Nokia 2009 Annual Report Download - page 102

Russia, Spain, Italy, Indonesia and Brazil, together representing approximately 50% of our total net
sales in 2007.
Our gross margin in 2008 was 34.3% compared with 33.8% in 2007. This improvement in our gross
margin reflected an increase in gross margin of Nokia Siemens Networks.
Research and development, or R&D, expenses were EUR 5 968 million, up 6% from EUR 5 636 million
in 2007. R&D expenses represented 11.8% of net sales in 2008, up from 11.0% in 2007. The increase
in R&D as a percentage of net sales reflected increased R&D expenses in Devices & Services which
were partially offset by decreased R&D expenses in Nokia Siemens Networks. In 2008, Nokia R&D
expenses included EUR 153 million representing the contribution of the assets to the Symbian
Foundation, restructuring charges of EUR 46 million and purchase price accounting related items of
EUR 351 million. In 2007, Nokia R&D expenses included restructuring charges of EUR 439 million and
purchase price accounting related items of EUR 136 million.
In 2008, selling and marketing expenses were EUR 4 380 million compared with EUR 4 379 million in
2007. Selling and marketing expenses represented 8.6% of our net sales both in 2008 and 2007.
Selling and marketing expenses decreased in Devices & Services and increased in Nokia Siemens
Networks. In 2008, selling and marketing expenses included a EUR 14 million reversal of restructuring
charges and EUR 343 million of purchase price accounting related items. Selling and marketing
expenses for 2007 included restructuring charges of EUR 149 million and purchase price accounting
related items of EUR 214 million.
Administrative and general expenses were EUR 1 284 million in 2008 and EUR 1 165 million in 2007.
Administrative and general expenses were equal to 2.5% of net sales in 2008 compared to 2.3% in
2007. Administrative and general expenses in 2008 included restructuring charges of EUR 163 million.
Administrative and general expenses for 2007 also included restructuring charges of EUR 146 million.
In 2008, other operating income and expenses included a EUR 152 million loss due to transfer of the
Finnish pension liabilities to pension insurance companies. In 2007, other operating income and
expenses included a EUR 1 879 million nontaxable gain on formation of Nokia Siemens Networks.
Other operating income and expenses in 2007 also included gains on sales of real estate of
EUR 128 million and a EUR 53 million gain on a business transfer partially offset by restructuring
charges of EUR 58 million related to Nokia Siemens Networks, EUR 23 million of Nokia Siemens
Networks related other costs, a EUR 12 million charge for Nokia Siemens Networks’ incremental costs,
EUR 32 million of restructuring charges and a EUR 25 million charge related to restructuring of a
subsidiary company.
Our operating profit for 2008 decreased 38% to EUR 4 966 million compared with EUR 7 985 million
in 2007. The decreased Devices & Services’ operating profit, driven by lower net sales and higher
operating expense, was partially offset by the decreased loss of Nokia Siemens Networks, resulting
from higher net sales and lower operating expenses and restructuring costs. Operating profit in 2007
was also impacted by the EUR 1 879 million nontaxable gain on formation of Nokia Siemens
Networks. Our operating margin was 9.8% in 2008 compared with 15.6% in 2007.
Results by Segments
Devices & Services
The following table sets forth our estimates for industry mobile device market volumes and
yearonyear growth rate by geographic area for the fiscal years 2008 and 2007. These estimates and
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