Nokia 2006 Annual Report Download - page 187

Notes to the Consolidated Financial Statements (Continued)
31. Commitments and contingencies (Continued)
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 nonperformance by Nokia.
Guarantees for loans and other financial commitments on behalf of other companies of
EUR 23 million in 2006 (EUR 0 million in 2005) represent guarantees relating to payment by a certain
Networks’ customer and other third parties under specified loan facilities between such a customer
and other third parties and their creditors. Nokia’s obligations under such guarantees are released
upon the earlier of expiration of the guarantee or payment by the customer.
Financing commitments of EUR 164 million in 2006 (EUR 13 million in 2005) are available under loan
facilities negotiated with a Networks’ customer. 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.
Venture fund commitments of EUR 208 million in 2006 (EUR 230 million in 2005) are financing
commitments to a number of funds making technology related investments. As a limited partner in
these funds Nokia is committed to capital contributions and also entitled to cash distributions
according to respective partnership agreements.
The Group is party of routine litigation incidental to the normal conduct of business, including, but
not limited to, several claims, suits and actions both initiated by third parties and initiated by Nokia
relating to infringements of patents, violations of licensing arrangements and other intellectual
property related matters, as well as actions with respect to products, contracts and securities. In the
opinion of the management 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 result of operations.
As of December 31, 2006, the Group had purchase commitments of EUR 1 630 million
(EUR 1 919 million in 2005) relating to inventory purchase obligations, primarily for purchases in
2007.
32. 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.
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