Reebok 2012 Annual Report Download - page 236

adidas Group
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2012 Annual Report
Consolidated Financial Statements
214
2012
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04.8
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Notes
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Notes to the Consolidated Statement of Financial Position
13 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, the Netherlands, Denmark
and Italy.
Goodwill (€ in millions)
Dec. 31, 2012 Dec. 31, 2011 1)
Goodwill, gross 1,568 1,580
Less: accumulated impairment losses (287) (27)
Goodwill, net 1,281 1,553
1) Restated according to IAS 8, see Note 03.
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 negative € 12 million and € 30 million was recorded
for the years ending December 31, 2012 and 2011, 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.
Goodwill impairment losses for 2012 amounted to € 265 million
(2011: € 0 million). The goodwill impairment amount related to
2012 comprises an impairment loss within the Wholesale segment
(€ 173 million) and an impairment loss within the Other Businesses
segment (€ 92 million)
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SEE ALSO NOTE 02.
Future changes in expected cash flows and discount rates may lead
to impairments of the reported goodwill in the future. For details see
Attachment I to the consolidated financial statements
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SEE STATEMENT
OF MOVEMENTS OF INTANGIBLE AND TANGIBLE ASSETS, P. 238.
The reconciliation of goodwill is as follows:
Reconciliation of goodwill, net (€ in millions)
Wholesale Retail Other
Businesses
Total
January 1, 2012 1) 913 234 406 1,553
Additions – – 5 5
Currency translation
differences (6) (3) (3) (12)
Impairment losses (173) – (92) (265)
December 31, 2012 734 231 316 1,281
1) Restated according to IAS 8, see Note 03.
14 Trademarks and other intangible assets
Trademarks and other intangible assets consist of the following:
Trademarks and other intangible assets (€ in millions)
Dec. 31, 2012 Dec. 31, 2011
Reebok 1,174 1,198
Rockport 166 169
Reebok-CCM Hockey 99 101
Other 45 35
Trademarks 1,484 1,503
Software, patents and concessions 702 669
Less: accumulated amortisation and
impairment losses 535 509
Other intangible assets 167 160
Trademarks and other intangible assets 1,651 1,663
At December 31, 2012, 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 permanent use of
the acquired brand names.
The reported other trademarks mainly relate to the brand names
Ashworth, Adams Golf and Five Ten. The increase of € 10 million
compared to 2011 is a result of the acquisition of Adams Golf, effective
June 1, 2012
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SEE NOTE 04.
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,
2012 and 2011.
Future changes in expected cash flows and discount rates may lead
to impairments of the accounted trademarks in the future.
As part of the goodwill impairment test, the Reebok trademark is
allocated on a pro-rata basis to the cash-generating units (or groups
of units). Thereof, the major shares relate to Retail CIS (€ 263 million),
Retail North America (€ 204 million), Wholesale North America
(€ 171 million), Wholesale Latin America (€ 80 million) and Wholesale
Japan (€ 74 million).
Amortisation expenses for intangible assets with definite useful lives
were € 49 million and € 48 million for the years ending December 31,
2012 and 2011, respectively
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SEE NOTE 31.
For details see Attachment I to the consolidated financial statements
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SEE STATEMENT OF MOVEMENTS OF INTANGIBLE AND TANGIBLE ASSETS, P. 238.