Reebok 2014 Annual Report Download - page 211

adidas Group
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2014 Annual Report
Consolidated Financial Statements
207
2014
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04.8
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Notes
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Notes to the Consolidated Statement of Financial Position
Effective November 24, 2014, Reebok International Limited completed the acquisition of Luta Ltd. (‘Luta’). Based
in London (UK), Luta designs and sells boxing and workout clothing. With this acquisition, the adidas Group has
entered into a long-term partnership with ‘Fight for Peace’, a non-profit organisation which combines boxing and
martial arts with education and personal development. In addition, this partnership facilitated the completion of
a licence agreement with the mixed martial arts organisation ‘Ultimate Fighting Championship’ (UFC). The entire
business of Luta was acquired for a purchase price of GBP 5 million in cash.
The acquisition had the following effect on the Group’s assets and liabilities, based on a preliminary purchase
price allocation:
Net assets of Luta Ltd. 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 0 – 0
Inventories 0 – 0
Other current assets 0 – 0
Property, plant and equipment 0 – 0
Trademarks and similar rights – 7 7
Accounts payable (0) – (0)
Deferred tax liabilities – (1) (1)
Net assets 1 6 6
Goodwill arising on acquisition –
Purchase price settled in cash 6
Less: cash and cash equivalents acquired (0)
Cash outflow on acquisition 6
The following valuation method for the acquired assets was applied:
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Trademarks and similar rights: The ‘relief-from-royalty method’ was applied. The fair value was determined
by discounting notional royalty savings after tax and adding a tax amortisation benefit, resulting from the
amortisation of the acquired asset.
The acquired subsidiary generated net sales of € 0 million as well as net losses of € 0.2 million in December
2014. If this acquisition had occurred on January 1, 2014, total Group net sales would have been € 14.5 billion and
net income attributable to shareholders would have been € 489 million for the year ending December 31, 2014.
Notes to the Consolidated Statement of Financial Position
Cash and cash equivalents consist of cash at banks, cash on hand, short-term bank deposits and investments in
money market funds. Short-term financial assets are only shown as cash and cash equivalents if they are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Short-term financial assets are classified ‘at fair value through profit or loss’. Changes in the fair value are
recognised in the income statement as they occur.
The majority of short-term financial assets are time deposits.
04
Acquisition
05
Cash and
cash equivalents
06
Short-term financial
assets