Sonus Networks Reports 2009 Fourth Quarter and Full Year Results
Westford, MA, February 25, 2010 – Sonus Networks, Inc. (Nasdaq: SONS), providing network transformation through IP communications technology, today announced results for the fourth quarter and full year ended December 31, 2009.
Revenue for the fourth quarter of fiscal 2009 was $68.7 million, compared to $56.2 million in the third quarter of fiscal 2009 and revenue from continuing operations of $89.5 million for the fourth quarter of fiscal 2008. The Company's net income on a GAAP basis for the fourth quarter of fiscal 2009 was $10.3 million, or $0.04 per diluted share, compared to a net loss of $3.4 million, or $0.01 per share, for the third quarter of fiscal 2009, and a loss from continuing operations of $99.5 million, or $0.37 per share, for the fourth quarter of fiscal 2008.
Revenue for fiscal 2009 was $227.5 million, compared to revenue from continuing operations of $313.1 million for fiscal 2008, a decrease of $85.6 million year over year. The Company's net loss on a GAAP basis for fiscal 2009 was $4.9 million, or $0.02 per share, compared to a loss from continuing operations of $116.2 million, or $0.43 per share, in fiscal 2008.
Included in both the fourth quarter and full year 2008 results is an $88.4 million non-cash charge related to an increase in the Company’s valuation allowance against its deferred tax asset.
"We are pleased with the progress we made over the past year to successfully re-engineer the Company,” said Richard Nottenburg, President and Chief Executive Officer of Sonus Networks. "Despite the challenges we and others in our industry faced in 2009, we ended the year profitable on a non-GAAP basis, with a strong balance sheet, more efficient cost structure and substantial operating leverage. As we accelerate our product innovation initiatives, I am confident Sonus is well positioned to capitalize on new growth opportunities to drive future profitability and success.”
Sonus Financial Guidance for Fiscal Year 2010
The following forward-looking statements reflect the Company’s expectations as of February 25, 2010:
- Revenue estimate: flat to low single digit percentage revenue growth on an annual basis as compared to fiscal 2009.
- Gross margin estimate: within longer term range of 58% to 62% on annual basis.
- Total operating expenses: in the range of $142 million to $146 million for the year.
Conference Call Details
Sonus Networks will host a conference call for analysts and investors to discuss its fourth quarter and full year 2009 results as well as certain forward-looking information today at 4:45 p.m. ET.
To listen live via telephone
Dial-in number: 800-913-1647
International Callers: +1 212-231-2907
To listen via internet
Sonus Networks will host a live webcast of the conference call. To access the webcast, visit www.sonus.net, About Us, Investor Relations.
About Sonus Networks
Sonus Networks, Inc., providing network transformation through IP communications technology, is leading the evolution of communications networks to support the multi-device demands of today’s digital lifestyle. Sonus solutions and services enable fixed, mobile and cable operators to gain network awareness and new multi-media capabilities essential to retaining and expanding their subscriber base. Through standards-based interoperable solutions and services, Sonus extends the investments made in traditional networks by enabling operators to seamlessly migrate to next generation technology and deliver the secure, reliable, scalable and cost-effective network needed to grow their business. Sonus maintains a website sonus.net. By including the foregoing website address, Sonus does not intend to incorporate by reference material contained on such website.
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, which identifies 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
Beth Panfil
978-614-8034
bpanfil@sonusnet.com
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three months ended
-----------------------------------------
December 31, September 30, December 31,
2009 2009 2008
------------ ------------- ------------
Revenue:
Product $47,009 $33,544 $53,642
Service 21,703 22,621 35,902
------------ ------------- ------------
Total revenue 68,712 56,165 89,544
------------ ------------- ------------
Cost of revenue:
Product 11,852 10,160 27,631
Service 11,481 10,755 22,101
------------ ------------- ------------
Total cost of revenue 23,333 20,915 49,732
------------ ------------- ------------
Gross profit 45,379 35,250 39,812
------------ ------------- ------------
Gross profit %
Product 74.8% 69.7% 48.5%
Service 47.1% 52.5% 38.4%
Total gross profit % 66.0% 62.8% 44.5%
Operating expenses:
Research and development 13,869 14,141 15,997
Sales and marketing 12,911 11,527 18,952
General and administrative 10,958 11,578 17,385
Impairment of
intangible assets - - 2,727
Restructuring - 1,533 702
------------ ------------- ------------
Total operating expenses 37,738 38,779 55,763
------------ ------------- ------------
Income (loss) from
operations 7,641 (3,529) (15,951)
Interest expense (89) (23) (34)
Interest income 592 787 2,546
Other income, net 47 12 (29)
------------ ------------- ------------
Income (loss) from
continuing operations
before income taxes 8,191 (2,753) (13,468)
Income tax benefit (provision) 2,118 (644) (86,040)
------------ ------------- ------------
Income (loss) from
continuing operations 10,309 (3,397) (99,508)
Loss from discontinued
operations, net of tax - - (183)
Loss on disposal of
discontinued operations,
net of tax - - (741)
------------ ------------- ------------
Net income (loss) $10,309 $(3,397) $(100,432)
============ ============= ============
Earnings (loss) per share:
Basic
Continuing operations $0.04 $(0.01) $(0.37)
Discontinued operations - - -
------------ ------------- ------------
$0.04 $(0.01) $(0.37)
============ ============= ============
Diluted
Continuing operations $0.04 $(0.01) $(0.37)
Discontinued operations - - -
------------ ------------- ------------
$0.04 $(0.01) $(0.37)
============ ============= ============
Shares used to compute
earnings (loss) per share:
Basic 274,359 273,907 272,536
Diluted 275,152 273,907 272,536
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Year ended
--------------------------
December 31, December 31,
2009 2008
------------ ------------
Revenue:
Product $136,276 $203,387
Service 91,220 109,758
------------ ------------
Total revenue 227,496 313,145
------------ ------------
Cost of revenue:
Product 38,893 74,274
Service 44,467 56,020
------------ ------------
Total cost of revenue 83,360 130,294
------------ ------------
Gross profit 144,136 182,851
------------ ------------
Gross profit %
Product 71.5% 63.5%
Service 51.3% 49.0%
Total gross profit % 63.4% 58.4%
Operating expenses:
Research and development 59,864 73,098
Sales and marketing 48,929 74,364
General and administrative 43,217 62,045
Litigation settlements - 19,100
Impairment of intangible assets - 2,727
Restructuring 3,510 702
------------ ------------
Total operating expenses 155,520 232,036
------------ ------------
Loss from operations (11,384) (49,185)
Interest expense (183) (291)
Interest income 4,105 12,643
Other income, net 71 358
------------ ------------
Loss from continuing operations
before income taxes (7,391) (36,475)
Income tax benefit (provision) 2,459 (79,675)
------------ ------------
Loss from continuing operations (4,932) (116,150)
Loss from discontinued operations,
net of tax - (4,491)
Loss on disposal of discontinued
operations, net of tax - (741)
------------ ------------
Net loss $(4,932) $(121,382)
============ ============
Loss per share:
Basic
Continuing operations $(0.02) $(0.43)
Discontinued operations - (0.02)
------------ ------------
$(0.02) $(0.45)
============ ============
Diluted
Continuing operations $(0.02) $(0.43)
Discontinued operations - (0.02)
------------ ------------
$(0.02) $(0.45)
============ ============
Shares used to compute loss per share:
Basic 273,730 271,477
Diluted 273,730 271,477
SONUS NETWORKS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31, December 31,
2009 2008
------------ ------------
Assets
Current assets:
Cash and cash equivalents $125,323 $122,207
Marketable securities 239,223 180,786
Accounts receivable, net 47,998 75,788
Inventory, net 21,925 22,553
Deferred income taxes 562 111
Other current assets 17,508 14,937
------ ------
Total current assets 452,539 416,382
Property and equipment, net 14,646 17,852
Intangible assets, net 341 568
Goodwill 5,053 5,025
Investments 49,598 84,965
Deferred income taxes 711 1,611
Other assets 17,849 9,182
------ -----
$540,737 $535,585
======== ========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $5,337 $9,200
Accrued expenses 19,292 28,231
Accrued litigation settlements - 9,600
Current portion of deferred revenue 74,748 40,962
Current portion of long-term liabilities 753 1,301
--- -----
Total current liabilities 100,130 89,294
Deferred revenue 25,242 37,991
Long-term liabilities 1,127 1,865
----- -----
Total liabilities 126,499 129,150
------- -------
Commitments and contingencies
Stockholders equity:
Common stock 277 275
Additional paid-in capital 1,286,326 1,272,952
Accumulated deficit (878,810) (873,878)
Accumulated other comprehensive income 6,712 7,353
Treasury stock (267) (267)
---- ----
Total stockholders' equity 414,238 406,435
------- -------
$540,737 $535,585
======== ========
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Year ended
---------------
December 31,
2009 2008
---- ----
Cash flows from operating activities:
Net loss $(4,932) $(121,382)
Adjustments to reconcile net loss to cash
flows provided by (used in) operating activities:
Depreciation and amortization of property and
equipment 10,104 11,661
Amortization of intangible assets 232 1,155
Impairment of intangible assets and goodwill - 6,357
Impairment of marketable equity securities - 92
Stock-based compensation 12,810 25,298
Loss on disposal of property and equipment 241 325
Deferred income taxes 449 78,212
Changes in operating assets and liabilities:
Accounts receivable 27,790 10,010
Inventory (2,456) 19,333
Insurance receivable - litigation settlement - 15,328
Other operating assets (7,836) 9,814
Accounts payable (4,229) (9,167)
Accrued expenses (9,803) (13,769)
Accrued litigation settlements (9,600) (30,400)
Deferred revenue 20,987 (19,602)
------ -------
Net cash provided by (used in) operating
activities 33,757 (16,735)
------ -------
Cash flows from investing activities:
Purchases of property and equipment (6,612) (9,709)
Business acquisition, net of cash acquired - (4,909)
Purchases of marketable securities (268,971) (370,102)
Sale/maturities of marketable securities 243,984 378,267
Decrease in litigation settlement escrow - 25,000
- ------
Net cash provided by (used in)
investing activities (31,599) 18,547
------- ------
Cash flows from financing activities:
Sale of common stock in connection with
employee stock purchase plan 1,119 3,755
Proceeds from exercise of stock options 51 437
Payment of tax withholding obligations related
to net share settlements of restricted
stock awards (673) (1,510)
Principal payments of capital lease obligations (233) (175)
---- ----
Net cash provided by financing activities 264 2,507
--- -----
Effect of exchange rate changes on cash and
cash equivalents 694 (1,045)
--- ------
Net increase in cash and cash equivalents 3,116 3,274
Cash and cash equivalents, beginning of period 122,207 118,933
------- -------
Cash and cash equivalents, end of period $125,323 $122,207
======== ========
SONUS NETWORKS, INC.
Supplemental Information
(In thousands)
(unaudited)
The following tables provide the details of stock-based compensation,
amortization of intangible assets, an earnout settlement related to our
Zynetix Ltd. acquisition and a change in estimate of a loss contingency
related to an employment tax audit 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
-----------------------------------------
December 31, September 30, December 31,
2009 2009 2008
---- ---- ----
Stock-based compensation
Cost of revenue - product $63 $67 $151
Cost of revenue - service 449 483 465
--- --- ---
Cost of revenue 512 550 616
--- --- ---
Research and development expense 706 774 1,213
Sales and marketing expense 812 885 1,494
General and administrative
expense 891 930 2,395
--- --- -----
Operating expense 2,409 2,589 5,102
----- ----- -----
Total stock-based
compensation $2,921 $3,139 $5,718
====== ====== ======
Amortization of intangible assets
Cost of revenue - product $40 $40 $279
Sales and marketing expense - - 52
- - --
Total amortization of
intangible assets $40 $40 $331
=== === ====
Earnout settlement - Zynetix
General and administrative expense $- $- $(334)
== == =====
Change in estimate - reduction of
loss contingency related to
employment tax audit (1)
Cost of revenue - product $- $- $(1)
-- -- ---
Research and development expense - - (1)
Sales and marketing expense - - (3)
General and administrative expense - - (117)
- - ----
Operating expense - - (121)
- - ----
Interest expense - - 71
Other income (expense) - - -
- - -
Total change in estimate -
reduction of loss
contingency related to
employment tax audit $- $- $(193)
== == =====
Year ended
--------------------------
December 31, December 31,
2009 2008
---- ----
Stock-based compensation
Cost of revenue - product $361 $734
Cost of revenue - service 1,784 2,731
----- -----
Cost of revenue 2,145 3,465
----- -----
Research and development expense 3,349 7,921
Sales and marketing expense 4,231 5,662
General and administrative expense 3,085 8,074
----- -----
Operating expense 10,665 21,657
------ ------
Total stock-based compensation $12,810 $25,122
======= =======
Amortization of intangible assets
Cost of revenue - product $224 $852
Sales and marketing expense - 169
- ---
Total amortization of intangible assets $224 $1,021
==== ======
Earnout settlement - Zynetix
General and administrative expense $- $1,351
== ======
Change in estimate - reduction of loss
contingency related to employment tax audit (1)
Cost of revenue - product $- $(8)
-- ---
Research and development expense - (52)
Sales and marketing expense - (99)
General and administrative expense - (504)
- ----
Operating expense - (655)
- ----
Interest expense - 71
Other income (expense) - 379
- ---
Total change in estimate - reduction
of loss contingency related to
employment tax audit $- $(1,113)
== =======
(1) Change in estimate resulting in a reduction of the loss contingency
related to the settlement of an employment tax audit by the Internal
Revenue Service that had resulted from the stock option review and
subsequent restatement.
