Reebok 2008 Annual Report Download - page 173

adidas Group Annual Report 2008 169
11 Goodwill
Goodwill primarily relates to the Group’s acquisitions of the Reebok and TaylorMade businesses
as well as recent and previous acquisitions of subsidiaries in the United States, Australia /New
Zealand, Netherlands /Belgium and Italy.
Goodwill
€ in millions
Dec. 31, 2008 Dec. 31, 2007
Goodwill, gross 1,499 1,436
Less: impairment — —
Goodwill, net 1,499 1,436
The majority of goodwill which primarily relates to the acquisition of the Reebok business in 2006
is denominated in US dollars. A positive currency translation effect of € 45 million and negative
€ 80 million was recorded for the years ending December 31, 2008 and 2007, respectively.
From January 1, 2005, goodwill is tested annually for impairment. There was no impairment
expense for the years ending December 31, 2008 and 2007. The Group determines whether
goodwill impairment is necessary at least on an annual basis. This requires an estimation of the
value in use of the cash-generating units to which the goodwill is allocated. Estimating the value
in use requires the Group to make an estimate of the expected future cash fl ows from the cash-
generating unit and also to choose a suitable discount rate in order to calculate the present value
of those cash fl ows.
Future changes in expected cash fl ows and discount rates may lead to impairments of the
accounted goodwill in the future.
For details see Statement of Movements of Tangible and Intangible Assets and Financial Assets (Attach-
ment I to these Notes).
12 Trademarks and other intangible assets
Trademarks and other intangible assets consist of the following:
Trademarks and other intangible assets
€ in millions
Dec. 31, 2008 Dec. 31, 2007
Trademarks, gross 1,390 1,291
Less: accumulated amortisation 0 —
Trademarks, net 1,390 1,291
Software, patents and concessions, gross 517 441
Less: accumulated amortisation 313 247
Other intangible assets, net 204 194
Trademarks and other intangible assets, net 1,594 1,485
Intangible asset amortisation expenses were € 61 million and € 64 million for the years ending
December 31, 2008 and 2007, respectively see also Note 25.
At December 31, 2008, trademarks related to the Reebok acquisition as well as the Ashworth
acquisition with indefi nite useful lives amounted to € 1,359 million (December 31, 2007:
€ 1,285 million) and € 21 million. They were estimated to be indefi nite due to the high degree of
brand recognition as well as their long-standing heritage. The trademarks are allocated to the
cash-generating units Reebok as well as TaylorMade- adidas Golf.
The Group determines whether trademarks with indefi nite useful life are impaired at least on
an annual basis. This requires an estimation of the fair value less costs to sell of the trade-
marks. Estimating the fair value less costs to sell requires the Group to make an estimate of the
expected future brand-specifi c sales and appropriate arm’s length royalty rates from the cash-
generating unit and also to choose a suitable discount rate in order to calculate the present value
of those cash fl ows. There was no impairment expense for the years ending December 31, 2008
and 2007.
Future changes in expected cash fl ows and discount rates may lead to impairments of the
accounted trademarks in the future.
For details see Statement of Movements of Tangible and Intangible Assets and Financial Assets (Attach-
ment I to these Notes).