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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 June 30, 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 August 1, 2004 was 59,147,498.



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REEBOK INTERNATIONAL LTD.

INDEX



|PART I. FINANCIAL INFORMATION: |  |                                                                                               
|------------------------------ |  | ----------------------------------------------------------------------------------------------
|Item 1.                        |  | Financial Statements (Unaudited)                                                              
|                               |  | Condensed Consolidated Balance Sheets
June 30, 2004 and 2003                                 
|                               |  | Condensed Consolidated Statements of Income
Three and Six Months Ended June 30, 2004 and 2003
|                               |  | Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 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

|                                                                                                                                      |                                                                                                                             | June 30,                  |           |           |          
|------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | ------------------------- | --------- | --------- | ---------
|
|
|
|
|Assets                                                                                                                                |                                                                                                                             |                           |           |           |          
|Current assets:                                                                                                                       |                                                                                                                             |                           |           |           |          
|                                                                                                                                      | Cash and cash equivalents                                                                                                   |                           | $         | 501,377   |          
|                                                                                                                                      | Accounts receivable, net of allowance for doubtful accounts (June 2004, $76,579 June 2003, $66,406, December 2003, $70,823) |                           |           | 623,264   |          
|                                                                                                                                      | Inventory                                                                                                                   |                           |           | 539,392   |          
|                                                                                                                                      | Deferred income taxes                                                                                                       |                           |           | 116,697   |          
|                                                                                                                                      | Prepaid expenses and other current assets                                                                                   |                           |           | 64,640    |          
|                                                                                                                                      |                                                                                                                             |                           |           |           |          
|                                                                                                                                      |                                                                                                                             | Total current assets      |           |           | 1,845,370
|                                                                                                                                      |                                                                                                                             |                           |           |           |          
|Property and equipment, net                                                                                                           |                                                                                                                             |                           | 160,542   |           |          
|Other non-current assets:                                                                                                             |                                                                                                                             |                           |           |           |          
|                                                                                                                                      | Goodwill, net                                                                                                               |                           |           | 82,817    |          
|                                                                                                                                      | Intangibles, net of amortization                                                                                            |                           |           | 199,881   |          
|                                                                                                                                      | Deferred income taxes                                                                                                       |                           |           | 19,511    |          
|                                                                                                                                      | Other                                                                                                                       |                           |           | 29,736    |          
|                                                                                                                                      |                                                                                                                             |                           |           |           |          
|                                                                                                                                      |                                                                                                                             | Total Assets              |           | $         | 2,337,857
|                                                                                                                                      |                                                                                                                             |                           |           |           |          
|Liabilities and Stockholders' Equity                                                                                                  |                                                                                                                             |                           |           |           |          
|Current liabilities:                                                                                                                  |                                                                                                                             |                           |           |           |          
|                                                                                                                                      | Notes payable to banks                                                                                                      |                           | $         | 15,772    |          
|                                                                                                                                      | Current portion of long-term debt                                                                                           |                           |           | 152,907   |          
|                                                                                                                                      | Accounts payable                                                                                                            |                           |           | 183,257   |          
|                                                                                                                                      | Accrued expenses                                                                                                            |                           |           | 359,955   |          
|                                                                                                                                      | Income taxes payable                                                                                                        |                           |           | 39,834    |          
|                                                                                                                                      |                                                                                                                             |                           |           |           |          
|                                                                                                                                      |                                                                                                                             | Total current liabilities |           |           | 751,725  
|                                                                                                                                      |                                                                                                                             |                           |           |           |          
|Long-term debt, net of current portion                                                                                                |                                                                                                                             |                           | 452,880   |           |          
|Minority interest and other long-term liabilities                                                                                     |                                                                                                                             |                           | 35,769    |           |          
|Commitments and contingencies                                                                                                         |                                                                                                                             |                           |           |           |          
|Stockholders' equity:                                                                                                                 |                                                                                                                             |                           |           |           |          
|Common stock, par value $.01; authorized 250,000 shares; issued shares: June 2004, 101,924; June 2003, 99,941; December 2003, 101,081 |                                                                                                                             |                           | 1,019     |           |          
|Retained earnings                                                                                                                     |                                                                                                                             |                           | 1,874,318 |           |          
|                                                                                                                                      | Less shares in treasury at cost: June 2004, 42,618; June 2003, 40,754; December 2003, 41,473                                |                           |           | (780,510  | )        
|Unearned compensation                                                                                                                 |                                                                                                                             |                           | (2,054    | )         |          
|Accumulated other comprehensive gain (loss)                                                                                           |                                                                                                                             |                           | 4,710     |           |          
|                                                                                                                                      |                                                                                                                             |                           |           |           |          
|                                                                                                                                      | Total Stockholders' Equity                                                                                                  |                           |           | 1,097,483 |          
|                                                                                                                                      |                                                                                                                             |                           |           |           |          
|Total Liabilities and Stockholders' Equity                                                                                            |                                                                                                                             | $                         | 2,337,857 |           | $        
|                                                                                                                                      |                                                                                                                             |                           |           |           |          

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
June 30, |         | Six Months Ended
June 30,
|------------------------------------------------ | -------------------------------------------- | --------------------------- | ------- | -------------------------
|
|
|Net sales                                        |                                              | $                           | 813,565 |                          
|Costs and expenses:                              |                                              |                             |         |                          
|                                                 | Cost of sales                                |                             |         | 495,788                  
|                                                 | Selling, general and administrative expenses |                             |         | 271,113                  
|                                                 | Interest expense, net                        |                             |         | 1,643                    
|                                                 | Loss on early extinguishment of debt         |                             |         | 10,228                   
|                                                 | Other expense, net                           |                             |         | 2,891                    
|                                                 |                                              |                             |         |                          
|                                                 |                                              |                             | 781,663 |                          
|                                                 |                                              |                             |         |                          
|Income before income taxes and minority interest |                                              |                             | 31,902  |                          
|Income taxes                                     |                                              |                             | 9,730   |                          
|                                                 |                                              |                             |         |                          
|Income before minority interest                  |                                              |                             | 22,172  |                          
|Minority interest                                |                                              |                             | 420     |                          
|                                                 |                                              |                             |         |                          
|Net income                                       |                                              | $                           | 21,752  |                          
|                                                 |                                              |                             |         |                          
|Basic earnings per share                         |                                              | $                           | ..36    |                          
|                                                 |                                              |                             |         |                          
|Diluted earnings per share                       |                                              | $                           | ..35    |                          
|                                                 |                                              |                             |         |                          
|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)

|                                                                                   |                                                       | Six Months Ended
June 30, |         
|---------------------------------------------------------------------------------- | ----------------------------------------------------- | ------------------------- | --------
|
|
|Cash flows from operating activities:                                              |                                                       |                           |         
|Net income                                                                         |                                                       | $                         | 62,857  
|Adjustments to reconcile net income to net cash used for operating activities:     |                                                       |                           |         
|                                                                                   | Depreciation and amortization                         |                           |         
|                                                                                   | Minority interest                                     |                           |         
|                                                                                   | Non-cash loss on early extinguishment of debt         |                           |         
|                                                                                   | 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                 |                           |         
|                                                                                   | Dividends to minority shareholders                    |                           |         
|                                                                                   | Income taxes payable                                  |                           |         
|                                                                                   |                                                       |                           |         
|                                                                                   |                                                       | Total adjustments         |         
|                                                                                   |                                                       |                           |         
|Net cash used for operating activities:                                            |                                                       |                           | (46,399 
|                                                                                   |                                                       |                           |         
|Cash flows used for investing activities:                                          |                                                       |                           |         
|                                                                                   | Payments to acquire property and equipment            |                           |         
|                                                                                   | Purchase of The Hockey Company (net of cash acquired) |                           |         
|                                                                                   |                                                       |                           |         
|Net cash used for investing activities                                             |                                                       |                           | (208,847
|                                                                                   |                                                       |                           |         
|Cash flows (used for) provided by financing activities:                            |                                                       |                           |         
|                                                                                   | Net borrowings of notes payable to banks              |                           |         
|                                                                                   | Re-payments of long-term debt                         |                           |         
|                                                                                   | Net proceeds from issuance of convertible debentures  |                           |         
|                                                                                   | 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                       |                                                       |                           | (7,225  
|                                                                                   |                                                       |                           |         
|Net decrease in cash and cash equivalents                                          |                                                       |                           | (192,222
|Cash and cash equivalents at beginning of period                                   |                                                       |                           | 693,599 
|                                                                                   |                                                       |                           |         
|Cash and cash equivalents at end of period                                         |                                                       | $                         | 501,377 
|                                                                                   |                                                       |                           |         
|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 and six months ended June 30, 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 June 30, 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
June 30, |        | Six Months Ended
June 30,
|------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------- | ------ | -------------------------
|
|Net income                                                                                                                                 |  | $                           | 21,752 |                          
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effect |  |                             | 3,171  |                          
|                                                                                                                                           |  |                             |        |                          
|Pro forma net income                                                                                                                       |  | $                           | 18,581 |                          
|                                                                                                                                           |  |                             |        |                          
|Basic earnings per share:                                                                                                                  |  |                             |        |                          
|As reported                                                                                                                                |  | $                           | .36    |                          
|Pro forma                                                                                                                                  |  | $                           | .32    |                          
|Diluted earnings per share:                                                                                                                |  |                             |        |                          
|As reported                                                                                                                                |  | $                           | .35    |                          
|Pro forma                                                                                                                                  |  | $                           | .30    |                          

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
June 30, |  | Six Months Ended
June 30,
|----------------------------------------------------------------------------- |  | --------------------------- |  | -------------------------
|
|Risk-free interest rates                                                      |  | 2.8%                        |  | 2.0%                     
|Dividend yields                                                               |  | .74%.76%                   |  | 0%                       
|Volatility factors of the expected market price of the Company's common stock |  | .33                         |  | .52                      
|Weighted-average expected life of the option                                  |  | 3.5 years                   |  | 3.5 years                

Net
income, as reported, included $258 and $223 of restricted stock based compensation expense for the three months ended June 30, 2004 and 2003, respectively and $491 and $432 of
restricted stock based compensation expense for the six months ended June 30, 2004 and 2003, respectively.

Recently Issued Accounting Standards

On July 6, 2004, the Emerging Issues Task Force of the Financial Accounting Standards Board (the "EITF") reached a tentative conclusion on EITF Issue
No. 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings Per Share," that contingently convertible debt instruments ("Co-Cos") are subject to the
if-converted method under FASB Statement No. 128,Earnings Per Share, regardless of the contingent features included in the
instrument (contingent price triggers, parity triggers, etc.). Under current practice, issuers of Co-Cos exclude the potential common shares underlying the Co-Co from the
calculation of diluted earnings per share until the market price or other contingency is met.

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%. As a result of the restricted convertibility feature of the debentures, the common stock issuable upon conversion of the
debentures is not required under current generally accepted accounting principles to be included in the Company's fully diluted shares until the occurrence of certain events.

7

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The
following table sets forth the calculation of diluted earnings per share assuming the conversion of these convertible debentures into common stock (amounts in thousands, except per
share data):

|                                                             |  | Three Months Ended
June 30, |        | Six Months Ended
June 30,
|------------------------------------------------------------ |  | --------------------------- | ------ | -------------------------
|
|Numerator for diluted earnings per share:                    |  |                             |        |                          
|As reported (see Note 3)                                     |  | $                           | 22,711 |                          
|Interest on 2.0% convertible debentures, net of income taxes |  |                             | 825    |                          
|                                                             |  |                             |        |                          
|Proforma                                                     |  | $                           | 23,536 |                          
|                                                             |  |                             |        |                          
|Denominator for diluted earnings per share:                  |  |                             |        |                          
|As reported (see Note 3)                                     |  |                             | 64,960 |                          
|Assumed conversion of 2.0% convertible debentures            |  |                             | 4,652  |                          
|                                                             |  |                             |        |                          
|Proforma                                                     |  |                             | 69,612 |                          
|                                                             |  |                             |        |                          
|Diluted earnings per share:                                  |  |                             |        |                          
|As reported                                                  |  | $                           | .35    |                          
|Pro forma                                                    |  | $                           | .34    |                          

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 six months ended June 30, 2004 are as follows:

|                           |  | Total |        | Employee
Severance
and Other |   | Marketing
Contracts |  
|-------------------------- |  | ----- | ------ | ---------------------------- | - | ------------------- | -
|Balance, December 31, 2003 |  | $     | 11,053 |                              | $ | 3,653               |  
|2004 Utilization           |  |       | (1,229 | )                            |   | (429                | )
|                           |  |       |        |                              |   |                     |  
|Balance, June 30, 2004     |  | $     | 9,824  |                              | $ | 3,224               |  
|                           |  |       |        |                              |   |                     |  

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 $4,824, is included in accrued expenses with the balance of $5,000 included in other long-term liabilities.

8

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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. 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 through the redemption date of May 17, 2004.

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

|                                                              |                                                    | Three Months Ended
June 30, |        | Six Months Ended
June 30,
|------------------------------------------------------------- | -------------------------------------------------- | --------------------------- | ------ | -------------------------
|
|Numerator for basic earnings per share:                       |                                                    |                             |        |                          
|Net income                                                    |                                                    | $                           | 21,752 |                          
|Numerator for diluted earnings per share:                     |                                                    |                             |        |                          
|Net income                                                    |                                                    | $                           | 21,752 |                          
|Interest on 4.25% convertible debentures, net of income taxes |                                                    |                             | 959    |                          
|                                                              |                                                    |                             |        |                          
|Net income                                                    |                                                    | $                           | 22,711 |                          
|                                                              |                                                    |                             |        |                          
|Denominator for basic earnings per share:                     |                                                    |                             |        |                          
|Weighted average shares                                       |                                                    |                             | 59,652 |                          
|                                                              |                                                    |                             |        |                          
|Denominator for diluted earnings per share:                   |                                                    |                             |        |                          
|Weighted average shares                                       |                                                    |                             | 59,652 |                          
|Effect of dilutive securities:                                |                                                    |                             |        |                          
|                                                              | Dilutive employee stock options and warrants       |                             |        | 1,959                    
|                                                              | Assumed conversion of 4.25% convertible debentures |                             |        | 3,349                    
|                                                              |                                                    |                             |        |                          
|                                                              |                                                    |                             | 64,960 |                          
|                                                              |                                                    |                             |        |                          
|Basic earnings per share                                      |                                                    | $                           | .36    |                          
|                                                              |                                                    |                             |        |                          
|Diluted earnings per share                                    |                                                    | $                           | ..35   |                          
|                                                              |                                                    |                             |        |                          

9

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4  COMPREHENSIVE INCOME

The following table sets forth the computation of comprehensive income:

|                                                                 |  | Three Months Ended
June 30, |        | Six Months Ended
June 30, |  
|---------------------------------------------------------------- |  | --------------------------- | ------ | ------------------------- | -
|
|Net income                                                       |  | $                           | 21,752 |                           | $
|Changes in foreign currency translation adjustments              |  |                             | (1,965 | )                         |  
|Net change due to hedging instruments in accordance with FAS 133 |  |                             | 21,656 |                           |  
|                                                                 |  |                             |        |                           |  
|Comprehensive income                                             |  | $                           | 41,443 |                           | $
|                                                                 |  |                             |        |                           |  

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 six months ended June 30, 2004, the Company acquired 1,145,600 shares of treasury stock for approximately $40.3 million. As of June 30, 2004, the Company
had approximately $109.9 million available for future repurchases of its common stock under these Board authorized programs.

7  ACQUISITION OF THE HOCKEY COMPANY

The Company has acquired all of the common shares of Montreal-based The Hockey Company Holdings, Inc. ("The Hockey Company"). The equity value of the
transaction was approximately $209.3 million, plus the assumption of debt and certain accruals of approximately $157.5 million. The transaction was effected through a Canadian tender
offer completed on June 18, 2004 at which time the Company acquired 92% of the outstanding shares of The Hockey Company, followed by the acquisition of the remaining shares that were not
tendered on July 23, 2004. The Hockey Company is a leading supplier of hockey apparel and equipment and, pursuant to a long-term license with the National Hockey League
("NHL"), is the exclusive supplier of authentic, replica and practice jerseys using NHL names and logos, including authentic "on-ice" game jerseys for all thirty NHL teams.
The Company has performed a preliminary analysis of the purchase accounting and will finalize this accounting during the third quarter of 2004.

The
acquisition was effective as of June 30, 2004. Accordingly, the balance sheet of The Hockey Company is included in the condensed consolidated balance sheet as of
June 30, 2004 but the sales and

10

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earnings
for The Hockey Company are not included in the Company's results for the second quarter of 2004 as these amounts were immaterial to the consolidated results.

8  SUBSEQUENT EVENT

On July 26, 2004, the Company's subsidiaries The Hockey Company and Sport Maska, Inc. completed a tender offer for all of their issued and
outstanding 111/4% Senior Secured Notes due 2009 and a related consent solicitation to effect certain amendments to the indenture governing these notes. Approximately
$117.5 million in principal amount of the notes were tendered for consideration equal to approximately $140.3 million. The notes purchased in the tender offer will be retired, and the
indenture governing the notes remaining outstanding has been amended to eliminate substantially all of the affirmative and restrictive covenants, certain repurchase rights and certain events of
default and related provisions. Approximately $7.5 million of the principal amount of the notes remain outstanding.

11

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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 assets and liabilities. On an
on-going basis the Company evaluates its estimates, including those related

12

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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 increase or reduce 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 sold to customers in other currencies; (2) significant assets and liabilities that are denominated in other

13

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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

Second Quarter 2004 Compared to Second Quarter 2003

Net sales for the quarter ended June 30, 2004, were $813.6 million, an increase of $11.0 million, or 1.4%, from the quarter ended
June 30, 2003 net sales of $802.6 million. On a constant dollar basis, which eliminates the effect of currency exchange fluctuations, net sales for the quarter ended June 30,
2004, decreased $11.8 million, or 1.3%. Worldwide sales of the Reebok Brand were $681.0 million in the second quarter of 2004, an increase of $14.7 million, or 2.2%, from
$666.3 million in the second quarter of 2003. On a constant dollar basis, worldwide sales of the Reebok Brand decreased $6.0 million or 0.9%.

U.S.
footwear sales of the Reebok Brand increased 2.8% to $279.3 million in the second quarter of 2004 from $271.8 million in the second quarter of 2003. U.S. footwear
revenues were adversely impacted by the bankruptcy filing of one of the Company's major customers, Footstar, which filed under Chapter 11 on March 2, 2004. This resulted in the cancellation of
open orders that would have shipped in the second quarter of 2004. U.S. footwear revenue was also adversely affected by negative retail outlet store comparisons that were driven by weak retail sales
in June. Also during the quarter, the Company's U.S. footwear off-price business declined compared to the second quarter of 2003 as the Company believes it is continuing to effectively
manage its footwear inventory levels, thereby reducing the closeout sales of its footwear products.

A
key focus of the Reebok Brand is to build upon the success of its three product and marketing platforms: Rbk, Performance and Classic. During the quarter, sales of Rbk footwear product
in the U.S. endorsed by music icons 50 Cent and Jay-Z increased by over 350% from the second quarter of 2003. During the quarter, sales of running footwear in the U.S. increased 9.4% from
the second quarter of 2003. The Company's Classic category continued to perform well in the quarter. During the quarter,

14

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U.S.
sales of Classic footwear increased by 28.3% from the second quarter of 2003. The sales increase is from both the Company's Classic original products as well as the Classic derivative products
that are more fashion forward.

U.S.
apparel sales of the Reebok Brand decreased in the second quarter of 2004 by 17.9% to $89.6 million from $109.1 million in the second quarter of 2003. The sales
decline was in both sports
licensed apparel and branded apparel. In order to support the Company's growing sports licensed apparel business the Company needed to implement a new,
state-of-the-art warehouse and manufacturing system for its Indianapolis facility. Since the second quarter of the year is the lowest volume quarter for this
location the Company decided to shut down the facility for approximately four weeks beginning in mid-April in order to implement the new systems. As a result of the shutdown, the Company
lost approximately $15.0 million in sales in the second quarter, but plans to ship much of this product during the third quarter of 2004. The Company's ability to achieve this will depend upon
how quickly the shipments from this facility return to normal capacity. The facility has experienced some start-up problems, but the Company believes that they will be resolved shortly.
The Company's branded apparel sales were down significantly for the quarter. Part of the decline is the result of the Company's strategy to reposition this product line for future growth and to exit
certain unprofitable product groups and part is due to the generally difficult year at retail for core branded apparel products.

The
Company acquired Montreal-based The Hockey Company Holdings Inc. ("The Hockey Company") effective June 30, 2004. Accordingly, the balance sheet of The Hockey Company is
included in the condensed consolidated balance sheet as of June 30, 2004 but the sales and earnings for The Hockey Company are not included in the Company's results for the second quarter of
2004.

International
sales of the Reebok Brand (including footwear and apparel) were $312.1 million in the second quarter of 2004, an increase of 9.4% from sales of $285.4 million
in the second quarter of 2003. International footwear sales increased 6.1% and international apparel sales increased by 13.7%. Changes in foreign currency exchange rates have favorably impacted these
comparisons. On a constant dollar basis, international sales of the Reebok Brand increased $6.0 million, or 2.0%, international footwear sales decreased approximately 0.2% and international
apparel sales increased by approximately 4.8%. In constant dollars, sales increased in many European countries including Austria, Belgium, Finland, Germany, Holland, Poland, Russia, Switzerland and
the U.K. However, sales declined significantly in France where a few major retailers continue to struggle with high apparel and footwear stock levels, much of which is coming from their own private
label brands. For the quarter, in constant dollars, international sales increased in the basketball, training, soccer and walking categories.

Rockport's
second quarter 2004 sales were $88.0 million, a decrease of 3.1% from sales of $90.8 million in the second quarter of 2003. Domestic sales for the Rockport Brand
decreased 5.9%, whereas international sales increased 3.5% as compared to the second quarter of 2003. Currency has favorably impacted these comparisons. On a constant dollar basis, international sales
of the Rockport Brand decreased 3.6%. International revenues accounted for approximately 33% of Rockport's sales in the second quarter of 2004 as compared to 31% in the second quarter of 2003.

Sales
of the Company's other brands, Ralph Lauren Footwear and The Greg Norman Collection, were $44.6 million in the second quarter of 2004, a decrease of 2.0% from sales of
$45.5 million in the second quarter of 2003.

During
the second quarter of 2004, the Company's overall gross margin was 39.1% of sales, an improvement of 160 basis points when compared with the Company's gross margin of 37.5% in the
second quarter of 2003. During the second 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 20 basis points.

15

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Selling,
general and administrative expenses for the second quarter of 2004 were $271.1 million, or 33.3% of sales, an increase of $10.7 million when compared with the
second quarter of 2003 selling, general and administrative expenses of $260.4 million, or 32.4% of sales. The Company continues to invest in brand building initiatives designed to lay the
foundation for future sales and profit growth worldwide. During the second quarter of 2004 both advertising and marketing and research and development expenses increased as a percentage of sales as
compared to the second quarter of 2003. In addition, the Company is investing in new systems and various supply chain initiatives and the Company is streamlining its product development processes.

On
May 17, 2004, the Company redeemed for cash the $250.0 million outstanding principal amount of its 4.25% convertible debentures due 2021. The redemption price included a
call premium of $5.3 million. The call premium and the writeoff of the remaining unamortized, original debt issuance costs of $4.9 million resulted in a $10.2 million
pre-tax loss due to the early extinguishment of debt.

For
the quarter ended June 30, 2004, other expenses, net, was income of $3.0 million compared to an expense of $1.1 million in the second quarter of 2003. Included
in other expenses, net, is the amortization of finite-lived intangibles, certain currency losses and other non-operating expenses. The fluctuation was primarily due to the fluctuation in
currency gains (losses).

Net
interest expense was $1.6 million for the quarter ended June 30, 2004, a decrease of $2.4 million as compared to the second quarter of 2003. During the second
quarter of 2004, interest expense was $6.2 million, which is comparable to interest expense of $6.8 million in the second quarter of 2003. Interest income was $4.6 million, an
increase of $1.8 million from the second quarter of 2003. The increase in interest income resulted from interest earned on the favorable settlement of some outstanding income tax matters.

The
Company's effective income tax rate was 30.5% in the second quarter of 2004 as compared to 30.4% in the second quarter of 2003. 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.

First Six Months of 2004 Compared to First Six Months of 2003

Net sales for the six months ended June 30, 2004, were $1.645 billion, a 2.8% increase from net sales of $1.601 billion for the six months
ended June 30, 2003. On a constant dollar basis, which eliminates the effect of currency exchange fluctuations, net sales for the six months ended June 30, 2004, decreased
$17.5 million or 1.1%. Worldwide sales of the Reebok Brand were $1.378 billion in the first six months of 2004, an increase of 3.6% from $1.330 billion in the first six months of
2003. On a constant dollar basis, worldwide sales of the Reebok Brand decreased $9.1 million or 0.7%.

U.S.
footwear sales of the Reebok Brand increased 2.2% to $540.0 million in the first six months of 2004 from $528.5 million in the first six months of 2003. U.S. footwear
revenues were adversely impacted by the bankruptcy filing of one of the Company's major customers, Footstar, which filed under Chapter 11 on March 2, 2004. The uncertainties about the financial
condition of Footstar and its ultimate bankruptcy filing resulted in the cancellation of open orders that would have shipped in the first six months of 2004. Sales of Rbk footwear product in the U.S.
endorsed by music icons 50 Cent and Jay-Z increased significantly in the first six months of 2004 as compared to the first six months of 2003. During the first six months of 2004, sales of
running footwear in the U.S. increased approximately 25.6% as compared to the first six months of 2003. During the first six months of 2004, U.S. sales of the Company's Classic footwear increased by
approximately 26.5% as compared to the same period in 2003.

16

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U.S.
apparel sales of the Reebok Brand decreased in the first six months of 2004 by 5.6% to $187.4 million from $198.5 million in the first six months of 2003. During the
first six months of 2004 sales of both NFL and NBA products increased double digits from the first six months of 2003. The Company's branded apparel sales were down significantly for the first half of
the year as compared to the first half of 2003.

International
sales of the Reebok Brand (including footwear and apparel) were $650.4 million in the first six months of 2004, an increase of 7.8% from sales of
$603.2 million in the first six months of 2003. Changes in foreign currency have favorably impacted these comparisons. On a constant dollar basis, international sales of the Reebok Brand
decreased $9.5 million or 1.4%, international footwear sales decreased approximately 1.8% and international apparel sales decreased by approximately 1.0%. In constant dollars, sales increased
in many European countries including Austria, Finland, Germany, Holland, Poland, Russia, and Switzerland. However, sales declined significantly in France where a few major retailers continue to
struggle with high apparel and footwear stock levels, much of which is
coming from their own private label brands. For the first six months of 2004, in constant dollars, international sales increased in the basketball, training, soccer and walking categories.

Rockport's
sales for the first six months 2004 were $175.0 million, a decrease of 3.6% from sales of $181.5 million in the first six months of 2003. Domestic sales for the
Rockport Brand decreased 10.2%, whereas international sales increased 11.1% as compared to the first six months of 2003. Currency has favorably impacted these comparisons. On a constant dollar basis,
international sales of the Rockport Brand decreased 6.1%. International revenues accounted for approximately 36% of Rockport's sales in the first six months of 2004 as compared to 31% in the first six
months of 2003.

Sales
of the Company's other brands; Ralph Lauren Footwear and The Greg Norman Collection, were $92.6 million in the first six months of 2004, an increase of 3.8% from sales of
$89.2 million in the first six months of 2003.

During
the first six months of 2004, the Company's overall gross margin was 39.6% of sales, which is an increase of 180 basis points when compared with the Company's gross margin of
37.8% in the first six months of 2003. During the first six months 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 six months 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 65 basis points.

Selling,
general and administrative expenses for the first six months of 2004 were $537.2 million, or 32.6% of sales, an increase of $40.5 million when compared with the
first six months of 2003 selling, general and administrative expenses of $496.7 million, or 31.0% of sales. The Company continues to invest in brand building initiatives designed to lay the
foundation for future sales and profit growth worldwide. During the first six months of 2004, advertising and marketing expenses increased approximately 13.5% and total research and development and
product development increased approximately 16.1%.

On
May 17, 2004 the Company redeemed the $250.0 million outstanding principal amount of its 4.25% convertible debentures due 2021. The redemption price included a call
premium of $5.3 million. The call premium and the writeoff of the remaining unamortized, original debt issuance costs of $4.9 million resulted in a loss due the early extinguishment of
debt of $10.2 million.

For
the six months ended June 30, 2004, other expenses, net, was $4.7 million compared to $0.5 million during the first six months of 2003. Included in other
expenses, net, are the amortization of finite-lived intangibles, certain currency losses and other non-operating expenses. The fluctuation was primarily due to the fluctuation in currency
gains (losses).

17

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Net
interest expense was $5.2 million for the six months ended June 30, 2004, a decrease of $3.4 million as compared to the first six months of 2003. During the
first six months of 2004, interest expense was $12.4 million, a decrease of $1.1 million from interest expense of $13.3 million in the first six months of 2003. Interest income
was $7.2 million, an increase of $2.4 million from the first six months of 2003. The increase in interest income resulted from interest earned on the favorable settlement of some
outstanding income tax matters.

The
Company's effective income tax rate was 30.5% in the first six months of 2004 as compared to 30.4% in the first six months of 2003. 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 July 1, 2004 through December 31, 2004 for the Reebok Brand
increased 2.5% as compared to the same period last year. Backlog in constant dollars is calculated by translating the 2004 backlog at the 2004 foreign exchange rates, thereby eliminating the effect of
currency fluctuations on the comparisons.

Comparisons
regarding orders scheduled for delivery for the period July 1, 2004 through December 31, 2004 are as follows for the Reebok Brand:

Percentage Change
2004/2004Reported
Dollars

Constant
DollarsU.S.A.:Footwear

+7.0
%
+7.0
%Apparel

+0.3
%
+0.3
%Total Domestic

+4.5
%
+4.5
%International:Footwear

+6.8
%
+0.4
%Apparel

-7.2
%
-12.1
%Total International

-0.2
%
-5.8
%Total Reebok Brand:Footwear

+6.9
%
+4.5
%Apparel

-3.4
%
-5.9
%Total Reebok Brand

+2.5
%
+0.1
%


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 June 30, 2004, the Company's working capital was $1.094 billion as compared with $1.161 billion at December 31, 2003 and
$1.077 billion at June 30, 2003. The current ratio, a comparison of current assets to current liabilities, at June 30, 2004 was 2.5 to 1, as compared to 3.1 to 1 at
December 31, 2003 and 2.9 to 1 at June 30, 2003.

18

---



Inventory
at June 30, 2004 increased by $63.1 million, or 13.3%, from June 30, 2003. Accounts receivable increased $82.6 million or 15.3%. The increases were
primarily due 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 declined approximately
$16.2 million or 3.3%. The decrease was primarily due to a decrease in Rockport inventory. Excluding the impact of The Hockey Company and currency, accounts receivable declined approximately
$4.5 million or .8%.

The
following table sets forth a reconciliation between inventory and receivables as of June 30, 2004 including and excluding the effect of the acquisition of The Hockey Company
(a non-gaap measure):

As Reported

The Hockey
Company

Without
The Hockey
CompanyInventory

539,392

67,544

471,848Accounts Receivable (net)

623,264

73,310

549,954


Cash
used for operations during the first six months of 2004 was $46.4 million, as compared to cash used for operations of $115.2 million during the first six months of
2003. The Company has acquired all the common shares of Montreal-based The Hockey Company for approximately $193.1 million (net of cash acquired) plus the assumption of debt and certain
accruals of $157.5 million. Capital expenditures for the six months ended June 30, 2004 were $15.8 million as compared to $21.0 million during the first six months of 2003.
Capital expenditures for 2004 are expected to be in the range of $65.0 to $75.0 million in order to support the Company's European regionalization, the rollout of SAP, the enhancement of its
sports licensing operations capability, and retail and other facility requirements internationally.

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 is not required under current generally accepted accounting principles to be included in the Company's fully diluted shares until the occurrence of certain events.
However, the accounting treatment for such contingently convertible debentures may change to an "as if" converted method for calculating diluted earnings per share. (See note 1)

On
May 17, 2004 the Company redeemed for cash the $250.0 million outstanding principal amount of its 4.25% convertible debentures due 2021. The redemption price on
May 17, 2004 was equal to 102.125% of the principal amount of the convertible debentures, together with accrued and unpaid interest up to but not including the redemption date. The holders
received the redemption price in cash.

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.

19

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During
the six months ended June 30, 2004, the Company acquired 1,145,600 shares of treasury stock for $40.3 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.

OFF BALANCE SHEET ARRANGEMENTS

The Company occupies its European distribution facility in Rotterdam, The Netherlands, 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 ten years, with one five-year renewal option.

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 and the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004.

LONG-TERM COMMITMENTS

Details of the Company's contractual obligations for long-term debt, leases and endorsement contracts and minimum royalty agreements, have been
updated to reflect the acquisition of The Hockey Company as well as the inclusion of certain minimum royalties under license agreements:

|                                            |  | Payments Due by Period
|------------------------------------------- |  | ----------------------
|
|Long-term Debt                              |  | $                     
|Endorsement Contracts and Minimum Royalties |  |                       
|Operating Leases                            |  |                       
|Capital Lease Obligations                   |  |                       
|                                            |  |                       
|Total                                       |  | $                     
|                                            |  |                       

Endorsement
contracts and minimum royalties represent approximate amounts of base compensation and minimum guaranteed royalties the Company is committed to pay to endorsers and
licensors. The Company is obligated to pay certain endorsers and licensors royalties based on a percentage of net sales of licensed products, subject to minimum royalty payments. During 2003
substantially all of the Company's aggregate minimum royalty requirements were earned through the sale of licensed products. Actual payments under some endorsement contracts are likely to vary based
upon bonuses paid, or reductions enforced, for specific performance achievements in future periods. The Company is also obligated to furnish certain endorsers with Reebok products for their use. It is
not possible to determine on an annual basis what will be spent as the contracts do not generally stipulate a specific amount of cash to be spent on the product.

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 six months of 2004 to
such risks or our management of such risks.

20

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Item 4. Controls and Procedures

21

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PART IIOTHER INFORMATION

Item 1: Legal Proceedings.

None.

Item 2: Changes in Securities and Use of Proceeds.

(e)Issuer Purchases of Equity Securities

|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
|------------------------------------ |  | -------------------------------- |  | ---------------------------- | ----- | -------------------------------------------------------------------------------- | --------- | --------------------------------------------------------------------------
|April 1, 2004 through April 30, 2004 |  |                                  |  |                              |       |                                                                                  |           |                                                                           
|May 1, 2004 through May 31, 2004     |  | 607,900                          |  | $                            | 34.04 |                                                                                  | 607,900   |                                                                           
|June 1, 2004 through June 30, 2004   |  | 500,000                          |  | $                            | 36.27 |                                                                                  | 500,000   |                                                                           
|                                     |  |                                  |  |                              |       |                                                                                  |           |                                                                           
|TOTALS                               |  | 1,107,900                        |  | $                            | 35.04 |                                                                                  | 1,107,900 |                                                                           
|                                     |  |                                  |  |                              |       |                                                                                  |           |                                                                           

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 June 30, 2004, the Company acquired 1,107,900 shares of treasury stock for approximately $38.8 million. As of June 30, 2004, the Company had approximately
$109.9 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.

The Company held its Annual Meeting of Shareholders on May 4, 2004. At the Annual Meeting:

Name of Director

Votes For

Votes WithheldNorman Axelrod

54,697,296

2,235,074Paul R. Duncan

56,343,731

588,639Richard G. Lesser

54,642,617

2,289,753Deval L. Patrick

56,359,294

573,076


22

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Item 5: Other Information.

None.

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

|Instruments Defining the Rights of Security Holders
|---------------------------------------------------
|4.1                                                
|4.2                                                
|4.3                                                
|4.4                                                
|Other Exhibits & Certifications                    
|31.1                                               
|31.2                                               
|32.1                                               
|32.2                                               

(b)Reports on Form 8-K

The
Company filed a Current Report on Form 8-K with the Commission on April 8, 2004. Under Item 5 of Form 8-K, "Other Events," the Company
filed a press release regarding the proposed acquisition by Reebok of The Hockey Company Holdings Inc. (the "Acquisition"). In connection with the Acquisition, Reebok entered into a Support
Agreement and a Lock-up Agreement, which the Company filed with the Report under Item 7.

The
Company furnished a Current Report on Form 8-K to the Commission on April 23, 2004. The Company furnished its preliminary financial results for the quarter
ended March 31, 2004 pursuant to

23

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Item
12 of Form 8-K, "Results of Operations and Financial Condition," and in accordance with SEC Release No. 33-8216.

The
Company filed a Current Report on Form 8-K with the Commission on April 27, 2004. Under Item 5 of Form 10-K, "Other Events," the Company
filed a press release regarding the Company's intention to sell through a private offering up to $300 million of convertible debentures due 2024.

24

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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: August 9, 2004 |  |                           |  |                                                                                             
|-------------------- |  | ------------------------- |  | --------------------------------------------------------------------------------------------
|                     |  | REEBOK INTERNATIONAL LTD.
|                     |  | BY:                       |  | /s/KENNETH WATCHMAKERKenneth Watchmaker
Executive Vice President and
Chief Financial Officer

25

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