NOKIA IN 2012
KEY DATA ................................................................................................................. 2
REVIEW BY THE BOARD OF DIRECTORS 2012 .......................... 3
ANNUAL ACCOUNTS 2012
Consolidated income statements, IFRS ................................................................. 18
Consolidated statements of comprehensive income, IFRS ............................... 19
Consolidated statements of fi nancial position, IFRS .......................................... 20
Consolidated statements of cash fl ows, IFRS ...................................................... 21
Consolidated statements of changes in shareholders’ equity, IFRS ................ 22
Notes to the consolidated fi nancial statements .................................................. 24
Income statements, parent company, FAS ........................................................... 70
Balance sheets, parent company, FAS ................................................................... 70
Statements of cash fl ows, parent company, FAS ................................................. 71
Notes to the fi nancial statements of the parent company ................................ 72
Nokia shares and shareholders ............................................................................... 77
Nokia Group 2008 – 2012, IFRS ................................................................................ 82
Calculation of key ratios ............................................................................................ 84
Signing of the Annual Accounts 2012
and proposal for distribution of profi t .................................................................. 85
Auditors’ report .......................................................................................................... 86
ADDITIONAL INFORMATION
Critical accounting policies ...................................................................................... 88
Corporate governance statement
Corporate governance .......................................................................................... 94
Board of Directors ............................................................................................... 100
Nokia Leadership Team ....................................................................................... 103
Compensation of the Board of Directors
and the Nokia Leadership Team ............................................................................ 106
Auditor fees and services ....................................................................................... 125
Investor information ................................................................................................ 126
Contact information ................................................................................................. 128
KEY
DATA
Based on fi nancial
statements according
to International
Financial Reporting
Standards, IFRS
Nokia, EURm
2012
2011 Change, %
Net sales
Operating loss
Loss before tax
Loss attributable to equity holders’ of the parent
Research and development expenses
%
Return on capital employed
Net debt to equity (gearing)
– 22
– 14
30 176
– 2 303
– 2 644
– 3 106
4 782
2012
neg.
– 46
38 659
– 1 073
– 1 198
– 1 164
5 584
2011
neg.
– 40
EUR
2012
2011 Change, %
Earnings per share, basic
Dividend per share
Average number of shares (1 000 shares)
* Board’s proposal
Nokia businesses, EURm
Devices & Services
Net sales
Operating loss/profi t
Location & Commerce
Net sales
Operating loss
Nokia Siemens Networks
Net sales
Operating loss
Personnel, December 31
Devices & Services
Location & Commerce
Nokia Siemens Networks
Corporate Common Functions
Nokia Group
10 major markets, net sales; EURm
China
India
Japan
USA
Brazil
Germany
Russia
UK
Indonesia
Italy
– 0.84
– 0.31
0.20
3 710 845 3 709 947
0.00 *
– 100
2012
2011 Change, %
15 686
– 1 100
23 943
884
1 103
– 301
13 779
– 799
1 091
– 1 526
14 041
– 300
– 34
1
– 80
– 2
166
2012
2011 Change, %
32 986
6 186
58 411
215
97 798
49 406
6 659
73 686
299
130 050
– 33
– 7
– 21
– 28
– 25
2012
2 509
2 227
2 182
1 880
1 753
1 299
1 287
900
799
783
2011
6 130
2 923
1 539
1 405
1 901
1 606
1 843
996
904
982
10 major countries, personnel, December 31
2012
2011
Main currencies,
rates at the end of
1 EUR
USD
GBP
CNY
INR
1.3140
0.8121
8.1963
71.9280
RUB
40.5002
JPY
110.16
2
N O K I A I N 2 0 1 2
India
China
Finland
Brazil
Germany
United States
Hungary
Poland
UK
Russia
20 027
18 684
11 767
7 348
7 026
6 692
2 772
2 491
1 740
1 573
22 279
22 165
16 970
11 887
10 992
7 980
5 198
2 541
3 237
1 256
REVIEW
BY THE BOARD
OF DIRECTORS 2012
Before the statutory information and other disclosures of
the review by the Board of Directors, the Board of Directors
outlines a brief summary of the key developments and actions
in and early .
■ Lumia products. Since the unveiling of the fi rst Nokia Lumia
products in , Nokia has expanded the Lumia experi-
ence to new price points and geographies. During the third
quarter of , Nokia announced the Nokia Lumia and
the Nokia Lumia , the fi rst devices in Nokia’s Windows
Phone range which began to ship in select markets during
the fourth quarter of .
■ Asha products. The Nokia Asha family has expanded rap-
idly since its debut at Nokia World in October . Nokia
Asha products blur the lines between feature phones and
smartphones and are designed to off er the best overall
experience and value proposition for the next billion mobile
device users. Asha signifi es Nokia’s focus on positive user
experiences and connecting millions of people to new op-
portunities that help them reach their aspirations. In ,
we continued to strengthen our Asha portfolio of products,
including launching the fi rst Asha full touch smartphones,
such as the Nokia Asha and Asha .
■ Symbian products. During Nokia’s transition to Windows
Phone, Nokia continued to ship devices based on its own
smartphone operating system called Symbian. However,
after a decade-long history as part of Nokia’s portfolio,
Nokia is not creating any new devices based on Symbian.
The Nokia PureView, a device which showcases some of
Nokia’s imaging capabilities and which came to market dur-
ing the fi rst half of , was the last Symbian device from
Nokia. Nokia does not expect to sell any signifi cant volumes
of Symbian devices in .
■ Strategy and restructuring activities. In June ,
Nokia outlined a range of actions – planned or since com-
pleted – aimed at sharpening its strategy, improving its
operating model and returning the company to profi table
growth. Nokia announced that it plans to invest in products
and experiences that make Lumia smartphones stand out
and available to more consumers, invest in location-based
services as an area of competitive diff erentiation for Nokia
products and extend its location-based platform to new
industries and improve the competitiveness and profi tabil-
ity of its Mobile Phones business. These actions announced
in June included also streamlining, reducing and divesting
certain operations, as well as headcount reductions in our
Devices & Services business. To execute the strategy Nokia
also made changes to its senior leadership.
■ HERE (formerly Location & Commerce). As of January ,
, HERE is the new name of our former Location &
Commerce business and reportable segment. Nokia’s HERE
business has continued to strengthen both its portfolio of
location-based off erings with updates to its signature ap-
plications and its customer base through new partnerships
and licensing deals. In November , Nokia introduced
the brand HERE, the fi rst location cloud aiming to deliver
the world’s best maps and location experiences across
multiple screens and operating systems. The business aims
to positively diff erentiate its digital map data and location-
based off erings from those of our competitors and create
competitive business models for our customers.
■ Nokia Siemens Networks. Nokia Siemens Networks exe-
cuted well during on the focused strategy and the
restructuring program it announced in the end of . Built
around both technological and geographic focus, quality and
innovation, the strategy guides Nokia Siemens Networks to
focus its business solely on mobile broadband and ser-
vices, for example by divesting a number of businesses and
streamlining its portfolio. At the same time as it announced
its new strategy, Nokia Siemens Networks also communicat-
ed plans to undertake a far-reaching and signifi cant restruc-
turing, aimed at reducing its annualized operating expenses
and production overheads.
RESULTS OF OPERATIONS
As of January , , Location & Commerce reportable seg-
ment is renamed as the HERE reportable segment and the
terms “Location & Commerce” and “HERE” can be used as
interchangeably in this annual report.
We have three businesses: Devices & Services, HERE (for-
merly Location & Commerce) and Nokia Siemens Networks, and
four operating and reportable segments for fi nancial reporting
purposes: Smart Devices and Mobile Phones within our Devices
& Services business; HERE; and Nokia Siemens Networks.
Our Devices & Services business includes two operating and
reportable segments – Smart Devices, which focuses on our
most advanced products, including Lumia smartphones, and
Mobile Phones, which focuses on our most aff ordable prod-
ucts, including Asha full touch smartphones – as well as Devices
& Services Other. Devices & Services Other includes intellec-
tual property income, net sales of spare parts and related cost
of sales and operating expenses and common research and
development expenses. Devices & Services Other also in-
cluded our luxury phone business Vertu until October , ,
when we sold most of our shareholding in Vertu to the private
equity fund EQT VI.
R E V I E W B Y T H E B O A R D O F D I R E C T O R S
3
Nokia Group
The following table sets forth selective line items and the
percentage of net sales that they represent for the fi scal years
and .
EURm
Net sales
Cost of sales
Gross profi t
2012
YoY
2011 change
30 176
38 659
– 22%
– 21 786
– 27 300
– 20%
8 390
11 359
– 26%
Research and development
expenses
– 4 782
– 5 584
Selling and marketing expenses
– 3 205
– 3 769
– 14%
– 15%
Administrative and general
expenses
Other operating income and
expenses
– 959
– 1 085
– 12%
– 1 747
– 1 994
– 12%
Operating loss
– 2 303
– 1 073
NET SALES
Our net sales and profi tability were negatively aff ected by the
increasing momentum of competing smartphone platforms
relative to our Symbian smartphones in all regions as we con-
tinued on our platform transition to Windows Phone, as well
as our pricing actions due to the competitive environment in
both the smartphone and feature phone markets. In addition,
during the fi rst half of our net sales and profi tability were
adversely aff ected by our lack of aff ordable full touch devices
which continued to be a growing part of the market. For Nokia
Siemens Networks, net sales decrease was driven primarily by
Nokia Siemens Networks’ strategy to focus on mobile broad-
band and services.
the decreased gross margin in Devices & Services compared
to , which was partially off set by increased gross margin in
Nokia Siemens Networks.
OPERATING EXPENSES
Our research and development (“R&D”) expenses were EUR
million in , compared to EUR million in .
Research and development costs represented .% of our
net sales in compared to .% in . The increase in
research and development expenses as a percentage of net
sales largely resulted from a relative decline in net sales in
. Research and development expenses included purchase
price accounting items of EUR million in compared
to EUR million in . At December , , we employed
people in research and development, representing ap-
proximately % of our total workforce.
In , our selling and marketing expenses were EUR
million, compared to EUR million in . Selling and mar-
keting expenses represented .% of our net sales in
compared to .% in . The increase in selling and market-
ing expenses as a percentage of net sales refl ected a decline
in net sales in . Selling and marketing expenses included
purchase price accounting items of EUR million in
compared to EUR million in .
Administrative and general expenses were EUR million
in , compared to EUR million in . Administrative
and general expenses were equal to .% of our net sales in
compared to .% in . The increase in administrative
and general expenses as a percentage of net sales refl ected a
decline in net sales in . Administrative and general ex-
penses included no purchase price accounting items in
compared to EUR million in .
The following table sets forth the distribution by geographi-
In , other income and expenses included restructuring
cal area of our net sales for the fi scal years and .
Distribution of net sales by geographic area
%
Europe
Middle East & Africa
Greater China
Asia-Pacifi c
North America
Latin America
Total
2012
2011
29
14
10
27
7
13
31
14
17
23
4
11
100
100
charges of EUR million, including EUR million related
to country and contract exits, impairments of assets of EUR
million, a negative adjustment of EUR million to purchase
price allocations related to the fi nal payment from Motorola,
amortization of acquired intangible assets of EUR million,
benefi t from cartel claim settlements of EUR million, a net
gain on sale of Vertu business of EUR million and a net gain
on sale of real estate of EUR million. In , other income
and expenses included restructuring charges of EUR mil-
lion, impairment of assets of EUR million, consideration
related to the Accenture transaction of EUR million, impair-
ment of shares in an associated company of EUR million and
a benefi t from a cartel claim settlement of EUR million.
The markets in which we generated the greatest net sales
in were, in descending order of magnitude, China, India,
Japan, the United States, Brazil, Germany, Russia, the United
Kingdom, Indonesia and Italy, together representing approxi-
mately % of total net sales in . In comparison, the
markets in which we generated the greatest net sales in
were China, India, Brazil, Russia, Germany, Japan, the United
States, the United Kingdom, Italy and Spain, together repre-
senting approximately % of total net sales in .
GROSS MARGIN
Our gross margin in was .%, compared to .% in
. The lower gross margin in resulted primarily from
OPERATING MARGIN
Our operating loss was EUR million, compared with
an operating loss of EUR million in . The increased
operating loss resulted primarily from restructuring charges
and associated items of EUR . billion and a decrease in the
operating performance of our Devices & Services business,
which was partially off set by an increase in the operating
performance of Nokia Siemens Networks. Our operating
margin was negative .% compared to negative .% in .
Our operating loss in included purchase price account-
ing items, restructuring charges and other special items of
net negative EUR . billion compared to net negative EUR .
billion in .
4
N O K I A I N 2 0 1 2
all net cash from operating activities, excluding cash outfl ows
related to restructuring, net fi nancial expenses and taxes, as
well as cash fl ows related to the receipt of quarterly platform
support payments from Microsoft (which commenced in the
fourth quarter ).
In , Nokia Siemens Networks’ contribution to net cash
from operating activities was approximately EUR . billion,
primarily due to net working capital changes. At the end of
, Nokia Siemens Networks’ contribution to the Nokia gross
cash was EUR . billion and contribution to Nokia’s net cash
was EUR . billion.
Our agreement with Microsoft includes platform support
payments from Microsoft to us as well as software royalty
payments from us to Microsoft. Under the terms of the agree-
ment governing the platform support payments, the amount
of each quarterly platform support payment is USD mil-
lion. We have a competitive software royalty structure, which
includes annual minimum software royalty commitments that
vary over the life of the agreement. Software royalty pay-
ments, with minimum commitments are paid quarterly. Over
the life of the agreement, both the platform support pay-
ments and the minimum software royalty commitments are
expected to measure in the billions of US dollars. Over the life
of the agreement the total amount of the platform support
payments is expected to slightly exceed the total amount of
the minimum software royalty commitment payments. As of
the end of , the amount of platform support payments
received by Nokia has exceeded the amount of minimum
software royalty commitment payments made to Microsoft,
thus the net cash fl ows have been in our favor. As a result,
the remaining minimum software royalty commitment pay-
ments are expected to exceed the remaining platform support
payments by a total of approximately EUR . billion over the
remaining life of the agreement. However, in the amount
of the platform support payments is expected to slightly
exceed the total amount of the minimum software royalty
commitment payments, thus the net cash fl ows are still ex-
pected to be slightly in our favor. In accordance with the terms
of the agreement, the platform support payments and annual
minimum software royalty commitment payments continue
for a corresponding period of time. We have recognized a por-
tion of the received platform support payments as a benefi t to
our Smart Devices cost of goods sold and the remainder as a
liability as part of accrued expenses and other liabilities on our
balance sheet.
RESULTS BY SEGMENTS
Devices & Services
The following table sets forth selective line items and the per-
centage of net sales that they represent for Devices & Services
for the fi scal years and .
CORPORATE COMMON
Corporate Common Functions’ expenses totaled EUR mil-
lion in , compared to EUR million in .
NET FINANCIAL INCOME AND EXPENSES
Financial income and expenses, net, was an expense of EUR
million in compared to an expense of EUR million
in . The higher net expense in was primarily driven by
foreign exchange losses. Nokia expects fi nancial income and
expenses, net, in to be an expense of approximately EUR
million.
Our net debt to equity ratio was negative % at Decem-
ber , , compared with a net debt to equity ratio of nega-
tive % at December , .
PROFIT BEFORE TAXES
Loss before tax was EUR million in , compared to a
loss of EUR million in . Taxes amounted to EUR
million in and EUR million in . Nokia taxes contin-
ued to be unfavorably aff ected by Nokia Siemens Networks
taxes as no tax benefi ts are recognized for certain Nokia
Siemens Networks deferred tax items. Additionally, in ,
Nokia taxes were adversely aff ected by allowances related to
Devices & Services’ Finnish deferred tax assets and discon-
tinuation of recognizing tax benefi ts for Devices & Services’
Finnish deferred tax items due to uncertainty of utilization of
these items.
NON-CONTROLLING INTERESTS
Loss attributable to non-controlling interests totaled EUR
million in , compared with a loss attributable to non-
controlling interests of EUR million in . This change was
primarily due to an increase in Nokia Siemens Networks’ losses.
PROFIT ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT AND EARNINGS PER SHARE
Loss attributable to equity holders of the parent in
totaled EUR million, compared with a loss of EUR
million in . Earnings per share in decreased to EUR
– . (basic) and EUR – . (diluted), compared with EUR – .
(basic) and EUR – . (diluted) in .
CASH FLOW AND FINANCIAL POSITION
The following chart sets out Nokia Group’s cash fl ow for the
fi scal years and and fi nancial position at the end of
each of those years, as well as the year-on-year growth rates.
EURm
2012
YoY
2011 Change
Net cash from operating activities
– 354
1 137
Total cash and other liquid assets
Net cash and other liquid assets 1
9 909 10 902
– 9%
4 360
5 581
– 22%
Total cash and other liquid assets minus interest-bearing liabilities.
Year-on-year, net cash and other liquid assets decreased by
EUR . billion in , primarily due to cash outfl ows related to
restructuring of approximately EUR . billion, the payment of
the dividend of approximately EUR million in and cash
outfl ows related to net fi nancial expenses and taxes as well as
capital expenditures. This was partially off set by positive over-
R E V I E W B Y T H E B O A R D O F D I R E C T O R S
5
EURm
Net sales 1
Cost of sales
Gross profi t
2012
YoY
2011 change
15 686
23 943
– 34%
– 12 340
– 17 303
– 29%
3 346
6 640
– 50%
Research and development
expenses
– 1 852
– 2 441
Selling and marketing expenses
– 1 857
– 2 180
– 24%
– 15%
Administrative and general
expenses
Other operating income and
expenses
– 292
– 362
– 19%
– 445
– 773
– 42%
Operating profi t/loss
– 1 100
884
Includes IPR income recognized in Devices & Services Other net sales.
NET SALES
The following table sets forth our Devices & Services net sales
and year-on-year growth rate by geographic area for the
fi scal years and . The IPR income referred to in the
paragraph below has been allocated to the geographic area
contained in this chart.
Devices & Services net sales by geographic area
EURm
Europe
Middle East & Africa
Greater China
Asia– Pacifi c
North America
Latin America
Total
2012
YoY
2011 Change
4 643
7 064
– 34%
2 827
4 098
– 31%
1 610
5 063
– 68%
3 811
4 896
– 22%
453
354
2 342 2 468
28%
– 5%
15 686 23 943
– 34%
The % year-on-year decline in Devices & Services net
sales in resulted from lower volumes in both Smart
Devices and Mobile Phones as well as a lower ASP in Mobile
Phones, partially off set by a higher ASP in Smart Devices.
Devices & Services Other net sales decreased in due to
lower non-recurring IPR income, the divestment of Vertu dur-
ing the fourth quarter and lower spare parts sales.
Smart Devices continued to transition as Symbian volumes
decreased sequentially every quarter in . Lumia device
volumes grew in the fi rst half of by expanding geographi-
cal distribution as well as new product launches, but were
negatively aff ected in the third quarter by product transi-
tions. In the fourth quarter , Smart Devices net sales grew
sequentially as we started shipping new Lumia devices, al-
though volumes were adversely aff ected by supply constraints
as we ramped up our production capacity, particularly related
to the Lumia . Smart Devices shipped a total of . million
Lumia devices in . During the fi rst half of , Mobile
Phones was negatively aff ected by aggressive price competi-
tion and the lack of aff ordable full touch devices. Towards the
end of the second quarter Mobile Phones introduced
aff ordable Asha full touch smartphones and sold . million
units in the second half .
Our overall Devices & Services net sales in benefi ted
from the recognition in Devices & Services Other of approxi-
mately EUR million (EUR million in ) of non-recurring
IPR income. The non-recurring IPR income relates to new pat-
ent license agreements for the respective years that included
settlements of past royalties and accordingly is not expected
to have a recurring benefi t. Patent license agreements are
generally multi-year arrangements and may cover both licen-
see’s past and future sales. Typically, when a patent license
agreement is signed it includes an agreement or settlement on
past royalties that the licensor is entitled to. Such income for
past periods is typically recognized as a non-recurring item.
The license payments relating to the future royalties are typi-
cally recognized over the remaining contract period based on
the contract terms. The future license payments may fl uctu-
ate based on the terms of the license.
During the last two decades, we have invested approximate-
ly EUR billion in research and development and built one of
the wireless industry’s strongest and broadest IPR portfolios,
with approximately patent families. We are a world
leader in the development of handheld device and mobile
communications technologies, which is also demonstrated by
our strong patent position. Within Devices & Services Other,
we estimate that our current annual IPR income run-rate is ap-
proximately EUR . billion.
VOLUME
The following chart sets out the mobile device volumes for our
Devices & Services business and year-on-year growth rates by
geographic area for the fi scal years and .
Devices & Services mobile device volumes by
geographic area
EURm
Europe
Middle East & Africa
Greater China
Asia– Pacifi c
North America
Latin America
Total
2012
67.3
81.7
27.5
YoY
2011 Change
87.8
– 23%
94.6
65.8
– 14%
– 58%
113.5
118.9
– 5%
2.2
43.4
3.9
– 44%
46.1
– 6%
335.6
417.1
– 20%
On a year-on-year basis, the decline in our total Devices &
Services volumes in was driven by lower volumes in both
Smart Devices and Mobile Phones discussed below.
AVERAGE SELLING PRICE
Our total mobile device ASP represents total Devices & Services
net sales divided by total Devices & Services volumes. Devices
& Services Other net sales includes net sales of Nokia’s luxury
phone business Vertu through October , , spare parts,
as well as IPR income. As IPR income is included in Devices &
Services Other net sales, we provide our total mobile device ASP
both including and excluding IPR income in this Annual Report.
Our total mobile device ASP, including IPR income, in
was EUR , down % from EUR in . The decrease in
our mobile device ASP in was due to a higher proportion
of Mobile Phones volumes and lower Mobile Phones ASPs,
partially off set by higher Smart Devices ASPs. Our total mobile
device ASP, excluding IPR income, in was EUR , down %
from EUR in .
6
N O K I A I N 2 0 1 2
GROSS MARGIN
Our Devices & Services gross margin in was .%, com-
pared to .% in . On a year-on-year basis, the decline in
our Devices & Services gross margin in was due to gross
margin declines in Smart Devices and to a lesser degree in
Mobile Phones and Devices & Services Other.
OPERATING EXPENSES
Devices & Services operating expenses decreased % year-
on-year in . On a year-on-year basis, operating expenses
related to Smart Devices decreased % in , where Mobile
Phones remained approximately on the same level. In addition
to the factors described below, the year-on-year changes
were aff ected by the proportionate allocation of operat-
ing expenses being aff ected by the relative mix of sales and
gross profi t performance between Mobile Phones and Smart
Devices. This resulted in higher and lower relative allocations
to Mobile Phones and Smart Devices, respectively.
Devices & Services research and development expenses
decreased % year-on-year in due to declines in Smart
Devices and Devices & Services Other research and develop-
ment expenses. The decreases in research and development
expenses were due primarily to a focus on priority projects
and cost controls as well as business divestments.
Devices & Services sales and marketing expenses decreased
% year-on-year in primarily due to lower overall busi-
ness activity, improved effi ciency in general marketing activi-
ties and business divestments.
Devices & Services administrative and general expenses
decreased % year-on-year in , primarily due structural
cost savings as well as business divestments.
In , Devices & Services other income and expense had
a negative year-on-year impact on profi tability. In , we
recognized special items of net EUR million in Devices &
Services Other, comprised of restructuring charges of EUR
million and related impairments of EUR million, a benefi t
from cartel claim settlements of EUR million, a net gain from
the sale of a real estate of EUR million and a net gain from
the divestment of the Vertu business of EUR million. In ,
we recognized special items of net EUR million in Devices
& Services Other, comprised of restructuring charges of EUR
million, impairment of assets of EUR million, Accenture
deal consideration of EUR million, impairment of shares in
an associated company of EUR million and a benefi t from a
cartel claim settlement of EUR million.
COST REDUCTION ACTIVITIES AND PLANNED
OPERATIONAL ADJUSTMENTS
We continue to target to reduce our Devices & Services operat-
ing expenses to an annualized run rate of approximately EUR
. billion, excluding special items and purchase price account-
ing related items, by the end of .
In June, , we announced additional restructuring
measures to those announced in , including targeted
investments in key growth areas, operational changes, divest-
ment of non-core assets and signifi cantly increased our cost
reduction target. The measures included the closure of our
manufacturing facility in Salo, Finland as well as the closure of
our research and development facilities in Ulm, Germany and
Burnaby, Canada. We also focused our sales and marketing ac-
tivities and streamlined our information technology, corporate
and support functions to align with the sharpened strategy.
In addition, we completed the divestment of Vertu and our
headquarters building in Finland.
As of December , , we had recognized cumulative
net charges in Devices & Services in and of approxi-
mately EUR . billion related to restructuring activities, which
included restructuring charges and associated impairments.
While the total extent of the restructuring activities is still to
be determined, we currently anticipate cumulative charges in
Devices & Services of approximately EUR . billion before the
end of . We also expect the total cash outfl ows related to
our Devices & Services restructuring activities to be approxi-
mately EUR . billion of which approximately EUR . billion had
been incurred as of December , .
OPERATING MARGIN
Devices & Services reported an operating loss of EUR
million in , compared with an operating profi t of EUR
million in . Devices & Services operating margin in
was negative .%, compared with positive .% in . The
year-on-year decrease in operating margin in was driven
primarily by the lower net sales and gross margin compared to
in both Smart Devices and Mobile Phones.
Smart Devices
The following table sets forth selective line items for Smart
Devices for the fi scal years and .
Smart Devices results summary
EURm
Net sales (EURm) 1
Smart Devices volume
(millions units)
Smart Devices ASP (EUR)
2012
YoY
2011 Change
5 446 10 820
– 50%
35.1
155
77.3
– 55%
140
11%
Gross margin (%)
8.8% 23.7%
Operating expenses (EURm)
2 018
2 974
– 32%
Contribution margin (%)
– 28.6%
– 3.8%
Does not include IPR income. IPR income is recognized in Devices & Ser-
vices Other net sales.
NET SALES
Smart Devices net sales decreased % to EUR million in
, compared to EUR million in . The year-on-year
decline in our Smart Devices net sales in was primarily due
to signifi cantly lower volumes, partially off set by higher ASPs.
VOLUME
Smart Devices volume decreased % to . million units in
, compared to . million units in . The year-on-year
decrease in our Smart Device volumes in was driven by
the strong momentum of competing smartphone platforms
relative to our Symbian devices. On a geographical basis, the
decrease in volumes was due to lower volumes in Greater Chi-
na, Europe, Asia Pacifi c, Middle East & Africa and Latin America,
partially off set by slightly higher volumes in North America.
AVERAGE SELLING PRICE
Smart Devices ASP represents Smart Devices net sales divided
by Smart Devices volumes. IPR income is not recognized at the
Smart Devices and Mobile Phone business unit levels.
R E V I E W B Y T H E B O A R D O F D I R E C T O R S
7
Smart Devices ASP increased % to EUR in , com-
pared to EUR in . The year-on-year increase in our
Smart Devices ASP in was primarily due to a positive mix
shift towards sales of our Lumia devices, which had a higher
ASP, a positive impact related to deferred revenue on services
sold in combination with our devices as well as the net positive
impact related to foreign currency fl uctuations, partially off set
by general price erosion and our pricing actions.
GROSS MARGIN
Smart Devices gross margin was .% in , down from
.% in . The year-on-year decline in our Smart Devices
gross margin in was primarily due to greater price erosion
than cost erosion due to the competitive environment, inven-
tory related allowances of EUR million in the second quar-
ter and EUR million in the third quarter , higher
fi xed costs per unit because of lower sales volumes, and a
negative product mix shift towards lower gross margin devices.
Mobile Phones
The following table sets forth selective line items for Mobile
Phones for the fi scal years and .
Mobile Phones results summary
EURm
Net sales (EURm) 1
Mobile Phones volume
(millions units)
Mobile Phones ASP (EUR)
2012
YoY
2011 Change
9 436 11 930
– 21%
300
31
340
– 12%
35
– 11%
Gross margin (%)
23.4%
26.1%
Operating expenses (EURm)
1 661
1 640
1%
Contribution margin (%)
5.6% 12.4%
Does not include IPR income. IPR income is recognized in Devices & Ser-
vices Other net sales.
NET SALES
Mobile Phones net sales decreased % to EUR million
in , compared to EUR million in . On a year-on-
year basis, our Mobile Phones net sales decreased in due
to lower volumes and ASPs.
VOLUME
Mobile Phones volume decreased % to million units in
, compared to million units in . The year-on-year
decline in our Mobile Phones volumes in was due to the
challenging competitive environment and market environ-
ment, which negatively aff ected our volumes across the
Mobile Phones portfolio. In particular, low-end smartphones
powered by the Android operating system proliferated at lower
price points throughout . During the second half of ,
Mobile Phones started shipping Asha full touch smartphones,
which improved the competitiveness of our higher end Mobile
Phones product portfolio. During the second half of , Mo-
bile Phones shipped . million Asha full touch smartphones.
AVERAGE SELLING PRICE
Mobile Phones ASP represents Mobile Phones net sales divided
by Mobile Phones volumes. IPR income is not recognized at the
Smart Devices and Mobile Phone business unit levels.
8
N O K I A I N 2 0 1 2
Mobile Phones ASP decreased % to EUR in , com-
pared to EUR in . The year-on-year decline in our Mobile
Phones ASP in was primarily due to a higher proportion of
sales of lower priced devices and general price erosion.
GROSS MARGIN
Mobile Phones gross margin was .% in , down from
.% in . The year-on-year decline in our Mobile Phones
gross margin in was primarily due to a higher proportion
of sales of lower gross margin devices as well as the net nega-
tive impact related to foreign currency fl uctuations.
Location & Commerce
As of January , our Location & Commerce business and
reportable segment was renamed HERE. The name Location &
Commerce is used in the following discussion of the operating
results for this segment for the fi scal years and .
The following table sets forth selective line items and the
percentage of net sales that they represent for Location &
Commerce for the fi scal years and .
EURm
Net sales
Cost of sales
Gross profi t
Research and development
expenses
Selling and marketing expenses
Administrative and general
expenses
Other operating income and
expenses
Operating loss
2012
1 103
– 228
875
– 883
– 186
YoY
2011 change
1 091
– 214
877
1%
7%
0%
– 958
– 259
– 8%
– 28%
– 77
– 68
13%
– 30
– 1 118
– 301
– 1 526
NET SALES
The following table sets forth Location & Commerce net sales
and year-on-year growth rate by geographic area for the fi scal
years and .
Location & Commerce net sales by geographic area
EURm
Europe
Middle East & Africa
Greater China
Asia-Pacifi c
North America
Latin America
Total
2012
477
74
63
82
335
72
YoY
2011 Change
488
74
-2%
0%
128
-51%
74
284
43
11%
18%
67%
1%
1 103
1 091
Location & Commerce net sales increased % to EUR
million in , compared to EUR million in . The
year-on-year increase in Location & Commerce external net
sales in was primarily driven by higher sales of map
content licenses to vehicle customers, partially off set by lower
sales to personal navigation devices customers. The year-on-
year decline in Location & Commerce internal net sales was
primarily due to lower sales related to the large decline in our
Symbian device volumes experienced since .
GROSS MARGIN
On a year-on-year basis, the decrease in Location & Commerce
gross margin in was primarily due to lower personal navi-
gation device sales which carry a higher gross margin, partially
off set by a higher gross margin in the vehicle segment.
NET SALES
The following table sets forth Nokia Siemens Networks’ net
sales and year-on-year growth rate by geographic area for the
fi scal years and .
Nokia Siemens Networks net sales by geographic area
OPERATING EXPENSES
Location & Commerce research and development expenses
decreased % primarily driven by a focus on cost controls,
lower project spending and a shift of research and develop-
ment operating expenses to cost of sales as a result of the
divestiture of the media advertising business.
Location & Commerce sales and marketing expenses de-
creased % primarily driven by a focus on cost controls and
lower marketing spending.
Location & Commerce administrative and general expenses
increased % primarily driven by higher use of services pro-
vided by shared support functions.
In , Location & Commerce other income and expense
had a positive year-on-year impact on profi tability. In ,
we recognized special items of EUR million in Location &
Commerce, comprised of restructuring charges of EUR
million. In , we recognized special items of EUR . billion in
Location & Commerce, comprised of restructuring charges of
EUR million and impairment of goodwill of EUR . billion.
OPERATING MARGIN
Location & Commerce operating loss decreased to EUR
million in , compared with a loss of EUR million in
. Location & Commerce operating margin in was
negative .%, compared with negative .% in . The
year-on-year improvement in operating margin in was
driven primarily by the lower other operating expenses due to
the impairment of Location & Commerce’s goodwill of EUR .
billion in .
Nokia Siemens Networks
Nokia Siemens Networks completed the acquisition of the ma-
jority of Motorola Solutions’ wireless network infrastructure
assets on April , . Accordingly, the results of Nokia Sie-
mens Networks for are not directly comparable to .
The following table sets forth selective line items and the
percentage of net sales that they represent for Nokia Siemens
Networks for the fi scal years and .
EURm
Net sales
Cost of sales
Gross profi t
2012
YoY
2011 change
13 779
14 041
– 9 610
– 10 199
4 169
3 842
– 2%
– 6%
9%
Research and development
expenses
– 2 046
– 2 185
– 6%
Selling and marketing expenses
– 1 158
– 1 328
– 13%
Administrative and general
expenses
Other operating income and
expenses
– 474
– 517
– 8%
– 1 290
– 112
Operating loss
– 799
– 300
– 166%
EURm
Europe
Middle East & Africa
Greater China
Asia– Pacifi c
North America
Latin America
Total
2012
YoY
2011 Change
3 896
4 469
– 13%
1 287
1 391
– 7%
1 278
1 465
– 13%
4 347
3 848
1 294
1 077
1 677
1 791
13 779 14 041
13%
20%
– 6%
– 2%
Nokia Siemens Networks’ net sales decreased % to EUR
million in , compared to EUR million in .
The year-on-year decline in Nokia Siemens Networks’ net sales
was primarily due to the decline in sales of business areas not
consistent with Nokia Siemens Networks’ strategic focus and
lower infrastructure equipment sales, partially off set by higher
services net sales. On a full year basis, services represented
slightly more than % of Nokia Siemens Networks’ net sales
in and .
GROSS MARGIN
Nokia Siemens Networks’ gross margin was .% in ,
compared to .% . The increase in Nokia Siemens
Networks gross margin in was primarily due to the better
gross margin in both infrastructure equipment and services.
Within infrastructure equipment, the increase was primarily
due to favorable region and product mix consistent with Nokia
Siemens Networks’ strategy to focus on mobile broadband.
Within services, the increase was primarily due to structural
cost actions and eff orts to align the services business with the
focused strategy.
OPERATING EXPENSES
Nokia Siemens Networks’ research and development expenses
decreased % year-on-year in primarily due to structural
cost saving actions and overall research and development
effi ciency.
Nokia Siemens Networks’ sales and marketing expenses de-
creased % year-on-year in primarily due to structural
cost saving actions.
Nokia Siemens Networks’ administrative and general
expenses decreased % year-on-year in primarily due to
structural cost saving actions.
In , Nokia Siemens Networks other and income and
expense had a negative year-on-year impact on profi tability.
In , we recognized special items of EUR . billion in Nokia
Siemens Networks, comprised of net restructuring charges
and associated items of EUR . billion. In , we recognized
special items of EUR million in Nokia Siemens Networks,
comprised of restructuring charges of EUR million.
R E V I E W B Y T H E B O A R D O F D I R E C T O R S
9
OPERATING MARGIN
Nokia Siemens Networks’ operating loss in was EUR
million, compared with an operating loss of EUR million in
. Nokia Siemens Networks’ operating margin in was
negative .%, compared with negative .% in primarily
due to restructuring charges of EUR . billion in .
STRATEGY AND RESTRUCTURING PROGRAM
In November , Nokia Siemens Networks announced its
strategy to focus on mobile broadband and services and the
launch of an extensive global restructuring program. Nokia
Siemens Networks continues to target to reduce its annual-
ized operating expenses and production overheads, excluding
special items and purchase price accounting related items, by
more than EUR billion by the end of , compared to the
end of . While these savings are expected to come largely
from organizational streamlining, it has also targeted areas
such as real estate, information technology, product and
service procurement costs, overall general and administrative
expenses, and a signifi cant reduction of suppliers in order to
further lower costs and improve quality.
During , Nokia Siemens Networks recognized restructur-
ing charges and other associated items of EUR . billion related
to this restructuring program, resulting in cumulative charges
of approximately EUR . billion. In total we now expect cumula-
tive Nokia Siemens Networks restructuring charges of approxi-
mately EUR . billion by the end of , virtually all of which
have now been recognized. By the end of , Nokia Siemens
Networks had cumulative restructuring related cash outfl ows
of approximately EUR million related to this restructuring
program. Nokia Siemens Networks expects restructuring-
related cash outfl ows to be approximately EUR million for
the full year , and approximately EUR million for the full
year related to this restructuring program.
The key fi nancial data, including the calculations of key
ratios, for the years , and are available in the
Annual Accounts section.
MAIN EVENTS IN 2012
Nokia
■ Nokia outlined a range of actions – planned or since
completed – aimed at sharpening its strategy, improving its
operating model and returning the company to profi table
growth. The measures included:
▪ Reductions within certain research and development pro-
jects, resulting in the closure of Nokia’s facilities in Ulm,
Germany and Burnaby, Canada;
▪ The transfer of device assembly from our production
facilities in Komarom in Hungary and Reynosa in Mexico to
Nokia facilities in Asia, where the majority of component
suppliers are based. The Komarom and Reynosa facilities
are now focusing on smartphone product customization;
▪ The consolidation of certain manufacturing operations,
resulting in the closure of Nokia’s manufacturing facility in
Salo, Finland;
▪ Nokia, and De’ Longhi SpA, a global leader in household
appliances, agreed terms for De’ Longhi to acquire Nokia’s
production facility in Cluj, Romania during the fi rst quarter
in ;
▪ Focusing of marketing and sales activities, including
prioritizing key markets; and
▪ Streamlining of corporate and support functions.
■ In April , to unify the fi nancial mode of operation of
Nokia, Nokia Corporation transferred its mobile device sales
related business operations, including sales agreements,
to Nokia Sales International Oy, a wholly owned subsidiary
of Nokia Corporation. The transfer had no eff ect on mobile
device sales that has been carried out by other Nokia
subsidiaries.
■ Nokia completed an off ering of EUR million of senior
unsecured convertible bonds due convertible into
ordinary shares of Nokia Corporation. Nokia intends to use
the net proceeds of the off ering to prudently manage its
capital structure, proactively address upcoming maturities
while preserving existing pools of liquidity and for general
corporate purposes.
■ Nokia entered into a new patent license agreement with
BlackBerry (formerly Research In Motion). The agreement
results in settlement of all existing patent litigation between
the companies and withdrawal of pending actions in the
US, UK and Canada related to a recent arbitration tribunal
decision.
■ Nokia sold its head offi ce building in Espoo, Finland, to
Finland-based Exilion and has leased it back from Exilion on
a long-term lease. The selling price was EUR million.
■ Since the end of , Nokia has outlined a range of planned
changes to streamline its IT organization. As part of the
planned changes, Nokia transferred certain activities and
approximately employees to HCL Technologies and TATA
Consultancy Services. In addition, Nokia plans to reduce
its global IT organization by approximately employees.
Nokia believes these changes will increase operational ef-
fi ciency and reduce operating costs, creating an IT organiza-
tion appropriate for Nokia’s current size and scope.
■ Nokia started development of a new manufacturing facility
in Vietnam to serve the feature phone market. The targeted
opening of the facility is the second half of .
■ During the third quarter, Nokia was again selected as a com-
ponent of the Dow Jones Sustainability World Index (DJSI)
and Dow Jones Sustainability Europe Index in the DJSI
Review.
■ In the third quarter, Nokia was included by the Carbon
Disclosure Project (CDP) in the Carbon Disclosure Leadership
Index and the Carbon Performance Leadership Index,
receiving recognition both for its disclosure of climate
change information and the action it is taking to reduce its
emissions.
10
N O K I A I N 2 0 1 2
Devices & Services
SMART DEVICES
■ Nokia continued to expand the breadth and depth of its
Nokia Lumia range of Windows Phone -based smartphones
and brought the range to new markets, including China and
the United States.
■ In September , Nokia launched its fi rst products on
Windows Phone , the latest generation of the Windows
Phone platform. Nokia started selling the fi rst products
running Windows Phone – the fl agship Nokia Lumia and
the mid-range Nokia Lumia – in select markets including
China, Germany, the United Kingdom and the United States.
Nokia has also launched in markets such as India as well
as introduced the Nokia in select markets, with Lumia
smartphones now available in more than markets around
the world. Nokia’s fi rst Windows Phone products showcase
the best of Windows Phone , which for the fi rst time shares
many core technologies with the wider Windows ecosystem.
Windows Phone also introduced multi-core processor
support, NFC (near fi eld communication) technology, and
support for higher screen resolutions, as well as increased
language support and new capabilities in imaging and ap-
plication.
■ Nokia continued to support the growth of the Windows
Phone ecosystem. The number of applications in the
Windows Phone Marketplace grew to more than by
the end of , up from approximately at the start
of the year.
■ During Nokia’s transition to Windows Phone through ,
Nokia continued to ship devices based on Symbian. The
Nokia PureView, a device which showcases our imaging
capabilities and which came to market in mid-, was the
last Symbian device from Nokia.
■ Nokia announced a range of wireless charging accessories
and partnerships. The Fatboy Recharge Pillow provides an
alternative way to charge the Lumia and Lumia
wirelessly, while HARMAN’S JBL brand introduced the JBL
PowerUP, a wireless charging docking station with high
quality audio in retro styling and the JBL PlayUp for high
quality portable audio. Nokia also agreed with Virgin Atlantic
to put wireless charging stations in its London Heathrow
Clubhouse lounge and with Coff ee Bean & Tea Leaf to put
charging plates on tables in some of their cafés.
■ Nokia announced the launch of Nokia Music in the United
States, further expanding the number of markets in which
the free music streaming service is now available. Nokia
Music is a free mobile experience exclusive to Nokia Lumia
handsets, providing consumers with a simple and delightful
way to discover and enjoy music.
MOBILE PHONES
■ Mobile Phones continued to expand Nokia’s Asha range of
products with technological and design innovations, in-
cluding launching full touch models such as the Asha
and Asha . These two models off er a fl uid ‘swipe’ user
interface and an open environment for third-party applica-
tion development – characteristics which helped earn the
complete Asha touch range full smartphone classifi cation
from global market research companies and analysts such
as GfK.
■ In the fourth quarter, Nokia introduced the Nokia in both
a single and dual SIM version. The Nokia includes Nokia’s
exclusive Slam feature, which enables consumers to share
multimedia content like photos and videos with nearby
friends almost instantly. Slam works with most Bluetooth-
enabled mobile phones without the need to pair devices,
and without the recipient needing to also have Slam.
■ Nokia unveiled Nokia Life+, the latest evolution of its widely-
used Nokia Life service. Nokia Life+ is a Web application,
which will provide millions of people with valuable informa-
tion on education, health and “infotainment” topics. Nokia
Life+ will be supported by the Nokia Asha and Nokia
Asha smartphones alongside a wide range of Nokia
mobile phones.
■ In the fi rst quarter , the Nokia Xpress browser, Nokia’s
cloud-accelerated browser for Series devices, continued
to grow rapidly with support for devices in languages
and more than countries. The Nokia Xpress browser is the
fi rst of its kind to support web apps, and since the release of
the SDK in , developer support has continued to grow.
HERE (formerly Location & Commerce)
■ Nokia introduced a new brand – HERE – for our location-based
products and services and has begun adopting the HERE
brand in the portfolio. HERE is the fi rst location cloud to de-
liver the world’s best maps and location experiences across
multiple screens and operating systems.
■ To further extend its location services, Nokia launched a
maps application for iOS under the HERE brand.
■ Nokia announced a strategic partnership with Mozilla to
bring new location experiences to the Firefox OS.
■ Nokia introduced LiveSight, a technology based on a highly
accurate, D map of the world. LiveSight provides a precise
and intuitive augmented reality experience.
■ HERE continued to grow the Nokia Location Platform (NLP),
an advanced location platform which off ers numerous
opportunities upon which third parties can build. During
the year, among others, Amazon became an NLP licensee
for maps and geocoding and Ford’s research organization
selected the NLP to leverage Nokia’s high-quality global
location content as well as scalable cloud services and APIs.
■ As part of its commitment to strengthen the Windows
Phone ecosystem, Nokia integrated the NLP into Windows
Phone OS to power location-based experiences built for
Windows Phone , including access to offl ine maps.
■ HERE agreed a partnership with Groupon to bring local and
national deals to Nokia customer and released a new version
of HERE Maps for the Lumia range that integrates Groupon
Now! deals into the app.
R E V I E W B Y T H E B O A R D O F D I R E C T O R S
11
■ HERE introduced My Commute, a new feature of HERE Drive
that learns people’s driving preferences and uses infor-
mation about the latest traffi c conditions to help people
choose between the diff erent routes they usually take to get
to the places they travel most.
■ HERE brought HERE City Lens, an augmented reality applica-
tion, to the Nokia Lumia smartphone range and continued to
update it throughout the year.
■ In the fi rst quarter, Location & Commerce released HERE
Transport, a mobile application for the Lumia range provid-
ing underground, tram, suburban train and bus directions
for more than cities in countries in a convenient way,
and further updated the application during the year.
■ HERE continued to build partnerships with a number of ma-
jor industry players, particularly in the area of automotive-
grade maps content and solutions. We are providing content
to partners including Audi, BMW Chrysler, Dacia, ESRI, Ford,
Garmin, Hyundai, Kia, Mercedes, Nikon, Pioneer, Scania,
Toyota and Volkswagen.
■ In indoor mapping, HERE continued to steadily increase its
coverage of venues and buildings around the world and now
covers venues and altogether buildings in
countries.
Nokia Siemens Networks
■ Nokia Siemens Networks added signifi cant commercial
LTE deals during , including; a major contract with
SOFTBANK MOBILE Corp. in Japan to upgrade its mobile
broadband capacity across the country, supplying, deploy-
ing and integrating its HSPA+ (G) and FDD LTE (G) networks;
deploying the world’s fi rst multi-technology, multi-vendor
self-organizing G and G mobile networks for KDDI, also in
Japan; and supporting T-Mobile’s G network evolution plan
with the modernization of its GSM, HSPA+ core and radio
access infrastructure in key markets in the USA to improve
existing voice and data coverage.
■ Nokia Siemens Networks had a total of LTE deals by the
year end, with other mobile broadband deals includ-
ing with: Bharti Airtel in India; Telkomsel in Indonesia; KT
in Korea; Singapore’s StarHub; Tele in Estonia, Latvia and
Lithuania; Hrvatski Telekom in Croatia; T-Mobile and Orange
in Poland; Polkomtel in Poland; Si.mobil in Slovenia; COTA
and Wimax Online in Spain; Zain KSA in Saudi Arabia; TOT in
Thailand; Optus in Australia; Mobile TeleSystems in Russia;
O in the UK; Vodacom in South Africa; Saudi Telecom
Company; and China Mobile.
■ Nokia Siemens Networks demonstrated its commitment
to staying at the forefront of mobile broadband innova-
tion with the opening of a mobile broadband testing and
development facility which opened in Silicon Valley in the
United States. In other LTE technology developments, Nokia
Siemens Networks: launched its “FlexiZone” approach to
mobile broadband coverage, which will deliver faster and
more fl exible G across areas with a very high user density
more effi ciently and cost eff ectively; and expanded its
portfolio, to enable smooth G rollouts using the ‘Digital
Dividend’ in the Asia Pacifi c region, Latin America and other
parts of the world.
■ Nokia Siemens Networks also launched a new CDMA base
station, bringing the benefi ts of its globally recognized
Flexi Multiradio Base Station platform to CDMA operators
whilst reducing base station operating costs by up to %,
and with G upgrade capability underlining Nokia Siemens
Networks’ commitment to mobile broadband technology
evolution.
■ Nokia Siemens Networks unveiled its ‘Intelligent IP Edge’,
the world’s most advanced network gateway that enables
operators to deliver a better mobile broadband experience
and reduce running costs using Nokia Siemens Networks’
Liquid Net approach. Nokia Siemens Networks and Juniper
Networks announced the launch of the “Integrated Packet
Transport Network”, addressing the need for service provid-
ers to simplify network architecture and giving operators
more fl exibility in their transport networks in a cost ef-
fective way, refl ecting Nokia Siemens Networks Liquid Net
approach to transforming networks to cope with unpredict-
ability and increasing network demand.
■ Nokia Siemens Networks extended its comprehensive
small cells portfolio with the launch of an enhanced range
of picocell base stations and G Femto access points, and
announced a US-based trial of its Hot Zone approach for
increasing network capacity in the Chicago area.
■ The launch of the Customer Experience Management (CEM)
on Demand portal in the fi rst quarter allowed Nokia Siemens
Networks to showcase a new way of handling relationships
with the world’s six billion mobile users. Nokia Siemens
Networks was recognized for its advances in CEM at the
Global Telecoms Business (GTB) Innovation Awards in
the wireless infrastructure category where it won a joint
award with Telkomsel for its use of Nokia Siemens Networks’
CEM on Demand portfolio. Guangdong MCC in China has
signed up to Nokia Siemens Networks’ CEM software and
services, enabling it to improve customer experience by
providing a unifi ed view of its customer data and continuous
reporting of usage trends.
SIGNIFICANT ACQUISITIONS AND
DIVESTMENTS IN 2012
■ Nokia completed the acquisition of all technologies and
intellectual property from Scalado AB to strengthen Nokia’s
leading position in mobile imaging. As part of the transac-
tion, approximately world-class imaging specialists trans-
ferred to Nokia.
■ During the fourth quarter in , Nokia completed the
divestment of Vertu, its luxury mobile phones business to
EQT VI, a European private equity fi rm.
■ Nokia acquired earthmine inc. Earthmine’s reality capture
and processing technologies will become integral parts of
the D map making capabilities of HERE.
12
N O K I A I N 2 0 1 2
■ During the year, Nokia Siemens Networks completed the sale
of its microwave transport business to DragonWave, the sale
of its fi xed line Broadband Access business to ADTRAN and
the divestment of the assets of the non-core IPTV busi-
ness to Belgacom and Accenture. It also announced it had
reached an agreement to sell its Optical Networks business
to Marlin Equity Partners and its Business Support Systems
business to Redknee.
PERSONNEL
The average number of employees of Nokia Group for was
( for and for ). At December ,
, Nokia Group employed a total of people (
people at December , and people at Decem-
ber , ). The total amount of wages and salaries paid in
was EUR million (EUR million in and EUR
million in ).
SUSTAINABILITY AT NOKIA
With over . billion customers using Nokia devices, Nokia is in
a unique position to eff ect positive environmental and social
change around the world. Nokia aims to maximize its positive
impact on the world and its people, reduce any negative envi-
ronmental impact, and aims to off er people products and solu-
tions that help them make sustainable choices. Also, by closely
collaborating with Nokia’s suppliers, Nokia hopes to improve
the social and environmental performance of its supply chain.
Nokia strives to be a responsible company in all areas, for ex-
ample aiming to reduce the emissions of its own facilities and
those of its suppliers, to increase energy effi ciency and use
green energy where possible, to save resources through simple
initiatives such as cutting down on packaging, and to use sus-
tainable, ethically sourced materials in Nokia’s products. Nokia
believes that its approach in considering its environmental and
social impact not only refl ects ethical and legal responsibilities,
but also makes good business sense and actually goes beyond
legal requirements. We also work to ensure world-class working
conditions for our own employees as well as at our suppliers’
operations. Furthermore, we invest in social projects which
impact particularly education and livelihoods.
■ In our own operations: we delivered progress in increasing
the waste utilization rate at our factories and in the level of
renewable electricity usage.
MANAGEMENT AND BOARD OF DIRECTORS
Board of Directors, Nokia Leadership Team
and President
Pursuant to the Articles of Association, Nokia Corporation has
a Board of Directors composed of a minimum of seven and
a maximum of members. The members of the Board are
elected for a one-year term at each Annual General Meeting,
i.e. from the close of that Annual General Meeting until the
close of the following Annual General Meeting, which convenes
each year by June . The Board has the responsibility for ap-
pointing and discharging the Chief Executive Offi cer, the Chief
Financial Offi cer and the other members of the Nokia Leader-
ship Team. The Chief Executive Offi cer also acts as President
and his rights and responsibilities include those allotted to the
President under Finnish law.
The Annual General Meeting held on May , elected the
following members to the Board of Directors: Bruce Brown,
Stephen Elop, Henning Kagermann, Jouko Karvinen, Helge
Lund, Isabel Marey-Semper, Mårten Mickos, Elizabeth Nelson,
Dame Marjorie Scardino, Risto Siilasmaa and Kari Stadigh.
For information on shares and stock options held by the
members of the Board of Directors, the President and CEO and
the other members of the Nokia Leadership Team, please see
the section “Compensation of the Board of Directors and the
Nokia Leadership Team” available in the Additional information
section of this ‘Nokia in ’ publication.
For more information regarding Corporate Governance,
please see the Corporate Governance Statement in the
Additional information section of this ‘Nokia in ’ publica-
tion or Nokia’s website, www.nokia.com/global/about-nokia.
Changes in the Nokia Leadership Team
During , the following appointments were made to the
Nokia Leadership Team:
■ Marko Ahtisaari was appointed Executive Vice President of
Design and member of the Nokia Leadership Team as from
February , .
Some of the sustainability highlights include:
■ Juha Putkiranta was appointed Executive Vice President
■ In products: we introduced environmental innovations, such
as bio-plastics and recycled metals, and reached % level
in renewable, paper-based materials use in Nokia device and
accessories packaging.
■ In sustainability related services: our focus on mobile
learning is bearing fruit, with million people having
experienced the Nokia Life information service at the
end of , Nokia Mobile Mathematics reaching
students, teachers, schools in South Africa, and
Nokia Education Delivery showing promising results in the
quality of teaching and classroom environment in India and
Indonesia. We also expanded HERE Transport application
further, off ering people options to reduce their environmen-
tal footprint by helping them plan their journeys on public
transport.
of Operations and member of the Nokia Leadership Team
as from July , .
■ Timo Toikkanen was appointed Executive Vice President
of Mobile Phones and member of the Nokia Leadership Team
as from July , .
■ Chris Weber was appointed Executive Vice President of Sales
and Marketing and member of the Nokia Leadership Team
as from July , .
Further, during , the following Nokia Leadership Team
members resigned:
■ Jerri DeVard, formerly Executive Vice President and Chief
Marketing Offi cer, stepped down from the Nokia Leadership
Team eff ective June , .
R E V I E W B Y T H E B O A R D O F D I R E C T O R S
13
■ Colin Giles, formerly Executive Vice President of Sales,
NOKIA OUTLOOK
stepped down from the Nokia Leadership Team eff ective
June , .
■ Mary T. McDowell, formerly Executive Vice President of
Mobile Phones stepped down from the Nokia Leadership
Team eff ective June , .
■ Niklas Savander, formerly Executive Vice President of
Markets stepped down from the Nokia Leadership Team
eff ective June , .
■ Esko Aho, formerly Executive Vice President of Corporate
Relations and Responsibility stepped down from the Nokia
Leadership Team eff ective August , .
ARTICLES OF ASSOCIATION
Nokia’s Articles of Association include a provision on obligation
to purchase shares.
Amendment of the Articles of Association requires a de-
cision 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 of
the Articles of Association, “Obligation to purchase shares”,
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.
Our Devices & Services business is expected to continue to
be subject to risks and uncertainties, as our Smart Devices
business unit continues to broaden its portfolio of Windows
Phone based products and our Mobile Phones business unit
continues to bring more smartphone features and design to
our Mobile Phones portfolio. Those risks and uncertainties in-
clude, among others, the timing, ramp-up, quality and demand
for our new products, including our Lumia and Asha devices;
further pressure on margins as competitors endeavor to capi-
talize on our transition; and uncertainty in the macroeconomic
environment.
Nokia Siemens Networks plans to continue to prioritize the
improvement of its profi tability and cash generation over
growth in revenue. In addition, it plans to target increasing
its market share in certain growth areas such as G (LTE), in
particular in priority countries, Japan, Korea and the United
States.
Longer-term, Nokia continues to target:
■ Devices & Services net sales to grow faster than the market,
and
■ Devices & Services operating margin to be % or more,
excluding special items and purchase price accounting
related items.
Longer-term, Nokia Siemens Networks continues to target:
■ Nokia Siemens Networks’ operating margin to be between
% and %, excluding special items and purchase price
accounting related items.
In , Nokia did not cancel or repurchase any shares nor
In , we announced additional restructuring measures
did Nokia issue any new shares.
In , Nokia transferred a total of Nokia shares
held by it as settlement under Nokia equity plans to the plan
participants, personnel of Nokia Group, including certain Nokia
Leadership Team members. The shares were transferred free
of charge and the amount of shares transferred represented
approximately .% of the total number of shares and the
total voting rights. The transfers did not have a signifi cant
eff ect on the relative holdings of the other shareholders of the
company nor on their voting power.
On December , , Nokia and its subsidiary companies
owned Nokia shares. The shares represented ap-
proximately .% of the total number of the shares of the com-
pany and the total voting rights. The total number of shares at
December , , was . On December , ,
Nokia’s share capital was EUR ..
Information on the authorizations held by the Board in
to issue shares and special rights entitling to shares, transfer
shares and repurchase own shares, as well as information on
related party transactions, the shareholders, stock options,
shareholders’ equity per share, dividend yield, price per earn-
ings ratio, share prices, market capitalization, share turnover
and average number of shares are available in the Annual
Accounts section.
to those announced during as a result of our Devices
& Services strategy. We announced in June that Nokia
targets to reduce its Devices & Services operating expenses,
excluding special items and purchase price accounting related
items, to an annualized run rate of approximately EUR . bil-
lion by the end of .
Nokia Siemens Networks continues to target to reduce its
annualized operating expenses and production overheads,
excluding special items and purchase price accounting related
items, by more than EUR billion by the end of , compared
to the end of . While these savings are expected to come
largely from organizational streamlining, it has also targeted
areas such as real estate, information technology, product and
service procurement costs, overall general and administrative
expenses and a signifi cant reduction of suppliers in order to
further lower costs and improve quality.
RISK FACTORS
Set forth below is a description of risk factors that could aff ect
Nokia, starting with the risks which are mainly related to our
primary revenue generating areas. 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
aff ect our business, sales, profi tability, results of operations,
14
N O K I A I N 2 0 1 2
fi nancial condition, liquidity, market share, brand, reputation
and share price from time to time. Unless otherwise indicated
or the context otherwise provides, references in these risk fac-
tors to “Nokia”, “we”, “us” and “our” mean Nokia’s consolidated
operating segments. Additional risks primarily related to Nokia
Siemens Networks that could aff ect Nokia are detailed under
the heading “Nokia Siemens Networks” below.
■ We may not be able to make Nokia products with Windows
Phone a competitive choice for consumers unless the
Windows Phone ecosystem becomes a competitive and prof-
itable global ecosystem that achieves suffi cient scale, value
and attractiveness to relevant market participants.
■ Our success in the smartphone market depends on our
ability to introduce and bring to market quantities of at-
tractive, competitively priced Nokia products with Windows
Phone that are positively diff erentiated from our competi-
tors’ products, both outside and within the Windows Phone
ecosystem, and receive broad market acceptance.
■ We may not be able to produce attractive and competitive
devices in our Mobile Phones business unit, including feature
phones and devices with features such as full touch that can
be categorized as smartphones, in a timely and cost effi cient
manner with diff erentiated hardware, software, localized
services and applications.
■ Our strategy for our HERE business includes various risks
and uncertainties and may not succeed if we are unable to
establish a successful location-based platform, extend our
location-based services across devices and operating sys-
tems, maintain current sources of revenue, provide support
for our HERE business and create new sources of revenue
from our location-based services and commerce assets.
■ Our products include numerous patented standardized or
proprietary technologies on which we depend and utilize
for revenue generation. Third parties may use without a
license and unlawfully infringe our intellectual property or
commence actions seeking to establish the invalidity of the
intellectual property rights of these technologies, or we may
not be able to maintain the existing sources of intellectual
property related revenue or establish new such sources.
■ We face intense competition in mobile products and in the
digital map data and related location-based content and
services markets.
■ Our failure to keep momentum and increase our speed of
innovation, product development and execution will impair
our ability to bring new innovative and competitive mobile
products and location-based or other services to the market
in a timely manner.
■ Our partnership with Microsoft is subject to risks and
uncertainties.
■ We may not be able to eff ectively and smoothly implement
the planned changes in operational structure or achieve
targeted effi ciencies and reductions in operating expenses.
■ We may not be able to retain, motivate, develop and recruit
appropriately skilled employees, which may hamper our abil-
ity to implement our strategies.
■ Our sales and profi tability are dependent on the develop-
ment of the mobile and communications industry, including
location-based and other services industries, in numerous
diverse markets, as well as on general economic conditions
globally and regionally.
■ Our ability to maintain and leverage our traditional
strengths in the mobile products market may be impaired
if we are unable to retain the loyalty of our mobile operator
and distributor customers and consumers as a result of the
implementation of our strategies or other factors.
■ If any of the companies we partner and collaborate with, in-
cluding Microsoft, 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 mobile
products or location-based or other services to market suc-
cessfully or in a timely way.
■ If the limited number of suppliers we depend on fail to deliv-
er suffi cient quantities of fully functional products, compo-
nents, sub-assemblies, software and services on favorable
terms and in compliance with our supplier requirements,
our ability to deliver our mobile products profi tably, in line
with quality requirements and on time could be materially
adversely aff ected.
■ We may fail to manage our manufacturing, service creation
and delivery as well as our logistics effi ciently and without
interruption, or fail to make timely and appropriate adjust-
ments, or fail to ensure that our products meet our and our
customers’ and consumers’ requirements and are delivered
on time and in suffi cient volumes.
■ Any actual or even alleged defects or other quality, safety
and security issues in our products, including the hardware,
software and content used in our products, could have a
material adverse eff ect on our sales, results of operations,
reputation and the value of the Nokia brand.
■ Our operations rely on the effi cient and uninterrupted op-
eration of complex and centralized information technology
systems and networks. If a system or network ineffi ciency,
malfunction or disruption occurs, this could have a material
adverse eff ect on our business and results of operations.
■ Any cybersecurity breach or other factors leading to an
actual or alleged loss, improper disclosure or leakage of any
personal or consumer data collected by us or our partners
or subcontractors, made available to us or stored in or
through our products could have a material adverse eff ect
on our sales, results of operations, reputation and value of
the Nokia brand.
■ Our business and results of operations, particularly our
profi tability, may be materially adversely aff ected if we are
not able to successfully manage the pricing of our products
and costs related to our products and our operations.
■ We have operations in a number of countries and, as a
result, face complex tax issues and could be obligated to pay
additional taxes in various jurisdictions and our actual or
anticipated performance, among other factors, could result
in allowances related to deferred tax assets.
R E V I E W B Y T H E B O A R D O F D I R E C T O R S
15
■ Our net sales, costs and results of operations, as well as
■ Nokia Siemens Networks’ restructuring plan to improve
the US dollar value of our dividends and market price of our
ADSs, are aff ected by exchange rate fl uctuations, particu-
larly 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.
■ Our products include increasingly complex technologies,
some of which have been developed by us or licensed to us
by certain third parties. As a result, evaluating the rights
related to the technologies we use or intend to use is more
and more challenging, and we expect increasingly to face
claims that we could have allegedly infringed third parties’
intellectual property rights. The use of these technologies
may also result in increased licensing costs for us, restric-
tions on our ability to use certain technologies in our prod-
ucts and/or costly and time-consuming litigation.
■ Our sales derived from, and manufacturing facilities and as-
sets located in, emerging market countries may be materi-
ally adversely aff ected by economic, regulatory, political or
other developments in those countries or by other countries
imposing regulations against imports to such countries.
■ Changes in various types of regulation, technical standards
and trade policies as well as enforcement of such regula-
tion and policies in countries around the world could have
a material adverse eff ect on our business and results of
operations.
■ An unfavorable outcome of litigation could have a material
adverse eff ect on our business, results of operations, fi nan-
cial condition and reputation.
■ Allegations of possible health risks from the electromagnetic
fi elds generated by base stations and mobile devices, and
the lawsuits and publicity relating to this matter, regardless
of merit, could have a material adverse eff ect on our sales,
results of operations, share price, reputation and brand value
by leading consumers to reduce their use of mobile devices,
by increasing diffi culty in obtaining sites for base stations,
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.
Nokia Siemens Networks
In addition to the risks described above, the following are risks
primarily related to Nokia Siemens Networks that could aff ect
Nokia.
■ Nokia Siemens Networks’ sales and profi tability depend
on its success in the mobile broadband infrastructure and
related services market. Nokia Siemens Networks may fail to
eff ectively and profi tably adapt its business and operations
in a timely manner to the increasingly diverse service needs
of its customers in that market.
■ Competition in the mobile broadband infrastructure and
related services market is intense. Nokia Siemens Networks’
may be unable to maintain or improve its market position
or respond successfully to changes in the competitive
environment.
fi nancial performance and competitiveness may not lead to
sustainable improvements in Nokia Siemens Networks’ over-
all competitiveness and profi tability, and it may be unable to
otherwise continue to reduce operating expenses and other
costs. Additionally, changes in the ownership structure of
Nokia Siemens Networks could have an adverse eff ect on
Nokia Siemens Networks or us.
■ Nokia Siemens Networks may fail to eff ectively and
profi tably invest in new competitive products, services,
upgrades and technologies and bring them to market in a
timely manner.
■ Nokia Siemens Networks’ business is dependent on a limited
number of customers.
■ Nokia Siemens Networks’ mobile broadband infrastructure
and related services business is dependent on large multi-
year contracts.
■ Nokia Siemens Networks’ liquidity and its ability to meet its
working capital requirements depend on access to available
credit under its fi nancing arrangements and other credit
lines as well as cash at hand. If those sources of liquidity
were to be unavailable, or cannot be refi nanced when they
mature, this could have a material adverse eff ect on our
business, results of operations and fi nancial condition.
■ Nokia Siemens Networks may be adversely aff ected by
customer fi nancing or extending payment terms it provides
to customers.
■ 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 current or 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 aff ect the assets and employees trans-
ferred by Siemens to Nokia Siemens Networks, or there may
be 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.
DIVIDEND
The Board will propose that no dividend be paid for the fi scal
year .
Board of Directors, Nokia Corporation
March ,
16
N O K I A I N 2 0 1 2
ANNUAL
ACCOUNTS 2012
Consolidated income statements, IFRS ................................................................. 18
Consolidated statements of comprehensive income, IFRS ............................... 19
Consolidated statements of fi nancial position, IFRS .......................................... 20
Consolidated statements of cash fl ows, IFRS ...................................................... 21
Consolidated statements of changes in shareholders’ equity, IFRS ................ 22
Notes to the consolidated fi nancial statements .................................................. 24
Income statements, parent company, FAS ........................................................... 70
Balance sheets, parent company, FAS ................................................................... 70
Statements of cash fl ows, parent company, FAS ................................................. 71
Notes to the fi nancial statements of the parent company ................................ 72
Nokia shares and shareholders ............................................................................... 77
Nokia Group 2008 – 2012, IFRS ................................................................................ 82
Calculation of key ratios ............................................................................................ 84
Signing of the Annual Accounts 2012
and proposal for distribution of profi t .................................................................. 85
Auditors’ report .......................................................................................................... 86
A N N U A L A C C O U N T S 2 0 1 2
17
CONSOLIDATED INCOME STATEMENTS, IFRS
Financial year ended December 31
Notes
Net sales
Cost of sales
Gross profi t
Research and development expenses
Selling and marketing expenses
Administrative and general expenses
Impairment of goodwill
Other income
Other expenses
Operating loss (–)/profi t (+)
Share of results of associated companies
Financial income and expenses
Loss (–)/profi t (+) before tax
Tax
2012
EURm
30 176
– 21 786
8 390
– 4 782
– 3 205
– 959
—
403
8
7
7, 8
– 2 150
2011
EURm
38 659
– 27 300
11 359
– 5 584
– 3 769
– 1 085
– 1 090
221
– 1 125
2–10, 24
– 2 303
– 1 073
15, 31
8, 11
– 1
– 340
– 2 644
– 1 145
12
– 23
– 102
– 1 198
– 290
2010
EURm
42 446
– 29 456
12 990
– 5 844
– 3 856
– 1 039
—
476
– 657
2 070
1
– 285
1 786
– 443
Loss (–)/profi t (+)
– 3 789
– 1 488
1 343
Loss (–)/profi t (+) attributable to equity holders of the parent
Loss attributable to non-controlling interests
Earnings per share
(for loss (–)/profi t (+) attributable to the equity holders of the parent)
28
Basic
Diluted
– 3 106
– 683
– 3 789
2012
EUR
– 0.84
– 0.84
– 1 164
– 324
– 1 488
2011
EUR
– 0.31
– 0.31
Average number of shares (1 000’s shares)
28
2012
2011
1 850
– 507
1 343
2010
EUR
0.50
0.50
2010
Basic
Diluted
See Notes to Consolidated Financial Statements.
3 710 845
3 709 947
3 708 816
3 710 845
3 709 947
3 713 250
18
N O K I A I N 2 0 1 2
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME, IFRS
Financial year ended December 31
Notes
Loss (–)/profi t (+)
2012
EURm
– 3 789
2011
EURm
– 1 488
Other comprehensive income (+)/expense (–)
Items that may be reclassifi ed subsequently to profi t or loss
Translation diff erences
Net investment hedges
Cash fl ow hedges
Available-for-sale investments
Other increase (+)/decrease (–), net
Income tax related to components
of other comprehensive income/expense
Other comprehensive income (+)/expense (–), net of tax
22
22
21
21
21, 22
39
– 58
– 41
35
10
12
– 3
9
– 37
116
70
– 16
– 16
126
2010
EURm
1 343
1 302
– 389
– 141
9
45
126
952
Total comprehensive income (+)/expense (–)
– 3 792
– 1 362
2 295
Total comprehensive income (+)/expense (–),
attributable to
equity holders of the parent
non-controlling interests
See Notes to Consolidated Financial Statements.
– 3 157
– 635
– 3 792
– 1 083
– 279
– 1 362
2 776
– 481
2 295
N O K I A C O R P O R A T I O N A N D S U B S I D I A R I E S
19
CONSOLIDATED STATEMENTS
OF FINANCIAL POSITION, IFRS
December 31
ASSETS
Non-current assets
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
(2012: EUR 248 million, 2011: EUR 284 million)
Prepaid expenses and accrued income
Current portion of long-term loans receivable
Other fi nancial assets
Investments at fair value through profi t 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 diff erences
Fair value and other reserves
Reserve for invested non-restricted equity
Retained earnings
Non-controlling 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 fi nancial liabilities
Accounts payable
Accrued expenses and other liabilities
Provisions
Total shareholders’ equity and liabilities
See Notes to Consolidated Financial Statements.
20
N O K I A I N 2 0 1 2
Notes
2012
EURm
2011
EURm
13
13
14
15
16
25
16, 34
4 876
647
1 431
58
689
1 254
112
4
9 071
18, 20
1 538
16, 20, 34
19
16, 34
16, 17, 35
16, 34
16, 34
16, 34
34
23
22
21
16, 34
25
16, 34
16, 34
16, 17, 34
16, 34
26
27
5 551
3 381
35
464
415
542
5 448
3 504
20 878
29 949
246
446
–629
744
123
3 136
3 995
8 061
1 386
9 447
5 087
700
69
5 856
201
261
90
4 394
7 081
2 619
14 646
29 949
4 838
1 412
1 842
67
641
1 848
99
3
10 750
2 330
7 181
4 488
54
500
433
1 233
7 279
1 957
25 455
36 205
246
362
– 644
771
154
3 148
7 836
11 873
2 043
13 916
3 969
800
76
4 845
357
995
483
5 532
7 450
2 627
17 444
36 205
CONSOLIDATED STATEMENTS
OF CASH FLOWS, IFRS
Financial year ended December 31
Cash fl ow from operating activities
Loss (–)/profi t (+) attributable to equity holders of the parent
Adjustments, total
Change in net working capital
Cash generated from operations
Interest received
Interest paid
Other fi nancial income and expenses, net
Income taxes paid, net
Net cash used in / from operating activities
Cash fl ow from investing activities
Acquisition of businesses, net of acquired cash
Purchase of current available-for-sale investments, liquid assets
Purchase of investments at fair value through profi t and loss, liquid assets
Purchase of non-current available-for-sale investments
Purchase of shares in associated companies
Proceeds from (+) / payment of (– ) other long-term receivables
Proceeds from (+) / payment of (– ) short-term loans receivable
Capital expenditures
Proceeds from disposal of businesses, net of disposed cash
Proceeds from disposal of shares in associated companies
Notes
2012
EURm
2011
EURm
32
32
– 3 106
3 838
123
855
130
– 277
– 584
– 478
– 354
13
– 1 668
– 40
– 55
– 1
—
24
– 461
– 15
5
– 1 164
3 486
– 638
1 684
190
– 283
264
– 718
1 137
– 817
– 3 676
– 607
– 111
– 2
– 14
– 31
– 597
– 2
4
2010
EURm
1 850
2 112
2 349
6 311
110
– 235
– 507
– 905
4 774
– 110
– 8 573
– 646
– 124
– 33
2
– 2
– 679
120
5
Proceeds from maturities and sale of current available-for-sale investments,
liquid assets
2 355
6 090
7 181
Proceeds from maturities and sale of investments
at fair value through profi t and loss, liquid assets
Proceeds from sale of non-current available-for-sale investments
Proceeds from sale of fi xed assets
Dividends received
Net cash from/used in investing activities
Cash fl ow from fi nancing activities
Other contributions from shareholders
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 fi nancing 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
16, 34
86
37
279
3
562
—
—
752
– 266
– 196
– 755
– 465
– 27
– 284
9 236
8 952
3 504
5 448
8 952
1 156
57
48
1
333
83
21
1
1 499
– 2 421
546
—
1
– 51
– 59
– 1 536
– 1 099
107
1 644
7 592
9 236
1 957
7 279
9 236
—
1
482
– 6
131
– 1 519
– 911
224
1 666
5 926
7 592
1 951
5 641
7 592
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.
N O K I A C O R P O R A T I O N A N D S U B S I D I A R I E S
21
CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS’ EQUITY, IFRS
Number
of
shares Share
Trans-
Share
lation
issue Treasury diff er-
(1 000’s) capital premium
shares ences reserves
Non-
other restrict. Retained controlling controlling
interests
interests
earnings
equity
Total
Before
non-
Fair
Reserve
for
value invested
non-
and
Balance at December 31, 2009
3 708 262
246
279
– 681
– 127
69
3 170
10 132
13 088
1 661 14 749
Translation diff erences
Net investment hedges, net of tax
Cash fl ow hedges, net of tax
Available-for-sale investments,
net of tax
Other increase, net
Profi t
Total comprehensive income
Stock options exercised related
to acquisitions
Share-based compensation
Excess tax benefi t on share-based
compensation
Settlement of performance
and restricted shares
Reissuance of treasury shares
Conversion of debt to equity
Dividend
Acquisitions and other change in
non-controlling interests
Translation diff erences
Net investment hedges net of tax
Cash fl ow hedges, net of tax
Available-for-sale investments,
net of tax
Other decrease, net
Loss
Total comprehensive income
Share-based compensation
Excess tax benefi t on share-based
compensation
Settlement of performance and
restricted shares
Contributions from shareholders
Dividend
Acquisitions and other change in
non-controlling interests
1 240
– 288
– 73
7
—
952
– 66
—
40
1 850
1 890
—
—
– 1
47
– 1
868
– 12
17
1
– 9
1 240
– 288
– 73
7
40
1 850
2 776
– 1
47
– 1
– 4
1
—
64 1 304
– 288
– 116
– 43
7
45
5
– 507 1 343
– 481 2 295
– 1
47
– 1
– 4
1
766
766
– 56 – 1 539
– 43
667
– 82
– 813
– 1 483
– 1 483
– 39
– 39
– 9
– 1 522
– 1 480
– 26
– 28
—
3
84
67
3 161
10 500
14 384
1 847 16 231
– 26
– 28
84
67
– 16
35
10
9
– 28
94
67
– 16
– 16
—
—
18
– 3
– 11
46
1 059
—
– 54
151
—
– 1 180
– 1 083
– 279 – 1 362
– 1 164
– 1 164
– 324 – 1 488
19
– 13
18
– 3
– 5
46
18
– 4
– 5
546
– 1
500
– 1 484
– 1 484
– 39 – 1 523
—
15
15
Total of other equity movements
868
—
33
18
—
Balance at December 31, 2010
3 709 130
246
312
– 663
825
Total of other equity movements
1 059
—
50
19
—
—
– 13
– 1 484
– 1 428
475
– 953
Balance at December 31, 2011
3 710 189
246
362
– 644
771
154
3 148
7 836
11 873
2 043 13 916
22
N O K I A I N 2 0 1 2
CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS’ EQUITY, IFRS (continued)
Number
of
shares Share
Trans–
Share
lation
issue Treasury diff er-
(1 000’s) capital premium
shares ences reserves
Non-
other restrict. Retained controlling controlling
interests
interests
earnings
equity
Total
Before
non-
Fair
Reserve
for
value invested
non-
and
Balance at December 31, 2011
3 710 189
246
362
– 644
771
154
3 148
7 836
11 873
2 043 13 916
Translation diff erences
Net investment hedges, net of tax
Cash fl ow hedges, net of tax
Available-for-sale investments,
net of tax
Other increase, net
Loss
Total comprehensive income
Share-based compensation
Excess tax benefi t on share-based
compensation
Settlement of performance and
restricted shares
Dividend
—
796
Convertible bond – equity component
Total of other equity movements
796
—
40
– 67
– 67
36
—
– 27
– 31
—
– 3 099
7
– 3 106
15
– 12
– 742
15
—
—
– 12
– 742
40
– 67
– 67
36
7
– 2
47
3
38
– 67
– 20
36
10
– 3 106
– 3 157
– 683 – 3 789
– 635 – 3 792
1
3
– 2
– 742
85
– 655
1
3
– 2
– 22
– 764
85
– 22
– 677
—
1
3
– 5
85
84
Balance at December 31, 2012
3 710 985
246
446
– 629
744
123
3 136
3 995
8 061
1 386 9 447
Dividends declared per share were EUR . for (EUR . for and EUR . for ), subject to shareholders’ approval.
See Notes to Consolidated Financial Statements.
N O K I A C O R P O R A T I O N A N D S U B S I D I A R I E S
23
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
1. ACCOUNTING PRINCIPLES
Basis of presentation
The consolidated fi nancial statements of Nokia Corporation
(“Nokia” or “the Group”), a Finnish public limited liability com-
pany 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 fi nancial state-
ments 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 consolidated fi nancial statements also conform to Finn-
ish accounting legislation. Nokia’s Board of Directors author-
ized the fi nancial statements for for issuance and fi ling on
March , .
As of April , , the Group’s operational structure fea-
tured two new operating and reportable segments: Smart
Devices and Mobile Phones, which combined with Devices &
Services Other and unallocated items form Devices & Services
business.
As of October , , the Group formed a Location &
Commerce business which combines NAVTEQ and Nokia’s social
location services operations from Devices & Services. Location
& Commerce business is an operating and reportable seg-
ment. From the third quarter until the end of the third
quarter , NAVTEQ was a separate reportable segment of
Nokia. As a result of this structure, Nokia currently has four
operating and reportable segments: Smart Devices and Mobile
Phones within Devices & Services, Location & Commerce and
Nokia Siemens Networks.
As of January , , Location & Commerce business and
reportable segment has been renamed as the HERE business
and reportable segment.
The presentation of Nokia Siemens Networks’ restructuring
and other associated expenses has been aligned with other
Nokia businesses and included within other expenses instead
of impacting functions. Accordingly, included in other expens-
es in is EUR million restructuring charges, previously
refl ected within cost of sales (EUR million), R&D (EUR mil-
lion), selling and marketing (EUR million) and administrative
expenses (EUR million). Included in other expenses in
is EUR million restructuring charges previously refl ected
within cost of sales (EUR million), R&D (EUR million), sell-
ing and marketing (EUR million) and administrative expenses
(EUR million).
Certain notes to the fi nancial statements include changes in
presentation format. To allow meaningful comparison be-
tween years, comparative information have been aligned with
current presentation format.
ADOPTION OF PRONOUNCEMENTS UNDER IFRS
In the current year, the Group has adopted all of the new and
revised standards, amendments and interpretations to exist-
ing standards issued by the IASB that are relevant to its opera-
tions and eff ective for accounting periods commencing on or
after January , .
■ Amendments to IAS Presentation of Financial Statements
retains the ‘one or two statement’ approach at the option
of the entity and only revises the way other comprehensive
income is presented: Requiring separate subtotals for those
elements which may be ‘recycled’ and those elements that
will not.
■ Amendment to IAS Income Taxes provides clarifi cation for
measurement of deferred taxes in situations where an asset
is measured using the fair value model in IAS Investment
Property by introducing a presumption that the carrying
amount of the underlying asset will be recovered through
sale.
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 amendments
did not have a material impact to the consolidated fi nancial
statements.
Principles of consolidation
The consolidated fi nancial 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 % of
the voting rights of the entity, the Group has the power to gov-
ern the operating and fi nancial 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 profi ts and losses of associates is
included in the consolidated income statement in accord-
ance with the equity method of accounting. An associate is an
entity over which the Group exercises signifi cant infl uence.
Signifi cant infl uence is generally presumed to exist when the
Group owns, directly or indirectly through subsidiaries, over
% of the voting rights of the company.
All inter-company transactions are eliminated as part of the
consolidation process. Profi t or loss and each component of
other comprehensive income are attributed to the owners of
the parent and to the non-controlling interests. In the consoli-
dated statement of fi nancial position, non-controlling inter-
ests are presented within equity, separately from the equity of
the owners of the parent.
The entities or businesses acquired during the fi nancial
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 entity or business
divested during an accounting period is included in the Group
accounts only to the date of disposal.
24
N O K I A I N 2 0 1 2
Business combinations
The acquisition method of accounting is used to account for
acquisitions of separate entities or businesses by the Group.
The consideration transferred in a business combination is
measured as the aggregate of the fair values of the assets
transferred, liabilities incurred towards the former own-
ers of the acquired business and equity instruments issued.
Acquisition-related costs are recognized as expense in profi t
and loss in the periods when the costs are incurred and the
related services are received. Identifi able assets acquired
and liabilities assumed by the Group are measured separately
at their fair value as of the acquisition date. Non-controlling
interests in the acquired business are measured separately
based on their proportionate share of the identifi able net
assets of the acquired business. The excess of the cost of the
acquisition over the interest in the fair value of the identifi able
net assets acquired and attributable to the owners of the par-
ent, is recorded as goodwill.
Assessment of the recoverability of long-lived
assets, intangible assets and goodwill
For the purposes of impairment testing, goodwill is allocated
to cash-generating units that are expected to benefi t from the
synergies of the acquisition in which the goodwill arose.
The Group assesses the carrying amount of goodwill annu-
ally 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 identifi able
intangible assets and long-lived assets if events or changes in
circumstances indicate that such carrying amount may not be
recoverable. Factors that could trigger an impairment review
include signifi cant underperformance relative to historical or
projected future results, signifi cant changes in the manner of
the use of the acquired assets or the strategy for the overall
business and signifi cant 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. If there is no reason to believe that cash-generating unit’s
value in use materially exceeds its fair value less costs to sell,
the Group may use fair value less costs to sell as its recover-
able amount.
Cash-generating unit, as determined for the purposes of
the Group’s goodwill impairment testing, is the smallest group
of assets (including goodwill) generating cash infl ows that are
largely independent of the cash infl ows from other assets or
groups of assets. In testing a cash-generating unit for impair-
ment, the Group identifi es all corporate assets that relate to
the cash-generating unit under review and those assets are
allocated, on a reasonable and consistent basis, to the rel-
evant units. The aggregate total carrying amount of the unit,
including the portion of the carrying amount of the corporate
assets allocated to the unit, is compared with its recoverable
amount. An impairment loss is recognized if the recoverable
amount is less than the carrying amount. Impairment losses
are recognized immediately in the income statement.
Disposals of separate entities or businesses
When a disposal transaction causes the Group to relinquish
control over a separate entity or business, the Group records
a gain or loss on disposal at the disposal date. The gain or loss
on disposal is calculated as the diff erence between the fair
value of the consideration received and the carrying amounts
of derecognized net assets attributable to the equity holders
of the parent and non-controlling interests of the disposed
entity or business, adjusted by amounts previously recognized
in other comprehensive income in relation to that entity or
business.
Foreign currency translation
FUNCTIONAL AND PRESENTATION CURRENCY
The fi nancial statements of all Group companies are measured
using functional currency, which is the currency of the primary
economic environment in which each of the companies oper-
ate. The consolidated fi nancial statements are presented in
euro, which is the functional and presentation 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 end of the accounting period. Foreign
exchange gains and losses arising from statement of fi nancial
position items are reported in fi nancial income and expenses.
Unrealized foreign exchange gains and losses related to non-
current available-for-sale investments are recognized in other
comprehensive income.
FOREIGN GROUP COMPANIES
In the consolidated accounts, all income and expenses of for-
eign Group companies, where the functional currency is other
than euro, are translated into euro at the average monthly
foreign exchange rates. All assets and liabilities of foreign
Group companies are translated into euro at the year-end for-
eign exchange rates. Diff erences resulting from the translation
of income and expenses at the average rate and assets and
liabilities at the closing rate are recognized in other compre-
hensive income as translation diff erences within consolidated
shareholder’s 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 proportionate
share of the translation diff erences is recognized as income or
as expense when the gain or loss on disposal is recognized.
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
25
Revenue recognition
Majority of the Group’s sales are recognized as revenue when
the signifi cant risks and rewards of ownership have transferred
to the buyer, continuing managerial involvement usually as-
sociated with ownership and eff ective control have ceased, the
amount of revenue can be measured reliably, it is probable that
economic benefi ts associated with the transaction will fl ow
to the Group and the costs incurred or to be incurred with re-
spect to 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 period 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 com-
ponents consisting of any combination of hardware, services
and software. The commercial eff ect of each separately iden-
tifi able component of the transaction is evaluated in order to
refl ect the substance of the transaction. The consideration re-
ceived from these transactions is allocated to each separately
identifi able component based on the relative fair value of each
component. The Group determines the fair value of each com-
ponent by taking into consideration 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 modifi cation of complex telecom-
munications equipment are recognized 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 benefi ts associated with the contract will fl ow to the
Group and the stage of contract completion can be measured
reliably. When the Group is not able to meet one or more of
the 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.
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
profi ts 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 where such revisions become probable
and can be estimated reliably. Losses on projects in progress
are recognized in the period they become probable and can be
estimated reliably.
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 as they do not meet the criteria for capitalization.
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 to years. Where an indica-
tion of impairment exists, the carrying amount of the related
intangible asset is assessed for recoverability. Any resulting
impairment losses are recognized immediately in the income
statement.
Employee benefi ts
PENSIONS
The Group companies have various pension schemes in ac-
cordance with the local conditions and practices in the coun-
tries in which they operate. The schemes are generally funded
through payments to insurance companies or contributions
to trustee-administered funds as determined by periodic
actuarial calculations.
In a defi ned contribution plan, the Group has no legal or
constructive obligation to make any additional contributions
even if the party receiving the contributions is unable to pay
the pension obligations in question. The Group’s contributions
to defi ned contribution plans, multi-employer and insured
plans are recognized in the income statement in a period which
the contributions relate to.
If a pension plan is funded through an insurance contract
where the Group does not retain any legal or constructive ob-
ligations, the plan is treated as a defi ned contribution plan. All
arrangements that do not fulfi ll these conditions are consid-
ered defi ned benefi t plans.
For defi ned benefi t plans, pension costs are assessed using
the projected unit credit method: Pension cost is recognized
in the income statement so as to spread the service cost over
the service lives of employees. Pension obligation is measured
as the present value of the estimated future cash outfl ows us-
ing interest rates on high quality corporate bonds with appro-
priate maturities. Actuarial gains and losses outside corridor
are recognized over the average remaining service lives of em-
ployees. The corridor is defi ned as ten percent of the greater
of the value of plan assets or defi ned benefi t obligation at the
beginning of the respective year. Actuarial gains and losses
within the corridor limits are not recognized.
26
N O K I A I N 2 0 1 2
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 specifi ed 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
fi nancial position is pension obligation at the closing date less
the fair value of plan assets, unrecognized actuarial gains
and losses, and past service costs. Any net pension asset is
limited to unrecognized actuarial losses, past service cost, the
present value of available refunds from the plan and expected
reductions in future contributions to the plan.
Actuarial valuations for the Group’s defi ned benefi t pension
plans are performed annually. In addition, actuarial valuations
are performed when a curtailment or settlement of a defi ned
benefi t plan occurs in the Group.
the income statement on a straight-line basis over the lease
terms unless another systematic approach is more represent-
ative of the pattern of the user’s benefi t.
Inventories
Inventories are stated at the lower of cost or net realizable
value. Cost is determined using standard cost, which approxi-
mates actual cost on a FIFO (First-in First-out) basis. Net realiz-
able 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 ap-
propriate proportion of production overhead is included in the
inventory values.
An allowance is recorded for excess inventory and obsoles-
cence based on the lower of cost or net realizable value.
TERMINATION BENEFITS
Termination benefi ts are payable when employment is ter-
minated before the normal retirement date, or whenever an
employee accepts voluntary redundancy in exchange for these
benefi ts. The Group recognizes termination benefi ts when it is
demonstrably committed to either terminating the employ-
ment of current employees according to a detailed formal plan
without possibility of withdrawal, or providing termination
benefi ts as a result of an off er made to encourage voluntary
redundancy.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumu-
lated depreciation. Depreciation is recorded on a straight-line
basis over the expected useful lives of the assets as follows:
Buildings and constructions
Light buildings and constructions
Production machinery,
measuring and test equipment
Other machinery and equipment
– years
– years
– years
– years
Land and water areas are not depreciated.
Maintenance, repairs and renewals are generally charged to
expense during the fi nancial 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 benefi ts in excess of the originally assessed stand-
ard of performance of the existing asset will fl ow to the Group.
Major renovations are depreciated over the remaining useful
life of the related asset. Leasehold improvements are depreci-
ated over the shorter of the lease term or useful life.
Gains and losses on the disposal of fi xed assets are included
in operating profi t/loss.
Leases
The Group has entered into various operating lease contracts.
The related payments are treated as rentals and recognized in
Financial assets
The Group has classifi ed its fi nancial assets to the following
categories: available-for-sale investments, loans and receiva-
bles, fi nancial assets at fair value through profi t or loss and
bank and cash.
AVAILABLE-FOR-SALE INVESTMENTS
The Group invests a portion of cash needed to cover projected
cash needs of its on-going operations in highly liquid, interest-
bearing investments and certain equity instruments. The fol-
lowing investments are classifi ed as available-for-sale based
on the purpose for acquiring the investments as well as ongo-
ing intentions: () Highly liquid fi xed income and money-market
investments that are readily convertible to known amounts of
cash with maturities at acquisition of months or less, which
are classifi ed in the balance sheet as current available-for-
sale investments, cash equivalents. Due to the high credit
quality and short-term nature of these investments, there
is an insignifi cant risk of changes in value. () Similar types of
investments as in category (), but with maturities at acquisi-
tion of longer than months, are classifi ed in the balance
sheet as current available-for-sale investments, liquid assets.
() Investments in technology related publicly quoted equity
shares, or unlisted private equity shares and unlisted funds,
are classifi ed in the balance sheet as non-current available-
for-sale investments.
Current fi xed income and money-market investments are
fair valued by using quoted market rates, discounted cash
fl ow analyses and other appropriate valuation models at the
balance sheet date. Investments 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 esti-
mated by using various factors, including, but not limited to:
() the current market value of similar instruments, () prices
established from a recent arm’s length fi nancing transaction
of the target companies, () analysis of market prospects and
operating performance of the target companies taking into
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
27
consideration the public market of comparable companies
in similar industry sectors. The remaining available-for-sale
investments, which are technology related investments in pri-
vate equity shares and unlisted funds for which the fair value
cannot be measured reliably due to non-existence of public
markets or reliable valuation methods against which to value
these assets, are carried at cost less impairment.
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 changes in fair value of available-for-sale investments
are recognized in fair value and other reserves as part of
shareholders’ equity, with the exception of interest calcu-
lated using the eff ective interest method as well as foreign
exchange gains and losses on monetary assets, which are rec-
ognized directly in profi t and loss. Dividends on available-for-
sale equity instruments are recognized in profi t and loss when
the Group’s right to receive payment is established. When the
investment is disposed of, the related accumulated changes in
fair value are released from shareholders’ equity and recog-
nized in profi t and loss. The weighted average method is used
when determining the cost basis of publicly listed equities be-
ing disposed of by the Group. FIFO (First-in First-out) method
is used to determine the cost basis of fi xed income securities
being disposed of by the Group.
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 im-
paired including, but not limited to, counterparty default and
other factors causing a reduction in value that can be consid-
ered other than temporary. The cumulative net loss relating
to that investment is removed from equity and recognized
in profi t and loss. 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 profi t and loss.
INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND
LOSS, LIQUID ASSETS
Certain highly liquid fi nancial assets are designated as invest-
ments at fair value through profi t and loss, liquid assets, at
inception. For these investments the following criteria must be
met: () the designation eliminates or signifi cantly reduces the
inconsistent treatment that would otherwise arise from meas-
uring the assets or recognizing gains or losses on a diff erent
basis; or () the assets are part of a group of fi nancial assets,
which are managed and their performance evaluated on a fair
value basis, in accordance with a documented risk manage-
ment or investment strategy.
These investments are initially recognized and subsequent-
ly remeasured at fair value. Fair value adjustments and realized
gains and losses are recognized in profi t and loss.
LOANS RECEIVABLE
Loans receivable include loans to customers and suppliers.
Loans receivable are initially measured at fair value and subse-
quently at amortized cost less impairment using the eff ective
interest method. Loans are subject to regular and thorough
review as to their collectability and available collateral. In the
event that a loan is deemed not fully recoverable, a provision is
made to refl ect the shortfall between the carrying amount and
the present value of the expected cash fl ows. Loan interest is
recognized in interest income. The long-term portion of loans
receivable is included on the statement of fi nancial position
under long-term loans receivable and the current portion
under current portion 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. Allowance for doubtful
accounts is based on a monthly review of all outstanding
amounts where signifi cant doubt about collectability exists.
Monthly review includes an analysis of historical bad debt,
customer concentrations, customer creditworthiness, current
economic trends and changes in our customer payment terms.
Allowance for doubtful accounts is included in profi t and loss
within other operating expenses.
Financial liabilities
COMPOUND FINANCIAL INSTRUMENTS
Compound fi nancial instruments have both a fi nancial liability
and an equity component from the issuers’ perspective. The
components are defi ned based on the terms of the fi nancial
instrument and presented and measured separately accord-
ing to their substance. At initial recognition of a compound
fi nancial instrument, the fi nancial liability component is
recognized at fair value and residual amount is allocated to the
equity component. This allocation is not revised subsequently.
The Group has issued a convertible bond, which is a compound
fi nancial instrument, and its fi nancial liability component is
accounted for as a loan payable.
LOANS PAYABLE
Loans payable are recognized initially at fair value, net of
transaction costs incurred. In subsequent periods loans payable
are measured at amortized cost using the eff ective interest
method. Transaction costs and loan interest are recognized in
interest expenses over the life of the instrument. The long-term
portion of loans payable is included on the statement of fi nan-
cial position under long-term interest-bearing liabilities and the
current portion under current portion of long-term loans.
28
N O K I A I N 2 0 1 2
ACCOUNTS PAYABLE
Accounts payable are carried at the original invoiced amount,
which is considered to be fair value due to the short-term
nature of the Group’s accounts payable.
Derivative fi nancial 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 under and qualify for hedge accounting or not.
Generally, the cash fl ows of a hedge are classifi ed as cash
fl ows from operating activities in the consolidated statement
of cash fl ows as the underlying hedged items relate to the
company’s operating activities. When a derivative contract is
accounted for as a hedge of an identifi able position relating to
fi nancing or investing activities, the cash fl ows of the contract
are classifi ed in the same manner as the cash fl ows of the posi-
tion being hedged.
DERIVATIVES NOT DESIGNATED IN HEDGE ACCOUNTING
RELATIONSHIPS CARRIED AT FAIR VALUE THROUGH
PROFIT AND LOSS
Forward foreign exchange contracts are valued 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 us-
ing the Garman & Kohlhagen option valuation model. Changes
in the fair value on these instruments are recognized in profi t
and loss.
Fair values of forward rate agreements, interest rate op-
tions, futures contracts and exchange traded options are cal-
culated based on quoted market rates at each balance sheet
date. Discounted cash fl ow analyses are used to value interest
rate and cross-currency interest rate swaps. Changes in the
fair value of these contracts are recognized in profi t and loss.
For derivatives not designated under hedge accounting but
hedging identifi able exposures such as anticipated foreign
currency denominated sales and purchases, the gains and
losses are recognized in other operating income or expenses.
The gains and losses on all other derivatives not designated
under hedge accounting are recognized in fi nancial income and
expenses.
Embedded derivatives are identifi ed and monitored by the
Group. Embedded derivatives are measured at fair valued
at each balance sheet date with changes in the fair value are
recognized in profi t and loss.
Hedge accounting
The Group applies hedge accounting on certain forward foreign
exchange contracts, certain options or option strategies and
certain interest rate derivatives. Qualifying options and option
strategies have zero net premium or a net premium paid. For
option structures the critical terms of the bought and sold op-
tions are the same and the nominal amount of the sold option
component is no greater than that of the bought option.
CASH FLOW HEDGES: HEDGING OF FORECAST FOREIGN
CURRENCY DENOMINATED SALES AND PURCHASES
The Group applies hedge accounting for “Qualifying hedges”.
Qualifying hedges are those properly documented cash fl ow
hedges of the foreign exchange rate risk of future forecast
foreign currency denominated sales and purchases that meet
the following requirements. The cash fl ow being hedged must
be “highly probable” and must present an exposure to varia-
tions in cash fl ows that could ultimately aff ect profi t or loss.
The hedge must be highly eff ective both prospectively and
retrospectively.
For qualifying foreign exchange forwards, the change in
fair value that refl ects the change in spot exchange rates is
deferred in fair value and other reserves to the extent that the
hedge is eff ective. For qualifying foreign exchange options, or
option strategies, the change in intrinsic value is deferred in
fair value and other reserves to the extent that the hedge is
eff ective. In all cases, the ineff ective portion is recognized im-
mediately in profi t and loss as fi nancial income and expenses.
Hedging costs, expressed either as the change in fair value
that refl ects the change in forward exchange rates less the
change in spot exchange rates for forward foreign exchange
contracts, or change in the time value for options, or op-
tions strategies, are recognized in other operating income or
expenses.
Accumulated changes in fair value from qualifying hedges
are released from fair value and other reserves to profi t
and loss as adjustments to sales and cost of sales when the
hedged cash fl ow aff ects profi t and loss. Forecast foreign
currency sales and purchases aff ect profi t and loss at various
dates up to approximately year from the balance sheet date.
If the hedged cash fl ow is no longer expected to occur, all
deferred gains or losses are released immediately to profi t and
loss as adjustments to sales and cost of sales. If the hedged
cash fl ow ceases to be highly probable, but is still expected to
occur, accumulated gains and losses remain in equity until the
hedged cash fl ow aff ects profi t and loss.
CASH FLOW HEDGES: HEDGING OF FOREIGN CURRENCY
RISK OF HIGHLY PROBABLE BUSINESS ACQUISITIONS
AND OTHER TRANSACTIONS
From time to time the Group hedges the cash fl ow variability
due to foreign currency risk inherent in highly probable busi-
ness acquisitions and other future transactions that result in
the recognition of non-fi nancial assets. When those non-
fi nancial assets are recognized in the statement of fi nancial
position, the gains and losses previously deferred are trans-
ferred from fair value and other reserves and included in the
initial acquisition cost of the asset. The deferred amounts are
ultimately recognized in profi t and loss as a result of goodwill
assessments in case of business acquisitions and through de-
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
29
preciation in case of other assets. In order to apply for hedge
accounting, the forecast transactions must be highly probable
and the hedges must be highly eff ective prospectively and
retrospectively.
CASH FLOW HEDGES: HEDGING OF CASH FLOW
VARIABILITY ON VARIABLE RATE LIABILITIES
The Group applies cash fl ow hedge accounting for hedging
cash fl ow variability on certain variable rate liabilities. The
eff ective portion of the gain or loss relating to interest rate
swaps hedging variable rate borrowings is deferred in fair value
and other reserves. The gain or loss related to the ineff ective
portion is recognized immediately in profi t and loss as fi nancial
income and expenses. For hedging instruments closed before
the maturity date of the related liability, hedge accounting
will immediately discontinue from that date onwards, with all
the cumulative gains and losses on the hedging instruments
recycled gradually to profi t and loss when the hedged variable
interest cash fl ows aff ect profi t and loss.
FAIR VALUE HEDGES
The Group applies fair value hedge accounting with the objec-
tive to reduce the exposure to fl uctuations 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 attrib-
utable to the hedged risk, are recorded in profi t and loss in
fi nancial income and expenses.
If a hedge no longer meets the criteria for hedge account-
ing, hedge accounting ceases and any fair value adjustments
made to the carrying amount of the hedged item while the
hedge was eff ective are amortized to profi t and loss based on
the eff ective interest method.
HEDGES OF NET INVESTMENTS IN FOREIGN
OPERATIONS
The Group also applies hedge accounting for its foreign cur-
rency hedging on net investments. Qualifying hedges are
those properly documented hedges of the foreign exchange
rate risk of foreign currency denominated net investments
that are eff ective both prospectively and retrospectively.
For qualifying foreign exchange forwards, the change in
fair value that refl ects the change in spot exchange rates is
deferred in translation diff erences within consolidated share-
holder’s equity. The change in fair value that refl ects the
change in forward exchange rates less the change in spot ex-
change rates is recognized in profi t and loss in fi nancial income
and expenses. For qualifying foreign exchange options, the
change in intrinsic value is deferred in translation diff erences
within consolidated shareholder’s equity. Changes in the time
value are at all times recognized directly in profi t and loss as
fi nancial income and expenses. If a foreign currency denomi-
nated loan is used as a hedge, all foreign exchange gains and
losses arising from the transaction are recognized in transla-
tion diff erences within consolidated shareholder’s equity. In
all cases, the ineff ective portion is recognized immediately in
profi t and loss as fi nancial income and expenses.
Accumulated changes in fair value from qualifying hedges
are released from translation diff erences 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 proportionate share of the changes in the fair value
from qualifying hedges deferred in translation diff erences is
recognized as income or as expense when the gain or loss on
disposal is recognized.
Income taxes
The tax expense comprises current tax and deferred tax.
Current taxes are based on the results of the Group compa-
nies 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 directly in equity, in which case, the tax is recognized
in other comprehensive income or equity, respectively.
Deferred tax assets and liabilities are determined, for all
temporary diff erences arising between tax bases of assets and
liabilities and their carrying amounts in the consolidated fi nan-
cial statements using liability method. Deferred tax assets are
recognized to the extent that it is probable that future taxable
profi t will be available against which the tax losses, unused tax
credits or deductible temporary diff erences can be utilized.
Each reporting period they are assessed for realizability and
when circumstances indicate it is no longer probable that
deferred tax assets will be utilized, they are adjusted as neces-
sary. Deferred tax liabilities are recognized for temporary dif-
ferences that arise between the amounts initially recognized
and the tax base of identifi able net assets acquired in business
combinations. Deferred tax assets and liabilities are off set
when there is a legally enforceable right to off set current tax
assets against current tax liabilities and when the deferred tax
assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or diff er-
ent taxable entities where there is an intention to settle the
balances on a net basis.
The enacted or substantively 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 prob-
able that an outfl ow of resources will be required to settle
the obligation and a reliable estimate of the amount can be
made. When the Group expects a provision to be reimbursed,
the reimbursement is recognized as an asset only when the
reimbursement is virtually certain. The Group assesses the ad-
equacy of its pre-existing provisions and adjusts the amounts
as necessary based on actual experience and changes in future
30
N O K I A I N 2 0 1 2
estimates at each balance sheet date.
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 volumes, product mix and
repair and replacement cost.
INTELLECTUAL PROPERTY RIGHTS (IPR) PROVISIONS
The Group provides for the estimated future settlements relat-
ed to asserted and unasserted past alleged IPR infringements
based on the probable outcome of potential infringement.
TAX PROVISIONS
A provision for tax contingencies is recognized 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 authorities. Tax
provisions are based upon the estimated future settlement
amount at each balance sheet date.
RESTRUCTURING PROVISIONS
The Group provides for the estimated cost to restructure when
a detailed formal plan of restructuring has been completed,
the restructuring plan has been announced by the Group and a
reliable estimate of the amount can be made.
OTHER PROVISIONS
The Group recognizes the estimated liability for non-can-
cellable 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 fulfi lling the contract and the
expected cost of terminating the contract.
Share-based compensation
The Group off ers three types of global equity settled share-
based compensation schemes for employees: stock options,
performance shares and restricted shares.
Employee services received, and the corresponding 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 recog-
nized as an expense in the income statement over the relevant
service periods.
A separate vesting period is defi ned for each quarterly stock
options plan tranche. When stock options are exercised, the
proceeds received, net of any transaction costs, are credited
to share issue premium and the reserve for invested non-
restricted equity.
The Group has also issued certain stock options which are
accounted for as cash-settled. Related employee services
received, and the liability incurred, are measured at the fair
value of the liability. The fair value of stock options is estimat-
ed based on the reporting date market value less the exercise
price of the stock options. The fair value of the liability is
remeasured at each reporting date and at the date of set-
tlement and related change in fair value is recognized in the
income statement over the relevant service periods.
Treasury shares
The Group recognizes acquired treasury shares as a deduc-
tion 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 fi nancial statements until they have been approved by
the shareholders at the Annual General Meeting.
Earnings per share
Basic earnings per share is calculated by dividing the profi t
attributable to equity holders of the parent by the weighted
average number of shares outstanding during the year exclud-
ing shares purchased by the Group and held as treasury shares.
Diluted earnings per share is calculated by adjusting the net
profi t attributable to equity holders of the parent to eliminate
the interest expense of the convertible bond and by adjusting
the weighted average number of the shares outstanding with
the dilutive eff ect of stock options, performance shares and
restricted shares outstanding during the year as well as the
assumed conversion of convertible bond.
Use of estimates and critical accounting
judgments
The preparation of fi nancial statements in conformity with
IFRS requires the application of judgment by management in
selecting appropriate assumptions for calculating fi nancial
estimates, which inherently contain some degree of uncer-
tainty. Management bases its estimates on historical experi-
ence, expected outcomes and various other assumptions
that are believed to be reasonable under the circumstances.
The related results form a 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. The Group will revise
material estimates if changes occur in the circumstances on
which an estimate was based or as a result of new informa-
tion or more experience. Actual results may diff er from these
estimates under diff erent assumptions or conditions.
Set forth below are areas requiring signifi cant judgment and
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
31
estimation that may have an impact on reported results and
the fi nancial position.
REVENUE RECOGNITION
Majority of the Group’s sales are recognized as revenue when
the signifi cant risks and rewards of ownership have transferred
to the buyer, continuing managerial involvement usually as-
sociated with ownership and eff ective control have ceased,
the amount of revenue can be measured reliably, it is probable
that economic benefi ts associated with the transaction will
fl ow to the Group and the costs incurred or to be incurred in
respect of the transaction can be measured reliably. Sales
could materially change if management’s assessment of such
criteria was determined to be inaccurate. 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 identifi able 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 component have been met. Deter-
mination of the fair value for each component requires the use
of estimates and judgment taking into consideration factors
which may have a signifi cant impact on the timing and amount
of revenue recognition. Examples of such factors include 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.
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.
Potential changes in these estimates could result in revisions
to the sales in future periods.
Revenue from contracts involving solutions achieved
through modifi cation of complex telecommunications equip-
ment is recognized on the percentage of completion basis
when the outcome of the contract can be estimated reliably.
Recognized revenues and profi ts are subject to revisions
during the project in the event that the assumptions regard-
ing the overall project outcome are revised. Current sales and
profi t 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, chang-
es in customers’ plans, realization of penalties, and other
corresponding factors, which may have a signifi cant impact on
the timing and amount of revenue recognition.
CUSTOMER FINANCING
The Group has provided a limited number of customer fi nanc-
ing arrangements and agreed extended payment terms with
selected customers. Should actual fi nancial position of the
customers or general economic conditions diff er from as-
sumptions, the ultimate collectability of such fi nancings and
trade credits may be required to be re-assessed, which could
result in a write-off of these balances and thus negatively
impact future profi ts. From time to time the Group endeavors
to mitigate this risk through transfer of its rights to the cash
collected from these arrangements to third party fi nancial
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 es-
timated losses resulting from subsequent inability of custom-
ers to make required payments. If the fi nancial conditions of
customers were to deteriorate, reducing their ability to make
payments, additional allowances may be required.
INVENTORY-RELATED ALLOWANCES
The Group periodically reviews inventory for excess amounts,
obsolescence and declines in net realizable value 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 esti-
mates could result in revisions to the valuation of inventory in
future periods.
WARRANTY PROVISIONS
The Group provides for the estimated cost of product warran-
ties 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 prod-
ucts incorporating complex technologies are continuously
introduced, and as local laws, regulations and practices may
change, changes in these estimates could result in additional
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 past costs related
to alleged asserted IPR infringements. The provision is an
estimate calculated based on a probable outcome of potential
future settlement. IPR infringement claims can last for varying
periods of time, resulting in irregular movements in the IPR
infringement provision. The ultimate 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 inher-
ent uncertain nature of litigation, the ultimate outcome or
actual cost of settlement may materially vary from estimates.
RESTRUCTURING PROVISIONS
32
N O K I A I N 2 0 1 2
The Group provides for the estimated future cost related to
restructuring programs. The provision made for restructuring
is based on management’s best estimate. Changes in esti-
mates of timing or amounts of costs to be incurred may be-
come necessary as the restructuring program is implemented.
BUSINESS COMBINATIONS
The Group applies the acquisition method of accounting to
account for acquisitions of businesses. The consideration
transferred in a business combination is measured as the ag-
gregate of the fair values of the assets transferred, liabilities
incurred towards the former owners of the acquired business
and equity instruments issued. Identifi able assets acquired,
and liabilities assumed by the Group are measured separately
at their fair value as of the acquisition date. Non-controlling
interests in the acquired business are measured separately
based on their proportionate share of the identifi able net
assets of the acquired business. The excess of the cost of the
acquisition over Nokia’s interest in the fair value of the identifi -
able net assets acquired is recorded as goodwill.
The allocation of fair values to the identifi able assets
acquired and liabilities assumed is based on various valuation
assumptions requiring management judgment. Actual results
may diff er from the forecasted amounts and the diff erence
could be material. See also Note .
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 fl ows attributable to the asset or cash-
generating unit discounted to present value. The key assump-
tions applied in the determination of recoverable amount
include discount rate, length of an explicit forecast period,
estimated growth rates, profi t margins and level of opera-
tional and capital investment. Amounts estimated could diff er
materially from what will actually occur in the future. See also
Note .
FAIR VALUE OF DERIVATIVES AND OTHER FINANCIAL
INSTRUMENTS
The fair value of fi nancial instruments that are not traded in
an active market (for example unlisted equities and embed-
ded derivatives) are determined using various valuation
techniques. The Group uses judgment to select an appropri-
ate valuation methodology as well as underlying assumptions
based on existing market practice and conditions. Changes in
these assumptions may cause the Group to recognize impair-
ments or losses in future periods.
INCOME TAXES
Management judgment is required in determining current tax
expense, tax provisions, deferred tax assets and liabilities and
the extent to which deferred tax assets can be recognized.
Each reporting period they are assessed for realizability and
when circumstances indicate it is no longer probable that
deferred tax assets will be utilized, they are adjusted as
necessary.
Tax provisions are recognized based on estimates and
assumptions when, despite of management’s 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 authorities. Furthermore, the
Group has ongoing tax investigations in multiple jurisdictions,
including Hungary and India. If the fi nal outcome of these mat-
ters diff ers from the amounts initially recorded, diff erences
may impact the income tax expense in the period in which such
determination is made.
In Netherlands but also in certain other jurisdictions, the
utilization of deferred tax assets is dependent on future
taxable profi t in excess of the profi ts arising from reversal
of existing taxable temporary diff erences. The recognition
of deferred tax assets is based upon whether it is more likely
than not that suffi cient taxable profi ts will be available in the
future from which the reversal of temporary diff erences and
tax losses can be deducted. Recognition therefore involves
judgment with regard to future fi nancial performance of a
particular legal entity or tax group in which the deferred tax
asset has been recognized.
PENSIONS
The determination of pension benefi t obligation and expense
for defi ned benefi t pension plans is dependent on the selec-
tion 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 as-
sets 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 materially aff ect the pension
benefi t obligation and future expense. See also Note .
SHARE-BASED COMPENSATION
The Group operates various types of equity and cash-settled
share-based compensation schemes for employees. Fair value
of equity settled stock options is based on certain assump-
tions, including, among others, expected volatility and expect-
ed life of the options. Non-market related vesting conditions
attached to performance shares are included in assumptions
about the number of shares that the employee will ultimately
receive relating to projections of net sales and earnings per
share. Signifi cant diff erences in equity market performance,
employee option activity and the Group’s projected and actual
net sales and earnings per share performance, may aff ect
future expense. See also Note .
New accounting pronouncements under IFRS
The Group will adopt the following new and revised standards,
amendments and interpretations to existing standards issued
by the IASB that are expected to be relevant to its operations
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
33
and fi nancial position:
other comprehensive income.
IFRS Financial Instruments will change the classifi cation,
measurement and impairment of fi nancial instruments based
on the Group’s objectives for the related contractual cash
fl ows.
IFRS Consolidated Financial Statements establishes prin-
ciples for the presentation and preparation of consolidated
fi nancial statements when an entity controls one or more
other entities.
IFRS Joint Arrangements establishes that the legal form
of an arrangement should not be the primary factor in the
determination of the appropriate accounting for the arrange-
ment. A party to a joint arrangement determines the type of
joint arrangement in which it is involved by assessing its rights
and obligations and accounts for those rights and obligations
in accordance with that type of joint arrangement.
IFRS Disclosure of Interests in Other Entities requires
disclosure of information that enables users of fi nancial state-
ments to evaluate nature of, and risks associated with, its
interests in other entities and the eff ects of those interests on
its fi nancial position, fi nancial performance and cash fl ows.
IFRS Fair Value Measurement replaces fair value measure-
ment guidance contained within individual IFRSs with a single,
unifi ed defi nition of fair value in a single new IFRS standard.
The new standard provides a framework for measuring fair
value, related disclosure requirements about fair value meas-
urements and further authoritative guidance on the applica-
tion of fair value measurement in inactive markets.
Amended IAS Employee Benefi ts discontinues use of the
‘corridor’ approach and remeasurement impacts will be recog-
nized in other comprehensive income. Net interest as a prod-
uct of discount rate and net pension liability will be recognized
in the income statements while eff ect from the diff erence
between the discount rate and actual return on plan assets will
be refl ected in remeasurements within other comprehensive
income. Previously unrecognized actuarial gains and losses
are also recognized in other comprehensive income. Other
long-term employee benefi ts are required to be measured in
the same way even though changes in the recognized amounts
are fully refl ected in profi t or loss. Treatment for termination
benefi ts, specifi cally the point in time when an entity would
recognize a liability for termination benefi ts is also revised.
The Group does not currently expect the adoption of the
amended IAS to have a material impact on the fi nancial
condition and the results of operations of the Group on a
going forward basis. However, the standard requires retro-
spective application for all fi nancial statements presented
including previous years. While the Group anticipates virtually
no impact to prior period income statements as a result of the
retrospective application, the Group expects change in the
net pension liabilities and other comprehensive income due to
the elimination of the ‘corridor approach’. For , there will
be an approximately EUR million (EUR million for )
increase in our pension liabilities and approximately EUR
million (EUR million for ) decrease, net of tax, in our
The eff ective date for IFRS , IFRS and IFRS is
January , , as issued by the IASB. In December , the
EU endorsed adoption of these standards for companies in the
EU with mandatory eff ective date of January , , earlier
adoption permitted. The Group will early adopt these stand-
ards on January , and will adopt IFRS and the amended
IAS on their eff ective date, January , .
On December, , the IASB amended the eff ective date
of IFRS to annual periods beginning on or after January ,
, and modifi ed the relief from restating comparative
periods and the associated disclosures in IFRS . The Group will
adopt the standards on the revised eff ective date.
Excluding the impacts of the Amended IAS Employee
Benefi ts, the Group does not expect material impact from
adoption of the other standards eff ective January , .
2. SEGMENT INFORMATION
Nokia has three businesses: Devices & Services, Location &
Commerce and Nokia Siemens Networks, and four operating
and reportable segments for fi nancial reporting purposes:
Smart Devices and Mobile Phones within our Devices &
Services business, Location & Commerce and Nokia Siemens
Networks.
Nokia’s reportable segments represent the strategic busi-
ness units that off er diff erent products and services. The chief
operating decision maker receives monthly fi nancial infor-
mation for these business units. Key fi nancial performance
measures of the reportable segments include primarily net
sales and contribution/operating profi t. Segment contribution
for Smart Devices and Mobile Phones consists of net sales as
well as its own, directly assigned costs and allocated costs but
excludes major restructuring projects/programs and certain
other items that are not directly related to the segments.
Operating Profi t is presented for Location & Commerce and
Nokia Siemens Networks. Nokia evaluates the performance of
its segments and allocates resources to them based on oper-
ating profi t/contribution.
Smart Devices focuses on Nokia’s most advanced prod-
ucts, including smartphones powered by the Windows Phone
system and has profi t-and-loss responsibility and end-to-end
accountability for the full consumer experience, including
product development, product management and product
marketing.
Mobile Phones focuses on the area of mass market entry
and feature phones as well as aff ordable smart phones and has
profi t-and-loss responsibility and end-to-end accountability
for the full consumer experience, including development, man-
agement and marketing of feature phone products, services
and applications.
Devices & Services Other includes net sales of spare parts
and related cost of sales and operating expenses, as well as
intellectual property related income and common research
34
N O K I A I N 2 0 1 2
amount of the platform support payment will fl uctuate based
on the applicable foreign exchange translation of the
US dollars into euro which is the Group’s reporting currency.
The received platform support payments are recognized over
time as a benefi t to our Smart Devices costs of goods sold.
The total amount of the platform payments is expected to
slightly exceed the total amount of the minimum software roy-
alty commitments. At the end of , the amount of platform
support payments received by Nokia has exceeded the amount
of minimum software royalty commitment payments made to
Microsoft and the remaining minimum software royalty com-
mitment payments are expected to exceed the remaining plat-
form support payments by a total of approximately EUR .
billion over the remaining life of the agreement. In accordance
with the terms of the agreement, the platform support pay-
ments and annual minimum software royalty commitment
payments continue for a corresponding period of time. The
Group has recognized a portion of the received platform sup-
port payments as a benefi t to our Smart Devices cost of goods
sold and the remainder within accrued expenses and other
liabilities. The Microsoft partnership also recognizes the value
of intellectual property and puts in place mechanisms for
exchanging intellectual property rights.
The accounting policies of the segments are the same as
those described in Note . Nokia accounts for intersegment
revenues and transfers as if the revenues were to third par-
ties, that is, at current market prices.
No single customer represents % or more of Group
revenues.
and development expenses. Devices & Services Other also
included operating results of Nokia’s luxury phone business
Vertu until October , , the date of divestment.
Net assets of Devices & Services Other consists of the as-
sets and liabilities related to the above mentioned activities
as well as common functions responsible for selling Nokia’s
products, executing marketing and communications, sourc-
ing, manufacturing and logistics across all Devices & Services
products which have not been allocated to Smart Devices and
Mobile Phones segments.
Location & Commerce develops a range of location-based
products and services for consumers, as well as platform
services and local commerce services for the Group’s feature
phones and smartphones as well as for other device manu-
facturers, application developers, Internet service provid-
ers, merchants, and advertisers. Location & Commerce also
continues to serve NAVTEQ’s existing customers both in
terms of provision of content and as a business-to-business
provider of map data. Location & Commerce has profi t and
loss responsibility and end-to-end accountability for the full
consumer experience. In November , we introduced HERE
as the new brand for Nokia’s location and mapping service.
Also, as of January , , Location & Commerce business and
reportable segment has been renamed as the HERE reportable
business and segment. HERE focuses on the development of
location-based services and local commerce.
Nokia Siemens Networks provides a portfolio of mobile,
fi xed and converged network technology, as well as profes-
sional services including managed services, consultancy and
systems integration, deployment and maintenance to opera-
tors and service providers.
Corporate Common Functions consists of company-wide
functions.
In February , Nokia announced a partnership with
Microsoft to bring together the respective complementary as-
sets and expertise of both parties to build a new global mobile
ecosystem for smartphones. The partnership, under which
Nokia is adopting and licensing Windows Phone from Microsoft
as its primary smartphone platform, was formalized in April
.
The Group is paying Microsoft a software royalty fee to
license the Windows Phone smartphone platform, which
the Group records as royalty expense in its Smart Devices
cost of goods sold. Nokia has a competitive software royalty
structure, which includes annual minimum software royalty
commitments and refl ects the large volumes that the Group
expects to ship, as well as a variety of other considerations
related to engineering work to which both companies are
committed. The Group expects that the adoption of Windows
Phone will enable it to reduce signifi cantly its operating
expenses.
In recognition of the contributions that the Group is provid-
ing, the Group will receive quarterly platform support pay-
ments from Microsoft. The amount of the quarterly platform
support payment is USD million for each quarter. The euro
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
35
Devices &
Smart Mobile Services Devices & Location &
Siemens
Services Commerce Networks
Corporate
Common
Nokia Functions and
Corporate
unallocated 4, 6
Elimina-
2012, EURm
Devices Phones
Other
Profi t and loss information
Net sales to external customers
5 445
9 435
Net sales to other segments
Depreciation and amortization
Impairment
Contribution
Operating profi t (+)/loss (–)
1
22
—
—
23
8
–1 560
524
790
15
194
33
–64
Share of results of associated companies —
—
—
15 670
16
239
41
–1 100
—
729
374
496
—
–301
1
13 777
2
587
37
–799
8
tions Group
30 176
–392
—
1 326
109
–2 303
–1
461
—
—
4
31
–103
–10
1
Balance sheet information
Capital expenditures 2
Segment assets 3
of which:
33
11
136
180
64
216
2 040 1 803
2 530
6 373
5 551
10 187
10 854
–3 016 29 949
Investments in associated companies
—
—
—
—
5
32
21
58
Segment liabilities 5
2 762
2 320
2 091
7 173
2 885
7 756
5 704
–3 016 20 502
2011, EURm
Profi t and loss information
Net sales to external customers
10 818 11 930
1 178
23 926
Net sales to other segments
Depreciation and amortization
Impairment
Contribution
Operating profi t (+)/loss (–) 1
2
18
—
—
20
2
15
315
168
–411
1 481
–186
Share of results of associated companies —
—
—
17
353
170
884
—
Balance sheet information
Capital expenditures 2
Segment assets 3
of which:
21
18
213
2 367
1 999
4 299
252
8 665
698
393
491
1 091
–1 526
1
14 035
6
711
19
–300
–17
43
302
—
—
7
58
–131
–7
—
38 659
–416
—
1 562
1 338
–1 073
–23
597
5 257
11 310
13 505
–2 532 36 205
Investments in associated companies
—
—
—
—
4
29
34
67
Segment liabilities 5
2 528
1 270
5 696
9 494
2 812
7 520
4 995
–2 532 22 289
2010, EURm
Profi t and loss information
Net sales to external customers
14 870 13 696
Net sales to other segments
Depreciation and amortization
Impairment
Contribution
Operating profi t (+)/loss (–)
3
38
—
—
17
—
552
13
350
—
1 376
2 327
–163
29 118
16
405
—
3 540
—
668
201
519
—
–663
2
12 660
1
843
2
–686
11
—
—
4
13
–113
–12
42 446
–218
—
1 771
15
–8
2 070
1
Share of results of associated companies —
—
—
Location & Commerce operating loss in includes a goodwill impair-
ment loss of EUR million.
Including goodwill, capital expenditures in amount to EUR million
(EUR million in ). The goodwill consists of EUR million in
(EUR million in ) for Devices & Services, EUR million in
(EUR million in ) for Location & Commerce, EUR million in
(EUR million in ) for Nokia Siemens Networks, and EUR million in
(EUR million in ) for Corporate Common Functions.
Comprises intangible assets, property, plant and equipment, invest-
ments, 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, Location &
Commerce and Nokia Siemens Networks’ assets include cash and other
liquid assets, available-for-sale investments, long-term loans receiv-
able and other financial assets as well as interest and tax related prepaid
expenses and accrued income. These are directly attributable to Location
& Commerce and Nokia Siemens Networks.
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.
Comprises accounts payable, accrued expenses and provisions except
those related to interest and taxes for Devices & Services and Corporate
Common Functions. In addition, Location & Commerce’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 Location &
Commerce and Nokia Siemens Networks.
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.
36
N O K I A I N 2 0 1 2
Net sales to external customers
by geographic area
by location of customer, EURm
Finland
China
India
Japan
USA
Brazil
Germany
Russia
UK
Indonesia
Italy
Other
Total
Segment non-current assets
by geographic area 7, EURm
Finland
China
India
Brazil
UK
USA
Other
Total
2012
2011
2010
303
317
2 509
6 130
2 227
2 923
371
7 149
2 952
2 182
1 539
730
1 880
1 405
1 630
1 753
1 901
1 506
1 299
1 606
1 287
1 843
900
799
783
996
904
982
2 019
1 744
1 470
1 157
1 266
14 254
18 113
20 452
30 176
38 659 42 446
2012
2011
1 662
1 651
387
151
77
175
472
185
83
212
4 166
4 757
336
732
6 954
8 092
4. PERSONNEL EXPENSES
EURm
2012
2011
2010
Wages and salaries
6 080
6 284
5 808
Share-based compensation
expense, total
Pension expenses, net
Other social expenses
Personnel expenses as per
income statement 1
Include termination benefits.
13
375
715
18
445
787
48
431
708
7 183
7 534
6 995
Share-based compensation expense includes pension and
other social costs of EUR million in (EUR million in
and EUR million in ) based upon the related employee
benefi t charge recognized during the year.
Pension expenses, comprised of multi-employer, insured
and defi ned contribution plans were EUR million in
(EUR million in and EUR million in ). The re-
mainder consists of expenses related to defi ned benefi t plans.
Average personnel
2012
2011
2010
Devices & Services
41 480
54 850 56 896
Location & Commerce
6 441
7 187
6 766
Nokia Siemens Networks
64 052
71 825 65 379
Group Common Functions
283
309
314
Nokia Group
112 256 134 171 129 355
Comprises intangible and tangible assets and property, plant and equip-
ment.
5. PENSIONS
3. PERCENTAGE OF COMPLETION
Contract sales recognized under percentage of completion ac-
counting are EUR million in (EUR million in
and EUR million in ). Service revenue for managed
services and network maintenance contracts are EUR
million in (EUR million in and EUR million
in ).
Advances received related to construction contracts,
included in accrued expenses and other liabilities, are EUR
million at December , (EUR million in ). Included
in accounts receivable are contract revenues recorded prior to
billings EUR million at December , (EUR million
in ) and billings in excess of costs incurred are EUR mil-
lion at December , (EUR million in ).
The aggregate amount of costs incurred and recognized
profi ts (net of recognized losses) under construction con-
tracts in progress since inception is EUR million at
December , (EUR million in ).
Retentions related to construction contracts, included in
accounts receivable, are EUR million at December ,
(EUR million at December , ).
The Group operates a number of post-retirement plans in vari-
ous countries. These plans include both defi ned contribution
and defi ned benefi t schemes.
The Group’s most signifi cant defi ned benefi t pension
plans are in Germany and in the UK. The majority of active
employees in Germany participate in the pension scheme BAP
(Beitragsorientierter Alterversorgungs Plan), formly known
as Beitragsorientierte Siemens Alterversorgung (“BSAV”).
The funding vehicle for the BAP is the NSN Pension Trust e.V.
In Germany, individual benefi ts 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 pen-
sion scheme is Nokia Group (UK) Pension Scheme Ltd which is
run on a Trust basis. In the UK, individual benefi ts are gener-
ally dependent on eligible compensation levels and years of
service for the defi ned benefi t section of the scheme and on
individual investment choices for the defi ned contribution
section of the scheme.
The following table sets forth the changes in the benefi t
obligation and fair value of plan assets during the year and
the funded status of the signifi cant defi ned benefi t pension
plans showing the amounts that are recognized in the Group’s
consolidated statement of fi nancial position at December :
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
37
EURm
2012
2011
Movements in prepaid/accrued pension costs recognized in
Present value of defi ned benefi t
obligations January 1
–1 737
–1 544
Translation diff erences
Current service cost
Interest cost
Plan participants’ contributions
Past service cost
Actuarial gain (+)/loss (–)
Acquisitions and divestments
Curtailments
Settlements
Benefi ts paid
Other movements 1
–6
–58
–82
–14
–2
–301
14
25
13
68
–2
–3
–59
–83
–9
–1
–26
—
8
17
46
–83
Present value of defi ned benefi t
obligations December 31
–2 082
–1 737
Plan assets at fair value January 1
1 657
1 494
Translation diff erences
Expected return on plan assets
Actuarial gain (+)/loss (–) on plan assets
Employer contribution
Plan participants’ contributions
Benefi ts paid
Settlements
Acquisitions and divestments
Other movements 1
9
80
67
51
14
–50
–10
–12
2
4
77
–14
54
9
–37
–11
–2
83
the statement of fi nancial position are as follows:
EURm
2012
2011
Prepaid (+)/accrued (–) pension costs
January 1
Net income (+)/expense (–)
recognized in the profi t and loss account
Contributions paid
Benefi ts paid
Acquisitions and divestments
Foreign exchange
Prepaid (+)/accrued (–) pension costs
December 31 1
–70
–40
51
18
2
3
–84
–49
54
9
–2
2
–36
–70
Included within prepaid expenses and accrued income/accrued expenses.
The accrued pension cost above is made up of a prepayment
of EUR million (EUR million in ) and an accrual of
EUR million (EUR million in ).
EURm
2012 2011
2010
2009 2008
Present value
of defi ned
benefi t
obligations
Plan assets
at fair value
–2 082 –1 737 –1 544 –1 411 –1 205
1 808 1 657 1 494 1 330 1 197
Plan assets at fair value December 31
1 808
1 657
Surplus (+)/defi cit (–)
–274
–80
–50
–81
–8
Defi cit
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 the statement of fi nancial position
–274
–80
239
1
–2
10
1
–1
–36
–70
Group has reclassified an existing plan as a defined benefit plan due to
requirement to cover for shortfall in return on plan assets in . This
reclassification did not have a material impact on the Group’s financial
statements.
Present value of obligations include EUR million (EUR
million in ) of wholly funded obligations, EUR million
of partly funded obligations (EUR million in ) and
EUR million (EUR million in ) of unfunded obligations.
The amounts recognized in the income statement are as
follows:
EURm
Current service cost
Interest cost
Expected return on plan assets
Net actuarial gain (–)/loss (+)
recognized in year
Impact of paragraph 58(b) limitation
Past service cost gain (–)/loss (+)
Curtailment
Settlement
Total, included in personnel expenses
2012
2011
2010
58
82
–80
2
—
2
–21
–3
40
59
83
–77
7
–7
1
–11
–6
49
61
78
–76
–1
3
1
–1
–11
54
Experience adjustments arising on plan obligations amount
to a loss of EUR million in (gain of EUR million in ,
EUR million in , a loss of EUR million in , a gain of
EUR million in ).
Experience adjustments arising on plan assets amount to
a gain of EUR million (a loss of EUR million in , a gain
of EUR million in , EUR million in , a loss of EUR
million in ).
The principal actuarial weighted average assumptions used
were as follows:
%
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
2012
2011
3.7
3.4
2.4
1.9
4.9
4.5
2.4
2.0
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 defi ned on a uniform basis, refl ecting
long-term returns, current market conditions and strategic
asset allocation.
The Group’s pension plan weighted average asset allocation
as a percentage of Plan Assets at December , , and ,
by asset category are as follows:
38
N O K I A I N 2 0 1 2
%
Asset category:
Equity securities
Debt securities
Insurance contracts
Short-term investments
Others
Total
2012
2011
22
60
8
3
7
20
62
8
3
7
100
100
The objective of the investment activities is to maximize the
excess of plan assets over projected benefi t obligations, within
an accepted risk level, taking into account the interest rate and
infl ation sensitivity of the assets as well as the obligations.
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 provided to Nokia by the Group’s German pen-
sion fund of EUR million (EUR million in ). See Note .
The actual return on plan assets was EUR million in
(EUR million in ).
In , the Group expects to make contributions of EUR
million to its defi ned benefi t pension plans.
6. EXPENSES BY NATURE
EURm
2012
2011
2010
Cost of material
13 697
18 331
20 917
Personnel expenses
5 750
7 014
6 881
Depreciation and amortization
1 326
1 562
1 771
Advertising and promotional
expenses
Warranty costs
984
312
1 212
1 291
671
894
Other costs and expenses
8 663
8 948
8 441
Total of Cost of sales,
Research and development,
Selling and marketing
and Administrative and
general expenses
30 732
37 738 40 195
7. OTHER INCOME AND EXPENSES
Other income totaled EUR million in (EUR million
in and EUR million in ). Other expenses totaled
EUR million in (EUR million in and EUR
million in ).
In , other operating income includes a gain on sale of a
real estate of EUR million, benefi t from cartel claim settle-
ments of EUR million and a gain of EUR million on sale of
Vertu, Nokia’s luxury phone business. As part of the transac-
tion, approximately employees transferred with Vertu.
Nokia retains a % minority shareholding in Vertu. Other
expenses included restructuring and related charges of EUR
million, which consists primarily of employee termination
benefi ts, but includes also, EUR million related to country
and contract exits based on Nokia Siemens Networks’ new
strategy that focuses on key markets and product segments
and a net loss of EUR million arising from divestments of
businesses within Nokia Siemens Networks, as well as related
impairments of assets of EUR million. Restructuring and
related charges included EUR million related to Devices &
Services, recorded within Devices & Services other, EUR mil-
lion related to Location & Commerce and EUR million to
Nokia Siemens Networks, respectively.
In , other operating income includes a benefi t from a
cartel claim settlement of EUR million. Other expenses in-
cluded restructuring charges of EUR million and associated
impairments of EUR million. Restructuring charges included
EUR million related to Devices & Services, recorded within
Devices & Services other. EUR million related to Location
& Commerce and EUR million to Nokia Siemens Networks,
respectively. Other expenses also included an impairment of
shares in an associated company of EUR million. In addi-
tion, other expenses included a consideration paid related to
the Accenture transaction of EUR million. Nokia agreed to
oursource its Symbian software development and support
activities to Accenture, which resulted in the transfer of ap-
proximately employees to Accenture.
In , other income includes a refund of customs duties
of EUR million, a gain on sale of assets and a business of EUR
million and a gain on sale of the wireless modem business of
EUR million impacting Devices & Services operating profi t.
The wireless modem business was responsible for develop-
ment of Nokia’s wireless modem technologies for LTE, HSPA
and GSM standards. The wireless modem business included
Nokia’s wireless modem technologies for LTE, HSPA and GSM
standards, certain related patens and approximately
Nokia R&D professionals, the vast majority of whom are locat-
ed in Finland, India, the UK and Denmark. The sale was closed
on November , . Other expenses included restructuring
charges of EUR million, of which EUR million is related
to Devices & Services and EUR million to Nokia Siemens
Networks. The restructuring charges in Devices & Services
mainly related to changes in Symbian Smartphones and
Services organizations as well as certain corporate functions.
In all three years presented “Other income and expenses”
include the costs of hedging forecasted sales and purchases
(forward points of cash fl ow hedges). Within the same line are
also included the fair value changes of derivatives hedging
identifi able and probable forecasted cash fl ows.
8. IMPAIRMENT
EURm
Goodwill
Other intangible assets
Property, plant and equipment
Inventories
Investments in associated companies 8
Available-for-sale investments
Other assets
Total, net
2012
2011
2010
—
16
54
—
31
—
1 090
2
104
7
41
94
—
109
1 338
—
—
—
—
—
107
3
110
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
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
39
benefi t from the synergies of the business combination in
which the goodwill arose. The Group has allocated goodwill to
the cash-generating units, which correspond to the Group’s
reportable segments at each of the respective years’ impair-
ment testing date, as presented in the table below:
EURm
Smart Devices
Mobile Phones
Location & Commerce
Nokia Siemens Networks
Total
2012
2011
899
530
862
502
3 270
3 274
183
173
4 882
4 811
The recoverable amounts for the Smart Devices CGU and
the Mobile Phones CGU are based on value in use calculations.
A discounted cash fl ow calculation was used to estimate the
value in use for both CGUs. Cash fl ow projections determined
by management are based on information available, to refl ect
the present value of the future cash fl ows expected to be
derived through the continuing use of the Smart Devices CGU
and the Mobile Phones CGU.
The recoverable amounts for the Location & Commerce CGU
and the Nokia Siemens Networks CGU are based on fair value
less costs to sell. A discounted cash fl ow calculation was used
to estimate the fair value less costs to sell for both CGUs. The
cash fl ow projections employed in the discounted cash fl ow
calculation have been determined by management based on
the information available, to refl ect the amount that an entity
could obtain from separate disposal of each of the Location
& Commerce CGU and the Nokia Siemens Networks CGU, in an
arm’s length transaction between knowledgeable, willing par-
ties, after deducting the estimated costs of disposal.
The cash fl ow projections employed in the value in use
and the fair value less costs to sell calculations are based on
detailed fi nancial plans approved by management, covering a
three-year planning horizon. Cash fl ows in subsequent peri-
ods refl ect a realistic pattern of slowing growth that declines
towards an estimated terminal growth rate utilized in the
terminal period. The terminal growth rate utilized does not
exceed long-term average growth rates for the industry and
economies in which the CGU operates. All cash fl ow projections
are consistent with external sources of information, wherever
available.
The key assumptions applied in the impairment testing
analysis for each CGU are presented in the table below:
Both value in use of Smart Devices CGU and Mobile Phones
CGU and fair value less costs to sell for Location & Commerce
CGU and Nokia Siemens Networks CGU are determined on
a pre-tax value basis using pre-tax valuation assumptions
including pre-tax cash fl ows and pre-tax discount rate. As
market-based rates of return for the Group’s CGUs are avail-
able only on a post-tax basis, the pre-tax discount rates are
derived by adjusting the post-tax discount rates to refl ect the
specifi c amount and timing of future tax cash fl ows.
The discount rates applied in the impairment testing for
each CGU have been determined independently of capital
structure refl ecting current assessments of the time value
of money and relevant market risk premiums. Risk premiums
included in the determination of the discount rate refl ect risks
and uncertainties for which the future cash fl ow estimates
have not been adjusted.
The recoverable amount of the Location & Commerce CGU
exceeds its carrying amount by a small margin in the fourth
quarter . The related valuation is deemed most sensitive
to the changes in both discount and long-term growth rates.
A discount rate increase in excess of . percentage point
or long-term growth decline in excess of percentage point
would result in impairment loss in the Location & Commerce
CGU. Management’s estimates of the overall automotive vol-
umes and market share, customer adoption of the new loca-
tion-based platform and related service off erings, projected
device sales volumes and fair value of the services sold within
the Group as well as continued focus on cost effi ciency are
the main drivers for the Location & Commerce net cash fl ow
projections. The Group’s cash fl ow forecasts refl ect the cur-
rent strategic views that license fee based models will remain
important in both near and long term. Management expects
that license fee based models which are augmented with soft-
ware and services and monetized via license fees, transactions
fees and advertising, will grow in the future as more customers
demand complete, end-to-end location solutions. Actual short
and long-term performance could vary from management’s
forecasts and impact future estimates of recoverable value.
Since the recoverable amount exceeds the carrying amount
only by a small margin, any material adverse changes such as
market deterioration or changes in the competitive landscape
could impact management’s estimates of the main drivers and
result in impairment loss.
In the fourth quarter of , the Group conducted annual
impairment testing for the Location & Commerce CGU to as-
Cash-generating unit
Smart
Devices
Mobile
Phones
Location &
Commerce
Nokia Siemens
Networks
%
2012
2011
2012
2011
2012
2011
2012
2011
Terminal growth rate
Post-tax discount rate
Pre-tax discount rate
2.3
10.5
12.8
1.9
9.0
12.2
-2.3
10.5
15.5
1.5
9.0
13.1
1.7
9.9
3.1
9.7
12.8
13.1
0.7
10.3
14.2
1.0
10.4
13.8
40
N O K I A I N 2 0 1 2
sess if events or changes in circumstances indicated that the
carrying amount of the Location & Commerce CGU was not
recoverable. As a result, the Group recorded an impairment
loss of EUR million to reduce the carrying amount of the
Location & Commerce CGU to its recoverable amount. The
impairment loss was allocated in its entirety to the carrying
amount of goodwill in the balance sheet of the Location &
Commerce CGU. This impairment loss is presented as impair-
ment of goodwill in the consolidated income statement.
As a result of the impairment loss, the amount of goodwill
allocated to the Location & Commerce CGU was reduced to
EUR million at December , .
The impairment charge was result of an evaluation of the
projected fi nancial performance and net cash fl ows of the
Location & Commerce CGU. The main drivers for manage-
ment’s net cash fl ow projections included license fees related
to digital map data, fair value of the services sold within the
Group and estimated average revenue per user with regard to
mobile media advertising. The average revenue per user was
estimated based on peer market data for mobile advertising
revenue. Projected device sales volumes impacted the overall
forecasted intercompany and advertising revenues. This took
into consideration the market dynamics in digital map data
and related location-based content markets, including the
Group’s long-term view at the time of impairment test-
ing, that the market will move from fee-based models towards
advertising-based models especially in some more mature
markets. It also refl ected recent results and related competi-
tive factors in local search and advertising markets resulting in
lower estimated growth prospects from location-based assets
integrated with diff erent advertising platforms. After consid-
eration of all relevant factors, the Group reduced the net sales
projections for the Location & Commerce CGU which, in turn,
reduced projected profi tability and cash fl ows.
The Group’s goodwill impairment testing did not result in
impairment charges for the years ended December ,
or . An impairment loss was recorded with respect to the
Group’s Location & Commerce CGU in , as noted above. No
further impairment charges were recorded with respect to the
other CGUs in .
Other intangible assets
During , EUR million impairment charge was recorded on
certain technology assets due to obsolescense within Mobile
Phones. Furthermore, a charge of EUR million was recorded
on intangible assets attributable to the decision to transition
certain operations into maintenance mode within Nokia Sie-
mens Networks. All charges were recorded in other operating
expenses.
Property, plant and equipment and inventories
During , the Group recognized EUR million impairment
losses related to restructuring activities mainly with respect to
its Salo, Finland and Komarom, Hungary facilities within other
operating expenses of Devices & Services Other. Nokia Sie-
mens Networks recorded an impairment loss of EUR million
to refl ect non-current assets of Optical Networks business at
market value, in anticipation of sale of the business.
Majority of impairment losses recognized with respect
to property, plant and equipment resulted from EUR mil-
lion charges related to the Group’s restructuring programs,
including the closure of manufacturing operations in Cluj,
Romania, and consolidation of other offi ce sites. The charges
were recorded in other operating expense and are included in
Devices & Services Other.
Investments in associated companies
After application of the equity method, including recognition
of the Group’s share of results of associated companies, the
Group determined that recognition of impairment losses of
EUR million in (EUR million in , EUR million in
) was necessary to adjust the Group’s investment in asso-
ciated companies to its recoverable amount. The charges were
recorded in other operating expense.
Available-for-sale investments
The Group’s investment in certain equity and interest-bearing
securities held as available-for-sale suff ered a signifi cant
or prolonged decline in fair value resulting in an impairment
charge of EUR million (EUR million in , EUR million
in ). These impairment losses are included within fi nancial
expenses and other operating expenses in the consolidated
income statement. See also Note .
9. ACQUISITIONS
Acquisitions completed in 2012
During , the Group completed minor acquisitions that
did not have a material impact on the consolidated fi nancial
statements. The purchase consideration paid and the total of
goodwill arising from these acquisitions amounted to EUR
million and EUR million, respectively. The goodwill arising
from these acquisitions is attributable to assembled workforce
and post-acquisition synergies.
■ Scalado AB, based in Lund, Sweden, provides and develops
imaging software and experiences. The Group acquired im-
aging specialists, all technologies and intellectual property
from Scalado AB on July , .
■ earthmine Inc., based in California, USA, develops systems to
collect and process D imagery. The Group acquired a %
ownership interest in earthmine on November , .
Acquisitions completed in 2011
MOTOROLA
On April , , Nokia Siemens Networks completed its ac-
quisition of Motorola Solutions’ networks business in exchange
for a total consideration of EUR million. The acquired busi-
ness consists of Motorola’s wireless networks infrastructure
equipment manufacturing and sales operations, including the
GSM, CDMA, WCDMA, WiMAX and LTE product portfolios and
services off erings. The acquisition is expected to strengthen
Nokia Siemens Networks’ position in certain regions, particu-
larly North America and Japan. The goodwill of EUR million
arising from the acquisition is attributable to the increased
presence in these key markets and the assembled workforce.
The majority of the goodwill acquired is expected to be de-
ductible for income tax purposes.
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
41
The following table summarizes the consideration paid,
the fair value of assets acquired, liabilities assumed and the
non-controlling interest at the acquisition date. Fair values of
certain assets acquired, liabilities assumed and goodwill were
provisional at the end of . Fair values have been fi nalized
during .
EURm
Total consideration in cash
Non-current assets
Goodwill
Developed technology
Customer relationships
Other intangible assets
Property, plant & equipment
Investments in associated companies
Deferred tax assets
Current assets
Inventories
Accounts receivable
Prepaid expenses and accrued income
Bank and cash
Total assets acquired
Non-current liabilities
Deferred tax liabilities
Other long-term liabilities
Current liabilities
Accounts payable
Accrued expenses
Provisions
Total liabilities assumed
Non-controlling interest
Net assets acquired
Provisional fair
values
2011
Adjustments
Final fair values
2012
642
155
156
195
3
509
105
6
36
656
103
228
20
31
382
1 038
15
15
30
154
166
30
350
380
16
642
9
—
—
—
9
–8
—
—
1
—
–6
—
—
–6
–5
—
—
—
–1
–2
–2
–5
–5
—
—
642
164
156
195
3
518
97
6
36
657
103
222
20
31
376
1 033
15
15
30
153
164
28
345
375
16
642
In , Nokia Siemens Networks had concluded on a work-
ing capital adjustment settlement with respect to the acquisi-
tion whereby Motorola Solutions agreed to make additional
installment payments to Nokia Siemens Networks. The install-
ment payments were subject to certain conditions that Nokia
Siemens Networks must fulfi l over a given time period. The
maximum amount of installment payments receivable totalled
EUR million and Nokia Siemens Networks had determined
that the fair value of the installment payments amounted to
EUR million. During , the working capital adjustment
arrangement has been settled and Nokia Siemens Networks
received the maximum amount of installment payments. As a
result, EUR million gain has been recognized in other operat-
ing income.
The fair value of accounts receivable of EUR million
includes trade receivables with a fair value of EUR mil-
lion. The gross contractual amount for trade receivables due
is EUR million, of which EUR million is expected to be
uncollectible.
Acquisition related costs of EUR million and EUR million
have been charged to administrative and general expenses
in the consolidated income statement for the years ended
December , and December , , respectively.
From April , , the consolidated statement of compre-
hensive income includes revenue and net loss contributed by
the Motorola Solutions’ networks business of EUR million
and EUR million, respectively.
Had Motorola Solutions’ networks business been consoli-
dated from January , , the Group consolidated statement
of income for would have shown revenue of EUR
million and loss of EUR million. This unaudited pro forma
information is not necessarily indicative of the results of the
combined operations had the acquisition actually occurred on
January , , nor is it indicative of the future results of the
combined operations.
During , the Group completed additional acquisitions
that in aggregate did not have a material impact on the con-
solidated fi nancial statements.
42
N O K I A I N 2 0 1 2
10. DEPRECIATION AND AMORTIZATION
EURm
2012
2011
2010
Depreciation and amortization
by function
Cost of sales
Research and development 1
Selling and marketing 2
Administrative and general
190
613
347
176
227
674
442
219
248
906
426
191
Total
1 326
1 562
1 771
In , depreciation and amortization allocated to research and develop-
ment included amortization of acquired intangible assets of EUR
million (EUR million in and EUR million in ).
In , depreciation and amortization allocated to selling and marketing
included amortization of acquired intangible assets of EUR million
(EUR million in and EUR million in ).
11. FINANCIAL INCOME AND EXPENSES
EURm
2012
2011 2010
impairments for these securities amounted to EUR million in and
EUR million in . Additional information can be found in Note and
Note .
During , interest income decreased mainly as a result
of lower cash levels than in and lower interest rates in
certain currencies where the Group has investments. Foreign
exchange gains (or losses) were negatively impacted by higher
hedging costs than in as well as signifi cant weakening of
certain emerging market currencies.
During , interest income increased mainly as a result
of higher cash levels than in and higher interest rates in
certain currencies where the Group has investments. Lower
interest rates in EUR and USD had a positive impact on Net fair
value gains (or losses) on investments at fair value through
profi t and loss but these gains were off set by the negative
impact on Net gains (or losses) on other derivatives desig-
nated at fair value through profi t and loss that was aff ected
by similar factors. Foreign exchange gains (or losses) were
positively impacted by low and in some cases negative hedging
costs (i.e. income) in as well as increased volatility on the
foreign exchange market.
Dividend income on available-for-sale
fi nancial investments
Interest income on available-for-sale
fi nancial investments
Interest income on loans receivables
carried at amortized cost
Interest income on investments at
fair value through profi t and loss
Net interest income (expense) on
derivatives not under hedge accounting
3
2
2
119
169
110
3
8
1
—
18
28
12. INCOME TAXES
EURm
Income tax
Current tax
Deferred tax
–4
–12
–20
Total
2012
2011
2010
– 641
– 504
– 1 145
– 724
– 421
– 1 145
– 752
462
– 290
– 97
– 193
– 290
– 798
355
– 443
– 126
– 317
– 443
Finnish entities
Other countries
Total
The diff erences between income tax expense computed at
statutory rate .% in in Finland (% in and )
and income taxes recognized in the consolidated income
statement is reconciled as follows:
Interest expense on fi nancial liabilities
carried at amortized cost
–264
–255
–254
Net realised gains (or losses) on disposal
of fi xed income available-for-sale
fi nancial investments
Net fair value gains (or losses) on
investments at fair value through
profi t and loss
–1
–4
1
27
102
–3
Net gains (net losses) on other derivatives
designated at fair value through
profi t and loss
–11
Net fair value gains (or losses) on hedged
items under fair value hedge accounting –15
–121
19
–82
–63
Net fair value gains (or losses) on
hedging instruments under
fair value hedge accounting
Net foreign exchange gains (or losses)
From foreign exchange derivatives
designated at fair value through
profi t and loss
From balance sheet items
revaluation
Other fi nancial income 1
Other fi nancial expenses 2
Total
23
72
58
–73
74
58
–173
–34
–165
52
–34
49
73
–81
–129
–340
–102
–285
Other financial income includes distributions of EUR million in
(EUR million in and EUR million in ) from a private fund held
as non-current available-for-sale.
Other financial expenses include an impairment loss of EUR million in
(EUR million in and EUR million in ) in the Group’s
investment in the above mentioned private fund due to changes in esti-
mated future cash flows resulting from distributions received as well as
other factors. The Group did not recognize any impairment losses related
to Asset Backed Securities in in other financial expenses, whereas
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
43
EURm
2012
2011
2010
13. INTANGIBLE ASSETS
Income tax expense (+)/benefi t (–)
at statutory rate
Permanent diff erences
Non tax deductible impairment
of goodwill (Note 8)
Taxes for prior years
Taxes on foreign subsidiaries’
profi ts in excess of (lower than)
EURm
2012
2011
–648
75
—
–50
–311
–22
283
–7
464
4
—
–48
Capitalized development costs
Acquisition cost January 1
Retirements
1 035
1 035
–7
—
Accumulated acquisition cost December 31 1 028
1 035
Accumulated amortization January 1
–1 029
–995
Retirements
Amortization
7
–6
—
–34
Accumulated amortization December 31
–1 028
–1 029
280
221
Net book value January 1
Net book value December 31
6
—
40
6
income taxes at statutory rates
43
–73
–195
Tax losses and temporary
diff erences with no tax eff ect 1 1 675
Net increase(+)/decrease (–)
in tax contingencies
39
Change in income tax rates
6
Taxes on undistributed earnings 2 –4
Other
9
Income tax expense
1 145
290
7
39
62
32
24
2
–31
2
443
Goodwill
Acquisition cost January 1
6 836
6 631
Translation diff erences
Acquisitions
Disposals
–16
54
—
17
189
–1
Accumulated acquisition cost December 31 6 874
6 836
Accumulated impairments January 1
–1 998
–908
Impairments
—
–1 090
Accumulated impairments December 31
–1 998
–1 998
Net book value January 1
Net book value December 31
4 838
4 876
5 723
4 838
Other intangible assets
Acquisition cost January 1
Translation diff erences
Additions
Acquisitions
Retirements
Impairments
Disposals
5 877
5 437
–20
46
11
–52
–65
–44
83
53
366
–23
–2
–37
Accumulated acquisition cost December 31 5 753
5 877
Accumulated amortization January 1
–4 471
–3 509
Translation diff erences
Retirements
Impairments
Disposals
Amortization
19
48
49
33
–84
21
—
25
–784
–924
Accumulated amortization December 31
–5 106
–4 471
Net book value January 1
Net book value December 31
1 406
1 928
647
1 406
In , this item primarily relates to Devices & Services’ past and current
year Finnish tax losses, unused tax credits and temporary differences and
Nokia Siemens Networks’ Finnish and German tax losses, unused tax cred-
its and temporary differences for which no deferred tax was recognized.
In and , this item primarily relates to Nokia Siemens Networks’
Finnish tax losses, unused tax credits and temporary differences for
which no deferred tax was recognized. In , it also includes benefit of
million from reassessment of recoverability of deferred tax assets in
Nokia Siemens Networks.
In , taxes on undistributed earnings mainly relates to changes to tax
rates applicable to profit distributions.
Certain of the Group companies’ income tax returns for
prior periods are under examination by tax authorities. Our
business and investments especially in emerging market coun-
tries may be subject to uncertainties, including unfavorable
or unpredictable taxation treatment. Management judgment
and a degree of estimation are required in determining tax
expense. Even though the Group does not believe that any
signifi cant additional taxes in excess of those already pro-
vided for will arise as a result of the examinations, it cannot be
excluded that fi nal resolutions of open items may substantially
diff er from the amounts initially recorded.
44
N O K I A I N 2 0 1 2
57
1
6
–20
44
–34
–1
8
–3
–30
23
14
75
–4
58
—
–5
–8
–23
–18
–2
73
56
–3
11
–7
57
–37
3
7
–7
–34
19
23
98
—
57
1
—
2
–42
–38
–3
75
14. PROPERTY, PLANT AND EQUIPMENT
EURm
2012
2011
EURm
2012
2011
Land and water areas
Acquisition cost January 1
Acquisitions
Impairments
Disposals
Accumulated acquisition cost December 31
Net book value January 1
Net book value December 31
Buildings and constructions
Acquisition cost January 1
Translation diff erences
Additions
Acquisitions
Impairments
Disposals
62
—
–4
–25
33
62
33
Other tangible assets
Acquisition cost January 1
Translation diff erences
Additions
57
9
–4
—
Disposals
62
57
62
Accumulated acquisition cost December 31
Accumulated depreciation January 1
Translation diff erences
Disposals
Depreciation
1 380
1 414
Accumulated depreciation December 31
–1
80
—
–36
–294
3
86
32
–124
–31
Net book value January 1
Net book value December 31
Advance payments and fi xed assets
under construction
Accumulated acquisition cost December 31 1 129
1 380
Net carrying amount January 1
Accumulated depreciation January 1
–519
–453
Translation diff erences
Translation diff erences
Impairments
Disposals
Depreciation
–3
15
134
–96
Accumulated depreciation December 31
–469
Net book value January 1
Net book value December 31
861
660
—
40
13
–119
–519
961
861
Machinery and equipment
Acquisition cost January 1
Translation diff erences
Additions
Acquisitions
Impairments
Disposals
4 078
4 004
–1
329
–8
–131
–573
–4
464
66
–25
–427
Additions
Acquisitions
Disposals
Transfers to:
Other intangible assets
Buildings and constructions
Machinery and equipment
Other tangible assets
Net carrying amount December 31
Total property, plant and equipment
1 431
1 842
15. INVESTMENTS IN ASSOCIATED
COMPANIES
Accumulated acquisition cost December 31 3 694
4 078
Accumulated depreciation January 1
–3 257
–3 185
EURm
2012
2011
Translation diff erences
Impairments
Disposals
Depreciation
–1
102
550
–437
–13
9
410
–478
Net carrying amount January 1
Translation diff erences
Additions
Deductions
Accumulated depreciation December 31
–3 043
–3 257
Impairments (Note 8)
Net book value January 1
Net book value December 31
821
651
819
821
Share of results
Other movements
Net carrying amount December 31
67
3
1
–4
–8
–1
—
58
136
–5
8
–7
–41
–23
–1
67
Shareholdings in associated companies are comprised of
investments in unlisted companies in all periods presented.
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
45
16. FAIR VALUE OF FINANCIAL INSTRUMENTS
Carrying amounts
Current Non-current
available-
for-sale
fi nancial
assets
available-
for-sale
fi nancial
assets
Financial
instruments
at fair
value
Loans and
receivables
Financial
liabilities
through measured at measured at
amortized
amortized
cost
cost
profi t
or loss
Total
carrying
amounts value 1
Fair
At December 31, 2012, EURm
Available-for-sale investments,
publicly quoted equity shares
Available-for-sale investments, carried at fair value
Available-for-sale investments,
carried at cost less impairment
Long-term loans receivable
Accounts receivable
Current portion of long-term loans receivable
Other current fi nancial assets, derivatives
Other current fi nancial assets, other
Investments at fair value through profi t and loss,
liquid assets
Available-for-sale investments,
liquid assets carried at fair value
Available for-sale investments,
cash equivalents carried at fair value
Total fi nancial assets
Long-term interest-bearing liabilities
Current portion of long-term loans payable
Short-term borrowing
Other fi nancial liabilities
Accounts payable
Total fi nancial liabilities
At December 31, 2011, EURm
Available-for-sale investments,
publicly quoted equity shares
Available-for-sale investments, carried at fair value
Available-for-sale investments,
carried at cost less impairment
Long-term loans receivable
Accounts receivable
Current portion of long-term loans receivable
Other current fi nancial assets, derivatives
Other current fi nancial assets, other
Investments at fair value through profi t and loss,
liquid assets
Available-for-sale investments,
liquid assets carried at fair value
Available for-sale investments,
cash equivalents carried at fair value
Total fi nancial assets
Long-term interest-bearing liabilities
Other long-term non-interest bearing fi nancial liabilities
Current portion of long-term loans payable
Short-term borrowing
Other fi nancial liabilities
Accounts payable
Total fi nancial liabilities
46
N O K I A I N 2 0 1 2
—
—
—
—
—
—
—
—
—
542
5 448
5 990
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1 233
7 279
8 512
—
—
—
—
—
—
—
11
447
231
—
—
—
—
—
—
—
—
—
—
—
—
—
—
448
—
415
—
—
—
—
—
112
5 551
35
—
16
—
—
—
689
863
5 714
—
—
—
—
—
—
7
419
215
—
—
—
—
—
—
—
—
—
90
—
90
—
—
—
—
—
—
475
—
433
—
—
—
—
—
—
—
—
—
—
99
7 181
54
—
25
—
—
—
—
—
—
—
—
—
—
—
—
—
—
11
447
231
112
11
447
231
110
5 551
5 551
35
448
16
35
448
16
415
415
542
542
5 448 5 448
13 256 13 254
5 087
5 087 5 298
201
261
—
201
261
90
201
261
90
4 394
9 943
4 394 4 394
10 033 10 244
—
—
—
—
—
—
—
—
—
—
7
419
215
99
7
419
215
97
7 181 7 181
54
475
25
54
475
25
433
433
1 233 1 233
7 279 7 279
641
908
7 359
—
17 420 17 418
—
—
—
—
—
—
—
—
—
—
—
483
—
483
—
—
—
—
—
—
—
3 969
3 969 3 929
3
357
995
—
3
357
995
483
3
357
995
483
5 532
5 532 5 532
10 856
11 339 11 299
For information about the valuation of items measured at fair value see
Note . The fair value is set to carrying amount for available-for-sale invest-
ments carried at cost less impairment for which no reliable fair value has
been possible to estimate. The fair value of loan receivables and payables is
estimated based on the current market values of similar instruments. The
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.
The following table presents the valuation methods used to de-
termine fair values of fi nancial instruments carried at fair value:
Instruments
with quoted
prices in
active markets
(Level 1)
Valuation
technique
using
observable
data (Level 2)
Valuation
technique
using non-
observable
data (Level 3)
At December 31, 2012, EURm
Available-for-sale investments, publicly quoted equity shares
Available-for-sale investments, carried at fair value
Other current fi nancial assets, derivatives 1
Investments at fair value through profi t and loss, liquid assets
Available-for-sale investments, liquid assets carried at fair value
Available for-sale investments, cash equivalents carried at fair value
Total assets
Derivative liabilities 1
Total liabilities
At December 31, 2011, EURm
Available-for-sale investments, publicly quoted equity shares
Available-for-sale investments, carried at fair value
Other current fi nancial assets, derivatives 1
Investments at fair value through profi t and loss, liquid assets
Available-for-sale investments, liquid assets carried at fair value
Available for-sale investments, cash equivalents carried at fair value
Total assets
Derivative liabilities 1
Total liabilities
11
57
—
415
532
5 448
6 463
—
—
7
60
—
433
1 201
7 279
8 980
—
—
—
20
448
—
10
—
478
90
90
—
13
475
—
32
520
483
483
—
370
—
—
—
—
370
—
—
—
346
—
—
—
—
346
—
—
Total
11
447
448
415
542
5 448
7 311
90
90
7
419
475
433
1 233
7 279
9 846
483
483
Note includes the split of hedge accounted and non-hedge accounted
derivatives.
Level category includes fi nancial assets and liabilities that
are measured in whole or in signifi cant part by reference to
published quotes in an active market. A fi nancial instrument
is regarded as quoted in an active market if quoted prices are
readily and regularly available from an exchange, dealer, bro-
ker, industry group, pricing service or regulatory agency and
those prices represent actual and regularly occurring market
transactions on an arm’s length basis. This category includes
listed bonds and other securities, listed shares and exchange
traded derivatives.
Level category includes fi nancial assets and liabilities
measured using a valuation technique based on assumptions
that are supported by prices from observable 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, fi nancial 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 the
Group’s over-the-counter derivatives and certain other instru-
ments not traded in active markets fall within this category.
Level category includes fi nancial assets and liabilities
measured using valuation 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 assump-
tions 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 as-
set classes in this category are unlisted equity investments as
well as unlisted funds.
The following table shows a reconciliation of the open-
ing and closing balances of Level fi nancial assets which are
measured at fair value:
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
47
EURm
Balance at December 31, 2010
Total gains/losses in income statement
Total gains/losses recorded in other
comprehensive income
Purchases
Sales
Other transfers
Balance at December 31, 2011
Total gains/losses in income statement
Total gains/losses recorded in other
comprehensive income
Purchases
Sales
Other transfers
Balance at December 31, 2012
Other available-
for-sale investments
carried at fair value
279
–22
51
81
–47
4
346
– 8
34
41
– 35
– 8
370
The gains and losses from fi nancial assets categorized in
level are included in other operating income and expenses as
the investment and disposal objectives for these investments
are business driven. A net loss of EUR million (net loss of
EUR million in ) related to level fi nancial instruments
held at December , , was included in the profi t and loss
during .
17. DERIVATIVE FINANCIAL INSTRUMENTS
Assets
Liabilities
2012, EURm
value 1 Notional 2 value 1 Notional 2
Fair
Fair
Hedges of net
investment in foreign
subsidiaries:
Forward foreign
exchange contracts
Cash fl ow hedges:
Forward foreign
exchange contracts
Fair value hedges
7
2 968
– 6
3 158
Interest rate swaps
174
1 626
—
Cash fl ow and
fair value hedges: 3
Cross currency
interest rate swaps
42
378
—
Derivatives not designated
in hedge accounting relationships
carried at fair value through profi t and loss:
—
—
185
7 111
– 18
3 337
Assets
Liabilities
2011, EURm
value 1 Notional 2 value 1 Notional 2
Fair
Fair
Hedges of net
investment in foreign
subsidiaries:
Forward foreign
exchange contracts
Cash fl ow hedges:
Forward foreign
exchange contracts
Fair value hedges
56
1 584
– 179
2 810
92
6 273
– 97
6 362
Interest rate swaps
167
1 627
—
—
Cash fl ow and
Fair value hedges: 3
Cross currency
interest rate swaps
26
378
—
—
Derivatives not designated
in hedge accounting relationships
carried at fair value through profi t and loss:
Forward foreign
exchange contracts
6 626
127
– 159
Currency options
bought
7
994
Currency options sold —
Interest rate swaps
Other derivatives
—
—
—
—
3
—
– 6
– 41
– 1
7 460
—
721
552
38
475
17 485
– 483
17 943
In the statement of financial position the fair value of derivative financial
instruments is included in Other financial assets and in Other financial
liabilities.
Includes the gross amount of all notional values for contracts that have
not yet been settled or cancelled. The amount of notional value out-
standing is not necessarily a measure or indication of market risk, as the
exposure of certain contracts may be offset by that of other contracts.
These cross-currency interest rate swaps have been designated partly as
fair value hedges and partly as cash flow hedges.
Raw materials, supplies and other
Work in progress
Finished goods
Total
2012
2011
409
352
777
1 538
789
516
1 025
2 330
During the Group recognized an expense of EUR million
(EUR million in and ) within cost of sales to write-
down the inventories to net realizable value.
19. PREPAID EXPENSES AND ACCRUED
INCOME
24
2 164
– 11
1 182
EURm
18. INVENTORIES
—
– 6
– 48
– 1
–90
—
289
513
9
EURm
2012
2011
Social security, VAT and other taxes
1 384
1 906
Deferred cost of sales
145
114
Other prepaid expenses and accrued income 1 852
2 468
8 488
Total
3 381
4 488
Forward foreign
exchange contracts
Currency options
bought
16
1 107
Currency options sold —
Interest rate swaps
Other derivatives
—
—
—
150
—
448
15 504
48
N O K I A I N 2 0 1 2
In , other prepaid expenses and accrued income in-
cluded advance payments to Qualcomm of EUR million (EUR
million in ). In , Nokia and Qualcomm entered
into a new year agreement, under the terms of which Nokia
was granted a license to all Qualcomm’s patents for the use
in Nokia mobile devices and Nokia Siemens Networks infra-
structure equipment. The fi nancial structure of the agree-
ment included an upfront payment of EUR . billion, which
is amortized over the contract period and ongoing royalties
payable to Qualcomm. As part of the licence agreement, Nokia
also assigned ownership of a number of patents to Qualcomm.
These patents were valued using the income approach based
on projected cash fl ows, on a discounted basis, over the as-
signed patents’ estimated useful life. Based on the valuation
and underlying assumptions Nokia determined that the fair
value of these patents were not material.
Prepaid expenses and accrued income also include accrued
interest income and various other prepaid expenses and
accrued income, but no amounts which are individually
signifi cant.
20. VALUATION AND QUALIFYING ACCOUNTS
EURm
Allowances on assets to which they apply:
Balance at
beginning of year
Charged to
costs and expenses
Balance
Deductions 1 at end of year
2012
Allowance for doubtful accounts
Excess and obsolete inventory
2011
Allowance for doubtful accounts
Excess and obsolete inventory
2010
Allowance for doubtful accounts
Excess and obsolete inventory
Deductions include utilization and releases of the allowances.
284
457
363
301
391
361
53
403
131
345
117
124
– 89
– 389
– 210
– 189
– 145
– 184
248
471
284
457
363
301
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
49
21. FAIR VALUE AND OTHER RESERVES
EURm
Gross
Tax Net
Gross
Tax
Net
Gross
Tax Net
Balance at December 31, 2009
61
– 15
46
17
6
23
78
– 9
69
Hedging
reserve
Available-for-sale
investments
Fair value and other
reserves total
Cash fl ow hedges:
Net fair value gains (+)/losses (–)
– 119
12 – 107
Transfer of gains (–)/losses (+) to profi t and loss
account as adjustment to net sales
Transfer of gains (–)/losses (+) to profi t and loss
account as adjustment to cost of sales
Available-for-sale investments:
Net fair value gains (+)/losses (–)
Transfer to profi t and loss account on impairment
Transfer of net fair value gains (–)/losses (+)
to profi t and loss account on disposal
Movements attributable to non-controlling interests
357
– 57 300
– 379
70 – 309
—
—
—
50
—
—
—
– 7
—
—
—
43
Balance at December 31, 2010
– 30
3
– 27
Cash fl ow hedges:
Net fair value gains (+)/losses (–)
106
– 25
81
Transfer of gains (–)/losses (+) to profi t and loss
account as adjustment to net sales
Transfer of gains (–)/losses (+) to profi t and loss
account as adjustment to cost of sales
Transfer of gains (–)/losses (+) as a basis adjustment
to assets and liabilities 1
Available-for-sale investments:
Net fair value gains (+)/losses (–)
Transfer to profi t and loss account on impairment
Transfer of net fair value gains (–)/losses (+)
to profi t and loss account on disposal
Movements attributable to non-controlling interests
Balance at December 31, 2011
– 166
42 – 124
162
– 36
126
14
– 3
11
—
—
—
– 8
78
—
—
—
– 2
– 21
—
—
—
– 10
57
Cash fl ow hedges:
Net fair value gains (+)/losses (–)
– 25
21
– 4
Transfer of gains (–)/losses (+) to profi t and loss
account as adjustment to net sales
Transfer of gains (–)/losses (+) to profi t and loss
account as adjustment to cost of sales
Available-for-sale investments:
Net fair value gains (+)/losses (–)
Transfer to profi t and loss account on impairment
Transfer of net fair value gains (–)/losses (+)
to profi t and loss account on disposal
Movements attributable to non-controlling interests
Balance at December 31, 2012
390
— 390
– 406
— – 406
—
—
—
– 47
– 10
—
—
—
—
—
—
—
– 47
—
– 10
The adjustments relate to acquisitions completed in . For more details see Note .
—
—
—
– 3
13
– 1
—
26
—
—
—
—
—
—
—
– 2
—
—
—
4
—
—
—
—
—
—
—
– 5
13
– 1
—
30
—
—
—
—
67
22
—
– 2
67
20
– 19
– 1
– 20
—
96
—
—
—
32
24
– 21
—
131
—
1
—
—
—
1
—
—
—
2
—
97
—
—
—
33
24
– 21
—
133
– 119
12 – 107
357
– 57 300
– 379
70 – 309
– 3
13
– 1
50
– 4
– 2
—
—
– 7
7
– 5
13
– 1
43
3
106
– 25
81
– 166
42 – 124
162
– 36 126
14
– 3
11
67
22
– 19
– 8
—
– 2
– 1
– 2
67
20
– 20
– 10
174
– 20 154
– 25
21
– 4
390
— 390
– 406
— – 406
32
24
– 21
– 47
121
1
—
—
—
33
24
– 21
– 47
2 123
50
N O K I A I N 2 0 1 2
22. TRANSLATION DIFFERENCES
EURm
Gross Tax
Net
Gross Tax
Net
Gross Tax
Net
Balance at December 31, 2009
– 295
3 – 292
215 – 50
165
– 80 – 47 – 127
Translation
diff erences
Net investment
hedging
Translation
diff erences total
Translation diff erences:
Currency translation diff erences
1 302
3 1 305
Transfer to profi t and loss
(fi nancial income and expense)
Net investment hedging:
Net investment hedging gains (+)/losses (–)
Transfer to profi t and loss
(fi nancial income and expense)
Movements attributable to non-controlling interests
Balance at December 31, 2010
Translation diff erences:
Currency translation diff erences
Transfer to profi t and loss
(fi nancial income and expense)
Net investment hedging:
Net investment hedging gains (+)/losses (–)
Transfer to profi t and loss
(fi nancial income and expense)
Movements attributable to non-controlling interests
Balance at December 31, 2011
Translation diff erences:
Currency translation diff erences
Transfer to profi t and loss
(fi nancial income and expense)
Net investment hedging:
—
—
—
—
– 63
944
17
– 8
—
—
– 35
918
—
—
– 2
4
—
—
—
—
—
4
—
—
—
– 65
948
17
– 8
—
—
– 35
922
—
—
—
—
—
—
1 302
3 1 305
—
—
—
– 389 101
– 288
– 389 101
– 288
—
—
—
—
—
—
– 174
51
– 123
—
– 63
770
—
– 2
55
—
– 65
825
—
—
—
—
—
—
17
—
– 8
—
17
– 8
– 37
9
– 28
– 37
9
– 28
—
—
—
—
—
—
– 211
60
– 151
—
– 35
707
—
—
64
—
– 35
771
40
– 1
39
– 1
—
– 1
—
—
—
—
—
—
40
– 1
39
– 1
—
– 1
Net investment hedging gains (+)/losses (–)
Transfer to profi t and loss
(fi nancial income and expense)
Movements attributable to non-controlling interests
Balance at December 31, 2012
—
—
2
959
—
—
—
3
—
—
2
– 58
– 9
– 67
– 58
– 9
– 67
—
—
—
—
—
—
—
2
—
—
—
2
962
– 269
51
– 218
690
54
744
23. THE SHARES OF THE PARENT COMPANY
Nokia shares and shareholders
Authorizations
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 , , the share capital of Nokia
Corporation was EUR . and the total number of
shares issued was .
On December , , the total number of shares included
shares owned by Group companies representing
approximately .% 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 capi-
tal or a par value of a share.
AUTHORIZATION TO INCREASE THE SHARE CAPITAL
At the Annual General Meeting held on May , , Nokia
shareholders authorized the Board of Directors to issue a
maximum of 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 authoriza-
tion may be used to develop the Company’s capital structure,
diversify the shareholder base, fi nance or carry out acquisi-
tions or other arrangements, settle the Company’s equity-
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
51
based incentive plans, or for other purposes resolved by the
Board. The authorization is eff ective until June , .
At the end of , 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 , , Nokia
shareholders authorized the Board of Directors to repurchase
a maximum of million Nokia shares by using funds in the
unrestricted equity. Nokia did not repurchase any shares on
the basis of this authorization. This authorization would have
been eff ective until June , as per the resolution of the
Annual General Meeting on May , , but it was terminated
by the resolution of the Annual General Meeting on May ,
.
At the Annual General Meeting held on May , , Nokia
shareholders authorized the Board of Directors to repurchase
a maximum of million Nokia shares by using funds in the
unrestricted equity. The amount of shares corresponds to
less than % of all the shares of the Company. The shares
may be repurchased under the buyback authorization in order
to develop the capital structure of the Company. In addition,
shares may be repurchased in order to fi nance 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. The authorization is eff ective
until June , .
AUTHORIZATIONS PROPOSED TO THE ANNUAL
GENERAL MEETING 2013
On January , , Nokia announced that the Board of Direc-
tors will propose that the Annual General Meeting convening
on May , authorize the Board to resolve to repurchase a
maximum of million Nokia shares. The proposed maximum
number of shares that may be repurchased corresponds to
less than % of all the shares of the Company. The shares may
be repurchased in order to develop the capital structure of the
Company, fi nance or carry out acquisitions or other arrange-
ments, settle the company’s equity-based incentive plans, be
transferred for other purposes, or be cancelled. The shares
may be repurchased either through a tender off er made to
all shareholders on equal terms, or in such marketplaces the
rules of which allow companies to trade with their own shares.
The authorization would be eff ective until June , and
terminate the current authorization for repurchasing of the
Company’s shares resolved at the Annual General Meeting on
May , .
Nokia also announced on January , that the Board
of Directors will propose to the Annual General Meeting to be
held on May , that the Annual General Meeting authorize
the Board to resolve to issue a maximum of million shares
through issuance of shares or special rights entitling to shares
(including stock options) in one or more issues. The Board may
issue either new shares or shares held by the Company. The
Board proposes that the authorization may be used to develop
the Company’s capital structure, diversify the shareholder
base, fi nance 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 sharehold-
ers’ pre-emptive rights. The authorization would be eff ective
until June , and terminate the current authorization
granted by the Annual General Meeting on May , .
24. SHARE-BASED PAYMENT
The Group has several equity-based incentive plans for
employees. The plans 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 fulfi llment of such per-
formance and other conditions, as determined in the relevant
plan rules.
The share-based compensation expense for all equity-
based incentive awards amounted to EUR million in
(EUR million in and EUR million in ).
Stock options
During Nokia administered two global stock option plans,
the Stock Option Plans and , each of which, includ-
ing its terms and conditions, has been approved by the Annual
General Meeting in the year when the plan was launched.
Each stock option entitles the holder to subscribe for one
new Nokia share. The stock options are non-transferable
and may be exercised for shares only. All of the stock options
granted under the Stock Option Plan have a vesting
schedule with % of the options vesting one year after grant
and .% each quarter thereafter. The stock options granted
under the plan have a term of approximately fi ve years.
The stock options granted under the Stock Option Plan
have a vesting schedule with % of stock options vesting
three years after grant and the remaining % vesting four
years from grant. The stock options granted under the
plan have a term of approximately six years.
The exercise price of the stock options is determined at
the time of grant, on a quarterly basis, in accordance with
a pre-agreed schedule after the release of Nokia’s periodic
fi nancial results. The exercise prices are based on the trade
volume weighted average price of a Nokia share on NASDAQ
OMX Helsinki during the trading days of the fi rst whole week
of the second month of the respective calendar quarter (i.e.,
February, May, August or November). With respect to the
Stock Option Plan, should an ex-dividend date take place dur-
ing that week, the exercise price shall be determined based on
the following week’s trade volume weighted average price of
the Nokia share on NASDAQ OMX Helsinki. Exercise prices are
determined on a one-week weighted average to mitigate any
day-specifi c fl uctuations in Nokia’s share price. The determi-
nation of exercise price is defi ned in the terms and conditions
of the stock option plans, which were approved by the share-
holders at the respective Annual General Meetings and
. The Board of Directors does not have the right to change
how the exercise price is determined.
Shares will be eligible for dividend for the fi nancial year in
which the subscription takes place. Other shareholder rights
52
N O K I A I N 2 0 1 2
commence on the date on which the subscribed shares are
entered in the Trade Register. The stock option grants are
generally forfeited if the employment relationship terminates
with Nokia.
of the total number of votes at December , . All share
subscription prices based on the exercises of stock options are
recorded in the reserve for invested non-restricted equity as
per a resolution by the Annual General Meeting.
Pursuant to the stock options issued under the global stock
The table below sets forth certain information relating to
option plans, an aggregate maximum number of
new Nokia shares may be subscribed for, representing .%
the stock options outstanding at December , .
Plan
(year of
launch)
2007 1
Stock options Number of
outstanding participants
Option
(sub)
(approx.) category
2012
Vesting status
(as percentage
of total number
of stock
options
outstanding)
Exercise period
First vest date
Last vest date
Expiry date
7 579 015
2 400 2007 2Q
Expired
July 1, 2008
July 1, 2011
December 31, 2012
2007 3Q
Expired
October 1, 2008 October 1, 2011
December 31, 2012
2007 4Q
Expired
January 1, 2009
January 1, 2012
December 31, 2012
2008 1Q
100.00
April 1, 2009
April 1, 2012
December 31, 2013
2008 2Q
100.00
July 1, 2009
July 1, 2012
December 31, 2013
2008 3Q
100.00
October 1, 2009 October 1, 2012
December 31, 2013
2008 4Q
93.75
January 1, 2010
January 1, 2013
December 31, 2013
2009 1Q
87.50
April 1, 2010
April 1, 2013
December 31, 2014
2009 2Q
81.25
July 1, 2010
July 1, 2013
December 31, 2014
2009 3Q
75.00
October 1, 2010 October 1, 2013
December 31, 2014
2009 4Q
68.75
January 1, 2011
January 1, 2014
December 31, 2014
Exercise
price/
share EUR
18.39
21.86
27.53
24.15
19.16
17.80
12.43
9.82
11.18
9.28
8.76
2010 1Q
62.50
April 1, 2011
April 1, 2014
December 31, 2015
10.11
2010 2Q
56.25
July 1, 2011
July 1, 2014
December 31, 2015
2010 3Q
50.00
October 1, 2011
October 1, 2014
December 31, 2015
2010 4Q
43.75
January 1, 2012
January 1, 2015
December 31, 2015
2011 2
18 141 987
1 960
2011 2Q
2011 3Q
2011 4Q
2012 1Q
2012 2Q
2012 3Q
2012 4Q
—
—
—
—
—
—
—
July 1, 2014
July 1, 2015
December 27, 2017
October 1, 2014 October 1, 2015
December 27, 2017
January 1, 2015
January 1, 2016
December 27, 2017
April 1, 2015
April 1, 2016
December 27, 2018
July 1, 2015
July 1, 2016
December 27, 2018
October 1, 2015
October 1, 2016
December 27, 2018
January 1, 2016
January 1, 2017
December 27, 2018
8.86
7.29
7.59
6.02
3.76
4.84
3.84
2.44
2.18
2.12
The Group’s global Stock Option Plan has a vesting schedule with a
% vesting one year after grant, and quarterly vesting thereafter, each
of the quarterly lots representing .% of the total grant. The grants
vest fully in four years.
The Group’s global Stock Option Plan has vesting schedule with %
of stock options vesting three years after grant and the remaining %
vesting four years from grant.
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
53
Total stock options outstanding as at December ,
Number of shares
Weighted average
exercise price
EUR
Weighted
average share
price EUR
Shares under option at January 1, 2010
Granted
Exercised
Forfeited
Expired
Shares under option at December 31, 2010
Granted
Exercised
Forfeited
Expired
Shares under option at December 31, 2011 2
Granted
Exercised
Forfeited
Expired
Shares under option at December 31, 2012
Options exercisable at December 31, 2009 (shares)
Options exercisable at December 31, 2010 (shares)
Options exercisable at December 31, 2011 (shares)
Options exercisable at December 31, 2012 (shares)
Includes also stock options granted under other than global equity plans,
however excluding the Nokia Siemens Network share-based incentive
program. For further information see “Other equity plans for employees”
below.
Due to an administrative error, the amount of stock options
granted to a Nokia Leadership Team member in Q was not reported
in Annual Accounts . The administrative error was corrected in
and the table reflects the corrected amount.
23 039 962
6 708 582
39 772
1 698 435
6 065 041
21 945 296
11 801 907
6 208
2 441 876
7 909 089
23 390 030
10 258 400
627
4 246 222
3 555 213
25 846 368
13 124 925
11 376 937
6 904 331
5 616 112
9.44
7.69
2.08
15.39
8.73
2.20
12.07
13.97
14.04
5.50
5.07
9.05
17.53
9.07
2.32
0.97
6.60
15.26
5.95
16.09
17.07
14.01
11.96
The weighted average grant date fair value of stock options
granted was EUR . in , EUR . in and EUR . in
.
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:
The options outstanding by range of exercise price at
December , are as follows:
Options outstanding
2012
2011
2010
Weighted average
expected
dividend yield
Weighted average
expected volatility
Risk-free
interest rate
7.96%
7.37%
4.73%
65.97%
36.95%
52.09%
0.70 – 1.60% 1.71 – 2.86% 1.52 – 2.49%
Weighted Weighted
average average
remaining exercise
price
EUR
contractual
life in years
5.78
4.96
2.99
1.86
1.03
2.64
6.02
8.65
11.37
19.03
Weighted average
risk-free interest rate
Expected life (years)
Weighted average
share price, EUR
1.13%
4.70
2.68%
4.70
1.78%
3.59
2.42
5.46
8.27
Expected term of stock options is estimated by observing
general option holder behavior and actual historical terms of
Nokia stock option plans.
Expected volatility has been set by reference to the implied
volatility of options available on Nokia shares in the open mar-
ket and in light of historical patterns of volatility.
Exercise prices, EUR
2.12 – 4.84
4.97 – 6.02
6.71 – 8.86
8.87 – 12.43
12.78 – 24.15
Number of
shares
12 382 650
5 822 568
3 737 369
2 697 026
1 206 755
25 846 368
54
N O K I A I N 2 0 1 2
Performance shares
During , Nokia administered four global performance
share plans, the Performance Share Plans of , ,
and , each of which, including its terms and conditions, has
been approved by the Board of Directors.
The performance shares represent a commitment by Nokia
Corporation to deliver Nokia shares to employees at a future
point in time, subject to Nokia’s fulfi llment of pre-defi ned
performance criteria. No Nokia shares will be delivered unless
the Group’s performance reaches at least one of the threshold
levels measured by two independent, pre-defi ned performance
criteria. The below table illustrates the performance criteria of
the Performance Share Plans from through .
Performance
criteria
Average annual
net sales growth
(Nokia Group)
EPS at the end of
performance period
(Nokia Group)
Average annual
net sales
(Nokia Group
excluding NSN)
Average annual
EPS (Nokia Group)
Performance share plan
2012
2011
2010
2009
—
Yes
Yes
Yes
—
—
Yes
Yes
Yes
—
Yes
Yes
—
—
—
—
The , and plans have a three-year perfor-
mance period. The shares vest after the respective perfor-
mance period. The plan has a two-year performance
period and a subsequent one-year restriction period, after
which the shares vest. The shares will be delivered to the par-
ticipants as soon as practicable after they vest. Until the Nokia
shares are delivered, the participants will not have any share-
holder 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 term “vesting” means that the
performance period and/or restriction period specifi ed in the
plan rules has ended and does not indicate that actual share
delivery took place.
The following table summarizes our global performance
share plans.
Performance
shares
outstanding
Plan at threshold 1,2
2009
2010
2011
2012
0
0
3 346 428
5 226 959
Number of
participants Performance Settle-
period ment
(approx.)
4 000
2009 – 2011
3 000
2010 – 2012
2012
2013
3 000
3 000
2011 – 2013
2014
2012 – 2013 3 2015
Shares under performance share plan vested on December ,
and are therefore not included in the outstanding numbers.
Does not include outstanding performance shares with deferred
delivery due to leave of absence.
Performance share plan has a two-year performance period with an
additional one-year restriction period.
The following tables set forth the performance criteria of
each global performance share plan.
Threshold
performance
Maximum
performance
Average
annual
EPS 1,2 net sales
EUR
growth 1
Average
annual
EPS 1,2 net sales
EUR
growth 1
1.01
0.82
0.50
-5%
0%
2.5%
1.53
1.44
1.10
10%
13.5%
10%
Plan
2009
2010
2011
Both the EPS and average annual net sales growth criteria have an equal
weight of %.
Performance share plan and : EPS at the end of the perfor-
mance period. Performance share plan : average annual EPS.
Threshold
performance
Maximum
performance
Average
annual
EPS 1
EUR
0.04
Average
annual
net sales 1
EURm
Average
annual
EPS 1
EUR
Average
annual
net sales 1
EURm
17 394
0.35
26 092
Plan
2012
Both the EPS and average annual net sales criteria have an equal weight of
%.
Performance shares outstanding as at December ,
Number of
performance
shares at
threshold
Weighted
average grant
date fair value
EUR 2
Performance shares at
January 1, 2010
Granted
Forfeited
Vested 3
Performance shares at
December 31, 2010
Granted
Forfeited
Vested 4
Performance shares at
December 31, 2011
Granted
Forfeited
Vested 5
Performance shares at
December 31, 2012
5 093 960
3 576 403
1 039 908
1 910 332
5 720 123
5 410 211
1 538 377
2 009 423
7 582 534
5 785 875
2 718 208
2 076 116
8 574 085
5.94
3.66
1.33
Includes also performance shares granted under other than global equity
plans. For further information see “Other equity plans for employees”
below.
The fair value of performance 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.
Includes performance shares under performance share plan that
vested on December , .
Includes performance shares under performance share plan that
vested on December , .
Includes performance shares under performance share plan that
vested on December , . Includes shares receivable through the one-
time special CEO incentive program that vested on December , .
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
55
There was no settlement under the Performance Share Plan
as neither of the threshold performance criteria of EPS
and Average Annual Net Sales Growth of this plan was met.
There was no settlement under the one-time special CEO
incentive program as the performance criteria were not met.
Restricted shares
During , Nokia administered four global restricted share
plans, the Restricted Share Plans , , and ,
each of which, including its terms and conditions, has been
approved by the Board of Directors.
Restricted shares are used on a selective basis to ensure
retention and recruitment of individuals with functional mas-
tery and other employees deemed critical to Nokia’s future
success.
All of the Group’s restricted share plans have a restric-
tion period of three years after grant. 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. The restricted share grants are generally
forfeited if the employment relationship terminates with
Nokia prior to vesting.
Restricted shares outstanding as at December ,
Weighted
average grant
date fair value
EUR 2
6.85
3.15
1.76
Number of
restricted
shares
9 381 002
5 801 800
1 492 357
1 330 549
12 359 896
8 024 880
2 063 518
1 735 167
16 586 091
12 999 131
4 580 182
1 324 508
23 680 532
Restricted shares at
January 1, 2010
Granted
Forfeited
Vested
Restricted shares at
December 31, 2010
Granted
Forfeited
Vested
Restricted shares at
December 31, 2011 3
Granted
Forfeited
Vested
Restricted shares at
December 31, 2012 4
Includes also restricted shares granted under other than global equity
plans. For further information see “Other equity plans for employees”
below.
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.
Includes restricted shares granted in Q under Restricted
Share Plan that vested on January , .
Includes restricted shares granted in Q under Restricted
Share Plan that vested on January , .
Other equity plans for employees
In addition to the global equity plans described above, Nokia
has equity plans for Nokia acquired businesses or employees in
the United States and Canada under which participants can re-
ceive Nokia ADSs or ordinary shares. These equity plans do not
result in an increase in the reserve for invested non-restricted
equity of Nokia. On the basis of these plans, the Group had .
million stock options outstanding on December , . The
weighted average exercise price is USD ..
In connection with the July , acquisition of NAVTEQ,
the Group assumed NAVTEQ’s Stock Incentive Plan
(“NAVTEQ Plan”). All unvested NAVTEQ restricted stock units
under the NAVTEQ Plan were converted to an equivalent num-
ber 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 – was approx-
imately million, all of which have been delivered by December
, . The Group does not intend to make further awards
under the NAVTEQ Plan.
The Group also has 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 %
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 ,
, approximately ADSs had been purchased under
this plan during , and there were a total of approximately
participants in the plan. The plan will be ramped-down
during as a new global Employee Share Purchase Plan will
be implemented as described below.
During – , Nokia had a one-time special CEO incen-
tive program designed to align the CEO’s compensation to
increased shareholder value and to link a meaningful portion
of CEO’s compensation directly to the performance of Nokia’s
share price over the period of – . Mr. Elop had the
opportunity to earn – Nokia shares at the end
of based on two independent criteria: Total Shareholder
Return (TSR) relative to a peer group of companies over the
two-year period and Nokia’s absolute share price at the end
of . As the minimum performance for neither of the two
performance criterion was reached, no share delivery took
place. The number of shares earned and to be settled may be
adjusted by the Board of Directors under certain exceptional
circumstances up until June , , should the results sig-
nifi cantly change.
On January , Nokia introduced an Employee Share
Purchase Plan, which is planned to be off ered in countries
to all Nokia employees (excluding Nokia Siemens Networks’
employees). Under the Plan, the eligible Nokia employees
can elect to make monthly contributions from their salary to
purchase Nokia shares. The contribution per employee cannot
exceed EUR per year. The share purchases will be made at
market value on pre-determined dates on a monthly basis dur-
ing a -month savings period. Nokia will off er one matching
share for every two purchased shares the employee still holds
after the last monthly purchase has been made in June .
In addition, free shares will be delivered to employees who
make the fi rst three consecutive monthly share purchases.
The participation in the plan is voluntary to the employees.
Nokia Siemens Networks established a share-based incen-
tive program in under which options for Nokia Siemens
Networks B.V. shares are granted to selected Nokia Siemens
Networks’ employees. The options generally become exercis-
able on the fourth anniversary of the grant date or, if earlier,
on the occurrence of certain corporate transactions, such as
56
N O K I A I N 2 0 1 2
initial public off ering (“IPO”). The exercise price of the options
is based on a per share value on grant as determined for the
purposes of the incentive program. The options will be cash-
settled at exercise unless an IPO has taken place, at which
point they would be converted into equity-settled options. If
an IPO has not taken place by the sixth anniversary of the grant
date, Nokia Siemens Networks will cash out any remaining op-
tions. If an IPO has taken place, equity options remain exercis-
able until the tenth anniversary of the grant date. The fair
value of the liability is determined based on the estimated fair
value of shares less the exercise price of the options on the
reporting date. The total carrying amount for liabilities arising
from share-based payment transactions is EUR million at
December , .
The recognition of the remaining deferred tax assets is sup-
ported by off setting deferred tax liabilities, earnings history
and profi t projections in the relevant jurisdictions.
At December , , the Group had undistributed earn-
ings of EUR million (EUR million in ) on which no
deferred tax liability has been formed as these will not reverse
in the foreseeable future.
26. ACCRUED EXPENSES AND OTHER
LIABILITIES
EURm
2012
2011
Social security, VAT and other taxes
821
1 358
25. DEFERRED TAXES
EURm
Deferred tax assets:
Wages and salaries
Deferred revenue
Advance payments
2012
2011
Other
Total
1 031
369
933
751
1 887
1 524
2 973
2 884
7 081
7 450
Intercompany profi t in inventory
58
66
Other accruals include accrued discounts, royalties and
marketing expenses as well as various amounts which are
individually insignifi cant. Majority of the deferred revenue and
advance payments will be recognized as revenue within the
next months.
Tax losses carried forward and
unused tax credits
Warranty provision
Other provisions
Depreciation diff erences
Share-based compensation
Other temporary diff erences
Reclassifi cation due to netting
of deferred taxes
Total deferred tax assets
Deferred tax liabilities:
Depreciation diff erences and
untaxed reserves
Fair value gains/losses
Undistributed earnings
Other temporary diff erences 1
Reclassifi cation due to netting
of deferred taxes
Total deferred tax liabilities
564
47
261
868
—
145
715
63
363
711
11
362
– 689
1 254
– 443
1 848
– 892
—
– 313
– 184
689
– 700
– 500
– 65
– 268
– 410
443
– 800
Net deferred tax asset
554
1 048
Tax charged to equity
3
– 4
In , other temporary differences included a deferred tax liability of
EUR million arising from purchase price allocation related to Nokia
Siemens Networks and NAVTEQ. In the deferred tax liabilities for
these two items were nil.
At December , , the Group had tax losses carry forward
of EUR million (EUR million in ) of which EUR
million will expire within years (EUR million in ).
At December , , the Group had tax losses carry
forward, temporary diff erences and tax credits of EUR
million (EUR million in ) for which no deferred tax
asset was recognized due to uncertainty of utilization of these
items. EUR million of those will expire within years (EUR
million in ).
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
57
27. PROVISIONS
EURm
Warranty
Restructuring
infringements
IPR Material
liability
Project
losses
Tax Other
Total
At January ,
Translation diff erences
Acquisitions
Additional provisions
Changes in estimates
Charged to profi t and loss account
Utilized during year
At December 31, 2012
At January ,
Translation diff erences
Acquisitions
Additional provisions
Changes in estimates
Charged to profi t and loss account
Utilized during year
At December 31, 2011
—
–
–
407
–
–
–
688
—
—
–
–
653
—
—
–
–
459
EURm
2012
2011
Analysis of total provisions
at December 31:
Non-current
Current
971
1 648
1 175
1 452
Outfl ows for the warranty provision are generally expected to
occur within the next months. Timing of outfl ows related to
tax provisions is inherently uncertain.
The restructuring provision is mainly related to restruc-
turing activities in Devices & Services and Nokia Siemens
Networks businesses. The majority of outfl ows related to the
restructuring is expected to occur during .
In February , Nokia announced planned changes at its
factories in Komarom, Hungary, Reynosa, Mexico and Salo,
Finland to increase effi ciency in smartphone manufacturing.
In June , Nokia announced additional actions to align its
workforce and operations. The planned actions was expected
to lead to a total reduction of up to positions glob-
ally by the end of . As part of this Nokia planned to make
signifi cant reductions in certain R&D projects, which resulted
in the closure of Ulm in Germany and Burnaby, Canada; reduce
factory operations, including the closure of the factory in
Salo; prioritize sales eff orts around certain markets resulting
in reducing headcount in certain other markets; align sup-
port functions around Nokia’s focused strategy resulting in a
signifi cant reduction in the number of employees in corporate
functions. As a result, Devices & Services recognized restruc-
turing charges of EUR million in total.
In April , Nokia announced plans to reduce its global
workforce by about employees by the end of , as
well as plans to consolidate the company’s research and prod-
uct development sites so that each site has a clear role and
—
—
–
–
–
388
—
—
–
–
–
431
—
–
—
—
–
–
–
–
—
–
–
–
—
–
–
—
–
–
–
242
—
—
—
149
327
453
2 619
—
—
–
–
—
—
–
–
–
–
–
–
–
–
–
125
205
299
420
2 627
mission. In September , Nokia announced plans to take
further actions to align its workforce and operations, which in-
cludes reductions in Sales and Marketing and Corporate func-
tions in line with Nokia’s earlier announcement in April .
The measures also include the closure of Nokia’s manufactur-
ing facility in Cluj, Romania, which – together with adjustments
to supply chain operations – has aff ected approximately
employees. As a result, Devices & Services recognized restruc-
turing charges of EUR million in total.
In , Location & Commerce announced further plans to
reduce its workforce and as a result recognized restructuring
charges of EUR million in total.
In September , Nokia announced a plan to concentrate
the development eff orts of the Location & Commerce busi-
ness in Berlin, Germany and Boston and Chicago in the U.S.,
and other supporting sites and plans to close its operations
in Bonn, Germany and Malvern, U.S. As a result, Location &
Commerce recognized restructuring charges of EUR million.
In November , Nokia Siemens Networks announced a
new strategy to focus on mobile broadband and services and
the launch of an extensive global restructuring program. At
the same time, Nokia Siemens Networks announced its inten-
tion to reduce its global workforce by approximately by
the end of . Restructuring and other associated expenses
incurred in Nokia Siemens Networks in totaled EUR
million (EUR million in ) including mainly personnel
related expenses as well as expenses arising from the country
and contract exits based on Nokia Siemens Networks’ strategy
that focuses on key markets and product segments.
The IPR provision is based on estimated potential future
settlements for asserted past IPR infringements. Final resolu-
tion of IPR claims generally occurs over several periods.
Material liability provision relates to non-cancellable pur-
chase commitments with suppliers. The outfl ows are expected
to occur over the next months.
58
N O K I A I N 2 0 1 2
Provisions for losses on projects in progress are related
to Nokia Siemens Networks’ onerous contracts. Utilization of
provisions for project losses is generally expected to occur in
the next months.
Other provisions include provisions for various contractual
obligations and provisions for pension and other social secu-
rity costs on share-based awards.
28. EARNINGS PER SHARE
2012
2011
2010
– 3 106
– 1 164
1 850
calculation of diluted earnings per share because they were
determined to be anti-dilutive.
In addition, million of performance shares were excluded
from the calculation of dilutive shares because contingency
conditions have not been met.
As at December , there were million of restricted
shares outstanding that could potentially have a dilutive
impact in the future but were currently excluded from the
calculation because they were determined anti-dilutive.
The convertible bond includes a voluntary conversion op-
tion. Based on the initial conversion price, voluntary conver-
sion of the entire bond would result in the issue of million
shares. The potential shares related to the bond as well as the
interest on the convertible bond were currently excluded from
the calculation of dilutive shares because they were deter-
mined to be anti-dilutive at December , .
29. COMMITMENTS AND CONTINGENCIES
– 3 106
– 1 164
1 850
EURm
2012
2011
—
—
—
Assets pledged
Collateral for our own commitments
Property under mortgages
—
38
18
2
– 3 106
– 1 164
1 850
Contingent liabilities on behalf
of Group companies
Other guarantees
937
1 292
Numerator/EURm
Basic:
Profi t attributable
to equity holders
of the parent
Diluted:
Profi t attributable
to equity holders
of the parent
Elimination of interest
expense, net of tax,
on convertible bond,
where dilutive
Profi t used to
determine diluted
earnings per share
Denominator/1 000 shares
Basic:
Weighted average
number of shares
in issue
Eff ect of dilutive
securities:
Stock options
Performance shares
Restricted shares
Assumed conversion
of convertible bond
Diluted:
Adjusted weighted
average number of
hares and assumed
conversions
3 710 845 3 709 947 3 708 816
—
—
—
—
—
—
—
—
—
—
—
324
4 110
—
4 434
Contingent liabilities on behalf
of Associated companies
Financial guarantees on behalf
of associated companies
Contingent liabilities on behalf
of other companies
Financial guarantees on behalf
of third parties 1
Other guarantees
Financing commitments
Customer fi nance commitments 1
Venture fund commitments
11
—
12
68
—
16
34
282
86
133
3 710 845 3 709 947 3 713 250
See also Note .
Basic earnings per share is calculated by dividing the profi t
attributable to equity holders of the parent by the weighted
average number of shares outstanding during the year exclud-
ing shares purchased by the Group and held as treasury shares.
Diluted earnings per share is calculated by adjusting the profi t
attributable to equity holders of the parent to eliminate the
interest expense of the convertible bond and by adjusting the
weighted average number of shares outstanding with the dilu-
tive eff ect of stock options, performance shares and restricted
shares outstanding during the year as well as the assumed
conversion of convertible bond.
In , stock options equivalent to million shares (
million in and million in ) were excluded from the
The amounts above represent the maximum principal amount
of commitments and contingencies.
Other guarantees include commercial guarantees of
EUR million in (EUR million in ) 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 compensation for non-
performance by Nokia Siemens Networks of its obligations
under network infrastructure supply agreements. Depending
on the nature of the guarantee, compensation is payable on
demand or subject to verifi cation of non-performance. Volume
of Other guarantees has decreased mainly due to expired
guarantees.
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
59
31. RELATED PARTY TRANSACTIONS
At December , , the Group had borrowings amounting
to EUR million (EUR million in ) from Nokia Unterstüt-
zungskasse GmbH, the Group’s German pension fund, which is
a separate legal entity. The loan bears interest at % annum
and its duration is pending until further notice by the loan
counterparts who have the right to terminate the loan with a
day notice.
There were no loans granted to the members of the Nokia
Leadership Team and the Board of Directors at December ,
, or .
EURm
2012
2011
2010
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
– 1
—
46
12
150
1
32
– 23
—
47
37
91
—
14
1
1
61
15
186
3
22
At December , , the Group has an outstanding fi nan-
cial guarantee of EUR million for an associated company of
the Group.
Management compensation
The following table sets forth the salary and cash incentive
information awarded and paid or payable by the company to
the President and CEO of Nokia Corporation for fi scal years
– as well as the share-based compensation expense
relating to equity-based awards, expensed by the company.
Financing commitments of EUR million in (EUR
million in ) are available under loan facilities negotiated
mainly with Nokia Siemens Networks’ customers. Availability
of the amounts is dependent upon the borrower’s continuing
compliance with stated fi nancial and operational covenants
and compliance with other administrative terms of the facil-
ity. The loan facilities are primarily available to fund capital
expenditure relating to purchases of network infrastructure
equipment and services.
Venture fund commitments of EUR million in (EUR
million in ) are fi nancing commitments to a number
of funds making technology related investments. As a limited
partner in these funds Nokia is committed to capital con-
tributions and also entitled to cash distributions according
to respective partnership agreements and underlying fund
activities.
As of December , , the Group had purchase commit-
ments of EUR million (EUR million in ) relating
to inventory purchase obligations, service agreements and
outsourcing arrangements, primarily for purchases in .
The Group has also entered into a partnership with Microsoft
whereas the Group is committed to a software royalty struc-
ture which includes annual minimum software royalty com-
mitments. In consideration for Nokia’s contribution under the
arrangement, the Group will also receive quarterly platform
support payments from Microsoft. Over the lifetime of the
agreement the total amount of the platform support pay-
ments is expected to slightly exceed the total amount of the
minimum software royalty commitments.
The Group is party to routine litigation incidental to the nor-
mal conduct of business, including, but not limited to, several
claims, suits and actions both initiated by third parties and
initiated by Nokia relating to infringements of patents, viola-
tions of licensing arrangements and other intellectual proper-
ty related matters, as well as actions with respect to products,
contracts and securities. Based on the information currently
available, 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 fi nancial condition or result of operations.
30. LEASING CONTRACTS
The Group leases offi ce, manufacturing and warehouse space
under various non-cancellable operating leases. Certain con-
tracts contain renewal options for various periods of time.
The future costs for non-cancellable leasing contracts are
as follows:
Leasing payments, EURm
Operating leases
2013
2014
2015
2016
2017
Thereafter
Total
238
176
130
87
68
309
1 008
Rental expense amounted to EUR in (EUR mil-
lion in and EUR million in ).
60
N O K I A I N 2 0 1 2
2012
2011
2010
Cash
Share-based
incentive compensation
expense
salary payments
Base
Cash
Share-based
incentive compensation
expense
salary payments
Base
Cash
Share-based
incentive compensation
expense
salary payments
Base
1 079 500
—
1 597 496 1 020 000
473 070
2 086 351
280 303
440 137
67 018
EUR
Stephen Elop
President and
CEO from
September 21, 2010
Total remuneration of the Nokia Leadership Team awarded
for the fi scal years – was EUR in (EUR
in and EUR in ), 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 in
(EUR in and EUR in ). For the Nokia
Leadership Team members whose employment terminated
during , the equity-based incentives were forfeited fol-
lowing the termination of employment in accordance with plan
rules.
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 respective years.
Board of Directors
EUR
EUR
EUR
2012
2011
2010
Gross
Shares
annual fee 1 received
Gross
annual fee 1
Shares
received
Gross
annual fee 1
Shares
received
440 000
70 575
155 000
10 428
155 000
7 294
—
—
440 000
29 604
440 000
20 710
Risto Siilasmaa,
Chairman as from May 3, 2012 2
Jorma Ollila,
Chairman until May 3, 2012 3
Dame Marjorie Scardino,
Vice Chairman 4
Bruce Brown
Stephen Elop 5
Lalita D. Gupte 6
Bengt Holmström
Henning Kagermann 7
Olli-Pekka Kallasvuo 8
Per Karlsson 9
Jouko Karvinen 10
Helge Lund
Isabel Marey-Semper 11
Mårten Mickos
Elizabeth Nelson 12
Kari Stadigh
Keijo Suila
150 000
130 000
24 062
20 850
—
—
—
—
—
—
155 000
24 860
—
—
155 000
130 000
140 000
130 000
140 000
130 000
—
—
—
24 860
20 850
22 454
20 850
22 454
20 850
—
Approximately % of each Board member’s gross annual fee is paid in
Nokia shares and the remaining approximately % of the gross annual
fee is paid in cash. 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 relating to
the acquisition of the shares, including taxes.
The fee paid to Risto Siilasmaa amounted to an annual total of EUR
for services as Chairman of the Board. The and fees
paid to Risto Siilasmaa amounted to an annual total of EUR each
year indicated, consisting of a fee of EUR for services as a mem-
ber of the Board and EUR for services as Chairman of the Audit
Committee.
The and fees paid to Jorma Ollila amounted to an annual total
of EUR each year indicated for his services as Chairman of the
Board.
The , and fees paid to Dame Marjorie Scardino amounted
to an annual total of EUR each year indicated for services as Vice
Chairman of the Board.
Stephen Elop did not receive remuneration for his services as a member
of the Board. This table does not include remuneration paid to Mr. Elop for
services as the President and CEO.
The fee paid to Lalita D. Gupte amounted to an annual total of EUR
, consisting of a fee of EUR for services as a member
of the Board and EUR for services as a member of the Audit
Committee.
150 000
10 092
150 000
7 058
—
—
130 000
155 000
—
130 000
140 000
130 000
140 000
—
—
—
—
8 746
10 428
—
8 746
9 419
8 746
9 419
—
—
130 000
8 746
—
140 000
130 000
130 000
130 000
155 000
—
—
—
6 588
6 117
6 117
6 117
7 294
—
—
140 000
6 588
—
—
—
—
—
—
—
—
130 000
6 117
The and fees paid to Henning Kagermann amounted to an
annual total of EUR each year indicated, consisting of a fee of
EUR for services as a member of the Board and EUR for
services as Chairman of the Personnel Committee.
Olli-Pekka Kallasvuo left his position on the Nokia Board of Directors in
. This table includes fees paid to Olli-Pekka Kallasvuo for his services
as a member of the Board, only.
The fee paid to Per Karlsson amounted to an annual total of EUR
, consisting of a fee of EUR for services as a member
of the Board and EUR for services as Chairman of the Personnel
Committee.
The fee paid to Jouko Karvinen amounted to an annual total of EUR
, consisting of a fee of EUR for services as a member of
the Board and EUR for service as Chairman of the Audit Commit-
tee. The fee paid to Jouko Karvinen amounted to an annual total
of EUR , consisting of a fee of for services as a member
of the Board and EUR for services as a member of the Audit
Committee.
The , and fees paid to Isabel Marey-Semper amounted to
an annual total of EUR each year indicated, consisting of a fee of
EUR for services as a member of the Board and EUR for
services as a member of the Audit Committee.
The fee paid to Elizabeth Nelson amounted to an annual total of
EUR , consisting of a fee of EUR for services as a member
of the Board and EUR for services as a member of the Audit
Committee.
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
61
the annual base salary and target incentive for the respective
period during which no severance payment is paid.
32. NOTES TO CASH FLOW STATEMENT
EURm
2012
2011
2010
Adjustments for:
Depreciation and
amortization (Note 10)
1 326
1 562
1 771
Profi t (–) / loss (+)
on sale of property,
plant and equipment and
available-for-sale investments – 131
Income taxes (Note 12)
1 145
– 49
290
– 193
443
Share of results of associated
companies (Note 15)
1
23
– 1
Non-controlling interest
– 683
– 324
– 507
Financial income and
expenses (Note 11)
Transfer from hedging
reserve to sales and
cost of sales (Note 21)
Impairment charges (Note 8)
Asset retirements (Note 13)
Share-based compensation
(Note 24)
Restructuring and related
charges 1 (Note 7, 27)
Other income and expenses
333
49
191
– 16
109
31
13
1 659
51
– 4
1 338
13
18
565
5
– 22
110
37
47
245
– 9
Adjustments, total
3 838
3 486
2 112
Change in net working capital
Decrease (+) / increase (–)
in short-term receivables
Decrease (+) / increase (–)
in inventories
Decrease (–) / increase (+)
in interest-free short-term
2 040
137
1 281
707
289
– 512
borrowings
– 2 702
– 1 145
1 563
Loans made to customers
Change in net working capital
78
123
81
17
– 638
2 349
The adjustments for restructuring and related charges represent the
non-cash portion of the restructuring and related charges recognized in
the income statement.
In , Nokia Siemens Networks’ EUR million loans and
capitalized interest of EUR million from Siemens were con-
verted into equity impacting the non-controlling interests in
the Consolidated Statements of Financial Position. The Group
did not engage in any material non-cash investing activities in
and .
Pension arrangements of certain
Nokia Leadership Team members
The members of the Nokia Leadership Team participate in
the local retirement programs applicable to employees in the
country where they reside. Executives in Finland, including
Mr. Elop, participate in the Finnish TyEL pension system, which
provides for a retirement benefi t based on years of service and
earnings according to prescribed statutory rules. Under the
Finnish TyEL pension system, base pay, incentives and other
taxable fringe benefi ts are included in the defi nition of earn-
ings, although gains realized from equity are not. The Finnish
TyEL pension scheme provides for early retirement benefi ts at
age with a reduction in the amount of retirement benefi ts.
Standard retirement benefi ts are available from age to ,
according to an increasing scale. The Nokia Leadership Team
members in the United States participate in Nokia’s US Retire-
ment Savings and Investment Plan. Under this (k) plan,
participants elect to make voluntary pre-tax contributions
that are % matched by Nokia up to % of eligible earnings.
% of the employer’s match vests for the participants during
each year of the fi rst four years of their employment. The
Nokia Leadership Team members in Germany participate in
the Nokia German Pension Plan that is % company funded.
Contributions are based on pensionable earnings, the pen-
sion table and retirement age. For the Nokia Leadership Team
members in UK, the pension accrued in the UK Pension Scheme
is a Money Purchase benefi t. Contributions are paid into the
UK Pension Scheme by both the member and employer. These
contributions are held within the UK Pension Scheme and are
invested in funds selected by the member.
Termination benefi ts of the President and CEO
In case of termination by Nokia for reasons other than cause,
Mr. Elop is entitled to a severance payment of up to months
of compensation (both annual base salary and target incentive)
and his equity will be forfeited as determined in the applicable
equity plan rules, with the exception of the equity out of the
Nokia Equity Program which will vest in an accelerated
manner (the performance period of Nokia Performance Share
Plan ended in and no shares were delivered in ac-
cordance with its terms). In case of termination by Mr. Elop, the
notice period is six months and he is entitled to a payment for
such notice period (both annual base salary and target incen-
tive for six months) and all his equity will be forfeited. In the
event of a change of control of Nokia, Mr. Elop may terminate
his employment upon a material reduction of his duties and re-
sponsibilities, upon which he will be entitled to a compensation
of months (both annual base salary and target incentive),
and his unvested equity will vest in an accelerated manner. In
case of termination by Nokia for cause, Mr. Elop is entitled to
no additional compensation and all his equity will be forfeited.
In case of termination by Mr. Elop for cause, he is entitled to a
severance payment equivalent to months of notice (both
annual base salary and target incentive), and his unvested eq-
uity will vest in an accelerated manner. Mr. Elop is subject to a
-month non-competition obligation after termination of the
contract. Unless the contract is terminated by Nokia for cause,
Mr. Elop may be entitled to compensation during the non-com-
petition period or a part of it. Such compensation amounts to
62
N O K I A I N 2 0 1 2
33. PRINCIPAL NOKIA GROUP COMPANIES
AT DECEMBER 31, 2012
%
Parent Group
holding majority
FI Nokia Sales International Oy
100.0
100.0
US Nokia Inc.
DE Nokia GmbH
GB Nokia UK Limited
KR Nokia TMC Limited
—
100.0
100.0
100.0
—
100.0
100.0
100.0
CN Nokia (China) Investment Co. Ltd
100.0
100.0
CN Nokia Telecommunications Ltd
4.5
83.9
NL Nokia Finance International B.V.
100.0
100.0
IN Nokia India Pvt Ltd
BR Nokia do Brazil Technologia Ltda
RU OOO Nokia
US NAVTEQ Corp
NL NAVTEQ B.V.
99.9
99.9
100.0
100.0
100.0
100.0
—
100.0
1.45
100.0
NL NAVTEQ Europe B.V.
NL Nokia Siemens Networks B.V.
FI Nokia Siemens Networks Oy
—
—
DE Nokia Siemens Networks GmbH & Co KG —
IN Nokia Siemens Networks Pvt. Ltd.
JP Nokia Siemens Networks Japan Corp.
US Nokia Siemens Networks US LLC
—
—
—
100.0
50.0 1
50.0
50.0
50.0
50.0
50.0
Nokia Siemens Networks B.V., the ultimate parent of the Nokia Siemens
Network group, is owned approximately % by each of Nokia and Sie-
mens 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 consoli-
dated Nokia Siemens Networks.
A complete list of subsidiaries and associated companies is
included in Nokia’s Statutory Accounts.
34. RISK MANAGEMENT
General risk management principles
Nokia has a common and systematic approach to risk manage-
ment across business operations and processes. Material
risks and opportunities are identifi ed, analyzed, managed and
monitored as part of business performance management.
Relevant key risks are identifi ed 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 ac-
cepted 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 its objectives. Risk management covers
strategic, operational, fi nancial and hazard risks.
Key risks are reported to the Group level management to
create assurance on business risks as well as to enable prior-
itization of risk management activities at Nokia. In addition to
general principles there are specifi c risk management policies
covering, for example, treasury and customer related credit
risks.
Financial risks
The objective for Treasury activities in Nokia is to guarantee
suffi cient funding for the Group at all times, and to identify,
evaluate and manage fi nancial risks. Treasury activities sup-
port this aim by mitigating the adverse eff ects caused by
fl uctuations in the fi nancial markets on the profi tability of the
underlying businesses and by managing the capital structure
of the Group by prudently balancing the levels of liquid assets
and fi nancial borrowings.
Treasury activities are governed by the Treasury Policy
approved by the CEO, that provides principles for overall
fi nancial risk management and determines the allocation
of responsibilities for fi nancial risk management in Nokia.
Standard Operating Procedures approved by the CFO cover
specifi c areas such as foreign exchange risk, interest rate risk,
credit and liquidity risk as well as use of derivative fi nancial
instruments in managing these risks. Nokia is risk averse in its
Treasury activities.
Financial risks are divided into (a) market risk (covering for-
eign exchange risk, interest risk and equity price risk), (b) credit
risk (covering business related credit risk and fi nancial credit
risk) and (c) liquidity risk.
A) MARKET RISK
Methodology for assessing market risk
exposures: 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 specifi ed market factors, at a specifi ed
confi dence level over a defi ned 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 correla-
tions of rates and prices estimated from a one-year sample of
historical market data, at % confi dence 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 % of pos-
sible outcomes. In the remaining % of possible outcomes, the
potential loss will be at minimum equal to the VaR fi gure, and
on average substantially higher.
The VaR methodology relies on a number of assumptions,
such as a) risks are measured under average market condi-
tions, assuming that market risk factors follow normal dis-
tributions; b) future movements in market risk factors follow
estimated historical movements; c) the assessed exposures do
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
63
not change during the holding period. Thus it is possible that,
for any given month, the potential losses at % confi dence
level are diff erent and could be substantially higher than the
estimated VaR.
Foreign exchange risk
Nokia operates globally and is exposed to transactional and
translational foreign exchange risks. Transaction risk arises
from foreign currency denominated assets and liabilities
together with foreign currency denominated future cash fl ows.
Transaction exposures are managed in the context of various
functional currencies of foreign Group companies.
According to the foreign exchange policy guidelines of the
Group, which remains the same as in the previous year, mate-
rial transactional foreign exchange exposures are hedged
unless hedging would be uneconomical due to market liquidity
and/or hedging cost. Exposures are defi ned using nominal
values of the transactions. Exposures are mainly hedged with
derivative fi nancial instruments such as forward foreign ex-
change contracts and foreign exchange options. The majority
of fi nancial instruments hedging foreign exchange risk have
duration of less than a year. The Group does not hedge fore-
cast foreign currency cash fl ows beyond two years.
Since Nokia has subsidiaries outside the euro zone, transla-
tion risk arises from the euro-denominated value of the share-
holders’ equity of foreign Group companies being exposed to
fl uctuations in exchange rates. Equity changes resulting from
movements in foreign exchange rates are shown as a transla-
tion diff erence in the Group consolidation.
Nokia uses, from time to time, forward foreign exchange
contracts, foreign exchange options and foreign currency
denominated loans to hedge its equity exposure arising from
foreign net investments.
At the end of years and , the following curren-
cies represent a signifi cant portion of the currency mix in the
outstanding fi nancial instruments:
2012, EURm
USD
JPY
CNY
INR
550
– 281
—
—
– 281
– 16
– 1 043
– 763
2011, EURm
USD
JPY
CNY
INR
FX derivatives used as
cashfl ow hedges
(net amount) 1
FX derivatives used as
net investment hedges
(net amount) 2
FX exposure from
balance sheet items
(net amount) 3
FX derivatives not
designated in a hedge
relationship and carried
at fair value through
profi t and loss
(net amount) 3
Cross currency / interest
rate hedges
1 282
110
—
– 20
– 1 045
– 17
– 2 023
– 818
– 962
– 19
880
– 109
875
255
– 825
– 264
420
—
—
—
The FX derivatives are used to hedge the foreign exchange risk from
forecast highly probable cashflows related to sales, purchases and busi-
ness acquisition activities. In some of the currencies, especially in US
dollar, Nokia has substantial foreign exchange risks in both estimated cash
inflows and outflows, which have been netted in the table. The underlying
exposures for which these hedges are entered into are not presented in
the table, as they are not financial instruments.
The FX derivatives are used to hedge the Group’s net investment expo-
sure. The underlying exposures for which these hedges are entered into
are not presented in the table, as they are not financial instruments.
The balance sheet items and some probable forecast cash flows which
are denominated in 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.
The VaR fi gures for the Group’s fi nancial instruments which
are sensitive to foreign exchange risks are presented in the
table below. The VaR calculation includes foreign currency
denominated monetary fi nancial instruments such as:
■ Available-for-sale investments, loans and accounts receiva-
bles, investments at fair value through profi t and loss, cash,
loans and accounts payable.
■ FX derivatives carried at fair value through profi t and loss
which are not in a hedge relationship and are mostly used for
hedging balance sheet FX exposure.
■ FX derivatives designated as forecasted cash fl ow hedges
and net investment hedges. Most of the VaR is caused by
these derivatives as forecasted cash fl ow and net invest-
ment exposures are not fi nancial instruments as defi ned
under IFRS and thus not included in the VaR calculation.
1 156
38
263
– 539
VaR from fi nancial instruments, EURm
2012
2011
– 1 439
106
– 114
420
428
—
—
—
At December 31
Average for the year
Range for the year
67
128
141
218
67–192 141–316
Interest rate risk
The Group is exposed to interest rate risk either through
market value fl uctuations of balance sheet items (i.e. price risk)
or through changes in interest income or expenses (i.e. refi -
nancing or reinvestment risk). Interest rate risk mainly arises
through interest bearing liabilities and assets. Estimated
future changes in cash fl ows and balance sheet structure also
expose the Group to interest rate risk.
FX derivatives used as
cashfl ow hedges
(net amount) 1
FX derivatives used as
net investment hedges
(net amount) 2
FX exposure from
balance sheet items
(net amount) 3
FX derivatives not
designated in a hedge
relationship and carried
at fair value through
profi t and loss
(net amount) 3
Cross currency / interest
rate hedges
64
N O K I A I N 2 0 1 2
The objective of interest rate risk management is to balance
uncertainty caused by fl uctuations in interest rates and net
long-term funding costs.
At the reporting date, the interest rate profi le of the
Group’s interest-bearing assets and liabilities is presented in
the table below:
Liabilities
– 4 191
– 1 312
– 4 313
2012
2011
Fixed Floating
rate
rate
Fixed Floating
rate
rate
3 488
6 627
6 384
4 733
– 950
– 703
5 315
2 071
3 783
1 880 – 1 784
1 736
– 1 656
EURm
Assets
Assets and liabilities
before derivatives
Interest rate
derivatives
Assets and liabilities
after derivatives
Business related credit risk
The Group aims to ensure highest possible quality in accounts
receivable and loans due from customers and other third par-
ties. Nokia and Nokia Siemens Networks Credit Policies (both
approved by the respective Leadership Teams) lay out the
framework for the management of the business related credit
risks in Nokia and Nokia Siemens Networks.
Nokia and Nokia Siemens Networks Credit Policies provide
that credit decisions are based on credit evaluation including
credit rating for larger exposures. Nokia and Nokia Siemens
Networks Rating Policies defi ne the rating principles. Ratings
are approved by Nokia and Nokia Siemens Networks Rating
Committees. Credit risks are approved and monitored accord-
ing to the credit policy of each business entity. When ap-
propriate, credit risks are mitigated with the use of approved
instruments, such as letters of credit, collateral or insurance
and sale of selected receivables.
1 177
3 531
3 807
2 127
Credit exposure is measured as the total of accounts receiv-
The interest rate exposure of the Group is monitored and
managed centrally. Nokia uses the Value-at-Risk (VaR) method-
ology complemented by selective shock sensitivity analyses to
assess and measure the interest rate risk of interest-bearing
assets, interest-bearing liabilities and related derivatives,
which together create the Group’s interest rate exposure. The
VaR for the Group interest rate exposure in the investment and
debt portfolios is presented in the table below. Sensitivities to
credit spreads are not refl ected in the below numbers.
EURm
At December 31
Average for the year
Range for the year
2012
2011
22
19
33
34
9 – 44
19 – 45
Equity price risk
Nokia’s exposure to equity price risk is related to certain pub-
licly listed equity shares.
The fair value of these investments at December ,
was EUR million (EUR million in ). The VaR for the Group
equity investment in publicly traded companies is insignifi cant.
B) CREDIT RISK
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in fi nancial loss to the
Group. Credit risk arises from credit exposures to customers,
including outstanding receivables, fi nancial guarantees and
committed transactions as well as fi nancial institutions, includ-
ing bank and cash, fi xed income and money-market investments
and derivative fi nancial instruments. Credit risk is managed
separately for business related and fi nancial credit exposures.
Except as detailed in the following table, the maximum ex-
posure to credit risk is limited to the book value of the fi nancial
assets as included in the Group’s balance sheet:
able and loans outstanding due from customers and other
third parties, and committed credits.
The accounts receivable do not include any major concen-
trations of credit risk by customer or by geography. Top three
customers account for approximately .%, .% and .%
(.%, .% and .% in ) of Group accounts receivable
and loans due from customers and other third parties as at
December , , while the top three credit exposures by
country amounted to .%, .% and .% (.%, .% and
.% in ).
The Group has provided allowances for doubtful accounts
as needed on accounts receivable and loans due from custom-
ers and other third parties not past due, based on the analysis
of debtors’ credit quality and credit history. The Group es-
tablishes allowances for doubtful accounts that represent an
estimate of incurred losses as of the end of reporting period.
All receivables and loans due from customers and other third
parties are considered on an individual basis in establishing
the allowances for doubtful accounts.
As at December , , the carrying amount before
deducting any allowances for doubtful accounts as well as
amounts expected to be uncollectible for acquired receivables
relating to customers for which an allowance was provided
or an uncollectible amount has been identifi ed amounted
to EUR million (EUR million in ). The amount
of provision taken against that portion of these receivables
considered to be impaired as well as the amount expected to
be uncollectible for acquired receivables was a total of EUR
million (EUR million in ) (see also Note and Note
). These aforementioned amounts are relative to total net
accounts receivable and loans due from customers and other
third parties of EUR in (EUR million in ).
An amount of EUR million (EUR million in ) relates
to past due receivables from customers for which no allowanc-
es for doubtful accounts were recognized. The aging of these
receivables is as follows:
EURm
2012
2011
EURm
Financial guarantees given on behalf
of customers and other third parties
Loan commitments given but not used
12
34
46
—
86
86
Past due 1 – 30 days
Past due 31 – 180 days
More than 180 days
2012
2011
250
70
45
365
169
118
29
316
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
65
In , Nokia adjusted the way aging credit notes are taken
into account when calculating past due receivables presented
in the table above. This adjustment has increased the amounts
of past due receivables compared to the method used by
Nokia in .
Financial credit risk
Financial instruments contain an element of risk resulting from
changes in market price of such instruments due to counter-
parties becoming less creditworthy or risk of loss due to coun-
terparties that are unable to meet their obligations. This risk is
measured and monitored centrally by Treasury. Nokia manages
fi nancial credit risk actively by limiting its counterparties to a
suffi cient number of major banks and fi nancial institutions and
monitoring the creditworthiness and exposure sizes continu-
ously. Nokia also enters into netting arrangements (which
gives Nokia the right to off set in the event that the counter-
party would not be able to fulfi ll the obligations) with all major
counterparties as well as collateral agreements (which require
counterparties to post collateral against derivative receiva-
bles) with certain counterparties.
Nokia’s investment decisions are based on strict creditwor-
thiness and maturity criteria as defi ned in the Treasury Policy
and Operating Principles. As a 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 fi nancial investments in the years presented.
The table below presents the breakdown of the outstand-
ing fi xed income and money market investments by sector and
credit rating grades ranked as per Moody’s rating categories.
Due between Due between Due between
Total
amount 1,2
EURm
Due within
3 months
EURm
3 and
12 months
EURm
1 and
3 years
EURm
3 and Due beyond
5 years
EURm
5 years
EURm
At December 31, 2012
Banks
Governments
Other
Rating 3
Aaa
Aa – Aa
A – A
Baa – Baa
Non rated
Aaa
Aa1 – Aa3
Aaa
Aa – Aa
A – A
Baa – Baa
Ba – C
Non rated
215
401
—
—
—
—
2
215
37
—
—
—
—
—
—
—
—
—
57
—
—
—
—
—
2
Total
6 405
5 772
115
At December 31, 2011
Banks
Governments
Other
Aaa
Aa – Aa
A – A
Baa – Baa
Non rated
Aaa
Aa1 – Aa3
Aaa
Aa – Aa
A – A
Baa – Baa
Ba – C
Non rated
270
408
—
2
260
400
—
—
—
—
—
—
—
—
—
—
10
6
—
—
—
—
—
2
Total
8 945
8 174
239
—
—
—
—
—
24
—
—
—
—
—
76
—
—
—
—
2
—
—
—
—
—
65
—
—
—
—
283
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
303
139
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
268
199
Fixed income and money-market investments include term deposits, in-
vestments in liquidity funds and investments in fixed income instruments
classified as available-for-sale investments and investments at fair value
through profit and loss. Liquidity funds invested solely in government
securities are included under Governments. Other liquidity funds are
included under Banks.
Included within fixed income and money-market investments is EUR
million of restricted investment at December , (EUR million at
December , ). They are restricted financial assets under various
contractual or legal obligations.
Bank parent company ratings used here for bank groups. In some emerg-
ing markets countries actual bank subsidiary ratings may differ from
parent company rating.
% of Nokia’s cash in bank accounts is held with banks of
investment grade credit rating (% for ).
C) LIQUIDITY RISK
Liquidity risk is defi ned as fi nancial distress or extraordinarily
high fi nancing costs arising due to a shortage of liquid funds
in a situation where outstanding debt needs to be refi nanced
or where business conditions unexpectedly deteriorate and
require fi nancing. Transactional liquidity risk is defi ned as
the risk of executing a fi nancial transaction below fair market
value, or not being able to execute the transaction at all, within
a specifi c period of time.
66
N O K I A I N 2 0 1 2
The objective of liquidity risk management is to maintain
Due to the dynamic nature of the underlying business, Nokia
suffi cient liquidity, and to ensure that it is available fast
enough without endangering its value, in order to avoid uncer-
tainty related to fi nancial distress at all times.
Nokia aims to secure suffi cient liquidity at all times by ef-
fi cient cash management and by investing in short-term liquid
interest bearing securities. Depending on overall liquidity
position Nokia aims to pre- or refi nance upcoming debt ma-
turities before contractual maturity dates. The transactional
liquidity risk is minimized by entering into transactions where
proper two-way quotes can be obtained from the market.
and Nokia Siemens Networks aim at maintaining fl exibility in
funding by keeping committed 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 , , the Group’s commit-
ted revolving credit facilities totaled EUR million (EUR
million in ).
The most signifi cant existing long-term funding programs as of December , were:
Issuer(s)
Program
Nokia Corporation
Shelf registration statement on fi le with the US Securities
and Exchange Commission
Nokia Corporation
Euro Medium-Term Note Program, totaling EUR 5 000 million
The most signifi cant existing short-term funding programs as of December , were:
Issuer(s)
Program
Nokia Corporation
Nokia Corporation
Local commercial paper program in Finland, totaling EUR 750 million
US Commercial Paper program, totaling USD 4 000 million
Issued
USD 1 500 million
EUR 1 750 million
Issued
—
—
—
Nokia Corporation and
Nokia Finance International B.V.
Nokia Siemens Networks
Finance B.V.
Euro Commercial Paper program, totaling USD 4 000 million
Local commercial paper program in Finland, totaling EUR 500 million
EUR 82 million
As of December , , Group’s interest bearing liabilities consisted of:
Issuer/borrower
Final maturity
2012
EURm
2011
EURm
Nokia
Revolving Credit Facility (EUR 1 500 million)
EUR Bond 2014 (EUR 1 250 million 5.5%)
EUR Bond 2019 (EUR 500 million 6.75%)
Nokia Corporation
Nokia Corporation
Nokia Corporation
USD Bond 2019 (USD 1 000 million 5.375%)
Nokia Corporation
USD Bond 2039 (USD 500 million 6.625%)
EUR EIB R&D Loan
Nokia Corporation
Nokia Corporation
EUR Convertible Bond 2017 (EUR 750 million 5%)
Nokia Corporation
March 2016
—
—
February 2014
1 250
1 250
February 2019
May 2019
May 2039
February 2014
October 2017
500
761
381
500
750
500
766
383
500
—
55
129
209
4 406
168
3 696
June 2012
—
613
600
—
132
150
80
—
—
176
250
80
181
1 143
5 549
506
1 625
5 321
Nokia Corporation
Nokia Corporation and
various subsidiaries
Nokia Siemens Networks
Finance B.V.
Nokia Siemens Networks
Finance B.V.
Nokia Siemens Networks
Finance B.V.
March 2014
June 2015
Nokia Siemens Networks Oy
October 2015
Nokia Siemens Networks
Finance B.V.
Nokia Siemens Networks
Finance B.V.
Nokia Siemens Networks
Finance B.V. and various
subsidiaries
January 2015
March 2015
Diff erences between Bond nominal
and carrying values 1
Other interest-bearing liabilities
Total Nokia
Nokia Siemens Networks
Revolving Credit Facility (EUR 2 000 million)
Bank Term Loan (EUR 600 million)
Revolving Credit Facility (EUR 750 million)
EUR Finnish Pension Loan
EUR EIB R&D Loan
EUR Nordic Investment Bank
Other interest-bearing liabilities
Total Nokia Siemens Networks
Total Nokia Group
This line includes mainly fair value adjustments for bonds that are
designated under Fair value hedge accounting and difference between
convertible bond nominal value and carrying value of the financial liability
component.
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
67
All Nokia borrowings specifi ed above are senior unsecured
and have no fi nancial covenants. All borrowings, apart from
EIB R&D loan, are used for general corporate purposes.
All Nokia Siemens Networks borrowings specifi ed above are
senior unsecured and include fi nancial covenants relating to
fi nancial leverage and interest coverage of the Nokia Siemens
Networks. As at year end all fi nancial covenants were
satisfi ed. All borrowings, apart from EIB and Nordic Investment
bank R&D loans, are used for general corporate purposes.
Nokia has not guaranteed any of the Nokia Siemens
Networks borrowings and thus these are non-recourse to
Nokia. All Nokia Siemens Networks Finance B.V. borrowings
above are guaranteed by Nokia Siemens Networks Oy and/or
Nokia Siemens Networks BV.
In October , Nokia issued a EUR million convert-
ible bond that matures in October . The bond includes a
voluntary conversion option starting from December until
maturity. Based on initial conversion price, voluntary conversion
of the entire bond would result in the issue of million shares.
In December , Nokia Siemens Networks entered into a
EUR million committed forward starting credit facility ef-
fective from the forward start date of June , . By April
the committed facility had been increased to EUR million.
The facility replaced EUR million revolving credit facility
from that matured in June . EUR million commit-
ted facility comprised in two equal parts, EUR million revolv-
ing credit facility maturing in June and EUR million term
loan maturing in June . In December , EUR million
of the term loan was prepaid and the maturity of the remaining
EUR million term loan was extended to March .
Of the Nokia Siemens Networks’ EUR Finnish Pension Loan,
EUR EIB R&D Loan and EUR Nordic Investment Bank Loan EUR
million, EUR million and EUR million respectively are
included in current maturities as of December, .
The following table below is an undiscounted cash fl ow
analysis for both fi nancial liabilities and fi nancial assets that
are presented on the balance sheet, and off -balance sheet
instruments such as loan commitments according to their re-
maining contractual maturity. Line-by-line reconciliation with
the balance sheet is not possible.
At 31 December 2012, EURm
Non-current fi nancial assets
Long-term loans receivable
Current fi nancial assets
Current portion of long-term loans
receivable
Short-term loans receivable
Investments at fair value through
profi t and loss
Available-for-sale investment
Cash
Cash fl ows related to derivative fi nancial
assets net settled:
Due
between
3 and
3 months 12 months
Due within
Due
between
1 and
3 years
Due
between
3 and
5 years
Due
beyond
5 years
Total
amount
217
40
1
493
6 008
3 504
1
12
1
1
5 782
3 504
2
46
37
131
28
—
5
119
—
—
—
11
82
—
—
—
260
25
—
—
—
216
—
—
Derivative contracts–receipts
240
78
– 30
86
25
81
Cash fl ows related to derivative fi nancial
assets gross settled:
Derivative contracts–receipts
Derivative contracts–payments
Accounts receivable 1
Non-current fi nancial liabilities
Long-term liabilities
Current fi nancial liabilities
13 864
– 13 596
4 579
10 299
– 10 212
3 952
3 072
– 2 959
615
41
– 17
12
41
– 17
—
411
– 391
—
– 6 642
– 111
– 163
– 2 933
– 1 123
– 2 312
Current portion of long-term loans
Short-term liabilities
– 216
– 262
– 83
– 207
– 133
– 55
—
—
—
—
—
—
Cash fl ows related to derivative fi nancial
liabilities net settled:
Derivative contracts–payments
– 99
– 2
– 3
– 7
– 7
– 80
Cash fl ows related to derivative fi nancial
liabilities gross settled:
Derivative contracts–receipts
Derivative contracts–payments
Accounts payable
Contingent fi nancial assets and liabilities
Loan commitments given, undrawn 2
Loan commitments obtained, undrawn 3
7 966
– 8 016
– 4 394
– 34
2 261
6 964
– 6 999
– 4 241
– 28
46
889
– 903
– 136
– 6
– 11
113
– 114
– 17
—
727
—
—
—
—
1 499
—
—
—
—
—
68
N O K I A I N 2 0 1 2
At 31 December 2011, EURm
Non-current fi nancial assets
Long-term loans receivable
Current fi nancial assets
Current portion of long-term loans
receivable
Short-term loans receivable
Investments at fair value through
profi t and loss
Available-for-sale investment
Cash
Cash fl ows related to derivative fi nancial
assets net settled:
Due
between
3 and
3 months 12 months
Due within
Due
between
1 and
3 years
Due
between
3 and
5 years
Due
beyond
5 years
Total
amount
112
59
14
575
8 557
1 957
1
10
12
—
8 305
1 957
2
43
62
4
49
2
7
133
—
—
—
14
69
—
—
—
264
15
—
—
—
290
35
—
Derivative contracts–receipts
215
72
– 46
90
17
82
Cash fl ows related to derivative fi nancial
assets gross settled:
Derivative contracts–receipts
Derivative contracts–payments
Accounts receivable 1
Non-current fi nancial liabilities
Long-term liabilities
Current fi nancial liabilities
16 014
– 15 779
5 872
14 272
1 226
– 14 113
– 1 200
5 030
802
41
– 27
40
41
– 27
—
434
– 412
—
– 5 391
– 106
– 153
– 2 374
– 316
– 2 442
Current portion of long-term loans
Short-term liabilities
– 387
– 1 002
– 61
– 915
– 326
– 87
—
—
—
—
—
—
Cash fl ows related to derivative fi nancial
liabilities net settled:
Derivative contracts–payments
– 107
—
– 3
– 2
– 3
– 99
Cash fl ows related to derivative fi nancial
liabilities gross settled:
Derivative contracts–receipts
Derivative contracts–payments
Accounts payable
Contingent fi nancial assets and liabilities
17 354
– 17 775
– 5 532
15 480
– 15 775
– 5 449
1 874
– 2 000
– 65
Loan commitments given, undrawn 2
Loan commitments obtained, undrawn 3
– 86
2 917
– 37
45
– 49
1 382
—
—
– 18
—
– 6
—
—
—
—
1 496
—
—
—
—
—
Accounts receivable maturity analysis does not include receivables ac-
counted based on the percentage of completion method of
EUR million (EUR million in ).
Loan commitments given, undrawn, have been included in the earliest
period in which they could be drawn or called.
Loan commitments obtained, undrawn, have been included based on the
period in which they expire. These amounts include related commitment
fees.
Hazard risk
Nokia strives to ensure that all fi nancial, 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 effi ciently internally managed and
where insurance markets off er acceptable terms and condi-
tions. The objective is to ensure that hazard risks, whether
related to physical assets (e.g. buildings) or intellectual assets
(e.g. Nokia brand) or potential liabilities (e.g. product liability)
are optimally insured taking into account both cost and reten-
tion levels.
Nokia purchases both annual insurance policies for specifi c
risks as well as multiline and/or multiyear insurance policies,
where available.
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
69
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
2012
EURm
2011
EURm
December 31
Notes
2012
EURm
2011
EURm
Net sales
Cost of sales
Gross margin
11 727
17 240
– 10 198
– 12 979
ASSETS
1 529
4 261
Fixed assets and other non-current assets
Selling and marketing expenses
– 1 141
– 1 384
Research and development expenses
– 2 298
– 2 888
Administrative expenses
Other operating expenses
Other operating income
– 133
– 119
1 136
– 227
– 586
203
Operating loss
2, 3
– 1 026
– 621
Financial income and expenses
Income from long-term investments
Dividend income from Group companies
2 168
3 696
Dividend income from other companies
Interest income from other companies
Other interest and fi nancial income
Interest income from Group companies
Interest income from other companies
Other fi nancial income
from other companies
Exchange gains and losses
Interest expenses and other
fi nancial expenses
7
2
11
1
7
– 147
1
—
20
5
8
65
Interest expenses to Group companies
Interest expenses to other companies
Impairment loss on investments
Other fi nancial expenses
– 14
– 115
– 53
– 72
– 750
– 1 461
– 31
– 98
Financial income and expenses, total
1 139
2 111
Intangible assets
Intangible rights
Other intangible assets
Tangible assets
Machinery and equipment
Investments
Investments in subsidiaries
Investments in associated
companies
Long-term loan receivables
from Group companies
Long-term loan receivables
from other companies
Other non-current assets
Current assets
Inventories and work in progress
Raw materials and supplies
Work in progress
Finished goods
Profi t before extraordinary items
and taxes
113
1 490
Receivables
4
5
6
6
6
14
165
179
2
2
36
319
355
1
1
11 548
11 199
3
—
48
105
11
—
13
85
11 704
11 308
1
6
50
57
74
72
78
224
Extraordinary items
Group contributions
Extraordinary items, total
Profi t before taxes
Income taxes
for the year
from previous years
deferred taxes
204
204
—
—
317
1 490
– 56
60
18
– 475
– 138
– 14
204
Deferred tax assets
Trade debtors from Group companies
Trade debtors from other companies
Short-term loan receivables
from Group companies
—
673
132
371
1 277
497
2 938
2 673
Prepaid expenses and accrued income
from Group companies
724
278
Prepaid expenses and accrued income
from other companies
1 503
5 970
2 194
7 290
Short-term investments
40
37
Net loss/profi t
– 154
1 542
Total
Bank and cash
37
290
17 989
19 505
See Notes to the financial statements of the parent company.
See Notes to the financial statements of the parent company.
70
N O K I A I N 2 0 1 2
STATEMENTS OF CASH FLOWS,
PARENT COMPANY, FAS
December 31
Notes
2012
EURm
2011
EURm
Financial year ended
December 31
Notes
2012
EURm
2011
EURm
SHAREHOLDERS’ EQUITY AND LIABILITIES
Net loss/profi t
– 154
1 542
Cash fl ow from operating activities
Shareholders’ equity
7
Share capital
Share issue premium
Treasury shares
Fair value reserve
Reserve for invested
non-restricted equity
Retained earnings
Net profi t for the year
Liabilities
Long-term liabilities
Long-term fi nance liabilities
to other companies
Short-term liabilities
Deferred tax liabilities
Current fi nance liabilities
from Group companies
Current fi nance liabilities
from other companies
Advance payments
from other companies
Adjustments, total
13
– 2 131
– 1 740
Cash fl ow before change
in net working capital
Change in net working capital
13
Cash generated from operations
Interest received
Interest paid
Other fi nancial income and expenses
Income taxes paid
– 2 285
1 631
– 654
13
– 146
– 352
– 115
Cash fl ow before extraordinary items
– 1 254
Extraordinary income and expenses
—
– 198
– 440
– 638
28
– 205
87
– 165
– 893
– 6
Net cash used in operating activities
– 1 254
– 899
Cash fl ow from investing activities
Investments in shares
Capital expenditures
Proceeds from sale of shares
Proceeds from sale of other
intangible assets
—
65
Proceeds from other long-term receivables
Proceeds from short-term receivables
Dividends received
– 70
– 9
357
8
64
– 563
– 66
2
17
21
109
1 510
1 179
2 656
Net cash from investing activities
1 969
3 246
246
46
– 634
– 46
3 120
2 927
– 154
5 505
246
46
– 649
68
3 132
2 128
1 542
6 513
7, 8
7, 8
7, 8
7, 8
7, 8
9
4 480
3 528
3 142
4 215
—
—
757
614
1 916
8 004
2 098
9 464
Trade creditors to Group companies
1 828
1 799
Cash fl ow from fi nancing activities
Trade creditors to other companies
293
621
Other contribution from shareholders
—
68
52
Proceeds from long-term borrowings
961
Proceeds from short-term borrowings
– 1 184
46
– 938
112
Accrued expenses and prepaid
income to Group companies
Accrued expenses and prepaid
income to other companies
Dividends paid
– 742
– 1 484
Net cash used in fi nancing activities
– 965
– 2 264
Net decrease/increase in cash
and cash equivalents
Cash and cash equivalents
at beginning of period
– 250
83
327
244
Total liabilities
12 484
12 992
Total
17 989
19 505
Cash and cash equivalents at end of period
77
327
See Notes to the financial statements of the parent company.
See Notes to the financial statements of the parent company.
P A R E N T C O M P A N Y
71
NOTES TO THE FINANCIAL STATEMENTS
OF THE PARENT COMPANY
1. ACCOUNTING PRINCIPLES
2. PERSONNEL EXPENSES
The Parent company Financial Statements are prepared ac-
cording to Finnish Accounting Standards (FAS).
See Note to Notes to the consolidated fi nancial state-
ments.
EURm
Wages and salaries
Pension expenses
Other social expenses
Personnel expenses as per profi t
and loss account
2012
2011
738
102
18
800
136
27
858
963
Management compensation
The following table sets forth the salary and cash incentive
information awarded and paid or payable by the company to
the President and CEO of Nokia Corporation for fi scal years
– as well as the share-based compensation expense
relating to equity-based awards, expensed by the company.
2012
2011
2010
EUR
Stephen Elop
President and
CEO from
September 21, 2010
Cash
Share-based
incentive compensation
expense
salary payments
Base
Cash
Share-based
incentive compensation
expense
salary payments
Base
Cash
Share-based
incentive compensation
expense
salary payments
Base
1 079 500
—
1 597 496 1 020 000
473 070
2 086 351
280 303
440 137
67 018
Total remuneration of the Nokia Leadership Team awarded
for the fi scal years – was EUR in (EUR
in and EUR in ), 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 in
(EUR in and EUR in ). For the Nokia
Leadership Team members whose employment terminated
during , the equity-based incentives were forfeited fol-
lowing the termination of employment in accordance with plan
rules.
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 respective years.
Board of Directors
EUR
EUR
EUR
2012
2011
2010
Gross
Shares
annual fee 1 received
Gross
annual fee 1
Shares
received
Gross
annual fee 1
Shares
received
Risto Siilasmaa,
Chairman as from May 3, 2012 2
Jorma Ollila,
Chairman until May 3, 2012 3
Dame Marjorie Scardino,
Vice Chairman 4
Bruce Brown
Stephen Elop 5
Lalita D. Gupte 6
Bengt Holmström
Henning Kagermann 7
Olli-Pekka Kallasvuo 8
Per Karlsson 9
Jouko Karvinen 10
Helge Lund
Isabel Marey-Semper 11
Mårten Mickos
Elizabeth Nelson 12
Kari Stadigh
Keijo Suila
440 000
70 575
155 000
10 428
155 000
7 294
—
—
440 000
29 604
440 000
20 710
150 000
130 000
24 062
20 850
—
—
—
—
—
—
155 000
24 860
—
—
—
—
155 000
130 000
140 000
130 000
140 000
130 000
24 860
20 850
22 454
20 850
22 454
20 850
150 000
10 092
150 000
7 058
—
—
—
—
130 000
155 000
8 746
10 428
—
—
130 000
140 000
130 000
140 000
—
—
8 746
9 419
8 746
9 419
—
—
130 000
8 746
—
140 000
130 000
130 000
130 000
155 000
—
—
—
6 588
6 117
6 117
6 117
7 294
—
—
140 000
6 588
—
—
—
—
—
—
—
—
—
—
130 000
6 117
72
N O K I A I N 2 0 1 2
Approximately % of each Board member’s gross annual fee is paid in
Nokia shares and the remaining approximately % of the gross annual
fee is paid in cash. 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 relating to
the acquisition of the shares, including taxes.
The fee paid to Risto Siilasmaa amounted to an annual total of EUR
for services as Chairman of the Board. The and fees
paid to Risto Siilasmaa amounted to an annual total of EUR each
year indicated, consisting of a fee of EUR for services as a mem-
ber of the Board and EUR for services as Chairman of the Audit
Committee.
The and fees paid to Jorma Ollila amounted to an annual total
of EUR each year indicated for his services as Chairman of the
Board.
The , and fees paid to Dame Marjorie Scardino amounted
to an annual total of EUR each year indicated for services as Vice
Chairman of the Board.
Stephen Elop did not receive remuneration for his services as a member
of the Board. This table does not include remuneration paid to Mr. Elop for
services as the President and CEO.
The fee paid to Lalita D. Gupte amounted to an annual total of EUR
, consisting of a fee of EUR for services as a member
of the Board and EUR for services as a member of the Audit
Committee.
The and fees paid to Henning Kagermann amounted to an
annual total of EUR each year indicated, consisting of a fee of
EUR for services as a member of the Board and EUR for
services as Chairman of the Personnel Committee.
Olli-Pekka Kallasvuo left his position on the Nokia Board of Directors in
. This table includes fees paid to Olli-Pekka Kallasvuo for his services
as a member of the Board, only.
The fee paid to Per Karlsson amounted to an annual total of EUR
, consisting of a fee of EUR for services as a member
of the Board and EUR for services as Chairman of the Personnel
Committee.
The fee paid to Jouko Karvinen amounted to an annual total of EUR
, consisting of a fee of EUR for services as a member of
the Board and EUR for service as Chairman of the Audit Commit-
tee. The fee paid to Jouko Karvinen amounted to an annual total
of EUR , consisting of a fee of for services as a member
of the Board and EUR for services as a member of the Audit
Committee.
The , and fees paid to Isabel Marey-Semper amounted to
an annual total of EUR each year indicated, consisting of a fee of
EUR for services as a member of the Board and EUR for
services as a member of the Audit Committee.
The fee paid to Elizabeth Nelson amounted to an annual total of
EUR , consisting of a fee of EUR for services as a member
of the Board and EUR for services as a member of the Audit
Committee.
Pension arrangements of certain
Nokia Leadership Team members
The members of the Nokia Leadership Team participate in
the local retirement programs applicable to employees in the
country where they reside. Executives in Finland, including
Mr. Elop, participate in the Finnish TyEL pension system, which
provides for a retirement benefi t based on years of service and
earnings according to prescribed statutory rules. Under the
Finnish TyEL pension system, base pay, incentives and other
taxable fringe benefi ts are included in the defi nition of earn-
ings, although gains realized from equity are not. The Finnish
TyEL pension scheme provides for early retirement benefi ts at
age with a reduction in the amount of retirement benefi ts.
Standard retirement benefi ts are available from age to ,
according to an increasing scale. The Nokia Leadership Team
members in the United States participate in Nokia’s US Retire-
ment Savings and Investment Plan. Under this (k) plan,
participants elect to make voluntary pre-tax contributions
that are % matched by Nokia up to % of eligible earnings.
% of the employer’s match vests for the participants during
each year of the fi rst four years of their employment. The
Nokia Leadership Team members in Germany participate in
the Nokia German Pension Plan that is % company funded.
Contributions are based on pensionable earnings, the pen-
sion table and retirement age. For the Nokia Leadership Team
members in UK, the pension accrued in the UK Pension Scheme
is a Money Purchase benefi t. Contributions are paid into the
UK Pension Scheme by both the member and employer. These
contributions are held within the UK Pension Scheme and are
invested in funds selected by the member.
Termination benefi ts of the President and CEO
In case of termination by Nokia for reasons other than cause,
Mr. Elop is entitled to a severance payment of up to months
of compensation (both annual base salary and target incentive)
and his equity will be forfeited as determined in the applicable
equity plan rules, with the exception of the equity out of the
Nokia Equity Program which will vest in an accelerated
manner (the performance period of Nokia Performance Share
Plan ended in and no shares were delivered in ac-
cordance with its terms). In case of termination by Mr. Elop, the
notice period is six months and he is entitled to a payment for
such notice period (both annual base salary and target incen-
tive for six months) and all his equity will be forfeited. In the
event of a change of control of Nokia, Mr. Elop may terminate
his employment upon a material reduction of his duties and re-
sponsibilities, upon which he will be entitled to a compensation
of months (both annual base salary and target incentive),
and his unvested equity will vest in an accelerated manner. In
case of termination by Nokia for cause, Mr. Elop is entitled to
no additional compensation and all his equity will be forfeited.
In case of termination by Mr. Elop for cause, he is entitled to a
severance payment equivalent to months of notice (both
annual base salary and target incentive), and his unvested eq-
uity will vest in an accelerated manner. Mr. Elop is subject to a
-month non-competition obligation after termination of the
contract. Unless the contract is terminated by Nokia for cause,
Mr. Elop may be entitled to compensation during the non-com-
petition period or a part of it. Such compensation amounts to
the annual base salary and target incentive for the respective
period during which no severance payment is paid.
Personnel average
Production
Marketing
R&D
Administration
2012
2011
1 086
763
3 788
2 379
2 473
1 064
5 985
2 373
8 016
11 895
Personnel, December 31
5 901
10 262
3. DEPRECIATION AND AMORTIZATION
EURm
2012
2011
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
—
19
143
2
164
145
3
16
164
3
25
143
—
171
131
1
39
171
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S O F T H E P A R E N T C O M P A N Y
73
4. INTANGIBLE ASSETS
6. INVESTMENTS
EURm
2012
2011
EURm
2012
2011
Capitalized development costs
Acquisition cost January 1
Disposals during the period
284
—
Accumulated acquisition cost December 31
284
284
—
284
Investments in subsidiaries
Acquisition cost January 1
Additions
Impairments
Disposals
11 199
12 054
3 127
608
– 740
– 1 360
– 2 038
– 103
Accumulated amortization January 1
– 284
– 281
Net carrying amount December 31
11 548
11 199
11
1
– 8
– 1
3
85
23
– 2
– 1
105
58
2
– 49
—
11
107
32
– 52
– 2
85
Disposals during the period
Amortization during the period
—
—
—
– 3
Investments in associated companies
Accumulated amortization December 31
– 284
– 284
Acquisition cost January 1
Additions
Impairments
Disposals
Net carrying amount December 31
Investments in other shares
Acquisition cost January 1
Additions
Impairments
Disposals
Net carrying amount 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
—
—
251
4
– 27
228
3
—
228
28
– 5
251
Accumulated amortization January 1
– 215
– 193
Disposals during the period
Amortization during the period
20
– 19
Accumulated amortization December 31
– 214
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
36
14
782
2
– 31
753
3
– 25
– 215
35
36
790
36
– 44
782
Accumulated amortization January 1
– 463
– 344
Disposals during the period
Amortization during the period
Accumulated amortization December 31
Net book value January 1
Net book value December 31
5. TANGIBLE ASSETS
18
– 143
– 588
319
165
24
– 143
– 463
446
319
At the end of and the parent company had only mi-
nor amounts of tangible assets. Most of the assets were leased
from Nokia Asset Management Oy, a company wholly owned by
Nokia Corporation.
74
N O K I A I N 2 0 1 2
7. SHAREHOLDERS’ EQUITY
Parent Company, EURm
Share
capital premium
Share
issue Treasury Fair value non-restricted Retained
earnings
reserve
shares
equity
Reserve
for invested
Total
Balance at December 31, 2009
246
—
– 685
—
3 154
4 555
7 270
Settlement of performance and restricted shares
16
– 9
7
Dividend
Net profi t
Balance at December 31, 2010
246
Other contribution from shareholders
—
46
– 669
—
3 145
3 612
6 334
– 1 483
– 1 483
540
540
Settlement of performance and restricted shares
20
– 13
Fair value reserve increase
68
Dividend
Net profi t
46
7
68
– 1 484 – 1 484
1 542
1 542
Balance at December 31, 2011
246
46
– 649
68
3 132
3 670
6 513
Settlement of performance and restricted shares
15
– 12
Fair value reserve decrease
– 114
Dividend
Net profi t
3
– 114
– 742
– 154
– 742
– 154
Balance at December 31, 2012
246
46
– 634
– 46
3 120
2 773
5 505
8. DISTRIBUTABLE EARNINGS
9. LONG-TERM LIABILITIES
EURm
2012
2011
EURm
Reserve for invested non-restricted equity
3 120
3 132
Long-term fi nancial liabilities
Fair value reserve
Retained earnings from previous years
Net profi t for the year
Retained earnings, total
Treasury shares
Distributable earnings, December 31
– 46
2 927
– 154
5 847
– 634
5 213
2 128
1 542
6 802
– 649
6 153
—
Bonds
Convertible bond
Loans from fi nancial institutions
Liabilities from Group companies
2012
2011
3 036
3 028
743
500
200
—
500
—
Long-term liabilities, total
4 479
3 528
Long-term liabilities repayable after 5 years
Bonds
Convertible bond
Loans from fi nancial institutions
1 749
1 731
—
—
—
—
Long-term liabilities, total
1 749
1 731
Bonds
Million
Interest, %
2009–2014
1 250 EUR
5.534
1 287
1 297
2009–2019
1 000 USD
2009–2019
2009–2039
500 EUR
500 USD
5.572
6.792
6.775
805
558
386
799
543
389
3 036
3 028
Convertible bond Million
Interest, %
2012–2017
750 EUR
7.920
743
743
—
—
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S O F T H E P A R E N T C O M P A N Y
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S O F T H E P A R E N T C O M P A N Y
75
10. COMMITMENTS AND CONTINGENCIES
14. PRINCIPAL NOKIA GROUP COMPANIES
EURm
2012
2011
Collateral for own commitments
Assets pledged
3
—
Contingent liabilities on behalf
of Group companies
Guarantees for loans
Leasing guarantees
Other guarantees
Contingent liabilities on behalf
of associated companies
1
168
43
2
204
65
Guarantees for loans
11
—
Contingent liabilities on behalf
of other companies
Guarantees for loans
Other guarantees
11. LEASING CONTRACTS
At December , the leasing contracts of the Parent Com-
pany amounted to EUR million (EUR million in 2011). EUR
12 million will expire in 2013 (EUR 16 million in 2012).
ON DECEMBER 31, 2012
See note to Notes to the consolidated fi nancial statements.
15. NOKIA SHARES AND SHAREHOLDERS
See Nokia shares and shareholders p. 77–81.
12
27
—
3
17. ACCRUED EXPENSES
16. ACCRUED INCOME
EURm
Taxes
Other
Total
EURm
Personnel expenses
Taxes
Other
Total
2012
2011
58
2 169
2 227
85
2 386
2 471
2012
2011
103
—
1 881
1 984
134
—
2 016
2 150
12. LOANS GRANTED TO THE MANAGEMENT
18. INCOME TAXES
OF THE COMPANY
There were no loans granted to the members of the Group
Executive Board and Board of Directors at December , .
13. NOTES TO CASH FLOW STATEMENTS
EURm
Adjustments for:
Depreciation
Income taxes
2012
2011
164
471
171
– 107
Financial income and expenses
– 2 694
– 3 529
Impairment of intangible assets
12
6
Impairment of non-current
available-for-sale investments
150
1 461
EURm
Income tax from operations
Income tax from extraordianry items
Total
2012
2011
– 56
—
– 56
– 138
—
– 138
Income taxes are shown separately in the Notes to the fi nancial
statements as they have been shown as a one-line item on the
face of the profi t and loss statement.
19. DEFERRED TAXES
EURm
2012
2011
– 475
– 475
204
204
Other operating income and expenses
– 234
258
Deferred taxes
Adjustments, total
– 2 131
– 1 740
Total
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
2 190
167
– 726
1 631
209
—
– 649
– 440
No deferred tax asset has been recognized for tax losses carry
forward, temporary diff erences and tax credits due to uncer-
tainty of utilization of these items.
76
N O K I A I N 2 0 1 2
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.
Group companies representing approximately .% of the
share capital and the total voting rights.
On December , , the share capital of Nokia
Under the Articles of Association of Nokia, Nokia
Corporation was EUR . and the total number of
shares issued was . On December , , the
total number of shares included shares owned by
Corporation does not have minimum or maximum share capi-
tal or a par value of a share.
Share capital and shares December 31, 2012
Share capital, EURm
Shares (1 000)
2012
246
2011
246
2010
246
2009
246
2008
246
3 744 956
3 744 956
3 744 956
3 744 956 3 800 949
Shares owned by the Group (1 000)
33 971
34 767
35 826
36 694
103 076
Number of shares excluding shares owned by the Group (1 000)
3 710 985
3 710 189
3 709 130
3 708 262 3 697 872
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
3 710 845
3 709 947
3 708 816
3 705 116
3 743 622
3 710 845
3 709 947
3 713 250
3 721 072 3 780 363
250 799
229 096
191 790
156 081
122 713
Each account operator is included in the figure as only one registered shareholder.
Key ratios December 31, 2012, IFRS (calculation see page 84)
2012
2011
2010
2009
2008
Earnings per share for profi t attributable
to equity holders of the parent, 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
-0.84
-0.84
neg.
0.00 1
0.00 1
0.00 1
0.00 1
2.17
– 0.31
– 0.31
neg.
0.20
749
neg.
5.30
3.20
0.50
0.50
15.48
0.40
1 498
0.80
5.17
3.88
0.24
0.24
37.17
0.40
1 498
1.67
4.48
3.53
1.07
1.05
10.37
0.40
1 520
0.37
3.60
3.84
10 873
13 987
28 709
33 078
41 046
Dividend to be proposed by the Board of Directors for fiscal year for shareholders’ approval at the Annual General Meeting convening on May , .
Calculated for all the shares of the company as of the applicable year-end.
Shares owned by the Group companies are not included.
AUTHORIZATIONS
Authorization to increase the share capital
At the Annual General Meeting held on May , , Nokia
shareholders authorized the Board of Directors to issue a
maximum of 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 authoriza-
tion may be used to develop the Company’s capital structure,
diversify the shareholder base, fi nance or carry out acquisi-
tions or other arrangements, settle the Company’s equity-
based incentive plans, or for other purposes resolved by the
Board. The authorization is eff ective until June , .
At the end of , 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 , , Nokia
shareholders authorized the Board of Directors to repurchase
a maximum of million Nokia shares by using funds in the
unrestricted equity. Nokia did not repurchase any shares on the
basis of this authorization. This authorization would have been
eff ective until June , as per the resolution of the Annual
General Meeting on May , , but it was terminated by the
resolution of the Annual General Meeting on May , .
At the Annual General Meeting held on May , , Nokia
shareholders authorized the Board of Directors to repurchase
a maximum of million Nokia shares by using funds in the
unrestricted equity. The amount of shares corresponds to
less than % of all the shares of the Company. The shares
may be repurchased under the buyback authorization in order
to develop the capital structure of the Company. In addition,
shares may be repurchased in order to fi nance or carry out
acquisitions or other arrangements, to settle the Company’s
equity-based incentive plans, to be transferred for other
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S O F T H E P A R E N T C O M P A N Y
77
purposes, or to be cancelled. The authorization is eff ective
until June , .
Company’s shares resolved at the Annual General Meeting on
May , .
Authorizations proposed to the Annual
General Meeting 2013
On January , , Nokia announced that the Board of Direc-
tors will propose that the Annual General Meeting convening
on May , authorize the Board to resolve to repurchase a
maximum of million Nokia shares. The proposed maximum
number of shares that may be repurchased corresponds to
less than % of all the shares of the Company. The shares may
be repurchased in order to develop the capital structure of the
Company, fi nance or carry out acquisitions or other arrange-
ments, settle the Company’s equity-based incentive plans, be
transferred for other purposes, or be cancelled. The shares
may be repurchased either through a tender off er made to
all shareholders on equal terms, or in such marketplaces the
rules of which allow companies to trade with their own shares.
The authorization would be eff ective until June , and
terminate the current authorization for repurchasing of the
Nokia also announced on January , that the Board
of Directors will propose to the Annual General Meeting to be
held on May , that the Annual General Meeting authorize
the Board to resolve to issue a maximum of million shares
through issuance of shares or special rights entitling to shares
(including stock options) in one or more issues. The Board may
issue either new shares or shares held by the Company. The
Board proposes that the authorization may be used to develop
the Company’s capital structure, diversify the shareholder
base, fi nance 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 sharehold-
ers’ pre-emptive rights. The authorization would be eff ective
until June , and terminate the current authorization
granted by the Annual General Meeting on May , .
Stock option exercises –
Year
Stock option category
Subscription
price
EUR
Number of
new shares
(1 000)
Date of
payment
Net
proceeds
EURm
New share
capital
EURm
2008
2009
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
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
78
N O K I A I N 2 0 1 2
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
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Year
Stock option category
Subscription
price
EUR
Number of
new shares
(1 000)
Date of
payment
Net
proceeds
EURm
New share
capital
EURm
2010
2011
2012
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
Nokia Stock Option Plan 2008 4Q
Nokia Stock Option Plan 2009 1Q
Nokia Stock Option Plan 2009 2Q
Nokia Stock Option Plan 2009 3Q
Total
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
Nokia Stock Option Plan 2008 4Q
Nokia Stock Option Plan 2009 1Q
Nokia Stock Option Plan 2009 2Q
Nokia Stock Option Plan 2009 3Q
Nokia Stock Option Plan 2009 4Q
Nokia Stock Option Plan 2010 1Q
Nokia Stock Option Plan 2010 2Q
Nokia Stock Option Plan 2010 3Q
Total
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
Nokia Stock Option Plan 2008 4Q
Nokia Stock Option Plan 2009 1Q
Nokia Stock Option Plan 2009 2Q
Nokia Stock Option Plan 2009 3Q
Nokia Stock Option Plan 2009 4Q
Nokia Stock Option Plan 2010 1Q
Nokia Stock Option Plan 2010 2Q
Nokia Stock Option Plan 2010 3Q
Nokia Stock Option Plan 2010 4Q
Total
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
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
10.11
8.86
7.29
18.39
21.86
27.53
24.15
19.16
17.80
12.43
9.82
11.18
9.28
8.76
10.11
8.86
7.29
7.59
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
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
0.00
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
0.00
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
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
N O K I A S H A R E S A N D S H A R E H O L D E R S
79
Reductions of share capital
Type of reduction
Cancellation of shares
Cancellation of shares
Cancellation of shares
Cancellation of shares
Cancellation of shares
Share turnover
Year
2008
2009
2010
2011
2012
Number of shares
(1 000)
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
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Share turnover (1 000)
20 002 578
15 696 008
12 299 112
11 025 092
12 962 489
Total number of shares (1 000)
3 744 956
3 744 956
3 744 956
3 744 956
3 800 949
% of total number of shares
534
419
328
294
341
2012 1
2011 2
2010 2
2009 2
2008 3
Includes share turnover in NASDAQ OMX Helsinki, New York Stock Exchange and until March , Frankfurter Wertpapierbörse.
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)
Low/high
Average 1
Year-end
Calculated by weighting average price with daily volumes.
Share prices, USD (New York Stock Exchange)
2012
2011
2010
2009
2008
1.33/4.46
3.33/8.49
6.59/11.82
6.67/12.25
9.95/25.78
2.62
2.93
5.19
3.77
8.41
7.74
9.64
8.92
17.35
11.10
ADS
Low/high
Average 1
Year-end
2012
2011
2010
2009
2008
1.63/5.87
4.46/11.75
8.00/15.89
8.47/16.58
12.35/38.25
3.41
3.95
7.13
4.82
11.11
10.32
13.36
12.85
24.88
15.60
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
|
|
|
|
|
45
40
35
30
25
20
15
10
5
0
|
|
|
|
|
/
/
/
/
/
/
/
/
/
/
80
N O K I A I N 2 0 1 2
Shareholders, December 31, 2012
Shareholders registered in Finland represented .% and
shareholders registered in the name of a nominee represented
.% of the total number of shares of Nokia Corporation.
The number of registered shareholders was on De-
cember , . Each account operator () is included in this
fi gure as only one registered shareholder.
Largest shareholders registered in Finland, December ,
Nominee registered shareholders include holders of
American Depositary Receipts (ADR). As of December , ,
ADRs represented .% of the total number of shares in
Nokia.
Shareholder
Ilmarinen Mutual Pension Insurance Company
Varma Mutual Pension Insurance Company
The State Pension Fund
Keva (Local Government Pensions Institution)
Schweizerische Nationalbank
Svenska Litteratursällskapet i Finland rf
Mutual Insurance Company Pension Fennia
Nordea Suomi Fund
OP-FocusSpecial Fund
OP-Delta Fund
Total number
of shares (1 000)
% of all shares
% of all voting rights
71 219
70 294
28 000
23 744
21 956
14 304
11 757
11 250
11 100
11 024
1.90
1.88
0.75
0.63
0.59
0.38
0.31
0.30
0.30
0.29
1.92
1.89
0.75
0.64
0.59
0.39
0.32
0.30
0.30
0.30
Excluding nominee registered shares and shares owned by Nokia Corporation. Nokia Corporation owned shares as of December , .
Breakdown of share ownership, December ,
By number of shares owned
Number of
shareholders
% of
shareholders
Total number of
shares
% of
all shares
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
47 197
122 422
71 436
9 190
439
41
53
21
18.82
48.81
28.48
3.66
0.18
0.02
0.02
0.01
250 799
100.00
2 894 271
57 051 389
224 666 202
223 116 498
84 287 325
28 065 662
122 363 685
3 002 511 020
3 744 956 052
0.08
1.52
6.00
5.96
2.25
0.75
3.27
80.17
100.00
By nationality
Non-Finnish shareholders
Finnish shareholders
Total
By shareholder category
(Finnish shareholders)
Corporations
Households
Financial and insurance institutions
Non-profi t organizations
General government
Total
SHARES AND STOCK OPTIONS OWNED BY
THE MEMBERS OF THE BOARD OF DIRECTORS
AND THE NOKIA LEADERSHIP TEAM
Members of the Board of Directors and the Nokia Leadership
Team owned on December , , an aggregate of
shares which represented approximately .% of the aggre-
gate number of shares and voting rights. They also owned
stock options which, if exercised in full, including both exercis-
able and unexercisable stock options, would be exercisable for
additional shares representing approximately .%
of the total number of shares and voting rights on Decem -
ber , .
% of shares
72.98
27.02
100.00
% of shares
3.34
13.04
2.72
1.93
5.99
27.02
Please note that the breakdown covers only shareholders registered
in Finland, and each account operator () is included in the number of
shareholders as only one registered shareholder. Due to this, the break-
down is not illustrative to the entire shareholder base of Nokia.
N O K I A S H A R E S A N D S H A R E H O L D E R S
81
NOKIA GROUP 2008 – 2012, IFRS*
Income statement, EURm
Net sales
Cost and expenses
Operating profi t
Share of results of associated companies
Financial income and expenses
Profi t before tax
Tax
Profi t
Profi t attributable to equity holders of the parent
Non-controlling interests
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
Non-controlling 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 fi nancial liabilities
Accounts payable
Accrued expenses and other liabilities
Provisions
Total assets
2012
2011
2010
2009
2008
30 176
– 32 479
– 2 303
– 1
– 340
– 2 644
– 1 145
– 3 789
– 3 106
– 683
– 3 789
9 071
20 878
1 538
9 431
9 909
9 447
8 061
1 386
5 856
5 087
700
69
38 659
– 39 732
– 1 073
– 23
– 102
– 1 198
– 290
– 1 488
– 1 164
– 324
– 1 488
10 750
25 455
2 330
12 223
10 902
13 916
42 446
– 40 376
2 070
40 984
– 39 787
1 197
1
– 285
1 786
– 443
1 343
1 850
– 507
1 343
11 978
27 145
2 523
12 347
12 275
16 231
30
– 265
962
– 702
260
891
– 631
260
12 125
23 613
1 865
12 875
8 873
14 749
50 710
– 45 744
4 966
6
– 2
4 970
– 1 081
3 889
3 988
– 99
3 889
15 112
24 470
2 533
15 117
6 820
16 510
11 873
14 384
13 088
14 208
2 043
4 845
3 969
800
76
1 847
5 352
4 242
1 022
88
1 661
5 801
4 432
1 303
66
2 302
2 717
861
1 787
69
14 646
17 444
17 540
15 188
20 355
201
261
90
4 394
7 081
2 619
357
995
483
5 532
7 450
2 627
29 949
36 205
116
921
447
6 101
7 365
2 590
39 123
44
727
245
4 950
6 504
2 718
13
3 578
924
5 225
7 023
3 592
35 738
39 582
* On July , , Nokia completed the acquisition of NAVTEQ Corporation.
NAVTEQ was a separate reportable segment of Nokia starting from the
third quarter until end of third quarter . Accordingly, the results
of NAVTEQ are not available for prior period. As of October , , Loca-
tion & Commerce was formed by combining the NAVTEQ business with
Devices & Services social location services operations. As of January ,
, Location & Commerce business and reportable segment has been
renamed as the HERE business and reportable segment.
82
N O K I A I N 2 0 1 2
Key ratios and economic indicators 1
Net sales, EURm
Change, %
Exports and foreign subsidiaries, EURm
Salaries and social expenses, EURm
Operating profi t, EURm
% of net sales
Financial income and expenses, EURm
% of net sales
Profi t before tax, EURm
% of net sales
Profi t 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
2012
30 176
– 21.9
29 873
7 170
– 2 303
– 7.6
– 340
1.1
– 2 644
– 8.8
– 3 106
– 10.3
1 145
0 2
461
1.5
517
1.7
4 782
15.8
2011
38 659
– 8.9
38 342
7 516
– 1 073
– 2.8
– 102
0.3
– 1 198
– 3.0
– 1 164
– 3.0
290
749
597
1.5
710
1.8
5 584
14.4
2010
42 446
3.6
42 075
2009
40 984
– 19.2
40 594
6 947
2 070
4.9
– 285
0.7
1 786
4.2
1 850
4.4
443
1 498
679
1.6
836
2.0
5 844
13.8
6 734
1 197
2.9
– 265
0.6
962
2.3
891
2.2
702
1 498
531
1.3
683
1.7
5 909
14.4
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
112 256
134 171
129 355
123 171
121 723
Non– interest bearing liabilities, EURm
Interest– bearing liabilities, EURm
14 253
5 549
16 168
5 321
16 591
5 279
14 483
5 203
16 833
4 452
Return on capital employed, %
Return on equity, %
Equity ratio, %
Net debt to equity, %
neg.
neg.
33.7
– 46
neg.
neg.
40.1
– 40
11.0
13.5
42.8
– 43
6.7
6.5
41.9
– 25
27.2
27.5
42.3
– 14
On July , , Nokia completed the acquisition of NAVTEQ Corporation.
NAVTEQ was a separate reportable segment of Nokia starting from the
third quarter until end of third quarter . Accordingly, the results
of NAVTEQ are not available for prior period. As of October , , Loca-
tion & Commerce was formed by combining the NAVTEQ business with
Devices & Services social location services operations. As of January ,
, Location & Commerce business and reportable segment has been
renamed as the HERE business and reportable segment.
Board’s proposal
Includes acquisitions, investments in shares and capitalized development
costs.
Calculation of Key Ratios, see page .
N O K I A G R O U P 2 0 0 8 – 2 0 1 2 , I F R S
83
CALCULATION OF KEY RATIOS
KEY RATIOS UNDER IFRS
Operating profi t
Profi t after depreciation
Shareholders’ equity
Share capital + reserves attributable to the Company’s equity
holders
Earnings per share (basic)
Profi t attributable to equity holders of the parent
Average of adjusted number of shares during the year
P/E ratio
Adjusted share price, December
Earnings per share
Dividend per share
Nominal dividend per share
The adjustment coeffi cients 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, %
Profi t before taxes + interest and other net fi nancial 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)
+ non-controlling interests
Return on shareholders’ equity, %
Profi t attributable to the equity holders of the parent
Average capital and reserves attributable to the Company’s
equity holders during the year
Equity ratio, %
Capital and reserves attributable to the Company’s equity
holders + non-controlling 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 + non-controlling interests
Year-end currency rates
USD
GBP
CNY
INR
RUB
JPY
1 EUR =
1.3140
0.8121
8.1963
71.9280
40.5002
110.16
84
N O K I A I N 2 0 1 2
SIGNING OF THE ANNUAL ACCOUNTS 2012
AND PROPOSAL BY THE BOARD OF DIRECTORS
FOR DISTRIBUTION OF PROFIT
The distributable funds in the balance sheet of the Company
at December , amounted to EUR million.
The Board proposes to the Annual General Meeting that
no dividend be paid out on the shares of the Company.
Espoo, March ,
Risto Siilasmaa
Chairman of the Board
Marjorie Scardino
Bruce Brown
Henning Kagermann
Jouko Karvinen
Helge Lund
Isabel Marey-Semper
Mårten Mickos
Elizabeth Nelson
Kari Stadigh
Stephen Elop
President and CEO
SIGNING OF THE ANNUAL ACCOUNTS 2012 AND PROPOSAL FOR DISTRIBUTION OF PROFIT
85
AUDITOR’S REPORT
TO THE ANNUAL GENERAL MEETING
OF NOKIA CORPORATION
We have audited the accounting records, the fi nancial state-
ments, the review by the Board of Directors and the adminis-
tration of Nokia Corporation for the year ended December
. The fi nancial statements comprise the consolidated
statement of fi nancial position, income statement, statement
of comprehensive income, statement of cash fl ows, statement
of changes in shareholders’ equity and notes to the consoli-
dated fi nancial statements, as well as the parent company’s
balance sheet, income statement, statement of cash fl ows and
notes to the fi nancial statements.
Responsibility of the Board of Directors and
the Managing Director
The Board of Directors and the Managing Director are respon-
sible for the preparation of consolidated fi nancial statements
that give a true and fair view in accordance with International
Financial Reporting Standards (IFRS) as adopted by the EU, as
well as for the preparation of fi nancial statements and the
review by the Board of Directors that give a true and fair view
in accordance with the laws and regulations governing the
preparation of the fi nancial 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 fi nances, and the Managing
Director shall see to it that the accounts of the company are in
compliance with the law and that its fi nancial aff airs have been
arranged in a reliable manner.
Auditor’s responsibility
Our responsibility is to express an opinion on the fi nancial
statements, on the consolidated fi nancial statements and on
the review by the Board of Directors based on our audit. The
Auditing Act requires that we comply with the requirements
of professional ethics. We conducted our audit in accordance
with good auditing practice in Finland. Good auditing practice
requires that we plan and perform the audit to obtain reason-
able assurance about whether the fi nancial statements and the
review by the Board of Directors are free from material mis-
statement, and whether the members of the Board of Directors
of the parent company and the Managing Director are guilty
of an act or negligence which may result in liability in damages
towards the company or have violated the Limited Liability
Companies Act or the articles of association of the company.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the fi nancial
statements and the review by the Board of Directors. The
procedures selected depend on the auditor’s judgment, in-
cluding the assessment of the risks of material misstatement,
whether due to fraud or error. In making those risk assess-
ments, the auditor considers internal control relevant to the
entity’s preparation of the fi nancial statements and the review
by the Board of Directors that give a true and fair view in order
to design audit procedures that are appropriate in the circum-
stances, but not for the purpose of expressing an opinion on
the eff ectiveness of the company’s internal control. 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 pres-
entation of the fi nancial statements and the review by the
Board of Directors.
We believe that the audit evidence we have obtained is suf-
fi cient and appropriate to provide a basis for our audit opinion.
Opinion on the consolidated fi nancial
statements
In our opinion, the consolidated fi nancial statements give
a true and fair view of the fi nancial position, fi nancial per-
formance, and cash fl ows of the group in accordance with
International Financial Reporting Standards (IFRS) as adopted
by the EU.
Opinion on the company’s fi nancial statements
and the review by the Board of Directors
In our opinion, the fi nancial statements and the review by the
Board of Directors give a true and fair view of both the con-
solidated and the parent company’s fi nancial performance and
fi nancial position in accordance with the laws and regulations
governing the preparation of the fi nancial 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 fi nancial statements.
Other opinions
We support that the fi nancial statements and the consoli-
dated fi nancial statements should be adopted. The proposal
by the Board of Directors regarding the use of profi t 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 fi nancial period audited by us.
Espoo, March
PricewaterhouseCoopers Oy
Authorised Public Accountants
Heikki Lassila
Authorised Public Accountant
86
N O K I A I N 2 0 1 2
ADDITIONAL
INFORMATION
Critical accounting policies ...................................................................................... 88
Corporate governance statement
Corporate governance .......................................................................................... 94
Board of Directors ............................................................................................... 100
Nokia Leadership Team ....................................................................................... 103
Compensation of the Board of Directors
and the Nokia Leadership Team ............................................................................ 106
Auditor fees and services ....................................................................................... 125
Investor information ................................................................................................ 126
Contact information ................................................................................................. 128
CRITICAL ACCOUNTING POLICIES
As of January , our Location & Commerce business and
reportable segment was renamed HERE. The name Location
& Commerce is used in the following discussion of critical ac-
counting policies.
Our accounting policies aff ecting our fi nancial condition and
results of operations are more fully described in Note to our
consolidated fi nancial statements. Some of our accounting
policies require the application of judgment by management in
selecting appropriate assumptions for calculating fi nancial es-
timates, 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 related results form the basis
for making judgments about reported carrying values of as-
sets and liabilities and reported amounts of revenues and ex-
penses that may not be readily apparent from other sources.
The Group will revise material estimates if changes occur in the
circumstances on which an estimate was based or as a result
of new information or more experience. Actual results may
diff er from current estimates under diff erent assumptions
or conditions. The estimates aff ect all our businesses equally
unless otherwise indicated.
The following paragraphs discuss critical accounting policies
and related judgments and estimates used in the preparation
of our consolidated fi nancial statements. We have discussed
the application of these critical accounting estimates with our
Board of Directors and Audit Committee.
REVENUE RECOGNITION
Majority of the Group’s sales are recognized when the signifi -
cant risks and rewards of ownership have transferred to the
buyer, continuing managerial involvement usually associ-
ated with ownership and eff ective control have ceased, the
amount of revenue can be measured reliably, it is probable that
economic benefi ts associated with the transaction will fl ow 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 Location & Commerce and
Nokia Siemens Networks revenues are generally recognized
when the signifi cant risks and rewards of ownership have
transferred to the buyer, continuing managerial involvement
usually associated with ownership and eff ective control have
ceased, the amount of revenue can be measured reliably, it is
probable that economic benefi ts associated with the trans-
action will fl ow to the Group and the costs incurred or to be
incurred in respect of the transaction can be measured reli-
ably. This requires us to assess at the point of delivery whether
these criteria have been met. When management 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 dis-
counts at the time of sale, mainly in the mobile device busi-
ness. Sales adjustments for volume based discount programs
are estimated largely based on historical activity under similar
programs. Price protection adjustments are based on esti-
mates of future price reductions and certain agreed customer
inventories at the date of the price adjustment. Devices &
Services and certain Nokia Siemens Networks service revenue
is generally recognized on a straight line basis over the ser-
vice period unless there is evidence that some other method
better represents the stage of completion. Devices & Services
and Location & Commerce license fees from usage are recog-
nized in the period when they are reliably measurable which is
normally when the customer reports them to the Group.
Devices & Services, Location & Commerce and Nokia
Siemens Networks may enter into multiple component trans-
actions consisting of any combination of hardware, services
and software. The commercial eff ect of each separately
identifi able element of the transaction is evaluated in order
to refl ect the substance of the transaction. The considera-
tion from these transactions is allocated to each separately
identifi able 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 sepa-
rately 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 modifi cation
of complex telecommunications equipment is recognized on
the percentage of completion basis when the outcome of the
contract can be estimated reliably. This occurs when total
contract revenue and the cost to complete the contract can
be estimated reliably, it is probable that economic benefi ts
associated with the contract will fl ow to the Group, and the
stage of contract completion can be measured. When we are
not able to meet one or more of 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.
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
profi t 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 probable and
can be estimated reliably. Losses on projects in progress are
recognized in the period they become probable and can be
estimated reliably.
Nokia Siemens Networks’ current sales and profi t estimates
for projects may change due to the early stage of a long-term
project, new technology, changes in the project scope, chang-
es 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 fi nancing
arrangements and agreed extended payment terms with
selected customers. In establishing credit arrangements, man-
agement must assess the creditworthiness of the customer
and the timing of cash fl ows expected to be received under
88
N O K I A I N 2 0 1 2
the arrangement. However, should the actual fi nancial position
of our customers or general economic conditions diff er from
our assumptions, we may be required to reassess the ultimate
collectability of such fi nancings and trade credits, which could
result in a write-off of these balances in future periods and
thus negatively impact our profi ts in future periods. Our as-
sessment of the net recoverable value considers the collateral
and security arrangements of the receivable as well as the
likelihood and timing of estimated collections. From time to
time, the Group endeavors to mitigate this risk through trans-
fer of its rights to the cash collected from these arrangements
to third-party fi nancial institutions on a non-recourse basis in
exchange for an upfront cash payment. The fi nancial impact of
the customer fi nancing related assumptions mainly aff ects the
Nokia Siemens Networks business. See also Note (b) to our
consolidated fi nancial 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 inability of our custom-
ers to make required payments. If fi nancial 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 specifi cally ana-
lyzes accounts receivables and historical bad debt, customer
concentrations, customer creditworthiness, current eco-
nomic 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 al-
lowance for doubtful accounts was EUR million at the end
of (EUR million at the end of ).
INVENTORY-RELATED ALLOWANCES
We periodically review our inventory for excess, obsoles-
cence and declines in market value below cost and record an
allowance against the inventory balance for any such de-
clines. 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 al-
lowance for excess and obsolete inventory was EUR million
at the end of (EUR million at the end of ). The
fi nancial impact of the assumptions regarding this allowance
aff ects mainly the cost of sales of the Devices & Services and
Nokia Siemens Networks businesses. During the Group
also recognized an expense of EUR million (EUR in )
within Devices & Services’ cost of sales to write-down the
inventories to net realizable value.
WARRANTY PROVISIONS
We provide for the estimated cost of product warranties at the
time revenue is recognized. Our products are covered by prod-
uct warranty plans of varying periods, depending on local prac-
tices and regulations. While we engage in extensive product
quality programs and processes, including actively monitoring
and evaluating the quality of our component suppliers, our
warranty obligations are aff ected by actual product failure
rates (fi eld failure rates) and by material usage and service
delivery costs incurred in correcting a product failure. Our war-
ranty provision 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 continu-
ously introduce new products which incorporate complex
technology, and as local laws, regulations and practices may
change, it will be increasingly diffi cult 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 diff er 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 antici-
pated, we increase the provision. Based on these estimates
and assumptions the warranty provision was EUR million at
the end of (EUR million at the end of ). The fi nan-
cial impact of the assumptions regarding this provision mainly
aff ects the cost of sales of our Devices & Services business.
PROVISION FOR INTELLECTUAL PROPERTY
RIGHTS, OR IPR, INFRINGEMENTS
We provide for the estimated past costs related to alleged
asserted IPR infringements based on the probable outcome of
each potential future settlement.
Our products include increasingly complex technologies
involving numerous patented and other proprietary technolo-
gies. Although we proactively try to ensure that we are aware
of any patents and other IPR related to our products under
development and thereby avoid inadvertent infringement of
proprietary technologies, the nature of our business is such
that patent and other IPR infringements may and do occur. We
identify potential IPR infringements through contact with par-
ties claiming infringement of their patented or otherwise ex-
clusive technology, or through our own monitoring of develop-
ments in patent and other IPR cases involving our competitors.
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 identifi ed potential infringement will result
in a probable outfl ow of resources, we record a liability 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
million at the end of (EUR million at the end of ).
The fi nancial impact of the assumptions regarding this provi-
sion mainly aff ects our Devices & Services business.
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 rea-
son, IPR infringement claims can last for varying periods of
time, resulting in irregular movements in the IPR infringement
provision. In addition, the ultimate outcome or actual cost of
settling an individual infringement may materially vary from
our estimates.
C R I T I C A L A C C O U N T I N G P O L I C I E S
89
LEGAL CONTINGENCIES
As discussed in Note to the consolidated fi nancial state-
ments, 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 inher-
ent uncertain nature of litigation, the ultimate outcome or
actual cost of settlement may materially vary from estimates.
BUSINESS COMBINATIONS
We apply the acquisition method of accounting to account for
acquisitions of businesses. The consideration transferred in a
business combination is measured as the aggregate of the fair
values of the assets transferred, liabilities incurred towards
the former owners of the acquired business and equity instru-
ments issued. Acquisition-related costs are recognized as
expense in profi t and loss in the periods when the costs are
incurred and the related services are received. Identifi able as-
sets acquired and liabilities assumed are measured separately
at their fair value as of the acquisition date. Non-controlling
interests in the acquired business are measured separately
based on their proportionate share of the identifi able net
assets of the acquired business. The excess of the cost of the
acquisition over our interest in the fair value of the identifi able
net assets acquired is recorded as goodwill.
The determination and allocation of fair values to the
identifi able assets acquired and liabilities assumed is based
on various assumptions and valuation methodologies requir-
ing considerable management judgment. The most signifi cant
variables in these valuations are discount rates, terminal
values, the number of years on which to base the cash fl ow
projections, as well as the assumptions and estimates used to
determine the cash infl ows and outfl ows. Management deter-
mines the 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
fl ows over that period. Although we believe that the assump-
tions applied in the determination are reasonable based on
information available at the date of acquisition, actual results
may diff er from the forecasted amounts and the diff erence
could be material.
VALUATION OF LONG-LIVED ASSETS,
INTANGIBLE ASSETS AND GOODWILL
We assess the carrying amount of identifi able intangible assets
and 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 that
we consider important, and which could trigger an impairment
review, include the following:
■ signifi cant underperformance relative to historical or
projected future results;
■ signifi cant changes in the manner of our use of these assets
or the strategy for our overall business; and
■ signifi cantly 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 indica-
tors of impairment, we measure any impairment based on
discounted projected cash fl ows.
This review is based upon our projections of anticipated
discounted future cash fl ows. The most signifi cant variables in
determining cash fl ows are discount rates, terminal values, the
number of years on which to base the cash fl ow projections, as
well as the assumptions and estimates used to determine the
cash infl ows and outfl ows. 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 fl ows over that
period. While we believe that our assumptions are appropri-
ate, such amounts estimated could diff er materially from what
will actually occur in the future. In assessing goodwill, these
discounted cash fl ows are prepared at a cash generating unit
level. Amounts estimated could diff er materially from what will
actually occur in the future.
Goodwill is allocated to the Group’s cash-generating units
(CGU) and discounted cash fl ows 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 management monitors operations and the CGUs
are expected to benefi t from the synergies arising from each
of our acquisitions. Accordingly, goodwill has been allocated to
the Group’s reportable segments; Smart Devices CGU, Mobile
Phones CGU, Location & Commerce CGU and Nokia Siemens
Networks CGU. Goodwill amounting to EUR million, EUR
million, EUR million and EUR million was allocated
to the Smart Devices CGU, Mobile Phones CGU, Location &
Commerce CGU and Nokia Siemens Networks CGU, respective-
ly, at the date of the impairment testing.
In the fourth quarter of , we conducted our annual
impairment testing to assess if events or changes in circum-
stances indicated that the carrying amount of our goodwill
may not be recoverable. The impairment testing was carried
out based on management’s assessment of fi nancial perfor-
mance and future strategies in light of current and expected
market and economic conditions.
The recoverable amounts for the Smart Devices CGU and
the Mobile Phones CGU are based on value in use calculations.
A discounted cash fl ow calculation was used to estimate the
value in use for both CGUs. Cash fl ow projections determined
by management are based on information available, to refl ect
the present value of the future cash fl ows expected to be
derived through the continuing use of the Smart Devices CGU
and the Mobile Phones CGU.
The recoverable amounts for the Location & Commerce CGU
and the Nokia Siemens Networks CGU are based on fair value
less costs to sell. A discounted cash fl ow calculation was used
to estimate the fair value less costs to sell for both CGUs. The
cash fl ow projections employed in the discounted cash fl ow
calculation have been determined by management based on
the information available, to refl ect the amount that an entity
could obtain from separate disposal of each of the Location
& Commerce CGU and the Nokia Siemens Networks CGU, in an
arm’s length transaction between knowledgeable, willing par-
ties, after deducting the estimated costs of disposal.
90
N O K I A I N 2 0 1 2
The cash fl ow projections employed in the value in use
and the fair value less costs to sell calculations are based on
detailed fi nancial plans approved by management, covering a
three-year planning horizon. Cash fl ows in subsequent peri-
ods refl ect a realistic pattern of slowing growth that declines
towards an estimated terminal growth rate utilized in the
terminal period. The terminal growth rate utilized does not
exceed long-term average growth rates for the industry and
economies in which the CGU operates. All cash fl ow projections
are consistent with external sources of information, wherever
available.
The key assumptions applied in the impairment testing for
each CGU in the annual goodwill impairment testing for each
year indicated are presented in the table below:
Cash generating units
Smart
Devices
%
Mobile
Phones
%
Location &
Commerce
%
Nokia Siemens
Networks
%
2012
2011
2012
2011
2012
2011
2012
2011
Terminal growth rate
Post-tax discount rate
Pre-tax discount rate
2.3
10.5
12.8
1.9
9.0
12.2
– 2.3
10.5
15.5
1.5
9.0
13.1
1.7
9.9
12.8
3.1
9.7
13.1
0.7
10.3
14.2
1.0
10.4
13.8
Both value in use of Smart Devices CGU and Mobile Phones
CGU and fair value less costs to sell for Location & Commerce
CGU and Nokia Siemens Networks CGU are determined on
a pre-tax value basis using pre-tax valuation assumptions
including pre-tax cash fl ows and pre-tax discount rate. As mar-
ket-based rates of return for the Group’s CGUs are available
only on a post-tax basis, the pre-tax discount rates are derived
by adjusting the post-tax discount rates to refl ect the specifi c
amount and timing of future tax cash fl ows. The discount rates
applied in the impairment testing for each CGU have been de-
termined independently of capital structure refl ecting current
assessments of the time value of money and relevant market
risk premiums. Risk premiums included in the determination of
the discount rate refl ect risks and uncertainties for which the
future cash fl ow estimates have not been adjusted.
The recoverable amount of the Location & Commerce CGU
exceeds its carrying amount by a small margin in the fourth
quarter . The related valuation is deemed most sensitive
to the changes in both discount and long-term growth rates.
A discount rate increase in excess of . percentage point
or long-term growth decline in excess of percentage point
would result in impairment loss in the Location & Commerce
CGU. Management’s estimates of the overall automotive vol-
umes and market share, customer adoption of the new loca-
tion-based platform and related service off erings, projected
device sales volumes and fair value of the services sold within
the Group as well as continued focus on cost effi ciency are
the main drivers for the Location & Commerce net cash fl ow
projections. The Group’s cash fl ow forecasts refl ect the cur-
rent strategic views that license fee based models will remain
important in both near and long term. Management expects
that license fee based models which are augmented with soft-
ware and services and monetized via license fees, transactions
fees and advertising, will grow in the future as more customers
demand complete, end-to-end location solutions. Actual short
and long-term performance could vary from management’s
forecasts and impact future estimates of recoverable value.
Since the recoverable amount exceeds the carrying amount
only by a small margin, any material adverse changes such as
market deterioration or changes in the competitive landscape
could impact management’s estimates of the main drivers and
result in impairment loss.
A charge to operating profi t of EUR million was re-
corded for the impairment of goodwill in our Location &
Commerce business in the fourth quarter . The impair-
ment loss was allocated in its entirety to the carrying amount
of goodwill in the balance sheet of the Location & Commerce
CGU. 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
Location & Commerce CGU was reduced to EUR million at
December , .
The impairment charge was the result of an evaluation of
the projected fi nancial performance and net cash fl ows of
the Location & Commerce CGU. The main drivers for manage-
ment’s net cash fl ow projections included license fees related
to digital map data, fair value of the services sold within the
Group and estimated average revenue per user with regard to
mobile media advertising. The average revenue per user was
estimated based on peer market data for mobile advertising
revenue. Projected device sales volumes impacted the overall
forecasted intercompany and advertising revenues. This took
into consideration the market dynamics in digital map data
and related location-based content markets, including the
Group’s long-term view at the time of the annual impair-
ment testing, that the market will move from fee-based mod-
els towards advertising-based models especially in some more
mature markets. It also refl ected recently announced results
and related competitive factors in local search and advertising
market resulting in lower estimated growth prospects from
location-based assets integrated with diff erent advertis-
ing platforms. After consideration of all relevant factors, the
Group reduced the net sales projections for the Location &
Commerce CGU which, in turn, reduced projected profi tability
and cash fl ows.
The Group’s goodwill impairment testing did not result in
impairment charges for the years ended December ,
or . An impairment loss was recorded with respect to
C R I T I C A L A C C O U N T I N G P O L I C I E S
91
the Group’s Location & Commerce CGU in , as discussed
above. No further impairment charges were recorded with
respect to the other CGUs in .
See Note to our consolidated fi nancial statements 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 fi nancial instruments that are not traded in
an active market, for example unlisted equities, are deter-
mined using valuation techniques. We use judgment to select
an appropriate valuation methodology and underlying as-
sumptions 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: () the current market value of similar instruments,
() prices established from a recent arm’s length fi nancing
transaction of the target companies, () analysis of market
prospects and operating performance of the target companies
taking into consideration of public market comparable compa-
nies in similar industry sectors. Changes in these assumptions
may cause the Group to recognize impairments or losses in
the future periods. During the Group received distribu-
tions of EUR million (EUR million in ) included in other
fi nancial income from a private fund held as non-current
available-for-sale. Due to a reduction in estimated future cash
fl ows the Group also recognized an impairment loss of EUR
million (EUR million in ) for the fund included in other
fi nancial expenses.
INCOME TAXES
The Group is subject to income taxes both in Finland and in
numerous other jurisdictions. Signifi cant judgment is required
in determining income tax expense, tax provisions, deferred tax
assets and liabilities recognized in the consolidated fi nancial
statements. We recognize deferred tax assets to the extent that
it is probable that suffi cient taxable income will be available in
the future against which the temporary diff erences, tax losses
and unused tax credits can be utilized. We have considered
future taxable income and tax planning strategies in making this
assessment. Deferred tax assets are assessed for realizability
each reporting period, and when circumstances indicate that it
is no longer probable that deferred tax assets will be utilized,
they are adjusted as necessary. In Nokia taxes continued to
be unfavorably aff ected by Nokia Siemens Networks taxes as no
tax benefi ts are recognized for certain Nokia Siemens Networks
deferred tax items. Additionally Nokia taxes were adversely
aff ected by allowances related to Devices & Services’ Finnish
deferred tax assets and discontinuation of recognizing tax
benefi ts for Devices & Services’ Finnish deferred tax items due
to uncertainty of utilization of these items.
At December , , the Group had tax losses carry
forward, temporary diff erences and tax credits of EUR
million (EUR million in ) for which no deferred tax as-
sets were recognized in the consolidated fi nancial statements
due to uncertainty of utilization of these items.
We recognize tax provisions based on estimates and as-
sumptions when, despite our belief that tax return positions
are supportable, it is more likely than not that certain posi-
tions will be challenged and may not be fully sustained upon
review by tax authorities. The Group has ongoing tax investi-
gations in multiple jurisdictions, including Hungary and India.
If the fi nal outcome of these matters diff ers from the amounts
initially recorded, diff erences may positively or negatively
impact the current taxes and deferred taxes in the period in
which such determination is made.
PENSIONS
The determination of our pension benefi t obligation and
expense for defi ned benefi t pension plans is dependent on
our selection of certain assumptions used by actuaries in
calculating such amounts. Those assumptions are described
in Note to our consolidated fi nancial 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 volatil-
ity, which has aff ected the value of our pension plan assets.
This volatility may make it diffi cult to estimate the long-term
rate of return on plan assets. Actual results that diff er from
our assumptions are accumulated and amortized over future
periods and therefore generally aff ect our recognized expense
and recorded obligation in such future periods. Our assump-
tions are based on actual historical experience and external
data regarding compensation and discount rate trends. While
we believe that our assumptions are appropriate, signifi cant
diff erences in our actual experience or signifi cant changes in
our assumptions may materially aff ect our pension obligation
and our future expense. The fi nancial impact of the pension
assumptions aff ects mainly the Devices & Services and Nokia
Siemens Networks businesses.
SHARE-BASED COMPENSATION
We have various types of equity-settled share-based compen-
sation schemes for employees mainly in Devices & Services
and Location & Commerce. Employee services received, and
the corresponding increase in equity, are measured by refer-
ence 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
to our consolidated fi nancial statements and include, among
others, the dividend yield, expected volatility and expected
life of stock options. The expected life of stock options is esti-
mated by observing general option holder behavior and actual
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 diffi cult. Non-market vesting conditions
attached to the performance shares are included in assump-
tions 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
92
N O K I A I N 2 0 1 2
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 profi t and loss
account, and in subsequent periods for unvested performance
shares for which the expense has not yet been recognized in
the profi t and loss account. Signifi cant diff erences in employee
option activity, equity market performance, and our projected
and actual net sales and earnings per share performance may
materially aff ect 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.
The Group has also issued certain stock options for the
employees of Nokia Siemens Networks, which are accounted
for as cash-settled. Related employee services received, and
the liability incurred, are measured at the fair value of the
liability. The fair value of stock options is estimated based on
the reporting date market value less the exercise price of the
stock options. The fair value of the liability is remeasured at
each reporting date and at the date of settlement and related
change in fair value is recognized in the income statement over
the relevant service periods.
C R I T I C A L A C C O U N T I N G P O L I C I E S
93
CORPORATE GOVERNANCE
This Corporate Governance statement is prepared in accord-
ance with Chapter , Section of the Finnish Securities Markets
Act and the recommendation of the Finnish Corporate
Governance Code and is issued separately from the review by
the Board of Directors. The review by the Board of Directors
is available on page of the ‘Nokia in ’ publication.
REGULATORY FRAMEWORK
MAIN CORPORATE GOVERNANCE BODIES
OF NOKIA
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 shareholders at a general meeting,
the Board of Directors (the “Board”), the President and the
Nokia Leadership Team chaired by the President and CEO.
Nokia’s corporate governance practices comply with Finnish
laws and regulations as well as with Nokia’s Articles of Associa-
tion. Nokia also complies with the Finnish Corporate Govern-
ance Code with the following exception:
Nokia is not in full compliance with recommendation of
the Finnish Corporate Governance Code as Nokia’s Restricted
Share Plans do not include any performance criteria but are
time-based only, with a restriction period of at least three
years from the grant. Restricted shares are granted on a
selective basis to promote long-term retention of individuals
with functional mastery and other employees and executives
deemed critical for the future success of Nokia, as well as to
support attraction of promising external talent in a competi-
tive environment in which Nokia’s peers, especially in the
United States, commonly use such shares. The Restricted
Share Plans also promote employee share ownership, and are
used in conjunction with the Performance Share and Stock
Option Plans. The Finnish Corporate Governance Code is ac-
cessible at www.cgfi nland.fi .
As a result of Nokia’s listing of its shares on the New York
Stock Exchange and its registration under the US Securities
Exchange Act of , Nokia must comply with the US federal
securities laws and regulations, including the Sarbanes-Oxley
Act of as well as the requirements of the New York Stock
Exchange, in particular the corporate governance rules under
section A of the New York Stock Exchange Listed Company
Manual, which is accessible at http://nysemanual.nyse.com/
lcm/. Nokia complies with the above rules in each case to the
extent that those provisions are applicable to foreign private
issuers. Nokia also complies with any other mandatory corpo-
rate governance rules applicable due to listing of Nokia share
in Helsinki and New York stock exchanges.
To the extent any non-domestic rules and regulations would
require a violation of the laws of Finland, Nokia is obliged to
comply with the Finnish requirements. Nevertheless, Nokia
aims to minimize the necessity for, or consequences of,
confl icts between the laws of Finland and applicable non-
domestic requirements.
External
Auditor
General Meeting of
Shareholders
Board of Directors
Audit Comittee
Corporate Governance &
Nomination Comittee
Personnel Comittee
Nokia Leadership Team
President & CEO
Internal
Audit
General Meeting of Shareholders
The shareholders may exercise their decision-making power
and their right to speak and ask questions at the general meet-
ing of shareholders. Each Nokia share entitles a shareholder to
one vote at general meetings of Nokia. Pursuant to the Finnish
Companies Act, an Annual General Meeting must be convened
each year by June . The Annual General Meeting decides,
among other things, on the election and remuneration of the
Board of Directors, the adoption of annual accounts, the use
of the profi t shown on the balance sheet, discharging from li-
ability the members of the Board and the President and CEO as
well as on the election and fees of external auditor.
In addition to the Annual General Meeting, an Extraordinary
General Meeting shall be convened when the Board considers
such meeting to be necessary, or, when the provisions of the
Finnish Companies Act mandate that such a meeting must be
held.
The Board of Directors
The operations of Nokia are managed under the direction of
the Board of Directors, within the framework set by the Finnish
Companies Act and our Articles of Association as well as any
complementary rules of procedure as defi ned 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 shareholders
of Nokia. The Board’s responsibilities are active, not passive,
and include the responsibility regularly to evaluate the strate-
gic direction of Nokia, management policies and the eff ective-
ness with which management implements them. The Board’s
responsibilities also include overseeing the structure and
composition of Nokia’s top management and monitoring legal
compliance and the management of risks related to Nokia’s
operations. In doing so, the Board may set annual ranges
94
N O K I A I N 2 0 1 2
and/or individual limits for capital expenditures, invest-
ments and divestitures and fi nancial commitments not to be
exceeded without Board approval.
Jouko Karvinen, Helge Lund, Isabel Marey-Semper, Mårten
Mickos, Elizabeth Nelson, Dame Marjorie Scardino, Risto Siilas-
maa and Kari Stadigh.
Nokia Board’s leadership structure consists of a Chairman
and Vice Chairman, elected annually by the Board and con-
fi rmed by the independent directors of the Board from
among the Board members upon the recommendation of the
Corporate Governance and Nomination Committee. On May ,
, the independent directors of the Board elected Risto
Siilasmaa as the new Chairman and Dame Marjorie Scardino
to continue as Vice Chairman of the Board. The Chairman has
certain specifi c duties as defi ned by Finnish standards and the
Nokia Corporate Governance Guidelines. The Vice Chairman
assumes the duties of the Chairman in case the Chairman is
prevented from performing his duties. The Board has deter-
mined that Nokia Board Chairman, Risto Siilasmaa, and the Vice
Chairman, Dame Marjorie Scardino, are independent as defi ned
by Finnish standards and relevant stock exchange rules.
Nokia does not have a policy concerning the combination
or separation of the roles of Chairman and Chief Executive
Offi cer, but the Board leadership structure is dependent on
the company needs, shareholder value and other relevant
factors applicable from time to time, respecting the high-
est corporate governance standards. In , the roles were
separate while Risto Siilasmaa was the Chairman of the Board
and Stephen Elop was the Chief Executive Offi cer.
The current members of the Board are all non-executive,
except the President and CEO. The Board has determined
that nine of the current ten non-executive Board members
are independent as defi ned by Finnish standards as well as
by the rules of the New York Stock Exchange. Mårten Mickos
was determined not to be independent under both Finnish
standards and the rules of the New York Stock Exchange due
to his position as CEO of Eucalyptus Systems, Inc., which has
a business relationship with and receives revenue from Nokia
Siemens Networks. The executive member of the Board,
President and CEO Stephen Elop, was determined not to be
independent under both Finnish standards and the New York
Stock Exchange rules.
The Board held meetings during , of which approxi-
mately half were regularly scheduled meetings held in person,
complemented by meetings through video or conference calls
and other means. In addition, in the non-executive direc-
tors held a meeting without management in connection with
each regularly scheduled Board meeting. Also, the independ-
ent directors held one meeting separately in .
Directors’ attendance at the Board meetings in , includ-
ing Committee meetings, but excluding meetings among the
non-executive directors or independent directors only, was as
described in the table on next page.
In risk management policies and processes the Board’s role
includes risk analysis and assessment in connection with each
fi nancial and business review, update and decision-making
proposal. Risk oversight is an integral part of all Board deliber-
ations. For a more detailed description of Nokia’s risk manage-
ment policies and processes, please see the chapter “Main
features of the internal control and risk management systems
in relation to the fi nancial reporting process” below.
The Board has the responsibility for appointing and dis-
charging the Chief Executive Offi cer, the Chief Financial Offi cer
and the other members of the Nokia Leadership Team. The
Chief Executive Offi cer, 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 confi rm the compensation and the employment
conditions of the President and CEO upon the recommenda-
tion of the Personnel Committee. The compensation and
employment conditions of the other members of the Nokia
Leadership Team are approved by the Personnel Committee
upon the recommendation of the President and CEO.
It is the responsibility of the members of the Board to act
in good faith and with due care so as to exercise their busi-
ness judgment on an informed basis in what they reason-
ably and honestly believe to be in the best interests of the
company and its shareholders. In discharging that obligation,
the directors must inform themselves of all relevant informa-
tion reasonably available to them. The Board and each Board
Committee also have the power to hire independent legal,
fi nancial or other advisors as they deem necessary.
The Board has three committees: Audit Committee,
Corporate Governance and Nomination Committee and
Personnel Committee. These committees assist the Board in
its duties pursuant to their respective committee charters.
The Board may also establish ad hoc committees for detailed
reviews or consideration of particular topics to be proposed
for the approval of the Board.
In line with Nokia’s Corporate Governance Guidelines, the
Board conducts annual performance evaluations, which also
include evaluations of the Board Committees’ work, the re-
sults of which are discussed by the Board. Regarding , the
evaluation was conducted by an external evaluator, and the
evaluation consisted of interviews with the Board members.
The results of the evaluation for year were discussed by
the entire Board.
ELECTION, COMPOSITION AND MEETINGS OF THE
BOARD OF DIRECTORS
Pursuant to the Articles of Association, Nokia Corporation has
a Board of Directors composed of a minimum of seven and
a maximum of members. The members of the Board are
elected for a one-year term 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 . The Annual General Meeting held on
May , elected the following members to the Board of
Directors: Bruce Brown, Stephen Elop, Henning Kagermann,
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
95
Board
meetings meetings
Audit Committee
Personnel Committee Nomination
meetings
Committee meetings
Corporate Governance &
Bruce Brown (as of May 3, 2012)
Stephen Elop
92%
100%
Bengt Holmström (until May 3, 2012)
80%
Henning Kagermann
Per Karlsson (until May 3, 2012)
Jouko Karvinen
Helge Lund
Isabel Marey-Semper
Mårten Mickos (as of May 3, 2012)
Elizabeth Nelson (as of May 3, 2012)
Jorma Ollila (until May 3, 2012)
Dame Marjorie Scardino
Risto Siilasmaa
100%
100%
100%
94%
88%
100%
100%
100%
82%
100%
—
—
—
—
—
100%
—
100%
—
100%
—
—
100%
(until May 3, 2012)
75%
—
—
100%
100%
—
86%
—
—
—
—
43%
—
100%
—
—
—
100%
—
100%
(as of May 3, 2012)
—
—
—
—
—
60%
100%
—
Kari Stadigh
100%
—
In addition, many of the directors attended as non-voting
observers in meetings of a committee in which they were not
a member.
According to the Nokia Board practices, the non-executive
directors meet without management in connection with each
regularly scheduled meeting. Such sessions are chaired by the
non-executive Chairman of the Board. If the non-executive
Chairman of the Board is unable to chair any of the meetings
of non-executive directors, the non-executive Vice Chairman
of the Board chairs the meeting. In addition, the independent
directors meet separately at least once annually.
All the directors who served on the Board for the term until
the close of the Annual General Meeting , except for Helge
Lund, attended Nokia’s Annual General Meeting held on May ,
. The Finnish Corporate Governance Code recommends
attendance by the Board Chairman and a suffi cient number of
directors in the general meeting of shareholders to allow the
shareholders to exercise their right to present questions to
the Board and management.
The independent directors of the Board confi rm the elec-
tion of the members and Chairmen for the Board’s com-
mittees from among the Board’s independent directors
upon the recommendation of the Corporate Governance
and Nomination Committee and based on each committee’s
member qualifi cation standards.
The Corporate Governance Guidelines concerning the
directors’ responsibilities, the composition and selection of
the Board, its committees and certain other matters relat-
ing to corporate governance are available on Nokia’s website,
www.nokia.com/global/about-nokia. Also, the Committee
Charters of the Audit Committee, Corporate Governance and
Nomination Committee and Personnel Committee are avail-
able on Nokia’s website, www.nokia.com/global/about-nokia.
Nokia also has a Code of Conduct which is equally applicable
to all of Nokia’s employees, directors and management, and
a Code of Ethics for the Principal Executive Offi cers and the
Senior Financial Offi cers. Both the Code of Conduct and Code
of Ethics are available on Nokia’s website, www.nokia.com/
global/about-nokia.
96
N O K I A I N 2 0 1 2
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee consists of a minimum of three mem-
bers of the Board who meet all applicable independence,
fi nancial literacy and other requirements of Finnish law and the
rules of the stock exchanges where Nokia shares are listed, i.e.
NASDAQ OMX Helsinki and the New York Stock Exchange. Since
May , , the Audit Committee has consisted of the follow-
ing three members of the Board: Jouko Karvinen (Chairman),
Isabel Marey-Semper and Elizabeth Nelson.
The Audit Committee is established by the Board primar-
ily for the purpose of overseeing the accounting and fi nancial
reporting processes of the company and audits of the fi nancial
statements of the company. The Committee is responsible for
assisting the Board’s oversight of () the quality and integrity
of the company’s fi nancial statements and related disclosure,
() the statutory audit of the company’s fi nancial state-
ments, () the external auditor’s qualifi cations and independ-
ence, () the performance of the external auditor subject to
the requirements of Finnish law, () the performance of the
company’s internal controls and risk management and as-
surance function, () the performance of the internal audit
function, and () the company’s compliance with legal and
regulatory requirements, including also the performance of its
ethics and compliance program. The Committee also main-
tains procedures for the receipt, retention and treatment of
complaints received by the company regarding accounting,
internal controls, or auditing matters and for the confi den-
tial, anonymous submission by employees of the company
of concerns regarding accounting or auditing matters. Our
disclosure controls and procedures, which are reviewed by the
Audit Committee and approved by the Chief Executive Offi cer
and the Chief Financial Offi cer, as well as our internal controls
over fi nancial reporting, are designed to provide reasonable
assurance regarding the quality and integrity of the company’s
fi nancial statements and related disclosures. The Disclosure
Committee chaired by the Chief Financial Offi cer is respon-
sible for the preparation of the quarterly and annual results
announcements, and the process includes involvement by
business managers, business controllers and other functions,
like internal audit, as well as a fi nal review and confi rmation by
the Audit Committee and the Board. For further information
on internal control over fi nancial reporting, see chapter “Main
features of the internal control and risk management systems
in relation to the fi nancial reporting process” below.
Under Finnish law, our external auditor is elected by our
shareholders by a simple majority vote at the Annual General
Meeting for one fi scal year at a time. The Audit Committee
makes a proposal to the shareholders in respect of the ap-
pointment of the external auditor based upon its evaluation of
the qualifi cations and independence of the auditor to be pro-
posed for election or re-election. Under Finnish law, the fees
of the external auditor are also approved by our 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
Annual General Meeting. For information about the fees paid
to Nokia’s external auditor, PricewaterhouseCoopers, during
see “Auditor fees and services” on page .
In discharging its oversight role, the Audit Committee has
full access to all company books, records, facilities and per-
sonnel. 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 fi rst meeting following the
appointment of the Committee. The Committee meets sepa-
rately with the representatives of Nokia’s management, heads
of the internal audit and ethics and compliance functions, and
the external auditor in connection with regularly scheduled
meetings. The head of the internal audit function has at all
times a direct access to the Audit Committee, without involve-
ment of management.
The Audit Committee had meetings in . The attend-
ance at all meetings was %. In addition, any directors who
wish to may attend Audit Committee meetings as non-voting
observers.
The Personnel Committee consists of a minimum of three
members of the Board who meet all applicable independ-
ence requirements of Finnish law and the rules of the stock
exchanges where Nokia shares are listed, i.e. NASDAQ OMX
Helsinki and the New York Stock Exchange. Since May , ,
the Personnel Committee has consisted of the following fi ve
members of the Board: Henning Kagermann (Chairman), Bruce
Brown, Helge Lund, Dame Marjorie Scardino and Kari Stadigh.
The primary purpose of the Personnel Committee 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 their terms of employment. The
Committee has overall responsibility for evaluating, resolving
and making recommendations to the Board regarding () com-
pensation of the company’s top executives and their em-
ployment conditions, () all equity-based plans, () incentive
compensation plans, policies and programs of the company
aff ecting executives and () other signifi cant incentive plans.
The Committee is responsible for overseeing compensation
philosophy and principles and ensuring the above compen-
sation programs are performance-based, designed with an
intention to contribute to the long-term value sustainability of
the company, properly motivate management, support overall
corporate strategies and are aligned with shareholders’ inter-
ests. The Committee is responsible for the review of senior
management development and succession plans.
The Personnel Committee had meetings in . The
average attendance at the meetings was %. In addition, any
directors who wish to may attend Personnel Committee meet-
ings as non-voting observers.
For further information on the activities of the Personnel
Committee, see “Executive compensation philosophy, pro-
grams and decision-making process” on page .
The Corporate Governance and Nomination Committee
consists of three to fi ve 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,
i.e. NASDAQ OMX Helsinki and the New York Stock Exchange.
Since May , , the Corporate Governance and Nomination
Committee has consisted of the following four members of
the Board: Risto Siilasmaa (Chairman), Henning Kagermann,
Jouko Karvinen and Dame Marjorie Scardino.
The Corporate Governance and Nomination Committee’s
purpose is () to prepare the proposals for the general meet-
ings in respect of the composition of the Board and the direc-
tor remuneration to be approved by the shareholders and ()
to monitor issues and practices related to corporate govern-
ance and to propose necessary actions in respect thereof.
The Committee fulfi lls its responsibilities by (i) actively
identifying individuals qualifi ed to become members of the
Board and considering and evaluating the appropriate level
and structure of director remuneration, (ii) proposing to the
shareholders the director nominees for election at the Annual
General Meetings as well as the director remuneration, (iii)
monitoring signifi cant developments in the law and practice
of corporate governance and of the duties and responsibili-
ties of directors of public companies, (iv) assisting the Board
and each Committee of the Board in its annual performance
evaluations, including establishing criteria to be used in con-
nection with such evaluations, (v) developing and recommend-
ing to the Board and administering our Corporate Governance
Guidelines, and (vi) reviewing the company’s disclosure in the
Corporate Governance Statement.
The Committee has the power to retain search fi rms or
advisors to identify candidates. The Committee may also
retain counsel or other advisors, as it deems appropriate.
The Committee has the sole authority to retain or terminate
such search fi rms or advisors and to review and approve such
search fi rm or advisor’s fees and other retention terms. It is
the Committee’s practice to retain a search fi rm to identify
new director candidates.
The Corporate Governance and Nomination Committee had
meetings in . The average attendance at the meetings
was %. In addition, any directors who wish to may attend
Corporate Governance and Nomination Committee meetings
as non-voting observers.
The charters of each of the committees are available on
Nokia’s website, www.nokia.com/global/about-nokia.
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
97
Nokia’s document retention practices and local statutory
requirements.
■ The information systems’ general controls to ensure that
suffi cient information technology general controls, includ-
ing change management, system development, computer
operations as well as access and authorizations, are in place.
■ The signifi cant processes, including six fi nancial cycles and
underlying IT cycle identifi ed by Nokia to address control
activities implementing a top down risk based approach.
These cycles include revenue cycle, delivery cycle, indirect
purchase cycle, treasury cycle, human resources cycle,
record to report cycle and IT cycle. Financial cycles have
been designed to (i) give a complete end-to-end view to all
fi nancial processes (ii) identify key control points (iii) identify
involved organizations, (iv) ensure coverage for important
accounts and fi nancial statement assertions and (v) enable
internal control management within Nokia.
Further, the management also:
■ assessed the design of controls in place to mitigate the
fi nancial reporting risks;
■ tested operating eff ectiveness of all key controls;
■ evaluated all noted defi ciencies in internal controls over
fi nancial reporting as of year-end; and
■ performed a quality review on assessment documentation
and provided feedback for improvement.
Based on this evaluation, the management has assessed the
eff ectiveness of Nokia’s internal control over fi nancial report-
ing, as at December , , and concluded that such internal
control over fi nancial reporting is eff ective.
Nokia also has an internal audit function that acts as an
independent appraisal function by examining and evaluating
the adequacy and eff ectiveness of Nokia’s system of inter-
nal control. Internal audit resides within the Chief Financial
Offi cer’s organization and 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.
For more information on Nokia’s risk management, please
see Note of Nokia’s consolidated fi nancial statements.
Nokia Leadership Team and CEO
Under its Articles of Association, in addition to the Board of
Directors, Nokia has a Nokia Leadership Team that is respon-
sible for the operative management of Nokia. The Chairman
and members of the Nokia Leadership Team are appointed by
the Board of Directors. Nokia Leadership Team is chaired by
the Chief Executive Offi cer. Only the Chairman of the Nokia
Leadership Team, the Chief Executive Offi cer, can be a member
of both the Board of Directors and the Nokia Leadership Team.
The Chief Executive Offi cer also acts as President, and his
rights and responsibilities include those allotted to the Presi-
dent under Finnish law.
MAIN FEATURES OF THE INTERNAL
CONTROL AND RISK MANAGEMENT SYSTEMS
IN RELATION TO THE FINANCIAL REPORTING
PROCESS
Nokia has a Risk Policy which outlines Nokia’s risk management
policies and processes and is approved by the Audit Commit-
tee. The Board’s role in risk oversight includes risk analysis and
assessment in connection with each fi nancial and business
review, update and decision-making proposal and is an integral
part of all Board deliberations. The Audit Committee is respon-
sible for, among other matters, the risk management relating
to the fi nancial reporting process and assisting the Board’s
oversight of the risk management function. Nokia applies a
common and systematic approach to the risk management
across all business operations and processes based on a strat-
egy approved by the Board. Accordingly, the risk management
at Nokia is not a separate process but a normal daily business
and management practice.
The management is responsible for establishing and
maintaining adequate internal control over fi nancial reporting
for Nokia. Nokia’s internal control over fi nancial reporting is
designed to provide reasonable assurance to the management
and the Board of Directors regarding the reliability of fi nancial
reporting and the preparation and fair presentation of pub-
lished fi nancial statements.
The management conducts a yearly assessment of Nokia’s
internal controls over fi nancial reporting in accordance with
the Committee of Sponsoring Organizations (COSO) frame-
work and the Control Objectives for Information and related
Technology (CoBiT) of internal controls. For the year , the
assessment was performed based on a top down risk as-
sessment of Nokia’s fi nancial statements covering signifi cant
accounts, processes and locations, corporate level controls,
control activities and information systems’ general controls.
As part of its assessment the management documented:
■ The corporate-level controls, which create the “tone from
the top” containing Nokia values and Code of Conduct and
provide discipline and structure to the decision making and
ways of working. Selected items from Nokia’s operational
mode and governance principles are separately documented
as corporate level controls.
■ The control activities, which consist of policies and proce-
dures to ensure the management’s directives are carried
out and the related documentation is stored according to
98
N O K I A I N 2 0 1 2
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
99
BOARD OF DIRECTORS
The current members of the Board of Directors were elected at
the Annual General Meeting on May , , based on the pro-
posal of the Board’s Corporate Governance and Nomination
Committee. On the same date, the Chairman and Vice Chair-
man, 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 elected on an
annual basis for a one-year term ending at the close of the
next Annual General Meeting. The election is made by a simple
majority of the shareholders’ votes represented at the Annual
General Meeting.
THE CURRENT MEMBERS OF THE BOARD
OF DIRECTORS AND ITS COMMITTEES
ARE SET FORTH BELOW.
CHAIRMAN RISTO SIILASMAA,
B. 1966
Chairman of the Board of Directors
of Nokia Corporation.
Board member since .
Chairman since .
Chairman of the Corporate Governance
and Nomination Committee.
Master of Science (Eng.) (Helsinki University of Technology).
President and CEO of F-Secure Corporation – .
Chairman of the Board of Directors of F-Secure
Corporation. Member of the Board of Directors of Mendor Ltd.
Vice Chairman of the Board of Directors of The Federation
of Finnish Technology Industries. Member of the Board of
Directors of The Confederation of Finnish Industries (EK).
Chairman of the Board of Directors of Elisa Corporation
– . Member of the Board of Directors of Elisa
Corporation – .
VICE CHAIRMAN
DAME MARJORIE SCARDINO,
B. 1947
Board member since .
Vice Chairman since .
Member of the Corporate Governance
and Nomination Committee.
Member of the Personnel Committee.
Bachelor of Arts (Baylor University). Juris Doctor (University of
San Francisco).
Chief Executive of Pearson plc. – . Chief Executive
of The Economist Group – . President of the North
American Operations of The Economist Group – .
Lawyer – and publisher of The Georgia Gazette
newspaper – .
Member of the Board of Directors of Pearson plc
– .
100
N O K I A I N 2 0 1 2
BRUCE BROWN, B. 1958
Chief Technology Offi cer of
The Procter & Gamble Company.
Board member since May , .
Member of the Personnel Committee.
M.B.A. (International Business)
(Xavier University). B.S. (Chemical Engi-
neering) (Polytechnic Institute of New
York University).
Various executive and managerial positions in Baby Care,
Feminine Care, and Beauty Care units of The Procter & Gamble
Company since in the United States, Germany and Japan.
Member of the Board of Directors of Agency for Science,
Technology & Research (A*STAR). Strategy Adviser in US
National Innovation. Member of the Board of Trustees of
Xavier University. Chairman of the Advisory Board of MDVIP.
Member of the Board of the University of Cincinnati Research
Institute.
JOUKO KARVINEN, B. 1957
CEO of Stora Enso Oyj.
Board member since .
Chairman of the Audit Committee.
Member of the Corporate Governance and
Nomination Committee.
Master of Science (Eng.) (Tampere Univer-
sity of Technology).
CEO of Philips Medical Systems Division – . Member
of Board of Management of Royal Philips Electronics and
Group Management Committee – . Holder of ex-
ecutive and managerial positions at ABB Group Limited from
, including Executive Vice President, Head of Automation
Technology Products Division and Member of Group Executive
Committee – , Senior Vice President, Business Area
Automation Power Products – , Vice President,
Business Unit Drives Products & Systems – , Vice
President, Power Electronics Division of ABB Drives Oy, Global AC
Drives Feeder Factory and R&D Centre – .
STEPHEN ELOP, B. 1963
President and CEO of Nokia Corporation.
Chairman of the Nokia Leadership Team.
Board member since .
Member of the Board of Directors of Aktiebolaget SKF.
Member of the Board of Directors of the Finnish Forest
Industries Federation and the Confederation of European Paper
Industries (CEPI).
Bachelor of Computer Engineering and
Management (McMaster University, Ham-
ilton, Canada). Doctor of Laws, honorary
(McMaster University, Hamilton, Canada).
President of Microsoft Business Division and mem-
ber of senior membership team of Microsoft Corporation
– . COO, Juniper Networks, Inc. – .
President, Worldwide Field Operations, Adobe Systems Inc.
– . President and CEO (last position), Macromedia Inc.
– .
HENNING KAGERMANN, B. 1947
Board member since .
Chairman of the Personnel Committee.
Member of the Corporate Governance
and Nomination Committee.
Ph.D. (Theoretical Physics) (Technical
University of Brunswick).
Co-CEO and Chairman of the Executive
Board of SAP AG – . CEO of SAP – . Co-
chairman of the Executive Board of SAP AG – .
A number of leadership positions in SAP AG since . Member
of SAP Executive Board – . Taught physics and
computer science at the Technical University of Brunswick and
the University of Mannheim – , became professor in
.
Member of the Supervisory Boards of Bayerische Motoren
Werke Aktiengesellschaft (BMW AG), Deutsche Bank AG,
Deutsche Post AG and Münchener Rückversicherungs-
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.
HELGE LUND, B. 1962
President and CEO of Statoil ASA.
Board member since .
Member of the Personnel Committee.
MA in Business Economics (School
of Economics and Business Administration,
Bergen). Master of Business Administration
(MBA) (INSEAD).
President and CEO of StatoilHydro – . President and
CEO of Statoil – . President and CEO of Aker Kvaerner
ASA – . Central managerial positions in the Aker RGI
system from . Prior to , Deputy Managing Director of
Nycomed Pharma AS, a political adviser to the Conservative
Party of the parliamentary group of Norway and a consultant of
McKinsey & Co.
ISABEL MAREY-SEMPER, B. 1967
Director of Advanced Research
of L’Oréal Group.
Board member since .
Member of the Audit Committee.
Ph.D. (Neuro-Pharmacology) (Université
Paris Pierre et Marie Curie – Collège de
France). MBA (Collège des Ingénieurs, Paris).
Director of Shared Services of L’Oréal Group – .
Chief Financial Offi cer, Executive Vice President in charge of
strategy of PSA Peugeot Citroën – . COO, Intellectual
Property and Licensing Business Unit of Thomson – .
Vice President Corporate Planning at Saint-Gobain – .
Director of Corporate Planning, High Performance Materials of
Saint-Gobain – . Principal of A.T. Kearney (Telesis, prior
to acquisition by A.T. Kearney) – .
Member of the Board of Directors of Faurecia S.A. – .
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
101
MÅRTEN MICKOS, B. 1962
Chief Executive Offi cer
of Eucalyptus Systems, Inc.
Board member since May , .
The following individuals served on Nokia Board until the
close of the Annual General Meeting held on May , :
■ Bengt Holmström, b. . Board member – . No
committee memberships in .
Master of Science (Eng.) (Helsinki Univer-
sity of Technology).
■ Per Karlsson, b. . Board member – . Served as
a member of the Personnel Committee until May , .
Senior Vice President, Database
Group, Sun Microsystems – . CEO, MySQL AB
– . Chairman, Vexillum Ab – . CEO, MatchON
Sports Ltd. – . CEO, Intellitel Communications Ltd.
– .
ELIZABETH NELSON, B. 1960
Independent Corporate Advisor.
Board member since May , .
Member of the Audit Committee.
M.B.A. (Finance) (The Wharton School,
University of Pennsylvania). B.S. (Foreign
Service) (Georgetown University).
Executive Vice President and Chief
Financial Offi cer, Macromedia, Inc. – . Vice President,
Corporate Development, Macromedia, Inc. – . Project
Manager, Corporate Development and International Finance,
Hewlett-Packard Company – . Associate, Robert
Nathan Associates – .
Member of the Board of Directors of Brightcove Inc.
Member of the Boards of Directors of Ancestry.com, Inc.
– , SuccessFactors, Inc. – , Autodesk, Inc.
– and CNET Networks, Inc. – .
KARI STADIGH, B. 1955
Group CEO and President of Sampo plc.
Board member since .
Member of the Personnel Committee.
Master of Science (Eng.) (Helsinki Univer-
sity of Technology). Bachelor of Business
Administration (Swedish School of
Economics and Business Administration,
Helsinki).
Deputy CEO of Sampo plc – . President of Sampo
Life Insurance Company Limited – . President of
Nova Life Insurance Company Ltd – . President and
COO of Jaakko Pöyry Group – .
Member of the Board of Directors of Nordea Bank AB (publ).
Chairman of the Board of Directors of If P&C Insurance Holding
Ltd (publ), Kaleva Mutual Insurance Company and Mandatum
Life Insurance Company Limited. Member of the Board of
Directors of Varma Mutual Pension Insurance Company. Vice
Chairman of the Board of Directors of Confederation of
Finnish Industries (EK). Vice Chairman of the Board of Directors
of the Federation of Finnish Financial Services. Member of
the Board of Directors of Central Chamber of Commerce of
Finland.
Chairman of the Board of Directors of Alma Media
Corporation – . Member of the Board of Directors of
Aspo Plc. . Chairman of the Board of Directors of Aspo Plc.
– .
■ Jorma Ollila, b. . Board member – . Chairman
– . No committee memberships in .
ELECTION OF THE BOARD MEMBERS
Proposal of the Corporate Governance
and Nomination Committee for Composition
of the Board of Directors in 2013
On January , , the Corporate Governance and Nomina-
tion Committee announced its proposal to the Annual General
Meeting convening on May , regarding the composition
of the Board of Directors for a one-year term from the Annual
General Meeting until the close of the Annual General
Meeting . The Committee will propose that the number
of Board members be ten and that the following current Nokia
Board members be re-elected as members of the Nokia Board
of Directors for a term until the close of the Annual General
Meeting : Bruce Brown, Stephen Elop, Henning Kager-
mann, Jouko Karvinen, Helge Lund, Mårten Mickos, Elizabeth
Nelson, Risto Siilasmaa and Kari Stadigh.
In addition, the Committee will propose that Elizabeth
Doherty, the Chief Financial Offi cer of Reckitt Benckiser Group
plc until March , , be elected as a member of the Nokia
Board of Directors for the same term until the close of the
Annual General Meeting .
Election of the Chairman and Vice Chairman
of the Board and the Chairmen and members
of the Board’s Committees
The Chairman and the Vice Chairman are elected by the new
Board and confi rmed by the independent directors of the
Board from among the Board members upon the recom-
mendation of the Corporate Governance and Nomination
Committee. The independent directors of the new Board will
also confi rm 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 Govern-
ance and Nomination Committee and based on each commit-
tee’s member qualifi cation standards. These elections will take
place at the Board’s assembly meeting following the Annual
General Meeting.
On January , , the Corporate Governance and
Nomination Committee announced that it will propose in the
assembly meeting of the new Board of Directors after the
Annual General Meeting on May , that Risto Siilasmaa be
elected as Chairman of the Board and Jouko Karvinen as Vice
Chairman of the Board.
102
N O K I A I N 2 0 1 2
NOKIA LEADERSHIP TEAM
According to our Articles of Association, the Nokia Leadership
Team is responsible for the operative management of the
Company. The Chairman and members of the Nokia Leader-
ship Team are appointed by the Board of Directors. Only the
Chairman of the Nokia Leadership Team, the President and
CEO, can be a member of both the Board of Directors and the
Nokia Leadership Team.
CHANGES IN THE NOKIA LEADERSHIP TEAM
During , the following appointments were made to
the Nokia Leadership Team:
■ Marko Ahtisaari was appointed Executive Vice President
of Design and member of the Nokia Leadership Team as
from February , .
■ Juha Putkiranta was appointed Executive Vice President
of Operations and member of the Nokia Leadership Team
as from July , .
■ Timo Toikkanen was appointed Executive Vice President
of Mobile Phones and member of the Nokia Leadership Team
as from July , .
■ Chris Weber was appointed Executive Vice President of
Sales and Marketing and member of the Nokia Leadership
Team as from July , .
Further, during , the following Nokia Leadership Team
members resigned:
■ Jerri DeVard, formerly Executive Vice President and Chief
Marketing Offi cer, stepped down from the Nokia Leadership
Team eff ective June , .
■ Colin Giles, formerly Executive Vice President of Sales,
stepped down from the Nokia Leadership Team eff ective
June , and left Nokia on September , .
■ Mary T. McDowell, formerly Executive Vice President
of Mobile Phones stepped down from the Nokia Leadership
Team eff ective June , and left Nokia on
December , .
■ Niklas Savander, formerly Executive Vice President
of Markets stepped down from the Nokia Leadership Team
eff ective June , and left Nokia on February , .
■ Esko Aho, formerly Executive Vice President of Corporate
Relations and Responsibility stepped down from the Nokia
Leadership Team and left Nokia eff ective August , .
He continues as an external consultant to Nokia.
THE CURRENT MEMBERS OF THE NOKIA
LEADERSHIP TEAM ARE SET FORTH BELOW.
CHAIRMAN STEPHEN ELOP, B. 1963
President and CEO of Nokia Corporation.
Member of the Board of Directors
of Nokia Corporation. Nokia Leadership
Team member and Chairman since .
Joined Nokia .
Bachelor of Computer Engineering and
Management (McMaster University, Ham-
ilton, Canada). Doctor of Laws, honorary (McMaster University,
Hamilton, Canada).
President of Microsoft Business Division and member of
senior membership team of Microsoft Corporation – .
COO, Juniper Networks, Inc. – . President, Worldwide
Field Operations, Adobe Systems Inc. – . President and
CEO (last position), Macromedia Inc. – .
MARKO AHTISAARI, B. 1969
Executive Vice President, Design.
Nokia Leadership Team member
since February , . With Nokia
– , rejoined .
Master of Arts in Philosophy (Graduate
School of Arts and Sciences, Columbia Uni-
versity, New York, USA). Bachelor of Arts in
Economics and Philosophy (Columbia College, New York, USA).
Senior Vice President, Design, Nokia – . CEO and
Co-founder, Dopplr – . Head of Brand & Design, Blyk
– . Director, Design Strategy, Nokia – .
Director, Insight & Innovation, Nokia – . Designer,
Satama Interactive – . Faculty Fellow, Graduate School
of Arts and Sciences, Columbia University – .
Member of the Board of Directors of Artek oy ab. Member
of the Board of Directors of WITNESS.
MICHAEL HALBHERR, B. 1964
Executive Vice President, HERE.
Nokia Leadership Team member
since . Joined Nokia .
PhD. (Electrical Engineering) (ETH, Zurich,
Switzerland). Worked at MIT Laboratory for
Computer Science (Cambridge, MA, USA).
Vice President, Ovi Product Develop-
ment, Nokia Services – . Vice President, Nokia Maps,
Nokia Services – . CEO, gate AG, Berlin, Germany
– . Managing Director, Europeatweb, Munich, Germany
– . Manager, The Boston Consulting Group, in the USA
and Switzerland – .
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
103
JO HARLOW, B. 1962
Executive Vice President, Smart Devices.
Nokia Leadership Team member
since . Joined Nokia .
Bachelor of science (psychology) (Duke
University, Durham, North Carolina, USA).
Senior Vice President, Symbian
Smartphones, Mobile Solutions, Nokia
– . Senior Vice President, Smartphones Product
Management, Nokia . Vice President, Live Category, Nokia
– . Senior Vice President, Marketing, Mobile Phones,
Nokia – . Vice President, Marketing, North America,
Mobile Phones, Nokia – . Marketing, sales and man-
agement roles at Reebok – and Procter & Gamble
– .
TIMO IHAMUOTILA, B. 1966
Executive Vice President,
Chief Financial Offi cer.
Nokia Leadership Team member
since . With Nokia – ,
rejoined .
Master of Science (Economics) (Helsinki
School of Economics). Licentiate of Sci-
ence (Finance) (Helsinki School of Economics).
Executive Vice President, Sales, Markets, Nokia – .
Executive Vice President, Sales and Portfolio Management,
Mobile Phones, Nokia . Senior Vice President, CDMA
Business Unit, Mobile Phones, Nokia – . Vice
President, Finance, Corporate Treasurer, Nokia – .
Director, Corporate Finance, Nokia – . Vice President
of Nordic Derivatives Sales, Citibank plc. – . Manager,
Dealing & Risk Management, Nokia – . Analyst, Assets
and Liability Management, Kansallis Bank – .
Member of the Board of Directors of Uponor Corporation.
Member of the Board of Directors of Nokia Siemens Networks
B.V. Member of the Board of Directors of Central Chamber of
Commerce of Finland.
LOUISE PENTLAND, B. 1972
Executive Vice President,
Chief Legal Offi cer.
Nokia Leadership Team member
since . Joined Nokia .
LL.B honours (law degree) (Newcastle
upon Tyne). Qualifi ed and active Solicitor
(England and Wales). Licensed attorney
(Member of the New York Bar).
Senior Vice President and Chief Legal Offi cer, Nokia
– . Acting Chief Legal Offi cer, Nokia – .
Vice President and Head of Legal, Enterprise Solutions, Nokia
– . Senior Legal Counsel, Nokia Networks – .
Before joining Nokia, corporate in-house legal positions at
Avon Cosmetics Ltd. and law fi rm positions prior to that in the
United Kingdom.
Member of the Board of Directors of Nokia Siemens
Networks B.V. Member of Association of General Counsel, CLO
Roundtable – Europe, Global Leaders in Law, Corporate Counsel
Forum. Vice chair of the International Bar Association.
JUHA PUTKIRANTA, B. 1957
Executive Vice President, Operations.
Nokia Leadership Team member
since July , . Joined Nokia .
Master of Science (Eng.) (Helsinki Univer-
sity of Technology). Majors in Industrial
Economics and Information Technology.
Senior Vice President, Supply
Chain, Nokia – . Senior Vice President, Multimedia
Computers, Nokia – . Senior Vice President, Imaging
Business Unit, Nokia – . Senior Vice President,
Cellular Telephone Business Unit, Nokia – . Vice
President, Corporate Planning and Business Development,
Nokia – . Managerial positions at Hewlett-Packard
Company – .
HENRY TIRRI, B. 1956
Executive Vice President,
Chief Technology Offi cer.
Nokia Leadership Team member
since . Joined Nokia .
Ph.D. (computer science) (University of
Helsinki). Dr. h.c. (University of Tampere).
Head of Nokia Research Center
(NRC), Corporate Development, Nokia – . Head of
NRC Systems Research – . Nokia Research Center,
Research Fellow – .
Adjunct Professor in computer science (University of
Helsinki). Adjunct Professor in computational engineer-
ing (Aalto University, Helsinki). Adjunct Professor in Civil
Engineering (University of California, Berkeley). Member of
the international Advisory Committee of Tsinghua National
Laboratory for Information Science and Technology.
104
N O K I A I N 2 0 1 2
KAI ÖISTÄMÖ, B. 1964
Executive Vice President,
Chief Development Offi cer.
Nokia Leadership Team member
since . Joined Nokia .
Doctor of Technology (signal processing).
Master of Science (engineering) (Tampere
University of Technology).
Executive Vice President, Devices, Nokia – .
Executive Vice President and General Manager of Mobile
Phones, Nokia – . Senior Vice President, Business Line
Management, Mobile Phones, Nokia – . Senior Vice
President, Mobile Phones Business Unit, Nokia Mobile Phones
– . Vice President, TDMA/GSM Product Line,
Nokia Mobile Phones – . Vice President, TDMA Product
Line – . Various technical and managerial positions
in Nokia Consumer Electronics and Nokia Mobile Phones
– .
Member of the Board of Directors of Sanoma Corporation.
Chairman of the Board of Directors of University of Tampere.
Chairman of the Board of The Funding Agency for Technology
and Innovation (TEKES).
TIMO TOIKKANEN, B. 1966
Executive Vice President, Mobile Phones.
Nokia Leadership Team member
since July , . Joined Nokia .
Master of Law degree (University of
Helsinki). Master of Law degree
(King’s College, London).
Head of Business Development,
Nokia – . Senior Vice President, Strategic Business
Operations, Nokia – . Senior Vice President, Sales,
Distribution East, Nokia – . Senior Vice President,
Middle East and Africa, Customer and Market Operations,
Nokia – . Vice President, Greater China Mobile Phones
Sales, Nokia. Vice President, Sales, China South Mobile Phones,
Nokia – . General Manager, Hong Kong and Macao,
Nokia – .
CHRIS WEBER, B. 1965
Executive Vice President,
Sales and Marketing.
Nokia Leadership Team member
since July , . Joined Nokia .
Bachelor degree in business administra-
tion (economics and computer science)
(Mount Union College, Alliance, Ohio, USA).
Senior Vice President of Markets, Americas, Nokia
– . CEO of own sales consulting business, – .
Holder of several executive sales and marketing positions
during a -year career at Microsoft, including corporate vice
president, U.S. Enterprise and Partner Group, and overseeing
national sales strategy, sales operations, enterprise partners
and vertical industry strategy.
JUHA ÄKRÄS, B. 1965
Executive Vice President,
Human Resources.
Nokia Leadership Team member
since . Joined Nokia .
Master of Science (Eng.) (Helsinki
University of Technology).
Senior Vice President, Human
Resources, Nokia – . Vice President, Global
Operational Human Resources, Nokia – . Senior
Vice President and General Manager, Core Networks, Nokia
Networks – . Vice President and General Manager,
IP Networks, Nokia Networks – . Vice President,
Strategy and Business Development, Nokia Networks
– . Vice President, Customer Services APAC,
Nokia Telecommunications – . Head of Marketing
and Business Development, Customer Services, Nokia
Telecommunications – . Business Development
Manager and Controller, Customer Services, Nokia Cellular
Systems – . Project Manager, Nokia Telecom AB
(Sweden) – .
Member of the Board of Directors of Nokia Siemens
Networks B.V. Member of the Board of Directors of The
Federation of Finnish Technology Industries.
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
105
COMPENSATION OF THE BOARD OF DIRECTORS
AND THE NOKIA LEADERSHIP TEAM
BOARD OF DIRECTORS
The following table sets forth the annual remuneration of the
members of the Board of Directors for service on the Board
and its committees, as resolved at the respective Annual
General Meetings in , and .
Position, EUR
2012
2011
2010
Chairman
440 000
440 000
440 000
Vice Chairman
150 000
150 000
150 000
Member
130 000
130 000
130 000
Chairman of
Audit Committee
Member of
Audit Committee
Chairman of
Personnel Committee
Total
25 000
25 000
25 000
10 000
10 000
10 000
25 000
25 000
1 700 000 1 1 700 000 1 1 700 000 2
25 000
Our President and CEO, Stephen Elop, did not receive remuneration for his
service as a member of the Board in and .
The aggregate amount of Board pay also includes the remuneration paid
to our former President and CEO in his capacity as a member of the Board
of Directors, but in that capacity only.
It is Nokia’s policy that director remuneration consists of an
annual fee only and no fees are paid for meeting attendance.
Approximately % of director compensation is paid in the
form of Nokia shares that are purchased from the market. It
is also Nokia’s policy that the Board members retain all Nokia
shares received as director compensation until the end of their
board membership (except for those shares needed to off set
any costs relating to the acquisition of the shares, including
taxes). In addition, it is Nokia’s policy that non-executive mem-
bers of the Board do not participate in any of Nokia’s equity
programs and do not receive stock options, performance
shares, restricted shares or any other equity-based or oth-
erwise variable compensation for their duties as Board mem-
bers. The President and CEO did not receive compensation
for his service as a member of the Board of Directors in .
The total compensation of the President and CEO is described
below in “Summary Compensation Table ” on page .
The remuneration of the Board of Directors is set annu-
ally by our Annual General Meeting by a resolution of a simple
majority of the shareholders’ votes represented at the meet-
ing, upon the proposal of the Corporate Governance and
Nomination Committee of the Board of Directors. The remu-
neration is set for the period as from the respective Annual
General Meeting until the close of the next Annual General
Meeting.
When preparing the proposal for the Board remuneration
for the shareholders’ approval in the Annual General Meeting,
it is the policy of the Corporate Governance and Nomination
Committee to review and compare the total remuneration
levels and their criteria paid in other global companies with net
sales and complexity of business comparable to that of Nokia.
The Committee’s aim is to ensure that Nokia has an effi cient
106
N O K I A I N 2 0 1 2
Board of international professionals representing a diverse
mix of skills and experience. A competitive Board remuneration
contributes to the achievement of this target.
Remuneration of the Board of Directors in 2012
For the year ended December , , the aggregate amount
of remuneration paid to the members of the Board of Direc-
tors for their services as members of the Board and its com-
mittees was EUR .
The following table sets forth the total annual remunera-
tion paid to the members of the Board of Directors in , as
resolved by the shareholders at the Annual General Meeting
on May , . 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 .
Fees
earned or
paid in
cash
EUR 1
Year
Total
EUR
2012
440 000
440 000
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
—
—
150 000
150 000
130 000
130 000
—
—
—
—
155 000
155 000
—
—
155 000
155 000
130 000
130 000
140 000
140 000
130 000
130 000
140 000
140 000
130 000
130 000
1 700 000
1 700 000
Risto Siilasmaa,
Chairman
as of May 3, 2012 2
Jorma Ollila,
Chairman
until May 3, 2012 3
Marjorie Scardino,
Vice Chairman 4
Bruce Brown
Stephen Elop 5
Bengt Holmström 3
Henning Kagermann 6
Per Karlsson 3
Jouko Karvinen 7
Helge Lund
Isabel Marey-Semper 8
Mårten Mickos
Elizabeth Nelson 9
Kari Stadigh
Total
Approximately % of each Board member’s annual remuneration is paid
in Nokia shares purchased from the market and the remaining approxi-
mately % is paid in cash. The non-executive members of the Board do
not participate in any of Nokia’s equity programs and do not receive stock
options, performance shares, restricted shares or any other equity-based
or other compensation for their duties as Board members.
Represents the fee paid to Risto Siilasmaa for service as the Chairman of
the Board.
Jorma Ollila, Bengt Holmström and Per Karlsson served on the Board
until the close of the Annual General Meeting in . They were not paid
any fees during fiscal year , but received their compensation for the
term until the close of the Annual General Meeting in during fiscal
year . For their compensation in see Note to our consolidated
financial statements.
Represents the fee paid to Marjorie Scardino for service as Vice Chairman
of the Board.
Stephen Elop did not receive remuneration for his service as a member
of the Board. This table does not include remuneration paid to Mr. Elop
for his service as the President and CEO. For the compensation paid for
his service as the President and CEO, see “Summary Compensation Table
” on page .
Represents the fees paid to Henning Kagermann, consisting of a fee of
EUR for service as a member of the Board and EUR for
service as the Chairman of the Personnel Committee.
Represents the fees paid to Jouko Karvinen, consisting of a fee of
EUR for service as a member of the Board and EUR for
service as the Chairman of the Audit Committee.
Represents the fees paid to Isabel Marey-Semper, consisting of a fee of
EUR for service as a member of the Board and EUR for
service as a member of the Audit Committee.
Represents the fees paid to Elizabeth Nelson, consisting of a fee of
EUR for service as a member of the Board and EUR for
service as a member of the Audit Committee.
Proposal by the Corporate Governance
and Nomination Committee for remuneration
to the Board of Directors in 2013
On January , , the Corporate Governance and Nomina-
tion Committee of the Board announced its proposal to the
Annual General Meeting convening on May , regard-
ing the remuneration to the Board of Directors in . The
Committee will propose that the annual fee payable to the
Board members elected at the same meeting for a term until
the close of the Annual General Meeting in , remain at the
same level as it has been for the past fi ve years and be as fol-
lows: EUR for the Chairman, EUR for the Vice
Chairman and EUR for each member (excluding the
President and CEO of Nokia if elected to the Nokia Board); for
the Chairman of the Audit Committee and the Chairman of the
Personnel Committee an additional annual fee of EUR ,
and for each member of the Audit Committee an additional
annual fee of EUR .
The guiding principle of the Committee’s proposal is to align
the interests of the directors with those of the shareholders
by remunerating directors primarily with Nokia shares that
must be retained for the duration of the Board membership.
Therefore, the Committee will propose that, as in the past,
approximately percent of the remuneration be paid in
Nokia shares purchased from the market, which shares shall be
retained until the end of a director’s Board membership in line
with the Nokia policy (except for those shares needed to off set
any costs relating to the acquisition of the shares, including
taxes). The rest of the remuneration would be payable in cash,
most of which is typically used to cover taxes arising out of the
remuneration.
EXECUTIVE COMPENSATION
The sections below describe in more detail, our executive
compensation philosophy, the design of our programs and
the factors that are considered during the decision-making
process. One of the underlying principles of our philosophy
and our program design is that a signifi cant portion of execu-
tive’s compensation is at-risk pay tied to the performance of
the company and aligned with the value delivered to share-
holders. Of the total compensation package for the President
and CEO, % is at-risk pay tied to performance. The amount
of pay at risk for the other members of the Nokia Leadership
Team ranges from % to %. Our programs are designed
so this portion of at-risk pay is earned and delivered when
results warrant. While signifi cant strides have been made in
the execution of our strategy, the transition has taken longer
than anticipated in terms of results relative to the measures
that were defi ned. As a result, under our executive compensa-
tion programs, the President and CEO and the members of the
Nokia Leadership Team have not realized signifi cant elements
of their pay over this past year.
Executive compensation philosophy, programs
and decision-making process
The basic principles of our executive compensation philosophy
are to attract, retain and motivate talented executive offi cers
on a global basis with the right mix of skills and capabilities
to drive Nokia’s success in an extremely complex and rapidly
evolving mobile communications industry. As a result, we have
developed an overall compensation framework that provides
competitive base pay rates combined with short- and long-
term incentives that are intended to result in a competitive
total compensation package.
Our executive compensation programs have been designed
to enable Nokia to eff ectively execute the strategy announced
in early . Specifi cally, our programs are designed to:
■ incorporate specifi c measures that align directly with the
execution of our strategy;
■ deliver an appropriate amount of performance-related vari-
able compensation for the achievement of strategic goals
and fi nancial targets in both the short- and long-term;
■ appropriately balance rewards between Nokia’s and an indi-
vidual’s performance; and
■ foster an ownership culture that promotes sustainability
and long-term value creation and align the interests of the
executive offi cers with those of the shareholders through
long-term equity-based incentives.
The competitiveness of Nokia’s executive compensation
levels and practices is one of several key factors the Personnel
Committee of the Board considers in its determination of
compensation for Nokia executive offi cers. The Personnel
Committee compares, on an annual basis, Nokia’s compensa-
tion practices, base salaries and total compensation, including
short- and long-term incentives against those of other rele-
vant companies with the same or similar revenue, size, global
reach and complexity that we believe we compete against for
executive talent. The relevant sample includes companies in
high technology, telecommunications and Internet services
industries, as well as companies from other industries that
are headquartered in Europe and the United States. The
peer group is determined by the Personnel Committee and
reviewed for appropriateness 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 com-
pensation consultant from Mercer Human Resources to obtain
benchmark data and information on current market trends.
The consultant works directly for the Personnel Committee
and meets annually with the Personnel Committee, with-
out 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 compensa-
C O M P E N S A T I O N O F T H E B O A R D O F D I R E C T O R S A N D T H E N O K I A L E A D E R S H I P T E A M
107
tion levels in preparation for meeting with the Committee. The
Committee has reviewed and established that the consult-
ant of Mercer Human Resources that works for the Personnel
Committee is independent of Nokia and does not have any
other business relationships with Nokia.
The Personnel Committee reviews the executive offi cers’
compensation on an annual basis, and from time to time dur-
ing 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 compensa-
tion level of the President and CEO. All compensation for the
President and CEO, including long-term equity incentives, is
approved by the Board and is confi rmed 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 Nokia Leadership Team (other than the
President and CEO of Nokia) and other executive level direct
reports to the President and CEO, including long-term equity
incentives and goals and objectives relevant to compensa-
tion. The Personnel Committee also reviews the results of the
evaluation of the performance of the Nokia Leadership Team
members (excluding the President and CEO) and other execu-
tive level 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 compensa-
tion of Nokia’s executive offi cers or recommending the com-
pensation of the President and CEO to the Board:
■ 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 offi cer
during the last year, which is evaluated at the end of the
year against individual goals that are aligned to Nokia-level
fi nancial and strategic goals and against the executive
offi cer’s overall leadership capabilities;
■ the size and impact of the particular offi cer’s role on Nokia’s
overall performance and strategic direction;
■ the internal comparison to the compensation levels of the
other executive offi cers of Nokia;
■ past experience and tenure in role; and
■ the potential and expected future contributions of the
executive.
The above factors are assessed by the Personnel
Committee in totality.
In , Nokia’s management performed an internal risk
assessment of Nokia’s compensation policies and practices
for all its employees specifi cally to understand any potential
risk factors that would be associated with the changes made
to Nokia’s compensation programs in in alignment to our
strategy. Management assessed such factors as Nokia’s pro-
portion of fi xed compensation in relation to variable compen-
sation, the caps on incentive compensation that can be earned
under our plans, performance metrics tied to the incentive
programs and the time horizon over which variable compen-
sation may be earned, as well as Nokia’s share ownership,
severance and recoupment policies and our overall governance
structure and practices. Based on the assessment, manage-
ment concluded that there are no material risks arising from
Nokia’s compensation programs, policies and practices or the
changes implemented that are likely to have a material adverse
eff ect on Nokia. The fi ndings of the analysis were reported to
the Personnel Committee. A similar assessment was not con-
ducted in , as the assessment considered changes in
our programs that were being implemented in .
Components of executive compensation
Our compensation program for executive offi cers includes
annual cash compensation in the form of a base salary and
short-term cash incentives as well as long-term equity-based
incentive awards in the form of performance shares, stock op-
tions and restricted shares.
ANNUAL CASH COMPENSATION
Base salaries are targeted at globally competitive market
levels. The Personnel Committee evaluates and weighs as a
whole the appropriate salary levels based on both our US and
European peer companies.
Short-term cash incentives are an important element of
our variable pay programs and are tied directly to Nokia-level
fi nancial and strategic goals that are shared by the Nokia
Leadership Team. The short-term cash incentive opportunity
is expressed as a percentage of each executive offi cer’s annual
base salary. These award opportunities and measurement
criteria are presented in the table below.
Short-term incentives are determined for the Nokia
Leadership Team based on their performance as a team.
Additionally, some members of the Nokia Leadership Team
have an objective on relative Total Shareholder Return (TSR).
The payment with respect to relative TSR is based on the
Personnel Committee’s assessment of Nokia’s total share-
holder return compared to key peer group companies that are
selected by the Personnel Committee in the high technology,
Internet services and telecommunications industries and rele-
vant market indices over one-, three- and fi ve-year periods.
The specifi c goals and underlying targets require the
Board’s approval with respect to the President and CEO and
the Personnel Committee’s approval with respect to the other
members of the Nokia Leadership Team.
The following table refl ects the measurement criteria that
were established for the President and CEO and members of
the Nokia Leadership Team for the year . The short-term
incentive payout is based on performance relative to targets
set for each measurement criteria listed in the table.
108
N O K I A I N 2 0 1 2
Short-term incentive as a % of annual base salary in
Position
President and CEO
Minimum
performance
Target
performance
Maximum
performance Measurement criteria
0%
100%
200%
Nokia Leadership Team
0%
75%
150%
Certain Nokia Leadership Team members
(in addition to above)
0%
25%
50%
Key fi nancial targets 1
(including gross profi t, OPEX
and net cash fl ow); and
Strategic objectives 1
(including targets for performance
of Nokia’s product and service
portfolio);
Total shareholder return 2
(comparison made with key
competitors in the high technology,
telecommunications and Internet
services industries over one-,
three- and fi ve-year periods)
One Nokia Leadership Team member’s incentive structure is also tied to
specific sales and gross margin targets in addition to the key financial
targets and strategic objectives.
Total Shareholder Return reflects the change in Nokia’s share price
during an established time period, including the amount of dividends
paid, divided by Nokia’s share price at the beginning of the period. The
calculation is conducted in the same manner for each company in the peer
group. Only certain members of the Nokia Leadership Team are eligible for
the additional Total Shareholder Return element. For Stephen Elop, Total
Shareholder Return was measured in the one-time special CEO incentive
program approved by the Board of Directors for the two-year period
– .
Annual incentive cash bonus under the Nokia short-term
cash incentive plan is paid once per year based on pre-deter-
mined Nokia performance criteria assessed as of December
, . To determine the pay-out under the Nokia short-
term cash incentive plan, the Personnel Committee approved
incentive goals are evaluated against pre-defi ned achievement
criteria. The resulting scores are then calculated against each
executive individual incentive target to ascertain an individual
pay-out percent. The executive’s annual base salary is then
multiplied by the pay-out percent to determine the pay-out
amount. The achievement scores and individual pay-out
percent and amount is presented to the Personnel Committee
for approval. In the event the achievement criteria is not met,
the actual short-term cash incentive awarded to the executive
offi cer can be zero. The maximum payout is only possible with
maximum performance on all measures.
For fi scal year , the incentive criteria were not achieved
and as a result there was no pay-out under the short-term
cash incentive plan.
For more information on the actual cash compensation paid
in to our executive offi cers, see “Summary compensation
table ” on page .
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 offi cers’ interests with shareholders’
interests, reward for long-term fi nancial performance and en-
courage retention, while also considering evolving regulatory
requirements and recommendations and changing economic
conditions. These awards are determined on the basis of the
factors discussed above in “Executive Compensation Phi-
losophy, Programs and Decision-making Process,” including a
comparison of an executive offi cer’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 fi nancial results and
an increase in share price. Performance shares vest as shares
if at least one of the pre-determined threshold performance
levels, tied to Nokia’s fi nancial performance, is achieved by the
end of the performance period. The value that the executive
receives is dependent on Nokia’s share price. Stock options are
granted with the purpose of creating value for the executive
offi cer, once vested, only if the Nokia share price at the time
of vesting is higher than the exercise price of the stock option
established at grant. This is also intended to focus executives
on share price appreciation, thus aligning the interests of the
executives with those of the shareholders. Restricted shares
are used primarily for long-term retention purposes and they
vest fully after the close of a pre-determined restriction
period. Any shares granted are subject to the share ownership
guidelines as explained below. All of these equity-based incen-
tive awards are generally forfeited if the executive leaves Nokia
prior to their vesting.
Recoupment of certain equity gains
The Board of Directors has approved a policy allowing for the
recoupment of equity gains realized by Nokia Leadership Team
members under Nokia equity plans in case of a fi nancial re-
statement caused by an act of fraud or intentional misconduct.
This policy applies to equity grants made to Nokia Leadership
Team members after January , .
Information on the actual equity-based incentives granted
to the members of our Nokia Leadership Team in is
included in “Stock option ownership of the Nokia Leadership
Team” on page and “Performance shares and restricted
shares of the Nokia Leadership Team” on page .
C O M P E N S A T I O N O F T H E B O A R D O F D I R E C T O R S A N D T H E N O K I A L E A D E R S H I P T E A M
109
Actual Executive Compensation for 2012
■ His equity grants were reduced to a level below the competi-
SERVICE CONTRACTS
Stephen Elop’s service contract covers his position as Presi-
dent and CEO as from September , . As at December ,
, Mr. Elop’s annual base salary, which is subject to an an-
nual review by the Board of Directors and confi rmation by the
independent members of the Board, is EUR . His in-
centive target under the Nokia short-term cash incentive plan
is % of annual base salary as at December , . In addi-
tion, Mr. Elop had a separate plan for – , approved by
the Board of Directors. Description and outcome of this plan is
below. Mr. Elop is entitled to the customary benefi ts in line with
our policies applicable to the top management, however, some
of them are being provided on a tax-assisted basis. Mr. Elop is
also eligible to participate in Nokia’s long-term equity-based
compensation programs according to Nokia policies and guide-
lines and as determined by the Board of Directors.
In case of termination by Nokia for reasons other than
cause, Mr. Elop is entitled to a severance payment of up to
months of compensation (both annual base salary and tar-
get incentive) and his equity will be forfeited as determined
in the applicable equity plan rules, with the exception of the
equity out of the Nokia Equity Program , which will vest
in an accelerated manner (the performance period of Nokia
Performance Share Plan ended in and no shares
were delivered in accordance with its terms). In case of ter-
mination by Mr. Elop, the notice period is six months and he
is entitled to a payment for such notice period (both annual
base salary and target incentive for six months) and all his
equity will be forfeited. In the event of a change of control of
Nokia, Mr. Elop may terminate his employment upon a material
reduction of his duties and responsibilities, upon which he will
be entitled to a compensation of months (both annual base
salary and target incentive), and his unvested equity will vest
in an accelerated manner. In case of termination by Nokia for
cause, Mr. Elop is entitled to no additional compensation and
all his equity will be forfeited. In case of termination by Mr. Elop
for cause, he is entitled to a severance payment equivalent
to months of notice (both annual base salary and target
incentive), and his unvested equity will vest in an accelerated
manner. Mr. Elop is subject to a -month non-competition
obligation after termination of the contract. Unless the con-
tract is terminated by Nokia for cause, Mr. Elop may be entitled
to compensation during the non-competition period or a part
of it. Such compensation amounts to the annual base salary
and target incentive for the respective period during which no
severance payment is paid.
The Board of Directors decided in March that in order
to align Mr. Elop’s compensation to increased shareholder
value and to link a meaningful portion of his compensation
directly to the performance of Nokia’s share price over the
period of – , his compensation structure for
and would be modifi ed. To participate in this program,
Mr. Elop invested a portion of his short-term cash incentive
opportunity and a portion of the value of his expected annual
equity grants into the program as follows:
■ His target short-term cash incentive level was reduced from
% to % and
tive market value.
In consideration, Mr. Elop had the opportunity to earn
a number of Nokia shares at the end of based on two
independent criteria, with half of the opportunity tied to each
criterion:
Total Shareholder Return (TSR) relative to a peer group of
companies over the two-year period from December ,
until December , : Minimum payout would re-
quire performance at the th percentile of the peer group
and the maximum payout would occur if the rank is among
the top three of the peer group. The peer group consists of
a number of relevant companies in the high technology/mo-
bility, telecommunications and Internet services industries.
Nokia’s absolute share price at the end of : Minimum
payout if the Nokia share price was EUR , with maximum
payout if the Nokia share price was EUR .
Nokia share price under both criteria was calculated as a -
day trade volume weighted average share price on the NASDAQ
OMX Helsinki. If the minimum level for one of the criterion had
been met, a total of Nokia ordinary shares would have
been delivered to Mr. Elop. At maximum level for both criteria,
a total of Nokia ordinary shares would have been de-
livered to him. Shares earned under this plan during –
would have been subject to an additional one-year vesting
period until the fi rst quarter , at which point the earned
and vested shares would have been delivered to Mr. Elop.
Based on the results, as of December , , no share de-
livery will take place as the minimum performance for neither
of the two performance criteria was reached. The number of
shares earned and to be settled may be adjusted by the Board
of Directors under certain exceptional circumstances up until
June , should the results signifi cantly change.
For information about the compensation and benefi ts
received by Mr. Elop during , see “Summary compensation
table ” on page and “Equity grants in ” on page
.
PENSION ARRANGEMENTS FOR THE MEMBERS
OF THE NOKIA LEADERSHIP TEAM
The members of the Nokia Leadership Team participate in
the local retirement programs applicable to employees in the
country where they reside. Executives in Finland, including
Mr. Elop, participate in the Finnish TyEL pension system, which
provides for a retirement benefi t based on years of service and
earnings according to prescribed statutory rules. Under the
Finnish TyEL pension system, base pay, incentives and other
taxable fringe benefi ts are included in the defi nition of earn-
ings, although gains realized from equity are not. The Finnish
TyEL pension scheme provides for early retirement benefi ts at
age with a reduction in the amount of retirement benefi ts.
Standard retirement benefi ts are available from age to ,
according to an increasing scale. The Nokia Leadership Team
members in the United States participate in Nokia’s US Retire-
ment Savings and Investment Plan. Under this (k) plan,
participants elect to make voluntary pre-tax contributions
that are % matched by Nokia up to % of eligible earnings.
110
N O K I A I N 2 0 1 2
Long-term equity-based incentives granted in
Nokia
Leadership
Team 3,4
Total
number of
Total participants
Performance shares
at threshold 2
1 131 000
5 785 875
Stock options
2 262 000 10 258 400
Restricted shares
1 606 000 12 999 131
3 560
180
3 690
The equity-based incentive grants are generally forfeited if the employ-
ment 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 description of our equity plans, see Note
to our consolidated financial statements.
For performance shares granted under Nokia Performance Share Plans,
at maximum performance, the settlement amounts to four times the
number at threshold.
Includes Jerri DeVard, Colin Giles, Mary T. McDowell and Niklas Savander
for the period until June , , Esko Aho until August , and
Marko Ahtisaari as from February , , Juha Putkiranta, Timo Toikkanen
and Chris Weber as from July , .
For the Nokia Leadership Team members whose employment terminated
during , the long-term equity-based incentives were forfeited follow-
ing termination of employment in accordance with plan rules.
% of the employer’s match vests for the participants during
each year of the fi rst four years of their employment. The
Nokia Leadership Team members in Germany participate in
the Nokia German Pension Plan that is % company funded.
Contributions are based on pensionable earnings, the pen-
sion table and retirement age. For the Nokia Leadership Team
members in UK, the pension accrued in the UK Pension Scheme
is a Money Purchase benefi t. Contributions are paid into the
UK Pension Scheme by both the member and employer. These
contributions are held within the UK Pension Scheme and are
invested in funds selected by the member.
ACTUAL COMPENSATION FOR THE MEMBERS
OF THE NOKIA LEADERSHIP TEAM IN 2012
At December , , Nokia had a Nokia Leadership Team con-
sisting of members. Changes in the composition in the Nokia
Leadership Team during are explained above in “Nokia
Leadership Team” on page .
The following tables summarize the aggregate cash com-
pensation paid and the long-term equity-based incentives
granted to the members of the Nokia Leadership Team under
our equity plans in .
Gains realized upon exercise of stock options and share-
based incentive grants vested for the members of the Nokia
Leadership Team during are included in “Stock option
exercises and settlement of shares” on page .
Aggregate cash compensation to the Nokia Leadership
Team for
Number of
members on
December 31,
2012
Base
salaries
EUR
Cash
incentive
payments 2
EUR
12
6 788 567
515 702
Year
2012
Includes base salary and cash incentives paid or payable by Nokia for the
fiscal year. The cash incentives are paid as a percentage of annual
base salary based on Nokia’s short-term cash incentives. Includes Jerri
DeVard, Colin Giles, Mary T. McDowell and Niklas Savander for the period
until June , , Esko Aho until August , and Marko Ahtisaari as
from February , , Juha Putkiranta, Timo Toikkanen and Chris Weber
as from July , .
The amount consists of the annual incentive cash bonus and other bo-
nuses earned and paid or payable by Nokia. For fiscal year , the annual
incentive bonus plan under the Nokia short-term cash incentive plan did
not achieve established criteria; as a result, there was no payout under
that plan. The amount includes the discretionary spot bonus awarded to
certain Nokia Leadership Team members in recognition of their specific
contributions toward the progress made on our strategy as we headed
into . The amount does not include any gains realized upon exercise
of stock options, which are described in “Stock option exercises and set-
tlement of shares” on page .
C O M P E N S A T I O N O F T H E B O A R D O F D I R E C T O R S A N D T H E N O K I A L E A D E R S H I P T E A M
111
Summary compensation table
Year
Salary
EUR
Bonus 2
EUR
Stock
awards 3
EUR
Option
awards 3
EUR
Change in
pension value
and
nonqualifi ed
deferred
compensation
All other
earnings 4 compensation
EUR
EUR
1 079 500
2012
0
2011 1 020 000 473 070
2010
2 631 400
3 752 396
280 303 440 137 1 682 607
539 300
570 690
57 750
550 000 173 924
479 493
423 524 245 634 1 341 568
497 350
539 443
800 132
106 575
185 448
166 328
56 776
73 956
340 471
262 183
150 311
31 933
69 395 6
2 085 948
3 115 276
40 146 7
8 743
8 893
2012
2011
2010
2012
555 296
55 494
539 300
106 575
58 732 10
1 315 397
Total 5
EUR
4 334 421
7 944 813
6 658 926
1 576 644
1 547 919
2 217 880
2012
411 531
44 038
539 300
106 575
61 477 11
1 162 921
2012
466 653
46 321
407 730
81 708
22 761 9,12 1 025 173
2012
2011
2010
2012
2011
2010
539 300
659 335
0
559 177 202 294
479 493
559 637 314 782 1 233 368
647 160
570 690
0
550 000 134 809
479 493
441 943 247 086 1 233 368
106 575
185 448
142 567
127 890
185 448
142 567
265 566 9,13 1 570 777
1 675 929
249 517
2 321 740
71 386
25 553 15
21 905
23 634
1 621 558
1 474 828
2 088 598
250 265
103 173
Name and principal
position 1
Stephen Elop,
President and CEO
Timo Ihamuotila,
EVP, Chief Financial Offi cer
Jo Harlow,
EVP, Smart Devices 8
Michael Halbherr,
EVP, Location & Commerce
Louise Pentland,
EVP, Chief Legal Offi cer 8
Mary T. McDowell,
EVP, Mobile Phones
until June 30, 2012 8,14
Niklas Savander,
EVP, Markets until
June 30, 2012 14
The positions set forth in this table are the current positions of the
named executives. Ms. McDowell served as Executive Vice President,
Mobile Phones and Mr. Savander served as Executive Vice President,
Markets until June , .
The amount consists of the annual incentive cash bonus and/or other
bonuses earned and paid or payable by Nokia for the respective fiscal
year. For fiscal year , the annual incentive bonus plan under the Nokia
short-term cash incentive plan did not achieve established criteria; as a
result, there was no pay-out under that plan. The amount for year
represents a discretionary spot bonus awarded to certain Nokia Leader-
ship Team members in recognition of their specific contributions toward
the progress made on our strategy as we headed into .
Amounts shown represent the grant date fair value of equity grants
awarded for 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 the grant date. The estimated
fair value is based on the grant date market price of a Nokia share less the
present value of dividends, if any, expected to be paid during the vesting
period. The value of the performance shares is presented on the basis
of granted number of shares, which is two times the number of shares at
threshold. The value of the stock awards with performance shares valued
at maximum (four times the number of shares at threshold), for each
of the named executive officers, is as follows: Mr. Elop EUR ;
Mr. Ihamuotila EUR ; Ms. Harlow EUR ; Mr. Halbherr
EUR ; Ms. Pentland EUR ; Ms. McDowell EUR ; and
Mr. Savander EUR .
The change in pension value represents the proportionate change in the
liability related to the individual executives. These executives are covered
by the Finnish State employees’ pension 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 , , 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 valua-
tion 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.
The amounts shown in the total compensation column do not represent
the amount actually payable or paid for the respective fiscal years, as
they also include the theoretical pension value and the theoretical grant
date fair value of the stock awards and option awards, and not the actual
value received by the executive.
All other compensation for Mr. Elop in includes: EUR for hous-
ing; EUR for participation in a health assessment and leadership
performance program; EUR for home security; and EUR tax-
able benefit for premiums paid under supplemental medical and disability
insurance and for mobile phone and driver.
All other compensation for Mr. Ihamuotila in includes: EUR for
car allowance; EUR service year award; EUR for participation
in a health assessment and leadership performance program; EUR
for home security and EUR taxable benefit for premiums paid under
supplemental medical and disability insurance and for mobile phone and
driver.
Salaries, benefits and perquisites for Ms. Harlow, Ms. Pentland and
Ms. McDowell were paid and denominated in GBP and USD. Amounts were
converted using year-end USD/EUR exchange rate of . and GBP/
EUR rate of .. For year disclosure, amounts were converted using
year-end USD/EUR and GBP/EUR exchange rate of . and .,
respectively. For year disclosure, amounts were converted using
year-end USD/EUR exchange rate of ..
Ms. McDowell and Ms. Pentland participated in Nokia’s U.S Retirement
Savings and Investment Plan. Under this (k) plan, participants elect to
make voluntary pre-tax contributions that are % matched by Nokia
up to % of eligible earnings. % of the employer’s match vests for the
participants during each of the first four years 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 % of their salary and %
of their short-term cash incentive. Contributions to the Restoration
and Deferral Plan are matched % up to % of eligible earnings, less
contributions made to the (k) plan. The Company’s contributions to
the plan are included under “All Other Compensation Column” and noted
hereafter.
All other compensation for Ms. Harlow in includes: EUR com-
pany contributions to the UK Pension Plan; EUR for car and fuel and
EUR for health insurance and home security.
All other compensation for Mr. Halbherr in includes: EUR
company contributions to the German Pension Plan and EUR for car,
fuel, account maintenance and health insurance.
All other compensation for Ms. Pentland in includes: EUR for
participation in a health assessment and leadership performance pro-
gram; EUR company contributions to the (k) Plan and EUR
provided under Nokia’s international assignment policy in the UK.
All other compensation for Ms. McDowell in includes: EUR
provided under Nokia’s international assignment policy in the UK; EUR
for car allowance; EUR for accrued and unused holiday and
payment provided under Nokia’s international assignment policy in the UK
and EUR company contributions to the (k) and Executive Salary
Deferral Plan.
Ms. McDowell’s and Mr. Savander’s equity grants were forfeited and can-
celled upon their respective terminations of employment in accordance
with plan rules.
All other compensation for Mr. Savander in includes: EUR for
car allowance; EUR for home security and EUR taxable benefit
for premiums paid under supplemental medical and disability insurance
and for mobile phone and driver.
112
N O K I A I N 2 0 1 2
Equity grants in
Name and principal
position
Stephen Elop,
President and CEO
Timo Ihamuotila, EVP,
Chief Financial Offi cer
Jo Harlow, EVP,
Smart Devices
Michael Halbherr, EVP,
Location & Commerce
Louise Pentland, EVP,
Chief Legal Offi cer
Mary T. McDowell, EVP,
Mobile Phones,
until June 30, 2012 4
Niklas Savander, EVP,
Markets,
until June 30, 2012 4
Option awards
Number of
shares
underlying
options
Grant
price
EUR
Grant
date
fair value 2
EUR
Performance
shares at
threshold
(number)
700 000
2.44
497 350
Stock awards
Performance
shares at Restricted
shares
maximum
(number)
(number)
Grant
date
fair value 3
EUR
150 000
2.44
106 575
150 000
2.44
106 575
150 000
2.44
106 575
115 000
2.44
81 708
150 000
2.44
106 575
180 000
2.44
127 890
350 000
1 400 000
500 000 2 631 400
75 000
300 000
75 000
300 000
75 000
300 000
57 500
230 000
100 000 539 300
100 000
539 300
100 000
539 300
75 000
407 730
75 000
300 000
100 000
539 300
90 000
360 000
120 000
647 160
Year
Grant
date
2012
May 11
June 30
March 31
2012
May 11
June 30
March 31
2012
May 11
June 30
March 31
2012
May 11
June 30
March 31
2012
May 11
June 30
March 31
2012
May 11
June 30
March 31
2012
May 11
June 30
March 31
Including all equity awards made during . Awards were made under
the Nokia Stock Option Plan , the Nokia Performance Share Plan
and the Nokia Restricted Share Plan .
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 . on May , . NASDAQ OMX Helsinki closing
market price was EUR . at grant date on May , .
For information with respect to the Nokia shares and equity
awards held by the members of the Nokia Leadership Team
as at December , , please see “Share ownership of the
Nokia Leadership Team” on page .
EQUITY-BASED INCENTIVE PROGRAMS
General
During the year ended December , , we administered
two global stock option plans, four global performance share
plans and four global restricted share plans. Both executives
and employees participate in these plans. Our compensation
programs promote long-term value creation and sustainability
of the company and ensure that remuneration is based on per-
formance. Performance shares have been the main element of
the company’s broad-based equity compensation program for
several years to further emphasize the performance element
in employees’ long-term incentives.
The primary equity instruments for the executive employ-
ees are performance shares and stock options. Restricted
shares are also used for executives for retention purposes.
The portfolio approach is designed to build an optimal and bal-
anced combination of long-term equity-based incentives and
to help focus recipients on long term fi nancial performance
as well as on share price appreciation, thus aligning recipients’
interests with those of shareholders. For directors below the
executive level the primary equity instruments are perfor-
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, if any, 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.
Ms. McDowell’s and Mr. Savander’s equity grants were forfeited and can-
celled upon their respective terminations of employment in accordance
with plan rules.
mance shares and restricted shares. Below the director level,
performance shares and restricted shares are used on a selec-
tive basis to ensure retention and recruitment of individuals
with functional mastery and other employees deemed critical
to Nokia’s future success.
The equity-based incentive grants are generally conditioned
upon continued employment with Nokia, as well as the fulfi ll-
ment of performance and other conditions, as determined in
the relevant plan rules.
The participant group for the equity-based incentive
program continued to include employees from many levels
of the organization. As at December , , the aggregate
number of participants in all of our active equity-based pro-
grams was approximately compared with approximately
as at December , refl ecting changes in our grant
guidelines and reduction in eligible population.
Stock option, performance share and restricted share
grants to the President and CEO are made upon recom-
mendation by the Personnel Committee and approved by
the Board of Directors and confi rmed by the independent
directors of the Board. Stock option, performance share and
restricted share grants to the other Nokia Leadership Team
members and other direct reports of the President and CEO
are approved by the Personnel Committee. Stock option,
performance share and restricted share grants to other
eligible employees are approved by the President and CEO on a
quarterly basis, based on an authorization given by the Board
of Directors.
C O M P E N S A T I O N O F T H E B O A R D O F D I R E C T O R S A N D T H E N O K I A L E A D E R S H I P T E A M
113
For a more detailed description of all of our equity-based
incentive plans, see Note to Nokia’s consolidated fi nancial
statements.
Performance shares
During , we administered four global performance share
plans, the Performance Share Plans of , , and
, each of which, including its terms and conditions, has
been approved by the Board of Directors.
The performance shares represent a commitment by Nokia
Corporation to deliver Nokia shares to employees at a future
point in time, subject to Nokia’s fulfi llment of pre-defi ned
performance criteria. No Nokia shares will be delivered unless
the Group’s performance reaches at least one of the threshold
levels measured by two independent, pre-defi ned performance
criteria. The below table illustrates the performance criteria of
the Performance Share Plans from through .
Performance criteria
2012 2011 2010 2009
Performance share plan
Average annual net sales
growth (Nokia Group)
EPS at the end of
performance period
(Nokia Group)
Average annual net sales
(Nokia Group excluding NSN)
Average annual EPS
(Nokia Group)
—
yes
yes
yes
—
—
yes
yes
yes
—
—
—
yes
yes
—
—
The , , and plans have a three-year perfor-
mance period. The shares vest after the respective perfor-
mance period. The plan has a two-year performance
period and a subsequent one-year restriction period, after
which the shares vest. 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.
Plan
2009 1
2010 1
2011
2012
Performance
period
Settlement
2009–2011
2010–2012
2011–2013
2012–2013 2
2012
2013
2014
2015
No Nokia shares were delivered under the Nokia Performance Share Plans
and as Nokia’s performance did not reach the threshold level of
either performance criteria under both plans.
Nokia Performance Share Plan has a one-year restriction period after
the two-year performance period.
Until the shares are delivered, the participants will not have
any shareholder rights, such as voting or dividend rights, as-
sociated with the performance shares. The performance share
grants are generally forfeited if the employment relationship
terminates with Nokia prior to vesting.
Similar to the previous , and plans, there was
no payout from the Performance Share Plan.
Stock options
During we administered two global stock option plans,
the Stock Option Plans and , each of which, includ-
ing its terms and conditions, has been approved by the Annual
General Meeting in the year when the plan was launched.
Each stock option entitles the holder to subscribe for one
new Nokia share. The stock options are non-transferable
and may be exercised for shares only. All of the stock options
granted under the Stock Option Plan have a vesting
schedule with % of the options vesting one year after grant
and .% each quarter thereafter. The stock options granted
under the plan have a term of approximately fi ve years.
The stock options granted under the Stock Option Plan
have a vesting schedule with % of stock options vesting
three years after grant and the remaining % vesting four
years from grant. The stock options granted under the
plan have a term of approximately six years. For information
on stock option exercise prices, exercise periods and expiry
dates, see Note to our consolidated fi nancial statements.
The exercise price of the stock options is determined at
the time of grant, on a quarterly basis, in accordance with
a pre-agreed schedule after the release of Nokia’s periodic
fi nancial results. The exercise prices are based on the trade
volume weighted average price of a Nokia share on NASDAQ
OMX Helsinki during the trading days of the fi rst whole week
of the second month of the respective calendar quarter (i.e.,
February, May, August or November). With respect to the
Stock Option Plan, should an ex-dividend date take place dur-
ing that week, the exercise price shall be determined based on
the following week’s trade volume weighted average price of
the Nokia share on NASDAQ OMX Helsinki. Exercise prices are
determined on a one-week weighted average to mitigate any
day-specifi c fl uctuations in Nokia’s share price. The determi-
nation of exercise price is defi ned in the terms and conditions
of the stock option plans, which were approved by the share-
holders at the Annual General Meetings and . The
Board of Directors does not have the right to change how the
exercise price is determined.
Shares will be eligible for dividend for the fi nancial year in
which the share subscription takes place. Other shareholder
rights will commence on the date on which the subscribed
shares are entered in the Trade Register. The stock option
grants are generally forfeited if the employment relationship
terminates with Nokia.
Restricted shares
During , we administered four global restricted share
plans, the Restricted Share Plans , , and ,
each of which, including its terms and conditions, has been
approved by the Board of Directors.
Restricted shares are used on a selective basis to ensure
retention and recruitment of individuals with functional mas-
tery and other employees deemed critical to Nokia’s future
success.
All of our restricted share plans have a restriction period of
three years after grant. Until the shares are delivered, the par-
ticipants will not have any shareholder rights, such as voting
or dividend rights, associated with the restricted shares. The
restricted share grants are generally forfeited if the employ-
ment relationship terminates with Nokia prior to vesting.
114
N O K I A I N 2 0 1 2
Nokia equity-based incentive program 2013
On January , , the Board of Directors approved the scope
and design of the Nokia Equity Program . The Equity Pro-
gram mirrors the Program in terms of performance
shares, stock options and restricted shares. In addition to these
instruments, the Board of Directors approved also the imple-
mentation of a new Employee Share Purchase Plan. Similarly to
the earlier broad-based equity incentive programs, the Equity
Program is designed to support the participants’ focus
and alignment with the company’s strategy and targets.
Nokia’s use of the performance-based plan in conjunction
with the restricted share plan as the main long-term incentive
vehicles is planned to eff ectively contribute to the long-term
value creation and sustainability of the company and to align
the interests of the employees with those of the sharehold-
ers. It is also designed to ensure that the overall equity-based
compensation is based on performance, while also ensuring
the recruitment and retention of talent vital to the future suc-
cess of Nokia. In addition, the new Employee Share Purchase
Plan is introduced to encourage employee share ownership,
commitment and engagement.
The primary equity instruments for the executive employ-
ees are performance shares and stock options. Restricted
shares are also used for executives for retention purposes.
For directors below the executive level, the primary equity
instruments are performance shares and restricted shares.
Below the director level, performance shares and restricted
shares are used on a selective basis to ensure retention and
recruitment of individuals with functional mastery and other
employees deemed critical to Nokia’s future success. These
equity-based incentive awards are generally forfeited if the
employee leaves Nokia prior to vesting.
The Employee Share Purchase Plan will be off ered to all
employees in selected jurisdictions (excluding Nokia Siemens
Networks’ employees), to the extent there are no local regula-
tory or administrative obstacles for the off er. The participa-
tion in the plan will be voluntary to eligible employees.
PERFORMANCE SHARES
The Performance Share Plan approved by the Board of
Directors has a performance period of two years ( – )
and a subsequent one-year restriction period. Therefore, the
amount of shares based on the fi nancial performance during
– will vest after . No Nokia shares will be deliv-
ered unless Nokia’s performance reaches at least one of the
threshold levels measured by two independent, pre-defi ned
performance criteria:
Average Annual Net Sales (non-IFRS): EUR million
(threshold) and EUR million (maximum) during the
performance period – , and
Average Annual EPS (diluted, non-IFRS): EUR . (threshold)
and . (maximum) during the performance period
– .
Average Annual Net Sales is calculated as an average of the
non-IFRS net sales for Nokia Group, excluding Nokia Siemens
Networks B.V. and its subsidiaries, for the years and .
Average Annual EPS is calculated as an average of the diluted,
non-IFRS earnings per share for the years and
for Nokia Group. Both the Average Annual Net Sales and the
Average Annual EPS criteria are equally weighted and perfor-
mance under each of the two performance criteria is calcu-
lated independent of each other.
We believe the performance criteria set above are challeng-
ing, yet realistic and within reach. The awards at the threshold
are signifi cantly reduced from grant level and achievement of
maximum award would serve as an indication that Nokia’s per-
formance signifi cantly exceeded current market expectations
of our long-term execution.
Achievement of the maximum performance for both criteria
would result in the vesting of a maximum of million Nokia
shares. Performance exceeding the maximum criteria does
not increase the number of performance shares that will vest.
Achievement of the threshold performance for both criteria
will result in the vesting of approximately million shares. If
only one of the threshold levels of performance is achieved,
only approximately million of the performance shares will
vest. If none of the threshold levels is achieved, then no Nokia
shares will be delivered. If the required performance level
is achieved, the vesting will occur after . Until the Nokia
shares are delivered, the participants will not have any share-
holder rights, such as voting or dividend rights associated with
these performance shares.
STOCK OPTIONS
The stock options to be granted in are out of the Stock
Option Plan approved by the Annual General Meeting in
. For more information about the Stock Option Plan
see “Stock Options” on page .
RESTRICTED SHARES
Restricted shares under the Restricted Share Plan ap-
proved by the Board of Directors are used as described above
on a selective basis to ensure retention and recruitment of
individuals with functional mastery and other employees
deemed critical to Nokia’s future success. The restricted
shares under the Restricted Share Plan have a three-
year restriction period. The restricted shares will vest and
the resulting Nokia shares will be delivered in and early
, dependent on the fulfi llment of the criteria of continued
employment during the restriction period. Until the shares
are delivered, the participants will not have any shareholder
rights, such as voting or dividend rights associated with these
restricted shares.
EMPLOYEE SHARE PURCHASE PLAN
Under the Employee Share Purchase Plan, eligible Nokia
employees can elect to make monthly contributions from
their salary to purchase Nokia shares. The contribution per
employee cannot exceed EUR per year. The share pur-
chases will be made at market value on pre-determined dates
on a monthly basis during a -month savings period. Nokia will
off er one matching share for every two purchased shares the
employee still holds after the last monthly purchase has been
made in June . In addition, free shares will be delivered
to employees who make the fi rst three consecutive monthly
share purchases. The participation in the plan is voluntary to
the employees.
C O M P E N S A T I O N O F T H E B O A R D O F D I R E C T O R S A N D T H E N O K I A L E A D E R S H I P T E A M
115
based compensation programs for employees and executives,
see “Equity-based incentive programs” on page .
Share ownership of the Board of Directors
At December , , the members of our Board of Directors
held the aggregate of shares and ADSs in Nokia, which
represented .% of our 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 the members of the Board of Directors as at
December , .
Name 1
Risto Siilasmaa
Marjorie Scardino
Bruce Brown
Stephen Elop
Shares 2
732 592
—
—
—
ADSs 2
—
67 362
42 850
425 000
Henning Kagermann
187 977
Jouko Karvinen
Helge Lund
Isabel Marey-Semper
Mårten Mickos
Elizabeth Nelson
Kari Stadigh
34 279
46 596
43 734
88 350
56 554
400 000
—
—
—
—
—
—
—
Bengt Holmström did not stand for re-election in the Annual General
Meeting held on May , and he held shares at that time. Per
Karlsson did not stand for re-election in the Annual General Meeting
held on May , and he held shares at that time. Per Karlsson’s
holdings included both shares held personally and shares held through a
company. Jorma Ollila did not stand for re-election in the Annual General
Meeting held on May , and he held shares at that time.
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. Stock options or other equity awards that are deemed as being
beneficially owned under the applicable SEC rules are not included. For
the number of shares or ADSs received as director compensation, see
Note to our consolidated financial statements.
Share ownership of the Nokia Leadership Team
The following table sets forth the share ownership, as well as
potential ownership interest through the holding of equity-
based incentives, of the members of the Nokia Leadership
Team as at December , .
MAXIMUM PLANNED GRANTS UNDER THE NOKIA
EQUITY-BASED INCENTIVE PROGRAM 2013 IN
YEAR 2013
The approximate maximum numbers of planned grants under
the Nokia Equity Program (i.e. performance shares, stock
options, restricted shares as well as matching share awards
under the Employee Share Purchase Plan) in are set forth
in the table below.
Planned maximum number of
shares available for grants
under the equity program 2013
Plan type
Stock options
Restricted shares
Performance shares at maximum 1
Employee share purchase plan 2
11 million
16 million
32 million
3.15 million
The number of Nokia shares to be delivered at threshold performance is a
quarter of maximum performance, i.e., a total of million Nokia shares.
The total maximum amount of employee contributions during the plan
cycle commencing in will be approximately EUR million, which
equals approximately . million Nokia shares using the January ,
closing share price of EUR .. Based on the matching ratio of one match-
ing share for every two purchased shares, the number of matching shares
would be . million. In addition, free shares will be delivered to em-
ployees who make the first three consecutive monthly share purchases.
As at December , , the total dilutive eff ect of all
Nokia’s stock options, performance shares and restricted
shares outstanding, assuming full dilution, was approximately
.% in the aggregate. The potential maximum eff ect of
the proposed Equity Program would be approximately
another .%.
SHARE OWNERSHIP
General
The following section describes the ownership or potential
ownership interest in the company of the members of our
Board of Directors and the Nokia Leadership Team as at
December , , either through share ownership or, with
respect to the Nokia Leadership Team, through holding of
equity-based incentives, which may lead to share ownership in
the future.
With respect to the Board of Directors, approximately %
of director compensation is paid in the form of Nokia shares
that are purchased from the market. It is also Nokia’s policy
that the Board members retain all Nokia shares received as di-
rector compensation until the end of their board membership
(except for those shares needed to off set any costs relating
to the acquisition of the shares, including taxes). In addition, it
is Nokia’s policy that non-executive members of the Board do
not participate in any of Nokia’s equity programs and do not
receive stock options, performance shares, restricted shares
or any other equity based or otherwise variable compensation
for their duties as Board members.
For a description of our remuneration for our Board of
Directors, see “Remuneration of the Board of Directors in
” on page .
The Nokia Leadership Team members receive equity-based
compensation in the form of performance shares, stock op-
tions and restricted shares. For a description of our equity-
116
N O K I A I N 2 0 1 2
Shares
receivable
through
stock
options
Shares
receivable
through
performance
shares at
threshold 4
Shares
receivable
through
performance
shares at
maximum 5
Shares
receivable
through
restricted
shares
Shares
Number of equity instruments held by
Nokia Leadership Team 1
983 866
5 686 250
1 379 750 6
5 519 000 6
2 772 500
% of the outstanding shares 2
0.027
0.153
0.037
0.149
0.075
22.11
16.09
16.09
11.71
No Nokia shares were delivered under Nokia Performance Share Plan ,
which vested in , as Nokia’s performance did not reach the threshold
level of either performance criteria. Therefore the shares deliverable
at maximum equals zero for Nokia Performance Share Plan . At
maximum performance under the Performance Share Plans and
, the number of shares deliverable equals four times the number of
performance shares at threshold.
No Nokia shares were delivered under the one-time special CEO incentive
program. Therefore the shares deliverable at threshold and maximum
equals zero for the incentive program.
% of the total outstanding
equity incentives
(per instrument) 3
Includes Nokia Leadership Team members at year end. Figures do not
include those former Nokia Leadership Team members who left during
.
The percentage is calculated in relation to the outstanding number of
shares and total voting rights of the company, excluding shares held by
Nokia Group.
The percentage is calculated in relation to the total outstanding equity
incentives per instrument.
No Nokia shares were delivered under Nokia Performance Share Plan ,
which vested in , as Nokia’s performance did not reach the threshold
level of either performance criteria. Therefore the shares deliverable at
threshold equals zero for the Performance Share Plan .
The following table sets forth the number of shares and
ADSs in Nokia held by members of the Nokia Leadership Team
as of December , .
Name 1
Shares 2
ADSs 2
Stephen Elop
— 425 000
Marko Ahtisaari
10 000
Michael Halbherr
205 451
Jo Harlow
Timo Ihamuotila
Louise Pentland
Juha Putkiranta
Henry Tirri
Timo Toikkanen
Chris Weber
Juha Äkräs
Kai Öistämö
14 219
74 825
31 444
36 031
11 931
4 821
4 043
21 761
119 340
—
—
25 000
—
—
—
—
—
—
—
—
Became Nokia
Leadership
Team member
(year)
2010
2012
2011
2011
2007
2011
2012
2011
2012
2012
2010
2005
Jerri DeVard left the Nokia Leadership Team on June , and did not
hold any shares at that time. Colin Giles left the Nokia Leadership Team on
June , and held shares at that time. Mary T. McDowell left
the Nokia Leadership Team on June , and held shares and
ADS’s at that time. Niklas Savander left the Nokia Leadership Team
on June , and held shares at that time. Esko Aho left the
Nokia Leadership Team on August , and held shares at that
time.
Stock options or other equity awards that are deemed as being benefi-
cially owned under applicable SEC rules are not included.
C O M P E N S A T I O N O F T H E B O A R D O F D I R E C T O R S A N D T H E N O K I A L E A D E R S H I P T E A M
117
Stock option ownership of the Nokia
Leadership Team
The following table provides certain information relating to
stock options held by members of the Nokia Leadership Team
as of December , . These stock options were issued
pursuant to Nokia Stock Option Plans and . For a
description of our stock option plans, please see Note to our
consolidated fi nancial statements.
Number of stock
options 1
Total intrinsic value of
stock options,
December 28, 2012
EUR 2
Name
Stephen Elop
Marko Ahtisaari
Michael Halbherr
Jo Harlow
Timo Ihamuotila
Louise Pentland
Juha Putkiranta
Stock
option
category
2010 4Q
2011 2Q
2011 3Q
2012 2Q
2010 2Q
2011 2Q
2011 3Q
2012 2Q
2007 2Q
2008 2Q
2009 2Q
2010 2Q
2011 2Q
2011 3Q
2012 2Q
2007 2Q
2008 2Q
2009 2Q
2010 2Q
2011 2Q
2011 3Q
2012 2Q
2007 2Q
2008 2Q
2009 2Q
2009 4Q
2010 2Q
2011 2Q
2011 3Q
2012 2Q
2007 2Q
2008 2Q
2009 2Q
2010 2Q
2011 2Q
2011 3Q
2012 2Q
2007 2Q
2008 2Q
2009 2Q
2010 2Q
2011 2Q
2012 2Q
2012 3Q
Expiration date
December 31, 2015
December 27, 2017
December 27, 2017
December 27, 2018
December 31, 2015
December 27, 2017
December 27, 2017
December 27, 2018
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015
December 27, 2017
December 27, 2017
December 27, 2018
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015
December 27, 2017
December 27, 2017
December 27, 2018
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2014
December 31, 2015
December 27, 2017
December 27, 2017
December 27, 2018
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015
December 27, 2017
December 27, 2017
December 27, 2018
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015
December 27, 2017
December 27, 2018
December 27, 2018
Exercise
price
per share
EUR
Exer-
cisable
Unexer-
cisable
Exer-
cisable 3
Unexer-
cisable
7.59
6.02
3.76
2.44
8.86
6.02
3.76
2.44
18.39
19.16
11.18
8.86
6.02
3.76
2.44
18.39
19.16
11.18
8.86
6.02
3.76
2.44
18.39
19.16
11.18
8.76
8.86
6.02
3.76
2.44
18.39
19.16
11.18
8.86
6.02
3.76
2.44
18.39
19.16
11.18
8.86
6.02
2.44
2.18
218 750
0
0
0
15 185
0
0
0
0
3750
5 683
3 655
0
0
0
0
3 500
4 462
14 060
0
0
0
0
20 000
28 433
13 750
39 375
0
0
0
0
4 000
9 750
16 875
0
0
0
0
10 000
16 250
14 060
0
0
0
281 250
250 000
500 000
700 000
11 815
30 000
100 000
115 000
0
0
1 317
2 845
15 000
255 000
150 000
0
0
1 038
10 940
70 000
200 000
150 000
0
0
6 567
6 250
30 625
70 000
200 000
150 000
0
0
2 250
13 125
45 000
150 000
115 000
0
0
3 750
10 940
27 000
50 000
53 500
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
343 000
0
0
0
56 350
0
0
0
0
0
0
73 500
0
0
0
0
0
0
73 500
0
0
0
0
0
0
0
73 500
0
0
0
0
0
0
56 350
0
0
0
0
0
24 500
40 125
118
N O K I A I N 2 0 1 2
Number of stock
options 1
Total intrinsic value of
stock options,
December 28, 2012
EUR 2
Exercise
price
per share
EUR
Exer-
cisable
Unexer-
cisable
Exer-
cisable 3
Unexer-
cisable
18.39
19.16
11.18
8.86
6.02
4.84
2.44
18.39
19.16
11.18
8.86
6.02
2,44
2.18
6.02
2.44
2.18
18.39
19.16
11.18
8.86
6.02
3.76
2.44
18.39
19.16
11.18
8.86
6.02
3.76
2.44
0
3 500
9 750
11 250
0
0
0
0
10 000
9 750
14 060
0
0
0
0
0
0
0
6 000
9 750
22 500
0
0
0
0
32 000
48 750
39 375
0
0
0
0
0
2 250
8 750
27 000
168 000 4
115 000
0
0
2 250
10 940
27 000
28 500
75 000
25 000
40 000
63 500
0
0
2 250
17 500
45 000
150 000
115 000
0
0
11 250
30 625
45 000
150 000
90 000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
56 350
0
0
0
0
0
13 965
56 250
0
19 600
47 625
0
0
0
0
0
0
56 350
0
0
0
0
0
0
44 100
658 223
5 028 027
1 035 065
5 490 746 20 230 256
The Personnel Committee approved a grant of Q stock
options to Mr. Tirri. Due to an administrative error, only stock
options were reflected in the documentation provided to Mr. Tirri and
reported in ‘Nokia in ’ publication. The administrative error was
corrected in .
During , the following executives stepped down from the Nokia
Leader ship Team: Jerri DeVard, Colin Giles, Mary T. McDowell, Niklas
Savander and Esko Aho. The information related to stock options held
for each former executive is as of the date of resignation from the Nokia
Leadership Team and is presented in the table below.
Name
Henry Tirri
Timo Toikkanen
Chris Weber
Juha Äkräs
Kai Öistämö
Stock
option
category
2007 2Q
2008 2Q
2009 2Q
2010 2Q
2011 2Q
2011 4Q
2012 2Q
2007 2Q
2008 2Q
2009 2Q
2010 2Q
2011 2Q
2012 2Q
2012 3Q
2011 2Q
2012 2Q
2012 3Q
2007 2Q
2008 2Q
2009 2Q
2010 2Q
2011 2Q
2011 3Q
2012 2Q
2007 2Q
2008 2Q
2009 2Q
2010 2Q
2011 2Q
2011 3Q
2012 2Q
Expiration date
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015
December 27, 2017
December 27, 2017
December 27, 2018
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015
December 27, 2017
December 27, 2018
December 27, 2018
December 27, 2017
December 27, 2018
December 27, 2018
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015
December 27, 2017
December 27, 2017
December 27, 2018
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015
December 27, 2017
December 27, 2017
December 27, 2018
Stock options held by the members of the
Nokia Leadership Team as at December 31, 2012
Total 5
All outstanding stock option plans
(global plans), Total
Number of stock options equals the number of underlying shares
represented by the option entitlement. Stock options granted under
and Stock Option Plans have different vesting schedules. The
Group’s global Stock Option Plan has a vesting schedule with a %
vesting one year after grant, and quarterly vesting thereafter, each of
the quarterly lots representing .% of the total grant. The grants vest
fully in four years. The Group’s global Stock Option Plan has a vesting
schedule with % of stock options vesting three years after grant and
the remaining % vesting four years from grant.
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 , of
EUR ..
For any gains realized upon exercise of stock options for the members of
the Nokia Leadership Team, see the table in “Stock option exercises and
settlement of shares” on page .
C O M P E N S A T I O N O F T H E B O A R D O F D I R E C T O R S A N D T H E N O K I A L E A D E R S H I P T E A M
119
Name
Jerri DeVard 6
as per June 30, 2012
Colin Giles 7
as per June 30, 2012
Mary T. McDowell 7
as per June 30, 2012
Niklas Savander 7
as per June 30, 2012
Number of stock
options 1
Total intrinsic value of
stock options,
December 28, 2012
EUR 8
Stock
option
category
Expiration date
Exercise
price
per share
EUR
Exer-
cisable
Unexer-
cisable
Exer-
cisable 3
Unexer-
cisable
2011 2Q
2011 3Q
December 27, 2017
December 27, 2017
2007 2Q
2008 2Q
2009 2Q
2010 2Q
2011 2Q
2011 3Q
2007 2Q
2008 2Q
2009 2Q
2010 2Q
2011 2Q
2011 3Q
2012 2Q
2007 2Q
2008 2Q
2009 2Q
2010 2Q
2011 2Q
2011 3Q
2012 2Q
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015
December 27, 2017
December 27, 2017
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015
December 27, 2017
December 27, 2017
December 27, 2018
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015
December 27, 2017
December 27, 2017
December 27, 2018
December 31, 2014
December 31, 2015
December 27, 2017
December 27, 2017
December 27, 2018
6.02
3.76
18.39
19.16
11.18
8.86
6.02
3.76
18.39
19.16
11.18
8.86
6.02
3.76
2.44
18.39
19.16
11.18
8.86
6.02
3.76
2.44
11.18
8.86
6.02
3.76
2.44
0
0
45 000
150 000
18 000
9 375
13 750
10 936
0
0
55 000
26 250
37 809
26 250
0
0
0
32 000
26 250
37 809
26 250
0
0
0
26 246
15 000
0
0
0
0
625
6 250
14 064
45 000
150 000
0
1 750
17 191
33 750
70 000
200 000
150 000
0
1 750
17 191
33 750
70 000
200 000
180 000
8 754
15 000
30 000
100 000
40 000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Esko Aho 7
as per August 31, 2012 2009 2Q
2010 2Q
2011 2Q
2011 3Q
2012 2Q
Ms. DeVard’s equity will be forfeited and cancelled upon termination of
employment in accordance with the plan rules.
Mr. Giles’, Ms. McDowell’s, Mr. Savander’s and Mr. Aho’s stock option
grants were forfeited and cancelled upon their respective terminations of
employment in accordance with the plan rules.
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 June , of EUR . in
respect of Ms. DeVard, Mr. Giles, Ms. McDowell and Mr. Savander and as at
August , of EUR . in respect of Mr. Aho.
Performance shares and restricted shares
of the Nokia Leadership Team
The following table provides certain information relating to
performance shares and restricted shares held by members
of the Nokia Leadership Team as at December , . These
entitlements were granted pursuant to our Performance Share
Plans , and and Restricted Share Plans ,
, and . For Stephen Elop the table also includes
the one-time special CEO incentive program. For a description
of our performance share and restricted share plans, please
see Note to the consolidated fi nancial statements.
120
N O K I A I N 2 0 1 2
Name
Stephen Elop
Marko Ahtisaari
Michael Halbherr
Jo Harlow
Timo Ihamuotila
Louise Pentland
Juha Putkiranta
Henry Tirri
Timo Toikkanen
Chris Weber
Juha Äkräs
Kai Öistämö
Plan
name 1
2010
2011
2011
2012
2010
2011
2012
2010
2011
2012
2010
2011
2012
2010
2011
2012
2010
2011
2012
2010
2011
2012
2010
2011
2012
2010
2011
2012
2011
2012
2010
2011
2012
2010
2011
2012
Performance shares
Restricted shares
Number of
Intrinsic
value
Number of
performance performance December 28,
2012 5
EUR
shares at
threshold 2 maximum 3
shares at
Plan
name 7
Number
restricted
shares
Intrinsic
value
of December 28,
2012 8
EUR
0
125 000
0 4
350 000
0
500 000
0 4
0
0
0 6
2010
2011
100 000
180 000
293 000
527 400
1 400 000
2 051 000
2012
500 000
1 465 000
0
15 000
57 500
0
35 000
75 000
0
35 000
75 000
0
35 000
75 000
0
22 500
57 500
0
13 500
51 750
0
22 500
57 500
0
13 500
51 750
12 500
51 750
0
22 500
57 500
0
22 500
45 000
0
60 000
230 000
0
140 000
300 000
0
140 000
300 000
0
140 000
300 000
0
90 000
230 000
0
54 000
207 000
0
90 000
230 000
0
54 000
207 000
50 000
207 000
0
90 000
230 000
0
90 000
180 000
0
0
336 950
0
0
439 500
0
0
439 500
0
0
439 500
0
0
336 950
0
0
303 255
0
0
336 950
0
0
303 255
0
303 255
0
0
336 950
0
0
263 700
2010
2011
2012
2009
2010
2011
2012
2009
2010
2011
2012
2009
2010
2011
2012
2010
2011
2012
2009
2010
2011
2012
2009
2010
2011
2012
2009
2010
2011
2012
2011
2012
2009
2010
2011
2012
2010
2011
2012
37 000
23 000
75 000
10 500
17 000
50 000
100 000
20 000
55 000
50 000
100 000
10 000
120 000
50 000
100 000
78 000
35 000
75 000
20 000
30 000
25 000
68 000
20 000
30 000
35 000
75 000
15 000
23 000
15 000
68 000
90 000
68 000
15 000
85 000
35 000
75 000
100 000
35 000
60 000
108 410
67 390
219 750
30 765
49 810
146 500
293 000
58 600
161 150
146 500
293 000
29 300
351 600
146 500
293 000
228 540
102 550
219 750
58 600
87 900
73 250
199 240
58 600
87 900
102 550
219 750
43 950
67 390
43 950
199 240
263 700
199 240
43 950
249 050
102 550
219 750
293 000
102 550
175 800
Performance shares and
restricted shares held by the
Nokia Leadership Team, Total 9
All outstanding performance
shares and restricted shares
(global plans), Total
1 379 750
5 519 000
5 890 765
2 772 500
8 123 425
8 574 085
34 296 340
30 634 233
23 680 532
69 383 959
The performance period for the plan is –, for the plan
– and for the plan – (with a subsequent one-year
restriction period), respectively.
The threshold number will vest as Nokia shares should the pre-deter-
mined threshold performance levels be met of both performance criteria.
No Nokia shares were delivered under the Performance Share Plan ,
which would have vested in , as Nokia’s performance did not reach
the threshold level of either performance criteria. Therefore the shares
deliverable at threshold equals zero for the Performance Share Plan .
The maximum number will vest as Nokia shares should the pre-deter-
mined maximum performance levels be met of both performance criteria.
The maximum number of performance shares equals four times the num-
ber at threshold. No Nokia shares were delivered under the Performance
Share Plan , as Nokia’s performance did not reach the threshold
level of either performance criteria. Therefore the shares deliverable at
maximum equals zero for the Performance Share Plan .
Represents the threshold and maximum number of shares under the one-
time special CEO incentive program. No Nokia shares were delivered under
C O M P E N S A T I O N O F T H E B O A R D O F D I R E C T O R S A N D T H E N O K I A L E A D E R S H I P T E A M
121
the incentive program, as Nokia’s performance did not reach the thresh-
old level of either performance criteria. Therefore the shares deliverable
at threshold and maximum equals zero.
For Performance Share Plans and the value of performance
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 is based on the closing market price of a Nokia share on NASDAQ
OMX Helsinki as at December , of EUR .. For the Performance
Share Plan no Nokia shares were delivered, as Nokia’s performance
did not reach the threshold level of either performance criteria.
The intrinsic value is zero, as no Nokia shares were delivered, as Nokia’s
performance did not reach the threshold level of either performance
criteria.
Under the Restricted Share Plans , , and , awards have
been granted quarterly. For the major part of the awards made under
these plans, the restriction period will end for the plan on January ,
; for the plan on January , ; for the plan on January ,
; and for the plan on July , .
The intrinsic value is based on the closing market price of a Nokia share on
NASDAQ OMX Helsinki as at December , of EUR ..
During , the following executives stepped down from the Nokia
Leader ship Team: Jerri DeVard, Colin Giles, Mary T. McDowell, Niklas
Savander and Esko Aho. The information related to performance shares
and restricted shares held by each of the former executives is as of the
date of resignation from the Nokia Leadership Team and is presented in
the table below.
Performance shares
Restricted shares
Name
Jerri DeVard 10
as per June 30, 2012
Colin Giles 11
as per June 30, 2012
Mary T. McDowell 11
as per June 30, 2012
Niklas Savander 11
as per June 30, 2012
Esko Aho 11
as per August 31, 2012
2010
2011
2010
2011
2010
2011
2010
2011
2012
Number of
Number of
performance performance
shares at
shares at
threshold 13 maximum 14
Plan
name 1
Intrinsic
value 12
EUR
Number
of
restricted
shares
Plan
name 5
Intrinsic
value 12
EUR
2011
22 500
90 000
12 500
22 500
50 000
90 000
30 000
35 000
120 000
140 000
30 000
35 000
120 000
140 000
15 000
15 000
20 000
60 000
60 000
80 000
0
0
90 400
0
0
0
0
0
0
0
0
2011
100 000
162 000
2009
2010
2011
2012
2010
2011
2012
2010
2011
2012
2010
2011
2012
20 000
55 000
35 000
60 000
115 000
50 000
100 000
115 000
50 000
120 000
32 400
89 100
56 700
97 200
186 300
81 000
162 000
186 300
81 000
194 400
58 000
23 000
30 000
131 080
51 980
67 800
Ms. DeVard’s equity will be forfeited and cancelled upon termination of
employment in accordance with the plan rules.
Mr. Giles’, Ms. McDowell’s, Mr. Savander’s and Mr. Aho’s performance and
restricted share grants were forfeited and cancelled upon their respective
terminations of employment in accordance with the plan rules.
The intrinsic value is based on the closing market price of a Nokia share
on NASDAQ OMX Helsinki as at June , of EUR . in respect of
Ms. DeVard, Mr. Giles, Ms. McDowell and Mr. Savander and as at August ,
of EUR . in respect of Mr. Aho.
The threshold number will vest as Nokia shares should the pre-deter-
mined threshold performance levels be met for both performance
criteria. No Nokia shares were delivered under the Performance Share Plan
, as Nokia’s performance did not reach the threshold level of either
performance criteria.
The maximum number will vest as Nokia shares should the pre-deter-
mined 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 Performance Share Plan , as Nokia’s
performance did not reach the threshold level of either performance
criteria.
122
N O K I A I N 2 0 1 2
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 for our Nokia Leadership Team members.
Stock options
awards 1
Performance shares
awards 2
Restricted shares
awards
Number of
shares
acquired on
exercise
Value
realized on
exercise
EUR
Number of
shares
delivered on
vesting
Value
realized on
vesting
EUR
Number of
shares
delivered on
vesting
Value
realized on
vesting
EUR
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
9 000 3
6 000 3
25 000 4
6 000 4
10 000 3
10 000 3
10 000 3
0
0
37 980 3
25 320 3
69 750 4
16 740 4
42 200 3
42 200 3
42 200 3
0
0
8 000 3
33 760 3
50 000 4
139 500 4
Name 5
Stephen Elop
Marko Ahtisaari
Michael Halbherr
Jo Harlow
Timo Ihamuotila
Louise Pentland
Juha Putkiranta
Henry Tirri
Timo Toikkanen
Chris Weber
Juha Äkräs
Kai Öistämö
Value realized on exercise is based on the difference between the Nokia
share price and exercise price of options.
No Nokia shares were delivered under the Performance Share Plan
during as Nokia’s performance did not reach the threshold level of
either performance criteria.
Represents the delivery of Nokia shares vested from the Restricted Share
Plan . Value is based on the average market price of the Nokia share
on NASDAQ OMX Helsinki on February , of EUR ..
Represents the delivery of Nokia shares vested from the Restricted Share
Plan . Value is based on the average market price of the Nokia share
on NASDAQ OMX Helsinki on April , of EUR ..
During , the following executives stepped down from the Nokia Lead-
ership Team: Jerri DeVard, Colin Giles, Mary T. McDowell, Niklas Savander
and Esko Aho. The information regarding stock option exercises and
settlement of shares regarding each of the former executives is as of the
date of resignation from the Nokia Leadership Team and is represented in
the table below.
Stock options
awards 1
Performance shares
awards 2
Restricted shares
awards
Number of
shares
acquired on
exercise
Value
realized on
exercise
EUR
Number of
shares
delivered on
vesting
Value
realized on
vesting
EUR
Number of
shares
delivered on
vesting
Value
realized on
vesting
EUR
Name
Jerri DeVard
as per June 30, 2012
Colin Giles
as per June 30, 2012
Mary T. McDowell
as per June 30, 2012
Niklas Savander
as per June 30, 2012
Esko Aho
as per August 31, 2012
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
10 000 3
42 200 3
38 000 4
106 020 4
38 000 4
106 020 4
7 000 3
25 000 4
29 540 3
69 750 4
C O M P E N S A T I O N O F T H E B O A R D O F D I R E C T O R S A N D T H E N O K I A L E A D E R S H I P T E A M
123
Share 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
value 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 mini-
mum 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 Nokia Leadership Team two
times the member’s annual base salary, respectively. To meet
this requirement, all members of the Nokia Leadership Team
are expected to retain % of any after-tax gains from equity
programs in shares until the minimum investment level is met.
The Personnel Committee regularly monitors the compliance
by the executives with the stock ownership guidelines.
Insider trading in securities
The Board of Directors has established a policy in respect of
insiders’ trading in Nokia securities. The members of the Board
and the Nokia Leadership Team are considered as primary
insiders. Under the policy, the holdings of Nokia securities by
the primary insiders are public information, which is avail-
able from Euroclear Finland Ltd. and available on our website.
Both primary insiders and secondary insiders (as defi ned 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” pe-
riod immediately preceding the release of our quarterly results
including the day of the release and the four-week “closed-
window” period immediately preceding the release of our an-
nual results including the day of the release. In addition, Nokia
may set trading restrictions based on participation in projects.
We update our insider trading policy from time to time and
provide training for compliance with the policy. Nokia’s insider
policy is in line with the NASDAQ OMX Helsinki Guidelines for
Insiders and also sets requirements beyond those guidelines.
124
N O K I A I N 2 0 1 2
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 Commit-
tee has adopted a policy regarding pre-approval of audit and
permissible non-audit services provided by our independent
auditors (the “Policy”).
2011
Under the Policy, proposed services either (i) may be pre-
approved by the Audit Committee without specifi c case-by-
case services approvals (“general pre-approval”); or (ii) require
the specifi c pre-approval of the Audit Committee (“specifi c
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 signifi cant M&A projects), tax and other
services are subject to a specifi c 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.
4.9
3.6
1.1
2.3
2.1
—
15.3 27.7
10.9 18.1
Nokia
Siemens
Nokia Networks Total
AUDITOR FEES AND SERVICES
PricewaterhouseCoopers Oy has served as our independent
auditor for each of the fi scal years in the three-year period
ended December , . The independent auditor is elected
annually by our shareholders at the Annual General Meeting for
the fi scal year in question. The Audit Committee of the Board
of Directors makes a proposal to the shareholders in respect
of the appointment of the auditor based upon its evaluation
of the qualifi cations 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 and in total,
with a separate presentation of those fees related to Nokia
and Nokia Siemens Networks.
2012
Nokia
Siemens
Nokia Networks Total
7.2
0.8
2.4
0.3
10.2 17.4
1.4 2.2
1.6 4.0
— 0.3
EURm
Audit fees 1
Audit-related fees 2
Tax fees 3
All other fees 4
7.2
1.3
2.8
1.1
Total
10.7
13.2 23.9
12.4
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.
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; advice on tax accounting matters;
advice and assistance in connection with local statutory accounting
requirements; due diligence related to acquisitions or divestitures; finan-
cial due diligence in connection with provision of funding to customers,
reports in relation to covenants in loan agreements; employee benefit
plan audits and reviews; and audit procedures in connection with investi-
gations and compliance programs. They also include 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 connection with statutory and regulatory filings and the
review of documents filed with the SEC and other capital markets or local
financial reporting regulatory bodies.
Tax fees include fees billed for (i) corporate and indirect compliance in-
cluding 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 advice; (iv) consultations and tax audits (assistance with technical tax
queries and tax audits and appeals and advice on mergers, acquisitions
and restructurings); (v) personal compliance (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 compensa-
tion programs and tax implications on short-term international transfers).
All other fees include fees billed for company establishment, forensic
accounting, data security, investigations and reviews of licensing arrange-
ments with customers, other consulting services and occasional training
or reference materials and services.
The Audit Committee establishes budgeted fee levels an-
nually 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 specifi c 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.
A U D I T O R F E E S A N D S E R V I C E S
125
INVESTOR INFORMATION
INFORMATION ON THE INTERNET
www.nokia.com/global/about-nokia
INVESTOR RELATIONS CONTACTS
investor.relations@nokia.com
Available on the Internet: fi nancial reports,
Nokia management’s presentations,
conference call and other investor related
materials, press releases as well as
environmental and social information.
Nokia Investor Relations
P.O. Box
FI- NOKIA GROUP
Finland
Tel. +
Fax +
Nokia Investor Relations
Main Street, Suite
White Plains, NY
USA
Tel. +
Annual General Meeting
Date: Tuesday, May , at . pm
Address: Helsinki Fair Centre, Amfi -hall, Messuaukio ,
Helsinki, Finland
Stock exchanges
The Nokia Corporation share is quoted on the following stock
exchanges:
Symbol
Trading currency
Dividend
The Board proposes to the Annual General Meeting that no
dividend be paid for the fi scal year .
NASDAQ OMX Helsinki
(since 1915)
New York Stock Exchange
(since 1994)
NOK1V
EUR
NOK
USD
Financial reporting
Nokia’s interim reports in are planned for April , July ,
and October . The results are planned to be published
in January .
Information published in 2012
All Nokia’s global press releases published in are available
on the Internet at press.nokia.com.
FORWARD-LOOKING STATEMENTS
It should be noted that Nokia and its business are exposed to
various risks and uncertainties and certain statements herein that
are not historical facts are forward-looking statements, including,
without limitation, those regarding: A) the expected plans and
benefits of our partnership with Microsoft to bring together
complementary assets and expertise to form a global mobile
ecosystem for smartphones; B) the timing and expected benefits
of our strategies, including expected operational and financial
benefits and targets as well as changes in leadership and
operational structure; C) the timing of the deliveries of our
products and services; D) our ability to innovate, develop, execute
and commercialize new technologies, products and services;
E) expectations regarding market developments and structural
changes; F) expectations and targets regarding our industry
volumes, market share, prices, net sales and margins of our
products and services; G) expectations and targets regarding our
operational priorities and results of operations; H) expectations
and targets regarding collaboration and partnering arrangements;
I) the outcome of pending and threatened litigation, regulatory
proceedings or investigations by authorities; J) expectations
regarding the successful completion of restructurings, invest-
ments, acquisitions and divestments on a timely basis and our
ability to achieve the financial and operational targets set in
connection with any such restructurings, investments, acquisi-
tions and divestments; and K) statements preceded by “believe,”
“expect,” “anticipate,” “foresee,” “target,” “estimate,” “designed,”
“aim”, “plans,” “intends,” “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,
including risks and uncertainties that could cause these differ-
ences include, but are not limited to: ) our ability to make the
Windows Phone ecosystem a competitive and profitable global
ecosystem that achieves sufficient scale, value and attractiveness
to relevant market participants, making Nokia products with
Windows Phone a competitive choice for consumers; ) our
success in the smartphone market, including our ability to
introduce and bring to market quantities of attractive, competi-
tively priced Nokia products with Windows Phone that are positive-
ly differentiated from our competitors’ products, both outside
and within the Windows Phone ecosystem; ) our ability to produce
attractive and competitive devices in our Mobile Phones business
unit, including feature phones and devices with features such as
full touch that can be categorized as smartphones, in a timely and
cost efficient manner with differentiated hardware, software,
126
N O K I A I N 2 0 1 2
as the impact of regulations against imports to those countries;
) the impact of changes in and enforcement of government
policies, technical standards, trade policies, laws or regulations in
countries where our assets are located and where we do business;
) investigations or claims by contracting parties in relation to
exits from countries, areas or contractual arrangements; )
unfavorable outcome of litigation, regulatory proceedings or
investigations by authorities; ) allegations of possible health
risks from electromagnetic fields generated by base stations and
mobile devices, and the lawsuits and publicity related to them,
regardless of merit; ) Nokia Siemens Networks’ success in the
mobile broadband infrastructure and related services market and
its ability to effectively, profitably and timely adapt business and
operations to the diverse needs of its customers; ) Nokia
Siemens Networks’ ability to maintain and improve its market
position and respond successfully to changes and competition in
the mobile broadband infrastructure and related services market;
) Nokia Siemens Networks’ success in implementing its
restructuring plan and reducing its operating expenses and other
costs; ) Nokia Siemens Networks’ ability to invest in and timely
introduce new competitive products, services, upgrades and
technologies; ) Nokia Siemens Networks’ dependence on limited
number of customers and large, multi-year contracts; ) Nokia
Siemens Networks’ liquidity and its ability to meet its working
capital requirements, including access to available credit under its
financing arrangements and other credit lines as well as cash at
hand; ) the management of Nokia Siemens Networks’ customer
financing exposure; ) whether ongoing or any additional
governmental investigations of alleged violations of law by some
former employees of Siemens may involve and affect the
carrier-related assets and employees transferred by Siemens to
Nokia Siemens Networks; ) any impairment of Nokia Siemens
Networks customer relationships resulting from ongoing or any
additional governmental investigations involving the Siemens
carrier-related operations transferred to Nokia Siemens Networks,
as well as the risk factors specified on pages - of Nokia’s
annual report on Form -F for the year ended December ,
under Item D. “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 undertake any
obligation to publicly update or revise forward-looking state-
ments, whether as a result of new information, future events or
otherwise, except to the extent legally required.
localized services and applications; ) the success of our HERE
strategy, including our ability to establish a successful location-
based platform and extend our location-based services across
devices and operating systems; ) our ability to provide support
for our Devices & Services business and maintain current and
create new sources of revenue from our location-based service
and commerce assets; ) our ability to protect numerous patented
standardized or proprietary technologies from third-party
infringement or actions to invalidate the intellectual property
rights of these technologies; ) our ability to maintain the existing
sources of intellectual property related revenue and establish new
such sources; ) 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 competitive environment; ) our ability to keep momentum
and increase our speed of innovation, product development and
execution in order to bring new innovative and competitive mobile
products and location-based or other services to the market in a
timely manner; ) the success of our partnership with Microsoft
in connection with the Windows Phone ecosystem; ) our ability
to effectively and smoothly implement the planned changes in our
operational structure and achieve targeted efficiencies and reduc-
tions in operating expenses; ) our ability to retain, motivate,
develop and recruit appropriately skilled employees; ) our
dependence on the development of the mobile and communica-
tions industry, including location-based and other services
industries, in numerous diverse markets, as well as on general
economic conditions globally and regionally; ) our ability to
maintain and leverage our traditional strengths in the mobile
products market, especially if we are unable retain the loyalty of
our mobile operator and distributor customers and consumers as
a result of the implementation of our strategies or other factors;
) the performance of the parties we partner and collaborate with,
including Microsoft and our ability to achieve successful
collaboration or partnering arrangements; ) our ability to deliver
our mobile products profitably, in line with quality requirements
and on time, especially if the limited number of suppliers we
depend on fail to deliver sufficient quantities of fully functional
products, components, sub-assemblies, software and services on
favorable terms and in compliance with our supplier requirements;
) 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; ) any actual or even
alleged defects or other quality, safety and security issues in our
products; ) any inefficiency, malfunction or disruption of a
system or network that our operations rely on; ) the impact of
cybersecurity breach or other factors leading to an actual or
alleged loss, improper disclosure or leakage of any personal or
consumer data collected by us or our partners or subcontractors,
made available to us or stored in or through our products; ) our
ability to successfully manage the pricing of our products and
costs related to our products and our operations; ) the potential
complex tax issues and obligations we may face, including the
obligation to pay additional taxes in various jurisdictions and our
actual or anticipated performance, among other factors, could
result in allowances related to deferred tax assets; ) 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; ) our ability to
protect the technologies, which we or others develop or which we
license, from claims that we have infringed third parties’
intellectual property rights, as well as our unrestricted use on
commercially acceptable terms of certain technologies in our
product and services; ) the impact of economic, regulatory,
political or other development on our sales, manufacturing
facilities and assets located in emerging market countries as well
I N V E S T O R I N F O R M A T I O N
127
CONTACT INFORMATION
NOKIA HEAD OFFICE
Keilalahdentie –
Espoo
P.O.Box , FI- Nokia Group
FINLAND
Tel. +
Fax +
NOKIA CALIFORNIA
South Matilda Avenue
W. Washington Ave
Sunnyvale, California
USA
Tel. +
NOKIA LATIN AMERICA
NW nd Av, Suite
Miami FL,
USA
Tel. +
Fax +
NOKIA BRAZIL
Av das Nacoes Unidas
. Torre Norte o.
Andar Cep -
Sao Paulo -
BRAZIL
Tel. +
Fax +
NOKIA GREATER CHINA & KOREA
Nokia China Campus
Beijing Economic and Technological Development Area
No. Donghuan Zhonglu
Beijing, PRC
Tel. +
NOKIA SOUTH EAST ASIA & PACIFIC
B Alexandra Road
#– Alexandra Technopark
SINGAPORE
Tel. +
Fax +
NOKIA INDIA
SP Infocity, Industrial Plot no.
Udyog Vihar, Phase , Dundahera, Gurgaon,
Haryana –
INDIA
Tel. +
Fax +
NOKIA MIDDLE EAST & AFRICA
Al Thuraya Tower II, th fl oor, Dubai Internet City
Dubai, UAE
Tel. +
Fax +
NOKIA EURASIA
Ul. Vozdvizhenka
Moscow
RUSSIA
Tel. +
Fax +