Answer & Explanation:It is a group paper. we are going to compare lululemon in Canada and Adidas in Germany. I have to do two parts of this paper.(3 pages for each, 6 pages in total). They are no. 4 and no .5 on the second pager.4.Describe how accounting principles have developed in each country in general terms, and evaluate the general content and approach of the Annual Report relative to this development. Why does financial reporting in the countries differ?For sections 5 through 9, the lists are designed to be suggestions or examples of relevant items for comparison, not checklists to be rigorously followed.5.Income Statement:For each company, describe (and/or) determine, evaluate and compare the following items:a)Form and content of income statementb)Manner of presentation of unusual/extraordinary items.c)Presentation and computation of earnings per share data?d)Accounting policies which are unusual or unique.e)Method of accounting for foreign currency translation.now, I will upload the requirements and both of two companies annual reports.
adidas_2015_2016.pdf

lululemon_2015_2016.pdf

final_analytical_project.docx

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ADIDAS
ANNUAL REPORT
TARGETS – RESULTS – OUTLOOK
TARGETS 2016 1, 2
RESULTS 2016 2
OUTLOOK 2017
CURRENCY-NEUTRAL
SALES DEVELOPMENT:
CURRENCY-NEUTRAL
SALES DEVELOPMENT:
CURRENCY-NEUTRAL
SALES DEVELOPMENT:
INCREASE AT A RATE
BETWEEN 10% AND 12%
INCREASE OF
18%
INCREASE AT A RATE
BETWEEN 11% AND 13%
Group sales of
€ 19.291 BILLION
Gross margin
Gross margin
Gross margin
47.3% – 47.8%
48.6%
INCREASE TO A LEVEL OF
UP TO 49.1%
Operating margin
Operating margin
Operating margin
AT LEAST STABLE
7.7%
INCREASE TO A LEVEL
BETWEEN 8.3% AND 8.5%
Average operating working capital
(in % of net sales)
Average operating working capital
(in % of net sales) decreases 0.3pp to
Average operating working capital
(in % of net sales)
AROUND PRIOR YEAR
LEVEL
20.2%
MODEST INCREASE
Capital expenditure
Capital expenditure
Capital expenditure
AROUND
€ 750 MILLION
€ 651 MILLION
AROUND
€ 1.1 BILLION
Gross borrowings
Gross borrowings decrease 12% to
Gross borrowings
MODERATE
DECLINE
€ 1.618 BILLION
MODERATE
DECLINE
Net borrowings/EBITDA ratio
Net borrowings/EBITDA ratio
Net borrowings/EBITDA ratio
versus prior year level (6.5%)
TO BE
MAINTAINED
BELOW 2
0.1
TO BE
MAINTAINED
BELOW 2
Net income from continuing operations
Net income from continuing operations
Net income from continuing operations
INCREASE AT A RATE
BETWEEN 10% AND 12%
INCREASES 41%
INCREASE AT A RATE
BETWEEN 18% AND 20%
to 1.019 billion
to around € 800 million
to a level between € 1.200 billion and
€ 1.225 billion
Shareholder value
adidas AG share price
Shareholder value
FURTHER INCREASE
INCREASES 67%
FURTHER INCREASE
Dividend per share
INCREASE OF 25% TO
€ 2.00 3
1 As published on March 3, 2016; the outlook was updated several times over the course of the year.
2 Figures reflect continuing operations as a result of the divestiture of the Rockport business.
3 Subject to Annual General Meeting approval.
FINANCIAL HIGHLIGHTS 2016
FINANCIAL HIGHLIGHTS 2016 (IFRS)
2016
2015
Change
Operating Highlights (€ in millions)
Net sales 1
19,291
16,915
14.0%
EBITDA 1
1,883
1,475
27.7%
Operating profit 1, 3
1,491
1,094
36.3%
Net income from continuing operations 1, 3
1,019
720
41.5%
1,017
668
52.2%
48.6%
48.3%
0.3pp
42.8%
43.1%
(0.3pp)
7.7%
6.5%
1.3pp
29.5%
32.9%
(3.4pp)
5.3%
4.0%
1.3pp
Average operating working capital in % of net sales 1
20.2%
20.5%
(0.3pp)
Equity ratio
42.6%
42.5%
0.2pp
0.1
0.3
Net income attributable to
shareholders 2, 3
Key Ratios
Gross margin 1
Operating expenses in % of net
sales 1
Operating margin 1, 3
Effective tax
rate 1, 3
Net income attributable to shareholders in % of net sales 2, 3
Net borrowings/EBITDA 1
Financial leverage
1.6%
8.1%
(6.5pp)
Return on equity 2
15.7%
11.2%
4.5pp
Total assets
15,176
13,343
13.7%
Inventories
3,763
3,113
20.9%
Balance Sheet and Cash Flow Data (€ in millions)
Receivables and other current assets
3,607
3,003
20.1%
Working capital
2,121
2,133
(0.6%)
Net borrowings
103
460
(77.6%)
6,472
5,666
14.2%
651
513
26.9%
1,348
1,090
23.7%
5.08
3.32
53.3%
4.99
3.32
50.6%
6.73
5.41
24.5%
2.00 4
1.60
25.0%
150.15
89.91
67.0%
60,617
55,555
9.1%
Shareholders’ equity
Capital expenditure
Net cash generated from operating
activities 2
Per Share of Common Stock (€)
Basic earnings 2, 3
Diluted
earnings 2, 3
Net cash generated from operating activities 2
Dividend
Share price at year-end
Other (at year-end)
Number of employees 1
Number of shares outstanding
201,489,310
200,197,417
0.6%
Average number of shares
200,188,276
201,536,418
(0.7%)
1
2
3
4
Figures reflect continuing operations as a result of the divestiture of the Rockport business.
Includes continuing and discontinued operations.
2015 excluding goodwill impairment of € 34 million.
Subject to Annual General Meeting approval.
»THROUGH
SPORT,
OUR CORE
BELIEF
WE HAVE
THE
POWER
TO
CHANGE
LIVES.
OUR
MISSION
ADIDAS
TO BE THE BEST
SPORTS COMPANY
IN THE WORLD.
ADIDAS BRAND
TO BE THE BEST
SPORTS BRAND
IN THE WORLD.
REEBOK BRAND
TO BE THE BEST
FITNESS BRAND
IN THE WORLD.
«
We are calling all creators. They are our ­creative
capital, the source of our inspiration. The game
changers, the difference makers, the shapers of
tomorrow. True athletes at heart, who set the pace,
always first to break new ground and rewrite the
rules as we know them. Their drive and courage
invigorates our brands and helps us create unique
experiences.
We need creators in order to continually push
­boundaries, to re-invent, to make something out
of nothing.
We need them to Create the New.
That’s why we invite all Creators, whether inside or
outside our company, to come in and work with
us. We give them spaces where their ideas can spark
and where collaborative exchange is encouraged.
Empowering this creative force is the essence of our
Open Source approach. It will take us an essential
step further towards making our brands the most
­relevant and desirable for all consumers.
ADIDAS
ANNUAL
REPORT 2016
1
TO OUR SHAREHOLDERS
OPERATIONAL AND SPORTING HIGHLIGHTS
LETTER FROM THE CEO
EXECUTIVE BOARD
SUPERVISORY BOARD
SUPERVISORY BOARD REPORT
CORPORATE GOVERNANCE REPORT INCLUDING THE DECLARATION ON
­CORPORATE GOVERNANCE
COMPENSATION REPORT
OUR SHARE
2
27
32
41
GROUP MANAGEMENT REPORT – OUR COMPANY
CORPORATE STRATEGY
adidas Brand Strategy
Reebok Brand Strategy
GLOBAL OPERATIONS
RESEARCH AND DEVELOPMENT
OUR PEOPLE
SUSTAINABILITY
3
6
10
14
18
20
48
55
60
62
67
72
78
GROUP MANAGEMENT REPORT – FINANCIAL REVIEW
INTERNAL MANAGEMENT SYSTEM
BUSINESS PERFORMANCE
Economic and Sector Development
Income Statement
Statement of Financial Position and Statement of Cash Flows
Treasury
Financial Statements and Management Report of adidas AG
Disclosures pursuant to § 315 Section 4 and § 289 Section 4 of the
German Commercial Code
BUSINESS PERFORMANCE BY SEGMENT
Western Europe
North America
Greater China
Russia/CIS
Latin America
Japan
MEAA
Other Businesses
86
90
90
92
96
101
104
107
111
111
111
112
112
113
113
113
114
SUBSEQUENT EVENTS AND OUTLOOK
Subsequent Events
Outlook
RISK AND OPPORTUNITY REPORT
Illustration of Material Risks
Illustration of Opportunities
MANAGEMENT ASSESSMENT OF ­P ERFORMANCE, RISKS AND
­O PPORTUNITIES, AND OUTLOOK
115
115
115
118
123
131
133
CONSOLIDATED FINANCIAL STATEMENTS
4
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES
Notes to the Consolidated Statement of Financial Position
Notes to the Consolidated Income Statement
Additional Information
STATEMENT OF MOVEMENTS OF INTANGIBLE AND TANGIBLE ASSETS
SHAREHOLDINGS
138
140
141
142
143
144
159
188
194
202
204
Responsibility Statement
Auditor’s Report
208
209
ADDITIONAL INFORMATION
5
TEN-YEAR OVERVIEW
GLOSSARY
DECLARATION OF SUPPORT
FINANCIAL CALENDAR
212
216
219
220
Group Management Report:
This report contains the Group Management Report of the adidas Group, comprising adidas AG
and its consolidated subsidiaries, and the Management Report of adidas AG.
PUBLICATIONS FOR THE 2016 FINANCIAL YEAR
ADIDAS
MAGAZINE
M AGA Z I N E
ADIDAS
ANNUAL REPORT
A N N UA L RE PORT
ADIDAS GROUP
SUSTAINABILITY
PROGRESS REPORT
SUSTA I N A B I L I TY RE PORT
(available from mid-April onwards)
Printed versions of our Annual Report with condensed consolidated financial statements (excluding the Notes) as
well as our Magazine can be ordered online. www.adidas-group.com/en/investors/financial-reports
SH
A
OL R E
DE
RS
TO
OU
R
S
— OPERATIONAL AND SPORTING HIGHLIGHTS
— LETTER FROM THE CEO
— EXECUTIVE BOARD
— SUPERVISORY BOARD
— SUPERVISORY BOARD REPORT
— C ORPORATE GOVERNANCE REPORT
INCLUDING THE DECLARATION ON
­CORPORATE GOVERNANCE
— COMPENSATION REPORT
— OUR SHARE
5
6
10
14
18
20
27
32
41
1
To our S hareholders
Operational and Sporting Highlights
OPERATIONAL AND
SPORTING HIGHLIGHTS
Q1 2016
JANUARY
——Leo Messi underlines his status in football
with a record fifth Ballon d’Or. The award is the
greatest acknowledgement of individual success
in football.
——adidas and Stella McCartney announce
the continuation of their long-term collabor­
ation. The iconic designer will continue to create
cutting-edge designs alongside the adidas brand
until 2020.
——Reebok launches Reebok Classic Leather,
a shoe created in collaboration with US rapper
and songwriter Kendrick Lamar. The shoe represents Kendrick’s powerful vision of unity and sold
out within 30 minutes.
——adidas
Football releases the world’s
first high-performance laceless boot: ACE 16+
PURECONTROL. Only a short period of time after
its launch, this disruptive football boot, which
is worn by international football stars such as
Mesut Özil and Ivan Rakitić, was sold out in
almost every channel.
——adidas Originals launches its ‘Future’
campaign. With its unique point of view on
creating the future by re-inventing the past,
adidas Originals is inspiring a new generation
not to follow but to challenge the status quo.
——Following the success of M1, TaylorMadeadidas Golf unveils its M2 drivers, fairways and
rescue clubs to complete the M family. Similar
to M1, the M2 product line meets the challenge
of delivering more performance to players of all
skill levels with the utilisation of multi-material
construction.
FEBRUARY
——adidas
continues its Sport 16 brand
campaign with ‘I’m here to create’, a series of
videos showing the personal creator stories of
famous female athletes such as WNBA All-Star
Candace Parker, tennis icon Caroline Wozniacki
and fitness artist Nicole Winhoffer.
——The
adidas brand and Wanderlust,
producer of the largest yoga lifestyle events in
the world, announce a US-focused, multi-year
partnership.
——adidas launches PureBOOST X, a running
——Reebok launches ZPump Fusion 2.0, a
shoe created exclusively for women by women.
PureBOOST X features a new floating arch, a
stretch mesh upper and a lock-down lacing
system that provide a personalised fit for every
woman’s foot.
running shoe that conforms to the shape of the
athlete’s foot to give a custom fit. The seamless
compression sleeve upper and the tyre-inspired
ZRated outsole provide comfort and control.
MARCH
——adidas Football announces a long-term
partnership with Juventus Turin midfielder
Paul Pogba, one of the world’s most in-demand
footballers. Continuing on his extraordinary
journey from the streets to superstar status,
Pogba has already won three Italian league titles
and three domestic cup trophies.
——Playing
——The Supervisory Board of adidas AG
resolves upon the successor for the longstanding adidas AG CEO Herbert Hainer. Effective
August 1, 2016, Kasper Rorsted is appointed as
ordinary member of the Executive Board and
effective October 1, 2016 as CEO of adidas AG.
in her first Grand Slam final,
adidas brand ambassador Angelique Kerber wins
the 2016 Australian Open in Melbourne.
——adidas
Originals launches further
colourways of its successful footwear franchise
NMD. The franchise, for which consumers were
queuing in front of stores, was sold out immediately, with more than 400,000 pairs sold within
just one day.
——Reebok is awarded the ISPO Communication Award 2016 in the multi-channel category
for its ‘Be More Human’ campaign.
——Together with YouTubers Amanda Steele
——adidas is listed in fifth place among the
and Marcus Butler, adidas neo presents its new
sneaker innovation Cloudfoam. The Cloudfoam
sneakers with a lightweight midsole and a
thick sockliner provide a classic silhouette plus
comfort.
Global 100 Most Sustainable Corporations in the
World (Global 100 Index) and is recognised as
the industry leader. It is the third consecutive
year that adidas is included in the top ten of the
Global 100 Index, compiled annually by Corporate
Knights.
6
1
To our S hareholders
Operational and Sporting Highlights
OPERATIONAL AND
SPORTING HIGHLIGHTS
Q2 2016
APRIL
——adidas opens its first Brand Centre in
Hong Kong. With a retail area of nearly 6,500
square feet, it is the largest sports brand
speciality store in the city’s Central district.
——adidas Originals relaunches its iconic
Gazelle. With this silhouette that was first
introduced in the 1960s, adidas Originals
continues defining a contemporary street look
for the future.
——adidas Running introduces UltraBOOST
Uncaged. The shoe was inspired by fans and
combines the performance and innovation of the
original UltraBOOST with the unique flair of the
adidas brand’s creative fan base.
MAY
——Reebok launches ‘25,915 Days’, a striking
campaign reminding people that they have, on
average, 25,915 days to live. With this campaign,
Reebok repeats its fitness mantra and motivates
fitness enthusiasts to live up to their fullest
potential.
——adidas Originals launches its official
Snapchat channel, taking an Open Source
approach and allowing influencers to showcase
and personify the brand.
——Shortly before the kick-off of the UEFA
EURO 2016, the adidas brand unveils the Mercury
Pack, a cutting-edge range of boots inspired by
the trophies that players around the world strive
to win.
——Reebok and three-time Defensive Player
JUNE
——The adidas brand and Zalando, one of
Europe‘s biggest online retailers, launch a new
pilot to meet the needs of today’s consumer
faster than ever. Consumers in Berlin are able
to place orders for adidas products on Zalando’s
app and get the delivery on the same day.
——In the USA, adidas Running launches
AlphaBOUNCE, a running shoe that offers an
adaptive fit and feel for runners and versatile
athletes. Men’s pairs were sold out within less
than twelve hours.
——adidas
announces that its football
business is expected to reach new record sales
of € 2.5 billion in 2016.
——The adidas brand announces its contract
——Together with other partners, Reebok
hosts the 2016 International Day of Yoga in
India’s biggest cities, reaching more than 25,000
participants.
extension with the German Football Association
(DFB) until 2022.
——adidas
——For the second time, Sergio García wins
the AT&T Byron Nelson in Irving/Texas, USA.
García wins playing a full TaylorMade bag
including an M2 driver, M1 fairway woods and
PSi irons.
——Reebok launches ‘Hunt Greatness’, a
campaign and platform inspired by American
football star J. J. Watt that encourages people
to pursue a better version of themselves, every
day, through fitness.
of the Year J. J. Watt announce the release
of the JJ I, the ultimate training shoe which
was developed in close collaboration with the
American football star.
establishes a new strategic
partnership with Chinese real estate and sports
business giant Wanda Group. In future, adidas
will sponsor two of Wanda’s IRONMAN events
and will help to further develop football and
basketball in China.
——The adidas brand announces the
cementing of its long-term relationship with
creative pioneer Kanye West in the launch of
adidas + KANYE WEST.
——As
——The
NBA’s most sought-after draft
prospects Brandon Ingram, Jaylen Brown, Jamal
Murray, Dragan Bender and Kris Dunn choose to
join adidas Basketball.
7
the second-youngest player ever,
TaylorMade-adidas Golf staffer Rich Berberian
wins the 49th PGA Professional Championship
in Verona/New York, USA.
1
To our S hareholders
Operational and Sporting Highlights
OPERATIONAL AND
SPORTING HIGHLIGHTS
Q3 2016
JULY
——Reebok launches its new CrossFit training
shoe Nano 6.0. It offers athletes strength and
comfort to overcome every obstacle in the
CrossFit box and beyond.
——CCM launches the ‘CCM Skills App’. The
app allows users to train virtually alongside
NHL Player Lance Pitlick, in a series of fun
and challenging drills intended to help improve
players’ technique on the ice.
——The adidas brand announces the launch
of its adidas Athletics range, designed to deliver
a fresh take on traditional pre- and post-match
outwear. The first highlight product of this range
is the adidas Z.N.E. Hoodie.
——adidas Originals and Alexander Wang
confirm their partnership during New York
Fashion Week. The Alexander Wang x adidas
Originals collection consists of 84 pieces that
celebrate the athleisure style in an unprecedented
way.
——adidas Football and the Irish Football
Association announce a four-year contract
extension. adidas will continue to supply kit and
training gear to Northern Ireland teams until at
least 2020.
——At the adidas Runbase in Berlin, adidas
launches the Futurecraft M.F.G. (Made for
Germany), the first shoe created at the industrychanging adidas SPEEDFACTORY that is now
available to consumers in limited quantities.
——Reebok and Vogue Fitness launch the first
women’s-only CrossFit facility in Abu Dhabi.
SEPTEMBER
AUGUST
——Kasper
——adidas AG is announced as the newest
Rorsted joins adidas as
member of the Executive Board. Following
a two-month induction period with Herbert
Hainer, Kasper Rorsted becomes CEO on
October 1, 2016.
member of the EURO STOXX 50 Index, Europe’s
leading blue-chip index. For adidas, this is
a big milestone as the EURO STOXX 50 is a
representation of the so-called ‘supersector
leaders’ in the Eurozone.
——The adidas brand presents the Creator
——The adidas brand and the United States
Studio, a digital platform giving football fans
the chance to design the third jersey for some
of the world’s biggest football clubs such as FC
Bayern or Manchester United. The kits with the
most likes will be entered into a top 100 gallery
per club.
Tennis Association announce a new partnership
to support American tennis on multiple levels by
impacting the future of American tennis through
a number of initiatives and programmes.
——adidas
announces the opening of
SPEEDFACTORY in the Atlanta area in late 2017.
This state-of-the-art facility will focus on running
footwear and targets production of 50,000 pairs
in 2017. In the mid term, adidas aims to produce
one million pairs of shoes for running and other
categories in its SPEEDFACTORY facilities.
——adidas Originals opens the doors to its
new flagship store on Spring Street in New York
City. The store celebrates the New York street
culture and will serve as a hub for sneakerheads
and streetwear enthusiasts.
——adidas Originals x Pharrell Williams
presents adidas Originals Hu, a collection of
apparel and shoes that celebrates cultural
diversity around the globe.
——adidas launches the next chapter of Sport
16 with the brand campaign video ‘Sport Needs
Creators’. The video debuted on air with the
start of the NFL season and is a call to athletes
everywhere who think and act beyond the norm
of sport.
——adidas is confirmed as a member in
the Dow Jones Sustainability Indices (DJSI)
World and Europe, the most recognised global
sustainability benchmark. As one of few
companies worldwide, adidas has remained in
this index for 17 consecutive years.
——After more than 15 years as adidas CEO,
Herbert Hainer retires from office and hands over
to his successor, Kasper Rorsted.
8
1
To our S hareholders
Operational and Sporting Highlights
OPERATIONAL AND
SPORTING HIGHLIGHTS
Q4 2016
OCTOBER
NOVEMBER
DECEMBER
——Gigi Hadid, style icon, fitness advocate and
——adidas and Parley for the Oceans unveil
trendsetter, joins Reebok’s female community
as the newest face of the brand’s #PerfectNever
movement, a call to action that asks women
around the world to celebrate the beauty of
imperfection and champions Reebok’s message
of self-betterment.
the first football products with the launch of the
adidas x Parley Real Madrid and Bayern Munich
home jerseys, made from Par …
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