Nortel Files and Reports Results for the First Quarter 2006

Toronto, Canada (ots/PRNewswire) -

Financial Reporting is Now Current
Nortel Provides Status Update
- Q1 2006 revenues of US$2.38 billion, essentially flat year over year
- Q1 2006 net loss of US$167 million, (US$0.04) per common share on a
diluted basis
- Q1 2006 cash balance of US$2.70 billion

TORONTO, Canada, June 6 /PRNewswire/ --

Nortel Networks(x) Corporation (NYSE:NT; TSX: NT) today announced
that it and its principal operating subsidiary Nortel Networks
Limited (NNL) have filed their unaudited financial statements for
the first quarter of 2006 prepared in accordance with accounting
principles generally accepted in the United States and related
Quarterly Reports on Form 10-Q and corresponding Canadian filings.
All dollar amounts included are in U.S. dollars.

TORONTO, Canada, June 6 /PRNewswire/ --

First Quarter 2006 Results

TORONTO, Canada, June 6 /PRNewswire/ --

Revenues were US$2.38 billion for the first quarter of 2006
compared to US$2.39 billion for the first quarter of 2005 and US$3.0
billion for the fourth quarter of 2005. The Company reported a net
loss in the first quarter of 2006 of US$167 million, or (US$0.04)
per common share on a diluted basis, compared to a net loss of
US$104 million, or (US$0.02) per common share on a diluted basis, in
the first quarter of 2005 and a net loss of US$2,302 million, or
(US$0.53) per common share on a diluted basis, in the fourth quarter
of 2005.

Net loss in the first quarter of 2006 included an income tax
expense of approximately US$23 million, a shareholder litigation
expense of US$19 million reflecting a mark-to-market adjustment of
the share portion of the proposed class action settlement and a
benefit of US$35 million in gains on the sale of businesses and
assets. Net loss in the first quarter of 2005 included special
charges of US$14 million related to restructuring activities. Net
loss in the fourth quarter of 2005 included a litigation expense of
US$2,474 million for the proposed class action settlement, a tax
benefit of approximately US$140 million related to a liability
release as a result of new information regarding transfer pricing
issues, special charges of US$25 million related to restructuring
activities and US$11 million of costs related to the sale of
businesses and assets.

"I am pleased to be current in our financial reporting," said Mike
Zafirovski, president and chief executive officer, Nortel. "While our
results reflect a challenging first quarter, we continue to expect
good revenue and operating margin momentum commencing in the second
quarter, in line with our previously communicated full year plan. We
remain focused on our business transformation initiatives, integrity
renewal and short term growth opportunities, while concurrently
building the long-term foundation for the new Nortel."

TORONTO, Canada, June 6 /PRNewswire/ --

Breakdown of First Quarter 2006 Revenues

TORONTO, Canada, June 6 /PRNewswire/ --

Mobility and Converged Core Networks revenues were US$1.43
billion, a decrease of 4 percent compared with the year-ago quarter
and a decrease of 23 percent sequentially. Enterprise Solutions and
Packet Networks revenues were US$871 million, a decrease of 1
percent compared with the year-ago quarter and a decrease of 15
percent sequentially. Revenues in both segments were impacted by the
timing of certain contracts as both deferred revenues and backlog
increased at quarter end by US$140 million and US$275 million,
respectively.

TORONTO, Canada, June 6 /PRNewswire/ --

Gross margin

TORONTO, Canada, June 6 /PRNewswire/ --

Gross margin was 38 percent of revenue in the first quarter of
2006, primarily impacted by product mix, including the timing of
certain contracts, and competitive pricing pressures, partially
offset by improvements in our cost structure.

TORONTO, Canada, June 6 /PRNewswire/ --

Selling, general and administrative (SG&A)

TORONTO, Canada, June 6 /PRNewswire/ --

SG&A expenses were US$595 million in the first quarter of 2006,
which included a cost of US$43 million in relation to internal
control remediation activities and investment in our finance
organization. This compares to SG&A expenses of US$578 million for
the first quarter of 2005, which included costs of US$60 million in
relation to restatement activities and investment in the Company's
finance organization and US$680 million for the fourth quarter of
2005, which included costs of approximately US$38 million related to
executive recruitment and retirement and costs of US$50 million in
relation to internal control remedial measures, investment in the
Company's finance processes and our prior restatement related
activities.

TORONTO, Canada, June 6 /PRNewswire/ --

Research and development (R&D)

TORONTO, Canada, June 6 /PRNewswire/ --

R&D expenses were US$478 million in the first quarter of 2006,
reflecting increased investment in targeted product areas and
unfavorable foreign exchange. This compares to US$474 million for
the first quarter of 2005 and US$451 million for the fourth quarter
of 2005.

TORONTO, Canada, June 6 /PRNewswire/ --

Other income (expense) - net

TORONTO, Canada, June 6 /PRNewswire/ --

Other income (expense) - net was net income of US$69 million for
the first quarter of 2006, which primarily related to investment
income of approximately US$29 million and a gain of US$26 million
related to the sale of a note receivable from Bookham, Inc.

TORONTO, Canada, June 6 /PRNewswire/ --

Cash

TORONTO, Canada, June 6 /PRNewswire/ --

Cash balance at the end of the first quarter of 2006 was US$2.70
billion, down from US$2.95 billion at the end of 2005. This decrease
in cash from the end of 2005 was primarily driven by a cash outflow
from operations of US$174 million, which included US$91 million for
pension funding and US$35 million for restructuring, and payments of
US$99 million for plant and equipment, and net payments of US$98
million related to the acquisition of Tasman, partially offset by
cash proceeds of US$87 million related to the sale of the Brampton
facility. On June 1, 2006, US$575 million related to the proposed
class action settlement, plus approximately US$5 million in interest
(accrued since March 23, 2006), was placed in escrow pending
satisfactory completion of all conditions to the settlement.

TORONTO, Canada, June 6 /PRNewswire/ --

Outlook (a)

TORONTO, Canada, June 6 /PRNewswire/ --

Commenting on the Company's financial expectations, Peter Currie,
executive vice president and chief financial officer, Nortel, said,
"For the full year 2006, we continue to expect strong revenue
momentum for the rest of 2006, resulting in high single digit growth
for the full year 2006 compared to 2005, gross margin to be around
40% as a percentage of revenue and operating expenses to be flat to
up slightly from 2005, with foreign exchange and growth related
expenses offsetting productivity and efficiencies. For the second
quarter of 2006, we expect revenue, gross margin and operating
expenses to support our full year guidance."

TORONTO, Canada, June 6 /PRNewswire/ --

(a) The Company's financial outlook contains forward-looking
information and as such, is based on certain assumptions, and is
subject to important risk factors and uncertainties (which are
summarized in italics at the end of this press release) that could
cause actual results or events to differ materially from this
outlook.

TORONTO, Canada, June 6 /PRNewswire/ --

Other items

TORONTO, Canada, June 6 /PRNewswire/ --

Financial Reporting Obligations; Stock Exchanges; Debt Securities;
Credit and Support Facilities

TORONTO, Canada, June 6 /PRNewswire/ --

With the filing by the Company and NNL of their Quarterly Reports
on Form 10-Q for the first quarter of 2006 and corresponding
Canadian filings, the Company and NNL are now current with their
financial reporting obligations. With the delivery of the filings to
the New York and Toronto stock exchanges, and their subsequent
delivery to shareholders, the Company and NNL will be in compliance
with stock exchange listing requirements and their financial
statement delivery obligations under applicable securities laws.

With the delivery of these filings to the indenture trustees, the
Company and NNL will also be in compliance with their obligations
under their public debt indentures. As previously announced, the
Company and NNL have obtained waivers under Nortel's USUS$1.3
billion one-year credit facility and NNL has obtained a waiver from
Export Development Canada (EDC) of all remaining defaults and
breaches under the EDC performance-based support facility. With the
delivery of the first quarter of 2006 filings, the Company and NNL
are in compliance with their obligations under the credit and
support facilities.

TORONTO, Canada, June 6 /PRNewswire/ --

OSC Bi-Weekly Updates; Management Cease Trade Orders

TORONTO, Canada, June 6 /PRNewswire/ --

Today's announcements serve as a status update by the Company and
NNL pursuant to the alternate information guidelines of the Ontario
Securities Commission (OSC). The Company and NNL reported that there
have been no material developments from prior status updates, with
the exception of the matters described herein. As previously
announced, the OSC issued an order prohibiting certain directors and
officers and certain current and former employees of the Company and
NNL from trading in securities of the Company and NNL. Two other
Canadian securities commissions issued similar orders. Now that the
Company and NNL are current in their financial reporting obligations
for the first quarter of 2006, the Company and NNL will be applying
to have the management cease trade orders revoked and will cease
reporting under the OSC's alternate information guidelines.

TORONTO, Canada, June 6 /PRNewswire/ --

Recent Business Highlights

TORONTO, Canada, June 6 /PRNewswire/ --

Revenue Momentum

TORONTO, Canada, June 6 /PRNewswire/ --

Recent momentum in Nortel's mobility portfolio includes the
deployment of one of the world's first commercial high-speed mobile
networks for Partner Communications Company Ltd in Israel based on
HSDPA technology. In addition to Partner, Nortel has worked with a
number of wireless operators on HSDPA trials and deployments
including Vodafone Spain in Barcelona, EDGE Wireless in the US, SKT
and KTF in Korea, SOFTBANK Group's BB Mobile in Japan, Orange France
and Mobilkom Austria. With the signing of an agreement with China's
Ministry of Railways for GSM-Railway switching centres along
passenger lines spanning 20 of China's 31 provinces, Nortel added to
its established leadership GSM-R position, which includes national
deployments for the three largest railway operations in Europe - RFF
in France, Network Rail in Great Britain and Deutsche Bahn in
Germany.

Nortel continues its lead in the Metro WDM market for the 7th
consecutive year with 26.2% Q1 2006 marketshare (Dell 'Oro Group) to
enable Ethernet connectivity options and industry leading storage
extension capabilities in support of Carrier Managed Services. BMW
through Charter Communications, the Australian Stock Exchange, and
the Agricultural Bank of China have all recently leveraged Nortel's
strength in securing their business.

Nortel's optical momentum with cable operators continues to build
with the announcement of customer wins with Charter Communications,
the fourth largest MSO in the US, and Unity Media, which has
Europe's largest cable network. These customers were recently added
to the fold of Nortel MSO customers that include Comcast, Time
Warner, and Cox Communications - the top three US Cable Operators.

Nortel's enterprise customer momentum includes customers such as;
Station Casinos Inc., one of the leading gaming corporations in the
U.S., privately owned airline Jazeera Airways, Lebanon based
consumer product manufacturing group Industry Development Company
(INDEVCO), and one of China's top four banks the Agriculture Bank of
China choosing Nortel's converged IP solutions.

TORONTO, Canada, June 6 /PRNewswire/ --

Leading Next-Generation Solutions

TORONTO, Canada, June 6 /PRNewswire/ --

The world's first handset based HSDPA Network has been launched by
SK Telecom, South Korea's largest mobile operator using LG-Nortel
wireless broadband technology. This network is the first to provide
HSDPA performance on handsets as well as data cards to enable
high-speed broadband wireless services to subscribers using either a
handset or a laptop computer. Nortel's HSDPA technology is a key
component in supporting SK Telecom's "3G+" new service offerings
such as "high quality video call" and "ultra speed data transfer".

Supporting our belief in the market potential of wireless
broadband including WiMAX and Wireless Mesh, leading Russia-based
service provider Golden Telecom is using wireless mesh network
technology from Nortel to build Moscow's first wireless mesh network
which will expand Golden Telecom's broadband communication services
to include universal indoor and outdoor wireless access to
approximately 3.9 million households in Moscow. National Taiwan
University Electrical Engineering and Graduate Institute of Business
Administration departments are collaborating with Nortel in a WiMAX
broadband service trial that includes a wide range of high-bandwidth
multimedia applications.

TORONTO, Canada, June 6 /PRNewswire/ --

About Nortel

TORONTO, Canada, June 6 /PRNewswire/ --

Nortel is a recognized leader in delivering communications
capabilities that enhance the human experience, ignite and power
global commerce, and secure and protect the world's most critical
information. Our next- generation technologies, for both service
providers and enterprises, span access and core networks, support
multimedia and business-critical applications, and help eliminate
today's barriers to efficiency, speed and performance by simplifying
networks and connecting people with information. Nortel does
business in more than 150 countries. For more information, visit
Nortel on the Web at www.nortel.com. For the latest Nortel news,
visit www.nortel.com/news.

TORONTO, Canada, June 6 /PRNewswire/ --

Certain statements in this press release may contain words such as
" could", "expects", "may", "anticipates", "believes", "intends",
"estimates ", "plans", "envisions", "seeks" and other similar
language and are considered forward-looking statements or
information under applicable securities legislation. 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, which are
difficult to predict and the actual outcome may be materially
different. Nortel has made various assumptions in the preparation of
its financial outlook in this press release, including the following
company specific assumptions: no further negative impact to Nortel's
results of operations, financial condition and liquidity arising
from Nortel's restatements of its financial results; Nortel's prices
increasing at or above the rate of price increases for similar
products in geographic regions in which Nortel sells its products;
increase in sales to Nortel's enterprise customers and wireless
service provider customers in the Asia Pacific region as a result of
Nortel's joint venture with LG Electronics Inc.; anticipated growth
in sales to enterprise customers, including the full year impact to
Nortel's revenues from its acquisition of PEC Solutions , Inc., (now
Nortel Government Solutions Incorporated); improvement in Nortel's
product costs due to favorable supplier pricing substantially offset
by higher costs associated with initial customer deployments in
emerging markets; cost reductions resulting from the completion of
Nortel's significant financial restatements and 2004 restructuring
plan; a moderate increase in costs over 2005 related to investments
in the finance organization and remedial measures related to
Nortel's material weaknesses in internal controls; increased employee
costs relative to expected cost of living adjustments and employee
bonuses offset by a significant reduction in executive recruitment
and severance costs incurred in 2005; and the effective execution of
Nortel's strategy. Nortel has also made certain macroeconomic and
general industry assumptions in the preparation of its financial
guidance including: a modest growth rate in the gross domestic
product of global economies in the range of 3.2% which is unchanged
from the growth rate in 2005; global service provider capital
expenditures in 2006 reflecting flat to low single digit growth as
compared to low double digit growth in 2005; a general increase in
demand for broadband access, data traffic and wireless
infrastructure and services in emerging markets with the rate of
growth in developed markets beginning to slow; and a moderate impact
as a result of expected industry consolidation among service
providers in various geographic regions, particularly in North
America and EMEA. The above 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 its expectations set out in this press release.
Further, 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 Nortel's
restatements and related matters including: Nortel's most recent
restatement and two previous restatements of its financial
statements and related events; the negative impact on Nortel and NNL
of their most recent restatement and delay in filing their financial
statements and related periodic reports; legal judgments, fines,
penalties or settlements, or any substantial regulatory fines or
other penalties or sanctions, related to the ongoing regulatory and
criminal investigations of Nortel in the U.S. and Canada; any
significant pending civil litigation actions not encompassed by
Nortel's proposed class action settlement; any substantial cash
payment and/or significant dilution of Nortel's existing equity
positions resulting from the finalization and approval of its
proposed class action settlement, or if such proposed class action
settlement is not finalized, any larger settlements or awards of
damages in respect of such class actions; any unsuccessful
remediation of Nortel's material weaknesses in internal control over
financial reporting resulting in an inability to report Nortel's
results of operations and financial condition accurately and in a
timely manner; the time required to implement Nortel's remedial
measures; Nortel's inability to access, in its current form, its
shelf registration filed with the United States Securities and
Exchange Commission (SEC), and Nortel's below investment grade
credit rating and any further adverse effect on its credit rating due
to Nortel's restatements of its financial statements; any adverse
affect on Nortel's business and market price of its publicly traded
securities arising from continuing negative publicity related to
Nortel's restatements ; Nortel's potential inability to attract or
retain the personnel necessary to achieve its business objectives;
any breach by Nortel of the continued listing requirements of the
NYSE or TSX causing the NYSE and/or the TSX to commence suspension
or delisting procedures; (ii) risks and uncertainties relating to
Nortel's business including: yearly and quarterly fluctuations of
Nortel's operating results; reduced demand and pricing pressures for
its products due to global economic conditions, significant
competition, competitive pricing practice, cautious capital spending
by customers, increased industry consolidation, rapidly changing
technologies, evolving industry standards, frequent new product
introductions and short product life cycles, and other trends and
industry characteristics affecting the telecommunications industry;
any material and adverse affects on Nortel's performance if its
expectations regarding market demand for particular products prove
to be wrong or because of certain barriers in its efforts to expand
internationally; any reduction in Nortel's operating results and any
related volatility in the market price of its publicly traded
securities arising from any decline in its gross margin, or
fluctuations in foreign currency exchange rates; any negative
developments associated with Nortel's supply contract and contract
manufacturing agreements including as a result of using a sole
supplier for key optical networking solutions components, and any
defects or errors in Nortel's current or planned products; any
negative impact to Nortel of its failure to achieve its business
transformation objectives; additional valuation allowances for all or
a portion of its deferred tax assets; Nortel's failure to protect
its intellectual property rights, or any adverse judgments or
settlements arising out of disputes regarding intellectual property;
changes in regulation of the Internet and/or other aspects of the
industry; Nortel's failure to successfully operate or integrate its
strategic acquisitions, or failure to consummate or succeed with its
strategic alliances; any negative effect of Nortel's failure to
evolve adequately its financial and managerial control and reporting
systems and processes, manage and grow its business, or create an
effective risk management strategy; and (iii) risks and
uncertainties relating to Nortel's liquidity, financing arrangements
and capital including: the impact of Nortel's most recent restatement
and two previous restatements of its financial statements; any
inability of Nortel to manage cash flow fluctuations to fund working
capital requirements or achieve its business objectives in a timely
manner or obtain additional sources of funding; high levels of debt,
limitations on Nortel capitalizing on business opportunities because
of credit facility covenants, or on obtaining additional secured
debt pursuant to the provisions of indentures governing certain of
Nortel's public debt issues and the provisions of its credit
facilities; any increase of restricted cash requirements for Nortel
if it is unable to secure alternative support for obligations
arising from certain normal course business activities, or any
inability of Nortel's subsidiaries to provide it with sufficient
funding; any negative effect to Nortel of the need to make larger
defined benefit plans contributions in the future or exposure to
customer credit risks or inability of customers to fulfill payment
obligations under customer financing arrangements; any negative
impact on Nortel's ability to make future acquisitions, raise
capital, issue debt and retain employees arising from stock price
volatility and further declines in the market price of Nortel's
publicly traded securities, or any future share consolidation
resulting in a lower total market capitalization or adverse effect
on the liquidity of Nortel's common shares. For additional
information with respect to certain of these and other factors, see
Nortel's Annual Report on Form 10- K/A, Quarterly Report 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.

TORONTO, Canada, June 6 /PRNewswire/ --

(x) Nortel, the Nortel logo and the Globemark are trademarks of
Nortel Networks.

TORONTO, Canada, June 6 /PRNewswire/ --

Nortel will host a teleconference/audio webcast to discuss First
Quarter 2006 Results.

TORONTO, Canada, June 6 /PRNewswire/ --

TIME: 8:30 AM - 9:30 AM EDT on Tuesday, June 6, 2006

TORONTO, Canada, June 6 /PRNewswire/ --

To participate, please call the following at least 15 minutes
prior to the start of the event.

Teleconference: Webcast:
North America: 1-888-211-4395 http://www.nortel.com/q1earnings2006
International: +1-212-231-6007
Replay:
(Available one hour after the conference call)
North America: 1-800-383-0935 Passcode: 21293763 followed by the
number sign
International: +1-402-530-5545 Passcode: 21293763 followed by the
number sign
Webcast: http://www.nortel.com/q1earnings2006
NORTEL NETWORKS CORPORATION
Consolidated Statements of Operations (unaudited)
(U.S. GAAP; Millions of U.S. dollars, except per share amounts)
Three months ended
--------------------------------------
March 31, December 31, March 31,
2006 2005 2005
------------ ------------ ------------
As restated
Revenues US$ 2,382 US$ 2,997 US$ 2,389
Cost of revenues 1,474 1,815 1,377
------------ ------------ ------------
Gross profit 908 1,182 1,012
Selling, general and administrative
expense 595 680 578
Research and development expense 478 451 474
Amortization of intangibles 5 6 2
Special charges 5 25 14
(Gain) loss on sale of businesses
and assets (35) 11 22
Shareholder litigation settlement
expense 19 2,474 -
------------ ------------ ------------
Operating earnings (loss) (159) (2,465) (78)
Other income - net 69 122 54
Interest expense
Long-term debt (46) (52) (50)
Other (24) (4) (3)
------------ ------------ ------------
Earnings (loss) from continuing
operations before income taxes,
minority interests and equity in
net earnings (loss) of associated
companies (160) (2,399) (77)
Income tax benefit (expense) (23) 102 (16)
------------ ------------ ------------
(183) (2,297) (93)
Minority interests - net of tax 9 (4) (14)
Equity in net earnings (loss) of
associated companies - net of tax (2) 1 1
------------ ------------ ------------
Net earnings (loss) from continuing
operations (176) (2,300) (106)
Net earnings from discontinued
operations - net of tax - (2) 2
------------ ------------ ------------
Net earnings (loss) before cumulative
effect of accounting change (176) (2,302) (104)
Cumulative effect of accounting
change - net of tax 9 - -
------------ ------------ ------------
Net earnings (loss) US$ (167) US$ (2,302) US$ (104)
------------ ------------ ------------
------------ ------------ ------------
Average shares outstanding (millions)
- Basic 4,339 4,338 4,338
Average shares outstanding (millions)
- Diluted 4,339 4,338 4,338
Basic and diluted earnings (loss)
per common share
- from continuing operations US$ (0.04) US$ (0.53) US$ (0.02)
- from discontinued operations 0.00 0.00 0.00
------------ ------------ ------------
Basic earnings (loss) per common
share US$ (0.04) US$ (0.53) US$ (0.02)
------------ ------------ ------------
------------ ------------ ------------
NORTEL NETWORKS CORPORATION
Consolidated Balance Sheets (unaudited)
(U.S. GAAP; Millions of U.S. dollars, except for share amounts)
--------------------------------------
March 31, December 31, March 31,
2006 2005 2005
------------ ------------ ------------
As restated
ASSETS
Current assets
Cash and cash equivalents US$ 2,695 US$ 2,951 US$ 3,430
Restricted cash and cash
equivalents 77 77 81
Accounts receivable - net 2,620 2,862 2,624
Inventories - net 1,984 1,804 1,974
Deferred income taxes - net 388 377 248
Other current assets 823 796 428
------------ ------------ ------------
Total current assets 8,587 8,867 8,785
Investments 246 244 287
Plant and equipment - net 1,531 1,564 1,586
Goodwill 2,680 2,592 2,260
Intangible assets - net 166 172 75
Deferred income taxes - net 3,606 3,629 3,707
Other assets 1,025 1,044 758
------------ ------------ ------------
Total assets US$ 17,841 US$ 18,112 US$ 17,458
------------ ------------ ------------
------------ ------------ ------------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities
Trade and other accounts payable US$ 1,069 US$ 1,180 US$ 974
Payroll and benefit-related
liabilities 778 801 460
Contractual liabilities 297 346 518
Restructuring liabilities 84 95 144
Other accrued liabilities 4,384 4,200 3,593
Long-term debt due within one year 168 1,446 1,289
Loan payable 1,300 - -
------------ ------------ ------------
Total current liabilities 8,080 8,068 6,978
Long-term debt 2,445 2,439 2,566
Deferred income taxes - net 109 104 144
Other liabilities 5,778 5,935 3,670
------------ ------------ ------------
Total liabilities 16,412 16,546 13,358
------------ ------------ ------------
Minority interests in subsidiary
companies 754 780 626
SHAREHOLDERS' EQUITY
Common shares, without par value -
Authorized shares: unlimited;
Issued and outstanding shares:
4,339,337,625 as of March 31,
2006 and 4,339,162,932 as of
December 31, 2005 33,935 33,932 33,840
Additional paid-in capital 3,295 3,281 3,301
Accumulated deficit (35,692) (35,525) (33,054)
Accumulated other comprehensive
loss (863) (902) (613)
------------ ------------ ------------
Total shareholders' equity 675 786 3,474
------------ ------------ ------------
Total liabilities and
shareholders' equity US$ 17,841 US$ 18,112 US$ 17,458
------------ ------------ ------------
------------ ------------ ------------
NORTEL NETWORKS CORPORATION
Consolidated Statements of Cash Flows (unaudited)
(U.S. GAAP; Millions of U.S. dollars)
Three months ended
--------------------------------------
March 31, December 31, March 31,
2006 2005 2005
------------ ------------ ------------
As restated
Cash flows from (used in) operating
activities
Net earnings (loss) from
continuing operations US$ (176) US$ (2,300) US$ (106)
Adjustments to reconcile net
earnings (loss) from continuing
operations to net cash from
(used in) operating activities,
net of effects from acquisitions
and divestitures of businesses:
Amortization and depreciation 60 69 81
Non-cash portion of shareholder
litigation settlement 19 1,899 -
Non-cash portion of special
charges and related asset
write downs - 24 -
Equity in net (earnings) loss
of associated companies 2 (1) (1)
Stock option compensation 25 30 18
Deferred income taxes 16 (135) 8
Other liabilities 73 38 79
(Gain) loss on sale or write
down of investments,
businesses and assets (34) (40) 27
Other - net 103 113 (107)
Change in operating assets and
liabilities (262) 420 (262)
------------ ------------ ------------
Net cash from (used in)
operating activities of
continuing operations (174) 117 (263)
------------ ------------ ------------
Cash flows from (used in) investing
activities
Expenditures for plant and
equipment (99) (82) (54)
Proceeds on disposals of plant
and equipment 87 - -
Restricted cash and cash
equivalents 3 (5) 1
Acquisitions of investments
and businesses - net of cash
acquired (121) (202) (2)
Proceeds on sale of investments
and businesses 30 162 83
------------ ------------ ------------
Net cash from (used in)
investing activities of
continuing operations (100) (127) 28
------------ ------------ ------------
Cash flows from (used in) financing
activities
Dividends paid by subsidiaries
to minority interests (18) (10) (14)
Increase in notes payable 4 11 20
Decrease in notes payable (3) (19) (26)
Borrowings in loan payable 1,300 - -
Repayments of long-term debt (1,275) - -
Decrease in capital leases payable (5) (2) (1)
Issuance of common shares 1 2 -
------------ ------------ ------------
Net cash from (used in)
financing activities of
continuing operations 4 (18) (21)
------------ ------------ ------------
Effect of foreign exchange rate
changes on cash and cash
equivalents 14 (16) (35)
------------ ------------ ------------
Net cash from (used in) continuing
operations (256) (44) (291)
Net cash from (used in)
operating activities of
discontinued operations - (1) 36
------------ ------------ ------------
Net increase (decrease) in cash
and cash equivalents (256) (45) (255)
Cash and cash equivalents at
beginning of period 2,951 2,996 3,685
------------ ------------ ------------
Cash and cash equivalents at
end of period US$ 2,695 US$ 2,951 US$ 3,430
------------ ------------ ------------
------------ ------------ ------------
NORTEL NETWORKS CORPORATION
Consolidated Financial Information (unaudited)
(U.S. GAAP; Millions of U.S. dollars)
Segmented revenues
The following table summarizes our revenue by segment for:
Three months ended
--------------------------------------
March 31, December 31, March 31,
2006 2005 2005
------------ ------------ ------------
As restated
Revenues
Mobility and Converged Core
Networks US$ 1,426 US$ 1,862 US$ 1,486
Enterprise Solutions and Packet
Networks 871 1,028 878
------------ ------------ ------------
Total reportable segments 2,297 2,890 2,364
Other 85 107 25
------------ ------------ ------------
Total revenues US$ 2,382 US$ 2,997 US$ 2,389
------------ ------------ ------------
------------ ------------ ------------
Geographic revenues
The following table summarizes our geographic revenues based on the
location of the customer for:
Three months ended
--------------------------------------
March 31, December 31, March 31,
2006 2005 2005
------------ ------------ ------------
As restated
Revenues
United States US$ 1,132 US$ 1,363 US$ 1,219
EMEA(a) 631 768 673
Canada 159 138 112
Asia Pacific 301 542 264
CALA(b) 159 186 121
------------ ------------ ------------
Total revenues US$ 2,382 US$ 2,997 US$ 2,389
------------ ------------ ------------
------------ ------------ ------------
(a) Europe, Middle East and Africa
(b) Caribbean and Latin America
Network Solutions revenues
The following table summarizes our external revenues by category of
network solutions for each of our reportable segments for:
Three months ended
-------------------------
March 31, March 31,
2006 2005
------------ ------------
As restated
Revenues
Mobility and Converged Core
Networks
CDMA solutions 514 534
GSM and UMTS solutions 633 713
Circuit and packet voice
solutions 279 239
------------ ------------
1,426 1,486
Enterprise Solutions and Packet
Networks
Circuit and packet voice
solutions 339 322
Optical networking solutions 250 237
Data networking and security
solutions(a) 282 319
------------ ------------
871 878
Other 85 25
------------ ------------
Total revenues US$ 2,382 US$ 2,389
------------ ------------
------------ ------------
(a) Includes US$175 and US$203 of revenue from our enterprise customers
for the three months ended March 31, 2006 and 2005, respectively.

ots Originaltext: Nortel Networks
Im Internet recherchierbar: http://www.presseportal.de

Contact:
For further information: Media, Patricia Vernon, +1-(905)-863-1035,
patricve@nortel.com; Investors, (888)-901-7286, +1-(905)-863-6049,
investor@nortel.com