Nokia 2003 Annual Report Download - page 148

Notes to the Consolidated Financial Statements (Continued)
29. Commitments and contingencies
2003 2002
EURm EURm
Collateral for our own commitments
Property under mortgages ............................................... 18 18
Assets pledged ........................................................ 13 13
Contingent liabilities on behalf of Group companies
Other guarantees ...................................................... 184 339
Collateral given on behalf of other companies
Securities pledged(1) .................................................... 28 34
Contingent liabilities on behalf of other companies
Guarantees for loans(1) .................................................. 557
Financing commitments
Customer finance commitments(1) ......................................... 490 857
(1) See also note 34(b).
The amounts above represent the maximum principal amount of commitments and contingencies.
Property under mortgages given as collateral for our own commitments include mortgages given
to the Finnish National Board of Customs as a general indemnity of EUR 18 million in 2003
(EUR 18 million in 2002).
Assets pledged for the Group’s own commitments include inventories and available-for-sale
investments of EUR 3 million and EUR 10 million, respectively, in 2003 (EUR 3 million of
inventories and EUR 10 million available-for-sale investments in 2002).
Other guarantees include guarantees of Nokia’s performance of EUR 171 million in 2003 (EUR 332
million in 2002). However, EUR 139 million of these guarantees are provided to certain Nokia
Networks’ customers in the form of bank guarantees, standby letters of credit and other similar
instruments. These instruments entitle the customer to claim payment as compensation for
non-performance by Nokia of its obligations under network infrastructure supply agreements.
Depending on the nature of the instrument, compensation is payable either immediately upon
request, or subject to independent verification of non-performance by Nokia.
Securities pledged and guarantees for loans on behalf of other companies of EUR 33 million in
2003 (EUR 91 million in 2002) represent guarantees relating to payment by certain Nokia
Networks’ customers under specified loan facilities between such customers and their creditors.
Nokia’s obligations under such guarantees are released upon the earlier of expiration of the
guarantee or early payment by the customer. The majority of the financial guarantees is expected
to expire by 2004.
Financing commitments of EUR 490 million in 2003 (EUR 857 million in 2002) are available under
loan facilities negotiated with customers of Nokia Networks. Availability of the amounts is
dependent upon the borrower’s continuing compliance with stated financial and operational
covenants and compliance with other administrative terms of the facility. The loans are primarily
available to fund capital expenditure relating to purchases of network infrastructure equipment
and services and to fund working capital. Certain loans are partially secured through either
guarantees by the borrower’s direct or indirect parent or other group companies, or shares and/or
other assets of the borrower, its parent or other entities under common ownership.
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