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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
November 3, 2004
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 File Number) (IRS Employer
of Incorporation) Identification No.)
250 APOLLO DRIVE, CHELMSFORD, MASSACHUSETTS 01824
(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))
Item 2.02. Results of Operations and Financial Condition.
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, 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.
On November 3, 2004, Sonus Networks, Inc. issued a press release
reporting its financial results for the quarter ended September 30, 2004. A copy
of the press release is attached as Exhibit 99.1 hereto.
Item 9.01. Financial Statements and Exhibits.
(c) 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 November 3, 2004
reporting financial results for the quarter ended
September 30, 2004.
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: November 3, 2004 SONUS NETWORKS, INC.
By: /s/ Albert A. Notini
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Albert A. Notini
President and Chief Operating Officer
Exhibit Index
99.1 Press release of Sonus Networks, Inc. dated November 3, 2004 reporting
financial results for the quarter ended September 30, 2004.
Exhibit 99.1
Sonus Networks Reports 2004 Third Quarter Financial Results; Revenues Increased
to $46.8 Million, EPS of $0.04
CHELMSFORD, Mass.--(BUSINESS WIRE)--Nov. 3, 2004--Sonus Networks
(Nasdaq: SONS), a leading supplier of service provider voice over IP
(VoIP) infrastructure solutions, today reported its financial results
for the third quarter ended September 30, 2004.
Revenues for the third quarter of fiscal 2004 were $46.8 million
compared with $22.3 million for the third quarter of fiscal 2003 and
$42.4 million for the second quarter of fiscal 2004. Net income for
the third quarter of fiscal 2004 was $10.3 million or $0.04 per share
compared with a net loss of $5.0 million or $0.02 per share for the
third quarter of fiscal 2003 and net income of $4.9 million or $0.02
for the second quarter of fiscal 2004.
"During the third quarter Sonus continued its success as a leader
in the rapidly expanding VoIP market," said Hassan Ahmed, chairman and
chief executive officer, Sonus Networks. "Revenue and earnings grew
sequentially and we continued to build our technology and market
momentum. We released new software for the trunking and access
markets, expanded our customer deployments and added new talent to our
company, all of which have enhanced our global market position."
Revenues for the first nine months of fiscal 2004 were $125.7
million compared with $46.8 million in the same period last year. Net
income for the first nine months of fiscal 2004 was $18.2 million or
$0.07 per share compared with a net loss for the first nine months of
fiscal 2003 of $22.0 million or $0.10 per share.
Building its position with service providers and carriers around
the world, Sonus continues to add new customers and expand
relationships with existing customers. For example, Interoute, one of
Europe's most advanced telecommunications networks, is deploying
additional Sonus equipment to meet growing demand for its successful
Virtual Voice Network. Further underscoring Sonus' success with its
customers, in August the company was named the market share leader in
several segments of the carrier VoIP equipment market by industry
research firms In-Stat/MDR and Synergy Research Group.
Sonus also continued focusing its development efforts on extending
its solutions in the trunking, access, wireless and international
markets. During the third quarter, Sonus introduced the latest version
of its industry-leading Open Services Architecture(TM) (OSA), which
offers new capabilities that help carriers reduce dependency on legacy
circuit switch technologies and accelerate the transition to VoIP. In
addition, Sonus delivered product enhancements in key areas such as
Class 5 services, voice over broadband, network border switching, and
operations and network management.
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 Open Services Architecture(TM) (OSA), Sonus delivers
end-to-end solutions addressing a full range of carrier applications,
including trunking and tandem switching, residential and business
access, network border switching and enhanced services. Sonus' voice
infrastructure solutions, including media gateways, softswitches and
network management systems, are deployed in service provider networks
worldwide. Sonus, founded in 1997, is headquartered in Chelmsford,
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 the "Risk Factors" section of Sonus' 2003
Annual Report on Form 10-K, as amended by Amendment No. 1 on Form
10-K/A dated July 28, 2004 and filed with the SEC, and the "Cautionary
Statements" section of Sonus' Quarterly Report on Form 10-Q, dated
August 20, 2004 and filed with the SEC, which identify important risk
factors that could cause actual results to differ from those contained
in the forward-looking statements. Risk factors include, among others,
risks associated with the company's assessment of internal control
over financial reporting as required by Section 404 of the
Sarbanes-Oxley Act and the risks associated with the pending
securities litigation and SEC investigation. In addition, 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.
Sonus is a registered trademark of Sonus Networks. Open Services
Architecture, GSX9000, Insignus and Sonus Insight are trademarks of
Sonus Networks. All other trademarks, service marks, registered
trademarks, or registered service marks are the property of their
respective owners.
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Three Months Three Months
Ended Ended Ended
September 30, June 30, September 30,
2004 2004 2003
-------------- -------------- --------------
Revenues $46,762 $42,361 $22,251
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Cost of revenues 10,469 13,941 9,256
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Gross profit 36,293 28,420 12,995
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Gross profit % 77.6% 67.1% 58.4%
Operating expenses:
Research and
development 8,975 8,923 8,036
Sales and marketing 10,539 8,635 7,732
General and
administrative 6,638 5,745 842
Stock-based
compensation 91 136 1,047
Amort. of goodwill and
purchased intangible
assets 601 600 602
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Total operating
expenses 26,844 24,039 18,259
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Income (loss) from
operations 9,449 4,381 (5,264)
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Interest expense (117) (121) (128)
Interest income 1,150 891 396
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Income (loss) before
provision for income
taxes 10,482 5,151 (4,996)
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Provision for income
taxes 214 217 33
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Net income (loss) $10,268 $4,934 $(5,029)
============== ============== ==============
Net income (loss) per
share:
Basic $0.04 $0.02 $(0.02)
Diluted $0.04 $0.02 $(0.02)
Shares used in
computation:
Basic 246,198 245,390 224,356
Diluted 251,728 250,127 224,356
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Nine Months Nine Months
Ended Ended
September 30, September 30,
2004 2003
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Revenues $125,655 $46,826
Cost of revenues 36,810 20,614
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Gross profit 88,845 26,212
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Gross profit % 70.7% 56.0%
Operating expenses:
Research and development 26,826 24,245
Sales and marketing 26,034 16,179
General and administrative 17,210 4,137
Stock-based compensation 606 2,616
Amort. of goodwill and purchased
intangible assets 1,801 1,806
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Total operating expenses 72,477 48,983
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Income (loss) from operations 16,368 (22,771)
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Interest expense (360) (406)
Interest income 2,806 1,238
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Income (loss) before provision for
income taxes 18,814 (21,939)
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Provision for income taxes 598 98
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Net income (loss) $18,216 $(22,037)
============== ===============
Net income (loss) per share:
Basic $0.07 $(0.10)
Diluted $0.07 $(0.10)
Shares used in computation:
Basic 245,394 213,322
Diluted 252,798 213,322
SONUS NETWORKS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
September December
30, 31,
2004 2003
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Assets
Current assets:
Cash, cash equivalents and marketable
securities $283,460 $305,392
Accounts receivable, net 35,402 23,754
Inventory, net 27,566 13,739
Other current assets 12,861 6,935
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Total current assets 359,289 349,820
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Property and equipment, net 7,138 5,009
Purchased intangible assets, net 601 2,402
Long-term marketable securities 16,441 -
Other assets 763 1,193
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$384,232 $358,424
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $29,255 $25,413
Accrued restructuring expenses 184 565
Current portion of deferred revenue 60,269 62,698
Current portion of long-term liabilities 61 182
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Total current liabilities 89,769 88,858
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Long-term deferred revenue, less current portion 27,720 24,302
Long-term liabilities, less current portion 661 829
Convertible subordinated note 10,000 10,000
Stockholders' equity:
Common stock 249 247
Capital in excess of par value 1,046,494 1,043,581
Accumulated deficit (790,346) (808,562)
Deferred compensation (48) (564)
Treasury stock (267) (267)
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Total stockholders' equity 256,082 234,435
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$384,232 $358,424
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SONUS NETWORKS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
Three Months Three Months Three Months
Ended Ended Ended
September 30, June 30, September 30,
2004 2004 2003
Cash flows from operating
activities:
Net income (loss) $10,268 $4,934 $(5,029)
Adjustments to reconcile net
income (loss) to net cash used
in operating activities:
Depreciation 1,276 1,271 2,194
Stock-based compensation 91 136 1,047
Amortization of purchased
intangible assets 601 600 602
Changes in current assets and
liabilities
Accounts receivable (3,492) 152 2,668
Inventory (7,365) (4,909) (1,016)
Other current assets 1,698 (6,169) (335)
Accounts payable 2,473 2,975 (1,018)
Accrued expenses (3,950) 591 1,775
Deferred revenue (5,017) (1,754) 9,999
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Net cash (used in) provided by
operating activities (3,417) (2,173) 10,887
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Cash flows from investing
activities:
Purchase of property and
equipment (2,015) (2,063) (1,387)
Purchases of marketable
securities, net (5,649) (21,640) -
Other assets 102 192 1
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Net cash used in investing
activities (7,562) (23,511) (1,386)
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Cash flows from financing
activities:
Net proceeds from sale of common
stock to public - - 126,025
Sales of common stock in
connection with employee stock
purchase plan 925 - 519
Proceeds from exercise of stock
options 704 - 2,659
Payments of long-term
liabilities (40) (52) (417)
Repurchase of common stock - - (1)
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Net cash provided by (used in)
financing activities 1,589 (52) 128,785
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Net (decrease) increase in cash
and cash equivalents (9,390) (25,736) 138,286
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Cash and cash equivalents,
beginning of period 126,235 151,971 116,773
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Cash and cash equivalents, end
of period $116,845 $126,235 $255,059
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CONTACT: Investor Relations:
Sonus Networks, Inc.
Jocelyn Philbrook, 978-614-8672
jphilbrook@sonusnet.com
or
Media Relations:
Laureen McGowan, 617-275-6515
lmcgowan@greenoughcom.com