Adidas 1998 Annual Report Download - page 45

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Notes to Consolidated Financial Statements 43
The companies of the Salomon group were consolidated as of January 1, 1998, the
date at which effective control transferred to adidas-Salomon AG.
Eight subsidiaries have not been included in the consolidated financial statements
in 1997 and 1998, since they have no or little active business and are insignificant to the
financial position. The shares in these companies are accounted for at the lower-of-cost
or net realizable value.
A schedule of the shareholdings of adidas-Salomon AG is shown in attachment I to
these notes.
Consolidation of equity is made in compliance with the book value method by offset-
ting the initial investments in subsidiaries against the relevant equity portion at fair value
held by the parent company as at acquisition date.
All significant intercompany transactions and accounts are eliminated in consolidation.
CURRENCY TRANSLATION:
Assets and liabilities of the Company’s non-Deutsche-Mark functional currency sub-
sidiaries are translated into Deutsche Mark at closing exchange rates at the balance sheet
date. Revenues and expenses are translated at the average exchange rates for the year.
All cumulative differences from the translation of equity of foreign subsidiaries resulting
from changes in exchange rates are included in shareholders’ equity without affecting
income.
A summary of exchange rates used to translate the financial statements of the Com-
pany’s subsidiaries to Deutsche Mark for major currencies in which the Company operates
is as follows:
Average rate for the year Spot rate
ended December 31, at December 31,
1998 1997 1998 1997
1 USD 1.7591 1.7334 1.6739 1.7921
100 FRF 29.8273 29.7084 29.8033 29.8830
1 GBP 2.9155 2.8399 2.7753 2.9820
100 ESP 1.1780 1.1843 1.1738 1.1814
1,000 ITL 1.0132 1.0170 1.010 1.0177
100 AUD 110.4121 128.8271 102.6940 117.4000
100 KRW 0.1279 0.1824 0.1392 0.1090
100 RUR* 22.2240 0.0300 7.7675 0.0298
100 JPY 1.3423 – 1.4716 –
* in Russia three currency-digits were eliminated in 1998
In the individual financial statements of group companies monetary items denominated
in a foreign currency are measured at closing exchange rates at the balance sheet date.
Resulting currency gains and losses are recorded immediately in income.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents represent cash and short-term, highly liquid investments
with maturities of three months and less.