Nokia 2003 Annual Report Download - page 63

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Credit Agencies, and mutual agreement with the borrower. Our continued intent is to further
mitigate our total customer financing exposure, market conditions permitting. We continue to
make arrangements with financial institutions and investors to sell credit risk we have incurred
from the commitments and outstanding loans we have made as well as from the financial
guarantees we have given.
In 2002, we recorded a net charge of EUR 265 million to write down the loans receivable to their
estimated recoverable amount and to write off various other amounts related to MobilCom.
However, this charge was substantially reversed in 2003 by EUR 226 million as a result of the
company receiving repayment of the MobilCom loans receivables in the form of subordinated
convertible perpetual bonds of France Telecom.
As a strategic market requirement, we plan to continue to extend customer financing and provide
extended payment terms to a small number of selected customers.
We expect our customer financing commitments to be financed mainly through cash flow from
operations as well as through the capital markets.
The following table sets forth the amounts of Nokia’s customer financing commitments and the
periods in which these commitments will expire if they are not utilized pursuant to the terms of
the related financing arrangements. Such amounts can also be available to customers in periods
prior to expiration. The amounts represent the maximum amount of commitments.
Customer Financing Commitments Expiration Per Period
2004 2005-2006 2007 Total
EURm
Customer financing commitments ............. 191 299 — 490
All customer financing commitments 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 available to fund capital expenditure relating to
purchases of network infrastructure equipment and services from Nokia Networks, or working
capital requirements. 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.
The following table sets forth the amounts of Nokia’s contingent commitments related to customer
financing for the periods indicated. The amounts represent the maximum principal amount of
commitments.
Contingent Commitments Expiration Per Period
2005- 2007-
2004 2006 2008 Thereafter Total
EURm
Guarantees of Nokia’s performance ...... 104 30 16 21 171
Financial guarantees and securities
pledged on behalf of customers ....... 30 3 — — 33
Total .............................. 134 33 16 21 204
Guarantees of Nokia’s performance include EUR 139 million of guarantees that are provided to
certain Nokia Networks customers in the form of bank guarantees, standby letters of credit and
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