Reebok 2008 Annual Report Download - page 175

adidas Group Annual Report 2008 171
Gross borrowings increased by € 427 million in 2008 compared to a decrease of € 432 million in
2007.
Borrowings are denominated in a variety of currencies in which the Group conducts its business.
The largest portions of effective gross borrowings (before liquidity swaps for cash management
purposes) as at December 31, 2008 are denominated in euros (2008: 57%; 2007: 51%) and
US dollars (2008: 39%; 2007: 45%).
Month-end weighted average interest rates on borrowings in all currencies ranged from 4.8%
to 5.4% in 2008 and from 5.2% to 5.6% in 2007.
As at December 31, 2008, the Group had cash credit lines and other long-term fi nancing
arrangements totalling € 6.5 billion (2007: € 6.3 billion); thereof unused credit lines accounted
for € 3.9 billion (2007: € 4.1 billion). In addition, the Group had separate lines for the issuance
of letters of credit in an amount of approximately € 0.3 billion (2007: € 0.2 billion).
The Group’s outstanding fi nancings are unsecured.
The private placement and convertible bond documentation each contain a negative-pledge
clause. Additionally, the private placement documentation contains minimum equity covenants
and net loss covenants. As at December 31, 2008, and December 31, 2007, actual share holders’
equity was well above the amount of the minimum equity covenant. Likewise, the relevant
amount of net income clearly exceeded net loss covenants.
The amounts disclosed as borrowings represent outstanding borrowings under the following
arrangements with aggregated expiration dates as follows:
Gross borrowings as at December 31, 2008
€ in millions
Up to 1 year
Between
1 and 3 years
Between
3 and 5 years After 5 years Total
Bank borrowings incl. commercial paper — — 748 — 748
Private placements 404 462 332 234 1,432
Convertible bond 393 — — — 393
Total 797 462 1,080 234 2,573
In accordance with the long-term funding strategy, the bank borrowings and commercial paper
with short-term maturities are also classifi ed as long-term borrowings as they represent per-
manent funding volumes that are covered by the committed long-term syndicated loan.
Gross borrowings as at December 31, 2007
€ in millions
Up to 1 year
Between
1 and 3 years
Between
3 and 5 years After 5 years Total
Bank borrowings incl. commercial paper — — 198 — 198
Private placements 186 583 376 419 1,564
Convertible bond — 384 — — 384
Total 186 967 574 419 2,146
The private placements with a maturity of up to one year are shown as short-term borrowings in
the balance sheet as at December 31, 2008. The practice of shifting short-term private place-
ments to long-term borrowings due to syndicated loan refi nancing ceased in 2008. The prior year
end amount has been reclassifi ed in order to ensure comparability.
The borrowings related to our outstanding convertible bond changed in value, refl ecting the
accruing interest on the debt component in accordance with IFRS requirements.