Reebok 2006 Annual Report Download - page 177

Notes ›173
Notes to the Consolidated Income Statement
25 » Other Operating Income and Expenses
Operating expenses include expenses for sales, marketing and research and development, as
well as for logistics and central finance and administration. In addition, they include deprecia-
tion on tangible and amortization on intangible assets, with the exception of goodwill amortiza-
tion and other depreciation and amortization which is included in the cost of sales.
A significant portion of the operating expenses comprises the marketing working budget.
The marketing working budget consists of promotion and communication spending such as
promotion contracts, advertising, retail support, events and other communication activities,
however it does not include marketing overhead expenses. In 2006, marketing working budget
of continuing operations accounted for approximately 35% (2005: 37%) of the total operating
expenses.
Total depreciation and amortization expense for tangible and intangible assets (excluding
goodwill) for continuing operations was € 209 million and € 113 million for the years ending
December 31, 2006 and 2005, respectively. Thereof, € 16 million and € 2 million were recorded
within the cost of sales as they are directly attributable to the production costs of goods sold.
Total other operating income for continuing operations was € 55 million and € 36 million
for the years ending December 31, 2006 and 2005, respectively. The other operating income
consists of payments in accounts receivable previously written off in the amount of € 3 million
(2005: € 2 million), releases of accruals and provisions for an amount of € 16 million (2005:
€ 8 million), other revenues for an amount of € 35 million (2005: € 24 million) and gains from
disposals of fixed assets for an amount of € 1 million (2005: € 2 million).
26 » Cost by Nature
Expenses are presented by function in the income statement. Supplementary information on
the expenses by nature is detailed below.
Cost of Materials
The total cost of materials for continuing operations was € 5.470 billion and € 3.325 billion for
the years ending December 31, 2006 and 2005, respectively.
Personnel Expenses
Personnel expenses were as follows:
Personnel expenses which are directly attributable to the production costs of goods are in-
cluded within the cost of sales.
› Notes to the Consolidated Balance Sheet
› Notes to the Consolidated Income Statement
Operating Income and Expenses (Continuing Operations) € in millions
Year ending Dec. 31
2006 2005
Marketing working budget 1,301 942
Marketing overhead 1) 291 207
Sales force 1) 904 534
Logistics 1) 491 347
Research & development 1) 98 63
Central finance & administration expenses 619 439
Other 0 5
Total 3,704 2,537
Thereof:
Depreciation and amortization 193 112
Other operating expenses 3,566 2,461
Other operating income 55 36
1) Including personnel and administration expenses.
Personnel Expenses (Continuing Operations) € in millions
Year ending Dec. 31
2006 2005
Wages and salaries 942 621
Social security contributions 92 57
Pension expense 53 28
Personnel expenses 1,087 706