Nokia 2003 Annual Report Download - page 163

Notes to the Consolidated Financial Statements (Continued)
36. Differences between International Accounting Standards and U.S. Generally Accepted
Accounting Principles (Continued)
The following table shows the results of operations as if FAS 142 were applied to prior periods:
2001
EURm
(except per
share amounts)
Net income as reported under U.S. GAAP .................................. 1,903
Add back: Goodwill amortization ........................................ 274
Adjusted net income .................................................. 2,177
Income per share—Basic
Net income as reported under U.S. GAAP ................................ 0.40
Goodwill amortization .............................................. 0.06
Adjusted net income ................................................ 0.46
Income per share—Diluted
Net income as reported under U.S. GAAP ................................ 0.40
Goodwill amortization .............................................. 0.06
Adjusted net income ................................................ 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 continue to amortize these
assets over their remaining useful lives.
As of January 1, 2002, the Group performed the transitional impairment test under FAS 142 and
compared the carrying value for each reporting 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 performed
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 continuing 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 exceeded the recoverable amount of the unit. Upon completion
of the annual 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.
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