Nokia 2003 Annual Report Download - page 172

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Notes to the Consolidated Financial Statements (Continued)
36. Differences between International Accounting Standards and U.S. Generally Accepted
Accounting Principles (Continued)
Under U.S. GAAP, related party transactions in 2002 with the subsidiary included sales by Nokia to
the subsidiary of EUR 1,462 million (EUR 2,090 million in 2001) and purchases by Nokia from the
subsidiary of EUR 2,090 million (EUR 1,536 million in 2001).
New US Accounting Standards
In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity (FAS 150). The statement establishes standards on
how to classify and measure certain financial instruments with characteristics of both liabilities
and equity and requires additional disclosures regarding alternative ways of settling instruments
and the capital structure of entities—all of whose shares are mandatory redeemable. The
provisions of FAS 150 were effective for all financial instruments entered into or modified after
May 31, 2003, and otherwise was effective the first interim period beginning after June 15, 2003.
However, the guidance applying to mandatorily redeemable noncontrolling interests has been
deferred. The Company does not expect this statement to have a material impact on the financial
statements.
In April 2003, the FASB issued SFAS 149, Amendment of Statement 133 on Derivative Instruments
and Hedging Activities (FAS 149). FAS 149 generally improves financial reporting for derivative
instruments by requiring that contracts with comparable characteristics be accounted for similarly
and by clarifying when a derivative contains a financing component that warrants special
reporting in the statement of cash flows. The guidance in SFAS 149 was effective prospectively for
contracts entered into or modified and for hedging relationships designated after June 30, 2003.
The Company has evaluated the impact of this statement and does not expect it to have a material
impact on the financial statements.
In December 2003 the Financial Accounting Standards Board issued FASB Interpretation No.46 R,
Consolidation of Variable Interest Entities Revised. FIN 46R modifies the scope exceptions
provided in FIN 46. Entities would be required to replace FIN 46 provisions with FIN 46R
provisions for all newly created post-January 31, 2003 entities as of the end of the first interim or
annual reporting period ending after March 15, 2004. We reviewed our investment portfolio,
including associated companies, and identified no investments in Variable Interest Entities, as
defined by FIN 46. However, we have identified that at December 31, 2003, Nokia is a variable
interest holder as defined by FIN 46 in a reinsurance company that was formed in connection
with its multi-line multi-year insurance program. This holding is represented by a call option on
the company’s shares and is fair valued in Nokia’s financial statements through the profit and loss
accounts. At December 31, 2003, the fair value of the option was EUR 25 million. Nokia’s exposure
to any additional loss is negligible.
F-63