11 Goodwill

Goodwill primarily relates to the Group’s acquisitions of the Reebok business as well as the previous acquisition of subsidiaries in the United States, Australia / New Zealand, Netherlands / Belgium and Italy.

GOODWILL

€ in millions

	Dec. 31 2007	Dec. 31 2006

Goodwill, gross	1,436	1,516
Less: impairment	—	—
Goodwill, net	1,436	1,516

The majority of goodwill which primarily relates to the acquisition of the Reebok business in 2006 is denominated in US dollars. A negative currency translation effect of € 80 million and € 88 million was recorded for the years ending December 31, 2007 and 2006, respectively.

From January 1, 2005, goodwill is tested annually for impairment. There was no impairment expense for the years ending December 31, 2007 and 2006. The Group determines whether goodwill impairment is necessary at least on an annual basis. This requires an estimation of the fair value less costs to sell of the cash-generating units to which the goodwill is allocated. Estimating the fair value less costs to sell requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

Future changes in expected cash flows and discount rates may lead to impairments of the accounted goodwill in the future. For details
see Statement of Movements of Tangible and Intangible Assets and Financial Assets (Attachment I to these Notes)