Nokia 2003 Annual Report Download - page 128

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Notes to the Consolidated Financial Statements (Continued)
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 contract revenues, included in prepaid income, were EUR 195 million at
December 31, 2003 (EUR 108 million in 2002 and EUR 146 million in 2001). Contract revenues
recorded prior to billings were EUR 665 million at December 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
2003 2002 2001
EURm EURm EURm
Wages and salaries ............................................. 2,501 2,531 2,388
Pension expenses, net ........................................... 184 224 193
Other social expenses ............................................ 341 385 524
Personnel expenses as per profit and loss account ..................... 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).
2003 2002 2001
EURm EURm EURm
Remuneration of the Chairman and the other members of the Board of
Directors, Group Executive Board and Presidents and Managing Directors* . 22 19 16
* Incentives included in remuneration ............................... 542
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 Parent 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 majority of benefits are financed by contributions to a central pool with the
majority of the contributions being used to pay current benefits. The other 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
F-19