426 / 488
414
Wiley 1FRS: Practical Implementation Guide and Workbook
Based on the expected cos t of sales and operating expenses synergy potential, the goodwill
arising on this acquisition was allocated to the cash-generating units ad idas and Reebok in an
amount of €699 million and €466 million , respec tively, and is converted in functional currencies as
appropriate. If this acquisition had occ urred on January I, 2006, total group net sales would have
been € 1O.2 billion and net income would have been €448 million for the year ending December 31,
2006.
Th e acquired Reebok subsidiaries con tributed €92 million to the group's operating profit for the
period from Febru ary to December 2006. The contribution to the net income cannot be disclosed
due to the advanced integration of the financing and tax activities. Effec tive September 1, 2006, the
adidas group assumed full ownership of its brand adidas subsi diary in Korea, ad idas Korea Ltd.,
Seou l (Korea), by purchasing the remaining 49% of shares for an amou nt of €30 million. The
additional net income for the group for the period from Sept ember to December 2006 was
€ I
million.
Effecti ve September
I ,
2006 , the adidas group sold its 92% of shares in P.T. Trigaris Sportindo
(adidas Indonesia) in connection with a restructuring of the Indonesian business.
12.
Goodwill
Goodwill primarily relates to the Grou p' s acquisitions of the Reebok business as well as of
subsidiaries in the United States, Australia/New Zealand, Nether landslBe lgium, and Italy.
Goodwill € in millions
Goodwill, gross
Less:
impairment
Goodwill,
net
Dec.
31
2006
1,516
1,5 16
Dec.
31.
2005
436
436
The increase in goodwill relates to the acquisition of the Reebok business. The main part of
this goodwill is denominated in US dollars. The currency translation effec t was negative €88
million.
From January I, 2005, goodwill is tested annu ally for impairment. There was no impairment
expense for the years ending December 31, 2006, and 2005. The Group determines whether
goodwill impairment is necessary at least on an annual basis. Thi s requires an estimation of the fair
value less cos ts to sell of the cash-genera ting units to which the goodwill is allocated. Estimating
the fair value less costs to sell requires the Group to make an esti mate of the expected future cash
flows from the cash-generating unit and also to choose a suitable disco unt rate in order to calc ulate
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 Move ments of Tangible and Intangible Asse ts and Financial Asse ts
[Attac hment I to these Notes).
12.3 NOKIA, December 31, 2006
Notes to the Consolidated Financial Statements
9. Acquisitions
On Febru ary 10, 2006, the Group completed its acqui sition of all of the outstanding common
stock of Intelli sync Corporati on. Intellisync is a leader in synchronization technology for platform–
independent wirel ess messaging and other busine ss appli cation s for mobile devices . The acquisition
of Intellisync will enhance Nokia's ability to respond to its customers and effec tively puts Nokia at
the core of any mobility solution for busine sses of all sizes. Intellisync reported revenues of USD
59 million (EUR 47 million) and net loss of USD 13 million (EUR 11 milli on) for the year ended
July 31, 2005. Intellisync' s contribution to revenue and net profit is not mate rial to the Group.
The total cost of the acquisition was EUR 325 million consisting of EUR 319 million of cash
and EUR 6 million of cos ts directly attributable to the acqui sition.
The following table summarises the estimated fair values of the asse ts acquired and liabilit ies
assumed at the date of acquisition. The fair value of intangible assets has been determined with the
assistance of an independent third party valuation specia list. The carryi ng amo unt of Intelli sync net
assets immediately before the acquisition amounted to EUR
SO
million.