Sonus Networks Reports 2001 Fourth Quarter And Annual Financial Results

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Fiscal 2001 Revenues Grow to $173.2 Million, Increase 235% over Previous Year

WESTFORD, Mass., January 16, 2002 – Sonus Networks, Inc. (Nasdaq: SONS), a leading provider of voice infrastructure solutions for the new public network, today reported financial results for its fourth quarter and fiscal year ended December 31, 2001.

Revenues for the fourth quarter of fiscal 2001 were $38.9 million compared with $28.6 million for the same period last year, an increase of 36 percent. Adjusted net loss for the fourth quarter of fiscal 2001 was $7.7 million or $0.04 per share, excluding an adjustment of a previous write-off of goodwill and purchased intangibles of $2.0 million, amortization of goodwill and purchased intangibles of $0.5 million and stock-based compensation of $7.2 million, compared with adjusted net income for the fourth quarter of fiscal 2000 of $0.1 million or $0.00 per share, excluding stock-based compensation of $6.4 million.

Actual net loss for the fourth quarter of fiscal 2001 was $13.4 million or $0.07 per share, including an adjustment of a previous write-off of goodwill and purchased intangibles, amortization of goodwill and purchased intangibles and stock-based compensation, compared with an actual net loss for the fourth quarter of fiscal 2000 of $6.3 million or $0.04 per share, including stock-based compensation.

Revenues for fiscal year 2001 were $173.2 million compared with $51.8 million for fiscal year 2000. Adjusted net loss for fiscal year 2001 was $17.8 million or $0.10 per share, excluding restructuring charges of $25.8 million, write-off of goodwill and purchased intangibles of $374.7 million, amortization of goodwill and purchased intangibles of $107.8 million, stock-based compensation of $75.5 million and an in-process research and development charge of $43.8 million, compared with adjusted net loss for fiscal year 2000 of $23.3 million or $0.17 per share, excluding stock-based compensation of $26.7 million.

Actual net loss for fiscal 2001 was $645.4 million or $3.74 per share, including restructuring charges, write-off of goodwill and purchased intangibles, amortization of goodwill and purchased intangibles, stock-based compensation and an in-process research and development charge, compared with an actual net loss for fiscal 2000 of $50.0 million or $0.52 per share, including stock-based compensation.

"Q4 marked another good quarter of progress in product development, customer deployments and international expansion, all of which further our market leadership," said Hassan Ahmed, president and CEO, Sonus Networks. "We are well positioned to weather the difficult climate our industry faces today, and we will continue to take the steps necessary to build our financial strength and expand our leadership as the telecom industry emerges from its current economic downturn."

During the quarter, Sonus significantly advanced its access product strategy with the introduction of the Insignus(TM) Softswitch. The Insignus Softswitch expands upon the industry-leading softswitching technologies that Sonus has been deploying for years, and provides new capabilities for delivering Class 5 services and comprehensive SIP (Session Initiation Protocol) support. Underscoring its commitment to the RBOC (Regional Bell Operating Company) market, Sonus also recently completed the Telcordia(TM) OSMINE Services process, which assures incumbent local exchange carriers that Sonus solutions will seamlessly integrate with their existing back-office systems.

Sonus broadened its customer base with the announcement of two new customers during the quarter. In November, Alestra, a joint venture between AT&T (NYSE: T) and Mexican financial and industrial institutions Bancomer and ALFA, selected Sonus to supply equipment for the development of Alestra's packet-based voice network. In October, Touch America, the broadband network and service provider subsidiary of The Montana Power Company (NYSE: MTP), announced that it will use Sonus' softswitch and media gateway systems to build an advanced VoIP network to carry all Touch America voice traffic.

In December, Sonus further expanded its global presence with the launch of the company's direct operations in China. Sonus established a regional office in Beijing, and also formed a distribution partnership with Photonic Bridges, a leading Chinese systems integrator. Last week, the company announced its first customer win in China. China Netcom has chosen Sonus to provide infrastructure solutions for China Netcom's nationwide packet voice network, and is deploying Sonus' GSX9000(TM) Open Services Switch, the Insignus Softswitch, including the ASX Access Server and PSX Policy Server modules, and the Sonus Insight(TM) Management System.

Also in December, Sonus reported that it has been ranked the worldwide market share leader in carrier-class packet voice switching equipment for a fifth consecutive quarter. Respected industry research firms Cahners In-Stat Group, Infonetics Research and Synergy Research Group all confirmed Sonus' continuing leadership position in a number of market segments during the third quarter of 2001.

"While these are challenging times for the telecom industry, we are excited about Sonus' prospects in the year ahead," continued Ahmed. "Packet voice technologies from Sonus are vital to our customers' businesses, and the interest in our products is strong. We will continue our focus on delivering the most innovative solutions in the industry, and are driving to expand our business into new geographies and market segments as we further our position as the premier franchise in next-generation voice."

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.

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 November 14, 2001, 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 Company's 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.

Insignus, GSX9000, Sonus Insight and Open Services Architecture are trademarks of Sonus Networks. All other company and product names may be trademarks of the respective companies with which they are associated.