NOTES
NOTES TO THE ANNUAL FINANCIAL STATEMENTS AND CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 1999/2000 FOR ESCADA AG, MUNICH

A. GENERAL INFORMATION

The notes to the consolidated statements and the notes to the annual financial statements of the parent company have been combined in accordance with § 298 (3) HGB (Handelsgesetzbuch = German Commercial Code). Unless noted otherwise, the remarks apply to both sets of statements.


1. CONSOLIDATED GROUP

In addition to ESCADA AG, 45 companies were included in the consolidated group in accordance with §§ 300 ff HGB (full consolidation) for the consolidated financial statements.

Amount of
capital stock/nominal
capital in thousands		 Currency Share
belonging
to group
in %
ESCADA MUNICH
Europe

ESCADA (U.K.) Limited, London, U.K. 100 GBP 100.0
ESCADA Beauté Ltd., London, U.K. 2,000 GBP 100.0
ESCADA France S.A.R.L., Paris, France 50,000 FRF 100.0
MONTAIGNE EXPANSION S.A., Paris, France 250 FRF 100.0
ESCADA DEVELOPMENT S.A.R.L., Paris, France 20,000 FRF 100.0
ESCADA Beauté Groupe S.A., Paris, France 144,311 FRF 100.0
EDIPAR S.A.R.L., Paris, France 70,000 FRF 100.0
ESCADA Monte Carlo S.A.M., Monte Carlo, Monaco 10,000 FRF 100.0
ESCADA Italia S.r.l., Milan, Italy 7,000,000 ITL 100.0
Grupo ESCADA España S.A., Manresa, Spain 250,411 ESP 74.9
ESCADA Textilien-Vertriebsgesellschaft m.b.H., Vienna, Austria 500 ATS 100.0
ESCADA Holding B.V., Amsterdam, Netherlands 300 NLG 100.0
ESCADA Sweden Retail AB, Stockholm, Sweden 250 SEK 100.0

Germany

Primera Damenkleiderfabrik, Aschheim 50 DEM 100.0
Clasen-Beteiligungs GmbH, Berlin 1,550 DEM 100.0
ESCADA BEAUTE Vertriebs GmbH, Aschheim 50 DEM 100.0
ESCADA Textilvertrieb GmbH, Aschheim 50 DEM 100.0

North America

ESCADA (USA) Inc., New York, USA
- Common stock 2,000 USD 100.0
- Preferred stock 2,700 USD 100.0
B.E.M. Enterprises Ltd., New York, USA 0.1 USD 80.0
ESCADA CANADA Inc., Toronto, Canada
- Common stock 3,120 CAD 90.0
- Preferred stock 2,980 CAD 100.0
ADIPAR Ltd., New York, USA 0.01 USD 100.0
ESCADA Beauté Ltd., New York, USA 1 USD 100.0

Asia

ESCADA Korea, Ltd., Seoul, Korea 372,000 KRW 100.0
ESCADA (Asia) Ltd., Hongkong 526 HKD 100.0
ESCADA Retails (HK) Limited, Hongkong 8,000 HKD 100.0
Primera (Asia) Ltd., Hongkong 500 HKD 100.0
ESCADA Japan Co. Ltd., Osaka, Japan 480,000 JPY 100.0
Laurèl Co. Ltd., Osaka, Japan 5,000 JPY 100.0
Green Horse Co. Ltd., Tokio, Japan 10,000 JPY 100.0


PRIMERA MÜNSTER
Germany:
Primera Holding GmbH, Aschheim 100 DEM 90.1
Primera AG, Münster 5,000 5,000 DEM 90.1
cavita fashion GmbH, Münster 5,750 DEM 90.1
Apriori Textilvertriebsgesellschaft mbH, Münster 4,000 DEM 85.6
La Mode Handelsgesellschaft mbH, Münster 1,000 DEM 90.1

Foreign:
"Schneberger" Ges.m.b.H., Stadl-Paura, 500 ATS 90.1
Schneberger Maroc S.A., Fes, Marokko 17,500 MAD 90.1
Primera Maroc S.A., Fes, Marokko 4,800 MAD 90.1
Primera Tunisie S.A., Ez-Zahara, Tunesien 50 TND 90.1


KEMPER, KREFELD
Germany:
Kemper GmbH, Krefeld 7,550 DEM 90.1
Girell Fashion GmbH, Krefeld 50 DEM 90.1
CERRUTI 1881 GmbH, Krefeld 50 DEM 90.1

Foreign:
Cerruti 1881 Femme Limited, London, Großbritannien 2,100 GBP 90.1
GUPER Fabrica de Confeccoes Lda., Trofa, Portugal 30,000 PTE 90.1
Cruiter 24 S.A.R.L., Paris, Frankreich 1,100 FRF 90.1
Kemper Vertrieb Ges.m.b.H., Parndorf, Österreich 500 ATS 90.1

Since the previous reporting year, twelve companies have left the consolidated group. Of those, the following no longer appear in the consolidated group because their assets were transferred to other companies in the group:
Liliane et Nicole S.A., SOCIETE NOVELLE TEIBU S.A., BORDEAUX EXPANSION S.A.R.L., CELLINI S.A., AUBERTIN S.A., VETEMENT OMNIUM DE GESTION D'UNE ENSEIGNE VOGUE S.A.R.L, NANTES-EXPANSION S.A.R.L., ESCADA España S.A., Creaciones Grau S.A., S.L.T. S.A, and Bernhard Schulte GmbH. ESCADA Palm Desert (Retail) Inc. is no longer an active company.

Newly included in the consolidated group are ESCADA Textilvertrieb GmbH and Kemper Vertriebs GesmbH.

The following companies and a German company for which the required information is not given in the notes on the basis of § 286 (3) P. 1 No. 2, 313 (3) HGB, were not included in the consolidated financial statements because of minor importance, particularly because of idle or minimal activity or the cessation of business activities, in accordance with § 296 (2) HGB:
ES-KÖ Mode GmbH, Düsseldorf ELC Handels- und Produktionsges.m.b.H., Budapest, Hungary Cerruti 1881 Ligne pour femme Inc., New York, USA ELC spol. s.r.l., Prague, Czech Republic ESCADA Hawaii Inc. i.L., Hawaii, USA Madrid Laurèl S.A. i.L., Madrid, Spain DLP Fragrances S.A.R.L., Paris, France Schneberger Tunisie S.A.R.L., Ez-Zahara, Tunisia

2. INVESTMENTS

The interests in ESCADA GENEVE S.A., Geneva, Switzerland (50 %), in E.J. Co., Ltd. i.L., Osaka, Japan (45 % common stock) and in HANBUL Cosmetics CO Ltd., Seoul, Korea (40 %) were not included in the consolidation at equity because of minor importance in accordance with § 311 (2) HGB.

BiBA Mode GmbH, Duisburg (49%) and another investment for which the required information, even with respect to the name and location, is not given in the notes on the basis of § 286 (3) P. 1 No. 2, 313 (3) HGB, are not consolidated at equity because of lack of significant influence.

The interest in FILUS Verwaltung GmbH & Co Mobilienleasing-OHG, Munich, is 19% (share of voting rights), in Kurt Neumann GmbH & Co., Berlin 5.1%, and in Herbert Clasen GmbH, Berlin 5.1%. ESCADA AG owns an interest of 0.2% in ESCADA-Shop-Handels Ges.m.b.H, Vienna, Austria.

3. REFERENCE DATE OF THE CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements were prepared on October 31, 2000, the reference date for the financial year of the parent company ESCADA AG. The reference date for the consolidated statements is identical to the balance sheet reference dates of the companies included in the consolidated statements. Exceptions to this schedule are ESCADA Beauté Groupe S.A., Paris, France, ESCADA Beauté Ltd., New York, USA, ADIPAR Ltd., New York, USA, ESCADA Beauté Ltd., London, U.K., ESCADA Beauté Vertriebs GmbH, Aschheim, and EDIPAR S.A.R.L, Paris, France, for which interim closing statements were prepared for the balance sheet date.

4. ACCOUNTING AND VALUATION METHODS

The INTANGIBLE ASSETS purchased for money are shown at acquisition cost and are depreciated on a linear schedule based on the anticipated useful life of 3 to 5 years. Goodwill assets from the capital consolidation are depreciated over a useful life of 5 to 15 years. Intangible assets of little value are depreciated immediately.

Items of PROPERTY, PLANT, AND EQUIPMENT are valued at the cost of acquisition or production.

Property, plant, and equipment is depreciated in some cases on a linear schedule, in some cases on a declining basis, using the tax simplification tables, in accordance with the AfA tables applicable to taxes. Business assets of little value are fully depreciated in the year of acquisition.

The FINANCIAL ASSETS are always valued at acquisition cost. When necessary, they have been depreciated to the lower assumed value. If the reasons for retaining the lower valuation no longer exist, they are revalued upward to the assumed higher value.

RAW MATERIALS AND SUPPLIES and MERCHANDISE are valued at the acquisition cost. Items with reduced market viability are written down to the assumed lower value.

WORK IN PROCESS and FINISHED GOODS are valued at the cost of production. The production costs include both the individual costs and a share of the overhead costs for production, materials and administration. If the production costs of finished products are not covered by the anticipated sales proceeds to be received, special deductions are taken to allow loss-free valuation.

ACCOUNTS RECEIVABLE AND OTHER ASSETS are always reported at nominal value. Individual and lump sum valuation corrections are taken on trade payables for recognizable individual risks and for the general interest and credit risk. When determining the amount of valuation adjustment, consideration was given to the fact that the receivables are partially secured by merchandise credit insurance.

The shares of TREASURY STOCK are valued at their average cost of acquisition.

The item for DEFERRED CHARGES AND PREPAID EXPENSES pertains to a disagio and to deferred claims from various contractual relationships. The item will be released on a linear basis over time.

TAX PROVISIONS and the OTHER PROVISIONS cover all recognizable risks and uncertain liabilities on the basis of a cautious business assessment.

LIABILITIES are reported at their repayment value.

In other respects the PRINCIPLES OF VALUATION remain unchanged from the previous year.


5. UNIFORM VALUATION IN ACCORDANCE WITH § 308 HGB

The annual financial statements for subsidiary companies were prepared and incorporated into the consolidated statements in accordance with uniform accounting and valuation principles, making allowance for the items that are subject to the consolidation or to elimination of intermediate profits or losses, according to the laws governing the parent company. Adjustments were dispensed with if they were of minor importance for the consolidated statements.


6. PRINCIPLES OF CURRENCY CONVERSION

Receivable and payable items in foreign currencies are converted by ESCADA AG using monthly average rates.

Losses from changes in exchange rates are accounted for by revaluation at the price in effect on the balance sheet date. Where loans and claims against affiliated companies were hedged in foreign currencies, they have been reported at the hedging rate.


From the balance sheets of foreign subsidiaries the capital was converted at historic prices, other entries in the balance sheet at the rate for the reference date (official average rate) for October 31, 2000.

The average rates for the financial year were used to convert the items in the income statement. The annual results are converted at the rates for the reference date.

To the extent that they result from the conversion of the individual balance sheets, the conversion differences resulting from the use of different rates are reported in the balance sheet under the item for shareholders' equity. The conversion differences resulting from conversion of the income statements are posted under the operating income or expenses.

Currency Reference
date rate
10/31/2000		 Reference
date rate
10/31/1999		 Average
rate
1999/2000		 Average
rate
1998/1999
1 USD 2.3269 1.8716 2.09238 1.81
1 CAD 1.5197 1.2687 1.41533 1.21
1 GBP 3.3721 3.0583 3.21402 2.93
1 TND 1.5719 1.5652 1.55243 1.55
100 HKD 29.8176 24.0818 26.8399 23.30
100 CHF 128.6899 122.0106 124.49028 122.13
100 NLG 88.7517 88.7517 88.7517 88.75
100 FRF 29.8164 29.8164 29.8164 29.82
100 ESP 1.1755 1.1755 1.1755 1.18
100 PTE 0.9756 0.9756 0.9756 0.98
100 ATS 14.2136 14.2136 14.2136 14.21
100 MAD 20.8067 18.9518 19.8471 18.60
1.000 ITL 1.0101 1.0101 1.0101 1.01
100 SEK 23.026 22.5092 23.17068 21.94
100 JPY 2.133 1.7837 1.96519 1.56
100 KRW 0.2044 0.1548 0.18621 0.15

7. CAPITAL CONSOLIDATION

For first-time consolidation, the moment of acquisition was selected as the time of initial consolidation.

Capital consolidation in accordance with § 301 HGB For the fully consolidated Group companies, the capital consolidation was carried out according to the book value method (§ 301 (1) No. 1 HGB). For first-time consolidation the moment of acquisition is always selected as the time of initial consolidation.

The goodwill values are written off over 15 years in accordance with § 309 Par. 1 P. 2 HGB. The goodwill from the shares of Primera Tunisie S.A.R.L. newly acquired in the previous year is being written off over 5 years.

The differences in amounts of liability resulting from the capital consolidation are TDM 3,291 in the reporting year (previous year TDM 3,251). The increase of TDM 40 is the result of the first-time consolidation of Kemper Vertriebs GesmbH.

During this year an asset item in the amount of TDM 1,811 from changes in the consolidated group reduced the other earnings reserves in accordance with § 309 (1) P. 3 HGB. This is the result of the purchase of additional shares in ESCADA Japan Co. Ltd. (TDM 1,057) and in La Mode Handelsgesellschaft mbH (TDM 650), as well as the first-time inclusion of ESCADA Textilvertrieb GmbH (TDM 104).

Shares in the capital, open reserves and profit assigned to partners outside the group were listed on the liability side as an “adjusting item for the shares of the other partners in the amount of their share in the shareholders' equity.” This liability share of TDM 3,088 was the result of balancing liability-side “adjusting items” of TDM 5,931 with asset-side “adjusting items” of TDM 2,843.
B. INFORMATION AND EXPLANATORY NOTES TO THE BALANCE SHEET

1. FIXED ASSETS

The changes in fixed assets during the fiscal year are shown on the following pages. The low-value business assets are included as eliminations in the year of acquisition.

The structure of share ownership in the company is on file with the commercial register of Munich under HRB No. 74942.

Group ESCADA AG
10/31/2000
TDM		 10/31/1999
TDM		 10/31/2000
TDM		 10/31/1999
TDM
Intangible assets 97,476 103,459 9,430 8,652
Property, plant and equipment 166,564 138,249 24,390 26,707
Financial assets 31,253 32,054 305,471 224,424
Fixed assets 295,293 273,762 339,291 259,783


2. ACCOUNTS RECEIVABLE AND OTHER ASSETS

The accounts due from companies affiliated with ESCADA AG are in part accounts receivable for deliveries of merchandise. The same applies to the accounts due from other group companies.

Other assets include receivables in the amount of TDM 17,848 (for ESCADA AG: TDM 7,865) (tax rebate claims for 2000), which do not legally come into existence until after the balance sheet date because of the difference between the calendar year and the fiscal year.

For the consolidated group, TDM 5,081 (previous year TDM 6,978) of the other assets has a remaining term of more than one year.

Group ESCADA AG
10/31/2000
TDM		 10/31/1999
TDM		 10/31/2000
TDM		 10/31/1999
TDM
Trade receivables 266,552 255,931 24,115 30,634
Accounts due from affiliated companies 1,126 4,157 209,073 235,951
Accounts due from other group companies 17,556 38,113 13,168 34,785
Other assets 69,809 71,597 17,877 11,977

Accounts receivable
and other assets

 355,043 369,798 264,233 313,347


3. DEFERRED CHARGES AND PREPAID EXPENSES

The item for deferred charges and prepaid expenses for ESCADA AG contains a disagio in the amount of TDM 1,762.


4. TREASURY STOCK

The company acquired the following shares of its own no-par-value stock in the period from the end of June to the end of October 2000:

Acquisition cost
1999/2000 Number TDM
Common stock 44,493 10,823
Preferred stock 32,526 6,814
77,019 17,637


The Executive Board decided in June 2000, to make use of the authorization given by the shareholders' meeting on May 5, 2000 to buy back stock, since it considered the market price of the ESCADA AG stock to be undervalued in view of the chances of growth.

Including the shares already purchased in the 1998/99 fiscal year, the company has acquired the following no-par-value shares:

Acquisition cost
1999/2000 Number TDM
Common stock 59,993 15,050
Preferred stock 43,326 9,716
103,319 24,766


The proportion of treasury common stock in the capital stock of the company is TDM 3,000 (3.88%); the proportion of treasury preferred stock in the capital stock is TDM 2,166 (2.80%).

5. DEFERRED TAXES

The deferral item of TDM 60,504 for deferred taxes in the consolidated balance sheet results on one hand from differences between the time of posting for the results under commercial law and the results under tax law in accordance with § 274 II HGB, as well as from adjustments of the consolidated closing statements for the subsidiary companies to match the uniform accounting and valuation rules of the group in accordance with § 274 II in combination with § 298 HGB (TDM 34,240). On the other hand, the deferred taxes are also a result of the consolidation postings according to § 306 Sentence 1 HGB (TDM 26,264).

The deferred taxes from the consolidation come from the elimination of internal profits within the group. The deferred taxes were determined on the basis of a tax rate of 50 %.

6. SHAREHOLDERS' EQUITY

a) Capital stock

The subscribed capital at October 31, 2000 is divided into:

825,512 shares of common stock and 722,112 shares of non-voting preferred stock in the form of no-par-value shares.

b) Authorized capital

As of October 31, 2000 the following capital was authorized (valid until April 30, 2003) TDM 20,000

New common or preferred stock can be issued one or more times, only in return for cash contributions.

c) Conditional capital TDM 7,500

The conditional capital increase through issuance of up to 75,000 bearer shares of common stock and of up to 75,000 bearer shares of non-voting preferred stock has been carried out to the extent that the holders of share options from the ESCADA 1998/99 share option plan, which were issued on the basis of the authorization granted on May 6, 1999, exercise their option right.

d) Earnings reserves

The shareholders' meeting on May 3, 2000 decided to transfer TDM 30,000 from net profit to other earnings reserves.

In addition, within the group TDM 63 were placed in the legal reserve and TDM 46 in the other earnings reserves by subsidiary companies. The change in the consolidated group reduced the legal reserves by TDM 35.

The amount of TDM 17,637 was taken from the other earnings reserves to establish a reserve for treasury stock.

In this reporting year, an asset-side amount of TDM 1,811 resulting from changes to the consolidation group changed the other earnings reserves in accordance with § 309 Par. 1 P. 3 HGB.

e) Net profit

The net profit of ESCADA AG includes a profit carryover of TDM 51,589.

The profit carryover from the 1998/99 fiscal year included in the consolidated net profit is TDM 104,105, after allowing for the change in currency parities.


7. SPECIAL RESERVES FOR THE YEAR


This special item was completely eliminated during the fiscal year.


8. PROVISIONS AND ACCRUED LIABILITIES

The provisions and accrued liabilities on the balance sheet date comprise the following:

Group ESCADA AG
10/31/2000
TDM		 10/31/1999
TDM		 10/31/2000
TDM		 10/31/1999
TDM
Personnel costs 22,090 19,863 6,291 8,415
Accounts payable 13,468 6,073 7,190 5,924
Costs of closing and restoration 11,396 2,163 590 1,143
Other provisions 33,184 30,307 7,398 8,390

Sundry accruals 80,138 58,406 21,469 23,872
Tax provisions 19,250 7,529 3,680 294
Pension provisions 2,340 1,555 0 0

Provisions and accrued liabilities

 101,728 67,490 25,149 24,166


Included in the other provisions is the provision for returns and guarantee in the amount of TDM 9,509 (previous year TDM 10,238) in the consolidated statement (ESCADA AG: TDM 6,417; previous year TDM 6,206).

9. LIABILITIES

The accounts due to affiliated companies in the case of ESCADA AG are for the most part accounts payable for deliveries of goods.

The reported liabilities are not further collateralized, aside from the reservations of title, which are common in the industry.

SUMMARY OF LIABILITIES OF THE ESCADA GROUP AS OF 10/31/2000

Remaining term
up to one year
TDM		 Remaining term
between one
and five years
TDM		 Remaining term
of more than
five years
TDM		 Total amount
TDM
1. Debentures 0 295,583 0 295,583
2. Liabilities due to banks 155,451 59,138 14,734 229,323
3. Trade payables 103,501 493 0 103,994
4. Notes payable 33,338 0 0 33,338
5. Accounts due to affiliated companies 41 0 0 41
6. Other liabilities 29,713 0 0 41
Total 322,044 355,214 14,734 691,992

SUMMARY OF LIABILITIES OF ESCADA AG AS OF 10/31/2000
Remaining term
up to one year
TDM		 Remaining term
between one
and five years
TDM		 Remaining term
of more than
five years
TDM		 Total amount
TDM
1. Debentures 0 295,583 0 295,583
2. Liabilities due to banks 10,441 0 0 10,441
3. Trade payables 31,490 0 0 31,490
4. Notes payable 20,000 0 0 20,000
5. Accounts due to affiliated companies 27,300 0 0 27,300
6. Other liabilities
* thereof for taxes:
TDM 100 (previous year TDM 1,545)
* thereof for social security:
TDM 190 (previous year TDM 224)		 6,962 0 0 6,962
Total 96,193 295,583 0 391,776


C. PARTICULARS OF THE INCOME STATEMENT

1. SALES

The sales - broken down geographically - are structured as follows:

GROUP 1999/2000
TDM		 1998/1999
TDM		 Change
%
Germany 297,000 352,661 - 15.8
Foreign 1,295,836 1,096,900 + 18.1
Total 1,592,836 1,449,561 + 18.1

ESCADA AG 1999/2000
TDM		 1998/1999
TDM		 Change
%
Germany 155,616 192,503 - 19.1
Foreign 506,738 465,610 + 8.8
Total 662,354 658,113 + 0.6


2. OTHER OPERATING REVENUES

The other operating revenues are structured as follows:


Group 1999/2000
TDM		 1998/1999
TDM		 Differenz
TDM
Elimination of provision 2,385 7,067 - 4,682
Exchange rate differences 14,020 13,912 108
Elimination of valuation
correction for receivables		 4,743 8,280 - 3,537
License revenues 2,864 3,680 - 816
Sale of fixed assets 488 975 - 487
Rental receipts 573 1,326 - 753

Revenues from elimination
of accrual for rent

 0 8,122 - 8,122
Other revenues 17,172 14,222 2,950

Other operating
revenues

 42,245 57,584 - 15,339

ESCADA AG

Elimination of
valuation corrections

 1,668 3,314 - 1,646
Elimination of provision 846 727 119
Exchange rate differences 3,636 8,136 - 4,500
License revenues 1,029 3,854 - 2,825
Rental receipts 759 790 - 31

Additions to financial
assets

 11,382 2,673 8,709
Other revenues 2,740 3,901 - 1,161

Other operating
revenues

 22,060 23,395 - 1,335

The revenues from additions to financial assets for ESCADA AG pertain to the reporting of an investment in an affiliated company where there is no longer any reason for retaining the lower valuation because of positive annual excesses in recent years and positive earnings expectations.

Other operating revenues include the retransfer of the special reserve item of TDM 444.

3. DEPRECIATION AND AMORTIZATION ON INTANGIBLE ASSETS AND PLANT, AND EQUIPMENT

The write-downs for the group came to TDM 48,761 for the fiscal year. The depreciation according to the summary of assets differs from the depreciation in the income statement by exchange rate differences in the amount of TDM 1, 818.

4. OTHER OPERATING EXPENSES

Other operating expenses comprise the following:
Group 1999/2000
TDM		 1998/1999
TDM		 Differenz
TDM
Costs of sales 287,488 240,851 46,637
Costs of space 119,284 92,073 27,211
Administrative costs 61,782 62,297 - 515
Depreciation 14,582 11,096 3,486
Collection costs 14,259 14,180 79
Incidental personnel costs 13,819 11,938 1,881

Other taxes

 6,572 5,570 1,002
Other expenses 54,316 51,544 2,772

Other operating
expenses

 572,102 489,549 82,553

ESCADA AG

Costs of sales

 101,398 85,894 15,504
Costs of space 25,087 24,899 188
Administrative costs 24,604 23,287 1,317
Exchange rate differences 10,856 13,584 - 2,728
Collection costs 10,966 11,877 - 911

Depreciation

 1,311 3,579 - 2,268
Incidental personnel costs 4,702 4,726 - 24
Operating costs 8,115 8,575 - 460
Other taxes 11 193 - 182
Other expenses 6,377 8,286 - 1,909

Other operating
expenses

 193,427 184,900 8,527

5. EXTRAORDINARY EXPENSES

The extraordinary expenses for ESCADA AG pertain to valuation corrections to receivables (TDM 12,531) and to expenditures for reorientation of the data processing system (TDM 2,600).

The expenses of losses from Primera Damenkleiderfabrik GmbH in the amount of TDM 22,048 include additional valuation corrections to accounts receivable in the amount of TDM 21,360.

The extraordinary expenses for the group totaling TDM 51,226 are made up of the following:

Structural measure, Kemper Group

TDM 4,927

Warranty payments, Neumann

TDM 13,000

Valuation correction to receivables

TDM 19,007

Logistics, USA

TDM 5,004

EDP, Germany

TDM 2,600

Various companies

TDM 6,688
TDM 51,226

Some of these items are expenses assigned to future fiscal years.


D. OTHER INFORMATION

1. FLOW OF FUNDS STATEMENT

10/31/2000
TDM
Annual net profit 3,882
Depreciation and amortization on fixed assets 51,671
Increase in long-term provisions 187
Extraordinary expenses not affecting payments 32,007
Other DVFA/SG adjustments - 7,228

CASHFLOW 80,519

Increase in short-term provisions 28,552
Loss from the disposal of fixed assets 2,721
Increase in inventories, trade accounts receivable and other assets - 14,148
Decrease in trade accounts payable and other liabilities - 193,457

OUTFLOW OF FUNDS FROM CURRENT BUSINESS ACTIVITY - 95,813

Pay-ins from disposals of fixed assets
(residual book value of the eliminations,
plus profits and less losses from the asset disposal)		 6,466
Payouts for investments in property, plant, and equipment - 54,476
Payouts for investments in intangible fixed assets - 9,817
Payouts for new shares in fully consolidated companies - 5,908
Addition of liquid funds from first-time consolidation 517

OUTFLOW OF FUNDS FROM INVESTMENT ACTIVITY - 63,218

Payouts to partners: dividends - 12,882
Payouts to partners: dividends to third parties - 962
Payouts for acquisition of shares of own stock - 17,637
Repayment of loans 61
Payout of loans - 351
Issuance of bond 195,583
Payouts from amortization of financial credits - 6,399

INFLOW OF FUNDS FROM FINANCING ACTIVITY 157,413

Changes in financial resources affecting payments - 1,618
Changes in value of financial assets due to exchange rates 1,842
Financial resources on hand at the beginning of the period 22,813


Additional information on the flow of funds statement

Definition of the fund of financial resources

The fund of financial resources corresponds to the balance sheet item "Checks, cash on hand and in banks."

Significant business events not affecting payments

The extraordinary expenditures in the amount of TDM 51,226 include warranty payments and valuation corrections in the amount of TDM 32,007, which do not affect payments.

Acquisition of shares in companies

In the 1999/2000 fiscal year the remaining 20 % of ESCADA Japan Co. Ltd. was acquired. The purchase price was TDM 5,908, and was paid in cash.


2. REPORTING BY SEGMENTS

SEGMENT REPORTING FOR ESCADA GROUP

October 31, 2000 in TDM

 ESCADA
COLLECTION		 SPORT

 ACCESSORIES/
LICENSES		 BEAUTE

 ESCADA
Total
Sales 723,188 145,599 44,405 176,550 1,089,743
Cost of materials 230,661 51,829 16,555 67,485 366,531
Gross profit 492,527 93,769 27,850 109,065 723,213
% of sales 68 % 64 % 63 % 62 % 66 %
Other operating income 13,255 2,849 6,244 2,426 24,775
Expenses 436,085 84,836 31,651 100,884 853,455
EBIT 69,698 11,782 2,444 10,608 94,532

SEGMENT REPORTING FOR ESCADA GROUP
October 31, 2000 in TDM


 LAUREL


 PRIMERA


 KEMPER


 Group
Elimination
and others		 Group
Sales 145,141 192,435 102,946 62,570 1,592,836
Cost of materials 58,581 103,119 49,027 26,182 603,440
Gross profit 86,560 89,317 53,919 36,388 989,396
% of sales 50 % 46 % 52 % 58 % 62 %
Other operating income 4,756 3,082 4,262 5,370 42,245
Expenses 86,894 80,683 57,655 67,827 946,514
EBIT 4,423 11,715 527 - 26,069 85,127


3. CONTINGENCIES AND OTHER FINANCIAL OBLIGATIONS

In accordance with § 251 and § 268 Par. 7 HGB the following legal liabilities were noted:

October 31, 2000 in TDM


 ESCADA AG
1999/2000
TDM		 Group
1999/2000
TDM		 ESCADA AG
Prev. year
TDM		 Group
Prev. year
TDM
1. Notes payable 5,513 14,243 18,593 23,494
* ESCADA AG: thereof to the benefit of affiliated companies:
TDM 0 (prev. year TDM 0)
2. Liabilities from sureties and guarantees for notes and checks 296,202 152 262,857 754
* ESCADA AG: thereof to the benefit of affiliated companies:
TDM 296,202 (prev. year TDM 262,857)
3. Liabilities from warranty agreements 89,310 15,537 91,185 18,773
* ESCADA AG: thereof to the benefit of affiliated companies:
TDM 81,810 (prev. year TDM 83,685)
* thereof to the benefit of other group companies:
TDM 7,500 (prev. year TDM 7,500)
4. Liabilities from furnishing collateral for obligations of others 0 2,257 0 2,146
* ESCADA AG: thereof to the benefit of affiliated companies:
TDM 0 (prev. year TDM 0)
391,025 32,189 372,635 45,167

ESCADA AG has issued letters of intent on behalf of eight affiliated companies, with the intention of guaranteeing the future financial solvency of the companies. ESCADA AG has also made such a statement to an affiliated company on behalf of a third party.

The following other financial liabilities are significant and worthy of mention:
October 31, 2000 in TDM


 ESCADA AG
1999/2000
TDM		 Group
1999/2000
TDM		 ESCADA AG
Prev. year
TDM		 Group
Prev. year
TDM
Liabilities from forward currency transactions 196,934 204,242 155,724 117,922
Liabilities from lease contracts 12,735 74,322 17,865 82,762
* thereof coming due in 2000/0:
ESCADA AG: TDM 4,869 (prev. year TDM 7,497)
Group: TDM 13,866 (prev. year TDM 16,781)
Liabilities from rental agreements 111,556 631,958 110,887 411,733
* thereof coming due in 2000/01:
ESCADA AG: TDM 20,370 (prev. year TDM 19,588)
Group: TDM 86,960 (prev. year: TDM 72,868)
Other liabilities 0 2,345 0 795
* thereof coming due in 2000/01:
Group: TDM 1,971 (prev. year TDM 795)
321,225 912,867 284,476 613,212

The purpose of the forward currency transactions was to hedge against currency risks of business operations and of the financing processes connected therewith.

The liabilities from forward currency transactions for ESCADA AG include forward currency transactions amounting to TDM 10,164 (previous year TDM 49,875) that were entered into on behalf of affiliated companies.

4. EXECUTIVE BOARD AND SUPERVISORY BOARD

EXECUTIVE BOARD

In accordance with the articles of incorporation, the Executive Board of the company consists of one or more members. The number of members of the Executive Board is determined by the Supervisory Board.

In addition to individual monitoring functions in associated companies, members of the board of management also occupy the following seats on legally constituted supervisory boards, advisory councils and comparable controlling bodies of business enterprises.

The Executive Board has included the following members since the year indicated:

WOLFGANG LEY

Salzburg, 1986 (Chief Executive Officer)
Advisory council of HypoVereinsbank AG, Munich

DR. GEORG KELLINGHUSEN

Munich, 2000
Regional advisory council of Deutsche Bank, Southern Germany
Verlag Neue Wirtschaftsbriefe, Herne

BEATE RAPP

Munich, 1995

JÜRGEN RICHTER

Munich, 1998

RICHARD SIMONIN

Neuilly sur Seine, France, 1999

FRANZ EGERMANN

Munich, 1998 (until November 2, 1999)


The compensation of the members of the Executive Board in the fiscal year amounted to TDM 3,579 (previous year TDM 5,289), including earnings of TDM 700 (previous year TDM 935) from subsidiary companies.

There is also a loan to a member of the Executive Board in the amount of TDM 1,200. This loan is subject to interest at 2 % over the base rate of the European Central Bank.

The members of the Executive Board receive partial payments of their profit sharing bonuses, which are settled against the final profit sharing claims.

SUPERVISORY BOARD

In accordance with the articles of incorporation, the Supervisory Board consists of twelve members. The following have been members of the Supervisory Board since the year indicated:
In addition to individual supervisory functions in investment interests of companies of which they are corporate agents, members of the Supervisory Board hold the following mandates in legally constituted supervisory boards, advisory boards, or similar controlling bodies of business enterprises.

PETER ZÜHLSDORFF
Darmstadt, 1997
Chairman
Managing Partner, DIH Deutsche Industrie Holding GmbH General Manager, Tengelmann Group, and Chairman of the Executive Board, Kaisers Kaffee AG GFK AG, Nuremberg TV Loonland AG, Munich Merck KGaA, Darmstadt Deutz AG, Cologne Triangle GmbH & Co. KG, Heppenheim The New Germany Fund, New York Russel Reynolds, Hamburg Melitta Group, Munich Diebels GmbH & Co KG, Issum


KARL-HEINZ SCHWEIGERT
Erding, 1992
Vice Chairman
Vice Chairman of the ESCADA AG Works Council, Chairman of the Group Works Council


FRANÇOIS BAUFUMÉ
Como, Italien, 1999
Chairman of the Executive Board, Ratti S.p.A.


DETLEF BIERBAUM
Cologne, 1991
Co-owner of the banking house Sal. Oppenheim jr. & Cie. KGaA AXA Colonia KAG, Cologne artemedia AG, Potsdam Douglas Holding AG, Hagen LVM Landwirtschaftlicher Versicherungsverein, Münster Tertia Handelsbeteiligungngsges. mbH, Cologne


KARIN BRAUN
Erding, 1992
Chairwoman of the ESCADA AG Works Council


DR. DIRK BUSSE
Meerbusch, 1992
Chairman of Management of Girmes GmbH member of the Advisory Council, IBENA Textilwerke Beckman GmbH & Co., Bocholt member of the Advisory Council, IKB Deutsche Industriebank AG, Düsseldorf member of the Supervisory Board, MOENUS Textilmaschinen AG, Mönchengladbach member of the committee of partners, TAG Textilausrüstungs-Gesellschaft Schroers GmbH & Co. KG, Krefeld Chairman of the Supervisory Board, TO Grundstücksverwaltungsgesellschaft Apolda AG, Apolda Vice Chairman of the SupervisoryBoard, Textilgruppe Hof AG, Hof/Saale member of the Advisory Council, Bischof + Klein GmbH & Co KG, Lengerich (since 2001) member of the Supervisory Board, Sametex spol. s.r., Kraslice (since December 2000) Chairman of the Board, Association of the Rhenish Textile Industry e.V., Wuppertal


DR. ROBERT DISSMANN
München, 1986
Attorney at Law and Certified Public Accountant member of the Advisory Council, FRIMO Group GmbH & Co., Lotte


HERLINDE IRL,
Erding, 1992
Head of Accounting

EDGAR ROSENBERGER
Hamburg, 1992
General Manager of IPURI GmbH Ludwig Beck AG, Munich Lambert GmbH, Mönchengladbach


MANFRED SCHALLMEYER
Frankfurt, 1992
Managing Director of IG Metall Triumph International AG, Munich Stihl AG, Aiblingen

HELGA SEHR
München, 1992
Secretary of IG Metall
Munich Administrative Office
Bosch AG, Munich


MARIA TEPPLER
Krefeld, 1997
Chairwoman of the Works Council of Kemper GmbH

The members of the Supervisory Board received total net compensation for the fiscal year 1999/2000 totaling DM 405,000 (previous year DM 405,000).


5. EMPLOYEES

The average number of employees working for ESCADA AG is as follows:

1999/2000 Previous year
Salaried employees 881 892
Industrial employees 343 355
1,224 1,247


The average number of employees working for the ESCADA Group are as follows:

1999/2000 Previous year
Germany 1,896 1,948
Foreign 2,451 2,255
4,347 4,203


1999/2000 Previous year
Sales 1,800 1,656
Production 1,254 1,314
Design 377 394
Shipping 332 311
Other 584 528
4,347 4,203