Adidas 2002 Annual Report Download - page 73

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71
OTHER LIABILITIES INCREASE DUE TO FAIR VALUATION OF
FINANCIAL INSTRUMENTS /// Other current liabilities
increased 35% from € 110 million in 2001 to € 149 million in
2002. Other non-current liabilities grew 45% from € 13 million
in 2001 to € 19 million. Both these increases were caused
primarily by a decrease in the fair value of the Group’s finan-
cial instruments (see note 21).
EQUITY RATIO IMPROVES FURTHER DESPITE NEGATIVE
CURRENCY IMPACT /// The Group’s equity base was further
strengthened in 2002 despite negative currency effects. Equity
rose 7% from € 1.0 billion in 2001 to € 1.1 billion in 2002. The
majority of the net income was retained within the Group and
used to strengthen the equity base. Negative effects came
from the translation of foreign subsidiaries’ equity into euro at
year-end due to the decline in the US dollar and other foreign
currencies versus the euro. As a matter of corporate policy,
adidas-Salomon hedges for the translation of the local bal-
ance sheets only under certain circumstances. In such cases,
if certain criteria are met, we may use changes in functional
currencies of foreign subsidiaries, changes in the currency
denomination of their monetary assets, or hedging with
forward contracts or options for this purpose. In addition, the
hedging reserve resulting from the fair valuation of financial
instruments used for product sourcing negatively impacted
the
year-end equity balance (see note 21). The equity ratio rose
by
1.1 percentage points from 24.3% in 2001 to 25.4% in 2002.
Financial leverage, the ratio of net borrowings to equity,
improved 27 percentage points to 139% versus 165% in the
prior year. This is a result of the Group’s strong operational
cash flow, used to reduce net borrowings.
FIXED ASSETS INCREASE /// Fixed assets (including financial
assets) increased by 13% from € 1.1 billion in 2001 to
€ 1.2 billion in 2002. This increase reflects strategic invest-
ments including the purchase of the remaining shares in
adidas Italy and the acquisitions of Arc’Teryx and Maxfli as
well as our 10% participation in the Bayern Munich football
club. The expansion of adidas own-retail activities and the
completion of our headquarter facilities in North America
also caused fixed assets to increase.
OTHER ASSETS INFLUENCED BY PARTICIPATION IN
BAYERN MUNICH /// Other current assets were unchanged
at € 267 million in 2002. Non-current assets grew 35% from
€ 108 million in 2001 to € 145 million in 2002. The increase
in non-current assets is mainly due to the purchase of a
participation in FC Bayern München AG for the amount of
€ 77 million.
EQUITY RATIO in % of total assets
1998 14.4
1999 19.0
2000 20.3
2001 24.3
2002 25.4
TAYLORMADE /// ROSSA
PUTTER