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6. Se
g
ment in
f
ormation
General descri
p
tion
During 2003 and up to September 30, 2004, Nortel Networks operations were organized around four reportable segments consisting of
Wireless Networks, Enterprise Networks, Wireline Networks and Optical Networks. Wireless Networks included network access and
core networking products for voice and data communications that span second and third generation wireless technologies and most major
global standards for mobile networks and related professional services. Enterprise Networks included circuit and packet voice solutions,
data networking and security solutions and the related professional services used by enterprise customers. Wireline Networks included
circuit and packet voice solutions, data networking and security solutions and the related professional services used by service provider
customers. Optical Networks included metropolitan, regional and long-haul optical transport and switching solutions and managed
broadband services and related professional services for both service provider and enterprise customers.
“Other” represented miscellaneous business activities and corporate functions. None of these activities meet the quantitative criteria to be
disclosed as reportable segments. As described in note 20, Nortel Networks access solutions operations were discontinued during the year
ended December 31, 2001. These operations were previously included as a separate business activity within “other”. The data below
excludes amounts related to the access solutions operations.
Effective October 1, 2004, a new streamlined organizational structure was established that involved, among other things, combining the
businesses of Nortel Networks four segments into two business organizations: (i) Carrier Networks and Global Operations, and
(ii) Enterprise Networks. Nortel Networks is reviewing the impact of these changes on its reportable segments.
Nortel Networks president and chief executive officer (the “CEO”) has been identified as the chief operating decision maker in assessing
the performance of the segments and the allocation of resources to the segments. Each reportable segment is managed separately with
each segment manager reporting directly to the CEO. The CEO relies on the information derived directly from the Nortel Networks
management reporting system. In 2003, Nortel Networks reported that the primary financial measure used by the former chief operating
decision maker in assessing performance and allocating resources to the segments was contribution margin, a measure that was
comprised of gross profit less SG&A expense. In April 2004, Nortel Networks and NNL’s board of directors appointed a new CEO.
Commencing in the second quarter of 2004, the primary financial measure used by the CEO in assessing performance and allocating
resources to the segments is management earnings (loss) before income taxes (“Management EBT”), a measure that includes contribution
margin, R&D expense, interest expense, other income (expense) — net, minority interests — net of tax and equity in net loss of
associated companies — net of tax. As a result of the change in Nortel Networks primary financial measure used to assess the
performance of the segments during the period in which Nortel Networks financial reports as described in note 23 have been delayed, and
because both contribution margin and Management EBT were available to the former chief operating decision maker during 2003, Nortel
Networks has determined that it is appropriate to disclose both contribution margin and Management EBT for the periods presented.
Costs associated with shared services and other corporate costs are allocated to the segments based on usage determined generally by
headcount. Costs not allocated to the segments are primarily related to Nortel Networks corporate compliance and other non-operational
activities and are included in “other”. In addition, the CEO does not review asset information on a segmented basis in order to assess
performance and allocate resources. The accounting policies of the reportable segments are the same as those applied to the consolidated
financial statements.
R
eceivables sales:
2003 2002 2001
Cash interest paid $186 $289 $253
Cash taxes paid (recovered) — net $ (4) $ (1,208) $ 20
2003 2002 2001
Proceeds from new securitizations $651 $562 $789
Proceeds from collections reinvested in revolving period securitizations $ 52 $ 276 $ 688