Reebok International Ltd (NYSE:RBK) today reported net income for the second quarter ended June 30, 2000 of $10.7m, or $.19 per share, compared with net income of $4.6m, or $.08 per share in the second quarter of 1999, a 138 per cent increase. For the six month period ended June 30, 2000, net income was $42.4m or $.74 per share as compared with net income of $22.5m or $0.40 per share for the 1999 comparable period.

Net sales as reported in US dollars for the 2000 second quarter were $685.1m as compared with 1999's net sales of $697.4m. Worldwide sales of the Reebok Brand in the 2000 second quarter were $559.6m, as compared with 1999's second quarter sales of $570.1m. Sales comparisons are adversely affected by the weakening of the Euro over the past several quarters. On a constant dollar basis, which eliminates the impact of currency fluctuations, worldwide sales for the Reebok Brand grew by approximately $1.6m or 0.3 per cent in the second quarter of 2000.

In the US, Reebok footwear sales in the quarter were $247.3m, an increase of 0.9 per cent from 1999's second quarter US footwear sales of $245.1m. Reebok apparel sales in the US, including sales of the Greg Norman Collection, were $52.9m for the quarter, as compared with 1999's second quarter sales of $59.2m.

On a constant dollar basis, sales of the Reebok Brand outside the US, including both footwear and apparel, increased 2.1 per cent in the 2000 second quarter to $271.4m.

Sales of the company's Rockport subsidiary were $96.8m in the 2000 second quarter as compared to sales of $104m in the second quarter of 1999. Sales of the company's Ralph Lauren Footwear division were $28.7m, as compared to sales of $23.3m in the prior year's second quarter.

The Company reported that on a constant dollar basis, its total worldwide backlog of open customer orders scheduled for delivery from July 2000 through December 2000 for the Reebok Brand increased by approximately 0.8 per cent. North American footwear backlog was up 6.2 per cent and international backlog decreased 0.6 per cent from 1999 amounts. Paul Fireman, the company's chairman and chief executive officer said, ``We are extremely pleased with the continued improvement in our Reebok business. Our US footwear backlog comparisons have now improved for four consecutive quarters. We are on track to achieving one of our key stated milestones, which was to stabilize Reebok's US footwear business in the first half of the year and begin to grow this business during the back half of 2000,'' Fireman said.

``During 2000, the Reebok brand is performing better at retail and our retail presence with key strategic accounts has improved,'' Fireman continued. ``We have begun to introduce exclusive product and marketing concepts for several key retailers and we will expand these programs even further during 2001. We have launched new impactful television and print advertising campaigns, delivering effective and consistent marketing messages to targeted consumer groups. We continue to expand the distribution of our proprietary DMX technology. In the US, unit sales of DMX product during the second quarter increased 78 per cent over the prior year's comparable period. And, we are very pleased with the feedback we've been receiving from many retailers regarding our new Reebok footwear product lines for next year. Based on this feedback we are optimistic that the forward momentum we've begun to generate in the US footwear market will continue throughout 2001.''

``In addition to the future growth opportunities we see for the Reebok brand - we see similar opportunities for our other brands.''

``Our Rockport division is introducing many new and different product offerings in the second half of 2000. These new products comprise a significant portion of the Rockport product line and provide the consumer with new and refreshed looks while still adhering to Rockport's heritage of engineered comfort and fit. The new World Tour Collection was launched at retail on July 15 and is the largest product launch in Rockport's history. The launch is supported by a fully integrated marketing program, including print and radio advertising. The initial sell-through results for this collection have been encouraging,'' Fireman added.

``Our Ralph Lauren Footwear division reported sales increases in the quarter,'' Fireman continued, ``with our Lauren line for women and our Polo Sport rugged categories performing well at retail. This division continues to expand its product offerings to reach an even broader consumer base. We believe we are generating greater consumer awareness for this product segment and remain excited about the future possibilities for this business.''

``The Greg Norman Collection has started to re-energize their business in a difficult apparel marketplace. Comparable store sales at key department stores improved during the first half of 2000 and the introduction of our new proprietary moisture management technology, PlayDry, is generating a lot of enthusiasm with consumers,'' Fireman said.

The company reported that its gross margin for the second quarter of 2000 was 38.2 per cent, an improvement of 20 basis points when compared with the gross margin of 38.0 per cent in the second quarter of 1999. ``During the quarter we continued to improve our Reebok brand gross margins as a result of strong inventory management, reduced cancellations and fewer closeout sales in the US This improvement was partially offset by margin erosion in Europe caused by the weakening of the Euro against the dollar,'' Fireman added.

SG&A expense totaled $234.8 million, or 34.3% of sales in the second quarter of 2000, as compared with last year's second quarter of $243.4 million, or 34.9 per cent of sales. ``I am pleased that our overall spending declined as a percentage of sales. However, it is our intention to continue to lower our SG&A percentage by driving for greater operating efficiencies as we begin to generate sales growth. As always, we will invest appropriately in all of our brands in order to generate improvements in our products, marketing communications and sales performance,'' Fireman said.

The company reported that its inventories at June 30, 2000 totaled $405.5m compared to $502m in the 1999 second quarter, a reduction of $96.5m or 19.2 per cent. ``We are extremely pleased with our balance sheet management and our ability to control inventories, reduce debt and improve cash flow. Our outstanding bank indebtedness has been reduced by $210.5m over the last twelve months and our cash position as compared with a year ago has increased $62.5m,'' Fireman said.

``We are definitely making progress, ahead of schedule, in building a solid foundation from which we believe we can sustain improved financial and operating performance over the long term. Our entire management team is operating in a consistent and purposeful way to execute our strategies and improve our shareholder returns,'' Fireman concluded.

Reebok International Ltd
Financial Summary (unaudited)

Three months ended June 30,

2000
1999
Net sales
$685,075,000
$697,393,000
Net income
$10,670,000
$4,569,000
Average basic shares
56,688,000
55,975,000
Average diluted shares
57,450,000
56,877,000
Basic earnings per share
$0.19
$0.08
Diluted earnings per share
$0.08
$0.19
   
Six months ended June 30,
2000
1999
Net sales
$1,454,904,000
$1,483,177,000
Net income
$42,382,000
$22,474,000
Average basic shares
56,606,000
56,020,000
Average diluted shares
57,100,000
56,727,000
Basic earnings per share
$0.75
$0.40
Diluted earnings per share
$0.74
$0.40

Reebok International Ltd., headquartered in Canton, MA, is a leading worldwide designer, marketer and distributor of sports, fitness and casual footwear, apparel and equipment under the Reebok, Rockport, and Greg Norman Brands and footwear under the Polo Ralph Lauren Brand. Sales for 1999 totaled approximately $2.9 billion.