
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

\|X\| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
OR
\|_\| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-9340
REEBOK INTERNATIONAL LTD.
Incorporated pursuant to the Laws of The Commonwealth of Massachusetts

Internal Revenue Service-- Employer Identification No. 04-2678061
1895 J.W. Foster Boulevard, Canton, Massachusetts, 02021
(781) 401-5000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes \|X\| No \|_\|
The total number of shares of the registrant's Common Stock, par value $.01 per share, outstanding on August 12, 2002 was 59,719,699.

REEBOK INTERNATIONAL LTD.
*INDEX*
*PART I. FINANCIAL INFORMATION:*

Item 1. Financial Statements (Unaudited)


Condensed Consolidated Balance Sheets--
June 30, 2002 and 2001, and December 31, 2001	3

Condensed Consolidated Statements of Income--
Three and Six Months Ended June 30, 2002 and 2001	4

Condensed Consolidated Statements of Cash Flows--
Six Months Ended June 30, 2002 and 2001	5

Notes to Condensed Consolidated Financial Statements	6 - 10


Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition	10 - 19

Item 3. Quantitative and Qualitative Disclosures About Market Risk	20


*Part II. OTHER INFORMATION:*


Item 1. Legal Proceedings	21

Item 2. Changes in Securities	21

Item 3. Defaults Upon Senior Securities	21

Item 4. Submission of Matters to a Vote of Security-Holders	21

Item 5. Other Information	21

Item 6. Exhibits	21-22


Reebok International Ltd.
Condensed Consolidated Balance Sheets
		June 30,					December 31,
Amounts in thousands		2002			2001			2001

		(Unaudited)					(See Note 1)
Assets
Current assets:
Cash and cash equivalents	$	419,390		$	149,859		$	413,281
Accounts receivable, net of allowance for
doubtful accounts (June 2002, $56,944; June 2001,
$46,908; December 2001, $55,240)		503,702			527,432			383,372
Inventory		407,612			474,952			362,927
Deferred income taxes		105,027			102,279			104,280
Prepaid expenses and other current assets		40,262			46,727			30,835

Total current assets		1,475,993			1,301,249			1,294,695

Property and equipment, net		133,112			136,043			133,952
Other non-current assets:
Goodwill, net		23,417			33,037			31,294
Intangibles, net of amortization		45,111			32,476			45,392
Deferred income taxes		9,987			15,418			16,094
Other		25,952			20,123			21,746

Total Assets	$	1,713,572		$	1,538,346		$	1,543,173

Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to banks	$	10,696		$	22,148		$	11,779
Current portion of long-term debt		114			265			97
Accounts payable		158,185			158,055			127,286
Accrued expenses		337,244			286,960			269,738
Income taxes payable		39,018			37,945			40,506

Total current liabilities		545,257			505,373			449,406

Long-term debt, net of current portion		351,908			351,013			351,210
Minority interest and other long-term liabilities		28,067			23,115			22,619
Commitments and contingencies

Stockholders' equity:
Common stock, par value $.01; authorized 250,000 shares;
issued shares: June 2002, 98,706;
June 2001, 97,558; December 2001, 98,050		987			976			981
Retained earnings		1,523,433			1,381,471			1,453,348
Less shares in treasury at cost: June 2002, 39,011
June 2001, 38,716; December 2001, 39,011		( 660,422	)		( 653,370	)		( 660,422	)
Unearned compensation		( 2,203	)		( 502	)		( 2,736	)
Accumulated other comprehensive loss		( 73,455	)		( 69,730	)		( 71,233	)

Total Stockholders' Equity		788,340			658,845			719,938

Total Liabilities and Stockholders' Equity	$	1,713,572		$	1,538,346		$	1,543,173

The accompanying notes are an integral part of the condensed consolidated financial statements.


Reebok International Ltd.
Condensed Consolidated Statements of Income (Unaudited)
	Three Months Ended					Six Months Ended
	June 30,					June 30,
Amounts in thousands, except per share data	2002			2001		2002			2001


Net sales	$	717,429	$	711,048	$	1,453,415		$		1,480,976
Costs and expenses:
Cost of sales		440,292		449,899		902,142				932,373
Selling, general and administrative expenses		236,407		227,554		450,046				451,014
Special charges				6,181						(158	)
Interest expense, net		4,550		4,095		7,915				8,104
Other expense, net		565		937		1,806				5,900

		681,814		688,666		1,361,909				1,397,233

Income before income taxes, minority interest and
cumulative effect of change in accounting principle		35,615		22,382		91,506				83,743
Income taxes		11,041		6,938		28,368				25,960

Income before minority interest and
cumulative effect of change in accounting principle		24,574		15,444		63,138				57,783
Minority interest		9		1,306		1,502				2,441

Income before cumulative effect of change
in accounting principle		24,565		14,138		61,636				55,342
Cumulative effect of change in accounting principle
(net of taxes), Note 1						(5,070	)

Net income	$	24,565	$	14,138	$	56,566		$		55,342

Basic earnings per share:

Before cumulative effect of change
in accounting principle	$	.41	$	.24	$	1.04		$		.95
Cumulative effect of change
in accounting principle						(.09	)

Net income	$	.41	$	.24	$	.95		$		.95

Diluted earnings per share:

Before cumulative effect of change
in accounting principle	$	.39	$	.24	$	.96		$		.90
Cumulative effect of change
in accounting principle						(.07	)

Net income	$	.39	$	.24	$	.89		$		.90

The accompanying notes are an integral part of the condensed consolidated financial statements.


Reebok International Ltd.
Condensed Consolidated Statements of Cash Flows (Unaudited)
	Six Months Ended
	June 30,
Amounts in thousands, except per share data	2002				2001

Cash flows from operating activities:
Net income	$	56,566		$	55,342
Adjustments to reconcile net income to net cash
used for operating activities:
Depreciation and amortization		16,073			18,698
Minority interest		1,502			2,441
Deferred income taxes		5,359			2,128
Loss on sale of assets, net					1,086
Cumulative effect of change in accounting principle		5,070
Changes in operating assets and liabilities exclusive of
changes arising from business acquisitions:
Accounts receivable		( 121,060	)		( 103,320	)
Inventory		( 29,525	)		( 89,076	)
Prepaid expenses and other		( 18,542	)		( 6,554	)
Accounts payable and accrued expenses		64,960			( 5,040	)
Dividends to minority shareholders		( 2,543	)		( 8,215	)
Income taxes payable		7,053			19,529

Total adjustments		( 71,653	)		( 168,323	)

Net cash used for operating activities		( 15,087	)		( 112,981	)

Cash flows used for investing activities:
Payments to acquire property and equipment		( 12,060	)		( 11,217	)
Proceeds from sale of assets					18,092
Acquisition of minority interest in and purchase of certain
subsidiaries					( 18,832	)

Net cash used for investing activities		( 12,060	)		( 11,957	)

Cash flows provided by financing activities:
Net borrowings (repayments) of notes payable to banks		( 414	)		7,237
Net proceeds from issuance of convertible debentures					244,729
Net borrowings (repayments) of long-term debt		490			( 257,503	)
Proceeds from issuance of common stock to employees		8,852			19,787

Net cash provided by financing activities		8,928			14,250

Effect of exchange rate changes on cash and
cash equivelants		24,328			( 8,118	)

Net increase (decrease) in cash and cash equivalents		6,109			( 118,806	)
Cash and cash equivalents at beginning of period		413,281			268,665

Cash and cash equivalents at end of period	$	419,390		$	149,859

Supplemental disclosures of cash flow information:
Interest paid	$	11,778		$	11,805
Income taxes paid		17,381			4,710

The accompanying notes are an integral part of the condensed consolidated financial statements.

Reebok International Ltd.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share data)

1 SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and reflect all adjustments (consisting of normal recurring accruals, and the cumulative effect of a change in accounting principle) which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods. The interim financial information and notes thereto should be read in conjunction with the Company's latest annual report on Form 10-K. The results of operations for the three and six months ended June 30, 2002 are not necessarily indicative of results to be expected for the entire year.

The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001.

Recently Issued Accounting Standards

Effective January 1, 2002, the Company adopted the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142) which requires that goodwill and intangible assets with indefinite useful lives no longer be amortized.

In the second quarter ended June 30, 2002, as a result of completing a goodwill impairment assessment required pursuant to SFAS No. 142, the Company recorded an $8.4 million charge ($5.1 million, net of income taxes) for goodwill impairment related to two non-Reebok Brand operating units. This charge has been presented as a cumulative effect of a change in accounting principle effective as of January 1, 2002.

In July 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal Activities"("SFAS 146"), which addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". The provisions of SFAS 146 are effective for exit or disposal activities that are initiated after December 31, 2002, with earlier application encouraged. The Company will adopt SFAS 146 for exit or disposal activities which are initiated after December 31, 2002, and it does not expect that the adoption of the Statement will have a significant impact on the Company's financial position or results of operations.

Reclassification

Certain amounts in prior periods have been reclassified to conform to the 2002 presentation. These reclassifications had no impact on previously reported results of operations or shareholders' equity.

2 SPECIAL CHARGES

Details of the special charge activity during the six months ended June 30, 2002 are as follows:


					Employee				Fixed
			Legal		Severance		Marketing		Asset
Total Charges	Total		Settlement		and Other		Contracts		Write-downs

Balance, December 31, 2001	$ 17,494		$ 5,652		$ 6,599		$ 4,548		$ 695
2002 Utilization	( 1,613	)	( 12	)	( 461	)	( 1,140	)

Balance, June 30, 2002	$ 15,881		$ 5,640		$ 6,138		$ 3,408		$ 695

The short-term portion of the accrual, or $9,535 is included in accrued expenses with the balance of $6,346 included in other long-term liabilities. The fixed asset write-downs relate to assets that will be abandoned or sold. The remaining accruals are expected to be utilized during fiscal 2002 through 2003, as leases expire, consolidations occur, contractual obligations come due and severance payments are made.

Details of the special charge activity for each special charge for the six months ended June 30, 2002 are as follows:


				Employee			Fixed
			Legal	Severance		Marketing	Asset
2001 Charge	Total		Settlement	and Other		Contracts	Write-downs

Balance, December 31, 2001	$ 883			$ 883
2002 Utilization	( 383	)		( 383	)

Balance, June 30, 2002	$ 500			$ 500


					Employee			Fixed
			Legal		Severance		Marketing	Asset
1999 Charge	Total		Settlement		and Other		Contracts	Write-downs

Balance, December 31, 2001	$ 6,846		$ 5,652		$ 1,194
2002 Utilization	( 90	)	( 12	)	( 78	)

Balance, June 30, 2002	$ 6,756		$ 5,640		$ 1,116


				Employee			Fixed
			Legal	Severance	Marketing		Asset
1998/1997 Charges	Total		Settlement	and Other	Contracts		Write-downs

Balance, December 31, 2001	$ 9,765			$ 4,522	$ 4,548		$ 695
2002 Utilization	( 1,140	)			( 1,140	)

Balance, June 30, 2002	$ 8,625			$ 4,522	$ 3,408		$ 695

3 EARNINGS PER SHARE

Basic earnings per share excludes dilution and is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if options to acquire common stock were exercised and assumes the conversion of the convertible debentures into Common Stock when dilutive.

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

	Three Months Ended			Six Months Ended
	June 30,			June 30,
	2002	2001	2002			2001
Numerator for basic earnings per share:
Net Income before cumulative effect of
change in accounting principle	$ 24,565	$ 14,138		$ 61,636		$ 55,342
Cumulative effect of change in accounting
principle				5,070

Net Income	$ 24,565	$ 14,138		$ 56,566		$ 55,342

Numerator for diluted earnings per share:
Net Income before cumulative effect of
change in accounting principle	$ 24,565	$ 14,138		$ 61,636		$ 55,342
Effect of dilutive securities:
Interest on 4.25% convertible
debentures, net of income taxes	1,833			3,666		2,463

	26,398	14,138		65,302		57,805
Cumulative effect of change in accounting
principle				5,070

Net Income	$ 26,398	$ 14,138		$ 60,232		$ 57,805

Denominator for basic earnings per share:
Weighted average shares	59,344	58,512		59,190		58,173

Denominator for dilutive earnings per share:
Weighted average shares	59,344	58,512		59,190		58,173
Effect of dilutive securities:
Dilutive employee stock options	2,003	1,661		2,071		1,690
Assumed conversion of 4.25% convertible
debentures	6,483			6,483		4,358

	67,830	60,173		67,744		64,221

Basic earnings per share
Before cumulative effect of change in
accounting principle	$ .41	$ .24		$ 1.04		$ .95
Cumulative effect of change in accounting principle				(.09	)

	$ .41	$ .24		$ .95		$ .95

Diluted earnings per share
Before cumulative effect of change in
accounting principle	$ .39	$ .24		$ .96		$ .90
Cumulative effect of change in accounting principle				(.07	)

	$ .39	$ .24		$ .89		$ .90

(1) The effect of the assumed conversion of the 4.25% convertible debentures has been excluded from the calculation of EPS for the three months ended June 30, 2001 as the impact would be anti-dilutive.

4 COMPREHENSIVE INCOME

The following table sets forth the computation of comprehensive income:

	Three Months Ended								Six Months Ended
	June 30,								June 30,

		2002				2001				2002				2001

Net Income	$		24,565		$		14,138		$		56,566				55,342
Changes in foreign currency
translation adjustments			28,722			(	14,839	)			25,541			(	34,781	)
Net change due to hedging instruments
in accordance with FAS 133		(	32,140	)			4,754			(	27,763	)			4,647

Comprehensive Income	$		21,147		$		4,053		$		54,344		$		25,208

5 INTANGIBLE ASSETS

As discussed in Note 1, the Company adopted FAS 142 as of January 1, 2002. As a result, the Company ceased amortization of goodwill and certain indefinite-lived intangibles beginning on January 1, 2002. As a result, the Company is providing the following disclosures regarding the components of intangible assets (other than goodwill) as of December 31, 2001 and the impact if the cessation of amortization of certain intangibles and goodwill had occurred in the prior periods.

	December 31, 2001
	Gross		Accumulated		Net
	Amount		Amortization		Balance
Amortizable Intangible Assets:
Licenses (1)	$	13,600	$	0	$	13,600
Other		575		423		152
Non-amortizable Intangible Assets:
Company tradename and trademarks		31,640				31,640

Total	$	45,815	$	423	$	45,392

(1) Licenses are being amortized over ten years beginning January 1, 2002.

Reported net income for the three and sixth month periods ended June 30, 2001, adjusted for the effects of the non-amortization provision of FAS 142 is as follows:






	Three Months Ended		Six Months Ended
	June 30, 2001		June 30, 2001


Reported net income	$	14,138		$	55,342
Add back:
Amortization of goodwill and other
intangibles (net of taxes)		580			1,255

Adjusted net income	$	14,718		$	56,597

Adjusted basic earnings per share	$	.25		$	.97
Adjusted diluted earnings per share	$	.24		$	.92

As a result of completing a goodwill impairment assessment required upon adoption of Statement of Financial Accounting Standards No. 142, “Goodwill and Intangible Assets”, the Company recorded an $8.4 million ($5.1, net of income taxes) for goodwill impairment related to two non-Reebok Brand operating units retroactive to the beginning of the fiscal year. This charge is presented as a cumulative effect of a change in accounting principle effective as of January 1, 2002.

6 COMMITMENTS AND CONTINGENCIES

The Company is involved in various legal proceedings generally incidental to its business. While it is not feasible to predict or determine the outcome of these proceedings, management does not believe that they should result in a materially adverse effect on the Company’s financial position, results of operations or liquidity.

Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements with regard to the Company’s sales, revenues, earnings, spending, margins, cash flow, future orders, inventory, products, plans strategies, objectives and guidance with respect to the Company’s future operating results. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will be,” “will continue,” “will result,” “could,” “may,” “might,” or any variations of such words or other words with similar meanings. Any such statements are subject to risks and uncertainties that could cause the Company’s actual results to differ materially from those discussed in such forward-looking statements. Prospective information is based on management’s then current expectations or forecasts. Such information is subject to the risk that such expectations or forecasts, or the assumptions underlying such expectations or forecasts, become inaccurate. The Company assumes no obligation to update any such forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.

Risks and uncertainties that could affect the Company’s actual results and could cause such results to differ materially from those contained in forward-looking statements made by or on behalf of the Company include, but are not limited to, the following: competition; shifts in consumer preferences; the ability to accurately forecast consumer demand and sales; the ability to sustain current pricing levels for the Company’s products; the potential of the backlog report to not be indicative of future sales; the effect of the Company’s investment in advertising, marketing, athlete endorsement, and athletic sponsorships; international sales and manufacturing operations; import regulations, political instability or general economic factors in the international regions where the Company conducts its business; interruption or unavailability of sources of supply; increases in leather prices; reliance on independent manufacturers; the ability to make timely payments on indebtedness; the ability to protect the Company’s intellectual property rights; the ability to realize the full value of the Company’s deferred tax assets; the ability to achieve the intended benefits from the restructuring of the Company’s global operations including operating and logistical efficiencies in the areas of distribution and information systems; the effect a strong United States dollar may have on the Company’s results of operations from its international business; and other factors mentioned or incorporated by reference in this report or other reports. This list of risk factors is not exhaustive. Other risks and uncertainties are discussed elsewhere in this report and in further detail under the caption entitled “Issues and Uncertainties” included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001, which has been filed with the Securities and Exchange Commission. In addition, the Company operates in a highly competitive and rapidly changing environment. Therefore, new risk factors can arise, and it is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on the Company’s business or the extent to which any individual risk factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. With respect to any statements concerning future orders, the Company’s backlog position is not necessarily indicative of future sales because the ratio of future orders to “at once” shipments as well as sales by Company-owned retail outlet stores may vary from year to year. In addition, many customer orders are cancelable and many markets are not included in open orders since sales are made by independent distributors. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

CRITICAL ACCOUNTING POLICIES

The Company’s significant accounting policies are described in Note 1 to the consolidated financial statements included in Item 8 in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001. The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to the carrying value of inventories, realizability of outstanding accounts receivable, sales returns and allowances, and the provision for income taxes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. In the past, actual results have not been materially different from the Company’s estimates. However, results may differ from these estimates under different assumptions or conditions.

The Company has identified the following as critical accounting policies, based on the significant judgments and estimates used in determining the amounts reported in its condensed consolidated financial statements:

Sales Returns and Allowances

The Company records reductions to revenue for estimated customer returns and allowances. The actual amount of customer returns or allowances could result in adjustments to those estimates.

Accounts Receivable

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company estimates potential losses based on its knowledge of the financial condition of certain customers, as well as an assessment of the overall conditions at retail. Historically, losses have been within the Company’s expectations. If the financial condition of the Company’s customers were to change, adjustments may be required to these estimates. Furthermore, the Company provides for estimated losses resulting from differences which arise from the gross carrying value of its receivables and the amounts which customers estimate are owed to the Company. The settlement or resolution of these differences could result in future changes to these estimates.

Inventory Valuation

The Company values its inventory at the lower of cost or market, determined by the difference between the cost of the inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are more or less favorable than those projected by management, adjustments may be required.

Hedging Policies

The Company uses foreign currency forward contracts, options contracts and interest rate swap agreements to hedge its exposure to: (1) merchandise purchased in US dollars that would be sold to customers in other currencies, (2) significant intercompany assets and liabilities and (3) interest rate movement. If actual fluctuations in foreign exchange rates or interest rates are more or less favorable than those projected by management, or if the actual amount of merchandise purchased in US dollars to be sold to customers in other currencies differs from the amounts projected, future operating results may be impacted by adjustments to these estimates.

Income Taxes

The carrying value of the Company’s net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions to realize the value of these assets. If the Company is unable to generate sufficient future taxable income in these jurisdictions, an adjustment may be required in the net carrying value of the deferred tax assets resulting in additional income tax expense in the Company’s consolidated statement of income. Management evaluates the realizability of the deferred tax assets and assesses the need for any valuation adjustment quarterly.

Recently Issued Accounting Standards

The Company has described the impact from the adoption of certain new accounting pronouncements effective in 2002 in notes 1 and 5 to the condensed consolidated financial statements.

Operating Results

Second Quarter 2002 Compared to Second Quarter 2001

Net sales for the quarter ended June 30, 2002 were $717.4 million, a 0.9% increase from 2001‘s second quarter net sales of $711.0 million. Worldwide sales of the Reebok Brand were $584.9 million an increase of 2.4 % from $571.4 million in the second quarter of 2001.

U.S. footwear sales of the Reebok Brand were $249.3 million in the second quarter of 2002, approximately flat with the second quarter of 2001. Sales of U.S. footwear to the athletic specialty channel of distribution increased during the quarter, whereas, sales to the volume channel of distribution, which consists primarily of moderate department stores, declined. During the second quarter, sales increased in four out of five of the largest categories of footwear product in the U.S. Basketball increased approximately 37%, driven by strong sales of Iverson and other Rbk product. Sales of walking footwear increased approximately 9% and men’s cross training footwear experienced a sales increase of 14%. Classics increased in the quarter despite a relatively weak fill-in business. The running category declined during the quarter. The Company is in the process of repositioning this category and will be launching its new premiere series running products in 2003. During the quarter, U.S. footwear returns increased, whereas, cancellations were flat with the same period in the prior year.

U.S. apparel sales of the Reebok Brand increased in the second quarter by 30.1% to $84.7 million from $65.1 million in the second quarter of 2001. The sales increase came from both Reebok branded and sports licensed apparel. Reebok branded apparel increased approximately 16% despite a 22% reduction in closeout sales and a 25% decrease in the Company’s full-price fill-in business. On a category basis, basketball apparel increased over 600% supported by strong Iverson product sales. On a trade channel basis, the growth is primarily in the athletic specialty channel. The Company’s new sports licensed apparel business which began operations in March 2001, continues to perform well. The Company believes that there is a fairly broad based return to fashionability for sports licensed apparel and that this has improved retail sell-throughs. The Company believes that the U.S. apparel business, both branded and sports licensed, is a long-term growth opportunity.

International sales of the Reebok Brand (including footwear and apparel) were $250.9 million in the second quarter of 2002, a decrease of 2.0% from sales of $256.0 million in the second quarter of 2001. On a constant dollar basis, international sales of the Reebok Brand decreased 4.6%. The decline in international sales is primarily the result of the Company’s sales performance in the Middle East and in Latin America. In Europe, for the quarter, sales increased 3.3% in reported dollars (but declined 1.5% in constant dollars), with particular strength in the U.K. market. The Company believes that a weak retail environment in certain European markets is affecting its business. Furthermore, the Company believes that its decision not to invest incrementally in the World Cup has depressed sales during the short-term in selected markets in Europe and Asia.

Rockport’s second quarter 2002 sales were $95.3 million, a decrease of 2.8% from sales of $98.0 million in the second quarter of 2001. Domestic sales for the Rockport Brand decreased 5.0% whereas international sales increased 4.2% as compared to the second quarter of 2001. During the second quarter of 2002, Rockport generated modest sales increases to the department store channel for its men’s products, reversing the trend of the past two quarters. However, sales declined in the value channel, which consists of moderate department and family footwear stores, where Rockport is implementing its new product segmentation strategy. As a result of this segmentation strategy, model stock positions on existing products have been reduced to accommodate the introduction of the new products beginning in the third quarter of 2002. The Company believes that with this new product segmentation strategy, it should be in a position to grow revenues during the second half of 2002. However, this growth will depend on conditions that exist at U.S. retail during that period of time. International revenues accounted for approximately 26% of Rockport’s sales in the second quarter of 2002 as compared to 25% in the second quarter of 2001.

Sales of the Company’s other brands were $37.2 million in the second quarter of 2002, a decrease of 10.6% from sales of $41.6 million in the second quarter of 2001.

During the second quarter of 2002, the Company’s overall gross margin was 38.6% of sales, which is an improvement of 190 basis points when compared with gross margin of 36.7% in the second quarter of 2001. During the second quarter of 2002, the impact of improved initial pricing margins, reduced closeout sales and strong inventory management helped to improve the Company’s margin. In addition, during the quarter the Company settled certain outstanding international customs related matters which accounted for approximately 93 basis points of the margin improvement (or $.07, after-tax, per diluted share). While international margins improved slightly in the quarter, they continue to be adversely effected by currency comparisons during the quarter. The Company believes that its gross margin percentage for the balance of the year will improve over the prior year in the range of 50 to 100 basis points.

Selling, general and administrative expenses for the second quarter of 2002 were $236.4 million, or 33.0% of sales, an increase of $8.8 million when compared with last year’s second quarter expense of $227.6 million, or 32.0% of sales. During the second quarter of 2002, the Company increased its U.S. media spend by 28% in order to support the rollout of its Rbk products and to support its integrated marketing strategy. The Company expects to continue its investment in working media throughout 2002 to support its advertising campaigns. The Company expects to finance these campaigns by generating greater efficiencies from its other marketing expenditures thereby keeping its total marketing spending at approximately the same percentage of sales for the full year as in 2001.

The Company did not record any special charges during the second quarter of 2002, however, in the second quarter of 2001, the Company recorded a special charge of $6.7 million for the integration and consolidation of the Company’s Rockport and Ralph Lauren Footwear brands into its Shared Service operation (See Note 2).

Included in other expenses, net, are the amortization of intangibles, certain currency losses and other non-operating expenses. For the second quarter of 2001, other expense, net was a net expense of $.9 million. During the second quarter of 2001, the Company identified an underaccrual of buying agent’s commissions of approximately $10.6 million relating to 2001 and prior years. In the opinion of the Company, the amounts were not material to any of the previously reported annual periods. Accordingly, the $10.6 million was recorded in the then current quarter in other expense. Also included in other expenses, net for the second quarter of 2001, was a gain of $8.2 million from the sale of certain real estate assets.

Net interest expense was $4.5 million for the second quarter of 2002, approximately the same as compared to the second quarter of 2001. The Company expects that its net interest expense could increase slightly each quarter from prior year amounts due to working capital requirements and to the lower rates of return the Company is realizing on invested cash.

The effective income tax rate was 31.0% in the second quarter of 2002 and 2001. The Company expects that the annual tax rate will be 31.0%. However, the rate could fluctuate depending on the amount of, and geographic mix of, the Company’s earnings, if the Company incurs non-benefitable losses in certain jurisdictions, the Company’s cash requirements, or if there are changes to the statutory rates.

First Six Months of 2002 Compared to First Six Months of 2001

Net sales for the six months ended June 30, 2002 were $1.453 billion, a 1.9% decrease from 2001‘s first six months net sales of $1.481 billion. Worldwide sales of the Reebok Brand were $1.197 billion which is comparable to the first six months of 2001.

U.S. footwear sales of the Reebok Brand were $496.3 million in the first six months of 2002, a decrease of 3.2% from $512.6 million for the first six months of 2001. Sales of U.S. footwear to the athletic specialty channel of distribution increased during the six months, whereas, sales to the volume channel of distribution, which consists primarily of moderate department stores, declined. During the first six months, sales increased in the basketball category by approximately 48%, driven by strong sales of Iverson and other Rbk product. Sales of walking footwear decreased approximately 9% and men’s cross training footwear experienced a sales decrease of approximately 23%. Classics were approximately flat with the prior year, despite a relatively weak fill-in business. The running category declined during the first six months. The Company is in the process of repositioning this category and will be launching its new premiere series running products in 2003. During the first six months of 2001, U.S. footwear returns increased, whereas, cancellations were flat with the same period in the prior year.

U.S. apparel sales of the Reebok Brand increased in the first six months by 37.3% to $157.1 million from $114.4 million in the first six months of 2001. The sales increase came from both Reebok branded and sports licensed apparel. Reebok branded apparel increased approximately 12% with closeout sales increasing slightly, and the Company’s full-price fill-in business being comparable with the same period in the prior year. On a category basis, basketball apparel increased over 600% supported by strong Iverson product sales. On a trade channel basis, the growth is primarily in the athletic specialty channel. The Company’s new sports licensed apparel business which began operations in March 2001, continues to perform well. The Company believes that there is a fairly broad based return to fashionability for sports licensed apparel and that this has improved retail sell-throughs. The Company believes that the U.S. apparel business, both branded and sports licensed, is a long-term growth opportunity.

International sales of the Reebok Brand (including footwear and apparel) were $543.3 million in the first six months of 2002, a decrease of 4.7% from sales of $569.8 million in the first six months of 2001. On a constant dollar basis, international sales of the Reebok Brand decreased 4.0%. The decline in international sales is primarily the result of the Company’s sales performance in the Middle East and in Latin America. In Europe, for the first six months, sales decreased 2.1% in reported dollars (2.3% in constant dollars). However, sales increased in the U.K. market. The Company believes that a weak retail environment in certain European markets is affecting its business. Furthermore, the Company believes that its decision not to invest incrementally in the World Cup has depressed sales during the short-term in selected markets in Europe and Asia.

Rockport’s sales for the first six months of 2002 were $182.7 million, a decrease of 8.2% from sales of $199.0 million in the first six months of 2001. Domestic sales for the Rockport Brand decreased 11.4% whereas international sales were flat as compared to the first six months of 2001. During the first six months of 2002, Rockport sales to the department store channel for its men’s products, declined, however, during the second quarter of 2002, they generated modest sales increases, reversing the trend of the past two quarters. Sales declined in the value channel, which consists of moderate department and family footwear stores, where Rockport is implementing its new product segmentation strategy. As a result of this segmentation strategy, model stock positions on existing products have been reduced to accommodate the introduction of the new products beginning in the third quarter of 2002. The Company believes that with this new product segmentation strategy, it should be in a position to grow revenues during the second half of 2002. However, this growth will depend on conditions that exist at U.S. retail during that period of time. International revenues accounted for approximately 29% of Rockport’s sales in the first six months of 2002 as compared to 26% in the first six months of 2001.

Sales of the Company’s other brands were $74.0 million in the first six months of 2002, a decrease of 13.1% from sales of $85.2 million in the first six months of 2001.

During the first six months of 2002, the Company’s overall gross margin was 37.9% of sales, which is an improvement of 90 basis points when compared with gross margin of 37.0% in the first six months of 2001. During the first six months of 2002, the impact of improved initial pricing margins, reduced closeout sales and strong inventory management helped to improve the Company’s margin. In addition, during the first six months the Company settled certain outstanding international customs related matters which accounted for approximately 46 basis points of the margin improvement (or $.07, after-tax, per diluted share). While international margins improved slightly in the period, they continue to be adversely effected by currency comparisons during the period. The Company believes that its gross margin percentage for the balance of the year will improve over the prior year in the range of 50 to 100 basis points.

Selling, general and administrative expenses for the first six month of 2002 were $450.0 million, or 31.0% of sales, relatively flat when compared with last year’s first six months expense of $451.0 million, or 30.5% of sales. During the first six months of 2002, the Company increased its U.S. media spend by approximately 40% in order to support the rollout of its Rbk products and to support its integrated marketing strategy. The Company expects to continue its investment in working media, throughout 2002 to support the advertising campaigns it will be running. The Company expects to finance these campaigns by generating greater efficiencies from its other marketing expenditures thereby keeping its total marketing spending at approximately the same percentage of sales for the full year as in 2001.

The Company did not record any special charges during the first six months of 2002, however, during the first six months of 2001, the Company recorded a special charge of $6.7 million for the integration and consolidation of the Company’s Rockport and Ralph Lauren Footwear brands into its Shared Service operation. Also during 2001, the Company changed certain previously recorded estimates based on actual amounts received or paid by the Company. The net change in estimates, which is reported in special charges, amounted to income of $6.8 million and relates primarily to the sale of the Company’s interest in its South African subsidiary.

Included in other expenses, net are the amortization of intangibles, certain currency losses and other non-operating expenses. For the first six months of 2001, other expense, net was a net expense of $5.9 million. During the first six months of 2001, the Company identified an underaccrual of buying agent’s commissions of approximately $10.6 million relating to 2001 and prior years. In the opinion of the Company, the amounts were not material to any of the previously reported annual periods. Accordingly, the $10.6 million was recorded in the first six months of 2001 in other expense. Also included in other expenses, net for the first six months of 2001, was a gain of $8.2 million from the sale of certain real estate assets, as well as, the write-off of $5.2 million of unamortized debt costs associated with the early extinguishment of the Company’s term loan.

Net interest expense was $7.9 million for the first six months of 2002, approximately the same as compared to the first six months of 2001. The Company expects that its net interest expense could increase slightly each quarter from prior year amounts due to working capital requirements and to the low rates of return the Company is realizing on invested cash.

The effective income tax rate was 31.0% in the first six months of 2002 and 2001. The Company expects that the annual tax rate will be 31.0%. However, the rate could fluctuate depending on the amount of, and geographic mix of, the Company’s earnings, if the Company incurs non-benefitable losses in certain jurisdictions, the Company’s cash requirements, or if there are changes to the statutory rates.

Reebok Brand Backlog of Open Orders

Worldwide backlog of open customer orders scheduled for delivery during the period July 1, 2002 through December 31, 2002 for the Reebok Brand backlog increased 16.4% as compared to the same period last year including the open orders for the Company’s new sports licensed apparel business. However, this comparison is not necessarily indicative of overall future sales trends since the Company’s new sports licensing business did not begin operations until March 2001. Excluding the open orders for sports licensed apparel in both 2002 and 2001, the Company’s worldwide backlog for the Reebok Brand increased 8.4% (2.8% in constant dollars).

Comparisons regarding orders scheduled for delivery for the period July 1, 2002 through December 31, 2002 are as follows for the Reebok Brand:

	Percentage Change							Proforma
	2002/2001 (1)							2002/2001 (2)
	Reported Constant							Reported Constant
	Dollars Dollars							Dollars Dollars
U.S.A.:
Footwear	+	5.4	%	+	5.4	%	+	5.4	%	+	5.4	%
Apparel	+	67.2	%	+	67.2	%	+	23.0	%	+	23.0	%
Total Domestic	+	21.9	%	+	21.9	%	+	7.8	%	+	7.8	%
International:
Footwear	+	10.3	%	-	0.5	%	+	10.3	%	-	0.5	%
Apparel	+	7.8	%	-	4.3	%	+	7.8	%	-	4.3	%
Total International	+	9.0	%	-	2.5	%	+	9.0	%	-	2.5	%
Total Reebok Brand:
Footwear	+	7.0	%	+	3.2	%	+	7.0	%	+	3.2	%
Apparel	+	32.8	%	+	23.7	%	+	11.5	%	+	1.8	%
Total Reebok Brand	+	16.4	%	+	10.9	%	+	8.4	%	+	2.8	%

(1) Includes the open orders in 2002 of the sports licensing business. However, this comparison is not indicative of overall future sales trends since the Company's sports licensing business did not begin operations until March 2001.

(2) Excludes backlog comparisons for the Company's sports licensing business which did not begin operations until March of 2001.

These backlog comparisons are not necessarily indicative of future sales trends. Many customer orders are cancelable, currencies may fluctuate, sales by Company-owned retail outlet stores are not included in the backlog and can vary from year-to-year, many markets in Latin America and Asia Pacific are not included in the backlog since sales are made by independent distributors and the ratio of orders booked early to at-once shipments can vary from period to period.

Liquidity and Sources of Capital

At June 30, 2002, the Company's working capital was $930.7 million as compared with $795.9 million at June 30, 2001. The current ratio at June 30, 2002 was 2.7 to 1, as compared to 2.9 to 1 at December 31, 2001 and 2.6 to 1 at June 30, 2001.

Inventory decreased by $67.4 million or 14.2% from June 30, 2001. The inventory reduction was achieved despite the increase in the Company's Sports Licensing inventory. The currency impact on inventory was an increase of approximately $20.0 million as compared to last year. During the second quarter of 2002 the Company improved its inventory turns to 4.7 from 4.1 during the second quarter of 2001. During the second quarter, the Company also reduced its days sales outstanding in accounts receivable by 6 days from the same period last year.

Cash used for operations during the first six months of 2002 was $15.1 million, as compared to cash used for operations of $113.0 million during the first six months of 2001. Capital expenditures for the six months ended June 30, 2002 were $12.1 million. During the second quarter of 2002, the Company entered into a new credit facility with a group of banks to replace the Company's prior Credit Agreement in the amount of $300.0 million which was scheduled to expire on August 31, 2002. The new $300.0 million credit facility has a term of three years, with the option for the Company to extend the term of the facility for an additional eighteen months. The pricing was adjusted to market conditions, otherwise, the terms and conditions, including the debt covenants, of the new credit facility are similar to the facility that was replaced. Cash generated from operations during the balance of 2002, together with the Company's existing and available credit lines, other financial resources and ability to access capital markets given the Company's existing credit ratings, are expected to adequately finance the Company's current and planned 2002 cash requirements. However, the Company's actual experience may differ from the expectations set forth in the preceding sentence. Factors that might lead to a difference include, but are not limited to, the matters discussed above and under the caption entitled Issues and Uncertainties included in the Company's Annual Report on Form 10-K as well as future events that might have the effect of reducing the Company's available cash balances (such as unexpected operating losses or increased capital or other expenditures, as well as increases in the Company's inventory or accounts receivable) or future events that might reduce or eliminate the availability of external financial resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our market risks, and the ways we manage them, are summarized in management's discussion and analysis of financial condition and results of operations as of December 31, 2001, included in the Company's Form 10-K for the year ended December 31, 2001. There have been no material changes in the first six months of 2002 to such risks or our management of such risks.

PART II - OTHER INFORMATION

Item 1: Legal Proceedings
None

Item 2: Changes in Securities and Use of Proceeds
None

Item 3: Defaults Upon Senior Securities
None

Item 4: Submission of Matters to a Vote of Secuirty Holders
None

Item 5: Other Information
None

Item 6
     Exhibits
            10.1     Employment Agreement dated as of June 12, 2002 between the Company and Martin Coles
            10.2     Relocation Agreement dated as of July 17, 2002 between the Company and Martin Coles
            10.3     Credit Agreement, dated as of June 3, 2002, among the Company, Reebok International Limited,
                        Reebok Finance Limited, the Lenders named therein, Credit Suisse First Boston as Administrative Agent,
                        Fleet National Bank as Syndication Agent, and ABN Amro Bank N.V., BNP Paribas, and Wachovia
                        Bank, National Association as Co-Documentation Agents

            99.1     Certification of Paul Fireman, dated as of August 13, 2002 and made pursuant to Section 1350,
                        Chapter 63 Of Title 18, United States Code, as adpoted pursuant to Section 906 of the Sarbanes-Oxley
                        Act of 2002
            99.2     Certification of Kenneth Watchmaker, dated as of August 13, 2002 and made pursuant to Section 1350,
                        Chapter 63 Of Title 18, United States Code, as adpoted pursuant to Section 906 of the Sarbanes-Oxley
                        Act of 2002

     Current Reports on Form 8-K
            The Company did not file any Current Reports on Form 8-K for the quarter ended March 31, 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Dated: August 14, 2002



			REEBOK INTERNATIONAL LTD.



		BY:	/s/ KENNETH WATCHMAKER

			Kenneth Watchmaker
			Executive Vice President and Chief Financial Officer

Reebok International Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollar amounts in thousands, except per share data)

1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Recently Issued Accounting Standards

Reclassification

2

SPECIAL CHARGES

3

EARNINGS PER SHARE

4

COMPREHENSIVE INCOME

5

INTANGIBLE ASSETS

6

COMMITMENTS AND CONTINGENCIES

Sales Returns and Allowances

Accounts Receivable

Inventory Valuation

Hedging Policies

Income Taxes

Recently Issued Accounting Standards

Reebok International Ltd.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share data)

SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES