================================================================================ 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 July 11, 2002 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 5. OTHER EVENTS. A copy of Sonus' press release, dated July 11, 2002, reporting its actual financial results for the second quarter ended June 30, 2002, is attached as Exhibit 99.1 hereto and incorporated by reference herein. The press release filed 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. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (C) EXHIBIT 99.1 Press release dated July 11, 2002 reporting Sonus' actual financial results for the second quarter ended June 30, 2002. 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 11, 2002 SONUS NETWORKS, INC. By: /s/ Stephen J. Nill ------------------- Stephen J. Nill Chief Financial Officer, Vice President of Finance and Administration and Treasurer (Principal Financial and Accounting Officer)
EXHIBIT 99.1 FOR IMMEDIATE RELEASE For more information, please contact: Investor Relations: Media Relations: Jocelyn Lynds Beth Morrissey 978-589-8672 978-589-8579 jlynds@sonusnet.com bmorrissey@sonusnet.com - ------------------- ----------------------- SONUS NETWORKS REPORTS 2002 SECOND QUARTER FINANCIAL RESULTS WESTFORD, MASS., JULY 11, 2002 -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, 2002. Revenues for the second quarter of fiscal 2002 were $21.3 million compared with $52.6 million in the same period last year. Adjusted net loss for the second quarter of fiscal 2002 was $10.5 million or $0.06 per share compared with adjusted net income for the second quarter of fiscal 2001 of $1.2 million or $0.01 per share. Actual net loss for the second quarter of fiscal 2002 was $17.8 million or $0.09 per share compared with an actual net loss for the second quarter of fiscal 2001 of $51.4 million or $0.30 per share. Revenues for the first six months of fiscal 2002 were $42.5 million compared with $94.1 million in the same period last year. Adjusted net loss for the first six months of fiscal 2002 was $23.2 million or $0.12 per share compared with adjusted net income for the first six months of fiscal 2001 of $1.3 million or $0.01 per share. Actual net loss for the first six months of fiscal 2002 was $34.0 million or $0.18 per share compared with an actual net loss for the first six months of fiscal 2001 of $133.9 million or $0.80 per share. A reconciliation of adjusted to actual net income (loss) for the periods is as follows: -- more --
THREE MONTHS ENDED SIX MONTHS ENDED ($ Millions) JUNE 30, JUNE 30, -------------------------------------- 2002 2001 2002 2001 ---- ---- ---- ---- Adjusted net income (loss) ($10.5) $ 1.2 ($23.2) $ 1.3 Write-off of inventory and purchase commitments -- -- (9.4) -- Stock-based compensation (6.0) (13.9) (11.7) (29.3) Amortization of goodwill and purchased intangibles (0.3) (38.7) (0.8) (65.9) Restructuring benefit (charges), net (1.0) -- 11.1 -- In-process research and development -- -- -- (40.0) ------ ------ ------ ------- Actual net income (loss) ($17.8) ($51.4) ($34.0) ($133.9) ====== ====== ====== ======= Sonus Networks Reports 2002 Second Quarter Financial Results -- p.2/ "The telecommunications market remains very challenging, and continues to impact our financial results," said Hassan Ahmed, president and CEO, Sonus Networks. "During this period, we have been focused on managing our business and finances with precision and extending our market leadership. Today's announcement of Deutsche Telekom, the largest PTT in Europe, as our newest customer further validates the packet voice market, and is an important endorsement of Sonus and our packet voice solutions." Concurrent with this release, Sonus announced that Deutsche Telekom's T-Systems International division has chosen Sonus to build out its next-generation VoIP network to provide multi-national corporations with enhanced voice services (see today's press release "T-Systems International Selects Sonus Networks to Provide Packet Voice Infrastructure and Services"). T-Systems will leverage the Sonus-based network to deliver services such as global voice VPN (virtual private network) and sophisticated call center routing facilities, with additional services to follow. In May, Sonus announced that KDDI, one of the largest carriers in Japan, selected Sonus to provide packet voice infrastructure solutions to support the delivery of voice over IP (VoIP) services over KDDI's broadband network. By deploying Sonus' industry-leading media gateway, softswitch and management solutions, KDDI will be able to cost-effectively deliver a range of SIP-based voice services over its high-speed fiber optic infrastructure. During the quarter, Sonus unveiled its SMARRT(TM) Cable solution, a next-generation packet voice solution specifically geared to the requirements of cable operators (MSOs). Building on packet technology already proven in carrier voice networks, Sonus' SMARRT Cable solution is designed for carrier-grade reliability, voice quality and features, and delivers voice services in a cost-effective and flexible PacketCable(TM) architecture. To further drive the implementation of VoIP in broadband cable networks, Sonus and Motorola, Inc. Broadband Communications Sector are collaborating to create a comprehensive packet voice solution available for broadband network operators. The Motorola/Sonus end-to-end packet voice solution draws upon the extensive capabilities of two industry leaders - Motorola providing advanced IP access network solutions and Sonus providing telco-grade packet voice infrastructure products. -- more -- Sonus Networks Reports 2002 Second Quarter Financial Results -- p.3/ Also in the quarter, Sonus was named the worldwide market share leader for carrier-class packet voice equipment for the seventh consecutive quarter. Leading industry research firms In-Stat/MDR, Infonetics Research and Synergy Research Group issued first quarter 2002 market share reports confirming Sonus' continued leadership position in a number of market segments. Also in May, the Aberdeen Group released a report citing Sonus' deployment with Japanese carrier Fusion Communications as one of the most significant VoIP deployments of 2001. Today, Sonus announced that it has been named as a defendant in a securities class action lawsuit (STEINBERG V. SONUS NETWORKS, INC., ET AL., 02 CV 11315 D. Mass) alleging that the company made false and misleading statements about its products and business. Sonus has not yet filed a response to the complaint. The company believes that the claims are without merit and that it has substantial legal and factual defenses, which it intends to pursue vigorously. 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(TM) (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 Sonus' Quarterly Report on Form 10-Q, dated May 10, 2002 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 emerging 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. SMARRT AND OPEN SERVICES ARCHITECTURE ARE TRADEMARKS OF SONUS NETWORKS. ALL OTHER COMPANY AND PRODUCT NAMES MAY BE TRADEMARKS OF THE RESPECTIVE COMPANIES WITH WHICH THEY ARE ASSOCIATED. -- more -- Sonus Networks Reports 2002 Second Quarter Financial Results -- p.4/ SONUS NETWORKS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) -- more --
JUNE 30, DECEMBER 31, 2002 2001 --------- --------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash, cash equivalents and marketable securities $ 104,710 $ 125,067 Accounts receivable, net 6,448 9,440 Inventories 9,847 18,865 Other current assets 1,804 2,952 --------- --------- Total current assets 122,809 156,324 PROPERTY AND EQUIPMENT, NET 16,978 23,335 GOODWILL, NET 1,673 1,673 PURCHASED INTANGIBLE ASSETS, NET 2,074 2,863 OTHER ASSETS, NET 561 689 --------- --------- $ 144,095 $ 184,884 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 31,968 $ 36,301 Accrued restructuring expenses 5,083 8,596 Deferred revenue 11,310 13,349 Current portion of long-term obligations 848 1,055 --------- --------- Total current liabilities 49,209 59,301 LONG-TERM OBLIGATIONS, LESS CURRENT PORTION 2,037 12,698 CONVERTIBLE SUBORDINATED NOTES 10,000 10,000 STOCKHOLDERS' EQUITY: Common stock 206 205 Capital in excess of par value 861,042 860,883 Accumulated deficit (763,410) (729,398) Deferred compensation (14,786) (28,721) Treasury stock (203) (84) --------- --------- Total stockholders' equity 82,849 102,885 --------- --------- $ 144,095 $ 184,884 ========= ========= Sonus Networks Reports 2002 Second Quarter Financial Results -- p.5/ SONUS NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 2002 ------------------------------------ ACTUAL ADJUSTED RESULTS ADJUSTMENTS RESULTS (A) --------- ------- -------- REVENUES $ 21,295 $ -- $ 21,295 Cost of revenues 9,948 -- 9,948 --------- ------- -------- GROSS PROFIT 11,347 -- 11,347 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) -- Amortization of goodwill and purchased intangible assets 383 (383) -- Restructuring charges, 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 ========= ======== (A) These Adjusted Condensed Consolidated Statements of Operations are for informational purposes only and are not in accordance with US generally accepted accounting principles. These statements exclude the impact of the amortization of stock-based compensation, amortization of goodwill and purchased intangibles and restructuring charges. (B) Represents only diluted net income per share as calculated under the treasury stock method. -- more --
THREE MONTHS ENDED JUNE 30, 2001 ------------------------------------ ACTUAL ADJUSTED RESULTS ADJUSTMENTS RESULTS (A) --------- ------- -------- REVENUES $ 52,551 $ -- $ 52,551 Cost of revenues 22,160 -- 22,160 --------- ------- -------- GROSS PROFIT 30,391 -- 30,391 OPERATING EXPENSES: Research and development 16,697 -- 16,697 Sales and marketing 10,615 -- 10,615 General and administrative 3,279 -- 3,279 Stock-based compensation 13,847 (13,847) -- Amortization of goodwill and purchased intangible assets 38,704 (38,704) -- --------- ------- -------- Total operating expenses 83,142 (52,551) 30,591 --------- ------- -------- LOSS FROM OPERATIONS (52,751) 52,551 (200) Interest expense (113) -- (113) Interest income 1,473 -- 1,473 --------- ------- -------- NET INCOME (LOSS) $ (51,391) $52,551 $ 1,160 ========= ======= ======== BASIC AND DILUTED NET INCOME (LOSS) PER SHARE $ (0.30) $ 0.01 (B) ========= ======== SHARES USED IN COMPUTATION 171,329 214,971 (B) ========= ======== Sonus Networks Reports 2002 Second Quarter Financial Results -- p.6/ SONUS NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2002 ---------------------------------------------- ACTUAL ADJUSTED RESULTS ADJUSTMENTS RESULTS (A) ---------- -------- ---------- REVENUES $ 42,453 $ -- $ 42,453 Cost of revenues: Write-off 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 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) -- Amortization 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 principles. These statements exclude the impact of the write-off of inventory and purchase commitments, amortization of stock-based compensation, amortization of goodwill and purchased intangibles, restructuring charges (benefit) and in-process research and development expenses. (B) Represents only diluted net income per share as calculated under the treasury stock method. ###
SIX MONTHS ENDED JUNE 30, 2002 ---------------------------------------------- ACTUAL ADJUSTED RESULTS ADJUSTMENTS RESULTS (A) ---------- -------- ---------- REVENUES $ 94,050 $ -- $ 94,050 Cost of revenues 40,171 -- 40,171 ---------- -------- ---------- GROSS PROFIT 53,879 -- 53,879 OPERATING EXPENSES: Research and development 30,616 -- 30,616 Sales and marketing 19,103 -- 19,103 General and administrative 5,942 -- 5,942 Stock-based compensation 29,270 (29,270) -- Amortization of goodwill and purchased intangible assets 65,911 (65,911) -- In-process research and development 40,000 (40,000) -- ---------- -------- ---------- Total operating expenses 190,842 (135,181) 55,661 LOSS FROM OPERATIONS (136,963) 135,181 (1,782) Interest expense (281) -- (281) Interest income 3,374 -- 3,374 ---------- -------- ---------- NET INCOME (LOSS) $ (133,870) $135,181 $ 1,311 ========== ======== ========== BASIC AND DILUTED NET INCOME (LOSS) PER SHARE $ (0.80) $ 0.01 (B) ========== ========== SHARES USED IN COMPUTATION 166,689 210,902 (B) ========== ==========