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Nokia Year 2000 Readiness Disclosure at December 31, 1998
January 29, 1999
During the fourth quarter 1998, Nokia continued to evaluate and manage the possible risks and costs associated with the Year 2000 issues. Activities were focused on products and systems, production systems, R&D systems, information systems, facilities and supplier readiness, as well as on Nokia´s after sales systems within a new separate subproject.
The Nokia Year 2000 Project
Nokia´s Year 2000 Project includes identifying the potential risk areas, increasing risk awareness, and introducing action plans and guidelines for managing Year 2000 issues. To date the Project is divided to subprojects addressing the Year 2000 issues in products and systems, production systems, R&D systems and after sales systems within Nokia Telecommunications, Nokia Mobile Phones, Nokia Communications Products, Nokia Ventures Organization and Nokia Research Center. Year 2000 subprojects for information systems, facilities systems and supplier readiness are Nokia-wide.
Products and systems
To date, based on testing and verification, Nokia´s display products, digital multimedia terminals and mobile phone battery charger products are Year 2000 compliant, and Nokia´s mobile phone products as well as analog satellite receivers are either compliant, can be made compliant or are products that are not affected by the date code. For those products which to-date are not compliant but can be made Year 2000 compliant, Nokia has compliance solutions in place.
Nokia has grouped its telecommunications infrastructure products into three categories: 1) products already Year 2000 compliant, 2) products to be made Year 2000 compliant, and 3) products that will not be made Year 2000 compliant.
The majority of Nokia´s infrastructure products to-date are Year 2000 compliant, according to testing and verification by Nokia Telecommunications. As announced earlier, for products classified as to be made Year 2000 compliant, Nokia plans to have the relevant compliance solutions during the first quarter 1999. Products that will not be made compliant include a limited number of old products for which manufacturing has been terminated or for which newer products have been substituted.
Production systems, R&D systems, after sales systems and other information systems
Nokia has completed an analysis of its production systems in its production sites worldwide and categorized such systems as critical or non-critical.
As announced earlier, Nokia aims to have all of those systems categorized as critical to be Year 2000 compliant during the first half 1999. Nokia also continues to upgrade other production systems hardware and software and to conduct tests for their Year 2000 compliance. Nokia has plans in place to have its R&D related systems compliant during the first half 1999.
Nokia aims to continue its production activities over the year-end 1999. To accomplish this, Nokia has implemented a "production sites by subsystems" approach. This integrates relevant Year 2000 issues arising from the production systems as well as from the facilities, supplier readiness and information systems subprojects which will be reviewed as part of the integrated "production sites by subsystems" approach.
During the fourth quarter 1998, Nokia further tasked its Year 2000 Project to look into the after sales systems in use by Nokia or by customers using Nokia´s products as a subproject within the Nokia Year 2000 Project. Nokia aims to have these after sales systems categorized as critical or non-critical during the first half 1999 and to have those systems categorized as critical to be Year 2000 compliant during the third quarter 1999.
As announced earlier, Nokia has plans to have its other critical information systems compliant by the second half of 1999 at the latest.
Facilities
Nokia continues to expect to have identified the relevant Year 2000 issues for its facilities systems and equipment during the first quarter 1999 and to have completed the necessary upgrading during the second half of 1999 at the latest.
Suppliers
Nokia sources materials, parts, products, information software and services from third parties which are then integrated or sold in connection with Nokia products or which are otherwise used by Nokia. Nokia has categorized its suppliers as critical or non-critical and has plans to complete the verification of the status of the materials, parts or products from all critical suppliers as well as their continued performance into the year 2000 during the first half of 1999.
Costs, risks and contingency planning
As announced earlier, Nokia´s direct Year 2000 cost estimate is FIM 450 million. By the end of 1998, Nokia had used approximately 50% of the estimated aggregate amount. Cost estimates may vary in the future and will be updated as Nokia learns additional information concerning the status of its and third parties´ Year 2000 compliance.
Nokia realizes that failing to correct material Year 2000 issues could result in an interruption in or failure of certain normal business activities and that such failures could have a material adverse effect on the company´s business, results and financial condition. Nokia is also connected to critical suppliers, financial institutions, customers and other business partners through computer systems, and failure of any of the critical interdependent information systems may materially and adversely affect Nokia.
Nokia´s Year 2000 Project continues to evaluate Year 2000 readiness of the company as explained in the Year 2000 Readiness Disclosures published by the Company. To the extent Nokia determines that Year 2000 issues have not been appropriately addressed it will develop contingency plans and take steps to implement such contingency plans during the second half of 1999 at the latest.
It should be noted that certain statements herein which are not historical facts, including, without limitation those regarding 1) the projected extent and timing of Year 2000 compliance for Nokia´s products, systems, and facilities as well as those of third parties, 2) the estimated costs of Year 2000 compliance activities, including actions currently contemplated and actions, including contingency plans, decided upon in the future, 3) the continuation of production activities over year-end 1999, 4) the estimated impact on Nokia´s business, results and financial condition of failures by it or third parties to adequately address Year 2000 issues, and 5) certain statements preceded by "believes", "expects", "aims", "intends", "estimates", "anticipates", or similar expressions, are forward looking statements. Because such statements involve risks and uncertainties, actual events may differ materially from those currently expected by Nokia. Factors that could cause such differences include, but are not limited to 1) additional information Nokia may discover concerning the status of Year 2000 compliance of the products, systems and facilities or those of third parties as part of Nokia´s Year 2000 Project, 2) failures of others, including public utilities, financial institutions, communications companies, transportation providers, customers, computer manufacturers and software providers, as well as other providers of resources of which Nokia relies, to identify, disclose and address Year 2000 issues accurately and on a timely basis, 3) the inability of Year 2000 consultants, experts and advisers to adequately identify and address Year 2000 issues as planned, 4) changes in technologies or methodologies used in identifying and addressing Year 2000 issues in products, systems and facilities, 5) the effectiveness and costs of contingency plans Nokia may develop as it learns more about the status of its own and others´ Year 2000 compliance an and readiness, and 6) factors that could affect Nokia´s business, results and financial condition generally, including the risk factors specified in Nokia' s Form 20-F for the year ended December 31, 1997.
The Nokia Year 2000 Readiness Disclosure at December 31, 1998 continues Nokia´s quarterly reporting on Year 2000 issues and updates the disclosure published on November 16, 1998. Nokia plans to publish its Year 2000 Readiness Disclosures accompanying its future quarterly results releases. Nokia will publish its 1999 1Q results on April 22, 2Q results on July 22 and 3Q results on October 21, 1999.
Nokia is the world's leading mobile phone supplier and a leading supplier of mobile and fixed telecom networks including related customer services. Nokia also supplies solutions and products for fixed and wireless datacom, as well as multimedia terminals and computer monitors. In 1998, net sales totaled FIM 79.2 billion (USD 15.7 billion, EUR 13.3 billion). Headquartered in Finland, Nokia is listed on five European Stock Exchanges and on the New York Stock Exchange (NOK.A), has sales in over 130 countries and employs more than 44,000 people worldwide.
Contact information:
Ms. Marja-Terttu Verho
Communications Manager, Nokia
Tel. +358 9 1807 286
Fax +358 9 962 409
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