Nokia 2014 Annual Report Download - page 67

65
Board review
NOKIA IN 2014
Nokia’s interest-bearing debt consisted of a EUR 750 million
convertible bond due in 2017, a EUR 500 million bond due in 2019,
aUSD 1 000 million bond due in 2019, a USD 500 million bond due
in 2039 and EUR 206 million of other liabilities. Refer to Note 35,
Risk management, of our consolidated nancial statements
included in this annual report for further information regarding
our interest-bearing liabilities.
In 2014, Nokia repaid a EUR 1 250 million bond, a EUR 500 million loan
from the European Investment Bank (the “EIB”) and EUR 1 500 million
in convertible bonds issued to Microsoft, which were netted against
proceeds from the Sale of the D&S Business. In addition, Nokia prepaid
all material interest-bearing liabilities related to Nokia Networks,
including the EUR 450 million and EUR 350 million bonds due in 2018
and in 2020, respectively, a EUR 88 million Finnish pension loan, a
EUR50 million loan from the EIB, a EUR 16 million loan from Nordic
Investment Bank and certain other debt. No new debt was issued in
2014. Nokia has no material debt maturing in 2015.
We believe with EUR 7 715 million cash and other liquid assets as
well as a EUR 1 500 million revolving credit facility, we have sucient
funds available to satisfy our future working capital needs, capital
expenditure, R&D, acquisitions and debt service requirements at least
through 2015. We also believe that with our current credit ratings of
BB by Standard & Poor’s and Ba2 by Moody’s, both with positive
outlook, we have access to capital markets should any funding needs
arise in 2015. Nokia has a target to re-establish its investment grade
credit rating.
There are no material o-balance sheet arrangements that have or
are reasonably likely to have a current or future eect on our nancial
condition, changes in nancial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital
resources that is material to investors.
Capital structure optimization program
As a result of our signicantly improved nancial position and
earnings prole after closing of the Sale of the D&S Business, we
announced a EUR 5 billion capital structure optimization program
to improve the eciency of Nokia’s capital structure. The program
consists of EUR 3 billion of total cash returns to shareholders through
dividends and share repurchases and EUR 2 billion of debt reduction
by the end of the second quarter 2016.
In accordance with the capital structure optimization program, Nokia
paid EUR 1 374 million in dividends (EUR 0.37 per share) consisting
ofEUR 408 million (EUR 0.11 per share) of ordinary dividends and
EUR966 million (EUR 0.26 per share) of special dividends in 2014.
Under the EUR 1.25 billion share repurchase program, Nokia
repurchased 67 million shares for EUR 427 million in 2014.
In 2014, Nokia reduced interest bearing debt by approximately
EUR950 million after the announcement of the capital structure
optimization program.
Structured nance
Structured nance includes customer nancing and other third-party
nancing. Network operators occasionally require their suppliers,
including us, to arrange, facilitate or provide long-term nancing
as a condition for obtaining infrastructure projects.
At December 31, 2014 our total customer nancing, outstanding and
committed equaled EUR 156 million, an increase of EUR 92 million,
as compared to EUR 64 million in 2013. At December 31, 2012, our
total customer nancing, outstanding and committed amounted to
EUR108 million. Customer nancing primarily consisted of nancing
commitments to network operators.
Refer to Note 35, Risk management, of our consolidated nancial
statements included in this annual report for further information
relating to our committed and outstanding customer nancing.
We expect our customer nancing commitments to be nanced
mainly from cash and other liquid assets and through cash ow
from operations.
At December 31, 2014 guarantees of Nokia’s performance consisted
ofEUR 465 million of guarantees that are provided to certain Nokia
Networks’ customers in the form of bank guarantees, or corporate
guarantees issued by Nokia Networks. These instruments entitle the
customer to claim payments as compensation for non-performance
by Nokia Networks of its obligations under network infrastructure
supply agreements. Depending on the nature of the instrument,
compensation is payable either on demand, or is subject to verication
of non-performance.
Financial guarantees and securities pledged that we may give on
behalf of customers, represent guarantees relating to payment by
certain Nokia Networks’ customers and other third parties under
specied loan facilities between such customers or other third parties
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 or other third party.
Refer to Note 30, Commitments and contingencies, of our
consolidated nancial statements included in this annual report
for further information regarding commitments and contingencies.
Venture fund investments and commitments
We make nancing commitments to a number of venture funds
that make technology related investments. The majority of the
investments are managed by Nokia Growth Partners that specializes
in growth-stage investing, seeking companies that are changing the
face of mobility and connectivity.
At December 31, 2014 the fair value of our venture fund investments
equaled EUR 778 million, as compared to EUR 627 million at
December 31, 2013. Refer to note 19, Fair value of nancial
instruments, of our consolidated nancial statements included in
this annual report for further information regarding fair value of
our venture fund investments.
At December 31, 2014 our venture fund commitments equaled EUR
274 million, as compared to EUR 215 million at December 31, 2013.
Asa limited partner in venture funds, Nokia is committed to capital
contributions and entitled to cash distributions according to the
respective partnership agreements and underlying fund activities.
Refer to Note 30, Commitments and contingencies, of our
consolidated nancial statements included in this annual report
for further information regarding commitments and contingencies.