Nokia 2013 Annual Report Download - page 13

REVIEW BY THE BOARD OF DIRECTORS 11
price accounting items, by more than EUR . billion by the end
of , compared to the end of .
During , NSN recognized restructuring charges and
other associated items of EUR  million related to this
restructuring program, resulting in cumulative charges of
approximately EUR   million. By the end of , NSN had
cumulative restructuring related cash outfl ows of approxi-
mately EUR   million relating to this restructuring program.
NSN expects restructuring related cash outfl ows to be ap-
proximately EUR  million for the full year  relating to
this restructuring program.
HERE
The following table sets forth selective line items for the fi scal
years  and .
YoY
EURm 2013 2012 Change
Net sales 914 1 103 – 17%
Cost of sales – 208 – 228 – 9%
Gross profi t 706 875 – 19%
Research and development
expenses – 648 – 883 – 27%
Selling and marketing expenses – 119 – 186 – 36%
Administrative and general
expenses – 69 – 77 – 10%
Other operating income and
expenses – 24 – 30 – 20%
Operating profi t (loss) – 154 – 301
NET SALES
HERE net sales decreased % to EUR  million in ,
compared to EUR   million in . HERE internal net sales
decreased % to EUR  million in , compared to EUR 
million in . HERE external net sales increased % to EUR
 million in , compared to EUR  million in . The
year-on-year decline in HERE internal net sales was due to low-
er recognition of deferred revenue related to our smartphone
sales. The year-on-year increase in HERE external net sales in
 was primarily due to higher sales to vehicle customers,
partially off set by lower sales to personal navigation devices
customers. Additionally, HERE net sales were negatively af-
fected by foreign currency fl uctuations.
The following table sets forth the distribution by geographi-
cal area of our net sales for the fi scal years  and .
HERE net sales by geographic area
YoY
EURm 2013 2012 Change
Europe 384 477 – 19%
Middle East & Africa 57 74 – 23%
Greater China 17 63 – 73%
Asia-Pacifi c 75 82 – 9%
North America 322 335 – 4%
Latin America 59 72 – 18%
Total 914 1 103 – 17%
GROSS MARGIN
On a year-on-year basis, the decrease in HERE gross margin,
.% in  compared to .% in , was primarily due to
proportionally higher sales of update units to vehicle custom-
ers which generally carry a lower gross margin, partially off set
by lower costs related to service delivery.
OPERATING EXPENSES
HERE research and development expenses decreased % to
EUR  million in  compared to EUR  million in ,
primarily due to a decrease in purchase price accounting
related items, EUR  million in  compared to EUR  mil-
lion in , and cost reduction actions.
HERE sales and marketing expenses decreased % to EUR
 million in  compared to EUR  million in , primar-
ily driven by a decrease in purchase price accounting items,
EUR  million in  compared to EUR  million in , cost
reduction actions and lower marketing spending.
HERE administrative and general expenses decreased %
to EUR  million in  compared to EUR  million in ,
primarily due cost reduction actions.
In , HERE other income and expense had a slightly
positive year-on-year impact on profi tability, decreasing from
EUR  million in  to EUR  million in . In , we
recognized restructuring charges of EUR  million in HERE,
compared to EUR  million in .
OPERATING PROFIT (LOSS)
HERE operating loss decreased to EUR  million in ,
compared with a loss of EUR  million in . HERE operating
margin in  was negative .%, compared with negative
.% in . The year-on-year improvement in operating
margin in  was driven primarily by the absence of signifi -
cant purchase price accounting related items arising from the
purchase of NAVTEQ, the vast majority of which had been fully
amortized as of the end of the second quarter of .
Advanced Technologies
The following table sets forth selective line items for the fi scal
years  and .