Nokia 2010 Annual Report Download - page 240

17. Derivative financial instruments (Continued)
(2)
Includes the gross amount of all notional values for contracts that have not yet been settled or
cancelled. The amount of notional value outstanding is not necessarily a measure or indication of
market risk, as the exposure of certain contracts may be offset by that of other contracts.
(3)
These crosscurrency interest rate swaps have been designated partly as fair value hedges and
partly as cash flow hedges.
(4)
Cash settled equity options are used to hedge risk relating to employee incentive programs and
investment activities.
In addition to derivative liabilities, the Group has a noncontrolling interest that includes a put
arrangement measured at its redemption value of EUR 88 million at December 31, 2010 presented in
Other financial liabilities. The put arrangement has been exercised in the first quarter of 2011.
18. Inventories
2010 2009
EURm EURm
Raw materials, supplies and other ......................................... 762 409
Work in progress . . ..................................................... 642 681
Finished goods ......................................................... 1 119 775
Total ................................................................. 2 523 1 865
19. Prepaid expenses and accrued income
Prepaid expenses and accrued income totalled EUR 4 360 million in 2010 (EUR 4 551 million in 2009).
In 2010, prepaid expenses and accrued income included advance payments to Qualcomm of
EUR 1 166 million (1 264 million in 2009). In 2008, Nokia and Qualcomm entered into a new 15 year
agreement, under the terms of which Nokia has been granted a license to all Qualcomm’s patents for
the use in Nokia mobile devices and Nokia Siemens Networks infrastructure equipment. The financial
structure of the agreement included an upfront payment of EUR 1.7 billion, which is amortized over
the contract period and ongoing royalties payable to Qualcomm. As part of the licence agreement,
Nokia also assigned ownership of a number of patents to Qualcomm. These patents were valued
using the income approach based on projected cash flows, on a discounted basis, over the assigned
patents’ estimated useful life. Based on the valuation and underlying assumptions Nokia determined
that the fair value of these patents were not material.
In addition, prepaid expenses and accrued income primarily consists of VAT and other tax receivables.
Prepaid expenses and accrued income also includes prepaid pension costs, accrued interest income
and other accrued income, but no amounts which are individually significant.
F52
Notes to the Consolidated Financial Statements (Continued)