Reliant FORM 10-K manual Other expenses, Related party transactions

Selling, general and administrative expense

The variations to selling, general and administrative expense were due to the following factors:

	2002	2001
Increase (decrease) of selling, general and administrative expense
Customer related	(102)	–
Employee related	(300)	–
Other accounts payable	(28)	(44)
Tax	1,910	(1,910)
Other	(1,900)	1,899
Net increase (decrease) of selling, general and administrative expense	(420)	(55)

Research and development expense

The variations to research and development costs were due to the following factors:

	2002	2001
Increase (decrease) of research and development
Product related	(5,734)	(1,585)
Related party	(150)	–
Other accounts payable	9,334	(7,787)
Tax	3,521	(3,986)
Other	(281)	–
Net increase (decrease) of research and development	6,690	(13,358)

Special Charges

As part of the Second Restatement process, the transactions impacting special charges were reviewed. As a result, various adjustments

have been made to correct certain items. The adjustments resulted in an increase of	2,646 and a decrease of 8,095 to special charges for
€	€
the years ended December 31, 2002 and 2001, respectively. Adjustments for restructuring related mainly to plant and equipment and real

estate related items. Nortel Networks S.A. determined that these items were accrued in error and the Second Restatement therefore cancels the original accruals in the period they were recorded. Accruals originally set-up in the year ended December 31, 2002 amounting

to	5,449 were adjusted. This adjustment was more than offset by the cancellation of accruals amounting to							€	8,095 originally setup in the
€
year ended December 31, 2001 and released in the year ended December 31, 2002.
Other expenses
For the year ended December, 31 2002 the				1,235 increase in the other expenses was primarily the result of adjustments to provisions for
litigations of		€	816, unrecoverable advances to suppliers for		594 partially offset by foreign exchange gains of 306 relating to items
			€	€	€	197	€		€
provided in error under restructuring. For the year ended December 31, 2001 the							435 increase in the other expenses was the result of an
adjustment for			497 to a payroll related accrual partially offset by a gain recorded on payments received from doubtful accounts fully
provided for		62.
(b)		€
	Related party transactions

A large portion of the activity of Nortel Networks S.A. is carried out with related parties. The adjustments to the financial statements of Nortel Networks have therefore resulted in changes in revenues and cost of revenues from and to related parties of Nortel Networks S.A. The analysis of out of balances positions (see below) has also led to certain corrections of revenue and cost of revenues with related parties. The following table summarizes the adjustments to related party revenues and cost of revenues:

	2002	2001
Increase (decrease) of revenue from related parties	(5,362)	9,800
Increase (decrease) of cost of revenues to related parties
Residual profit sharing adjustment	(49,668)	(60,747)
Other	(4,856)	–
Net increase (decrease) of gross profit from related parties	49,162	70,547