Reebok 2006 Annual Report Download - page 88

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› Group Business PerformanceGroup Management Report ›
084 ANNUAL REPORT 2006 › adidas Group ›
Other Non-Current Liabilities Increase 87%
Other non-current liabilities increased 87% to € 43 million at
the end of 2006 from € 23 million in 2005, primarily due to
an increased non-current portion of deferred income. Other
non-current liabilities for the adidas Group excluding Reebok
increased 86%.
Shareholder’s Equity Up 5%
Shareholders’ equity rose 5% to € 2.828 billion at the end of
2006 versus € 2.684 billion in 2005. The majority of net income
was offset by negative currency translation effects due to the
strong euro against the US dollar.
Expenses Related to Off-Balance Sheet Items
Our most important off-balance sheet assets are operating
leases, which are related to offices, retail stores, warehouses
and equipment. Rent expenses increased 63% to € 278 mil-
lion in 2006 from € 171 million in the prior year, mainly due to
the first-time inclusion of rent expenses related to the Reebok
business (see Note 5, p. 156). Rent expenses for the adidas
Group excluding Reebok increased 33%, mainly reflecting the
continued expansion of own-retail activities at brand adidas.
Strong Cash Flow Development
In 2006, cash inflow from operating activities was € 762 mil-
lion and was primarily used to finance working capital needs
in accordance with the seasonality of the business. The Group
used € 2.988 billion of net cash for investing activities mainly
related to the acquisition of Reebok including the buyback of
Reebok’s major properties in the USA and Europe. Further,
this development also reflects spending for property, plant
and equipment, such as investment in adidas own-retail activi-
ties. Cash inflow from financing activities totaled € 1.035 bil-
lion, mainly reflecting increases in long-term borrowings to
finance the acquisition of Reebok.
Shareholders’ Equity € in millions
2002
20031)
20041)
2005
20062)
1,081
1,285
1,544
2,684
2,828
1) Restated due to application of amendment to IAS 19.
2) Including Reebok business.
Capital Expenditure by Segment
Change in Cash and Cash Equivalents € in millions
Cash and Net cash Net cash Net cash Effect of Cash and
cash provided by used in provided by exchange cash
equivalents operating investing financing rates on equivalents
at the end activities activities activities cash at the end
of 2005 of 2006
TaylorMade-adidas Golf 5% adidas 49%
HQ /Consolidation
20%
Reebok 26%
1,525
762 (2,988)
1,035 (23) 311