Adidas 2003 Annual Report Download - page 76

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OPERATING EXPENSES REDUCED BY 1% /// Operating
expenses, including selling, general and administrative
expenses (SG&A) and depreciation and amortization (exclud-
ing goodwill), were nearly stable at € 2.324 billion in 2003
versus € 2.343 billion in 2002. As a percentage of sales,
operating expenses increased 1.2 percentage points to 37.1%
in 2003 (2002: 35.9%). The main contributors to this increase
were continued own-retail expansion and higher bad debt
expenses. Further, one-time operating income of € 23 million
in 2002 relating to the release of a legal provision and the sale
of land was not repeated in 2003.
MARKETING WORKING BUDGET DOWN 2% /// The Group’s
marketing working budget, which is now evenly divided
between advertising and promotional expenses, decreased
2% to € 807 million in 2003 versus € 824 million in 2002,
reflecting a decline in all segments. As a percentage of sales,
this equates to 12.9%, an increase of 0.3 percentage points
versus the prior year’s level of 12.6%. The primary driver of
this increase was contract prolongations with renegotiated
conditions.
RETAIL INCREASES DRIVE EMPLOYEE GROWTH /// At
December 31, 2003, adidas-Salomon employed 15,686
people. This represents an increase of 7% since the end of
2002 when the Group employed 14,716 people. New employ-
ees were primarily added in own-retail activities at brand
adidas. The majority of our employees now work in own-retail
and sales functions. Personnel expenses (including produc-
tion) decreased 7% to € 709 million in 2003 from € 758
million in 2002 as a result of currency effects. Costs which are
directly attributable to production are included within the cost
of sales. Detailed information regarding adidas-Salomon
employees, human resources policy and performance incen-
tives is included in this report (see Employees).
72 REPORTING GROUP MANAGEMENT REPORT /// GROUP BUSINESS PERFORMANCE
MARKETING WORKING BUDGET in % of net sales
1999 13.5
2000 13.7
2001 12.0
2002 12.6
2003 12.9
OPERATING EXPENSES € in millions
1999 1,871
2000 2,091
2001 2,126
2002 2,343
2003 2,324
ARC’TERYX /// SIDEWINDER TR JACKET