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TaylorMade-adidas Golf* Reports Record Third Quarter Revenue, Earnings

Reach Year-to-Date Revenue of €359 Million, 300 Series™ to Drive 2001 Success

CARLSBAD, Calif., 02/11/2000 - TaylorMade-adidas Golf today announced its third quarter revenue and earnings, including the report of record third-quarter sales of €95 million and record year-to-date revenue of €359 million. 

The revenue increase of 20 percent over the Q3 1999 was driven primarily by sales of irons and by the continued growth of the company’s adidas footwear and apparel lines. Year-to-date growth in revenue of 30 percent has been generated primarily by market strength in irons, metalwoods and adidas brand footwear and apparel. Year-to-date revenue from the company’s line of golf balls has also grown by 24 percent over the same period of 1999. 

Gross margins in the third quarter reached 54.1 percent as a result of the company’s continuing efforts to realize manufacturing efficiencies and improve the economics of its supplier relationships. These same factors pushed year-to-date gross margins to 49.8 percent, compared to the 1999 year-to-date gross margin of 49.0 percent. 

TaylorMade-adidas' third-quarter operating profit contribution to its parent, adidas Salomon AG’s, earnings was up by €1 million compared to the prior year. The year-to-date contribution exceeds that of the prior year by €8 million as a result of strong growth in revenue and gross margin partially offset by expenses associated with the expanded operating base. 

“We are excited that we were able to deliver third-quarter revenue that exceeds the previous record we had established just last year," said president Mark King. "Beginning in late 1999 we refocused our product development, marketing and sales organizations to meet the needs of the serious, competitive golfer. We believe our third-quarter results confirm that we've solidified this position as well as the growth potential for products that serve the needs of these consumers. 

"In addition, we've made substantial investments in R&D, supply chain management, marketing and sales that will allow us to generate and service the growth expected in coming years. While building this infrastructure has increased operating expenses in the short term, the company remains on track to deliver record earnings for 2000 and is well-positioned to take advantage of the market momentum being generated by the recently introduced 300 Series™ metalwoods." 

King went on to discuss specifics of the company’s introduction of its 300 Series™ of metalwoods, citing the exceptional reception for the product's first deliveries. He also pointed out an underlying reason for this success: the club's winning ways with professionals. Currently, it's the No.1 driver on the PGA Tour in 2000 and has recently reached the No.1 weekly driver count position on the European PGA Tour. 

In addition to the reaction to its first deliveries, the volume of retailer pre-order for the 300 Series™ has beat that of any club in TaylorMade history. King said the company expects to continue to deliver limited quantities of 300 Series™ metalwoods through the end of 2000, with a full product launch in the first quarter of 2001.

About TaylorMade-adidas Golf

TaylorMade has led the golf industry’s technological evolution since it was founded in 1979, constantly innovating new equipment and products that help golfers of all levels improve their game. In 1998 the company combined operations with adidas Golf, manufacturer of performance golf footwear, apparel and accessories. Global headquarters for TaylorMade-adidas Golf are located in Carlsbad, Calif., where it develops superior products for the committed golfer. TaylorMade-adidas Golf is a wholly owned subsidiary of adidas-Salomon AG, a $6 billion company. Detailed information on the company and its products can be found at 800-888-CLUB or on the Web at http://taylormadegolf.eu/ or at http://adidasgolf.eu/

* Figures presented are based on European currency as part of Group sales.