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
April 9, 2003
Date of Report (Date of earliest event reported)
SONUS NETWORKS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 000-30229 04-3387074
----------- --------- ----------
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
5 CARLISLE ROAD, WESTFORD, MASSACHUSETTS 01886
(Address of Principal Executive Offices) (Zip Code)
(978) 692-8999
(Registrant's telephone number, including area code)
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
99.1 Press release dated April 9, 2003 reporting the financial results of
Sonus Networks, Inc. for the fiscal quarter ended March 31, 2003.
Item 9. REGULATION FD DISCLOSURE
In accordance with SEC Release No. 33-8216, the following information,
which is intended to be furnished under "Item 12. Results of Operations and
Financial Condition," is instead being furnished under "Item 9. Regulation FD
Disclosure." The following information 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 April 9, 2003, Sonus Networks, Inc. issued a press release providing
financial results for the fiscal quarter ended March 31, 2003. A copy of the
press release is attached as Exhibit 99.1 hereto and incorporated herein by
reference.
The press release attached as an exhibit to this report includes "safe
harbor" language pursuant to the Private Securities Litigation Reform Act of
1995, as amended, indicating that certain statements about Sonus' business
contained in the press release are "forward-looking" rather than "historic." The
press release also states that these and other risks relating to Sonus' business
are set forth in the documents filed by Sonus with the Securities and Exchange
Commission.
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: April 9, 2003 SONUS NETWORKS, INC.
By:
/s/ Stephen J. Nill
------------------------------------------
Stephen J. Nill
Chief Financial Officer, Vice President of
Finance and Administration and Treasurer
Exhibit Index
99.1 Press release dated April 9, 2003 reporting the financial results of
Sonus Networks, Inc. for the fiscal quarter ended March 31, 2003.
Sonus Networks Reports 2003 First Quarter Financial Results; Revenues
Increase 27% Sequentially, Loss Narrows to $0.02 Per Share
Business Editors/High-Tech Writers
WESTFORD, Mass.--(BUSINESS WIRE)--April 9, 2003--Sonus Networks,
Inc. (Nasdaq: SONS), a leading provider of voice infrastructure
solutions for the new public network, today reported its financial
results for the first quarter ended March 31, 2003, in accordance with
U.S. generally accepted accounting principles (GAAP).
Revenues for the first quarter of fiscal 2003 were $16.0 million
compared with $12.7 million in the fourth quarter of fiscal 2002. Net
loss for the first quarter of fiscal 2003 was $4.4 million or $0.02
per share compared with a net loss for the fourth quarter of fiscal
2002 of $12.8 million or $0.07 per share. Revenues for the first
quarter of fiscal 2002 were $21.2 million and the net loss for the
first quarter of fiscal 2002 was $16.2 million or $0.09 per share.
"Our financial results for the first quarter reflected good
progress toward our business objectives," said Hassan Ahmed, president
and CEO, Sonus Networks. "We grew our revenues 27 percent over last
quarter, and by continuing to manage our business with precision, we
further narrowed our net loss. In Q1, we also continued to add new
customers around the globe and made important additions to our product
family."
During the quarter, Sonus expanded its addressable market with the
introduction of its SMARRT Wireless solutions. These solutions include
wireless carrier applications such as Gateway Mobile Switching Center
(GMSC), Wireless Transit/Tandem Switching and Wireless Long Distance.
Sonus' SMARRT Wireless allows carriers to cost-effectively deploy and
operate wireless networks, increase network capacity to accommodate
growing subscriber traffic, and build new revenue streams and customer
loyalty through the delivery of packet-based enhanced services.
Sonus also began shipping Release 5.0 of its packet voice
infrastructure solutions. This latest version of the Sonus Open
Services Architecture(TM) (OSA) provides greater value to service
providers in three important areas: new revenue-generating
opportunities enabled by a suite of voice VPN services; expanded
international capabilities delivered through additional international
signaling variants; and network performance optimization provided
through a range of enhanced traffic management features.
Continuing to expand its customer base, Sonus announced that
NuVox, an integrated communications provider serving the Midwestern
and Southeastern United States, selected Sonus to develop a VoIP
network that will carry all of NuVox's long distance voice traffic, as
well as offload Internet traffic from NuVox's circuit-switched local
voice network.
Underscoring Sonus' success with both existing and new customers,
the company was again ranked the number one provider of carrier-class
packet voice equipment for the fourth quarter of 2002. Industry
research firms In-Stat/MDR, Infonetics Research and Synergy Research
Group named Sonus the market share leader, recognizing Sonus as the
top equipment vendor in several major service provider packet
telephony market segments.
Finally, Sonus announced the appointment of Bert Notini, executive
vice president and CFO of Manufacturers' Services Limited (NYSE: MSV),
to the company's board of directors. Notini has worked with companies
in the high tech industry for nearly 20 years. With extensive
background in the financial and legal fields, Notini brings invaluable
experience and perspective to the Sonus Networks board, particularly
in the area of corporate governance.
About Sonus Networks
Sonus Networks, Inc., is a leading provider of packet voice
infrastructure products for the new public network. With its Open
Services Architecture (OSA), Sonus delivers end-to-end solutions
addressing a full range of carrier applications, including trunking,
residential access and Centrex, tandem switching, and IP voice
termination, as well as enhanced services. Sonus' award-winning 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 Westford,
Massachusetts. Additional information on Sonus is available at
http://www.sonusnet.com.
This release may contain projections or other forward-looking
statements regarding future events or the future financial performance
of Sonus 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' Annual Report on Form
10-K, dated March 19, 2003 and filed with the SEC, which identifies
important risk factors that could cause actual results to differ from
those contained in the forward-looking statements. These risk factors
include, among others, the adverse effect of recent developments in
the telecommunications industry, the weakened financial position of
many service providers, Sonus' ability to grow its customer base,
dependence on new product offerings, market acceptance of its
products, rapid technological and market change and manufacturing and
sourcing risks. 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 is a trademark of Sonus Networks. All other company and
product names may be trademarks of the respective companies with which
they are associated.
SONUS NETWORKS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2003 2002
(Unaudited)
Assets
Current assets:
Cash, cash equivalents and marketable
securities $106,236 $111,167
Accounts receivable, net 2,454 2,956
Inventories 11,287 10,776
Other current assets 4,488 3,806
Total current assets 124,465 128,705
Property and equipment, net 9,226 11,174
Goodwill and purchased intangible assets, net 903 1,174
Other assets, net 494 480
$135,088 $141,533
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $33,840 $37,521
Accrued restructuring expenses 1,513 3,143
Deferred revenue 31,831 29,235
Current portion of long-term obligations 1,527 1,606
Total current liabilities 68,711 71,505
Long-term obligations, less current portion 2,660 3,293
Convertible subordinated notes 10,000 10,000
Stockholders' equity:
Common stock 207 207
Capital in excess of par value 858,514 858,126
Accumulated deficit (802,249) (797,868)
Deferred compensation (2,494) (3,469)
Treasury stock (261) (261)
Total stockholders' equity 53,717 56,735
$135,088 $141,533
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
Three months ended Three months ended
March 31, 2003 December 31, 2002
US Adjustments Non US Adjustments Non
GAAP GAAP GAAP GAAP
Results Results Results Results
(A) (A)
Revenues $16,019 $-- $16,019 $12,660 $-- $12,660
Cost of
revenues:
Write-off
(benefit) of
inventory and
purchase
commitments (735) 735 -- -- -- --
Other cost of
revenues 6,165 -- 6,165 6,298 -- 6,298
Total cost of
revenues 5,430 735 6,165 6,298 -- 6,298
Gross profit 10,589 (735) 9,854 6,362 -- 6,362
Gross
profit % 66.1% 61.5% 50.3% 50.3%
Operating expenses:
Research and
development 7,702 -- 7,702 8,783 -- 8,783
Sales and
marketing 5,274 -- 5,274 5,656 -- 5,656
General and
adminis-
trative 1,080 -- 1,080 539 -- 539
Stock-based
compensation 894 (894) -- 3,841 (3,841) --
Amort. of
goodwill and
purchased
intangible
assets 271 (271) -- 358 (358) --
Write-off of
goodwill and
purchased
intangible
assets -- -- -- 175 (175) --
Restructuring
charges
(benefit), net -- -- -- 16 (16) --
Total operating
expenses 15,221 (1,165) 14,056 19,368 (4,390) 14,978
Loss from
operations (4,632) 430 (4,202) (13,006) 4,390 (8,616)
Interest
expense (130) -- (130) (238) -- (238)
Interest
income 381 -- 381 424 -- 424
Net loss $(4,381) $430 $(3,951) $(12,820) $4,390 $(8,430)
Basic and
diluted
net loss
per share $(0.02) $(0.02) $(0.07) $(0.04)
Shares used
in
computation 198,703 198,703 195,648 195,648
(A) These Adjusted Condensed Consolidated Statements of Operations are
for informational purposes only and are not in accordance with US
generally accepted accounting principles (GAAP). These statements
exclude the impact of the write-off (benefit) of inventory and
purchase commitments, amortization of stock-based compensation,
amortization and write-off of goodwill and purchased intangible
assets and restructuring charges (benefit). Sonus' management uses
the non-GAAP financial results as an alternative means for
assessing our quarterly operations. Even though Sonus' management
recognizes that non-GAAP financial results are not a substitute
for GAAP results, non-GAAP measures are helpful in assisting
Sonus' management understand and manage its business. Please refer
to the section entitled Explanation of Use of Non-GAAP Financial
Results on page 29 of Sonus' Annual Report on Form 10-K, dated
March 19, 2003, which explains in detail the use by Sonus'
management of non-GAAP financial results.
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
Three months ended Three months ended
March 31, 2003 March 31, 2002
US Adjustments Non US Adjustments Non
GAAP GAAP GAAP GAAP
Results Results Results Results
(A) (A)
Revenues $16,019 $-- $16,019 $21,158 $-- $21,158
Cost of
revenues:
Write-off
(benefit)
of inventory
and purchase
commitments (735) 735 -- 9,434 (9,434) --
Other cost
of revenues 6,165 -- 6,165 9,875 -- 9,875
Total cost
of revenues 5,430 735 6,165 19,309 (9,434) 9,875
Gross profit 10,589 (735) 9,854 1,849 9,434 11,283
Gross
profit % 66.1% 61.5% 8.7% 53.3%
Operating expenses:
Research and
development 7,702 -- 7,702 14,615 -- 14,615
Sales and
marketing 5,274 -- 5,274 8,407 -- 8,407
General and
adminis-
trative 1,080 -- 1,080 1,466 -- 1,466
Stock-based
compensation 894 (894) -- 5,743 (5,743) --
Amort. of
goodwill and
purchased
intangible
assets 271 (271) -- 406 (406) --
Restructuring
charges
(benefit), net -- -- -- (12,141) 12,141 --
Total operating
expenses 15,221 (1,165) 14,056 18,496 5,992 24,488
Loss from
operations (4,632) 430 (4,202) (16,647) 3,442 (13,205)
Interest
expense (130) -- (130) (139) -- (139)
Interest
income 381 -- 381 592 -- 592
Net loss $(4,381) $430 $(3,951) $(16,194) $3,442 $(12,752)
Basic and
diluted net
loss
per share $(0.02) $(0.02) $(0.09) $(0.07)
Shares used
in
computation 198,703 198,703 186,057 186,057
(A) These Adjusted Condensed Consolidated Statements of Operations are
for informational purposes only and are not in accordance with US
generally accepted accounting principles (GAAP). These statements
exclude the impact of the write-off (benefit) of inventory and
purchase commitments, amortization of stock-based compensation,
amortization of goodwill and purchased intangible assets and
restructuring charges (benefit). Sonus' management uses the
non-GAAP financial results as an alternative means for assessing
our quarterly operations. Even though Sonus' management recognizes
that non-GAAP financial results are not a substitute for GAAP
results, non-GAAP measures are helpful in assisting Sonus'
management understand and manage its business. Please refer to the
section entitled Explanation of Use of Non-GAAP Financial Results
on page 29 of Sonus' Annual Report on Form 10-K, dated March 19,
2003, which explains in detail the use by Sonus' management of
non-GAAP financial results.
CONTACT: Investor Relations:
Sonus Networks, Inc.
Jocelyn Philbrook, 978/589-8672
jphilbrook@sonusnet.com
or
Media Relations:
Sonus Networks, Inc.
Beth Morrissey, 978/589-8579
bmorrissey@sonusnet.com