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Consolidated Balance Sheets as of December 31, 2002
As Second Pooling o
f
As
previously Restatement interest pooled and
reported Adjustments Adjustments restated
ASSETS
Current assets
Cash and cash equivalents 66,687 897 82,835 150,419
Accounts receivable 45,665 164 38,126 83,955
Inventories — net 58,385 838 20,847 80,070
Receivables from related parties 123,272 115,237 (4,438) 234,071
Other current assets 99,490 (2,972) 9,846 106,364
Total current assets
393,499 114,164 147,216 654,879
Lon
g
-term receivable from related
p
art
y
140,010 – – 140,010
Investments at cost 5,632 – 10,544 16,176
Plant and equipment — net 126,948 82,629 8,544 218,121
Goodwill ––––
Intangible assets — net – – 3,454 3,454
Deferred income taxes — net 35,304 – 7,964 43,268
Other assets 6 – – 6
Total assets
701,399 196,793 177,722 1,075,914
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Trade and other accounts payable 80,257 1,406 9,488 91,151
Payables to related parties 52,023 (7,531) 44,834 89,326
Payroll and benefit-related liabilities 44,503 333 5,973 50,809
Contractual Liabilities 33,818 (1,488) 5,488 37,818
Restructuring 15,231 (3,401) 1,516 13,346
Other accrued liabilities 161,005 (4,500) 17,755 174,260
Long-term debt due within one year – 3,073 – 3,073
Total current liabilities
386,837 (12,108) 85,054 459,783
Other liabilities 1,837 268 732 2,837
Long-term deferred Income – – 17,231 17,231
Lon
g
-term deb
t
– 76,457 – 76,457
Long-term note payable to related party 200,000 – 20,000 220,000
Total liabilities
588,674 64,617 123,017 776,308
Minority interest – – 9,757 9,757
SHAREHOLDERS’ EQUITY
Common shares, 0.005 par value 306,544 – – 306,544
Additional paid-in capital – – 43,997 43,997
Accumulated deficit (193,819) 132,176 951 (60,692)
Total shareholders’ equity
112,725 132,176 44,948 289,849
Total liabilities and shareholders’ equity
701,399 196,793 177,722 1,075,914
4
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A
ccountin
g
chan
g
es
(a) Guarantees
In November 2002, the FASB issued FIN 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others — an interpretation of FASB Statements No. 5, 57 and 107 and rescission of FASB
interpretation No. 34” (“FIN 45”). FIN 45 defines a guarantee as a contract that contingently requires a guarantor to pay a
guaranteed party as a result of changes in an underlying economic characteristic (such as interest rates or market value) that is
related to an asset, a liability or an equity security of the guaranteed party or a third party’s failure to perform under a specified
agreement. FIN 45 requires that a liability be recognized for the estimated fair value of the guarantee at its inception. Guarantees
issued prior to January 1, 2003 are not subject to the recognition and measurement provisions, but are subject to expanded
disclosure requirements. Nortel Networks S.A. has entered into agreements that contain features which meet the definition of a
guarantee under FIN 45. Effective December 31, 2002, Nortel Networks S.A. adopted the disclosure requirements of FIN 45. In
addition, effective January 1, 2003, Nortel Networks S.A. adopted the initial recognition and measurement provisions of FIN 45
which apply on a prospective basis to certain guarantees