Reebok 2013 Annual Report Download - page 231

adidas Group
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2013 Annual Report
Consolidated Financial Statements
227
2013
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04.8
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Notes
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Notes to the Consolidated Income Statement
A total net fair value of negative € 36 million (2012: negative € 10 million) for forward contracts related to hedging
instruments falling under hedge accounting as per definition of IAS 39 “Financial Instruments: Recognition and
Measurement” was recorded in the hedging reserve. The remaining net fair value of € 4 million (2012: € 9 million),
mainly related to liquidity swaps for cash management purposes and to forward contracts hedging intercompany
dividend receivables, was recorded in the income statement. The total fair value of negative € 2 million (2012:
positive € 2 million) for outstanding currency options related to cash flow hedges. This consists of a positive
time value of € 8 million (2012: € 2 million) and of a negative time value of € 12 million (2012: € 5 million) and, in
contrast to the preceding table, does not include the intrinsic value of the options.
The fair value adjustments of outstanding cash flow hedges for forecasted sales are reported in the income
statement when the forecasted sales transactions are recorded. The vast majority of these transactions are
forecasted to occur in 2014. At the balance sheet date, inventories were adjusted by positive € 20 million (2012:
positive € 16 million) which will be recognised in the income statement in 2014.
In the hedging reserve, a negative amount of € 6 million (2012: negative € 21 million) is included for hedging
the currency risk of net investments in foreign entities, mainly for the subsidiaries LLC “adidas, Ltd.” and adidas
Sports (China) Co. Ltd. This reserve will remain until the investment in the foreign entity has been sold. As at
December 31, 2013, no ineffective part of the hedges was recorded in the income statement.
In order to determine the fair values of its derivatives that are not publicly traded, the adidas Group uses
generally accepted quantitative financial models based on market conditions prevailing at the balance sheet date.
In 2013, the fair values of the derivatives were determined applying mainly the “par method”, which uses
actively traded forward rates.
Notes to the Consolidated Income Statement
Other operating income consists of the following:
Other operating income
(€ in millions) Year ending
Dec. 31, 2013
Year ending
Dec. 31, 2012
Income from accounts receivable previously written off 3 4
Income from release of accrued liabilities and other provisions 83 37
Gains from disposal of fixed assets 1 1
Sundry income 54 83
Reversals of impairment losses for intangible and tangible assets 2 2
Other operating income 143 127
Sundry income partly relates to income from insurance compensations.
Other operating expenses include expenses for sales, marketing, research and development, as well as for
logistics and central administration. In addition, they include impairment losses as well as depreciation on
tangible assets and amortisation on intangible assets (except goodwill impairment losses), with the exception of
depreciation and amortisation which is included in the cost of sales.
Marketing working budget is a material component of other operating expenses. The marketing working
budget consists of promotion and communication spending such as promotion contracts, advertising, events and
other communication activities. However, it does not include marketing overhead expenses, which are presented
in marketing overheads. In 2013, marketing working budget accounted for 24% (2012: 25%) of the total other
operating expenses.
Expenses for central administration include the functions IT, Finance, Legal, Human Resources, Facilities &
Services as well as General Management.
29
Other operating income
30
Other operating expenses