TORONTO -- Nortel Networks(x) Corporation (NYSE/TSX:NT)
announced that today it has completed the filing of its audited financial
statements for the year 2005 prepared in accordance with United States
generally accepted accounting principles in U.S. dollars, and related Annual
Report on Form 10-K and corresponding Canadian filings. The filings reflect
the restatement of the years ended 2003 and 2004, and the first nine months of
2005. The filing of the 2005 audited financial statements and related filings
of the Company's principal operating subsidiary, Nortel Networks
Limited("NNL"), are in process. Annexed to this press release is certain
selected financial information.
"The restatements have been completed and we have filed the Company's
2005 Annual Report on Form 10-K. I now look forward to completing our first
quarter 2006 reporting and moving back to being a timely filer," said Mike
Zafirovski, president and chief executive officer, Nortel. "Despite this
delay, we have remained focused on our short term priorities of business
transformation, integrity renewal, growth imperatives and on re-creating a
great company, and I look forward to updating you on our progress in a planned
mid-May business update."
Revisions to the Company's previously reported 2003 and 2004 financial
results reflect negative impacts on revenue of $261 million and $312 million
and on net earnings/loss of $141 million and $156 million, respectively, as
well as revisions to the Company's previously reported 2005 nine month results
reflecting negative impacts on revenue of $520 million and on net
earnings/loss of $164 million in the aggregate. With respect to financial
results prior to 2003, the revisions reflect negative impacts on revenue of
$384million and on net earnings/loss of $70 million in the aggregate. These
revenue adjustments resulted in the deferral to later periods of revenue that
was previously recognized in prior periods.
Fourth Quarter 2005 Results
Revenues were $3.00 billion for the fourth quarter of 2005 compared to
$2.51 billion for the fourth quarter of 2004. Nortel reported a net loss in
the fourth quarter of $2.30 billion, or $0.53 per common share on a diluted
basis, compared to net earnings of $102 million, or $0.02 per common share on
a diluted basis, in the fourth quarter of 2004. The fourth quarter of 2005
results included a litigation expense of $2,474 million, as a result of the
agreement reached in principle for the proposed settlement of certain
shareholder class action litigation, a tax benefit of approximately
$140million related to a liability release as a result of new information
regarding transfer pricing issues, special charges of $25 million related to
restructuring activities and $11 million of costs related to the sale of
businesses and assets.
Year 2005 Results
For the year 2005, revenues were $10.52 billion compared to $9.52 billion
for the year 2004. Nortel reported a net loss of $2.58 billion, or $0.59 per
common share on a diluted basis, for the year 2005, compared to a net loss of
$207 million, or $0.05 per common share on a diluted basis, for the year 2004.
The year 2005 results included a litigation expense of $2,474 million, as a
result of the agreement reached in principle for the proposed settlement of
certain shareholder class action litigation, special charges of $170 million
related to restructuring activities and $47 million of costs related to the
sale of businesses and assets.
As previously announced, the Company expects to file its and NNL's first
quarter 2006 Quarterly Reports on Form 10-Q, and the corresponding filings
under Canadian securities laws, no later than the week of June 5, 2006.
The Company plans to hold a teleconference/audio webcast on May 16, 2006
at 8:30 am EDT to provide a business update. Details of the call will be
disclosed in advance of the event.
Nortel Networks Ltd.