Nokia 2005 Annual Report Download - page 76

included production lines, test equipment and computer hardware used primarily in research and
development as well as office and manufacturing facilities. We expect the amount of our capital
expenditures during 2006 to be higher than 2005 and to be funded from our cash flow from
operations.
Structured Finance
Structured Finance includes customer financing and other third party financing. Network
operators in some markets sometimes require their suppliers, including us, to arrange or provide
long-term financing as a condition to obtaining or bidding on infrastructure projects. Customer
financing continues to be requested by some operators in some markets. Extended payment terms
may continue to result in a material aggregate amount of trade credits, but the associated risk is
mitigated by the fact that the portfolio relates to a variety of customers. See ‘‘Item 3.D Risk
Factors—Customer financing to network operators can be a competitive requirement and could
adversely and materially affect our sales, results of operations, balance sheet and cash flow.’’
The following table sets forth Nokia’s total structured finance, outstanding and committed, for the
years indicated.
Structured Finance
At December 31,
2005 2004 2003
(EUR millions)
Financing commitments ............................................. 13 56 490
Outstanding long-term loans (net of allowances and write-offs) ............. 63 — 354
Outstanding financial guarantees and securities pledged ................... — 3 33
Total ............................................................ 63 59 877
In 2005, our total structured financing, outstanding and committed, increased to EUR 63 million
from EUR 59 million in 2004 and primarily consisted of the funding of the EUR 56 million 2004
financing commitment to a network operator. The committed financing in 2005 of an additional
EUR 13 million to this network operator will expire in 2008. This commitment does not increase
our total and outstanding credit risk from EUR 63 million, as it is available only if the outstanding
loan of EUR 56 million is repaid. The guarantees of EUR 3 million outstanding in 2004 were
released.
See Notes 9 and 38(b) to our consolidated financial statements included in Item 18 of this annual
report on Form 20-F for additional information relating to our committed and outstanding
customer financing.
In 2004, we reduced our total customer financing, outstanding and committed, by EUR 818 million
(or 93%) compared to 2003. Our outstanding loans decreased mainly due to the fact that the
customer financing to Huchison 3G UK Ltd in the United Kingdom, which amounted to EUR 653
million, was prepaid and released. The total committed customer financing to the TNL PCS S.A.
(Telemar) in Brazil, which amounted to EUR 191 million, was sold off and released. In addition,
the reduction was achieved through release of outstanding guarantees as well as arrangements
with banks, financial institutions and Export Credit Agencies, and mutual agreement with the
borrower.
In 2003, our outstanding loans decreased by EUR 1 127 million mainly due to the fact that the
MobilCom loan was exchanged for subordinated convertible perpetual bonds of France Telecom.
These bonds were treated as available-for-sale investments and were sold during 2004 and 2005.
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