Nokia 2005 Annual Report Download - page 190

Notes to the Consolidated Financial Statements (Continued)
32. Commitments and contingencies (Continued)
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 nonperformance by Nokia.
Guarantees for loans on behalf of other companies of EUR 0 million in 2005 (EUR 3 million in 2004)
represent guarantees relating to payment by certain 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.
Financing commitments of EUR 13 million in 2005 (EUR 56 million in 2004) are available under
loan facilities negotiated with customers of 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 loan facilities are primarily
available to fund capital expenditure relating to purchases of network infrastructure equipment
and services and to fund working capital.
The Group has been named as defendant along with certain of its senior executives in a class
action complaint in the United States relating to certain public statements about its product
portfolio and related financial projections in early 2004. The Group does not believe that the claim
has merit and intends to vigorously defend itself.
The Group is party to routine litigation incidental to the normal conduct of business. In the
opinion of management the outcome of and liabilities in excess of what has been provided for
related to these or other proceedings, in the aggregate, are not likely to be material to the
financial condition or results of operations.
As of December 31, 2005, the Group had purchase commitments of EUR 1,919 million
(EUR 1,236 million in 2004) relating to inventory purchase obligations, primarily for purchases
in 2006.
33. Leasing contracts
The Group leases office, manufacturing and warehouse space under various non-cancellable
operating leases. Certain contracts contain renewal options for various periods of time.
The future costs for non-cancellable leasing contracts are as follows:
Operating
leases
Leasing payments, EURm
2006 ................................................................ 187
2007 ................................................................ 144
2008 ................................................................ 108
2009 ................................................................ 88
2010 ................................................................ 60
Thereafter ............................................................ 77
Total ................................................................ 664
Rental expense amounted to EUR 262 million in 2005 (EUR 236 million in 2004 and EUR 285 million
in 2003).
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