Nokia 2008 Annual Report Download - page 84

Nokia Siemens Networks
The following table sets forth selective line items and the percentage of net sales that they represent
for Nokia Siemens Networks and our Networks business group for the fiscal years 2007 and 2006.
Year Ended
December 31,
2007
Percentage of
Net Sales
Year Ended
December 31,
2006
Percentage of
Net Sales
Percentage
Increase/
(Decrease)
(EUR millions, except percentage data)
Net sales ................. 13393 100.0% 7 453 100.0% 80%
Cost of Sales .............. (9876) (73.7)% (4 910) (65.9)% 101%
Gross profit ............... 3517 26.3% 2 543 34.1% 38%
Research and development
expenses ............... (2746) (20.5)% (1 180) (15.8)% 133%
Selling and marketing
expenses ............... (1394) (10.4)% (544) (7.3)% 156%
Administrative and general
expenses ............... (701) (5.2)% (245) (3.3)% 186%
Other income and expenses . . 16 0.01% 234 3.1% (93)%
Operating profit............ (1308) (9.8)% 808 10.8%
Nokia Siemens Networks net sales were EUR 13 393 million in 2007 compared with EUR 7 453 million
in 2006.
In Nokia Siemens Networks, gross profit was EUR 3 517 million in 2007 compared with
EUR 2 543 million in 2006. This represented a gross margin of 26.3% in 2007 reflecting the impact of
restructuring charges and other items of EUR 318 million and purchase price accounting related items
of EUR 224 million compared with a gross margin of 34.1% in 2006.
In Nokia Siemens Networks, R&D expenses increased to EUR 2 746 million in 2007 compared with
EUR 1 180 million in 2006. In 2007, R&D expenses represented 20.5% of Nokia Siemens Networks net
sales reflecting the impact of restructuring charges and other items of EUR 439 million and purchase
price accounting related items of EUR 136 million compared with 15.8% in 2006.
In 2007, Nokia Siemens Networks selling and marketing expenses increased to EUR 1 394 million
compared with EUR 544 million in 2006. Nokia Siemens Networks selling and marketing expenses
represented 10.4% of its net sales in 2007 reflecting the impact of restructuring charges and other
one time items of EUR 149 million and purchase price accounting related items of EUR 214 million
compared with 7.3% in 2006.
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 of EUR 53 million. In 2006, other operating income
and expenses included a gain of EUR 276 million representing our share of the proceeds from the
Telsim sale.
Nokia Siemens Networks 2007 operating loss was EUR 1 308 million compared to an operating profit
of EUR 808 million in 2006. 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. In 2006, Nokia Siemens Networks
operating profit included the negative impact of EUR 39 million incremental costs related to Nokia
Siemens Networks. Nokia Siemens Networks operating margin for 2007 was negative 9.8% compared
with positive 10.8% in 2006. The lower operating profit primarily reflected the impact of
restructuring charges, intangible asset amortization and other purchase price accounting related
items as well as pricing pressures, a greater proportion of sales from the emerging markets and a
higher share of service sales.
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