Nokia provides recast segment results for 2015 reflecting new financial reporting structure

Transcription

1 provides recast segment results for 05 reflecting new financial reporting structure Corporation Stock Exchange Release April, 06 at 08:45 (CET +) provides recast segment results for 05 reflecting new financial reporting structure Espoo, Finl today provided recast segment results for 05 reflecting the company s new financial reporting organizational structure, following the acquisition of Alcatel-Lucent. s organizational structure is intended to enable the company to create an innovation leader in next generation technology services. With state-of-the-art software, hardware services for any type of network, is at the forefront of creating licensing the technologies that are increasingly at the heart of our connected lives. Three reportable segments To support s strategic objectives reflect the way the company evaluates operational performance allocates resources, will revise its financial reporting structure. As of the first quarter 06, will have three reportable segments: The (i) Broadb (ii) IP reportable segments within s the (iii) reportable segment within the. In addition, will disclose segment-level data for Common. Broadb Broadb is composed of the Mobile Fixed groups. The Mobile group offers an industry-leading portfolio of end-to-end mobile networking solutions comprising hardware, software services for telecommunications operators, enterprises related markets/verticals such as public safety Internet of Things. The Fixed group provides copper fiber access products, solutions, services. The portfolio allows for a customized combination of technologies that brings fiber to the most economical point for the customer. IP IP is composed of the IP/Optical & Analytics groups. The IP/Optical group provides the key IP routing optical transport systems, software services to build high capacity network infrastructure for the internet global connectivity. The & Analytics group offers software solutions spanning customer experience management, network operations management,

2 communications collaboration, policy charging, as well as Cloud, IoT, security, analytics platforms that enable digital services providers enterprises to accelerate innovation, monetize services, optimize their customer experience. The group has two main objectives: To drive growth renewal in its existing patent licensing ; to build new es for, based on breakthrough innovation in key technologies products, in the areas of Digital Media Digital Health. As of the first quarter 06, the majority of net sales the related costs attributable to licensing patenting the separate patent portfolios of, s, Bell Labs will be recorded in. Each reportable segment will continue to separately record its research development. Common As of the first quarter 06, Common includes the Alcatel Submarine Radio Frequency Systems es, both of which are being managed as separate entities. In addition, Common includes Bell Labs operating, as well as certain corporate-level centrally-managed operating. Supplementary financial information As of the first quarter 06, will additionally provide supplementary net sales information on a quarterly basis for: Services (part of s ); Each of the four groups that comprise s ; IP Routing (part of the IP reportable segment within s ); Optical (part of the IP reportable segment within s ). This disclosure will be presented in the footnotes of the Segment information eliminations table. Recast combined company segment financial results To provide a basis for comparison, the following tables present a recasting of combined company segment financial results on an unaudited basis for all four quarters of 05 separately, as well as for full year 05. This financial information has been prepared to reflect the financial results of the continuing operations of the combined company as if it had been operating as such for the full financial year of 05. Certain accounting policy alignments, adjustments reclassifications have been necessary in order to combine the financial information of Alcatel-Lucent, these are explained below in the Basis of preparation section of this stock exchange release.

3 Segment information eliminations (comparable combined company information, unaudited) Q'5 Broadb IP Common EUR million Net sales (8) 6 9 Cost of sales ( 85) (87) ( 686) () (85) 8 ( 865) Gross profit % of net sales.4% 9.% 4.9% 99.% 8.8% 6.9% Research development (70) () ( 0) (7) (70) 0 ( 65) % of net sales 7% % 8% 7% 4% 9% Selling, general administrative (54) (9) (705) () (48) 0 (774) % of net sales % % % 8% % % income (9) (0) (8) () 0 (49) Operating profit () 0 76 % of net sales 4.0%.9%.7% 65.% (54.5)% 4.5% Mobile net sales of EUR 686 million, Fixed net sales of EUR 54 million. IP net sales of EUR 79 million, Optical net sales of EUR 0 million, & Analytics net sales of EUR 85 million. Services net sales of EUR million. Segment information eliminations (comparable combined company information, unaudited) Q'5 Broadb IP Common EUR million Net sales (5) 6 6 Cost of sales ( 775) (885) ( 66) () () 5 ( 868) Gross profit % of net sales 5.5% 44.4% 7.9% 99.% 7.0% 9.% Research development (668) (07) (975) (70) (7) 0 ( 8) % of net sales 6% 9% 7% % 9% 8% Selling, general administrative (5) (90) (7) (8) (6) 0 (80) % of net sales % % % % 4% % income (9) (8) (6) Operating profit % of net sales 7.%.7% 8.7% 54.6% 7.% 0.% Mobile net sales of EUR 7 million, Fixed net sales of EUR 580 million. IP net sales of EUR 769 million, Optical net sales of EUR 407 million, & Analytics net sales of EUR 47 million. Services net sales of EUR 0 million.

4 Segment information eliminations (comparable combined company information, unaudited) Q'5 Broadb IP Common EUR million Net sales (6) 6 95 Cost of sales ( 98) (874) ( 79) () (95) 6 ( 984) Gross profit % of net sales 4.7% 4.7% 7.0% 98.% 7.4% 7.7% Research development (604) (0) (904) (55) (64) 0 ( 04) % of net sales 4% 9% 5% % 0% 6% Selling, general administrative (490) (80) (670) (7) (5) 0 (748) % of net sales % % % 6% 4% % income Operating profit (80) 0 68 % of net sales 0.7%.9%.% 49.6% (8.0)% 0.7% Mobile net sales of EUR 90 million, Fixed net sales of EUR 566 million. IP net sales of EUR 78 million, Optical net sales of EUR 45 million, & Analytics net sales of EUR 44 million. Services net sales of EUR 84 million. Segment information eliminations (comparable combined company information, unaudited) Q4'5 Broadb IP Common EUR million Net sales (4) 7 79 Cost of sales ( 6) ( 065) (4 6) (4) () 4 (4 447) Gross profit % of net sales 7.8% 46.% 40.% 99.%.5% 4.4% Research development (68) (9) ( 0) (7) (77) 0 ( 6) % of net sales % 7% 4% 8% 0% 5% Selling, general administrative (55) (09) (76) () (58) 0 (85) % of net sales % % % 8% % % income (5) 0 0 Operating profit (9) 0 79 % of net sales.8% 0.0% 5.6% 75.% (50.7)% 6.6% Mobile net sales of EUR 4 8, Fixed net sales of EUR 698 million. IP net sales of EUR 90 million, Optical net sales of EUR 5 million, & Analytics net sales of EUR 55 million. Services net sales of EUR 500 million.

5 Segment information eliminations (comparable combined company information, unaudited) Q-Q4'5 Broadb IP Common EUR million Net sales (4) Cost of sales ( 669) ( 696) (5 65) (0) (8) 4 (6 64) Gross profit % of net sales 5.5% 4.6% 7.6% 99.0%.8% 9.% Research development ( 655) ( 58) ( 94) (70) (84) 0 (4 468) % of net sales 5% 9% 6% 5% % 7% Selling, general administrative ( 078) (770) ( 848) (09) (9) 0 ( 75) % of net sales % % % 0% 4% % income (0) 9 () Operating profit (0) % of net sales 9.%.8% 0.% 64.4% (.7)% 0.8% Mobile net sales of EUR million, Fixed net sales of EUR 85 million. IP net sales of EUR million, Optical net sales of EUR 584 million, & Analytics net sales of EUR 760 million. Services net sales of EUR 9 06 million. Recast combined company net sales by geographic area for s The geographic exposure for s has changed significantly, following the acquisition of Alcatel-Lucent. The following table provides a recasting of combined company net sales for s by geographic area on an unaudited basis for all four quarters of 05 separately, as well as for full year 05. NET SALES BY GEOGRAPHIC AREA (comparable combined company information, unaudited) NOKIA'S NETWORKS BUSINESS EUR million Q'5 Q'5 Q'5 Q4'5 Q-Q4'5 Asia-Pacific Europe Greater China Latin America Middle East & Africa North America

6 Recast stalone segment financial results In addition, to fulfill external reporting requirements, the following tables include a recasting of s stalone financial results, on an unaudited basis for all four of the quarters of 05 separately, as well as for full year 05. This financial information has been prepared to reflect the financial results of the continuing operations of on a stalone basis. Certain accounting policy alignments, adjustments reclassifications have been necessary, these are explained below in the Basis of preparation section of this stock exchange release. Segment information eliminations ( stalone s, unaudited) Q'5 Broadb IP Common EUR million Non-IFRS exclusions 4 Net sales (4) Cost of sales ( 556) (94) ( 750) () () 4 ( 749) () ( 75) Gross profit () 0 86 () 84 % of net sales.9% 8.7% 4.5% 99.% 40.5% 40.4% Research development (8) (75) (458) (58) (9) 0 (56) (7) (54) % of net sales 6% 4% 7% % 8% 9% Selling, general admin- (77) (67) (44) () (8) 0 (8) (0) (9) istrative % of net sales % % % 8% % % income (6) () (9) () 0 (9) 0 (9) Operating profit () 86 (49) 0 48 (0) 8 % of net sales 5.7% (7.0)% 4.% 69.6% 8.5% 7.8% Mobile net sales of EUR 7 million, Fixed net sales of EUR 8 million. IP net sales of EUR 6 million, & Analytics net sales of EUR 80 million. Services net sales of EUR 66 million. 4 Non-IFRS measures exclude goodwill impairment charges, intangible asset amortization items related to purchase price allocation, as well as restructuring-related costs, costs related to the Alcatel-Lucent transaction certain other items that may not be indicative of the s underlying.

7 Segment information eliminations ( stalone s, unaudited) Q'5 Broadb IP Common EUR million Non-IFRS exclusions 4 Net sales (4) Cost of sales ( 477) (9) ( 65) () 4 ( 6) 7 ( 575) Gross profit % of net sales 9.5% 5.9% 40.8% 99.0% 44.8% 46.0% Research development (60) (64) (44) (57) () 0 (50) () (56) % of net sales 5% % 6% 9% 7% 8% Selling, general admin- (96) (69) (65) (8) (9) 0 (4) (7) (448) istrative % of net sales % 4% % 4% 4% 5% income Operating profit () 49 % of net sales.8% 6.6%.% 55.5% 7.0% 6.9% Mobile net sales of EUR 407 million, Fixed net sales of EUR million. IP net sales of EUR 0 million, & Analytics net sales of EUR 85 million. Services net sales of EUR 59 million. 4 Non-IFRS measures exclude goodwill impairment charges, intangible asset amortization items related to purchase price allocation, as well as restructuring-related costs, costs related to the Alcatel-Lucent transaction certain other items that may not be indicative of the s underlying. Segment information eliminations ( stalone s, unaudited) Q'5 Broadb IP Common EUR million Non-IFRS exclusions 4 Net sales (4) Cost of sales ( 57) (49) ( 7) () 0 4 ( 70) 0 ( 70) Gross profit % of net sales 8.% 54.7% 40.% 98.9% 4.4% 4.4% Research development (46) (6) (40) (45) (8) 0 (47) (8) (48) % of net sales 4% 9% 4% 8% 6% 6% Selling, general admin- (7) (65) (6) (7) () 0 (85) (7) (4) istrative % of net sales % 0% % 6% % 4% income (00) (80) Operating profit () (45) % of net sales 4.% 5.8% 4.% 54.7% 5.8%.0% Mobile net sales of EUR 5 million, Fixed net sales of EUR 6 million. IP net sales of EUR 8 million, & Analytics net sales of EUR 0 million. Services net sales of EUR 04 million. 4 Non-IFRS measures exclude goodwill impairment charges, intangible asset amortization items related to purchase price allocation, as well as restructuring-related costs, costs related to the Alcatel-Lucent transaction certain other items that may not be indicative of the s underlying.

8 Segment information eliminations ( stalone s, unaudited) Q4'5 Broadb IP Common EUR million Non-IFRS exclusions 4 Net sales (4) Cost of sales ( 748) (70) ( 98) () 0 4 ( 96) 0 ( 96) Gross profit % of net sales 7.9% 56.8% 40.% 99.5% 46.9% 46.9% Research development (80) (67) (447) (60) (4) 0 (5) (9) (540) % of net sales 4% 7% 4% 5% 5% 5% Selling, general admin- (0) (7) (76) () (9) 0 (47) (70) (507) istrative % of net sales % 8% % 8% % 4% income () 0 (4) () Operating profit (74) 0 76 (9) 64 % of net sales 4.4%.7% 5.4% 78.% 0.4% 7.8% Mobile net sales of EUR 776 million, Fixed net sales of EUR 9 million. IP net sales of EUR 47 million, & Analytics net sales of EUR 47 million. Services net sales of EUR 495 million. 4 Non-IFRS measures exclude goodwill impairment charges, intangible asset amortization items related to purchase price allocation, as well as restructuring-related costs, costs related to the Alcatel-Lucent transaction certain other items that may not be indicative of the s underlying. Segment information eliminations ( stalone s, unaudited) Q-Q4'5 Broadb IP Common EUR million Non-IFRS exclusions 4 Net sales (5) Cost of sales (6 5) (65) (7 005) (7) 0 5 (6 998) 6 (6 96) Gross profit % of net sales 7.5% 50.9% 9.0% 99.% 44.0% 44.% Research development ( 470) (69) ( 79) (0) (84) 0 ( 04) (8) ( 080) % of net sales 4% 0% 5% % 6% 7% Selling, general admin- ( 47) (74) ( 4) (08) (97) 0 ( 66) (44) ( 77) istrative % of net sales % % % % % 4% income (4) Operating profit (89) (6) 697 % of net sales.9% 0.4%.7% 68.0% 5.7%.6% Mobile net sales of EUR 0 0 million, Fixed net sales of EUR 6 million. IP net sales of EUR 54 million, & Analytics net sales of EUR 8 million. Services net sales of EUR 5 44 million. 4 Non-IFRS measures exclude goodwill impairment charges, intangible asset amortization items related to purchase price allocation, as well as restructuring-related costs, costs related to the Alcatel-Lucent transaction certain other items that may not be indicative of the s underlying.

9 Basis of preparation The recast combined company financial results presented in this press release are derived from the unaudited condensed financial information presented in the interim reports of Alcatel-Lucent for all quarters of 05 from the audited financial information presented in the annual report for 05 for. financial information includes only continuing operations, which means that all periods presented exclude the operating results attributable to the divested HERE. The accounting impact of the purchase price allocation done on Alcatel-Lucent, upon acquisition by, is not reflected in the combined company financial results. The following tables provide a summary of the adjustments reclassifications that have been made to align Alcatel-Lucent s s income statement information with the combined company s accounting policies financial statement presentation. These include the: Reclassification of certain items from net sales to offset R&D or to be included in other income as these do not reflect the ordinary activities of the combined company; reclassification of items, such as change in the bad debt reserve, related to field trials gains on sales of assets from cost of sales to R&D to offset SG&A other to meet the definitions of these line items in the combined company; reclassification of withholding taxes to income taxes instead of presenting them within the operational income statement items; reclassification of discounting costs & hedging, bonds & guarantees, litigation costs capital gain/loss on disposal of entities from below operating profit to other to reflect the application of the combined company accounting policy; some R&D cost of development work on internal use software that were previously capitalized by Alcatel-Lucent have now been expensed as incurred due to adoption of the combined company accounting policy; reclassification of net interest related to defined benefit pension plans from operational income statement items to financial items below operating profit; reallocation of items of costs based on their nature the definition of the line items in the combined company accounting policies. These reallocations relate to procurement, order management, project financial controllers, learning solution management, product line management communications. The recast combined company financial information has been prepared by management for illustrative purposes only is not necessarily indicative of the financial position or results of s operations that would have been realized had the acquisition of Alcatel-Lucent or the sale of the HERE occurred earlier, nor is it meant to be indicative of any anticipated future results of operations.

10 Accounting reclassifications accounting policy alignments Q'5 EUR million Alcatel-Lucent Accounting reclassifications accounting policy alignments Net sales 95 5 () (8) 6 9 Cost of sales ( 769) ( 6) 8 ( 865) Gross profit 65 9 (0) 0 64 Research development (547) (609) (9) 0 ( 65) Selling, general administrative (5) (48) 7 0 (774) income (9) - (0) 0 (49) Operating profit 46 8 (5) 0 76 Q'5 EUR million Alcatel-Lucent Accounting reclassifications accounting policy alignments Net sales () (5) 6 6 Cost of sales ( 67) ( 48) 5 ( 868) Gross profit Research development Selling, general administrative (56) (59) () 0 ( 8) (86) (46) 0 (80) income 4 - (40) 0 74 Operating profit (0) Q'5 EUR million Alcatel-Lucent Accounting reclassifications accounting policy alignments Net sales (64) (6) 6 95 Cost of sales ( 78) ( 47) (5) 6 ( 984) Gross profit 97 8 (69) 0 40 Research development Selling, general administrative (484) (548) 8 0 ( 04) (58) (4) 0 (748) income Operating profit 475 (5) 0 68

11 Q4'5 EUR million Alcatel-Lucent Accounting reclassifications accounting policy alignments Net sales (47) (4) 7 79 Cost of sales ( 96) ( 5) 6 4 (4 447) Gross profit (4) 0 7 Research development Selling, general administrative (54) (60) (7) 0 ( 6) (40) (477) 5 0 (85) income Operating profit (5) 0 79 Q-Q4'5 EUR million Alcatel-Lucent Accounting reclassifications accounting policy alignments Net sales (44) (4) Cost of sales (7 08) (9 ) 5 4 (6 64) Gross profit (0) Research development Selling, general administrative ( 088) ( 5) (9) 0 (4 468) ( 507) ( 76) 95 0 ( 75) income 6 - (7) 0 89 Operating profit (9) About is a global leader in the technologies that connect people things. Powered by the innovation of Bell Labs, the company is at the forefront of creating licensing the technologies that are increasingly at the heart of our connected lives. With state-of-the-art software, hardware services for any type of network, is uniquely positioned to help communication service providers, governments, large enterprises deliver on the promise of 5G, the Cloud the Internet of Things. Media Enquiries: Communications Tel. +58 (0) press.services@nokia.com Investor Enquiries: Investor Relations

12 Tel RISKS AND FORWARD-LOOKING STATEMENTS It should be noted that its es are exposed to various risks uncertainties certain statements herein that are not facts are forward-looking statements, including, without limitation, those regarding: A) our ability to integrate Alcatel Lucent into our operations achieve the targeted plans benefits, including targeted synergies in relation to the acquisition of Alcatel Lucent announced on April 5, 05 closed in early 06; B) expectations, plans or benefits related to our strategies growth management; C) expectations, plans or benefits related to future performance of our es; D) expectations, plans or benefits related to changes in our management other leadership, operational structure operating model, financial reporting structure reportable segments, including the expected characteristics,, organizational structure, management operations following the acquisition of Alcatel Lucent; E) the accounting policy alignments, adjustments reclassifications related to the recast combined company financial information; F) expectations regarding market developments, general economic conditions structural changes; G) expectations targets regarding financial performance, results, operating, taxes, cost savings competitiveness, as well as results of operations including targeted synergies those related to market share, prices, net sales, income margins; H) statements preceded by or including believe, expect, anticipate, foresee, sees, target, estimate, designed, aim, plans, intends, focus, continue, project, should, will or similar expressions. These statements are based on the management s best assumptions beliefs in light of the information currently available to it. Because they involve risks uncertainties, actual results may differ materially from the results that we currently expect. Factors, including risks uncertainties, that could cause such differences include, but are not limited to: ) our ability to execute our strategy, sustain or improve the operational financial performance of our or correctly identify or successfully pursue opportunities or growth; ) our ability to achieve the anticipated operational benefits synergies from the Alcatel Lucent transaction, including our ability to integrate Alcatel Lucent into our operations within the timeframe targeted, our ability to implement our organization operational structure efficiently; ) our ability to manage improve our financial operating performance, cost savings, competitiveness synergy benefits after the acquisition of Alcatel Lucent, as well as the risk factors specified on pages 69 to 87 of our annual report on Form 0-F filed on April, 06 under Operating financial review prospects Risk factors, as well as in s other filings with the U.S. Securities Exchange Commission. unknown or unpredictable factors or underlying assumptions subsequently proven to be incorrect could cause actual results to differ materially from those in the forward-looking statements. We do not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.