Reebok 2009 Annual Report Download - page 187

CONSOLIDATED FINANCIAL STATEMENTS Notes 183
Goodwill 12
Goodwill primarily relates to the Group’s acquisitions of the Reebok and TaylorMade businesses as
well as recent and previous acquisitions of subsidiaries, primarily in the United States, Australia/
New Zealand, Netherlands/Belgium and Italy.
N °-
1 2
GOODWILL
€ IN MILLIONS
Dec. 31, 2009 Dec. 31, 2008
Goodwill, gross 1,478 1,499
Less: impairment — —
Goodwill, net 1,478 1,499
The majority of goodwill which primarily relates to the acquisition of the Reebok business in 2006
is denominated in US dollars. A negative currency translation effect of € 27 million and positive
€ 45 million was recorded for the years ending December 31, 2009 and 2008, respectively.
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 flows from the cash-generating unit and also to choose a suitable dis-
count rate in order to calculate the present value of those cash flows. There was no impairment
expense for the years ending December 31, 2009 and 2008.
Future changes in expected cash flows 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 Attachment I to these Notes.
Trademarks and other intangible assets 13
Trademarks and other intangible assets consist of the following:
N °-
1 3
TRADEMARKS AND OTHER INTANGIBLE ASSETS
€ IN MILLIONS
Dec. 31, 2009 Dec. 31, 2008
Reebok 1,075 1,113
Rockport 152 157
Reebok-CCM Hockey 90 93
TaylorMade-adidas Golf 25 27
Trademarks, gross 1,342 1,390
Less: accumulated amortisation 0 0
Trademarks, net 1,342 1,390
Software, patents and concessions, gross 538 517
Less: accumulated amortisation 378 313
Other intangible assets, net 160 204
Trademarks and other intangible assets, net 1,502 1,594
At December 31, 2009, trademarks, mainly related to the acquisition of Reebok International Ltd.
(USA) in 2006 and Ashworth, Inc. in 2008, have indefinite useful lives. They were estimated to be
indefinite due to the high degree of continuing brand recognition.
The Group determines whether trademarks with indefinite 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-specific 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 flows. There was no impairment expense for the years ending December 31, 2009
and 2008.
Future changes in expected cash flows and discount rates may lead to impairments of the
accounted trademarks in the future.
Scheduled depreciation expenses were € 66 million and € 61 million for the years ending
December 31, 2009 and 2008, respectively see also Note 30. Impairment losses which are included
within depreciation and amortisation (shown in other operating expenses see also Note 30) were
€ 19 million and € 0 million for the years ending December 31, 2009 and 2008, respectively. These
are related to distribution rights, for which no future economic benefit exists.
For details see Statement of Movements of Tangible and Intangible Assets Attachment I to
these Notes.