Nokia 2009 Annual Report Download - page 108

performed in lower cost locations and lower restructuring charges. In 2008, R&D expenses included
restructuring charges and other items of EUR 46 million and purchase price accounting related items
of EUR 180 million. In 2007, R&D expenses included restructuring charges and other items of
EUR 439 million and purchase price accounting related items of EUR 136 million.
In 2008, Nokia Siemens Networks’ selling and marketing expenses increased to EUR 1 421 million
compared with EUR 1 394 million in 2007. Nokia Siemens Networks’ selling and marketing expenses
represented 9.3% of its net sales in 2008 compared with 10.4% in 2007. The increase in selling and
marketing expenses related to the fact that the results of Nokia Siemens Networks from January 1,
2007 to March 31, 2007 included our former Networks business group only. In 2008, selling and
marketing expenses included the reversal of restructuring charges and other items of EUR 14 million
and purchase price accounting related items of EUR 286 million. In 2007, selling and marketing
expenses included restructuring charges and other items of EUR 149 million and purchase price
accounting related items of EUR 214 million.
In 2008, other operating income and expenses included a restructuring charge and other items of
EUR 49 million and a gain of EUR 65 million from the transfer of Finnish pension liabilities to pension
insurance companies. In 2007, other operating income and expenses included a restructuring charge
and other items of EUR 58 million and a gain on sale of real estate EUR 53 million.
Nokia Siemens Networks 2008 operating loss was EUR 301 million compared to an operating loss of
EUR 1 308 million in 2007. In 2008, the operating loss included EUR 646 million of restructuring
charges and purchase price accounting related items of EUR 477 million. In 2007, the operating loss
included a charge of EUR 1 110 million related to Nokia Siemens Networks’ restructuring costs and
other items and a gain on sale of real estate of EUR 53 million. The operating loss in 2007 also
included EUR 570 million of intangible asset amortization and other purchase price accounting related
items. Nokia Siemens Networks’ operating margin for 2008 was negative 2.0% compared with
negative 9.8% in 2007. The decreased operating loss resulted primarily from higher net sales and
lower operating expenses and the impact of decreased restructuring charges and intangible asset
amortization and other purchase price accounting related items.
Corporate Common Functions
Corporate Common Functions’ expenses totaled EUR 396 million in 2008 compared with Corporate
Common Functions’ operating profit of EUR 1 709 million in 2007. In 2008, Corporate Common
Functions’ operating profit included a EUR 217 million loss due to transfer of Finnish pension
liabilities to pension insurance companies. In 2007, Corporate Common Functions’ operating profit
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 and Expenses
During 2008, Nokia’s interest expense was EUR 2 million, compared with net financial income of
EUR 239 million in 2007. This change was primarily due to the increased interest expense as a result
of an increase in interestbearing liabilities incurred to finance the NAVTEQ acquisition. Foreign
exchange gains and losses increased due to a higher cost of hedging and increased volatility on the
foreign exchange market.
The net debt to equity ratio was negative 14% at December 31, 2008 compared with a net debt to
equity ratio of negative 62% at December 31, 2007. See Item 5B. “Liquidity and Capital Resources”
below.
Profit Before Taxes
Profit before tax and minority interests decreased 40% to EUR 4 970 million in 2008 compared with
EUR 8 268 million in 2007. Taxes amounted to EUR 1 081 million and EUR 1 522 million in 2008 and
2007, respectively. In 2008, taxes included the positive impact of EUR 128 million due to recognition
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