Adidas reveals financial breakdown of Five Ten acquisition, reports 40 percent outdoor segment growth for 2011

Adidas Group reported its outdoor sales up 40 percent in 2011, including an interesting valuation look at its Five Ten acquisition last November.
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Adidas Group reported its outdoor sales up 40 percent in 2011 to a SNEWS estimated EUR $280 million ($372 million), as part of an 11 percent increase in total company sales of EUR 13.4 billion ($17.6 billion) for the year.

The German athletic footwear, apparel and equipment giant released its annual report Wednesday, with officials saying they are committed to expanding Adidas’ presence in the outdoor industry.

Part of that growth included the Nov. 2011 acquisition of climbing and outdoor footwear brand Five Ten, of which officials revealed a more detailed financial breakdown.

According to the report, Adidas officials valued Five Ten’s total assets and liabilities at EUR 16 million (roughly $21 million in today’s dollars) at the time of the acquisition. That includes valuing Five Ten’s inventories at EUR 4 million, trademarks at EUR 8 million and other intangible assets — namely the company’s technologies such as its Stealth Rubber — at EUR 14 million, along with a balance of remaining assets and liabilities.

The report discloses that Adidas officials agreed to pay nearly a 70 percent premium on that net asset valuation for a total of EUR 27 million in cash and contingent payments. Coverting that to dollars, officials said it included $25 million in cash (which was reported at the time of the acquisition) plus another previously undisclosed $13 million in contingent payments if certain performance metrics are met during the next three years.

For a more detailed look at Adidas' financial valuation of Five Ten, click here to access the annual report and proceed to page 188.

Despite the good financial detail of the Five Ten acquisition, Adidas officials did not reveal a monetary figure on its total outdoor group revenue — only saying it grew sales by 40 percent during the year. Taking that into account along with Adidas officials previously stating the company's 2010 outdoor group revenue at about EUR 200 million, SNEWS estimates Adidas Outdoor pulled in about EUR 280 million ($372 million) in 2011. Adidas expects its outdoor group to reach EUR 500 million in sales by 2015.

For further background on the Adidas/Five Ten deal, click here to read a SNEWS interview with Adidas Senior Vice President Rolf Reinschmidt and Five Ten Founder and CEO Charles Cole following the acquisition last November.

--David Clucas



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