Nokia in 2009
Review by the Board of Directors
and Nokia Annual Accounts 2009
Key data ........................................................................................................................................................................... 2
Review by the Board of Directors ........................................................................................................................... 3
Annual Accounts 2009
Consolidated income statements, IFRS ................................................................................................................... 8
Consolidated statements of comprehensive income, IFRS ................................................................................ 9
Consolidated statements of financial position, IFRS ........................................................................................ 10
Consolidated statements of cash flows, IFRS ..................................................................................................... 11
Consolidated statements of changes in shareholders’ equity, IFRS ............................................................. 12
Notes to the consolidated financial statements ................................................................................................ 14
Income statements, parent company, FAS .......................................................................................................... 52
Balance sheets, parent company, FAS ................................................................................................................... 52
Statements of cash flows, parent company, FAS ............................................................................................... 53
Notes to the financial statements of the parent company ............................................................................. 54
Nokia shares and shareholders .............................................................................................................................. 58
Nokia Group 2005–2009, IFRS ................................................................................................................................. 64
Calculation of key ratios ........................................................................................................................................... 66
Proposal by the Board of Directors for distribution of profit ......................................................................... 67
Auditors’ report .......................................................................................................................................................... 68
Additional information
Critical accounting policies ..................................................................................................................................... 70
Corporate governance statement
Group Executive Board ......................................................................................................................................... 74
Board of Directors .................................................................................................................................................. 76
Corporate governance .......................................................................................................................................... 78
Compensation of the Board of Directors and the Group Executive Board .................................................. 81
Auditor fees and services ......................................................................................................................................... 96
Investor information ................................................................................................................................................. 97
Contact information .................................................................................................................................................. 98
Key data *
Based on financial
statements according to
International Financial
Reporting Standards, IFRS
Main currencies, exchange
rates at the end of 2009
1 EUR
1.4648
USD
GBP
0.9006
CNY 10.0018
INR
68.3223
RUB 44.1402
130.30
JPY
2
Nokia in 2009
Nokia, EURm
2009
2008
Change, %
Net sales
Operating profit
Profit before tax
Profit attributable to equity holders’ of the parent
Research and development expenses
40 984
1 197
962
891
5 909
%
Return on capital employed
Net debt to equity (gearing)
2009
6.7
– 25
50 710
4 966
4 970
3 988
5 968
2008
27.2
– 14
– 19
– 76
– 81
– 78
– 1
EUR
Earnings per share, basic
Dividend per share
Average number of shares (1 000 shares)
** Board’s proposal
2009
0.24
0.40 **
3 705 116
2008
Change, %
1.07
0.40
3 743 622
– 78
—
Reportable segments, EURm
2009
2008
Change, %
Devices & Services
Net sales
Operating profit
NAVTEQ
Net sales
Operating profit
Nokia Siemens Networks
Net sales
Operating profit
Personnel, December 31
Devices & Services
NAVTEQ
Nokia Siemens Networks
Corporate Common Functions
Nokia Group
10 major markets, net sales; EURm
China
India
UK
Germany
USA
Russia
Indonesia
Spain
Brazil
Italy
27 853
3 314
670
– 344
12 574
– 1 639
2009
54 773
4 571
63 927
282
123 553
2009
5 990
2 809
1 916
1 733
1 731
1 528
1 458
1 408
1 333
1 252
10 major countries, personnel, December 31
2009
Finland
India
China
Germany
Brazil
United States
Hungary
UK
Mexico
Poland
21 559
18 376
15 419
11 582
10 288
7 294
6 342
4 010
2 619
1 937
35 099
5 816
361
– 153
15 309
– 301
– 21
– 43
125
– 18
2008
Change, %
– 10
13
6
– 21
– 2
61 130
4 049
60 295
355
125 829
2008
5 916
3 719
2 382
2 294
1 907
2 083
2 046
1 497
1 902
1 774
2008
23 320
15 562
14 505
12 309
8 557
8 060
7 541
4 313
3 559
1 646
* On July 10, 2008, Nokia completed the acquisition of NAVTEQ Corporation. NAVTEQ is a a separate reportable segment
of Nokia starting from the third quarter 2008. Accordingly, the results of NAVTEQ are not available for the prior periods.
Review by the Board of Directors 2009
In 2009, Nokia’s net sales decreased 19 % to EUR 40 984
million (EUR 50 710 million in 2008). Net sales of De-
vices & Services for 2009 decreased 21 % to EUR 27 853
million (EUR 35 099 million). Net sales of NAVTEQ * were
EUR 670 million in 2009 (EUR 361 million for the six
months ended December 31, 2008). Net sales of Nokia
Siemens Networks decreased 18 % to EUR 12 574 mil-
lion (EUR 15 309 million).
In 2009, Europe accounted for 36 % (37 %) of
Nokia’s net sales, Asia-Pacific 22 % (22 %), Greater
China 16 % (13 %), Middle East & Africa 14 % (14 %),
Latin America 7 % (10 %), and North America 5 % (4 %).
The 10 markets in which Nokia generated the greatest
net sales in 2009 were, in descending order of magni-
tude, China, India, the UK, Germany, the United States,
Russia, Indonesia, Spain, Brazil and Italy, together
representing approximately 52 % of total net sales in
2009. In comparison, the 10 markets in which Nokia
generated the greatest net sales in 2008 were China,
India, the UK, Germany, Russia, Indonesia, the United
States, Brazil, Italy and Spain, together representing
approximately 50 % of total net sales in 2008.
Nokia’s gross margin in 2009 was 32.4 %, com-
pared to 34.3 % in 2008. Nokia’s 2009 operating profit
decreased 76 % to EUR 1 197million, compared with
EUR 4 966 million in 2008. Nokia’s 2009 operating
margin was 2.9 % (9.8 %). Nokia’s operating profit in
2009 included purchase price accounting items and
other special items of net negative EUR 2 306 million
(net negative EUR 2 067 million). Devices & Services
operating profit decreased 43 % to EUR 3 314 million,
compared with EUR 5 816 million in 2008, with a
reported operating margin of 11.9 % (16.6 %). Devices
& Services operating profit in 2009 included special
items of negative EUR 174 million (net negative EUR
557 million). NAVTEQ’s operating loss in 2009 was
EUR 344 million with a reported operating margin of
– 51.3 % compared to an operating loss of EUR 153 mil-
lion, for the six months ended on December 31, 2008
representing an operating margin of – 42.4 %. NAVTEQ’s
operating loss in 2009 included purchase price ac-
counting items and other special items of negative
EUR 465 million (net negative EUR 235 million). Nokia
Siemens Networks had an operating loss of EUR 1 639
million, compared with a EUR 301 million operating
loss in 2008, representing an operating margin of
– 13.0 % (– 2.0 %). Nokia Siemens Networks operating
loss in 2009 included purchase price accounting items
and other special items, including EUR 908 million
impairment of goodwill, of net negative EUR 1 667
million (net negative EUR 1 058 million).
In 2009, Nokia’s net sales and profitability were
negatively impacted by the deteriorated global
economic conditions, including weaker consumer and
corporate spending, constrained credit availability and
currency market volatility. The demand environment,
in particular for mobile devices, improved during the
latter part of the year as the global economy started
showing initial signs of recovery.
Reported research and development expenses
were EUR 5 909 million in 2009, down 1 % from EUR
5 968 million in 2008. Research and development
costs represented 14.4 % of Nokia net sales in 2009,
up from 11.8 % in 2008. Research and development
expenses included purchase price accounting items
and other special items of EUR 564 million in 2009
(EUR 550 million in 2008). At December 31, 2009, Nokia
employed 37 020 people in research and development,
representing approximately 30 % of the group’s total
workforce, and had a strong research and develop-
ment presence in 16 countries.
In 2009, Nokia’s selling and marketing expenses
were EUR 3 933 million, compared with EUR 4 380
million in 2008. Selling and marketing expenses for
Nokia represented 9.6 % of its net sales in 2009 (8.6 %).
Selling and marketing expenses included purchase
price accounting items and other special items of EUR
413 million in 2009 (EUR 341 million).
Administrative and general expenses were EUR
1 145 million in 2009 compared to EUR 1 284 million in
2008. Administrative and general expenses were equal
to 2.8 % of net sales in 2009 (2.5 %). Administrative and
general expenses included special items of EUR 103
million in 2009 (EUR 163 million).
Group Common Functions expenses totaled EUR
134 million in 2009, compared to EUR 396 million in
2008. Expenses in 2008 included a EUR 217 million loss
due to transfer of Finnish pension liabilities.
Net financial expense was EUR 265 million in 2009
(EUR 2 million).
Profit before tax and minority interests was
EUR 962 million (EUR 4 970 million in 2008). Profit was
EUR 260 million (EUR 3 889 million), based on a profit
of EUR 891 million (profit of EUR 3 988 million) attrib-
utable to equity holders of the parent and a negative
EUR 631 million (negative EUR 99 million) attributable
to minority interests. Earnings per share decreased to
EUR 0.24 (basic) and EUR 0.24 (diluted), compared to
EUR 1.07 (basic) and EUR 1.05 (diluted) in 2008.
Operating cash flow for the year ended December
31, 2009 was EUR 3 247 million (EUR 3 197 million for
the year ended December 31, 2008) and total com-
bined cash and other liquid assets were EUR 8 873 mil-
lion (EUR 6 820 million). As of December 31, 2009, our
net debt-to-equity ratio (gearing) was – 25 % (– 14 %
as of December 31, 2008). In 2009, capital expenditure
amounted to EUR 531 million (EUR 889 million).
The key financial data, including the calculation
of key ratios, for the years 2009, 2008 and 2007 are
available in the Annual Accounts.
* On July 10, 2008, Nokia completed the acquisition of NAVTEQ Corporation. NAVTEQ is a separate reportable segment of Nokia starting from
the third quarter 2008. Accordingly, the results of NAVTEQ are not available for the prior periods. Accordingly, the results of NAVTEQ for the
full year 2009 are not directly comparable to the results for the full year 2008.
Main events in 2009
Nokia Group
» Nokia formed Solutions, a new unit responsible
for driving Nokia’s offering of solutions, with the
aim of integrating the mobile device, services and
content into a unique and compelling offering for
the consumer. The unit formally started operating
on October 1, 2009.
» Nokia announced changes to its Group Executive
Board, with Robert Andersson leaving Nokia’s
Group Executive Board as of September 30, 2009
in connection with his transfer to new duties
in Nokia’s Corporate Development unit; Alberto
Torres joining Nokia’s Group Executive Board
as of October 1, 2009 in connection with his
appointment as head of the Solutions unit, and;
Simon Beresford-Wylie leaving the Group Execu-
tive Board on September 30, 2009 after stepping
down as Chief Executive Officer of Nokia Siemens
Networks.
» Nokia announced that Rajeev Suri was appointed
as Chief Executive Officer of Nokia Siemens Net-
works as of October 1, 2009.
» Nokia continued to take action to adjust its
business operations and cost base in accordance
with market demand as well as seek savings in
operational expenses, looking at all areas and
activities across Devices & Services and global
support functions. Actions included the closure
of certain Nokia facilities, the streamlining of
Nokia’s research and development organization,
temporary lay-offs in production, and measures
to increase efficiency in certain global support
functions.
» Nokia was named as the world’s most sustainable
technology company according to the 2009–2010
edition of the Dow Jones Sustainability Indexes.
Devices & Services
» Nokia strengthened its portfolio of Mobile Phones
with new models such as the: Nokia 2323 clas-
sic, an affordable mobile device offering an FM
radio with recording and an Internet browser;
Nokia 2330 classic, an affordable mobile device
equipped with an integrated camera; Nokia
3720 classic, a rugged handset designed to resist
water, dust and shock; Nokia 5130 XpressMusic,
an affordable handset optimized for music; Nokia
6303 classic, featuring a 3.2 megapixel camera, an
Internet browser and long battery life; Nokia 6700
classic, equipped with a 5 megapixel camera,
assisted GPS navigation, and high speed data
access and Nokia X3, an affordable music device
with stereo speakers, built-in FM radio and a 3.2
megapixel camera.
3
Review by the Board of Directors
»
To create additional value for users of our Mobile
Phones, Nokia also developed its offering of ser-
vices designed to be accessed with them: In India
and Indonesia, Nokia launched Nokia Life Tools,
through which consumers can access timely
and relevant agricultural information, as well as
education and entertainment services, without
requiring the use of GPRS or Internet connectivity;
Nokia also continued to expand Ovi Mail, a free
email service designed especially for users in
emerging markets with Internet-enabled devices.
» Nokia introduced Nokia Money, a new mobile
financial service. The service is to be rolled
out gradually to selected markets and will be
operated in cooperation with Obopay, a leading
developer of mobile payment solutions in which
Nokia invested.
» Nokia strengthened its portfolio of Smartphones
with new models such as the: Nokia N97, featur-
ing a tilting 3.5” touch display with a full QWERTY
keyboard, a 5 megapixel camera, integrated AGPS
sensors and an electronic compass, and 32 GB
of onboard memory; Nokia N97 mini, a smaller
companion to the Nokia N97, featuring a tilting
3.2” touch display and a fully customizable
homescreen; Nokia 5230, an affordable touch
smartphone that, in select markets, is available
with Comes With Music; Nokia E72, a device
designed especially for business use and messag-
ing, featuring the latest consumer and corporate
email solutions and simple Instant Messaging
setup; Nokia E75, featuring a slide out QWERTY
keyboard, 3.2 megapixel camera and assisted GPS
and Nokia X6, a powerful, touch entertainment
device with 32 GB of onboard memory that, in
select markets, is available in combination with
Comes With Music.
Building on the functionalities of Nokia’s Smart-
phones and enhancing their value for consumers,
Nokia continued to develop Ovi, the Internet
services brand under which it has integrated
many of its individual services to simplify the
user experience and differentiate it from com-
petitors. For example, Nokia launched Ovi Store,
a one-stop shop for applications and content for
millions of Nokia device users, and made avail-
able the Ovi SDK (software development kit), the
Ovi Maps Player API (application programming in-
terface) and the Ovi Navigation API, enabling the
creation of sophisticated applications for the web
as well as the Symbian and Maemo platforms.
»
» Nokia continued to develop Ovi Maps, a service
that gives consumers access to mapping and, for
those with GPSenabled Nokia mobile devices,
navigation. Ovi Maps utilizes NAVTEQ’s digital
maps database and is evolving from a static map
to a dynamic platform upon which users can add
their own content and access location-based
services as well as content placed on the map by
third parties, such as Lonely Planet, Michelin and
4
Nokia in 2009
WCities. During January 2010, Nokia introduced
a new version of Ovi Maps for its selected smart-
phones that includes navigation at no extra cost
for consumers available for download on Nokia’s
web site. This new version of Ovi Maps includes
high-end car and pedestrian navigation features,
such as turn-by-turn voice guidance for 74 coun-
tries, in 46 languages, and traffic information for
more than 10 countries, as well as detailed maps
for more than 180 countries.
» Nokia launched in Russia Ovi Music, represent-
ing the first step to bring Nokia Music Store–our
chain of digital music stores–into the Ovi stable
of services. During 2010, we plan to migrate our
existing Nokia Music Stores in different countries
to Ovi Music, bringing a number of benefits such
as a single account and a sleek and simple Ovi
look and feel and other user experience improve-
ments. The Ovi Music catalog has more than 9
million tracks available for download.
NAVTEQ
» NAVTEQ announced the availability of Motorway
Junction Objects, which enables navigation
systems to display full 3D animation of complex
junctions, in Australia, Europe and North America
with coverage of over 8 000 locations.
» NAVTEQ announced that NAVTEQ Discover Cities™
reached a global pedestrian navigation milestone
of 100 cities.
» NAVTEQ announced the availability of NAVTEQ
LocationPoint™, a location-based advertising
service for mobile applications, in several Euro-
pean countries, as well as agreements with AAA,
Loopt and Nextar in North America to utilize the
offering.
» NAVTEQ launched real time traffic in 11 European
countries and expanded NAVTEQ Traffic Patterns™
to 9 European countries.
» Nokia commenced shipments of the Nokia
» NAVTEQ launched maps in Chile, Venezuela, Ice-
N900, a handset that delivers computer-grade
performance in a compact QWERTY and touch
form factor. The Nokia N900 runs on Maemo, a
desktop PC-like software architecture based on
the open source Linux software, and which Nokia
is continuing to develop.
» Nokia commenced shipments of the Nokia Book-
let 3G, a new Windows 7-based mini-laptop, built
for all-day mobility and connectivity. Encased in
an ultra-portable aluminum chassis, the Nokia
Booklet 3G runs for up to 12 hours on a single
charge and has a broad range of connectivity
options.
» Nokia continued to partner with third party
companies, operators, developers and content
providers in areas that it believes could positively
differentiate its Smartphones, as well as other
Nokia mobile devices, from those offered by
competitors. For example, partnering with opera-
tors, Nokia continued to grow Nokia Messaging,
its push email and instant messaging service.
Nokia also continued to work together with the
music industry to expand Nokia Music Store, its
digital music store, and Comes With Music, its
‘all-you-can-eat’ music offering. Additionally,
Nokia formed a global alliance with Microsoft to
design and market a suite of productivity applica-
tions for Nokia’s Smartphones, and commenced
a partnership with Intel Corporation to develop
a new class of Intel® Architecture-based mobile
computing device and chipset architectures
that will combine the performance of powerful
computers with high-bandwidth mobile broad-
band communications and ubiquitous Internet
connectivity. Nokia also launched Ovi lifecasting,
an application developed together with Facebook
that enables people to publish their location and
status updates directly to their Facebook account
from the home screen of a mobile device.
land and Croatia, along with a significant increase
in major city coverage in its India map to now
encompass 84 cities.
» NAVTEQ announced that it signed an agreement
with Samsung Electronics providing access to
all countries in the NAVTEQ database as well as
NAVTEQ’s Visual Content, Speed Limits, Extended
Lanes and NAVTEQ Discover Cities™.
» NAVTEQ announced a global technology agree-
ment with Microsoft to allow the rapid deploy-
ment of innovative collection capabilities, as
well as accelerating the collection, creation and
storage of 3D map data and visuals.
» NAVTEQ announced the integration of Nokia GPS
data for availability in NAVTEQ traffic products in
North America and Europe.
Nokia Siemens Networks
» Nokia Siemens Networks won 29 new 3G
contracts during 2009, confirming its industry-
leading position in wireless broadband. The
company secured key deals across the globe
including contracts with: Softbank in Japan; Tele-
nor in Denmark and Sweden; Megafon in Russia;
Hutchison Telecom in Hong Kong; China Unicom
and China Mobile; Nuevatel in Bolivia; and Viettel
and Vinaphone in Vietnam.
» Nokia Siemens Networks took significant steps
forward in LTE, making the world’s first LTE call
and handover on commercial software and
started LTE interoperability tests with 4 leading
device vendors. Nokia Siemens Networks had
by year end 2009 shipped capable LTE hardware
to close to all its 3G customers, demonstrating
readiness to support operators all over the world
in the first commercial deployments of LTE.
» Nokia Siemens Networks was selected to provide
»
LTE networks for Zain Bahrain and Telenor
Denmark, taking commercial LTE references to six,
including a deal with Verizon, the United States
operator, which selected Nokia Siemens Networks
as a supplier of its IP Multi-Media Subsystem (IMS)
network, which will enable rich multimedia appli-
cations across its networks.
» Nokia Siemens Networks signed 37 new Managed
Services contracts in 2009, breaking into new
geographic markets across the world with land-
mark agreements that included contracts with
Orange in the United Kingdom and Spain, Oi in
Brazil, Zain in Nigeria and East Africa and Unitech
in India.
» Nokia Siemens Networks extended its global
services delivery capability with the inauguration
of a Global Networks Solutions Centre in Noida,
India.
» Nokia Siemens Networks announced a number
of technological advances including the launch
of the Flexi Multiradio base station which allows
GSM/EDGE, WCDMA/HSPA/HSPA+ and LTE standards
to run concurrently in a single unit, and the
Evolved Packet Core for LTE that will enable
operators to efficiently offer a full range of data,
voice, and high-quality and real-time multimedia
services over different wireless standards using
the same open platform in the core network.
» Nokia Siemens Networks also launched new
solutions including FlexiPacket Microwave, a
next generation full packet microwave solution
which combines Carrier Ethernet Transport with
Microwave Radio, and charge@once unified
and business solutions that allow operators to
combine charging and billing.
» Nokia Siemens Networks announced a reorgani-
zation of its business structure to align it better
to customer needs. At the same time, Nokia
Siemens Networks announced a plan to improve
its financial performance, which include targeted
reductions of annualized operating expenses
and production overheads of EUR 500 million by
the end of 2011, compared to the end of 2009,
on a non-IFRS basis. As part of that effort, the
company is conducting a global personnel review
which may lead to headcount reductions in the
range of about 7 % to 9 % of its approximately
64 000 employees.
Acquisitions and divestments in 2009
»
In December 2009, Nokia and New Alliance, an in-
vestment company which is part of the Shanghai
Alliance Investment Ltd, announced plans to form
a 50-50 joint venture company to offer a range
of mobile services in China and support the local
developer ecosystem.
In December 2009, Nokia sold its minority hold-
ing in Venyon, a leading trusted service manager
on the mobile near field communication (NFC)
market, to Giesecke & Devrient.
In October, 2009, Nokia completed the sale of
Symbian Professional Services to Accenture.
In October 2009, Nokia Siemens Networks and
Juniper Networks formed a joint venture offering
a Carrier Ethernet solution for mobile backhaul,
business and residential broadband networks.
The joint venture company is 60 % owned by
Juniper Networks and 40 % by Nokia Siemens
Networks.
In September 2009, Nokia acquired Dopplr, a mo-
bile service provider for international travelers.
In September 2009, NAVTEQ acquired Acuity
Mobile, whose leading mobile location-based
advertising delivery platform enables NAVTEQ to
continue to differentiate its interactive advertis-
ing capabilities.
In September 2009, Nokia acquired certain assets
of Plum Ventures, a company that develops and
operates a cloud-based social media sharing and
messaging service for private groups.
In August 2009, Nokia acquired cellity, a mobile
software company that has developed a solution
for aggregating address book data.
In April 2009, Nokia sold its security appliance
business to Check Point Software Technologies.
In February 2009, Nokia acquired bit-side, a
professional services and software company.
In January 2009, NAVTEQ acquired T-Traffic
Systems, a leading provider of traffic services in
Germany.
»
»
»
»
»
»
»
»
»
Personnel
The average number of employees for 2009 was
123 171, (121 723 for 2008 and 100 534 for 2007). At
December 31, 2009, Nokia employed a total of 123 553
people (125 829 at December 31, 2008, and 112 262 at
December 31, 2007). The total amount of wages and
salaries paid in 2009 was EUR 5 658 million (EUR 5 615
million in 2008 and EUR 4 664 million in 2007).
Management and Board of Directors
Board of Directors, Group Executive Board
and President
Pursuant to the Articles of Association, Nokia Corpora-
tion has a Board of Directors composed of a minimum
of 7 and a maximum of 12 members. The members
of the Board are elected for a term of one year at
each Annual General Meeting, i.e. as from the close
of that Annual General Meeting until the close of the
Review by the Board of Directors
following Annual General Meeting, which convenes
each year by June 30. A general meeting may also
dismiss a member of the Board of Directors. The Board
has the responsibility for appointing and discharging
the Chief Executive Officer, the Chief Financial Officer
and the other members of the Group Executive Board.
The Chief Executive Officer, who is separated from
Chairman, also acts as President and his rights and
responsibilities include those allotted to the President
under Finnish law.
The current members of the Board of Directors
were elected at the Annual General Meeting on April
23, 2009. On December 31, 2009, the Board consisted
of the following members: Jorma Ollila (Chair),
Marjorie Scardino (Vice Chair), Georg Ehrnrooth, Lalita
D. Gupte, Bengt Holmström, Henning Kagermann, Per
Karlsson, Olli-Pekka Kallasvuo, Isabel Marey-Semper,
Risto Siilasmaa and Keijo Suila.
Information on shares and stock options held
by the members of the Board of Directors and the
President and CEO as well as the other members of
the Group Executive Board are available in the Annual
Accounts.
For more information regarding Corporate
Governance, please see the Corporate Governance
Statement in the Additional information section of
this document or at Nokia’s website, www.nokia.com.
Changes in the Group Executive Board
Alberto Torres, Executive Vice President, Head of
Solution Unit, was appointed as a member of the
Group Executive Board as from October 1, 2009. Robert
Andersson and Simon Beresford-Wylie left the Group
Executive Board as from September 30, 2009.
Service contracts
Olli Pekka Kallasvuo’s service contract covers his
current position as President and CEO and Chairman
of the Group Executive Board. As at December 31,
2009, Mr. Kallasvuo’s annual total gross base salary,
which is subject to an annual review by the Board
of Directors and confirmation by the independent
members of the Board, is EUR 1 176 000. His incentive
targets under the Nokia short-term cash incentive
plan are 150 % of the annual gross base salary. In
case of termination by Nokia for reasons other than
cause, including a change of control, Mr. Kallasvuo is
entitled to a severance payment of up to 18 months
of compensation (both the annual total gross base
salary and target incentive). In case of termination by
Mr. Kallasvuo, the notice period is six months and he
is entitled to a payment for such notice period (both
annual total gross base salary and target incentive
for six months). Mr. Kallasvuo is subject to a 12-month
non-competition obligation after termination of the
contract. Unless the contract is terminated for cause,
Mr. Kallasvuo may be entitled to compensation dur-
ing the non-competition period or a part of it. Such
compensation amounts to the annual total gross base
salary and target incentive for the respective period
during which no severance payment is paid.
5
Review by the Board of Directors
Provisions on the amendment
of articles of association
Industry and Nokia outlook
for full year 2010
Amendment of the Articles of Association requires
a decision of the general meeting, supported by
two-thirds of the votes cast and two-thirds of the
shares represented at the meeting. Amendment of the
provisions of Article 13 of the articles of association
requires a resolution supported by three-quarters
of the votes cast and three-quarters of the shares
represented at the meeting.
Shares and share capital
Nokia has one class of shares. Each Nokia share
entitles the holder to one vote at general meetings
of Nokia.
In 2009, Nokia issued 7 500 new shares upon
exercise of stock options issued to personnel in 2004.
Effective March 25, 2009, a total of 56 million shares
held by the company were cancelled.The issuance of
new shares and cancellation of shares did not impact
the amount of share capital of the company. Neither
the issuance of shares nor the cancellation of shares
had any significant effect on the relative holdings of
the other shareholders of the company nor on their
voting power.
In 2009, Nokia did not repurchase any shares.
In 2009, Nokia transferred a total of 10 351 876
Nokia shares held by it under Nokia equity plans as
settlement under the plans to the Plan participants,
personnel of Nokia Group. The amount of shares
transferred represented approximately 0.2 % of the
total number of shares and the total voting rights.
The transfers did not have a significant effect on the
relative holdings of the other shareholders of the
company nor on their voting power.
On December 31, 2009, Nokia and its subsidiary
companies owned 36 693 564 Nokia shares. The
shares represented approximately 1.0 % of the total
number of the shares of the company and the total
voting rights. The total number of shares at December
31, 2009, was 3 744 956 052. On December 31, 2009,
Nokia’s share capital was EUR 245 896 461.96.
Information on the authorizations held by the
Board in 2009 to issue shares and special rights enti-
tling to shares, transfer shares and repurchase own
shares as well as information on the shareholders,
stock options, shareholders’ equity per share, divi-
dend yield, price per earnings ratio, share prices, mar-
ket capitalization, share turnover and average number
of shares may be found in the Annual Accounts.
6
Nokia in 2009
» Nokia expects industry mobile device volumes to
be up approximately 10 % in 2010, compared to
2009, based on the industry mobile device market
definition applied by Nokia beginning in 2010.
»
» Nokia targets its mobile device volume market
share to be flat in 2010, compared to 2009, based
on the industry mobile device market definition
applied by Nokia beginning in 2010.
» Nokia targets to increase its mobile device value
market share slightly in 2010, compared to 2009,
based on the industry mobile device market
definition applied by Nokia beginning in 2010.
» Nokia and Nokia Siemens Networks expect a flat
market in euro terms for the mobile and fixed in-
frastructure and related services market in 2010,
compared to 2009.
» Nokia and Nokia Siemens Networks target Nokia
Siemens Networks to grow faster than the market
in 2010, compared to 2009.
Risk factors
Set forth below is a description of risk factors that
could affect Nokia. There may be, however, additional
risks unknown to Nokia and other risks currently
believed to be immaterial that could turn out to be
material. These risks, either individually or together,
could adversely affect our business, sales, results of
operations, financial condition and share price from
time to time.
» We need to have a competitive portfolio of high
quality products and services and their combina-
tion that are preferred, purchased and used by
our current and potential customers and consum-
ers. If we fail to achieve or maintain a competi-
tive portfolio, our business, sales and results of
operations may be materially adversely affected.
» Our sales and profitability have been, and
continue to be, driven to significant extent by our
success in the traditional mobile device market.
Increasingly, however, our sales and profitability
depend on our success in the market for con-
verged mobile devices. Our failure to effectively,
timely and profitably adapt our business and
operations to the developing requirements of
the converged mobile device market could have a
material adverse effect on our business, results of
operations, particularly our profitability, and our
financial condition.
»
Competition in the various markets where we do
business–traditional mobile devices, converged
mobile devices, digital map data and related
location-based content, and mobile and fixed
network infrastructure and related services–is
intense. Our failure to maintain or improve
our market position or respond successfully to
changes in the competitive environment in those
markets may have a material adverse effect on
our business, sales and results of operations.
Any actual or even alleged defects or other qual-
ity, safety and security issues in our products and
services and their combinations, including but
not limited to the hardware, software and con-
tent used in our products, or any loss, improper
disclosure or leakage of any personal or consumer
data collected by us, made available to us or
stored in or through our products and services,
could materially adversely affect our sales, results
of operations, reputation and the value of the
Nokia brand.
» We are a global company and have sales in most
countries of the world and, consequently, our
sales and profitability are dependent on the
development of the mobile and fixed communi-
cations industry in numerous diverse markets, as
well as on general economic conditions globally
and regionally.
» Our business and results of operations, particu-
larly our profitability, may be materially adversely
affected if we are not able to successfully manage
costs related to our products and services and
their combinations, and to our operations.
» Our net sales, costs and results of operations,
as well as the US dollar value of our dividends
and market price of our ADSs, are affected by
exchange rate fluctuations, particularly between
the euro, which is our reporting currency, and the
US dollar, the Japanese yen and the Chinese yuan,
as well as certain other currencies.
» We depend on a limited number of suppliers for
the timely delivery of sufficient quantities of
fully functional components, sub-assemblies,
software, applications and content and for their
compliance with our supplier requirements, such
as our own and our customers’ and consum-
ers’ product quality, safety, security and other
standards. Their failure to deliver or meet those
requirements could materially adversely affect
our ability to deliver our products and services
and their combinations successfully and on time.
» We are developing new technologies, products
and services, including applications and content,
in collaboration with other companies. We believe
that success in the converged mobile device mar-
ket in particular requires such collaboration and
partnering. If any of those companies were to fail
to perform as planned or if we fail to achieve the
collaboration or partnering arrangements needed
to succeed, we may not be able to bring our prod-
ucts and services to market successfully or in a
timely way and this could have a material adverse
effect on our sales and results of operations.
» Our sales and results of operations could be ma-
terially adversely affected if we fail to efficiently
manage our manufacturing, service creation and
delivery as well as logistics without interruption
or make timely and appropriate adjustments,
or fail to ensure that our products and services,
meet our and our customers’ and consumers’
requirements and are delivered on time and in
sufficient volumes.
»
»
» Our products and services and their combination
include increasingly complex technologies, some
of which have been developed by us or licensed
to us by certain third parties. As a consequence,
evaluating the rights related to the technologies
we use or intend to use is more and more chal-
lenging, and we expect increasingly to face claims
that we have infringed third parties’ intellectual
property rights. The use of these technologies
may also result in increased licensing costs for us,
restrictions on our ability to use certain technolo-
gies in our products and services and/or costly
and time-consuming litigation, which could have
a material adverse effect on our business, results
of operations and financial condition.
» Our products and services and their combina-
tion include numerous Nokia, NAVTEQ and Nokia
Siemens Networks patented, standardized or pro-
prietary technologies on which we depend. Third
parties may use without a license or unlawfully
infringe our intellectual property or commence
actions seeking to establish the invalidity of the
intellectual property rights of these technologies.
This may have a material adverse effect on our
business and results of operations.
» Our sales derived from, and assets located in,
emerging market countries may be materially
adversely affected by economic, regulatory and
political developments in those countries or by
other countries imposing regulations against
imports to such countries. As sales from those
countries represent a significant portion of our
total sales, economic or political turmoil in those
countries could materially adversely affect our
sales and results of operations. Our investments
in emerging market countries may also be subject
to other risks and uncertainties.
»
Changes in various types of regulation and trade
policies in countries around the world could have
a material adverse effect on our business and
results of operations.
» Our operations rely on the efficient and uninter-
rupted operation of complex and centralized
information technology systems and networks.
If a system or network inefficiency, malfunction
or disruption occurs, this could have a material
adverse effect on our business and results of
operations.
»
If we are unable to retain, motivate, develop and
recruit appropriately skilled employees, our abil-
Review by the Board of Directors
undetected additional violations that may have
occurred prior to the transfer or violations that
may have occurred after the transfer of such
assets and employees that could have a material
adverse effect on Nokia Siemens Networks and
our reputation, business, results of operations
and financial condition.
Dividend
Nokia’s Board of Directors will propose a dividend of
EUR 0.40 per share for 2009.
ity to implement our strategies may be hampered
and, consequently, could have a material adverse
effect on our business and results of operations.
An unfavorable outcome of litigation could have a
material adverse effect on our business, results of
operations and financial condition.
Allegations of possible health risks from the elec-
tromagnetic fields generated by base stations
and mobile devices, and the lawsuits and public-
ity relating to this matter, regardless of merit,
could have a material adverse effect on our sales,
results of operations, share price, reputation and
brand value by leading consumers to reduce their
use of mobile devices, by increasing difficulty in
obtaining sites for base stations, or by leading
regulatory bodies to set arbitrary use restrictions
and exposure limits, or by causing us to allocate
additional monetary and personnel resources to
these issues.
In addition to the risks described above and ap-
plicable to whole Nokia Group, the following are risks
primarily related to Nokia Siemens Networks that
could affect Nokia.
»
»
»
»
In response to its declined market share and de-
teriorated financial performance, Nokia Siemens
Networks announced in 2009 a plan to improve
its financial performance by reducing operating
expenses and other costs and increasing profit-
ability. If Nokia Siemens Networks is unable to
execute its plan effectively and timely or if the
plan fails to achieve the desired results, that may
have a material adverse effect on our business,
results of operations and financial condition.
The networks infrastructure and related services
business relies on a limited number of custom-
ers and large multi-year contracts. Unfavorable
developments under such a contract or in relation
to a major customer may have a material adverse
effect on our business, results of operations and
financial condition.
Providing customer financing or extending
payment terms to customers can be a competi-
tive requirement in the network infrastructure
and related services business and may have a
material adverse effect on our business, results of
operations and financial condition.
Some of the Siemens carrier-related operations
transferred to Nokia Siemens Networks have been
and continue to be the subject of various criminal
and other governmental investigations related
to whether certain transactions and payments
arranged by some former employees of Siemens
were unlawful. As a result of those investigations,
government authorities and others have taken
and may take further actions against Siemens
and/or its employees that may involve and affect
the assets and employees transferred by Siemens
to Nokia Siemens Networks, or there may be
7
Nokia Corporation and Subsidiaries
Consolidated income statements, IFRS
Financial year ended December 31
Notes
Net sales
Cost of sales
Gross profit
Research and development expenses
Selling and marketing expenses
Administrative and general expenses
Impairment of goodwill
Other income
Other expenses
Operating profit
Share of results of associated companies
Financial income and expenses
Profit before tax
Tax
Profit
7
6
6, 7
2–9, 23
14, 30
10
11
Profit attributable to equity holders of the parent
Loss attributable to minority interests
Earnings per share
(for profit attributable to the equity holders of the parent)
27
Basic
Diluted
2009
EURm
40 984
– 27 720
13 264
– 5 909
– 3 933
– 1 145
– 908
338
– 510
1 197
30
– 265
962
– 702
2008
EURm
50 710
– 33 337
17 373
– 5 968
– 4 380
– 1 284
—
420
– 1 195
4 966
6
– 2
4 970
– 1 081
2007
EURm
51 058
– 33 781
17 277
– 5 636
– 4 379
– 1 165
—
2 312
– 424
7 985
44
239
8 268
– 1 522
260
3 889
6 746
891
– 631
260
2009
EUR
0.24
0.24
3 988
– 99
3 889
2008
EUR
1.07
1.05
7 205
– 459
6 746
2007
EUR
1.85
1.83
Average number of shares (1 000’s shares)
27
2009
2008
2007
Basic
Diluted
3 705 116
3 721 072
3 743 622
3 780 363
3 885 408
3 932 008
See Notes to consolidated financial statements.
8
Nokia in 2009
Nokia Corporation and Subsidiaries
Consolidated statements of comprehensive income, IFRS
Financial year ended December 31
Notes
Profit
Other comprehensive income
Translation differences
Net investment hedge gains (+)/losses (–)
Cash flow hedges
Available-for-sale investments
Other increase (+)/decrease (–), net
Income tax related to components
of other comprehensive income
21
21
20
20
20, 21
Other comprehensive income (+)/expense (–), net of tax
2009
EURm
260
– 563
114
25
48
– 7
– 44
–427
2008
EURm
3 889
595
– 123
– 40
– 15
28
58
503
2007
EURm
6 746
– 151
51
– 7
49
– 46
– 12
– 116
Total comprehensive income (+)/expense (–)
–167
4 392
6 630
Total comprehensive income (+)/expense (–)
attributable to
equity holders of the parent
minority interests
See Notes to consolidated financial statements.
429
– 596
–167
4 577
– 185
4 392
7 073
– 443
6 630
9
Nokia Corporation and Subsidiaries
Consolidated statements of financial position, IFRS
December 31
ASSETS
Non-current assets
Capitalized development costs
Goodwill
Other intangible assets
Property, plant and equipment
Investments in associated companies
Available-for-sale investments
Deferred tax assets
Long-term loans receivable
Other non-current assets
Current assets
Inventories
Accounts receivable, net of allowances for doubtful accounts
(2009: EUR 391 million, 2008: EUR 415 million)
Prepaid expenses and accrued income
Current portion of long-term loans receivable
Other financial assets
Investments at fair value through profit
and loss, liquid assets
Available-for-sale investments, liquid assets
Available-for-sale investments, cash equivalents
Bank and cash
Total assets
SHAREHOLDERS’ EQUITY AND LIABILITIES
Capital and reserves attributable to equity holders of the parent
Share capital
Share issue premium
Treasury shares, at cost
Translation differences
Fair value and other reserves
Reserve for invested non-restricted equity
Retained earnings
Minority interests
Total equity
Non-current liabilities
Long-term interest-bearing liabilities
Deferred tax liabilities
Other long-term liabilities
Current liabilities
Current portion of long-term loans
Short-term borrowings
Other financial liabilities
Accounts payable
Accrued expenses
Provisions
Total shareholders’ equity and liabilities
See Notes to consolidated financial statements.
Notes
12
12
12
13
14
15
24
15, 33
15
17, 19
15, 19, 33
18
15, 33
15, 16, 33
15, 33
15, 33
15, 33
33
22
21
20
15, 33
24
15, 33
15, 33
15, 16, 33
15, 33
25
26
2009
EURm
143
5 171
2 762
1 867
69
554
1 507
46
6
2008
EURm
244
6 257
3 913
2 090
96
512
1 963
27
10
12 125
15 112
1 865
7 981
4 551
14
329
580
2 367
4 784
1 142
23 613
35 738
246
279
–681
–127
69
3 170
10 132
13 088
1 661
14 749
4 432
1 303
66
5 801
44
727
245
4 950
6 504
2 718
15 188
35 738
2 533
9 444
4 538
101
1 034
—
1 272
3 842
1 706
24 470
39 582
246
442
–1 881
341
62
3 306
11 692
14 208
2 302
16 510
861
1 787
69
2 717
13
3 578
924
5 225
7 023
3 592
20 355
39 582
10
Nokia in 2009
Nokia Corporation and Subsidiaries
Consolidated statements of cash flows, IFRS
Financial year ended December 31
Notes
Cash flow from operating activities
Profit attributable to equity holders of the parent
Adjustments, total
Change in net working capital
Cash generated from operations
Interest received
Interest paid
31
31
Other financial income and expenses, net received
Income taxes paid, net received
Net cash from operating activities
Cash flow from investing activities
Acquisition of Group companies, net of acquired cash
Purchase of current available-for-sale investments, liquid assets
2009
EURm
891
3 390
140
4 421
125
– 256
– 128
– 915
3 247
– 29
– 2 800
Purchase of investments at fair value through profit and loss, liquid assets – 695
– 95
– 30
– 27
—
—
2
2
– 531
40
61
Purchase of non-current available-for-sale investments
Purchase of shares in associated companies
Additions to capitalized development costs
Long-term loans made to customers
Proceeds from repayment and sale of long-term loans receivable
Proceeds from (+) /payment of (–) other long-term receivables
Proceeds from (+) /payment of (–) short-term loans receivable
Capital expenditures
Proceeds from disposal of shares in associated companies
Proceeds from disposal of businesses
Proceeds from maturities and sale of current available-for-sale
investments, liquid assets
Proceeds from maturities and sale of investments at fair value through
profit and loss, liquid assets
Proceeds from sale of non-current available-for-sale investments
Proceeds from sale of fixed assets
Dividends received
Net cash used in investing activities
Cash flow from financing activities
Proceeds from stock option exercises
Purchase of treasury shares
Proceeds from long-term borrowings
Repayment of long-term borrowings
Proceeds from (+) /repayment of (-) short-term borrowings
Dividends paid
Net cash used in financing activities
Foreign exchange adjustment
Net increase (+) /decrease (–) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Cash and cash equivalents comprise of:
Bank and cash
Current available-for-sale investments,
cash equivalents
15, 33
2008
EURm
3 988
3 024
– 2 546
4 466
416
– 155
250
– 1 780
3 197
– 5 962
– 669
—
– 121
– 24
– 131
—
129
– 1
– 15
– 889
3
41
2007
EURm
7 205
1 159
605
8 969
362
– 59
67
– 1 457
7 882
253
– 4 798
—
– 126
– 25
– 157
– 261
163
5
– 119
– 715
6
—
1 730
4 664
4 930
108
14
100
2
—
10
54
6
—
50
72
12
– 2 148
– 2 905
– 710
—
—
3 901
– 209
– 2 842
– 1 546
– 696
– 25
378
5 548
5 926
1 142
4 784
5 926
53
– 3 121
714
– 34
2 891
– 2 048
– 1 545
– 49
– 1 302
6 850
5 548
1 706
3 842
5 548
987
– 3 819
115
– 16
661
– 1 760
– 3 832
– 15
3 325
3 525
6 850
2 125
4 725
6 850
The figures in the consolidated cash flow statement cannot be directly traced from the balance sheet without additional information as a result of
acquisitions and disposals of subsidiaries and net foreign exchange differences arising on consolidation.
See Notes to consolidated financial statements.
11
Nokia Corporation and Subsidiaries
Consolidated statements of changes in shareholders’ equity, IFRS
EURm
shares (1 000’s) capital premium
shares differences
Number of
Share
Share
issue Treasury
Reserve for
invested
Fair value
Translation and other non-restricted
reserves
Before
equity earnings
Retained minority Minority
interests
interests
Total
–34
–167
38
–14
—
11 123
11 968
92 12 060
–167
16
–151
Balance at December 31, 2006
3 965 730
246
2 707
–2 060
Translation differences
Net investment hedge gains, net of tax
Cash flow hedges, net of tax
Available-for-sale investments, net of tax
Other decrease, net
Profit
Total comprehensive income
—
Stock options exercised
57 269
Stock options exercised related
to acquisitions
Share-based compensation
Excess tax benefit on share-based
compensation
Settlement of performance shares
Acquisition of treasury shares
Reissuance of treasury shares
Cancellation of treasury shares
3 138
–180 590
403
—
46
–3
228
128
–104
Share premium reduction and transfer
–2 358
–11
48
—
–129
37
58
–3 884
7
2 733
Dividend
Minority interest on formation
of Nokia Siemens Networks
Total of other equity movements
—
–2 063
–1 086
—
Balance at December 31, 2007
3 845 950
246
644
–3 146
–163
Translation differences
Net investment hedge gains, net of tax
Cash flow hedges, net of tax
Available-for-sale investments, net of tax
Other increase, net
Profit
595
–91
—
23
42
–3
Total comprehensive income
—
—
—
504
39
3 547
5 622
–157 390
143
Stock options exercised
Stock options exercised
related to acquisitions
Share-based compensation
Excess tax benefit on share-based
compensation
Settlement of performance
and restricted shares
Acquisition of treasury shares
Reissuance of treasury shares
Cancellation of treasury shares
Dividend
Acquisitions and other change
in minority interests
Vested portion of share-based payment
awards related to acquisitions
Acquisition of Symbian
1
74
–117
–179
154
–44
–3 123
2
4 232
19
Total of other equity movements
—
–202
1 265
Balance at December 31, 2008
3 697 872
246
442
–1 881
—
341
—
62
12
Nokia in 2009
38
–11
48
–40
7 205
7 073
978
–3
228
128
–37
6
38
–5
48
–6
–46
–459
6 746
–443
6 630
978
–3
228
128
–37
–40
7 205
7 165
—
932
9
–3 884
–3 884
–2 733
2 358
7
—
—
7
—
—
–1 685
–1 685
–75
–1 760
—
2 991
2 991
3 299
–4 418
–4 268
2 916
–1 352
3 299
13 870
14 773
2 565 17 338
46
3 988
4 034
—
51
595
–91
42
–3
46
3 988
4 577
51
1
74
595
–91
–25
–5
29
3 889
–67
–2
–17
–99
–185
4 392
51
1
74
–117
–6
–124
–69
–3 123
2
—
–69
–3 123
2
—
–4 232
–1 992
–1 992
–35 –2 027
–37
–37
12
19
12
19
12
7
–6 212
–5 142
–78 –5 220
3 306
11 692
14 208
2 302 16 510
Nokia Corporation and Subsidiaries
Consolidated statements of changes in shareholders’ equity, IFRS (continued)
EURm
shares (1 000’s) capital premium
shares differences
Number of
Share
Share
issue Treasury
Reserve for
invested
Fair value
Translation and other non-restricted
reserves
Before
equity earnings
Retained minority Minority
interests
interests
Total
Balance at December 31, 2008
3 697 872
246
442
–1 881
62
3 306
11 692
14 208
2 302 16 510
Translation differences
Net investment hedge gains, net of tax
Cash flow hedges, net of tax
Available-for-sale investments, net of tax
Other decrease, net
Profit
Total comprehensive income
Stock options exercised
Stock options exercised related
to acquisitions
Share-based compensation
Excess tax benefit on share-based
compensation
Settlement of performance
and restricted shares
Acquisition of treasury shares
341
– 552
84
– 35
42
—
—
—
–468
7
7
– 1
891
890
—
—
– 1
16
– 12
10 352
– 166
230
– 136
– 552
– 9
– 561
84
– 35
42
– 1
891
429
– 1
16
84
14
44
– 8
49
2
– 7
-631
–596
260
–167
—
– 1
16
– 12
– 1
– 13
Reissuance of treasury shares
31
Cancellation of treasury shares
Dividend
1
969
Total of other equity movements
—
–163
1 200
—
Balance at December 31, 2009
3 708 262
246
279
–681
–127
Dividends declared per share were EUR 0.40 for 2009 (EUR 0.40 for 2008 and EUR 0.53 for 2007), subject to
shareholders’ approval.
– 72
—
1
—
– 969
– 72
—
1
—
– 1 481
– 1 481
– 44 – 1 525
–136
–2 450
–1 549
–45 –1 594
3 170
10 132
13 088
1 661 14 749
—
69
13
Notes to the consolidated financial statements
1. Accounting principles
»
Amendment to IAS 23, Borrowing costs, changes
the treatment of borrowing costs that are directly
attributable to an acquisition, construction or
production of a qualifying asset. These costs
will consequently form part of the cost of that
asset. Other borrowing costs are recognized as
an expense.
» Under the amended IAS 32, Financial instru-
ments: Presentation, the Group must classify
puttable financial instruments or instruments or
components thereof that impose an obligation to
deliver to another party, a pro-rata share of net
assets of the entity only on liquidation, as equity.
Previously, these instruments would have been
classified as financial liabilities.
Amendments to IFRIC 9 and IAS 39 clarify the
accounting treatment of embedded derivatives
when reclassifying financial instruments.
IFRIC 13, Customer Loyalty Programs addresses
the accounting surrounding customer loyalty pro-
grams and whether some consideration should
be allocated to free goods or services provided
by a company. Consideration should be allocated
to award credits based on their fair value, as they
are a separately identifiable component.
IFRIC 15, Agreements for the Construction of
Real Estate helps entities determine whether a
particular construction agreement is within the
scope of IAS 11, Construction Contracts or IAS 18,
Revenue. At issue is whether such an agreement
constitutes a construction contract under IAS 11.
If so, an entity should use the percentage-of-
completion method to recognize revenue. If not,
the entity should account for the agreement
under IAS 18, which requires that revenue be
recognized upon delivery of a good or service.
IFRIC 16, Hedges of a Net Investment in a Foreign
Operation clarifies the accounting treatment in
respect of net investment hedging. This includes
the fact that net investment hedging relates to
differences in functional currency not presenta-
tion currency, and hedging instruments may be
held anywhere in the group.
IFRIC 18, Transfers of Assets from Customers clari-
fies the requirements for agreements in which
an entity receives an item of property, plant and
equipment or cash it is required to use to con-
struct or acquire an item of property, plant and
equipment that must be used to provide access to
a supply of goods or services.
»
»
»
»
»
»
In addition, a number of other amendments
that form part of the IASB’s annual improvement
project were adopted by the Group.
The adoption of each of the above mentioned stan-
dards did not have a material impact to the consoli-
dated financial statements.
Principles of consolidation
The consolidated financial statements include
the accounts of Nokia’s parent company (“Parent
Company”), and each of those companies over which
the Group exercises control. Control over an entity
is presumed to exist when the Group owns, directly
or indirectly through subsidiaries, over 50% of the
voting rights of the entity, the Group has the power
to govern the operating and financial policies of the
entity through agreement or the Group has the power
to appoint or remove the majority of the members
of the board of the entity.
The Group’s share of profits and losses of as-
sociated companies is included in the consolidated
income statement in accordance with the equity
method of accounting. An associated company is
an entity over which the Group exercises significant
influence. Significant influence is generally presumed
to exist when the Group owns, directly or indirectly
through subsidiaries, over 20% of the voting rights
of the company.
All inter-company transactions are eliminated as
part of the consolidation process. Minority interests
are presented separately as a component of net profit
and they are shown as a component of sharehold-
ers’ equity in the consolidated statement of financial
position.
Profits realized in connection with the sale
of fixed assets between the Group and associated
companies are eliminated in proportion to share
ownership. Such profits are deducted from the
Group’s equity and fixed assets and released in the
Group accounts over the same period as depreciation
is charged.
The companies acquired during the financial
periods presented have been consolidated from the
date on which control of the net assets and operations
was transferred to the Group. Similarly the result
of a Group company divested during an accounting
period is included in the Group accounts only to the
date of disposal.
Business combinations
The purchase method of accounting is used to account
for acquisitions of separate entities or businesses by
the Group. The cost of an acquisition is measured as
the aggregate of the fair values at the date of exchange
of the assets given, liabilities incurred, equity instru-
ments issued and costs directly attributable to the ac-
quisition. Identifiable assets, liabilities and contingent
liabilities acquired or assumed by the Group are mea-
sured separately at their fair value as of the acquisition
date. The excess of the cost of the acquisition over the
Group’s interest in the fair value of the identifiable net
assets acquired is recorded as goodwill.
Assessment of the recoverability of long-lived
and intangible assets and goodwill
For the purposes of impairment testing, goodwill is al-
located to cash-generating units that are expected to
Basis of presentation
The consolidated financial statements of Nokia
Corporation (“Nokia” or “the Group”), a Finnish public
limited liability company with domicile in Helsinki, in
the Republic of Finland, are prepared in accordance
with International Financial Reporting Standards as
issued by the International Accounting Standards
Board (“IASB”) and in conformity with IFRS as adopted
by the European Union (“IFRS”). The consolidated
financial statements are presented in millions of euros
(“EURm”), except as noted, and are prepared under
the historical cost convention, except as disclosed in
the accounting policies below. The notes to the con-
solidated financial statements also conform to Finnish
Accounting legislation. On March 11, 2010, Nokia’s
Board of Directors authorized the financial statements
for 2009 for issuance and filing.
The Group completed the acquisition of all of
the outstanding equity of NAVTEQ on July 10, 2008
and a transaction to form Nokia Siemens Networks
on April 1, 2007. The NAVTEQ and the Nokia Siemens
Networks business combinations have had a material
impact on the consolidated financial statements and
associated notes. See Note 8.
Adoption of pronouncements under IFRS
In the current year, the Group has adopted all of the
new and revised standards, amendments and interpre-
tations to existing standards issued by the IASB that
are relevant to its operations and effective for account-
ing periods commencing on or after January 1, 2009.
»
»
»
»
IAS 1 (revised), Presentation of financial state-
ments, prompts entities to aggregate information
in the financial statements on the basis of shared
characteristics. All non-owner changes in equity
(i.e. comprehensive income) should be presented
either in one statement of comprehensive income
or in a separate income statement and statement
of comprehensive income.
Amendments to IFRS 7 require entities to provide
additional disclosures about the fair value mea-
surements. The amendments clarify the existing
requirements for the disclosure of liquidity risk.
Amendment to IFRS 2, Share-based payment,
Group and Treasury Share Transactions, clarifies
the definition of different vesting conditions,
treatment of all non-vesting conditions and
provides further guidance on the accounting
treatment of cancellations by parties other than
the entity.
Amendment to IAS 20, Accounting for government
grants and disclosure of government assistance,
requires that the benefit of a below-market rate
government loan is measured as the difference
between the carrying amount in accordance
with IAS 39 and the proceeds received, with the
benefit accounted for in accordance with IAS 20.
14
Nokia in 2009
benefit from the synergies of the acquisition in which
the goodwill arose.
The Group assesses the carrying amount of
goodwill annually or more frequently if events or
changes in circumstances indicate that such carrying
amount may not be recoverable. The Group assesses
the carrying amount of identifiable intangible assets
and long-lived assets if events or changes in circum-
stances indicate that such carrying amount may not
be recoverable. Factors that trigger an impairment
review include underperformance relative to historical
or projected future results, significant changes in the
manner of the use of the acquired assets or the strat-
egy for the overall business and significant negative
industry or economic trends.
The Group conducts its impairment testing by
determining the recoverable amount for the asset or
cash-generating unit. The recoverable amount of an
asset or a cash-generating unit is the higher of its
fair value less costs to sell and its value in use. The
recoverable amount is then compared to its carrying
amount and an impairment loss is recognized if the
recoverable amount is less than the carrying amount.
Impairment losses are recognized immediately in the
profit and loss account.
Foreign currency translation
Functional and presentation currency
The financial statements of all Group entities are
measured using the currency of the primary economic
environment in which the entity operates (functional
currency). The consolidated financial statements are
presented in Euro, which is the functional and presen-
tation currency of the Parent Company.
Transactions in foreign currencies
Transactions in foreign currencies are recorded at
the rates of exchange prevailing at the dates of the
individual transactions. For practical reasons, a rate
that approximates the actual rate at the date of the
transaction is often used. At the end of the accounting
period, the unsettled balances on foreign currency
assets and liabilities are valued at the rates of ex-
change prevailing at the year-end. Foreign exchange
gains and losses arising from statement of financial
position items, as well as fair value changes in the
related hedging instruments, are reported in financial
income and expenses. For non-monetary items, such
as shares, the unrealized foreign exchange gains and
losses are recognized in the other comprehensive
income.
Foreign Group companies
In the consolidated accounts all income and expenses
of foreign subsidiaries are translated into Euro at
the average foreign exchange rates for the account-
ing period. All assets and liabilities of foreign Group
companies are translated into Euro at the year-end
foreign exchange rates with the exception of goodwill
arising on the acquisition of foreign companies prior
to the adoption of IAS 21 (revised 2004) on January 1,
2005, which is translated to Euro at historical rates.
Differences resulting from the translation of income
and expenses at the average rate and assets and
liabilities at the closing rate are treated as an adjust-
ment affecting consolidated shareholders’ equity. On
the disposal of all or part of a foreign Group company
by sale, liquidation, repayment of share capital or
abandonment, the cumulative amount or proportion-
ate share of the translation difference is recognized as
income or as expense in the same period in which the
gain or loss on disposal is recognized.
Revenue recognition
Sales from the majority of the Group are recognized
when the significant risks and rewards of ownership
have transferred to the buyer, continuing managerial
involvement usually associated with ownership and
effective control have ceased, the amount of revenue
can be measured reliably, it is probable that economic
benefits associated with the transaction will flow to
the Group and the costs incurred or to be incurred in
respect of the transaction can be measured reliably.
The Group records reductions to revenue for special
pricing agreements, price protection and other
volume based discounts. Service revenue is generally
recognized on a straight line basis over the service pe-
riod unless there is evidence that some other method
better represents the stage of completion. License
fees from usage are recognized in the period when
they are reliably measurable which is normally when
the customer reports them to the Group.
The Group enters into transactions involving
multiple components consisting of any combination of
hardware, services and software. The commercial ef-
fect of each separately identifiable component of the
transaction is evaluated in order to reflect the sub-
stance of the transaction. The consideration received
from these transactions is allocated to each separately
identifiable component based on the relative fair
value of each component. The Group determines the
fair value of each component by taking into consider-
ation factors such as the price when the component
or a similar component is sold separately by the
Group or a third party. The consideration allocated to
each component is recognized as revenue when the
revenue recognition criteria for that component have
been met.
In addition, sales and cost of sales from contracts
involving solutions achieved through modification
of complex telecommunications equipment are rec-
ognized using the percentage of completion method
when the outcome of the contract can be estimated
reliably. A contract’s outcome can be estimated
reliably when total contract revenue and the costs to
complete the contract can be estimated reliably, it is
probable that the economic benefits associated with
the contract will flow to the Group and the stage of
contract completion can be measured reliably. When
the Group is not able to meet those conditions, the
policy is to recognize revenues only equal to costs
incurred to date, to the extent that such costs are
expected to be recovered.
Progress towards completion is measured by
reference to cost incurred to date as a percentage of
estimated total project costs, the cost-to-cost method.
Notes to the consolidated financial statements
The percentage of completion method relies
on estimates of total expected contract revenue
and costs, as well as dependable measurement of
the progress made towards completing a particular
project. Recognized revenues and profits are subject
to revisions during the project in the event that the
assumptions regarding the overall project outcome
are revised. The cumulative impact of a revision in
estimates is recorded in the period such revisions
become likely and estimable. Losses on projects in
progress are recognized in the period they become
probable and estimable.
Shipping and handling costs
The costs of shipping and distributing products are
included in cost of sales.
Research and development
Research and development costs are expensed as
they are incurred, except for certain development
costs, which are capitalized when it is probable that
a development project will generate future economic
benefits, and certain criteria, including commercial
and technological feasibility, have been met. Capital-
ized development costs, comprising direct labor and
related overhead, are amortized on a systematic basis
over their expected useful lives between two and five
years.
Capitalized development costs are subject to
regular assessments of recoverability based on
anticipated future revenues, including the impact
of changes in technology. Unamortized capitalized
development costs determined to be in excess of their
recoverable amounts are expensed immediately.
Other intangible assets
Acquired patents, trademarks, licenses, software
licenses for internal use, customer relationships and
developed technology are capitalized and amortized
using the straight-line method over their useful lives,
generally 3 to 6 years, but not exceeding 20 years.
Where an indication of impairment exists, the carry-
ing amount of any intangible asset is assessed and
written down to its recoverable amount.
Pensions
The Group companies have various pension schemes
in accordance with the local conditions and practices
in the countries in which they operate. The schemes
are generally funded through payments to insurance
companies or to trustee-administered funds as deter-
mined by periodic actuarial calculations.
In a defined contribution plan, the Group has
no legal or constructive obligation to make any
additional contributions if the party receiving the
contributions is unable to pay the pension obligations
in question. The Group’s contributions to defined
15
Notes to the consolidated financial statements
contribution plans, multi-employer and insured plans
are recognized in the income statement in the period
to which the contributions relate.
All arrangements that do not fulfill these
conditions are considered defined benefit plans. If a
defined benefit plan is funded through an insurance
contract where the Group does not retain any legal or
constructive obligations, such a plan is treated as a
defined contribution plan.
For defined benefit plans, pension costs are
assessed using the projected unit credit method: The
pension cost is recognized in the income statement so
as to spread the service cost over the service lives of
employees. The pension obligation is measured as the
present value of the estimated future cash outflows
using interest rates on high quality corporate bonds
with appropriate maturities. Actuarial gains and
losses outside the corridor are recognized over the
average remaining service lives of employees. The
corridor is defined as ten percent of the greater of the
value of plan assets or defined benefit obligation at
the beginning of the respective year.
Past service costs are recognized immediately in
income, unless the changes to the pension plan are
conditional on the employees remaining in service
for a specified period of time (the vesting period). In
this case, the past service costs are amortized on a
straight-line basis over the vesting period.
The liability (or asset) recognized in the statement
of financial position is pension obligation at the clos-
ing date less the fair value of plan assets, the share
of unrecognized actuarial gains and losses, and past
service costs. Any net pension asset is limited to unrec-
ognized actuarial losses, past service cost, the present
value of available refunds from the plan and expected
reductions in future contributions to the plan.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation. Depreciation is recorded
on a straight-line basis over the expected useful lives
of the assets as follows:
Buildings and constructions
20–33 years
Production machinery,
measuring and test equipment
1–3 years
Other machinery and equipment
3–10 years
Land and water areas are not depreciated.
Maintenance, repairs and renewals are generally
charged to expense during the financial period in
which they are incurred. However, major renovations
are capitalized and included in the carrying amount
of the asset when it is probable that future economic
benefits in excess of the originally assessed standard
of performance of the existing asset will flow to the
Group. Major renovations are depreciated over the
remaining useful life of the related asset. Leasehold
improvements are depreciated over the shorter of the
lease term or useful life.
Gains and losses on the disposal of fixed assets
are included in operating profit/loss.
16
Nokia in 2009
Leases
The Group has entered into various operating leases,
the payments under which are treated as rentals
and recognized in the profit and loss account on a
straight-line basis over the lease terms unless another
systematic approach is more representative of the
pattern of the user’s benefit.
Inventories
Inventories are stated at the lower of cost or net
realizable value. Cost is determined using standard
cost, which approximates actual cost on a FIFO (First-
in First-out) basis. Net realizable value is the amount
that can be realized from the sale of the inventory in
the normal course of business after allowing for the
costs of realization.
In addition to the cost of materials and direct
labor, an appropriate proportion of production over-
head is included in the inventory values.
An allowance is recorded for excess inventory
and obsolescence based on the lower of cost or net
realizable value.
Financial assets
The Group has classified its financial assets as one of
the following categories: available-for-sale invest-
ments, loans and receivables, financial assets at fair
value through profit or loss and bank and cash.
Available-for-sale investments
The Group classifies the following investments as
available-for-sale based on the purpose for acquiring
the investments as well as ongoing intentions: (1)
highly liquid, interest-bearing investments with ma-
turities at acquisition of less than 3 months, which are
classified in the balance sheet as current available-for-
sale investments, cash equivalents, (2) similar types of
investments as in category (1), but with maturities at
acquisition of longer than 3 months, classified in the
balance sheet as current available-for-sale invest-
ments, liquid assets, (3) investments in technology
related publicly quoted equity shares, or unlisted
private equity shares and unlisted funds, classified in
the balance sheet as non-current available-for-sale
investments.
Current fixed income and money-market invest-
ments are fair valued by using quoted market rates,
discounted cash flow analyses and other appropriate
valuation models at the balance sheet date. Invest-
ments in publicly quoted equity shares are measured
at fair value using exchange quoted bid prices. Other
available-for-sale investments carried at fair value
include holdings in unlisted shares. Fair value is
estimated by using various factors, including, but
not limited to: (1) the current market value of similar
instruments, (2) prices established from a recent arm’s
length financing transaction of the target companies,
(3) analysis of market prospects and operating perfor-
mance of the target companies taking into consider-
ation the public market of comparable companies in
similar industry sectors. The remaining available-for-
sale investments are carried at cost less impairment,
which are technology related investments in private
equity shares and unlisted funds for which the fair
value cannot be measured reliably due to non-exis-
tence of public markets or reliable valuation methods
against which to value these assets. The investment
and disposal decisions on these investments are busi-
ness driven.
All purchases and sales of investments are
recorded on the trade date, which is the date that
the Group commits to purchase or sell the asset.
The fair value changes of available-for-sale
investments are recognized in fair value and other
reserves as part of shareholders’ equity, with the
exception of interest calculated using effective inter-
est method and foreign exchange gains and losses
on monetary assets, which are recognized directly in
profit and loss. Dividends on available-for-sale equity
instruments are recognized in profit and loss when
the Group’s right to receive payment is established.
When the investment is disposed of, the related
accumulated fair value changes are released from
shareholders’ equity and recognized in the income
statement. The weighted average method is used
when determining the cost-basis of publicly listed
equities being disposed of. FIFO (First-in First-out)
method is used to determine the cost basis of fixed
income securities being disposed of. An impairment is
recorded when the carrying amount of an available-
for-sale investment is greater than the estimated fair
value and there is objective evidence that the asset
is impaired including but not limited to counterparty
default and other factors causing a reduction in value
that can be considered permanent. The cumulative
net loss relating to that investment is removed from
equity and recognized in the income statement for
the period. If, in a subsequent period, the fair value of
the investment in a non-equity instrument increases
and the increase can be objectively related to an event
occurring after the loss was recognized, the loss is
reversed, with the amount of the reversal included in
the income statement.
Investments at fair value through profit and loss,
liquid assets
The investments at fair value through profit and loss,
liquid assets include highly liquid financial assets
designated at fair value through profit or loss at
inception. For investments designated as at fair value
through profit or loss, the following criteria must be
met: (1) the designation eliminates or significantly
reduces the inconsistent treatment that would other-
wise arise from measuring the assets or recognizing
gains or losses on a different basis; or (2) the assets
are part of a group of financial assets, which are man-
aged and their performance evaluated on a fair value
basis, in accordance with a documented risk manage-
ment or investment strategy.
These investments are initially recorded at fair
value. Subsequent to initial recognition, these invest-
ments are remeasured at fair value. Fair value adjust-
ments and realized gain and loss are recognized in the
income statement.
Notes to the consolidated financial statements
Loans receivable
Loans receivable include loans to customers and
suppliers and are initially measured at fair value and
subsequently at amortized cost using the effective
interest method less impairment. Loans are subject
to regular and thorough review as to their collect-
ability and as to available collateral; in the event that
any loan is deemed not fully recoverable, a provision
is made to reflect the shortfall between the carrying
amount and the present value of the expected cash
flows. Interest income on loans receivable is recog-
nized by applying the effective interest rate. The long
term portion of loans receivable is included on the
statement of financial position under long-term loans
receivable and the current portion under current por-
tion of long-term loans receivable.
Bank and cash
Bank and cash consist of cash at bank and in hand.
Accounts receivable
Accounts receivable are carried at the original amount
due from customers, which is considered to be fair
value, less allowances for doubtful accounts based on
a periodic review of all outstanding amounts including
an analysis of historical bad debt, customer concentra-
tions, customer creditworthiness, current economic
trends and changes in our customer payment terms.
Bad debts are written off when identified as uncollect-
ible, and are included within other operating expenses.
Financial liabilities
Loans payable
Loans payable are recognized initially at fair value, net
of transaction costs incurred. Any difference between
the fair value and the proceeds received is recog-
nized in profit and loss at initial recognition. In the
subsequent periods, they are stated at amortized cost
using the effective interest method. The long term
portion of loans payable is included on the statement
of financial position under long-term interest-bearing
liabilities and the current portion under current por-
tion of long-term loans.
Accounts payable
Accounts payable are carried at the original invoiced
amount, which is considered to be fair value due to
the short-term nature.
Derivative financial instruments
All derivatives are initially recognized at fair value
on the date a derivative contract is entered into and
are subsequently remeasured at their fair value. The
method of recognizing the resulting gain or loss varies
according to whether the derivatives are designated
and qualify under hedge accounting or not. Gener-
ally the cash flows of a hedge are classified as cash
flows from operating activities in the consolidated
statement of cash flows as the underlying hedged
items relate to company’s operating activities. When
a derivative contract is accounted for as a hedge of an
identifiable position relating to financing or investing
activities, the cash flows of the contract are classified
in the same manner as the cash flows of the position
being hedged.
zero premium structure are the same and where the
nominal amount of the sold option component is no
greater than that of the bought option.
For qualifying foreign exchange forwards the
Derivatives not designated in hedge accounting
relationships carried at fair value through profit
and loss
Fair values of forward rate agreements, interest
rate options, futures contracts and exchange traded
options are calculated based on quoted market rates
at each balance sheet date. Discounted cash flow
analyses are used to value interest rate and currency
swaps. Changes in the fair value of these contracts are
recognized in the income statement.
Fair values of cash settled equity derivatives are
calculated based on quoted market rates at each bal-
ance sheet date. Changes in fair value are recognized
in the income statement.
change in fair value that reflects the change in spot
exchange rates is deferred in shareholders’ equity to
the extent that the hedge is effective. For qualifying
foreign exchange options, or option strategies, the
change in intrinsic value is deferred in shareholders’
equity to the extent that the hedge is effective. In all
cases the ineffective portion is recognized immedi-
ately in the profit and loss account as financial income
and expenses. Hedging costs, expressed either as
the change in fair value that reflects the change in
forward exchange rates less the change in spot ex-
change rates for forward foreign exchange contracts,
or changes in the time value for options, or options
strategies, are recognized within other operating
income or expenses.
Forward foreign exchange contracts are valued
Accumulated fair value changes from qualifying
at the market forward exchange rates. Changes in fair
value are measured by comparing these rates with
the original contract forward rate. Currency options
are valued at each balance sheet date by using the
Garman & Kohlhagen option valuation model. Changes
in the fair value on these instruments are recognized
in the income statement.
For the derivatives not designated under hedge
accounting but hedging identifiable exposures such
as anticipated foreign currency denominated sales
and purchases, the gains and losses are recognized
within other operating income or expenses. The gains
and losses on all other hedges not designated under
hedge accounting are recognized under financial
income and expenses.
Embedded derivatives are identified and moni-
tored by the Group and fair valued as at each balance
sheet date. In assessing the fair value of embedded
derivatives, the Group employs a variety of methods
including option pricing models and discounted cash
flow analysis using assumptions that are based on
market conditions existing at each balance sheet date.
The fair value changes are recognized in the income
statement.
Hedge accounting
Cash flow hedges: Hedging of anticipated foreign
currency denominated sales and purchases
The Group applies hedge accounting for “Qualifying
hedges”. Qualifying hedges are those properly docu-
mented cash flow hedges of the foreign exchange rate
risk of future anticipated foreign currency denomi-
nated sales and purchases that meet the requirements
set out in IAS 39. The cash flow being hedged must be
“highly probable” and must present an exposure to
variations in cash flows that could ultimately affect
profit or loss. The hedge must be highly effective both
prospectively and retrospectively.
The Group claims hedge accounting in respect
of certain forward foreign exchange contracts and
options, or option strategies, which have zero net pre-
mium or a net premium paid, and where the critical
terms of the bought and sold options within a collar or
hedges are released from shareholders’ equity into
the income statement as adjustments to sales and
cost of sales, in the period when the hedged cash flow
affects the income statement. If the hedged cash flow
is no longer expected to take place, all deferred gains
or losses are released immediately into the profit and
loss account as adjustments to sales and cost of sales.
If the hedged cash flow ceases to be highly probable,
but is still expected to take place, accumulated gains
and losses remain in equity until the hedged cash flow
affects the income statement.
Changes in the fair value of any derivative instru-
ments that do not qualify for hedge accounting under
IAS 39 are recognized immediately in the income
statement. The fair value changes of derivative instru-
ments that directly relate to normal business opera-
tions are recognized within other operating income
and expenses. The fair value changes from all other
derivative instruments are recognized in financial
income and expenses.
Cash flow hedges: Hedging of foreign currency risk
of highly probable business acquisitions and other
transactions
The Group hedges the cash flow variability due to
foreign currency risk inherent in highly probable
business acquisitions and other future transactions
that result in the recognition of non-financial assets.
When those non-financial assets are recognized in the
balance sheet the gains and losses previously deferred
in equity are transferred from equity and included in
the initial acquisition cost of the asset. The deferred
amounts are ultimately recognized in the profit and
loss as a result of goodwill assessments in case of
business acquisitions and through depreciation in
case of other assets. In order to apply for hedge ac-
counting, the forecasted transactions must be highly
probable and the hedges must be highly effective
prospectively and retrospectively.
The Group claims hedge accounting in respect of
forward foreign exchange contracts, foreign currency
denominated loans, and options, or option strategies,
which have zero net premium or a net premium paid,
and where the terms of the bought and sold options
within a collar or zero premium structure are the same.
17
Notes to the consolidated financial statements
For qualifying foreign exchange forwards, the
change in fair value that reflects the change in spot
exchange rates is deferred in shareholders’ equity. The
change in fair value that reflects the change in for-
ward exchange rates less the change in spot exchange
rates is recognized in the profit and loss account
within financial income and expenses. For qualify-
ing foreign exchange options the change in intrinsic
value is deferred in shareholders’ equity. Changes
in the time value are at all times recognized directly
in the profit and loss account as financial income
and expenses. In all cases the ineffective portion is
recognized immediately in the income statement as
financial income and expenses.
Cash flow hedges: Hedging of cash flow variability
on variable rate liabilities
The Group applies cash flow hedge accounting for
hedging cash flow variability on variable rate liabili-
ties. The effective portion of the gain or loss relating
to interest rate swaps hedging variable rate borrow-
ings is deferred in shareholders’ equity. The gain or
loss relating to the ineffective portion is recognized
immediately in the income statement as financial
income and expenses.
Fair value hedges
The Group applies fair value hedge accounting with
the objective to reduce the exposure to fluctuations
in the fair value of interest-bearing liabilities due to
changes in interest rates and foreign exchange rates.
Changes in the fair value of derivatives designated
and qualifying as fair value hedges, together with
any changes in the fair value of the hedged liabilities
attributable to the hedged risk, are recorded in
the income statement within financial income and
expenses.
If a hedge no longer meets the criteria for hedge
accounting, hedge accounting ceases and any fair
value adjustments made to the carrying amount of
the hedged item during the periods the hedge was
effective are amortized to profit or loss based on the
effective interest method.
Hedges of net investments in foreign operations
The Group also applies hedge accounting for its for-
eign currency hedging on net investments.
Qualifying hedges are those properly document-
ed hedges of the foreign exchange rate risk of foreign
currency denominated net investments that meet the
requirements set out in IAS 39. The hedge must be
effective both prospectively and retrospectively.
The Group claims hedge accounting in respect of
forward foreign exchange contracts, foreign currency
denominated loans, and options, or option strategies,
which have zero net premium or a net premium paid,
and where the terms of the bought and sold options
within a collar or zero premium structure are the same.
For qualifying foreign exchange forwards, the
change in fair value that reflects the change in spot
exchange rates is deferred in shareholders’ equity. The
change in fair value that reflects the change in for-
ward exchange rates less the change in spot exchange
rates is recognized in the profit and loss account
within financial income and expenses. For qualify-
18
Nokia in 2009
ing foreign exchange options the change in intrinsic
value is deferred in shareholders’ equity. Changes in
the time value are at all times recognized directly in
the profit and loss account as financial income and
expenses. If a foreign currency denominated loan is
used as a hedge, all foreign exchange gains and losses
arising from the transaction are recognized in share-
holders’ equity. In all cases the ineffective portion is
recognized immediately in the income statement as
financial income and expenses.
Accumulated fair value changes from qualify-
ing hedges are released from shareholders’ equity
into the income statement only if the legal entity in
the given country is sold, liquidated, repays its share
capital or is abandoned.
Income taxes
The tax expense comprises current tax and deferred
tax. Current taxes are based on the results of the
Group companies and are calculated according to
local tax rules. Taxes are recognized in the income
statement, except to the extent that it relates to items
recognized in the other comprehensive income or di-
rectly in equity, in which case the tax is recognized in
other comprehensive income or equity, respectively.
Deferred tax assets and liabilities are deter-
mined, using the liability method, for all temporary
differences arising between the tax bases of assets
and liabilities and their carrying amounts in the con-
solidated financial statements. Deferred tax assets are
recognized to the extent that it is probable that future
taxable profit will be available against which the
unused tax losses or deductible temporary differences
can be utilized. When circumstances indicate it is no
longer probable that deferred tax assets will be uti-
lized they are assessed for realizability and adjusted
as necessary. Deferred tax liabilities are recognized
for temporary differences that arise between the fair
value and tax base of identifiable net assets acquired
in business combinations. Deferred tax assets and
deferred tax liabilities are offset for presentation
purposes when there is a legally enforceable right to
set off current tax assets against current tax liabilities,
and the deferred tax assets and the deferred tax
liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity
or different taxable entities which intend either to
settle current tax liabilities and assets on a net basis,
or to realize the assets and settle the liabilities simul-
taneously, in each future period in which significant
amounts of deferred tax liabilities or assets are
expected to be settled or recovered.
The enacted or substantially enacted tax rates as
of each balance sheet date that are expected to apply
in the period when the asset is realized or the liability
is settled are used in the measurement of deferred tax
assets and liabilities.
Provisions
Provisions are recognized when the Group has a
present legal or constructive obligation as a result of
past events, it is probable that an outflow of resources
will be required to settle the obligation and a reli-
able estimate of the amount can be made. Where
the Group expects a provision to be reimbursed, the
reimbursement is recognized as an asset only when
the reimbursement is virtually certain. At each bal-
ance sheet date, the Group assesses the adequacy of
its preexisting provisions and adjusts the amounts as
necessary based on actual experience and changes in
future estimates.
Warranty provisions
The Group provides for the estimated liability to
repair or replace products under warranty at the time
revenue is recognized. The provision is an estimate
calculated based on historical experience of the level
of repairs and replacements.
Intellectual property rights (IPR) provisions
The Group provides for the estimated future settle-
ments related to asserted and unasserted past alleged
IPR infringements based on the probable outcome of
potential infringement.
Tax provisions
The Group recognizes a provision for tax contingen-
cies based upon the estimated future settlement
amount at each balance sheet date.
Restructuring provisions
The Group provides for the estimated cost to restruc-
ture when a detailed formal plan of restructuring has
been completed and the restructuring plan has been
announced.
Other provisions
The Group recognizes the estimated liability for non-
cancellable purchase commitments for inventory in
excess of forecasted requirements at each balance
sheet date.
The Group provides for onerous contracts based
on the lower of the expected cost of fulfilling the
contract and the expected cost of terminating the
contract.
Share-based compensation
The Group offers three types of global equity settled
share-based compensation schemes for employees:
stock options, performance shares and restricted
shares. Employee services received, and the cor-
responding increase in equity, are measured by
reference to the fair value of the equity instruments
as of the date of grant, excluding the impact of any
non-market vesting conditions. Non-market vesting
conditions attached to the performance shares are
included in assumptions about the number of shares
that the employee will ultimately receive. On a regular
basis, the Group reviews the assumptions made and,
where necessary, revises its estimates of the number
of performance shares that are expected to be settled.
Share-based compensation is recognized as an ex-
pense in the income statement over the service period.
A separate vesting period is defined for each quarterly
lot of the stock options plans. When stock options are
exercised, the proceeds received net of any transac-
tion costs are credited to share issue premium and the
reserve for invested non-restricted equity.
Treasury shares
The Group recognizes acquired treasury shares as a
deduction from equity at their acquisition cost. When
cancelled, the acquisition cost of treasury shares is
recognized in retained earnings.
Dividends
Dividends proposed by the Board of Directors are not
recorded in the financial statements until they have
been approved by the shareholders at the Annual
General Meeting.
Earnings per share
The Group calculates both basic and diluted earnings
per share. Basic earnings per share is computed using
the weighted average number of shares outstanding
during the period. Diluted earnings per share is com-
puted using the weighted average number of shares
outstanding during the period plus the dilutive effect
of stock options, restricted shares and performance
shares outstanding during the period.
Use of estimates and critical accounting
judgements
The preparation of financial statements in conformity
with IFRS requires the application of judgment by
management in selecting appropriate assumptions
for calculating financial estimates, which inherently
contain some degree of uncertainty. Management
bases its estimates on historical experience and
various other assumptions that are believed to be
reasonable under the circumstances, the results of
which form the basis for making judgments about
the reported carrying values of assets and liabilities
and the reported amounts of revenues and expenses
that may not be readily apparent from other sources.
Actual results may differ from these estimates under
different assumptions or conditions.
Set forth below are areas requiring significant
judgment and estimation that may have an impact on
reported results and the financial position.
Revenue recognition
Sales from the majority of the Group are recognized
when the significant risks and rewards of ownership
have transferred to the buyer, continuing managerial
involvement usually associated with ownership and
effective control have ceased, the amount of revenue
can be measured reliably, it is probable that economic
benefits associated with the transaction will flow to
the Group and the costs incurred or to be incurred in
respect of the transaction can be measured reliably.
Sales may materially change if management’s as-
sessment of such criteria was determined to be inac-
curate. The Group enters into transactions involving
multiple components consisting of any combination
of hardware, services and software. The consideration
received from these transactions is allocated to each
separately identifiable component based on the rela-
tive fair value of each component. The consideration
allocated to each component is recognized as revenue
when the revenue recognition criteria for that compo-
nent have been met. Determination of the fair value
for each component requires the use of estimates and
judgment taking into consideration factors such as
the price when the component is sold separately by
the Group or the price when a similar component is
sold separately by the Group or a third party, which
may have a significant impact on the timing and
amount of revenue recognition.
The Group makes price protection adjustments
based on estimates of future price reductions and
certain agreed customer inventories at the date of the
price adjustment. Possible changes in these estimates
could result in revisions to the sales in future periods.
Revenue from contracts involving solutions
achieved through modification of complex tele-
communications equipment is recognized on the
percentage of completion basis when the outcome
of the contract can be estimated reliably. Recog-
nized revenues and profits are subject to revisions
during the project in the event that the assumptions
regarding the overall project outcome are revised.
Current sales and profit estimates for projects may
materially change due to the early stage of a long-
term project, new technology, changes in the project
scope, changes in costs, changes in timing, changes in
customers’ plans, realization of penalties, and other
corresponding factors.
Customer financing
The Group has provided a limited number of customer
financing arrangements and agreed extended pay-
ment terms with selected customers. Should the
actual financial position of the customers or general
economic conditions differ from assumptions, the ulti-
mate collectability of such financings and trade credits
may be required to be re-assessed, which could result
in a write-off of these balances and thus negatively
impact profits in future periods. The Group endeavors
to mitigate this risk through the transfer of its rights
to the cash collected from these arrangements to third
party financial institutions on a non-recourse basis in
exchange for an upfront cash payment.
Allowances for doubtful accounts
The Group maintains allowances for doubtful accounts
for estimated losses resulting from the subsequent in-
ability of customers to make required payments. If the
financial conditions of customers were to deteriorate,
resulting in an impairment of their ability to make
payments, additional allowances may be required in
future periods.
Inventory-related allowances
The Group periodically reviews inventory for excess
amounts, obsolescence and declines in market value
Notes to the consolidated financial statements
below cost and records an allowance against the
inventory balance for any such declines. These reviews
require management to estimate future demand for
products. Possible changes in these estimates could
result in revisions to the valuation of inventory in
future periods.
Warranty provisions
The Group provides for the estimated cost of product
warranties at the time revenue is recognized. The
Group’s warranty provision is established based upon
best estimates of the amounts necessary to settle
future and existing claims on products sold as of each
balance sheet date. As new products incorporating
complex technologies are continuously introduced,
and as local laws, regulations and practices may
change, changes in these estimates could result in ad-
ditional allowances or changes to recorded allowances
being required in future periods.
Provision for intellectual property rights,
or IPR, infringements
The Group provides for the estimated future settle-
ments related to asserted and unasserted past alleged
IPR infringements based on the probable outcome of
potential infringement. IPR infringement claims can
last for varying periods of time, resulting in irregular
movements in the IPR infringement provision. The ul-
timate outcome or actual cost of settling an individual
infringement may materially vary from estimates.
Legal contingencies
Legal proceedings covering a wide range of matters
are pending or threatened in various jurisdictions
against the Group. Provisions are recorded for pending
litigation when it is determined that an unfavorable
outcome is probable and the amount of loss can be
reasonably estimated. Due to the inherent uncertain
nature of litigation, the ultimate outcome or actual
cost of settlement may materially vary from estimates.
Capitalized development costs
The Group capitalizes certain development costs when
it is probable that a development project will generate
future economic benefits and certain criteria, including
commercial and technological feasibility, have been
met. Should a product fail to substantiate its estimated
feasibility or life cycle, material development costs may
be required to be written-off in future periods.
Business combinations
The Group applies the purchase method of accounting
to account for acquisitions of businesses. The cost of
an acquisition is measured as the aggregate of the fair
values at the date of exchange of the assets given, li-
abilities incurred, equity instruments issued and costs
directly attributable to the acquisition. Identifiable
assets, liabilities and contingent liabilities acquired or
assumed are measured separately at their fair value
as of the acquisition date. The excess of the cost of
the acquisition over our interest in the fair value of
the identifiable net assets acquired is recorded as
goodwill.
The allocation of fair values to the identifiable
assets acquired and liabilities assumed is based on
19
Notes to the consolidated financial statements
various valuation assumptions requiring management
judgment. Actual results may differ from the fore-
casted amounts and the difference could be material.
See also Note 8.
tions of net sales and earnings per share. Significant
differences in equity market performance, employee
option activity and the Group’s projected and actual
net sales and earnings per share performance, may
materially affect future expense. See also Note 23.
Assessment of the recoverability of long-lived
assets, intangible assets and goodwill
The recoverable amounts for long-lived assets,
intangible assets and goodwill have been determined
based on the expected future cash flows attributable
to the asset or cash-generating unit discounted to
present value. The key assumptions applied in the
determination of recoverable amount include the
discount rate, length of the explicit forecast period
and estimated growth rates, profit margins and level
of operational and capital investment. Amounts esti-
mated could differ materially from what will actually
occur in the future. See also Note 7.
Fair value of derivatives and other financial
instruments
The fair value of financial instruments that are not
traded in an active market (for example, unlisted equi-
ties, currency options and embedded derivatives) are
determined using various valuation techniques. The
Group uses judgment to select an appropriate valua-
tion methodology as well as underlying assumptions
based on existing market practice and conditions.
Changes in these assumptions may cause the Group to
recognize impairments or losses in future periods.
Income taxes
Management judgment is required in determining
income tax expense, tax provisions, deferred tax
assets and liabilities and the extent to which deferred
tax assets can be recognized. When circumstances in-
dicate it is no longer probable that deferred tax assets
will be utilized they are assessed for realizability and
adjusted as necessary. If the final outcome of these
matters differs from the amounts initially recorded,
differences may impact the income tax expense in the
period in which such determination is made.
Pensions
The determination of pension benefit obligation
and expense for defined benefit pension plans is
dependent on the selection of certain assumptions
used by actuaries in calculating such amounts. Those
assumptions include, among others, the discount rate,
expected long-term rate of return on plan assets and
annual rate of increase in future compensation levels.
A portion of plan assets is invested in equity securities
which are subject to equity market volatility. Changes
in assumptions and actuarial conditions may materi-
ally affect the pension obligation and future expense.
See also Note 5.
Share-based compensation
The Group operates various types of equity settled
share-based compensation schemes for employees.
Fair value of stock options is based on certain assump-
tions, including, among others, expected volatility and
expected life of the options. Non-market vesting con-
ditions attached to performance shares are included
in assumptions about the number of shares that the
employee will ultimately receive relating to projec-
20
Nokia in 2009
New accounting pronouncements under IFRS
The Group will adopt the following new and revised
standards, amendments and interpretations to exist-
ing standards issued by the IASB that are expected to
be relevant to its operations:
IFRS 3 (revised) Business Combinations replaces
IFRS 3 (as issued in 2004). The main changes brought
by IFRS 3 (revised) include clarification of the defini-
tion of a business, immediate recognition of all
acquisition-related costs in profit or loss, recognition
of subsequent changes in the fair value of contingent
consideration in accordance with other IFRSs and
measurement of goodwill arising from step acquisi-
tions at the acquisition date.
IAS 27 (revised), “Consolidated and Separate
Financial Statements” clarifies presentation of
changes in parent-subsidiary ownership. Changes in
a parent’s ownership interest in a subsidiary that do
not result in the loss of control must be accounted
for exclusively within equity. If a parent loses control
of a subsidiary it shall derecognize the consolidated
assets and liabilities, and any investment retained
in the former subsidiary shall be recognized at fair
value at the date when control is lost. Any differences
resulting from this shall be recognized in profit or
loss. When losses attributed to the minority (non-
controlling) interests exceed the minority’s interest in
the subsidiary’s equity, these losses shall be allocated
to the non-controlling interests even if this results in a
deficit balance.
IFRS 9 will change the classification, measurement
and impairment of financial instruments based on our
objectives for the related contractual cash flows.
Amendments to IFRS 2 and IFRIC 11 clarify that an
entity that receives goods or services in a share-based
payment arrangement should account for those goods
or services no matter which entity in the group settles
the transaction, and no matter whether the transac-
tion is settled in shares or cash.
Amendment to IAS 32 requires that if rights issues
offered are issued pro rata to entity’s all existing
shareholders in the same class for a fixed amount of
currency, they should be classified as equity regard-
less of the currency in which the exercise price is
denominated.
Amendments to IFRIC 14 and IAS 19 address the
circumstances when an entity is subject to minimum
funding requirements and makes an early payment
of contributions to cover those requirements. The
amendment permits such an entity to treat the ben-
efit of such an early payment as an asset.
IFRIC 19 clarifies the requirements when an entity
renegotiates the terms of a financial liability with its
creditor and the creditor agrees to accept the entity’s
equity instruments to settle the financial liability fully
or partially. The entity’s equity instruments issued to
a creditor are part of the consideration paid to extin-
guish the financial liability and the issued instruments
should be measured at their fair value.
In addition, there a number of other amendments
that form part of the IASB’s annual improvement
project which will be adopted by the Group on
January 1, 2010.
The Group will adopt IFRS 3 (revised), IAS 27
(revised) and the amendments to IFRS 2 and IFRIC 11,
IFRIC 14 and IAS 19 and IAS 32 as well as the additional
amendments that form part of the IASB’s annual im-
provement project on January 1, 2010. IFRIC 19 will be
adopted on January 1, 2011. The Group does not expect
that the adoption of these new standards, interpreta-
tions and amendments will have a material impact on
the financial condition and results of operations.
The Group is required to adopt IFRS 9 by Janu-
ary 1, 2013 with earlier adoption permitted. The Group
is currently evaluating the potential impact of this
standard on the Group’s accounts.
2. Segment information
Nokia is organized on a worldwide basis into three op-
erating and reportable segments: Devices & Services,
NAVTEQ, and Nokia Siemens Networks. Nokia’s report-
able segments represent the strategic business units
that offer different products and services for which
monthly financial information is provided to the chief
operating decision maker.
As of January 1, 2008, the Group’s three mobile
device business groups and the supporting horizontal
groups have been replaced by an integrated business
segment, Devices & Services. Commencing with the
third quarter 2008, NAVTEQ is also a reportable seg-
ment. Prior period results for Nokia and its reportable
segments have been regrouped for comparability
purposes according to the new reportable segments
effective in 2008.
Devices & Services is responsible for developing
and managing the Group’s portfolio of mobile devices,
services and their combinations as well as designing
and developing services, applications and content.
Devices & Services also manages our supply chains,
sales channels, brand and marketing activities, and
explores corporate strategic and future growth op-
portunities for Nokia.
NAVTEQ is a leading provider of comprehensive
digital map information and related location-based
content and services for automotive navigation sys-
tems and mobile navigation devices, Internet-based
mapping applications, and government and business
solutions.
Nokia Siemens Networks provides mobile and
fixed network solutions and related services to opera-
tors and service providers.
Corporate Common Functions consists of com-
pany wide functions.
The accounting policies of the segments are the
same as those described in Note 1. Nokia accounts
for intersegment revenues and transfers as if the rev-
enues or transfers were to third parties, that is, at cur-
rent market prices. Nokia evaluates the performance
of its segments and allocates resources to them based
on operating profit.
No single customer represents 10% or more of
Group revenues.
Notes to the consolidated financial statements
Devices &
Services
NAVTEQ
Nokia
Siemens
Networks
Total
reportable
segments
Corporate
Common
Functions and
Corporate
unallocated 4, 6 Eliminations
Group
27 841
12
432
56
3 314
—
232
9 203
—
8 268
35 084
15
484
58
5 816
—
578
10 300
—
8 425
37 682
23
489
—
7 584
—
579
91
488
—
–344
—
21
6 145
5
2 330
318
43
238
—
–153
—
18
7 177
4
2 726
—
—
—
—
—
—
12 564
40 984
10
860
919
–1 639
32
278
11 015
26
7 927
113
1 780
975
1 331
32
531
26 363
31
18 525
15 308
50 710
1
889
47
–301
–13
292
15 652
62
10 503
59
1 611
105
5 362
–13
888
33 129
66
21 654
13 376
51 058
17
714
27
–1 308
4
40
1 203
27
6 276
4
—
—
4
34
–134
–2
—
12 479
38
5 568
—
—
6
33
–396
19
1
9 641
30
4 606
—
41
3
36
1 709
40
–113
40 984
—
1 784
1 009
1 197
30
531
–3 104
35 738
69
–3 104
20 989
–59
50 710
—
1 617
138
4 966
6
889
–3 188
39 582
96
–3 188
23 072
–81
51 058
—
1 206
63
7 985
44
2009, EURm
Profit and loss information
Net sales to external customers
Net sales to other segments
Depreciation and amortization
Impairment
Operating profit/loss 1
Share of results of associated companies
Balance sheet information
Capital expenditures 2
Segment assets 3
of which:
Investments in associated companies
Segment liabilities 5
2008, EURm
Profit and loss information
Net sales to external customers
Net sales to other segments
Depreciation and amortization
Impairment
Operating profit/loss
Share of results of associated companies
Balance sheet information
Capital expenditures 2
Segment assets 3
of which:
Investments in associated companies
Segment liabilities 5
2007, EURm
Profit and loss information
Net sales to external customers
Net sales to other segments
Depreciation and amortization
Impairment and customer finance charges
Operating profit /loss 1
Share of results of associated companies
1 Nokia Siemens Networks operating loss in 2009 includes a goodwill impairment loss of EUR 908 mil-
lion. Corporate Common Functions operating profit in 2007 includes a non-taxable gain of EUR 1 879
million related to the formation of Nokia Siemens Networks.
4 Unallocated assets include cash and other liquid assets, available-for-sale investments, long-term
loans receivable and other financial assets as well as interest and tax related prepaid expenses and
accrued income for Devices & Services and Corporate Common Functions.
2
Including goodwill and capitalized development costs, capital expenditures in 2009 amount to
EUR 590 million (EUR 5 502 million in 2008). The goodwill and capitalized development costs consist
of EUR 7 million in 2009 (EUR 752 million in 2008) for Devices & Services, EUR 22 million in 2009
(EUR 3 673 million in 2008) for NAVTEQ, EUR 30 million in 2009 (EUR 188 million in 2008) for Nokia
Siemens Networks, and EUR 0 million in 2009 (EUR 0 million in 2008) for Corporate Common Functions.
5 Comprises accounts payable, accrued expenses and provisions except those related to interest and
taxes for Devices & Services and Corporate Common Functions. In addition, NAVTEQ’s and Nokia Sie-
mens Networks’ liabilities include non-current liabilities and short-term borrowings as well as interest
and tax related prepaid income and accrued expenses and provisions. These are directly attributable
to NAVTEQ and Nokia Siemens Networks as they are separate legal entities.
3 Comprises intangible assets, property, plant and equipment, investments, inventories and accounts
receivable as well as prepaid expenses and accrued income except those related to interest and taxes
for Devices & Services and Corporate Common Functions. In addition, NAVTEQ’s and Nokia Siemens
Networks’ assets include cash and other liquid assets, available-for-sale investments, long-term loans
receivable and other financial assets as well as interest and tax related prepaid expenses and accrued
income. These are directly attributable to NAVTEQ and Nokia Siemens Networks as they are separate
legal entities.
6 Unallocated liabilities include non-current liabilities and short-term borrowings as well as interest
and tax related prepaid income, accrued expenses and provisions related to Devices & Services and
Corporate Common Functions.
21
Notes to the consolidated financial statements
Net sales to external customers
by geographic area
by location of customer
Finland
China
India
UK
Germany
USA
Russia
Indonesia
Other
Total
Segment non-current assets
by geographic area 1
Finland
China
India
UK
Germany
USA
Other
Total
2009
EURm
390
5 990
2 809
1 916
1 733
1 731
1 528
1 458
23 429
40 984
2009
EURm
1 698
358
180
228
243
5 859
1 377
9 943
2008
EURm
362
5 916
3 719
2 382
2 294
1 907
2 083
2 046
30 001
50 710
2008
EURm
1 154
434
154
668
306
7 037
2 751
12 504
1 Comprises intangible and tangible assets and property, plant and equipment.
3. Percentage of completion
Contract sales recognized under percentage of completion accounting were
EUR 6 868 million in 2009 (EUR 9 220 million in 2008 and EUR 8 329 million in 2007).
Services revenue for managed services and network maintenance contracts were
EUR 2 607 million in 2009 (EUR 2 530 million in 2008 and EUR 1 842 million in 2007).
Included in accrued expenses were advances received related to construc-
tion contracts of EUR 126 million at December 31, 2009 (EUR 261 million in 2008).
Included in accounts receivable were contract revenues recorded prior to billings
of EUR 1 396 million at December 31, 2009 (EUR 1 423 million in 2008) and billings in
excess of costs incurred of EUR 451 million at December 31, 2009 (EUR 677 million in
2008).
The aggregate amount of costs incurred and recognized profits (net of recog-
nized losses) under open construction contracts in progress since inception (for
contracts acquired inception refers to April 1, 2007) was EUR 15 351 million in 2009
(EUR 11 707 million in 2008).
Retentions related to construction contracts, included in accounts receivable,
were EUR 265 million at December 31, 2009 (EUR 211 million at December 31, 2008).
4. Personnel expenses
EURm
Wages and salaries
Share-based compensation expense, total
Pension expenses, net
Other social expenses
Personnel expenses as per profit and
loss account
2009
5 658
13
427
649
2008
2007
5 615
67
478
754
4 664
236
420
618
6 747
6 914
5 938
22
Nokia in 2009
Share-based compensation expense includes pension and other social costs of
EUR –3 million in 2009 (EUR –7 million in 2008 and EUR 8 million in 2007) based upon
the related employee benefit charge recognized during the year.
Pension expenses, comprised of multi-employer, insured and defined contribu-
tion plans were EUR 377 million in 2009 (EUR 394 million in 2008 and EUR 289 million
in 2007). Expenses related to defined benefit plans comprise the remainder.
Average personnel
2009
2008
2007
Devices & Services
NAVTEQ
Nokia Siemens Networks
Group Common Functions
Nokia Group
56 462
4 282
62 129
298
123 171
57 443
3 969
59 965
346
121 723
49 887
—
50 336
311
100 534
2007
EURm
322
5 898
3 684
2 574
2 641
2 124
2 012
1 754
30 049
51 058
5. Pensions
The Group operates a number of post-employment plans in various countries. These
plans include both defined contribution and defined benefit schemes.
The Group’s most significant defined benefit pension plans are in Germany and
in the UK. The majority of active employees in Germany participate in a pension
scheme which is designed according to the Beitragsorientierte Siemens Altersvers-
orgung (BSAV). The funding vehicle for the BSAV is the NSN Pension Trust. In Ger-
many, individual benefits are generally dependent on eligible compensation levels,
ranking within the Group and years of service.
The majority of active employees in Nokia UK participate in a pension scheme
which is designed according to the Scheme Trust Deeds and Rules and is compliant
with the Guidelines of the UK Pension Regulator. The funding vehicle for the pension
scheme is Nokia Group (UK) Pension Scheme Ltd which is run on a Trust basis. In the
UK, individual benefits are generally dependent on eligible compensation levels
and years of service for the defined benefit section of the scheme and on individual
investment choices for the defined contribution section of the scheme.
In prior years, the Group had a significant pension plan in Finland. Prior to
March 1, 2008, the reserved benefits portion of the Finnish state Employees’ Pen-
sion Act (TyEL) system, that was pre-funded through a trustee-administered Nokia
Pension Foundation, was accounted for as a defined benefit plan. As of March 1,
2008 the Finnish statutory pension liability and plan related assets of Nokia and
Nokia Siemens Networks were transferred to two pension insurance companies. The
transfer did not affect the number of employees covered by the plan nor did it affect
the current employees’ entitlement to pension benefits.
At the transfer date, the Group has not retained any direct or indirect obligation
to pay employee benefits relating to employee service in current, prior or future
periods. Thus, the Group has treated the transfer of the Finnish statutory pension
liability and plan assets as a settlement of the Group’s TyEL defined benefit plan.
From the date of transfer onwards, the Group has accounted for the TyEL plan as a
defined contribution plan. The transfer resulted in EUR 152 million loss consisting
of a EUR 217 million loss impacting Common Group Functions and a EUR 65 million
gain impacting Nokia Siemens Networks operating profit. These are included in the
other operating income and expense, see Note 6. Subsequent to the transfer of the
Finnish statutory pension liability and plan assets, the Group retains only certain
immaterial voluntary defined benefit pension liabilities in Finland.
The following table sets forth the changes in the benefit obligation and fair
value of plan assets during the year and the funded status of the significant defined
benefit pension plans showing the amounts that are recognized in the Group’s
consolidated statement of financial position at December 31:
EURm
Present value of defined benefit
obligations at beginning of year
Foreign exchange
Current service cost
Interest cost
Plan participants’ contributions
Past service cost
Actuarial gain (+)/loss (–)
Acquisitions
Curtailment
Settlements
Benefits paid
Present value of defined benefit
obligations at end of year
Plan assets at fair value at beginning of year
Foreign exchange
Expected return on plan assets
Actuarial gain (+)/loss (–) on plan assets
Employer contribution
Plan participants’ contributions
Benefits paid
Curtailments
Settlements
Acquisitions
Plan assets at fair value at end of year
Surplus (+)/deficit (–)
Unrecognized net actuarial gains (–)/losses (+)
Unrecognized past service cost
Amount not recognized as an asset in the
balance sheet because of limit in IAS 19 paragraph 58(b)
Prepaid (+)/accrued (–) pension cost in
statement of financial position
Notes to the consolidated financial statements
2009
2008
Movements in prepaid/accrued pension costs recognized in the statement of finan-
cial position are as follows:
–1 205
5
–55
–69
–12
—
–139
2
—
2
60
–2 266
56
–79
–78
–10
–2
105
–2
10
1 025
36
–1 411
–1 205
1 197
–7
70
56
49
12
–44
—
–2
–1
1 330
–81
–21
1
–5
2 174
–58
71
–39
141
10
–24
–5
–1 078
5
1 197
–8
–113
1
—
EURm
Prepaid (+)/accrued (–) pension costs at beginning of year
Net income (expense) recognized
in the profit and loss account
Contributions paid
Benefits paid
Acquisitions
Foreign exchange
Prepaid (+)/accrued (–) pension costs at end of year *
2009
2008
–120
–36
–50
49
16
1
–2
–106
–228
141
12
3
–12
–120
*
included within prepaid expenses and accrued income / accrued expenses
The prepaid pension cost above is made up of a prepayment of EUR 68 million
(EUR 55 million in 2008) and an accrual of EUR 174 million (EUR 175 million in 2008).
EURm
2009
2008
2007
2006
2005
Present value of defined benefit
obligation
Plan assets at fair value
Surplus (+)/deficit (–)
–1 411
1 330
–81
–1 205 –2 266
2 174
1 197
–92
–8
–1 577 –1 385
1 276
1 409
–109
–168
Experience adjustments arising on plan obligations amount to a loss of EUR 12 mil-
lion in 2009 (gain of EUR 50 million in 2008, a loss of EUR 31 million in 2007 and
EUR 25 million in 2006). Experience adjustments arising on plan assets amount to a
gain of EUR 54 million in 2009 (a loss of EUR 22 million in 2008, EUR 3 million in 2007
and EUR 11 million in 2006).
The principal actuarial weighted average assumptions used were as follows:
–106
–120
%
Discount rate for determining present values
Expected long-term rate of return on plan assets
Annual rate of increase in future compensation levels
Pension increases
2009
2008
5.3
5.4
2.8
2.0
5.8
5.7
2.7
1.9
Present value of obligations include EUR 822 million (EUR 707 million in 2008) of
wholly funded obligations, EUR 516 million of partly funded obligations (EUR 416
million in 2008) and EUR 73 million (EUR 82 million in 2008) of unfunded obligations.
The amounts recognized in the income statement are as follows:
EURm
2009
2008
2007
Current service cost
Interest cost
Expected return on plan assets
Net actuarial (gains) losses recognized in year
Impact of paragraph 58(b) limitation
Past service cost gains (–)/losses (+)
Curtailment
Settlement
Total, included in personnel expenses
55
69
–70
–9
5
—
—
—
50
79
78
–71
—
—
2
–12
152
228
125
104
–95
10
—
—
–1
–12
131
The expected long-term rate of return on plan assets is based on the expected
return multiplied with the respective percentage weight of the market-related value
of plan assets. The expected return is defined on a uniform basis, reflecting long-
term historical returns, current market conditions and strategic asset allocation.
The Groups’s pension plan weighted average asset allocation as a percentage
of Plan Assets at December 31, 2009, and 2008, by asset category are as follows:
%
Asset category:
Equity securities
Debt securities
Insurance contracts
Real estate
Short-term investments
Total
2009
2008
21
65
8
1
5
100
12
72
8
1
7
100
23
Notes to the consolidated financial statements
The objective of the investment activities is to maximize the excess of plan assets
over projected benefit obligations, within an accepted risk level, taking into account
the interest rate and inflation sensitivity of the assets as well as the obligations.
The Pension Committee of the Group, consisting of the Head of Treasury, Head
of HR and other HR representatives, approves both the target asset allocation as well
as the deviation limit. Derivative instruments can be used to change the portfolio
asset allocation and risk characteristics.
The foreign pension plan assets include a self investment through a loan pro-
vided to Nokia by the Group’s German pension fund of EUR 69 million (EUR 69 million
in 2008). See Note 30.
The actual return on plan assets was EUR 126 million in 2009 (EUR 31 million
in 2008).
In 2010, the Group expects to make contributions of EUR 69 million to its
defined benefit pension plans.
7. Impairment
EURm
Capitalized development costs
Goodwill
Other intangible assets
Property, plant and equipment
Inventories
Investments in associated companies
Available-for-sale investments
Other non-current assets
Total, net
2009
—
908
56
1
—
19
25
—
1 009
2008
2007
—
—
—
77
13
8
43
8
149
27
—
—
—
—
7
29
—
63
6. Other operating income and expenses
Capitalized development costs
Other operating income for 2009 includes a gain on sale of security appliance
business of EUR 68 million impacting Devices & Services operating profit and a gain
on sale of real estate in Oulu, Finland, of EUR 22 million impacting Nokia Siemens
Networks operating loss. In 2009, other operating expenses includes EUR 178 million
of charges related to restructuring activities in Devices & Services due to measures
taken to adjust the business operations and cost base according to market condi-
tions. In conjunction with the decision to refocus its activities around specified core
assets, Devices & Services recorded impairment charges totalling EUR 56 million for
intangible assets arising from the acquisitions of Enpocket and Intellisync and the
asset acquisition of Twango.
In 2008, other operating expenses include EUR 152 million net loss on transfer
of Finnish pension liabilities, of which a gain of EUR 65 million is included in Nokia
Siemens Networks’ operating profit and a loss of EUR 217 million in Corporate
Common expenses. Devices & Services recorded EUR 259 million of restructuring
charges and EUR 81 million of impairment and other charges related to closure of
the Bochum site in Germany. Other operating expenses also include a charge of
EUR 52 million related to other restructuring activities in Devices & Services and
EUR 49 million charges related to restructuring and other costs in Nokia Siemens
Networks.
Other operating income for 2007 includes a non-taxable gain of EUR 1 879 mil-
lion relating to the formation of Nokia Siemens Networks. Other operating income
also includes gain on sale of real estates in Finland of EUR 128 million, of which
EUR 75 million is included in Common functions’ operating profit and EUR 53 mil-
lion in Nokia Siemens Networks’ operating profit. In addition, a gain on business
transfer EUR 53 million impacted Common functions’ operating profit. In 2007, other
operating expenses includes EUR 58 million in charges related to restructuring costs
in Nokia Siemens Networks. Devices & Services recorded a charge of EUR 17 million
for personnel expenses and other costs as a result of more focused R&D. Devices
& Services also recorded restructuring costs of EUR 35 million primarily related to
restructuring of a subsidiary company.
In all three years presented, “Other operating income and expenses” include
the costs of hedging highly probable forecasted sales and purchases (forward points
of cash flow hedges). As from 2009, on the same line are included also the fair value
changes of derivatives hedging identifiable and probable forecasted cash flows.
In 2009 and 2008, the Group did not recognize any impairment charge on capital-
ized development costs. During 2007, Nokia Siemens Networks recorded an impair-
ment charge on capitalized development costs of EUR 27 million. The impairment
loss was determined as the full carrying amount of the capitalized development
programs costs related to products that will not be included in future product
portfolios. This impairment amount is included within research and development
expenses in the consolidated income statement.
Goodwill
Goodwill is allocated to the Group’s cash-generating units (CGU) for the purpose of
impairment testing. The allocation is made to those cash-generating units that are
expected to benefit from the synergies of the business combination in which the
goodwill arose. The Group has allocated goodwill to three cash-generating units,
which correspond to the Group’s operating and reportable segments: Devices &
Services CGU, Nokia Siemens Networks CGU and NAVTEQ CGU.
The recoverable amounts for the Devices & Services CGU and the NAVTEQ CGU are
based on value in use calculations. The cash flow projections employed in the value
in use calculation are based on financial plans approved by management. These
projections are consistent with external sources of information, wherever available.
Cash flows beyond the explicit forecast period are extrapolated using an estimated
terminal growth rate that does not exceed the long-term average growth rates for
the industry and economies in which the CGU operates.
The recoverable amount for the Nokia Siemens Networks CGU is based on fair
value less costs to sell. A discounted cash flow calculation was used to estimate the
fair value less costs to sell of the Nokia Siemens Networks CGU. The cash flow projec-
tions employed in the discounted cash flow calculation have been determined by
management based on the best information available to reflect the amount that
an entity could obtain from the disposal of the Nokia Siemens Networks CGU in an
arm’s length transaction between knowledgeable, willing parties, after deducting
the estimated costs of disposal.
During 2009, the conditions in the world economy have shown signs of im-
provement as countries have begun to emerge from the global economic downturn.
However, significant uncertainty exists regarding the speed, timing and resiliency
of the global economic recovery and this uncertainty is reflected in the impairment
testing for each of the Group’s CGUs.
Goodwill amounting to EUR 1 227 million was allocated to the Devices &
Services CGU. The impairment testing has been carried out based on management’s
expectation of stable market share and normalized profit margins in the medium
to long term. The goodwill impairment testing conducted for the Devices & Services
CGU for the year ended December 31, 2009 did not result in any impairment charges.
In the third quarter of 2009, the Group recorded an impairment loss of
EUR 908 million to reduce the carrying amount of the Nokia Siemens Networks CGU
to its recoverable amount. The impairment loss was allocated in its entirety to the
carrying amount of goodwill arising from the formation of Nokia Siemens Networks
24
Nokia in 2009
Notes to the consolidated financial statements
and from subsequent acquisitions completed by Nokia Siemens Networks. This
impairment loss is presented as impairment of goodwill in the consolidated income
statement. As a result of the impairment loss, the amount of goodwill allocated to
the Nokia Siemens Networks CGU has been reduced to zero.
The recoverability of the Nokia Siemens Networks CGU has declined as a result
of a decline in forecasted profits and cash flows. The Group evaluated the historical
and projected financial performance of the Nokia Siemens Networks CGU taking
into consideration the challenging competitive factors and market conditions in the
infrastructure and related services business. As a result of this evaluation, the Group
lowered its net sales and gross margin projections for the Nokia Siemens Networks
CGU. This reduction in the projected scale of the business had a negative impact on
the projected profits and cash flows of the Nokia Siemens Networks CGU.
Goodwill amounting to EUR 3 944 million has been allocated to the NAVTEQ CGU.
The impairment testing has been carried out based on management’s assessment
of the financial performance and future strategies of the NAVTEQ CGU in light of
current and expected market and economic conditions. The goodwill impairment
testing conducted for the NAVTEQ CGU for the year ended December 31, 2009 did
not result in any impairment charges. The recoverable amount of the NAVTEQ CGU
is between 5–10% higher than its carrying amount. The Group has concluded that
a reasonably possible change of 1% in the valuation assumptions for long-term
growth rate or discount rate would give rise to an impairment loss.
The key assumptions applied in the impairment testing analysis for each CGU
are presented in the table below:
In 2008, Nokia Siemens Networks recognised an impairment loss amounting to
EUR 35 million relating to the sale of its manufacturing site in Durach, Germany. The
impairment loss was determined as the excess of the book value of transferring as-
sets over the fair value less costs to sell for the transferring assets. The impairment
loss was allocated to property, plant and equipment and inventories.
Investments in associated companies
After application of the equity method, including recognition of the associate’s
losses, the Group determined that recognition of an impairment loss of EUR 19 mil-
lion in 2009 (EUR 8 million in 2008, EUR 7 million in 2007) was necessary to adjust
the Group’s net investment in the associate to its recoverable amount.
Available-for-sale investments
The Group’s investment in certain equity securities held as non-current available-
for-sale suffered a permanent decline in fair value resulting in an impairment
charge of EUR 25 million in 2009 (EUR 43 million in 2008, EUR 29 million in 2007).
8. Acquisitions
Cash-generating unit
Acquisitions completed in 2009
Terminal growth rate
Post-tax discount rate
Pre-tax discount rate
Devices &
Services
Nokia Siemens
Networks
NAVTEQ
%
2.00
8.86
11.46
%
1.00
9.95
13.24
%
5.00
10.00
12.60
The Group has applied consistent valuation methodologies for each of the
Group’s CGUs for the years ended December 31, 2009, 2008 and 2007. The discount
rates applied in the impairment testing for each CGU have been determined inde-
pendently of capital structure reflecting current assessments of the time value of
money and relevant market risk premiums. Risk premiums included in the determi-
nation of the discount rate reflect risks and uncertainties for which the future cash
flow estimates have not been adjusted. Overall, the discount rates applied in the
2009 impairment testing have decreased in line with declining interest rates and
narrowing credit spreads.
The goodwill impairment testing conducted for each of the Group’s CGUs for the
years ended December 31, 2008 and 2007 did not result in any impairment charges.
Other intangible assets
In conjunction with the Group’s decision to refocus its activities around specified
core assets, the Group recorded impairment charges in 2009 totalling EUR 56 million
for intangible assets arising from the acquisitions of Enpocket and Intellisync and
the asset acquisition of Twango. The impairment charge was recognised in other
operating expense and is included in the Devices & Services segment. In connec-
tion with the decline in the Group’s profit and cash flow projections of the Nokia
Siemens Networks CGU, the Group conducted an assessment of the carrying amount
of the identifiable intangible assets arising from the formation of Nokia Siemens
Networks concluding that such carrying amount was recoverable.
Property, plant and equipment and inventories
During 2009, the Group completed five acquisitions that did not have a material
impact on the consolidated financial statements. The purchase consideration paid
and the total goodwill arising from these acquisitions amounted to EUR 29 million
and EUR 32 million, respectively. The goodwill arising from these acquisitions is at-
tributable to assembled workforce and post acquisition synergies.
»
»
»
»
»
Plum Ventures, Inc., based in Boston, USA, develops and operates a cloud-based
social media sharing and messaging service for private groups. The Group
acquired certain assets of Plum on September 11, 2009.
Dopplr Oy, based in Helsinki, Finland, provides a Social Atlas that enables mem-
bers to share travel plans and preferences privately with their networks. The
Group acquired a 100% ownership interest in Dopplr on September 28, 2009.
Huano Technology Co., Ltd, based in Changsha, China, is an infrastructure
service provider with Nokia Siemens Networks as its primary customer. Nokia
Siemens Networks increased its ownership interest in Huano from 49% to 100%
on July 22, 2009.
T-Systems Traffic GmbH is a leading German provider of dynamic mobility servic-
es delivering near real-time data about traffic flow and road conditions. NAVTEQ
acquired a 100% ownership interest in T-Systems Traffic on January 2, 2009.
Acuity Mobile, based in Greenbelt, USA, is a leading provider of mobile market-
ing content delivery solutions. NAVTEQ acquired a 100% ownership interest in
Acuity Mobile on September 11, 2009.
Acquisitions completed in 2008
NAVTEQ
On July 10, 2008, the Group completed its acquisition of all of the outstanding com-
mon stock of NAVTEQ. Based in Chicago, NAVTEQ is a leading provider of comprehen-
sive digital map information for automotive systems, mobile navigation devices,
Internet-based mapping applications, and government and business solutions. The
Group will use NAVTEQ’s industry leading maps data to add context–time, place,
people–to web services optimized for mobility.
In 2008, resulting from the Group’s decision to discontinue the production of mobile
devices in Germany, an impairment loss was recognised amounting to EUR 55 mil-
lion. The impairment loss related to the closure and sale of production facilities at
Bochum, Germany and is included in the Devices & Services segment.
The total cost of the acquisition was EUR 5 342 million and consisted of cash
paid of EUR 2 772 million, debt issued of EUR 2 539 million, costs directly attributable
to the acquisition of EUR 12 million and consideration attributable to the vested
portion of replacement share-based payment awards of EUR 19 million.
25
Notes to the consolidated financial statements
The following table summarizes the estimated fair values of the assets ac-
quired and liabilities assumed at the date of acquisition.
EURm
Goodwill
Intangible assets subject to amortization:
Map database
Customer relationships
Developed technology
License to use trade name and trademark
Capitalized development costs
Other intangible assets
Property, plant & equipment
Deferred tax assets
Available-for-sale investments
Other non-current assets
Non-current assets
Inventories
Accounts receivable
Prepaid expenses and accrued income
Available-for-sale investments,
liquid assets
Available-for-sale investments,
cash equivalents
Bank and cash
Current assets
Total assets acquired
Deferred tax liabilities
Other long-term liabilities
Non-current liabilities
Accounts payable
Accrued expenses
Provisions
Current liabilities
Total liabilities assumed
Net assets acquired
Carrying
amount
Fair
value
Useful
lives
114
3 673
5 years
4 years
4 years
6 years
5
22
8
7
22
4
68
84
262
36
6
456
3
94
36
140
97
57
427
997
46
54
100
29
96
5
130
230
767
1 389
388
110
57
—
7
1 951
83
148
36
6
2 224
3
94
36
140
97
57
427
6 324
786
39
825
29
120
8
157
982
5 342
The goodwill of EUR 3 673 million has been allocated to the NAVTEQ segment. The
goodwill is attributable to assembled workforce and the synergies expected to arise
subsequent to the acquisition including acceleration of the Group’s internet services
strategy. None of the goodwill acquired is expected to be deductible for income tax
purposes.
Symbian
On December 2, 2008, the Group completed its acquisition of 52.1% of the outstand-
ing common stock of Symbian Ltd. As a result of this acquisition, the Group’s total
ownership interest has increased from 47.9% to 100% of the outstanding common
stock of Symbian. A UK-based software licensing company, Symbian developed and
licensed Symbian OS, the market-leading open operating system for mobile phones.
The acquisition of Symbian is a fundamental step in the establishment of the Sym-
bian Foundation.
The Group contributed the Symbian OS and S60 software to the Symbian
Foundation for the purpose of creating a unified mobile software platform with a
common UI framework. The goal of the Symbian Foundation is to extend the appeal
of the platform among all partners, including developers, mobile operators, content
and service providers and device manufacturers. The unified platform will promote
innovation and accelerate the availability of new services and experiences for
consumers and business users around the world. A full platform was available for all
Foundation members under a royalty-free license, from the Foundation’s first day
of operations.
26
Nokia in 2009
The acquisition of Symbian was achieved in stages through successive share
purchases at various times from the formation of the company. Thus, the amount
of goodwill arising from the acquisition has been determined via a step-by-step
comparison of the cost of the individual investments in Symbian with the acquired
interest in the fair values of Symbian’s identifiable net assets at each stage. Revalu-
ation of the Group’s previously held interests in Symbian’s identifiable net assets
is recognised as a revaluation surplus in equity. Application of the equity method
has been reversed such that the carrying amount of the Group’s previously held
interests in Symbian have been adjusted to cost. The Group’s share of changes in
Symbian’s equity balances after each stage is included in equity.
The total cost of the acquisition was EUR 641 million consisting of cash paid of
EUR 435 million, costs directly attributable to the acquisition of EUR 6 million and
investments in Symbian from previous exchange transactions of EUR 200 million.
The following table summarizes the estimated fair values of the assets ac-
quired and liabilities assumed at the date of acquisition.
EURm
Goodwill
Intangible assets subject to amortization:
Developed technology
Customer relationships
License to use trade name and trademark
Property, plant & equipment
Deferred tax assets
Non-current assets
Accounts receivable
Prepaid expenses and accrued income
Bank and cash
Current assets
Total assets acquired
Deferred tax liabilities
Financial liabilities
Accounts payable
Accrued expenses
Total liabilities assumed
Net assets acquired
Revaluation of previously
held interests in Symbian
Nokia share of changes in Symbian’s
equity after each stage of the acquisition
Cost of the business combination
Carrying
amount
Fair
value
—
5
—
—
5
33
7
45
20
43
147
210
255
—
—
5
48
53
202
470
41
11
3
55
31
19
105
20
43
147
210
785
17
20
5
53
95
690
22
27
641
The goodwill of EUR 470 million has been allocated to the Devices & Services seg-
ment. The goodwill is attributable to assembled workforce and the significant
benefits that the Group expects to realise from the Symbian Foundation. None of
the goodwill acquired is expected to be deductible for income tax purposes.
The contribution of the Symbian OS and S60 software to the Symbian Founda-
tion has been accounted for as a retirement. Thus, the Group has recognised a loss
on retirement of EUR 165 million consisting of EUR 55 million book value of Symbian
identifiable intangible assets and EUR 110 million book value of capitalised S60
development costs.
For NAVTEQ and Symbian, the Group has included net losses of EUR 155 million
and EUR 52 million, respectively, in the consolidated profit and loss. The following
table depicts pro forma net sales and operating profit of the combined entity as
though the acquisition of NAVTEQ and Symbian had occurred on January 1, 2008:
Pro forma (unaudited), EURm
Net sales
Net profit
2008
51 063
4 080
During 2008, the Group completed five additional acquisitions. The total purchase
consideration paid and the total goodwill arising from these acquisitions amounted
to EUR 514 million and EUR 339 million, respectively. The goodwill arising from these
acquisitions is attributable to assembled workforce and post acquisition synergies.
»
Trolltech ASA, based in Oslo, Norway, is a recognised software provider with
world-class software development platforms and frameworks. The Group
acquired a 100% ownership interest in Trolltech ASA on June 6, 2008.
» Oz Communications Inc., headquartered in Montreal, Canada, is a leading con-
sumer mobile messaging solution provider delivering access to popular instant
messaging and email services on consumer mobile devices. The Group acquired
a 100% ownership interest in Oz Communications Inc. on November 4, 2008.
»
»
Atrica, based in Santa Clara, USA, is one of the leading providers of Carrier
Ethernet solutions for Metropolitan Area Networks. Nokia Siemens Networks
acquired a 100% ownership interest in Atrica on January 7, 2008.
Apertio Ltd, based in Bristol, England is the leading independent provider of
subscriber-centric networks for mobile, fixed and converged telecommunica-
tions operators. Nokia Siemens Networks acquired a 100% ownership interest
in Apertio Ltd on February 11, 2008.
» On January 1, 2008, Nokia Siemens Networks assumed control of Vivento Tech-
nical Services from Deutsche Telekom.
Notes to the consolidated financial statements
Acquisitions completed in 2007
The Group and Siemens AG (Siemens) completed a transaction to form Nokia Sie-
mens Networks on April 1, 2007. Nokia and Siemens contributed to Nokia Siemens
Networks certain tangible and intangible assets and certain business interests that
comprised Nokia’s networks business and Siemens’ carrier-related operations. This
transaction combined the worldwide mobile and fixed-line telecommunications
network equipment businesses of Nokia and Siemens. Nokia and Siemens each own
approximately 50% of Nokia Siemens Networks. Nokia has the ability to appoint key
officers and the majority of the members of the Board of Directors. Accordingly, for
accounting purposes, Nokia is deemed to have control and thus consolidates the
results of Nokia Siemens Networks in its financial statements.
The transfer of Nokia’s networks business was treated as a partial sale to
the minority shareholders of Nokia Siemens Networks. Accordingly, the Group
recognised a non-taxable gain on the partial sale amounting to EUR 1 879 million.
The gain was determined as the Group’s ownership interest relinquished for the
difference between the fair value contributed, representing the consideration
received, and book value of the net assets contributed by the Group to Nokia
Siemens Networks. Upon closing of the transaction, Nokia and Siemens contributed
net assets with book values amounting to EUR 1 742 million and EUR 2 385 million,
respectively. The Group’s contributed networks business was valued at EUR 5 500
million. In addition, the Group incurred costs directly attributable to the acquisition
of EUR 51 million.
The table below presents the reported results of Nokia Networks prior to the
formation of Nokia Siemens Networks and the reported results of Nokia Siemens
Networks since inception.
EURm
Net sales
Nokia Networks
Nokia Siemens Networks
Total
Operating profit
Nokia Networks
Nokia Siemens Networks
Total
2007
2006
January–March
April–December
Total
January–March
April–December
Total
1 697
*
1 697
78
*
78
*
11 696
11 696
*
–1 386
–1 386
1 697
11 696
13 393
78
–1 386
–1 308
1 699
N/A
1 699
149
N/A
149
5 754
N/A
5 754
659
N/A
659
7 453
N/A
7 453
808
N/A
808
* No results presented as Nokia Siemens Networks began operations on April 1, 2007.
It is not practicable to determine the results of the Siemens’ carrier-related opera-
tions for the three month period of January 1, 2007 through March 31, 2007 as
Siemens did not report those operations separately. As a result pro forma revenues
and operating profit as if the acquisition had occurred as of January 1, 2007 have
not been presented.
The following table summarizes the estimated fair values of the assets ac-
quired and liabilities assumed at the date of acquisition.
27
Notes to the consolidated financial statements
Carrying
amount
EURm
Fair
value
EURm
Useful
lives
Years
»
Twango, provides a comprehensive media sharing solution for organising and
sharing photos, videos and other personal media. The Group acquired substan-
tially all assets of Twango on July 25, 2007.
—
—
—
143
47
190
371
111
153
825
1 010
3 135
870
55
382
5 452
6 277
171
34
205
231
1 539
1 344
463
3 577
3 782
110
2 385
Intangible assets subject to amortization:
Customer relationships
Developed technology
License to use trade name and trademark
Capitalized development costs
Other intangible assets
Property, plant & equipment
Deferred tax assets
Other non-current assets
Non-current assets
Inventories
Accounts receivable
Prepaid expenses and accrued income
Other financial assets
Bank and cash
Current assets
Total assets acquired
Deferred tax liabilities
Long-term interest-bearing liabilities
Non-current liabilities
Short-term borrowings
Accounts payable
Accrued expenses
Provisions
Current liabilities
Total liabilities assumed
Minority interest
Net assets acquired
Cost of acquisition
Goodwill
Less non-controlling interest in goodwill
Plus costs directly attributable
to the acquisition
Goodwill arising on formation
of Nokia Siemens Networks
1 290
710
350
154
47
2 551
344
181
153
3 229
1 138
3 087
846
55
382
5 508
8 737
997
34
1 031
213
1 491
1 502
397
3 603
4 634
108
3 995
5 500
1 505
753
51
803
The goodwill of EUR 803 million has been allocated to the Nokia Siemens Networks
segment. The goodwill is attributable to assembled workforce and the synergies
expected to arise subsequent to the acquisition. None of the goodwill acquired is
expected to be deductible for income tax purposes.
The amount of the loss specifically attributable to the business acquired from
Siemens since the acquisition date included in the Group’s profit for the period has
not been disclosed as it is not practicable to do so. This is due to the ongoing inte-
gration of the acquired Siemens’ carrier-related operations and Nokia’s networks
business, and management’s focus on the operations and results of the combined
entity, Nokia Siemens Networks.
During 2007, the Group completed the acquisition of the following three com-
panies. The purchase consideration paid and goodwill arising from these acquisi-
tions was not material to the Group.
»
»
Enpocket Inc., based in Boston, USA, a global leader in mobile advertising
providing technology and services that allow brands to plan, create, execute,
measure and optimise mobile advertising campaigns around the world. The
Group acquired 100% ownership interest in Enpocket Inc. on October 5, 2007.
Avvenu Inc., based in Palo Alto, USA, provides internet services that allow
anyone to use their mobile devices to securely access, use and share personal
computer files. The Group acquired 100% ownership interest in Avvenu Inc. on
December 5, 2007.
28
Nokia in 2009
6
4
5
3
3–5
9. Depreciation and amortization
EURm
2009
2008
2007
Depreciation and amortization by function
Cost of sales
Research and development 1
Selling and marketing 2
Administrative and general
Total
266
909
424
185
1 784
297
778
368
174
1 617
303
523
232
148
1 206
1
2
In 2009, depreciation and amortization allocated to research and development included amortization
of acquired intangible assets of EUR 534 million (EUR 351 million in 2008 and EUR 136 million in 2007,
respectively).
In 2009, depreciation and amortization allocated to selling and marketing included amortization of
acquired intangible assets of EUR 401 million (EUR 343 million in 2008 and EUR 214 million in 2007,
respectively).
10. Financial income and expenses
EURm
2009
2008
2007
3
—
101
–243
Dividend income on available-for-sale
financial investments
Interest income on available-for-sale
financial investments
Interest income on loans receivables
carried at amortised cost
Interest expense on financial
liabilities carried at amortised cost
Net realised gains (or losses) on disposal
of fixed income available-for-sale
financial investments
Net fair value gains (or losses) on investments
at fair value through profit and loss
Interest income on investments at fair
value through profit and loss
Net fair value gains (or losses) on hedged items
under fair value hedge accounting
Net fair value gains (or losses) on hedging
instruments under fair value hedge accounting —
18
Other financial income
Other financial expenses
–29
Net foreign exchange gains (or losses)
From foreign exchange derivatives
11
19
–4
2
1
357
—
—
355
1
–185
–43
–4
—
—
—
—
17
–31
–17
—
—
—
—
43
–24
designated at fair value through
profit and loss account
From balance sheet items revaluation
Net gains (net losses) on other derivatives
designated at fair value through
profit and loss account
Total
–358
230
–15
–265
432
–595
37
–118
6
–2
5
239
During 2008, interest expense has increased significantly due to increase in interest-
bearing liabilities mainly related to NAVTEQ acquisition. Foreign exchange gains (or
losses) have increased due to higher cost of hedging and increased volatility on the
foreign exchange market. During 2009, interest income has decreased significantly
due to lower interest rates and interest expense has increased given higher long-
term funding with higher cost.
11. Income taxes
12. Intangible assets
Notes to the consolidated financial statements
2009
2008
2007
EURm
2009
2008
EURm
Income tax
Current tax
Deferred tax
Total
Finland
Other countries
Total
–736
34
–702
76
–778
–702
–1 514
433
–1 081
–604
–477
–1 081
–2 209
687
–1 522
–1 323
–199
–1 522
The differences between income tax expense computed at statutory rate (in Finland
26%) and income taxes recognized in the consolidated income statement is recon-
ciled as follows at December 31, 2009:
EURm
Income tax expense at statutory rate
Permanent differences
Non-taxable gain on the formation of
Nokia Siemens Networks 1
Non tax deductible impairment of
Nokia Siemens Networks’ goodwill 2
Taxes for prior years
Taxes on foreign subsidiaries’ profits
in excess of (lower than) income taxes
at statutory rates
Change in losses and temporary
differences with no tax effect 3
Net increase (+)/decrease (–) in tax
contingencies 4
Change in income tax rates
Deferred tax liability on undistributed
earnings 5
Other
Income tax expense
1 See note 8
2 See Note 7
2009
250
–96
—
236
–17
2008
1 292
–65
2007
2 150
61
—
–489
—
–128
—
20
–145
–181
–138
577
–186
4
111
–32
702
—
2
–22
220
–37
1 081
15
50
–114
–37
4
1 522
3
In 2009 this item primarily relates to Nokia Siemens Networks’ losses and temporary differences for
which no deferred tax was recognized.
4 See Note 26
5
In 2008 and 2007 the change in deferred tax liability on undistributed earnings mainly related to
changes to tax rates applicable to profit distributions.
Certain of the Group companies’ income tax returns for periods ranging from 2003
through 2009 are under examination by tax authorities. The Group does not believe
that any significant additional taxes in excess of those already provided for will
arise as a result of the examinations.
Capitalized development costs
Acquisition cost January 1
Additions during the period
Retirements during the period
Disposals during the period
Accumulated acquisition cost December 31
Accumulated amortization January 1
Retirements during the period
Disposals during the period
Amortization for the period
Accumulated amortization December 31
Net book value January 1
Net book value December 31
Goodwill
Acquisition cost January 1
Translation differences
Acquisitions
Disposals during the period
Impairments during the period
Other changes
Accumulated acquisition cost December 31
Net book value January 1
Net book value December 31
Other intangible assets
Acquisition cost January 1
Translation differences
Additions during the period
Acquisitions
Retirements during the period
Impairments during the period
Disposals during the period
Accumulated acquisition cost December 31
Accumulated amortization January 1
Translation differences
Retirements during the period
Impairments during the period
Disposals during the period
Amortization for the period
Accumulated amortization December 31
Net book value January 1
Net book value December 31
1 811
27
—
–8
1 830
–1 567
—
8
–128
–1 687
244
143
6 257
–207
32
–3
–908
—
5 171
6 257
5 171
5 498
–142
50
3
–26
–94
–2
5 287
–1 585
56
17
38
2
–1 053
–2 525
3 913
2 762
1 817
131
–124
–13
1 811
–1 439
14
11
–153
–1 567
378
244
1 384
431
4 482
–35
—
–5
6 257
1 384
6 257
3 218
265
95
2 189
–55
—
–214
5 498
–860
–32
—
—
48
–741
–1 585
2 358
3 913
29
Notes to the consolidated financial statements
13. Property, plant and equipment
EURm
2009
2008
EURm
2009
2008
Advance payments and fixed assets under construction
Net carrying amount January 1
Translation differences
Additions
Acquisitions
Disposals
Transfers to:
Other intangible assets
Buildings and constructions
Machinery and equipment
Other tangible assets
Net carrying amount December 31
105
–2
29
—
–1
–3
–34
–36
–13
45
154
—
67
26
–13
–12
–76
–41
—
105
Total property, plant and equipment
1 867
2 090
14. Investments in associated companies
EURm
2009
2008
Net carrying amount January 1
Translation differences
Additions
Deductions 1
Impairment
Share of results
Dividends
Other movements
Net carrying amount December 31
96
–4
30
–50
–19
30
—
–14
69
325
–19
24
–239
–8
6
–6
13
96
1 On December 2, 2008, the Group completed its acquisition of 52.1% of the outstanding common stock
of Symbian Ltd, a UK based software licensing company. As a result of this acquisition, the Group’s total
ownership interest has increased from 47.9% to 100% of the outstanding common stock of Symbian.
See Note 8.
Shareholdings in associated companies are comprised of investments in unlisted
companies in all periods presented.
Land and water areas
Acquisition cost January 1
Translation differences
Additions during the period
Impairments during the period
Disposals during the period
Accumulated acquisition cost December 31
Net book value January 1
Net book value December 31
Buildings and constructions
Acquisition cost January 1
Translation differences
Additions during the period
Acquisitions
Impairments during the period
Disposals during the period
Accumulated acquisition cost December 31
Accumulated depreciation January 1
Translation differences
Impairments during the period
Disposals during the period
Depreciation for the period
Accumulated depreciation December 31
Net book value January 1
Net book value December 31
Machinery and equipment
Acquisition cost January 1
Translation differences
Additions during the period
Acquisitions
Impairments during the period
Disposals during the period
Accumulated acquisition cost December 31
Accumulated depreciation January 1
Translation differences
Impairments during the period
Disposals during the period
Depreciation for the period
Accumulated depreciation December 31
Net book value January 1
Net book value December 31
Other tangible assets
Acquisition cost January 1
Translation differences
Additions during the period
Accumulated acquisition cost December 31
Accumulated depreciation January 1
Translation differences
Depreciation for the period
Accumulated depreciation December 31
Net book value January 1
Net book value December 31
30
Nokia in 2009
60
—
1
—
–2
59
60
59
1 274
–17
132
—
—
–77
1 312
–350
3
—
42
–80
–385
924
927
4 183
–67
386
1
–1
–518
3 984
–3 197
50
—
489
–510
–3 168
986
816
30
–2
19
47
–15
1
–13
–27
15
20
73
–4
3
–4
–8
60
73
60
1 008
–9
382
28
–90
–45
1 274
–239
1
30
17
–159
–350
769
924
4 012
10
613
68
–21
–499
4 183
–3 107
–8
8
466
–556
–3 197
905
986
20
2
8
30
–9
—
–6
–15
11
15
15. Fair value of financial instruments
Carrying amounts
Notes to the consolidated financial statements
Current Non-current
available-
for-sale
financial
assets
available-
for-sale
financial
assets
At December 31, 2009, EURm
Available-for-sale investments in publicly quoted equity shares
Other available-for-sale investments carried at fair value
Other available-for-sale investments carried at cost less impairment
Long-term loans receivable
Other non-current assets
Accounts receivable
Current portion of long-term loans receivable
Derivative assets
Other current financial assets
Fixed income and money-market investments carried at fair value
7 151
Investments designated at fair value through profit and loss
Total financial assets
Long-term interest-bearing liabilities
Other long-term non-interest bearing financial liabilities
Current portion of long-term loans payable
7 151
8
257
258
31
554
Short-term borrowings
Derivative liabilities
Accounts payable
Total financial liabilities
At December 31, 2008, EURm
—
—
Available-for-sale investments in publicly quoted equity shares
Other available-for-sale investments carried at fair value
Other available-for-sale investments carried at cost less impairment
8
225
241
Long-term loans receivable
Other non-current assets
Accounts receivable
Current portion of long-term loans receivable
Derivative assets
Other current financial assets
Fixed income and money-market investments carried at fair value
Total financial assets
Long-term interest-bearing liabilities
Other long term non-interest bearing financial liabilities
Current portion of long-term loans payable
Short-term borrowings
Derivative liabilities
Accounts payable
Total financial liabilities
5 114
5 114
38
512
1 014
9 602
—
—
924
924
—
Financial
instruments
at fair
value
Loans and
receivables
Financial
liabilities
through measured at measured at
amortised
profit or
cost
loss
amortised
cost
316
580
896
245
245
1 014
Total
carrying
amounts
Fair value
8
257
258
46
6
8
257
258
40
6
7 981
7 981
14
316
13
7 182
580
16 661
4 432
2
44
727
245
14
316
13
7 182
580
16 655
4 691
2
44
727
245
46
6
7 981
14
13
8 060
—
4 432
2
44
727
—
4 950
10 155
4 950
10 400
4 950
10 659
27
10
9 444
101
20
8
225
241
27
10
9 444
101
1 014
20
5 152
16 242
861
3
13
3 578
924
5 225
8
225
241
24
10
9 444
101
1 014
20
5 152
16 239
855
3
13
3 578
924
5 225
10 604
10 598
—
861
3
13
3 578
5 225
9 680
The current fixed income and money-market investments included available-for-
sale liquid assets of EUR 2 367 million (EUR 1 272 million in 2008) and cash equiva-
lents of EUR 4 784 million (EUR 3 842 million in 2008). See Note 33, section Financial
Credit Risk, for details on fixed income and money-market investments.
The fair value of loan receivables and payables is estimated based on the
current market values of similar instruments. Fair value is estimated to be equal to
the carrying amount for short-term financial assets and financial liabilities due to
limited credit risk and short time to maturity.
For information about the valuation of items measured at fair value see Note 1.
In the tables above fair value is set to carrying amount for other available-for-
sale investments carried at cost less impairment for which no reliable fair value has
been possible to estimate.
The amount of change in the fair value of investments designated at fair value
through profit and loss attributable to changes in the credit risk of the assets was
deemed inconsequential during 2009. Fair value changes that are attributable to
changes in market conditions are calculated based on relevant benchmark interest
rates.
31
Notes to the consolidated financial statements
Note 16 includes the split of hedge accounted and non-hedge accounted
derivatives.
The following table presents the valuation methods used to determine fair
values of financial instruments carried at fair value:
At December 31, 2009, EURm
Fixed income and money-market investments carried at fair value
Investments at fair value through profit and loss
Available-for-sale investments in publicly quoted equity shares
Other available-for-sale investments carried at fair value
Derivative assets
Total assets
Derivative liabilities
Total liabilities
Instruments with
quoted prices in
active markets
(Level 1)
Valuation
technique using
observable data
(Level 2)
Valuation
technique using non-
observable data
(Level 3)
6 933
580
8
—
—
7 521
—
—
249
—
—
15
316
580
245
245
—
—
—
242
—
242
—
—
Total
7 182
580
8
257
316
8 343
245
245
Level 1 category includes financial assets and liabilities that are measured in whole
or in significant part by reference to published quotes in an active market. A finan-
cial instrument is regarded as quoted in an active market if quoted prices are readily
and regularly available from an exchange, dealer, broker, industry group, pricing
service or regulatory agency and those prices represent actual and regularly oc-
curring market transactions on an arm’s length basis. This category includes listed
bonds and other securities, listed shares and exchange traded derivatives.
Level 2 category includes financial assets and liabilities measured using a
valuation technique based on assumptions that are supported by prices from ob-
servable current market transactions. These include assets and liabilities for which
pricing is obtained via pricing services, but where prices have not been determined
in an active market, financial assets with fair values based on broker quotes and
assets that are valued using the Group’s own valuation models whereby the mate-
rial assumptions are market observable. The majority of Group’s over-the-counter
derivatives and several other instruments not traded in active markets fall within
this category.
Level 3 category includes financial assets and liabilities measured using valua-
tion techniques based on non market observable inputs. This means that fair values
are determined in whole or in part using a valuation model based on assumptions
that are neither supported by prices from observable current market transactions
in the same instrument nor are they based on available market data. However, the
fair value measurement objective remains the same, that is, to estimate an exit
price from the perspective of the Group. The main asset classes in this category are
unlisted equity investments as well as unlisted funds.
The following table shows a reconciliation of the opening and closing recorded
amount of Level 3 financial assets and liabilities which are measured at fair value:
EURm
Other available- for-sale investments carried at fair value
Balance at December 31, 2008
Total gains/losses in income statement
Total gains/losses recorded in other comprehensive income
Purchases
Sales
Transfer from level 1 and 2
At December 31, 2009
214
–30
15
45
–2
—
242
The gains and losses from Level 3 financial instruments are included in the line
other operating expenses of the profit and loss for the period. A net loss of EUR 14
million related to Level 3 financial instruments held at December 31, 2009, was
included in the profit and loss during 2009.
32
Nokia in 2009
Notes to the consolidated financial statements
16. Derivative financial instruments
17. Inventories
2009, EURm
Hedges of net investment
in foreign subsidiaries:
Assets
Liabilities
EURm
Fair
Fair
value 1 Notional 2
value 1 Notional 2
Raw materials, supplies and other
Work in progress
Finished goods
Total
2009
409
681
775
1 865
2008
519
744
1 270
2 533
Forward foreign exchange contracts 12
1 128
–42
2 317
Cash flow hedges:
Forward foreign exchange contracts 25
—
Interest rate swaps
8 062
—
–25
–2
7 027
330
18. Prepaid expenses and accrued income
Prepaid expenses and accrued income totalled EUR 4 551 million (EUR 4 538 million
in 2008).
In 2009, prepaid expenses and accrued income included advance payments to
Qualcomm of EUR 1 264 million (1 358 million in 2008). In 2008, Nokia and Qualcomm
entered into a new 15-year-agreement, under the terms of which Nokia has been
granted a license to all Qualcomm’s patents for the use in Nokia mobile devices and
Nokia Siemens Networks infrastructure equipment. The financial structure of the
agreement included an up-front payment of EUR 1.7 billion, which is amortized over
the contract period and on-going royalties payable to Qualcomm. As part of the
licence agreement, Nokia also assigned ownership of a number of patents to Qual-
comm. These patents were valued using the income approach based on projected
cash flows, on a discounted basis, over the assigned patents’ estimated useful life.
Based on the valuation and underlying assumptions Nokia determined that the fair
value of these patents were not material.
In addition, prepaid expenses and accrued income primarily consists of VAT and
other tax receivables. Prepaid expenses and accrued income also include prepaid
pension costs, accrued interest income and other accrued income, but no amounts
which are individually significant.
Fair value hedges
Interest rate swaps
117
1 750
–10
Cash flow and fair value hedges: 4
Cross currency interest rate swaps —
—
–77
Derivatives not designated in hedge
accounting relationships carried at
fair value through profit and loss:
Forward foreign exchange contracts 147
8
Currency options bought
—
Currency options sold
Interest rate swaps
7
Cash settled equity options bought 3 —
316
5 785
442
—
68
6
17 241
–68
—
–1
–20
—
–245
68
416
6 504
—
102
499
—
17 263
2008, EURm
Hedges of net investment in foreign
in foreign subsidiaries:
Forward foreign exchange contracts 80
30
Currency options bought
—
Currency options sold
1 045
724
—
–14
—
–44
472
—
768
Cash flow hedges:
Forward foreign exchange contracts 562
14 577
–445
11 792
Derivatives not designated in hedge
accounting relationships carried at
fair value through profit and loss:
Forward foreign exchange contracts 322
6
Currency options bought
—
Currency options sold
6
Interest rate futures
7
Interest rate swaps
Cash settled equity options bought 3
1
Cash settled equity options sold 3 —
1 014
7 817
201
—
21
618
25
—
25 028
–416
—
–5
—
—
—
—
–924
7 370
—
186
—
—
—
–13
20 575
1 The fair value of derivative financial instruments is included on the asset side under heading Other
financial assets and on the liability side under Other financial liabilities.
2 Includes the gross amount of all notional values for contracts that have not yet been settled or can-
celled. The amount of notional value outstanding is not necessarily a measure or indication of market
risk, as the exposure of certain contracts may be offset by that of other contracts.
3 Cash settled equity options are used to hedge risk relating to employee incentive programs and invest-
ment activities.
4 These cross-currency interest rate swaps have been designated partly as fair value hedges and partly
as cash flow hedges.
33
Notes to the consolidated financial statements
19. Valuation and qualifying accounts
EURm
Allowances on assets to which they apply:
Balance at
beginning
of year
Charged to
cost and
expenses
Deductions 1
Acquisitions
2009
Allowance for doubtful accounts
Excess and obsolete inventory
2008
Allowance for doubtful accounts
Excess and obsolete inventory
2007
Allowance for doubtful accounts
Excess and obsolete inventory
1 Deductions include utilization and releases of the allowances.
415
348
332
417
212
218
155
192
224
151
38
145
– 179
– 179
– 141
– 221
– 72
– 202
—
—
—
1
154
256
Balance
at end
of year
391
361
415
348
332
417
34
Nokia in 2009
Notes to the consolidated financial statements
20. Fair value and other reserves
EURm
Gross
Tax
Net
Gross
Tax
Net
Gross
Tax
Net
Balance at December 31, 2006
69
– 19
50
– 66
2
– 64
3
– 17
– 14
Hedging reserve,
Available-for-sale
investments
Total
Cash flow hedges:
Net fair value gains (+)/losses (–)
Transfer of gains (–)/losses (+) to profit and loss account
as adjustment to net sales
Transfer of gains (–)/losses (+) to profit and loss account
as adjustment to cost of sales
Available-for-sale Investments:
Net fair value gains (+)/losses (–)
Transfer to profit and loss account on impairment
Transfer of net fair value gains (–)/losses (+) to
profit and loss account on disposal
Movements attributable to minority interests
Balance at December 31, 2007
Cash flow hedges:
Net fair value gain (+)/losses (–)
Transfer of gains (–)/losses (+) to profit and loss account
as adjustment to net sales
Transfer of gains (–)/losses (+) to profit and loss account
as adjustment to cost of sales
Transfer of gains (–)/losses (+) as a basis adjustment
to assets and liabilities
Available-for-sale Investments:
Net fair value gains (+)/losses (–)
Transfer to profit and loss account on impairment
Transfer of net fair value gains (–)/losses (+)
to profit and loss account on disposal
Movements attributable to minority interests
Balance at December 31, 2008
Cash flow hedges:
Net fair value gains (+)/losses (–)
Transfer of gains (–)/losses (+) to profit and loss account
as adjustment to net sales
Transfer of gains (–)/losses (+) to profit and loss account
as adjustment to cost of sales
Available-for-sale Investments:
Net fair value gains (+)/losses (–)
Transfer to profit and loss account on impairment
Transfer of net fair value gains (–)/losses (+)
to profit and loss account on disposal
Movements attributable to minority interests
Balance at December 31, 2009
103
– 27
76
– 794
214
– 580
684
– 185
499
—
—
—
– 8
54
—
—
—
2
– 15
—
—
—
– 6
39
281
– 67
214
– 631
177
– 454
186
– 62
124
124
– 32
92
—
—
—
87
101
—
—
—
– 21
– 20
—
—
—
66
81
– 19
6
– 13
873
– 222
651
– 829
205
– 624
—
—
—
– 65
—
—
—
16
61
– 15
—
—
—
– 49
46
—
—
—
32
29
– 12
—
– 17
—
—
—
—
– 29
1
13
3
– 29
—
—
—
36
14
– 2
– 2
17
—
—
—
– 1
—
—
—
1
—
—
—
—
9
—
1
– 1
10
—
—
—
– 4
—
—
—
6
—
—
—
31
29
– 12
—
– 16
—
—
—
—
– 20
1
14
2
– 19
—
—
—
32
14
– 2
– 2
23
103
– 27
76
– 794
214
– 580
684
– 185
499
32
29
– 12
– 8
37
– 1
—
—
2
– 14
31
29
– 12
– 6
23
281
– 67
214
– 631
177
– 454
186
– 62
124
124
– 32
92
– 29
1
13
90
72
9
—
1
– 22
– 10
– 20
1
14
68
62
– 19
6
– 13
873
– 222
651
– 829
205
– 624
36
14
– 2
– 67
78
– 4
—
—
16
– 9
32
14
– 2
– 51
69
The presentation of the “Fair value and other reserves” footnote has been changed
to correspond with the presentation of the Statement of Comprehensive Income.
es on forward exchange contracts that have been designated to hedge forecasted
sales or purchases that are no longer expected to occur.
In order to ensure that amounts deferred in the cash flow hedging reserve rep-
resent only the effective portion of gains and losses on properly designated hedges
of future transactions that remain highly probable at the balance sheet date, Nokia
has adopted a process under which all derivative gains and losses are initially rec-
ognized in the profit and loss account. The appropriate reserve balance is calculated
at the end of each period and posted to the fair value and other reserves.
All of the net fair value gains or losses recorded in the fair value and other
reserve at December 31, 2009 on open forward foreign exchange contracts which
hedge anticipated future foreign currency sales or purchases are transferred from
the Hedging Reserve to the profit and loss account when the forecasted foreign cur-
rency cash flows occur, at various dates up to approximately 1 year from the balance
sheet date.
The Group continuously reviews the underlying cash flows and the hedges
allocated thereto, to ensure that the amounts transferred to the fair value reserves
during the year ended December 31, 2009, 2008 and 2007 do not include gains/loss-
35
Notes to the consolidated financial statements
21. Translation differences
EURm
Gross
Tax
Net
Gross
Tax
Net
Gross
Tax
Net
Translation
differences
Net investment
hedging
Total
Balance at December 31, 2006
Translation differences:
Currency translation differences
Transfer to profit and loss (financial income and expense)
Net investment hedging:
Net investment hedging gains (+)/losses (–)
Transfer to profit and loss (financial income and expense)
Movements attributable to minority interests
Balance at December 31, 2007
Translation differences:
Currency translation differences
Transfer to profit and loss (financial income and expense)
Net investment hedging:
Net investment hedging gains (+)/losses (–)
Transfer to profit and loss (financial income and expense)
Movements attributable to minority interests
Balance at December 31, 2008
Translation differences:
Currency translation differences
Transfer to profit and loss (financial income and expense)
Net investment hedging:
Net investment hedging gains (+)/losses (–)
Transfer to profit and loss (financial income and expense)
Movements attributable to minority interests
Balance at December 31, 2009
–37
—
–37
41
–38
3
4
–38
–34
–151
—
—
—
–16
–204
595
—
—
—
—
391
–556
–7
—
—
8
–164
—
—
—
—
—
—
—
—
—
—
—
—
2
—
—
—
1
3
–151
—
—
—
–16
–204
595
—
—
—
—
391
–554
–7
—
—
9
–161
—
—
51
—
—
92
—
—
–123
—
—
—
—
–13
—
—
–51
—
—
32
—
—
–31
–19
—
—
114
1
—
84
—
—
–31
—
—
–50
—
—
38
—
—
41
—
—
–91
—
—
–50
—
—
83
1
—
34
–151
—
51
—
–16
—
—
–151
—
–13
—
—
38
—
–16
–112
–51
–163
595
—
–123
—
—
—
—
32
—
—
360
–19
595
—
–91
—
—
341
–556
–7
2
—
–554
–7
114
1
8
–80
–31
—
1
83
1
9
–47
–127
22. The shares of the Parent Company
Nokia shares and shareholders
Shares and share capital
Nokia has one class of shares. Each Nokia share entitles the holder to one vote at
General Meetings of Nokia.
On December 31, 2009, the share capital of Nokia Corporation was
EUR 245 896 461.96 and the total number of shares issued was 3 744 956 052.
On December 31, 2009, the total number of shares included 36 693 564 shares
owned by Group companies representing approximately 1.0% of the share capital
and the total voting rights.
Under the Articles of Association of Nokia, Nokia Corporation does not have
minimum or maximum share capital or a par value of a share.
Authorizations
Authorization to increase the share capital
At the Annual General Meeting held on May 3, 2007, Nokia shareholders authorized
the Board of Directors to issue a maximum of 800 million new shares through one or
more issues of shares or special rights entitling to shares, including stock options.
The Board of Directors may issue either new shares or shares held by the Company.
The authorization includes the right for the Board to resolve on all the terms and
conditions of such issuances of shares and special rights, including to whom the
shares and the special rights may be issued. The authorization is effective until
June 30, 2010.
At the end of 2009, the Board of Directors had no other authorizations to issue
shares, convertible bonds, warrants or stock options.
Other authorizations
At the Annual General Meeting held on May 8, 2008, Nokia shareholders authorized
the Board of Directors to repurchase a maximum of 370 million Nokia shares by using
funds in the unrestricted shareholders’ equity. Nokia repurchased 71 090 000 shares
under this authorization in 2008. In 2009, Nokia did not repurchase any shares on the
basis of this authorization. This authorization was effective until June 30, 2009 as per
the resolution of the Annual General Meeting on May 8, 2008, but it was terminated
by the resolution of the Annual General Meeting on April 23, 2009.
At the Annual General Meeting held on April 23, 2009, Nokia shareholders
authorized the Board of Directors to repurchase a maximum of 360 million Nokia
shares by using funds in the unrestricted shareholders’ equity. The amount of shares
corresponds to less than 10% of all shares of the company. The shares may be repur-
chased under the buy-back authorization in order to develop the capital structure of
the company. In addition, shares may be repurchased in order to finance or carry out
acquisitions or other arrangements, to settle the company’s equity-based incentive
plans, to be transferred for other purposes, or to be cancelled. Nokia has not pur-
chased any shares based on this authorization. The authorization is effective until
June 30, 2010 and the authorization terminated the authorization for repurchasing
of the Company’s shares resolved at the Annual General Meeting on May 8, 2008.
36
Nokia in 2009
Notes to the consolidated financial statements
Authorizations proposed to the Annual General Meeting 2010
The Board of Directors will propose to the Annual General Meeting to be held on
May 6, 2010 that the Annual General Meeting authorize the Board to resolve to re-
purchase a maximum of 360 million Nokia shares by using funds in the unrestricted
shareholders’ equity. The proposed maximum number of shares represents less
than 10% of all the shares of the Company. The shares may be repurchased in order
to develop the capital structure of the Company, finance or carry out acquisitions or
other arrangements, settle the Company’s equity-based incentive plans, be trans-
ferred for other purposes, or be cancelled. The authorization would be effective
until June 30, 2011 and terminate the current authorization granted by the Annual
General Meeting on April 23, 2009.
The Board of Directors will also propose to the Annual General Meeting to be
held on May 6, 2010 that the Annual General Meeting authorize the Board to resolve
to issue a maximum of 740 million shares through issuance of shares or special
rights entitling to shares (including stock options) in one or more issues. The Board
proposes that the authorization may be used to develop the Company’s capital
structure, diversify the shareholder base, finance or carry out acquisitions or other
arrangements, settle the Company’s equity-based incentive plans, or for other
purposes resolved by the Board. The proposed authorization includes the right
for the Board to resolve on all the terms and conditions of the issuance of shares
and special rights entitling to shares, including issuance in deviation from the
shareholders’ pre-emptive rights. The authorization would be effective until June
30, 2013 and terminate the current authorization granted by the Annual General
Meeting on May 3, 2007.
23. Share-based payment
The Group has several equity-based incentive programs for employees. The pro-
grams include performance share plans, stock option plans and restricted share
plans. Both executives and employees participate in these programs.
The equity-based incentive grants are generally conditional upon continued
employment as well as fulfillment of such performance, service and other condi-
tions, as determined in the relevant plan rules.
The share-based compensation expense for all equity-based incentive awards
amounted to EUR 16 million in 2009 (EUR 74 million in 2008 and EUR 228 million in
2007).
Stock options
Nokia’s global stock option plans in effect for 2009, including their terms and condi-
tions, were approved by the Annual General Meetings in the year when each plan
was launched, i.e., in 2003, 2005 and 2007.
Each stock option entitles the holder to subscribe for one new Nokia share. The
stock options are non-transferable. All of the stock options have a vesting schedule
with 25% of the options vesting one year after grant and 6.25% each quarter there-
after. The stock options granted under the plans generally have a term of five years.
The exercise price of the stock options is determined at the time of grant on a
quarterly basis. The exercise prices are determined in accordance with a pre-agreed
schedule quarterly after the release of Nokia’s periodic financial results and are
based on the trade volume weighted average price of a Nokia share on NASDAQ OMX
Helsinki during the trading days of the first whole week of the second month of
the respective calendar quarter (i.e., February, May, August or November). Exercise
prices are determined on a one-week weighted average to mitigate any short term
fluctuations in Nokia’s share price. The determination of exercise price is defined in
the terms and conditions of the stock option plan, which are approved by the share-
holders at the respective Annual General Meeting. The Board of Directors does not
have the right to amend the above-described determination of the exercise price.
The stock option exercises are settled with newly issued Nokia shares which
entitle the holder to a dividend for the financial year in which the subscription
occurs. Other shareholder rights commence on the date on which the shares sub-
scribed for are registered with the Finnish Trade Register.
Pursuant to the stock options issued under the global stock option plans, an
aggregate maximum number of 22 755 509 new Nokia shares may be subscribed
for, representing 0.6% of the total number of votes at December 31, 2009. During
2009, the exercise of 7 500 options resulted in the issuance of 7 500 new shares. The
exercises of stock options resulted in an increase of Nokia’s share capital prior to
May 3, 2007. After that date the exercises of stock options have no longer resulted
in an increase of the share capital as thereafter all share subscription prices are
recorded in the fund for invested non-restricted equity as per a resolution by the
Annual General Meeting.
There were no stock options outstanding as of December 31, 2009, which upon
exercise would result in an increase of the share capital of the parent company.
37
Notes to the consolidated financial statements
The table below sets forth certain information relating to the stock options out-
standing at December 31, 2009.
Stock
Plan
options
(year of outstanding
2009
launch)
Number of
participants
(approx.)
Option
(sub)
category
Vesting status
(as percentage of
total number of
stock options
outstanding)
2003 1
0
0
2005 1
12 120 029
7 000
2007 1
10 635 480
9 000
2004 2Q
2004 3Q
2004 4Q
2005 2Q
2005 3Q
2005 4Q
2006 1Q
2006 2Q
2006 3Q
2006 4Q
2007 1Q
2007 2Q
2007 3Q
2007 4Q
2008 1Q
2008 2Q
2008 3Q
2008 4Q
2009 1Q
2009 2Q
2009 3Q
2009 4Q
Expired
Expired
Expired
100.00
100.00
93.75
87.50
81.25
75.00
68.75
62.50
56.25
50.00
43.75
37.50
31.25
25.00
—
—
—
—
—
1 The Group’s current global stock option plans have a vesting schedule with a 25% vesting one year
after grant, and quarterly vesting thereafter, each of the quarterly lots representing 6.25% of the total
grant. The grants vest fully in four years.
Total stock options outstanding as at December 31, 2009 1
Exercise period
First vest date
Last vest date
Expiry date
July 1, 2005
July 1, 2008
December 31, 2009
October 3, 2005
October 1, 2008
December 31, 2009
January 2, 2006
January 2, 2009
December 31, 2009
July 1, 2006
July 1, 2009
December 31, 2010
October 1, 2006
October 1, 2009
December 31, 2010
January 1, 2007
January 1, 2010
December 31, 2010
April 1, 2007
April 1, 2010
December 31, 2011
July 1, 2007
July 1, 2010
December 31, 2011
October 1, 2007
October 1, 2010
December 31, 2011
January 1, 2008
January 1, 2011
December 31, 2011
April 1, 2008
April 1, 2011
December 31, 2011
July 1, 2008
July 1, 2011
December 31, 2012
October 1, 2008
October 1, 2011
December 31, 2012
January 1, 2009
January 1, 2012
December 31, 2012
April 1, 2009
April 1, 2012
December 31, 2013
July 1, 2009
July 1, 2012
December 31, 2013
October 1, 2009
October 1, 2012
December 31, 2013
January 1, 2010
January 1, 2013
December 31, 2013
April 1, 2010
April 1, 2013
December 31, 2014
July 1, 2010
July 1, 2013
December 31, 2014
October 1, 2010
October 1, 2013
December 31, 2014
January 1, 2011
January 1, 2014
December 31, 2014
Exercise
price/share
EUR
11.79
9.44
12.35
12.79
13.09
14.48
14.99
18.02
15.37
15.38
17.00
18.39
21.86
27.53
24.15
19.16
17.80
12.43
9.82
11.18
9.28
8.76
Number of shares
Weighted average
exercise price, EUR 2
Weighted average
share price, EUR 2
Shares under option at January 1, 2007
Granted
Exercised
Forfeited
Expired
Shares under option at December 31, 2007
Granted
Exercised
Forfeited
Expired
Shares under option at December 31, 2008
Granted
Exercised
Forfeited
Expired
Shares under option at December 31, 2009
Options exercisable at December 31, 2006 (shares)
Options exercisable at December 31, 2007 (shares)
Options exercisable at December 31, 2008 (shares)
Options exercisable at December 31, 2009 (shares)
93 285 229
3 211 965
57 776 205
1 992 666
1 161 096
35 567 227
3 767 163
3 657 985
783 557
11 078 983
23 813 865
4 791 232
104 172
893 943
4 567 020
23 039 962
69 721 916
21 535 000
12 895 057
13 124 925
21.75
22.15
9.52
16.28
18.48
16.99
15.13
17.83
15.28
17.44
14.21
16.31
14.96
15.89
11.15
6.18
17.01
13.55
15.39
16.65
14.66
14.77
16.09
1 Includes also stock options granted under other than global equity plans. For further information see
2 The weighted average exercise price and the weighted average share price do not incorporate the
“Other equity plans for employees” below.
effect of transferable stock option exercises during 2007 by option holders not employed by the Group.
38
Nokia in 2009
Notes to the consolidated financial statements
The weighted average grant date fair value of stock options granted was EUR 2.34 in
2009, EUR 3.92 in 2008, and EUR 3.24 in 2007.
The options outstanding by range of exercise price at December 31, 2009 are
as follows:
Options outstanding
Weighted
average remaining
contractual life
in years
Number
of shares
Weighted
average
exercise
price, EUR
215 987
10 498 214
12 202 542
123 219
23 039 962
4.27
3.06
2.61
2.03
6.07
12.10
18.28
26.63
Exercise prices, EUR
0.81–9.93
10.26–14.99
15.37–19.86
21.86–37.37
Nokia calculates the fair value of stock options using the Black-Scholes model.
The fair value of the stock options is estimated at the grant date using the following
assumptions:
Performance shares
The Group has granted performance shares under the global 2005, 2006, 2007,
2008 and 2009 plans, each of which, including its terms and conditions, has been
approved by the Board of Directors. A valid authorization from the Annual General
Meeting is required when the plans are to be settled by using the Nokia newly
issued shares or treasury shares. The Group may also settle the plans by using cash
instead of shares.
The performance shares represent a commitment by the Group to deliver
Nokia shares to employees at a future point in time, subject to Nokia’s fulfillment
of pre-defined performance criteria. No performance shares will vest unless the
Group’s performance reaches at least one of the threshold levels measured by two
independent, pre-defined performance criteria: the Group’s average annual net
sales growth for the performance period of the plan and earnings per share (“EPS”)
at the end of the performance period.
The 2005 plan had a four-year performance period with a two-year interim
measurement period. The 2006, 2007, 2008 and 2009 plans have a three-year perfor-
mance period with no interim payout. The shares vest after the respective interim
measurement period and/or the performance period. The shares will be delivered
to the participants as soon as practicable after they vest. Until the Nokia shares are
delivered, the participants will not have any shareholder rights, such as voting or
dividend rights associated with the performance shares.
2009
2008
2007
The following table summarizes our global performance share plans.
Weighted average expected
dividend yield
Weighted average expected
volatility
Risk-free interest rate
Weighted average risk-free
interest rate
Expected life (years)
Weighted average share price, EUR
3.63%
3.20%
2.30%
43.46%
25.24%
1.97–2.94% 3.15–4.58% 3.79–4.19%
39.92%
2.23%
3.60
10.82
3.65%
3.55
16.97
4.09%
3.59
18.49
Expected term of stock options is estimated by observing general option holder
behavior and actual historical terms of Nokia stock option plans.
Performance
shares
out-
standing
pants
Plan at threshold 1, 2 (approx.)
Number
Interim
of partici- measure-
ment
period
1st
2nd
Perform- (interim) (final)
settle- settle-
ment ment
ance
period
2005
2006
2007
2008
2009
0
0
0
2 178 538
2 892 063
11 000 2005–2006 2005–2008
N/A 2006–2008
12 000
N/A 2007–2009
5 000
N/A 2008–2010
6 000
N/A 2009–2011
6 000
2007
N/A
N/A
N/A
N/A
2009
2009
2010
2011
2012
1 Shares under performance share plan 2007 vested on December 31, 2009 and are therefore not
Expected volatility has been set by reference to the implied volatility of options
included in the outstanding numbers.
available on Nokia shares in the open market and in light of historical patterns of
volatility.
2 Does not include 23 359 outstanding performance shares with deferred delivery due to leave of
absence.
The following table sets forth the performance criteria of each global performance
share plan.
Plan
2005
2006
2007
2008
2009
Interim measurement
Performance period
Performance period
Performance period
Performance period
Performance period
Threshold performance
Maximum performance
EPS 1,2
EUR
Average annual
net sales growth 1
EPS 1,2
EUR
Average annual
net sales growth 1
0.75
0.82
0.96
1.26
1.72
1.01
3%
8%
11%
9.5%
4%
–5%
0.96
1.33
1.41
1.86
2.76
1.53
12%
17%
26%
20%
16%
10%
1 Both the EPS and average annual net sales growth criteria have an equal weight of 50%.
2 The EPS for 2005, 2006 and 2007 plans: basic reported. The EPS for 2008 plan: diluted excluding special
items. The EPS for 2009 plan: diluted non-IFRS.
39
Notes to the consolidated financial statements
Performance shares outstanding as at December 31, 2009 1
Number of performance shares at threshold
Weighted average grant date fair value, EUR 2
Performance shares at January 1, 2007 3
Granted
Forfeited
Vested 4
Performance shares at December 31, 2007 5
Granted
Forfeited
Vested 3, 4, 6
Performance shares at December 31, 2008
Granted
Forfeited
Vested 5, 7
Performance shares at December 31, 2009
12 614 389
2 163 901
1 001 332
222 400
13 554 558
2 463 033
690 909
7 291 463
8 035 219
2 960 110
691 325
5 210 044
5 093 960
19.96
13.35
9.57
1 Includes also performance shares granted under other than global equity plans. For further informa-
4
Includes also performance shares vested under other than global equity plans.
tion see “Other equity plans for employees” below.
2 The fair value of performance shares is estimated based on the grant date market price of the Com-
pany’s share less the present value of dividends expected to be paid during the vesting period.
3 Based on the performance of the Group during the Interim Measurement Period 2004–2005, under
the 2004 Performance Share Plan, both performance criteria were met. Hence, 3 595 339 Nokia shares
equaling the threshold number were delivered in 2006. The performance shares related to the interim
settlement of the 2004 Performance Share Plan are included in the number of performance shares out-
standing at January 1, 2007 as these performance shares were outstanding until the final settlement
in 2008. The final payout, in 2008, was adjusted by the shares delivered based on the Interim Measure-
ment Period.
There will be no settlement under the Performance Share Plan 2007 as neither of
the threshold performance criteria of EPS and Average Annual Net Sales Growth of
this plan was met.
Restricted shares
5 Based on the performance of the Group during the Interim Measurement Period 2005–2006, under
the 2005 Performance Share Plan, both performance criteria were met. Hence, 3 980 572 Nokia
shares equaling the threshold number were delivered in 2007. The performance shares related to the
interim settlement of the 2005 Performance Share Plan are included in the number of performance
shares outstanding at December 31, 2007 as these performance shares were outstanding until the
final settlement in 2009. The final payout, in 2009, was adjusted by the shares delivered based on the
Interim Measurement Period.
6 Includes performance shares under Performance Share Plan 2006 that vested on December 31, 2008.
7 Includes performance shares under Performance Share Plan 2007 that vested on December 31, 2009.
The Group has granted restricted shares under global plans to recruit, retain, reward
and motivate selected high potential employees, who are critical to the future suc-
cess of Nokia. It is Nokia’s philosophy that restricted shares will be used only for key
management positions and other critical talent. The outstanding global restricted
share plans, including their terms and conditions, have been approved by the Board
of Directors. A valid authorization from the Annual General Meeting is required
when the plans are to be settled by using Nokia newly issued shares or treasury
shares. The Group may also settle the plans by using cash instead of shares.
All of our restricted share plans have a restriction period of three years after
grant, after which period the granted shares will vest. Once the shares vest, they
will be delivered to the participants. Until the Nokia shares are delivered, the
participants will not have any shareholder rights, such as voting or dividend rights,
associated with the restricted shares.
Restricted shares outstanding as at December 31, 2009 1
Number of restricted shares
Weighted average grant date fair value, EUR 2
Restricted shares at January 1, 2007
Granted
Forfeited
Vested
Restricted shares at December 31, 2007
Granted 3
Forfeited
Vested
Restricted shares at December 31, 2008
Granted
Forfeited
Vested
Restricted shares at December 31, 2009
1 Includes also restricted shares granted under other than global equity plans. For further information
see “Other equity plans for employees” below.
2 The fair value of restricted shares is estimated based on the grant date market price of the Company’s
share less the present value of dividends, if any, expected to be paid during the vesting period.
3 Includes grants assumed under “NAVTEQ Plan” (as defined below).
40
Nokia in 2009
6 064 876
1 749 433
297 900
1 521 080
5 995 329
4 799 543
358 747
2 386 728
8 049 397
4 288 600
446 695
2 510 300
9 381 002
24.37
13.89
7.59
Notes to the consolidated financial statements
At December 31, 2009 the Group had loss carry forwards, primarily attributable to
foreign subsidiaries of EUR 1 150 million (EUR 1 013 million in 2008), most of which
will expire within 20 years.
At December 31, 2009 the Group had loss carry forwards and temporary differ-
ences of EUR 2 532 million (EUR 102 million in 2008) for which no deferred tax asset
was recognized due to uncertainty of utilization of these items. Most of these items
do not have an expiry date.
At December 31, 2009 the Group had undistributed earnings of EUR 322 million
(EUR 274 million in 2008), for which no deferred tax liability was recognized as these
earnings are considered to be permanently invested.
25. Accrued expenses
EURm
Social security, VAT and other taxes
Wages and salaries
Advance payments
Other
Total
2009
2008
1 808
474
546
3 676
6 504
1 700
665
532
4 126
7 023
Other operating expense accruals include deferred service revenue, accrued
discounts, royalties and marketing expenses as well as various amounts which are
individually insignificant.
Other equity plans for employees
In addition to the global equity plans described above, the Group sponsors immate-
rial equity plans for Nokia-acquired businesses or employees in the United States
or Canada that do not result in an increase in the share capital of Nokia. These plans
are settled by using Nokia shares or ADSs acquired from the market. When treasury
shares are issued on exercise of stock options any gain or loss is recognized in share
issue premium.
On basis of these plans the Group had 0.3 million stock options outstanding on
December 31, 2009. The weighted average exercise price is USD 16.13.
In connection with our July 10, 2008 acquisition of NAVTEQ, the Group assumed
NAVTEQ’s 2001 Stock Incentive Plan (“NAVTEQ Plan”). All unvested NAVTEQ restricted
stock units under the NAVTEQ Plan were converted to an equivalent number of
restricted stock units entitling their holders to Nokia shares. The maximum number
of Nokia shares to be delivered to NAVTEQ employees during the years 2008–2012 is
approximately 3 million, of which approximately 1 million shares have already been
delivered by December 31, 2009. The Group does not intend to make further awards
under the NAVTEQ Plan.
24. Deferred taxes
EURm
2009
2008
Deferred tax assets:
Intercompany profit in inventory
Tax losses carried forward
Warranty provision
Other provisions
Depreciation differences
and untaxed reserves
Share-based compensation
Other temporary differences
Reclassification due to netting
of deferred taxes
Total deferred tax assets
Deferred tax liabilities:
Depreciation differences
and untaxed reserves
Fair value gains/losses
Undistributed earnings
Other temporary differences 1
Reclassification due to netting
of deferred taxes
Total deferred tax liabilities
Net deferred tax asset
Tax charged to equity
77
263
73
315
796
15
320
–352
1 507
–469
–67
–345
–774
352
–1 303
144
293
117
371
1 059
68
282
–371
1 963
–654
–62
–242
–1 200
371
–1 787
204
176
– 13
–128
1 In 2009 other temporary differences include a deferred tax liability of EUR 744 million (EUR 1 140 mil-
lion in 2008) arising from purchase price allocation related to Nokia Siemens Networks and NAVTEQ.
41
Notes to the consolidated financial statements
26. Provisions
EURm
Warranty Restructuring
IPR
infringements
Project
losses
Tax
Other
Total
At January 1, 2008
Exchange differences
Acquisitions
Additional provisions
Change in fair value
Changes in estimates
Charged to profit and loss account
Utilized during year
At December 31, 2008
At January 1, 2009
Exchange differences
Additional provisions
Change in fair value
Changes in estimates
Charged to profit and loss account
Utilized during year
At December 31, 2009
1 489
– 16
1
1 211
—
– 240
971
– 1 070
1 375
1 375
– 13
793
—
– 178
615
– 1 006
971
617
—
—
533
—
– 211
322
– 583
356
356
—
268
—
– 62
206
– 378
184
545
—
3
266
—
– 92
174
– 379
343
343
—
73
—
– 9
64
– 17
390
116
—
—
389
—
– 42
347
– 218
245
245
—
269
—
– 63
206
– 254
197
452
—
6
47
—
– 45
2
—
460
460
—
139
—
– 325
– 186
—
274
498
—
2
747
– 7
– 143
597
– 284
813
813
—
344
– 1
– 174
169
– 280
702
3 717
– 16
12
3 193
– 7
– 773
2 413
– 2 534
3 592
3 592
– 13
1 886
– 1
– 811
1 074
– 1 935
2 718
EURm
2009
2008
Other provisions include provisions for non-cancelable purchase commitments,
Analysis of total provisions at December 31:
Non-current
Current
841
1 877
978
2 614
product portfolio provisions for the alignment of the product portfolio and related
replacement of discontinued products in customer sites and provision for pension
and other social security costs on share-based awards.
Outflows for the warranty provision are generally expected to occur within the
next 18 months. In 2009, warranty provision decreased compared to 2008 primarily
due to lower sales volumes in Devices & Services. Timing of outflows related to tax
provisions is inherently uncertain. In 2009, tax provisions decreased due to the posi-
tive development and outcome of various prior year items.
The restructuring provision is mainly related to restructuring activities in
Devices & Services and Nokia Siemens Networks segments. The majority of outflows
related to the restructuring is expected to occur during 2010.
In 2009, Devices & Services recognized restructuring provisions of EUR 208
million mainly related to measures taken to adjust our business operations and cost
base according to market conditions. In 2008, resulting from the Group’s decision to
discontinue the production of mobile devices in Germany, a restructuring provision
of EUR 259 million was recognized. Devices & Services also recognized EUR 52 million
related to other restructuring activities.
Restructuring and other associated expenses incurred in Nokia Siemens
Networks in 2009 totaled EUR 310 million (EUR 646 million in 2008) including
mainly personnel related expenses as well as expenses arising from the elimina-
tion of overlapping functions, and the realignment of product portfolio and related
replacement of discontinued products in customer sites. These expenses included
EUR 151 million (EUR 402 million in 2008) impacting gross profit, EUR 30 million
(EUR 46 million in 2008) research and development expenses, EUR 12 million (rever-
sal of provision EUR 14 million in 2008) in selling and marketing expenses, EUR 103
million (EUR 163 million in 2008) administrative expenses and EUR 14 million (EUR
49 million in 2008) other operating expenses. EUR 514 million was paid during 2009
(EUR 790 million during 2008).
Provisions for losses on projects in progress are related to Nokia Siemens
Networks’ onerous contracts.
The IPR provision is based on estimated future settlements for asserted and
unasserted past IPR infringements. Final resolution of IPR claims generally occurs
over several periods. In 2008, EUR 379 million usage of the provisions mainly relates
to the settlements with Qualcomm, Eastman Kodak, Intertrust Technologies and
ContentGuard.
42
Nokia in 2009
27. Earnings per share
Numerator/EURm
Basic/Diluted:
Profit attributable to equity holders
of the parent
Denominator/1 000 shares
Basic:
Weighted average shares
Effect of dilutive securities:
Performance shares
Restricted shares
Stock options
2009
2008
2007
891
3 988
7 205
3 705 116
3 743 622 3 885 408
9 614
6 341
1
15 956
25 997
6 543
4 201
36 741
26 304
3 693
16 603
46 600
Diluted:
Adjusted weighted average shares
and assumed conversions
3 721 072
3 780 363 3 932 008
Under IAS 33, basic earnings per share is computed using the weighted average
number of shares outstanding during the period. Diluted earnings per share is com-
puted using the weighted average number of shares outstanding during the period
plus the dilutive effect of stock options, restricted shares and performance shares
outstanding during the period.
In 2009, stock options equivalent to 12 million shares (11 million in 2008) were
excluded from the calculation of diluted earnings per share because they were
determined to be anti-dilutive.
Notes to the consolidated financial statements
28. Commitments and contingencies
EURm
Collateral for our own commitments
Property under mortgages
Assets pledged
2009
2008
18
13
18
11
Contingent liabilities on behalf of Group companies
Other guarantees
1 350
2 896
Contingent liabilities on behalf of other companies
Financial guarantees on behalf of third parties 1
Other guarantees
Financing commitments
Customer finance commitments 1
Venture fund commitments 2
1 See also note 33 b).
2 See also note 33 a).
—
3
99
293
2
1
197
467
on April 9, 2007. The parties entered into negotiations for a new license agreement
with the intention of reaching a mutually acceptable agreement on a timely basis.
Prior to the commencement of negotiations and as negotiations proceeded, Nokia
and Qualcomm were engaged in numerous legal disputes in the United States,
Europe and China. On July 24, 2008 Nokia and Qualcomm entered into a new license
agreement covering various current and future standards and other technologies,
and resulting in a settlement of all litigation between the companies. Under the
terms of the 15 year agreement covering various standards and other technologies,
Nokia has been granted a license under all Qualcomm’s patents for use in Nokia’s
mobile devices and Nokia Siemens Networks infrastructure equipment, and Nokia
has agreed not to use any of its patents directly against Qualcomm. The financial
terms included a one-time lump-sum cash payment of EUR 1.7 billion made by
Nokia to Qualcomm in the fourth quarter of 2008 and on-going royalty payments
to Qualcomm. The lump-sum payment made to Qualcomm will be expensed over
the term of the agreement. Nokia also agreed to assign ownership of a number of
patents to Qualcomm.
As of December 31, 2009, the Group had purchase commitments of EUR 2 765
million (EUR 2 351 million in 2008) relating to inventory purchase obligations, ser-
vice agreements and outsourcing arrangements, primarily for purchases in 2010.
The amounts above represent the maximum principal amount of commitments and
contingencies.
29. Leasing contracts
Property under mortgages given as collateral for our own commitments
include mortgages given to the Finnish National Board of Customs as a general
indemnity of EUR 18 million in 2009 (EUR 18 million in 2008).
Assets pledged for the Group’s own commitments include available-for-sale
investments of EUR 10 million in 2009 (EUR 10 million of available-for-sale invest-
ments in 2008).
Other guarantees include guarantees of EUR 1 013 million in 2009 (EUR 2 682
million in 2008) provided to certain Nokia Siemens Networks’ customers in the form
of bank guarantees or corporate guarantees issued by Nokia Siemens Networks’
Group entity. These instruments entitle the customer to claim payment as compen-
sation for non-performance by Nokia of its obligations under network infrastruc-
ture supply agreements. Depending on the nature of the guarantee, compensation
is payable on demand or subject to verification of non-performance. Volume of
Other guarantees has decreased due to release of certain commercial guarantees
and due to exclusion of those guarantees where possibility for claim is considered
as remote.
Contingent liabilities on behalf of other companies were EUR 3 million in 2009
The Group leases office, manufacturing and warehouse space under various non-
cancellable operating leases. Certain contracts contain renewal options for various
periods of time.
The future costs for non-cancellable leasing contracts are as follows:
Leasing payments, EURm
Operating leases
2010
2011
2012
2013
2014
Thereafter
Total
348
254
180
131
99
210
1 222
(EUR 3 million in 2008).
Rental expense amounted to EUR 436 million in 2009 (EUR 418 million in 2008
Financing commitments of EUR 99 million in 2009 (EUR 197 million in 2008) are
available under loan facilities negotiated mainly with Nokia Siemens Networks’ cus-
tomers. Availability of the amounts is dependent upon the borrower’s continuing
compliance with stated financial and operational covenants and compliance with
other administrative terms of the facility. The loan facilities are primarily available
to fund capital expenditure relating to purchases of network infrastructure equip-
ment and services.
Venture fund commitments of EUR 293 million in 2009 (EUR 467 million in 2008)
are financing commitments to a number of funds making technology related invest-
ments. As a limited partner in these funds Nokia is committed to capital contribu-
tions and also entitled to cash distributions according to respective partnership
agreements.
and EUR 328 million in 2007).
30. Related party transactions
At December 31, 2009, the Group had borrowings amounting to EUR 69 million
(EUR 69 million in 2008 and EUR 69 million in 2007) from Nokia Unterstützungskasse
GmbH, the Group’s German pension fund, which is a separate legal entity. The loan
bears interest at 6% annum and its duration is pending until further notice by the
loan counterparts who have the right to terminate the loan with a 90 day notice
period.
The Group is party of routine litigation incidental to the normal conduct of
There were no loans made to the members of the Group Executive Board and
business, including, but not limited to, several claims, suits and actions both initi-
ated by third parties and initiated by Nokia relating to infringements of patents,
violations of licensing arrangements and other intellectual property related mat-
ters, as well as actions with respect to products, contracts and securities. In the
opinion of the management outcome of and liabilities in excess of what has been
provided for related to these or other proceedings, in the aggregate, are not likely
to be material to the financial condition or result of operations.
Nokia’s payment obligations under the subscriber unit cross-license agree-
ments signed in 1992 and 2001 with Qualcomm Incorporated (“Qualcomm”) expired
Board of Directors at December 31, 2009, 2008 or 2007.
43
Notes to the consolidated financial statements
EURm
2009
2008
2007
Transactions with associated companies
Share of results of associated companies
Dividend income
Share of shareholders’ equity
of associated companies
Sales to associated companies
Purchases from associated companies
Receivables from associated
companies
Liabilities to associated companies
30
—
35
8
211
2
31
6
6
21
59
162
29
8
44
12
158
82
125
61
69
Management compensation
The following table sets forth the salary and cash incentive information awarded
and paid or payable by the company to the Chief Executive Officer and President of
Nokia Corporation for fiscal years 2007–2009 as well as the share-based compensa-
tion expense relating to equity-based awards, expensed by the company.
2009
2008
2007
EUR
Olli-Pekka Kallasvuo
President and CEO
Base
salary
Cash
Share-based
incentive compensation
payments
expense
Base
salary
Cash
Share-based
incentive compensation
payments
expense
Base
salary
Cash
Share-based
incentive compensation
payments
expense
1 176 000
1 288 144
2 840 777
1 144 800
721 733
1 286 370
1 037 619
2 348 877
4 805 722
Total remuneration of the Group Executive Board awarded for the fiscal years 2007–
2009 was EUR 10 723 777 in 2009 (EUR 8 859 567 in 2008 and EUR 13 634 791 in 2007),
which consisted of base salaries and cash incentive payments. Total share-based
compensation expense relating to equity-based awards expensed by the company
was EUR 9 668 484 in 2009 (EUR 4 850 204 in 2008 and EUR 19 837 583 in 2007).
Board of Directors
The following table depicts the annual remuneration structure paid to the members
of our Board of Directors, as resolved by the Annual General Meetings in the respec-
tive years.
Board of Directors
Gross
annual fee
EUR 1
Shares
received
Gross
annual fee
EUR 1
Shares
received
Gross
annual fee
EUR 1
Shares
received
2009
2008
2007
Jorma Ollila, Chairman 2
440 000
16 575
Dame Marjorie Scardino, Vice Chairman 3
150 000
Georg Ehrnrooth 4
Lalita D. Gupte 5
Bengt Holmström
Henning Kagermann
Olli-Pekka Kallasvuo 6
Per Karlsson 7
Isabel Marey-Semper 8
Risto Siilasmaa 9
Keijo Suila 10
Vesa Vainio 11
155 000
140 000
130 000
130 000
130 000
155 000
140 000
140 000
130 000
—
5 649
5 838
5 273
4 896
4 896
4 896
5 838
5 273
5 273
4 896
—
440 000
150 000
155 000
140 000
130 000
130 000
130 000
155 000
—
140 000
140 000
—
9 499
3 238
3 346
3 022
2 806
2 806
2 806
3 346
—
3 022
3 022
—
375 000
150 000
155 000
140 000
130 000
130 000
130 000
155 000
—
—
140 000
140 000
8 110
3 245
3 351
3 027
2 810
2 810
2 810
3 351
—
—
3 027
3 027
1 Approximately 60% of the gross annual fee is paid in cash and the remaining 40% in Nokia shares pur-
chased from the market and included in the table under “Shares Received.” Further, it is Nokia policy
that the directors retain all company stock received as director compensation until the end of their
board membership, subject to the need to finance any costs including taxes relating to the acquisition
of the shares.
2 This table includes fees paid for Mr. Ollila, Chairman, for his services as Chairman of the Board, only.
3 The 2009, 2008 and 2007 fees of Ms. Scardino amounted to EUR 150 000 for services as Vice Chairman.
4 The 2009, 2008 and 2007 fees of Mr. Ehrnrooth amounted to a total of EUR 155 000, consisting of a fee
of EUR 130 000 for services as a member of the Board and EUR 25 000 for services as Chairman of the
Audit Committee.
44
Nokia in 2009
5 The 2009, 2008 and 2007 fees of Ms. Gupte amounted to a total of EUR 140 000, consisting of fee of
130 000 for services as a member of the Board and EUR 10 000 for services as a member of the Audit
Committee.
6 This table includes fees paid to Mr. Kallasvuo, President and CEO, for his services as a member of the
Board, only.
7 The 2009, 2008 and 2007 fees of Mr. Karlsson amounted to a total of EUR 155 000, consisting of a fee
of EUR 130 000 for services as a member of the Board and EUR 25 000 for services as Chairman of the
Personnel Committee.
8 The 2009 fee paid to Ms. Marey-Semper amounted to a total of EUR 140 000, consisting of a fee of
EUR 130 000 for services as a member of the Board and EUR 10 000 for services as a member of the
Audit Committee.
9 The 2009 and 2008 fee of Mr. Siilasmaa amounted to a total of EUR 140 000, consisting of fee of
EUR 130 000 for services as a member of the Board and EUR 10 000 for services as a member of the
Audit Committee.
10 The 2008 and 2007 fees of Mr. Suila amounted to a total of EUR 140 000, consisting of a fee of
EUR 130 000 for services as a member of the Board and EUR 10 000 for services as a member of the
Audit Committee.
11 Mr. Vainio was a member of the Board of Directors and the Audit Committee until the end of the Annual
General Meeting on May 8, 2008. Mr. Vainio received his fees for services as a member of the Board and
as a member of the Audit Committee, as resolved by the shareholders at the Annual General Meeting
on May 3, 2007, already in 2007 and thus no fees were paid to him for the services rendered during
2008. The 2007 fee of Mr. Vainio amounted to a total of EUR 140 000 consisting of a fee of EUR 130 000
for services as a member of the Board and EUR 10 000 for services as a member of the Audit
Committee.
Pension arrangements of certain Group Executive Board Members
Olli-Pekka Kallasvuo can, as part of his service contract, retire at the age of 60 with
full retirement benefit should he be employed by Nokia at the time. The full retire-
ment benefit is calculated as if Mr. Kallasvuo had continued his service with Nokia
through the retirement age of 65. Hallstein Moerk, following his arrangement with a
previous employer, and continuing in his current position at Nokia, has a retirement
benefit of 65% of his pensionable salary beginning at the age of 62 and early retire-
ment is possible at the age of 55 with reduced benefits. Mr. Moerk will retire at the
end of September 2010 at the age of 57.
31. Notes to cash flow statements
EURm
Adjustments for:
2 009
2 008
2 007
Depreciation and amortization (Note 9)
1 784
1 617
1 206
Profit (–)/loss (+) on sale of property,
plant and equipment and
available-for-sale investments
Income taxes (Note 11)
Share of results of associated companies
(Note 14)
Minority interest
Financial income and expenses (Note 10)
Transfer from hedging reserve to sales
and cost of sales (Note 20)
Impairment charges (Note 7)
Asset retirements (Note 8, 12)
Share-based compensation (Note 23)
Restructuring charges
Finnish pension settlement (Note 5)
Other income and expenses
Adjustments, total
Change in net working capital
Decrease (+)/increase (–) in short-term
receivables
Decrease (+)/increase (–) in inventories
Decrease (–)/increase (+) in interest-free
short-term borrowings
Loans made to customers
Change in net working capital
– 111
702
– 30
– 631
265
44
1 009
35
16
307
—
—
3 390
– 11
– 1 864
1 081
1 522
– 6
– 99
2
– 44
– 459
– 239
– 445
– 110
149
186
74
448
152
– 124
3 024
63
—
228
856
—
—
1 159
1 145
640
– 534
321
– 2 146
– 245
– 1 698
– 2 333
2 996
53
140
—
– 2 546
—
605
Notes to the consolidated financial statements
The Transfer from hedging reserve to sales and cost of sales for 2008 and 2007 have
been reclassified for comparability purposes from Other financial income and ex-
penses to Adjustments to profit attributable to equity holders of the parent within
Net cash from operating activities on the Consolidated Statements of Cash Flows.
The Group did not engage in any material non-cash investing activities in
2009 and 2008. In 2007 the formation of Nokia Siemens Networks was completed
through the contribution of certain tangible and intangible assets and certain
business interests that comprised Nokia’s networks business and Siemens’ carrier-
related operations. See Note 8.
32. Principal Nokia Group companies
at December 31, 2009
%
US
DE
GB
KR
CN
NL
HU
IN
IT
ES
RO
BR
RU
US
NL
FI
DE
IN
Nokia Inc.
Nokia GmbH
Nokia UK Limited
Nokia TMC Limited
Nokia Telecommunications Ltd
Nokia Finance International B.V
Nokia Komárom Kft
Nokia India Pvt Ltd
Nokia Italia S.p.A
Nokia Spain S.A.U
Nokia Romania SRL
Nokia do Brazil Technologia Ltda
OOO Nokia
NAVTEQ Corp
Nokia Siemens Networks B.V
Nokia Siemens Networks Oy
Nokia Siemens Networks GmbH & Co KG
Nokia Siemens Networks Pvt. Ltd.
Parent
Group
holding majority
—
100.0
—
100.0
4.5
100.0
100.0
99.9
100.0
100.0
100.0
99.9
100.0
—
—
—
—
—
100.0
100.0
100.0
100.0
83.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
50.0 1
50.0
50.0
50.0
1 Nokia Siemens Networks B.V., the ultimate parent of the Nokia Siemens Network group, is owned ap-
proximately 50% by each of Nokia and Siemens and consolidated by Nokia. Nokia effectively controls
Nokia Siemens Networks as it has the ability to appoint key officers and the majority of the members
of its Board of Directors, and accordingly, Nokia consolidated Nokia Siemens Networks.
33. Risk management
General risk management principles
Nokia has a common and systematic approach to risk management across business
operations and processes. Material risks and opportunities are identified, analyzed,
managed and monitored as part of business performance management. Relevant
key risks are identified against business targets either in business operations or as
an integral part of long and short term planning. Nokia’s overall risk management
concept is based on visibility of the key risks preventing Nokia from reaching its
business objectives rather than solely focusing on eliminating risks.
The principles documented in Nokia’s Risk Policy and accepted by the Audit
Committee of the Board of Directors require risk management and its elements
to be integrated into business processes. One of the main principles is that the
business, function or category owner is also the risk owner, but it is everyone’s
responsibility at Nokia to identify risks, which prevent Nokia to reach the objectives.
Risk management covers strategic, operational, financial and hazard risks.
Key risks are reported to the Group level management to create assurance on
business risks as well as to enable prioritization of risk management activities at
Nokia. In addition to general principles there are specific risk management policies
covering, for example treasury and customer related credit risks.
45
Notes to the consolidated financial statements
Financial risks
2008, EURm
USD
JPY
GBP
INR
The objective for Treasury activities in Nokia is twofold: to guarantee cost-efficient
funding for the Group at all times, and to identify, evaluate and hedge financial
risks. There is a strong focus in Nokia on creating shareholder value. Treasury activi-
ties support this aim by: i) mitigating the adverse effects caused by fluctuations
in the financial markets on the profitability of the underlying businesses; and ii)
managing the capital structure of the Group by prudently balancing the levels of
liquid assets and financial borrowings.
Treasury activities are governed by policies approved by the CEO. Treasury
Policy provides principles for overall financial risk management and determines
the allocation of responsibilities for financial risk management in Nokia. Operating
Procedures cover specific areas such as foreign exchange risk, interest rate risk, use
of derivative financial instruments, as well as liquidity and credit risk. Nokia is risk
averse in its Treasury activities.
a) Market risk
Foreign exchange risk
Nokia operates globally and is thus exposed to foreign exchange risk arising from
various currencies. Foreign currency denominated assets and liabilities together
with expected cash flows from highly probable purchases and sales contribute
to foreign exchange exposure. These transaction exposures are managed against
various local currencies because of Nokia’s substantial production and sales outside
the Euro zone.
According to the foreign exchange policy guidelines of the Group, which remain
the same as in the previous year, material transaction foreign exchange exposures
are hedged unless hedging would be uneconomical due to market liquidity and/or
hedging cost. Exposures are mainly hedged with derivative financial instruments
such as forward foreign exchange contracts and foreign exchange options. The
majority of financial instruments hedging foreign exchange risk have duration of
less than a year. The Group does not hedge forecasted foreign currency cash flows
beyond two years.
Since Nokia has subsidiaries outside the Euro zone, the euro-denominated
value of the shareholders’ equity of Nokia is also exposed to fluctuations in ex-
change rates. Equity changes resulting from movements in foreign exchange rates
are shown as a translation difference in the Group consolidation.
Nokia uses, from time to time, foreign exchange contracts and foreign currency
denominated loans to hedge its equity exposure arising from foreign net invest-
ments.
At the end of year 2009 and 2008, following currencies represent significant
FX derivatives used as cashflow
hedges (net amount) 1
– 3 359
2 674
—
– 122
FX derivatives used as net
investment hedges (net amount) 2 – 232
—
– 699
– 179
FX exposure from balance sheet
items (net amount) 3
FX derivatives not designated
in a hedge relationship and
carried at fair value through
profit and loss (net amount) 3
729
-494
– 579
236
– 615
480
527
– 443
1 The FX derivatives are used to hedge the foreign exchange risk from forecasted highly probable cash
flows related to sales, purchases and business acquisition activities. In some of the currencies, espe-
cially in US Dollar, Nokia has substantial foreign exchange risks in both estimated cash inflows and
outflows, which have been netted in the table. See Note 20 for more details on hedge accounting. The
underlying exposures for which these hedges are entered into are not presented in the table, as they
are not financial instruments as defined under IFRS 7.
2 The FX derivatives are used to hedge the Group’s net investment exposure. The underlying exposures
for which these hedges are entered into are not presented in the table, as they are not financial instru-
ments as defined under IFRS 7.
3 The balance sheet items which are denominated in the foreign currencies are hedged by a portion of
FX derivatives not designated in a hedge relationship and carried at fair value through profit and loss
resulting in offsetting FX gains or losses in the financial income and expenses.
Interest rate risk
The Group is exposed to interest rate risk either through market value fluctuations
of balance sheet items (i.e. price risk) or through changes in interest income or
expenses (i.e. re-financing or re-investment risk). Interest rate risk mainly arises
through interest bearing liabilities and assets. Estimated future changes in cash
flows and balance sheet structure also expose the Group to interest rate risk.
The objective of interest rate risk management is to optimize the balance
between minimizing uncertainty caused by fluctuations in interest rates and maxi-
mizing the consolidated net interest income and expenses.
The interest rate exposure of the Group is monitored and managed centrally.
Nokia uses the Value-at-Risk (VaR) methodology to assess and measure the interest
rate risk of the net investments (cash and investments less outstanding debt) and
related derivatives.
As at the reporting date, the interest rate profile of the Group’s interest-bearing
assets and liabilities is presented in the table below:
portion of the currency mix in the outstanding financial instruments:
EURm
2009, EURm
USD
JPY
CNY
INR
FX derivatives used as cashflow
hedges (net amount) 1
– 1 767
663
—
– 78
FX derivatives used as net
investment hedges (net amount) 2 – 969
– 6
– 983
– 208
Assets
Liabilities
Assets and liabilities
before derivatives
Interest rate derivatives
Assets and liabilities
after derivatives
2009
2008
Fixed
rate
Floating
rate
Fixed
rate
Floating
rate
5 712
– 3 771
3 241
– 1 403
2 946
– 3 604
1 941
1 628
1 838
– 1 693
– 658
—
4 007
-785
3 222
—
3 569
145
– 658
3 222
FX exposure from balance sheet
items net amount) 3
FX derivatives not designated
in a hedge relationship and
carried at fair value through
profit and loss (net amount) 3
Cross currency/interest
rate hedges
46
Nokia in 2009
– 464
– 421
– 1 358
80
Equity price risk
– 328
578
1 633
– 164
375
—
—
—
Nokia is exposed to equity price risk as the result of market price fluctuations in the
listed equity instruments held mainly for strategic business reasons.
Nokia has certain strategic minority investments in publicly listed equity
shares. The fair value of the equity investments which are subject to equity price
risk at December 31, 2009 was EUR 8 million (EUR 8 million in 2008). In addition,
Nokia invests in private equity through venture funds, which, from time to time,
may have holdings in equity instruments which are listed in stock exchanges. These
Notes to the consolidated financial statements
investments are classified as available-for-sale carried at fair value. See Note 15 for
more details on available-for-sale investments.
Interest rate risk
Due to the insignificant amount of exposure to equity price risk, there are
currently no outstanding derivative financial instruments designated as hedges for
these equity investments.
The VaR for the Group interest rate exposure in the investment and debt portfolios
is presented in Table 2 below. Sensitivities to credit spreads are not reflected in the
below numbers.
Nokia is exposed to equity price risk on social security costs relating to its
equity compensation plans. Nokia mitigates this risk by entering into cash settled
equity option contracts.
The sizeable difference between the 2009 and 2008 numbers is mainly due
the fact that Nokia issued bonds with long maturities during the first half of 2009,
which resulted in a significant increase in the Group’s exposure to long-term inter-
est rates.
Value-at-Risk
Table 2 Treasury investment and debt portfolios Value-at-Risk
Nokia uses the Value-at-Risk (VaR) methodology to assess the Group exposures to
foreign exchange (FX), interest rate, and equity risks. The VaR gives estimates of
potential fair value losses in market risk sensitive instruments as a result of adverse
changes in specified market factors, at a specified confidence level over a defined
holding period.
In Nokia the FX VaR is calculated with the Monte Carlo method which simulates
random values for exchange rates in which the Group has exposures and takes the
non-linear price function of certain FX derivative instruments into account. The
variance-covariance methodology is used to assess and measure the interest rate
risk and equity price risk.
The VaR is determined by using volatilities and correlations of rates and prices
estimated from a one-year sample of historical market data, at 95% confidence
level, using a one-month holding period. To put more weight on recent market
conditions, an exponentially weighted moving average is performed on the data
with an appropriate decay factor.
This model implies that within a one-month period, the potential loss will not
exceed the VaR estimate in 95% of possible outcomes. In the remaining 5% of pos-
sible outcomes, the potential loss will be at minimum equal to the VaR figure, and
on average substantially higher.
The VaR methodology relies on a number of assumptions, such as, a) risks are
measured under average market conditions, assuming that market risk factors
follow normal distributions; b) future movements in market risk factors follow
estimated historical movements; c) the assessed exposures do not change during
the holding period. Thus it is possible that, for any given month, the potential
losses at 95% confidence level are different and could be substantially higher than
the estimated VaR.
FX Risk
The VaR figures for the Group’s financial instruments which are sensitive to foreign
exchange risks are presented in Table 1 below. As defined under IFRS 7, the financial
instruments included in the VaR calculation are:
»
»
FX exposures from outstanding balance sheet items and other FX derivatives
carried at fair value through profit and loss which are not in a hedge relation-
ship and are mostly used for hedging balance sheet FX exposure.
FX derivatives designated as forecasted cash flow hedges and net investment
hedges. Most of the VaR is caused by these derivatives as forecasted cash flow
and net investment exposures are not financial instruments as defined under
IFRS 7 and thus not included in the VaR calculation.
Table 1 Foreign exchange positions Value-at-Risk
EURm
At December 31
Average for the year
Range for the year
VaR from financial instruments
2009
190
291
160–520
2008
442
337
191–730
EURm
At December 31
Average for the year
Range for the year
Equity price risk
2009
41
33
4–52
2008
6
10
4–25
The VaR for the Group equity investment in publicly traded companies is
insignificant.
b) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obli-
gations resulting in financial loss to the Group. Credit risk arises from bank and cash,
fixed income and money-market investments, derivative financial instruments,
loans receivable as well as credit exposures to customers, including outstanding re-
ceivables, financial guarantees and committed transactions. Credit risk is managed
separately for business related- and financial-credit exposures.
Except as detailed in the following table, the maximum exposure to credit risk
is limited to the book value of the financial assets as included in Group’s balance
sheet:
EURm
Financial guarantees given on behalf of
customers and other third parties
Loan commitments given but not used
2009
2008
—
99
99
2
197
199
Business related credit risk
The Company aims to ensure highest possible quality in accounts receivable and
loans due from customers and other third parties. The Group Credit Policy, approved
by Group Executive Board, lays out the framework for the management of the busi-
ness related credit risks in all Nokia group companies.
Credit exposure is measured as the total of accounts receivable and loans out-
standing due from customers and other third parties, and committed credits.
Group Credit Policy provides that credit decisions are based on credit evalua-
tion including credit rating for larger exposures. Nokia & Nokia Siemens Networks
Rating Policy defines the rating principles. Ratings are approved by Nokia & Nokia
Siemens Networks Rating Committee. Credit risks are approved and monitored
according to the credit policy of each business entity. These policies are based on
the Group Credit Policy. Concentrations of customer or country risks are monitored
at the Nokia Group level. When appropriate, assumed credit risks are mitigated with
47
Notes to the consolidated financial statements
the use of approved instruments, such as collateral or insurance and sale of selected
receivables.
The Group has provided impairment allowances as needed including on ac-
counts receivable and loans due from customers and other third parties not past
due, based on the analysis of debtors’ credit quality and credit history. The Group
establishes an allowance for impairment that represents an estimate of incurred
losses. All receivables and loans due from customers and other third parties are
considered on an individual basis for impairment testing.
Top three customers account for approximately 2.2%, 2.2% and 1.9% (2008:
4.0%, 3.8% and 3.5%) of Group accounts receivable and loans due from customers
and other third parties as at December 31, 2009, while the top three credit expo-
sures by country amounted to 7.2%, 6.5% and 5.6% (2008: 8.5%, 7.2% and 7.2%),
respectively.
As at December 31, 2009, the carrying amount before deducting any impair-
ment allowance of accounts receivable relating to customers for which an impair-
ment was provided amounted to EUR 2 528 million (2008: EUR 3 042 million). The
amount of provision taken against that portion of these receivables considered to
be impaired was EUR 391 million (2008: EUR 415 million) (see also note 19 Valuation
and qualifying accounts).
An amount of EUR 679 million (2008: EUR 729 million) relates to past due receiv-
ables from customers for which no impairment loss was recognized. The aging of
these receivables is as follows:
EURm
Past due 1–30 days
Past due 31–180 days
More than 180 days
2009
2008
393
170
116
679
453
240
36
729
Fixed income and money-market investments 1, 2, 3
EURm
The carrying amount of accounts receivable that would otherwise be past due
or impaired but whose terms have been renegotiated was EUR 36 million (EUR 0
million in 2008).
As at December 31, 2009, the carrying amount before deducting any impair-
ment allowance of loans due from customers and other third parties for which im-
pairment was provided amounted to EUR 4 million (2008: EUR 4 million). The amount
of provision taken for these loans was EUR 4 million (2008: EUR 4 million).
There were no past due loans from customers and other third parties.
Financial credit risk
Financial instruments contain an element of risk of loss resulting from counterpar-
ties being unable to meet their obligations. This risk is measured and monitored
centrally by Treasury. Nokia manages financial credit risk actively by limiting its
counterparties to a sufficient number of major banks and financial institutions
and monitoring the credit worthiness and exposure sizes continuously as well as
through entering into netting arrangements (which gives Nokia the right to offset
in the event that the counterparty would not be able to fulfill the obligations) with
all major counterparties and collateral agreements (which require counterparties to
post collateral against derivative receivables) with certain counterparties.
Nokia’s investment decisions are based on strict creditworthiness and maturity
criteria as defined in the Treasury Policy and Operating Procedure. Due to global
banking crisis and the freezing of the credit markets in 2008, Nokia applied an even
more defensive approach than usual within Treasury Policy towards investments
and counterparty quality and maturities, focusing on capital preservation and
liquidity. As result of this investment policy approach and active management of
outstanding investment exposures, Nokia has not been subject to any material
credit losses in its financial investments.
The table below presents the breakdown of the outstanding available-for-sale
fixed income and money market investments by sector and credit rating grades
ranked as per Moody’s rating categories.
4 000
3 500
3 000
2 500
2 000
1 500
1 000
500
0
Ba1–B3
Baa1–Baa3
A1–A3
Aa1–Aa3
Aaa
2008
2009
2008
2009
2008
2009
2008
2009
Banks
Corporates
Governments
ABS
1 Fixed income and money-market investments include term deposits, investments in liquidity funds
and investments in fixed income instruments classified as available-for-sale investments and invest-
ments at fair value though profit and loss. Liquidity funds invested solely in government securities are
included under Governments. Other liquidity funds are included under Banks.
2
Included within fixed income and money-market investments is EUR 48 million of restricted invest-
ment at December 31, 2009 (EUR 114 million at December 31, 2008). They are restricted financial
assets under various contractual or legal obligations.
3 Bank parent company ratings used here for bank groups. In some emerging markets countries actual
bank subsidiary ratings may differ from parent company rating.
84% of Nokia’s cash is held with banks of investment grade credit rating (89% for
2008).
48
Nokia in 2009
c) Liquidity risk
Liquidity risk is defined as financial distress or extraordinary high financing costs
arising due to a shortage of liquid funds in a situation where business conditions
unexpectedly deteriorate and require financing. Transactional liquidity risk is de-
fined as the risk of executing a financial transaction below fair market value, or not
being able to execute the transaction at all, within a specific period of time.
The objective of liquidity risk management is to maintain sufficient liquidity,
and to ensure that it is available fast enough without endangering its value, in order
to avoid uncertainty related to financial distress at all times.
Nokia guarantees a sufficient liquidity at all times by efficient cash manage-
ment and by investing in liquid interest bearing securities. The transactional liquid-
ity risk is minimized by only entering transactions where proper two-way quotes
can be obtained from the market.
Due to the dynamic nature of the underlying business, Nokia and Nokia
Siemens Networks aim at maintaining flexibility in funding by keeping commit-
ted and uncommitted credit lines available. Nokia and Nokia Siemens Networks
manage their respective credit facilities independently and facilities do not include
cross-default clauses between Nokia and Nokia Siemens Networks or any forms of
guarantees from either party. At the end of December 31, 2009 the committed facili-
ties totaled EUR 4 113 million.
The most significant existing Committed Facilities include:
Borrower(s):
Nokia Corporation:
Nokia Siemens Networks Finance B.V.
and Nokia Siemens Networks Oy:
USD 1 923 million Revolving Credit
Facility, maturing 2012
EUR 2 000 million Revolving
Credit Facility, maturing 2012
Nokia Siemens Networks Finance B.V.: EUR 750 million Credit Facility,
maturing 2013
USD 1 923 million Revolving Credit Facility of Nokia Corporation is used primarily
for US and Euro Commercial Paper Programs back up purposes. As at year end 2009,
this facility was fully undrawn.
EUR 2 000 million Revolving Credit Facility of Nokia Siemens Networks Finance
B.V. and Nokia Siemens Networks Oy is used for general corporate purposes. The Fa-
cility includes financial covenants related to gearing test, leverage test and interest
coverage test of Nokia Siemens Networks. As of December 31, 2009 EUR 49 million
of the facility was utilized and all financial covenants were satisfied. The EUR 750
million Credit Facility of Nokia Siemens Networks Finance B.V. was fully utilized for
general funding purposes.
As of December 31, 2009 the weighted average commitment fee on the com-
mitted credit facilities was 0.70% per annum.
The most significant existing funding programs include:
Issuer(s):
Nokia Corporation:
Nokia Corporation:
Nokia Corporation:
Nokia Corporation:
Nokia Corporation and Nokia
International Finance B.V.:
Medium Term Note (EMTN) program,
totaling EUR 5 000 million
Shelf registration statement on file
with the US Securities and Exchange
Commission
Local commercial paper program in
Finland, totaling EUR 750 million
US Commercial Paper (USCP) program,
totaling USD 4 000 million
Euro Commercial Paper (ECP) program,
totaling USD 4 000 million
Notes to the consolidated financial statements
Of the above funding programs, EMTN, Shelf registration and US Commer-
cial Paper program have been utilized in 2009. On December 31, 2009 a total of
EUR 1 750 million, USD 1 500 million and USD 693 million were outstanding under
these programs, respectively. Local commercial paper program and ECP program
have not been used to a material degree in 2009.
Nokia’s international creditworthiness facilitates the efficient use of interna-
tional capital and loan markets. The ratings as of December 31, 2009 were:
Short-term:
Long-term:
Standard & Poor’s
Moody’s
Standard & Poor’s
Moody’s
A–1
P–1
A
A2
The following table below is an undiscounted cash flow analysis for both
financial liabilities and financial assets that are presented on the balance sheet, and
off-balance sheet instruments such as loan commitments according to their remain-
ing contractual maturity. Line-by-line reconciliation with the balance sheet is not
possible.
49
Notes to the consolidated financial statements
At December 31, 2009, EURm
Non-current financial assets
Long-term loans receivable
Other non-current assets
Current financial assets
Current portion of long-term loans receivable
Short-term loans receivable
Investments at fair value through profit and loss
Available-for-sale investment
Cash
Cash flows related to derivative financial assets net settled:
Derivative contracts–receipts
Cash flows related to derivative financial assets gross settled:
Derivative contracts–receipts
Derivative contracts–payments
Accounts receivable 1, 2
Non-current financial liabilities
Long-term liabilities
Current financial liabilities
Current portion of long-term loans
Short-term liabilities
Cash flows related to derivative financial liabilities net settled:
Derivative contracts–payments
Cash flows related to derivative financial liabilities gross settled:
Derivative contracts–receipts
Derivative contracts–payments
Accounts payable
Contingent financial assets and liabilities
Loan commitments given undrawn 2
Loan commitments obtained undrawn 3
Due within
3
months
Due between
3 and 12
months
Due between
1 and 3
years
Due between
3 and 5
years
Due beyond
5
years
—
—
4
1
3
6 417
1 142
88
14 350
– 14 201
5 903
– 124
– 3
– 628
– 6
14 528
– 14 646
-4 873
– 59
—
—
—
11
1
22
322
—
–47
1 067
– 1 037
1 002
– 96
– 41
– 100
6
1 422
– 1 443
– 74
– 40
—
36
3
—
—
29
290
—
80
—
—
73
6
1
—
—
515
110
—
110
—
—
—
4
1
—
—
139
116
—
27
—
—
—
– 594
– 2 973
– 2 596
—
—
– 2
—
—
– 3
—
2 841
—
—
10
—
—
—
—
—
—
—
52
—
—
—
—
—
50
Nokia in 2009
Notes to the consolidated financial statements
Due within
3
months
Due between
3 and 12
months
Due between
1 and 3
years
Due between
3 and 5
years
Due beyond
5
years
At December 31, 2008, EURm
Non-current financial assets
Long-term loans receivable
Other non-current assets
Current financial assets
Current portion of long-term loans receivable
Short-term loans receivable
Available-for-sale investment
Cash
Cash flows related to derivative financial assets net settled :
Derivative contracts–receipts
Cash flows related to derivative financial assets gross settled:
Derivative contracts– receipts
Derivative contracts–payments
Accounts receivable 1
Non-current financial liabilities
Long-term liabilities
Current financial liabilities
Current portion of long-term loans
Short-term liabilities
Cash flows related to derivative financial liabilities gross settled:
Derivative contracts–receipts
Derivative contracts–payments
Accounts payable
Contingent financial assets and liabilities
Loan commitments given undrawn 2
Financial guarantee given uncalled 2
Loan commitments obtained undrawn 3
—
1
5
8
3 932
1 706
5
19 180
– 18 322
6 702
– 1
—
– 3 207
15 729
– 16 599
– 5 152
– 197
– 2
—
—
1
101
2
483
—
3
5 184
– 5 090
1 144
– 46
– 14
– 388
4 859
– 4 931
– 67
—
—
—
1 Accounts receivable maturity analysis does not include accrued receivables and receivables accounted
based on the percentage of completion method of EUR 1 004 million (2008: EUR 1 528 million).
2 Loan commitments given undrawn and financial guarantees given uncalled have been included in the
earliest period in which they could be drawn or called.
3 Loan commitments obtained undrawn have been included based on the period in which they expire.
Hazard risk
Nokia strives to ensure that all financial, reputation and other losses to the Group
and our customers are minimized through preventive risk management measures.
Insurance is purchased for risks, which cannot be efficiently internally managed and
where insurance markets offer acceptable terms and conditions. The objective is to
ensure that hazard risks, whether related to physical assets (e.g. buildings) or intel-
lectual assets (e.g. Nokia) or potential liabilities (e.g. product liability) are optimally
insured taking into account both cost and retention levels.
Nokia purchases both annual insurance policies for specific risks as well as
multi-line and/or multi-year insurance policies, where available.
19
3
—
—
583
—
1
—
—
70
6
—
—
—
120
—
—
—
—
—
8
1
—
—
254
—
—
—
—
—
– 741
– 64
– 159
—
—
—
—
– 5
—
—
50
—
—
—
—
—
—
—
362
—
—
—
—
—
—
—
51
Parent company financial statements according to
Finnish Accounting Standards
Income statements, parent company, FAS
Balance sheets, parent company, FAS
Financial year ended December 31
Notes
Net sales
Cost of sales
Gross margin
Selling and marketing expenses
Research and development expenses
Administrative expenses
Other operating expenses
Other operating income
2009
EURm
2008
EURm
20 167
26 940
– 14 666
– 18 712
5 501
8 228
– 1 403
– 3 097
– 396
– 70
106
– 1 393
– 3 147
– 769
– 340
120
Operating profit
2, 3
641
2 699
Financial income and expenses
Income from long-term investments
Dividend income from Group companies
Dividend income from other companies
Interest income from Group companies
Other interest and financial income
Interest income from Group companies
Interest income from other companies
Other financial income from other companies
290
2
—
84
2
9
31
3
4
398
12
—
December 31
A S S E T S
Fixed assets and other non-current assets
Intangible assets
Capitalized development costs
Intangible rights
Other intangible assets
Tangible assets
Investments
Investments in subsidiaries
Investments in associated companies
Long-term loan receivables
from Group companies
Other non-current assets
Current assets
Inventories and work in progress
Exchange gains and losses
106
– 478
Raw materials and supplies
Interest expenses and other financial expenses
Interest expenses to Group companies
Interest expenses to other companies
Other financial expenses
Financial income and expenses, total
– 80
– 161
– 10
242
– 338
-63
– 6
– 437
Profit before extraordinary items and taxes
883
2 262
Work in progress
Finished goods
Receivables
Deferred tax assets
Trade debtors from Group companies
Trade debtors from other companies
Extraordinary items
Group contributions
Extraordinary items, total
Profit before taxes
Income taxes
for the year
from previous years
Net profit
10
10
40
40
893
2 302
Short-term loan receivables from Group companies
Short-term loan receivables from other companies
Prepaid expenses and accrued income
from Group companies
Prepaid expenses and accrued income
from other companies
Short-term investments
18
– 127
1
767
– 539
– 14
1 749
Bank and cash
Total
See Notes to the financial statements of the parent company.
See Notes to the financial statements of the parent company.
52
Nokia in 2009
Notes
2009
EURm
2008
EURm
4
5
6
6
6
13
46
418
477
—
21
52
155
228
—
12 109
12 084
30
10
74
10
8
41
12 223
12 143
45
86
86
217
1
1 080
713
3 472
—
15
84
100
70
254
—
899
913
12 039
1
65
1 858
7 139
2 179
16 096
35
2
70
20 161
197
28 920
December 31
Notes
2009
EURm
2008
EURm
Financial year ended December 31
Notes
S H A R E H O L D E R S ’ E Q U I T Y A N D L I A B I L I T I E S
Shareholders’ equity
Share capital
Treasury shares
Reserve for invested non-restricted equity
Retained earnings
Net profit for the year
7
7
7, 8
7, 8
7, 8
246
– 685
3 154
3 788
767
7 270
246
– 1 885
3 291
4 489
1 749
7 890
Liabilities
Long-term liabilities
Long-term finance liabilities to other companies 9
3 255
—
Short-term liabilities
Current finance liabilities from Group companies
3 380
13 345
Current finance liabilities from other companies
Advance payments from other companies
Trade creditors to Group companies
Trade creditors to other companies
Accrued expenses and prepaid income
to Group companies
Accrued expenses and prepaid income
to other companies
Total liabilities
473
217
3 280
531
2 598
182
2 377
695
1 682
9 636
1 616
21 030
12 891
21 030
Parent company
Statements of cash flows, parent company, FAS
13
13
Cash flow from operating activities
Net profit
Adjustments, total
Cash flow before change in net working capital
Change in net working capital
Cash generated from operations
Interest received
Interest paid
Other financial income and expenses
Income taxes paid
Cash flow before extraordinary items
Extraordinary income and expenses
Net cash from operating activities
1 938
2 179
2009
EURm
2008
EURm
767
99
866
881
1 747
88
– 140
157
46
1 898
40
1 749
1 357
3 106
543
3 649
418
– 399
– 469
– 1 020
2 179
—
– 93
– 1
– 461
30
– 3
– 1
128
8 356
292
– 4 026
– 53
– 211
106
—
—
—
– 3 750
34
Net cash from / used in investing activities
8 247
– 7 900
Cash flow from financing activities
Proceeds from stock option exercises
Proceeds from borrowings
Repayment of borrowings
Purchase of treasury shares
Dividends paid
—
51
3 287
10 777
– 12 085
—
– 1 481
– 5
– 3 123
– 1 992
Net cash used in / from financing activities
– 10 279
5 708
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
– 94
199
– 13
212
Cash flow from investing activities
Investments in shares
Additions to capitalized development costs
Capital expenditures
Proceeds from sale of shares
Proceeds from sale of other intangible assets
Long-term loans made to customers
73
217
Proceeds from other long-term receivables
Proceeds from short-term receivables
Dividends received
Total
20 161
28 920
Cash and cash equivalents at end of period
105
199
See Notes to the financial statements of the parent company.
See Notes to the financial statements of the parent company.
53
Notes to the financial statements of the parent company
1. Accounting principles
2. Personnel expenses
The Parent company Financial Statements are prepared according to Finnish Ac-
counting Standards (FAS).
EURm
See also Note 1 to Notes to the consolidated financial statements.
Wages and salaries
Pension expenses
Other social expenses
Personnel expenses as per profit and loss account
2009
1 096
146
42
1 284
2008
1 115
160
63
1 338
Management compensation
The following table sets forth the salary and cash incentive information awarded
and paid or payable by the company to the Chief Executive Officer and President of
Nokia Corporation for fiscal years 2007–2009 as well as the share-based compensa-
tion expense relating to equity-based awards, expensed by the company.
2009
2008
2007
EUR
Olli-Pekka Kallasvuo
President and CEO
Base
salary
Cash
Share-based
incentive compensation
payments
expense
Base
salary
Cash
Share-based
incentive compensation
payments
expense
Base
salary
Cash
Share-based
incentive compensation
payments
expense
1 176 000
1 288 144
2 840 777
1 144 800
721 733
1 286 370
1 037 619
2 348 877
4 805 722
Total remuneration of the Group Executive Board awarded for the fiscal years 2007–
2009 was EUR 10 723 777 in 2009 (EUR 8 859 567 in 2008 and EUR 13 634 791 in 2007),
which consisted of base salaries and cash incentive payments. Total share-based
compensation expense relating to equity-based awards expensed by the company
was EUR 9 668 484 in 2009 (EUR 4 850 204 in 2008 and EUR 19 837 583 in 2007).
Board of Directors
The following table depicts the annual remuneration structure paid to the members
of our Board of Directors, as resolved by the Annual General Meetings in the respec-
tive years
Board of Directors
Gross
annual fee
EUR 1
Shares
received
Gross
annual fee
EUR 1
Shares
received
Gross
annual fee
EUR 1
Shares
received
2009
2008
2007
Jorma Ollila, Chairman 2
440 000
16 575
Dame Marjorie Scardino, Vice Chairman 3
150 000
Georg Ehrnrooth 4
Lalita D. Gupte 5
Bengt Holmström
Henning Kagermann
Olli-Pekka Kallasvuo 6
Per Karlsson 7
Isabel Marey-Semper 8
Risto Siilasmaa 9
Keijo Suila 10
Vesa Vainio 11
155 000
140 000
130 000
130 000
130 000
155 000
140 000
140 000
130 000
—
5 649
5 838
5 273
4 896
4 896
4 896
5 838
5 273
5 273
4 896
—
440 000
150 000
155 000
140 000
130 000
130 000
130 000
155 000
—
140 000
140 000
—
9 499
3 238
3 346
3 022
2 806
2 806
2 806
3 346
—
3 022
3 022
—
375 000
150 000
155 000
140 000
130 000
130 000
130 000
155 000
—
—
140 000
140 000
8 110
3 245
3 351
3 027
2 810
2 810
2 810
3 351
—
—
3 027
3 027
1 Approximately 60% of the gross annual fee is paid in cash and the remaining 40% in Nokia shares pur-
chased from the market and included in the table under “Shares Received.” Further, it is Nokia policy
that the directors retain all company stock received as director compensation until the end of their
board membership, subject to the need to finance any costs including taxes relating to the acquisition
of the shares.
2 This table includes fees paid for Mr. Ollila, Chairman, for his services as Chairman of the Board, only.
3 The 2009, 2008 and 2007 fees of Ms. Scardino amounted to EUR 150 000 for services as Vice Chairman.
4 The 2009, 2008 and 2007 fees of Mr. Ehrnrooth amounted to a total of EUR 155 000, consisting of a fee
of EUR 130 000 for services as a member of the Board and EUR 25 000 for services as Chairman of the
Audit Committee.
5 The 2009, 2008 and 2007 fees of Ms. Gupte amounted to a total of EUR 140 000, consisting of fee of
130 000 for services as a member of the Board and EUR 10 000 for services as a member of the Audit
Committee.
6 This table includes fees paid to Mr. Kallasvuo, President and CEO, for his services as a member of the
Board, only.
7 The 2009, 2008 and 2007 fees of Mr. Karlsson amounted to a total of EUR 155 000, consisting of a fee
of EUR 130 000 for services as a member of the Board and EUR 25 000 for services as Chairman of the
Personnel Committee.
8 The 2009 fee paid to Ms. Marey-Semper amounted to a total of EUR 140 000, consisting of a fee of
EUR 130 000 for services as a member of the Board and EUR 10 000 for services as a member of the
Audit Committee.
54
Nokia in 2009
9 The 2009 and 2008 fee of Mr. Siilasmaa amounted to a total of EUR 140 000, consisting of fee of
EUR 130 000 for services as a member of the Board and EUR 10 000 for services as a member of the
Audit Committee.
10 The 2008 and 2007 fees of Mr. Suila amounted to a total of EUR 140 000, consisting of a fee of
EUR 130 000 for services as a member of the Board and EUR 10 000 for services as a member of the
Audit Committee.
11 Mr. Vainio was a member of the Board of Directors and the Audit Committee until the end of the Annual
General Meeting on May 8, 2008. Mr. Vainio received his fees for services as a member of the Board and
as a member of the Audit Committee, as resolved by the shareholders at the Annual General Meeting
on May 3, 2007, already in 2007 and thus no fees were paid to him for the services rendered during
2008. The 2007 fee of Mr. Vainio amounted to a total of EUR 140 000 consisting of a fee of EUR 130 000
for services as a member of the Board and EUR 10 000 for services as a member of the Audit
Committee.
Pension arrangements of certain Group Executive Board Members
Olli-Pekka Kallasvuo can, as part of his service contract, retire at the age of 60 with
full retirement benefit should he be employed by Nokia at the time. The full retire-
ment benefit is calculated as if Mr. Kallasvuo had continued his service with Nokia
through the retirement age of 65. Hallstein Moerk, following his arrangement with a
previous employer, and continuing in his current position at Nokia, has a retirement
benefit of 65% of his pensionable salary beginning at the age of 62 and early retire-
ment is possible at the age of 55 with reduced benefits. Mr. Moerk will retire at the
end of September 2010 at the age of 57.
Personnel average
Production
Marketing
R&D
Administration
2009
2008
3 091
1 225
8 431
2 408
15 155
3 481
1 226
8 717
2 552
15 976
Personnel, December 31
14 133
16 262
3. Depreciation and amortization
EURm
2009
2008
Depreciation and amortization by asset class category
Intangible assets
Capitalized development costs
Intangible rights
Other intangible assets
Tangible assets
Total
Depreciation and amortization by function
R&D
Production
Selling, marketing and administration
Total
9
23
170
—
202
177
—
25
202
28
28
28
—
84
54
1
29
84
Notes to the financial statements of the parent company
4. Intangible assets
EURm
2009
2008
Capitalized development costs
Acquisition cost January 1
Additions during the period
Disposals during the period
Accumulated acquisition cost December 31
Accumulated amortization January 1
Disposals during the period
Amortization during the period
Accumulated amortization December 31
Net book value January 1
Net book value December 31
Intangible rights
Acquisition cost January 1
Additions during the period
Disposals during the period
Accumulated acquisition cost December 31
Accumulated amortization January 1
Disposals during the period
Amortization during the period
Accumulated amortization December 31
Net book value January 1
Net book value December 31
Other intangible assets
Acquisition cost January 1
Additions during the period
Disposals during the period
Accumulated acquisition cost December 31
Accumulated amortization January 1
Disposals during the period
Amortization during the period
Accumulated amortization December 31
Net book value January 1
Net book value December 31
287
1
—
288
– 266
—
– 9
– 275
21
13
286
34
– 16
304
– 234
– 1
– 23
– 258
52
46
185
437
– 3
619
– 30
– 1
– 170
– 201
155
418
358
53
– 124
287
– 252
14
– 28
– 266
106
21
259
32
– 5
286
– 211
5
– 28
– 234
48
52
6
179
—
185
– 2
—
– 28
– 30
4
155
5. Tangible assets
At the end of 2009 and 2008 the parent company had no tangible assets. These
assets were leased from Nokia Asset Management Oy, a company wholly owned by
Nokia Corporation.
55
2009
2008
12 084
108
– 83
12 109
6 564
5 624
– 104
12 084
10
27
– 7
30
41
33
—
74
9
1
—
10
4
37
—
41
Share
capital
246
Share
issue
premium
2 312
46
– 2 358
Notes to the financial statements of the parent company
6. Investments
EURm
Investments in subsidiaries
Acquisition cost January 1
Additions
Disposals
Net carrying amount December 31
Investments in associated companies
Acquisition cost January 1
Additions
Disposals
Net carrying amount December 31
Investments in other shares
Acquisition cost January 1
Additions
Disposals
Net carrying amount December 31
7. Shareholders' equity
Parent company, EURm
Balance at December 31, 2006
Share issue
Cancellation of treasury shares
Acquisitions of treasury shares
Settlement of performance and restricted shares
Reserve for invested non-restricted equity
Dividend
Net profit
Balance at December 31, 2007
Stock options exercised
Cancellation of treasury shares
Acquisitions of treasury shares
Settlement of performance and restricted shares
Dividend
Net profit
Balance at December 31, 2008
Cancellation of treasury shares
Settlement of performance and restricted shares
Dividend
Net profit
Reserve
for invested
non-
restricted
equity
Treasury
shares
Retained
earnings
– 2 054
—
8 773
2 733
– 3 884
58
246
—
– 3 147
4 231
– 3 123
154
3 299
3 299
51
-59
246
—
– 1 885
3 291
969
231
– 137
Total
9 277
46
—
– 3 884
58
941
– 1 686
6 358
11 110
51
—
– 3 123
95
– 1 992
1 749
7 890
—
94
– 1 481
767
7 270
– 2 733
– 1 686
6 358
10 712
– 4 231
– 1 992
1 749
6 238
– 969
– 1 481
767
4 555
Balance at December 31, 2009
246
—
– 685
3 154
56
Nokia in 2009
Notes to the financial statements of the parent company
8. Distributable earnings
13. Notes to cash flow statements
EURm
2009
2008
EURm
2009
2008
Reserve for invested non-restricted equity
Retained earnings from previous years
Net profit for the year
Retained earnings, total
Treasury shares
Distributable earnings, December 31
9. Long-term liabilities
3 154
3 788
767
7 709
–685
7 024
3 291
4 489
1 749
9 529
–1 885
7 644
Adjustments for:
Depreciation
Income taxes
Financial income and expenses
Impairment of intangible assets
Impairment of non-current available-for-sale investments
Other operating income and expenses
Adjustments, total
EURm
2009
2008
Long-term financial liabilities
Bonds
Loans from financial institutions
Long-term liabilities, total
Long-term liabilities repayable after 5 years
Bonds
Loans from financial institutions
Long-term liabilities, total
Bonds
2009–2014
2009–2019
2009–2019
2009–2039
Total
Milj.
Interest
1 250 EUR
1 000 USD
500 EUR
500 USD
5,534
5,572
6,792
6,775
2 755
500
3 255
1 483
500
1 983
1 272
653
508
322
2 755
—
—
—
—
—
—
—
—
—
—
—
Change in net working capital
Short-term trade receivables, increase (–), decrease (+)
Inventories, increase (–), decrease (+)
Interest-free short-term liabilities,
increase (+), decrease (–)
Change in net working capital
14. Principal Nokia Group companies
on December 31, 2009
See note 32 to Notes to the consolidated financial statements.
15. Nokia shares and shareholders
See Nokia shares and shareholders p. 58– 62.
16. Accrued income
10. Commitments and contingencies
EURm
Contingent liabilities on behalf of Group companies
Guarantees for loans
Leasing guarantees
Other guarantees
Contingent liabilities on behalf of other companies
Guarantees for loans
2009
2008
1
157
162
—
8
171
128
2
11. Leasing contracts
At December 31, 2009 the leasing contracts of the Parent Company amounted to EUR
35 million (EUR 106 million in 2008). EUR 21 million will expire in 2010 (EUR 29 million
in 2009).
12. Loans granted to the management of the company
There were no loans granted to the members of the Group Executive Board and
Board of Directors at December 31, 2009.
EURm
Taxes
Other
Total
17. Accrued expenses
EURm
Personnel expenses
Taxes
Other
Total
18. Income tax
EURm
Income tax from operations
Other income tax
Total
202
126
– 242
– 7
7
13
99
364
37
480
881
84
553
437
109
—
174
1 357
1 402
184
– 1 043
543
2009
—
1 873
1 873
2008
129
2 117
2 246
2009
226
48
1 481
1 755
2008
236
—
1 597
1 833
2009
2008
124
3
127
528
11
539
Income taxes are shown separately in the Notes to the financial statements as they
have been shown as a one-line item on the face of the profit and loss statement.
57
Nokia shares and shareholders
Shares and share capital
Nokia has one class of shares. Each Nokia share entitles
the holder to one vote at General Meetings of Nokia.
On December 31, 2009, the share capital of Nokia
Corporation was EUR 245 896 461.96 and the total
number of shares issued was 3 744 956 052.
Share capital and shares December 31, 2009
Share capital, EURm
Shares (1 000)
On December 31, 2009, the total number of shares
Under the Articles of Association of Nokia, Nokia
included 36 693 564 shares owned by Group compa-
nies representing approximately 1.0 % of the share
capital and the total voting rights.
Corporation does not have minimum or maximum
share capital or a par value of a share.
2009
246
2008
246
2007
246
2006
246
2005
266
3 744 956
3 800 949
3 982 812
4 095 043
4 433 887
Shares owned by the Group (1 000)
36 694
103 076
136 862
129 312
261 511
Number of shares excluding shares owned by the Group (1 000)
3 708 262
3 697 872
3 845 950
3 965 730
4 172 376
Average number of shares excluding shares
owned by the Group during the year (1 000), basic
Average number of shares excluding shares
owned by the Group during the year (1 000), diluted
Number of registered shareholders 1
1 Each account operator is included in the figure as only one registered shareholder
3 705 116
3 743 622
3 885 408
4 062 833
4 365 547
3 721 072
3 780 363
3 932 008
4 086 529
4 371 239
156 081
122 713
103 226
119 143
126 352
Key ratios December 31, 2009, IFRS (calculation see page 66)
2009
2008
2007
2006
2005
Earnings per share from net profit, EUR
Earnings per share, basic
Earnings per share, diluted
P/E ratio
(Nominal) dividend per share, EUR
Total dividends paid, EURm 2
Payout ratio
Dividend yield, %
Shareholders’ equity per share, EUR 3
Market capitalization, EURm 3
0.24
0.24
37.17
0.40 1
1 498 1
1.67 1
4.48 1
3.53
1.07
1.05
10.37
0.40
1 520
0.37
3.60
3.84
1.85
1.83
14.34
0.53
2 111
0.29
2.0
3.84
1.06
1.05
14.60
0.43
1 761
0.41
2.80
3.02
0.83
0.83
18.61
0.37
1 641
0.45
2.4
2.95
33 078
41 046
101 995
61 390
64 463
1 2009 Dividend to be proposed by the Board of Directors for shareholders’ approval at the Annual General Meeting convening on May 6, 2010.
2 Calculated for all the shares of the company as of the applicable year-end.
3 Shares owned by the Group companies are not included.
Authorizations
Authorization to increase the share capital
At the Annual General Meeting held on May 3, 2007,
Nokia shareholders authorized the Board of Directors
to issue a maximum of 800 million shares through one
or more issues of shares or special rights entitling to
shares, including stock options. The Board of Directors
may issue either new shares or shares held by the
Company. The authorization includes the right for the
Board to resolve on all the terms and conditions of
such issuances of shares and special rights, including
to whom the shares and the special rights may be
issued. The authorization is effective until June 30,
2010.
At the end of 2009, the Board of Directors had
no other authorizations to issue shares, convertible
bonds, warrants or stock options.
Other authorizations
At the Annual General Meeting held on May 8, 2008,
Nokia shareholders authorized the Board of Directors
to repurchase a maximum of 370 million Nokia shares
by using funds in the unrestricted shareholders’
equity. Nokia repurchased 71 090 000 shares under
this authorization in 2008. In 2009, Nokia did not re-
purchase any shares on the basis of this authorization.
This authorization was effective until June 30, 2009 as
per the resolution of the Annual General Meeting on
May 8, 2008, but it was terminated by the resolution of
the Annual General Meeting on April 23, 2009.
At the Annual General Meeting held on April 23,
2009, Nokia shareholders authorized the Board of Di-
rectors to repurchase a maximum of 360 million Nokia
shares by using funds in the unrestricted sharehold-
ers’ equity. The amount of shares corresponds to less
than 10% of all shares of the company. The shares may
be repurchased under the buy-back authorization in
order to develop the capital structure of the company.
In addition, shares may be repurchased in order to
finance or carry out acquisitions or other arrange-
ments, to settle the company’s equity-based incentive
plans, to be transferred for other purposes, or to be
cancelled. Nokia has not purchased any shares based
on this authorization. The authorization is effective
until June 30, 2010 and the authorization terminated
the authorization for repurchasing of the Company’s
shares resolved at the Annual General Meeting on
May 8, 2008.
Authorizations proposed to the Annual General
Meeting 2010
The Board of Directors will propose to the Annual
General Meeting to be held on May 6, 2010 that the An-
nual General Meeting authorize the Board to resolve to
58
Nokia in 2009
Nokia shares and shareholders
repurchase a maximum of 360 million Nokia shares by
using funds in the unrestricted shareholders’ equity.
The proposed maximum number of shares represents
less than 10% of all the shares of the Company. The
shares may be repurchased in order to develop the
capital structure of the Company, finance or carry out
acquisitions or other arrangements, settle the Com-
pany’s equity-based incentive plans, be transferred
for other purposes, or be cancelled. The authorization
would be effective until June 30, 2011 and terminate
the current authorization granted by the Annual
General Meeting on April 23, 2009.
The Board of Directors will also propose to the
Annual General Meeting to be held on May 6, 2010
that the Annual General Meeting authorize the Board
to resolve to issue a maximum of 740 million shares
through issuance of shares or special rights entitling
to shares (including stock options) in one or more
issues. The Board proposes that the authorization may
be used to develop the Company’s capital structure,
diversify the shareholder base, finance or carry out
acquisitions or other arrangements, settle the Com-
pany’s equity-based incentive plans, or for other pur-
poses resolved by the Board. The proposed authoriza-
tion includes the right for the Board to resolve on all
the terms and conditions of the issuance of shares and
special rights entitling to shares, including issuance in
deviation from the shareholders’ pre-emptive rights.
The authorization would be effective until June 30,
2013 and terminate the current authorization granted
by the Annual General Meeting on May 3, 2007.
Share issues 2005–2009
Year
Type of issue
2005
Nokia Stock Option Plan 2003 2Q
Nokia Stock Option Plan 2003 3Q
Nokia Stock Option Plan 2004 2Q
Nokia Stock Option Plan 2004 3Q
Total
2006
Nokia Stock Option Plan 2003 2Q
Nokia Stock Option Plan 2003 3Q
Nokia Stock Option Plan 2003 4Q
Nokia Stock Option Plan 2004 2Q
Nokia Stock Option Plan 2004 3Q
Nokia Stock Option Plan 2004 4Q
Nokia Stock Option Plan 2005 2Q
Nokia Stock Option Plan 2005 3Q
Total
2007
Nokia Stock Option Plan 2002 A/B
Nokia Stock Option Plan 2001C 1Q/02
Nokia Stock Option Plan 2001C 3Q/02
Nokia Stock Option Plan 2001C 4Q/02
Nokia Stock Option Plan 2003 2Q
Nokia Stock Option Plan 2003 3Q
Nokia Stock Option Plan 2003 4Q
Nokia Stock Option Plan 2004 2Q
Nokia Stock Option Plan 2004 3Q
Nokia Stock Option Plan 2004 4Q
Nokia Stock Option Plan 2005 2Q
Nokia Stock Option Plan 2005 3Q
Nokia Stock Option Plan 2005 4Q
Nokia Stock Option Plan 2006 1Q
Nokia Stock Option Plan 2006 2Q
Nokia Stock Option Plan 2006 3Q
Total
Subscription
price
EUR
Number of
new shares
(1 000)
Date of
payment
Net
proceeds
EURm
New share
capital
EURm
14.95
12.71
11.79
9.44
14.95
12.71
15.05
11.79
9.44
12.35
12.79
13.09
17.89
26.06
12.99
16.86
14.95
12.71
15.05
11.79
9.44
12.35
12.79
13.09
14.48
14.99
18.02
15.37
61
6
55
3
125
2 287
32
3
523
9
17
174
2
3 047
43 513
17
243
49
9 683
53
48
1 569
30
25
1 350
4
13
13
631
7
57 248
2005
2005
2005
2005
2006
2006
2006
2006
2006
2006
2006
2006
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
0.00
0.00
0.00
0.00
0.01
0.14
0.00
0.00
0.03
0.00
0.00
0.01
0.00
0.18
0.91
0.08
0.65
0.02
1.66
34.19
0.41
0.05
6.16
0.08
0.21
2.22
0.03
43.34
778.00
0.44
3.00
0.83
145.00
0.15
0.67
0.72
18.00
0.29
0.30
17.00
0.06
0.19
0.19
11.00
0.12
975.81
0.03
0.02
0.20
59
Nokia shares and shareholders
Share issues 2005–2009 (continued)
Year
Type of issue
2008
Nokia Stock Option Plan 2003 2Q
Nokia Stock Option Plan 2003 3Q
Nokia Stock Option Plan 2003 4Q
Nokia Stock Option Plan 2004 2Q
Nokia Stock Option Plan 2004 3Q
Nokia Stock Option Plan 2004 4Q
Nokia Stock Option Plan 2005 2Q
Nokia Stock Option Plan 2005 3Q
Nokia Stock Option Plan 2005 4Q
Nokia Stock Option Plan 2006 1Q
Nokia Stock Option Plan 2006 2Q
Nokia Stock Option Plan 2006 3Q
Nokia Stock Option Plan 2006 4Q
Nokia Stock Option Plan 2007 1Q
Nokia Stock Option Plan 2007 2Q
Nokia Stock Option Plan 2007 3Q
Total
2009
Nokia Stock Option Plan 2004 2Q
Nokia Stock Option Plan 2004 3Q
Nokia Stock Option Plan 2004 4Q
Nokia Stock Option Plan 2005 2Q
Nokia Stock Option Plan 2005 3Q
Nokia Stock Option Plan 2005 4Q
Nokia Stock Option Plan 2006 1Q
Nokia Stock Option Plan 2006 2Q
Nokia Stock Option Plan 2006 3Q
Nokia Stock Option Plan 2006 4Q
Nokia Stock Option Plan 2007 1Q
Nokia Stock Option Plan 2007 2Q
Nokia Stock Option Plan 2007 3Q
Nokia Stock Option Plan 2007 4Q
Nokia Stock Option Plan 2008 1Q
Nokia Stock Option Plan 2008 2Q
Nokia Stock Option Plan 2008 3Q
Total
60
Nokia in 2009
Subscription
price
EUR
Number of
new shares
(1 000)
Date of
payment
Net
proceeds
EURm
New share
capital
EURm
14.95
12.71
15.05
11.79
9.44
12.35
12.79
13.09
14.48
14.99
18.02
15.37
15.38
17.00
18.39
21.86
11.79
9.44
12.35
12.79
13.09
14.48
14.99
18.02
15.37
15.38
17.00
18.39
21.86
27.53
24.15
19.16
17.80
2 444
11
82
415
5
13
361
5
0
1
192
11
6
0
0
0
3 546
0
8
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
8
2008
2008
2008
2008
2008
2008
2008
2008
2008
2008
2008
2008
2008
2008
2008
2008
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
36.53
0.15
1.24
4.90
0.05
0.16
4.62
0.07
0.00
0.01
3.46
0.17
0.09
0.00
0.00
0.00
51.45
0.00
0.07
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.07
Nokia shares and shareholders
Reductions of share capital
Type of reduction
Cancellation of shares
Cancellation of shares
Cancellation of shares
Cancellation of shares
Cancellation of shares
Share turnover
Number of
shares
(1 000)
230 000
341 890
169 500
185 410
56 000
Amount of
reduction of the
share capital
EURm
Amount of
reduction of the
restricted capital
EURm
Amount of
reduction of the
retained earnings
EURm
13.80
20.51
—
—
—
—
—
—
—
—
—
—
—
—
—
Year
2005
2006
2007
2008
2009
2009 1
2008 2
2007 2
2006 2
2005 2
Share turnover (1 000)
Total number of shares (1 000)
% of total number of shares
11 025 092
3 744 956
294
12 962 489
3 800 949
341
12 695 999
3 982 812
319
12 480 730
4 095 043
305
12 977 232
4 433 887
293
1
2
Includes share turnover in NASDAQ OMX Helsinki, New York Stock Exchange and Frankfurter Wertpapierbörse.
Includes share turnover in all exchanges.
Share prices, EUR (NASDAQ OMX Helsinki)
2009
2008
2007
2006
2005
Low/high
Average 1
Year-end
6.67/12.25
9.95/25.78
14.63/28.60
14.61/18.65
10.75/15.75
9.64
8.92
17.35
11.10
20.82
26.52
15.97
15.48
13.20
15.45
1 Calculated by weighting average price with daily volumes.
Share prices, USD (New York Stock Exchange)
ADS
Low/high
Average 1
Year-end
2009
2008
2007
2006
2005
8.47/16.58
12.35/38.25
19.08/41.10
17.72/23.10
13.92/18.62
13.36
12.85
24.88
15.60
29.28
38.39
19.98
20.32
16.39
18.30
1 Calculated by weighting average price with daily volumes.
Nokia share prices on NASDAQ OMX Helsinki
(EUR)
Nokia ADS prices on the New York Stock Exchange
(USD)
35
30
25
20
15
10
5
0
|
01/05
|
01/06
|
01/07
|
01/08
|
01/09
45
40
35
30
25
20
15
10
5
0
|
01/05
|
|
01/06
|
01/07
|
01/08
|
01/09
|
61
Nokia shares and shareholders
Shareholders, December 31, 2009
Shareholders registered in Finland represented
12,17 % and shareholders registered in the name of a
nominee represented 87,83 % of the total number of
shares of Nokia Corporation. The number of registered
shareholders was 156 081 on December 31, 2009. Each
account operator (23) is included in this figure as only
one registered shareholder.
Nominee registered shareholders include holders
of American Depositary Receipts (ADR). As of Decem-
ber 31, 2009, ADRs represented 19,38 % of the total
number of shares in Nokia.
Largest shareholders registered in Finland, December 31, 2009
(excluding nominee registered shares
and shares owned by Nokia Corporation 1)
Ilmarinen Mutual Pension Insurance Company
Svenska Litteratursällskapet i Finland rf
Folketrygfondet
The State Pension Fund
Sigrid Jusélius Foundation
Varma Mutual Pension Insurance Company
OP-Delta-Sijoitusrahasto
BNP Paribas Arbitrage
Nordea Nordenfonden
Etera
1 Nokia Corporation owned 36 693 564 shares as of December 31, 2009.
Breakdown of share ownership, December 31, 2009 1
Total number of shares
( 1 000 )
% of all
shares
% of all
voting rights
30 876
14 226
11 700
10 700
9 400
8 700
6 821
5 127
4 627
4 350
0.82
0.38
0.31
0.29
0.25
0.23
0.18
0.14
0.12
0.12
0.83
0.38
0.32
0.29
0.25
0.23
0.18
0.14
0.12
0.12
By number of shares owned
Number of shareholders
% of shareholders
Total number of shares
% of share capital
1–100
101–1 000
1 001–10 000
10 001–100 000
100 001–500 000
500 001–1 000 000
1 000 001–5 000 000
Over 5 000 000
Total
45 228
78 088
28 773
3 676
229
36
36
15
28.98
50.03
18.43
2.36
0.15
0.02
0.02
0.01
156 081
100.00
2 748 905
32 635 554
83 185 330
93 395 576
48 563 675
24 629 194
77 972 171
3 381 825 647
3 744 956 052
0.07
0.87
2.22
2.49
1.30
0.66
2.08
90.30
100.00
By nationality, %
Non-Finnish shareholders
Finnish shareholders
Total
Shares
87.83
12.17
100.00
By shareholder category
(Finnish shareholders), %
Corporations
Households
Financial and insurance institutions
Non-profit organizations
General government
Total
Shares
1.76
5.35
1.35
1.70
2.02
12.17
1 Please note that the breakdown covers only shareholders registered in Finland, and each account operator (23) is included in the number of
shareholders as only one registered shareholder. Due to this, the breakdown is not illustrative to the entire shareholder base of Nokia.
Shares and stock options owned by
the members of the Board of Directors
and the Group Executive Board
Members of the Board of Directors and the Group
Executive Board owned on December 31, 2009, an
aggregate of 2 421 968 shares which represented ap-
proximately 0.06 % of the aggregate number of shares
and voting rights. They also owned stock options
which, if exercised in full, including both exercisable
and unexercisable stock options, would be exercisable
for additional 4 232 410 shares representing approxi-
mately 0.11 % of the total number of shares and voting
rights on December 31, 2009.
62
Nokia in 2009
63
Nokia Group 2005 –2009, IFRS *
2009
2008
2007
2006
2005
50 710
– 45 744
4 966
6
– 2
4 970
– 1 081
3 889
99
3 988
15 112
24 470
2 533
15 117
6 820
16 510
14 208
2 302
2 717
861
1 787
69
20 355
13
3 578
924
5 225
7 023
3 592
51 058
– 43 073
7 985
44
239
8 268
– 1 522
6 746
459
7 205
8 305
29 294
2 876
14 665
11 753
17 338
14 773
2 565
1 285
203
963
119
41 121
– 35 633
5 488
28
207
5 723
– 1 357
4 366
– 60
4 306
4 031
18 586
1 554
8 495
8 537
12 060
11 968
92
396
69
205
122
18 976
10 161
173
714
184
7 074
7 114
3 717
—
180
67
3 732
3 796
2 386
22 617
34 191
– 29 552
4 639
10
322
4 971
– 1 281
3 690
– 74
3 616
3 501
18 951
1 668
7 373
9 910
12 514
12 309
205
268
21
151
96
9 670
—
279
98
3 494
3 320
2 479
22 452
39 582
37 599
Profit and loss account, EURm
Net sales
Cost and expenses
Operating profit
Share of results of associated companies
Financial income and expenses
Profit before tax
Tax
Profit before minority interests
Minority interests
Profit attributable to equity holders of the parent
Balance sheet items, EURm
Fixed assets and other non-current assets
Current assets
Inventories
Accounts receivable and prepaid expenses
Total cash and other liquid assets
Total equity
Capital and reserves attributable to
the Company’s equity holders
Minority interests
Long-term liabilities
Long-term interest-bearing liabilities
Deferred tax liabilities
Other long-term liabilities
Current liabilities
Current portion of long-term loans
Short-term borrowings
Other financial liabilities
Accounts payable
Accrued expenses
Provisions
Total assets
40 984
– 39 787
1 197
30
– 265
962
– 702
260
631
891
12 125
23 613
1 865
12 875
8 873
14 749
13 088
1 661
5 801
4 432
1 303
66
15 188
44
727
245
4 950
6 504
2 718
35 738
* As of April 1, 2007, Nokia results include those of Nokia Siemens Networks on a fully consolidated
Nokia’s former Networks business group and Siemens’ carrier-related operations for fixed and mobile
networks. Accordingly, the results of the Nokia Group and Nokia Siemens Networks for the full years
2008–2009 are not directly comparable to the results for the full years 2005–2007. Nokia’s first quarter
2007 and full years 2005–2006 results included the Nokia’s former Networks business group only.
On July 10, 2008, Nokia completed the acquisition of NAVTEQ Corporation. NAVTEQ ia a separate
reportable segment of Nokia starting from the third quarter 2008. Accordingly, the results of NAVTEQ
are not available for the prior periods.
64
Nokia in 2009
Nokia Group 2005–2009, IFRS
Key ratios and economic indicators 1
Net sales, EURm
Change, %
Exports and foreign subsidiaries, EURm
Salaries and social expenses, EURm
Operating profit, EURm
% of net sales
Financial income and expenses, EURm
% of net sales
Profit before tax, EURm
% of net sales
Profit from continuing operations, EURm
% of net sales
Taxes, EURm
Dividends, EURm
Capital expenditure, EURm
% of net sales
Gross investments 3, EURm
% of net sales
R&D expenditure, EURm
% of net sales
Average personnel
Non-interest bearing liabilities, EURm
Interest-bearing liabilities, EURm
Return on capital employed, %
Return on equity, %
Equity ratio, %
Net debt to equity, %
2009
40 984
– 19.2
40 594
6 734
1 197
2.9
– 265
0.6
962
2.3
891
2.2
702
1 498 2
531
1.3
683
1.7
5 909
14.4
123 171
14 483
5 203
6.7
6.5
41.9
– 25
2008
50 710
– 0.7
50 348
6 847
4 966
9.8
– 2
—
4 970
9.8
3 988
7.9
1 081
1 520
889
1.8
1 166
2.3
5 968
11.8
2007
51 058
24.2
50 736
5 702
7 985
15.6
239
0.5
8 268
16.2
7 205
14.1
1 522
2 111
715
1.4
1 017
2.0
5 647
11.1
121 723
100 534
16 833
4 452
27.2
27.5
42.3
– 14
18 208
1 090
54.8
53.9
46.7
– 62
2006
41 121
20.3
40 734
4 206
5 488
13.3
207
0.5
5 723
13.9
4 306
10.5
1 357
1 761
650
1.6
897
2.2
3 897
9.5
65 324
10 103
249
46.1
35.5
54.0
– 69
1 As of April 1, 2007, Nokia results include those of Nokia Siemens Networks on a fully consolidated
basis. Nokia Siemens Networks, a company jointly owned by Nokia and Siemens, is comprised of
Nokia’s former Networks business group and Siemens’ carrier-related operations for fixed and mobile
networks. Accordingly, the results of the Nokia Group and Nokia Siemens Networks for the full years
2008–2009 are not directly comparable to the results for the full years 2005–2007. Nokia’s first quarter
2007 and full years 2005–2007 results included Nokia’s former Networks business group only.
On July 10, 2008, Nokia completed the acquisition of NAVTEQ Corporation. NAVTEQ is a separate report-
able segment of Nokia starting from the third quarter 2008. Accordingly, the results of NAVTEQ are not
available for the prior periods.
2 Board’s proposal
3
Includes acquisition0s, investments in shares and capitalized development costs.
Calculation of key ratios, see page 66.
2005
34 191
16.4
33 860
3 773
4 639
13.6
322
0.9
4 971
14.5
3 616
10.6
1 281
1 641
607
1.8
870
3.1
3 825
11.2
56 896
9 487
300
36.5
27.1
56.4
– 77
65
Equity ratio, %
Capital and reserves attributable to the Company’s equity holders
+ minority shareholders’ interests
Total assets – advance payments received
Net debt to equity (gearing), %
Long-term interest-bearing liabilities (including the current portion thereof)
+ short-term borrowings – cash and other liquid assets
Capital and reserves attributable to the equity holders of the parent
+ minority shareholders’ interests
Year-end exchange rates 2009
USD
GBP
JPY
CNY
INR
1 EUR =
1.4648
0.9006
130.30
10.0018
68.3223
Calculation of key ratios
Key ratios under IFRS
Operating profit
Profit after depreciation
Shareholders’ equity
Share capital + reserves attributable to the Company’s equity holders
Earnings per share (basic)
Profit attributable to equity holders of the parent
Average of adjusted number of shares during the year
P/E ratio
Adjusted share price, December 31
Earnings per share
Dividend per share
Nominal dividend per share
The adjustment coefficients of the share issues that have
taken place during or after the year in question
Payout ratio
Dividend per share
Earnings per share
Dividend yield, %
Nominal dividend per share
Share price
Shareholders’ equity per share
Capital and reserves attributable to the Company’s equity holders
Adjusted number of shares at year end
Market capitalization
Number of shares x share price per share class
Adjusted average share price
Amount traded, in EUR, during the period
Adjusted number of shares traded during the period
Share turnover, %
Number of shares traded during the period
Average number of shares during the period
Return on capital employed, %
Profit before taxes + interest and other net financial expenses
Average capital and reserves attributable to the Company’s equity holders
+ short-term borrowings + long-term interest-bearing liabilities (including
the current portion thereof)
+ minority shareholders’ interests
Return on shareholders’ equity, %
Profit attributable to the equity holders of the parent
Average capital and reserves attributable to the Company’s equity holders
during the year
66
Nokia in 2009
Proposal by the Board of Directors
for distribution of profit
The distributable funds in the balance sheet of the Company as per December 31, 2009 amount
to EUR 7 024 million.
The Board proposes that from the retained earnings a dividend of EUR 0.40 per share is to be
paid out on the shares of the Company. As per December 31, 2009, the number of shares of the
Company amounted to 3 744 956 052, based on which the maximum amount to be distributed
as dividend is EUR 1 498 million.
The proposed dividend is in line with the Company’s distribution policy and it significantly
exceeds the minority dividend required by law.
Espoo, March 11, 2010
Jorma Ollila
Chairman
Marjorie Scardino
Georg Ehrnrooth
Lalita D. Gupte
Bengt Holmström
Henning Kagermann
Per Karlsson
Isabel Marey-Semper
Risto Siilasmaa
Keijo Suila
Olli-Pekka Kallasvuo
President and CEO
67
Auditors’ report
To the Annual General Meeting of Nokia Corporation
We have audited the accounting records, the financial statements, the review by the Board of Directors and the
administration of Nokia Corporation for the year ended 31 December 2009. The financial statements comprise the
consolidated statement of financial position, income statement, statement of comprehensive income, cash flow state-
ment, statement of changes in shareholders’ equity and notes to the consolidated financial statements, as well as the
parent company’s balance sheet, income statement, cash flow statement and notes to the financial statements.
Responsibility of the Board of Directors and the Managing Director
The Board of Directors and the Managing Director are responsible for the preparation of the financial statements and
the review by the Board of Directors and for the fair presentation of the consolidated financial statements in accor-
dance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the fair presenta-
tion of the financial statements and the review by the Board of Directors in accordance with laws and regulations
governing the preparation of the financial statements and the review by the Board of Directors in Finland. The Board
of Directors is responsible for the appropriate arrangement of the control of the company’s accounts and finances,
and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its
financial affairs have been arranged in a reliable manner.
Auditor’s responsibility
Our responsibility is to perform an audit in accordance with good auditing practice in Finland, and to express an opin-
ion on the parent company’s financial statements, on the consolidated financial statements and on the review by the
Board of Directors based on our audit. Good auditing practice requires that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the financial statements and the review by
the Board of Directors are free from material misstatement and whether the members of the Board of Directors of the
parent company and the Managing Director have complied with the Limited Liability Companies Act.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements and the review by the Board of Directors. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements and of the review by the
Board of Directors, whether due to fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the entity’s preparation and fair presentation of the financial statements and the review by
the Board of Directors in order to design audit procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements and the review by
the Board of Directors.
The audit was performed in accordance with good auditing practice in Finland. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion on the consolidated financial statements
In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial
performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as
adopted by the EU.
Opinion on the company’s financial statements
and the review by the Board of Directors
In our opinion, the financial statements and the review by the Board of Directors give a true and fair view of both the
consolidated and the parent company’s financial performance and financial position in accordance with the laws and
regulations governing the preparation of the financial statements and the review by the Board of Directors in Finland.
The information in the review by the Board of Directors is consistent with the information in the financial statements.
Other opinions
We support that the financial statements should be adopted. The proposal by the Board of Directors regarding the
distribution of the profit shown in the balance sheet is in compliance with the Limited Liability Companies Act. We
support that the Members of the Board of Directors and the Managing Director should be discharged from liability for
the financial period audited by us.
Helsinki, March 11, 2010
PricewaterhouseCoopers Oy
Authorised Public Accountants
Merja Lindh
Authorised Public Account
68
Nokia in 2009
Additional information
Critical accounting policies ................................................................................................................ 70
Corporate governance statement
Group Executive Board .................................................................................................................... 74
Board of Directors ............................................................................................................................. 76
Corporate governance ..................................................................................................................... 78
Compensation of the Board of Directors and the Group Executive Board ............................. 81
Auditor fees and services .................................................................................................................... 96
Investor information ............................................................................................................................ 97
Contact information ............................................................................................................................. 98
69
Critical accounting policies
Our accounting policies affecting our financial condi-
tion and results of operations are more fully described
in Note 1 to our consolidated financial statements.
Certain of our accounting policies require the applica-
tion of judgment by management in selecting appro-
priate assumptions for calculating financial estimates,
which inherently contain some degree of uncertainty.
Management bases its estimates on historical experi-
ence and various other assumptions that are believed
to be reasonable under the circumstances, the results
of which form the basis for making judgments about
the reported carrying values of assets and liabilities
and the reported amounts of revenues and expenses
that may not be readily apparent from other sources.
Actual results may differ from these estimates under
different assumptions or conditions. The estimates
affect all our segments equally unless otherwise
indicated.
We believe the following are the critical account-
ing policies and related judgments and estimates
used in the preparation of our consolidated financial
statements. We have discussed the application of
these critical accounting estimates with our Board of
Directors and Audit Committee.
Revenue recognition
Sales from the majority of the Group are recognized
when the significant risks and rewards of ownership
have transferred to the buyer, continuing managerial
involvement usually associated with ownership and
effective control have ceased, the amount of revenue
can be measured reliably, it is probable that economic
benefits associated with the transaction will flow to
the Group, and the costs incurred or to be incurred in
respect of the transaction can be measured reliably.
The remainder of revenue is recorded under the
percentage of completion method.
Devices & Services and certain NAVTEQ and Nokia
Siemens Networks revenues are generally recognized
when the significant risks and rewards of ownership
have transferred to the buyer, continuing managerial
involvement usually associated with ownership and
effective control have ceased, the amount of revenue
can be measured reliably, it is probable that economic
benefits associated with the transaction will flow to
the Group and the costs incurred or to be incurred in
respect of the transaction can be measured reliably.
This requires us to assess at the point of delivery
whether these criteria have been met. When man-
agement determines that such criteria have been
met, revenue is recognized. We record estimated
reductions to revenue for special pricing agreements,
price protection and other volume based discounts
at the time of sale, mainly in the mobile device busi-
ness. Sales adjustments for volume based discount
programs are estimated based largely on historical
activity under similar programs. Price protection
adjustments are based on estimates of future price
reductions and certain agreed customer inventories
at the date of the price adjustment. Devices & Services
70
Nokia in 2009
and certain Nokia Siemens Networks service revenue
is generally recognized on a straight line basis over
the service period unless there is evidence that some
other method better represents the stage of comple-
tion. Devices & Services and NAVTEQ license fees from
usage are recognized in the period when they are reli-
ably measurable which is normally when the customer
reports them to the Group.
Devices & Services, NAVTEQ and Nokia Siemens
Networks may enter into multiple component transac-
tions consisting of any combination of hardware,
services and software. The commercial effect of each
separately identifiable element of the transaction
is evaluated in order to reflect the substance of the
transaction. The consideration from these transac-
tions is allocated to each separately identifiable
component based on the relative fair value of each
component. The consideration allocated to each
component is recognized as revenue when the
revenue recognition criteria for that element have
been met. The Group determines the fair value of each
component by taking into consideration factors such
as the price when the component is sold separately by
the Group, the price when a similar component is sold
separately by the Group or a third party and cost plus
a reasonable margin.
Nokia Siemens Networks revenue and cost of
sales from contracts involving solutions achieved
through modification of complex telecommunica-
tions equipment is recognized on the percentage of
completion basis when the outcome of the contract
can be estimated reliably. This occurs when total con-
tract revenue and the cost to complete the contract
can be estimated reliably, it is probable that economic
benefits associated with the contract will flow to the
Group, and the stage of contract completion can be
measured. When we are not able to meet those condi-
tions, the policy is to recognize revenues only equal
to costs incurred to date, to the extent that such costs
are expected to be recovered. Completion is measured
by reference to costs incurred to date as a percentage
of estimated total project costs using the cost-to-cost
method.
The percentage of completion method relies on
estimates of total expected contract revenue and
costs, as well as the dependable measurement of the
progress made towards completing the particular
project. Recognized revenues and profit are subject
to revisions during the project in the event that the
assumptions regarding the overall project outcome
are revised. The cumulative impact of a revision in
estimates is recorded in the period such revisions
become likely and estimable. Losses on projects in
progress are recognized in the period they become
likely and estimable.
Nokia Siemens Networks’ current sales and profit
estimates for projects may change due to the early
stage of a long-term project, new technology, changes
in the project scope, changes in costs, changes in
timing, changes in customers’ plans, realization of
penalties, and other corresponding factors.
Customer financing
We have provided a limited number of customer
financing arrangements and agreed extended pay-
ment terms with selected customers. In establishing
credit arrangements, management must assess the
creditworthiness of the customer and the timing of
cash flows expected to be received under the arrange-
ment. However, should the actual financial position
of our customers or general economic conditions
differ from our assumptions, we may be required to
re-assess the ultimate collectability of such financings
and trade credits, which could result in a write-off of
these balances in future periods and thus negatively
impact our profits in future periods. Our assessment
of the net recoverable value considers the collateral
and security arrangements of the receivable as well
as the likelihood and timing of estimated collections.
The Group endeavors to mitigate this risk through the
transfer of its rights to the cash collected from these
arrangements to third-party financial institutions
on a non-recourse basis in exchange for an upfront
cash payment. During the past three fiscal years the
Group has not had any write-offs or impairments
regarding customer financing. The financial impact of
the customer financing related assumptions mainly
affects the Nokia Siemens Networks segment. See also
Note 33 b) to our consolidated financial statements for
a further discussion of long-term loans to customers
and other parties.
Allowances for doubtful accounts
We maintain allowances for doubtful accounts for
estimated losses resulting from the subsequent in-
ability of our customers to make required payments.
If the financial conditions of our customers were to
deteriorate, resulting in an impairment of their ability
to make payments, additional allowances may be
required in future periods. Management specifically
analyzes accounts receivables and historical bad debt,
customer concentrations, customer creditworthiness,
current economic trends and changes in our customer
payment terms when evaluating the adequacy of
the allowance for doubtful accounts. Based on these
estimates and assumptions the allowance for doubtful
accounts was EUR 391 million in 2009 (EUR 415 million
in 2008).
Inventory-related allowances
We periodically review our inventory for excess, obso-
lescence and declines in market value below cost and
record an allowance against the inventory balance for
any such declines. These reviews require management
to estimate future demand for our products. Possible
changes in these estimates could result in revisions to
the valuation of inventory in future periods. Based on
these estimates and assumptions the allowance for
excess and obsolete inventory was EUR 361 million in
2009 (EUR 348 million in 2008). The financial impact
of the assumptions regarding this allowance affects
mainly the cost of sales of the Devices & Services and
Nokia Siemens Networks segments.
parties claiming infringement of their patented or
otherwise exclusive technology, or through our own
monitoring of developments in patent and other intel-
lectual property right cases involving our competitors,
we identify potential IPR infringements.
Critical accounting policies
development costs in future periods.
Whenever there is an indicator that develop-
ment costs capitalized for a specific project may be
impaired, the recoverable amount of the asset is
estimated. An asset is impaired when the carrying
amount of the asset exceeds its recoverable amount.
The recoverable amount is defined as the higher of an
asset’s net selling price and value in use. Value in use
is the present value of discounted estimated future
cash flows expected to arise from the continuing
use of an asset and from its disposal at the end of its
useful life. For projects still in development, these
estimates include the future cash outflows that are
expected to occur before the asset is ready for use. See
Note 7 to our consolidated financial statements.
Impairment reviews are based upon our projec-
tions of anticipated discounted future cash flows. The
most significant variables in determining cash flows
are discount rates, terminal values, the number of
years on which to base the cash flow projections, as
well as the assumptions and estimates used to de-
termine the cash inflows and outflows. Management
determines discount rates to be used based on the
risk inherent in the related activity’s current business
model and industry comparisons. Terminal values are
based on the expected life of products and forecasted
life cycle and forecasted cash flows over that period.
While we believe that our assumptions are appropri-
ate, such amounts estimated could differ materially
from what will actually occur in the future.
We estimate the outcome of all potential IPR
infringements made known to us through assertion
by third parties, or through our own monitoring of
patent- and other IPR-related cases in the relevant
legal systems. To the extent that we determine that
an identified potential infringement will result in a
probable outflow of resources, we record a liabil-
ity based on our best estimate of the expenditure
required to settle infringement proceedings. Based
on these estimates and assumptions the provision
for IPR infringements was EUR 390 million in 2009
(EUR 343 million in 2008). The financial impact of the
assumptions regarding this provision mainly affects
Devices & Services segment.
Our experience with claims of IPR infringement
is that there is typically a discussion period with the
accusing party, which can last from several months to
years. In cases where a settlement is not reached, the
discovery and ensuing legal process typically lasts a
minimum of one year. For this reason, IPR infringe-
ment claims can last for varying periods of time,
resulting in irregular movements in the IPR infringe-
ment provision. In addition, the ultimate outcome or
actual cost of settling an individual infringement may
materially vary from our estimates.
Legal contingencies
Business combinations
As discussed in Note 28 to the consolidated financial
statements, legal proceedings covering a wide range
of matters are pending or threatened in various
jurisdictions against the Group. We record provisions
for pending litigation when we determine that an
unfavorable outcome is probable and the amount of
loss can be reasonably estimated. Due to the inherent
uncertain nature of litigation, the ultimate outcome
or actual cost of settlement may materially vary from
estimates.
Capitalized development costs
We capitalize certain development costs primarily
in the Nokia Siemens Networks segment when it is
probable that a development project will be a success
and certain criteria, including commercial and techni-
cal feasibility, have been met. These costs are then
amortized on a systematic basis over their expected
useful lives, which due to the constant development of
new technologies is between two to five years. During
the development stage, management must estimate
the commercial and technical feasibility of these
projects as well as their expected useful lives. Should
a product fail to substantiate its estimated feasibility
or life cycle, we may be required to write off excess
We apply the purchase method of accounting to
account for acquisitions of businesses. The cost of an
acquisition is measured as the aggregate of the fair
values at the date of exchange of the assets given, li-
abilities incurred, equity instruments issued, and costs
directly attributable to the acquisition. Identifiable
assets, liabilities and contingent liabilities acquired or
assumed are measured separately at their fair value
as of the acquisition date. The excess of the cost of
the acquisition over our interest in the fair value of
the identifiable net assets acquired is recorded as
goodwill.
The determination and allocation of fair values
to the identifiable assets acquired and liabilities as-
sumed is based on various assumptions and valuation
methodologies requiring considerable management
judgment. The most significant variables in these
valuations are discount rates, terminal values, the
number of years on which to base the cash flow
projections, as well as the assumptions and estimates
used to determine the cash inflows and outflows.
Management determines discount rates to be used
based on the risk inherent in the related activity’s
current business model and industry comparisons.
Terminal values are based on the expected life of
products and forecasted life cycle and forecasted cash
flows over that period. Although we believe that the
71
Warranty provisions
We provide for the estimated cost of product warran-
ties at the time revenue is recognized. Our products
are covered by product warranty plans of varying
periods, depending on local practices and regula-
tions. While we engage in extensive product quality
programs and processes, including actively monitor-
ing and evaluating the quality of our component
suppliers, our warranty obligations are affected by
actual product failure rates (field failure rates) and by
material usage and service delivery costs incurred in
correcting a product failure. Our warranty provi-
sion is established based upon our best estimates of
the amounts necessary to settle future and existing
claims on products sold as of the balance sheet date.
As we continuously introduce new products which
incorporate complex technology, and as local laws,
regulations and practices may change, it will be
increasingly difficult to anticipate our failure rates,
the length of warranty periods and repair costs. While
we believe that our warranty provisions are adequate
and that the judgments applied are appropriate,
the ultimate cost of product warranty could differ
materially from our estimates. When the actual cost
of quality of our products is lower than we originally
anticipated, we release an appropriate proportion of
the provision, and if the cost of quality is higher than
anticipated, we increase the provision. Based on these
estimates and assumptions the warranty provision
decreased to EUR 971 million primarily due to lower
sales volumes in Devices & Services in 2009 (EUR 1 375
million in 2008). The financial impact of the assump-
tions regarding this provision mainly affects the cost
of sales of Devices & Services segment.
Provision for intellectual property rights,
or IPR, infringements
We provide for the estimated future settlements
related to asserted and unasserted past alleged IPR
infringements based on the probable outcome of each
potential infringement.
Our products and solutions include increasingly
complex technologies involving numerous patented
and other proprietary technologies. Although we
proactively try to ensure that we are aware of any
patents and other intellectual property rights related
to our products and solutions under development and
thereby avoid inadvertent infringement of proprietary
technologies, the nature of our business is such that
patent and other intellectual property right infringe-
ments may and do occur. Through contact with
Critical accounting policies
assumptions applied in the determination are reason-
able based on information available at the date of ac-
quisition, actual results may differ from the forecasted
amounts and the difference could be material.
Valuation of long-lived and intangible assets
and goodwill
We assess the carrying amount of identifiable intan-
gible assets, long-lived assets if events or changes
in circumstances indicate that such carrying amount
may not be recoverable. We assess the carrying
amount of our goodwill at least annually, or more
frequently based on these same indicators. Factors we
consider important, which could trigger an impair-
ment review, include the following:
»
»
»
significant underperformance relative to histori-
cal or projected future results;
significant changes in the manner of our use of
these assets or the strategy for our overall busi-
ness; and
significantly negative industry or economic
trends.
When we determine that the carrying amount
of intangible assets, long-lived assets or goodwill
may not be recoverable based upon the existence of
one or more of the above indicators of impairment,
we measure any impairment based on discounted
projected cash flows.
This review is based upon our projections of
anticipated discounted future cash flows. The most
significant variables in determining cash flows are
discount rates, terminal values, the number of years
on which to base the cash flow projections, as well as
the assumptions and estimates used to determine the
cash inflows and outflows. Management determines
discount rates to be used based on the risk inherent
in the related activity’s current business model and
industry comparisons. Terminal values are based on
the expected life of products and forecasted life cycle
and forecasted cash flows over that period. While we
believe that our assumptions are appropriate, such
amounts estimated could differ materially from what
will actually occur in the future. In assessing goodwill,
these discounted cash flows are prepared at a cash
generating unit level. Amounts estimated could differ
materially from what will actually occur in the future.
Goodwill is allocated to the Group’s cash-generat-
ing units (CGU) and discounted cash flows are prepared
at CGU level for the purpose of impairment testing. The
allocation of goodwill to our CGUs is made in a manner
that is consistent with the level at which manage-
ment monitors operations and the CGUs expected to
benefit from the synergies arising from each of our
acquisitions. Accordingly, (i) goodwill arising from
the acquisitions completed by the Devices & Services
segment has been allocated to the Devices & Services
CGU, (ii) goodwill arising from the acquisition of and
72
Nokia in 2009
acquisitions completed by NAVTEQ has been allocated
to the NAVTEQ CGU and (iii) goodwill arising from the
formation of and acquisitions completed by Nokia
Siemens Networks has been allocated to the Nokia
Siemens Networks CGU.
The recoverable amounts for the Devices &
Services CGU and NAVTEQ CGU are determined based on
a value in use calculation. The cash flow projections
employed in the value in use calculation are based
on financial plans approved by management. These
projections are consistent with external sources of
information, whenever available. Cash flows beyond
the explicit forecast period are extrapolated using an
estimated terminal growth rate that does not exceed
the long-term average growth rates for the industry
and economies in which the CGU operates.
In prior years we used a value in use calculation
to determine the recoverable amount of the Nokia
Siemens Networks CGU. In 2009 the value in use
calculation resulted in a recoverable amount that was
lower than the carrying amount for the Nokia Siemens
Networks CGU. As a result, we performed an analysis to
determine the fair value less costs to sell of the Nokia
Siemens Networks CGU. The fair value less costs to sell
of the Nokia Siemens Networks CGU exceeded its value
in use. IFRS requires that recoverable amount is based
on the higher of the value in use and fair value less
costs to sell and accordingly the current year goodwill
assessment is based on a discounted cash flow
calculation to estimate the fair value less costs to sell.
The cash flow projections employed in the discounted
cash flow calculation have been determined by
management based on the best information available
to reflect the amount that an entity could obtain from
the disposal of the Nokia Siemens Networks CGU in an
arm’s length transaction between knowledgeable,
willing parties, after deducting the estimated costs
of disposal.
The discount rates applied in the value in use
calculation for each CGU have been determined
independently of capital structure reflecting current
assessments of the time value of money and relevant
market risk premiums. Risk premiums included in the
determination of the discount rate reflect risks and
uncertainties for which the future cash flow estimates
have not been adjusted. Overall, the discount rates ap-
plied in the 2009 impairment testing have decreased
in line with declining interest rates and narrowing
credit spreads.
In case there are reasonably possible changes in
estimates or underlying assumptions applied in our
goodwill impairment testing, such as growth rates
and discount rates, which could have a material im-
pact on the carrying amount of the goodwill or result
in an impairment loss, those are disclosed below in
connection with the relevant CGU.
The Group recorded an impairment loss of
EUR 908 million in the third quarter of 2009 to reduce
the carrying amount of the Nokia Siemens Networks
CGU to its recoverable amount. The impairment loss
was allocated in its entirety to the carrying amount
of goodwill arising from the formation of Nokia
Siemens Networks and from subsequent acquisitions
completed by Nokia Siemens Networks. The impair-
ment loss is presented as impairment of goodwill in
the consolidated income statement. As a result of the
impairment loss, the amount of goodwill allocated to
the Nokia Siemens Networks CGU has been reduced
to zero.
The recoverability of the Nokia Siemens Networks
CGU has declined as a result of a decline in forecasted
profits and cash flows. The Group evaluated the
historical and projected financial performance of the
Nokia Siemens Networks CGU taking into consider-
ation the challenging competitive factors and market
conditions in the infrastructure and related service
business. As a result of this evaluation, the Group
lowered its net sales and gross margin projections for
the Nokia Siemens Networks CGU. The reduction in the
projected scale of the business had a negative impact
on the projected profits and cash flows of the Nokia
Siemens Networks CGU.
We have performed our annual goodwill impair-
ment testing during the fourth quarter of 2009 on the
opening fourth quarter balances. During 2009, the
conditions in the world economy have shown signs of
improvement as countries have begun to emerge from
the global economic downturn. However, significant
uncertainty exists regarding the speed, timing and
resiliency of the global economic recovery and this
uncertainty is reflected in the impairment testing for
each of the Group’s CGUs.
Goodwill amounting to EUR 1 227 million has
been allocated to the Devices & Services CGU for the
purpose of impairment testing. The impairment
testing has been carried out based on management’s
expectation of stable market share and normalized
profit margins in the medium to long-term. The good-
will impairment testing conducted for the Devices &
Services CGU for the year ended December 31, 2009 did
not result in any impairment charges.
Goodwill amounting to EUR 3 944 million has
been allocated to the NAVTEQ CGU. The impairment
testing has been carried out based on management’s
expectations and assessment of the financial perfor-
mance and future strategies of the NAVTEQ CGU in light
of current and expected market and economic condi-
tions. The goodwill impairment testing conducted
for the NAVTEQ CGU for the year ended December 31,
2009 did not result in any impairment charges. The
recoverable amount of the NAVTEQ CGU is between 5
to 10% higher than its carrying amount. The Group ex-
pects that a reasonably possible change of 1% in the
valuation assumptions for long-term growth rate or
discount rate would give rise to an impairment loss.
The key assumptions applied in the impairment
testing for each CGU in the annual goodwill impair-
ment testing for each year indicated are presented in
the table below:
Cash-generating unit, %
2009
2008
2009
2008
2009
2008
Devices & Services 1
Nokia Siemens Networks
NAVTEQ 1
Terminal growth rate
Pre-tax discount rate
2.00
2.28
11.46
12.35
1.00
1.00
13.24
15.60
5.00
5.00
12.60
12.42
1 Subsequent to the acquisition of NAVTEQ on July 10, 2008, we have had three operating and reportable segments: Devices & Services,
NAVTEQ and Nokia Siemens Networks. The organizational changes fundamentally altered our reporting structure, the information reported
to management as well as the way in which management monitors and runs operations and accordingly no directly comparable informa-
tion for the Devices & Services CGU and NAVTEQ CGU is available for the year ended December 31, 2007.
The annual goodwill impairment testing
conducted for each of the Group’s CGUs for the years
ended December 31, 2008 and 2007 have not resulted
in any impairment charges. The goodwill impairment
testing for the year ended December 31, 2009 resulted
in the aforementioned impairment charge for the
Nokia Siemens Networks CGU.
The Group has applied consistent valuation
methodologies for each of the Group’s CGUs for the
years ended December 31, 2009, 2008 and 2007. We
periodically update the assumptions applied in our
impairment testing to reflect management’s best
estimates of future cash flows and the conditions that
are expected to prevail during the forecast period.
See Note 7 to our consolidated financial state-
ments for further information regarding “Valuation of
long-lived and intangible assets and goodwill.”
Fair value of derivatives and other financial
instruments
The fair value of financial instruments that are not
traded in an active market (for example, unlisted equi-
ties, currency options and embedded derivatives) are
determined using valuation techniques. We use judg-
ment to select an appropriate valuation methodology
and underlying assumptions based principally on
existing market conditions. If quoted market prices are
not available for unlisted shares, fair value is estimated
by using various factors, including, but not limited to:
(1) the current market value of similar instruments,
(2) prices established from a recent arm’s length fi-
nancing transaction of the target companies, (3) analy-
sis of market prospects and operating performance of
the target companies taking into consideration of pub-
lic market comparable companies in similar industry
sectors. Changes in these assumptions may cause the
Group to recognize impairments or losses in the future
periods. The financial impact of these assumptions
mainly affects Devices & Services segment.
Income taxes
The Group is subject to income taxes both in Finland
and in numerous other jurisdictions. Significant judg-
ment is required in determining income tax expense,
tax provisions, deferred tax assets and liabilities rec-
ognized in the consolidated financial statements. We
recognize deferred tax assets to the extent that it is
probable that sufficient taxable income will be avail-
able in the future against which the temporary differ-
ences and unused tax losses can be utilized. We have
considered future taxable income and tax planning
strategies in making this assessment. If circumstances
indicate it is no longer probable that deferred tax as-
sets will be utilized they are assessed for realizability
and adjusted as necessary. At December 31, 2009, the
Group had loss carry forwards and temporary differ-
ences of EUR 2 532 million (EUR 102 million in 2008) for
which no deferred tax assets were recognized in the
consolidated financial statements due to loss history
and current year loss in certain jurisdictions.
We recognize tax provisions based on estimates
and assumptions when, despite our belief that tax
return positions are supportable, it is more likely than
not that certain positions will be challenged and may
not be fully sustained upon review by tax authori-
ties. In 2009, Nokia benefited EUR 203 million from
the positive net effect from the development and
outcome of various prior year taxes and changes in
tax contingencies impacting Nokia taxes.
If the final outcome of these matters differs
from the amounts initially recorded, differences may
positively or negatively impact the income tax and
deferred tax provisions in the period in which such
determination is made.
Pensions
The determination of our pension benefit obligation
and expense for defined benefit pension plans is
dependent on our selection of certain assumptions
used by actuaries in calculating such amounts. Those
assumptions are described in Note 5 to our consolidat-
ed financial statements and include, among others,
the discount rate, expected long-term rate of return
on plan assets and annual rate of increase in future
compensation levels. A portion of our plan assets is
invested in equity securities. The equity markets have
experienced volatility, which has affected the value
of our pension plan assets. This volatility may make
it difficult to estimate the long-term rate of return
on plan assets. Actual results that differ from our as-
sumptions are accumulated and amortized over future
periods and therefore generally affect our recognized
expense and recorded obligation in such future peri-
ods. Our assumptions are based on actual historical
experience and external data regarding compensation
and discount rate trends. While we believe that our
Critical accounting policies
assumptions are appropriate, significant differences
in our actual experience or significant changes in our
assumptions may materially affect our pension obli-
gation and our future expense. The financial impact of
the pension assumptions affects mainly the Devices &
Services and Nokia Siemens Networks segments.
Share-based compensation
We have various types of equity settled share-based
compensation schemes for employees. Employee
services received, and the corresponding increase in
equity, are measured by reference to the fair value
of the equity instruments as at the date of grant,
excluding the impact of any non-market vesting
conditions. Fair value of stock options is estimated by
using the Black-Scholes model on the date of grant
based on certain assumptions. Those assumptions
are described in Note 23 to our consolidated financial
statements and include, among others, the dividend
yield, expected volatility and expected life of stock op-
tions. The expected life of stock options is estimated
by observing general option holder behavior and ac-
tual historical terms of Nokia stock option programs,
whereas the assumption of the expected volatility
has been set by reference to the implied volatility of
stock options available on Nokia shares in the open
market and in light of historical patterns of volatility.
These variables make estimation of fair value of stock
options difficult.
Non-market vesting conditions attached to the
performance shares are included in assumptions
about the number of shares that the employee will
ultimately receive relating to projections of sales and
earnings per share. On a regular basis, we review the
assumptions made and revise the estimates of the
number of performance shares that are expected
to be settled, where necessary. At the date of grant,
the number of performance shares granted that are
expected to be settled is assumed to be two times
the amount at threshold. Any subsequent revisions to
the estimates of the number of performance shares
expected to be settled may increase or decrease total
compensation expense. Such increase or decrease
adjusts the prior period compensation expense in
the period of the review on a cumulative basis for
unvested performance shares for which compensation
expense has already been recognized in the profit and
loss account, and in subsequent periods for unvested
performance shares for which the expense has not
yet been recognized in the profit and loss account.
Significant differences in employee option activity,
equity market performance, and our projected and
actual net sales and earnings per share performance
may materially affect future expense. In addition, the
value, if any, an employee ultimately receives from
share-based payment awards may not correspond to
the expense amounts recorded by the Group.
73
Corporate governance statement *
Group Executive Board
The current members of Nokia’s Group Executive Board are set forth below.
According to Nokia’s Articles of Association, Nokia
has a Group Executive Board that is responsible
for the operative management of the Group. The
Board has the responsibility for appointing and
discharging the President and Chief Executive
Officer, Chief Financial Officer and the other
members of the Group Executive Board. The Chief
Executive Officer, who is separate from Chairman,
also acts as President, and his rights and respon-
sibilities include those allotted to the President
under Finnish law.
* This Corporate Governance Statement is issued separately
from the Review by the Board of Directors. The review
by the Board of Directors 2009 starts on page 3 of this
publication.
74
Nokia in 2009
Olli-Pekka Kallasvuo, b. 1953
President and CEO of Nokia Corporation.
Member of the Board of Directors of Nokia
Corporation.
Group Executive Board member since 1990,
Chairman since 2006.
With Nokia 1980 –1981, rejoined 1982.
LL.M. (University of Helsinki).
President and COO of Nokia Corporation 2005–2006,
Executive Vice President and General Manager of Nokia
Mobile Phones 2004–2005, Executive Vice President,
CFO of Nokia 1999–2003, Executive Vice President of
Nokia Americas and President of Nokia Inc. 1997–1998,
Executive Vice President, CFO of Nokia 1992–1996,
Senior Vice President, Finance of Nokia 1990–1991.
Chairman of the Board of Directors of NAVTEQ Corpora-
tion and Nokia Siemens Networks B.V. Member of the
Board of the Confederation of Finnish Industries EK.
Member of The European Round Table of Industrialists.
Esko Aho, b. 1954
Executive Vice President,
Corporate Relations and Responsibility.
Group Executive Board member since 2009.
Joined Nokia 2008.
Master of Social Sciences (University of Helsinki).
President of the Finnish Innovation Fund, Sitra 2004–
2008. Private consultant 2003–2004. Lecturer, Harvard
University 2000–2001. Prime Minister of Finland
1991–1995. Chairman of the Centre Party 1990–2002.
Member of the Finnish Parliament 1983–2003. Elector
in the presidential elections of 1978, 1982 and 1988.
Member of the Board of Directors of Fortum Corpora-
tion and Russian Venture Company. Vice Chairman of
the Board, Technology Industries of Finland. Member
of the Club de Madrid, the InterAction Council and the
Science and Technology in Society Forum (STS).
Timo Ihamuotila, b. 1966
Executive Vice President, Chief Financial Officer.
Group Executive Board member since 2007. With
Nokia 1993–1996, rejoined 1999.
Master of Science (Economics) (Helsinki School of
Economics), Licentiate of Science (Finance) (Helsinki
School of Economics).
Executive Vice President, Sales, Markets 2008–2009,
Executive Vice President, Sales and Portfolio Manage-
ment, Mobile Phones 2007, Senior Vice President, CDMA
Business Unit, Mobile Phones 2004–2007, Vice Presi-
dent, Finance, Corporate Treasurer 2000–2004, Direc-
tor, Corporate Finance, Nokia Corporation 1999–2000.
Vice President of Nordic Derivates Sales, Citibank plc
1996–1999. Manager, Dealing & Risk Management,
Nokia 1993–1996. Analyst, Assets and Liability
Management, Kansallis Bank 1990–1993.
Member of the Board of Directors of NAVTEQ
Corporation and Nokia Siemens Networks B.V.
Mary T. McDowell, b. 1964
Executive Vice President, Chief Development Officer.
Group Executive Board member since 2004.
Joined Nokia 2004.
Bachelor of Science (Computer Science) (College of
Engineering at the University of Illinois).
Executive Vice President and General Manager of
Enterprise Solutions 2004–2007. Senior Vice President,
Strategy and Corporate Development of Hewlett-Pack-
ard Company 2003, Senior Vice President & General
Manager, Industry-Standard Servers of Hewlett-
Packard Company 2002–2003, Senior Vice President
& General Manager, Industry-Standard Servers of
Compaq Computer Corporation 1998-2002, Vice Presi-
dent, Marketing, Server Products Division of Compaq
Computer Corporation 1996–1998. Holder of executive,
managerial and other positions at Compaq Computer
Corporation 1986–1996.
Member of the Board of Directors of NAVTEQ
Corporation.
Hallstein Moerk, b. 1953
Executive Vice President, Human Resources.
Group Executive Board member since 2004.
Joined Nokia 1999.
Diplomøkonom (Econ.) (Norwegian School
of Management).
Holder of various positions at Hewlett-Packard Cor-
poration 1977–1999. HR Manager for Europe, Middle
East and Africa and Managing Director for European
Multicountry Area were the last positions.
Member of the Board of Advisors of Center for HR
Strategy, Rutgers University. Fellow of Academy of
Human Resources, Class of 2007.
Dr. Tero Ojanperä, b. 1966
Executive Vice President, Services.
Group Executive Board member since 2005.
Joined Nokia 1990.
Master of Science (University of Oulu), Ph.D. (Delft
University of Technology, The Netherlands).
Executive Vice President, Chief Technology Officer
2006–2007. Executive Vice President & Chief Strategy
Officer 2005–2006, Senior Vice President, Head of
Nokia Research Center 2003–2004. Vice President, Re-
search, Standardization and Technology of IP Mobility
Networks, Nokia Networks 1999–2002. Vice President,
Radio Access Systems Research and General Manager
of Nokia Networks in Korea 1999. Head of Radio Access
Systems Research, Nokia Networks 1998–1999, Princi-
pal Engineer, Nokia Research Center, 1997–1998.
Member of Young Global Leaders.
Niklas Savander, b. 1962
Executive Vice President, Services.
Group Executive Board Member 2006.
Joined Nokia 1997.
Master of Science (Eng.) (Helsinki University of Tech-
nology), Master of Science (Economics and Business
Administration) (Swedish School of Economics and
Business Administration, Helsinki).
Executive Vice President, Technology Platforms
2006–2007. Senior Vice President and General Manager
of Nokia Enterprise Solutions, Mobile Devices Busi-
ness Unit 2003–2006, Senior Vice President, Nokia
Mobile Software, Market Operations 2002–2003, Vice
President, Nokia Mobile Software, Strategy, Market-
ing & Sales 2001–2002, Vice President and General
Manager of Nokia Networks, Mobile Internet Applica-
tions 2000–2001, Vice President of Nokia Networks,
Systems Marketing 1997–1998. Holder of executive and
managerial positions at Hewlett-Packard Company
1987–1997.
Member of the Board of Directors of NAVTEQ Corpora-
tion and Nokia Siemens Networks B.V. Member of the
Board of Directors and secretary of Waldemar von
Frenckells Stiftelse.
Richard A. Simonson, b. 1958
Executive Vice President, Head of Mobile Phones
and Strategic Sourcing, Devices.
Group Executive Board member since 2004.
Joined Nokia 2001.
Bachelor of Science (Mining Eng.) (Colorado School
of Mines), Master of Business Administration (Finance)
(Wharton School of Business at University
of Pennsylvania).
Executive Vice President & Chief Financial Officer of
Nokia Corporation 2003–2009, Vice President & Head
of Customer Finance of Nokia Corporation 2001–2003,
Managing Director of Telecom & Media Group of
Barclays 2001, Head of Global Project Finance and
other various positions at Bank of America Securities
1985–2001.
Member of the Board of Directors of Nokia Siemens
Networks B.V. Member of the Board of Directors of
Electronic Arts, Inc., and Silver Spring Networks. Mem-
ber of the Board of Trustees of International House
–New York. Member of US Treasury Advisory Commit-
tee on the Auditing Profession.
Alberto Torres, b. 1965
Executive Vice President, Solutions.
Group Executive member since October 1, 2009.
Joined Nokia 2004.
Ph.D. in Computer Science (Stanford University),
Bachelor and Master of Science (Universidad Simón
Bolívar).
Senior Vice President, Head of Devices Category
Management 2009, Senior Vice President, Focused
Businesses 2008–2009, President, Vertu 2005–2009,
Vice President, Corporate Strategy, Nokia 2004–2005,
Principal, McKinsey & Company, 1994–2003, President,
Gnosis 1988–1989.
Anssi Vanjoki, b. 1956
Executive Vice President, Markets.
Group Executive Board member since 1998.
Joined Nokia 1991.
Master of Science (Econ.) (Helsinki School of Economics
and Business Administration).
Executive Vice President and General Manager of
Multimedia 2004–2007. Executive Vice President of
Nokia Mobile Phones 1998–2003, Senior Vice President,
Europe & Africa of Nokia Mobile Phones 1994–1998,
Vice President, Sales of Nokia Mobile Phones
1991–1994, 3M Corporation 1980–1991.
Chairman of the Board of Directors of Amer Sports
Corporation. Member of the Board of Directors of
Sonova Holding AG.
Dr. Kai Öistämö, b. 1964
Executive Vice President, Devices.
Group Executive Board Member since 2005.
Joined Nokia in 1991.
Doctor of Technology (Signal Processing), Master
of Science (Engineering) (Tampere University of
Technology). Executive Vice President and General
Manager of Mobile Phones 2005–2007. Senior Vice
President, Business Line Management, Mobile Phones
2004–2005, Senior Vice President, Mobile Phones
Business Unit, Nokia Mobile Phones 2002–2003, Vice
President, TDMA/GSM 1900 Product Line, Nokia Mobile
Phones 1999–2002, Vice President, TDMA Product Line
1997–1999. Various technical and managerial posi-
tions in Nokia Consumer Electronics and Nokia Mobile
Phones 1991–1997.
Member of Board of Directors of Nokian Tyres plc.
Corporate governance statement
Alberto Torres, Executive Vice President, Head of Solu-
tion Unit, was appointed as a member of the Group Ex-
ecutive Board as of October 1, 2009. Robert Andersson
left the Group Executive Board as from September 30,
2009 to head Nokia Corporate Alliances and Business
Development. Simon Beresford-Wylie, left the Group
Executive Board and the position of Chief Executive
Officer of Nokia Siemens Networks as from September
30, 2009 and left the company on November 1, 2009.
Juha Äkräs has been appointed Executive Vice Presi-
dent of Human Resources as from April 1, 2010. At the
same time, he will become a member of the Group
Executive Board. Mr. Äkräs is currently Senior Vice
President, co-heading Human Resources with
Mr. Moerk, the current Executive Vice President of
Human Resources. Mr. Moerk will leave the Group
Executive Board as from March 31, 2010 and will act as
Executive Advisor in Nokia until his retirement at the
end of September 2010.
75
Corporate governance statement
Board of Directors
The current members of the Board of Directors
were elected at the Annual General Meeting on
April 23, 2009, based on the proposal of the Cor-
porate Governance and Nomination Committee
of the Board of Directors. On the same date, the
Chairman and Vice Chairman of the Board of Di-
rectors, as well as the Chairmen and members of
the committees of the Board, were elected among
the Board members and among the independent
directors of the Board, respectively.
The members of the Board of Directors are an-
nually elected by a simple majority of the share-
holders’ votes represented at the Annual General
Meeting for a one-year term ending at close of
the next Annual General Meeting.
76
Nokia in 2009
The current members of the Board of Directors and its committees
are set forth below.
Chairman Jorma Ollila, b. 1950
Chairman of the Board of Directors of Nokia
Corporation.
Chairman of the Board of Directors
of Royal Dutch Shell Plc.
Board member since 1995. Chairman since 1999.
Master of Political Science (University of Helsinki),
Master of Science (Econ.) (London School of
Economics), Master of Science (Eng.) (Helsinki
University of Technology).
Chairman and CEO, Chairman of the Group Executive
Board of Nokia Corporation 1999–2006, President and
CEO, Chairman of the Group Executive Board of Nokia
Corporation 1992–1999, President of Nokia Mobile
Phones 1990–1992, Senior Vice President, Finance of
Nokia 1986–1989. Holder of various managerial posi-
tions at Citibank within corporate banking 1978–1985.
Vice Chairman of the Board of Directors of Otava
Books and Magazines Group Ltd and member of the
Board of Directors of Fruugo Inc. Chairman of the
Boards of Directors and the Supervisory Boards of The
Research Institute of the Finnish Economy ETLA and
Finnish Business and Policy Forum EVA. Member of the
Board of Directors of the University of Helsinki.
Chairman of the World Business Council for Sustain-
able Development. Vice Chairman of the Independent
Reflection Group of the Council of the European Union
considering the future of the European Union. Member
of The European Round Table of Industrialists.
Member of the Board of Directors of Ford Motor
Company 2000–2008. Vice Chairman of UPM-Kymmene
Corporation 2004–2008.
Vice Chairman Dame Marjorie Scardino, b. 1947
Chief Executive and member of the Board
of Directors of Pearson plc.
Board member since 2001. Vice Chairman since 2007.
Chairman of the Corporate Governance and
Nomination Committee and member of the
Personnel Committee.
Bachelor of Arts (Baylor University), Juris Doctor
(University of San Francisco).
Chief Executive of The Economist Group 1993–1997,
President of the North American Operations of The
Economist Group 1985–1993, lawyer 1976–1985
and publisher of The Georgia Gazette newspaper
1978–1985.
Georg Ehrnrooth, b. 1940
Board member since 2000.
Chairman of the Audit Committee and member
of the Corporate Governance and Nomination
Committee.
Master of Science (Eng.) (Helsinki University
of Technology).
President and CEO of Metra Corporation 1991–2000,
President and CEO of Lohja Corporation 1979–1991.
Holder of various executive positions at Wärtsilä
Corporation within production and management
1965–1979.
Member of the Board of Directors of Sandvik AB
(publ). Vice Chairman of the Boards of Directors of
The Research Institute of the Finnish Economy ETLA
and Finnish Business and Policy Forum EVA. Member
of the Board of Directors of Sampo plc. 1992–2009 and
Chairman 2006–2009. Chairman of the Board of Direc-
tors of Assa Abloy AB (publ) 1994–2006. Vice Chairman
of the Board of Directors of Rautaruukki Corporation
2001–2007.
Lalita D. Gupte, b. 1948
Non-executive Chairman of the ICICI Venture
Funds Management Co Ltd.
Board member since 2007.
Member of the Audit Committee.
B.A. in Economics (Hons) (University of Delhi) and Mas-
ter of Management Studies (University of Bombay).
Joint Managing Director and member of the Board of
Directors of ICICI Bank Ltd 2002–2006, Joint Managing
Director and member of the Board of Directors of ICICI
Ltd 1999–2002 (ICICI Ltd merged with ICICI Bank Ltd
in 2002), Deputy Managing Director of ICICI Ltd 1996–
1999, Executive Director on the Board of Directors of
ICICI Ltd 1994–1996. Various leadership positions in
Corporate and Retail Banking, Strategy and Resources,
and International Banking in ICICI Ltd since 1971.
Member of the Boards of Directors of ICICI Venture
Funds Management Co Ltd (non-executive Chairman),
Bharat Forge Ltd, Kirloskar Brothers Ltd, FirstSource
Solutions Ltd, Godrej Properties Ltd, HPCL-Mittal Ener-
gy Ltd and Swadhaar FinServe Pvt Ltd. (non-executive
Chairman). Also member of Board of Governors of edu-
cational institutions. Member of the Board of Directors
(executive director) of ICICI Bank Ltd 2002–2006, Mem-
ber of the Board of Directors (non-executive director)
of ICICI Bank Ltd 1994–2002, Member of the Board of
Directors (executive director) of ICICI Ltd 1994–2002.
Member of the Board of Directors of ICICI Securities
Ltd 1993–2006, ICICI Prudential Life Insurance Co Ltd
2000–2006, ICICI Lombard General Insurance Co Ltd
2000–2006, ICICI Bank UK Ltd 2003–2006, ICICI Bank
Canada 2003–2006, ICICI Bank Eurasia Limited Liability
Company 2005–2006.
Dr. Bengt Holmström, b. 1949
Paul A. Samuelson Professor of Economics at MIT,
joint appointment at the MIT Sloan School
of Management.
Board member since 1999.
Bachelor of Science (Helsinki University), Master of
Science (Stanford University), Doctor of Philosophy
(Stanford University).
Edwin J. Beinecke Professor of Management Studies
at Yale University 1985–1994.
Member of the American Academy of Arts and Sciences
and Foreign Member of The Royal Swedish Academy
of Sciences. Member of the Boards of Directors of
The Research Institute of the Finnish Economy ETLA
and Finnish Business and Policy Forum EVA. Member
of Aalto University Foundation Board.
Prof. Dr. Henning Kagermann, b. 1947
Board member since 2007.
Member of the Personnel Committee.
Ph.D. in Theoretical Physics (Technical University
of Brunswick).
Per Karlsson, b. 1955
Independent Corporate Advisor.
Board member since 2002.
Chairman of the Personnel Committee and member
of the Corporate Governance and Nomination
Committee.
Degree in Economics and Business Administration
(Stockholm School of Economics).
Executive Director, with mergers and acquisitions
advisory responsibilities, at Enskilda M&A, Enskilda
Securities (London) 1986–1992. Corporate strategy
consultant at the Boston Consulting Group (London)
1979–1986.
Member of the Board of Directors of IKANO Holdings S.A.
Isabel Marey-Semper, b. 1967
L’Oréal Group, Director Shared Services R&D.
Board member since 2009.
Member of the Audit Committee.
Ph.D. in NeuroPharmacology (Université Paris Pierre
et Marie Curie–Collège de France), MBA (Collège des
Ingénieurs, Paris).
Co-CEO and Chairman of the Executive Board of SAP AG
2008–2009. CEO of SAP 2003–2008. Co-chairman of
the Executive Board of SAP 1998–2003. A number of
leadership positions in SAP since 1982. Member of SAP
Executive Board 1991–2009. Taught physics and com-
puter science at the Technical University of Brunswick
and the University of Mannheim 1980–1992, became
professor in 1985.
Chief Financial Officer, EVP in charge of strategy of PSA
Peugeot Citroën 2007–2009. COO, Intellectual Property
and Licensing Business Unit of Thomson 2006–2007.
Vice President Corporate Planning at Saint-Gobain
2004–2005. Director of Corporate Planning, High
Performance Materials at Saint-Gobain 2002–2004.
Principal, A.T. Kearney (Telesis, prior to acquisition by
A.T. Kearney) 1997–2002.
Member of the Board of Directors of Faurecia S.A.
2007–2009.
Risto Siilasmaa, b. 1966
Board member since 2008.
Member of the Audit Committee.
Master of Science (Eng) (Helsinki University
of Technology).
President and CEO of F-Secure Corporation 1988–2006.
Chairman of the Board of Directors of F-Secure Cor-
poration, Elisa Corporation and Fruugo Inc. Member
of the Board of Directors of Blyk Ltd, Ekahau Inc. and
Efecte Corporation. Vice Chairman of the Board of
Directors of The Federation of Finnish Technology In-
dustries and Finnish-American Chamber of Commerce,
member of the Board of Directors of Confederation of
Finnish Industries EK.
Member of the supervisory boards of Deutsche
Bank AG, Deutsche Post AG and Münchener Rückver-
sicherungs-Gesellschaft AG (Munich Re). Member of the
Board of Directors of Wipro Ltd. President of Deutsche
Akademie der Technikwissenschaften. Member of the
Honorary Senate of the Foundation Lindau Nobel-
prizewinners.
Olli-Pekka Kallasvuo, b. 1953
President and CEO of Nokia Corporation.
Board member since 2007.
LL.M. (University of Helsinki).
President and COO of Nokia Corporation 2005–2006,
Executive Vice President and General Manager of Nokia
Mobile Phones 2004–2005, Executive Vice President,
CFO of Nokia 1999–2003, Executive Vice President of
Nokia Americas and President of Nokia Inc. 1997–1998,
Executive Vice President, CFO of Nokia 1992–1996,
Senior Vice President, Finance of Nokia 1990–1991.
Chairman of the Board of Directors of Nokia Siemens
Networks B.V. and NAVTEQ Corporation. Member of the
Board of the Confederation of Finnish Industries EK.
Member of The European Round Table of Industrialists.
Member of the Board of Directors of EMC Corporation
2004–2009. Chairman of the Board of Directors of
Sampo Plc 2001–2006.
Corporate governance statement
Keijo Suila, b. 1945
Board member since 2006.
Member of the Personnel Committee.
B.Sc. (Economics and Business Administration)
(Helsinki University of Economics and Business
Administration).
President and CEO of Finnair Plc 1999–2005. Chairman
of oneworld airline alliance 2003–2004 and member of
various international aviation and air transportation
associations 1999–2005. Holder of various executive
positions, including Vice Chairman and Executive
Vice President, at Huhtamäki Oyj, Leaf Group and Leaf
Europe 1985–1998.
Chairman of the Board of Directors of Solidium Oy and
The Finnish Fair Corporation. Member of the Board of
Directors of Kesko Corporation 2001–2009 and Vice
Chairman 2006–2009.
Proposal of the Corporate Governance
and Nomination Committee for Composition
of the Board of Directors in 2010
On January 28, 2010, the Corporate Governance and
Nomination Committee announced its proposal to
the Annual General Meeting convening on May 6, 2010
regarding the composition of the Board of Direc-
tors for a one-year term as from the Annual General
Meeting in 2010 until the close of the Annual General
Meeting 2011. The Committee proposes to the Annual
General Meeting that the number of Board members
be ten and that the following current Board members
be re-elected: Lalita D. Gupte, Dr. Bengt Holmström,
Prof. Dr. Henning Kagermann, Olli-Pekka Kallasvuo,
Per Karlsson, Isabel Marey-Semper, Jorma Ollila, Dame
Marjorie Scardino, Risto Siilasmaa and Keijo Suila.
Nokia’s Board leadership structure consists of a Chair-
man and Vice Chairman, annually elected by the Board
and confirmed by the independent directors of the
Board from among the Board members upon the
recommendation of the Corporate Governance and
Nomination Committee. The independent directors of
the Board also confirm the election of the members
and Chairmen for the Board’s committees from among
the Board’s independent directors upon the recom-
mendation of the Corporate Governance and Nomina-
tion Committee and based on each committee’s
member qualification standards. These elections will
take place at the Board’s assembly meeting following
the Annual General Meeting.
On January 28, 2010, the Corporate Governance and
Nomination Committee announced that it will propose
at the assembly meeting of the new Board of Directors
after the Annual General Meeting on May 6, 2010 that
Jorma Ollila be elected as Chairman of the Board and
Dame Marjorie Scardino as Vice Chairman of the Board.
77
Corporate governance statement
Corporate governance
Pursuant to the provisions of the Finnish Companies
Act and Nokia’s Articles of Association, the control and
management of Nokia is divided among the share-
holders at a general meeting, the Board of Directors
(or the “Board”), the President and the Group Execu-
tive Board chaired by the Chief Executive Officer.
Under its Articles of Association, in addition to the
Board of Directors, Nokia has a Group Executive Board,
which is responsible for the operative management of
the Group. The Chairman and members of the Group
Executive Board are appointed by the Board of Direc-
tors. Only the Chairman of the Group Executive Board
can be a member of both the Board of Directors and
the Group Executive Board.
The Board of Directors
The operations of the company are managed under
the direction of the Board of Directors, within the
framework set by the Finnish Companies Act and
Nokia’s Articles of Association as well as any comple-
mentary rules of procedure as defined by the Board,
such as the Corporate Governance Guidelines and
related Board Committee charters.
The responsibilities of the Board of Directors
The Board represents and is accountable to the share-
holders of the company. The Board’s responsibilities
are active, not passive, and include the responsibility
regularly to evaluate the strategic direction of the
company, management policies and the effective-
ness with which management implements them.
The Board’s responsibilities also include overseeing
the structure and composition of the company’s top
management and monitoring legal compliance and
the management of risks related to the company’s op-
erations. In doing so, the Board may set annual ranges
and/or individual limits for capital expenditures,
investments and divestitures and financial commit-
ments not to be exceeded without Board approval.
Nokia has a Risk Policy which outlines Nokia’s
risk management policies and processes and is
approved by the Audit Committee. The Board’s role
in risk oversight includes risk analysis and assess-
ment in connection with each financial and business
review, update and decision-making proposal and is
an integral part of all Board deliberations. The Audit
Committee is responsible for, among other matters,
risk management relating to the financial reporting
process and assisting the Board’s oversight of the risk
management function. Nokia applies a common and
systematic approach to risk management across all
business operations and processes based on a strategy
approved by the Board. Accordingly, risk management
at Nokia is not a separate process but a normal daily
business and management practice.
The Board has the responsibility for appointing
78
Nokia in 2009
and discharging the President and the Chief Executive
Officer, the Chief Financial Executive Officer and the
other members of the Group Executive Board. The Chief
Executive Officer, who is separate from Chairman, also
acts as President, and his rights and responsibilities
include those allotted to the President under Finnish
law. Subject to the requirements of Finnish law, the
independent directors of the Board confirm the com-
pensation and the employment conditions of the Chief
Executive Officer upon the recommendation of the Per-
sonnel Committee. The compensation and employment
conditions of the other members of the Group Executive
Board are approved by the Personnel Committee upon
the recommendation of the Chief Executive Officer.
The basic responsibility of the members of the
Board is to act in good faith and with due care so as to
exercise their business judgment on an informed basis
in what they reasonably and honestly believe to be in
the best interests of the company and its shareholders.
In discharging that obligation, the directors must in-
form themselves of all relevant information reasonably
available to them. The Board and each Board Com-
mittee also have the power to hire independent legal,
financial or other advisors as they deem necessary.
The Board conducts annual performance self-
evaluations, which also include evaluations of the Board
Committees’ work, the results of which are discussed by
the Board. In 2009, the self-evaluation process consist-
ed of a questionnaire, a one-to-one discussion between
the Chairman and each director, and a discussion by the
entire Board of the outcome of the evaluation, possible
measures to be taken, as well as measures taken based
on the Board’s self-evaluation of the previous year.
In addition, performance of the Board Chairman was
evaluated in a process led by the Vice Chairman.
Election, composition and meetings
of the Board of Directors
Pursuant to the Articles of Association, Nokia Corpora-
tion has a Board of Directors composed of a minimum
of seven and a maximum of 12 members. The mem-
bers of the Board are elected for a term of one year at
each Annual General Meeting, i.e., as from the close
of that Annual General Meeting until the close of the
following Annual General Meeting, which convenes
each year by June 30. The Annual General Meeting held
on April 23, 2009 elected 11 members to the Board
of Directors. The members of the Board of Directors
elected by the Annual General Meeting in 2009 are
Georg Ehrnrooth, Lalita D. Gupte, Dr. Bengt Holmström,
Dr. Henning Kagermann, Olli-Pekka Kallasvuo, Per
Karlsson, Jorma Ollila, Dame Marjorie Scardino, Isabel
Marey-Semper, Risto Siilasmaa and Keijo Suila.
Nokia’s Board leadership structure consists of a
Chairman and Vice Chairman, annually elected by the
Board and confirmed by the independent directors of
the Board from among the Board members upon the
recommendation of the Corporate Governance and
Nomination Committee. On April 23, 2009, the indepen-
dent directors of the Board elected Jorma Ollila to con-
tinue to act as Chairman and Dame Marjorie Scardino
to continue to act as Vice Chairman of the Board. The
Chairman has certain specific duties as defined by
Finnish standards and the Nokia Corporate Governance
Guidelines. The Board has determined that Nokia Board
Chairman, Mr. Ollila, is independent as defined by
Finnish standards, and also under the New York Stock
Exchange rules since June 1, 2009. The Vice Chairman
of the Board shall assume the duties of the Chairman
in case the Chairman is prevented from performing his
duties. The Board has determined that Nokia Board Vice
Chairman, Dame Marjorie Scardino, is also independent
as defined by Finnish standards and relevant stock
exchange rules and has been independent since being
appointed Vice Chairman in 2007. The Chief Execu-
tive Officer is currently a member of the Board. Nokia
does not have a policy concerning the combination or
separation of the roles of Chairman and Chief Executive
Officer, but the leadership structure is dependent on the
company needs, shareholder value and other relevant
factors applicable from time to time, and respecting the
highest corporate governance standards.
The current members of the Board are all
non-executive, except the President and CEO who is
an executive member of the Board. The Board has
determined that all ten non-executive Board members
are independent as defined by Finnish standards. Also,
the Board has determined that nine of the Board’s ten
non-executive members are independent directors as
defined by the rules of the New York Stock Exchange. Dr.
Bengt Holmström was determined not to be indepen-
dent under the rules of the New York Stock Exchange
due to a family relationship with an executive officer of
a Nokia supplier of whose consolidated gross revenue
from Nokia accounts for an amount that exceeds the
limit provided in the New York Stock Exchange rules,
but that is less than 8%. The executive member of the
Board, President and CEO Olli-Pekka Kallasvuo, was
determined not to be independent under both Finnish
standards and the New York Stock Exchange rules.
The Board held 13 meetings during 2009, of which
seven were regularly scheduled meetings held in
person and six were meetings held in writing. The at-
tendance at all meetings was 100%. The non-executive
directors meet without management at regularly
scheduled sessions twice a year and at such other times
as they deem appropriate, in practice in connection
with each regularly scheduled meeting in 2009. Such
sessions were chaired by the non-executive Chairman
of the Board or, in his absence, the non-executive Vice
Chairman of the Board. In addition, the independent
directors meet separately at least once annually, and
did so in 2009. All the directors attended Nokia’s Annual
General Meeting held on April 23, 2009. The Finnish
Corporate Governance Code recommends attendance by
the Board Chairman and a sufficient number of direc-
tors to allow the shareholders to exercise their right to
present questions to the Board and management.
The independent directors of the Board also
confirm the election of the members and Chairmen
for the Board’s committees from among the Board’s
independent directors upon the recommendation of
the Corporate Governance and Nomination Committee
and based on each committee’s member qualification
standards.
The Corporate Governance Guidelines concerning
the directors’ responsibilities, the composition and
selection of the Board, Board Committees and certain
other matters relating to corporate governance are
available on Nokia’s website, www.nokia.com.
According to Finnish law, the shareholders have
the right to submit director recommendations or other
agenda items or proposals to the agenda of a general
meeting provided that the item or proposal belongs to
the scope of the general meeting of the shareholders
and the request is made to the Board in writing well in
advance to be included in the notice of the meeting,
which time may not be deemed to be earlier than four
weeks before the notice of the meeting.
Committees of the Board of Directors
The Audit Committee consists of a minimum of three
members of the Board who meet all applicable indepen-
dence, financial literacy and other requirements of Finn-
ish law and the rules of the stock exchanges where Nokia
shares are listed, including NASDAQ OMX Helsinki and the
New York Stock Exchange. Since April 23, 2009, the Audit
Committee consists of the following four members of
the Board: Georg Ehrnrooth (Chairman), Lalita D. Gupte,
Isabel Marey-Semper and Risto Siilasmaa.
The Audit Committee is established by the Board
primarily for the purpose of overseeing the accounting
and financial reporting processes of the company and
audits of the financial statements of the company.
The Committee is responsible for assisting the Board’s
oversight of (1) the quality and integrity of the com-
pany’s financial statements and related disclosure,
(2) the statutory audit of the company’s financial
statements, (3) the external auditor’s qualifications
and independence, (4) the performance of the external
auditor subject to the requirements of Finnish law, (5)
the performance of the company’s internal controls
and risk management and assurance function, (6) the
performance of the internal audit function, and (7) the
company’s compliance with legal and regulatory re-
quirements. The Committee also maintains procedures
for the receipt, retention and treatment of complaints
received by the company regarding accounting,
internal controls, or auditing matters and for the con-
fidential, anonymous submission by employees of the
company of concerns regarding accounting or auditing
matters. Nokia’s disclosure controls and procedures,
which are reviewed by the Audit Committee and
approved by the Chief Executive Officer and the Chief
Financial Officer, as well as Nokia’s internal controls
over financial reporting, are designed to provide rea-
sonable assurance regarding the quality and integrity
of the company’s financial statements and related
disclosures. The Disclosure Committee chaired by the
Chief Financial Officer is responsible for preparation of
the quarterly and annual results announcements, and
the process includes involvement by business manag-
ers, business controllers and other functions, like
internal audit, as well as a final review and confirma-
tion by the Audit Committee and the Board.
Under Finnish law, Nokia’s external auditor is
elected by the shareholders by a simple majority vote
at the Annual General Meeting for one fiscal year at
a time. The Audit Committee makes a proposal to
the shareholders in respect of the appointment of
the external auditor based upon its evaluation of the
qualifications and independence of the auditor to be
proposed for election or re-election. Also under Finn-
ish law, the fees of the external auditor are approved
by Nokia’s shareholders by a simple majority vote at
the Annual General Meeting. The Committee makes
a proposal to the shareholders in respect of the fees
of the external auditor, and approves the external
auditor’s annual audit fees under the guidance given
by the shareholders at the Annual General Meeting.
For information about the fees paid to Nokia’s external
auditor, PricewaterhouseCoopers, during 2009 see
“Auditor fees and services” on page 96.
In discharging its oversight role, the Committee
has full access to all company books, records, facilities
and personnel. The Committee may retain counsel,
auditors or other advisors in its sole discretion, and
must receive appropriate funding, as determined by
the Committee, from the company for the payment of
compensation to such outside advisors.
The Audit Committee meets at least four times
a year based upon a schedule established at the first
meeting following the appointment of the Committee.
The Committee meets separately with the representa-
tives of Nokia’s management, head of the internal audit
function, and the external auditor in connection with
each regularly scheduled meeting. The head of the in-
ternal audit function has at all time direct access to the
Audit Committee, without involvement of management.
The Audit Committee had six meetings in 2009.
The attendance at all meetings was 100%. In addition,
any directors who wish to may attend Audit Commit-
tee meetings as nonvoting observers.
The Personnel Committee consists of a minimum of
three members of the Board who meet all applicable
independence requirements of Finnish law and the
rules of the stock exchanges where Nokia shares are
listed, including NASDAQ OMX Helsinki and the New
York Stock Exchange. Since April 23, 2009, the Person-
nel Committee consists of the following four members
of the Board: Per Karlsson (Chairman), Henning Kager-
mann, Marjorie Scardino and Keijo Suila.
The primary purpose of the Personnel Commit-
tee is to oversee the personnel policies and practices
of the company. It assists the Board in discharging its
responsibilities relating to all compensation, including
equity compensation, of the company’s executives and
the terms of employment of the same. The Committee
has overall responsibility for evaluating, resolving and
Corporate governance statement
making recommendations to the Board regarding (1)
compensation of the company’s top executives and
their employment conditions, (2) all equity-based
plans, (3) incentive compensation plans, policies and
programs of the company affecting executives and
(4) other significant incentive plans. The Committee is
responsible for overseeing compensation philosophy
and principles and ensuring the above compensation
programs are performance-based, properly motivate
management, support overall corporate strategies and
are aligned with shareholders’ interests. The Commit-
tee is responsible for the review of senior management
development and succession plans.
The Personnel Committee had four meetings in
2009. The average ratio of attendance at the meetings
was 94%. Three members of the Committee attended
100% of the Committee meetings and one member
attended 75% of the meetings. In addition, any direc-
tors who wish to may attend Personnel Committee
meetings as nonvoting observers.
For further information on the activities of the
Personnel Committee, see “Executive compensation
philosophy, programs and decision-making process”
on page 82.
The Corporate Governance and Nomination Commit-
tee consists of three to five members of the Board who
meet all applicable independence requirements of
Finnish law and the rules of the stock exchanges where
Nokia shares are listed, including NASDAQ OMX Helsinki
and the New York Stock Exchange. Since April 23, 2009,
the Corporate Governance and Nomination Committee
consists of the following three members of the Board:
Marjorie Scardino (Chairman), Georg Ehrnrooth and
Per Karlsson.
The Corporate Governance and Nomination Com-
mittee’s purpose is (1) to prepare the proposals for
the general meetings in respect of the composition
of the Board and the director remuneration to be ap-
proved by the shareholders and (2) to monitor issues
and practices related to corporate governance and to
propose necessary actions in respect thereof.
The Committee fulfills its responsibilities by
(i) actively identifying individuals qualified to become
members of the Board, (ii) proposing to the sharehold-
ers the director nominees for election at the Annual
General Meetings, (iii) monitoring significant develop-
ments in the law and practice of corporate governance
and of the duties and responsibilities of directors of
public companies, (iv) assisting the Board and each
Committee of the Board in its annual performance
self-evaluations, including establishing criteria to be
used in connection with such evaluations, (v) develop-
ing and recommending to the Board and administer-
ing Nokia’s Corporate Governance Guidelines, and (vi)
reviewing the company’s disclosure in the Corporate
Governance Statement.
The Committee has the power to retain search
firms or advisors to identify candidates. The Com-
mittee may also retain counsel or other advisors,
as it deems appropriate. The Committee has sole
79
Corporate governance statement
authority to retain or terminate such search firms
or advisors and to review and approve such search
firm or advisor’s fees and other retention terms. It is
the Committee’s practice to retain a search firm to
identify director candidates each time a new director
candidate is searched for.
The Corporate Governance and Nomination Com-
mittee had three meetings in 2009. The attendance at
all meetings was 100%. In addition, any directors who
wish to may attend Corporate Governance and Nomi-
nation Committee meetings as nonvoting observers.
The charters of each of the committees are avail-
able on Nokia’s website, www.nokia.com.
Certain corporate governance
policies
Nokia has a Code of Conduct which is equally ap-
plicable to all of Nokia’s employees, directors and
management and is accessible on Nokia’s website,
www.nokia.com. In addition, Nokia has a Code of Eth-
ics for the Principal Executive Officers and the Senior
Financial Officers. For more information about Nokia’s
Code of Ethics, please see www.nokia.com.
Nokia’s corporate governance practices comply
with the Finnish Corporate Governance Code approved
by the boards of the Finnish Securities Market Associa-
tion and NASDAQ OMX Helsinki effective as of Janu-
ary 1, 2009. The Finnish Corporate Governance Code is
accessible, among others, at www.cgfinland.fi. In ad-
dition, Nokia complies with the corporate governance
rules that are mandatory for foreign private issuers
under section 303A of the New York Stock Exchange
Listed Company Manual, which is accessible at http://
nysemanual.nyse.com/lcm/, as well as any other
mandatory corporate governance rules applicable due
to listing of Nokia share in Helsinki, Frankfurt and New
York stock exchanges.
Internal audit function
Nokia has an internal audit function that acts as an
independent appraisal function by examining and
evaluating the adequacy and effectiveness of the
company’s system of internal control.
Internal audit resides within the Chief Financial
Officer’s organization and also reports to the Audit
Committee of the Board of Directors. The head of
internal audit function has at all times direct access
to the Audit Committee, without involvement of the
management.
80
Nokia in 2009
Compensation of the Board of Directors and the Group Executive Board
Board of Directors
The following table sets forth the annual remunera-
tion of the members of the Board of Directors based
on their positions on the Board and its committees,
including the remuneration paid to the President and
CEO for his duties as a member of the Board of Direc-
tors only, as resolved at the respective Annual General
Meetings in 2009, 2008 and 2007.
Position, EUR
Chairman
Vice Chairman
Member
Chairman of Audit Committee
Member of Audit Committee
Chairman of Personnel Committee
Total
2009 1
440 000
150 000
130 000
25 000
10 000
25 000
1 840 000
2008
440 000
150 000
130 000
25 000
10 000
25 000
1 710 000
2007
375 000
150 000
130 000
25 000
10 000
25 000
1 775 000
1 The increase in the total amount results from the Board of Directors having one more member in 2009 compared to 2008 while fees paid
based on the position remained the same.
It is Nokia’s policy that the remuneration consists of
an annual fee only, no fees for meeting attendance
are paid, and that a significant portion of director
compensation will be paid in the form of company
stock purchased from the market. It is also Nokia’s
policy that the Board members shall retain all Nokia
shares received as director compensation until the
end of the board membership (except for those shares
needed to offset any costs relating to the acquisition of
the shares, including taxes). In addition, non-executive
members of the Board do not receive stock options,
performance shares, restricted shares or other variable
compensation for their duties as Board members as per
company policy. The President and CEO receives variable
compensation for his executive duties, but not for his
duties as a member of the Board of Directors. The total
compensation of the President and CEO is described in
“Summary compensation table 2009” on page 85.
When preparing the Board of Directors’ remu-
neration proposal, it is the policy of the Corporate
Governance and Nomination Committee of the Board
to review and compare the remuneration levels and
their criteria paid in other global companies with net
sales and business complexity comparable to that of
Nokia. The Committee’s aim is to ensure that Nokia
has an efficient Board of world-class professionals
representing an appropriate and diverse mix of skills
and experience. A competitive Board remuneration
contributes to the achievement of this target.
The remuneration of the Board of Directors is
resolved annually by Nokia’s Annual General Meet-
ing by a simple majority of the shareholders’ votes
represented at the meeting, upon proposal by the
Corporate Governance and Nomination Committee.
The remuneration is resolved for the period as from
the respective Annual General Meeting until the close
of the next Annual General Meeting.
Remuneration of the Board of Directors in 2009
For the year ended December 31, 2009, the aggregate
remuneration paid to the members of the Board of
Directors for their services as members of the Board
and its committees was EUR 1 840 000.
The following table sets forth the total annual
remuneration paid to the members of the Board of
Directors in 2009, as resolved by the shareholders
at the Annual General Meeting on April 23, 2009. For
information with respect to the Nokia shares and
equity awards held by the members of the Board of
Directors, please see “Share ownership of the Board of
Directors” on page 88.
Change in
pension
value and
non-qualified
deferred
compensation
Non-equity
incentive
plan
compen-
sation 2
EUR
earnings 2
EUR
All other
compen-
sation 2
EUR
Stock
awards 2
EUR
Option
awards 2
EUR
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Fees
earned
or paid
in cash 1
EUR
440 000
150 000
155 000
140 000
130 000
130 000
130 000
155 000
140 000
140 000
130 000
Total
EUR
440 000
150 000
155 000
140 000
130 000
130 000
130 000
155 000
140 000
140 000
130 000
Jorma Ollila, Chairman 3
Marjorie Scardino, Vice Chairman 4
Georg Ehrnrooth 5
Lalita D. Gupte 6
Bengt Holmström
Henning Kagermann
Olli-Pekka Kallasvuo 7
Per Karlsson 8
Isabel Marey-Semper 9
Risto Siilasmaa 10
Keijo Suila
Year
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
1 Approximately 60% of each Board member’s annual remunera-
tion is paid in cash and the remaining 40% in Nokia shares
purchased from the market.
2 Not applicable to any non-executive member of the Board of
Directors.
3 The 2009 fee of Mr. Ollila was paid for his services as Chairman of
the Board.
4 The 2009 fee of Ms. Scardino was paid for her services as Vice
Chairman of the Board.
5 The 2009 fee paid to Mr. Ehrnrooth amounted to a total of
EUR 155 000, consisting of a fee of EUR 130 000 for services as a
member of the Board and EUR 25 000 for services as Chairman of
the Audit Committee.
member of the Board and EUR 25 000 for services as Chairman of
the Personnel Committee.
6 The 2009 fee paid to Ms. Gupte amounted to a total of
9 The 2009 fee paid to Ms. Marey-Semper amounted to a total of
EUR 140 000, consisting of a fee of EUR 130 000 for services as a
member of the Board and EUR 10 000 for services as a member of
the Audit Committee.
EUR 140 000, consisting of a fee of EUR 130 000 for services as a
member of the Board and EUR 10 000 for services as a member of
the Audit Committee.
7 This table includes remuneration paid to Mr. Kallasvuo, President
and CEO, for his services as a member of the Board only. For the
compensation paid for his services as the President and CEO, see
“Summary compensation table 2009” on page 85.
10 The 2009 fee paid to Mr. Siilasmaa amounted to a total of
EUR 140 000, consisting of a fee of EUR 130 000 for services as a
member of the Board and EUR 10 000 for services as a member of
the Audit Committee.
8 The 2009 fee paid to Mr. Karlsson amounted to a total of
EUR 155 000, consisting of a fee of EUR 130 000 for services as a
81
Compensation of the Board of Directors and the Group Executive Board
Proposal of the Corporate Governance
and Nomination Committee for remuneration
to the Board of Directors in 2010
On January 28, 2010, the Corporate Governance and
Nomination Committee of the Board announced that it
will propose to the Annual General Meeting to be held
on May 6, 2010 that the annual remuneration payable
to the Board members elected at the same meeting
for the term until the close of the Annual General
Meeting in 2011 be unchanged from 2008 and 2009 as
follows: EUR 440 000 for the Chairman, EUR 150 000 for
the Vice Chairman and EUR 130 000 for each member;
for the Chairman of the Audit Committee and the
Chairman of the Personnel Committee an additional
annual fee of EUR 25 000; and for each member of
the Audit Committee an additional annual fee of
EUR 10 000. Further, the Corporate Governance and
Nomination Committee proposes that approximately
40% of the remuneration be paid in Nokia shares
purchased from the market, which shares shall be
retained until the end of the board membership in line
with the Nokia policy (except for those shares needed
to offset any costs relating to the acquisition of the
shares, including taxes).
Executive compensation
Executive compensation philosophy, programs
and decision-making process
Our executive compensation philosophy and programs
have been developed to enable Nokia to effectively
compete in an extremely complex and rapidly evolving
mobile communications industry. Nokia is a leading
company in its industry and conducts business glob-
ally. Nokia’s executive compensation programs have
been designed to attract, retain and motivate talented
executive officers globally that drive Nokia’s success
and industry leadership worldwide. Our compensa-
tion programs are designed to promote long-term
value sustainability of the company and to ensure that
remuneration is based on performance.
Nokia’s compensation program for executive officers
includes:
»
»
competitive base pay rates; and
short- and long-term incentives that are intended
to result in a competitive total compensation
package.
The objectives of Nokia’s executive compensation
programs are to:
»
»
attract and retain outstanding executive talent;
deliver a significant amount of performance-
related variable compensation for the achieve-
ment of both short- and long-term stretch goals;
82
Nokia in 2009
»
»
appropriately balance rewards between both
Nokia’s and an individual’s performance; and
align the interests of the executive officers with
those of the shareholders through long-term
incentives in the form of equity-based awards.
The competitiveness of Nokia’s executive com-
pensation levels and practices is one of several key
factors the Personnel Committee of the Board (the
“Personnel Committee”) considers in its determi-
nation of compensation for Nokia executives. The
Personnel Committee compares, on an annual basis,
Nokia’s compensation practices, base salaries and
total compensation, including short- and long-term
incentives against those of other relevant companies
with the same or similar revenue, size, global reach
and complexity that Nokia believes it competes
against for executive talent. The relevant sample
includes companies in high technology, telecommu-
nications and Internet services industries, as well as
other industries that are headquartered in Europe and
the United States. The peer group is determined by the
Personnel Committee and reviewed for appropriate-
ness from time to time as deemed necessary due to
such factors as changes in the business environment
or industry.
The Personnel Committee retains and uses an
external consultant from Mercer Human Resources to
obtain benchmark data and information on current
market trends. The consultant works directly for the
Chairman of the Personnel Committee and meets
annually with the Personnel Committee, without
management present, to provide an assessment of
the competitiveness and appropriateness of Nokia’s
executive pay levels and programs. Management
provides the consultant with information regarding
Nokia’s programs and compensation levels in prepara-
tion for meeting with the Committee. The consultant
of Mercer Human Resources that works for the Person-
nel Committee is independent of Nokia and does not
have any other business relationships with Nokia.
The Personnel Committee reviews the executive
officers’ compensation on an annual basis and from
time to time during the year when special needs
arise. Without management present, the Personnel
Committee reviews and recommends to the Board
the corporate goals and objectives relevant to the
compensation of the President and CEO, evaluates the
performance of the President and CEO in light of those
goals and objectives, and proposes to the Board the
compensation level of the President and CEO, which is
confirmed by the independent members of the Board.
Management’s role is to provide any information
requested by the Personnel Committee to assist in
their deliberations.
In addition, upon recommendation of the
President and CEO, the Personnel Committee approves
all compensation for all the members of the Group
Executive Board (excluding that of the President and
CEO of Nokia) and other direct reports to the President
and CEO, including long-term equity incentives and
goals and objectives relevant to compensation. The
Personnel Committee also reviews the results of the
evaluation of the performance of the Group Executive
Board members (excluding the President and CEO)
and other direct reports to the President and CEO and
approves their incentive compensation based on such
evaluation.
The Personnel Committee considers the following
factors, among others, in its review when determining
the compensation of Nokia’s executive officers:
»
»
»
»
The compensation levels for similar positions (in
terms of scope of position, revenues, number of
employees, global responsibility and reporting
relationships) in relevant comparison companies;
The performance demonstrated by the executive
officer during the last year;
The size and impact of the role on Nokia’s overall
performance and strategic direction;
The internal comparison to the compensation
levels of the other executive officers of Nokia; and
»
Past experience and tenure in role.
The above factors are assessed by the Personnel
Committee in totality.
Nokia’s management performed an internal risk
assessment of Nokia’s compensation policies and
practices for its employees in 2009. The internal risk
assessment concluded that there are no risks arising
from Nokia’s compensation policies and practices that
are reasonably likely to have a material adverse effect
on Nokia. The findings of the analysis were reported
to the Personnel Committee.
Components of executive compensation
Nokia’s compensation program for executive officers
includes annual cash compensation in the form of a
base salary, short-term cash incentives and long-term
equity-based incentive awards in the form of perfor-
mance shares, stock options and restricted shares.
Annual cash compensation
Base salaries are targeted at globally competitive
market levels.
Short-term cash incentives are an important
element of our variable pay programs and are tied di-
rectly to Nokia’s and the executive’s performance. The
short-term cash incentive opportunity is expressed
as a percentage of the executive officer’s annual base
salary. These award opportunities and measurement
criteria are presented in the table below.
Measurement criteria for the short-term cash
incentive plan include those financial objectives that
are considered important measures of Nokia’s success
in driving increased shareholder value. Financial
Compensation of the Board of Directors and the Group Executive Board
objectives are established that are based on a number
of factors and are intended to be stretch targets that,
if achieved, we believe, will result in performance
that would exceed that of our key competitors in the
high technology, telecommunications and Internet
services industries. The target setting, as well as
the weighting of each measure, also requires the
Personnel Committee’s approval. The following table
reflects the measurement criteria that are established
for the President and CEO and members of the Group
Executive Board and the relative weighting of each
objective for the year 2009.
Incentive as a % of annual base salary in 2009
Minimum
performance, %
Target
performance, %
Maximum
performance, %
Measurement criteria
Position
President and CEO
Total
Group Executive Board
Total
1 Total shareholder return reflects the change in Nokia’s share
price during an established time period added with the value
of dividends per share paid during the said period, divided by
Nokia’s share price at the beginning of the period. The calcula-
tion is the same also for each company in the said peer group.
0
0
0
0
0
0
100
25
25
150
75
25
225
37.5
37.5
300
168.75
37.5
(a) Financial Objectives (includes targets for net sales,
operating profit and operating cash flow management and
key business goals)
(c) Total Shareholder Return 1 (comparison made with key
competitors in the high technology, telecommunications
and Internet services industries over one-, three- and
five-year periods)
(d) Strategic Objectives
(a) Financial Objectives (includes targets for net sales,
operating profit and operating cash flow management); and
(b) Individual Strategic Objectives (as described below)
(c) Total Shareholder Return 1,2 (comparison made with
key competitors in the high technology, telecommunications
and Internet services industries over one-, three- and
five-year periods)
100
206.25
2 Only some members of the Group Executive Board are eligible for
the additional 25% total shareholder return element.
The short-term incentive payout is based on perfor-
mance relative to targets set for each measurement
criteria listed in the table above and includes: (1) a
comparison of Nokia’s actual performance to pre-
established targets for net sales, operating profit and
operating cash flow management and key business
goals and (2) a comparison of each executive of-
ficer’s individual performance to his/her predefined
individual strategic objectives and targets. Individual
strategic objectives include key criteria which are
the cornerstone for the success of Nokia’s long-term
strategy and require a discretionary assessment of
performance by the Personnel Committee.
When determining the final incentive payout,
the Personnel Committee determines an overall score
for each executive based on the degree to which (a)
Nokia’s financial objectives and key business goals
have been achieved together with (b) qualitative
and quantitative scores assigned to the individual
strategic objectives. The final incentive payout is
determined by multiplying each executive’s eligible
salary by: (i) his/her incentive target percentage; and
(ii) the score resulting from the above mentioned fac-
tors (a) and (b). The resulting score for each executive
is then multiplied by an “affordability factor,” which
is determined based on overall sales, profitability
and cash flow of Nokia. The Personnel Committee
may apply discretion when evaluating actual results
against targets and the resulting incentive payouts. In
certain exceptional situations, the actual short-term
cash incentive awarded to the executive officer could
be zero. The maximum payout is only possible with
maximum performance on all measures.
The portion of the short-term cash incentives
that is tied to (a) Nokia’s financial objectives and key
business goals and (b) individual strategic objec-
tives and targets, is paid twice each year based on
the performance for each of Nokia’s short-term plans
that end on June 30 and December 31 of each year.
Another portion of the short-term cash incentives
is paid annually at the end of the year, based on the
Personnel Committee’s assessment of (c) Nokia’s total
shareholder return compared to key competitors,
which are selected by the Personnel Committee, in
the high technology, Internet services and telecom-
83
Actual executive compensation for 2009
At December 31, 2009, Nokia had a Group Executive
Board consisting of eleven members. Changes in the
composition of the Group Executive Board during 2009
are explained in “Group Executive Board” on page 74.
The following tables summarize the aggregate
cash compensation paid and the long-term equity-
based incentives granted to the members of the Group
Executive Board under Nokia’s equity plans in 2009.
Gains realized upon exercise of stock options and
share-based incentive grants vested for the members
of the Group Executive Board during 2009 are included
in “Share ownership” on page 89.
Compensation of the Board of Directors and the Group Executive Board
munications industries and relevant market indices
over one-, three- and five-year periods. In the case
of the President and CEO, the annual incentive award
is also partly based on his performance compared
against (d) strategic leadership objectives, including
performance in key markets, development of strategic
capabilities enhanced competitiveness of core busi-
nesses and executive development.
For more information on the actual cash compen-
sation paid in 2009 to Nokia’s executive officers, see
“Summary compensation table 2009” on page 84.
Long-term equity-based incentives
Long-term equity-based incentive awards in the form
of performance shares, stock options and restricted
shares are used to align executive officers interests
with shareholders’ interests, reward performance
and encourage retention. These awards are deter-
mined on the basis of the factors discussed above in
“Executive compensation philosophy, programs and
decision-making process”, including a comparison
of the executive officer’s overall compensation with
that of other executives in the relevant market and
the impact on the competitiveness of the executive’s
compensation package in that market. Performance
shares are Nokia’s main vehicle for long-term equity-
based incentives and reward the achievement of both
Nokia’s long-term financial results and an increase in
share price. Performance shares vest as shares, if at
least one of the pre-determined threshold perfor-
mance levels, tied to Nokia’s financial performance,
is achieved by the end of the performance period and
the value is dependent on Nokia’s share price. Stock
options are granted to fewer employees that are in
more senior and executive positions. Stock options
create value for the executive officer, once vested, if
the Nokia share price is higher than the exercise price
of the stock option established at grant, thereby align-
ing the interests of the executives with those of the
shareholders. Restricted shares are used primarily for
retention purposes and they vest fully after the close
of a pre-determined restriction period. These equity-
based incentive awards are generally forfeited if the
executive leaves Nokia prior to vesting. In addition,
any shares granted are subject to the share ownership
guidelines as explained below.
Information on the actual equity-based incen-
tives granted to the members of Nokia’s Group
Executive Board is included in “Share ownership” on
page 89.
Aggregate cash compensation to the Group Executive Board for 2009 1
Year
2009
Number of
members
December 31,
2009
Base
salaries
EUR
Cash
incentive
payments 2
EUR
11
6 107 162
4 614 593
1 Includes base salary and cash incentives paid or payable by
Nokia for the 2009 fiscal year. The cash incentives are paid as a
percentage of annual base salary based on Nokia’s short-term
cash incentives. Includes Robert Andersson and Simon Beresford-
Wylie for the period until Septermber 30, 2009 and Alberto
Torres as from October 1, 2009.
2 Excluding any gains realized upon exercise of stock options,
which are described in “Share ownership” on page 89.
Long-term equity-based incentives granted in 2009 1
Group Executive
Board 3
Performance shares at threshold 2
Stock options
Restricted shares
345 000
690 000
558 000
1 The equity-based incentive grants are generally forfeited if the
employment relationship terminates with Nokia prior to vesting.
The settlement is conditional upon performance and/or service
conditions, as determined in the relevant plan rules. For a descrip-
tion of Nokia’s equity plans, see Note 23 “Share-based payment” to
Nokia’s consolidated financial statements on page 37.
2 At maximum performance, the settlement amounts to four times
the number at threshold.
3
Includes Robert Andersson for the period until Septermber 30,
2009 and Alberto Torres as from October 1, 2009.
84
Nokia in 2009
Total
2 960 110
4 791 232
4 288 600
Total number
of participants
5 800
3 700
500
Compensation of the Board of Directors and the Group Executive Board
Summary compensation table 2009
Name and
principal
position 1
Olli-Pekka Kallasvuo
President and CEO
Year **
Salary
EUR
Bonus 2
EUR
Stock
awards 3
EUR
Option
awards 3
EUR
2009
2008
2007
1 176 000
1 144 800
1 037 619
1 288 144
721 733
2 348 877
3 332 940
2 470 858
5 709 382
650 661
548 153
581 690
Timo Ihamuotila
EVP and Chief Financial Officer 7
Richard Simonson
EVP, Mobile Phones (Chief Financial
Officer until October 31, 2009) 8
Anssi Vanjoki
EVP, Markets
Kai Öistämö
EVP, Devices
Mary McDowell
EVP, Chief Development Officer 8
2009
396 825
234 286
752 856
135 834
2009
2008
2007
2009
2008
2007
2009
2008
2007
2009
2008
2007
648 494
630 263
488 422
630 000
615 143
556 381
460 000
445 143
382 667
508 338
493 798
444 139
453 705
293 477
827 333
342 250
260 314
900 499
343 225
200 126
605 520
349 911
196 138
769 773
1 449 466
699 952
1 978 385
863 212
699 952
1 978 385
935 174
699 952
1 978 385
800 873
620 690
1 978 385
166 126
152 529
199 956
166 126
152 529
199 956
166 126
152 529
199 956
152 283
133 463
199 956
1 The positions set forth in this table are the current positions of
the named executives. Until October 30, 2009, Mr. Ihamuotila
served as Executive Vice President and Global Head of Sales. Mr.
Simonson served as Executive Vice President and Chief Financial
Officer until October 30, 2009.
2 Bonus payments are part of Nokia’s short-term cash incentives.
The amount consists of the bonus awarded and paid or payable
by Nokia for the respective fiscal year.
3 Amounts shown represent the grant date fair value of equity
grants awarded in the respective fiscal year. The fair value of
stock options equals the estimated fair value on the grant date,
calculated using the Black-Scholes model. The fair value of
performance shares and restricted shares equals the estimated
fair value on grant date. The estimated fair value is based on the
grant date market price of the Nokia share less the present value
of dividends expected to be paid during the vesting period. The
value of the performance shares is presented on the basis of a
number of shares, which is two times the number of shares at
threshold. The value of restricted shares and performance shares
at maximum (four times the number of shares at threshold), for
each of the named executive officer, is as follows: Mr. Kallasvuo
EUR 5 586 450; Mr. Ihamuotila EUR 1 249 720; Mr. Simonson EUR
2 024 831; Mr. Vanjoki EUR 1 438 576; Mr. Öistämö EUR 1 510 538
and Ms. McDowell EUR 1 328 290.
4 The change in pension value represents the proportionate
change in the liability related to the individual executive. These
executives are covered by the Finnish State employees’ pen-
sion act (“TyEL”) that provides for a retirement benefit based
on years of service and earnings according to the prescribed
statutory system. The TyEL system is a partly funded and a partly
pooled “pay as you go” system. Effective March 1, 2008, Nokia
transferred its TyEL pension liability and assets to an external
Finnish insurance company and no longer carries the liability on
its financial statements. The figures shown represent only the
change in liability for the funded portion. The method used to
derive the actuarial IFRS valuation is based upon available salary
information at the respective year end. Actuarial assumptions
including salary increases and inflation have been determined to
arrive at the valuation at the respective year end.
5 The change in pension value for Mr. Kallasvuo includes the reduc-
tion of EUR 1 571 for the proportionate change in the liability
related to the individual under the funded part of the Finnish
TyEL pension (see footnote 4 above). In addition, it includes
EUR 1 360 000 for the change in liability in the early retirement
benefit at the age of 60 provided under his service contract.
Nokia carries the liability on its books for the early retirement
benefit. Considerable portion of this change in pension liability
stems from the actuarial change to the discount interest rate
used in the calculation.
6 All other compensation for Mr. Kallasvuo in 2009 includes:
EUR 130 000 for his services as member of the Board or Directors,
see page 81 “Remuneration of the Board of Directors in 2009”
above; EUR 21 540 for car allowance, EUR 10 000 for financial
counseling, EUR 10 989 for taxable benefit for premiums paid
under supplemental medical and disability insurance, EUR 4 719
for driver and for mobile phone.
7 All other compensation for Mr. Ihamuotila in 2009 includes:
EUR 7 620 for car allowance, EUR 10 000 for financial counseling,
EUR 2 337 for the amount related to the end of his international
assignment in the United States under Nokia’s policy, EUR 1 238
taxable benefit for premiums paid under supplemental medical
and disability insurance and for mobile phone.
8 Salaries, benefits and perquisites for Ms. McDowell and Mr.
Simonson are paid and denominated in USD. Amounts were
converted to euro using year-end 2009 USD/EUR exchange rate of
1.43. For year 2008 disclosure, amounts were converted to euro
using the year-end 2008 USD/EUR exchange rate of 1.40. For year
2007 disclosure, amounts were converted to euro using year-end
2007 USD/EUR exchange rate of 1.47.
9 All other compensation for Mr. Simonson in 2009 includes: EUR
96 498 company contributions to the Restoration & Deferral plan,
EUR 11 538 company contributions to the 401(k) plan, EUR 12 345
for car allowance, EUR 11 194 for financial counseling, EUR 3 391
imputed income under the Employee Stock Purchase Plan.
Change in
pension
value and
non-qualified
deferred
compensation
earnings
EUR
Non-equity
incentive
plan
compen-
sation
EUR
All other
compen-
sation
EUR
Total
EUR
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
1 358 429 4, 5
469 060
956 333
177 248 6
175 164
183 603
7 983 422
5 529 768
10 817 504
15 575 4
21 195 7
1 556 571
68 541 4
—
18 521
9 824 4
87 922
41 465
134 966 9
106 632
46 699
31 055 10
33 552
49 244
29 778 11
29 712
32 086
33 726 12
33 462
32 463
2 852 757
1 882 853
3 540 795
2 101 184
1 761 490
3 702 986
1 944 127
1 615 384
3 240 079
1 845 131
1 477 551
3 424 716
10 All other compensation for Mr. Vanjoki in 2009 includes:
EUR 19 817 for car allowance and driver benefit, EUR 10 000 for
financial counseling, EUR 1 238 as taxable benefit for premiums
paid under supplemental medical and disability insurance and
for mobile phone.
11 All other compensation for Mr. Öistämö in 2009 includes:
EUR 18 540 for car allowance, EUR 10 000 for financial counsel-
ing, EUR 1 238 as taxable benefit for premiums paid under
supplemental medical and disability insurance and for mobile
phone.
12 All other compensation for Ms. McDowell in 2009 includes:
EUR 12 345 for car allowance, EUR 10 996 for financial counsel-
ing, EUR 10 280 company contributions to the 401(k) plan and
EUR 105 as service award under Nokia’s policy.
* None of the named executive officers participated in a for-
mulated, non-discretionary, incentive plan. Annual incentive
payments are included under the “Bonus” column.
** History has been provided only for those data elements previ-
ously disclosed unless otherwise indicated.
85
Compensation of the Board of Directors and the Group Executive Board
Equity grants in 2009 1
Name and principal position
Year
Option awards
Stock awards
Number of
shares
underlying
options
Grant
date
Grant
price
(EUR)
Grant date
fair value 2
(EUR)
Performance
shares at
threshold
(number)
Performance
shares at
maximum
(number)
Restricted
shares
(number)
Grant date
fair value 3
(EUR)
Olli-Pekka Kallasvuo
President and CEO
Timo Ihamuotila
EVP and Chief Financial Officer
Richard Simonson
EVP, Mobile Phones (Chief Financial
Officer until October 31, 2009)
Anssi Vanjoki
EVP, Markets
Kai Öistämö
EVP, Devices
Mary McDowell
EVP, Chief Development Officer
2009
2009
May 8
235 000
11.18
650 661
117 500
470 000
150 000
3 332 940
May 8
Nov 6
35 000
20 000
11.18
8.76
96 908
38 927
27 500
110 000
35 000
752 856
2009
May 8
60 000
11.18
166 126
30 000
120 000
107 000
1 449 466
2009
May 8
60 000
11.18
166 126
30 000
120 000
40 000
863 212
2009
May 8
60 000
11.18
166 126
30 000
120 000
50 000
935 174
2009
May 8
55 000
11.18
152 283
27 500
110 000
38 000
800 873
1
Including all equity awards made during 2009. Awards were
made under the Nokia Stock Option Plan 2007, the Nokia Per-
formance Share Plan 2009 and the Nokia Restricted Share Plan
2009.
2 The fair value of stock options equals the estimated fair value
on the grant date, calculated using the Black-Scholes model.
The stock option exercise price was EUR 11.18 on May 8, 2009
and EUR 8.76 on November 6, 2009. NASDAQ OMX HELSINKI clos-
ing market price at grant date on May 8, 2009 was EUR 10.84 and
on November 6, 2009 was EUR 8.84.
3 The fair value of performance shares and restricted shares equals
the estimated fair value on grant date. The estimated fair value
is based on the grant date market price of the Nokia share less
the present value of dividends expected to be paid during the
vesting period. The value of performance shares is presented on
the basis of a number of shares, which is two times the number
at threshold.
For information with respect to the Nokia shares and
equity awards held by the members of the Group
Executive Board, please see “Share ownership” on
page 89.
Pension arrangements for the members of the
Group Executive Board
The members of the Group Executive Board partici-
pate in the local retirement programs applicable to
employees in the country where they reside. Execu-
tives in Finland participate in the Finnish TyEL pension
system, which provides for a retirement benefit
based on years of service and earnings according to a
prescribed statutory system. Under the Finnish TyEL
pension system, base pay, incentives and other tax-
able fringe benefits are included in the definition of
earnings, although gains realized from equity are not.
The Finnish TyEL pension scheme provides for early
retirement benefits at age 62 with a reduction in the
amount of retirement benefits. Standard retirement
benefits are available from age 63 to 68, according to
an increasing scale.
Executives in the United States participate in
Nokia’s Retirement Savings and Investment Plan.
Under this 401(k) plan, participants elect to make vol-
untary pre-tax contributions that are 100% matched
by Nokia up to 8% of eligible earnings. 25% of the em-
ployer match vests for the participants for each year
of their employment. Participants earning in excess
of the Internal Revenue Service (IRS) eligible earning
limits may participate in the Nokia Restoration and
Deferral Plan which allows employees to defer up to
50% of their salary and 100% of their bonus into this
non-qualified plan. Contributions to the Restoration
and Deferral Plan in excess of IRS deferral limits will
be matched 100% up to 8% of eligible earnings less
contributions made to the 401(k) plan.
Olli-Pekka Kallasvuo can, as part of his service
contract, retire at the age of 60 with full retirement
benefits should he be employed by Nokia at the time.
The full retirement benefit is calculated as if Mr. Kallas-
vuo had continued his service with Nokia through the
retirement age of 65.
Hallstein Moerk, following his arrangement with
a previous employer, and continuing in his current
position at Nokia, has a retirement benefit of 65%
of his pensionable salary beginning at the age of 62
and early retirement is possible at the age of 55 with
reduced benefits. Mr. Moerk will retire at the end of
September 2010 at the age of 57.
nual gross base salary. In case of termination by Nokia
for reasons other than cause, including a change
of control, Mr. Kallasvuo is entitled to a severance
payment of up to 18 months of compensation (both
annual total gross base salary and target incentive). In
case of termination by Mr. Kallasvuo, the notice period
is six months and he is entitled to a payment for such
notice period (both annual total gross base salary
and target incentive for six months). Mr. Kallasvuo is
subject to a 12-month non-competition obligation
after termination of the contract. Unless the contract
is terminated for cause, Mr. Kallasvuo may be entitled
to compensation during the non-competition period
or a part of it. Such compensation amounts to the
annual total gross base salary and target incentive
for the respective period during which no severance
payment is paid.
Equity-based compensation programs
Service contracts
Olli-Pekka Kallasvuo’s service contract covers his
current position as President and CEO and Chairman of
the Group Executive Board. As at December 31, 2009,
Mr. Kallasvuo’s annual total gross base salary, which is
subject to an annual review by the Board of Directors
and confirmation by the independent members of the
Board, is EUR 1 176 000. His incentive targets under the
Nokia short-term cash incentive plan are 150% of an-
General
During the year ended December 31, 2009, Nokia
sponsored three global stock option plans, five global
performance share plans and four global restricted
share plans. Both executives and employees partici-
pate in these plans. Performance shares are the main
element of the company’s broad-based equity com-
pensation program to further emphasize the perfor-
mance element in employees’ long-term incentives.
86
Nokia in 2009
Compensation of the Board of Directors and the Group Executive Board
Our compensation programs promote long-term value
sustainability of the company and ensure that remu-
neration is based on performance. The rationale for
using both performance shares and stock options for
employees in higher job grades is to build an optimal
and balanced combination of longterm equity-based
incentives. The equity-based compensation programs
intend to align the potential value received by par-
ticipants directly with the performance of Nokia. We
also have granted restricted shares to a small selected
number of key employees each year.
The equity-based incentive grants are generally
conditioned upon continued employment with Nokia,
as well as the fulfillment of performance and other
conditions, as determined in the relevant plan rules.
The broad-based equity compensation program
for 2009, which was approved by the Board of Direc-
tors, followed the structure of the program in 2008.
The participant group for the 2009 equity-based
incentive program continued to be broad, with a
wide number of employees in many levels of the or-
ganization eligible to participate. As at December 31,
2009, the aggregate number of participants in all of
Nokia’s equity-based programs was approximately
13 000 compared with approximately 18 000 as at
December 31, 2008 reflecting changes in Nokia’s grant
guidelines and reduction in eligible population.
The employees of Nokia Siemens Networks
including the Chief Executive Officer of Nokia Siemens
Networks have not participated in any new Nokia
equity-based incentive plans since the formation of
Nokia Siemens Networks on April 1, 2007.
For a more detailed description of all of Nokia’s
equity-based incentive plans, see Note 23 “Share-
based payment” to Nokia’s consolidated financial
statements on page 37.
Performance shares
We have granted performance shares under the global
2005, 2006, 2007, 2008 and 2009 plans, each of which,
including its terms and conditions, has been approved
by the Board of Directors.
The performance shares represent a commitment
by Nokia Group to deliver Nokia shares to employees
at a future point in time, subject to Nokia’s fulfillment
of pre-defined performance criteria. No performance
shares will vest unless Nokia’s performance reaches
at least one of the threshold levels measured by two
independent, pre-defined performance criteria: The
Group’s average annual net sales growth for the per-
formance period of the plan and earnings per share
(“EPS”) at the end of the performance period.
The 2005 Performance Share Plan has a four-
year performance period and a two-year interim
measurement period. The 2006, 2007, 2008 and 2009
plans have a three-year performance period with no
interim measurement period. The shares vest after the
respective interim measurement period and/or the
performance period. The shares will be delivered to
the participants as soon as practicable after they vest.
The below table summarizes the relevant periods and
settlements under the plans.
to amend the above-described determination of the
exercise price.
Performance
share plan
2005
2006
2007
2008
2009
Performance
period
2005–2008
2006–2008
2007–2009
2008–2010
2009–2011
Interim
measurement
period
2005–2006
N/A
N/A
N/A
N/A
1st (interim)
settlement
2nd (final)
settlement
2007
N/A
N/A
N/A
N/A
2009
2009
2010
2011
2012
Until the Nokia shares are delivered, the par-
ticipants will not have any shareholder rights, such
as voting or dividend rights associated with the
performance shares. The performance share grants
are generally forfeited if the employment relationship
terminates with Nokia prior to vesting.
The performance share grants are approved by
the CEO at the end of the respective calendar quarter
on the basis of an authorization given by the Board
of Directors. Performance share grants to the CEO are
made upon recommendation by the Personnel Com-
mittee and approved by the Board of Directors and
confirmed by the independent members of the Board.
Performance share grants to the other Group Execu-
tive Board members and other direct reports of the
CEO are approved by the Personnel Committee.
Stock options
Nokia’s global stock option plans in effect for 2009,
including their terms and conditions, were approved
by the Annual General Meetings in the year when each
plan was launched, i.e., in 2003, 2005 and 2007.
Each stock option entitles the holder to subscribe
for one new Nokia share. The stock options are non-
transferable. All of the stock options have a vesting
schedule with a 25% vesting one year after grant
and 6.25% each quarter thereafter. The stock options
granted under the plans generally have a term of five
years.
The exercise price of the stock options are
determined at the time of grant on a quarterly basis.
The exercise prices are determined in accordance with
a pre-agreed schedule quarterly after the release of
Nokia’s periodic financial results and are based on the
trade volume weighted average price of a Nokia share
on NASDAQ OMX Helsinki during the trading days of the
first whole week of the second month of the respec-
tive calendar quarter (i.e., February, May, August or
November). Exercise prices are determined on a one-
week weighted average to mitigate any short-term
fluctuations in Nokia’s share price. The determination
of exercise price is defined in the terms and conditions
of the stock option plan, which are approved by the
shareholders at the respective Annual General Meet-
ing. The Board of Directors does not have the right
Stock option grants are approved by the CEO at
the time of stock option pricing on the basis of an
authorization given by the Board of Directors. Stock op-
tion grants to the CEO are made upon recommendation
by the Personnel Committee and a re approved by the
Board of Directors and confirmed by the independent
members of the Board. Stock option grants to the other
Group Executive Board members and to other direct re-
ports of the CEO are made by the Personnel Committee.
Restricted shares
Nokia has granted restricted shares to recruit, retain,
reward and motivate selected high potential employ-
ees, who are critical to the future success of Nokia.
It is Nokia’s philosophy that restricted shares will be
used only for key management positions and other
critical talent. The outstanding global restricted share
plans, including their terms and conditions, have been
approved by the Board of Directors.
All of Nokia’s restricted share plans have a
restriction period of three years after grant. Once the
shares vest, they are transferred and delivered to the
participants. The restricted share grants are generally
forfeited if the employment relationship terminates
with Nokia prior to vesting. Until the Nokia shares are
delivered, the participants do not have any sharehold-
er rights, such as voting or dividend rights, associated
with the restricted shares. Restricted share grants are
approved by the CEO at the end of the respective calen-
dar quarter on the basis of an authorization given by
the Board of Directors. Restricted share grants to the
CEO are made upon recommendation by the Personnel
Committee and approved by the Board of Directors and
confirmed by the independent directors of the Board.
Restricted share grants to the other Group Executive
Board members and other direct reports of the CEO are
approved by the Personnel Committee.
Other equity plans for employees
In addition to Nokia’s global equity plans described
above, Nokia has equity plans for Nokia-acquired busi-
nesses or employees in the United States and Canada
under which participants can receive Nokia ADSs or
ordinary shares. These equity plans do not result in an
increase in the share capital of Nokia.
87
Compensation of the Board of Directors and the Group Executive Board
In connection with Nokia’s July 10, 2008 acquisi-
tion of NAVTEQ, Nokia assumed NAVTEQ’s 2001 Stock
Incentive Plan (“NAVTEQ Plan”). All unvested NAVTEQ
restricted stock units under the NAVTEQ Plan were
converted to an equivalent number of restricted stock
units entitling their holders to Nokia shares. The
maximum number of Nokia shares to be delivered to
NAVTEQ employees during the years 2008–2012 is ap-
proximately 3 million of which approximately 1 million
shares have already been delivered by December 31,
2009. The Group does not intend to make further
awards under the NAVTEQ Plan.
We have also an Employee Share Purchase Plan
in the United States, which permits all full-time Nokia
employees located in the United States to acquire
Nokia ADSs at a 15% discount. The purchase of the
ADSs is funded through monthly payroll deductions
from the salary of the participants, and the ADSs are
purchased on a monthly basis. As of December 31,
2009, approximately 12.3 million ADSs had been
purchased under this plan since its inception, and
there were a total of approximately 760 participants
in the plan.
For more information on these plans, see Note
23 “Share-based payment” to Nokia’s consolidated
financial statements on page 37.
Equity-based compensation program 2010
The Board of Directors announced the proposed scope
and design for the Equity Program 2010 on January
28, 2010. The main equity instrument continues to be
performance shares. In addition, stock options will
be used on a limited basis for senior managers, and
restricted shares will be used for a small number of
high potential and critical employees. These equity-
based incentive awards are generally forfeited if the
employee leaves Nokia prior to vesting.
Performance shares
The Performance Share Plan 2010 approved by the
Board of Directors will cover a performance period of
three years (2010–2012). No performance shares will
vest unless Nokia’s performance reaches at least one
of the threshold levels measured by two independent,
pre-defined performance criteria:
1
2
Average Annual Net Sales Growth: 0% (threshold)
and 13.5% (maximum) during the performance
period 2010–2012, and
EPS (diluted, non-IFRS): EUR 0.82 (threshold) and
EUR 1.44 (maximum) at the end of the perfor-
mance period in 2012.
Average Annual Net Sales Growth is calculated
as an average of the net sales growth rates for the
years 2010 through 2012. EPS is the diluted, non-IFRS
earnings per share in 2012. Both the EPS and Average
Annual Net Sales Growth criteria are equally weighted
and performance under each of the two performance
criteria is calculated independent of each other.
Achievement of the maximum performance for
both criteria would result in the vesting of a maximum
of 17 million Nokia shares. Performance exceeding the
maximum criteria does not increase the number of
88
Nokia in 2009
performance shares that will vest. Achievement of the
threshold performance for both criteria will result in
the vesting of approximately 4.25 million shares. If only
one of the threshold levels of performance is achieved,
only approximately 2.13 million of the performance
shares will vest. If none of the threshold levels is
achieved, then none of the performance shares will
vest. For performance between the threshold and max-
imum performance levels, the vesting follows a linear
scale. If the required performance levels are achieved,
the vesting will occur December 31, 2012. Until the
Nokia shares are delivered, the participants will not
have any shareholder rights, such as voting or dividend
rights associated with these performance shares.
Stock options
The stock options to be granted in 2010 are out of the
Stock Option Plan 2007 approved by the Annual Gen-
eral Meeting in 2007. For more information on Stock
Option Plan 2007 see “Equity-based compensation
programs” on page 86.
Restricted shares
The restricted shares to be granted under the Restrict-
ed Share Plan 2010 will have a three-year restriction
period (2010–2012). The restricted shares will vest
and the payable Nokia shares be delivered in 2013 and
early 2014, subject to fulfillment of the service period
criteria. Participants will not have any shareholder
rights or voting rights during the restriction period,
until the Nokia shares are transferred and delivered to
plan participants at the end of the restriction period.
Maximum planned grants in 2010
The maximum number of planned grants under the
Nokia Equity Program 2010 (i.e., performance shares,
stock options and restricted shares) in 2010 are set
forth in the table below.
Maximum number
of planned grants
under the
equity program in 2010
Plan type
Stock options
Restricted shares
Performance shares at threshold 1
8 million
6 million
4.25 million
1 The maximum number of Nokia shares to be delivered at maxi-
mum performance is four times the number at threshold, i.e.,
a total of 17 million Nokia shares.
As at December 31, 2009, the total dilutive effect
of Nokia’s stock options, performance shares and
restricted shares outstanding, assuming full dilution,
was approximately 1.6% in the aggregate. The poten-
tial maximum effect of the proposed equity program
2010 would be approximately another 0.8%.
Recoupment of certain equity gains
The Board of Directors has approved a policy allowing
for the recoupment of equity gains realized by Group
Executive Board members under Nokia equity plans
in case of a financial restatement caused by an act
of fraud or intentional misconduct. This policy will
apply to equity grants made to Group Executive Board
members after January 1, 2010.
Share ownership
General
The following section describes the ownership or
potential ownership interest in the company of the
members of Nokia’s Board of Directors and the Group
Executive Board, either through share ownership or
through holding of equity-based incentives, which
may lead to share ownership in the future.
In line with Nokia’s policy, approximately 40% of
the remuneration paid to the members of the Board
of Directors has been paid in Nokia’s shares purchased
from the market. It is Nokia’s policy that the directors
retain all company stock received as director com-
pensation until the end of their board membership,
subject to the need to finance any costs including
taxes relating to the acquisition of the shares. Non-
executive members of the Board of Directors do not
receive stock options, performance shares, restricted
shares or other variable compensation.
For a description of Nokia’s equity-based com-
pensation programs for employees and executives,
see “Equity-based compensation programs” on
page 86.
Share ownership of the Board of Directors
At December 31, 2009, the members of Nokia’s Board
of Directors held the aggregate of 1 626 314 shares
and ADSs in Nokia (not including stock options or
other equity awards that are deemed as being
beneficially owned under applicable SEC rules), which
represented 0.04% of Nokia’s outstanding shares and
total voting rights excluding shares held by Nokia
Group at that date.
The following table sets forth the number of
shares and ADSs held by members of the Board of
Directors as at December 31, 2009.
Shares 1
ADSs 1
Jorma Ollila 2
Marjorie Scardino
Georg Ehrnrooth 3
Lalita D. Gupte
Bengt Holmström
Henning Kagermann
Olli-Pekka-Kallasvuo 4
Per Karlsson 3
Isabel Marey-Semper
Risto Siilasmaa
Keijo Suila
740 970
—
327 531
—
27 118
10 512
383 555
32 073
5 273
48 295
13 515
—
26 150
—
11 322
—
—
—
—
—
—
—
1 The number of shares or ADSs includes not only shares or ADSs
received as director compensation, but also shares or ADSs
acquired by any other means.
Compensation of the Board of Directors and the Group Executive Board
2 For Mr. Ollila, this table includes his share ownership only. Mr. Ol-
lila was entitled to retain all vested and unvested stock options,
performance shares and restricted shares granted to him in
respect of his services as the CEO of Nokia prior to June 1, 2006 as
approved by the Board of Directors. Therefore, in addition to the
above-presented share ownership, Mr. Ollila held, as at December
31, 2009, a total of 1 200 000 stock options. The information
relating to stock options held by Mr. Ollila as at December 31,
2009 is presented in the table below.
Number of stock options
Total intrinsic value
of stock options,
December 31, 2009
EUR
Stock option
category
Expiration
date
Jorma Ollila
2004 2Q
2005 2Q
2006 2Q
December 31, 2009
December 31, 2010
December 31, 2011
Exercise
price per
share EUR
11.79
12.79
18.02
Exercisable Unexercisable
Exercisable Unexercisable
400 000
400 000
325 000
—
—
75 000
0
0
0
0
0
0
The number of stock options in the above table equals the
number of underlying shares represented by the option entitle-
ment. Stock options vest over four years: 25% after one year and
6.25% each quarter thereafter. The intrinsic value of the stock
options in the above table is based on the difference between
the exercise price of the options and the closing market price of
Nokia shares on NASDAQ OMX Helsinki as at December 30, 2009 of
EUR 8.92.
3 Mr. Ehrnrooth’s and Mr. Karlsson’s holdings include both shares
held personally and shares held through a company.
4 For Mr. Kallasvuo, this table includes his share ownership only.
Mr. Kallasvuo’s holdings of long-term equity-based incentives
are outlined in “Stock option ownership of the Group Executive
Board” on page 90 and “Performance shares and restricted
shares” on page 92.
Share ownership of the Group Executive Board
The following table sets forth the share ownership, as
well as potential ownership interest through holding
of equity-based incentives, of the members of the
Group Executive Board as at December 31, 2009.
Shares
receivable
through stock
options
Shares
Shares
receivable
through
performance
shares at
threshold 3
Shares
receivable
through
performance
shares at
maximum 4
Shares
receivable
through
restricted
shares
Number of equity instruments held by Group Executive Board
1 179 209
3 032 410
521 000
2 084 000
1 151 000
% of the shares 1
% of the total outstanding equity incentives (per instrument) 2
0.0318
—
0.0818
13.326
0.0140
10.228
0.0562
10.228
0.0310
12.269
1 The percentage is calculated in relation to the outstanding num-
ber of shares and total voting rights of the company, excluding
shares held by Nokia Group.
2 The percentage is calculated in relation to the total outstanding
equity incentives per instrument, i.e., stock options, performance
shares and restricted shares, as applicable, under the global
equity plans.
3 No Nokia shares were delivered under Nokia Performance Share
Plan 2007 as Nokia’s performance did not reach the threshold
level of either performance criterion. Therefore the shares
deliverable at threshold equals zero for the performance share
plan 2007.
4 No Nokia shares were delivered under Nokia Performance Share
Plan 2007 as Nokia’s performance did not reach the threshold
level of either performance criterion. Therefore the shares deliv-
erable at maximum equals zero for Nokia Performance Share Plan
2007. At maximum performance under the performance share
plan 2008 and 2009, the number of shares deliverable equals four
times the number of performance shares at threshold.
The following table sets forth the number of shares
and ADSs in Nokia (not including stock options or
other equity awards that are deemed as being
beneficially owned under the applicable SEC rules)
held by members of the Group Executive Board as at
December 31, 2009.
Mr. Andersson left the Group Executive Board as of
September 30, 2009 to head Nokia Corporate Alliances
and Business Development. He held 69 855 shares on
September 30, 2009. Mr. Beresford-Wylie left the Group
Executive Board as of September 30, 2009 and ceased
employment with Nokia Siemens Networks on Novem-
ber 1, 2009. He held 87 547 shares on September 30,
2009.
Olli-Pekka Kallasvuo
Esko Aho
Timo Ihamuotila
Mary McDowell
Hallstein Moerk
Tero Ojanperä
Niklas Savander
Richard Simonson
Alberto Torres
Anssi Vanjoki
Kai Öistämö
Shares
383 555
—
47 159
127 906
64 526
55 826
71 165
158 841
41 410
125 514
67 750
ADSs
—
—
—
5 000
—
—
—
30 557
—
—
—
89
Compensation of the Board of Directors and the Group Executive Board
Stock option ownership
of the Group Executive Board
The following table provides certain information re-
lating to stock options held by members of the Group
Executive Board as at December 31, 2009. These stock
options were issued pursuant to Nokia Stock Option
Plans 2003, 2005 and 2007. For a description of Nokia’s
stock option plans, see Note 23 “Share-based pay-
ment” to Nokia’s consolidated financial statements
on page 37.
Stock option
category
Expiration
date
2004 2Q
2005 2Q
2005 4Q
2006 2Q
2007 2Q
2008 2Q
2009 2Q
2009 2Q
2004 2Q
2005 2Q
2006 2Q
2007 2Q
2008 2Q
2009 2Q
2009 4Q
2004 2Q
2005 2Q
2006 2Q
2007 2Q
2008 2Q
2009 2Q
2004 2Q
2005 2Q
2006 2Q
2007 2Q
2008 2Q
2009 2Q
2004 2Q
2005 2Q
2006 2Q
2007 2Q
2008 2Q
2009 2Q
Olli-Pekka Kallasvuo
Esko Aho
Timo Ihamuotila
Mary McDowell
Hallstein Moerk
Tero Ojanperä
90
Nokia in 2009
Number of stock options 1
Total intrinsic value
of stock options,
December 31, 2009
EUR 2
Exercisable
Unexercisable
Exercisable 3 Unexercisable
—
60 000
93 750
243 750
90 000
35 937
—
—
—
6 300
7 200
18 000
6 250
—
—
—
60 000
81 250
30 935
8 750
—
—
17 500
48 750
18 000
6 250
—
—
40 000
48 750
18 000
6 250
—
—
—
6 250
56 250
70 000
79 063
235 000
35 000
—
—
2 700
14 000
13 750
35 000
20 000
—
—
18 750
24 065
19 250
55 000
—
—
11 250
14 000
13 750
35 000
—
—
11 250
14 000
13 750
35 000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3 200
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Exercise
price per
share EUR
11.79
12.79
14.48
18.02
18.39
19.16
11.18
December 31, 2009
December 31, 2010
December 31, 2010
December 31, 2011
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2014
11.18
December 31, 2009
December 31, 2010
December 31, 2011
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2014
December 31, 2009
December 31, 2010
December 31, 2011
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2009
December 31, 2010
December 31, 2011
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2009
December 31, 2010
December 31, 2011
December 31, 2012
December 31, 2013
December 31, 2014
11.79
12.79
18.02
18.39
19.16
11.18
8.76
11.79
12.79
18.02
18.39
19.16
11.18
11.79
12.79
18.02
18.39
19.16
11.18
11.79
12.79
18.02
18.39
19.16
11.18
Compensation of the Board of Directors and the Group Executive Board
Stock option ownership of the Group Executive Board, continued
Number of stock options 1
Total intrinsic value
of stock options,
December 31, 2009
EUR 2
Stock option
category
Expiration
date
Exercise
price per
share EUR
Exercisable
Unexercisable
Exercisable 3 Unexercisable
Niklas Savander
Richard Simonson
Alberto Torres
Anssi Vanjoki
Kai Öistämö
2004 2Q
2005 2Q
2006 2Q
2007 2Q
2008 2Q
2009 2Q
2004 2Q
2005 2Q
2006 2Q
2007 2Q
2008 2Q
2009 2Q
2004 2Q
2005 2Q
2006 2Q
2007 2Q
2008 2Q
2009 2Q
2004 2Q
2005 2Q
2006 2Q
2007 2Q
2008 2Q
2009 2Q
2004 2Q
2005 2Q
2005 4Q
2006 2Q
2007 2Q
2008 2Q
2009 2Q
December 31, 2009
December 31, 2010
December 31, 2011
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2009
December 31, 2010
December 31, 2011
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2009
December 31, 2010
December 31, 2011
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2009
December 31, 2010
December 31, 2011
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2009
December 31, 2010
December 31, 2010
December 31, 2011
December 31, 2012
December 31, 2013
December 31, 2014
11.79
12.79
18.02
18.39
19.16
11.18
11.79
12.79
18.02
18.39
19.16
11.18
11.79
12.79
18.02
18.39
19.16
11.18
11.79
12.79
18.02
18.39
19.16
11.18
11.79
12.79
14.48
18.02
18.39
19.16
11.18
Stock options held by the members of the
Group Executive Board
Total 4
All outstanding stock option
plans (global plans), Total
1 Number of stock options equals the number of underlying shares
represented by the option entitlement. Stock options vest over
four years: 25% after one year and 6.25% each quarter thereaf-
ter.
2 The intrinsic value of the stock options is based on the difference
between the exercise price of the options and the closing market
price of Nokia shares on NASDAQ OMX Helsinki as at December 30,
2009 of EUR 8.92.
—
7 000
33 750
18 000
8 750
—
—
60 000
81 250
30 935
10 000
—
—
10 000
5 850
10 125
3 125
—
—
26 250
50 000
30 935
10 000
—
—
7 200
17 500
81 250
30 935
10 000
—
—
—
11 250
14 000
19 250
55 000
—
—
18 750
24 065
22 000
60 000
—
—
1 350
7 875
6 875
20 000
—
—
18 750
24 065
22 000
60 000
—
—
1 750
18 750
24 065
22 000
60 000
1 688 537
1 343 873
12 844 453
9 911 056
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3 200
6 099
3 For gains realized upon exercise of stock options for the mem-
4 Mr. Andersson left the Group Executive Board as of Septem-
bers of the Group Executive Board, see the table in “Stock Option
Exercises and Settlement of Shares” on page 94.
ber 30, 2009 to head Nokia Corporate Alliances and Business
Development. Mr. Beresford-Wylie left the Group Executive
Board as of September 30, 2009 and ceased employment with
Nokia Siemens Networks on November 1, 2009. From April 1,
2007, Mr. Beresford-Wylie has participated in a long-term cash
incentive plan sponsored by Nokia Siemens Networks instead
of the long-term equity-based plans of Nokia. The information
related to stock options held and retained by Mr. Andersson and
Mr. Beresford-Wylie as of the date of resignation from the Group
Executive Board is presented in the table below.
91
Compensation of the Board of Directors and the Group Executive Board
Number of stock options 1
Total intrinsic value
of stock options,
EUR 7
Robert Andersson 5
(as per September 30, 2009)
Simon Beresford-Wylie 6
(as per September 30, 2009)
Stock option
category
Expiration
date
Exercise
price per
share EUR
Exercisable
Unexercisable
Exercisable 3 Unexercisable
2004 2Q
2005 2Q
2005 4Q
2006 2Q
2007 2Q
2008 2Q
2009 2Q
2004 2Q
2005 2Q
2006 2Q
December 31, 2009
December 31, 2010
December 31, 2010
December 31, 2011
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2009
December 31, 2010
December 31, 2011
11.79
12.79
14.48
18.02
18.39
19.16
11.18
11.79
12.79
18.02
—
12 000
24 500
35 000
16 000
5 000
—
—
54 000
75 000
—
—
3 500
20 000
16 000
15 000
5 000
—
—
6 250
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5 Mr. Andersson remained with Nokia and thus is entitled to retain
all vested and unvested stock options granted to him prior to
leaving the Group Executive Board as of September 30, 2009.
6 Mr. Beresford-Wylie’s stock option grants were forfeited upon
termination of employment in accordance with the plan rules.
7 The intrinsic value of the stock options is based on the difference
between the exercise price of the options and the closing market
price of Nokia shares on NASDAQ OMX Helsinki as at September
30, 2009 of EUR 10.05.
Performance shares and restricted shares
The following table provides certain information
relating to performance shares and restricted shares
held by members of the Group Executive Board as at
December 31, 2009. These entitlements were granted
pursuant to Nokia’s Performance Share Plans 2007,
2008 and 2009 and Restricted Share Plans 2007, 2008
and 2009. For a description of Nokia’s performance
share and restricted share plans, please see Note 23
“Share-based payment” to the consolidated financial
statements on page 37.
Performance shares
Restricted shares
Plan
name 1
Number of
performance
shares at
threshold 2
Number of
performance
shares at
maximum 3, 4
2007
2008
2009
2008
2009
2007
2008
2009
2007
2008
2009
2007
2008
2009
2007
2008
2009
2007
2008
2009
Olli-Pekka Kallasvuo
Esko Aho
Timo Ihamuotila
Mary McDowell
Hallstein Moerk
Tero Ojanperä
Niklas Savander
92
Nokia in 2009
—
57 500
117 500
—
17 500
—
10 000
27 500
—
14 000
27 500
—
10 000
17 500
—
10 000
17 500
—
14 000
27 500
—
230 000
470 000
—
70 000
—
40 000
110 000
—
56 000
110 000
—
40 000
70 000
—
40 000
70 000
—
56 000
110 000
Intrinsic
value 4
December 31,
2009
EUR
—
—
2 096 200
—
312 200
—
—
490 600
—
—
490 600
—
—
312 200
—
—
312 200
—
—
490 600
Intrinsic
value 6
December 31,
2009
EUR
892 000
669 000
1 338 000
Number of
restricted
shares
100 000
75 000
150 000
7 000
25 000
25 000
14 000
35 000
35 000
20 000
38 000
25 000
14 000
25 000
25 000
14 000
25 000
25 000
20 000
38 000
62 440
223 000
223 000
124 880
312 200
312 200
178 400
338 960
223 000
124 880
223 000
223 000
124 880
223 000
223 000
178 400
338 960
Plan
name 5
2007
2008
2009
2008
2009
2007
2008
2009
2007
2008
2009
2007
2008
2009
2007
2008
2009
2007
2008
2009
Compensation of the Board of Directors and the Group Executive Board
Performance shares
Restricted shares
Number of
performance
shares at
threshold 2
Number of
performance
shares at
maximum 3,4
Intrinsic
value 4
December 31,
2009
EUR
—
16 000
30 000
—
5 000
10 000
—
16 000
30 000
—
16 000
30 000
—
64 000
120 000
—
20 000
40 000
—
64 000
120 000
—
64 000
120 000
—
—
535 200
—
—
178 400
—
—
535 200
—
—
535 200
Intrinsic
value 6
December 31,
2009
EUR
312 200
196 240
954 440
115 960
89 200
223 000
312 200
196 240
356 800
312 200
196 240
446 000
Number of
restricted
shares
35 000
22 000
107 000
13 000
10 000
25 000
35 000
22 000
40 000
35 000
22 000
50 000
Plan
name 5
2007
2008
2009
2007
2008
2009
2007
2008
2009
2007
2008
2009
521 000
2 084 000
6 288 600
1 151 000
10 266 920
5 093 960 11
20 375 720 12
52 040 089
9 381 002
83 678 538
4 For Performance Share Plans 2008 and 2009 the value of per-
6 The intrinsic value is based on the closing market price of a
formance shares is presented on the basis of Nokia’s estimation
of the number of shares expected to vest. The intrinsic value for
the Performance Share Plan 2009 is based on the closing market
price of a Nokia share on NASDAQ OMX Helsinki as at December
30, 2009 of EUR 8.92. For the Performance Share Plan 2007 no
Nokia shares were delivered as Nokia’s performance did not
reach the threshold level of either performance criterion.
5 Under the Restricted Share Plans 2007, 2008 and 2009, awards
have been granted quarterly. For the major part of the awards
made under these plans, the restriction period will end for the
2007 plan, on January 1, 2011; and for the 2008 plan, on Janu-
ary 1, 2012 and for the 2009 plan, on January 1, 2013.
Nokia share on NASDAQ OMX Helsinki as at December 30, 2009 of
EUR 8.92.
7 Mr. Andersson, left the Group Executive Board as of September
30, 2009 to head Nokia Corporate Alliances and Business
Development. Mr. Beresford-Wylie left the Group Executive Board
as of September 30, 2009 and ceased employment with Nokia
Siemens Networks on November 1, 2009. From April 1, 2007, Mr.
Beresford-Wylie has participated in a long-term cash incentive
plan sponsored by Nokia Siemens Networks instead of the long-
term equity-based plans of Nokia. The information related to
performance shares and restricted shares held by Mr. Andersson
and Mr. Beresford-Wylie as of the date of resignation from the
Group Executive Board is presented in the table below.
Plan
name 1
2007
2008
2009
2007
2008
2009
2007
2008
2009
2007
2008
2009
Richard Simonson
Alberto Torres
Anssi Vanjoki
Kai Öistämö
Performance shares and
restricted shares held by
the Group Executive Board,
Total 7
All outstanding
performance shares and
restricted shares
(global plans), Total
1 The performance period for the 2007 plan is 2007-2009, 2008
plan 2008-2010 and 2009 plan 2009-2011, respectively.
2 The threshold number will vest as Nokia shares should the
pre-determined threshold performance levels be met. No Nokia
shares were delivered under the Performance Share Plan 2007
as Nokia’s performance did not reach the threshold level of
either performance criterion. Therefore the shares deliverable at
threshold equals zero for the Performance Share Plan 2007.
3 The maximum number will vest as Nokia shares should the pre-
determined maximum performance levels be met. The maximum
number of performance shares equals four times the number
at threshold. No Nokia shares were delivered under the Perfor-
mance Share Plan 2007 as Nokia’s performance did not reach the
threshold level of either performance criterion. Therefore the
shares deliverable at maximum equals zero for the Performance
Share Plan 2007.
Robert Andersson 8
(as per September 30, 2009) 2007
2008
2009
Simon Beresford-Wylie 9
(as per September 30, 2009) —
8 Mr. Andersson remained with Nokia and thus is entitled to retain
performance shares and restricted shares granted to him prior to
leaving the Group executive Board as of September 30, 2009.
9 Mr. Beresford-Wylie’s performance and restricted shares grants
were forfeited upon termination of employment in accordance
with the plan rules.
10 The intrinsic value is based on the closing market price of a
Nokia share on NASDAQ OMX Helsinki as at September 30, 2009 of
EUR 10.05.
Performance shares
Number of
performance
shares at
threshold 2
Number of
performance
shares at
maximum 3,4
Plan
name 1
Intrinsic
value 10
EUR
—
—
50 250
—
10 000
2 500
—
40 000
10 000
—
—
—
Restricted shares
Number of
restricted
shares
Intrinsic
value 10
EUR
20 000
25 000
7 000
201 000
251 250
70 350
25 000
251 250
Plan
name 5
2006
2007
2008
2006
11 The threshold number will vest as Nokia shares should the
12 The maximum number will vest as Nokia shares should the pre-
predetermined threshold performance levels be met. No Nokia
shares were delivered under the Performance Share Plan 2007 as
Nokia’s performance did not reach the threshold level of either
performance criterion. Therefore the aggregate number does not
include any shares for Performance Share Plan 2007.
determined maximum performance levels be met. The maximum
number of performance shares equals four times the number
at threshold. No Nokia shares were delivered under the Perfor-
mance Share Plan 2007 as Nokia’s performance did not reach the
threshold level of either performance criterion. Therefore the
aggregate number does not include any shares for Performance
Share Plan 2007.
93
Compensation of the Board of Directors and the Group Executive Board
Stock option exercises and settlement
of shares
The following table provides certain information
relating to stock option exercises and share deliveries
upon settlement during the year 2009 for Nokia’s
Group Executive Board members.
Name 5
Olli-Pekka Kallasvuo
Esko Aho
Timo Ihamuotila
Mary McDowell
Hallstein Moerk
Tero Ojanperä
Niklas Savander
Richard Simonson
Alberto Torres
Anssi Vanjoki
Kai Öistämö
Stock option
awards 1
Number
of shares
acquired
on exercise
Value
realized
on exercise
(EUR)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Performance shares
awards 2
Number
of shares
delivered
on vesting
Value
realized
on vesting
(EUR)
Restricted shares
awards 3
Number
of shares
delivered
on vesting
Value
realized
on vesting
(EUR)
180 300
1 491 450
135 000 4
1 159 000 4
0
14 760
81 300
50 900
50 900
37 121
81 300
8 865
81 300
56 284
0
137 835
727 170
459 304
459 304
309 802
727 170
85 030
727 170
455 746
0
0
4 500
40 005
25 000
222 250
15 000
133 350
15 000
133 350
15 000
133 350
25 000
222 250
4 800
42 672
25 000
222 250
25 000
222 250
1 Value realized on exercise is based on the difference between the
Nokia share price and exercise price of options (non-transferable
stock options).
2 Represents the final payout in gross shares for the 2005 and 2006
performance share grants. Value for the 2005 performance share
grant is based on the market price of the Nokia share on NASDAQ
OMX Helsinki as at May 27, 2009 of EUR 10.85. Value for the 2006
performance share grant is based on the closing market price of
the Nokia share on NASDAQ OMX Helsinki as at February 26, 2009
of EUR 7.72.
3 Delivery of Nokia shares vested from the 2006 restricted share
grant to all members of the Group Executive Board. Value is
based on the closing market price of the Nokia share on NASDAQ
OMX Helsinki on October 21, 2009 of EUR 8.89
4 Represents the final payout in gross shares for the 2005 and
2006 restricted share grants. Value for the 2005 restricted share
grant is based on the closing market price of the Nokia share on
NASDAQ OMX Helsinki on February 26, 2009 of EUR 7.72. Value for
the 2006 restricted share grant is based on the closing market
price of the Nokia share on NASDAQ OMX Helsinki on October 21,
2009 of EUR 8.89.
5 Mr. Andersson, left the Group Executive Board as of September
30, 2009 to head Nokia Corporate Alliances and Business Devel-
opment. Mr. Beresford-Wylie left the Group Executive Board as of
September 30, 2009 and ceased employment with Nokia Siemens
Networks on November 1, 2009. The information regarding stock
option settlement exercises and settlement of shares regarding
Mr. Andersson and Mr. Beresford-Wylie as of the date of resigna-
tion from the Group Executive Board is presented in the table
below.
Name
Year
Robert Andersson
(as per September 30, 2009) 2009
Simon Beresford-Wylie
(as per September 30, 2009) 2009
Stock option
awards 1
Number
of shares
acquired
on exercise
Value
realized
on exercise
(EUR)
Performance shares
awards 2
Number
of shares
delivered
on vesting
Value
realized
on vesting
(EUR)
Restricted shares
awards 3
Number
of shares
delivered
on vesting
Value
realized
on vesting
(EUR)
0
0
0.00
0.00
45 960
374 718
81 300
727 170
0
0
0.00
0.00
94
Nokia in 2009
Stock ownership guidelines
for executive management
One of the goals of our long-term equity-based
incentive program is to focus executives on promoting
the long-term sustainability of the company and on
building value for shareholders on a long-term basis.
In addition to granting stock options, performance
shares and restricted shares, we also encourage
stock ownership by our top executives and have stock
ownership commitment guidelines with minimum
recommendations tied to annual base salaries. For
the President and CEO, the recommended minimum
investment in Nokia shares corresponds to three times
his annual base salary and for members of the Group
Executive Board two times the member’s annual base
salary, respectively. To meet this requirement, all
members of the Group Executive Board are expected
to retain 50% of any after-tax gains from equity pro-
grams in shares until the minimum investment level is
met. The Personnel Committee regularly monitors the
compliance by the executives with the stock owner-
ship guidelines.
Insider trading in securities
The Board of Directors has established and regularly
updates a policy in respect of insiders’ trading in
Nokia securities. The members of the Board and the
Group Executive Board are considered as primary
insiders. Under the policy, the holdings of Nokia secu-
rities by the primary insiders are public information,
which is available from Euroclear Finland Ltd and on
Nokia’s website. Both primary insiders and second-
ary insiders (as defined in the policy) are subject to a
number of trading restrictions and rules, including,
among other things, prohibitions on trading in Nokia
securities during the three-week “closed-window”
period immediately preceding the release of Nokia’s
quarterly results and the four-week “closed-window”
period immediately preceding the release of Nokia’s
annual results. In addition, Nokia may set trading
restrictions based on participation in projects. Nokia
updates its insider trading policy from time to time
and closely monitors compliance with the policy on a
regular basis. Nokia’s insider policy is in line with the
NASDAQ OMX Helsinki Guidelines for Insiders and also
sets requirements beyond those guidelines.
Compensation of the Board of Directors and the Group Executive Board
95
EURm
Audit fees 1
Audit-related fees 2
Tax fees 3
All other fees 4
Total
Nokia
6.2
1.2
3.6
0.3
11.3
2009
Nokia
Siemens
Networks
9.8
1.6
2.0
—
13.4
2008
Nokia
Siemens
Networks
13.1
5.0
3.0
—
21.1
Total
19.5
7.4
6.8
0.7
34.4
Total
Nokia
16.0
2.8
5.6
0.3
24.7
6.4
2.4
3.8
0.7
13.3
1 Audit Fees consist of fees billed for the annual audit of the
company’s consolidated financial statements and the statutory
financial statements of the company’s subsidiaries. They also in-
clude fees billed for other audit services, which are those services
that only the independent auditor reasonably can provide, and
include the provision of comfort letters and consents in con-
nection with statutory and regulatory filings and the review of
documents filed with the SEC and other capital markets or local
financial reporting regulatory bodies.
2 Audit-Related Fees consist of fees billed for assurance and
related services that are reasonably related to the performance
of the audit or review of the company’s financial statements or
that are traditionally performed by the independent auditor,
and include consultations concerning financial accounting and
reporting standards; SAS 70 audit of internal controls; advice on
tax accounting matters; advice and assistance in connection with
local statutory accounting requirements; due diligence related
to acquisitions; financial due diligence in connection with provi-
sion of funding to customers, reports in relation to covenants
in loan agreements; employee benefit plan audits and reviews;
and audit procedures in connection with investigations and the
compliance program implemented at Nokia Siemens Networks
related to the Siemens’ carrier-related operations transferred
to Nokia Siemens Networks. The amounts paid by Nokia to
PricewaterhouseCoopers in 2008 include EUR 2.5 million Nokia
has recovered or will be able to recover from a third party.
3 Tax fees include fees billed for (i) corporate and indirect
compliance including preparation and/or review of tax returns,
preparation, review and/or filing of various certificates and
forms and consultation regarding tax returns and assistance
with revenue authority queries; (ii) transfer pricing advice and
assistance with tax clearances; (iii) customs duties reviews
and advise; (iv) consultations and tax audits (assistance with
technical tax queries and tax audits and appeals and advise on
mergers, acquisitions and restructurings); (v) personal compli-
ance (preparation of individual tax returns and registrations
for employees (non-executives), assistance with applying visa,
residency, work permits and tax status for expatriates); and (vi)
consultation and planning (advice on stock based remuneration,
local employer tax laws, social security laws, employment laws
and compensation programs, tax implications on short-term
international transfers).
4 All Other Fees include fees billed for company establishment,
forensic accounting, data security, investigations and reviews of
licensing arrangements with customers and occasional training
or reference materials and services.
Audit committee pre-approval policies
and procedures
The Audit Committee of our Board of Directors is
responsible, among other matters, for the oversight
of the external auditor subject to the requirements of
Finnish law. The Audit Committee has adopted a policy
regarding pre-approval of audit and permissible non-
audit services provided by our independent auditors
(the “Policy”).
Under the Policy, proposed services either
(i) may be pre-approved by the Audit Committee
without a specific case-by-case services approvals
(“general pre-approval”); or (ii) require the specific
pre-approval of the Audit Committee (“specific pre-
approval”). The Audit Committee may delegate either
type of pre-approval authority to one or more of
its members. The appendices to the Policy set out
the audit, audit-related, tax and other services that
have received the general pre-approval of the Audit
Committee. All other audit, audit-related (including
services related to internal controls and significant
M&A projects), tax and other services are subject to a
specific pre-approval from the Audit Committee. All
service requests concerning generally pre-approved
services will be submitted to the Corporate Controller
who will determine whether the services are within
the services generally pre-approved. The Policy and its
appendices are subject to annual review by the Audit
Committee.
The Audit Committee establishes budgeted fee
levels annually for each of the four categories of audit
and non-audit services that are pre-approved under
the Policy, namely, audit, audit-related, tax and other
services. Requests or applications to provide services
that require specific approval by the Audit Committee
are submitted to the Audit Committee by both the
independent auditor and the Corporate Controller.
At each regular meeting of the Audit Committee, the
independent auditor provides a report in order for
the Audit Committee to review the services that the
auditor is providing, as well as the status and cost of
those services.
Auditor fees and services
Auditor fees and services
PricewaterhouseCoopers Oy has served as our
independent auditor for each of the fiscal years in the
three-year period ended December 31, 2009. The inde-
pendent auditor is elected annually by our sharehold-
ers at the Annual General Meeting for the fiscal year in
question. The Audit Committee of the Board of Direc-
tors makes a proposal to the shareholders in respect
of the appointment of the auditor based upon its
evaluation of the qualifications and independence of
the auditor to be proposed for election or re-election
on an annual basis.
The following table sets forth the aggregate fees
for professional services and other services rendered
by PricewaterhouseCoopers to Nokia in 2009 and 2008
in total with a separate presentation of those fees
related to Nokia and Nokia Siemens Networks.
96
Nokia in 2009
Investor information
Information on the Internet
www.nokia.com/investors
Investor relations contacts
investor.relations@nokia.com
Available on the Internet: financial reports, Nokia
management’s presentations, conference call and
other investor related materials, press releases as
well as environmental and social information.
Nokia Investor Relations
102 Corporate Park Drive
White Plains, NY 10604
USA
Tel. +1 914 368 0555
Fax +1 914 368 0600
Nokia Investor Relations
P.O. Box 226
FI-00045 NOKIA GROUP
Finland
Tel. +358 7180 34927
Fax +358 7180 38329
Annual General Meeting
Date: Thursday, May 6, 2010 at 3.00 pm
Address: Helsinki Fair Centre, Amfi-hall, Messuaukio 1,
Helsinki, Finland
Dividend
Dividend proposed by the Board of Directors for the
fiscal year 2009 is EUR 0.40.
The dividend record date is proposed to be May 11,
2010 and the pay date on or about May 25, 2010.
Financial reporting
Nokia’s quarterly reports in 2010 are planned for
April 22, July 22, and October 21. The 2010 results are
planned to be published in January 2011.
Information published in 2009
All Nokia’s press releases published in 2009 are
available on the Internet at investors.nokia.com.
Stock exchanges
The shares of Nokia Corporation are quoted on the following stock exchanges:
Symbol
Trading currency
NASDAQ OMX Helsinki (quoted since 1915)
NOK1V
Frankfurter Wertpapierbörse (1988)
New York Stock Exchange (1994)
NOA3
NOK
EUR
EUR
USD
List of indices
NOK1V
OMXN40 OMX Nordic 40
OMXH OMX Helsinki
OMXH25 OMX Helsinki 25
NOK
NYA NYSE Composite
NYL.ID NYSE World Leaders
NYYID NYSE TMT
HX45 OMX Helsinki Information Technology
CTN CSFB Technology
BE500 Bloomberg European 500
MLO Merrill Lynch 10
BETECH Bloomberg
Telecommunication Equipment
SX5E DJ Euro STOXX 50
SX5P DJ STOXX 50
E3X FTSE Eurofirst 300
It should be noted that certain statements herein which are not
historical facts are forward-looking statements, including, without
limitation, those regarding: A) the timing of the deliveries of our
products and services and their combinations; B) our ability to de-
velop, implement and commercialize new technologies, products and
services and their combinations; C) expectations regarding market
developments and structural changes; D) expectations and targets
regarding our industry volumes, market share, prices, net sales and
margins of products and services and their combinations; E) expec-
tations and targets regarding our operational priorities and results
of operations; F) the outcome of pending and threatened litigation;
G) expectations regarding the successful completion of acquisitions
or restructurings on a timely basis and our ability to achieve the
financial and operational targets set in connection with any such
acquisition or restructuring; and H) statements preceded by “be-
lieve,” “expect,” “anticipate,” “foresee,” “target,” “estimate,” “de-
signed,” “plans,” “will” or similar expressions. These statements are
based on management’s best assumptions and beliefs in light of the
information currently available to it. Because they involve risks and
uncertainties, actual results may differ materially from the results
that we currently expect. Factors that could cause these differences
include, but are not limited to: 1) the competitiveness and quality of
our portfolio of products and services and their combinations; 2) our
ability to timely and successfully develop or otherwise acquire the
appropriate technologies and commercialize them as new advanced
products and services and their combinations, including our ability
to attract application developers and content providers to develop
applications and provide content for use in our devices; 3) our ability
to effectively, timely and profitably adapt our business and opera-
tions to the requirements of the converged mobile device market and
the services market; 4) the intensity of competition in the various
markets where we do business and our ability to maintain or improve
our market position or respond successfully to changes in the com-
petitive environment; 5) the occurrence of any actual or even alleged
defects or other quality, safety or security issues in our products and
services and their combinations; 6) the development of the mobile
and fixed communications industry and general economic conditions
globally and regionally; 7) our ability to successfully manage costs;
8) exchange rate fluctuations, including, in particular, fluctuations
between the euro, which is our reporting currency, and the US dol-
lar, the Japanese yen and the Chinese yuan, as well as certain other
currencies; 9) the success, financial condition and performance of
our suppliers, collaboration partners and customers; 10) our ability
to source sufficient amounts of fully functional components, sub-
assemblies, software, applications and content without interruption
and at acceptable prices and quality; 11) our success in collabora-
tion arrangements with third parties relating to the development of
new technologies, products and services, including applications and
content; 12) our ability to manage efficiently our manufacturing and
logistics, as well as to ensure the quality, safety, security and timely
delivery of our products and services and their combinations; 13) our
ability to manage our inventory and timely adapt our supply to meet
changing demands for our products; 14) our ability to protect the
complex technologies, which we or others develop or that we license,
from claims that we have infringed third parties’ intellectual proper-
ty rights, as well as our unrestricted use on commercially acceptable
terms of certain technologies in our products and services and their
combinations; 15) our ability to protect numerous Nokia, NAVTEQ
and Nokia Siemens Networks patented, standardized or proprietary
technologies from third-party infringement or actions to invalidate
the intellectual property rights of these technologies; 16) the impact
of changes in government policies, trade policies, laws or regulations
and economic or political turmoil in countries where our assets are
located and we do business; 17) any disruption to information tech-
nology systems and networks that our operations rely on; 18) our
ability to retain, motivate, develop and recruit appropriately skilled
employees; 19) unfavorable outcome of litigations; 20) allegations of
possible health risks from electromagnetic fields generated by base
stations and mobile devices and lawsuits related to them, regardless
of merit; 21) our ability to achieve targeted costs reductions and in-
crease profitability in Nokia Siemens Networks and to effectively and
timely execute related restructuring measures; 22) developments
under large, multi-year contracts or in relation to major customers
in the networks infrastructure and related services business; 23)
the management of our customer financing exposure, particularly
in the networks infrastructure and related services business; 24)
whether ongoing or any additional governmental investigations into
alleged violations of law by some former employees of Siemens AG
(“Siemens”) may involve and affect the carrier-related assets and
employees transferred by Siemens to Nokia Siemens Networks; 25)
any impairment of Nokia Siemens Networks customer relationships
resulting from ongoing or any additional governmental investiga-
tions involving the Siemens carrier-related operations transferred
to Nokia Siemens Networks; as well as the risk factors specified on
pages 11–32 of Nokia’s annual report Form 20-F for the year ended
December 31, 2009 under Item 3D. “Risk Factors.” Other unknown
or unpredictable factors or underlying assumptions subsequently
proving to be incorrect could cause actual results to differ materially
from those in the forward-looking statements. Nokia does not un-
dertake any obligation to publicly update or revise forward-looking
statements, whether as a result of new information, future events or
otherwise, except to the extent legally required.
97
Contact information
Nokia Head Office
Keilalahdentie 2 – 4
02150 Espoo
P.O.Box 226, FI-00045 Nokia Group
FINLAND
Tel. +358 7180 08000
Fax +358 7180 34003
Nokia Corporate Office –New York
102 Corporate Park Drive
White Plains, New York 10604
USA
Tel. +1 914 368 0400
Fax +1 914 368 0501
Nokia Latin America
703 NW 62nd Av, Suite 100
Miami FL, 33126
USA
Tel. +1 786 388 4002
Fax +1 786 388 4030
Nokia Brazil
Av das Nacoes Unidas
12.901 Torre Norte 11o.
Andar Cep 04578-910
Sao Paulo 04578-910
BRAZIL
Tel. +55 11 5508 6350
Fax +55 11 5508 0471
Nokia Greater China & Korea
Nokia China Campus
Beijing Economic and Technological Development Area
No.5 Donghuan Zhonglu
Beijing, PRC 100176
Tel. +86 10 8711 8888
Nokia South East Asia & Pacific
438B Alexandra Road
#07-00 Alexandra Technopark
SINGAPORE 119968
Tel. +65 6723 2323
Fax +65 6723 2324
Nokia India
SP Infocity, Industrial Plot no. 243
Udyog Vihar, Phase 1, Dundahera, Gurgaon,
Haryana – 122016
INDIA
Tel. +91 124 483 3000
Fax +91 124 483 3099
Nokia Middle East & Africa
Al Thuraya Tower II, 27th floor, Dubai Internet City
Dubai, UAE
Tel. +971 4 369 7600
Fax +971 4 369 7604
Nokia Eurasia
Stoleshnikov Per 14
103031 Moscow
RUSSIA
Tel. +7495 795 0500
Fax +7495 795 0509
98
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