UNITED STATES
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
November 2, 2010
Date of Report (Date of earliest event reported)
SONUS NETWORKS, INC.
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE |
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001-34115 |
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04-3387074 |
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(State or Other Jurisdiction |
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(Commission File Number) |
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(IRS Employer |
7 TECHNOLOGY PARK DRIVE, WESTFORD, MASSACHUSETTS 01886
(Address of Principal Executive Offices) (Zip Code)
(978) 614-8100
(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):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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 (the “Exchange Act”), otherwise subject to the liabilities of that Section 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 November 2, 2010, Sonus Networks, Inc. issued a press release reporting financial results for the quarter ended September 30, 2010. A copy of the press release is furnished 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 November 2, 2010 reporting its financial results for the quarter ended September 30, 2010.
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.
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Date: November 2, 2010 |
SONUS NETWORKS, INC. |
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By: |
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/s/ Jeffrey M. Snider |
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Jeffrey M. Snider |
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Senior Vice President and General Counsel |
Exhibit Index
99.1 Press release of Sonus Networks, Inc. dated November 2, 2010 reporting its financial results for the quarter ended September 30, 2010.
Exhibit 99.1
SONUS NETWORKS REPORTS
2010 THIRD QUARTER RESULTS
Westford, MA, November 2, 2010 — Sonus Networks, Inc. (Nasdaq: SONS), a market leader in next generation IP-based network solutions, today announced results for the quarter ended September 30, 2010.
Revenue for the third quarter of fiscal 2010 was $42.7 million, compared to $61.2 million in the second quarter of fiscal 2010 and $56.2 million for the third quarter of fiscal 2009. The Company’s net loss on a GAAP basis for the third quarter of fiscal 2010 was $22.3 million, or $0.08 per share, compared to net income of $0.3 million, or $0.00 per diluted share, for the second quarter of fiscal 2010, and a net loss of $3.4 million, or $0.01 per share, for the third quarter of fiscal 2009.
“We are pleased with the customer growth we achieved during the third quarter across our entire product line. The timing of revenue from several large orders negatively impacted our third quarter operating results but is not expected to negatively impact our results for the year,” said Raymond P. Dolan, President and Chief Executive Officer of Sonus. “We continue to have a positive outlook ahead and remain focused on leveraging all of our product platforms to accelerate growth and profitability.”
2010 Guidance
The Company expects to achieve total revenue between $225 and $245 million for 2010. For 2010, Non-GAAP gross margin is expected to be within the range of 58% to 62%, and total Non-GAAP operating expenses are expected to be in the range of $145 to $148 million.
Conference Call Details:
Sonus Networks will host a conference call for analysts and investors to discuss its third quarter 2010 results as well as certain forward-looking information today at 4:45 p.m. ET.
To listen live via
telephone:
Dial-in number: 800-743-4304
International Callers: +1 212-231-2900
To listen via
internet:
Sonus Networks will host a live webcast of the conference call. To access the webcast, visit
www.sonusnet.com, About Us, Investor Relations.
-ends-
About Sonus Networks
Sonus Networks, Inc. is a leader in IP networking with proven expertise in delivering secure, reliable and scalable next generation infrastructure and subscriber solutions. With customers in over 50 countries across the globe and over a decade of experience in transforming networks to IP, Sonus has enabled service providers and enterprises to capture and retain users and generate significant ROI. Sonus products include media and signaling gateways, policy/routing servers, session border controllers and subscriber feature servers. Sonus products are supported by a global services team with experience in design, deployment and maintenance of some of the world’s largest and most complex IP networks. For more information visit 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 Item 1A “Risk Factors” of Sonus’ Annual Report on Form 10-K for the year ended December 31, 2009 and Form 10-Q for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. 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, except as required by law.
Sonus is a registered trademark 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:
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Wayne Pastore |
Fran Murphy |
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978-614-8291 |
978-614-8148 |
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wpastore@sonusnet.com |
fmurphy@sonusnet.com |
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
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Three months ended |
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|||||||
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September 30, |
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June 30, |
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September 30, |
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2010 |
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2010 |
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2009 |
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Revenue: |
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Product |
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$ |
19,391 |
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$ |
36,796 |
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$ |
33,544 |
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Service |
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23,348 |
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24,385 |
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22,621 |
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Total revenue |
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42,739 |
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61,181 |
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56,165 |
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Cost of revenue: |
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|||
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Product |
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7,231 |
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10,826 |
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10,160 |
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Service |
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11,730 |
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11,842 |
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10,755 |
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Total cost of revenue |
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18,961 |
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22,668 |
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20,915 |
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Gross profit |
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23,778 |
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38,513 |
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35,250 |
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Gross profit % |
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Product |
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62.7 |
% |
70.6 |
% |
69.7 |
% |
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Service |
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49.8 |
% |
51.4 |
% |
52.5 |
% |
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Total gross profit % |
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55.6 |
% |
62.9 |
% |
62.8 |
% |
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Operating expenses: |
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Research and development |
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16,226 |
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15,106 |
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14,141 |
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Sales and marketing |
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11,836 |
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12,392 |
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11,527 |
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General and administrative |
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17,157 |
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10,971 |
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11,578 |
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Restructuring |
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1,114 |
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— |
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1,533 |
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Total operating expenses |
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46,333 |
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38,469 |
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38,779 |
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Income (loss) from operations |
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(22,555 |
) |
44 |
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(3,529 |
) |
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Interest expense |
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(10 |
) |
(30 |
) |
(23 |
) |
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Interest income |
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439 |
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466 |
|
787 |
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Other income, net |
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1 |
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1 |
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12 |
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Income (loss) before income taxes |
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(22,125 |
) |
481 |
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(2,753 |
) |
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Income tax provision |
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(153 |
) |
(170 |
) |
(644 |
) |
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Net income (loss) |
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$ |
(22,278 |
) |
$ |
311 |
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$ |
(3,397 |
) |
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Earnings (loss) per share: |
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Basic |
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$ |
(0.08 |
) |
$ |
— |
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$ |
(0.01 |
) |
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Diluted |
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$ |
(0.08 |
) |
$ |
— |
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$ |
(0.01 |
) |
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Shares used to compute earnings (loss) per share: |
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Basic |
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275,412 |
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275,051 |
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273,907 |
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Diluted |
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275,412 |
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276,314 |
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273,907 |
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SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
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Nine months ended |
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September 30, |
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September 30, |
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2010 |
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2009 |
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Revenue: |
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Product |
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$ |
92,465 |
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$ |
89,267 |
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Service |
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73,863 |
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69,517 |
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Total revenue |
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166,328 |
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158,784 |
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Cost of revenue: |
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Product |
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30,358 |
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27,041 |
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Service |
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35,501 |
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32,986 |
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Total cost of revenue |
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65,859 |
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60,027 |
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Gross profit |
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100,469 |
|
98,757 |
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Gross profit % |
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Product |
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67.2 |
% |
69.7 |
% |
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Service |
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51.9 |
% |
52.6 |
% |
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Total gross profit % |
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60.4 |
% |
62.2 |
% |
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Operating expenses: |
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Research and development |
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46,272 |
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45,995 |
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Sales and marketing |
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37,822 |
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36,018 |
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General and administrative |
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38,272 |
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32,259 |
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Restructuring |
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1,114 |
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3,510 |
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Total operating expenses |
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123,480 |
|
117,782 |
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Loss from operations |
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(23,011 |
) |
(19,025 |
) |
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Interest expense |
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(53 |
) |
(94 |
) |
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Interest income |
|
1,420 |
|
3,513 |
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Other income, net |
|
12 |
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24 |
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Loss before income taxes |
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(21,632 |
) |
(15,582 |
) |
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Income tax benefit (provision) |
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(469 |
) |
341 |
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Net loss |
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$ |
(22,101 |
) |
$ |
(15,241 |
) |
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Loss per share: |
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||
|
Basic |
|
$ |
(0.08 |
) |
$ |
(0.06 |
) |
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Diluted |
|
$ |
(0.08 |
) |
$ |
(0.06 |
) |
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Shares used to compute loss per share: |
|
|
|
|
|
||
|
Basic |
|
275,107 |
|
273,518 |
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||
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Diluted |
|
275,107 |
|
273,518 |
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||
SONUS NETWORKS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
|
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|
September 30, |
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December 31, |
|
||
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|
2010 |
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2009 |
|
||
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Assets |
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Current assets: |
|
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Cash and cash equivalents |
|
$ |
81,245 |
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$ |
125,323 |
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Marketable securities |
|
247,908 |
|
239,223 |
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Accounts receivable, net |
|
34,710 |
|
47,998 |
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||
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Inventory, net |
|
26,982 |
|
21,925 |
|
||
|
Deferred income taxes |
|
650 |
|
562 |
|
||
|
Other current assets |
|
19,657 |
|
17,508 |
|
||
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Total current assets |
|
411,152 |
|
452,539 |
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Property and equipment, net |
|
16,588 |
|
14,646 |
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Intangible assets, net |
|
1,928 |
|
341 |
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Goodwill |
|
5,056 |
|
5,053 |
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||
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Investments |
|
84,314 |
|
49,598 |
|
||
|
Deferred income taxes |
|
960 |
|
711 |
|
||
|
Other assets |
|
22,427 |
|
17,849 |
|
||
|
|
|
$ |
542,425 |
|
$ |
540,737 |
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|
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Liabilities and stockholders’ equity |
|
|
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||
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Current liabilities: |
|
|
|
|
|
||
|
Accounts payable |
|
$ |
19,040 |
|
$ |
5,337 |
|
|
Accrued expenses |
|
24,126 |
|
19,292 |
|
||
|
Current portion of deferred revenue |
|
56,014 |
|
74,748 |
|
||
|
Current portion of long-term liabilities |
|
492 |
|
753 |
|
||
|
Total current liabilities |
|
99,672 |
|
100,130 |
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||
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|
|
|
|
|
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||
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Deferred revenue |
|
35,818 |
|
25,242 |
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||
|
Long-term liabilities |
|
911 |
|
1,127 |
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||
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Total liabilities |
|
136,401 |
|
126,499 |
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||
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|
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Commitments and contingencies |
|
|
|
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|
||
|
|
|
|
|
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|
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Stockholders equity: |
|
|
|
|
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||
|
Common stock |
|
279 |
|
277 |
|
||
|
Additional paid-in capital |
|
1,299,983 |
|
1,286,326 |
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||
|
Accumulated deficit |
|
(900,911 |
) |
(878,810 |
) |
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|
Accumulated other comprehensive income |
|
6,940 |
|
6,712 |
|
||
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Treasury stock |
|
(267 |
) |
(267 |
) |
||
|
Total stockholders’ equity |
|
406,024 |
|
414,238 |
|
||
|
|
|
$ |
542,425 |
|
$ |
540,737 |
|
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
|
|
Nine months ended |
|
||||
|
|
|
September 30, |
|
September 30, |
|
||
|
|
|
2010 |
|
2009 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
||
|
Net loss |
|
$ |
(22,101 |
) |
$ |
(15,241 |
) |
|
Adjustments to reconcile net loss to cash flows provided by operating activities: |
|
|
|
|
|
||
|
Depreciation and amortization of property and equipment |
|
8,134 |
|
7,497 |
|
||
|
Amortization of intangible assets |
|
413 |
|
184 |
|
||
|
Stock-based compensation |
|
12,410 |
|
9,889 |
|
||
|
Loss on disposal of property and equipment |
|
81 |
|
173 |
|
||
|
Deferred income taxes |
|
60 |
|
(137 |
) |
||
|
Changes in operating assets and liabilities: |
|
|
|
|
|
||
|
Accounts receivable |
|
13,471 |
|
41,600 |
|
||
|
Inventory |
|
(10,360 |
) |
(4,217 |
) |
||
|
Other operating assets |
|
1,484 |
|
(7,516 |
) |
||
|
Accounts payable |
|
12,704 |
|
(3,212 |
) |
||
|
Accrued expenses |
|
4,477 |
|
(12,999 |
) |
||
|
Accrued litigation settlements |
|
— |
|
(9,600 |
) |
||
|
Deferred revenue |
|
(8,347 |
) |
4,240 |
|
||
|
Net cash provided by operating activities |
|
12,426 |
|
10,661 |
|
||
|
|
|
|
|
|
|
||
|
Cash flows from investing activities: |
|
|
|
|
|
||
|
Purchases of property and equipment |
|
(9,193 |
) |
(4,813 |
) |
||
|
Purchase of intangible assets |
|
(2,000 |
) |
— |
|
||
|
Purchases of marketable securities |
|
(283,461 |
) |
(179,416 |
) |
||
|
Sale/maturities of marketable securities |
|
236,698 |
|
228,979 |
|
||
|
Net cash provided by (used in) investing activities |
|
(57,956 |
) |
44,750 |
|
||
|
|
|
|
|
|
|
||
|
Cash flows from financing activities: |
|
|
|
|
|
||
|
Sale of common stock in connection with employee stock purchase plan |
|
1,353 |
|
1,119 |
|
||
|
Proceeds from exercise of stock options |
|
327 |
|
32 |
|
||
|
Payment of tax withholding obligations related to net share settlements of restricted stock awards |
|
(572 |
) |
(531 |
) |
||
|
Principal payments of capital lease obligations |
|
(194 |
) |
(189 |
) |
||
|
Net cash provided by financing activities |
|
914 |
|
431 |
|
||
|
|
|
|
|
|
|
||
|
Effect of exchange rate changes on cash and cash equivalents |
|
538 |
|
856 |
|
||
|
|
|
|
|
|
|
||
|
Net increase (decrease) in cash and cash equivalents |
|
(44,078 |
) |
56,698 |
|
||
|
Cash and cash equivalents, beginning of year |
|
125,323 |
|
122,207 |
|
||
|
Cash and cash equivalents, end of period |
|
$ |
81,245 |
|
$ |
178,905 |
|
SONUS NETWORKS, INC.
Supplemental Information
(In thousands)
(unaudited)
The following tables provide the details of stock-based compensation and amortization of intangible assets included in the Company’s Condensed Consolidated Statements of Operations and the line items in which these amounts are reported. Additional information regarding these items is available in the Investor Relations section of our website at http://www.sonusnet.com. The information contained on our website or that can be accessed through our website should not be considered to be part of, or incorporated into, this press release.
|
|
|
Three months ended |
|
Nine months ended |
|
|||||||||||
|
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|||||
|
|
|
2010 |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
|||||
|
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Cost of revenue - product |
|
$ |
105 |
|
$ |
89 |
|
$ |
67 |
|
$ |
265 |
|
$ |
298 |
|
|
Cost of revenue - service |
|
396 |
|
404 |
|
483 |
|
1,219 |
|
1,335 |
|
|||||
|
Cost of revenue |
|
501 |
|
493 |
|
550 |
|
1,484 |
|
1,633 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Research and development expense |
|
617 |
|
665 |
|
774 |
|
1,888 |
|
2,643 |
|
|||||
|
Sales and marketing expense |
|
647 |
|
688 |
|
885 |
|
2,064 |
|
3,419 |
|
|||||
|
General and administrative expense |
|
4,947 |
|
1,366 |
|
930 |
|
6,974 |
|
2,194 |
|
|||||
|
Operating expense |
|
6,211 |
|
2,719 |
|
2,589 |
|
10,926 |
|
8,256 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Total stock-based compensation |
|
$ |
6,712 |
|
$ |
3,212 |
|
$ |
3,139 |
|
$ |
12,410 |
|
$ |
9,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Amortization of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Cost of revenue - product |
|
$ |
37 |
|
$ |
38 |
|
$ |
40 |
|
$ |
113 |
|
$ |
184 |
|
|
Research and development |
|
100 |
|
100 |
|
— |
|
300 |
|
— |
|
|||||
|
Total amortization of intangible assets |
|
$ |
137 |
|
$ |
138 |
|
$ |
40 |
|
$ |
413 |
|
$ |
184 |
|