Nortel faces formal SEC investigation

April 6, 2004 Toronto--Nortel Networks announced that the Securities and Exchange Commission (SEC) has issued a formal order of investigation in connection with the company's previous restatement of its financial results for certain periods, as announced in October 2003, and the company's announcements in March 2004 regarding the likely need to further revise certain previously announced results and restate previously filed financial results for one or more earlier periods.

April 6, 2004 Toronto--Nortel Networks announced that the Securities and Exchange Commission (SEC) has issued a formal order of investigation in connection with the company's previous restatement of its financial results for certain periods, as announced in October 2003, and the company's announcements in March 2004 regarding the likely need to further revise certain previously announced results and restate previously filed financial results for one or more earlier periods.

The matter has been the subject of an informal SEC inquiry. As previously announced, an independent review is also being undertaken by the Nortel Networks Audit Committee.

Nortel Networks has been fully cooperating with the SEC and will continue to do so in order to bring the inquiry to a conclusion as promptly as possible.

In March, Douglas Beatty, the company's incumbent chief financial officer, and Michael Gollogly, the incumbent controller, have been placed on paid leave of absence pending completion of the independent review being undertaken by the Nortel Networks Audit Committee.

The independent review is examining the circumstances leading to the restatement of Nortel Networks financial statements, which was announced in October 2003. The company announced on March 10, 2004 that as a result of the work done to date in connection with the independent review, Nortel Networks believes it is likely that it will need to revise its previously announced unaudited results for the year ended December 31, 2003, and the results reported in certain of its quarterly reports for 2003, and to restate its previously filed financial results for one or more earlier periods.

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