Nokia 2015 Annual Report Download - page 61

59
Board review
NOKIA IN 2015
In 2014, our cash ow used in nancing activities equaled EUR 4 576
million, an increase of EUR 4 099 million, as compared to EUR 477
million in 2013. Cash outows from nancing activities were primarily
attributable to the repayment of EUR 2 791 million in interest-bearing
liabilities, payment of EUR 0.11 per share in dividends equaling
EUR408 million and EUR 0.26 per share in special dividends equaling
EUR 966 million, as well as EUR 427 million in cash outows relating
toshare repurchases. We also acquired subsidiary shares from a
non-controlling interest holder and paid dividends to non-controlling
interest holders in 2014 equaling approximately EUR 60 million.
Financial assets and debt
At December 31, 2015 our net cash and other liquid assets equaled
EUR 7 775 million and consisted of EUR 9 849 million in total cash and
other liquid assets and EUR 2 074 million of long-term interest-bearing
liabilities and short-term borrowings.
We hold our cash and other liquid assets predominantly in euro. Our
liquid assets are mainly invested in high-quality money market and
xed income instruments with strict maturity limits. We also have
aEUR 1 500 million undrawn revolving credit facility available for
liquidity purposes.
Our interest-bearing liabilities consisted of 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 196 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 2015, we exercised our option to redeem our EUR 750 million
convertible bonds due in 2017. The redemption led to materially all
convertible bonds being converted into Nokia shares. Additionally,
werenanced our undrawn EUR 1 500 million revolving credit facility
maturing in March 2016 with a new similar size facility maturing in
June2018. The new facility has two one-year extension options,
nonancial covenants and it remains undrawn. We believe with
EUR9849 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 2016.
Wealso believe that with our current credit ratings of BB+ by Standard
& Poor’s and Ba2 by Moody’s, we have access to the capital markets
should any funding needs arise in 2016. Nokia aims to re-establish
itsinvestment grade credit rating.
O-balance sheet arrangements
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 are material to investors.
Capital structure optimization program
In 2015, we announced plans for a two-year, EUR 7 billion program
tooptimize the eciency of our capital structure. The program was
subject to the closing of the Alcatel Lucent and HERE transactions,
aswell as the conversion of all Nokia and Alcatel Lucent convertible
bonds. This comprehensive capital structure optimization program
focuses on shareholder distributions and de-leveraging, while
maintaining our nancial strength.
The program consists of the following components:
■Shareholder distributions of approximately EUR 4 billion, calculated
assuming ownership of all outstanding shares of Alcatel Lucent
andconversion of all Nokia and Alcatel Lucent convertible bonds:
– Planned ordinary dividend payments, as follows:
– A planned ordinary dividend for 2015 of at least EUR 0.15 per
share, subject to shareholder approval in 2016; and
– A planned ordinary dividend for 2016 of at least EUR 0.15 per
share, subject to shareholder approval in 2017;
– A planned special dividend of EUR 0.10 per share, subject to
shareholder approval in 2016; and
– A planned two-year, EUR 1.5 billion share repurchase program,
subject to shareholder approval in 2016.
■De-leveraging of approximately EUR 3 billion:
– Planned reduction of interest-bearing liabilities of the combined
company by approximately EUR 2 billion; and
– Planned reduction of debt-like items of the combined company
by approximately EUR 1 billion in 2016.
Refer to “—Dividend” below for the Board of Director’s dividend
proposal for 2015.
In January 2016, as part of the capital structure optimization program,
Alcatel Lucent S.A., a company controlled by us, repaid its EUR 190
million 8.50% senior notes. In February, 2016, Alcatel Lucent USA Inc.,
a subsidiary of Alcatel Lucent S.A., redeemed its USD 650 million
4.625% notes due July 2017, USD 500 million 8.875% notes due
January 2020 and USD 700 million 6.750% notes due November 2020
in accordance with their respective terms and conditions. In February
2016, Alcatel Lucent S.A. terminated its EUR 504 million revolving
credit facility.