Adidas 2005 Annual Report Download - page 154
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150 Financial Analysis
Notes to the Consolidated Income Statement
24 …
…
… Operating Expenses (Selling, General and Administrative Expenses as well as
Depreciation and Amortization [excluding Goodwill])
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 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 signifi cant portion of the operating expenses comprises the marketing working budget. The
marketing working budget consists of promotion and communication spending such as pro-
motion contracts, advertising, retail support, events and other communication activities, how-
ever it does not include marketing overhead expenses. In 2005, marketing working budget
of continuing operations accounted for approximately 37% (2004: 37%) of the total operating
expenses.
Total depreciation and amortization expense for tangible and intangible assets (excluding
goodwill) for continuing operations was € 113 million and € 97 million for the years ending
December 31, 2005 and 2004, respectively. Thereof, € 2 million and € 2 million were recorded
within the cost of sales as they are directly attributable to the production costs of goods sold.
25 …
…
… 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 was € 3.325 billion and € 2.948 billion for continuing operations for
the years ending December 31, 2005 and 2004, respectively.
Personnel Expenses
Personnel expenses were as follows:
Personnel expenses which are directly attributable to the production costs of goods are
included within the cost of sales.
Operating Expenses (Continuing Operations) € in millions
Year ending December 31
2005 2004
Marketing working budget 942 833
Marketing overhead 207 183
Sales 534 454
Logistics 347 325
Research & development 63 59
Central fi nance & administration 439 381
Other 5 1
Total operating expenses 2,537 2,236
Thereof:
Depreciation and amortization 112 95
Selling, general and administrative 2,425 2,141
Personnel Expenses (Continuing Operations) € in millions
Year ending December 31
2005 2004
Wages and salaries 621 557
Social security contributions 58 53
Pension expense 27 27
Personnel expenses 706 637