Adidas 1997 Annual Report Download - page 37

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35
adidas-Salomon AG (the former adidas AG*), a German stock corporation, and its subsidiaries design, develop and market a
broad range of athletic and active lifestyle products, consisting of athletic footwear, apparel and accessories primarily under the
tradename adidas (and also under the tradename erima). The Company’s headquarters are located in Herzogenaurach, Federal
Republic of Germany.
1. General The accompanying consolidated financial statements of adidas-Salomon AG and its subsidiaries
(collectively the “Company”) are prepared in accordance with accounting principles generally
accepted by the International Accounting Standards Committee (“International Accounting
Standards”) and comply with the Company’s significant accounting policies described herein.
2. Summary of significant The consolidated financial statements are prepared in accordance with the consolidation,
accounting policies accounting and valuation principles described below. As compared to the previous year, these
principles have been applied consistently in all material respects except the accounting treatment
of unrealized gains and losses on hedging contracts for future commercial transactions (see
note 15). In order to improve the presentation clarity of the consolidated income statements certain
accounts have been reclassified. These reclassifications do not individually or together significantly
affect the comparability. Therefore the respective prior year figures have not been adjusted.
Principles of consolidation:
The consolidated financial statements include the accounts of adidas-Salomon AG and its significant
direct and indirect subsidiaries. The companies of the Salomon group will be consolidated beginning
January 1, 1998, the date at which effective control transferred to adidas-Salomon AG. Further, a
consolidation in 1997 for the period December 22, 1997 to December 31, 1997 would have been
associated with unreasonably high costs and time constraints and the impact on the consolidated
income statements would have been insignificant with respect to the short period of time.
The Company’s investments in companies not included in consolidation are accounted for at cost.
All significant intercompany transactions and accounts are eliminated in consolidation.
Consolidation of equity is made in compliance with the book value method by offsetting the initial
investments in subsidiaries against the relevant equity portion held by the parent company as at
acquisition date.
A schedule of the shareholdings of adidas-Salomon AG is shown in attachment I to these notes.
Goodwill and intangible assets:
Goodwill and intangible assets are valued at cost less accumulated amortization. Goodwill
resulting from the excess of the acquisition cost over the fair value of the net assets of businesses
acquired in purchase transactions and intangible assets are amortized over their expected useful
economic lives up to 20 years.
* The change of the name was registered in the Commercial Register on December 19, 1997.
adidas-Salomon AG and Subsidiaries
Notes to Consolidated Financial Statements