Adidas 2003 Annual Report Download - page 84

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80 REPORTING GROUP MANAGEMENT REPORT /// FINANCE AND INVESTMENT
NET BORROWINGS REDUCED BY € 552 MILLION /// Net
borrowings at December 31, 2003 were € 946 million, down
37% or € 552 million versus € 1.498 billion at the end of the
prior year. This is the largest reduction in the Group’s history.
As a consequence, the interest result improved 19% to nega-
tive € 59 million in 2003 from negative € 73 million in 2002.
Continued tight working capital management had a significant
positive impact on this decline. In addition, positive currency
effects contributed approximately 15% or € 75 million of the
net borrowings improvement. Another 21% or € 114 million
of the decrease in the total net borrowings was due to
accounting effects related to the convertible bond issue as
this amount was reported as equity (see note 15). However,
even excluding these positive effects, the Group’s net borrow-
ings reduction continued successfully with a decrease for the
third year in a row and significantly exceeded Management’s
targets that were announced at the beginning of 2003.
FAVORABLE INTEREST RATE DEVELOPMENT CONTINUES ///
The weighted average interest rate on the Group’s gross
borrowings fell to 2.7% in 2003 from 3.2% in 2002. The Group
continued the existing interest rate options as protection
against rising interest rates. Within this shelter, we were able
to participate in the interest rate reductions throughout the
year. As a result of the issuance of the € 400 million 2.5%
convertible bond and the issuance of fixed-rate private place-
ments, the share of fixed-rate financing rose sharply.
NET TOTAL BORROWINGS € in millions
1999 1,591
2000 1,791
2001 1,679
2002 1,498
2003 946
NET TOTAL BORROWINGS BY QUARTER1) € in millions
Q1 2003 1,624
Q1 2002 1,909
Q2 2003 1,583
Q2 2002 1,849
Q3 2003 1,423
Q3 2002 1,843
Q4 2003 946
Q4 2002 1,498
1)At end of period
INTEREST RATE DEVELOPMENT1) in %
1999 4.2
2000 5.1
2001 4.5
2002 3.2
2003 2.7
1)Weighted average interest rate of gross borrowings
CLICHÉ /// JEREMIE DACLIN SKATEBOARD