Nortel Reports Financial Results for the First Quarter 2012
(firmenpresse) - TORONTO, ONTARIO -- (Marketwire) -- 05/10/12 -- Nortel(1) Networks Corporation (OTCBB: NRTLQ) -
Financial Presentation and Q1 2012 Results
Nortel(1) Networks Corporation announced its results for the first quarter of 2012. Results were prepared in accordance with United States generally accepted accounting principles (GAAP) in U.S. dollars.
Nortel's consolidated results include the results of operations and financial position of Nortel Networks Corporation, its principal operating subsidiary Nortel Networks Limited, and their subsidiaries in the Asia, CALA, and EMEA regions other than those included in the U.S. or EMEA deconsolidated subsidiaries. As of June 1, 2010, and October 1, 2010, the EMEA Subsidiaries and U.S. Subsidiaries, respectively, were deconsolidated and accounted for under the cost method of accounting. 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 and following the divestitures of our businesses, only the residual contracts not transferred with the businesses are included in Nortel's financial results. As a result of the business sales, Nortel currently has one reportable segment, being the consolidated entity, as its chief operating decision maker reviews financial and operating results on that basis.
Our historical financial performance is not indicative of our future financial performance.
Financial Summary
Nortel's overall financial performance in the first quarter of 2012 reflects the sale of all of its businesses in prior quarters.
Revenues
Revenues were $1 million in the first quarter of 2012 related to remaining customer contracts, compared to $20 million for the first quarter of 2011 related to the multiservice switching products and related services business and remaining customer contracts. The decrease resulted primarily from the sale of the multiservice switching products and related services business.
SG&A
A focus on reducing costs and divesting of the multiservice switching products and related services business resulted in lower SG&A expense compared to the year ago quarter. SG&A expense was $27 million in the first quarter of 2012, compared to $38 million for the first quarter of 2011.
Net Loss
The Company reported a net loss in the first quarter of 2012 of $63 million, compared to a net loss of $105 million in the first quarter of 2011.
The net loss in the first quarter of 2012 included interest expense of $86 million and other expense - net of $10 million comprised primarily of a currency exchange loss of $6 million, partially offset by reorganization items of $68 million.
Reorganization items of $68 million were primarily comprised of gains on divestitures of $78 million related primarily to additional proceeds received from escrow as a result of meeting certain performance criteria, partially offset by professional fees of $11 million.
The net loss in the first quarter of 2011 included interest expense of $79 million and other expense - net of $12 million comprised primarily of a currency exchange loss of $10 million, partially offset by other operating income - net of $24 million primarily related to billings under transition services agreements.
Cash
The cash balance as of March 31, 2012 was $724 million, compared to a cash balance of $751 million as of December 31, 2011. Restricted cash was $7.6 billion primarily related to the business divestiture and IP proceeds. The cash balance decreased primarily due to cash outflows related to general operations, partially offset by the positive impact of foreign currency fluctuations on cash and cash equivalents.
As previously announced, Nortel does not expect that the Company's 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 .
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 Nortel's 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. Nortel's assumptions, although considered reasonable by Nortel at the date of this press release, may prove to be inaccurate and consequently Nortel's 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 Nortel's ability to: obtain required approvals and successfully consummate remaining divestitures; ability to satisfy remaining transition services agreement obligations in connection with divestiture of businesses and assets; successfully conclude ongoing discussions for the sale of Nortel's remaining assets; develop, obtain required approvals for, and implement a court approved plan; allocation of the sale proceeds of our businesses and assets among the various Nortel entities participating in these sales may take considerable time to resolve; resolve ongoing issues with creditors and other third parties whose interests may differ from Nortel's; maintain adequate cash on hand in each of its jurisdictions to fund remaining work within the jurisdiction during the Creditor Protection Proceedings; obtain any further required approvals from the Canadian Monitor, the U.K. Administrators, the U.S. Principal Officer, the U.S. Creditors' Committee, or other third parties; utilize net operating loss carryforwards and certain other tax attributes in the future; avoid the substantive consolidation of NNI's assets and liabilities with those of one or more other U.S. Debtors;
operate effectively, and in consultation with the Canadian Monitor, the Canadian creditors' committee, the U.S. Creditors' Committee, the U.S. Principal Officer, and work effectively with the U.K. Administrators and French Administrator 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; retain and incentivize key employees as may be needed; retain, or if necessary, replace suppliers on acceptable terms and avoid disruptions in Nortel's supply chain regarding our remaining stranded contracts; 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 Nortel's recorded liabilities subject to compromise; prevent third parties from obtaining court orders or approvals that are contrary to Nortel's interests; 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 Nortel's remaining restructuring work including fluctuations in foreign currency exchange rates; the sufficiency of workforce and cost reduction initiatives; any adverse legal judgments, fines, penalties or settlements related to any significant pending or future litigation actions; failure to maintain integrity of Nortel's information systems; and Nortel's potential inability to maintain an effective risk management strategy.
For additional information with respect to certain of these and other factors, see Nortel's 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.
(1)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 first quarter 2012 results.
Contacts:
Nortel
Media Relations
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Datum: 10.05.2012 - 19:07 Uhr
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