Nokia 2003 Annual Report Download - page 131
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Notes to the Consolidated Financial Statements (Continued)
7. Impairment
Nokia Nokia Common
Mobile Nokia Ventures Group
2003 Phones Networks Organization Functions Group
EURm EURm EURm EURm EURm
Customer finance impairment charges, net of
reversals .............................. — (226) — — (226)
Impairment of goodwill .................... — 151 — — 151
Impairment of available-for-sale investments . . . — — 27 — 27
Impairment of capitalized development costs . . . — 275 — — 275
Total, net ............................... — 200 27 — 227
2002
EURm EURm EURm EURm EURm
Customer finance impairment charges, net ..... — 279 — — 279
Impairment of goodwill .................... — 121 61 — 182
Impairment of available-for-sale investments . . . — — 22 55 77
Total, net ............................... — 400 83 55 538
2001
EURm EURm EURm EURm EURm
Customer finance impairment charges ........ — 714 — — 714
Impairment of goodwill .................... — 211 307 — 518
Impairment of available-for-sale investments . . . — — 6 74 80
Total ................................... — 925 313 74 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
FlexiGateway 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 FlexiGateway and 12% discount rate for
Metrosite, expected to arise from the continuing 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 impairment charge to write down the loans receivable to
their estimated recoverable amount related to MobilCom and EUR 13 million was a partial
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 million 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.
F-22