Nokia 2005 Annual Report Download - page 75

At December 31, 2005, Nokia had EUR 21 million in long-term interest-bearing liabilities and
EUR 377 million in short-term borrowings, offset by EUR 9 910 million in cash and other liquid
assets, resulting in a liquid assets balance of EUR 9 512 million, compared with EUR 11 308 million
at the end of 2004. In addition, we held EUR 255 million in 2004 of subordinated convertible
perpetual bonds of France Telecom classified as available-for-sale investments and not included in
cash and other liquid assets. We were not unconditionally permitted to sell these bonds until the
end of June 2004. For further information regarding our long-term liabilities, including interest
rate structure and currency mix, see Note 26 to our consolidated financial statements included in
Item 18 of this annual report on Form 20-F. Our ratio of net interest- bearing debt, defined as
short-term and long-term debt less cash and other liquid assets, to equity, defined as shareholders’
equity and minority interests, was -77%, -79% and -71% at December 31, 2005, 2004 and 2003,
respectively. The change in 2005 resulted from an increased number of share buybacks. The
change in 2004 resulted from both our continued good profitability and the improvements in our
cash and other liquid assets position reflecting the increased amount of share buy-backs.
The total dividends per share were EUR 0.37 for the year ended December 31, 2005, subject to
shareholders’ approval, compared with EUR 0.33 and EUR 0.30 for the years ended December 31,
2004 and 2003, respectively. See ‘‘Item 3.A Selected Financial Data—Distribution of Earnings.’’
Nokia has no potentially significant refinancing requirements in 2006. Nokia expects to incur
additional indebtedness from time to time as required to finance working capital needs. At
December 31, 2005, Nokia had a USD 500 million US Commercial Paper, or USCP, program and a
USD 500 million Euro Commercial Paper, or ECP, program. In addition, at the same date, Nokia had
a Finnish local commercial paper program totaling EUR 750 million. At December 31, 2005, we also
had a committed credit facility of USD 2 000 million and a number of short-term uncommitted
facilities. For further information regarding our short-term borrowings, including the average
interest rate, see Note 28 to our consolidated financial statements included in Item 18 of this
annual report on Form 20-F.
Nokia has historically maintained a high level of liquid assets. Management estimates that the cash
and other liquid assets level of EUR 9 910 million at the end of 2005, together with Nokia’s
available credit facilities, cash flow from operations, funds available from long-term and
short-term debt financings, as well as the proceeds of future equity or convertible bond offerings,
will be sufficient to satisfy our future working capital needs, capital expenditure, research and
development and debt service requirements at least through 2006. The ratings of our short and
long-term debt from credit rating agencies have not changed during the year. The ratings at
December 31, 2005, were:
Short-term Standard & Poor’s A-1
Moody’s P-1
Long-term Standard & Poor’s A
Moody’s A1
We believe that Nokia will continue to be able to access the capital markets on terms and in
amounts that will be satisfactory to us, and that we will be able to obtain bid and performance
bonds, to arrange or provide customer financing as necessary to support our business and to
engage in hedging transactions on commercially acceptable terms.
Nokia is not a capital intensive company in terms of fixed assets, but rather invests in research
and development, marketing and building the Nokia brand. In 2005, capital expenditures totaled
EUR 607 million compared with EUR 548 million in 2004 and EUR 432 million 2003. The increase
in 2005 resulted from increased amount of capital expenditures in machinery and equipment to
support the company’s growing volumes. Principal capital expenditures during the three years
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