Amer Sports Corporation Financial Results 2009 (IFRS)

(Thomson Reuters ONE) - Amer Sports CorporationFINANCIAL STATEMENT BULLETINFebruary 4, 2010 at 1:00 pmOCTOBER-DECEMBER, 2009 * Amer Sports Q4/09 net sales of EUR 482.8 million fell by 3% (495.3). In local currencies, net sales were at last year's level. Net sales fell by 6% in the Americas, increased by 8% in the EMEA region and fell by 4% in Asia Pacific in local currency terms. * EBIT was EUR 39.4 million (35.2). Earnings per share were EUR 0.37 (0.20). * Winter and Outdoor sales grew by 3% in local currencies. EBIT grew to EUR 42.5 million (36.7). Winter Sports Equipment's profitability improved significantly. * Ball Sports sales fell by 8%. The fall of EBIT of EUR 2.2 million (3.4) reflects a slower than anticipated top-line. * Fitness sales grew by 10%. EBIT of EUR -0.5 million (-2.3) includes bad debt provisions of EUR 5 million.JANUARY-DECEMBER, 2009 * Amer Sports net sales were at EUR 1,533 million (1,577), falling by 3%. In local currencies, net sales fell by 4%. Net sales fell by 12% in the Americas, increased by 3% in the EMEA region and fell by 3% in Asia Pacific in local currency terms. * EBIT was EUR 43.8 million (78.9). The result reflects the challenging operating environment in North America as well as a one-time charge of EUR 5 million (net income EUR 7 million). Earnings per share were EUR 0.28 (0.37). Taxes were 6.0 million positive (-11.6) due to increased deferred tax assets. * Amer Sports financial position improved significantly with net debt declining by EUR 333.1 million to EUR 282.5 million. The reduction reflects a strong cash flow from operating activities of EUR 181.6 million (10.5), which, was driven by a successful working capital reduction program. Furthermore, net proceeds of EUR 151.5 million were raised with a rights offering and EUR 60 million with a hybrid bond. This resulted in a substantial improvement in gearing from 121% to 38%. * Amer Sports Board of Directors proposes a dividend of EUR 0.16 per share (0.16 per share in 2008).+-----------------------+------+------+----+------+-------+-------+----+------+| |10-12/|10-12/| | | | | | ||EUR million | | |Ch %|Ch %*)| 2009| 2008|Ch %|Ch %*)|| | 2009| 2008| | | | | | |+-----------------------+------+------+----+------+-------+-------+----+------+|Net sales | 482.8| 495.3| -3| 1|1,533.4|1,576.6| -3| -4|+-----------------------+------+------+----+------+-------+-------+----+------+|Gross profit | 196.5| 184.3| 7| 11| 620.0| 633.0| -2| -4|+-----------------------+------+------+----+------+-------+-------+----+------+|EBIT | 39.4| 35.2| 12| 16| 43.8| 78.9| -44| -46|+-----------------------+------+------+----+------+-------+-------+----+------+|Of net sales | 8.2| 7.1| | | 2.9| 5.0| | |+-----------------------+------+------+----+------+-------+-------+----+------+|Financing income and | | | | | | | | || | -7.1| -11.3| | | -18.4| -33.3| | ||expenses | | | | | | | | |+-----------------------+------+------+----+------+-------+-------+----+------+|Earnings before taxes | 32.3| 23.9| 35| | 25.4| 45.6| -44| |+-----------------------+------+------+----+------+-------+-------+----+------+|Net result | 36.6| 17.7| | | 31.4| 34.0| -8| |+-----------------------+------+------+----+------+-------+-------+----+------+|Earnings per share, EUR| 0.37| 0.20| | | 0.28| 0.37| | |+-----------------------+------+------+----+------+-------+-------+----+------+|Equity per share, EUR | | | | | 6.05| 5.44| | |+-----------------------+------+------+----+------+-------+-------+----+------+|ROCE, % | | | | | 4.3| 7.9| | |+-----------------------+------+------+----+------+-------+-------+----+------+|ROE, % | | | | | 5.0| 6.7| | |+-----------------------+------+------+----+------+-------+-------+----+------+|Equity ratio, % | | | | | 48.2| 30.6| | |+-----------------------+------+------+----+------+-------+-------+----+------+|Gearing, % | | | | | 38| 121| | |+-----------------------+------+------+----+------+-------+-------+----+------+|Personnel at year end | | | | | 6,331| 6,338| | |+-----------------------+------+------+----+------+-------+-------+----+------+*) Change in local currency termsShare-based key indicators have been adjusted for the impact of the share issuein 2009.OUTLOOK AND GUIDANCE FOR 2010Amer Sports does not anticipate a quick recovery in the sporting goods market,and therefore the company's key priority is to improve its profitability throughgross margin improvements and continued tight cost control. The company willalso continue to focus on strict working capital management, although animprovement similar to the previous year cannot be expected. Capitalexpenditures and other investments will remain at the previous year's level. Thecompany's tax rate is expected to be approximately 20%.MESSAGE FROM PEKKA PAALANNE, ACTING PRESIDENT AND CEO:"Amer Sports declining sales trend turned slightly positive towards the end ofthe fourth quarter, although this reflected more the timing of winter sportsdeliveries and weak comparables in the Fitness segment than a recovery in themarket. Our profitability also started to improve thanks to programs initiatedduring 2009, and we expect the favorable development to continue during 2010.As a whole, last year was a very challenging one due to the recessionaryenvironment. Consequently, Amer Sports results were the weakest during the pastdecade. Our key priority in 2009 was to strengthen the balance sheet, and inthis task we exceeded our own plans. I'm particularly proud of the results ofthe working capital reduction program in which the whole organization wasinvolved. During the year, we re-established a strong balance sheet and ourgearing fell from 121% to 38%.Over the past decade Amer Sports has undergone significant changes and hasbecome a leading global sporting goods company. With the appointment of HeikkiTakala as our new CEO and President, from April 1, 2010, the company will entera new era."For further information, please contact:Tommy Ilmoni, Vice President, IR and Corporate Communications, tel. +3589 7257 8233Pekka Paalanne, Acting President and CEO, tel. +358 9 7257 8212TELEPHONE CONFERENCEAn English-language telephone conference call for investors and analysts will beheld on Thursday, February 4 at 3:00 pm Finnish time. To participate in theconference call, please call +44 (0)203 003 2666 (UK/international dial-innumber). The conference can also be followed from a direct transmission on theInternet, at www.amersports.com .A recorded version will be available later at the same address: replay number+44 208 196 1998 and access code 6801881#.FINANCIAL RESULTS 2009 (IFRS)The sporting goods industry's market conditions were challenging throughout2009. Weak global economic conditions and uncertainty about the financialmarkets' performance affected the sporting goods sector, including Amer Sports.The US market continued to suffer more than the European market and, in general,there was less demand for high-ticket items. For Amer Sports this meant largesales declines in the Fitness and Golf businesses in particular. On the otherhand, the demand for low-ticket items remained relatively healthy, and somecategories even saw clear growth, such as Salomon's footwear business.NET SALES AND EBIT IN OCTOBER-DECEMBERNet sales for Amer Sports were at EUR 482.8 million (495.3), showing a fall of3%. In local currencies, net sales were at last year's level.Net sales by business segment+------------------+------+------+------+------+----------+----------+| |10-12/|10-12/|Change|Change|% of sales|% of sales|| | | | | | | ||EUR million | 2009| 2008| %| %*)| 10-12/09| 10-12/08|+------------------+------+------+------+------+----------+----------+|Winter and Outdoor| 329.2| 326.6| 1| 3| 68| 66|+------------------+------+------+------+------+----------+----------+|Ball Sports | 94.7| 110.0| -14| -8| 20| 22|+------------------+------+------+------+------+----------+----------+|Fitness | 58.9| 58.7| 0| 10| 12| 12|+------------------+------+------+------+------+----------+----------+|Total | 482.8| 495.3| -3| 1| 100| 100|+------------------+------+------+------+------+----------+----------+*) In local currency termsGeographic breakdown of net sales+------------+------+------+------+------+----------+----------+| |10-12/|10-12/|Change|Change|% of sales|% of sales|| | | | | | | ||EUR million | 2009| 2008| %| %*)| 10-12/09| 10-12/08|+------------+------+------+------+------+----------+----------+|Americas | 154.6| 178.8| -14| -6| 32| 36|+------------+------+------+------+------+----------+----------+|EMEA | 266.1| 249.5| 7| 8| 55| 50|+------------+------+------+------+------+----------+----------+|Asia Pacific| 62.1| 67.0| -7| -4| 13| 14|+------------+------+------+------+------+----------+----------+|Total | 482.8| 495.3| -3| 1| 100| 100|+------------+------+------+------+------+----------+----------+*) In local currency termsEBIT by business segment+------------------+------+------+------+------+----------+----------+| |10-12/|10-12/|Change|Change|% of sales|% of sales|| | | | | | | ||EUR million | 2009| 2008| %| %*)| 10-12/09| 10-12/08|+------------------+------+------+------+------+----------+----------+|Winter and Outdoor| 42.5| 36.7| 16| 20| 12.9| 11.2|+------------------+------+------+------+------+----------+----------+|Ball Sports | 2.2| 3.4| -35| -28| 2.3| 3.1|+------------------+------+------+------+------+----------+----------+|Fitness | -0.5| -2.3| | | | |+------------------+------+------+------+------+----------+----------+|Headquarters | -4.8| -2.6| | | | |+------------------+------+------+------+------+----------+----------+|Total | 39.4| 35.2| 12| 16| 8.2| 7.1|+------------------+------+------+------+------+----------+----------+*) In local currency termsThe Group's EBIT was EUR 39.4 million (35.2). The improvement reflects to alarge extent both higher sales and a better profitability within the WinterSports Equipment business area. EBIT includes bad debt provisions of EUR 5million in the Fitness segment.Net financial expenses amounted to EUR 7.1 million (11.3). Earnings before taxeswere EUR 32.3 million (23.9), and earnings per share came to EUR 0.37 (0.20).NET SALES AND EBIT IN JANUARY-DECEMBER 2009Amer Sports net sales were EUR 1,533.4 million (1,576.6), seeing a fall of 3%.In local currency terms, net sales fell by 4%.Net sales by business segment+------------------+-------+-------+------+------+----------+----------+| | | |Change|Change|% of sales|% of sales|| | | | | | | ||EUR million | 2009| 2008| %| %*)| 2009| 2008|+------------------+-------+-------+------+------+----------+----------+|Winter and Outdoor| 862.6| 860.8| 0| 0| 56| 55|+------------------+-------+-------+------+------+----------+----------+|Ball Sports | 476.7| 495.5| -4| -7| 31| 31|+------------------+-------+-------+------+------+----------+----------+|Fitness | 194.1| 220.3| -12| -15| 13| 14|+------------------+-------+-------+------+------+----------+----------+|Total |1,533.4|1,576.6| -3| -4| 100| 100|+------------------+-------+-------+------+------+----------+----------+*) In local currency termsGeographic breakdown of net sales+------------+-------+-------+------+------+----------+----------+| | | |Change|Change|% of sales|% of sales|| | | | | | | ||EUR million | 2009| 2008| %| %*)| 2009| 2008|+------------+-------+-------+------+------+----------+----------+|Americas | 620.5| 677.8| -8| -12| 40| 43|+------------+-------+-------+------+------+----------+----------+|EMEA | 735.0| 723.0| 2| 3| 48| 46|+------------+-------+-------+------+------+----------+----------+|Asia Pacific| 177.9| 175.8| 1| -3| 12| 11|+------------+-------+-------+------+------+----------+----------+|Total |1,533.4|1,576.6| -3| -4| 100| 100|+------------+-------+-------+------+------+----------+----------+*) In local currency termsEBIT by business segment+------------------+-----+-------+------+------+----------+----------+| | | |Change|Change|% of sales|% of sales|| | | | | | | ||EUR million | 2009| 2008| %| %*)| 2009| 2008|+------------------+-----+-------+------+------+----------+----------+|Winter and Outdoor| 46.5| 41.1| 13| 17| 5.4| 4.8|+------------------+-----+-------+------+------+----------+----------+|Ball Sports | 23.5| 37.0| -36| -40| 4.9| 7.5|+------------------+-----+-------+------+------+----------+----------+|Fitness | -7.5| 3.8| | | | 1.7|+------------------+-----+-------+------+------+----------+----------+|Headquarters |-18.7|-3.0**)| | | | |+------------------+-----+-------+------+------+----------+----------+|Total | 43.8| 78.9| -44| -46| 2.9| 5.0|+------------------+-----+-------+------+------+----------+----------+*) In local currency terms**) Including EUR 13 million capital gainThe Group's EBIT was EUR 43.8 million (78.9). The weakened results reflectmainly Amer Sports operations in North America as well as a one-time charge ofEUR 5 million (net income EUR 7 million).Net financial expenses, which amounted to EUR 18.4 million (33.3), included EUR6.2 million in unrealized foreign exchange gains. Earnings before taxes came toEUR 25.4 million (45.6). Taxes were EUR 6.0 million positive (-11.6) due toincreased deferred net tax assets. The deferred tax adjusted tax rate was 18%(25%), which is in line with the Group's on-going tax rate of 20%. Earnings pershare were EUR 0.28 (0.37).CAPITAL EXPENDITUREThe Group's capital expenditure on fixed assets totaled EUR 39.5 (43.1) million,which is well in line with the depreciations of EUR 35.0 (38.2) million. Thebiggest projects were the roll-out ofthe global IT platform of EUR 10 millionand Precor's new strength equipment facility of EUR 4.5million in NorthCarolina, USA.RESEARCH AND DEVELOPMENTEUR 52.0 million (55.6) was invested in research and development, representing3.4% of net sales. Winter and Outdoor's share of R&D expenditure was 62%, whileBall Sports accounted for 12%, and Fitness for 26%.FINANCIAL POSITION AND CASH FLOWAmer Sports had interest-bearing liabilities at the end of December of EUR404.1 million (687.7), consisting of short-term debt of EUR 121.3 million andlong-term debt of EUR 282.8 million. Liquid assets amounted to EUR 121.6 million(72.1) at the end of the period. The Group's net debt was EUR 282.5 million(615.6). The hybrid bond is treated as equity. Amer Sports' total unusedcommitted credit facilities amounted to EUR 275.0 million.+----------------+----------+-----+-----+----------+----+-------+-----+| | | | |Syndicated| | | || |Commercial| | Bank| | |Pension| ||Type of debt | |Other| | credit|Bond| |Other|| | papers| | loan| | | loan| || | | | |facility*)| | | |+----------------+----------+-----+-----+----------+----+-------+-----+|EUR million | 112| 9|69**)| 110| 75| 26| 3|+----------------+----------+-----+-----+----------+----+-------+-----+|Share of debt, %| 28| 2| 17| 27| 19| 6| 1|+----------------+----------+-----+-----+----------+----+-------+-----+| | | |2011,| 2011,| | | ||Maturity |< 6 months| 2010| | |2011| | || | | | 2012| 2012| | | |+----------------+----------+-----+-----+----------+----+-------+-----+*) Unused portion was EUR 215 million**) USD 100 millionAmer Sports has a EUR 325 million committed revolving credit facility, maturingin 2011 and 2012, of which EUR 110 million has been used. Furthermore, thecompany has, as of January 2009, committed revolving credit facilities of EUR60 million maturing in January 2010.Amer Sports' long-term debt consists of a EUR 75 million private placement bondmaturing in 2011, a USD 100 million term loan and draw-downs totaling EUR 110million as part of the original EUR 575 million loan syndicate of 2005 (maturingin 2011 and 2012), and a EUR 25.7 million pension loan.Short-term financing is mainly raised with a EUR 500 million domestic commercialpaper program, of which EUR 112.3 million had been used by the end of December.In March, Amer Sports Corporation issued a EUR 60 million hybrid bond in orderto strengthen its capital structure and to refinance existing debt. The couponrate of the bond is 12.0% per annum. The bond has no maturity, but the companymay call in the bond after three years. The hybrid bond is unsecured andsubordinated to all senior debt and is treated as equity in Amer Sportsconsolidated financial statements. The hybrid bond does not confer shareholders'rights, nor does it dilute the holdings of shareholders.The equity ratio at the end of December was 48.2 (30.6) and gearing was 38%(121).Net cash flow from operating activities after interest and taxes was EUR 181.6million (10.5). The substantial improvement in cash flow reflects a successfulworking capital reduction program. Net cash flow from investment activities wasEUR -41.1 million (-14.6).EUR 160 million rights offeringAs part of Amer Sports' measures to improve its balance sheet, the companyundertook a rights offering that was completed on October 23, 2009. The proceedsfrom the rights offering have been used to strengthen Amer Sports' financialposition and to improve the company's operational and strategic flexibility. Asa result of the rights offering, the number of Amer Sports' shares increased by48,471,734 to 121,517,285 shares. The total net proceeds of the rights offeringamounted to EUR 151.5 million.BUSINESS SEGMENT REVIEWSWINTER AND OUTDOOR+------------------+------+------+------+------+-----+-----+------+------+| |10-12/|10-12/|Change|Change| | |Change|Change|| | | | | | | | | ||EUR million | 2009| 2008| %| %*)| 2009| 2008| %| %*)|+------------------+------+------+------+------+-----+-----+------+------+|Net sales | | | | | | | | |+------------------+------+------+------+------+-----+-----+------+------+|Winter Sports | | | | | | | | || | 203.7| 196.7| 4| 6|371.7|378.9| -2| -1||Equipment | | | | | | | | |+------------------+------+------+------+------+-----+-----+------+------+|Apparel and | | | | | | | | || | 73.8| 73.9| 0| 2|304.7|277.9| 10| 11||Footwear | | | | | | | | |+------------------+------+------+------+------+-----+-----+------+------+|Cycling | 27.1| 31.3| -13| -12|100.4|114.2| -12| -13|+------------------+------+------+------+------+-----+-----+------+------+|Sports Instruments| 24.6| 24.7| 0| 4| 85.8| 89.8| -4| -5|+------------------+------+------+------+------+-----+-----+------+------+|Net sales, total | 329.2| 326.6| 1| 3|862.6|860.8| 0| 0|+------------------+------+------+------+------+-----+-----+------+------+|EBIT | 42.5| 36.7| 16| 20| 46.5| 41.1| 13| 17|+------------------+------+------+------+------+-----+-----+------+------+|Personnel, Dec 31 | | | | |3,940|3,777| 4| |+------------------+------+------+------+------+-----+-----+------+------+*) In local currency termsIn 2009, Winter and Outdoor's net sales of EUR 862.6 million (860.8) were atlast year's level in local currency terms. The breakdown of net sales bybusiness area was as follows: Winter Sports Equipment 43%, Apparel and Footwear35%, Cycling 12%, and Sports Instruments 10%. In 2009, the EMEA accounted for68% of net sales, the Americas for 21%, and Asia Pacific for 11%.+---------------+------+------+------+------+-----+-----+------+------+| |10-12/|10-12/|Change|Change| | |Change|Change|| | | | | | | | | ||EUR million | 2009| 2008| %| %*)| 2009| 2008| %| %*)|+---------------+------+------+------+------+-----+-----+------+------+|Americas | 50.8| 60.8| -16| -12|181.1|202.3| -10| -12|+---------------+------+------+------+------+-----+-----+------+------+|EMEA | 236.1| 219.2| 8| 9|585.4|558.8| 5| 6|+---------------+------+------+------+------+-----+-----+------+------+|Asia Pacific | 42.3| 46.6| -9| -6| 96.1| 99.7| -4| -6|+---------------+------+------+------+------+-----+-----+------+------+|Total net sales| 329.2| 326.6| 1| 3|862.6|860.8| 0| 0|+---------------+------+------+------+------+-----+-----+------+------+*) In local currency termsThe EBIT of EUR 46.5 million (41.1) increased by 17% in local currency terms.The improvement reflects clearly better profitability in Winter Sports Equipmentand the continued good level of profitability in Apparel and Footwear. Theprofitability of both Cycling and Sports Instruments weakened mainly due tolower sales. In October-December EBIT grew to EUR 42.5 million (36.6). WinterSports Equipment's profitability improved significantly.Winter Sports EquipmentIn 2009, Winter Sports Equipment's net sales of EUR 371.7 million (378.9) wereat last year's level in local currencies. The biggest product categories werealpine ski equipment, representing 78% of net sales, cross country 12%, andsnowboards 10%. Net sales of alpine ski equipment fell in local currency termsby 3%, snowboards fell by 10% and cross country increased by 22%.The development of sales showed very different patterns in the key marketsduring 2009. The alpine and Nordic countries started to show signs of recoverywith favorable weather conditions. The North American market continued to weakenwhereas the Asian market was flat. Industry sales were relatively stable as awhole, at approximately EUR 1.4 billion: alpine ski equipment EUR 1.0 billion,snowboards EUR 0.3 billion, and cross-country ski equipment EUR 0.1 billion. TheEMEA continued to be the largest winter sports region representing 71% of globalsales, followed by the Americas with 17%, and Asia Pacific with 12%.After significant restructuring in 2008, 2009 was the first year for the WinterSports Equipment business operating under its new structure. Winter SportsEquipment successfully completed its consolidation of the manufacturing sitesfrom ten to six at the beginning of the year. In addition, the integration ofthe Bulgarian ski factory, which was acquired in 2008, proceeded according toplan. The Winter Sports Equipment business area produced a positive result aftera very challenging period.Apparel and FootwearNet sales in Apparel and Footwear increased by 11% in local currency terms toEUR 304.7 million (277.9). Net sales by product categories were as follows:footwear 55% and apparel and gear 45%. Net sales of footwear increased in localcurrency terms by 15%, and apparel and gear by 6%. The EMEA continued to be thelargest business region representing 69% of global sales, followed by theAmericas with 26%, and Asia Pacific with 5%.Salomon strengthened its global position in the outdoor footwear market in2009. The main growth drivers were the trail running footwear and the newprogressive hiking-backpacking offer. The unique positioning of Salomon as themountain apparel brand continued to generate positive results with sales growingfaster than the market, especially in Europe. Ski apparel continued to grow andSalomon strengthened its position on the market. The Apparel and Footwearbusiness is weighted towards the winter season. However, the outdoor andtrail-running spring/summer collections have continued to be the fastest growingcategories.Despite a tough US environment and high exposure in the US market, Arc'teryxmanaged to increase its sales. This was mainly driven by a successfulspring/summer collection.Even though the US was the toughest market in 2009, Amer Sports estimates thatits Apparel and Footwear business area's market share increased in the US. Theoutdoor trend remained strong and trail running as a category continued to gainpopularity. The business area's good profitability was maintained in 2009.CyclingDue to the challenging business climate in 2009, both independent bike dealersand bike manufacturers clearly reduced their inventories during the year. Thisresulted in a major fall in OEM orders and weak demand in the US especially.Mavic saw net sales fall in local currencies by 13% to EUR 100.4 million(114.2). The biggest product categories were rims and wheels, representing 83%of net sales, and apparel and footwear 14%. Net sales of rims and wheels fell inlocal currency terms by 16%, and apparel and footwear by 3%. The distribution ofCycling's net sales by geographical region was as follows: EMEA 65%, AsiaPacific 21%, and the Americas 14%.At the beginning of 2009, Mavic decided to recall its R-Sys front wheels andreplace the original carbon spokes with a new and stronger construction.Customers appreciated the way this recall was managed, which showed Mavic'scontinuous commitment to maintaining its strong brand image. Improving thesupply chain and maintain tight control of expenses were key focus areas in2009. Mavic's profitability weakened in 2009 due to lower sales volumes and thedisruption caused by the recall of R-Sys wheels.On September 1, 2009, Amer Sports announced that it was exploring strategicalternatives in respect of its cycling business and that the review could resultin the divestment of Mavic. Amer Sports evaluated several different options, andreached the conclusion that the divestment of Mavic would not be in the bestinterest of shareholders. Instead Amer Sports will concentrate its efforts onfurther developing its cycling business.Sports InstrumentsNet sales of Sports Instruments' net sales fell by 5% in local currency terms toEUR 85.8 million (89.8). Over the years, wristop computers and divinginstruments have consistently increased their share of Suunto's total net sales:reaching 80% of total business in 2009. Net sales of wristop computers increasedin local currency terms by 3% and diving instruments fell by 13%. Thedistribution of net sales by geographical region was as follows: EMEA 56%, theAmericas 29%, and Asia Pacific 15%. Suunto's profitability weakened in 2009.In 2009, Suunto entered the premium sports watch market with the SuuntoElementum collection.Winter and Outdoor outlook 2010The Winter and Outdoor segment is well positioned to continue to improve itsprofitability. The Apparel and Footwear business area continues to extend itsdirect-to-consumer program and its profitability is expected to remain at a goodlevel. Within Winter Sports Equipment, Cycling and Sports Instruments the focusis on improving gross margins while maintaining tight cost control.BALL SPORTS+-----------------+------+------+------+------+-----+-----+------+------+| |10-12/|10-12/|Change|Change| | |Change|Change|| | | | | | | | | ||EUR million | 2009| 2008| %| %*)| 2009| 2008| %| %*)|+-----------------+------+------+------+------+-----+-----+------+------+|Net sales | | | | | | | | |+-----------------+------+------+------+------+-----+-----+------+------+|Racquet Sports | 40.9| 45.1| -9| -5|222.7|227.0| -2| -5|+-----------------+------+------+------+------+-----+-----+------+------+|Team Sports | 43.6| 52.8| -17| -8|187.3|189.9| -1| -6|+-----------------+------+------+------+------+-----+-----+------+------+|Golf | 10.2| 12.1| -16| -13| 66.7| 78.6| -15| -16|+-----------------+------+------+------+------+-----+-----+------+------+|Net sales, total | 94.7| 110.0| -14| -8|476.7|495.5| -4| -7|+-----------------+------+------+------+------+-----+-----+------+------+|EBIT | 2.2| 3.4| -35| -28| 23.5| 37.0| -36| -40|+-----------------+------+------+------+------+-----+-----+------+------+|Personnel, Dec 31| | | | |1,586|1,731| -8| |+-----------------+------+------+------+------+-----+-----+------+------+*) In local currency termsIn 2009, Ball Sports net sales of EUR 476.7 million (495.5) fell by 7% in localcurrencies. The breakdown of net sales by business area was as follows: RacquetSports 47%, Team Sports 39%, and Golf 14%. The Americas generated 63% of netsales, EMEA 23%, and Asia Pacific 14%.+------------+------+------+------+------+-----+-----+------+------+| |10-12/|10-12/|Change|Change| | |Change|Change|| | | | | | | | | ||EUR million | 2009| 2008| %| %*)| 2009| 2008| %| %*)|+------------+------+------+------+------+-----+-----+------+------+|Americas | 61.7| 74.9| -18| -9|298.7|316.9| -6| -10|+------------+------+------+------+------+-----+-----+------+------+|EMEA | 18.0| 19.2| -6| -4|111.5|119.1| -6| -4|+------------+------+------+------+------+-----+-----+------+------+|Asia Pacific| 15.0| 15.9| -6| -6| 66.5| 59.5| 12| 4|+------------+------+------+------+------+-----+-----+------+------+|Total | 94.7| 110.0| -14| -8|476.7|495.5| -4| -7|+------------+------+------+------+------+-----+-----+------+------+*) In local currency termsThe EBIT of EUR 23.5 million (37.0), fell by 40% in local currency terms. Thelower EBIT was the result of revenue declines and lower margins driven by therecessionary environment. The Americas and the Golf business area were impactedin particular. The 2009 revenue declines were also affected by the inventorydestocking trend in retail. In October-December EBIT was 2.2 million (3.4) andclose to the previous year's level.Racquet SportsIn local currencies, Racquet Sports' net sales fell in local currency terms by5% to EUR 222.7 million (227.0). The breakdown of Racquet Sports sales by regionwas as follows: the Americas 42%, EMEA 36% and Asia Pacific 22%. In localcurrencies, the Americas saw a fall of 12%, EMEA fell by 2% whereas Asia Pacificgrew by 6%. The decline in the Americas was driven by the poor economicenvironment. The growth in Asia Pacific reflects a positive development in bothAustralia and Korea combined with the expanded distribution in China. RacquetSports' profitability remained at a good level.For 2009, market trends remained stable for Racquet Sports. Wilson's position asthe leading tennis racket brand strengthened further. Its strong racket brandposition was leveraged to drive growth in tennis strings and accessories. Thebiggest product categories were tennis rackets, representing 40% of net sales,and tennis balls 22%. Net sales of tennis rackets fell in local currency termsby 9%, and tennis balls were at least year's level.Shipments of the new BLX racket line started in January 2010. Roger Federer,Juan Martin Del Potro, and Justine Henin debuted successfully the new technologyat the 2010 Australian Open.Team SportsIn local currencies, Team Sports' net sales fell in local currency terms by 6%to EUR 187.3 million (189.9). The breakdown of Team Sports sales by region is asfollows: the Americas 94%, EMEA 2% and Asia Pacific 4%. In local currencies, theAmericas fell by 6%, the EMEA fell by 19% and Asia grew by 25%. Team Sports'profitability weakened due to revenue declines and lower margins driven by therecessionary environment.The business environment in the Americas remained challenging due to theeconomic environment and the inventory destocking trend by the trade. The growthin Asia Pacific was driven by Korea, where the baseball strategies have beensuccessful. The biggest product categories were American footballs, representing21% of net sales, baseballs and gloves with 20%, baseball and softball bats with17%, and basketballs with 15%. Net sales of American footballs fell in localcurrency terms by 10%, baseballs and gloves increased by 2%, baseball/softballbats were at last year's level, and basketballs fell by 4%.GolfIn local currencies, Golf's net sales fell in local currency terms by 16% to EUR66.7 million (78.6). The breakdown of sales by market was: the Americas 44%,EMEA 44% and Asia Pacific 12%. In local currencies, the Americas fell by 25%,the EMEA fell by 4%, and Asia Pacific fell by 19%. The biggest productcategories were clubs, representing 59% of net sales, and balls 26%. Net salesof clubs fell in local currencies by 15%, and balls by 21%.The golf equipment market remained very competitive. The overall market declinecreated a challenge for brands and retailers alike. Wilson Golf's profitabilitywas affected by the challenging market environment.Wilson Golf's strategy is to focus on the iron category and the brand iscommitted to making the best irons in the industry. Several new award-winningproducts have been launched in 2010.Ball Sports outlook 2010A slight recovery is expected in the Ball Sports segment, driven by retaildistribution gains and assumed restocking due to low trade inventory levels.Ball Sports' profitability is expected to improve mainly due to gross marginimprovements and tight cost control.FITNESS+-----------------+------+------+------+------+-----+-----+------+------+| |10-12/|10-12/|Change|Change| | |Change|Change|| | | | | | | | | ||EUR million | 2009| 2008| %| %*)| 2009| 2008| %| %*)|+-----------------+------+------+------+------+-----+-----+------+------+|Net sales | 58.9| 58.7| 0| 10|194.1|220.3| -12| -15|+-----------------+------+------+------+------+-----+-----+------+------+|EBIT | -0.5| -2.3| | | -7.5| 3.8| | |+-----------------+------+------+------+------+-----+-----+------+------+|Personnel, Dec 31| | | | | 737| 765| -4| |+-----------------+------+------+------+------+-----+-----+------+------+*) In local currency terms.In 2009, Fitness' net sales fell by 15% in local currencies to EUR 194.1 million(220.3). The Americas accounted for 72% of net sales, EMEA for 20%, and AsiaPacific for 8%.+------------+------+------+------+------+-----+-----+------+------+| |10-12/|10-12/|Change|Change| | |Change|Change|| | | | | | | | | ||EUR million | 2009| 2008| %| %*)| 2009| 2008| %| %*)|+------------+------+------+------+------+-----+-----+------+------+|Americas | 42.3| 43.6| -3| 8|140.7|158.8| -11| -15|+------------+------+------+------+------+-----+-----+------+------+|EMEA | 11.9| 11.2| 6| 11| 38.1| 45.4| -16| -11|+------------+------+------+------+------+-----+-----+------+------+|Asia Pacific| 4.7| 3.9| 21| 30| 15.3| 16.1| -5| -19|+------------+------+------+------+------+-----+-----+------+------+|Total | 58.9| 58.7| 0| 10|194.1|220.3| -12| -15|+------------+------+------+------+------+-----+-----+------+------+*) In local currency termsEBIT fell to EUR -7.5 million (3.8) due to the sharp fall in sales, which couldnot be fully offset by the cost reduction programs. In October-December, EBITwas -0.5 million (-2.3), including bad debt provisions of EUR 5 million.Fitness equipment manufacturers worldwide experienced significant reductions insales in both the commercial and consumer markets during 2009. Of Precor's netsales, clubs and institutions represented 87% and home use was 13%.The commercial business (clubs and institutions) fell by 14% in localcurrencies. A dependable driver of commercial equipment sales growth had beenthe opening of new facilities. With tightened credit markets and uncertainconsumer spending, most fitness customers held off on expansion plans in 2009.Within existing facilities, a reduction in customer spending on extras such aspersonal training and pro-shop gear led to lower revenues, which in turn droveowners to cut expenses. Many chose to address expense cuts by deferring plansfor new fitness equipment, preferring to stretch the service life of theirexisting equipment. In the fourth quarter of 2009, commercial business saw aslight improvement as club operators increased their investments in new andreplacement equipment.The consumer (home use) business fell by 19% in local currencies. The market forconsumer equipment experienced a second year of decline with the premiumsegment, where Precor competes particularly, exposed to the broader trend ofreduced discretionary spending. Financial weakness among specialty fitnessdealers, the primary distribution channel for premium home equipment, magnifiedmarket challenges.Related to the construction of the new strength equipment production facility inNorth Carolina, Precor has had significant capital expenditures in 2009. Thetotal amount is approximately EUR 4.5 million. The facility is now in use andwill provide the required capacity for the recently launched selectorizedstrength lines and reduce manufacturing costs.Fitness outlook 2010In the near-term the outlook for the industry is uncertain. However, as 2009progressed sales became more predictable and, in the fourth quarter, Precorreturned to growth. Precor has strengthened its position during the downturn bycontinuing market penetration of the AMT®, successfully launching two new linesof strength equipment, and winning key international hospitality accounts.Precor is well positioned when demand returns in the fitness industry.PERSONNELAt the end of December, the Group employed 6,331 people (6,338). The Groupemployed an average of 6,362 people (6,285) during the review period.+------------------+------------+------------+------+| |December 31,|December 31,|Change|| | | | || | 2009| 2008| %|+------------------+------------+------------+------+|Winter and Outdoor| 3,940| 3,777| 4|+------------------+------------+------------+------+|Ball Sports | 1,586| 1,731| -8|+------------------+------------+------------+------+|Fitness | 737| 765| -4|+------------------+------------+------------+------+|Headquarters | 68| 65| 5|+------------------+------------+------------+------+|Total | 6,331| 6,338| 0|+------------------+------------+------------+------++------------+------------+------------+------+| |December 31,|December 31,|Change|| | | | || | 2009| 2008| %|+------------+------------+------------+------+|EMEA | 3,590| 3,428| 5|+------------+------------+------------+------+|Americas | 2,195| 2,337| -6|+------------+------------+------------+------+|Asia Pacific| 546| 573| -5|+------------+------------+------------+------+|Total | 6,331| 6,338| 0|+------------+------------+------------+------+BOARD OF DIRECTORS AND MANAGEMENT OF THE COMPANYAmer Sports Corporation reorganized its management model in 2009 by creating asingle group-wide Amer Sports management team. The purpose of the new ExecutiveBoard is to strengthen the development and consistent execution of Amer Sports'corporate strategy across all business areas and regions, driving Groupintegration, common goals, and the Group's overall performance.In 2009, the following new members were appointed to the Executive Board:Jean-Marc Pambet, President of Apparel and Footwear, Bernard Millaud, Presidentof Cycling; Terhi Heikkinen, Senior Vice President Human Resources; and AnttiJ?kel?en, Chief Development Officer. Due to the change, the Amer SportsExecutive Team ceased to exist.On December 22, 2009, Amer Sports Board of Directors appointed Mr. Heikki Takala(MSc) as Amer Sports' President and CEO effective from April 1, 2010. RogerTalermo will continue in a special role assigned by Amer Sports Board ofDirectors until the June 21, 2010, after which he will resign from the company.Pekka Paalanne, Executive Vice President and Deputy to the President and CEO wasappointed as acting President and CEO from December 22, 2009, until March31, 2010.Amer Sports Executive Board members as of December 31, 2009:- Pekka Paalanne, Acting President and CEO (December 22, 2009-March 31, 2010)- Thomas Ehrnrooth, Senior Vice President Sales and Channel Management- Vincent Wauters, Senior Vice President Supply Chain and Information Technology- Terhi Heikkinen, Senior Vice President Human Resources- Antti J?kel?en, Chief Development Officer- Chris Considine, President of Ball Sports- Paul Byrne, President of Fitness Equipment- Juha Pinomaa, President of Sports Instruments- Michael Schineis, President of Winter Sports Equipment- Jean-Marc Pambet, President of Apparel and Footwear- Bernard Millaud, President of CyclingAmer Sports' Executive Board members are presented in more detail atwww.amersports.com/about .CORPORATE GOVERNANCE STATEMENTAmer Sports has issued its Corporate Governance statement as a separate report.Amer Sports' auditors have checked that the statement has been issued and thatthe description of the main features of the internal control and risk managementsystems in relation to the financial reporting process is consistent with AmerSports' financial statements. The Corporate Governance Code is publiclyavailable on Amer Sports' website www.amersports.com, in the Corporate governance section.SHARES AND SHAREHOLDERSThe company's paid-up share capital recorded in the Trade Register as ofDecember 31, 2009 was EUR 292,182,204. On December 31, 2009, the company had amarket capitalization of EUR 848.3 million (389.7), excluding own shares.On October 23, 2009 the final outcome of Amer Sports' rights offering showedthat 48,070,466 million shares, representing 99.2% of the total number of sharesoffered, were subscribed for with subscription rights. The remaining 401,268shares were subscribed for without subscription rights. As a result of therights offering, the number of Amer Sports' shares increased on October26, 2009, by 48,471,734 shares to 121,517,285 shares.Amer Sports' rights offeringA total of 48,471,734 new shares were subscribed for in Amer Sports' rightsoffering. The subscription period for the offering ended on October 19, 2009.All the new shares were registered with the Trade Register on October 26, 2009.Following the registration, the total number of Amer Sports' shares is121,517,285 shares. The new shares include the right to dividends and otherdistributions as well as other shareholder rights, effective from theregistration date of October 26, 2009.The highest price of the subscription rights on the OMX Helsinki Stock Exchangewas EUR 2.15, and the lowest EUR 1.23, and the last trading price was EUR 2.11.In 2009, a total of 8.6 million were traded at a total price of EUR 13.1million.Trading in sharesOver the course of the period, a total of 71.0 million (101.3) Amer Sportsshares were traded on the NASDAQ OMX Helsinki exchange, to a total value of EUR458.3 million (1,172.5). The share turnover was 76.4% (139.6) (of the averagenumber of shares, excluding own shares).At the close of the review period, the last trading in Amer Sports Corporationshares was at EUR 7.00. The high for the period on the NASDAQ OMX Helsinkiexchange was EUR 7.19, and the low EUR 3.67. The average share price was EUR6.45.Major shareholders, December 31, 2009 (includes no nominee registrations)+--+------------------------------------------+---------+-----------+| | | |% of shares|| | | | || | | Shares| and votes|+--+------------------------------------------+---------+-----------+|1 |Maa- ja Vesitekniikan Tuki ry. |5,000,000| 4.1|+--+------------------------------------------+---------+-----------+|2 |Varma Mutual Pension Insurance Company |4,770,210| 3.9|+--+------------------------------------------+---------+-----------+|3 |Ilmarinen Mutual Pension Insurance Company|4,191,668| 3.4|+--+------------------------------------------+---------+-----------+|4 |Brotherus Ilkka |2,681,179| 2.2|+--+------------------------------------------+---------+-----------+|5 |The State Pension Fund |1,937,556| 1.6|+--+------------------------------------------+---------+-----------+|6 |Odin Norden |1,684,832| 1.4|+--+------------------------------------------+---------+-----------+|7 |Tapiola Mutual Pension Insurance Company |1,614,500| 1.3|+--+------------------------------------------+---------+-----------+|8 |Mandatum Life Insurance Company |1,609,680| 1.3|+--+------------------------------------------+---------+-----------+|9 |Odin Finland |1,090,888| 0.9|+--+------------------------------------------+---------+-----------+|10|OP-Finland Value Fund |1,025,000| 0.8|+--+------------------------------------------+---------+-----------+At the end of December, Amer Sports had 13,342 registered shareholders (12,320).Outside Finland, ownership and nominee registrations represented 52.6% (45.2%)of the shares. Public sector entities owned 12.5%, households 12.4%, financialand insurance corporations 11.7%, non-profit institutions 8.2%, and privatecompanies 2.3%. Amer Sports had 334,900 own shares, which are owned by AmerSports International Oy. The number of own shares corresponds to 0.3% of allAmer Sports shares.Major changes in holdingsAmer Sports Corporation received information on February 19, 2009, to the effectthat Novator Finland Oy converted all of its NASDAQ OMX forward contracts intodirect holdings in shares of Amer Sports Corporation on February 18, 2009. Aftersettlement of the NASDAQ OMX forward contracts concerning 7,000,000 shares inAmer Sports Corporation, Novator Finland Oy then held 14,688,900 shares,representing 20.11% of the shares and voting rights in Amer Sports Corporation.On July 2, 2009, Amer Sports Corporation was notified that Novator Finland Oyhad sold its entire holding of shares in the company.Amer Sports Corporation received information on February 19, 2009, to the effectthat the Danske Bank A/S Helsinki Branch's share capital and voting rights inAmer Sports fell under 5% (1/20) on February 23, 2009, due to a transactioncompleted on February 18, 2009. The Danske Bank A/S Helsinki Branch held then noshares in Amer Sports Corporation.The stock exchange announcements on major changes in shareholdings in 2009 canbe found on the Amer Sports Web pages at www.amersports.com/investors.Disclosure of controlAmer Sports' Board of Directors is not aware of any natural or legal persons whohave control over the company or has information on these persons' portion ofthe voting rights of the shares and of the total number of shares.Agreements and arrangements relating to shareholdings and use of voting rightsAmer Sports' Board of Directors is not aware of any agreements or arrangementsconcerning the ownership of the company's shares and the use of their votingrights.Shareholdings of the management and administrative bodies, December 31, 2009+----------------------------------+---------+---------------------------------+|Shareholder | Shares| Circle of acquaintances and|| | | controlled corporations|+----------------------------------+---------+---------------------------------+|Board of Directors | | |+----------------------------------+---------+---------------------------------+|Anssi Vanjoki | 23,416| |+----------------------------------+---------+---------------------------------+|Ilkka Brotherus |2,681,179| 10,250|+----------------------------------+---------+---------------------------------+|Martin Burkhalter | 5,091| |+----------------------------------+---------+---------------------------------+|Christian Fischer | 5,091| |+----------------------------------+---------+---------------------------------+|Hannu Ry?nen | 3,375| 14,175|+----------------------------------+---------+---------------------------------+|Bruno S?er | 5,091| |+----------------------------------+---------+---------------------------------+|Pirjo V?aho | 7,302| |+----------------------------------+---------+---------------------------------+|Executive Board | | |+----------------------------------+---------+---------------------------------+|Pekka Paalanne | 52,000| |+----------------------------------+---------+---------------------------------+|Paul Byrne | 0| |+----------------------------------+---------+---------------------------------+|Chris Considine | 7,150| |+----------------------------------+---------+---------------------------------+|Thomas Ehrnrooth | 22,500| |+----------------------------------+---------+---------------------------------+|Terhi Heikkinen | 0| |+----------------------------------+---------+---------------------------------+|Antti J?kel?en | 0| |+----------------------------------+---------+---------------------------------+|Bernard Millaud | 6,875| |+----------------------------------+---------+---------------------------------+|Jean-Marc Pambet | 6,875| |+----------------------------------+---------+---------------------------------+|Juha Pinomaa | 5,850| 15|+----------------------------------+---------+---------------------------------+|Michael Schineis | 10,000| |+----------------------------------+---------+---------------------------------+|Vincent Wauters | 24,491| |+----------------------------------+---------+---------------------------------+|TOTAL |2,866,286| |+----------------------------------+---------+---------------------------------+|% of shares | 2.36| |+----------------------------------+---------+---------------------------------++----------------------------------+---------+---------------------------------+|Including circle of acquaintances |2,890,726| ||and controlled corporations | | |+----------------------------------+---------+---------------------------------+|% of shares | 2.38| 24,440|+----------------------------------+---------+---------------------------------+Exercise of warrantsThe highest price of the 2004 warrants on the OMX Helsinki Stock Exchange wasEUR 1.30, and the lowest EUR 0.11. In 2009, a total of 5,700 warrants weretraded at a total price of EUR 4,609.Amendments to the terms and conditions of the warrant programsPursuant to the terms and conditions of Amer Sports' warrant programs, AmerSports' Board of Directors must amend the terms and conditions of the warrantprograms to take into account the impact of the rights offering by adjusting theexercise price of the warrants and/or the number of shares that can besubscribed for through exercise of the warrants in a manner to be determined bythe Board of Directors. On October 29, 2009, Amer Sports' Board of Directorsdecided on such amendments. The terms and conditions of its publicly traded2004 warrants were amended to the effect that each 2004 warrant entitles itsholder to subscribe for five shares at the subscription price of EUR 9.44 pershare.RESOLUTIONS OF THE GENERAL MEETINGS OF SHAREHOLDERSAmer Sports' Annual General Meeting of shareholders, which was held on March5, 2009, authorized the Board of Directors to decide on issuing new shares onthe following terms and conditions: New shares may be issued and the company'sown shares held by the company may be conveyed against payment ("Share IssueAgainst Payment") to the company's shareholders in proportion to their currentshareholdings in the company. By virtue of the authorization, the Board ofDirectors is entitled to decide on issuing a maximum of 7,000,000 new shares.The subscription price of the new shares shall be booked to the investednon-restricted equity fund. The authorization to issue shares is valid for twoyears from the date of the decision of the Annual General Meeting.On March 5, 2009, the Annual General Meeting re-elected Anssi Vanjoki, IlkkaBrotherus, Pirjo V?aho, Martin Burkhalter, Christian Fischer, and Bruno S?eras members of the Board of Directors, and appointed Hannu Ry?nen as a newboard member. The Board's term of service will run until the close of the 2010Annual General Meeting. The Authorized Public Accountant PricewaterhouseCoopersOy was elected to act as the company's auditor. Jouko Malinen, Authorized PublicAccountant, was elected as the auditor in charge of the audit.Extraordinary General meeting, September 23, 2009The Extraordinary General Meeting of Amer Sports' shareholders held on September23, 2009, authorized the Board of Directors to undertake a share issue forconsideration in which the shareholders were entitled to subscribe for newshares in proportion to their existing shareholdings. The Board of Directors wasauthorized to decide upon offering any shares that may remain unsubscribed forpursuant to the shareholders' pre-emptive rights to parties determined by theBoard of Directors. By virtue of the authorization, the Board of Directors wasentitled to decide on issuing a maximum of 150,000,000 new shares in the shareissue. The Board of Directors was authorized to determine the other terms andconditions of the share issue. The authorization of the Board of Directors toundertake the share issue did not supersede or otherwise invalidate the shareissue authorization granted to the Board of Directors by the Annual GeneralMeeting on March 5, 2009.Authorization to repurchase or convey own sharesAmer Sports did not acquire any its own shares during 2009. Amer Sports' Boardof Directors does not have a valid authorization to acquire or dispose of AmerSports' own shares.The documentation and press releases related to the meetings are available onthe company's website, at www.amersports.com .SIGNIFICANT RISKS AND UNCERTAINTIESAmer Sports' business is balanced by its broad portfolio of sports and brands aswell as its presence in all major markets. Amer Sports Corporation's short-termrisks are particularly associated with consumer demand in North America andEurope and successful execution of its cost reduction and efficiency improvementmeasures.For example, the following risks can potentially have an impact on the company'sdevelopment: * The United States represents 40% of the world-wide sporting goods market and approximately 40% of Amer Sports' sales. There is a correlation between the demand for sporting goods and the development of US retail sales. Therefore, a change in overall US retail sales can have an impact on Amer Sports' business. * Winter sports equipment represents 24% of Amer Sports' sales. Weather conditions can have an impact on the company's results. Historically, however, poor snow conditions in one region are compensated for by good snow conditions in another region. * A change in the euro's value vis-?is other currencies has an impact on Amer Sports' results. The impact, however, is limited due to the fact that the company's euro-US dollar position is relatively balanced. * Despite extensive testing of its products before market launch, the company cannot completely rule out the risk of product recalls and legal actions related to product liability. Amer Sports has standard insurance cover against the financial consequences of product recalls and product liability cases. Product quality issues could harm Amer Sports' reputation and, as a result, could have an adverse effect on its sales. * Losing a significant client would affect Amer Sports' sales. However, this risk is limited because Amer Sports' client base is diversified, with the five largest clients accounting for less than 10% of the company's annual sales. * Amer Sports uses steel, rubber, and oil-based raw materials and components in its products. Price increases affecting these materials can have a negative impact on product costs. Amer Sports typically introduces new products every year, which can, depending on the market situation, offset the impact of material cost increases. * A large part of Amer Sports' production is outsourced. The aim is to minimize the supply, quality, and price risks associated with purchasing. Although the business areas audit their subcontractors regularly, possible delivery problems or breaches of contract by subcontractors may have an impact on Amer Sports' operations. * Amer Sports' most important production facilities are the Winter Sports Equipment factories in Austria and Bulgaria, Precor's factory in the United States, and the Suunto factory in Finland. In addition, Amer Sports has major factories in Eastern Europe, which are owned by subcontractors. Amer Sports' most important distribution centers are located in Germany, Austria, the United States, and France. Any unexpected production or delivery breaks in these units would have a negative impact on the company's business. * A characteristic feature of the sporting goods industry is the need to protect intellectual property rights and disputes connected with them. The material impacts on Amer Sports' financial position and operational result arising from pending litigation affecting the business areas and decisions of the authorities are assessed regularly, and current estimates are presented publicly when necessary. * Amer Sports has goodwill and intangible assets with the indefinite lifetime of EUR 453 million on its balance sheet, as at December 31, 2009, which is 62% of the company's net equity. The valuation of goodwill and intangible assets on Amer Sports' consolidated balance sheet is, to a significant degree, dependent on management estimates of the future cash generation capacity of the relevant assets or cash generating units. Management reviews the carrying amounts of its goodwill and intangible assets annually to determine whether there is any indication of impairment. The company undertook goodwill and intangible asset impairment testing during the fourth quarter of 2009 and did not indicate any impairment in its 2009 financial statements. * Amer Sports sources a significant portion of its products from subcontractors located throughout Asia, which exposes it to the political, economic, and regulatory conditions in that area, and to a variety of local business and labor practice issues. The violation of labor laws, regulations or standards by Amer Sports' subcontractors, or the divergence of those subcontractors' labor practices from those generally accepted as ethical in the European Union or the international community, could have a material adverse effect on Amer Sports' public image and the reputation of its brands. * Amer Sports relies on data communications to operate its business, and it is in the process of integrating its IT platform globally and implementing further applications to better control its supply chain. System failures and service interruptions may occur as the result of a number of factors. Any of these factors could have a material adverse affect on Amer Sports' business.OUTLOOK FOR 2010Amer Sports does not anticipate a quick recovery in the sporting goods market,and therefore the company's key priority is to improve its profitability throughgross margin improvements and continued tight cost control. The company willalso continue to focus on strict working capital management, although animprovement similar to the previous year cannot be expected. Capitalexpenditures and other investments will remain at the previous year's level. Thecompany's tax rate is expected to be approximately 20%.DIVIDEND POLICYAmer Sports wishes to be seen as a competitive investment that increasesshareholder value through a combination of dividends and share priceperformance. The company therefore pursues a progressive dividend policyreflecting its results, with the objective of distributing a dividend of atleast one-third of annual net profits.BOARD OF DIRECTORS' PROPOSAL FOR DISTRIBUTION OF EARNINGSThe parent company's unrestricted shareholders' equity amounts to EUR407,895,630.60, of which the net result for the period is EUR -27,979,155.99.The Board of Directors proposes to the Annual General Meeting that thedistri

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