Notes to the Income Statement
1 | Sales
Sales are recognized when goods are delivered or services
performed and the risk incident to the goods or services is
transferred. Discounts, customer bonuses and rebates are
deducted from sales. A breakdown of sales and their development
by business segment and region can be found in
the segment reporting.
2 | Cost of Goods Sold
This item comprises the cost of internally produced goods
and the purchase price of merchandise sold. The cost of
internally produced goods includes directly attributable
costs such as the cost of direct materials, direct labor, and
energy costs, as well as production overheads, including
depreciation of production facilities. The cost of goods
sold include the write-downs on inventories.
3 | Marketing and Selling Expenses
Marketing and selling expenses comprise the cost of
marketing, the sales organization, as well as distribution
logistics and write-downs of trade receivables. Marketing
expenses for advertising, trade marketing, and similar items
amounted to €1,334 million (previous year: €1,297 million).
4 | Research and Development Expenses
In accordance with IAS 38 (Intangible Assets), research and
development expenses comprise the cost of research and of
product and process development, including expenses for
third-party services. Development expenditures are expensed
fully in the period in which they occur, as the risks in the
period up to their market launch mean that the criteria for
capitalization are not fulfilled.
5 | General and Administrative Expenses
This item comprises the personnel expenses and other costs
of administration, as well as the cost of external services
that are not allocated internally to other functions.
6 | Other Operating Income
| | |
(in € million) |
2003 |
2004 |
Gains on disposal of fixed assets |
3 |
6 |
Exchange gains |
14 |
13 |
Income from release of provisions |
23 |
49 |
Miscellaneous other income |
55 |
49 |
|
95 |
117 | | | | | | | | | |
Miscellaneous other income includes income from license
agreements, prior-period income, income from the reversal
of valuation allowances on receivables, and other miscellaneous
income.
7 | Other Operating Expenses
| | |
(in € million) |
2003 |
2004 |
Restructuring costs |
10 |
7 |
Losses on disposal of fixed assets |
4 |
6 |
Exchange losses |
18 |
14 |
Amortization of goodwill and trademarks acquired |
32 |
36 |
Miscellaneous other expenses |
75 |
83 |
|
139 |
146 | | | | | | | | | |
Miscellaneous other expenses include provisions for risks
and other miscellaneous expenses.
8 | Interest Result
| | |
(in € million) |
2003 |
2004 |
Interest income
(thereof from affiliated companies) |
22
(-) |
11
(-) |
Interest expense
(thereof to affiliated companies) |
-2
(-) |
-18
(-) |
|
20 |
-7 | | | | | | | | | |
The interest expense on pension and other entitlements
acquired in previous years is netted against any return on
plan assets and the amortization of unrecognized actuarial
gains and losses. This results in net interest income in the
amount of €1 million (previous year: €5 million).
9 | Other Financial Result
| | |
(in € million) |
2003 |
2004 |
Other financial income |
30 |
12 |
Other financial expense |
-32 |
-18 |
|
-2 |
-6 | | | | | | | | | |
Other financial income primarily comprises exchange
gains on financial items denominated in foreign currencies.
Other financial expense consists of exchange losses on
such financial items.
 |
|
Our strong brands have substantial growth potential. |
10 | Taxes on Income
Taxes on income comprise the taxes paid or owed on
income in the individual countries, as well as deferred
taxes. Income tax expense including deferred taxes can
be broken down as follows:
| | |
(in € million) |
2003 |
2004 |
Taxes on income
Germany
International |
81
108
|
83
103
|
|
189 |
186 |
Deferred taxes |
1 |
4 |
|
190 |
190 | | | | | | | | | |
Taxes on income include tax refunds attributable to prior
periods in the amount of €2 million (previous year: tax
refunds of €1 million).
Allocation of deferred taxes
|
|
| | | | | |
(in € million) |
Dec. 31, 2003 |
Dec. 31, 2004 |
Dec. 31, 2003 |
Dec. 31, 2004 |
Fixed assets |
4 |
2 |
103 |
103 |
Inventories |
11 |
9 |
- |
- |
Receivables and other assets |
7 |
6 |
6 |
5 |
Provisions for pensions and other employee benefits |
14 |
14 |
44 |
53 |
Other provisions |
16 |
21 |
- |
- |
Liabilities |
7 |
5 |
7 |
7 |
Loss carryforwards |
2 |
1 |
- |
- |
|
61 |
58 |
160 |
168 |
Offset deferred taxes |
-38 |
-34 |
-38 |
-34 |
Deferred taxes reported in the balance sheet |
23 |
24 |
122 |
134 | | | | | | | | | | | | |
Deferred taxes result from temporary differences between
the carrying amounts in the tax accounts of the Group companies
and the carrying amounts in the consolidated balance
sheet. Deferred taxes are measured using the balance
sheet liability method on the basis of the tax rates expected
to be enacted in the individual countries when the temporary
differences reverse. These rates are based on the
legislation in force at the balance sheet date. Deferred tax
receivables and deferred tax liabilities are offset if they are
for the same tax authorities.
Calculation of the actual tax expense
With an effective tax rate of 38.6 %, the actual tax expense
is €18 million more than the expected tax expense. The
expected tax rate is calculated as the weighted average of the
tax rates of the individual Group companies, and amounts
to 34.9 % (previous year: 35.8 %). The change in this tax rate
is due largely to the discontinuation of the solidarity charge
in favor of the flood victims in Germany and tax cuts in several
European countries.
The following table shows the reconciliation of expected to
actual tax expense:
| | |
(in € million) |
2003 |
2004 |
Expected tax expense at a tax rate
of 34.9 % (previous year: 35.8 %) |
176 |
172 |
Tax increases due to
non-deductible expenses |
17 |
9 |
Other tax effects |
-3 |
9 |
Actual tax expense |
190 |
190 | | | | | | | | |
11 | Minority Interests
€6 million of profit after tax is attributable to minority
interests (previous year: €7 million). These minority interests
relate primarily to shareholdings in Nivea-Kao Co., Ltd.,
Japan, PT. Beiersdorf Indonesia, Beiersdorf India Limited,
and Bode Chemie GmbH & Co., Hamburg.
12 | Earnings per Share
Earnings per share for 2004 amounted to €3.88 (previous
year: €3.50). Since the settlement of the share buyback
program on February 3, 2004, Beiersdorf AG has held
8,393,672 own shares. These were deducted when calculating
the earnings per share, which resulted in a pro rated
weighted number of shares of 76,375,748. As there are no
outstanding financial instruments that can be exchanged
for shares, the diluted earnings per share do not deviate
from earnings per share.
13 | Other Disclosures
Cost of materials
The cost of raw materials, consumables, and supplies, and of
purchased goods and services, amounted to €1,113 million
(previous year: €1,149 million).
Personnel expenses
| | |
(in € million) |
2003 |
2004 |
Wages and salaries |
647 |
644 |
Social security contributions and other benefits |
130 |
131 |
Pension expenses |
31 |
29 |
|
808 |
804 | | | | | | | | |
Employees
The breakdown of employees by function is as follows:
| | |
|
2003 |
2004 |
Production |
6,131 |
6,145 |
Sales and Marketing |
6,378 |
6,385 |
Other functions |
4,155 |
3,962 |
|
16,664 |
16,492 | | | | | | | | |
Employees of consolidated joint ventures are included in
the total number of employees in proportion to the interest
held. A total of 190 people are employed by these companies
(previous year: 179).
A breakdown of employees by Beiersdorf Group segment
can be found in the segment reporting.
|