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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FEBRUARY 28, 2007
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
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SONUS NETWORKS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 000-30229 04-3387074
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
7 TECHNOLOGY PARK DRIVE, WESTFORD, MASSACHUSETTS 01886
(Address of Principal Executive Offices) (Zip Code)
(978) 614-8100
(Registrant's telephone number, including area code)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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The information in this Current Report on Form 8-K and the exhibit attached
hereto shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") or incorporated by
reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific reference in
such a filing.
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On February 28, 2007, Sonus Networks, Inc. (the "Registrant") issued a
press release reporting certain financial results for the quarter and year ended
December 31, 2006. A copy of the press release is attached as Exhibit 99.1
hereto.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
The following exhibit relating to Item 2.02 shall be deemed to be
furnished, and not filed:
99.1 Press release of Sonus Networks, Inc. dated February 28,
2007 reporting certain financial results for the quarter
and year ended December 31, 2006.
2
SIGNATURE
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.
Date: February 28, 2007 SONUS NETWORKS, INC.
By: /s/ Ellen Richstone
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Ellen Richstone
Chief Financial Officer
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EXHIBIT INDEX
99.1 PRESS RELEASE OF SONUS NETWORKS, INC. DATED FEBRUARY 28, 2007 REPORTING
CERTAIN FINANCIAL RESULTS FOR THE QUARTER AND YEAR ENDED
DECEMBER 31, 2006.
4
Exhibit 99.1
SONUS NETWORKS REPORTS FOURTH QUARTER AND FISCAL YEAR 2006
FINANCIAL RESULTS
INDUSTRY LEADER REPORTS RECORD FOURTH QUARTER AND ANNUAL REVENUE
WESTFORD, Mass., Feb. 28 /PRNewswire-FirstCall/ -- Sonus Networks, Inc.
(Nasdaq: SONS), a leading supplier of service provider Voice over IP (VoIP)
infrastructure solutions, today reported its financial results for the fourth
quarter and fiscal year ended December 31, 2006.
Revenues for the fourth quarter of fiscal 2006 were $79 million compared to
$75 million in the third quarter of fiscal 2006. Revenues for the full year
fiscal 2006 were $279 million. Cash, cash equivalents and investments increased
by $47 million during 2006, to $361 million.
"2006 was a great year for Sonus. We set new records for revenue,
profitability, order activity, cash flow from operations and, perhaps most
importantly, consumer and business traffic on our customers' networks. These
results reflect the increasing momentum for our solutions as the industry moves
aggressively to IP," said Hassan Ahmed, chairman and CEO, Sonus Networks. "Our
growing portfolio of products seamlessly brings together voice, media and
data-rich services empowering today's consumers to access real-time personalized
services and to always remain connected. It is this vision for the future of
communications that is enabling us to make steady progress in boosting our
financial performance and creating value for our shareholders."
Non-GAAP Financial Metrics Highlights:
The Company is not providing detailed GAAP or non-GAAP financial results for
the quarter or full year at this time because the Company has not yet completed
its previously announced restatement of certain historical consolidated
financial statements resulting from its voluntary review of the processes by
which it has historically granted and accounted for employee stock options. The
Company had previously determined that it will restate certain historical
financial statements to record the additional stock-based compensation expense,
related tax impacts and any other unrecorded adjustments previously determined
to be immaterial. The preliminary, non-GAAP financial metrics provided in this
release do not include associated stock-based compensation expense or any impact
that may result from the stock option review and related restatement.
-- Fourth quarter gross margins declined modestly from our performance in
Q3, but were at the high-end of our target operating model range of
58 - 62%;
-- Fourth quarter operating expenses increased moderately from Q3 as a
percentage of revenue with the primary increase relating to the voluntary
stock option review;
-- Fourth quarter net income increased meaningfully over Q4 2005, even
before recognizing a significant income tax benefit in Q406;
-- Annual gross margins increased modestly as a percentage of revenue from
our performance in 2005;
-- Annual operating expenses decreased moderately as a percentage of
revenue compared to 2005;
-- Annual net income increased meaningfully from 2005;
-- Deferred revenue as of December 31, 2006 increased to $94 million;
-- Finally, cash and cash equivalents, marketable securities and long-term
investments as of December 31, 2006 were a record $361 million.
The Company also announced that as a result of its increased profitability
in 2006 and forecasted sustained profitability, it will reverse a portion of the
reserve against its deferred tax assets in accordance with Financial Accounting
Standard 109 "Accounting for Income Taxes" (FAS 109) and will record a
significant income tax benefit in the fourth quarter of 2006.
Update on Stock-Based Compensation Review
As previously reported, the Company has completed its internal stock option
review and continues to work diligently to complete its analysis of the revised
accounting and to file its periodic reports with the Securities and Exchange
Commission (SEC). The Company intends to file a Form 12b-25 with the SEC stating
that it will be unable to file its Form 10-K for the year ended December 31,
2006 until this process has been completed.
The Company voluntarily notified the SEC of its internal stock option review
in August 2006 and expects to receive from the SEC a notice of formal order of
investigation. Sonus has been fully cooperating with the SEC and will continue
to do so. The Company's Audit Committee completed its investigation of the
Company's stock option practices and accounting, which found no improper conduct
or violation of Company policies by any member of the Company's current
management.
Fourth Quarter 2006 Summary
In the fourth quarter of 2006, Sonus Networks continued to build its market
presence around the globe. In Europe, Sonus announced that eTel, an Internet
Service Provider (ISP) and fixed telephony service provider in Central Europe,
selected Sonus' Voice over Broadband (VoBB) network infrastructure as the
foundation for its next generation voice network. The Sonus solution will be
delivered through NK Networks & Services, one of the independent IT-network and
telecommunications systems integrators that Sonus has partnered with to augment
its market presence and direct sales activities. In North America and
Asia-Pacific, Sonus' position as the preferred partner by leading network
operators was confirmed by independent market research groups, Infonetics and
Synergy Research Group, which reported that Sonus holds market share leadership
positions in key segments of the next generation voice market.
In the fourth quarter, Sonus continued its pace of industry-leading
innovation by delivering new features that advance IP-voice communications.
Sonus developed a suite of IP-based new emergency voice calling features to
serve National Security/Emergency Preparedness (NS/EP) needs as outlined by the
National Communications System (NCS), whose Executive Agent is the Department of
Homeland Security. The emergency calling features are designed to ensure that
NS/EP communications are given priority for completion during periods of network
congestion, such as during crises or emergencies. Sonus was selected to develop
these features based on the Company's proven ability to deliver carrier-class,
Session Initiation Protocol (SIP)-based solutions.
Sonus also received "acceptance status" from the Technical Standards
Committee "A" (Telecommunications) of the Rural Utilities Service/Rural
Development Utilities Program (RUS/RDUP), a division of the United States
Department of Agriculture, for key elements of Sonus' industry leading IMS-ready
architecture. RUS/RDUP acceptance enhances Sonus' ability to address market
opportunities with rural telecommunications providers throughout the United
States.
Also in the fourth quarter, Sonus drove industry efforts to promote
interoperability. The Company participated in the inaugural IMS Plugfest,
sponsored by the IMS Forum and hosted at the University of New Hampshire
Interoperability Lab (UNH IOL). Sonus Networks successfully participated in all
of the Plugfest's rigorous tests, which validated the interoperability
capabilities of Sonus' IMS-ready solutions.
Beyond the Company's participation in industry-wide organizations, like the
IMS Forum and the Plugfest events, the Company continued to expand network
operator access to IMS-ready applications and services, and announced that Soleo
Communications was the first member to join Sonus' recently launched
Interoperability Certification Program, part of Sonus' Open Services Partner
Alliance (OSPA). Sonus also expanded its partnership with Cantata Technology by
integrating the Cantata SnowShore(R) IP Media Server(TM) with Sonus' IMS-ready
architecture to perform the Media Resource Function (MRF) and facilitate the
seamless delivery of subscriber-focused services and applications.
Sonus' position as the preferred partner of leading network operators and
the Company's continued technological innovation were also substantiated by
independent market research groups, Infonetics and Synergy Research Group, which
reported that Sonus holds market share leadership positions in key segments of
the IMS market worldwide, as well as in target geographies North America and
Japan.
"Given the sustainable macro trends in play throughout the industry and our
entire company's commitment to our customers, Sonus has strong growth prospects
for the future. Over the past year, Sonus successfully outpaced the market's
growth by anticipating our customers' needs and delivering the field-proven,
industry-solutions required to address them. As we look ahead at 2007 and
beyond, Sonus will continue to execute its strategy for leading the market
through proactive innovation and superior customer service," concluded Ahmed.
About Sonus Networks
Sonus Networks, Inc. is a leading provider of voice over IP (VoIP)
infrastructure solutions for wireline and wireless service providers. With its
comprehensive IP Multimedia Subsystem (IMS) solution, Sonus addresses the full
range of carrier applications, including residential and business voice
services, wireless voice and multimedia, trunking and tandem switching, carrier
interconnection and enhanced services. Sonus' voice infrastructure solutions are
deployed in service provider networks worldwide. Founded in 1997, Sonus is
headquartered in Westford, Massachusetts. Additional information on Sonus is
available at http://www.sonusnet.com.
This release may contain forward-looking statements regarding future events
that involve risks and uncertainties. Readers are cautioned that these
forward-looking statements are only predictions and may differ materially from
actual future events or results. Readers are referred to Item 1A "Risk Factors"
of Sonus' Quarterly Report on Form 10-Q dated May 8, 2006, filed with the SEC,
which identifies important risk factors that could cause actual results to
differ from those contained in the forward-looking statements. Risk factors
include among others: the impact of material weaknesses in our disclosure
controls and procedures and our internal control over financial reporting on our
ability to report our financial results timely and accurately; the
unpredictability of our quarterly financial results; risks and uncertainties
associated with the Company's announced review of its historical stock option
grants and accounting, including the impact on the Company's financial
statements or results, any tax liabilities or penalties, the Company's inability
to timely report with the Securities and Exchange Commission, the Company's
potential inability to meet NASDAQ requirements for continued listing, potential
investigations, regulatory actions or litigation arising out of the review or
any restatement; risks associated with our international expansion and growth;
consolidation in the telecommunications industry; and potential costs resulting
from pending securities litigation against the company. Any forward-looking
statements represent Sonus' views only as of today and should not be relied upon
as representing Sonus' views as of any subsequent date. While Sonus may elect to
update forward-looking statements at some point, Sonus specifically disclaims
any obligation to do so.
The product information in this press release is for informational purposes
only and is subject to change at Sonus' sole discretion without notice. Sonus
has no obligation or commitment to develop or deliver any product or future
release, upgrade, feature, enhancement or function described in this release.
The information is provided "AS IS," with all faults, and without any warranties
whatsoever, express or implied, including, but not limited to, warranties of
merchantability, performance, or fitness for a particular purpose.
Sonus is a registered trademark of Sonus Networks, Inc. All other company
and product names may be trademarks of the respective companies with which they
are associated.
For more information, please contact:
Investor Relations: Media Relations:
Jocelyn Philbrook Sarah McAuley
978-614-8672 978-614-8745
jphilbrook@sonusnet.com smcauley@sonusnet.com
SOURCE Sonus Networks, Inc.
-0- 02/28/2007
/CONTACT: Investor Relations: Jocelyn Philbrook, +1-978-614-8672,
jphilbrook@sonusnet.com, or Media Relations: Sarah McAuley, +1-978-614-8745,
smcauley@sonusnet.com, both of Sonus Networks, Inc./
/Web site: http://www.sonusnet.com/
(SONS)