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The following table presents the impact on net earnings (loss) for the year ended December 31, 2001 of the SFAS 142 requirement
to cease the amortization of goodwill as if the standard had been in effect beginning January 1, 2001.
2001
Net earnings (loss) — reported (339,539)
Amortization of goodwill 3,434
Net earnings (loss) — adjusted (336,105)
(
j
)Im
p
airment or dis
p
osal of lon
g
-lived assets (
p
lant and e
q
ui
p
ment)
In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS
144”), which addressed financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS 144 is
applicable to certain long-lived assets, including those reported as discontinued operations, and develops one accounting model for
long-lived assets to be disposed of by sale. SFAS 144 superseded SFAS No. 121, “Accounting for the Impairment of Long-lived
Assets and for Long-lived Assets to be Disposed Of”, and APB No. 30, “Reporting the Results of Operations — Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions” (“APB 30”), for the disposal of a segment of a business. Nortel Networks S.A. adopted the provisions of SFAS 144
effective January 1, 2002.
SFAS 144 requires that long-lived assets to be disposed of by sale be measured at the lower of carrying amount or fair value less
cost to sell, whether reported in continuing operations or in discontinued operations. Discontinued operations will no longer be
measured at net realizable value or include amounts for operating losses that have not yet been incurred. SFAS 144 also broadened
the reporting of discontinued operations to include the disposal of a component of an entity provided that the operations and cash
flows of the component will be eliminated from the ongoing operations of the entity and the entity will not have any significant
continuing involvement in the operations of the component. The adoption of SFAS 144 did not have a material impact on Nortel
Networks S.A. results of operations and financial condition.
(k) Derivative financial instruments
Effective January 1, 2001, Nortel Networks S.A. adopted SFAS 133, and the corresponding amendments under SFAS No. 138,
“Accounting for Certain Derivative Instruments and Certain Hedging Activities — an amendment of SFAS No. 133” (“SFAS
138”).
The adoption of SFAS 133 did not have a material impact on Nortel Networks S.A. results of operations and financial condition.
5
. Consolidated
f
inancial statement details
The following consolidated financial statement details are presented as of December 31 for the consolidated balance sheets and for each
of the years ended December 31 for the consolidated statements of operations and consolidated statements of cash flows.
Consolidated statements of o
p
erations
R
esearch and develo
p
ment ex
p
ense:
2003 2002 2001
R&D expense 236,967 264,275 249,603
R&D costs incurred on behalf of others
(a)
5,445 9,098 2,885
Total 242,412 273,373 252,488
(a) These costs included R&D charged to customers of Nortel Networks S.A. pursuant to contracts that provided for full recovery of the estimated cost of development,
material, engineering, installation and other applicable costs, which were accounted for as contract costs.