Adidas 1997 Annual Report Download - page 15

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13
At December 31, 1997 order backlog for
footwear was up by 55%, growing at a slight-
ly faster rate than order backlog for apparel
(54%). This trend is primarily influenced by
orders on hand in the USA. Order
backlog for
hardware and other products grew by 123%
to DM 63 million.
Currency risks related to purchases in US
dollar have already been hedged for more
than 90% of the anticipated US dollar pur-
chase volume for 1998. For example, pur-
chases invoiced in US dollar for fiscal 1998
are almost fully hedged at a rate below
DM 1.70.
TOP PRIORITY:
INTEGRATION OF SALOMON
The dominant focus for 1998 will be the
integration of the Salomon group. Prepara-
tory meetings are already taking place at all
levels, in order to realize the anticipated syn-
ergies. Important decisions have already been
taken. For example, for winter 1999/2000
a winter sports apparel collection under
the Salomon brand name will be introduced
for the first time. Taylor Made’s well-estab-
lished distribution channels in the USA and
Japan will already be used in 1998 in order to
promote sales of adidas golf footwear and
golf apparel. adidas and Salomon have also
agreed on a close cooperation in the sector
of hiking boots, a product category in which
both companies can draw on extensive
expertise and brand image.
However, it is anticipated that the implemen-
tation of combined activities will not yield any
positive bottom-line impact for the combined
group before 1999.
Management Discussion and Analysis
A second point of strategic focus will be to
establish a wholly-owned subsidiary in Japan
which will take over distribution of footwear
and apparel in one of the most important
markets in Asia when the existing license
agreement with the Japanese company
Descente expires at the end of 1998. The
process has already been initiated and first
steps have been taken to ensure as smooth
a transition as possible.
Listing of the adidas share on a US stock
exchange, originally planned for 1998, has
been postponed for the time being due to
the priority of the integration of Salomon.
Rebuilding and relocation of the Company’s
headquarters in Herzogenaurach will also be
one of the future projects. In order to bring
together at one site the various areas in
product development, marketing and admin-
istration
which are today scattered over a rela-
tively wide area, adidas plans to relocate
its
headquarters within Herzogenaurach and to
implement the “World of Sports” project. The
first stage will commence in 1998.
INCREASE IN PROFIT
EXPECTED FOR 1998
Based on the high volume of order backlog
and, with the exception of Asia, continued
strong demand for adidas-Salomon group
branded sports products,
Management cur-
rently expects growth in the pre-tax result and,
even allowing for a higher tax rate, higher
after-tax earnings than those recorded for
1997.