Reebok 2007 Annual Report Download - page 209

ANNUAL REPORT 2007 --- adidas Group
205CURRENCY EXPOSURE The adidas Group’s reporting and consolidation currency is the euro.
Since the Group produces and sells its products worldwide, the company is exposed to several
currencies, especially US dollar, Japanese yen and British pound. In order to minimize the risk
from increasing / declining exchange rates versus the euro, the adidas Group hedges itself
against the major currencies.  see also Hedging
CURRENCY-NEUTRAL Financial fi gures translated at prior-year exchange rates. This indicates
increases or decreases to reported fi gures by eliminating variances arising from currency trans-
lation, thus refl ecting the underlying business performance.
CURRENCY OPTION  see Option
CURRENT ASSET INTENSITY OF INVESTMENTS Percentage of total assets tied up in current
assets.
Current asset intensity of investments = current assets / total assets.
CUSTOMER FLOW MANAGEMENT™ A widely used initiative of managing the fl ow of people and
related information from entry to a retailer’s point-of-sale or specifi c service area. The aim is to
optimize the consumer’s shopping experience and increase shop sales.
DAYS OF SALES OUTSTANDING (DSO) Average time of receipt of outstanding payments from
customers.
DEMAND-DRIVEN SUPPLY CHAIN Management of up- and downstream relationships between
suppliers and customers to deliver the best value to the customer at the least cost to the supply
chain as a whole. A clear focus of the concept is this alignment of the supply chain to the cus-
tomers’ needs, bridging the gap between optimal customer relationship management and the
company’s supply chain management.  see also Supply Chain
DILUTED EARNINGS PER SHARE (DILUTED EPS) Performance indicator used to gauge a com-
pany’s earnings per share, assuming that all stock options, options and conversion rights related
to a convertible bond are exercised, which would result in an increase of the number of shares
outstanding.
Diluted EPS = (net income + interest expense on convertible bonds net of tax) / (weighted average
number of shares outstanding during the year + weighted share options + shares from assumed
conversion of convertible bonds).
DIRECTIONAL ACCOUNTS High-profi le boutiques and metropolitan retailers that target trend-
setting sports lifestyle consumers.
D & O LIABILITY INSURANCE Directors and Offi cers (D & O) liability insurance. Protects directors
and offi cers from liability and litigation from actions against them, claiming wrongdoing in con-
nection to the company’s business.
EARNINGS PER SHARE (EPS) Performance indicator that expresses a company’s net income in
relation to the number of ordinary shares issued.
Earnings per share = net income / weighted average number of shares outstanding during the
year.
EBITDA Earnings before interest, taxes, depreciation and amortization.
EMERGING MARKETS Developing countries showing potential for growth in both size and impor-
tance in the future. For the adidas Group, emerging markets are the developing countries of
Asia, Eastern Europe, Latin America and Africa.
EQUITY RATIO Shows the role of shareholders’ equity within the overall fi nancing structure of
a company.
Equity ratio = shareholder’s equity / total assets.
EQUITY-TO-FIXED-ASSET RATIO Defi nes the percentage of non-current assets fi nanced by equity.
Equity-to-fi xed-asset ratio = equity / non-current assets.
FAIR VALUE Amount at which assets are traded fairly between business partners. Fair value is
often identical to market price.
FAMILY FOOTWEAR CHANNEL Primarily North American retail distribution channel, catering for
affordable footwear across all age groups.
FINANCE LEASE Method of acquiring an asset that involves a series of rental payments extend-
ing over the expected lifetime of the asset.
FINANCIAL COVENANTS A promise in a debt instrument, or any other formal debt agreement,
that certain activities will or will not be carried out.
FINANCIAL LEVERAGE Ratio refl ects the role of borrowings within the fi nancing structure of
a company.
Financial leverage = net total borrowings / shareholders’ equity.
FORMOTION™ Apparel and footwear technology that enhances the natural movement of sport
for greater comfort, fi t and control while athletes are in motion.
FORWARD CONTRACT Agreement to exchange amounts of one currency for another currency
at an agreed fi xed rate at a future date.
FRANCHISING Franchising is a form of business by which the owner (franchisor) of a product,
service or method obtains distribution through affi liated dealers (franchisees). The franchisee
offers assistance in organizing, training, merchandising, marketing and managing in return for
a monetary consideration.
FREE CASH FLOW Cash that is generated by a company’s operating activities after the deduction
of capital expenditure and other cash expenses such as taxes and interest from the operating
profi t.
Free cash fl ow = operating profi t + depreciation and amortization (incl. goodwill) +/– changes in
operating working capital – capital expenditures +/- non-operating components.
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