Reebok 2006 Annual Report Download - page 84

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› Group Business PerformanceGroup Management Report ›
080 ANNUAL REPORT 2006 › adidas Group ›
Reebok Acquisition Drives Net Financial Expenses Increase
Net financial expenses increased 203% to € 158 million in
2006 from € 52 million in the prior year. This reflects the
financing of the Reebok acquisition. The cash outflow for this
transaction occurred at the end of January 2006.
Financial Income Down 5%
Financial income decreased 5% to € 39 million in 2006 from
€ 42 million in the prior year. This reflects the reduction in the
Group’s cash position after the acquisition of Reebok in Janu-
ary 2006.
Financial Expenses Increase due to Reebok Acquisition
Financial expenses increased 111% to € 197 million in 2006
(2005: € 94 million), particularly as a result of the financing
of the Reebok acquisition. An increase of the weighted aver-
age interest rate also had an impact on this development (see
Treasury, p. 85).
Income Before Taxes Up 10%
As a result of the operating improvements in the adidas and
TaylorMade-adidas Golf segments, income before taxes (IBT)
increased 10% to € 723 million in 2006 from € 655 million
in 2005. As a percentage of sales, however, IBT decreased
by 2.7 percentage points to 7.2% in 2006 from 9.9% in 2005,
reflecting the Group’s lower operating margin as well as the
significant increase in net financial expenses related to the
Reebok acquisition.
Net Financial Expenses € in millions
2002
2003
20041) 2)
20051)
20063)
87
49
59
52
158
1) Figures reflect continuing operations as a result of the divestiture of the Salomon
business segment.
2) Adjusted to reflect the application of IAS 32.
3) Including Reebok business segment from February 1, 2006 onwards, excluding
Greg Norman wholesale business from December 1, 2006 onwards.
Income Before Taxes € in millions
2002
2003
20041) 2)
20051)
20063)
390
438
526
655
723
1) Figures reflect continuing operations as a result of the divestiture of the Salomon
business segment.
2) Adjusted to reflect the application of IAS 32.
3) Including Reebok business segment from February 1, 2006 onwards, excluding
Greg Norman wholesale business from December 1, 2006 onwards.
Income Before Taxes by Quarter € in millions
Q1 20051)
Q1 20062)
Q2 20051)
Q2 20063)
Q3 20051)
Q3 20063)
Q4 20051)
Q4 20064)
194
220
142
128
309
360
11
14
1) Figures reflect continuing operations as a result of the divestiture of the Salomon
business segment.
2) Including Reebok business segment from February 1, 2006 onwards.
3) Including Reebok business segment.
4) Including Reebok business segment, excluding Greg Norman wholesale business
from December 1, 2006 onwards.