Nortel restates financials yet again

Nortel restates financials yet again

Nortel to restate financial results for 2004, 2005 and the first nine months of 2006

Nortel this week said it will engage in another round of financial restatements and delay the filing of its 2006 annual report because of actuarial errors in pension and post retirement plans.

Nortel will restate financial results for 2004, 2005 and the first nine months of 2006, and will make adjustments to periods before 2004. The company also said it now expects to file its 2006 annual report by March 16; previously Nortel had said it expected to file the report in late February.

The restatements will have no material impact on the company's Q4 2006 performance, Nortel said.

"Today's announcement does not slow our progress or divert our focus," said Mike Zafirovski, Nortel president and CEO, in a statement.

The restatement primarily will correct third-party actuarial calculation errors in Nortel's North American pension and post retirement plans, as well as revenue incorrectly recognized in previous periods that should have been deferred to later periods. Many of the errors have come to light as a result of management having implemented remedial measures to improve Nortel's internal control over financial reporting, the company said.

Nortel expects revisions to its previously reported nine-months numbers for 2006 -- resulting in increases in revenues and improvements in net earnings of US$24 million and US$15 million, respectively -- as well as revisions to its previously reported 2005 and 2004 financial results, reflecting reductions in revenue of US$28 million and US$33 million, and increases in net loss of US$87 million and US$42 million, respectively.

For results before 2004, Nortel expects revisions to reduce revenue by US$27 million and net earnings by US$5 million, in the aggregate.

Meanwhile, Q4 2006 revenue is expected to be US$3.32 billion, an increase of 10.2% over the US$3.01 billion recorded for Q4 2005.

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