new Reebok joint ventures in latin america.

RECEIvABlES INCREASE 7% Group receivables increased 7%

to € 2.055 billion at the end of the first nine months of 2008 versus € 1.918 billion in the prior year. on a currency-neutral basis, receivables increased 9%, which is below our sales growth for the third quarter. this reflects ongoing strict disci- pline in the Group’s trade terms management and concerted collection efforts in all segments.

OtHER CuRRENt ASSEtS uP 38% other current assets increased 38% to € 726 million at the end of the first nine months of 2008 from € 528 million in 2007, mainly due to higher fair values of financial instruments. higher prepay- ments for promotion contracts and own-retail rental agree- ments also contributed to this development.

BalaNCe sheet stRuCtuRe¹⁾

in % of total assets

BalaNCe sheet stRuCtuRe¹⁾

in % of total liabilities and equity

GRoup MaNaGeMeNt RepoRt -- Group Business performance - Balance sheet and Cash Flow statement

FIxEd ASSEtS INCREASE 3% Fixed assets increased by 3% to

€ 3.897 billion at the end of the first nine months of 2008 versus € 3.777 billion in 2007 as a result of new warehouses in the usa and the uK, as well as own-retail expansion. additions of € 365 million were partly offset by depreciation and amorti- zation of € 218 million as well as currency effects.

ASSEtS HEld-FOR-SAlE GROw 1% assets held-for-sale increased 1% to € 57 million at the end of the first nine months of 2008 (2007: € 56 million). two warehouses in the uK were reclassified as assets held-for-sale at the end of 2007, and in the second quarter of 2008 some land and buildings in herzogenaurach, which are no longer in the scope of a sale, were transferred back to fixed assets.

OtHER NON-CuRRENt ASSEtS INCREASE 25% other non- current assets grew by 25% to € 170 million at the end of the first nine months of 2008 from € 134 million in 2007, mainly driven by an increase in long-term promotional contracts and security deposits.

ACCOuNtS PAyABlE GROw 12% accounts payable increased 12% to € 775 million at the end of the first nine months of 2008 versus € 690 million in 2007. on a currency-neutral basis, accounts payable increased 13%. this development is largely related to the first-time consolidation of the new Reebok joint ventures in latin america.

OtHER NON-CuRRENt lIABIlItIES dECREASE 8% other non-current liabilities decreased 8% to € 50 million at the end of the first nine months of 2008 from € 55 million in 2007, primarily as a result of a decrease in the fair value of non- current forward contracts.

Assets Sep. 30, 2008 sep. 30, 2007

total assets (€ in millions) 9,456 8,738

1) For absolute figures see Consolidated Balance Sheet, p. 29.

Cash and cash equivalents 2.7

inventories 19.2

Fixed assets 41.2

other assets 15.2

accounts receivable 21.7

12.9 3.6 22.0 18.3

43.2

liabilities and equity Sep. 30, 2008 sep. 30, 2007

total liabilities and equity (€ in millions) 9,456 8,738 1) For absolute figures see Consolidated Balance Sheet, p. 29.

accounts payable 8.2

long-term borrowings 30.7

other liabilities 26.0

total equity 35.1 35.6

7.9 28.9

27.6

(18)

18

EQuIty GROwS duE tO INCREASE IN NEt INCOME shareholders’ equity increased 7% to € 3.306 billion at the end of the first nine months of 2008 versus € 3.096 billion in 2007. Net income development over the last twelve months more than offset the buyback of adidas aG shares. Compared to the 2007 year-end level of € 3.023 billion, shareholders’ equity increased 9%.

CASH FlOw REFlECtS SEASONAlIty OF BuSINESS in the first nine months of 2008, cash outflow from operating activities was € 100 million. Cash outflow for investing activities was

€ 220 million and was mainly related to spending for property, plant and equipment such as investment in furnishings and fittings for adidas and Reebok own-retail stores. to finance the buyback of adidas aG shares in an amount of € 377 million as well as our investing activities, long-term borrowings increased by € 757 million. Consequently, net cash provided by financing activities increased by € 281 million.

NEt BORROwINGS INCREASE By € 392 MIllION Net borrowings at september 30, 2008 were € 2.593 billion, up 18% or

€ 392 million versus € 2.201 billion in the prior year. the positive impact of our strong bottom-line profitability was more than offset by the share buyback, investments in controlled space, other capital expenditure and operating working capital needs. as a result, the Group’s financial leverage increased 7.3 percentage points to 78.5% at the end of the first nine months of 2008 versus 71.1% in the prior year. Compared to the 2007 year-end level of € 1.766 billion, net debt increased by € 827 million.

aCCouNts paYaBle¹⁾

€ in millions

iNveNtoRies¹⁾

€ in millions

ReCeivaBles¹⁾

€ in millions Net BoRRoWiNGs¹⁾

€ in millions

2007 2008 1) at september 30.

690 1,596

1,918 2,201

775 1,812

2,055 2,593

GRoup MaNaGeMeNt RepoRt -- Group Business performance - Balance sheet and Cash Flow statement

shaReholDeRs’ eQuitY¹⁾

€ in millions

2007 2008

1) at september 30, excluding minority interests.

3,096 3,306

(19)

19

NiNe MoNths RepoRt 2008 --- adidas Group 2004

2005 2006 2007 2008

tHIRd QuARtER 2008 CuRRENCy-NEutRAl SAlES GROw 15% in the third quarter of 2008, revenues for the adidas segment grew 15% on a currency-neutral basis, driven by growth in all regions. in euro terms, sales increased 10% to

€ 2.218 billion from € 2.012 billion in the prior year.

FIRSt NINE MONtHS CuRRENCy-NEutRAl SEGMENt SAlES uP 16% in the first nine months of 2008, revenues for the adidas segment grew 16% on a currency-neutral basis. in euro terms, sales increased 10% to € 6.004 billion in the first nine months of 2008 from € 5.465 billion in the prior year.

SPORt PERFORMANCE REvENuES GROw 19% ON A CuRRENCy-NEutRAl BASIS sales in the first nine months of 2008 increased 19% on a currency-neutral basis in the sport performance division. Revenues grew in all major product categories. the football category showed the highest growth rate supported by sales related to ueFa euRo 2008™.

sales in the running, training and basketball categories also increased at double-digit rates. in euro terms, sport performance sales improved 12% during the first nine months of 2008 to € 4.813 billion from € 4.284 billion in the prior year.

SPORt StylE SAlES INCREASE 6% ON A CuRRENCy- NEutRAl BASIS sales in the sport style division grew 6% on a currency-neutral basis in the first nine months of 2008.

Fashion revenues increased at a double-digit rate. originals grew modestly. in euro terms, sport style sales increased slightly to € 1.158 billion in the first nine months of 2008 (2007: € 1.153 billion).

aDiDas BusiNess peRFoRMaNCe in the first nine months of 2008, currency-neutral sales in the adidas segment grew 16%. in euro terms, sales increased 10% to € 6.004 billion from € 5.465 billion in the prior year. Gross margin increased 1.4 percentage points to 49.1% (2007: 47.7%), due to an improving regional and product mix, further own-retail expansion and favorable currency movements.

Gross profit grew 13% to € 2.947 billion in the first nine months of 2008 from € 2.605 billion in 2007. operating margin increased 0.2 per- centage points to 15.8% in 2008 (2007: 15.7%).

strong net sales and gross margin improve- ments more than offset the increase in operating expenses as a percentage of net sales. Consequently, operating profit increased 11% to € 951 million in the first nine months of 2008 versus € 856 million in the prior year.

aDiDas at a GlaNCe

€ in millions

Nine Months Nine Months

2008 2007 Change

Net sales Gross profit Gross margin operating profit operating margin

6,004 5,465 10%

2,947 2,605 13%

49.1% 47.7% 1.4pp

951 856 11%

15.8% 15.7% 0.2pp

NiNe MoNths aDiDas Net sales

€ in millions

GRoup MaNaGeMeNt RepoRt -- Business performance by segment - adidas Business performance

4,545 5,248

5,465 6,004 4,155