Adidas 2017

OUR CORE BELIEF
ANNUAL REPORT 2017
002
OUR MISSION
ADIDAS
TO BE THE BEST SPORTS COMPANY IN THE WORLD

1 TO OUR SHAREHOLDERS 2 G
ROUP MANAGEMENT REPORT – 3 G
ROUP MANAGEMENT REPORT – 4 C
ONSOLIDATED FINANCIAL 5 ADDITIONAL INFORMATION
OUR COMPANY FINANCIAL REVIEW STATEMENTS
TARGETS – RESULTS – OUTLOOK
TARGETS 2017 1, 2 RESULTS 2017 2 OUTLOOK 2018
Currency-neutral sales Currency-neutral sales Currency-neutral sales

INCREASE AT A RATE BETWEEN 12% AND 14% INCREASE OF 16% INCREASE AT A RATE AROUND 10%
Sales of
€ 21.218 BILLION
Gross margin Gross margin Gross margin
INCREASE UP TO 0.3PP increase of 1.2pp to 50.4% INCREASE TO A LEVEL OF UP TO 50.7%
Other operating expenses (in % of net sales) Other operating expenses (in % of net sales) Other operating expenses (in % of net sales)
BELOW PRIOR YEAR LEVEL decrease of 0.8pp to 41.9% BELOW PRIOR YEAR LEVEL
Operating margin Operating margin Operating margin
INCREASE BETWEEN 0.2PP AND 0.4PP increase of 1.2pp to 9.8% INCREASE TO A LEVEL BETWEEN 10.3% AND 10.5%
Net income from continuing operations Net income from continuing operations 3 Net income from continuing operations 3
INCREASE AT A RATE BETWEEN 13% AND 15% increase of 32% to € 1.430 BILLION INCREASE AT A RATE BETWEEN 13% AND 17%
to a level between € 1.615 billion and € 1.675 billion
Basic earnings per share from continuing operations Basic earnings per share from continuing operations 3
Basic earnings per share from continuing operations 3
INCREASE AT A RATE BETWEEN 13% AND 15% increase of 31% to € 7.05 INCREASE AT A RATE BETWEEN 12% AND 16%
Average operating working capital (in % of net sales) Average operating working capital (in % of net sales) Average operating working capital (in % of net sales)
MODEST INCREASE decrease of 0.7pp to 20.4% AROUND PRIOR YEAR LEVEL
ANNUAL REPORT 2017
Capital expenditure 4
AROUND € 1.1 BILLION € 752 MILLION AROUND € 900 MILLION
Shareholder value adidas AG share price INCREASE OF 11% Shareholder value
FURTHER INCREASE Dividend per share INCREASE OF 30% TO € 2.60 5 FURTHER INCREASE
1 As published on March 8, 2017; the outlook was updated over the course of the year.
2 Figures reflect continuing operations as a result of the divestiture of the Rockport, TaylorMade, Adams Golf, Ashworth and CCM Hockey businesses.
3 2017 excluding negative one-time tax impact of € 76 million.
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4 Excluding acquisitions and finance leases.
5 Subject to Annual General Meeting approval.
ADIDAS
Financial Highlights 2017 (IFRS)
FINANCIAL HIGHLIGHTS 2017 (IFRS)

2017 2016 Change
Operating Highlights (€ in millions)

Net sales 1 21,218 18,483 15%
Gross profit 1 10,703 9,100 18%
Other operating expenses 1 8,882 7,885 13%
EBITDA 1 2,511 1,953 29%
Operating profit 1 2,070 1,582 31%
Net income from continuing operations 1, 3 1,430 1,082 32%
Net income attributable to shareholders 2, 3 1,173 1,017 15%
Key Ratios
Gross margin 1 50.4% 49.2% 1.2pp
Other operating expenses in % of net sales 1 41.9% 42.7% (0.8pp)
Operating margin 1 9.8% 8.6% 1.2pp
Effective tax rate 1, 3 29.3% 29.6% (0.3pp)
Net income attributable to shareholders in % of net sales 2, 3 5.5% 5.5% 0.0pp
Average operating working capital in % of net sales 1 20.4% 21.1% (0.7pp)
Equity ratio 44.4% 42.6% 1.8pp
Net borrowings/EBITDA 1 (0.2) 0.1 n.a.
Financial leverage (7.5%) 1.6% (9.1pp)
Return on equity 2 17.0% 15.7% 1.3pp
Balance Sheet and Cash Flow Data (€ in millions)

Total assets 14,522 15,176 (4%)
Inventories 3,692 3,763 (2%)
Receivables and other current assets 3,277 3,607 (9%)
Operating working capital 4,033 3,468 16%
Net cash/(net borrowings) 484 (103) n.a.
Shareholders’ equity 6,450 6,472 (0%)
ANNUAL REPORT 2017
Capital expenditure 1 752 642 17%

Net cash generated from operating activities 2 1,648 1,348 22%
Per Share of Common Stock (€)

Basic earnings 1, 3 7.05 5.39 31%
Diluted earnings 1, 3 7.00 5.29 32%
Net cash generated from operating activities 2 8.14 6.73 21%
Dividend 2.60 4 2.00 30%
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Share price at year-end 167.15 150.15 11%
ADIDAS
Other (at year-end)

Number of employees 1 56,888 58,902 (3%)
Number of shares outstanding 203,861,234 201,489,310 1%
Average number of shares 202,391,673 200,188,276 1%
2 Includes continuing and discontinued operations.
ABOUT THIS REPORT THE FOLLOWING SYMBOLS INDICATE In addition, this report contains a combined non-financial
IMPORTANT INFORMATION: statement for adidas AG and the Group. The content of the
With the Annual Report 2017, adidas communicates financial ↗  There is more information online. non-financial statement is covered by a separate limited
and non-financial information in a combined publication. The There is more information in a related table or diagram. assurance engagement of KPMG AG Wirtschaftsprüfungs
report provides a comprehensive overview of the financial, There is more information within the report. gesellschaft.  SEE NON-FINANCIAL STATEMENT, P. 100 The assurance
environmental and social performance of adidas in the 2017 These are parts of the non-financial statement that are was conducted using the International Standard on Assurance
financial year. covered by a separate limited assurance engagement. Engagements ISAE 3000 (Revised).  SEE INDEPENDENT AUDITOR’S
 SEE NON-FINANCIAL STATEMENT, P. 100 ASSURANCE REPORT, P. 226 The content of the non-financial statement
For the first time, we publish our Annual Report exclusively in combined with further information in this report and on our
a digital format. It is available as a full-content PDF and as a DATA AND FINANCIAL REPORTING STANDARDS corporate website fulfills the Global Reporting Initiative’s
condensed Online Summary. The reporting period is the financial year from January 1 to (GRI) G4 ‘Core’ option. The GRI content index can be found
December 31, 2017. To ensure this report is as current as online. ↗ ADIDAS-GROUP.COM/SUSTAINABILITY
possible, it includes all relevant information available up to
the Responsibility Statement dated February 23, 2018. It was not part of KPMG’s engagement to review the condensed
online version of this report or references to external sources
The consolidated financial statements and the Group such as our corporate website.
Manage ment Report are prepared in accordance with the
ADIDAS ANNUAL REPORT 2017 principles of the International Financial Reporting Standards FORWARD-LOOKING STATEMENTS
 PDF (IFRS), as adopted by the European Union (EU), and additional Our Group Management Report contains forward-looking
requirements pursuant to the German Commercial Code statements that reflect Management’s current view with
(Handelsgesetzbuch – HGB). respect to the future development of our company. The outlook
is based on estimates that we have made on the basis of all the
Internal Control over Financial Reporting (ICoFR) provides information available to us at the time of completion of this
reasonable assurance regarding the reliability of financial Annual Report. In addition, such forward-looking statements
ANNUAL REPORT 2017
reporting and compliance with applicable laws and regu are subject to uncertainties which are beyond the control of the
ADIDAS ANNUAL REPORT 2017, lations. To monitor the effectiveness of ICoFR, accounting- company.  SEE RISK AND OPPORTUNITY REPORT, P. 131 In case the
ONLINE SUMMARY related processes are regularly reviewed. underlying assumptions turn out to be incorrect or described
↗ REPORT.ADIDAS-GROUP.COM risks or opportunities materialize, actual results and
INDEPENDENT ASSURANCE developments may materially deviate (negatively or positively)
To enhance readability, registered trademarks as well as The consolidated financial statements prepared by adidas AG, from those expressed by such statements. adidas does not
005
references to rounding differences are omitted in this including the statement of financial position, income statement, assume any obligation to update any forward-looking
ADIDAS
publication. The adidas Annual Report 2017 is available in statement of comprehensive income, statement of changes in statements made in the Group Management Report beyond
English and German. equity, statement of cash flows, and the notes as well as the statutory disclosure obligations.  SEE SUBSEQUENT EVENTS AND
Group Management Report have been audited by KPMG AG OUTLOOK, P. 128
Wirtschaftsprüfungsgesellschaft.  SEE INDEPENDENT AUDITOR’S

REPORT, P. 221
ADIDAS ANNUAL REPORT 2017
TO OUR GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL

SHAREHOLDERS FINANCIAL REVIEW STATEMENTS
Operational and Sporting Highlights 008 Internal Management System 102 Consolidated Statement of Financial Position 150
Letter from the CEO 016 Business Performance 105 Consolidated Income Statement 152
Economic and Sector Development 105
Executive Board 020 Consolidated Statement of Comprehensive Income 153
Income Statement 107
Supervisory Board 024 Statement of Financial Position and Consolidated Statement of Changes in Equity 154
Statement of Cash Flows 111
Supervisory Board Report 027 Consolidated Statement of Cash Flows 155
Treasury 115
Corporate Governance Report Financial Statements and Management Report Notes 157
including the Declaration on of adidas AG 118 Notes to the Consolidated Statement of Financial Position 169
Corporate Governance 033 Disclosures pursuant to § 315a Section 1 and Notes to the Consolidated Income Statement 201
§ 289a Section 1 of the German Commercial Code 120
Compensation Report 039 Additional Information 205
Business Performance by Segment 124
Our Share 057 Statement of Movements of Intangible
Western Europe 124 and Tangible Assets 213
North America 124
Greater China 125 Shareholdings 215
Russia/CIS 125 Responsibility Statement 220
GROUP MANAGEMENT REPORT Latin America 126
OUR COMPANY Independent Auditor’s Report 221
Japan 126
MEAA 126 Independent Auditor’s Assurance Report 226
ANNUAL REPORT 2017
Subsequent Events and Outlook 128

Corporate Strategy 062
Subsequent Events 128
adidas Brand Strategy 067
Outlook 128 ADDITIONAL
Reebok Brand Strategy 070
Sales and Distribution Strategy 072 Risk and Opportunity Report 131 INFORMATION
Illustration of Material Risks 136
Global Operations 074
Illustration of Opportunities 144
Innovation 078 Ten-Year Overview 229
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Management Assessment of Performance,
ADIDAS
People and Culture 081 Risks and Opportunities, and Outlook 146 Glossary 232
Sustainability 088 Declaration of Support 236
Non-Financial Statement 100 Financial Calendar 237
Group Management Report: This report contains the Group Management Report of the adidas Group,
comprising adidas AG and its consolidated subsidiaries, and the Management Report of adidas AG.
TO O UR
S H A R E H O L D E RS
ANNUAL REPORT 2017
Operational and Sporting Highlights 008 Corporate Governance Report
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including the Declaration on
Letter from the CEO 016 Corporate Governance 033
ADIDAS
Executive Board 020 Compensation Report 039
Supervisory Board 024 Our Share 057
Supervisory Board Report 027

OPERATIONAL AND SPORTING

HIGHLIGHTS
OPERATIONAL AND
SPORTING HIGHLIGHTS
Q1 2017
‘ORIGINAL IS NEVER FINISHED’
The new campaign and film launched by adidas Originals
showcase visionaries from the worlds of music, skate, sport,
style and art. Reaffirming the notion ‘Original is never
finished’, the film features a remix of Frank Sinatra’s ‘My Way’
with a provocative, reimagined approach to today’s streetwear
culture. With a multi-generational cast including Snoop Dogg
and Dev Hynes, among others, adidas Originals re-interprets
its own classics and turns to a new generation of creators to
inspire them to redefine the meaning of originality.
↗ ADIDAS ORIGINALS ON YOUTUBE
REEBOK PRESENTS NEXT PHASE OF

‘BE MORE HUMAN’ CAMPAIGN
ANNUAL REPORT 2017
A new rousing suite of films champions the hard work and

physicality that lead people to more enriched lives, and cele
brates the value of human connection. The series examines
the physical blemishes upon which life’s stories are written –
from calloused, scarred hands to a worn-out pair of running
shoes. It is the latest evolution of Reebok’s ‘Be More Human’
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rally cry, which encourages people to be the best possible
ADIDAS
version of themselves physically, mentally and socially.

↗ REEBOK ON YOUTUBE

HIGHLIGHTS
ADIDAS INCREASES SALES AND

EARNINGS GUIDANCE UNTIL 2020
Following an exceptionally successful 2016 financial year,
adidas increases its long-term guidance. The company
intends to strongly accelerate sales and earnings growth until
2020 as part of its long-term strategic business plan, ‘Creating
the New’. adidas expects currency-neutral sales to increase
at a rate between 10% and 12% on average per year between
2015 and 2020 (previously: to increase at a high-single-digit
rate). At this point in time, net income from continuing
operations is projected to grow between 20% and 22% on
average per year in the five-year period (previously: to increase
by around 15% on average).
↗ READ PRESS RELEASE
ADIDAS SWIM PRESENTS PARLEY

FOR THE OCEANS COLLECTION
ANNUAL REPORT 2017
The swim range is made from Parley Ocean Plastic and

features upcycled waste made from used fishing nets and
debris intercepted in coastal areas and converted into ‘UNLEASH YOUR CREATIVITY’ CAMPAIGN
technical yarn fibers such as Econyl, a recycled polyamide Continuing the ‘Here to Create’ conversation that began in
yarn. Econyl regenerated materials offer the same high 2016, the campaign reinforces the adidas brand΄s point of
quality and performance as the material (nylon 6) usually view that engaging an athlete΄s imagination will take them
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found in wider swim apparel. further than their mind or body ever could. The campaign is
ADIDAS
↗ ADIDAS SWIM ON YOUTUBE told through a female athlete΄s lens and stars supermodel
Karlie Kloss, fitness influencer Hannah Bronfman, and WNBA
All-Star Candace Parker, among others.
↗ ADIDAS ON YOUTUBE

HIGHLIGHTS
Q2 2017
ADIDAS AND SIEMENS SET TO COLLABORATE IN
THE DIGITAL PRODUCTION OF SPORTING GOODS
adidas and Siemens announce their intention to collaborate in
the digital production of sporting goods. As part of a joint
PARLEY EDITIONS OF GAME-CHANGING research and development program, the partners will be
RUNNING FOOTWEAR working to drive forward the digitalization of the adidas
adidas reveals the UltraBOOST, UltraBOOST X and Ultra Speedfactory to ultimately develop capabilities for fast,
BOOST Uncaged Parley editions. The footwear features a blue transparent and individualized production. As a leader in
colorway inspired by the shades of the ocean. Reusing an digital factory automation and simulation solutions,
average of eleven plastic bottles per pair, the shoes’ laces, Siemens brings invaluable expertise to the table. A digital
heel webbing, heel lining and sock liner covers are made from Speedfactory ‘twin’ will allow the entire production process
recycled PET material. to be simulated, tested and optimized up-front. Merging the
↗ ADIDAS RUNNING ON YOUTUBE virtual and real worlds will help shorten the time to market,
#PARLEY, #ULTRABOOST
bring greater flexibility and provide improved manufacturing
quality and efficiency.
FUTURECRAFT 4D — INDUSTRY’S FIRST REEBOK ANNOUNCES ‘COTTON + CORN’

APPLICATION OF DIGITAL LIGHT SYNTHESIS SUSTAINABLE PRODUCTS INITIATIVE
ANNUAL REPORT 2017
Futurecraft 4D is the world’s first high-performance footwear The initiative is intended to bring plant-based footwear to the
featuring midsoles crafted with light and oxygen using Digital market in 2018. The first shoe ‘made from things that grow’
Light Synthesis, a technology led by Silicon Valley-based tech will have an upper comprised of organic cotton and a base
company Carbon. The midsole pioneers a digital footwear originating from industrial grown corn, which is a non-food
component creation process that eliminates the necessity source. For the Cotton + Corn initiative, Reebok partnered with
of traditional prototyping or molding. With Digital Light DuPont Tate & Lyle Bio Products, a leading manufacturer of
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Synthesis, adidas operates on a completely different manu high-performance bio-based solutions.
ADIDAS
facturing scale and sport performance quality, departing from

3D printing and bringing additive manufacturing in the sports
industry into a new dimension. Ultimately, adidas aims to
create more than 100,000 pairs of this high-performance
footwear by the end of 2018.
↗ ADIDAS.COM/FUTURECRAFT
#FUTURECRAFT

HIGHLIGHTS
PERSONNEL CHANGES ON THE EXECUTIVE

BOARD OF ADIDAS AG
Effective May 11, Harm Ohlmeyer is appointed to succeed
Robin J. Stalker as CFO and Labor Director of a didas AG.
Karen Parkin is elevated to the Executive Board, responsible ADIDAS FOOTBALL LAUNCHES NEMEZIZ
for Global Human Resources, effective May 12. Additionally, Nemeziz is the latest cleat designed to provide unprecedented
Gil Steyaert is appointed to the Executive Board as ordinary agility for the game’s most fluid players. For the development
member effective May 12, and succeeds Glenn Bennett as Board of this shoe, adidas tapped into a common ritual in ancient
Member responsible for Global Operations on August 5, 2017. battle, in dance and in sport: the use of taping for increased
↗ READ PRESS RELEASES physical and mental strength. Nemeziz provides security,
↗ ADIDAS-GROUP.COM/EXECUTIVE-BOARD
support and adaptability to suit players whose agility helps
them dominate.
↗ ADIDAS FOOTBALL ON YOUTUBE
ANNUAL REPORT 2017
ADIDAS AND JAMES HARDEN UNVEIL

HARDEN LS
Harden LS is a lifestyle evolution of the Harden Vol. 1 and
continuation of the Harden signature line. The model utilizes
multi-color Primeknit uppers, full-length BOOST, refreshed
signature detailing and an uncaged toe box. It is available in
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four distinct colorways with the timing of each colorway
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release date being shared by James Harden exclusively on his

social media channels.

HIGHLIGHTS
Q3 2017
ADIDAS AND MAJOR LEAGUE SOCCER Z.N.E. PULSE COLLECTION

EXTEND PARTNERSHIP TO 2024 adidas Athletics unveils its latest Z.N.E. collection, the first
The extension of the existing apparel partnership represents apparel range of its kind to be inspired by the rising heartbeat
the largest investment in American soccer to drive adidas’ of athletes before a game. adidas worked closely with athletes
North American business. The deal makes adidas the official during the development process, including collecting and
supplier partner for the League. Earlier in 2017, adidas and analyzing data to help shape the Athletics Pulse range. This
Major League Soccer had already launched the newly designed focused on the ‘pulse moment’ when athletes leave the locker
Nativo, the Official Match Ball for the 2017 MLS season. room and head towards the field of play, a moment when the
↗ READ PRESS RELEASE athletes’ heart rate peaks in anticipation. At the heart of the
collection is the adidas Z.N.E. Pulse Knit Hoodie, crafted in
breathable merino wool.
FIRST-EVER ULTRABOOST LACELESS

With innovation and creativity at the heart of adidas’ DNA,
the launch of its first-ever laceless performance running
silhouette marks a landmark occasion for the adidas brand.
The shoe continues to challenge convention and once again
ANNUAL REPORT 2017
sets new boundaries.

↗ ADIDAS RUNNING ON YOUTUBE
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ADIDAS

HIGHLIGHTS
ADIDAS COMPLETES DIVESTITURE

OF CCM HOCKEY
adidas announces that as of September 1 it has formally
completed the previously announced divestiture of its CCM
hockey business to a newly formed affiliate of Birch Hill
Equity Partners.
ADIDAS LISTED IN DOW JONES

SUSTAINABILITY INDICES
For the 18th year in a row, adidas is included in the Dow Jones
ANNUAL REPORT 2017
Sustainability Indices (DJSI), which evaluate the sustainability

‘DON'T BE QUIET PLEASE’ CAMPAIGN performance of the largest 2,500 companies listed in the
adidas, Pharrell Williams, Stan Smith and adidas sponsored Dow Jones Global Total Stock Market Index. In the ‘Textiles,
tennis athletes Garbiñe Muguruza, Angelique Kerber, Sascha Apparel & Luxury Goods Industry’, adidas is rated industry
Zverev, Dominic Thiem and Jo-Wilfried Tsonga gather at best in nine criteria: Brand Management, Customer Relation
Frederick Johnson Community Court in Harlem, New York, ship Manage ment, Impact Measurement and Valuation,
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to host a tennis clinic with local youth organizations to kick Materiality, Risk and Crisis Management, Supply Chain
ADIDAS
off the launch of ‘Don’t Be Quiet Please’, a New York City-wide Management, Environmental Policy and Management Systems,
campaign inspiring individuals to make game-changing pledges. Corporate Citizenship and Philanthropy, and Human Rights.
↗ ADIDAS ORIGINALS ON YOUTUBE ↗ READ PRESS RELEASE
#ADIDASPHARRELLWILLIAMS

HIGHLIGHTS
Q4 2017 REEBOK OPENS GLOBAL FLAGSHIP STORE

AT NEW BOSTON HEADQUARTERS
Located at 25 Drydock Avenue within the Innovation and Design
Building in Boston, the store is a truly unique retail experience.
A key feature is the ‘YourReebok’ customization shop, allowing
consumers to create custom and personalized products on
site. The new location is the only Reebok store in the world
where customers can have a customized version of the
brand’s Classic Leather shoe, made by hand, on site. In
addition, consumers can design personalized graphic apparel
and accessories, produced on site in just minutes, and are
able to test footwear prior to purchase in the store, in the
surrounding neighborhood or at Reebok’s fitness facility.
LAUNCH OF AM4 PROJECT

adidas announces the first major project to be created at its
Speedfactory facility in Ansbach, Germany. The launch of the
ANNUAL REPORT 2017
AM4 series heralds a significant moment for the brand in

ADIDAS COMPLETES DIVESTITURE OF terms of the future of manufacturing, with Speedfactory being
TAYLORMADE, ADAMS GOLF AND ASHWORTH a facility that will allow adidas to explore, test and co-create
adidas announces that effective October 2 it has formally with consumers, as well as constantly invent and reinvent
completed the previously announced divestiture of its design and define the future of how the brand creates. The
TaylorMade, Adams Golf and Ashworth golf brands to a newly launch also marks the start of a key city journey for adidas
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formed affiliate of KPS Capital Partners, LP. Speedfactory, with the adidas Made For London (AM4LDN)
ADIDAS
↗ READ PRESS RELEASE and the adidas Made for Paris (AM4PAR) being the first in a
series of individually designed and manufactured running
shoes that adidas will release in the six key cities.
↗ ADIDAS.COM/SPEEDFACTORY
#SPEEDFACTORY, #HERETOCREATE

HIGHLIGHTS
REEBOK AND VICTORIA BECKHAM UNITE

FOR INNOVATIVE NEW PARTNERSHIP
Reebok announces a pivotal partnership with fashion power
house Victoria Beckham. The British designer will join Reebok’s
growing community of accomplished and inspiring women –
including Ariana Grande, Gigi Hadid, Aly Raisman and Teyana
Taylor, among others. The long-term partnership will be
highlighted by the introduction of a bold new Reebok x Victoria
Beckham collection which will be introduced in late 2018.
ADIDAS PREPARES FOR ADIDAS INVITES THE WORLD TO

ANNUAL REPORT 2017
THE 2018 FIFA WORLD CUP CREATE IN NEW GLOBAL CAMPAIGN

ADIDAS EXPANDS DIGITAL PRESENCE AND adidas introduces ‘Telstar 18’, the Official Match Ball, as well adidas launches the latest chapter in its ‘Here to Create’
LAUNCHES NEW APP as the new jerseys for the German national team and other campaign – ‘Calling all Creators’. The multi-dimensional story
The adidas app offers consumers a seamless shopping adidas federations such as Spain, Russia, Japan, Colombia, features 25 of the world’s most influential athletes, designers
experience, personalized services and inspiration on sport Argentina, Mexico, Belgium, Egypt and Morocco. Both the and musicians in sports culture seated at one table. United by
and style. ‘To you, for you, with you’ is the motto for the app, match ball and the jerseys take inspiration from past designs their passion to create, they call on athletes everywhere to
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which adidas revealed in November at Dreamforce, the but are brought into the 21st century with innovative elements. defy conventions and join the adidas movement by using their
ADIDAS
world’s largest software conference, in San Francisco, USA. ‘Telstar 18’, for example, is a reimagining of the first adidas imagination to make something new and shape sports culture.
The new app uses Salesforce technology including Commerce FIFA World Cup match ball, also called Telstar, which was Some of the brand’s recent innovations are featured at this
Cloud, Marketing Cloud and Service Cloud, and is available for used at the 1970 tournament in Mexico. table, including BOOST, footwear created using Parley Ocean
download through the Apple App Store and the Google Play ↗ ADIDAS FOOTBALL ON YOUTUBE Plastic, and Futurecraft 4D footwear.
Store in the US and UK. ↗ ADIDAS ON YOUTUBE
LETTER FROM THE CEO
LETTER
FROM THE
CEO
KASPER RORSTED
ANNUAL REPORT 2017
» AT H L E T E S
W I L L N OT S E T T L E
F O R AV E R A G E .
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AND NEITHER
ADIDAS
DO WE.«
SEE VIDEO MESSAGE FROM OUR CEO
↗ REPORT.ADIDAS-GROUP.COM/#SHAREHOLDERS
LETTER FROM THE CEO
DEAR SHAREHOLDERS, functions. Their job is to make sure we implement our strategy with excellence in every category
and market, and to promote the development of future leaders, with a focus on female talent.
At adidas, we believe that, through sport, we have the power to change lives. This core belief
guides the way we run our company, how we work with our partners, how we create our To align the interests of our senior leaders with those of the adidas AG shareholders, we also
products, and how we engage with our consumers. linked long-term remuneration of senior executives to the development of our share price.
Athletes will not settle for average. And neither do we. Every day, we come to work to create PROGRESS ON OUR GAME PLAN: ‘CREATING THE NEW’
and sell the best sports and fitness products in the world, and to offer the best service and An athlete’s mindset drives us to raise the standards for the entire industry. We have until 2020
consumer experience – and to do it all in a sustainable way. to implement Creating the New, which is the right strategy to succeed in the highly attractive
industry we are in. We are making great strides and clearly delivering against our financial
WHAT MAKES A WINNING TEAM ambition. But we are far from the finish line.
Physical power is not enough – athletes need mental strength in their game. We foster an
athlete’s mindset through three people behaviors that are at the core of our culture: Confidence, Speed, Cities, and Open Source
Collaboration, and Creativity. In 2017, we picked up the pace in becoming the first true fast sports company in the world,
based on our strategic choice Speed. The net sales share of speed-enabled products increased
Confidence allows athletes to make quick decisions on the field, to reach higher. Confidence to 28% in 2017. We also made further progress to achieve a 20% higher share of full-price sales
enables us to be an industry leader and to redefine what today’s sports company looks like. with this part of our business. In addition to embedding Speed in our existing supply chain and
production processes, we explore new, disruptive business models and technologies. In our
Every elite athlete relies on partners: coaches, team mates, and nutritionists. We, too, get Speedfactories in Ansbach, Germany, and Atlanta, USA, smart manufacturing brings production
stronger together through industry-leading collaborations. Internally, we are a team that plays closer to our consumer. Last year saw the first major product created at the Speedfactory:
to win and trusts in each other’s abilities and talents. the AM4 series, an individually crafted shoe made exclusively for our global key cities.
No great athlete succeeds by copying their predecessors’ training plans and strategies. It takes To make our mark on a global scale, we need to win the consumer in major metropolitan
creativity to gain an edge and stand out. Our mission is to be the best sports company in centers. We over-invest to grow share of mind, share of market, and share of trend in six global
ANNUAL REPORT 2017
the world by staying authentic to all athletes, tailoring to their unique needs, tastes, and mega Cities: London, Los Angeles, New York, Paris, Shanghai, and Tokyo. In 2017, we improved
experiences. brand desire in most of these cities by delivering extraordinary experiences to our consumers.
As a result, our key cities made an above-average contribution to the overall growth of our
LEADERSHIP IN ACTION company and helped us win market share.
Confidence, Collaboration, and Creativity are the foundations of the leadership framework we
launched globally last year – it defines what great leadership at adidas looks like. In 2017, we The direction of sport – and our company – is set by all creators. As defined in our strategic
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saw three new leaders joining the Executive Board: Harm Ohlmeyer taking over as Chief choice Open Source, we invite athletes, consumers, and partners to collaborate with our
ADIDAS
Financial Officer, Karen Parkin being elevated to Board Member responsible for Human brands. By inspiring innovation in the industry and beyond, creative partnerships help us shape
Resources, and Gil Steyaert becoming Board Member responsible for Global Operations. All the future of sport – and the sports culture.
three were internal promotions, a nod to our people potential.
Our creative collaborations with Alexander Wang, Kanye West, and Stella McCartney to name a
To continue to excel in leadership development, we established a Core Leadership Group and few, continued to drive brand desire and growth. By partnering up with the world’s best
an Extended Leadership Group consisting of leaders from our most important markets and athletes and teams, we build communities of advocates. This also takes place on a local level;
LETTER FROM THE CEO
the ‘adidas Runners’ community, for instance, currently has over 50,000 active runners in Externally, our efforts continue to receive recognition, with adidas being listed in the Dow Jones
Western Europe alone. Sustainability Indices for the 18th consecutive year, and being awarded the third re-accreditation
of our social supply chain program by the Fair Labor Association. What’s more, this Annual
Our appetite for collaboration allows us to share our sports knowledge by working with the Report marks the beginning of paper-free reporting – another testament to walking the talk
best in other fields. Our partnership with Parley for the Oceans is a prime example: In 2017, we in our daily business.
released multiple franchise silhouettes, such as the UltraBOOST, NMD and EQT, made of
Parley Ocean Plastic. We also joined forces with Carbon, a pioneer in 3D printing, to launch a AN ATHLETE’S MINDSET TURNS TO PERFORMANCE
new product and platform: Futurecraft 4D. Driven by athlete data, a production process called Competition is in our DNA. We are constantly reassessing our processes, thinking of ways to
‘Digital Light Synthesis’ enables us to print previously impossible designs without labor- get faster, stronger, and more attractive for the consumer. In this spirit, we continued to break
intensive and complex assembly. records in the way we operate and the value we bring to our stakeholders.
Portfolio, adidas North America, Digital, and ONE adidas 2017 financial results
On top of focusing on Speed, Cities, and Open Source, along with our unique culture, we In 2017, we achieved record sales of € 21.2 billion, reflecting currency-neutral growth of 16%.
accelerated Creating the New with four priorities: Portfolio, adidas North America, Digital, and The adidas brand continued to grab share of mind and market around the globe, growing at
ONE adidas. We moved ahead with actively managing our brand portfolio and completed the double-digit rates in all regions except Russia/CIS.
divestiture of the TaylorMade, Adams Golf and Ashworth golf brands, as well as the CCM hockey
business. In the meanwhile, the ‘Muscle-Up’ turnaround at Reebok is in full motion. Despite currency headwinds, our gross margin climbed 120 basis points to 50.4%. We increased
our investments into our brands while strictly managing costs. As a result, we fed the gross
In North America, the largest sporting goods market in the world, we grew our adidas brand margin improvement through to the operating margin, which expanded to a level of 9.8%. Our
business by over 30% and kept building capabilities and infrastructure. Our global e-commerce net income from continuing operations, excluding the negative one-time impact of the US tax
business was up more than 50%. Digital, however, means much more to us; gearing up for the reform, grew more than twice as fast as our top line, up 32% to € 1.430 billion.
future, we are driving digital transformation across the entire organization. Finally, we are
pulling levers to improve our operational efficiency and to become a more agile and truly global 2018 outlook
company. We will continue our momentum in 2018, with a bias for quality growth. We are targeting a
ANNUAL REPORT 2017
currency-neutral sales increase of around 10% against difficult comparisons, given two
Sustainability consecutive years of strong double-digit growth.
It is our obligation to operate responsibly. We have integrated sustainability in most aspects of
our business, from product creation and supplier management to store concept development By increasingly leveraging our scalable operating model, net income is expected to once again
and facilities. Through our actions, we challenge and inspire everyone to contribute to a more grow significantly faster than revenues, to a level of more than € 1.6 billion. This will not only
sustainable future. keep us on track toward our 2020 financial ambition, but also allows us to raise the bar once
018
more: We are now targeting even higher net income growth, between 22% and 24% on average
ADIDAS
In 2017, we created more than one million pairs of shoes made with Parley Ocean Plastic, while per year, for our current strategic cycle from 2015 until 2020.
93% of all cotton we sourced globally was Better Cotton. Following our decision to go plastic-
free at our offices, the changes we have implemented will avoid more than 40 tons of single-
use plastic items per year.
LETTER FROM THE CEO
IN CLOSING
Our mission is to be the best sports company in the world, but we are only as good as what our
consumers, athletes, teams, partners, shareholders, and the media say about us. When all our
stakeholders call us the best, market share, leadership, and profitability will follow.
This logic is reflected in our 2017 performance and 2018 outlook. Our strategy Creating the
New paired with an athlete’s mindset enables us to deliver sustainable value for our
stakeholders, our employees, and for society at large – now and in the future.
We will consistently put Creating the New into practice. Our strategy might span only until 2020
but, like any athlete, we keep aiming for better. We play to win.
Thank you for your ongoing support.
Sincerely yours,
KASPER RORSTED
CEO
ANNUAL REPORT 2017
019
ADIDAS
EXECUTIVE BOARD
EXECUTIVE
BOARD
ANNUAL REPORT 2017
020
ADIDAS
ERIC LIEDTKE HARM OHLMEYER KASPER RORSTED ROLAND AUSCHEL KAREN PARKIN GIL STE YAERT
GLOBAL BRANDS CHIEF FINANCIAL OFFICER CHIEF EXECUTIVE OFFICER GLOBAL SALES GLOBAL HUMAN RESOURCES GLOBAL OPER ATIONS
EXECUTIVE BOARD
OUR
EXECUTIVE
BOARD IS
COMPRISED OF ROLAND AUSCHEL
SIX MEMBERS. GLOBAL SALES
EACH BOARD
MEMBER IS Roland Auschel was born in Bad Waldsee, Germany, in 1963 and is a German
RESPONSIBLE citizen. After obtaining his Bachelor’s degree in European Business Studies in
FOR AT LEAST ONE Germany and the UK as well as an MBA in the United States, he joined the
MAJOR FUNCTION adidas team as a Strategic Planner in 1989. During his career with the
WITHIN THE company, he has held many senior management positions, including Business
COMPANY. Unit Manager, Key Account Manager Europe and Head of Region Europe,
Middle East and Africa. In 2009, he became Chief Sales Officer Multichannel
Markets. In 2013, Roland Auschel was appointed to the Executive Board, where
he assumed responsibility for Global Sales.
KASPER RORSTED
CHIEF EXECUTIVE OFFICER
Kasper Rorsted was born in Aarhus, Denmark, in 1962 and is a Danish national.
After studying Business Economics at the International Business School in
Copenhagen, he completed a series of Executive Programs at Harvard
ANNUAL REPORT 2017
Business School. Kasper Rorsted then gained valuable experience within the
IT sector through various management positions at Oracle, Compaq and
Hewlett Packard. In 2005, Kasper Rorsted joined consumer goods manufacturer
Henkel as Executive Vice President Human Resources, Purchasing, Information
Technologies and Infrastructure Services. Three years after joining Henkel, he
was appointed Chief Executive Officer. In August 2016, Kasper Rorsted joined
021
adidas. After two months as a Board member, he took over as Chief Executive
ADIDAS
Officer of adidas in October 2016.
Kasper Rorsted is also:

—— Member of the Supervisory Board, Bertelsmann SE & Co. KGaA,
Gütersloh, Germany
—— Member of the Supervisory Board, Danfoss A/S, Nordborg, Denmark 1
1 Until April 1, 2017.
EXECUTIVE BOARD
HARM OHLMEYER
CHIEF FINANCIAL OFFICER 3
Harm Ohlmeyer was born in 1968 in Hoya, Germany, and is a German national.
He holds a degree in Economics from Regensburg University, Germany, as well
as an MBA from Murray State University, USA. Harm Ohlmeyer started his
career with adidas in 1998 and gained extensive experience in the areas of
Finance and Sales, including responsibility as Senior Vice President Finance
TaylorMade-adidas Golf in Carlsbad, USA, Senior Vice President Finance adidas
Brand and Senior Vice President Finance for Global Sales (adidas and Reebok).
From 2011, he led the company’s e-commerce business, most recently as Senior
Vice President Digital Brand Commerce. From 2014 to 2016, he held additional
responsibility as Senior Vice President Sales Strategy and Excellence. Harm
Ohlmeyer was appointed to the Executive Board effective March 7, 2017 and
became Chief Financial Officer and Labor Director effective May 11, 2017.
3 Since May 11, 2017.
ERIC LIEDTKE
GLOBAL BRANDS
Eric Liedtke, a US citizen, holds a Bachelor of Arts degree in Journalism from

the University of Wisconsin-Madison. He joined adidas in 1994 as Global Line
Manager for Cross Training in Portland/Oregon. During his 20-year career
with adidas, he has held senior management positions of increasing
ANNUAL REPORT 2017
responsibility at adidas America, including Director of Footwear Marketing

and Vice President Brand Marketing. In 2006, Eric Liedtke moved to the
corporate headquarters in Herzogenaurach, Germany, to become Senior Vice
President Global Brand Marketing. From 2011, he held the position of Senior
Vice President adidas Sport Performance, responsible for all adidas brand
sports categories globally. Eric Liedtke has been Executive Board member
022
since March 2014, responsible for Global Brands (the adidas and Reebok
ADIDAS
brands). In addition to his Executive Board position, he is a passionate member

of the Steering Committee of Parley for the Oceans.
Eric Liedtke is also:

—— Member of the Board of Directors, Carbon, Inc., Redwood City, USA 2
2 Since December 19, 2017.

EXECUTIVE BOARD
KAREN PARKIN
GLOBAL HUMAN RESOURCES 4
Karen Parkin was born in 1965, is a British national and also holds a US
passport. She obtained a Bachelor’s degree in Education from Sheffield
Hallam University, UK, and completed the Business Management Leadership
Program at Lancaster University Management School. Karen Parkin joined
adidas in 1997 as Sales Director adidas UK, where she subsequently was
Business Development Director from 2003 to 2005. In 2005, she moved to
adidas America as Vice President Business Development, subsequently taking
on responsibility for the supply chain function at adidas America in 2007 as
Vice President Logistics and Supply Chain North America. In 2013 and 2014,
Karen Parkin acted as Senior Vice President Global Supply Chain, based at the
company’s headquarters in Herzogenaurach and at the adidas America
headquarters in Portland, Oregon. Since 2014, she has held the position of
Chief HR Officer. Karen Parkin was appointed to the Executive Board, responsible
for Global Human Resources, effective May 12, 2017.
4 Since May 12, 2017.
GIL STEYAERT
GLOBAL OPERATIONS 5
Gil Steyaert was born in Belgium in 1962 and is a French national. He holds a
degree in Business from ISC Paris Business School. Gil Steyaert started at
ANNUAL REPORT 2017
FOR MORE adidas in 1999 as Joint Managing Director for France and has since worked in
INFORMATION various local and regional roles with increasing responsibility. From 2003 to
ON THE 2013, he was Managing Director North (UK, Ireland, Benelux and Scandinavia).
ADIDAS AG Subsequently, he led Western Europe as Managing Director. Gil Steyaert was
EXECUTIVE appointed to the Executive Board effective May 12, 2017 and took over
BOARD responsibility for Global Operations on August 5, 2017.
023
↗ ADIDAS-GROUP.COM/
EXECUTIVE-BOARD 5 Since August 5, 2017.
ADIDAS
ROBIN J. STALKER GLENN BENNETT

CHIEF FINANCIAL OFFICER 6 GLOBAL OPERATIONS 7
6 Until May 11, 2017. 7 Until August 4, 2017.
SUPERVISORY BOARD
SUPERVISORY BOARD
IGOR LANDAU WILLI SCHWERDTLE IAN GALLIENNE DR. WOLFGANG JÄGER*

CHAIRMAN DEPUTY CHAIRMAN residing in Gerpinnes, Belgium residing in Bochum, Germany
residing in Lugano, Switzerland residing in Munich, Germany Co-Chief Executive Officer, Groupe Bruxelles Research Fellow at the Institute for Social
Pensioner Independent Management Consultant as Lambert, Brussels, Belgium Movements at the Ruhr Universität Bochum,
well as Partner, WP Force Solutions GmbH, —— Member of the Board of Directors, Expert Commission ’Cultures of remembrance
Bad Homburg v. d. Höhe, Germany Pernod Ricard SA, Paris, France of social democracy‘ of Hans-Böckler-Stiftung,
—— Member of the Supervisory Board, —— Member of the Board of Directors, Bochum, Germany 4
Eckes AG, Nieder-Olm, Germany SGS SA, Geneva, Switzerland
—— Chairman of the Supervisory Board, —— Member of the Board of Directors,
Windeln.de SE, Munich, Germany Umicore SA, Brussels, Belgium 1
—— Member of the Board of Directors,
Erbe SA, Loverval, Belgium
Mandates within the Groupe Bruxelles Lambert:
ANNUAL REPORT 2017

Imerys SA, Paris, France
SABINE BAUER* —— Member of the Board of Directors, Sienna BIOGRAPHICAL
DEPUTY CHAIRWOMAN Capital S.à r.l., Strassen, Luxembourg INFORMATION
residing in Erlangen, Germany —— Member of the Board of Directors, GBL ON OUR
Full-time member of the Works Council Energy S.à r.l., Strassen, Luxembourg 2 SUPERVISORY
024
Herzogenaurach, adidas AG DIETER HAUENSTEIN* —— Member of the Board of Directors, GBL BOARD MEMBERS
IS AVAILABLE
ADIDAS
Chairwoman of the Central Works Council, residing in Herzogenaurach, Germany Verwaltung SA, Strassen, Luxembourg 3
adidas AG Full-time member of the Works Council ONLINE
Chairwoman of the European Works Council, Herzogenaurach, adidas AG ↗ ADIDAS-GROUP.COM/SUPERVISORY-BOARD
adidas AG
* Employee representative. 2 Since January 1, 2017. 4 Since September 1, 2017; formerly Managing Director in charge of Public
1 Until April 25, 2017. 3 Until January 1, 2017. Relations and Scholarships, Hans-Böckler-Stiftung, Düsseldorf, Germany.
SUPERVISORY BOARD
DR. STEFAN JENTZSCH KATJA KRAUS KATHRIN MENGES ROLAND NOSKO*

residing in New York, USA residing in Hamburg, Germany residing in Neuss, Germany residing in Wolnzach, Germany
Corporate Finance Consultant/Partner, Author/Managing Partner, Jung von Matt/ Executive Vice President Human Resources Trade Union Official, IG BCE, Headquarters
Perella Weinberg Partners LP, New York, USA sports GmbH, Hamburg, Germany and Infrastructure Services, Nuremberg, Nuremberg, Germany
—— Deputy Chairman of the Supervisory Henkel AG & Co. KGaA, Düsseldorf, Germany —— Deputy Chairman of the Supervisory
Board, AIL Leasing München AG, Mandates within the Henkel Group: Board, CeramTec GmbH, Plochingen,
Grünwald, Germany —— Member of the Supervisory Board, Germany
Henkel Central Eastern Europe GmbH, —— Member of the Supervisory Board, Plastic
Vienna, Austria Omnium Automotive Exteriors GmbH,
—— Member of the Supervisory Board, Munich, Germany 5
Henkel Nederland B.V., Nieuwegein,
The Netherlands
Henkel Norden AB, Stockholm, Sweden
ANNUAL REPORT 2017
Henkel Norden Oy, Vantaa, Finland
HERBERT KAUFFMANN UDO MÜLLER*

residing in Stuttgart, Germany residing in Herzogenaurach, Germany
Independent Management Consultant, Director Future Communication, adidas AG
Stuttgart, Germany
025
—— Member of the Supervisory Board,
ADIDAS
DEUTZ AG, Cologne, Germany
* Employee representative.
5 Since July 13, 2017.
SUPERVISORY BOARD
HANS RUPRECHT* NASSEF SAWIRIS HEIDI THALER-VEH* KURT WITTMANN*

residing in Herzogenaurach, Germany residing in London, Great Britain residing in Uffenheim, Germany residing in Markt Bibart, Germany
Vice President Customer Service Central Chief Executive Officer & Member of the Member of the Central Works Council, Full-time member of the Works Council
Europe West, adidas AG Board of Directors, OCI N.V., Amsterdam, adidas AG Herzogenaurach, adidas AG
The Netherlands First Deputy Chairman of the Works Council
—— Member of the Board of Directors, Herzogenaurach, adidas AG
LafargeHolcim Ltd., Jona, Switzerland
Mandates within the OCI N.V. Group:
OCI Partners LP, Wilmington,
Delaware, USA
ANNUAL REPORT 2017
STANDING COMMITTEES
Steering Committee — Igor Landau (Chairman), Sabine Bauer*, Willi Schwerdtle
026
General Committee — Igor Landau (Chairman), Sabine Bauer*, Roland Nosko*, Willi Schwerdtle
ADIDAS
Audit Committee — Herbert Kauffmann (Chairman), Ian Gallienne 6, Dr. Wolfgang Jäger*, Hans Ruprecht*
Finance and Investment Committee — Igor Landau (Chairman), Sabine Bauer*, Dr. Wolfgang Jäger*, Herbert Kauffmann
Nomination Committee — Igor Landau (Chairman), Kathrin Menges, Willi Schwerdtle
Mediation Committee pursuant to § 27 section 3 Co-Determination Act (MitbestG) — Igor Landau, Sabine Bauer*, Willi Schwerdtle, Heidi Thaler-Veh*
* Employee representative.
6 Committee member since March 7, 2017; previously Dr. Stefan Jentzsch until March 7, 2017.
SUPERVISORY BOARD REPORT
SUPER
V I S O RY
B OA R D
REPORT
IGOR LANDAU
CHAIRMAN OF THE SUPERVISORY BOARD
ANNUAL REPORT 2017
» T H E CO M PA N Y I S
WELL POS I T I ON ED
TO CON T I N UE TO
027
ADIDAS
G R O W P R O F I T A B LY. «
DEAR SHAREHOLDERS, The Executive Board involved us directly and in a timely and comprehensible manner in all of
the company’s fundamental decisions. After in-depth consultation and examination of the
We look back on another exceptional year. Thanks to strong brands, unique partnerships and detailed information submitted to us by the Executive Board, we approved individual transactions
collaborations in the world of sport as well as a sharp focus on our consumers’ needs, the where required by law.
company was able to record another year of strong top- and bottom-line growth. Driven by
innovative products and powerful marketing campaigns, the momentum experienced by our The Executive Board informed us extensively and in a timely manner through written and oral
brands remained high throughout the year. This led to sales and earnings results that clearly reports. This information covered all relevant aspects of the company’s business strategy,
surpassed targets set at the beginning of the year. These positive developments are the business planning, including finance, investment and personnel planning, the course of
consequence of numerous measures which have been implemented to support the successful business and the company’s financial position and profitability. We were also kept up to date on
execution of our strategic business plan ‘Creating the New’. First introduced in 2015, Creating matters relating to the risk situation, risk management and compliance as well as all major
the New was updated with several complementary initiatives at the beginning of 2017 in order decisions and business transactions.
to grow the top and bottom line even faster than initially projected. Consequently, adidas
updated its outlook for 2020 and presented an even more ambitious set of financial targets. In The Executive Board always explained immediately and in a detailed manner any deviations in
2017 again, we generated double-digit sales growth rates in almost all regions, including in the business performance from the established plans, and the Supervisory Board as a whole
focus markets North America and Greater China as well as the important e-commerce channel. discussed these matters in depth.
Paired with an exceptional profitability improvement, this shows that the company’s success is
both broad-based and well balanced. The divestiture of the TaylorMade, Adams Golf and The Executive Board regularly provided us with comprehensive written reports for the
Ashworth brands as well as the CCM Hockey business was completed during the course of preparation of our meetings. We thus always had the opportunity to critically analyze the
2017, which will allow the company to focus even more on the execution of its strategic business Executive Board’s reports and resolution proposals within the committees and within the
plan. Newly appointed members of the Executive Board have assumed their roles fast and Supervisory Board as a whole and to put forward suggestions before passing resolutions after
smoothly, with Harm Ohlmeyer taking over as Chief Financial Officer, Karen Parkin being in-depth examination and consultation. At the Supervisory Board meetings, the Executive
elevated to Executive Board Member responsible for Human Resources and Gil Steyaert Board was available to discuss and answer our questions. In the periods between our meetings,
becoming Executive Board Member responsible for Global Operations. All three appointments the Executive Board also provided us with extensive, timely monthly reports on the current
were internal ones, which speaks for the quality and depth of the organization’s pool of talent. business situation. We critically examined, specifically challenged and checked the plausibility
ANNUAL REPORT 2017
Taking all this into consideration, the company is well positioned to continue to grow profitably of the information provided by the Executive Board.
in 2018 and beyond.
In the year under review, we held seven regular meetings of the entire Supervisory Board, two
SUPERVISION AND ADVICE IN DIALOGUE of which took place outside Germany. The attendance rate of the members in the Supervisory
WITH THE EXECUTIVE BOARD Board meetings was around 95% in the year under review. The committee meetings, with the
In the year under review, we performed all of our tasks laid down by law, the Articles of exception of one General Committee meeting and two Finance and Investment Committee
028
Association, the German Corporate Governance Code (the ‘Code’) and the Rules of Procedure meetings from which one member was excused in each case, were fully attended. The external
ADIDAS
carefully and conscientiously, as in previous years. In 2017, we also followed intensively the auditor, KPMG AG Wirtschaftsprüfungsgesellschaft (‘KPMG’), attended all regular meetings of
work of the Executive Board. In this context, we regularly advised the Executive Board on the the Supervisory Board – the exception being the two meetings which took place outside
management of the company and diligently and continuously supervised its management Germany – insofar as no Executive Board matters were dealt with. KPMG also attended all
activities. We assured ourselves of the legality, expediency and regularity of the management meetings of the Audit Committee.
activities and found that there were no objections to be raised.
In the periods between meetings, the Supervisory Board Chairman and the Audit Committee TRANSACTIONS REQUIRING SUPERVISORY BOARD APPROVAL
Chairman maintained regular contact with the Chief Executive Officer and the Chief Financial In accordance with statutory regulations and the Rules of Procedure of the Supervisory Board,
Officer, conferring on matters such as corporate strategy, business planning and development, certain transactions and measures require a formal resolution or the prior approval of the
the risk situation and risk management as well as compliance. In addition, the Executive Board Supervisory Board.
immediately informed the Supervisory Board Chairman about any significant events of
fundamental importance for the management and for evaluating the situation and development The topic of our February and March meetings was, after thorough discussion, the approval of
of the company, where necessary also at short notice. the 2017 Budget and Investment Plan presented by the Executive Board. In March, we resolved
upon the resolutions to be proposed to the 2017 Annual General Meeting, including the proposal
TOPICS FOR THE ENTIRE SUPERVISORY BOARD regarding the appropriation of retained earnings for the 2016 financial year as well as the
Our consultations and examinations focused on the following topics: proposal to change the Supervisory Board compensation.
SITUATION AND BUSINESS DEVELOPMENT At our February meeting, we additionally dealt with the planned divestiture of TaylorMade,
The development of sales and earnings, the employment situation as well as the financial Adams Golf, Ashworth and CCM Hockey and the integration of the FiveTen brand into adidas
position of the company and the business development of the company’s individual business Outdoor. The competent Finance and Investment Committee ultimately approved the sale of
areas and markets were presented to us in detail by the Executive Board at every Supervisory TaylorMade and CCM Hockey.
Board meeting and were discussed regularly. Further topics which were always discussed
were the possible impact of global economic developments as well as the development of our COMPOSITION OF THE EXECUTIVE BOARD
individual brands and markets. Following in-depth discussions about the resolution proposal prepared by the General
Committee on the appointment of Harm Ohlmeyer as successor to the long-standing Chief
At our February and March meeting, we dealt with the ‘Acceleration Plan’ and with the updated Financial Officer Robin J. Stalker, we resolved at our March meeting to appoint Harm Ohlmeyer
financial targets for 2020. Various initiatives for the key pillars ‘Portfolio, adidas North America, as Executive Board member with effect from March 7, 2017 and as Chief Financial Officer with
ONE adidas, Digital’ were launched in the context of the Acceleration Plan. Those initiatives aim effect from the end of the Annual General Meeting on May 11, 2017. We also resolved upon the
at supporting the momentum experienced by our brands and accelerating sales and net income conclusion of his Executive Board service contract. Prior to this, we had approved the mutually
growth compared to the original five-year plan. agreed termination of the Executive Board mandate of Robin J. Stalker with effect from the end
ANNUAL REPORT 2017
of the Annual General Meeting on May 11, 2017. Furthermore, after in depth-consultation, we

In August, we examined the topic of retail profitability. Furthermore, we dealt with the CSR approved the conclusion of the corresponding termination agreement regarding the Executive
Directive Implementation Act and the non-financial reporting legally required for the first time Board service contract.
therein. In this connection, we assigned the Audit Committee the task of preparing the audit
of the non-financial reporting by the Supervisory Board. We commissioned an external At the May meeting, we furthermore approved the mutually agreed termination of the long-
examination of the content pursuant to § 111 section 2 sentence 4 German Stock Corporation standing Executive Board mandate of Glenn Bennett by the end of the third quarter of 2017 at
029
Act (Aktiengesetz – AktG). One topic of the October meeting was a detailed and sound analysis the latest and approved the termination agreement to be concluded. In this context, we
ADIDAS
of the strategic business plan. In addition, the business in the Asia/Pacific region was discussed. appointed Gil Steyaert, successor to Glenn Bennett, as Executive Board member with effect
At the December meeting, as stipulated in the Rules of Procedure of the Supervisory Board, from May 12, 2017 and approved the conclusion of his Executive Board service contract.
one agenda item was the report by the Executive Board on the marketing and sponsorship
agreements concluded in the respective calendar year.
Furthermore, Karen Parkin was appointed as member of the Executive Board for the newly COMPOSITION OF AND CHANGES ON THE SUPERVISORY BOARD
created Executive Board function Human Resources. We resolved upon the appointment of There were no personnel changes with regard to the full Supervisory Board in the reporting
Karen Parkin as member of the Executive Board with effect from May 12, 2017 and approved period. At the March meeting of the Audit Committee, the composition of the Audit Committee
the conclusion of her Executive Board service contract. was addressed. Dr. Stefan Jentzsch stated that he would leave the Audit Committee for
professional reasons. As his replacement, Ian Gallienne was elected as new member of the
In December, we resolved upon the termination of the appointment and the concurrent Audit Committee. At the May meeting of the Audit Committee, Herbert Kauffmann was
reappointment of Roland Auschel and Eric Liedtke with effect from January 1, 2018 and reelected as Chairman of the Audit Committee.
approved the conclusion of their new Executive Board service contracts. Thus, we were able to
commit Roland Auschel and Eric Liedtke long-term to the company as both of them are key for With regard to the representation of women and men, the Supervisory Board complies with the
the company and its successful development. statutory minimum quota pursuant to § 96 section 2 sentences 1, 3 and 4 AktG. Both the
shareholder representatives and the employee representatives resolved in accordance with
EXECUTIVE BOARD COMPENSATION § 96 section 2 sentence 3 AktG that the minimum quota of 30% women and 30% men on the
All matters regarding Executive Board compensation were prepared comprehensively by the Supervisory Board shall be fulfilled separately for the shareholder representatives and the
General Committee, as provided for in the Rules of Procedure of the Supervisory Board, employee representatives.
explained to the Supervisory Board as a whole and submitted for resolution.
The term of office of the Supervisory Board members, including the four members who were
Each year at our February meeting of the entire Supervisory Board, the main subject is elected as new shareholder or employee representatives in the supplementary election, will
Executive Board compensation. At this meeting, following an in-depth review of the performance expire as scheduled at the end of the Annual General Meeting in May 2019.
of the individual Executive Board members and their respective achievement of the targets set
in the 2016 Performance Bonus Plan, we resolved upon the bonuses to be paid to the Executive CORPORATE GOVERNANCE
Board members based on the 2016 Performance Bonus Plan. Furthermore, we also discussed The Supervisory Board regularly monitors the application and further development of the
in detail the criteria and key targets for the 2017 Performance Bonus Plan and the individual corporate governance regulations within the company, in particular the implementation of
bonus target amounts and determined them for each Executive Board member. the recommendations of the Code. Therefore, in the year under review, we also dealt with the
Code, in particular with the amendments resolved upon by the Government Commission on
ANNUAL REPORT 2017
In line with the Code, in the year under review we commissioned an external, independent February 7, 2017.
compensation expert to review the structure of the Executive Board compensation and the
individual compensation levels of the Executive Board members. The review found that the The last Declaration of Compliance was issued by the Executive Board and Supervisory Board
compensation meets the requirements of the German Stock Corporation Act and of the Code. of adidas AG pursuant to § 161 AktG on February 13, 2017.
However, current compensation levels could be oriented even more toward market standards.
At our meetings in February and October, we considered in detail the results of the review of In February 2018, we discussed in depth the current 2018 Declaration of Compliance and then
030
the compensation levels and structure. We agreed with the compensation expert’s assessment. resolved upon it and made it permanently available to our shareholders on our corporate
ADIDAS
On this basis and on the occasion of the reappointments of Roland Auschel and Eric Liedtke, we website. ↗ ADIDAS-GROUP.COM/S/CORPORATE-GOVERNANCE
resolved in December to adjust their compensation in accordance with the results of the review
by the independent compensation expert with effect from January 1, 2018. At our May, August, October and December meetings, within the framework of our regular self-
evaluation, we dealt with the planning and preparation of a new efficiency examination of the
Supervisory Board and Audit Committee which began in late 2017 and will be concluded in 2018.
Pursuant to the new recommendation of the Code, we also developed a competency profile for —— The Steering Committee did not meet in the year under review.
the full Supervisory Board. Under consideration of the specific features which result from the —— The General Committee held six meetings in the 2017 financial year. The main focus of
activities of the organization as a globally present, public listed company, we ensured that the the meetings was the preparation of the resolutions of the Supervisory Board as a whole,
full Supervisory Board has the knowledge, skills and professional expertise required to properly detailed individually above, in particular the resolution on the changes on the Executive
perform its duties. Details can be found in the Corporate Governance Report including the Board, the targets for the 2017 Performance Bonus, the target achievement of the
Declaration on Corporate Governance (‘Corporate Governance Report’).  SEE CORPORATE 2016 Performance Bonus and the determination of the Executive Board compensation and
GOVERNANCE REPORT INCLUDING THE DECLARATION ON CORPORATE GOVERNANCE, P. 33 review of its appropriateness. The drafting of the long-term compensation plan 2018/2020
(LTIP 2018/2020) was also an agenda item.
In December, we discussed the independence of the members of the Supervisory Board and —— The Audit Committee also held six meetings in the year under review. The Chief Financial
the respective independence criteria. A corresponding resolution was passed in February 2018. Officer and the auditor were present at all meetings and reported to the committee
Based thereon, in the Supervisory Board’s assessment, currently all members are independent. members in detail.
In the year under review, no conflicts of interest arose in regard to the Executive Board In addition to the supervision of the accounting process, the committee’s work also focused
members. There were also no conflicts of interest within the Supervisory Board. It is pointed on the comprehensive review of the first quarter report, the first half year report and the
out that in December 2015, the Supervisory Board approved the conclusion of a three-year report on the first nine months together with the Chief Financial Officer and the auditor before
contract, effective January 1, 2016, with a company in which one Supervisory Board member is the respective dates of publication, also the examination of the annual financial statements
involved. The order volume is to be confirmed annually by the Supervisory Board. A resolution and the consolidated financial statements for 2016, including the combined Management
was passed by the Supervisory Board as regards the order volume for the 2018 financial year Report of adidas AG and the Group, as well as the Executive Board’s proposal regarding the
at the meeting in December 2017. In the view of the Supervisory Board, there was no conflict of appropriation of retained earnings. Following an in-depth review of the audit reports with
interest. Nevertheless, as in the previous years, the Supervisory Board member concerned did the auditor, the committee decided to recommend that the Supervisory Board approve the
not participate in the respective resolution. 2016 annual financial statements and consolidated financial statements. In addition, after
obtaining the auditor‘s declaration of independence and after conclusion of a disclosure
Further information on corporate governance within the company can be found in the agreement, the Audit Committee prepared the Supervisory Board’s proposal to the Annual
Corporate Governance Report.  SEE CORPORATE GOVERNANCE REPORT INCLUDING THE DECLARATION ON General Meeting concerning the selection of the auditor of the annual financial statements
ANNUAL REPORT 2017
CORPORATE GOVERNANCE, P. 33 and the consolidated financial statements for the 2017 financial year and the auditor for
the audit review of interim management reports (half year report and quarterly reports) for
EFFICIENT COMMITTEE WORK the 2017 financial year and, insofar as interim financial reports are to be prepared prior to
In order to perform our tasks in an efficient manner, we have established a total of six standing the 2018 Annual General Meeting, for the 2018 financial year and recommended that the
Supervisory Board committees. Supervisory Board propose KPMG to the Annual General Meeting in this respect. The Audit
Committee declared to the Supervisory Board in this regard that the recommendation is free
031
The committees prepare resolutions and topics for the meetings of the entire Supervisory from undue influence by a third party and that no clause of the kind referred to in Article 16
ADIDAS
Board. Within the legally permissible framework and in appropriate cases, we have furthermore section 6 of the EU Regulation No. 537/2014 of the European Parliament and of the Council
delegated the Supervisory Board‘s authority to pass certain resolutions to individual of April 14, 2014 on specific requirements regarding the statutory audit of public-interest
committees. With the exception of the Audit Committee, the Supervisory Board Chairman also entities has been imposed upon it.
chairs all the standing committees. The committee chairpersons inform the Supervisory Board
about the content and results of the committee meetings at the subsequent meeting of the In the year under review, the CSR Directive Implementation Act was a regularly discussed
entire Supervisory Board. topic at Audit Committee meetings. In particular, the Audit Committee dealt with the
preparation of the non-financial reporting which is to be audited by the Supervisory Board Executive Board explained the financial statements in detail. At both meetings, the auditor
and which is legally required for the first time. reported the material results of the audit, inter alia with regard to the priority topics agreed and
the key audit matters and was available for questions and the provision of additional information.
Furthermore, the Audit Committee dealt intensively with the monitoring of the effectiveness The auditor did not report any significant weaknesses with respect to the internal control and
of the risk management system, the compliance management system, the internal control risk management system relating to the accounting process. We also discussed in depth with
system and the internal audit system. Moreover, the committee addressed the findings of the Executive Board the proposal concerning the appropriation of retained earnings, which
Internal Audit and the audit plan. provides for a dividend of € 2.60 per dividend-entitled share and adopted this significant
increase to € 2.60 compared with the previous year under consideration of the strong business
In addition, at every meeting of the Audit Committee, the Chief Compliance Officer gave development in the 2017 financial year, the company’s good financial situation and future
regular reports. prospects. Based on our own examinations of the annual and consolidated financial statements
(including the non-financial statement), we came to the conclusion that there are no objections
—— The Finance and Investment Committee held two meetings in the year under review, both to be raised. At our financial statements meeting, therefore, following the recommendation of
of which were held by way of a conference call. the Audit Committee, we approved the audit results and the financial statements including the
non-financial statement prepared by the Executive Board. The annual financial statements of
At the May meeting, the sale of TaylorMade was discussed and subsequently approved. At adidas AG were thus approved.
the June meeting, the committee approved the divestiture of CCM Hockey.
EXPRESSION OF THANKS
—— The Nomination Committee held one meeting in the year under review to discuss the On behalf of the entire Supervisory Board, I wish to thank the members of the Executive Board
competency profile newly recommended by the Code. and all adidas employees around the world for their great personal dedication and their ongoing
commitment, and I also thank the employee representatives for their trusting collaboration.
—— The Mediation Committee, established in accordance with the German Co-Determination
Act (Mitbestimmungsgesetz — MitbestG), did not have to be convened in 2017. I would particularly like to thank our departed long-standing Executive Board members Glenn
Bennett and Robin J. Stalker who sustainably shaped the company. The success story of a didas
EXAMINATION OF THE 2017 ANNUAL FINANCIAL STATEMENTS AND is closely linked to Glenn Bennett’s responsibilities in the area of Global Operations. During
ANNUAL REPORT 2017
CONSOLIDATED FINANCIAL STATEMENTS Robin J. Stalker’s term of office as CFO, the company’s value increased from € 3 billion to more
KPMG audited the 2017 consolidated financial statements prepared by the Executive Board in than € 30 billion. These are outstanding achievements, for which I would like to express my
accordance with § 315e German Commercial Code (Handelsgesetzbuch – HGB) in compliance sincere appreciation to Glenn Bennett and Robin J. Stalker on behalf of the Supervisory Board
with IFRS and issued an unqualified opinion thereon. The auditor also approved without and all adidas employees.
qualification the 2017 annual financial statements of a didas AG, prepared in accordance with
HGB requirements, and the combined Management Report of adidas AG and the Group. For the Supervisory Board
032
Furthermore, at the request of the Supervisory Board, KPMG audited the non-financial
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statement, which had to be prepared for the first time. The financial statements, the proposal
put forward by the Executive Board regarding the appropriation of retained earnings and the
auditor’s reports were distributed by the Executive Board to all Supervisory Board members in I G O R L A N DA U
a timely manner. We examined the documents in depth, with a particular focus on legality and CHAIRMAN OF THE SUPERVISORY BOARD
regularity, in the presence of the auditor at the Audit Committee meeting held on March 2, 2018
and at the Supervisory Board’s March 6, 2018 financial statements meeting, during which the March 2018
CORPORATE GOVERNANCE REPORT

INCLUDING THE DECLARATION ON
CORPORATE GOVERNANCE
CORPORATE recommendations of the Code as amended on February 7, 2017, Maximum number of non-group mandates held by members of the
GOVERNANCE REPORT which was published in the Federal Gazette on April 24, 2017
and May 19, 2017 (corrected version).
Supervisory Board (section 5.4.5 subsection 1 sentence 2)
One member of the Supervisory Board, Ian Gallienne, holds
INCLUDING THE more than three mandates in supervisory bodies of non-
DECLARATION ON The Executive Board and Supervisory Board of a didas AG group companies with similar requirements. Ian Gallienne is
CORPORATE declare that the recommendations of the ‘Government

Commission on the German Corporate Governance Code’
Co-Chief Executive Officer of Groupe Bruxelles Lambert (GBL).
GBL is a holding company and, in its capacity as an institutional
GOVERNANCE 1 have been and are met with the following deviations: investor represented by, inter alia, its Co-Chief Executive
Officer, regularly holds mandates in supervisory bodies of its
Corporate Governance stands for responsible and trans Definition of the target level of provision (section 4.2.3 subsection 3) portfolio companies. All companies in which Ian Gallienne
parent management and corporate control oriented toward For Executive Board members of adidas AG initially appointed holds mandates in supervisory bodies are portfolio or group
a sustainable increase in value. We are convinced that good on or after October 1, 2013 and for Executive Board members companies of GBL and these mandates thus have to be
corporate governance is an essential foundation for to be appointed in future, there are defined contribution attributed to his main occupation as Co-Chief Executive
sustainable corporate success and enhances the confidence pension plans which, due to their structure, do not aim to Officer. Therefore, we are of the opinion that, as regards its
placed in our company by our shareholders, business reach a defined target level of provision. In the view of the intent and purpose, the recommendation of section 5.4.5
partners, employees and the financial markets. The Supervisory Board, this structure leads to a higher degree of subsection 1 sentence 2 is not applicable to Ian Gallienne.
following report includes the Corporate Governance Report control and future planning capability with regard to the However, as a precaution, we declare a deviation based on the
and the Declaration on Corporate Governance issued by the company’s expenses for pension plans. good reasons set out above. Moreover, the Supervisory Board
Executive Board and Supervisory Board. has assured itself that Ian Gallienne has sufficient time to
Specification of a regular limit of length of membership for perform his Supervisory Board mandate at adidas AG.
DECLARATION BY THE EXECUTIVE BOARD AND Supervisory Board members (section 5.4.1 subsection 2 sentence 2
SUPERVISORY BOARD OF ADIDAS AG ON THE in conjunction with sentence 1 new version) Herzogenaurach, February 2018
GERMAN CORPORATE GOVERNANCE CODE In accordance with section 5.4.1 subsection 2 sentence 2 in
PURSUANT TO § 161 GERMAN STOCK conjunction with sentence 1 of the Code, the Supervisory Board For the Executive Board For the Supervisory Board
ANNUAL REPORT 2017
CORPORATION ACT (AKTIENGESETZ – AKTG) has specified concrete objectives for its composition. However, KASPER RORSTED IGOR LANDAU
The Executive Board and Supervisory Board of a didas AG it has not specified a regular limit of length of membership for Chief Executive Officer Chairman of the Supervisory Board
issued their last Declaration of Compliance pursuant to Supervisory Board members. The Supervisory Board is of the
§ 161 AktG on February 13, 2017. For the period from the opinion that an extended length of membership of individual
publication of the last Declaration of Compliance up to and Supervisory Board members may, in the individual case, be in
including May 19, 2017, the following Declaration refers to the the interest of the company and of those entitled to elect The aforementioned Declaration of Compliance has been
033
German Corporate Governance Code (hereinafter referred to members to the Supervisory Board, which would not be taken published on and can be downloaded from our website.
ADIDAS
as the ‘Code’) as amended on May 5, 2015. For the period as into consideration if there was a general limit. ↗ ADIDAS-GROUP.COM/S/CORPORATE-GOVERNANCE
of May 20, 2017, the following Declaration refers to the
1 The Corporate Governance Report including the Declaration on Corporate Governance is an unaudited section of the combined Management Report.

SUGGESTIONS OF THE GERMAN CORPORATE Executive Board ensures appropriate risk management and COMPOSITION AND WORKING METHODS OF
GOVERNANCE CODE LARGELY FULFILLED risk controlling as well as compliance with statutory THE SUPERVISORY BOARD
In addition to the recommendations, the Code contains a regulations and internal guidelines. It is bound to the Our Supervisory Board consists of 16 members. It comprises
number of suggestions for good and responsible corporate company’s interest and obligated to strive for a sustainable eight shareholder representatives and eight employee
governance, compliance with which is not required to be increase in company value. representatives in accordance with the German Co-Deter
disclosed separately by law. adidas is compliant with the mination Act (Mitbestimmungsgesetz – MitbestG).  SEE
suggestions of the Code except for the suggestion outlined in Irrespective of the Executive Board’s overall responsibility, its SUPERVISORY BOARD, P. 24 The shareholder representatives are
section 4.2.3 subsection 2 sentence 9 of the Code according members are individually responsible for managing their elected by the shareholders at the Annual General Meeting,
to which early disbursements of multiple-year, variable respective business areas in accordance with the Executive and the employee representatives by the employees. The last
remuneration components should not be permitted. Board’s Business Allocation Plan. There are no Executive periodic election took place in 2014. In the 2016 financial year,
 SEE COMPENSATION REPORT, P. 39 Board committees. The CEO is responsible in particular for supplementary elections of the Supervisory Board took place.
leading the entire Executive Board as well as for guiding The term of office of the current members of the Supervisory
DUAL BOARD SYSTEM business development, including the coordination of the Board expires at the end of the 2019 Annual General Meeting.
As a globally operating public listed company with its registered business segments, brands and markets. The members of the
seat in Herzogenaurach, Germany, a didas AG is, inter alia, Executive Board keep each other informed regularly and Taking into account the recommendations of the Code, the
subject to the provisions of German stock corporation law. comprehensively on all significant developments in their Supervisory Board resolved upon the following objectives for
A dual board system, which assigns the management of the business areas and align on all cross-functional measures. its composition in February 2016 and confirmed these in
company to the Executive Board and advice and supervision of Further details on collaboration within the Executive Board November 2016:
the Executive Board to the Supervisory Board, is one of the are governed by the Rules of Procedure of the Executive Board —— The composition of the Supervisory Board including
fundamental principles of German stock corporation law. and the Business Allocation Plan. These documents specifically members with international background shall be
These two boards are strictly separated both in terms of stipulate requirements for meetings and resolutions as well as maintained to the current extent. Diversity in terms
members and of competencies. In the interest of the company, for cooperation with the Supervisory Board. of expertise and experience on the grounds of origin,
however, both Boards cooperate closely. education or professional activity shall continue to be taken
At the Supervisory Board meetings, the Executive Board into account in the future.
ANNUAL REPORT 2017
COMPOSITION AND WORKING METHODS OF reports in writing and orally on the agenda items and —— The number of women on the Supervisory Board, namely
THE EXECUTIVE BOARD resolution proposals and answers all questions from the four, but no less than the number stipulated by law, shall be
The composition of our Executive Board, which consists of six individual Supervisory Board members. The CEO and the maintained. Furthermore, one woman shall be a member
members, reflects the international character of our company. CFO maintain regular contact with the Chairman of the of the Nomination Committee.
No member of the Executive Board has accepted more than a Supervisory Board and the Audit Committee Chairman and —— As in the past, all members of the Supervisory Board
total of three supervisory board mandates in non-group listed consult with them on key aspects of strategy, planning and shall be independent. This presupposes that all employee
034
companies or in supervisory bodies of non-group companies business development as well as on questions of risk representatives also in principle meet the independence
ADIDAS
with similar requirements.  SEE EXECUTIVE BOARD. P. 20 The management and compliance within the company. criteria as defined by the Code. Substantial, not merely
Executive Board is responsible for independently managing temporary conflicts of interest shall be avoided.
the company, determining the company’s strategic orientation, —— The members of the Supervisory Board shall have sufficient
agreeing this with the Supervisory Board and ensuring its time for performing their mandate.
implementation. Further, it defines business targets, company —— The age limit of, in general, 72 years at the time of election
policy and the organization of the company. Additionally, the shall be taken into account.

In accordance with the reasons stated in the Declaration are independent. The names of all Supervisory Board independent member of the Supervisory Board shall possess
of Compliance, we do not follow the recommendation to members are stated in this Annual Report.  SEE SUPERVISORY expertise in the areas of accounting and annual auditing as
specify a regular limit of length of membership for Super BOARD, P. 24 Based on the Supervisory Board’s assessment, the well as specific expertise and experience with regard to the
visory Board members. appropriate number of independent members of shareholder application of accounting principles and internal control
representatives amounts to at least 80% or six members. The systems. In particular, the Supervisory Board shall also
Together, the members of the Supervisory Board have the age limit of, in general, 72 years at the time of election was consist of persons who have leadership experience in an
knowledge, skills and professional expertise required to taken into account in the selection process. The composition international company because they hold a management
properly perform their duties. All of them are familiar with the of the Supervisory Board consequently fully complies with the position or because they are members of a supervisory board
sector in which the company operates. As they furthermore specified set of objectives. or a comparable body. The entire Supervisory Board currently
have extensive knowledge of various professional fields and fulfills the competency profile.
many years of international experience, they bring a broad In accordance with the recommendation of the Code, the
spectrum of expertise and experience to the performance Supervisory Board prepared a profile of skills and expertise With regard to the Supervisory Board’s future composition,
of the Supervisory Board’s function. The number of female (competency profile) for the entire Supervisory Board at its when proposing candidates to the Supervisory Board, the
Supervisory Board members currently amounts to four. meeting in February 2018. According to this competency Nomination Committee will not only take into account the
The members of our Supervisory Board do not exercise profile, the main objective is that the Supervisory Board is requirements of the law, the Code and the Supervisory Board’s
directorships or similar positions or advisory tasks for key composed in such a way that it can fulfill its duties stipulated Rules of Procedure but also the targets and criteria resolved
competitors of the company. Further, they do not have by law and in the Articles of Association in the interest of the upon and the competency profile prepared. The best interests
business or personal relations with adidas AG, its Executive company. This includes, above all, ensuring qualified of the company will continue to play a decisive role when
Board and Supervisory Board or a controlling shareholder supervision of and provision of advice to the Executive Board. nominating candidates for election.
which may cause a substantial and not merely temporary To this end, criteria such as personality, integrity and
conflict of interest. Based on the aforementioned independence are important. Moreover, based on their The Supervisory Board supervises and advises the Executive
independence criteria and assuming that all of the employee knowledge, skills and experience, the members of the Board in questions relating to the management of the
representatives also in principle meet these criteria for Supervisory Board are expected to be able to perform the company. The Executive Board regularly, expeditiously and
Supervisory Board members as defined by the Code, in the duties of a supervisory board member in an international comprehensively reports on business development and
ANNUAL REPORT 2017
Supervisory Board’s assessment, currently all of its members company. For this purpose, the goal is that the entire planning as well as on the risk situation including compliance
Supervisory Board reflects the entire extent of knowledge and and coordinates the strategy of the company and its
Further information on corporate governance experience considered essential in view of adidas’ activities. implementation with the Supervisory Board. The Supervisory
This includes, inter alia, knowledge and experience in the Board examines and approves the annual financial statements
areas of technology, digitalization, e-commerce and retail. of adidas AG and the adidas Group, taking into consideration
More information on topics covered in this report can be found on our website
↗ ADIDAS-GROUP.COM/S/CORPORATE-GOVERNANCE
Moreover, the Supervisory Board is expected to possess the auditor’s reports, and resolves upon the proposal of the
035
including: knowledge and experience in the business segments/ Executive Board on the appropriation of retained earnings.
ADIDAS
—— Articles of Association markets important for adidas, in particular the Asian and US- Additionally, it resolves upon the resolution proposals to be
—— Rules of Procedure of the Executive Board American markets, and in the management of an international presented to the Annual General Meeting. Certain business
—— Rules of Procedure of the Supervisory Board
—— Rules of Procedure of the Audit Committee company. Furthermore, the entire Supervisory Board is to transactions and measures of the Executive Board with
—— Supervisory Board Committees (composition and tasks) possess knowledge and experience in the areas of corporate fundamental significance are subject to prior approval by the
—— CVs of Executive Board members and Supervisory Board members
strategy, compliance and corporate governance. At least one Supervisory Board or by a Supervisory Board committee.

The Supervisory Board is also responsible for the appointment Apart from the tasks and responsibilities, the Rules of and inclusion initiatives of the company, particularly
and dismissal of members of the Executive Board. When Procedure of the Supervisory Board and of the Audit concerning the promotion of women in leadership positions.
appointing members of the Executive Board, the Supervisory Committee also set out the individual requirements expected  SEE PEOPLE AND CULTURE, P. 81
Board pays attention to the best possible composition of the of the members and the procedure for meetings and passing
Executive Board. Inter alia, experience, industry knowledge resolutions. These Rules of Procedure are available on our Pursuant to the ‘Law on Equal Participation of Women and
and personal expert qualifications play an important role in website. The Supervisory Board Report provides information Men in Leadership Positions in the Private and Public Sector’,
this regard. In addition, taking into account the international on the activities of the Supervisory Board and its committees the percentage of women and men on the Supervisory Board
structure of the company, the Supervisory Board considers in the year under review.  SEE SUPERVISORY BOARD REPORT, P. 27 must be at least 30% each. The shareholder representatives
diversity. This applies, in particular, also with regard to age, and the employee representatives have each resolved in
internationality and other important personal qualities. The The members of the Supervisory Board are individually accordance with § 96 section 2 sentence 3 AktG that this
Supervisory Board further determines the Executive Board responsible for undertaking any necessary training and minimum quota shall be fulfilled separately for the shareholder
compensation system, examines it regularly and decides on professional development measures required for their tasks representatives and the employee representatives. Both the
the individual overall compensation of each Executive Board and, in doing so, are supported by adidas AG. The company shareholder representatives and the employee representatives
member. To this end, the relation between Executive Board informs the Supervisory Board regularly about current fulfill the statutory minimum quota.
compensation and that of senior management and the entire legislative changes as well as opportunities for external
employees is taken into account, also in terms of its training, and provides the Supervisory Board with relevant Furthermore, target figures for the percentage of female
development over time. Further information on Executive specialist literature. representation on the Executive Board and the first two
Board compensation is compiled in the Compensation Report. management levels have been determined for adidas AG. All
 SEE COMPENSATION REPORT, P. 39 Every two years, the Supervisory Board and the Audit implementation periods expired for the first time on
Committee examine the efficiency of their work. As a result, June 30, 2017. Since Karen Parkin’s appointment in May 2017,
In order to increase the efficiency of its work and to deal with suggestions for even better cooperation can be made. The the target of appointing one woman to the Executive Board is
complex topics, the Supervisory Board has formed six current efficiency examinations, which are being conducted fulfilled. The target figure of 18% for the first management
permanent expert committees from within its members, with the help of an external consultant, began in late 2017 and level below the Executive Board was also fulfilled. The target
which, inter alia, prepare its resolutions and, in certain cases, will be concluded in 2018. figure of 30% for the second management level below
ANNUAL REPORT 2017
pass resolutions on its behalf. These committees are the the Executive Board was only just missed, at 29%, due to
Steering Committee, the General Committee, the Audit COMMITMENT TO THE PROMOTION OF THE unplanned departures from the company.
Committee, the Finance and Investment Committee, the EQUAL PARTICIPATION OF WOMEN AND MEN IN
Mediation Committee in accordance with § 27 section 3 LEADERSHIP POSITIONS The Supervisory Board or Executive Board have once again
MitbestG and the Nomination Committee. The chairmen of When filling leadership positions in the company, the Executive determined target figures and respective implementation
the committees report to the entire Supervisory Board on the Board takes diversity into consideration and especially aims deadlines for the percentage of female representation on the
036
results of the committee work on a regular basis. The for an appropriate consideration of women. The Supervisory Executive Board of a didas AG as well as for the first and
ADIDAS
composition of the committees can be found in the respective Board is also convinced that an increase in the number of second management levels below the Executive Board. The
overview of the Supervisory Board.  SEE SUPERVISORY BOARD, P. 24 women in leadership positions within the company is target figures are as follows:
Further information on the committees’ tasks is available on necessary to ensure that, in the future, an increased number —— The target figure for the Executive Board is 1/7 or 14.29%.
our website. ↗ ADIDAS-GROUP.COM/S/SUPERVISORY-BOARD-COMMITTEES of female candidates are available for Executive Board The deadline for achieving this target figure is June 30, 2022.
positions. The Supervisory Board thus supports the diversity

—— The target figure for the first management level below the and social standards, environmental responsibility, chemical TRANSPARENCY AND PROTECTION OF
Executive Board is 24% and 30% for the second management management and our social commitment, such as supporting SHAREHOLDERS’ INTERESTS
level below the Executive Board. The implementation period refugees, is available in this Annual Report and on our website. It is our goal to inform all institutional investors, private
for both targets expires on December 31, 2019.  SEE SUSTAINABILITY, P. 88 ↗ ADIDAS-GROUP.COM/SUSTAINABILITY shareholders, financial analysts, business partners,
employees and the interested public about the company’s
AVOIDING CONFLICTS OF INTEREST COMPLIANCE AND RISK MANAGEMENT situation, at the same time and to an equal extent, through
The members of the Executive Board and Supervisory Board Compliance with laws, internal and external provisions and regular, transparent and up-to-date communication. We
are obligated to disclose any conflicts of interest to the responsible risk management are part of corporate publish all essential information, such as press releases, ad
Supervisory Board without any delay. Substantial transactions governance at adidas. Our compliance management system is hoc announcements and voting rights notifications as well as
between the company and members of the Executive Board or organizationally linked to the company’s risk and opportunity all presentations from roadshows and conferences, all financial
persons in a close relation with them require Supervisory management system. As part of our global ‘Fair Play Concept’, reports and the financial calendar on our website. With our
Board approval. Contracts between the company and the compliance management system establishes the comprehensive Investor Relations activities, we maintain close
members of the Supervisory Board also require Supervisory organizational framework for company-wide awareness of and continuous contact with our current and potential share
Board approval. The Supervisory Board reports any conflicts our internal rules and guidelines and for the legally compliant holders. ↗ ADIDAS-GROUP.COM/S/INVESTORS  SEE OUR SHARE, P. 57
of interest, as well as the handling thereof, to the Annual conduct of our business. It underscores our strong
General Meeting. In the year under review, neither the commitment to ethical and fair behavior in our own In addition, we provide all documents and information on our
members of the Executive Board nor the members of the organization and also sets the parameters for how we deal Annual General Meeting on our website. The shareholders of
Supervisory Board – with the exception of the matter outlined with others. The principles of our compliance management adidas AG exercise their shareholders’ rights at the Annual
in the Supervisory Board Report – faced any conflicts of interest. system are set out in the Risk and Opportunity Report. The General Meeting. Each share grants one vote. Our shareholders
 SEE SUPERVISORY BOARD REPORT, P. 27 risk and opportunity management system ensures risk- are involved in all fundamental decisions at the Annual
aware, opportunity-oriented and informed actions in a General Meeting through their participation rights. It is our
SHARE OWNERSHIP OF AND SHARE dynamic business environment in order to guarantee the intention to support our shareholders in exercising their
TRANSACTIONS CONDUCTED BY THE competitiveness and sustainable success of adidas. voting rights at the Annual General Meeting. At our next
EXECUTIVE BOARD AND SUPERVISORY BOARD Annual General Meeting, taking place in Fuerth (Bavaria) on
ANNUAL REPORT 2017
 SEE RISK AND OPPORTUNITY REPORT, P. 131
An overview of the managers’ transactions notified to adidas AG May 9, 2018, we will again provide our shareholders with the
in 2017 by persons discharging managerial responsibilities best possible service. Shareholders have the possibility, inter
pursuant to Article 19 of the Market Abuse Regulation is Further information on the principles alia, to electronically register for the Annual General Meeting
of our management
published on our website. through our shareholder portal or to participate in voting by
↗ ADIDAS-GROUP.COM/S/MANAGERS-TRANSACTIONS granting powers of representation and voting instructions
More information on topics covered in this report can be found online to the proxies appointed by the company. Further, all
037
on our website at ↗ ADIDAS-GROUP.COM
RELEVANT MANAGEMENT PRACTICES shareholders can follow the Annual General Meeting in full
including:
ADIDAS
Our business activities are oriented towards the legal length live on the company’s website, subject to technical
—— Code of Conduct
systems in the various countries and markets in which we —— Sustainability availability of the website.
operate. This implies a high level of social and environmental —— Social commitment
—— Risk and opportunity management and compliance
responsibility. Further information on company-specific —— Information and documents on the Annual General Meeting SHARE-BASED PROGRAMS
practices which are applied in addition to statutory require —— Managers’ transactions In the 2017 financial year, a long-term incentive (LTI) plan,
—— Accounting and annual audit
ments, such as our Code of Conduct, on compliance with working which is part of the long-term remuneration for senior

executives of adidas, was implemented. Based on this plan,

the plan participants receive registered stock units (RSU).
 SEE NOTE 27, P. 186  SEE PEOPLE AND CULTURE, P. 81
As per their contracts, each member of the Executive Board is

entitled to participate in a Long-Term Incentive Plan set up for
the Executive Board members. The new LTIP 2018/2020 aims
to link the long-term compensation of the Executive Board
even more strongly to the company’s performance and thus to
the interests of the shareholders. Furthermore, the decisive
assessment factors are to be simplified and made more
transparent and the long-term compensation of the Executive
Board and senior management is to be aligned. Against this
background, the LTIP 2018/2020 is – in contrast to the previous
LTIP 2015/2017 – share-based as it comprises the acquisition
of adidas shares subject to a lock-up period.
 SEE COMPENSATION REPORT, P. 39
ACCOUNTING AND ANNUAL AUDIT

didas AG prepares the annual financial statements in
a
accordance with the provisions of the German Commercial
Code (Handelsgesetzbuch – HGB) and the Stock Corporation
Act. The annual consolidated financial statements are
prepared in accordance with the principles of the International
ANNUAL REPORT 2017
Financial Reporting Standards (IFRS), as adopted by the

European Union (EU).
KPMG AG Wirtschaftsprüfungsgesellschaft was appointed as

auditor for the 2017 annual financial statements and annual
consolidated financial statements by the Annual General
038
Meeting. The Supervisory Board had previously assured itself
ADIDAS
of the auditor’s independence.

 SEE INDEPENDENT AUDITOR’S REPORT, P. 221
COMPENSATION REPORT
COMPENSATION REPORT than the incentive to achieve the targets decisive for being PREVIOUS COMPENSATION SYSTEM
granted the one-year variable compensation component. Previously, in case of 100% target achievement, the total
For adidas, transparent and comprehensible reporting on Corresponding contractual provisions ensure that this compensation (without other benefits and pension payments)
the compensation of the Executive Board and Supervisory weighting can be maintained in the future. In terms of the was essentially made up of 35% fixed compensation, 30%
Board is an essential element of good corporate governance. appropriateness of the Executive Board compensation, when annual Performance Bonus and 35% LTIP Bonus. In addition,
The Compensation Report is a component of the combined determining the compensation, the Supervisory Board takes there are various pension commitments. Moreover, at its
Management Report and outlines the principles of the into consideration factors such as the size and the global equitable discretion, the Supervisory Board may grant a
compensation system for the members of the Executive orientation, the economic situation, the success and outlook special bonus in case of extraordinary performance by an
Board and Supervisory Board as well as the level and of the company, as well as the common level of the Executive Board member which is not related to performance
structure of the compensation in accordance with the legal compensation in comparison with peer companies and with criteria that were already decisive for granting the
requirements and the recommendations of the German the compensation structure applicable for other areas of the Performance Bonus or the LTIP Bonus. Such special bonus is
Corporate Governance Code (the ‘Code’) as amended on company. To this end, the relation between the Executive limited to a maximum of 100% of the annual fixed salary of the
February 7, 2017. Board compensation and that of Senior Management and calendar year for which the special bonus is granted.
employees overall is taken into account, both in total and in
terms of its development over time, with the relevant groups The compensation system consists of the following components:
COMPENSATION OF THE EXECUTIVE of persons having been determined by the Supervisory Board.
BOARD MEMBERS In addition, when determining the compensation, the tasks Non-performance-related components
and contribution of each Executive Board member to the Fixed compensation
Following preparation by the Supervisory Board’s General company’s success, their individual performance as well as The fixed compensation consists of the annual fixed salary.
Committee, the compensation system for our Executive Board the overall performance of the Executive Board are taken into In principle, it is paid in twelve equal monthly installments
and the total compensation of each member of the Executive consideration. The compensation system aims to appropriately and generally remains unchanged during the term of the
Board is determined and regularly reviewed by the entire remunerate exceptional performance, while diminishing service contract.
Supervisory Board. The compensation and personnel topics variable compensation when targets are not met. Thus, in the
dealt with by the Supervisory Board and General Committee Supervisory Board’s opinion, an appropriate level of Other benefits
ANNUAL REPORT 2017
in the year under review are described in detail in the compensation, which is reviewed annually by the Supervisory The other benefits primarily consist of paying for, or providing
Supervisory Board Report.  SEE SUPERVISORY BOARD REPORT, P. 27 Board and adjusted if required, can be ensured. the monetary value of, non-cash benefits and of other benefits
such as premiums or contributions to insurance schemes
The compensation system is geared toward creating an The compensation system for the members of the Executive normal for the market, the assumption of relocation costs, the
incentive for successful, sustainably value-oriented corporate Board which has been applicable since the 2015 financial year provision of a company car or the use of the internal driver
management and development. Against this background, was adopted by the shareholders at the Annual General service or the payment of a car allowance and, if Executive
039
more than 50% of the variable target compensation component Meeting on May 7, 2015. The Supervisory Board resolved to Board members are also subject to taxation abroad, the costs
ADIDAS
is based upon multi-year performance criteria. The variable change individual elements of the existing compensation for tax consultants selected by adidas. The total amount of
compensation components are designed in such a way that system described in the following with effect from the 2018 these other benefits is capped at 5% of the total compensation
the incentive to achieve the long-term targets decisive for the financial year. Details on the changed elements can be found comprising the fixed salary and a (possible) Performance
multi-year variable target compensation component is higher following the description of the previous compensation system. Bonus granted in the respective financial year.
COMPENSATION REPORT
Compensation system for Executive Board members in 2017 1 degree of target achievement). The result is the individual
amount of the Performance Bonus to be paid (bonus amount).
When determining the degrees of target achievement and
Fixed compensation 2017 Performance Bonus LTIP 2015/2017
thus when determining the bonus amount, the Supervisory
35% of target direct compensation. 30% of target direct compensation. 35% of target direct compensation.
Board may take into account extraordinary developments
The fixed compensation is paid out For the performance criteria deter- For the performance criteria deter-
monthly in twelve equal installments. mined at the beginning of the 2017 mined in the 2015 financial year, see which are not related to the performance of the Executive
financial year, see the section ‘2017 the section ‘LTIP 2015/2017’ on page 47.
Performance Bonus’ on page 47.
Board. The bonus amount is capped at a maximum of 150% of
Payout of the LTIP Bonus will be the individual Bonus target amount. If the overall degree of
The bonus amount is payable following effected after the 2017 consolidated
approval of the consolidated financial financial statements are approved. target achievement lies at or below 50%, the Executive Board
statements of the past financial year.
Target direct
member is not entitled to the Performance Bonus.
compensation
(in case of 100%
target achievement) If an Executive Board member takes or leaves office during a
financial year, the Performance Bonus is generally calculated
Cap of overall pro rata temporis based on the degree of target achievement
compensation
(maximum
determined at the end of the financial year. In certain cases
compensation) Fixed compensation 2017 Performance Bonus LTIP 2015/2017 defined in the Terms & Conditions of the Performance Bonus,
The Performance Bonus is capped at a The LTIP Bonus is capped at a maximum of 150% of the
maximum of 150% of the individual Bonus individual LTIP target amount. If the overall degree of entitlement to the payout of a Performance Bonus is forfeited,
target amount. If the overall degree of target target achievement lies at or below 50%, the Executive
achievement lies at or below 50%, the Board member is not entitled to the LTIP Bonus.
unless the Supervisory Board determines otherwise at its
Executive Board member is not entitled to equitable discretion.
the Performance Bonus. For the ultimate evaluation of the Executive Board’s
performance, qualitative criteria are taken into account.
The bonus amount is payable following approval of the
Fixed compensation One-year performance-related compensation Multi-year performance-related compensation consolidated financial statements of the past financial year.
Long-Term Incentive Plan 2015/2017 (LTIP 2015/2017)

ANNUAL REPORT 2017
Based on the Long-Term Incentive Plan 2015/2017 (LTIP

Performance-related components individual performance criteria are designed in such a way 2015/2017) measured over a three-year period, the LTIP
Performance Bonus that the target achievement of the respective performance Bonus serves – in line with sustainability-oriented develop
As the annual variable component, the Performance Bonus criterion may also be zero. When targets are clearly not met, ment of the company – as compensation for the long-term
serves as compensation for the Executive Board’s performance the Performance Bonus may consequently be forfeited entirely. performance of the Executive Board. On this basis, at the
in the past financial year in line with the short-term development beginning of the 2015 financial year, the Supervisory Board
040
of the company. At the end of the financial year, the precise target achievement defined five weighted performance criteria oriented toward
ADIDAS
of each Executive Board member, which is, in principle, based sustainable growth of the company. Furthermore, at the
At the beginning of the financial year, the Supervisory Board on a comparison of the predefined target values with the beginning of 2015 or upon appointment to the Executive
establishes the respective weighted performance criteria and values achieved in the year under review, is examined. The Board, the Supervisory Board defined the individual amount
determines the individual amount of the Performance Bonus Supervisory Board determines at its equitable discretion the of the LTIP Bonus target amount for each Executive Board
target amount for each member of the Executive Board, based factor by which the Bonus target amount is multiplied by member, based on a target achievement of 100% (LTIP
on a target achievement of 100% (Bonus target amount). The adding up these degrees of target achievement (overall target amount).
COMPENSATION REPORT
At the end of the 2017 financial year, the precise target Pension commitments of invalidity or death prior to reaching the age of 62, for the
achievement of each Executive Board member, which is based The current members of the Executive Board generally have minimum coverage, the Executive Board member’s pension
on a comparison of the predefined target values with the defined contribution pension plans. The pension entitlement account will be credited with the outstanding pension
values achieved at the end of the three-year period covering of Glenn Bennett and Robin J. Stalker, who resigned from the contributions for the time until the Executive Board member
the years 2015 to 2017, was examined. The Supervisory Board Executive Board in the 2017 financial year, will be covered by would have reached the age of 62, but no longer than for
then determined at its equitable discretion the factor by which the defined benefit pension plans granted to them. 120 months (without interest accrual). The pension benefits
the LTIP target amount is multiplied by adding up these due upon death of the Executive Board member are payable to
degrees of target achievement, while additionally taking into Defined contribution pension plans the widow, the widower or the registered civil partner and the
account qualitative criteria. The result is the individual amount The defined contribution pension plans, each in the form of a children entitled to pension benefits as joint creditors.
of the LTIP Bonus to be paid (bonus amount). Payout of the direct commitment, basically have the same structure as the
LTIP Bonus will be effected after the 2017 consolidated existing ‘adidas Management Pension Plan’ for managers. At the option of the Executive Board member or the surviving
financial statements are approved. When determining the dependents, the payout of all pension benefits is made either
degrees of target achievement and thus when determining As part of the pension commitments, an amount equaling a as a one-time payment or in up to ten equal annual install
the bonus amount, the Supervisory Board may take into percentage determined by the Supervisory Board, which is ments. If no choice is made by the Executive Board member or
account extraordinary developments which are not related to related to the individual annual fixed compensation, is credited by the surviving dependents, the pension benefits are paid out
the performance of the Executive Board. to the virtual pension account of the individual Executive in three equal annual installments. As a rule, in case of a
Board member each year. The Supervisory Board annually payout in annual installments, the installments are due in
The LTIP Bonus is capped at a maximum of 150% of the resolves on this percentage, which most recently was set at January of the respective year. The still outstanding install
individual LTIP target amount. If the overall degree of target 50%. When making its decision, the Supervisory Board takes ments of the benefit phase bear the maximum interest rate of
achievement lies at or below 50%, the Executive Board into account the targeted individual pension level and the the first due date of the pension benefits for the calculation of
member is not entitled to the LTIP Bonus. If an Executive resulting annual and long-term expenses for the company. the actuarial reserve according to the German Actuarial
Board member takes or leaves office during the term of the The pension assets existing at the beginning of the respective Reserve Ordinance (DeckRV) for life insurance companies.
LTIP 2015/2017 (Performance Period), the LTIP Bonus is calendar year shall yield a fixed interest rate of 3% p.a., however
generally calculated on a pro rata basis. In certain cases for no longer than until the pension benefits first become due. As regards insolvency insurance, the pension plans can be
ANNUAL REPORT 2017
defined in the Terms & Conditions of the LTIP 2015/2017, As a rule, interest shall be credited as at the close of integrated into the existing trust model, the Contractual Trust
entitlement to the payout of an LTIP Bonus is generally December 31 in each calendar year, and on the due date in the Arrangement (CTA).
forfeited, unless the Supervisory Board determines otherwise year in which the pension benefits are first due. Entitlement to
at its equitable discretion. the pension benefits becomes vested immediately. Defined benefit pension plans
Starting from a base amount totaling 10% (Robin J. Stalker) or
The entitlements to pension benefits comprise pensions to be 20% (Glenn Bennett) of the respective pensionable income
041
received upon reaching the age of 65, or, on application, early granted in the pension plan, a module of two percentage points
ADIDAS
retirement pensions to be received upon reaching the age of of the pensionable income, or three percentage points since
62 (early pensions), or invalidity and survivors’ benefits. March 6, 2015, is created for the Executive Board members for
each full year of tenure as an Executive Board member (in
On occurrence of the pension-triggering event, the pension deviation herefrom, the starting date chosen for Glenn Bennett,
benefits generally correspond to the balance of the pension who was a member of the Executive Board as of March 6, 1997
account including accumulated interest on that date. In case was January 1, 2000).
COMPENSATION REPORT
As its targeted level of provision, the Supervisory Board has Commitments to Executive Board members upon termination of tenure COMPENSATION SYSTEM APPLICABLE AS OF
determined for the Executive Board members a pension Unless otherwise agreed in the individual case, if the service THE 2018 FINANCIAL YEAR
entitlement amounting to a maximum of 50% of an Executive contract ends upon the Executive Board member reaching the The Supervisory Board resolved to change individual elements
Board member’s pensionable income. The amount of age of 65 or upon non-renewal of the service contract, the of the existing compensation system described above with
pensionable income currently equals the individual annual Executive Board member is entitled to receive his annual fixed effect from the 2018 financial year. In this way, the entire
fixed salary indicated in the table ‘Benefits granted’. salary on a pro rata basis up to the date on which he leaves compensation system of the Executive Board is to be simplified
office as well as a potential prorated Performance Bonus and and the assessment factors will be made more transparent.
The pension benefits comprise retirement pensions to be a potential prorated LTIP Bonus. Further, Executive Board With the compensation system applicable as of the 2018
received upon reaching the age of 65 as well as disability and members are subject to a post-contractual competition financial year, at least 80% of the variable compensation
survivors’ benefits. prohibition of two years. As consideration, for the duration of (Performance Bonus and LTIP) is directly linked to the short-
the competition prohibition, the Executive Board members and long-term sales and profitability targets externally
In the event that an Executive Board member leaves the generally receive a compensation amount totaling 50% of the communicated. At the same time, the compensation of the
company prior to reaching retirement age, the non-forfeiture fixed compensation last received, subject to offsetting (e.g. of Executive Board members is being directly brought into line
of the pension entitlement will be in line with legal provisions. income from other use of his work capacity). Under certain with the interests of the shareholders.
The pension entitlement is not, as legally envisaged, reduced circumstances, the departing Executive Board member also
pro rata temporis, i.e. it amounts to at least the base amount receives a follow-up bonus 2. This follow-up bonus is payable The changes to the compensation system concern the
of the pension commitment made to the Executive Board in two tranches, twelve and 24 months following the end of the following aspects:
member, plus the pension modules accumulated annually contract.
during the term of office. Apportionment of the overall payments
In case of premature termination of tenure in the absence of The components of the total compensation remain unchanged,
Following the pension-triggering event, ongoing pensions are good cause, the Executive Board service contracts cap consisting of fixed compensation, an annual Performance
adjusted in line with the development of state pensions. potential severance payments at a maximum of twice the total Bonus, an LTIP Bonus and other benefits and pension
annual compensation, not exceeding payment claims for the payments. In case of 100% target achievement, the share of
adidas Management Pension Plan remaining period of the service contract (Severance Payment the fixed compensation component in the total compensation
ANNUAL REPORT 2017
The Executive Board members who were active members of Cap). If the service contract is terminated due to a change of (without other benefits and pension payments) still amounts
the Executive Board in the 2017 financial year and who control, a possible severance payment is limited to 150% of to 35%; the annual Performance Bonus component, however,
belonged to the group of senior executives of adidas AG prior the Severance Payment Cap. now only amounts to 25% (instead of the previous general
to their Executive Board appointments 1 will at the time of value of 30%), while the share of the LTIP Bonus component is
their retirement receive additional payments from the ‘adidas If an Executive Board member dies during his term of office, increased from the previous general value of 35% to 40%.
Management Pension Plan’. Until their appointment as his spouse or partner receives or, alternatively, any dependent
042
Executive Board members, adidas AG had contributed pension children receive, in addition to pension benefits, the pro rata Performance-related components
ADIDAS
components under these supplementary provisions which annual fixed salary for the month of death and the following 2018 Performance Bonus
were introduced for all of these senior executives of the three months, but no longer than until the agreed end date of As the annual variable component, the Performance Bonus
company in 1989. the service contract. still serves as compensation for the Executive Board’s
1 Roland Auschel, Eric Liedtke, Harm Ohlmeyer and Robin J. Stalker.

2 As regards the current members of the Executive Board, such a follow-up bonus was agreed with Roland Auschel and Eric Liedtke, in each case in the amount of 75% of the Performance Bonus granted to them
for the last full financial year. Furthermore, a follow-up bonus will be paid to Glenn Bennett (75%) and Robin J. Stalker (100%), who both departed from the Executive Board in 2017.
COMPENSATION REPORT
performance in the past financial year in line with the short- extraordinary developments which are not related to the pro rata temporis based on the degree of target achievement
term development of the company. performance of the Executive Board. Even in the case of an determined at the end of the financial year. In certain cases
overall degree of target achievement of more than 150%, the defined in the Terms & Conditions of the Performance Bonus,
In future, the amount of the Performance Bonus will be bonus amount is capped at a maximum of 150% of the entitlement to the payout of a Performance Bonus is forfeited,
determined based on the achievement of, generally, four individual Bonus target amount. If the overall degree of target unless the Supervisory Board determines otherwise at its
weighted targets which are determined – as before – by the achievement lies at or below 50%, the Executive Board equitable discretion.
Supervisory Board at the beginning of the financial year. Two member is not entitled to the Performance Bonus.
of these targets are the same for all Executive Board members If an Executive Board member takes or leaves office during a The bonus amount is payable following approval of the
and are weighted at 60%. In this regard, the targets for the financial year, the Performance Bonus is generally calculated consolidated financial statements of the past financial year.
respective financial year are directly linked to the annual
forecast externally communicated and, at the same time,
follow directly from the – also externally communicated – Compensation system for Executive Board Members from 2018 2
long-term growth targets of a didas. For instance, for the 2018

financial year, these targets are currency-neutral sales
Fixed compensation 2018 Performance Bonus LTIP 2018/2020
growth and the operating margin. It is intended to retain these 35% of target direct compensation. 25% of target direct compensation. 40% of target direct compensation.
targets in the years to come. 100% target achievement thereby
The fixed compensation is paid out For the performance criteria deter- For the performance criterion ‘absolute
reflects the communicated guidance for the financial year monthly in twelve equal installments. mined at the beginning of the 2018 increase in net income from continuing
financial year, see the section ‘2018 operations’ determined in the 2018
(2018: currency-neutral sales to increase around 10%, Performance Bonus’ on this page. financial year, see the section ‘LTIP
2018/2020’ on page 44.
operating margin to increase to a level between 10.3% and The bonus amount is payable following
10.5%). The other two targets are individual targets with a approval of the consolidated financial The Grant Amount for the respective
statements of the past financial year. annual LTIP tranche is payable
40% weighting. All targets are designed in such a way that following approval of the consolidated
financial statements for the respective
target achievement may also be zero. When targets are clearly performance year. 1
not met, the Performance Bonus may consequently be Target direct
compensation
forfeited entirely.
ANNUAL REPORT 2017
(in case of 100%

target achievement)
As before, at the end of the financial year, the Supervisory

Board examines the precise target achievement of each Cap of overall
Executive Board member, which is, in principle, based on a compensation
(maximum
comparison of the predefined target values with the values compensation) Fixed compensation 2018 Performance Bonus LTIP 2018/2020
achieved in the year under review. The Supervisory Board The Performance Bonus is capped at a If the annual increase in net income is below € 140 million,
maximum of 150% of the individual Bonus the Executive Board member is not entitled to a Grant
043
determines the factor by which the Bonus target amount is target amount. If the overall degree of target Amount for the respective performance year. 2
achievement lies at or below 50%, the Executive
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multiplied by adding up these degrees of target achievement Board member is not entitled to the Perfor- Even if the increase in net income exceeds € 280 million
mance Bonus. in the respective performance year, the factor of target
(overall degree of target achievement). The result is the achievement is capped at a maximum of 150%.
individual amount of the Performance Bonus to be paid (bonus
amount). When determining the degrees of target achievement Fixed compensation One-year performance-related compensation Multi-year performance-related compensation
and thus when determining the bonus amount, the Supervisory 1 The Grant Amount must be invested in the acquisition of adidas AG shares which are subject to a lock-up period.
2 If the increase in net income from continuing operations is below € 210 million in the performance year 2018 or 2019, the target value for 100% target achievement is increased correspondingly for the following
Board may, at its equitable discretion, take into account performance year, unless the Supervisory Board decides otherwise at its equitable discretion.
COMPENSATION REPORT
Long-Term Incentive Plan 2018/2020 (LTIP 2018/2020) Growth target for net income from amount of the actual increase in net income from continuing
Performance year continuing operations
As of 2018, the previous LTIP 2015/2017 is replaced by a new operations for the respective performance year:
2018 (compared to 2017 1) + € 210 million
Long-Term Incentive Plan 2018/2020 (LTIP 2018/2020). The
2019 (compared to 2018) + € 210 million
LTIP 2018/2020 aims to link the long-term compensation of 2020 (compared to 2019) + € 210 million
Increase in net income from continuing
operations compared to the previous
the Executive Board even more strongly to the company’s year Factor
1 The basis for 2017 is net income from continuing operations in the amount of € 1,430 million (without
performance and thus to the interests of the shareholders. the negative tax-related one-time effect in the 2017 financial year). ≥ + € 280 million 150%
Furthermore, the decisive assessment factors are to be + € 210 million 100%
simplified and made more transparent and the long-term If the increase in net income from continuing operations is + € 140 million 50%
< + € 140 million 0%
compensation of the Executive Board and Senior Management below € 210 million in the performance year 2018 or 2019, the
is to be aligned. target value for 100% target achievement is increased
correspondingly for the following performance year, unless If the actual increase in net income from continuing operations
Against this background, the LTIP 2018/2020 – in contrast to the Supervisory Board decides otherwise at its equitable compared to the previous year is between the above-
the previous LTIP 2015/2017 – is share-based. It now consists discretion. For instance, if net income increases by mentioned values, the factor is determined based on a
of three annual tranches (2018, 2019 and 2020). Moreover, the € 180 million in the performance year 2018, net income in the sliding scale. If the annual increase in net income is below
assessment basis is extended. The compensation of the performance year 2019 must increase by € 240 million for a € 140 million, the factor is zero. Furthermore, the factor is
Executive Board members for each annual LTIP tranche is target achievement of 100%. However, if the increase in net capped at 150%, even if the increase in net income (significantly)
now no longer assessed based on a period of three years but income is higher than € 210 million in a performance year, exceeds € 280 million.
based on a period of approximately four and a half years. the target for the following performance year remains
unaffected by this. This means that compared to the previous By multiplying the factor thus calculated with the annual LTIP
Each of the three annual LTIP tranches consists of a year net income in the following performance year must still be target amount determined by the Supervisory Board for the
performance year and a subsequent lock-up period of about increased by € 210 million for a target achievement of 100%, respective Executive Board member based on a target
three years. At the beginning of 2018, the Supervisory Board despite the higher net income achieved in the previous year. achievement of 100%, the Grant Amount is determined, which
determined as performance criterion for each of the three is paid out to the Executive Board member for the respective
performance years (2018, 2019 and 2020) the absolute increase Against this background, the Supervisory Board determined annual LTIP tranche for the performance year following the
ANNUAL REPORT 2017
in net income from continuing operations compared to the the individual amount of the annual LTIP target amount for adoption of the consolidated financial statements of adidas.
respective previous year. In this respect, the target values for each Executive Board member based on a target achievement
the annual LTIP tranches follow directly from the externally of 100%. The Executive Board members have to invest the Grant
published long-term net income growth targets of the Amount which remains after deducting applicable taxes and
company. For instance, if net income from continuing The precise target achievement will be determined for the social security contributions into the acquisition of adidas AG
operations increased by a total of € 630 million (100% target respective performance year on the basis of the adopted shares. The shares purchased are subject to a lock-up period.
044
achievement) in the three-year period from 2018 to 2020, net consolidated financial statements. In this respect, the The lock-up period ends in the third financial year after the
ADIDAS
income from continuing operations would amount to Supervisory Board may, at its equitable discretion, take into acquisition of the shares upon expiry of the month in which
€ 2,060 million in 2020.  SEE TABLE BELOW Compared to 2015, account extraordinary developments which are not related to the Annual General Meeting takes place. The Executive Board
this would correspond to an average increase in net income of the performance of the Executive Board. The factor by which members may only dispose of the shares after expiry of the
23% per year, which would be within the target corridor of 22% to the annual LTIP target amount determined for the respective lock-up period. Due to this mechanism, the compensation
24%, as defined in our corporate strategy. Executive Board member is multiplied is derived from the which the Executive Board members eventually receive from
COMPENSATION REPORT
the LTIP 2018/2020 is directly dependent on the share price If an Executive Board member takes or leaves office during a
performance during the respective, approximately three-year performance year, the Grant Amount for the respective annual
lock-up period and thus dependent on the long-term tranche of the LTIP 2018/2020 is generally calculated on a pro
performance of the company. The Executive Board members rata basis. The departed Executive Board member does not
are entitled to any amounts distributed in connection with participate in the annual LTIP tranches for performance years
these shares during the lock-up period. which begin after the respective Executive Board member’s
departure. In certain cases defined in the plan terms of the
Therefore, taking the annual LTIP tranche for the 2018 LTIP 2018/2020, any claims in connection with the LTIP
financial year as an example, the LTIP 2018/2020 is structured 2018/2020 are generally forfeited and a didas AG shares
as follows: already purchased, for which the lock-up period has not yet
—— In the 2019 financial year, the degree of target achievement expired, must be transferred to a didas without compensation
for the 2018 performance year (increase in net income from payments, unless the Supervisory Board determines other
continuing operations in the 2018 financial year compared wise at its equitable discretion.
to the 2017 financial year) is determined following the
adoption of the consolidated financial statements for the Furthermore, the plan terms of the LTIP 2018/2020 contain
2018 financial year. malus and claw back provisions which allow the Supervisory
—— The Grant Amount determined on this basis is paid out to Board, under certain circumstances, to reduce at its equitable
the Executive Board members by the end of March 2019. discretion the compensation from the LTIP 2018/2020 until
If the increase in net income from continuing operations expiry of the lock-up period (malus) and beyond (claw back).
is below € 140 million, the Executive Board members do Such circumstances are, in particular, material misstatements,
not receive a Grant Amount; if the increase in net income for instance, in the financial reports as well as serious
amounts to more than € 280 million, the cap of 150% compliance violations.
applies.
—— The Grant Amount (reduced by applicable taxes and social In all other respects, the details of the previous compensation
ANNUAL REPORT 2017
security contributions) is then invested into the acquisition system also apply to the changed compensation system. The
of adidas AG shares. compensation system applicable as of the 2018 financial
—— The Executive Board members may only dispose of these year will be presented to the 2018 Annual General Meeting
shares upon expiry of the month in which the Annual for approval.
General Meeting in 2022 takes place (i.e. if the Annual
General Meeting takes place in May 2022, the Executive
045
Board members can dispose of the shares as of June 2022).
ADIDAS
COMPENSATION REPORT
Comparison of previous compensation system and new compensation system 3
Alignment
between
Claw Executive Board
Transparency of back/ Share- Defining and Senior
Components of compensation system 1
Performance criteria performance criteria Cap Malus based period Management
Fixed
compen- Performance Performance Performance Performance
sation Bonus LTIP Bonus 2 LTIP 3 Bonus LTIP Bonus LTIP LTIP LTIP LTIP LTIP
Previous 35% 30% 35% 5 criteria 5 criteria Limited Limited Capped at 150%; Capped at 150%; No No 3 years No
compensation no payout if the no payout if the
system – 3 shared targets: – 5 shared targets: overall degree overall degree
increase in net income from of target of target
earnings per share continuing opera- achievement lies achievement lies
(EPS), operating tions, increase in at or below 50% at or below 50%
margin and Net presence on the
Promoter Score US market, share
(NPS) price development,
improvement in
– 2 individual retail profitability,
targets improvement in
sustainability
New compen- 35% 25% 40% 4 criteria 1 criteria 100% target 100% target Capped at 150%; Capped at 150% Yes Yes Around Yes
sation system achievement achievement no payout if the (with defined 4.5 years
(applicable as of – 2 shared targets – 1 shared target: for shared for each overall degree of and externally
the 2018 financial (60% weighting): absolute increase targets year made target communicated
year) 4 currency-neutral in net income made trans- transparent achievement lies threshold);
sales growth, from continuing parent and and is in at or below 50% no payout below
operating margin operations is in sync sync with defined threshold
with externally
ANNUAL REPORT 2017
– 2 individual externally commu-

targets (40% communicated
weighting) nicated long-term
outlook outlook
1 Assuming 100% target achievement.
2 Reflects the 2017 financial year for previous compensation system and 2018 financial year for new compensation system.
3 Reflects the LTIP 2015/2017 for previous compensation system and LTIP 2018/2020 for new compensation system.
4 The compensation system applicable as of the 2018 financial year will be presented to the 2018 Annual General Meeting for approval.
046
ADIDAS
COMPENSATION REPORT
EXECUTIVE BOARD COMPENSATION 2017 year under review. This means that the cap for the LTIP a prepayment in the amount of € 2,225,400 in connection
2017 Performance Bonus 2015/2017 applies, i.e. the payout of the LTIP Bonus is limited with the bonus amount from the LTIP 2015/2017; any
For the Performance Bonus, the Supervisory Board determined to 150% of the respective individual Bonus target amount overpayments or underpayments which may result when
an increase despite the higher overall degree of target achievement. comparing these amounts with the amounts determined
—— in earnings per share (EPS), once the final figures are available will be offset in the 2018
—— in the operating margin, In the year under review, no payout in connection with the and 2019 financial year. At the end of April 2019 and at the
—— in the Net Promoter Score (NPS) on a global scale and LTIP 2015/2017 was made to the current members of the end of April 2020, Robin J. Stalker will be paid out 75%
two criteria relating to the individual performance of the Executive Board because the performance period did not end and 25%, i.e. € 554,810 and € 184,937, of the Performance
Executive Board members as success parameters. Based on until December 31, 2017. The payout will be made in the 2018 Bonus granted to him for the 2017 financial year as a
the targets actually achieved, this results in a degree of target financial year, depending on the target achievement following follow-up bonus. In accordance with the stipulation in his
achievement between 132% and 140% for the respective the approval of the consolidated financial statements for the service contract, he will be paid monthly compensation
individual Executive Board members for the year under review. 2017 financial year. in the amount of € 27,729 gross for the post-contractual
competition prohibition for a period of 24 months. This
LTIP 2015/2017 Commitments to Executive Board members in connection with corresponds to 50% of the last fixed monthly salary. The
For the LTIP 2015/2017, the Supervisory Board determined termination of tenure reserves set up for this compensation for post-contractual
the following Performance criteria in the 2015 financial year: In connection with the termination of Robin J. Stalker’s and competition prohibition amount to € 665,500. The claims to
—— achievement of a defined amount of net income from Glenn Bennett’s tenure by mutual consent at the end of the pension payments deriving from the a didas Management
continuing operations Annual General Meeting of adidas AG on May 11, 2017 and on Pension Plan and the pension commitment dated
—— increase in the presence on the US market measured by/ August 4, 2017, respectively, it was agreed that the contractual February 15, 2001, as amended on December 17, 2014,
assessed on the basis of the increase in market shares commitments on the part of the company will continue to be remain unaffected and will be paid out in accordance with
of a
didas footwear and an improvement in the brand’s granted until expiry of their respective service contracts on the contractual regulations.
popularity March 31, 2018. —— For the period from August 5, 2017 to March 31, 2018, Glenn
—— increase in the a didas AG share price over three years and —— For the period from May 12, 2017 to March 31, 2018, Bennett receives fixed compensation in the amount of
relative outperformance of the adidas AG share compared Robin J. Stalker receives fixed compensation in the € 464,942 and other benefits in the amount of € 21,929. His
ANNUAL REPORT 2017
to the DAX-30 price index amount of € 590,363 and other benefits in the amount of past service costs for this period amount to € 198,085. The
—— increase in profitability of the retail segment € 25,222. His past service costs for this period amount to Performance Bonus for the 2017 financial year amounts to
—— improvement of sustainability measured by/assessed on € 343,876. The Performance Bonus for the 2017 financial € 924,113. For the 2018 financial year, Glenn Bennett will
the basis of the improvement of employee satisfaction and year amounts to € 739,746. For the 2018 financial year, receive a prorated Performance Bonus in the amount of
an increase in the percentage of female representation in Robin J. Stalker will receive a prorated Performance Bonus € 173,705. From the LTIP 2015/2017, he will be paid out an
management positions within the company. in the amount of € 139,050. The bonus payment from the amount of € 3,995,313. Glenn Bennett does not participate
047
LTIP 2015/2017 corresponds to € 3,338,100. Robin J. in the new LTIP 2018/2020. At the end of April 2019 and at
ADIDAS
In addition, the Supervisory Board decided that qualitative Stalker does not participate in the new LTIP 2018/2020. the end of April 2020, he will be paid out 50% and 25%, i.e.
criteria should also be taken into account when determining The prorated fixed compensation for 2018 was already paid € 462,056 and € 231,028, of the Performance Bonus granted
the overall degree of target achievement. Based on the targets out to him in 2017. Furthermore, in 2017, a didas made a to him for the 2017 financial year as a follow-up bonus.
actually achieved, with regard to the LTIP, this results in an prepayment to Robin J. Stalker in the amount of € 695,250 In accordance with the stipulation in his service contract,
overall degree of target achievement of more than 150% for in connection with the Performance Bonus for the 2017 he will be paid monthly compensation in the amount of
the respective individual Executive Board members for the financial year and prorated for the 2018 financial year and € 29,535 gross for the post-contractual competition
COMPENSATION REPORT
prohibition for a period of 24 months. This corresponds Pension commitments Overall compensation for 2017 in accordance with the Code
to 50% of the last fixed monthly salary. The reserves set The service costs for the pension commitments granted to the Based on the Supervisory Board’s determination outlined
up for this compensation for post-contractual competition Executive Board members in the 2017 financial year and the above, the overall compensation of the Executive Board for
prohibition amount to € 708,846. The claims to pension cash values of the vested rights are set out individually: the 2017 financial year amounts to € 38.013 million (2016:
payments deriving from the pension commitment dated € 16.086 million). Due to the high Performance Bonus paid for
December 16, 2002, as amended on December 17, 2014, the successful financial year and the payout in connection
remain unaffected and will be paid out in accordance with with the LTIP 2015/2017 as well as the increase in the
the contractual regulations. number of Executive Board members, the appointment of
Harm Ohlmeyer as member of the Executive Board and as
successor to Robin J. Stalker with effect from March 7, 2017,
the appointment of Gil Steyaert as member of the Executive
Pension commitments in the 2017 financial year in € 4 Board and as successor to Glenn Bennett with effect from
May 12, 2017 and the appointment of Karen Parkin as member
of the Executive Board also with effect from May 12, 2017, the
Accumulated pension obligation for
the pension commitments excluding total compensation for the year under review is higher than
Service costs deferred compensation
the total compensation for the 2016 financial year.
Executive Board members incumbent as at December 31, 2017 2016 2017 2016 2017
Kasper Rorsted 1 587,372 1,243,202 615,559 1,523,987 The recommendations of the Code to individually disclose the
Roland Auschel 360,846 430,138 1,137,760 1,457,786 compensation components for each Executive Board member
Eric Liedtke 359,588 502,371 1,201,127 1,387,206 and to use the sample tables attached to the Code are
Harm Ohlmeyer 2 n. a. 385,521 n. a. 385,521
implemented in the following.
Karen Parkin 3 n. a. 289,045 n. a. 289,045
Gil Steyaert 3 n. a. 296,747 n. a. 296,747
Total 1,307,806 3,147,024 2,954,446 5,340,292
Benefits granted in accordance with the Code
In the following table, the benefits granted for the 2016 and
ANNUAL REPORT 2017
Executive Board members departing in the 2017 financial year

2017 financial years are disclosed including other benefits
Glenn Bennett 4 260,911 872,497 7,043,697 n. a.
and service costs, and also including the maximum and
Robin J. Stalker 5 346,914 880,423 6,102,723 n. a.
minimum achievable compensation.
Total 607,825 1,752,920 13,146,420 n. a.
Executive Board members incumbent until September 30, 2016

In accordance with the requirements of the Code, the
Herbert Hainer 6 2,837,209 n. a. n. a. n. a.
Performance Bonus is disclosed with the amount granted
Total 2,837,209 n. a. n. a. n. a.
048
in case of 100% target achievement. Pursuant to the
1 Member of the Executive Board as of August 1, 2016 and Chief Executive Officer as of October 1, 2016.
ADIDAS
2 Member of the Executive Board as of March 7, 2017. recommendations of the Code, the LTIP Bonus resulting from
3 Member of the Executive Board as of May 12, 2017.
4 Member of the Executive Board until August 4, 2017. The prorated service costs 2017 for Glenn Bennett also comprise the contractually agreed follow-up bonus in the amount of € 693,085 a due to his departure at
the LTIP 2015/2017 measured over a three-year period is to
the end of August 4, 2017 as the follow-up bonus is a commitment for other pension benefits in the case of a member leaving office prematurely which is concluded in advance.
5 Member of the Executive Board until May 11, 2017. The prorated service costs 2017 for Robin J. Stalker also comprise the contractually agreed follow-up bonus in the amount of € 739,746 due to his departure with
be indicated with the pro rata temporis target amount of an
effect from the end of the Annual General Meeting on May 11, 2017 as the follow-up bonus is a commitment for other pension benefits in the case of a member leaving office prematurely which is concluded in advance. average probability scenario at the time of granting, whereas
6 Chief Executive Officer and member of the Executive Board until September 30, 2016. The prorated service costs 2016 for Herber Hainer also comprise the contractually agreed follow-up bonus in the amount of
€ 2,540,625 due to his departure at the end of September 30, 2016 as the follow-up bonus is a commitment for other pension benefits in the case of a member leaving office prematurely which is concluded in advance. adidas AG takes the 100% target amount as a basis.
COMPENSATION REPORT
Benefits granted in € 5
Kasper Rorsted
Executive Board member, Chief Executive Officer Roland Auschel
since August 1, 2016 and October 1, 2016, respectively Executive Board member, Global Sales
2016 2017 2017 (min.) 2017 (max.) 2016 2017 2017 (min.) 2017 (max.)
Fixed compensation 833,333 2,000,000 2,000,000 2,000,000 650,000 750,000 750,000 750,000
Other benefits 18,800 452 452 452 17,943 17,943 17,943 17,943
Total 852,133 2,000,452 2,000,452 2,000,452 667,943 767,943 767,943 767,943
One-year variable compensation 1, 2 625,000 1,714,286 0 2,571,429 557,000 642,857 0 964,286
Multi-year variable compensation 833,333 2,000,000 0 3,000,000 616,667 750,000 0 1,125,000
LTIP 2015/2017 3, 4 833,333 2,000,000 0 3,000,000 616,667 750,000 0 1,125,000
Total 2,310,466 5,714,738 2,000,452 7,571,881 1,841,609 2,160,800 767,943 2,857,228
Service costs 5, 6 587,372 1,243,202 1,243,202 1,243,202 360,846 430,138 430,138 430,138
Overall compensation 2,897,838 6,957,940 3,243,654 8,815,083 2,202,455 2,590,938 1,198,081 3,287,366
Harm Ohlmeyer
Executive Board member, Chief Financial Officer
Eric Liedtke since March 7, 2017 and since the end of the Annual General Meeting
Executive Board member, Global Brands on May 11, 2017, respectively
2016 2017 2017 (min.) 2017 (max.) 2016 2017 2017 (min.) 2017 (max.)
Fixed compensation 650,000 820,000 820,000 820,000 n. a. 561,603 561,603 561,603
Other benefits 13,396 12,575 12,575 12,575 n. a. 14,650 14,650 14,650
ANNUAL REPORT 2017
Total 663,396 832,575 832,575 832,575 n. a. 576,254 576,254 576,254

One-year variable compensation 1, 2 557,000 702,857 0 1,054,286 n. a. 481,374 0 722,061
Multi-year variable compensation 616,667 820,000 0 1,230,000 n. a. 561,603 0 842,405
LTIP 2015/2017 3, 4 616,667 820,000 0 1,230,000 n. a. 561,603 0 842,405
Total 1,837,062 2,355,432 832,575 3,116,861 n. a. 1,619,231 576,254 2,140,720
Service costs 5, 6 359,588 502,371 502,371 502,371 n. a. 385,521 385,521 385,521
Overall compensation 2,196,650 2,857,803 1,334,946 3,619,232 n. a. 2,004,752 961,775 2,526,241
049
ADIDAS
COMPENSATION REPORT
Karen Parkin Gil Steyaert

Executive Board member, Global Human Resources Executive Board member, Global Operations
since May 12, 2017 since May 12, 2017 and August 5, 2017, respectively
2016 2017 2017 (min.) 2017 (max.) 2016 2017 2017 (min.) 2017 (max.)
Fixed compensation n. a. 437,829 437,829 437,829 n. a. 437,829 437,829 437,829
Other benefits n. a. 14,070 14,070 14,070 n. a. 8,590 8,590 8,590
Total n. a. 451,899 451,899 451,899 n. a. 446,419 446,419 446,419
One-year variable compensation 1, 2 n. a. 375,282 0 562,923 n. a. 375,282 0 562,923
Multi-year variable compensation n. a. 437,829 0 656,743 n. a. 437,829 0 656,743
LTIP 2015/2017 3, 4 n. a. 437,829 0 656,743 n. a. 437,829 0 656,743
Total n. a. 1,265,010 451,899 1,671,565 n. a. 1,259,529 446,419 1,666,085
Service costs 5, 6 n. a. 289,045 289,045 289,045 n. a. 296,747 296,747 296,747
Overall compensation n. a. 1,554,055 740,944 1,960,610 n. a. 1,556,276 743,166 1,962,832
Herbert Hainer Glenn Bennett

Chief Executive Officer Executive Board member, Global Operations
until September 30, 2016 until August 4, 2017
2016 2017 2017 (min.) 2017 (max.) 2016 7 2017 8, 9 2017 (min.) 2017 (max.)
Fixed compensation 1,200,000 n. a. n. a. n. a. 721,474 421,115 421,115 421,115
Other benefits 26,917 n. a. n. a. n. a. 35,056 19,862 19,862 19,862
Total 1,226,917 n. a. n. a. n. a. 756,531 440,977 440,977 440,977
ANNUAL REPORT 2017
One-year variable compensation 1, 2 1,355,000 n. a. n. a. n. a. 686,602 694,822 0 1,042,233
Multi-year variable compensation 1,694,000 n. a. n. a. n. a. 903,665 887,847 0 1,331,771
LTIP 2015/2017 3, 4 1,694,000 n. a. n. a. n. a. 903,665 887,847 0 1,331,771
Total 4,275,917 n. a. n. a. n. a. 2,346,798 2,023,647 440,977 2,814,981
Service costs 5, 6 2,837,209 n. a. n. a. n. a. 260,911 872,497 872,497 872,497
Overall compensation 7,113,126 n. a. n. a. n. a. 2,607,709 2,896,144 1,313,475 3,687,479
050
ADIDAS
COMPENSATION REPORT
Robin J. Stalker
Chief Financial Officer
until the end of the Annual General Meeting on May 11, 2017
2016 2017 10 2017 (min.) 2017 (max.)
Fixed compensation 665,500 241,512 241,512 241,512

Other benefits 20,018 7,265 7,265 7,265
Total 685,518 248,777 248,777 248,777
One-year variable compensation 1, 2 540,000 556,200 0 834,300
Multi-year variable compensation 741,800 741,800 0 1,112,700
LTIP 2015/2017 3, 4 741,800 741,800 0 1,112,700
Total 1,967,318 1,546,777 248,777 2,195,777
Service costs 5, 6 346,914 880,423 880,423 880,423
Overall compensation 2,314,232 2,427,199 1,129,199 3,076,199
1 C ontractually agreed Performance Bonus target amount 2016 for Kasper Rorsted due to his intra-year appointment to the Executive Board with effect from August 1, 2016. Contractually agreed Performance Bonus target amount 2016 due to the termination of Herbert Hainer’s Executive Board mandate (with effect from
the end of September 30, 2016) during the plan term.
2 Contractually agreed Performance Bonus target amount 2017 due to the intra-year appointment of Harm Ohlmeyer (with effect from March 7, 2017), Karen Parkin (with effect from May 12, 2017) and Gil Steyaert (with effect from May 12, 2017) to the Executive Board. Contractually agreed Performance Bonus target amount
2017 due to the termination of the Executive Board mandates of Robin J. Stalker (with effect from the end of the Annual General Meeting on May 11, 2017) and Glenn Bennett (with effect from the end of August 4, 2017) during the plan term.
3 C ontractually agreed LTIP Bonus target amount 2015/2017 due to the appointment of Kasper Rorsted (with effect from August 1, 2016) , Harm Ohlmeyer (with effect from March 7, 2017), Karen Parkin (with effect from May 12, 2017) and Gil Steyaert (with effect from May 12, 2017) to the Executive Board during the plan term.
4 Contractually agreed LTIP Bonus target amount 2015/2017 due to the termination of the Executive Board mandates of Herbert Hainer (with effect from the end of September 30, 2016), Robin J. Stalker (with effect from the end of the Annual General Meeting on May 11, 2017) and Glenn Bennett (with effect from the end of
August 4, 2017) during the plan term.
5 Service costs 2016 stated pro rata temporis due to the intra-year termination of Herbert Hainer’s Executive Board mandate with effect from the end of September 30, 2016. The service costs 2016 for Herbert Hainer also comprise the contractually agreed follow-up bonus in the amount of € 2,540,625 due to his departure
with effect from the end of September 30, 2016 as the follow-up bonus is a commitment for other pension benefits in the case of a member leaving office prematurely which is concluded in advance.
6 Service costs 2017 stated pro rata temporis due to the intra-year termination of the Executive Board mandates of Robin J. Stalker (with effect from the end of the Annual General Meeting on May 11, 2017) and Glenn Bennett (with effect from the end of August 4, 2017). The service costs 2017 for Robin J. Stalker and Glenn
Bennett also comprise the contractually agreed follow-up bonus (Robin J. Stalker: in the amount of € 739,746 , Glenn Bennett: in the amount of € 693,085 ) due to the intra-year departures as the follow-up bonus is a commitment for other pension benefits in the case of a member leaving office prematurely which is
concluded in advance.
7 Exchange rate 1.10690 $/€ (annual average rate 2016).
8 Exchange rate 1.12662 $/€ annual average rate 2017).
9 Executive Board compensation stated pro rata temporis due to the intra-year termination of Glenn Bennett’s Executive Board mandate at the end of August 4, 2017. Glenn Bennett’s service contract terminates with effect from March 31, 2018. The variable compensation components (Performance Bonus and LTI) granted
for the 2017 financial year were already fully earned by Glenn Bennett during his term of office as Executive Board member. In addition to the overall compensation set out, Glenn Bennett received the following compensation for the period from August 5, 2017 to December 31, 2017: fixed compensation in the amount of
ANNUAL REPORT 2017
€ 287,730 and other benefits in the amount of € 13,571. This compensation and the service costs for the period from August 5, 2017 to December 31, 2017 in the amount of € 122,585 are set out in the Compensation Report as part of the overall payments to former members of the Executive Board.
10 Executive Board compensation stated pro rata temporis due to the intra-year termination of Robin J. Stalker’s Executive Board mandate with effect from the end of the Annual General Meeting on May 11, 2017. Robin J. Stalker’s service contract terminates with effect from March 31, 2018. The variable compensation
components (Performance Bonus and LTI) granted for the 2017 financial year were already fully earned by Robin J. Stalker during his term of office as Executive Board member. In addition to the overall compensation set out, Robin J. Stalker received the following compensation for the period from May 12, 2017 to
December 31, 2017: fixed compensation in the amount of € 423,988 and other benefits in the amount of € 18,725. This compensation and the service costs for the period from May 12, 2017 to December 31, 2017 in the amount of € 246,965 are set out in the Compensation Report as part of the overall payments to former
members of the Executive Board.
051
ADIDAS
COMPENSATION REPORT
Allocation in accordance with the Code the Performance Bonus are disclosed as an allocation for the 2015/2017 measured over a three-year period is disclosed in
Pursuant to the recommendations of the Code, the fixed financial year in which the compensation was granted. In the total as an allocation because, as stipulated by the Code, it is
compensation, other benefits and the service costs as well as year under review, the LTIP Bonus resulting from the LTIP to be disclosed in the year in which the plan ends.
Allocation in € 6
Kasper Rorsted
Executive Board member,
Chief Executive Officer Roland Auschel Eric Liedtke
since August 1, 2016 and Executive Board member, Executive Board member,
October 1, 2016, respectively Global Sales Global Brands
2016 2017 2016 2017 2016 2017
Fixed compensation 833,333 2,000,000 650,000 750,000 650,000 820,000

Other benefits 18,800 452 17,943 17,943 13,396 12,575
Total 852,133 2,000,452 667,943 767,943 663,396 832,575
One-year variable compensation 1, 2 937,500 2,400,000 835,500 880,714 835,500 969,943
Multi-year variable compensation n. a. 4,250,000 n. a. 2,975,000 n. a. 3,080,000
LTIP 2015/2017 3, 4 n. a. 4,250,000 n. a. 2,975,000 n. a. 3,080,000
Other n. a. n.a. n. a. n.a. n. a. n. a.
Total 5 1,789,633 8,650,453 1,503,443 4,623,657 1,498,896 4,882,518
Service costs 6, 7 587,372 1,243,202 360,846 430,138 359,588 502,371
Overall compensation 2,377,005 9,893,655 1,864,289 5,053,795 1,858,484 5,384,889
Harm Ohlmeyer
Executive Board member, Gil Steyaert
ANNUAL REPORT 2017
Chief Financial Officer Karen Parkin Executive Board member,

since March 7, 2017 and with effect Executive Board member, Global Operations
from the end of the Annual General Global Human Resources since May 12, 2017 and
Meeting on May 11, 2017, respectively since May 12, 2017 August 5, 2017, respectively
2016 2017 2016 2017 2016 2017
Fixed compensation n. a. 561,603 n. a. 437,829 n. a. 437,829

Other benefits n. a. 14,650 n. a. 14,070 n. a. 8,590
Total n. a. 576,254 n. a. 451,899 n. a. 446,419
052
One-year variable compensation 1, 2 n. a. 640,228 n. a. 495,372 n. a. 502,878
ADIDAS
Multi-year variable compensation n. a. 842,405 n. a. 656,743 n. a. 656,743

LTIP 2015/2017 3, 4 n. a. 842,405 n. a. 656,743 n. a. 656,743
Other n. a. n. a. n. a. n. a. n. a. n. a.
Total 5 n. a. 2,058,886 n. a. 1,604,015 n. a. 1,606,040
Service costs 6, 7 n. a. 385,521 n. a. 289,045 n. a. 296,747
Overall compensation n. a. 2,444,407 n. a. 1,893,060 n. a. 1,902,787
COMPENSATION REPORT
Allocation in € 6
Glenn Bennett Robin J. Stalker

Herbert Hainer Executive Board member, Chief Financial Officer
Chief Executive Officer Global Operations until the end of the Annual General
until September 30, 2016 until August 4, 2017 Meeting on May 11, 2017
2016 2017 8 2016 9 2017 10, 11 2016 2017 12
Fixed compensation 1,200,000 n. a. 721,474 421,115 665,500 241,512

Other benefits 26,917 n. a. 35,056 19,862 20,018 7,265
Total 1,226,917 n. a. 756,531 440,977 685,518 248,777
One-year variable compensation 1, 2 2,032,500 n. a. 1,029,903 924,113 810,000 739,746
Multi-year variable compensation n. a. n. a. n. a. 3,995,313 n. a. 3,338,100
LTIP 2015/2017 3, 4 n. a. n. a. n. a. 3,995,313 n. a. 3,338,100
Other n. a. n. a. n. a. n. a. n. a. n. a.
Total 5 3,259,417 n. a. 1,786,434 5,360,404 1,495,518 4,326,623
Service costs 6, 7 2,837,209 n. a. 260,911 872,497 346,914 880,423
Overall compensation 6,096,626 n. a. 2,047,345 6,232,901 1,842,432 5,207,045
1 Contractually agreed Performance Bonus target amount 2016 for Kasper Rorsted due to his intra-year appointment to the Executive Board with effect from August 1, 2016. Contractually agreed Performance Bonus target amount 2016 due to the termination of Herbert Hainer’s Executive Board mandate (with effect from
the end of September 30, 2017) during the plan term.
2 C ontractually agreed Performance Bonus target amount 2017 due to the intra-year appointments of Harm Ohlmeyer (with effect from March 7, 2017), Karen Parkin (with effect from May 12, 2017) and Gil Steyaert (with effect from May 12, 2017) to the Executive Board. Contractually agreed Performance Bonus target amount
2017 due to the termination of Robin J. Stalker’s (with effect from the end of the Annual General Meeting on May 11, 2017) and Glenn Bennett’s (with effect from the end of August 4, 2017) Executive Board mandates during the plan term.
3 Contractually agreed LTIP Bonus target amount 2015/2017 due to the appointment of Kasper Rorsted (with effect from August 1, 2016) , Harm Ohlmeyer (with effect from March 7, 2017), Karen Parkin (with effect from May, 12 2017) and Gil Steyaert (with effect from May 12, 2017) to the Executive Board during the plan term.
4 Contractually agreed LTIP Bonus target amount 2015/2017 due to the termination of the Executive Board mandates of Robin J. Stalker (with effect from the end of the Annual General Meeting on May 11, 2017) and Glenn Bennett (with effect from August 4, 2017) during the plan term.
5 The compensation components set out above constitute the overall compensation both for the 2017 financial year and for the previous year, which have to be set out individually in accordance with German Commercial Law.
6 Service costs stated pro rata temporis due to the intra-year termination of Herbert Hainer’s Executive Board mandate with effect from the end of September 30, 2016. The service costs 2016 for Herbert Hainer also comprise the contractually agreed follow-up bonus in the amount of € 2,540,625 due to his departure with
effect from the end of September 30, 2016 as the follow-up bonus is a commitment for other pension benefits in the case of a member leaving office prematurely which is concluded in advance.
7 Service costs stated pro rata temporis due to the intra-year termination of the Executive Board mandates of Robin J. Stalker (with effect from the end of the Annual General Meeting on May 11, 2017) and Glenn Bennett (with effect from the end of August 4, 2017). The service costs 2017 for Robin J. Stalker and Glenn
Bennett also comprise the contractually agreed follow-up bonuses (Robin J. Stalker: in the amount of € 739,746, Glenn Bennett: in the amount of € 693,085) due to their intra-year departures as the follow-up bonus is a commitment for other pension benefits in the case of a member leaving office prematurely which is
concluded in advance.
8 In addition to the overall compensation stated, Herbert Hainer received an LTIP Bonus 2015/2017 in the amount of € 5,082,000. This compensation is set out in the Compensation Report as part of the overall payments to former members of the Executive Board.
ANNUAL REPORT 2017

11 Executive Board compensation stated pro rata temporis due to the intra-year termination of Glenn Bennett’s Executive Board mandate at the end of August 4, 2017. Glenn Bennett’s service contract terminates with effect from March 31, 2018. The variable compensation components (Performance Bonus and LTI) granted
for the 2017 financial year were already fully earned by Glenn Bennett during his term of office as Executive Board member. In addition to the overall compensation set out, Glenn Bennett received the following compensation for the period from August 5, 2017 to December 31, 2017: fixed compensation in the amount of
€ 287,730 and other benefits in the amount of € 13,571. This compensation and the service costs for the period from August 5, 2017 to December 31, 2017 in the amount of € 122,585 are set out in the Compensation Report as part of the overall payments to former members of the Executive Board.
12 Executive Board compensation stated pro rata temporis due to intra-year termination of Robin J. Stalker’s Executive Board mandate with effect from the end of the Annual General Meeting on May 11, 2017. Robin J. Stalker’s service contract terminates with effect from March 31, 2018. The variable compensation
components (Performance Bonus and LTI) granted for the 2017 financial year were already fully earned by Robin J. Stalker during his term of office as Executive Board member. In addition to the overall compensation set out, Robin J. Stalker received the following compensation for the period from May 12, 2017 to
December 31, 2017: fixed compensation in the amount of € 423,988 and other benefits in the amount of € 18,725. This compensation and the service costs for the period from May 12, 2017 to December 31, 2017 in the amount of € 246,965 are set out in the Compensation Report as part of the overall payments to former
members of the Executive Board.
053
ADIDAS
COMPENSATION REPORT
Overall payments to former members of the Executive Board and their The dynamization of the pensions paid to former Executive COMPENSATION OF THE
surviving dependents Board members is effected in accordance with statutory SUPERVISORY BOARD MEMBERS
In the 2017 financial year, overall payments to former regulations or regulations under collective agreements,
members of the Executive Board and their surviving dependents unless a surplus from the pension fund is used for an increase COMPENSATION SYSTEM
amounted to € 13.520 million (2016: € 8.754 million). The in pension benefits after pension payments have already begun. In accordance with § 18 of adidas AG’s Articles of Association,
increase is attributable, on the one hand, to the inclusion of the compensation of the Supervisory Board members consists
the bonus paid to Herbert Hainer in connection with the LTIP Review of Executive Board compensation of two components: fixed compensation and additional
2015/2017 in the overall payments for 2017. On the other, the In the 2017 financial year, the Supervisory Board had the compensation for membership in committees. The Supervisory
increase is attributable, in particular, also to the inclusion of Executive Board compensation system reviewed with regard Board members are not granted variable compensation.
the compensation and the service costs for Robin J. Stalker to appropriateness by an independent external compensation Furthermore, the Supervisory Board members receive
for the period from May 12, 2017 to March 31, 2018 and for expert. In doing so, the overall annual target compensation of attendance fees and are reimbursed for expenses they incur.
Glenn Bennett for the period from August 5, 2017 to the individual Executive Board members and the structure of
March 31, 2018 as well as the compensation for the post- the Executive Board compensation were examined in detail. Fixed compensation for Supervisory Board function
contractual competition prohibition and the follow-up bonus This review found that while the compensation meets the Each member receives fixed compensation which is paid
in connection with the termination of their Executive Board requirements of the German Stock Corporation Act and the following the end of the respective financial year. The
mandates in the overall payments. For details, see the section Code, it could be aligned even more closely with customary Chairman of the Supervisory Board and his deputies receive
‘Commitments to Executive Board members in connection market levels. Against this background, the Supervisory higher fixed compensation.
with termination of tenure’.  SEE PAGE 47 Board resolved in December 2017 to increase the compen
sation of Roland Auschel and Eric Liedtke with effect from Deputy Chairman/
Member Chairman Chairwoman
Provisions for pension entitlements for the former members January 1, 2018.
General Amount deter- 300% of the 200% of the
of the Executive Board who resigned on or before December  31, calculation mined by the base amount base amount
2005 and their surviving dependents were created, amounting Miscellaneous Annual General
Meeting (base
to € 44.587 million (2016: € 45.821 million) in total as at The Executive Board members do not receive any additional amount)
December 31, 2017. compensation for mandates within a didas. The Executive Amount until € 50,000 € 150,000 € 100,000
ANNUAL REPORT 2017
Board members have not received any loans and advance June 30, 2017
(based on full
There are pension commitments toward six former Executive payments from adidas AG; due to his departure from the year)
Board members who resigned after December 31, 2005, Executive Board, prepayments were made to Robin J. Stalker Amount from € 80,000 € 240,000 € 160,000
July 1, 2017
which are covered by a pension fund or a pension fund in with regard to the 2017 Performance Bonus and prorated for (based on full
combination with a reinsured pension trust fund. From this, 2018 as well as with regard to the LTIP 2015/2017.  SEE PAGE 47 year)
indirect obligations amounting to € 40.106 million (2016:
054
€ 29.472 million) arise for adidas AG, for which no accruals were
ADIDAS
established due to financing through the pension fund and

pension trust fund. This increase is attributable, in particular,
to the resignation of Robin J. Stalker and Glenn Bennett.
COMPENSATION REPORT
Additional compensation for membership in committees The compensation paid for a committee chairmanship also SUPERVISORY BOARD COMPENSATION 2017
Furthermore, the Supervisory Board members receive covers the membership in such committee. The members of Fixed compensation and attendance fees
additional compensation for membership in certain the Steering Committee, the Mediation Committee, the The total compensation paid to our Supervisory Board in the
committees; in this regard, too, compensation is increased if Nomination Committee and committees which are established 2017 financial year amounted to € 1.78 million (2016:
the chairmanship of a committee is assumed. In accordance ad hoc do not receive additional compensation. If a Supervisory € 1.26 million). In addition, attendance fees totaling € 126,750
with § 18 of the Articles of Association, the amount of the Board member is a member of more than one committee, the (2016: €  70,500) were paid. The increase in the total
respective additional compensation is based on the fixed member only receives compensation for his task in the compensation for the 2017 financial year compared to the
compensation (base amount) determined for the Supervisory committee with the highest compensation. 2016 financial year is attributable, in particular, to the fact
Board members by the Annual General Meeting and depends that the Annual General Meeting on May 11, 2017 approved
on the tasks and responsibilities connected with the respective Reduced fixed compensation and additional compensation in case of the amendment to the Articles of Association regarding the
committee membership. membership for only part of financial year adjustment of the Supervisory Board compensation with
If a member belongs to the Supervisory Board or a committee effect from July 1, 2017. Moreover, as the Annual General
General Committee and for only part of a financial year, the fixed compensation and Meeting on May 12, 2016 resolved to enlarge the Supervisory
Finance and Investment
Committee Audit Committee additional compensation are reduced accordingly on a pro Board by four members, 2017 was the first full financial
Member Chairman Member Chairman rata temporis basis. year during which the Supervisory Board was composed of
General 50% 100% 100% 150% 16 members.
calculation (in 200% since Attendance fees
% of the base July 1, 2017
amount) Furthermore, for meetings requiring personal attendance, Miscellaneous
Amount until € 25,000 € 50,000 € 50,000 € 75,000 an attendance fee is granted. Until June 30, 2017, the at- The Supervisory Board members have not received any loans
June 30, 2017
tendance fee amounted to € 750 and since July 1, 2017 it or advance payments from adidas AG.
(based on full
year) amounts to € 1,000.
Amount from € 40,000 € 80,000 € 80,000 € 160,000
July 1, 2017
(based on full Expenses
year) The Supervisory Board members are reimbursed for necessary
ANNUAL REPORT 2017
expenses and travel expenses incurred in connection with their

mandates as well as for the VAT payable on their compensation,
insofar as they charge for it separately.
055
ADIDAS
COMPENSATION REPORT
Compensation of Supervisory Board members in € 7
2016 2016 2017 2017

fixed compensation 2016 fixed compensation 2017
compensation committee work attendance fees compensation committee work attendance fees
Supervisory Board members incumbent as at December 31, 2017

Igor Landau
(Chairman of the Supervisory Board, Chairman of the General Committee,
Chairman of the Finance and Investment Committee) 150,000 50,000 5,250 195,000 65,000 9,750
Sabine Bauer
(Deputy Chairwoman of the Supervisory Board, Member of the General Committee,
Member of the Finance and Investment Committee) 100,000 25,000 5,250 130,000 32,500 9,750
Willi Schwerdtle
(Deputy Chairman of the Supervisory Board, Member of the General Committee) 100,000 25,000 5,250 130,000 32,500 9,000
Ian Gallienne 1
(Member of the Audit Committee since March 7, 2017) 27,322 n. a. 1,500 65,000 55,860 10,000
Dieter Hauenstein 50,000 n. a. 3,750 65,000 n. a. 6,250
Roswitha Hermann 2 14,208 n. a. 750 n. a. n. a. n.a.
Dr. Wolfgang Jäger
(Member of the Audit Committee, Member of the Finance and Investment Committee) 50,000 50,000 6,750 65,000 65,000 10,750
Dr. Stefan Jentzsch
(Member of the Audit Committee until March 7, 2017) 50,000 50,000 7,500 65,000 9,140 7,000
Herbert Kauffmann
(Chairman of the Audit Committee, Member of the Finance and Investment Committee) 50,000 75,000 7,500 65,000 117,500 10,750
Katja Kraus 50,000 n. a. 3,000 65,000 n. a. 6,250
Kathrin Menges 50,000 n. a. 3,750 65,000 n. a. 4,250
Udo Müller 3 11,885 n. a. 750 65,000 n. a. 6,250
Roland Nosko
ANNUAL REPORT 2017
(Member of the General Committee) 50,000 25,000 5,250 65,000 32,500 9,750
Hans Ruprecht
(Member of the Audit Committee) 50,000 50,000 7,500 65,000 65,000 10,750
Nassef Sawiris 1 27,322 n. a. 1,500 65,000 n. a. 5,250
Michael Storl 2 14,208 n. a. 750 n. a. n. a. n.a.
Heidi Thaler-Veh 50,000 n. a. 3,750 65,000 n. a. 5,500
Kurt Wittmann 3 11,885 n. a. 750 65,000 n. a. 5,500
Total 906,831 350,000 70,500 1,300,000 475,000 126,750
056
1 Member of the Supervisory Board with effect from June 15, 2016.
ADIDAS
2 Member of the Supervisory Board for the period from June 24, 2016 to October 6, 2016.
3 Member of the Supervisory Board with effect from October 6, 2016.
OUR SHARE
OUR SHARE a significant US tax reform, strong global economic growth, in the successful execution of Creating the New and the
the outcome of the French parliamentary election as well as company’s ability to sustainably grow revenues and
Despite some minor setbacks throughout the year, accommodative monetary policies by central banks around improve margins in the years to come. Consequently, the
international stock markets ended the year 2017 on a the world. The Federal Reserve’s decisions on interest rate adidas AG share reached a new all-time high of € 199.95 on
positive note. While the DAX-30 and the EURO STOXX 50 increases and balance sheet cuts, the strengthening of the August 4, 2017. However, unfavorable newsflow regarding the
increased by 13% and 6%, respectively, the MSCI World euro, terror attacks and geopolitical risks only temporarily put US retail environment as well as some profit-taking and
Textiles, Apparel & Luxury Goods Index was up 32%. The pressure on international equity markets. As a result, the strategic asset re-allocation executed by capital market
adidas AG share traded fairly in line with international stock DAX-30 increased a strong 13%, while the EURO STOXX 50 participants, following the strong share price development
markets and ended 2017 with an increase of 11% compared gained 6% in 2017. The MSCI World Textiles, Apparel & Luxury during the first nine months, temporarily put pressure on the
to the prior year. As a result of the strong operational Goods Index ended the year with a 32% increase.  SEE TABLE 9 adidas AG share towards the end of 2017. Consequently, the
performance in 2017 as well as Management’s confidence in The a didas AG share traded fairly in line with international adidas AG share closed the year at € 167.15 and thus 11%
the strength of the company’s financial position and long- stock markets and ended the year 11% above the 2016 year- above the prior year-end level.  SEE DIAGRAM 8
term growth aspirations, we intend to propose a dividend end level. In particular, the publication of the company’s 2020
per share of € 2.60 at our 2018 Annual General Meeting. acceleration plan, including an increase in the company’s
Performance of the adidas AG share and important indices 9
financial 2020 ambition, strongly supported the positive trend
at year-end 2017 in %
ADIDAS AG SHARE CONTINUES UPSWING IN 2017 of the share during the course of 2017. In addition, the release
In 2017, international stock markets ended the year on a of strong financial results, driven by the relentless execution
positive note, despite some minor setbacks throughout the of the strategic business plan ‘Creating the New’, which 1 year 3 years 5 years 10 years
year. The strong performance was supported by business- resulted in an upgrade of the company’s full year 2017 outlook adidas AG 11 190 148 226
friendly policy decisions following the US elections, including at the end of July, helped to reinforce investors’ confidence DAX-30 13 32 70 60
EURO STOXX 50 6 11 33 (20)
MSCI World Textiles, Apparel &
Luxury Goods 32 26 52 133
Five-year share price development 1 8
Source: Bloomberg.
ANNUAL REPORT 2017
| Dec. 31, 2012 Dec. 31, 2017 |

LEVEL 1 ADR PERFORMS IN LINE WITH
300
COMMON STOCK
250 Our Level 1 ADR closed 2017 at US $ 99.82, representing an
increase of 27% versus the prior year level (2016: US $ 78.55).
200 The more pronounced increase of the Level 1 ADR price
057
compared to the ordinary share price was due to the
150
ADIDAS
depreciation of the US dollar versus the euro in 2017. The

number of Level 1 ADRs outstanding decreased to 7.1 million at
100
year-end 2017 compared to 8.8 million at the end of 2016. The
50 average daily trading volume decreased to around 60,200 ADRs
in 2017 (2016: around 101,200). Further information on our ADR
1 Index: December 31, 2012 = 100. adidas AG DAX-30 EURO STOXX 50 MSCI World Textiles, Apparel & Luxury Goods Index program can be found on our website. ↗ ADIDAS-GROUP.COM/ADR
OUR SHARE
ADIDAS AG SHARE MEMBER OF of the convertible bond was con verted (2016: 48%). The payout of € 530 million (2016: € 405 million) reflects a payout
IMPORTANT INDICES convertible bond closed the year 12% above the prior year ratio of 37.1% (2016: 37.4%) of net income from continuing
The adidas AG share is included in a variety of high-quality level at € 205.91 (2016: € 183.40). operations excluding the negative one-time tax impact as a
indices around the world, most importantly the DAX-30, the result of the US tax reform in 2017.  SEE TABLE 10 This is within
EURO STOXX 50 Index as well as the MSCI World Textiles, DIVIDEND PROPOSAL OF € 2.60 PER SHARE the target range of between 30% and 50% of net income from
Apparel & Luxury Goods Index, which comprises our major As a result of the strong operational performance in 2017, the continuing operations as defined in our dividend policy.
competitors. At December 31, 2017, our weighting in the company’s robust financial position as well as Manage
DAX-30, which is calculated on the basis of free float market ment’s confidence in our long-term growth aspirations, the SHAREHOLDER RETURN PROGRAM EXPIRED
capitalization and twelve-month share turnover, improved adidas AG Executive and Supervisory Boards will recommend On October 1, 2014, adidas AG announced a multi-year
to 3.01% (2016: 2.89%). Our higher weighting compared to the paying a dividend of € 2.60 per dividend-entitled share to shareholder return program of up to € 1.5 billion in total to be
prior year was due to the increase in market capitalization shareholders at the Annual General Meeting (AGM) on completed by December 31, 2017. The shareholder return
of adidas AG. Within the DAX-30, we ranked 11 on market May 9, 2018. This represents an increase of 30% compared to program was executed by buying back shares via the stock
capitalization (2016: 14) and 12 on turnover (2016: 12) at the prior year dividend (2016: € 2.00). Subject to the meeting’s exchange under the authorization given by the Annual General
year-end 2017. Our weighting in the EURO STOXX 50 Index, approval, the dividend will be paid on May 15, 2018. The total Meeting on May 8, 2014, and on May 12, 2016, for the period
which is based on free-float market capitalization, amounted
to 1.28% on December 31, 2017 (2016: 1.31%). Additionally, in
recognition of our social and environmental efforts, adidas AG
The adidas AG share 10
is listed in several key sustainability indices.  SEE TABLE 10
MORE THAN 90% OF THE 2017 1 2016 Important indices

CONVERTIBLE BOND CONVERTED Number of shares outstanding 2 shares 203,861,234 201,489,310 —D AX-30
In March 2012, a didas AG successfully issued a convertible Basic earnings per share 3 € 7.05 5.39 — EURO STOXX 50
— MSCI World Textiles, Apparel &
bond, due on June 14, 2019, for an aggregate nominal amount Diluted earnings per share 3 € 7.00 5.29 Luxury Goods
of € 500 million. Proceeds from the offering have allowed the Year-end price € 167.15 150.15 — Deutsche Börse Prime Consumer
ANNUAL REPORT 2017
Year high € 199.95 159.50 — Dow Jones Sustainability Indices

company to further optimize its debt structure. The bonds (World and Europe)
Year low € 143.80 83.45
were priced with a 0.25% annual coupon and a conversion — ECPI Ethical Equity Indices
Market capitalization4 € in millions 34,075 30,254 (Euro and EMU)
premium of 40% above the reference price of € 59.61, Dividend per share € 2.60 5 2.00 — ECPI ESG Equity (Euro and World)
resulting in an initial conversion price of € 83.46 per share. As — Ethibel Sustainability Indices
Dividend payout € in millions 530 4 405
(Global and Europe)
a consequence of contractual provisions relating to dividend Dividend payout ratio 3 % 37.1 4 37.4 — Euronext Vigeo (Eurozone 120,
protection, the conversion price was adjusted to € 81.13 Dividend yield % 1.6 1.3 Europe 120)
— FTSE4Good Index Series
058
per share. This adjustment became effective on May 12, 2017. Shareholders’ equity per share 4 € 31.64 32.12
— MSCI Global Sustainability Indexes
Price-earnings ratio at year-end 6 % 23.7 27.8
ADIDAS
The bonds have been callable by the issuer since June 2017. — MSCI SRI Indexes
Average trading volume per trading day 7 shares 653,389 892,646 — STOXX Global ESG Leaders
In 2017, 2,814,470 shares were transferred following the
exercise of conversion rights, all of which were serviced from 2 All shares carry full dividend rights.
treasury shares of the company. The remaining bonds were 3 Based on net income from continuing operations.
4 Based on number of shares outstanding at year-end.
convertible into up to 377,190 new or existing adidas AG shares. 5 Subject to Annual General Meeting approval.
6 Based on basic EPS from continuing operations.
 SEE NOTE 18, P. 175 Consequently, as at December 31, 2017, 94% 7 Based on number of shares traded on all German stock exchanges.
OUR SHARE
adidas AG high and low share prices per month 1 in € 11 through to May 11, 2021. The authorization covers the
repurchase of up to 10% of the company’s share capital on the
stock exchange. The total number of shares bought back by
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
adidas AG within the framework of the shareholder return
230
program amounted to 11,146,969. This corresponds to a
notional amount of € 11,146,969 in the nominal capital and
199.95
199.20
210
196.10
193.00
consequently 5.33% of the company’s nominal capital. The total
187.70
185.70
184.15
183.20
180.60
aggregate acquisition costs (excluding incidental purchasing
177.60
190
costs) for the shareholder return program amounted to around
187.85
186.35
183.20
158.40
170 € 900 million.
155.40
175.60
175.20
169.85
168.35
167.15
164.35
150 STRONG INTERNATIONAL INVESTOR BASE
159.80
Based on our share register, we estimate that adidas AG

144.30
143.80
130
currently has more than 70,000 shareholders (2016: 60,000).
In our latest ownership analysis conducted in January 2018,
30-day moving average High and low share prices Source: Bloomberg. we identified almost 100% of our shares outstanding.
1 Based on daily Xetra closing prices. Institutional investors represent the largest investor group,
holding 87% of shares outstanding (2016: 87%). Private
investors and undisclosed holdings account for 10% (2016:
Shareholder structure by investor group 1 12 Shareholder structure by region 1, 2 13 8%). Lastly, a didas AG currently holds 3% of the company’s
shares as treasury shares (2016: 4%); this decline versus
6% the prior year reflects treasury shares transferred following
3% France the exercise of conversion rights from the convertible bond
10%
Treasury shares partly offset by shares purchased as part of our share buyback
ANNUAL REPORT 2017
Private investors and 9%

undisclosed holdings Belgium program.  SEE DIAGRAM 12
40%
11%
87% North America
Germany In terms of geographical distribution, the North American
Institutional investors
15% market currently accounts for 40% of institutional share
Rest of world holdings (2016: 40%), followed by the UK with 18% (2016:
21%). Identified German institutional investors hold 11% of
18%
059
shares outstanding (2016: 8%). Belgium and France account
United Kingdom
ADIDAS
1 As of January 2018. for 9% (2016: 9%) and 6% (2016: 5%), respectively. 15% of
institutional shareholders were identified in other regions of
1 As of January 2018.
2 Reflects institutional investors only. the world (2016: 17%).  SEE DIAGRAM 13
OUR SHARE
ADIDAS AG SHARE RECEIVES STRONG VOTING RIGHTS NOTIFICATIONS PUBLISHED

ANALYST SUPPORT All voting rights notifications received in 2017 and thereafter
Both the company and the a didas AG share continued to in accordance with §§ 33 et seq. of the German Securities
receive strong analyst support in 2017. Around 40 analysts Trading Act (Wertpapierhandelsgesetz – WpHG) (§§ 21 et seq.
from investment banks and brokerage firms regularly German Securities Trading Act old version) can be viewed on our
published research reports on adidas. The vast majority corporate website. ↗ ADIDAS-GROUP.COM/VOTING_RIGHTS_NOTIFICATIONS
of analysts are confident about the medium- and long- Information on reportable shareholdings that currently
term potential of the company. This is reflected in the exceed or fall below a certain threshold can also be found in
recommendation split for our share as at December 31, 2017. the Notes section of this Annual Report.  SEE NOTE 26, P. 182
46% of analysts recommended investors to ’buy’ our share
(2016: 27%). 46% advised to ‘hold’ our share (2016: 56%) and 8% MANAGERS’ TRANSACTIONS REPORTED ON
of the analysts recommended to ‘sell’ our share (2016: 17%). CORPORATE WEBSITE
Managers’ transactions involving adidas AG shares (ISIN
SUCCESSFUL INVESTOR RELATIONS ACTIVITIES DE000A1EWWW0) or related financial instruments, as defined
didas AG strives to maintain close contact to institutional and
a by Article 19 of the European Market Abuse Regulation (MAR),
private shareholders as well as analysts. In 2017, Management conducted by members of our Executive or Supervisory
and the Investor Relations team spent 46 days on roadshows Boards, by key executives or by any person in close relationship
(2016: 47) and also spent 21 days presenting at 14 national with these persons, are reported on our website.
and international conferences (2016: 28 days at 16 conferences). ↗ ADIDAS-GROUP.COM/S/MANAGERS-TRANSACTIONS
Furthermore, in order to present additional information

around Creating the New, our strategic business plan until EXTENSIVE FINANCIAL INFORMATION
2020, as well as the newly introduced acceleration plan, we AVAILABLE ONLINE
hosted an Investor Day on March 14 at the company’s head We offer extensive information around our share as well as
quarters in Herzogenaurach, Germany. More than 100 investors the company’s strategy and financial results on our corporate
ANNUAL REPORT 2017
and analysts attended the event in person. website. Our event calendar lists all conferences and roadshows
we attend and provides all presentations for download. In
For the fourth time in five years, adidas was awarded a Red addition to live webcasts of all major events such as the
Dot Communication Design Award for its Annual Report. In Annual General Meeting, Investor Days and our IR Tutorial
addition, the adidas Investor Relations team won the Workshops, we also offer webcasts of our quarterly conference
prestigious European IR Magazine Award in the following calls. ↗ ADIDAS-GROUP.COM/S/INVESTORS
060
categories: ‘Best in sector: Consumer Discretionary’ and
ADIDAS
‘Best in region: Germany’.

G RO UP
M A N AG E M E N T
R E P O RT
O UR C O M PA N Y
ANNUAL REPORT 2017
Corporate Strategy 062 Innovation 078
061
adidas Brand Strategy 067
People and Culture 081
ADIDAS
Reebok Brand Strategy 070

Sales and Distribution Strategy 072 Sustainability 088
Global Operations 074 Non-Financial Statement 100
CORPORATE STRATEGY

CORPORATE STRATEGY driving significant improvements in the desirability of our Culture

brands and has increased our relevance with consumers We have great talents in our organization who work with
Everything we do is rooted in sport. With sport playing an around the globe. As a result, we are gaining market share in passion for sports and our brands. Our people will bring our
increasingly important role in more and more people’s lives, those categories, markets and cities that we have identified as strategy to life and our culture will make the difference in
on and off the field of play, we operate in a highly attractive future growth drivers for our company. achieving our long-term goals. We are convinced that a
industry. Through our authentic sports brands, we push the culture of creativity, collaboration and confidence will be a key
boundaries of products, experiences and services to drive STRATEGIC CHOICES enabler for us to Create the New.  SEE PEOPLE AND CULTURE, P. 81
brand desire and capitalize on the growth opportunities in Our strategic business plan has a powerful foundation in our
sport as well as in sports-inspired casual and activewear. unique corporate culture and is built around three strategic Our leaders role model this behavior. To enhance our
choices that will support us in intensifying our focus on our leadership structure, we established the Core Leadership
OUR CORE BELIEF: THROUGH SPORT, WE HAVE consumers and will drive brand desirability: Speed, Cities and Group at the end of 2016. This selected group of leaders is
THE POWER TO CHANGE LIVES Open Source. mainly responsible for driving the execution of our strategic
The importance of sport, however, goes far beyond that. Sport business plan, with a particular focus on improving cross-
is central to every culture and society and is core to an functional collaboration and decision making. In 2017, we
individual’s health and happiness. Therefore, we believe that,
through sport, we have the power to change lives. And we
work every day to inspire and enable people to harness the
Our strategy: ‘Creating the New’ 14
power of sport in their lives.
OUR MISSION: TO BE THE BEST SPORTS

COMPANY IN THE WORLD
It is our mission to be the best sports company in the world.
Best means that we design, build and sell the best sports
products in the world, with the best service and experience,
ANNUAL REPORT 2017
OPEN SOURCE
and that we do so in a sustainable way. Best is what our TOP LINE &
consumers, athletes, teams, partners, media and share MARKET SHARE
CIT GROWTH
holders will say about us. We are confident that we will see IES
CULTURE
improvements with regard to market share, leadership and BRAND GROSS MARGIN
profitability once people are saying that we are the best. FOCUS EXPANSION
DESIRE
OPERATING
062
STRATEGIC BUSINESS PLAN: CREATING THE NEW
D LEVERAGE
EE
ADIDAS
‘Creating the New’ is our strategic business plan until the

year 2020. Our ambition to further drive top- and bottom-line
SP
growth by significantly increasing brand desirability builds the
core of Creating the New. The strategic business plan
therefore focuses on our brands as they connect and engage
with our consumers. This consumer-centric approach is
CORPORATE STRATEGY

continued to sharpen our leadership structure by adding an means to us being able to anticipate what consumers want higher share of full-price sales with this part of our business
Extended Leadership Group which supports the Core and reacting accordingly in a timely manner. Being fast will compared to the regular range.
Leadership Group in implementing our strategy and which give us a decisive competitive advantage. The benefits include
will serve as a succession pipeline for Core Leadership Group higher product availability, reduced inventory risk, incremental In addition to focusing on Speed in our existing supply chain
members. The Leadership Framework, introduced in 2017, net sales and higher margins. Speed is therefore a critical and and production processes, we also explore new, disruptive
unites all leaders in our company through a clear definition of powerful lever for us. business models and technologies to make us faster. At the
what strong leadership looks like at adidas. end of 2015, we opened our first Speedfactory  SEE GLOSSARY in
We are using our industry-leading experience to further Ansbach, Germany. Using smart manufacturing instead of
We believe that a performance culture is essential to evolve our entire business model end-to-end, from range centralized production, it brings production closer to where
successfully executing our strategy. To further promote a planning to product creation, sourcing, supply chain, go-to- the consumer is. It opens doors to the creation of products
performance culture within our company, we have finalized a market and sales. In this context, our Speed concept builds on completely unique to the fit and functional needs of our
new way of developing our people and evaluating their three programs: consumers, through a combination of the craft of shoemaking
performance. In addition, we made major progress in —— Never out of stock: We strengthen our existing ‘never- and cutting-edge technology. 2017 saw the first major product
recalibrating our approach to compensation and benefits. out-of-stock’ business proposition by setting a global, to be created at the Speedfactory: The AM4 series, an
Long-term remuneration for our senior management, for permanent offer with longer life cycles and continuous individually designed and manufactured shoe made for our
instance, will be simplified and linked to the development of reproduction and replenishment. This ensures our most global key cities, went into production. In addition, we opened
the company’s bottom line and our share price going forward iconic and desired products are permanently available to a second Speedfactory in Atlanta, USA, to create product more
in order to further align the interests of our senior leaders our consumers. quickly for and closer to the US consumer. Bringing the two
with the interests of our shareholders. —— Planned responsiveness: Systematically monitoring trends factories up to speed is what we are focusing on in 2018. And
at the point of sale enables us to better read demand while Speedfactory enables us to rethink conventional manu
As a company, we value diversity and promote inclusivity. signals, re-order seasonal products on shorter lead facturing processes, it also enables us to continuously learn
While today our employee base is already very diverse in times and deliver them within the season. By doing so, we from it, which in turn will help us to also improve efficiency
terms of nationalities, we also aim to continuously increase can repeat seasonal product successes and fulfil higher and increase opportunities within the traditional supply chain,
the share of females in leadership positions. With the consumer demand than initially forecast. which will remain the backbone of our global sourcing activity.
ANNUAL REPORT 2017
appointment of Karen Parkin to the Executive Board in May —— In-season creation: We create ranges later in the season  SEE GLOBAL OPERATIONS, P. 74  SEE INNOVATION, P. 78
2017, we have made further progress in this regard. In to ensure we capture the latest trends in our industry. This,
addition, between July 2015 and June 2017, the share of in turn, helps us to create unexpected newness and drive Cities
women at Board-1 level increased from 11% to 18%, and at brand desire. Urbanization continues to be a global megatrend. Most of the
Board-2 level the percentage of women grew from 26% to global population lives in cities and already today cities
29% during the same period.  SEE PEOPLE AND CULTURE, P. 81 Since the launch of the Speed programs, we have steadily account for around 80% of global GDP. Cities are shaping
063
expanded the coverage. All categories and markets have now global trends and consumers’ perception, perspectives and
Speed
ADIDAS
been fully onboarded and started to capitalize on the benefits buying decisions. To be successful in the future, we therefore
Driving brand desirability begins with putting our consumers of the Speed programs. The net sales share of speed-enabled need to win the consumer in the world’s most influential
at the heart of everything we do and serving them in the best products has continuously increased to a level of 28% in 2017 cities. We have identified six global megacities in which we
possible way. This involves ensuring that consumers always which is fully in line with our overall ambition to increase the want to over-proportionally invest to grow share of mind,
find fresh and desirable products where and when they want share of speed-enabled products to at least 50% by 2020. In share of market, share of trend: London, Los Angeles, New
them and with an unrivaled brand experience. This, in turn, addition, we are making further progress to achieve a 20% York, Paris, Shanghai and Tokyo.
CORPORATE STRATEGY

We aim to deliver extraordinary experiences to consumers in The 2017 results for several KPIs (NPS and market share) creative partnerships with Alexander Wang, Kanye West
these cities across all touchpoints by engaging more deeply signal we are well on track to achieve our long-term target to and Stella McCartney, among others, to further drive brand
with them in communities where they live, places where they double revenues in our global key cities by the end of 2020 desire and growth.
work, fields, courts and streets where they play and doors compared to 2015. Our global cities make an above-average —— Athlete collaborations: Through athlete collaborations we
where they shop. At the same time, we strive to create high contribution to the overall growth of our company and help us aim to build communities of athletes that help shape the
synergies between our activation and commercial efforts. achieve market share gains. In addition, we also experienced a future of their sport together with us. Such collaborations
This also includes aligning our initiatives with similar activities relative improvement in brand desire in most of our key cities. include relationships with the world’s best athletes and
of key retail partners. teams, but they also take place on a local level. To directly
Open Source engage and interact with a broader consumer community,
It is our goal to create an end-to-end ecosystem in these cities Open Source is a collaboration-based innovation model we have expanded our digital and physical space projects
which connects consumers to relevant products, through that aims to build brand advocacy by opening the brands’ in 2017. For instance, ‘adidas runners’, a highly engaged
bottom-up activation and holistic retail experiences: doors to the consumer and by inviting him or her to co- community of runners, now counts over 50,000 active
—— Activation: Our global key cities offer a unique platform create the future of sport and sports culture with us. It is runners in Western Europe alone. Other collaborations
to activate our brands. Key successes in 2017 include the about learning and sharing, about starting conversations include Wanderlust, a producer of the largest yoga lifestyle
‘Green Light Run’ in Tokyo, receiving six Cannes awards, as between the brand, external experts and consumers and events in the world, or our Tango League, a grassroots
well as the Parley ‘Run for the Oceans’ in New York City and about giving them the chance to have an impact on what we event for the football enthusiast, among others.
the launch of our new football footwear franchise Nemeziz do. We provide access for externals to tools and resources —— Partner collaborations: The strategic initiatives in the
in London, which have not only created brand heat in the we use to create, thereby acquiring and nurturing creative area of partner collaborations intend to open up our
respective cities but also received significant global social capital, and explore new territories so as to create knowledge of sport by working with the best in other fields.
media coverage. unprecedented brand value for the consumer beyond mere By exchanging core competencies, we will create unique
—— Products: We continue to drive a multi-pronged strategy of transactional businesses. value for our brands and ultimately also for our consumers.
product introductions, focused across all six cities, including Our partnership with Parley for the Oceans  SEE GLOSSARY
global campaign launches and exclusive collections. With We have defined three strategic initiatives for Open Source: serves as a prime example. As a founding member of the
the launch of the AM4 series in 2017, we introduced the first —— Creative collaborations: Creative collaborations increase organization, our support goes far beyond financial aid
ANNUAL REPORT 2017
shoe that was co-created with consumers from our global our creative capital through new tools, new environments to fund beach clean-ups. In 2017, we launched multiple
key cities and tailored to their unique demands. Produced and new perspectives from outside creative thinkers. They franchise silhouettes, such as the UltraBOOST, NMD or EQT,
in our Speedfactory, the AM4 saw its debut in London and are meant to give creativity a platform and provide the made out of Parley Ocean Plastic  SEE GLOSSARY. In total, we
Paris at the end of 2017, with the remaining four global key right tools for ideas to blossom. With the Brooklyn Creator have produced more than one million pairs of shoes using
cities to follow in 2018. Farm, for example, a design space and creation hub, we Parley Ocean Plastic.  SEE SUSTAINABILITY, P. 88 In addition,
—— Experiences: We are committed to providing premium offer urban creative talent a platform and invite them we joined forces with Carbon, a company pioneering in the
064
retail experiences to our consumers with executions that in to fuel innovation in sport with their ideas, outside any field of 3D printing, to launch a new product and platform:
ADIDAS
connect, engage and inspire them. The opening of our regular seasonal product creation calendars. Following Futurecraft 4D. Driven by athlete data, a production process
second adidas Originals flagship store in London in 2017 set the initial set-up phase in 2016, the creator farm has called ‘Digital Light Synthesis’ enables us to print previously
a new benchmark in the industry. Moreover, in collaboration meanwhile started to have a visible impact on our creative impossible designs without labor-intensive and complex
with our retail partners, we made significant progress in direction and leaves a footprint in the local creative assembly. The Futurecraft 4D shoe launched in 2017 and
transforming retail spaces into premium shopping spaces community. In addition, we have evolved our successful will be expanded in the course of 2018.  SEE INNOVATION, P. 78
in key doors within key trade zones.
CORPORATE STRATEGY

We remain committed to embedding external creative capital represents the biggest opportunity for the adidas brand, given operating efficiency and profitability in the years to come, and
in our processes to extend our possibilities in creating the its relatively small market share compared to other regions. disciplined execution has yielded some first positive results
future of sport. To ensure that we are at the pulse of the To improve the adidas brand’s overall positioning in the region, already. For example, we achieved a further reduction of our
consumer journey at key moments and touchpoints in their we have made North America a strategic priority and started product range and marketing concepts. This not only has a
lives, we have identified two key targets which we are to significantly increase our investments into North America positive impact on profitability but also increases the impact
progressing against: On the one hand, we aim to drive brand in order to be more relevant and always visible to the of our product franchises. Similarly, we carried out major
heat by inviting consumers to become part of our creative consumer. In this context, over the last years, we have stepped simplifications on the material, packaging and production
culture, thereby measuring the user-generated content on up investments into our organizational set-up, including the side, which helped us to realize an increase in product
social media, and on the other hand to grow the number of further expansion of our US headquarters in Portland, margins. Our pipeline of initiatives aimed at enabling
users in our digital ecosystem. For both targets, we made elevated our marketing efforts and upgraded our distribution scalability and operating leverage is filled and we expect more
considerable progress in 2017. By using the insights we infrastructure. As a consequence of those initiatives, North benefits to flow through in the years to come.
generate through Open Source, we will craft better products America saw strong double-digit top-line growth in each of the
and services for our consumers, driving improvements in past three years, despite an increasingly challenging and Digital
brand desire, sales, market share and profitability. promotional environment. While we are pleased with the The digital transformation is fundamentally changing the way
progress we have been making in North America in recent our consumers behave and the way we work. Technology has
‘CREATING THE NEW’ ACCELERATION PLAN years, we are still not satisfied with our current position, which enabled us to accelerate building direct relationships with our
In March 2017, we introduced a number of initiatives to foster leaves significant upside for the years to come. Therefore, consumer. Improving digital capabilities along the entire
brand momentum and accelerate top- and bottom-line growth: going forward, we will continue to execute our game plan for value chain enables us not only to interact with the consumer,
North America in order to continue to increase our market but also to become faster, better and more efficient in every
Portfolio share and reach our target of € 5 billion in revenues for the part of the organization. In 2017, we established the ’Digital
Every entity must contribute to the success of our company, adidas brand by 2020. North America, however, is more than Leadership Team’ with the purpose to orchestrate the digital
be it a brand, a channel or a market. We constantly revisit the just a market share story, as our profitability in the region initiatives across the company and support functional teams
performance and strategic fit of our portfolio, now with a remains below our global profitability level even after in decision making. In collaboration with the Executive Board,
narrowed focus on operating within our core strength areas of significant improvements in 2017. the Digital Leadership Team has defined a clear roadmap of
ANNUAL REPORT 2017
athletic footwear and apparel. This will allow us to reduce digital priorities. In this context, our own e-commerce sites
complexity and pursue our target consumer more aggressively ONE adidas adidas.com and Reebok.com are our biggest and most
with both the adidas and the Reebok brand. In 2017, we We continuously strive for operational excellence. ONE adidas important stores, which enable growth by delivering a unique
completed the sale of the TaylorMade, Adams Golf and encompasses a set of initiatives that will enable our company consumer experience that is premium, connected and
Ashworth brands as well as our CCM Hockey business. In to work smarter, more efficiently and in a more aligned way. personalized. To support our 2020 own e-commerce revenue
addition, we continued to execute upon Reebok’s turnaround By focusing on three pillars – Brand Leadership  SEE GLOSSARY, target of € 4 billion, we went through a major paradigm shift
065
plan ‘Muscle Up’, aimed at accelerating the brand’s top-line marketing effectiveness and operating efficiency – we in 2017 in how we gear and align our activities towards digital.
ADIDAS
growth and improving its profitability. challenge the current standards and norms in our As we continuously improve our digital capabilities in order to
organization. In order to create a more scalable business serve our consumer in the best possible way, in 2017 we
adidas North America model, we will therefore focus on those opportunities that introduced new features and technologies on our online
North America represents the biggest market in the sporting enable us to standardize and harmonize current processes platform to improve the shopping experience. In addition,
goods industry with a total share of approximately 40%. At the and procedures. In this context, 2017 saw the kick-off of 2017 saw the launch of the adidas shopping app with more
same time, from a geographical perspective, North America several initiatives which will significantly improve our than 600,000 downloads in less than two months. With 57%
CORPORATE STRATEGY

growth, our e-commerce platform was by far the fastest- —— To deliver on our commitment to increase shareholder
growing channel in 2017. returns: Creating the New includes a strong commitment
to generating increasing returns for our shareholders.
FINANCIAL AMBITION UNTIL 2020 Given our firm confidence in the strength of the company’s
Creating long-term value for our shareholders drives our financial position and future growth ambitions, we target
overall decision-making process. Therefore, we are focused a consistent dividend payout ratio in a range between 30%
on rigorously managing those factors under our control, and 50% of net income from continuing operations.
making strategic choices that will drive sustainable revenue
and earnings growth and, ultimately, operating cash flow.
We are committed to increasing returns to shareholders
with above-industry-average share price performance and
dividends.  SEE INTERNAL MANAGEMENT SYSTEM, P. 102
Our unique corporate culture and the three strategic choices

will continue to be step-changers with regard to brand
desirability and brand advocacy. In combination with the
initiatives that are part of our acceleration plan, this will
enable us:
—— To achieve top-line growth significantly above industry
average: We aim to increase currency-neutral revenues
annually between 2015 and 2020 at a rate between 10%
and 12% on average (initially, in March 2015: high-single-
digit currency-neutral increase).
—— To win significant market share across key categories and
ANNUAL REPORT 2017
markets: We have defined key categories within the adidas

and Reebok brands that will spur our growth going forward.
From a market perspective, we have defined clear roles for
each of our markets, depending on macroeconomic trends,
the competitive environment and our brand strength in the
respective markets.
066
—— To improve our profitability sustainably: We plan to
ADIDAS
substantially improve the company’s profitability, growing

our net income from continuing operations by an average
of between 22% and 24% per year between 2015 and 2020
(initially, in March 2015: increase at around 15%; updated
in March 2017: increase between 20% and 22%).
CORPORATE STRATEGY
adidas Brand Strategy
ADIDAS BRAND STRATEGY stronger. Therefore, the adidas brand continues to evolve —— Consumer centricity: Companies that put the consumer’s
directed by the guiding principles of Brand Leadership  SEE voice as a centerpiece of their decision-making process
MISSION: TO BE THE BEST SPORTS BRAND GLOSSARY, our operating model. The aim of Brand Leadership have proven higher levels of success in creating brand
IN THE WORLD is to provide an organizational structure which enables advocacy. Therefore, we implemented a global Net
The adidas brand has a long history and deep-rooted a ‘consumer-obsessed’ culture that can act with speed, Promoter Score (NPS) ecosystem in order to drive brand
connection with sport. Its broad and diverse sports portfolio, agility and empowerment. In 2017, to further strengthen momentum in a measurable and objective manner. NPS,
from major global sports such as football and running, to collaboration and alignment in execution across the sport- first introduced in 2015, has become an important part
regional heartbeat sports such as American football and specific categories, we combined all of the sport-specific of the adidas brand’s advocacy program. Through this
rugby, has enabled the brand to transcend cultures and business units under one leadership. Similarly, we have program, we strive to understand consumers’ perception
become one of the most recognized and iconic global brands, created a new business unit called Core, which caters to the (positive and negative) of the brand and the key drivers
on and off the field of play. The adidas brand’s mission is to be value consumer across categories. Moreover, to simplify which motivate them to recommend the brand to their
the best sports brand in the world, by designing, building and the interaction between global and local organizations, friends.  SEE INTERNAL MANAGEMENT SYSTEM, P. 102
selling the best sports products in the world, with the best we consolidated Brand Management and Concept-to-
service and experience. Consumer into a holistic marketing function. Finally, to PRODUCT FRANCHISES: CREATE THE MOST
streamline and align the two most future-facing functions, DESIRED SYMBOLS IN SPORT
Driven by a relentless pursuit of innovation as well as decades we consolidated Creative Direction and our Future Team We are convinced that footwear has the highest influence on
of accumulating sports science expertise, the adidas brand has to create continuity and creative fidelity stretching from brand perception among product categories. Footwear is also
developed a truly unique and comprehensive sports offering. upstream innovation, engineering and sports science the most powerful driver of NPS, which in turn translates
Spanning footwear, apparel, equipment and services, the brand through future design, advanced design, brand design and directly into consumer purchase intent and our potential to
caters for all, from elite professional athletes and teams to any seasonal creative direction. grow market share. Therefore, the adidas brand is focused on
individual who wants to make sport part of their lives. We help —— Creator archetype: Owing to the rapid evolution of sport relentlessly creating newness in footwear, as a function of
athletes of all levels to make a difference – in their game, in and sports culture, the adidas brand targets key consumer cutting-edge technological innovation with references to
their lives, in their world. This is anchored in our core belief groups and influencers to create brand desirability and history, drawing from deep knowledge and an archive which
that, through sport, we have the power to change lives. momentum through a well-defined consumer segmentation are unrivaled in the industry. At the same time, the brand has
ANNUAL REPORT 2017
strategy. The consumer grid comprises six key quadrants a clear strategy to reduce the number of footwear models,
CONSUMER OBSESSION: (Male Athlete, Female Athlete, Young Creator, Streetwear putting a stronger focus on key franchises that can really
CREATING FOR THE CREATORS Hound, Amplifier and Value Consumer), which are not make a difference for the brand. Such footwear franchises are
The consumer is at the heart of everything the adidas brand mutually exclusive. Within this grid, it is key to win the most defined as long-term concepts that we commit to for a multi-
does. By constantly developing desirable products and influential consumers, defined as the creator archetype. year period. The goal of franchises is not only to shape sport,
inspiring experiences, the brand strives to build a strong True to the brand’s values, these influential consumers but also to influence culture. They are built to create trends,
067
image, trust and loyalty with consumers. Through ‘Creating define themselves as a work in progress – are all doers rather than follow. They are targeted directly at the consumer
ADIDAS
the New’, the adidas brand has refined its strategic direction, and makers, first to adopt, focused on what’s new and what’s through iconic features, stories and functions, and have the
operational processes and incentive systems, to foster a next. A large portion of creators live, play and work in the potential to be iterated and expanded over time. Their life
culture of consumer obsession across its entire organization. world’s most influential and aspirational cities, a key reason cycles are being carefully managed, to ensure longevity. In
—— Operating model: To ensure long-term success, it is for the company’s Cities strategic choice. In 2017, the adidas addition, franchises will be prioritized throughout the value
important that we continue to challenge ourselves to learn brand accelerated global and local marketing initiatives to chain, building on the company’s strategic choices of Speed,
and grow. We must constantly iterate to become faster and amplify the brand’s creator positioning in the marketplace. Cities and Open Source. The adidas brand expects its top
CORPORATE STRATEGY
footwear franchises to represent at least 30% of the brand's The adidas brand will relentlessly focus on five products for her: —— Reason to buy: The second priority is to harmonize and
footwear business by 2020. In 2017, key adidas brand the bra, the tee, the tank, the tights and the running shoe. These deliver globally consistent and impactful communication
franchises included modern icons such as the UltraBOOST, are the five products the brand will innovate against, with the aim around the brand’s key franchises. By investing more
PureBOOST, Alphabounce, ‘X’, Nemeziz, NMD and EQT as to create the best the industry has ever known in these five items. money against fewer items, the adidas brand will strive to
well as a blend of past icons such as the Superstar, Stan In 2017, the first results of this approach proved successful, with elevate and maintain the iconic status of its key franchises,
Smith and Gazelle. strong double-digit growth for our women’s business resulting in giving the consumer clear and compelling reasons to buy
an increase in the share of total business for the women’s the product.
Following on from the strong success in footwear, in 2017 the segment. A key highlight in this context was the launch of two —— Sports communities: Sports communities is where loyalty
adidas brand started to extend its franchise methodology and global marketing campaigns: ‘Unleash Your Creativity’ telling the is built and earned. The adidas brand defines sports
approach to apparel. Focused on a set of initiatives that have story of 15 female athletes who defy convention as well as a communities as those places where athletes are fully
proven to be successful in footwear, the brand aims at running-specific campaign ‘Fearless AF’, which aims to break immersed in their sport with peers and friends. It’s the
accelerating its performance in apparel going forward. In this down the stereotypes about female runners. In addition, the football cage, the run base or the street court. Until 2020,
context, 2017 saw the successful evolution of the Z.N.E. adidas brand increased its roster of female influencers around the brand will therefore significantly step up its grassroots
Hoodie as part of the new Athletics apparel product line. The Karlie Kloss, Hannah Bronfman and Robin Arzon and continued and local activation efforts, led by initiatives in the world’s
Z.N.E. Hoodie, specifically engineered to remove distractions to build on the partnership with Wanderlust, organizer of some most influential cities.
and maximize athletes’ focus in the make or break period of the largest yoga lifestyle events in the world.
before they compete, was succeeded by the Z.N.E. pants and In terms of partnership assets, while reducing the ratio of
a suite of related apparel products during the course of the MARKETING INVESTMENTS: marketing spend and the number of partnerships, the adidas
year that live up to the same promise. At the same time, the MEAN MORE BY DOING LESS brand will nonetheless continue to bring its products to the
adidas brand increased its resources and focal point on The adidas brand is focused on creating inspirational and biggest stages in the world through:
apparel innovation with a clear focus on fit, feel and aesthetic. innovative marketing concepts that drive consumer advocacy —— Events with global reach: such as the FIFA World Cup, the
This will include the further development of the recently and build brand equity. As a result, we are committed to UEFA EURO, the UEFA Champions League, Roland Garros
launched Alphaskin franchise, a rejuvenation of the Clima continue increasing our absolute marketing investments (French Open) and the Boston Marathon.
platform, as well as more iterations within exciting growth going forward. While the brand currently spends almost half —— High-profile teams: such as the national association
ANNUAL REPORT 2017
platforms such as Primeknit in the years to come. of its marketing investments on partnership assets, with the football teams of Germany, Spain, Argentina, Mexico,
remainder on brand marketing activities such as digital, Colombia, Belgium and Japan, as well as top clubs such as
WOMEN’S: A NEW DIMENSION advertising, point-of-sale and grassroots activations, we will Manchester United, Real Madrid, Bayern Munich, Juventus
TO DRIVE GROWTH decrease the ratio of marketing investments spent on promotion and Flamengo Rio de Janeiro in football, the New Zealand
Winning the female consumer is an imperative for the adidas partnerships  SEE GLOSSARY to less than 45% by 2020. In addition, All Blacks in rugby, and American universities such as
brand and offers tremendous growth potential. Women are the brand will consolidate and focus resources to have the Miami, Arizona State and Texas A&M.
068
active in all sports and, to a large extent, dominate social biggest effect on the creator and the brand’s key franchises. —— High-profile individuals: such as football stars Lionel
ADIDAS
media and household shopping behavior. Given the magnitude This will be achieved by focusing on three priorities: Messi, Paul Pogba, Gareth Bale, Mesut Özil and Gabriel
of the business opportunity, in 2017, the adidas brand further —— Reason to believe: By harnessing the brand’s creator Jesus, basketball stars James Harden, Damian Lillard and
invested resources in building a cross-functional women’s positioning, the emotion of sport, and the power of sport Andrew Wiggins, marathon record holder Dennis Kimetto,
organization and support infrastructure to set direction for to change lives, the adidas brand will communicate a American football players Aaron Rodgers and Von Miller,
creative, ranging, merchandising and marketing and to steer reason to believe in the brand, letting the world know what baseball athletes Kris Bryant and Carlos Correa as well
cross-category planning. distinguishes adidas from the competition. as tennis stars Garbiñe Muguruza and Alexander Zverev.
CORPORATE STRATEGY
In addition, the adidas brand also has a number of strategic by focusing on winning the football creator in key cities Runbases, as well as play a central role in driving the future
partnerships and creative collaborations in place. The as well as increasing investment in the brand’s football of digital in sport in cooperation with Runtastic.
strategic partnership with Kanye West is likely to be the most footwear franchises. In 2017, the adidas brand pursued —— The second category where the adidas brand is focused
significant one ever created between an athletic brand and a its full reset of its football footwear business with the on driving significant market share gains is adidas Core.
non-athlete, while the collaboration between adidas Originals continued focus on the ‘X’, Nemeziz and Copa franchises adidas Core targets a more price-conscious consumer,
and Pharrell Williams remains highly influential. Top as well as playing off its strong product heritage with the particularly in emerging markets, offering entry-price point
designers and design studios the brand works with include re-introduction of the Predator. styles across all categories. To ensure success, the adidas
Yohji Yamamoto, Stella McCartney, Raf Simons, Gosha —— The adidas brand also strives for leadership in lifestyle in Core formula employs a ‘fast fashion’ business model. This
Rubchinskiy and Alexander Wang. every market with Originals. Not only is adidas the original means quick reaction to emerging trends through shorter
sports brand, it also was the first brand to bring sport to lead times and excellence in retail execution.
SUSTAINABILITY the street. Brand credibility and heritage is an important  SEE INNOVATION, P. 78
The adidas brand is committed to sustainability and our prerequisite to win the discerning streetwear hound
strategic partnership with Parley for the Oceans  SEE GLOSSARY consumer. These consumers are looking for substance Amplify
serves as a prime example. adidas has changed the game by and craft and are inspired by stories and design. Growth —— The training category is the adidas brand’s largest
starting mass production of shoes using Parley Ocean Plastic in this category will be driven by iconic products from performance category and is also the apparel engine of
 SEE GLOSSARY, and the brand continues to push for a more the brand’s past such as the Samba, Stan Smith, Gazelle the brand. Led by cutting-edge innovation in fabrics and
eco-innovative future. In 2017, we created more than one and Superstar as well as pioneering new contemporary materials, the adidas brand aims to significantly increase
million pairs of shoes using Parley Ocean Plastic and restated silhouettes inspired by elements from the past and the its apparel footprint through Training, which provides
our ambition to reduce the use of virgin plastic. During 2017, future, such as NMD, EQT, Tubular and Swift Runner, which products for general training purposes as well as for specific
the initiative was extended to adidas Originals, yielding account for approximately 50% of the adidas Originals sports, as well as through Athletics, which is geared to
pioneering outcomes such as the EQT Support ADV Parley, footwear offering. capturing the sports mindset of every athlete off the pitch.
as well as to apparel performance products in the form of Given the high visibility of its products in all markets,
four Major League Soccer (MLS) football jerseys. Grow this category plays a central role in amplifying the brand
—— The running category is the adidas brand’s biggest message and DNA.
ANNUAL REPORT 2017
 SEE SUSTAINABILITY, P. 88
growth opportunity across all genders and price points

ROLE OF CATEGORIES  SEE GLOSSARY. The brand’s goal is to double sales in the Authenticate
The adidas brand has assigned each category a role and category by 2020 compared to the 2015 financial year. Many —— In order to be the best sports brand in the world, the adidas
ambition until 2020, allowing the brand to exploit short- and innovations in the sports industry start in running. With brand also needs to be true to sports on a local level. As
medium-term potential, while at the same time incubating groundbreaking innovation in materials such as Boost and such, the brand will continue to cater to a wide range of
long-term opportunities for the brand. There are four pioneering new manufacturing processes being driven sports such as golf, basketball, American football, baseball,
069
overarching roles: Lead, Grow, Amplify and Authenticate. through Speedfactory, the timing is perfect for the adidas outdoor, rugby, tennis, handball, volleyball, swimming and
ADIDAS
brand to strike in this category. To spur growth, amongst boxing. To maximize impact and resources, in key markets
Lead other things, adidas Running will significantly refine and and cities, the adidas brand will prioritize those sports that
—— To lead in the sporting goods industry, we believe it is a evolve its franchise strategy for the male and female are most significant in terms of local culture, participation
must to lead in the world’s most popular sport, football. athlete, increase its investment in running communities and national pride.
As such, the adidas brand aspires to be the number one and grassroots activations such as the Berlin and Boston
football brand in every market by 2020. This will be driven
CORPORATE STRATEGY
Reebok Brand Strategy
REEBOK BRAND STRATEGY performance needs and style desires, and seeks to exceed further apparel franchises focused on the female Game
expectations across the spectrum. Changers.
MISSION: TO BE THE BEST FITNESS BRAND
IN THE WORLD Within that consumer group, Reebok will continue to focus on Reebok puts a strong emphasis on innovation. The brand is
Reebok is an American-inspired global brand with a deep the female Game Changers going forward. Rooted in Reebok’s committed to maintaining a full and innovative product pipeline,
fitness heritage and the mission of being the best fitness heritage, the brand is putting women at the heart of everything bringing new technologies, styles and processes to life. In this
brand in the world. To realize this mission, the past years have the brand does. This female-centric approach, with women context, 2018 will see the launch of the PureMove Bra, a
been characterized by a transformation from traditional being the focal point of content strategy, marketing activation revolutionary sports bra featuring patented fabric technology
sports to fitness. The three sides of the Reebok Delta, a and distribution, is a fundamentally different approach that adapts to movement and intensity. Beyond technology
symbol of change and transformation, represent the physical, compared to other brands in the industry. It will allow Reebok platforms, Reebok is further investing into innovation that
mental and social changes that occur when individuals to become truly dual-gender with the goal of its women’s consumers can relate to, fostered by unique collaborations and
embrace the challenge of bettering themselves in the gym, in business representing 50% of the brand’s net sales. In recent stories. For example, in 2017 the brand launched the Reebok
their lives and in the world. years, the brand has made significant strides in having a Innovation Collective, a consumer-facing platform to highlight
distinct position with women by signing prominent influencers this type of storytelling.  SEE INNOVATION, P. 78
Throughout this journey, Reebok has invested in its training that are relevant to her.
and running businesses to develop products that cater to all MARKETING INVESTMENTS:
fitness routines, while returning to its fitness roots in Classics PRODUCT FRANCHISES: AMPLIFYING BRAND PURPOSE AND
to support a fashion-forward lifestyle outside of the gym. LEVERAGING THE BRAND’S FITNESS DNA DRIVING SCALE
Driven by its ambition to be the innovation leader in fitness, Reebok recognizes the importance of building strong footwear Reebok is focused on creating inspirational marketing
Reebok continues to merge its iconic past with new technologies and apparel franchises, establishing innovative but repeatable capabilities that build brand equity and consumer advocacy,
that revolutionize both performance and lifestyle products. product lines that become annuities for the brand and core while unleashing powerful brand messages. A key element of
items for the consumer. This is not only essential for enhancing Reebok’s marketing and communication strategy is to connect
CONSUMER OBSESSION: THE GAME CHANGERS consumer perception and brand consideration, but also emotionally to consumers through its ‘Be More Human’
Reebok’s consumer obsession focuses on being distinctive, essential for the efficiency of the Reebok brand. platform, supported by a number of relevant assets and
ANNUAL REPORT 2017
relevant, and authentic with its focus consumers – the Game influencers in the digital ecosystem.
Changers. These consumers, equally women and men, of all For this reason, Reebok is heavily investing into franchises,
ages, are driven by becoming their absolute best mentally, making them a key priority going forward. By 2020, Reebok —— Be More Human: Inspiring people to be their absolute best
socially and physically. The Game Changers participate in a expects footwear franchises to represent at least 25% of the physically, mentally and socially is not only the brand’s
range of activities, are fitness-centric and are inspired by the brand’s total footwear business. Key franchises include guiding principle, but also the essence of Reebok’s global
broader fitness world. They share four essential qualities to performance products  SEE GLOSSARY such as the CrossFit Nano marketing campaign Be More Human. Launched in 2015,
070
create a unified mindset: self-betterment, perseverance, or the recently launched FloatRide Run that have been Be More Human celebrates everyday people who choose
ADIDAS
confidence and non-complacency. These are the core values authenticated by their respective communities, as well as to embrace fitness and lead more fulfilling and less
that hold the Game Changers together. They blend fitness into styles that are unique to Reebok’s fitness DNA, such as the self-focused lives. A suite of films launched in 2017 marks
their lives, care about style, and are passionate about what Classic Leather and the Freestyle. In apparel, Reebok has the evolution of Be More Human, opening the aperture
they do. Through robust research and interaction with established franchises specifically for women, such as the Lux to even more types of fitness and people, but with the
consumers, Reebok has taken significant time to understand Tight, which debuted in 2017. 2018 will see the introduction of same message that physicality unlocks a better version
the complexities of their fitness lifestyle across both product of yourself. To celebrate the launch, ReebokONE trainers
CORPORATE STRATEGY
Reebok Brand Strategy
were available across several US cities, offering workouts ROLE OF THE CATEGORIES were merged under one leadership team to streamline
in exchange for a simple handshake as a way to physically Running, Training and Classics each play vital roles for the Reebok’s organization and create an environment that is fully
and socially connect people through fitness. The campaign Game Changers. Consequently, Reebok is focusing on those dedicated to fitness. In this context, Reebok moved its
is supported by ‘Stories of Progress’, an online collection of three categories to amplify its impact on the fitness enthusiast headquarters to a new location in the heart of the city of
inspirational influencer testimonials, and related content and leverage commercial opportunities from major fitness Boston during the course of 2017.
at brand events, retailers and Reebok FitHub locations. activities to lifestyle. Reebok Running’s insight-driven and
—— Authentic and influential fitness assets: To amplify the consumer-led approach supports authentic and desired Furthermore, to win in North America, efficient and effective
brand and increase its relevance vis-à-vis the fitness cushioning experiences, leveraging innovative technologies distribution is key to Reebok’s future success in this all-
consumer, Reebok has entered into a series of partnerships for high-performance runners. Additionally, Reebok Running important market. The company has therefore accelerated its
with some of the world’s most influential artists and has also developed several contemporary silhouettes, which initiatives to streamline Reebok’s store base in the market. In
athletes, such as Future, Gigi Hadid and J.J. Watt. In 2017, epitomize the intersection of innovation and style. Reebok total, the company will close nearly 50% of its own stores in
music artist Ariana Grande, actress Nina Dobrev and Training remains central to Reebok’s Game Changer mindset the US market – both concept stores and factory outlets – with
high-profile designer Victoria Beckham joined Reebok’s and offers a complete range of both highly specialized and the majority of closures having been executed during 2017. At
strong roster of brand ambassadors. In addition, to validate versatile products that are at the forefront of fitness and true the same time, the brand is also streamlining its wholesale
its authenticity as the best fitness brand in the world, to the culture and community that Game Changers train and business, putting a clear focus on retailers helping Reebok to
Reebok has entered into partnerships with some of the live in. Reebok Classics fuses the brand’s fitness heritage with elevate brand equity and improve the quality of its growth.
fastest-growing and most innovative organizations in the the modern looks of fitness reflected in Running and Training
fitness world, such as CrossFit, Ragnar, Midnight Runners to support the Game Changer consumer who seeks to reflect In addition to streamlining Reebok’s organizational set-up
and Les Mills. Finally, continuing to build relationships with a fitness lifestyle in every aspect of life. and progressing on the brand’s turnaround efforts in the US
fitness instructors is a crucial component of Reebok’s goal market, an integral part of Muscle Up is focused on rethinking
of connecting with the global fitness community. With over ‘MUSCLE UP’: REEBOK TRANSFORMATION the core fundamentals of Reebok’s end-to-end operations.
100,000 fitness instructors currently being part of its global STRENGTHENS BRAND FUNDAMENTALS Initiatives span across product development, go-to-market
network, Reebok has made major progress towards its goal Over the last years, Reebok has made major progress in its initiatives and marketing effectiveness to measures that help
to be the brand of choice for instructors around the world. transformation from a general sports brand to a 100% fitness- accelerate Reebok’s product margins.
ANNUAL REPORT 2017
—— Digital ecosystem: Reebok is changing the way it operates focused brand. While Reebok has recorded top-line growth for
digitally to realize maximum growth potential. The brand several years in a row, the brand’s overall market share Executing against those initiatives will have a positive impact
recognizes the need to be relevant and authentic in the remains below levels seen in the past. In addition, there has on Reebok’s operational and financial performance and will
digital ecosystem, particularly for women. As a result, been no growth in Reebok’s home market, North America, in accelerate the brand’s top-line growth as well as significantly
this ecosystem is the main channel for communication the recent past and the brand’s margins are not accretive to lift the brand’s profitability in the years to come. In 2017, the first
and marketing initiatives as well as from a commercial the company’s overall profitability. full year of executing Muscle Up, Reebok has already realized
071
perspective, providing experiences and products online. meaningful profitability improvements, as reflected by the
ADIDAS
Reebok is focused on improving speed, usability and Therefore, and as announced in 2016, Reebok continued to brand’s increase in gross margin of 4.0 percentage points to a
consumer experience on Reebok.com, both mobile and execute upon its turnaround plan ‘Muscle Up’ in 2017, aimed level of 40.7%.
desktop, with 2018 seeing further enhancements to at accelerating Reebok’s top-line growth in the US and
Reebok’s digital ecosystem. improving its overall profitability. As part of this plan, the
company has created one united team for Reebok in North
America. As a result, Reebok’s global and US organizations
CORPORATE STRATEGY
Sales and Distribution Strategy
SALES AND DISTRIBUTION STRATEGY wholesale doors, we have an unrivaled network of consumer —— ‘Ship from Store’ which allows us to service consumers
touchpoints within our industry. In addition, through our own faster than before by turning our stores into mini
TRANSFORMING THE MARKETPLACE e-commerce channel, our single biggest store available to distribution centers.
Our Global Sales function drives the commercial performance consumers in over 40 countries, we are leveraging a consistent —— ‘Buy Online, Return to Store’ which not only provides
of the company by converting brand desire into profitable and global framework. We are also seeing considerable success consumers with a convenient way to return product
sustainable business growth. It is our ambition to deliver the in leveraging our strong cross-functional partnerships with purchases but also offers new buying opportunities.
best shopping experience within the sporting goods industry key wholesale partners, which is critical for ensuring a —— ‘Partner Program’ which enables us to expand our online
across all consumer touchpoints. We strive to transform the consumer journey to the full extent. By seamlessly integrating offering to a larger group of consumers by making it
marketplace by moving from managing the marketplace as it the channels within our market portfolio, we are uniquely available to selected key wholesale partners.
exists today toward shaping and growing our future destiny. positioned to pursue and succeed in strategies that deliver —— ‘Endless Aisle’ which provides in-store visitors with access
Our objective is to establish scalable business solutions in premium consumer experiences and increase the productivity to our full range of products through our e-commerce
order to deliver premium experiences, thereby meeting and of our distribution footprint. As we replicate this model to platform.
surpassing consumer expectations with an integrated brand capitalize on new consumer opportunities through own retail —— Our newly introduced ‘adidas shopping App’ is an always-on
offering. destinations (own retail stores and own e-commerce sites) as connection to the adidas brand and offers premium
well as our wholesale partner doors (wholesale managed shopping experiences.
DRIVING OPERATIONAL EXCELLENCE ACROSS spaces and e-wholesale) we create halo effects across all
OUR GLOBAL MARKETS consumer touchpoints, resulting in further marketplace In 2017, we deployed a strategic mix of these capabilities
Our sales strategy is crafted by a centralized and integrated expansion. across all our markets in our own-retail operations and at key
marketplace team which supports the flawless execution of wholesale partner locations. For example, based on the initial
our brand strategies and drives operational excellence across In 2017, we advanced our sales strategy with several initiatives success of the Partner Program in 2016, we continued to
the globe. In this context, in 2017 we continued to execute our focused, amongst others, on premium consumer experience, onboard multiple partners across Western Europe and North
strategic business plan until 2020, ‘Creating the New’, across marketplace transformation and productivity of the sales America in 2017. In addition, 2017 saw the successful
our nine global markets. During the course of 2017, we also platform. introduction of the adidas shopping App in Western Europe
completed all preparatory work to consolidate the markets and the US. The App is directly linked to the adidas e-commerce
ANNUAL REPORT 2017
Greater China, Japan, South Korea and South-East Asia/ Premium consumer experiences store and provides consumers with personal conversations, a
Pacific, creating one consolidated market for Asia Pacific We aim to be ‘omni-present’ along the consumer journey and frictionless checkout, seamless order tracking as well as
(APAC). This will allow us to better serve the converging strive to capture the full sales potential on the platforms personalized content. The success of the App will be
consumer and customer demands in the region in the years to available to our consumers. We also strive to minimize significantly enhanced by continued investments in Customer
come. In a changing global landscape, our diverse market occasions when consumer demand is not met, by offering Relationship Management (CRM), which will enable us to
portfolio is an important asset in maximizing the business, innovative solutions. Based on these objectives, we focus on develop a deeper consumer understanding and connection.
072
elevating our competitiveness and achieving our ambitions the following omni-channel initiatives:
Marketplace transformation
ADIDAS
towards 2020. —— ‘Inventory Check’ which allows online shoppers to view

in-store product availability. Our goal is to leverage and scale the success of our initiatives
SEAMLESS CONSUMER JOURNEY ACROSS —— ‘Click & Collect’ which allows consumers to order online across our channels to better serve consumers. The key
OUR CHANNELS and purchase or reserve items for pick-up in a local store. contributor to this approach is controlled space. Whenever we
With more than 2,500 own-retail stores, around 13,000 can actively manage the way our brands and products are
mono-branded franchise stores and approximately 150,000 presented at the point of sale, the impact on the consumer
CORPORATE STRATEGY
Sales and Distribution Strategy
experience, and ultimately on our operational and financial shopping experience for our consumers within these key —— Consumer service excellence: In 2017, we established the
performance, is significant. We have the power to do so in own commercial areas across all identified distribution points of Sales Academy. The program helps us to transform the
retail (including e-commerce) and in wholesale (franchise wholesale and own retail. The learnings from this culture and effectiveness of our sales teams. As a result,
stores, wholesale managed space and in e-wholesale). By transformation program provide a further boost to our Cities consumers enjoy significantly elevated service levels
2020, we aim to generate more than 60% of our revenues strategic choice and enable us to scale this opportunity up, by which have proven commercially rewarding through higher
through controlled space. rolling it out to a much greater number of cities where we will conversion rates  SEE GLOSSARY and increased average
apply a focus of investments in areas where our focus selling prices.
For us, own retail acts as a catalyst to our controlled space consumers live, play and shop. —— Personalized interaction: Our commitment to deliver
ambition. We amplify our success in own retail by translating a premium shopping experience is reflected online
key learnings to franchise stores and expanding franchising Specialty Sales through our digital brand flagship stores, adidas.com and
as a business model in existing as well as into new In 2017, we established the Specialty Sales organization. The reebok.com, as well as our newly created adidas shopping
geographies. After the successful launch of our adidas objective of this organization is to drive brand heat and desire App. E-commerce and digital communication are powerful
flagship store in New York City in 2016, we opened our biggest in boutiques and sneaker stores, thereby directly catering to tools for our brands to engage with consumers.
ever adidas Originals flagship store in Chicago in 2017. We our most influential consumers. The team provides superior —— Insight-driven decision-making: We continue to invest
expect these flagships to set new standards in terms of service levels, customized range access across selected in our analytical capabilities and technical infrastructure
product presentation, execution and service that will be categories, such as running and Originals, as well as to become faster and more insight-driven in decision-
replicated across all other channels. We expect e-commerce exceptional campaign roll-outs across the globe and has a making. Leveraging data such as cross-channel product
to continue to be the fastest-growing channel that we operate, clear alignment with our key cities and trade zones. Following sell-through and consumer purchasing behaviors delivers
with revenues forecast to grow to € 4 billion in 2020. In initial success in 2017, with strong growth generated in actionable insights in areas such as assortment planning
wholesale, we will continue to expand our footprint with a boutiques and sneaker stores, we will continue to focus on and product life cycle management.
focus on prioritized key accounts, targeting important growing our Specialty Sales initiatives in 2018 and beyond. —— Distribution channel mix: Based on a thorough analysis of
consumer hotspots and trade zones, especially those that are the profitability of our distribution channels in each of our
part of our Cities initiative. Strategic partnerships to operate Productivity and efficiency of sales platform markets, in 2017 we started an optimization program to
controlled space remain an important thrust of this expansion. We are committed to further driving productivity improvements shift focus and resources to our most profitable channels.
ANNUAL REPORT 2017
across our sales platform through a multi-faceted approach: By doing so, we aim at further improving the distribution
Cities and trade zones —— Premium presentation: Our physical selling spaces are mix of our company and consequently the efficiency of our
In 2017, we saw continued success in New York City, Los an important factor in driving Net Promoter Score (NPS) Global Sales organization.
Angeles, Paris, London, Shanghai and Tokyo. The combined and full-price sell-through. We further evolved the brand
revenue growth for our six key cities outpaced the company's experience through the launch and expansion of premium We are confident that our sales strategy will help us realize
overall top-line development. In addition, our Net Promoter store concepts such as Stadium  SEE GLOSSARY and significant improvements in brand desirability, as measured
073
Score (NPS)  SEE GLOSSARY relatively outperformed in most of Neighbourhood  SEE GLOSSARY for the adidas brand as well as by our NPS, net sales, market share and profitability.
ADIDAS
these key cities. To further drive momentum, we will continue FitHub  SEE GLOSSARY for the Reebok brand. Our own-retail  SEE INTERNAL MANAGEMENT SYSTEM, P. 102
to prioritize consumer insights, retail executions and concepts are designed for scalability. Consequently, we
wholesale partnerships across those cities. We have also will continue to roll them out across our store base, which
started to focus on those cities by looking at them on a trade yields benefits across channels, considering the positive
zone level, rather than on a key account and key doors spillover impact on our wholesale and franchise partners.
perspective. Our intention is to create one holistic premium
GLOBAL OPERATIONS
GLOBAL OPERATIONS By delivering on these priorities, Global Operations leverages when and where they are wanted by the consumer across our
efficiencies across infrastructure and processes and ensures wholesale, retail and e-commerce channels. Bringing
Global Operations manages the development, production a competitive digital ecosystem and supply chain. This products to market faster allows our customers and direct-
planning, sourcing and distribution of the vast majority of continues to be underlined by our ‘On-Time In-Full’ (OTIF) to-consumer channel to place orders closer to the actual time
our products. The function strives to increase efficiency metric, a non-financial KPI for our company, measuring the of sale, facilitating buying decisions that are based on better
throughout the company’s supply chain and ensures the adidas delivery performance toward our customers and our market knowledge. Consequently, we will move away from
highest standards in product quality, availability and delivery own-retail stores.  SEE INTERNAL MANAGEMENT SYSTEM, P. 102 In predominantly developing products in advance of seasonal
for our customers as well as our own-retail and e-commerce 2017, adidas delivered 78% of its adidas and Reebok brand merchandising calendars and toward creation and production
activities at competitive costs. products ‘on time’ and ‘in full’ (2016: 77%), which is broadly in capabilities that respond to consumer demands with in-
line with the overall target of around 80%. For 2018, Global season development and rapid replenishment manufacturing.
CLEARLY DEFINED PRIORITIES Operations strives to increase OTIF further towards the Fresher and more desirable products will increase the
FOR GLOBAL OPERATIONS targeted 80% level. OTIF was measured for 74% of net sales of company’s full-price share of sales and reduce the risk of
Global Operations delivers upon its mission to create the best all adidas and Reebok brand products in 2017. It is also overbuying. In 2017, we made further progress around our
product by focusing on innovative materials and manufacturing planned to further roll out OTIF to those markets that are Speed strategic priority and we are well on track to achieve
capabilities as well as to provide the best service by enabling currently not in scope, thereby increasing the overall share of our target of at least 50% of the company’s net sales through
product availability as the consumer chooses through the adidas and Reebok brand products measured against ‘on speed-enabled articles by 2020. For this part of our business,
company’s omni-channel approach to supply chain agility. time’ and ‘in full’. we expect to achieve a 20% higher share of full-price sales
compared to the regular range which, driven by higher brand
The strategy of Global Operations is an extension of the overall BECOME THE FIRST FAST SPORTS COMPANY and product desirability, will also see significant increases in
adidas strategy – thus the consumer is at the center of ‘Speed’ is a strategic priority for the company. Our ambition is the full-price sell-through.
everything we do. The function strengthens brand desirability to be the first fast sports company in the sporting goods
by providing the right product to consumers – in the right industry.  SEE CORPORATE STRATEGY, P. 62 Global Operations is a In 2017, Global Operations continued to expand its efforts to
quality, size, color and style, in the right place, at the right key enabler for this by leveraging market and sell-through ‘enable later ordering’ and further reduced production lead
time, across the entire range of the company’s channels and data in new ways as well as by responding quickly to deliver times. The function succeeded in providing 60 days or less
ANNUAL REPORT 2017
brands. Additionally, Global Operations builds capabilities concepts that are fresh and desirable and made available production lead times on approximately 80% of apparel
that further improve supply chain efficiencies, while mitigating
costs, thereby ensuring a continuously competitive supply chain.
Global Operations in go-to-market process 15
Within our strategic business plan ‘Creating the New’, Global

Operations focuses on delivering against three strategic
074
priorities driven by several initiatives: Global Operations
ADIDAS
—— Become the first fast sports company.

—— Create a seamless consumer experience.
Marketing Design Product Sourcing Supply Chain Global
—— Transform the way we create and manufacture. Development Management Sales
Briefing Concept Product Creation Manufacturing Distribution Sales

GLOBAL OPERATIONS
volumes throughout the year. The vast majority of footwear company. The function is focused on innovative distribution increased speed-to-market capabilities. At the same time,
(around 85%) and hardware (around 95%) volumes are already capabilities, with the goal of providing the best service by the function also plays a critical role in driving operational
on 60 days or less production lead times. In addition to enabling product availability as the consumer chooses efficiency for the company. In particular, through material and
shortening our overall production lead times, Global through the omni-channel approach to supply chain agility. packaging consolidation, Global Operations aims at mitigating
Operations has scaled its fast replenishment capabilities of material and labor costs.
best-selling articles, creating more articles within seasons By creating a higher commonality of our products across the
based on actual sell-through data and ensuring constant various channels, Global Operations ensures higher flexibility We constantly look for the next generation of materials by
availability of long lifecycle products. Across all product at each consumer touchpoint. This, in turn, enables a broader focusing, amongst others, on knitted footwear, direct-to-
categories, replenishment capabilities have been established range of products to be available at the point of sale, including textile digital printing and sustainable materials. Building on
on 30 days production lead times. Even faster production lead online orders able to be picked up in our own-retail stores or our successful partnership with Parley for the Oceans  SEE
times of on average less than 10 days have been established shipped from a store and own-retail stores able to sell GLOSSARY, 2017 saw the introduction of new footwear and
for customized footwear products, which are available via our inventory available in other own-retail stores.  SEE SALES AND apparel products using sustainable materials. In 2018, we will
own e-commerce website. DISTRIBUTION STRATEGY, P. 72 continue to roll out Parley Ocean Plastic  SEE GLOSSARY across
our key categories, with running footwear and football apparel
adidas is leveraging its strengths in sourcing and partnering In 2017, Global Operations focused on further optimizing its playing a major role. To facilitate the growing demand for
with industrial and academic experts to develop smart distribution center network, while at the same time preparing Parley Ocean Plastic we are in the process of establishing an
manufacturing solutions that can react quickly to consumer it for future consumer demand and supporting the company’s operations set-up dedicated to sustainable material sourcing.
trends. In this context, Speedfactory  SEE GLOSSARY is one overall growth ambition. In this context, in 2017 we continued  SEE SUSTAINABILITY, P. 88
initiative, aimed at moving production closer to key markets to build two new distribution centers in Rieste/Germany and
while developing high-quality performance products faster Suzhou/China - both of which are expected to go live in 2018. Through its focus on ‘Digital Creation’, Global Operations has
than ever before. Powered by end-to-end automated In addition, we started with the construction of a new already started to improve the product creation process from
manufacturing processes and innovative materials, distribution center in Pennsylvania/USA and began to expand concept to shelf. Based on 3D software tools, we are today
Speedfactory allows us to support the growing demand for our existing West Coast facility, aimed at supporting our future able to look at product solutions the way the consumer sees
product personalization in a socially and environmentally growth expectations for North America, in particular around them at an early stage during the creation process. This
ANNUAL REPORT 2017
responsible way. In addition, it helps us to provide faster the company’s e-commerce and own-retail businesses. enables creation teams to iterate faster, take product
reaction times to consumer needs and to enhance the Lastly, to improve our consumer service in the UK, 2018 will decisions quicker and reduce drop rates  SEE GLOSSARY. In
consumer experience, by enabling consumers to co-create in see the addition of a new e-commerce facility to our existing addition, 3D technology allows for more frequent and rapid
an interactive production process. Insights gained from our distribution network in the market. virtual product iterations without increasing the need for
Speedfactories will enable us to drive digital manufacturing physical samples. After testing 3D software tools across all
also into our existing supply chain.  SEE CORPORATE STRATEGY, P. 62 TRANSFORM THE WAY WE CREATE AND major business units in 2016, many of our business units have
075
MANUFACTURE started to leverage 3D technology as a new way of working in
ADIDAS
CREATE A SEAMLESS CONSUMER EXPERIENCE Global Operations is driving innovation in new materials, new the product creation process during 2017.
Global Operations has a strong track record for establishing product constructions and new ways of manufacturing that
state-of-the-art infrastructure, processes and systems that deliver consumer value and enable competitive advantage. By In addition to focusing on managing a more concentrated
are required to support the company’s growth ambition. It has investing in tools that more directly connect design and portfolio of key footwear franchises, Global Operations also
been successfully consolidating and improving legacy factory production, Global Operations is changing traditional continues to implement its modular approach to our apparel
structures, thereby reducing complexity and costs for the models of development to deliver constant freshness and business. Transitioning to a set pre-season selection of
GLOBAL OPERATIONS
standard product features and driving consistent executions facilities worldwide. We value long-term relationships: Around WORKING WITH 296 INDEPENDENT
across categories for core products has been underway for half of our strategic suppliers have worked with adidas for MANUFACTURING PARTNERS
several seasons in apparel. Meanwhile Global Operations has more than ten years and, of these, close to 15% have a tenure In 2017, Global Operations worked with 296 independent
fully embedded the modular approach to creation, enabling of more than 20 years.  SEE DIAGRAM 16 The length of our manufacturing partners (2016: 297). Of our independent
us to ensure a consistent brand footprint, capture cost savings supplier relationship is determined by specific performance manufacturing partners, 79% were located in Asia (2016:
through factory efficiencies and reduce production lead times. criteria which is regularly measured and reviewed by Global 80%), 11% in the Americas (2016: 12%), 9% in Europe (2016:
In 2017, Global Operations further incorporated our new Operations. The latest list of our suppliers can be found on our 7%) and 1% in Africa (2016: 1%).  SEE DIAGRAM 17
digital creation tools into the modular approach, which further website. ↗ ADIDAS-GROUP.COM/SUSTAINABILITY adidas also operates a
increases speed in the creation process and allows us to limited number of own production and assembly sites in the VIETNAM SHARE OF FOOTWEAR PRODUCTION
leverage automation opportunities. Going forward, we will USA (2), Canada (1) and Germany (1). In order to ensure the INCREASES SLIGHTLY
continue to gradually roll out our digitized capabilities and high quality that consumers expect from our products, we 97% of our total 2017 footwear volume was produced in Asia
tools to progress on our vision of an end-to-end digital value enforce strict control and inspection procedures at our (2016: 97%). Production in Europe and the Americas combined
chain from pre-season planning to product creation, suppliers and in our own factories. Effectiveness of product- accounted for 3% of the sourcing volume (2016: 3%).  SEE
production and sales. In this context, in 2018 we will set the related standards is constantly measured through quality and DIAGRAM 18 Vietnam represents our largest sourcing country
foundation for the exciting endeavor of ‘end-to-end Digital material claim procedures. In addition, we track social and with 44% of the total volume (2016: 42%), followed by
Creation’ and will focus our efforts toward developing the new environmental performance criteria of our suppliers through Indonesia with 25% (2016: 24%) and China with 19% (2016:
holistic digital creation framework. the C- and E-KPI tracking system. Adherence to social and 22%). In 2017, our footwear suppliers produced approximately
environmental standards is promoted throughout our supply 403 million pairs of shoes (2016: 360 million pairs).  SEE
Driving the level of automation in our supply chain remains of chain.  SEE SUSTAINABILITY, P. 88 DIAGRAM 19 Our largest footwear factory produced approximately
overriding importance for Global Operations. In this context, 11% of the footwear sourcing volume (2016: 10%).
auto cutting and auto stitching are important focus areas, as
Strategic supplier relationships 16
they allow us to reduce our dependency on manual labor
while at the same time ensuring consistent and highest
quality standards. To further improve our production Total Hardware Apparel Footwear
ANNUAL REPORT 2017
efficiency, we will accelerate the level of automation in our Number of strategic suppliers 109 15 60 34 Suppliers by region 1 17
supply chain in the years to come. Average years as
strategic supplier 11.4 12 10 13
% of all production volume 83% 50% 85% 90% 1%
MAJORITY OF PRODUCTION THROUGH Strategic relationships
9% Africa
INDEPENDENT SUPPLIERS < 5 years 16% 27% 15% 12% Europe
To keep our production costs competitive, we outsource Strategic relationships 11%
< 10 years 37% 20% 45% 29%
076
almost 100% of production to independent third-party Americas
79%
Strategic relationships
ADIDAS
suppliers, primarily located in Asia. While we provide them with < 15 years 20% 20% 17% 26% Asia
detailed specifications for production and delivery, these Strategic relationships
< 20 years 13% 0% 17% 12%
suppliers possess excellent expertise in cost-efficient, high-
Strategic relationships
volume production of footwear, apparel and hardware  SEE < 25 years 8% 20% 3% 12%
GLOSSARY. Working closely with key strategic partners, the vast Strategic relationships
1 Figures include the adidas and Reebok brands, adidas Golf and Ashworth, but exclude local sourcing
majority of our products are produced in 109 manufacturing > 25 years 6% 13% 3% 9% partners, sourcing agents, subcontractors, second-tier suppliers and licensee factories.
GLOBAL OPERATIONS
CHINA REMAINS LARGEST SOURCE COUNTRY 382 million units).  SEE DIAGRAM 21 The largest apparel factory China remained our largest source country, accounting for
FOR APPAREL produced approximately 10% of this apparel volume in 2017 40% of the sourced volume (2016: 36%), followed by Pakistan
In 2017, we sourced 93% of the total apparel volume from Asia (2016: 11%). and Turkey with 18% and 15%, respectively (2016: 17% and
(2016: 93%). The Americas represented 4% of the volume, 16%, respectively). The total hardware sourcing volume was
Europe 3% and Africa 1% (2016: the Americas 3%, Europe 4% CHINA SHARE OF HARDWARE PRODUCTION approximately 110 million units (2016: 109 million units), with
and Africa less than 1%).  SEE DIAGRAM 20 China is the largest INCREASES the largest factory accounting for 15% of production (2016:
source country, representing 23% of the produced volume In 2017, 82% of our hardware products, such as balls and 12%).  SEE DIAGRAM 23
(2016: 27%), followed by Cambodia with 22% (2016: 22%) and bags, was produced in Asia (2016: 79%). European countries
Vietnam with 18% (2016: 17%). In total, our suppliers produced accounted for 16% (2016: 18%), while the Americas
approximately 404 million units of apparel in 2017 (2016: represented 2% of the total volume (2016: 3%).  SEE DIAGRAM 22
Footwear production by region 1 18 Apparel production by region 1 20 Hardware production by region 1 22
3%
1% Europe 1% 2%
2%
Europe 4% Africa Americas
Americas
Americas 16%
Europe
97% 93% 82%

Asia Asia Asia
ANNUAL REPORT 2017
1 Figures include the adidas and Reebok brands, adidas Golf and Ashworth. 1 Figures include the adidas and Reebok brands, adidas Golf and Ashworth. 1 Figures include the adidas and Reebok brands, adidas Golf and Ashworth.
Footwear production1 in million pairs 19 Apparel production 1, 2 in million units 21 Hardware production 1, 2 in million units 23
077
2017 403 2017 404 2017 110
ADIDAS
2016 360 2016 382 2016 109

2015 301 2015 364 2015 113
2014 258 2014 309 2014 99
2013 256 2013 292 2013 94
1 Figures include the adidas and Reebok brands, adidas Golf and Ashworth. 1 Figures include the adidas and Reebok brands, adidas Golf and Ashworth. 1 Figures include the adidas and Reebok brands, adidas Golf and Ashworth.
2 2013 restated due to a reclassification of certain apparel accessories from apparel to hardware. 2 2013 restated due to a reclassification of certain apparel accessories from apparel to hardware.
INNOVATION
INNOVATION and culture. This provides the starting point to build concepts in cooperation with Oechsler AG, Manz AG, BASF and Kurtz
of relevance. Ersa – we will continue to unlock further potential through
Creating innovative products to meet the needs of collaborations. In addition to these already established
professional and everyday athletes as well as consumers is The FUTURE team at adidas is tasked to develop a strong partnerships, we announced a new collaboration with
a prerequisite to strengthening our market position in the portfolio of innovation capabilities such as new materials, Siemens, a global leader in the fields of industry, energy and
sporting goods industry and a premise to being the best production processes and consumer-centric scientific healthcare, as well as for infrastructure solutions, to drive the
sports company in the world. We therefore remain highly research to provide a platform for meaningful concept digitalization of Speedfactory. In addition, we commenced a
committed to maintaining a full and innovative product development. Projects are incubated within the company and partnership with Carbon, a Silicon Valley-based tech company
pipeline, bringing new groundbreaking technologies and aligned to the broader sourcing, marketing, creative and working to revolutionize product creation through hardware,
processes to life, investing into forward-looking and strategic functions across the organization, ensuring a robust software and molecular science, to enable mass production of
sustainable ways of production and exploring the many and impactful innovation pipeline. additively manufactured components, coming to life in the
possibilities of digitalization across our entire value chain. Futurecraft 4D, the first performance footwear crafted with
True to the vision of creative collaboration, our innovation To further strengthen long-term research capabilities, adidas light and oxygen.
approach is widely based on our Open Source mindset which implemented a centralized project team in 2017 in order to
is clearly visible in our numerous collaborations with drive the process for the application and management of FIVE PILLARS OF INNOVATION
athletes and consumers, universities, industry-leading publicly funded research projects. Located within the FUTURE Within our innovation principles, we identified five strategic
companies as well as national and international governments team, the team is responsible to collaborate with governmental pillars, which enable us to develop the best products and
and research organizations. organizations on local, national and European level to develop experiences for athletes and consumers, while at the same
key projects with strong consortia partners, tackling major time drive game-changing innovations in the fields of
MEETING THE NEEDS AND EXPECTATIONS OF societal challenges that will impact our consumer and manufacturing, digital and sustainability.
OUR CONSUMER industry.
Innovation within the company follows a decentralized Athlete innovation
approach. In line with their respective strategic and long-term This approach also reflects our commitment to the Open Our clear focus is to produce the best and most innovative
visions and distinctive positioning, each brand runs its own Source mindset, where we seek to build value together with products for athletes to enable them to perform at their very
ANNUAL REPORT 2017
innovation activities. However, fundamental research as well athletes and consumers, universities, industry-leading best. To achieve this, we work closely together with athletes
as expertise and competencies in sustainable product creation companies as well as national and international governments and teams as well as numerous universities and industry-
are shared across the company. and research organizations. In addition to opening up our leading companies, to deliver against the needs of our target
doors to valuable feedback, we also get inspired by and consumer.
For the adidas brand, innovation is focused on meeting the receive input from knowledgeable and valued partners.
needs and expectations of our consumer. The modern Whether we work with Parley for the Oceans on products Manufacturing innovation
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innovation landscape extends beyond product and partially created from upcycled plastic waste ('Parley Ocean To simplify manufacturing, enable product innovation and
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increasingly requires innovation teams to consider the Plastic'  SEE GLOSSARY), intercepted before it reaches the ocean increase speed-to-market capabilities by bringing the
development of experiences and services and to provide from beaches and coastal communities, with BASF, the production of apparel and footwear closer to the consumer,
greater levels of transparency and direct integration of our world’s leading chemical company, on Boost, an industry-first the company’s innovation activities are also focused on new
consumer through co-creation. In partnership with our cushioning technology designed to deliver maximum energy manufacturing technologies. Our goal is to combine state-of-
consumer insight teams, foresight and trend analysis efforts return, responsiveness and comfort to athletes, or the-art information technology with new manufacturing
are shared on an ongoing basis, documenting shifts in society Speedfactory, a revolutionary automated production concept processes and innovative products. For this reason, we
INNOVATION
commit ourselves to long-term cooperation with industry- building of insights and foresights that keep us at the forefront analysis into the movement of the body, was used to allow
leading companies and organizations to take a leading role in of product innovation. adidas’ innovation teams to see exact points where female
manufacturing innovation. runners need the most support and where their foot needs
SUCCESSFUL COMMERCIALIZATION OF room for natural expansion. This process led to the unique
Digital and experience innovation INNOVATIONS design of the UltraBOOST X shoe.
The adidas brand was amongst the first in the industry to We believe developing industry-leading technologies and user
comprehensively bring data analytics to the athlete. With experiences is only one aspect of being an innovation leader. AM4 Series: The first major project to be created at the adidas
decades of continuous investment in sports science, sensor Equally important is the successful commercialization of Speedfactory facility in Ansbach, Germany and in 2018 also in
technology and digital communication platforms, adidas has those technological innovations: Atlanta, USA. The adidas Made For London (AM4LDN) and the
already taken a leading role in terms of changing the sporting adidas Made for Paris (AM4PAR) shoes are the first in a series
goods industry through technology. With the increasing speed Futurecraft 4D: High-performance footwear featuring midsoles of individually designed and manufactured running shoes
of digitalization, this field will remain one of our core areas. crafted with light and oxygen using Digital Light Synthesis, a adidas will release in six key cities around the world. In the
technology led by Carbon. The Futurecraft 4D’s midsole coming months, Los Angeles, New York, Tokyo and Shanghai
Sustainability innovation pioneers a digital footwear component creation process that will also have bespoke product created tailored to the unique
Our commitment to manage our business in a responsible eliminates the necessity of traditional prototyping or molding. demands and using local market insight of each respective city.
way has long been one of the company’s principles. To stay at With the new technology, adidas now operates on a completely
the forefront of sustainable innovation, adidas is pursuing a different manufacturing scale and sport performance quality, Prime SP Parley: The first 3D knitted sprint spike, created
proactive approach to establish internationally recognized officially departing from 3D printing and bringing additive with plastic taken from beaches and coastal communities
best practices and achieve scalable improvements. As part of manufacturing in the sports industry into a new dimension. before reaching the oceans. The silhouette focuses both on
our sustainability roadmap we have set ourselves the target Ultimately, adidas aims to create more than 100,000 pairs of the needs of sprinters, by incorporating a Primeknit upper for
for 2020 to invest in materials, processes and innovative this high-performance footwear by the end of 2018. support and a laser-welded frame for reduced weight, and on
machinery which will allow us to upcycle materials into the needs of the world, by integrating Parley Ocean Plastic
products and reduce waste.  SEE SUSTAINABILITY, P. 88 adizero Sub2: A high-performance marathon shoe created to and protecting our oceans from marine plastic pollution.
take athletes below the two-hour barrier. It explores the
ANNUAL REPORT 2017
Female athlete innovation performance of a range of state-of-the-art materials in adidas Alphaskin: A new base-layer technology constructed
Our long-term commitment to the female athlete continues to different temperatures and environments and on different to match the body’s movements in sport. Alphaskin was
be a focus for the company. To fuel the growth of our women’s surfaces. The shoe delivers the best of adidas running developed using the ARAMIS motion-capture system instead
business, we have taken a holistic approach to understanding technology in an extremely fast, lightweight form and marks of a traditional static mannequin for testing, in order to find
the female athlete’s performance and non-performance the debut of adidas’ new Boost Light innovation. Engineered out where fabric constrains an athlete’s performance. The
needs throughout her active life by looking at this target group specifically for elite athletes on race day, Boost Light is the new design eliminates seams to help athletes focus on their
079
as an integrated part of our business but from a separate and brand’s lightest-ever foam and retains the industry-leading performance in competition and training. Alphaskin offers
ADIDAS
unique angle. With a focus on the female athlete, it is crucial energy return. kinetic wrapping in a range of compression levels that suit
to fully understand the particular anatomy and specific each athlete’s personal preference.
product needs of the female consumer to help unlock her full UltraBOOST X: A lightweight running shoe for the female
potential. To enable this, we are working to establish a robust runner, featuring a Boost midsole, an adaptive arch as well as Reebok Floatride Run: The first shoe featuring Reebok’s new
network of industry leaders and academic experts with our a Primeknit upper for perfect fit and flexibility. The ARAMIS Floatride Foam technology. The unique and consistent cell
‘Path to Expert’ approach, which will help to accelerate the system, a motion tracking technology that enables a detailed structure of Floatride Foam delivers soft, responsive
INNOVATION
cushioning without compromising weight, so runners can NEW PRODUCT LAUNCHES GENERATE THE R&D EXPENSES INCREASE 25%
‘float’ through their run. The one-piece Ultraknit upper is MAJORITY OF SALES Expenses for research and development (R&D) include
engineered in zones to offer support and breathable flexibility. As in prior years, the majority of sales were generated with expenses for personnel and administration, but exclude other
Seamless construction and a 3D heel cradle limit irritation products newly introduced in the course of 2017. New products costs, for example those associated with the design aspect of
while locking in a comfortable fit. tend to have a higher gross margin compared to products the product creation process. In 2017, as in prior years, all
which have been in the market for more than one season. As R&D costs were expensed as incurred. The company’s R&D
Reebok Cotton + Corn: The initiative is intended to bring a result, newly launched products contributed overpro por expenses increased 25% to € 187 million from € 149 million in
plant-based footwear to the market in 2018. The first shoe tionately to net income in 2017. We expect this development to the prior year.
‘made from things that grow’ will have an upper comprised of continue in 2018 as we will present a wide range of new,
organic cotton and a base originating from industrial grown innovative products.  SEE SUBSEQUENT EVENTS AND OUTLOOK, P. 128 As our R&D departments comprise experienced and multi-
corn, which is a non-food source. For the Cotton + Corn skilled people from different areas of technical expertise and
initiative, Reebok partnered with DuPont Tate & Lyle Bio In 2017, brand adidas and Reebok sales were again driven by from diverse cultural backgrounds, personnel expenses
Products, a leading manufacturer of high-performance bio- the latest product offerings. At brand adidas, products represent the largest portion of R&D expenses, accounting for
based solutions. launched during the course of the year accounted for 79% of 64% of total R&D expenditure.
brand sales (2016: 77%), while only 2% of sales were generated
The awards the company has attained for its innovations with products introduced three or more years ago (2016: 1%). The number of people employed in R&D activities at December
confirm our continuous efforts to become the innovation At Reebok, 69% of footwear sales were generated by products 31, 2017, was 1,062, compared to 1,021 employees in the prior
leader in the sporting goods industry. In 2017, for example, launched in 2017 (2016: 73%). Only 12% of footwear product year. This represents 2% of total employees.
the Futurecraft 4D was awarded with the ‘Fast Company’s sales relate to products introduced three or more years ago
Innovation by Design Award 2017’ and named one of the (2016: 11%). In 2017, R&D expenses represented 2.1% of other operating
25 best innovations 2017 by Time Magazine. Also, we were expenses (2016: 1.9%). R&D expenses as a percentage of
named ‘Game Changer 2017’ in the category ‘Operations of sales increased to 0.9% (2016: 0.8%).  SEE TABLE 24
the Future’ by Manager Magazin and Bain & Company for
executing innovative solutions such as Futurecraft 4D,
ANNUAL REPORT 2017
Key R&D metrics 1, 2 24

Speedfactory and Parley. In addition, the Reebok Floatride
Run was named ‘Best Debut’ in the 2017 Runner’s World
Summer Shoe Guide. 2017 2016 2015 2014 2013
R&D expenses (€ in millions) 187 149 139 126 124

R&D expenses (in % of net sales) 0.9 0.8 0.8 0.9 0.9
R&D expenses (in % of other operating expenses) 2.1 1.9 1.9 2.0 2.0
080
R&D employees 1,062 1,021 993 985 992
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1 2017 and 2016 figures reflect continuing operations as a result of the divestiture of the Rockport, TaylorMade, Adams Golf, Ashworth and CCM Hockey businesses.
2 2015, 2014 and 2013 figures reflect continuing operations as a result of the divestiture of the Rockport business.
PEOPLE AND CULTURE
PEOPLE AND CULTURE on all levels and win both their hearts and minds. The People program for 24 months with the right to return to their home
Strategy consists of four pillars that serve as a basis for location while being developed with the goal of them assuming
At adidas, we believe that our people are the key to the creating the culture and environment for our people in order Senior Management positions in the future.
company’s success. Their performance, well-being and to successfully support Creating the New.  SEE DIAGRAM 25
knowledge have a significant impact on brand desire, These four pillars also serve as a tool for prioritization, sense- In 2017, we continued our central onboarding process at our
consumer satisfaction and, ultimately, our financial checking and measuring our HR actions and initiatives. The headquarters in Herzogenaurach, Germany, which ensures
performance. Through the delivery of our People Strategy, People Strategy is implemented through a portfolio of projects new starters enjoy a high-quality, consistent experience upon
we focus our efforts on four fundamentals: the attraction which will directly deliver into each of the four pillars. In 2017, joining the company. In addition, we piloted a digital pre-
and retention of the right talents, role model leadership, we made good progress by delivering the following initiatives. onboarding app available initially to new joiners in our Digital
diversity and inclusion, as well as the creation of a unique Brand Commerce teams across Herzogenaurach, Portland,
corporate culture. Meaningful reasons to join and stay Amsterdam and Zaragoza. The app allows us to engage with
Kicked off in 2015, our internal career development program new hires immediately upon their signing of an employment
PEOPLE STRATEGY ENABLES A CULTURE FOR Talent Carousel entered its third year, with the first generation contract. Through research into other organizations, we
DELIVERING ‘CREATING THE NEW’ graduating in 2017. The program encourages employees from learned that connecting with new joiners and providing them
As an integral part of our corporate strategy ‘Creating the all over the world to apply and become one of 20 finalists to with a cultural onboarding before their first day on the job
New’, the People Strategy is a testament to thinking that our take a cross-functional and international career step by shortens their ramp-up time as it reduces complexity in the
2020 strategy can only be executed if we speak to our people starting a new role in a new location. Candidates remain in the initial stages, ensuring they are highly engaged from day one.
Both our pre-onboarding platform and in-person experience
provide important learnings for a global onboarding initiative
The four pillars of our People Strategy 25
which aims at introducing standard onboarding tools in the
next two years.
People Strategy Our Learning Campus provides access to learning

Defines and inspires the right organizational culture for Creating the New
opportunities for employees globally. Through this digital
ANNUAL REPORT 2017
Attraction & retention Role model leadership Diversity & inclusion Culture platform, our people are able to develop skills to support their
of the right talents current performance and future career development. In 2017,
we saw additional functional learning opportunities become
Meaningful reasons to join Role models who inspire us Bring forward fresh and A creative climate to make accessible under the Learning Campus umbrella.
and stay diverse perspectives a difference
Attract and retain great talent Nurture and inspire role Represent and live the It is our goal to develop a Introduced in 2016 in Germany, the US, the Netherlands and
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by offering personal model leadership. diversity of our consumers culture that cherishes Hong Kong, our employee Stock Purchase Plan was rolled out
experiences, choices and in our people. collaboration, creativity and
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individual careers. confidence – three behaviors

to Greater China, Taiwan and the Hong Kong market organization
we deem crucial to the in 2017. By the end of the year, 45% of our total employee
successful delivery of our population were eligible to take part in the program, and
corporate strategy.
around 3,600 decided to participate. It is planned to extend
Choice & Agility & Speed this program to further countries in the coming years.
PEOPLE AND CULTURE
Our offices in the Netherlands, Spain and China received of the strategic initiatives that form the Creating the New with basic knowledge on how to become a good people
awards from the Top Employer Institute for their efforts to portfolio as well as the functional and market project manager, manage their business and continue to develop
provide an exceptional work environment for our people. With portfolios. They drive continuous improvement across themselves throughout their career. The course can also
its certification, the Top Employer Institute recognized the organization and also mentor and sponsor younger be booked by managers who would like to refresh their
adidas’ People Strategy, its organization-wide Learning & leaders. The ELG serves as a succession pool for the CLG. people management skills. Since 2016, this curriculum is
Development framework which encourages different kinds of —— A third group – the Global High Potential Group (GHIPO) – complemented by the ’Fit2Lead Experienced Manager’ training
learning and its career management model. adidas promotes will be formed in the first quarter of 2018. Within this group, that is geared towards managers who bring more than five
and encourages employee mobility across the organization which will consist of 50 members, we are striving for a 50:50 years of manage ment experience and/or lead or influence
and holds line managers accountable for developing the gender balance. With the GHIPO group we want to identify larger teams.
succession pipeline. and develop high potentials who have the ability to take on
more complex, demanding and higher-level responsibilities Bring forward fresh and diverse perspectives
In the neighboring forest at our headquarters, we opened at a global executive level. The GHIPO program will develop We delivered our 'BIG Deal' gender intelligence training to the
the company’s first-ever outdoor kindergarten group with participants’ capability against a consistent future Senior Board and their direct reports, covering 387 executives across
20 children, extending our child-care offer in a unique way. Management profile. nearly all our market subsidiaries within the course of a year.
Also, we laid the foundation stone for our second day-care ‘BIG’ stands for Balanced, Inclusive, Gender Intelligent. BIG
center on campus. It will open in October 2018, providing In an effort to drive clarity and accountability, the CLG has Deal is a one-day workshop designed to give participants new
spots for a total of another 138 children: 75 for kindergarten created the company’s first global Leadership Framework. It insights and practical tools that support them in building an
children, 48 for nursery children, and 15 spots for short-term is based on the three company behaviors creativity, inclusive company culture. Participants are challenged to re-
or emergency day care. collaboration, confidence (the ‘3Cs’) and articulates the visit and think critically about some of their key thoughts and
particular behaviors that are expected of leaders at adidas. beliefs around diversity, stereotyping and gender in the
Role models who inspire us The framework was developed jointly with employees workplace.
In 2017, we made significant progress with this People worldwide who provided feedback on what great leadership
Strategy pillar. Two new leadership groups were created, with within adidas looks like to them. It now provides a global and Functional and local market teams continued to develop
a third one in the making: universal language that is inclusive, reduces the need for dedicated plans to invest in a stronger female talent pipeline,
ANNUAL REPORT 2017
—— The Core Leadership Group (CLG) is the most senior local interpretations and outlines concrete behaviors that data analysis on gender balance and action plans to establish
group, made up of around 20 members from our Executive serve as a measure of leadership effectiveness. It will also be a more balanced organization in terms of gender, age and origin.
Leadership population. Members of this group jointly built into the way we hire and promote as well as rate
represent top positions and roles across our company. performance. The framework was activated and cascaded to Our employee resource groups across the organization with
These functional and geographical experts partner with employees globally through the CLG and ELG groups. an employee base of more than 700 members per group
the Executive Board in teaching and overseeing the cross- Employees’ awareness of the framework as well as its overall regularly hold awareness events and activations garnering
082
functional execution of the Creating the New strategy, effectiveness are measured via our monthly employee corporate support for topics such as women’s, LGBTQ, age and
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accelerating its delivery, as well as mentoring and experience survey ‘People Pulse’. origin as well as giving employees from all walks of life a voice.
sponsoring the next generation of leaders. The CLG also
serves as the succession pool for the Board. We continued to deliver our people manager training A creative climate to make a difference
—— The Extended Leadership Group (ELG) currently has ‘Fit2Lead’ across the US, Asia and EMEA (Europe, Middle East In a continued effort to provide our employees with the best
around 100 members. This new community of leaders and Africa). This training is specially designed for all first-time work environment possible, further construction work has
collaborates across functions to lead the implementation people managers who lead up to five people. It provides them started on our headquarters campus in Herzogenaurach. A
PEOPLE AND CULTURE
new building called ‘Arena’ will become the company’s new The year was also focused on further stabilizing and enhancing People Pulse allows for the monthly measurement of
main office in the first half of 2019, offering over 2,000 the HR Shared Service Center function for Germany. All employeeNPS (eNPS).  SEE INTERNAL MANAGEMENT SYSTEM, P. 102
employees a new home, centralizing most of the employees in employee queries relating to compensation, benefits, time The calculation logic of the eNPS score is identical with brand
Herzogenaurach on the World of Sports campus. 2017 also management and HR systems are being centrally channeled NPS: Based on the main question ‘On a scale of 0-10, how
saw the construction of a third future workplace space, ’Base’, and managed through this department. HR Partners are thus likely are you to recommend adidas as a place to work?’, the
following the successes of ‘Pitch 1’ and ‘Pitch 2’. Employees enabled to focus fully on supporting line managers and total share of detractors (responses below 7) is deducted from
based in these buildings work according to the activity-based employees on topics such as career counseling, people the total share of promoters (responses scoring 9 and 10),
working concept. They no longer have assigned desks but can management and coaching. In the first half of 2018, a new HR producing the eNPS score. This new approach as well as a
choose from a multitude of different types of rooms and Shared Service Center will be going operational in Portland. new focus on collecting open-comment feedback from
spaces based on the tasks they have on hand. Change employees on a regular basis allowed the reduction of the
management in these new buildings is supported through a MEASURING THE SUCCESS OF OUR questionnaire to a short pulse check of seven questions
dedicated mobile app as well as employee-led feedback HR INITIATIVES maximum, with the eNPS question at the center.
groups and regular feedback surveys. Our HR function measures the success and the effectiveness
of the company’s efforts with regard to its people initiatives The People Pulse cadence is made up of two components:
Our ‘MakerLabs’ at our headquarters in Herzogenaurach and through a set of chosen KPIs. We use two people KPIs: —— The eNPS question which is asked every month to allow
in Portland, USA, serve as dedicated spaces providing tools employee experience as an internal measure and employer for tracking over time
such as laser cutters and 3D printers and know-how to help rankings as an external measure. —— A focus topic which changes monthly and is directly derived
employees realize their ideas and create prototypes. The from the company’s strategic agenda as well as the new
‘MakerLab’ idea has its roots in the ‘hacker space’ concept, Employee engagement Leadership Framework and the 3Cs. The cycle repeats
where all employees are given free rein to create and bring We have set ourselves important goals of becoming the best itself every six months
their ideas to life. sports company in the world by becoming a truly consumer-
centric organization and putting our people at the heart of 2017 marked the creation of the baseline eNPS score which
HR FOUNDATIONS FOR OUR PEOPLE STRATEGY everything we do. When it comes to measuring whether we was needed to establish the measurement of KPI improvement
In 2017, the adidas HR function further evolved People are living up to these ambitions, our consumers and people over time, as well as to produce internal benchmarks.
ANNUAL REPORT 2017
OneView – a self-service online portal that allows employees, are the best data sources. Research shows that external benchmarks for eNPS are not
leaders and HR Partners to both access and manage the most meaningful to compare the level of positive employee
important personal and work data such as salary, career and We are convinced that our employees’ feedback will play a experience between companies as People Pulse is specifically
team information as well as HR applications. By providing crucial role in our pursuit of creating a world-class employee tailored to adidas’ needs as well as its Creating the New
direct access to People OneView, users are empowered to experience so we can continue to attract and retain top talent. strategy and People Strategy. A direct like-for-like comparison
manage their most important personal data without having to We can only tell if we are successful by asking our people and of the adidas eNPS score to that of other companies is
083
go via their HR Partner. HR Partners in turn regain valuable hence empower them to share their feedback on a regular therefore not feasible. In line with the NPS industry standard
ADIDAS
time to counsel and support employees. In 2017, two new basis. In support of this thinking, the adidas Executive Board approach, the focus lies on incremental improvement of the
modules were added to the platform: Dashboarding gives HR approved the launch of ‘People Pulse’ for all office employees baseline score vs. the score for each pulse. For external
Partners and senior leaders access to certain HR-specific with an email account. Kicked off in June 2017, People Pulse benchmarking, we continue to use top employer rankings such
metrics and standard reports, Org Viewing provides all is adidas’ new approach and system platform for measuring as Glassdoor and Universum, where adidas’ attractiveness as
employees with full transparency over the organizational the level of employee satisfaction with the experience adidas an employer is compared to that of other companies in similar
structure of the company. provides as an employer.
PEOPLE AND CULTURE
and other industries. Tracking of these external rating scores basis. An area for improvement is the communication of cornerstone of our rewards program is our Global Salary
is managed by the HR Talent Acquisition team on a regular basis. results and the definition of actions addressing the results. Management System, which is used as a basis for establishing
The insights-to-action process will therefore become a focus and evaluating the value of employees’ positions and salaries
Given the above, targets that were agreed with the Executive area for 2018. in a market-driven and performance-oriented way. The various
Board for the baseline year were mainly qualitative in nature variable compensation and benefits components we offer our
with the exception of the participation rate: Employer rankings employees include:
Our ‘employer of choice’ status continues to garner worldwide —— Bonus program – Short Term Incentive (STI) program
Target Result 2017 recognition and enables us to attract, retain and engage —— Profit participation program – ‘Champions Bonus’ (Germany)
Reporting of People Pulse – Reports with scores and anonymized industry-leading talent to sustain the company’s success and —— Long-Term Incentive (LTI) Plan for leaders and Executive
results comments are provided to the Executive
Board as well as leaders on both Board-1 growth. In 2017, adidas locations around the world leveraged Board members
and Board-2 level. our employer brand attributes for attraction, retention and —— 401-K Retirement Plan (USA) and adidas Pension Plan
– Employees have access to the overall
company results via a SharePoint engagement strategies. This work contributed to several Top (Germany)
workspace and our global intranet a-LIVE. Ten rankings worldwide, including the Glassdoor and the —— adidas Stock Purchase Plan.
Minimum participation – Since its launch in June, monthly Focus Best Employer rankings, as well as the Candidate
rate per month of 50% and articipation rates have been increasing,
p
accumulated participation from 45% to around 55% in November and Experience Award EMEA/APAC (Asia Pacific). This has also We are continuously improving our remuneration approach
rate of 80% at least once December. helped us to attract some of the industry’s top talent. and are therefore investing in a number of projects and
every six months - By October, approximately 85% of eligible
employees had participated in at least one initiatives to increase significance of our remuneration
monthly pulse. PERFORMANCE MANAGEMENT programs, as well as to ensure we are investing in the right
Results recipients to, – Leaders partner with HR and other To drive high performance within the company, we use a people at the right level. One of the improvements we
among others, relevant functions to review, cascade and
– actively show leadership communicate monthly results. performance management approach called ‘The Score’. It conducted was the initiation of a new salary adjustment
commitment and – Discussion with network of ‘People brings target setting and performance appraisal under one approach. It was applied in Germany and the US in 2017 to
ownership by openly Pulse Champions’ to share best-practice
discussing People Pulse examples. common process. Each employee is evaluated at least once a minimize salary differences and, more importantly, inequity of
results – One example for successful implemen- year, optionally twice, and receives performance feedback employees on the same positions and grades. It is based on a
– drive action on identified tation of feedback is the introduction of
accordingly. In 2018, The Score will be replaced by ‘#MyBest’ higher level of detail for external market data and addresses
ANNUAL REPORT 2017
areas of improvement new work-life balance measures in Greater

China which resulted in significant score which is a new and holistic performance development internal pay gaps – also helping ensure that we pay equally at
improvements.
approach combining monthly high-quality conversations the same level for female and male employees.
Expansion of People – Pilot of People Pulse for ten retail stores
Pulse to own retail stores in Germany and the Central Distribution between the employee and the line manager, regular upward
and Distribution Centers Center in Rieste, Germany.
and peer feedback options with quarterly target setting and In addition, we improved transparency and governance for
before the end of 2017 – Lessons-learned meetings to define
roadmap for 2018 regarding the roll-out performance evaluation. In 2017, we focused on training management remuneration. Analytics for our global
to retail stores and Distribution Centers employees on the new approach as well as piloting #MyBest. management population provided higher transparency about
globally.
084
actual remuneration as well as internal and external
Wages and benefits
ADIDAS
positioning of compensation and benefits packages. The aim

In addition, we measured the effectiveness of People Pulse as We are committed to rewarding our employees with was to ensure objective decision making for management
a tool, using the November Pulse to get employees’ feedback compensation and benefit programs that are competitive in remuneration, and to continue standardizing our pay
on People Pulse itself. Positive feedback revolved around the the marketplace. Remuneration throughout the company structures. In 2017, we also rolled out a new, global Long
fact that People Pulse gives employees a voice and the chance comprises fixed and variable monetary compensation, non- Term Incentive Program for Senior Management. This
to contribute and provide feedback quickly and on a regular monetary rewards as well as other intangible benefits. The program provides Restricted Stock Units (RSU), linked to our
PEOPLE AND CULTURE
Earnings per Share (EPS) targets and to our share price opportunity to start a functional career within adidas. The In 2017, 23,113 employees accessed our Learning Campus
performance. It closely links the goals of our Senior program comprises six three-month assignments in various digitally, while 4,295 employees participated in in-person
Management with those of our shareholders – sustainable departments. At least one of these assignments takes place learning activities, ranging from two hours to two days in
success and long-term growth – and fosters company abroad. At year-end 2017, we employed 63 participants in our duration. In 2018, adidas core learning programs will be
ownership mentality. We will introduce a similar plan for the global FTP (2016: 49). created to support strategic business initiatives, build
Executive Board in 2018.  SEE NOTE 27, P. 186 Succession management: Our succession management capabilities connected to our 3Cs and support development of
approach aims to ensure stability and certainty in business future cross-functional organizational capabilities. Input into
Our subsidiaries also grant a variety of benefits to employees, continuity. We achieve this through a globally consistent the program offer is managed through a business needs
depending upon locally defined practices and country-specific succession plan which covers successors for director-level assessment supported by our HR organization.
regulations and norms. positions and above. We conduct regular reviews to ensure
individual development plans are in place to prepare WORK-LIFE INTEGRATION
DEVELOPMENT AND TRAINING successors for their potential next steps. We aim to harmonize the commercial interests of the
Talent and succession management company with the professional, private and family needs of
The quality of current and future talent and leadership is key Employee collaboration and learning our employees. Our Work-Life Integration initiatives and
to our success. With specifically designed talent management We believe that a robust and state-of-the-art internal programs include flexible work time and place, people
tools, we identify talents at all levels of our company who have communication platform is essential for driving employee development and leadership competence related to work-life
the potential to become future leaders or key players within engagement and fostering learning as well as open integration, as well as family-oriented services. In addition to
the organization. In order to prepare them for more complex collaboration within our organization. We use an enterprise providing flexible working opportunities such as teleworking,
future roles, they participate in targeted development collaboration platform called ‘a-LIVE’, which encourages sabbaticals and parent/child offices, we have a day-care
programs and have tailored individual development plans. employees to share knowledge, collaborate and discuss center at our headquarters in Herzogenaurach, for example.
current topics. In addition, we have established an ‘Ask the Our office in Panama also offers financial support for day
Apprenticeships and internships: Our development programs Management’ platform on our intranet, enabling employees care, and our office in Amsterdam provides a contingent of
are complemented by apprenticeship and internship to openly address questions to our senior leaders. day-care places.
programs. The adidas apprenticeship offers young people
ANNUAL REPORT 2017
who want to join our company directly out of school the Via a-LIVE we also offer all employees access to the Learning In order to plan parental leave and re-entry in the best
opportunity to gain business experience in a two- to three- Campus, a state-of-the-art learning platform launched in possible way, we have dedicated and tailored programs in
year rotation program. It includes vocational training in retail, 2014 that provides opportunities for both e-learning and place providing employees with advice at an early stage and
shoe technology and IT, as well as integrated study programs knowledge sharing. Employees are able to access content options for their return to work, also taking into consideration
in fields such as digital commerce, finance or international 24/7 in a virtual environment. Under the Learning Campus flexible working hours and work locations. In Germany, for
business. At the end of 2017, we employed 65 apprentices in brand we also offer in-person learning activities. Through a instance, we guarantee our employees on parental leave their
085
Germany (2016: 63) and 37 integrated study program students global implementation of our Learning Management System positions, which are only filled temporarily. In the US, we give
ADIDAS
(2016: 35). Our global internship program offers students that continued through 2017, we have increased accessibility parents a special option: In addition to regular parental leave,
three to six months of work experience within adidas. In 2017, of employee training and development activities across the which allows new parents to stay home for up to ten weeks
we employed 765 interns in Germany (2016: 623). globe with a future goal of the majority of in-person and digital with 70% of their salary, adidas offers an extra two weeks’
Trainee program: The Functional Trainee Program (FTP) is an learning activities contributing to an employee’s individual paid parental leave for parents. Furthermore, adidas’ special
18-month program providing graduates with an international People OneView profile. parental bonding leave provides parents with the possibility to
background and excellent educational credentials the stay home for up to six months within the first twelve months
PEOPLE AND CULTURE
after the child’s birth or placement. While unpaid, it offers Additionally, we continue our support of the international —— adidas is listed in the genderdax  SEE GLOSSARY and regularly
parents the opportunity to stay home longer and take care of LGBTQ community, which is also driven by our employees takes part in benchmark studies in order to review our
their new arrival and new life together. at our major locations. 2017 also saw the creation of a activities in the fields of diversity and inclusion.
new Experienced Generation network which represents the
Starting with our company’s headquarters in Germany, we interests and needs of our more experienced employees. MIXED LEADERSHIP TEAMS
introduced a new off-campus working approach in 2017. Every —— We provide quarterly diversity reports to management to At adidas, we believe in mixed leadership teams as a
employee with an adidas AG contract whose working tasks support decision making and target setting, and provide competitive advantage and driver of success. A prerequisite
can be carried out independently of campus facilities, campus diversity training to our employees and gender intelligence for increasing the number of women at the highest levels of
equipment or personal interaction onsite is eligible to work training to our leaders. management is the general promotion of women within the
20% of their total working time off-campus. This new Works company worldwide at all levels of management. We have
Council agreement is based on our belief that results can be External activities and memberships various initiatives in place, e. g. with members of the Executive
achieved in the same quality and quantity, regardless of —— Our active membership in ‘Charta der Vielfalt’ (‘Diversity Board agreeing to mentor female talents as well as an equal
people’s location. With this regulation we are supporting our Charter’), Prout at Work and the Diversity and Inclusion in gender split in our GHIPO program to guarantee that our
people in working more flexibly and choosing the best work Asia Network (DIAN) allows us to promote communication succession pipeline is balanced. In addition, our women’s
environment for the task they have at hand. and the sharing of best practices and insights. network is also working on mentoring circles to foster the
—— We have been participating in international diversity career professional development of junior colleagues. Already in
DIVERSITY AND INCLUSION fairs and events such as Women in Tech, Opportunities for 2011, adidas proactively set itself the goal of increasing the
We believe it is crucial for the success of our company to Women Conference and the British LGBT awards. number of women in management positions in the coming
have a very diverse workforce and individuals with different years. ↗ ADIDAS-GROUP.COM/S/EMPLOYEES
ideas, strengths, interests and cultural backgrounds. We see
a great benefit in the diversity of our employees as this helps
us to better fulfil the wishes and multi-faceted demands of
our consumers around the world. All our employees are Mixed leadership targets 26
appreciated – regardless of gender, nationality, ethnic origin,

ANNUAL REPORT 2017
religion, world view, disability, age, sexual orientation or identity.

adidas AG Target set in 2015 for 2017 Evaluation June 30, 2017 Target set in 2017 for 2019/2022
Supervisory Board to appoint one woman Karen Parkin appointed as the first woman Percentage share of women on the
At our company’s headquarter, we have employees from more to the adidas AG Executive Board to the adidas AG Executive Board in May 2017 Executive Board by 2022: 14.29% (1/7)
than 100 nations. As part of our global diversity approach we Percentage share of women in Percentage share of women in Percentage share of women in
management positions (Board-1 level) to management positions (Board-1 level): 18% management positions (Board-1 level) to be
proactively pursue a portfolio of internal and external activities be increased from 11% (July 2015) to 18% increased to 24% by 2019
as well as memberships: Percentage share of women in Percentage share of women in Percentage share of women in
086
management positions (Board-2 level) to management positions (Board-2 level): 29% management positions (Board-2 level) to be
be increased from 26% (July 2015) to 30% increased to 30% by 2019
ADIDAS
Internal activities
Global Target set in March 2011 for 2017 Evaluation 2017 Target set in 2017 for 2020
—— We have regular events highlighting diversity as a key
Percentage share of women in Percentage share of women in Percentage share of women in
topic, such as our global Diversity Day. We support the management positions to be increased management positions: 31% management positions to be increased to
760-member strong global Women’s Networking group. from 30% (March 2011) to 32% 32%
PEOPLE AND CULTURE
Pursuant to the German ‘Law on Equal Participation of Employee statistics 1 27 Employees by region 1 29
Women and Men in Leadership Positions in the Private and
Public Sector’ the Supervisory Board and Executive Board 12%
2017 2016
of adidas AG have set specific targets to be achieved by Western Europe
Total number of employees 2 56,888 58,902
June 30, 2017, and new targets to be achieved by
Total employees 20%
December 31, 2019.  SEE CORPORATE GOVERNANCE REPORT INCLUDING Male 50% 50% Group functions
THE DECLARATION ON CORPORATE GOVERNANCE, P. 33  SEE TABLE 26 Female 50% 50% 11% 20%
Management positions MEAA North America
GLOBAL EMPLOYEE POPULATION Male 69% 70% 3%
Female 31% 30% 10%
On December 31, 2017, the company had 56,888 employees Japan
Average age of employees (in years) 30 30 Greater China
(thereof 7,581 adidas AG), which represents a decrease of 3% 8%
Average length of service (in years) 4 5 16%
versus 58,902 in the previous year. This is a result of the Latin America
1 At year-end. Figures reflect continuing operations as a result of the divestiture of the Rockport,
Russia/CIS
divestiture of our TaylorMade and CCM Hockey businesses. TaylorMade, Adams Golf, Ashworth and CCM Hockey businesses.
On a full-time equivalent basis, our company had 48,775 2 Number of employees on a headcount basis.
1 At year-end.
employees (thereof 6,927 adidas AG) on December 31, 2017

(2016: 50,319).  SEE TABLE 27
Number of employees by function 1 28 Employees by function 1 30
Personnel expenses increased to € 2.549 billion in 2017

(2016: € 2.373 billion), representing 12% of sales (2016: 13%). Employees 2 Full-time equivalents 3
2%
IT 2%
 SEE NOTE 33, P. 201 An overview of the development of our
2017 2016 2017 2016
2% Research &
employee base in the past ten years can be found in our ten- Own retail 32,698 35,109 25,640 27,552 development
Production
year overview.  SEE TEN-YEAR OVERVIEW, P. 229 Sales 3,795 4,018 3,680 3,910
7%
Logistics 5,890 5,999 5,617 5,721
Sales
Marketing 5,964 5,379 5,742 5,166
ANNUAL REPORT 2017
9%
Central functions Central functions & 57%
and administration
administration 5,157 5,044 4,835 4,749 Own retail
10%
Production 1,132 1,164 1,105 1,135
Marketing
Research &
development 1,062 1,021 1,002 955
10%
IT 1,190 1,168 1,154 1,131
Logistics
Total 56,888 58,902 48,775 50,319
087
1 At year end. Figures reflect continuing operations as a result of the divestiture of the Rockport,
ADIDAS
1 At year-end.
TaylorMade, Adams Golf, Ashworth and CCM Hockey businesses.
2 Number of employees on a headcount basis.
3 Number of employees on a full-time equivalent basis.
SUSTAINABILITY
SUSTAINABILITY decisions that shape our day-to-day-operations. 2017 saw a providers such as the EHS+ Centre in China and the
refreshment of this materiality exercise. Building on the International Labour Organization’s (ILO) Better Work program.
Being a sustainable business is about striking the balance insights gained from past assessments we categorized ↗ ADIDAS-GROUP.COM/S/PARTNERSHIPS
between shareholder expectations and the needs and potential relevant topics in a first step. We then validated
concerns of our employees and consumers, the workers in these topics through in-depth discussions with experts across We believe transparent communication to our stakeholders is
our supply chain and the environment. We believe that all relevant functions. In doing so, our focus centered on the critical. For that reason we regularly disclose important
acting as a responsible business will contribute to lasting importance a topic has for our business performance and sustainability updates from our work throughout the year on
economic success. stakeholders but also considered the impact adidas has on our corporate channels including our corporate website. A
these topics. As a result we were able to confirm our strategic key element is the publication of our global supplier factory
ambitions and embedded goals that we aim to reach by 2020. lists, showing factories we source from. The lists were first
OUR APPROACH  SEE NON-FINANCIAL STATEMENT, P. 100 disclosed in 2007 and are updated twice a year. In addition, we
publish lists of the factories that manufacture products for
Our commitment to sustainable practices rests on the STAKEHOLDER DIALOGUE AND TRANSPARENCY major sports events such as the FIFA World Cup or Olympic
company’s mission: To be the best sports company in the Engaging openly with stakeholders and establishing ways to Games, and disclose the names of factories of suppliers who
world. Best means that we design, build and sell the best increase transparency and disclosure has long been central process materials for our primary suppliers or subcontractors,
sports products in the world, with the best service and to our approach. Our stakeholders are those people or where the majority of wet processes  SEE GLOSSARY are carried
experience and in a sustainable way. This mission is supported organizations who affect or are affected by our operations, out. ↗ ADIDAS-GROUP.COM/S/SUPPLY-CHAIN-STRUCTURE
by the adidas sustainability roadmap toward 2020 and beyond, including our employees, consumers, suppliers and their
which is a direct outcome of our business strategy ‘Creating workers, customers, investors, media, governments and GOVERNANCE STRUCTURE
the New’. We believe that, through sport, we have the power to NGOs. The adidas ‘Stakeholder Relations Guideline’ specifies A cross-functional governance structure ensures timely and
change lives. But sport needs a space to exist. These spaces key principles for the development of stakeholder relations direct execution of these programs that drive achievement of
are increasingly endangered due to man-made issues, and details the different forms of stakeholder our voluntarily set goals for 2020. A Sponsor Board composed
including human rights violations, pollution, growing energy engagement. Through active participation in, for example, the of functional heads from Social and Environmental Affairs
consumption and waste. Our holistic approach to sustainability Better Cotton Initiative (BCI), the Sustainable Apparel (SEA), Global Operations (GOPS), Global Brands, Human
ANNUAL REPORT 2017
responds to the challenges that endanger the spaces of sport Coalition (SAC), the Leather Working Group (LWG) and the Resources, Global Workplaces, Retail Concept, Sales, Finance
and simultaneously our planet and people. Building on Apparel and Footwear International RSL Management and Communication oversees the progress made toward our
existing programs, it tackles these subjects that are most (AFIRM) Working Group, we work closely with leading goals in bi-monthly meetings and gives direction for further
material to our business and our stakeholders, and translates companies from a variety of sectors to develop sustainable development of the sustainability roadmap. The Sponsor
our overall sustainability efforts into tangible goals for 2020 business approaches and to debate social and environmental Board works in close alignment with the strategic working
that have a direct impact on the world of sport we operate in. topics on a global level. This is also supported by our group that is tasked with the monitoring of ongoing relevant
088
↗ ADIDAS-GROUP.COM/SUSTAINABILITY membership in organizations such as the World Federation of developments within the company and the reporting of
ADIDAS
the Sporting Goods Industry (WFSGI), the Fair Factories progress to the Sponsor Board. Ultimately, the program
MATERIAL TOPICS Clearinghouse (FFC), the Fair Labor Association (FLA) and owners ensure operational execution of the programs.
We seek to ensure that we address the topics that are most the German government-led Partnership on Sustainable Important updates and requests for decision making are
salient to our business, our key stakeholders as well as the Textiles (‘Textilbündnis’). In addition, we build awareness, shared with the Executive Board and designated sustainability
challenges ahead. To identify these topics we openly engage capacity and knowledge of laws and rights among factory champions on a regular basis.
with our stakeholders and involve their views and opinions in management and workers by partnering with leading
SUSTAINABILITY
EXTERNAL RECOGNITION OUR PROGRESS offer global support by developing guidelines and systems,
We have continuously received positive recognition from and monitor and influence standards and regulations through
international institutions, rating agencies, NGOs and socially For years, adidas has regularly reported about its sustain external observation and interaction. Senior Management
responsible investment analysts for our sustainability ability performance by measuring and disclosing the progress from SEA and GOPS reviews and signs off policy updates and
initiatives. In 2017, adidas AG was again represented in a made toward our targets. is informed about proper execution and monitoring.
variety of high-profile sustainability indices and subject to
corporate sustainability assessments.  SEE OUR SHARE, P. 57 PRODUCT SAFETY We publish our A-01 Policy annually on our corporate website
For example, for the 18th consecutive time, adidas AG was Product safety is an imperative. As a company we have to and communicate it to all relevant stakeholders internally and
selected to join the Dow Jones Sustainability Indices (DJSI), manage the risk of selling defective products that may result externally. The efficiency of our product safety approach is
the world’s first global sustainability index family tracking the in injury to consumers or impair our image. To mitigate this evaluated by the absence of any product recalls as well as by
performance of the leading sustainability-driven companies risk, we have company-wide product safety policies in place benchmarking standards and executional procedures against
worldwide. As one of the top-scoring companies in our that ensure we consistently apply physical and chemical the guidance as developed by the AFIRM Group.
industry ‘Textiles, Apparel & Luxury Goods’, we earned the product safety and conformity standards. Since pioneering the
Gold Class distinction for excellent corporate sustainability Restricted Substances Policy (‘A-01’ Policy) in 1998, we Progress toward targets
performance for the second year in a row and were rated continue to develop policies which ban or restrict chemicals in In 2017, we published an updated version of our A-01 Policy on
industry best in the criteria Human Rights, Supply Chain our products. ↗ ADIDAS-GROUP.COM/S/PRODUCT-SAFETY our corporate website. In addition, we created a dedicated
Management, Impact Measurement and Valuation, Materiality, ‘Product safety and compliance’ workspace on our global
Environmental Policy and Management Systems, Risk and The A-01 Policy for product materials covers the strictest intranet a-LIVE that serves as a platform for all employees
Crisis Management, Brand Management, Corporate Citizenship applicable local requirements and includes best-practice involved in product creation by providing them with the
and Philanthropy, and Customer Relationship Management. standards as recommended by consumer organizations. It information required to ensure we conceptualize, develop,
As a result of our response to assessments conducted by the prohibits, for example, the use of chemicals considered produce and distribute products that are in compliance with
Carbon Disclosure Project (CDP), adidas was awarded with a harmful or toxic, the sourcing or processing of raw materials national and international regulations and best-practice
B score in the Climate Change submission and with an A– from any endangered or threatened species and the use of standards as well as in accordance with the laws of intellectual
score in the Water submission in 2017. Furthermore, adidas leathers, hides or skins from animals that have been property. The workspace offers policies, manuals and
ANNUAL REPORT 2017
received recognition in the annual CITI (Corporate Information inhumanely treated, whether these animals are wild or standards, as well as contact details for internal global support
Transparency Index) 4.0 evaluation for the environmental farmed. The policy is updated at least once a year based on and best-practice sharing guidelines and training material.
performance of our supply chain in China for the fourth year in findings in our ongoing dialogue with scientific organizations
a row. In 2017, we ranked first in the leather industry, and fifth and is mandatory for all business partners who have to We have further strengthened our collaborative approach with
out of more than 200 global brands. adidas further ranked confirm receipt and acknowledgement of the latest policy industry peers within the AFIRM Group. We continued to mature
second in its industry in the Corporate Human Rights update each year in a written format. our programs on a global scale with enhanced supplier training
089
Benchmark evaluation and, for an unprecedented third time, tools and outreach, and contributed to a consolidated AFIRM
ADIDAS
received accreditation for its social supply chain program by Both our own quality assurance laboratories and external Restricted Substances List that harmonizes a Restricted
the FLA. To provide information for the third accreditation, testing institutes are used to constantly monitor material Substances Lists across the industry. We further participated in
nine years of social compliance work was evaluated. Our samples to ensure supplier compliance with these several public stakeholder consultation processes initiated by
program was first accredited by the FLA in 2005, then requirements. Materials that do not meet our standards and the European Commission (ECHA), and also several US state
reaccredited in 2008. ↗ ADIDAS-GROUP.COM/S/RECOGNITION specifications are rejected. To ensure successful application legislative initiatives to inform governmental entities on
of the policy, we promote internal business understanding, implications and opportunities of drafted legislation.
SUSTAINABILITY
In 2017, we recorded quality issues for one accessory product as own retail stores globally). The biggest impact however occurs Progress is tracked annually through an environmental data
(model adidas Hockey Pro Glove) with around 3,000 produced in the upstream supply chain in factories beyond the Tier 1 reporting system that allows for follow-up toward the set
items, out of 321 million units of hardware produced during the suppliers we have a direct relationship with.   SEE DIAGRAM 31 targets and is disclosed in detail in our annual Green Company
years of manufacture. One product item identified during a spot Report that will be available as of April 2018 on our corporate
check by Dutch authorities at a point of sale was found to be not OWN SITES website. ↗ ADIDAS-GROUP.COM/S/GREEN-COMPANY-REPORTS
compliant with the REACH regulation of the European Union. Since 2008, our ‘Green Company’ program strives to achieve
This subsequently led to immediate action from our end. All ambitious savings in water, waste and energy at adidas own In 2016, we established an Integrated Management System
products that were delivered to markets were recalled by sites globally. Including administrative offices, production (IMS) which combines three existing management systems:
asking consumers who purchased this article to return it to the facilities and distribution centers, the program covers more ISO 50001 (Energy), ISO 14001 (Environment) and OHSAS
store where it was bought. We have not been notified about any than 85% of our global employee base (excluding own retail). 18001 (Health and Safety). IMS is helping us to drive further
consumer complaints related to this product quality deficit. In 2015, we presented a new set of targets to be achieved by business integration and impact relevant decisions for our
2020, including targets for carbon reduction that were operations globally. A dedicated IMS policy helps to promote
ENVIRONMENTAL IMPACTS calculated considering a science-based methodology and wider understanding and ensures application among all
adidas is proactively addressing the impacts of climate context-based targets for water reduction. adidas entities affected. In addition, our global intranet
change through a number of initiatives in its own operations, ↗ADIDAS-GROUP.COM/S/ENVIRONMENTAL-APPROACH a-LIVE supports best-practice sharing among all adidas
its supply chain and through various partnerships. As an employees globally.
example, the company joined the ‘UN Climate Neutral Now’
initiative in 2015 to promote a wider understanding of the
need and the opportunities for society to become climate
Organizational footprint 1 31
neutral as well as to showcase that many organizations are
already taking concrete action in this direction. As such,
adidas is committed to action steps as a champion of the VALUE CHAIN
initiative such as the continued estimation and reduction of its

emissions. GREENHOUSE
42%
ANNUAL REPORT 2017
GAS
OFFICES, DISTRIBUTION CENTERS,
USE PHASE AND END-OF-LIFE

RAW MATERIAL PRODUCTION
ORGANIZATIONAL FOOTPRINT
UPSTREAM SUPPLY CHAIN

31%
INBOUND AND OUTBOUND

AIR
ADMINISTRATION & OTHER
OWN RETAIL GLOBALLY

In 2016, for the first time, we conducted a fact-based pilot POLLUTION
PRODUCTION SITES
DIRECT SUPPLIERS
INDIRECT SPENDS
TOTAL IMPACT
analysis to assess our organizational environmental footprint.
INDIRECTS
LOGISTICS
RETAIL
The aim was to better understand where our main
15%
TIER 3
TIER 2
TIER 1
WATER
50%
18%
10%
6%
8%
4%
1%
3%
CONSUMPTION
environmental impacts occur along our value chain, and to
090
translate them into monetary terms. Using the baseline of
WATER
6%
ADIDAS
2015, we focused on five main environmental impacts: POLLUTION

Greenhouse Gas (GHG) emissions, water consumption, land
use as well as air and water pollution. Results show that
only 4% of our impact relates to our core operations
LAND USE 6%
(operations related to all of our administration offices,
1 Greenhouse gas: carbon dioxide, methane and nitrous oxide. Air pollution: sulphur oxides, nitrogen oxides, particulate matter, toxic organic substances. Water consumption: i.a. surface water, ground water.
distribution centers and own production sites globally, as well Water pollution: i.a. nitrogen and phosphorus, toxic organic substances, heavy metals. Land use: arable land, pastures and grassland, industrial land use, unsustainable forest area.
SUSTAINABILITY
Progress toward targets 2017 also experienced renewed and visible support for our One of the ways we try to minimize our suppliers’ environmental
By the end of 2017, our own sites globally managed a 29% ambition to further reduce our environmental footprint from impacts at their manufacturing plants is by helping them
reduction in carbon net emissions (baseline 2015) and a 27% the adidas Executive Board, who challenged all adidas establish sound environmental management systems. The
reduction in water consumption per employee (baseline facilities worldwide to remove single-use plastic items that majority of our footwear sourcing volume, 95% (2016: 96%), is
2008). are disposable and generally used only once before they are produced in factories which are certified in accordance with
thrown away, such as plastic bags, water bottles and cutlery. the International Environmental Standards ISO 14001 and/or
Targets 2020 2017 2016 The changes will avoid more than 40 tonnes of single-use the Workplace Health and Safety Management Standards
3% absolute annual reduction in plastic per year. The announcement that was made on a-LIVE OHSAS 18001. The remaining part of our footwear sourcing
CO2 Scope 1 and Scope 2 1 net emissions
(baseline 2015) 29% 11% was the most successful post to date, showing the high volume is produced in factories that have other management
35% reduction in water consumption per commitment and engagement of both our Senior Management systems in place. All footwear factories in our monitoring
employee and employees worldwide toward responsible business scope are regularly assessed against our standards on
(baseline 2008) 27% 23%
practices. environment and workplace health and safety, receiving
1 Scope 1: Emissions that arise directly from sources that are owned or controlled by adidas entities,
such as fuels used in our boilers, Scope 2: emissions generated by purchased electricity consumed by evaluation by means of our environmental compliance E-KPI
adidas entities.
SUPPLY CHAIN rating.
Three of our facilities received LEED  SEE GLOSSARY Gold As almost all of our production is outsourced, a significant
certification. After the office in Santiago, Chile, received part of our environmental impact occurs, at different Environmental compliance (E-KPI)
certification in 2016, the new office in Buenos Aires, Argentina intensities, throughout the supply chain. Therefore, for us, E-KPI is our tool designed to measure and improve
was the second office in South America to be awarded with sourcing is not only about ensuring high product quality and environmental performance of our strategic Tier 1 suppliers
this certification. The India headquarters in Gurugram timely delivery, it also means working with our suppliers to by setting them 20% intensity reduction targets to be achieved
became our first LEED Gold certification in Asia and the ensure the highest environmental standards and supporting by 2020 in the areas of energy, water and waste (baseline
relocated headquarters in Dubai also became LEED Gold them to reduce their overall water consumption and waste 2014). Using a benchmarking approach, E-KPI allows for a
certified. In addition, adidas received its first-ever LEED volume as well as improve their carbon footprint. Using the high level of transparency into suppliers’ actual consumption
certification for own retail. The store in Madrid was accredited environmental performance of our own sites as best-practice intensity, supporting us to define suppliers' specified areas
for its interior design and construction. examples, we provide a set of specific policies and guidelines for improvement and training needs that match their respective
ANNUAL REPORT 2017
to our suppliers: Mandatory for all business partners, the situation. We follow a similar approach for our apparel material
In line with our ambition to reduce the environmental footprint ‘Workplace Standards’ (the supply chain code of conduct) as Tier 2 suppliers, with the aim of them achieving a 35% water
of our consumer events by 2020, we developed our first well as supportive guidelines such as our ‘Environmental reduction by the end of 2020 (baseline 2014) 1.
‘Sustainable Events’ guidelines which will serve as orientation Guidelines’ and ‘Guide to Best Environmental Practice’ are
for our markets globally to run events more sustainably and updated regularly and build the basis for our engagement Progress toward targets
inspire best-practice sharing opportunities. The guidelines with suppliers. In addition, we have initiated a system of multi- Compared to the 2016 results, our suppliers enrolled in our
091
are available to our internal teams through a-LIVE and to level and cross-functional training sessions with our global environmental program made good progress 2. 48% of strategic
ADIDAS
external agencies, with the aim of, for example, increasing supplier network and provide regular training. Guidance and suppliers are on track to achieve their energy reduction target
energy awareness and minimizing the use of single-use training materials are reviewed by SEA Senior Management for 2020, which represents an increase of 11 percentage
plastic at our own events. prior to release. ↗ ADIDAS-GROUP.COM/S/SUPPLY-CHAIN-APPROACH points compared to the results from the previous measure
ment. More than half of these suppliers (55%) are on track to
1 Apparel material suppliers are specialists in printing and dyeing operations. Based on results from previous years and a change in our tracking methodology, the target for our apparel material suppliers was adjusted to a 35% reduction by 2020.
2 E-KPI 2017 refers to environmental data covering full year 2016, using a baseline of 2014. Strategic suppliers enrolled in our environmental program cover more than 80% of our total sourcing volume.
SUSTAINABILITY
achieve their waste reduction target, also marking a significant expertise that identified and outlined short- and medium- and has committed to increasing the sourcing volumes of
improvement of 16 percentage points compared to the term action for the facilities with a positive impact either Better Cotton, with the aim of achieving 100% sustainable
previous results. 54% of this group of suppliers are on their immediately or within the next three years. Similarly with cotton  SEE GLOSSARY by 2018. Not only does the BCI aim to
way to achieving the water reduction targets, showing a stable waste, we did a pilot assessment in Vietnam to identify waste reduce the use of pesticides, it also promotes efficient water
performance and no change in percentage points compared to reduction and recycling opportunities. The global guidelines use, crop rotation and fair working conditions.
the previous ratings. In addition, 46% of our apparel material developed will support all facilities to manage their waste and
suppliers made good progress and are well on their way to identify opportunities to recycle. Low-performing facilities are In addition, we aim to reduce the use of virgin plastic and are
achieve the 2020 target. further asked to develop improvement plans and provide increasing the use of recycled polyester in our products. As of
regular progress updates. adidas also hosts joint discussions 2015, adidas has partnered up with Parley for the Oceans  SEE
If facilities’ performance achievement is at risk, we take with the factories. GLOSSARY. As a founding member, adidas supports Parley for
several steps to support and ensure their performance gets the Oceans in its education and communication efforts and
back on track. For example, in 2017, we launched various In 2017, we tracked again the environmental impact related to commits to the Parley A.I.R. (Avoid, Intercept, Redesign)
energy efficiency projects targeting underperforming facilities the transport of our goods and recorded a small reduction in strategy. As part of this strategy we are working on turning
in Vietnam, Cambodia and Indonesia with the help of external air freight and a slight increase in sea freight throughout what we believe is a problem (marine plastic pollution) into
all categories, while truck freight remained stable. All in all, progress with an eco-innovative replacement for virgin plastic,
the vast majority of our shipments take place via sea freight. Parley Ocean Plastic  SEE GLOSSARY, and have committed to
Freight types used to ship adidas and Reebok 32
 SEE DIAGRAM 32 extend the supply chain for Parley Ocean Plastic.  SEE
products 1 in % of product shipped
INNOVATION, P. 78  SEE CORPORATE STRATEGY, P. 62 ↗ ADIDAS-GROUP.COM/S/
SUSTAINABLE MATERIALS AND PROCESSES SUSTAINABILITY-INNOVATION

Apparel 2017 2016 Following our ambition to create the best for the athlete
Truck 7 7 while optimizing our environmental impact, we innovate We are further rolling out a global take-back program to all
Sea freight 89 87 materials and processes. We are committed to steadily our key cities and markets, implementing 'Make every thread
Air freight 4 6 increasing the use of more sustainable materials in our count', with the main objective to raise consumers’ awareness
production, products and stores and are driving toward of what happens to products at the end of their life. It helps
ANNUAL REPORT 2017
Accessories and gear 2017 2016
Truck 17 17 closed-loop solutions. Our approach to sustainable materials consumers to give their old clothes and footwear a second
Sea freight 81 78 is influenced by new technological trends and developments, life. Consumers can drop off old shoes and apparel from any
Air freight 2 5 engagement with stakeholders including scientific brand. The collected items are then sent to the adidas
organizations as well as market availability. Any major Distribution Center, where they are picked up by a service
Footwear 2017 2016
changes in the material selection that impact product costs provider that sorts products according to different quality
Truck 1 1
are subject to review and approval by Senior Management. criteria. Products either go into a second-hand market or are
Sea freight 96 95
092
Air freight 3 4
Execution and progress is tracked and managed by the further recycled into secondary raw material, to be used for
ADIDAS
respective materials development and sourcing departments. new products in various industries. A small portion of products
2017 2016 (less than 10%) cannot be recycled and thus is sent for
1 Figures are expressed as a percentage of the total number of products transported. Data covers
products sourced through Global Operations, excluding local sourcing.
As a founding member of the Better Cotton Initiative (BCI), disposal. ↗ ADIDAS-GROUP.COM/S/PRODUCT-END-OF-LIFE
adidas is working on reducing the use of conventional cotton
SUSTAINABILITY
Progress toward targets advanced our existing take-back program in Canada and strategic apparel material suppliers will have 80% of
In 2017, 93% (2016: 68%) of the cotton we sourced globally introduced 'Make every thread count' to four of our strategic auxiliaries and 90% of dyestuffs bluesign-approved.
was Better Cotton, exceeding our original target of 80%. This key cities (Los Angeles, New York, London and Paris).
is a huge step toward our goal of sourcing 100% sustainable 2014 2017
cotton by 2018. Our success is the result of clear target setting – CHEMICAL MANAGEMENT Products free of PFC 90% > 99%
both with suppliers and with internal teams who support the For years, adidas has been running leadership programs in
sourcing of Better Cotton for our products. Chemical Management within its area of direct influence. In a Volatile Organic Compounds (VOCs), which are typically found
spirit of continuous improvement of our chemical footprint, in solvents used in our manufacturing process, can – in high
2015 2016 2017 these programs are regularly updated. Our approach has concentration – cause breathing difficulties and other health
Better Cotton sourced 43% 68% 93% been developed in consultation with external stakeholders problems for production workers. In 2017, we achieved an all-
including chemical experts, environmental organizations and time low of 11.6 grams (2016: 14 grams) of VOCs per pair of
industry federations and was reviewed by the Sponsor Board shoes 3. By applying innovative as well as environmentally
We already eliminated plastic bags in our own stores globally and finally approved by SEA and GOPS Senior Management. sound bonding and priming technologies while following
in 2016, and have started to integrate Parley Ocean Plastic Our targets for 2020 include achieving 100% sustainable input the adidas guidelines on the use of chemicals, our athletic
into key products, including running, outdoor, Originals chemistry by adopting the Manufacturing Restricted footwear suppliers have been able to reduce the use of
and Stella McCartney shoes, football jerseys and swimwear. Substances List (MRSL) of the Zero Discharge of Hazardous VOCs from well above 100 grams per pair in 1999 to below
↗ ADIDAS.COM/PARLEY Overall, we managed to create more than Chemistry (ZDHC) group, phasing out hazardous chemicals 12 grams.
one million pairs of shoes with Parley Ocean Plastic in 2017. and providing our strategic suppliers with a list of positive
Together with Parley for the Oceans, we have further driven chemistry (the bluesign bluefinder). FAIR WORKING CONDITIONS IN OUR
the conceptualization of the required set-up for a global ↗ ADIDAS-GROUP.COM/S/CHEMICAL-FOOTPRINT SUPPLY CHAIN
collection network at scale. As part of our overall effort to adidas recognizes its responsibility to respect human rights
extend social and environmental monitoring to lower tiers, we Progress toward targets and the importance of showing that we are taking the
expanded our scope for the Parley supply chain from apparel In 2017, we collected the ZDHC MRSL acknowledgement necessary steps to fulfil this social obligation as a business.
suppliers to also include suppliers for footwear, and letters from our suppliers, with more than 99% signed letters We do this by striving to operate responsibly along the entire
ANNUAL REPORT 2017
accessories and gear, now covering almost 20 Tier 2 suppliers received from our strategic suppliers. Carefully reviewing the value chain, by safeguarding the rights of our own employees
in total. feedback from our suppliers will support us to define proper and those of the workers who manufacture our products
tracking and monitoring of MRSL compliance in our supply through our Workplace Standards, and by applying our
Our ambition to expand the use of waterless dyeing chain. On our way to phasing out hazardous chemicals, we influence to affect change wherever human rights issues are
technologies for our products received renewed support in successfully delivered against our commitment to be 99% linked to our business activities. As part of its human rights
2017 as it was chosen as a key accelerator project going free of poly- and perfluorinated substances (PFCs) by no later efforts, adidas has developed a modern slavery outreach
093
forward. This means that we will look into different technologies, than the end of 2017: More than 99% of the adidas products program that looks beyond strategic Tier 1 suppliers, aiming
ADIDAS
including DryDye, with the aim to develop a holistic approach for the spring/summer 2018 season will be PFC-free. Lastly, to drive greater transparency in its supply chain.
on how to save water overall, including water reduction during our suppliers exceeded the 2017 targets of 50% of auxiliaries ↗ ADIDAS-GROUP.COM/S/HUMAN-RIGHTS
pre-treatment or the creation of a closed-loop water treatment and 80% dyestuffs to be bluesign-approved: By 2020, our
system in dyeing factories. Furthermore, we also built on and
3 Data covers production in our main sourcing region Asia.

SUSTAINABILITY
Ensuring compliance with standards Worker empowerment we have maintained a seat on FIFA’s Independent Advisor
Since its inception in 1997, our human and labor rights We offer any stakeholder the opportunity to anonymously Board on Human Rights.
program for our supply chain has been built on the back of raise complaints and have found efficient ways to specifically
intense stakeholder outreach and engagement, seeking to empower workers in our supply chain by providing them with Efforts within our modern slavery outreach program have
understand and define the most salient issues to address as a innovative tools to raise their voice. ↗ ADIDAS-GROUP.COM/S/ ranged from providing targeted training to almost 100 Tier 2
company. Our Workplace Standards, the supply chain code of SUSTAINABILITY-CONTACT Since 2012, in parallel to existing suppliers across Asia to gaining deeper insights into prevailing
conduct established in 1997, are a contractual obligation grievance systems, the ‘Worker Hotline’ enables factory labor conditions at the Tier 3 raw material source for leather
under the manufacturing agreements the company signs with workers to anonymously ask questions or raise concerns by and cotton. We were recognized as a leading brand in the
its main business partners to ensure workers’ health and writing a text message. Additional ways to measure worker KnowTheChain ranking that examined forced labor risks in
safety and provide provisions to ensure environmentally satisfaction and get their view are worker satisfaction surveys the leather supply chain in 2016 and were awarded the
sound factory operations. These standards follow International that we started to conduct in Indonesia in 2016. Thomson Reuters Foundation Stop Slavery Award 2017, which
Labour Organization (ILO) and United Nations (UN) conventions celebrates businesses that excel in efforts to identify,
relating to human rights and employment practices, as well Our ambitions for 2020 include achieving 100% of strategic investigate and root out forced labor from their supply chains.
as the model code of conduct of the World Federation of the suppliers 4 covered by innovative grievance mechanisms and
Sporting Goods Industry (WFSGI). Specific reference to the supporting our suppliers and licensees in further improving We were able to expand the Worker Hotline service: 63% of
code provisions of the ILO conventions is provided in the their social and environmental compliance performance as our strategic suppliers with more than 250,000 factory
adidas ‘Guidelines on Employment Standards’. The SEA measured by our C- and E-KPI rating tools. workers across four of our major sourcing countries
Senior Management reviews and approves all policies and (Cambodia, China, Indonesia and Vietnam) were covered by
implementation processes of the labor rights program. Progress toward targets the end of 2017. Our focus was to improve this service to
Throughout 2017, we deepened our stakeholder engagement develop into a digital worker grievance platform, including a
To enforce compliance with these standards and rate suppliers on the topic of human rights, extending our outreach to new app-based version which was piloted in some factories.
on their ability to deliver fair, healthy and environmentally representatives of special-interest groups, migrant workers, We also further rolled out the worker satisfaction survey to a
sound workplace conditions, adidas regularly conducts and other vulnerable communities. We continued our total of 47 factories across nine countries with around 8,000
announced and unannounced, internal and external audits involvement with a UN-backed multi-stakeholder committee, factory workers participating in the survey. The results will
ANNUAL REPORT 2017
using a rating system with C- (social compliance) and E- examining the adverse human rights impacts of mega help our suppliers to identify areas for improvement that need
(environmental compliance) KPIs and attached scores sporting events and supported the UN’s Standards of Conduct to be addressed, with progress to be communicated back to
between 1C/1E and 5C/5E (with 1 being the worst and 5 being for Business on LGBTI rights. Our engagement with the newly the workers. Lastly, we saw more than two thirds of our
the best). According to the results, our sourcing teams decide formed Business Network for Civic Freedoms and Human strategic supply chain evaluated with a 3C rating and good
the course of action, ranging from training needs at the Rights Defenders included, for example, responding to calls performance. More details are provided below.
factories to reinforcement mechanisms such as sending from labor rights advocates for direct engagement with the
094
warning letters or even termination of contracts. Potential Cambodian government over freedom of expression and
ADIDAS
new suppliers are assessed in a similar way and orders can association. We further contributed to the UN Special
only be placed if approval by the SEA team has been granted. Rapporteur’s fourth annual report on the situation of human
rights defenders and spoke at the United Nations in Geneva
on this very topic. In addition, together with other stakeholders,
4 Strategic suppliers are responsible for around 80% of our global production volumes.
SUSTAINABILITY
OUR PERFORMANCE (SUPPLY CHAIN) Supplier factories by region 1 33 Initial assessments, performance audits and environmental audits
In 2017, we conducted a total of 209 initial assessments (2016:
At the end of 2017, we worked with 782 (2016: 1,038) 213), 81% of which were undertaken in Asia (2016: 84%), with
independent factories which manufacture products for our China accounting for 42% of these assessments (2016: 46%).
1,000
company in 56 countries (2016: 63).   SEE DIAGRAM 33 The main Overall, 29% (2016: 39%) of all candidate factories either were
800
reason for the decline in the number of suppliers is the rejected outright or were rejected for failure to remediate
600
divestiture of the TaylorMade and CCM Hockey businesses as threshold issues in a timely manner. The total number of
400
well as further consolidation at factories producing for 200 initial assessments, the first approval stage for new entry
our Sports Licensed business in 2017. We worked with
0 factories, decreased marginally by 2% compared to 2016.
62 licensees whose suppliers manufactured products in Asia Americas EMEA Total Performance audits at our current suppliers showed a slight
360 factories across 44 countries (2016: 61 licensees in 661 273 104 1,038 increase of 3%. As part of our divestiture strategy, we increased
2016
64% 26% 10% 100%
377 factories across 48 countries). 68% of the factories are the number of audits carried out at the factories making for the
532 160 90 782
located in the Asia Pacific region, 20% in the Americas, and 2017 brands that we divested in 2017. We did so to ensure workers
68% 20% 12% 100%
12% in Europe, Middle East and Africa (EMEA) 5. received their full benefits and entitlements during the
transition of the owner relationship. The total number of
1 Excluding own factories and licensee factories.
AUDITS environmental audits increased by 8% compared to the previous
In 2017, adidas conducted 1,015 social compliance and year, mainly due to the increase in SAC HIGG environmental
environmental audits (2016: 989), using in-house technical assessments.   SEE TABLE 35
Number of audits in supplier factories 2015 – 2017 34
staff as well as external third-party monitors commissioned
by adidas business entities and licensees.  SEE TABLE 34 The number of audits in factories manufacturing goods for
 SEE TABLE 35 licensees remained the same, in line with the stable number
2017 2016 2015 of licensees.  SEE TABLE 36 The number of self-governance and
In addition, 114 self-governance audits and collaboration adidas 409 372 524 collaboration audits at licensee factories totaled 26 at the end
audits were conducted. When a factory reaches a compliance External monitor 606 617 611 of 2017.
ANNUAL REPORT 2017
Total 1,015 989 1,135

maturity level of 4C and above, we empower the supplier to
conduct their own audit and develop appropriate remediation AUDIT COVERAGE
plans (‘self-governance’ audit) while we carefully track this A total of 48% (2016: 40%) of all active suppliers were
process. Collaboration audits are conducted in partnership audited in 2017. ‘High-risk’ locations in Asia 6, the major
with other brands, or as part of joint remediation exercises. sourcing region of adidas, received extensive monitoring in
2017 with an audit coverage that was close to 70% (2016:
095
65%). As a general principle, factories located in low-risk
ADIDAS
countries (i.e. with strong government enforcement and

inspectorate systems) are considered out of scope for our
audit coverage.
5 Factories in scope: Individual facilities of direct supply chain including subcontractors and factories of agencies (indirect supply chain). Supplier factories: Excluding own factories and licensee factories. Licensee factories: This may include factories that produce both for adidas directly and for licensees/agents.
6 High-risk locations in Asia include China, Hong Kong, Macao, Vietnam, Bangladesh, Cambodia, India, Indonesia, Laos, Malaysia, Myanmar, Pakistan, Philippines, Singapore, Sri Lanka and Thailand.
SUSTAINABILITY
AUDIT RESULTS Number of audits by region and type 35

We audit our suppliers regularly against our Workplace
Standards and rate them according to their social and
Region Initial assessment 1 Performance audit 2 Environmental audit 3 Total
environmental compliance performance with a C- and E-KPI
2017 2016 2017 2016 2017 2016 2017 2016
rating tool. An evaluation of E-KPI is contained in the description
Asia 170 178 544 524 138 137 852 839
of the environmental performance of our supply chain.
Americas 9 23 70 75 12 0 91 98
EMEA 30 12 37 34 5 6 72 52
Social compliance (C-KPI) Total4 209 213 651 633 155 143 1,015 989
In 2017, more than two thirds (69%) of our direct suppliers 1 Every new supplier factory has to pass an initial assessment to prove compliance with the Workplace Standards before an order is placed. The data includes both ‘initial assessments’ and ‘initial assessment follow-ups’.
completely fulfilled our basic expectations and received 2 Audits conducted in approved supplier factories.
3 Includes SAC HIGG as well as environmental and chemical management audits.
ratings of 3C or better. Out of these, 19% were given a rating 4 Includes audits done in licensee factories.
of 4C or better, which reflects an increase of 3 percentage

points compared to the previous year. Suppliers rated with a
Number of audits conducted in licensee factories 1 36
4C are classified as ‘self-governance’, indicating that these
factories have reached a high level of complaince maturity
with the existence of effective social and health and safety Region Initial assessment 2 Performance audit 3 Environmental audit Total
management systems and the ability to conduct their own 2017 2016 2017 2016 2017 2016 2017 2016
audits and develop remediation plans on their own. Asia 49 54 187 182 11 12 247 248
  SEE DIAGRAM 37 Americas 1 6 18 20 1 0 20 26
EMEA 3 2 16 12 1 2 20 16
Since 2013, there has been a focused effort to improve the 2C Total 53 62 221 214 13 14 287 290
factories and move them up a level, which has led to a 14% 1 This may include factories that produce both for adidas directly and for licensees/agents.
2 Every new factory has to pass an initial assessment to prove compliance with the Workplace Standards before an order is placed.
reduction of suppliers in this category. The number of 1C 3 Audits conducted in approved factories.
category suppliers, which represent the lowest-performing

ANNUAL REPORT 2017
factories with serious issues and very weak commitment to Percentage of KPI assessed factories by C rating 37
compliance, decreased from seven to six factories in 2017.
Such factories are given a one-year grace period to move up a
1C
grade or have their services terminated. 2C 3C 4C 5C
50 49 50
40
The number of factories that are subject to C-KPI ratings has 32
30 29
096
remained relatively stable at around 47% of the global supply
20 19 16
ADIDAS
chain for the last three years (2016: 45%). These factories 10
represent our long-term strategic partners. 0 2 2 1 1
2017 2016
1 The calculation method reflects actual supplier performance by calcuating numbers using the latest KPI assessment rating of each active supplier.
SUSTAINABILITY
VISITS AND TRAINING NON-COMPLIANCE IN ACTIVE FACTORIES Labor non-compliance findings

During 2017, 1,241 factory visits (2016: 1,226) were Our suppliers are evaluated against a number of critical DIAGRAM 39 presents the most frequent labor-related non-
undertaken. These visits involved various types of audit, compliance issues. While threshold issues are serious but compliances identified during audits of our existing supplier
Strategic Compliance Plan discussions, project work and correctable non-compliances that can be addressed in a factories. More than two thirds of these findings fall into the
project meetings with factory management on high-priority specified timeframe through remedial action, zero tolerance top three categories: ‘Basic wage’, ‘Management systems for
issues at different levels in our supply chain. Additionally, we issues – such as forced labor, child labor practices and critical working hours’ and ‘No standardized filing systems’. Besides
conducted 132 training sessions and workshops for suppliers, life-threatening health, safety and environment conditions – identifying non-compliances with our Workplace Standards,
licensees, workers and adidas employees (2016: 169).  SEE immediately trigger a warning and potential disqualification adidas’ compliance team focuses on the use and effectiveness
TABLE 38 The 22% decrease in the number of training sessions of a supplier. The diagrams  SEE DIAGRAM 39  SEE DIAGRAM 40 of the factories’ HR management systems, and identifies any
is a result of our advisory staff spending more time on illustrate the non-compliance findings that were identified gaps in policies and procedures related to specific risk areas,
engagement processes, including the development of worker through performance audits, collaboration audits and self- such as forced labor, child labor, freedom of association or
satisfaction surveys and digital grievance systems for governance assessments 7. discrimination. As a result, the percentages shown indicate the
workers. In total, 1,907 people (2016: 3,349) attended the systemic shortcomings of active suppliers, rather than the
training sessions, which covered basic as well as long-term confirmed presence of a specific case of non-compliance.
strategic topics.  SEE DIAGRAM 39
Top 10 labor non-compliance findings 39

identified during audits in 2017
23%
3%
Other 1
Management systems
of disciplinary 23%
Number of training sessions by region and type 1
38 practices Basic wage
ANNUAL REPORT 2017
14%
3%
Region Type and number of training sessions Management systems
Recruitment
for working hours
Fundamental 2 Performance 3 Sustainability 4 Total 5%
8%
2017 2016 2017 2016 2017 2016 2017 2016 Social and medical
insurance No standardized filing
Asia 42 42 4 40 49 45 95 127 system 2
Americas 24 24 0 0 1 0 25 24 5%
6%
EMEA 7 11 2 5 3 2 12 18 Excessive hours
097
Company policy/staff handbook
Total 73 77 6 45 53 47 132 169 5%
ADIDAS
in % 55 45 5 27 40 28 100 100 Communication systems 5%

Annual leave/public holidays
1 Training sessions conducted for suppliers, workers, licensees, agents and adidas employees.
2 Fundamental training covers Workplace Standards and SEA introduction, FFC training as well as SEA policies and standard operating procedures (SOPs).
3 Performance training covers specific labor, health, safety and environmental issues.
4 Sustainability training covers sustainable compliance guideline and KPI improvement as well as factory self-audits. 1 ‘Other’ includes freedom of association issues, discrimination, lack of training, etc.
2 ‘No standardized filing system’ indicates a factory does not keep relevant information/documents and
records which demonstrate compliance with laws and regulations.
7 Data refers to the period May to December 2017 and includes self-governance and collaboration audits.
SUSTAINABILITY
Top 10 health and safety non-compliance findings 40 INDEPENDENT FLA AUDITS ENFORCEMENT
identified during audits in 2017
In 2017, the FLA conducted four factory assessments or Warning letters are an essential part of our enforcement
remediation verification exercises in Guatemala, Indonesia, efforts and are triggered when we find ongoing serious non-
Cambodia and Vietnam using the methodology from the compliance issues that need to be addressed by our suppliers.
22%
Sustainable Compliance Initiative (SCI). The number of We work closely with our suppliers to help them improve their
Other 1
conventional independent monitoring visits conducted by FLA performance. However, where we face situations of severe
3% 22%
accredited monitors has declined over the years for companies’ or repeated non-compliance, we do terminate business
First aid Fire safety
programs accredited by the FLA. This shifts companies’ activities relationships with suppliers.
4% 12%
from conventional monitoring activities to engagement in value-
Personal protective Architectural
equipment considerations added FLA projects that focus on reducing and eliminating Warning letters
4% 9% chronic non-compliance issues or improving monitoring In 2017, we issued a total of 42 (2016: 31) warning letters
Electricity and Machine safety methodologies. During 2017, adidas’ so-called twelve redirect across 15 countries. The largest number of warning letters
electrical hazards
7% activities included project activities for migrant worker continues to be issued in Asia, where more than 60% of all
5%
Hazardous chemicals protection, compliance beyond Tier 1 suppliers, civil society supplier factories are located. Compared to the previous year,
Chemical storage in production
engagement in the Americas region, and responsible sourcing the overall number of first warning letters doubled, mainly
6%
6% practices. We continued active support of the implementation of due to the fact that factories were not able to fully remediate
Sanitation and hygiene
Management systems the FLA Fair Compensation Strategy with wage data gathering their threshold issues identified in 2016, or had new threshold
for health and safety
exercises in Honduras, Ukraine and Cambodia. issues in 2017.
1 ‘Other’ refers, for example, to occupational hazard risks, personal protective equipment, ergonomics
and housekeeping.
In 2017, the FLA accredited the adidas program for the third The total number of second warnings decreased in 2017, with
time. To provide information for the accreditation, nine years three letters being issued (2016: 7). Suppliers who receive
of social compliance work was evaluated, reviewed and second warning letters are only one step away from being
verified, including factory assessments, annual reports, third- notified of possible termination of the manufacturing
Health and safety non-compliance findings party complaints, participation in strategic projects for forced agreement and receive focused monitoring by the SEA team.
ANNUAL REPORT 2017
DIAGRAM 40 shows the health and safety non-compliances labor, migrant workers’ protection, fair compensation, The number of third warning letters issued to business partners
identified during audits in supplier factories. Fire and electrical remediation, workplace standards alignment, responsible (which result in factory terminations) decreased to one in 2017
safety are critical areas for existing suppliers and together sourcing practices, and collaboration with civil society and (2016: 5).  SEE TABLE 41
accounted for 26% of the non-compliances identified in 2017. brands. The accreditation recognized adidas’ leadership to
The way chemicals were stored and used, including the coordinate brand efforts which address labor violations, and It is difficult to generalize about the grounds for a warning
presence of banned chemicals, accounted for 12% of non- included commendation for the application of mobile technology letter as it may be issued for a single unresolved non-
098
compliance findings reported. A further 6% of the findings to implement the text message- and application-based conformance or for multiple breaches of our standards. The
ADIDAS
related to management systems, policies and procedures, and platform for workers to submit grievances, for the pioneering range of issues that resulted in warning letters in 2017 included
specifically a lack of compliance with our Workplace Standards and piloting of various methods to address fair compensation non-compliances in regard to fire safety practices, receipt of
and expectation for effective health and safety systems, for workers as well as for the programmatic implementation of wages, social and medical insurance, hazardous chemicals
including the recruitment and retention of qualified safety staff. social compliance standards, assessments and risk mapping management, overtime, deductions, transparency and safety
 SEE DIAGRAM 40 beyond the Tier 1 supply chain. ↗ FAIRLABOR.ORG controls in high-risk areas.
SUSTAINABILITY
Terminations either rejected directly after the initial assessment identified our Workplace Standards. The remediation of factory issues is
In 2017, we terminated agreements with four suppliers for zero tolerance issues, or were ‘rejected with a second visit’ due beneficial for workers as it raises the bar in terms of better and
compliance reasons (2016: 10), mainly due to non-remediated to identification of one or more threshold issues, which means timelier pay, improved benefits, reduced hours, and the legal
threshold issues in consecutive audits, although in one of the they were rejected but given the chance to remediate the non- protection of formal employment contracts as well as significant
cases it was triggered by the supplier refusing to grant the compliance issues within a specific timeframe.  SEE TABLE 42 improvements in basic health and safety within the workplace.
SEA team access to audit the factory.  SEE TABLE 43 While Suppliers who have threshold issues are normally given three
terminations happen at our existing factories, we pre-screen Overall, at the end of 2017, the ‘first-time rejection rate’ of 29% months to remediate those issues before being re-audited for
all new factories and if our initial assessments uncover zero of all new factories visited was lower than the previous year final SEA acceptance.
tolerance or threshold issues suppliers are rejected. (2016: 39%) and the ‘final rejection rate’ was at 2% (2016: 4%).
 SEE TABLE 42 This shows the importance and impact of pre-
In 2017, initial assessments were conducted in 209 factories approval screening, as well as the efforts undertaken by the
(2016: 213 factories), and 50 factories (2016: 71 factories) were suppliers to resolve issues and come into conformance with
Number of warning letters issued to adidas suppliers by region 1 41
Region 1st warning 2nd warning 3rd and final warning Total warning letters
2017 2016 2017 2016 2017 2016 2017 2016
Asia 35 18 1 5 0 4 36 27
Americas 2 1 1 1 0 1 3 3
EMEA 1 0 1 1 1 0 3 1
Total 38 19 3 7 1 5 42 31
1 Including warning letters issued by licensees and agents, but excluding warnings to main suppliers for the non-disclosure of subcontractors, which are either issued directly through business entities, or by the
adidas Legal department where there is a breach of contract obligations under a manufacturing agreement. A third and final warning results in a recommended termination.
ANNUAL REPORT 2017
Worldwide rejections after initial 42 Number of business relationship terminations 43

assessment due to compliance problems due to compliance problems
2017 2016 Region 2017 2016
Total number of first-time Asia 4 7
099
rejections 1 50 71 Americas 0 2
ADIDAS
First-time rejection rate 29% 39% EMEA 0 1

Total number of final rejections 2 4 8 Global 4 10
Final rejection rate 2% 4%
1 Factories that were directly rejected after first visit, i.e. with no chance of being visited a second time,
and factories that were rejected after initial assessments but which were given a chance for a
second visit.
2 Factories that were directly rejected after first visit, i.e. with no chance of being visited a second time,
and factories that were rejected after being visited a second time.
NON-FINANCIAL STATEMENT
NON-FINANCIAL STATEMENT
In accordance with §§ 315b, 315c HGB in combination with §§ 289b to 289e HGB, adidas publishes a combined non-financial statement for adidas AG and the Group in this combined Management
Report. The content of the non-financial statement can be found throughout the entire combined Management Report, with relevant parts being indicated by this symbol . These parts are not
covered by the Audit of the Consolidated Financial Statements and of the Group Management Report, as they were subject to a separate limited assurance engagement of KPMG AG Wirtschafts
prüfungsgesellschaft.  SEE INDEPENDENT AUDITOR’S ASSURANCE REPORT, P. 226 Links and references are not part of the non-financial statement and have therefore not been assessed.
adidas applied the Global Reporting Initiative (GRI) guidelines as an external reporting framework. The content of the non-financial statement combined with further information in this report
and on our corporate website fulfills the GRI G4 ‘Core’ option. The GRI content index can be found online. ↗ ADIDAS-GROUP.COM/S/REPORTING-APPROACH
Description of business model

 SEE SALES AND DISTRIBUTION STRATEGY, P. 72
 SEE GLOBAL OPERATIONS, P. 74
Environmental approach People and Culture Human Rights

—— Sustainable materials and processes —— Wages and benefits —— Fair labor conditions
 SEE SUSTAINABILITY, P. 88  SEE PEOPLE AND CULTURE, P. 81  SEE SUSTAINABILITY, P. 88
—— Water consumption (supply chain) —— Development and training —— Fair labor conditions (supply chain)
 SEE SUSTAINABILITY, P. 88  SEE PEOPLE AND CULTURE, P. 81  SEE SUSTAINABILITY, P. 88
ANNUAL REPORT 2017
—— Carbon footprint (supply chain) —— Employee engagement —— Supplier relationships

 SEE SUSTAINABILITY, P. 88  SEE PEOPLE AND CULTURE, P. 81  SEE GLOBAL OPERATIONS, P. 74
 SEE INTERNAL MANAGEMENT SYSTEM, P. 102
—— Waste volume (supply chain) Anti-bribery and corruption

 SEE SUSTAINABILITY, P. 88 Consumer matters —— Ethical business practices
—— Consumer satisfaction  SEE RISK AND OPPORTUNITY REPORT, P. 131
100
Product responsibility  SEE INTERNAL MANAGEMENT SYSTEM, P. 102
ADIDAS
—— Product safety and transparency  SEE MANAGEMENT ASSESSMENT OF PERFORMANCE, RISKS AND
 SEE SUSTAINABILITY, P. 88 OPPORTUNITIES, AND OUTLOOK, P. 146

G RO UP
M A N AG E M E N T
R E P O RT
FIN AN C IAL REVI E W
ANNUAL REPORT 2017
Internal Management System 102 Business Performance by Segment 124 Subsequent Events and Outlook 128
Western Europe 124 Subsequent Events 128
Business Performance 105
North America 124 Outlook 128
Economic and Sector Development 105
Greater China 125
Income Statement 107 Risk and Opportunity Report 131
Russia/CIS 125
Statement of Financial Position and Illustration of Material Risks 136
Latin America 126
101
Statement of Cash Flows 111 Illustration of Opportunities 144
Treasury Japan 126
ADIDAS
115
Financial Statements and Management Report MEAA 126 Management Assessment of Performance,
of adidas AG 118 Risks and Opportunities, and Outlook 146
Disclosures pursuant to § 315a Section 1 and

§ 289a Section 1 of the German Commercial Code 120
INTERNAL MANAGEMENT SYSTEM

INTERNAL MANAGEMENT of our top line and operational efficiency. The primary drivers Therefore, we are committed to improving the efficiency
SYSTEM to enhance operating margin are as follows:
—— Sales and gross margin development: Management
of our marketing investments. This includes concentrating
our communication efforts on key global brand initiatives
We are committed to increasing shareholder value. We strive focuses on identifying and exploiting growth opportunities and focusing our promotion spend on well-selected
to create value by converting sales and operating profit that not only provide for future top-line improvements, but partnerships with top events, leagues, clubs, federations,
growth into strong operating cash flow, while at the same also have potential to increase our gross margin. Major athletes and artists. We also aim to increase operational
time managing our asset base proactively. Our company’s levers for enhancing our sales and gross margin include: efficiency by tightly managing operating overhead expenses
planning and controlling system is therefore designed to —— Minimizing clearance activities, while at the same time  SEE GLOSSARY. In this respect, we regularly review our
provide a variety of tools to assess our current performance increasing the full-price share of sales. operational structure – harmonizing business processes,
and to align future strategic and investment decisions to —— Optimizing our product mix. standardizing systems, eliminating redundancies and
best utilize commercial and organizational opportunities in —— Improving the quality of distribution, with a particular leveraging the scale of our organization.
the interest of our shareholders. focus on e-commerce and controlled space  SEE GLOSSARY.
—— Realizing supply chain efficiency initiatives. TIGHT OPERATING WORKING CAPITAL
INTERNAL MANAGEMENT SYSTEM DESIGNED —— Operating expense control: Management puts high MANAGEMENT
TO DRIVE SHAREHOLDER VALUE emphasis on tightly controlling operating expenses to Due to a comparatively low level of fixed assets required in our
In order to drive and steer creation of shareholder value, the leverage sales growth through to the bottom line. This business, the efficiency of the balance sheet depends to a
company’s Management focuses on a set of major financial requires a particular focus on ensuring flexibility in the large degree on our operating working capital management.
Key Performance Indicators (KPIs).  SEE DIAGRAM 44 Sales and company’s cost base. Marketing expenditure  SEE GLOSSARY In this context, our key metric is average operating working
operating profit growth, paired with a focus on management is one of our largest operating expenses and at the same capital as a percentage of net sales. Monitoring the
of operating working capital, are the main contributors to time one of the most important mechanisms for driving development of this metric facilitates the measurement of our
operating cash flow  SEE GLOSSARY improvements. At the same brand desirability and top-line growth sustainably. progress in improving the efficiency of our business cycle.
time, value-enhancing capital expenditure benefits future
operating profit and cash flow development. In addition, the
development of the company’s net income position, as well as
ANNUAL REPORT 2017
earnings per share (EPS), is of high importance as it directly

Major Key Performance Indicators (KPIs) 44
drives returns in the interest of our shareholders.  SEE
DIAGRAM 44 Our strong focus on shareholder value creation is
reflected in the fact that our Management’s variable com Net sales
pensation is closely linked to the company’s growth in sales,
profitability and net income.  SEE COMPENSATION REPORT, P. 39 Operating profit
102
Operating cash flow
Operating working capital Shareholder
ADIDAS
OPERATING MARGIN AS MAJOR KPI FOR value

OPERATIONAL PROGRESS Capital expenditure
Operating margin (defined as operating profit as a percentage
of net sales) is one of our company’s major KPIs to drive and
Net income / EPS Shareholder return
improve our operational performance. It highlights the quality

We strive to proactively manage our inventory levels to meet In addition to optimizing return on investments, we evaluate Net Promoter Score (NPS): Maintaining and enhancing
market demand and ensure fast replenishment. Inventory larger projects upon completion and document learnings for brand desirability through the creation of strong brand
aging is controlled carefully to reduce inventory obsolescence future capital expenditure decisions. identities is crucial for sustaining and driving profitable
and to minimize clearance activities. As a result, Inventory growth. Therefore, mainly on a market and category level, we
Days Lasting (IDL) is monitored and assessed regularly as it NET INCOME AND EARNINGS PER SHARE TO invest in primary qualitative and quantitative research such as
measures the average number of days goods remain in FOCUS ON SHAREHOLDER INTERESTS trend scouting and consumer surveys to determine brand
inventory before being sold, highlighting the efficiency of Beyond our ambition to maximize operating cash flow, we loyalty and brand strength. Measures that are tracked include
capital locked up in products. To optimize capital tied up in are committed to a continuous improvement in the company’s brand awareness, likeability and purchase intent.
accounts receivable, we strive to improve collection efforts in bottom line. We are convinced that, by doing so, we place an
order to reduce the Days of Sales Outstanding (DSO) and even stronger focus on the interests of our shareholders. Furthermore, within the framework of Creating the New, we
improve the aging of accounts receivable. Likewise, we strive Consequently, Management closely monitors the develop implemented an NPS system, which strengthens our
to optimize payment terms with our suppliers to best manage ment of both net income and earnings per share (EPS) and capabilities to more carefully review brand advocacy as NPS
our accounts payable. executes against these two major financial KPIs.  SEE tells us how likely it is that consumers will recommend our
DIAGRAM 44 Our strong focus on driving sustainable expansion brands. NPS is a key pillar in transforming our company into
CAPITAL EXPENDITURE TARGETED TO to the company’s bottom line is also reflected in the fact a consumer-centric organization. It represents a holistic and
MAXIMIZE FUTURE RETURNS that, as part of the new Long-Term Incentive Plan 2018/2020, transparent measure of brand performance and has been
Improving the effectiveness of capital expenditure  SEE GLOSSARY the variable compensation for our Management is directly successfully applied in other industries and organizations.
is another major lever to maximize our operating cash flow. linked to the company’s net income growth. NPS comes from the following question asked to a surveyed
We control capital expenditure with a top-down, bottom-up  SEE COMPENSATION REPORT, P. 39 group of people: ‘How likely is it that you would recommend
approach.  SEE GLOSSARY In a first step, Management defines this brand to a friend?’ The answer has a scale from 0 to 10
focus areas within the framework of our strategic business NON-FINANCIAL KEY PERFORMANCE with 10 being the most likely. NPS is calculated using
plan ‘Creating the New’ and an overall investment budget INDICATORS Promoters (consumers that answered 9 or 10) minus
based on investment requests from various functions within In addition to the major financial KPIs to assess the Detractors (consumers that answered 0 to 6). Consumers
the organization. Then, in a second step, our operating performance and operational success of our company, as answering 7 or 8 are called Neutrals or Passives and are not
ANNUAL REPORT 2017
segments align their initiatives within the scope of assigned outlined above, we have identified a set of non-financial KPIs taken into consideration for the calculation of the NPS.
priorities and available budget. We evaluate potential return that help us track our progress in areas that are critical for
on planned investments utilizing the net present value our long-term success but are not directly reflected in the Our efforts around NPS (both our own NPS as well as the NPS
method. Risk is accounted for, adding a risk premium to the financial statements. These non-financial KPIs are assessed of our major competitors) are driven by an independent
cost of capital and thus reducing our estimated future on a regular basis and managed by the respective business agency and monitored by our internal global consumer insight
earnings streams where appropriate. By means of scenario functions. Non-financial KPIs which we are closely moni teams on a regular basis. In addition, NPS is measured across
103
planning, the sensitivity of investment returns is tested toring include, amongst others, Net Promoter Score (NPS) many of our own-retail stores as well as our own e-commerce
ADIDAS
against changes in initial assumptions. For large investment  SEE GLOSSARY, market share, backlogs and sell-through data platform. We firmly believe that advocacy will create sustained
projects, timelines and deviations versus budget are as well as our customer delivery performance (On-Time In- growth for our brands, underpinned by the fact that brand
monitored on a monthly basis throughout the course of the Full), employee engagement and a set of KPIs in the area of advocates on average buy more than non-advocates. In
project. our sustainability performance. addition, a large part of our consumers rely on referrals by
friends or family when making purchase decisions.

Market share: To measure the operational performance of therefore also helps us to improve our delivery performance, STRUCTURED PERFORMANCE
our brands relative to our major competitors, we continuously which is a major aspect when it comes to customer MEASUREMENT SYSTEM
collect, on a market and category level, market share data. satisfaction. The OTIF assessment covers both the adidas We have developed an extensive performance measurement
 SEE CORPORATE STRATEGY, P. 62 The findings provide detailed and Reebok brands in most of our key markets.  SEE system, which utilizes a variety of tools to measure the
insights for our senior management team into which markets MANAGEMENT ASSESSMENT OF PERFORMANCE, RISKS AND OPPORTUNITIES, AND company’s performance. Key performance indicators as well
and categories we have been able to gain market share OUTLOOK, P. 146 as other important financial metrics are monitored and
relative to our peers, enabling us to leverage those insights compared against initial targets as well as rolling forecasts
across the organization.   SEE MANAGEMENT ASSESSMENT OF Employee engagement: To measure the level of engagement  SEE GLOSSARY on a monthly basis. When negative deviations
PERFORMANCE, RISKS AND OPPORTUNITIES, AND OUTLOOK, P. 146 In addition, and motivation of our employees, adidas carries out employee exist between actual and target numbers, we perform a
the results help us to define clear roles and responsibilities engagement surveys. These surveys aim to provide key insights detailed analysis to identify and address the cause. If
for each of our markets and categories within our long-term into how well we, as an employer, are doing in engaging our necessary, action plans are implemented to optimize the
strategic aspirations, based on their overall positioning within employees. They thus enable us to develop the right focus and development of our operating performance. To assess current
the sporting goods industry. future people strategies across our organization, helping us to sales and profitability development, Management continuously
create a world-class employee experience and continue to analyzes the performance of our operating segments. We also
Backlogs and sell-through data: To manage demand planning attract and retain top talent. Against the background of benchmark our financial results with those of our major
and better anticipate our future performance, backlogs organizational and management changes within the company, competitors on a regular basis.
 SEE GLOSSARY comprising orders received up to nine months in a new approach and system platform for measuring the level of
advance of the actual sale are monitored closely. However, due employee engagement was implemented in 2017. Taking into account year-to-date performance as well as
to the growing share of own retail (including our own  SEE PEOPLE AND CULTURE, P. 81 opportunities and risks, the company’s full year financial
e-commerce channel) in our business mix, fluctuating order performance is assessed on a monthly basis. In this respect,
patterns among our customers as well as an increasing part of Sustainability performance: We have a strong commitment also backlogs, sell-through data, feedback from customers
our business being realized under significantly shortened lead to enhance the social and environmental performance of our and own-retail stores are assessed as available. Finally, as a
times, orders received from our retail partners are less company. By doing so, we firmly believe we will not only further early indicator for future performance, the results of
indicative of anticipated revenues for adidas compared to the improve the company’s overall reputation, but also increase any relevant recent market and consumer research are
ANNUAL REPORT 2017
past. Therefore, qualitative feedback from our retail partners its economic value. We therefore follow a comprehensive assessed as available.
on the sell-through success of our products at the point of sale roadmap with clear targets and regularly track our
as well as such data received from our own-retail activities is progress toward these targets.  SEE MANAGEMENT ASSESSMENT OF
becoming increasingly important. PERFORMANCE, RISKS AND OPPORTUNITIES, AND OUTLOOK, P. 146 A major
focus lies on measuring the environmental footprint of our

On-Time In-Full (OTIF): OTIF measures the company’s own sites globally as well as monitoring and rating our supplier
104
delivery performance towards customers and our own-retail factories with regard to social and environmental compli
ADIDAS
stores. Managed by our Global Operations function, OTIF ance with our Workplace Standards.  SEE SUSTAINABILITY, P. 88
assesses to what degree customers received what they We have a strong track record in sustainability disclosure,
ordered and if they received it on time.  SEE GLOBAL OPERATIONS, P. providing regular updates about our sustainability
74 It helps us to investigate improvement potential in the performance in the company’s Annual Report as well as on our
area of order book management and logistics processes. It corporate website. ↗ ADIDAS-GROUP.COM/S/SUSTAINABILITY-REPORTS
BUSINESS PERFORMANCE
Economic and Sector Development
and benign financing conditions. Moreover, a simultaneous economies grew 2.3% in 2017, supported by improving labor
BUSINESS PERFORMANCE recovery in major developed economies as well as developing market conditions as well as accommodative monetary
economies provided a major boost to global trade. Despite policies. In particular, topics around international relations,
In 2017, adidas recorded strong operational and financial domestic policy uncertainty in major economies, developed such as the ongoing Brexit negotiations, remained a political
improvements. Revenues increased 16% on a currency-
neutral basis, driven by strong double-digit growth at the
Regional GDP development 1 in % 45
adidas brand and a mid-single-digit sales increase at Reebok.
All market segments recorded double-digit currency-neutral
sales increases, with the exception of Russia/CIS, where Global 2 Euro area 2 Eastern Europe 2, 3 USA 2 Asia 2, 4 Latin America 2
revenues declined. The gross margin increased 1.2  percentage
7 6.5 6.3 6.4
points to 50.4%, mainly reflecting an improved pricing and
6
product mix. Other operating expenses as a percentage of
5
sales were down 0.8 percentage points to 41.9%. Despite the 4
3.8
2.8 3.0 2.9
non-recurrence of a one-time gain related to the early 3 2.4 2.4 2.3
2.1
1.8 1.7
termination of the Chelsea F.C. sponsorship that was included 2 1.5
1.0 0.9
in the prior year, the company’s operating margin increased 1
1.2 percentage points to 9.8%. As a result of a revaluation of 0
– 1 (0.6)
the company’s US deferred tax assets, which became
– 2 (1.5)
necessary following the implementation of the US tax reform,
the company recorded a negative one-time tax impact in the 2015 2016 2017
amount of € 76 million in 2017. Excluding this negative one- 1 Real change in percent versus prior year; 2015 and 2016 figures restated compared to prior year.
2 Source: World Bank.
time tax impact, net income from continuing operations 3 Includes Emerging Europe and Central Asia.
4 Includes East Asia and Pacific.
increased 32% to € 1.430 billion. This translates into basic
EPS from continuing operations of € 7.05, representing an
ANNUAL REPORT 2017
Quarterly unemployment rate by region 1 46 Quarterly development of consumer price index 1 47

increase of 31% versus the prior year period. in % of total active population by region
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
ECONOMIC AND SECTOR
USA 2
4.7 4.5 4.3 4.2 4.1 USA 2
2.1 2.4 1.6 2.2 2.2
DEVELOPMENT Euro area 3 9.6 9.4 9.1 8.9 8.7 Euro area 3 1.1 1.5 1.3 1.5 1.4
Japan 4 3.1 2.8 2.8 2.8 2.7 Japan 4 0.3 0.2 0.4 0.7 0.6
105
GLOBAL ECONOMY ACCELERATES IN 2017 1 China 5 4.0 4.0 4.0 4.0 4.0 China 5 2.1 0.9 1.5 1.6 1.8
ADIDAS
The global economy gained pace during 2017, with global Russia 6 5.3 5.4 5.1 5.1 5.1 Russia 6 5.4 4.3 4.4 3.0 2.5
gross domestic product (GDP) expanding 3.0%. The upswing Brazil 7 11.9 13.7 13.0 12.4 12.0 Brazil 7 6.3 4.6 3.0 2.5 3.0
was driven by a rise in consumer confidence, a pick-up in 1 Quarter-end figures except for Q4 figures (refer to November data). 1 Quarter-end figures except for Q4 figures (refer to November data).
2 Source: US Bureau of Labor Statistics. 2 Source: US Bureau of Labor Statistics.
manufacturing activity, a stabilization of commodity prices 3 Source: Eurostat. 3 Source: Eurostat.
4 Source: Japan Ministry of Internal Affairs and Communications. 4 Source: Japan Ministry of Internal Affairs and Communications.
5 Source: China Ministry of Human Resources and Social Security. 5 Source: China National Bureau of Statistics.
6 Source: Russia Federal Service of State Statistics. 6 Source: Russia Federal Service of State Statistics.
1 Source: World Bank Global Economic Prospects. 7 Source: Brazil Institute of Geography and Statistics. 7 Source: Brazil Institute of Geography and Statistics.
Economic and Sector Development
overhang but were less of a drag on economic activity than expansion, as retailers are leveraging both mobile
previously expected. At 4.3%, growth in developing economies technologies and social media tools. From a category
accelerated, as obstacles to economic activity diminished perspective, athletic footwear continued to drive the sector in
in commodity-exporting countries and commodity prices 2017, supported by ongoing high demand for various casual
experienced a further stabilization. and running styles. Basketball footwear, on the other hand,
remained challenged throughout the year. Growth in the
ROBUST GROWTH IN THE SPORTING GOODS overall athletic apparel category was more muted in the
INDUSTRY CONTINUES absence of major global sports events during 2017.
The global sporting goods industry continued to grow at Nevertheless, underlying demand for activewear apparel
robust rates in 2017, despite a moderate deceleration of remained robust, as consumers continued to reallocate wallet
momentum in individual regions. In particular, sector growth share away from traditional apparel. The equipment category
in North America was slower than in previous years as the recorded another mixed year in 2017, albeit with signs of
marketplace was negatively impacted by a further stabilization in some areas.
consolidation in US retail and by supply-demand mismatches
in certain categories. Most other markets expanded, driven by
Exchange rate development 1 € 1 equals 49
global trends such as increasing penetration of sportswear
(‘athleisure’)  SEE GLOSSARY, rising sports participation rates
and increasing health awareness. Moreover, digital Average Average
developments continued to reshape the sports industry rate Q1 Q2 Q3 Q4 rate
2016 2017 2017 2017 2017 2017
around the world. Social fitness remained an overriding
USD 1.1069 1.0691 1.1412 1.1806 1.1993 1.1266
theme and the e-commerce channel continued to see rapid GBP 0.8188 0.8555 0.8793 0.8818 0.8872 0.8754
JPY 120.40 119.55 127.75 132.82 135.01 126.24
RUB 74.278 60.274 67.428 68.495 69.080 65.560
Quarterly consumer confidence development 1 48 CNY 7.3515 7.3760 7.8664 7.8355 7.8365 7.6116
ANNUAL REPORT 2017
by region 1 Spot rates at quarter-end.
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
USA 2 113.3 124.9 117.3 120.6 123.1

Euro area 3 (5.1) (5.1) (1.3) (1.2) 0.5
Japan 4 42.3 43.9 43.3 43.9 44.7
106
China 5 108.4 111.0 113.3 118.6 122.6
Russia 6 (18.0) (15.0) (14.0) (11.0) (11.0)
ADIDAS
Brazil 7 100.3 102.0 100.5 98.5 100.5

1 Quarter-end figures.
2 Source: Conference Board.
3 Source: European Commission.
4 Source: Economic and Social Research Institute, Government of Japan.
5 Source: China National Bureau of Statistics.
6 Source: Russia Federal Service of State Statistics.
7 Source: Brazil National Confederation of Industry.
Income Statement
INCOME STATEMENT Net sales by region 1 in % of net sales 52 SALES GROW IN FOOTWEAR AND APPAREL
Currency-neutral footwear sales grew 24% in 2017, driven by
ADIDAS DELIVERS STRONG FINANCIAL 14% double-digit growth in the running category as well as at adidas
PERFORMANCE IN 2017 MEAA Originals and adidas neo. In addition, high-single-digit
In 2017, revenues increased 16% on a currency-neutral basis. 5% increases in the football and training categories also contributed
29%
In euro terms, revenues grew 15% to € 21.218 billion from Japan to this development. Apparel revenues grew 7% on a currency-
Western Europe
€ 18.483 billion in 2016.  SEE DIAGRAM 50 From a market segment 9% neutral basis, due to double-digit increases in the outdoor
perspective, currency-neutral sales grew at double-digit rates Latin America category as well as at adidas Originals. In addition, high-single-
3%
in all regions in 2017, except for Russia/CIS, where revenues digit growth in the training category also contributed to this
Russia/CIS
declined.  SEE BUSINESS PERFORMANCE BY SEGMENT, P. 124 21% development. Currency-neutral accessory and hardware sales
18%
North America were up 6%, driven by double-digit growth at adidas Originals
Greater China
and adidas neo.  SEE DIAGRAM 53
Net sales 1, 2 € in millions 50
1 Figures reflect all operating activities of the operating segments, including Other Businesses.
Net sales by product category 1 € in millions 53

2017 21,218
2016 18,483
2015 16,915 ADIDAS BRAND REVENUES GROW AT STRONG Change
2014 14,534 DOUBLE-DIGIT RATE (currency-
2017 2016 Change neutral)
2013 14,203
Currency-neutral revenues for the adidas brand increased
Footwear 12,427 10,132 23% 24%
18%, driven by double-digit sales increases in the running and Apparel 7,747 7,352 5% 7%
1 2017 and 2016 figures reflect continuing operations as a result of the divestiture of the Rockport,
TaylorMade, Adams Golf, Ashworth and CCM Hockey businesses. outdoor categories as well as at adidas Originals and adidas Hardware 1,044 999 5% 6%
2 2015, 2014 and 2013 figures reflect continuing operations as a result of the divestiture of the
Rockport business.
neo. In addition, high-single-digit sales increases in the Total 21,218 18,483 15% 16%
training category also contributed to this development. In 1 Figures reflect continuing operations as a result of the divestiture of the Rockport, TaylorMade,
Adams Golf, Ashworth and CCM Hockey businesses.
euro terms, adidas brand revenues grew 16% to € 18.993
ANNUAL REPORT 2017
Net sales by segment € in millions 51

billion compared to € 16.334 billion in 2016. Currency-neutral
Reebok brand sales were up 4% versus the prior year, driven
by double-digit sales increases in Classics as well as low- Net sales by product category 1 in % of net sales 54
Change
(currency-
single-digit growth in the running category. While Reebok’s
Western Europe 5,883 5,291 11% 13%
international revenues grew at a double-digit rate in 2017, 5%
North America 4,275 3,412 25% 27% sales in the US declined, reflecting the significant amount of Hardware
107
Greater China 3,789 3,010 26% 29% store closures in the market. In euro terms, Reebok sales
ADIDAS
Russia/CIS 660 679 (3%) (13%) increased 4% to € 1.843 billion (2016: € 1.770 billion). 37% 59%
Latin America 1,907 1,731 10% 12% Apparel Footwear
Japan 1,056 1,007 5% 10%
MEAA 2,907 2,685 8% 10%
Other Businesses 1 739 667 11% 12%
Total 21,218 18,483 15% 16%
1 Figures reflect continuing operations as a result of the divestiture of the Rockport, TaylorMade, 1 Figures reflect continuing operations as a result of the divestiture of the Rockport, TaylorMade,
Adams Golf, Ashworth and CCM Hockey businesses. Adams Golf, Ashworth and CCM Hockey businesses.
Income Statement
COST OF SALES INCREASES ROYALTY AND COMMISSION INCOME Other operating expenses 1, 2 in % of net sales 56
Cost of sales is defined as the amount we pay to third parties INCREASES
for expenses associated with producing and delivering our Royalty and commission income increased 11% on a currency-
2017 41.9
products. In addition, own-production expenses are also neutral basis and 10% in euro terms to € 115 million (2016: 2016 42.7
included in the cost of sales. However, these expenses € 105 million). 2015 43.1
represent only a very small portion of total cost of sales. In 2014 42.7
2017, cost of sales was € 10.514 billion, representing an OTHER OPERATING INCOME DECLINES 2013 42.3
increase of 12% compared to the prior year level of €  9.383  billion. In 2017, other operating income declined 49% to € 133 million
This development reflects the strong growth of our business as from € 262 million in 2016. This development mainly reflects 1 2017 and 2016 figures reflect continuing operations as a result of the divestiture of the Rockport,
well as less favorable hedging rates and higher input costs the non-recurrence of two one-time gains in 2016, which were 2 2015, 2014 and 2013 figures reflect continuing operations as a result of the divestiture of the
Rockport business.
mainly due to an increase in material and labor costs. related to the early termination of the Chelsea F.C. contract as
well as the divestiture of the Mitchell & Ness business.
GROSS MARGIN IMPROVES
Marketing expenses 1, 2 in % of net sales 57
1.2 PERCENTAGE POINTS OTHER OPERATING EXPENSES AS A
In 2017, the gross profit increased 18% to € 10.703 billion PERCENTAGE OF SALES DOWN
from € 9.100 billion in 2016, representing a gross margin 0.8 PERCENTAGE POINTS 2017 12.9
increase of 1.2 percentage points to 50.4% (2016: 49.2%). Other operating expenses, including depreciation and 2016 13.0
 SEE DIAGRAM 55 This development was due to the positive effects amortization, consist of marketing expenditure as well as 2015 13.9
from a better pricing and product mix, which more than offset operating overhead costs. In 2017, other operating expenses 2014 13.2
2013 12.6
negative currency effects as well as higher input costs. were up 13% to € 8.882 billion (2016: € 7.885 billion), reflecting
an increase in marketing expenditure as well as higher operating
overhead expenditure.  SEE NOTE 32, P. 201 As a percentage of TaylorMade, Adams Golf, Ashworth and CCM Hockey businesses.
Gross margin 1, 2, 3 in % 55
sales, other operating expenses decreased 0.8 percentage 2 2015, 2014 and 2013 figures reflect continuing operations as a result of the divestiture of the
Rockport business.
points to 41.9% from 42.7% in 2016.  SEE DIAGRAM 56 Marketing
ANNUAL REPORT 2017
2017 50.4 expenditure amounted to € 2.732 billion in 2017 compared to

2016 49.2 € 2.410 billion in the prior year, representing an increase of
2015 48.3 13% compared to the 2016 level. As a percentage of sales,
2014 47.6 marketing expenditure declined 0.2 percentage points to
2013 49.3
12.9% (2016: 13.0%), reflecting the company’s strong top-line
development.  SEE DIAGRAM 57 Operating overhead expenses
108
1 Gross margin = (gross profit / net sales) × 100.
2 2017 and 2016 figures reflect continuing operations as a result of the divestiture of the Rockport, increased 12% to € 6.150 billion in 2017 from € 5.475 billion
ADIDAS

in the prior year. As a percentage of sales, operating overhead
Rockport business. expenses declined 0.6 percentage points to 29.0% from 29.6%
in the prior year, reflecting the company’s focus on executing
the strategic business plan ‘Creating the New’ as well as the
strong operational performance in 2017.
Income Statement
EBITDA INCREASES 29% Operating profit 1, 2, 3, 4, 5 € in millions 59 the positive effect from lower other operating expenses as a
Earnings before interest, taxes, depreciation and amortization percentage of sales, partly offset by the decline in other
as well as impairment losses/reversal of impairment losses operating income.
2017 2,070
on property, plant and equipment and intangible assets 2016 1,582
(EBITDA) increased 29% to € 2.511 billion in 2017 versus 2015 1,094 NET FINANCIAL EXPENSES INCREASE
€ 1.953 billion in 2016.  SEE DIAGRAM 58 Depreciation and 2014 961 Financial income increased 68% to € 46 million in 2017 (2016:
amortization expense for tangible and intangible assets 2013 1,233 € 28 million), mainly due to positive exchange rate effects.
(excluding impairment losses/reversal of impairment losses) Financial expenses were up 26% to € 93 million compared to
increased 23% to € 452 million in 2017 (2016: € 368 million). 1 2017 and 2016 figures reflect continuing operations as a result of the divestiture of the Rockport, € 74 million in 2016. This development was due to an increase
This development is mainly due to an increase in property, 2 2015, 2014 and 2013 figures reflect continuing operations as a result of the divestiture of the in other financial expenses as a result of impairment losses
Rockport business.
plant and equipment. In accordance with IFRS, intangible 3 2015 excluding goodwill impairment of € 34 million. on other financial assets. As a result, the company recorded
4 2014 excluding goodwill impairment of € 78 million.
assets with indefinite useful lives (goodwill  SEE GLOSSARY and 5 2013 excluding goodwill impairment of € 52 million.
net financial expenses of € 47 million, an increase of 1%
trademarks) are tested annually and additionally when there compared to the prior year level of € 46 million.  SEE DIAGRAM 61
are indications of potential impairment. In this connection, an
impairment of intangible assets with unlimited useful lives Operating margin 1, 2, 3, 4, 5, 6 in % 60 TAX RATE INCREASES 3.5 PERCENTAGE
was incurred in 2017. POINTS TO 33.0%
The company’s tax rate in 2017 reached a level of 33.0%,
2017 9.8
representing an increase of 3.5 percentage points compared
EBITDA 1, 2, 3 € in millions 58 2016 8.6
to the prior year level of 29.6%. This development was solely
2015 6.5
2014 6.6
driven by a negative one-time tax impact in the amount of € 76
2017 2,511 2013 8.7 million, reflecting a revaluation of the company’s US deferred
2016 1,953 tax assets, which became necessary following the
2015 1,475 1 Operating margin = (operating profit / net sales) × 100. implementation of the US tax reform. Excluding this negative,
2014 1,283 2 2017 and 2016 figures reflect continuing operations as a result of the divestiture of the Rockport,
non-cash-relevant tax impact, the company’s tax rate
ANNUAL REPORT 2017

2013 1,496 3 2015, 2014 and 2013 figures reflect continuing operations as a result of the divestiture of the decreased 0.3 percentage points to 29.3%.
Rockport business.
1 EBITDA = Income before taxes (IBT) + net interest expenses + depreciation and amortization. 5 2014 excluding goodwill impairment of € 78 million.
2 2017 and 2016 figures reflect continuing operations as a result of the divestiture of the Rockport, 6 2013 excluding goodwill impairment of € 52 million. NET INCOME FROM CONTINUING OPERATIONS
EXCLUDING ONE-TIME TAX IMPACT UP 32%
Rockport business. TO € 1.430 BILLION
Net financial expenses € in millions 61 Excluding the negative one-time tax impact, net income from
109
OPERATING MARGIN INCREASES continuing operations increased 32% to € 1.430 billion versus
ADIDAS
1.2 PERCENTAGE POINTS € 1.082 billion in 2016.  SEE DIAGRAM 62 Basic EPS from
2017 47
Operating profit grew 31% to € 2.070 billion in 2017 versus 2016 46 continuing operations increased 31% to € 7.05 from € 5.39 in
€ 1.582 billion in 2016.  SEE DIAGRAM 59 This represents an 2015 21 2016.  SEE DIAGRAM 63 Diluted EPS from continuing operations
operating margin increase of 1.2 percentage points to 9.8% 2014 48 was up 32% to € 7.00 in 2017 (2016: € 5.29).
compared to the prior year level of 8.6%.  SEE DIAGRAM 60 This 2013 68
development was due to the gross margin increase as well as
Income Statement
Including the one-time tax impact, net income from continuing Including the negative one-time tax impact, the company’s net
operations rose 25% to € 1.354 billion (2016: € 1.082 billion). income attributable to shareholders increased 8% to
Basic EPS from continuing operations increased 24% from € 1.097 billion (2016: € 1.017 billion). Basic EPS from
€ 5.39 in 2016 to € 6.68 in 2017. Diluted EPS from continuing continuing and discontinued operations increased 7% to
operations was up 25% to € 6.63 in 2017 (2016: € 5.29). € 5.42 (2016: € 5.08) and diluted EPS from continuing and
discontinued operations grew 8% to € 5.38 (2016: € 4.99).
The total number of shares outstanding increased by 2,371,924
Net income from continuing operations 1, 2, 3, 4 62
shares in 2017 to 203,861,234 as a result of share conversions € in millions
in relation to the company’s outstanding convertible bond
which were partly offset by shares repurchased as part of the
company’s share buyback program.  SEE FINANCIAL HIGHLIGHTS, P. 4 2017 1,430
2016 1,082
Consequently, the average number of shares used in the
2015 720
calculation of basic earnings per share (EPS) was 202,391,673
2014 642
(2016: 200,188,276).
2013 825
LOSSES FROM DISCONTINUED OPERATIONS 1 2017 excluding negative one-time tax impact of € 76 million.
AMOUNT TO € 254 MILLION 2 2015 excluding goodwill impairment of € 34 million.
In 2017, adidas incurred losses from discontinued operations 4 2013 excluding goodwill impairment of € 52 million.
of € 254 million, net of tax, mainly related to the TaylorMade

and CCM Hockey businesses (2016: losses of € 62 million).
Basic earnings per share 1, 2, 3, 4, 5 in € 63
These losses from discontinued operations were due to a loss
recognized on the measurement to fair value less costs to
sell, net of tax, in the amount of € 256 million, partly offset by 2017 7.05
income from discontinued operating activities of € 1 million. 2016 5.39
ANNUAL REPORT 2017
2015 3.54
NET INCOME ATTRIBUTABLE TO 2014 3.05
2013 3.93
SHAREHOLDERS EXCLUDING ONE-TIME TAX
IMPACT INCREASES 15% TO € 1.173 BILLION
1 Figures reflect continuing operations.
The company’s net income attributable to shareholders, 2 2017 excluding negative one-time tax impact of € 76 million.
which in addition to net income from continuing operations 3 2015 excluding goodwill impairment of € 34 million.
110
includes the losses from discontinued operations, grew 15% 5 2013 excluding goodwill impairment of € 52 million.
ADIDAS
to € 1.173 billion (2016: € 1.017 billion) excluding the negative

one-time tax impact. As a result, basic EPS from continuing
and discontinued operations increased 14% to € 5.79 versus
€ 5.08 in 2016, while diluted EPS from continuing and
discontinued operations grew 15% to € 5.75 (2016: € 4.99).
Statement of Financial Position and
Statement of Cash Flows
STATEMENT OF FINANCIAL POSITION Total current assets decreased 3% to € 8.645 billion at the a decrease in the fair value of financial instruments as well as
AND STATEMENT OF CASH FLOWS end of December 2017 compared to € 8.886 billion in 2016. a decrease in other financial assets, which was mainly related
Cash and cash equivalents were up 6% to € 1.598 billion at to the non-recurrence of the extraordinary receivable related
DIVESTITURE OF THE TAYLORMADE AND CCM the end of December 2017 from € 1.510 billion in the prior to the early termination of the Chelsea F.C. contract. Other
HOCKEY BUSINESSES year, as net cash generated from operating activities was only current assets were down 14% to € 498 million at the end of
On September 1, 2017, we formally completed the divestiture partly offset by net cash used in investing and financing December 2017 (2016: €  580  million), mainly due to a
of the CCM Hockey business. In addition, as of October 2, activities. Currency effects had a negative impact on cash and decrease in prepaid promotion contracts as well as tax
2017, the TaylorMade business (including the TaylorMade, cash equivalents in an amount of € 111 million. Inventories receivables other than income taxes.  SEE NOTE 10, P. 170 Assets
Adams Golf and Ashworth brands) was divested. As a result, decreased 2% to € 3.692 billion at the end of December 2017
all relevant assets and liabilities were derecognized from the from € 3.763 billion in 2016.  SEE NOTE 09, P. 170  SEE DIAGRAM 66
Inventories € in millions 66
consolidated statement of financial position as of these dates. On a currency-neutral basis, inventories grew 4%. Inventories
However, a restatement of the 2016 balance sheet items is not from continuing operations increased 2% (+8% currency-
permitted under IFRS.  SEE NOTE 04, P. 169 neutral), reflecting higher stock levels to support the 2017 3,692
company’s top-line momentum. Accounts receivable 2016 3,763
ASSETS increased 5% to € 2.315 billion at the end of December 2017 2015 3,113
At the end of December 2017, total assets were down 4% to (2016: € 2.200 billion).  SEE NOTE 07, P. 169  SEE DIAGRAM 67 On a 2014 2,526
2013 2,634
€ 14.522 billion versus € 15.176 billion in the prior year, as a currency-neutral basis, receivables were up 13%. Receivables
result of a decrease in both current assets as well as non- from continuing operations increased 15% (+ 23% currency-
current assets.  SEE DIAGRAM 64 neutral), mainly reflecting the company’s top-line development
in 2017. Other current financial assets declined 46% to Accounts receivable € in millions 67
€ 393 million at the end of December 2017 from € 729 million
in 2016.  SEE NOTE 08, P. 170 This development was mainly due to
2017 2,315
Structure of statement of financial position 1 64 2016 2,200
ANNUAL REPORT 2017
in % of total assets 2015 2,049

Structure of statement of financial position 1
65
in % of total liabilities and equity 2014 1,946
2013 1,809
2017 2016
Assets (€ in millions) 14,522 15,176 2017 2016
Liabilities and equity (€ in millions) 14,522 15,176

Cash and cash equivalents 11.0 9.9
Accounts payable € in millions 68
Accounts receivable 15.9 14.5
111
Short-term borrowings 0.9 4.2
Inventories 25.4 24.8 Accounts payable 13.6 16.4
ADIDAS
Fixed assets 2 33.9 35.4 Long-term borrowings 6.8 6.5 2017 1,975
Other assets 13.7 15.4 Other liabilities 34.4 30.4 2016 2,496
Total equity 44.3 42.5 2015 2,024
2017 2016 2014 1,652
1 For absolute figures see adidas AG Consolidated Statement of Financial Position, p. 119.
2017 2016
2013 1,825
2 Fixed assets = property, plant and equipment + goodwill + trademarks + other intangible assets +
long-term financial assets. 1 For absolute figures see adidas AG Consolidated Statement of Financial Position, p. 119.
classified as held for sale amounted to € 72 million in 2017 continuing operations decreased 17% (–15% currency- € 80 million at the end of December 2017 from € 44 million in
due to the concrete plan to sell the Reebok headquarters in neutral), reflecting the company´s focus on inventory the prior year, mainly as a result of an increase in provisions
Canton.  SEE NOTE 11, P. 170 management as well as improved terms with our suppliers for personnel. Non-current accrued liabilities decreased 29%
and phasing of sourcing activities. Other current financial to € 85 million from € 120 million in 2016 due to a decrease in
Total non-current assets declined 7% to € 5.877 billion at the liabilities were up 81% to € 362 million from € 201 million in accruals for personnel as well as invoices not yet received.
end of December 2017 from € 6.290 billion in 2016. Fixed 2016, mainly as a result of an increase in the negative fair  SEE NOTE 21, P. 177
assets decreased 8% to € 4.920 billion at the end of December value of financial instruments.  SEE NOTE 19, P. 176 Other current
2017 versus € 5.367 billion in 2016. Additions of € 861 million, provisions increased 29% to € 741 million at the end of Shareholders’ equity decreased to € 6.450 billion at the end of
primarily related to own-retail activities, investments into the December 2017 versus € 573 million in 2016, driven by an December 2017 versus € 6.472 billion in 2016, driven by
company’s logistics and IT infrastructure as well as the increase in operational provisions. Current accrued liabilities negative currency effects of € 525 million as well as the
further development of the company’s headquarters in grew 8% to € 2.180 billion at the end of December 2017 from dividend of € 405 million paid to shareholders for the 2016
Herzogenaurach, were more than offset by the pre-divestiture € 2.023 billion in 2016, mainly as a result of an increase in financial year. In addition, a decrease of hedging reserves of
reclassification of the net book value of fixed assets of the invoices not yet received as well as higher accruals for € 375 million as well as the repurchase of treasury shares in
TaylorMade and CCM Hockey businesses to assets held for customer discounts. Other current liabilities were up 9% to an amount of € 89 million, including incidental purchasing
sale in an amount of € 392 million. In addition, negative € 473 million at the end of December 2017 from € 434 million costs, also contributed to the decline. These developments
currency effects of € 380 million as well as depreciation and in 2016, primarily due to an increase in miscellaneous taxes more than offset the net income generated during the last
amortization of € 498 million contributed to this develop payable.  SEE NOTE 22, P. 177 twelve months and the reissuance of treasury shares in an
ment. Other non-current financial assets more than amount of € 248 million. The company’s equity ratio increased
doubled to € 219 million from € 96 million at the end of 2016. Total non-current liabilities decreased 8% to € 1.796 billion at to 44.4% compared to 42.6% in the prior year.  SEE NOTE 26, P. 182
 SEE NOTE 16, P. 174 This development was mainly due to the the end of December 2017 from € 1.957 billion in the prior  SEE DIAGRAM 69
recognition of seller and contingent notes related to the year. Long-term borrowings remained relatively unchanged
divestiture of the TaylorMade and CCM Hockey businesses. at €  983 million at the end of December 2017 from OPERATING WORKING CAPITAL
Deferred tax assets decreased 14% to € 630 million from € € 982 million in the prior year.  SEE NOTE 18, P. 175 Deferred tax Operating working capital  SEE GLOSSARY increased 16% to
732 million in 2016 as a result of a revaluation of the company’s liabilities decreased 29% to € 275 million from € 387 million € 4.033 billion at the end of December 2017 compared to
ANNUAL REPORT 2017
US deferred tax assets, which became necessary following in 2016, partly due to the pre-divestiture reclassification of the
the implementation of the US tax reform. TaylorMade and CCM Hockey businesses to liabilities held for Average operating working capital 1, 2, 3 in % of net sales 70
sale. Other non-current provisions increased 82% to
LIABILITIES AND EQUITY
Total current liabilities decreased 7% to € 6.291 billion at the 2017 20.4
2016 21.1
end of December 2017 from € 6.765 billion in 2016. Short- Equity ratio in % 69
2015 20.5
112
term borrowings declined 79% to € 137 million at the end of
2014 22.4
ADIDAS
December 2017 (2016: € 636 million), reflecting conversions 2013 21.3

2017 44.4
of the company’s convertible bond into adidas AG shares as 2016 42.6
well as a decrease in bank loans. Accounts payable were down 2015 42.5 1 Average operating working capital = sum of operating working capital at quarter-end / 4.
21% to € 1.975 billion at the end of December 2017 versus 2014 45.3 Operating working capital = accounts receivable + inventories – accounts payable.
€ 2.496 billion in 2016.  SEE DIAGRAM 68 On a currency-neutral 2013 47.3 TaylorMade, Adams Golf, Ashworth and CCM Hockey businesses.
basis, accounts payable declined 19%. Accounts payable from Rockport business.
€ 3.468 billion in 2016. On a currency-neutral basis, operating The majority of the company’s capital expenditure was related LIQUIDITY ANALYSIS
working capital grew 27%. Operating working capital from to our controlled space initiatives. Investments in new or In 2017, net cash generated from operating activities
continuing operations rose 25% (+36% currency-neutral). remodeled own-retail and franchise stores as well as in shop- increased to € 1.648 billion (2016: € 1.348 billion).  SEE
Average operating working capital as a percentage of sales in-shop presentations of our brands and products in our FINANCIAL HIGHLIGHTS, P. 4 Net cash generated from continuing
from continuing operations decreased 0.7 percentage points customers’ stores accounted for 48% of total capital operating activities rose to € 1.641 billion (2016: € 1.309 billion),
to 20.4% (2016: 21.1%), reflecting the strong top-line expenditure (2016: 55%). Expenditure for IT and logistics driven by an increase in income before taxes which was partly
development during the last twelve months as well as the represented 13% and 9%, respectively (2016: 10% and 8%, offset by higher operating working capital requirements as well
company’s continued focus on tight working capital respectively). In addition, expenditure for administration as an increase in income taxes paid. Net cash used in investing
management.  SEE DIAGRAM 70 represented 7% (2016: 9%), while 22% of total capital activities rose to € 680 million (2016: € 614 million). Net cash
expenditure was recorded for other initiatives (2016: 18%). used in continuing investing activities increased to € 676 million
INVESTMENT ANALYSIS  SEE DIAGRAM 71 From a regional perspective, the majority of the (2016: € 605 million). The majority of continuing investing
Capital expenditure is defined as the total cash expenditure capital expenditure was recorded at the company’s activities in 2017 related to spending for property, plant and
for the purchase of tangible and intangible assets (excluding headquarters in Herzogenaurach, Germany, accounting for equipment, such as investments in the furnishing and fitting of
acquisitions). Capital expenditure increased 16% to € 755 47% (2016: 32%). In addition, capital expenditure in Greater our own-retail stores and investments in IT systems as well as
million in 2017 (2016: € 651 million). Capital expenditure from China accounted for 16% (2016: 15%) of the total capital the purchase of investments and other long-term assets. Net
continuing operations increased 17% to € 752 million from expenditure, followed by Western Europe with 10% (2016: cash used in financing activities and net cash used in continuing
€ 642 million in 2016. Capital expenditure for property, plant 12%), North America with 8% (2016: 13%), MEAA and Russia/ financing activities grew to € 769 million each (2016:
and equipment was up 16% to € 681 million compared to CIS with 5% each (2016: 9% and 7%, respectively), Latin € 553 million and € 545 million, respectively), mainly due to the
€ 586  million in the prior year. The company invested America with 4% (2016: 7%) as well as Japan with 3% (2016: dividend paid to shareholders, the repayment of short-term
€ 74 million in intangible assets, representing a 14% increase 2%).  SEE DIAGRAM 72 borrowings as well as the repurchase of treasury shares.
compared to the prior year (2016: € 65 million). Depreciation Exchange rate effects negatively impacted the company’s cash
and amortization excluding impairment losses/reversal of position by € 111 million. As a result of all these developments,
impairment losses of tangible and intangible assets increased cash and cash equivalents increased €  88 million to
Capital expenditure by region in % of total CAPEX 72
13% to € 421 million in 2017 (2016: € 373 million). € 1.598 billion at the end of December 2017 compared to
ANNUAL REPORT 2017
€ 1.510 billion at the end of December 2016.  SEE DIAGRAM 74

10%
Capital expenditure by type in % of total CAPEX 71
Western Europe
Net borrowings/EBITDA 1, 2 € in millions 73
47% 8%
7% HQ/Consolidation North America
Administration
16% 2017 (0.2)
9%
113
Greater China 2016 0.1
Logistics 2015 0.3
ADIDAS
5%
13% 48% 2014 0.1
Russia/CIS
IT Controlled space 2% 2013 (0.2)
4%
22% Other Businesses
Latin America
Other 5% 1 2017 and 2016 figures reflect continuing operations as a result of the divestiture of the Rockport,
3%
MEAA Japan 2 2015, 2014 and 2013 figures reflect continuing operations as a result of the divestiture of the
Rockport business.
Net cash at December 31, 2017 amounted to € 484 million, Change in cash and cash equivalents € in millions 74
compared to net borrowings of €  103 million in 2016,
representing an improvement of € 587 million compared to
Cash and cash Cash and cash
the prior year. This development was driven by the increase in equivalents Net cash generated equivalents
at the end of from operating Net cash used in Net cash used in Effect of exchange at the end of
cash generated from operating activities as well as proceeds 2016 activities investing activities financing activities rates 2017
arising from the disposal of the TaylorMade and CCM Hockey
businesses, partly offset by the utilization of cash for the
purchase of fixed assets as well as the dividend paid to
1,648
shareholders and the repurchase of adidas AG shares. In
addition, the conversion of convertible bonds into adidas AG
shares also contributed to this improvement.  SEE TREASURY, P. 115
(680)
The company’s ratio of net borrowings over EBITDA amounted 1,598
1,510
to –0.2 at the end of December 2017 (2016: 0.1), which is within (769) (111)
the company’s mid-term target corridor of below two times.
 SEE DIAGRAM 73
Operating cash flow, as described in the Internal Management

System, increased 24% to € 1.202 billion in 2017 from € 969
million in 2016, mainly due to the higher operating profit.
 SEE INTERNAL MANAGEMENT SYSTEM, P. 102
OFF-BALANCE SHEET ITEMS

The company’s most significant off-balance sheet items are
commitments for promotion and advertising as well as
ANNUAL REPORT 2017
operating leases, which are related to own-retail stores,

offices, warehouses and equipment. The company has entered
into various operating leases as opposed to property
acquisitions in order to reduce exposure to property value
fluctuations. Minimum future lease payments for operating
leases were € 2.649 billion at December 31, 2017, compared
114
to € 2.501 billion at the end of December 2016, representing
ADIDAS
an increase of 6%.  SEE NOTE 29, P. 189 At the end of December

2017, financial commitments for promotion and advertising
decreased 7% to € 5.255 billion in 2017 (2016: € 5.643 billion).
 SEE NOTE 39, P. 210
Treasury
TREASURY —— The Treasury department is responsible for specific STANDARD COVENANTS

centralized treasury transactions and for the global In the case of our committed credit facilities, we have entered
CORPORATE FINANCING POLICY implementation of our Treasury Policy. into various legal covenants. These legal covenants may
In order to be able to meet the company’s payment commitments —— On a subsidiary level, where applicable and economically include limits on the disposal of fixed assets, the amount of
at all times, the major goal of our financing policy is to ensure reasonable, local managing directors and finance directors debt secured by liens, cross default provisions and change of
sufficient liquidity reserves, while at the same time minimizing are responsible for managing treasury matters in their control. However, our financial arrangements do not contain
our financial expenses. The operating activities of our segments respective subsidiaries. Controlling functions on a corporate any financial covenants. If we failed to meet any covenant and
and the resulting cash inflows represent the company’s main level ensure that the transactions of the individual business were unable to obtain a waiver from a majority of partner
source of liquidity. Liquidity is planned on a rolling monthly units are in compliance with our Treasury Policy. banks, borrowings would become due and payable immediately.
basis under a multi-year financial and liquidity plan. This As at December 31, 2017, we were in full compliance with all of
comprises all consolidated companies. Our in-house bank CENTRALIZED TREASURY FUNCTION our covenants. We are fully confident we will continue to be
concept takes advantage of any surplus funds of individual In accordance with our Treasury Policy, all worldwide credit compliant with these covenants going forward. We believe
companies to cover the financial requirements of others, thus lines are directly or indirectly managed by the Treasury that cash generated from operating activities, together with
reducing external financing needs and optimizing our net department. Portions of those lines are allocated to our access to internal and external sources of funds, will be
interest expenses. Furthermore, by settling intercompany subsidiaries and backed by adidas AG guarantees. As a result sufficient to meet our future operating and capital needs.
transactions via intercompany financial accounts, we are able of this centralized liquidity management, the company is well
to reduce external bank account transactions and thus bank positioned to allocate resources efficiently throughout the FINANCIAL FLEXIBILITY
charges. Effective management of our currency exposure and organization. The company’s debt is generally unsecured and The company’s financial flexibility is ensured by the availability
interest rate risks are additional goals and responsibilities of may include standard covenants, which are reviewed on a of credit facilities, consisting of committed and uncommitted
our centrally managed Treasury department. quarterly basis. We maintain good relations with numerous bilateral credit lines at different banks with a remaining time
partner banks, thereby avoiding a high dependency on any to maturity of up to five years. In addition, we have an unused
TREASURY POLICY AND RESPONSIBILITIES single financial institution. Banking partners of the company multi-currency commercial paper program in the amount of
Our Treasury Policy governs all treasury-related issues, and our subsidiaries are required to have at least a BBB+ € 2.0 billion available (2016: € 2.0 billion). At the end of 2017,
including banking policy and approval of bank relationships, long-term investment grade rating by Standard & Poor’s or an committed and uncommitted bilateral credit lines amounted
ANNUAL REPORT 2017
financing arrangements and liquidity/asset management, equivalent rating by another leading rating agency.  SEE RISK to € 2.251 billion (2016: € 2.403 billion), of which € 2.145 billion
currency and interest risk management as well as the AND OPPORTUNITY REPORT, P. 131 Only in exceptional cases are our was unutilized (2016: € 2.024 billion). Committed and uncom
management of intercompany cash flows. Responsibilities companies authorized to work with banks with a lower mitted credit lines represent approximately 47% and 53% of
are arranged in a three-tiered approach: rating. To ensure optimal allocation of the company’s liquid total short-term bilateral credit lines, respectively (2016: 43%
—— The Treasury Committee consists of members of the financial resources, subsidiaries transfer excess cash to our and 57%, respectively).  SEE DIAGRAM 77 We monitor the ongoing
Executive Board and other senior executives who decide headquarters in all instances where it is legally and economically need for available credit lines based on the current level of
115
on the Treasury Policy and provide strategic guidance for feasible. In this regard, the standardization and consolidation debt as well as future financing requirements.
ADIDAS
managing treasury-related topics. Major changes to our of our global cash management and payment processes,
Treasury Policy are subject to the prior approval of the including automated domestic and cross-border cash pools
Treasury Committee.  SEE GLOSSARY, is a key priority for our Treasury department.
Treasury
Total credit facilities € in millions 75 OUTSTANDING BONDS GROSS BORROWINGS DECREASE

In 2014, we issued two eurobonds with an overall volume of The company’s gross borrowings are composed of bank
€ 1.0 billion, thereby taking the opportunity of a low interest borrowings as well as the outstanding eurobonds and the
2017 2016
rate environment in the eurobond market to further strengthen convertible bond. Gross borrowings decreased 31% to
Bilateral credit lines 2,251 2,403
the company’s financing mix while increasing the overall € 1.120 billion at the end of 2017 from € 1.618 billion in the
Eurobonds 983 982
Convertible bond 31 257 duration. The seven-year eurobond of € 600 million matures prior year. This development was mainly due to the conversion
on October 8, 2021 and has a coupon of 1.25%. The twelve- of convertible bonds and a decrease in short-term bank
Total 3,265 3,642 year eurobond of € 400 million matures on October 8, 2026 borrowings. Bank borrowings amounted to € 106 million
and has a coupon of 2.25%.  SEE NOTE 18, P. 175 In addition, compared to € 379 million in the prior year. Convertible bonds
2017 2016
adidas AG successfully issued a convertible bond in March outstanding decreased 88% to € 31 million from € 257 million
2012, for an aggregate nominal amount of € 500 million, due in the prior year. This was a result of further conversions into
on June 14, 2019. The bonds were priced with a 0.25% annual adidas AG shares that occurred in the course of 2017, partly
Remaining time to maturity of available facilities € in millions 76
coupon and a conversion premium of 40% above the reference offset by an increase in the convertible bond’s debt component.
price of € 59.61. As at December 31, 2017, 94% of the con  SEE OUR SHARE, P. 57 The conversions were done on a non-cash
2017 2016 vertible bond was converted (2016: 48%).  SEE OUR SHARE, P. 57 basis using treasury shares. The debt component was fully
< 1 year 1,601 2,160  SEE TABLE 78 accrued to its nominal value by the end of 2017. Including the
1 to 3 years 381 150 company’s eurobonds, the total amount of bonds outstanding
3 to 5 years 746 945 at the end of 2017 was € 1.014 billion (2016: € 1.239 billion).
> 5 years 537 387 Issued bonds at a glance € in millions 78
 SEE TABLE 79
Total 3,265 3,642

Volume Coupon Maturity
Financing structure € in millions 79
2017 2016 Convertible bond € 500 fixed 2019
Eurobond € 600 fixed 2021
Eurobond € 400 fixed 2026
ANNUAL REPORT 2017
2017 2016
Cash and short-term financial assets 1,604 1,515

Bilateral credit lines € in millions 77
Bank borrowings 106 379
Eurobonds 983 982
Convertible bond 31 257
2017 2016
Gross total borrowings 1,120 1,618
Committed 1,055 1,041
Net cash/(net borrowings) 484 (103)
Uncommitted 1,196 1,362
116
ADIDAS
Total 2,251 2,403
2017 2016
Treasury
EURO DOMINATES CURRENCY MIX NET CASH POSITION OF € 484 MILLION Interest rate development 1 in % 83
The vast majority of our gross borrowings are denominated in Net cash at December 31, 2017 amounted to € 484 million,
euros. At the end of 2017, gross borrowings denominated in compared to net borrowings of € 103 million in 2016,
2017 2.7
euros accounted for 91% of total gross borrowings (2016: representing an improvement of € 587 million versus the 2016 2.3
77%).  SEE DIAGRAM 80 prior year.  SEE DIAGRAM 82 This development was driven by the 2015 2.4
increase in cash generated from operating activities as well 2014 3.1
as proceeds arising from the disposal of the TaylorMade and 2013 3.8
Currency split of gross borrowings € in millions 80
CCM Hockey businesses, partly offset by the utilization of cash
for the purchase of fixed assets as well as the dividend paid to 1 Weighted average interest rate of gross borrowings.
2017 2016 shareholders and the repurchase of adidas AG shares. In

EUR 1,016 1,242 addition, the conversion of convertible bonds into adidas AG EFFECTIVE FOREIGN EXCHANGE MANAGEMENT
USD 2 157 shares also contributed to this improvement. A KEY PRIORITY
All others 102 219 As a globally operating company, adidas is exposed to currency
risks. Therefore, effective currency management is a key
Total 1,120 1,618 Net cash/(net borrowings) 1 € in millions 82
focus of our Treasury department, with the aim of reducing
2017 2016
the impact of currency fluctuations on non-euro-denominated
2017 484 net future cash flows. In this regard, hedging US dollars is a
2016 (103) central part of our program. This is a direct result of our
STABLE DEBT MATURITY PROFILE 2015 (460) Asian-dominated sourcing, which is largely denominated in
Over the course of 2017, the company’s financing maturity 2014 (185) US dollars.  SEE GLOBAL OPERATIONS, P. 74 In 2017, our Treasury
2013 295
profile remained stable. In 2018, assuming unchanged department managed a net deficit of around US $ 6.6 billion
maturities, debt instruments of € 137 million will mature, of related to operational activities (2016: US $ 6.5 billion).
1 Net cash/Net borrowings = cash and cash equivalents + short-term financial assets – short-term
which € 31 million consists of the anticipated conversions. borrowings – long-term borrowings. Thereof, around US $ 3.8 billion was against the euro (2016:
This compares to € 606 million which matured during the US $ 3.5 billion). As governed by our Treasury Policy, we have
ANNUAL REPORT 2017
course of 2017.  SEE DIAGRAM 81 established a hedging system on a rolling basis up to 24

INTEREST RATE INCREASES months in advance, under which the vast majority of the
The weighted average interest rate on the company’s gross anticipated seasonal hedging volume is secured approximately
Remaining time to maturity of gross borrowings € in millions 81
borrowings increased to 2.7% in 2017 (2016: 2.3%).  SEE six months prior to the start of a season. In rare instances,
DIAGRAM 83 This development was mainly due to conversions of hedges are contracted beyond the 24-month horizon. We had
2017 2016 the convertible bond into adidas AG shares and a reduction largely covered our anticipated hedging needs for 2018 as of
117
< 1 year 137 636 in short-term borrowings. Fixed-rate financing represented year-end 2017. At the same time, we have already started
ADIDAS
1 to 3 years – – 91% of total gross borrowings at the end of 2017 (2016: 77%). hedging our exposure for 2019. The use or combination of
3 to 5 years 596 595 Variable-rate financing accounted for 9% of total gross different hedging instruments, such as forward exchange
> 5 years 387 387
borrowings at the end of the year (2016: 23%). contracts, currency options and swaps, protects us against
unfavorable currency movements.
Total 1,120 1,618
 SEE RISK AND OPPORTUNITY REPORT, P. 131
2017 2016
Financial Statements and Management
Report of adidas AG
FINANCIAL STATEMENTS AND PREPARATION OF ACCOUNTS adidas AG net sales € in millions 85

MANAGEMENT REPORT OF ADIDAS AG Unlike the consolidated financial statements, which are in
conformity with the International Financial Reporting Standards
2017 2016
adidas AG is the parent company of the adidas Group. It (IFRS), as adopted by the European Union as at December 31,
Royalty and commission income 1,809 1,580
includes operating business functions, primarily for the 2017, the following financial statements of adidas AG have
adidas Germany 1,027 939
German market, as well as corporate headquarter functions been prepared in accordance with the rules set out in the Foreign subsidiaries 175 137
such as Marketing, Treasury, Taxes, Legal and Finance. German Commercial Code (Handelsgesetzbuch – HGB). Y-3 98 89
adidas AG also administers the company’s shareholdings. Other revenues 623 544
INCOME STATEMENT Total 3,732 3,289
OPERATING ACTIVITIES AND CAPITAL
Statement of income in accordance with 84
STRUCTURE OF ADIDAS AG HGB (Condensed) € in millions
NET SALES INCREASE 13%
The majority of the operating business of adidas AG consists Sales of adidas AG comprise external revenues generated by
of the sale of merchandise to wholesale partners and own- adidas Germany with products of the adidas and Reebok
retail activities. 2017 2016 brands, external revenues from Y-3 products as well as
Net sales 3,732 3,289 revenues from foreign subsidiaries. Revenues of adidas AG
In addition to its own trading activities, the results of adidas AG Total output 3,732 3,289 also include royalty and commission income, mainly from
Other operating income 503 439
are significantly influenced by its holding function for the affiliated companies, and other revenues. In 2017, adidas AG
Cost of materials (1,292) (1,127)
company as a whole. This is reflected primarily in currency net sales grew 13% to € 3.732 billion (2016: € 3.289 billion).
Personnel expenses (692) (588)
effects, transfer of costs for services provided, interest result Depreciation and amortization (91) (100)
This growth was mainly due to an increase in royalty income
and income from investments in related companies. Other operating expenses (2,170) (1,803) from affiliated companies as well as higher sales at adidas
Operating profit (10) 110 Germany.  SEE TABLE 85
The opportunities and risks as well as the future development Financial result 655 600
of adidas AG largely reflect those of the company as a whole. Taxes (96) (93) OTHER OPERATING INCOME UP 15%
Net income 549 617 In 2017, other operating income of adidas AG increased 15%
ANNUAL REPORT 2017
 SEE SUBSEQUENT EVENTS AND OUTLOOK, P. 128

Retained earnings brought forward 24 322
 SEE RISK AND OPPORTUNITY REPORT, P. 131 to € 503 million (2016: € 439 million). This development was
Allocation to other revenue reserves 0 (300)
primarily due to positive currency effects.
Utilization for the repurchase of treasury
The asset and capital structure of adidas AG is significantly shares 0 (11)
impacted by its holding and financing function for the company. Retained earnings 573 629 OTHER OPERATING EXPENSES INCREASE 20%
For example, 49% of total assets as at December 31, 2017 In 2017, other operating expenses for adidas AG rose 20% to
related to financial assets (2016: 53%), which primarily consist € 2.170 billion (2016: € 1.803 billion).  SEE TABLE 84 This was
118
of shares in affiliated companies. Inter company accounts, largely attributable to an increase in expenses for advertising
ADIDAS
through which transactions between affiliated companies are and promotion, allowances for doubtful accounts, negative
settled, represent another 35% of total assets (2016: 35%) and currency effects and higher legal and consultancy expenses.
48% of total equity and liabilities as at December 31, 2017
(2016: 45%).
Financial Statements and Management
Report of adidas AG
DEPRECIATION AND AMORTIZATION DECLINES 9% BALANCE SHEET TOTAL ASSETS ABOVE PRIOR YEAR
Depreciation and amortization for adidas AG decreased 9% to At the end of December 2017, total assets grew 11% to € 8.863
Balance sheet in accordance with HGB 86
€ 91 million in 2017 (2016: € 100 million), mainly as a result of (Condensed) € in millions
billion compared to € 8.003 billion in the prior year. This
a decline in depreciation and amortization of software. development was mainly a result of increases in cash and cash
equivalents, receivables and other assets as well as fixed assets.
OPERATING RESULT DECREASES Dec. 31, Dec. 31,  SEE TABLE 86
2017 2016
SIGNIFICANTLY
Assets
In 2017, adidas AG generated an operating loss of € 10 million, SHAREHOLDERS’ EQUITY UP 13%
Intangible assets 124 112
(2016: operating profit of € 110 million).  SEE TABLE 84 This Property, plant and equipment 610 493 Shareholders’ equity increased 13% to € 2.704 billion at the
development was primarily due to an increase in other Financial assets 4,308 4,205 end of December 2017 (2016: € 2.395 billion).  SEE TABLE 86
operating expenses as well as increases in cost of materials Fixed assets 5,042 4,810 The equity ratio rose slightly to 30.5% (2016: 29.9%).
and personnel expenses, which more than offset higher sales. Inventories 49 50
Receivables and other assets 3,262 2,968 PROVISIONS INCREASE 19%
Cash and cash equivalents, securities 337 28
FINANCIAL RESULT IMPROVES Provisions were up 19% to € 624 million at the end of 2017
Current assets 3,648 3,046
The financial result of adidas AG improved 9% to € 655 million (2016: € 525 million).  SEE TABLE 86 The increase primarily
Prepaid expenses 168 143
in 2017 (2016: € 600 million). The increase was attributable to resulted from higher provisions for personnel as well as higher
Active difference from asset allocation 5 4
higher profit transfers from affiliated companies under profit Total assets 8,863 8,003 marketing provisions.
and loss transfer agreements.
Equity and liabilities LIABILITIES AND OTHER ITEMS UP 9%
NET INCOME DECLINES Shareholders’ equity 2,704 2,395 At the end of December 2017, liabilities and other items
Provisions 624 525
Net income, after taxes of € 96 million (2016: € 93 million), increased 9% to € 5.535 billion (2016: € 5.083 billion).
Liabilities and other items 5,535 5,083
amounted to € 549 million in 2017 and was thus 11% below  SEE TABLE 86 The increase was mainly a result of higher
Total equity and liabilities 8,863 8,003
the prior year level (2016: € 617 million).  SEE TABLE 84 payables to affiliated companies, partly offset by the decline
in liabilities related to the convertible bond.
ANNUAL REPORT 2017
119
ADIDAS
Disclosures pursuant to § 315a Section 1
and § 289a Section 1 of the German
Commercial Code
CASH INFLOW FROM OPERATING ACTIVITIES DISCLOSURES PURSUANT TO § 315A In addition, restrictions of voting rights may exist pursuant,
REFLECTS CHANGE IN CASH AND CASH SECTION 1 AND § 289A SECTION 1 OF inter alia, to § 136 AktG or for treasury shares pursuant to
EQUIVALENTS THE GERMAN COMMERCIAL CODE § 71b AktG as well as due to capital market regulations, in
adidas AG generated a positive cash flow from operating particular pursuant to §§ 21 et seq. German Securities Trading
activities of € 1.109 billion (2016: € 263 million). The change COMPOSITION OF SUBSCRIBED CAPITAL Act (Wertpapierhandelsgesetz – WpHG).
versus the prior year was mainly a result of higher payables to The nominal capital of adidas AG amounts to € 209,216,186
affiliated companies, partly offset by an increase in receivables (as at December 31, 2017) and is divided into the same number The shares that were issued in the context of the Stock
from affiliated companies. Net cash outflow from investment of registered no-par-value shares with a pro rata amount in Purchase Plan to employees of adidas AG and employees of
activities was € 330 million (2016: € 133 million). This was the nominal capital of € 1 each (‘shares’). Pursuant to § 4 subsidiaries participating in the Stock Purchase Plan are not
primarily attributable to capital expenditure for tangible fixed section 10 of the Articles of Association, shareholders’ claims subject to any lock-up periods, unless such a waiting period is
assets of € 227 million and capital expenditure for financial to the issuance of individual share certificates are, in principle, stipulated in locally applicable regulations. Employees who
assets in an amount of € 115 million, partly offset by disposals excluded. Each share grants one vote at the Annual General hold the shares which they purchased themselves (investment
from financial assets of € 12 million. Financing activities Meeting. All shares carry the same rights and obligations. As shares) for at least one year will subsequently receive one
resulted in a net cash outflow of € 469 million (2016: € 549 at December 31, 2017, adidas AG held 5,354,952 treasury share for every six investment shares without having to pay
million). The net cash outflow from financing activities mainly shares, which however do not confer any rights to the company for such share (so-called matching share) if they are still
relates to the dividend payment in an amount of € 405 million. in accordance with § 71b German Stock Corporation Act adidas employees at that point in time. If employees transfer,
As a result of all these developments, cash and cash equivalents (Aktiengesetz – AktG).  SEE NOTE 26, P. 182 pledge or hypothecate investment shares in any way during
of adidas AG increased to € 337 million at the end of December the one-year vesting period, the right to receive matching
2017 compared to € 28 million at the end of the prior year. In the USA, we have issued American Depositary Receipts shares shall cease.
(ADRs). ADRs are deposit certificates of non-US shares that
adidas AG has bilateral credit lines of € 1.7 billion. In addition, are traded instead of the original shares on US stock SHAREHOLDINGS IN SHARE CAPITAL
the company has a multi-currency commercial paper program exchanges. Two ADRs equal one share.  SEE OUR SHARE, P. 57 EXCEEDING 10% OF VOTING RIGHTS
in an amount of € 2.0 billion.  SEE TREASURY, P. 115 We have not been notified of, and are not aware of, any direct
RESTRICTIONS ON VOTING RIGHTS OR or indirect shareholdings in the share capital of adidas AG
ANNUAL REPORT 2017
adidas AG is able to meet its financial commitments at all times. TRANSFER OF SHARES exceeding 10% of the voting rights.
We are not aware of any contractual agreements with
adidas AG or other agreements restricting voting rights or the SHARES WITH SPECIAL RIGHTS
transfer of shares. Based on the Code of Conduct in There are no shares bearing special rights. In particular, there
conjunction with an internal guideline of adidas AG and based are no shares with rights conferring powers of control.
on Article 19 section 11 of the Market Abuse Regulation,
120
however, particular lock-up periods do exist for members of VOTING RIGHT CONTROL IF EMPLOYEES
ADIDAS
the Executive Board with regard to the purchase and sale of HAVE A SHARE IN THE CAPITAL
adidas AG shares. These lock-up periods are connected, in Like all other shareholders, employees who hold adidas AG
particular, with the (time of) publication of quarterly and full shares exercise their control rights directly in accordance
year results. Lock-up periods stipulated in the Code of with statutory provisions and the Articles of Association. The
Conduct and the internal guideline also exist for employees shares which employees acquire in the context of the Stock
who have access to yet unpublished financial results. Purchase Plan are held in trust centrally by a service provider
Commercial Code
on behalf of the participating employees. As long as the held in which, however, the Chairman of the Supervisory AUTHORIZATION OF THE EXECUTIVE BOARD TO
shares are held in trust, the trustee shall take reasonable Board has two votes. ISSUE SHARES
measures to allow participating employees to directly or The authorization of the Executive Board to issue shares is
indirectly exercise their voting rights in respect of the shares If the Executive Board does not have the required number of regulated by § 4 of the Articles of Association and by statutory
held in trust. members, the competent court shall, in urgent cases, make provisions:
the necessary appointment upon application by any party
EXECUTIVE BOARD APPOINTMENT AND involved (§ 85 section 1 AktG). Authorized Capital
DISMISSAL —— Until June 7, 2020, the Executive Board is authorized to
Pursuant to § 6 of the Articles of Association and § 84 AktG, AMENDMENTS TO THE ARTICLES OF increase the nominal capital, subject to Supervisory Board
the Supervisory Board is responsible for determining the ASSOCIATION approval, by issuing new shares against contributions in
exact number of members of the Executive Board, for their Pursuant to § 179 section 1 sentence 1 AktG, the Articles of kind once or several times by no more than € 16,000,000
appointment and dismissal as well as for the appointment of Association of adidas AG can, in principle, only be amended by altogether (Authorized Capital 2017/II).
the Chief Executive Officer (CEO). The adidas AG Executive a resolution passed by the Annual General Meeting. Pursuant —— Until June 14, 2021, the Executive Board is authorized to
Board, which, as a basic principle, comprises at least two to § 21 section 3 of the Articles of Association in conjunction increase the nominal capital, subject to Supervisory Board
members, currently consists of the CEO as well as five further with § 179 section 2 sentence 2 AktG, the Annual General approval, by issuing new shares against contributions in
members. Executive Board members may be appointed for a Meeting of adidas AG principally resolves upon amendments cash once or several times by no more than € 4,000,000
maximum period of five years. Such appointments may be to the Articles of Association with a simple majority of the altogether (Authorized Capital 2016).
renewed and the terms of office may be extended, provided votes cast and with a simple majority of the nominal capital —— Until June 7, 2022, the Executive Board is authorized to
that no term exceeds five years.  SEE EXECUTIVE BOARD, P. 20 represented when passing the resolution. However, if increase the nominal capital, subject to Supervisory Board
mandatory legal provisions stipulate a larger majority of approval, by issuing new shares against contributions in
The Supervisory Board may revoke the appointment of an voting rights or capital, this is applicable. When it comes to cash once or several times by no more than € 50,000,000
individual as member of the Executive Board or CEO for good amendments solely relating to the wording, the Supervisory altogether (Authorized Capital 2017/I).
cause, such as gross negligence of duties or a vote of no Board is authorized to make these modifications in accordance —— Until June 7, 2022, the Executive Board is authorized to
confidence by the Annual General Meeting. with § 179 section 1 sentence 2 AktG in conjunction with § 10 increase the nominal capital, subject to Supervisory Board
ANNUAL REPORT 2017
section 1 sentence 2 of the Articles of Association. approval, by issuing new shares against contributions in
As adidas AG is subject to the regulations of the German Co- cash once or several times by no more than € 20,000,000
Determination Act (Mitbestimmungsgesetz – MitbestG), the AUTHORIZATIONS OF THE EXECUTIVE BOARD altogether (Authorized Capital 2017/III).
appointment of Executive Board members and also their The authorizations of the Executive Board are regulated by
dismissal requires a majority of at least two thirds of the §§ 76 et seq. AktG in conjunction with §§ 7 and 8 of the Articles Subject to Supervisory Board approval, shareholders’
Supervisory Board members (§ 31 MitbestG). If such a majority of Association. The Executive Board is responsible, in subscription rights are partially excluded or may be excluded
121
is not established in the first vote by the Supervisory Board, particular, for managing the company and represents the in certain cases for the above-mentioned, in principle
ADIDAS
the Mediation Committee has to present a proposal which, company judicially and extra-judicially. cumulative authorizations.  SEE NOTE 26, P. 182
however, does not exclude other proposals. The appointment
or dismissal is then made in a second vote with a simple Contingent Capital
majority of the votes cast by the Supervisory Board members. —— The nominal capital of the company is conditionally
Should the required majority not be established in this case increased by up to € 36,000,000 (Contingent Capital 2010).
either, a third vote, again requiring a simple majority, must be The Contingent Capital serves the purpose of granting
Commercial Code
holders or creditors of bonds that were issued up to nominal value of up to € 1,000,000,000 with or without a Group companies or by third parties on account of the
May 5, 2015 based on the resolution of the Annual General limited term, against contributions in cash once or several company or its subordinated Group companies or third
Meeting on May 6, 2010 subscription or conversion rights times until May 7, 2019, and to guarantee bonds issued by parties assigned by the company or one of its subordinated
relating to no more than a total of 36,000,000 shares in subordinated Group companies. The Executive Board is Group companies.
compliance with the corresponding conditions of the bonds. also authorized, subject to Supervisory Board approval,
to exclude shareholders’ subscription rights for fractional The repurchase can be carried out via the stock exchange,
On March 14, 2012, following the approval of the Supervisory amounts and to exclude shareholders’ subscription rights through a public invitation to submit sale offers, through a
Board, the Executive Board resolved to make partial use of the insofar as this is necessary for granting subscription rights public repurchase offer, or through granting tender rights
authorization granted by the Annual General Meeting on to which holders or creditors of previously issued bonds are to shareholders. Furthermore, the authorization sets out
May 6, 2010 and issued a convertible bond, excluding entitled. Furthermore, the Executive Board is authorized, the lowest and highest nominal value that may be granted
shareholders’ subscription rights, on March 21, 2012. However, subject to Supervisory Board approval, to also exclude in each case.
the shares will only be issued insofar as bondholders make shareholders’ subscription rights if the issue price of the
use of their conversion rights. The total number of shares to bonds is not significantly below the hypothetical market The purposes for which adidas AG shares repurchased
be issued to bondholders in case of full conversion amounted value of these bonds and the number of shares to be issued based on this authorization may be used are set out in the
to up to 3,182,525 shares as at December 31, 2016. Due to the does not exceed 10% of the nominal capital. The issuance resolution on Item 9 of the Agenda for the Annual General
fact that conversion rights were exercised, which were all of new shares or the use of treasury shares must be taken Meeting held on May 12, 2016. The shares may in particular
serviced with treasury shares of the company, the remaining into account when calculating the limit of 10% in certain be used as follows:
number of shares to be issued to bondholders in case of specific cases.
full conversion amounted to up to 377,190 shares as at —— T hey may be sold via the stock exchange, through a
December 31, 2017. The Executive Board has so far not utilized the authorization public share purchase offer made to all shareholders
to issue bonds with warrants and/or convertible bonds or sold otherwise against cash (limited to 10% of the
Moreover, the authorization to issue bonds with warrants and/ granted by the Annual General Meeting on May 8, 2014. nominal capital taking into account certain offsets) at
or convertible bonds granted on May 6, 2010 was canceled by a price not significantly below the stock market price
resolution of the Annual General Meeting on May 8, 2014. AUTHORIZATION OF THE EXECUTIVE BOARD of shares with the same features.
ANNUAL REPORT 2017
TO REPURCHASE SHARES —— They may be offered and assigned as consideration

—— Furthermore, the nominal capital of the company is The authorizations of the Executive Board to repurchase for the direct or indirect acquisition of companies,
conditionally increased by up to € 12,500,000 (Contingent adidas AG shares arise from §§ 71 et seq. AktG and, as at the parts of companies, participations in companies
Capital 2014). The Contingent Capital serves the purpose balance sheet date, from the authorization granted by the or other economic assets or within the scope of
of granting holders or creditors of bonds that were issued Annual General Meeting on May 12, 2016. company mergers.
based on the resolution of the Annual General Meeting on —— They may be offered and sold as consideration for the
122
May 8, 2014 subscription or conversion rights relating to —— Until May 11, 2021, the Executive Board is authorized to acquisition of industrial property rights or intangible
ADIDAS
no more than a total of 12,500,000 shares in compliance repurchase adidas AG shares in an amount totaling up to property rights or for the acquisition of licenses
with the corresponding conditions of the bonds. Based on 10% of the nominal capital at the date of the resolution (or, relating to such rights, also through subordinated
the authorization granted by the Annual General Meeting as the case may be, a lower amount of nominal capital at Group companies.
on May 8, 2014, the Executive Board is authorized, the date of utilization of the authorization) for any lawful —— They may be used for purposes of meeting the
subject to Supervisory Board approval, to issue bonds purpose and within the legal framework. The authorization subscription or conversion rights or obligations or
with warrants and/or convertible bonds in an aggregate may be used by the company but also by its subordinated the company’s right to delivery of shares arising from
Commercial Code
bonds with warrants and/or convertible bonds issued also by using equity derivatives which are arranged with
by the company or its subordinated Group companies. a credit institution or financial services institution in close
—— In connection with employee stock purchase plans, up conformity with market conditions. adidas AG may acquire
to 4,000,000 shares may be issued in favor of (current call options issued for physical delivery and/or sell put
or former) employees of the company and its affiliated options or use a combination of call and put options or
companies as well as in favor of (current and former) other equity derivatives if the option conditions ensure that
management bodies of the company’s affiliated these shares are only delivered if they were purchased in
companies. compliance with the equality principle. All share purchases
—— They may be canceled without requiring an additional using the aforementioned equity derivatives are limited
resolution of the Annual General Meeting. to a maximum value of 5% of the nominal capital existing
at the date on which the resolution was adopted by the
Furthermore, the shares may be assigned to members of the Annual General Meeting (or, as the case may be, a lower
Executive Board as compensation by way of a stock bonus amount of nominal capital at the date of utilization of the
subject to the provision that resale by the Executive Board authorization). The term of the options may not exceed 18
members shall only be permitted following a retention period months and must furthermore be chosen in such a way that
of at least three years from the date of assignment. the shares are acquired upon the exercise of the options
Responsibility in this case lies with the Supervisory Board. no later than May 11, 2021. The authorization furthermore
sets out the lowest and highest nominal value that may be
In case of utilization of shares for the above-mentioned granted in each case.
purposes, except for the cancelation of shares, shareholders’
subscription rights are excluded. For excluding subscription rights, the use and cancelation of
shares purchased using equity derivatives, the general
The Supervisory Board may provide that transactions based provisions adopted by the Annual General Meeting (set out
on this authorization may only be carried out subject to the above) are applicable accordingly.
ANNUAL REPORT 2017
approval of the Supervisory Board or one of its committees.

CHANGE OF CONTROL/COMPENSATION
In the year under review, the Executive Board partly utilized AGREEMENTS
the authorization to repurchase treasury shares. In a third Material agreements entered into by adidas AG containing
tranche (total period from November 8, 2016 up to and a change-of-control clause relate to financing agreements.
including January 31, 2017) of the share buyback program, In the case of a change of control, these agreements, in
123
adidas AG bought back 472,966 treasury shares via the stock accordance with common practice, entitle the creditor to
ADIDAS
exchange in the period from January 1, 2017 up to and termination and early calling-in of any outstanding amounts.
including January 31, 2017.  SEE NOTE 26, P. 182
No compensation agreements exist between adidas AG and
—— In the scope of the authorization resolved by the Annual members of the Executive Board or employees relating to the
General Meeting on May 12, 2016, the Executive Board event of a takeover bid.
is furthermore authorized to conduct the share buyback
BUSINESS PERFORMANCE BY SEGMENT
Gross margin in Western Europe increased 1.1 percentage NORTH AMERICA

BUSINESS PERFORMANCE points to 45.5% from 44.4% in 2016 as positive effects from a Revenues in North America grew 27% on a currency-neutral
BY SEGMENT more favorable pricing and channel mix more than offset the
significant negative impact from unfavorable currency
basis and 25% in euro terms to €  4.275 
billion from
€ 3.412 billion in 2016. adidas brand sales increased 35% on a
adidas has divided its operating activities into the following developments as well as higher input costs. Operating currency-neutral basis, driven by double-digit sales growth in
operating segments: Western Europe, North America expenses were up 7% to € 1.501 billion versus € 1.398 billion the running and training categories as well as at adidas
(excluding USA Reebok), USA Reebok, Greater China, in 2016. This development reflects an increase in marketing Originals and adidas neo. Revenues of the Reebok brand
Russia/CIS, Latin America, Japan, Middle East, South Korea expenditure as well as higher operating overhead costs. in North America decreased 15% on a currency-neutral
and Southeast Asia/Pacific. While the business segments Operating expenses as a percentage of sales were down basis, reflecting the closure of own-retail stores in the US.
Western Europe, Greater China, Russia/CIS, Latin America 0.9 percentage points to 25.5% (2016: 26.4%). The operating  SEE REEBOK BRAND STRATEGY, P. 70 From a category perspective,
and Japan are reported separately, North America (excluding margin increased 2.1 percentage points to 20.0% (2016: double-digit growth in Classics was more than offset by sales
USA Reebok) and USA Reebok are combined to the reportable 18.0%), as a result of the gross margin improvement as well declines in the training and running categories.  SEE TABLE 88
segment North America. Similarly, the markets Middle East, as the positive effect of lower operating expenses as a
South Korea and Southeast Asia/Pacific are aggregated to the percentage of sales. Operating profit in Western Europe Gross margin in North America increased 1.8 percentage
reportable segment MEAA (‘Middle East, Africa and other increased 24% to € 1.178 billion versus € 951 million in the points to 39.5% (2016: 37.7%) driven by an improved product
Asian markets’). Each market comprises all business prior year.  SEE TABLE 87 mix, partly offset by a less favorable channel and pricing mix
activities in the wholesale and retail distribution channels of as well as higher input costs. Operating expenses were up
the adidas and Reebok brands. Segmental operating expenses 14% to € 1.280 billion versus € 1.124 billion in 2016, reflecting
primarily relate to marketing expenditure as well as oper an increase in marketing expenditure as well as higher
ating overhead costs. operating overhead costs. Operating expenses as a percentage
of sales decreased 3.0 percentage points to 29.9% (2016:
WESTERN EUROPE 32.9%). As a result of the strong top-line development, the
In 2017, sales in Western Europe increased 13% on a currency-
neutral basis. In euro terms, sales in Western Europe grew
ANNUAL REPORT 2017
11% to € 5.883 billion from € 5.291 billion in 2016. Despite

Western Europe at a glance € in millions 87 North America at a glance € in millions 88
difficult prior year comparisons mainly resulting from
revenues generated with UEFA EURO 2016 related products
as well as the termination of the Chelsea F.C. sponsorship Change Change
(currency- (currency-
as of June 30, 2016, adidas brand revenues grew 12% on a 2017 2016 Change neutral) 2017 2016 Change neutral)
currency-neutral basis. This development was driven by double- Net sales 5,883 5,291 11% 13% Net sales 4,275 3,412 25% 27%
124
digit sales growth in the running and outdoor categories as adidas brand 5,388 4,889 10% 12% adidas brand 3,843 2,897 33% 35%
ADIDAS
well as at adidas Originals and adidas neo. In addition, mid- Reebok brand 496 402 23% 24% Reebok brand 432 514 (16%) (15%)
single-digit increases in the training category also supported Gross profit 2,679 2,350 14% – Gross profit 1,689 1,286 31% –
Gross margin 45.5% 44.4% 1.1pp – Gross margin 39.5% 37.7% 1.8pp –
this development. Reebok brand revenues in Western Europe
Segmental Segmental
increased 24% on a currency-neutral basis, as a result of operating profit 1,178 951 24% – operating profit 468 214 119% –
double-digit sales growth in Classics as well as high-single- Segmental Segmental
digit growth in the training and running categories.  SEE TABLE 87 operating margin 20.0% 18.0% 2.1pp – operating margin 10.9% 6.3% 4.7pp –
gross margin increase as well as the positive effect of lower Greater China at a glance € in millions 89 marketing expenditure as well as lower operating overhead
operating expenses as a percentage of sales, the operating costs. Operating expenses as a percentage of sales increased
margin improved 4.7 percentage points to 10.9% from 6.3% in 1.5 percentage points to 44.3% versus 42.7% in the prior
Change
2016. Operating profit in North America more than doubled to (currency- year. As a result of the gross margin increase, which more
€ 468 million from € 214 million in 2016.  SEE TABLE 88 than offset the negative effect of higher operating expenses
Net sales 3,789 3,010 26% 29%
as a percentage of sales, the operating margin improved
adidas brand 3,707 2,944 26% 30%
GREATER CHINA 5.2 percentage points to 20.6% from 15.4% in 2016. Operating
Reebok brand 82 67 23% 25%
Sales in Greater China grew 29% on a currency-neutral basis. Gross profit 2,162 1,731 25% – profit in Russia/CIS increased 30% to € 136 million versus
In euro terms, sales in Greater China were up 26% to Gross margin 57.1% 57.5% (0.5pp) – € 105 million in 2016.  SEE TABLE 90
€ 3.789 billion from € 3.010 billion in 2016. Revenues of brand Segmental
operating profit 1,342 1,060 27% –
adidas increased 30% on a currency-neutral basis. This
Segmental Russia/CIS at a glance € in millions 90
development was due to double-digit sales growth in the operating margin 35.4% 35.2% 0.2pp –
running, training and basketball categories as well as at
adidas Originals and adidas neo. In addition, the outdoor Change
category, where revenues more than doubled, also contributed (currency-
to this development. Reebok brand sales in Greater China RUSSIA/CIS Net sales 660 679 (3%) (13%)
grew 25% on a currency-neutral basis, driven by double-digit Sales in Russia/CIS decreased 13% on a currency-neutral adidas brand 478 514 (7%) (16%)
sales increases in the training and running categories as well basis, reflecting the significant number of store closures in Reebok brand 182 166 10% (2%)
as in Classics.  SEE TABLE 89 2017. In euro terms, sales in Russia/CIS declined 3% to Gross profit 429 395 8% –
€ 660  million from €  679 million in 2016. adidas brand Gross margin 64.9% 58.1% 6.7pp –
Gross margin in Greater China decreased 0.5 percentage revenues were down 16% on a currency-neutral basis, due to Segmental
operating profit 136 105 30% –
points to 57.1% (2016: 57.5%), as a more favorable product sales declines in most categories. Revenues of the Reebok Segmental
and pricing mix was more than offset by negative currency brand in Russia/CIS decreased 2% on a currency-neutral operating margin 20.6% 15.4% 5.2pp –
effects. Operating expenses were up 22% to € 820 million basis, as increases in the training category were more than
ANNUAL REPORT 2017
versus € 671 million in 2016. This development reflects an offset by declines in the running category as well as in
increase in both marketing expenditure as well as operating Classics.  SEE TABLE 90
overhead costs. Operating expenses as a percentage of sales
declined 0.6 percentage points to 21.7% (2016: 22.3%). As a Gross margin in Russia/CIS increased 6.7 percentage points
result of lower operating expenses as a percentage of sales, to 64.9% from 58.1% in 2016, driven by an improved pricing
which more than offset the decline in gross margin, the mix as well as significant positive currency effects, which
125
operating margin improved 0.2 percentage points to 35.4% more than offset a less favorable channel mix. Operating
ADIDAS
versus 35.2% in 2016. Operating profit in Greater China expenses were up 1% to € 292 million (2016: € 290 million),
increased 27% to € 1.342 billion from € 1.060 billion in 2016. reflecting negative currency effects. On a currency-neutral
 SEE TABLE 89 basis, operating expenses declined, due to a decrease in
LATIN AMERICA more than offset the decline in gross margin, the operating pricing and channel mix. This was partly offset by higher input
Revenues in Latin America increased 12% on a currency- margin increased 0.9 percentage points to 14.0% from 13.1% costs as well as a less favorable product mix. Operating
neutral basis and 10% in euro terms to € 1.907 billion from in 2016. Operating profit in Latin America increased 18% to expenses were up 2% to € 310 million from € 304 million in
€ 1.731 billion in 2016. Revenues of brand adidas were up 12% € 268 million versus € 227 million in 2016.  SEE TABLE 91 2016, reflecting higher marketing expenditure as well as an
on a currency-neutral basis. This development was driven by increase in operating overhead costs. Operating expenses as
double-digit sales growth at adidas Originals and adidas neo. JAPAN a percentage of sales decreased 0.8 percentage points to
In addition, mid-single-digit increases in the football category Sales in Japan grew 10% on a currency-neutral basis. In euro 29.4% (2016: 30.2%). The operating margin grew 4.6 per
also contributed to this development. Reebok brand sales in terms, revenues in Japan increased 5% to € 1.056 billion from centage points to 25.2% versus 20.6% in 2016, as a result of
Latin America grew 12% on a currency-neutral basis, driven € 1.007 billion in 2016. adidas brand revenues grew 10% on a the gross margin increase as well as the positive effect of
by double-digit growth in the training category as well as in currency-neutral basis, driven by double-digit sales increases lower operating expenses as a percentage of sales. Operating
Classics.  SEE TABLE 91 in the running and outdoor categories as well as at adidas profit in Japan increased 28% to €  266  million from
neo. In addition, high-single-digit increases in the football € 207 million in 2016.  SEE TABLE 92
Gross margin in Latin America decreased 0.3 percentage category and at adidas Originals as well as mid-single-digit
points to 42.1% (2016: 42.4%), as the positive effects from a growth in the training category also contributed to this MEAA
more favorable pricing, channel and product mix were more development. Sales of the Reebok brand in Japan were up 6% Revenues in MEAA were up 10% on a currency-neutral basis.
than offset by significant negative currency effects as well as on a currency-neutral basis, supported by double-digit sales In euro terms, sales in MEAA grew 8% to € 2.907 billion from
higher input costs. Operating expenses increased 6% to increases in the running and training categories, which more € 2.685 billion in 2016. Sales of the adidas brand increased
€ 535 million from € 507 million in 2016, reflecting an increase than offset declines in Classics.  SEE TABLE 92 11% on a currency-neutral basis, due to double-digit sales
in both marketing expenditure as well as operating overhead growth in the running and outdoor categories as well as at
costs. Operating expenses as a percentage of sales declined Gross margin in Japan increased 3.7 percentage points to adidas Originals and adidas neo. Reebok brand revenues in
1.2 percentage points to 28.1% (2016: 29.3%). As a result of 53.0% versus 49.4% in 2016, driven by a significantly more MEAA were up 2% on a currency-neutral basis, driven by high-
lower operating expenses as a percentage of sales, which favorable currency development as well as an improved single-digit increases in the training category.  SEE TABLE 93
ANNUAL REPORT 2017
Latin America at a glance € in millions 91 Japan at a glance € in millions 92 MEAA at a glance € in millions 93
Change Change Change

(currency- (currency- (currency-
2017 2016 Change neutral) 2017 2016 Change neutral) 2017 2016 Change neutral)
Net sales 1,907 1,731 10% 12% Net sales 1,056 1,007 5% 10% Net sales 2,907 2,685 8% 10%
adidas brand 1,673 1,515 10% 12% adidas brand 955 907 5% 10% adidas brand 2,603 2,385 9% 11%
126
Reebok brand 235 216 9% 12% Reebok brand 101 100 1% 6% Reebok brand 304 301 1% 2%
ADIDAS
Gross profit 803 734 9% – Gross profit 560 497 13% – Gross profit 1,514 1,344 13% –
Gross margin 42.1% 42.4% (0.3pp) – Gross margin 53.0% 49.4% 3.7pp – Gross margin 52.1% 50.0% 2.1pp –
Segmental Segmental Segmental
operating profit 268 227 18% – operating profit 266 207 28% – operating profit 847 722 17% –
Segmental Segmental Segmental
operating margin 14.0% 13.1% 0.9pp – operating margin 25.2% 20.6% 4.6pp – operating margin 29.1% 26.9% 2.2pp –
Gross margin in MEAA increased 2.1 percentage points to

52.1% (2016: 50.0%), driven by an improved pricing, product
and channel mix, partly offset by negative currency effects
and higher input costs. Operating expenses were up 7% to
€ 669 million versus € 624 million in 2016, mainly as a result
of higher operating overhead costs. As a percentage of sales,
operating expenses declined 0.2 percentage points to 23.0%
from 23.2% in 2016. The operating margin was up 2.2 per
centage points to 29.1% (2016: 26.9%), as a result of the
higher gross margin as well as the positive effect of lower
operating expenses as a percentage of sales. Operating profit
in MEAA increased 17% to € 847 million versus € 722 million
in 2016.  SEE TABLE 93
ANNUAL REPORT 2017
127
ADIDAS
SUBSEQUENT EVENTS AND OUTLOOK
SUBSEQUENT EVENTS OUTLOOK Western Europe, North America (excluding USA Reebok), USA
AND OUTLOOK FORWARD-LOOKING STATEMENTS

Reebok, Russia/CIS, Latin America, Asia/Pacific and Emerging
Markets. While the business segments Western Europe,
In 2018, we expect the global economy and consumer This Management Report contains forward-looking statements Russia/CIS, Latin America, Asia/Pacific and Emerging
spending to grow, providing a positive backdrop for robust that reflect Management’s current view with respect to the Markets are reported separately, North America (excluding
growth and expansion of the sporting goods industry. Through future development of our company. The outlook is based on USA Reebok) and USA Reebok are combined to the reportable
our extensive pipeline of innovative products, powerful estimates that we have made on the basis of all the information segment North America. Each market comprises all business
brand-building activities and tight control of both our available to us at the time of completion of this Annual Report. activities in the wholesale and retail distribution channels of
inventory levels and our cost base, we project strong top- In addition, such forward-looking statements are subject to the adidas and Reebok brands.
and bottom-line improvements in 2018. We forecast sales to uncertainties which are beyond the control of the company.
increase at a rate of around 10% on a currency-neutral basis.  SEE RISK AND OPPORTUNITY REPORT, P. 131 In case the underlying GLOBAL ECONOMY TO GROW STEADILY IN 2018 1
Gross margin is projected to grow up to 0.3 percentage points assumptions turn out to be incorrect or described risks or Global GDP is projected to remain on a steady growth trajectory,
to a level of up to 50.7%. Operating margin is expected to opportunities materialize, actual results and developments expanding 3.1% in 2018. The ongoing cyclical recovery is
increase between 0.5 and 0.7 percentage points to a level may materially deviate (negatively or positively) from those expected to continue, driven by a further acceleration in global
between 10.3% and 10.5%, driven by the increase in gross expressed by such statements. adidas does not assume any trade, on the back of benign global financing conditions,
margin as well as the positive effect of lower other operating obligation to update any forward-looking statements made in accommodative monetary policies, rising consumer confidence
expenses as a percentage of sales. Paired with lower financial this Management Report beyond statutory disclosure and firming commodity prices. However, the headline growth
expenses and a reduced tax rate, we project net income from obligations. forecast conceals differences between the pace of growth in
continuing operations to increase to a level between developed and developing economies. Developing economies
€ 1.615 billion and € 1.675 billion. CHANGES TO SEGMENTAL REPORTING are forecast to see an acceleration of growth to 4.5% as
To win the consumer in the dynamic Asian business commodity-exporting economies benefit from a stabilization of
environment and to provide consumers with a consistent oil and other commodity prices. In contrast, growth in developed
SUBSEQUENT EVENTS best-in-class brand experience across all channels and economies is projected to slow to 2.2%, as gradual monetary
markets, we aim at further driving simplicity and consistency tightening appears likely and aging populations as well as weak
ANNUAL REPORT 2017
NO SUBSEQUENT EVENTS across Asia. In this context, effective January 1, 2018, we have productivity trends impose a constraint on growth. With
Since the end of 2017, there have been no significant consolidated our former four Asia/Pacific markets Greater macroeconomic indicators generally at elevated levels already
organizational, management, economic, sociopolitical, legal China, Japan, South Korea and Southeast Asia/Pacific to one and potential economic growth set to decrease due to a
or financial changes which we expect to influence our operating segment Asia/Pacific. By doing so, we will create a slowdown in productivity growth as well as less favorable
business materially going forward. more sustainable business model across Asia, in which we demographic trends, risks to the global outlook are tilted to the
will be able to share and implement best practices in a more downside. A rise in borrowing costs or disorderly movements in
128
efficient manner. financial markets might cause turbulence and potentially derail
ADIDAS
the expansion. In addition, instances of trade protectionism or

Therefore, effective January 1, 2018, adidas has divided its geopolitical conflicts could dampen consumer confidence,
operating activities into the following operating segments: trade and growth.
1 Source: World Bank Global Economic Prospects.

SPORTING GOODS INDUSTRY EXPANSION TO support consumer spending on sporting goods. Around the CURRENCY-NEUTRAL SALES TO INCREASE
CONTINUE IN 2018 world, rising sports participation and health awareness is AT A RATE OF AROUND 10% IN 2018
In the absence of any major macroeconomic shocks, we expect projected to continue to boost demand for athletic We expect sales to increase at a rate of around 10% on a
the global sporting goods industry to grow at a mid-single-digit performance products. In addition, sportswear penetration currency-neutral basis in 2018.  SEE TABLE 94 Despite continued
rate in 2018. Sector growth in North America, the biggest rates are forecast to edge up further as sports-inspired apparel uncertainties regarding the global economic outlook, the
market by size globally, is yet to return to the pace seen in the and footwear (‘athleisure’) has become a structural component company’s sales development will be favorably impacted by
past. At the same time, most markets globally look set to of the broader fashion landscape, fueling the demand for rising consumer spending, increasing penetration of sportswear
continue expanding at robust rates. The occurrence of major athletic casual and activewear products. Within the supply (‘athleisure’) and growing health awareness in most
sports events such as the 2018 FIFA World Cup will provide a chain, innovation such as the application of new manufac geographical areas, as well as major events such as the 2018
modest tailwind to the overall sector. Consumer spending on turing techniques is projected to enhance speed-to-market FIFA World Cup. In addition, the further expansion and
sporting goods in the developing economies is expected to capabilities of sports brands, which will favorably impact improvement of our controlled space initiatives, in particular
grow faster than in the more developed markets. Progressing sales growth as consumers’ demands can be met faster and through our own e-commerce channel, is expected to contribute
urbanization and a growing middle-class in many developing more precisely. On the distribution side, the e-commerce to sales growth.
economies are predicted to further propel industry growth channel, which is already a significant growth driver for the
throughout the year. In developed economies, the sporting industry, is anticipated to broaden out further as investments NORTH AMERICA AND ASIA/PACIFIC TO GROW
goods industry is forecast to expand, as wage increases on into the digital transformation continue across the sporting AT A DOUBLE-DIGIT CURRENCY-NEUTRAL RATE
the back of generally strong labor market conditions will goods industry. In 2018, we expect currency-neutral revenues to increase in
most market segments. While currency-neutral sales are
projected to grow at double-digit rates in North America and
2018 Outlook 94
Asia/Pacific, currency-neutral sales in Western Europe and
Latin America are forecast to improve at a mid-single-digit
Currency-neutral sales development (in %): rate each. In addition, currency-neutral revenues in Emerging
adidas to increase at a rate of around 10% Markets are expected to grow at a low-single-digit rate.
Western Europe 1 mid-single-digit increase Currency-neutral sales in Russia/CIS are expected to be
ANNUAL REPORT 2017
North America 1 double-digit increase around the prior year level.  SEE TABLE 94
Asia/Pacific 1 double-digit increase
Russia/CIS 1 around prior year level
GROSS MARGIN EXPECTED TO INCREASE TO A
Latin America 1 mid-single-digit increase
Emerging Markets 1
low-single-digit increase
LEVEL OF UP TO 50.7%
Gross margin to increase up to 0.3pp to a level of up to 50.7% In 2018, the gross margin is forecast to increase up to
Other operating expenses in % of sales below prior year level 0.3 percentage points to a level of up to 50.7% (2017: 50.4%).
129
Operating profit to increase at a rate between 9% and 13%  SEE TABLE 94 Gross margin will benefit from the positive effects
ADIDAS
Operating margin to increase between 0.5 and 0.7pp to a level between 10.3% and 10.5% of a more favorable pricing, channel and regional mix. These
Net income from continuing operations 2 to increase at a rate between 13% and 17% to a level between € 1.615 billion and € 1.675 billion improvements will be partly offset by the negative impact
Basic earnings per share from continuing operations 2 to increase at a rate between 12% and 16%
from unfavorable currency movements as well as higher
Average operating working capital in % of sales around prior year level
labor expenditures in our sourcing countries and higher
Capital expenditure to increase to a level of around € 900 million
commodity prices.
1 Combined sales of the adidas and Reebok brands.
OPERATING MARGIN TO EXPAND TO A LEVEL CAPITAL EXPENDITURE TO INCREASE TO A

BETWEEN 10.3% AND 10.5% LEVEL OF AROUND € 900 MILLION
In 2018, other operating expenses as a percentage of sales In 2018, capital expenditure is expected to be around € 900 million
are expected to be below the prior year level of 41.9%. This, and thus above the prior year level (2017: € 752 million).
together with continued top-line growth and the projected Investments will mainly focus on controlled space initiatives of
gross margin improvement, is expected to drive an increase in the adidas and Reebok brands, the company’s IT and logistics
operating profit of between 9% and 13%. Consequently, we infrastructure as well as the further development of the
expect the operating margin to increase between 0.5 and 0.7 corporate headquarters in Herzogenaurach, Germany.
percentage points to a level between 10.3% and 10.5%
compared to the prior year level of 9.8%.  SEE TABLE 94 MANAGEMENT TO PROPOSE DIVIDEND
OF € 2.60
NET INCOME FROM CONTINUING OPERATIONS As a result of the strong operational and financial performance
TO INCREASE BETWEEN 13% AND 17% in 2017, our strong financial position as well as Management’s
Net income from continuing operations is projected to confidence in our short- and long-term growth aspirations, the
increase to a level between € 1.615 billion and € 1.675 billion. adidas AG Executive and Supervisory Boards will recommend
This development reflects an increase of between 13% and paying a dividend of € 2.60 per dividend-entitled share for 2017
17% compared to the prior year level of € 1.430 billion, (2016: € 2.00) to shareholders at the Annual General Meeting
excluding the negative one-time tax impact recorded in 2017. (AGM) on May 9, 2018. This represents a payout ratio of 37.1%
Basic earnings per share from continuing operations are (2016: 37.4%) based on the company's net income from
expected to increase at a rate between 12% and 16% compared continuing operations excluding the negative one-time tax
to the prior year level of € 7.05, excluding the negative one- impact in 2017. This is consistent with the prior year's payout
time tax impact in 2017.  SEE TABLE 94 Net financial expenses ratio and in line with our long-term policy to distribute between
are forecast to decrease in 2018. The tax rate is projected to 30% and 50% of net income from continuing operations to
be below the prior year level of 29.3%, excluding the negative shareholders.  SEE OUR SHARE. P, 57
ANNUAL REPORT 2017
one-time tax impact recorded in 2017.
AVERAGE OPERATING WORKING CAPITAL AS A

PERCENTAGE OF SALES TO BE AROUND PRIOR
YEAR LEVEL
In 2018, average operating working capital as a percentage of
130
sales is projected to be around the prior year level of 20.4%.
ADIDAS
RISK AND OPPORTUNITY REPORT
RISK AND OPPORTUNITY The Internal Audit department provides objective assurance system focuses on the identification, evaluation, handling,
REPORT to the Executive Board and Supervisory Board regarding the

adequacy and effectiveness of the company’s risk and
monitoring and systematic reporting of risks and opportunities.
The key objective of the risk and opportunity management
In order to remain competitive and ensure sustainable opportunity management system on a regular basis. In system is to support business success and protect the
success, adidas consciously takes certain risks and addition, the Internal Audit department includes an company as a going concern through an opportunity-focused
continuously explores and develops opportunities. Our risk assessment of the effectiveness of risk management but risk-aware decision-making framework. Our Risk
and opportunity management principles and system provide processes and compliance with the company’s Risk Management Policy outlines the principles, processes, tools,
the framework for our company to conduct business in a Management Policy as part of its regular auditing activities risk areas, key responsibilities, reporting requirements and
well-controlled environment. with selected adidas subsidiaries or functions each year. communication timelines within our company.
RISK AND OPPORTUNITY MANAGEMENT To facilitate effective risk and opportunity management, we Risk and opportunity management is a company-wide activity
PRINCIPLES implemented a risk and opportunity management system, which utilizes key insights from the members of the Executive
We define risk as the potential occurrence of an external or which is based on the integrated frameworks for enterprise Board as well as from global and local business units and
internal event (or series of events) that may negatively impact risk management and internal controls developed and functions.
our ability to achieve the company’s business objectives or published by the Committee of Sponsoring Organizations of
financial goals. Opportunity is defined as the potential the Treadway Commission (COSO). Additionally, we have Our risk and opportunity management process comprises the
occurrence of an external or internal event (or series of adapted our risk and opportunity management system to following steps:
events) that can positively impact the company’s ability to more appropriately reflect the structure as well as the —— Risk and opportunity identification: adidas continuously
achieve its business objectives or financial goals. We have corporate and management culture of the company. This monitors the macroeconomic environment and
summarized risks in four main categories: Strategic, developments in the sporting goods industry, as well as
Operational, Legal and Compliance, and Financial. internal processes, to identify risks and opportunities
adidas risk and opportunity management system 95
Opportunities are classified in two main categories: Strategic as early as possible. Our company-wide network of Risk
and Operational, and Financial. Owners (generally all leaders reporting directly to the
Executive Board, including the Managing Directors of our
ANNUAL REPORT 2017
Supervisory and Executive Boards

RISK AND OPPORTUNITY MANAGEMENT markets) ensures an effective bottom-up identification of
SYSTEM risks and opportunities. The Risk Management department
The Executive Board has overall responsibility for establishing Risk Management has defined a catalog of potential risk areas (Risk Universe)
Risk Management Policy and Methodology / Support
an effective risk and opportunity management system that to assist Risk Owners in identifying and categorizing risks
ensures comprehensive and consistent management of all and opportunities. The Risk Owners use various instruments
material risks and opportunities.  SEE DIAGRAM 95 The Risk in the risk and opportunity identification process, such as
131
Management department governs, operates and develops the Monitoring and Identification primary qualitative and quantitative research including
reporting
ADIDAS
company’s risk and opportunity management system and is trend scouting and consumer surveys as well as feedback
the owner of the centrally managed risk and opportunity Risk Owners from our business partners and controlled space network.
management process on behalf of the Executive Board. The These efforts are supported by global market research
Supervisory Board is responsible for monitoring the and competitor analysis. Through this process, we seek to
Handling Evaluation
effectiveness of the risk management system. These duties identify the markets, categories, consumer target groups
are undertaken by the Supervisory Board’s Audit Committee. and product styles which show most potential for future
growth at a local and global level. Equally, our analysis Risk evaluation categories 96
focuses on those areas that are at risk of saturation or
exposed to increased competition or changing consumer
tastes. However, our risk and opportunity identification Almost certain >85% Material Risks
process is not only limited to external risk factors or
Very likely 50% – 85%
opportunities; it also includes an internal perspective
Likelihood
that considers processes, projects, human resources and
Likely 30% – 50%
compliance aspects.
—— Risk and opportunity evaluation: We evaluate identified Possible 15% – 30%
risks and opportunities individually according to a
systematic evaluation methodology, which allows adequate Unlikely <15%
prioritization as well as allocation of resources. Risk and
opportunity evaluation is also part of the Risk Owners’ Very low Low Medium High Very high
responsibility. The Risk Management department supports Financial ≤ € 5 million € 5 million – € 20 million – € 50 million – ≥ € 100 million
and guides the Risk Owners in the evaluation process. equivalent 1 € 20 million € 50 million € 100 million
Qualitative Almost no media Limited local media Local and limited National and limited Extensive inter-
equivalent coverage coverage national media international media national media
According to our methodology, risks and opportunities are
coverage coverage coverage
evaluated by looking at two dimensions: the potential Minor injuries Minor injuries
impact and the likelihood that this impact materializes. to employees or to employees or Injuries to Serious, life- Fatalities of
third parties such third parties such employees or changing injuries employees or
Based on this evaluation, we classify risks and as consumers, as consumers, third parties such to employees or third parties such
opportunities into five categories: marginal, minor, customers, vendors, customers, vendors, as consumers, third parties such as consumers,
athletes that do not athletes that require customers, vendors, as consumers, customers, vendors,
moderate, significant and major. require medical medical treatment. athletes that lead to customers, vendors, athletes.
treatment. hospitalization. athletes.
The potential impact is evaluated using five categories:

ANNUAL REPORT 2017
Potential impact
very low, low, medium, high and very high. These
Risk classification: Marginal Minor Moderate Significant Major
categories represent quantitative or equivalent qualitative 1 Based on operating profit, financial result or tax expenses.
measurements. The quantitative measure ments are
based on the potential financial effect on the relevant
income statement metrics (operating profit, financial When evaluating risks and opportunities, we also consider might only have an effect on the achievement of the
result or tax expenses). Qualitative measurements used the earliest time period when the company’s target company’s objectives after the next financial year.
132
are, for example, the degree of media exposure or damage achievement may be impacted, in order to provide a broad
ADIDAS
to people’s health and safety. Likelihood represents the perspective and ensure early identification and mitigation. We consider both gross and net risks in our risk
possibility that a given risk or opportunity may materialize Short-term risks and opportunities may affect the assessments. While the gross risk reflects the inherent
with the specific impact. The likelihood of individual risks achievement of the company’s objectives already in the (‘worst-case’) risk before any mitigating action, the net
and opportunities is evaluated on a percentage scale current financial year, mid-term risks and opportunities risk reflects the residual (‘expected’) risk after all
divided into five categories: unlikely, possible, likely, very would impact the company’s target achievement in the mitigating action. On the one hand, this approach allows
likely and almost certain.  SEE DIAGRAM 96 next financial year, while long-term risks and opportunities for a good understanding of the impact of mitigating
action taken; on the other hand, it provides the basis for —— Risk and opportunity monitoring and reporting: Our risk and opportunities and decides if Risk Owners are
scenario analysis. Our assessment of risks presented in and opportunity management system aims to increase the required to take further action.
this report only reflects the net risk perspective. We transparency of risks and opportunities. As both risks and
measure the actual financial impact of the most relevant opportunities are subject to constant change, Risk Owners 4.
Based on the Executive Board’s decision, Risk
risks that materialized against the original assessment on not only monitor developments but also the adequacy and Management creates the final risk and opportunity
a yearly basis. In this way, we ensure continuous effectiveness of the current risk-handling strategy on an report that is also shared with a selected group of
monitoring of the accuracy of risk evaluations across the ongoing basis. leaders across the company.
company, which enables us to continuously improve
evaluation methodology based on our findings. Regular risk reporting takes place half-yearly and consists 5.
The Executive Board in collaboration with Risk
of a five-step reporting stream that is supported and Management presents the final risk and opportunity
In assessing the potential effect from opportunities, each facilitated by a globally used company-wide IT solution: assessment results to the Audit Committee of the
opportunity is appraised with respect to viability, Supervisory Board.
commerciality and potential risks. This approach is 1. Risk Owners are required to report to Risk Management
applied to longer-term strategic prospects but also to risks that have a possible gross impact of € 10 million Material changes in previously reported risks and
shorter-term tactical and opportunistic initiatives at the and above or a net impact of € 1 million and above, both opportunities and/or newly identified risks and
corporate level as well as at the market and brand level. In regardless of the likelihood of materializing. Risk opportunities that are classified as moderate, significant
contrast to the risk evaluation, only the net perspective Owners are also required to report all opportunities or major as well as any issues identified which, due to
exists for assessing opportunities. that have an impact of € 1 million and above. their material nature, require immediate reporting, are
—— Risk and opportunity handling: Risks and opportunities also reported outside the regular half-yearly reporting
are treated in accordance with the company’s risk and 2.
Risk Management consolidates and aggregates the stream on an ad hoc basis to the Risk Management
opportunity management principles as described in the reported risks and opportunities and provides a department and the Executive Board.
Risk Management Policy. Risk Owners are in charge of consolidated report based on the Risk Owners’ input to
developing and implementing appropriate risk-mitigating each member of the Executive Board concerning his or COMPLIANCE MANAGEMENT SYSTEM
action and exploiting opportunities within their area her individual area of responsibility. Each report (ADIDAS FAIR PLAY COMPLIANCE
ANNUAL REPORT 2017
of responsibility. In addition, the Risk Owners need to specifically highlights substantial individual risks and FRAMEWORK)
determine a general risk-handling strategy for the identified opportunities. Each member of the Executive Board We consider compliance with the law as well as with external
risks, which is either risk avoidance, risk reduction with reviews the reported risks and opportunities of his or and internal regulations to be imperative. Every employee is
the objective to minimize impact and/or likelihood, risk her individual area of responsibility, adding his or her required to act ethically and in compliance with the law as
transfer to a third party or risk acceptance. The decision own assessment of risks and opportunities if necessary. well as with external and internal regulations while executing
on the implementation of the respective risk-handling the company’s business. Violations must be avoided under all
133
strategy also takes into account the costs in relation to the 3. Risk Management provides a consolidated report to all circumstances. As a company with worldwide operations and
ADIDAS
effectiveness of any planned mitigating action if applicable. members of the Executive Board that includes both the more than 56,000 employees, however, we realize that it will
The Risk Management department works closely with assessment of each member of the Executive Board never be possible to exclude compliance violations with
the Risk Owners to monitor the continuous progress of and the material risks and opportunities reported by absolute certainty.
planned mitigating action and assess the viability of already Risk Owners. The Executive Board reviews the report,
implemented mitigating action. jointly agrees on a final company assessment of risks The adidas Fair Play Compliance Framework and our risk and
opportunity management system are closely aligned and both
are overseen by the company’s Chief Compliance Officer who policy, the privacy policy or the antitrust and competition law relevant HR manager or the Works Council) or externally via
reports directly to the company’s Chief Executive Officer. We policy, training of employees or targeted compliance-related an independent, confidential reporting hotline or email
see compliance as all-encompassing, spanning all business communication by management or the Compliance service. The hotline (named ‘Fair Play hotline’) is available at
functions throughout the entire value chain, from supply chain department. In 2017, more than 6,000 employees participated all times worldwide. In case of reported or suspected
through to the end consumer. In 2017, we therefore in our web-based Code of Conduct training, which is a compliance violations, the Chief Compliance Officer or the
significantly increased the size of our central Compliance mandatory component of employee onboarding, while around Compliance department undertake the required investigations.
team and added dedicated regional Compliance teams based 2,700 employees completed our web-based anti-bribery and
across our major regional hubs. The central Compliance team corruption training. In addition, 11,800 employees completed Appropriate and timely response to compliance violations is
works closely with regional Compliance Managers and local the Preventing Anti-Competitive Practices training. essential. Therefore, we have established a team of regional
Compliance Officers to conduct a systematic assessment of Furthermore, over 95% of senior executives were trained in Compliance Managers and a global network of local
key compliance risks on a half-yearly basis. In addition, the dedicated three-hour compliance workshops and the Compliance Officers overseen by the Chief Compliance Officer
central Compliance team regularly conducts detailed members of the Executive Board also completed a separate as contact persons to whom complaints and information
compliance risk assessments within selected entities. compliance training session. concerning compliance violations can be reported. We track,
monitor and report potential incidents of non-compliance
The company’s compliance management system is based on To ensure timely detection of potential infringements of worldwide using a web-based reporting solution. In 2017, we
the OECD Principles of Corporate Governance. It refers to the statutory regulations or internal guidelines, we have recorded 419 potential compliance violations, representing a
OECD Guidelines for Multinational Enterprises and is implemented whistleblowing procedures which allow 26% increase compared to the prior year when 331 potential
designed to: employees to either report concerns over wrongdoing/ violations were recorded.  SEE DIAGRAM 97  SEE DIAGRAM 98 This
—— Support the achievement of qualitative and sustainable potential compliance violations internally (e.g. directly to their increase is attributable to ongoing senior management
growth through good corporate governance. supervisor, to the Chief Compliance Officer, regional communication (e.g. reemphasizing our non-retaliation
—— Reduce and mitigate the risk of financial losses or damage Compliance Managers or local Compliance Officers, the policy), training and workshops, which have led to improved
caused by non-compliant conduct.
—— Protect and further enhance the value and reputation of
the company and its brands through compliant conduct.
ANNUAL REPORT 2017
Potential compliance violations 97

—— Preserve diversity by fighting harassment and discrimination.
Malfeasance, including
Our Fair Play Code of Conduct, which is applicable globally Financial, conflicts of interest
and for all business areas, stipulates guidelines for behavior including theft and corruption Competition Behavioral Other 1
in everyday work, which all employees are obliged to comply 210 194
with. The Code of Conduct is accessible on our website, on our 180
155
134
intranet and as an app for smartphones. ↗ ADIDAS-GROUP.COM/S/ 150
ADIDAS
CODE-OF-CONDUCT The Code of Conduct is the cornerstone of our 120

compliance management program which is founded on three 90
60
pillars: prevention, detection and response. 32 36
30
2
0
Prevention includes, for example, policies such as the
company’s Code of Conduct, the anti-bribery and corruption 1 Includes payroll issues, intellectual property and leaks of confidential information, inter alia.
employee awareness with respect to ethical conduct and our DESCRIPTION OF THE MAIN FEATURES OF THE examines internal controls, including IT controls, to assess
continuously improving compliance activities. INTERNAL CONTROL AND RISK MANAGEMENT their effectiveness. The Audit Committee of the Supervisory
SYSTEM RELATING TO THE CONSOLIDATED Board also monitors the effectiveness of ICoFR. However, due
Appropriate sanction mechanisms, ranging from warnings FINANCIAL REPORTING PROCESS PURSUANT to the limitations of ICoFR, even with appropriate and
through to termination of employment, are used to react TO § 315 SECTION 4 GERMAN COMMERCIAL functional systems absolute certainty about the effectiveness
promptly to confirmed compliance violations. Insights gained CODE (HANDELSGESETZBUCH – HGB) of ICoFR cannot be guaranteed.
from the investigation of past violations are used to The internal control and risk management system relating to
continuously improve the compliance management system. the consolidated financial reporting process of the company All adidas companies are required to comply with the
represents a process embedded within the company-wide consolidated financial reporting policies (Finance Manual),
Monthly key performance indicators, including those for corporate governance system. It aims to provide reasonable which are available to all employees involved in the financial
participation in training and for compliance violations, are assurance regarding the reliability of the company’s external reporting process through the company-wide intranet. We
reported to the Executive Board by the Compliance financial reporting by ensuring company-wide compliance update the Finance Manual on a regular basis, dependent on
department. The Chief Compliance Officer regularly reports with statutory accounting regulations, in particular the regulatory changes and internal developments. Changes to
to the Chief Executive Officer on the further development of International Financial Reporting Standards (IFRS) and the Finance Manual are promptly communicated to all adidas
the compliance program and on major compliance cases, internal consolidated financial reporting policies (Finance companies. Clear policies serve to limit employees’ scope of
which are also reported to the Audit Committee. Further, he Manual). We regard the internal control and risk management discretion with regard to recognition and valuation of assets
reports to the Audit Committee at one of its meetings at least system as a process based on the principle of segregation of and liabilities, thus reducing the risk of inconsistent
once a year concerning the contents and the further duties, encompassing various sub-processes in the areas of accounting practices within the company. We aim to ensure
development of the compliance program. Accounting, Controlling, Taxes, Treasury, Planning, Reporting compliance with the Finance Manual through continuous
and Legal, focusing on the identification, assessment, adherence to the four-eyes principle in accounting-related
treatment, monitoring and reporting of financial reporting processes. In addition, each quarter, the local manager
risks. Clearly defined responsibilities are assigned to each responsible for the accounting process within the respective
distinct sub-process. In a first step, the internal control and company and the respective local Managing Director confirm
Reporting of potential compliance violations in % 98
risk management system serves to identify and assess as adherence to the Finance Manual and to IFRS in a signed
ANNUAL REPORT 2017
well as to limit and control risks identified in the consolidated representation letter to the Accounting department.
20% financial reporting process which might result in our
Compliance Officer consolidated financial statements not being compliant with The accounting for adidas companies is conducted either
42%
internal and external regulations. locally or by an adidas Shared Service Center. The majority of
Named call the IT Enterprise Resource Planning (ERP) systems used are
38%
to hotline Internal Control over Financial Reporting (ICoFR) serves to based on a company-wide standardized SAP system. Some
135
Anonymous call provide reasonable assurance regarding the reliability of adidas companies use Navision-based ERP software. As part
ADIDAS
to hotline financial reporting and compliance with applicable laws and of an initiative aimed at harmonizing our system infrastructure
regulations despite identified financial reporting risks. To (One ERP), we will also introduce an SAP-based ERP system
monitor the effectiveness of ICoFR, the Policies and Internal within these adidas companies in the medium term. Following
Controls department and the Internal Audit department approval by the Finance Director of the respective adidas
regularly review accounting-related processes. Additionally, company, the local financial statements are transferred to a
as part of the year-end audit, the external auditor selects and central consolidation system based on SAP SEM-BCS. At the
corporate level, the regularity and reliability of the financial routine basis. After ensuring data plausibility, the centrally steps, all items in the consolidated income statement and in
statements prepared by adidas companies are reviewed by coordinated and monitored consolidation process begins, the consolidated statement of financial position are analyzed
the Accounting and Controlling departments. These reviews running automatically on SAP SEM-BCS. Controls within the with respect to trends and variances. Unless already otherwise
include automated validations in the system as well as the individual consolidation steps, such as those relating to the clarified, the adidas companies are asked to explain any
creation of reports and analyses to ensure data integrity and consolidation of debt or of income and expenses, are identified material deviations.
adherence to the reporting logic. In addition, differences conducted both manually and system-based, using
between current year and prior year financial data as well as automatically created consolidation logs. Any inadequacies All financial systems used are protected against malpractice
budget figures are analyzed on a market level. If necessary, are remedied manually by systematically processing the by means of appropriate authorization concepts, approval
adidas seeks the opinion of independent experts to review individual errors as well as differences and are reported back concepts and access restrictions. Access authorizations are
business transactions that occur infrequently and on a non- to the adidas companies. After finalization of all consolidation reviewed on a regular basis and updated if required. The risk
of data loss or outage of accounting-related IT systems is
minimized through central control and monitoring of virtually
Corporate risks overview 99 all IT systems, centralized management of change processes
and regular data backups.
Change Change
Potential impact (2016 rating) Likelihood (2016 rating)
ILLUSTRATION OF MATERIAL RISKS
This report includes an explanation of what we perceive as
Strategic risks material risks to the achievement of the company’s objectives
Risks related to distribution strategy Very high ↑ (Medium) Likely
in the time period from 2018 to 2020. Our presentation of risks
Consumer demand risks Very high Possible
in this year’s Annual Report differs from the 2016 Annual
Risks related to technology change High Possible
Competition risks Medium Likely ↑ (Possible) Report as we have expanded our scope and do not only focus
Macroeconomic, sociopolitical and regulatory risks Very high Unlikely on risks that could impact the company’s business
performance over a one-year period. Besides our material
Operational risks
risks, we also report the following risks that we deem to be
ANNUAL REPORT 2017
Business partner risks Very high ↑ (High) Possible

IT and cyber security risks High Possible relevant: competition risks, macroeconomic, sociopolitical
Personnel risks High Unlikely ↓ (Possible) and regulatory risks, personnel risks, inventory risks, fraud
Inventory risks High Unlikely and corruption risks, credit risks, interest rate and share
price risks as well as financing and liquidity risks. The risks
Legal and compliance risks
Data privacy risks Very high Possible overview table shows the assessment of all risks described
Risks related to product counterfeiting and imitation Very high Possible below.  SEE TABLE 99
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Risks related to customs and tax regulations High Likely
ADIDAS
Fraud and corruption risks Very high Unlikely STRATEGIC RISKS

Financial risks Risks related to distribution strategy
Currency risks Very high Possible ↓ (Likely) The inability to appropriately influence the channels in which
Credit risks Very high ↑ (High) Unlikely the company’s products are sold constitutes a continuous
Interest rate and share price risks Low Possible ↓ (Likely) risk. Gray market activity or parallel imports could negatively
Financing and liquidity risks Very low Very Likely ↑ (Likely) affect our own sales performance and the image of our
brands. Furthermore, changes to segmentation, store formats consumer demand or consumer trends. Consumer demand and exchanged. Failure to anticipate, recognize and respond
and channel strategies could lead to inadequate utilization of changes can be sudden and unexpected, particularly when it to changes in technology in a timely manner could disrupt the
our multiple distribution channels as well as strong retaliation comes to fashion-related businesses. Therefore, failure to company’s business model, lead to a deterioration of our
from our customers and franchise partners. An unbalanced anticipate consumer demand, as well as creating and offering competitive position in the marketplace and substantially
portfolio of own-retail stores (e.g. overexposure to certain products that do not resonate with consumers, is a critical affect our ability to achieve our strategic and financial goals.
markets or store formats) or inappropriate store locations risk to the success of our brands. Because of average lead
may result in worse-than-expected sales development and times of 12 to 18 months, we face a risk of short-term revenue In order to mitigate this risk, we established a cross-functional
lower profitability. Failure to recognize and respond to loss in cases where we are unable to respond quickly to digital leadership group that identifies and assesses
consolidation in the retail industry could lead to increased changes in consumer demand. Even more critical, however, is technology trends and coordinates adoption of new
dependency on particular retail partners, reduced bargaining the risk of continuously overlooking new consumer trends or technologies. Furthermore, we build partnerships with
power and, consequently, margin erosion. The inability to failing to acknowledge their potential magnitude over a technology and business leaders around the world to stay
properly adjust our distribution strategy to the continuously sustained period of time. connected to the latest advancements. For example, we have
changing retail industry, which is experiencing increasing entered into a partnership with Carbon, a Silicon Valley-based
substitution of physical retail stores by digital commerce To mitigate these risks, identifying and responding to shifts in digital 3D manufacturing company.  SEE INNOVATION, P. 78
platforms, could result in sales and profit shortfalls. consumer demand as early as possible is a key responsibility
of our brand organizations and, in particular, of the respective Competition risks
To mitigate these risks, adidas has developed and implemented Risk Owners. Therefore, we utilize extensive primary and Strategic alliances amongst competitors and/or retailers, the
clearly defined distribution policies and procedures to avoid secondary research tools as outlined in our risk and increase of retailers’ own private label businesses and intense
overdistribution of products in a particular channel and limit opportunity identification process. We continuously expand competition for consumers and promotion partnerships
the exposure to gray markets. We continuously monitor our our consumer analytics efforts to read and quickly react to between well-established industry peers and new market
own-retail store portfolio, which helps us identify imbalances changes in demand or trend shifts. In addition, direct entrants (e.g. new brands, vertical retailers  SEE GLOSSARY)
and quickly take appropriate action such as store closure or communication with consumers on social media platforms or pose a substantial risk to adidas. This could lead to harmful
remodeling. New store openings are managed according to a direct touchpoints with consumers via our own e-commerce competitive behavior, such as price wars in the marketplace
standardized company-wide business plan model, taking into channel help us strengthen our understanding of consumer or bidding wars for promotion partnerships. Sustained pricing
ANNUAL REPORT 2017
account our many years of own-retail experience and best preferences and behavior and, as a result, help us to reduce pressure in key markets could threaten the company’s
practices from around the world. In addition, we conduct our vulnerability to changes in demand. Through continuous financial performance and the competitiveness of our brands.
specific training for our sales force to appropriately manage monitoring of sell-through data and disciplined product Aggressive competitive practices could also drive increases in
product distribution and ensure that the right product is sold lifecycle management, in particular for our major product marketing costs and market share losses, thus hurting the
at the right point of sale to the right consumer at an franchises, we are able to better detect demand patterns and company’s profitability and market position. World leaders in
appropriate price. We invest significant resources in the prevent overexposure. digital technologies could threaten adidas’ success in markets
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further expansion of our own e-commerce activities and work for sport, health and fitness apps.
Risks related to technology change
ADIDAS
closely with retail partners with strong expertise in digital

commerce. Technological advancement is happening at an unprecedented To mitigate competition risks, we continuously monitor and
pace and has profound implications for our company’s analyze information on our competitors and markets in order
Consumer demand risks operations. Technologies such as 3D printing, augmented to be able to anticipate unfavorable changes in the competitive
Success in the sporting goods industry largely depends on the reality, blockchain and artificial intelligence are changing the environment rather than reacting to such changes. This
ability to anticipate and quickly respond to changes in way products and services are made, offered, experienced enables us to proactively adjust our marketing and sales
activities when needed. Continuous investment in research investments to alternative, more attractive markets, changes Overreliance on a supplier for a substantial portion of the
and development ensures that we remain innovative and in product prices, closure of own-retail stores, more company’s product volume, or overdependence on a particular
distinct from competitors.  SEE INNOVATION, P. 78 We also pursue conservative product purchasing, tight working capital customer, increases the company’s vulnerability to delivery
a strategy of entering into long-term agreements with key management and an increased focus on cost control. In and sales shortfalls and could lead to significant margin
promotion partners such as FC Bayern Munich or Lionel addition, by building on our leading position within the pressure. Business partner default (including insolvency) or
Messi, as well as adding new partners to refresh and diversify sporting goods industry, we actively engage in supporting other disruptive events such as strikes may negatively affect
our portfolio, e.g. Gabriel Jesus or Victoria Beckham. In policymakers and regulators in their efforts to liberalize the company’s business activities and result in additional
addition, our product and communication initiatives are global trade and curtail trade barriers and also in order to costs and liabilities as well as lower sales for the company.
designed to increase brand desire, drive market share growth proactively adapt to significant changes in the regulatory Unethical business practices or improper behavior on the part
and strengthen our brands’ market position. environment. of business partners could have a negative spill-over effect on
the company’s reputation, lead to higher costs or liabilities
Macroeconomic, sociopolitical and regulatory risks OPERATIONAL RISKS and disrupt business activities.
Growth in the sporting goods industry is highly dependent on Business partner risks
consumer spending and consumer confidence. Economic adidas interacts and enters into partnerships with various To mitigate business partner risks, adidas has implemented
downturns and sociopolitical factors such as military conflicts, third parties, such as promotion partners, retail partners or various measures. For example, we generally include clauses
changes of government, civil unrest, nationalization or suppliers. As a result, the company is exposed to a multitude in contractual agreements with athletes, clubs and federations
expropriation, in particular in regions where adidas is strongly of business partner risks. or other promotion partners that allow us to suspend or even
represented, therefore could negatively impact the company’s terminate our partnership in case of improper or unethical
business activities and top- and bottom-line performance. In Injuries to individual athletes or poor on-field performance on conduct. In addition, we work with a broad portfolio of
addition, substantial changes in the regulatory environment the part of sponsored teams or athletes could reduce their promotion partners, including individual athletes, club teams
(e.g. trade restrictions, economic and political sanctions) consumer appeal and eventually result in lower sales and and federations or associations in numerous sports in order
could lead to potential sales shortfalls or cost increases. For diminished attractiveness of our brands. Failure to cement to reduce the dependence on the success and popularity of a
example, the ongoing negotiations between the UK and the and maintain strong relationships with retailers could have few individual partners. To ensure strong relationships with
European Union regarding the UK’s withdrawal from the substantial negative effects on our wholesale activities and retailers, adidas is committed to delivering outstanding
ANNUAL REPORT 2017
European Union (‘Brexit’) could cause business and consumer thus the company’s business performance. Losing important customer service and providing our retail partners with the
uncertainty, create an additional administrative burden to customers in key markets due to sub-par relationship support and tools required to establish and maintain a
adhere to changes in regulatory frameworks and also increase management would result in significant sales shortfalls. We mutually successful business relationship. Customer
uncertainty concerning the future of the European Union. work with strategic partners in various areas of our business relationship management is not only a key activity for our
(e.g. product creation, manufacturing, research and sales force but also of utmost importance to our company’s
To mitigate these macroeconomic, sociopolitical and development) or distributors in a few selected markets whose top executives and second-line management. We also utilize a
138
regulatory risks, adidas strives to balance sales across key approach might differ from our own business practices and broad distribution strategy which includes further expansion
ADIDAS
regions and also between developed and emerging markets. standards, which could also negatively impact the company’s of our direct-to-consumer business to reduce the risk of
We also continuously monitor the macroeconomic, political business performance and reputation. Similarly, failure to overreliance on particular key customers. Specifically, no
and regulatory landscape in all our key markets to anticipate maintain strong relationships with suppliers or service single customer accounted for more than 5% of the company’s
potential problem areas, so that we are able to quickly adjust providers could negatively impact the company’s sales and sales in 2017. To reduce the risk of business interruption in
our business activities accordingly upon any change in profitability. Risks may also arise from a dependence on the supply chain, we work with suppliers who demonstrate
conditions. Potential adjustments may be a reallocation of particular suppliers, customers or service providers. reliability, quality and innovation. Furthermore, in order to
minimize any potential negative consequences such as a security measures such as anti-virus software and firewalls successful, is an essential part of our strategic business plan
violation of our Workplace Standards by our suppliers, we are designed to further protect our systems and critical ‘Creating the New’ and is designed to reduce these risks.
enforce strict control and inspection procedures at our information. We perform multiple backups at alternating data  SEE PEOPLE AND CULTURE, P. 81 To optimize staffing levels and
suppliers and also demand adherence to social and center locations for the company’s core ERP system on a daily resource allocation (i.e. having the right people with the right
environmental standards throughout our supply chain.  SEE basis. In addition, for the ERP system, our contingency solution skillsets in the right roles), we have launched a strategic
SUSTAINABILITY, P. 88 In addition, we have selectively bought allows us to quickly switch to a remote site if necessary – workforce management initiative. We continuously invest in
insurance coverage for the risk of business interruptions without any loss of data. System security, controls and reliability improving employer branding activities to be the ‘employer of
caused by physical damage to suppliers’ premises. To reduce are regularly reviewed and tested by the Internal Audit choice’ in our industry and as a result attract and retain the
dependency on any particular supplier, the company follows a department. To increase awareness amongst employees with right talent. We have also established a global recruiting
strategy of diversification. In this context, adidas works with a regard to information security and data privacy, we conduct organization to enhance our internal and external recruiting
broad network of suppliers and, for the vast majority of its various training programs and regular information campaigns. services and capabilities. In addition, we strengthen employee
products, does not have a single-sourcing model  SEE GLOSSARY. retention by providing employees with development and
Personnel risks career opportunities (e.g. via our Talent Carousel program)
IT and cyber security risks Achieving the company’s strategic and financial objectives is and we focus on promoting from within the organization
Theft or leakage of confidential and sensitive information or highly dependent on our employees and their talents. In this rather than recruiting externally. We also have attractive
data (e.g. product data, employee data, consumer data) could respect, strong leadership and a performance-enhancing reward and incentive schemes in place, designed to further
lead to reputational damage, penalties and higher costs. Data culture are critical to the company’s success. Therefore, support long-term employee commitment.
leakage could trigger in-depth forensic investigation resulting inconsistent or ineffective leadership as well as the failure to
in temporary unavailability of key systems and business install and maintain a performance-oriented culture and Inventory risks
interruption. Key business processes, including product ensure strong employee engagement amongst our workforce As we place initial production orders up to nine months in
marketing, order management, warehouse management, could also substantially impede our ability to achieve our advance of delivery, adidas is exposed to inventory risks
invoice processing, customer support and financial reporting, goals. An ineffective, unbalanced allocation of resources to relating to misjudging consumer demand at the time of
are all dependent on IT systems. A significant systems outage business activities could cause operational inefficiencies and production planning. Overestimating demand could result in
or application failure in our infrastructure or that of our result in lower employee engagement. In addition, global inappropriate capacity utilization at our suppliers’ factories,
ANNUAL REPORT 2017
business partners could therefore result in considerable competition for highly qualified personnel remains fierce. As lead to overproduction and cause excess inventory for the
disruptions to our business. Virus or malware attacks could a result, the loss of key personnel in strategic positions and company as well as in the marketplace. This can have negative
also lead to systems disruption, result in the loss of business- the inability to identify, recruit and retain sufficient numbers implications for our financial performance, including product
critical and/or confidential information or harm data integrity. of highly qualified and skilled people who best meet the returns, inventory obsolescence and higher levels of clearance
specific needs of our company pose substantial risks to our activity as well as reduced liquidity due to higher operating
To mitigate these risks, our IT organization proactively business performance. Unattractive or non-competitive working capital requirements. Similarly, underestimating
139
engages in system preventive maintenance, service continuity management and employee remuneration may exacerbate demand can lead to product shortfalls at the point of sale. In
ADIDAS
planning and adherence to applicable IT policies. Data security these risks. In addition, a lack of sufficient training measures this situation, adidas faces the risk of missed sales
is managed by restricting user access based on job description and inadequate documentation of critical know-how might opportunities and/or customer and consumer disappointment,
and adhering to data protection regulations. We conduct dilute or lead to a loss of key capabilities. which could lead to a reduction in brand loyalty and hurt our
security reviews of key systems and applications on a regular reputation. In addition, the company faces potential
basis and have established monitoring and alert systems to Our People Strategy, aimed at fostering a corporate culture of profitability impacts from additional costs such as airfreight in
detect and properly tackle IT security incidents. Additional confidence, creativity and collaboration that is needed to be efforts to speed up replenishment.
In order to mitigate these risks, we actively manage inventory ensure we understand legal requirements across the globe monitor changes in legislation in order to properly adopt
levels, for example by continuous monitoring of stock levels and take appropriate action to remain compliant. regulatory requirements regarding customs and taxes. In
as well as centralizing stock holding and clearance activities. addition, our internal legal, customs or tax departments
We also continuously strive to improve our forecasting and Risks related to product counterfeiting and imitation advise our operational management teams to ensure
material planning processes.  SEE INTERNAL MANAGEMENT SYSTEM, P. 102 As popular consumer brands which largely rely on appropriate and compliant business practices. Furthermore,
In addition, our Global Operations function is continuously technological and design innovation, our brands are frequent we work closely with customs authorities and governments
improving the agility and flexibility of our planning environment targets for counterfeiting and imitation. worldwide to make sure we adhere to customs and import
in order to shorten lead times and ensure availability of regulations and obtain the required clearance of products to
products while trying to avoid excess inventories.  SEE GLOBAL To reduce the loss of sales and the potential damage to brand fulfill sales demand.
OPERATIONS, P. 74 In this context, the company’s strategic priority reputation resulting from counterfeit products, the company
‘Speed’ is an important driver, leveraging market and sell- makes use of extensive legal protection (generally through Fraud and corruption risks
through data in new ways. This, in turn, enables us to respond registration of trademarks) and works closely with law We face the risk that members of the Executive Board as well
quickly to consumer demand and to deliver concepts that are enforcement authorities, investigators and external legal as our employees breach rules and standards that guide
fresh and desirable and made available when and where they counsel. Although we have stepped up measures such as appropriate and responsible business behavior. This includes
are wanted by the consumer.  SEE CORPORATE STRATEGY, P. 62 product security labeling with our authorized suppliers, the the risks of fraud, financial misstatements or manipulation,
development of these measures remains a key priority going bribery and corruption.
LEGAL AND COMPLIANCE RISKS forward.
Data privacy risks Our Fair Play Compliance Framework helps us manage these
As a globally operating company, adidas is subject to various Risks related to customs and tax regulations risks in a proactive way and enables us to prevent, detect and
laws and regulations concerning data protection and privacy. Numerous laws and regulations regarding customs and taxes adequately respond in case of fraudulent or corrupt behavior.
Non-compliance with such laws and regulations could lead to as well as changes in such laws and regulations affect the Our Global Policy Manual provides a framework for basic
substantial penalties and fines. For example, non-compliance company’s business practices worldwide. Non-compliance work procedures and processes and our Fair Play Code of
with the EU General Data Protection Regulation, which will be with regulations concerning product imports (including Conduct stipulates that every employee and our business
in force as of May 2018, may result in fines of up to 4% of annual calculation of customs values), intercompany transactions or partners shall act ethically in compliance with the laws and
ANNUAL REPORT 2017
net sales. In addition, publication of failure to comply with income taxes could lead to substantial financial penalties and regulations of the legal systems where they conduct company
data protection and privacy regulations could cause significant additional costs as well as negative media coverage and business. In addition, our regional compliance managers and
reputational damage and result in a loss of consumer trust in therefore reputational damage, for example in case of local compliance officers guide and advise our operating
our brands. As it is critical for the company’s future success to understatements or underpayments of corporate income managers regarding fraud and corruption topics. Furthermore,
constantly analyze and effectively utilize data, these risks taxes or customs duties. Changes in regulations regarding we utilize controls such as segregation of duties in IT systems
have become increasingly important for the company. customs and taxes may also have a substantial impact on the and data analytics technology to prevent or detect fraudulent
140
company’s sourcing costs or income taxes. Therefore, we also activities.
ADIDAS
To mitigate these risks, we have established a global data create provisions in accordance with the relevant accounting
privacy policy that applies to all adidas businesses worldwide. regulations to account for potential disputes with customs or FINANCIAL RISKS
In addition, our data protection officer and the data protection tax authorities. Currency risks
department are continuously monitoring the adherence to Currency risks for adidas are a direct result of multi-currency
data privacy standards and provide training and guidance. We To proactively manage such risks, we constantly seek expert cash flows within the company. Furthermore, translation
are also working with external partners and law firms to advice from specialized law and tax advisory firms. We closely impacts from the conversion of non-euro-denominated
results into the company’s functional currency, the euro, shareholders’ equity are also included in accordance with impacts of currency on our sourcing activities (due to their
might lead to a material negative impact on our company’s IFRS requirements. own private label sourcing efforts), are also excluded from
financial performance. The biggest single driver behind this this analysis.
risk results from the mismatch of the currencies required for However, many other financial and operational variables that
sourcing our products versus the denominations of our sales. could potentially reduce the effect of currency fluctuations are Utilizing a centralized currency risk management system, we
The vast majority of our sourcing expenses are in US dollars, excluded from the analysis. For instance: hedge currency needs for projected sourcing requirements on
while sales are denominated in other currencies to a large —— Interest rates, commodity prices and all other exchange a rolling basis up to 24 months in advance. In rare instances,
extent – most notably the euro. Exposures are presented in rates are assumed constant. hedges are contracted beyond the 24-month horizon.  SEE
the respective table.  SEE TABLE 100 The exposure from firm —— Exchange rates are assumed at a year-end value instead TREASURY, P. 115 Our goal is to have the vast majority of our
commitments and forecast transactions was calculated on a of the more relevant sales-weighted average figure, which hedging volume secured six months prior to the start of a
one-year basis. we utilize internally to better reflect both the seasonality of given season. The company also largely hedges balance sheet
our business and intra-year currency fluctuations. risks. Due to our strong global position, we are able to partly
In line with IFRS 7 requirements, we have calculated the —— The underlying forecast cash flow exposure (which the minimize currency risk by utilizing natural hedges. Our gross
impact on net income and shareholders’ equity based on hedge instrument mainly relates to) is not required to be US dollar cash flow exposure calculated for 2018 was around
changes in our most important currency exchange rates. The revalued in this analysis. € 6.0 billion at year-end 2017, which we hedged using forward
calculated impacts mainly result from changes in the fair —— Operational issues, such as potential discounts for key exchange contracts, currency options and currency swaps.
value of our hedging instruments. The analysis does not accounts, which have high transparency regarding the  SEE TABLE 100 Our Treasury Policy allows us to utilize hedging
include effects that arise from the translation of our foreign

entities’ financial statements into the company’s reporting
Exposure to foreign exchange risk based on notional amounts € in millions 100
currency, the euro. The sensitivity analysis is based on the net
balance sheet exposure, including intercompany balances
from monetary assets and liabilities denominated in foreign USD GBP JPY CNY
currencies. Moreover, all outstanding currency derivatives were
As at December 31, 2017
re-evaluated using hypothetical foreign exchange rates to
ANNUAL REPORT 2017
Exposure from firm commitments and forecast transactions (5,824) 1,206 659 845
determine the effects on net income and equity. The analysis Balance sheet exposure including intercompany exposure (154) (17) (6) (43)
was performed on the same basis for both 2016 and 2017. Total gross exposure (5,978) 1,189 653 802
Hedged with other cash flows
Based on this analysis, a 10% increase in the euro versus the Hedged with currency options 453 (68) (44)
US dollar at December 31, 2017 would have led to a € 7 million Hedged with forward contracts 4,465 (919) (431) (997)
Net exposure (1,060) 202 178 (195)
increase in net income.    SEE TABLE 101 The more negative
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market values of the US dollar hedges would have decreased As at December 31, 2016
ADIDAS
shareholders’ equity by € 255 million. A 10% weaker euro at Exposure from firm commitments and forecasted transactions (6,763) 985 615 252
December 31, 2017 would have led to a € 14 million decrease Balance sheet exposure including intercompany exposure (478) (11) (6) 28
Total gross exposure (7,241) 974 609 280
in net income. Shareholders’ equity would have increased by
Hedged with other cash flows 114
€ 334 million. The impacts of fluctuations of the US dollar
Hedged with currency options 405 (54)
against the Chinese renminbi and of the euro against the Hedged with forward contracts 5,253 (985) (578) (53)
British pound and the Japanese yen on net income and Net exposure (1,469) (11) (23) 227
Sensitivity analysis of foreign exchange rate changes € in millions 101 Objective evidence that financial assets are impaired includes,
for instance, significant financial difficulty of the issuer or
debtor, indications of the potential bankruptcy of the borrower
USD GBP JPY CNY
and the disappearance of an active market for a financial asset
As at December 31, 2017 because of financial difficulties. The company utilizes allowance
EUR +10% EUR +10% EUR +10% USD +10% accounts for impairments that represent our estimate of
Equity (255) 88 43 76
incurred credit losses with respect to accounts receivable.
Net income 7 1 1 12
EUR –10% EUR –10% EUR –10% USD –10%
Equity 334 (101) (52) (76)
Allowance accounts are used as long as the company is
Net income (14) (3) (1) (11) satisfied that recovery of the amount due is possible. Once
this is no longer the case, the amounts are considered
irrecoverable and are directly written off against the financial
EUR +10% EUR +10% EUR +10% USD +10%
Equity (277) 85 53 48
asset. The allowance consists of two components:
Net income 7 1 1 7 —— firstly, an allowance established for all receivables
EUR –10% EUR –10% EUR –10% USD –10% dependent on the aging structure of receivables past due
Equity 355 (104) (66) (48) date and
Net income (8) (1) (1) (6) —— secondly, a specific allowance that relates to individually
assessed risks for each specific customer – irrespective
of aging.
instruments, such as currency options or option combinations, At the end of 2017, there was no relevant concentration of credit
which provide protection from negative exchange rate risk by type of customer or geography. Our credit risk exposure At the end of 2017, no customer accounted for more than 10%
fluctuations while – at the same time – retaining the potential is mainly influenced by individual customer characteristics. of accounts receivable.
to benefit from future favorable exchange rate developments Under the company’s credit policy, new customers are analyzed
in the financial markets. for creditworthiness before standard payment and delivery The Treasury department arranges currency, commodity and
ANNUAL REPORT 2017
terms and conditions are offered. Tolerance limits for accounts interest rate hedges, and invests cash, with major banks of a
Credit risks receivable are also established for each customer. Both high credit standing throughout the world. adidas subsidiaries
A credit risk arises if a customer or other counterparty to a creditworthiness and accounts receivable limits are monitored are authorized to work with banks rated BBB+ or higher. Only
financial instrument fails to meet its contractual obligations. on an ongoing basis. Customers that fail to meet the company’s in exceptional cases are subsidiaries authorized to work with
 SEE NOTE 30, P. 190 adidas is exposed to credit risks from its minimum creditworthiness are, in general, allowed to purchase banks rated lower than BBB+.  SEE TREASURY, P. 115 To limit risk
operating activities and from certain financing activities. products only on a prepayment basis. in these cases, restrictions are clearly stipulated, such as
142
Credit risks arise principally from accounts receivable and, to maximum cash deposit levels. In addition, the credit default
ADIDAS
a lesser extent, from other third-party contractual financial Other activities to mitigate credit risks include retention of swap premiums of our partner banks are monitored on a
obligations such as other financial assets, short-term bank title clauses as well as, on a selective basis, credit insurance, monthly basis. In the event that the defined threshold is
deposits and derivative financial instruments. Without taking the sale of accounts receivable without recourse, and bank exceeded, credit balances are shifted to banks compliant with
into account any collateral, the carrying amount of financial guarantees. the limit.
assets and accounts receivable represents the maximum
exposure to credit risk.
We believe our risk concentration is limited due to the broad Set-off possibilities of derivative financial assets and 102 December 31, 2017 would have led to a € 5.8 million decrease
liabilities € in millions
distribution of our investment business with more than in net income.
20 globally operating banks. At December 31, 2017, no bank
accounted for more than 10% of our investments. Including 2017 2016 To reduce interest rate risks and maintain financial flexibility,
subsidiaries’ short-term deposits in local banks, the average a core tenet of our company’s financial strategy is to continue
Assets
concentration was 1%. This leads to a maximum exposure of to use surplus cash flow from operations to reduce gross
Gross amounts of recognized financial assets 115 383
€ 98 million in the event of default of any single bank. We have borrowings. Beyond that, we may consider adequate hedging
Financial instruments which qualify for set-off
further diversified our investment exposure by investing into in the statement of financial position 0 0 strategies through interest rate derivatives in order to mitigate
AAA-rated money market funds. Net amounts of financial assets presented in the interest rate risks.  SEE TREASURY, P. 115 To reduce share price
statement of financial position 115 383
risks, the company uses derivative instruments to hedge
Set-off possible due to master agreements (100) (96)
In addition, in 2017, we held derivatives with a positive fair market Total net amount of financial assets 15 287
against share price fluctuations.
value in the amount of € 101 million. The maximum exposure
Liabilities
to any single bank resulting from these assets amounted to Financing and liquidity risks
Gross amounts of recognized financial
€ 27 million and the average concentration was 4%. liabilities (280) (112) Liquidity risks arise from not having the necessary resources
Financial instruments which qualify for set-off available to meet maturing liabilities with regard to timing,
In accordance with IFRS 7, the following table includes further in the statement of financial position 0 0 volume and currency structure. In addition, the company
Net amounts of financial liabilities presented in
information about set-off possibilities of derivative financial the statement of financial position (280) (112)
faces the risk of having to accept unfavorable financing terms
assets and liabilities.   SEE TABLE 102 The majority of agreements Set-off possible due to master agreements 100 96 due to liquidity restraints. Our Treasury department uses an
between financial institutions and adidas include a mutual Total net amount of financial liabilities (180) (16) efficient cash management system to manage liquidity risk.
right to set off. However, these agreements do not meet the At December 31, 2017, cash and cash equivalents together
criteria for offsetting in the statement of financial position, with marketable securities amounted to € 1.604 billion
because the right to set off is enforceable only in the event of (2016: € 1.515 billion). Moreover, our company maintains
counterparty defaults. Interest rate and share price risks € 2.251 billion (2016: € 2.403 billion) in bilateral credit lines,
Changes in global market interest rates affect future interest which are designed to ensure sufficient liquidity at all times.
ANNUAL REPORT 2017
The carrying amounts of recognized derivative financial payments for variable-interest liabilities. As the company Of these, € 600 million consist of core committed lines.
instruments, which are subject to the mentioned agreements, does not have material variable-interest liabilities, even a  SEE TREASURY, P. 115
are also presented in the following table.  SEE TABLE 102 significant increase in interest rates should have only slight
adverse effects on the company’s profitability, liquidity and Future cash outflows arising from financial liabilities that are
financial position. In addition, share price fluctuations may recognized in the consolidated statement of financial position
affect our Long-Term Incentive Plan (LTIP), which is a share- are presented in the following table.  SEE TABLE 103 This
143
based remuneration scheme with cash settlement. In line includes payments to settle obligations from borrowings as
ADIDAS
with IFRS 7 requirements, we have calculated the impact on well as cash outflows from cash-settled derivatives with
net income based on changes in the company’s share price. A negative market values. Financial liabilities that may be
10% increase in the adidas AG share price versus the closing settled in advance without penalty are included on the basis of
share price at December 31, 2017 would have led to a € 5.8 the earliest date of potential repayment. Cash flows for
million increase in net income whereas a 10% decrease in the variable-interest liabilities are determined with reference to
adidas AG share price versus the closing share price at the conditions at the balance sheet date.
Future cash outflows € in millions 103 these initiatives could enable us to accelerate top- and
bottom-line growth.  SEE SALES AND DISTRIBUTION STRATEGY, P. 72
Up to Up to 2 Up to 3 Up to 4 Up to 5 More than 5
1 year years years years years years Total Partnerships: adidas is constantly evolving its partnership
network within sport and culture, such as with academic
organizations and companies from other industries in research
Bank borrowings 106 106
Eurobond1 16 16 17 616 9 425 1,099
and development.  SEE INNOVATION, P. 78 These partnerships
Accounts payable 1,975 1,975 have generated multiple new growth opportunities for adidas,
Other financial liabilities 88 5 93 as we have acquired product or process know-how and gained
Accrued liabilities2 837 1 838 access to new distribution channels or markets. Partnerships,
Derivative financial liabilities 275 9 284 strategic alliances and collaborations may enable us to pursue
Total 3,297 31 17 616 9 426 4,395 further growth and efficiency opportunities.
Bank borrowings 379 379 Product portfolio: Over the last years, we have benefited from
Eurobond1 16 16 16 17 616 435 1,116 strong consumer demand for selected product franchises
Accounts payable 2,496 2,496 such as UltraBOOST, Stan Smith or NMD. We believe that a
Other financial liabilities 90 16 107
continued focus on product franchises combined with
Accrued liabilities2 704 9 713
disciplined product lifecycle management and well-executed
Derivative financial liabilities 110 3 113
Total 3,795 44 16 17 616 435 4,924
distribution offers further upside potential both in terms of
sales and profit. In addition, further optimizing pricing and
1 Including interest payments.
2 Accrued interest excluded. range architecture could result in better-than-expected top-
line growth and bottom-line improvements. We continue to
see untapped sales potential at more commercial price
We ended the year 2017 with net cash of € 484 million (2016: STRATEGIC AND OPERATIONAL points. Consequently, the further expansion in categories
ANNUAL REPORT 2017
net borrowings of € 103 million). OPPORTUNITIES such as basketball and running, where we feel currently
Organic growth opportunities underrepresented, could result in additional market share
Distribution strategy: The sporting goods retail environment and net sales growth and lead to further profitability
ILLUSTRATION OF OPPORTUNITIES is changing constantly. We therefore continue to adapt our improvements.
distribution strategy to this constantly changing environment
In this report, we focus on opportunities we deem to be and have made controlled space initiatives a strategic priority. Opportunities related to organizational and process improvements
144
material for adidas in the period from 2018 to 2020. Our  SEE CORPORATE STRATEGY, P. 62 This includes the further expansion Data analytics: Data and analytics play a crucial role in
ADIDAS
presentation of opportunities in this year’s Annual Report of our own e-commerce activities, a clear focus on retail enabling fact-based decision making. Therefore, we have
differs from the 2016 Annual Report as we have expanded our partners that provide consumers with the best shopping established a dedicated Advanced Analytics team to drive
scope and do not only focus on opportunities that could impact experience and customer service, retail space management business decision making by leveraging the power of data.
the company’s business performance over a one-year period. with key retail partners, as well as the introduction and roll- Throughout 2018, we will continue to enhance our existing
The assessment is shown in the opportunities overview table. out of new own-retail store formats. Successful results from capabilities to build and scale insights-driven use cases,
 SEE TABLE 104 using latest technology that will bring value to our business
operations across the entire company. As a result, we could help us increase efficiency and productivity beyond our
become faster and more efficient in our operations. We may current expectations by optimizing organizational structures
increase visibility and understanding of consumer preferences, and capability management.
increase full-price sales, reduce discounts and optimize order
book management, inventory management and purchasing. FINANCIAL OPPORTUNITIES
This could result in improved top- and bottom-line Favorable financial market changes
performance. Favorable exchange and interest rate developments can
potentially have a positive impact on the company’s financial
Process optimization: Continued optimization of key business results. Our Treasury department closely monitors the
processes and strict cost control are vital to achieving high financial markets to identify and exploit opportunities.
profitability and return on invested capital. We are confident Translation effects from the conversion of non-euro-
that there is still significant opportunity to improve process denominated results into our company’s functional currency,
efficiency and effectiveness and further streamline cost the euro, might positively impact our company’s financial
structures throughout our company. Consequently, we will performance.  SEE TREASURY, P. 115
continue to focus on driving the standardization and
harmonization of processes, as reflected by the company’s
‘ONE adidas’ initiative.  SEE CORPORATE STRATEGY, P. 62 For
example, further centralizing and bundling our global non-
trade procurement activities  SEE GLOSSARY could help realize
additional cost savings. Our strategic workforce management
initiative also not only mitigates the risk of unbalanced
allocation of personnel across the company but could also
ANNUAL REPORT 2017
Corporate opportunities overview 104
Change Change
Potential impact (2016 rating) Likelihood (2016 rating)
Strategic and operational opportunities

Organic growth opportunities Very high ↑ (High) Possible
145
Opportunities related to organizational and process
improvements High ↑ (Medium) Likely ↑ (Possible)
ADIDAS
Financial opportunities
Favorable financial market changes Very high Possible
MANAGEMENT ASSESSMENT OF
PERFORMANCE, RISKS AND
OPPORTUNITIES, AND OUTLOOK
MANAGEMENT due to the gross margin increase as well as the positive effect for our company. In 2017, adidas AG was again represented in
ASSESSMENT OF from lower other operating expenses as a percentage of
sales, which more than offset the decline in other operating
a variety of high-profile sustainability indices. For the 18th
consecutive time, adidas AG was selected to join the Dow
PERFORMANCE, RISKS income. As a result, net income from continuing operations, Jones Sustainability Indices (DJSI), the world’s first global
AND OPPORTUNITIES, excluding the negative one-time tax impact in 2017, was up sustainability index family tracking the performance of the
AND OUTLOOK 32% to € 1.430 billion, and thus exceeded our initial guidance of

an improvement at a rate between 13% and 15%.  SEE INCOME
leading sustainability-driven companies worldwide. In the
sector ‘Textiles, Apparel & Luxury Goods’, we were rated
STATEMENT, P. 107 industry best in the criteria Human Rights, Supply Chain
ASSESSMENT OF PERFORMANCE VERSUS TARGETS Management, Impact Measurement and Valuation, Materiality,
We communicate our financial targets on an annual basis. We In 2017, average operating working capital as a percentage of Environmental Policy and Management Systems, Risk and
also provide updates throughout the year as appropriate. In sales ended the year at a level of 20.4%. This development Crisis Management, Brand Management, Corporate Citizenship
2017, the company delivered a strong operational and financial represents a decrease compared to the prior year level of and Philanthropy, and Customer Relationship Management.
performance. Sales development was favorably impacted by 21.1%, while our initial guidance was for a modest increase.  SEE SUSTAINABILITY, P. 88 As we are convinced that our employees’
rising consumer spending on sporting goods, supported by Capital expenditure (excluding acquisitions) amounted to feedback plays a crucial role in our pursuit of creating a
global trends such as increasing penetration of sportswear € 752 million in 2017, below our initial guidance of around world-class work environment, during the course of 2017, we
(‘athleisure’), increasing health awareness and rising sports € 1.1 billion, mainly reflecting fewer-than-expected store kicked off a new approach and system platform (‘People
participation rates.  SEE ECONOMIC AND SECTOR DEVELOPMENT, P. 105 openings throughout the year. Investments were mainly Pulse’) for a monthly measurement of the level of employee
The strong brand momentum, supported by innovative product focused on controlled space initiatives of the adidas and Reebok satisfaction. Following the implementation of this approach in
launches and inspiring marketing campaigns, as well as the brands, aimed at further strengthening our own-retail activities, June 2017, our monthly participation rates toward year-end
successful execution of the company’s strategic business plan franchise store presence and shop-in-shop presentations. exceeded our minimum participation rate target. In 2018, we
‘Creating the New’ drove strong sales and earnings growth Other areas of investment included logistics infrastructure and aim to further expand People Pulse across the organization
throughout the year. As a result, we increased our full-year top- IT systems as well as the further development of our corporate and build on the key learnings from the surveys.  SEE PEOPLE
and bottom-line guidance in July 2017.  SEE TABLE 105 headquarters in Herzogenaurach, Germany.  SEE STATEMENT OF AND CULTURE, P. 81 Finally, we continue to enjoy a strong level of
on-time in-full (OTIF) deliveries to our customers and own-

ANNUAL REPORT 2017
FINANCIAL POSITION AND STATEMENT OF CASH FLOWS, P. 111
In 2017, revenues increased 16% on a currency-neutral basis, retail stores. In 2017, OTIF saw a slight improvement
driven by double-digit growth at the adidas brand. Currency- Beyond our financial performance, we also actively monitor compared to the prior year level and we are well on track to
neutral sales grew at double-digit rates in nearly all market non-financial KPIs.  SEE INTERNAL MANAGEMENT SYSTEM, P. 102 In achieve our mid-term target.  SEE GLOBAL OPERATIONS, P. 74
segments. As a result, revenues increased above our initial 2017, our Net Promoter Score (NPS) saw further
guidance of 12% to 14% currency-neutral sales growth. Gross improvements, reflecting the strong momentum of our brands
margin increased 1.2 percentage points to 50.4%, exceeding and products throughout the year. Also from a market share
146
our initial forecast of an increase of up to 0.3 percentage points. perspective, we continue to be very encouraged by our strong
ADIDAS
This development was due to the larger-than-expected positive performance in key categories and key markets, as defined in
effects from a better pricing and product mix, which more than the company’s strategic business plan. North America and
offset headwinds from unfavorable currency movements. The Greater China, two of our focus markets, were once again
operating margin increased 1.2 percentage points to a level of notable standouts, as we were able to further improve our
9.8%, which was above our initial guidance of an increase of market share in these regions. Our diligence and discipline
between 0.2 and 0.4 percentage points. This development was in sustainability matters continues to yield strong recognition
ASSESSMENT OF OVERALL RISKS AND Taking into account the potential financial impact as well as forms a solid basis for our future business development and
OPPORTUNITIES the likelihood of materializing of the risks explained within provides the resources necessary to pursue the opportunities
Our Risk Management team aggregates all risks and this report, and considering the strong balance sheet as well available to the company. Compared to the prior year, our
opportunities reported by Risk Owners and Executive Board as the current business outlook, we do not foresee any assessment of certain risks has changed in terms of likelihood
members through the half-yearly risk and opportunity material jeopardy to the viability of the company as a going of occurrence and/or potential financial impact. The partial
assessment process. Results from this process are analyzed concern. This assessment is also supported by the historical changes in risk evaluation have no substantial impact on the
and reported to the Executive Board accordingly. In addition, response to our financing demands. adidas therefore has not overall adidas risk profile, which we believe remains
the Executive Board discusses and assesses risks and opportu sought an official rating by any of the leading rating unchanged compared to the prior year.
nities on a regular basis.  SEE RISK AND OPPORTUNITY REPORT, P. 131 agencies. We remain confident that our earnings strength
ASSESSMENT OF FINANCIAL OUTLOOK
In March 2015, adidas unveiled ,Creating the New’, its 2020
Company targets versus actual key metrics 105 strategic business plan, which defines strategic priorities and
objectives for the period up to 2020. The strategy is designed
to drive brand desirability which, in turn, is expected to spur
2016 2017 2017 2017 2018
Results 1 Initial targets 1, 2 Updated targets 1, 3 Results 1 Outlook top- and bottom-line growth for the company in the years to
Sales (year-over-year change, 20% to increase at a rate to increase at a rate 16% to increase at a rate around come. Our successes since 2016, as measured by financial as
currency-neutral) between 12% and 14% between 17% and 19% 10% well as non-financial KPIs, are a direct consequence of
Gross margin 49.2% to increase up to 0.3pp to increase up to 0.8pp 50.4% to increase up to 0.3pp to a relentlessly executing Creating the New. Therefore, we will
1.2pp level of up to 50.7%
continue to focus on further executing against our strategic
Other operating expenses 42.7% below prior year level below prior year level 41.9% below prior year level
(in % of net sales)
business plan, while at the same time fine-tuning it wherever
(0.8pp)
needed and whenever necessary.
Operating profit (€ in millions) 1,582 to increase at a rate to increase at a rate 2,070 to increase at a rate between
between 13% and 15% between 24% and 26% 31% 9% and 13%
Operating margin 8.6% to increase between to increase up to 0.6pp 9.8% to increase between 0.5pp In March 2017, Creating the New was updated with
0.2pp and 0.4pp and 0.7pp to a level between complementary initiatives in order to grow the top and bottom
ANNUAL REPORT 2017
1.2pp
10.3% and 10.5%
line even faster than initially projected. This will ensure we
Net income from continuing 1,082 to increase at a rate to increase at a rate 1,430 to increase at a rate between
operations 4 (€ in millions) between 13% and 15% between 26% and 28% 32% 13% and 17% to a level continue our momentum in the years to come, resulting in
between € 1.615 billion and strong sales and profitability improvements until 2020.
€ 1.675 billion
Basic earnings per share from 5.39 to increase at a rate to increase at a rate 7.05 to increase at a rate between
Consequently, we increased our financial targets for 2020. We
continuing operations 4 (in €) between 13% and 15% between 25% and 27% 31% 12% and 16% project currency-neutral revenues to increase at a rate of 10%
Average operating working 21.1% modest increase modest increase 20.4% around prior year level to 12% on average per year until 2020 compared to the 2015
147
capital (in % of net sales) (0.7pp) results. By outperforming the sporting goods industry, our
ADIDAS
Capital expenditure 5 (€ in millions) 642 around € 1.1 billion up to € 1.0 billion 752 to increase to a level of brands will increase market share over the period. This, in
17% around € 900 million
combination with the expected gross margin improvement
2 As published on March 8, 2017.
and our ability to generate operating leverage, will significantly
3 As published on July 27, 2017. increase our profitability. As a result, net income from
5 Excluding acquisitions and finance leases. continuing operations is expected to grow at a higher rate
than the top line. While in March 2017, we projected net
income from continuing operations to expand by 20% to 22%

on average per year during the five-year period, we now
expect net income from continuing operations to grow by 22%
to 24% on average per year, following the strong operational
and financial performance in 2017.  SEE CORPORATE STRATEGY, P. 62
Through our extensive pipeline of new product launches

paired with brand-building activities, the positive effects from
major sporting events, including the 2018 FIFA World Cup, as
well as through tight control of inventory levels and stringent
cost management, we project strong revenue and profitability
improvements in 2018. Our net income is expected to benefit
from a further expansion in gross margin and the positive
effect of lower other operating expenses as a percentage of
sales.  SEE SUBSEQUENT EVENTS AND OUTLOOK, P. 128 We believe that
our outlook for 2018 is realistic within the scope of the current
trading and economic environment.
Assuming no significant deterioration in the global economy,

we are confident that we will achieve strong top- and bottom
line improvements in 2018. However, ongoing uncertainties
regarding the economic outlook and consumer sentiment in
both developed and emerging economies as well as persisting
high levels of currency volatility represent risks to the
ANNUAL REPORT 2017
achievement of our stated financial goals and aspirations.

 SEE ECONOMIC AND SECTOR DEVELOPMENT, P. 105 No other material
event between the end of 2017 and the publication of this report
has altered our view.
148
ADIDAS
CO N S O L I DAT E D
F I N A N CI A L
STAT E M E N T S
ANNUAL REPORT 2017
Consolidated Statement of Notes 157 Statement of Movements of

Financial Position 150 Notes to the Consolidated Statement of Intangible and Tangible Assets 213
Financial Position 169
Consolidated Income Statement 152 Shareholdings 215
149
Notes to the Consolidated Income Statement 201
Consolidated Statement of Responsibility Statement 220
ADIDAS
Additional Information 205

Comprehensive Income 153
Independent Auditor’s Report 221
Consolidated Statement of
Changes in Equity 154 Independent Auditor’s Assurance Report 226
Consolidated Statement of Cash Flows 155

CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

adidas AG Consolidated Statement of Financial Position (IFRS) € in millions
Note Dec. 31, 2017 Dec. 31, 2016 Change in %
Assets
Cash and cash equivalents 5 1,598 1,510 5.8
Short-term financial assets 6 5 5 0.2
Accounts receivable 7 2,315 2,200 5.2
Other current financial assets 8 393 729 (46.1)
Inventories 9 3,692 3,763 (1.9)
Income tax receivables 35 71 98 (27.4)
Other current assets 10 498 580 (14.1)
Assets classified as held for sale 11 72 – n.a.
Total current assets 8,645 8,886 (2.7)
Property, plant and equipment 12 2,000 1,915 4.5

Goodwill 13 1,220 1,412 (13.6)
Trademarks 14 1,309 1,680 (22.1)
Other intangible assets 14 154 167 (7.5)
Long-term financial assets 15 236 194 21.8
Other non-current financial assets 16 219 96 127.3
Deferred tax assets 35 630 732 (14.0)
ANNUAL REPORT 2017
Other non-current assets 17 108 94 14.7

Total non-current assets 5,877 6,290 (6.6)
Total assets 14,522 15,176 (4.3)

The accompanying notes are an integral part of these consolidated financial statements.
150
ADIDAS
FINANCIAL POSITION
adidas AG Consolidated Statement of Financial Position (IFRS) € in millions
Note Dec. 31, 2017 Dec. 31, 2016 Change in %
Liabilities and equity

Short-term borrowings 18 137 636 (78.5)
Accounts payable 1,975 2,496 (20.9)
Other current financial liabilities 19 362 201 80.5
Income taxes 35 424 402 5.3
Other current provisions 20 741 573 29.3
Current accrued liabilities 21 2,180 2,023 7.8
Other current liabilities 22 473 434 8.9
Liabilities classified as held for sale 11 – – n.a.
Total current liabilities 6,291 6,765 (7.0)
Long-term borrowings 18 983 982 0.1

Other non-current financial liabilities 23 22 22 1.1
Pensions and similar obligations 24 298 355 (16.3)
Deferred tax liabilities 35 275 387 (28.8)
Other non-current provisions 20 80 44 81.7
Non-current accrued liabilities 21 85 120 (29.4)
Other non-current liabilities 25 53 46 14.6
Total non-current liabilities 1,796 1,957 (8.2)
Share capital 204 201 1.2

Reserves (81) 749 n.a.
ANNUAL REPORT 2017
Retained earnings 6,327 5,521 14.6

Shareholders’ equity 26 6,450 6,472 (0.3)
Non-controlling interests 28 (15) (17) 13.6
Total equity 6,435 6,455 (0.3)
14,522
151
Total liabilities and equity 15,176 (4.3)
ADIDAS
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED INCOME STATEMENT

adidas AG Consolidated Income Statement (IFRS) € in millions
Year ending Year ending

Note Dec. 31, 2017 Dec. 31, 2016 Change
Net sales 37 21,218 18,483 14.8%

Cost of sales 10,514 9,383 12.1%
Gross profit 10,703 9,100 17.6%
(% of net sales) 50.4% 49.2% 1.2pp
Royalty and commission income 115 105 9.6%
Other operating income 31 133 262 (49.3%)
Other operating expenses 12, 14, 32 8,882 7,885 12.6%
(% of net sales) 41.9% 42.7% (0.8pp)
Operating profit 2,070 1,582 30.8%
(% of net sales) 9.8% 8.6% 1.2pp
Financial income 34 46 28 67.6%
Financial expenses 34 93 74 25.7%
Income before taxes 2,023 1,536 31.7%
(% of net sales) 9.5% 8.3% 1.2pp
Income taxes 35 668 454 47.2%
(% of income before taxes) 33.0% 29.6% 3.5pp
Net income from continuing operations 1,354 1,082 25.2%
(% of net sales) 6.4% 5.9% 0.5pp
ANNUAL REPORT 2017
Losses from discontinued operations, net of tax 3 254 62 310.0%

Net income 1,100 1,020 7.9%
(% of net sales) 5.2% 5.5% (0.3pp)
Net income attributable to shareholders 1,097 1,017 7.8%
(% of net sales) 5.2% 5.5% (0.3pp)
Net income attributable to non-controlling interests 3 2 21.4%
152
Basic earnings per share from continuing operations (in €) 36 6.68 5.39 23.9%
ADIDAS
Diluted earnings per share from continuing operations (in €) 36 6.63 5.29 25.2%
Basic earnings per share from continuing and discontinued operations (in €) 36 5.42 5.08 6.7%
Diluted earnings per share from continuing and discontinued operations (in €) 36 5.38 4.99 7.8%
COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

adidas AG Consolidated Statement of Comprehensive Income (IFRS) € in millions

Note Dec. 31, 2017 Dec. 31, 2016
Net income after taxes 1,100 1,020

Items of other comprehensive income that will not be reclassified subsequently to profit or loss
Remeasurements of defined benefit plans (IAS 19), net of tax1 24 23 (60)
Subtotal of items of other comprehensive income that will not be reclassified subsequently to profit or loss 23 (60)
Items of other comprehensive income that are or will be reclassified to profit or loss when specific conditions are met
Net (loss)/gain on cash flow hedges, net of tax 30 (375) 87
Reclassification of foreign currency differences on loss of significant influence 15 (0)
Currency translation differences (539) 71
Subtotal of items of other comprehensive income that are or will be reclassified to profit or loss when specific conditions are met (899) 158
Other comprehensive income (876) 97
Total comprehensive income 224 1,117
Attributable to shareholders of adidas AG 220 1,115

Attributable to non-controlling interests 4 2
1 Includes actuarial gains or losses relating to defined benefit obligations, return on plan assets (excluding interest income) and the asset ceiling effect.
ANNUAL REPORT 2017
153
ADIDAS
CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

adidas AG Consolidated Statement of Changes in Equity (IFRS) € in millions
Cumulative
currency Share- Non-con-
Share Capital translation Hedging Other Retained holders’ trolling
Note capital reserve differences reserve reserves1 earnings equity interests Total equity
Balance at December 31, 2015 200 777 (123) 59 (122) 4,874 5,666 (18) 5,648
Net income recognized directly in equity 71 87 (60) 97 0 97
Net income 1,017 1,017 2 1,020
Total comprehensive income 71 87 (60) 1,017 1,115 2 1,117
Reissuance of treasury shares due to the conversion of convertible bonds 26 3 60 178 240 240
Repurchase of treasury shares 26 (2) (228) (229) (229)
Dividend payment 26 (320) (320) (2) (322)
Equity-settled share-based payment 27 1 1 1
Balance at December 31, 2016 201 838 (52) 146 (182) 5,521 6,472 (17) 6,455
Net income recognized directly in equity (525) (375) 23 (877) 1 (876)
Net income 1,097 1,097 3 1,100
Total comprehensive income (525) (375) 23 1,097 220 4 224
Reissuance of treasury shares due to the conversion of convertible bonds 26 3 46 180 229 229
Repurchase of treasury shares 26 (0) (73) (73) (73)
Repurchase of treasury shares due to equity-settled share-based payment 26 (0) (15) (15) (15)
Reissuance of treasury shares due to equity-settled share-based payment 26 0 19 20 20
ANNUAL REPORT 2017
Dividend payment (405) (405) (1) (406)

Equity-settled share-based payment 27 2 2 2
Balance at December 31, 2017 204 884 (577) (229) (159) 6,327 6,450 (15) 6,435
1 Reserves for remeasurements of defined benefit plans (IAS 19), option plans and acquisition of shares from non-controlling interest shareholders.
154
ADIDAS
CASH FLOWS
CONSOLIDATED STATEMENT OF CASH FLOWS

adidas AG Consolidated Statement of Cash Flows (IFRS) € in millions

Note Dec. 31, 2017 Dec. 31, 2016
Operating activities:
Income before taxes 2,023 1,536
Adjustments for:
Depreciation, amortization and impairment losses 12, 13, 14, 32, 34 484 376
Reversals of impairment losses 31 (1) (2)
Unrealized foreign exchange gains, net (75) (7)
Interest income 34 (25) (21)
Interest expense 34 62 70
Losses/(gains) on sale of property, plant and equipment and intangible assets, net 17 (24)
Other non-cash expense/(income) 31, 32 3 (0)
Payment for external funding of pension obligations (CTA) (30) –
Proceeds from early termination of promotion and advertising contracts 4, 31 76 –
Operating profit before working capital changes 2,534 1,927
Increase in receivables and other assets (477) (462)
Increase in inventories (216) (656)
Increase in accounts payable and other liabilities 422 973
Cash generated from operations before interest and taxes 2,263 1,782
ANNUAL REPORT 2017
Interest paid (65) (46)

Income taxes paid (556) (427)
Net cash generated from operating activities – continuing operations 1,641 1,309
Net cash generated from operating activities – discontinued operations 6 39
Net cash generated from operating activities 1,648 1,348
155
ADIDAS
CASH FLOWS
adidas AG Consolidated Statement of Cash Flows (IFRS) € in millions

Note Dec. 31, 2017 Dec. 31, 2016
Investing activities:
Purchase of trademarks and other intangible assets (74) (64)
Proceeds from sale of trademarks and other intangible assets 0 0
Purchase of property, plant and equipment (678) (578)
Proceeds from sale of property, plant and equipment 2 5
Proceeds from sale of assets held for sale 11 – 14
Proceeds from sale of a disposal group 11 6 29
Proceeds from disposal of discontinued operations net of cash disposed 174 –
Purchase of short-term financial assets (0) (0)
Purchase of investments and other long-term assets (132) (33)
Interest received 25 21
Net cash used in investing activities – continuing operations (676) (605)
Net cash used in investing activities – discontinued operations (4) (9)
Net cash used in investing activities (680) (614)
Financing activities:
Repayments of finance lease obligations (2) (3)
Dividend paid to shareholders of adidas AG 26 (405) (320)
Dividend paid to non-controlling interest shareholders (1) (2)
Acquisition of non-controlling interests 28 – (24)
Repurchase of treasury shares 26 (85) (218)
Repurchase of treasury shares due to share-based payments (15) –
ANNUAL REPORT 2017
Proceeds from reissuance of treasury shares due to share-based payments 13 –

Proceeds from short-term borrowings – 159
Repayments of short-term borrowings 18 (273) (138)
Net cash used in financing activities – continuing operations (769) (545)
Net cash used in financing activities – discontinued operations (0) (9)
Net cash used in financing activities (769) (553)
156
Effect of exchange rates on cash (111) (35)
Increase of cash and cash equivalents 88 145
ADIDAS
Cash and cash equivalents at beginning of year 5 1,510 1,365

Cash and cash equivalents at end of period 5 1,598 1,510
NOTES
NOTES 01 » GENERAL New standards and interpretations as well as amendments to

The consolidated financial statements of adidas AG as at existing standards and interpretations are usually not applied
didas AG is a listed German stock corporation and parent
a December 31, 2017 comprise a didas AG and its subsidiaries by adidas before the EU effective date.
of the a didas Group located at Adi-Dassler-Str. 1, 91074 and are prepared in compliance with International Financial
Herzogenaurach, Germany, and is entered into the commercial Reporting Standards (IFRS), as to be applied in the European New standards and interpretations and amendments to existing
register at the Local Court of Fürth (HRB 3868). a didas AG Union (EU) as at December 31, 2017, and the additional standards and interpretations issued by the International
and its subsidiaries (collectively ‘adidas’, ‘the Group’ or ‘the requirements pursuant to § 315e section 1 German Commercial Accounting Standards Board (IASB) and endorsed by the EU
company’) design, develop, produce and market a broad Code (Handelsgesetzbuch – HGB). which are effective for financial years beginning after
range of athletic and sports lifestyle products. As at January 1, 2017, and which have not been applied in preparing
December 31, 2017, the operating activities of a didas are The following new standards and interpretations and these consolidated financial statements are:
divided into 13 operating segments: Western  Europe, amendments to existing standards and interpretations are —— IFRS 4 Amendment – Applying IFRS 9 Financial
North  America (excluding USA Reebok), USA Reebok, effective for financial years beginning on January 1, 2017 and Instruments with IFRS 4 Insurance Contracts (EU effective
Greater China, Russia/CIS, Latin America, Japan, Middle East, have been applied for the first time to the consolidated date: January 1, 2018): The amendment addresses the
South Korea, Southeast Asia/Pacific, adidas Golf, Runtastic financial statements: temporary accounting consequences of the different
and Other centrally managed businesses. Due to the completed —— IAS 7 Amendment – Disclosure Initiative (EU effective effective dates of IFRS 9 Financial Instruments and IFRS 4
divestitures of the former TaylorMade and CCM Hockey date: January 1, 2017): This amendment introduces a new Insurance Contracts. adidas does not have any insurance
operating segments on October 2, 2017, and September 1, 2017, disclosure relating to changes in liabilities arising from contracts accounted for under IFRS 4. Therefore, the
respectively, income and expenses of the former TaylorMade financing activities. The amendment requires enhanced amendment is not expected to have any impact on the
and CCM Hockey operating segments were reported as disclosures in the consolidated financial statements. company’s consolidated financial statements.
discontinued operations as at December 31, 2017.  SEE NOTE 03  SEE NOTE 38 —— IFRS 9 Financial Instruments (EU effective date:
—— IAS 12 Amendment – Recognition of Deferred Tax Assets January 1, 2018): The new standard prescribes rules
Each market comprises all wholesale, retail and e-commerce for Unrealised Losses (EU effective date: January 1, 2017): for the accounting of financial instruments, replacing
business activities relating to the distribution and sale of This amendment clarifies existing guidance for recognizing the current guidelines in IAS 39 Financial Instruments:
products of the adidas and Reebok brands to retail customers deferred tax assets. The amendment did not have any Recognition and Measurement. In particular, IFRS 9
ANNUAL REPORT 2017
and end consumers. adidas and Reebok branded products material impact on the consolidated financial statements. prescribes new classification methods for financial assets,
include footwear, apparel and hardware, such as bags and balls. —— Improvements to IFRSs (2014–2016) – Amendments which has an effect on the company’s classification and
to IFRS 12 (EU effective date: January 1, 2017): These subsequent presentation of certain financial assets.
Runtastic operates in the digital health and fitness space. The improvements include amendments to IFRS 12 which adidas has identified all financial instruments that require
company provides a comprehensive ecosystem for tracking clarify the scope of the standard with regard to disclosure classification according to IFRS 9, defined the respective
and managing health and fitness data. requirements. The improvement clarifies that the scope business models for managing the financial assets and
157
of the standard applies to an entity’s interests regardless analyzed contractual cash flow characteristics of financial
ADIDAS
The operating segment Other centrally managed businesses of whether they are classified as held for sale, held for assets by performing a test based on the single contracts.
primarily includes the business activities of the Y-3 label. distribution or discontinued operations in accordance with The business model and fulfilling the so-called ‘SPPI
IFRS 5. These amendments did not have a material impact test’ are the basis for the respective classification and
on the consolidated financial statements. measurement of financial assets according to IFRS 9. As a
result of the changes in IFRS 9 classification, the company
has determined that most financial assets previously
NOTES
classified as available-for-sale will be classified as at or continue accounting for hedge instruments according restate comparative information for prior periods with
fair value through profit or loss. The classification as at to IAS 39. The company has decided to adopt IFRS 9 for respect to classification and measurement (including
fair value through profit or loss is caused by the fact that hedge accounting at the EU effective date. As a result of impairment) changes. Differences in the carrying amounts
the respective financial instruments do not achieve the the evaluation, the company has decided to designate of financial assets and financial liabilities due to the first-
contractual cash flow characteristic. Furthermore, equity forward exchange contracts – with the exception of hedges time adoption of IFRS 9 will be recognized in retained
investments which are currently classified as available- of a net investment in foreign operations – solely by the earnings and other reserves as at January 1, 2018.
for-sale and measured at cost because they do not spot value, with the forward element posted under the IFRS 9 is neither expected to have a significant effect on
have a quoted market price in an active market will be costs of hedging in Other Comprehensive Income (OCI). the company’s accounting for financial liabilities nor on
measured as fair value through profit or loss. Furthermore, This change is expected to result in less hedge the derecognition of financial assets as the new guidelines
investment securities which are currently measured at fair ineffectiveness for forward exchange contracts. Hedges of are – to a large extent – adopted from IAS 39. As a result
value in other comprehensive income based on IAS 39 will net investment in a foreign operation will retain a forward of the IFRS 9 evaluation, a didas identified the need for
be measured as fair value through profit or loss since the designation, resulting in the expected future ineffectiveness changes of accounting-related IT systems including: adding
respective contracts do not satisfy the contractual cash flow from the cross-currency basis under IFRS 9 accounted for new accounts, e.g. for separating hedge components, as
characteristics test. Due to the classification changes, as of in profit or loss. In this respect, at the first-time application well as adding aging buckets for impairment purposes.
January 1, 2018, a
didas expects a positive fair value change of IFRS 9 as of January 1, 2018, the company expects an The estimated effects of the IFRS 9 implementation on
in the mid-single-digit million range in euros. immaterial effect. In addition, the company will continue the above- mentioned balance sheet line items as at
The new standard also introduces the ‘expected credit to designate foreign currency options solely with their January 1, 2018, are based on current estimations. The
loss model’ for financial assets, which will require intrinsic value as the hedged instrument, with resulting actual effects of the IFRS  9 implementation as at
company-wide policy adjustments to the allowance for changes in time value recognized as costs of hedging in January 1, 2018, may deviate because the new accounting
doubtful accounts relating to accounts receivable. adidas OCI. a didas decided to designate solely the spot value methods may be subject to changes until the publication
has analyzed and determined the future calculation model components of forward exchange contracts as hedge of the first consolidated financial statements after the
for this allowance, which will calculate the allowance for instruments for the cash flow hedges under the application effective date.
doubtful accounts on all accounts receivable using lifetime of IFRS 9. adidas has elected to utilize the option to account —— IFRS 15 Revenue from Contracts with Customers including
expected credit losses. This calculation model also uses for forward elements for a period of time as costs of Amendments to IFRS 15: Effective Date of IFRS 15 (EU
ANNUAL REPORT 2017
portfolios consisting of accounts receivable bearing hedging in OCI. effective date: January 1, 2018): This new standard
similar features, such as the Credit Default Spread (CDS) Additionally, the new standard adds new disclosures going replaces the current guidance on recognizing revenue
and Days Sales Outstanding (DSO). The calculation model beyond the current disclosure requirements in accordance in accordance with IFRS, in particular IAS 18 Revenue,
is based on historic information about default rates which, with IFRS 7 Financial Instruments: Disclosures. adidas IAS 11 Construction contracts and IFRIC 13 Customer
at the respective balance sheet date, are adjusted for has identified the disclosures relevant to the company Loyalty Programmes and provides a holistic framework
current information and forecasts. At the first-time which are either new or have to be changed due to the for all aspects of revenue recognition. IFRS 15 creates a
158
application of IFRS 9 as of January 1, 2018, the adjusted implementation of IFRS 9. Retrospective restatement in centralized, single five-step model for recognizing revenue
ADIDAS
calculation of the allowances for doubtful accounts the consolidated financial statements is either not arising from contracts with customers.
relating to accounts receivable is expected to result in a permitted or not required for most disclosures, with the adidas has determined that the accounting for revenue
low double-digit million decrease in euros with a exception of certain disclosures related to hedge recognition at the transfer of control is comparable to
corresponding increase in retained earnings. accounting. The company does not plan to retrospectively current practice in accordance with IAS 18. It has also
According to the new standard, an entity can choose to restate information except where required by the standard. been determined that customer incentives and options
either account for hedge instruments according to IFRS 9 adidas will take advantage of the option allowing it not to such as volume rebates, cooperative advertising
NOTES
allowances and slotting fees as well as any obligation of measurement of sales-based licensing-out of trademarks The company has updated internal policies and IT systems
adidas to pay for the delivery of goods to the customer do and royalties is similar to the previous practice in according to IFRS 15 in order to collect the necessary
not create performance obligations under IFRS  15. accordance with IAS 18. Contract assets and liabilities will information for new IFRS 15 disclosures. It is not expected
Currently, customer incentives which are contractually arise in relation to licensing-out contracts with fixed that IFRS 15 will significantly increase the amount of
agreed upon are accounted for as sales discounts and are consideration, with the following expected effects to be disclosures in the consolidated financial statements of
accrued over the financial year. Customer incentives recognized in the consolidated statement of financial adidas  AG.
which are not contractually agreed upon as well as position on January 1, 2018: approximately € 3 million in —— IFRS 15 Amendment – Clarifications to IFRS 15 (EU
promises that are implied by a didas’ customary business contract assets, less than € 1 million in contract liabilities, effective date: January 1, 2018): The amendment provides
practice and do not bear the characteristics of a discount and an adjustment to retained earnings in an amount of some transition relief for modified and completed contracts
are accounted for as expenditure for marketing investments. approximately € 2 million. The change will have an and adds guidance for identifying performance obligations,
According to IFRS 15, customer incentives are principally immaterial effect on revenues in the 2018 financial year. principal vs. agent considerations, and licensing. The
treated as a reduction of sales, except in cases where The estimated effects of the IFRS 15 implementation on company will use the transition relief available for the
adidas receives from its customer a distinct service as the above-mentioned balance sheet line items as at modified retrospective method related to modified and
consideration for the payment to the customer. January 1, 2018, are based on current estimations. The completed contracts. The transition relief reduces the
In accordance with IAS 18, adidas accrues revenue related actual effects of the IFRS 15 implementation as at workload necessary to analyze contracts with customers.
to estimated returns based on past experience by means January 1, 2018, may deviate because the new accounting —— Improvements to IFRSs (2014–2016) – Amendments to
of a return provision which is recorded in the statement of methods may be subject to changes until the publication IFRS 1 and IAS 28 (EU effective date: January 1, 2018):
financial position with a corresponding debit entry in the of the first consolidated financial statements after the These improvements include amendments to IFRS 1
income statement in the form of a reduction of gross effective date. and IAS 28. The amendments to IFRS 1 eliminated the
sales. The current adidas policy requires that the provision After further analysis, adidas has chosen the modified short-term transition exemptions and the amendments to
is calculated on a net basis in the amount of the standard retrospective method (also called ‘cumulative effect IAS 28 made a clarification about the option for qualifying
margin (i.e. the difference between gross sales and cost of method’) for the first-time application of IFRS 15. According entities (such as venture capital organizations) to apply
sales) for the products sold which are expected to be to this transition method, the cumulative effect of applying either the equity method or fair value through profit or loss
returned. IFRS 15 requires a gross presentation of the IFRS 15 will be shown in the opening balance as at to the measurement of associates or joint ventures at initial
ANNUAL REPORT 2017
return provision. In addition, an asset for the right to January 1, 2018. adidas will use a practical expedient recognition. These improvements are not expected to have
recover products from customers upon settling the refund offered in the IFRS 15 Amendment Clarifications to a material impact on the consolidated financial statements.
liability has to be recognized. The company currently IFRS 15 which is applicable for the modified retrospective —— IFRS 16 Leases (EU effective date: January 1, 2019): The
performs a fine adjustment of the calculation logic of the method. This allows the company to reflect the aggregate new standard replaces the guidance in IAS 17 Leases
return rate. The first-time application of IFRS 15 as at effect of all contract modifications that occur before the and the respective interpretations IFRIC 4 Determining
January 1, 2018, is expected to lead to a balance sheet beginning of the earliest period presented or before the Whether an Arrangement Contains a Lease, SIC-15
159
prolongation in the low three-digit million range in euros date of initial application. Except for the separate Operating Leases – Incentives and SIC-27 Evaluating the
ADIDAS
due to the increase in the return provision, the initially presentation of contract assets and contract liabilities in Substance of Transactions Involving the Legal Form of a
recognized return asset and a potential adjustment of the consolidated statement of financial position, IFRS 15 Lease. IFRS 16 eliminates the required classification of
retained earnings. does not change the presentation in the consolidated leases into operating and finance leases in accordance
No significant changes in the timing or amount of revenue statement of financial position or in the consolidated with IAS 17, replacing it with a single accounting model
recognized are expected with regard to revenue from own- income statement. requiring lessees to recognize a right-of-use asset and
retail transactions and licensing. The timing and a corresponding lease liability for leases with a lease
NOTES
term of more than twelve months. The new standard is issued by the IASB. These are not yet effective in the EU and amendment is not expected to have any material impact on
expected to have a significant impact on the company’s hence have not been applied in preparing these consolidated the consolidated financial statements.
consolidated statement of financial position and the financial statements: —— IFRS 17 – Insurance Contracts (IASB effective date:
consolidated income statement, in particular upon initial —— IFRS 2 Amendment – Classification and Measurement of January 1, 2021): The new standard regulates the
application. adidas has a significant number of operating Share-Based Payment Transactions (IASB effective date: recognition, measurement, presentation, and disclosure
leases worldwide – mainly pertaining to more than January 1, 2018): The amendment clarifies the accounting of certain insurance contracts that influence the entity’s
2,500 rented own-retail stores and rented warehouses. treatment for cash-settled share-based payment financial position, financial performance and cash flows.
 SEE NOTE 29 Under IFRS 16, these have to be accounted for as transactions that include a performance condition, the Insurance contracts which the entity issues, reinsurance
right-of-use assets with corresponding lease liabilities in classification of share-based payment transactions with contracts the entity holds, and investment contracts with
the consolidated statement of financial position. In addition, net settlement features, and the treatment of share- discretionary participation features issued by the entity
the nature of the expenses relating to lease obligations is based payment classification due to modifications of the are all within the scope of the standard. IFRS 17 replaces
going to change: Depreciation expenses for the right-of-use terms and conditions. The company currently accounts IFRS 4 Insurance contracts, which is currently not applied
assets and interest expenses for the lease obligations are to for cash-settled share-based payment transactions with by the company. Therefore, the standard is not expected to
be reported in the consolidated income statement instead performance conditions in line with the upcoming clarified have any impact on the consolidated financial statements.
of rent expenses, which under IAS 17 were expensed to the guidance. Additionally, a didas does not currently have —— IAS 28 Amendment – Long-term Interests in Associates
consolidated income statement on a straight-line basis share-based payment transactions with net settlement and Joint Ventures (IASB effective date: January 1, 2019):
over the lease term.The company has continued to collect features or regularly modify terms and conditions of share- The amendment clarifies that IFRS 9 Financial Instruments –
real estate lease contracts in the global lease management based payment transactions. This amendment is not including the impairment requirements – should be applied
system, which captures relevant information from lease expected to have any impact on the company’s consolidated to long-term interests in an associate or joint venture
contracts and uses this information to create accounting financial statements. forming part of a net investment but for which the equity
reports. a didas intends to use this system also for IFRS 16 —— IFRS 9 Amendment – Prepayment Features with Negative method is not applied. a didas does not have long-term
accounting purposes and is in the process of working with Compensation (IASB effective date: January 1, 2019): The interests in an associate or joint venture forming part of
the supplier to ensure system functionality and compliance amendment offers additional guidance on how to classify a net investment but for which the equity method is not
according to IFRS 16 logic. Based on a completeness survey, prepayable financial assets according to IFRS 9 and it applied and which will not be accounted for according to
ANNUAL REPORT 2017
the company is internally evaluating which other leased clarifies the accounting for financial liabilities following IFRS 9 starting January 1, 2018. Therefore, the amendment
assets fall under the scope of IFRS 16.adidas has decided a modification. According to the IFRS 9 evaluation, a didas is not expected to have any impact on the consolidated
to apply the modified retrospective method with optional does not have any financial assets with prepayment financial statements.
practical expedients as the transition method. The company features. Additionally, the company does not currently —— IAS 40 Amendment – Transfers of Investment Property
expects changes to Key Performance Indicators (KPIs), expect modifications to financial liabilities. Therefore, this (IASB effective date: January 1, 2018): This amendment
in particular: an extension of the statement of financial amendment is not expected to have any material impact on clarifies guidance for transfers of property to – or from –
160
position, a decrease in the equity ratio as well as an increase the company’s consolidated financial statements. investment property. adidas does not have investment
ADIDAS
in EBITDA, EBIT, cash used in financing activities and cash —— IFRS 10 and IAS 28 Amendment – Sale or Contribution property and therefore this amendment will not have an
generated from operating activities. Further analysis of the of Assets between an Investor and its Associate or Joint effect on the company’s financial statements.
expected impact on the company’s consolidated financial Venture (IASB effective date: indefinitely postponed): The —— IFRIC 22 – Foreign Currency Transactions and Advance
statements is still in progress. amendment addresses an inconsistency between IFRS 10 Consideration (IASB effective date: January 1, 2018):
The following new standards and interpretations as well as and IAS 28 regarding the sale or contribution of assets This new interpretation clarifies the accounting for
amendments to existing standards and interpretations were between an investor and its associate or joint venture. This transactions that include the receipt or payment of advance
NOTES
consideration in a foreign currency. The interpretation be shown in profit or loss unless the dividend relates to 02 » S
UMMARY OF SIGNIFICANT ACCOUNTING
states that the transaction date, for the purpose of income which is recorded in equity or other comprehensive POLICIES
determining the exchange rate for received or performed income. adidas does not expect any effects from this The consolidated financial statements are prepared in
prepayments, is the date of the initial recognition of the amendment. The amendments to IAS 23 specify that accordance with the consolidation, accounting and valuation
non-monetary prepayment asset or deferred income when a qualifying asset has become ready for its intended principles described below.
liability. adidas already translates non-monetary items, sale or use, any outstanding borrowed amount is no
such as prepayments, at the exchange rate as of the initial longer used in the calculation of the capitalization rate Principles of consolidation
recognition date. Therefore, this interpretation is not for the specific qualifying asset, but instead used in the The consolidated financial statements include the financial
expected to have an impact on the consolidated financial general capitalization rate for borrowings. a
didas currently statements of adidas AG and all its direct and indirect
statements. capitalizes the borrowing costs for one qualifying asset. The subsidiaries, which are prepared in accordance with uniform
—— IFRIC 23 – Uncertainty over Income Tax Treatments (IASB amendments to IAS 23 are not expected to have a material accounting principles. An entity is considered a subsidiary if it
effective date: January 1, 2019): This new interpretation impact on the consolidated financial statements. is controlled by adidas AG. Control exists when adidas is
applies to income taxes within the scope of IAS 12 Income exposed to, or has rights to, variable returns from its
Taxes and clarifies the accounting for uncertainties in The consolidated financial statements have in principle been involvement with the investee and has the ability to affect
income taxes. In the case of uncertainty regarding the prepared on the historical cost basis with the exception of those returns through its power over the investee.
determination of taxable profit/tax loss, tax bases, unused certain items in the statement of financial position such as:
tax losses, unused tax credits and tax rates under IAS 12, financial instruments valued at fair value through profit or loss, The number of consolidated subsidiaries developed as follows
this interpretation should be applied. This interpretation available-for-sale financial assets, derivative financial for the years ending December 31, 2017 and December 31, 2016,
is not expected to have an impact on the consolidated instruments and plan assets which are measured at fair value. respectively:
financial statements.
—— Improvements to IFRSs (2015–2017) – Amendments The consolidated financial statements are presented in euros (€)
Number of consolidated subsidiaries
to IFRS 3, IFRS 11, IAS 12 and IAS 23 (IASB effective and, unless otherwise stated, all values are presented in
date: January 1, 2019): These improvements include millions of euros (€ in millions). Due to rounding principles,
amendments to IFRS 3 which clarify that when an entity numbers presented may not exactly sum up to totals provided.
ANNUAL REPORT 2017
2017 2016
obtains control of a business that was previously a joint January 1 143 145
operation, the entity must remeasure its previously held First-time consolidated subsidiaries 3 2
interests in that business. The amendments to IFRS 11 Thereof: newly founded 3 2
clarify that an entity does not remeasure previously held Thereof: purchased – –
interests in a business when it assumes joint control of a Deconsolidated/divested subsidiaries (17) (3)
Intercompany mergers – (1)
joint operation. The amendments to IFRS 3 and IFRS 11
December 31 129 143
161
would only have a potential impact in the case that the
ADIDAS
aforementioned transactions take place in the year of

initial application. The amendments to IAS 12 clarify that
the income tax effects resulting from dividend payments
should be presented in the same manner as the income
from which the dividends are derived. In other words,
the income tax consequences from dividends should
NOTES
The subsidiaries are held either directly by adidas AG or Principles of measurement

indirectly via the two holding companies a didas Beteiligungs The following table includes an overview of selected
gesellschaft mbH in Germany or adidas International B.V. in the subsequent measurement principles used in the preparation
Netherlands. of the consolidated financial statements.
A schedule of the shareholdings of adidas AG is shown in

Overview of selected subsequent measurement principles
Attachment II to the consolidated financial statements.
 
SEE SHAREHOLDINGS OF ADIDAS AG, HERZOGENAURACH, P. 215 This
schedule comprises information about the name, domicile, Item Subsequent measurement principle
currency and equity of all consolidated subsidiaries as well as Assets
the respective share held in the capital of these subsidiaries. Cash and cash equivalents Nominal amount
Furthermore, the schedule of the shareholdings of adidas AG Short-term financial assets At fair value through profit or loss
will be published on the electronic platform of the German Accounts receivable Amortized cost
Federal Gazette. Inventories Lower of cost and net realizable value

Assets classified as held for sale Lower of carrying amount and fair value less costs to sell
Property, plant and equipment Amortized cost
Within the scope of the first-time consolidation, all acquired
Goodwill Impairment-only approach
assets and liabilities are recognized in the statement of Intangible assets (except goodwill):
financial position at fair value at the acquisition date. A debit With definite useful life Amortized cost
difference between the acquisition cost and the proportionate With indefinite useful life Impairment-only approach
fair value of assets, liabilities and contingent liabilities is Other financial assets (categories according to IAS 39):
shown as goodwill. A credit difference is recorded in the At fair value through profit or loss At fair value through profit or loss
Held to maturity Amortized cost
income statement.
Loans and receivables Amortized cost
Available-for-sale At fair value in other comprehensive income or at amortized cost
Acquisitions of additional investments in subsidiaries which
ANNUAL REPORT 2017
are already controlled are recorded as equity transactions. Liabilities

Borrowings Amortized cost
Therefore, neither fair value adjustments of assets and
Accounts payable Amortized cost
liabilities nor gains or losses are recognized. Any difference
Liabilities/provisions for cash-settled share-based
between the cost for such an additional investment and the payment arrangements Fair value
carrying amount of the net assets at the acquisition date is Other financial liabilities Amortized cost
recorded directly in shareholders’ equity. Provisions:
162
Pensions Projected unit credit method
Other provisions Expected settlement amount
ADIDAS
The financial effects of intercompany transactions as well as

Accrued liabilities Amortized cost
any unrealized gains and losses arising from intercompany
business relations are eliminated in preparing the consolidated
financial statements.
NOTES
Currency translation Discontinued operations Changes in the fair value of derivatives that are designated
Transactions in foreign currencies are initially recorded in the A component of the company’s business is classified as a and qualify as cash flow hedges, and that are effective, as
respective functional currency by applying the spot exchange discontinued operation if the operations and cash flows of the defined in IAS 39 ‘Financial instruments: recognition and
rate valid at the transaction date to the foreign currency amount. component can be clearly distinguished, operationally and for measurement’, are recognized in equity. When the
financial reporting purposes, from the rest of the company effectiveness is not 100%, the ineffective portion of the change
In the individual financial statements of subsidiaries, and if the component either has been disposed of or is in the fair value is recognized in the income statement.
monetary items denominated in non-functional currencies of classified as held for sale, and: Accumulated gains and losses in equity are transferred to the
the subsidiaries are generally translated into the functional —— represents a separate major line of business or geographic income statement in the same periods during which the
currency at closing exchange rates at the balance sheet date. area of operations, hedged forecast transaction affects the income statement.
The resulting currency gains and losses are recorded directly —— is part of a single coordinated plan to dispose of a separate
in the income statement. major line of business or geographic area of operations or Certain derivative transactions, while providing effective
—— is a subsidiary acquired exclusively with a view to resale. economic hedges under the company’s risk management
Assets and liabilities of the company’s non-euro functional policies, may not qualify for hedge accounting under the
currency subsidiaries are translated into the presentation When an operation is classified as a discontinued operation, specific rules of IAS 39. Changes in the fair value of any
currency, the euro, which is also the functional currency of the comparative consolidated income statement and derivative instruments that do not meet these rules are
adidas AG, using closing exchange rates at the balance sheet consolidated statement of cash flows are restated and recognized immediately in the income statement.
date. For practical reasons, revenues and expenses are presented as if the operation had been classified as such from
translated at average rates for the period which approximate the the start of the comparative year. Hedges of net investments in foreign entities are accounted
exchange rates on the transaction dates. All cumulative for in a similar way to cash flow hedges. If the hedging
differences from the translation of equity of foreign subsidiaries Derivative financial instruments instrument is a derivative (e.g. a forward exchange contract)
resulting from changes in exchange rates are included in a didas uses derivative financial instruments, such as currency
a or a foreign currency borrowing, effective currency gains and
separate item within shareholders’ equity without affecting the options, forward exchange contracts, commodity futures as losses in the derivative and all gains and losses arising on the
income statement. well as interest rate swaps and cross-currency interest rate translation of the borrowing, respectively, are recognized in
swaps, to hedge its exposure to foreign exchange, commodity equity.
ANNUAL REPORT 2017
A summary of exchange rates to the euro for major currencies in price and interest rate risks. In accordance with its Treasury
which the Group operates is as follows: Policy, adidas does not enter into transactions with derivative
a didas documents the relationship between hedging
financial instruments for trading purposes. instruments and hedge objects at transaction inception, as
Exchange rates
well as the risk management objectives and strategies for
Derivative financial instruments are initially recognized in the undertaking various hedge transactions. This process
Average rates for the year statement of financial position at fair value, and subsequently includes linking all derivatives designated as hedges to
163
€ 1 equals ending Dec. 31, Spot rates at Dec. 31, also measured at their fair value. The method of recognizing specific firm commitments and forecast transactions. a didas
ADIDAS
2017 2016 2017 2016 the resulting gains or losses is dependent on the nature of the also documents its assessment of whether the derivatives
USD 1.1266 1.1069 1.1993 1.0541 hedge. On the date a derivative contract is entered into, adidas that are used in hedging transactions are highly effective by
GBP 0.8754 0.8188 0.8872 0.8562
designates derivatives as either a hedge of a forecast using different methods of effectiveness testing, such as the
JPY 126.2381 120.4031 135.0100 123.4000
transaction (cash flow hedge) or a hedge of a net investment ‘dollar offset method’ or the ‘hypothetical derivative method’.
CNY 7.6116 7.3515 7.8365 7.3123
in a foreign operation.
RUB 65.5601 74.2778 69.0799 63.9384
NOTES
The fair values of currency options, forward exchange price in the ordinary course of business less the estimated Land leases are measured at the lower of the fair value or the
contracts and commodity futures are determined on the basis costs of completion and the estimated costs necessary to present value of minimum lease payments and are depreciated
of market conditions on the reporting dates. The fair value of make the sale. Costs are determined using a standard on a straight-line basis over the contractually agreed lease term.
a currency option is determined using generally accepted valuation method: the ‘average cost method’. Costs of finished
models to calculate option prices. The fair value of an option goods include cost of raw materials, direct labor and the Estimated useful lives are as follows:
is influenced not only by the remaining term of the option but components of the manufacturing overheads which can be
also by additional factors, such as the actual foreign exchange reasonably attributed to finished goods. The allocation of
Estimated useful lives of property, plant and equipment
rate and the volatility of the underlying foreign currency base. overheads is based on the planned average utilization. The
Fair values are determined taking into consideration the net realizable value allowances are computed consistently
counterparty risk. adidas has exercised the option to calculate throughout the company based on the age and expected Years
the amounts on counterparty level according to IFRS 13 ‘Fair future sales of the items on hand. Land indefinite
Value Measurement’, paragraph 48. Land leases 50 – 99
Assets/liabilities and disposal groups classified as held for sale Buildings and leasehold improvements 20 – 50 1
Cash and cash equivalents Assets/liabilities and disposal groups classified as held for Furniture and fixtures 3 – 5
Cash and cash equivalents represent cash at banks, cash on sale are primarily non-current assets and liabilities expected Technical equipment and machinery as well as
other equipment 2 – 10 1
hand and short-term deposits with maturities of three months to be recovered principally through sale rather than through
or less from the date of acquisition. continuing use. These are measured at the lower of their 1 Or, if shorter, the lease term/useful life.  SEE NOTE 29
carrying amount and fair value less costs to sell. Assets

Cash equivalents are short-term, highly liquid investments classified as held for sale are not depreciated on a straight- Expenditures for repairs and maintenance are expensed as
that are readily convertible to known amounts of cash and line basis. incurred. Renewals and improvements are capitalized and
which are subject to an insignificant risk of changes in value. depreciated separately, if the recognition criteria are met.
Property, plant and equipment
Receivables and other financial assets Property, plant and equipment are measured at amortized Impairment losses
Receivables and other financial assets are recognized at fair cost. This comprises any costs directly attributable to bringing If facts and circumstances indicate that non-current assets
ANNUAL REPORT 2017
value, which corresponds to the nominal value for current the asset to the condition necessary for it to be capable of (e.g. property, plant and equipment and intangible assets
receivables and other financial assets. For non-current operating in the manner intended by Management less any including goodwill) might be impaired, the recoverable
receivables and other financial assets, the fair value is accumulated depreciation and accumulated impairment amount is determined. It is measured at the higher of its fair
estimated as the present value of future cash flows discounted losses. Depreciation is recognized for those assets, with the value less costs of disposal and value in use. Non-financial
at the market rate of interest at the balance sheet date. exception of land and construction in progress, over the items measured at the recoverable amount primarily relate to
Subsequently, these are measured at amortized cost using the estimated useful life utilizing the ‘straight-line method’ and impaired property, plant and equipment being measured
164
‘effective interest method’. Required allowances, if necessary, taking into account any potential residual value, except where based on value in use or on fair value taking unobservable
ADIDAS
are determined on the basis of individual risk assessments, the ‘declining-balance method’ is more appropriate in light of inputs (e.g. profit or cash flow planning) into account. The fair
and on the aging structure of receivables past due. the actual utilization pattern. Parts of an item of property, value is measured at Level 3 according to IFRS 13 ‘Fair Value
plant and equipment with a cost that is significant in relation Measurement’.
Inventories to the total cost of the item are depreciated separately.
Merchandise and finished goods are valued at the lower of
cost or net realizable value, which is the estimated selling
NOTES
An impairment loss is recognized in other operating expenses future cash flows discounted at the financial asset’s original Goodwill is carried in the functional currency of the acquired
or reported in goodwill impairment losses if the carrying effective interest rate, or as the difference between amortized foreign entity.
amount exceeds the recoverable amount. cost and the fair value considering previous impairment
losses. Intangible assets (except goodwill)
The impairment test for goodwill is performed based on Intangible assets are valued at amortized cost. Amortization
groups of cash-generating units which represent the lowest Leases is calculated on a straight-line basis taking into account any
level within the company at which goodwill is monitored for Under finance lease arrangements, the substantial risks and potential residual value.
internal management purposes. If there is an impairment rewards associated with an asset are transferred to the
loss for a group of cash-generating units, first the carrying lessee. At the beginning of the lease arrangement, the Expenditures during the development phase of internally
amount of any goodwill allocated to the group of cash- respective asset and a corresponding liability are recognized generated intangible assets are capitalized as incurred if they
generating units is reduced. Subsequently, provided that the at the fair value of the asset or, if lower, the net present value qualify for recognition under IAS 38 ‘Intangible Assets’.
recoverable amount is lower than the carrying amount, the of the minimum lease payments. For subsequent
other non-current assets of the group of cash-generating measurement, minimum lease payments are apportioned Estimated useful lives are as follows:
units are reduced pro rata on the basis of the carrying amount between the finance expense and the reduction of the
Estimated useful lives of intangible assets
of each asset in the group of cash-generating units. outstanding liability. The finance expense is allocated to each
period during the lease term so as to produce a constant
Irrespective of whether there is an impairment indication, periodic interest rate on the remaining balance of the liability. Years
intangible assets with an indefinite useful life (in particular In addition, depreciation and any impairment losses for the Trademarks indefinite 1
trademarks) and goodwill acquired in business combinations associated assets are recognized. Depreciation is performed Software 5 – 7
are tested annually on September 30 for impairment. over the lease term or, if shorter, over the useful life of the Patents and licenses 5 – 15
asset. Websites 2
An impairment loss recognized in goodwill is not reversible. 1 For exceptions  SEE NOTE 14
With respect to all other impaired assets, an impairment loss Under operating lease agreements, rent expenses are
recognized in prior periods is reversed affecting the income recognized on a straight-line basis over the term of the lease. Research and development
ANNUAL REPORT 2017
statement if there has been a change in the estimates used to Research costs are expensed in full as incurred. Development
determine the recoverable amount. An impairment loss is Goodwill costs for internally generated intangible assets are also
reversed only to the extent that the asset’s carrying amount Goodwill is an asset representing the future economic benefits expensed as incurred if they do not meet the recognition
does not exceed the carrying amount that would have been arising from assets acquired in a business combination that criteria of IAS 38 ‘Intangible Assets’, paragraph 57.
determined (net of depreciation or amortization) if no are not individually identified and separately recognized. This
impairment loss had been recognized. results when the purchase cost exceeds the fair value of Financial assets
165
acquired identifiable assets, liabilities and contingent All purchases and sales of financial assets are recognized on
ADIDAS
Impairment losses for financial assets are recognized when, liabilities. Goodwill arising from the acquisition of a foreign the trade date and initially measured at fair value. Available-
as a result of one or more events that occurred after the initial entity and any fair value adjustments to the carrying amounts for-sale financial assets include non-derivative financial
recognition of the financial asset, there is objective evidence of assets, liabilities and contingent liabilities of that foreign assets which are not allocable under another category of
that a financial asset is impaired. The amount of the entity are treated as assets, liabilities and contingent liabilities IAS 39. If their respective fair value can be measured reliably,
impairment loss is measured as the difference between the of the respective reporting entity, and are translated at they are subsequently carried at fair value. If this is not the
asset’s carrying amount and the present value of estimated exchange rates prevailing at the date of the initial consolidation. case, these are measured at cost. Realized and unrealized
NOTES
gains and losses arising from changes in the fair value of result of a past event which can be estimated reliably and is which are not recognized because it is not probable that an
financial assets are included in the income statement for the likely to lead to an outflow of resources, and where the timing outflow of resources will be required to settle the obligation or
period in which they arise, except for available-for-sale or amount is uncertain. Other non-current provisions are the amount of the obligation cannot be measured with
financial assets where unrealized gains and losses are discounted if the effect of discounting is material. sufficient reliability. Contingent liabilities are not recognized
recognized in equity unless they are impaired. in the consolidated statement of financial position but are
Accrued liabilities are liabilities to pay for goods or services disclosed and explained in the Notes.  SEE NOTE 39
Borrowings and other liabilities that have been received or supplied but have not been paid,
Borrowings (e.g. Eurobonds) and other liabilities are invoiced or formally agreed with the supplier, including Treasury shares
recognized at fair value using the ‘effective interest method’, amounts due to employees. Here, however, the timing and When treasury shares recognized as equity are repurchased,
net of transaction costs incurred. In subsequent periods, amount of an outflow of resources is not uncertain. the amount of the consideration paid, which includes directly
long-term borrowings are stated at amortized cost using the attributable costs, net of any tax effects, is recognized as a
‘effective interest method’. Any difference between proceeds Pensions and similar obligations deduction from equity. The nominal value of € 1 per treasury
(net of transaction costs) and the redemption value is Provisions and expenses for pensions and similar obligations share is debited to share capital. Any premium or discount to
recognized in the income statement over the term of the relate to the company’s obligations for defined benefit and the nominal value is shown as an adjustment to the capital
borrowing. defined contribution plans. The obligations under defined reserve. If treasury shares are sold or re-issued, the nominal
benefit plans are determined separately for each plan by value of the shares will be credited to share capital and the
Compound financial instruments (e.g. convertible bonds) are valuing the employee benefits accrued in return for their amount exceeding the nominal value will be added to the
divided into a liability component shown under borrowings service during the current and prior periods. These benefit capital reserve.
and into an equity component resulting from conversion accruals are discounted to calculate their present value, and
rights. The equity component is included in the capital reserve. the fair value of any plan assets is deducted in order to Revenue
The fair value of the liability component is determined by determine the net liability. The discount rate is set on the Revenue in terms of income derived from the sale of goods is
discounting the interest and principal payments of a basis of yields of high-quality corporate bonds at the balance recognized when the significant risks and rewards of
comparable liability without conversion rights, applying risk- sheet date provided there is a deep market for high-quality ownership of the goods are transferred to the buyer and when
adjusted interest rates. The liability component is subsequently corporate bonds in a given currency. Otherwise, government adidas does not retain any continuing managerial involvement
ANNUAL REPORT 2017
measured at amortized cost using the ‘effective interest bond yields are used as a reference. Calculations are with the goods. The timing of the transfer of significant risks
method’. The equity component is determined as the performed by qualified actuaries using the ‘projected unit and rewards depends on the individual terms of the sales
difference between the fair value of the total compound credit method’ in accordance with IAS 19 ‘Employee Benefits’. agreement (terms of delivery). In addition, revenue from the
financial instrument and the fair value of the liability Obligations for contributions to defined contribution plans are sale of goods is only recognized when the amount of revenue
component and is reported within equity. There is no recognized as an expense in the income statement as as well as associated costs can be measured reliably and
subsequent measurement of the equity component. At initial incurred. when it is probable that the economic benefits associated with
166
recognition, directly attributable transaction costs are the transaction will flow to the company.
Contingent liabilities
ADIDAS
assigned to the equity and liability component pro rata on the

basis of the respective carrying amounts. Contingent liabilities are possible obligations that arise from Revenue is measured at the fair value of the consideration
past events and whose existence will be confirmed only by the received or receivable, net of returns, early payment discounts
Provisions and accrued liabilities occurrence of one or more uncertain future events not wholly and rebates.
Other provisions are recognized where a present obligation within the control of adidas. Additionally, contingent liabilities
(legal or constructive) to third parties has been incurred as a may be present obligations that arise from past events but
NOTES
Under certain conditions and in accordance with contractual that is directly attributable to the acquisition, construction or Income tax is recognized in the income statement except to
agreements, customers of adidas have the right to return production of a qualifying asset. This interest is capitalized as the extent that it relates to items recognized directly in equity,
products and to either exchange them for similar or other part of the cost of the qualifying asset. in which case it is recognized in equity.
products or to return the products against the issuance of a
credit note. Revenue related to estimated returns is accrued Government grants Share-based payment
based on past experience by means of a provision for returns, didas receives government grants related to income in the
a The cost of equity-settled share-based payment transactions
allowances and warranty.  SEE NOTE 20 form of subsidies, subventions or premiums from local, with employees is determined by the fair value at the grant
national or international government authorities such as date using an appropriate valuation model.  SEE NOTE 27 That
Provided that the customers meet certain pre-defined those of the Federal Republic of Germany, the European Union cost is recognized in personnel expenses, together with a
conditions, adidas grants its customers different types of and the Free State of Bavaria. corresponding increase in equity (retained earnings), over the
globally aligned performance-based rebates. Examples are period in which the service and, where applicable, the
sales growth and loyalty as well as sell-out support, e.g. Government grants related to income are recognized if there performance conditions are fulfilled (the vesting period). The
through retail space management/franchise stores. When it is is reasonable assurance that the grants will be received and cumulative expense recognized for equity-settled transactions
assumed that the customer fulfills the requirements for being that adidas will comply with the conditions attached. at each reporting date until the vesting date reflects the extent
granted the rebate, this amount is accrued by means of an to which the vesting period has expired and the company’s
accrued liability for marketing and sales.  SEE NOTE 21 Grants related to income are reported in the consolidated best estimate of the number of equity instruments that will
income statement as a deduction from the related expenses. ultimately vest.
In addition, adidas generates revenue from the licensing-out
of the right to use the adidas and Reebok brands as well as Income taxes Service and non-market performance conditions are not
various other trademarks to third parties. The related royalty Current income taxes are computed in accordance with the taken into account when determining the fair value of awards
and commission income is recognized based on the contract applicable taxation rules established in the countries in which at the grant date, but the likelihood of the conditions being
terms on an accrual basis. adidas operates. met is assessed as part of the company’s best estimate of the
number of equity instruments that will ultimately vest. If the
Advertising and promotional expenditures didas computes deferred taxes for all temporary differences
a estimate is changed, even a credit in the income statement for
ANNUAL REPORT 2017
Advance payments for media campaigns are included in between the carrying amount and the tax base of its assets the period can be possible as it reflects the movement in
prepaid expenses (other current and non-current assets) until and liabilities and tax loss carry-forwards. As it is not cumulative expenses from the beginning to the end of that
the services are received, and upon receipt expensed in full. permitted to recognize a deferred tax liability for the initial period.
Significant costs for media campaigns are expensed over the recognition of goodwill, a
didas does not compute any deferred
duration of the media campaign. taxes thereon. No expense is recognized for awards that do not ultimately vest
because non-market performance and/or service conditions
167
Promotional expenses including one-time up-front payments Deferred tax assets arising from deductible temporary have not been met.
ADIDAS
for promotion contracts are principally expensed on a differences and tax loss carry-forwards which exceed taxable
straight-line basis over the term of the agreement. temporary differences are only recognized to the extent that it Equity-settled share-based payment transactions with parties
is probable that the entity concerned will generate sufficient other than employees are generally measured at the fair
Interest taxable income to realize the associated benefit. value of the goods or services received, except where the fair
Interest is recognized as income or expense as incurred using value cannot be estimated reliably, in which case they are
the ‘effective interest method’ with the exception of interest measured at the fair value of the equity instruments granted,
NOTES
measured at the date the entity obtains the goods or the 03 » DISCONTINUED OPERATIONS The results of the Rockport, TaylorMade and CCM operations
counterparty renders the service. On May 10, 2017, adidas signed a definitive agreement to sell are shown as discontinued operations in the consolidated
its TaylorMade business including the brands TaylorMade, income statement:
For cash-settled share-based payment transactions, the Adams Golf and Ashworth (together TaylorMade). The
Discontinued operations € in millions
goods or services acquired and the liability incurred are transaction was completed on October 2, 2017. The TaylorMade
measured at the fair value of the liability. Until the liability is business is reported as discontinued operations. The
settled, the fair value of the liability is remeasured at each end consideration was paid in cash and via a combination of a Year ending Year ending
of the reporting period and at the date of settlement, with any secured note and contingent considerations of which the fair Dec. 31, Dec. 31,
2017 2016
changes in fair value recognized in profit or loss for the period. values were estimated by applying the discounted cash flow
Net sales 667 808
model and Monte Carlo method, respectively.  SEE NOTE 04 Expenses (666) (895)
Estimation uncertainties and judgments Gain/(loss) from operating activities 1 (87)
The preparation of financial statements in conformity with On July 26, 2017, adidas signed an agreement to sell the Income taxes 0 27
IFRS requires the use of assumptions and estimates that CCM Hockey business. The transaction was completed on Gain/(loss) from operating activities, net of tax 1 (60)
affect reported amounts and related disclosures. Although September 1, 2017. The CCM Hockey business is reported as (Loss) from the sale of discontinued
operations (304) (3)
such estimates are based on the best knowledge of current discontinued operations. The consideration was paid in cash Income taxes 48 1
events and actions, actual results may ultimately differ from and in the form of a secured note. The fair value of the secured (Loss) from the sale of discontinued operations,
these estimates. note was estimated by applying the discounted cash flow net of tax (256) (2)
(Loss) from discontinued operations, net of tax (254) (62)
method.  SEE NOTE 04
Basic earnings per share from discontinued
The key assumptions concerning the future and other key operations (€) (1.26) (0.31)
sources of estimation uncertainty at the balance sheet date The net result of discontinued operations presented in the Diluted earnings per share from discontinued
which have a significant risk of causing a material adjustment consolidated income statement as at December 31, 2017 also operations (€) (1.26) (0.31)
to the carrying amounts of assets and liabilities within the contains the fair value adjustment of the contingent
next financial year are outlined in the respective Notes, in considerations as well as allowances for outstanding receivables The loss from discontinued operations in an amount of
particular goodwill  SEE NOTE 13, trademarks  SEE NOTE 14, in connection with the sale of the Rockport operating segment € 254 million (2016: € 62 million) was entirely attributable to
ANNUAL REPORT 2017
other provisions  SEE NOTE 20, pensions  SEE NOTE 24, derivatives in July 2015. the shareholders of adidas AG.
 SEE NOTE 30, deferred taxes  SEE NOTE 35, as well as litigation
and other legal risks  SEE NOTE 39. TaylorMade and CCM Hockey were classified as assets held
for sale and discontinued operations for the first time as of
Judgments have also been used in classifying leasing May 10, 2017 and June 30, 2017, respectively. The prior year
arrangements as well as in determining valuation methods figures of the consolidated statement of cash flows have been
168
for intangible assets. restated to show the discontinued operations separately from
ADIDAS
continuing operations.
NOTES
04 » D
ISPOSAL OF SUBSIDIARIES AS WELL AS half a promissory note was issued by the buyer. All Accounts receivable € in millions
ASSETS AND LIABILITIES contractually agreed closing assets were transferred by
The divestiture of the TaylorMade business was completed on adidas at the closing date. This was followed by a transition
Dec. 31, Dec. 31,
October 2, 2017. The total purchase price amounted to service period which ended on June 30, 2017. The final 2017 2016
US $ 425 million consisting of US $ 200 million in cash, a purchase price will be determined in early 2018. In 2016, a Accounts receivable, gross 2,484 2,377
promissory note in an amount of US $ 100 million and earn- resulting gain from this transaction in an amount of Less: accumulated allowances for doubtful
accounts (169) (177)
out components in an amount of US $ 125 million. In 2017, a € 39 million was accounted for as other operating income.
Accounts receivable, net 2,315 2,200
preliminary cash consideration of US $ 155 million was  SEE NOTE 31
received for which the cash component of US $ 200 million

was adjusted mainly due to lower estimated net working
Movement in allowances for doubtful accounts
capital compared to target net working capital and the net NOTES TO THE CONSOLIDATED € in millions
cash transferred. The assets and liabilities, which were STATEMENT OF FINANCIAL POSITION
reported as assets/liabilities held for sale since May 10, 2017
due to the concrete plans to sell the business, were 05 » CASH AND CASH EQUIVALENTS 2017 2016
consequently derecognized from the consolidated statement Cash and cash equivalents consist of cash at banks, cash on Allowances at January 1 177 149
of financial position as of October 2, 2017. For the impact of hand and short-term deposits. Additions 46 76
Reversals (39) (41)
the divestiture on the items in the consolidated statement of
Write-offs charged against the allowance
financial position  SEE NOTE 38 The TaylorMade business is Short-term deposits are only shown as cash and cash accounts (9) (8)
part of Other Businesses (discontinued operations). equivalents if they are readily convertible to a known amount Currency translation differences (7) 0
of cash and are subject to an insignificant risk of changes in Other changes 0 0
The divestiture of the CCM Hockey business was completed value. Allowances at December 31 169 177
on September 1, 2017 for a preliminary cash consideration of

US  $ 76 million plus a promissory note amounting to 06 » SHORT-TERM FINANCIAL ASSETS
Accounts receivable past due but not impaired
US $ 40 million. The assets and liabilities which were reported Short-term financial assets are classified ‘at fair value
ANNUAL REPORT 2017
€ in millions
as assets/liabilities held for sale since June 30, 2017 due to through profit or loss’. Changes in the fair value are recognized
the concrete plans to sell the business were consequently in the consolidated income statement as they occur.
derecognized from the consolidated statement of financial Past due Past due Past due Past due Past due
1 – 30 31 – 60 61 – 90 91 – 180 > 180
position as of September 1, 2017. For the impact of the The majority of short-term financial assets are marketable days days days days days
divestiture on the items in the consolidated statement of securities. Dec. 31, 2017 153 61 6 4 2
financial position  SEE NOTE 38 The CCM Hockey business is Dec. 31, 2016 164 63 11 5 6
169
part of Other Businesses (discontinued operations). 07 » ACCOUNTS RECEIVABLE
ADIDAS
Accounts receivable consist mainly of the currencies US

As of June 30, 2016 (closing date), the company formally dollar, euro, Chinese renminbi as well as Japanese yen and With respect to accounts receivable as at the balance sheet
completed the divestiture of the Mitchell & Ness business. are as follows: date past due but not impaired, based on credit history and
The preliminary purchase price amounted to US $ 75 million current credit ratings, there are no indications that customers
in total. According to the purchase agreement, the first half of will not be able to meet their obligations.
the total purchase price was received in cash and for the other
NOTES
Further, no indications of default are recognizable for accounts 09 » INVENTORIES

receivable that are neither past due nor impaired. Inventories by major classification are as follows:
Inventories € in millions
For further information about credit risks  SEE RISK AND
OPPORTUNITY REPORT, P. 131
Dec. 31, 2017 Dec. 31, 2016

08 » OTHER CURRENT FINANCIAL ASSETS Allowance Allowance
Other current financial assets consist of the following: for for
Gross obsoles- Net Gross obsoles- Net
value cence value value cence value
Other current financial assets € in millions
Merchandise and finished goods on hand 2,716 (132) 2,584 2,748 (170) 2,578
Goods in transit 1,103 – 1,103 1,151 – 1,151
Raw materials 5 – 5 35 (2) 34
Dec. 31, Dec. 31,
2017 2016 Work in progress 0 – 0 1 – 1
Currency options 12 20 Inventories 3,824 (132) 3,692 3,935 (172) 3,763
Forward exchange contracts 98 348

Security deposits 44 81
Financial assets related to the early
termination of promotion contracts – 77 Goods in transit mainly relate to shipments of finished goods 11 » A
SSETS/LIABILITIES AND DISPOSAL
Promissory notes – 15 and merchandise from suppliers in Asia to subsidiaries in GROUPS CLASSIFIED AS HELD FOR SALE
Sundry 239 187 Europe, Asia, North America and Latin America. At December 31, 2017, assets/liabilities held for sale
Other current financial assets 393 729 comprise a building of Reebok International Ltd. in an
10 » OTHER CURRENT ASSETS amount of € 72 million. The Reebok headquarters was moved
The line item ‘Sundry’ mainly relates to a secured promissory Other current assets consist of the following: from Canton to Boston in September 2017. From this moment
note in the amount of € 31 million which is part of the divestiture on, the land and building were readily sellable and therefore
Other current assets € in millions
of the Mitchell & Ness business as well as to credit cards and reported as ‘Assets classified as held for sale’.
ANNUAL REPORT 2017
similar receivables. The secured promissory note will be due

upon finalization of the sale of Mitchell & Ness in 2018. Dec. 31, Dec. 31, At December 31, 2017, impairment loses (before transaction
2017 2016 costs) of € 1 million were included in operating profit.
Other current financial assets include accumulated allowances Prepaid expenses 261 311
Tax receivables other than income taxes 146 180
in the amount of € 51 million.
Sundry 99 97
Other current assets, gross 506 588
170
For further information about currency options and forward Less: accumulated allowances (8) (8)
ADIDAS
exchange contracts  SEE NOTE 30 Other current assets, net 498 580
Prepaid expenses mainly relate to promotion and service

contracts as well as rents.
NOTES
12 » PROPERTY, PLANT AND EQUIPMENT The increase in the line item ‘Construction in progress, net’ represent the lowest level within the company at which
Property, plant and equipment consist of the following: mainly relates to investments in the company’s headquarters goodwill is monitored for internal management purposes.
in Herzogenaurach and to the expansion of the warehouse in This requires an estimation of the recoverable amount of the
Property, plant and equipment € in millions
Rieste, Germany. groups of cash-generating units to which the goodwill is
allocated. The recoverable amount of a group of cash-
Dec. 31, Dec. 31, Additionally, borrowing costs in an amount of € 1 million generating units is determined on the basis of value in use.
2017 2016 (2016: € 1 million) related to the construction of qualifying Estimating the value in use requires adidas to make an
Land, land leases, buildings and leasehold assets at adidas AG were capitalized using a capitalization estimate of the expected future cash flows from the groups of
improvements 1,242 1,395
Technical equipment and machinery 288 325
rate of 1.3% (2016: 1.3%). cash-generating units and also to choose a suitable discount
Other equipment as well as furniture and rate in order to calculate the present value of those cash flows.
fixtures 1,721 1,710 For details see Attachment I to the consolidated financial
3,251 3,430 statements  SEE STATEMENT OF MOVEMENTS OF INTANGIBLE AND TANGIBLE This calculation uses cash flow projections based on the
Less: accumulated depreciation and
impairment losses (1,629) (1,733)
ASSETS, P. 213 financial planning covering a three-year period in total. The
1,622 1,697 planning is based on long-term expectations of the company
Construction in progress, net 378 218 13 » GOODWILL and reflects in total for the groups of cash-generating units an
Property, plant and equipment, net 2,000 1,915 Goodwill primarily relates to the acquisitions of the Reebok, average annual mid-single- to low-double-digit sales increase
TaylorMade and Runtastic businesses as well as acquisitions with varying forecast growth prospects for the different
of subsidiaries, primarily in the USA, Australia, New Zealand, groups of cash-generating units. Furthermore, a didas expects
Depreciation expenses were € 358 million and € 303 million the Netherlands, Denmark and Italy. the operating margin to expand, primarily driven by an
for the years ending December 31, 2017 and 2016, respectively. improvement in the gross margin as well as lower operating
Goodwill € in millions
 SEE NOTE 32 expenses as a percentage of sales. The planning for capital
expenditure and working capital is primarily based on past
As a general principle, it is regularly assessed whether there Dec. 31, Dec. 31, experience. The planning for future tax payments is based on
are any indications that furniture and fixtures might be 2017 2016 current statutory corporate tax rates of the individual groups
ANNUAL REPORT 2017
impaired. Irrespective of the existence of such indications, Goodwill, gross 1,675 1,908 of cash-generating units. Cash flows beyond this three-year
Less: accumulated impairment losses (454) (496)
furniture and fixtures in own-retail stores are tested annually period are extrapolated using steady growth rates of 1.7%
Goodwill, net 1,220 1,412
for impairment whereby the recoverable amount is calculated (2016: 1.7%). According to the company’s expectations, these
using the discounted cash flow method as part of determining growth rates do not exceed the long-term average growth rate
the profitability of the respective own-retail stores. Impairment The majority of goodwill, which primarily relates to the of the business sector in which the respective group of cash-
losses amounted to € 13 million and € 10 million for the years acquisition of the Reebok business in 2006, is denominated in generating units operates.
171
ending December 31, 2017 and 2016, respectively.  SEE NOTE 32 US dollars. A currency translation effect of negative € 78 million
ADIDAS
These are related to other equipment, furniture and fixtures and positive € 20 million was recorded for the years ending Discount rates are based on a weighted average cost of capital
as well as buildings and leasehold improvements, mainly in December 31, 2017 and 2016, respectively. calculation considering a five-year average market-weighted
the company’s own-retail activities, for which contrary to debt/equity structure and financing costs referencing major
expectations there will be an insufficient flow of future didas determines whether goodwill impairment is necessary
a competitors for the respective group of cash-generating
economic benefits. In 2017, reversals of impairment losses at least on an annual basis. The impairment test for goodwill units. The discount rates used are after-tax rates and reflect
were recorded in an amount of € 1 million (2016: € 2 million). is performed based on groups of cash-generating units which
NOTES
the specific equity and country risk of the respective group of basis of an existing purchase price offer at this point of time. ‘Other’ comprises the groups of cash-generating units for
cash-generating units.  SEE NOTES 03, 04 AND 30 which the respective carrying amount of allocated goodwill is
not significant in comparison with the company’s total
The groups of cash-generating units are defined as the The divestiture of TaylorMade, Adams Golf and Ashworth was carrying amount of goodwill.
regional markets which are responsible for the joint formally completed on October 2, 2017.
distribution of the a
didas and Reebok brands as well as the A change in the discount rate by up to approximately 4.2
other operating segments adidas Golf and Runtastic. The On July 26, 2017, a
didas signed an agreement to sell its CCM percentage points or a reduction of planned free cash inflows
regional markets are: Western Europe, North America Hockey business. The divestiture of the CCM Hockey business by up to approximately 40% would not result in any impairment
(excluding USA Reebok), USA Reebok, Greater China, Russia/ was formally completed on September 1, 2017. requirement.
CIS, Latin America, Japan, Middle East, South Korea and
Southeast Asia/Pacific. The number of groups of cash- At December 31, 2017, the number of cash-generating units Future changes in expected cash flows and discount rates may
generating units amounted to a total of twelve at the end of decreased again to a total of twelve as a result of the completed lead to impairments of the reported goodwill in the future.
2017 and 2016, respectively. divestiture of the CCM Hockey and TaylorMade businesses.
For details see Attachment I to the consolidated financial
Following the company’s internal management reporting In the course of the annual impairment test, a
didas assessed statements  SEE STATEMENT OF MOVEMENTS OF INTANGIBLE AND TANGIBLE
and the related split of the market North America into whether goodwill impairment was required. In this context, ASSETS, P. 213
North America (excluding USA Reebok) and USA Reebok, the there was no need for goodwill impairment for the years
number of groups of cash-generating units increased from ending December 31, 2017 and 2016, respectively.
twelve to a total of thirteen in 2017.
The carrying amounts of acquired goodwill allocated to the
On May 10, 2017, a didas signed an agreement to sell its golf respective groups of cash-generating units and the respective
equipment business which included the brands TaylorMade, discount rates applied to the cash flow projections are as
Adams Golf and Ashworth (together TaylorMade). As a result, follows:
the goodwill allocated to the group of cash-generating units
ANNUAL REPORT 2017
Allocation of goodwill
TaylorMade-adidas Golf in the amount of € 292 million was
split and re-allocated to the new cash-generating units
TaylorMade amounting to € 113 million and a didas Golf Goodwill Discount rate
(€ in millions) (after taxes)
amounting to € 179 million based on relative values (value in
use) of the operation disposed of and the cash-generating unit Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2017 2016 2017 2016
retained, respectively. The re-allocated goodwill was initially
Western Europe 600 643 8.2% 7.7%
172
measured according to IAS 36 ‘Impairment of Assets’ and Greater China 215 231 8.1% 7.5%
ADIDAS
goodwill allocated to the cash-generating unit TaylorMade TaylorMade-

was subsequently transferred to ‘Assets classified as held for adidas Golf – 293 – 6.5%
adidas Golf 178 – 7.7% –
sale’. The recoverable amount of the new cash-generating
Other 228 245 7.9 – 9.5% 7.3 – 8.9%
unit TaylorMade identified in the course of the impairment
Total 1,220 1,412
test was determined based on the net realizable value on the
NOTES
The reconciliation of goodwill is as follows: to ‘Assets classified as held for sale’ at June 30, 2017. The
divestiture of the CCM Hockey business was formally
Reconciliation of goodwill, net € in millions
completed on September 1, 2017.
Taylor- didas tests at least on an annual basis whether trademarks

a
Western Made- are impaired. This requires an estimation of the fair value less
Europe Greater China adidas Golf TaylorMade adidas Golf Other Total
costs to sell of the trademarks. As part of this estimation,
January 1, 2017 643 231 293 – – 245 1,412
Re-allocation of adidas is required to make an estimate of the expected future
goodwill – – (292) 113 179 – – trademark-specific sales and appropriate arm’s length notional
Currency translation royalty rates and also to choose a suitable discount rate in
differences (43) (16) (1) – (1) (17) (78)
order to calculate the present value of those cash flows. Future
Decrease in companies
consolidated – – – (113) – – (113) trademark-specific sales are based on the underlying financial
December 31, 2017 600 215 – – 178 228 1,220 planning used for the goodwill impairment test.
During the impairment test for trademarks, the recoverable

amount is determined on the basis of fair value less costs to
14 » T
RADEMARKS AND OTHER At December 31, 2017, trademarks, mainly related to the sell (costs to sell are calculated with 1% of the fair value). The
INTANGIBLE ASSETS acquisition of Reebok International Ltd. (USA) in 2006 and fair value is determined by discounting notional royalty
Trademarks and other intangible assets consist of the runtastic GmbH in 2015, have indefinite useful lives, with the savings after tax and adding a tax amortization benefit,
following: exception of the definite useful life of the Five Ten trademark. resulting from the amortization of the acquired asset (‘relief-
This is due to the expectation of permanent use of the acquired from-royalty method’). These calculations use projections of
Trademarks and other intangible assets € in millions
trademarks Reebok and Runtastic and of the limited use of net sales-related royalty savings, based on financial planning
the Five Ten trademark. which covers a period of three years in total. The level of the
applied royalty rate for the determination of the royalty
ANNUAL REPORT 2017
Dec. 31, Dec. 31,

2017 2016 The Ashworth and Adams Golf trademarks amounting to savings is based on contractual agreements between adidas
Reebok 1,292 1,470 € 41 million were initially measured according to IAS 36 and external licensees as well as publicly available royalty
CCM Hockey – 122
‘Impairment of Assets’ and subsequently transferred to rate agreements for similar assets. The royalty rates applied
Runtastic 31 31
‘Assets classified as held for sale’ due to the signing of an are in a range between 3% and 4.5% of the respective
Other 9 57
Less: accumulated amortization and
agreement in May 2017 to sell the TaylorMade business. The trademark-specific sales. Notional royalty savings beyond
impairment losses (23) – divestiture of TaylorMade, Adams Golf and Ashworth was this period are extrapolated using steady growth rates of 1.7%
173
Trademarks 1,309 1,680 formally completed on October 2, 2017. (2016: 1.7%). The growth rates do not exceed the long-term
Software, patents and licenses 839 925
ADIDAS
average growth rate of the business to which the trademarks

Less: accumulated amortization and
impairment losses (685) (758)
On July 26, 2017, a
didas signed an agreement to sell its CCM are allocated.
Other intangible assets 154 167 Hockey business. For this reason, the CCM Hockey trademarks
Trademarks and other intangible assets 1,463 1,847 amounting to € 109 million were initially measured according The discount rate is based on a weighted average cost of
to IAS 36 ‘Impairment of Assets’ and subsequently transferred capital calculation derived using a five-year average market-
weighted debt/equity structure and financing costs referencing
NOTES
the company’s major competitors. The discount rate used is As part of the goodwill impairment test, the Reebok and the amounting to € 56 million (2016: € 50 million) which are
an after-tax rate and reflects the specific equity and country Five Ten trademarks are allocated on a pro rata basis to the classified as ‘available-for-sale’ and measured at cost as a
risk. The applied discount rate depends on the respective groups of cash-generating units. Thereof, the major shares reliable determination of the fair value is impossible without
intangible asset being valued and ranges between 8.5% and relate to Western Europe (€ 353 million), USA Reebok having concrete negotiations regarding a sale. Other minority
9.6% (2016: between 6.5% and 9.0%). (€ 224 million), Russia/CIS (€ 203 million) and Latin shareholdings include impairment losses in an amount of
America (€ 118 million). All other trademarks are part of the € 20 million in 2017 (2016: € 5 million). These shares are
In total, trademark impairment losses of € 23 million were respective groups of cash-generating units. unlisted and do not have an active market. There is currently
recognized in 2017 (2016: € 0 million). no intention to sell these shares.
Amortization expenses for intangible assets with definite
Long-term financial assets € in millions
On the basis of the value in use determination of Runtastic on useful lives were € 63 million and € 70 million for the years
the cash-generating unit level and due to adjusted growth ending December 31, 2017 and 2016, respectively. In 2017,
assumptions, an indication of a potential impairment was impairment losses on other intangible assets amounted to Dec. 31, Dec. 31,
identified. In the course of the trademark impairment test, the € 10 million (2016: € 10 million).  SEE NOTE 32 2017 2016
recoverable amount of the Runtastic trademark in the amount Investment in FC Bayern München AG 82 81
Investments and loans 98 49
of € 16 million was determined to be lower than its carrying For details see Attachment I to the consolidated financial
Other financial assets 56 64
amount and an impairment loss of €  15 
million was statements  SEE STATEMENT OF MOVEMENTS OF INTANGIBLE AND TANGIBLE
Long-term financial assets 236 194
recognized. Regarding the determination of the fair value less ASSETS, P. 213
costs to sell, a royalty rate of 3.5% and a discount rate of 9.6%

was applied. 15 » LONG-TERM FINANCIAL ASSETS Other financial assets mainly include unquoted equity
Long-term financial assets primarily include an 8.33% invest instruments.
In the course of the trademark impairment test, the ment in FC Bayern München AG (2016: 8.33%) of € 82 million
recoverable amount of the Five Ten trademark in the amount (2016: € 81 million). This investment is classified as ‘fair value 16 » OTHER NON-CURRENT FINANCIAL ASSETS
of € 1 million was also determined to be lower than its through profit or loss’ and recorded at fair value. This equity Other non-current financial assets consist of the following:
carrying amount. The impairment loss of € 8 million was security does not have a quoted market price in an active
ANNUAL REPORT 2017
Other non-current financial assets € in millions

mainly due to the planned integration of the Five Ten market. Therefore, existing contractual arrangements were
trademark into a didas by the end of 2020 and the resulting used in order to calculate the fair value as at December 31, 2017.
limitation of its remaining useful life to three years. Dec. 31, Dec. 31,
The line item ‘Investments and loans’ comprises investments 2017 2016
For the Reebok trademark, there was no indication of a which are mainly invested in insurance products, which are Currency options 14 18
potential impairment. Neither an increase in the discount rate measured at fair value, securities for long-term variable
Security deposits 67 34
174
of up to approximately 2.0 percentage points nor a reduction compensation components as well as other loans. Investments
Earn-out components 19 –
ADIDAS
of trademark-specific sales of up to approximately 28.4% or of include impairment losses in an amount of € 11 million in Promissory notes 118 30
the applied royalty rate of approximately 1.3 percentage points 2017 (2016: € 0 million). Sundry 0 0
would result in any impairment requirement. However, future Other non-current financial assets 219 96
changes in expected cash flows and discount rates may lead The line item ‘Other financial assets’ includes the shares in
to impairments of the accounted trademarks in the future. Immobilieninvest und Betriebsgesellschaft Herzo-Base For further information about currency options and forward
GmbH & Co. KG as well as other minority shareholdings exchange contracts  SEE NOTE 30
NOTES
For information about promissory notes and earn-out The amounts disclosed as gross borrowings represent
components  SEE NOTE 03 outstanding borrowings under the following arrangements
with aggregated expiration dates as follows:
17 » OTHER NON-CURRENT ASSETS
Gross borrowings as at December 31, 2017 € in millions
Other non-current assets consist of the following:
Other non-current assets € in millions

Up to Between Between More than
1 year 1 and 3 years 3 and 5 years 5 years Total
Bank borrowings incl. commercial paper 106 – – – 106

Dec. 31, Dec. 31,
2017 2016 Eurobond – – 596 387 983
Prepaid expenses 108 94 Convertible bond 31 – – – 31
Sundry 0 0 Total 137 – 596 387 1,120
Other non-current assets 108 94
Prepaid expenses mainly include prepayments for long-term The above table includes two Eurobonds amounting to The convertible bond initially had a conversion premium of 40%
promotion contracts and rents.  SEE NOTES 39 AND 29 € 1 billion in total issued on October 1, 2014. The seven-year above the reference price of € 59.61, which resulted in an initial
Eurobond of € 600 million matures on October 8, 2021 and has conversion price of € 83.46 per share. As a consequence of
18 » BORROWINGS AND CREDIT LINES a coupon of 1.25%. The twelve-year Eurobond of € 400 million contractual provisions relating to dividend protection, the
Borrowings are denominated in a variety of currencies in which matures on October 8, 2026 and has a coupon of 2.25%. The conversion price was adjusted from € 81.57 to € 81.13 (2016:
adidas conducts its business. The largest portions of effective Eurobonds have denominations of € 1,000 each and were € 82.00 to € 81.57) per share. This adjustment became effective
gross borrowings (before liquidity swaps for cash management priced with a spread of 68 basis points and 100 basis points, on May 12, 2017. On June 14, 2017, the bondholders had the
purposes) as at December 31, 2017 are denominated in euros respectively, above the corresponding euro mid-swap rate. The right to call the bond from adidas AG at nominal value plus
(2017: 91%; 2016: 77%). issue price was fixed at 99.145% and 99.357%, respectively. interest accrued on the nominal amount. This option was not
utilized. adidas AG is entitled to redeem all remaining bonds as
ANNUAL REPORT 2017
The weighted average interest rate on the Group’s gross In addition, gross borrowings include the outstanding portion of a whole if, at any time, the aggregate principal amount of bonds
borrowings increased to 2.7% in 2017 (2016: 2.3%). the convertible bond for an aggregate nominal amount of outstanding falls below 15% of the aggregate principal amount
€ 31 million (2016: € 260 million) divided into denominations of of the bonds that were initially issued. Furthermore, as of
As at December 31, 2017, adidas had cash credit lines and € 200,000 which was issued on March 21, 2012. The bond has a July 14, 2017, adidas AG is entitled to redeem all remaining
other long-term financing arrangements totaling € 3.3 billion maximum maturity (including prolongation options) until bonds as a whole if, on 20 of 30 consecutive trading days, the
(2016: € 3.6 billion); thereof unused credit lines accounted for June 14, 2019. The coupon of the bond amounts to 0.25% and adidas AG share price exceeds the current conversion price of
175
€ 2.1 
billion (2016: €  2.0 
billion). In addition, as at is payable annually, commencing on June 14, 2013. The bond € 81.13 by at least 30%.
ADIDAS
December 31, 2017, adidas had separate lines for the issuance is, at the option of the respective holder, convertible at any
of letters of credit and guarantees in an amount of time from and including May 21, 2012, up to and including According to IAS 32 ‘Financial Instruments: Presentation’, the
approximately € 0.2 billion (2016: € 0.2 billion). June 5, 2019, into up to 0.4 million new or existing adidas AG conversion right represented in the convertible bond constitutes
shares (as at December 31, 2017). In 2017, the bondholders a financial instrument which at issuance is covered in the
converted an aggregate nominal amount of € 229 million of the capital reserve in an amount of € 55 million after deduction of the
convertible bond into 2,814,470 adidas AG shares.  SEE NOTE 26 issuance cost. The initial difference of € 59 million compared to
NOTES
the nominal amount of € 500 million is accrued as interest For further information about currency options, forward Provisions for personnel mainly consist of provisions for
expense of the financial liability over the expected maturity of exchange contracts and commodity futures  SEE NOTE 30 short- and long-term variable compensation components as
the convertible bond using the ‘effective interest method’. As at well as of provisions for social plans relating to restructuring
December  31, 2017, the financial liability amounted to For further information about finance lease obligations measures.
€ 31 million (2016: € 257 million).  SEE NOTE 29
Provisions for returns, allowances and warranty primarily

Gross borrowings as at December 31, 2016 € in millions
arise due to bonus agreements with customers and the
obligation of fulfilling customer claims with regard to the
Up to Between Between More than return of products sold by adidas. The amount of the provision
1 year 1 and 3 years 3 and 5 years 5 years Total follows the historical development of returns, allowances and
Bank borrowings incl. commercial paper 379 – – – 379 warranty as well as current agreements.
Eurobond – – 595 387 982
Convertible bond 257 – – – 257
Provisions for taxes other than income taxes mainly relate to
Total 636 – 595 387 1,618
value added tax, real estate tax and motor vehicle tax.
Sundry provisions mainly include provisions for customs

For further details on future cash outflows  SEE RISK AND 20 » OTHER PROVISIONS risks, onerous contracts and provisions due to the divestiture
OPPORTUNITY REPORT, P. 131 Other provisions consist of the following: of operating segments.
19 » OTHER CURRENT FINANCIAL LIABILITIES

Other provisions € in millions
Other current financial liabilities consist of the following:
Other current financial liabilities € in millions

Currency
Jan. 1, translation Dec. 31, Thereof
ANNUAL REPORT 2017
2017 differences Usage Reversals Additions Transfers 2017 non-current

Dec. 31, Dec. 31, Marketing 28 (3) (17) (0) 26 (7) 27 –
2017 2016
Personnel 99 (10) (56) (1) 96 (11) 117 33
Currency options 3 1
Returns, allowances and warranty 230 (16) (187) (2) 251 (16) 261 –
Taxes, other than income taxes 36 (4) (14) (0) 9 0 27 –
Finance lease obligations 0 3
Sundry 224 (11) (78) (14) 260 10 391 47
Earn-out components 21 7
Other provisions 617 (45) (351) (18) 642 (24) 821 80
Sundry 67 81
176
Other current financial liabilities 362 201
ADIDAS
Marketing provisions mainly consist of provisions for Management follows past experience from similar
The line item ‘Sundry’ mainly relates to payables due to the promotion contracts, which are comprised of obligations to transactions when assessing the recognition and the
divestiture of operating segments and due to customs duties. clubs and athletes. measurement of other provisions; in particular external legal
opinions are considered for provisions for customs risks and
for litigation and other legal risks. All evidence from events
NOTES
until the preparation of the consolidated financial statements 23 » OTHER NON-CURRENT FINANCIAL
is taken into account. LIABILITIES
Other non-current financial liabilities consist of the following:
The transfers include reclassifications to ‘Liabilities classified
Other non-current financial liabilities € in millions
as held for sale’.
21 » ACCRUED LIABILITIES Dec. 31, Dec. 31,

Accrued liabilities consist of the following: 2017 2016
Accrued liabilities € in millions Forward exchange contracts 14 2
Revaluation total return swap 4 –
Finance lease obligations 3 4
Currency Earn-out components 5 15
Jan. 1, translation Dec. 31, Thereof
2017 differences Usage Reversals Additions Transfers 2017 non-current Sundry 1 0
Goods and services not yet invoiced 708 (44) (530) (22) 766 (46) 833 1 Other non-current financial liabilities 22 22
Marketing and sales 748 (35) (516) (18) 639 (11) 806 3
Personnel 633 (31) (439) (4) 492 (57) 595 76 For further information about currency options and forward
Sundry 54 (4) (26) (5) 21 (10) 30 5 exchange contracts  SEE NOTE 30
Accrued liabilities 2,143 (113) (1,511) (49) 1,919 (124) 2,265 85
For further information about finance lease obligations

 SEE NOTE 29
Accrued liabilities for marketing and sales mainly consist of 22 » OTHER CURRENT LIABILITIES
accruals for distribution, such as discounts, rebates and sales Other current liabilities consist of the following: 24 » PENSIONS AND SIMILAR OBLIGATIONS
commissions. didas has recognized post-employment benefit obligations
a
Other current liabilities € in millions
arising from defined benefit plans. The benefits are provided
ANNUAL REPORT 2017
Accrued liabilities for personnel mainly consist of accruals for pursuant to the legal, fiscal and economic conditions in each
outstanding salary payments, such as bonuses and overtime, Dec. 31, Dec. 31, respective country and mainly depend on the employees’
as well as outstanding vacation. 2017 2016 years of service and remuneration.
Tax liabilities other than income taxes 200 131
Liabilities due to personnel 65 65 Pensions and similar obligations € in millions
Sundry accrued liabilities mainly include accruals for interest
Liabilities due to social security 22 24
as well as for dismantling costs.
Deferred income 53 43
177
Customers with credit balances 54 85 Dec. 31, Dec. 31,
ADIDAS
The transfers include reclassifications to ‘Liabilities classified 2017 2016

Sundry 78 86
as held for sale’. Liability arising from defined benefit pension
Other current liabilities 473 434
plans 295 338
Similar obligations 2 17
The line item ‘Sundry’ mainly consists of liabilities relating to Pensions and similar obligations 298 355
franchise store openings and advance payments from customers.
NOTES
Defined contribution pension plans The final salary defined benefit pension scheme in the UK is
The total expense for defined contribution plans amounted to closed to new entrants and to future accrual. The benefits are
€ 67 million in 2017 (2016: € 66 million). mainly paid out in the form of pensions. The scheme operates
under UK trust law as well as under the jurisdiction of the UK
Defined benefit pension plans Pensions Regulator and therefore is subject to a minimum
Given the company’s diverse structure, different defined funding requirement. The Trustee Board is responsible for
benefit pension plans exist, comprising a variety of post- setting the scheme’s funding objective, agreeing the
employment benefit arrangements. The company’s major contributions with the company and determining the
defined benefit pension plans relate to adidas AG and its investment strategy of the scheme.
subsidiaries in the UK and South Korea. The defined benefit
pension plans generally provide payments in case of death,
Breakdown of the present value of the obligation arising from defined
disability or retirement to former employees and their benefit pension plans in the major countries € in millions
survivors. The obligations arising from defined benefit
pension plans are partly covered by plan assets.
Dec. 31, 2017 Dec. 31, 2016
In Germany, adidas AG grants its employees contribution- Germany UK South Korea Germany UK South Korea
based and final salary defined benefit pension schemes, Active members 203 – 18 211 – 17
which provide employees with entitlements in the event of Former employees with vested rights 106 52 – 76 69 –
retirement, disability and death. German pension plans Pensioners 77 7 – 86 4 –
operate under the legal framework of the German Company Total 386 59 18 375 73 17
Pensions Act (‘Betriebsrentengesetz’) and under general
German labor legislation. New employees are entitled to
benefits in accordance with the adidas Pension Plan or the In South Korea, adidas grants a final pay pension plan to The Group’s pension plans are subject to risks from changes in
adidas Management Pension Plan. The adidas Pension Plan is certain employees. This plan is closed to new entrants. The actuarial assumptions, such as the discount rate, salary and
ANNUAL REPORT 2017
a matching contribution plan; the contributions to this pension benefits are paid out in the form of a lump sum. The pension pension increase rates, and risks from changes in longevity. A
plan are partly paid by the employee and partly paid by the plan operates under the Employee Retirement Benefit lower discount rate results in a higher defined benefit obligation
employer. The contributions are transferred into benefit Security Act (ERSA). This regulation requires a minimum and/or in higher contributions to the pension funds. Lower than
components. The benefits are paid out in the form of a funding amounting to 80% of the present value of the vested expected performance of the plan assets could lead to an
pension, a lump sum or installments. The pension plans in benefit obligation. The annual contribution includes at least increase in required contributions or to a decline of the funded
Germany are financed using book reserves, a contractual the minimum amount in order to meet the funding status.
178
trust arrangement (CTA) and a pension fund (‘Pensionsfonds’) requirements. The pension plan at TaylorMade South Korea
ADIDAS
in combination with a reinsured provident fund was derecognized due to the divestiture of the TaylorMade
(‘Unterstützungskasse’) for certain former members of the business as at October 2, 2017.  SEE NOTE 04
Executive Board of adidas AG. Further details about the
pension entitlements of members of the Executive Board
of adidas AG are contained in the Compensation Report.
 SEE COMPENSATION REPORT, P. 39
NOTES
The following tables analyze the defined benefit plans, plan Weighted average actuarial assumptions
in %
assets, present values of the defined benefit pension plans,
expenses recognized in the consolidated income statement,
actuarial assumptions and further information. Dec. 31, Dec. 31,
2017 2016
Discount rate 2.3 2.1

Amounts for defined benefit pension plans recognized in Expected rate of salary increases 3.7 3.1
the consolidated statement of financial position Expected pension increases 1.6 1.7
€ in millions
The weighted average actuarial assumptions as at the balance

Dec. 31, Dec. 31,
2017 2016 sheet date are used to determine the defined benefit liability at
Present value of funded obligation from that date and the pension expense for the upcoming financial
defined benefit pension plans 482 485 year.
Fair value of plan assets (218) (178)
Funded status 264 307
The actuarial assumptions for withdrawal and mortality rates
Present value of unfunded obligation from
defined benefit pension plans 31 31 are based on statistical information available in the various
Asset ceiling effect 0 0 countries. In Germany, the Heubeck 2005 G mortality tables are
Net defined benefit liability 295 338 used. In the UK, assumptions are based on the S2PA base table
Thereof: liability 295 338 with modified improvement of the life expectancy mortality
Thereof: adidas AG 248 275
tables. In South Korea, the KIDI 2015 tables from the Korean
Thereof: asset (0) (0)
Insurance Development Institute are used.
Thereof: adidas AG – –
As in the previous year, the calculation of the pension liabilities

The determination of assets and liabilities for defined benefit in Germany is based on a discount rate determined using the
ANNUAL REPORT 2017
plans is based upon statistical and actuarial valuations. In ‘Mercer Yield Curve (MYC)’ approach.
particular, the present value of the defined benefit obligation is
driven by financial variables (such as the discount rates or
future increases in salaries) and demographic variables (such
as mortality and employee turnover). The actuarial assumptions
may differ significantly from the actual circumstances and
179
could lead to different cash flows.
ADIDAS
NOTES
Remeasurements, such as gains or losses arising from Of the total pension expenses recorded in the consolidated
changes in the actuarial assumptions for defined benefit income statement, an amount of €  25  million (2016:
pension plans during the financial year or a return on the plan € 16 million) relates to employees of adidas AG, € 0.6 million
assets exceeding the interest income, are immediately (2016: € 0.2 million) relates to employees in the UK and
recognized outside the income statement as a change in other € 2.8 
million (2016: €  3 
million) relates to employees in
reserves in the consolidated statement of comprehensive South Korea. The pension expense is mainly recorded within
income. other operating expenses. The production-related part of the
pension expenses is recognized within cost of sales.
Pension expenses for defined benefit pension plans

€ in millions
Present value of the defined benefit obligation
€ in millions

Dec. 31, Dec. 31,
2017 2016 2017 2016
Current service cost 27 17 Present value of the obligation from defined

benefit pension plans as at January 1 516 419
Net interest expense 7 6
Currency translation differences (7) (8)
Thereof: interest cost 11 11
Current service cost 27 17
Thereof: interest income (4) (5)
Interest cost 11 11
Past service cost/(credit) 1 (0)
Contribution by plan participants 0 0
Gain on plan settlements (0) (1)
Pensions paid (11) (11)
Expenses for defined benefit pension plans
(recognized in the consolidated income Payments for plan settlements 0 (2)
statement) 34 23 Actuarial (gains)/losses (21) 89
Actuarial (gains)/losses (21) 89 Thereof: due to changes in financial
Thereof: due to changes in financial assumptions (22) 70
assumptions (22) 70
ANNUAL REPORT 2017
Thereof: due to changes in demographic

Thereof: due to changes in demographic assumptions (2) (1)
assumptions (2) (1) Thereof: due to experience adjustments 2 21
Thereof: due to experience adjustments 2 21 Past service cost/(credit) 1 (0)
Return on plan assets (not included in net Gain on plan settlements (0) (1)
interest income) (7) (6)
Business combinations/transfers/divestitures (2) 1
Asset ceiling effect (0) (0)
Present value of the obligation from defined
Remeasurements for defined benefit pension benefit pension plans as at December 31 513 516
plans (recognized as (increase)/decrease in
180
other reserves in the consolidated statement of
(29) 84
ADIDAS
comprehensive income)
Total 5 106
NOTES
In the following table, the effects of reasonably conceivable Approximately 93% (2016: 92%) of the total plan assets are In the UK, the plan assets are held under trust within the
changes in the actuarial assumptions on the present value of allocated to plan assets in the three major countries: Germany pension fund. The investment strategy is aligned with the
the obligation from defined benefit pension plans are (2017: 63%, 2016: 57%), UK (2017: 23%, 2016: 28%) and South structure of the pension obligations in these countries. In the
analyzed. In addition, for Germany, the UK and South Korea Korea (2017: 7%, 2016: 8%). rest of the world, the plan assets consist predominantly of
the average duration of the obligation is shown. insurance contracts.
Sensitivity analysis of the obligation from defined benefit pension plans € in millions
The expected payments for the 2018 financial year amount to
€ 43 million. Thereof, € 6 million relates to benefits directly
Dec. 31, 2017 Dec. 31, 2016 paid to pensioners by the subsidiaries and € 37 million to
employer contributions paid into the plan assets. In 2017, the
Germany UK South Korea Germany UK South Korea
actual return on plan assets (including interest income) was
Present value of the obligation from defined benefit pension plans 386 59 18 375 73 17
€ 11 million (2016: € 10 million).
Increase in the discount rate by 0.5% 355 51 18 344 63 16
Reduction in the discount rate by 0.5% 422 67 19 412 85 18
Average duration of the obligations (in years) 17 28 7 18 30 8
Composition of plan assets € in millions
Since many pension plans are closed to future accrual or are Part of the plan assets in Germany is held by a trustee under Dec. 31, Dec. 31,
not dependent on the salary, the salary trend plays a minor role a Contractual Trust Arrangement (CTA) for the purpose of 2017 2016
in determining pension obligations. Due to the fact that about funding the pension obligations of adidas AG and insolvency Cash and cash equivalents 19 28
Equity instruments 26 59
half of the benefits of the German pension plans are paid as insurance with regard to part of the pension obligations of
Bonds 26 34
lump sums or installment payments, the pension increase rate adidas AG. The trustee is the registered association a didas
Real estate 50 13
and the mortality assumption have significantly less impact Pension Trust e.V. The investment committee of the adidas Pension plan reinsurance 46 44
than the discount rate when calculating the pension obligations. Pension Trust determines the investment strategy with the Investment funds 51 –
goal to match the pension liabilities as far as possible and to
ANNUAL REPORT 2017
Insurance policies – 0
Fair value of plan assets € in millions
generate a sustainable return. In August 2014, an amount of Other assets 0 0
€ 65 million in cash was transferred to the trustee. In addition, Fair value of plan assets 218 178
2017 2016 in 2017, an amount of € 30 million in cash was transferred to

Fair value of plan assets at January 1 178 173 the trustee. The plan assets in the registered association are
Currency translation differences (3) (7) mainly invested in real estate, equity index funds and hybrid All equities and bonds are traded freely and have a quoted
Pensions paid (4) (3) bonds. Another part of the plan assets in Germany is invested market price in an active market.
181
Contributions by the employer 36 6 in insurance contracts via pension funds or provident funds.
Contributions paid by plan participants 0 0
ADIDAS
For this portion, an insurance entity is responsible for the At each balance sheet date, the company analyzes the over- or
Interest income from plan assets 4 5
determination and the implementation of the investment underfunding and, where appropriate, adjusts the composition
Return on plan assets (not included in net
interest income) 7 6 strategy. of plan assets.
Settlement payments – (1)
Business combinations/transfers/divestitures (1) –
Fair value of plan assets at December 31 218 178
NOTES
25 » OTHER NON-CURRENT LIABILITIES The following overview of the existing amounts of authorized pro rata amount in the nominal capital of other shares
Other non-current liabilities consist of the following: capital refers to § 4 sections 2, 3, 4 and 5 of the Articles of which have been issued by adidas AG since May 11, 2017,
Association and consequently does not include the Authorized subject to the exclusion of subscription rights pursuant to
Capitals 2013/I, 2013/III and 2015 canceled by the Annual or in accordance with § 186 section 3 sentence 4 AktG on the
Other non-current liabilities € in millions
General Meeting on May 11, 2017, which had also not been basis of an authorized capital or following a repurchase, or
utilized up to May 11, 2017. The authorized capital of adidas AG for which subscription or conversion rights or subscription
Dec. 31, Dec. 31, entitles the Executive Board, subject to Supervisory Board or conversion obligations have been granted since May 11,
2017 2016 approval, to increase the nominal capital 2017, through the issuance of convertible bonds and/or
Liabilities due to personnel 2 5 bonds with warrants, with subscription rights excluded in
Deferred income 51 41
until June 7, 2022 accordance with § 186 section 3 sentence 4 AktG, does not
Sundry 0 0
—— by issuing new shares against contributions in cash once or exceed 10% of the nominal capital existing on the date of
Other non-current liabilities 53 46
several times by no more than € 50 million and, subject to the entry of this authorization into the commercial register
Supervisory Board approval, to exclude residual amounts or – if this amount is lower – as of the respective date on
26 » SHAREHOLDERS’ EQUITY from shareholders’ subscription rights (Authorized Capital which the resolution on utilization of the authorization is
The nominal capital of adidas AG has remained unchanged 2017/I); adopted; the overall amount of shares issued based on
since December 31, 2016. As at the balance sheet date, and in until June 7, 2020 the Authorized Capital 2017/III and the Authorized Capital
the period beyond, up to and including February 23, 2018, it —— by issuing new shares against contributions in kind once 2017/II must not exceed 10% of the nominal capital existing
amounted to € 209,216,186 divided into 209,216,186 registered or several times by no more than € 16 million and, subject on the date of the respective issuance;
no-par-value shares and is fully paid in. to Supervisory Board approval, to exclude shareholders’ until June 14, 2021
subscription rights (Authorized Capital 2017/II); —— by issuing up to 4,000,000 new shares against contributions
Each share grants one vote and is entitled to dividends starting until June 7, 2022 in cash once or several times by no more than € 4 million
from the beginning of the year it was issued. Treasury shares —— by issuing new shares against contributions in cash and, subject to Supervisory Board approval, to determine the
held directly or indirectly are not entitled to dividend payment once or several times by no more than € 20 million and, further content of the rights embodied in the shares and the
in accordance with § 71b German Stock Corporation Act subject to Supervisory Board approval, to exclude residual terms and conditions of the share issuance. Shareholders’
ANNUAL REPORT 2017
(Aktiengesetz – AktG). As at the balance sheet date, adidas AG amounts from shareholders’ subscription rights and to subscription rights shall be excluded (Authorized Capital
held 5,354,952 treasury shares, corresponding to a notional exclude shareholders’ subscription rights when issuing 2016). Any repurchased treasury shares of adidas AG which
amount of € 5,354,952 in the nominal capital and consequently the new shares at a value not essentially below the stock are used by adidas AG for employee stock purchase plans
2.56% of the nominal capital. As at February 23, 2018, market price of the adidas AG shares already listed on during the term of this authorization shall be attributed
adidas AG holds 5,322,731 treasury shares, corresponding to the stock exchange at the point in time when the issue to the maximum number of 4,000,000 shares. The new
a notional amount of € 5,322,731 in the nominal capital and price is ultimately determined, which should be as close shares may only be issued to (current or former) employees
182
consequently 2.54% of the nominal capital. as possible to the placement of the shares; this exclusion of adidas AG and its affiliated companies as well as to
ADIDAS
of subscription rights can also be associated with the (current and former) members of management bodies of
Authorized Capital listing of the adidas AG shares on a foreign stock exchange the adidas AG’s affiliated companies.
The Executive Board of adidas AG did not utilize the existing (Authorized Capital 2017/III). The authorization to exclude
amount of authorized capital of up to € 90 million in the 2017 subscription rights pursuant to the previous sentence may,
financial year or in the period beyond the balance sheet date however, only be used to the extent that the pro rata amount
up to and including February 23, 2018. of the new shares in the nominal capital together with the
NOTES
Contingent Capital share are convertible into 6,163,246 shares of adidas AG. The rights to choose to deliver adidas AG shares for the total
The following description of the Contingent Capital is based conversion price currently amounts to € 81.13 per share. The amount or a part amount instead of payment of the amount
on § 4 sections 6 and 7 of the Articles of Association of convertible bond bears an interest rate of 0.25% per annum. due and insofar as no cash settlement, treasury shares or
adidas AG as well as on the underlying resolutions of the Bondholders were entitled to demand early redemption of the shares of another publicly listed company are used to service
Annual General Meetings held on May 6, 2010 and May 8, 2014. bonds as at June 14, 2017. Since July 14, 2017, adidas AG may these rights. The new shares will be issued at the respective
Additional contingent capital does not exist. conduct an early redemption of the bond, if, on 20 of 30 option or conversion price to be established in accordance
consecutive trading days, the share price of adidas AG exceeds with the aforementioned authorization resolution. The new
Contingent Capital 2010 and Convertible Bond the current conversion price of € 81.13 by at least 30%. The shares will carry dividend rights from the commencement of
The nominal capital of adidas AG is conditionally increased by bonds are listed on the Open Market segment of the Frankfurt the financial year in which the shares are issued. The Executive
up to € 36 million (Contingent Capital 2010). The Contingent Stock Exchange. For details regarding the servicing of the Board is authorized, subject to Supervisory Board approval, to
Capital serves the purpose of granting holders or creditors of convertible bond with treasury shares  SEE REPURCHASE AND USE stipulate any additional details concerning the implementation
bonds that were issued up to May 5, 2015 based on the OF TREASURY SHARES, P. 183 of the contingent capital increase.
resolution of the Annual General Meeting on May 6, 2010
subscription or conversion rights relating to no more than Moreover, the authorization to issue bonds with warrants and/ Up to the balance sheet date and in the period beyond the
a total of 36,000,000 shares in compliance with the or convertible bonds granted on May 6, 2010 was canceled by balance sheet date up to and including February 23, 2018, the
corresponding conditions of the bonds. The new shares shall resolution of the Annual General Meeting on May 8, 2014. Executive Board of adidas AG did not issue any bonds based
be issued at the respective option or conversion price to be on the authorization granted on May 8, 2014 and consequently
established in accordance with the aforementioned The Executive Board of adidas AG did not issue shares from did not issue any shares from the Contingent Capital 2014.
authorization resolution. The new shares shall carry dividend the Contingent Capital 2010 up to the balance sheet date and
rights from the commencement of the financial year in which in the period beyond the balance sheet date up to and including Repurchase and use of treasury shares
the shares are issued. February 23, 2018. Against the background of the introduction of an employee
stock purchase plan, the Annual General Meeting of May 12, 2016
On March 14, 2012, the Executive Board, with the approval of Contingent Capital 2014 canceled the authorization of the Executive Board to repurchase
the Supervisory Board, made partial use of the authorization At the balance sheet date, the nominal capital is conditionally treasury shares granted on May 8, 2014, which was used in
ANNUAL REPORT 2017
of the Annual General Meeting from May 6, 2010, and on increased by up to € 12.5 million divided into not more than 2014 and 2015. At the same time, the Annual General Meeting
March 21, 2012 issued a convertible bond due on June 14, 2019 12,500,000 shares (Contingent Capital 2014). The contingent granted the Executive Board a new authorization to repurchase
(including a prolongation option) in a nominal value of capital increase will be implemented only to the extent that treasury shares up to an amount totaling 10% of the nominal
€ 500 million via an offer to institutional investors outside the holders or creditors of option or conversion rights or the capital until May 11, 2021. The authorization may be used by
USA excluding shareholders’ subscription rights. In principle, persons obligated to exercise the option or conversion duties adidas AG but also by its subordinated Group companies or by
the conversion rights are exercisable at any time between based on bonds issued by adidas AG or a subordinated Group third parties on account of adidas AG or its subordinated
183
May 21, 2012 and June 5, 2019, subject to lapsed conversion company, pursuant to the authorization of the Executive Board Group companies or third parties assigned by adidas AG or
ADIDAS
rights as set out under § 6 section 3 or to the excluded periods granted by the resolution adopted by the Annual General one of its subordinated Group companies.
as defined by § 6 section 4 of the bond terms and conditions, Meeting on May 8, 2014 (Agenda Item 7), up to May 7, 2019 and
and (subject to an adjustment of the conversion ratio resulting guaranteed by adidas AG, exercise their option or conversion Based on the authorization to repurchase treasury shares
from the dilution adjustment regulations set out under § 10 or rights or, if they are obliged to exercise the option or conversion granted by the Annual General Meeting on May 8, 2014, the
a change of control in accordance with § 13 of the bond terms duties, meet their obligations to exercise the warrant or adidas AG Executive Board commenced a share buyback
and conditions) based on a conversion price of € 81.13 per convert the bond, or to the extent that adidas AG exercises its program on November 7, 2014.
NOTES
Under the granted authorization, adidas AG repurchased a For details  SEE DISCLOSURES PURSUANT TO § 315A SECTION 1 AND § 289A price of € 3,538,364 (excluding incidental purchasing costs)
total of 4,889,142 shares for a total price of € 299,999,987 SECTION 1 OF THE GERMAN COMMERCIAL CODE, P. 120 with a pro rata amount or an amount in the nominal capital of
(excluding incidental purchasing costs), i.e. for an average price € 20,086 or 0.009%. All shares purchased for this purpose on
of € 61.36 per share, in a first tranche between November 7, In the 2017 financial year, a total of 2,814,470 treasury shares April 7, 2017 were issued to eligible employees on April 11, 2017.
2014 and December 12, 2014 inclusive. This corresponded to were used to meet obligations arising from the conversion of
a notional amount of € 4,889,142 in the nominal capital and adidas AG’s convertible bond. In the 2018 financial year and On July 7, 2017, adidas AG purchased 22,563 adidas AG shares
consequently to 2.34% of the nominal capital. The shares up to and including February 23, 2018, a total of 9,861 treasury at an average price of € 175.61 in connection with the
were repurchased for cancelation (capital reduction) or shares were used to meet obligations arising from the employee stock purchase plan. This corresponded to a total
otherwise used to meet obligations arising from the potential conversion of adidas AG’s convertible bond. price of € 3,962,498 (excluding incidental purchasing costs)
conversion of adidas AG’s € 500 million convertible bond. with a pro rata amount or an amount in the nominal capital of
Moreover, in the 2017 financial year, 30,420 treasury shares € 22,563 or 0.01%. All shares purchased for this purpose on
Under the granted authorization, adidas AG repurchased a and in the period beyond up to and including February 23, July 7, 2017 were issued to eligible employees on July 11, 2017.
total of 4,129,627 shares for a total price of € 299,999,992 2018, another 22,360 treasury shares were used as
(excluding incidental purchasing costs), i.e. for an average consideration, inter alia for the transfer or licensing of On October 9, 2017, adidas AG purchased 20,454 adidas AG
price of € 72.65 per share, in a second tranche between intellectual property rights and intangible property rights due shares at an average price of € 194.40 in connection with the
March 6, 2015 and June 15, 2015 inclusive. This corresponded to contractual obligations. employee stock purchase plan. This corresponded to a total
to a notional amount of € 4,129,627 in the nominal capital and price of € 3,976,337 (excluding incidental purchasing costs)
consequently to 1.97% of the nominal capital. In the 2017 financial year and up to and including February 23, with a pro rata amount or an amount in the nominal capital of
2018, adidas AG used a total of 2,877,111 treasury shares. € 20,454 or 0.009%. All shares purchased for this purpose
The shares were repurchased for cancelation (capital reduction) on October 9, 2017 were issued to eligible employees on
or otherwise used to meet obligations arising from the potential Employee stock purchase plan October 11, 2017.
conversion of adidas AG’s € 500 million convertible bond. In the 2016 financial year, adidas AG introduced an employee
stock purchase plan in favor of employees of adidas AG and its On January 8, 2018, adidas AG purchased 25,672 adidas AG
Based on the authorization granted by the Annual General affiliated companies. shares at an average price of € 173.27 in connection with the
ANNUAL REPORT 2017
Meeting on May 12, 2016, adidas AG repurchased a total of employee stock purchase plan. This corresponded to a total
2,128,200 shares for a total price of € 299,999,851 (excluding On January 6, 2017, adidas AG purchased 25,699 adidas AG price of € 4,448,258 (excluding incidental purchasing costs) with
incidental purchasing costs), i.e. for an average price of shares at an average price of € 144.41 in connection with the a pro rata amount or an amount in the nominal capital of
€ 140.96 per share, in a third tranche between November 8, employee stock purchase plan. This corresponded to a total € 25,672 or 0.01%. At the same time, adidas AG purchased
2016 and January 31, 2017 inclusive. This corresponded to a price of € 3,711,236 (excluding incidental purchasing costs) another 3,642 adidas AG shares at an average price of € 173.27,
notional amount of € 2,128,200 in the nominal capital and with a pro rata amount or an amount in the nominal capital of which were used as matching shares. This corresponded to a
184
consequently to 1.02% of the nominal capital. The repurchased € 25,699 or 0.01%. All shares purchased for this purpose on total price of € 631,059 (excluding incidental purchasing costs)
ADIDAS
shares were either canceled, thus reducing the nominal January 6, 2017 were issued to eligible employees on January 9, with a pro rata amount or an amount in the nominal capital
capital, or used to meet obligations arising from the potential 2017 and on January 10, 2017. of € 3,642 or 0.002%. All shares purchased for this purpose
conversion of adidas AG’s € 500 million convertible bond and on January 8, 2018 were issued to eligible employees on
other admissible purposes under the authorization granted On April 7, 2017, adidas AG purchased 20,086 adidas AG January 10, 2018. For details on the employee stock purchase
by the Annual General Meeting on May 12, 2016. The share shares at an average price of € 176.16 in connection with the plan  SEE DISCLOSURES PURSUANT TO § 315A SECTION 1 HGB AND § 289A
buyback program expired on December 31, 2017. employee stock purchase plan. This corresponded to a total SECTION 1 OF THE GERMAN COMMERCIAL CODE, P. 120 SEE NOTES 02 AND 27
NOTES
Changes in the percentage of voting rights Notified reportable shareholdings as at February 23, 2018
Pursuant to § 160 section 1 no. 8 AktG, existing shareholdings
which have been notified to adidas AG in accordance with
Notification
§ 33 section 1 or section 2 (and until December 31, 2017, obligations and
Date of reaching, attributions in
§ 21 section 1 or section 1a) German Securities Trading Act exceeding or Reporting accordance with Shareholdings Number of voting
(Wertpapierhandelsgesetz – WpHG) need to be disclosed. Notifying party falling below threshold WpHG 1 in % rights
December 28,
Albert Frère 2 2017 Exceeding 5% § 33 7.50 15,694,711
The following table reflects reportable shareholdings in December 13, Falling below
adidas AG, Herzogenaurach, as at the balance sheet date and Fidelity Mt. Vernon Street Trust, Boston, MA, USA 3 2017 3% § 21 2.99 6,258,487
up to and including February 23, 2018 which have each been November 28, Falling below
adidas AG, Herzogenaurach, Germany 4 2017 3% 2.62 5,478,213
notified to adidas AG in written form. The respective details
§§ 22, 25 sec. 1
are taken from the most recent voting rights notification November 14, no. 1 and § 25
received by adidas AG. All voting rights notifications dis BlackRock, Inc., Wilmington, DE, USA 5 2017 Exceeding 5% sec. 1 no. 2 7.38 15,448,941
Elian Corporate Trustee (Cayman) Limited, Grand Cayman, December 16, §§ 22, 25 sec. 1
closed by adidas AG in the year under review and up to and
Cayman Islands 6 2016 Exceeding 5% no. 2 5.71 11,950,482
including February 23, 2018 are available on the a didas FMR LLC, Wilmington, DE, USA 7 May 12, 2016 Exceeding 5% § 22 5.31 11,117,704
website. ↗ ADIDAS-GROUP.COM/S/VOTING-RIGHTS-NOTIFICATIONS The details Capital Research and Management Company, Los Angeles, § 22 sec. 1
on the percentage of shareholdings and voting rights may no CA, USA 8 July 22, 2015 Exceeding 3% sent. 1 no. 6 3.02 6,325,110
§ 22 sec. 1
longer be up to date.
sent. 1 no. 6
in conjunction
with § 22 sec. 1
Capital management The Capital Group Companies, Inc., Los Angeles, CA, USA 9 July 22, 2015 Exceeding 3% sent. 2 and 3 3.02 6,325,110
The company’s policy is to maintain a strong capital base so
1 The provisions of the WpHG stated refer to the version applicable at the time of publication of the respective individual voting rights notification. Until December 31, 2017, the notification obligations and
as to uphold investor, creditor and market confidence and to attributions were regulated in §§ 21 et seq. WpHG and have been regulated in §§ 33 et seq. since January 1, 2018.
2 See adidas AG’s disclosure dated February 8, 2018.
sustain future development of the business. 3 See adidas AG’s disclosure dated December 20, 2017.
4 See adidas AG’s disclosure dated December 4, 2017.
ANNUAL REPORT 2017
5 See adidas AG’s disclosure dated November 20, 2017.

didas seeks to maintain a balance between a higher return
a 6 See adidas AG’s disclosure dated December 22, 2016.
7 See adidas AG’s disclosure dated May 19, 2016.
on equity that might be possible with higher levels of 8 See adidas AG’s disclosure dated July 29, 2015.
9 See adidas AG’s disclosure dated July 28, 2015.
borrowings and the advantages and security afforded by a
sound capital position. The company further aims to maintain
net debt below two times EBITDA over the long term.
185
ADIDAS
NOTES
Financial leverage amounts to negative 7.5% (2016: positive of treasury shares exceeding the nominal value. In addition, shares granted in the third investment quarter between
1.6%) and is defined as the ratio between net borrowings the item includes the effects of the employee stock April 1, 2017 and June 30, 2017 were issued to the eligible
(short- and long-term borrowings less cash and cash purchase plan. employees on July 11, 2017. The investment shares granted
equivalents as well as short-term financial assets) in an in the fourth investment quarter between July 1, 2017 and
amount of negative € 484 million (2016: positive € 103 million) The capital reserve includes restricted capital in an amount of September 30, 2017 were issued to the eligible employees on
and shareholders’ equity in an amount of € 6.450 billion (2016: € 4 million. Furthermore, other reserves include additional October 11, 2017.
€ 6.472 billion). EBITDA (continuing operations) amounted to restricted capital in an amount of € 47 million.
€ 2.511 billion for the financial year ending December 31, 2017 The plan enables employees to purchase adidas AG shares
(2016: € 1.953 billion). The ratio between net borrowings and Distributable profits and dividends with a 15% discount (‘investment shares’) and to benefit from
EBITDA (continuing operations) amounted to negative 0.2 for the Profits distributable to shareholders are determined by free matching shares. Currently, eligible employees of
financial year ending December 31, 2017 (2016: positive 0.1). reference to the retained earnings of adidas AG and calculated adidas AG and eleven other subsidiaries can participate in the
under German Commercial Law. plan. Up to two weeks before the start of an investment
Reserves quarter each eligible employee can enroll for the plan. The
Reserves within shareholders’ equity are as follows: Based on the resolution of the 2017 Annual General Meeting, company accepts enrollment requests on the first day of the
—— Capital reserve: primarily comprises the paid premium the dividend for 2016 was € 2.00 per share (total amount: relevant investment quarter. This is the grant date for the
for the issuance of share capital as well as the equity € 405 million). The Executive Board of adidas AG will propose investment and matching shares. The fair value at the vesting
component of the issued convertible bond. to use retained earnings of adidas AG in an amount of date is equivalent to the fair value of the granted equity
—— Cumulative currency translation differences: comprises € 573 million as reported in the 2017 financial statements of instruments at this date. The employees invest an amount up
all foreign currency differences arising from the translation adidas AG for a dividend payment of € 2.60 per dividend- to 10% of their gross base salary per quarter in the plan. A few
of the financial statements of foreign operations. entitled share for the year 2017 as at December 31, 2017 and days after the end of the investment quarter the shares are
—— Hedging reserve: comprises the effective portion of the to carry forward the subsequent remaining amount. purchased on the market at fair market value and transferred
cumulative net change in the fair value of cash flow hedges to the employees. Thereby the amount invested during the
related to hedged transactions that have not yet occurred as As at December  31, 2017, 203,861,234 dividend-entitled quarter plus the top-up from adidas is used. These shares can
well as of hedges of net investments in foreign subsidiaries. shares exist, resulting in a dividend payment of € 530 million. be sold at any time by the employee. If the shares are held for
ANNUAL REPORT 2017
—— Other reserves: comprises the remeasurements of defined a period of one year after the last day of an investment quarter,
benefit plans consisting of the cumulative net change of 27 » SHARE-BASED PAYMENT employees will receive one-time free matching shares (one
actuarial gains or losses relating to the defined benefit Equity-settled share-based payment transactions with employees matching share for every six adidas AG shares acquired). This
obligations, the return on plan assets (excluding interest In 2016, adidas announced the introduction of an open-ended plan currently constitutes an equity-settled share-based
income) and the asset ceiling effect, expenses recognized employee stock purchase plan (the ‘plan’). The plan is payment for both elements. For the component of the
for share option plans, effects from the acquisition of operated on a quarterly basis, with each calendar quarter matching shares relating to the specific period of service an
186
non-controlling interests, as well as reserves required referred to as an ‘investment quarter’. The investment shares appropriate discount is taken into account. The effects are
ADIDAS
by law. granted in the first investment quarter between October 1, 2016 presented in the following table:
—— Retained earnings: comprises both amounts which are and December 31, 2016 were issued to the eligible employees
required by the Articles of Association and voluntary on January 9, 2017 and January 10, 2017, respectively. The
amounts that have been set aside by a didas. The reserve investment shares granted in the second investment quarter
includes the unappropriated accumulated profits less between January 1, 2017 and March 31, 2017 were issued to
dividends paid and consideration paid for the repurchase the eligible employees on April 11, 2017. The investment
NOTES
Equity-settled share-based payment transactions with employees As at January 1, 2017 (grant date), an amount of € 5 million
was recognized as expenses for basic shares over the vesting
period of twelve months.
As at December
31, 2016 As at December 31, 2017
1st investment 1st investment 2nd investment 3rd investment 4th investment 5th investment The second part of the agreement grants bonus shares of
quarter quarter quarter quarter quarter quarter
US $ 5 million if certain conditions are fulfilled. This option can
Grant date Oct. 1, 2016 Oct. 1, 2016 Jan. 2, 2017 April 3, 2017 July 3, 2017 Oct. 2, 2017
be granted two times. As at December 31, 2017, it was likely
Share price at grant date (in €) 157.40 157.40 151.30 175.85 168.90 196.10
that the bonus shares will be issued. Therefore, expenses
Share price at December 31 (in €) 150.15 167.15
recognized for bonus shares amounting to € 1.4 million were
Number of granted investment
shares based on the share price as accrued in 2017.
at December 31 24,665 – – – – 26,671
Number of actually purchased investment
shares – 25,699 20,086 22,563 20,454 – Cash-settled share-based payment transactions with employees
Outstanding granted matching shares In 2017, adidas implemented a Long-Term Incentive (LTI)
based on the share price as at plan, which is a share-based remuneration scheme with cash
December 31 or actually purchased
investment shares 4,110 3,643 3,016 3,429 3,077 4,445 settlement. RSUs (Restricted Stock Units) are granted on the
Average remaining vesting period in condition that the beneficiary is employed for three or four
months as at December 31 (in months) 12 0 3 6 9 12
years by adidas AG or one of its subsidiaries in a position
where he or she is not under notice during that period. This
minimum period of employment pertains to the calendar year
The number of forfeited matching shares during the period Equity-settled share-based payment transactions with third parties in which the RSUs are granted and the three subsequent
amounted to 1,463 (2016: 0). In 2016, adidas entered into a promotion and advertising calendar years.
contract, which includes a share-based payment transaction
As at December 31, 2017, the total expenses recognized with third parties. The contract has a duration of five years The total value of the cash remuneration payable to senior
relating to investment shares amounted to € 2.5 million (2016: and will end in 2021. management is recalculated on each reporting date and on
ANNUAL REPORT 2017
€ 0.6 million). the settlement date, based on the fair value of the RSUs, and
The first part of the agreement grants a one-time transfer of recognized through an appropriate increase in the provision
Expenses recognized relating to vesting of matching shares basic shares over five years which correspond to a value of as personnel expenses that are spread over the period of
amounted to € 1.4 million in 2017 (2016: € 0.1 million). US $ 5 million each year. Based on the contractual terms, the service of the beneficiary. Furthermore, social security
first transfer in 2017 equated to 30,420 shares. The shares contributions are considered in the calculation of the fair
As at December 31, 2017, a total amount of € 4 million (2016: from the third tranche of repurchased shares with an average value, if appropriate for the respective country regulations
187
€ 3 million) was invested by the participants in the stock price of € 140.96 per share were used as a consideration. and the seniority of the participants. All changes to the
ADIDAS
purchase plan and was not yet transferred into shares by the  SEE NOTE 26 subsequent measurement of this provision are reported
end of December 2017. Therefore, this has been included in under personnel expenses.
‘Other current financial liabilities’.  SEE NOTE 19
NOTES
Due to the implementation of the new LTI, one tranche with a 28 » NON-CONTROLLING INTERESTS Financial information on subsidiaries with
non-controlling interests € in millions
three-year term and another with a four-year term were This line item within equity comprises the non-controlling
issued in 2017. The number of RSUs granted depends on the interests in subsidiaries which are not directly or indirectly
seniority of the beneficiaries. In addition, for the four-year attributable to adidas AG. Non-controlling interests
plan, the number of RSUs also depends on the achievement of Dec. 31, Dec. 31,
a target figure which is based on the growth of the diluted Non-controlling interests are assigned to two subsidiaries as 2017 2016
earnings per share from continuing operations. at December 31, 2017 and 2016, respectively.  SEE ATTACHMENT II Net sales (third parties) 185 168
Net income 20 15
TO THE CONSOLIDATED FINANCIAL STATEMENTS SEE SHAREHOLDINGS OF
Net income attributable to
The value of one RSU is the average price of the adidas AG These subsidiaries were partly
ADIDAS AG, HERZOGENAURACH, P. 215 non-controlling interests 3 2
share as quoted for the first 20 stock exchange trading days in acquired in connection with the acquisition of Reebok and
January of the respective financial year. partly through purchases or foundations in the last years. Other comprehensive income 17 (1)
Total comprehensive income 38 15
Total comprehensive income attributable to
At December 31, 2017, the calculation of the provision is With respect to the consolidated financial statements of non-controlling interests 4 2
based on a fair value of € 161.61 per RSU for the three-year adidas AG, on a single basis, no subsidiary has a material
cycle and a fair value of € 157.91 per RSU for the four-year non-controlling interest. Current assets 98 85
cycle. The fair value is based on the closing price of the Non-current assets 16 16
adidas AG share on December 29, 2017, adjusted for future For the following subsidiaries with non-controlling interests Current liabilities (63) (55)
Non-current liabilities (1) (1)
dividend payments. the main financial information is presented combined.
Net assets 50 44
Net assets attributable to non-controlling
The average risk-free interest rate is based on German interests according to the consolidated
Subsidiaries with non-controlling interests statement of financial position (15) (17)
government securities and is 0.71% for the three-year cycle
and 0.67% for the four-year cycle.
Net cash generated from operating activities 14 18
Principal Ownership interests held Net cash used in investing activities (3) (8)
At December 31, 2017, the RSU Plan worldwide comprised place of by non-controlling interests
ANNUAL REPORT 2017
Legal entity name business (in %) Net cash (used in)/generated from financing
408,236 RSUs from the three-year tranche and 331,143 RSUs activities (6) 0
Dec. 31, Dec. 31,
from the four-year tranche. The RSUs for the three-year 2017 2016 Net increase of cash and cash equivalents 5 10
Dividends paid to non-controlling interests
tranche were issued in 2017. In 2017, this resulted in an expense Life Sport Ltd. Israel 15% 15%
during the year 1 1 2
of € 31 million. The corresponding provision amounted to Reebok India Company India 6.85% 6.85%
1 Included in net cash used in financing activities.
€ 31 million.
188
The following table presents the main financial information on
ADIDAS
subsidiaries with non-controlling interests.

NOTES
29 » LEASING AND SERVICE ARRANGEMENTS Minimum lease payments for finance leases in 2017 include Financial commitments for service arrangements
€ in millions
land leases with a remaining lease term of 95 years. The
Operating leases minimum lease payments under these contracts amount to
didas leases primarily retail stores as well as offices,
a € 11 million. The estimated amount representing interest is Dec. 31, Dec. 31,
2017 2016
warehouses and equipment. The contracts regarding these € 10 million and the present value amounts to € 2 million.
Within 1 year 181 134
leases with expiration dates of between one and 21 years
Between 1 and 5 years 255 233
partly include renewal options and escalation clauses. Rent The net present values and the minimum lease payments
After 5 years 0 0
expenses (continuing operations), which partly depend on net under these contracts over their remaining terms up to 2020
Total 437 366
sales, amounted to € 779 million and € 707 million for the and the land leases with a remaining lease term of 95 years
years ending December 31, 2017 and 2016, respectively. are as follows:
Future minimum lease payments for minimum lease

Minimum lease payments for finance leases
durations on a nominal basis are as follows: € in millions
Minimum lease payments for operating leases Dec. 31, Dec. 31,
€ in millions 2017 2016
Lease payments falling due:

Within 1 year 0 3
Dec. 31, Dec. 31,
2017 2016 Between 1 and 5 years 1 1
After 5 years 11 12
Within 1 year 722 688
Total minimum lease payments 13 16
Between 1 and 5 years 1,341 1,289
Less: estimated amount representing interest (10) (10)
After 5 years 586 523
Present value of minimum lease payments 3 6
Total 2,649 2,501
Thereof falling due:
ANNUAL REPORT 2017
Within 1 year 0 3
Between 1 and 5 years 0 1
Finance leases After 5 years 2 2
didas also leases various premises for administration and
a
warehousing which are classified as finance leases.
Service arrangements
The net carrying amount of these assets of € 5 million and didas has outsourced certain logistics and information
a
189
€ 8 million was included in property, plant and equipment as technology functions, for which it has entered into long-term
ADIDAS
at December 31, 2017 and 2016, respectively. For the year contracts. Financial commitments under these contracts
ending December  31, 2017, interest expenses (continuing mature as follows:
operations) were € 0 million (2016: € 0 million) and depreciation
expenses (continuing operations) were € 3 million (2016:
€ 4 million).
NOTES
30 » FINANCIAL INSTRUMENTS
Additional disclosures on financial instruments
Carrying amounts of financial instruments as at December 31, 2017, according to categories of IAS 39 and their fair values € in millions
Measurement according to IAS 39
Measurement
Category according to Carrying amount Fair value recognized Fair value recognized according to Fair value
IAS 39 Dec. 31, 2017 Amortized cost in equity in net income IAS 17 Dec. 31, 2017
Financial assets
Cash and cash equivalents n. a. 1,598 1,598 1,598
Short-term financial assets FAHfT 5 5 5
Accounts receivable LaR 2,315 2,315 2,315
Other current financial assets
Derivatives being part of a hedge n. a. 82 82 82
Derivatives not being part of a hedge FAHfT 28 28 28
Other financial assets LaR 283 283 283
Long-term financial assets
Other equity investments FAHfT 82 82 82
Available-for-sale financial assets AfS 145 56 1 89 145
Loans LaR 9 9 9
Other non-current financial assets
ANNUAL REPORT 2017
Promissory notes AfS 118 118 118

Earn-out components AfS 19 19 19
1 Investments in other equity instruments are measured at cost less impairment losses
190
ADIDAS
NOTES
Measurement
Financial liabilities
Short-term borrowings
Bank borrowings FLAC 106 106 106
Convertible bond FLAC 31 31 63
Accounts payable FLAC 1,975 1,975 1,975
Current accrued liabilities FLAC 837 837 837
Other current financial liabilities
Derivatives not being part of a hedge FLHfT 24 24 24
Earn-out components n. a. 21 21 21
Other financial liabilities FLAC 67 67 67
Finance lease obligations n. a. 0 0 0
Long-term borrowings
Eurobond FLAC 983 983 1,035
Convertible bond FLAC – – –
Non-current accrued liabilities FLAC 1 1 1
Other non-current financial liabilities
Earn-out components n. a. 5 5 5
ANNUAL REPORT 2017

Finance lease obligations n. a. 3 3 3
Thereof: aggregated by category according to IAS 39

Financial assets at fair value through profit or loss 129
Thereof: designated as such upon initial recognition (Fair Value Option - FVO) −
Thereof: Held for Trading (FAHfT) 129
191
Loans and Receivables (LaR) 2,674
Available-for-Sale Financial Assets (AfS) 282
ADIDAS
Financial Liabilities Measured at Amortized Cost (FLAC) 4,001

Financial Liabilities at fair value through profit or loss Held for Trading (FLHfT) 29
NOTES
Measurement
Financial assets
Cash and cash equivalents n.a. 1,510 1,510 1,510
Short-term financial assets FAHfT 5 5 5
Accounts receivable LaR 2,200 2,200 2,200
Other current financial assets
Derivatives being part of a hedge n.a. 325 325 325
Long-term financial assets
Other equity investments FAHfT 81 81 81
Available-for-sale financial assets AfS 102 64 1 39 102
Loans LaR 10 10 10
Other non-current financial assets
ANNUAL REPORT 2017
192
ADIDAS
NOTES
Measurement
Financial liabilities
Short-term borrowings
Bank borrowings FLAC 379 379 379
Convertible bond FLAC 257 257 476
Accounts payable FLAC 2,496 2,496 2,496
Current accrued liabilities FLAC 704 704 704
Other current financial liabilities
Earn-out components n.a. 7 7 7
Finance lease obligations n.a. 3 3 3
Long-term borrowings
Eurobond FLAC 982 982 1,048
Convertible bond FLAC – – –
Non-current accrued liabilities FLAC 9 9 9
Other non-current financial liabilities
Earn-out components n.a. 15 15 15
ANNUAL REPORT 2017

Finance lease obligations n.a. 4 4 4
Thereof: aggregated by category according to IAS 39

Financial assets at fair value through profit or loss 148
Thereof: designated as such upon initial recognition (Fair Value Option – FVO) –
Thereof: Held for Trading (FAHfT) 148
Loans and Receivables (LaR) 2,590
193
Available-for-Sale Financial Assets (AfS) 148
ADIDAS
Financial Liabilities Measured at Amortized Cost (FLAC) 4,909

Financial Liabilities at fair value through profit or loss Held for Trading (FLHfT) 24
NOTES
Fair value hierarchy of financial instruments according to IFRS 13 as at December 31, 2017 € in millions
Fair value
Dec. 31, 2017 Level 1 Level 2 Level 3
Short-term financial assets 5 5

Derivative financial instruments
Derivatives being part of a hedge 83 83
Derivatives not being part of a hedge 42 42
Long-term financial assets 227 89 1 138
Promissory notes 118 118
Financial assets 494 218 276
Short-term borrowings 169 169

Long-term borrowings 1,035 1,035
Financial liabilities 1,517 1,035 457 25
1 Net gains in the amount of € 4 million and losses in the amount of € 3 million due to currency translation differences were recognized in equity in 2017.
Level 1 is based on quoted prices in active markets for identical assets or liabilities.
Level 2 is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 is based on inputs for the asset or liability that are not based on observable market data (unobservable inputs).
ANNUAL REPORT 2017
194
ADIDAS
NOTES
Fair value hierarchy of financial instruments according to IFRS 13 as at December 31, 2016 € in millions
Fair value
Dec. 31, 2016 Level 1 Level 2 Level 3
Short-term financial assets 5 5

Long-term financial assets 184 39 1 145
Promissory notes 45 45
Financial assets 636 445 190
Short-term borrowings 855 855

Long-term borrowings 1,048 1,048
Financial liabilities 2,039 1,048 969 22
1 Net gains in the amount of € 2 million and gains in the amount of € 1 million due to currency translation differences were recognized in equity in 2016.
Level 1 is based on quoted prices in active markets for identical assets or liabilities.
Level 2 is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 is based on inputs for the asset or liability that are not based on observable market data (unobservable inputs).
ANNUAL REPORT 2017
195
ADIDAS
NOTES
Reconciliation of fair value hierarchy level 3 in 2017 € in millions
Fair value Currency Fair value

Jan. 1, 2017 Additions Disposals Gains Losses translation Dec. 31, 2017
Long-term financial This category relates to an 8.33% investment in FC Bayern München AG of

assets € 82 million. Dividends are distributed by FC Bayern München AG instead
of regular interest payments. These dividends are recognized in other
financial income. 81 – – 1 – – 82
Promissory note On July 26, 2017, adidas signed a definitive agreement to sell the CCM Hockey
operating segment which was divested on September 1, 2017. The transaction
included a promissory note. The discounted cash flow method is applied. The
fair value adjustment is recognized in discontinued operations. – 36 – – (1) – 35
Promissory note On May 10, 2017, adidas signed a definitive agreement to sell its TaylorMade
business including the brands TaylorMade, Adams Golf and Ashworth (together
TaylorMade) which was divested on October 2, 2017. The transaction included
a promissory note. The discounted cash flow method is applied. The fair value
adjustment is recognized in discontinued operations. – 86 – – (0) (3) 83
Promissory notes On January 23, 2015, adidas signed a definitive agreement to sell the Rockport
operating segment which was divested on July 31, 2015. The transaction
included contingent promissory notes. The discounted cash flow method is
applied. The fair value adjustment is recognized in discontinued operations. 45 – – – (40) (5) –
Earn-out components On May 10, 2017, adidas signed a definitive agreement to sell its TaylorMade
(assets) business including the brands TaylorMade, Adams Golf and Ashworth (together
TaylorMade). The transaction included earn-out components which are
measured based on the Monte Carlo method. The earn-out components are
dependent on the achievement of certain performance measures over the first
five years. The fair value adjustment is recognized in discontinued operations – 19 – – – – 19
Investments in other The change in fair value refers to recognized impairment losses resulting from
equity instruments one or more events where objective evidence of an impairment was identified,
ANNUAL REPORT 2017
considering expectations regarding future business development. The

impairment is recognized in other financial result. 64 26 (14) – (20) – 56
Earn-out components The aquisition of Runtastic includes earn-out components which are measured
(liabilities) based on the discounted cash flow method. The earn-out components are
dependent on retention of the Runtastic management as well as on the
achievement of certain performance measures over the first three years after
the acquisition. The fair value adjustment refers to accretion and is recognized
in interest result. 22 – (2) – 5 – 25
196
ADIDAS
NOTES
Reconciliation of fair value hierarchy level 3 in 2016 € in millions
Fair value Currency Fair value

Jan. 1, 2016 Additions Disposals Gains Losses translation Dec. 31, 2016
Long-term financial This category relates to an 8.33% investment in FC Bayern München AG of

assets € 81 million. Dividends are distributed by FC Bayern München AG instead
of regular interest payments. These dividends are recognized in other
financial income. 81 – – 1 – – 81
Promissory notes On January 23, 2015, adidas signed a definitive agreement to sell the Rockport
operating segment which was divested on July 31, 2015. The transaction
included contingent promissory notes. The discounted cash flow method is
applied. The fair value adjustment is recognized in discontinued operations. 42 – – 2 – 1 45
Investments in other The change in fair value refers to recognized impairment losses resulting from
equity instruments one or more events where objective evidence of an impairment was identified,
considering expectations regarding future business development. The
impairment is recognized in other financial result. 22 47 – – (5) – 64
Earn-out components The aquisition of Runtastic includes earn-out components which are measured
(liabilities) based on the discounted cash flow method. The earn-out components are
dependent on retention of the Runtastic management as well as on the
achievement of certain performance measures over the first three years after
the acquisition. The fair value adjustment refers to accretion and is recognized
in interest result. 21 – – – 1 – 22
Due to the short-term maturities of cash and cash equivalents, The fair values of currency options, forward exchange
short-term financial assets, accounts receivable and payable contracts and commodity futures are determined on the basis
ANNUAL REPORT 2017
as well as other current financial receivables and payables, of market conditions at the balance sheet date. The fair value
their respective fair values equal their carrying amount. of a currency option is determined using generally accepted
models to calculate option prices. The fair market value of an
The fair values of non-current financial assets and liabilities option is influenced not only by the remaining term of the
are estimated by discounting expected future cash flows using option, but also by other determining factors such as the
current interest rates for debt of similar terms and remaining actual foreign exchange rate and the volatility of the underlying
197
maturities and adjusted by a company-specific credit risk foreign currency base.
ADIDAS
premium.
In accordance with IFRS 13, the following tables show the
Fair values of long-term financial assets classified as valuation methods used in measuring Level 1, Level 2 and
‘Available-for-sale’ are based on quoted market prices in an Level 3 fair values, as well as the significant unobservable
active market or are calculated as present values of expected inputs used.
future cash flows.
NOTES
Financial instruments Level 1 not measured at fair value
Significant
Type Valuation method unobservable inputs Category
Convertible bond The fair value is based on the market price of the convertible bond as at December 31, 2017. Not applicable FLAC
Eurobond The fair value is based on the market price of the Eurobond as at December 31, 2017. Not applicable FLAC
Financial instruments Level 2 measured at fair value
Significant
Type Valuation method unobservable inputs Category
Short-term financial assets The discounted cash flow method is applied, which considers the present value of expected payments, discounted using Not applicable FAHfT
a risk-adjusted discount rate. Due to their short-term maturities, it is assumed that their respective fair value is equal to
the notional amount.
Available-for-sale financial assets The fair value is based on the market price of the assets as at December 31, 2017. Not applicable AfS
Forward exchange contracts In 2017, adidas applied the par method (forward NPV) for all currency pairs to calculate the fair value, implying actively Not applicable n.a./FAHfT
traded forward curves.
Currency options adidas applies the Garman-Kohlhagen model, which is an extended version of the Black-Scholes model. Not applicable n.a./FAHfT
Commodity futures The fair value is determined based on commodity forward curves, discounted by deposit and swap interest rates. Not applicable n.a./FAHfT
Total return swap (for own shares) The fair value is based on the market price of the adidas AG share as at December 31, 2017, minus accrued interest. Not applicable n.a./FLHfT
ANNUAL REPORT 2017
198
ADIDAS
NOTES
Financial instruments Level 3 measured at fair value
Inter-relationship between signif-

Significant icant unobservable inputs and fair value
Type Valuation method unobservable inputs measurement Category
Investment in This equity security does not have a quoted market price in an active market. See column ‘Valuation method’ FAHfT
FC Bayern München AG Existing contractual arrangements (based on the externally observable dividend
policy of FC Bayern München AG) are used in order to calculate the fair value as
at December 31, 2017.
Earn-out components (assets) The valuation follows an option price model based on the ‘Monte Carlo Risk-adjusted maturity-specific The estimated fair value would increase AfS
method’ to simulate future EBITDA values. The derived earn-out payments are discount rate (decrease) if the dividends were higher
discounted using a risk-adjusted discount rate. (2.1% – 4.9%) (lower) or the risk-adjusted discount
EBITDA values, confidence level rate was lower (higher).
Promissory notes The discounted cash flow method is applied which considers the present value Risk-adjusted maturity-specific AfS
of expected payments, discounted using a risk-adjusted discount rate. The discount rate The estimated fair value would increase
expected payments are determined by considering the possible scenarios of (2.0% – 3.2%) (decrease) if the dividends were higher
expected dividends, the amount to be paid under each scenario and the proba- (lower) or the risk-adjusted discount
bility of each scenario. rate was lower (higher).
Investments in other equity These equity instruments do not have a quoted market price in an active See column ‘Valuation method’ AfS
instruments market. Existing contractual arrangements are used in order to calculate the
fair value as at December 31, 2017.
Earn-out components (liabilities) The discounted cash flow method is applied, which considers the present value Risk-adjusted discount rate The estimated fair value would increase n.a.
of expected payments, discounted using a risk-adjusted discount rate. (1.75%) (decrease) if EBITDA were higher
(lower) or the risk-adjusted discount
rate were lower (higher).
Net gains/(losses) on financial instruments recognized Net gains or losses on financial assets or financial liabilities the promissory note related to the agreement for the sale of
in the consolidated income statement held for trading include the effects from fair value the Rockport operating segment. The dividend underlying the
€ in millions
measurements of the derivatives that are not part of a hedging determination of future cash flows is no longer expected. A
ANNUAL REPORT 2017
relationship, and changes in the fair value of other financial change in the discount rate by 1 percentage point or a
Year ending Year ending instruments as well as interest expenses. reduction of simulated future EBITDA values by 10% would
Dec. 31, Dec. 31,
2017 2016 result in a reduction of fair values of 5% and approximately
Financial assets or financial liabilities at fair Net losses on available-for-sale financial assets mainly refer 10%, respectively.
value through profit or loss 1 1 to an adjustment to the fair value of the contingent
Thereof: designated as such upon initial considerations in connection with the sale of the Rockport Net gains or losses on financial liabilities measured at
recognition – –
199
Thereof: classified as held for trading 1 1
operating segment in July 2015. amortized cost include effects from early settlement and
ADIDAS
Loans and receivables (60) (35) reversals of accrued liabilities.

Available-for-sale financial assets (56) (3) Net gains or losses on loans and receivables comprise mainly
Financial liabilities measured at impairment losses and reversals. The disclosures required by IFRS 7 ‘Financial Instruments:
amortized cost 22 15
Disclosures’, paragraphs 13A to 13F (‘Offsetting financial assets
During the course of 2017, significant unobservable inputs and financial liabilities’) as well as 31 to 42 (‘Nature and Extent
have not significantly changed with the exception of inputs for of Risks arising from Financial Instruments’) can be found in
NOTES
these Notes and in the Group Management Report. SEE NOTE 07 Notional amounts of all outstanding currency hedging A total net fair value of negative € 178 million (2016: positive
instruments € in millions
SEE RISK AND OPPORTUNITY REPORT, P. 131 € 240 million) for forward exchange contracts related to
hedging instruments falling under hedge accounting as per
Financial instruments for the hedging of foreign exchange risk Dec. 31, Dec. 31, definition of IAS 39 ‘Financial Instruments: Recognition and
2017 2016
didas uses natural hedges and arranges forward exchange
a Measurement’ was recorded in the hedging reserve. The
Forward exchange contracts 11,327 11,750
contracts, currency options and currency swaps to protect remaining net fair value of negative € 2 million (2016: positive
against foreign exchange risk. As at December 31, 2017, € 18 million), mainly related to currency swaps for liquidity
Total 11,892 12,209
adidas had outstanding currency options with premiums paid management purposes and to forward exchange contracts
totaling an amount of € 12 million (2016: € 15 million). The hedging intercompany dividend receivables, was recorded in
effective part of the currency hedges is directly recognized in The comparatively high amount of forward exchange contracts the income statement. The total fair value of positive
hedging reserves and as part of the acquisition costs of is primarily due to currency swaps for liquidity management € 8 million (2016: positive €  18 million) for outstanding
inventories, respectively, and posted into the income purposes and hedging transactions. currency options related to cash flow hedges. This consists of
statement at the same time as the underlying secured a positive time value of € 7 million (2016: positive € 9 million)
transaction is recorded. An amount of positive € 2 million Of the total amount of outstanding hedges, the following and of a negative time value of negative € 1 million (2016:
after taxes (2016: positive € 9 million) for currency options contracts related to the US dollar (i.e. the biggest single negative € 1 million) and furthermore includes an intrinsic
and an amount of negative € 144 million after taxes (2016: exposure of product sourcing): value of the options in an amount of € 2 million.
positive € 226 million) for forward exchange contracts were
Notional amounts of outstanding US dollar hedging
recorded in hedging reserves. Currency option premiums instruments € in millions
The fair value adjustments of outstanding cash flow hedges
impacted net income in the amount of € 6 million in 2017 for future sales are reported in the income statement when
(2016: € 2 million). the planned sales transactions are recorded. The vast majority
Dec. 31, Dec. 31, of these transactions are expected to occur in 2018. In 2017, a
2017 2016
The total time value of the currency options not being part of gain from hedges for sales transactions in an amount of € 60
Forward exchange contracts 5,201 6,156
a hedge in an amount of positive € 6 million (2016: positive Currency options 453 405
million was realized (2016: € 26 million). At the balance sheet
€ 7 million) was recorded in the income statement in 2017. In date, inventories were adjusted without affecting the
ANNUAL REPORT 2017
Total 5,654 6,561

2017, due to a change in the exposure, some of the currency consolidated income statement by positive € 64 million (2016:
hedges were terminated and consequently an amount of negative  € 12 million) which will be recognized in the
€ 1 million was reclassified from hedging reserves to the The fair value of all outstanding currency hedging instruments consolidated income statement at the expected realization of
income statement. is as follows: the hedged item in 2018.
Fair values € in millions

In the years ending December 31, 2017 and 2016, hedging In the hedging reserve, a negative amount of € 90 million
200
instruments related to product sourcing were bought to hedge (2016: negative € 92 million) is included for hedging the
ADIDAS
a total net amount of US $ 6.6 billion and US $ 6.5 billion, Dec. 31, 2017 Dec. 31, 2016 currency risk of net investments in foreign entities, mainly for
respectively. Positive Negative Positive Negative
the subsidiaries LLC ‘adidas, Ltd.’ and adidas Sports (China)
fair value fair value fair value fair value Co. Ltd. This reserve will remain until the investment in the
The notional amounts of all outstanding currency hedging Forward exchange foreign entity has been sold. As at December 31, 2017, no
contracts 101 (280) 362 (112)
instruments, which are mainly related to cash flow hedges, ineffective part of the hedges was recorded in the income
Currency options 25 (3) 19 (1)
are summarized in the following table: Total 126 (283) 381 (113) statement.
NOTES
In order to determine the fair values of its derivatives that are For further information about the line item ‘Income from the Income from government grants is reported as a deduction
not publicly traded, adidas uses generally accepted divestiture of the Mitchell & Ness business’  SEE NOTE 04 from the related expenses and amounted to € 24 million in
quantitative financial models based on market conditions 2017 (2016: € 23 million).
prevailing at the balance sheet date. Sundry income mainly relates to income from cost
Other operating expenses € in millions
reimbursements and from sub-licensing of trademarks.
The fair values of derivatives were determined applying the
‘par method’ (forward NPV), which uses actively traded 32 » OTHER OPERATING EXPENSES Year ending Year ending
forward rates. Other operating expenses include expenses for sales, Dec. 31, Dec. 31,
2017 2016
marketing, research and development, as well as for logistics
Expenditure for marketing investments 2,141 1,889
and central administration less any income from government Expenditure for point-of-sale investments 592 521
NOTES TO THE CONSOLIDATED INCOME grants, if applicable. In addition, other operating expenses Marketing overhead 1 748 642
STATEMENT include impairment losses as well as depreciation of tangible Sales force 1 2,352 2,146
assets and amortization of intangible assets (except goodwill Logistics 1 1,098 932
All figures related to the 2017 and 2016 financial years in the impairment losses), with the exception of depreciation and Research and development 1 187 149
Central administration 1 1,765 1,605
‘Notes to the consolidated income statement’ refer to the amortization which is included in the cost of sales.
Other operating expenses 8,882 7,885
company’s continuing operations unless otherwise stated.
Thereof: depreciation, amortization and
Expenditure for marketing investments is a material impairment losses 451 369
31 » OTHER OPERATING INCOME component of other operating expenses. The expenditure for 1 Including personnel and administration expenses.
Other operating income consists of the following: marketing investments consists of promotion and
communication spending such as promotion contracts,
Other operating income € in millions
advertising, events and other communication activities. In 2017, the total sales and distribution costs amounted to
However, it does not include marketing overhead expenses, € 6,930 million (2016: € 6,131 million).
Year ending Year ending which are presented in marketing overheads. In 2017,
Dec. 31, Dec. 31, expenditure for marketing investments accounted for 24% 33 » COST BY NATURE
ANNUAL REPORT 2017
2017 2016
(2016: 24%) of the total other operating expenses. Expenses are presented by function according to the ‘cost of
Income from release of accrued liabilities and
other provisions 60 54 sales method’ in the income statement. Supplementary
Income from accounts receivable previously Expenses for central administration include the functions IT, information on the expenses by nature is detailed below.
written off 2 3
Finance, Legal, Human Resources, Facilities & Services as
Gains from disposal of fixed assets 3 3
Reversals of impairment losses for intangible
well as General Management. Cost of materials
and tangible assets 1 2 The total cost of materials relating to the amount of inventories
201
Income from the early termination of Depreciation and amortization expense for tangible and recognized as an expense during the period was
promotion contracts 2 69
ADIDAS
intangible assets (except goodwill impairment losses) and € 10.454 billion and € 9.324 billion for the years ending
Income from the divestiture of the Mitchell &
Ness business 0 39 impairment losses were € 453 million and € 370 million for December 31, 2017 and 2016, respectively.
Sundry income 65 92 the years ending December 31, 2017 and 2016, respectively.
Other operating income 133 262 Thereof, amounts of € 2 million and € 2 million, respectively,
were recorded within the cost of sales as they are directly
assigned to the production costs.
NOTES
Personnel expenses Financial expenses € in millions Information regarding available-for-sale investments,

Personnel expenses were as follows: borrowings and financial instruments is also included in these
Notes.  SEE NOTES 06, 15, 18 AND 30
Personnel expenses € in millions Year ending Year ending
Dec. 31, Dec. 31,
2017 2016
35 » INCOME TAXES
Interest expense on financial instruments
Year ending Year ending measured at amortized cost 62 70
adidas AG and its German subsidiaries are subject to German
Dec. 31, Dec. 31, corporate and trade taxes. For the years ending December 31,
2017 2016 Interest expense on financial instruments at
fair value through profit or loss 0 0 2017 and 2016, the statutory corporate income tax rate of 15%
Wages and salaries 2,234 2,091
Interest expense on other provisions and plus a surcharge of 5.5% thereon is applied to earnings. The
Social security contributions 214 197 non-financial liabilities 0 0
Pension expenses 101 84 Other 31 4
municipal trade tax is approximately 11.4% of taxable income.
Personnel expenses 2,549 2,373 Financial expenses 93 74
For non-German subsidiaries, deferred taxes are calculated
based on tax rates that have been enacted or substantively
Personnel expenses are primarily included within other Interest income from financial instruments, measured at enacted by the closing date.
operating expenses. Personnel expenses which are directly amortized cost, mainly consists of interest income from bank
attributable to the production costs of goods are included deposits and loans. Deferred tax assets and liabilities
within the cost of sales. Deferred tax assets and liabilities are offset if they relate to
Interest income/expense from financial instruments at fair the same fiscal authority. The following deferred tax assets
34 » FINANCIAL INCOME/FINANCIAL EXPENSES value through profit or loss mainly includes interest payments and liabilities, determined after appropriate offsetting, are
Financial result consists of the following: from investment funds as well as net interest payments from presented in the consolidated statement of financial position:
interest derivatives not being part of a hedging relationship.
Financial income € in millions Deferred tax assets/liabilities € in millions
Unrealized gains/losses from fair value measurement of such
financial assets are shown in other financial income or
expenses.
ANNUAL REPORT 2017
Year ending Year ending Dec. 31, Dec. 31,

Dec. 31, Dec. 31, 2017 2016
2017 2016
Interest expense on financial instruments measured at Deferred tax assets 630 732
Interest income from financial instruments
Deferred tax liabilities (275) (387)
measured at amortized cost 23 21 amortized cost mainly includes interest on borrowings and
Deferred tax assets, net 355 345
Interest income from financial instruments at effects from using the ‘effective interest method’.
fair value through profit or loss 0 0
Interest income from non-financial assets 2 0
Interest expense on other provisions and non-financial
Net foreign exchange gains 19 5
202
Other 1 1 liabilities particularly includes effects from measurement of
ADIDAS
Financial income 46 28 other provisions at present value and interest on non-financial

liabilities such as tax payables.
Other financial expenses include impairment losses on other

financial assets amounting to € 31 million for the year ending
December 31, 2017 (2016: € 4 million).
NOTES
The movement of deferred taxes is as follows: Deferred tax assets are recognized only to the extent that the Tax expenses
realization of the related benefit is probable. For the Tax expenses are split as follows:
Movement of deferred taxes € in millions
assessment of probability, in addition to past performance
Income tax expenses € in millions
and the respective prospects for the foreseeable future,
2017 2016 appropriate tax structuring measures are also taken into
Deferred tax assets, net as at January 1 345 269 consideration. Year ending Year ending
Dec. 31, Dec. 31,
Deferred tax (expense)/income (19) 56 2017 2016
Change in consolidated companies 1 (17) 1 Deferred tax assets for which the realization of the related tax
Current tax expenses 649 482
Change in deferred taxes attributable to benefits is not probable decreased from € 731 million to Deferred tax expenses/(income) 19 (56)
remeasurements of defined benefit plans
recorded in other comprehensive income 2 (7) 21 € 518 million for the year ending December 31, 2017. These Income tax expenses 668 426
Change in deferred taxes attributable to the amounts mainly relate to tax losses carried forward and
change in the effective portion of the fair value unused foreign tax credits of the US tax group, which begin to
of qualifying hedging instruments recorded in
other comprehensive income 3 68 (2) expire in 2026. The remaining unrecognized deferred tax The current tax expenses include interest and penalties in
Currency translation differences (15) 0 assets relate to subsidiaries operating in markets where the respect of income tax.
Deferred tax assets, net as at December 31 355 345 realization of the related tax benefit is not considered
1 See Note 04. probable. The deferred tax income includes tax income of € 80 million in
2 See Note 24.
3 See Note 30. total (2016: € 29 million) related to the origination and reversal
The divestiture of TaylorMade has been reflected as a share of temporary differences.
Gross company deferred tax assets and liabilities after transaction in the US. Under US law, the buyer has the option
valuation allowances, but before appropriate offsettings, are to elect to treat the transaction as an asset acquisition for
attributable to the items detailed in the table below: income tax purposes. In the event that the buyer chooses this
option, the deferred tax assets and liabilities in this regard
Deferred taxes € in millions
may change.
ANNUAL REPORT 2017
Dec. 31, Dec. 31, didas does not recognize deferred tax liabilities for
a
2017 2016 unremitted earnings of non-German subsidiaries to the extent
Non-current assets 150 202 that they are expected to be permanently invested in
Current assets 219 193
international operations. These earnings, the amount of
Accrued liabilities and provisions 302 334
which cannot be practicably computed, could become subject
Accumulated tax loss carry-forwards 30 76
Deferred tax assets 702 805
to additional tax if they were remitted as dividends or if the
203
Non-current assets 255 346 company were to sell its shareholdings in the subsidiaries.
ADIDAS
Current assets 69 68
Accrued liabilities and provisions 23 46
Deferred tax liabilities 347 460
Deferred tax assets, net 355 345
NOTES
The company’s effective tax rate differs from an assumed tax In 2017, the effective tax rate of 33.0% was affected by the US It is necessary to include 1.8 million and 6.0 million potential
rate of 30% for the year ending December 31, 2017 as follows: tax reform. The one-time non-cash effect of € 76 million is dilutive shares arising from the convertible bond issuance in
reflected in 2017 in the line item ‘Changes in tax rates’. March 2012 in the calculation of diluted earnings per share
Tax rate reconciliation
Excluding the effect of the US tax reform, the effective tax rate in 2017 and 2016, respectively, as due to the potential dilutive
in 2017 was 29.3%. shares a dilutive effect resulted as at the balance sheet date.
Year ending Dec. 31, 2017 Year ending Dec. 31, 2016  SEE NOTE 18 The average share price reached € 176.02 per
€ in € in
For 2016 and 2017, the line item ‘Losses for which benefits share during 2017 and thus exceeded the conversion price of
millions in % millions in % were not recognizable and changes in valuation allowances’ € 81.13 per share. As a consequence of contractual provisions
Expected income mainly related to changes in valuation allowances for Brazil. relating to dividend protection, the conversion price was
tax expenses 607 30.0 434 30.0
adjusted from € 81.57 to € 81.13 per share. This adjustment
Tax rate
differentials (215) (10.6) (160) (11.0) For 2017, the line item ‘Changes in tax rates’ mainly reflects became effective on May 12, 2017.
Non-deductible tax rate reductions in the US. For 2016, this line item mainly
expenses 44 2.2 48 3.3
reflected a UK tax rate reduction. The bonus shares vested under the equity-settled share-based
Losses for which
benefits were payment program with third parties were not considered in the
not recognizable 36 » EARNINGS PER SHARE calculation of the diluted earnings per share because the
and changes
in valuation Basic earnings per share are calculated by dividing the net conditions have not yet been met.  SEE NOTE 27
allowances 37 1.8 51 3.5 income from continuing operations attributable to
Changes in tax shareholders by the weighted average number of shares
rates 87 4.3 (8) (0.5)
Other, net 2 0.1 0 0.0
outstanding during the year, excluding ordinary shares
563 27.8 365 25.3 purchased by adidas and held as treasury shares.
Withholding tax
expenses 105 5.2 61 4.2
Income tax
expenses 668 33.0 426 29.5
ANNUAL REPORT 2017
204
ADIDAS
NOTES
Earnings per share ADDITIONAL INFORMATION
37 » SEGMENTAL INFORMATION
Continuing operations Discontinued operations Total
didas operates predominantly in one industry segment –
a
Year ending Year ending Year ending Year ending Year ending Year ending the design, distribution and marketing of athletic and sports
Dec. 31, 2017 Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2016
lifestyle products.
Net income from continuing
operations (€ in millions) 1,354 1,082 – – – –
Net income attributable to As at December 31, 2017, following the company’s internal
non-controlling interests (€ in
millions) 3 2 – – – –
management reporting by markets and in accordance with
Net income attributable to the definition of IFRS 8 ‘Operating Segments’, 13 operating
shareholders (€ in millions) 1,352 1,079 (254) (62) 1,097 1,017 segments were identified: Western Europe, North America
Weighted average number of
(excluding USA Reebok), USA Reebok, Greater China, Russia/
shares 202,391,673 200,188,276 202,391,673 200,188,276 202,391,673 200,188,276
Basic earnings per share (in €) 6.68 5.39 (1.26) (0.31) 5.42 5.08 CIS, Latin America, Japan, Middle East, South Korea,
Southeast Asia/Pacific, adidas Golf, Runtastic and Other
Net income attributable to centrally managed businesses. Due to the completed
shareholders (€ in millions) 1,352 1,079 (254) (62) 1,097 1,017
divestitures of the former TaylorMade and CCM Hockey
Interest expense on convertible
bond, net of taxes (€ in operating segments on October 2, 2017 and September 1,
millions) 1 12 – – 1 12 2017, respectively, income and expenses of the former
Net income used to determine TaylorMade and CCM Hockey operating segments were
diluted earnings per share (€ in
millions) 1,353 1,091 (254) (62) 1,099 1,029 reported as discontinued operations as at December 31,
Weighted average number of 2017.  SEE NOTE 03 In 2017, the former operating segment
shares 202,391,673 200,188,276 202,391,673 200,188,276 202,391,673 200,188,276
North America was split into two operating segments: North
Weighted assumed conversion
of the convertible bond 1,846,245 5,958,632 1,846,245 5,958,632 1,846,245 5,958,632 America (excluding USA Reebok) and USA Reebok. The
Dilutive effect of share-based operating segments Middle East, South Korea and Southeast
ANNUAL REPORT 2017
payments 2,712 – 2,712 – 2,712 –

Asia/Pacific were aggregated to MEAA (’Middle East, Africa
Weighted average number of
shares for diluted earnings per and other Asian markets’). The operating segments North
share 204,240,629 206,146,908 204,240,629 206,146,908 204,240,629 206,146,908 America (excluding USA Reebok) and USA Reebok were
aggregated to North America. Furthermore, the former
Diluted earnings per share (in €) 6.63 5.29 (1.26) (0.31) 5.38 4.99
operating segment TaylorMade-adidas Golf was split into
the operating segments TaylorMade and adidas 
Golf.
205
For further information on basic and diluted earnings per According to the criteria of IFRS 8 for reportable segments,
ADIDAS
share from discontinued operations  SEE NOTE 03 the operating segments Western Europe, North America,
Greater China, Russia/CIS, Latin America, Japan and MEAA
are reported separately. The remaining operating segments
are aggregated under Other Businesses due to their only
subordinate materiality. Historic and estimated future
economic indicators that have been assessed in determining
NOTES
that the aggregated operating segments share similar There are no intersegment sales between the reportable
characteristics were profitability characteristics on net segments. Accounting and valuation policies applied for
margin and contribution level, gross domestic product (GDP) reporting segmental information are the same as those used
growth rates as well as consumer price inflation. for adidas.  SEE NOTE 02
Each market comprises all wholesale, retail and e-commerce The results of the operating segments are reported in the
business activities relating to the distribution and sale of line item ‘Segmental operating profit’. This is defined as
products of the adidas and Reebok brands to retail customers gross profit minus other operating expenses plus royalty and
and end consumers. commission income and other operating income attributable
to the segment or group of segments, however without
didas Golf comprises the distribution and sale of a
a didas considering headquarter costs and central expenditure for
Golf branded products. marketing investments.
Runtastic operates in the digital health and fitness space. Segmental assets include accounts receivable as well as
The company provides a comprehensive ecosystem for inventories. Only these items are reported to the chief
tracking and managing health and fitness data. operating decision maker on a regular basis. Depreciation,
amortization, impairment losses (except for goodwill) and
Other centrally managed businesses primarily includes the reversals of impairment losses as well as capital
business activities of the Y-3 label. expenditures for tangible and intangible assets are part of
the segmental reporting, even though segmental assets do
Certain centralized corporate functions do not meet the not contain tangible and intangible assets. Depreciation and
definition of IFRS 8 for an operating segment. This includes, amortization as well as impairment losses and reversals
in particular, functions such as Global Brands and Global of impairment losses not directly attributable to a segment
Sales (central brand and distribution management for the or a group of segments are presented under HQ and
ANNUAL REPORT 2017
adidas and Reebok brands), central treasury, global sourcing Consolidation in the reconciliations.
as well as other headquarter functions. Assets, liabilities,
income and expenses relating to these corporate functions Segmental liabilities only contain accounts payable from
are presented in the reconciliations. operating activities as there are no other liability items
reported regularly to the chief operating decision maker.
The chief operating decision maker for adidas has been
206
defined as the entire Executive Board of adidas AG. Interest income and interest expenses as well as income
ADIDAS
taxes are not allocated to the reportable segments and are

not reported separately to the chief operating decision
maker.
NOTES
Segmental information I € in millions Reconciliations

The following tables include reconciliations of segmental
information to the aggregate numbers of the consolidated
Net sales Segmental Segmental Segmental
(third parties) 1 operating profit 1 assets 2 liabilities 2 financial statements, taking into account items which are not
2017 2016 2017 2016 2017 2016 2017 2016 directly attributable to a segment or a group of segments.
Western Europe 5,883 5,291 1,178 951 1,728 1,595 129 200
North America 4,275 3,412 468 214 1,500 1,273 77 117
Net sales (third parties) € in millions
Greater China 3,789 3,010 1,342 1,060 627 507 153 167
Russia/CIS 660 679 136 105 216 284 7 6
Latin America 1,907 1,731 268 227 724 757 66 73
Japan 1,056 1,007 266 207 236 218 44 38 Dec. 31, Dec. 31,
MEAA 2,907 2,685 847 722 715 751 88 90 2017 2016
Reportable segments 20,479 17,816 4,504 3,485 5,747 5,385 563 691 Reportable segments 20,479 17,816
Other Businesses (continuing operations) 739 667 68 52 306 594 26 143 Other Businesses 1,405 1,475
Other Businesses (discontinued operations) 667 808 26 (66) – – – – Reclassification to discontinued operations (667) (808)
Other Businesses 1,405 1,475 95 (14) 306 594 26 143 Total 21,218 18,483
Total 21,885 19,291 4,599 3,471 6,053 5,978 589 834
1 Year ending December 31.
2 At December 31.
Segmental information II € in millions Operating profit € in millions
Impairment losses Year ending Year ending

Capital Depreciation and and reversals of Dec. 31, Dec. 31,
expenditure 1 amortization 1 impairment losses 1 2017 2016
ANNUAL REPORT 2017
2017 2016 2017 2016 2017 2016 Operating profit for reportable segments 4,504 3,485
Operating profit for Other Businesses 95 (14)
Western Europe 75 76 50 40 1 1 Segmental operating profit 4,599 3,471
North America 62 87 32 21 4 2 Reclassification to discontinued operations (26) 66
Greater China 120 97 71 52 2 2 HQ (1,623) (1,327)
Russia/CIS 38 47 27 21 1 0 Central expenditure for marketing
Latin America 29 48 28 22 1 0 investments (842) (703)
Japan 20 14 14 13 0 1 Consolidation (38) 74
207
MEAA 41 60 36 31 2 1 Operating profit 2,070 1,582
ADIDAS
Reportable segments 385 430 258 199 11 7 Financial income 46 28

Other Businesses (continuing operations) 9 5 10 12 13 (1) Financial expenses (93) (74)
Other Businesses (discontinued operations) 7 7 7 14 7 2 Income before taxes 2,023 1,536
Other Businesses 16 12 17 26 20 1
Total 401 442 275 225 30 8
1 Year ending December 31.
NOTES
Capital expenditure € in millions Assets € in millions Net sales (third parties) € in millions
Year ending Year ending Dec. 31, Dec. 31, Year ending Year ending
Dec. 31, Dec. 31, 2017 2016 Dec. 31, Dec. 31,
2017 2016 2017 2016
Accounts receivable and inventories of
Reportable segments 385 430 reportable segments 5,747 5,385 Footwear 12,428 10,135
Other Businesses 16 12 Accounts receivable and inventories of Other Apparel 7,779 7,476
Reclassification to discontinued operations (7) (7) Businesses 306 594 Hardware 1,679 1,681
HQ 357 207 Segmental assets 6,053 5,978 Reclassification to discontinued operations (667) (808)
Consolidation – – Non-segmental accounts receivable and Total 21,218 18,483
inventories (45) (15)
Total 752 642
Current financial assets 1,996 2,245
Other current assets 641 678
Non-current assets 5,877 6,290
Geographical information
Depreciation and amortization € in millions
Total 14,522 15,176 Net sales (third parties) are shown in the geographic market
in which the net sales are realized. Non-current assets are
Year ending Year ending allocated to the geographic market based on the domicile of
Dec. 31, Dec. 31, the respective subsidiary independent of the segmental
2017 2016
Liabilities € in millions
structure and consist of tangible assets, goodwill, trademarks,
Reportable segments 258 199
Other Businesses 17 26 other intangible assets and other non-current assets.
Reclassification to discontinued operations (7) (14) Dec. 31, Dec. 31,
HQ 145 141 2017 2016
Consolidation – – Accounts payable of reportable segments 563 691 Geographical information € in millions
Total 413 353 Accounts payable of Other Businesses 26 143
Segmental liabilities 589 834
Net sales (third parties) Non-current assets
Non-segmental accounts payable 1,386 1,662
ANNUAL REPORT 2017
Current financial liabilities 499 837 Year ending Year ending

Impairment losses and reversals of impairment losses Dec. 31, Dec. 31, Dec. 31, Dec. 31,
€ in millions Other current liabilities 3,817 3,432 2017 2016 2017 2016
Non-current liabilities 1,796 1,957
Western Europe 6,352 5,728 2,138 2,056
Total 8,087 8,721
North America 4,882 4,131 803 1,197
Greater China 3,812 3,028 532 515
Dec. 31, Dec. 31,
2017 2016 Russia/CIS 660 680 359 369
Reportable segments 11 7 Latin America 1,917 1,741 217 288
208
Other Businesses 20 1 Japan 1,231 1,187 225 280
Reclassification to discontinued operations (7) (2) MEAA 3,030 2,795 518 563
ADIDAS
HQ 1 (0) Reclassification
to discontinued
Consolidation 14 10
operations (667) (808) – –
Total 38 15
Total 21,218 18,483 4,792 5,268
NOTES
With regard to Germany, Western Europe contains net sales Impact of divestiture on items in the consolidated statement of Net cash generated from discontinued operations
financial position € in millions € in millions
(third parties) (continuing operations) amounting to
€ 1,226 million and € 1,092 million as well as non-current
assets amounting to € 1,082 million and € 1,015 million for October 2, Year ending Year ending
2017 Dec. 31, Dec. 31,
the years 2017 and 2016, respectively. With regard to the USA, 2017 2016
Cash and cash equivalents (11)
North America contains net sales (third parties) (continuing Net cash generated from operating activities 6 39
Current assets (234)
operations) amounting to € 4,092 million and € 3,253 million Net cash (used in) investing activities (4) (9)
Non-current assets (93)
as well as non-current assets amounting to € 695 million and Net cash (used in) financing activities (0) (9)
Liabilities 153
€ 1,062 million for the years 2017 and 2016, respectively. Net assets (185)
Net cash generated from discontinued
operations 2 22
38 » ADDITIONAL CASH FLOW INFORMATION Consideration received in cash 131

In 2017, the increase in cash generated from operating Less: cash and cash equivalents disposed of (11) In 2017, the following changes in financial liabilities impacted
activities compared to the prior year was primarily due to an Net cash inflow 119 the net cash used in financing activities:
increase in income before taxes which was partly offset by
higher operating working capital requirements and an As of September 1, 2017, the CCM Hockey operating segment
increase in income taxes paid. was divested. The following assets and liabilities were
consequently derecognized from the consolidated statement
Net cash used in investing activities in 2017 mainly related to of financial position as of September 1, 2017:
spending for property, plant and equipment such as
investments in the furnishing and fitting of own-retail stores,
Impact of divestiture on items in the consolidated statement of
in new office buildings and IT systems and the purchase of
financial position € in millions
financial assets and other long-term assets. This was partly
offset by proceeds from the disposal of discontinued
operations. September 1,
ANNUAL REPORT 2017
2017
Cash and cash equivalents (10)

Net cash used in financing activities mainly related to the Current assets (138)
dividend paid to shareholders of adidas AG, the repayment of Non-current assets 0
short-term borrowings and the repurchase of treasury Liabilities 55
shares. Net assets (94)
209
As of October 2, 2017, the TaylorMade operating segment was Consideration received in cash 65
Less: cash and cash equivalents disposed of (10)
ADIDAS
divested. The following assets and liabilities were consequently

Net cash inflow 55
derecognized from the consolidated statement of financial
position as of October 2, 2017:
NOTES
Impact of change in financial liabilities on net cash used in financing activities € in millions Information regarding commitments under lease and service
contracts is also included in these Notes.  SEE NOTE 29
Non-cash effects
Litigation and other legal risks
Decrease in Effect of
Payments in New lease companies exchange Dec. 31, The company is currently engaged in various lawsuits
Jan. 1, 2017 this period obligations consolidated Other rates 2017
resulting from the normal course of business, mainly in
Short-term borrowings 636 (297) – – (227) 24 137
connection with distribution agreements as well as intellectual
Lease obligations 6 (2) 0 (0) 0 (0) 4
property rights. The risks regarding these lawsuits are
Total 643 (299) 0 (0) (227) 23 140
covered by provisions when a reliable estimate of the amount
of the obligation can be made.  SEE NOTE 20 In the opinion of
Management, the ultimate liabilities resulting from such
As of June 30, 2016, the company formally completed the 39 » OTHER FINANCIAL COMMITMENTS AND claims will not materially affect the assets, liabilities, financial
divestiture of the Mitchell & Ness business.  SEE NOTE 04 The CONTINGENCIES position and profit or loss of the Group.
following assets and liabilities were consequently Other financial commitments
derecognized from the consolidated statement of financial
a didas has other financial commitments (continuing In connection with the financial irregularities at Reebok India
position: operations) for promotion and advertising contracts, which Company in 2012, various legal uncertainties were identified.
mature as follows: The respective remaining risks cannot be assessed
conclusively. However, based on legal opinions and internal
Impact of divestiture on items in the consolidated statement of
assessments, Management assumes that the effects will not
financial position € in millions
Financial commitments for promotion and advertising
have any material influence on the assets, liabilities, financial
€ in millions
position and profit or loss of the company.
June 30,
2016
Dec. 31, Dec. 31, In September 2017, an employee of the company’s US
Cash and cash equivalents (2) 2017 2016
subsidiary was charged with criminal violations relating to
ANNUAL REPORT 2017
Current assets (22) Within 1 year 893 988

Non-current assets (8) Between 1 and 5 years 2,600 2,585
alleged unlawful payments to certain high school basketball
Liabilities 7 After 5 years 1,762 2,070 players or their families. The company’s US subsidiary, with
Net assets (25) Total 5,255 5,643 the full support of the company, is cooperating with the
Consideration received in cash 31 prosecutors and actively working to understand the
Less: cash and cash equivalents disposed of (2) allegations, which includes an internal investigation with the
Net cash inflow 29
Commitments with respect to promotion and advertising assistance of outside counsel. While Management currently
210
contracts maturing after five years have remaining terms of believes that the effects will not have any material influence
ADIDAS
up to 13 years from December 31, 2017. on the assets, liabilities, financial position and profit or loss of
the company, the risks related to this case cannot be assessed
Compared to December 31, 2016, commitments for promotion conclusively at this point in time.
and advertising contracts decreased as there were no new
significant long-term commitments in the 2017 financial year.
NOTES
40 » RELATED PARTY DISCLOSURES 41 » OTHER INFORMATION Accountant service fees for the auditor of the financial statements
According to the definitions of IAS 24 ‘Related Party Disclosures’, Employees The expenses for the audit fees comprise the expenses of
the Supervisory Board and the Executive Board of adidas AG The average numbers of employees (continuing operations) adidas 
AG, Herzogenaurach, as well as all German
have been identified as related parties who solely receive are as follows: subsidiaries of adidas AG. In 2017, the expenses for the
remuneration in connection with their function as key professional audit service fees for the auditor KPMG AG
Employees
management personnel. For information about the Wirtschaftsprüfungsgesellschaft amounted to € 1.6 million
remuneration of the Supervisory Board and the Executive (2016: € 1.3 million).
Board of adidas AG  SEE NOTE 41 SEE COMPENSATION REPORT, P. 39 Year ending Year ending
Dec. 31, Dec. 31, Expenses for tax consultancy services provided by the auditor,
2017 2016
In addition, a
didas Pension Trust e.V., a registered association, for other confirmation services provided by the auditor and for
Own retail 32,349 33,307
is regarded as a related party. Based on a Contractual Trust Sales 3,981 3,778 other services provided by the auditor amounted to € 0.1 million
Arrangement, a didas Pension Trust e.V. manages the plan Logistics 5,914 5,876 (2016: € 0.1 million), € 0.1 million (2016: € 0.0 million) and
assets in the form of an administrative trust to fund and protect Marketing 5,717 4,959 € 0.0 million (2016: € 0.1 million), respectively.
part of the pension obligations of adidas AG.  SEE NOTE 24 Central administration 5,114 4,840
Employees, senior executives and members of the Executive Production 1,241 1,150 Expenses for the audit fees of KPMG AG Wirtschafts
Research and development 1,059 967
Board of adidas AG can be members of the registered prüfungsgesellschaft were mainly related to the audits of
Information technology 1,204 1,169
association. a didas AG has the right to claim a refund of pension both the consolidated financial statements and the financial
Total 56,577 56,046
payments from adidas Pension Trust e.V. under specific statements of adidas AG, as well as the audit of the financial
contractually agreed conditions. statements of its subsidiary, adidas CDC Immobilieninvest
GmbH. Integrated IT project audits were also conducted.
Other confirmation services consist of audits which are either

required by law or contractually agreed, such as European
Market Infrastructure Regulation (EMIR) audits according to
ANNUAL REPORT 2017
§ 20 WpHG, audits according to the German Packaging

Ordinance (Verpackungsverordnung – VerpackV), audits of the
utilization of funds, and other contractually agreed-upon
confirmation services.
The tax consultancy services include support services for
211
transfer pricing and consulting for sales taxes on a case-by-
ADIDAS
case basis.
Other services provided by the auditor consist of supporting

services to ensure the quality of sales transactions and of
legal consultancy services.
NOTES
Remuneration of the Supervisory Board and the Executive Board of Executive Board 42 » I NFORMATION RELATING TO THE GERMAN
adidas AG In 2017, the overall compensation of the members of the CORPORATE GOVERNANCE CODE
Supervisory Board Executive Board totaled € 23.3 million (2016: € 21.2 million), Information pursuant to § 161 German Stock Corporation Act
Pursuant to the Articles of Association, the Supervisory Board € 23.3 million thereof relates to short-term benefits (2016: (Aktiengesetz – AktG)
members’ fixed annual payment amounted to € 1.8 million € 11.3 million) and € 0.0 million to long-term benefits (2016: In February 2018, the Executive Board and Supervisory Board
(2016: € 1.3 million). € 9.9 million). Post-employment benefits (costs for accrued of adidas AG issued an updated Declaration of Compliance in
pension entitlements for members of the Executive Board as accordance with § 161 AktG and made it permanently available
Members of the Supervisory Board were not granted any well as follow-up bonuses for resigned members of the to the shareholders. The full text of the Declaration of
loans or advance payments in 2017. Executive Board) totaled € 4.9 million (2016: € 4.8 million). Compliance is available on the company’s corporate website.
In 2017, former members of the Executive Board and their 43 » EVENTS AFTER THE BALANCE SHEET DATE
survivors received pension payments totaling € 3.7 million Company-specific subsequent events
(2016: € 3.6 million). No company-specific subsequent events are known which
might have a material influence on the assets, liabilities,
Pension obligations relating to former members of the financial position and profit or loss of the company.
Executive Board and their survivors amount in total to
€ 84.7 million (2016: € 75.3 million). Date of preparation
The Executive Board of adidas AG prepared and approved the
Benefits confirmed to former members of the Executive Board consolidated financial statements for submission to the
in 2017 due to the termination of their Executive Board Supervisory Board on February 23, 2018. It is the Supervisory
mandates were recognized in the consolidated income Board’s task to examine the consolidated financial statements
statement and amounted to € 1.4 million (2016: € 2.6 million). and give their approval and authorization for issue.
Current members of the Executive Board were not granted any Herzogenaurach, February 23, 2018
ANNUAL REPORT 2017
loans or advance payments in 2017.

The Executive Board of adidas AG
Advance payments were made to a former member of the
Executive Board with regard to the Performance Bonus for
2017 and prorated for 2018, as well as with regard to the LTIP
2015/2017. Kasper Rorsted Roland Auschel Eric Liedtke
212
ADIDAS
Further information on disclosures according to § 314 section

1 no. 6a HGB is provided in the Compensation Report.
 SEE COMPENSATION REPORT, P. 39 Harm Ohlmeyer Karen Parkin Gil Steyaert
STATEMENT OF MOVEMENTS OF
INTANGIBLE AND TANGIBLE ASSETS
STATEMENT OF MOVEMENTS OF INTANGIBLE AND TANGIBLE ASSETS

Statement of Movements of Intangible and Tangible Assets € in millions Attachment 1
Land, land Other

Software, Internally leases, buildings Technical equipment,
patents and generated Total intangible and leasehold equipment and furniture and Construction in Total tangible
Goodwill Trademarks concessions software assets improvements machinery fixtures progress assets
Acquisition cost
January 1, 2016 1,879 1,628 865 20 4,392 1,319 300 1,502 100 3,221
Currency effect 29 53 12 – 93 28 10 33 1 73
Additions – – 65 – 65 87 27 272 201 586
Transfers to assets held for sale – – (6) – (6) (0) (0) (1) – (1)
Transfers – 0 (2) – (2) (8) 13 79 (82) 2
Disposals (0) – (29) – (29) (31) (25) (175) (2) (233)
December 31, 2016/January 1, 2017 1,908 1,681 904 20 4,513 1,395 325 1,710 218 3,648
Currency effect (119) (197) (40) – (356) (83) (20) (118) (10) (231)
Additions – – 74 – 74 89 27 300 266 681
Transfers to assets held for sale (113) (152) (101) – (366) (156) (31) (66) (4) (256)
Decrease in companies consolidated (0) – (0) – (0) (0) 0 0 0 (0)
Transfers – – (2) – (2) 48 6 36 (89) 1
Disposals – – (17) – (17) (52) (18) (142) (3) (215)
December 31, 2017 1,675 1,332 819 20 3,846 1,242 288 1,721 378 3,629
ANNUAL REPORT 2017
213
ADIDAS
STATEMENT OF MOVEMENTS OF
INTANGIBLE AND TANGIBLE ASSETS
Statement of Movements of Intangible and Tangible Assets € in millions Attachment 1
Land, land Other

Software, Internally leases, buildings Technical equipment,
patents and generated Total intangible and leasehold equipment and furniture and Construction in Total tangible
Goodwill Trademarks concessions software assets improvements machinery fixtures progress assets
Accumulated depreciation, amortization and

impairment
January 1, 2016 487 0 691 5 1,184 389 155 1,039 0 1,583
Currency effect 9 0 13 – 22 6 8 28 (0) 42
Additions – 0 64 5 70 56 35 213 – 303
Impairment losses – – 10 – 10 2 0 8 – 10
Reversals of impairment losses – – (0) – (0) (1) – (1) – (2)
Transfers to assets held for sale – – (1) – (1) (0) (0) (0) – (0)
Transfers – – (4) – (4) (1) 6 0 – 4
Disposals (0) – (25) – (25) (26) (23) (158) – (207)
December 31, 2016/January 1, 2017 496 1 748 10 1,255 425 180 1,128 0 1,733
Currency effect (41) (0) (36) – (78) (29) (16) (88) (0) (133)
Additions – 0 59 4 63 66 31 261 – 358
Impairment losses – 23 10 – 34 2 0 11 0 13
Reversals of impairment losses – – (0) – (0) (1) – (0) – (1)
Transfers to assets held for sale – (1) (94) – (95) (67) (25) (57) – (149)
Decrease in companies consolidated – 0 (0) – (0) (0) 0 0 – (0)
Transfers – 0 0 – 0 11 0 (11) – (0)
Disposals – – (16) – (16) (45) (16) (132) – (193)
December 31, 2017 454 23 671 14 1,163 362 154 1,112 0 1,628
ANNUAL REPORT 2017
Net carrying amount

January 1, 2016 1,392 1,628 173 15 3,208 930 145 463 100 1,638
December 31, 2016 1,412 1,680 157 10 3,259 970 145 582 218 1,915
December 31, 2017 1,220 1,309 148 6 2,683 880 134 609 378 2,000
214
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SHAREHOLDINGS
SHAREHOLDINGS
Shareholdings of adidas AG, Herzogenaurach at December 31, 2017
Equity
(currency units Share in capital
Company and Domicile Currency in thousands) held by 1 in %
Germany
1 adidas Insurance & Risk Consultants GmbH 2 Herzogenaurach (Germany) EUR 26 directly 100
2 adidas Beteiligungsgesellschaft mbH 2 Herzogenaurach (Germany) EUR 681,990 directly 100
3 adidas CDC Immobilieninvest GmbH Herzogenaurach (Germany) EUR 8,702 14 100
4 adidas Verwaltungsgesellschaft mbH 3 Herzogenaurach (Germany) EUR 4,303 76 100
5 adidas anticipation GmbH 2 Herzogenaurach (Germany) EUR 25 directly 100
Europe (incl. Middle East and Africa)

6 adidas sport gmbh Cham (Switzerland) CHF 6,721 directly 100
7 adidas Austria GmbH Klagenfurt (Austria) EUR 6,926 directly 95.89
6 4.11
8 runtastic GmbH Pasching (Austria) EUR 999 10 100
9 adidas France S.a.r.l. Landersheim (France) EUR 200,297 directly 100
10 adidas International B.V. Amsterdam (Netherlands) EUR 6,832,931 directly 93.97
9 6.03
11 adidas International Trading B.V. Amsterdam (Netherlands) EUR 1,626,127 10 100
12 adidas International Marketing B.V. Amsterdam (Netherlands) EUR 54,009 10 100
ANNUAL REPORT 2017
13 adidas International Finance B.V. Amsterdam (Netherlands) EUR 46,191 10 100

14 adidas International Property Holding B.V. Amsterdam (Netherlands) EUR 50,955 86 100
15 adidas Infrastructure Holding B.V. Amsterdam (Netherlands) EUR (23) 10 100
16 adidas Benelux B.V. Amsterdam (Netherlands) EUR 4,663 directly 100
17 Hydra Ventures B.V. Amsterdam (Netherlands) EUR (17,979) 10 100
18 adidas (UK) Limited Stockport (Great Britain) GBP 30,907 10 100
19 Reebok International Limited 5 London (Great Britain) EUR 340,383 76 100
20 Trafford Park DC Limited London (Great Britain) GBP 1,089 15 100
215
21 Reebok Pensions Management Limited 3, 5 London (Great Britain) GBP – 19 100
ADIDAS
22 Reebok Europe Holdings London (Great Britain) GBP 26,493 19 100

1 The number refers to the number of the company.
2 Profit and loss transfer agreement.
3 Company with no active business.
4 Sub-group Reebok International Ltd.
5 Sub-group Reebok International Limited.
6 Sub-group adidas Indy, LLC (formerly: Sports Licensed Division of the adidas Group, LLC).
SHAREHOLDINGS
Equity
23 Luta Limited 3, 5 London (Great Britain) GBP – 19 100

24 adidas (Ireland) Limited Dublin (Ireland) EUR 2,806 10 100
25 adidas International Re DAC Dublin (Ireland) EUR 21,872 10 100
26 Reebok Ireland Limited 3 Dublin (Ireland) EUR 56 24 100
27 Five Ten Europe NV 3 Lasne (Belgium) EUR (271) 78 100
28 adidas España S.A.U. Zaragoza (Spain) EUR 41,286 2 100
29 adidas Finance Spain S.A.U. Zaragoza (Spain) EUR 36,390 76 100
30 Global Merchandising, S.L. Madrid (Spain) EUR 8,022 10 100
31 adidas Italy S.p.A. Monza (Italy) EUR 55,813 10 100
32 adidas Portugal – Artigos de Desporto, S.A. Lisbon (Portugal) EUR 6,440 10 100
33 adidas Business Services Lda. Morea de Maia (Portugal) EUR 1,263 10 98
directly 2
34 adidas Norge AS Oslo (Norway) NOK 29,357 directly 100
35 adidas Sverige AB Solna (Sweden) SEK 45,222 directly 100
36 adidas Finance Sverige AB Solna (Sweden) SEK 272,188 76 100
37 adidas Suomi Oy Helsinki (Finland) EUR 1,620 10 100
38 adidas Danmark A/S Copenhagen (Denmark) DKK 20,635 10 100
39 adidas CR s.r.o. Prague (Czech Republic) CZK 148,054 directly 100
40 adidas Budapest Kft. Budapest (Hungary) HUF 462,671 directly 100
41 adidas Bulgaria EAD Sofia (Bulgaria) BGN 8,431 directly 100
42 LLC ‘adidas, Ltd.’ Moscow (Russia) RUB 26,357,060 7 100
ANNUAL REPORT 2017
43 adidas Poland Sp.z o.o. Warsaw (Poland) PLN 62,031 directly 100
44 adidas Finance Poland S.A. Warsaw (Poland) PLN 98,837 76 100
45 adidas Romania S.R.L. Bucharest (Romania) RON 24,762 10 100
46 adidas Baltics SIA Riga (Latvia) EUR 1,163 10 100
47 adidas Slovakia s.r.o. Bratislava (Slovak Republic) EUR 1,464 directly 100
48 adidas Trgovina d.o.o. Ljubljana (Slovenia) EUR 538 directly 100
49 SC ‘adidas-Ukraine’ Kiev (Ukraine) UAH 954,714 directly 100
50 adidas LLP Almaty (Republic of Kazakhstan) KZT 4,751,216 directly 100
216
51 adidas Serbia d.o.o. Belgrade (Serbia) RSD 532,183 10 100
ADIDAS
52 adidas Croatia d.o.o. Zagreb (Croatia) HRK 39,998 10 100

53 adidas Hellas A.E. Athens (Greece) EUR 19,307 directly 100
SHAREHOLDINGS
Equity
54 adidas (Cyprus) Limited Nicosia (Cyprus) EUR 923 directly 100

55 adidas Spor Malzemeleri Satis ve Pazarlama A.S. Istanbul (Turkey) TRY 316,405 10 100
56 adidas Emerging Markets L.L.C Dubai (United Arab Emirates) USD 18,958 indirectly 51
9 49
57 adidas Emerging Markets FZE Dubai (United Arab Emirates) USD 119,681 10 100
58 adidas Levant Limited Dubai (United Arab Emirates) JOD 2,956 57 100
59 adidas Levant Limited – Jordan Amman (Jordan) JOD 1,720 58 100
60 adidas Imports & Exports Ltd. Cairo (Egypt) EGP (34,455) 61 100
61 adidas Sporting Goods Ltd. Cairo (Egypt) EGP 263,559 10 90
11 10
62 adidas Egypt Ltd. 3 Cairo (Egypt) USD (1,831) directly 100
63 Reebok Israel Ltd. Holon (Israel) ILS 15,839 directly 100
64 Life Sport Ltd. Holon (Israel) ILS 128,827 10 85
65 adidas Morocco LLC Casablanca (Morocco) MAD (57,870) directly 100
66 adidas (South Africa) (Pty) Ltd. Cape Town (South Africa) ZAR 320,376 directly 100
North America
67 adidas North America, Inc. Portland, Oregon (USA) USD 4,775,256 10 100
68 adidas America, Inc. Portland, Oregon (USA) USD 221,944 67 100
69 adidas International, Inc. Portland, Oregon (USA) USD 88,314 67 100
70 adidas Team, Inc. 3 Des Moines, Iowa (USA) USD (1,013) 67 100
71 The Reebok Worldwide Trading Company, LLC Wilmington, Delaware (USA) USD 17,918 76 100
ANNUAL REPORT 2017
72 Reebok Securities Holdings LLC 3, 4 Wilmington, Delaware (USA) USD – 76 100

73 Textronics, Inc. Wilmington, Delaware (USA) USD 12,389 69 100
74 Onfield Apparel Group, LLC 3, 6 Dover, Delaware (USA) USD – 76 99
75 1
75 Reebok Onfield, LLC 3, 6 Dover, Delaware (USA) USD – 76 100
76 Reebok International Ltd. 4 Canton, Massachusetts (USA) USD (1,263,280) 67 100
77 adidas Indy, LLC6 (formerly: Sports Licensed Division of the adidas Group, LLC) Wilmington, Delaware (USA) USD 33,560 76 99
217
72 1
78 Stone Age Equipment, Inc. Redlands, California (USA) USD (512) 68 100
ADIDAS
79 Spartanburg DC, Inc. Spartanburg, South Carolina (USA) USD 12,661 68 100
SHAREHOLDINGS
Equity
80 adidas Canada Ltd. Woodbridge, Ontario (Canada) CAD 122,500 10 100
Asia
81 adidas Sourcing Limited Hong Kong (China) USD 548,652 11 100
82 adidas Services Limited Hong Kong (China) USD 13,414 10 100
83 adidas Hong Kong Limited Hong Kong (China) HKD 380,686 2 100
84 Reebok Trading (Far East) Limited Hong Kong (China) USD 31,406 76 100
85 adidas (Suzhou) Co. Ltd. Suzhou (China) CNY 230,058 2 100
86 adidas Sports (China) Co. Ltd. Suzhou (China) CNY 9,647,843 2 100
87 adidas (China) Ltd. Shanghai (China) CNY 987,565 10 100
88 adidas Sports Goods (Shanghai) Co., Ltd Shanghai (China) CNY – 87 100
89 Runtastic Software Technology (Shanghai) Co., Ltd. Shanghai (China) CNY – 10 100
90 Zhuhai adidas Technical Services Limited Zhuhai (China) CNY 42,458 81 100
91 adidas Logistics (Tianjin) Co., Ltd. Tianjin (China) CNY 151,388 15 100
92 adidas Business Services (Dalian) Limited Dalian (China) CNY 9,439 10 100
93 adidas Japan K.K. Tokyo (Japan) JPY 15,943,471 10 100
94 adidas Korea LLC. Seoul (Korea) KRW 203,106,999 directly 100
95 adidas Korea Technical Services Limited Pusan (Korea) KRW 3,894,309 81 100
96 adidas India Private Limited New Delhi (India) INR 4,636,148 directly 10.67
10 89.33
97 adidas India Marketing Private Limited New Delhi (India) INR 6,042,126 96 98.62
10 1.00
ANNUAL REPORT 2017
directly 0.37
98 adidas Technical Services Private Limited New Delhi (India) USD 3,407 81 100
99 Reebok India Company New Delhi (India) INR (21,851,375) 109 93.15
100 PT adidas Indonesia Jakarta (Indonesia) IDR 383,423,936 10 99
directly 1
101 adidas (Malaysia) Sdn. Bhd. Petaling Jaya (Malaysia) MYR 58,014 directly 60
10 40
218
102 adidas Philippines Inc. Pasig City (Philippines) PHP 822,484 directly 100
103 adidas Singapore Pte. Ltd. Singapore (Singapore) SGD 9,062 directly 100
ADIDAS
104 adidas Taiwan Limited Taipei (Taiwan) TWD 1,774,204 10 100

SHAREHOLDINGS
Equity
105 adidas (Thailand) Co., Ltd. Bangkok (Thailand) THB 1,419,989 directly 100
106 adidas Australia Pty Limited Mulgrave (Australia) AUD 88,584 10 100
107 adidas New Zealand Limited Auckland (New Zealand) NZD 6,115 directly 100
108 adidas Vietnam Company Limited Ho Chi Minh City (Vietnam) VND 224,561,408 10 100
109 Reebok (Mauritius) Company Limited Port Louis (Mauritius) USD (154) 76 99
71 1
Latin America
110 adidas Argentina S.A. Buenos Aires (Argentina) ARS 1,280,248 10 76.96
2 23.04
111 Reebok Argentina S.A. 3 Buenos Aires (Argentina) ARS 89,365 11 96.25
10 3.75
112 adidas do Brasil Ltda. São Paulo (Brazil) BRL 571,730 2 100
113 adidas Franchise Brasil Servicos Ltda. São Paulo (Brazil) BRL 36,088 112 100
114 Reebok Produtos Esportivos Brasil Ltda. 3 Jundiaí (Brazil) BRL 10,469 10 100
115 adidas Chile Limitada Santiago de Chile (Chile) CLP 116,551,782 directly 99
1 1
116 adidas Colombia Ltda. Bogotá (Colombia) COP (45,422,402) directly 100
117 adidas Perú S.A.C. Lima (Peru) PEN 95,948 directly 99.21
115 0.79
118 adidas de Mexico, S.A. de C.V. Mexico City (Mexico) MXN 1,346,420 directly 100
119 adidas Industrial, S.A. de C.V. Mexico City (Mexico) MXN 362,084 directly 100
ANNUAL REPORT 2017
120 Reebok de Mexico, S.A. de C.V. 3 Mexico City (Mexico) MXN (1,260,310) directly 100
121 adidas Latin America, S.A. Panama City (Panama) USD (72,607) directly 100
122 Concept Sport, S.A. Panama City (Panama) USD 1,988 10 100
123 adidas Market LAM, S.A. 3 Panama City (Panama) USD (2,782) 10 100
124 3 Stripes S.A. (adidas Uruguay) 3 Montevideo (Uruguay) UYU (436) directly 100
125 Tafibal S.A. Montevideo (Uruguay) UYU 37,568 directly 100
126 Raelit S.A. Montevideo (Uruguay) UYU 48,959 directly 100
219
127 Reebok Central America S.A. 4 San Pedro Sula (Honduras) HNL – 76 99.60
71 0.40
ADIDAS
128 adidas Corporation de Venezuela, S.A. 3 Caracas (Venezuela) VEF (17) directly 100
129 adisport Corporation San Juan (Puerto Rico) USD (2,605) 10 100
RESPONSIBILITY STATEMENT
RESPONSIBILITY STATEMENT
To the best of our knowledge, and in accordance with the applicable reporting principles, the
consolidated financial statements give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Group, and the Group Management Report, which has been
combined with the Management Report of adidas AG, includes a fair review of the development
and performance of the business and the position of the Group, together with a description of
the material opportunities and risks associated with the expected development of the Group.
Herzogenaurach, February 23, 2018
KASPER RORSTED
CEO
ANNUAL REPORT 2017
ROLAND AUSCHEL ERIC LIEDTKE HARM OHLMEYER KAREN PARKIN GIL STEYAERT
GLOBAL SALES GLOBAL BRANDS CFO GLOBAL HUMAN RESOURCES GLOBAL OPERATIONS
220
ADIDAS
INDEPENDENT AUDITOR’S REPORT
Note: This is a translation of the German original. Solely the In our opinion, on the basis of the knowledge obtained in Public Auditors in Germany] (IDW). Our responsibilities under
original text in German language is authoritative. the audit, those requirements and principles are further described in
the “Auditor’s Responsibilities for the Audit of the Consolidated
—— the accompanying consolidated financial statements Financial Statements and of the Group Management Report”
INDEPENDENT AUDITOR’S comply, in all material respects, with the IFRSs as section of our auditor’s report. We are independent of the
REPORT adopted by the EU, and the additional requirements of

German commercial law pursuant to Section 315e (1) HGB
group entities in accordance with the requirements of
European law and German commercial and professional
[Handelsgesetzbuch: German Commercial Code] and, in law, and we have fulfilled our other German professional
REPORT ON THE AUDIT OF THE compliance with these requirements, give a true and fair responsibilities in accordance with these requirements. In
CONSOLIDATED FINANCIAL view of the assets, liabilities, and financial position of addition, in accordance with Article 10 (2) point (f) of the EU
STATEMENTS AND OF THE GROUP the Group as at December 31, 2017, and of its financial Audit Regulation, we declare that we have not provided non-
MANAGEMENT REPORT performance for the financial year from January 1, 2017 audit services prohibited under Article 5 (1) of the EU Audit
to December 31, 2017, and Regulation. We believe that the evidence we have obtained is
OPINIONS —— the accompanying group management report as a whole sufficient and appropriate to provide a basis for our opinions
We have audited the consolidated financial statements of provides an appropriate view of the Group’s position. In on the consolidated financial statements and on the group
adidas AG, Herzogenaurach and its subsidiaries (the Group), all material respects, this group management report is management report.
which comprise the consolidated statement of financial consistent with the consolidated financial statements,
position as at December 31, 2017, and the consolidated complies with German legal requirements and appropri- KEY AUDIT MATTERS IN THE AUDIT OF THE
income statement, the consolidated statement of profit ately presents the opportunities and risks of future devel- CONSOLIDATED FINANCIAL STATEMENTS
and loss and other comprehensive income, consolidated opment. Our opinion on the group management report Key audit matters are those matters that, in our professional
statement of changes in equity and consolidated statement of does not cover the content of the non-financial statement, judgment, were of most significance in our audit of the
cash flows for the financial year from January 1, 2017 to the corporate governance statement and the corporate consolidated financial statements for the financial year from
December 31, 2017, and notes to the consolidated financial governance report mentioned above. January 1, 2017 to December 31, 2017. These matters were
statements, including a summary of significant accounting addressed in the context of our audit of the consolidated
ANNUAL REPORT 2017
policies. In addition, we have audited the report on the position Pursuant to Section 322 (3) sentence 1 HGB, we declare that financial statements as a whole, and in forming our opinion
of the Company and the Group (“group management report”) our audit has not led to any reservations relating to the legal thereon, we do not provide a separate opinion on these matters.
of a
didas AG, Herzogenaurach for the financial year from compliance of the consolidated financial statements and of
January 1, 2017 to December 31, 2017. In accordance with the the group management report. VALUATION AND PRESENTATION OF THE DISPOSAL GROUPS TAYLORMADE UND CCM
German legal requirements we have not audited the content HOCKEY IN ACCORDANCE WITH IFRS 5
of the non-financial statement, as such included in the group BASIS FOR THE OPINIONS
221
management report, and the corporate governance state We conducted our audit of the consolidated financial For information on the accounting and valuation methods used,
ADIDAS
ment as well as the corporate governance report which are statements and of the group management report in as well as management’s judgements and sources of estimation
included in section ”Corporate Governance Report including accordance with Section 317 HGB and the EU Audit Regulation uncertainty, please refer to Note 02 in the consolidated financial
the Declaration on Corporate Governance” of the group No. 537/2014 (referred to subsequently as “EU Audit statements. For the disclosures on Discontinued Operations and
management report. Regulation”) and in compliance with German Generally Disposal of subsidiaries as well as assets and liabilities, please
Accepted Standards for Financial Statement Audits refer to Notes 3 and 4, respectively, in the consolidated Financial
promulgated by the Institut der Wirtschaftsprüfer [Institute of Statements.
THE RISK TO THE CONSOLIDATED FINANCIAL STATEMENTS OUR AUDIT APPROACH THE RISK TO THE CONSOLIDATED FINANCIAL STATEMENTS
After the Supervisory Board passed resolutions for the We first assessed whether the classification of the two In 2017, adidas AG launched a new share-based compensation
disposals of TaylorMade and CCM Hockey in May 2017 and disposal groups TaylorMade and CCM Hockey as discontinued program for executives and introduced an employee
June 2017, respectively, adidas entered into contracts dated operations in accordance with IFRS 5 was appropriate. We participation program as of October 1, 2016. In addition, a
May 10, 2017 and July 26, 2017, respectively, to dispose of the inquired of corporate accounting and reviewed the minutes of share-based compensation program was agreed to for an
two business segments. The disposals of the two discontinued the Supervisory Board’s meetings. In addition, amongst artist and a designer (non-employees), with a contract date of
operations were completed so that they were both others we reviewed internal and external communications to 19 May 2016 for the years 2017 to 2021. The respective
deconsolidated during the financial year. For the fiscal year assess whether the criteria for classification as discontinued programs contain various vesting conditions, which are linked
2017, adidas reported a loss from discontinued operations, operations were met. to grants of equity instruments or a cash settlement. As of
after tax, of EUR 254 million. The sales contracts include, December 31, 2017, adidas has accrued stock-based
among other things, variable purchase price components, With the assistance of KPMG valuation specialists, we also compensation expense in equity, as well as short- and long-
payment for which will become due in the future and whose assessed the valuation of the variable purchase price term sales and personnel provisions.
amount depends on the achievement of certain future components included in the contracts, which are accounted
performance goals for the buyer. Promissory notes and earn- for as other non-current financial assets. The interpretation of the contractual agreements and thus the
out components were therefore recognized as other non- classification of share-based payment programs in
current financial assets in the amount of EUR 137 million. In addition, we assessed whether the discontinued operations accordance with IFRS 2 are complex. Furthermore, assessing
disclosures are sufficiently detailed and appropriate. the likelihood of achieving the vesting conditions as of the
The classification and reporting of the two business segments balance sheet date and during the vesting period involves
TaylorMade and CCM Hockey as discontinued operations in OUR CONCLUSIONS judgement.
accordance with IFRS 5 is complex and requires judgement. The disclosure of the disposal groups TaylorMade and
The assumptions underlying the valuation of the financial assets CCM Hockey as discontinued operations is in accordance with There is a risk to the consolidated financial statements that
related to the variable purchase price components contained IFRS 5. The valuation of the financial assets related to the the criteria for classification as share-based payment
in the sales contracts are subject to judgement. In addition, variable purchase price components contained in the sales programs under IFRS 2 are not met, or that the classification
the disclosures in the notes to the consolidated financial contracts is appropriate. The discontinued operations as equity-settled or cash-settled share-based payment in
ANNUAL REPORT 2017
statements related to discontinued operations are complex. disclosures in the notes are sufficiently detailed and accordance with IFRS 2 was incorrect. There is also the risk
appropriate. that the fair values of the equity instruments granted or the
There exists a risk to the consolidated financial statements respective liability were not measured in accordance with
that the discontinued operations were inappropriately identified THE VALUATION AND ACCURACY OF STOCK-BASED COMPENSATION PROGRAMS IFRS 2.
as such and that the disclosure as discontinued operations in
the consolidated income statement is therefore incorrect. In For information on the accounting and valuation methods used, OUR AUDIT APPROACH
222
addition, there is a risk that the valuation of the financial as well as management’s judgements and sources of estimation We first assessed whether the criteria for classification as
ADIDAS
assets for the variable purchase price components contained uncertainty, please refer to Note 02 in the consolidated financial share-based payment programs under IFRS 2 were met. We
in the sales contracts is not appropriate. There also exists a statements. For information on the share-based payment analyzed the contractual obligations of the respective programs
risk that the disclosures for discontinued operations in the programs, please refer to Note 27 in the consolidated financial in detail and evaluated whether the share-based payments are
notes to the consolidated financial statements are not sufficient. statements. equity or cash-settled in accordance with IFRS 2.
Among other things, we assessed the valuation model and the The assessment of provisions for tax obligations requires that —— the remaining parts of the annual report, with the exception
reasonableness of the assumptions used for vesting adidas exercise judgement in the assessment of tax matters of the audited consolidated financial statements and group
conditions (employee turnover) and performance conditions and make estimates regarding tax risks. management report and our auditor’s report.
(stock price at the end of the vesting period). In doing so, we
compared assumptions used for vesting conditions with There exists a risk to the consolidated financial statements Our opinions on the consolidated financial statements and on
historical employee turnover, and compared projections for that the provisions for tax obligations arising from tax audits the group management report do not cover the other
future share prices with actuarial valuation models. are either over- or undervalued. information, and consequently we do not express an opinion
or any other form of assurance conclusion thereon.
By examining the respective contracts and the related OUR AUDIT APPROACH
accounting treatment, we ensured that the underlying adidas regularly appoints external experts to substantiate its In connection with our audit, our responsibility is to read the
assumptions regarding the likelihood of achieving vesting own risk assessment with tax expert opinions. Among other other information and, in so doing, to consider whether the
conditions were reasonable as of the reporting date, and that things, we involved KPMG local and international tax other information
the accounting for the share-based programs was appropriate. specialists in the audit team to review both adidas’s risk —— is materially inconsistent with the consolidated financial
assessment and tax expert opinions. KPMG specialists statements, with the group management report or our
OUR CONCLUSIONS reviewed the correspondence with the relevant tax authorities, knowledge obtained in the audit, or
The share-based compensation programs have been appro- and they also analyzed and examined the assumptions used in —— otherwise appears to be materially misstated.
priately classified in accordance with IFRS 2. The valuation determining tax provisions based on their knowledge and We were engaged to perform a separate independent limited
methods used are appropriate, and the assumptions underly- experience of the current application of the relevant legislation assurance engagement on the non-financial statement. With
ing the valuation regarding the achievement of vesting condi- by public authorities and courts. With our international regards to content, scope and results of this independent
tions as of the reporting date have been reasonably estimated. network, we have also included tax specialists with the limited assurance engagement we refer to our report hereon
relevant knowledge of the respective local legal systems and from February, 23, 2018.
THE VALUATION OF RISKS FROM TAX AUDITS regulations, who reported the results of their assessment to us.
RESPONSIBILITIES OF MANAGEMENT AND THE
For information on the accounting and valuation methods used, OUR CONCLUSIONS SUPERVISORY BOARD FOR THE CONSOLIDATED
ANNUAL REPORT 2017
as well as management’s judgements and sources of estimation The judgement used by adidas in determining the amounts to FINANCIAL STATEMENTS AND THE GROUP
uncertainty, please refer to Note 02 in the consolidated financial be recognized as provisions for tax obligations arising from MANAGEMENT REPORT
statements. For disclosures on income taxes, please see Note 35 tax audits is appropriate. Management is responsible for the preparation of the
in the consolidated financial statements. consolidated financial statements that comply, in all material
OTHER INFORMATION respects, with IFRSs as adopted by the EU and the additional
THE RISK TO THE CONSOLIDATED FINANCIAL STATEMENTS Management is responsible for the other information. The requirements of German commercial law pursuant to Section
223
adidas conducts business in various tax jurisdictions. As of other information comprises: 315e (1) HGB and that the consolidated financial statements,
ADIDAS
December 31, 2017, income tax liabilities include provisions —— the non-financial statement, in compliance with these requirements, give a true and fair
for risks from tax audits in the amount of EUR 424 million. The —— the corporate governance statement, view of the assets, liabilities, financial position, and financial
application of local tax legislation and tax relief is complex —— the Corporate Governance Report in accordance with performance of the Group. In addition, management is
and involves various risks. Nr. 3.10 of German Corporate Governance Code, and responsible for such internal controls as they have determined
necessary to enable the preparation of consolidated financial AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF for one resulting from error, as fraud may involve collusion,
statements that are free from material misstatement, THE CONSOLIDATED FINANCIAL STATEMENTS AND forgery, intentional omissions, misrepresentations, or the
whether due to fraud or error. OF THE GROUP MANAGEMENT REPORT override of internal controls.
Our objectives are to obtain reasonable assurance about —— Obtain an understanding of internal controls relevant to
In preparing the consolidated financial statements, whether the consolidated financial statements as a whole are the audit of the consolidated financial statements and of
management is responsible for assessing the Group’s ability free from material misstatement, whether due to fraud or arrangements and measures (systems) relevant to the
to continue as a going concern. They also have the error, and whether the group management report as a whole audit of the group management report in order to design
responsibility for disclosing, as applicable, matters related to provides an appropriate view of the Group’s position and, in all audit procedures that are appropriate in the circumstances,
going concern. In addition, they are responsible for financial material respects, is consistent with the consolidated financial but not for the purpose of expressing an opinion on the
reporting based on the going concern basis of accounting statements and the knowledge obtained in the audit, complies effectiveness of these systems.
unless there is an intention to liquidate the Group or to cease with the German legal requirements and appropriately —— Evaluate the appropriateness of accounting policies used
operations, or there is no realistic alternative but to do so. presents the opportunities and risks of future development, by management and the reasonableness of estimates made
as well as to issue an auditor’s report that includes our by management and related disclosures.
Furthermore, management is responsible for the preparation opinions on the consolidated financial statements and on the —— Conclude on the appropriateness of management’s use of
of the group management report that, as a whole, provides an group management report. the going concern basis of accounting and, based on the
appropriate view of the Group’s position and is, in all material audit evidence obtained, whether a material uncertainty
respects, consistent with the consolidated financial Reasonable assurance is a high level of assurance, but is exists related to events or conditions that may cast
statements, complies with German legal requirements, and not a guarantee that an audit conducted in accordance significant doubt on the Group’s ability to continue as a going
appropriately presents the opportunities and risks of future with Section 317 HGB and the EU Audit Regulation and in concern. If we conclude that a material uncertainty exists,
development. In addition, management is responsible for compliance with German Generally Accepted Standards for we are required to draw attention in the auditor’s report
such arrangements and measures (systems) as they have Financial Statement Audits promulgated by the Institut der to the related disclosures in the consolidated financial
considered necessary to enable the preparation of a group Wirtschaftsprüfer (IDW) will always detect a material statements and in the group management report or, if
management report that is in accordance with the applicable misstatement. Misstatements can arise from fraud or error such disclosures are inadequate, to modify our respective
German legal requirements, and to be able to provide and are considered material if, individually or in the aggregate, opinions. Our conclusions are based on the audit evidence
ANNUAL REPORT 2017
sufficient appropriate evidence for the assertions in the group they could reasonably be expected to influence the economic obtained up to the date of our auditor’s report. However,
management report. decisions of users taken on the basis of these consolidated future events or conditions may cause the Group to cease
financial statements and this group management report. to be able to continue as a going concern.
The supervisory board is responsible for overseeing the —— Evaluate the overall presentation, structure and content
Group’s financial reporting process for the preparation of the We exercise professional judgment and maintain professional of the consolidated financial statements, including the
consolidated financial statements and of the group manage skepticism throughout the audit. We also: disclosures, and whether the consolidated financial
224
ment report. —— Identify and assess the risks of material misstatement of statements present the underlying transactions and events
ADIDAS
the consolidated financial statements and of the group in a manner that the consolidated financial statements
management report, whether due to fraud or error, design give a true and fair view of the assets, liabilities, financial
and perform audit procedures responsive to those risks, position and financial performance of the Group in
and obtain audit evidence that is sufficient and appropriate compliance with IFRSs as adopted by the EU and the
to provide a basis for our opinions. The risk of not detecting additional requirements of German commercial law
a material misstatement resulting from fraud is higher than pursuant to Section 315e (1) HGB.
—— Obtain sufficient appropriate audit evidence regarding the From the matters communicated with those charged with GERMAN PUBLIC AUDITOR
financial information of the entities or business activities governance, we determine those matters that were of most RESPONSIBLE FOR THE ENGAGEMENT
within the Group to express opinions on the consolidated significance in the audit of the consolidated financial
financial statements and on the group management statements of the current period and are therefore the key The German Public Auditor responsible for the engagement is
report. We are responsible for the direction, supervision audit matters. We describe these matters in our auditor’s Haiko Schmidt.
and performance of the group audit. We remain solely report unless law or regulation precludes public disclosure
responsible for our opinions. about the matter. Munich, February 23, 2018
—— Evaluate the consistency of the group management report
with the consolidated financial statements, its conformity KPMG AG
with [German] law, and the view of the Group’s position it OTHER LEGAL AND REGULATORY Wirtschaftsprüfungsgesellschaft
provides. REQUIREMENTS [Original German version signed by:]
—— Perform audit procedures on the prospective information
presented by management in the group management FURTHER INFORMATION PURSUANT TO ARTICLE 10 Karl Braun Haiko Schmidt
report. On the basis of sufficient appropriate audit evidence OF THE EU AUDIT REGULATION Wirtschaftsprüfer Wirtschaftsprüfer
we evaluate, in particular, the significant assumptions used We were elected as auditor by the annual general meeting on [German Public Auditor] [German Public Auditor]
by management as a basis for the prospective information, May 11, 2017. We were engaged by the supervisory board on
and evaluate the proper derivation of the prospective October 13, 2017. We have been the auditor of the adidas AG
information from these assumptions. We do not express as a listed entity since 1995 without interruption.
a separate opinion on the prospective information and on
the assumptions used as a basis. There is a substantial We declare that the opinions expressed in this auditor’s report
unavoidable risk that future events will differ materially are consistent with the additional report to the audit committee
from the prospective information. pursuant to Article 11 of the EU Audit Regulation (long-form
audit report).
We communicate with those charged with governance
ANNUAL REPORT 2017
regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including any
significant deficiencies in internal controls that we identify
during our audit.
We also provide those charged with governance with a
225
statement that we have complied with the relevant
ADIDAS
independence requirements, and communicate with them all

relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable,
the related safeguards.
INDEPENDENT AUDITOR’S
ASSURANCE REPORT
LIMITED ASSURANCE INDEPENDENCE AND QUALITY ASSURANCE ON Within the scope of our engagement, we performed amongst
REPORT OF THE THE PART OF THE AUDITING FIRM

We are independent from the Company in accordance with the
others the following procedures:
—— Inquiries of personnel on group level who are responsible
INDEPENDENT AUDITOR requirements of independence and quality assurance set out for the materiality analysis to get an understanding of the
REGARDING THE in legal provisions and professional pronouncements and process for identifying material topics and respective report
COMBINED NON- have fulfilled our additional professional obligations in

accordance with these requirements.
boundaries for adidas
—— A risk assessment, including a media research, of relevant
FINANCIAL STATEMENT information about the sustainability performance of adidas
Our audit firm applies the legal provisions and professional in the reporting period
To the Supervisory Board of adidas AG, Herzogenaurach pronouncements for quality assurance, in particular the —— Evaluation of the design and implementation of systems
professional code for German Public Auditors and Chartered and processes for the collection, processing and monitoring
We have performed an independent limited assurance Accountants (in Germany) and the quality assurance standard of disclosures on environmental, employee and social
engagement on the Combined Non-Financial Statement of of the German Institute of Public Auditors (Institut der Wirtschafts matters, human rights, corruption and bribery, including
adidas AG, Herzogenaurach, (further the “Company” or
prüfer, IDW) regarding quality assurance requirements in data consolidation
“adidas”) and the adidas Group according to §§ 315b, 315c audit practice (IDW QS 1). —— Inquiries of personnel on group level who are responsible
German Commercial Code (HGB) in conjunction with §§ 289b for determining disclosures on concepts, due diligence
to 289e HGB (further the “Report“) for the year from January 1 PRACTITIONER’S RESPONSIBILITY processes, results and risks, the conduction of internal
to December 31, 2017. Our responsibility is to express a conclusion based on our controls and consolidation of the disclosures
work performed of the Report within a limited assurance —— Evaluation of selected internal and external documents
MANAGEMENT’S RESPONSIBILITY engagement. —— Analytical evaluation of data and trends of quantitative
The management board of adidas is responsible for the disclosures which are reported by all sites on group level
preparation of the Report in accordance with §§ 315b, 315c HGB We conducted our work in accordance with the International —— Assessment of local data collection and reporting processes
in conjunction with §§ 289b to 289e HGB. Standard on Assurance Engagements (ISAE) 3000 (Revised): and reliability of reported data via a sampling survey in
“Assurance Engagements other than Audits or Reviews of Herzogenaurach (Germany) and a video conference with
ANNUAL REPORT 2017
This responsibility of the management board includes the Historical Financial Information” published by IAASB. This Sports Licensed Division Indianapolis (USA)
selection and application of appropriate methods to prepare Standard requires that we plan and perform the assurance —— Assessment of the overall presentation of the disclosures
the Report and the use of assumptions and estimates for engagement to obtain limited assurance whether any matters
individual disclosures which are reasonable under the given have come to our attention that cause us to believe that the As described in the section “Our Performance (Supply Chain)”
circumstances. Furthermore, the responsibility includes Report for the period from January 1 to December 31, 2017, in the Report, 1,015 social compliance and environmental
designing, implementing and maintaining systems and has not been prepared, in all material respects in accordance audits at suppliers were performed by in-house technical
226
processes relevant for the preparation of the Report in a way with §§ 315b, 315c HGB in conjunction with §§ 289b to 289e HGB. staff as well as external third-party monitors commissioned
ADIDAS
that is free of – intended or unintended – material misstatements. We do not, however, issue a separate conclusion for each by adidas business entities and licensees. The reasonableness
disclosure. In a limited assurance engagement the evidence and accuracy of the conclusions from the performed audit
gathering procedures are more limited than in a reasonable work were not part of our limited assurance engagement.
assurance engagement and therefore less assurance is obtained
than in a reasonable assurance engagement. The choice of
audit procedures is subject to the auditor’s own judgement.
INDEPENDENT AUDITOR’S
ASSURANCE REPORT
CONCLUSION RESTRICTION OF USE/CLAUSE ON GENERAL

Based on the procedures performed and the evidence received ENGAGEMENT TERMS
to obtain assurance, nothing has come to our attention that This report is issued for purposes of the Supervisory Board of
causes us to believe that the Report of adidas for the business adidas AG, Herzogenaurach, only. We assume no responsibility
year from January 1 to December 31, 2017 is not prepared, in with regard to any third parties.
all material respects, in accordance with §§ 315b, 315c HGB
in conjunction with §§ 289b to 289e HGB. Our assignment for the Supervisory Board of adidas AG,
Herzogenaurach, and professional liability is governed by
the General Engagement Terms for Wirtschaftsprüfer and
Wirtschaftsprüfungsgesellschaften (Allgemeine Auftrags
bedingungen für Wirtschaftsprüfer und Wirtschaftsprüfungs
gesellschaften) in the version dated January 1, 2017 (HTTPS://
WWW.KPMG.DE/BESCHEINIGUNGEN/LIB/AAB_ENGLISH.PDF). By reading and
using the information contained in this report, each recipient

confirms notice of provisions of the General Engagement
Terms (including the limitation of our liability for negligence
to EUR 4 million as stipulated in No. 9) and accepts the validity
of the General Engagement Terms with respect to us.
Munich, February 23, 2018
KPMG AG
Wirtschaftsprüfungsgesellschaft
[Original German version signed by:]
ANNUAL REPORT 2017
Laue ppa. Auer

Wirtschaftsprüfer
[German Public Auditor]
227
ADIDAS
A D D I T I O N A L
I N FO R M AT I O N
ANNUAL REPORT 2017
Ten-Year Overview 229
228
Glossary
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232
Declaration of Support 236
Financial Calendar 237

TEN-YEAR OVERVIEW
TEN-YEAR OVERVIEW
Ten-year overview
2017 2016 2015 2014 2013 2012 2011 1 2010 2009 2008
Income Statement Data (€ in millions)

Net sales 2, 3 21,218 18,483 16,915 14,534 14,203 14,883 13,322 11,990 10,381 10,799
Gross profit 2, 3 10,703 9,100 8,168 6,924 7,001 7,103 6,329 5,730 4,712 5,256
Royalty and commission income 2, 3 115 105 119 102 103 105 93 100 86 89
Other operating income 2, 3 133 262 96 138 142 127 98 110 100 103
Other operating expenses 2, 3 8,882 7,885 7,289 6,203 6,013 6,150 5,567 5,046 4,390 4,378
EBITDA 2, 3 2,511 1,953 1,475 1,283 1,496 1,445 1,199 1,159 780 1,280
Operating profit 2, 3, 4, 5, 6, 7 2,070 1,582 1,094 961 1,233 1,185 953 894 508 1,070
Net financial result (47) (46) (21) (48) (68) (69) (84) (88) (150) (166)
Income before taxes 2, 3, 4, 5, 6, 7 2,023 1,536 1,073 913 1,165 1,116 869 806 358 904
Income taxes 2, 3, 8 593 454 353 271 340 327 261 238 113 260
Net income attributable to non-controlling interests 3 2 6 6 3 (2) (5) (1) 0 (2)
Net income attributable to shareholders 4, 5, 6, 7, 8, 9 1,173 1,017 668 568 839 791 613 567 245 642
Income Statement Ratios

Gross margin 2, 3 50.4% 49.2% 48.3% 47.6% 49.3% 47.7% 47.5% 47.8% 45.4% 48.7%
Operating margin 2, 3, 4, 5, 6, 7 9.8% 8.6% 6.5% 6.6% 8.7% 8.0% 7.2% 7.5% 4.9% 9.9%
Interest coverage 2, 3 55.6 32.7 23.8 19.3 24.0 14.6 12.2 10.1 3.9 7.4
Effective tax rate 2, 3, 4, 5, 6, 7, 8 29.3% 29.6% 32.9% 29.7% 29.2% 29.3% 30.0% 29.5% 31.5% 28.8%
Net income attributable to shareholders in % of net sales 4, 5, 6, 7, 8, 9 5.5% 5.5% 4.0% 3.9% 5.9% 5.3% 4.6% 4.7% 2.4% 5.9%
ANNUAL REPORT 2017
Net Sales by Brand (€ in millions)

adidas brand 18,993 16,334 13,939 11,774 11,059 11,344 9,867 8,714 7,520 7,821
Reebok brand 1,843 1,770 1,751 1,578 1,599 1,667 1,940 1,913 1,603 1,717
1 2011 restated according to IAS 8 in the 2012 consolidated financial statements.
229
ADIDAS

TEN-YEAR OVERVIEW
Ten-year overview
2017 2016 2015 2014 2013 2012 2011 1 2010 2009 2008
Net Sales by Product Category (€ in millions)

Footwear 2, 3 12,427 10,132 8,360 6,658 6,587 6,922 6,242 5,389 4,642 4,919
Apparel 2, 3 7,747 7,352 6,970 6,279 5,811 6,290 5,733 5,380 4,663 4,775
Hardware 2, 3 1,044 999 1,585 1,597 1,806 1,671 1,347 1,221 1,076 1,105
Balance Sheet Data (€ in millions)

Total assets 14,522 15,176 13,343 12,417 11,599 11,651 11,237 10,618 8,875 9,533
Inventories 3,692 3,763 3,113 2,526 2,634 2,486 2,502 2,119 1,471 1,995
Receivables and other current assets 3,277 3,607 3,003 2,861 2,583 2,444 2,431 2,324 2,038 2,523
Working capital 2,354 2,121 2,133 2,970 2,125 2,504 1,990 1,972 1,649 1,290
Net cash/(net borrowings) 484 (103) (460) (185) 295 448 90 (221) (917) (2,189)
Shareholders’ equity 6,450 6,472 5,666 5,624 5,489 5,304 5,137 4,616 3,771 3,386
Balance Sheet Ratios

Net borrowings/EBITDA 2, 3 (0.2) 0.1 0.3 0.1 (0.2) (0.3) (0.1) 0.2 1.2 1.7
Average operating working capital in % of net sales 2, 3 20.4% 21.1% 20.5% 22.4% 21.3% 20.0% 20.4% 20.8% 24.3% 24.5%
Financial leverage (7.5%) 1.6% 8.1% 3.3% (5.4%) (8.5%) (1.8%) 4.8% 24.3% 64.6%
Equity ratio 44.4% 42.6% 42.5% 45.3% 47.3% 45.5% 45.7% 43.5% 42.5% 35.5%
Equity-to-fixed-assets ratio 109.7% 102.9% 96.9% 110.9% 115.8% 111.1% 104.6% 97.4% 85.9% 73.6%
Asset coverage I 140.3% 134.0% 136.8% 158.7% 145.0% 152.7% 140.7% 141.5% 137.4% 127.7%
Asset coverage II 86.2% 83.8% 89.3% 105.9% 93.2% 100.4% 93.2% 97.7% 102.9% 89.1%
Fixed asset intensity of investments 40.5% 41.4% 43.8% 40.8% 40.9% 41.0% 43.7% 44.6% 49.5% 48.2%
Current asset intensity of investments 59.5% 58.6% 56.2% 59.2% 59.1% 59.0% 56.3% 55.4% 50.5% 51.8%
ANNUAL REPORT 2017
Liquidity I 25.5% 22.4% 25.5% 38.6% 34.4% 44.3% 31.6% 35.5% 30.0% 10.5%
Liquidity II 62.3% 54.9% 63.7% 83.0% 72.6% 82.9% 68.3% 78.2% 80.4% 55.1%
Liquidity III 121.0% 110.6% 121.8% 140.7% 128.3% 139.7% 126.0% 132.4% 132.2% 109.8%
Working capital turnover 2, 3 9.0 8.7 7.9 4.9 6.7 5.9 6.7 6.1 6.3 8.4
Return on equity 9 17.0% 15.7% 11.2% 8.7% 14.3% 9.9% 11.9% 12.3% 6.5% 18.9%
Return on capital employed 9 39.8% 24.2% 16.5% 13.8% 23.6% 19.3% 19.9% 20.2% 11.3% 19.8%
230
ADIDAS

TEN-YEAR OVERVIEW
Ten-year overview
2017 2016 2015 2014 2013 2012 2011 1 2010 2009 2008
Data per Share

Share price at year-end (in €) 167.15 150.15 89.91 57.62 92.64 67.33 50.26 48.89 37.77 27.14
Basic earnings 2, 3, 4, 5, 6, 7, 8 (in €) 7.05 5.39 3.54 3.05 3.93 3.78 2.93 2.71 1.25 3.25
Diluted earnings 2, 3, 4, 5, 6, 7, 8 (in €) 7.00 5.29 3.54 3.05 3.93 3.78 2.93 2.71 1.22 3.07
Price/earnings ratio at year-end 2, 3, 4, 5, 6, 7, 8 23.7 27.8 25.4 18.9 23.6 17.8 17.1 18.0 30.2 8.4
Market capitalization at year-end (€ in millions) 34,075 30,254 18,000 11,773 19,382 14,087 10,515 10,229 7,902 5,252
Net cash generated from operating activities 9 (in €) 8.14 6.73 5.41 3.36 3.03 4.50 3.86 4.28 6.11 2.52
Dividend (in €) 2.60 10 2.00 1.60 1.50 1.50 1.35 1.00 0.80 0.35 0.50
Number of shares outstanding at year-end (in thousands) 203,861 201,489 200,197 204,327 209,216 209,216 209,216 209,216 209,216 193,516
Employees
Number of employees at year-end 2, 3 56,888 58,902 55,555 53,731 49,808 46,306 46,824 42,541 39,596 38,982
Personnel expenses 2, 3 (€ in millions) 2,549 2,373 2,184 1,842 1,833 1,872 1,646 1,521 1,352 1,283
ANNUAL REPORT 2017
231
ADIDAS
GLOSSARY
GLOSSARY CASH POOLING /F

A cash management technique for physical concentration of
cash. Cash pooling allows adidas to combine credit and debit FITHUB
positions from various accounts and several subsidiaries into FitHub is Reebok’s new own-retail store concept, inspired by
/A one central account. This technique supports our in-house CrossFit gyms and fitness studios. Each FitHub offers a
bank concept where advantage is taken of any surplus funds selection of Reebok’s best product assortment, from footwear
ATHLEISURE of subsidiaries to cover cash requirements of other to apparel and accessories. Also, it inspires people to move, to
The term is composed of the words athletic and leisure. It subsidiaries, thus reducing external financing needs and train, to get fit and have fun doing it with innovative fitness
describes a fashion trend of sportswear no longer being just optimizing our net interest expenses. products, trusted advice from trained staff and community-
meant for training but increasingly shaping everyday clothing. based events.
CONTROLLED SPACE
Includes own-retail business, mono-branded franchise
/B stores, shop-in-shops, joint ventures with retail partners and /G
co-branded stores. Controlled space offers a high level of
BACKLOGS brand control and ensures optimal product offering and GENDERDAX
Also called order backlogs. The value of orders received for presentation according to brand requirements. An industry- and science-based gender and diversity project,
future delivery. Most retailers’ orders are received six to nine including a ranking of German companies which are
months in advance. CONVERSION RATE committed to actively supporting highly qualified and career-
A key ratio in retail business describing the number of buying oriented women within their human resource and diversity
BRAND LEADERSHIP customers compared to those who entered the store without management.
adidas’ operating model that aims at providing an organizational buying something; i.e. a 25% conversion rate means that 100
structure which enables a ‘consumer-obsessed’ culture that persons entered a store with 25 of them buying something. GOODWILL
can act with speed, agility and empowerment. Intangible asset that quantifies the price that a buyer of a
company has paid for the reputation, know-how and market
ANNUAL REPORT 2017
/D position of the acquired company. Goodwill is the excess of the

/C amount paid over the fair value of the net assets acquired at
DROP RATE the purchase date. It is stated at cost and tested for impairment
CAPITAL EXPENDITURE Share of articles that are dropped because they do not meet the annually or on such other occasions that events or changes in
Total cash expenditure used for the purchase of tangible and demand or strategic direction for a given season, despite being circumstances indicate that it might be impaired.
intangible assets, excluding acquisitions and finance leases. created initially. These articles are excluded from the range, do
232
not go into serial production and are not sold to customers.
ADIDAS
GLOSSARY
/H /M NET PROMOTER SCORE (NPS)

A survey-based measure of how likely people are to
HARDWARE MARKETING EXPENDITURE recommend a brand. The survey is based on one single
A product category which comprises equipment that is used Expenditures that relate to point-of-sale and marketing question to consumers: ‘How likely are you to recommend this
rather than worn by the consumer, such as bags, balls, fitness investments. While point-of-sale investments include brand to your friends?’, which can be answered within a scale
equipment, golf clubs and hockey sticks. expenses for advertising and promotion initiatives at the point from 0 to 10. Promoters are consumers giving the brand a 9 or
of sale as well as store fittings and furniture, marketing 10 rating, while detractors are those between a 0 and 6 rating.
investments relate to sponsorship contracts with teams and The NPS is the difference between promoters and detractors
/L individual athletes as well as to advertising, events and other measured in percentage points.
communication activities. Marketing overhead expenses are
LEED not included in marketing expenditure. NON-CONTROLLING INTERESTS
Leadership in Energy and Environmental Design (LEED) Part of net income or equity which is not attributable to the
certification is an internationally recognized green building shareholders of the reporting company as it relates to outside
certification system, providing third-party verification that a /N ownership interests in subsidiaries that are consolidated with
building was designed and built using strategies aimed at the parent company for financial reporting purposes.
improvements in the following areas: energy savings, water NEIGHBOURHOOD
efficiency, CO2 emission reduction, indoor environmental quality Neighbourhood is adidas Originals’ premium own-retail store NON-TRADE PROCUREMENT ACTIVITIES
and stewardship of resources and sensitivity to their impacts. concept which brings the style and spirit of sport to the Non-trade procurement is the sourcing of goods and services
streets. The aim is to turn Originals stores into a local cultural which are not linked or indirectly linked to regular trade
epicenter. The store environment takes its inspiration from products sold to customers. The goods and services are
the neighborhood, which is at the heart of Originals. classified as consumption by internal stakeholders and
include things such as repairing equipment and purchasing
NET CASH/NET BORROWINGS office supplies.
Net cash is when the sum of cash and short-term financial
ANNUAL REPORT 2017
assets exceeds gross borrowings. Net borrowings is the

portion of gross borrowings not covered by the sum of cash
and short-term financial assets.
cash and cash equivalents
233
Net cash/net borrowings = + short-term financial assets
ADIDAS
– short-term borrowings
– long-term borrowings
GLOSSARY
/O OPERATING WORKING CAPITAL PRICE POINTS

A company’s short-term disposable capital which is used to Specific selling prices, normally using ‘psychological’ numbers,
OMNI-CHANNEL SALES APPROACH finance its day-to-day business. In comparison to working e. g. a product price of US $ 99.99 instead of US $ 100.
Describes the ambition to achieve a globally consistent capital, operating working capital does not include non-
product offer, brand communication, availability and service operational items such as financial assets and taxes. PROMOTION PARTNERSHIPS
across all sales channels (wholesale, retail and e-commerce) Partnerships with events, associations, leagues, clubs and
and consumer touchpoints. individual athletes. In exchange for the services of promoting
accounts receivable the company’s brands, the party is provided with products
OPERATING CASH FLOW Operating working capital =
+ inventories and/or cash and/or promotional materials.
Comprises operating profit, change in operating working – accounts payable
capital and net investments.
/R
/P
operating profit ROLLING FORECAST
+/– change in operating working PARLEY FOR THE OCEANS A projection about the future that is updated at regular
Operating cash flow = capital Parley for the Oceans is the network and space where intervals, keeping the forecasting period constant (e. g. twelve
+/– net investments
(capital expenditure less creators, thinkers and leaders raise awareness for the beauty months).
depreciation) and fragility of the oceans and collaborate on projects that can
end their destruction. As a founding member since 2015,
adidas supports Parley for the Oceans in its education and /S
OPERATING OVERHEAD EXPENSES communication efforts and commits to the Parley A.I.R.
Expenses which are not directly attributable to the products (Avoid, Intercept, Redesign) strategy. SHARE TURNOVER
or services sold, such as costs for distribution, marketing The total value of all shares traded in the share price currency
overhead costs, logistics, research and development, as well PARLEY OCEAN PLASTIC over a specific period of time (normally daily). It is calculated
ANNUAL REPORT 2017
as general and administrative costs, but not including costs Parley Ocean Plastic is a material created from upcycled by multiplying the number of shares traded by the respective
for promotion, advertising and communication. plastic waste that is intercepted before it reaches beaches price.
and coastal communities. Parley for the Oceans works with its
partners to collect, sort and transport the recovered raw SINGLE-SOURCING MODEL
material (mainly PET bottles) to our supplier who produces Supply chain activities limited to one specific supplier. Due to
the yarn, which is legally trademarked. the dependency on only one supplier, a company can face
234
disadvantages during the sourcing process.
ADIDAS
PERFORMANCE PRODUCTS
In the sporting goods industry, performance products relate to
technical footwear and apparel used primarily in doing sports.
GLOSSARY
SPEEDFACTORY SUSTAINABLE COTTON /V

adidas Speedfactory is a digitally automated, hyper-flexible For adidas, sustainable cotton means certified organic cotton
shoe factory that can be placed anywhere in the world. It or any other form of sustainably produced cotton that is VERTICAL RETAILER
enables us to combine speed in manufacturing with the currently available or might be in future, and Better Cotton. A retail company that (vertically) controls the entire design,
flexibility to rethink conventional processes, and give the production and distribution processes of its products.
consumers what they want, when they want it. Speedfactory
provides greater precision, athlete data-driven design /T
opportunities, and high performance. It also enables /W
accelerated speed to market – three times faster than the TOP AND BOTTOM LINE
standard production times – allowing for quicker response A company’s bottom line is its net income attributable to WET PROCESSES
time to trends and shifts in the marketplace. There are shareholders. More specifically, the bottom line is a company’s Wet processes are defined as water-intense processes, such
currently two Speedfactory locations in the world: one in income after all expenses have been deducted from revenues. as dyeing and finishing of materials.
Ansbach, Germany and the other in Atlanta, USA. The top line refers to a company’s sales or revenues.
STADIUM TOP-DOWN, BOTTOM-UP

Stadium is a new own-retail store concept for the adidas A specific concept for information and knowledge processing.
brand, inspired by high school stadiums. It aims at creating a In a first step, information and empowerment of management
sports stadium-like atmosphere to enhance the in-store decisions is delegated from top to bottom. After going into
experience, such as a tunnel entrance, stands for live-game more detail on the bottom level, the final information and
viewing on big screens, locker rooms instead of dressing decision are then transported back to the top.
rooms and track and field areas where consumers can test
and experience products.
ANNUAL REPORT 2017
235
ADIDAS
DECLARATION OF SUPPORT
DECLARATION adidas Croatia d.o.o., Zagreb, Croatia adidas Poland Sp.z o.o., Warsaw, Poland
OF SUPPORT adidas Danmark A/S, Copenhagen, Denmark

adidas de Mexico, S.A. de C.V., Mexico City, Mexico
adidas Portugal - Artigos de Desporto, S.A., Lisbon, Portugal
adidas Romania S.R.L., Bucharest, Romania
adidas do Brasil Ltda., São Paulo, Brazil adidas Serbia d.o.o., Belgrade, Serbia
adidas AG declares support, except in the case of political adidas Emerging Markets FZE, Dubai, United Arab Emirates adidas Services Limited, Hong Kong, China
risk, that the below-mentioned companies are able to meet adidas Emerging Markets L.L.C, Dubai, United Arab Emirates adidas Singapore Pte. Ltd., Singapore, Singapore
their contractual liabilities. This declaration replaces the adidas España S.A.U., Zaragoza, Spain adidas Slovakia s.r.o., Bratislava, Slovak Republic
declaration dated February 17, 2017, which is no longer valid. adidas France S.a.r.l., Landersheim, France adidas Sourcing Limited, Hong Kong, China
The declaration of support automatically ceases from the adidas Hellas A.E., Athens, Greece adidas Spor Malzemeleri Satis ve Pazarlama A.S., Istanbul,
time that a company no longer is a subsidiary of adidas AG. adidas Hong Kong Limited, Hong Kong, China Turkey
adidas Imports & Exports Ltd., Cairo, Egypt adidas sport gmbh, Cham, Switzerland
adidas India Marketing Private Limited, New Delhi, India adidas Sporting Goods Ltd., Cairo, Egypt
adidas (China) Ltd., Shanghai, China adidas Industrial, S.A. de C.V., Mexico City, Mexico adidas Sports Goods (Shanghai) Co., Ltd., Shanghai, China
adidas (Cyprus) Limited, Nicosia, Cyprus adidas Indy, LLC (formerly: Sports Licensed Division of the adidas Sports (China) Co. Ltd., Suzhou, China
adidas (Ireland) Limited, Dublin, Ireland adidas Group, LLC), Wilmington, Delaware, USA adidas Suomi Oy, Helsinki, Finland
adidas (Malaysia) Sdn. Bhd., Petaling Jaya, Malaysia adidas Insurance & Risk Consultants GmbH, adidas Sverige AB, Solna, Sweden
adidas (South Africa) (Pty) Ltd., Cape Town, South Africa Herzogenaurach, Germany adidas Taiwan Limited, Taipei, Taiwan
adidas (Suzhou) Co. Ltd., Suzhou, China adidas International B.V., Amsterdam, Netherlands adidas Trgovina d.o.o., Ljubljana, Slovenia
adidas (Thailand) Co., Ltd., Bangkok, Thailand adidas International Finance B.V., Amsterdam, Netherlands adidas Vietnam Company Limited, Ho Chi Minh City, Vietnam
adidas (UK) Limited, Stockport, Great Britain adidas International Marketing B.V., Amsterdam, Netherlands adisport Corporation, San Juan, Puerto Rico
adidas America, Inc., Portland, Oregon, USA adidas International Property Holding B.V., Amsterdam, Concept Sport, S.A., Panama City, Panama
adidas anticipation GmbH, Herzogenaurach, Germany Netherlands Global Merchandising, S.L., Madrid, Spain
adidas Argentina S.A., Buenos Aires, Argentina adidas International Re DAC, Dublin, Ireland Hydra Ventures B.V., Amsterdam, Netherlands
adidas Australia Pty Limited, Mulgrave, Australia adidas International Trading B.V., Amsterdam, Netherlands LLC ‘adidas, Ltd.’, Moscow, Russia
ANNUAL REPORT 2017
adidas Austria GmbH, Klagenfurt, Austria adidas International, Inc., Portland, Oregon, USA PT adidas Indonesia, Jakarta, Indonesia
adidas Baltics SIA, Riga, Latvia adidas Italy S.p.A., Monza, Italy Raelit S.A., Montevideo, Uruguay
adidas Benelux B.V., Amsterdam, Netherlands adidas Japan K.K., Tokyo, Japan Reebok Argentina S.A., Buenos Aires, Argentina
adidas Budapest Kft., Budapest, Hungary adidas Korea LLC., Seoul, Korea Reebok International Limited, London, Great Britain
adidas Bulgaria EAD, Sofia, Bulgaria adidas Latin America, S.A., Panama City, Panama Reebok International Ltd., Canton, Massachusetts, USA
adidas Business Services (Dalian) Limited, Dalian, China adidas LLP, Almaty, Republic of Kazakhstan Reebok Produtos Esportivos Brasil Ltda., Jundiaí, Brazil
236
adidas Business Services Lda., Morea de Maia, Portugal adidas Logistics (Tianjin) Co., Ltd., Tianjin, China Reebok Israel Ltd., Holon, Israel
ADIDAS
adidas Canada Ltd., Woodbridge, Ontario, Canada adidas Morocco LLC, Casablanca, Morocco SC ‘adidas-Ukraine’, Kiev, Ukraine
adidas CDC Immobilieninvest GmbH, Herzogenaurach, adidas New Zealand Limited, Auckland, New Zealand Spartanburg DC, Inc., Spartanburg, South Carolina, USA
Germany adidas Norge AS, Oslo, Norway Stone Age Equipment, Inc., Redlands, California, USA
adidas Chile Limitada, Santiago de Chile, Chile adidas North America, Inc., Portland, Oregon, USA Tafibal S.A., Montevideo, Uruguay
adidas Colombia Ltda., Bogotá, Colombia adidas Perú S.A.C., Lima, Peru Textronics, Inc., Wilmington, Delaware, USA
adidas CR s.r.o., Prague, Czech Republic adidas Philippines Inc., Pasig City, Philippines Trafford Park DC Limited, London, Great Britain
F I N A N CI A L
CA L E N DA R
2 01 8
FULL YEAR 2017 RESULTS FIRST QUARTER 2018 RESULTS ANNUAL GENERAL MEETING
Press Conference in Herzogenaurach, Germany / Press Release / Conference Fuerth (Bavaria),
Press Release / Conference Call and Webcast / Call and Webcast Germany / Webcast
ANNUAL REPORT 2017
Publication of 2017 Annual Report
237
DIVIDEND PAYMENT FIRST HALF 2018 RESULTS NINE MONTHS 2018 RESULTS
ADIDAS
(subject to Annual General Press Release / Conference Call and Webcast / Press Release / Conference Call
Meeting approval) Publication of First Half Report and Webcast
A D I DAS AG
ADI-DASSLER-STR. 1 INVESTOR RELATIONS ADIDAS IS A MEMBER OF DIRK

91074 HERZOGENAURACH TEL + 49 (0) 91 32 84 – 29 20 (GERMAN INVESTOR RELATIONS
GERMANY FAX + 49 (0) 91 32 84 – 31 27 ASSOCIATION)
ANNUAL REPORT 2017
TEL + 49 (0) 91 32 84 – 0 CONCEPT, DESIGN AND REALIZATION

FAX + 49 (0) 91 32 84 – 22 41 MPM CORPORATE COMMUNICATION
SOLUTIONS, MAINZ, GERMANY
ADIDAS-GROUP . C OM
WWW.MPM.DE
238
ADIDAS
↗ INVESTOR.RELATIONS@ADIDAS–GROUP.COM
↗ ADIDAS–GROUP.COM ⁄ INVESTORS
© 2018 adidas AG

Adidas 2017

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OUR CORE BELIEF

ANNUAL REPORT 2017

TO BE THE BEST SPORTS COMPANY IN THE WORLD

TARGETS – RESULTS – OUTLOOK

TARGETS 2017 1, 2 RESULTS 2017 2 OUTLOOK 2018

Currency-neutral sales Currency-neutral sales Currency-neutral sales

Financial Highlights 2017 (IFRS)

FINANCIAL HIGHLIGHTS 2017 (IFRS)

Operating Highlights (€ in millions)

Balance Sheet and Cash Flow Data (€ in millions)

Capital expenditure 1 752 642 17%

Per Share of Common Stock (€)

Other (at year-end)

Wirtschaftsprüfungsgesellschaft. SEE INDEPENDENT AUDITOR’S

TO OUR GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL

Subsequent Events and Outlook  128

Sustainability  088 Declaration of Support  236

Non-Financial Statement  100 Financial Calendar  237

Operational and Sporting Highlights  008 Corporate Governance Report

Executive Board  020 Compensation Report  039

Supervisory Board  024 Our Share  057

Supervisory Board Report  027

OPERATIONAL AND SPORTING

REEBOK PRESENTS NEXT PHASE OF

A new rousing suite of films champions the hard work and

version of themselves physically, mentally and socially.

OPERATIONAL AND SPORTING

ADIDAS INCREASES SALES AND

ADIDAS SWIM PRESENTS PARLEY

The swim range is made from Parley Ocean Plastic and

OPERATIONAL AND SPORTING

FUTURECRAFT 4D — INDUSTRY’S FIRST REEBOK ANNOUNCES ‘COTTON + CORN’

facturing scale and sport performance quality, departing from

OPERATIONAL AND SPORTING

PERSONNEL CHANGES ON THE EXECUTIVE

ADIDAS AND JAMES HARDEN UNVEIL

release date being shared by James Harden exclusively on his

OPERATIONAL AND SPORTING

ADIDAS AND MAJOR LEAGUE SOCCER Z.N.E. PULSE COLLECTION

FIRST-EVER ULTRABOOST LACELESS

sets new boundaries.

OPERATIONAL AND SPORTING

ADIDAS COMPLETES DIVESTITURE

ADIDAS LISTED IN DOW JONES

Sustainability Indices (DJSI), which evaluate the sustainability

OPERATIONAL AND SPORTING

Q4 2017 REEBOK OPENS GLOBAL FLAGSHIP STORE

LAUNCH OF AM4 PROJECT

AM4 series heralds a significant moment for the brand in

OPERATIONAL AND SPORTING

REEBOK AND VICTORIA BECKHAM UNITE

ADIDAS PREPARES FOR ADIDAS INVITES THE WORLD TO

THE 2018 FIFA WORLD CUP CREATE IN NEW GLOBAL CAMPAIGN

LETTER FROM THE CEO

LETTER FROM THE CEO

LETTER FROM THE CEO

LETTER FROM THE CEO

Thank you for your ongoing support.

Officer of adidas in October 2016.

Kasper Rorsted is also:

Wirtschaftsprüfungsgesellschaft.  SEE INDEPENDENT AUDITOR’S

Subsequent Events and Outlook 128

Sustainability 088 Declaration of Support 236

Non-Financial Statement 100 Financial Calendar 237

Operational and Sporting Highlights 008 Corporate Governance Report

Executive Board 020 Compensation Report 039

Supervisory Board 024 Our Share 057

Supervisory Board Report 027

SUPERVISORY BOARD REPORT

SUPERVISORY BOARD REPORT

SUPERVISORY BOARD REPORT

of the Annual General Meeting on May 11, 2017. Furthermore, after in depth-consultation, we

SUPERVISORY BOARD REPORT

SUPERVISORY BOARD REPORT

SUPERVISORY BOARD REPORT

 SEE RISK AND OPPORTUNITY REPORT, P. 131

long-term growth targets of a didas. For instance, for the 2018

9 Exchange rate 1.10690 $/€ (annual average rate 2016).