Nokia 2006 Annual Report Download - page 212

Notes to the Consolidated Financial Statements (Continued)
38. Differences between International Financial Reporting Standards and US Generally
Accepted Accounting Principles (Continued)
Reclassification of foreign currency translation
While foreign currency translation differences are the same in aggregate, certain classification
differences exist between IFRS and US GAAP. Net foreign exchange gains/(losses) of EUR (202) million,
EUR (161) million and EUR (54) million are included in the determination of net income under US
GAAP of which EUR (414) million, EUR 418 million and EUR (345) million are included in cost of sales
for the year ended December 31, 2006, 2005 and 2004, respectively. EUR 243 million,
EUR (568) million and EUR 283 million of the net foreign exchange gains/(losses) are included in the
determination of net sales in 2006, 2005 and 2004, respectively.
Reclassification to financial income and expense
Under IFRS, certain net gains of EUR 137 million in 2004 have been classified as other operating
income in 2004. This gain resulted from instruments held for operating purposes that were
considered to be nonhedging derivatives under US GAAP and are classified as financial income and
expense.
Included within the EUR 137 million net gain recognized in 2004 is EUR 160 million, representing the
premium return under a multiline, multiyear insurance program, see Note 7. Under US GAAP, this
gain represents the settlement of a call option on the counter party’s interest in an unconsolidated
reinsurance subsidiary.
Bank and cash
Under US GAAP, bank overdrafts of EUR 112 million and EUR 46 million in 2006 and 2005,
respectively, for which there is a legal right of offset are excluded from shortterm borrowings and
included within bank and cash, which has been reflected in total US GAAP assets of
EUR 22 835 million and EUR 22 725 million, respectively.
Treasury stock retirement
Under IFRS, the accounting treatment for treasury stock retirement involves an increase in the share
premium account corresponding to the reduction in share capital for the nominal value of treasury
stock retired. Treasury stock is reduced by the acquisition cost of retired treasury stock with a
corresponding reduction in retained earnings.
Under US GAAP, the accounting treatment for treasury stock retirement does not affect the share
premium account. Instead, the reduction in retained earnings is offset in part by the reduction in
share capital for the nominal value of treasury stock retired. The impact of this difference is a
reduction in the share premium account amounting to EUR 20 million and EUR 14 million in 2006
and 2005, respectively.
Minority interests
IFRS requires the presentation of minority interests within equity on the face of the balance sheet.
Under US GAAP, minority interests is presented as a separate item on the face of the balance sheet
outside of equity.
Indemnification agreements
The Group enters into standard indemnification agreements in the ordinary course of business.
Pursuant to these agreements, the Group indemnifies, holds harmless, and agrees to reimburse the
indemnified party for losses suffered or incurred by the indemnified party, generally the Group’s
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