=============================================================================== 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 9, 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 October 9, 2002, reporting its actual financial results for the third quarter ended September 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 October 9, 2002 reporting Sonus' actual financial results for the third quarter ended September 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: October 10, 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 THIRD QUARTER FINANCIAL RESULTS WESTFORD, MASS., OCTOBER 9, 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 third quarter ended September 30, 2002. These results are consistent with the revised business outlook the Company provided on September 24, 2002. Revenues for the third quarter of fiscal 2002 were $7.4 million compared with $40.3 million in the same period last year. Adjusted net loss for the third quarter of fiscal 2002 was $14.6 million or $0.08 per share compared with an adjusted net loss for the third quarter of fiscal 2001 of $11.4 million or $0.06 per share. Actual net loss for the third quarter of fiscal 2002 was $21.6 million or $0.11 per share compared with an actual net loss for the third quarter of fiscal 2001 of $498.2 million or $2.81 per share. Revenues for the first nine months of fiscal 2002 were $49.9 million compared with $134.3 million in the same period last year. Adjusted net loss for the first nine months of fiscal 2002 was $37.9 million or $0.20 per share compared with an adjusted net loss for the first nine months of fiscal 2001 of $10.1 million or $0.06 per share. Actual net loss for the first nine months of fiscal 2002 was $55.7 million or $0.30 per share compared with an actual net loss for the first nine months of fiscal 2001 of $632.0 million or $3.71 per share. A reconciliation of adjusted to actual net loss for the periods is as follows: THREE MONTHS ENDED NINE MONTHS ENDED ($ Millions) SEPTEMBER 30, SEPTEMBER 30, ---------------------------------------------------------- 2002 2001 2002 2001 ---- ---- ---- ---- Adjusted net loss ($ 14.6) ($ 11.4) ($ 37.9) ($ 10.1) Write-off of inventory and purchase commitments -- -- (9.4) -- Stock-based compensation (4.0) (39.1) (15.7) (68.3) Amortization of goodwill and purchased intangibles (0.4) (41.4) (1.1) (107.3) Write-off of goodwill and purchased intangibles (1.7) (376.7) (1.7) (376.7) Restructuring benefit (charges), net (0.9) (25.8) 10.1 (25.8) In-process research and development -- (3.8) -- (43.8) -------- -------- -------- -------- Actual net loss ($21.6) ($ 498.2) ($55.7) ($632.0) ======== ======== ======== ======== -- more --
"This continues to be a challenging period for the telecommunications industry, and that certainly has impacted our financial results for the quarter," said Hassan Ahmed, president and CEO, Sonus Networks. "During these times, we remain keenly focused on the priorities that we laid out at the beginning of the year - building our customer base, developing industry-leading technologies and preserving our financial strength. Our leading products and customer support capabilities give us a strong competitive position, and we have continued to add important new customers each quarter." Sonus further expanded its customer base in the third quarter, announcing a deployment with Deutsche Telekom's T-Systems International Division. T-Systems has chosen Sonus to build out its next-generation voice over IP (VOIP) network to provide large multinational customers with enhanced voice services, such as Global Voice VPN (virtual private network) and sophisticated call center routing facilities. Sonus continued to develop new industry partnerships through the Open Services Partner Alliance(sm) (OSPA), broadening Sonus' solutions offerings for enhanced services, access solutions and QOS management. New partners joining the OSPA during the quarter include Innomedia, Personeta, Psytechnics, Skywave, Terayon and Unisys. Sonus also announced that for the eighth consecutive quarter, the Company has been ranked the leading provider of carrier-class packet voice equipment. Respected industry research firms In-Stat/MDR, Infonetics Research and Synergy Research Group issued Q2 2002 market share reports naming Sonus the industry leader in key packet voice market segments. 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. -- more --
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 AUGUST 14, 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 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. SONUS IS A REGISTERED TRADEMARK OF SONUS NETWORKS. OPEN SERVICES ARCHITECTURE IS A TRADEMARK OF SONUS NETWORKS AND OPEN SERVICES PARTNER ALLIANCE IS A SERVICE MARK OF SONUS NETWORKS. ALL OTHER COMPANY AND PRODUCT NAMES MAY BE TRADEMARKS OF THE RESPECTIVE COMPANIES WITH WHICH THEY ARE ASSOCIATED. -- more --
SONUS NETWORKS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) SEPTEMBER 30, DECEMBER 31, 2002 2001 ----------------- ---------------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash, cash equivalents and marketable securities $ 92,107 $ 125,067 Accounts receivable, net 2,957 9,440 Inventories 9,427 18,865 Other current assets 2,456 2,952 ----------------- ---------------- Total current assets 106,947 156,324 PROPERTY AND EQUIPMENT, net 13,950 23,335 GOODWILL, net -- 1,673 PURCHASED INTANGIBLE ASSETS, net 1,707 2,863 OTHER ASSETS, net 485 689 ----------------- ---------------- $ 123,089 $ 184,884 ================= ================ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 26,429 $ 36,301 Accrued restructuring expenses 4,479 8,596 Deferred revenue 10,941 13,349 Current portion of long-term obligations 1,845 1,055 ----------------- ---------------- Total current liabilities 43,694 59,301 LONG-TERM OBLIGATIONS, less current portion 3,682 12,698 CONVERTIBLE SUBORDINATED NOTES 10,000 10,000 STOCKHOLDERS' EQUITY: Common stock 207 205 Capital in excess of par value 860,111 860,883 Accumulated deficit (785,048) (729,398) Deferred compensation (9,345) (28,721) Treasury stock (212) (84) ----------------- ---------------- Total stockholders' equity 65,713 102,885 ----------------- ---------------- $ 123,089 $ 184,884 ================= ================ --more--
SONUS NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) THREE MONTHS ENDED THREE MONTHS ENDED SEPTEMBER 30, 2002 SEPTEMBER 30, 2001 -------------------------------------------------------------------------- US GAAP ADJUSTED US GAAP ADJUSTED RESULTS ADJUSTMENTS RESULTS (A) RESULTS ADJUSTMENTS RESULTS (A) ---------- ----------- ----------- ---------- ----------- ----------- REVENUES $ 7,445 $-- $ 7,445 $ 40,286 $-- $ 40,286 Cost of revenues 4,747 -- 4,747 18,129 -- 18,129 --------- --------- --------- --------- --------- -------- GROSS PROFIT 2,698 -- 2,698 22,157 -- 22,157 OPERATING EXPENSES: Research and development 9,685 -- 9,685 18,746 -- 18,746 Sales and marketing 5,520 -- 5,520 12,660 -- 12,660 General and administrative 2,445 -- 2,445 3,330 -- 3,330 Stock-based compensation 3,962 (3,962) -- 39,069 (39,069) -- Amortization of goodwill and purchased intangible assets 367 (367) -- 41,368 (41,368) -- Write-off of goodwill and purchased intangible assets 1,673 (1,673) -- 376,719 (376,719) -- Restructuring charges (benefit), net 987 (987) -- 25,807 (25,807) -- In-process research and development -- -- -- 3,800 (3,800) -- --------- --------- --------- --------- --------- -------- Total operating expenses 24,639 (6,989) 17,650 521,499 (486,763) 34,736 --------- --------- --------- --------- --------- -------- LOSS FROM OPERATIONS (21,941) 6,989 (14,952) (499,342) 486,763 (12,579) Interest expense (163) -- (163) (147) -- (147) Interest income 466 -- 466 1,328 -- 1,328 --------- --------- --------- --------- --------- -------- NET LOSS $ (21,638) $ 6,989 $ (14,649) $(498,161) $ 486,763 $(11,398) ========= ========= ========= ========= ========= ======== BASIC AND DILUTED NET LOSS PER SHARE $ (0.11) $ (0.08) $ (2.81) $ (0.06) ========= ========= ========= ======== SHARES USED IN COMPUTATION 191,823 191,823 177,313 177,313 ========= ========= ========= ======== (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, the write-off of goodwill and purchased intangible assets, restructuring charges (benefit) and in-process research and development expenses. -more-
SONUS NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) NINE MONTHS NINE MONTHS ENDED ENDED SEPTEMBER 30, 2002 SEPTEMBER 30, 2001 ------------------------------------------------------------------------- US GAAP ADJUSTED US GAAP ADJUSTED RESULTS ADJUSTMENTS RESULTS (A) RESULTS ADJUSTMENTS RESULTS (A) ---------- ----------- ----------- ---------- ----------- ------------ REVENUES $ 49,898 $-- $ 49,898 $ 134,336 $-- $ 134,336 Cost of revenues: Write-off of inventory and purchase commitments 9,434 (9,434) -- -- -- -- Other cost of revenues 24,570 -- 24,570 58,300 -- 58,300 --------- --------- --------- --------- --------- --------- Total cost of revenues 34,004 (9,434) 24,570 58,300 -- 58,300 --------- --------- --------- --------- --------- --------- GROSS PROFIT 15,894 9,434 25,328 76,036 -- 76,036 OPERATING EXPENSES: Research and development 36,525 -- 36,525 49,362 -- 49,362 Sales and marketing 22,207 -- 22,207 31,763 -- 31,763 General and administrative 5,601 -- 5,601 9,272 -- 9,272 Stock-based compensation 15,655 (15,655) -- 68,339 (68,339) -- Amortization of goodwill and purchased intangible assets 1,156 (1,156) -- 107,279 (107,279) -- Write-off of goodwill and purchased intangible assets 1,673 (1,673) -- 376,719 (376,719) -- Restructuring charges (benefit), net (10,141) 10,141 -- 25,807 (25,807) -- In-process research and development -- -- -- 43,800 (43,800) -- --------- --------- --------- --------- --------- --------- Total operating expenses 72,676 (8,343) 64,333 712,341 (621,944) 90,397 --------- --------- --------- --------- --------- --------- LOSS FROM OPERATIONS (56,782) 17,777 (39,005) (636,305) 621,944 (14,361) Interest expense (438) -- (438) (428) -- (428) Interest income 1,570 -- 1,570 4,702 -- 4,702 --------- --------- --------- --------- --------- --------- NET LOSS $ (55,650) $ 17,777 $ (37,873) $(632,031) $ 621,944 $ (10,087) ========= ========= ========= ========= ========= ========= BASIC AND DILUTED NET LOSS PER SHARE $ (0.30) $ (0.20) $ (3.71) $ (0.06) ========= ========= ========= ========= SHARES USED IN COMPUTATION 188,620 188,620 170,220 170,220 ========= ========= ========= ========= (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 impact of the write-off of inventory and purchase commitments, amortization of stock-based compensation, amortization of goodwill and purchased intangible assets, the write-off of goodwill and purchased intangible assets, restructuring charges (benefit) and in-process research and development expenses. ###