adidas is all in

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adidas is all in

TOGETHER WE WIN

Q1 F i r s t Q u a r t e r R e p o r t

J a n u a r y – M a r c h 2 0 12

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Ta b l e o f C o n T e n T s

First Quarter Results at a Glance 3

Financial Highlights 4

Operational and Sporting Highlights 5

Interview with the CEO 6

Our Share 10

Group Business Performance 13

Economic and Sector Development 13

Income Statement 14

Statement of Financial Position and Statement of Cash Flows 18

Business Performance by Segment 21

Wholesale Business Performance 21

Retail Business Performance 23

Other Businesses Performance 25

Subsequent Events and Outlook 27

Consolidated Statement of Financial Position 31

Consolidated Income Statement 33

Consolidated Statement of Comprehensive Income 34

Consolidated Statement of Changes in Equity 35

Consolidated Statement of Cash Flows 36

Selected Explanatory Notes to the Interim Consolidated Financial Statements 37

Executive and Supervisory Boards 40

Financial Calendar 2012 41

Publishing Details & Contact 42

01 TO OuR SHaREHOldERS

01.1 01.2 01.3 01.4 01.5

02 INTERIM GROup MaNaGEMENT REpORT

02.1

02.2

02.3

03 INTERIM CONSOlIdaTEd FINaNCIal STaTEMENTS (IFRS)

03.1 03.2 03.3 03.4 03.5 03.6

04 addITIONal INFORMaTION

04.1 04.2 04.3

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Q 1 / 2 012 01.1 First Quarter Results at a Glance

01 First Quarter Results at a Glance (€ in millions)

First quarter

2012 First quarter

2011 Change

Group

Net sales 3,824 3,273 16.8%

Gross profit 1,826 1,587 15.0%

Gross margin 47.7% 48.5% (0.7pp)

Operating profit 409 313 30.4%

Operating margin 10.7% 9.6% 1.1pp

Wholesale

Net sales 2,614 2,320 12.7%

Gross profit 1,092 1,000 9.2%

Segmental operating profit 851 802 6.2%

Segmental operating margin 32.6% 34.6% (2.0pp)

Retail

Net sales 693 577 20.0%

Gross profit 426 354 20.5%

Gross margin 61.5% 61.2% 0.2pp

Segmental operating margin 16.6% 15.4% 1.1pp

Other Businesses

Net sales 517 376 37.1%

Gross profit 226 172 31.3%

Segmental operating margin 28.7% 28.1% 0.6pp

Sales by Brand

adidas 2,888 2,439 18.4%

Reebok 451 477 (5.4%)

TaylorMade-adidas Golf 387 281 37.6%

Rockport 60 54 11.2%

Reebok-CCM Hockey 37 22 73.2%

Rounding differences may arise in percentages and totals.

01.1

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Q 1 / 2 012 01.2 Financial Highlights

1) Twelve-month trailing average.

02 Financial Highlights (IFRS)

First quarter

2012 First quarter

2011 Change

Operating Highlights (€ in millions)

Net sales 3,824 3,273 16.8%

EBITDA 469 363 29.1%

Operating profit 409 313 30.4%

Net income attributable to shareholders 289 209 38.3%

Key Ratios (%)

Operating expenses as a percentage of net sales 38.4% 40.0% (1.6pp)

Operating margin 10.7% 9.6% 1.1pp

Effective tax rate 25.5% 26.5% (1.0pp)

Net income attributable to shareholders as a percentage of net sales 7.6% 6.4% 1.2pp

Operating working capital as a percentage of net sales¹⁾ 20.7% 20.5% 0.2pp

Equity ratio 48.1% 45.2% 2.9pp

Net borrowings/EBITDA 0.5 0.8 (0.3pp)

Financial leverage 11.6% 20.1% (8.5pp)

Return on equity 5.3% 4.6% 0.6pp

Balance Sheet and Cash Flow Data (€ in millions)

Total assets 11,453 10,037 14.1%

Inventories 2,375 2,033 16.8%

Receivables and other current assets 3,167 2,795 13.3%

Working capital 2,595 2,050 26.6%

Net borrowings 640 914 (30.0)%

Shareholders’ equity 5,509 4,542 21.3%

Capital expenditure 62 50 24.8%

Net cash used in operating activities (704) (609) 15.7%

Per Share of Common Stock (€)

Basic earnings 1.38 1.00 38.3%

Diluted earnings 1.38 1.00 38.3%

Net cash used in operating activities (3.37) (2.91) 15.7%

Share price at end of period 58.54 44.46 31.7%

Other (at end of period)

Number of employees 46,485 44,362 4.8%

Number of shares outstanding 209,216,186 209,216,186 –

Average number of shares 209,216,186 209,216,186 –

01.2

€ in millions

2012 € in millions

2012

03 First quarter net sales

3,824

3,273

04 First quarter net income attributable to shareholders

289 209

€ in millions

2011 € in millions

2011

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Q 1 / 2 012 01.3 Operational and Sporting Highlights

Operational and Sporting Highlights First Quarter 2012

01.3

09. adidas sponsored Lionel Messi is voted World Footballer of the Year for the third time in a row. Picture 01

11. adidas opens the doors to its fourth Brand Center worldwide, in the city of Shanghai, the second adidas Brand Center in China. The store is one of the Group’s largest, spanning 2,800m².

15. Reebok kicks off its new brand campaign “The Sport Of Fitness Has Arrived”. The campaign builds upon Reebok’s heritage as a fitness brand to communicate that fitness can be as exciting and engaging as any sport. The idea of fitness as a sport is embodied through Reebok’s partnership with CrossFit and the culture of community, competition and camaraderie that it builds. Picture 02 18. Europe’s first stand-alone adidas SLVR store

opens in Berlin during Mercedes-Benz Fashion Week. The 120m² store is located in “Mitte”, one of the most vibrant and trendsetting areas of Berlin.

30. adidas and Porsche Design Group announce the next step in their collaboration by entering into a new contract. The highly functional and fashionable range is available worldwide in over 250 Porsche Design stores.

02. The first adidas NEO label store opens its doors to the public in Hamburg, Germany. The adidas NEO label focuses on 14- to 19-year- olds with a unique and fresh fast-fashion offering. The store in Hamburg is the first of ten to be opened in Germany. Picture 03

02. TaylorMade promotes its R11S driver by appealing to consumers’ emotions with the

“Driver Love” campaign. The effort is focused on the strong bond golfers have with their favourite clubs, rather than the technology behind it. Picture 04

08. adidas and Dwight Howard launch the adiPower Howard 2 signature basketball shoe. It is the lightest Howard signature shoe to date and features a signature shattered glass graphic throughout the shoe as a nod to Dwight’s power and history of bringing down backboards.

09. Reebok kicks off a four-week campaign supporting ZigTech in the US, using TV, digital and mobile technology, social media and print.

13. adidas and UEFA launch the adidas Finale Munich, the Official Match Ball for the 2012 UEFA Champions League Final. 2012 marks the 20th final in UEFA Champions League history. The very first final was held in Munich.

Picture 05

05. adidas presents the Official Match Ball to be used at the London 2012 Olympic Games football tournament. The ball is called “The Albert” and was officially revealed at the City of Coventry Stadium.

19. TaylorMade-adidas Golf announces the acquisition of Adams Golf, Inc. The addition of Adams Golf enables TaylorMade-adidas Golf to broaden its product range and to extend its presence across a wider array of golfers.

20. adidas Golf unveils their Samba Golf Majors Collection for 2012 that includes four limited- edition colourways, individually numbered and inspired by golf’s most prestigious tourna- ments. Only 1,950 pairs of each model have been created, commemorating the introduction year of the original and iconic Samba.

Picture 06

22. adidas, Official Sportswear Partner of Team GB and ParalympicsGB, presents the team kit that will be worn by the British athletes at the London 2012 Olympic and Paralympic Games.

Designed by British designer Stella McCartney, the kit is the most comprehensive range that has ever been supplied to a national team.

22. The Reebok Classics campaign “It takes a lot to make a Classic” is launched in the US. Through an integrated global marketing campaign, Reebok is reaffirming its heritage and reclaiming its position as the authentic classics brand.

28. adidas unveils the latest chapter of its “adidas is all in” brand campaign. Featuring brand ambassadors such as FIFA World Player of the Year Lionel Messi, football superstar David Beckham, the NBA’s Most Valuable Player Derrick Rose and pop icon Katy Perry, the campaign concept takes away the boundaries of fame, money, age, gender and geography and showcases that passion unites us all.

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adidas is all in L O S A N G E L E S 1 1 : 1 4

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Q 1 / 2 012 01.4 Interview with the CEO

Interview with the CEO

In the first quarter of 2012, the adidas Group achieved its fifth consecutive quarter of double-digit revenue growth and an earnings per share increase of 38%.

All regions and segments contributed to the strong operational development, driven in particular by momentum at adidas and TaylorMade-adidas Golf.

During the quarter, the Group also successfully issued a convertible bond and entered into a definitive agreement to acquire Adams Golf.

In the following interview, Herbert Hainer, adidas Group CEO, reviews the first quarter of 2012 and discusses the opportunities and challenges the Group faces for the remainder of the year.

01.4

HE R b E R T H a INE R CEO

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? Herbert, how has the year started for the Group and what are the key financial highlights?

! I am pleased to report exceptional results for the first quarter of 2012. With currency-neutral sales increasing 14% or 17% in euro terms to over € 3.8 billion, we recorded our fifth straight quarter of double-digit revenue growth. In particular, growth rates in Greater China and Japan as well as at TaylorMade-adidas Golf were significantly above our initial expectations. Despite a 0.7 percentage points decline in the Group’s gross margin to 47.7% due to input cost pressures, Group operating margin improved 1.1 percentage points to 10.7%. This in turn drove earnings per share up 38% to € 1.38. Looking at the balance sheet, we continue to be in great shape. Compared to the prior year, net debt is down 30% to € 640 million. And while many of our competitors are suffering from high inventory levels in various parts of the world, we have again been able to show sequential improvements, with the inventory growth rate moderating further to 13% currency-neutral. All in all, there is no doubt that these results confirm the outstanding momentum and global power of the adidas Group.

? Striking in your results is that all regions continued to perform very well, in particular Greater china and Western europe. What is driving this development?

! Focus, consistency and investment in our brands and channels is driving this period of unprecedented growth for our Group around the world. Looking specifically at Greater China, with growth of 26%

currency-neutral in the first quarter, there is no doubt that we are gaining share in this key market. We have rebuilt our business patiently and with discipline since 2009, with a razor-sharp focus on the quality of distribution, such as the number of stores and optimising locations.

We have also refined our product offering and visual merchandising to match a more and more sophisticated Chinese consumer. This is very evident in our own-retail sales where comparable store sales increased 10% during the period. In Western Europe, here it is also all about execution, as we continue to excite consumers and customers with the ultimate in product innovation and brand experiences. With revenue growth of 7%, we have secured and built on the market gains we achieved in the prior year. We are doing this by paying close attention to putting the right product in the right channels, improving consumer interaction through high-quality in-store and shop-in-shop initiatives as well as best-in-class customer replenishment programmes.

? adidas sales growth was a very impressive 16% currency- neutral during the quarter. Was this all due to the major sports events this year?

! Not at all, the performance of the adidas brand is much more than just the major sports events. While we definitely saw a strong uptake of our football and Olympic-related product offerings, we had equally impressive currency-neutral growth rates in our other core categories. Sales in running were up 16%, driven by the continued success of our lightweight adizero offerings and the introduction of our most breathable running shoe to date, the new ClimaCool Seduction.

In basketball, we continue to see robust sales growth, with footwear in particular being very strong, up 23%. And in outdoor and Sport

Style, growth rates showed no sign of slowing and kept pace with the prior year, increasing 45% and 24% respectively. This strength across multiple categories ensured we enjoyed significant global growth, which is underpinned by the fact that sales for the brand were up at a double-digit rate in all of our regions.

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T o o u r S h a r e h o l d e r S

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? Can you give more details on Reebok’s performance in the first quarter, and what impact the changes in the licenced business had on the brand?

! In the first quarter, Reebok sales declined 7% currency- neutral, in line with our expectations. Excluding the impact from shifting the reporting of US-related NHL sales to the Reebok-CCM Hockey segment as well as the end of the NFL licence and also excluding toning, sales were up 10%. The NFL impact was rather small in the quarter as the contract just ended in March. Although Reebok has some challenges to overcome in Western Europe this year due to the weak economic environment and as retailers currently focus on the major sporting events, we continue to see good progress in most other regions. In North America, sales excluding licences and toning were up 5% and profitability continued to improve, due to a better price mix and an overall stronger product offering. In all other regions, sales were up for the quarter, as we expanded performance- related offerings like Zig and RealFlex, and introduced some new Classics product. All in all, this is having a positive impact on margins, with an improvement of 60 basis points in the brand’s gross margin.

Therefore, while I would have liked to have been able to show more growth, our progress with the brand continues. And, looking forward, our plans for 2013, which will include some major product and technology launches, are starting to take shape. We look forward to sharing more on this with you later this year at our Investor Trip in September.

? Can you tell us about the impacts you are expecting from issues you have discovered at Reebok in India?

! Unfortunately, we discovered commercial irregularities at our Reebok business in India. Due to the sensitivity of the ongoing investigation, specific details will be disclosed as appropriate in due course. Based on our current estimations, the maximum negative impact could be a pre-tax amount of up to € 125 million. As these irregularities have been deemed to have occurred prior to the 2012 financial year, we might have to restate prior-year Group consolidated financial statements in line with the requirements of IAS 8. The financial statements of adidas AG will not be affected by this issue.

I can assure you that we have, and will continue to, vigorously pursue a course of action to protect our Group’s interests, which has already resulted in the appointment of a new local leadership team in India at the end of March. Under this new leadership team, we also now plan to accelerate restructuring of our business activities in India, including significant changes to the commercial business practices. This could lead to additional one-time charges in the remaining quarters of 2012 in an estimated amount of up to € 70 million.

? TaylorMade-adidas Golf delivered quite extraordinary results. Can you give an update on the golf category and how the proposed acquisition of Adams Golf fits into your plans?

! Our performance at TaylorMade-adidas Golf in the first quarter was simply breathtaking. With 32% currency-neutral growth, the segment achieved its highest growth rate in almost nine years. This is even more significant as it comes on top of 20% growth last year.

What’s behind the success? Well, it’s the innovative product line-up we have for today’s golfer across all categories. Sales grew at double-digit rates in all club categories, apparel and footwear, with metalwoods up 28% and irons growing 64% being just some of the highlights. Even more importantly, the strong increase in sales allowed TaylorMade- adidas Golf to double its operating profit compared to a year ago.

Looking at our planned acquisition, after already becoming the largest golf company in the world, our mission is now to be the best golf company in the world across all geographies, products and customer demographics, and adding Adams Golf is another important step in achieving that goal. The proposed combination of TaylorMade-adidas Golf and Adams Golf brings together two highly complementary sets of brands, combining TaylorMade-adidas Golf’s focus on the younger and the low-to-mid handicap golfer with Adams Golf’s focus on game improvement as well as senior and women golfers. The total transaction cost is around € 53 million.

? In March you issued a € 500 million convertible bond. What is the rationale behind this transaction and what are the key impacts?

! Maintaining a healthy balance sheet structure and optimising the cost of capital are important considerations, particularly in uncertain economic times. Given the strong market conditions for convertible bonds, we saw a great opportunity to secure long-term financing at favourable terms. This includes a very low annual coupon of 0.25%, and a high premium to the conversion price of 40%, which ensures existing shareholders are also protected. The proceeds allow us to pre-finance upcoming maturities as well as our ongoing business growth and working capital needs. In terms of the impact, until the conversion price is met, there is no dilutive component in our earnings per share. When met, the potential additional shares amount to 5.99 million and the after-tax interest adjustment based on accounting rules will equal around € 9 million. Therefore, the potential dilutive effect on earnings is only around 1%.

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Q 1 / 2 012

? Finally, taking recent developments into account, are there any changes to your financial outlook for the year?

! Taking into account the better than expected first quarter financial performance, the continuing strong momentum of our brands in key markets, as well as the negative impacts from potential one-time charges related to our planned restructuring of activities at Reebok India, we are in a position to increase our full year top- and bottom-line guidance. Full year sales are now expected to grow at a rate approaching 10% on a currency-neutral basis, compared to our

original projection of a mid- to high-single-digit increase. Despite first half input cost pressures, we continue to forecast a stable gross margin compared to the prior year. In addition, operating margin is expected to increase to a level approaching 8%, despite negative one-time charges of up to € 70 million related to potential restructuring and changes to commercial activities in India. Putting it all together, net income attributable to shareholders is expected to increase at a rate of between 12% and 17% to a new record level of between € 750 million and € 785 million, also above our initial guidance of between 10%

and 15%.

01.4 Interview with the CEO

Herbert, thank you for this interview.

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Q 1 / 2 012 01.5 Our Share

Global stock markets maintain positive momentum at the start of 2012

In the first quarter of 2012, international stock markets improved significantly, thereby sustaining the positive momentum from the end of the prior year. During the period, European policymakers agreed on stricter budget discipline, approved another bailout package for Greece and, at the end of the quarter, committed to increase the total financial rescue capacity to up to € 800 billion in order to prevent a further flare-up of the sovereign debt crisis in the euro area. These measures were key triggers for strengthening investor confidence and improved equity market conditions. In addition, a series of solid US economic indicators provided a further positive catalyst. Three- year-low unemployment levels, strong retail sales trends as well as rising consumer confidence indicated that the world’s major economy is on track towards a fundamental recovery. The announcement by the Fed to leave interest rates at the current record low levels until late 2014 also provided positive stimulus. However, temporary setbacks throughout the quarter put pressure on equity markets. In particular, the sluggish economic prospects for the euro area unsettled investors, with unemployment reaching an all-time high for the region and the ECB cutting its 2012 GDP growth forecast. Similarly, market participants raised concerns with regard to the slowdown of the Chinese economy, in part fuelled by soaring oil prices as a result of political tensions in Middle Eastern countries. As a result of these developments, the DAX-30 increased strongly, gaining 18%, and ended the quarter at 6,947 points. The Dow Jones and the MSCI World Textiles, Apparel & Luxury Goods Index, which comprises the Group’s main competitors, gained 8% and 23%, respectively, compared to the end of December 2011.

Our Share

In the first quarter of 2012, international stock markets maintained the positive momentum from the end of the prior year and increased considerably. This development mainly reflected strengthening investor confidence as policymakers made progress in resolving the sovereign debt crisis in the euro area. In addition, several data points indicated fundamental improvements in the US economy.

Accordingly, the DAX-30 and the MSCI World Textiles, Apparel & Luxury Goods Index gained 18% and 23%, respectively, compared to the end of December 2011. Following three consecutive quarters of clear market outperformance, the adidas AG share increased at a slightly lower rate compared to both indices, gaining 16%.

01.5

05 The adidas AG share

Number of shares outstanding First quarter average 209,216,186 At March 31¹⁾ 209,216,186

Type of share Registered 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) DE000A1EWWW0

Stock symbol ADS, ADSGn.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 Indexes FTSE4Good Europe Index

Ethibel Sustainability Index Excellence Europe ASPI Eurozone Index

ECPI Ethical Index EMU STOXX Global ESG Leaders 1) All shares carry full dividend rights.

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Q 1 / 2 012

adidas AG share increases significantly in the first quarter

The adidas AG share started strongly in 2012, continuing the prior quarter momentum. General positive market sentiment as well as positive analyst and press commentary about the upcoming adidas Group 2011 results and 2012 outlook supported the adidas AG share at the beginning of the year. The favourable trend continued into February as a result of several recommendation upgrades and target price increases by analysts, who expressed their confidence in the superior positioning of the adidas Group’s brands and the Group’s ability to benefit from the underlying strength of the sporting goods market.

Better than expected results reported by one of our major competitors provided additional support for the adidas AG share in mid-February.

These developments resulted in the adidas AG share reaching a new all-time high of € 60.34 on February 20. The publication of the Group’s 2011 full year financial results on March 7 as well as the confirmation of the 2012 outlook was well received. The strong sales momentum across all markets and channels as well as the solid balance sheet improvements, in particular the net cash position at year-end and the further deceleration in inventory growth, were mentioned as key highlights by market participants. Nevertheless, in light of the strong share price appreciation year-to-date, some investors took profits, resulting in a share price correction on the day of the results release.

Towards the end of the quarter, however, these losses were more than offset, supported by favourable market trends as well as successful investor marketing activity. As a consequence, the adidas AG share finished the three-month period at € 58.54, representing an increase of 16% compared to the end of December 2011.

Number of ADRs continues to increase

The number of Level 1 ADRs (American Depository Receipts) increased during the three-month period compared to the end of 2011.

At March 30, 2012, 10.1 million ADRs were outstanding (December 30, 2011: 10.0 million). This development represents a significant increase versus March 31, 2011, when 6.6 million ADRs were outstanding. The Level 1 ADR closed the quarter at US $ 39.07, reflecting an increase of 20% compared to the end of December 2011. The more pronounced increase of the Level 1 ADR price compared to the ordinary share price was due to the depreciation of the US dollar versus the euro at the end of the first quarter of 2012 compared to year-end 2011.

01.5 Our Share

06 Historical performance of the adidas AG share and important indices at March 30, 2012 (in %)

YTD 1 year 3 years 5 years Since IPO

adidas AG 16 32 134 43 505

DAX-30 18 (1) 70 0 216

MSCI World Textiles,

Apparel & Luxury Goods 23 21 187 54 303

Source: Bloomberg.

07 Share price development in 2012¹⁾

| Dec. 30, 2011 Mar. 30, 2012 |

130

115

100

85

adidas AG DAX-30 MSCI World Textiles, Apparel & Luxury Goods Index 1) Index: December 30, 2011 = 100.

Successful convertible bond issue

In mid-March, adidas AG issued a convertible bond, due on June 14, 2019, for an aggregate nominal amount of € 500 million See note 5, P. 38. The bonds are not callable by the issuer or putable by the bondholders until June 2017. In addition, the bonds are convertible into 5.99 million new or existing adidas AG shares.

Proceeds from the offering will allow the Group to further optimise its debt structure, pre-finance maturing debt as well as finance ongoing business growth and working capital needs. The bonds were offered solely to institutional investors outside the US and were very well received by the financial community. Being several times oversubscribed, the bonds were priced with a 0.25% annual coupon and a conversion premium of 40% above the reference price of € 59.61, resulting in a conversion price of € 83.46. Trading of the convertible bond commenced on the Frankfurt Stock Exchange (“Freiverkehr”) on April 12, 2012.

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Q 1 / 2 012 01.5 Our Share

Dividend proposal of € 1.00 per share

The adidas AG Executive and Supervisory Boards will recommend paying a dividend of € 1.00 to shareholders at the Annual General Meeting (AGM) on May 10, 2012 (2010: € 0.80). Subject to the meeting’s approval, the dividend will be paid on May 11, 2012. This represents an increase of 25% compared to an increase of net income attributable to shareholders of 18% in the prior year. The total payout of € 209 million (2010: € 167 million) represents a payout ratio of 31% of net income attributable to shareholders versus 30% in the prior year. This is in line with our dividend policy where we intend to pay out between 20% and 40% of net income attributable to shareholders.

Changes in shareholder base

In the first quarter of 2012, the Group received one voting rights notification according to article 21, section 1 of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) ^{taBle 08}. This voting rights notification and those received thereafter can be viewed on our corporate website : WWW.adidaS-GrouP.coM/votinG_riGHtS_notiFicationS. Directors’ dealings reported on corporate website

The purchase or sale of adidas AG shares (ISIN DE000A1EWWW0) 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 first quarter of 2012, adidas AG received notification that Christian Tourres, member of the adidas AG Supervisory Board, had sold 49,372 shares on March 15, 2012.

08 Voting rights notification received in Q1 2012

Date of

notification Notifying

party Threshold

crossed Voting rights of total

shares outstanding Date of change

Mar. 28, 2012 BlackRock Advisors Holdings, Inc. and others >3% 7,316,232

(3.50%) Mar. 16, 2012

09 adidas AG market capitalisation at year-end

(€ in millions)

2012¹⁾ 12,248

2011 10,515

2010 10,229

2009 7,902

2008 5,252

1) At March 30.

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Q 1 / 2 012 02.1 Group Business Performance Economic and Sector Development

Economic and Sector Development

Global economy grows in the first quarter

In the first quarter of 2012, increasing domestic demand as well as robust activity in the manufacturing and services sectors in the emerging markets were the key drivers of growth in the global economy. Developed economies posted low levels of economic activity, with high fuel prices and acute austerity measures depressing spending and economic growth in many of these markets. Western Europe’s economic performance remained lacklustre with the euro area as a whole contracting moderately, despite GDP expansion in both Germany and France. The euro debt crisis remained a key challenge for the region, with stringent austerity measures and fiscal tightening, coupled with high unemployment levels, inhibiting confidence and spending. In contrast, most European emerging markets recorded solid GDP growth, buoyed by slowing inflationary pressures and robust consumption. Russia in particular benefited from strong domestic demand and high commodity prices. In the USA, high fuel prices and unemployment levels negatively impacted economic activity. Despite these pressures, the stabilising housing market and improvements in consumer confidence supported growth in consumer spending. Most Asian economies recorded strong GDP growth rates, driven by high export levels and strong wage growth. However, economic expansion in China, on the back of deliberate inflation mitigation measures, was at a lower level than in previous quarters. Japan’s GDP, in contrast, grew only modestly, with economic activity and domestic demand being driven by government stimulus and post-earthquake reconstruction investment. In Latin America, robust commodity prices along with low unemployment rates, slowing inflation and policy stimulus from many regional governments were major drivers for many economies. However, falling demand, particularly from Europe, negatively impacted exports and industrial output.

Group Business Performance

In the first quarter of 2012, the adidas Group continued to deliver strong results. Currency-neutral Group sales increased 14% as a result of double-digit growth in all segments. In euro terms, adidas Group revenues grew 17% to € 3.824 billion from € 3.273 billion in 2011. The Group’s gross margin decreased 0.7 percentage points to 47.7% (2011: 48.5%), as the increase in input costs more than offset the positive impact from a more favourable product and regional sales mix as well as a larger share of higher- margin Retail sales. The Group’s gross profit rose 15% to € 1.826 billion in the first quarter of 2012 versus

€ 1.587 billion in 2011. The Group’s operating margin was up 1.1 percentage points to 10.7% from 9.6% in 2011. This was primarily due to positive effects from lower other operating expenses as a percentage of sales, which more than offset a decrease in gross margin. An increase in other operating income as well as royalty and commission income also positively contributed to this development. The Group’s operating profit grew 30% to € 409 million in the first quarter of 2012 versus € 313 million in 2011. The Group’s net income attributable to shareholders increased 38% to € 289 million from € 209 million in 2011. Diluted earnings per share grew 38% to € 1.38 in the first quarter of 2012 versus € 1.00 in 2011.

02.1

10 Quarterly consumer confidence development¹⁾

(by region)

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012

USA²⁾ 63.8 57.6 46.4 64.8 69.5

Euro area³⁾ (10.6) (10.0) (19.3) (21.3) (19.1)

Japan⁴⁾ 38.3 36.3 38.5 38.1 40.1

China⁵⁾ 107.6 108.1 103.4 100.5 105.0

Russia⁶⁾ (13.0) (9.0) (7.0) (7.0) (5.0)

1) Quarter-end figures.

2) Source: Conference Board.

3) Source: European Commission.

4) Source: Economic and Social Research Institute, Government of Japan.

5) Source: China National Bureau of Statistics.

6) Source: Russia Federal Service of State Statistics.

11 Exchange rate development¹⁾

(€ 1 equals) Average rate

2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Average rate 2012²⁾

USD 1.3922 1.4453 1.3503 1.2939 1.3356 1.3114

GBP 0.8678 0.9026 0.8667 0.8353 0.8339 0.8346

JPY 111.04 116.25 103.79 100.20 109.56 103.97

RUB 40.871 40.400 43.041 41.659 39.171 39.667

CNY 9.0000 9.3534 8.5810 8.1527 8.4067 8.2726

1) Spot rates at quarter-end.

2) Average rate for the first quarter of 2012.

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14

Q 1 / 2 012 02.1 Group Business Performance Economic and Sector Development Income Statement

Income Statement

adidas Group currency-neutral sales grow 14% in the first quarter of 2012

In the first quarter of 2012, Group revenues grew 14% on a currency- neutral basis as a result of double-digit sales increases in Wholesale, Retail and Other Businesses. Currency translation effects had a positive impact on sales in euro terms. Group revenues grew 17% to

€ 3.824 billion in the first quarter of 2012 from € 3.273 billion in 2011

diaGraM 12.

Group sales increase driven by double-digit sales growth in all segments

In the first quarter of 2012, currency-neutral Wholesale revenues increased 10% due to double-digit sales growth at adidas. Currency- neutral Retail sales increased 16% versus the prior year, driven by high-single-digit comparable store sales growth. Revenues in Other Businesses were up 32% on a currency-neutral basis, driven by strong double-digit sales increases at TaylorMade-adidas Golf and Reebok-CCM Hockey. Currency translation effects had a positive impact on segmental sales in euro terms. Wholesale revenues

12 First quarter net sales (€ in millions)

2012 3,824

2011 3,273

2010 2,674

2009 2,577

2008 2,621

13 First quarter net sales by segment

2012

¹68% Wholesale

2 18% Retail

3 14% Other Businesses 1

2 3

14 First quarter net sales by region

2012

1 31% Western Europe 2 23% North America 3 15% Other Asian Markets 4 11% European Emerging Markets 5 10% Latin America

6 10% Greater China 6

5 1

3 2 4

Positive growth in the global sporting goods industry in the first quarter

In the first quarter of 2012, the global sporting goods industry recorded healthy growth, driven by increases in volumes and average selling prices. Industry growth was driven in particular by robust consumer spending in the emerging markets, which offset subdued private spending in some Western European markets and in Japan.

From a category perspective, running product was the biggest sales driver, supported in particular by the continued popularity of lightweight running. Training and outdoor categories posted robust sales increases. The mild weather in many major markets supported participation in many outdoor sports and had an especially pronounced effect in increasing golf rounds in the US and the UK.

Conversely, this effect also resulted in weak sales in many winter sports categories. In Europe, despite austerity measures and high unemployment in many markets, the sporting goods industry grew modestly. In Western Europe, solid consumer spending and retail activity in Germany drove industry growth in that market, however consumer demand for sporting goods in some peripheral euro area countries remained challenging. In European emerging markets, rising wages and reduced inflationary concerns supported confidence and consumption, which also positively impacted retail sales and expansion of the sporting goods sector, particularly in Russia. In North America, strong retail sales trends in running, basketball and training supported the positive development of the sporting goods industry.

Sporting goods technology innovations, particularly in lightweight products, contributed significantly to growth in these categories. The region experienced exceptionally mild weather, which supported an early start to the season for many outdoor spring/summer sports, also helping to substantially increase golf participation. The US toning market also remained challenged during the quarter. Strong wage growth and consumer spending supported increases in Asia’s sporting goods industry. Growth in China’s sportswear industry was mainly driven by international brands, as over-inventory issues continued to negatively impact many domestic players. However, by contrast, in Japan, low economic activity and consumer spending levels meant the sporting goods industry’s performance remained muted. Latin America’s sporting goods industry had a solid start to the year, with easing inflation and loosening credit control measures supporting consumer discretionary spending on sporting goods in most regional markets.

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15

Q 1 / 2 012

increased 13% to € 2.614 billion in the first quarter of 2012 from

€ 2.320 billion in 2011. Retail sales rose 20% to € 693 million versus

€ 577 million in the prior year. Sales in Other Businesses grew 37% to

€ 517 million (2011: € 376 million).

Currency-neutral sales increase in all regions

In the first quarter of 2012, currency-neutral adidas Group sales grew in all regions. Revenues in Western Europe increased 7% on a currency-neutral basis, primarily as a result of sales growth in the UK, Italy, Poland, Spain and Germany. In European Emerging Markets, Group sales increased 15% on a currency-neutral basis due to double- digit growth in most of the region’s markets. Sales for the adidas Group in North America grew 11% on a currency-neutral basis due to strong increases in the USA. Sales in Greater China increased 26% on a currency-neutral basis. Currency-neutral revenues in Other Asian Markets grew 26%, driven by strong double-digit increases in Japan and South Korea. In Latin America, sales grew 14% on a currency- neutral basis, with double-digit increases in most of the region’s major markets. In most regions, currency translation effects had a positive impact on regional sales in euro terms ^{taBle 15}.

Group sales up in all product categories

In the first quarter of 2012, Group sales grew at double-digit rates in all product categories on a currency-neutral basis. Currency-neutral footwear sales increased 12% during the period. This development was due to double-digit growth in the running, football, outdoor and basketball categories. Apparel revenues increased 12% on a currency-neutral basis, driven by strong growth in football and outdoor. Currency-neutral hardware sales increased 31% compared to the prior year, primarily due to strong growth at TaylorMade-adidas

Golf as well as in the football category. Currency translation effects had a positive impact on sales in euro terms ^{taBle 16}.

New product introductions contributed to the sales growth in all product categories. An overview of major product launches in the first quarter of 2012 is provided in the table below ^{taBle 17}.

02.1 Group Business Performance Income Statement

15 Net sales by region (€ in millions)

First quarter

2012 First quarter

2011 Change Change

(currency-neutral)

Western Europe 1,174 1,094 7% 7%

European Emerging Markets 430 370 16% 15%

North America 869 751 16% 11%

Greater China 385 284 36% 26%

Other Asian Markets 594 446 33% 26%

Latin America 372 328 14% 14%

Total¹⁾ 3,824 3,273 17% 14%

1) Rounding differences may arise in totals.

16 Net sales by product category (€ in millions)

First quarter

2012 First quarter

2011 Change Change

(currency-neutral)

Footwear 1,848 1,619 14% 12%

Apparel 1,527 1,323 15% 12%

Hardware 449 331 35% 31%

Total¹⁾ 3,824 3,273 17% 14%

1) Rounding differences may arise in totals.

17 Major product launches in Q1 2012

Product Brand

adipure 11Pro football boot adidas

adizero Rose 2.5 basketball shoe adidas

miCoach Resolution running shoe adidas

adizero adios 2 running shoe adidas

Barricade 7 tennis shoe adidas

Terrex Fast R outdoor shoe adidas

adipure Trainer training shoe adidas

adizero gld2O Olympic swimsuit adidas

adipure women’s training apparel adidas

Zig Activate running shoe Reebok

RealFlex Transition training shoe Reebok

RealFlex CrossFit Nano training shoe Reebok

CrossFit apparel Reebok

R11S and R11S TP drivers TaylorMade

RocketBallz drivers, irons and ball TaylorMade

Penta TP5 and TP3 ball TaylorMade

Samba footwear adidas Golf

Powerband 4.0 footwear adidas Golf

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16

Q 1 / 2 012 02.1 Group Business Performance Income Statement

18 First quarter gross profit (€ in millions)

2012 1,826

2011 1,587

19 First quarter gross margin (in %)

2012 47.7

2011 48.5

20 First quarter other operating expenses (€ in millions)

2012 1,467

2011 1,309

21 First quarter operating profit (€ in millions)

2012 409

2011 313

22 First quarter operating margin (in %)

2012 10.7

2011 9.6

Group gross margin decreases 0.7 percentage points The gross margin of the adidas Group decreased 0.7 percentage points to 47.7% in the first quarter of 2012 (2011: 48.5%) ^{diaGraM 19}. The increase in input costs more than offset the positive impact from a more favourable product and regional sales mix as well as a larger share of higher-margin Retail sales. Gross profit for the adidas Group grew 15% in the first quarter of 2012 to € 1.826 billion versus

€ 1.587 billion in the prior year ^{diaGraM 18}. Royalty and commission income grows

Royalty and commission income for the adidas Group increased 34%

to € 25 million in the first quarter of 2012 from € 18 million in 2011. On a currency-neutral basis, royalty and commission income was up 32%, mainly as a result of higher licensee sales at adidas.

Other operating income increases 44%

Other operating income includes items such as gains from the disposal of fixed assets and releases of accruals and provisions as well as insurance compensation. In the first quarter of 2012, other operating income increased 44% to € 25 million (2011: € 17 million). This was mainly due to the release of operational accruals and provisions as well as insurance compensation from damages relating to prior year events.

Other operating expenses as a percentage of sales down 1.6 percentage points

Other operating expenses, including depreciation and amortisation, consist of items such as sales working budget, marketing working budget and operating overhead costs. Other operating expenses as a percentage of sales decreased 1.6 percentage points to 38.4%

in the first quarter of 2012 from 40.0% in 2011. In euro terms, other operating expenses increased 12% to € 1.467 billion (2011:

€ 1.309 billion), as a result of higher marketing expenditure as well as the expansion of the Group’s own-retail activities ^{diaGraM 20}. Thereof, sales and marketing working budget expenditures amounted to € 426 million, which represents an increase of 2% versus the prior year level (2011: € 417 million). The increase was primarily related to higher expenditures for both the adidas and the Reebok brand. By brand, adidas sales and marketing working budget increased 1% to

€ 312 million in the first quarter of 2012 compared to € 311 million in the prior year. Sales and marketing working budget for Reebok also increased 1%, amounting to € 58 million (2011: € 58 million).

As a percentage of sales, the Group’s sales and marketing working budget decreased 1.6 percentage points to 11.1% (2011: 12.7%).

Number of Group employees up 5%

At the end of the first quarter of 2012, the Group employed 46,485 people. This represents an increase of 5% versus the prior year level of 44,362. New hirings related to the expansion of the Group’s own-retail store base were the main driver of this development. On a full-time equivalent basis, the number of employees increased 1% to 39,903 at the end of the first quarter of 2012 (2011: 39,428).

Operating margin improves 1.1 percentage points

Group operating profit increased 30% to € 409 million in the first quarter of 2012 versus € 313 million in 2011 ^{diaGraM 21}. As a result, the operating margin of the adidas Group improved 1.1 percentage points to 10.7% (2011: 9.6%) ^{diaGraM 22}. This was primarily due to the positive effects from lower other operating expenses as a percentage of sales, which more than offset the decrease in gross margin. Higher royalty and commission income as well as higher other operating income also contributed to this development.

Financial income grows 78%

Financial income increased 78% to € 8 million in the first quarter of 2012 from € 5 million in the prior year, mainly due to an increase in interest income.

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17

Q 1 / 2 012 02.1 Group Business Performance Income Statement

25 First quarter net income attributable to shareholders

(€ in millions)

2012 289

2011 209

2010 168

2009 5

2008 169

26 First quarter diluted earnings per share (in €)

2012 1.38

2011 1.00

2010 0.80

2009 0.04

2008 0.79

Financial expenses decrease 16%

Financial expenses decreased 16% to € 28 million in the first quarter of 2012 (2011: € 33 million) ^{diaGraM 23}. The decrease in negative exchange rate effects contributed to the decline.

Income before taxes as a percentage of sales increases 1.5 percentage points

Income before taxes (IBT) for the adidas Group increased 36%

to € 389 million from € 285 million in 2011 ^{diaGraM 24}. IBT as a percentage of sales improved 1.5 percentage points to 10.2% in the first quarter of 2012 from 8.7% in 2011. This was a result of the Group’s operating margin increase and lower net financial expenses.

Net income attributable to shareholders up 38%

The Group’s net income attributable to shareholders increased to

€ 289 million in the first quarter of 2012 from € 209 million in 2011

diaGraM 25. This represents an increase of 38% versus the prior year level. Higher IBT was the primary reason for this development. The Group’s tax rate decreased 1.0 percentage points to 25.5% in the first quarter of 2012 (2011: 26.5%), mainly due to a more favourable earnings mix.

Basic and diluted earnings per share reach € 1.38

In the first quarter of 2012, basic and diluted earnings per share amounted to € 1.38 (2011: € 1.00) ^{diaGraM 26}, representing an increase of 38%. The weighted average number of shares used in the calculation of both basic and diluted earnings per share was 209,216,186 (2011 average: 209,216,186) as there were no potential dilutive shares in the quarter.

23 First quarter financial expenses (€ in millions)

2012 28

2011 33

24 First quarter income before taxes (€ in millions)

2012 389

2011 285

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18

Q 1 / 2 012 02.1 Group Business Performance Statement of Financial Position and Statement of Cash Flows

27 Structure of statement of financial position¹⁾(in % of total assets)

March 31, 2012

March 31, 2011

Assets (€ in millions) 11,453 10,037

Cash and cash equivalents 5.2% 4.1%

Accounts receivable 20.7% 21.5%

Inventories 20.7% 20.2%

Fixed assets 36.9% 38.9%

Other assets 16.5% 15.3%

■ March 31, 2012 ■ March 31, 2011

1) For absolute figures see adidas AG Consolidated Statement of Financial Position, p. 31.

28 Structure of statement of financial position¹⁾(in % of total liabilities and equity)

March 31, 2012

March 31, 2011

Liabilities and equity (€ in millions) 11,453 10,037

Short-term borrowings 4.2% 2.2%

Accounts payable 12.6% 13.1%

Long-term borrowings 10.5% 13.2%

Other liabilities 24.6% 26.2%

Total equity 48.1% 45.3%

■ March 31, 2012 ■ March 31, 2011

1) For absolute figures see adidas AG Consolidated Statement of Financial Position, p. 31.

Statement of Financial Position and Statement of Cash Flows

Total assets increase 14%

At the end of March 2012, total assets grew 14% to € 11.453 billion versus € 10.037 billion in the prior year. This was the result of an increase in current assets as well as non-current assets. Compared to December 31, 2011, total assets increased 1%.

Group inventories up 17%

Group inventories increased 17% to € 2.375 billion at the end of March 2012 versus € 2.033 billion in 2011 ^{diaGraM 29}. On a currency-neutral basis, inventories grew 13%, reflecting input cost increases as well as our expectations for continued growth in the coming quarters.

Accounts receivable increase 10%

At the end of March 2012, Group receivables increased 10% to

€ 2.366 billion (2011: € 2.155 billion) as a result of the Group sales growth ^{diaGraM 30}. On a currency-neutral basis, receivables were up 8%. This growth is lower than the 13% currency-neutral wholesale- related sales increase in the first quarter of 2012 and mirrors strict discipline in the Group’s trade terms management and concerted collection efforts.

Other current financial assets up 17%

Other current financial assets grew 17% to € 198 million at the end of March 2012 from € 170 million in 2011. This development was mainly due to the increase in the fair value of financial instruments.

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19

Q 1 / 2 012 02.1 Group Business Performance Statement of Financial Position and Statement of Cash Flows

29 Inventories¹⁾ (€ in millions)

2012 2,375

2011 2,033

1) At March 31.

30 Accounts receivable¹⁾ (€ in millions)

2012 2,366

2011 2,155

1) At March 31.

31 Accounts payable¹⁾ (€ in millions)

2012 1,446

2011 1,316

1) At March 31.

Other current assets up 24%

Other current assets increased 24% to € 518 million at the end of March 2012 from € 418 million in 2011, mainly as a result of an increase in tax receivables other than income taxes as well as prepaid expenses.

Fixed assets increase 8%

Fixed assets include property, plant and equipment, goodwill, trademarks and other intangible assets as well as long-term financial assets. Fixed assets increased 8% to € 4.221 billion at the end of March 2012 versus € 3.905 billion in 2011. Additions in an amount of

€ 429 million were primarily related to the continued expansion of our own-retail activities, investments into the Group’s IT infrastructure as well as the further development of the Group’s headquarters in Herzogenaurach. Positive currency translation effects in an amount of € 160 million also contributed to the increase. Additions were partly offset by depreciation and amortisation amounting to € 256 million as well as disposals of € 17 million. Compared to December 31, 2011, fixed assets decreased 2%.

Assets held for sale decrease 18%

At the end of March 2012, assets held for sale declined 18% to

€ 25 million compared to € 30 million in 2011. This decrease was due to certain assets which were impaired in the fourth quarter of 2011 due to a change in conditions.

Other non-current assets up 2%

Other non-current assets increased 2% to € 112 million at the end of March 2012 from € 111 million in 2011, mainly driven by an increase in prepaid promotion partnerships.

Accounts payable increase 10%

Accounts payable were up 10% to € 1.446 billion at the end of March 2012 versus € 1.316 billion in 2011 ^{diaGraM 31}. On a currency-neutral basis, accounts payable increased 9%, reflecting the growth in inventories during the first quarter.