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During 2003, we made cash contributions to our defined benefit pension plans of approximately $300. In 2004, we made cash contributions of
approximately $140 to our defined benefit pension plans, which excludes $78 of deferred contributions for 2004 which were made in 2003, and
approximately $30 to our post-retirement benefit plans.
The contractual cash obligations table above primarily included long-term balance sheet reserves related to asset retirement costs and deferred
compensation accruals. Payment information related to our asset retirement costs has been presented based on the termination date of the
associated lease contracts. Payment information related to our deferred compensation accruals has been presented based on the anticipated
retirement dates of the employees participating in the programs.
We agreed with JDS that if we purchased a minimum amount of designated products determined as a percentage of our total purchases for such
products during the period from January 1, 2001 to December 31, 2003, we would earn consideration from JDS as a reduction, in whole or in
part, of the deferred consideration otherwise payable in our common shares to JDS. We believe that our purchases over the term of the
purchase arrangement were sufficient to meet the required measurement metrics to December 31, 2003. No amounts relating to this
arrangement have been reflected in the contractual cash obligations table above. See note 3 “Restatement” to the accompanying consolidated
financial statements for information regarding changes in the accounting for the deferred consideration.
Generally, customer financing arrangements may include financing with deferred payment terms in connection with the sale of our products
and services, as well as funding for non-product costs associated with network installation and integration of our products and services. We
may also provide funding for working capital purposes and equity financing. The following table provides information related to our customer
financing commitments, excluding our discontinued operations as of:
In 2003, we entered into certain agreements to restructure and/or settle various customer financing and related receivables. As a result of these
transactions, we received cash consideration of approximately $230 to settle outstanding receivables of approximately $610 (with a net
carrying value of approximately $120). Also, we recorded net customer financing bad debt recoveries of $113 as a result of these favorable
settlements and adjustments to other existing provisions.
During 2003, we reduced undrawn commitments by $651 primarily as a result of the expiration or cancellation of commitments and changing
customer business plans. As of December 31, 2003, approximately $108 of the $177 in undrawn commitments was not available for funding
under the terms of our financing agreements.
We continue to regularly assess the levels of our customer financing provisions based on a loan-by-loan review to evaluate whether the terms
of each loan reflect current market conditions. We review the ability of our customers to meet their repayment obligations and determine our
provisions accordingly. Commitments to extend future financing generally have conditions for funding, fixed expiration or termination dates
and specific interest rates and purposes. We cannot predict with certainty the extent to which our customers will satisfy the applicable
conditions for funding, and subsequently request funding, prior to the termination date of the commitments. We are currently directly
supporting most outstanding balances and expect to initially fund any future commitments in the normal course of business from our working
capital.
77
P
ension,
p
ost-
r
etirement and
p
ost-em
p
lo
y
ment obli
g
ations
Other lon
g
-
t
erm liabilities re
f
lected on the balance sheets
JDS
p
urchase arran
g
ement
Customer financin
g
December 31,
2003 2002
Drawn and outstandin
g
—
g
ross $ 401 $ 1,120
Provisions for doubtful accounts (281) (824)
Drawn and outstandin
g
—
ne
t
120 296
Undrawn commitments
(a)
180 831
Total customer financing $ 300 $ 1,127
(a) Included short-term and long-term amounts. Short-term and long-term amounts were included in accounts receivable — net and other assets, respectively, in the
consolidated balance sheets.
(b) On January 8, 2004, Nortel Networks renegotiated an agreement with a certain customer which reduced Nortel Networks aggregate undrawn customer financing
commitments from $177 to $69.