Nokia 2011 Annual Report Download - page 118

In 2011, our selling and marketing expenses were EUR 3 791 million, compared to EUR 3 877 million
in 2010. Selling and marketing expenses represented 9.8% of our net sales in 2011 compared to 9.1%
in 2010. The increase in selling and marketing expenses as a percentage of net sales reflected a
decline in net sales in 2011 compared to an increase in net sales and a decrease in selling and
marketing expenses in 2010. Selling and marketing expenses included purchase price accounting
items and other special items of EUR 444 million in 2011 compared to EUR 429 million in 2010.
Administrative and general expenses were EUR 1 121 million in 2011, unchanged compared to 2010.
Administrative and general expenses were equal to 2.9% of our net sales in 2011 compared to 2.6% in
2010. The increase in administrative and general expenses as a percentage of net sales reflected the
decrease in net sales in 2011. Administrative and general expenses included special items of
EUR 37 million in 2011 compared to EUR 77 million in 2010.
In 2011, other income and expenses included restructuring charges of EUR 500 million, impairment of
assets of EUR 90 million, consideration related to the Accenture transaction of EUR 251 million,
impairment of shares in an associated company of EUR 41 million and a benefit from a cartel claim
settlement of EUR 49 million in 2011. In 2010, other income and expenses included restructuring
charges of EUR 112 million, a prior year-related refund of customs duties of EUR 61 million, a gain on
sale of assets and businesses of EUR 29 million and a gain on sale of the wireless modem business of
EUR 147 million.
Operating Margin
Our 2011 operating loss was EUR 1 073 million, compared with an operating profit of
EUR 2 070 million in 2010. The decreased operating profit resulted primarily from an impairment of
goodwill of EUR 1.1 billion in our Location & Commerce business, a decrease in the operating profit in
our Devices & Services business, which was partially offset by a decrease in the operating loss in
Nokia Siemens Networks. Our 2011 operating margin was (2.8)% in 2011, compared to 4.9% in 2010.
Our operating profit in 2011 included purchase price accounting items and other special items of net
negative EUR 2 898 million compared to net negative EUR 1 134 million in 2010.
Corporate Common
Corporate Common Functions’ expenses totaled EUR 131 million in 2011, compared to
EUR 113 million in 2010.
Net Financial Income and Expenses
Financial income and expenses, net, was an expense of EUR 102 million in 2011 compared to an
expense of EUR 285 million in 2010. The lower net expense in 2011 was primarily driven by lower net
costs related to hedging our cash balances and favorable fluctuations in certain foreign exchange
rates. Nokia expects financial income and expenses, net, in 2012 to be an expense of approximately
EUR 300 million primarily due to higher expected net costs related to hedging our cash balances, as
well as higher costs related to Nokia Siemens Networks’ financing.
Our net debt to equity ratio was negative 40% at December 31, 2011, compared with a net debt to equity
ratio of negative 43% at December 31, 2010. See Item 5B. “Liquidity and Capital Resources” below.
Profit Before Taxes
Loss before tax was EUR 1 198 million in 2011, compared to profit of EUR 1 786 million in 2010. Taxes
amounted to EUR 290 million in 2011 and EUR 443 million in 2010. The effective tax rate decreased to
negative 24.2% in 2011, compared with 24.8% in 2010. In 2011, our taxes continued to be unfavorably
affected by Nokia Siemens Networks taxes as no tax benefits are recognized for certain Nokia
Siemens Networks deferred tax items due to uncertainty of utilization of these items.
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