SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
August 10, 2005
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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
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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
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(Registrant's telephone number, including area code)
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 4.01. Changes in Registrant's Certifying Accountant.
(a) On August 10, 2005, the Audit Committee of the Board of Directors of Sonus
Networks, Inc., determined to retain Deloitte & Touche LLP ("Deloitte") as the
Registrant's independent registered public accounting firm. Ernst & Young LLP
("E&Y") was dismissed as the Registrant's independent registered public
accounting firm on August 10, 2005.
E&Y's reports on the Registrant's financial statements for the past two years
did not contain any adverse opinion or a disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.
During the Registrant's two most recently completed fiscal years and through
August 10, 2005, there were no disagreements between the Registrant and E&Y on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of E&Y, would have caused it to make reference to the subject
matter of the disagreement in connection with its reports on the financial
statements for such years; and there were no reportable events as defined in
Item 304(a)(1)(v) of Regulation S-K except as disclosed in the following
paragraph.
In July 2004, the Registrant restated certain of its financial statements
previously issued as a result of a number of adjustments, the largest of which
related to revenue, deferred revenue, inventory reserves, purchase accounting,
impairments, accrued expenses and stock-based compensation. In connection with
the restatement, E&Y advised the Registrant that significant internal control
matters that collectively constituted material weaknesses in internal control
over financial reporting existed as described in Part II, Item 9A of the
Registrant's Form 10-K/A for fiscal year 2003. In Management's Report on
Internal Control Over Financial Reporting and Part II, Item 9A of the
Registrant's Form 10-K for fiscal year 2004, the Registrant described material
weaknesses in its internal control over financial reporting and the Registrant's
management concluded that, as of December 31, 2004, the Registrant's internal
control over financial reporting was not effective. In its report, E&Y rendered
an unqualified opinion on management's assessment of its internal control over
financial reporting and an adverse opinion on the effectiveness of the
Registrant's internal control over financial reporting. As described in the
Registrant's Form 10-K for fiscal year 2004, the Registrant commenced
implementing process and control improvements intended to address these material
weaknesses.
As described in Part I, Item 4 of the Forms 10-Q filed by the Registrant for
each of the first and second quarters of 2005, the Registrant has continued in
2005 implementing process and control improvements intended to address the
reported material weaknesses.
The Registrant's Audit Committee discussed with E&Y the issues relating to the
Registrant's internal control over financial reporting, and the Registrant has
authorized E&Y to respond fully to the inquiries of Deloitte concerning the
subject matter thereof.
The Registrant requested E&Y to furnish it with a letter addressed to the
Securities and Exchange Commission stating whether it agrees with the above
statements and, if not, stating the respects in which it does not agree. A copy
of that letter dated August 15, 2005 is attached as Exhibit 16.1 to this Form
8-K.
(b) On August 10, 2005, the Audit Committee of the Board of Directors of Sonus
Networks, Inc. determined to engage Deloitte to serve as the Registrant's
independent registered public accounting firm for the fiscal year ending
December 31, 2005. During the Registrant's two most recent fiscal years and the
subsequent interim period prior to engaging Deloitte, neither the Registrant nor
anyone on its behalf consulted with Deloitte on any matter that (i) involved the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Registrant's financial statements, in each case where either a written
report or oral advice was provided that Deloitte concluded was an important
factor considered by the Registrant in reaching a decision as to the accounting,
auditing or financial reporting issue; or (ii) was either the subject of a
disagreement (as defined in Item 304(a)(1)(iv) and the related instructions to
Item 304 of Regulation S-K) or a reportable event (as described in Item
304(a)(1)(v) of Regulation S-K).
Item 9.01. Financial Statements and Exhibits.
Exhibit
Number Description
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16.1 Letter from Ernst & Young LLP, dated August 15, 2005 to 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: August 16, 2005 SONUS NETWORKS, INC.
By: /s/ Ellen Richstone
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Ellen Richstone
Chief Financial Officer
Exhibit Index
16.1 Letter from Ernst & Young LLP, dated August 15, 2005 to the
Securities and Exchange Commission.
Exhibit 16.1
[GRAPHIC OF LETTER HEAD OMITTED]
ERNST & YOUNG
August 15, 2005
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Gentlemen:
We have read item 4.01 of Form 8-K dated August 15, 2005 of Sonus Networks, Inc.
and are in agreement with the statements contained therein, except that we have
no basis to agree or disagree with the following statements of the registrant
contained therein:
The statements in the first sentence in the first paragraph of item
4.01(a); the statements in the fifth paragraph of item 4.01(a); and the
statements in paragraph 4.01(b).
Regarding the registrant's statement concerning the material weaknesses in
internal control included in the fourth paragraph of item 4.01(a) therein,
we had considered such matters in determining the nature, timing and
extent of procedures performed in our audits of the registrant's 2003 and 2004
financial statements.
/s/ Ernst & Young LLP