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REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS
To the Shareholders and Board of Directors of Nortel Networks Corporation
We have audited the accompanying consolidated balance sheets of Nortel Networks Corporation and its subsidiaries (“Nortel Networks”) as of
December 31, 2003 and 2002 and the related consolidated statements of operations, changes in equity and comprehensive income (loss) and
cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of Nortel
Networks management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Nortel Networks as of
December 31, 2003 and 2002 and the results of their operations and their cash flows for each of the three years in the period ended December
31, 2003 in conformity with accounting principles generally accepted in the United States of America.
As described in note 3 to the consolidated financial statements, the accompanying consolidated financial statements of Nortel Networks as of
December 31, 2002, and for the years ended December 31, 2002 and 2001 have been restated.
As described in note 4 to the consolidated financial statements, effective January 1, 2003, Nortel Networks changed its method of accounting
for stock-based compensation and asset retirement obligations, in accordance with Statement of Financial Accounting Standards (“SFAS”)
SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure”, and SFAS No. 143, “Accounting for Asset
Retirement Obligations”, respectively. Also, as described in note 4, effective January 1, 2002, Nortel Networks changed its method of
accounting for goodwill in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”.
On January 10, 2005, we reported separately to the Shareholders of Nortel Networks on consolidated financial statements for the same periods,
audited in accordance with Canadian generally accepted auditing standards and prepared in accordance with Canadian generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
Independent Registered Chartered Accountants
Toronto, Canada
January 10, 2005
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