Reebok 2011 Annual Report Download - page 233

adidas Group
2011 Annual Report
ADDITIONAL INFORMATION
229
2011
D
D&O liability insurance
Directors and Officers (D&O) liability insurance
protects directors and officers from liability and liti-
gation related to action taken against them, claim-
ing wrongdoing in connection with the company’s
business.
Days of Sales Outstanding (DSO)
Average time of receipt of outstanding payments
from customers.
Diluted Earnings Per Share
(Diluted EPS)
Performance indicator used to gauge a company’s
earnings per share, assuming that all stock options
and conversion rights related to a convertible bond
are exercised, which would result in an increase of
the number of shares outstanding.
Diluted EPS = (net income attributable to share-
holders + interest expense on convertible bonds net
of tax) / (weighted average number of shares out-
standing during the year + weighted share options
+ shares from assumed conversion of convertible
bonds).
E
EBITDA
Earnings before interest, taxes, depreciation, amor-
tisation and impairment losses as well as reversals
of impairment losses for tangible and intangible
assets.
Economic value added (EVA)
Economic value added is a measure of a company’s
financial performance based on the residual wealth
calculated by deducting cost of capital from its
operating profit (after tax). EVA can thus also be
described as the surplus profit over the WACC de-
manded by the capital market, indicating whether
the shareholders have earned a return that com-
pensates the risk.
EVA = operating profit after tax – cost of capital.
Emerging markets
Developing countries showing potential for growth
in both economic strength and private wealth in the
future. For the adidas Group, emerging markets are
the developing countries of Asia, Eastern Europe,
Latin America and Africa.
Enterprise Resource Planning (ERP)
A business management system that integrates all
facets of the business, e.g. planning, manufactur-
ing, sales and marketing.
Equity derivatives
Class of derivatives whose value is at least partly
derived from one or more underlying equity securi-
ties. Options and forward contracts are by far the
most common equity derivatives, however there
are many other types of equity derivatives that are
actively traded.
Equity ratio
Shows the role of shareholders’ equity within the
overall financing structure of a company.
Equity ratio = (shareholders’ equity / total assets)
× 100.
E-tailer
Retailer that primarily uses the internet as a medi-
um for consumers to shop for the goods or services
provided. E-tailers optimise the internet potential
to attract, convert and retain consumers.
F
Fair Factories Clearinghouse (FFC)
The Fair Factories Clearinghouse was established
in 2004 with the purpose of improving social, en-
vironmental and security standards and helping
to create humane working conditions for workers
making consumer goods globally. Membership
includes many sporting and consumer goods com-
panies as well as a wide range of consumer goods
suppliers :
WWW.FAIRFACTORIES.ORG .
Fair Labor Association (FLA)
The Fair Labor Association , a non-profit labour
rights organisation, is a multi-stakeholder initiative
bringing together companies, colleges and univer-
sities, and civil society organisations to improve
working conditions worldwide by promoting adher-
ence to international and national labour laws
: WWW.FAIRLABOR.ORG .
Fair value
Amount at which assets are generally traded be-
tween business parties. Fair value is often identical
to market price.
Finance lease
Method of acquiring an asset that involves a lease
with a special leasing company for a specific, non-
terminable initial leasing term. The investment risk
is borne by the lessee.
Financial leverage
Ratio reflecting the role of borrowings within the
financing structure of a company.
Financial leverage = (net borrowings / sharehold-
ers’ equity) × 100.
FlexPLM
FlexPLM is an adidas Group Product Lifecycle Man-
agement System for apparel, accessories and gear;
it is a key enabler for the Fast and Lean Creation
programme.
Forward contract
Agreement to exchange amounts of one currency
for another currency at an agreed fixed rate at a
future date.
Franchising
Form of business by which the owner (franchisor)
of a product, service or method obtains distribu-
tion through affiliated dealers (franchisees). The
franchisor offers assistance in organising, training,
merchandising, marketing and managing in return
for a monetary consideration.
Free cash flow
Cash that is generated by a company’s operating
activities after the deduction of capital expenditure
and other cash expenses such as taxes and interest
from the operating profit.
Free cash flow = operating profit +/– change in op-
erating working capital +/– net investments (capital
expenditure less depreciation and amortisation) +/–
financial result and income taxes.
05.2 Glossary