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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
October 8, 2003
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 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
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.
On October 8, 2003, Sonus Networks, Inc. issued a press release
providing financial results for the fiscal quarter ended September 30, 2003. A
copy of the press release is attached as Exhibit 99.1 hereto.
The press release attached 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.
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: October 8, 2003 SONUS NETWORKS, INC.
By:
/s/ Stephen J. Nill____________________
Stephen J. Nill
Chief Financial Officer, Vice President of
Finance and Administration and Treasurer
Exhibit Index
99.1 Press release dated October 8, 2003 reporting the financial results of
Sonus Networks, Inc. for the fiscal quarter ended September 30, 2003.
Exhibit 99.1
Sonus Networks Reports 2003 Third Quarter Financial Results; Revenues
Grow 34% Sequentially, 285% Over Previous Year; Company Achieves
Quarterly Profit
WESTFORD, Mass.--(BUSINESS WIRE)--Oct. 8, 2003--Sonus Networks,
Inc. (Nasdaq: SONS), a leading provider of carrier packet voice
infrastructure solutions, today reported its financial results for the
third quarter ended September 30, 2003 in accordance with U.S.
generally accepted accounting principles (GAAP).
Revenues for the third quarter of fiscal 2003 were $28.6 million
compared with $21.4 million for the second quarter of fiscal 2003 and
$7.4 million for the third quarter of fiscal 2002. Net income for the
third quarter of fiscal 2003 was $1.2 million or $0.01 per diluted
share compared with a net loss for the second quarter of fiscal 2003
of $3.2 million or $0.01 per diluted share and a net loss of $21.6
million or $0.11 per diluted share for the third quarter of fiscal
2002.
Revenues for the first nine months of fiscal 2003 were $66.0
million compared with $49.9 million in the same period last year. Net
loss for the first nine months of fiscal 2003 was $6.4 million or
$0.03 per diluted share compared with a net loss for the first nine
months of fiscal 2002 of $55.7 million or $0.30 per diluted share.
"This was a strong quarter for Sonus Networks, our fourth
consecutive quarter of revenue growth," said Hassan Ahmed, president
and CEO, Sonus Networks. "Our revenues grew 34% sequentially to $28.6
million, reflecting increased market demand for packet telephony and
the expanding number of customers who have adopted Sonus' solutions.
We achieved an important milestone in reporting our first quarterly
profit on a GAAP basis. Additionally, we bolstered our balance sheet
to capitalize on the opportunity ahead, adding $126 million to our
cash and marketable securities through a common stock offering in
September."
In July, Sonus disclosed that Verizon Communications has deployed
Sonus' voice infrastructure solutions to support Verizon's delivery of
long distance services to select markets. Verizon is carrying customer
traffic on its Sonus infrastructure and is now expanding its footprint
to additional U.S. markets. Also in Q3, Sonus announced that Powercom,
a Wisconsin-based communications provider, has deployed a Sonus-based
network for domestic and international long distance, toll-free
calling and calling card services, with plans to deliver local voice
services in the future.
Further expanding its presence around the globe, Sonus opened an
office in India. Sonus' new direct operations in Mumbai will serve the
rapidly growing India telecommunications market, including
next-generation carriers as well as established service providers.
During the quarter, Sonus achieved ISO 9001:2000 certification,
underscoring the company's commitment to delivering high-quality
next-generation packet voice solutions. Earlier this year, Sonus
became the first company to receive CUE Certification, a
3-in-1-product certification service offered by TUV America for the
Canadian, United States and European markets.
Sonus' market leadership was reinforced in Q3 as Sonus was once
again named the market share leader in key categories such as carrier
voice over IP (VoIP) gateway revenues, minutes of VoIP traffic and
revenue-generating carrier ports by independent industry research
firms. Synergy Research Group recognized Sonus as a top performer in
its second quarter 2003 analysis of the VoIP equipment market, with
50.9% market share in high-density VoIP gateway revenues worldwide.
Finally, Sonus continued to focus on strengthening its financial
position during the quarter. In September, the company completed a
public offering of its common stock, adding approximately $126 million
to its balance sheet.
About Sonus Networks
Sonus Networks, Inc., is a leading provider of packet voice
infrastructure solutions for wireline and wireless service providers.
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 the "Cautionary Statements" section of Sonus' Quarterly
Report on Form 10-Q, dated August 13, 2003 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 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. 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 is a trademark of Sonus Networks. All other company and
product names may be trademarks of the respective companies with which
they are associated.
SONUS NETWORKS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
Sept. 30, Dec. 31,
2003 2002
----------- ---------
(Unaudited)
Assets
Current assets:
Cash, cash equivalents and marketable
securities $292,856 $111,167
Accounts receivable, net 5,604 2,956
Inventories 12,333 10,776
Other current assets 6,313 3,806
----------- ---------
Total current assets 317,106 128,705
Property and equipment, net 6,514 11,174
Purchased intangible assets, net 361 1,174
Other assets, net 339 480
----------- ---------
$324,320 $141,533
=========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $36,560 $37,521
Accrued restructuring expenses 845 3,143
Deferred revenue 34,036 29,235
Current portion of long-term obligations 1,329 1,606
----------- ---------
Total current liabilities 72,770 71,505
Long-term obligations, less current portion 1,822 3,293
Convertible subordinated notes 10,000 10,000
Stockholders' equity:
Common stock 246 207
Capital in excess of par value 1,045,077 858,126
Accumulated deficit (804,250) (797,868)
Deferred compensation (1,078) (3,469)
Treasury stock (267) (261)
----------- ---------
Total stockholders' equity 239,728 56,735
----------- ---------
$324,320 $141,533
=========== =========
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
Three months ended
September 30, 2003
-----------------------------
US GAAP Non-GAAP
Results Adjustments Results(A)
-----------------------------
Revenues $28,644 $-- $28,644
Cost of revenues 11,047 -- 11,047
-------- ------ --------
Gross profit 17,597 -- 17,597
Gross profit % 61.4% 61.4%
Operating expenses:
Research and development 7,984 -- 7,984
Sales and marketing 6,536 -- 6,536
General and administrative 999 -- 999
Stock-based compensation 866 (866) --
Amort. of goodwill and
purchased intangible
assets 271 (271) --
Write-off of goodwill
and purchased intangible
assets -- -- --
Restructuring charges -- -- --
-------- ------ --------
Total operating
expenses 16,656 (1,137) 15,519
-------- ------ --------
Income (loss)
from operations 941 1,137 2,078
Interest expense (128) -- (128)
Interest income 396 -- 396
-------- ------ --------
Net income (loss) $1,209 $1,137 $2,346
======== ====== ========
Net income (loss)
per share:
Basic $0.01 $0.01
Diluted $0.01 $0.01
Shares used in
computation:
Basic 224,356 224,356
Diluted 239,446 239,446
Three months ended
September 30, 2002
-----------------------------
US GAAP Non-GAAP
Results Adjustments Results(A)
-----------------------------
Revenues $7,445 $-- $7,445
Cost of revenues 4,747 -- 4,747
--------- ------ ---------
Gross profit 2,698 -- 2,698
Gross profit % 36.2% 36.2%
Operating expenses:
Research and development 9,685 -- 9,685
Sales and marketing 5,520 -- 5,520
General and administrative 2,445 -- 2,445
Stock-based compensation 3,962 (3,962) --
Amort. of goodwill and
purchased intangible
assets 367 (367) --
Write-off of goodwill
and purchased intangible
assets 1,673 (1,673) --
Restructuring charges 987 (987) --
--------- ------ ---------
Total operating
expenses 24,639 (6,989) 17,650
--------- ------ ---------
Income (loss)
from operations (21,941) 6,989 (14,952)
Interest expense (163) -- (163)
Interest income 466 -- 466
--------- ------ ---------
Net income (loss) $(21,638) $6,989 $(14,649)
========= ====== =========
Net income (loss)
per share:
Basic $(0.11) $(0.08)
Diluted $(0.11) $(0.08)
Shares used in
computation:
Basic 191,823 191,823
Diluted 191,823 191,823
Three months ended
June 30, 2003
-----------------------------
US GAAP Non-GAAP
Results Adjustments Results(A)
-----------------------------
Revenues $21,356 $-- $21,356
Cost of revenues 8,793 -- 8,793
-------- ------ --------
Gross profit 12,563 -- 12,563
Gross profit % 58.8% 58.8%
Operating expenses:
Research and development 8,245 -- 8,245
Sales and marketing 5,643 -- 5,643
General and administrative 1,188 -- 1,188
Stock-based compensation 739 (739) --
Amort. of goodwill and
purchased intangible
assets 271 (271) --
-------- ------ --------
Total operating
expenses 16,086 (1,010) 15,076
-------- ------ --------
Income (loss)
from operations (3,523) 1,010 (2,513)
Interest expense (148) -- (148)
Interest income 461 -- 461
-------- ------ --------
Net income (loss)$ (3,210) $1,010 $(2,200)
======== ====== ========
Net income (loss)
per share:
Basic $(0.01) $(0.01)
Diluted $(0.01) $(0.01)
Shares used in
computation:
Basic 215,970 215,970
Diluted 215,970 215,970
(A) These Adjusted Condensed Consolidated Statements of Operations
are for informational purposes only and are not in accordance with US
generally accepted accounting principles (GAAP). These statements
exclude the amortization of stock-based compensation, amortization of
goodwill and purchased intangible assets, write-off of goodwill and
purchased intangible assets and restructuring charges. Sonus'
management uses the Non-GAAP financial results as an alternative means
for assessing Sonus' quarterly operations. Even though Sonus'
management recognizes that Non-GAAP financial results are not a
substitute for GAAP results, Non-GAAP measures are helpful in
assisting Sonus' management understand and manage its business. Please
refer to the section entitled Explanation of Use of Non-GAAP Financial
Results on page 29 of Sonus' Annual Report on Form 10-K, dated March
19, 2003, which explains in detail the use by Sonus' management of
Non-GAAP financial results.
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
Nine months ended
September 30, 2003
-----------------------------
US GAAP Non-GAAP
Results Adjustments Results(A)
-----------------------------
Revenues $66,019 $-- $66,019
Cost of revenues:
Write-off (benefit)
of inventory and
purchase commitments (735) 735 --
Other cost of revenues 26,005 -- 26,005
-------- ------ --------
Total cost of revenues 25,270 735 26,005
-------- ------ --------
Gross profit 40,749 (735) 40,014
Gross profit % 61.7% 60.6%
Operating expenses:
Research and development 23,931 -- 23,931
Sales and marketing 17,453 -- 17,453
General and administrative 3,267 -- 3,267
Stock-based compensation 2,499 (2,499) --
Amort. of goodwill and
purchased intangible
assets 813 (813) --
Write-off of goodwill
and purchased intangible
assets -- -- --
Restructuring charges
(benefit), net -- -- --
-------- ------ --------
Total operating expenses 47,963 (3,312) 44,651
-------- ------ --------
Loss from operations (7,214) 2,577 (4,637)
Interest expense (406) -- (406)
Interest income 1,238 -- 1,238
-------- ------ --------
Net loss $(6,382) $2,577 $(3,805)
======== ====== ========
Basic and diluted
net loss per share $(0.03) $(0.02)
======== ========
Shares used in
computation 213,322 213,322
======== ========
Nine months ended
September 30, 2002
-----------------------------
US GAAP Non-GAAP
Results Adjustments Results(A)
-----------------------------
Revenues $49,898 $-- $49,898
Cost of revenues:
Write-off (benefit)
of inventory and
purchase commitments 9,434 (9,434) --
Other cost of revenues 24,570 -- 24,570
--------- ------ ---------
Total cost of revenues 34,004 (9,434) 24,570
--------- ------ ---------
Gross profit 15,894 9,434 25,328
Gross profit % 31.9% 50.8%
Operating expenses:
Research and development 36,525 -- 36,525
Sales and marketing 22,207 -- 22,207
General and administrative 5,601 -- 5,601
Stock-based compensation 15,655 (15,655) --
Amort. of goodwill and
purchased intangible
assets 1,156 (1,156) --
Write-off of goodwill and
purchased intangible
assets 1,673 (1,673) --
Restructuring charges
(benefit), net (10,141) 10,141 --
--------- ------ ---------
Total operating expenses 72,676 (8,343) 64,333
--------- ------ ---------
Loss from operations (56,782) 17,777 (39,005)
Interest expense (438) -- (438)
Interest income 1,570 -- 1,570
--------- ------ ---------
Net loss $(55,650)$17,777 $(37,873)
========= ====== =========
Basic and diluted
net loss per share $(0.30) $(0.20)
========= =========
Shares used in
computation 188,620 188,620
========= =========
(A) These Adjusted Condensed Consolidated Statements of Operations
are for informational purposes only and are not in accordance with US
generally accepted accounting principals (GAAP). These statements
exclude the impact of the write-off (benefit) of inventory and
purchase commitments, amortization of stock-based compensation,
amortization of goodwill and purchased intangible assets, write-off of
goodwill and purchased intangible assets and restructuring charges
(benefit). Sonus' management uses the non-GAAP financial results as
an alternative means for assessing Sonus' quarterly operations. Even
though Sonus' management recognizes that non-GAAP financial results
are not a substitute for GAAP results, non-GAAP measures are helpful
in assisting Sonus' management understand and manage its business.
Please refer to the section entitled Explanation of Use of Non-GAAP
Financial Results on page 29 of Sonus' Annual Report on Form 10-K,
dated March 19, 2003, which explains in detail the use by Sonus'
management of non-GAAP financial results.
CONTACT: Sonus Networks, Inc.
Investor Relations:
Jocelyn Philbrook, 978-589-8672
jphilbrook@sonusnet.com
or
Media Relations:
Beth Morrissey, 978-589-8579
bmorrissey@sonusnet.com