##### 



SECURITIES AND EXCHANGE COMMISSION




Washington, D.C. 20549


FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report
(date of earliest event reported)
July 24, 2003

NORTEL NETWORKS LIMITED




(Exact name of registrant as specified in its charter)


|                                               |  |                          |  |                                  
|---------------------------------------------- |  | ------------------------ |  | ---------------------------------
|CANADA                                         |  | 000-30758                |  | 62-12-62580                      
|                                               |  |                          |  |                                  
|(State or other jurisdiction
of incorporation) |  | (Commission
File Number) |  | (IRS Employer
Identification No.)

|                                                      |  |           
|----------------------------------------------------- |  | ----------
|8200 Dixie Road, Suite 100, Brampton, Ontario, Canada |  | L6T 5P6   
|                                                      |  |           
|(address of principal executive offices)              |  | (Zip code)

Registrants telephone number, including area code (905) 863-0000.





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##### 





|Item 5. |  | Other Events
|------- |  | ------------

On July 24, 2003 Nortel Networks Corporation issued its financial results
for the second quarter and first six months of 2003.

Nortel Networks Corporations revenues were US$2.33 billion for the second
quarter of 2003 compared to US$2.77 billion in the same period in 2002.
Nortel Networks Corporation reported net loss in the second quarter of
2003 of US$14 million, or US$0.00 per common share, compared to a net loss
of US$697 million, or US$0.20 per common share, in the second quarter of
2002.

Net loss in the second quarter of 2003 included an aggregate of US$37
million (net of tax) for the amortization of acquired technology and
deferred stock option compensation associated with acquisitions and US$5
million of special charges for restructuring. Nortel Networks
Corporations reported results also included a benefit of approximately
US$51 million (pre-tax) related to the reduction in provisions associated
with the collection in the quarter of certain customer financing
receivables.

Gross margin was 43.7 percent of sales in the second quarter of 2003, up
from 34.5 percent in the second quarter of 2002.

For the first half of 2003, Nortel Networks Corporation reported revenues
from continuing operations of US$4.73 billion compared to US$5.69 billion
for the same period in 2002. Nortel Networks Corporation reported net
earnings of US$40 million, or US$0.01 per common share for the first half
of 2003, compared to a net loss of US$1.54 billion, or US$0.46 per common
share, in the first six months of 2002. These results included US$190
million of net earnings from discontinued operations  net of tax; US$139
million of special charges for restructuring and an aggregate of US$73
million (net of tax) for the amortization of acquired technology and
deferred stock option compensation associated with acquisitions.

Given in 2003 relatively minor amounts may have greater effect on reported
results, Nortel Networks Corporation has initiated a comprehensive review
and analysis of its assets and liabilities. The outcome of the activity
may result in the elimination of certain assets and liabilities but is not
expected to have a negative impact to net assets. No amounts relating to
the elimination of any such assets and liabilities have been included in
the results for the second quarter of 2003.

Nortel Networks Corporation owns all of the Registrants common shares and
the Registrant is Nortel Networks Corporations principal direct operating
subsidiary.





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##### 



NORTEL NETWORKS CORPORATION
Consolidated Results (unaudited)
(millions of U.S. dollars, except per share amounts)

|                                                               |                                |                |              |      |                    |       |                  |       |         |       |       |       |     |       |        |       |      |       | 
|-------------------------------------------------------------- | ------------------------------ | -------------- | ------------ | ---- | ------------------ | ----- | ---------------- | ----- | ------- | ----- | ----- | ----- | --- | ----- | ------ | ----- | ---- | ----- | 
|                                                               |                                |                |              |      | U.S. GAAP         
|                                                               |                                |                |              |      |                   
|                                                               |                                |                |              |      | Three months ended |       | Six months ended
|                                                               |                                |                |              |      | June 30,           |       | June 30,        
|                                                               |                                |                |              |      |                    |       |                 
|                                                               |                                |                |              |      | 2003(1)            |       | 2002             |       | 2003(1) |       | 2002 
|                                                               |                                |                |              |      |                    |       |                  |       |         |       |      
|Revenues                                                       |                                | $              | 2,326        |      |                    | $     | 2,773            |       |         | $     | 4,725 |       |     | $     | 5,685  |      
|Cost of revenues(2)                                            |                                |                | 1,310        |      |                    |       | 1,815            |       |         |       | 2,680 |       |     |       | 3,969  |      
|                                                               |                                |                |              |      |                    |       |                  |       |         |       |       |       |     |       |        |      
|Gross profit                                                   |                                |                | 1,016        |      |                    |       | 958              |       |         |       | 2,045 |       |     |       | 1,716  |      
|                                                              
|Selling, general and administrative expense(2)                 |                                |                | 416          |      |                    |       | 767              |       |         |       | 903   |       |     |       | 1,511  |      
|Research and development expense(2)                            |                                |                | 479          |      |                    |       | 579              |       |         |       | 968   |       |     |       | 1,174  |      
|Amortization of acquired technology                            |                                |                | 33           |      |                    |       | 41               |       |         |       | 66    |       |     |       | 84     |      
|Deferred stock option compensation                             |                                |                | 17           |      |                    |       | 21               |       |         |       | 32    |       |     |       | 46     |      
|Special charges                                                |                                |                | 5            |      |                    |       | 403              |       |         |       | 139   |       |     |       | 890    |      
|Gain on sale of businesses                                     |                                |                |             |      |                    |       |                 |       |         |       |      |       |     |       | (14    | )    
|                                                               |                                |                |              |      |                    |       |                  |       |         |       |       |       |     |       |        |      
|Operating earnings (loss)                                      |                                |                | 66           |      |                    |       | (853             | )     |         |       | (63   | )     |     |       | (1,975 | )    
|                                                              
|Other income (expense)  net                                   |                                |                | 6            |      |                    |       | (9               | )     |         |       | 54    |       |     |       | (28    | )    
|Interest expense                                               |                                |                |              |      |                    |       |                  |       |         |       |       |       |     |       |        |      
|                                                               |                                | Long-term debt |              |      | (44                | )     |                  |       | (55     | )     |       |       | (89 | )     |        |       | (113 | )    
|                                                               |                                | Other          |              |      | (2                 | )     |                  |       | (9      | )     |       |       | (9  | )     |        |       | (21  | )    
|                                                               |                                |                |              |      |                    |       |                  |       |         |       |       |       |     |       |        |      
|Earnings (loss) from continuing operations before income taxes |                                |                | 26           |      |                    |       | (926             | )     |         |       | (107  | )     |     |       | (2,137 | )    
|                                                              
|Income tax benefit                                             |                                |                | 7            |      |                    |       | 229              |       |         |       | 9     |       |     |       | 603    |      
|                                                               |                                |                |              |      |                    |       |                  |       |         |       |       |       |     |       |        |      
|                                                               |                                |                | 33           |      |                    |       | (697             | )     |         |       | (98   | )     |     |       | (1,534 | )    
|Minority interests  net of tax(3)                             |                                |                | (27          | )    |                    |       | 10               |       |         |       | (25   | )     |     |       | 10     |      
|Equity in net loss of associated companies  net of tax        |                                |                | (20          | )    |                    |       | (10              | )     |         |       | (27   | )     |     |       | (14    | )    
|                                                               |                                |                |              |      |                    |       |                  |       |         |       |       |       |     |       |        |      
|Net loss from continuing operations                            |                                |                | (14          | )    |                    |       | (697             | )     |         |       | (150  | )     |     |       | (1,538 | )    
|                                                              
|Net earnings from discontinued operations  net of tax         |                                |                |             |      |                    |       |                 |       |         |       | 190   |       |     |       |       |      
|                                                               |                                |                |              |      |                    |       |                  |       |         |       |       |       |     |       |        |      
|Net earnings (loss)                                            |                                | $              | (14          | )    |                    | $     | (697             | )     |         | $     | 40    |       |     | $     | (1,538 | )    
|                                                               |                                |                |              |      |                    |       |                  |       |         |       |       |       |     |       |        |      
|Basic and diluted earnings (loss) per common share(4)(5)       |                                |                |              |      |                    |       |                  |       |         |       |       |       |     |       |        |      
|                                                               | - from continuing operations   |                | $            | 0.00 |                    |       | $                | (0.20 | )       |       | $     | (0.03 | )   |       | $      | (0.46 | )   
|                                                               | - from discontinued operations |                |              | 0.00 |                    |       |                  | 0.00  |         |       |       | 0.04  |     |       |        | 0.00  |     
|                                                               |                                |                |              |      |                    |       |                  |       |         |       |       |       |     |       |        |      
|Basic and diluted earnings (loss) per common share(4)(5)       |                                | $              | 0.00         |      |                    | $     | (0.20            | )     |         | $     | 0.01  |       |     | $     | (0.46  | )    
|                                                               |                                |                |              |      |                    |       |                  |       |         |       |       |       |     |       |        |      
|Weighted average number of common shares (millions)            |                                |                |              |      |                    |       |                  |       |         |       |       |       |     |       |        |      
|                                                               |                                |                | - basic(4)   |      |                    | 4,336 |                  |       |         | 3,450 |       |       |     | 4,336 |        |       |      | 3,333 | 
|                                                               |                                |                | - diluted(5) |      |                    | 4,336 |                  |       |         | 3,450 |       |       |     | 4,336 |        |       |      | 3,333 | 



|(1) |  | These unaudited consolidated results for the three months and six months ended June 30, 2003 are preliminary and are subject to change. Nortel Networks disclaims any intention or obligation to update or revise these preliminary results prior to the filing of its reported results for the three months and six months
ended June 30, 2003.                                                                                                                                                                                                                                                                                                                                      
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Effective January 1, 2003, Nortel Networks adopted prospectively the fair value accounting for stock options. The stock option expense for the three months and six months ended June 30, 2003 was $7 and $12, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(3) |  | Previously included as a
component of Other income
(expense)  net.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(4) |  | The basic weighted average
number of common shares
included the minimum number of
common shares to be issued upon
settlement of the prepaid
forward purchase contracts
issued on June 12, 2002. The
minimum number of common shares
to be issued on a weighted
basis for the three months
ended June 30, 2003 and 2002
were 455 and 101 (in millions),
respectively. The minimum
number of common shares to be
issued on a weighted basis for
the six months ended June 30,
2003 and 2002 were 468 and 51
(in millions), respectively.                                                                                                                                                
|   
|(5) |  | As a result of the reported net losses from continuing operations for
the three months ended June 30, 2003 and June 30, 2002, approximately
191 and 198 (in millions), respectively, of potentially dilutive
securities were not included in the calculation of diluted loss per
common share because to do so would have been anti-dilutive. Also, as
a result of the reported net losses from continuing operations for the
six months ended June 30, 2003 and 2002, approximately 191 and 192 (in
millions), respectively, of potentially dilutive securities were not
included in the calculation of diluted loss per common share because
to do so would have been anti-dilutive.





---



##### 



NORTEL NETWORKS CORPORATION
Consolidated Balance Sheets (unaudited)
(millions of U.S. dollars)

|                                                                                                                                                                                                       |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |       | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------- | - | --------- | ----- | --------- | - | ------------ | ----- |  | - | ------- | ----- | 
|                                                                                                                                                                                                       |                                                                                                                   |   | U.S. GAAP
|                                                                                                                                                                                                       |                                                                                                                   |   |          
|                                                                                                                                                                                                       |                                                                                                                   |   | June 30,  |       | March 31, |   | December 31,
|                                                                                                                                                                                                       |                                                                                                                   |   | 2003(1)   |       | 2003      |   | 2002        
|                                                                                                                                                                                                       |                                                                                                                   |   |           |       |           |   |             
|ASSETS                                                                                                                                                                                                 |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |      
|Current assets                                                                                                                                                                                         |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |      
|                                                                                                                                                                                                       | Cash and cash equivalents                                                                                         |   | $         | 4,190 |           |   | $            | 3,999 |  |   | $       | 3,861 | 
|                                                                                                                                                                                                       | Restricted cash and cash equivalents                                                                              |   |           | 115   |           |   |              | 227   |  |   |         | 249   | 
|                                                                                                                                                                                                       | Accounts receivable (less provisions of $355 at June 30, 2003, $403 at March 31, 2003,
$477 at December 31, 2002) |   |           | 1,717 |           |   |              | 1,857 |  |   |         | 1,910 | 
|                                                                                                                                                                                                       | Inventories  net                                                                                                 |   |           | 830   |           |   |              | 846   |  |   |         | 889   | 
|                                                                                                                                                                                                       | Income taxes recoverable                                                                                          |   |           | 57    |           |   |              | 60    |  |   |         | 58    | 
|                                                                                                                                                                                                       | Deferred income taxes  net                                                                                       |   |           | 400   |           |   |              | 785   |  |   |         | 791   | 
|                                                                                                                                                                                                       | Other current assets                                                                                              |   |           | 439   |           |   |              | 420   |  |   |         | 718   | 
|                                                                                                                                                                                                       |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |       | 
|Total current assets                                                                                                                                                                                   |                                                                                                                   |   | 7,748     |       |           |   | 8,194        |       |  |   | 8,476   |      
|                                                                                                                                                                                                      
|Investments                                                                                                                                                                                            |                                                                                                                   |   | 209       |       |           |   | 211          |       |  |   | 246     |      
|Plant and equipment  net                                                                                                                                                                              |                                                                                                                   |   | 1,380     |       |           |   | 1,397        |       |  |   | 1,444   |      
|Goodwill                                                                                                                                                                                               |                                                                                                                   |   | 2,202     |       |           |   | 2,201        |       |  |   | 2,201   |      
|Intangible assets  net                                                                                                                                                                                |                                                                                                                   |   | 33        |       |           |   | 65           |       |  |   | 98      |      
|Deferred income taxes  net                                                                                                                                                                            |                                                                                                                   |   | 3,600     |       |           |   | 3,040        |       |  |   | 2,723   |      
|Other assets(2)                                                                                                                                                                                        |                                                                                                                   |   | 669       |       |           |   | 786          |       |  |   | 783     |      
|                                                                                                                                                                                                       |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |       | 
|Total assets                                                                                                                                                                                           |                                                                                                                   | $ | 15,841    |       |           | $ | 15,894       |       |  | $ | 15,971  |      
|                                                                                                                                                                                                       |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |       | 
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                                                   |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |      
|Current liabilities                                                                                                                                                                                    |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |      
|                                                                                                                                                                                                       | Notes payable                                                                                                     |   | $         | 48    |           |   | $            | 78    |  |   | $       | 100   | 
|                                                                                                                                                                                                       | Trade and other accounts payable                                                                                  |   |           | 802   |           |   |              | 776   |  |   |         | 902   | 
|                                                                                                                                                                                                       | Payroll and benefit-related liabilities                                                                           |   |           | 635   |           |   |              | 668   |  |   |         | 521   | 
|                                                                                                                                                                                                       | Contractual liabilities                                                                                           |   |           | 1,355 |           |   |              | 1,458 |  |   |         | 1,547 | 
|                                                                                                                                                                                                       | Restructuring                                                                                                     |   |           | 637   |           |   |              | 702   |  |   |         | 785   | 
|                                                                                                                                                                                                       | Other accrued liabilities                                                                                         |   |           | 2,560 |           |   |              | 2,668 |  |   |         | 2,894 | 
|                                                                                                                                                                                                       | Long-term debt due within one year                                                                                |   |           | 184   |           |   |              | 234   |  |   |         | 233   | 
|                                                                                                                                                                                                       |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |       | 
|Total current liabilities                                                                                                                                                                              |                                                                                                                   |   | 6,221     |       |           |   | 6,584        |       |  |   | 6,982   |      
|                                                                                                                                                                                                      
|Long-term debt                                                                                                                                                                                         |                                                                                                                   |   | 3,694     |       |           |   | 3,664        |       |  |   | 3,719   |      
|Deferred income taxes  net                                                                                                                                                                            |                                                                                                                   |   | 488       |       |           |   | 487          |       |  |   | 344     |      
|Other liabilities                                                                                                                                                                                      |                                                                                                                   |   | 2,416     |       |           |   | 2,413        |       |  |   | 2,352   |      
|                                                                                                                                                                                                       |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |       | 
|                                                                                                                                                                                                       |                                                                                                                   |   | 12,819    |       |           |   | 13,148       |       |  |   | 13,397  |      
|                                                                                                                                                                                                       |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |       | 
|Minority interest in subsidiary companies                                                                                                                                                              |                                                                                                                   |   | 623       |       |           |   | 606          |       |  |   | 614     |      
|SHAREHOLDERS EQUITY                                                                                                                                                                                   |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |      
|Common shares, without par value  Authorized shares: unlimited; Issued and outstanding
shares: 3,945,270,970 at June 30, 2003, 3,862,915,463 at March 31, 2003
and 3,850,284,146 at December 31, 2002 |                                                                                                                   |   | 33,726    |       |           |   | 33,620       |       |  |   | 33,587  |      
|Additional paid-in capital                                                                                                                                                                             |                                                                                                                   |   | 3,587     |       |           |   | 3,690        |       |  |   | 3,734   |      
|Deferred stock option compensation                                                                                                                                                                     |                                                                                                                   |   | (53       | )     |           |   | (70          | )     |  |   | (96     | )    
|Deficit                                                                                                                                                                                                |                                                                                                                   |   | (33,696   | )     |           |   | (33,682      | )     |  |   | (33,736 | )    
|Accumulated other comprehensive loss                                                                                                                                                                   |                                                                                                                   |   | (1,165    | )     |           |   | (1,418       | )     |  |   | (1,529  | )    
|                                                                                                                                                                                                       |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |       | 
|Total shareholders equity                                                                                                                                                                             |                                                                                                                   |   | 2,399     |       |           |   | 2,140        |       |  |   | 1,960   |      
|                                                                                                                                                                                                       |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |       | 
|Total liabilities and shareholders equity                                                                                                                                                             |                                                                                                                   | $ | 15,841    |       |           | $ | 15,894       |       |  | $ | 15,971  |      
|                                                                                                                                                                                                       |                                                                                                                   |   |           |       |           |   |              |       |  |   |         |       | 



|(1) |  | The unaudited consolidated balance sheet as at June 30, 2003 is preliminary
and is subject to change. Nortel Networks disclaims any intention or
obligation to update or revise such balance sheet prior to the filing of its
reported results for the three months and six months ended June 30, 2003.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Included in Other assets were provisions related to long-term accounts
receivable of $324 at June 30, 2003, $682 at March 31, 2003 and $781 at
December 31, 2002.                                                                                                                                      





---



##### 



NORTEL NETWORKS CORPORATION
Consolidated Statements of Cash Flows (unaudited)
(millions of U.S. dollars)

|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |      |       |  
|------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------- | ---------------------------------------- | ---- | ------------------ | ---- | ---------------- | ----- | ------- | ---- | ----- | ---- | --- | ---- | ----- | ------ | ---- | ----- | -
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      | U.S. GAAP         
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                   
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      | Three months ended |      | Six months ended
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      | June 30,           |      | June 30,        
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                 
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      | 2003(1)            |      | 2002             |       | 2003(1) |      | 2002 
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |      
|Cash flows from (used in) operating activities         |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |       
|                                                       | Net loss from continuing operations                                                                                                                                            |                                                                   | $                                        | (14  | )                  |      | $                | (697  | )       |      | $     | (150 | )   |      | $     | (1,538 | )   
|                                                       | Adjustments to reconcile net loss from continuing operations
to net cash from (used in) operating activities, net of
effects from acquisitions and divestitures of businesses: |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |     
|                                                       |                                                                                                                                                                                | Amortization and depreciation                                     |                                          |      | 139                |      |                  |       | 185     |      |       |      | 279 |      |       |        | 384  |      
|                                                       |                                                                                                                                                                                | Non-cash portion of special charges and related asset write downs |                                          |      | (21                | )    |                  |       | 285     |      |       |      | (26 | )    |       |        | 382  |      
|                                                       |                                                                                                                                                                                | Equity in net loss of associated companies                        |                                          |      | 20                 |      |                  |       | 10      |      |       |      | 27  |      |       |        | 14   |      
|                                                       |                                                                                                                                                                                | Current and deferred stock option compensation                    |                                          |      | 24                 |      |                  |       | 21      |      |       |      | 44  |      |       |        | 46   |      
|                                                       |                                                                                                                                                                                | Deferred income taxes                                             |                                          |      |                   |      |                  |       | (231    | )    |       |      | (6  | )    |       |        | (614 | )    
|                                                       |                                                                                                                                                                                | Other liabilities                                                 |                                          |      | 39                 |      |                  |       | 7       |      |       |      | 65  |      |       |        | (30  | )    
|                                                       |                                                                                                                                                                                | Gain on repurchases of outstanding debt securities                |                                          |      |                   |      |                  |       |        |      |       |      | (4  | )    |       |        |     |      
|                                                       |                                                                                                                                                                                | (Gain) loss on sale or write down of investments and businesses   |                                          |      | 9                  |      |                  |       | (4      | )    |       |      | 42  |      |       |        | (26  | )    
|                                                       |                                                                                                                                                                                | Other  net                                                       |                                          |      | (107               | )    |                  |       | 137     |      |       |      | (78 | )    |       |        | 206  |      
|                                                       |                                                                                                                                                                                | Change in operating assets and liabilities:                       |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |      |      
|                                                       |                                                                                                                                                                                |                                                                   | Accounts receivable                      |      |                    | 139  |                  |       |         | 371  |       |      |     | 186  |       |        |      | 544   |  
|                                                       |                                                                                                                                                                                |                                                                   | Inventories                              |      |                    | 6    |                  |       |         | 36   |       |      |     | 117  |       |        |      | 126   |  
|                                                       |                                                                                                                                                                                |                                                                   | Income taxes                             |      |                    | 10   |                  |       |         | 750  |       |      |     | 5    |       |        |      | 1,280 |  
|                                                       |                                                                                                                                                                                |                                                                   | Restructuring                            |      |                    | (153 | )                |       |         | (294 | )     |      |     | (343 | )     |        |      | (665  | )
|                                                       |                                                                                                                                                                                |                                                                   | Accounts payable and accrued liabilities |      |                    | (182 | )                |       |         | (232 | )     |      |     | (335 | )     |        |      | (90   | )
|                                                       |                                                                                                                                                                                |                                                                   | Other operating assets and liabilities   |      |                    | (37  | )                |       |         | (130 | )     |      |     | (32  | )     |        |      | (237  | )
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |     
|                                                       | Net cash from (used in) operating activities of continuing operations                                                                                                          |                                                                   |                                          | (128 | )                  |      |                  | 214   |         |      |       | (209 | )   |      |       | (218   | )   
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |     
|Cash flows from (used in) investing activities         |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |       
|                                                       | Expenditures for plant and equipment                                                                                                                                           |                                                                   |                                          | (38  | )                  |      |                  | (105  | )       |      |       | (56  | )   |      |       | (208   | )   
|                                                       | Proceeds on disposals of plant and equipment                                                                                                                                   |                                                                   |                                          | 15   |                    |      |                  | 32    |         |      |       | 21   |     |      |       | 76     |     
|                                                       | Decrease in restricted cash and cash equivalents                                                                                                                               |                                                                   |                                          | 124  |                    |      |                  |      |         |      |       | 144  |     |      |       |       |     
|                                                       | Increase in long-term receivables                                                                                                                                              |                                                                   |                                          | (2   | )                  |      |                  | (103  | )       |      |       | (11  | )   |      |       | (210   | )   
|                                                       | Decrease in long-term receivables                                                                                                                                              |                                                                   |                                          | 192  |                    |      |                  | 16    |         |      |       | 197  |     |      |       | 105    |     
|                                                       | Acquisitions of investments and businesses  net of cash acquired                                                                                                              |                                                                   |                                          |     |                    |      |                  | (6    | )       |      |       | (2   | )   |      |       | (25    | )   
|                                                       | Proceeds on sale of investments and businesses                                                                                                                                 |                                                                   |                                          | 1    |                    |      |                  | 14    |         |      |       | 8    |     |      |       | 73     |     
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |     
|                                                       | Net cash from (used in) investing activities of continuing operations                                                                                                          |                                                                   |                                          | 292  |                    |      |                  | (152  | )       |      |       | 301  |     |      |       | (189   | )   
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |     
|Cash flows from (used in) financing activities         |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |       
|                                                       | Decrease in notes payable  net                                                                                                                                                |                                                                   |                                          | (1   | )                  |      |                  | (66   | )       |      |       | (18  | )   |      |       | (77    | )   
|                                                       | Proceeds from long-term debt                                                                                                                                                   |                                                                   |                                          |     |                    |      |                  | 20    |         |      |       |     |     |      |       | 31     |     
|                                                       | Repayments of long-term debt                                                                                                                                                   |                                                                   |                                          | (51  | )                  |      |                  | (4    | )       |      |       | (94  | )   |      |       | (6     | )   
|                                                       | Decrease in capital leases payable                                                                                                                                             |                                                                   |                                          | (1   | )                  |      |                  | (1    | )       |      |       | (2   | )   |      |       | (5     | )   
|                                                       | Issuance of common shares                                                                                                                                                      |                                                                   |                                          |     |                    |      |                  | 857   |         |      |       |     |     |      |       | 862    |     
|                                                       | Issuance of prepaid forward purchase contracts                                                                                                                                 |                                                                   |                                          |     |                    |      |                  | 623   |         |      |       |     |     |      |       | 623    |     
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |     
|                                                       | Net cash from (used in) financing activities of continuing operations                                                                                                          |                                                                   |                                          | (53  | )                  |      |                  | 1,429 |         |      |       | (114 | )   |      |       | 1,428  |     
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |     
|                                                       | Effect of foreign exchange rate changes on cash and cash equivalents                                                                                                           |                                                                   |                                          | 60   |                    |      |                  | 52    |         |      |       | 78   |     |      |       | 46     |     
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |     
|                                                       | Net cash from continuing operations                                                                                                                                            |                                                                   |                                          | 171  |                    |      |                  | 1,543 |         |      |       | 56   |     |      |       | 1,067  |     
|                                                       | Net cash from discontinued operations                                                                                                                                          |                                                                   |                                          | 20   |                    |      |                  | 237   |         |      |       | 273  |     |      |       | 289    |     
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |     
|Net increase in cash and cash equivalents              |                                                                                                                                                                                |                                                                   | 191                                      |      |                    |      | 1,780            |       |         |      | 329   |      |     |      | 1,356 |       
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |     
|Cash and cash equivalents at beginning of period  net |                                                                                                                                                                                |                                                                   | 3,999                                    |      |                    |      | 3,089            |       |         |      | 3,861 |      |     |      | 3,513 |       
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |     
|Cash and cash equivalents at end of period  net       |                                                                                                                                                                                | $                                                                 | 4,190                                    |      |                    | $    | 4,869            |       |         | $    | 4,190 |      |     | $    | 4,869 |       
|                                                       |                                                                                                                                                                                |                                                                   |                                          |      |                    |      |                  |       |         |      |       |      |     |      |       |        |     



|(1) |  | The unaudited consolidated statements of cash flows for the three months
and six months ended June 30, 2003 are preliminary and are subject to change.
Nortel Networks disclaims any intention or obligation to update or revise such
statements of cash flows prior to the filing of its reported results for the
three months and six months ended June 30, 2003.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### 



NORTEL NETWORKS CORPORATION
Consolidated Results (unaudited)(1)Supplementary Information
(millions of U.S. dollars)

Revenues

|            |                     |  |   |                    |  |         |   |          |  |                  |  |         |    |          |   |       |  |  |   |       |  |  |  |     |    | 
|----------- | ------------------- |  | - | ------------------ |  | ------- | - | -------- |  | ---------------- |  | ------- | -- | -------- | - | ----- |  |  | - | ----- |  |  |  | --- | -- | 
|            |                     |  |   | U.S. GAAP         
|            |                     |  |   |                   
|            |                     |  |   | Three months ended |  |         |   |          |  | Six months ended |  |         |    |         
|            |                     |  |   | June 30,           |  |         |   |          |  | June 30,         |  |         |    |         
|            |                     |  |   |                    |  |         |   |          |  |                  |  |         |    |         
|            |                     |  |   | 2003               |  | 2002(2) |   | % Change |  | 2003             |  | 2002(2) |    | % Change
|            |                     |  |   |                    |  |         |   |          |  |                  |  |         |    |         
|By segment: |                     |  |   |                    |  |         |   |          |  |                  |  |         |    |          |   |       |  |  |   |       |  |  |  |    
|            | Wireless Networks   |  | $ | 987                |  |         | $ | 1,123    |  |                  |  | (12     | %) |          | $ | 1,940 |  |  | $ | 2,259 |  |  |  | (14 | %)
|            | Enterprise Networks |  |   | 547                |  |         |   | 636      |  |                  |  | (14     | %) |          |   | 1,160 |  |  |   | 1,311 |  |  |  | (12 | %)
|            | Wireline Networks   |  |   | 494                |  |         |   | 588      |  |                  |  | (16     | %) |          |   | 1,056 |  |  |   | 1,270 |  |  |  | (17 | %)
|            | Optical Networks    |  |   | 298                |  |         |   | 406      |  |                  |  | (27     | %) |          |   | 568   |  |  |   | 812   |  |  |  | (30 | %)
|            | Other               |  |   |                   |  |         |   | 20       |  |                  |  | (100    | %) |          |   | 1     |  |  |   | 33    |  |  |  | (97 | %)
|            |                     |  |   |                    |  |         |   |          |  |                  |  |         |    |          |   |       |  |  |   |       |  |  |  |    
|            | Total               |  | $ | 2,326              |  |         | $ | 2,773    |  |                  |  |         |    |          | $ | 4,725 |  |  | $ | 5,685 |  |  |  |     |   
|            |                     |  |   |                    |  |         |   |          |  |                  |  |         |    |          |   |       |  |  |   |       |  |  |  |    

|                         |               |  |                    |       |      |  |          |       |                  |  |      |     |          |  |   |       |  |  |   |       |  |  |  |     |   
|------------------------ | ------------- |  | ------------------ | ----- | ---- |  | -------- | ----- | ---------------- |  | ---- | --- | -------- |  | - | ----- |  |  | - | ----- |  |  |  | --- | --
|                         |               |  | U.S. GAAP         
|                         |               |  |                   
|                         |               |  | Three months ended |       |      |  |          |       | Six months ended |  |      |     |         
|                         |               |  | June 30,           |       |      |  |          |       | June 30,         |  |      |     |         
|                         |               |  |                    |       |      |  |          |       |                  |  |      |     |         
|                         |               |  | 2003               |       | 2002 |  | % Change |       | 2003             |  | 2002 |     | % Change
|                         |               |  |                    |       |      |  |          |       |                  |  |      |     |         
|By geographic region:(3) |               |  |                    |       |      |  |          |       |                  |  |      |     |          |  |   |       |  |  |   |       |  |  |  |    
|                         | United States |  | $                  | 1,138 |      |  | $        | 1,490 |                  |  |      | (24 | %)       |  | $ | 2,342 |  |  | $ | 2,896 |  |  |  | (19 | %)
|                         | EMEA(4)       |  |                    | 583   |      |  |          | 632   |                  |  |      | (8  | %)       |  |   | 1,224 |  |  |   | 1,356 |  |  |  | (10 | %)
|                         | Canada        |  |                    | 138   |      |  |          | 201   |                  |  |      | (31 | %)       |  |   | 268   |  |  |   | 420   |  |  |  | (36 | %)
|                         | Other         |  |                    | 467   |      |  |          | 450   |                  |  |      | 4   | %        |  |   | 891   |  |  |   | 1,013 |  |  |  | (12 | %)
|                         |               |  |                    |       |      |  |          |       |                  |  |      |     |          |  |   |       |  |  |   |       |  |  |  |    
|                         | Total         |  | $                  | 2,326 |      |  | $        | 2,773 |                  |  |      |     |          |  | $ | 4,725 |  |  | $ | 5,685 |  |  |  |     |   
|                         |               |  |                    |       |      |  |          |       |                  |  |      |     |          |  |   |       |  |  |   |       |  |  |  |    

Percentage change in revenue by segment and geographic region(2)(3)

|                                  |                     |  |                    |     |      |  |        |     |              |  |         |     |       |  |  |    |    |  |  |      |    |  |  |     |   
|--------------------------------- | ------------------- |  | ------------------ | --- | ---- |  | ------ | --- | ------------ |  | ------- | --- | ----- |  |  | -- | -- |  |  | ---- | -- |  |  | --- | --
|                                  |                     |  | U.S. GAAP         
|                                  |                     |  |                   
|                                  |                     |  | Q2 2003 vs Q1 2003
|                                  |                     |  |                    |     |     
|                                  |                     |  | United States      |     | EMEA |  | Canada |     | Asia Pacific |  | CALA(5) |     | Total
|                                  |                     |  |                    |     |      |  |        |     |              |  |         |     |      
|By segment and
geographic region: |                     |  |                    |     |      |  |        |     |              |  |         |     |       |  |  |    |    |  |  |      |    |  |  |    
|                                  | Wireless Networks   |  |                    | (2  | %)   |  |        | (11 | %)           |  |         | 51  | %     |  |  | 87 | %  |  |  | (28  | %) |  |  | 4   | % 
|                                  | Enterprise Networks |  |                    | (8  | %)   |  |        | (14 | %)           |  |         | (21 | %)    |  |  | (2 | %) |  |  | (32  | %) |  |  | (11 | %)
|                                  | Wireline Networks   |  |                    | (26 | %)   |  |        | 10  | %            |  |         | 6   | %     |  |  | 0  | %  |  |  | (12  | %) |  |  | (12 | %)
|                                  | Optical Networks    |  |                    | 77  | %    |  |        | (26 | %)           |  |         | (10 | %)    |  |  | 1  | %  |  |  | 17   | %  |  |  | 10  | % 
|                                  | Other               |  |                    | 0   | %    |  |        | 0   | %            |  |         | 0   | %     |  |  | 0  | %  |  |  | (100 | %) |  |  | (74 | %)
|                                  | Total               |  |                    | (5  | %)   |  |        | (9  | %)           |  |         | 6   | %     |  |  | 27 | %  |  |  | (23  | %) |  |  | (3  | %)

|                                  |                     |  |                    |     |      |  |        |      |              |  |      |     |       |  |  |     |    |  |  |     |    |  |  |     |   
|--------------------------------- | ------------------- |  | ------------------ | --- | ---- |  | ------ | ---- | ------------ |  | ---- | --- | ----- |  |  | --- | -- |  |  | --- | -- |  |  | --- | --
|                                  |                     |  | U.S. GAAP         
|                                  |                     |  |                   
|                                  |                     |  | Q2 2003 vs Q2 2002
|                                  |                     |  |                    |     |     
|                                  |                     |  | United States      |     | EMEA |  | Canada |      | Asia Pacific |  | CALA |     | Total
|                                  |                     |  |                    |     |      |  |        |      |              |  |      |     |      
|By segment and geographic
region: |                     |  |                    |     |      |  |        |      |              |  |      |     |       |  |  |     |    |  |  |     |    |  |  |    
|                                  | Wireless Networks   |  |                    | (25 | %)   |  |        | 17   | %            |  |      | (45 | %)    |  |  | 49  | %  |  |  | (9  | %) |  |  | (12 | %)
|                                  | Enterprise Networks |  |                    | (17 | %)   |  |        | (5   | %)           |  |      | (13 | %)    |  |  | (13 | %) |  |  | (35 | %) |  |  | (14 | %)
|                                  | Wireline Networks   |  |                    | (21 | %)   |  |        | 1    | %            |  |      | 21  | %     |  |  | (34 | %) |  |  | (50 | %) |  |  | (16 | %)
|                                  | Optical Networks    |  |                    | (29 | %)   |  |        | (44  | %)           |  |      | (63 | %)    |  |  | 32  | %  |  |  | (7  | %) |  |  | (27 | %)
|                                  | Other               |  |                    | (98 | %)   |  |        | (100 | %)           |  |      | 100 | %     |  |  | 103 | %  |  |  | 0   | %  |  |  | (99 | %)
|                                  | Total               |  |                    | (24 | %)   |  |        | (8   | %)           |  |      | (31 | %)    |  |  | 15  | %  |  |  | (22 | %) |  |  | (16 | %)



|(1) |  | These unaudited consolidated results are preliminary and are subject
to change. Nortel Networks disclaims any intention or obligation to update or
revise these preliminary consolidated results prior to the filing of its
reported results for the three months and six months ended June 30, 2003.                                                  
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Certain historical revenues by segment between Wireline Networks and
Other have been revised to reflect reclassifications of certain minor product
portfolios during the first quarter of 2003. Overall consolidated Nortel
Networks revenues and revenues by geographic regions for the relevant periods
were not impacted by these reclassifications.
|   
|(3) |  | Revenues were attributable to geographic regions based on the location
of the customer.                                                                                                                                                                                                                                                                
|   
|(4) |  | The Europe, Middle East and Africa region.                                                                                                                                                                                                                                                                                                             
|   
|(5) |  | The Caribbean and Latin America region.                                                                                                                                                                                                                                                                                                                





---



##### 



NORTEL NETWORKS CORPORATION
Consolidated Results (unaudited)(1)Supplementary Information

Days sales outstanding (DSO)

|                                                       |  |         |  |    
|------------------------------------------------------ |  | ------- |  | ---
|                                                       |  | Q2 2003 |  |    
|Accounts receivables X 90 days

Revenue for the period |  | 66      |  | DSO
|                                                       |  |         |  |    
|                                                       |  | Q1 2003 |  |    
|                                                       |  | 70      |  | DSO

Inventory turnover

|                                                      |  |         |  |      
|----------------------------------------------------- |  | ------- |  | -----
|                                                      |  | Q2 2003 |  |      
|Cost of revenues for the period

Average inventory(2) |  | 1.5632  |  | turns
|                                                      |  |         |  |      
|                                                      |  | Q1 2003 |  |      
|                                                      |  | 1.5793  |  | turns

Inventory Days

|                            |  |         |  |     
|--------------------------- |  | ------- |  | ----
|                            |  | Q2 2003 |  |     
|90 days

Inventory turnover |  | 58      |  | days
|                            |  |         |  |     
|                            |  | Q1 2003 |  |     
|                            |  | 57      |  | days



|(1) |  | These unaudited consolidated results are preliminary and are subject to change.
Nortel Networks disclaims any intention or obligation to update or revise
these preliminary consolidated results prior to the filing of its reported
results for the three months and six months ended June 30, 2003.              
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | For Q2 2003, Average inventory represents the sum of inventories  net as at
March 31, 2003 and inventories  net as at June 30, 2003 divided by two. For
Q1 2003, Average inventory represents the sum of inventories  net as at
December 31, 2002 and inventories  net as at March 31, 2003 divided by two.





---



##### 



Certain information in this report is forward-looking and is subject to
important risks and uncertainties. The results or events predicted in
these statements may differ materially from actual results or events.
Factors which could cause results or events to differ from current
expectations include, among other things: the severity and duration of the
industry adjustment; the sufficiency of our restructuring activities,
including the potential for higher actual costs to be incurred in
connection with restructuring actions compared to the estimated costs of
such actions; fluctuations in operating results and general industry,
economic and market conditions and growth rates; the ability to recruit
and retain qualified employees; fluctuations in cash flow; the level of
outstanding debt and our current debt ratings; the ability to meet the
financial covenant in our credit facilities; the use of cash collateral to
support our normal course business activities; the impact of our defined
benefit plans and our deferred tax assets on our results of operations,
cash flows and compliance with our financial covenant; the ability to make
acquisitions and/or integrate the operations and technologies of acquired
businesses in an effective manner; the impact of rapid technological and
market change; the impact of price and product competition; international
growth and global economic conditions, particularly in emerging markets
and including interest rate and currency exchange rate fluctuations; the
impact of rationalization in the telecommunications industry; the
dependence on new product development; the uncertainties of the Internet;
the impact of the credit risks of our customers and the impact of customer
financing and commitments; the impact of supply and outsourcing contracts
that contain delivery and installation provisions, which, if not met,
could result in the payment of substantial penalties or liquidated
damages; the ability to obtain timely, adequate and reasonably priced
component parts from suppliers and internal manufacturing capacity; the
future success of our strategic alliances; and the adverse resolution of
litigation. For additional information with respect to certain of these
and other factors, see the reports filed by Nortel Networks Limited with
the United States Securities and Exchange Commission. Unless otherwise
required by applicable securities laws, Nortel Networks Limited disclaims
any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.





---



##### 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.

| |                                           |                      
| | ----------------------------------------- | ---------------------
| | NORTEL NETWORKS LIMITED                  
|
|
| | By:                                       | /s/ Douglas C. Beatty
| |                                          
| | Douglas C. Beatty
Chief Financial Officer
|
|
| | By:                                       | /s/ Blair F. Morrison
| |                                          
| | Blair F. Morrison
Assistant Secretary    

Dated: July 25, 2003