Adidas 1998 Annual Report Download - page 59

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Notes to Consolidated Financial Statements 57
20. PERSONNEL EXPENSES The breakdown of personnel expenses is as follows:
Year ended December 31,
1998 1998 1997
adidas- adidas adidas
(in DM 000) Salomon (comparable) (restated)
Wages and salaries 865,614 623,000 547,857
Social security contributions 111,858 77,505 70,389
Pension expense 26,232 25,153 28,210
1,003,704 725,658 646,456
21. FINANCIAL RESULT Financial result consists of the following:
Year ended December 31,
1998 1998 1997
adidas- adidas adidas
(in DM 000) Salomon (comparable) (restated)
Interest income 12,321 17,012 14,215
Interest expense (177,307) (78,410) (47,663)
Interest expense, net
(164,986) (61,398) (33,448)
Income from investments 45 29 109
Write-down of investments (11,546) (11,546) 0
Option premiums regarding discontinued
currency options (61,741) (61,741) 0
Other – net, primarily net exchange gains 13,950 16,577 2,319
(224,278) (118,079) (31,020)
Since 1998, the Company charges premiums regarding discontinued currency options
to financial expenses. In 1997, such amounts had been charged to cost of goods sold. The
amount of such charges in 1997 was DM 25.4 million.
22. INCOME TAXES
In general, adidas-Salomon AG and its German subsidiaries are subject to a municipal
trade tax of approximately 15% of taxable income, which is deductible in the determination
of federal corporation tax. The corporate tax rate for undistributed earnings is 45% plus a
surcharge of 5.5% (7.5% in 1997) thereon. Upon distribution of domestic earnings, 15
percentage points of corporation tax and the attributable surcharge thereon are refunded.
Shareholders who are subject to German income tax are entitled to an additional refund of
the remaining 30 percentage points of corporate income tax and the attributable surcharge
paid by the Company.