Reebok 2007 Annual Report Download - page 188

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ANNUAL REPORT 2007 --- adidas Group CONSOLIDATED FINANCIAL STATEMENTS - Notes to the Consolidated Income Statement
N
OTES TO THE CONSOLIDATED INCOME STATEMENT
 24 OTHER OPERATING INCOME AND EXPENSES Operating expenses include expenses for
sales, marketing and research and development, as well as for logistics and central fi nance and
administration. In addition, they include depreciation on tangible assets and amortization on
intangible assets, with the exception of goodwill amortization and other depreciation and amorti-
zation which is included in the cost of sales.
Marketing working budget is the largest component of operating expenses. The marketing
working budget consists of promotion and communication spending such as promotion con-
tracts, advertising, retail support, events and other communication activities. However, it does
not include marketing overhead expenses. In 2007, marketing working budget accounted for
approximately 34 % (2006: 35 %) of the total operating expenses.
Total depreciation and amortization expense for tangible and intangible assets (excluding
goodwill) was € 211 million and € 209 million for the years ending December 31, 2007 and 2006,
respectively. Thereof, € 7 million and € 16 million were recorded within the cost of sales as they
are directly attributable to the production costs of goods sold.
Total other operating income was € 80 million and € 55 million for the years ending Decem-
ber 31, 2007 and 2006, respectively. The other operating income consists of payments in
accounts receivable previously written off in the amount of € 1 million (2006: € 3 million), releas-
es of accruals and provisions for an amount of € 20 million (2006: € 16 million), other revenues
for an amount of € 38 million (2006: € 35 million) and gains from disposals of fi xed assets for
an amount of € 21 million (2006: € 1 million).
OPERATING INCOME AND EXPENSES
€
in milli
o
n
s
Year ending Dec. 31
2
007 2006
Marketing working budget
Marketing overhead 1)
Sales force 1)
Logistics 1)
Research and development 1)
Central fi nance and administration expenses
To
t
al
Thereof:
Depreciation and amortization
Other operating expenses
Other operating income
1)
Includin
g
personnel and administration expenses.
1
,
378 1,301
322 291
1,0
37
904
5
29 491
8
4 98
6
85
619
4
,
03
5
3
,
70
4
4
20
4 193
3
,
911 3,566
80
55
 25 COST BY NATURE Expenses are presented by function in the income statement. Supple-
mentary information on the expenses by nature is detailed below.
COST OF MATERIALS The total cost of materials was € 5.153 billion and € 5.470 billion for the
years ending December 31, 2007 and 2006, respectively.
PERSONNEL EXPENSES Personnel expenses were as follows:
PERSONNEL EXPENSES
€
in milli
o
n
s
Year ending Dec. 31
200
7
2006
Wages and salaries
Social security contributions
Pension expense
P
ersonne
l
expenses
1
,
133 942
92
92
5
4 53
1,279 1,087
7
Personnel expenses which are directly attributable to the production costs of goods are included
within the cost of sales.
 26 FINANCIAL INCOME / FINANCIAL EXPENSES Financial result consists of the following:
FINANCIAL INCOME
€
in milli
o
n
s
Year ending Dec. 31
200
7
2006
Interest income from fi nancial instruments measured at amortized cost
Interest income from fi nancial instruments at fair value through profi t or loss
Interest income from non-fi nancial assets
Net foreign exchange gains
Fair value gains from available-for-sale investments
Other
Financial income
2
3 34
4 3
—
—
7
2
—
—
2
—
36 39