Reebok 2009 Annual Report Download - page 98

94 GROUP MANAGEMENT REPORT – OUR GROUP Research and Development
Active trademark and patent
protection policy
To capitalise on the Group’s R&D achieve-
ments, we seek patent protection for all
our footwear, apparel and hardware inno-
vations. It is an important business policy
for our Group to secure the best available
patent protection for our innovations in
major markets. As we use a wide range
of different technologies in our prod-
ucts, we are not dependent upon any
single technology, or any patent rights
related to any single technology. We also
own a substantial portfolio of registered
trademarks for the Group’s brands and
related proprietary names. As part of our
business policy, we enforce the Group’s
trademarks and patents by monitor-
ing the marketplace for infringements
and taking action to prevent them. This
includes a vigorous anti-counterfeiting
programme. We also have comprehen-
sive processes, and undertake significant
research, to avoid infringement of third-
party intellectual property rights see
Risk and Opportunity Report, p. 140.
R&D expenses increase 6%
In 2009, as in prior years, all R&D costs
were expensed as incurred. adidas
Group R&D expenses increased by 6%
to € 86 million (2008: € 81 million) as a
result of increases at brand adidas from
initiatives relating to the development
of intelligent products.
R&D expenses include expenses for per-
sonnel and administration, but exclude
other costs, for example those associated
with the design aspect of the product
creation process. Personnel expenses
represent the largest portion of R&D
expenses, accounting for more than 50%
of total R&D expenses in 2009. In 2009,
R&D expenses represented 2.0% of total
operating expenses versus 1.9% in the
prior year. R&D expenses as a percentage
of sales remained stable at 0.8% (2008:
0.8%) see Note 2, p. 171.
Highly skilled technical personnel
For all our brands, the success of our
R&D efforts depends on bringing
together a multi-faceted and highly
skilled workforce. At December 31,
2009, 999 people were employed in the
Group’s R&D activities compared to
1,152 employees in 2008 (–13%). This
represents 3% of total Group employ-
ees, unchanged compared to the prior
year (2008: 3%). The R&D departments
for each brand comprise experienced
teams from different areas of expertise.
Employees with a background in mechan-
ical and technical engineering as well as
biomechanics specialise primarily in the
development of performance footwear
with a special focus on reducing stress
on knees and other joints. Experts in
material engineering concentrate on the
development of apparel and footwear
with an emphasis on increasing durability
and flexibility as well as enhancing tem-
perature and moisture management.
Other professional backgrounds include
industrial and graphic design, Finite
Element Analysis, advanced CAD design
and kinesiology. In 2010, we expect the
number of R&D employees to remain
largely unchanged.
Successful commercialisation of
technological innovations
Developing industry-leading technologies
is only one aspect of being an innovation
leader. Even more important is the suc-
cessful commercialisation of those tech-
nological innovations. Also in 2009, the
majority of adidas Group sales were gen-
erated with products newly introduced in
the course of the year. New products tend
to have a higher gross margin compared
to products which are in the market for
more than one season. As a result, newly
launched products contributed over-
proportionately to the Group’s net income
in 2009. We expect this development to
continue in 2010 as our launch schedule
highlights a full pipeline of innovative
products see Subsequent Events and Out-
look, p. 156.
N °-
02
N °-
03
N °-
04
R&D EXPENSES
€ IN MILLIONS
R&D EXPENSES
IN % OF NET SALES
R&D EXPENSES
IN % OF OTHER OPERATING EXPENSES
2005 1 )
2006 2 )
2007
2008
2009
2005 1 )
2006 2 )
2007
2008
2009
2005 1 )
2006 2 )
2007
2008
2009
63
98
84
81
86
0.9
1.0
0.8
0.8
0.8
2.5
2.6
2.1
1.9
2.0
1) Reflects continuing operations as a result of the divestiture of the Salomon
business segment.
2) Including Reebok, Rockport and Reebok-CCM Hockey from February 1, 2006
onwards.
1) Reflects continuing operations as a result of the divestiture of the Salomon
business segment.
2) Including Reebok, Rockport and Reebok-CCM Hockey from February 1, 2006
onwards.
1) Reflects continuing operations as a result of the divestiture of the Salomon
business segment.
2) Including Reebok, Rockport and Reebok-CCM Hockey from February 1, 2006
onwards.