Nokia 2009 Annual Report Download - page 112

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, facilitate or provide long
term financing as a condition to obtaining or bidding on infrastructure projects.
In response to the tightening of the credit markets in 2009, requests for customer financing have
increased in volume and scope. However, during 2009, we decreased the amount of financing we
provided directly to our customers. We do not currently intend to significantly increase financing to
our customers which may have an adverse effect on our ability to compete successfully for their
business. Rather, as a strategic market requirement, we plan to continue to arrange and facilitate
financing, typically supported by Export Credit or Guarantee Agencies, and provide extended payment
terms to a number of customers. 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.
The following table sets forth our total structured finance, outstanding and committed, for the years
indicated.
Structured Finance
2009 2008 2007
At December 31,
(EUR millions)
Financing commitments .............................................. 99 197 270
Outstanding longterm loans (net of allowances and writeoffs) .............. 46 27 10
Current portion of outstanding longterm loans (net of allowances and write
offs) ............................................................ 14 101 156
Outstanding financial guarantees and securities pledged .................... — 2 130
Total.............................................................. 159 327 566
In 2009, our total structured financing, outstanding and committed, decreased to EUR 159 million
from EUR 327 million in 2008 and primarily consisted of committed financing to network operators.
In 2008, our total structured financing, outstanding and committed, decreased to EUR 327 million
from EUR 566 million in 2007 and primarily consisted of committed financing to network operators.
Outstanding financial guarantees given on behalf of third parties decreased from EUR 130 million in
2007 to EUR 2 million in 2008.
See Note 33(b) to our consolidated financial statements included in Item 18 of this annual report for
further information relating to our committed and outstanding customer financing.
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 may give. Should the demand for customer finance increase in the future, we
intend to further mitigate our total structured financing exposure, market conditions permitting.
We expect our structured financing commitments to be financed mainly through the capital markets
as well as through cash flow from operations.
The structured financing commitments are available under loan facilities mainly negotiated with
customers of Nokia Siemens Networks. Availability of the amounts is dependent upon the borrowers’
continuing compliance with stated financial and operational covenants and compliance with other
administrative terms of the facilities. The customer loans are available to fund capital expenditure
relating to purchase of network infrastructure equipment and services from Nokia Siemens Networks.
110