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8-K - FORM 8-K - NORTEL NETWORKS CORP | d8k.htm |
Exhibit 99.1
www.nortel.com
FOR IMMEDIATE RELEASE: | November 12, 2010 |
For more information:
Media Relations
MediaRelations@nortel.com
Nortel Reports Financial Results for the Third Quarter 2010
| Through the creditor protection process, Nortel has sold substantially all of its businesses generating approximately $3.2 billion in net proceeds for the benefit of its creditors, and preserving 13,000 jobs for employees with the purchasers of the businesses |
| Cash position as of September 30, 2010 continues to reflect restructuring progress |
| Focus remains on maximizing value for stakeholders, including the provision of transition services to purchasers, assessing strategic alternatives to maximize value of Nortels extensive intellectual property portfolio, sale of remaining assets, wind down of global operations, ongoing cost reduction, and other significant restructuring matters |
Financial Presentation and Q3 2010 Results
The presentation of our financial results continues to be significantly impacted by accounting conclusions resulting from developments in the creditor protection process. The third quarter loss of $649 million includes non-cash charges of approximately $490 million resulting from the remeasurement of the liabilities related to the Canadian defined benefit pension plans in conjunction with the transfer of the plans pursuant to the terms of the previously announced court-approved Settlement Agreement.
| Cash balance as of September 30, 2010 was $1.7 billion, flat from June 30, 2010, plus restricted cash balance of $3.2 billion of primarily divestiture proceeds |
| Third quarter revenues of $85 million |
TORONTONortel* Networks Corporation [OTC: NRTLQ] announced its results for the third quarter 2010. Results were prepared in accordance with United States generally accepted accounting principles (GAAP) in U.S. dollars.
As of May 31, 2010, Nortel determined that it no longer had significant influence over the operating and financial policies of the EMEA Subsidiaries primarily due to the significance of the completed business divestitures. As a result, Nortel accounted for the EMEA Subsidiaries as an investment using the cost method as of June 1, 2010. Commencing June 1, 2010, the financial results of the EMEA Subsidiaries are no longer included in Nortels financial results. In the context of the Creditor Protection Proceedings, Nortel continues to evaluate the method of accounting for all of its subsidiaries.
As a result of the divestitures of: (1) the Code Division Multiple Access (CDMA)/LTE Access and Enterprise Solutions (ES) businesses in the fourth quarter of 2009; (2) the Optical Networking and Carrier Ethernet, and Global System for Mobile communications (GSM)/GSM for Railways (GSM-R) businesses in the first quarter of 2010; and (3) the Carrier VoIP and Application Solutions (CVAS) business and Nortels interest in the LGN joint venture in the second quarter of 2010, only the residual contracts related to those businesses were included in the respective reportable segments. The MEN reportable segment also continued to include the multiservice switching products and related services (MSS) business. As announced on September 25, 2010,
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Nortel entered into asset sale agreements with Ericsson, the successful acquirer at auction, for the sale of the MSS business. Nortel and Ericsson are working toward a successful transition and closing of the transaction.
The ES and LGN businesses are presented as discontinued operations while the other residual businesses are presented as continuing operations. The discussion below relates to Results from Continuing Operations under U.S. GAAP and excludes the financial results of the EMEA Subsidiaries. As a result, the comparative segment information has been recast to reflect this change.
Financial Summary
Nortels overall financial performance in the third quarter of 2010 was impacted by the sale of substantially all of its businesses in prior quarters.
| Revenues in the third quarter of $85 million, with declines year over year in all segments and in all regions. |
| Gross margin of negative 3.5 percent in the third quarter, a decrease of 49.6 percentage points from the year ago quarter. |
| SG&A expense in the third quarter of $108 million, a decrease of 23.4 percent from the year ago quarter. |
| R&D expense in the third quarter of $3 million, a decrease of 98.3 percent from the year ago quarter. |
| Cash balance as of September 30, 2010 was $1.7 billion, flat from June 30, 2010. |
Segment Revenues
Segment revenues from continuing operations were $85 million in the third quarter of 2010 compared to $942 million for the third quarter of 2009, reflecting a reduction of 90.1% percent as a result of the business divestitures.
Segment Revenues B/(W)
Q3 2010 | YoY | |||||||
Wireless Networks (WN) |
$ | 31 | (95 | )% | ||||
Carrier VoIP and Application Solutions (CVAS) |
4 | (97 | )% | |||||
Metro Ethernet Networks (MEN) |
48 | (75 | )% | |||||
Other |
2 | |||||||
Total Segment Revenues from Continuing Operations |
$ | 85 | (90 | )% | ||||
Discontinued Operations |
$ | 0 | (100 | )% | ||||
Discontinued operations revenues from ES in the third quarter of 2010 were nil, a decrease of 100 percent compared with the year ago quarter as a result of the divestiture of the ES, NGS and DiamondWare businesses in the fourth quarter of 2009.
Gross Margin
Gross margin declined to negative 3.5 percent of revenues in the third quarter of 2010 compared to 46.1 percent for the third quarter of 2009, primarily as a result of the business divestitures. Gross margin was also impacted by the ongoing costs related to delivery of the transition services agreements, the recovery of which is recorded in other operating income.
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Operating Expenses
Operating Expenses B/(W)
Q3 2010 | YoY | |||||||
SG&A |
$ | 108 | 23 | % | ||||
R&D |
3 | 98 | % | |||||
Total Operating Expenses |
$ | 111 | 65 | % | ||||
A focus on reducing costs and the business divestitures resulted in lower operating expenses compared to the year ago quarter. Operating expenses were $111 million in the third quarter of 2010 compared to $314 million for the third quarter of 2009. Operating expenses were also impacted by a change in the methodology of allocating certain SG&A expenses related to corporate overhead costs to R&D expense and cost of revenues.
SG&A expense was $108 million in the third quarter of 2010, compared to $141 million for the third quarter of 2009. R&D expense was $3 million in the third quarter of 2010, compared to $173 million for the third quarter of 2009. These reductions were a result of the reasons described above.
Net Loss
The Company reported a net loss in the third quarter of 2010 of $649 million compared to a net loss of $508 million in the third quarter of 2009.
The net loss included reorganization costs of $529 million, interest expense of $77 million and other expense of $18 million, partially offset by other operating income of $94 million comprised primarily of billings under transition services agreements.
The $529 million in reorganization costs primarily related to a charge of $490 resulting from the remeasurement of liabilities related to Nortels Canadian defined pension plans triggered by the cessation of all future pension accruals immediately prior to the transfer of the plans to a replacement administrator appointed by the Office of the Superintendent of Financial Services pursuant to the terms of the previously announced court-approved Settlement Agreement regarding former Canadian employees. The remeasurement utilized wind-up basis assumptions resulting in a significant increase in the liabilities.
Reorganization costs also included asset impairments of $22 million and a loss of $25 million related to purchase price adjustments from business divestitures, partially offset by a recovery of $18 million related to the fair value of certain long-lived assets. Other expense of $18 million was comprised primarily of a currency exchange loss of $44 million partially offset by rental income of $21 million.
The net loss in the third quarter of 2009 of $508 million included a loss from discontinued operations of $157 million, $159 million equity in net loss of EMEA Subsidiaries, reorganization items of $224 million, and interest expense of $75 million, other expenses of $57 million, and other operating charges of $44 million.
Cash
The cash balance as of September 30, 2010 was $1.7 billion and restricted cash was $3.2 billion primarily related to the business divestiture proceeds, essentially flat from June 30, 2010. The slightly higher cash balance was primarily due to a net favorable foreign exchange impact of $12 million, cash from investing activities of $8 million and cash from operating activities of $7 million, partially offset by cash used in financing activities of $9 million primarily related to dividends paid by subsidiaries to non-controlling interests.
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As previously announced, Nortel does not expect that the Companys common shareholders or the NNL preferred shareholders will receive any value from the creditor protection proceedings and expects that the proceedings will result in the cancellation of these equity interests.
* * * * * *.
About Nortel
For more information, visit Nortel on the Web at www.nortel.com. For the latest Nortel news, visit www.nortel.com/news.
About Nortel
Certain statements in this press release may contain words such as could, expects, may, should, will, anticipates, believes, intends, estimates, targets, plans, envisions, seeks and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on Nortels current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which Nortel operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. Nortels assumptions, although considered reasonable by Nortel at the date of this press release, may prove to be inaccurate and consequently Nortels actual results could differ materially from the expectations set out herein.
Actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following: (i) risks and uncertainties relating to the Creditor Protection Proceedings including: (a) risks associated with Nortels ability to: stabilize the business and maximize the value of Nortels businesses; obtain required approvals and successfully consummate pending and future divestitures; ability to satisfy transition services agreement obligations in connection with divestiture of operations; successfully conclude ongoing discussions for the sale of Nortels other assets or businesses; develop, obtain required approvals for, and implement a court approved plan; resolve ongoing issues with creditors and other third parties whose interests may differ from Nortels; generate cash from operations and maintain adequate cash on hand in each of its jurisdictions to fund operations within the jurisdiction during the Creditor Protection Proceedings; if necessary, arrange for sufficient debtor-in-possession or other financing; continue to have cash management arrangements and obtain any further required approvals from the Canadian Monitor, the U.K. Administrators, the French Administrator, the Israeli Administrators, the U.S. Creditors Committee, or other third parties; raise capital to satisfy claims, including Nortels ability to sell assets to satisfy claims against Nortel; maintain R&D investments; realize full or fair value for any assets or business that are divested; utilize net operating loss carryforwards and certain other tax attributes in the future; avoid the substantive consolidation of NNIs assets and liabilities with those of one or more other U.S. Debtors; attract and retain customers or avoid reduction in, or delay or suspension of, customer orders as a result of the uncertainty caused by the Creditor Protection Proceedings; maintain market share, as competitors move to capitalize on customer concerns; operate Nortels business effectively under the new organizational structure, and in consultation with the Canadian Monitor, and the U.S. Creditors Committee and work effectively with the U.K. Administrators, French Administrator and Israeli Administrators in their respective administration of the EMEA businesses subject to the Creditor Protection Proceedings; continue as a going concern; actively and adequately communicate on and respond to events, media and rumors associated with the Creditor Protection Proceedings that could adversely affect Nortels relationships with customers, suppliers, partners and employees; retain and incentivize key employees and attract new employees as may be needed; retain, or if necessary, replace major suppliers on acceptable terms and avoid disruptions in Nortels supply chain; maintain current relationships with reseller partners, joint venture partners and strategic alliance partners; obtain court orders or approvals with respect to motions filed from time to time; resolve claims made against Nortel in connection with the Creditor Protection Proceedings for amounts not exceeding Nortels recorded liabilities subject to compromise; prevent third parties from obtaining court orders or approvals that are contrary to Nortels interests; reject, repudiate or terminate contracts; and (b) risks and uncertainties associated with: limitations on actions against any Debtor during the Creditor Protection Proceedings; the values, if any, that will be prescribed pursuant to any court approved plan to outstanding Nortel securities and, in particular, that Nortel does not expect that any value will be prescribed to the NNC common shares or the NNL preferred shares in any such plan; the delisting of NNC common shares from the NYSE; and the delisting of NNC common shares and NNL preferred shares from the TSX; and (ii) risks and uncertainties relating to Nortels business including: the sustained economic downturn and volatile market conditions and resulting negative impact on Nortels business, results of operations and financial position and its ability to accurately forecast its results and cash position; cautious capital spending by customers as a result of factors including current economic uncertainties; fluctuations in foreign currency exchange rates; any requirement to make larger contributions to defined benefit plans in the future; a high level of debt, arduous or restrictive terms and conditions related to accessing certain sources of funding; the sufficiency of workforce and cost reduction initiatives; any negative developments associated with Nortels suppliers and contract manufacturers including Nortels reliance on certain suppliers for key optical networking solutions components and on one supplier for most of its manufacturing and design functions; potential penalties, damages or cancelled customer contracts from failure to meet contractual obligations including delivery and installation deadlines and any defects or errors in Nortels current or planned products; significant competition, competitive pricing practices, industry consolidation, rapidly changing technologies, evolving industry standards, frequent new product introductions and short product life cycles, and other trends and industry characteristics affecting the telecommunications industry; any material, adverse affects on Nortels performance if its expectations regarding market demand for particular products prove to be wrong; potential higher operational and financial risks associated with Nortels international operations; a failure to protect Nortels intellectual property rights; any adverse legal judgments, fines, penalties or settlements related to any significant pending or future litigation actions; failure to maintain integrity of Nortels information systems; changes in regulation of the Internet or other regulatory changes; and Nortels potential inability to maintain an effective risk management strategy.
For additional information with respect to certain of these and other factors, see Nortels Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the SEC. Unless otherwise required by applicable securities laws, Nortel disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
* | Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks. |
Note that Nortel will not be hosting a teleconference/audio webcast to discuss third quarter 2010 results.
NORTEL NETWORKS CORPORATION
(Under Creditor Protection Proceedings as of January 14, 2009)
Condensed Consolidated Statements of Operations (unaudited)
(U.S. GAAP; Millions of U.S. dollars, except per share amounts)
Three months ended | Nine months ended | |||||||||||||||
September 30, 2010 |
September 30, 2009 |
September 30, 2010 |
September 30, 2009 |
|||||||||||||
Revenues: |
||||||||||||||||
Products |
$ | 72 | $ | 865 | $ | 478 | $ | 2,582 | ||||||||
Services |
13 | 77 | 114 | 223 | ||||||||||||
85 | 942 | 592 | 2,805 | |||||||||||||
Cost of revenues |
||||||||||||||||
Products |
81 | 484 | 452 | 1,476 | ||||||||||||
Services |
7 | 24 | 40 | 75 | ||||||||||||
88 | 508 | 492 | 1,551 | |||||||||||||
Gross profit |
(3 | ) | 434 | 100 | 1,254 | |||||||||||
-3.5 | % | 46.1 | % | 16.9 | % | 44.7 | % | |||||||||
Selling, general and administrative expense |
108 | 141 | 409 | 494 | ||||||||||||
Research and development expense |
3 | 173 | 106 | 574 | ||||||||||||
Management operating margin |
(114 | ) | 120 | (415 | ) | 186 | ||||||||||
-134.1 | % | 12.7 | % | -70.1 | % | 6.6 | % | |||||||||
Amortization of intangible assets |
| (1 | ) | | (2 | ) | ||||||||||
Gain on sale of businesses and assets |
| 15 | 3 | (1 | ) | |||||||||||
Other operating expense (income)net |
(94 | ) | 44 | (250 | ) | 41 | ||||||||||
Total operating expenses |
17 | 372 | 268 | 1,106 | ||||||||||||
Operating earnings (loss) |
(20 | ) | 62 | (168 | ) | 148 | ||||||||||
Other income (expense)net |
(18 | ) | 57 | 14 | 17 | |||||||||||
Interest expense |
||||||||||||||||
Long-term debt |
(77 | ) | (75 | ) | (227 | ) | (224 | ) | ||||||||
Other |
| | | (1 | ) | |||||||||||
Earnings (loss) from operations before reorganization items, income taxes, equity in net earnings of associated companies and Equity Investees |
(115 | ) | 44 | (381 | ) | (60 | ) | |||||||||
Reorganization itemsnet |
(529 | ) | (224 | ) | (1,420 | ) | (290 | ) | ||||||||
Earnings (loss) from operations before incomes taxes and equity in net earnings of associated companies and Equity Investees |
(644 | ) | (180 | ) | (1,801 | ) | (350 | ) | ||||||||
Income tax benefit (expense) |
4 | (8 | ) | 37 | (21 | ) | ||||||||||
Earnings (loss) from continuing operations before equity in net earnings of associated companies and Equity Investees |
(640 | ) | (188 | ) | (1,764 | ) | (371 | ) | ||||||||
Equity in net earnings (loss) of associated companiesnet of tax |
| (2 | ) | (1 | ) | (3 | ) | |||||||||
Equity in net loss of Equity Investee (a) |
| (159 | ) | (50 | ) | (448 | ) | |||||||||
Net loss from continuing operations |
(640 | ) | (349 | ) | (1,815 | ) | (822 | ) | ||||||||
Net earnings (loss) from discontinued operationsnet of tax (b) |
(5 | ) | (157 | ) | 28 | (451 | ) | |||||||||
Net loss |
(645 | ) | (506 | ) | (1,787 | ) | (1,273 | ) | ||||||||
Income attributable to noncontrolling interests |
(4 | ) | (2 | ) | (11 | ) | (16 | ) | ||||||||
Net loss attributable to Nortel Networks Corporation |
$ | (649 | ) | $ | (508 | ) | $ | (1,798 | ) | $ | (1,289 | ) | ||||
Average shares outstanding (millions)Basic |
499 | 499 | 499 | 499 | ||||||||||||
Average shares outstanding (millions)Diluted |
499 | 499 | 499 | 499 | ||||||||||||
Basic and diluted earnings (loss) per common sharecontinuing operations |
$ | (1.29 | ) | $ | (0.70 | ) | $ | (3.66 | ) | $ | (1.68 | ) | ||||
Basic and diluted earnings (loss) per common sharediscontinued operations |
$ | (0.01 | ) | $ | (0.32 | ) | $ | 0.06 | $ | (0.90 | ) | |||||
Total basic and diluted earnings (loss) per common share |
$ | (1.30 | ) | $ | (1.02 | ) | $ | (3.60 | ) | $ | (2.58 | ) | ||||
(a) | Nortel determined that, as of the Petition Date, the presentation of the Equity Investees under the equity method of accounting was more appropriate based on the conclusion that Nortel exercised significant influence over those entities. The equity method of accounting resulted in the financial position and results of operations of the Equity Investees being presented net on a single line on the balance sheet and statement of operations, respectively, versus being combined gross into each individual line item. As of May 31, 2010, the Equity Investees are accounted for under the cost method of accounting. |
(b) | The ES business as well as the shares of NGS and DiamondWare are presented as discontinued operations beginning with the quarter ended September 30, 2009. The LGN business is presented as discontinued operations beginning with the quarter ended June 30, 2010. Accordingly, comparative periods have been recast to give effect for the changes in presentation. |
NORTEL NETWORKS CORPORATION
(Under Creditor Protection Proceedings as of January 14, 2009)
Condensed Consolidated Balance Sheets (unaudited)
(U.S. GAAP; Millions of U.S. dollars, except per share amounts)
September 30, 2010 |
December 31, 2009 |
|||||||
ASSETS | ||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 1,686 | $ | 1,998 | ||||
Short-term investments |
| 18 | ||||||
Restricted cash and cash equivalents |
177 | 92 | ||||||
Accounts receivablenet |
193 | 625 | ||||||
Inventoriesnet |
29 | 183 | ||||||
Deferred income taxesnet |
| 24 | ||||||
Other current assets |
272 | 348 | ||||||
Assets held for sale |
269 | 272 | ||||||
Assets of discontinued operations |
18 | 148 | ||||||
Total current assets |
2,644 | 3,708 | ||||||
Restricted cash |
3,062 | 1,928 | ||||||
Investments |
| 117 | ||||||
Plant and equipmentnet |
132 | 688 | ||||||
Goodwill |
| 9 | ||||||
Intangible assetsnet |
| 51 | ||||||
Deferred income taxesnet |
| 10 | ||||||
Other assets |
112 | 177 | ||||||
Total assets |
$ | 5,950 | $ | 6,688 | ||||
LIABILITIES AND SHAREHOLDERS DEFICIT | ||||||||
Current liabilities |
||||||||
Trade and other accounts payable |
$ | 155 | $ | 294 | ||||
Payroll and benefit-related liabilities |
85 | 128 | ||||||
Contractual liabilities |
82 | 93 | ||||||
Restructuring liabilities |
6 | 4 | ||||||
Other accrued liabilities |
145 | 660 | ||||||
Liabilities held for sale |
9 | 205 | ||||||
Liabilities of discontinued operations |
29 | 53 | ||||||
Total current liabilities |
511 | 1,437 | ||||||
Long-term liabilities |
||||||||
Long-term debt |
| 41 | ||||||
Investment in net liabilities of Equity Investees |
| 534 | ||||||
Deferred income taxesnet |
| 7 | ||||||
Other liabilities |
50 | 226 | ||||||
Total long-term liabilities |
50 | 808 | ||||||
Liabilities subject to compromise |
9,317 | 7,358 | ||||||
Liabilities subject to compromise of discontinued operations |
117 | 129 | ||||||
Total liabilities |
9,995 | 9,732 | ||||||
SHAREHOLDERS DEFICIT | ||||||||
Common shares, without par valueAuthorized shares: unlimited; |
35,604 | 35,604 | ||||||
Issued and outstanding shares: 498,206,366 as of September 30, 2010 and December 31, 2009 respectively |
||||||||
Additional paid-in capital |
3,597 | 3,623 | ||||||
Accumulated deficit |
(43,675 | ) | (41,876 | ) | ||||
Accumulated other comprehensive income |
(189 | ) | (1,124 | ) | ||||
Total Nortel Networks Corporation shareholders deficit |
(4,663 | ) | (3,773 | ) | ||||
Noncontrolling interest |
618 | 729 | ||||||
Total shareholders deficit |
(4,045 | ) | (3,044 | ) | ||||
Total liabilities and shareholders deficit |
$ | 5,950 | $ | 6,688 | ||||
NORTEL NETWORKS CORPORATION
(Under Creditor Protection Proceedings as of January 14, 2009)
Condensed Consolidated Statements of Cash Flows
(U.S. GAAP; Millions of U.S. dollars)
Three months ended | Nine months ended | |||||||||||||||
September 30, 2010 |
September 30, 2009 |
September 30, 2010 |
September 30, 2009 |
|||||||||||||
Cash flows from (used in) operating activities |
||||||||||||||||
Net earnings (loss) attributable to Nortel Networks Corporation |
$ | (649 | ) | $ | (508 | ) | $ | (1,798 | ) | $ | (1,289 | ) | ||||
Net (earnings) loss from discontinued operationsnet of tax |
5 | 157 | $ | (28 | ) | $ | 451 | |||||||||
Adjustments to reconcile net earnings (loss) to net cash from (used in) operating activities, net of effects from acquisitions and divestitures of businesses: |
||||||||||||||||
Amortization and depreciation |
15 | 38 | 51 | 139 | ||||||||||||
Non-cash portion of cost reduction activities |
| 10 | | 18 | ||||||||||||
Equity in net earnings of associated companiesnet of tax |
| 2 | 1 | 3 | ||||||||||||
Equity in net (earnings) loss of Equity Investees |
| 159 | 50 | 448 | ||||||||||||
Share-based compensation expense |
| | | 73 | ||||||||||||
Deferred income taxes |
| 1 | (6 | ) | 8 | |||||||||||
Pension and other accruals |
30 | 131 | 83 | 153 | ||||||||||||
Loss on sales of business and impairment of assetsnet |
| 13 | 2 | 1 | ||||||||||||
Income (loss) attributable to noncontrolling interestsnet of tax |
4 | 2 | 11 | 16 | ||||||||||||
Reorganization itemsnon cash |
481 | 203 | 1,279 | 265 | ||||||||||||
Othernet |
32 | (272 | ) | 424 | (479 | ) | ||||||||||
Change in operating assets and liabilities: Other |
125 | 140 | 129 | 418 | ||||||||||||
Net cash from (used in) operating activities of continuing operations |
43 | 76 | 198 | 225 | ||||||||||||
Net cash from (used in) operating activities of discontinued operations |
(36 | ) | 48 | (377 | ) | (4 | ) | |||||||||
Net cash from (used in) operating activities |
7 | 124 | (179 | ) | 221 | |||||||||||
Cash flows from (used in) investing activities |
||||||||||||||||
Expenditures for plant and equipment |
(1 | ) | (7 | ) | (8 | ) | (26 | ) | ||||||||
Proceeds on disposals of plant and equipment |
| | | 87 | ||||||||||||
Change in restricted cash and cash equivalents |
(43 | ) | (39 | ) | (1,221 | ) | (82 | ) | ||||||||
Decrease in short-term and long-term investments |
| | 24 | 40 | ||||||||||||
Acquisitions of investments and businessesnet of cash acquired |
(1 | ) | (1 | ) | (3 | ) | (1 | ) | ||||||||
Proceeds from sales of investments and businesses and assetsnet |
17 | | 987 | 6 | ||||||||||||
Net cash from (used in) investing activities of continuing operations |
(28 | ) | (47 | ) | (221 | ) | 24 | |||||||||
Net cash from (used in) investing activities of discontinued operations |
36 | (3 | ) | 203 | 7 | |||||||||||
Net cash from (used in) investing activities |
8 | (50 | ) | (18 | ) | 31 | ||||||||||
Cash flows from (used in) financing activities |
||||||||||||||||
Dividends paid, including paid by subsidiaries to noncontrolling interests |
(8 | ) | | (19 | ) | (6 | ) | |||||||||
Decrease in notes payable |
| | | (41 | ) | |||||||||||
Repayment of capital leases |
(1 | ) | (2 | ) | (4 | ) | (7 | ) | ||||||||
Net cash from (used in) financing activities of continuing operations |
(9 | ) | (2 | ) | (23 | ) | (54 | ) | ||||||||
Net cash from (used in) financing activities of discontinued operations |
| | (77 | ) | (29 | ) | ||||||||||
Net cash from (used in) financing activities |
(9 | ) | (2 | ) | (100 | ) | (83 | ) | ||||||||
Effect of foreign exchange rate changes on cash and cash equivalents |
12 | 41 | 11 | 51 | ||||||||||||
Reduction of cash and cash equivalents of deconsolidated subsidiaries |
| | (26 | ) | | |||||||||||
Net cash from (used in) continuing operations |
18 | 68 | (61 | ) | 246 | |||||||||||
Net cash from (used in) discontinued operations |
| 45 | (251 | ) | (26 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents |
18 | 113 | (312 | ) | 220 | |||||||||||
Cash and cash equivalents at beginning of period |
1,668 | 1,743 | 1,998 | 2,397 | ||||||||||||
Less cash and cash equivalents of Equity Investees |
| | | (761 | ) | |||||||||||
Adjusted cash and cash equivalents at beginning of period |
1,668 | 1,743 | 1,998 | 1,636 | ||||||||||||
Cash and cash equivalents at end of period |
1,686 | 1,856 | 1,686 | 1,856 | ||||||||||||
Less cash and cash equivalents of discontinued operations at end of period |
| (346 | ) | | (346 | ) | ||||||||||
Cash and cash equivalents of continuing operations at end of period |
$ | 1,686 | $ | 1,510 | $ | 1,686 | $ | 1,510 | ||||||||
NORTEL NETWORKS CORPORATION
(Under Creditor Protection Proceedings as of January 14, 2009)
Consolidated Financial Information (unaudited)
(U.S. GAAP; Millions of U.S. dollars)
Segmented revenues
The following table summarizes our revenue and management operating margin by segment. The financial information for our business segments does not include the results of the Equity Investees, which is consistent with the way we manage our business segments.
Three months ended | Nine months ended | |||||||||||||||
September 30, 2010 |
September 30, 2009 |
September 30, 2010 |
September 30, 2009 |
|||||||||||||
Segment Revenues |
||||||||||||||||
Wireless Networks |
$ | 31 | $ | 601 | $ | 191 | $ | 1,781 | ||||||||
Carrier VoIP and Application Systems |
4 | 151 | 166 | 381 | ||||||||||||
Metro Ethernet Networks |
48 | 190 | 233 | 643 | ||||||||||||
Total reportable segments |
83 | 942 | 590 | 2,805 | ||||||||||||
Other |
2 | | 2 | | ||||||||||||
Total segment revenues |
85 | 942 | 592 | 2,805 | ||||||||||||
Management Operating Margin |
||||||||||||||||
Wireless Networks |
$ | 16 | $ | 187 | $ | 83 | $ | 453 | ||||||||
Carrier VoIP and Application Systems |
(4 | ) | 14 | (52 | ) | (19 | ) | |||||||||
Metro Ethernet Networks |
5 | (22 | ) | (28 | ) | (39 | ) | |||||||||
Total reportable segments |
17 | 179 | 3 | 395 | ||||||||||||
Other |
(131 | ) | (59 | ) | (418 | ) | (209 | ) | ||||||||
Total Management Operating Margin |
(114 | ) | 120 | (415 | ) | 186 | ||||||||||
-134.12 | % | 12.74 | % | -70.10 | % | 6.63 | % | |||||||||
Amortization of intangible assets |
| (1 | ) | | (2 | ) | ||||||||||
Gain (loss) on sales of businesses and assets |
| 15 | 3 | (1 | ) | |||||||||||
Other operating expense (income)net |
(94 | ) | 44 | (250 | ) | 41 | ||||||||||
Total operating loss |
(20 | ) | 62 | (168 | ) | 148 | ||||||||||
Other income (expense)net |
(18 | ) | 57 | 14 | 17 | |||||||||||
Interest expense |
(77 | ) | (75 | ) | (227 | ) | (225 | ) | ||||||||
Reorganization itemsnet |
(529 | ) | (224 | ) | (1,420 | ) | (290 | ) | ||||||||
Income tax benefit (expense) |
4 | (8 | ) | 37 | (21 | ) | ||||||||||
Equity in net earnings (loss) of associated companiesnet of tax |
| (2 | ) | (1 | ) | (3 | ) | |||||||||
Equity in net earnings (loss) of Equity Investees |
| (159 | ) | (50 | ) | (448 | ) | |||||||||
Net earnings (loss) attributable to Nortel Networks Corporation from continuing operations |
$ | (640 | ) | $ | (349 | ) | $ | (1,815 | ) | $ | (822 | ) | ||||
Geographic revenues
The following table summarizes our geographic revenues based on the location of the customer for:
Three months ended | Nine months ended | |||||||||||||||
September 30, 2010 |
September 30, 2009 |
September 30, 2010 |
September 30, 2009 |
|||||||||||||
Revenues |
||||||||||||||||
United States |
$ | 30 | $ | 730 | $ | 341 | $ | 1,972 | ||||||||
EMEA (a) |
1 | 2 | 3 | 4 | ||||||||||||
Canada |
1 | 82 | 45 | 238 | ||||||||||||
Asia |
51 | 74 | 155 | 393 | ||||||||||||
CALA (b) |
2 | 54 | 48 | 198 | ||||||||||||
Total revenues |
$ | 85 | $ | 942 | $ | 592 | $ | 2,805 | ||||||||
(a) | Europe, Middle East and Africa |
(b) | Caribbean and Latin America |
Network Solutions revenues
The following table summarizes our revenue by segment. The financial information for our business segments does not include the results of the Equity Investees, which is consistent with the way we manage our business segments.
Three months ended | Nine months ended | |||||||||||||||
September 30, 2010 |
September 30, 2009 |
September 30, 2010 |
September 30, 2009 |
|||||||||||||
Revenues |
||||||||||||||||
Wireless Networks |
||||||||||||||||
CDMA solutions |
$ | 12 | $ | 441 | $ | 34 | $ | 1,348 | ||||||||
GSM and UMTS solutions |
19 | 160 | 157 | 433 | ||||||||||||
31 | 601 | 191 | 1,781 | |||||||||||||
Carrier VoIP and Application Systems |
||||||||||||||||
Circuit and packet voice solutions |
4 | 151 | 166 | 381 | ||||||||||||
4 | 151 | 166 | 381 | |||||||||||||
Metro Ethernet Networks |
||||||||||||||||
Optical networking solutions |
16 | 178 | 147 | 590 | ||||||||||||
Data networking and security solutions |
32 | 12 | 86 | 53 | ||||||||||||
48 | 190 | 233 | 643 | |||||||||||||
Other |
2 | | 2 | | ||||||||||||
Total revenues |
$ | 85 | $ | 942 | $ | 592 | $ | 2,805 | ||||||||