Thanks. Does that debt include their Vendor Financing agreements?
Most of the 136,000 debt repayment in 2003 is for the Lucent Facility, (a little bit for FCC debt).
NT and ERICY debt repayments start in 2004.
Management implies that Interest can be paid from results of operations in 2003. Principle repayment will come from Cash on Hand.
Here is segment from Lucent 10-K regarding customer financing.
CUSTOMER FINANCING
The following table presents our customer financing commitments at September
30, 2001 and September 30, 2000 (dollars in billions):
<Table>
<Caption>
SEPTEMBER 30, 2001 SEPTEMBER 30, 2000
------------------------------- --------------------------------
TOTAL TOTAL LOANS
LOANS AND AND
GUARANTEES LOANS GUARANTEES GUARANTEES LOANS GUARANTEES
---------- ----- ---------- ---------- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
Drawn commitments............ $3.0 $2.6 $0.4 $2.0 $1.3 $0.7
Available but not drawn...... 1.4 1.4 -- 3.9 3.3 0.6
Not available................ 0.9 0.6 0.3 2.2 2.1 0.1
---- ---- ---- ---- ---- ----
Total commitments........ $5.3 $4.6 $0.7 $8.1 $6.7 $1.4
---- ---- ---- ---- ---- ----
---- ---- ---- ---- ---- ----
</Table>
Some of our customers worldwide are requiring their suppliers to arrange or provide long-term financing for them as a condition of obtaining or bidding on infrastructure projects. These projects may require financing in amounts ranging from modest sums to more than a billion dollars. We use a disciplined credit evaluation and business review process that takes into account the credit quality of individual borrowers and their related business plans, as well as market conditions. We consider requests for financing on a case-by-case basis and offer financing only after careful review. As market conditions permit, our intention is to sell or transfer these long-term financing arrangements, which may include both commitments and drawn-down borrowings, to financial institutions and other investors. This enables us to reduce the amount of our commitments and free up additional financing capacity. As part of the revenue recognition process, we determine whether the notes receivable under these contracts are reasonably assured of collection based on various factors, including our ability to sell these notes.
Our credit process monitors the drawn and undrawn commitments and guarantees of debt to our customers. Customers are reviewed on a quarterly or annual basis depending upon their risk profile. As part of our review, we assess the customer's short-term and long-term liquidity position, current operating performance versus plan, execution challenges facing the company, changes in competitive landscape, industry and macroeconomic conditions, and changes to management and sponsors. Depending upon the extent of any deterioration of a ustomer's credit profile or non-compliance with our legal documentation, we undertake actions that could include canceling the commitment, compelling the borrower to take corrective measures, and increasing efforts to mitigate potential losses. These actions are designed to mitigate unexpected events that could have an impact on our future results of operations and cash flows; however, there can be no assurance that this will be the case. Adverse industry conditions, such as the continued softening in the CLEC market, have negatively affected the creditworthiness of several customers that participate in our customer financing program. For the year ended September 30, 2001, we recorded provisions for uncollectibles and customer financings of $2.2 billion, of which approximately $1.3 billion was related to three customer finance projects, including Winstar and One.Tel. On April 18, 2001, Winstar filed for Chapter 11 protection and in late May 2001, One.Tel filed for voluntary administration (e.g. bankruptcy) and subsequently announced that it will be liquidated and its assets sold. We have built a mobile fiber-optic network for One.Tel, which is substantially complete. During November 2001, we entered into an agreement with the liquidator affirming our ownership of the network. Reserves associated with total drawn commitments were $2.1 billion, reflecting a net exposure of approximately $900 million.
Our overall customer financing exposure, coupled with a continued decline in telecommunications market conditions, negatively affected revenue, results of operations and cash flows in fiscal year 2001. We will continue to provide or commit to financing where appropriate for our business. Our ability to arrange or provide financing for our customers will depend on a number of factors, including our capital structure, credit rating and level of available credit, and our continued ability to sell or transfer commitments and drawn-down borrowings on acceptable terms. Due to recent economic uncertainties and reduced demand for financings in capital and bank markets, we may be required to continue to hold certain customer financing obligations for longer periods prior to the sale to third-party lenders. In addition, specific risks associated with customer financing, including the risks associated with new technologies, new network construction, market demand and competition, customer business plan viability and funding risks may require us to hold certain customer financing obligations over a longer term. Any unexpected developments in our customer financing arrangements could negatively affect revenue, results of operations and cash flows in the future. In addition, we may be required to record additional reserves related to customer financing in the future. |
