N O K I A I N 2 0 0 3
Nokia in 2003 kannet 1
Nokia in 2003 kannet 1
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12.3.2004 11:07:29
Nokia in 2003 kannet 2
Nokia in 2003 kannet 2
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12.3.2004 11:07:33
A N N U A L A C C O U N T S 2 0 0 3
Key data 2003
Review by the Board of Directors
Consolidated profit and loss accounts, IAS
Consolidated balance sheets, IAS
Consolidated cash flow statements, IAS
Statements of changes in shareholders’ equity, IAS
Notes to the consolidated financial statements
Profit and loss accounts, parent company, FAS
Cash flow statements, parent company, FAS
Balance sheets, parent company, FAS
Notes to the financial statements of the parent company
Nokia shares and shareholders
Nokia 1999– 2003, IAS
Calculation of key ratios
Proposal by the Board of Directors
to the Annual General Meeting
Auditors’ report
A D D I T I O N A L I N F O R M A T I O N
U.S. GAAP
Critical accounting policies
Group Executive Board
Board of Directors
Risk factors
Corporate Governance
Investor information
General contact information
4
5
8
9
10
12
13
32
32
33
34
38
45
48
49
50
52
55
58
60
62
63
68
69
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Nokia in 2003 | 3
Key data 2003
N O K I A
2003
2002
Change, %
2001
The key data is based on
financial statements according
to International Accounting
Standards, IAS
Main currencies,
rates at year end 2003
1 EUR = USD 1.2274
GBP 0.7029
SEK 8.9992
JPY 132.32
4 | Nokia in 2003
EURm
Net sales
Operating profit
Profit before taxes
Net profit
Research and development
Return on capital employed, %
Net dept to equity (gearing), %
EUR
Earnings per share, basic
Dividend per share
Average number
29 455
5 011
5 345
3 592
3 760
34.7
–71
0.75
0.30 *
30 016
4 780
4 917
3 381
3 052
35.3
–61
0.71
0.28
–2
5
9
6
23
6
7
31 191
3 362
93 475
2 200
2 985
27.9
–41
0.47
0.27
of shares (1 000 shares)
4 761 121
4 751 110
4 702 852
* Board’s proposal
B U S I N E S S G R O U P S
2003
2002
Change, %
2001
EURm
Nokia Mobile Phones
Net sales
Operating profit
Research and development
23 618
5 483
2 064
Nokia Networks
Net sales
Operating profit
Research and development
Nokia Ventures Organization
Net sales
Operating profit
Research and development
Personnel, Dec. 31
Nokia Mobile Phones
Nokia Networks
Nokia Ventures Organization
Common Group Functions
Nokia Group
5 620
–219
1 540
366
–161
124
27 785
15 301
1 561
6 712
51 359
23 211
5 201
1 884
6 539
–49
995
459
–141
136
26 090
17 361
1 506
6 791
51 748
2
5
10
–14
55
–20
–14
–9
6
–12
4
–1
–1
23 158
4 521
1 599
7 534
–73
1 135
585
–855
221
26 453
19 392
1 886
6 118
53 849
1 0 M A J O R M A R K E T S
2003
2002
2001
Net sales, EURm
USA
UK
Germany
China
UAE
India
Italy
France
Brazil
Spain
1 0 M A J O R CO U N T R I E S
Personnel, Dec. 31
Finland
USA
China
Germany
Hungary
UK
Brazil
Mexico
Denmark
South Korea
4 475
2 693
2 297
2 013
1 886
1 062
1 003
867
805
748
2003
22 274
6 636
4 595
3 486
2 571
1 947
1 497
1 290
1 270
743
4 665
3 111
1 849
2 802
925
539
1 342
1 273
773
531
2002
22 535
6 661
4 778
3 620
1 975
2 139
1 466
1 158
1 176
821
5 614
2 808
2 003
3 418
619
264
1 168
1 260
892
644
2001
22 246
7 298
5 202
3 892
1 937
2 286
1 413
1 198
1 166
864
NOKIA IN 2003_s03-16
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8.3.2004, 13:09
Review by the Board of Directors 2003
Nokia’s net sales in 2003 decreased by 2% compared with 2002 and to-
taled EUR 29 455 million (EUR 30 016 million in 2002). Sales in Nokia Mo-
bile Phones were up 2% at EUR 23 618 million (EUR 23 211 million) and
decreased in Nokia Networks by 14% to EUR 5 620 million (EUR 6 539 mil-
lion). Sales decreased in Nokia Ventures Organization by 20% to EUR 366
million (EUR 459 million).
Operating profit in 2003 increased by 5% and totaled EUR 5 011 mil-
lion (EUR 4 780 million in 2002). Operating margin was 17.0% (15.9% in
2002). Operating profit in Nokia Mobile Phones increased by 5% to EUR
5 483 million (EUR 5 201 million in 2002). Operating loss in Nokia Net-
works increased to EUR 219 million (operating loss of EUR 49 million in
2002). Operating margin in Nokia Mobile Phones was 23.2% (22.4% in
2002), while the operating margin in Nokia Networks was –3.9% (–0.7%
in 2002). Nokia Ventures Organization showed an operating loss of EUR
161 million (operating loss of EUR 141 million in 2002). Common Group
Expenses totaled EUR 92 million (EUR 231 million in 2002).
In 2003, operating profit included a positive adjustment of EUR 226 mil-
lion related to customer financing impairment charges (MobilCom) and of
EUR 550 million charges related to restructuring costs and impairments and
write-offs of capitalized R&D expenses, as well as a goodwill impairment of
EUR 151 million. All these items impacted on Nokia Networks operating re-
sult. In 2002, operating profit included customer finance impairments of
EUR 279 million and goodwill impairments of EUR 182 million.
Financial income totaled EUR 352 million in 2003 (EUR 156 million in
2002). Profit before tax and minority interests was EUR 5 345 million in
2003 (EUR 4 917 million in 2002). Net profit totaled EUR 3 592 million in
2003 (EUR 3 381 million in 2002). Earnings per share increased to EUR 0.75
(basic) and to EUR 0.75 (diluted) in 2003, compared with EUR 0.71 (basic)
and EUR 0.71 (diluted) in 2002.
At December 31, 2003, net-debt-to-equity ratio (gearing) was –71% (–61%
at the end of 2002). Total capital expenditures in 2003 amounted to EUR
432 million (EUR 432 million in 2002).
At the end of 2003, outstanding long-term loans to customers totaled
EUR 354 million (compared with EUR 1 056 million in 2002), while guar-
antees given on behalf of customers totaled EUR 33 million (EUR 91 mil-
lion). In addition, Nokia had financing commitments totaling EUR 490
million (EUR 857 million) at the end of 2003.
Global Reach
In 2003, Europe, Middle-East & Africa accounted for 57% of Nokia’s net sales
(54% in 2002), the Americas 21% (22%) and Asia-Pacific 22% (24%). The 10
largest markets were the US, UK, Germany, China, United Arab Emirates, India,
Italy, France, Brazil and Spain, together representing 61% of total sales.
employees, representing approximately 39% of Nokia’s total personnel. No-
kia has R&D centers in 11 countries. Research and development expenses
increased by 23% (2% in 2002) and totaled EUR 3 760 million (EUR 3 052
million in 2002), representing 12.8% of net sales (10.2% of net sales in 2002).
Excluding personnel-related restructuring costs as well as impairments
and write-offs of capitalized R&D expenses in Nokia Networks totaling
EUR 470 million, the increase in R&D expenses would have been 8%, rep-
resenting 11.2% of net sales.
Joint Initiatives
Industry cooperation is a key driver of a balanced business ecosystem
and healthy competition. As the industry creates and implements open
specifications, it enables devices and systems to work seamlessly togeth-
er independently of the vendor.
The Open Mobile Alliance (OMA) has gained overwhelming industry
support. Since its inception in June 2002, OMA has grown to more than
350 companies representing mobile operators, device and network sup-
pliers, information technology companies, and content providers. It has
intensified cooperation among industry players, bringing about the fast-
er adoption of mobile services as well as market growth for the entire
mobile industry. Interoperability is requisite for the success of mobile
services and it is broadly supported through OMA. To date, there are 17
Enabler Releases available within OMA, and Nokia has been very active in
deploying these. Of the latest Nokia devices introduced, 14 phone models
adhere to multiple OMA specifications.
The Digital Home Working Group (DHWG) was introduced in June
2003 by Nokia together with 16 other industry leaders from the PC, con-
sumer electronics and mobile industries to simplify sharing of digital
content among consumer electronics, PCs, and mobile devices. The goal
is to establish a platform of interoperability based on open industry
standards to enable the transparent home network so that consumers can
easily consume, manage, and distribute digital content in new ways.
People
The average number of personnel for 2003 was 51 605 (52 714 for 2002).
At the end of 2003, Nokia employed 51 359 people worldwide (51 748 at
year-end 2002). In 2003, Nokia’s personnel decreased by a total of 389
employees (decrease of 2 101 in 2002).
During 2003, our people management objectives focused on develop-
ing the leadership skills and competencies of our managers and leaders.
A number of Nokia initiatives supported these objectives and helped to
create a competitive advantage through our people.
Research and Development
In 2003, Nokia continued to invest in its worldwide research and devel-
opment network and cooperation. At year-end, Nokia had 19 849 R&D
Corporate Reorganization
Towards the end of 2003, Nokia decided, effective January 1, 2004, to reor-
ganize in order to further align the company’s overall structure with its
strategy. Nokia’s new structure includes four business groups which
Nokia in 2003 | 5
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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
Net sales by business group
Jan. 1 – Dec. 31
Nokia Mobile Phones
Nokia Networks
2003
EURm
23 618
5 620
Nokia Ventures Organization
366
%
80
19
1
2002
EURm
% Change
%
23 211
6 539
459
77
22
1
2
–14
–20
Inter-business
group eliminations
–149
–193
Nokia Group
29 455
100
30 016
100
–2
Operating profit by business group, IAS
Jan. 1 – Dec. 31
% of
2003
EURm net sales
% of
2002
EURm net sales
Nokia Mobile Phones
Nokia Networks
5 483
–219
23.2
–3.9
Nokia Ventures Organization –161
–44.0
Common Group Expenses
–92
22.4
–0.7
–30.7
5 201
–49
–141
–231
Nokia Group
5 011
17.0
4 780
15.9
form the main reporting structure: Mobile Phones, Multimedia, Networks,
and Enterprise Solutions. This provides us with a strong organizational base
from which to make progress in the mobility industry and which also builds
on the changes that were first implemented in Nokia Mobile Phones in 2002.
The new structure also includes three horizontal groups that support
the business groups: Customer and Market Operations, Technology Plat-
forms and Research, Venturing and Business Infrastructure.
Corporate Governance
In 2003, the Board evaluated its practices in light of the various corporate
governance initiatives introduced during the year. The emphasis was to
maintain and adopt best practices to further increase transparency and
accountability towards all stakeholders. Nokia aims to comply with ap-
plicable rules and regulations, and to proactively seek practices beyond
those requirements to enhance good governance.
Corporate Responsibility
During 2003, Nokia expanded its global community involvement program,
Make a Connection, to 16 countries, reaching over 1.25 million people,
and participated in the Philippines pilot of BRIDGEit, which uses mobile
technology to bring interactive learning materials to schools in poor and
remote areas. The employee volunteering initiative, Nokia Helping Hands,
also grew and is now in more than 25 countries. Nokia also signed a 3-year
frame agreement for cooperation with WWF (World Wide Fund for Nature).
Nokia participates in many international initiatives, such as the United Nations’
Global Compact and ICT Task Force, International Youth Foundation,
6 | Nokia in 2003
World Business Council for Sustainable Development and WWF.
As a result of the company’s performance in economic, environmental
and social issues, and increased transparency in reporting, Nokia was
again included in Socially Responsible Investment (SRI) benchmarks,
such as the Dow Jones Sustainability Indexes and the FTSE4Good. In 2003,
Nokia was ranked number one in the Global Communications Technolo-
gy and European Technology market industry sectors within the Dow
Jones Sustainability Index.
Nokia Mobile Phones in 2003
For the full year 2003, Nokia volumes reached a record 179 million units,
leading to an estimated market share slightly above 38%.
Nokia Mobile Phones broadened and revitalized its product portfolio
by launching 40 new products during 2003 with an emphasis on more
advanced devices, CDMA technology, entry-level phones and market lo-
calization. In addition to focusing on innovation and design in the port-
folio in 2003, Nokia also made good progress in improving the quality of
its processes and products, leading to concrete results.
Of the new products launched, 31 models had color-screens, 14 mod-
els had cameras and 24 models were MMS-enabled. The focus on more
advanced devices includes the broad camera phone portfolio, with 12
camera phone models on the market by year-end. Nokia also started
sales of two products to drive the adoption of advanced devices: the No-
kia 7600, Nokia’s second 3G WCDMA phone to pave the way for mass mar-
ket 3G services, and the Nokia 6600 smart phone. The commercial success
of the Nokia 6600 has enabled the Symbian OS and Series 60 to become
industry-leading smart phone platforms.
During the year, Nokia launched 11 CDMA handsets including Nokia’s
first color-screen CDMA product, the Nokia 3586, and Nokia’s first CDMA
camera phone, the Nokia 6225.
A refreshed line of entry-level phones includes the Nokia 3200, the
company’s first high-volume, affordable camera phone; and the Nokia 2200
Series CDMA phones, designed for first-time users and growth markets.
Highlighting Nokia’s commitment to usability are two popular local-
ized products. The high-end Nokia 6108 pen-based phone for the Chinese
market was the first phone enabling text input, handwriting recognition
and predictive text in English and Chinese. It was followed by an entry-
level product, the Nokia 3108.
As examples of Nokia’s expanding imaging product portfolio, the No-
kia Imagewear product group was launched in the third quarter and the
Nokia Image Frame started shipping during the fourth quarter. These
products give consumers new ways to use digital images, and also
strengthen Nokia’s overall imaging-related product offering.
In 2003, Nokia Mobile Phones also introduced products in new functional
categories, such as the Nokia 7700 media device and the Nokia N-Gage mobile
game deck. The Multimedia business group is now responsible for the
development and commercialization of devices such as these.
For enterprises, Nokia Mobile Phones introduced a range of business-
oriented devices, such as the Nokia 6810 and Nokia 6820 messaging de-
vices with full QWERTY keyboards, and the Nokia D211 and Nokia D311
multimode radio cards. The Enterprise Solutions business group is now
responsible for the development and commercialization of messaging
devices and data card products such as these, including the Communicator
product line.
In line with the high levels of demand, Nokia made the decision to expand
production capacity at its Komárom factory in Hungary, among others.
NOKIA IN 2003_s03-16
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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
Nokia Networks in 2003
During 2003, Nokia announced seven 3G network deals in Bahrain, Greece,
Hong Kong, Singapore, Switzerland, the UK and France. Mobile operators
began reconfirming their commitments to 3G WCDMA in the second half
of the year by renewing and continuing network agreements and by ac-
celerating network rollouts. By the end of 2003, Nokia was a supplier to
six of the world’s 12 commercially launched 3G networks and was rolling
out 3G WCDMA networks to 26 customers around the world. Altogether,
Nokia has 37 public 3G references.
Nokia announced 18 GSM, GPRS or GSM/GPRS/EDGE deals covering all
markets, in addition to four EDGE deals in Latin America and Asia-Pacific.
During the year, EDGE gained momentum and at year-end, Nokia was a
supplier to nine of the eleven commercially launched EDGE networks.
This included a nationwide EDGE deployment and network opening with
AT&T Wireless in the United States.
There was also strong momentum in packet-based core networks
and Nokia’s GPRS references increased by ten to 76 networks. Nokia also
concluded 13 deals for Nokia Intelligent Content Delivery, the core net-
work solution for multimedia services traffic and charging, and made
several deals for MMS and other service enablers. Nokia has now supplied
MMS technology to approximately 60 operators around the world. In TET-
RA networks for public safety and security customers, Nokia signed four
new deals in China and France.
As part of Nokia’s aim to double the global subscriber base by 2008,
the Nokia Connect GSM Solution for growth markets was launched in Au-
gust. The Nokia Connect GSM Solution comprises infrastructure, network
management and services, and aims to halve the total cost of ownership
in network investment and operations.
In October, Nokia introduced its carrier grade network products for
push-to-talk over cellular, a technology enabling new direct voice service
for one-on-one and one-to-group communications over existing GPRS
networks. Nokia has over 30 trials underway with operators globally.
During 2003, many mobile operators sought to lower their operating
expenses and to improve the quality of their mobile services. In line with
this, the importance of the Operations Solutions business to Nokia in-
creased and Nokia successfully joined several leading operators to pro-
vide operations support, network performance services and service
quality management solutions.
During the first half of the year, the group took measures to improve
its profitability by lowering its research and development costs and re-
ducing the number of employees. The actions already showed results in
the fourth quarter as Nokia Networks profitability improved.
Nokia Ventures Organization in 2003
In the first half of 2003, revenue at Nokia Internet Communications con-
tinued to be affected by the slowdown in information technology spend-
ing. During the second half of 2003, the market began to show signs of
improvement. Enterprises continued to rank spending on corporate net-
work security as among their highest priorities with positive effects on
the overall market growth in 2003. Full-year sales at Nokia Internet Com-
munications were slightly lower year on year, reflecting the continued
weakness of the US dollar.
The unit introduced new product categories and solutions in 2003
that expanded Nokia’s network security appliance portfolio beyond pe-
rimeter security, into the secure content management and connectivity
arenas. New products focused predominantly on extending mobility to
enterprise workforces, protecting corporate e-mail content, and providing
firewall/virtual private network benefits to remote offices.
During 2003, Nokia Home Communications continued renewing and
broadening its product portfolio of advanced digital satellite, terrestrial
and cable television receivers with new models for consuming, sharing
and storing diverse digital content. These new products increased the
interoperability between digital TV receivers and mobile phones. Never-
theless, sales in 2003 for Nokia Home Communications clearly declined
compared to 2002.
Changes in share capital
In 2003, Nokia’s share capital increased by EUR 429 616.32 as a result of
the issue of 7 160 272 new shares upon exercise of warrants issued to key
personnel in 1997. Nokia’s share capital was also increased in May by EUR
73 502.82 when 1 225 047 shares were issued to finance the acquisition of
Eizel Technologies, Inc. The shares were issued for a subscription price of
EUR 14.76 per share based on the market price of Nokia share. Due to the
limited number of shares issued, the issuance did not have any signifi-
cant effect on the relative holdings of the other shareholders of the com-
pany nor on their voting power.
Nokia repurchased through its share repurchase plan a total of
94 478 500 shares on the Helsinki Exchanges at an aggregate price of ap-
proximately EUR 1.351 billion during the period from April 22 to Novem-
ber 28. The price paid was based on the market price at the time of repur-
chase. The shares were repurchased to be used for the purposes specified
in the authorization held by the Board. The aggregate par value of the
shares purchased was EUR 5 668 710, representing approximately 2% of
the share capital of the company and the total voting rights. These new
holdings did not have any significant effect on the relative holdings of
the other shareholders of the company nor on their voting power.
On December 31, 2003, Nokia and its subsidiary companies owned
96 024 549 Nokia shares. The shares had an aggregate par value of EUR
5 761 472.94, representing 2% of the share capital of the company and the
total voting rights.
The total number of shares at December 31, 2003 was 4 796 292 460. As
a result of the new share issues, Nokia received a total of EUR 23 105 302.71 in
additional shareholders’ equity in 2003. At December 31, 2003, Nokia’s share
capital was EUR 287 777 547.60.
Outlook
In 2003, Nokia continued to perform well in a challenging environment,
translating its core strengths of leading brand, excellence in execution and
continuous product renewal into strong profitability. Going into 2004, the
company expects market conditions to remain challenging, but sees en-
couraging indications for recovery. Nokia continues to expect somewhat
over 10% volume growth for the mobile device market in 2004. Moreover,
the convergence of the mobile communications, information technology
and media industries opens possibilities for Nokia to create new product
and service categories, such as mobile games, multimedia and enterprise
solutions. The network infrastructure market began to stabilize towards
the end of 2003 and is expected to be flat to slightly up in 2004. Nokia will
continue to build on its industry-leading position, seeking to achieve high
profitability as well as to grow market share.
Dividend
Nokia’s Board of Directors will propose a dividend of EUR 0.30 per share
for 2003.
Nokia in 2003 | 7
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C O N S O L I DAT E D F I N A N C I A L STAT E M E N T S ACCO R D I N G TO I A S
Consolidated profit and loss accounts, IAS
Financial year ended Dec. 31
Notes
Net sales
Cost of sales
Research and development expenses
Selling, general and administrative
2003
EURm
29 455
–17 237
–3 760
2002
EURm
30 016
–18 278
–3 052
2001
EURm
31 191
–19 787
–2 985
expenses
6,7
–3 363
–3 239
–3 523
Customer finance impairment charges,
net of reversals
Impairment of goodwill
Amortization of goodwill
7
7
9
Operating profit
Share of results of associated companies
Financial income and expenses
2, 3, 4, 5, 6, 7, 9
32
10
11
28
Profit before tax and minority interests
Tax
Minority interests
Net profit
Earnings per share
Basic
Diluted
Average number of shares
(1 000 shares)
Basic
Diluted
See Notes to Consolidated Financial Statements.
226
–151
–159
5 011
–18
352
–279
–182
–206
4 780
–19
156
–714
–518
–302
3 362
–12
125
5 345
–1 699
–54
4 917
–1 484
–52
3 475
–1 192
–83
3 592
3 381
2 200
2003
EUR
0.75
0.75
2002
EUR
0.71
0.71
2001
EUR
0.47
0.46
28
2003
2002
2001
4 761 121 4 751 110 4 702 852
4 761 160 4 788 042 4 787 219
8 | Nokia in 2003
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C O N S O L I DAT E D F I N A N C I A L STAT E M E N T S ACCO R D I N G TO I A S
Consolidated balance sheets, IAS
Dec. 31
ASSETS
Fixed assets and other non–current assets
Capitalized development costs
Goodwill
Other intangible assets
Property, plant and equipment
Investments in associated companies
Available-for-sale investments
Deferred tax assets
Long-term loans receivable
Other non-current assets
Notes
2003
EURm
2002
EURm
12
12
12
13
14
15
24
16
537
186
185
1 566
76
121
743
354
69
3 837
1 072
476
192
1 874
49
238
731
1 056
54
5 742
Current assets
Inventories
Accounts receivable, net of allowances for doubtful
17, 19
1 169
1 277
accounts (2003: EUR 367 million, 2002: EUR 300 million) 18, 19
18
Prepaid expenses and accrued income
Other financial assets
Available-for-sale investments
Available-for-sale investments, cash equivalents
Bank and cash
15
15, 34
34
5 231
1 106
465
816
10 151
1 145
20 083
23 920
5 385
1 156
416
–
7 855
1 496
17 585
23 327
Notes
2003
EURm
2002
EURm
21
20
22
23
24
25
26
27
288
2 272
–1 373
–85
93
13 953
15 148
164
20
241
67
328
387
84
2 919
2 468
2 422
8 280
287
2 225
–20
135
–7
11 661
14 281
173
187
207
67
461
377
–
2 954
2 611
2 470
8 412
Total assets
Dec. 31
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity
Share capital
Share issue premium
Treasury shares, at cost
Translation differences
Fair value and other reserves
Retained earnings
Minority interests
Long-term liabilities
Long-term interest-bearing liabilities
Deferred tax liabilities
Other long-term liabilities
Current liabilities
Short-term borrowings
Current portion of long-term debt
Accounts payable
Accrued expenses
Provisions
Total shareholders’ equity and liabilities
23 920
23 327
See Notes to Consolidated Financial Statements.
Nokia in 2003 | 9
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C O N S O L I DAT E D F I N A N C I A L STAT E M E N T S ACCO R D I N G TO I A S
Consolidated cash flow statements, IAS
Financial year ended Dec. 31
Notes
Cash flow from operating activities
Net profit
Adjustments total
Net profit before change in net working capital
Change in net working capital
33
33
Cash generated from operations
Interest received
Interest paid
Other financial income and expenses
Income taxes paid
2003
EURm
3 592
2 953
6 545
–203
6 342
256
–33
119
–1 440
2002
EURm
3 381
3 151
6 532
955
7 487
229
–94
139
–1 947
Net cash from operating activities
5 244
5 814
Cash flow from investing activities
Acquisition of Group companies, net of acquired cash
(2003: EUR 0 million 2002: EUR 6 million 2001: EUR 12 million)
Purchase of non-current available-for-sale investments
Purchase of shares in associated companies
Additions to capitalized development costs
Long-term loans made to customers
Proceeds from repayment and sale of long term
loans receivable
Proceeds from (+) / payment of (–)
other long–term receivables
Proceeds from (+) / payment of (–)
short–term loans receivable
Capital expenditures
Proceeds from disposal of shares in Group companies,
net of disposed cash
Proceeds from sale of non-current available-for-sale
investments
Proceeds from sale of fixed assets
Dividends received
–7
–282
–61
–218
–97
315
–18
63
–432
–
381
19
24
–10
–99
–
–418
–563
314
–32
–85
–432
93
162
177
25
2001
EURm
2 200
4 132
6 332
978
7 310
226
–155
99
–933
6 547
–131
–323
–
–431
–1 129
–
84
–114
–1 041
–
204
175
27
Net cash used in investing activities
–313
–868
–2 679
Cash flow from financing activities
Proceeds from stock option exercises
Purchase of treasury shares
Capital investment by minority shareholders
Proceeds from long-term borrowings
Repayment of long-term borrowings
Proceeds from (+) / repayment of (–)
short–term borrowings
Dividends paid
23
–1 355
–
8
–56
–22
–1 378
163
–17
26
100
–98
77
–21
4
102
–59
–406
–1 348
–602
–1 396
Net cash used in financing activities
–2 780
–1 580
–1 895
Foreign exchange adjustment
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning
of period
–182
1 969
–163
3 203
9 351
6 125
Cash and cash equivalents at end of period
11 320
9 328
–43
1 930
4 183
6 113
10 | Nokia in 2003
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C O N S O L I DAT E D F I N A N C I A L STAT E M E N T S ACCO R D I N G TO I A S
Notes
2003
EURm
2002
EURm
2001
EURm
Change in net fair value of current
available-for-sale investments
–24
23
12
As reported on balance sheet
11 296
9 351
6 125
Movement in cash and cash equivalents:
At beginning of year as previously reported
9 351
6 125
4 183
On adoption of IAS 39 remeasurement of current
available-for-sale investments to fair value
–
–
42
At beginning of year as restated
9 351
6 125
4 225
Net fair value gains (+)/losses(–)
on current available-for-sale investments
Net increase in cash and cash equivalents
As reported on balance sheet
At end of year comprising:
Bank and cash
Current available-for-sale
–24
1 969
11 296
23
3 203
9 351
–30
1 930
6 125
1 145
1 496
1 854
investments, cash equivalents
15, 34
10 151
11 296
7 855
9 351
4 271
6 125
See Notes to Consolidated Financial Statements.
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.
NOKIA IN 2003_s03-16
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Nokia in 2003 | 11
C O N S O L I DAT E D F I N A N C I A L STAT E M E N T S ACCO R D I N G TO I A S
Consolidated statements of changes in shareholders’ equity, IAS
Group, EURm
Number of
shares (1 000)
Share
capital
Share issue
premium
Treasury
shares
Translation
differences
Balance at December 31, 2000
4 692 133
282
1 695
–157
Effect of adopting IAS 39
Balance at January 1, 2001, restated
4 692 133
18 329
23 057
–995
3 778
Share issue related to acquisitions
Stock options exercised
Stock options issued on acquisitions
Stock options exercised related to
acquisitions
Acquisition of treasury shares
Reissuance of treasury shares
Dividend
Translation differences
Net investment hedge losses
Cash flow hedges, net
Available-for-sale investments, net
Other increase, net
Net profit
282
1
1
1 695
–157
331
76
20
–10
–52
–21
157
347
347
65
–86
Balance at December 31, 2001
4 736 302
Stock options exercised
Stock options exercised related to
50 377
284
3
–900
983
acquisitions
Tax benefit on stock options exercised
Acquisition of treasury shares
Reissuance of treasury shares
Dividend
Translation differences
Net investment hedge gains
Cash flow hedges, net of tax
Available-for-sale investments, net of tax
Other increase, net
Net profit
2 060
–21
326
160
–17
22
–17
18
–285
94
Fair value
and other
reserves
–
–56
–56
Retained
earnings
Total
8 641
10 808
–56
8 641
10 752
332
77
20
–10
–21
105
–1 314
65
–86
76
0
9
2 200
12 205
163
–17
22
–17
18
–1 279
–285
94
60
–87
23
3 381
76
0
20
60
–87
–1 314
9
2 200
9 536
–1 279
23
3 381
Balance at December 31, 2002
4 786 762
287
2 225
–20
135
–7
11 661
14 281
Share issue related to acquisitions
Stock options exercised
Stock options exercised related to
acquisitions
1 225
7 160
1
–95 339
460
Tax benefit on stock options exercised
Acquisition of treasury shares
Reissuance of treasury shares
Dividend
Translation differences
Net investment hedge gains
Cash flow hedges, net of tax
Available-for-sale investments, net of tax
Other increase, net
Net profit
18
22
–6
13
–1 363
10
18
23
–6
13
–1 363
10
–1 340
–375
155
2
98
40
3 592
–375
155
2
98
–1 340
40
3 592
Balance at December 31, 2003
4 700 268
288
2 272
–1 373
–85
93
13 953
15 148
Dividends declared per share were EUR 0.30 for 2003 (EUR 0.28 for 2002 and EUR 0.27 for 2001), subject to shareholders’ approval.
See Notes to Consolidated Financial Statements.
12 | Nokia in 2003
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N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
1. Accounting principles
Basis of presentation
The consolidated financial statements of Nokia Corporation (“Nokia” or
“the Group”), a Finnish limited liability company with domicile in Hel-
sinki, are prepared in accordance with International Accounting Stand-
ards (IAS). The consolidated financial statements are presented in mil-
lions of euros (EURm), except as noted, and are prepared under the his-
torical cost convention except as disclosed in the accounting policies be-
low. The notes to the consolidated financial statements also conform
with Finnish Accounting legislation.
In 2001 the Group adopted IAS 39, Financial Instruments: Recognition
and Measurement (IAS 39). The effects of adopting the standard are sum-
marized in the consolidated statement of changes in shareholders’ equi-
ty and cash flow statements.
Use of estimates
The preparation of financial statements in conformity with generally ac-
cepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the finan-
cial statements and the reported amounts of revenues and expenses dur-
ing the reporting period. Actual results could differ from those estimates.
Principles of consolidation
The consolidated financial statements include the accounts of Nokia’s
parent company (“Parent Company”), and each of those companies in
which it either owns, directly or indirectly through subsidiaries, over
50% of the voting rights, or over which it has control of their operating
and financial policies. The Group’s share of profits and losses of associat-
ed companies (generally 20% to 50% voting rights or over which the
Group has significant influence) is included in the consolidated profit
and loss account in accordance with the equity method of accounting.
All inter-company transactions are eliminated as part of the consoli-
dation process. Minority interests are presented separately in arriving at
the net profit. They are also shown separately from shareholders’ equity
and liabilities in the consolidated balance sheet.
Profits realized in connection with the sale of fixed assets between
the Group and associated companies are eliminated in proportion to
share ownership. Such profits are deducted from the Group’s equity and
fixed assets and released in the Group accounts over the same period as
depreciation is charged.
The companies acquired during the financial periods presented have
been consolidated from the date on which control of the net assets and
operations was transferred to the Group. Similarly the result of a Group
company divested during an accounting period is included in the Group
accounts only to the date of disposal.
Goodwill
Acquisitions of companies are accounted for using the purchase method
of accounting. Goodwill represents the excess of the purchase cost over
the fair value of assets less liabilities of acquired companies. Goodwill is
amortized on a straight-line basis over its expected useful life. Useful
lives vary between two and five years depending upon the nature of the
acquisition. Expected useful lives are reviewed at each balance sheet
date and, where these differ significantly from previous estimates, am-
ortization periods are changed accordingly.
The Group assesses the carrying value of goodwill annually or, more
frequently, if events or changes in circumstances indicate that such car-
rying value may not be recoverable. If such indication exists, the recover-
able amount is determined for the cash-generating unit to which good-
will belongs. This amount is then compared to the carrying amount of
the cash-generating unit and an impairment loss is recognized if the re-
coverable amount is less than the carrying amount. Impairment losses
are recognized immediately in the profit and loss account.
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 rea-
sons, a rate that approximates the actual rate at the date of the transac-
tion is often used. At the end of the accounting period, the unsettled balanc-
es on foreign currency receivables and liabilities are valued at the rates of
exchange prevailing at the year-end. Foreign exchange gains and losses re-
lated to normal business operations are treated as adjustments to sales or to
cost of sales. Foreign exchange gains and losses associated with financing
are included as a net amount under financial income and expenses.
Foreign Group companies
In the consolidated accounts all items in the profit and loss accounts of
foreign subsidiaries are translated into euro at the average foreign
exchange rates for the accounting period. The balance sheets of foreign
Group companies are translated into euro at the year-end foreign ex-
change rates with the exception of goodwill arising on the acquisition of
a foreign company, which is translated, to euro at historical rates. Differ-
ences resulting from the translation of profit and loss account items at the
average rate and the balance sheet items at the closing rate are also
treated as an adjustment affecting consolidated shareholders’ equity. On
the disposal of all or part of a foreign Group company by sale, liquida-
tion, repayment of share capital or abandonment, the cumulative
amount or proportionate share of the translation difference is recog-
nized as income or as expense in the same period in which the gain or
loss on disposal is recognized.
Fair valuing principles
Financial assets and liabilities
Under IAS 39, the Group classifies its investments in marketable debt and
equity securities and investments in unlisted equity securities into the
following categories: held-to-maturity, trading, or available-for-sale
depending on the purpose for acquiring the investments. All investments
of the Group are currently classified as available-for-sale. Available-for-
sale investments are fair valued by using quoted market rates, discount-
ed cash flow analyses and other appropriate valuation models at the bal-
ance sheet date. Certain unlisted equities for which fair values cannot be
measured reliably are reported 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 fair value changes of available-for-sale investments are recog-
nized in shareholders’ equity. When the investment is disposed of, the
related accumulated fair value changes are released from shareholders’
equity and recognized in the profit and loss account. The accumulated
Nokia in 2003 | 13
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N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
fair value changes are calculated using a weighted average purchase
price method. An impairment is recorded when the carrying amount of
an available for sale investment is greater than the estimated fair value
and there is objective evidence that the asset is impaired. The cumula-
tive net loss relating to that investment is removed from equity and rec-
ognized in the profit and loss account for the period. If, in a subsequent
period, the fair value of the investment increases and the increase can be
objectively related to an event occurring after the loss was recognized,
the loss is reversed, with the amount of the reversal included in the prof-
it and loss account.
The fair values of other financial assets and financial liabilities are
assumed to approximate their carrying values, either because of their
short maturities, or where their fair values cannot be measured reliably.
Derivatives
Fair values of forward rate agreements, interest rate options and futures
contracts are calculated based on quoted market rates at the balance
sheet date. Interest rate and currency swaps are valued by using dis-
counted cash flow analyses. The changes in the fair values of these con-
tracts are reported in the profit and loss account.
Fair values of cash settled equity derivatives are calculated by revalu-
ing the contract at year-end quoted market rates. Changes in the fair val-
ue are reported in the profit and loss account.
Forward foreign exchange contracts are valued with the forward ex-
change rate. Changes in fair value are calculated by comparing this with the
original amount calculated by using the contract forward rate prevailing at
the beginning of the contract. Currency options are valued at the balance
sheet date by using the Garman & Kohlhagen option valuation model.
Changes in the fair value on these instruments are reported in the profit and
loss account except to the extent they qualify for hedge accounting.
Embedded derivatives are identified and monitored in the Group and
fair valued at the balance sheet date. In assessing the fair value of em-
bedded derivatives the Group uses a variety of methods, such as option
pricing models and discounted cash flow analysis, and makes assump-
tions that are based on market conditions existing at each balance sheet
date. The fair value changes are reported in the profit and loss account.
Hedge accounting
Hedging of anticipated foreign currency denominated sales and purchases
The Group applies hedge accounting for ‘Qualifying hedges’. Qualifying
hedges are those properly documented cash flow hedges of the foreign
exchange rate risk of future anticipated foreign currency denominated
sales and purchases that meet the requirements set out in IAS 39. The
cash flow being hedged must be ‘highly probable’ and must ultimately
impact the profit and loss account. The hedge must be highly effective
both prospectively and retrospectively.
The Group claims hedge accounting in respect of certain forward for-
eign exchange contracts and options, or option strategies, which have
zero net premium or a net premium paid, and where the critical terms of
the bought and sold options within a collar or zero premium structure
are the same and where the nominal amount of the sold option compo-
nent is no greater than that of the bought option.
For qualifying foreign exchange forwards the change in fair value is
deferred in shareholders’ equity to the extent that the hedge is effective.
For qualifying foreign exchange options the change in intrinsic value is
deferred in shareholders’ equity to the extent that the hedge is effective.
Changes in the time value are at all times taken directly as adjustments
to sales or to cost of sales in the profit and loss account.
Accumulated fair value changes from qualifying hedges are released
from shareholders’ equity into the profit and loss account as adjust-
ments to sales and cost of sales, in the period when the hedged cash flow
affects the profit and loss account. If the hedged cash flow is no longer
expected to take place, all deferred gains or losses are released into the
profit and loss account as adjustments to sales and cost of sales, immedi-
ately. If the hedged cash flow ceases to be highly probable, but is still ex-
pected to take place, accumulated gains and losses remain in equity until
the hedged cash flow affects the profit and loss account.
Changes in the fair value of any derivative instruments that do not
qualify for hedge accounting under IAS 39 are recognized immediately in
the profit and loss account. The fair value changes of derivative instru-
ments that directly relate to sales and purchases are recognized as ad-
justments to sales and cost of sales respectively. The fair value changes
from all other derivative instruments are recognized in financial income
and expenses.
Foreign currency hedging of net investments
The Group also applies hedge accounting for its foreign currency hedging
on net investments. Qualifying hedges are those properly documented
hedges of the foreign exchange rate risk of foreign currency-denominat-
ed net investments that meet the requirements set out in IAS 39. The
hedge must be effective both prospectively and retrospectively.
The Group claims hedge accounting in respect of forward foreign ex-
change contracts, foreign currency-denominated loans, and options, or
option strategies, which have zero net premium or a net premium paid,
and where the terms of the bought and sold options within a collar or
zero premium structure are the same.
For qualifying foreign exchange forwards the change in fair value
that reflects the change in spot exchange rates is deferred in sharehold-
ers’ equity. The change in fair value that reflects the change in forward
exchange rates less the change in spot exchange rates is recognized in the
profit and loss account. For qualifying foreign exchange options the
change in intrinsic value is deferred in shareholders’ equity. Changes in
the time value are at all times taken directly to the profit and loss ac-
count. If a foreign currency-denominated loan is used as a hedge, all for-
eign exchange gains and losses arising from the transaction are recog-
nized in shareholders’ equity.
Accumulated fair value changes from qualifying hedges are released
from shareholders’ equity into the profit and loss account only if the le-
gal entity in the given country is sold or liquidated.
Revenue recognition
Sales from the majority of the Group are recognized when persuasive
evidence of an arrangement exists, delivery has occurred, the fee is fixed
and determinable and collectibility is probable. The remainder of the
sales is recorded under the percentage of completion method.
Sales and cost of sales from contracts involving solutions achieved
through modification of telecommunications equipment are recognized
on the percentage of completion method when the outcome of the con-
tract can be estimated reliably. A contract’s outcome can be estimated
reliably when total contract revenue and the costs to complete the con-
14 | Nokia in 2003
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N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
tract can be estimated reliably, it is probable that the economic benefits
associated with the contract will flow to the company and the stage of
contract completion can be measured reliably. When the Group is not
able to meet those conditions, the policy is to recognize revenues only
equal to costs incurred to date, to the extent that such costs are expected
to be recovered.
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 ex-
pected contract revenue and costs, as well as dependable measurement
of the progress made towards project completion. Recognized revenues
and profits are subject to revisions during the project in the event that
the assumptions regarding the overall project outcome are revised. The
cumulative impact of a revision in estimates is recorded in the period
such revisions become known and estimable. Losses on projects in
progress are recognized immediately when known and estimable.
All the Group’s material revenue streams are recorded according to
the above policies.
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, ex-
cept for certain development costs, which are capitalized when it is
probable that a development project will be a success, and certain crite-
ria, including commercial and technological feasibility, have been met.
Capitalized development costs, comprising direct labor and related over-
head are amortized on a systematic basis over their expected useful lives
between two and five years.
Other intangible assets
Expenditures on acquired patents, trademarks and licenses are capital-
ized and amortized using the straight-line method over their useful lives,
but not exceeding 20 years. Where an indication of impairment exists,
the carrying amount of any intangible asset is assessed and written
down to its recoverable amount. Costs of software licenses associated
with internal-use software are capitalized. These costs are included
within other intangible assets and are amortized over a period not to
exceed three years.
Pensions
The Group companies have various pension schemes in accordance with
the local conditions and practices in the countries in which they operate.
The schemes are generally funded through payments to insurance com-
panies or to trustee-administered funds as determined by periodic actu-
arial calculations.
The Group’s contributions to defined contribution plans and to multi-
employer and insured plans are charged to the profit and loss account in
the period to which the contributions relate.
For defined benefit plans, principally the reserved portion of the
Finnish TEL system, pension costs are assessed using the projected unit
credit method: the cost of providing pensions is charged to the profit and
loss account so as to spread the service cost over the service lives of em-
ployees. The pension obligation is measured as the present value of the
estimated future cash outflows using interest rates on government secu-
rities that have terms to maturity approximating the terms of the related
liabilities. Actuarial gains and losses outside the corridor are recognized
over the average remaining service lives of employees.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depre-
ciation. Depreciation is recorded on a straight-line basis over the expect-
ed useful lives of the assets as follows:
Buildings and constructions
Production machinery, measuring and test equipment
Other machinery and equipment
20–33 years
3 years
3–10 years
Land and water areas are not depreciated.
Maintenance, repairs and renewals are generally charged to expense
during the financial period in which they are incurred. However, major
renovations are capitalized and included in the carrying amount of the
asset when it is probable that future economic benefits in excess of the
originally assessed standard of performance of the existing asset will
flow to the Group. Major renovations are depreciated over the remaining
useful life of the related asset.
Gains and losses on the disposal of fixed assets are included in operat-
ing profit/loss.
Leases
The Group has entered into various operating leases, the payments un-
der which are treated as rentals and charged to the profit and loss ac-
count on a straight-line basis over the lease terms.
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is
determined using standard cost, which approximates actual cost, on a
first in first out (FIFO) basis. Net realizable value is the amount that can
be realized from the sale of the inventory in the normal course of busi-
ness after allowing for the costs of realization.
In addition to the cost of materials and direct labor, an appropriate
proportion of production overheads are included in the inventory values.
An allowance is recorded for excess inventory and obsolescence.
Cash and cash equivalents
The Group manages its short-term liquidity through holdings of cash and
highly liquid interest-bearing securities (included as current available-
for-sale investments in the balance sheet). For the purposes of the cash
flow statement, these holdings are shown together as cash and cash
equivalents.
Accounts receivable
Accounts receivable are carried at the original invoice amount to custom-
ers less an estimate made for doubtful receivables based on a periodic
review of all outstanding amounts, which includes an analysis of histor-
ical bad debt, customer concentrations, customer creditworthiness, cur-
rent economic trends and changes in our customer payment terms. Bad
debts are written off when identified.
Nokia in 2003 | 15
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N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
Borrowings
Borrowings are classified as originated loans and are recognized initially
at an amount equal to the proceeds received, net of transaction costs in-
curred. In subsequent periods, they are stated at amortized cost using
the effective yield method; any difference between proceeds (net of
transaction costs) and the redemption value is recognized in the profit
and loss account over the period of the borrowings.
Loans to customers
Loans to customers are recorded at amortized cost. Loans are subject to
regular and thorough review as to their collectibility and as to available
collateral; in the event that any loan is deemed not fully recoverable,
provision is made to reflect the shortfall between the carrying amount
and the present value of the expected cash flows. Interest income on
loans to customers is accrued monthly on the principal outstanding at
the market rate on the date of financing and is included within other
operating income within selling, general and administrative expenses.
Income taxes
Current taxes are based on the results of the Group companies and are
calculated according to local tax rules.
Deferred tax assets and liabilities are determined, using the liability
method, for all temporary differences arising between the tax basis of
assets and liabilities and their carrying values for financial reporting
purposes. Currently enacted tax rates are used in the determination of
deferred income tax.
Under this method the Group is required, in relation to an acquisi-
tion, to make provision for deferred taxes on the difference between the
fair values of the net assets acquired and their tax bases.
The principal temporary differences arise from intercompany profit
in inventory, warranty and other provisions, untaxed reserves and tax
losses carried forward. Deferred tax assets relating to the carry forward
of unused tax losses are recognized to the extent that it is probable that
future taxable profit will be available against which the unused tax loss-
es can be utilized.
Stock options
Stock options are granted to employees. The options are granted with a
fixed exercise price set on a date outlined in the plan. When the options
are exercised, the proceeds received, net of any transaction costs, are
credited to share capital (nominal value) and share premium. Treasury
shares are acquired by the Group to meet its obligations under employee
stock option plans in the United States. When treasury shares are issued
on exercise of stock options any gain or loss is recognized in share issue
premium. Tax benefits on options exercised in the United States are cred-
ited to share issue premium.
Provisions
Provisions are recognized when the Group has a present legal or con-
structive obligation as a result of past events, it is probable that an out-
flow of resources will be required to settle the obligation and a reliable
estimate of the amount can be made. Where the Group expects a provi-
sion to be reimbursed, the reimbursement would be recognized as an
asset but only when the reimbursement is virtually certain.
The Group recognizes the estimated liability to repair or replace
products still under warranty at the balance sheet date. The provision is
16 | Nokia in 2003
calculated based on historical experience of the level of repairs and re-
placements.
The Group recognizes the estimated liability for non-cancellable pur-
chase commitments for inventory in excess of forecasted requirements
at each balance sheet date.
The Group recognizes a provision for the estimated future settle-
ments related to asserted and unasserted Intellectual Property Rights
(IPR) infringements, based on the probable outcome of each case as of
each balance sheet date.
The Group recognizes a provision for social security costs on unexercised
stock options granted to employees at the date options are granted. The pro-
vision is measured based on the fair value of the options, and the amount of
the provision is adjusted to reflect the changes in the Nokia share price.
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
The Group calculates both basic and diluted earnings per share in accord-
ance with IAS 33, Earnings per share, (IAS 33). Under IAS 33, basic earnings
per share is computed using the weighted average number of shares out-
standing during the period. Diluted earnings per share is computed using
the weighted average number of shares outstanding during the period
plus the dilutive effect of stock options outstanding during the period.
2. Segment information
Nokia is organized on a worldwide basis into three primary business
segments: Nokia Mobile Phones, Nokia Networks, and Nokia Ventures
Organization. Nokia’s reportable segments are strategic business units
that offer different products and services for which monthly financial
information is provided to the Board.
Nokia Mobile Phones develops, manufactures and supplies mobile
phones and wireless data products, including a complete range of mo-
bile phones for all major digital and analog standards worldwide.
Nokia Networks is a leading provider of mobile and IP network infra-
structure and related services. Nokia Networks aims to be a leader in IP
mobility core, radio and broadband access for network providers and
operators.
Nokia Ventures Organization exists to create new businesses outside
the natural development path of the company’s core activities. The unit
comprises venture capital activities, incubation, and a portfolio of new
ventures, including two more mature businesses: Nokia Internet Com-
munications and Nokia Home Communications.
Common Group Functions consists of common research and general
Group functions.
The accounting policies of the segments are the same as those de-
scribed in Note 1. Nokia accounts for intersegment revenues and trans-
fers as if the revenues or transfers were to third parties, that is, at cur-
rent market prices. Nokia evaluates the performance of its segments and
allocates resources to them based on operating profit.
No single customer represents 10% or more of Group revenues.
NOKIA IN 2003_s03-16
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N OT E S TO T H E CO N S O L I D AT E D F I N A N C I A L STAT E M E N TS
2003, EURm
Profit and loss information
Nokia
Mobile
Phones
Nokia
Networks
Nokia
Ventures
Organization
Common
Group
Functions
Total
reportable
segments
Net sales to external customers
Net sales to other segments
Depreciation and amortization
Impairment and customer finance charges
Operating profit
Share of results of associated
23 475
143
441
–
5 483
5 620
–
520
200
–219
–
44
4 108
–
349
17
8
40
–161
–
3
106
–
11
–11
169
–
–92
–18
54
1 071
76
29 455
149
1 138
240
5 011
–18
432
10 117
76
Elimina–
tions
–149
–22
5 273
1 628
147
159
7 207
–22
Profit and loss information
Net sales to external customers
Net sales to other segments
Depreciation and amortization
Impairment and customer finance charges
Operating profit
Share of results of associated
22 997
214
546
–
5 201
6 538
1
542
400
–49
–
93
6 163
–
441
18
33
83
–141
–
8
114
–
40
–40
190
55
–231
–19
107
965
49
30 016
193
1 311
538
4 780
–19
432
12 130
49
–193
–26
5 080
1 861
188
225
7 354
–24
–
331
4 832
–
–
224
4 888
–
companies
Balance sheet information
Capital expenditures 1
Segment assets 2
of which: Investments in
associated companies
Unallocated assets 3
Total assets
Segment liabilities 4
Unallocated liabilities 5
Total liabilities
2002, EURm
companies
Balance sheet information
Capital expenditures 1
Segment assets 2
of which: Investments in
associated companies
Unallocated assets 3
Total assets
Segment liabilities 4
Unallocated liabilities 5
Total liabilities
2001, EURm
Profit and loss information
Net sales to external customers
Net sales to other segments
Depreciation and amortization
Impairment and customer finance charges
Operating profit
Share of results of associated companies
23 107
51
642
–
4 521
–
7 521
13
511
925
–73
–
563
22
115
307
–855
–
–
–
162
80
–231
–12
31 191
86
1 430
1 312
3 362
–12
–86
1
2
Including goodwill and capitalized development costs, capital expenditures amount
to EUR 670 million in 2003 (EUR 860 million in 2002). The goodwill and capitalized
development costs consist of EUR 36 million in 2003 (EUR 41 million in 2002) for Nokia
Mobile Phones, EUR 182 million in 2003 (EUR 377 million in 2002) for Nokia Networks,
EUR 20 million in 2003 (EUR 1 million in 2002) for Nokia Ventures Organization and
EUR 0 million in 2003 (EUR 9 million in 2002) for Common Group Functions.
3
4
5
Comprises intangible assets, property, plant and equipment, investments, inventories
and accounts receivable as well as prepaid expenses and accrued income except those
related to interest and taxes.
Unallocated assets including prepaid expenses and accrued income related to taxes
and deferred tax assets (EUR 834 million in 2003 and EUR 853 million in 2002).
Comprises accounts payable, deferred income, accrued expenses and provisions except
those related to interest and taxes.
Unallocated liabilities including prepaid income and accrued expenses related to taxes
and deferred tax liabilities (EUR 394 million in 2003 and EUR 248 million in 2002).
Nokia in 2003 | 17
NOKIA IN 2003_s17-31
17
8.3.2004, 13:37
Group
29 455
–
1 138
240
5 011
–18
432
10 095
76
13 825
23 920
7 185
1 423
8 608
30 016
–
1 311
538
4 780
–19
432
12 104
49
11 223
23 327
7 330
1 543
8 873
31 191
–
1 430
1 312
3 362
–12
N OT E S TO T H E CO N S O L I DAT E D F I N A N C I A L STAT E M E N TS
Net sales to external customers
by geographic area
Finland
USA
Great Britain
Germany
China
Other
Total
Segment assets
by geographic area
Finland
USA
Great Britain
Germany
China
Other
Total
2003
EURm
347
4 475
2 693
2 297
2 013
17 630
2002
EURm
353
4 665
3 111
1 849
2 802
17 236
2001
EURm
453
5 614
2 808
2 003
3 418
16 895
29 455
30 016
31 191
2003
EURm
4 215
1 563
344
387
1 011
2 575
2002
EURm
4 913
1 777
627
431
1 107
3 249
10 095
12 104
Capital expenditures
by market area
2003
EURm
2002
EURm
2001
EURm
Finland
USA 1
Great Britain
Germany
China
Other 1
Total
160
49
9
17
53
144
432
188
71
27
21
47
78
432
477
151
34
37
131
211
1 041
1
Including goodwill and capitalized development costs, capital expenditures amount
to EUR 670 million in 2003 (EUR 860 million in 2002 and EUR 2 064 million in 2001). The
goodwill and capitalized development costs consist of EUR 20 million in USA in 2003
(1 EUR million in USA in 2002 and EUR 582 million in 2001) and EUR 218 million in other
areas in 2003 (EUR 427 million in 2002 and EUR 441 million in 2001).
3. Percentage of completion
Contract sales recognized under the cost-to-cost method of percentage of
completion accounting were approximately EUR 4.8 billion in 2003 (EUR
5.9 billion in 2002 and EUR 6.7 billion in 2001). Billings in advance of con-
tract revenues, included in prepaid income, were EUR 195 million at De-
cember 31, 2003 (EUR 108 million in 2002 and EUR 146 million in 2001).
Contract revenues recorded prior to billings were EUR 665 million at De-
cember 31, 2003 (EUR 573 million in 2002 and EUR 319 million in 2001).
Revenue recognition on initial 3G network contracts started in 2002
when Nokia Networks achieved 3G functionality for its single-mode and
dual-mode WCDMA 3G systems. Upon achieving 3G functionality for WCDMA
network projects, the Group began recognizing revenue under the cost-
to-cost input method of percentage of completion accounting and have
continued to apply the method in 2003. Until the time 3GPP specifications
required by our customers were met, the application of the cost-to-cost
input model was deferred.
4. Personnel expenses
Wages and salaries
Pension expenses, net
Other social expenses
Personnel expenses as per
profit and loss account
2003
EURm
2 501
184
341
2002
EURm
2 531
224
385
2001
EURm
2 388
193
524
3 026
3 140
3 105
Pension expenses, comprised of multi-employer, insured and defined
contribution plans were EUR 146 million in 2003 (EUR 167 million in 2002
and EUR 196 million in 2001).
Remuneration of the Chairman and the
other members of the Board of Directors,
Group Executive Board and Presidents *
* Incentives included in remuneration
22
5
19
4
16
2
Pension commitments for the management:
The retirement age of the management of the Group companies is between
60–65 years. For the Chief Executive Officer and the President of the Par-
ent Company the retirement age is 60 years. There are also three other
Group Executive Board Members whose retirement age is 60 years.
5. Pensions
The most significant pension plans are in Finland and are comprised of
the Finnish state TEL system with benefits directly linked to employee
earnings. These benefits are financed in two distinct portions. The ma-
jority of benefits are financed by contributions to a central pool with the
majority of the contributions being used to pay current benefits. The oth-
er part comprises reserved benefits which are pre-funded through the
trustee-administered Nokia Pension Foundation. The pooled portion of
the TEL system is accounted for as a defined contribution plan and the
reserved portion as a defined benefit plan. The foreign plans include
both defined contribution and defined benefit plans.
18 | Nokia in 2003
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18
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N OT E S TO T H E CO N S O L I DAT E D F I N A N C I A L STAT E M E N TS
The amounts recognized in the balance sheet relating to single employer
defined benefit schemes are as follows:
2003
2002
Domestic
Plans
EURm
Foreign
Plans
EURm
Domestic
Plans
EURm
Foreign
Plans
EURm
The principal actuarial weighted average assumptions used were as
follows:
2003
2002
Domestic
%
Foreign
%
Domestic
%
Foreign
%
Discount rate for determining
683
204
636
126
present values
–666
17
140
–343
–139
61
–539
97
45
–261
–135
63
Expected long term rate of
return on plan assets
Annual rate of increase in future
compensation levels
Pension increases
5.25
6.00
3.50
2.30
5.30
6.87
3.49
2.27
5.50
5.58
7.25
6.56
3.50
2.30
3.09
2.29
Fair value of plan assets
Present value of funded
obligations
Surplus/(Deficit)
Unrecognized net actuarial
(gains)/losses
Prepaid/(Accrued) pension
cost in balance sheet
157
–78
142
–72
The amounts recognized in the profit and loss account are as follows:
2003
EURm
2002
EURm
2001
EURm
Current service cost
Interest cost
Expected return on plan assets
Net actuarial losses (gains)
recognized in year
Past service cost
Curtailment
Total, included in personnel expenses
54
46
–55
3
–
–10
38
58
47
–61
2
11
–
57
49
40
–75
–16
–
–1
–3
Movements in prepaid pension costs recognized in the balance sheet are
as follows:
2003
EURm
2002
EURm
Prepaid pension costs at beginning of year
Net income (expense) recognized in
the profit and loss account
Contributions paid
70
–38
47
73
–57
54
Prepaid pension costs at end of year
79 *
70 *
* included within prepaid expenses and accrued income
The prepaid pension cost above is made up of a prepayment of EUR 164
million (EUR 150 million in 2002) and an accrual of EUR 85 million (EUR 80
million in 2002).
The domestic pension plans’ assets include Nokia securities with fair
values of EUR 19 million in 2003 (EUR 125 million in 2002).
The foreign pension plan assets include a self investment through a loan
provided to Nokia by the Group’s German pension fund of EUR 64 million
(EUR 66 million in 2002). (Note 31)
The actual return on plan assets was EUR 41 million in 2003 (EUR –66 million
in 2002).
6. Selling and marketing expenses, administration
expenses and other operating income and expenses
Selling and marketing expenses
Administration expenses
Other operating expenses
Other operating income
2003
EURm
–2 649
–630
–384
300
2002
EURm
–2 579
–701
–292
333
2001
EURm
–2 363
–737
–605
182
Total
–3 363
–3 239
–3 523
Other operating income for 2003 includes a gain of EUR 56 million on the
sale of the remaining shares of Nokian Tyres Ltd. In 2003, Nokia Networks
recorded a charge of EUR 80 million for personnel expenses and other
costs in connection with the restructuring taken in light of general
downturn in market conditions, of which EUR 15 million was paid during
2003. Other operating expenses in 2003 included restructuring charges of
166 million in 2001.
Other operating income for 2002 includes a gain of EUR 106 million re-
lating to the sale of Nokia Venture Partner’s investment in PayPal within
Nokia Ventures Organization. Other operating expenses for 2002 are com-
posed of various items which are individually insignificant.
The Group expenses advertising and promotion costs as incurred.
Advertising and promotional expenses were EUR 1 414 million in 2003
(EUR 1 174 million in 2002 and EUR 849 million in 2001).
Nokia in 2003 | 19
NOKIA IN 2003_s17-31
19
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N OT E S TO T H E CO N S O L I DAT E D F I N A N C I A L STAT E M E N TS
7. Impairment
2003, EURm
Customer finance impairment charges,
net of reversals
Impairment of goodwill
Impairment of available-for-sale investments
Impairment of capitalized development costs
Total, net
2002, EURm
Customer finance impairment charges, net
Impairment of goodwill
Impairment of available-for-sale investments
Total, net
2001, EURm
Customer finance impairment charges
Impairment of goodwill
Impairment of available-for-sale investments
Total
Nokia
Mobile Phones
Nokia
Networks
Nokia Ventures
Organization
Common
Group Functions
–
–
–
–
–
–
–
–
–
–
–
–
–
–226
151
–
275
200
279
121
–
400
714
211
–
925
–
–
27
–
27
–
61
22
83
–
307
6
313
–
–
–
–
–
–
–
55
55
–
–
74
74
Group
–226
151
27
275
227
279
182
77
538
714
518
80
1 312
Relating to restructuring at Nokia Networks, Nokia recorded in 2003 EUR
206 million impairment of capitalized development costs relating to the
WCDMA 3G systems. In 2003 Nokia also recorded a EUR 26 million and EUR
43 million impairment of capitalized development costs relating to Flexi-
Gateway and MetroSite systems, respectively. The impairment losses
were determined as the difference between the carrying amount of the
asset and its recoverable amount. In determining the recoverable
amount the Group calculated the present value of estimated discounted
future cash flows, using a 15% discount rate for WCDMA and FlexiGate-
way and 12% discount rate for MetroSite, expected to arise from the con-
tinuing use of the asset and from its disposal at the end of its useful life.
During 2002, Nokia recorded a net customer financing impairment
charge of EUR 279 million. Of this amount, EUR 292 million was an im-
pairment charge to write down the loans receivable to their estimated
recoverable amount related to MobilCom and EUR 13 million was a par-
tial recovery received relating to amounts written off in 2001 related to
Dolphin. The impairment charge recorded in 2002 relating to MobilCom
was substantially reversed in 2003 by EUR 226 million as a result of the
company receiving repayment of the MobilCom loans receivables in the
form of subordinated convertible perpetual bonds of France Telecom.
During 2001, Nokia recorded an impairment charge of EUR 714 million
to cover Nokia Networks’ customer loans by EUR 669 million related to a
defaulted financing to Telsim, a GSM operator in Turkey, and EUR 45 mil-
lion relating to the insolvency of Dolphin in the UK. These charges resulted
in a write-down of the company’s total exposure to Telsim and Dolphin.
Nokia Networks business, Nokia recorded an impairment charge of EUR
151 million and EUR 104 million, respectively, on goodwill related to the
acquisition of Amber Networks. The recoverable amount for Amber Net-
works was derived from the value in use discounted cash flow projec-
tions, which covers the estimated life of the Amber platform technology,
using a discount rate of 15%. At December 31, 2003, there is EUR 0 million
of Amber goodwill. The impairment is a result of significant declines in
the market outlook for products under development. In the Nokia Net-
works business in 2001, Nokia recognized a goodwill impairment charge
of EUR 170 million related to the acquisition of DiscoveryCom, as a result
of a decision to discontinue the related product development.
In 2002 and 2001, Nokia recognized impairment losses of EUR 36 mil-
lion and EUR 88 million, respectively, on goodwill related to the acquisi-
tion of Ramp Networks. In 2002 and 2001, Nokia recognized impairment
losses of EUR 25 and EUR 181 million, respectively, on goodwill related to
the acquisition of Network Alchemy. Both of these entities are part of the
Nokia Internet Communications business unit of Nokia Ventures Organi-
zation. For the impairments in 2001 the recoverable amounts were calcu-
lated based on value in use discounted cash flow projections using a dis-
count rate of 13%. The impairments in 2001 resulted from the restructur-
ing of these businesses. In 2002, the remaining goodwill balances were
written off as a result of decisions to discontinue the related product
development.
Nokia recognized various minor goodwill impairment charges total-
ing EUR 0 million in 2003 (EUR 17 million in 2002).
In 2003 and 2002 Nokia has evaluated the carrying value of goodwill
arising from certain acquisitions by determining if the carrying values of
the net assets of the cash generating unit to which the goodwill belongs
exceeds the recoverable amounts of that unit. In 2003 and 2002, in the
During 2003 the company’s investment in certain equity securities
suffered a permanent decline in fair value resulting in an impairment
charge of EUR 27 million relating to non-current available-for-sale in-
vestments (EUR 77 million in 2002 and EUR 80 million in 2001).
20 | Nokia in 2003
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8.3.2004, 13:37
N OT E S TO T H E CO N S O L I DAT E D F I N A N C I A L STAT E M E N TS
8. Acquisitions
In 2003, Nokia made three minor purchase acquisitions for a total consid-
eration of EUR 38 million, of which EUR 20 million in cash and EUR 18 mil-
lion in non-cash consideration.
In 2002, Nokia increased its voting percentage of 39.97% and holding
percentage of 59.97% in Nextrom Holding S.A. to voting percentage of
86.21% and a holding percentage of 79.33%. These increases resulted
from rights offering by Nextrom in June 2002 and by acquiring new reg-
istered and bearer shares in an offering by Nextrom in December 2002
both totalling EUR 13 million. The fair value of net assets acquired was
EUR 4 million giving rise to goodwill of EUR 9 million.
In August 2001, Nokia acquired Amber Networks, a networking infra-
structure company, for EUR 408 million, for its ability to develop fault-tol-
erant edge routers, to build on our strong market share established in
the 3G mobile networks and as part of a broader strategy to shape future
mobile network architectures. The acquisition was paid in 20 861 212
shares of Nokia stock and 2 624 434 Nokia stock options. The fair value of
net assets acquired was EUR –13 million giving rise to goodwill of EUR 421
million which represented the future cash flow projections.
In January 2001, Nokia acquired in a cash tender offer Ramp Net-
works, a provider of purpose built Internet security appliances, for EUR
147 million. The fair value of net assets acquired was EUR –16 million giv-
ing rise to goodwill of EUR 163 million.
9. Depreciation and amortization
Depreciation and
amortization by asset category
2003
EURm
2002
EURm
2001
EURm
Intangible assets
Capitalized development costs
Intangible rights
Goodwill
Other intangible assets
Property, plant and equipment
Buildings and constructions
Machinery and equipment
Other tangible assets
327
51
159
21
34
545
1
233
65
206
28
37
737
5
169
65
302
34
31
811
18
Total
1 138
1 311
1 430
Depreciation and amortization by function
Cost of sales
R&D
Selling, marketing and administration
Other operating expenses
Goodwill
214
537
185
43
159
314
473
211
107
206
367
427
264
70
302
Total
1 138
1 311
1 430
10. Financial income and expenses
2003
EURm
2002
EURm
2001
EURm
Income from available-for-sale investments
Dividend income
Interest income
Other financial income
Exchange gains and losses
Interest expense
Other financial expenses
Total
11. Income taxes
Current tax
Deferred tax
Total
Finland
Other countries
Total
24
323
38
32
–25
–40
352
25
230
27
–29
–43
–54
156
27
215
24
–25
–82
–34
125
2003
EURm
–1 686
–13
2002
EURm
–1 423
–61
2001
EURm
–1 542
350
–1 699
–1 484
–1 192
–1 118
–581
–1 102
–382
–877
–315
–1 699
–1 484
–1 192
The differences between income tax expense computed at statutory rates
(29% in Finland in 2003, 2002 and 2001) and income tax expense provided
on earnings are as follows at December 31:
2003
EURm
1 555
–
46
58
Income tax expense at statutory rate
Deduction for write-down of
investments in subsidiaries
Amortization of goodwill
Impairment of goodwill
Provisions without income
tax benefit/expense
Taxes for prior years
Taxes on foreign subsidiaries’ net income in
excess of income taxes at statutory rates
–77
Operating losses with no current tax benefit 8
53
Other
–
56
2002
EURm
1 431
–
59
70
–10
8
–59
6
–21
2001
EURm
1 011
–37
87
197
5
23
–106
16
–4
Income tax expense
1 699
1 484
1 192
At December 31, 2003 the Group had loss carry forwards, primarily attrib-
utable to foreign subsidiaries of EUR 186 million (EUR 425 million in 2002
and EUR 75 million in 2001), most of which will expire between 2005 and
2023.
Certain of the Group companies’ income tax returns for periods rang-
ing from 1998 through 2002 are under examination by tax authorities.
The Group does not believe that any significant additional taxes in excess
of those already provided for will arise as a result of the examinations.
Nokia in 2003 | 21
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N OT E S TO T H E CO N S O L I DAT E D F I N A N C I A L STAT E M E N TS
12. Intangible assets
Capitalized development costs
Acquisition cost Jan. 1
Additions
Impairment and write-offs
Accumulated amortization Dec. 31
2003
EURm
1 707
218
–455
–933
2002
EURm
1 314
418
–25
–635
Machinery and equipment
Acquisition cost Jan. 1
Additions
Disposals
Translation differences
Accumulated depreciation Dec. 31
2003
EURm
2002
EURm
3 249
336
–313
–49
–2 521
3 626
346
–637
–86
–2 303
Net carrying amount Dec. 31
537
1 072
Net carrying amount Dec. 31
702
946
Goodwill
Acquisition cost Jan. 1
Additions
Impairment charges (Note 7)
Accumulated amortization Dec. 31
Net carrying amount Dec. 31
Other intangible assets
Acquisition cost Jan. 1
Additions
Disposals
Translation differences
Accumulated amortization Dec. 31
Net carrying amount Dec. 31
1 429
20
–151
–1 112
186
524
87
–44
–13
–369
185
1 601
10
–182
–953
476
533
75
–72
–12
–332
192
The amount of capitalized development cost impairment and
write-offs in 2003 include an EUR 275 million impairment charge based
on IAS impairment review and EUR 180 million of other write-offs.
(EUR 0 million and EUR 25 million in 2002, respectively).
13. Property, plant and equipment
2003
EURm
2002
EURm
Land and water areas
Acquisition cost Jan. 1
Additions
Disposals
Translation differences
Net carrying amount Dec. 31
Buildings and constructions
Acquisition cost Jan. 1
Additions
Disposals
Translation differences
Accumulated depreciation Dec. 31
Net carrying amount Dec. 31
22 | Nokia in 2003
112
–
–
–4
108
911
5
–1
–28
–196
691
145
1
–31
–3
112
918
9
–7
–9
–171
740
Other tangible assets
Acquisition cost Jan. 1
Additions
Disposals
Translation differences
Accumulated depreciation Dec. 31
Net carrying amount Dec. 31
22
–
–1
–3
–6
12
Advance payments and fixed assets under construction
60
Acquisition cost Jan. 1
44
Additions
Disposals
–10
Transfers to:
Other intangible assets
Machinery and equipment
Translation differences
Net carrying amount Dec. 31
–4
–35
–2
53
79
7
–58
–6
–6
16
137
35
–68
–7
–34
–3
60
Total property, plant and equipment
1 566
1 874
14. Investments in associated companies
Net carrying amount Jan. 1
Additions
Share of results
Translation differences
Other movements
Net carrying amount Dec. 31
2003
EURm
2002
EURm
49
59
–18
–2
–12
76
49
24
–19
1
–6
49
In 2003, Nokia increased its ownership in Symbian from 19.0 percent to
32.2 percent by acquiring part of the shares of Symbian owned by Mo-
torola representing 13.2% of all the shares in Symbian, for EUR 57 million
(GBP 39.6 million) in cash.
In 2001, Nextrom Holding S.A. was accounted for under the equity
method. Due to the increase of Nokia’s ownership in 2002 Nextrom Hold-
ing S.A. has been fully consolidated for accounting purposes from the
date of increased ownership which is reflected in other movements.
Shareholdings in associated companies are comprised of investments in
unlisted companies in 2003 and 2002.
NOKIA IN 2003_s17-31
22
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N OT E S TO T H E CO N S O L I DAT E D F I N A N C I A L STAT E M E N TS
15. Available-for-sale investments
Fair value at Jan. 1
Additions, net
Net fair value gains/(losses)
Impairment charges (Note 7)
Fair value at Dec. 31
Non-current
Current
Current, cash equivalents
2003
EURm
8 093
2 911
111
–27
11 088
121
816
10 151
2002
EURm
4 670
3 587
–87
–77
8 093
238
–
7 855
Available-for-sale investments, comprising marketable debt and equity
securities and investments in unlisted equity shares, are fair valued, ex-
cept in the case of certain unlisted equities, where the fair value cannot
be measured reliably. Such unlisted equities are carried at cost, less im-
pairment (EUR 45 million in 2003 and EUR 48 million in 2002). Fair value
for equity investments traded in active markets and for unlisted equities,
where the fair value can be measured reliably, is EUR 77 million in 2003
and EUR 190 million in 2002. Fair value for equity investments traded in
active markets is determined by using exchange quoted bid prices. For
other investments, fair value is estimated by using the current market
value of similar instruments or by reference to the discounted cash flows
of the underlying net assets. Gains and losses arising from the change in
the fair value of available-for-sale investments are recognized directly in
fair value and other reserves.
Available-for-sale investments are classified as non-current, except
for 1) the subordinated convertible perpetual bonds of France Telecom
(convertible at any time to ordinary shares of France Telecom at a price of
EUR 40 and with a fixed coupon of 5.75% until the end of 2009, thereafter
floating rate plus a spread of 300bp, both being subject to a maximum
50bp step down linked to France Telecom’s long term credit ratings), which
are regarded as current available-for-sale investments and 2) highly liquid,
19. Valuation and qualifying accounts
interest-bearing investments held as part of the Group’s on going cash
management activities which are regarded as current available-for-sale
investments, cash equivalents. See Note 34 for details of these investments.
16. Long-term loans receivable
Long-term loans receivable, consisting of loans made to customers prin-
cipally to support their financing of network infrastructure and services
or working capital, net of allowances and write-offs amounts (Note 7),
are repayable as follows:
Under 1 year
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
17. Inventories
Raw materials, supplies and other
Work in progress
Finished goods
2003
EURm
–
354
–
–
354
2003
EURm
346
435
388
2002
EURm
–
494
–
562
1 056
2002
EURm
534
432
311
Total
1 169
1 277
18. Receivables
Prepaid expenses and accrued income mainly consist of VAT and tax
receivables, prepaid pension costs, accrued interest income and other
accruals.
Accounts receivable include EUR 40 million (EUR 21 million in 2002)
due more than 12 months after the balance sheet date.
Balance at
beginning of year
EURm
Charged to cost
and expenses
EURm
Charged to
other accounts
EURm
Deductions 1
EURm
Balance at
end of year
EURm
Allowances on
assets to which they apply:
2003
Doubtful accounts receivable
Excess and obsolete inventory
2002
Doubtful accounts receivable
Long-term loans receivable
Excess and obsolete inventory
2001
Doubtful accounts receivable
Long-term loans receivable
Excess and obsolete inventory
1 Deductions include utilization and releases of the allowances
300
290
217
13
314
236
59
263
228
229
186
-
318
108
–
334
–
–
–
–
–
–
–
–
–161
–331
–103
–13
–342
–127
–46
–283
367
188
300
0
290
217
13
314
Nokia in 2003 | 23
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20. Fair value and other reserves
Balance at Dec. 31, 2001
Cash flow hedges:
Fair value gains/(losses) in period
Available-for-sale investments:
Net fair value gains/(losses)
Transfer to profit and loss account on impairment
Transfer to profit and loss account on disposal
Balance at Dec. 31, 2002 1, 2
Cash flow hedges
Fair value gains/(losses) in period
Available-for-sale investments
Net fair value gains/(losses)
Transfer to profit and loss account on impairment
Transfer to profit and loss account on disposal
Balance at Dec. 31, 2003 1, 2
Hedging reserve
EURm
Available-for-sale
investments, EURm
–38
60
–
–
–
22
2
–
–
–
24
58
–
–155
67
1
–29
–
98
27
–27
69
Total
EURm
20
60
–155
67
1
–7
2
98
27
–27
93
1 The tax on the balance of the cash flow hedges was EUR –8 million in 2003 and EUR –9 million in 2002.
2 The tax on the balance of the available-for-sale investments was EUR –14 million in 2003 and EUR –16 million in 2002.
In order to ensure that amounts deferred in the cash flow hedging re-
serve represent only the effective portion of gains and losses on properly
designated hedges of future transactions that remain highly probable at
the balance sheet date, Nokia has adopted a process under which all de-
rivative gains and losses are initially recognized in the profit and loss
account. The appropriate reserve balance is calculated at the end of each
period and posted to equity.
Nokia continuously reviewed the underlying cash flows and the
hedges allocated thereto, to ensure that the amounts transferred to the
Hedging Reserve during the year ended December 31, 2003 and 2002 did
not include gains/losses on forward exchange contracts designated to
hedge forecasted sales or purchases that are no longer expected to occur.
Because of the number of transactions undertaken during each period
and the process used to calculate the reserve balance, separate disclosure
of the transfers of gains and losses to and from the reserve would be im-
practical.
All of the net fair value gains or losses recorded in the Fair value and
other reserve at December 31, 2003 on open forward foreign exchange
contracts which hedge anticipated future foreign currency sales or pur-
chases are transferred from the Hedging Reserve to the profit and loss ac-
count when the forecasted foreign currency cash flows occur, at various
dates up to 1 year from the balance sheet date.
21. The shares of the Parent Company
See note 16 to Notes to the financial statements of the Parent company.
22. Distributable earnings
Retained earnings
Translation differences (distributable earnings)
Treasury shares
Other non-distributable items
Portion of untaxed reserves
Distributable earnings, Dec. 31
2003
EURm
13 953
–363
–1 373
12
12 229
Retained earnings under IAS and Finnish Accounting Standards (FAS) are
substantially the same. Distributable earnings are calculated based on
Finnish legislation.
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23. Long-term liabilities
Long-term loans are repayable as follows:
Bonds
Loans from financial institutions
Loans from pension insurance companies
Other long-term finance loans
Other long-term liabilities
Deferred tax liabilities
Total long-term liabilities
Outstanding
Dec. 31, 2003
EURm
Repayment date
beyond 5 years
EURm
Outstanding
Dec. 31, 2002
EURm
–
1
18
1
67
87
241
328
–
–
18
–
67
85
62
98
15
12
67
254
207
461
2003
EURm
2002
EURm
40
36
157
179
233
98
743
–33
–22
–186
–241
502
48
109
118
183
168
105
731
–33
–25
–149
–207
524
-25
The long-term liabilities excluding deferred tax liabilities as of
December 31, 2003 mature as follows:
24. Deferred taxes
2004
2005
2006
2007
2008
Thereafter
Percent of
total
EURm
Deferred tax assets:
–
1
1
–
–
85
87
–
1.0%
0.6%
–
–
98.4%
Intercompany profit in inventory
Tax losses carried forward
Warranty provision
Other provisions
Other temporary differences
Untaxed reserves
100.0%
Total deferred tax assets
The currency mix of the Group long-term liabilities as at
December 31, 2003 was as follows:
EUR
94.44%
USD
3.93%
BRL
0.97%
Others
0.66%
At December 31, 2003 and 2002 the weighted average interest rate on
loans from financial institutions was 5.81% and 8.44%, respectively.
Deferred tax liabilities:
Untaxed reserves
Fair value gains/losses
Other
Total deferred tax liabilities
Net deferred tax asset
The tax (charged)/credited to shareholders’ equity is as follows:
Fair value and other reserves, fair value gains/losses
22
Bonds:
Million
Currency
Interest
2003
EURm
2002
EURm
1989–2004
40.0
GBP
11.375%
–
62
At December 31, 2003 the bonds are reported under short-term
borrowings as the bonds mature in 2004.
Deferred income tax liabilities have not been established for withholding
tax and other taxes that would be payable on the unremitted earnings of
certain subsidiaries, as such earnings are permanently reinvested. At
December 31, 2003 the Group had loss carry forwards of EUR 75 million
(EUR 91 million in 2002) for which no deferred tax asset was recognized
due to uncertainty of utilization of these loss carry forwards. These loss
carry forwards will expire in years 2005 through 2010.
NOKIA IN 2003_s17-31
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Nokia in 2003 | 25
N OT E S TO T H E CO N S O L I DAT E D F I N A N C I A L STAT E M E N TS
25. Short-term borrowings
Short-term borrowings consist primarily of borrowings from banks de-
nominated in different foreign currencies. The weighted average interest
rate at December 31, 2003 and 2002 was 6.73% and 6.01%, respectively.
26. Accrued expenses
Social security, VAT and other taxes
Wages and salaries
Prepaid income
Other
Total
2003
EURm
501
170
276
1 521
2 468
Other includes various amounts which are individually insignificant.
27. Provisions
IPR
Warranty infringements
EURm
EURm
Other
EURm
1 603
At Jan. 1, 2003
–36
Exchange differences
683
Additional provisions
Change in fair value
–
Unused amounts reversed –286
Charged to profit
and loss account
397
Utilized during year
–661
At Dec. 31, 2003
1 303
Analysis of total provisions at December 31:
Non-current
Current
273
–
119
–
–
119
–21
371
594
–
300
–22
–28
250
–96
748
2003
EURm
593
1 829
2002
EURm
385
212
196
1 818
2 611
Total
EURm
2 470
–36
1 102
–22
–314
766
–778
2 422
2002
EURm
460
2 010
The IPR provision is based on estimated future settlements for asserted
and unasserted past IPR infringements. Final resolution of IPR claims
generally occurs over several periods. This results in varying usage of the
provision year to year.
Other provisions mainly include provisions for non-cancellable pur-
chase commitments, tax provisions and a provision for social security
costs on stock options.
28. Earnings per share
Numerator/EURm
Basic/Diluted:
Net profit
Denominator/1 000 shares
Basic:
2003
2002
2001
3 592
3 381
2 200
Weighted average shares
4 761 121
4 751 110
4 702 852
Effect of dilutive securities:
stock options
Diluted:
40
36 932
84 367
Adjusted weighted average
shares and assumed conversions 4 761 161
4 788 042
4 787 219
Under IAS 33, basic earnings per share is computed using the weighted
average number of shares outstanding during the period. Diluted earn-
ings per share is computed using the weighted average number of shares
outstanding during the period plus the dilutive effect of stock options
outstanding during the period.
29. Commitments and contingencies
2003
EURm
2002
EURm
Collateral for our own commitments
Property under mortgages
Assets pledged
18
13
Contingent liabilities on behalf of Group companies
Other guarantees
184
Collateral given on behalf of other companies
Securities pledged 1
Contingent liabilities on behalf of other companies
Guarantees for loans 1
28
5
18
13
339
34
57
Financing commitments
Customer finance commitments 1
1 See also note 34 b
490
857
The amounts above represent the maximum principal amount of com-
mitments and contingencies.
26 | Nokia in 2003
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Property under mortgages given as collateral for our own commit-
ments include mortgages given to the Finnish National Board of Customs
as a general indemnity of EUR 18 million in 2003 (EUR 18 million in 2002).
Assets pledged for the Group’s own commitments include inventories
and available-for-sale investments of EUR 3 million and EUR 10 million,
respectively, in 2003 (EUR 3 million of inventories and EUR 10 million
available-for-sale investments in 2002).
Other guarantees include guarantees of Nokia’s performance of EUR
171 million in 2003 (EUR 332 million in 2002). However, EUR 139 million of
these guarantees are provided to certain Nokia Networks’ customers in
the form of bank guarantees, standby letters of credit and other similar
instruments. These instruments entitle the customer to claim payment
as compensation for non-performance by Nokia of its obligations under
network infrastructure supply agreements. Depending on the nature of
the instrument, compensation is payable either immediately upon request,
or subject to independent verification of nonperformance by Nokia.
Securities pledged and guarantees for loans on behalf of other com-
panies of EUR 33 million in 2003 (EUR 91 million in 2002) represent guar-
antees relating to payment by certain Nokia Networks’ customers under
specified loan facilities between such customers and their creditors. Nokia’s
obligations under such guarantees are released upon the earlier of expi-
ration of the guarantee or early payment by the customer. The majority
of the financial guarantees is expected to expire by 2004.
Financing commitments of EUR 490 million in 2003 (EUR 857 million in
2002) are available under loan facilities negotiated with customers of
Nokia Networks. Availability of the amounts is dependent upon the bor-
rower’s continuing compliance with stated financial and operational
covenants and compliance with other administrative terms of the facility.
The loans are primarily available to fund capital expenditure relating to
purchases of network infrastructure equipment and services and to fund
working capital. Certain loans are partially secured through either guar-
antees by the borrower’s direct or indirect parent or other group compa-
nies, or shares and/or other assets of the borrower, its parent or other
entities under common ownership.
The Group is party to routine litigation incidental to the normal con-
duct of business. In the opinion of management the outcome of and lia-
bilities in excess of what has been provided for related to these proceed-
ings, in the aggregate, are not likely to be material to the financial condi-
tion or results of operations.
As of December 31, 2003, the Group had purchase commitments of
EUR 1 051 million (EUR 949 million in 2002) relating to inventory pur-
chase obligations, primarily for purchases in 2004.
30. Leasing contracts
The Group leases office, manufacturing and warehouse space under var-
ious non-cancellable operating leases. Certain contracts contain renewal
options for various periods of time.
The future costs for non-cancellable leasing contracts are as follows:
2003
Leasing payments, EURm
2004
2005
2006
2007
2008
Thereafter
Total
Operating
leases
176
147
117
102
87
124
753
Rental expense amounted to EUR 285 million in 2003 (EUR 384 million in
2002 and EUR 393 million in 2001).
31. Related party transactions
Nokia Pension Foundation is a separate legal entity that manages and
holds in trust the assets for the Group’s Finnish employee benefit plans;
these assets include 0.03% of Nokia’s shares. In 2002 Nokia Pension Foun-
dation was the counterparty to equity swap agreements with the Group.
The equity swaps were entered into to hedge part of the company’s lia-
bility relating to future social security cost on stock options. During 2003,
all outstanding transactions were terminated and no new ones were
entered into. During 2002, new transactions were entered into and old
ones terminated based on the hedging need. The transactions and termi-
nations were executed on standard commercial terms and conditions.
The notional amount of the equity swaps outstanding at December 31,
2002 was EUR 12 million and the fair value EUR 0 million.
At December 31, 2003 the Group had no contribution payment liability
to Nokia Pension Foundation (EUR 14 million in 2002 included in accrued
expenses).
At December 31, 2003 the Group had borrowings amounting to EUR 64
million (EUR 66 million in 2002) from Nokia Unterstützungskasse GmbH,
the Group’s German pension fund, which is a separate legal entity.
The Group recorded net rental expense of EUR 2 million in 2003 (EUR 2
million in 2002 and EUR 4 million in 2001) pertaining to a sale-leaseback
transaction with the Nokia Pension Foundation involving certain build-
ings and a lease of the underlying land.
There were no loans granted to top management at December 31,
2003 or 2002. See Note 4, Personnel expenses, for officers and directors
remunerations.
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Nokia in 2003 | 27
N OT E S TO T H E CO N S O L I DAT E D F I N A N C I A L STAT E M E N TS
32. Associated companies
34. Risk management
2003
EURm
2002
EURm
2001
EURm
Share of results of associated companies
Dividend income
Share of shareholders’ equity of
associated companies
Receivables from associated companies
Liabilities to associated companies
–18
3
18
–
3
–19
1
30
–
7
–12
–
41
2
–
33. Notes to cash flow statement
Adjustments for:
Depreciation and amortization (Note 9)
(Profit)/loss on sale of property,
plant and equipment and
available-for-sale investments
Income taxes (Note 11)
Share of results of associated
companies (Note 32)
Minority interest
Financial income and expenses (Note 10)
Impairment charges (Note 7)
Customer financing impairment
charges and reversals
Other
2003
EURm
2002
EURm
2001
EURm
1 138
1 311
1 430
170
1 699
18
54
–352
453
–226
–1
–92
1 484
19
52
–156
245
279
9
148
1 192
12
83
–125
598
714
80
Adjustments, total
2 953
3 151
4 132
Change in net working capital
(Increase) Decrease in
short-term receivables
(Increase) Decrease in
inventories
Increase in interest-free
short-term liabilities
Change in net working capital
Non-cash investing activities
Acquisition of:
Current available-for-sale investments
in settlement of customer loan
Company acquisitions
Amber Networks
Total
–216
–41
54
–203
676
18
–
694
25
243
687
955
–
–
–
–
–286
434
830
978
–
–
408
408
General risk management principles
Nokia’s overall risk management concept is based on visibility of the key
risks preventing Nokia from reaching its business objectives. This covers
all risk areas; strategic, operational, financial and hazard risks. Risk
management at Nokia is a systematic and pro-active way to analyze, re-
view and manage all opportunities, threats and risks related to Nokia’s
objectives rather than to solely eliminate risks.
The principles documented in Nokia’s Risk Policy and accepted by the
Audit Committee of the Board of Directors require risk management and
its elements to be integrated into business processes. One of the main
principles is that the business or function owner is also the risk owner,
however, it is everyone’s responsibility at Nokia to identify risks pre-
venting us from reaching our objectives.
Key risks are reported to the business and Group level management
to create assurance on business risks and to enable prioritization of risk
management implementation at Nokia. In addition to general principles
there are specific risk management policies covering, for example, treas-
ury and customer finance risks.
Financial risks
The key financial targets for Nokia are growth, profitability, operational
efficiency and a strong balance sheet. The objective for the Treasury
function is twofold: to guarantee cost-efficient funding for the Group at
all times, and to identify, evaluate and hedge financial risks in close co-
operation with the business groups. There is a strong focus in Nokia on
creating shareholder value. The Treasury function supports this aim by
minimizing the adverse effects caused by fluctuations in the financial
markets on the profitability of the underlying businesses and by manag-
ing the balance sheet structure of the Group.
Nokia has Treasury Centers in Geneva, Singapore/Beijing and Dallas/
Sao Paolo, and a Corporate Treasury unit in Espoo. This international or-
ganization enables Nokia to provide the Group companies with financial
services according to local needs and requirements.
The Treasury function is governed by policies approved by top man-
agement. Treasury Policy provides principles for overall financial risk
management and determines the allocation of responsibilities for finan-
cial risk management in Nokia. Operating Policies cover specific areas
such as foreign exchange risk, interest rate risk, use of derivative finan-
cial instruments, as well as liquidity and credit risk. Nokia is risk averse
in its Treasury activities. Business Groups have detailed Standard Operat-
ing Procedures supplementing the Treasury Policy in financial risk man-
agement related issues.
Market risk
Foreign exchange risk
Nokia operates globally and is thus exposed to foreign exchange risk aris-
ing from various currency combinations. Foreign currency denominated
assets and liabilities together with expected cash flows from highly
probable purchases and sales give rise to foreign exchange exposures.
These transaction exposures are managed against various local currencies
because of Nokia’s substantial production and sales outside the Euro zone.
28 | Nokia in 2003
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N OT E S TO T H E CO N S O L I DAT E D F I N A N C I A L STAT E M E N TS
GBP 30%
JPY 26%
Others 17%
USD 15%
SEK 5%
AUD 7%
Due to the changes in the business environment, currency combina-
tions may also change within the financial year. The most significant
non-euro sales currencies during the year were US dollar (USD), UK pound
sterling (GBP) and Australian dollar (AUD). In general, depreciation of an-
other currency relative to the euro has an adverse effect on Nokia’s sales
and operating profit, while appreciation of another currency has a posi-
tive effect, with the exception of Japanese yen, being the only significant
foreign currency in which Nokia has more purchase than sales.
The chart above shows the breakdown by currency of the underlying
net foreign exchange transaction exposure as of December 31, 2003 (in
some of the currencies, especially the US dollar, Nokia has both substan-
tial sales as well as cost, which have been netted in the chart).
According to the foreign exchange policy guidelines of the Group,
material transaction foreign exchange exposures are hedged. Exposures
are mainly hedged with derivative financial instruments such as for-
ward foreign exchange contracts and foreign exchange options. The ma-
jority of financial instruments hedging foreign exchange risk have a du-
ration of less than a year. The Group does not hedge forecasted foreign
currency cash flows beyond two years.
Nokia uses the Value-at-Risk (“VaR”) methodology to assess the for-
eign exchange risk related to the Treasury management of the Group ex-
posures. The VaR figure represents the potential fair value losses for a
portfolio resulting from adverse changes in market factors using a speci-
fied time period and confidence level based on historical data. To correct-
ly take into account the non-linear price function of certain derivative
instruments, Nokia uses Monte Carlo simulation. Volatilities and correla-
tions are calculated from a one-year set of daily data. The VaR figures as-
sume that the forecasted cash flows materialize as expected. The VaR fig-
ures for the Group transaction foreign exchange exposure, including
hedging transactions and Treasury exposures for netting and risk man-
agement purposes, with a one-week horizon and 95% confidence level,
are shown in the table below.
ations in exchange rates. Equity changes caused by movements in for-
eign exchange rates are shown as a translation difference in the Group
consolidation. Nokia uses, from time to time, foreign exchange contracts
and foreign currency denominated loans to hedge its equity exposure
arising from foreign net investments.
Interest rate risk
The Group is exposed to interest rate risk either through market value
fluctuations of balance sheet items (i.e. price risk) and through changes
in interest income or expenses (i.e. re-investment risk). Interest rate risk
mainly arises through interest-bearing liabilities and assets. Estimated
future changes in cash flows and balance sheet structure also expose the
Group to interest rate risk.
Treasury is responsible for monitoring and managing the interest rate
exposure of the Group. Due to the current balance sheet structure of Nokia,
emphasis is placed on managing the interest rate risk of investments.
Nokia uses the VaR methodology to assess and measure the interest
rate risk in the investment portfolio, which is benchmarked against a
one-year investment horizon. The VaR figure represents the potential
fair value losses for a portfolio resulting from adverse changes in market
factors using a specified time period and confidence level based on his-
torical data. For interest rate risk VaR, Nokia uses variance-covariance
methodology. Volatilities and correlations are calculated from a one-year
set of daily data. The VaR-based interest rate risk figures for an invest-
ment portfolio with a one-week horizon and 95% confidence level are
shown in the table below.
Treasury investment portfolio Value-at-Risk (EURm)
VaR
At December 31
Average for the year
Range for the year
2003
2002
9.8
6.7
4.7–11.9
5.4
5.1
3.1–8.7
Equity price risk
Nokia has certain strategic minority investments in publicly traded com-
panies. These investments are classified as available-for-sale. The fair
value of the equity investments at December 31, 2003 was EUR 8 million
(EUR 137 million in 2002).
There are currently no outstanding derivative financial instruments
designated as hedges of these equity investments. The VaR figures for
equity investments, shown in the table below, have been calculated us-
ing the same principles as for interest rate risk.
Transaction foreign exchange position Value-at-Risk (EURm)
Equity investments Value-at-Risk (EURm)
VaR
At December 31
Average for the year
Range for the year
2003
2002
VaR
16.7
9.3
5.8–16.7
5.9
14.3
4.9–27.6
At December 31
Average for the year
Range for the year
2003
2002
0.2
3.5
0.2–9.4
6.5
8.8
5.5–19.0
Since Nokia has subsidiaries outside the Euro zone, the euro-denomi-
nated value of the shareholders’ equity of Nokia is also exposed to fluctu-
In addition to the listed equity holdings, Nokia invests in private equity
through Nokia Venture Funds. The fair value of these available-for-sale
Nokia in 2003 | 29
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N OT E S TO T H E CO N S O L I DAT E D F I N A N C I A L STAT E M E N T S
equity investments at December 31, 2003 was USD 85 million (USD 54 mil-
lion in 2002). Nokia is exposed to equity price risk on social security costs
relating to stock compensation plans. Nokia hedges this risk by entering
into cash settled equity swap and option contracts.
Credit risk
Customer Finance Credit Risk
Network operators in some markets sometimes require their suppliers
to arrange or provide term financing in relation to infrastructure
projects. Nokia has maintained a financing policy aimed at close cooper-
ation with banks, financial institutions and Export Credit Agencies to
support selected customers in their financing of infrastructure invest-
ments. Nokia actively mitigates, market conditions permitting, this expo-
sure by arrangements with these institutions and investors.
Credit risks related to customer financing are systematically ana-
lyzed, monitored and managed by Nokia’s Customer Finance organiza-
tion, reporting to the Chief Financial Officer. Credit risks are approved
and monitored by Nokia’s Credit Committee along principles defined in
the Company’s credit policy and according to the credit approval process.
The Credit Committee consists of the CFO, Group Controller, Head of Group
Treasury and Head of Nokia Customer Finance.
At the end of December 31, 2003 our long-term loans to customers, net
of allowances and write-offs, totaled EUR 354 million (EUR 1 056 million
in 2002), while financial guarantees given on behalf of third parties to-
taled EUR 33 million (EUR 91 million in 2002). In addition, we had financing
commitments totaling EUR 490 million (EUR 857 million in 2002). Total
customer financing (outstanding and committed) stood at EUR 877 mil-
lion (EUR 2 004 million in 2002).
The term customer financing portfolio at December 31, 2003 was:
Outstanding
Financing
Commitments
Total Portfolio EURm
387
490
Totals
877
The term customer financing portfolio at December 31, 2003 mainly
consists of outstanding and committed customer financing to wireless
operators Hutchison 3G UK Ltd in the United Kingdom and to TNL PCS S.A.
(Telemar) in Brazil. Total committed customer financing to Hutchison 3G
UK Ltd amounted to EUR 653 million, of which outstanding financing was
EUR 354 million, while total committed customer financing to Telemar
amounted to EUR 191 million, of which none was outstanding.
Financial credit risk
Financial instruments contain an element of risk of the counterparties
being unable to meet their obligations. This risk is measured and moni-
tored by the Treasury function. The Group minimizes financial credit
risk by limiting its counterparties to a sufficient number of major banks
and financial institutions, as well as through entering into netting ar-
rangements, which gives the Company the right to offset in the case that
the counterparty would not be able to fulfill the obligations.
Direct credit risk represents the risk of loss resulting from counter-
party default in relation to on-balance sheet products. The fixed income
and money market investment decisions are based on strict creditwor-
thiness criteria. The outstanding investments are also constantly moni-
30 | Nokia in 2003
tored by the Treasury. Nokia does not expect the counterparties to de-
fault given their high credit quality.
Current Available-for-sale investments 1, 2, 3
Maturity date less than 12 months
2003, EURm
Governments
Banks
Corporates
Maturity date 12 months or more
2003, EURm
Governments
Banks
Corporates
Total
2003, EURm
Governments
Banks
Corporates
Maturity date less than 12 months
2002, EURm
Governments
Banks
Corporates
Maturity date 12 months or more
2002 EURm
Governments
Banks
Corporates
Total
2002 EURm
Governments
Banks
Corporates
Fair Unrealized Unrealized
gains
losses
value
1 058
5 206
2 165
8 430
1 109
264
1 165
2 538
2 167
5 470
3 330
10 967
–
–1
–
–2
–3
–
–
–3
–3
–1
–1
–5
1
2
1
4
6
4
128
137
7
6
128
141
Fair Unrealized Unrealized
gains
losses
value
284
4 012
2 075
6 371
692
314
478
1 484
976
4 326
2 553
7 855
–
–
–
–
–
–
–1
–1
–
–
–1
–1
–
4
3
7
18
5
7
30
18
8
10
37
EURm
Fixed rate investments
Floating rate investments
Total
2003
10 541
426
10 967
2002
7 433
422
7 855
NOKIA IN 2003_s17-31
30
8.3.2004, 13:37
N OT E S TO T H E CO N S O L I DAT E D F I N A N C I A L STAT E M E N TS
1
Available-for-sale investments are carried at fair value in 2003 and 2002.
2 Weighted average interest rate for current available-for-sale investments
was 3.08% in 2003 and 3.54% in 2002.
3
Included within current Available-for-sale investments is EUR 31 million and
EUR 44 million of restricted cash at December 31, 2003 and 2002, respectively.
Liquidity risk
Nokia guarantees a sufficient liquidity at all times by efficient cash man-
agement and by investing in liquid interest bearing securities. Due to the
dynamic nature of the underlying business Treasury also aims at main-
taining flexibility in funding by keeping committed and uncommitted
credit lines available. During the year Nokia refinanced all its Revolving
Credit Facilities. At the end of December 31, 2003 the new committed fa-
cility totaled USD 2.0 billion. The committed credit facility is intended to
be used for U.S. and Euro Commercial Paper Programs back up purposes.
The commitment fee on the facility is 0.10% per annum.
The most significant existing funding programs include:
Revolving Credit Facility of USD 2 000 million, maturing in 2008
Local commercial paper program in Finland, totaling EUR 750 million
Euro Commercial Paper (ECP) program, totaling USD 500 million
US Commercial Paper (USCP) program, totaling USD 500 million
None of the above programs have been used to a significant degree in 2003.
Nokia’s international creditworthiness facilitates the efficient use of
international capital and loan markets. The ratings of Nokia from credit
rating agencies have not changed during the year. The ratings as at
December 31, 2003 were:
Short-term
Long-term
Standard & Poor’s
Moody’s
Standard & Poor’s
Moody’s
A-1
P-1
A
A1
Hazard risk
Nokia strives to ensure that all financial, reputation and other losses to the
Group and our customers are minimized through preventive risk manage-
ment measures or purchase of insurance. Insurance is purchased for risks,
which cannot be internally managed. Nokia’s Insurance & Risk Finance
function’s objective is to ensure that Group’s 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.
Nokia purchases both annual insurance policies for specific risks and mul-
ti-line multi-year insurance policies, where available. Nokia has concluded a
Multi-Line Multi-Year Insurance covering a variety of the above mentioned
risks in order to decrease the likelihood of non-anticipated sudden losses.
Notional amounts of derivative financial instruments 1
1
2
3
Includes the gross amount of all notional values for contracts that have not yet been
settled or cancelled. The amount of notional value outstanding is not necessarily a
measure or indication of market risk, as the exposure of certain contracts may be
offset by that of other contracts.
As at December 31, 2003 notional amounts include contracts amounting to EUR 3
billion used to hedge the shareholders’ equity of foreign subsidiaries (December 31,
2002 EUR 2 billion).
Cash settled equity swaps and options can be used to hedge risk relating to incentive
programs and investment activities.
Fair values of derivatives
The net fair values of derivative financial instruments at the balance sheet
2002
date were:
EURm
2003
EURm
Derivatives with positive fair value 1:
Forward foreign exchange contracts 2
Currency options bought
Cash settled equity options
Interest rate swaps
Embedded derivatives 3
Derivatives with negative fair value 1:
Forward foreign exchange contracts 2
Currency options written
Embedded derivatives 3
358
59
13
1
25
-108
-35
-8
235
21
28
-
14
-98
-7
-
1
2
3
Out of the forward foreign exchange contracts and currency options, fair value EUR 90
million was designated for hedges of net investment in foreign subsidiaries as at
December 31, 2003 (EUR 36 million at December 31, 2002) and reported in translation
differences.
Out of the foreign exchange forward contracts, fair value EUR 33 million was
designated for cash flow hedges as at December 31, 2003 (EUR 31 million at
December 31, 2002) and reported in fair value and other reserves.
Embedded derivatives are components of contracts having the characteristics
of derivatives, and thus requiring fair valuing of such components. The change
in the fair value is reported in other financial income and expenses.
35. Principal Nokia Group companies at December 31, 2003
Parent holding, % Group majority, %
US
DE
GB
KR
CN
Nokia Inc.
Nokia GmbH
Nokia UK Limited
Nokia TMC Limited
Beijing Capitel Nokia
Mobile Telecommunications Ltd
Nokia Finance International B.V.
NL
HU Nokia Komárom Kft
BR
IT
FR
CN
Nokia do Brazil Technologia Ltda
Nokia Italia Spa
Nokia France S.A.
Dongguan Nokia Mobile
Phones Company Ltd
Beijing Nokia Hang Xing
Telecommunications Systems Co. Ltd
CN
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
52.9
100.0
100.0
100.0
100.0
100.0
70.0
69.0
Foreign exchange forward contracts 2
Currency options bought 2
Currency options sold 2
Interest rate swaps
Cash settled equity options 3
Cash settled equity swaps 3
2003
EURm
10 271
2 924
2 478
1 500
228
–
2002
EURm
Shares in listed companies
Group holding more than 5% Group holding %
Group voting %
11 118
1 408
1 206
–
209
12
Nextrom Holding S.A.
79.33
86.21
Associated companies
Symbian Limited
32.19
32.19
A complete list of subsidiaries and associated companies is included in Nokia’s Statutory Accounts.
Nokia in 2003 | 31
NOKIA IN 2003_s17-31
31
8.3.2004, 13:37
P A R E N T CO M PA N Y
Profit and loss accounts, FAS
Cash flow statements, FAS
Financial year ended Dec. 31
Notes
2003
EURm
2002
EURm
Financial year ended Dec. 31
Notes
EURm
2003
EURm
2002
Operating profit
2, 3
3 695
3 373
Net sales
Cost of sales
Gross margin
Marketing expenses
Research and development expenses
Administrative expenses
Other operating expenses
Other operating income
Financial income and expenses
Income from long-term investments
Dividend income from Group companies
Dividend income from other companies
Interest income from Group companies
Interest income from other companies
Other interest and financial income
Interest income from Group companies
Interest income from other companies
Other financial income from other companies
Exchange gains and losses
Interest expenses and other financial expenses
Interest expenses to Group companies
Interest expenses to other companies
Other financial expenses
Financial income and expenses, total
22 402
–13 704
21 488
–13 323
Cash flow from operating activities
Net profit
Adjustments, total
8 698
8 165
–1 058
–3 496
–762
–79
392
–1 038
–2 693
–857
–370
166
Net profit before change in net working capital
Change in net working capital
Cash generated from operations
Interest received
Interest paid
Other financial income and expenses
Income taxes paid
Cash flow before extraordinary items
Extraordinary income and expenses
14
14
3 070
1 041
4 111
–660
3 451
167
–37
127
–1 095
2 613
119
2 947
999
3 946
1 088
5 034
166
–34
169
–1 659
3 676
–214
106
23
15
21
145
1
42
144
–26
–9
–19
443
363
25
25
1
122
3
1
121
–25
–10
–29
597
Net cash used in operating activities
2 732
3 462
Cash flow from investing activities
Investments in shares
Additions to capitalized development costs
Capital expenditures
Proceeds from sale of shares
Long-term loans made to customers
Proceeds from prepayment and transfers
of long-term loans receivable
Long-term loans repaid by customers
–235
–218
–36
1 024
–97
315
163
Proceeds from (+), payments of (–) short-term receivables
Dividends received
–1 420
123
–58
–418
–29
32
–563
314
74
–4 051
381
Net cash used in investing activities
–381
–4 318
Profit before extraordinary items and taxes
4 138
3 970
Extraordinary items
Group contributions
Extraordinary items, total
Cash flow from financing activities
Proceeds from share issue
93
93
119
119
Proceeds from borrowings
Repayment of borrowings
Purchase of treasury shares
Dividends paid
23
247
–64
–1 351
–1 340
163
1 941
188
–
–1 279
Profit before taxes
4 231
4 089
Net cash used in financing activities
–2 485
1 013
–1 132
–29
–1 098
–44
Net decrease (–), increase (+) in cash and cash equivalents
Cash and cash equivalents at beginning of period
–134
237
3 070
2 947
Cash and cash equivalents at end of period
103
157
80
237
See Notes to the financial statements of the parent company.
Income taxes
for the year
from previous years
Net profit
32 | Nokia in 2003
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P A R E N T CO M PA N Y
Balance sheets, FAS
Dec. 31
ASSETS
Notes
2003
EURm
2002
EURm
Dec. 31
Notes
2003
EURm
2002
EURm
SHAREHOLDERS’ EQUITY AND LIABILITIES
Fixed assets and other non-current assets
Shareholders’ equity
Intangible assets
Capitalized development costs
Intangible rights
Other intangible assets
Tangible assets
Investments
Investments in subsidiaries
Investments in associated companies
Long-term loan receivables from Group companies
Long-term loan receivables from other companies
Other non-current assets
4
5
6
6
7
Current assets
Inventories and work in progress
Raw materials and supplies
Work in progress
Finished goods
Prepaid inventories
Receivables
Trade debtors from Group companies
Trade debtors from other companies
Short-term loan receivables from Group companies
Short-term loan receivables from other companies
619
52
–
671
–
3 540
4
152
394
17
4 107
81
80
237
7
405
1 895
1 046
9 886
13
3
Prepaid expenses and accrued income from Group companies
Prepaid expenses and accrued income from other companies 454
1 071
59
–
1 130
–
3 519
5
353
1 088
22
4 987
162
115
307
1
585
1 204
1 098
8 466
28
5
517
Short-term investments
Bank and cash
13 297
11 318
31
72
47
190
18 583
18 257
8
8
9
8, 9
288
2 222
–1 351
8 062
3 070
287
2 182
–
6 454
2 947
12 291
11 870
Share capital
Share issue premium
Treasury shares
Retained earnings
Net profit for the year
Liabilities
Long-term liabilities
Bonds
Long-term liabilities from Group companies
10
–
–
–
62
2
64
Short-term liabilities
Current finance liabilities from Group companies
3 100
2 902
Current finance liabilities from other companies
Advance payments from other companies
Trade creditors to Group companies
Trade creditors to other companies
65
4
767
923
Accrued expenses and prepaid income to Group companies
16
Accrued expenses and prepaid income to other companies 1 417
6 292
–
6
828
928
6
1 653
6 323
Total liabilities
6 292
6 387
See Notes to the financial statements of the parent company.
18 583
18 257
NOKIA IN 2003_s32-70
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Nokia in 2003 | 33
N OT E S TO T H E F I N A N C I A L STAT E M E N TS O F T H E PA R E N T CO M PA N Y
1. Accounting principles
3. Depreciation and amortization
The Parent company Financial Statements are prepared according to
Finnish Accounting Standards (FAS).
See Note 1 to Notes to the consolidated financial statements.
2. Personnel expenses
Wages and salaries
Pension expenses
Other social expenses
2003
EURm
1 050
149
117
2002
EURm
948
169
110
Personnel expenses as per profit and loss account
1 316
1 227
Depreciation and amortization by asset class category
Intangible assets
2003
EURm
2002
EURm
Capitalized development costs
Intangible rights
Other intangible assets
Tangible assets
Total
Depreciation and amortization by function
R & D
Production
Selling, marketing and administration
Remuneration of the members of the Board of Directors,
the Chief Executive Officer and the President *
* Salaries include incentives
5
2
Total
4
1
Pension commitments for the management:
For the Chief Executive Officer and the President of the Parent Company
the retirement age is 60 years. There are also three other Group Executive
Board Members whose retirement age is 60 years.
Personnel average
Production
Marketing
R & D
Administration
Personnel, Dec. 31
2003
2002
4 839
1 577
12 553
3 481
5 370
1 786
11 890
3 399
22 450
22 445
2003
2002
22 132
22 261
4. Intangible assets
Capitalized development costs
Acquisition cost Jan. 1
Additions
Disposals
Accumulated amortization Dec. 31
Net carrying amount Dec. 31
Intangible rights
Acquisition cost Jan. 1
Additions
Disposals
Accumulated amortization Dec. 31
Net carrying amount Dec. 31
Other intangible assets
Acquisition cost Jan. 1
Additions
Disposals
Accumulated amortization Dec. 31
Net carrying amount Dec. 31
34 | Nokia in 2003
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8.3.2004, 13:45
327
42
–
–
369
332
–
37
369
2003
EURm
1 706
201
–491
–797
619
225
36
–5
–204
52
50
–
–47
–3
0
233
50
1
–
284
239
-
45
284
2002
EURm
1 315
418
–27
–635
1 071
214
32
–21
–166
59
52
–
–2
–50
0
N OT E S TO T H E F I N A N C I A L STAT E M E N TS O F T H E PA R E N T CO M PA N Y
5. Tangible assets
At the end of 2003 and 2002 the parent company had no tangible assets.
These assets were leased from Nokia Asset Management Oy, a company
wholly owned by Nokia Oyj.
6. Investments
Investments in subsidiaries
Acquisition cost Jan. 1
Additions
Disposals
Net carrying amount Dec. 31
Investments in associated companies
Acquisition cost Jan. 1
Additions
Disposals
Net carrying amount Dec. 31
7. Other non-current assets
Investments in other shares
Acquisition cost Jan. 1
Additions
Disposals
Net carrying amount Dec. 31
Other investments
2003
EURm
3 519
41
–20
3 540
5
–
–1
4
2002
EURm
3 448
104
–33
3 519
25
1
-21
5
2003
EURm
2002
EURm
17
231
–238
10
7
17
36
301
–319
18
4
22
Shareholdings in other companies include listed investments of EUR 0
million in 2003 (EUR 7 million in 2002). At the balance sheet date, the fair
value of these investments was EUR 1 million (EUR 71 million in 2002).
NOKIA IN 2003_s32-70
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Nokia in 2003 | 35
N OT E S TO T H E F I N A N C I A L STAT E M E N TS O F T H E PA R E N T CO M PA N Y
8. Shareholders’ equity
Parent Company, EURm
Balance at Dec. 31, 2001
Share issue
Reissuance of treasury shares
Dividend
Net profit
Balance at Dec. 31, 2002
Share issue
Reissuance of treasury shares
Acquisition of treasury shares
Dividend
Net profit
Share
capital
Share issue
premium
Treasury
shares
284
3
287
1
2 022
160
2 182
40
–
–
–1 351
Balance at Dec. 31, 2003
288
2 222
-1 351
Retained
earnings
7 734
–1 280
2 947
9 401
–1 339
3 070
11 132
Total
10 040
163
–
–1 280
2 947
11 870
41
–
–1 351
–1 339
3 070
12 291
9. Distributable earnings
11. Commitments and contingencies
Retained earnings from previous years
Net profit for the year
Retained earnings, total
Treasury shares
Distributable earnings, Dec. 31
2003
EURm
8 062
3 070
11 132
–1 351
9 781
10. Bonds
Million of
bonds
Currency
Interest
2003
EURm
1989 – 2004
40.0
GBP
11.375%
–
At December 31, 2003 the bonds are reported under short-term
borrowings as the bonds mature in 2004.
2002
EURm
6 454
2 947
9 401
–
9 401
2002
EURm
62
2003
EURm
2002
EURm
Collateral for own commitments
Mortgages
Collateral given on behalf of other companies
Assets pledged
–
28
Contingent liabilities on behalf of Group companies
Guarantees for loans
Leasing guarantees
Other guarantees
112
350
186
–
34
4
479
301
Contingent liabilities on behalf of other companies
Guarantees for loans
5
56
12. Leasing contracts
At December 31, 2003 the leasing contracts of the Parent Company
amounted to EUR 936 million (EUR 1 458 million in 2002), of which EUR
454 million related to Group internal agreements. EUR 472 million will
expire in 2004 (EUR 495 million in 2003).
13. Loans granted to top management
There were no loans granted to top management at December 31, 2003.
36 | Nokia in 2003
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N OT E S TO T H E F I N A N C I A L STAT E M E N TS O F T H E PA R E N T CO M PA N Y
14. Notes to cash flow statements
Adjustments for:
Depreciation
Income taxes
Financial income and expenses
Impairment charges
Other operating income and expenses
Adjustments, 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
2003
EURm
339
1 161
–443
374
–390
1 041
–564
181
–277
–660
2002
EURm
284
1 143
–597
289
–120
999
613
–209
684
1 088
15. Principal Nokia Group companies
on December 31, 2003
See note 35 to Notes to the consolidated financial statements.
16. Nokia Shares and Shareholders
See Nokia Shares and Shareholders p. 38–44.
NOKIA IN 2003_s32-70
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Nokia in 2003 | 37
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
Shares and share capital
Nokia has one class of shares. Each Nokia share entitles the holder to one
(1) vote at General Meetings of Nokia. With effect from April 10, 2000, the
par value of the share is EUR 0.06.
The minimum share capital stipulated in the Articles of Association is
EUR 170 million and the maximum share capital EUR 680 million. The
share capital may be increased or reduced within these limits without
amending the Articles of Association. On December 31, 2003 the share
capital of Nokia Corporation was EUR 287 777 547.60 and the total
number of shares and votes was 4 796 292 460.
On December 31, 2003 the total number of shares included 96 024 549
shares owned by the Group companies with an aggregate par value of
EUR 5 761 472.94 representing approximately 2 per cent of the total
number of shares and votes.
Share capital and shares, Dec.31, 2003 1
Share capital, EURm
2003
288
2002
287
2001
284
2000
282
1999
279
Shares (1 000, par value EUR 0.06)
4 796 292
4 787 907
4 737 530
4 696 213
4 654 064
Shares owned by the Group at year-end (1 000)
96 024
1 145
1 228
4 080
1 385
Number of shares excluding shares owned
by the Group at year-end (1 000)
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
4 700 268
4 786 762
4 736 302
4 692 133
4 652 679
4 761 121
4 751 110
4 702 852
4 673 162
4 593 761
4 761 160
4 788 042
4 787 219
4 792 980
4 743 184
Number of registered shareholders 2
133 991
129 508
116 352
94 500
48 771
1 Figures have been recalculated to reflect the par value of EUR 0.06 of the share.
2 Each account operator is included in the figure as only one registered shareholder.
Key Ratios, Dec. 31, 2003, IAS (calculation see page 48) 2003
Earnings per share from net profit, EUR
Earnings per share, basic
Earnings per share, diluted
P/E Ratio
(Nominal) dividend per share, EUR
Total dividends paid, EURm
Payout ratio
Dividend yield, %
Shareholders’ equity per share, EUR
Market capitalization, EURm 3
* Board’s proposal.
3 Shares owned by the Group companies are not included.
0.75
0.75
18.28
0.30 *
1 439 *
0.40
2.2
3.22
65 757
2002
0.71
0.71
21.34
0.28
1 341
0.39
1.8
2.98
72 537
2001
0.47
0.46
61.6
0.27
1 279
0.57
0.9
2000
0.84
0.82
56.5
0.28
1 315
0.33
0.6
1999
0.56
0.54
80.4
0.20
931
0.36
0.4
2.58
137 163
2.30
222 876
1.59
209 371
Splits of the par value of the Nokia share
Par value before
Split ratio
Par value after
Effective date
1986
1995
1998
1999
2000
FIM 100 (EUR 16.82)
FIM 20 (EUR 3.36)
FIM 5 (EUR 0.84)
FIM 2.5 (EUR 0.42)
EUR 0.24
5:1
4:1
2:1
2:1
4:1
FIM 20 (EUR 3.36)
FIM 5 (EUR 0.84)
FIM 2.5 (EUR 0.42)
EUR 0.24 4
EUR 0.06
December 31, 1986
April 24, 1995
April 16, 1998
April 12, 1999
April 10, 2000
4 At the same time with a bonus issue of EUR 0.03 per each share of a par value of EUR 0.24.
38 | Nokia in 2003
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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
Convertible bonds and stock options
The table on page 40 depicts the main features of our outstanding stock
option plans, which may result in the increase of our share capital. The
increase in share capital resulted by these stock options is the number of
shares to be issued times the par value of each share. The plans have
been approved by the Annual General Meetings in the year of the launch
of the plan.
General information about our stock option plans
Shares subscribed for pursuant to the stock options described on page 40
will entitle to dividend for the financial year in which the subscription
occurs. Other shareholder rights will commence on the date on which
the share subscription is entered in the Finnish Trade Register.
Pursuant to the stock options issued, an aggregate maximum number of
321 755 816 new shares may be subscribed for representing EUR 19 305 348.96
of the share capital and approximately 6.71 percent of the total number
of votes on December 31, 2003. During 2003 the exercise of 447 517 op-
tions resulted in the issuance of 7 160 272 new shares and the increase of
the share capital of Nokia Corporation with EUR 429 616.32.
There were no other stock options and no convertible bonds out-
standing as of December 31, 2003, the exercise of which would result in
an increase of the share capital of the Parent Company.
The Nokia Holding Inc. 1999 Stock Option Plan
In 1999 Nokia introduced a complementary stock option plan available
for Nokia employees in the U.S. and Canada (The Nokia Holding Inc. 1999
Stock Option Plan). Each stock option granted by December 31, 2000 enti-
tles the holder to purchase one Nokia ADS during certain periods of time
after April 1, 2001 until five years from the date of grant, for a price with-
in the range of USD 20.50 – 54.50 per ADS. On December 31, 2003 a total of
769 335 stock options were outstanding and 722 503 were exercisable
under the Nokia Holding Inc. 1999 Stock Option Plan. An exercise of the
stock options under the Nokia Holding Inc. 1999 Stock Option Plan does
not result in increase of the share capital of Nokia Corporation. The max-
imum number of ADSs with a par value of EUR 0.06 that may be issued
under the Nokia Holding Inc. 1999 Stock Option Plan is 2 000 000. The
shares are carried at purchase cost in the balance sheet until disposed.
Authorizations
Authorization to increase the share capital
The Board of Directors had been authorized by Nokia shareholders at the
Annual General Meeting held on March 21, 2002 to decide on an increase
of the share capital by a maximum of EUR 55 800 000 offering a maxi-
mum of 930 000 000 new shares. In 2003, the Board of Directors did not
increase the share capital on the basis of this authorization. The author-
ization expired on March 21, 2003.
At the Annual General Meeting held on March 27, 2003 Nokia share-
holders authorized the Board of Directors to decide on an increase of the
share capital by a maximum of EUR 57 000 000, of which a maximum of
EUR 3 000 000 may result from incentive plans. The increase of the share
capital may consist of one or more issues offering a maximum of 950 000 000
new shares with a par value of EUR 0.06 within one year as of the resolu-
tion of the Annual General Meeting. The share capital may be increased
in deviation from the shareholders’ pre-emptive rights for share sub-
scription provided that from the company’s perspective important finan-
cial grounds exist such as financing or carrying out of an acquisition or an-
other arrangement and granting incentives to key persons. In 2003, the
Board of Directors has increased the share capital on the basis of this au-
thorization by an aggregate of EUR 73 502.82 consisting of 1 225 047 new
shares, as a result of which the unused authorization amounted to EUR
56 926 497.18, corresponding to 948 774 953 shares on December 31,
2003. The authorization is effective until March 27, 2004.
At the end of 2003, 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 March 27, 2003 Nokia shareholders
authorized the Board of Directors to repurchase a maximum of 225 mil-
lion Nokia shares, representing less than 5 per cent of total shares out-
standing, and to resolve on the disposal of a maximum of 225 million
Nokia shares. In 2003, a total of 94 478 500 shares were repurchased un-
der the buy-back authorization, as a result of which the unused authori-
zation amounted to 130 521 500 shares on December 31, 2003. No shares
were disposed of in 2003 under the respective authorization. The shares
may be repurchased under the buy-back authorization in order to develop
the capital structure of the company, to finance or carry out acquisitions
or other arrangements, to grant incentives to key persons, to be trans-
ferred in other ways, or to be cancelled. The authorization to dispose of
the shares may be carried out pursuant to terms determined by the
Board in connection with acquisitions or other arrangements or for
incentive purposes to key persons. The Board may resolve to dispose the
shares in another proportion than that of the shareholders’ pre-emptive
rights to the company's shares, provided that from the company’s perspec-
tive important financial grounds exist for such disposal. These authoriza-
tions are effective until March 27, 2004.
NOKIA IN 2003_s32-70
39
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Nokia in 2003 | 39
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
Maximum amount of outstanding stock options, Dec. 31, 2003 5
Plan
(Year of
launch)
Total
plan
size
Number of
participants
(approx.)
Maximum number
of shares
(Sub)category
Vesting
schedule
Subscription
periods
Exercise
price
/option
Exercise
price
/share
Split
ratio
Starting
Ending
1999
1999A
Vested
April 1, 2001
December 31, 2004
67.55 EUR
16.89 EUR
1999B
Vested
April 1, 2002
December 31, 2004
225.12 EUR
56.28 EUR
1999C
Vested
April 1, 2003
December 31, 2004
116.48 EUR
29.12 EUR
4:1
4:1
4:1
144 000 000
16 000
2001
2001A+B See footnote 6
July 1, 2002
December 31, 2006
36.75 EUR
36.75 EUR
1:1
2001C3Q/01 See footnote 6
October 1, 2002
December 31, 2006
20.61 EUR
20.61 EUR
1:1
2001C4Q/01 See footnote 6
January 1, 2003
December 31, 2006
26.67 EUR
26.67 EUR
1:1
2001C1Q/02 See footnote 6
April 1, 2003
December 31, 2007
26.06 EUR
26.06 EUR
1:1
2001C3Q/02 See footnote 6
October 1, 2003
December 31, 2007
12.99 EUR
12.99 EUR
1:1
2001C4Q/02 See footnote 6
January 1, 2004
December 31, 2007
16.86 EUR
16.86 EUR
1:1
2002A+B See footnote 6
July 1, 2003
December 31, 2007
17.89 EUR
17.89 EUR
1:1
2003 2Q
2003 3Q
July 1, 2004
December 31, 2008
14.95 EUR
14.95 EUR
1:1
October 1, 2004
December 31, 2008
12.71 EUR
12.71 EUR
1:1
145 000 000 25 000
2003
94 600 000 23 000
5 Figures have been recalculated to reflect the par value of EUR 0.06 of the shares.
6 25% vest 1 year after grant; 6.25% in 12 subsequent quarterly blocks.
Note: All vested stock options are listed on the Helsinki Exchanges.
40 | Nokia in 2003
NOKIA IN 2003_s32-70
40
8.3.2004, 13:45
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
Information relating to stock options during 2003, 2002 and
2001 is as follows:
Shares under option at Dec. 31, 2000
Granted 8
Exercised
Forfeited
Shares under option at Dec. 31, 2001
Granted
Exercised
Forfeited
Shares under option at Dec. 31, 2002
Granted
Exercised
Forfeited
Shares under option at Dec. 31, 2003
Number
of shares
184 531 757
72 644 065
24 790 689
4 385 380
227 999 753
51 127 314
51 586 807
6 097 025
221 443 235
31 098 505
7 700 791
5 847 332
238 993 617
Options exercisable at Dec. 31, 2001 (shares)
Options exercisable at Dec. 31, 2002 (shares)
Options exercisable at Dec. 31, 2003 (shares)
106 300 988
107 721 842
148 150 370
Weighted
average
exercise
price 7
EUR
19.71
31.78
3.54
31.09
25.71
17.96
3.61
33.51
28.81
14.94
3.97
25.23
27.90
9.53
27.92
31.88
7 Weighted average exercise price, calculated for options where exercise price is known.
8 Includes options converted in acquisitions.
The options outstanding by range of exercise price at Dec. 31, 2003 are as follows:
Options outstanding
Vested options outstanding
Exercise
prices
EUR
0.30 – 14.72
14.95
14.97 – 17.29
17.89
18.18 – 26.67
28.87 – 36.15
36.75
38.09 – 56.28
Number of
shares
2 647 598
30 301 723
47 143 267
47 257 409
20 379 501
12 950 428
39 574 791
38 738 900
238 993 617
Weighted
average
remaining
contractual
life in years
6.25
3.39
1.00
2.60
2.24
1.06
2.32
1.02
Weighted
average
exercise
price
EUR
9.02
14.95
16.88
17.89
26.59
29.15
36.75
56.17
Weighted
average
exercise
price
EUR
7.92
–
16.88
17.89
26.53
29.15
36.75
56.14
Number of
of shares
2 038 575
–
47 086 191
14 999 068
9 552 830
12 945 688
22 835 620
38 692 398
148 150 370
NOKIA IN 2003_s32-70
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Nokia in 2003 | 41
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
Share issues and bonus issues 1999–2003
Year
1999
2000
2001
2002
2003
Type of Issue
Nokia Stock Option Plan 1994
Nokia Stock Option Plan 1995
Nokia Stock Option Plan 1997
Bonus Issue
Share issue to stockholders
Subscription
price or amount
of bonus issue EUR
0.98
1.77
3.23
0.01
of Rooftop Communications Corporation
20.04
Total
Nokia Stock Option Plan 1995
Nokia Stock Option Plan 1997
Share issue to stockholders
of Network Alchemy, Inc.
Share issue to stockholders
of DiscoveryCom, Inc.
Total
Nokia Stock Option Plan 1995
Nokia Stock Option Plan 1997
Nokia Stock Option Plan 1999 (A)
Share issue to stockholders
of Amber Networks, Inc.
Total
Nokia Stock Option Plan 1997
Nokia Stock Option Plan 1999 (A)
Total
Nokia Stock Option Plan 1997
Share issue to stockholders
of Eizel Technologies Inc.
Total
1.77
3.23
49.91
45.98
1.77
3.23
16.89
20.77
3.23
16.89
3.23
14.76
Number of
new shares
(1 000)
12 238
18 602
33 456
2 118
66 414
22 011
10 117
6 112
3 909
42 149
1 682
20 993
382
18 329
41 386
50 357
20
50 377
7 160
1 225
8 385
Date of
payment
Net
proceeds
EURm
New share
capital
EURm
1999
1999
1999
1999
1999
2000
2000
2000
2000
2001
2001
2001
2001
2002
2002
2003
2003
12.03
32.85
107.97
42.45
195.30
38.87
32.65
305.06
179.75
556.33
2.97
67.81
6.46
380.72
457.96
162.50
0.33
162.83
23.11
18.08
41.19
0.73
1.12
2.01
36.05
0.13
40.04
1.32
0.61
0.37
0.23
2.53
0.10
1.26
0.02
1.10
2.48
3.02
0.00
3.02
0.43
0.07
0.50
Reductions of share capital
Type of reduction
Cancellation of shares
Cancellation of shares
Number
of affected
(1 000, par value
EUR 0.06)
Amount of
reduction of the
share capital
EURm
Amount of
reduction of the
restricted capital
EURm
Amount of
reduction of the
retained earnings
EURm
257 123
69
15.43
0.004
–
–
3 435.27
–
Year
1999
2001
42 | Nokia in 2003
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8.3.2004, 13:45
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
Share turnover (all stock exchanges) 9
2003
2002
2001
2000
Share turnover (1 000)
Total number of shares (1 000)
% of total number of shares
11 788 172
4 796 292
246
12 926 683
4 787 907
270
11 457 748
4 737 530
242
7 827 428
4 696 213
167
1999
7 930 612
4 654 064
170
Share prices, EUR (Helsinki Exchanges) 10
Low/high
Average 11
Year-end
2003
2002
2001
2000
1999
11.44/16.16
14.12
13.71
11.10/29.45
18.13
15.15
14.35/46.50
24.57
28.96
35.81/64.88
51.09
47.50
13.74/45.00
21.67
45.00
Share prices, USD (New York Stock Exchange) 11
2003
2002
2001
2000
1999
ADS
Low/high
Average 11
Year-end
12.67/18.45
15.99
17.00
10.76/26.90
16.88
15.50
12.95/44.69
24.84
24.53
29.44/61.88
47.36
43.50
15.05/47.77
23.16
47.77
9 Figures have been recalculated to reflect the par value of EUR 0.06 of the share.
10 Figures have been recalculated to reflect the par value of EUR 0.06 of the share.
11 Calculated by weighing average price with daily volumes.
Shareholders, December 31, 2003
Shareholders registered in Finland represent 11.43 per cent and share-
holders registered in the name of a nominee represent 88.57 per cent of
the total number of shares of Nokia. The number of registered shareholders
was 133 991 on December 31, 2003. Each account operator (28) is included
in this figure as only one registered shareholder.
Nominee registered shareholders include holders of American Depos-
itary Receipts (ADR) and Svenska Depåbevis (SDB). As of December 31,
2003 ADR’s represented 25.29 per cent and SDB’s 3.30 per cent of the total
number of shares in Nokia.
Largest shareholders registered in Finland, Dec. 31, 2003
(excluding nominee registered shares
and shares owned by Nokia Corporation 12)
Total number of shares
(1 000)
Per cent of all the shares
and voting rights
Svenska Litteratursällskapet i Finland r f
Sigrid Jusélius Stiftelse
BNP Arbitrage
The Local Government Pensions Institution
The Finnish Cultural Foundation
Ilmarinen Mutual Pension Insurance Company
Varma Mutual Pension Insurance Company
Finnish National Fund for Research and Developement (SITRA)
The State Pension Fund
Samfundet Folkhälsan i Svenska Finland
12 Nokia Corporation owned 94 478 500 Nokia shares as of December 31, 2003.
20 611
16 500
14 139
9 130
7 756
7 596
6 474
5 435
5 400
4 552
0.43
0.34
0.29
0.19
0.16
0.16
0.13
0.11
0.11
0.09
NOKIA IN 2003_s32-70
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10.3.2004, 12:02
Nokia in 2003 | 43
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
Shares and stock options owned by the members of
the Board of Directors and the Group Executive Board
Members of the Board of Directors and the Group Executive Board owned
on December 31, 2003 an aggregate of 1 381 431 shares representing
approximately 0.03 per cent of the aggregate number of shares and vot-
ing rights, as well as stock options, which, if exercised in full, would be
exercisable for 14 781 000 shares representing approximately 0.31 per cent
of the total number of shares and voting rights on December 31, 2003.
Breakdown of share ownership, Dec. 31, 2003 13
By number of shares owned
Number of
shareholders
Per cent of
shareholders
Total number
of shares
Per cent of
share capital
Average
holding
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
By nationality, per cent
Non-Finnish shareholders
Finnish shareholders
Total
47 692
60 108
21 494
4 287
317
44
31
18
35.59
44.86
16.04
3.20
0.24
0.03
0.02
0.01
2 890 705
23 510 875
68 369 292
113 005 750
64 961 611
31 520 465
61 133 771
4 430 899 991
0.06
0.49
1.43
2.36
1.35
0.66
1.27
92.38
0.06
0.49
1.43
2.36
1.35
0.66
1.27
92.38
133 991
100.00
4 796 292 460
100.00
100.00
By shareholder category (Finnish shareholders), per cent
Shares
Corporations
Households
Financial and insurance institutions
Non-profit organizations
General government
Shares
89.18
10.82
100.00
Total
2.68
4.19
0.71
2.15
1.09
10.82
13
Please note that the breakdown covers only shareholders registered in Finland,
and each account operator (28) is included in the number of shareholders as only
one registered shareholder. Due to this, the breakdown is not illustrative to the
entire shareholder base of Nokia.
44 | Nokia in 2003
NOKIA IN 2003_s32-70
44
8.3.2004, 13:45
N O K I A 1999–200 3, IAS
2003
2002
2001
2000
1999
Profit and loss account, EURm
Net sales
Cost and expenses
Operating profit
Share of results of associated companies
Financial income and expenses
Profit before tax and minority interests
Tax
Minority interests
Net profit
Balance sheet items, EURm
Fixed assets and other non-current assets
Current assets
Inventories
Accounts receivable and prepaid expenses
Available-for-sale investments
Cash and cash equivalents
Shareholders’ equity
Minority shareholders’ interests
Long-term liabilities
Long-term interest-bearing liabilities
Deferred tax liabilities
Other long-term liabilities
Current liabilities
Short-term borrowings
Current portion of long-term loans
Accounts payable
Accrued expenses and provisions
Total assets
29 455
–24 444
5 011
–18
352
5 345
–1 699
–54
3 592
3 837
20 083
1 169
6 802
816
11 296
15 148
164
328
20
241
67
8 280
387
84
2 919
4 890
23 920
30 016
–25 236
4 780
–19
156
4 917
–1 484
–52
3 381
5 742
17 585
1 277
6 957
–
9 351
14 281
173
461
187
207
67
8 412
377
–
2 954
5 081
23 327
31 191
–27 829
3 362
–12
125
3 475
–1 192
–83
2 200
6 912
15 515
1 788
7 602
–
6 125
12 205
196
460
207
177
76
9 566
831
–
3 074
5 661
22 427
30 376
–24 600
5 776
–16
102
5 862
–1 784
–140
3 938
6 388
13 502
2 263
7 056
–
4 183
10 808
177
311
173
69
69
8 594
1 069
47
2 814
4 664
19 890
19 772
–15 864
3 908
–5
–58
3 845
–1 189
–79
2 577
3 487
10 792
1 772
4 861
–
4 159
7 378
122
407
269
80
58
6 372
792
1
2 202
3 377
14 279
NOKIA IN 2003_s32-70
45
8.3.2004, 13:45
Nokia in 2003 | 45
N O K I A 199 9–2003, IAS
2003
2002
2001
2000
1999
23 618
5 620
366
–
–149
29 455
16 623
347
6 273
6 559
29 455
5 483
–219
–161
–92
5 011
27 196
16 115
1 536
6 758
51 605
22 626
11 479
9 947
7 553
51 605
2 064
1 540
124
32
3 760
23 211
6 539
459
–
–193
30 016
16 111
353
6 541
7 364
30 016
5 201
–49
–141
–231
4 780
26 090
18 463
1 566
6 595
52 714
22 615
12 057
10 093
7 949
52 714
1 884
995
136
37
3 052
23 158
7 534
585
–
–86
31 191
15 330
453
7 891
7 970
31 191
4 521
–73
–855
–231
3 362
27 320
22 040
2 155
6 201
57 716
23 653
14 045
11 215
8 803
57 716
1 599
1 135
221
30
2 985
21 887
7 714
854
–
–79
30 376
15 554
494
7 708
7 114
30 376
4 879
1 358
–387
–74
5 776
27 353
23 508
2 222
5 625
58 708
24 495
14 365
11 491
8 357
58 708
1 306
1 013
235
30
2 584
13 182
5 673
415
580
–78
19 772
10 614
479
4 909
4 249
19 772
3 099
1 082
–175
–98
3 908
20 975
22 804
1 256
6 142
51 177
23 155
12 997
8 818
6 207
51 177
835
777
110
33
1 755
Net sales by business group, EURm
Nokia Mobile Phones
Nokia Networks
Nokia Ventures Organization
Discontinued Operations 1
Inter-business group eliminations
Nokia Group
Net sales by market area, EURm
Europe
of which Finland
Americas
Asia-Pacific
Nokia Group
Operating profit/loss, EURm
Nokia Mobile Phones
Nokia Networks
Nokia Ventures Organization
Common Group Expenses 2
Nokia Group
Average personnel
Nokia Mobile Phones
Nokia Networks
Nokia Ventures Organization
Common Group Functions3
Nokia Group
In Finland
Other European countries
Americas
Asia-Pacific
Nokia Group
Research and development, EURm
Nokia Mobile Phones
Nokia Networks
Nokia Ventures Organization
Common Group Expenses 2
Nokia Group
1 Discontinued Operations include discontinued and divested operations as follows: Display Products 1999.
2 Common Group Expenses include the operating profit/loss of Common Group Functions and discontinued and divested operations.
3 Common Group Functions also include discontinued and divested operations.
46 | Nokia in 2003
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N O K I A 199 9–200 3, IAS
2003
29 455
–1.9
29 108
3 026
5 011
17.0
352
1.2
5 345
18.1
3 592
12.2
1 699
1 439 *
432
1.5
1 013
3.4
3 760
12.8
51 605
8 117
491
34.7
24.4
64.8
–71
2002
30 016
–3.8
29 663
3 140
4 780
15.9
156
0.5
4 917
16.4
3 381
11.3
1 484
1 340
432
1.4
966
3.2
3 052
10.2
52 714
8 309
564
35.3
25.5
62.5
–61
2001
31 191
2.7
30 738
3 235
3 362
10.8
125
0.4
3 475
11.1
2 200
7.1
1 192
1 279
1 041
3.3
2 149
6.9
2 985
9.6
57 716
8 988
1 038
27.9
19.1
56.0
–41
2000
30 376
53.6
29 882
2 888
5 776
19.0
102
0.3
5 862
19.3
3 938
13.0
1 784
1 315
1 580
5.2
3 095
10.2
2 584
8.5
58 708
7 616
1 289
58.0
43.3
55.7
–26
1999
19 772
48.4
19 293
2 383
3 908
19.8
–58
–0.3
3 845
19.4
2 577
13.0
1 189
931
1 358
6.9
1 889
9.6
1 755
8.9
51 177
5 717
1 062
55.7
41.3
53.3
–41
Key ratios and economic indicators
Net sales, EURm
Change, %
Exports and foreign subsidiaries, EURm
Salaries and social expenses, EURm
Operating profit, EURm
% of net sales
Financial income and expenses, EURm
% of net sales
Profit before tax and minority interests, EURm
% of net sales
Net profit, EURm
% of net sales
Taxes, EURm
Dividends, EURm
Capital expenditure, EURm
% of net sales
Gross investments **, EURm
% of net sales
R&D expenditure, EURm
% of net sales
Average personnel
Non–interest bearing liabilities, EURm
Interest–bearing liabilities, EURm
Return on capital employed, %
Return on equity, %
Equity ratio, %
Net debt to equity, %
* Board’s proposal
** Includes acquisitions, investments in shares and capitalized development costs.
Calculation of Key Ratios, see page 48.
NOKIA IN 2003_s32-70
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Nokia in 2003 | 47
C A LC U L AT I O N O F K E Y R AT I O S
Return on capital employed, %
Profit before taxes and minority interests
+ interest and other net financial expenses
Average shareholders’ equity + short-term borrowings
+ long-term interest-bearing liabilities (including the current portion thereof)
+ minority shareholders’ interests
Return on shareholders’ equity, %
Net profit
Average shareholders’ equity during the year
Equity ratio, %
Shareholders’ equity + minority shareholders’ interests
Total assets – advance payments received
Net debt to equity (gearing), %
Long-term interest-bearing liabilities (including the current portion thereof)
+ short-term borrowings – cash and cash equivalents
Shareholders’ equity + minority shareholders’ interests
Year-end currency rates 2003
USD
GBP
SEK
JPY
1 EUR =
1.2274
0.7029
8.9992
132.32
Key ratios under IAS
Operating profit
Profit after depreciation
Shareholders’ equity
Share capital + reserves
Earnings per share
Net profit
Average of adjusted number of shares during the year
P/E ratio
Adjusted share price, December 31
Earnings per share
Dividend per share
Nominal dividend per share
The adjustment coefficients of the share issues that have
taken place during or after the year in question
Payout ratio
Dividend per share
Earnings per share
Dividend yield, %
Nominal dividend per share
Share price
Shareholders’ equity per share
Shareholders’ equity
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
48 | Nokia in 2003
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P R O P O S A L B Y T H E B OA R D O F D I R E C TO R S TO T H E A N N U A L G E N E R A L M E E T I N G
The distributable earnings in the balance sheet of the Group amount to
EUR 12 229 million and those of the Company to EUR 9 781 million.
The Board proposes that from the funds at the disposal of the Annual
General Meeting, a dividend of EUR 0.30 per share is to be paid out on a
total of 4 796 292 460 shares, amounting to EUR 1 439 million.
Espoo, January 22, 2004.
Jorma Ollila
Chairman and CEO
Paul J. Collins
Georg Ehrnrooth
Bengt Holmström
Per Karlsson
Robert F.W. van Oordt
Marjorie Scardino
Vesa Vainio
Arne Wessberg
Pekka Ala-Pietilä
President
NOKIA IN 2003_s32-70
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Nokia in 2003 | 49
AUDITORS’ REPORT
To the shareholders of Nokia Corporation
We have audited the accounting records, the financial statements and
the administration of Nokia Corporation for the year ended December 31,
2003. The financial statements prepared by the Board of Directors and
the President include the report of the Board of Directors, consolidated
financial statements prepared in accordance with International Account-
ing Standards (IAS), and parent company financial statements prepared
in accordance with prevailing regulations in Finland (FAS). Based on our
audit we express an opinion on the consolidated financial statements
and on the parent company’s financial statements and administration.
We conducted our audit in accordance with Finnish Generally Accepted
Auditing Standards. Those standards require that we plan and perform
the audit in order to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit in-
cludes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting princi-
ples used and significant estimates made by the management, as well as
evaluating the overall financial statement presentation. The purpose of
our audit of the administration has been to examine that the Chairman
and the other members of the Board of Directors and the President have
complied with the rules of the Finnish Companies’ Act.
Consolidated financial statements
In our opinion, the consolidated financial statements prepared in accord-
ance with International Accounting Standards (IAS) give a true and fair
view of the consolidated results of operations as well as of the financial
position. The financial statements are in accordance with prevailing reg-
ulations in Finland and can be adopted.
Parent company’s financial statements and administration
The financial statements have been prepared in accordance with the
Finnish Accounting Act and other rules and regulations governing the
preparation of financial statements in Finland. The financial statements
give a true and fair view, as defined in the Finnish Accounting Act, of the
parent company’s result of operations, as well as the financial position.
The financial statements can be adopted and the Chairman and the other
members of the Board of Directors and the President of the parent com-
pany can be discharged from liability for the period audited by us. The
proposal by the Board of Directors concerning the disposition of the prof-
it for the year is in compliance with the Finnish Companies’ Act.
Espoo, January 22, 2004.
PricewaterhouseCoopers Oy
Authorized Public Accountants
Eero Suomela
Authorized Public Accountant
50 | Nokia in 2003
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A D D I T I O N A L I N F O R M A T I O N
U.S. GAAP
Critical accounting policies
Group Executive Board
Board of Directors
Risk factors
Corporate Governance
Investor information
General contact information
52
55
58
60
62
63
68
69
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Nokia in 2003 | 51
U .S . GAAP
The Group’s consolidated financial statements are prepared in accord-
ance with International Accounting Standards, which differ in certain
respects from accounting principles generally accepted in the United
States (U.S. GAAP). The principal differences between IAS and U.S. GAAP are
presented below together with explanations of certain adjustments that
affect consolidated net income and total shareholders’ equity as of and
for the years ended December 31:
Reconciliation of net income
Net income reported under IAS
U.S. GAAP adjustments:
Pension expense
Development costs
Provision for social security
cost on stock options
Stock compensation expense
Cash flow hedges
Net investment in foreign companies
Amortization of identifiable
intangible assets acquired
Amortization of goodwill
Impairment of goodwill
Deferred tax effect of
U.S. GAAP adjustments
2003
EURm
2002
EURm
2001
EURm
3 592
3 381
2 200
–12
322
–21
–9
9
–
–22
162
151
–75
–5
–66
–90
–35
6
48
–22
206
104
76
–22
–104
–132
–85
-22
–
–7
28
–
47
Net income under U.S. GAAP
4 097
3 603
1 903
Reconciliation of shareholders’ equity
Total shareholders’ equity reported under IAS 15 148
14 281
U.S. GAAP adjustments:
Pension expense
Additional minimum liability
Development costs
Marketable securities and
unlisted investments
Provision for social security
cost on stock options
Deferred compensation
Share issue premium
Stock compensation
Acquisition purchase price
Amortization of identifiable
intangible assets acquired
Amortization of goodwill
Impairment of goodwill
Translation of goodwill
Deferred tax effect of
U.S. GAAP adjustments
–49
–
–99
49
14
–10
186
–176
3
–51
396
255
–293
–37
–5
–421
77
35
–13
179
–166
4
–29
234
104
–240
64
147
Total shareholders’ equity under U.S. GAAP
15 437
14 150
Pension expense and additional minimum liability
Under IAS, pension assets, defined benefit pension liabilities and expense
are actuarially determined in a similar manner to U.S. GAAP. However, under
IAS the prior service cost, transition adjustments and expense resulting from
plan amendments are generally recognized immediately. Under U.S. GAAP,
these expenses are generally recognized over a longer period. Also, under
U.S. GAAP the employer should recognize an additional minimum pension li-
ability charged to other comprehensive income when the accumulated ben-
efit obligation (ABO) exceeds the fair value of the plan assets and this amount
is not covered by the liability recognized in the balance sheet. The calcula-
tion of the ABO is based on approach two as described in EITF 88-1, Determi-
nation of Vested Benefit Obligation for a Defined Benefit Pension Plan, under
which the actuarial present value is based on the date of separation from
service. The U.S. GAAP pension adjustment reflects the difference between
the prepaid pension asset and related pension expense as determined by
applying IAS 19, Employee Benefits, and the pension asset and pension ex-
pense determined by applying FAS 87, Employers’ Accounting for Pensions.
Development costs
Development costs have been capitalized under IAS after the product in-
volved has reached a certain degree of technical feasibility. Capitaliza-
tion ceases and depreciation begins when the product becomes available
to customers. The depreciation period of these capitalized assets is be-
tween two and five years.
Under U.S. GAAP, software development costs would similarly be capi-
talized after the product has reached a certain degree of technical feasi-
bility. However, certain non-software related development costs capital-
ized under IAS would not be capitalizable under U.S. GAAP and therefore
would have been expensed under U.S. GAAP.
Under IAS, whenever there is an indication that capitalized develop-
ment costs may be impaired the recoverable amount of the asset is esti-
mated. An asset is impaired when the carrying amount of the asset exceeds
its recoverable amount. Recoverable amount is defined as the higher of an
asset’s net selling price and value in use. Value in use is the present value of
estimated discounted future cash flows expected to arise from the continu-
ing use of an asset and from its disposal at the end of its useful life.
Under US GAAP, the unamortized capitalized costs of a computer soft-
ware product is compared at each balance sheet date to the net realizable
value of that product with any excess written off. Net realizable value is
defined as the estimated future gross revenues from that product reduced
by the estimated future costs of completing and disposing of that product,
including the costs of performing maintenance and customer support re-
quired to satisfy the enterprise’s responsibility set forth at the time of sale.
The amount of unamortized capitalized computer software costs, under
U.S. GAAP, is EUR 438 million in 2003 (EUR 651 million in 2002).
Marketable securities and unlisted investments
Under IAS, prior to the adoption of IAS 39 on January 1, 2001, investments
in marketable securities were carried at cost. Upon adoption of IAS 39, all
available-for-sale investments, which includes all publicly listed and
non-listed marketable securities, are measured at fair value and gains
and losses are recognized within shareholders’ equity until realized in
the profit and loss account upon sale or disposal.
Under U.S. GAAP, the Group’s listed marketable securities would be
classified as available-for-sale and carried at aggregate fair value with
52 | Nokia in 2003
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U .S . GAAP
combination is recorded as an identifiable intangible asset with a related
deferred tax liability. The intangible asset is amortized over its estimated
useful life. The adjustment to U.S. GAAP net income and shareholders’ equity
relates to the amortization and accumulated amortization, respectively,
of Amber Networks’ intangible asset.
The gross carrying amount of unpatented technology recorded as
identifiable intangible assets, under U.S. GAAP, is EUR 109 million as of
December 31, 2003 (EUR 109 million as of December 31, 2002), which is
being amortized over an estimated useful life of five years. Accumulated
amortization as of December 31, 2003 was EUR 51 million (EUR 29 million
at December 31, 2002). The amortization expense for the year ended De-
cember 31, 2003 is EUR 22 million (EUR 22 million and EUR 7 million in
2002 and 2001, respectively).
Amortization expense on intangible assets is expected to be EUR 22
million in 2004 and 2005 and EUR 14 million in 2006.
The net carrying amount of other intangible assets under U.S. GAAP is
EUR 623 million in 2003 and consists of capitalized development costs of
EUR 438 million and acquired patents, trademarks and licenses of EUR 185
million. The Group does not have indefinite lived intangible assets. The
amortization expense under U.S. GAAP of other intangible assets subject
to amortization as of December 31, 2003, is expected to be approximately
EUR 167 million for each of the next five years.
Amortization of goodwill
Under IAS, goodwill is amortized over its estimated useful life. Under U.S.
GAAP, prior to July 1, 2001, goodwill was amortized over its estimated use-
ful life consistent with IAS. The Group adopted the transition provisions of
FAS 141, Business Combinations (FAS 141), with effect from July 1, 2001. The
Group also adopted the provisions of FAS 142, Goodwill and Other Intangi-
ble Assets (FAS 142), on January 1, 2002. As a result, goodwill relating to
purchase acquisitions and acquisitions of associated companies is no long-
er subject to amortization subsequent to the date of adoption. As the non-
amortization of goodwill provisions of FAS 142 were effective immediately
for all acquisitions after June 30, 2001, goodwill arising from the Amber
Networks acquisition and other minor acquisitions is not amortized.
The U.S. GAAP adjustment reverses the amortization expense recorded
under IAS and also reverses the movement in accumulated amortization under
IAS during the period subsequent to the adoption of FAS 141 and FAS 142.
gross unrealized holding gains and losses reported as a separate compo-
nent of shareholders’ equity. Investments in equity securities that are
not traded on a public market are carried at historical cost, giving rise to
an adjustment between IAS and U.S. GAAP.
Provision for social security cost on stock options
Under IAS, the Group provides for social security costs on stock options
on the date of grant, based on the fair value of the option. The provision is
adjusted for movements in the fair value of the options.
Under U.S. GAAP, no expense is recorded until the options are exercised.
Stock compensation
Under IAS, no compensation expense is recorded on stock options granted.
Under U.S. GAAP, the Group follows the methodology in APB Opinion 25,
Accounting for Stock Issued to Employees (APB 25), to measure employee
stock compensation.
Certain employees have been granted stock options with an exercise
price less than the quoted market value of the underlying stock on the
date of grant. Also, certain employees have been granted restricted
shares. This intrinsic value of the stock options and the restricted shares is
recorded as deferred compensation within shareholders’ equity and rec-
ognized in the profit and loss account over the vesting period of the stock
options. The stock options issued are recorded as share issue premium.
Cash flow hedges
As a result of a specific difference in the rules under IAS 39 and FAS 133, Ac-
counting for Derivative Instruments and Hedging Activities, relating to hedge
accounting, certain foreign exchange gains and losses classified within equity
under IAS would be included in the income statement under U.S. GAAP.
Net investment in foreign companies
Under IAS, on the disposal of a foreign entity, the cumulative amount of the
exchange differences which have been deferred and which relate to that for-
eign entity should be recognized as income or as expenses in the same period
in which the disposal is recognized. An enterprise may dispose of its interest
in a foreign entity through sale, liquidation, repayment of share capital and
permanent loans, or abandonment of all, or part of, that entity.
Under U.S. GAAP, the cumulative translation differences are reported in
the profit and loss account only upon the sale or upon complete or sub-
stantially complete liquidation of the investment in a foreign entity.
Acquisition purchase price
Under IAS, when the consideration paid in a business combination in-
cludes shares of the acquirer, the purchase price of the acquired business
is determined at the date on which the shares are exchanged.
Under U.S. GAAP, the measurement date for shares of the acquirer is
the first day on which both the number of acquirer shares and the
amount of other considerations become fixed. The average share price
for a few days before and a few days after the measurement date is then
used to value the shares.
Amortization of identifiable intangible assets acquired
Under IAS, acquired unpatented technology is not separately recognized
on acquisition but is included within goodwill.
Under U.S. GAAP, any unpatented technology acquired in a business
NOKIA IN 2003_s32-70
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Nokia in 2003 | 53
U .S . GAAP
The following table shows the results of operations as if FAS 142 were
applied to prior periods:
EURm (except per share amounts)
Net income as reported under U.S. GAAP
Add back: Goodwill amortization
Adjusted net income
Income per share/Basic
Net income as reported under U.S. GAAP
Goodwill amortization
Adjusted net income
Income per share/Diluted
Net income as reported under U.S. GAAP
Goodwill amortization
Adjusted net income
2001
1 903
274
2 177
0.40
0.06
0.46
0.40
0.06
0.45
Impairment of goodwill
The Group has evaluated its existing goodwill relating to prior business
combinations and has determined that an adjustment or reclassification
to intangible assets as of January 1, 2002 was not required in order to
conform to the new criteria in FAS 141. The Group has also reassessed the
useful lives and carrying values of other intangible assets, and will con-
tinue to amortize these assets over their remaining useful lives.
As of January 1, 2002, the Group performed the transitional impair-
ment test under FAS 142 and compared the carrying value for each re-
porting unit to its fair value, which was determined based on discounted
cash flows. Upon completion of the transitional impairment test, the
Group determined that there was no impairment as of January 1, 2002, as
the carrying value of each reporting unit did not exceed its fair value.
The Group has also completed the annual impairment test required by
FAS 142 during the fourth quarter of 2003 and 2002, which was also per-
formed by comparing the carrying value of each reporting unit to its fair
value based on discounted cash flows.
Under IAS, goodwill is allocated to “cash generating units”, which are
the smallest group of identifiable assets which includes the goodwill
under review for impairment, and that generates cash inflows from con-
tinuing use that are largely independent of the cash inflows from other
assets. Under IAS, the Group recorded in 2003 and 2002 an impairment of
goodwill of EUR 151 million and EUR 104 million, respectively, related to
Amber Networks as the carrying amount of the cash generating unit ex-
ceeded the recoverable amount of the unit. Upon completion of the annu-
al impairment test, the Group determined that the impairment recorded
for Amber Networks should be reversed for U.S. GAAP purposes because, at
the Core Networks reporting unit level in 2003 and IP Mobility Network
reporting unit level in 2002, where Amber Networks resides, the fair value
of the reporting unit exceeded the book value of the reporting unit.
Below is a roll forward of U.S. GAAP goodwill during 2003 and 2002:
EURm
Nokia Mobile Phones
Nokia Networks
Nokia Ventures
Organization
Common
Group Functions
Balance as of Jan. 1, 2002
Goodwill acquired
Impairment losses
Translation adjustment
Balance as of Dec. 31, 2002
Goodwill acquired
Translation adjustment
Balance as of Dec. 31, 2003
351
–
-
–202
149
–
5
154
382
–
–17
–42
323
–
–52
271
80
–
–61
4
23
20
–6
37
–
9
–
–
9
–
–
9
Group
813
9
–78
–240
504
20
–53
471
Of the amount of goodwill under U.S. GAAP, EUR 259 million at December
31, 2003 relates to the acquisition of Amber Networks in 2001. Goodwill is
not deductible for tax purposes.
Translation of goodwill
Under IAS, the Group translates goodwill arising on the acquisition of for-
eign subsidiaries at historical rates.
Under U.S. GAAP, goodwill is translated at the closing rate on the bal-
ance sheet date with gains and losses recorded as a component of share-
holders’ equity.
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CRITICAL ACCOUNTING POLICIES
Our accounting policies affecting our financial condition and results of
operations are more fully described in Note 1 to our consolidated finan-
cial statements. Certain of Nokia’s accounting policies require the appli-
cation of judgment by management in selecting appropriate assump-
tions for calculating financial estimates, which inherently contain some
degree of uncertainty. Management bases its estimates on historical
experience and various other assumptions that are believed to be rea-
sonable under the circumstances, the results of which form the basis for
making judgments about the reported carrying values of assets and liabil-
ities and the reported amounts of revenues and expenses that may not
be readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.
Nokia believes the following are the critical accounting policies and
related judgments and estimates used in the preparation of its consoli-
dated financial statements.
Revenue recognition
Revenue from the majority of the Group is recognized when persuasive
evidence of an arrangement exists, delivery has occurred, the fee is fixed
and determinable and collectibility is probable. The remainder of reve-
nue is recorded under the percentage of completion method.
Nokia Mobile Phones’ and Nokia Ventures Organization’s, as well as
certain of Nokia Networks’, revenue is recognized when persuasive evi-
dence of an arrangement exists, delivery has occurred, the fee is fixed
and determinable and collectibility is probable. This requires us to
assess at the point of delivery whether these criteria have been met.
Upon making such assessment, revenue is recognized. In particular,
Nokia records estimated reductions to revenue for customer programs
and incentive offerings, including special pricing agreements, price pro-
tection and other volume based discounts, mainly in the mobile phone
business. Sales adjustments for volume based discount programs are
estimated based largely on historical activity under similar programs.
Price protection adjustments are based on estimates of future price re-
ductions and certain agreed customer inventories at the date of the price
adjustment.
from contracts
Nokia Networks’ revenue
involving solutions
achieved through modification of telecommunications equipment is rec-
ognized on the percentage of completion basis when the outcome of the
contract can be estimated reliably. A contract’s outcome can be estimated
reliably when total contract revenue can be estimated reliably, it is prob-
able that economic benefits associated with the contract will flow to the
company, and the stage of contract completion can be measured reliably.
When we are not able to meet those conditions, the policy is to recognize
revenues only equal to costs incurred to date, to the extent that such
costs are expected to be recovered. Completion is measured by reference
to costs incurred to date as a percentage of estimated total project costs.
The percentage of completion method relies on estimates of total
expected contract revenue and costs, as well as the dependable measure-
ment of the progress made towards completing the particular project.
Recognized revenues and profit are subject to revisions during the
project in the event that the assumptions regarding the overall project
outcome are revised. The cumulative impact of a revision in estimates is
recorded in the period such revisions become known and estimable.
Losses on projects in progress are recognized immediately when known
and estimable.
Revenue recognition on initial 3G network contracts started in 2002
when Nokia Networks achieved 3G functionality for its single-mode and
dual-mode WCDMA 3G systems. Upon achieving 3G functionality for WCDMA
network projects, we began recognizing revenue under the cost-to-cost
input method of percentage of completion accounting and have consist-
ently applied this method since that point. Until the time the 3GPP speci-
fications required by our customers were met, we deferred the applica-
tion of the cost-to-cost input model.
Nokia Networks’ current sales and profit estimates for projects may
change due to the early stage of a long-term project, new technology,
changes in the project scope, changes in costs, changes in timing, chang-
es in customers’ plans, realization of penalties, and other corresponding
factors.
Customer financing
We have provided customer financing and agreed extended payment
terms with selected customers in our Nokia Networks business. In estab-
lishing credit arrangements, management must assess the creditworthi-
ness of the customer and the timing of cash flows expected to be received
under the arrangement. However, should the actual financial position of
our customers or general economic conditions differ from our assump-
tions, we may be required to re-assess the ultimate collectibility of such
financings and trade credits, which could result in a write-off of these
balances in future periods and thus negatively impact our profits in
future periods. Our assessment of the net recoverable value considers
the collateral and security arrangements of the receivable as well as the
likelihood and timing of estimated collections. For information about
MobilCom/France Telecom, see Notes 7 and 15 to our consolidated finan-
cial statements. See also note 34(b) to our consolidated financial state-
ments for a further discussion of long-term customer loans.
Allowances for doubtful accounts
We maintain allowances for doubtful accounts for estimated losses
resulting from the subsequent inability of our customers to make re-
quired payments. If the financial conditions of our customers were to de-
teriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required in future periods. Management
specifically analyzes accounts receivables and analyzes historical bad
debt, customer concentrations, customer creditworthiness, current eco-
nomic trends and changes in our customer payment terms when evalu-
ating the adequacy of the allowance for doubtful accounts.
Inventory-related allowances
We periodically review our inventory for excess inventory, obsolescence
and declines in market value below cost and record an allowance
against the inventory balance for any such declines. These reviews re-
quire management to estimate future demand for our products. Possible
changes in these estimates could result in revisions to the valuation of
inventory.
Warranty provisions
We provide for the estimated cost of product warranties at the time rev-
enue is recognized. Nokia’s products are covered by product warranty
plans of varying periods, depending on local practices and regulations.
While we engage in extensive product quality programs and processes,
Nokia in 2003 | 55
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C R I T I C A L ACCO U N T I N G P O L I C I E S
including actively monitoring and evaluating the quality of our compo-
nent suppliers, our warranty obligations are affected by actual product
failure rates (field failure rates) and by material usage and service delivery
costs incurred in correcting a product failure. Our warranty 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 our new products incorporate complex technologies, as we con-
tinuously introduce new products, and as local laws, regulations and
practices may change, it will be increasingly difficult to anticipate our
failure rates, the length of warranty periods and repair costs. While we
believe that our warranty provisions are adequate and that the judgments
applied are appropriate, the ultimate cost of product warranty could differ
materially from our estimates. When the actual cost of quality of our
products is lower than we originally anticipated, we release an appro-
priate proportion of the provision, and if the cost of quality is higher
than anticipated, we increase the provision.
Provision for intellectual property rights, or IPR, infringements
We provide for the estimated future settlements related to asserted and
unasserted IPR infringements based on the probable outcome of each
infringement. The ultimate outcome or actual cost of settling an individual
infringement may vary from our estimates.
Our products and solutions include increasingly complex technolo-
gies involving numerous patented and other proprietary technologies.
Although we proactively try to ensure that we are aware of any patents
related to our products and solutions under development and thereby
avoid inadvertent infringement of proprietary technologies, the nature
of our business is such that patent infringements may and do occur.
Through contact with parties claiming infringement of their patented
technology, or through our own monitoring of developments in patent
cases involving our competitors, we identify potential IPR infringements.
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-related cases in the relevant legal systems. To the
extent that we determine that an identified potential infringement will
more likely than not result in an outflow of resources, we record a liabil-
ity based on our best estimate of the expenditure required to settle in-
fringement proceedings.
Our experience with claims of IPR infringement is that there is typi-
cally a discussion period with the accusing party, which can last from
several months to years. In cases where a settlement is not reached, the
discovery and ensuing legal process typically lasts a minimum of one
year. For this reason, the ultimate outflow relating to IPR infringement
claims can last for varying periods of time, resulting in irregular move-
ments in the IPR infringement provision.
Capitalized development costs
We capitalize certain development costs when it is probable that a devel-
opment project will be a success and certain criteria, including commer-
cial and technological feasibility, have been met. These costs are then
amortized on a systematic basis over their expected useful lives, which
due to the constant development of new technologies is between two to
five years. During the development stage, management must estimate
the commercial and technological feasibility of these projects as well as
their expected useful lives. Should a product fail to substantiate its esti-
mated feasibility or life cycle, we may be required to write off excess
development costs in future periods.
Whenever there is an indicator that development costs capitalized for
a specific project may be impaired, the recoverable amount of the asset is
estimated. An asset is impaired when the carrying amount of the asset
exceeds its recoverable amount. The recoverable amount is defined as
the higher of an asset’s net selling price and value in use. Value in use is
the present value of discounted estimated future cash flows expected to
arise from the continuing use of an asset and from its disposal at the end
of its useful life. For projects still in development, these estimates include
the future cash out flows that are expected to occur before the asset is
ready for use. See note 7 to our consolidated financial statements.
Impairment reviews are based upon our projections of anticipated
future cash flows. The most significant variables in determining cash
flows are discount rates, terminal values, the number of years on which
to base the cash flow projections, as well as the the assumptions and es-
timates used to determine the cash inflows and outflows. Management
determines discount rates to be used based on the risk inherent in the
related activity’s current business model and industry comparisons. Ter-
minal values are based on the expected life of products and forecasted
life cycle and forecasted cash flows over that period. While we believe
that our assumptions are appropriate, such amounts estimated could
differ materially from what will actually occur in the future. For IAS, dis-
counted estimated cash flows are used to identify the existence of an
impairment while for US GAAP undiscounted future cash flows are used.
Consequently, an impairment could be required under IAS but not under
US GAAP.
Valuation of long-lived and intangible assets and goodwill
We assess the carrying value of identifiable intangible assets, long-lived
assets and goodwill annually, or more frequently if events or changes in
circumstances indicate that such carrying value may not be recoverable.
Factors we consider important, which could trigger an impairment re-
view, include the following:
• significant underperformance relative to historical or projected
future results;
• significant changes in the manner of our use of the acquired assets
or the strategy for our overall business; and
• significant negative industry or economic trends.
When we determine that the carrying value of intangible assets,
long-lived assets or goodwill may not be recoverable based upon the
existence of one or more of the above indicators of impairment, we
measure any impairment based on discounted projected cash flows.
This review is based upon our projections of anticipated future cash
flows. The most significant variables in determining cash flows are
discount rates, terminal values, the number of years on which to base
the cash flow projections, as well as the assumptions and estimates used
to determine the cash inflows and outflows. Management determines
discount rates to be used based on the risk inherent in the related activity’s
current business model and industry comparisons. Terminal values are
based on the expected life of products and forecasted life cycle and fore-
casted cash flows over that period. While we believe that our assumptions
56 | Nokia in 2003
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CRITICAL ACCOUNTING POLICIES
are appropriate, such amounts estimated could differ materially from
what will actually occur in the future. For IAS these discounted cash
flows are prepared at a cash generating unit level, and for U.S. GAAP these
cash flows are prepared at a reporting unit level. Consequently, an im-
pairment could be required under IAS and not U.S. GAAP or vice versa.
Deferred taxes
Management judgment is required in determining our provision for
income taxes, deferred tax assets and liabilities and the extent to which
deferred tax assets can be recognized. We recognize deferred tax assets if
it is probable that sufficient taxable income will be available in the
future against which the temporary differences and unused tax losses
can be utilized. We have considered future taxable income and tax planning
strategies in assessing whether deferred tax assets should be recognized.
Pensions
The determination of our pension benefit obligation and expense for
defined benefit pension plans is dependent on our selection of certain
assumptions used by actuaries in calculating such amounts. Those
assumptions are described in Note 5 to our consolidated financial state-
ments and include, among others, the discount rate, expected long-term
rate of return on plan assets and annual rate of increase in future com-
pensation levels. A portion of our plan assets is invested in equity securi-
ties. The equity markets have experienced volatility, which has affected
the value of our pension plan assets. This volatility may make it difficult
to estimate the long-term rate of return on plan assets. Actual results
that differ from our assumptions are accumulated and amortized over
future periods and therefore generally affect our recognized expense and
recorded obligation in such future periods. Our assumptions are based
on actual historical experience and external data regarding compensa-
tion and discount rate trends. While we believe that our assumptions are
appropriate, significant differences in our actual experience or signifi-
cant changes in our assumptions may materially affect our pension obli-
gation and our future expense.
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January 22, 2004
G R O U P E X E C U T I V E B OA R D
Our articles of association provide for a Group Executive Board, which is responsible for managing the operations of Nokia. The Chairman and the
members of the Group Executive Board are elected by the Board of Directors. Only the Chairman of the Group Executive Board can be a member of
both the Board of Directors and the Group Executive Board. The current members of our Group Executive Board are set forth below.
Chairman Jorma Ollila, b. 1950
Chairman and CEO of Nokia Corporation.
Group Executive Board member since 1986.
Chairman since 1992.
Joined Nokia 1985.
Master of Political Science (University of Helsinki),
Master of Science (Econ.) (London School of
Economics), Master of Science (Eng.) (Helsinki
University of Technology).
President and CEO, and Chairman of the Group
Executive Board of Nokia Corporation 1992–1999,
President of Nokia Mobile Phones 1990–1992,
Senior Vice President, Finance of Nokia 1986–1989.
Holder of various managerial positions at Citibank
within corporate banking 1978–1985.
Member of the Board of Directors of Ford Motor
Company and UPM-Kymmene Corporation and Vice
Chairman of Otava Books and Magazines Group Ltd.
Member of The European Round Table of
Industrialists.
Pekka Ala-Pietilä, b. 1957
President of Nokia Corporation and Head
of Customer and Market Operations.
Group Executive Board member since 1992.
Joined Nokia 1984.
Master of Science (Econ.) (Helsinki School
of Economics and Business Administration).
President of Nokia Corporation and Head of Nokia
Ventures Organization 1999–2003. Executive Vice
President and Deputy to the CEO of Nokia
Corporation and President of Nokia
Communications Products 1998–1999, President
of Nokia Mobile Phones 1992–1998, Vice President,
Product Marketing of Nokia Mobile Phones
1991–1992, Vice President, Strategic Planning
of Nokia Mobile Phones 1990–1991.
Member of the Supervisory Board of SAP AG.
Member of the Science and Technology Policy
Council of Finland, member of the Board of the
Finnish-American Chamber of Commerce, member
of the Board of the Economic Information Bureau.
Dr. Matti Alahuhta, b. 1952
Executive Vice President, Chief Strategy Officer.
Group Executive Board member since 1993.
With Nokia 1975–1982, rejoined 1984.
Doctor of Science (Technology) (Helsinki University
of Technology).
President of Nokia Mobile Phones 1998–2003.
President of Nokia Telecommunications 1993–1998,
Executive Vice President of Nokia Telecommunica-
tions 1992, Senior Vice President, Public Networks
of Nokia Telecommunications 1990–1992.
Member of the Board of Directors of Kone Oyj.
Chairman of the Board of Technology Industries
of Finland, Vice Chairman of the Board of the
Confederation of Finnish Industry and Employers,
Vice Chairman of the Executive Committee of
The International Institute for Management
Development (IMD).
Sari Baldauf, b. 1955
Executive Vice President and General Manager
of Networks.
Group Executive Board member since 1994.
Joined Nokia 1983.
Master of Science (Business Administration)
(Helsinki School of Economics and Business
Administration).
President of Nokia Networks 1999–2003, Executive
Vice President of Nokia APAC 1997–1998, President,
Cellular Systems of Nokia Telecommunications
1988–1996, Vice President, Business Development
of Telenokia 1987–1988.
Member of the Board of Directors of SanomaWSOY
Oyj. Member of the Board of International Youth
Foundation (Baltimore, USA) and member of the
Board of Foundation for Economic Education.
Dr. J. T. Bergqvist, b. 1957
Senior Vice President and General Manager,
Business Units, Networks.
Group Executive Board member since 2002.
Joined Nokia 1983.
Doctor of Science (Technology) (Helsinki University
of Technology).
Executive Vice President and General Manager,
IP Mobility Nokia Networks 2001–2003,
Senior Vice President, Radio Access Systems
of Nokia Telecommunications 1997–2000, Vice
President, Cellular Transmission Business, Network
and Access Systems of Nokia Telecommunications
1995–1996, Area General Manager, Area Manage-
ment of Nokia Telecommunications 1993–1994,
Area General Manager, Marketing of Nokia Cellular
Systems 1990–1992.
Member of the Board of Directors of Norvestia plc.
Mary T. McDowell, b. 1964
Senior Vice President and General Manager
of Enterprise Solutions.
Group Executive Board member since
January 1, 2004.
Joined Nokia 2004.
Bachelor of Science (Computer Science) (College
of Engineering at the University of Illinois).
Senior Vice President, Strategy and Corporate
Development of Hewlett-Packard Company 2003,
Senior Vice President & General Manager, Industry-
Standard Servers of Hewlett-Packard Company
2002–2003, Senior Vice President & General
Manager, Industry-Standard Servers of Compaq
Computer Corporation 1998–2002, Vice President,
Marketing, Server Products Division of Compaq
Computer Corporation 1996–1998. Holder of
executive, managerial and other positions at
Compaq Computer Corporation 1986–1996.
Member of the Board of Visitors for the College
of Engineering at the University of Illinois.
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Olli-Pekka Kallasvuo, b. 1953
Executive Vice President and General Manager
of Mobile Phones.
Group Executive Board member since 1990.
With Nokia 1980–81, rejoined 1982.
LL.M. (University of Helsinki).
Executive Vice President, CFO of Nokia 1999–2003,
Executive Vice President of Nokia Americas and
President of Nokia Inc. 1997–1998, Executive Vice
President, CFO of Nokia 1992–1996, Senior Vice
President, Finance of Nokia 1990–1991.
Chairman of the Board of Directors of F-Secure
Corporation, Nextrom Holding S.A. and Sampo plc.
Pertti Korhonen, b. 1961
Senior Vice President, Chief Technology Officer.
Group Executive Board member since 2002.
Joined Nokia 1986.
Master of Science (Electronics Eng.) (University of
Oulu).
Executive Vice President of Nokia Mobile Software
2001–2003. Senior Vice President, Global Operations,
Logistics and Sourcing of Nokia Mobile Phones
1999–2001, Senior Vice President, Global Operations
and Logistics of Nokia Mobile Phones 1998–1999,
Vice President, Logistics of Nokia Mobile Phones
1996–1998, Vice President, Manufacturing Europe
of Nokia Mobile Phones 1993–1996, Project
Executive of Nokia Mobile Phones UK Ltd, 1991–
1993, Vice President, R&D of Nokia Mobile Phones,
Oulu 1990–1991.
Hallstein Moerk, b. 1953
Senior Vice President, Human Resources.
Group Executive Board member since
January 1, 2004.
Joined Nokia 1999.
Diplomøkonom (Econ.) (Norwegian School
of Management).
Holder of various positions at Hewlett-Packard
Corporation 1979–1999.
Member of the Board of Directors of Flisekompaniet.
Member of the Board of Advisors for Center for HR
Strategy, Rutgers University.
Dr. Yrjö Neuvo, b. 1943
Senior Vice President, Technology Advisor.
Group Executive Board member since 1993.
Joined Nokia 1993.
Master of Science (Eng.), Licentiate of Science
(Technology) (Helsinki University of Technology),
Ph.D. (EE) (Cornell University).
Executive Vice President, CTO of Nokia Mobile
Phones 1999–2003, Senior Vice President, Product
Creation of Nokia Mobile Phones 1994–1999, Senior
Vice President, Technology of Nokia 1993–1994,
National Research Professor of The Academy of
Finland 1984–1992, Professor of Tampere University
of Technology 1976–1992, Visiting Professor of
University of California, Santa Barbara 1981–1982.
Vice Chairman of the Board of Directors of Vaisala
Corporation. Member of Finnish Academy of
Technical Sciences, The Finnish Academy of Science
and Letters, and Academiae Europae, Foreign
member of Royal Swedish Academy of Engineering
Sciences, and Fellow of the Institute of Electrical
and Electronics Engineers.
Richard A. Simonson, b. 1958
Senior Vice President, Chief Financial Officer.
Group Executive Board member since
January 1, 2004.
Joined Nokia 2001.
Bachelor of Science (Mining Eng.) (Colorado School
of Mines), Master of Business Administration
(Finance) (Wharton School of Business at University
of Pennsylvania).
Vice President & Head of Customer Finance of
Nokia Corporation 2001–2003, Managing Director
of Telecom & Media Group of Barclays 2001,
Head of Global Project Finance and other various
positions at Bank of America Securities 1985–2001.
Veli Sundbäck, b. 1946
Senior Vice President, Corporate Relations
and Responsibility of Nokia Corporation.
Group Executive Board member since 1996.
Joined Nokia 1996.
LL.M. (University of Helsinki).
Executive Vice President, Corporate Relations
and Trade Policy of Nokia Corporation 1996–2003.
Secretary of State at the Ministry for Foreign Affairs
1993–1995, Under-Secretary of State for External
Economic Relations at the Ministry for Foreign
Affairs 1990–1993.
Chairman of the Board of Directors of Huhtamäki
Oyj. Member of the Board of EICTA (European
Information, Communications and Consumer
Electronics Technology Industry Association),
member of the Bureau of the United Nations
Information and Communication Technologies Task
Force (UN ICT TF), Vice Chairman of the Board of the
International Chamber of Commerce, Finnish
Section, Chairman of the Trade Policy Committee
of The Confederation of Finnish Industry and
Employers, Chairman of the Board of the Finland-
China Trade Association.
Anssi Vanjoki, b. 1956
Executive Vice President and General Manager
of Multimedia.
Group Executive Board member since 1998.
Joined Nokia 1991.
Master of Science (Econ.) (Helsinki School
of Economics and Business Administration).
Executive Vice President of Nokia Mobile Phones
1998–2003. Senior Vice President, Europe & Africa
of Nokia Mobile Phones 1994–1998, Vice President,
Sales of Nokia Mobile Phones 1991–1994, 3M
Corporation 1980–1991.
Governor of European Foundation of Quality
Management.
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January 22, 2004
B OA R D O F D I R E C TO R S
Pursuant to the provisions of the Finnish Companies Act and our articles of association, the control and management of Nokia is divided among the
shareholders in a general meeting, the Board of Directors and the Group Executive Board. The current members of the Board of Directors were elected
at the Annual General Meeting on March 27, 2003, in accordance with the proposal of the Corporate Governance and Nomination Committee. On the same
date, the Chairman and Vice Chairman were elected by the Board members. Certain information with respect to these individuals is set forth below.
Jorma Ollila, b. 1950
Chairman and CEO.
Chairman of the Group Executive Board of Nokia Corporation.
Board member since 1995. Chairman since 1999.
Master of Political Science (University of Helsinki), Master of Science (Econ.)
(London School of Economics), Master of Science (Eng.) (Helsinki University of
Technology).
President and CEO, and Chairman of the Group Executive Board of Nokia
Corporation 1992–1999, President of Nokia Mobile Phones 1990–1992,
Senior Vice President, Finance of Nokia 1986–1989. Holder of various managerial
positions at Citibank within corporate banking 1978–1985.
Member of the Board of Directors of Ford Motor Company and UPM-Kymmene
Corporation and Vice Chairman of Otava Books and Magazines Group Ltd.
Member of The European Round Table of Industrialists.
Paul J. Collins, b. 1936
Board member since 1998. Vice Chairman since 2000.
BBA (University of Wisconsin), MBA (Harvard Business School).
Vice Chairman of Citigroup Inc. 1998–2000, Vice Chairman and member of
the Board of Directors of Citicorp and Citibank N.A. 1988–2000. Holder of various
executive positions at Citibank within investment management, investment
banking, corporate planning as well as finance and administration 1961–1988.
Member of the Board of Directors of BG Group and Kimberly-Clark Corporation.
Georg Ehrnrooth, b. 1940
Board member since 2000.
Master of Science (Eng.) (Helsinki University of Technology).
President and CEO of Metra Corporation 1991–2000, President and CEO of Lohja
Corporation 1979–1991. Holder of various executive positions at Wärtsilä
Corporation within production and management 1965–1979.
Chairman of the Board of Directors of Assa Abloy AB (publ) and Varma Mutual
Pension Insurance Company, Vice Chairman of the Board of Directors of
Rautaruukki Corporation, member of the Board of Directors of Oy Karl Fazer Ab,
Sandvik AB (publ) and Sampo plc. Chairman of The Center for Finnish Business
and Policy Studies (EVA).
Dr. Bengt Holmström, b. 1949
Paul A. Samuelson Professor of Economics at MIT, joint appointment
at the MIT Sloan School of Management.
Board member since 1999.
Bachelor of Science (Helsinki University), Master of Science (Stanford University),
Doctor of Philosophy (Stanford University).
Edwin J. Beinecke Professor of Management Studies at Yale University 1985–1994.
Member of the Board of Directors of Kuusakoski Oy. Member of the American
Academy of Arts and Sciences and Foreign Member of The Royal Swedish
Academy of Sciences.
Per Karlsson, b. 1955
Independent Corporate Advisor.
Board member since 2002.
Degree in Economics and Business Administration (Stockholm School of
Economics).
Executive Director, with mergers and acquisitions advisory responsibilities,
at Enskilda M&A, Enskilda Securities (London) 1986–1992. Corporate strategy
consultant at the Boston Consulting Group (London) 1979–1986.
Board member of IKANO Holdings S.A.
Robert F. W. van Oordt, b. 1936
Chairman of Rodamco Europe N.V.
Board member since 1998.
Drs of Economics (University of Amsterdam).
CEO of Rodamco Europe N.V. 2000–2001, Chairman of the Executive Board
of NV Koninklijke KNP BT 1993–1996, Chairman of the Executive Board of
Bührmann-Tetterode N.V. 1990–1993, Executive Vice President and COO and
member of the Board of Directors of Hunter Douglas Group N.V. 1979–1989.
Consultant and partner with McKinsey & Company Inc. 1967–1979.
Chairman of Rodamco Europe N.V., member of the Supervisory Board of
Draka Holding N.V., member of the Board of Directors of Fortis Bank N.V.,
Schering-Plough Corporation and N.V. Umicore S.A.
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B OA R D O F D I R E C TO R S
On January 22, 2004, with an amendment on February 6, 2004, the Corporate
Governance and Nomination Committee announced its proposal to the Annual
General Meeting convening on March 25, 2004 regarding the election of the
members of the Board of Directors. As Mr. Robert F. W. van Oordt has reached
the Nokia Board's retirement age of 68 years, as provided by the Corporate
Governance guidelines of Nokia, he will not stand for re-election to the Board.
The Corporate Governance and Nomination Committee will propose that
the number of board members be decreased from the current nine to eight
and that the following persons be re-elected for a term of one year:
Mr. Paul J. Collins, Mr. Georg Ehrnrooth, Dr. Bengt Holmström, Mr. Per Karlsson,
Mr. Jorma Ollila, Dame Marjorie Scardino, Mr. Vesa Vainio and Mr. Arne
Wessberg.
Dame Marjorie Scardino, b. 1947
Chief Executive and member of the Board of Directors of Pearson plc.
Board member since 2001.
BA (Baylor), JD (University of San Francisco).
Chief Executive of The Economist Group 1993–1997, President of the North
American Operations of The Economist Group 1985–1993. Lawyer 1976–1985
and publisher of the Georgia Gazette newspaper 1978–1985.
Vesa Vainio, b. 1942
Board member since 1993.
LL.M. (University of Helsinki).
Chairman 1998–1999 and 2000–2002 and Vice Chairman 1999–2000 of the
Board of Directors of Nordea AB (publ). Chairman of the Executive Board and
CEO of Merita Bank Ltd and CEO of Merita Ltd 1992–1997. President of Kymmene
Corporation 1991–1992. Holder of various other executive positions in Finnish
industry 1972–1991.
Chairman of the Board of Directors of UPM-Kymmene Corporation.
Arne Wessberg, b. 1943
Chairman of the Board of Directors and Chief Executuve Officer
of Yleisradio Oy (Finnish Broadcasting Company).
Board member since 2001.
Studies in economics in the University of Tampere 1963–1966.
Chairman of the Board of Eurosport Consortium 1998–2000, member 1989–1997.
Member of the Board of Trustees of IIC 1996–1998 and 1993–1995. Holder of
various positions at Yleisradio Oy (Finnish Broadcasting Company) in different
executive roles 1979–1994 and as a reporter and editor 1971–1976.
President of the European Broadcasting Union (EBU), member of the Board of
Directors of the International Council of NATAS and member of the Trilateral
Commission (Europe).
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R I S K FAC TO R S
January 22, 2004
Set forth below is a description of factors that may affect our business,
results of operations and share price from time to time.
• Changes in the mobile communications industry require us to develop
complex, evolving technologies to use in our various businesses, some
of which are new to us. If we fail to develop these technologies or suc-
cessfully commercialize them as new advanced products and solutions
that meet the demands of the market, or fail to do so on a timely basis,
or if the evolution of our operating environment is slower than antici-
pated leading to delays in the deployment and acceptance of new servic-
es, it may have a material adverse impact on our business, our ability to
meet our targets, and our results of operations.
• Our products and solutions include increasingly complex technology
involving numerous patented and other proprietary technologies. As
a consequence, evaluating the protection of the technologies we intend
to use is more difficult than before, and we may face claims that we have
infringed third parties’ intellectual property rights. The use of increas-
ingly complex technology may result in increased licensing costs for us,
restrictions on our ability to use such technology and offer our products
and solutions, the invalidation of intellectual property rights on which
we depend and/or costly and time-consuming litigation.
• The development of the mobility industry is significantly altering the
competitive landscape and increasing competition. We are entering
businesses where the competitive landscape is new to us or still in the
early stages of development. Our failure to respond successfully to this
development may have a material adverse impact on our business, our
ability to meet our targets, and our results of operations.
• Reaching our targets depends on numerous factors, such as our ability
to offer products and solutions that meet the demands of the market
and to manage the prices and costs of our products and solutions, our
operational efficiency, the pace of development and acceptance of new
technologies, our entry into new business areas, and general economic
conditions. Depending on those factors, some of which we may influ-
ence and others of which are beyond our control, we may fail to reach
our targets and we may fail to provide accurate forecasts of our sales
and results of operations.
• Our sales and results of operations could be adversely affected if we fail
to efficiently manage our manufacturing and logistics, or fail to ensure
that our products and solutions meet our and our customers’ quality,
safety and other corresponding requirements and are delivered in time.
• We are developing a number of our new products and solutions in col-
laboration with other companies. If any of these companies were to fail
to perform, we may not be able to bring our products and solutions to
market successfully or on a timely basis.
• We depend on our suppliers for the timely delivery of components and
for their compliance with our supplier requirements, such as, most nota-
bly, our and our customers’ product quality, safety and other corre-
sponding standards. Their failure to do so could adversely affect our abil-
ity to deliver our products and solutions successfully and on time.
• Our operations rely on complex and highly centralized information tech-
nology systems and networks. If any system or network disruption oc-
curs, this reliance could have a material adverse impact on our opera-
tions, sales and operating results.
• The global networks business relies on a limited number of customers
and large multi-year contracts. Unfavorable developments under a major
contract or in relation to a major customer may affect our sales, our
results of operations and cash flow adversely.
• Customer financing to network operators can be a competitive require-
ment and could affect our sales, results of operations, balance sheet and
cash flow adversely.
• Our sales, costs and results are affected by exchange rate fluctuations,
particularly between the euro, which is our reporting currency, and the
US dollar, the UK pound sterling and the Japanese yen as well as certain
other currencies.
• If we are unable to recruit, retain and develop appropriately skilled em-
ployees, we may not be able to implement our strategies and, conse-
quently, our results of operations may suffer.
• If we are unable to effectively and smoothly implement the new organ-
izational structure effective January 1, 2004, we may experience a mate-
rial adverse impact on our operations, sales and results of operations.
• Our sales derived from, and assets located in, emerging market coun-
tries may be adversely affected by economic, regulatory and political de-
velopments in those countries.
• Allegations of health risks from the electromagnetic fields generated by
base stations and mobile handsets, and the lawsuits and publicity relat-
ing to them, regardless of merit, could affect our operations negatively
by leading consumers to reduce their use of mobile devices or by causing
us to allocate monetary and personnel resources to these issues.
• Changes in various types of regulation in countries around the world
could affect our business adversely.
• Our share price has been and may continue to be volatile in response to
conditions in the global securities markets generally and in the commu-
nications and technology sectors in particular.
We file an annual report on Form 20-F with the US Securities and Exchange
Commission, which report also includes a description of risk factors that
may affect us. Nokia filed its Form 20-F annual report for the year ended
December 31, 2003 on February 6, 2004. For further information please refer
to our Form 20-F annual report.
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C O R P O R AT E G O V E R N A N C E
Pursuant to the provisions of the Finnish Companies Act and our articles
of association, the control and management of Nokia is divided among
the shareholders in a general meeting, the Board of Directors and the
Group Executive Board. Our articles of association provide for a Group
Executive Board, which is responsible for managing the operations of
Nokia. The Chairman and the members of the Group Executive Board are
elected by the Board of Directors. Only the Chairman of the Group Executive
Board can be a member of both the Board of Directors and the Group
Executive Board.
The Board of Directors
The operations of the company are managed under the direction of the
Board of Directors, within the framework set by the Finnish Companies
Act and our articles of association and the complementary Corporate
Governance Guidelines and related charters as adopted by the Board.
The responsibilities of the Board of Directors
The Board represents and is accountable to the shareholders of the com-
pany. The Board’s responsibilities are active and not passive and include
the responsibility to regularly evaluate the strategic direction of the com-
pany, management policies and the effectiveness with which manage-
ment implements its policies. The Board’s responsibilities further in-
clude overseeing the structure and composition of the company’s top
management and monitoring legal compliance and the management of
risks related to the company’s operations. In doing so the Board may set
out annual ranges and/or individual limits for capital expenditures, in-
vestments and divestitures and financial commitments not to be exceeded
without Board approval.
The Board has the responsibility for appointing and discharging the
Chief Executive Officer and the President and the other members of the
Group Executive Board. Subject to the requirements of Finnish law, the
independent directors of the Board will confirm the compensation and
the employment conditions of the Chief Executive Officer and the Presi-
dent upon the recommendation of the Personnel Committee. The com-
pensation and employment conditions of the other members of the
Group Executive Board are approved by the Personnel Committee.
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 ten mem-
bers. The members of the Board are elected for a term of one year at each
Annual General Meeting, which convenes each March or April. Since the
Annual General Meeting held on March 27, 2003, the Board has consisted
of nine members. Nokia’s CEO, Mr. Jorma Ollila, also serves as the Chairman
of the Board. The other members of the Board are all non-executive and
independent as defined in the Finnish rules and regulations. The Board con-
vened nine times during 2003, three of the meetings were held in the
form of a conference call, and the average ratio of attendance at the
meetings was 99%. The non-executive directors meet without executive
directors at least twice a year, or more often as they deem appropriate.
The Board and each committee also has the power to hire independent
legal, financial or other advisors as it deems necessary.
The Board elects a Chairman and a Vice Chairman from among its
members for one term at a time. On March 27, 2003 the Board resolved
that Mr. Jorma Ollila should continue to act as Chairman and that Mr. Paul
J. Collins should continue to act as Vice Chairman. The Board also ap-
points the members and the chairmen for its committees from among its
non-executive, independent members for one term at a time.
The Board and each of its committees conducts annual performance
self-evaluations. The Corporate Governance Guidelines concerning the
directors’ responsibilities, the composition and selection of the Board,
Board committees and certain other matters relating to corporate gov-
ernance are available on our website, www.nokia.com.
The Committees of the Board of Directors
The Audit Committee consists of a minimum of three members of the
Board, who meet all applicable independence, financial literacy and other
requirements of Finnish law and applicable stock exchange rules. Since
March 27, 2003, the Committee has consisted of the following four mem-
bers of the Board: Mr. Robert F.W. van Oordt (Chairman), Mr. Georg Ehrn-
rooth, Mr. Per Karlsson and Mr. Arne Wessberg.
The Audit Committee is established by the Board primarily for the
purpose of overseeing the accounting and financial reporting processes
of the company and audits of the financial statements of the company.
The Committee is responsible for assisting the Board’s oversight of (1)
the quality and integrity of the company’s financial statements and re-
lated disclosure, (2) the performance of the company’s internal controls
and risk management and risk audit function, (3) the company’s compli-
ance with legal and regulatory requirements, (4) the external auditor’s
qualifications and independence, and (5) the performance of the external
auditor subject to the requirements of Finnish law. The Committee also
maintains procedures for the receipt, retention and treatment of com-
plaints received by the company regarding accounting, internal controls,
or auditing matters. Under Finnish law, our external auditor is elected by
our shareholders at the Annual General Meeting. The Audit Committee
makes a recommendation to the shareholders in respect of the appoint-
ment of the external auditor based upon its evaluation of the qualifica-
tions and independence of the auditor to be proposed for election or re-
election. The Audit Committee meets at least four times per year based
upon a schedule established at the first meeting following the appoint-
ment of the Committee. The Committee meets separately with the repre-
sentatives of the management and the external auditor at least twice a
year. The Audit Committee held four meetings in 2003.
The Personnel Committee consists of a minimum of three members
of the Board. Since March 27, 2003, the Personnel Committee has consisted
of the following four members of the Board: Mr. Paul J. Collins (Chairman),
Dr. Bengt Holmström, Dame Marjorie Scardino and Mr. Vesa Vainio.
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 of the
company’s executives and the terms of employment of the same. The
Committee has overall responsibility for evaluating, resolving and mak-
ing recommendations to the Board regarding (1) compensation of the
company’s top executives and their employment conditions, (2) all equi-
ty-based plans, (3) incentive compensation plans, policies and programs
of the company affecting executives, and (4) other significant incentive
plans. The Committee is responsible for ensuring the above compensa-
tion programs are performance-based, properly motivate management,
support overall corporate strategies and align with shareholders’ inter-
ests. The Committee is responsible for the review of senior management
Nokia in 2003 | 63
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C O R P O R AT E G O V E R N A N C E
development and succession plans. The Personnel Committee convened
three times in 2003.
The Corporate Governance and Nomination Committee consists of
three to five members of the Board. Since March 27, 2003, the Corporate Gov-
ernance and Nomination Committee has consisted of the following three
members of the Board: Mr. Paul J. Collins (Chairman), Dr. Bengt Holm-
ström and Mr. Vesa Vainio.
Under Finnish law, if the roles of the Chairman and the Chief Execu-
tive Officer are combined, the company must have a President. The re-
sponsibilities of the President are defined in the Finnish Companies Act
and other relevant legislation along with any additional guidance and
instructions given from time to time by the Board and the Chief Executive
Officer. The responsibilities of the Chief Executive Officer are determined
by the Board.
The Corporate Governance and Nomination Committee’s purpose is
(1) to prepare the proposals for the general meetings in respect of the
composition of the Board along with the director remuneration to be
approved by the shareholders, and (2) to monitor issues and practices
related to corporate governance and to propose necessary actions in re-
spect thereof.
The Committee fulfills its responsibilities by (I) actively identifying
individuals qualified to become members of the Board, (II) recommend-
ing to the shareholders the director nominees for election at the Annual
General Meetings, (III) monitoring significant 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 self-evaluation, in-
cluding establishing criteria to be used in connection with such evalua-
tion, and (V) developing and recommending to the Board and adminis-
tering the Corporate Governance Guidelines of the company. The Corporate
Governance and Nomination Committee held four meetings in 2003.
The charters of each of the committees are available on our website,
www.nokia.com.
We also have a company Code of Conduct which is equally applicable
to all of our employees, directors and management and is accessible at
our website, www.nokia.com. As well, we have a Code of Ethics for the
Principal Executive Officers and the Senior Financial Officers. For more
information about our Code of Ethics, please see www.nokia.com.
Nokia’s corporate governance practices comply with the Corporate
Governance Recommendation for Listed Companies approved by Hex Plc,
the Central Chamber of Commerce of Finland and the Confederation of
Finnish Industry and Employers in December 2003.*
Proposal of the Corporate Governance
and Nomination Committee of the Board
On January 22, 2004, with an amendment on February 6, 2004, the Corpo-
rate Governance and Nomination Committee announced its proposal to
the Annual General Meeting convening on March 25, 2004 regarding the
election of the members of the Board of Directors. As Mr. Robert F. W.
van Oordt has reached the Nokia Board’s retirement age of 68 years, as
provided by the Corporate Governance guidelines of Nokia, he will not
stand for re-election to the Board. The Corporate Governance and Nomi-
nation Committee will propose that the number of board members be
decreased from the current nine to eight and that the following persons
be re-elected for a term of one year: Mr. Paul J. Collins, Mr. Georg Ehrn-
rooth, Dr. Bengt Holmström, Mr. Per Karlsson, Mr. Jorma Ollila, Dame Mar-
jorie Scardino, Mr. Vesa Vainio and Mr. Arne Wessberg.
Compensation of the Members of the Board of Directors and the Group Executive Board
Compensation of the Board of Directors 2001–2003
Chairman
Vice Chairman
Other Members
Year
2001
2002
2003
Gross annual
retainer
(EUR 1 000)
Shares received 1 Gross annual
retainer
(EUR 1 000)
Shares received 1
Gross annual
retainer
(EUR 1 000)
Shares received 1
130
130
150
1 530
2 650
4 032
100
100
150 2
1 178
2 038
4 032 2
75
75
100 3
882
1 529
2 688 3
1
2
3
*
As part of the Gross Annual Retainer for that year.
Includes a retainer of EUR 125 000 for services as Vice Chairman of the Board and EUR 25 000 for services as Chairman of the Personnel Committee. Of the shares received in 2003,
3 360 shares were for services as Vice Chairman of the Board and 672 shares for services as Chairman of the Personnel Committee.
The 2003 retainer of Mr. Robert F. W. van Oordt amounted to a total of EUR 125 000, consisting of a retainer of EUR 100 000 for services as Member of the Board and EUR 25 000 for
services as Chairman of the Audit Committee. The shares received by Mr. Robert F. W. van Oordt amounted to a total of 3 360 shares, consisting of 2 688 shares for services as a
Member of the Board and 672 shares for services as Chairman of the Audit Committee.
The Corporate Governance Recommendation for listed Companies recommends a company to describe the manner in which the internal audit function of the company is organized.
As Nokia has comprehensive risk management and internal control processes in place, there is no separate internal audit function at Nokia.
64 | Nokia in 2003
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64
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C O R P O R AT E G O V E R N A N C E
Nokia through age 65. Nokia does not offer any such benefit to any other
members of the 2003 Group Executive Board.
Service contracts of the Chairman and CEO and of the President
We have a service contract with each of Mr. Jorma Ollila and Mr. Pekka
Ala-Pietilä, each of an indefinite duration. The Board has also agreed
with Mr. Jorma Ollila on the continuation of his services as CEO of Nokia
through 2006.
Mr. Jorma Ollila’s contract has provisions for severance payments for
up to 24 months of compensation (both base compensation and bonus)
in the event of his termination of employment for reasons other than
cause, including a change of control. As previously mentioned, Mr. Jorma
Ollila is further entitled to a full statutory pension from the date he turns
60 years of age, instead of the statutory age of 65.
Mr. Pekka Ala-Pietilä’s contract has provisions for severance pay-
ments for up to 18 months of compensation (both base compensation
and bonus) in the event of his termination of employment for reasons
other than cause, including a change of control. As previously men-
tioned, Mr. Pekka Ala-Pietilä is entitled to a full statutory pension from
the date he turns 60 years of age, instead of the statutory age of 65.
Management share ownership
The following tables set forth the number of shares and ADSs beneficially
held by members of the Board of Directors and the Group Executive
Board as of December 31, 2003 (not including the new Group Executive
Board Members whose service began on January 1, 2004).
Board of Directors, Dec. 31, 2003
Jorma Ollila 2
Paul J. Collins
Georg Ehrnrooth 3
Bengt Holmström
Per Karlsson 3
Robert F.W. van Oordt
Marjorie Scardino
Vesa Vainio
Arne Wessberg
Total
Shares 1
ADSs
189 388
–
305 559
7 687
8 517
7 719
–
18 347
5 099
–
109 376
–
–
–
–
5 099
–
–
542 316
114 475
1
2
The number of shares includes not only shares acquired as compensation for services
as member of the Board of Directors, but also shares acquired by any other means.
For Mr. Jorma Ollila’s holdings of stock options, see the table under “Management Stock
Option Ownership” below.
3 Mr. Georg Ehrnrooth’s and Mr. Per Karlsson’s holdings include both shares held
personally and shares held through a company.
Board of Directors
For the year ended December 31, 2003, the aggregate compensation of the
eight non-executive members of the Board of Directors was approxi-
mately EUR 0.875 million. Non-executive members of the Board of Direc-
tors do not receive bonuses or stock options. The remuneration for mem-
bers of our Board of Directors for each term expiring at the close of the
next Annual General Meeting is resolved annually by our Annual General
Meeting, after being proposed by the Corporate Governance and Nomina-
tion Committee of our Board.
The table on page 64 depicts the total annual remuneration paid to
the members of our Board of Directors, as resolved by the Annual General
Meetings in the respective years. Since the fiscal period 1999, approxi-
mately 60% of each Board member’s annual retainer has been paid in
cash, with the balance in Nokia Corporation shares acquired from the
market.
Group Executive Board
For the year ended December 31, 2003, Nokia had a Group Executive
Board consisting of 10 members. Three new members have been ap-
pointed to serve on the Group Executive Board as from January 1, 2004.
The aggregate compensation, excluding gains realized upon the exercise
of stock options, of the 10 members of the Group Executive Board for
2003, including Mr. Jorma Ollila, was approximately EUR 10.9 million. Of
this amount, approximately EUR 5.4 million was paid pursuant to bonus
arrangements for the 2003 calendar year. The bonuses of the members of
the Group Executive Board are paid as a percentage of annual base salary
based on Nokia’s Short-Term Incentive Plan. Short-term cash incentives
are paid twice each year based on performance for each of Nokia’s short-
term plans that end on June 30 and December 31 of each year.
Short-term incentive payments are primarily determined based on a
formula that considers the company’s performance to pre-established
targets for Net Sales, Operating Profit and Net Working Capital efficiency
measures. Certain executives may have objectives related to quality,
technology innovation, new product revenue, or other objectives of key
strategic importance, which may require a discretionary assessment of
performance by the Personnel Committee.
Subject to the requirements of Finnish law, the independent directors
of the Board will confirm the compensation and the employment condi-
tions of Mr. Jorma Ollila and Mr. Pekka Ala-Pietilä upon the recommenda-
tion of the Personnel Committee. The compensation and employment
conditions of the other members of the Group Executive Board are ap-
proved by the Personnel Committee.
Our executives forming the Group Executive Board in 2003 participate
in the Finnish TEL pension system, which provides for a retirement ben-
efit based on years of service and earnings according to the prescribed
statutory system. Under the Finnish TEL pension system, base pay, incen-
tives and other taxable fringe benefits are included in the definition of
earnings, although gains realized from stock options are not. The Finnish
TEL pension scheme provides for early retirement benefits at age 60 and
full retirement benefits at age 65. The current TEL provisions cap the total
pension benefit at 60% of the pensionable earnings amount.
For Mr. Jorma Ollila, Mr. Pekka Ala-Pietilä, Dr. Matti Alahuhta, Mr. Olli-Pekka
Kallasvuo and Ms. Sari Baldauf, Nokia offers a full retirement benefit at
age 60. The full retirement benefit is based on the executive’s pensionable
earnings at age 60, assuming that the executive continues service with
NOKIA IN 2003_s32-70
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C O R P O R AT E G O V E R N A N C E
Group Executive Board, Dec. 31, 2003
Pekka Ala-Pietilä
Matti Alahuhta
Sari Baldauf
J.T. Bergqvist
Olli-Pekka Kallasvuo
Pertti Korhonen
Yrjö Neuvo
Veli Sundbäck
Anssi Vanjoki
Total
Shares
49 600
129 200
183 200
12 800
44 000
15 300
74 540
110 000
106 000
724 640
On December 31, 2003, the aggregate interest of the members of the
Board of Directors and the Group Executive Board (not including the new
Group Executive Board members whose service began on January 1,
2004) in our outstanding share capital was 1 381 431 shares and ADSs,
representing less than 1% of the issued share capital and voting rights in
Nokia Corporation.
Management stock option ownership
The following tables provide certain information relating to stock op-
tions held by members of the Group Executive Board as of December 31,
2003 (not including the new Group Executive Board members whose
service began on January 1, 2004). These stock options were issued pur-
suant to the Nokia Stock Option Plans 1999, 2001 and 2003. For a descrip-
tion of our stock option plans, including information regarding the expi-
ration date of the options under these plans, please see www.nokia.com.
Stock option ownership of the Group Executive Board, Dec. 31, 2003
Number of shares represented by exercisable
options as of December 31, 2003
Number of shares represented by unexercisable
options as of December 31, 2003
Exercise price per share
EUR 16.89
EUR 56.28
EUR 29.12
EUR 36.75
EUR 26.67
EUR 17.89
EUR 36.75
EUR 26.67
EUR 17.89
1999 A1
1999 B1
1999 C1 2001 A and B2
2001 C4Q/013 2002 A and B 4
2001 B2 2001C 4Q/013
2002 B4
Jorma Ollila
Pekka Ala-Pietilä
Matti Alahuhta
Sari Baldauf
J.T. Bergqvist
Olli-Pekka Kallasvuo
Pertti Korhonen
Yrjö Neuvo
Veli Sundbäck
Anssi Vanjoki
1 020 000
0
340 000
420 000
100 000
0
34 000
280 000
400 000
280 000
1 056 000
475 200
369 600
369 600
92 400
369 600
94 120
264 000
264 000
264 000
544 000
244 800
190 400
190 400
47 600
190 400
27 880
136 000
136 000
136 000
562 500
140 625
56 250
56 250
22 500
56 250
16 875
39 375
22 500
39 375
218 750
54 686
21 875
21 875
8 750
21 875
6 561
15 311
8 750
15 311
312 500
78 125
54 687
54 687
21 875
54 687
21 875
21 875
12 500
31 250
437 500
109 375
43 750
43 750
17 500
43 750
13 125
30 625
17 500
30 625
281 250
70 314
28 125
28 125
11 250
28 125
8 439
19 689
11 250
19 689
687 500
171 875
120 313
120 313
48 125
120 313
48 125
48 125
27 500
68 750
2003 2Q5
EUR 14.95
800 000
170 000
120 000
120 000
50 000
120 000
50 000
40 000
50 000
100 000
1
2
3
4
5
Each 1999 A, B and C option originally granted entitles the holder to subscribe for four shares of Nokia stock. The exercise price per share and the number of shares for the 1999 A, B and
C options have been adjusted for the share split that took place in April 2000.
Each 2001 A and B option originally granted entitles the holder to subscribe for one share of Nokia stock. The 2001 A and B options were 25% exercisable on July 1, 2002. An additional
6.25% of the original grant amount becomes exercisable each calendar quarter thereafter, so that the options will be fully exercisable on July 1, 2005. As of December 31, 2003, of the
original grant of 2001 A and B options, 56.25% was vested and exercisable.
Each 2001 C option originally granted entitles the holder to subscribe for one share of Nokia stock. The 2001 C options were 25% exercisable on January 1, 2003 and an additional 6.25%
will be exercisable each calendar quarter thereafter, so that the options will be fully exercisable on January 2, 2006. As of December 31, 2003, of the original grant of 2001 C options,
43.75% was vested and exercisable.
Each 2002 A and B option originally granted entitles the holder to subscribe for one share of Nokia stock. The 2002 A and B options were 25% exercisable on July 1, 2003 and an
additional 6.25% will be exercisable each calendar quarter thereafter, so that the options will be fully exercisable on July 3, 2006. As of December 31, 2003, of the original grant of 2002
A and B options, 31.25% was vested and exercisable.
Each 2003 option originally granted entitles the holder to subscribe for one share of Nokia stock. The 2003 options will be 25% exercisable on July 1, 2004 and an additional 6.25% will
be exercisable each calendar quarter thereafter, so that the options will be fully exercisable on July 2, 2007. As of December 31, 2003, of the original grant of 2003 options none was
vested and exercisable.
Insiders’ trading in Securities
The Board of Directors has established a policy in respect of insiders’
trading in Nokia securities. Under the policy, the holdings of Nokia secu-
rities by the primary insiders (as defined) are public information, which
is available in the Finnish Central Securities Depositary and on the com-
pany’s website. As well, both primary insiders and secondary insiders
(as defined) are subject to a number of trading restrictions and rules, in-
cluding among other things, prohibitions on trading in Nokia securities
during the three-week “closed-window” period immediately preceding
the disclosure of our quarterly results and the four-week “closed-win-
dow” period immediately preceding the disclosure of our annual results.
In addition, the company may set trading restrictions based on project
participation. We update our insider trading policy from time to time
and monitor our insiders’ compliance with the policy on a regular basis.
Nokia’s Insider Policy complies with the Helsinki Exchanges Guidelines
for Insiders and also sets out requirements beyond those guidelines.
66 | Nokia in 2003
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C O R P O R AT E G O V E R N A N C E
The initial threshold for the Average Annual Net Sales Growth criteria
is 4% resulting in the vesting of up to 2 million Performance Shares. Sim-
ilarly, the first threshold for the annual EPS Growth criteria is 3% result-
ing in the vesting of up to 2 million Performance Shares. The maximum
performance for Average Annual Net Sales Growth criteria is 16% result-
ing in the vesting of up to 8.5 million Performance Shares. Similarly, the
maximum performance for the annual EPS Growth criteria is 12% result-
ing in the vesting of up to 8.5 million Performance Shares. The EPS per-
centages above are approximate figures based on the criteria expressed
in euro cents. Performance exceeding the set criteria does not increase
the number of Performance Shares vesting.
Under the 2004 Program, the maximum performance level for both
criteria will result in the vesting of the maximum of 17 million Perform-
ance Shares. If the threshold levels of performance are not achieved,
none of the Performance Shares will vest. For performance between the
threshold and maximum performance levels the payout follows a linear
scale. If required performance levels are achieved, the first payout will
take place in 2006 up to a maximum of 4 million shares. The second and
final payout, if applicable, will be in 2008. The company will determine
the method by which the shares are obtained for delivery after vesting,
which may also include cash settlement.
Stock Options and Restricted Shares
Under the 2004 program, Nokia will issue significantly fewer Stock Options
for incentive purposes than in 2003 when approximately 30 million op-
tions were granted under the Stock Option Program out of the maximum
of 94.6 million Stock Options as approved by the Annual General Meeting
the same year. In 2004, the maximum number of Stock Options to be
granted is 7 million.
Going forward, the company will continue to use a limited number of
Restricted Shares to recruit, retain, reward and motivate selected high po-
tential and critical employees. In 2004, the maximum number of Restrict-
ed Shares to be granted is 2 million.
The maximum number of shares and/or options to be granted under
the 2004 Equity Program is 26 million, or approximately 0.6 per cent of all
outstanding shares.
Administration of the Program
Following the approval of the program by the Board of Directors, the Per-
sonnel Committee will administer the program according to its charter,
including the determination of the principles under which grants will be
made. The Board of Directors will approve the grants to the CEO and the
President.
Stock ownership guidelines for executive management
The goal of our long-term, equity-based incentive awards is to recognize
progress towards the achievement of our strategic objectives, and to fo-
cus executives on building value for shareholders. In addition to stock
option grants, we encourage stock ownership by our top executives. In
January 2001, we introduced a stock ownership commitment guideline
with minimum recommendations tied to annual fixed salaries. For the
members of the Group Executive Board, the recommended minimum in-
vestment in our shares corresponds to two times the member’s annual
base salary, to be fulfilled by January 2006. This timeline is adjusted for
persons, including also the new Group Executive Board members whose
service began on January 1, 2004, to whom we have started to apply the
guidelines after their initial introduction.
Nokia Stock Option Plans
For a summary of the existing Nokia stock option plans please see
www.nokia.com. The plans have been approved by the Annual General
Meetings in the year of the launch of the plan.
Restricted Shares
In 2003, we granted a total of 452 250 Restricted Shares to 28 of our key
management personnel who are critical to the future success of Nokia.
These Restricted Shares will vest in October 2006, at which time the
shares will be transferred and delivered to the recipients. Until the
shares are transferred and delivered, the recipients will not have any
voting or dividend rights associated with these shares. Mr. Pertti Korhonen,
a member of the 2003 Group Executive Board, was granted 35 000 Restricted
Shares in 2003.
Nokia’s Equity Based Compensation Program 2004
On January 22, 2004, the Board of Directors approved a new equity based
compensation program 2004 for Nokia, as proposed by the Personnel
Committee. Under this program, Nokia will introduce Performance
Shares as the main element of its broad based equity compensation pro-
gram to further emphasize the performance element in the employees’
long-term incentives. As part of this change, Nokia will grant significant-
ly fewer stock options in 2004 compared to 2003.
The new, more diversified program aligns the potential value re-
ceived by participants directly with the performance of the company.
The target group for this new share-based incentive program continues
to be broad and to include a wide number of employees on many levels
of the organization. However, the number of actual participants will be
smaller as the program increases the focus on rewarding achievement
and on retaining high potential and critical employees.
Performance Shares
Performance Shares represent a commitment by the company to deliver
Nokia shares to employees at a future point in time, subject to the com-
pany’s fulfillment of pre-defined performance criteria. Performance
Shares will vest subject to the company’s performance reaching at least
one of the threshold levels measured by two independent, pre-defined
performance criteria: the company’s Average Net Sales Growth and EPS
Growth (basic, reported) for the 2004 to 2007 period. Both the EPS and
Average Net Sales Growth criteria will have an equal weight of 50%.
NOKIA IN 2003_s32-70
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Nokia in 2003 | 67
I N V E STO R I N FO R M AT I O N
Information on the Internet
www.nokia.com/investor
Investor relations contacts
investor.relations@nokia.com
Available on the Internet: financial reports, Nokia management’s presentations,
conference call and other investor related material, press releases as well as
environmental and social information.
Nokia Investor Relations
6000 Connection Drive
IRVING, Texas 75039
USA
tel. +1 972 894 4880
fax +1 972 894 4381
Nokia Investor Relations
P.O. Box 226
FIN-00045 NOKIA GROUP
tel. + 358 7180 34289
fax +358 7180 38787
Annual General Meeting
Date: Thursday, March 25, 2004 at 3.00 p.m.
Address: Hartwall Areena, Veturitie 13, Helsinki, Finland.
Dividend
Dividend proposed by the Board of Directors for 2003 is EUR 0.30.
The dividend record date is March 30, 2004 and the dividend will be paid
April 16, 2004.
Financial reporting
Nokia’s quarterly reports in 2004 are planned for April 16, July 15
and October 14. The 2004 results will be published in January 2005 and
the financial statements in February/March 2005.
Stock exchanges
The shares of Nokia Corporation are quoted on the following stock exchanges:
Symbol
NOK1V
NOKI
NOA3
NOK
NOK
Trading
currency
EUR
SEK
EUR
EUR
USD
HEX, Helsinki (quoted since 1915)
Stockholmsbörsen (1983)
Frankfurter Wertpapierbörse (1988)
Bourse de Paris (1988)
New York Stock Exchange (1994)
List of indices
NOK1V
NOKI
NOK
HEX HEX General Index
OMX Stockholm
NYA NYSE Composite
HEXTELE HEX Telecommunications GENX Swedish General
NNA NYSE Utilities
Index
GENX04 Swedish Engineer
NN NYSE Utilities
HEX 20 HEX 20 Index
GENX16 Swedish SX 16 Index
CTN GSFO Technology
BE500 Bloomberg Europe
BETECH BBG Europe Technology
SX5E DJ Euro STOCXX 50
SX5P DJ Europe STOXX
SX__ Various other Dj Indices
E300 FTSE Eurotop 300
MLO Merrill Lynch 10
It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding: A) the timing of product and solution deliveries; B) our ability to develop, implement and commercialize new
products, solutions and technologies; C) expectations regarding market growth, developments and structural changes; D) expectations and targets for our results of operations; and E) statements preceded by “believe,” “expect,” “anticipate,”
“foresee” or similar expressions are forward-looking statements. Because these statements involve risks and uncertainties, actual results may differ materially from the results that we currently expect. Factors that could cause these
differences include, but are not limited to: 1) developments in the mobile communications industry and the broader mobility industry, including the development of the mobile software and services market, as well as industry consolidation
and other structural changes; 2) timing and success of the introduction and roll-out of new products and solutions; 3) demand for and market acceptance of our products and solutions; 4) the impact of changes in technology and the success
of our product and solution development; 5) the intensity of competition in the mobility industry and changes in the competitive landscape; 6) our ability to control the variety of factors affecting our ability to reach our targets and give
accurate forecasts; 7) pricing pressures; 8) the availability of new products and services by network operators and other market participants; 9) general economic conditions globally and in our most important markets; 10) our success in
maintaining efficient manufacturing and logistics as well as high quality of our products and solutions; 11) inventory management risks resulting from shifts in market demand; 12) our ability to source quality components without
interruption and at acceptable prices; 13) our success in collaboration arrangements relating to technologies, software or new products and solutions; 14) the success, financial condition, and performance of our collaboration partners,
suppliers and customers; 15) any disruption to information technology systems and networks that our operations rely on; 16) our ability to have access to the complex technology involving patents and other intellectual property rights
included in our products and solutions at commercially acceptable terms and without infringing any protected intellectual property rights; 17) developments under large, multi-year contracts or in relation to major customers; 18) the
management of our customer financing exposure; 19) exchange rate fluctuations, including, in particular, fluctuations between the euro, which is our reporting currency, and the US dollar and the Japanese yen; 20) our ability to recruit, retain
and develop appropriately skilled employees; 21) our ability to implement our new organizational structure; and 22) the impact of changes in government policies, laws or regulations as well as 23) the risk factors specified on pages 12 to
21 of the company’s Form 20-F under “Item 3.D Risk Factors” for the year ended December 31, 2003.
68 | Nokia in 2003
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G E N E R A L CO N TAC T I N FO R M AT I O N
NOKIA
Keilalahdentie 2–4
P.O. Box 226
FIN-00045 NOKIA GROUP
Tel. +358 7180 08000
Fax +358 7180 38226
Mobile Phones
Keilalahdentie 2–4
P.O. Box 100
FIN-00045 NOKIA GROUP
Tel. +358 7180 08000
Fax + 358 7180 45782
Multimedia
Keilalahdentie 2–4
P.O. Box 100
FIN-00045 NOKIA GROUP
Tel. +358 7180 08000
Fax + 358 7180 45782
Networks
Keilalahdentie 2–4
P.O. Box 300
FIN-00045 NOKIA GROUP
Tel. +358 7180 08000
Fax +358 7180 38200
Enterprise Solutions
Keilalahdentie 2–4
P.O. Box 100
FIN-00045 NOKIA GROUP
Tel. +358 7180 08000
Fax + 358 7180 45782
NOKIA IN 2003_s32-70
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Nokia in 2003 | 69
© Nokia 2004. Nokia and Nokia Connecting People are registered trademarks of Nokia Corporation.
Paper: Galerie Art Silk 115 g/m2
Cover: Galerie Art Gloss 250 g/m2
Printed matter
Design: Louise Boström Oy. Sävypaino ISO 9001, 2004.
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