Reebok 2011 Annual Report Download - page 195

adidas Group
2011 Annual Report
CONSOLIDATED FINANCIAL STATEMENTS
191
2011
191
2011
04.8 Notes Notes to the Consolidated Statement of Financial Position
12 Goodwill
Goodwill primarily relates to the Group’s acquisitions of the Reebok
and TaylorMade businesses as well as acquisitions of subsidiaries,
primarily in the United States, Australia/New Zealand, Netherlands,
Denmark and Italy.
Goodwill (€ in millions)
Dec. 31, 2011 Dec. 31, 2010
Goodwill, gross 1,580 1,539
Less: accumulated impairment losses – –
Goodwill, net 1,580 1,539
The majority of goodwill which primarily relates to the acquisition of
the Reebok business in 2006 is denominated in US dollars. A currency
translation effect of € 30 million and € 61 million was recorded for the
years ending December 31, 2011 and 2010, 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 units
and also to choose a suitable discount rate in order to calculate the
present value of those cash flows. There was no need for impairment
for the years ending December 31, 2011 and 2010.
Future changes in expected cash flows and discount rates may
lead to impairments of the accounted goodwill in the future. For
details see Attachment I to the consolidated financial statements
SEE STATEMENT OF MOVEMENTS OF INTANGIBLE AND TANGIBLE ASSETS, P. 216 .
The reconciliation of goodwill is as follows:
Reconciliation of goodwill (€ in millions)
Wholesale Retail Other
Businesses
Total
January 1, 2011 916 228 395 1.539
Additions 6 5 – 11
Currency translation
differences 18 1 11 30
December 31, 2011 940 234 406 1.580
13 Trademarks and other intangible assets
Trademarks and other intangible assets consist of the following:
Trademarks and other intangible assets
(€ in millions)
Dec. 31, 2011 Dec. 31, 2010
Reebok 1,198 1,159
Rockport 169 163
Reebok-CCM Hockey 101 98
TaylorMade-adidas Golf 27 27
Five Ten 8 –
Trademarks 1,503 1,447
Software, patents and concessions 669 600
Less: accumulated amortisation and
impairment losses 509 458
Other intangible assets 160 142
Trademarks and other intangible assets 1,663 1,589
At December 31, 2011, trademarks, mainly related to the acquisition
of Reebok International Ltd. (USA) in 2006 and Ashworth, Inc. in 2008,
have indefinite useful lives. This is due to the expectation of perma-
nent use of the acquired brand names.
The Group tests at least on an annual basis whether trademarks
with indefinite useful lives are impaired. This requires an estimation
of the fair value less costs to sell of the trademarks. As part of this
estimation, the Group is required to make an estimate of the expected
future trademark-specific sales and appropriate arm’s length notional
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 need for impairment for the years ending
December 31, 2011 and 2010.
Future changes in expected cash flows and discount rates may
lead to impairments of the accounted trademarks in the future.
Amortisation expenses for intangible assets with definite
useful lives were € 48 million and € 55 million for the years ending
December 31, 2011 and 2010, respectively SEE NOTE 30 . Impairment
losses amounted to € 0 million and € 11 million for the years ending
December 31, 2011 and 2010, respectively SEE NOTE 30 . These are
related to distribution and licensing rights, for which no future
economic benefit exists.
For details see Attachment I to the consolidated financial state-
ments SEE STATEMENT OF MOVEMENTS OF INTANGIBLE AND TANGIBLE ASSETS, P. 216 .