Reebok 2007 Annual Report Download - page 189

185
ANNUAL REPORT 2007 --- adidas Group
FINANCIAL EXPENSES
€
in milli
o
n
s
Year ending Dec. 31
2007 2006
Interest expense on fi nancial instruments measured at amortized cost
Interest expense on fi nancial instruments at fair value through profi t or loss
Interest expense on provisions and non-fi nancial liabilities
Net foreign exchange losses
Other
F
i
nanc
i
al ex
p
ense
s
(
163
)
(182)
(
1
)
(1)
(
2
)
(1)
— —
(
4
)
(13)
7)
(170) (197
)
Interest income from fi nancial instruments, measured at amortized cost, mainly consists of
interest income from bank deposits and loans.
Interest income / expense from fi nancial instruments at fair value through profi t or loss
mainly includes interest payments from investment funds as well as net interest payments from
interest derivatives not being part of a hedging relationship. Unrealized gains / losses from fair
value measurement of such fi nancial assets are shown in other fi nancial income or expenses.
Interest expense on fi nancial instruments measured at amortized cost mainly includes inter-
est on borrowings and effects from using the effective interest method.
Interest expense on provisions and non-fi nancial liabilities particularly includes effects from
measurement of provisions at present value and interest on non-fi nancial liabilities such as tax
payables.
Other fi nancial expenses include impairment losses on other fi nancial assets amounting to
€ 4 million and € 8 million for the years ending December 31, 2007 and 2006, respectively. Also
included in other fi nancial expenses are minority interests, which are not recorded in equity
according to IAS 32.
Information regarding the Group’s available-for-sale investments, borrowings and fi nancial
instruments is also included in these Notes.  see Notes 6, 13, 15 and 23
 27 INCOME TAXES adidas AG and its German subsidiaries are subject to German corporate
and trade taxes.
For the years ending December 31, 2007 and 2006, the statutory corporate income tax rate of
25 % plus a surcharge of 5.5 % thereon is applied to earnings. The municipal trade tax is approxi-
mately 15 % of taxable income, which is deductible in the determination of income for corpo-
ration tax purposes. The tax rate reduction due to the German Tax Reform 2008 was taken into
account for the calculation of the deferred tax assets and liabilities of the German companies in
2007.
For non-German companies, deferred taxes are calculated based on tax rates that have been
enacted or substantively enacted by the closing date.
DEFERRED TAX ASSETS AND LIABILITIES Deferred tax assets and liabilities are offset if they
relate to the same fi scal authority. The following deferred tax assets and liabilities, determined
after appropriate offsetting, are presented on the balance sheet:
DEFERRED TAX ASSETS / LIABILITIES
€ in million
s
Dec.
31
Dec. 31
2007
2006
Deferred tax assets
Deferred tax liabilities
D
e
f
erred tax assets, ne
t
3
1
5
332
(
450
)
(522)
(135) (190
)
)
The movements of deferred taxes are as follows:
MOVEMENT OF DEFERRED TAXES
€
in milli
o
n
s
2007
2006
D
eferred tax assets, net as at Januar
y
1
Deferred tax (expense) / income
Change in consolidated companies 1)
Change in deferred taxes attributable to effective portion of qualifying
hedging instruments recorded in equity  see Note 23
Currency translation differences
Change in deferred taxes attributable to actuarial gains and losses
recorded in equity  see Note 18
D
eferred tax assets
,
net as at December
3
1
1
) Relates to the acquisition of Reebok International Ltd. (USA) and its subsidiaries for the year ending December 31, 2006.  see Note 4
(190) 153
)
2
6 (14)
—
(347)
11
2
25
17
(
7
)
(1)
)
(135) (190
)
05