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| Name | Symbol | Market | Type |
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Hot Features
Premium
RNS No 6812h
NORTEL NETWORKS CORPORATION
27 October 1999
NORTEL NETWORKS REPORTS STRONG THIRD QUARTER RESULTS
:: Revenues Up 30 per cent to $5.4 Billion
:: Net Earnings from Operations Up 61 per cent to $380 Million
:: EPS From Operations Up 33 per cent to $0.28
Brampton, Ontario, October 26 - Nortel Networks(x) (NYSE/TSE: NT) today
reported results for the third quarter and first nine months of 1999.
Revenues increased 30 percent to $5.39 billion for the third quarter of 1999
of from $4.14 billion for the same period in 1998. Net earnings from
operations applicable to common shares (a) for the quarter were $380 million,
or $0.28 per share, compared to $236 million, or $0.21 per share, for the same
period in 1998, an increase in EPS from operations of 33 percent. Including
Acquisition Related Costs (a) and one-time gains and charges, Nortel Networks
recorded net earnings applicable to common shares in the third quarter of 1999
of $1 million or less than $0.01 per share.
"We are extremely pleased with our strong growth in the quarter which
reflected continued momentum with our carrier and service provider customers,"
said John Roth, president and chief executive officer, Nortel Networks. "The
strong demand for our optical, wireless, high speed access and new Internet
Protocol (IP) offerings further confirmed our leadership in creating a
high-performance Internet with new economics and increased speed, reliability
and quality.
Notable highlights since the beginning of third quarter included:
- Announcements related to the deployment of our market leading next
generation Internet capabilities, including
AT&T Wireless Services - Wireless Internet solutions (TDMA) for five states in
the western United States,
Cable & Wireless - open Optical Internet equipment and system integration for
its European network, and nationwide open Optical Internet solutions for its
national network in the United States,
Level 3 Communications - transport, Optical Internet (10 Gigabit) solutions
and network management for its IP optimised end-to-end international network,
Telia - high performance IP packet network in Sweden,
NET-tel Communications - Internet Telephony, packet voice gateway and
multimedia access platform for transition to next generation packet network in
the United States,
Prism Communications - expansion of its network across 33 markets in the U.S.
with Internet Telephony and high speed access solutions (DSL-based),
NaviNet - High speed access solutions (CVX1800) for Internet Access Services,
Bouygues Telecom - General Packet Radio Service (GPRS) trial in selected areas
of Paris,
One-2-One - market trial of GPRS solution in areas of London, to demonstrate
Wireless Internet capabilities using WAP (Wireless Application Protocol), and
Swisscom (TNet'99) - Optical Internet Solutions, Intranet Services and prime
contractor for the Telecom '99 network.
- Two product announcements concerning the next generation Optical Internet:
the OPTera(x) Packet Solution, which will bridge optical and packet networks
to deliver advanced optical switching and routing at speeds of up to 19
Terabits per second, and an even higher capacity optical transport using an 80
Gigabit per second platform and supporting up to 6.4 Terabits per second of
traffic on a single fibre. Expected to be available in 2000 and 2001
respectively, both solutions will be scalable from today's offerings.
- The acquisition announcements involving Clarify, a leader in front office
application solutions focussed on customer relationship management for
eBusiness and Periphonics, a leading provider of interactive voice and web
response solutions used in call centres and other network applications."
"These highlights, together with continued progress on key business
initiatives, including virtual integration of our business operations,
evolution of eBusiness initiatives and realigning the organisation to better
serve our customers, will position us well for continued success in 2000,"
Roth said.
Commenting specifically on the Corporation's anticipated U.S. GAAP financial
results for 2000, Frank Dunn, senior vice-president and chief financial
officer, Nortel Networks, said, "Given the strong quarter and our
strengthening momentum in the marketplace, we now expect that our revenue
growth will exceed the market growth of 14 to 15 percent by about 6 percentage
points, and that our growth in earnings per share from operations will be
faster than our revenue growth".
Revenue Breakdown
Segment revenues for the third quarter increased 32 percent for the Carrier
segment and 27 percent for the Enterprise segment over the same period in
1998.
Carrier segment revenues reflected continued strong increases in both optical
networks and high speed access solutions in the United States and Europe.
Sales of mobility systems increased significantly in Europe, the United States
and Asia Pacific more than off setting a decline in Brazil.
Enterprise segment revenues increased in the quarter, primarily driven by the
increase in enterprise data revenues due to the Bay Networks merger. Sales of
enterprise applications also increased in the United States and Europe more
than offsetting a decline in Canada.
Geographic revenues for the third quarter of 1999 increased 39 percent in the
United States and 24 percent outside the United States and Canada over the
third quarter 1998, while revenues in Canada declined 3 percent.
The overall increase in net earnings from operations for the quarter was
driven by revenue growth, higher gross profit and a decrease in the effective
tax rate.
The third quarter 1999 earnings specifically included one-time pre-tax net
gains of $110 million (primarily related to the divestiture and outsourcing of
certain operations as part of the strategy to streamline operations announced
in January 1999), one-time pre-tax charges of $103 million (primarily related
to asset writedowns and severance costs associated with the Enterprise
segment) and Acquisition Related Costs of $384 million (primarily related to
the Bay Networks intangible assets).
Nine-Month Results
For the first nine months of 1999, revenues increased 29 per cent to $15.22
billion from $11.81 billion for the same period in 1998. Net earnings from
operations applicable to common shares (a) for the first nine months were $970
million, or $0.72 per share, compared to $588 million, or $0.54 per share, for
the same period in 1998, an increase in EPS from operations of 33 per cent.
Including Acquisition Related Costs and one-time gains and charges, Nortel
Networks recorded a net loss of $614 million, or $0.46 per share, for the
first nine months of 1999.
Expenses
Selling, general and administrative ("SG&A") expenses in the quarter were $979
million, or 18.2 per cent of revenue, compared with $728 million, or 17.6 per
cent of revenue, in the third quarter of 1998. For the first nine months of
1999, SG&A expenses were $2.87 billion, or 18.9 per cent of revenue, compared
with $2.06 billion, or 17.5 per cent of revenues, in the first nine months of
1998. The increased SG&A expenses in the quarter primarily reflected the
higher SG&A expenses associated with Enterprise operations that have
traditionally higher spending levels, increased levels of customer financing
activity and investments to support Nortel Networks' enhanced global marketing
programs.
Research and development ("R&D") expenses were $755 million, or 14.0 per cent
of revenue, in the quarter, compared with $616 million, or 14.9 per cent of
revenue, in the third quarter of 1998. For the first nine months of 1999, R&D
expenses were $2.12 billion, or 13.9 per cent of revenues, compared with $1.80
billion, or 15.3 per cent of revenue, in the first nine months of 1998. The
increased R&D investments in the quarter reflected planned increases in the
Carrier and Enterprise segments focused on data networking and IP
technologies.
Nortel Networks is a global leader in telephony, data, wireless and wireline
solutions for the Internet. The Company had 1998 revenues of $17.6 billion and
serves carrier, service provider and enterprise customers globally. Today,
Nortel Networks is creating a high-performance Internet that is more reliable
and faster than ever before. It is redefining the economics and quality of
networking and the Internet through Unified Networks(x) that promise a new
era of collaboration, communications and commerce. Visit us at
www.nortelnetworks.com.
Certain information included in this press release is forward-looking and is
subject to important risks and uncertainties. The results or events predicted
in these statements may differ materially from actual results or events.
Factors which could cause results or events to differ from current
expectations include, among other things: the impact of price and product
competition; the dependence on new product development; the impact of rapid
technological and market change; the ability of Nortel Networks to integrate
the operations and technologies of acquired businesses in an effective manner;
general industry and market conditions and growth rates; international growth
and global economic conditions, particularly in emerging markets and including
interest rate and currency exchange rate fluctuations; unanticipated impact of
Year 2000 issues; and the impact of consolidations in the telecommunications
industry. For additional information with respect to certain of these and
other factors, see the reports filed by Nortel Networks with the United States
Securities and Exchange Commission. Nortel Networks disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
(a) Net earnings from operations applicable to common shares is defined as
reported net earnings applicable to common shares before "Acquisition Related
Costs" (the amortization of intangible assets from the acquisition of Bay
Networks, Inc. ("Bay Networks") and all subsequent acquisitions, and the
amortization of any purchased in-process research and development from prior
acquisitions) and one-time gains and charges.
(x) Nortel Networks, the Nortel Networks Globemark, Unified Networks, OPTera
and How the world shares ideas are trademarks of Nortel Networks.
NORTEL NETWORKS CORPORATION Condensed Consolidated Results (unaudited)
(millions of U.S. dollars except per share figures)
--------------------- --------------------
CDN GAAP CDN GAAP
Three months ended Nine months ended
September 30, September 30,
--------------------- --------------------
1999 1998 1999 1998
---------- -------- --------- ---------
Revenues................... $5,393 $4,141 $15,224 $11,807
Cost of revenues........... 3,099 2,346 8,669 6,811
---------- -------- --------- ---------
Gross profit............... 2,294 1,795 6,555 4,996
Selling, general and
administrative expense.... 979 728 2,873 2,064
Research and development
expense................... 755 616 2,122 1,801
Amortization of intangibles
Purchased in-process R&D. 71 321 672 713
Acquired technology...... 171 57 513 57
Goodwill................. 162 62 462 99
Special charges............ 103 388 165 420
---------- -------- --------- ---------
53 (377) (252) (158)
Investment and other income
- net..................... 33 130 112 195
Interest expense
Long-term debt........... (27) (28) (77) (87)
Other.................... (11) (36) (40) (81)
Gain on sale of businesses. 110 260 110 258
---------- -------- --------- ---------
Earnings (loss) before
income taxes.............. 158 (51) (147) 127
Income tax provision....... 150 130 446 332
---------- -------- --------- ---------
Net earnings (loss)........ 8 (181) (593) (205)
Dividends on preferred
shares.................... 7 8 21 23
---------- -------- --------- ---------
Net earnings (loss)
applicable to common
shares.................... $ 1 $ (189) $ (614) $(228)
---------- -------- --------- ---------
---------- -------- --------- ---------
Earnings (loss) per
common share.............. $ - $ (.17) $ (.46) $(.21)
---------- -------- --------- ---------
---------- -------- --------- ---------
Net earnings applicable
to common shares from
operations (x)............ $ 380 $ 236 $ 970 $ 588
---------- -------- --------- ---------
---------- -------- --------- ---------
Earnings per common share
from operations (x)....... $ .28 $ .21 $ .72 $ .54
---------- -------- --------- ---------
---------- -------- --------- ---------
Dividends declared per
common share.............. $ .0375 $ .0375 $ .1125 $.1125
---------- -------- --------- ---------
---------- -------- --------- ---------
Effective tax rate (xx).... 27.8 (+) 35.5 31.0 (+) 35.5
Weighted average number of per cent per cent per cent per cent
common shares outstanding
(millions)................ 1,359 1,144 1,347 1,082
(x) Excludes the impact of Acquisition Related Costs (the amortization
of intangible assets from Bay Networks, Inc. ("Bay Networks"), and all
subsequent acquisitions, and the amortization of purchased in-process research
and development from prior acquisitions) and one-time gains and charges.
(xx) Excludes the impact of Acquisition Related Costs.
(+) The decrease in the effective tax rate for the three months and nine
months ended September 30, 1999, was a consequence of a higher United States
tax deduction related to the exercise of stock options. Certain comparative
figures have been reclassified to conform with the current period's
presentation.
NORTEL NETWORKS CORPORATION Condensed Consolidated Results (unaudited)
Supplementary Information (millions of U.S. dollars except per share figures)
CDN GAAP
------------------------------------
For the three months ended
------------------------------------
9/30/99 9/30/99 9/30/98 Change
------ ------ ------ ------
(As Reported) A B C
Revenues............... $ 5,393 $ 5,393 $ 4,141 30 per cent
Cost of revenues....... $ 3,099 $ 3,099 $ 2,346 32 per cent
------ ------ ------
Gross profit............ 2,294 2,294 1,795 28 per cent
Selling, general and
administrative
expense................ 979 979 728
Research and
development expense.... 755 755 616
Amortization of
intangibles
Purchased
in-process R&D....... 71 - -
Acquired technology... 171 - -
Goodwill.............. 162 20 22
Special charges......... 103 - -
------ ------ ------
53 540 429
Investment and other
income - net........... 33 33 13
Interest expense
Long-term debt........ (27) (27) (28)
Other................. (11) (11) (36)
Gain on sale of
businesses............. 110 - -
------ ------ ------
Earnings before income
taxes.................. 158 535 378 42 per cent
Income tax provision.... 150 148 134
------ ------ ------
Net earnings............ 8 387 244 59 per cent
Dividends on preferred
shares................. 7 7 8
------ ------ ------
Net earnings applicable
to common shares....... $ 1 $ 380 $ 236 61 per cent
------ ------ ------
------ ------ ------
Earnings per common
share.................. $ - $ .28 $ .21 33 per cent
------ ------ ------
------ ------ ------
A - Excludes net charges of $ 379M for the impact of Acquisition
Related Costs and after tax one-time gains and charges.
B - Excludes net charges of $ 425M for the impact of Acquisition
Related Costs and after tax one-time gains and charges.
C - Represents the change between the three month periods ended
September 30, 1999 and September 30, 1998, which exclude the adjustments
discussed in points A and B above.
NORTEL NETWORKS CORPORATION
Condensed Consolidated Results (unaudited)
Supplementary Information
(millions of U.S. dollars except per share figures)
CDN GAAP
------------------------------------
For the nine months ended
------------------------------------
9/30/99 9/30/99 9/30/98 Change
------ ------ ------ ------
(As Reported) A B C
Revenues............... $ 15,224 $ 15,224 $ 11,807 29 per cent
Cost of revenues....... $ 8,669 $ 8,669 $ 6,811 27 per cent
------ ------ ------
Gross profit............ 6,555 6,555 4,996 31 per cent
Selling, general
and administrative
expense................ 2,873 2,873 2,064
Research and development
expense................ 2,122 2,122 1,801
Amortization of
intangibles
Purchased
in-process R&D....... 672 - -
Acquired technology... 513 - -
Goodwill.............. 462 62 59
Special charges......... 165 - -
------ ------ ------
(252) 1,498 1,072
Investment and other
income - net........... 112 55 42
Interest expense
Long-term debt........ (77) (77) (87)
Other................. (40) (40) (81)
Gain on sale of
businesses............. 110 - -
------ ------ ------
Earnings (loss) before
income taxes........... (147) 1,436 946 52 per cent
Income tax provision.... 446 445 335
------ ------ ------
Net earnings (loss)..... (593) 991 611 62 per cent
Dividends on preferred
shares................. 21 21 23
------ ------ ------
Net earnings (loss)
applicable to
common shares......... $ (614) $ 970 $ 588 65 per cent
------ ------ ------
------ ------ ------
Earnings (loss) per
common share - basic... $ (.46) $ .72 $ .54 33 per cent
------ ------ ------
------ ------ ------
A - Excludes net charges of $ 1,584M for the impact of Acquisition Related
Costs and after tax one-time gains and charges.
B - Excludes net charges of $ 816M for the impact of Acquisition Related
Costs and after tax one-time gains and charges.
C - Represents the change between the nine month periods ended September 30,
1999 and September 30, 1998, which exclude the adjustments discussed in points
A and B above.
NORTEL NETWORKS CORPORATION Condensed Consolidated Results (unaudited)
(millions of U.S. dollars except per share figures)
U.S. GAAP U.S. GAAP
------------------ ------------------
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
1999 1998 1999 1998
-------- ------- -------- --------
Revenues ................... $ 5,027 $ 3,960 $ 14,526 11,251
Cost of revenues .............. 2,851 2,215 8,197 6,404
-------- ------- -------- --------
Gross profit .................. 2,176 1,745 6,329 4,847
Selling, general and
administrative expense ....... 926 698 2,756 1,971
Research and development
expense ...................... 767 627 2,178 1,829
Amortization of intangibles
Purchased in-process R&D ... - 995 184 1,547
Acquired technology ........ 171 57 513 57
Goodwill ................... 306 106 893 136
Special charges ............... 103 377 165 405
-------- ------- -------- --------
(97) (1,115) (360) (1,098)
Investment and other income
- net ........................ 63 115 124 154
Interest expense
Long-term debt ............. (27) (26) (74) (81)
Other ...................... (11) (36) (40) (81)
Gain on sale of businesses .... 110 260 110 258
-------- ------- -------- --------
Earnings (loss) before
income taxes ................. 38 (802) (240) (848)
Income tax provision .......... 110 90 262 259
-------- ------- -------- --------
Net loss ...................... (72) (892) (502) (1,107)
Dividends on preferred
shares ....................... 7 8 21 23
-------- ------- -------- --------
Net loss applicable to
common shares ............ $ (79) $ (900) $ (523) $ (1,130)
-------- ------- -------- --------
-------- ------- -------- --------
Loss per common share
- basic .................. $ (.06) $ (.79) $ (.39) $ (1.04)
-------- ------- -------- --------
- diluted ................ $ (.06) $ (.79) $ (.39) $ (1.04)
-------- ------- -------- --------
Net earnings applicable to
common shares from
operations (x) ........... $ 314 $ 225 $ 827 $ 546
-------- ------- -------- --------
Earnings per common share from
operations (x) - basic ... $ .23 $ .20 $ .61 $ .50
-------- ------- -------- --------
- diluted . $ .22 $ .19 $ .59 $ .49
-------- ------- -------- --------
Dividends declared per
common share ............... $ .0375 $ .0375 $ .1125 $ .1125
-------- ------- -------- --------
Effective tax rate (xx) ...... 34.6 33.3 34.6 33.3
Weighted average number per cent per cent per cent per cent
of common shares outstanding
(millions) - basic .......... 1,359 1,144 1,347 1,082
- diluted ........ 1,410 1,182 1,398 1,122
(x) Excludes the impact of Acquisition Related Costs and one-time gains
and charges.
(xx) Excludes the impact of Acquisition Related Costs.
Certain comparative figures have been reclassified to conform
with the current period's presentation.
NORTEL NETWORKS CORPORATION
Condensed Consolidated Results (unaudited)
Supplementary Information
(millions of U.S. dollars except per share figures)
U.S. GAAP
------------------------------------
For the three months ended
------------------------------------
9/30/99 9/30/99 9/30/98 Change
------------------------------------
A B C
Revenues................ $ 5,027 $ 5,027 $ 3,960 27 per cent
Cost of revenues........ 2,851 2,851 2,215 29 per cent
------ ------ ------
Gross profit............ 2,176 2,176 1,745 25 per cent
Selling, general and
administrative
expense............... 926 926 698
Research and development
expense................ 767 767 627
Amortization of
intangibles
Purchased
in-process R&D....... - - -
Acquired technology... 171 - -
Goodwill.............. 306 17 19
Special charges......... 103 - -
------ ------ ------
(97) 466 401
Investment and other
income - net........... 63 63 9
Interest expense
Long-term debt....... (27) (27) (26)
Other................ (11) (11) (36)
Gain on sale of
businesses............. 110 - -
------ ------ ------
Earnings before income
taxes.................. 38 491 348 41 per cent
Income tax provision.... 110 170 115
------ ------ ------
Net earnings (loss)..... (72) 321 233 38 per cent
Dividends on preferred
shares................. 7 7 8
------ ------ ------
Net earnings (loss)
applicable to
common shares......... $ (79) $ 314 $ 225 40 per cent
------ ------ ------
------ ------ ------
Earnings (loss) per common
share - basic......... $ (.06) $ .23 $ .20 15 per cent
------ ------ ------
------ ------ ------
- diluted....... $ (.06) $ .22 $ .19 16 per cent
------ ------ ------
------ ------ ------
A - Excludes net charges of $ 393M for the impact of Acquisition
Related Costs and after tax one-time gains and charges.
B - Excludes net charges of $ 1,125M for the impact of Acquisition Related
Costs and after tax one-time gains and charges.
C - Represents the change between the three month periods ended September 30,
1999 and September 30, 1998, which exclude the adjustments discussed in points
A
and B above.
NORTEL NETWORKS CORPORATION Condensed Consolidated Results (unaudited)
Supplementary Information (millions of U.S. dollars except per share figures)
U.S. GAAP
For the nine months ended
9/30/99 9/30/99 9/30/98 Change
A B C
Revenues................ $ 14,526 $ 14,526 $ 11,251 29 per cent
Cost of revenues........ 8,197 8,197 6,404 28 per cent
------ ------ ------
Gross profit............ 6,329 6,329 4,847 31 per cent
Selling, general and
administrative
expense................ 2,756 2,756 1,971
Research and development
expense................ 2,178 2,178 1,829
Amortization of
intangibles
Purchased
in-process R&D....... 184 - -
Acquired technology... 513 - -
Goodwill.............. 893 52 49
Special charges......... 165 - -
------ ------ ------
(360) 1,343 998
Investment and other
income - net........... 124 67 16
Interest expense
Long-term debt........ (74) (74) (81)
Other................. (40) (40) (81)
Gain on sale of
businesses............. 110 - -
------ ------ ------
Earnings (loss) before
income taxes........... (240) 1,296 852 52 per cent
Income tax provision.... 262 448 283
------ ------ ------
Net earnings (loss)..... (502) 848 569 49 per cent
Dividends on preferred
shares................. 21 21 23
------ ------ ------
Net earnings (loss)
applicable to
common shares.......... $ (523) $ 827 $ 546 51 per cent
------ ------ ------
------ ------ ------
Earnings (loss) per common
share - basic.......... $ (.39) $ .61 $ .50 22 per cent
------ ------ ------
------ ------ ------
- diluted........ $ (.39) $ .59 $ .49 20 per cent
------ ------ ------
------ ------ ------
A - Excludes net charges of $ 1,350M for the impact of Acquisition Related
Costs and after tax one-time gains and charges.
B - Excludes net charges of $ 1,676M for the impact of Acquisition Related
Costs and after tax one-time gains and charges.
C - Represents the change between the nine month periods ended September 30,
1999 and September 30, 1998, which exclude the adjustments discussed in points
A
and B above.
NORTEL NETWORKS CORPORATION Condensed Consolidated Results (unaudited)
(millions of U.S. dollars except per share figures)
U.S. GAAP U.S. GAAP ---------------------- ------------------
Reconciliation of reported loss Three months Three months
applicable to common shares to ended ended
restated amounts (x) June 30, March 31,
----------- --------- -------- --------
1999 1998 1999 1998
----------- --------- -------- --------
Net loss applicable to
common shares,
as reported............... $ (275) $ (38) $ (208) $ (205)
Adjustment:
Income tax annualization.. 17 12 22 1
----------- --------- -------- ---------
Net loss applicable to
common shares,
as restated............... $ (258) $ (26) $ (186) $ (204)
----------- --------- -------- ---------
----------- --------- -------- ---------
Loss per common share
- basic................ $ (.19) $ (.02) $ (.14) $ (.19)
----------- --------- -------- ---------
----------- --------- -------- ---------
- diluted............. $ (.19) $ (.02) $ (.14) $ (.19)
----------- --------- -------- ---------
----------- --------- -------- ---------
As previously reported:
Loss per common share
- basic............... $ (.20) $ (.04) $ (.16) $ (.20)
----------- --------- -------- --------
----------- --------- -------- -- ------
- diluted............. $ (.20) $ (.04) $(.16) $ (.20)
----------- --------- -------- ---------
----------- --------- -------- ---------
U.S. GAAP U.S. GAAP
---------------------- -------------------
Reconciliation of reported Three months Three months
supplementary measure of net ended ended
earnings applicable to common June 30, March 31,
shares to restated amounts (x) --------------------- -------------------
1999 1998 1999 1998
----------- --------- -------- ---------
Supplementary measure of
net earnings applicable
to common shares,
as reported............... $ 303 $ 184 $ 171 $ 124
Adjustment:
Income tax
annualization........... 17 12 22 1
----------- --------- -------- ---------
Supplementary measure of
net earnings applicable to
common shares, as restated $ 320 $ 196 $ 193 $ 125
----------- --------- -------- ---------
----------- --------- -------- ---------
Supplementary measure of
net earnings per
common share
- basic................ $ .24 $ .19 $ .14 $ .12
----------- --------- -------- ---------
----------- --------- -------- ---------
- diluted.............. $ .23 $ .18 $ .14 $ .12
----------- --------- -------- ---------
----------- --------- -------- ---------
As previously reported:
Supplementary measure of
net earnings per
common share
- basic................ $ .22 $ .17 $ .13 $ .12
----------- --------- -------- ---------
----------- --------- -------- ---------
- diluted.............. $ .22 $ .17 $ .12 $ .11
----------- --------- -------- ---------
----------- --------- -------- ---------
(x) For the purposes of reporting under United States GAAP, companies are
required to estimate the annual tax rate and apply this rate to their earnings
or loss on a quarterly basis. For 1999 and 1998, the quarterly financial
statement profile has been adjusted to reflect this practice. This adjustment
impacts the income tax provision on the statements of operations with an
offset to income taxes payable on the balance sheets. The adjustment has a nil
impact on the Corporation's net earnings (loss) on the statements of
operations and the balance sheets for the fiscal periods ended, and as at,
December 31, 1999 and 1998.
NORTEL NETWORKS CORPORATION Condensed Consolidated Results (unaudited)
Supplementary Information
(U.S. dollars, millions) CDN GAAP
---------------------------------------------------
Three months ended Nine months ended
Revenues September 30, September 30,
--------------------------- ----------------------
percentage Change percentage Change
1999 1998 from 1998 1999 1998 from 1998
---- ---- --------- ---- ---- ---------
By Geographic Areas:(1)
United States... $ 3,168 $ 2,281 39 per $ 8,858 6,588 34 per
cent cent
Canada............ 319 328 (3) per 1,057 929 14 per
cent cent
Other Countries... 1,906 1,532 24 per 5,309 4,290 24 per
------- ------- cent -------- ------- cent
Total.......... $ 5,393 $ 4,141 30 per $ 15,224 $ 11,807 29 per
------- ------- cent -------- ------- cent
------- ------- -------- -------
By Segment:(2)
Carrier........ $ 4,016 $ 3,031 32 per $ 11,235 $ 9,126 23 per
cent cent
Enterprise........ 1,356 1,070 27 per 3,924 2,508 56 per
cent cent
Corporate and
Other............ 21 40 (48) per 65 173 (62) per
------- ------- cent -------- ------- cent
Total........ $ 5,393 $ 4,141 30 per $ 15,224 $ 11,807 29 per
------- ------- cent -------- ------- cent
------- ------- -------- -------
(1) Revenues by geographic area have been restated to reflect the evolution of
certain non operating businesses within the management structure.
(2) Revenues by segment have been restated to reflect the evolution of certain
businesses within the management structure. The primary effect of this
reclassification was to move certain businesses among Enterprise, Other and
Carrier to more closely align the businesses with their primary customers.
(U.S. dollars, billions)
CDN GAAP U.S. GAAP
--------------------- ------------------
As at As at As at As at
September December September December
Balance Sheet Items 30, 1999 31, 1998 30, 1999 31, 1998
--------------------- ------------------
Cash and Cash
Equivalents........... $ 1.21 $ 2.28 $ 1.19 $ 2.23
-------- -------- -------- ------
-------- -------- -------- ------
Accounts Receivable $ 6.91 $ 5.46 $ 6.25 $ 5.15
-------- -------- -------- ------
-------- -------- -------- ------
Inventories............ $ 2.58 $ 1.69 $ 2.39 $ 1.60
-------- -------- -------- ------
-------- -------- -------- ------
Total Assets........... $ 20.73 $ 19.73 $ 22.41 $21.81
-------- -------- -------- ------
-------- -------- -------- ------
Long-term Debt......... $ 1.52 $ 1.67 $ 1.41 $ 1.53
-------- -------- -------- ------
-------- -------- -------- ------
Shareholders'
Equity................ $11.46 $11.57 $12.89 $12.79
-------- -------- -------- ------
-------- -------- -------- ------
Company: Nortel Networks Contact: Investor Relations: Angela McMonagle, Nortel
Networks,+1 905-863-6044, mcmona(at)nortelnetworks.com; Media Relations: Jeff
Ferry, Nortel Networks, +1 703-712-8339, jferry(at)nortelnetworks.com;
Archived images on this organisation are available through CNW E-Pix at
www.newswire.ca.Images are free to members of The Canadian Press./ (NT. NT)
END
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