Nokia 2008 Annual Report Download - page 85

Corporate Common Functions
Corporate Common Functions’ operating profit totaled EUR 1 709 million in 2007 compared with
Corporate Common Functions’ expenses of EUR 185 million in 2006. Corporate Common Functions’
operating profit in 2007 included a EUR 1 879 million nontaxable gain on the formation of Nokia
Siemens Networks, EUR 75 million of real estate gains and a EUR 53 million gain on a business
transfer.
Net Financial Income
Net financial income totaled EUR 239 million in 2007 compared with EUR 207 million in 2006. The
increase in net financial income was primarily due to the increased interest income as a result of a
higher level of liquid assets.
The net debt to equity ratio was negative 61% at December 31, 2007 compared with a net debt to
equity ratio of negative 69% at December 31, 2006. See Item 5B. “Liquidity and Capital Resources”
below.
Profit Before Taxes
Profit before tax and minority interests increased 44% to EUR 8 268 million in 2007 compared with
EUR 5 723 million in 2006. Taxes amounted to EUR 1 522 million and EUR 1 357 million in 2007 and
2006, respectively. In 2007, taxes include the positive impact of EUR 122 million due to changes in
deferred tax assets resulting from the decrease in the German statutory tax rate. In 2006, taxes
include received and accrued tax refunds from previous years of EUR 84 million. The effective tax rate
decreased to 18.4% in 2007 compared with 23.7% in 2006, primarily due to the EUR 1 879 million
nontaxable gain on formation of Nokia Siemens Networks in 2007.
Minority Interests
Minority shareholders’ interest in our subsidiaries’ losses totaled EUR 459 million in 2007 compared
with minority shareholders’ interest in our subsidiaries’ profits of EUR 60 million in 2006. The change
was primarily due to the formation of Nokia Siemens Networks and Siemens’ share of the losses of
Nokia Siemens Networks.
Net Profit and Earnings per Share
Net profit in 2007 totaled EUR 7 205 million compared with EUR 4 306 million in 2006, representing a
yearonyear increase in net profit of 67% in 2007. Earnings per share in 2007 increased to EUR 1.85
(basic) and EUR 1.83 (diluted) compared with EUR 1.06 (basic) and EUR 1.05 (diluted) in 2006.
Related Party Transactions
There have been no material transactions during the last three fiscal years to which any director,
executive officer or at least 5% shareholder, or any relative or spouse of any of them, was party.
There is no significant outstanding indebtedness owed to Nokia by any director, executive officer or
at least 5% shareholder.
There are no material transactions with enterprises controlling, controlled by or under common
control with Nokia or associates of Nokia.
See Note 31 to our consolidated financial statements included in Item 18 of this annual report.
5B. Liquidity and Capital Resources
At December 31, 2008, our cash and other liquid assets (bank and cash; availableforsale
investments, cash equivalents; and availableforsale investments, liquid assets) decreased to
EUR 6 820 million, compared with EUR 11 753 million at December 31, 2007, primarily as a result of
the EUR 2 772 million cash portion of the purchase price of NAVTEQ, EUR 1.7 billion lumpsum cash
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