Nokia 2007 Annual Report Download - page 24

Our sales, costs and results of operations are affected by exchange rate fluctuations,
particularly between the euro, which is our reporting currency, and the US dollar, the Chinese
yuan, the UK pound sterling and the Japanese yen, as well as certain other currencies.
We operate globally and are therefore exposed to foreign exchange risks in the form of both
transaction risks and translation risks. Our policy is to monitor and hedge exchange rate exposure,
and we manage our operations to mitigate, but not to eliminate, the impacts of exchange rate
fluctuations. Our sales, costs and results of operations may be materially affected by exchange rate
fluctuations. Similarly, exchange rate fluctuations may also materially affect the US dollar value of any
dividends or other distributions that are paid in euro. For a more detailed discussion of exchange
risks, see “Item 5.A Operating Results—Certain Other Factors—United States Dollar,” “Item 5.A
Operating Results—Results of Operations—Exchange Rates” and Note 35 of our consolidated financial
statements included in Item 18 of this annual report.
Providing customer financing or extending payment terms to customers can be a competitive
requirement and could have a material adverse effect on our results of operations and
financial condition.
Customers in some markets sometimes require their suppliers, including us, to arrange or provide
financing in order to obtain sales or business. Moreover, they may require extended payment terms.
In some cases, the amounts and duration of these financings and trade credits, and the associated
impact on our working capital, may be significant. Defaults under these financings have occurred in
the past and may also occur in the future.
Customer financing continues to be requested by some of our customers in some markets, but to a
considerably lesser extent and with considerably lower importance than in the late 1990s and early
2000s. As a strategic market requirement, we plan to continue to arrange and facilitate financing to
our customers, and provide financing and extended payment terms to a small number of selected
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. We cannot guarantee that we will be successful in providing needed financing to
customers. Also, our ability to manage our total customer finance and trade credit exposure depends
on a number of factors, including our capital structure, market conditions affecting our customers, the
level of credit available to us and our ability to mitigate exposure on acceptable terms. We cannot
guarantee that we will be successful in managing the challenges connected with the total customer
financing and trade credit exposure that we may have from time to time. See “Item 5.B Liquidity and
Capital Resources—Structured Finance,” and Note 35(b) to our consolidated financial statements
included in Item 18 of this annual report for a more detailed discussion of issues relating to customer
financing, trade credits and related commercial credit risk.
Allegations of possible health risks from the electromagnetic fields generated by base stations
and mobile devices, and the lawsuits and publicity relating to them, regardless of merit, could
have a material adverse effect on our sales, results of operations and share price by leading
consumers to reduce their use of mobile devices, or by leading regulatory bodies to set
arbitrary use restrictions and exposure limits, or by causing us to allocate additional
monetary and personnel resources to these issues.
There has been public speculation about possible health risks to individuals from exposure to
electromagnetic fields from base stations and from the use of mobile devices. A substantial amount
of scientific research conducted to date by various independent research bodies has indicated that
these radio signals, at levels within the limits prescribed by safety standards set by, and
recommendations of, public health authorities, present no adverse effect on human health. We
cannot, however, be certain that future studies, irrespective of their scientific basis, will not suggest a
link between electromagnetic fields and adverse health effects that would have a material adverse
effect on our sales, results of operations and share price. Research into these issues is ongoing by
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