Reebok 2010 Annual Report Download - page 199

Consolidated Financial Statements Notes 195
Acquisition/disposal of subsidiaries as well as assets and liabilities 03
Effective January 1, 2009, adidas International B.V. acquired the outstanding 25% of the shares of
Reebok’s subsidiary in Spain, adidas Finance Spain S.A. (formerly Reebok Spain S.A.), Alicante,
for a purchase price in the amount of € 12 million. The goodwill resulting from this transaction
amounted to € 1 million.
Effective January 1, 2009, adidas International B.V. acquired 51% of the shares of Life Sport
Ltd. for a purchase price in the amount of ILS 25.6 million. Based in Holon (Israel), Life Sport Ltd.
is a marketing company for adidas and Reebok products in Israel.
The acquisition had the following effect on the Group’s assets and liabilities:
Life Sport Ltd.’s net assets at the acquisition date
€ in millions
Pre-acquisition
carrying
amounts Fair value adjustments
Recognised
values on
acquisition
Cash and cash equivalents 0 — 0
Accounts receivable 5 — 5
Inventories 7 — 7
Other current assets 2 — 2
Property, plant and equipment, net 6 — 6
Other intangible assets 0 1 1
Non-current financial assets 0 — 0
Deferred tax assets 0 — 0
Current financial liabilities (9) — (9)
Accounts payable (7) — (7)
Other current liabilities (3) — (3)
Non-current financial liabilities (1) — (1)
Pensions and similar obligations (0) — (0)
Net assets 0 1 1
Goodwill arising on acquisition 4
Purchase price settled in cash 5
Cash and cash equivalents acquired 0
Cash outflow on acquisition 5
Pre-acquisition carrying amounts were based on applicable IFRS standards.
The excess of the acquisition cost paid versus the net of the amounts of the fair values
assigned to all assets acquired and liabilities assumed was recognised as goodwill. Any acquired
asset that did not meet the identification and recognition criteria for an asset was included in the
amount recognised as goodwill.
The goodwill arising on this acquisition was allocated to the cash-generating unit adidas at
the time of the acquisition. As part of the Group’s reorganisation in the second half of 2009, it has
been reallocated and is denominated in the local functional currency of the acquired entity see
also Note 2.
The acquired subsidiary contributed net losses of € 0 million to the Group’s net income for the
period from January to December 2009.
Effective January 23, 2009, adidas AG acquired the remaining 5% of the shares of its subsidiary
in Greece, adidas Hellas A.E., Thessaloniki, for a purchase price in the amount of € 1 million.
On February 16, 2009, adidas International, Inc. acquired assets of Bones in Motion, Inc. as
part of an asset deal for a purchase price in the amount of USD 5 million. Based in Austin/Texas
(USA), Bones in Motion, Inc. is engaged in developing, manufacturing and selling sports- and
fitness-specific location-aware software applications and web-based services.
The acquisition had the following effect on the Group’s assets and liabilities:
Bones in Motion, Inc.’s net assets at the acquisition date
€ in millions
Pre-acquisition
carrying
amounts Fair value adjustments
Recognised
values on
acquisition
Accounts receivable 0 — 0
Trademarks and other intangible assets, net — 3 3
Net assets — 3 3
Goodwill arising on acquisition 1
Purchase price settled in cash 4
Cash and cash equivalents acquired —
Cash outflow on acquisition 4
Pre-acquisition carrying amounts were based on applicable IFRS standards.
The following valuation methods for the acquired assets were applied:
– Trademarks and other intangible assets: The “multi-period-excess-earnings method” was used
for the valuation of patents. The respective future excess cash flows were identified and adjusted
in order to eliminate all elements not associated with these assets. Future cash flows were
measured on the basis of the expected sales by deducting variable and sales-related imputed
costs for the use of contributory assets. Subsequently, the outcome was discounted using the
appropriate discount rate and adding a tax amortisation benefit.
The excess of the acquisition cost paid versus the net of the amounts of the fair values
assigned to all assets acquired and liabilities assumed was recognised as goodwill. Any acquired
asset that did not meet the identification and recognition criteria for an asset was included in the
amount recognised as goodwill.
The goodwill arising on this acquisition was allocated to the cash-generating unit adidas at
the time of the acquisition. As part of the Group’s reorganisation in the second half of 2009, it has
been reallocated and is denominated in the local functional currency of the acquired entity see
also Note 2.
If this acquisition had occurred on January 1, 2009, total Group net sales would have been
€ 10.4 billion and net income would have been € 245 million for the year ending December 31,
2009.