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SHAREHOLDERS’ EQUITY € in millions |
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| 1) | Restated due to application of amendment to IAS 19. |
| 2) | Including Reebok business segment from February 1, 2006 onwards. |
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CHANGE IN CASH AND CASH EQUIVALENTS € in millions |
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| 1) | Includes a negative exchange rate effect of € 1 million. |
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2007 CAPITAL EXPENDITURE BY SEGMENT |
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EQUITY BASE FURTHER STRENGTHENED
The Group’s equity
base was further strengthened compared to the prior year.
Shareholders’ equity rose 7 % to € 3.023 billion at the end of
2007 versus € 2.828 billion in 2006. The net income generated
during the period more than offset negative currency translation
effects.
EXPENSES RELATED TO OFF-BALANCE SHEET ITEMS
Our
most important off-balance sheet assets are operating leases,
which are related to retail stores, offices, warehouses and
equipment. The Group has entered into various operating
leases as opposed to property acquisitions to reduce exposure
to property value fluctuations. Rent expenses increased 21 %
to € 337 million in 2007 from € 278 million in the prior year,
mainly due to the continued expansion of adidas own-retail
activities.
CASH FLOW DEVELOPMENT REFLECTS OPERATIONAL
STRENGTH
In 2007, cash inflow from operating activities was
€ 780 million. It was primarily used to finance working capital
needs in accordance with the seasonality of our business.
Cash outflow for investing activities was € 285 million and was
mainly related to spending for property, plant and equipment
such as investment in the furnishing and fitting of adidas
and Reebok own-retail stores. In addition, investments also
related
to the Reebok integration. Major integration projects
included the construction of the shared adidas and Reebok
warehousing
and distribution center in the UK. Cash outflow
for financing activities totaled € 510 million and was related
to the payment of dividends as well as the reduction of long-term
borrowings. Operating activities provided less cash than
used in investing and financing activities. As a result of this
development
and a negative exchange rate effect of € 1 million,
cash and cash equivalents decreased by € 16 million to
€ 295 million at the end of 2007 (2006: € 311 million).
CAPITAL EXPENDITURES FOCUS ON OWN-RETAIL ACTIVITIES
Capital expenditure is the total cash expenditure for the purchase
of tangible and intangible assets and the construction
of tangible
assets. Group capital expenditures increased 4 % to
€ 289 million in 2007 (2006: € 277 million). The adidas segment
accounted for 52 % of Group capital expenditures (2006: 49 %). Expenditures in the Reebok segment accounted for
20 % of total expenditures (2006: 26 %). The majority of adidas
and Reebok expenditures focused on the expansion of own-retail
activities. TaylorMade-adidas Golf capital expenditures
accounted for 4 % of total expenditures (2006: 5 %). The
remaining
24 % of total capital expenditures was recorded
in the HQ / Consolidation segment (2006: 20 %) and was mainly
related to integration initiatives such as the construction of
the shared warehouse facility in the UK and the Group-wide
harmonization of IT systems.
