Adidas 1997 Annual Report Download - page 40

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38
3. Acquisitions Effective July 1, 1996 adidas assumed full ownership over its former joint venture companies
adidas Australia and adidas New Zealand through the acquisition of the remaining interest. The
purchase price totalled DM 77 million. The purchase costs in excess of the proportionate shares
of the acquired net assets of DM 75 million were allocated to goodwill of adidas-Salomon AG.
Effective October 1, 1996 the Company acquired 51% of the shares of its former licensee and
distributor in South Korea. The purchase costs (USD 16.5 million) in excess of the proportionate
share of the acquired net assets of Jewoo Trading Co. Ltd. (now adidas Korea) of DM 8 million
were allocated to goodwill of adidas-Salomon AG.
Effective October 1, 1997 adidas assumed full ownership over its former joint venture company
adidas Benelux, Netherlands and its fully owned subsidiary adidas Belgium through the acquisition
of the remaining interest. The purchase price totalled DM 65 million. The purchase costs in excess
of the proportionate shares of the acquired net assets of DM 55 million were allocated to goodwill
of adidas-Salomon AG.
Effective December 22, 1997 the Company acquired 100% of the Salomon Family Holding
Company, Sport Développement S.C.A. (now adidas Salomon France S.A.) which owned 38.87%
of the shares and 56.12% of the voting rights of Salomon S.A., Annecy (France). The aggregate
purchase price of DM 942 million is accounted for at cost under investments (see notes 8 and 22).
The Salomon group will be consolidated with effect from January 1, 1998.
Salomon is a world leader in winter sports equipment, specifically alpine and cross-country
skiing. In addition the company has a line of summer equipment (golf, hiking shoes and cycle
components), which represents approximately half its revenues. The main brands of the group are
Salomon, Taylor Made and Mavic. In the fiscal year ending March 31, 1997, the group generated
net sales of FRF 4.42 billion (approximately DM 1.32 billion) and net income of FRF 214 million
(approximately DM 64 million).
In 1997 no further significant acquisitions have been made.
4. Inventories Inventories by major classification are as follows:
(in DM 000) Dec. 31, 1997 Dec. 31, 1996
Finished goods and merchandise 1,591,891 1,071,798
Work-in-process 3,656 6,270
Raw materials 10,554 9,980
1,606,101 1,088,048
Inventories are net of reserves for the excess of cost over the net realizable value of certain finished
goods and merchandise inventories based on changing trends in the industry and excess stock.
These reserves aggregated approximately DM 159 million and DM 141 million as of December 31,
1997 and 1996, respectively.