Reebok 2009 Annual Report Download - page 188

184 CONSOLIDATED FINANCIAL STATEMENTS Notes
Long-term financial assets 14
Long-term financial assets include a 10% investment in FC Bayern München AG of € 79 mil-
lion (2008: € 77 million). This investment is classified as “fair value through profit or loss” and
recorded at fair value. This equity security does not have a quoted market price in an active
market, therefore existing contractual settlements were used in order to calculate the fair value
as at December 31, 2009. Dividends are distributed by FC Bayern München AG instead of regular
interest payments.
Additionally, long-term financial assets include investments which are mainly invested in
insurance products and are measured at fair value, as well as other financial assets.
N °-
1 4
LONG-TERM FINANCIAL ASSETS
€ IN MILLIONS
Dec. 31, 2009 Dec. 31, 2008
Investment in FC Bayern München AG 79 77
Investments 12 12
Other financial assets 0 7
Long-term financial assets 91 96
Fair value adjustments from impairment losses amounted to € 5 million and € 0 million for the
years ending December 31, 2009 and 2008, respectively. These are related to impairments of other
financial assets to cover anticipated risks of default see also Note 32.
Other non-current financial assets 15
Other non-current financial assets consist of the following:
N °-
1 5
OTHER NON-CURRENT FINANCIAL ASSETS
€ IN MILLIONS
Dec. 31, 2009 Dec. 31, 2008
Interest rate derivatives 4 8
Currency options 19 19
Forward contracts 2 7
Security deposits 21 23
Other financial assets 12 3
Other non-current financial assets 58 60
Information regarding forward contracts as well as currency options and interest rate derivatives
is also included in these Notes see also Note 28.
Other non-current assets 16
Other non-current assets consist of the following:
N °-
1 6
OTHER NON-CURRENT ASSETS
€ IN MILLIONS
Dec. 31, 2009 Dec. 31, 2008
Prepaid expenses 117 108
Sundry 9 12
Other non-current assets 126 120
Prepaid expenses mainly include prepayments for long-term promotional contracts and service
contracts see also Note 37 and Note 27.
Borrowings and credit lines 17
With settlement on October 8, 2003, the adidas Group had issued a € 400 million convertible
bond through its wholly-owned Dutch subsidiary, adidas International Finance B.V. The bond was
guaranteed by adidas AG and issued in tranches of € 50,000 each with a maturity up to 15 years.
The bond was, at the option of the respective holder, subject to certain conditions, convertible from
and including November 18, 2003, up to and including September 20, 2018, into ordinary no-par-
value bearer shares of adidas AG at the conversion price of € 25.50 which was fixed upon issue.
The coupon of the bond was 2.5% and was payable annually in arrears on October 8 of each year,
commencing on October 8, 2004. The bond was convertible into approximately 16 million no-par-
value bearer shares.
The convertible bond was not callable by the issuer until October 2009. It was callable
thereafter, between October 2009 and October 2012, subject to the adidas AG share price
amounting to at least 130% of the conversion price. After having fulfilled the aforementioned
condition, in October 2009 the Group announced the early redemption of the convertible bond.
Following the announcement, the convertible bond was fully converted into no-par-value bearer
shares of adidas AG by the bondholders. Investors had the right to put the bond at par in October
2009, October 2012 and October 2015.
The fair values of the liability component and the equity conversion component were
determined on the issuance of the bond. The fair value of the liability component, included in
long-term borrowings, was calculated using a market interest rate of approximately 4.6% for an
equivalent straight bond without conversion rights. Due to the retrospective application of the
amendment to IAS 39 and IAS 32 as of December 31, 2005, the liability and equity split of the
convertible bond changed. As a result, the liability component as at the date of issuance increased
by € 71.1 million with an equivalent decrease in equity. The amount of the equity component,
which is included in equity in the capital reserve, amounts to € 44.1 million (less transaction costs
of € 0.9 million). The liability component was valued using the “effective interest method”.