Nortel Networks Ltd. plans to restate its financial results for 2003, 2004 and the first nine months of 2005, and w...
March 10, 2006
Nortel Networks Ltd. plans to restate its financial results for 2003, 2004 and the first nine months of 2005, and will have adjustments to periods prior to 2003, primarily due to revenue incorrectly recognized in prior periods that should have been deferred to future periods.
The news comes on the same day the company reported a net loss in the fourth quarter of 2005 of US$2.2 billion, which is associated with the settling of two class-action lawsuits revolving around Nortel’s past accounting troubles.
The restatement adjustments were identified primarily through an extensive contract review undertaken as part of remedial efforts to compensate for previously reported internal control deficiencies and through discussions with their independent auditors as part of the audit of the 2005 financial results.
“Our priority is to have accurate financial information,” said Mike Zafirovski, Nortel’s president and CEO.
“Although the need to restate certain financial statements is unfortunate, it’s the right thing to do. This revenue is real — it was recognized in the wrong periods.
“The restatements do not affect the company’s cash position. The extensive contract review we undertook in 2005 underscores our commitment to ensure a solid foundation going forward.”