• Responsibility Statement 
• Independent Auditor´s Report 
• Consolidated Balance Sheet 
• Consolidated Income Statement 
• Consolidated Statement of Cash Flows 
• Consolidated Statement of Recognized Income and Expense 
• Notes 
• Statement of Movements of Intangible and Tangible Assets and Financial Assets 
• Shareholdings 

15 Borrowings and Credit Lines

With settlement on October 8, 2003, adidas issued a € 400 million convertible bond through its wholly-owned Dutch subsidiary, adidas International Finance B.V. The bond was guaranteed by adidas AG and issued in tranches of € 50,000 each with a maturity up to 15 years. The bond is, at the option of the respective holder, subject to certain conditions, convertible from and including November 18, 2003, up to and including September 20, 2018, into ordinary no-par-value bearer shares of adidas AG at the conversion price of € 25.50 which was fixed upon issue. The coupon of the bond is 2.5 % and is payable annually in arrears on October 8 of each year, commencing on October 8, 2004. The bond is convertible into approximately 16 million no-par-value shares.

The convertible bond is not callable by the issuer until October 2009. It is callable thereafter, subject to a 130 % trigger between October 2009 and October 2012 and subject to a 115 % trigger between October 2012 and 2015. The convertible bond is unconditionally callable thereafter. Investors have the right to convert the bond in October 2009, October 2012 and October 2015.

The fair values of the liability component and the equity conversion component were determined on the issuance of the bond. The fair value of the liability component, included in longterm borrowings, was calculated using a market interest rate of approximately 4.6 % for an equivalent straight bond without conversion rights. Due to the retrospective application of the amendment to IAS 39 and IAS 32, the liability and equity split of the convertible bond changed. As a result, the liability component as at the date of issuance increased by € 71.1 million with an equivalent decrease in equity. The amount of the equity component, which is included in equity in the capital reserve, amounts to € 44.1 million (less transaction costs of € 0.9 million). The liability component is valued using the “effective interest method”.

The adidas AG share first traded above 110 % (€ 28.05) of the conversion price of € 25.50 on more than 20 trading days within the last 30 trading days in the fourth quarter of 2004. Consequently, bond holders have had the right to convert their convertible bonds into equity since January 1, 2005. An early redemption or conversion of the convertible bond is currently not expected.