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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
July 10, 2003
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
----------- --------- ----------
(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 9. REGULATION FD DISCLOSURE (INFORMATION FURNISHED PURSUANT TO
ITEM 12, "RESULTS OF OPERATIONS AND FINANCIAL CONDITION")
In accordance with SEC Release No. 33-8216, the information in this
Form 8-K and the exhibit attached hereto, 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." Such 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 July 10, 2003, Sonus Networks, Inc. issued a press release providing
financial results for the fiscal quarter ended June 30, 2003. A copy of the
press release is attached as Exhibit 99.1 hereto.
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: July 10, 2003 SONUS NETWORKS, INC.
By:
/s/ Stephen J. Nill
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Stephen J. Nill
Chief Financial Officer, Vice President of
Finance and Administration and Treasurer
Exhibit Index
99.1 Press release dated July 10, 2003 reporting the financial results of
Sonus Networks, Inc. for the fiscal quarter ended June 30, 2003.
Exhibit 99.1
Sonus Networks Reports 2003 Second Quarter Financial Results
WESTFORD, Mass.--(BUSINESS WIRE)--July 10, 2003--
Revenues Increase 33% Sequentially, Loss Narrows to $0.01 Per Share;
Verizon Deploys Sonus Networks for Select Long Distance VoIP Expansion
Sonus Networks, Inc. (Nasdaq: SONS), a leading provider of voice
infrastructure solutions for the new public network, today reported
its financial results for the second quarter ended June 30, 2003.
Revenues for the second quarter of fiscal 2003 were $21.4 million
compared with $16.0 million for the first quarter of fiscal 2003 and
$21.3 million for the second quarter of fiscal 2002. Net loss for the
second quarter of fiscal 2003 was $3.2 million or $0.01 per share
compared with a net loss for the first quarter of fiscal 2003 of $4.4
million or $0.02 per share and a net loss of $17.8 million or $0.09
per share for the second quarter of fiscal 2002.
Revenues for the first six months of fiscal 2003 were $37.4
million compared with $42.5 million in the same period last year. Net
loss for the first six months of fiscal 2003 was $7.6 million or $0.04
per share compared with a net loss for the first six months of fiscal
2002 of $34.0 million or $0.18 per share.
"We are pleased with the progress that we made in the second
quarter, particularly with our 33% sequential revenue growth," said
Hassan Ahmed, president and CEO, Sonus Networks. "We executed across
all areas of the business - broadening and strengthening our customer
base, expanding our leading product offering, bolstering our balance
sheet and advancing our drive to profitability."
Sonus Networks also announced today that Verizon Communications
has deployed Sonus' voice infrastructure solutions to support
Verizon's delivery of long distance services to select markets.
Verizon is now carrying customer traffic on its Sonus infrastructure.
"Implementing innovative network technologies is a critical
component of Verizon's strategy, and we are proud to play a role in
supporting the development of Verizon's advanced, next-generation
network," continued Ahmed.
Under the agreement, Verizon is implementing Sonus' GSX9000(TM)
Open Services Switch, the Insignus(TM) Softswitch and Sonus
Insight(TM) Management System. Verizon has completed the first office
application (FOA) and is now expanding its network footprint to
additional U.S. markets.
During the second quarter, Sonus announced deployments with four
new customers in North America and in Asia. IDT Corporation is
deploying Sonus' voice infrastructure solutions to expand IDT's
international reach and to deliver domestic and international calling
card services. New York-based Epana Networks has also implemented a
Sonus-based network to support the delivery of their prepaid calling
services. In Mexico, Unefon is building out a VoIP network with Sonus
to provide access services, as well as long distance and enhanced
services, to enterprise customers. In Japan, Asia Internet Holdings
recently launched its wholesale VoIP service for telecommunications
service providers and carriers in the Asia Pacific region based on the
Sonus Networks solution.
Further broadening its leading product offerings, Sonus this
quarter introduced its new SMARRT Services(TM) packet-based enhanced
services. By combining Sonus' native service capabilities with those
of select Open Services Partner Alliance(SM) (OSPA) members, Sonus is
now offering a suite of enhanced services, including IP Centrex,
prepaid/postpaid calling cards, network based call centers,
conferencing, unified communications and voice virtual private
networks (VPN).
Finally, Sonus continued to focus on strengthening its financial
position during the quarter. In April, the company completed a public
offering of its common stock, adding approximately $57 million to its
balance sheet.
"Our revenue growth, coupled with premier customer wins like
Verizon Communications underscores our belief that the packet voice
market is entering a new phase," continued Ahmed. "Incumbent carriers
are now adopting packet voice solutions and Sonus Networks is proud to
be at the forefront of this transition."
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 "Cautionary Statements" section of Sonus' Quarterly
Report on Form 10-Q, dated May 9, 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, GSX9000, Insignus, Sonus Insight and SMARRT Services are
trademarks of Sonus Networks. Open Services Partner Alliance is a
service mark 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)
June 30, December 31,
2003 2002
(Unaudited)
Assets
Current assets:
Cash, cash equivalents and marketable
securities $161,064 $111,167
Accounts receivable, net 6,076 2,956
Inventories 11,552 10,776
Other current assets 6,464 3,806
Total current assets 185,156 128,705
Property and equipment, net 7,271 11,174
Purchased intangible assets, net 632 1,174
Other assets, net 365 480
$193,424 $141,533
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $35,954 $37,521
Accrued restructuring expenses 1,204 3,143
Deferred revenue 34,182 29,235
Current portion of long-term
obligations 1,431 1,606
Total current liabilities 72,771 71,505
Long-term obligations, less current portion 2,200 3,293
Convertible subordinated notes 10,000 10,000
Stockholders' equity:
Common stock 228 207
Capital in excess of par value 915,698 858,126
Accumulated deficit (805,459) (797,868)
Deferred compensation (1,748) (3,469)
Treasury stock (266) (261)
Total stockholders' equity 108,453 56,735
$193,424 $141,533
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
Three months ended June 30, 2003
US GAAP Adjustments Non-GAAP
Results Results (A)
Revenues $21,356 $-- $21,356
Cost of revenues:
Write-off (benefit) of inventory and
purchase commitments -- -- --
Other cost of revenues 8,793 -- 8,793
Total cost of revenues 8,793 -- 8,793
Gross profit 12,563 -- 12,563
Gross profit % 58.8% 58.8%
Operating expenses:
Research and development 8,245 -- 8,245
Sales and marketing 5,643 -- 5,643
General and administrative 1,188 -- 1,188
Stock-based compensation 739 (739) --
Amort. of goodwill and purchased
intangible assets 271 (271) --
Restructuring charges (benefit), net -- -- --
Total operating expenses 16,086 (1,010) 15,076
Loss from operations (3,523) 1,010 (2,513)
Interest expense (148) -- (148)
Interest income 461 -- 461
Net loss $(3,210) $1,010 $(2,200)
Basic and diluted net loss per share $(0.01) $(0.01)
Shares used in computation 215,970 215,970
Three months ended June 30, 2002
US GAAP Adjustments Non-GAAP
Results Results (A)
Revenues $21,295 $-- $21,295
Cost of revenues:
Write-off (benefit) of inventory and
purchase commitments -- -- --
Other cost of revenues 9,948 -- 9,948
Total cost of revenues 9,948 -- 9,948
Gross profit 11,347 -- 11,347
Gross profit % 53.3% 53.3%
Operating expenses:
Research and development 12,225 -- 12,225
Sales and marketing 8,280 -- 8,280
General and administrative 1,690 -- 1,690
Stock-based compensation 5,950 (5,950) --
Amort. of goodwill and purchased
intangible assets 383 (383) --
Restructuring charges (benefit), net 1,013 (1,013) --
Total operating expenses 29,541 (7,346) 22,195
Loss from operations (18,194) 7,346 (10,848)
Interest expense (136) -- (136)
Interest income 512 -- 512
Net loss $(17,818) $7,346 $(10,472)
Basic and diluted net loss per share $(0.09) $(0.06)
Shares used in computation 189,193 189,193
Three months ended March 31, 2003
US GAAP Adjustments Non-GAAP
Results Results (A)
Revenues $16,019 $-- $16,019
Cost of revenues:
Write-off (benefit) of inventory and
purchase commitments (735) 735 --
Other cost of revenues 6,165 -- 6,165
Total cost of revenues 5,430 735 6,165
Gross profit 10,589 (735) 9,854
Gross profit % 66.1% 61.5%
Operating expenses:
Research and development 7,702 -- 7,702
Sales and marketing 5,274 -- 5,274
General and administrative 1,080 -- 1,080
Stock-based compensation 894 (894) --
Amort. of goodwill and purchased
intangible assets 271 (271) --
Restructuring charges (benefit), net -- -- --
Total operating expenses 15,221 (1,165) 14,056
Loss from operations (4,632) 430 (4,202)
Interest expense (130) -- (130)
Interest income 381 -- 381
Net loss $(4,381) $430 $(3,951)
Basic and diluted net loss per share $(0.02) $(0.02)
Shares used in computation 198,703 198,703
(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 Sonus'
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 Result's 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)
Six months ended June 30, 2003
US GAAP Adjustments Non GAAP
Results Results (A)
Revenues $37,375 $-- $37,375
Cost of revenues:
Write-off (benefit) of inventory
and purchase commitments (735) 735 --
Other cost of revenues 14,958 -- 14,958
Total cost of revenues 14,223 735 14,958
Gross profit 23,152 (735) 22,417
Gross profit % 61.9% 60.0%
Operating expenses:
Research and development 15,947 -- 15,947
Sales and marketing 10,917 -- 10,917
General and administrative 2,268 -- 2,268
Stock-based compensation 1,633 (1,633) --
Amort. of goodwill and purchased
intangible assets 542 (542) --
Restructuring charges (benefit), net -- -- --
Total operating expenses 31,307 (2,175) 29,132
Loss from operations (8,155) 1,440 (6,715)
Interest expense (278) -- (278)
Interest income 842 -- 842
Net loss $(7,591) $1,440 $(6,151)
Basic and diluted net loss per share $(0.04) $(0.03)
Shares used in computation 207,483 207,483
Six months ended June 30, 2002
US GAAP Adjustments Non GAAP
Results Results (A)
Revenues $42,453 $-- $42,453
Cost of revenues:
Write-off (benefit) of inventory
and purchase commitments 9,434 (9,434) --
Other cost of revenues 19,823 -- 19,823
Total cost of revenues 29,257 (9,434) 19,823
Gross profit 13,196 9,434 22,630
Gross profit % 31.1% 53.3%
Operating expenses:
Research and development 26,840 -- 26,840
Sales and marketing 16,687 -- 16,687
General and administrative 3,156 -- 3,156
Stock-based compensation 11,693 (11,693) --
Amort. of goodwill and purchased
intangible assets 789 (789) --
Restructuring charges (benefit), net (11,128) 11,128 --
Total operating expenses 48,037 (1,354) 46,683
Loss from operations (34,841) 10,788 (24,053)
Interest expense (275) -- (275)
Interest income 1,104 -- 1,104
Net loss $(34,012) $10,788 $(23,224)
Basic and diluted net loss per share $(0.18) $(0.12)
Shares used in computation 187,593 187,593
(A) These Adjusted Condensed Consolidated Statements of Operations are
for informational purposes only and are not in accordance with US
generally accepted accounting principals (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 Sonus'
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: Sonus Networks, Inc.
Investor Relations:
Jocelyn Philbrook, 978-589-8672
jphilbrook@sonusnet.com
or
Media Relations:
Tracy Sullivan, 617-275-6518
tsullivan@greenoughcom.com