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adidas Group
Annual Report
2013

Table of contents

  • Page 1
    adidas Group Annual Report 2 0 13

  • Page 2
    ... at a low- to mid-single-digit rate TaylorMade-adidas Golf increase at a low- to mid-single-digit rate Rockport increase at a mid- to high-single-digit rate Reebok-CCM Hockey increase at a mid-single-digit rate Gross margin Wholesale segment stable versus prior year TaylorMade-adidas Golf increase...

  • Page 3
    ... to reach the next level. We love achievement and success: of our people, our athletes and our products. We are driven by our ambition and our passion for what we do. Always one step ahead - always giving our best. True to our heritage and our values. We are the adidas Group. And everything we do...

  • Page 4
    ... net sales 1) 2) Average operating working capital in % of net sales Equity ratio Net borrowings/EBITDA Financial leverage Return on equity Balance Sheet and Cash Flow Data (â,¬ in millions) Total assets Inventories Receivables and other current assets Working capital Net cash Shareholders' equity...

  • Page 5
    ... of adidas Sport Performance is to make athletes better by making them faster, stronger, smarter, cooler and more natural. The main focus is on five key categories: football, basketball, running, training and outdoor. adidas Golf adidas Golf develops high-performance golf footwear and apparel for...

  • Page 6
    ... Corporate Governance Compensation Report Our Share 24 25 26 30 36 40 42 48 53 58 2 20 13 01.5 01.6 01.7 01.8 01.9 01.10 02 02.1 02.2 02.3 02.4 02.5 02.6 02.7 02.8 02.9 02.10 OUR GROUP GROUP MANAGEMENT REPORT adidas Group Worldwide Major Sporting Events 2014 Group Strategy Global Sales Strategy...

  • Page 7
    ...03 03.1 03.2 FINANCIAL REVIEW GROUP MANAGEMENT REPORT Internal Group Management System Group Business Performance Economic and Sector Development Income Statement Statement of Financial Position and Statement of Cash Flows Treasury Financial Statements and Management Report of adidas AG Disclosures...

  • Page 8
    ... position than as part of the adidas Running team. Innovation for the runner is at the heart of everything we do, and we relentlessly strive to find new technologies, materials and products that help them be better and run faster. Our industry-changing innovation, the Energy Boost running shoe...

  • Page 9
    Find out more here: WWW.ADIDAS-GROUP.COM LOVE_BOOST DECEMBER 2013: LAUNCH Launch of the Supernova Glide Boost adidas Group / 2013 Annual Report

  • Page 10
    ... FANS 13 20 MAT T H I A S M E CKIN G B U S I NE SS UN I T FOOT B A LL A DI DA S HE R Z O G E N A U R ACH, GE R MA N Y --- 2.5 YEARS In development 600 PLAYERS Tested in 10 different countries by 600 players adidas Group / 2013 Annual Report F O R T H E L O V E 6 O F S P O R T

  • Page 11
    ... launch. We are football. We are ready." For the love of sport. 7 20 13 Find out more here: WWW.ADIDAS-GROUP.COM LOVE_BRAZUCA DECEMBER 3, 2013: LAUNCH Launched on December 3, 2013, available simultaneously across all channels (Wholesale, Retail and eCommerce) adidas Group / 2013 Annual Report

  • Page 12
    ... R DESIG N H ER ZO G EN A UR AC H , G E RM ANY --- STAN SMITH Named after the American tennis player Stan Smith 2013: 40 TH BIRTHDAY The return of the Stan Smith. Just in time for its 40th birthday, adidas relaunches the icon adidas Group / 2013 Annual Report F O R T H E L O V E O F

  • Page 13
    ... way Stan Smith Up is writing a new chapter in the 40-year heritage of this timeless shoe. Evolving originality with respect to our past." For the love of sport. Find out more here: WWW.ADIDAS-GROUP.COM LOVE_STAN_SMITH MARCH 1, 2014 Release of the Stan Smith Up adidas Group / 2013 Annual Report

  • Page 14
    ... my great team - we make the magic happen every day to get our extraordinary products to consumers all over the world. We all know it has become incredibly easy for a consumer to purchase a product across multiple channels, such as in stores, online, via mobile, etc. The best way we can service this...

  • Page 15
    Output by 2015: 100 MILLION PIECES PER YEAR CAPACITY Warehouse capacity: more than 35 million pieces, more than 900,000 boxes and more than 95,000 palettes adidas Group / 2013 Annual Report

  • Page 16
    JANUARY 2013 Reebok and Spartan Race announce a multi-year partnership MARCH 2013 The Reebok Running team competes in the Atlanta Spartan Race and interviews Spartan athletes on site adidas Group / 2013 Annual Report F O R T H E L O V E O F S P O R T

  • Page 17
    ...is Matt and I am part of the Reebok Running Footwear product development team. It's a dream come true to get the opportunity to completely redefine the footwear for a sport. The Spartan Race partnership gave us this unique chance! Our objective was clear - to build a shoe that would conquer any dif...

  • Page 18
    ... with an unforgettable media experience on a private jet at 30,000 feet on route to Las Vegas. The boundaries for innovation are non-existent." O F S O V E P O R T For the love of sport. MEDIA EVENT First golf company PR team to launch a product to media on a jet adidas Group / 2013 Annual Report...

  • Page 19
    Find out more here: WWW.ADIDAS-GROUP.COM LOVE_JETSPEED NOVEMBER 15, 2013: RELEASE Release of JetSpeed, a breakthrough line of metalwoods MEDIA COVERAGE The JetSpeed product received substantial media coverage as a result of the trip adidas Group / 2013 Annual Report

  • Page 20
    25 HOMECOURT STORES TO OPEN GLOBALLY BY THE END OF 2014 Find out more here: WWW.ADIDAS-GROUP.COM LOVE_HOMECOURT JANUARY 1, 2014 HomeCourt retail concept launches in Beijing Brand Centre adidas Group / 2013 Annual Report F O R T H E L O V E O F S P O R T

  • Page 21
    ... brings the spirit of sport to retail, creating a place where consumers can feel the energy of the game and experience the unprecedented breadth and depth of the adidas brand." For the love of sport. APRIL 11, 2014 HomeCourt store opens in Bluewater in the UK adidas Group / 2013 Annual Report

  • Page 22
    ...NEO offers teens the desirable products and experiences they want and can afford to buy. This love story has only just started." For the love of sport. FEBRUARY 2013 NEO's first fashion show in New York City with Selena Gomez, curated by teenagers from around the world adidas Group / 2013 Annual...

  • Page 23
    F O R T H E L O V E O F S P O R T 19 20 13 Love letter from: @DreamGiiiirl Laura Find out more here: WWW.ADIDAS-GROUP.COM LOVE_NEO AUGUST 2013 NEO receives first love letter DECEMBER 2013 NEO reaches over 2 million Facebook fans adidas Group / 2013 Annual Report

  • Page 24

  • Page 25

  • Page 26
    ...am and you work with incredible and interesting products. A great example of this is our latest Derrick Rose basketball shoe - the D Rose 4.5 - and the apparel for the 63rd NBA All-Star Game in New Orleans, which celebrates the rich culture and fun atmosphere of this unique city by featuring vibrant...

  • Page 27
    ....9 01.10 Corporate Mission Statement Strategic Business Plan Operational and Sporting Highlights 2013 Letter from the CEO Executive Board Supervisory Board Supervisory Board Report Corporate Governance Report including the Declaration on Corporate Governance Compensation Report Our Share 24 25 26...

  • Page 28
    ... our brands and products to improve our competitive position. 2 We are innovation and design leaders who seek to help athletes of all skill levels achieve peak performance with every product we bring to market. 3 We are consumer-focused and therefore we continuously improve the quality, look...

  • Page 29
    ..."attack markets" North America, Greater China and Russia/CIS are targeted to contribute around 50% of total Group sales growth. We intend to increase the portion of sales generated through controlled space initiatives to over 50% of Group sales in the coming years. adidas Group / 2013 Annual Report

  • Page 30
    ... season. / PICTURE 11 24. Reebok-CCM Hockey previews the much-anticipated RBZ skates and RBZ N Stage 2 sticks to media in Quebec, Canada. 27. As part of the global "Live With Fire" campaign, Reebok unveils its latest 06. adidas and Porsche Design Sport mark a new milestone with their launch of...

  • Page 31
    To Our Shareholders Operational and Sporting Highlights 2013 / 01.3 / Q1 06 01 02 03 05 07 04 27 20 13 08 09 10 12 13 11 Q2 adidas Group / 2013 Annual Report

  • Page 32
    ... Field Trip in Herzogenaurach, the adidas Group assuming responsibility for Global Sales on Board level effective October 1, 2013. / PICTURE 06 19. Reebok announces a new partnership with world-renowned group fitness confirms its Route 2015 targets, which forecast sales of â,¬ 17 billion and an...

  • Page 33
    To Our Shareholders Operational and Sporting Highlights 2013 / 01.3 / Q3 03 06 07 01 04 05 29 02 20 13 08 10 13 09 11 12 14 Q4 adidas Group / 2013 Annual Report

  • Page 34
    ...to steadily increase shareholder returns over time. Looking out to 2014, while the Group will again face significant translation and margin challenges due to currency declines, from an operational perspective, Management is confident of strong underlying growth momentum compared to 2013. This will...

  • Page 35
    ... this spirit, I am pleased to report that our Group finished 2013 strongly. Towards year-end, we regained the kind of growth momentum more typical of our high-performance standards. We delivered an exceptional fourth quarter result, with robust currency-neutral sales growth of 12% and operating pro...

  • Page 36
    ... key deliverable of our Route 2015 strategy - to drive quality growth and sustainable success for our Group by fuelling consumer desire with premium products and brand experiences. Let me share with you a few examples: / We called out 2013 as the year of running, and it was exactly that. Sales grew...

  • Page 37
    ... market structure. I am convinced that our new and more coordinated set-up will make us even more attractive for consumers and customers and will enable us to further extend our leadership position in this important region. In North America, we have united adidas and Reebok under one management team...

  • Page 38
    ... Farm. / After successfully piloting adidas NEO stores in Germany in 2012/2013, we will extend our test phase by opening stores in Poland and the Czech Republic in 2014, as we continue to drive towards our long-term target to grow NEO into a one billion euro business. The first NEO store in Poland...

  • Page 39
    ...sport. This is our passion. And we will continue to work in a way that makes us proud of the result. I am convinced that we have everything in place to reach new heights, break records and drive long-term sustainable value. 35 20 13 HE R B ERT H A I NER adidas Group CEO adidas Group / 2013 Annual...

  • Page 40
    ... Deutschland AG, Munich, Germany / Member of the Supervisory Board, Deutsche Lufthansa AG, Cologne, Germany / R O B IN J. STA L K ER C hi ef Fi na nc i al O ffi cer For more information on the adidas Group's Executive Board: WWW.ADIDAS-GROUP.COM EXECUTIVE-BOARD adidas Group / 2013 Annual Report...

  • Page 41
    ...team as a Strategic Planner in 1989. During his 2013 career with the adidas Group, he has held many senior management positions, including Business Unit Manager, Key Account Manager Europe and Head of Region Europe, Middle East and Africa. In 2009, he became Chief Sales Officer Multichannel Markets...

  • Page 42
    To Our Shareholders Executive Board / 01.5 / All our employees put their entire dedication and energy into our mission of making the adidas Group the global leader in the sporting goods industry. Why? Because we want to create as much sustainable value for all our stakeholders as possible. No ...

  • Page 43
    To Our Shareholders Executive Board / 01.5 / adidas Group / 2013 Annual Report F O R T H E L O V E O F S P O R T

  • Page 44
    ... to § 27 section 3 Co-Determination Act (MitbestG) / Igor Landau, Sabine Bauer, Willi Schwerdtle, Heidi Thaler-Veh 1) Employee representative. 2) Since October 2, 2013; formerly Management Consultant, Hofheim am Taunus, Germany. 3) Since December 31, 2013. adidas Group / 2013 Annual Report

  • Page 45
    ..., CeramTec GmbH, Plochingen, Germany 41 20 13 HANS RUPRECHT 1) Sales Director Customer Service Central Europe West, adidas AG HEIDI THALER-VEH 1) Member of the Central Works Council, adidas AG CHRISTIAN TOURRES Former Member of the Executive Board of adidas AG adidas Group / 2013 Annual Report

  • Page 46
    ... Supervisory Board Dear Shareholders, 42 20 13 We look back on 2013 as a challenging but also successful year. Thanks to strong brands and partnerships in the world of sports, as well as first-class innovations, the adidas Group was again able to achieve good overall business results. Growth in...

  • Page 47
    ... at Reebok India Company. In addition, the Executive Board provided us with information on business development and planned marketing activities in the football category in the run-up to the 2014 World Cup. In August, we dealt intensively with the Group's new logistics and warehousing strategy and...

  • Page 48
    ... held various management positions within the Group in Germany and abroad in the past 20 years. With the creation of a separate Executive Board function for Global Sales, we have taken into account the importance of Global Sales for our company. At our extraordinary meeting on January 8, 2014, after...

  • Page 49
    ... no direct advisory or other service relationships between the company and a member of the Supervisory Board. Further information on corporate governance at the adidas Group can be found in the Corporate Governance Report including the Declaration on Corporate Governance / SEE CORPORATE GOVERNANCE...

  • Page 50
    ... detail the quarterly financial reports and the first half year report, together with the Chief Financial Officer and the auditor, prior to their publication. At a committee meeting in September, the committee members focused solely on the topic of risk management and the internal control system...

  • Page 51
    ... control and risk management system relating to the accounting process. We also discussed in depth with the Executive Board the proposal concerning the appropriation of retained earnings, which provides for a dividend of â,¬ 1.50 per dividendentitled share and adopted it in light of the Group's good...

  • Page 52
    ...the Executive Board and 20 Further information on Corporate Governance More information on topics covered in this report can be found on our website WWW.ADIDAS-GROUP.COM/CORPORATE_GOVERNANCE including: Articles of Association Rules of Procedure of the Executive Board Business Allocation Plan Rules...

  • Page 53
    ...the number of women in management positions within the adidas Group. The Supervisory Board thus supports the Group's diversity concepts, particularly regarding management development programmes, with the goal of increasing the representation of women on the Executive Board in the long term. In order...

  • Page 54
    ... 1% of the shares issued by adidas AG, but we do not report this on an individual basis for the members of the Boards. Instead, we publish the total holdings of all members of the Executive Board and all members of the Supervisory Board separately in order to safeguard the Board members' protectable...

  • Page 55
    ... and our employees and have been incorporated into our Code of Conduct. Our business activities are oriented towards the legal systems in the various countries and markets in which we operate. This implies a high level of social and environmental responsibility. adidas Group / 2013 Annual Report

  • Page 56
    ...this report can be found on our website at : // WWW.ADIDAS-GROUP.COM including: Code of Conduct Sustainability Social commitment Risk and opportunity management and compliance Information and documents on the Annual General Meeting Directors' dealings Accounting and annual audit Share ownership...

  • Page 57
    ... the Supervisory Board Report / SEE SUPERVISORY BOARD REPORT, P. 42. The compensation system is geared towards creating an incentive for successful, sustainably value-oriented corporate development and management. For determining the Executive Board members' compensation particularly in terms of its...

  • Page 58
    ... development of the adidas AG share price. The assessment base for the individual performance criteria is the three-year period from 2012 to 2014. / The LTIP Bonus serves - in line with sustainability-oriented corporate planning - as compensation for the long-term performance of the Executive Board...

  • Page 59
    ...component resulting from a management share option plan does not exist and is not planned. The development of the adidas AG share, however, constitutes one of the four performance criteria for the LTIP 2012/2014. The total compensation paid to our Executive Board in the 2013 financial year amounted...

  • Page 60
    ...service contract is terminated due to a change of control, his potential severance payment is limited to 150% of the Severance Payment Cap. The other service...on the Performance Bonus granted to the respective Executive Board member for the last full financial year. adidas Group / 2013 Annual Report

  • Page 61
    ... the Executive Board and their surviving dependants In 2013, pension payments to former Executive Board members or to their surviving dependants amounted to â,¬ 3.421 million (2012: â,¬ 3.336 million). As at December 31, 2013, the provisions for pension entitlements of this group of persons totalled...

  • Page 62
    ...in 2013 for both the DAX-30 and the MSCI World Textiles, Apparel & Luxury Goods Index. The adidas AG share outperformed both indices, supported by ongoing strong performance in emerging markets and market participants' rising confidence in the adidas Group's Route 2015 strategic business plan. This...

  • Page 63
    ...World Textiles, Apparel & Luxury Goods Index 03 / The adidas AG share Number of shares outstanding 2013 average Number of shares outstanding At year-end 2013 1) Type of share Free ï¬,oat Initial Public Offering Share split Stock exchange Stock registration number (ISIN) Stock symbol 1) All shares...

  • Page 64
    ... adidas AG share closed 2013 at a new all-time high of â,¬ 92.64, representing a 38% increase and a significant outperformance relative to international stock markets / TABLE 01. This implies a market capitalisation of â,¬ 19.4 billion at the end of 2013 versus â,¬ 14.1 billion at the end of 2012...

  • Page 65
    ... international companies with substantial operating businesses and credible disclosure policies. Further information on our ADR Programme can be found on our website at : // WWW.ADIDAS-GROUP.COM/ADR. Strong sustainability track record reï¬,ected in index memberships In recognition of our social...

  • Page 66
    ... again by buy-side analysts in the sector Consumer/Luxury Goods. In August 2013, the adidas Group 2012 Annual Report "Pushing Boundaries" ranked second among the German DAX-30 companies for the prestigious "Best Annual Report 2013" award granted by the German business magazine "manager magazin". The...

  • Page 67
    ... to share information in a timely and transparent manner, giving better insight into our business and showing them the Group behind our brands. 08 / Share ratios at a glance 2013 2012 Basic earnings per share Cash generated from operating activities per share Year-end price Year high Year low...

  • Page 68
    ...am part of Reebok's Brand Communications team. Reebok's latest product innovation in walking is Skyscape, a shoe so lightweight that you may even forget you have them on. My team and I had the privilege to develop an engaging marketing platform that will be activated across all media channels - with...

  • Page 69
    ...Sporting Events 2014 Group Strategy Global Sales Strategy Global Brands Strategy Other Businesses Strategy Global Operations Research and Development Employees Sustainability 66 67 68 72 77 86 94 99 105 111 G R O U P M A N A G E M E N T R E P O R T: This report contains the Group Management Report...

  • Page 70
    ..., USA TaylorMade-adidas Golf Headquarters, Carlsbad/California, USA Reebok-CCM Hockey Headquarters, Montreal/Quebec, Canada Reebok International Headquarters, The Rockport Company Headquarters, Canton/Massachusetts, USA adidas Group Latin America, Panama City, Panama 6 adidas International Trading...

  • Page 71
    ...IAAF Continental Cup, Marrakech, Morocco adidas Official Partner of the IAAF SEP 28 BMW Berlin Marathon, Berlin, Germany adidas Main Sponsor DEC 7 - 21 IHF Women's Handball World Championship, Hungary/Croatia adidas Official IHF Sponsor adidas Group / 2013 Annual Report 20 APR 21 MAY 14 MAY...

  • Page 72
    ...committed to increasing returns to shareholders with above-industry-average share price performance and dividends / SEE OUR SHARE, P. 58. Investments focused on highest-potential markets and channels As a Group, we target leading market positions in all markets in which we compete. However, we have...

  • Page 73
    ... found in sport - performance, passion, integrity and diversity - and that values sustainability. Supply Chain Become closest to every consumer by building and managing a supply chain that quickly responds to changing market needs and supports multiple distinct business models. Sustainable Company...

  • Page 74
    Group Management Report - Our Group Group Strategy / 02.3 / 02 / adidas Group Route 2015 targets 1) (â,¬ in millions) 2010 2011 2012 2013 2015 targets adidas Group net sales 2) Global Sales 2) Wholesale Retail thereof eCommerce Global Brands 2) adidas Reebok Other Businesses Operating margin ...

  • Page 75
    ... around the world. In terms of our own retail, we intend to open at least 750 adidas and Reebok stores between 2010 and 2015, as well as grow significantly our eCommerce business, which we project to increase to â,¬ 500 million by 2015 / SEE GLOBAL SALES STRATEGY, P. 72. / Leverage growth and...

  • Page 76
    ...of sale, the Global Sales team is aiming to create desire for the adidas and Reebok brands and grow market share through wholesale partners, own-retail stores and our e-commerce activities. The strategic business plan Route 2015 outlines our long-term priorities: / increasing the share of controlled...

  • Page 77
    ... Relationships by building long-term sustainable strategic relationships with our leading and inï¬,uential customers T Training by developing and rolling out a training programme, PEAK, which trains, develops, rewards and recognises the Global Wholesale sales team adidas Group / 2013 Annual Report

  • Page 78
    ... the global mandatory range share in all our own stores. / Drive people excellence through improved training and development procedures. / Omni-channel focus: Create a seamless shopping experience for our consumers by connecting our online and ofï¬,ine touchpoints. adidas Group / 2013 Annual Report

  • Page 79
    ... Management Report - Our Group Global Sales Strategy / Retail Strategy / 02.4 / 04 / Retail strategic pillars To become a top retailer by delivering healthy, sustainable growth with outstanding return on investment Focus on the consumer Achieve operational excellence Exploit portfolio of brands...

  • Page 80
    ...key markets. / Become the "go-to destination" for all adidas and Reebok products in terms of technologies, benefits and heritage. / Deliver personalised experiences at key consumer touchpoints by leveraging the full potential of our evolving CRM/loyalty solutions. adidas Group / 2013 Annual Report

  • Page 81
    ... targeted growth for the Group until 2015. Areas within adidas and Reebok that were identified as key contributors and game changers for the adidas Group include: / Gaining sales and market share in the key global categories running and basketball with adidas Sport Performance. / Expanding adidas...

  • Page 82
    ...: / Leadership in product innovation to excite and inspire the consumer. / Marketing and communication leadership. / Activation and validation via a relevant set of promotion partnerships. / Extending brand reach and appeal through strategic partnerships. 78 20 13 adidas Group / 2013 Annual Report

  • Page 83
    ... global brand with German roots. adidas Sport Performance: The guiding principle of adidas Sport Performance is to make athletes better by making them faster, stronger, smarter, cooler and more natural. The main focus is on five key categories: football, running, basketball, training and outdoor...

  • Page 84
    ..., the founder of the company. The main objective is simple: to make athletes better, with innovation at the heart of all adidas Sport Performance products. From a category perspective, football / PICTURE 05, running / PICTURE 02 and basketball are our key strategic categories for growth. However, to...

  • Page 85
    ...for the New York Fashion Week. To ensure success, the NEO formula employs a "fast fashion" business model. This means quick reaction to emerging trends through shorter lead times and excellence in retail execution. In addition, adidas Sport Style also partners with a number of top designers, such as...

  • Page 86
    ... values Brand attitude Key markets Key strategic pillars Net sales in 2013 â,¬ 1.599 billion 82 20 13 11 / The House of Fitness 09 / Reebok ZQuick running shoe Fit for Life Fitness Fitness Training Studio Classics Fitness Running Walking Kids Royal adidas Group / 2013 Annual Report

  • Page 87
    ... expanding its activities in the area of wearable electronics / SEE RESEARCH AND DEVELOPMENT, P. 99. 13 / Reebok Spartan Race obstacle racing 83 20 13 12 / adidas Sport Performance Springblade running shoe 14 / adidas Sport Performance miCoach Smart Run watch adidas Group / 2013 Annual Report

  • Page 88
    ... the Fit Generation consumer in the social world and enable Reebok to be part of the conversation in real time. In addition, Reebok is also opening the Reebok Production Studios, to enable the brand to become a constant creator of exciting and relevant content. adidas Group / 2013 Annual Report

  • Page 89
    Group Management Report - Our Group Global Brands Strategy / 02.5 / Activation and validation via a relevant set of promotion partnerships The utilisation of promotion partners such as federations, teams, leagues, events and individuals is an important part of endorsing brand positioning, and an ...

  • Page 90
    ... style, comfort and performance to the golf enthusiast, complementing adidas Golf's athletic high-performance positioning. Together, adidas Golf and Ashworth make TaylorMade-adidas Golf a global leader in golf apparel and one of the top three companies in footwear sales. Adams Golf's product focus...

  • Page 91
    Group Management Report - Our Group Other Businesses Strategy / TaylorMade-adidas Golf Strategy / 02.6 / Focus on design and technologically advanced products One of TaylorMade-adidas Golf's core objectives is to create the best performance golf products in the marketplace. This involves a clear ...

  • Page 92
    ... the new ClimaChill line. 04 / adidas Golf adizero One golf shoe Adams Golf's key strategy for growth is to use its position as the number one hybrid brand on the world's six major professional golf tours, including the PGA Tour, to become the best-selling hybrid brand worldwide. Recent product...

  • Page 93
    ... keen execution of them continue to set TaylorMade-adidas Golf's marketing efforts apart from the competition. Effective retail and e-commerce strategy leverages key accounts and assets TaylorMade-adidas Golf makes it a point to create compelling pointof-sale communications and displays designed to...

  • Page 94
    ...Rockport Total Motion campaign 90 20 13 About Rockport Brand mission Brand attitude Key markets Key strategic pillars Drive product concept recognition Leverage men's and women's opportunity Evolve point-of-sale experience Net sales in 2013 â,¬ 289 million adidas Group / 2013 Annual Report

  • Page 95
    ... and retail, driving convergence to the omni-channel strategic vision. / Elevating presence at the point of sale, through significant investments to further connect with the consumer on an emotional level in both own-retail and wholesale environments. 91 20 13 adidas Group / 2013 Annual Report

  • Page 96
    ... Reebok-CCM Hockey's strategy is to increase market share by leveraging its performance positioning and dedication to innovate for the leading athletes in the sport. Product innovation key to brand positioning The key priority for Reebok-CCM Hockey is to design and market products that are targeted...

  • Page 97
    ... with its high-performance positioning in the sport. Through a commitment to product innovation, Reebok-CCM Hockey's pricing strategy is to dominate the market in the premium price segments and to be a strong competitor within the mid-price segment of the market. adidas Group / 2013 Annual Report

  • Page 98
    ... delivery performance towards customers (Wholesale) and our own-retail stores / SEE INTERNAL GROUP MANAGEMENT SYSTEM, P. 118. In 2013, the adidas Group delivered 82% of its adidas and Reebok products "on time" and "in full" (2012: 78%). For 2014, Global Operations strives to maintain OTIF at a level...

  • Page 99
    ...material costing in order to further manage our cost base. In addition to material, we will consolidate product types within the apparel supply chain. In addition, Global Operations is a key contributor to the Group's Integrated Business Planning (IBP) project / SEE INTERNAL GROUP MANAGEMENT SYSTEM...

  • Page 100
    ...apparel and hardware. The latest list of our suppliers can be found on our website : // WWW.ADIDAS-GROUP.COM/SUSTAINABILITY. Modernising the Group's infrastructure Global Operations continues to focus on building the required infrastructure, processes and systems to support the Group's growth plans...

  • Page 101
    ... Rockport, Reebok-CCM Hockey, Adams Golf and the Sports Licensed Division are not serviced through Global Operations, but instead utilise their own purchasing organisations. In order to quickly seize short-term opportunities in their local market or react to trade regulations, Group subsidiaries may...

  • Page 102
    ... Management Report - Our Group Global Operations / 02.7 / China share of apparel production decreases In 2013, we sourced 84% of the total apparel volume for adidas, Reebok, adidas Golf and Ashworth from Asia (2012: 84%). Europe remained the second-largest apparel sourcing region, representing...

  • Page 103
    ... Management Report - Our Group Research and Development / 02.8 / Research and Development Creating innovative products to meet the needs of professional and everyday athletes and consumers is a prerequisite to strengthening our market position in the sporting goods industry. In a rapidly changing...

  • Page 104
    Group Management Report - Our Group Research and Development / 02.8 / 01 / Major R&D activities and locations Main activities Major locations adidas The adidas innovation team is divided into groups that focus on performance footwear, apparel and hardware innovation, within which there are ...

  • Page 105
    .... This represents 2% of total Group employees. In 2014, we expect the number of R&D employees to remain stable. R&D expenses at prior year level Each year, we invest considerable resources into developing and commercialising new technologies as well as fresh design ideas, in order to offer the best...

  • Page 106
    Group Management Report - Our Group Research and Development / 02.8 / Successful product launches across all major adidas categories In 2013, adidas sales were again driven by the latest product offerings, with products launched during the course of the year accounting for 74% of brand sales (2012...

  • Page 107
    ... HOCKEY STRATEGY, P. 92. / SEE REEBOK-CCM Innovation a key success factor for TaylorMade-adidas Golf At TaylorMade-adidas Golf, current products (i.e. products launched in the last 18 months, which is the typical product life cycle in golf) represented 81% of total hardware sales in 2013 (2012...

  • Page 108
    ..., at the same time, advancing existing product platforms with a focus on performance skates and sticks. Reebok-CCM Hockey will also continue its partnership with TaylorMade-adidas Golf and its university research partners. For more information on 2014 product initiatives EVENTS AND OUTLOOK, P. 151...

  • Page 109
    ... for open, innovative and collaborative learning solutions. Online communication platforms to drive employee engagement, collaboration and learning / SEE P. 108 adidas Group / 2013 Annual Report 20 13 01 / Three strategic workstreams supporting achievement of our Route 2015 targets 105

  • Page 110
    ... performance, succession, development and learning opportunities to enable our employees to reach their potential at every stage of their career / DIAGRAM 02. Talent management: The quality of current and future leadership within the adidas Group is key to our success. With specifically designed...

  • Page 111
    ... offers students three to six months of work experience within the adidas Group. It plays a key role in our recruiting strategy. At the end of 2013, we employed 532 interns in Germany (2012: 492). Performance management: To further drive a high-performance culture within the adidas Group, in 2013...

  • Page 112
    ...2013, we also launched a new Learning Management System in headquarter locations and selected key markets to streamline our classroom training registration processes and provide access and reporting around selected training activities. In 2014, the scope will be expanded to further support our Group...

  • Page 113
    ...important non-financial KPI for our Group / SEE INTERNAL GROUP MANAGEMENT SYSTEM, P. 118. They enable us to develop the right focus and future people strategies across our organisation. The adidas Group conducted its second Global Employee Engagement Survey in 2013. The comprehensive set of over 80...

  • Page 114
    ... Marketing Production IT Research & development On a full-time equivalent basis, our Group had 43,537 employees on December 31, 2013 (2012: 40,168). Due to the high share of employees working on a part-time basis in the Retail segment, this figure is lower than the figure reported on...

  • Page 115
    ... short. More information online More information on the following topics is available on our website at : // WWW.ADIDAS-GROUP.COM/EN / / / / / / Our Group's sustainability approach Supply chain management Stakeholder engagement Products and sustainability Reporting and performance data Our Group...

  • Page 116
    Group Management Report - Our Group Sustainability / 02.10 / Careful supplier selection To improve working conditions throughout our supply chain, Global Operations works closely with our SEA team on supplier selection. The SEA team assesses all potential new suppliers, and orders can only be ...

  • Page 117
    ... management systems in place. Around 20% of the adidas Group's workforce is located at these sites. Read more about the Green Company programme and our performance achievements on our website at : // WWW.ADIDAS-GROUP.COM/EN/SUSTAINABILITY/PLANET/GREEN-COMPANY. adidas Group / 2013 Annual Report

  • Page 118
    ...rst adidas "Better Place" products were introduced globally in 2009 in response to increasing consumer demand for sustainable apparel and footwear. These products have been a part of the adidas brand product offering ever since. 13 In 2013, we focused on increasing the use of sustainable materials...

  • Page 119
    ...family tracking the performance of the leading sustainability-driven companies worldwide. In the category "Clothing, Accessories & Footwear", adidas AG was rated as industry leader in sustainability issues and corporate responsibility for the tenth time. 115 20 13 adidas Group / 2013 Annual Report

  • Page 120
    ... Run tracks everything a runner wants from the user's wrist, including their heart rate, removing the necessity of chest straps. And it also delivers an advanced and intuitive blend of coaching and performance data, designed to help runners maximise their training every time they lace up their shoes...

  • Page 121
    ...N A GE ME N T R E P OR T 03.1 03.2 Internal Group Management System Group Business Performance Economic and Sector Development Income Statement Statement of Financial Position and Statement of Cash Flows Treasury Financial Statements and Management Report of adidas AG Disclosures pursuant to § 315...

  • Page 122
    ... include: / Optimising our product mix. / Minimising clearance activities. / Increasing the quality of distribution, with a particular focus on controlled space. / Over-proportionate growth in emerging markets. / Realising supply chain efficiency initiatives. adidas Group / 2013 Annual Report

  • Page 123
    ...Acquisitive growth focus is primarily related to improving the Group's positioning within a certain sports category, strengthening our technology portfolio or addressing new consumer segments. Any potential acquisition candidate must correspond with the Group's strategic direction. Maximising return...

  • Page 124
    ... Report being an integral part of this. All our social and environmental publications, which include more details and additional data, are provided on our corporate website at : // WWW.ADIDAS-GROUP.COM/EN/SUSTAINABILITY/ REPORTING-POLICIES-AND-DATA/SUSTAINABILITY-REPORTS. adidas Group / 2013 Annual...

  • Page 125
    ... planning process and communicated in advance of all relevant business milestones. While the process roll-out was successfully finalised in 2012, 2013 saw important system changes and data restructuring, initiated to make the approach sustainable and integrated in the Group's overall value chain...

  • Page 126
    ....3% (2012: 47.7%), driven by the positive impact from a more favourable pricing, product and regional sales mix as well as a larger share of higher-margin Retail sales. The Group's gross profit rose 1% to â,¬ 7.140 billion in 2013 versus â,¬ 7.103 billion in 2012. In 2013, the adidas Group incurred...

  • Page 127
    Group Management Report - Financial Review Group Business Performance / Economic and Sector Development / 03.2 / The US economy grew modestly in 2013, with GDP, according to the Federal Reserve, expanding 2.3% compared to 1.8% in 2012. Low inï¬,ation and a recovery in the real estate market helped...

  • Page 128
    ...in 2013, driven in particular by increases in the basketball and high-performance running categories. Highly innovative performance products also fuelled growth in US sporting apparel sales, which are estimated to have increased at a high-single-digit rate. adidas Group currency-neutral revenues and...

  • Page 129
    .... Group sales increase driven by growth in Retail and Other Businesses In 2013, currency-neutral Wholesale revenues remained stable. While sales at Reebok grew at a low-single-digit rate, revenues at adidas remained at the prior year level. Currency-neutral Retail sales increased 8% versus the...

  • Page 130
    Group Management Report - Financial Review Group Business Performance / Income Statement / 03.2 / 11 / Net sales by region (â,¬ in millions) 2013 2012 Change Change (currency-neutral) Western Europe European Emerging Markets North America Greater China Other Asian Markets Latin America Total 1) ...

  • Page 131
    ... in millions) 2013 2012 Sales working budget Marketing working budget Marketing overhead Sales force Logistics Research & development Central administration Total â- 2013 â- 2012 340 1,457 425 1,890 766 128 1,127 6,133 304 1,502 445 1,885 750 128 1,136 6,150 adidas Group / 2013 Annual Report

  • Page 132
    ... segments. In absolute terms, sales working budget expenditure increased 12% to â,¬ 340 million in 2013 from â,¬ 304 million in the prior year. This development was mainly a result of higher expenditure related to the expansion of the Group's own-retail activities. By brand, adidas sales working...

  • Page 133
    ... represents an increase of 10% versus the prior year level of 46,306. New hirings related to the expansion of the Group's own-retail store base, in particular in European Emerging Markets, were the main driver of this development. On a full-time equivalent basis, the number of employees increased...

  • Page 134
    ... losses, basic and diluted earnings per share were up 6% to â,¬ 4.01, which is below our initial projections of â,¬ 4.25 to â,¬ 4.40 (2012: â,¬ 3.78) / DIAGRAM 31. The weighted average number of shares used in the calculation was 209,216,186 / SEE NOTE 34, P. 231. adidas Group / 2013 Annual Report

  • Page 135
    ... borrowings Accounts payable Long-term borrowings Other liabilities Total equity â- 2013 â- 2012 1) For absolute figures see adidas AG Consolidated Statement of Financial Position, p. 186. 11,599 11,651 5.9% 2.4% 15.7% 15.4% 5.6% 10.4% 25.5% 26.5% 47.3% 45.3% adidas Group / 2013 Annual Report

  • Page 136
    Group Management Report - Financial Review Group Business Performance / Statement of Financial Position and Statement of Cash Flows / 03.2 / 35 / 2013 2012 2011 2010 2009 Total assets 1) (â,¬ in millions) 11,599 11,651 11,237 10,618 8,875 Assets At the end of December 2013, total assets remained...

  • Page 137
    ... Management Report - Financial Review Group Business Performance / Statement of Financial Position and Statement of Cash Flows / 03.2 / Liabilities and equity Total current liabilities increased 8% to â,¬ 4.732 billion at the end of December 2013 from â,¬ 4.374 billion at the end of December 2012...

  • Page 138
    ... and fitting of stores in our Retail segment as well as investments in the Group's logistics infrastructure and IT systems. These were partly offset by the sale of short-term financial assets. Net cash used in financing activities totalled â,¬ 439 million (2012: net cash generated from financing...

  • Page 139
    ... subsidiaries. Controlling functions on a Group level ensure that the transactions of the individual business units are in compliance with the Group's Treasury Policy. 135 20 13 46 / 2013 2012 2011 2010 2009 Net borrowings/EBITDA (0.2) (0.3) (0.1) 0.2 1.2 adidas Group / 2013 Annual Report

  • Page 140
    ...-term bilateral credit lines, respectively (2012: 20% and 80%) / DIAGRAM 49. Uncommitted Total â- 2013 â- 2012 50 / Currency split of gross borrowings (â,¬ in millions) 2013 2012 EUR USD All others Total â- 2013 â- 2012 1,016 193 125 1,334 1,004 424 59 1,487 adidas Group / 2013 Annual...

  • Page 141
    Group Management Report - Financial Review Group Business Performance / Treasury / 03.2 / Standard financial covenants In the case of our committed credit facilities, we have entered into various covenants. These covenants may include limits on the disposal of fixed assets, the amount of debt ...

  • Page 142
    ... effects had a positive impact of â,¬ 3 million on net cash development. Net cash 1) Rounding differences may arise in totals. 56 / 2013 Financial leverage (in %) (5.3) (8.5) (1.7) 4.8 24.3 Effective currency management a key priority As a globally operating company, the adidas Group is exposed...

  • Page 143
    ...Group Business Performance / Financial Statements and Management Report of adidas AG / 03.2 / Financial Statements and Management Report of adidas AG adidas AG is the parent company of the adidas Group. It includes operating business functions, primarily for the German market, as well as corporate...

  • Page 144
    Group Management Report - Financial Review Group Business Performance / Financial Statements and Management Report of adidas AG / 03.2 / Other operating income down 8% In 2013, other operating income of adidas AG decreased 8% to â,¬ 1.165 billion (2012: â,¬ 1.270 billion). This was primarily due ...

  • Page 145
    ...aware of, any direct or indirect shareholdings in the share capital of adidas AG exceeding 10% of the voting rights. Shares with special rights There are no shares bearing special rights. In particular, there are no shares with rights conferring powers of control. adidas Group / 2013 Annual Report

  • Page 146
    ... Management Report - Financial Review Group Business Performance / Disclosures pursuant to § 315 Section 4 and § 289 Section 4 of the German Commercial Code / 03.2 / Voting right control if employees have a share in the capital Like all other shareholders, employees who hold adidas AG shares...

  • Page 147
    ... cash (limited to 10% of the nominal capital taking into account certain offsets) at a price not significantly below the stock market price of shares with the same features. / They may be offered and assigned as consideration for the direct or indirect acquisition of companies, parts of companies...

  • Page 148
    ... Management Report - Financial Review Business Performance by Segment / Wholesale Business Performance / 03.3 / Business Performance by Segment The adidas Group has divided its operating activities into Wholesale, Retail and Other Businesses. The Wholesale segment comprises the adidas and Reebok...

  • Page 149
    ... by brand In 2013, adidas Sport Performance wholesale revenues grew 1% on a currency-neutral basis. Growth was mainly a result of sales increases in the training, running, football and outdoor categories, partly offset by declines in categories closely related to prior year major sporting events...

  • Page 150
    Group Management Report - Financial Review Business Performance by Segment / Retail Business Performance / 03.3 / Retail Business Performance Retail full year results In 2013, Retail revenues increased 8% on a currency-neutral basis as a result of high-single-digit sales growth at adidas. Currency...

  • Page 151
    Group Management Report - Financial Review Business Performance by Segment / Retail Business Performance / 03.3 / period, mainly due to double-digit growth in the training, running and basketball categories. adidas Originals & Sport Style sales rose 12% on a currency-neutral basis, driven by ...

  • Page 152
    ... to 41.0% (2012: 42.8%). The positive effect from higher product margins at Rockport and Reebok-CCM Hockey was more than offset by lower product margins at TaylorMade-adidas Golf related to inventory clearance activities as a result of the challenging golf market in 2013. Other Businesses gross pro...

  • Page 153
    ...adidas Golf. Sales at Reebok-CCM Hockey and Rockport declined at a high-single-digit rate. Sales in European Emerging Markets increased 1% on a currency-neutral basis. Strong growth at Rockport was partly offset by sales declines at Reebok-CCM Hockey. Revenues at TaylorMade-adidas Golf grew at a low...

  • Page 154
    Group Management Report - Financial Review Business Performance by Segment / Other Businesses Performance / 03.3 / Currency-neutral Reebok-CCM Hockey sales were up 11%. This increase is partly due to the low comparison basis resulting from the NHL lockout during the third and fourth quarter of ...

  • Page 155
    ... pipeline of new and innovative products at all brands and the positive effects from major sporting events including the 2014 FIFA World Cup, we project top- and bottom-line improvements in our Group's financial results in 2014. We forecast adidas Group sales to increase at a high-single-digit rate...

  • Page 156
    Group Management Report - Financial Review Subsequent Events and Outlook / 03.4 / Global economy to grow in 2014 According to the World Bank, global GDP is projected to increase 3.2% in 2014 (2013: 2.4%). While several major high-income economies are expected to return to growth in 2014 and inï¬,...

  • Page 157
    ...Group Wholesale Retail Comparable store sales Other Businesses TaylorMade-adidas Golf Rockport Reebok-CCM Hockey Gross margin Operating margin Net income attributable to shareholders Average operating working capital in % of net sales Capital expenditure Store base Gross borrowings high-single-digit...

  • Page 158
    ... Retail segment sales are projected to grow at a high-single- to low-double-digit rate in 2014. The Group expects a net increase of its store base of around 250 adidas and Reebok stores in 2014. We plan to open around 450 new stores, depending on the availability of desired locations. New stores...

  • Page 159
    ...In 2014, the adidas Group gross margin is forecasted to increase to a level between 49.5% and 49.8% (2013: 49.3%). Improvements are expected in most segments. Group gross margin will benefit from a positive pricing, product and regional sales mix, as growth rates in high-margin emerging markets are...

  • Page 160
    ... strategic business plan, we project adidas Group sales and net income to increase in 2015. We also expect further improvements in operating margin. Further details of our Route 2015 strategic goals and initiatives are outlined in the Group Strategy section of this Annual Report / SEE GROUP STRATEGY...

  • Page 161
    ... Reebok Reebok Reebok Reebok Reebok Reebok TaylorMade TaylorMade TaylorMade TaylorMade TaylorMade TaylorMade TaylorMade adidas Golf adidas Golf Adams Golf Adams Golf Rockport Rockport Rockport Rockport Rockport Reebok Hockey Reebok Hockey CCM CCM CCM 157 20 13 adidas Group / 2013 Annual Report

  • Page 162
    ...internal event (or series of events) that can positively impact the Group's ability to achieve its business objectives or financial goals. 01 / adidas Group risk and opportunity management system Supervisory and Executive Boards Group Risk Management Risk Management Policy & Methodology/Support...

  • Page 163
    ... the macroeconomic environment, developments in the sporting goods industry, as well as internal processes, to identify risks and opportunities as early as possible. The Risk Owners (i.e. all direct reports to the adidas AG Executive Board and the Managing Directors of all our markets) have primary...

  • Page 164
    ... compliance management system is based on the OECD Principles of Corporate Governance. It refers to the OECD Guidelines for Multinational Enterprises and is designed to: 160 20 13 Regular risk reporting consists of a two-step reporting stream supported and facilitated by a globally used Group-wide...

  • Page 165
    ... 5 German Commercial Code (Handelsgesetzbuch - HGB) The internal control and risk management system relating to the consolidated financial reporting process of the adidas Group represents a process embedded within the Group-wide corporate governance system. It aims at providing reasonable assurance...

  • Page 166
    ... Management Report - Financial Review Risk and Opportunity Report / 03.5 / 162 20 13 The accounting for Group companies is conducted either locally or by an adidas Group Shared Service Centre. Most of the IT ERP systems used are based on a Group-wide standardised SAP system. Some Group companies...

  • Page 167
    Group Management Report - Financial Review Risk and Opportunity Report / Strategic Risks / 03.5 / 03 / Corporate risk overview Likelihood Potential impact Strategic Risks Macroeconomic, socio-political and regulatory risks Growth in the sporting goods industry is highly dependent on consumer ...

  • Page 168
    ... and customers as well as our positive expectations for our key sales markets we now assess the likelihood of materialising as unlikely (2012: possible). Risks related to media and stakeholder activities The adidas Group faces considerable risk if we are unable to uphold high levels of consumer...

  • Page 169
    ...for sporting goods products is one of the most serious threats to our industry. Consumer demand changes can be sudden and unexpected, particularly in our fashion-related businesses. Because industry product procurement cycles average 12 to 18 months, the Group faces a risk of short-term revenue loss...

  • Page 170
    ... with retailers could have substantial negative effects on our wholesale activities and thus the Group's business performance. Losing important customers in key markets due to subpar relationship management would result in significant sales shortfalls. adidas Group / 2013 Annual Report

  • Page 171
    ... providing our retail partners with the support and tools to establish and maintain a mutually successful business relationship. Customer relationship management is not only a key activity for our sales force but also of highest importance to our Group's top executives and second-line management. As...

  • Page 172
    ... of materialising is probable (2012: unlikely). IT risks Key business processes, including product marketing, order management, warehouse management, invoice processing, customer support and financial reporting, are all dependent on IT systems. A significant systems outage or loss of data...

  • Page 173
    ... methodology for all IT projects that includes tight cost control and regular risk reviews for all major projects. The IT organisation's strategic direction is aligned with the adidas Group's overall Route 2015 strategic business plan. New quality reviews for major projects have been implemented to...

  • Page 174
    ...are not met, business relations are terminated / SEE SUSTAINABILITY, P. 111. In order to minimise the environmental impact of producing and distributing our products, the adidas Group developed a fully comprehensive environmental strategy (Environmental Strategy 2015). This strategy takes a holistic...

  • Page 175
    ... risk by employing dedicated teams that monitor the quality of our products on all levels of the supply chain through rigorous testing prior to production, close cooperation with suppliers throughout the manufacturing process, random testing after retail delivery, open communication about defective...

  • Page 176
    ... structure. In addition, the adidas Group faces the risk of having to accept unfavourable financing terms due to liquidity restraints. Our Group Treasury department uses an efficient cash management system to manage liquidity risk. At December 31, 2013, Group cash, cash equivalents and marketable...

  • Page 177
    Group Management Report - Financial Review Risk and Opportunity Report / Financial Risks / 03.5 / 05 / Future cash outï¬,ows 1) (â,¬ in millions) Up to 1 year Up to 2 years Up to 3 years Up to 4 years Up to 5 years Up to 6 years Up to 7 years Total As at December 31, 2013 Bank borrowings 2) ...

  • Page 178
    ...as certificates of deposit, which we value at "fair value through profit or loss" due to the short-term maturity of these instruments. Potential effects due to changes in interest rates are considered immaterial and are not recognised in the sensitivity analysis. adidas Group / 2013 Annual Report

  • Page 179
    ... addition, legislative and regulatory changes, e.g. the elimination of trade barriers, can potentially open new channels of distribution or lead to lower import costs and positively impact Group profitability. Furthermore, governments are increasingly promoting living an active lifestyle to fight...

  • Page 180
    ...and customisation platforms reï¬,ecting each brand's strategy. With mi adidas and YourReebok, consumers can design and order completely customised adidas and Reebok footwear online, thereby creating their own unique style. This is a particularly relevant opportunity in the kids' segment. In addition...

  • Page 181
    ... and development, designers in the fashion industry, other brands and non-traditional sporting goods retailers. These partnerships have generated multiple new growth avenues for the Group, as we have acquired product or process know-how and gained access to new distribution channels or markets. For...

  • Page 182
    ...promotion partnerships with world-class athletes in key sports, we regard the likelihood that those opportunities materialise to such an extent in the short term only as possible (2012: likely). Personnel opportunities Recruiting highly qualified employees, in particular for our own-retail segment...

  • Page 183
    Group Management Report - Financial Review Risk and Opportunity Report / 03.5 / 09 / Changes in corporate risk assessment versus prior year 2013 2012 Likelihood Potential impact Likelihood Potential impact Strategic risks Macroeconomic, socio-political and regulatory risks Dependency risks ...

  • Page 184
    ... / SEE STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CASH FLOWS, P. 131. 180 20 13 Beyond our financial performance, we also actively monitor the Group's key non-financial KPIs on a regular basis, as available / SEE INTERNAL GROUP MANAGEMENT SYSTEM, P. 118. From a market share perspective, we...

  • Page 185
    ...2015 strategic business plan in 2010, we have made good progress towards our Route 2015 aspirations. We remain focused on creating long-term sustainable shareholder value and continue to pursue all targets with utmost diligence. 01 / adidas Group targets versus actual key metrics 2012 Results 2013...

  • Page 186
    ... that help players of all levels to get the most out of this great game. My team and I launched many innovative products in 2013, highlighted by the launch of the CCM RBZ skate and RBZ Stage II stick. These two products generated incredible excitement in both the consumer and professional channels...

  • Page 187
    ... Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes Notes to the Consolidated Statement of Financial Position Notes to the Consolidated Income Statement Notes - Additional Information Statement of Movements of Intangible and Tangible Assets Shareholdings 184...

  • Page 188
    ...loss of the Group, and the Group Management Report, which has been combined with the Management Report of adidas AG, includes a fair review of the development and performance of the business and the position of the Group, together with a description of the material opportunities and risks associated...

  • Page 189
    ... prepared by adidas AG, Herzogenaurach, comprising the statement of financial position, income statement, statement of comprehensive income, statement of changes in equity, statement of cash ï¬,ows and the notes, together with the management report of the Company and the Group for the business year...

  • Page 190
    ..., 2013 Dec. 31, 2012 Change in % ASSETS Cash and cash equivalents Short-term financial assets Accounts receivable Other current financial assets Inventories Income tax receivables Other current assets Assets classified as held for sale Total current assets Property, plant and equipment Goodwill...

  • Page 191
    Consolidated Financial Statements Consolidated Statement of Financial Position / 04.3 / .. / adidas AG Consolidated Statement of Financial Position (IFRS) (â,¬ in millions) Note Dec. 31, 2013 Dec. 31, 2012 Change in % LIABILITIES AND EQUITY Short-term borrowings Accounts payable Other current ...

  • Page 192
    ... to non-controlling interests Basic earnings per share (in â,¬) Diluted earnings per share (in â,¬) Rounding differences may arise in percentages and totals. The accompanying notes are an integral part of these consolidated financial statements. 34 34 3.76 3.76 adidas Group / 2013 Annual Report

  • Page 193
    ...fic conditons are met Other comprehensive income Total comprehensive income Attributable to shareholders of adidas AG Attributable to non-controlling interests 1) Includes actuarial gains or losses relating to defined benefit obligations, return on plan assets (excluding interest income) and the...

  • Page 194
    ... plans (IAS 19), share option plans and acquisition of shares from non-controlling interest shareholders. Rounding differences may arise in percentages and totals. The accompanying notes are an integral part of these consolidated financial statements. 25 209 777 adidas Group / 2013 Annual Report

  • Page 195
    ...Financial Statements Consolidated Statement of Changes in Equity / 04.6 / Cumulative currency translation differences Hedging reserves Other reserves 1) Retained earnings Total shareholders' equity Non-controlling interests Total... 473 (283) 5,481 191 20 13 adidas Group / 2013 Annual Report

  • Page 196
    ... Acquisition of subsidiaries and other business units net of cash acquired Proceeds from disposal of subsidiaries net of cash Proceeds from sale of short-term financial assets (Purchase of)/proceeds from investments and other long-term assets Interest received Net cash used in investing activities...

  • Page 197
    ... of adidas and Reebok products to retail customers. The Retail segment comprises all business activities relating to the sale of adidas and Reebok products directly to end consumers through own retail and own e-commerce platforms. adidas and Reebok branded products include footwear, apparel and...

  • Page 198
    ... Financial Assets and Financial Liabilities (effective date: January 1, 2013): This amendment required additional disclosures in the Group's financial statements / SEE RISK AND OPPORTUNITY REPORT, P. 158. / IFRS 13 Fair Value Measurement (effective date: January 1, 2013): This new standard...

  • Page 199
    ... acquisition date is directly recorded in shareholders' equity. The financial effects of intercompany transactions, as well as any unrealised gains and losses arising from intercompany business relations are eliminated in preparing the consolidated financial statements. adidas Group / 2013 Annual...

  • Page 200
    ... used in the preparation of the consolidated financial statements. Overview of selected measurement principles Item Measurement principle Assets Cash and cash equivalents Short-term financial assets Accounts receivable Inventories Assets classified as held for sale Property, plant and equipment...

  • Page 201
    ... options are determined on the basis of market conditions on the reporting dates. The fair value of a currency option is determined using generally accepted models to calculate option prices. The fair market value of an option is inï¬,uenced not only by the remaining term of the option but also by...

  • Page 202
    ... goods are valued at the lower of cost or net realisable value, which is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Costs are determined using a standard valuation method: the "average cost...

  • Page 203
    ... with indefinite useful lives in the years ending December 31, 2013 and 2012. In addition, an increase in the discount rate of up to approximately 1.5% or a reduction of cash inï¬,ows of up to approximately 20% would not result in any impairment requirement. adidas Group / 2013 Annual Report

  • Page 204
    ... on the basis of value in use. This calculation uses cash ï¬,ow projections based on the financial planning covering a four-year period in total. The planning is based on the adidas Group's strategic business plan "Route 2015" / SEE GROUP STRATEGY, P. 68 until 2015 and was prolonged by two...

  • Page 205
    ... costs are also expensed as incurred if they do not meet the recognition criteria of IAS 38 "Intangible Assets". The Group spent â,¬ 128 million and â,¬ 128 million on product research and development for the years ending December 31, 2013 and 2012, respectively. adidas Group / 2013 Annual Report

  • Page 206
    ...return for their service during the current and prior periods. These benefit accruals are discounted to calculate their present value, and the fair value of any plan assets is deducted in order to determine the net liability. The discount rate is set on the basis of yields of high-quality corporate...

  • Page 207
    Consolidated Financial Statements Notes / 04.8 / Recognition of revenues Sales are recognised at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates, when the significant risks and rewards of ownership of the goods are transferred to the ...

  • Page 208
    ...for the period from June to December 2012. If this acquisition had occurred on January 1, 2012, total Group net sales would have been â,¬ 14.9 billion and net income attributable to shareholders would have been â,¬ 534 million for the year ending December 31, 2012. adidas Group / 2013 Annual Report

  • Page 209
    ... assets Short-term financial assets are classified at "fair value through profit or loss". Changes in the fair value are recognised in the income statement as they occur. The majority of short-term financial assets are time deposits. 06 Accounts receivable Accounts receivable consist mainly...

  • Page 210
    ... other than income taxes Sundry Other current assets, gross Less: accumulated allowances Other current assets, net 236 133 138 507 1 506 231 136 123 490 1 489 Prepaid expenses relate mainly to promotion agreements and service contracts as well as rents. adidas Group / 2013 Annual Report

  • Page 211
    ... a new warehouse facility in Germany. For details see Attachment I to the consolidated financial statements / SEE STATEMENT OF MOVEMENTS OF INTANGIBLE AND TANGIBLE ASSETS, P. 238. 207 20 13 12 Goodwill Goodwill primarily relates to the Group's acquisitions of the Reebok and TaylorMade businesses...

  • Page 212
    ...ed as "fair value through profit or loss" and recorded at fair value. This equity security does not have a quoted market price in an active market. Therefore, existing contractual arrangements were used in order to calculate the fair value as at December 31, 2013. adidas Group / 2013 Annual Report

  • Page 213
    ...a sale. These shares are unlisted and do not have an active market. There is no intention to sell these shares. Additionally, long-term financial assets include investments which are mainly invested in insurance products and are measured at fair value, as well as other financial assets. Long-term...

  • Page 214
    ...3 years Between 3 and 5 years Total Bank borrowings Private placements Eurobond Convertible bond Total 59 221 - - 280 - 145 499 - 644 - 114 - 449 563 59 480 499 449 1,487 For further details on future cash outï¬,ows / SEE RISK AND OPPORTUNITY REPORT, P. 158. adidas Group / 2013 Annual Report

  • Page 215
    ... fulfilling customer claims with regard to the return of products sold by the Group. The amount of the provision follows the historical development of returns, allowances and warranty as well as current agreements. Provisions for taxes other than income taxes mainly relate to value added tax, real...

  • Page 216
    ... contracts Finance lease obligations Sundry Other non-current financial liabilities 11 2 9 0 22 1 2 13 1 17 For further information about currency options and forward contracts lease obligations / SEE NOTE 27. / SEE NOTE 28. For information about finance adidas Group / 2013 Annual Report

  • Page 217
    ... of the investment strategy. Further details about the pension entitlements of members of the Executive Board of adidas AG are contained in the Compensation Report / SEE COMPENSATION REPORT, P. 53. The final salary defined benefit pension scheme in the UK is closed to new entrants and to...

  • Page 218
    ... countries (â,¬ in millions) Dec. 31, 2013 Dec. 31, 2012 Germany UK Japan Germany UK Japan Active members Former employees with vested rights Pensioners Total 123 31 70 224 - 37 4 41 14 - - 14 112 30 77 219 - 35 3 38 15 - - 15 The Group's pension plans are subject to risks from changes...

  • Page 219
    ... production-related part of the pension expenses is recognised within cost of sales. Present value of the defined benefit obligation (â,¬ in millions) 2013 2012 Present value of the obligation from defined benefit pension plans as at January 1 Currency translation differences Current service...

  • Page 220
    ... Composition of plan assets (â,¬ in millions) Dec. 31, 2013 Dec. 31, 2012 Cash and cash equivalents Equity instruments Bonds Real estate Pension plan reinsurance Insurance policies Other assets Fair value of plan assets 14 28 11 1 25 4 0 83 13 24 10 1 24 4 0 76 adidas Group / 2013 Annual Report

  • Page 221
    ... in cash once or several times by no more than â,¬ 20 million and, subject to Supervisory Board approval, to exclude residual amounts from shareholders' subscription rights and to exclude shareholders' subscription rights when issuing the new shares at a value not essentially below the stock market...

  • Page 222
    ... the Open Market segment of the Frankfurt Stock Exchange. Repurchase of adidas AG shares The Annual General Meeting on May 6, 2010, authorised the Executive Board to repurchase adidas AG shares up to an amount totalling 10% of the nominal capital until May 5, 2015. The authorisation may be used by...

  • Page 223
    ... Group Companies, Inc., Los Angeles, CA, USA 7) BlackRock Advisors Holdings, Inc., New York, NY, USA 8) BlackRock International Holdings, Inc., New York, NY, USA 8) BR Jersey International Holdings, L.P., St. Helier, Jersey, Channel Islands 8) BlackRock Financial Management, Inc., New York, NY, USA...

  • Page 224
    ...2012 was â,¬ 1.35 per share (total amount: â,¬ 282 million). The Executive Board of adidas AG will propose to shareholders a dividend payment of â,¬ 1.50 per dividend-entitled share for the year 2013 to be made from retained earnings of â,¬ 424 million reported in the financial statements of adidas...

  • Page 225
    ...-term contracts. Financial commitments under these contracts mature as follows: 20 13 Financial commitments for service arrangements (â,¬ in millions) Dec. 31, 2013 Dec. 31, 2012 Within 1 year Between 1 and 5 years After 5 years Total 89 99 28 216 81 115 - 196 adidas Group / 2013 Annual Report

  • Page 226
    ... to IAS 17 Fair value Dec. 31, 2013 Financial assets Cash and cash equivalents Short-term financial assets Accounts receivable Other current financial assets Derivatives being part of a hedge Derivatives not being part of a hedge Other financial assets Long-term financial assets Other equity...

  • Page 227
    ... to IAS 17 Fair value Dec. 31, 2012 Financial assets Cash and cash equivalents Short-term financial assets Accounts receivable Other current financial assets Derivatives being part of a hedge Derivatives not being part of a hedge Other financial assets Long-term financial assets Other equity...

  • Page 228
    ... future cash ï¬,ows using current interest rates for debt of similar terms and remaining maturities and adjusted by an adidas Group specific credit risk premium. Fair values of long-term financial assets classified as available-for-sale are based on quoted market prices in an active market or...

  • Page 229
    ... discount rate. Due to their short-term maturities, their respective fair value is equal to the notional amount. The fair value is based on the market price of the assets as at December 31, 2013. For EUR/USD, the adidas Group applies the par method, which uses actively traded forward rates. For the...

  • Page 230
    ... instruments is as follows: Fair values (â,¬ in millions) Dec. 31, 2013 Dec. 31, 2012 Positive fair value Negative fair value Positive fair value Negative fair value Forward contracts Currency options Total 47 11 58 (79) (13) (92) 53 7 60 (54) (5) (59) adidas Group / 2013 Annual Report

  • Page 231
    ... overheads. In 2013, marketing working budget accounted for 24% (2012: 25%) of the total other operating expenses. Expenses for central administration include the functions IT, Finance, Legal, Human Resources, Facilities & Services as well as General Management. adidas Group / 2013 Annual Report

  • Page 232
    ... Dec. 31, 2012 Interest income from financial instruments measured at amortised cost Interest income from financial instruments at fair value through profit or loss Interest income from non-financial assets Other Financial income 8 17 0 1 26 13 22 0 1 36 adidas Group / 2013 Annual Report

  • Page 233
    ..., are presented in the consolidated statement of financial position: Deferred tax assets/liabilities (â,¬ in millions) Dec. 31, 2013 Dec. 31, 2012 Deferred tax assets Deferred tax liabilities Deferred tax assets, net 486 (338) 148 528 (368) 160 adidas Group / 2013 Annual Report 20 13

  • Page 234
    ...to be permanently invested in international operations. These earnings, the amount of which cannot be practicably computed, could become subject to additional tax if they were remitted as dividends or if the Group were to sell its shareholdings in the subsidiaries. adidas Group / 2013 Annual Report

  • Page 235
    ... NOTE 17. Earnings per share Year ending Dec. 31, 2013 Year ending Dec. 31, 2012 Net income attributable to shareholders (â,¬ in millions) Weighted average number of shares Basic and diluted earnings per share (in â,¬) 787 209,216,186 3.76 526 209,216,186 2.52 adidas Group / 2013 Annual Report

  • Page 236
    ...Reebok products to retail customers. The Retail segment comprises all business activities relating to the sale of adidas and Reebok products directly to end consumers through own retail and own e-commerce platforms. The operating segment TaylorMade-adidas Golf comprises the brands TaylorMade, adidas...

  • Page 237
    Consolidated Financial Statements Notes / Notes - Additional Information / 04.8 / Segments (â,¬ in millions) Wholesale Retail Other Businesses Total 2013 2012 2013 2012 2013 2012 2013 2012 Net sales (non-Group) Segmental operating profit Segmental assets Segmental liabilities Capital ...

  • Page 238
    ...190 794 2,113 1,386 6,118 450 190 640 1,150 364 2,220 1,986 6,360 Product information Net sales (non-Group) (â,¬ in millions) Year ending Dec. 31, 2013 Year ending Dec. 31, 2012 Footwear Apparel Hardware Total 6,873 5,813 1,806 14,492 6,922 6,290 1,671 14,883 adidas Group / 2013 Annual Report

  • Page 239
    ... and fitting of stores in the Retail segment, in new office buildings, warehouses and IT systems. Cash outï¬,ows from financing activities were mainly related to dividend paid to shareholders of adidas AG and to cash repayments of short-term borrowings. Current revolving financial transactions...

  • Page 240
    ... of the Supervisory Board and the Executive Board of adidas AG / SEE NOTE 39 / SEE COMPENSATION REPORT, P. 53. 39 Other information Employees The average numbers of employees are as follows: Employees Year ending Dec. 31, 2013 Year ending Dec. 31, 2012 Own retail Sales Logistics Marketing 13 26...

  • Page 241
    ... of the members of the Executive Board totalled â,¬ 5.6 million (2012: â,¬ 6.1 million). Post-employment benefits (costs for accrued pension entitlements for members of the Executive Board) totalled â,¬ 0.9 million (2012: â,¬ 0.7 million). In 2013, former members of the Executive Board and their...

  • Page 242
    ...1, 2012 December 31, 2012 December 31, 2013 Rounding differences may arise in percentages and totals. 27 (6) - 265 287 (10) - 52 329 0 (0) 0 0 (0) 0 0 506 (7) 47 0 (0) - - - - 0 (20) 527 (19) 49 0 (0 9) 549 1,553 1,281 1,204 1,503 1,484 1,419 156 162 155 adidas Group / 2013 Annual Report

  • Page 243
    ... Financial Statements Statement of Movements of Intangible and Tangible Assets / 04.9 / ATTACHMENT I Internally generated software Total intangible assets Land and buildings Technical equipment and machinery Other equipment, furniture and fixtures Construction in progress Total tangible assets...

  • Page 244
    ... business 6) The number refers to the number of the company 7) Sub-group Onfield 8) Sub-group Reebok-CCM Hockey, Inc. 9) Sub-group Reebok International Limited 10) Profit and loss transfer agreement 11) Sub-group Taylor Made Golf Co., Inc. 12) Sub-group Adams Golf, LLC adidas Group / 2013 Annual...

  • Page 245
    ... business 6) The number refers to the number of the company 7) Sub-group Onfield 8) Sub-group Reebok-CCM Hockey, Inc. 9) Sub-group Reebok International Limited 10) Profit and loss transfer agreement 11) Sub-group Taylor Made Golf Co., Inc. 12) Sub-group Adams Golf, LLC adidas Group / 2013 Annual...

  • Page 246
    ... business 6) The number refers to the number of the company 7) Sub-group Onfield 8) Sub-group Reebok-CCM Hockey, Inc. 9) Sub-group Reebok International Limited 10) Profit and loss transfer agreement 11) Sub-group Taylor Made Golf Co., Inc. 12) Sub-group Adams Golf, LLC adidas Group / 2013 Annual...

  • Page 247
    ... business 6) The number refers to the number of the company 7) Sub-group Onfield 8) Sub-group Reebok-CCM Hockey, Inc. 9) Sub-group Reebok International Limited 10) Profit and loss transfer agreement 11) Sub-group Taylor Made Golf Co., Inc. 12) Sub-group Adams Golf, LLC adidas Group / 2013 Annual...

  • Page 248
    ... and I am in an exciting position helping to drive Rockport's powerful brand promise loud and clear to the consumer. From working with internal departments in marketing and product creation right through to supporting our teams in the markets, it's an exciting time for the brand as we begin to more...

  • Page 249
    05.1 05.2 05.3 05.4 05.5 05.6 Ten-Year Overview Glossary Index Declaration of Support Publishing Details & Contact Financial Calendar 246 250 256 257 258 259 05 A D D I T I O N A L I N F O R M AT I O N

  • Page 250
    ...Brand (â,¬ in millions) adidas Reebok TaylorMade-adidas Golf Rockport Reebok-CCM Hockey Net Sales by Product Category (â,¬ in millions) Footwear 3) Apparel 3) Hardware 3) Balance Sheet Data (â,¬ in millions) Total assets 6) Inventories Receivables and other current assets Working capital 6) Net cash...

  • Page 251
    Additional Information Ten-Year Overview / 05.1 / 2010 2009 2008 2007 2006 2) 2005 2004 11,990 5,730 100 110 5,046 1,159 894 (88) 806 238 ...) 3,023 8,379 1,607 1,913 1,733 (2,231) 2,828 5,750 1,230 1,551 2,644 551 2,684 4,434 1,155 1,425 1,336 (665) 1,544 adidas Group / 2013 Annual Report

  • Page 252
    ... Number of employees at year-end 3) Personnel expenses 3) (â,¬ in millions) Rounding differences may arise in percentages and totals. 1) 2011 restated according to IAS 8 in the 2012 consolidated financial statements. Prior years are not restated. 2) Including Reebok, Rockport and Reebok-CCM Hockey...

  • Page 253
    Additional Information Ten-Year Overview / 05.1 / 2010 2009 2008 2007 2006 2) 2005 2004 0.2 20.8% 4.8% 43.5% 97.4% 141.5% 97.7% 44.6% 55.4% 35.5% 78.2% 132.4% 6.1 12.3% 20.2% 1.2 24... 1,352 38,982 1,283 31,344 1,186 26,376 1,087 15,935 706 14,254 637 adidas Group / 2013 Annual Report

  • Page 254
    .... Cash pooling A cash management technique for physical concentration of cash. Cash pooling allows the adidas Group to combine credit and debit positions from various accounts and several subsidiaries into Conversion rate A key ratio in retail business describing the number of buying customers...

  • Page 255
    ...working conditions for workers making consumer goods globally. Membership includes many sporting and consumer goods companies as well as a wide range of consumer goods suppliers / D Days of Sales Outstanding (DSO) Average time of receipt of outstanding payments from customers. have earned a return...

  • Page 256
    ... customers for the adidas Group and account for a large percentage of sales. Grassroots events Events that involve the advertising and promotion of products and/or services on a local and/or personal level. A message is shared with a small group of inï¬,uencers within a target group. If successful...

  • Page 257
    ... and communication. / M Market capitalisation Total market value of all shares outstanding. Market capitalisation = number of shares outstanding Ã- current market price equivalents + short-term financial assets - shortterm borrowings - long-term borrowings Non-controlling interests Part of...

  • Page 258
    .... adidas Golf, Rockport, Reebok-CCM Hockey and Other Centrally Managed Brands. Sell-through An indicator of how fast retailers are selling a particular product to the consumer. Performance business In the sporting goods industry, performance business relates to technical footwear and apparel 254...

  • Page 259
    ... commercialisation of future trends, particularly lifestyle trends. World Business Council for Sustainable Development (WBCSD) A global association of around 200 international companies dealing exclusively with business and sustainable development : WWW.WBCSD.ORG. adidas Group / 2013 Annual Report

  • Page 260
    ...67 Statement of Cash Flows 131 ff., 192 Statement of Financial Position (Balance Sheet) 131 ff., 186, 205 ff. Structure and Strategy: - adidas Group 68 ff. - Brand Segments 77 ff. Subsequent Events and Outlook 151 ff. Supervisory Board: - Committees 40 - Members 40 f. - Report 42 ff. Supply Chain 68...

  • Page 261
    ...Made Golf Limited, Basingstoke, Great Britain Taylor Made Korea Ltd., Seoul, Korea Textronics, Inc., Wilmington, Delaware, USA The Rockport Company, LLC, Wilmington, Delaware, USA Trafford Park DC Limited (formerly Reebok Finance Limited), London, Great Britain 257 20 13 adidas Group / 2013 Annual...

  • Page 262
    ... adidas Group publications, please see our corporate website or download our Investor Relations and Media App from the App Store. To improve readability, registered trademarks are omitted in this Annual Report. Concept and Design Strichpunkt, Stuttgart / Berlin adidas Group / 2013 Annual Report

  • Page 263
    ..., Germany Press release, analyst conference call and webcast Publication of 2013 Annual Report May 6, 2014 First Quarter 2014 Results Press release, conference call and webcast Publication of First Quarter 2014 Report May 8, 2014 Annual General Meeting Fuerth (Bavaria), Germany Webcast May...

  • Page 264
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