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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 28, 2004
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.)
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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Item 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
The information in this Current Report on Form 8-K and the exhibits
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 July 28, 2004, Sonus Networks, Inc. issued a press release reporting its
financial results for the quarter and fiscal year ended December 31, 2003, and
for its quarter ended March 31, 2004. A copy of the press release is attached as
Exhibit 99.1 hereto.
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 28, 2004 SONUS NETWORKS, INC.
By: /s/ Albert A. Notini
-------------------------------------
Albert A. Notini
President and Chief Operating Officer
Exhibit Index
99.1 Press release of Sonus Networks, Inc. dated July 28, 2004 reporting
financial results for the fourth quarter and fiscal year ended December
31, 2003, and for the first quarter ended March 31, 2004.
Exhibit 99.1
Sonus Networks Reports Financial Results for Q4 FY2003, Fiscal Year 2003 and Q1
FY2004
CHELMSFORD, Mass.--(BUSINESS WIRE)--July 28, 2004--Sonus Networks, Inc.
(Nasdaq: SONSE), a leading supplier of service provider voice over IP (VoIP)
infrastructure solutions, today reported its financial results for the fourth
quarter and fiscal year ended December 31, 2003, and for its first quarter ended
March 31, 2004. Sonus has restated its consolidated financial results for fiscal
years 2001 and 2002 and the first three quarters of fiscal 2003 in its Form
10-K/A filed with the Securities and Exchange Commission (SEC) on July 28, 2004.
Sonus today also filed its Form 10-Q for the first quarter of 2004 with the SEC.
Sonus will hold a conference call to review its financial results at 8:15 am
Eastern time, Thursday, July 29, 2004.
Today's filings bring the Company into compliance with the SEC requirements
for the filing of its periodic reports. The Company received notice today from
the Nasdaq Stock Market that it has determined to delist the Company's stock
from the Nasdaq National Market effective as of the opening of the market on
Monday, August 2, 2004. The Company has notified Nasdaq that it has filed its
delinquent SEC reports. The Company has requested that its common stock remain
listed on the Nasdaq National Market because the Company is now in compliance
with Nasdaq's filing requirement and is awaiting a determination from Nasdaq.
"Today we reported our financial results through the first quarter of 2004,
filed all the related securities filings and are once again in compliance with
the SEC financial reporting requirements. The completion of our financial review
forms a strong foundation for us to continue to build the company and expand our
position in the market," said Hassan Ahmed, chief executive officer and
chairman, Sonus Networks. "During this period in which we have invested
significant energy in our financial review, our business has continued to
thrive. We have announced new customers, extended our industry-leading solutions
further into the wireless and access markets, significantly expanded our
engineering, sales and services resources, and taken actions to strengthen our
internal controls, processes and infrastructure. We are excited about the market
opportunity for voice over IP and are confident in our ability to play a
leadership role."
Revenues for the first quarter of fiscal 2004 were $36.5 million compared
with $9.2 million in the first quarter of 2003. Net income for the first quarter
of fiscal 2004 was $3.0 million, or $0.01 per share, compared with a net loss
for the first quarter of fiscal 2003 of $9.7 million, or $0.05 per share.
Revenues for the fourth quarter of fiscal 2003 were $46.4 million compared
with $12.5 million in the fourth quarter of fiscal 2002. Net income for the
fourth quarter of fiscal 2003 was $6.9 million, or $0.03 per diluted share,
compared with a net loss for the fourth quarter of fiscal 2002 of $13.4 million,
or $0.07 per share. Revenues for fiscal year 2003 were $93.2 million compared
with $93.9 million for fiscal year 2002. Net loss for fiscal year 2003 was $15.1
million, or $0.07 per share, compared with a net loss for fiscal year 2002 of
$73.8 million, or $0.39 per share.
Restatement of Consolidated Financial Statements
As a result of the financial review, Sonus has restated its consolidated
financial results for fiscal years 2001 and 2002 and the first three quarters of
fiscal 2003 as embodied in its Form 10-K/A. As previously reported, the primary
impact of the restatements is the adjustment to the timing of revenue
recognition and certain other financial statement accounts. Principal
adjustments to revenue relate to the timing of revenue where the revenue has
been deferred and recognized in subsequent periods. In addition, other material
restatements include adjustments to purchase accounting, impairments, accruals
and deferred compensation.
An overview of adjustments by period is as follows:
-- 2003 - Restated revenues for the first nine months of 2003 were $46.8
million compared with $66.0 million as initially reported. Restated
deferred revenues as of September 30, 2003 were $85.2 million compared
with $34.0 million as initially reported. Accrued expenses as of
September 30, 2003 were $17.5 million compared with $32.9 million as
initially reported. Restated net loss was $22.0 million, or $0.10 per
share, compared with $6.4 million, or $0.03 per share, as initially
reported.
-- 2002 - Restated revenues for fiscal 2002 were $93.9 million compared
with $62.6 million as initially reported. Restated deferred revenues
as of December 31, 2002 were $59.8 million compared with $29.2 million
as initially reported. Accrued expenses as of December 31, 2002 were
$16.5 million compared with $33.4 million as initially reported.
Restated net loss was $73.8 million, or $0.39 per share, compared with
$68.5 million, or $0.36 per share, as initially reported.
-- 2001 - Restated revenues for fiscal 2001 were $128.8 million compared
with $173.2 million as initially reported. Restated deferred revenues
as of December 31, 2001 were $60.4 million compared with $13.3 million
as initially reported. Accrued expenses as of December 31, 2001 were
$18.4 million compared with $27.7 million as initially reported.
Restated net loss was $635.6 million, or $3.68 per share compared with
$645.4 million, or $3.74 per share, as initially reported.
Sonus' restated annual financial statements are included in its Amendment
No. 1 on Form 10-K/A on file with the SEC. Investors are encouraged to read this
filing for a more complete description of the financial restatement. For the
purpose of restating its consolidated financial statements for the first three
quarters of 2003 and 2002, consistent with the restatements in the Company's
Form 10-K/A, Sonus anticipates amending its previously filed quarterly reports
on Form 10-Q for each of the first three quarters of 2003, as soon as
practicable.
Sonus also reported that Stephen J. Nill, its vice president of business
operations and former chief financial officer, has resigned at the request of
the company.
Company Conference Call, Webcast and Replay Information
Date: Thursday, July 29, 2004
Time: 8:15 am Eastern
To listen via telephone: Dial-in number: +1-800-633-8410 or +1-212-896-6053
To listen via the Internet: Sonus will host a live webcast of the
conference call. To access the webcast, visit the Sonus Networks Investor
Relations site at http://www.sonusnet.com.
Replay: A telephone playback of the call will be available following the
conference and can be accessed by calling +1-402-977-9140 or +1-800-633-8284.
The access code for the replay is 21204187. The telephone playback will be
available through August 12, 2004.
The webcast will be available on the Sonus Networks Investor Relations site
through July 29, 2005. To access the replay of the webcast, visit the Investor
Relations site at http://www.sonusnet.com.
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 (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' Annual Report 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 July 28, 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,
uncertainties regarding the timing of the Company's completion of the filing of
its Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, the
possibility that Sonus may be delisted from Nasdaq, risks as to the litigation
and SEC investigation with respect to the foregoing and related matters,
unforeseen issues encountered in the completion of the audit and uncertainties
regarding the extent to which prior period financial statements will be
restated. 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)
Year Ended December 31, 2001
-----------------------------------
As Reported Adjustments As Restated
----------- ----------- -----------
Revenues $173,199 $(44,399) $128,800
Cost of revenues 75,698 (12,920) 62,778
----------- ----------- -----------
Gross profit 97,501 (31,479) 66,022
Gross profit % 56.3% 70.9% 51.3%
Operating expenses:
Research and development 65,004 (1,108) 63,896
Sales and marketing 42,267 (1,391) 40,876
General and administrative 13,068 (241) 12,827
Stock-based compensation 75,500 (1,368) 74,132
Amort. Of goodwill and purchased
intangible assets 107,759 (37,208) 70,551
Write-off of goodwill and
purchased intangible assets 374,735 17,652 392,387
Restructuring charges, net 25,807 (18,486) 7,321
In-process research and
development 43,800 800 44,600
----------- ----------- -----------
Total operating expenses 747,940 (41,350) 706,590
----------- ----------- -----------
Income (loss) from operations (650,439) 9,871 (640,568)
Interest expense (567) (58) (625)
Interest income 5,574 - 5,574
----------- ----------- -----------
Net income (loss) $(645,432) $9,813 $(635,619)
=========== =========== ===========
Net income (loss) per share:
Basic $(3.74) $0.06 $(3.68)
Diluted $(3.74) $0.06 $(3.68)
Shares used in computation:
Basic 172,382 523 172,905
Diluted 172,382 523 172,905
SONUS NETWORKS, INC.
Condensed Consolidated Balance Sheet
(In thousands)
December 31, 2001
--------------------------------
As As
Reported Adjustments Adjusted
---------- ----------- ---------
Assets
Current assets:
Cash, cash equivalents and
marketable securities $125,067 $(54) $125,013
Accounts receivable, net 9,440 1,241 10,681
Inventory 18,865 11,437 30,302
Other current assets 2,952 3,356 6,308
---------- ----------- ---------
Total current assets 156,324 15,980 172,304
Property and equipment, net 23,335 208 23,543
Purchased intangible assets, net 4,536 15,453 19,989
Other assets, net 689 (319) 370
---------- ----------- ---------
$184,884 $31,322 $216,206
========== =========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued
expenses $36,301 $(5,584) $30,717
Accrued restructuring expenses 8,596 (5,935) 2,661
Current portion of deferred
revenue 13,349 43,110 56,459
Current portion of long-term
obligations 1,055 (483) 572
---------- ----------- ---------
Total current liabilities 59,301 31,108 90,409
Long-term deferred revenue, less
current portion - 3,942 3,942
Long-term liabilities, less current
portion 12,698 (11,409) 1,289
Convertible subordinated notes 10,000 - 10,000
Stockholders' equity:
Common stock 205 - 205
Capital in excess of par value 860,883 (1,778) 859,105
Accumulated deficit (729,398) 9,813 (719,585)
Deferred compensation (28,721) (354) (29,075)
Treasury stock (84) - (84)
---------- ----------- ---------
Total stockholders' equity 102,885 7,681 110,566
---------- ----------- ---------
$184,884 $31,322 $216,206
========== =========== =========
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Year
Ended
December
31, 2003 Year Ended December 31, 2002
--------- -------------------------------
As As As
Reported Reported Adjustments Restated
--------- --------- ----------- ---------
Revenues $93,210 $62,558 $31,359 $93,917
Cost of revenues 37,909 40,302 11,274 51,576
--------- --------- ----------- ---------
Gross profit 55,301 22,256 20,085 42,341
Gross profit % 59.3% 35.6% 64.0% 45.1%
Operating expenses:
Research and development 32,190 45,308 (717) 44,591
Sales and marketing 23,169 27,863 (77) 27,786
General and administrative 10,475 6,141 (893) 5,248
Stock-based compensation 3,418 19,495 (2,624) 16,871
Amort. Of goodwill and
purchased intangible
assets 2,408 1,514 2,715 4,229
Write-off of goodwill and
purchased intangible
assets - 1,848 9,102 10,950
Restructuring charges, net - (10,125) 17,864 7,739
--------- --------- ----------- ---------
Total operating expenses 71,660 92,044 25,370 117,414
--------- --------- ----------- ---------
Income (loss) from operations (16,359) (69,788) (5,285) (75,073)
Interest expense (610) (676) 1 (675)
Interest income 2,135 1,994 (1) 1,993
--------- --------- ----------- ---------
Income (loss) before
provision for income taxes (14,834) (68,470) (5,285) (73,755)
Provision for income taxes 302 - 86 86
--------- --------- ----------- ---------
Net income (loss) $(15,136) $(68,470) $(5,371) $(73,841)
========= ========= =========== =========
Net income (loss) per share:
Basic $(0.07) $(0.36) $(0.03) $(0.39)
Diluted $(0.07) $(0.36) $(0.03) $(0.39)
Shares used in computation:
Basic 220,696 189,889 1,119 191,008
Diluted 220,696 189,889 1,119 191,008
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three
Months
Ended
December
31, 2003 Three Months Ended December 31, 2002
--------- ------------------------------------
As As
Reported As Reported Adjustments Restated
--------- -------------- ----------- ---------
Revenues $46,384 $12,660 $(184) $12,476
Cost of revenues 17,295 6,298 911 7,209
--------- -------------- ----------- ---------
Gross profit 29,089 6,362 (1,095) 5,267
Gross profit % 62.7% 50.3% 595.1% 42.2%
Operating expenses:
Research and
development 7,945 8,783 494 9,277
Sales and marketing 6,990 5,656 788 6,444
General and
administrative 6,338 538 (2,001) (1,463)
Stock-based
compensation 802 3,841 (915) 2,926
Amort. Of goodwill and
purchased intangible
assets 602 359 317 676
Write-off of goodwill
and purchased
intangible assets - 175 (175) -
Restructuring charges,
net - 16 951 967
--------- -------------- ----------- ---------
Total operating
expenses 22,677 19,368 (541) 18,827
--------- -------------- ----------- ---------
Income (loss) from
operations 6,412 (13,006) (554) (13,560)
Interest expense (204) (238) - (238)
Interest income 897 424 - 424
--------- -------------- ----------- ---------
Income (loss) before
provision for income
taxes 7,105 (12,820) (554) (13,374)
Provision for income
taxes 204 - 21 21
--------- -------------- ----------- ---------
Net income (loss) $6,901 $(12,820) $(575) $(13,395)
========= ============== =========== =========
Net income (loss) per
share:
Basic $0.03 $(0.07) $- $(0.07)
Diluted $0.03 $(0.07) $- $(0.07)
Shares used in
computation:
Basic 242,983 195,648 459 196,107
Diluted 258,607 195,648 459 196,107
SONUS NETWORKS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
December December 31, 2002
31, 2003 ------------------------------
As As As
Reported Reported Adjustments Adjusted
---------- --------- --------------------
Assets
Current assets:
Cash, cash equivalents
and marketable
securities $305,392 $111,167 $6,971 $118,138
Accounts receivable, net 23,754 2,956 1,666 4,622
Inventory 13,739 10,776 (327) 10,449
Other current assets 6,935 3,806 (290) 3,516
---------- --------- ---------- ---------
Total current assets 349,820 128,705 8,020 136,725
Property and equipment, net 5,009 11,174 372 11,546
Purchased intangible assets,
net 2,402 1,174 3,636 4,810
Other assets, net 1,193 480 (44) 436
---------- --------- ---------- ---------
$358,424 $141,533 $11,984 $153,517
========== ========= ========== =========
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable and
accrued expenses $25,413 $37,521 $(17,407) $20,114
Accrued restructuring
expenses 565 3,143 (812) 2,331
Current portion of
deferred revenue 62,698 29,235 22,493 51,728
Current portion of long-
term obligations 182 1,606 - 1,606
---------- --------- ---------- ---------
Total current
liabilities 88,858 71,505 4,274 75,779
Long-term deferred revenue,
less current portion 24,302 - 8,024 8,024
Long-term liabilities, less
current portion 829 3,293 - 3,293
Convertible subordinated
notes 10,000 10,000 - 10,000
Stockholders' equity:
Common stock 247 207 - 207
Capital in excess of par
value 1,043,581 858,126 (4,566) 853,560
Accumulated deficit (808,562) (797,868) 4,442 (793,426)
Deferred compensation (564) (3,469) (190) (3,659)
Treasury stock (267) (261) - (261)
---------- --------- ---------- ---------
Total stockholders'
equity 234,435 56,735 (314) 56,421
---------- --------- ---------- ---------
$358,424 $141,533 $11,984 $153,517
========== ========= ========== =========
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three
Months
Ended
March 31,
2004 Three Months Ended March 31, 2003
---------- ---------------------------------
As As
Reported As Reported Adjustments Restated
---------- ----------- ----------- ---------
Revenues $36,532 $16,019 $(6,810) $9,209
Cost of revenues 12,400 5,430 (1,337) 4,093
---------- ----------- ----------- ---------
Gross profit 24,132 10,589 (5,473) 5,116
Gross profit % 66.1% 66.1% 80.4% 55.6%
Operating expenses:
Research and development 8,928 7,702 3 7,705
Sales and marketing 6,860 5,274 (1,303) 3,971
General and
administrative 4,827 1,080 759 1,839
Stock-based compensation 379 894 30 924
Amort. of goodwill and
purchased intangible
assets 600 271 331 602
---------- ----------- ----------- ---------
Total operating
expenses 21,594 15,221 (180) 15,041
---------- ----------- ----------- ---------
Income (loss) from
operations 2,538 (4,632) (5,293) (9,925)
Interest expense (122) (130) - (130)
Interest income 765 381 - 381
---------- ----------- ----------- ---------
Income (loss) before
provision for income
taxes 3,181 (4,381) (5,293) (9,674)
Provision for income taxes 167 - 33 33
---------- ----------- ----------- ---------
Net income (loss) $3,014 $(4,381) $(5,326) $(9,707)
========== =========== =========== =========
Net income (loss) per
share:
Basic $0.01 $(0.02) $(0.03) $(0.05)
Diluted $0.01 $(0.02) $(0.03) $(0.05)
Shares used in
computation:
Basic 244,607 198,703 - 198,703
Diluted 255,592 198,703 - 198,703
SONUS NETWORKS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
March 31, 2003
------------------------------
March 31, As As
2004 Reported Adjustments Adjusted
---------- --------- --------------------
Assets
Current assets:
Cash, cash equivalents
and marketable
securities $301,924 $106,236 $410 $106,646
Accounts receivable, net 32,062 2,454 2,300 4,754
Inventory 15,292 11,287 1,683 12,970
Other current assets 8,390 4,488 684 5,172
---------- --------- ---------- ---------
Total current assets 357,668 124,465 5,077 129,542
Property and equipment, net 5,607 9,226 391 9,617
Purchased intangible assets,
net 1,802 903 3,305 4,208
Long-term marketable
securities 5,814 - - -
Other assets, net 1,057 494 (79) 415
---------- --------- ---------- ---------
$371,948 $135,088 $8,694 $143,782
========== ========= ========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and
accrued expenses $26,972 $33,840 $(17,232) $16,608
Accrued restructuring
expenses 285 1,513 - 1,513
Current portion of
deferred revenue 65,242 31,831 24,274 56,105
Current portion of long-
term obligations 153 1,527 - 1,527
---------- --------- ---------- ---------
Total current
liabilities 92,652 68,711 7,042 75,753
Long-term deferred revenue,
less current portion 29,518 - 7,263 7,263
Long-term liabilities, less
current portion 754 2,660 - 2,660
Convertible subordinated
notes 10,000 10,000 - 10,000
Stockholders' equity:
Common stock 248 207 - 207
Capital in excess of par
value 1,044,866 858,514 (4,553) 853,961
Accumulated deficit (805,548) (802,249) (884) (803,133)
Deferred compensation (275) (2,494) (174) (2,668)
Treasury stock (267) (261) - (261)
---------- --------- ---------- ---------
Total stockholders'
equity 239,024 53,717 (5,611) 48,106
---------- --------- ---------- ---------
$371,948 $135,088 $8,694 $143,782
========== ========= ========== =========
CONTACT: Investor Relations:
Sonus Networks, Inc.
Jocelyn Philbrook, 978-614-8672
jphilbrook@sonusnet.com
or
Media Relations:
Beth Morrissey, 978-614-8579
bmorrissey@sonusnet.com