Reebok 2008 Annual Report Download - page 212

208 Appendix Glossary
Glossary
AFIRM (Apparel and Footwear International Restricted Substances List Management) Working
Group A centre of excellence comprising experts whose aim it is to reduce the use and impact
of harmful substances in the apparel and footwear supply chains.
American Depositary Receipt (ADR) US-traded negotiable certifi cate of a foreign-based
company held by a US bank that entitles the holder to all dividends and rights of the underlying
stock. ADRs provide a way for Americans to invest in foreign-based companies by buying their
shares in the USA instead of through an overseas exchange.
Asset coverage I & II The extent to which a company’s non-current assets cover its debt
obligations.
They are expressed as a percentage and calculated as follows:
Asset coverage I (%) = (equity + non-current liabilities) / non-current assets.
Asset coverage II (%) = (equity + non-current liabilities) / (non-current assets + inventories).
Athletic specialty A largely mall-based retail distribution concept in North America that
focuses primarily on selling sports and sports lifestyle products to consumers.
Backlogs Also called order backlogs. The value of orders received for future delivery. At
adidas and Reebok, most retailers’ orders are received six to nine months in advance, depending
on the season.
Basic Earnings Per Share (Basic EPS) Performance indicator used to gauge a company’s
earnings per share, based on the number of shares outstanding (excluding stock options, as
well as options and conversion rights related to a convertible bond).
Basic EPS = net income / weighted average number of shares outstanding during the year.
see also Diluted Earnings Per Share
Beta factor Indicates a stock’s relative risk. A beta coeffi cient of more than one indicates that
the stock has a higher risk than the overall market. Conversely, a beta coeffi cient of less than
one indicates a lower risk.
Computer Aided Design (CAD) A computer application to aid in the design process.
Capital expenditure Total cash expenditure used for the purchase of tangible and intangible
assets, excluding acquisitions and fi nance leases.
Classics Reebok products designed in an authentic heritage style, targeting sports lifestyle
consumers who seek trendsetting streetwear with authentic origins.
Clearance sales Revenues generated outside the course of normal business terms, arising
from commercial decisions by management to clear excess stock usually through specifi c
channels and at a signifi cant discount.
Co-branded stores adidas or Reebok stores that are co-branded together with a partner, for
example a sports league such as the NHL, NFL or NBA.
Consumer price index (CPI) Measure of the average price of consumer goods and services
purchased by households. Determined by measuring the price of a standard group of goods
meant to represent the typical market basket of a typical urban consumer. The percentage
change in the CPI is a measure of infl ation.
Commercial paper Tradable unsecured promissory notes issued for the purpose of short-
term fi nancing. Commercial paper is issued on an ongoing, revolving basis with maturities
typically between seven days and 12 months or more.
Concession corners Retail space that is fully operated by one brand within the adidas Group
and is part of a larger sales area operated by a retail partner.
Controlled space Controlled space includes own-retail business, mono-branded stores, shop-
in-shops, joint ventures with retail partners and co-branded stores. Controlled space offers
a high level of brand control and ensures optimal product offering and presentation according to
brand requirements.
Convertible bond Corporate bond that can be exchanged for a specifi c number of shares of
a company’s common stock. Convertible bonds tend to have lower interest rates than non-
convertibles because they also accrue value as the price of the underlying stock rises. In this
way, convertible bonds refl ect a combination of the benefi ts of stocks and those of bonds.
Corporate Governance Distribution of rights and responsibilities among the primary stake-
holders in a company, in particular shareholders, the Executive Board and the Supervisory
Board.
Cost of sales Costs of sourcing and manufacturing products. This fi gure includes costs for
raw materials plus costs of production, freight, customs and delivery to the adidas Group’s
sales organisations.
Credit spread Risk premium which represents the yield difference between risk-free
government bonds and corporate bonds with the same duration. A potential investor demands
an additional yield (risk premium = credit spread) for the higher risk of default with corporate
bonds versus government bonds.