Reebok 2006 Annual Report Download - page 89

085
Treasury
Treasury System and Responsibilities
Our Group’s treasury policy governs all treasury-related
issues, including banking policy and approval of bank rela-
tionships, global financing arrangements and liquidity/asset
management, currency and interest risk management as well
as the management of intercompany cash flows. Responsi-
bilities are arranged in a three-tiered approach:
» The Treasury Committee, consisting of members of the
Executive Board and other senior executives, decides upon
the Group’s treasury policy and provides strategic guidance
for managing treasury-related topics. The Treasury Committee
approves all major changes to our treasury policy.
» The Group Treasury department is responsible for specific
centralized treasury transactions and for global implementa-
tion of our Group’s treasury policy.
» On a subsidiary level, local managing directors and finan-
cial controllers are responsible for managing treasury matters
in the respective subsidiaries. Brand and regional controlling
ensures that the transactions of the individual business units
are in compliance with the Group’s treasury policy.
Centralized Treasury Function
In accordance with our Group’s treasury policy, more than
90% of our worldwide credit lines are managed by the Group
Treasury department. Portions of the lines are allocated to the
Group’s subsidiaries and backed by parental guarantees. As
a result of this centralized liquidity management, the Group
is well positioned to allocate resources efficiently throughout
the organization. The Group’s debt is generally unsecured and
includes standard financial covenants which are reviewed on
a quarterly basis. We maintain good relations with numer-
ous partner banks, thereby avoiding a strong dependency on
any single institution. Banking partners of the Group and our
subsidiaries are required to have at least a BBB+ long-term
investment grade rating by Standard & Poor’s or an equivalent
rating by another leading rating agency (see Note 24, p. 171).
To optimize the Group’s cash position and ensure optimal allo-
cation of liquid financial resources, subsidiaries are required
to transfer excess cash to the Group’s headquarters.
Number and Volume of Financing Instruments Increased
The acquisition of Reebok International Ltd. (USA) strongly
increased the Group’s financing requirements. As a result, we
increased the number and volume of certain financing instru-
ments. By issuing private placements in the USA, in Europe
and in Asia in a total amount of around € 1.3 billion in 2006,
we continued to diversify the Group’s financing structure. This
further reduced our dependency on single credit institutions
and country-specific factors. In addition, long-term financial
flexibility is ensured by a currently unutilized € 2.0 billion syndi-
cated loan as well as additional unutilized bilateral credit lines
at different banks in an amount of € 2.4 billion (see Note 16,
p. 160). The Group’s currency split of gross borrowings was
also further diversified in 2006. We significantly increased our
US dollar-denominated financing to reflect the acquisition of
US dollar-based assets related to Reebok. We monitor the
ongoing need for available credit lines based on the current
level of debt as well as future financing requirements.
Total Credit Facilities € in millions
2006 2005
Total 6,935 5,140
Short-term lines
Medium-term committed lines
Private placements
Convertible bond
2,776
2,000
1,784
375
2,194
2,013
567
366
Remaining Time to Maturity of Available Facilities € in millions
2006 2005
Total 6,935 5,140
< 1 year
1 to 3 years
3 to 5 years
> 5 years
2,879
985
2,480
591
2,227
308
2,427
178
» Balance Sheet and Cash Flow Statement
» Treasury
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