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F-37
Goodwill:
The following table outlines goodwill by reportable segment:
During the year ended December 31, 2003, Nortel Networks performed its annual goodwill impairment test and concluded that there was
no impairment. During the three months ended September 30, 2002, an impairment test was performed on goodwill in accordance with
SFAS 142 for all reporting units due to a significant adverse change in the business climate and taking into consideration Nortel
Networks market capitalization at the end of the third quarter of 2002. All of Nortel Networks reporting units had fair values in excess of
their carrying values with the exception of Optical Networks. As a result of the impairment test, Nortel Networks recorded a write down
of goodwill of $595 within the Optical Networks segment during the year ended December 31, 2002.
I
ntangible assets — net:
Other accrued liabilities:
Wireless Enterprise Wireline Optical
Networks Networks Networks Networks Other Total
Balance — net as of December 31, 2001 $ 21 $ 1,658 $ 524 $ 590 $ 15 $ 2,808
Change:
Disposal – –
–
– (15) (15)
Impairment – –
–
(595) – (595)
Foreign exchange – (2) (2) 5 – 1
Balance — net as of December 31, 2002 21 1,656 522 – – 2,199
Change:
Additions
(a)
13 31 43 9 – 96
Foreign exchange 1 5 4 – – 10
Balance — net as of December 31, 2003 $ 35 $ 1,692 $ 569 $ 9 $ – $ 2,305
(a) See note 10 for additional information.
2003 2002
Acquired technology
(a)
$ – $ 98
Other intangible assets
(b)
45 –
Pension intangible assets
(c)
41 41
Intangible assets — net $86 $139
(a) As of December 31, 2003, acquired technology was fully amortized.
(b) Other intangible assets are being amortized over a ten year period ending in 2013. Amortization expense for the next five years commencing in 2004 is expected to
be $9, $6, $5, $5 and $4, respectively. The amortization expense is denominated in a foreign currency and may fluctuate due to changes in foreign exchange rates.
(c) Pension intangible assets were recorded as required by SFAS No. 87, “Employers’ Accounting for Pensions”. Amounts are not amortized but are adjusted as part of
the annual minimum pension liability assessment.
2003 2002
Outsourcing and selling, general and administrative related $ 302 $ 486
Customer deposits 73 69
Product related 120 171
Warrant
y
387 408
Deferred income 761 1,108
Miscellaneous taxes 76 74
Income taxes payable 111 150
Current liabilities of discontinued operations 663
Interest payable 62 67
Advance billings in excess of revenues recognized to date on long-term contracts 509 394
Other 98 267
Other accrued liabilities $ 2,505 $ 3,257