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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
MARCH 13, 2006
DATE OF REPORT (Date of earliest event reported)
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SONUS NETWORKS, INC.
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(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
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(Address of Principal Executive Offices) (Zip Code)
(978) 614-8100
(Registrant's telephone number, including area code)
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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))
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The information in this Current Report on Form 8-K and the exhibit 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.
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On March 13, 2006, Sonus Networks, Inc. issued a press release reporting
its financial results for the quarter and year ended December 31, 2005. A copy
of the press release is attached as Exhibit 99.1 hereto.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
The following exhibit relating to Item 2.02 shall be deemed to be
furnished, and not filed:
99.1 Press release of Sonus Networks, Inc. dated March 13, 2006
reporting financial results for the quarter and year ended
December 31, 2005.
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: March 13, 2006 SONUS NETWORKS, INC.
By: /s/ Ellen Richstone
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Ellen Richstone
Chief Financial Officer
EXHIBIT INDEX
99.1 Press release of Sonus Networks, Inc. dated March 13, 2006 reporting
financial results for the quarter and year ended December 31, 2005.
Exhibit 99.1
SONUS NETWORKS REPORTS FOURTH QUARTER AND FISCAL YEAR 2005 FINANCIAL RESULTS
CHELMSFORD, Mass., March 13 /PRNewswire-FirstCall/ -- Sonus Networks, Inc.
(Nasdaq: SONS), 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, 2005.
Revenues for the fourth quarter of fiscal 2005 were $57.2 million compared
with $45.1 million in the same period last year, an increase of 27%. Net income
for the fourth quarter of fiscal 2005 was $5.0 million, or $0.02 per diluted
share, compared with net income for the fourth quarter of fiscal 2004 of $6.3
million, or $0.02 per diluted share.
Revenues for fiscal year 2005 were $194.6 million compared with $170.7
million for fiscal year 2004, an increase of 14%. Net income for fiscal year
2005 was $8.4 million, or $0.03 per diluted share, compared with net income for
fiscal year 2004 of $24.5 million, or $0.10 per diluted share.
"2005 was a strong year for Sonus, culminating with robust revenue, order
and shipments growth in the fourth quarter," said Hassan Ahmed, chairman and
CEO, Sonus Networks. "We are aggressively driving growth across all areas of the
Company by broadening our market reach into new regions, introducing new
innovative technology, expanding our footprint within our existing customers'
networks and winning significant new deployments with operators in each of our
global theaters." Ahmed continued, "Today's announcement that KDDI, a major
carrier in Japan, is deploying a Sonus packet voice solution to replace its
legacy infrastructure represents an important milestone for Sonus and the
industry overall."
In a press release issued earlier today, Sonus announced that it was
selected by KDDI, a leading telecommunication service provider in Japan, for a
multi-million dollar contract as the exclusive vendor for its
convergence-enabled packet voice network (see related announcement "KDDI Selects
Sonus Networks to Deploy Largest VoIP Network in Japan"). In the first phase of
this project, KDDI is deploying a full suite of Sonus' industry-leading
solutions, including the GSX9000(TM) Open Services Switch, the PSX(TM) Call
Routing Server and the Sonus Insight(TM) Element Management System. The new
packet voice network will deliver enhanced voice services to one of the most
technologically advanced societies in the world and is planned to be the largest
IP telephony network in Japan. By 2008, KDDI plans to have 100 percent of its
long-distance traffic on its Sonus-based VoIP network.
Fourth Quarter 2005 Summary
In the fourth quarter of 2005, Sonus Networks continued to broaden its
customer base and expand its presence throughout the Europe, Middle East and
Africa region. To address and service the growing market opportunity throughout
Europe, Sonus Networks announced the opening of a new operations center in
Prague, Czech Republic. The establishment of an office in the Czech Republic is
in direct response to increased demand for Sonus solutions throughout the
region. In addition to Prague, the Company now has a regional sales and support
presence throughout several countries in Western Europe, including the United
Kingdom, France and Germany.
Sonus announced that it was awarded a multi-million dollar contract for the
worldwide expansion of T-Systems' business VoIP network. T-Systems is the
business customer division of the Deutsche Telekom Group and one of Europe's
leading providers of information and communications technology.
The Company reported that in tandem with its recently announced partner, TNN
Networks, Sonus is delivering a complete IMS (IP Multimedia Subsystem)-ready
voice over broadband (VoBB) solution to 012 Golden Lines, a leading Israeli
Internet Service Provider (ISP) and a provider of international voice services
for enterprises and consumers.
In Japan, Sonus continues to lead the service provider VoIP market. Synergy
Research Group reported that in the third quarter of 2005, Sonus accounted for
more than 61% of the total media gateway industry and more than 80% of the high
density media gateway industry. Japan, which has been a key driver in global
VoBB adoption, continues to be a strategic focus for Sonus.
Globally, Sonus continued to build on its worldwide leadership position.
Sonus was recognized as the market share leader of carrier-class VoIP equipment
for the third quarter of 2005 by Infonetics Research and Synergy Research Group.
By the end of the year, according to research conducted by iLocus, Sonus'
industry-leading solutions were carrying in excess of 17 billion minutes of VoIP
traffic per month, a 70 percent increase compared to December 2004.
Sonus continued to drive market penetration for IP-based solutions in the
fourth quarter with a new technology introduction, the Sonus-certified Consumer
Voice over Broadband (c-VoBB) Solution, the first in a series of integrated
IMS-ready solutions designed to enable the rapid deployment of next-generation
services. The Sonus c-VoBB solution empowers network operators to enter the
consumer VoIP market in a cost-efficient manner and supports a broad portfolio
of IMS-ready applications.
Sonus also announced the availability of the Sonus Voice Portal, an
interactive voice response system for managing consumer voice profile data. The
Sonus Voice Portal was the first application created with and managed by Sonus'
IMX application platform, a web-based multimedia environment that enables
wireline and wireless service providers to rapidly develop, integrate, launch,
and manage enhanced telecommunication applications and services.
To further promote consumer adoption of VoIP services, Sonus aligned with
other industry leaders, including EarthLink, Google, Level 3, Pulver.com, Skype
and USA Datanet, as founding members of the Internet Voice Campaign (IVC). Part
of the VON Coalition, a non-profit, VoIP industry advocacy organization, the
Internet Voice Campaign is designed to raise awareness and help educate
consumers about the benefits of IP-based voice solutions.
"In the year ahead, we aim to capitalize on our increased momentum to foster
demand for our solutions both in markets where Sonus has a long-standing
leadership position and in those that are just beginning to embrace the benefits
of VoIP," said Ahmed. "Through the success of our customers and awareness
campaigns like the IVC, consumers are beginning to recognize that VoIP has the
power to change the way we communicate. It's an exciting time in the evolution
of communications networks, and Sonus continues to lead the world's migration to
IMS-based networks."
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
comprehensive IP Multimedia Subsystem (IMS) solution, Sonus addresses the full
range of carrier applications, including residential and business voice
services, wireless voice and multimedia, trunking and tandem switching, carrier
interconnection and enhanced services. Sonus' voice infrastructure solutions are
deployed in service provider networks worldwide. Founded in 1997, Sonus 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 "Cautionary
Statements" section of the Company's most recent quarterly report on Form 10-Q
filed with the SEC, which identifies important risk factors that could cause
actual results to differ from those contained in the forward-looking statements.
Risk factors include among others: the impact of material weaknesses in our
disclosure controls and procedures and our internal control over financial
reporting on our ability to report our financial results timely and accurately;
the unpredictability of our quarterly financial results; risks associated with
our international expansion and growth; consolidation in the telecommunications
industry; and potential costs resulting from pending securities litigation
against the company. 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, Inc. Sonus GSX9000 Open
Services Switch, PSX Call Routing Server, SGX Signaling Gateway, and the Sonus
Insight Management System are trademarks of Sonus Networks, Inc. All other
company and product names may be trademarks of the respective companies with
which they are associated.
For more information, please contact:
Investor Relations: Media Relations:
Jocelyn Philbrook Sarah McAuley
978-614-8672 212-699-1836
jphilbrook@sonusnet.com smcauley@sonusnet.com
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Three Months Three Months
Ended Ended Ended
December 31, September 30, December 31,
2005 2005 2004
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Revenues:
Product $ 41,908 $ 29,107 $ 31,191
Service 15,342 16,550 13,892
Total revenues 57,250 45,657 45,083
Cost of revenues:
Product 13,965 17,410 8,760
Service 6,905 6,073 4,997
Total cost of revenues 20,870 23,483 13,757
Gross profit 36,380 22,174 31,326
Gross profit %:
Product 66.7% 40.2% 71.9%
Service 55.0% 63.3% 64.0%
Total gross profit 63.5% 48.6% 69.5%
Operating expenses:
Research and development 12,483 11,787 9,348
Sales and marketing 12,881 10,834 8,935
General and administrative 8,116 5,455 7,385
Stock-based compensation 5 11 65
Amortization of purchased intangible
assets - - 601
Total operating expenses 33,485 28,087 26,334
Income (loss) from operations 2,895 (5,913) 4,992
Interest expense (121) (121) (119)
Interest income 3,092 2,690 1,477
Income (loss) before income taxes 5,866 (3,344) 6,350
Provision (benefit) for income taxes 844 (640) 89
Net income (loss) $ 5,022 $ (2,704) $ 6,261
Net income (loss) per share:
Basic $ 0.02 $ (0.01) $ 0.03
Diluted $ 0.02 $ (0.01) $ 0.02
Weighted average shares outstanding:
Basic 249,390 248,801 247,134
Diluted 252,356 248,801 256,443
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Year Ended Year Ended
December 31, December 31,
2005 2004
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Revenues:
Product $ 134,812 $ 124,087
Service 59,798 46,651
Total revenues 194,610 170,738
Cost of revenues:
Product 53,622 32,911
Service 23,898 17,656
Total cost of revenues 77,520 50,567
Gross profit 117,090 120,171
Gross profit %:
Product 60.2% 73.5%
Service 60.0% 62.2%
Total gross profit 60.2% 70.4%
Operating expenses:
Research and development 46,385 36,174
Sales and marketing 44,246 34,969
General and administrative 26,848 24,595
Stock-based compensation 20 671
Amortization of purchased intangible
assets - 2,402
Total operating expenses 117,499 98,811
(Loss) income from operations (409) 21,360
Interest expense (491) (479)
Interest income 9,879 4,283
Income before income taxes 8,979 25,164
Provision for income taxes 611 687
Net income $ 8,368 $ 24,477
Net income per share:
Basic $ 0.03 $ 0.10
Diluted $ 0.03 $ 0.10
Weighted average shares outstanding:
Basic 248,584 245,830
Diluted 253,024 253,816
SONUS NETWORKS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2005 2004
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Assets
Current assets:
Cash and cash equivalents $ 155,679 $ 121,931
Marketable debt securities 140,569 170,145
Accounts receivable, net 72,321 32,486
Inventory, net 37,831 28,346
Other current assets 15,833 10,891
Deferred income taxes 519 -
Total current assets 422,752 363,799
Property and equipment, net 15,181 8,217
Long-term investments 17,993 21,029
Deposits 631 783
$ 456,557 $ 393,828
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 20,408 $ 8,654
Accrued expenses 23,204 18,240
Accrued restructuring expenses 195 186
Current portion of deferred
revenue 88,199 65,105
Convertible subordinated note 10,000 -
Current portion of long-term
liabilities 48 30
Total current liabilities 142,054 92,215
Long-term deferred revenue, less
current portion 33,853 25,960
Long-term liabilities, less current
portion 485 613
Convertible subordinated note - 10,000
Total liabilities 176,392 128,788
Commitments and contingencies - -
Stockholders' equity:
Common stock 252 250
Additional paid-in capital 1,055,941 1,049,142
Accumulated deficit (775,717) (784,085)
Accumulated other comprehensive
loss (44) -
Treasury stock (267) (267)
Total stockholders' equity 280,165 265,040
$ 456,557 $ 393,828
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
Year Ended Year Ended
Ended Ended
December 31, December 31,
2005 2004
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Cash flows from operating activities:
Net income $ 8,368 $ 24,477
Adjustments to reconcile net income
to cash flows from
operating activities:
Depreciation and amortization of
property and equipment 7,976 5,796
Tax benefit from stock options
exercised - 67
Stock-based compensation 20 671
Amortization of purchased intangible
assets - 2,402
Loss of disposal of property and
equipment 142 -
Deferred income taxes (519) -
Changes in current assets and liabilities:
Accounts receivable (40,019) (8,732)
Inventory (11,321) (14,607)
Other current assets (4,342) (3,956)
Accounts payable 11,955 5,406
Accrued expenses and accrued
restructuring expenses 3,895 (4,490)
Deferred revenue 33,067 4,065
Cash flows provided by operating
activities 9,222 11,099
Cash flows from investing activities:
Purchases of property and equipment (14,229) (9,004)
Maturities (purchases) of marketable
debt securities, net 32,612 (19,497)
Increase in restricted cash (591) -
Other assets 656 410
Cash flows provided by (used in)
investing activities 18,448 (28,091)
Cash flows from financing activities:
Sales of common stock in connection
with employee stock purchase plan 4,517 1,721
Proceeds from exercise of stock
options 2,264 3,669
Payments of long-term liabilities (87) (182)
Cash flows provided by financing
activities 6,694 5,208
Effect of exchange rate changes on
cash and cash equivalents (616) -
Net increase (decrease) in cash and
cash equivalents 33,748 (11,784)
Cash and cash equivalents, beginning
of year 121,931 133,715
Cash and cash equivalents, end of
year $ 155,679 $ 121,931
SOURCE Sonus Networks, Inc.
-0- 03/13/2006
/CONTACT: Investor Relations: Jocelyn Philbrook, +1-978-614-8672,
jphilbrook@sonusnet.com, or Media Relations: Sarah McAuley, +1-212-699-1836,
smcauley@sonusnet.com /
/First Call Analyst: /
/FCMN Contact: /
/Website: http://www.sonusnet.com /
(SONS)