Filter
Top Products
F-80
On April 28, 2004, Nortel Networks announced that the Independent Review was extended to include the second half of 2003 and it was
determined that the previously announced unaudited results for the year ended December 31, 2003 needed to be revised and that the
financial results reported in each of Nortel Networks quarterly periods of 2003 and for earlier periods including 2002 and 2001 needed to
be restated. Nortel Networks announced that it and NNL were not expected to timely file their first quarter 2004 financial statements and,
in accordance with Canadian securities regulations, their 2003 Canadian GAAP audited financial statements and Annual Information
Form.
In April 2004, Nortel Networks terminated for cause its former president and chief executive officer, former chief financial officer and
former controller and, in August 2004, seven additional senior finance employees with significant responsibilities for Nortel Networks
financial reporting as a whole or for their respective business units and geographic regions in August 2004.
On May 14, 2004, Nortel Networks announced that it had received a Federal Grand Jury Subpoena for the production of certain
documents, including financial statements and corporate, personnel and accounting records, prepared during the period from January 1,
2000 to the date of the subpoena. The materials sought are pertinent to an ongoing criminal investigation being conducted by the U.S.
Attorney’s Office for the Northern District of Texas, Dallas Division.
On May 17, 2004, Nortel Networks announced that the OSC had issued a temporary order that prohibits all trading by directors, officers
and certain current and former employees in the securities of Nortel Networks and NNL, which temporary order was replaced with a final
order issued on May 31, 2004. The final order remains in effect until two full business days following the receipt by the OSC of all
filings required to be made by Nortel Networks and NNL pursuant to Ontario securities laws.
On June 29, 2004, Nortel Networks announced that it did not expect to timely file financial statements for the second quarter of 2004 and
related periodic reports in accordance with U.S. and Canadian securities laws.
On August 16, 2004, Nortel Networks received a letter from the Integrated Market Enforcement Team of the Royal Canadian Mounted
Police (“RCMP”) advising Nortel Networks that the RCMP would be commencing a criminal investigation into Nortel Networks
financial accounting situation.
On August 19, 2004, Nortel Networks announced a new streamlined organizational structure, effective October 1, 2004, 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. Further, a focused workforce reduction of approximately 3,250 employees was
announced. In addition, the Audit Committee anticipated that there would be work done, in addition to that portion of the inquiry which
affects Nortel Networks and NNL’s ability to finalize their 2003 audited financial statements, in connection with its Independent Review,
on remedial measures, internal controls and improvements to processes.
On October 27, 2004, Nortel Networks announced that Nortel Networks and NNL did not expect to file their third quarter 2004 financial
statements, and the related periodic reports, by the required deadlines in November 2004 in compliance with certain U.S. and Canadian
securities regulations.
Nortel Networks has terminated for cause 10 individuals, including its former president and chief executive officer, its former chief
financial officer and its former controller. Nortel Networks has demanded repayment by the individuals terminated for cause of payments
made under Nortel Networks bonus plans in respect of 2003.
Subsequent to the March 10, 2004 announcement, numerous class action complaints, including ERISA class action complaints, have
been filed against Nortel Networks in the U.S. and Canada. In addition, a derivative action complaint has been filed against Nortel
Networks. Nortel Networks is subject to significant pending civil litigation which, if decided against Nortel Networks, could result in
substantial damages or other penalties which, in turn, could have a material adverse effect on the business, results of operations, financial
condition and liquidity of Nortel Networks (see note 22).
In January 2005, the Audit Committee reported the findings of the Independent Review, together with its recommendations for governing
principles for remedial measures that were developed for the Audit Committee by WCPHD. Each of Nortel Networks and NNL's Boards
of Directors has adopted those recommendations in their entirety and directed management to develop a detailed plan and timetable for
their implementation, and will monitor their implementation.
Also in January 2005, the Nortel Networks Audit Committee determined to review the facts and circumstances leading to the restatement
of certain revenues for specific transactions identified in the Second Restatement. This review will have a particular emphasis on the
underlying conduct that led to the initial recognition of these revenues. The Audit Committee will develop any appropriate additional
remedial measures, and has engaged WCPHD to advise it in connection with such review.
EDC Su
pp
ort Facilit
y
On March 10, 2004, Nortel Networks announced that the filing of the 2003 Annual Reports with the SEC would be delayed. On
March 15, 2004, Nortel Networks announced that the filing of the 2003 Annual Reports with the SEC would extend beyond March 30,
2004 and that would result in EDC having the right to terminate its commitments under the EDC Support Facility and to exercise certain
rights against the collateral under the related security agreements (see note 24). NNL obtained a waiver from EDC on March 29, 2004 of
certain defaults under the EDC Support Facility related to the delay in filing the 2003 Annual Reports with the SEC, the trustees under
Nortel Networks and NNL’s public trust indentures and EDC and to permit continued access to the EDC Support Facility in accordance
with its terms while Nortel Networks and NNL completed their filing obligations. The waiver also applied to certain related breaches
under the EDC Support Facility relating to the delayed filings and the planned restatements and revisions to Nortel