SBJ/June 18 - 24, 2001/Special Report

Reebok International Ltd.

Reebok International Ltd.
1895 J.W. Foster Blvd.
Canton, MA 02021
Phone: (781) 401-5000
Fax: (781) 401-7159
NYSE: RBK


Introduction:

In the world of sports, Reebok is a powerhouse. A global leader in athletic shoes and apparel, the company counts Venus Williams and Allen Iverson as endorsers, and recently signed a merchandise pact with the NFL.

But gleaning information about Reebok's financial commitments to the sports world can be tough. Terms of endorsement contracts and money spent on sponsorships are consistently omitted from Reebok's annual and quarterly reports. Even last December's five-year, nearly $40 million contract signed with Williams, what would appear to be a material event, was not cited in any Reebok securities document. In this way, Reebok is no different from its other major public company competitor in the United States, Nike.

The last 12 months have been a banner year for the company, with its stock price more than tripling since early 2000. A look at its results shows how far the company had fallen, though. It earned $135 million in 1997; two years later that was down to $11 million. In 2000, that jumped to $81 million, but not because of sales, which were flat. Instead, falling expenses, in part because of slashed endorsement rosters, helped fuel the Reebok fire.


CEO: Paul Fireman

2000 salary:

$1,000,012
2000 bonus:
$2,100,000
Other compensation:
$55,251
Options:
2,000,000
1999 salary:
$1,000,012
1999 bonus:
0
Other compensation:
$81,539
Options:
500,000

 Price as of June 11: $28.81

  52-week price range: $12.31 to $31.80

  IPO date: July 26, 1985

  IPO price: $17

  Underwriter: N/A

  IPO performance: Up 69%

  Shares outstanding: 58,491,275

  Inside ownership: 8,408,140 (14.0%)

  No. of employees: 6,000


Board of directors:

Norman Axelrod — Axelrod is CEO and president of Linens 'N Things. (*)

Paul R. Duncan — Duncan is an executive vice president. (Owns 214,214 shares)

Richard G. Lesser — Lesser is executive vice president and director of TJX Cos. Inc. (Owns 74,707 shares)

Deval L. Patrick — Patrick is executive vice president and general counsel of the Coca-Cola Co. (*)

Paul B. Fireman — Fireman is CEO and chairman of Reebok. (Owns 7,058,782 shares, or 11.9%)

Thomas M. Ryan — Ryan is CEO of CVS Corp. (Owns 40,373 shares)

Dorothy E. Puhy — Puhy is CFO of Dana-Farber Cancer Institute. (Owns 119 shares)

Mannie L. Jackson — Jackson is CEO and majority owner of Harlem Globetrotters International Inc. (Owns 53,752 shares)

Geoffrey Nunes — Nunes is a retired senior vice president and general counsel for Millipore Corp.

* Shareholdings for Patrick and Axelrod were not provided in the 2000 proxy because they were up for nomination to the board at the time the proxy was issued. They were voted onto the board on May 1.


Corporate officers:

Angel R. Martinez*, chief marketing officer (2000 salary: $550,004; bonus: $514,800; options: 100,000; other compensation: $32,962)

Kenneth I. Watchmaker, chief financial officer (2000 salary: $592,310; bonus: $980,866; restricted stock award: $393,750; options: 100,000; other compensation: $44,865)

David A. Perdue, CEO Reebok division (2000 salary: $434,624; bonus: $604,597; restricted stock award: $393,750; options: 100,000; other compensation: $9,962)

Terry R. Pillow, CEO Rockport division (2000 salary: $353,431; bonus: $302,062; restricted stock award: $393,750; options: 100,000; other compensation: $51,118)

* Martinez resigned on April 10.


Largest outside shareholder:

Investors Group Trust Co. Ltd. — 4,773,900 shares (8.2%)

Performance Record
In thousands except per-share data;
fiscal years ended Dec. 31
2000
1999
1998
1997
1996
Revenue
$95,887
$60,278
$30,551
$12,014
$3,058
Gross margin (loss)
$54,886
$26,200
$13,320
$1,583
($1,175)
Operating expenses
$131,711
$83,908
$53,157
$36,554
$15,197
Net income
(loss)
($106,068)
($17,097)
($35,509)
($34,177)
($16,103)
Net earnings (loss) per share
($4.04)
($0.74)
($1.94)
($3.08)
($2.31)
Long-term debt
$19,608
$19,608
$207
$458
$685
Sources: SportsLine.com's annual reports, proxies and
IPO filings
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