FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission file number 1-9340
REEBOK INTERNATIONAL LTD.
_________________________________________________________________
(Exact name of registrant as specified in its charter)
Massachusetts 04-2678061
____________________________________ ____________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Technology Center Drive, Stoughton, Massachusetts 02072
_________________________________________________________________
(Address of principal executive offices) (Zip Code)
(617) 341-5000
_________________________________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( )
The number of shares outstanding of registrant's common stock,
par value $.01 per share, at May 7, 1996, was 73,069,214 shares.
<PAGE>
REEBOK INTERNATIONAL LTD.
INDEX
PART I. FINANCIAL INFORMATION:
Item 1 Financial Statements (Unaudited)
Consolidated Balance Sheets - March 31, 1996 and
1995, and December 31, 1995 . . . . . . . . . . 2-3
Consolidated Statements of Income - Three
Months ended March 31, 1996 and 1995. . . . . . 4
Consolidated Statements of Cash Flows - Three
Months Ended March 31, 1996 and 1995. . . . . . 5-6
Notes to Consolidated Financial Statements . . . 7
Item 2
Management's Discussion and Analysis of Results
Of Operations and Financial Condition . . . . . 8-12
Part II. OTHER INFORMATION:
Item 1 Legal Proceedings . . . . . . . . . . . . . . . . 13
Items 2-5 Not Applicable . . . . . . . . . . . . . . . . . 13
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . 13
<PAGE>
REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1996 1995 1995
__________ __________ ___________
(Amounts in thousands)
Current assets:
Cash and cash equivalents $ 64,844 $ 64,980 $ 80,393
Accounts receivable, net
of allowance for doubtful
accounts (1996, $50,513;
March 1995, $45,487;
December 1995, $46,401) 683,996 738,125 506,563
Inventory 579,726 635,920 635,012
Deferred income taxes 80,232 73,660 75,543
Prepaid expenses and other
current assets 48,123 29,352 45,418
__________ __________ __________
Total current assets 1,456,921 1,542,037 1,342,929
__________ __________ __________
Property and equipment, net 189,505 180,745 192,033
Non-current assets:
Intangibles, net of
amortization 63,775 98,639 64,436
Deferred income taxes 4,256
Other 56,421 45,008 56,825
__________ __________ __________
120,196 147,903 121,261
__________ __________ __________
$1,766,622 $1,870,685 $1,656,223
========== ========== ==========
-2-
<PAGE>
REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
March 31, December 31,
1996 1995 1995
__________ __________ __________
(Amounts in thousands, except share data)
Current liabilities:
Notes payable to banks $ 76,848 $ 87,309 $ 66,682
Commercial paper 50,000 65,000
Current portion of
long-term debt 26 5,148 946
Accounts payable 164,448 180,097 166,037
Accrued expenses 152,669 189,782 144,585
Income taxes payable 73,534 129,272 47,956
Dividends payable 5,601 6,066 5,742
__________ __________ __________
Total current liabilities 523,126 662,674 431,948
__________ __________ __________
Long-term debt, net of
current portion 265,537 135,728 254,178
Deferred income taxes 3,198 4,604
Minority interest 33,710 26,180 31,081
Commitments and contingencies
Outstanding redemption value of
equity put options 39,123 39,123
Stockholders' equity:
Common stock, par value $.01;
authorized 250,000,000 shares;
issued 1996, 110,099,236;
issued March 31, 1995,
116,614,838; issued December
31, 1995, 111,015,133 1,086 1,166 1,096
Additional paid-in capital 145,382
Retained earnings 1,504,049 1,487,909 1,487,006
Less 36,447,502 shares in
treasury at cost (610,252) (603,241) (603,241)
Unearned compensation (514) (2,898) (1,208)
Foreign currency translation
adjustment 7,559 17,785 11,636
__________ __________ __________
901,928 1,046,103 895,289
__________ __________ __________
$1,766,622 $1,870,685 $1,656,223
========== ========== ==========
The accompanying notes are an integral part of the consolidated
financial statements.
-3-
<PAGE>
REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
Three Months Ended
March 31,
___________________________
1996 1995
____ ____
Net sales $ 902,923 $ 935,478
Other income 762 1,138
_________ _________
903,685 936,616
Costs and expenses:
Cost of sales 551,791 557,399
Selling, general and
administrative expenses 263,544 265,263
Amortization of intangibles 626 1,002
Minority interest 4,634 3,377
Interest expense 6,528 4,874
Interest income (1,150) (1,105)
_________ _________
825,973 830,810
_________ _________
Income before income taxes 77,712 105,806
Income taxes 29,297 39,889
_________ _________
Net income $ 48,415 $ 65,917
========= =========
Net income per common share $ 0.64 $ 0.80
========= =========
Dividends per common share $ .075 $ .075
========= =========
Weighted average common and
common equivalent shares
outstanding 75,143 82,602
========= =========
Certain amounts in 1995 have been reclassified to permit comparisons.
The accompanying notes are an integral part of the consolidated financial
statements.
-4-
<PAGE>
REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
________________
1996 1995
____ ____
(Amounts in thousands)
Cash flows from operating activities:
Net income $ 48,415 $ 65,917
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 9,344 9,766
Amortization of intangibles 626 1,002
Minority interest 4,634 3,377
Amortization of unearned compensation (231) 1,118
Deferred income taxes (6,484) (8,173)
Changes in operating assets and
liabilities, exclusive of those arising
from business acquisitions:
Accounts receivable (186,118) (185,572)
Inventory 51,240 9,483
Prepaid expenses (9,034) 1,337
Other 7,951 (12,426)
Accounts payable 6,009 2,241
Accrued expenses 4,798 30,237
Income taxes payable 25,737 26,114
___________ __________
Total adjustments (91,528) (121,496)
___________ __________
Net cash used for operating activities (43,113) (55,579)
___________ __________
Cash flows from investing activities:
Payments to acquire property and
equipment (8,657) (19,452)
Payments for business acquisitions (2,305)
___________ __________
Net cash used for investing activities (8,657) (21,757)
___________ __________
-5-
<PAGE>
REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
___________________
1996 1995
____ ____
(amounts in thousands)
Cash flows from financing activities:
Net borrowings of notes payable to banks 12,379 16,209
Proceeds from issuance of commercial paper 50,000 65,000
Net borrowings of long-term debt 11,092 2,146
Proceeds from issuance of common stock to
employees 117 2,246
Dividends paid (5,693) (6,068)
Repurchases of common stock (32,031) (26,241)
________ _________
Net cash provided by financing activities 35,864 53,292
________ _________
Effect of exchange rate changes on cash
and cash equivalents 357 5,088
________ _________
Net decrease in cash and cash equivalents (15,549) (18,956)
________ _________
Cash and cash equivalents at beginning of period 80,393 83,936
________ _________
Cash and cash equivalents at end of period $ 64,844 $ 64,980
======== =========
Supplemental disclosures of cash flow information:
1996 1995
____ ____
Cash paid during the period for:
Interest $ 7,230 $ 8,499
Income taxes 16,210 13,009
The accompanying notes are an integral part of the consolidated
financial statements.
-6-
<PAGE>
REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
______________________________
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three months ended
March 31, 1996 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1996. For
further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
NOTE 2 - CONTINGENCIES
______________________________
On August 29, 1995, the Company obtained a favorable ruling on
its motion for summary judgment in the lawsuit entitled Stutz
Motor Car of America, Inc. v. Reebok International Ltd., (filed
on July 1, 1993 in the Central District of Los Angeles County
Superior Court as Case Number BC074579 and removed to the United
States District Court for the Central District of California
where it was assigned Civil Action No. 93-4433LGB) and, as a
result, the case was dismissed. The Plaintiff has appealed the
decision. The Company believes that the Plaintiff's appeal is
without merit and is confident that the District Court decision
will be upheld.
The Company's settlement with the National Association of
Attorneys General ("NAAG") relating to the investigation by NAAG
against the Company was approved by the Federal Court for the
Southern District of New York on October 20, 1995. The Court's
order approving the settlement was appealed to the Second Circuit
Court of Appeals on January 9, 1996 by counsel purporting to
represent a class of Reebok and Rockport consumers. The Company
is currently awaiting a decision on the appeal, which it believes
to be without merit.
-7-
<PAGE>
REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following table shows the percentage which amounts in the
Consolidated Statements of Income bear to net sales:
Percentage of Net Sales
_______________________
Three Months Ended
March 31,
___________________
1996 1995
____ ____
Net sales 100.0% 100.0%
Other income .1 .1
______ ______
100.1 100.1
Costs and expenses:
Cost of sales 61.1 59.6
Selling, general and
administrative expenses 29.2 28.4
Amortization of intangibles .1 .1
Minority interest .5
.3
Interest expense .7 .5
Interest income (.1) (.1)
______ ______
91.5 88.8
______ ______
Income before income taxes 8.6 11.3
Income taxes 3.2 4.3
______ ______
Net income 5.4% 7.0%
====== ======
-8-
<PAGE>
REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following discussion contains forward-looking statements
which involve risks and uncertainties. The Company's actual
results may differ materially from the results discussed in the
forward-looking statements. Factors that might cause such a
difference include, but are not limited to, the matters discussed
in Attachment A to this Quarterly Report on Form 10-Q.
Operating Results
_________________
First Quarter 1996 Compared to First Quarter 1995
_________________________________________________
Net sales for the quarter ended March 31, 1996, were $902.9
million, 3.5% less than the first quarter 1995 sales of $935.5
million. The Reebok Division's worldwide sales were $790.4
million, a decrease of 3.4% from $818.0 million(A) in the first
quarter of 1995. U.S. footwear sales of the Reebok Division
decreased 12.8% to $333.7 million from $382.7 million in the
first quarter of 1995. This decrease is attributed to sales
declines in all categories except for walking which experienced a
significant increase and basketball which had sales that were
approximately equal to those of a year ago. Reebok Division's
U.S. apparel sales increased by 24.0% to $61.9 million from $49.9
million(A) in 1995. The increase resulted primarily from
increases in sales of T-shirts and core basics. Reebok Division's
International sales (including both footwear and apparel) were
$394.8 million in the first quarter of 1996, an increase of 2.4%
from $385.4 million in the first quarter of 1995. This increase
is attributed primarily to increases in the soccer, walking and
women's categories which were partially
____________
(A) The 1995 sales are adjusted to include the retail division's
apparel sales in U.S. apparel consistent with the 1996
presentation. Previously, all retail sales (including
footwear and apparel) had been included in U.S. footwear
sales. In addition, all sales of Tinley brand apparel for
1995 have been reclassified to Avia to conform with the 1996
presentation.
-9-
<PAGE>
offset by declines in the running, men's cross training and
classic categories. On a local currency basis, thereby
eliminating the impact of foreign currency exchange changes,
Russia, Switzerland, Spain, Italy, Japan and Korea had increases
in sales whereas Germany, France and Canada experienced decreased
sales. The International sales increase was not materially
impacted by changes in foreign currency exchange rates.
Rockport's first quarter sales increased by 1.4% to $85.8
million from $84.6 million in the first quarter of 1995. Sales
increases in the men's casual dress category were partially
offset by a sales decline in the performance walking category.
Sales in the first quarter of 1996 were impacted
disproportionately by Rockport's strategy of decreasing its
reliance on older promotional type products and introducing more
new products to the market on a regular basis. Management
believes that Rockport's first quarter sales results are not
necessarily indicative of the current health of this brand.
Avia's first quarter sales decreased by 18.8% to $26.7
million from $32.9 million(A) in 1995. All categories except
running had decreases in sales from the same period a year ago.
In January 1996 Reebok announced its intention to sell Avia
during 1996. The uncertainty resulting from Reebok's announced
intention to sell its subsidiary has negatively impacted Avia's
business. On April 23, 1996, Reebok signed a letter of intent
with American Sporting Goods Corporation, Inc. ("ASG") agreeing
to sell its Avia subsidiary to ASG. The closing of the
transaction is subject to the completion of due diligence, the
execution of a definitive purchase agreement, and normal closing
conditions, including the required review under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended.
Gross margins declined to 38.9% during the quarter, compared
to 40.4% in 1995's first quarter. U.S. footwear margins were
unfavorably impacted by higher than normal markdowns taken during
the quarter ended March 31, 1996. 1996 International margins
improved slightly as compared to the first quarter of 1995.
Selling, general and administrative expenses for the quarter
were $263.5 million or 29.2% of sales, as compared to $265.3
million, or 28.4% of sales in 1995's first quarter. SG&A
expenses declined in dollars in the first quarter of 1996 as
compared with the first quarter of the prior year, but as a
percentage of sales increased due to a lower sales base.
-10-
<PAGE>
All operating divisions reported lower or flat G&A expenses as
compared with the first quarter of 1995 except retail, where
increased spending was attributable to an increase of 48 stores
operating in 1996 as compared with the first quarter of 1995.
Sales and marketing expenses increased during the quarter due to
increased investments in advertising and product development.
For the first quarter of 1996, increased spending on advertising
and product development for the Reebok and Rockport brands
amounted to $12.7 million. Exclusive of these increases, total
SG&A spending declined by $14.5 million or 5.5% as compared with
the same period in 1995.
Minority interest represents the minority shareholders'
proportionate share of the net income of certain of the Company's
consolidated subsidiaries.
Interest expense increased 33.9% as a result of increased
borrowings to finance working capital needs and long term capital
investments including property and equipment and share
repurchases.
Year-to-year earnings per share comparisons benefited from
the share repurchase program. Weighted average common shares
outstanding for the quarter ended March 31, 1996 declined 9.1% to
75.1 million shares, as compared to 82.6 million shares for the
first quarter of 1995.
Liquidity and Sources of Capital
________________________________
The Company's financial position remains strong. Working
capital increased by $54.4 million, or 6.2% from the same period
a year ago. The current ratio at March 31, 1996, was 2.8 to 1,
as compared to 3.1 to 1 at December 31, 1995 and 2.3 to 1 at
March 31, 1995.
Accounts receivable decreased from March 31, 1995 by $54.1
million or 7.3% partially due to lower first quarter sales in
1996. Inventory decreased by $55.3 million or 8.7% from December
31, 1995; whereas in 1995 inventory increased in the first
quarter by $11.3 million from 1994 year end. Improved
forecasting, production planning and logistics operations provide
the Company with the tools to operate with lower inventory
levels. The net assets held for sale of Avia have been
classified as prepaid expenses and other current assets and are
not included in accounts receivable and inventory at March 31,
1996 and December 31, 1995.
-11-
<PAGE>
During the twelve months ended March 31, 1996, cash and cash
equivalents decreased by $.1 million, and outstanding borrowings
increased by $99.2 million, while $231.3 million of the Company's
stock was repurchased. Cash used for operations during the first
quarter of 1996 was $43.1 million, a decrease of $12.5 million as
compared with the first quarter in 1995. In addition, fixed
asset additions during the first quarter of 1996 were
approximately one half of the first quarter of 1995. Cash
generated from operations, together with the Company's existing
credit lines and other financial resources, is expected to
adequately finance the Company's current and planned 1996 cash
requirements. However, the Company's actual experience may
differ from the expectations set forth in the preceding sentence.
Factors that might lead to such a difference include, but are not
limited to, the matters discussed in Attachment A to this
quarterly report on Form 10-Q, as well as future events that
might have the effect of reducing the Company's available cash
balances (such as unexpected operating losses or capital or other
expenditures) or that might reduce or eliminate the availability
of external financing sources.
-12-
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
Reference is made to Item 3. Legal Proceedings in the Company's
Annual Report on Form 10-K, dated March 29, 1996, for a
description of Stutz Motor Car of America, Inc. v. Reebok
International Ltd. and the status of the Company's settlement
with the National Association of Attorneys General.
Items 2 - 5
Not applicable
Item 6
(a) Exhibits:
11. Statement Re Computation of Per Share Earnings
27. Financial Data Schedule
(b) Reports on Form 8-K: There were no reports on Form 8-K
filed during the quarter ended March 31, 1996.
-13-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Dated: May 10, 1996
REEBOK INTERNATIONAL LTD.
BY: /s/ KENNETH WATCHMAKER
_________________________
Kenneth Watchmaker
Executive Vice President and
Chief Financial Officer
-14-
<PAGE>
Attachment A
ISSUES AND UNCERTAINTIES
________________________
The Company's quarterly report on Form 10-Q attached hereto,
as well as other public documents of the Company, may include
forward-looking statements which involve risks and uncertainties.
The Company's actual results may differ materially from those
discussed in such forward-looking statements. Prospective
information is based on management's then current expectations or
forecasts. Such information is subject to the risk that such
expectations or forecasts, or the assumptions used in making such
estimates or forecasts, become inaccurate. The following
discussion identifies important factors that could affect the
Company's actual results and could cause such results to differ
materially from those contained in forward looking statements
made by or on behalf of the Company.
Competition and Consumer Preferences
____________________________________
The footwear and apparel industry is intensely competitive
and subject to rapid changes in consumer preferences, as well as
technological innovations. A major technological breakthrough or
unusual marketing or promotional success by one of the Company's
competitors could adversely affect the Company's competitive
position. In addition, in countries where the athletic footwear
market is mature, sales growth may be dependent in part on the
Company increasing its market share at the expense of its
competitors. The Company also faces strong competition with
respect to its other product lines, such as the ROCKPORT product
line and the GREG NORMAN collection.
Competition in the markets for the Company's products occurs
in a variety of ways, including price, quality, brand image and
ability to meet delivery commitments to retailers. The intensity
of the competition faced by the various operating units of the
Company and the rapid changes in the consumer preference and
technology that can occur in the footwear and apparel markets
constitute significant risk factors in the Company's operations.
Inventory Risk
______________
The footwear industry has relatively long lead times for
design and production of product and thus, the Company must
commit to production tooling and in some cases to production in
advance of orders. If the Company fails to accurately forecast
consumer demand or if there are changes in consumer preference or
market demand after the Company has made such production
commitments, the Company may encounter difficulty in liquidating
its inventory, which may have an adverse effect on the Company's
sales margins and brand image.
Sales Forecasts
_______________
The Company's investment in advertising and marketing is
based on sales forecasts and is necessarily made in advance of
actual sales. The markets in which the Company does business are
highly competitive, and the Company's business is affected by a
variety of factors, including brand awareness, changing consumer
preferences, fashion trends, retail market conditions and
economic and other factors. There can be no assurance that sales
forecasts will be achieved, and to the extent sales forecasts are
not achieved, these investments will represent a higher
percentage of net revenues, and the Company will experience
higher inventory levels and associated carrying costs, all of
which would adversely impact the Company's financial condition
and results.
Advertising and Marketing Investment
____________________________________
Because consumer demand for athletic footwear and apparel is
heavily influenced by brand image, the Company's business
requires substantial investments in marketing and advertising,
including television and other advertising, athlete endorsements
and athletic sponsorships, as well as investments in retail
presence. The Company intends to continue its increased
investment in advertising and marketing in 1996; however, there
can be no assurance that such increased investment will result in
increased sales.
Retail Operations
_________________
The Company currently operates approximately 100 retail
stores in the U.S. and a significant number of retail stores
internationally which are operated either directly or through the
Company's distributors. The Company has made a significant
capital investment in opening these stores and incurs significant
expenditures in operating these stores. To the extent the
Company continues to expand its retail organization, the
Company's performance could be adversely affected by lower than
anticipated sales at its retail stores. The performance of the
Company's retail organization is also subject to the general
retail market conditions.
Timeliness of Product
_____________________
Timely product deliveries are essential in the footwear and
apparel business since the Company's orders are cancelable by
customers if agreed delivery windows are not met. If as a result
of design, production or distribution problems, the Company is
late in delivering product, it could have an adverse impact on
its sales and/or profitability.
Global Sales and Production
___________________________
A substantial portion of the Company's products are
manufactured abroad and approximately 40% of the Company's sales
are made outside the U.S. The Company's footwear and apparel
production operations are thus subject to the usual risks of
doing business abroad, such as import duties, tariffs, quotas and
other threats to free trade, labor unrest, political instability
and other problems linked to local production conditions. If
such factors limited or prevented the Company from selling
products in any significant market or prevented the Company from
acquiring products from its suppliers in Indonesia, China or
Thailand, or significantly increased the cost to the Company of
such products, the Company's operations could be seriously
disrupted until alternative suppliers were found or alternative
markets were developed, with a significant negative impact.
Sources of Supply
_________________
The Company depends upon its independent manufacturers to
manufacture high-quality product in a timely and cost-efficient
manner and relies upon the availability of sufficient production
capacity at its existing manufacturers or the ability to utilize
alternative sources of supply. In addition, if the Company were
to experience significant shortages in raw materials used in its
products, it could have a negative effect on the Company's
business, including increased costs or difficulty in delivering
product.
Risks of Currency Fluctuations
______________________________
The Company conducts operations in various international
countries and a significant portion of its sales are transacted
in local currencies. As a result, the Company's revenues are
subject to foreign exchange rate fluctuations. The Company
enters into forward currency exchange contracts to hedge its
exposure for merchandise purchased in U.S. dollars that will be
sold to customers in other currencies. The Company also uses
foreign currency exchange contracts to hedge significant inter-
company assets and liabilities denominated in other currencies.
Customers
_________
Although the Company has no single customer that represents
10% or more of its sales, the Company has certain significant
customers, the loss of which could have an adverse effect on its
business. There could also be a negative effect on the Company's
business if any such significant customer became insolvent or
otherwise failed to pay its debts.
Intellectual Property
_____________________
The Company believes that its trademarks, its technologies
and designs are of great value. Loss of the REEBOK or ROCKPORT
trademark rights could have a serious impact on the Company's
business. Because of the importance of such intellectual
property rights, the Company's business is subject to the risk of
counterfeiting, parallel trade or intellectual property
infringement. The Company is, however, vigilant in protecting
its intellectual property rights.
<PAGE>
Litigation
__________
The Company is subject to the normal risks of litigation
with respect to its business operations.
Economic Factors
________________
The Company's business is subject to economic conditions in
the Company's major markets, including, without limitation,
recession, inflation or general weakness in retail markets.
Adverse changes in such economic factors could have a negative
effect on the Company's business.
Tax Rate Changes
________________
If the Company was to encounter significant tax rate changes
in the major markets in which it operates, it could have an
adverse effect on its business.
Quarterly Reports
_________________
The financial results reflected in the Company's quarterly
report on Form 10-Q are not necessarily indicative of the
financial results which may be achieved in future quarters or for
year-end, which results may vary.
<PAGE>
REEBOK INTERNATIONAL LTD.
(Amounts in Thousands, Except Per Share Data)
Exhibit 11 - Statement RE: Computation of Per Share Earnings
Three Months Ended
March 31,
__________________
1996 1995
____ ____
Primary
________________________________
Average shares outstanding 74,385 80,693
Net effect of dilutive stock options 754 1,909
_______ _______
Total 75,139 82,602
======= =======
Net income $48,415 $65,917
======= =======
Per share amount $ 0.64 $ 0.80
======= =======
Fully Diluted
________________________________
Average shares outstanding 74,385 80,693
Net effect of dilutive stock options 758 1,909
_______ _______
Total 75,143 82,602
======= =======
Net income $48,415 $65,917
======= =======
Per share amount $ 0.64 $ 0.80
======= =======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MARCH 31, 1996 CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF
INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000770949
<NAME> REEBOK INTERNATIONAL LTD.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 64,844
<SECURITIES> 0
<RECEIVABLES> 734,509
<ALLOWANCES> 50,513
<INVENTORY> 579,726
<CURRENT-ASSETS> 1,456,921
<PP&E> 340,343
<DEPRECIATION> 150,838
<TOTAL-ASSETS> 1,766,622
<CURRENT-LIABILITIES> 523,126
<BONDS> 341,568
1,086
0
<COMMON> 0
<OTHER-SE> 900,842
<TOTAL-LIABILITY-AND-EQUITY> 1,766,622
<SALES> 902,923
<TOTAL-REVENUES> 903,685
<CGS> 551,791
<TOTAL-COSTS> 551,791
<OTHER-EXPENSES> 267,654
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,528
<INCOME-PRETAX> 77,712
<INCOME-TAX> 29,297
<INCOME-CONTINUING> 48,415
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,415
<EPS-PRIMARY> .64
<EPS-DILUTED> .64
</TABLE>
