Adidas 1996 Annual Report Download - page 37

Cash Flow and Investments
53
142
112
199619951994
201
131
114
46
1993
69
37
Purchase of Major Investments
included in 1996:
v51% outstanding majority share-
holding in Australian and New
Zealand subsidiaries from Pacific
Dunlop effective as of July 1, 1996
v 51% shareholding in Jewoo Trad -
ing Co. Ltd., the distributor
of
adidas sporting goods in South
Korea, from Dutch company
Hagemeyer N.V. effective as of
October 1, 1996
The increase in Intangibles and
Other Assets from DM 132 million
in 1995 to DM 225 million in 1996
primarily reflects goodwill of DM 83
million in relation to the above
purchases.
The Net Borrowings to Share-
holders’ Equity Ratio decreased
from 71% in 1995 to 38% in 1996
due to:
va decline in net borrowings from
DM 407 million at the end of
1995 to DM 340 million at the
end of 1996 resulting from (1) an
increase in net cash provided by
operations from DM 131 million
in 1995 to DM 201 million in
1996, which was more than suf-
ficient to finance the purchase of
shareholdings in subsidiaries/
joint ventures and capital expen-
ditures for property and equip-
ment and (2) the net cash posi-
tion assumed from Jewoo Trad-
ing Co. Ltd., and
van enlarged equity base from
continued net income growth in
1996.
The cash assumed from Jewoo
Trading Co. Ltd. is invested with
maturities ranging from less than
three months up to more than twelve
months and is reflected under asset
categories according to the maturity
structure.
Debt Financing at the end of fiscal
year 1996 was primarily in the
short-term range. Short-term bor-
rowings consist of bank borrowings
and discounted trade bills, typically
with maturities of less than 3 months.
As of December 31, 1996, major
borrowings were in DEM (31.0%),
GBP (18.3%) and FRF (10.1%).
Long-term bank borrowings were
reduced from DM 19 million to
DM 5 million, which is in line with
the repayment schedule.
Month-end weighted average inter-
est rates on borrowings ranged from
4.8% to 6.2% and from 6.5% to
7.3% for the years ended Decem
ber
31, 1996, and 1995, respectively.
adidas has cash credit lines of
approximately DM 2.1 billion (of
which, on December 31, 1996,
we had allocated DM 128 million to
be available for the issuance of
letters of credit) and separate lines
for the issuance of letters of credit
of approximately DM 730 million,
which
are used primarily to support
our
sourcing activities in Asia. As of
December 31,
1996 unused cash
credit lines amounted to approxi-
mately DM 1.5 billion.
In order to protect our future financ-
ing capabilities and the applicable
interest rates, during 1996, we con-
verted uncommitted short-term lines
of approximately DM 250 million into
committed medium-term credit lines
and also arranged interest caps for
a total amount of DM 100 million.
Both the credit facility and the caps
run until the year 2000 with the caps
providing protection against an in-
crease of the average borrowing rate
above 6.25%, up to a maximum of
9.75%, calculated against a basket
of currencies reflecting our typical
borrowings.
mNet Cash
Used in
Investing
Activities
(DM million)
mNet Cash
Provided by
Operating
Activities
(DM million)