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Nortel Networks Reports Record Revenues and Operating Results for the Fourth Quarter and the year 1999


    -  Revenues up 21% in the quarter and 26% for 1999 
    
    -  Net Earnings from Operations up 58% in the quarter and 62% for 1999 
    
    -  EPS From Operations up 53% in the quarter and 38% for 1999

    BRAMPTON, ONT., Jan. 25 /CNW/ - Nortel Networks* (NYSE/TSE: NT) today
reported results for the fourth quarter and the year 1999

    Fourth Quarter Results
    ----------------------

    Revenues increased 21% to US$6.99 billion for the fourth quarter of 1999
from US$5.77 billion for the same period in 1998. Net earnings from operations
applicable to common shares(a) for the quarter were US$755 million, or US$0.55
per share, compared to US$477 million, or US$0.36 per share, for the same
period in 1998, an increase in earnings per share from operations of 53
percent. Including Acquisition Related Costs(a) and one-time gains and
charges, Nortel Networks recorded net earnings applicable to common shares in
the fourth quarter of 1999 of US$417 million or US$0.30 per share.
    The overall increase in net earnings from operations in the quarter was
driven by higher revenues and gross profit and a decrease in the effective tax
rate.
    "We are extremely pleased with our strong growth in the fourth quarter,"
said John Roth, president and chief executive officer, Nortel Networks. "Our
strong financial performance with carrier and service provider customers
reflected our leadership position in creating the high-performance Internet."

    1999 Results
    ------------

    For the year 1999, revenues increased 26 percent to US$22.22 billion from
US$17.58 billion for the year 1998. Net earnings from operations applicable to
common shares(a) for the year 1999 were US$1.73 billion, or US$1.28 per share,
compared to US$1.07 billion, or US$0.93 per share for 1998, an increase in
earnings per share from operations of 38 percent. Including Acquisition
Related Costs(a) and one-time gains and charges, Nortel Networks recorded a
net loss of US$197 million, or US$0.15 per share, for 1999.
    "We are extremely pleased with the strength in our optical and high-speed
Internet access capabilities as well as the success of our wireless solutions
which overcame volatility in South America early in the year," said John Roth,
president and chief executive officer. "We are proud of our record results
which reflect success in several key Internet markets and geographic areas
while continuing to lay the foundation for continued strong growth at the
heart of the Internet in 2000."

    "Highlights for 1999 included:

       -  Our Optical Internet business grew more than 80% over 1998, driven
          by explosive customer demand. We moved into the No. 1 market share
          position globally in SONET/SDH and DWDM, according to Ryan Hankin
          Kent.

       -  We made significant inroads in the rapidly growing high-speed
          Internet access market. With one of the broadest portfolios
          available, we were selected by a variety of service providers for
          our solutions using copper, cable or wireless technologies.

       -  We experienced strong momentum in the wireless infrastructure
          business in the second half of the year as customers endorsed our
          strategy for the Wireless Internet resulting in several key
          contract wins and third generation trials.

       -  Our ATM/IP carrier routing/switching portfolio built momentum as we
          exited the year and overall, we made significant market share gains
          as reported by Cahners In-Stat.

       -  We completed or announced key product introductions and
          acquisitions that continue to enhance our market leading Internet
          capabilities, including OPTera* 1600G 160 channel optical
          amplification system, OPTera* LH open optical platform and the
          proposed acquisition of Qtera's* extra long haul regeneration
          capabilities for the Optical Internet; OPTera* Packet Solution to
          deliver highly reliable optical switching and routing capabilities
          for carrier networks; Internet Communications Architecture and Open
          IP strategies for Enterprise networking solutions; and
          Periphonics'* web-enabled Interactive Voice Response capabilities
          and our proposed acquisition of Clarify's* customer relationship
          management capabilities for second generation eBusiness solutions.

    "Overall, 1999 was a great year. We announced a record number of
acquisitions; entered into more than 20 commitments for Internet backbone
networks globally; began the realignment of our manufacturing to leverage the
capabilities of the outsourcing industry and committed to tripling our Optical
Internet manufacturing capacity. We are extremely pleased with how we have
been able to better serve our customers through our strengths, agility and
execution."
    Commenting on his outlook for 2000, Mr. Roth said: "Our strong customer
relationships and industry leading position in high-growth Internet markets
reinforces my confidence in our continued success in 2000. We will continue to
optimize our operations model and realign our workforce throughout 2000 around
the Internet growth engines. We enter the new millennium with a strong order
book and customer momentum across the high-growth segments of our business."

    Revenue Breakdown
    -----------------

    Segment revenues for the fourth quarter of 1999 increased 31 percent for
the Carrier segment and decreased 5 percent for the Enterprise segment over
the same period in 1998. For the full year 1999, Carrier segment revenues
increased 26 percent and Enterprise segment revenues increased 33 percent
compared to 1998.
    Carrier segment revenues reflected strong growth in both Optical Internet
and high-speed Internet access solutions in the United States, Europe and
Latin America in the quarter and for the year compared to the same periods in
1998. Mobility revenues were strong in the quarter in the United States,
Europe, Latin America and Asia Pacific and, overall, grew significantly in the
year.
    Enterprise segment revenues decreased in the quarter compared to the same
period in 1998 primarily due to lower data networking revenues. For the full
year 1999, Enterprise segment revenues increased, primarily driven by the
increase in data networking revenues due to the Bay Networks merger.
    Geographic revenues for the fourth quarter of 1999 compared to the fourth
quarter of 1998 increased 30 percent outside the United States and Canada, and
20 percent in the United States, while revenues in Canada declined 12 percent.
For the full year 1999, revenues increased 30 percent in the United States, 26
percent outside the United States and Canada, and 5 percent in Canada.

    Expenses
    --------

    Selling, general and administrative ("SG&A") expenses in the quarter were
US$1.23 billion, or 17.6 percent of revenue, compared with US$1.03 billion, or
17.8 percent of revenue, in the fourth quarter of 1998. For the full year
1999, SG&A expenses were US$4.10 billion, or 18.5 percent of revenue, compared
with US$3.09 billion, or 17.6 percent of revenue, for 1998. The SG&A expenses
in the quarter reflected investments to support Nortel Networks global growth
and, as a percentage of revenues, reflected the impact of ongoing workforce
realignment.
    Research and development ("R&D") expenses were US$786 million, or 11.2
percent of revenue, in the quarter, compared with US$652 million, or 11.3
percent of revenue, in the fourth quarter of 1998. For the full year 1999, R&D
expenses were US$2.91 billion, or 13.1 percent of revenue, compared with
US$2.45 billion, or 14 percent of revenue, for 1998. The increased R&D
expenses in the quarter reflected planned expenses 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 1999 revenues of US$22.2
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* 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.

    * Nortel Networks, the Nortel Networks logo, the Globemark, Unified
        Networks, OPTera and How the world shares ideas are trademarks of
        Nortel Networks. Qtera is a trademark of Qtera Corporation. Clarify
        is a trademark of Clarify Inc. Periphonics is a trademark of
        Periphonics Corporation.


    <<
                         NORTEL NETWORKS CORPORATION
                      Consolidated Results (unaudited)
             (millions of U.S. dollars except per share figures)

                                           CDN GAAP            CDN GAAP
                                     -----------------    ------------------
                                         Three months        Twelve months
                                            ended                ended
                                         December 31,         December 31,
                                     -----------------    ------------------
                                       1999     1998         1999      1998
                                     -------  --------    --------  --------

    Revenues.......................  $ 6,993  $ 5,768     $ 22,217  $ 17,575

    Cost of revenues...............    3,928    3,239       12,597    10,050
                                     -------  --------    --------  --------
    Gross profit...................    3,065    2,529        9,620     7,525

    Selling, general and
     administrative expense........    1,229    1,029        4,102     3,093
    Research and development
     expense.......................      786      652        2,908     2,453
    Amortization of intangibles
      Purchased in-process
       research and development....       50      528          722     1,241
      Acquired technology..........      173      171          686       228
      Goodwill.....................      177      141          639       240
    Special charges................       44       27          209       447
                                     -------  --------    --------  --------
                                         606      (19)         354      (177)

    Equity in net loss
     of associated companies.......        -      (22)         (13)      (19)
    Other income - net.............      122       42          357       492
    Interest expense
      Long-term debt...............      (24)     (30)        (101)     (117)
      Other........................      (31)     (34)         (71)     (115)
                                     -------  --------    --------  --------
    Earnings (loss) before
     income taxes..................      673      (63)         526        64
    Income tax provision...........      250      269          696       601
                                     -------  --------    --------  --------
    Net earnings (loss)............      423     (332)        (170)     (537)
    Dividends on preferred shares..        6        9           27        32
                                     -------  --------    --------  --------
    Net earnings (loss) applicable
     to common shares..............  $   417  $  (341)    $   (197) $   (569)
                                     -------  --------    --------  --------
                                     -------  --------    --------  --------

    Earnings (loss) per common
     share.........................  $   .30  $  (.26)    $   (.15) $   (.50)
                                     -------  --------    --------  --------
                                     -------  --------    --------  --------

    Net earnings applicable
     to common shares
     from operations*............  $   755  $   477     $  1,725  $  1,065
                                     -------  --------    --------  --------
                                     -------  --------    --------  --------

    Earnings per common share
     from operations*............  $   .55  $   .36     $   1.28  $    .93
                                     -------  --------    --------  --------
                                     -------  --------    --------  --------

    Dividends declared per
     common share.................   $ .0375  $ .0375     $    .15  $    .15
                                     -------  --------    --------  --------
                                     -------  --------    --------  --------

     Effective tax rate(+)........   23.9%(++)   35.5%    28.0%(++)    35.5%


    Weighted average number
     of common shares
     outstanding (millions).......     1,370    1,327        1,353     1,144

    *   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.

    (+)   Excludes the impact of Acquisition Related Costs.

    (++)  The decrease in the effective tax rate for the three months and
          twelve months ended December 31, 1999, compared to the same
          periods for 1998, was a consequence of a higher United States tax
          deduction related to the exercise of stock options.

          All references to earnings (loss) per common share, earnings per
          common share from operations, dividends declared per common share,
          and weighted average number of common shares outstanding, have
          been restated to reflect the impact of the stock dividend of one
          common share paid to shareholders of record as of the close of
          business on August 17, 1999.

          Certain comparative figures have been reclassified to conform to
          the current period's presentation.



                         NORTEL NETWORKS CORPORATION
                      Consolidated Results (unaudited)
                          Supplementary Information
             (millions of U.S. dollars except per share figures)

                                                   CDN GAAP
                                     ---------------------------------------
                                            For the three months ended
                                     ---------------------------------------
                                     12/31/99    12/31/99   12/31/98  Change
                                     --------    --------   --------  ------
                                   (As Reported)     A          B       C

    Revenues.......................   $ 6,993     $ 6,993    $ 5,768    21%
    Cost of revenues...............     3,928       3,928      3,239    21%
                                      --------    --------   --------
    Gross profit...................     3,065       3,065      2,529    21%


    Selling, general and
     administrative expense........     1,229       1,229      1,029
    Research and development
     expense.......................       786         786        652
    Amortization of intangibles
      Purchased in-process research
       and development.............        50           -          -
      Acquired technology..........       173           -          -
      Goodwill.....................       177          24         20
    Special charges................        44           -          -
                                      --------    --------   --------
                                          606       1,026        828

    Equity in net loss of
     associated companies..........         -           -        (22)
    Other income - net.............       122          25         12
    Interest expense
      Long-term debt...............       (24)        (24)       (30)
      Other........................       (31)        (31)       (34)
                                      --------    --------   --------
    Earnings before income taxes...       673         996        754    32%

    Income tax provision...........       250         235        268
                                      --------    --------   --------
    Net earnings...................       423         761        486    57%

    Dividends on preferred shares..         6           6          9
                                      --------    --------   --------

    Net earnings applicable to
     common shares.................   $   417     $   755    $   477    58%
                                      --------    --------   --------
                                      --------    --------   --------

    Earnings per common share......   $   .30     $   .55    $   .36    53%
                                      --------    --------   --------
                                      --------    --------   --------


     A - Excludes net charges of $338 for the impact of Acquisition
         Related Costs and after tax one-time gains and charges.

     B - Excludes net charges of $818 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
         December 31, 1999 and December 31, 1998, which exclude the
         adjustments discussed in points A and B above.



                         NORTEL NETWORKS CORPORATION
                      Consolidated Results (unaudited)
                          Supplementary Information
             (millions of U.S. dollars except per share figures)

                                                   CDN GAAP
                                     ---------------------------------------
                                            For the twelve months ended
                                     ---------------------------------------
                                     12/31/99    12/31/99   12/31/98  Change
                                     --------    --------   --------  ------
                                  (As Reported)      A          B       C


    Revenues.......................   $22,217     $22,217    $17,575    26%
    Cost of revenues...............    12,597      12,597     10,050    25%
                                      --------    --------   --------
    Gross profit...................     9,620       9,620      7,525    28%

    Selling, general and
     administrative expense........     4,102       4,102      3,093
    Research and development
     expense.......................     2,908       2,908      2,453
    Amortization of intangibles
      Purchased in-process research
       and development.............       722           -          -
      Acquired technology..........       686           -          -
      Goodwill.....................       639          86         79
    Special charges................       209           -          -
                                      --------    --------   --------
                                          354       2,524      1,900

    Equity in net loss of
     associated companies..........       (13)        (13)       (19)
    Other income - net.............       357          93         51
    Interest expense
      Long-term debt...............      (101)       (101)      (117)
      Other........................       (71)        (71)      (115)
                                      --------    --------   --------
    Earnings before income taxes...       526       2,432      1,700    43%

    Income tax provision...........       696         680        603
                                      --------    --------   --------
    Net earnings (loss)............      (170)      1,752      1,097    60%

    Dividends on preferred shares..        27          27         32
                                      --------    --------   --------

    Net earnings (loss) applicable
     to common shares..............   $  (197)    $ 1,725    $ 1,065    62%
                                      --------    --------   --------
                                      --------    --------   --------

    Earnings (loss) per common
     share - basic.................   $  (.15)    $  1.28    $   .93    38%
                                      --------    --------   --------
                                      --------    --------   --------

     A - Excludes net charges of $1,922 for the impact of Acquisition
         Related Costs and after tax one-time gains and charges.

     B - Excludes net charges of $1,634 for the impact of Acquisition
         Related Costs and after tax one-time gains and charges.

     C - Represents the change between the twelve month periods ended
         December 31, 1999 and December 31, 1998, which exclude the
         adjustments discussed in points A and B above.



                           NORTEL NETWORKS CORPORATION
                        Consolidated Results (unaudited)
               (millions of U.S. dollars except per share figures)


                            U.S. GAAP                  U.S. GAAP
                       --------------------  -------------------------------
                        Three months ended        Twelve months ended
                           December 31,               December 31,
                       --------------------  -------------------------------
                         1999       1998       1999       1998       1997
                       ---------  ---------  ---------  ---------  ---------
    Revenues.......... $ 6,573    $ 5,522* $21,287* $16,857* $14,581
    Cost of revenues..   3,662      3,082     12,063*   9,645*   8,501*
                       ---------  ---------  ---------  ---------  ---------
    Gross profit......   2,911      2,440      9,224      7,212      6,080
    Selling, general
     and
     administrative
     expense..........   1,190        990      3,979*   2,961      2,564
    Research and
     development
     expense..........     814        703      2,992      2,532      2,221
    Amortization of
     intangibles
      Purchased in-
       process
       research and
       development....      68        209        252      1,756          -
      Acquired
       technology.....     173        171        686        228          -
      Goodwill........     314        287      1,207        423         32
    Special charges...      44         (1)*    160*     313*      12*
                       ---------  ---------  ---------  ---------  ---------
                           308         81        (52)    (1,001)     1,251

    Equity in net loss
     of associated
     companies........      (2)        (4)        (2)       (48)       (54)
    Other income
     - net............     186          1*     420        441*      53*
    Interest expense
      Long-term debt..     (19)       (26)       (93)      (107)      (119)
      Other...........     (31)       (34)       (71)      (115)       (38)
                       ---------  ---------  ---------  ---------  ---------
    Earnings (loss)
     before income
     taxes............     442         18        202       (830)     1,093
    Income tax
     provision........     264        161(xx)    526        420        381
                       ---------  ---------  ---------  ---------  ---------
    Net earnings
     (loss)...........     178       (143)      (324)    (1,250)       712
    Dividends on
     preferred
     shares...........       6          9         27         32         17
                       ---------  ---------  ---------  ---------  ---------
    Net earnings
     (loss) applicable
     to common shares. $   172    $  (152)   $  (351)   $(1,282)   $   695
                       ---------  ---------  ---------  ---------  ---------
                       ---------  ---------  ---------  ---------  ---------

    Earnings (loss)
     per common share
         - basic...... $   .13    $  (.11)   $  (.26)   $ (1.12)   $   .67
                       ---------  ---------  ---------  ---------  ---------
                       ---------  ---------  ---------  ---------  ---------

         - diluted.... $   .12    $  (.11)   $  (.26)   $ (1.12)   $   .65
                       ---------  ---------  ---------  ---------  ---------
                       ---------  ---------  ---------  ---------  ---------

    Net earnings
     applicable to
     common shares
     from
     operations(xxx).. $   607    $   434    $ 1,434    $   980    $   687
                       ---------  ---------  ---------  ---------  ---------
                       ---------  ---------  ---------  ---------  ---------
    Earnings per
     common share from
     operations(xxx)
         - basic...... $   .44    $   .33    $  1.06    $   .86    $   .66
                       ---------  ---------  ---------  ---------  ---------
                       ---------  ---------  ---------  ---------  ---------
         - diluted.... $   .43    $   .32    $  1.04    $   .83    $   .64
                       ---------  ---------  ---------  ---------  ---------
                       ---------  ---------  ---------  ---------  ---------
    Dividends declared
     per common share. $ .0375    $ .0375    $   .15    $   .15    $   .15
                       ---------  ---------  ---------  ---------  ---------
                       ---------  ---------  ---------  ---------  ---------
    Effective tax
     rate(+)..........    33.8%      33.3%      34.3%      33.3%      35.2%

    Weighted average
     number of common
     shares
     outstanding
     (millions)
          - basic.....   1,370      1,327      1,353      1,144      1,044
          - diluted...   1,428      1,364      1,382      1,181      1,067

    *   Represents reclassifications in accordance with United States GAAP.
          In addition, revenues for the first, second, and third quarters of
          1999 and 1998 have been adjusted to $4,286, $5,281, and $5,147,
          and to $3,341, $4,004,  and $3,990, respectively. These revenue
          adjustments were reflected in cost of revenues.

    (xx)  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 was 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 had a $19 impact on the
          Corporation's income tax provision for the fourth quarter of 1998
          and a nil impact on 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.

    (xxx) Excludes the impact of Acquisition Related Costs and one-time gains
          and charges.

    (+)   Excludes the impact of Acquisition Related Costs.

          All references to earnings (loss) per common share, earnings per
          common share from operations, dividends declared per common share,
          and weighted average number of common shares outstanding, have been
          restated to reflect the impact of the stock dividend of one common
          share paid to shareholders of record as of the close of business on
          August 17, 1999.

          Certain comparative figures have been reclassified to conform to
          the current period's presentation.



                         NORTEL NETWORKS CORPORATION
                      Consolidated Results (unaudited)
                          Supplementary Information
             (millions of U.S. dollars except per share figures)

                                                     U.S. GAAP
                                       -------------------------------------
                                             For the three months ended
                                       -------------------------------------
                                       12/31/99  12/31/99  12/31/98  Change
                                       --------- --------- --------- -------
                                          As         A         B        C
                                       Reported

    Revenues..........................  $ 6,573   $ 6,573   $ 5,522    19%
    Cost of revenues..................    3,662     3,662     3,082    19%
                                       --------- --------- ---------
    Gross profit......................    2,911     2,911     2,440    19%

    Selling, general and
     administrative expense...........    1,190     1,190       990
    Research and development
     expense..........................      814       814       703
    Amortization of intangibles
      Purchased in-process research
       and development................       68         -         -
      Acquired technology.............      173         -         -
      Goodwill........................      314        18        17
    Special charges...................       44         -         -
                                       --------- --------- ---------
                                            308       889       730

    Equity in net loss of
     associated companies.............       (2)       (2)       (3)
    Other income (expense) - net......      186        89        (2)
    Interest expense
      Long-term debt..................      (19)      (19)      (26)
      Other...........................      (31)      (31)      (34)
                                       --------- --------- ---------
    Earnings before income taxes......      442       926       665    39%
    Income tax provision..............      264       313       222
                                       --------- --------- ---------
    Net earnings......................      178       613       443    38%

    Dividends on preferred shares.....        6         6         9
                                       --------- --------- ---------

    Net earnings applicable to
     common shares....................  $   172   $   607   $   434    40%
                                       --------- --------- ---------
                                       --------- --------- ---------

    Earnings per common
     share -  basic...................  $   .13   $   .44   $   .33    33%
                                       --------- --------- ---------
                                       --------- --------- ---------
           -  diluted.................  $   .12   $   .43   $   .32    34%
                                       --------- --------- ---------
                                       --------- --------- ---------

    A -  Excludes net charges of $435 for the impact of Acquisition Related
         Costs and after tax one-time gains and charges.
    B -  Excludes net charges of $586 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
         December 31, 1999 and December 31, 1998, which exclude the
         adjustments discussed in points A and B above.



                           NORTEL NETWORKS CORPORATION
                        Consolidated Results (unaudited)
                            Supplementary Information
               (millions of U.S. dollars except per share figures)

                                                     U.S. GAAP
                                     ----------------------------------------
                                            For the twelve months ended
                                     ----------------------------------------
                                      12/31/99   12/31/99   12/31/98   Change
                                     ---------- ---------- ---------- -------
                                         As
                                      Reported       A          B        C

    Revenues....................... $ 21,287*   $ 21,287   $ 16,857    26%
    Cost of revenues...............   12,063*     12,047      9,570    26%
                                     ---------- ---------- ----------
    Gross profit...................    9,224         9,240      7,287    27%

    Selling, general and
     administrative expense........    3,979*      3,946      2,961
    Research and development
     expense.......................    2,992         2,992      2,532
    Amortization of intangibles
      Purchased in-process research
       and development.............      252             -          -
      Acquired technology..........      686             -          -
      Goodwill.....................    1,207            70         66
    Special charges................      160*          -          -
                                     ---------- ---------- ----------
                                         (52)        2,232      1,728

    Equity in net loss of
     associated companies..........       (2)           (2)       (32)
    Other income - net.............      420           156         43
    Interest expense
      Long-term debt...............      (93)          (93)      (107)
      Other........................      (71)          (71)      (115)
                                     ---------- ---------- ----------
    Earnings before income taxes...      202         2,222      1,517    46%

    Income tax provision...........      526           761        505
                                     ---------- ---------- ----------
    Net earnings (loss)............     (324)        1,461      1,012    44%

    Dividends on preferred shares..       27            27         32

    Net earnings (loss) applicable
     to common shares..............  $  (351)     $  1,434     $  980    46%
                                     ---------- ---------- ----------
                                     ---------- ---------- ----------

    Earnings (loss) per common
     share - basic.................  $  (.26)     $   1.06     $  .86    23%
                                     ---------- ---------- ----------
                                     ---------- ---------- ----------
           - diluted...............  $  (.26)     $   1.04     $  .83    25%
                                     ---------- ---------- ----------
                                     ---------- ---------- ----------

     A - Excludes net charges of $1,785 for the impact of Acquisition
         Related Costs and after tax one-time gains and charges.

     B - Excludes net charges of $2,262 for the impact of Acquisition
         Related Costs and after tax one-time gains and charges.

     C - Represents the change between the twelve month periods
         ended December 31, 1999 and December 31, 1998, which exclude
         the adjustments discussed in points A and B above.

     * Represents reclassifications in accordance with United States GAAP.



                         NORTEL NETWORKS CORPORATION
                      Consolidated Results (unaudited)
                          Supplementary Information

                                        (U.S. dollars, millions)
                                                CDN GAAP
                            ------------------------------------------------
                               Three months ended       Twelve months ended
    Revenues                       December 31,             December 31,
                            -----------------------  -----------------------
                                                %                        %
                                             Change                   Change
                                              from                     from
                              1999     1998   1998     1999     1998   1998
                            -------  ------- ------  -------  ------- ------
    By Geographic Areas:(1)
      United States........  $3,911   $3,255   20%   $12,758   $9,839   30%

      Canada...............     375      425  (12%)    1,434    1,362    5%

      Other Countries......   2,707    2,088   30%     8,025    6,374   26%
                            -------- --------        -------- --------

      Total................  $6,993   $5,768   21%   $22,217  $17,575   26%
                            -------- --------        -------- --------
                            -------- --------        -------- --------

    By Segment: (2)
      Service Provider
       and Carrier.........  $5,526   $4,212   31%   $16,761  $13,338   26%

      Enterprise...........   1,452    1,532   (5%)    5,376    4,040   33%

      Corporate and Other..      15       24  (38%)       80      197  (59%)
                            -------- --------        -------- --------

      Total................  $6,993   $5,768   21%   $22,217  $17,575   26%
                            -------- --------        -------- --------
                            -------- --------        -------- --------

    (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
         between Service Provider and Carrier, Enterprise, and Other 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
                                December    December    December    December
    Balance Sheet Items         31, 1999    31, 1998    31, 1999    31, 1998
                               ----------  ----------  ----------  ----------

    Cash and Cash Equivalents..  $  2.26     $  2.28     $  2.16     $  2.23
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------

    Accounts Receivable........  $  6.79     $  5.46     $  6.10     $  5.15
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------

    Inventories................  $  2.96     $  1.69     $  2.82     $  1.60
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------

    Total Assets...............  $ 22.60     $ 19.73     $ 23.98     $ 21.81
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------

    Long-term Debt.............  $  1.69     $  1.67     $  1.43     $  1.53
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------

    Shareholders' Equity.......  $ 12.52     $ 11.57     $ 13.66     $ 12.79
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------

    >>
    %SEDAR: 00000596EB



-30-


For further information: Investor Relations: Angela McMonagle, Nortel 
Networks, (905) 863-6044, mcmona@nortelnetworks.com; Media Relations: Jeff 
Ferry, Nortel Networks, (703) 712-8339, jferry@nortelnetworks.com.
Archived images on this organization are available through CNW E-Pix at 
www.newswire.ca. Images are free to members of The Canadian Press.

SOURCE Bell Glomedia

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