1st Quarter Results

Nokia Corporation 20 April 2001 Nokia exceeds first quarter earnings targets - extends leadership in a challenging environment Nokia today announced strong first quarter 2001 results exceeding earlier estimates, again achieving good profitability and faster-than- market growth in both networks and mobile phones. -Nokia's net sales grew by 22% to EUR 8 007 million. In Nokia Networks, net sales growth was 35% and in Nokia Mobile Phones 20% -Pro forma operating profit increased by 8% to EUR 1 440 million -Pro forma operating margin for Nokia was 18.0%, Nokia Networks 18.0% and Nokia Mobile Phones 20.7% -Pro forma earnings per share (diluted) were EUR 0.22 (0.19), on a reported basis EPS (diluted) were 0.20 (0.19) As communicated earlier, Nokia has decided to disclose pro forma as well as reported figures starting with this quarter to increase transparency and provide more meaningful information to investors. Pro forma adjustments for this quarter reflect the exclusion of amortization of goodwill in the amount of EUR 71 million (EUR 19 million in the first quarter 2000) associated with acquisitions. In the future, pro forma adjustments could also reflect other possible changes in the company's structure as a result of acquisitions or divestments, changes in accounting standards, as well as other non- recurring items. All reported figures can be found on pages 5 and 6 and in the tables at the end of this report. PRO FORMA (excludes goodwill amortization) EUR Million 1Q/2001 1Q/2000 Change(%) Full Year 2000 Net sales 8 007 6 537 +22 30 376 Nokia Networks 2 022 1 502 +35 7 714 Nokia Mobile Phones 5 830 4 839 +20 21 887 Nokia Ventures 169 211 -20 854 Organization Operating profit 1 440 1 335 +8 5 916 Nokia Networks 364 280 +30 1 400 Nokia Mobile Phones 1 207 1 162 +4 4 897 Nokia Ventures -102 -59 -73 -307 Organization Common Group Expenses -29 -48 -74 Profit before tax and 1 484 1 352 +10 6 002 minority interests Net profit 1 045 910 +15 4 078 EPS, EUR Basic 0.22 0.20 +10 0.87 Diluted 0.22 0.19 +11 0.85 Commenting on the results, Jorma Ollila, Nokia's Chairman and CEO expressed confidence in the company's ability to perform well in demanding conditions. 'I am more than pleased with our first-quarter numbers. We were able to extend our leadership while managing the day-to-day challenges of a demanding economic environment. During the quarter, we continued to increase our market share in both handsets and networks and we again sustained profitable growth and strong positive operating cashflow,' said Ollila. NOKIA IN JANUARY-MARCH 2001 (PRO FORMA) (International Accounting Standards, IAS, pro forma, comparisons given to the first quarter 2000 results) Pro forma adjustments for this quarter reflect the exclusion of amortization of goodwill in the amount of EUR 71 million (EUR 19 million in the first quarter 2000) associated with acquisitions. Nokia's net sales increased by 22% to EUR 8 007 million (EUR 6 537 million). Sales growth was strong in all geographic regions. Sales of Nokia Networks increased by 35% to EUR 2 022 million (EUR 1 502 million), with growth especially strong in Asia Pacific and the Americas. Sales of Nokia Mobile Phones grew by 20% to EUR 5 830 million (EUR 4 839 million), with growth strongest in Europe and Asia Pacific. Sales of Nokia Ventures Organization decreased by 20% and totaled EUR 169 million (EUR 211 million). Pro forma adjustments did not affect net sales. Pro forma operating profit increased by 8% to EUR 1 440 million (EUR 1 335 million), representing a pro forma operating margin of 18.0% (20.4%). Pro forma operating profit in Nokia Networks increased by 30% to EUR 364 million (EUR 280 million), representing a pro forma operating margin of 18.0% (18.6%). Pro forma operating profit in Nokia Mobile Phones increased by 4% to EUR 1 207 million (EUR 1 162 million), representing a pro forma operating margin of 20.7% (24.0%). Nokia Ventures Organization reported a pro forma operating loss of EUR 102 million (pro forma operating loss of EUR 59 million). Common Group Expenses, which comprises Nokia Head Office and Nokia Research Center, totaled EUR 29 million (EUR 48 million). Pro forma earnings per share increased to EUR 0.22 (basic) and to EUR 0.22 (diluted) compared with EUR 0.20 (basic) and EUR 0.19 (diluted). BUSINESS ENVIRONMENT AND FORECASTS Nokia believes it has the opportunity not only to extend its leadership in mobile handsets but also to gain the leading position in the 3G mobile network infrastructure market. The global mobile communications market will make the transition from second to third generation technologies, with network investments in third generation commencing in late 2001, and many operators preparing for commercial launches in the second half of 2002. During this period, Nokia believes the mobile phone market will continue to grow significantly. The company therefore reiterates its global market volume outlook of 450-500 million units for 2001. The impact of third generation investments will become more apparent in Nokia Networks in 2002, and in Nokia Mobile Phones commencing in the second half of 2002. Current economic uncertainties and the transition to packet-based services continue to limit our visibility for the remainder of 2001. However, capacity expansions in GSM networks are continuing and new GSM operators are also entering the market. In mobile phones, our own inventories and those of Nokia-manufactured phones in the sales channels have continued at somewhat lower levels than at the end of 2000, allowing us a healthy flow of deliveries. Nokia expects to achieve revenue growth of about 20% for the second quarter and for the full year 2001, reflecting more difficult market conditions. In the second quarter 2001, Nokia expects pro forma EPS of about EUR 0.20 (diluted). For the full year 2001, Nokia is confident that the pro forma operating margin for the Nokia Group, Nokia Networks and Nokia Mobile Phones will remain in the high teens. As investments into third generation technologies accelerate, the company also expects to see growth of 25-35% for 2002. STATEMENT BY JORMA OLLILA, CHAIRMAN AND CEO I am more than pleased with our first-quarter numbers. We were able to extend our leadership while managing the day-to-day challenges of a demanding economic environment. During the quarter, we continued to increase our market share in both handsets and networks and we again sustained profitable growth and strong positive operating cashflow of EUR 1.7 billion. In the networks business, backed by our recent successes, we are well on track for our targeted leadership in 3G infrastructure. In the overall 3G mobile network infrastructure market we believe Nokia has the extraordinary opportunity to achieve twice the market share reached in the second generation. Our WCDMA pilot deliveries are scheduled for June of this year, with commercial volume deliveries timed to commence in October 2001. We have recently signed a number of important deals with 3G operators, including some where Nokia provided vendor financing. We will continue to maintain a prudent approach to financing, by providing financing only in certain transactions with long-term strategic significance and to operators with a solid business case. We consider that the bulk of our vendor financing has now been announced for the initial phase of the third generation network rollout. In mobile phones, Nokia's volume growth continued to outpace the market. We estimate that our first-quarter sales volume increased at more than twice the rate of the overall market, compared to the first quarter 2000. With 11 product announcements already on the board this year, we see ourselves as well positioned to move towards our stated 40% global market share target. Nokia continues to drive and develop technical architecture for the mobile Internet designed to provide a user-friendly mobile Internet experience for anyone on any network with any type of access. Secure and reliable network solutions for corporations is also a growth area for us. Through Nokia Ventures Organization we will focus on these and other growth opportunities outside our networks and mobile phones businesses. Our position in this industry has never been stronger. We will continue to target high profitability, focusing on determined actions to further improve operational efficiency, increase the competitiveness of our products and build on the Nokia brand. This is our fundamental formula for profitable growth, which we implemented long before the current economic difficulties. Our results attest to the soundness of this approach. We believe strongly in the long-term opportunities of the growing mobile communications industry and see ourselves very well positioned for the transition towards the third generation technologies. NOKIA NETWORKS During the first quarter, Nokia Networks grew 35% compared to the first quarter 2000, with growth fastest in Asia. GSM operators continued to invest in network capacity; in addition to winning three new GSM customers, Nokia signed a number of significant network expansion agreements in China, Poland, Thailand and Venezuela. In third generation networks, Nokia was chosen as a supplier by Cegetel in France, Telenor Mobile in Norway, Telia in Norway and in Finland, ONE in Austria, Cable & Wireless Optus in Australia, Hutchison 3G in the United Kingdom, Orange, France Telecom Group in France, the United Kingdom and Germany and Wind in Italy. Nokia also entered into a 3G trial with Chungwa Telecom in Taiwan. These announcements brought Nokia closer to its targeted 35% market share in 3G networks, as well as placing the company on par in market share terms with its nearest competitor in 3G. In addition, Nokia signed several mobile data related deals and agreed on GPRS deliveries with three new customers. Nokia launched several new products and solutions for mobile data and 3G networks, including Nokia Artuse MMS center, the industry-first multimedia messaging solution, and the Nokia Payment solution for mobile e-commerce. Nokia also introduced GSM 800 technology, enabling both TDMA and TDMA/GSM operators to launch GSM services on 800 MHz frequencies, with an evolution path towards future 3G services with EDGE and WCDMA. In broadband DSL, Nokia signed agreements in China, Europe and the US. Expansion of the TETRA standard for professional cellular networks continued and Nokia signed two TETRA network deals in China. The company made the decision to outsource manufacturing in Camberley (UK) and Haukipudas (Finland) to SCI Systems Inc. The move is intended to step up the degree of flexibility in production in these two key locations. In response to the intensifying competition in the DSL markets, Nokia streamlined its operations and sharpened its business focus in Broadband Systems. The shift in focus, combined with the positive benefits from the use of common Nokia technology platforms, is designed to enhance the competitiveness of the Broadband Systems division. Nokia Mobile Phones During the first quarter, Nokia made sweeping new model launches across several protocols and geographic regions, notably the company's first GPRS phones for GSM markets in Europe and Asia Pacific. With 11 product announcements already made by early April, Nokia is well positioned to move towards its targeted 40% share of the global handset market. In March, Nokia took important steps to strengthen its position in CDMA by unveiling two premium category WAP-enabled models, the Nokia 8887 (CDMA 800) and the Nokia 8877 (CDMA 1700) for Korea, the only major cellular market in the world where Nokia has not sold its digital phones until now. For the Americas markets Nokia introduced two stylish CDMA models with mobile Internet browsers: the tri-mode Nokia 3285 and the dual-mode Nokia 3280. All four models are scheduled to ship in the second quarter. Nokia introduced three models in its basic category - the first of its entry-level phones to feature WAP. These were the Nokia 3330 for GSM markets in Europe and Asia Pacific, and the tri-mode Nokia 3360 and the dual-mode 3320 for TDMA markets in the Americas. Deliveries of the Nokia 3330 have just started, while availability of the Nokia 3360 and the Nokia 3320 are scheduled for the third quarter. Nokia's first GPRS model, the Nokia 8310 is a fashion category phone with both GPRS and HSCSD and comes with WAP 1.2.1 and an integrated FM Radio. Deliveries are planned to start in the third quarter. The Nokia 6310, a classic category model targeted for mobile professionals, also comes with GPRS, HSCSD and WAP 1.2.1, as well as integrated Bluetooth and SyncML support. The Nokia 6310 is scheduled to be available in the fourth quarter. For the lifestyle conscious consumer segments in the Asia Pacific GSM markets, Nokia introduced the Gold Edition of its premium category model 8850. Deliveries are scheduled to start in the second quarter. In early April, Nokia, together with J-Phone, introduced the J-NMO1, a new PDC phone for the Japanese market. This model is also expected to be available in the second quarter. While focusing on WCDMA technology, Nokia views this partnership as an effective strategy to ensure the company maintains a presence in the PDC market. In the area of value-added services specifically for Nokia terminals, Nokia is focusing on music, images and games. The first full-color game for the Nokia 9210, the Virtually Board Snowboarding game, will become available through Club Nokia during the second quarter. Club Nokia will also be offering new mobile game packs over WAP for the Nokia 3330 to Club Nokia members. In March, the company announced its entry into music devices by introducing the Nokia Music Player, planned to become available during the third quarter. It enables users to listen to downloadable audio/music (AAC/MP3) files or to an integrated FM stereo radio; it can also be used as a handsfree kit for the Nokia 3310, 3330, 8210 and 8850 phones. During the first quarter, Nokia continued to drive forward various industry initiatives for enriching the mobile user experience and creating a global services market for mobile handsets. In March, Nokia demonstrated the first WAP/XHTML browser implementation on a standard mobile phone. XHTML (Extensible Hyper Text Markup Language) is the format for the future evolution of mobile services and the basis for the WAP Next Generation developed by the WAP Forum. XHTML bridges the gap between the mobile and fixed Internet and creates a truly open, global market for service creation. Nokia plans to introduce its first WAP/XHTML enabled handsets during this year. Nokia Ventures Organization Nokia Internet Communications strengthened its network security portfolio with new solutions for small office networks. The Nokia IP51 and the Nokia IP55 appliances have been designed to deliver high performance security to small offices in distributed enterprises and service providers offering managed security services to small businesses. Nokia's VPN product line was extended by the new Nokia CC5205 Gigabit Ethernet VPN appliance, powered by Nokia's patented IP clustering technology. The company also introduced its Windows 2000-compliant Nokia VPN policy manager, in addition to the Nokia IP530 Network Security Platform, a high performance security appliance for medium to large enterprise networks. Nokia Home Communications presented its first consumer retail product to the United States. The Media Terminal, a home infotainment center that seamlessly combines the Internet and digital TV broadcast, brings a unique product category to the market where consumers can use one central device for organizing and storing today's popular media and Internet applications. Backed by its global investment scope, Nokia Venture Partners continued to add new leading edge companies to its portfolio. With USD 650 million under management, Nokia Venture Partners is the largest venture capital firm to invest exclusively in mobile Internet related start-up businesses and technologies. NOKIA IN JANUARY-MARCH 2001 REPORTED (International Accounting Standards, IAS, comparisons given to the first quarter 2000 results) Nokia's net sales increased by 22% to EUR 8 007 million (EUR 6 537 million). Sales growth was strong in all geographic regions. Sales of Nokia Networks increased by 35% to EUR 2 022 million (EUR 1 502 million), with growth especially strong in Asia Pacific and the Americas. Sales of Nokia Mobile Phones grew by 20% to EUR 5 830 million (EUR 4 839 million), with growth strongest in Europe and Asia Pacific. Sales of Nokia Ventures Organization decreased by 20% and totaled EUR 169 million (EUR 211 million). Operating profit increased by 4% to EUR 1 369 million (EUR 1 316 million), representing an operating margin of 17.1% (20.1%). Operating profit in Nokia Networks increased by 26% to EUR 345 million (EUR 273 million), representing an operating margin of 17.1% (18.2%). Operating profit in Nokia Mobile Phones increased by 2% to EUR 1 183 million (EUR 1 162 million), representing an operating margin of 20.3% (24.0%). Nokia Ventures Organization reported an operating loss of EUR 130 million (operating loss of EUR 70 million). Common Group Expenses, which comprises Nokia Head Office and Nokia Research Center, totaled EUR 29 million (EUR 48 million). Financial income totaled EUR 47 million (financial income EUR 20 million). Profit before tax and minority interests was EUR 1 414 million (EUR 1 333 million). Net profit totaled EUR 975 million (EUR 891 million). Earnings per share increased to EUR 0.21 (basic) and to EUR 0.20 (diluted) compared with EUR 0.19 (basic) and EUR 0.19 (diluted). At March 31, 2001, net debt-to-equity ratio (gearing) was -36% (-26% at the end of 2000). During the January to March period 2001, capital expenditures amounted to EUR 305 million (EUR 311 million). The average number of employees during the quarter was 60 173. At March 31, Nokia employed a total of 60 289 people (56 539 people at March 31, 2000). Effective March 2, a total of 7 914 Nokia shares were returned to Nokia pursuant to agreements made in connection with business acquisitions effected before the reporting period. The aggregate par value of these shares, which were received without consideration, was EUR 474.84 and they represented less than 0.001% of the share capital of the company and the total voting rights. These new holdings did not have any significant effect on the relative holdings of the other shareholders of the company or on the voting powers among them. Nokia shareholders resolved at the General Meeting on March 21 to cancel a total of 68 950 shares held by the company, including the aforementioned 7 914 shares. The cancellation will become effective during the second quarter 2001. On March 31, the Group companies owned 4 009 901 Nokia shares. The shares had an aggregate par value of EUR 240 594.06 representing 0.085% of the share capital of the company and the total voting rights. The number of issued shares on March 31 was 4 698 219 267 and the share capital was EUR 281 893 156.02. CONSOLIDATED PROFIT AND LOSS ACCOUNT, IAS, EUR million (unaudited) Proforma Proforma Reported Reported 1-3/01 1-3/00 1-3/01 1-3/00 Net sales 8 007 6 537 8 007 6 537 Cost of sales -5 028 -4 012 -5 028 -4 012 Research and development -766 -530 -766 -530 expenses Selling, general and -773 -660 -773 -660 administrative expenses Amortization of goodwill - - -71 -19 Operating profit 1 440 1 335 1 369 1 316 Share of results of -2 -3 -2 -3 associated companies Financial income and expenses 47 20 47 20 Profit before tax and 1 485 1 352 1 414 1 333 minority interests Tax -418 -416 -418 -416 Minority interests -21 -26 -21 -26 Net profit 1 046 910 975 891 Earnings per share, EUR Net profit Basic 0.22 0.20 0.21 0.19 Diluted 0.22 0.19 0.20 0.19 Average number of shares (1 000 shares) Basic 4 693 211 4 653 944 4 693 211 4 653 944 Diluted 4 788 743 4 788 256 4 788 743 4 788 256 Depreciation and amortization, total 313 180 CONSOLIDATED PROFIT AND LOSS ACCOUNT, IAS, EUR million (unaudited) Proforma Reported 1-12/00 1-12/00 Net sales 30 376 30 376 Cost of sales -19 072 -19 072 Research and development expenses -2 584 -2 584 Selling, general and administrative -2 804 -2 804 expenses Amortization of goodwill - -140 Operating profit 5 916 5 776 Share of results of associated companies -16 -16 Financial income and expenses 102 102 Profit before tax and minority interests 6 002 5 862 Tax -1784 -1784 Minority interests -140 -140 Net profit 4 078 3 938 Earnings per share, EUR Net profit Basic 0.87 0.84 Diluted 0.85 0.82 Average number of shares (1 000 shares) Basic 4 673 162 4 673 162 Diluted 4 792 980 4 792 980 Depreciation and amortization, total 1 009 NET SALES BY BUSINESS GROUP, EUR million (unaudited) 1-3/2001 1-3/2000 Change % 1-12/2000 Nokia Networks 2 022 1 502 35 7 714 Nokia Mobile Phones 5 830 4 839 20 21 887 Nokia Ventures 169 211 -20 854 Organization Inter-business group -14 -15 -79 eliminations Nokia Group 8 007 6 537 22 30 376 OPERATING PROFIT BY BUSINESS GROUP, EUR million (unaudited) Proforma 1-3/2001 1-3/2000 1-12/2000 Nokia Networks 364 280 1 400 Nokia Mobile Phones 1 207 1 162 4 897 Nokia Ventures -102 -59 -307 Organization Common Group Expenses -29 -48 -74 Nokia Group 1 440 1 335 5 916 Goodwill amortization 1-3/2001 1-3/2000 1-12/2000 Nokia Networks 19 7 42 Nokia Mobile Phones 24 1 18 Nokia Ventures 28 11 80 Organization Common Group Expenses - - - Nokia Group 71 19 140 Reported 1-3/2001 1-3/2000 1-12/2000 Nokia Networks 345 273 1 358 Nokia Mobile Phones 1 183 1 161 4 879 Nokia Ventures -130 -70 -387 Organization Common Group Expenses -29 -48 -74 Nokia Group 1 369 1 316 5 776 CONSOLIDATED BALANCE SHEET, IAS, EUR million (unaudited) 31.3.2001 31.3.2000 31.12.2000 0 ASSETS Fixed assets and other non-current assets Intangible assets 2 123 1 206 1 994 Property, plant and equipment 2 707 2 159 2 732 Investments in associated 60 91 61 companies Investments in other companies 95 155 150 Deferred tax assets 449 366 401 Long-term loan receivables 850 208 808 Other assets 294 135 242 6 578 4 320 6 388 Current assets Inventories 2 213 1 993 2 263 Receivables 6 710 5 548 7 056 Short-term investments 3 715 3 312 2 774 Bank and cash 1 559 884 1 409 14 197 11 737 13 502 Total assets 20 775 16 057 19 890 SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity Share capital 282 280 282 Share issue premium 1 700 1 411 1 695 Treasury shares -154 -151 -157 Equity adjustments 159 282 347 Retained earnings 8 292 5 805 8 641 10 279 7 627 10 808 Minority interests 196 137 177 Long-term liabilities Long-term interest bearing 126 274 173 liabilities Deferred tax liabilities 59 78 69 Other long-term liabilities 74 62 69 259 414 311 Current liabilities Short-term borrowings 1 351 685 1 069 Current portion of long-term debt 47 1 47 Accounts payable 2 491 2 141 2 814 Accrued expenses 4 137 3 586 2 860 Provisions 2 015 1 466 1 804 10 041 7 879 8 594 Total shareholders' equity and 20 775 16 057 19 890 liabilities Interest-bearing liabilities 1 524 960 1 289 Shareholders' equity per share, EUR 2.19 1.63 2.30 Number of shares (1000 shares) * 4 694 209 4 669 169 4 692 133 * Shares owned by Group companies are excluded CONSOLIDATED CASH FLOW STATEMENT, IAS, MEUR 1-3/2001 1-3/2000 1-12/2000 Cash flow from operating activities Net profit 975 891 3 938 Adjustments, total 706 573 2 805 Net profit before change in net 1 681 1 464 6 743 working capital Change in net working capital 239 -557 -1 377 Cash generated from operations 1 920 907 5 366 Interest received 74 67 255 Interest paid - 29 -31 - 115 Other financial income and 87 -107 - 454 expenses Income taxes paid - 329 -228 -1 543 Net cash from operating activities 1 723 608 3 509 Cash flow from investing activities Acquisition of Group companies, net of acquired cash - 143 - - 400 Investments in other shares - 8 -103 - 111 Additions in capitalized development - 89 -114 - 393 costs Long-term loans receivable from - 73 - - 776 customers Capital expenditures - 306 -311 -1 580 Proceeds from disposal of Group companies, net of disposed cash - 6 4 Proceeds from sale of other shares 10 32 75 Proceeds from sale of fixed assets 64 93 221 Dividends received - 1 51 Net cash used in investing activities - 545 - 396 -2 909 Cash flow from financing activities Proceeds from issuance of share 4 27 72 capital Treasury shares acquired - - - 160 Capital investment by minority - - 7 shareholders Long-term liabilities, proceeds - 25 15 - 82 from/payment of Short-term borrowings, proceeds 6 -143 133 from/payment of Long-term receivables, proceeds - 25 -125 - from/payment of Short-term receivables, proceeds - 10 41 378 from/payment of Dividends paid - -25 -1 004 Net cash used in financing activities - 50 - 210 - 656 Foreign exchange impact on cash - 37 35 80 Net increase in cash and cash 1 091 37 24 equivalents Cash and cash equivalents at 4 183 4 159 4 159 beginning of period Cash and cash equivalents at end of 5 274 4 196 4 183 period Dividends Dividends to Nokia's shareholders, EUR 1314 million (EUR 931 in 2000), were booked as liability at the end of the first quarter both in 2001 and 2000. Cash flow impact will be shown the second quarter. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY, EUR million (unaudited) Fair Trans- value Share lation and Share issue Treasury differ-other Retained capital premium shares ences reserves Earnings Total Balance at December 31,1999 279 1 079 -24 243 5 801 7 378 Share issue 1 332 333 Acquisition of -127 -127 treasury shares Dividend -931 -931 Translation differences 39 39 Other increase/decrease, net 44 44 Net profit 891 891 Balance at March 31,2000 280 1 411 -151 282 5 805 7 627 Balance at December 31,2000 282 1 695 -157 347 - 8 641 10 808 Share issue 4 4 Disposal of treasury 3 3 shares Stock options issued 4 4 on acquisitions Stock options exercised related to acquisitions -3 -3 Dividend -1 314 -1 314 Translation differences -56 -56 Effect of change in -56 -56 accounting principle (IAS 39) Cash flow hedges and -76 -76 fair value adjustments Other increase/decrease, net -10 -10 Net profit 975 975 Balance at March 31,2001 282 1 700 -154 291 -132 8 292 10 279 COMMITMENTS AND CONTINGENCIES, EUR million (unaudited) GROUP 31.3.2001 31.3.2000 31.12.2000 Collateral for own commitments Mortgages 12 12 12 Assets pledged 4 3 4 Collateral given on behalf of other companies Assets pledged 23 - 23 Contingent liabilities on behalf of Group companies Other guarantees 692 492 656 Contingent liabilities on behalf of other companies Guarantees for loans 249 276 298 Leasing obligations 1 142 639 895 NOTIONAL AMOUNTS OF DERIVATIVE FINANCIAL INSTRUMENTS, EUR million 1) (unaudited) 31.3.2001 31.3.2000 31.12.2000 Foreign exchange forward contracts 2)3) 10 350 10 372 10 497 Currency options bought 2 011 2 588 2 165 Currency options sold 1 837 2 397 2 029 Interest rate forward and futures - - - contracts 2) Interest rate swaps 51 250 250 Cash settled equity swaps 4) 313 - 336 1) The notional amounts of derivatives summarized here do not represent amounts exchanged by the parties and, thus are not a measure of the exposure of Nokia caused by its use of derivatives. 2) Notional amounts outstanding include positions, which have been closed off. 3) Notional amount includes contracts used to hedge the net investments in foreign subsidiaries. 4) Cash settled equity swaps are used to hedge risks relating to incentive programs and investments activities. Closing rate, 1 EUR = 0.897 USD Change in Accounting Principles The Group has adopted, beginning January 1, 2001, IAS39, Financial instruments: recognition and measurement. The impact of the changes in policy on opening shareholders' equity is quantified as follows: Total shareholders' equity at 31 December 2000 as previously reported 10 808 IAS 39 transition adjustments: Fair value adjustments to available-for-sale debt and equity investments 1) 58 58 Transfer of gains and losses on qualifying cash flow hedging derivatives 2) -114 -114 Total shareholders' equity at 1 January 2001 10 752 1) Available-for-sale investments in debt and equity securities and investments in unlisted equity shares are measured at fair value unless investments are held for trading or originated loans or unlisted equities cannot be measured reliably. 2) Gains and losses on foreign exchange forward contracts that are properly designated and are highly effective as cash flow hedges of highly probable forecast foreign currency cash flows are deferred in a hedging reserve within equity. Previously, such gains and losses were reported as deferred income or expenses. It should be noted that certain statements herein which are not historical facts, including, without limitation those regarding 1) the timing of product deliveries; 2) the Company's ability to develop new products and technologies; 3) expectations regarding market growth and developments; 4) expectations for growth and profitability; and 5) statements preceded by 'believes', 'expects', 'anticipates', 'foresees', or similar expressions, are forward- looking statements. Because such statements involve risks and uncertainties, actual results may differ materially from the results currently expected by the Company. Factors that could cause such differences include, but are not limited to 1) industry conditions, such as the strength of product demand, the intensity of competition, pricing pressures, the acceptability of new product introductions such as Internet-ready phones, the introduction of new products by competitors, the impact of changes in technology, including the Company's success in the emerging 3G market, the ability of the Company to source components from third parties without interruption and at reasonable prices, demand for vendor financing and the Company's ability and willingness to provide such financing, and the success and financial condition of the Company's strategic partners and customers; 2) operating factors, such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development or inventory risks due to shifts in market demand; 3) general economic conditions, such as the rate of economic growth in the Company's principal geographic markets or fluctuations in exchange rates, including impact of the exchange rate between the euro and the US dollar; as well as 4) the risk factors specified on pages 21 to 23 of the Company's Form 20-F for the year ended December 31, 1999. NOKIA Helsinki, April 20, 2001 For more information: Lauri Kivinen, Corporate Communications, tel. +358 7180 34495 Ulla James, Investor Relations, tel. +1 972 894 4880 Antti Raikkonen, Investor Relations, tel. +358 7180 34290 www.nokia.com Nokia will report its 2Q and 3Q 2001 results on 19 July and 19 October.

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