Index to Consolidated Financial Statements | Reliant FORM 10-K

PART II
ITEM 8. Consolidated Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
	PAGE

Report of Independent Registered Chartered Accountants	F-1
Consolidated Statements of Operations	F-2

Consolidated Balance Sheets	F-3
Consolidated Statements of Changes in Equity and Comprehensive Income (Loss)	F-4

Consolidated Statements of Cash Flows	F-5
Notes to Consolidated Financial Statements	F-6
* * * * * * * * *

Quarterly Financial Data (Unaudited)	F-92
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Reliant FORM 10-K manual Index to Consolidated Financial Statements

Contents

Annual report pursuant to or 15d Washington, D.CSecurities Exchange Act For the transition period from Explanatory Note Table of Contents Item 9A Item 1. Business Overview Part Business environment Developments in 2003Page Strategic plan Other business developments2003 Networking solutions Networking solutionsNetworking Network components Products Wireless Networks Network access Product developmentCore networking Customers Markets Circuit and packet voice solutions Enterprise NetworksCompetition Data networking and security solutions Wireline Networks Circuit and packet voice solutions Markets Optical Networks Product development Markets Backlog Sales and distribution Sources and availability of materials Product standards, certification and regulations Strategic alliances, acquisitions and minority investments Seasonality Intellectual property Research and development Employee relations Financial information by geographic area Environmental matters Risk factors Working capital Type of Site Item 2. PropertiesNumber of Sites Owned Leased Geographic Locations Item 3. Legal Proceedings Page Page Environmental matters High Low Item 4. Submission of Matters to a Vote of Security Holders Canadian tax matters DividendsSales of unregistered securities Dividends Item 6. Selected Financial Data Unaudited 2003 2002 2001 2000 Total Revenues and cost of revenues adjustments Other adjustments Business overview Accounting changes and recent accounting pronouncements Business overview Our businessOur segments Our business environment How we measure performance Our strategic plan and outlook Comprehensive Review and First Restatement Consolidated results summary Independent Review Second RestatementYears ended December 31, 2002 Revenues and cost of revenues Intercompany balances Foreign exchangeSpecial charges Other First, second and third quarters ReclassificationsDis operations Page Revenues and cost of revenues Intercompany balances Revenue Independent Review Personnel actionsEDC Support Facility Debt securities Credit facilities and security agreements Credit ratings Shelf registration statementRegulatory actions and pending litigation Stock-based compensation plans Evolution of our supply chain strategy Other business developmentsShareholder rights plan Customer financing commitments Ownership adjustment in our French and German operationsSale of Entrust shares Real estate Customer financing arrangements Results of operations continuing operationsSegment revenues Geographic revenues 2003 vs 2002 vs2004 Wireless Networks revenues 2002 vs Enterprise Networks revenues 2002 vs Wireline Networks revenues Optical Networks revenues 2002 vs Gross profit and gross margin Wireless NetworksSegment gross profit and gross margin For the years ended December 2003 vs 2002 vs 2001 Wireline Networks Enterprise NetworksOptical Networks Segment selling, general and administrative expense Selling, general and administrative expenseOperating expenses For the years ended December 2003 vs 2002 vs 2001 $ Change Research and development expense Segment research and development expense Segment Management EBT Segment contribution marginAmortization of intangibles Deferred stock option compensation Special charges Page Other income expense net Gain loss on sale of businesses and assets Interest expense Results of operations dis operationsIncome tax benefit expense Net earnings loss from continuing operations Liquidity and capital resources Cash flows2003 2002 Page Uses of liquidity Purchase obligations Contractual cash obligationsOutsourcing contracts Obligations under special charges Customer financing JDS purchase arrangementPension, post-retirement and post-employment obligations Other long-term liabilities reflected on the balance sheets Dis operations Joint ventures/minority interestsSources of liquidity Credit facilities Shelf registration statement and base shelf prospectus Off-balance sheet arrangements Credit ratingsBid, performance related and other bonds Other indemnifications or guarantees Revenue recognition Application of critical accounting estimates Provisions for doubtful accounts Provisions for inventory Tax asset valuation Income taxes Goodwill valuation Tax contingencies Pension and post-retirement benefits Change in Assumption Special charges Accounting changes and recent accounting pronouncements Other contingenciesAccounting changes Recent accounting pronouncements Market risk Equity price risk Legal proceedings Risk factors/forward looking statementsRisks relating to our restatements and related matters Page Operations, financial condition and liquidity Page Page Page Page Risks relating to our business Page Page Page Page 104 Page Page Page Page Page Page Page Index to Consolidated Financial Statements Report of Independent Registered Chartered Accountants Nortel Networks Corporation Assets Consolidated Balance Sheets as of December Total comprehensive income loss for the year Cash flows from used in operating activities Significant accounting policies Nortel Networks CorporationBasis of presentation Principles of consolidation Revenue recognition Translation of foreign currencies Research and development Earnings loss per common share Income taxesCash and cash equivalents Restricted cash and cash equivalents Receivables sales InvestmentsPlant and equipment Goodwill Long-lived assets held and used Intangible assets Warranty costsPension, post-retirement and post-employment benefits Derivative financial instruments Stock-based compensation 2003 2002 2001 Black-Scholes weighted-average assumptions Weighted-average stock option fair value per option granted2003 2002 2001 Recent accounting pronouncements Comparative figures Restatement First RestatementSecond Restatement Page Page 121 Total restatement adjustments 289 183 314 272 Page Revenues and cost of revenues Other adjustments Revenue recognition adjustmentsApplication of SAB 101 or SOP Revenues Cost of revenues 2002 2001 Presentation errors Other revenue recognition adjustmentsReseller transactions Foreign exchange Functional currency designation Other errorsIntercompany transaction designation Goodwill impairment 980 Nplc business acquisition Goodwill impairment other acquisitions Other special chargesOther 2002 2001 Other adjustments Selling, general and administrative expenseCost of revenues Research and development expense Interest expense Other income expense netIncome taxes and minority interests Reclassifications Decrease to net loss on disposal of operations net of tax Dis operations Balance sheet Other adjustments Guarantees Consolidated Balance Sheet as of December 31Accounting changes Consolidation of variable interest entities Asset retirement obligationsPage Pensions and other post-retirement benefits Determining whether an arrangement contains a leaseStock-based compensation Accounting for goodwill and other intangible assets 23,270 Derivative financial instruments Consolidated financial statement detailsConsolidated statements of operations Accounts receivable net Consolidated balance sheetsInventories net Other current assets Goodwill Wireless Enterprise WirelineIntangible assets net Other accrued liabilities Other liabilities Interest and taxes paid recoveredMinority interests in subsidiary companies Change in operating assets and liabilities Segment information General description Receivables sales Product revenues Segments2003 2002 2001 Revenues Contribution margin Long-lived assets Geographic information Year ended December 31 Special charges Accrued Costs Payments Adjustments Balance as Incurred Made JanuaryDuring December 2003 Lease costs a Year ended December 31 Income taxes 2003 2002 2001 Employee benefit plans Net Operating Capital Tax LossesCredits b Total Page Change in plan assets 2003 2002 Change in benefit obligation 2003 2002 2001 Pension expense Allocation of net pension expenseDefined benefit plans 20032002 2003 2002 Target Actual 2003 2002 2001 Post-retirement benefit costPage Net tangible Deferred Closing date Purchase Other acquisitionsAcquisition Price Goodwill Technology Compensation Divestitures Service commerce operationsSale of Arris Group, Inc. investment High speed module operations Closures Sale of ClarifyLong-term debt, credit and support facilities Long-term debt Credit facilities Financial instruments and hedging activities Support facilityRisk management Foreign currency risk Fair value Equity price risk2003 2002 Interest rate swap contracts Cross currency coupon swap contracts Other derivatives Credit riskReceivables sales Fair Guarantees Business sale and business combination agreementsIntellectual property indemnification obligations Third party debt agreements Lease agreements Product warranties Other indemnification agreementsCommitments Bid, performance related and other bonds Venture capital financing Customer financing Operating leases and other commitments Purchase commitmentsOperating Outsourcing Leases Contracts Charges Income Capital stock Common shares Restricted cash and cash equivalents Prepaid forward purchase contracts Dividends Preferred sharesShareholder rights plan Earnings loss per common share Stock-based compensation plans Stock options Accumulated other comprehensive loss Maximum Options Restricted stock unit plan Employee stock purchase plans Directors’ deferred share compensation plans Dis operations 2003 2002 2001 Cash flows from used in dis operations Activity Activity Contingencies Related party transactionsPage Page Environmental matters Subsequent events EDC Support Facility Credit facilities and security agreements Debt securities Directory and operator services businessStock-based compensation plans Stock exchanges Evolution of Nortel Networks supply chain strategy Supplemental consolidating financial information Nortel Non Nortel Non 612 450 15,364 380 Supplemental Consolidating Balance Sheets as of December 31 182 240 413 388 262 16,961 Nortel Non Networks 818 592 487 525 768 572 111 648 206 Quarterly Financial Data Unaudited Report of Independent Registered Chartered Accountants Additions Schedule ConsolidatedCharged Beginning To costs End Item 9A. Controls and Procedures 114 Scope of the Independent Review Summary of Findings of the Independent Review Page Page Page Governing Principles for Remedial Measures Page Page Page Page Additional Background Page Second Restatement Independent Review Second Restatement Process Page Fixed or determinable fees-An increase of $133 million Page Principal Adjustments Page Page Revenue Independent Review Remedial Measures Page Name Age Position with the Company Page Page Page Name and age Office and position currently held Appointment Year Subsequent appointment Audit committee financial expert Beneficial ownership reporting complianceAudit committee Code of ethics and other corporate governance matters Summary compensation table Item 11. Executive Compensation Year Long Term Compensation Name Principal PositionAnnual Compensation Salary Bonus 147 148 149 150 Option grants in 2004 Annual cash incentive awards Value of Unexercised CommonIn-the-Money Realized $ Exercisable 152 Exercisable Unexercisable Dunn Debon Spradley Bolouri DeRoma Maturation or Payout Threshold# Target# Maximum# #12 Long-term incentive plans awards in last two fiscal years Retirement plans Page Total Earnings Certain employment arrangements Page Compensation of directors Security ownership of directors and management Compensation committee interlocks and insider participation Title of Class of Security Name of Beneficial Owner 163 Plan category Equity compensation plan information Indebtedness of management Item 13. Certain Relationships and Related Transactions Table of Indebtedness of Directors and Executive Officers Item 14. Principal Accountant Fees and ServicesAudit Fees January 1 Audit-Related Fees Tax FeesAll Other Fees Reports on Form 8-K Page Page Page Exhibit Index ExhibitNumber Description Number Description Number Description Number Description Number Description Number Description Subsidiary of Nortel Networks Limited Report of Independent Registered Public Accounting Firm 182 183 184 Nortel Networks S.A Nortel Networks S.A Use of estimates Research and development Cash and cash equivalents Plant and equipment Financial instruments State sponsored pension plans 192 Restatement Interest Second Pooling PreviouslyReported Restated Interest Pooled Reported Accruals Net increase decrease to net loss Accruals and provisions2002 2001 Increase decrease of cost of revenues Net increase decrease of cost of revenues Related party transactions Other expenses2002 2001 Increase decrease of research and development Net increase decrease of research and development Related party revenues and cost of revenues Residual profit sharingRelated party out of balances Plant and equipment Interest on long- term debt Costs of revenues, research and development expense Consolidated Balance Sheets as of December 31 Guarantees Consolidation of variable interest entities Asset retirement obligations Determining whether an arrangement contains a lease Stock-based compensationAccounting for goodwill and other intangible assets Derivative financial instruments 204 Wireline Optical WirelessInvestment at cost net Networks Long-term debt Segment information General description Major customers Long-lived assets Geographic information2003 2002 2001 External revenues Contract Expected sublease revenue on leases Income taxes Northern Telecom France Acquisitions and divestitures AcquisitionsNortel Networks France Matra Nortel Communication Distribution Other profit sharing agreements Royalties Sale of investmentFinancing transactions Share pledge Financial instruments Joint ventures/minority interests/disposed business Leases Contracts Shareholders’ equity Plan a Outstanding Weighted Options Nortel Networks Company Savings Plan Security agreements Page Signatures Directors