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adidas-Salomon ANNUAL REPORT 2000
67
Notes to Consolidated Financial Statements
has only engaged in currency options which, at the time of their
purchase, were “out-of-the-money”.
Management has decided not to pursue hedge accounting in
its use of currency options, but to assess their fair value and
record the resulting gains or losses in current income as incurred.
The consequence is that such gains or losses will not be
recorded at the time of the transactions for which the hedging
transaction had been arranged, but already at the time the fair
value of the options changes. In recent years, virtually all of
adidas-Salomon’s currency hedging for future commercial
transactions – except for very short periods – had been done
with options. The goal is to limit the potential impact of changes
in the fair value of options on the results. Therefore, the Com-
pany has decided to focus more on forward contracts.
Equally, the Company discontinues hedge accounting for interest
rate caps, which hedge interest rate risk. Through 2000, the
premium paid for such caps was amortized over the coverage
period of the interest rate cap. From 2001 onwards, the Com-
pany will record changes in the fair value of outstanding caps
in income as incurred.
The Company believes that the changes through the implemen-
tation of IAS 39 will not have any material impact on the Com-
pany’s financial position or cash flows and its reporting thereon.
However, this changed procedure may cause certain volatilities
in earnings reported in the future, when fair value changes are
recorded in current income for options arranged as a hedge for
future transactions.
In addition, the Company will adopt IAS 40 “Investment
Property”. The Company has analyzed the impacts of this
standard and it is believed that it will not have any material
impact on the Company’s financial position, results of
operations or cash flows and its reporting thereon.
German Statutory Reporting
The Company does not prepare consolidated financial state-
ments under accounting principles generally accepted in Ger-
many (German GAAP) pursuant to the exemption in § 292a
of the German Commercial Code (HGB). The consolidated
financial statements in accordance with § 292a HGB include
an explanation of differences between IAS and German GAAP.
The consolidated financial statements with this appendix are
filed with the Commercial Register at the Local Court in Fürth
(Bavaria).
2. Summary of Significant
Accounting Policies
The consolidated financial statements are prepared in accor-
dance with the consolidation, accounting and valuation prin-
ciples described below.
Certain items previously reported in specific financial statement
captions have been reclassified to conform to the 2000 presen-
tation.
Principles of Consolidation
The consolidated financial statements include the accounts
of adidas-Salomon AG and its significant direct and indirect
subsidiaries, which are prepared under uniform accounting
principles.
A company is a subsidiary if adidas-Salomon AG controls
directly or indirectly the financial and operating policies of the
respective enterprise.