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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|ý                                             | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|--------------------------------------------- | ----------------------------------------------------------------------------------------
|For the quarterly period ended March 31, 2004
|OR                                           
|o                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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Commission
file number1-9340

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 May 3, 2004 was 59,965,309.



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REEBOK INTERNATIONAL LTD.

INDEX



|PART I. FINANCIAL INFORMATION: |  |                                                                                            
|------------------------------ |  | -------------------------------------------------------------------------------------------
|Item 1.                        |  | Financial Statements (Unaudited)                                                           
|                               |  | Condensed Consolidated Balance Sheets
March 31, 2004 and 2003                             
|                               |  | Condensed Consolidated Statements of Income
Three Months Ended March 31, 2004 and 2003    
|                               |  | Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 2004 and 2003
|                               |  | Notes to Condensed Consolidated Financial Statements                                       
|Item 2.                        |  | Management's Discussion and Analysis of Results of Operations and Financial Condition      
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                 
|Item 4.                        |  | Controls and Procedures                                                                    
|Part II. OTHER INFORMATION:    |  |                                                                                            
|Item 1.                        |  | Legal Proceedings                                                                          
|Item 2.                        |  | Changes in 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 and Current Reports on Form 8-K                                                   

2

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PART IFINANCIAL INFORMATION

Item 1. Financial Statements.

Reebok International Ltd.        Condensed Consolidated Balance Sheets

|                                                                                                                                        |                                                                                                                              | March 31,                 |           |           |          
|--------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | ------------------------- | --------- | --------- | ---------
|
|
|
|
|Assets                                                                                                                                  |                                                                                                                              |                           |           |           |          
|Current assets:                                                                                                                         |                                                                                                                              |                           |           |           |          
|                                                                                                                                        | Cash and cash equivalents                                                                                                    |                           | $         | 614,872   |          
|                                                                                                                                        | Accounts receivable, net of allowance for doubtful accounts (March 2004, $72,951
March 2003, $60,706
December 2003, $70,823) |                           |           | 564,301   |          
|                                                                                                                                        | Inventory                                                                                                                    |                           |           | 408,781   |          
|                                                                                                                                        | Deferred income taxes                                                                                                        |                           |           | 98,483    |          
|                                                                                                                                        | Prepaid expenses and other current assets                                                                                    |                           |           | 56,008    |          
|                                                                                                                                        |                                                                                                                              |                           |           |           |          
|                                                                                                                                        |                                                                                                                              | Total current assets      |           |           | 1,742,445
|                                                                                                                                        |                                                                                                                              |                           |           |           |          
|Property and equipment, net                                                                                                             |                                                                                                                              |                           | 149,562   |           |          
|Other non-current assets:                                                                                                               |                                                                                                                              |                           |           |           |          
|                                                                                                                                        | Goodwill, net                                                                                                                |                           |           | 24,690    |          
|                                                                                                                                        | Intangibles, net of amortization                                                                                             |                           |           | 41,696    |          
|                                                                                                                                        | Deferred income taxes                                                                                                        |                           |           | 20,581    |          
|                                                                                                                                        | Other                                                                                                                        |                           |           | 25,166    |          
|                                                                                                                                        |                                                                                                                              |                           |           |           |          
|                                                                                                                                        |                                                                                                                              | Total Assets              |           | $         | 2,004,140
|                                                                                                                                        |                                                                                                                              |                           |           |           |          
|Liabilities and Stockholders' Equity                                                                                                    |                                                                                                                              |                           |           |           |          
|Current liabilities:                                                                                                                    |                                                                                                                              |                           |           |           |          
|                                                                                                                                        | Notes payable to banks                                                                                                       |                           | $         | 17,338    |          
|                                                                                                                                        | Current portion of long-term debt                                                                                            |                           |           | 161       |          
|                                                                                                                                        | Accounts payable                                                                                                             |                           |           | 137,123   |          
|                                                                                                                                        | Accrued expenses                                                                                                             |                           |           | 333,035   |          
|                                                                                                                                        | Income taxes payable                                                                                                         |                           |           | 37,364    |          
|                                                                                                                                        |                                                                                                                              |                           |           |           |          
|                                                                                                                                        |                                                                                                                              | Total current liabilities |           |           | 525,021  
|                                                                                                                                        |                                                                                                                              |                           |           |           |          
|Long-term debt, net of current portion                                                                                                  |                                                                                                                              |                           | 353,017   |           |          
|Minority interest and other long-term liabilities                                                                                       |                                                                                                                              |                           | 43,882    |           |          
|Commitments and contingencies                                                                                                           |                                                                                                                              |                           |           |           |          
|Stockholders' equity:                                                                                                                   |                                                                                                                              |                           |           |           |          
|Common stock, par value $.01; authorized 250,000 shares; issued shares: March 2004, 101,441;
March 2003, 99,771; December 2003, 101,081 |                                                                                                                              |                           | 1,014     |           |          
|Retained earnings                                                                                                                       |                                                                                                                              |                           | 1,838,860 |           |          
|                                                                                                                                        | Less shares in treasury at cost: March 2004, 41,511; March 2003, 40,072; December 2003, 41,473                               |                           |           | (741,683  | )        
|Unearned compensation                                                                                                                   |                                                                                                                              |                           | (991      | )         |          
|Accumulated other comprehensive loss                                                                                                    |                                                                                                                              |                           | (14,980   | )         |          
|                                                                                                                                        |                                                                                                                              |                           |           |           |          
|                                                                                                                                        | Total Stockholders' Equity                                                                                                   |                           |           | 1,082,220 |          
|                                                                                                                                        |                                                                                                                              |                           |           |           |          
|Total Liabilities and Stockholders' Equity                                                                                              |                                                                                                                              | $                         | 2,004,140 |           | $        
|                                                                                                                                        |                                                                                                                              |                           |           |           |          

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)

|                                                 |                                              | 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)

|                                                                               |                                                      | Three Months Ended
March 31, |        
|------------------------------------------------------------------------------ | ---------------------------------------------------- | ---------------------------- | -------
|
|
|Cash flows from operating activities:                                          |                                                      |                              |        
|Net income                                                                     |                                                      | $                            | 41,104 
|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:                                   |                                                      |                              |        
|                                                                               | Accounts receivable                                  |                              |        
|                                                                               | Inventory                                            |                              |        
|                                                                               | Prepaid expenses and other                           |                              |        
|                                                                               | Accounts payable and accrued expenses                |                              |        
|                                                                               | Dividends to minority shareholders                   |                              |        
|                                                                               | Income taxes payable                                 |                              |        
|                                                                               |                                                      |                              |        
|                                                                               |                                                      | Total adjustments            |        
|                                                                               |                                                      |                              |        
|Net cash used for operating activities:                                        |                                                      |                              | (70,090
|                                                                               |                                                      |                              |        
|Cash flows used for investing activities:                                      |                                                      |                              |        
|                                                                               | Payments to acquire property and equipment           |                              |        
|                                                                               |                                                      |                              |        
|Net cash used for investing activities                                         |                                                      |                              | (8,163 
|                                                                               |                                                      |                              |        
|Cash flows (used for) provided by financing activities:                        |                                                      |                              |        
|                                                                               | Net borrowings of notes payable to banks             |                              |        
|                                                                               | Re-payments of long-term debt                        |                              |        
|                                                                               | Proceeds from issuance of common stock to employees  |                              |        
|                                                                               | Dividends paid                                       |                              |        
|                                                                               | Repurchase of common stock                           |                              |        
|                                                                               |                                                      |                              |        
|                                                                               | Net cash (used for) provided by financing activities |                              |        
|                                                                               |                                                      |                              |        
|Effect of exchange rate changes on cash and cash equivalents                   |                                                      |                              | (7,680 
|                                                                               |                                                      |                              |        
|Net decrease in cash and cash equivalents                                      |                                                      |                              | (78,727
|Cash and cash equivalents at beginning of period                               |                                                      |                              | 693,599
|                                                                               |                                                      |                              |        
|Cash and cash equivalents at end of period                                     |                                                      | $                            | 614,872
|                                                                               |                                                      |                              |        
|Supplemental disclosures of cash flow information:                             |                                                      |                              |        
|                                                                               | Interest paid                                        |                              | $      
|                                                                               | Income taxes paid                                    |                              |        

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

5

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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, 2004 are not necessarily indicative of results to be expected for the entire year.

The
balance sheet at December 31, 2003 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, 2003.

Accounting for Stock-Based Compensation

At March 31, 2004, 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."

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 31,2004

2003Net income

$
41,104

$
40,835Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effect


1,413


2,317Pro forma net income

$
39,691

$
38,518Basic earnings per share:As reported

$
.69

$
.68Pro forma

$
.68

$
.66Diluted earnings per share:As reported

$
.63

$
.63Pro forma

$
.62

$
.61


6

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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 31,2004

2003Risk-free interest rates

2.8%

2.5%Dividend yields

0.8%

0.0%Volatility factors of the expected market price of the Company's common stock

.33

.52Weighted-average expected life of the option

3.5 years

3.5 years


Net
income, as reported, included $233 and $242 of restricted stock based compensation expense for the three months ended March 31, 2004 and 2003, respectively.

Reclassification

Certain amounts in prior periods have been reclassified to conform to the 2004 presentation. These reclassifications had no impact on previously reported results
of operations or stockholders' equity.

2  SPECIAL CHARGES

Details of the special charge activity during the three months ended March 31, 2004 are as follows:

Total

Employee
Severance
and Other

Marketing
ContractsBalance, December 31, 2003

$
11,053

$
3,653

$
7,4002004 Utilization


(400
)




(400
)Balance, March 31, 2004

$
10,653

$
3,653

$
7,000


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 $5,400, is included in accrued expenses with the balance of $5,253 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 and warrants to acquire common stock were exercised and assumes the conversion of the 4.25% 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,
|------------------------------------------------------------- | -------------------------------------------------- | ----------------------------
|
|Numerator for basic earnings per share:                       |                                                    |                             
|Net income                                                    |                                                    | $                           
|Numerator for diluted earnings per share:                     |                                                    |                             
|Net income                                                    |                                                    | $                           
|Interest on 4.25% convertible debentures, net of income taxes |                                                    |                             
|                                                              |                                                    |                             
|Net income                                                    |                                                    | $                           
|                                                              |                                                    |                             
|Denominator for basic earnings per share:                     |                                                    |                             
|Weighted average shares                                       |                                                    |                             
|                                                              |                                                    |                             
|Denominator for diluted earnings per share:                   |                                                    |                             
|Weighted average shares                                       |                                                    |                             
|Effect of dilutive securities:                                |                                                    |                             
|                                                              | Dilutive employee stock options and warrants       |                             
|                                                              | Assumed conversion of 4.25% convertible debentures |                             
|                                                              |                                                    |                             
|                                                              |                                                    |                             
|                                                              |                                                    |                             
|Basic earnings per share                                      |                                                    | $                           
|                                                              |                                                    |                             
|Diluted earnings per share                                    |                                                    | $                           
|                                                              |                                                    |                             

4  COMPREHENSIVE INCOME

The following table sets forth the computation of comprehensive income:

|                                                                 |  | Three Months Ended
March 31,
|---------------------------------------------------------------- |  | ----------------------------
|
|Net income                                                       |  | $                           
|Changes in foreign currency translation adjustments              |  |                             
|Net change due to hedging instruments in accordance with FAS 133 |  |                             
|                                                                 |  |                             
|Comprehensive income                                             |  | $                           
|                                                                 |  |                             

8

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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.

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, 2004, the Company acquired 37,700 shares of treasury stock for approximately $1.5 million. As of March 31, 2004, the Company
had approximately $148.7 million available for future repurchases of its common stock under these Board authorized programs.

7  SUBSEQUENT EVENTS

On April 7, 2004, the Company entered into a Support Agreement with The Hockey Company Holdings Inc. ("Holdings"), and a Lock-up
Agreement with certain shareholders of Holdings and its subsidiary, The Hockey Company ("THC"), with respect to the Company's intended purchase of the outstanding common shares of Holdings. On
April 22, 2004, pursuant to these agreements, the Company commenced a tender offer to purchase all of the issued and outstanding common shares of Holdings for Canadian $21.25 per share in cash.
This transaction is subject to certain conditions, including the receipt of all necessary government approvals and satisfaction of a minimum tender condition. The equity value of the proposed
transaction is approximately U.S. $204.0 million (based on exchange rates as of April 8, 2004), plus the assumption of U.S. $125.0 million of debt. Holdings is a leading supplier
of hockey apparel and equipment and, pursuant to a long-term license with the National Hockey League, is the exclusive supplier of authentic, replica and practice jerseys using NHL names
and logos, including the authentic "on-ice" game jerseys for all 30 NHL teams.

On
April 30, 2004 the Company sold $350.0 million of its 20-year convertible debentures in the 144A private placement market. The convertible debentures are
senior unsecured obligations of the Company and are convertible into the Company's common stock under certain circumstances at a conversion rate of $51.26, subject to certain adjustments.

The
convertible debentures bear regular interest at an annual rate of 2.0%. Regular interest is payable in cash semi-annually through May 1, 2009, and thereafter will
accrue and be due and payable only upon the earlier to occur of redemption, repurchase or final maturity. As a result of the restricted convertibility feature of the debentures, the common stock
issuable upon conversion of the debentures will not be included in the Company's fully diluted shares until the occurrence of certain events.

Also,
beginning May 1, 2009, the Company may redeem all or some of the $350.0 million convertible debentures at par plus accrued and unpaid interest, if any, to the
redemption date. In addition, holders of the convertible debentures may require the Company to purchase the convertible debentures on May 1, 2009, 2014 and 2019 at par plus accrued and unpaid
interest, if any, to the redemption date.

9

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The
Company intends to use the net proceeds from this offering for general corporate purposes, which may include refinancing existing indebtedness (including the outstanding 4.25%
convertible debentures
due 2021), repurchasing shares of its common stock, financing acquisitions (including its proposed acquisition of The Hockey Company Holdings Inc.) and other general corporate purposes.

On
April 30, 2004, the Company issued a formal notice of redemption to redeem on May 17, 2004 the $250.0 million outstanding principal amount of its 4.25%
convertible debentures due 2021. The redemption price on May 17, 2004 is equal to 102.125% of the principal amount of the convertible debentures, together with accrued and unpaid interest, if
any, up to but not including the redemption date. Holders can either elect to convert their convertible debentures into shares of the Company's common stock or receive the redemption price in cash. If
holders receive the redemption price in cash, the Company will fund the redemption with cash on hand.

10

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

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 sports leagues and other brands the Company licenses; 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, 2003, which has been filed with the Securities and Exchange Commission. In addition, 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 backlog position is not necessarily indicative of future sales
because the ratio of future orders to "at once" shipments as well as sales by Company-owned retail outlet stores may vary from year to year. In addition, currencies may fluctuate, many customer orders
are cancelable and many markets are not included in open orders since sales are made by independent distributors. Accordingly, investors should not place undue reliance on forward-looking statements
as a prediction of actual results.

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, 2003. 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

11

---



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 accounts
receivable, the carrying value of inventories, hedging policies, 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. In the past, actual results have not been materially different from the Company's estimates. However, results may differ from these estimates under different assumptions or conditions.

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.
Historically, losses have been within the Company's expectations. If the financial condition of the Company's customers was to change, adjustments may be required to these estimates. 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. If the Company determined that increases or decreases to the allowance for doubtful accounts was appropriate, the
Company would record an adjustment to reduce or increase selling, general and administrative expense and net income in the period in which the Company made such a determination.

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 decrease or increase the Company's cost of sales and net income in the period in which they were recorded.

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

12

---



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.

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 in the net carrying
value of the deferred tax assets resulting in additional income tax expense in the Company's consolidated statement of income. Management evaluates the realizability of the deferred tax assets and
assesses the need for any valuation adjustment quarterly.

CONSTANT DOLLAR COMPARISONS

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 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.

OPERATING RESULTS

First Quarter 2004 Compared to First Quarter 2003

Net sales for the quarter ended March 31, 2004, were $831.9 million, an increase of $33.6 million, or 4.2%, from the quarter ended
March 31, 2003 net sales of $798.3 million. On a constant dollar basis, which eliminates the effect of currency exchange fluctuations, net sales for the quarter ended March 31,
2004, decreased $5.6 million, or 0.7%. Worldwide sales of the Reebok Brand were $696.9 million in the first quarter of 2004, an increase of $33.0 million, or 5.0%, from
$663.9 million in the first quarter of 2003. On a constant dollar basis, worldwide sales of the Reebok Brand decreased $3.1 million or 0.4%.

U.S.
footwear sales of the Reebok Brand increased 1.6% to $260.7 million in the first quarter of 2004 from $256.7 million in the first quarter of 2003. U.S. footwear
revenues were adversely impacted by one of the Company's major customers, Footstar, which filed bankruptcy on March 2, 2004. The uncertainties about the financial condition of Footstar and its
ultimate bankruptcy filing impacted the flow of product during the quarter. During the quarter, sales of Reebok footwear in the U.S. to the athletic specialty, sporting goods and better department
store channels of distribution increased. As a result, nearly two-thirds of the Company's U.S. footwear business is now through these important channels of distribution. The Company
believes that driving much of this improvement in the shape of its U.S. footwear business is the successful performance at retail of its new Rbk footwear products, that are endorsed by popular music
performers, which has helped to improve the Company's performance in the athletic specialty channel. While the Company works to expand Rbk throughout the U.S., another strategic priority during 2004
is to further strengthen its performance product positioning. In the performance product area, the Company believes that it has strengthened its positioning by continuing to market and sell its
running business through its Premier Series Collection of running products. As a

13

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result
of the successful launch of Reebok's Premier series, the Company believes it is gaining shelf space in the U.S. running specialty channel of distribution. During the quarter, U.S. sales of
footwear running products experienced strong increases. Also during the first quarter of 2004, sales of the Company's Classic footwear products in the U.S. increased by 25%. The Company believes its
Classic product strategy has been successful in targeting various lifestyles of consumers with several distinct Classic product collections. Several of these products are aimed at a younger, more
fashion conscious consumer, however, its more traditional Classic original are also performing well at retail. Also during the quarter, U.S. sales of kids products increased by 18%. The kids category
has an improved product assortment that balances adaptations of adult Rbk, Performance and Classic products, along with kids specific products at key volume price points. Partially offsetting these
increases was a decrease in sales of basketball and walking products.

U.S.
apparel sales of the Reebok Brand increased in the first quarter of 2004 by 9.4% to $97.9 million from $89.5 million in the first quarter of 2003. The sales increase
came from a strong double-digit increase in the Company's sports licensed apparel business. The Company's sports licensing products continue to perform well with strong retail
sell-throughs at sporting goods stores, team shops and specialty licensed accounts. The increase in sales of sports licensed apparel was partially offset by the decline in branded apparel
sales which is in line with the Company's previously announced strategy to reposition this business for future growth beginning in 2005. The Company believes the branded apparel market will continue
to be difficult for the remainder of 2004.

On
April 8, 2004, the Company announced its plans to acquire all of the outstanding shares of Montreal-based The Hockey Company Holdings Inc. The Company believes that the
acquisition of The Hockey Company and its portfolio of hockey brand names, including CCM, JOFA and KOHO, is an excellent strategic fit for the Company. The Hockey Company has a ten-year
licensing deal with the National Hockey League beginning with the 2004 season. In addition it has long-term deals with the Canadian Hockey League and the American Hockey League. The
Company believes that it can leverage its current infrastructure and expertise in assisting The Hockey Company to design, develop, source, market and sell its licensed apparel.

Furthermore,
this planned acquisition brings Reebok into the sports equipment market. The Hockey Company's primary brands, CCM, JOFA and KOHO are among the most highly recognized and
respected performance brands in the world of hockey. The Company believes that this acquisition gives it an excellent opportunity to leverage these brands and The Hockey Company's expertise into the
equipment business. With this acquisition, the Company becomes a major player in a global sport in which it currently has no presence.

International
sales of the Reebok Brand (including footwear and apparel) were $338.3 million in the first quarter of 2004, an increase of 6.5% from sales of $317.7 million
in the first quarter of 2003. International footwear sales increased 7.2% and international apparel sales increased by 5.6%. Changes in foreign currency exchange rates have favorably impacted these
comparisons. On a constant dollar basis, international sales of the Reebok Brand decreased $15.5 million, or 4.4%, international footwear sales decreased approximately 3.2% and international
apparel sales decreased by approximately 5.9%. In constant dollars, sales increased in many European countries including Austria, Germany, Greece, Holland, Switzerland and Poland, whereas sales
declined in the U.K., France and Italy. For the quarter, in constant dollars, international sales increased in the adventure, basketball, running and soccer categories.

Rockport's
first quarter 2004 sales were $86.9 million, a decrease of 4.2% from sales of $90.7 million in the first quarter of 2003. Domestic sales for the Rockport Brand
decreased 14.6%, whereas international sales increased 18.6% as compared to the first quarter of 2003. Currency has favorably impacted these comparisons. On a constant dollar basis, international
sales of the Rockport Brand increased 7.8%. International revenues accounted for approximately 39% of Rockport's sales in

14

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the
first quarter of 2004 as compared to 31% in the first quarter of 2003. During the quarter, Rockport's U.S. department store business increased approximately 8%, however, sales to the volume
channel of distribution declined. Rockport plans to introduce a new collection of products that is specifically designed and engineered for this channel of distribution in the third quarter of 2004.

Sales
of the Company's other brands, Ralph Lauren Footwear and The Greg Norman Collection, were $48.1 million in the first quarter of 2004, an increase of 10.1% from sales of
$43.7 million in the first quarter of 2003.

During
the first quarter of 2004, the Company's overall gross margin was 40.2% of sales, an improvement of 210 basis points when compared with the Company's gross margin of 38.1% in the
first quarter of 2003. During the first quarter of 2004 the Company's gross margins in both its U.S. footwear and apparel business have improved. The Company's gross margin during the quarter also
benefited from the strengthening of exchange rates in many of its international markets. The improvement in the Company's international margins had the effect of improving its overall operating
margins by approximately 100 basis points.

Selling,
general and administrative expenses for the first quarter of 2004 were $266.1 million, or 32.0% of sales, an increase of $29.8 million when compared with the first
quarter of 2003 selling, general and administrative expenses of $236.3 million, or 29.6% of sales. Approximately $10.1 million of this increase is due to the impact of currency and
$14.4 million is due to increased advertising and marketing expenses. The balance is due to an increase in the Company's selling and product design and development expenses. The Company
continues to invest in brand-building initiatives that it believes are necessary for the long-term success of its brands. These initiatives include the signing of Yao Ming and Sonny
Vaccaro, European regionalization, investments in infrastructure improvements to its supply chain and increased advertising and marketing expenses.

For
the quarter ended March 31, 2004, other expenses, net, was $1.9 million compared to $1.6 million in the first quarter of 2003. Included in other expenses, net,
are the amortization of finite-lived intangibles, certain currency losses and other non-operating expenses.

Net
interest expense was $3.5 million for the quarter ended March 31, 2004, a decrease of $1.0 million as compared to the first quarter of 2003. During the first
quarter of 2004, interest expense was $6.2 million which is comparable to interest expense of $6.5 million in the first quarter of 2003. Interest income was
$2.6 million, an increase of $0.7 million from the first quarter of 2003. The increase in interest income resulted from higher interest income earned on cash and cash equivalants due to
higher cash balances.

The
Company's effective income tax rate was 30.5% in the first quarter of 2004 as compared to 30.4% in the first quarter of 2003. The increase is a result of improved earnings in the
U.S. Based on current estimates, the Company expects that the full year 2004 effective income tax rate will approximate 30.5%. However, the actual effective tax rate could fluctuate depending on the
level and geographic mix of the Company's earnings and if there are changes in statutory rates.

Reebok Brand Backlog of Open Orders

Worldwide backlog of open customer orders scheduled for delivery during the period April 1, 2004 through September 30, 2004 for the Reebok Brand
increased 5.4% as compared to the same period last year. Backlog in constant dollars is calculated by translating the 2003 backlog at the 2004 foreign exchange rates, thereby eliminating the effect of
currency fluctuations on the comparisons.

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Comparisons
regarding orders scheduled for delivery for the period April 1, 2004 through September 30, 2004 are as follows for the Reebok Brand:

Percentage Change
2004/2003Reported
Dollars

Constant
DollarsU.S.A.:Footwear

+9.1
%
+9.1
%Apparel

-8.0
%
-8.0
%Total Domestic

+3.6
%
+3.6
%International:Footwear

+4.7
%
-7.7
%Apparel

+11.7
%
-2.7
%Total International

+8.0
%
-5.3
%Total Reebok Brand:Footwear

+7.5
%
+2.6
%Apparel

+2.1
%
-5.1
%Total Reebok Brand

+5.4
%
-0.4
%


These
backlog comparisons are not necessarily indicative of future sales trends. Many customer orders are cancelable with little or no penalty, currencies may fluctuate, sales by
Company-owned retail outlet stores are not included in the backlog and can vary from year-to-year, many markets in Latin America and Asia Pacific are not included in the
backlog because sales are made by independent distributors, and the ratio of orders booked early to at-once shipments can vary from period to period.

Liquidity and Sources of Capital

At March 31, 2004, the Company's working capital was $1.217 billion as compared with $1.161 billion at December 31, 2003, and
$1.067 billion at March 31, 2003. The current ratio at March 31, 2004 was 3.3 to 1, as compared to 3.1 to 1 at both December 31, 2003 and March 31, 2003.

Inventory
at March 31, 2004 decreased by $8.7 million, or 2.1%, from March 31, 2003. Currency fluctuations have impacted these comparisons. On a constant dollar
basis, inventories declined approximately $31.9 million. The decrease was both domestically and internationally and occurred in
both footwear and apparel. Inventory turns in the first quarter of 2004 were 4.7 times, as compared to 4.3 times during the first quarter of 2003. Accounts receivable at March 31, 2004
increased approximately 5% from March 31, 2003, which is in line with the Company's sales increase.

Cash
used for operations during the first quarter of 2004 was $70.1 million as compared to $151.3 million during the first quarter of 2003. Capital expenditures for the
quarter ended March 31, 2004 were $8.2 million as compared to $7.5 million during the same period of 2003. During 2004, capital expenditures are expected to be in the range of
$70.0 to $80.0 million.

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On April 30, 2004 the Company sold $350.0 million of 2.0% of convertible debentures due May 1, 2024. The Company intends to use the net proceeds from this offering
for general corporate purposes, which may include refinancing existing indebtedness (including the outstanding 4.25% convertible debentures due 2021), repurchasing shares of its common stock,
financing acquisitions (including its proposed acquisition of The Hockey Company Holdings Inc.) and other general corporate purposes.

On
April 30, 2004, the Company issued a formal notice of redemption to redeem on May 17, 2004 the $250.0 million outstanding principal amount of its 4.25%
convertible debentures due 2021. The redemption price on May 17, 2004 is equal to 102.125% of the principal amount of the convertible debentures, together with accrued and unpaid interest, if
any, up to but not including the redemption date. Holders can either elect to convert their convertible debentures into shares of the Company's common stock or receive the redemption price in cash. If
holders receive the redemption price in cash, the Company will fund the redemption with cash on hand.

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
2004 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 quarter ended March 31, 2004, the Company acquired 37,700 shares of treasury stock for $1.5 million. The acquisition of the shares was in accordance with the
Company's previously announced intention to utilize share buybacks to partially offset the dilutive effect of outstanding stock options. The Company acquired fewer shares during the first quarter than
originally planned due to the Company's ongoing discussions with The Hockey Company, which prevented the Company from trading in its own securities during much of the first quarter of 2004.

Also
during the first quarter of 2004 the Company's Board of Directors declared a semi-annual cash dividend in the amount of $0.15 per share, or $9.0 million, which
was paid on March 19, 2004, to shareholders of record as of March 5, 2004.

OFF BALANCE SHEET ARRANGEMENTS

The Company occupies its Canton, Massachusetts headquarters under an operating lease entered into in 1998. During the quarter, the Company finalized an amendment
to the lease under which the initial term was extended for an additional five years, with two five-year renewal options. Under the amendment to the lease, the Company has also leased from
the lessor a property adjacent to the Company's headquarters, the acquisition of which by the lessor was financed by the lease. As a result of the lease renewal, the Company recorded a
long-term asset and an offsetting long-term liability of $1.8 million related to the fair value of the residual value guarantee related to this lease. For further
information regarding the Company's off balance sheet arrangements, 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, 2003.

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LONG-TERM COMMITMENTS

After revising for the lease renewal which was finalized in the quarter, the Company's contractual obligations for long-term leases is as follows:

|                 |  | Payments Due by Period
|---------------- |  | ----------------------
|
|Operating Leases |  | 215.8                 

For
further details regarding the Company's contractual obligations for long-term debt, leases and endorsement contracts, 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, 2003.

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, 2003, included in the Company's Form 10-K for the year ended December 31, 2003. There have been no material changes in the first three months of 2004 to
such risks or our management of such risks.

Item 4. Controls and Procedures



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PART IIOTHER INFORMATION

Item 1: Legal Proceedings.

None.

Item 2: Changes in 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
|------------------------------------------ |  | -------------------------------- |  | ---------------------------- | ----- | -------------------------------------------------------------------------------- | ------ | --------------------------------------------------------------------------
|January 1, 2004
through
January 31, 2004   |  | 37,700                           |  | $                            | 39.61 |                                                                                  | 37,700 |                                                                           
|February 1, 2004
through
February 29, 2004 |  |                                  |  |                              |       |                                                                                  |        |                                                                           
|March 1, 2004
through
March 31, 2004       |  |                                  |  |                              |       |                                                                                  |        |                                                                           
|                                           |  |                                  |  |                              |       |                                                                                  |        |                                                                           
|TOTALS                                     |  | 37,700                           |  | $                            | 39.61 |                                                                                  | 37,700 |                                                                           
|                                           |  |                                  |  |                              |       |                                                                                  |        |                                                                           

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, 2004, the Company acquired 37,700 shares of treasury stock for approximately $1.5 million. As of March 31, 2004, the Company had approximately
$148.7 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.

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Item 6: Exhibits and Reports on Form 8-K.

|10.1 |  | Amended and Restated Participation Agreement dated as of March 19, 2004 among the Company, as Lessor and Guarantor; Credit Suisse Leasing 92A, L.P., as Lessor; the Lendors named therein; Credit Suisse First
Boston, as Administrative Agent; Fleet National Bank and Scotiabanc Inc., as Co-Documentation Agents; and Wachovia Bank, National Association and BNP Paribas Leasing Corporation, as Co-Syndication Agents.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.2 |  | Amended and Restated Lease dated as of March 19, 2004 between Credit Suisse Leasing 92A, L.P., as Lessor, and the Company, as Lessee.                                                                                                                                                                                                                                                                                      
|10.3 |  | Amended and Restated Guaranty from the Company dated as of March 19, 2004.                                                                                                                                                                                                                                                                                                                                                 
|10.4 |  | Indenture dated as of April 30, 2004 between the Company and U.S. Bank National Association as Trustee.                                                                                                                                                                                                                                                                                                                    
|10.5 |  | Registration Rights Agreement dated as of April 30, 2004 among the Company and Credit Suisse First Boston, LLC, BNP Paribas Securities Corp., and Banco IMI SpA, as Initial Purchasers.                                                                                                                                                                                                                                    
|31.1 |  | Certification of Paul Fireman, Chairman and Chief Executive Officer, dated May 10, 2004, and made pursuant to Rule 13a-14(a) and 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.                                                                                                                                                                                   
|31.2 |  | Certification of Kenneth Watchmaker, Executive Vice President and Chief Financial Officer, dated May 10, 2004, and made pursuant to Rule 13a-14(a) and 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                             
|32.1 |  | Certification of Paul Fireman, Chairman and Chief Executive Officer, dated as of May 10, 2004, and made pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.                                                                                                                                                                        
|32.2 |  | Certification of Kenneth Watchmaker, Executive Vice President and Chief Financial Officer, dated as of May 10, 2004, and made pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.                                                                                                                                                  

The
Company furnished a Current Report on Form 8-K with the Commission on January 28, 2004. The Company furnished its preliminary financial results for the
quarter and fiscal year ended December 31, 2004 pursuant to Item 12 of Form 8-K, "Results of Operations and Financial Condition," and in accordance with SEC Release
No. 33-8216.

20

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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 10, 2004 |  |                           |  |                                                                                             
|------------------ |  | ------------------------- |  | --------------------------------------------------------------------------------------------
|                   |  | REEBOK INTERNATIONAL LTD.
|                   |  | BY:                       |  | /s/KENNETH WATCHMAKERKenneth Watchmaker
Executive Vice President and Chief Financial Officer

21

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