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The selected financial data presented below was derived from Nortel Networks Corporation’s audited consolidated financial statements and
related notes thereto included elsewhere in this Annual Report on Form 10-K except for the summarized balance sheet data as of December 31,
2001 and 2000. Readers should note the following information regarding the selected financial data presented below.
Nortel Networks Corporation has restated its previously reported consolidated financial statements for the fiscal years ended December 31,
2002 and 2001 and the quarters ended March 31, June 30 and September 30, 2003. The selected financial data presented below includes all
such restatements and covers the years ended December 31, 2003, 2002 and 2001 as well as selected balance sheet data as of December 31,
2003, 2002, 2001 and 2000. In connection with the restatement of the fiscal years ended December 31, 2002 and 2001, and the quarters ended
March 31, June 30 and September 30, 2003, Nortel Networks identified certain adjustments to its previously reported consolidated financial
statements for periods prior to fiscal 2001. The net effect of the adjustments relating to periods prior to fiscal 2001 have been reflected in the
selected financial data presented below as adjustments to accumulated deficit as of December 31, 2000. The disclosure presented below
addresses the adjustments identified in the Second Restatement that related to the periods prior to 2001.
Except for selected balance sheet data as of December 31, 2000, financial data for the years ended December 31, 2000 and 1999 has not been
restated or presented in the selected financial data presented below. Due to the identified material weaknesses in our internal controls over
financial reporting, significant turnover in Nortel Networks finance personnel, changes in accounting systems, documentation weaknesses, a
likely inability to obtain third party corroboration in certain cases due to the substantial industry adjustment in recent years and the passage of
time generally, Nortel Networks has determined that extensive additional efforts over an extended period of time would be required to restate
its 2000 and 1999 selected financial data. Nortel Networks also believes that selected financial data for these periods would not be meaningful
to investors due to the significant industry adjustment in the telecommunications industry beginning in 2001, which significantly impacted
Nortel Networks financial results in 2001 and subsequent periods and limits the relevance of financial results in periods prior to 2001 for
purposes of analysis of trends in subsequent periods. Previously reported financial information for 2000 and 1999 should not be relied upon.
See the “Controls and Procedures — Additional Background — Second Restatement — Estimates; Omissions of 1999 and 2000 Selected
Financial Data; Decision Not to Amend Certain Previous Filings” section of this report.
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ITEM 6. Selected Financial Data (Unaudited)