Executive Summary Nokia's net sales in 2003 decreased by 2% compared with 2002 and totaled EUR million (EUR million in 2002). Operating profit in 2003 increased by 5% and totaled EUR million (EUR million in 2002). Financial income totaled EUR 352 million in 2003 (EUR 156 million in 2002). In 2003, Nokia continued to invest in its worldwide research and development network and cooperation. At the end of the year Nokia had R&D employees, representing approximately 39% of Nokia's net sales in 2003 decreased by 2% compared with 2002 and totaled EUR million (EUR million in 2002). Operating profit in 2003 increased by 5% and totaled EUR million (EUR million in 2002). Financial income totaled EUR 352 million in 2003 (EUR 156 million in 2002). In 2003, Nokia continued to invest in its worldwide research and development network and cooperation. At the end of the year Nokia had R&D employees, representing approximately 39% of

EXECUTIVE SUMMARY CONTINUED Nokia's total personnel. Nokia has R&D centers in 11 countries. Research and development expenses increased by 23% (2% in 2002) and totaled EUR million (EUR million in 2002), representing 12.8% of net sales (10.2% of net sales in 2002). Towards the end of 2003, Nokia decided to reorganize. Nokia's now has four business groups: Mobile Phones; reporting structure: Mobile Phones; Multimedia; Networks; and Enterprise Solutions. This provides them with a very good chance to make progress in the mobile industry. Nokia's total personnel. Nokia has R&D centers in 11 countries. Research and development expenses increased by 23% (2% in 2002) and totaled EUR million (EUR million in 2002), representing 12.8% of net sales (10.2% of net sales in 2002). Towards the end of 2003, Nokia decided to reorganize. Nokia's now has four business groups: Mobile Phones; reporting structure: Mobile Phones; Multimedia; Networks; and Enterprise Solutions. This provides them with a very good chance to make progress in the mobile industry.

Part A: Introduction Chairman: Jorma Ollila Chairman: Jorma Ollila Nokia Head Office Nokia Head Office Keilalahdentie 2-4 P.O. Box 226 FIN Nokia Group Finland End of last fiscal year: December, 2003 End of last fiscal year: December, 2003 Products: Mobile Phones, Multimedia (set top boxes, home satellite systems, mobile gaming devices) networks (wireless switching and transmission equipment used in carrier networks) and enterprise solutions (wireless systems for businesses). Products: Mobile Phones, Multimedia (set top boxes, home satellite systems, mobile gaming devices) networks (wireless switching and transmission equipment used in carrier networks) and enterprise solutions (wireless systems for businesses).

Part A: Audit Report PricewaterhouseCoopers Oy PricewaterhouseCoopers Oy Authorized Public Accountants The report of the independent auditors states that they have examined the consolidated financial statements and that it accurately represents the financial standings of the Nokia Cooperation. They have also stated that the financial statements are in accordance with the Generally Accepted Accounting Principles established in the United States. The report of the independent auditors states that they have examined the consolidated financial statements and that it accurately represents the financial standings of the Nokia Cooperation. They have also stated that the financial statements are in accordance with the Generally Accepted Accounting Principles established in the United States.

Part A: Stock Market Information Recent Stock Price: $15.42 Recent Stock Price: $ month trading range: $ $ month trading range: $ $18.45 Dividends per share:.304 Dividends per share:.304 Date of info: 3/26/04 Date of info: 3/26/04 I would personally buy stock in Nokia. They are the largest producer of mobile phones (a pretty important part of the world today) and they seem to of made some recent improvements that ought to help the company greatly. I would personally buy stock in Nokia. They are the largest producer of mobile phones (a pretty important part of the world today) and they seem to of made some recent improvements that ought to help the company greatly.

Part B: Industry Situation and Company Plans Nokia has been around since the beginning of mobile phones. Nokia believes that “mobility changes the way people live there lives.” That statement is not too hard to believe when you consider the fact that they have over 1.5 billion mobile phone subscriptions globally. Nokia sees mobility expanding into new areas such as imaging, games, entertainment, media and enterprises. They believe there are already new mobile devices that are bringing more business to them. They also believe even though they are starting to sell other mobile devices that there are still many mobile phones that will be sold to completely new users. Nokia has been around since the beginning of mobile phones. Nokia believes that “mobility changes the way people live there lives.” That statement is not too hard to believe when you consider the fact that they have over 1.5 billion mobile phone subscriptions globally. Nokia sees mobility expanding into new areas such as imaging, games, entertainment, media and enterprises. They believe there are already new mobile devices that are bringing more business to them. They also believe even though they are starting to sell other mobile devices that there are still many mobile phones that will be sold to completely new users.

Part C: Income Statement Gross income $29,45530,01631,191 Operating income 5,0114,7803,362 Net income 3,5923,3812,200 *Amounts in millions

Income Statement (continued) As you can see from the table the gross income decreases somewhat from 2001 to 2002 and from 2002 to As you can see from the table the gross income decreases somewhat from 2001 to 2002 and from 2002 to The operating income goes up in each of the years listed. The operating income goes up in each of the years listed. The Net Income also rises slightly as the years go up. The Net Income also rises slightly as the years go up.

Part C: Balance Sheet year Assets = Liabilities + Owners Equity 2003$23,9208,77215, ,3279,04614,281 *amounts in millions

Balance Sheet continued There was an increase in both assets and stockholders equity going from the year 2002 to There was an increase in both assets and stockholders equity going from the year 2002 to There was a slight decrease in liabilities. There was a slight decrease in liabilities. The company seems to be doing relatively well. The company seems to be doing relatively well.

Part C: Statement of cash flows Cash flows from operating activities (which were $5,244 in 2003 and $5,814 in 2002) were more than net income (which was $3,592 in 2003 and $3,381 in 2002). Cash flows from operating activities (which were $5,244 in 2003 and $5,814 in 2002) were more than net income (which was $3,592 in 2003 and $3,381 in 2002).

Part D: Accounting Policies Revenue recognition: Revenue from the majority of the group is recognized when persuasive evidence of arrangement exists, delivery has occurred, the fee is fixed and determinable. The remainder of revenue is recorded under the percentage of completion method. Revenue recognition: Revenue from the majority of the group is recognized when persuasive evidence of arrangement exists, delivery has occurred, the fee is fixed and determinable. The remainder of revenue is recorded under the percentage of completion method. Inventory: they periodically review there inventory for excess inventory, obsolescence and declines in market value below cost and record an allowance against the inventory balance for any such declines. These reviews require management to estimate future demand for there products. Possible changes in these estimates could result in revisions to the valuation of inventory. Inventory: they periodically review there inventory for excess inventory, obsolescence and declines in market value below cost and record an allowance against the inventory balance for any such declines. These reviews require management to estimate future demand for there products. Possible changes in these estimates could result in revisions to the valuation of inventory.

Part D: Financial Analysis Liquidity Ratios Working Capitol: (2003 = $11,803) (2002 = $9,173) Working Capitol: (2003 = $11,803) (2002 = $9,173) Current Ratio: (2003 = 2.4) (2002 = 2.1) Current Ratio: (2003 = 2.4) (2002 = 2.1) Receivable Turnover: (2003 = 5.5 times) (2002 = 5.6 times) Receivable Turnover: (2003 = 5.5 times) (2002 = 5.6 times) Average days sales uncollected: (2003 = 66.4 days) (2002 = 64.7 days) Average days sales uncollected: (2003 = 66.4 days) (2002 = 64.7 days) Inventory turnover: (2003 = 19.19) (2002 = 18.80) Inventory turnover: (2003 = 19.19) (2002 = 18.80) Average days inventory on hand: (2003 = days) (2002 = days) Average days inventory on hand: (2003 = days) (2002 = days) The only really major change in any of the amounts was in the working capitol and of course the current ratio. There was an increase of $ in working capitol. That to me seems like A LOT! The other amount changes are quite a lot too considering the large numbers we dealing with.

Part E: Financial Analysis Profitability Ratios Profit Margin: (2003 = 12.19%) (2002 = 11.26%) Profit Margin: (2003 = 12.19%) (2002 = 11.26%) Asset Turnover: ( 2003 = 1.25 times) (2002 = 1.34 times) Asset Turnover: ( 2003 = 1.25 times) (2002 = 1.34 times) Return on Assets: (2003 = 15.2%) (2002 = 15.1%) Return on Assets: (2003 = 15.2%) (2002 = 15.1%) Return on Equity: (2003 = 24.41%) (2002 = 25.53%) Return on Equity: (2003 = 24.41%) (2002 = 25.53%) There was no really big gains or losses in any of the above ratios. The above amounts are somewhat average for a company that size. None of the amounts really stick out.

Part E: Financial Analysis Solvency Ratio Debt to Equity: (2003 = 54.7%) (2002 = 58.9%) Debt to Equity: (2003 = 54.7%) (2002 = 58.9%) As you can see from the ratio, the company is in relatively well economic standing. Nokia is doing even better now (in 2003) that investors actually own more of the company than creditors. As you can see from the ratio, the company is in relatively well economic standing. Nokia is doing even better now (in 2003) that investors actually own more of the company than creditors.

Part E: Financial Analysis Market Strength Ratio Price/ earnings per share: (2003 = times) (2002 = times) Price/ earnings per share: (2003 = times) (2002 = times) Dividend Yield: (2003 = 2.2%) (2002 =1.8%) Dividend Yield: (2003 = 2.2%) (2002 =1.8%) From the above information I can tell you shareholders of Nokia must expect some of their return to come from increases in the price of there shares. Since the market price is between 18 and 22 times earnings investors are paying a kind of high price in relation to earnings. Hopefully the company will continue to do well. From the above information I can tell you shareholders of Nokia must expect some of their return to come from increases in the price of there shares. Since the market price is between 18 and 22 times earnings investors are paying a kind of high price in relation to earnings. Hopefully the company will continue to do well.