Nortel Delays Release Of Financial Reports

The reports are at the center of an accounting controversy that has resulted in several high-level firings as well as criminal and regulatory investigations in Canada and the United States.

Nortel had previously said it would have completed the financial reports, spanning several financial years and the first two quarters of 2004, by the end of October.

"We have taken this decision to postpone our filings as a prudent measure to take the steps needed to ensure that we have captured all necessary corrections and adjustments in our restated results," Bill Owens, Nortel president and chief executive, said Thursday in a statement.

Owens said initial investigation warranted "double-checking of several revenue areas" and that the company was "targeting completion within 30 to 60 days."

The company is working on the restatement of its financial results for each fiscal quarter in 2003 and for 2002 and 2001, and the preparation of its financial statements for 2003 and the first and second quarters of 2004.

The company has previously announced a reduction of approximately 50 percent in net earnings for 2003 but that there would be no impact to the company's cash balance as of Dec. 31, 2003.

It said Thursday that its "revenue percentage growth for the full year 2004 compared to 2003 is now expected to be in the low single digits."

Financial results for the third quarter of 2004 were not ready, but Nortel anticipated reporting cash as at Sept. 30 of approximately $3.4 billion.

It said the accounting review had found a net reduction in revenue of approximately $600 million in 1999 and $2.5 billion in 2000.

Of the amount in 2000, approximately $250 million of revenue will be permanently reversed, with the remaining revenue adjustments in 1999 and 2000 being deferred and recognized in subsequent years.

The impact of these adjustments was estimated to result in a net increase in revenues of approximately $1.35 billion in 2001, $450 million in 2002 and $450 million in 2003.

Nortel also said it is seeking another waiver on repaying a $286 million bond issue financed by the Canadian Export Development Corp., an agency that works at arm's length from the government to help Canadian companies finance trade deals.

The financing, essentially a loan, is due on Nov. 19.

Nortel also said it would seek to delay its annual general shareholders meeting to by May 31, 2005 from the end of this year.

The company acknowledged that accounting report delays could see stock exchanges in New York and Toronto suspend Nortel stock trading and delist the company.

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