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April 22, 1998
Nortel (Northern Telecom) Announces the Successful Completion of its Acquisition of Aptis Communications, Inc.
The acquisition was consummated by way of a merger between a wholly-owned subsidiary of Northern Telecom Limited and Aptis. In connection with the merger, the Aptis security holders became entitled to receive Nortel common shares and/or cash. At closing, Nortel issued approximately 2.5 million common shares and paid approximately $US 5 million in cash to the Aptis security holders. Subject to the fulfillment of certain conditions, approximately $US 40 million in Nortel common shares and cash will be paid to the Aptis security holders over the next three years. The remainder of the purchase price (approximately $US 90 million) is contingent upon the achievement of certain milestone events scheduled to occur within the next five months and is payable, at Nortel's option, in Nortel common shares or cash.
A significant portion of the acquisition price relates to in-process research and development. Nortel will charge this amount to its earnings using an accelerated depreciation method over a period of less than 12 months, resulting in significant non-cash charges against Nortel's 1998 earnings. The time period during which the charges will be expensed principally reflects the need for further research and development expenditures resulting from the rapid pace of change in access and virtual private network technologies, the need for further significant research and development expenditures to bring the product to commercial availability and the anticipated integration of Aptis' technology into Nortel's product portfolio under development. While the amount of the charges cannot be specifically determined at this time, they are expected to be within the range of 85% - 95% of the aggregate acquisition cost. Excluding the impact of the charges, the acquisition is not expected to have a material impact on Nortel's 1998 consolidated results of operations.
Nortel works with customers in more than 150 countries and territories to design, build and integrate their communications products and advanced digital networks. Customers include public and private institutions; Internet service providers; local, long-distance, cellular mobile and PCS communications companies; cable television companies; and utilities.
Nortel had 1997 revenues of $US 15.5 billion and has approximately 73,000 employees worldwide.
