March 18, 2005 08:41 ET

Nortel Provides Status Update; Nortel to File Third Quarter 2004 Financial Statements




MARCH 18, 2005 - 08:41 ET

Nortel Provides Status Update; Nortel to File Third
Quarter 2004 Financial Statements

TORONTO--(CCNMatthews - Mar 18, 2005) -

Nortel Networks Corporation (NYSE:NT)(TSX:NT) and its principal
operating subsidiary, Nortel Networks Limited ("NNL"), today provided a
status update pursuant to the alternative information guidelines of the
Ontario Securities Commission. These guidelines contemplate that the
Company and NNL will normally provide bi-weekly updates on their affairs
until such time as they are current with their filing obligations under
Canadian securities laws.

Third Quarter of 2004; Canadian GAAP Financial Statements

The Company and NNL expect to file their unaudited financial statements
for the third quarter of 2004 prepared in accordance with United States
generally accepted accounting principles ("U.S. GAAP"), and related
Quarterly Reports on Form 10-Q and corresponding Canadian filings, after
the close of trading today.

Pursuant to new Canadian securities regulations and recent amendments to
the Canada Business Corporations Act regulations, the Company and NNL
will no longer be filing financial statements prepared in accordance
with Canadian generally accepted accounting principles ("Canadian
GAAP"), including for the fiscal year 2004. Consistent with the
financial statement presentation in the Company's and NNL's 2004
Quarterly Reports on Form 10-Q, the Company's and NNL's audited
financial statements for the fiscal year 2004 to be filed with their
respective Annual Report on Form 10-K will include a reconciliation note
highlighting the material differences between their financial statements
prepared in accordance with U.S. GAAP as compared to Canadian GAAP.
Subsequent to 2005, no further reconciliation notes will be required in
the Company's or NNL's financial statements.

Annual Shareholders' Meeting

The Company's application to the Ontario Superior Court of Justice for
an order extending the time for calling the Company's 2004 Annual
Shareholders' Meeting (the "Meeting") to a date no later than June 30,
2005 was heard on March 3, 2005. The Court granted an order to a date no
later than June 30, 2005. The extension was sought to permit compliance
with a specific rule of the United States Securities and Exchange
Commission which will require, in these circumstances, that the Company
provide to shareholders its 2004 audited financial statements either
prior to or concurrently with the mailing of the proxy materials for the
Meeting. The Company plans to hold a combined 2004/2005 Annual
Shareholders' Meeting as soon as reasonably possible within the extended
time period granted by the Court.

Status of Civil Proceedings

On March 9, 2005, the Company and certain of its current and former
officers and directors and its auditors were named as defendants in a
purported class proceeding filed in the Ontario Superior Court of
Justice, Commercial List, on behalf of all Canadian residents who
purchased the Company's securities from April 24, 2003 to April 27,
2004. This lawsuit alleges, among other things, negligence,
misrepresentations, oppressive conduct, insider trading and violations
of Canadian corporation and competition laws in connection with the
Company's 2003 financial results and seeks damages of CDN $3 billion,
plus punitive damages in the amount of CDN $1 billion, prejudgment and
postjudgment interest and costs of the action.

The Company and NNL reported that there have been no material
developments in the matters reported in their status updates of June 2,
2004 through February 28, 2005; the Company's press release "Nortel
Announces Senior Management Appointments" dated March 4, 2005; the
Company's press release "Nortel Announces New Waiver from Export
Development Canada" dated March 15, 2005, and the Company's press
release "Nortel Networks Corporation Shareholder Proposals" dated March
17, 2005, with the exception of the matters described above.

The Company's and NNL's next bi-weekly status update is expected to be
released during the week of March 28, 2005.

About Nortel

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. Serving both
service provider and enterprise customers, Nortel delivers innovative
technology solutions encompassing end-to-end broadband, Voice over IP,
multimedia services and applications, and wireless broadband designed to
help people solve the world's greatest challenges. Nortel does business
in more than 150 countries. For more information, visit Nortel on the
Web at For the latest Nortel news, visit

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 outcome of regulatory and
criminal investigations and civil litigation actions related to Nortel's
restatements and the impact any resulting legal judgments, settlements,
penalties and expenses could have on Nortel's results of operations,
financial condition and liquidity; the findings of Nortel's independent
review and implementation of recommended remedial measures; the outcome
of the independent review with respect to revenues for specific
identified transactions, which review will have a particular emphasis on
the underlying conduct that led to the initial recognition of these
revenues; the restatement or revisions of Nortel's previously announced
or filed financial results and resulting negative publicity; the
existence of material weaknesses in Nortel's internal controls over
financial reporting; the impact of Nortel's and NNL's failure to timely
file their financial statements and related periodic reports, including
breach of its support facility and public debt obligations and Nortel's
inability to access its shelf registration statement filed with the
United States Securities and Exchange Commission ("SEC"); ongoing SEC
reviews, which may result in changes to our public filings; the
potential delisting or suspension of Nortel's and NNL's publicly traded
securities; the impact of management changes, including the termination
for cause of Nortel's former CEO, CFO and Controller in April 2004; the
sufficiency of Nortel's restructuring activities, including the work
plan announced on August 19, 2004 as updated on September 30, 2004,
including the potential for higher actual costs to be incurred in
connection with restructuring actions compared to the estimated costs of
such actions;

cautious or reduced spending by Nortel's customers; fluctuations in
Nortel's operating results and general industry, economic and market
conditions and growth rates; fluctuations in Nortel's cash flow, level
of outstanding debt and current debt ratings; Nortel's ability to
recruit and retain qualified employees; the use of cash collateral to
support Nortel's normal course business activities; the dependence on
Nortel's subsidiaries for funding; the impact of Nortel's defined
benefit plans and deferred tax assets on results of operations and
Nortel's cash flow; the adverse resolution of class actions, litigation
in the ordinary course of business, intellectual property disputes and
similar matters; Nortel's dependence on new product development and its
ability to predict market demand for particular products; Nortel's
ability to integrate the operations and technologies of acquired
businesses in an effective manner; the impact of rapid technological and
market change; the impact of price and product competition; barriers to
international growth and global economic conditions, particularly in
emerging markets and including interest rate and currency exchange rate
fluctuations; the impact of rationalization and consolidation in the
telecommunications industry; changes in regulation of the Internet; the
impact of the credit risks of Nortel's customers and the impact of
customer financing and commitments; stock market volatility generally
and as a result of acceleration of the settlement date or early
settlement, which is currently not available, of Nortel's forward
purchase contracts; the impact of Nortel's supply and outsourcing
contracts that contain delivery and installation provisions, which, if
not met, could result in the payment of substantial penalties or
liquidated damages; and the future success of Nortel's strategic

For additional information with respect to certain of these and other
factors, see the most recent Annual Report on Form 10-K and Quarterly
Report on Form 10-Q filed by Nortel 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.

Nortel, the Nortel logo and the Globemark are trademarks of Nortel


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