In the first of its bi-weekly updates required by the Ontario Securities Commission (OSC), Nortel Networks Corp.'s CEO Bill Owens said that while the company intends to "get through the accounting restatement in good shape," the company can't say when it will have the restatements of accounts for 2003 and the first quarter of 2004 completed.
Bill Kerr, the company's chief financial officer, explained Wednesday during a teleconference that while the company "remains fully committed to completing the restatements as soon as possible," the process is complex and involves "numerous groups and hundreds of people."
"In light of the work yet to be done to complete the restatements, the audit of the financial statements and the independent review by the Audit Committee, we will not complete the restatements in the second quarter and are not in a position to provide and anticipate a completion or filing date," Kerr said.
On April 28, the Brampton, Ont.-based firm announced it was firing CEO Frank Dunn, replacing him with Owens. Also let go were CFO Douglas Beatty and former controller Michael Gollogly, who had both been on paid leave since March.
The company also indicated that its financials for the last three years were likely misrepresented. Nortel's Audit Committee would conduct an independent review, which would focus on management's practices regarding accruals and provisions. The review, which was originally set to cover the company's accounting practices in 2000, 2001 and 2002 had been extended to include all of 2003 as well, Nortel said.
It's business as usual for Nortel, according to Owens.
"Most of the external attention since April 28 has been focused on the restatement, but I want you to know that we have continued to move our business forward," Owens said. "We have made a number of key contract announcements and we have launched a key new IP networking solution, all since April 28."
Owens indicated that he has been visiting with and speaking to employees and customers around the world. Through these discussions, Owens said he has created a list of short-term priorities.
"Of course, the restatement is of the highest importance, and we will get this done as promptly as possible in align with doing it correctly, and we will fix our financial systems to report accurately and transparently in the future, he said."
Also top of mind, Owens said he will continue his "personal, dedicated outreach to our customers and our prospects in all global markets; to our employees and to our many stakeholders in other areas; and will ensure that our focus is on improving the effectiveness of our business."
Other priorities for the company include driving revenue growth; putting in place a core marketing and sales function; as well as driving in cash balances and reducing costs as time goes on, "which does not necessarily mean employee reductions; it means processes and finding ways to get cost levels as low as possible," Owens said.
According to a Nortel statement, the company has been informed by the Royal Canadian Mounted Police that it is conducting a review of the firm's accounting information to "determine the need for a criminal investigation." Nortel is already being investigated by the OSC and the U.S. Securities and Exchange Commission (SEC).