Reebok 2007 Annual Report Download - page 191

187
ANNUAL REPORT 2007 --- adidas Group
 28 EARNINGS PER SHARE Basic earnings per share are calculated by dividing the net income
attributable to shareholders by the weighted average number of shares outstanding during the
year.
Dilutive potential shares arose under the Management Share Option Plan (MSOP) of adidas
AG, which was implemented in 1999  see Note 32. As the required performance criteria for the ex-
ercise of the stock options of all tranches of the share option plan have been fulfi lled, dilutive
potential shares impact the diluted earnings per share calculation.
It is also necessary to include dilutive potential shares arising from the convertible bond
issuance in October 2003 in the calculation of diluted earnings per share as at December 31,
2007 and 2006, respectively, as the required conversion criteria were fulfi lled at the balance
sheet date  see Note 15. As a result, the convertible bond is assumed to have been converted into
ordinary shares and the net income is adjusted to eliminate the interest expense less the tax
effect.
EARNINGS PER SHARE
Year ending
2007 Dec. 31 2006
Net income attributable to shareholders (€ in millions)
Weighted average number of shares
Bas
i
c earn
i
ngs per share
(
in €
)
Net income attributable to shareholders (€ in millions)
Interest expense on convertible bond, net of taxes (€ in millions)
Net
i
ncome used to determ
i
ne d
i
luted earn
i
ngs per share
(
€ in millions
)
Weighted average number of shares
Weighted share options
Weighted assumed conversion convertible bond
W
eighted average number o
f
shares
f
or diluted earnings per share
D
i
luted earn
i
n
g
s per share
(
in €
)
551 483
2
0
3,
594
,
97
5
203,386,104
7
2.71 2.37
551 483
12
12
5
563 495
2
03,594,97
5
203,386,104
1
8
7
,887
328,308
15,684,
3
1
5
15,685,110
2
219,467,177 219,399,522
5
2.57 2.25
NOTES – ADDITIONAL INFORMATION
 29 SEGMENTAL INFORMATION The Group operates predominately in one industry segment –
the design, wholesale and marketing of athletic and sports lifestyle products. The Group is cur-
rently managed by brands.
Certain Group functions are centralized and an allocation of these functions to specifi c
segments is not considered to be meaningful. This includes functions such as central treasury,
worldwide sourcing as well as other headquarter departments. Assets, liabilities, income and
expenses relating to these corporate functions are presented in the HQ / Consolidation column
together with other non-allocable items and intersegment eliminations.
The Reebok segment includes the brands Reebok, Reebok-CCM Hockey and Rockport. The
Greg Norman license, which was acquired with the Reebok business and subsequently sold in
November 2006, was allocated to the TaylorMade-adidas Golf segment. In 2007, the remaining
retail activities were allocated to the Reebok segment. Both the NBA and Liverpool licensed
businesses were transferred to brand adidas in the fi rst half of 2006.
Information about the Group’s segments in accordance with the management approach is
presented on the following page.
There are no intersegment sales between the brands. Net sales to third parties are shown in
the geographic market in which the revenues are realized. The global sourcing function is in-
cluded in the HQ / Consolidation column. Transactions between the segments are based on the
dealing-at-arm’s-length principle.
Segment assets include all operating assets and comprise mainly accounts receivable,
inventory as well as property, plant and equipment and intangible assets. Segment liabilities
comprise operating liabilities and consist principally of trade and other payables as well as
accrued liabilities and provisions. Non-allocable items including fi nancial assets or assets and
liabilities relating to income taxes and borrowings, are included in the HQ / Consolidation
column.
Capital expenditure, amortization and depreciation relate to segment assets; the acquisition
of goodwill and the inception of fi nance leases do not affect capital expenditure.
05