Reebok 2006 Annual Report Download - page 90

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› Group Business PerformanceGroup Management Report ›
086 ANNUAL REPORT 2006 › adidas Group ›
Net Debt Position Better Than Target at € 2.231 Billion
Net debt at December 31, 2006 was € 2.231 billion, up
€ 2.782 billion versus a net cash position of € 551 million in
the prior year. This increase was driven by the payment of
around € 3.2 billion for the acquisition of Reebok International
Ltd. (USA), paid on January 31, 2006. This amount included
the buyback of employee stock options and Reebok’s convert-
ible bond. In addition, expenditure of around € 170 million for
the buyback of Reebok’s major properties in the USA and in
Europe influenced this development (see Note 5, p. 156). The
net debt position at year-end was significantly better than our
original target of around € 2.5 billion, communicated at the
beginning of 2006. The Group’s financial leverage was 78.9%
at the end of 2006, clearly below our year-end target of 100%.
On a net debt basis, the utilization of the available credit facil-
ities for the Group at the end of 2006 was 32%.
Financing Structure Further Diversified
In 2006, we continued to diversify the Group’s financing struc-
ture. Bank borrowings increased 170% to € 275 million from
€ 102 million in the prior year and the total amount of our
private placements increased 215% to € 1.784 billion in 2006
(2005: € 567 million). The current value of the convertible bond
increased 2% to € 375 million in 2006 from € 366 million in the
prior year, reflecting the accrued interest on the debt compo-
nent in accordance with IFRS requirements. As a result, gross
borrowings increased to € 2.578 billion at the end of 2006 from
€ 1.035 billion in the prior year (see Note 16, p. 160).
2006 2005
Total cash and short-term financial assets 347 1,586
Bank borrowings 275 102
Commercial paper 144 0
Asset-backed securities 0 0
Private placements 1,784 567
Convertible bond 375 366
Gross total borrowings 2,578 1,035
Net cash (net borrowings) (2,231) 551
Financing Structure € in millions
Net Cash (Net Borrowings) by Quarter1) € in millions
Q1 2005
Q1 20062)
Q2 2005
Q2 20062)
Q3 2005
Q3 20062)
Q4 2005
Q4 20062)
(700)
(2,952)
(613)
(2,829)
(657)
(2,728)
551)
(2,231)
1) At end of period.
2) Including Reebok business.
Net Cash (Net Borrowings) € in millions
2002
20031)
20041)
2005
20062)
(1,498)
(1,018)
(665)
551)
(2,231)
1) Restated due to application of amendment to IAS 39.
2) Including Reebok business.
Interest Rate Development1) in %
2002
2003
2004
2005
2006
3.2
2.7
3.4
4.0
4.8
1) Weighted average interest rate of gross borrowings.
Financial Leverage in %
2002
20031)
20041)
2005
20062)
138.5)
79.2)
43.1)
(20.5)
78.9)
1) Restated due to application of IAS 32/IAS 39 and amendment to IAS 19.
2) Including Reebok business.