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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

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|ý                                             | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|--------------------------------------------- | ----------------------------------------------------------------------------------------
|For the quarterly period ended March 31, 2005
|OR                                           
|o                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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Commission file number 1-9340

REEBOK INTERNATIONAL LTD.Incorporated pursuant to the Laws of The Commonwealth of Massachusetts

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Internal Revenue ServiceEmployer Identification No. 04-2678061

1895 J.W. Foster Boulevard, Canton, Massachusetts, 02021
(781) 401-5000

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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 ý    No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 under the Securities Exchange Act of
1934). Yes ý    No o

The total number of shares of the Registrant's Common Stock, par value $.01 per share, outstanding on April 29, 2005 was 59,669,800.



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REEBOK INTERNATIONAL LTD.

INDEX



|PART I. FINANCIAL INFORMATION: |  |                                                                                           
|------------------------------ |  | ------------------------------------------------------------------------------------------
|Item 1.                        |  | Financial Statements (Unaudited)                                                          
|                               |  | Condensed Consolidated Balance SheetsMarch 31, 2005 and 2004                             
|                               |  | Condensed Consolidated Statements of IncomeThree Months Ended March 31, 2005 and 2004    
|                               |  | Condensed Consolidated Statements of Cash FlowsThree Months Ended March 31, 2005 and 2004
|                               |  | Notes to Condensed Consolidated Financial Statements                                      
|Item 2.                        |  | Management's Discussion and Analysis of Financial Condition and Results of Operations     
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                
|Item 4.                        |  | Controls and Procedures                                                                   
|Part II. OTHER INFORMATION:    |  |                                                                                           
|Item 1.                        |  | Legal Proceedings                                                                         
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                               
|Item 3.                        |  | Defaults Upon Senior Securities                                                           
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                       
|Item 5.                        |  | Other Information                                                                         
|Item 6.                        |  | Exhibits                                                                                  

2

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PART IFINANCIAL INFORMATION

Item 1. Financial Statements.

Reebok International Ltd.        Condensed Consolidated Balance Sheets        Amounts in thousands, except per share data

|                                            |                                                                                                                                          | March 31,                                  |         |           |          
|------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | --------- | ---------
|
|
|
|Assets                                      |                                                                                                                                          |                                            |         |           |          
|Current Assets:                             |                                                                                                                                          |                                            |         |           |          
|                                            | Cash and cash equivalents                                                                                                                |                                            | $       | 483,388   |          
|                                            | Accounts receivable, net of allowance for doubtful accounts (March 2005, $84,276, March 2004, $72,951, December 2004, $81,280)           |                                            |         | 707,689   |          
|                                            | Inventory                                                                                                                                |                                            |         | 470,233   |          
|                                            | Deferred income taxes                                                                                                                    |                                            |         | 113,384   |          
|                                            | Prepaid expenses and other current assets                                                                                                |                                            |         | 78,301    |          
|                                            |                                                                                                                                          |                                            |         |           |          
|                                            |                                                                                                                                          | Total current assets                       |         |           | 1,852,995
|                                            |                                                                                                                                          |                                            |         |           |          
|Property and equipment, net                 |                                                                                                                                          |                                            | 183,510 |           |          
|Other non-current assets:                   |                                                                                                                                          |                                            |         |           |          
|                                            | Goodwill, net                                                                                                                            |                                            |         | 126,052   |          
|                                            | Intangibles, net of amortization                                                                                                         |                                            |         | 195,919   |          
|                                            | Deferred income taxes                                                                                                                    |                                            |         | 41,568    |          
|                                            | Other                                                                                                                                    |                                            |         | 31,122    |          
|                                            |                                                                                                                                          |                                            |         |           |          
|                                            |                                                                                                                                          | Total Assets                               |         | $         | 2,431,166
|                                            |                                                                                                                                          |                                            |         |           |          
|Liabilities and Stockholders' Equity        |                                                                                                                                          |                                            |         |           |          
|Current liabilities:                        |                                                                                                                                          |                                            |         |           |          
|                                            | Notes payable to banks                                                                                                                   |                                            | $       | 56,006    |          
|                                            | Current portion of long-term debt                                                                                                        |                                            |         | 100,464   |          
|                                            | Accounts payable                                                                                                                         |                                            |         | 165,593   |          
|                                            | Accrued expenses                                                                                                                         |                                            |         | 339,807   |          
|                                            | Income taxes payable                                                                                                                     |                                            |         | 73,162    |          
|                                            |                                                                                                                                          |                                            |         |           |          
|                                            |                                                                                                                                          | Total current liabilities                  |         |           | 735,032  
|                                            |                                                                                                                                          |                                            |         |           |          
|Long-term debt, net of current portion      |                                                                                                                                          |                                            | 359,815 |           |          
|Minority interest                           |                                                                                                                                          |                                            | 10,444  |           |          
|Other long-term liabilities                 |                                                                                                                                          |                                            | 41,775  |           |          
|Commitments and contingencies               |                                                                                                                                          |                                            |         |           |          
|Stockholders' equity:                       |                                                                                                                                          |                                            |         |           |          
|                                            | Common stock, par value $.01; authorized 250,000 shares; issued shares: March 2005, 102,312; March 2004, 101,441; December 2004, 101,827 |                                            |         | 1,023     |          
|                                            | Retained earnings                                                                                                                        |                                            |         | 2,035,754 |          
|                                            | Less shares in treasury at cost: March 2005, 42,619; March 2004, 41,511; December 2004, 42,619                                           |                                            |         | (780,510  | )        
|Unearned compensation                       |                                                                                                                                          |                                            | (7,457  | )         |          
|Accumulated other comprehensive gain (loss) |                                                                                                                                          |                                            | 35,290  |           |          
|                                            |                                                                                                                                          |                                            |         |           |          
|                                            |                                                                                                                                          | Total Stockholders' Equity                 |         |           | 1,284,100
|                                            |                                                                                                                                          |                                            |         |           |          
|                                            |                                                                                                                                          | Total Liabilities and Stockholders' Equity |         | $         | 2,431,166
|                                            |                                                                                                                                          |                                            |         |           |          

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

3

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Reebok International Ltd.        Condensed Consolidated Statements of Income (Unaudited)        Amounts in thousands, except per share data

|                                                 |                     | Three Months Ended
March 31,                
|------------------------------------------------ | ------------------- | --------------------------------------------
|
|Net sales                                        |                     | $                                           
|                                                 | Costs and expenses: |                                             
|                                                 |                     | Cost of sales                               
|                                                 |                     | Selling, general and administrative expenses
|                                                 |                     | Interest expense, net                       
|                                                 |                     | Other expense, net                          
|                                                 |                     |                                             
|                                                 |                     |                                             
|                                                 |                     |                                             
|Income before income taxes and minority interest |                     |                                             
|Income taxes                                     |                     |                                             
|                                                 |                     |                                             
|Income before minority interest                  |                     |                                             
|Minority interest                                |                     |                                             
|                                                 |                     |                                             
|Net income                                       |                     | $                                           
|                                                 |                     |                                             
|Basic earnings per share:                        |                     | $                                           
|                                                 |                     |                                             
|Diluted earnings per share:                      |                     | $                                           
|                                                 |                     |                                             
|Dividends per common share:                      |                     | $                                           
|                                                 |                     |                                             

The
accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

4

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Reebok International Ltd.        Condensed Consolidated Statements of Cash Flows (Unaudited)        Amounts in thousands, except per share data

|                                                                                   |                                                      | Three Months Ended
March 31, |        
|---------------------------------------------------------------------------------- | ---------------------------------------------------- | ---------------------------- | -------
|
|Cash flows from operating activities:                                              |                                                      |                              |        
|Net income                                                                         |                                                      | $                            | 43,229 
|Adjustments to reconcile net income to net cash used for operating activities:     |                                                      |                              |        
|                                                                                   | Depreciation and amortization                        |                              |        
|                                                                                   | Minority interest                                    |                              |        
|                                                                                   | Deferred income taxes                                |                              |        
|Changes in operating assets and liabilities, excluding the effect of acquisitions: |                                                      |                              |        
|                                                                                   | Accounts receivable                                  |                              |        
|                                                                                   | Inventory                                            |                              |        
|                                                                                   | Prepaid expenses and other                           |                              |        
|                                                                                   | Accounts payable and accrued expenses                |                              |        
|                                                                                   | Income taxes payable                                 |                              |        
|                                                                                   |                                                      |                              |        
|                                                                                   |                                                      | Total adjustments            |        
|                                                                                   |                                                      |                              |        
|                                                                                   | Net cash used for operating activities:              |                              |        
|                                                                                   |                                                      |                              |        
|Cash flows used for investing activities:                                          |                                                      |                              |        
|Payments to acquire property and equipment                                         |                                                      |                              | (10,528
|                                                                                   |                                                      |                              |        
|                                                                                   | Net cash used for investing activities               |                              |        
|                                                                                   |                                                      |                              |        
|Cash flows (used for) provided by financing activities:                            |                                                      |                              |        
|Net borrowings of notes payable to banks                                           |                                                      |                              | (7,493 
|Re-payments of long-term debt                                                      |                                                      |                              | (192   
|Proceeds from issuance of common stock to employees                                |                                                      |                              | 12,625 
|Dividends paid                                                                     |                                                      |                              | (8,952 
|Repurchase of common stock                                                         |                                                      |                              | (1,765 
|                                                                                   |                                                      |                              |        
|                                                                                   | Net cash (used for) provided by financing activities |                              |        
|                                                                                   |                                                      |                              |        
|Effect of exchange rate changes on cash and cash equivalents                       |                                                      |                              | (8,106 
|                                                                                   |                                                      |                              |        
|Net decrease in cash and cash equivalents                                          |                                                      |                              | (81,845
|Cash and cash equivalents at beginning of period                                   |                                                      |                              | 565,233
|                                                                                   |                                                      |                              |        
|Cash and cash equivalents at end of period                                         |                                                      | $                            | 483,388
|                                                                                   |                                                      |                              |        
|Supplemental disclosures of cash flow information:                                 |                                                      |                              |        
|Interest paid                                                                      |                                                      | $                            | 7,118  
|Income taxes paid                                                                  |                                                      |                              | 12,596 

The
accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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Reebok International Ltd.        Notes to Condensed Consolidated Financial Statements (Unaudited)        (Dollar amounts in thousands, except per share data)

1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States
("GAAP") for interim financial information and reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the
results of operations for the interim periods. The interim financial information and notes thereto should be read in conjunction with the Company's latest annual report on
Form 10-K. The results of operations for the three months ended March 31, 2005 are not necessarily indicative of results to be expected for the entire year.

The
balance sheet at December 31, 2004 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for
complete financial statements. 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, 2004.

Reclassification

Certain amounts in prior periods have been reclassified to conform to the 2005 presentation. These reclassifications had no impact on previously reported results of operations
or stockholders' equity.

Accounting for Stock-Based Compensation

At March 31, 2005, the Company had stock-based employee compensation plans. The Company accounts for those plans under the recognition and measurement principles of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and related Interpretations. The Company's policy is to grant stock options with an exercise price equal
to the market value at the date of the grant, and accordingly no compensation expense is recognized. The Company provides pro forma disclosures of the compensation expense determined under the fair
value provisions of Financial Accounting Standards Board Statement No. 123, "Accounting for Stock-Based Compensation." The Company expects to adopt FASB Statement No. 123 (revised 2004)
"Share-Based Payment" ("SFAS 123R") on January 1, 2006. The standard requires all share-based payments to employees, including grants of employee stock options, to be recognized in the
income statement based on their fair values. See Recently Issued Accounting Standards below.

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For
purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information follows (in thousands,
except for earnings per share information):

Three Months Ended
March 31,2005

2004Net income

$
43,229

$
41,104Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards net of related tax effect


2,454


1,413Pro forma net income

$
40,775

$
39,691


Three Months Ended
March 31,2005

2004Basic earnings per share:As reported

$
.73

$
.69Pro forma

$
.69

$
.68Diluted earnings per share:As reported

$
.70

$
.63Pro forma

$
.66

$
.62


Pro
forma information regarding net income and earnings per share is required by SFAS 123, which requires that the information be determined as if the Company had accounted for its employee
stock options granted subsequent to December 31, 1994 under the fair value method of that Statement. The fair value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions as follows:

Three Months Ended
March 31,2005

2004Risk-free interest rates

4.1%

2.8%Dividend yields

0.7%

0.8%Volatility factors of the expected market price of the Company's common stock

.22

.33Weighted-average expected life of the option

3.5 years

3.5 years


Net
income, as reported, included $692 and $233 of restricted stock-based compensation expense for the three months ended March 31, 2005 and 2004, respectively.

Recently Issued Accounting Standards

On December 16, 2004, the Financial Accounting Standards Board ("FASB") issued FASB Statement No. 123 (revised 2004) "Share-Based Payment" ("SFAS 123R"),
which is a revision of Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). SFAS 123R supersedes APB

7

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Opinion
No. 25, "Accounting for Stock Issued to Employees," and amends FASB Statement No. 95, "Statement of Cash Flows." Generally, the approach in SFAS 123R is similar to the
approach described in SFAS 123. However, SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement
based on their fair values. Pro forma disclosure will no longer be an alternative.

Under
SFAS 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method
to be used at the date of adoption. The transition alternatives include the modified retrospective and the modified prospective adoption methods. Under the modified retrospective method, prior periods
may be restated based on the amounts previously recognized under SFAS 123 for purposes of pro forma disclosures either for all periods presented or as of the beginning of the year of adoption.

The
modified prospective method requires that compensation expense be recognized beginning with the effective date, based on the requirements of SFAS 123R, for all share-based payments granted
after the effective date, and based on the requirements of SFAS 123, for all awards granted to employees prior to the effective date of SFAS 123R that remain unvested on the effective
date.

The
provisions of this statement will be effective as of the beginning of the first interim or annual reporting period that begins after December 31, 2005. The Company expects to adopt the
standard on January 1, 2006. The Company is evaluating the requirements of SFAS 123R and has not determined its method of adoption. The Company does not believe, however, that
SFAS 123R will have a material impact on its financial position or results of operations.

2
SPECIAL CHARGES

Details of the special charge activity during the three months ended March 31, 2005 are as follows:

Total

Employee
Severance
and Other

Marketing
ContractsBalance, December 31, 2004

$
7,064

$
1,264

$
5,8002005 Utilization


(1,328
)

(928
)

(400
)Balance, March 31, 2005

$
5,736

$
336

$
5,400


The
remaining accrual, which reflects a portion of the total costs to be incurred related to the Company's European reorganization, is comprised primarily of severance, lease termination costs and
contractual marketing obligations and will be utilized over the next few years as planned consolidations occur and contractual obligations come due. The short-term portion of the accrual,
or $1,936, is included in accrued expenses, with the balance of $3,800 included in other long-term liabilities.

3
EARNINGS PER SHARE

Basic earnings per share excludes dilution and is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding
for the period.

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Diluted
earnings per share reflects the potential dilution that could occur if options to acquire common stock were exercised and assumes the conversion of the convertible debentures into common stock
when dilutive.

The
following table sets forth the computation of basic and diluted earnings per share (amounts in thousands, except per share data):

Three Months Ended
March 31,2005

2004Net income

$
43,229

$
41,104Numerator for diluted earnings per share:Net income

$
43,229

$
41,104Interest on 4.25% convertible debentures, net of income taxes





1,846Interest on 2.00% convertible debentures, net of income taxes


186Net income

$
43,415

$
42,950Denominator for basic earnings per share:Weighted average shares


59,331


59,681Denominator for diluted earnings per share:Weighted average shares


59,331


59,681Effect of dilutive securities:Dilutive employee stock options and warrants


1,968


2,254Assumed conversion of 4.25% convertible Debentures





6,483Assumed conversion of 2.00% convertible Debentures


1,03862,337


68,418Basic earnings per share:

$
.73

$
.69Diluted earnings per share:

$
.70

$
.63


4
COMPREHENSIVE INCOME

The following table sets forth the computation of comprehensive income:

Three Months Ended
March 31,2005

2004Net income

$
43,229

$
41,104Changes in foreign currency translation adjustments


(12,443
)

(2,439
)Net change due to hedging instruments in accordance with FAS 133


27,805


9,667Comprehensive income

$
58,591

$
48,332


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5
COMMITMENTS AND CONTINGENCIES

The Company is involved in various legal proceedings generally incidental to its business. While it is not feasible to predict or determine the outcome of these proceedings,
management does not believe that they should result in a materially adverse effect on the Company's financial position, results of operations or liquidity.

The
Company has entered into financing agreements, real property and equipment leases which contain tax indemnity provisions. The maximum potential amount of future payments is not determinable since
any amounts potentially owed by the Company would be due to future changes in tax rates or income tax regulations which cannot be predicted.

6
ACQUISITION OF COMMON STOCK

Under various share repurchase programs, the Board of Directors has authorized the repurchase of Reebok common stock in the open market or privately negotiated transactions.
During the three months ended March 31, 2005, the Company acquired 40,000 shares of its common stock for approximately $1.8 million. As of March 31, 2005, the Company had
approximately $65.8 million available for future repurchases of its common stock under these Board authorized programs.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including
statements about the Company's sales, revenues, earnings, spending, margins, cash flow, future orders, inventory, products, actions, plans, strategies, objectives and guidance with respect to the
Company's future operating results. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and
may contain the words "believe," "anticipate," "expect," "estimate," "intend," "plan," "project," "will be," "will continue," "will result," "could," "may," "might," or any variations of such words or
other words with similar meanings. Any such statements are subject to risks and uncertainties that could cause the Company's actual results to differ materially from the results 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 underlying such expectations or forecasts, may change. The Company assumes no obligation to update any such forward-looking statements to reflect actual results, changes in assumptions or
changes in other factors affecting such forward-looking statements.

Risks
and uncertainties 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 include, but are not limited to, the following: economic conditions in the Company's major markets; competition; shifts in consumer preferences; the ability to maintain advantageous licenses
with the Company's licensors; risks associated with the Company's international sales, distribution and manufacturing; increases in raw material prices; the Company's ability to manage and forecast
its growth and inventories; the loss of significant customers or suppliers; and the effect of currency fluctuations. This list of risk factors is not exhaustive. Other risks and uncertainties are
discussed elsewhere in this report and in further detail under the caption entitled "Issues and Uncertainties" included in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2004, which has been filed with the Securities and Exchange Commission. The Company operates in a highly competitive and rapidly changing environment. Therefore, new
risk factors can arise, and it is not possible for management to predict all such risk factors, nor to assess the impact of
all such risk factors on the Company's business or the extent to which any individual risk factor, or combination of factors, may cause results to differ materially from those contained in any
forward-looking statement. With respect to any statements concerning future orders, the Company's open order position is not necessarily indicative of future sales because a significant portion of the
Company's business, including sales by Company-owned retail stores, Rockport, Ralph Lauren Footwear and The Greg Norman Collection are not included in the backlog.    In addition, many
markets are not included in open orders since sales are made by independent distributors. Finally, many orders may be cancelled, currency may fluctuate and the ratio of future orders to "at once"
shipments may vary from year to year.

CRITICAL ACCOUNTING POLICIESThe Company's significant accounting policies are described in Note 1 to the consolidated financial
statements included in Item 8 in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004. The Company's discussion and analysis of its financial
condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an on-going basis the Company evaluates its estimates, including those related to sales returns and allowances, the realizability of
outstanding

11

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accounts
receivable, the carrying value of inventories, hedging policies, endorsement contracts and the provision for income taxes. The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that
are not readily apparent from other sources. However, results may differ from these estimates under different assumptions or conditions. The Company is not aware of any trends, demands, commitments,
events or uncertainties that are reasonably likely to occur that would materially affect the methodology, the assumptions described, or accounting estimates used. There have been no material changes
made to the accounting estimate in the past three years. In the past, actual results have not been materially different from the Company's estimates. Management has discussed the development and
selection of its accounting estimates, and the Management's Discussion and Analysis disclosure regarding these estimates, with its audit committee.

The
Company has identified the following as critical accounting policies based on the significant judgments and estimates used in determining the amounts reported in its consolidated financial
statements:

Sales Returns and Allowances

The Company records reductions to revenue for estimated customer returns and allowances. The Company bases its estimates on historical rates of customer returns and allowances
as well as the
specific identification of outstanding returns and allowances that have not yet been received by the Company. The actual amount of customer returns or allowances, which is inherently uncertain, may
differ from the Company's estimates. If actual or expected returns and allowances were significantly greater or lower than the reserves the Company had established, the Company would record an
adjustment to reduce or increase net sales and net income in the period in which it made such a determination.

Accounts Receivable

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company estimates
potential losses based on the Company's historical rate of credit losses, its knowledge of the financial condition of certain customers and an assessment of the overall conditions at retail. If the
financial condition of the Company's customers was to change, adjustments may be required to these estimates. If the Company determined that increases or decreases to the allowance for doubtful
accounts was appropriate, the Company would record an adjustment to increase or reduce selling, general and administrative expense and net income in the period in which the Company made such a
determination. Historically, losses have been within the Company's expectations. Furthermore, the Company provides for estimated losses resulting from differences between the gross carrying value of
its receivables and the amounts that customers estimate are owed to the Company. The settlement or resolution of these differences could result in future changes to these estimates.

Inventory Valuation

The Company values its inventory at the lower of cost (first-in, first-out method) or market. Market value is estimated based upon assumptions made
about future demand and retail market conditions. If the Company determines that the estimated market value of its inventory is less than the carrying value of such inventory, the Company provides a
reserve for such difference as a charge to cost of sales. If actual market conditions are more or less favorable than those projected by the Company, further adjustments may be required that would
increase or decrease the Company's cost of sales and net income in the period in which they were recorded.

12

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Hedging Policies

The Company uses foreign currency forward contracts, options contracts and interest rate swap agreements to hedge its exposure to: (1) merchandise purchased in U.S.
Dollars that is forecasted to be sold to customers in other currencies; (2) significant assets and liabilities that are denominated in other
currencies; and (3) interest rate movement. If actual fluctuations in foreign exchange rates or interest rates are more or less favorable than those projected by management, or if the actual
amount of merchandise purchased in U.S. Dollars to be sold to customers in other currencies differs from the amounts projected, an adjustment may be required to reduce or increase cost of goods sold
or other income and net income.

Endorsement Contracts

In general, endorsement payments are expensed on a straight-line basis over the term of the contract. However, certain contract elements may be accounted for
differently based upon the facts and circumstances of each individual contract. Certain contracts provide for contingent payments for meeting specific performance achievements. The Company records
these contingent payments in selling, general and administrative expenses when the specific performance achievement has been met.

Some
of the contracts provide for payments based upon endorsers maintaining a level of performance in their sport over an extended period of time (e.g., maintaining a top ranking in a sport for a
year). These amounts are reported in selling, general and administrative expenses when the Company determines that it is probable that the specified level of performance will be maintained throughout
the period. In these instances, to the extent that actual payments to the endorser differ from the Company's estimate due to changes in the endorser's athletic performance, increased or decreased
selling, general and administrative expenses may be reported in a future period.

Some
of the contracts provide for royalty payments to endorsers based upon a predetermined percentage of sales of particular products. The Company expenses a portion of these payments in cost of sales
and a portion in selling, general and administrative expenses as the related sales are made. In certain contracts, the Company offers minimum guaranteed royalty payments. For contractual obligations
for which the Company estimates that it will not meet the minimum guaranteed amount of royalty fees through sales of product, the Company records the fees on a straight-line basis over the
guarantee period.

Income Taxes

The carrying value of the Company's net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions to
realize the value of these assets. If the Company is unable to generate sufficient future taxable income in these jurisdictions, an adjustment may be required to the net carrying value of the deferred
tax assets resulting in additional income tax expense in the Company's consolidated statement of income, thereby reducing net income. Management evaluates the realizability of the deferred tax assets
and assesses the need for any valuation adjustment quarterly.

RECENTLY ISSUED ACCOUNTING STANDARDSThe Company has described the impact anticipated from the adoption of certain new accounting
pronouncements effective in 2005 in Note 1 to the Condensed Consolidated Financial Statements for the quarter ended March 31, 2005.

NON-GAAP MEASURESThe Company provides certain constant dollar comparisons, which eliminate the effect of foreign currency
fluctuations on such comparisons, in this Quarterly Report on Form 10-Q. Constant dollars are calculated by translating the prior period financial information at the current period
foreign exchange rates, thereby eliminating the effect of foreign currency fluctuations. Because of the significance of the Company's international operations and because of the significant

13

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fluctuation
that has occurred in foreign currency values as compared to the U.S. Dollar, the Company believes that disclosing constant dollar comparisons in certain instances assists in the readers'
understanding of the Company's consolidated financial statements. However, such comparisons may not reflect future changes in currency.

In
this Quarterly Report on Form 10-Q the Company provides certain net sales and balance sheet comparisons which exclude the results of The Hockey Company. Since the Company
acquired The Hockey Company effective June 30, 2004, The Hockey Company results are included in the Reebok Brand results from the acquisition date. The Company believes that disclosing
comparisons excluding the results of The Hockey Company in certain instances assists in the readers' understanding of the Company's consolidated financial statements.

OPERATING RESULTS

First Quarter 2005 Compared to First Quarter 2004

Net sales for the quarter ended March 31, 2005 were $925.0 million, an increase of $93.1 million, or 11.2%, from the quarter ended March 31, 2004
net sales of $831.9 million. On a constant dollar basis, which eliminates the effect of currency exchange fluctuations, net sales for the quarter ended March 31, 2005 increased
$77.7 million, or 9.2%. Worldwide sales of the Reebok Brand were $783.2 million in the first quarter of 2005, an increase of $86.3 million, or 12.4%, from $696.9 million in
the first quarter of 2004.

The
following table provides a reconciliation of net sales for the three months ended March 31, 2005 and 2004, excluding the sales of The Hockey Company:

|              |               | 2005               |   | 2004 
|------------- | ------------- | ------------------ | - | -----
|
|Reebok Brand: |               |                    |   |      
|              | U.S. Footwear |                    | $ | 272.7
|              | U.S. Apparel  |                    |   | 113.6
|              | International |                    |   | 396.9
|              |               |                    |   |      
|              |               | Total Reebok Brand |   | $    
|              |               |                    |   |      
|              |               | Total Company      |   | $    
|              |               |                    |   |      

U.S.
footwear sales of the Reebok Brand increased 4.6% to $272.7 million in the first quarter of 2005 from $260.7 million in the first quarter of 2004. During the quarter, the Company's
full price, fill-in business for U.S. footwear increased and returns, cancellations and off-price close-out business declined as a percentage of sales when compared
to the prior year's first quarter. Also during the first quarter of 2005, footwear and apparel sales in the Company's U.S. outlet stores were flat with the prior year's first quarter on a comparable
store basis, in what the Company believes was a difficult retail environment.

As
part of the Company's strategy to grow quality market share, the Company continues to invest in three key product and marketing platforms: Rbk, Performance, and Classic. The Company believes that
its Rbk product and marketing platform, which was launched three years ago, has successfully introduced Reebok in a younger and fresher way. Many of its new technology products, such as The Pump,
feature the Rbk branding. During the 2005 first quarter, the Company experienced an improvement in the performance of its Allen Iverson basketball products. Iverson is healthy, was the most valuable
player in the NBA All-Star game and led the league in scoring for the 2004-2005 basketball regular season. During the 2005 first quarter, U.S. footwear sales of Rbk products
increased double-digits driven by the strong sell-in of Rbk footwear products endorsed by music icons. The

14

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Company
believes that its strategy to market to younger consumers is working and as a result, U.S. footwear sales of Rbk products increased to about 16% of our U.S. footwear sales in the quarter.

With
regard to the Company's Performance footwear products, it continues to drive its running business through its Premier line of running products. Since the Company launched Premier approximately
two years ago, it believes it has been successful in improving its penetration into running specialty shops around the world. And, it believes that it is successfully executing its strategy to
leverage the authenticity of Premier running products into other running product offerings in order to reach multiple channels of distribution and a broader consumer base with a greater range of price
points. In the first quarter of 2005, U.S. footwear sales of sports performance products increased 8%. During the quarter, U.S. footwear sales of Reebok running products increased 19% over the prior
year's first quarter. The Company's cleated business is also performing well which the Company believes is a result of its relationships with the four major sports leagues in the United States. Sales
of football and baseball cleated product increased approximately 280% in the quarter.

The
Company's third product and marketing platform, Reebok Classic, reported a worldwide constant dollar footwear sales increase of 4.3% in the quarter, although sales of Classic product did decline
slightly in the U.S., consistent with the market trend to more technical product. Overall, the growth of Reebok Classic is being driven by the introduction of new products that are more contemporary
and appeal to a younger consumer. The Company is continuing its product segmentation strategy for Reebok Classic product to ensure that the right product assortment is being offered in the right
retail doors to satisfy our consumers' needs.

U.S.
apparel sales of the Reebok Brand increased by 16.0% to $113.6 million in the first quarter of 2005 from $97.9 million in the first quarter of 2004. Excluding the sales of the
Hockey Company in 2005, sales of U.S. apparel increased by 10.0%. The Company generated double-digit sales increases in both sports licensed and Reebok branded apparel in the first quarter of 2005 as
compared to the first quarter of 2004. The Company's sports licensed products continue to perform well with strong sales increases to athletic specialty retailers, sporting goods dealers and team
shops. During the quarter, sales of both NFL and NBA apparel products increased double digits. The Company is also beginning to experience success in its European region with its NFL licensed
products. All key markets and countries in Europe are now selling NFL licensed products and certain new markets, such as Poland and the Middle East, just recently began selling product. Most of the
sales increases have come from apparel, including women's NFL products, but sales of NFL headwear are also beginning to increase with some key accounts.

International
sales of the Reebok Brand (including footwear and apparel) were $396.9 million in the first quarter of 2005, an increase of 17.3% from sales of $338.3 million in the first
quarter of 2004. The Hockey Company sales represent approximately $15.7 million of the increase. International footwear sales increased 22.1% and international apparel sales increased by 11.2%.
Changes in foreign currency exchange rates have favorably impacted these comparisons. On a constant dollar basis, international sales of the Reebok Brand increased $45.1 million, or 12.8%.
International footwear sales increased approximately 17.4% and international apparel sales increased by approximately 7.0%. Substantially all of the international apparel sales increase is due to the
inclusion of The Hockey Company sales in the 2005 first quarter. On a category basis, the sales improvement came from the Adventure, Classics, Training, Kids, Running, Tennis and Walking categories.
Internationally our Rbk product sales currently represent less than 5% of total footwear sales.

In
constant dollars, sales increased in the Company's Europe, Africa and Mideast region, in countries such as Austria, Belgium, Germany, Holland, Poland, Portugal, Russia, Scandinavia and the U.K.,
whereas sales declined in France, Italy and Spain. In the U.K., during the quarter the Company reported strong sales increases, with a double-digit constant dollar footwear sales increase and a 7%
constant dollar apparel sales increase in the quarter. The Company's Asia Pacific region performed well

15

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in
the quarter with double-digit sales increases in Australia, China, India, Japan and Korea. In Latin America, sales by the Company's independent distributors increased by 25% in the quarter and the
Company again noted strong sales performance in virtually all of the countries in which it operates.

Rockport's
sales for the first quarter of 2005 were $90.0 million, an increase of 3.6% from sales of $86.9 million in the first quarter of 2004. Domestic sales for the Rockport Brand
decreased 1.4%, whereas international sales increased 11.3% as compared to the first quarter of 2004. Currency has favorably impacted these comparisons. On a constant dollar basis, international sales
of the Rockport brand increased 6.4%. International revenues accounted for approximately 42% of Rockport's sales in the first quarter of 2005 as compared to 39% in the first quarter of 2004.

Sales
of the Company's other brands, Ralph Lauren Footwear and The Greg Norman Collection, were $51.8 million in the first quarter of 2005, an increase of 7.7% from sales of
$48.1 million in the first quarter of 2004.

The
Company's overall gross margin was 40.3% of sales during the first quarter of 2005, which is an increase of 10 basis points when compared with the Company's gross margin of 40.2% in the first
quarter of 2004. During the quarter, the Company's footwear margins improved but were partially offset by a decline in its apparel margins. The Company's international margins improved, helped by
favorable currency comparisons that were partially offset by the impact of price adjustments to competitively value the product line at retail and by the impact of closeouts. The gross impact of
currency movements contributed approximately 85 basis points to the consolidated margins in the quarter. However, the net improvement in the international margins had the effect of improving
consolidated margins by only 58 basis points in the quarter.

Selling,
general and administrative expenses for the first quarter of 2005 were $303.9 million, or 32.9% of sales, an increase of $37.8 million when compared to $266.1 million, or
32.0% of sales, for the first quarter of 2004. During the quarter, the Company launched its largest global integrated marketing and advertising campaign in nearly a decade and significantly increased
its overall advertising spend for the Reebok Brand. The "I Am What I Am" marketing campaign celebrates authenticity and individuality and the Company believes that it is both relevant and inspiring
for young consumers. In several key markets in Europe the Company's advertising spending more than tripled. The coordinated launch of the "I Am What I Am" campaign in Europe covered thirteen countries
including the U.K., France, Spain and Italy. As a result of these investments in the quarter, the Company's total Reebok Brand advertising expense increased approximately 40% as compared with 2004's
first quarter.

For
the quarter ended March 31, 2005, other expenses, net, was income of $1.2 million. Included in other expenses, net, is the amortization of finite-lived intangibles, certain currency
gains and losses and other non-operating expenses.

Net
interest expense was $2.7 million for the quarter ended March 31, 2005, a decrease of $0.9 million as compared to the first quarter of 2004. Interest expense increased $0.5
during the first quarter of 2005 and interest income increased $1.4 million for the first quarter of 2005 as compared to the first quarter of 2004. The increase in interest income is due to
increased interest rates.

The
Company's effective income tax rate was 30.08% for the first quarter of 2005 as compared to 30.50% for the first quarter of 2004. The Company expects that its full year 2005 effective income tax
rate will be in the range of 30% to 31%. The estimated 2005 tax rate is based on current tax law and the current expected geographic mix of our earnings. Under current accounting rules, the tax rate
could, and is expected to, fluctuate on a quarterly basis depending on the jurisdictions in which profits are considered to be earned, changes in estimates of credits and deductions, the resolution of
issues arising from tax audits with various taxing authorities and the ability to realize deferred tax assets.

16

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Reebok Brand Backlog of Open Orders

Worldwide backlog of open customer orders (including The Hockey Company) scheduled for delivery during the period April 1, 2005 through September 30, 2005 for the
Reebok Brand increased 4.2% as compared to the same period last year. Backlog in constant dollars is calculated by translating the 2004 backlog at the 2005 foreign exchange rates, thereby eliminating
the effect of currency fluctuations on the comparisons.

Comparisons
regarding orders scheduled for delivery for the period April 1, 2005 through September 30, 2005 for the Reebok Brand are as follows:

As Reported
Percentage Change
2005/2004Reported
Dollars

Constant
DollarsUSA:Footwear

+
4.6
%
+
4.6
%Apparel

+
7.3
%
+
7.3
%Total Domestic

+
5.4
%
+
5.4
%International:Footwear

+
11.4
%
+
5.3
%Apparel

-
6.6
%
-
11.2
%Total International

+
2.6
%
-
2.7
%Total Reebok Brand:Footwear

+
7.0
%
+
4.9
%Apparel

-
0.5
%
-
3.3
%Total Reebok Brand

+
4.2
%
+
1.8
%


The
inclusion of The Hockey Company in the Company's open backlog is favorably affecting comparisons since most of The Hockey Company's open backlog relates to the second quarter of 2005 and the
Company did not acquire The Hockey Company until June 2004. The Company's backlog position is not necessarily indicative of future sales because a significant portion of the Company's business,
including sales by Company-owned retail stores, Rockport, Ralph Lauren Footwear and The Greg Norman Collection are not included in the backlog. In addition, many markets are not included in open
orders since sales are made by independent distributors. Finally, many orders may be cancelled, currency may fluctuate and the ratio of future orders to "at once" shipments may vary from year to year.

Liquidity and Sources of Capital

At March 31, 2005, the Company's working capital was $1.118 billion compared to $1.051 billion at December 31, 2004 and $1.217 billion at
March 31, 2004. The current ratio, a comparison of current assets to current liabilities, was 2.5 to 1 at March 31, 2005 compared to 2.3 to 1 at December 31, 2004 and 3.3 to 1 at
March 31, 2004. The decrease in the current ratio from March 31, 2004 to March 31, 2005 is primarily due to the purchase of The Hockey Company for $197.7 million in cash
(net of cash received) during the second quarter of 2004 and to the increase in the current portion of long term debt of $100.0 million as a result of the Company's 6.75% debentures becoming
payable during 2005.

Accounts
receivable at March 31, 2005 were $707.7 million compared to $564.3 million at March 31, 2004. Inventory at March 31, 2005 were $470.2 million
compared to $408.8 million at March 31, 2004. The increases in inventory and accounts receivable are primarily related to the Company's acquisition of The Hockey Company and to the
effects of currency. Excluding the impact of The Hockey Company and currency, inventory decreased approximately $13.8 million or 3% and accounts receivable increased

17

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approximately
$83.0 million or 15%. Much of the Company's sales growth was in regions where the days sales outstanding in receivables ("DSOs") are longer than the Company's average and, as a
result, the Company's DSOs increased from the prior year's first quarter.

The
following table sets forth a reconciliation between inventory and receivables as of March 31, 2005 and 2004, excluding the effect of currency and The Hockey Company:

March 31,Inventory

2005

2004

Increase/
DecreaseBalance as reported

$
470.2

$
408.8

15.0%Less:Effect of currency


(9.1
)The Hockey Company


(66.1
)$
395.0

$
408.8

-3.4%


March 31,Accounts Receivable

2005

2004

Increase/
DecreaseBalance as reported

$
707.7

$
564.3

25.4
%Less:Effect of currency


(18.2
)The Hockey Company


(42.1
)$
647.4

$
564.3

14.7
%


Cash
used for operations during the first three months of 2005 was $57.4 million, as compared to cash used for operations of $70.1 million during the first three months of 2004. Capital
expenditures for the three months ended March 31, 2005 were $10.5 million and $8.2 million for the first three months of 2004. The capital expenditures are primarily related to
the Company's European regionalization, the rollout of SAP, the enhancement of its sports licensing operations capability, and retail and other facility requirements internationally.

The
Company believes that cash generated from operations, together with the Company's existing credit lines and other financial resources, will adequately finance the Company's planned 2005 cash
requirements. However, the Company's actual experience may differ from the expectations set forth in the preceding sentence. Factors that might lead to a difference include, but are not limited to,
the matters discussed in the Company's Annual Report on Form 10-K under the heading "Issues and Uncertainties," as well as future events that might have the effect of reducing the
Company's available cash balances (such as unexpected operating losses or increased capital or other expenditures, as well as increases in the Company's inventory or accounts receivable), or future
events that might reduce or eliminate the availability of external financial resources.

During
the three months ended March 31, 2005, the Company acquired 40,000 shares of its common stock for $1.8 million. Also, during the three month period ended March 31, 2005,
the Company paid cash dividends in the amount of $0.15 per share, or $9.0 million in the aggregate.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Our market risks, and the ways we manage them, are summarized in management's discussion and analysis of financial condition and results of operations as of December 31,
2004, included in the Company's Form 10-K for the year ended December 31, 2004. There have been no material changes in the first three months of 2005 to such risks or our
management of such risks.

18

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Item 4. Controls and Procedures

19

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PART IIOTHER INFORMATION

Item 1. Legal Proceedings.

The Company is involved in various legal proceedings generally incidental to its business. While it is not feasible to predict or determine the outcome of these proceedings,
management does not believe that they should result in a materially adverse effect on the Company's financial position, results of operations or liquidity.

The
Company has entered into financing agreements, real property and equipment leases which contain tax indemnity provisions. The maximum potential amount of future payments is not determinable since
any amounts potentially owed by the Company would be due to future changes in tax rates or income tax regulations which cannot be predicted.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

|Period                                     |        | Total Number of
Shares Purchased |        | Average Price Paid
Per Share |       | Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs |        | Maximum Dollar Value
that May Yet Be
Purchased Under the
Plans or Programs
(in Thousands)
|------------------------------------------ | ------ | -------------------------------- | ------ | ---------------------------- | ----- | -------------------------------------------------------------------------------- | ------ | -----------------------------------------------------------------------------------------
|January 1, 2005 through January 31, 2005   |        |                                  |        |                              |       |                                                                                  |        |                                                                                          
|February 1, 2005 through February 28, 2005 |        |                                  |        |                              |       |                                                                                  |        |                                                                                          
|March 1, 2005 through March 31, 2005       |        | 40,000                           |        | $                            | 44.11 |                                                                                  | 40,000 |                                                                                          
|                                           |        |                                  |        |                              |       |                                                                                  |        |                                                                                          
|                                           | TOTALS |                                  | 40,000 |                              | $     | 44.11                                                                            |        | 40,000                                                                                   
|                                           |        |                                  |        |                              |       |                                                                                  |        |                                                                                          

In
February 2004 the Company's Board of Directors approved the continuation of the Company's share repurchase programs that had been previously authorized by the Board and authorized the
repurchase of an additional $111.0 million of the Company's common stock in the open market or privately negotiated transactions. This brought the total authorized repurchases remaining under
this program, as of the date of the Board's approval, to approximately $150.0 million. During the three months ended March 31, 2005, the Company acquired 40,000 shares of its common
stock for approximately $1.8 million. As of March 31, 2005, the Company had approximately $65.8 million available for future repurchases of its common stock under these Board
authorized programs.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None.

Item 6. Exhibits

None.

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Other
Exhibits & Certifications

21

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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.

|Date: May 3, 2005 |  |                           |  |                                                                                             
|----------------- |  | ------------------------- |  | --------------------------------------------------------------------------------------------
|                  |  | REEBOK INTERNATIONAL LTD.
|                  |  | BY:                       |  | /s/KENNETH WATCHMAKERKenneth Watchmaker
Executive Vice President and
Chief Financial Officer

22

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