BMW 2002 Annual Report Download - page 46

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Sales and administrative costs increased by
5.5%, also less than the increase in revenues.They
represent 11.6% of revenues. In the previous year,
the ratio had been 12.1% as a
result of expenses for
the launch of the new BMW 7 Series and the MINI.
Research and development expenditure has
again increased sharply as a result of the continu-
ing product offensive. In total, these expenses in-
creased
by 20.9% compared to the previous year.
The research and development costs include depre-
ciation and disposals of euro 536 million (2001:
euro 443 million) on development costs recognised
as assets. Research and development costs as a
percentage of revenues was 4.8 % (2001: 4.3 %).
To t al research and development costs in the
finan-
cial year amounted to euro 2,333 million (2001:
euro 1,885 million).They comprise additions to
capitalised development costs plus research and
development expenses less depreciation and dis-
posals of capitalised development costs.
Net operating expenses increased by euro 378
million compared to the previous year.This was
mainly due to the sharp decrease in other operating
income.The previous years figure included a one-
off gain on the sale of land not required for operational
purposes (euro 75 million), reimbursed value added
tax (euro 62 million) and gains relating to marketable
securities (euro 55 million). In addition, expenses for
write-downs within other operating expenses in-
creased by euro 171 million in the year under report.
This increase was
mainly attributable to the higher
level of residual value risks relating to leasing activi-
ties.
Against this, impairment losses on intangible
assets fell by euro 69 million.
The financial result improved by 28.9% com-
pared to the previous year. As a result of the strength
of the euro against most of the main currencies,
losses on derivative financial instruments not desig-
nated as fair value or cash flow hedges, fell sharply.
The financial result includes write-downs on
marketable securities of euro 22 million (2001:
euro  million).
The profit from ordinary activities improved by
1.7% against the previous year. After adjustment for
the one-off gain of euro 75 million in
the previous
year on the sale of land not required for operational
purposes, the profit from ordinary activities improved
by 4.1%. The pre-tax return on sales was 7.8%
(2001: 8.4%). As a consequence of the lower in-
come tax expense (down 7.2%), the effective tax rate
for the year fell by 3.7 percentage points to 38.7%.
This is due to the fact that income tax expenses in
the previous year included write-downs on deferred
tax assets.
More than one million cars sold.
Sales volume, revenues and earnings again above
the previous year.
Highest-ever levels of expenditure for the future.
All segments achieved record results.
in euro million 4th quarter 4th quarter 2002 2001
2002 2001
Automobiles 9,356 8,969 38,179 33,542
Motorcycles 242 212 1,130 1,059
Financial Services 1,834 1,784 8,213 7,514
Reconciliations 1,488  979  5,240  3,652
BMW Group 9,944 9,986 42,282 38,463
Segment revenues