Adidas 2005 Annual Report Download - page 149

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Consolidated Financial Statements (IFRS)
Authorized Capital
The Executive Board of adidas-Salomon AG has made use of its authorization granted pursuant
to § 4 section 2 of the Company’s Articles of Association, to increase the nominal capital of the
Company, subject to Supervisory Board approval, by up to € 11,600,000 through the issuance
of 4,531,250 no-par-value bearer shares, and, on November 4, 2005, decided to increase the
nominal capital by € 11,600,000 and to issue 4,531,250 no-par-value bearer shares. With Su-
pervisory Board approval, shareholders’ subscription rights were excluded. The corresponding
amendment of the Articles of Association (cancellation of § 4 section 2, and the corresponding
renumbering of the following sections) was entered into the Commercial Register on Novem-
ber 4, 2005. As at December 31, 2005, the authorized capital of the Company is set out in § 4
section 2 (formerly section 3) and 3 (formerly section 4) of the Articles of Association, pursu-
ant to which the Executive Board shall be entitled, subject to Supervisory Board approval, to
increase the nominal capital
until June 19, 2010
…
…
… by issuing new shares against contributions in cash once or several times by no more than
a maximum of € 41,000,000 and, subject to Supervisory Board approval, to exclude fractional
shares from shareholders’ subscription rights (Authorized Capital I);
and until June 19, 2008
…
…
… by issuing new shares against contributions in cash or in kind once or several times by no
more than a maximum of € 4,000,000 and, subject to Supervisory Board approval, to exclude
shareholders’ subscription rights (Authorized Capital III).
Contingent Capital
As set out in § 4 section 4 (formerly section 5) of the Company’s Articles of Association, in
the version dated February 7, 2006, the nominal capital was conditionally increased by up to
€ 1,102,291.20 through the issuance of not more than 430,582 no-par-value bearer shares
(Contingent Capital 1999) for the purpose of granting stock options in connection with the
Management Share Option Plan to members of the Executive Board of adidas-Salomon AG as
well as to managing directors/senior vice presidents of its affi liated companies and to other
executives of adidas-Salomon AG and of its affi liated companies.
As a result of the exercise of 371,505 stock options and the issuance of 371,505 no-par-value
bearer shares during 2005 associated with three exercise periods each of Tranche I (1999),
Tranche II (2000), Tranche III (2001) and Tranche IV (2002) and with one exercise period of
Tranche V (2003) of the Management Share Option Plan, the nominal amount of Contingent
Capital 1999 at the balance sheet date amounted to € 1,243,859.20, divided into 485,882 no-
par-value shares.
In January 2006, the nominal amount of Contingent Capital 1999 was reduced to € 1,102,291.20,
divided into 430,582 no-par-value bearer shares, as a result of the exercise of 55,300 stock op-
tions and the issuance of 55,300 no-par-value bearer shares associated with the thirteenth
exercise period of Tranche I (1999), the eleventh exercise period of Tranche II (2000), the eighth
exercise period of Tranche III (2001), the fi fth exercise period of Tranche IV (2002) as well as the
second exercise period of Tranche V (2003) of the Management Share Option Plan. On February
18, 2006, the nominal amount of Contingent Capital 1999 amounted to € 1,102,291.20, divided
into 430,582 no-par-value bearer shares.
The entry of the respective change to the Articles of Association with the Commercial Register
was made in January 2006.
In accordance with § 4 section 5 (formerly section 6) of the Company’s Articles of Association,
the nominal capital is conditionally increased by up to a further € 23,040,000, divided into not
more than 9,000,000 no-par-value bearer shares (Contingent Capital 2003). The contingent
capital increase will be implemented only to the extent that the holders of the subscription or
conversion rights or the persons obligated to exercise the subscription or conversion duties
based on the bonds with warrants or convertible bonds, which are issued or guaranteed by
the Company or a wholly-owned direct or indirect subsidiary of the Company pursuant to the
authorization of the Executive Board on the basis of the shareholder resolution dated May 8,
2003, make use of their subscription or conversion right or, if they are obligated to exercise
the subscription or conversion rights, they meet their obligations to exercise the warrant or
convert the bond. The Executive Board is authorized, subject to Supervisory Board approval, to
fully suspend the shareholders’ rights to subscribe the bonds with warrants and/or convert-
ible bonds, if the Executive Board has concluded following an examination in accordance with
its legal duties that the issue price of the bonds with warrants and/or convertible bonds is not
signifi cantly below the hypothetical market value computed using recognized fi nancial calcu-
lation methods. This authorization to suspend the subscription rights applies, however, only
with respect to the bonds with warrants and/or convertible bonds with subscription or conver-
sion rights to the shares having a pro rata amount of the registered share capital totaling a
maximum of € 11,600,000.
The nominal value of Contingent Capital 2003 as at the balance sheet date amounted to
€ 23,040,000, as a conversion of the bonds had not yet been implemented by that date. On Feb-
ruary 17, 2006, the nominal value of Contingent Capital 2003 still amounted to € 23,040,000,
as the bondholders entitled to convert have not made use of their right to conversion of their
bonds into shares.
In principle, the conversion right may be exercised during the period commencing on January
1, 2005 and ending on September 20, 2018, subject to the expiration of the conversion right ac-
cording to § 6 section 3 or subject to the excluded period specifi ed in § 6 section 4 of the Terms
and Conditions of the Convertible Bond.
Notes to the Consolidated Balance Sheet