Exhibit 99.1
SONUS NETWORKS REPORTS
2010 SECOND QUARTER RESULTS
Westford, MA, August 3, 2010 — Sonus Networks, Inc. (Nasdaq: SONS), a market leader in next generation IP-based network solutions, today announced results for the quarter ended June 30, 2010.
Revenue for the second quarter of fiscal 2010 was $61.2 million, compared to $62.4 million in the first quarter of fiscal 2010 and $61.6 million for the second quarter of fiscal 2009. The Company’s net income on a GAAP basis for the second quarter of fiscal 2010 was $0.3 million, or $0.00 per diluted share, compared to a net loss of $0.1 million, or $0.00 per share, for the first quarter of fiscal 2010, and net income of $4.4 million, or $0.02 per diluted share, for the second quarter of fiscal 2009.
“We are pleased with our solid operating results in the second quarter,” said Richard Nottenburg, President and Chief Executive Officer of Sonus Networks. “During the quarter, we successfully launched the NBS-5200 Network Border Switch on our next generation ConnexIP platform and are pleased with the traction we have made to date.”
Conference Call Details:
Sonus Networks will host a conference call for analysts and investors to discuss its second 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: 800-671-2810
International Callers: +1 303-223-2684
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, Form 10-Q for the quarter ended March 31, 2010 and Form 10-Q for the quarter ended June 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:
Wayne Pastore 978-614-8291 wpastore@sonusnet.com |
| Fran Murphy 978-614-8148 fmurphy@sonusnet.com |
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
|
| Three months ended |
| |||||||
|
| June 30, |
| March 31, |
| June 30, |
| |||
|
| 2010 |
| 2010 |
| 2009 |
| |||
Revenue: |
|
|
|
|
|
|
| |||
Product |
| $ | 36,796 |
| $ | 36,278 |
| $ | 36,320 |
|
Service |
| 24,385 |
| 26,130 |
| 25,287 |
| |||
Total revenue |
| 61,181 |
| 62,408 |
| 61,607 |
| |||
|
|
|
|
|
|
|
| |||
Cost of revenue: |
|
|
|
|
|
|
| |||
Product |
| 10,826 |
| 12,301 |
| 10,747 |
| |||
Service |
| 11,842 |
| 11,929 |
| 10,568 |
| |||
Total cost of revenue |
| 22,668 |
| 24,230 |
| 21,315 |
| |||
|
|
|
|
|
|
|
| |||
Gross profit |
| 38,513 |
| 38,178 |
| 40,292 |
| |||
|
|
|
|
|
|
|
| |||
Gross profit % |
|
|
|
|
|
|
| |||
Product |
| 70.6 | % | 66.1 | % | 70.4 | % | |||
Service |
| 51.4 | % | 54.3 | % | 58.2 | % | |||
Total gross profit % |
| 62.9 | % | 61.2 | % | 65.4 | % | |||
|
|
|
|
|
|
|
| |||
Operating expenses: |
|
|
|
|
|
|
| |||
Research and development |
| 15,106 |
| 14,940 |
| 15,501 |
| |||
Sales and marketing |
| 12,392 |
| 13,594 |
| 12,344 |
| |||
General and administrative |
| 10,971 |
| 10,144 |
| 10,186 |
| |||
Restructuring |
| — |
| — |
| (7 | ) | |||
Total operating expenses |
| 38,469 |
| 38,678 |
| 38,024 |
| |||
|
|
|
|
|
|
|
| |||
Income (loss) from operations |
| 44 |
| (500 | ) | 2,268 |
| |||
Interest expense |
| (30 | ) | (13 | ) | 8 |
| |||
Interest income |
| 466 |
| 515 |
| 1,077 |
| |||
Other income, net |
| 1 |
| 10 |
| 19 |
| |||
|
|
|
|
|
|
|
| |||
Income before income taxes |
| 481 |
| 12 |
| 3,372 |
| |||
Income tax benefit (provision) |
| (170 | ) | (146 | ) | 1,011 |
| |||
|
|
|
|
|
|
|
| |||
Net income (loss) |
| $ | 311 |
| $ | (134 | ) | $ | 4,383 |
|
|
|
|
|
|
|
|
| |||
Earnings (loss) per share: |
|
|
|
|
|
|
| |||
Basic |
|
|
|
|
|
|
| |||
Diluted |
| $ | — |
| $ | — |
| $ | 0.02 |
|
|
| $ | — |
| $ | — |
| $ | 0.02 |
|
Shares used to compute earnings (loss) per share: |
|
|
|
|
|
|
| |||
Basic |
| 275,051 |
| 274,701 |
| 273,543 |
| |||
Diluted |
| 276,314 |
| 274,701 |
| 273,768 |
| |||
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
|
| Six months ended |
| ||||
|
| June 30, |
| June 30, |
| ||
|
| 2010 |
| 2009 |
| ||
Revenue: |
|
|
|
|
| ||
Product |
| $ | 73,074 |
| $ | 55,723 |
|
Service |
| 50,515 |
| 46,896 |
| ||
Total revenue |
| 123,589 |
| 102,619 |
| ||
|
|
|
|
|
| ||
Cost of revenue: |
|
|
|
|
| ||
Product |
| 23,127 |
| 16,881 |
| ||
Service |
| 23,771 |
| 22,231 |
| ||
Total cost of revenue |
| 46,898 |
| 39,112 |
| ||
|
|
|
|
|
| ||
Gross profit |
| 76,691 |
| 63,507 |
| ||
|
|
|
|
|
| ||
Gross profit % |
|
|
|
|
| ||
Product |
| 68.4 | % | 69.7 | % | ||
Service |
| 52.9 | % | 52.6 | % | ||
Total gross profit % |
| 62.1 | % | 61.9 | % | ||
|
|
|
|
|
| ||
Operating expenses: |
|
|
|
|
| ||
Research and development |
| 30,046 |
| 31,854 |
| ||
Sales and marketing |
| 25,986 |
| 24,491 |
| ||
General and administrative |
| 21,115 |
| 20,681 |
| ||
Restructuring |
| — |
| 1,977 |
| ||
Total operating expenses |
| 77,147 |
| 79,003 |
| ||
|
|
|
|
|
| ||
Loss from operations |
| (456 | ) | (15,496 | ) | ||
Interest expense |
| (43 | ) | (71 | ) | ||
Interest income |
| 981 |
| 2,726 |
| ||
Other income, net |
| 11 |
| 12 |
| ||
|
|
|
|
|
| ||
Income (loss) before income taxes |
| 493 |
| (12,829 | ) | ||
Income tax benefit (provision) |
| (316 | ) | 985 |
| ||
|
|
|
|
|
| ||
Net income (loss) |
| $ | 177 |
| $ | (11,844 | ) |
|
|
|
|
|
| ||
Earnings (loss) per share: |
|
|
|
|
| ||
Basic |
|
|
|
|
| ||
Diluted |
| $ | — |
| $ | (0.04 | ) |
|
| $ | — |
| $ | (0.04 | ) |
Shares used to compute earnings (loss) per share: |
|
|
|
|
| ||
Basic |
| 274,877 |
| 273,320 |
| ||
Diluted |
| 276,038 |
| 273,320 |
| ||
SONUS NETWORKS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
|
| June 30, |
| December 31, |
| ||
|
| 2010 |
| 2009 |
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 103,788 |
| $ | 125,323 |
|
Marketable securities |
| 249,393 |
| 239,223 |
| ||
Accounts receivable, net |
| 40,188 |
| 47,998 |
| ||
Inventory, net |
| 21,181 |
| 21,925 |
| ||
Deferred income taxes |
| 669 |
| 562 |
| ||
Other current assets |
| 20,394 |
| 17,508 |
| ||
Total current assets |
| 435,613 |
| 452,539 |
| ||
|
|
|
|
|
| ||
Property and equipment, net |
| 14,355 |
| 14,646 |
| ||
Intangible assets, net |
| 2,065 |
| 341 |
| ||
Goodwill |
| 5,053 |
| 5,053 |
| ||
Investments |
| 66,474 |
| 49,598 |
| ||
Deferred income taxes |
| 780 |
| 711 |
| ||
Other assets |
| 22,623 |
| 17,849 |
| ||
|
| $ | 546,963 |
| $ | 540,737 |
|
|
|
|
|
|
| ||
Liabilities and stockholders’ equity |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 18,619 |
| $ | 5,337 |
|
Accrued expenses |
| 17,584 |
| 19,292 |
| ||
Current portion of deferred revenue |
| 57,141 |
| 74,748 |
| ||
Current portion of long-term liabilities |
| 484 |
| 753 |
| ||
Total current liabilities |
| 93,828 |
| 100,130 |
| ||
|
|
|
|
|
| ||
Deferred revenue |
| 31,703 |
| 25,242 |
| ||
Long-term liabilities |
| 1,042 |
| 1,127 |
| ||
Total liabilities |
| 126,573 |
| 126,499 |
| ||
|
|
|
|
|
| ||
Commitments and contingencies |
|
|
|
|
| ||
|
|
|
|
|
| ||
Stockholders equity: |
|
|
|
|
| ||
Common stock |
| 278 |
| 277 |
| ||
Additional paid-in capital |
| 1,292,492 |
| 1,286,326 |
| ||
Accumulated deficit |
| (878,633 | ) | (878,810 | ) | ||
Accumulated other comprehensive income |
| 6,520 |
| 6,712 |
| ||
Treasury stock |
| (267 | ) | (267 | ) | ||
Total stockholders’ equity |
| 420,390 |
| 414,238 |
| ||
|
| $ | 546,963 |
| $ | 540,737 |
|
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
| Six months ended |
| ||||
|
| June 30, |
| June 30, |
| ||
|
| 2010 |
| 2009 |
| ||
Cash flows from operating activities: |
|
|
|
|
| ||
Net income (loss) |
| $ | 177 |
| $ | (11,844 | ) |
Adjustments to reconcile net income (loss) to cash flows provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization of property and equipment |
| 4,804 |
| 5,004 |
| ||
Amortization of intangible assets |
| 276 |
| 153 |
| ||
Stock-based compensation |
| 5,698 |
| 6,750 |
| ||
Loss on disposal of property and equipment |
| 59 |
| 15 |
| ||
Deferred income taxes |
| — |
| (208 | ) | ||
Changes in operating assets and liabilities: |
|
|
|
|
| ||
Accounts receivable |
| 7,778 |
| 37,714 |
| ||
Inventory |
| (5,201 | ) | (5,204 | ) | ||
Other operating assets |
| 261 |
| (13,472 | ) | ||
Accounts payable |
| 12,989 |
| 1,204 |
| ||
Accrued expenses |
| (1,828 | ) | (11,275 | ) | ||
Accrued litigation settlements |
| — |
| (100 | ) | ||
Deferred revenue |
| (11,181 | ) | 3,645 |
| ||
Net cash provided by operating activities |
| 13,832 |
| 12,382 |
| ||
|
|
|
|
|
| ||
Cash flows from investing activities: |
|
|
|
|
| ||
Purchases of property and equipment |
| (4,276 | ) | (3,352 | ) | ||
Purchase of intangible assets |
| (2,000 | ) | — |
| ||
Purchases of marketable securities |
| (168,953 | ) | (61,926 | ) | ||
Sale/maturities of marketable securities |
| 139,620 |
| 153,738 |
| ||
Increase in litigation settlement escrow |
| — |
| (9,500 | ) | ||
Net cash provided by (used in) investing activities |
| (35,609 | ) | 78,960 |
| ||
|
|
|
|
|
| ||
Cash flows from financing activities: |
|
|
|
|
| ||
Sale of common stock in connection with employee stock purchase plan |
| 609 |
| 529 |
| ||
Proceeds from exercise of stock options |
| 61 |
| 1 |
| ||
Payment of tax withholding obligations related to net share settlements of restricted stock awards |
| (257 | ) | (287 | ) | ||
Principal payments of capital lease obligations |
| (110 | ) | (124 | ) | ||
Net cash provided by financing activities |
| 303 |
| 119 |
| ||
|
|
|
|
|
| ||
Effect of exchange rate changes on cash and cash equivalents |
| (61 | ) | 407 |
| ||
|
|
|
|
|
| ||
Net increase (decrease) in cash and cash equivalents |
| (21,535 | ) | 91,868 |
| ||
Cash and cash equivalents, beginning of year |
| 125,323 |
| 122,207 |
| ||
Cash and cash equivalents, end of period |
| $ | 103,788 |
| $ | 214,075 |
|
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 |
| Six months ended |
| |||||||||||
|
| June 30, |
| March 31, |
| June 30, |
| June 30, |
| June 30, |
| |||||
|
| 2010 |
| 2010 |
| 2009 |
| 2010 |
| 2009 |
| |||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
| |||||
Cost of revenue - product |
| $ | 89 |
| $ | 71 |
| $ | 115 |
| $ | 160 |
| $ | 231 |
|
Cost of revenue - service |
| 404 |
| 419 |
| 387 |
| 823 |
| 852 |
| |||||
Cost of revenue |
| 493 |
| 490 |
| 502 |
| 983 |
| 1,083 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Research and development expense |
| 665 |
| 606 |
| 1,102 |
| 1,271 |
| 1,869 |
| |||||
Sales and marketing expense |
| 688 |
| 729 |
| 1,490 |
| 1,417 |
| 2,534 |
| |||||
General and administrative expense |
| 1,366 |
| 661 |
| 616 |
| 2,027 |
| 1,264 |
| |||||
Operating expense |
| 2,719 |
| 1,996 |
| 3,208 |
| 4,715 |
| 5,667 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total stock-based compensation |
| $ | 3,212 |
| $ | 2,486 |
| $ | 3,710 |
| $ | 5,698 |
| $ | 6,750 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Amortization of intangible assets |
|
|
|
|
|
|
|
|
|
|
| |||||
Cost of revenue - product |
| $ | 38 |
| $ | 38 |
| $ | 48 |
| $ | 76 |
| $ | 144 |
|
Research and development |
| 100 |
| 100 |
| — |
| 200 |
| — |
| |||||
Total amortization of intangible assets |
| $ | 138 |
| $ | 138 |
| $ | 48 |
| $ | 276 |
| $ | 144 |
|