Adidas 2003 Annual Report Download - page 138

9 /// OTHER CURRENT ASSETS
Other current assets consist of the following:
OTHER CURRENT ASSETS € in thousands
Dec. 31 Dec. 31
2003 2002
Prepaid expenses 97,977 80,791
Taxes receivable 55,887 76,374
Interest rate options 4,657 4,487
Currency options 4,602 6,847
Forward contracts 25,529 25,035
Security deposits 10,364 10,250
Receivables from affiliated companies 103 326
Investment property held-for-sale 26,275 21,652
Sundry 39,025 47,842
Other current assets, gross 264,419 273,604
Less: allowance 4,992 6,169
Other current assets, net 259,427 267,435
Prepaid expenses relate mainly to promotion agreements and service contracts.
Investment property held-for-sale relates to parts of land of the former “Herzo Base” in
Herzogenaurach. This land, owned by the GEV Grundstücksgesellschaft Herzogenaurach mbH
& Co. KG, was bought (through acquisition of 90% of the shares) in 1998.
A portion is being used for the development of adidas-Salomon’s international headquarters
“World of Sports”, and is included under property, plant and equipment. The remaining part, not
needed in the future by adidas-Salomon, has a size of 77 hectares and is to be sold. According to the
“Urban Design Contract”, signed with the town Herzogenaurach in December 2001, the land is to
be split into a housing area (31 hectares), an industrial area (19 hectares), a public area (24 hectares)
and other areas (3 hectares). Furthermore, GEV has to undertake specified opening and develop-
ment measures as well as to transfer a small portion of land to the town Herzogenaurach at
predetermined conditions.
The fair value of this investment property cannot be determined reliably at the current time,
as the land is not yet fully developed and building permits exist only partially. However, the Group
estimates that the fair value for the land could be a mid-double-digit million euro amount.
To secure an appropriate market value, the Group continued in 2003 to pursue development
and commercialization under the control of GEV as decided in 2002. In 2003, GEV sold the first
pieces of land. The development and sale of the complete area is expected to occur within the next
12 to 15 years.
Investment property held-for-sale includes the acquisition costs of land as well as capitalized
expenses, which occurred in connection with the development of the land to be sold. Last year’s,
these expenses were reported under sundry. To conform with this year’s presentation the comparative
figures totaling approximately € 4 million have been reclassified.
Information regarding forward contracts as well as currency and interest options is also
included in these notes (see note 23).
10 /// PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
PROPERTY, PLANT AND EQUIPMENT € in thousands
Dec. 31 Dec. 31
2003 2002
Land and buildings 271,244 290,239
Technical equipment and machinery 143,731 129,499
Other equipment, furniture and fittings 305,493 300,666
720,468 720,404
Less: accumulated depreciation 387,972 369,836
332,496 350,568
Advance payments and construction in progress, net 12,058 15,188
Property, plant and equipment, net 344,554 365,756
Depreciation expense was € 83 million and € 84 million for the years ending December 31,
2003 and 2002 respectively.
11 /// GOODWILL
Goodwill primarily relates to the Group’s acquisitions of the Salomon group and subsidiaries in the
United States, Australia/New Zealand, Netherlands/Belgium and Italy.
GOODWILL € in thousands
Dec. 31 Dec. 31
2003 2002
Goodwill, gross 861,142 868,005
Thereof relating to the acquisition of the Salomon group 584,882 584,882
Less: accumulated amortization 270,097 229,263
Goodwill, net 591,045 638,742
134 FINANCIAL ANALYSIS CONSOLIDATED FINANCIAL STATEMENTS (IFRS) /// NOTES TO THE CONSOLIDATED BALANCE SHEET