Nortel Networks will delay the filing of its 2003 annual report and that of Nortel Networks Limited (NNL), its main operating subsidiary, because it may need to restate its financials for the second time.
North America’s largest maker of telephone equipment said its audit committee has been reviewing the circumstances leading to the restatement of its financials in October 2003.
As a result of this work, Nortel is reviewing accruals and provisions of prior periods, which will likely require it to revise its results for the 2003 calendar year, several of its 2003 quarterly reports, and financial results for prior periods, according to the company. Given the volume and complexity of the work involved, company management can’t predict when the review will be completed, Nortel stated.
Nortel also warned that once the delay in filing its 2003 annual report extends beyond March 30, the company and NNL wouldn’t be in compliance with their obligations to deliver their SEC filings under their public debt indentures and some of their support and credit facilities. About $1.8 billion of notes of NNL (or its subsidiaries) and $1.8 billion of convertible debt securities is outstanding.
The delay in filing the annual report, however, will not result in an automatic default and acceleration of such long-term debt, according to the company.