Nokia 2003 Annual Report Download - page 164

Notes to the Consolidated Financial Statements (Continued)
36. Differences between International Accounting Standards and U.S. Generally Accepted
Accounting Principles (Continued)
Below is a roll forward of U.S. GAAP goodwill during 2003 and 2002:
Nokia Nokia Common
Mobile Nokia Ventures Group
Phones Networks Organization Functions Group
EURm EURm EURm EURm EURm
Balance as of January 1, 2002 ............... 351 382 80 — 813
Goodwill acquired ........................ — — — 9 9
Impairment losses ........................ — (17) (61) — (78)
Translation adjustment .................... (202) (42) 4 — (240)
Balance as of December 31, 2002 ............ 149 323 23 9 504
Goodwill acquired ........................ — — 20 — 20
Translation adjustment .................... 5 (52) (6) — (53)
Balance as of December 31, 2003 ............ 154 271 37 9 471
Of the amount of goodwill under U.S. GAAP, EUR 259 million at December 31, 2003, relates to the
acquisition of Amber Networks in 2001. Goodwill is not deductible for tax purposes.
Translation of goodwill
Under IAS, the Group translates goodwill arising on the acquisition of foreign subsidiaries at
historical rates.
Under U.S. GAAP, goodwill is translated at the closing rate on the balance sheet date with gains
and losses recorded as a component of shareholders’ equity.
Disclosures required by U.S. GAAP
Dependence on limited sources of supply
Nokia’s manufacturing operations depend to a certain extent on obtaining adequate supplies of
fully functional components on a timely basis. Our principal requirements are for electronic
components, such as semiconductors, microprocessors, micro controllers, memory devices and
displays, which have a wide range of applications in our products. In addition, a particular
component may be available only from a limited number of suppliers. Suppliers may from time to
time extend lead times, limit supplies or increase prices due to capacity constraints or other
factors, which could adversely affect our ability to deliver our products and solutions on a timely
basis. Moreover, even if we attempt to select our suppliers and manage our supplier relationships
with scrutiny, a component supplier may fail to meet our supplier requirements, such as, most
notably, our and our customers’ product quality, safety and other corresponding standards, and
consequently some of our products are unacceptable to us and our customers, or we may fail in
our own quality controls. Moreover, a component supplier may experience delays or disruption to
its manufacturing, or financial difficulties. Any of these events could delay our successful delivery
of products and solutions, which meet our and our customers’ quality, safety and other
corresponding requirements, or otherwise adversely affect our sales and our results of operations.
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