Adidas 2000 Annual Report Download - page 35

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adidas-Salomon ANNUAL REPORT 2000
31
Management Discussion & Analysis
Royalty and Commission Income Increases
Royalty and commission income increased by 24% to c43 million.
The main driver of this development was a
significant increase
in sales by our licensees in Europe and Asia.
Financial Result Deteriorates
The financial result in 2000 declined 12% to negative c94 million,
primarily due to increased interest expenses, driven by higher
interest rates.
Extraordinary Income Neutral to Results
In 2000, extraordinary income was recorded at a level of
c0.3 million. This was the result of exercised stock options,
which were granted in the Special Reward and Incentive Plan
(SRIP). These options are exercisable until June 30, 2001 and
are neutral to the results as the resulting expenses of the same
amount are included in the SG&A expenses.
Income Before Taxes Decreases
In 2000, adidas-Salomon’s income before taxes was
c347 million, down 13% over last year. The decrease was
a result of the lower operating profit and financial result.
This decline is in line with the expectations that the Group
communicated throughout the year.
Net Income in Line with Expectations
Net income for the Group decreased 20% to c182 million.
A higher tax rate and higher minority interests were the drivers
of this decrease. The increase in the tax rate by 1.9 percentage
points was mainly due to two factors: the constant and non-
tax-deductible goodwill amortization in connection with a lower
income before taxes and foreign withholding tax charges.
Minority interests
increased as a result of better performance by
our joint ventures.
Earnings per share in 2000 were c4.01, representing a year-
over-year decrease of 20%. This result is exactly in line with
the expectations that the Group has communicated since
January 2000.
Operating Profit
(euros in millions)
2000
1999
1998
1997
1996
0 100 200 300 400 500 600
Royalty and Commission Income
(euros in millions)
0 102030405060
2000
1999
1998
1997
1996
Operating Profit by Brand
(euros in millions) 2000 % of Total
adidas 391 89
Salomon 57 13
TaylorMade-adidas Golf 44 10
Mavic 4 1
Total* 437 100
* Difference in total due to HQ/Consolidation