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Nokia Year 2000 Readiness Disclosure at March 31, 1999
April 22, 1999
Nokia continued to evaluate and manage the possible risks and costs associated with the Year 2000 issues in the first quarter 1999.
Activities were focused on products and systems, production systems, R&D systems, after sales systems, information systems, facilities and supplier readiness as well as contingency planning.
The Nokia Year 2000 Project
Nokia´s Year 2000 Project includes identifying potential risk areas, increasing risk awareness, and introducing action plans and guidelines for managing Year 2000 issues. The Project is divided into subprojects addressing the Year 2000 issues in products and systems, production systems, R&D systems and after sales systems within each of Nokia Telecommunications, Nokia Mobile Phones and Other Operations, which includes Nokia Communications Products, Nokia Ventures Organization and Nokia Research Center. The Year 2000 subprojects for information systems, facilities systems and supplier readiness are Nokia-wide.
Products and systems
According to testing and verification, most of Nokia´s infrastructure related products and terminal products, including mobile phones, display products, digital multimedia terminals and battery chargers for mobile phones are Year 2000 compliant. For those products which to date are not compliant but can be made Year 2000 compliant, Nokia has introduced relevant compliance solutions.
As announced earlier, a small number of Nokia´s products will not be made compliant. These include a limited number of old products no longer manufactured or for which new 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 critical systems to be Year 2000 compliant during the first half 1999. Nokia also continues to upgrade other production systems hardware and software and is testing their Year 2000 compliance. For its R&D related systems Nokia has plans to have made them compliant during the first half 1999.
As announced earlier, Nokia aims to continue its production activities over the change of the millennium. To accomplish this, Nokia implemented a "production sites by subsystems" approach in the fourth quarter 1998. The approach integrates relevant Year 2000 issues arising from the production systems, information systems, facilities and supplier readiness subprojects to be reviewed and assessed in a comprehensive way.
During the first quarter 1999, Nokia completed the categorization of its after sales systems to critical or non-critical. As announced earlier, Nokia has plans to have those systems categorized as critical to be Year 2000 compliant during the third quarter 1999 and to have its other critical information systems compliant during the second half of 1999 at the latest.
Facilities
Nokia has identified the relevant Year 2000 issues for its facilities systems and equipment. Nokia has categorized its facilities as critical or non-critical and has started necessary Year 2000 related upgrading in the critical facilities. As announced earlier, Nokia plans to have the necessary facilities systems upgrading completed during the second half of 1999 at the latest.
Suppliers
Nokia sources certain materials, components, products, information software and services from third parties. These materials are then integrated into or sold in connection with Nokia products or otherwise used by Nokia. During the first quarter 1999, Nokia continued to verify and audit the status of its sourced items and the continued compliance of its suppliers into the year 2000.
Nokia has categorized its suppliers as critical or non-critical. As announced earlier, Nokia has plans to complete the verification of all of its critical suppliers as well as their continued performance into the year 2000 during the first half of 1999.
Contingency planning, costs and risks
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. Being connected to certain critical suppliers, financial institutions, customers and other business partners through computer systems, a failure of any of the critical interdependent information systems could also materially and adversely affect Nokia.
Nokia believes that planning and implementing of necessary Year 2000 upgrades will reduce the possible Year 2000 issues related to its products, services and its own operations over the change of the millennium. Nonetheless, Nokia plans to have special taskforces available throughout the critical change-over period. Nokia also continues to study various alternative operating models to meet foreseen as well as unexpected Year 2000 issues. Nokia will include these operation models in its contingency planning. Alternative operating models may include: introducing complementary suppliers for certain materials, components, products, software programs or services; modifying or redesigning certain components; manufacturing and holding certain special stock; assisting critical suppliers in their Year 2000 upgrading; as well as redefining the need for resources. Nokia also has plans to establish dedicated Year 2000 Operations Centers as the global contact point within Nokia during the change of the millennium.
Nokia´s Year 2000 Project will continue to evaluate the Year 2000 readiness of the company as explained in the previous Year 2000 Readiness Disclosures published by the Company. Nokia will also continue contingency planning and, to the extent it determines that Year 2000 issues have not been appropriately addressed, implement these plans, during the second half of 1999 at the latest.
Nokia continues to estimate its direct Year 2000 costs to be EUR 75.7 million. At the end of March 1999, Nokia had spent approximately 75% 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 own and relevant third parties´ Year 2000 compliance.
Currency rate March 31, 1999 1 EUR = 1.086 USD, 1 EUR = 5.94573 FIM
- - - 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 with which Nokia is involved, 2) the estimated costs of Year 2000 compliance activities, including actions currently contemplated and actions, including operating models and 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, with which Nokia is involved, 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, suppliers, 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 operating models and contingency plans Nokia may develop as it learns more about the status of its own and others´ Year 2000 compliance 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, 1998.- - -
The Nokia Year 2000 Readiness Disclosure published on April 22, 1999 continues Nokia´s quarterly reporting on Year 2000 issues and updates the disclosures published on November 16, 1998 and January 29, 1999. Nokia´s next Year 2000 Readiness Disclosures will be published on July 22 and October 21, 1999.
Contact information:
Marja-Terttu Verho
Senior Manager, Nokia Corporate Communications
Tel. +358 9 1807 286
Fax +358 9 652 409
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