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F-63
Performance related and other bonds generally have a term of twelve months and are typically renewed, as required, over the term of the
applicable contract. The various contracts to which these bonds apply generally have terms ranging from two to five years. Any potential
payments which might become due under these bonds would be related to Nortel Networks non-performance under the applicable
contract. Historically, Nortel Networks has not had to make material payments under these types of bonds and does not anticipate that
any material payments will be required in the future. The following table sets forth the maximum potential amount of future payments
under bid, performance related and other bonds, net of the corresponding restricted cash and cash equivalents, as of December 31:
2003 2002
Bid and performance related bonds
(a)
$ 427 $ 299
Other bonds
(b)
53 136
Total bid, performance related and other bonds $ 480 $ 435
(a) Net of restricted cash and cash equivalent amounts of $14 and $188 as of December 31, 2003 and 2002, respectively.
(b) Net of restricted cash and cash equivalent amounts of $31 and $26 as of December 31, 2003 and 2002, respectively.
Customer financin
g
Pursuant to certain financing agreements, Nortel Networks is committed to provide future financing in connection with purchases of
Nortel Networks products and services. Commitments to extend future financing generally have conditions for funding, fixed expiration
or termination dates and specific interest rates and purposes. Nortel Networks attempts to limit its financing credit risk by utilizing an
internal credit committee that monitors the credit exposure of Nortel Networks. The following table sets forth customer financing related
information and commitments, excluding discontinued operations, as of December 31:
2003 2002
Drawn and outstanding — gross $ 401 $ 1,120
Provisions for doubtful accounts (281) (824)
Drawn and outstanding — net
(a)
120 296
Undrawn commitments
(b)
180 831
Total customer financin
g
$ 300 $ 1,127
(a) Included short-term and long-term amounts. Short-term and long-term amounts were included in accounts receivable — net and other assets, respectively, in the
consolidated balance sheets.
(b) See note 23.
During the year ended December 31, 2003, Nortel Networks recorded net customer financing bad debt recoveries of $113 as a result of
settlements and adjustments to other existing provisions. During the year ended December 31, 2002, Nortel Networks recorded net
customer financing bad debt expense of $171. The recoveries and expense were included in the consolidated statements of operations
within SG&A.
During the year ended December 31, 2003, Nortel Networks entered into certain agreements to restructure and/or settle various customer
financing and related receivables. As a result of these transactions, Nortel Networks received cash consideration of approximately $230
to settle outstanding receivables of approximately $610 (with a net carrying value of $120). Additional non-cash consideration received
under one such restructuring agreement included a five year equipment and services supply agreement and the mutual release of all other
claims between the parties.
During the year ended December 31, 2003, Nortel Networks reduced undrawn customer financing commitments by $651 as a result of
the expiration or cancellation of commitments and changing customer business plans. As of December 31, 2003, approximately $108 of
the $180 in undrawn commitments was not available for funding under the terms of the financing agreements.
Venture ca
p
ital financin
g
Nortel Networks has entered into agreements with selected venture capital firms where the venture capital firms make and manage
investments in start-ups and emerging enterprises. The agreements require Nortel Networks to fund requests for additional capital up to
its commitments when and if requests for additional capital are solicited by the venture capital