Nortel Networks Corp. this week said it would delay filing its 2003 annual report with the U.S. Securities and Exchange Commission as it continues an internal review begun in October.
Nortel's audit is currently re-examining the "establishment, timing of, support for and release to income" of certain accruals and provisions in prior periods. The company said it believes it will need to revise its previously announced unaudited results for the full year and results in some of its quarterly reports for 2003. The company also said it would restate its previously filed financial results for one or more earlier periods.
Nortel said it could not provide a timeframe for completing the work.
Once the delay in filing the 2003 Form 10-K extends beyond March 30, Nortel will not be in compliance with its obligations to deliver to relevant parties its SEC filings under its public debt indentures and some of its support and credit facilities. Approximately US$1.8 billion of notes and US$1.8 billion of Nortel convertible debt securities are outstanding under the indentures.
The delay in filing the 2003 Form 10-K will not result in an automatic default and acceleration of such long-term debt, Nortel says. The company believes that the public debt securities will not become due and payable as a result of a restatement and the related delay in filing the 2003 Form 10-K. If Nortel is unable to meet its respective payment obligations, the company said it would seek alternative financing sources to satisfy such obligations.
Nortel said it would request waivers from financial backers but that no waiver is guaranteed.