TORONTO -- Nortel Networks Corporation (NYSE/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.
First Quarter 2006 Results
Revenues were $2.38 billion for the first quarter of 2006 compared to $2.39 billion for the first quarter of 2005 and $3.0 billion for the fourth quarter of 2005. The Company reported a net loss in the first quarter of 2006 of $167 million, or ($0.04) per common share on a diluted basis, compared to a net loss of $104 million, or ($0.02) per common share on a diluted basis, in the first quarter of 2005 and a net loss of $2,302 million, or ($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 $23 million, a shareholder litigation expense of $19 million reflecting a mark-to-market adjustment of the share portion of the proposed class action settlement and a benefit of $35 million in gains on the sale of businesses and assets. Net loss in the first quarter of 2005 included special charges of $14 million related to restructuring activities. Net loss in the fourth quarter of 2005 included a litigation expense of $2,474 million for the proposed class action settlement, a tax benefit of approximately $140 million related to a liability release as a result of new information regarding transfer pricing issues, special charges of $25 million related to restructuring activities and $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."
Nortel Networks Ltd. (NYSE/Toronto: NT)