Sonus Networks Reports 2010 First Quarter Results

News provided by

May 04, 2010, 04:05 ET

WESTFORD, Mass., May 4 /PRNewswire-FirstCall/ -- Sonus Networks, Inc. (Nasdaq: SONS), a market leader in next generation IP-based network solutions, today announced results for the quarter ended March 31, 2010.

Revenue for the first quarter of fiscal 2010 was $62.4 million, compared to $68.7 million in the fourth quarter of fiscal 2009 and $41.0 million for the first quarter of fiscal 2009. The Company's net loss on a GAAP basis for the first quarter of fiscal 2010 was $0.1 million, or $0.00 per share, compared to net income of $10.3 million, or $0.04 per diluted share, for the fourth quarter of fiscal 2009, and a net loss of $16.2 million, or $0.06 per share, for the first quarter of fiscal 2009.

"We are pleased with our strong first quarter results, which reflect the successful execution of our strategic plan," said Richard Nottenburg, President and Chief Executive Officer of Sonus Networks. "During the quarter, we continued to extend our leadership position as we added new customers, penetrated new markets and made significant enhancements to our core products and service offerings. We look forward to launching new products on our next generation platform in the near future."

Conference Call Details:

Sonus Networks will host a conference call for analysts and investors to discuss its first 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: 800-908-9173

International Callers: +1 212-231-2900

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.

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 and Form 10-Q for the quarter ended March 31, 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.

SONUS NETWORKS, INC. Condensed Consolidated Statements of Operations (in thousands, except per share data) (unaudited)


			Three months ended
			March 31,	December 31,	March 31,
			2010	2009	2009
Revenue:
	Product		$ 36,278	$ 47,009	$ 19,403
	Service		26,130	21,703	21,609
		Total revenue	62,408	68,712	41,012

Cost of revenue:
	Product		12,301	11,852	6,134
	Service		11,929	11,481	11,663
		Total cost of revenue	24,230	23,333	17,797

Gross profit			38,178	45,379	23,215

Gross profit %
	Product		66.1%	74.8%	68.4%
	Service		54.3%	47.1%	46.0%
		Total gross profit %	61.2%	66.0%	56.6%

Operating expenses:
	Research and development		14,940	13,869	16,353
	Sales and marketing		13,594	12,911	12,147
	General and administrative		10,144	10,958	10,495
	Restructuring		-	-	1,984
		Total operating expenses	38,678	37,738	40,979

Income (loss) from operations			(500)	7,641	(17,764)
Interest expense			(13)	(89)	(79)
Interest income			515	592	1,649
Other income (expense), net			10	47	(7)

Income (loss) before income taxes			12	8,191	(16,201)
Income tax benefit (provision)			(146)	2,118	(26)

Net income (loss)			$ (134)	$ 10,309	$ (16,227)

Earnings (loss) per share:
	Basic
	Diluted		$ -	$ 0.04	$ (0.06)
			$ -	$ 0.04	$ (0.06)
Shares used to compute earnings (loss) per share:
	Basic		274,701	274,359	273,095
	Diluted		274,701	275,152	273,095

SONUS NETWORKS, INC. Condensed Consolidated Balance Sheets (in thousands) (unaudited)

				March 31,	December 31,
				2010	2009
Assets
Current assets:
	Cash and cash equivalents			$ 64,861	$ 125,323
	Marketable securities			281,799	239,223
	Accounts receivable, net			32,385	47,998
	Inventory, net			20,119	21,925
	Deferred income taxes			640	562
	Other current assets			20,426	17,508
		Total current assets		420,230	452,539

Property and equipment, net				13,518	14,646
Intangible assets, net				2,203	341
Goodwill				5,059	5,053
Investments				66,299	49,598
Deferred income taxes				730	711
Other assets				17,035	17,849
				$ 525,074	$ 540,737

Liabilities and stockholders' equity
Current liabilities:
	Accounts payable			$ 8,506	$ 5,337
	Accrued expenses			14,265	19,292
	Current portion of deferred revenue			59,149	74,748
	Current portion of long-term liabilities			525	753
		Total current liabilities		82,445	100,130

Deferred revenue				24,451	25,242
Long-term liabilities				1,145	1,127
			Total liabilities	108,041	126,499

Commitments and contingencies

Stockholders equity:
	Common stock			278	277
	Additional paid-in capital			1,289,415	1,286,326
	Accumulated deficit			(878,944)	(878,810)
	Accumulated other comprehensive income			6,551	6,712
	Treasury stock			(267)	(267)
			Total stockholders' equity	417,033	414,238
				$ 525,074	$ 540,737

SONUS NETWORKS, INC. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)

					Three months ended
					March 31,	March 31,
					2010	2009
Cash flows from operating activities:
	Net loss				$ (134)	$ (16,227)
	Adjustments to reconcile net loss to cash flows provided by operating activities:
		Depreciation and amortization of property and equipment			2,458	2,502
		Amortization of intangible assets			138	96
		Stock-based compensation			2,486	3,040
		Loss on disposal of property and equipment			57	2
		Deferred income taxes			-	(38)
		Changes in operating assets and liabilities:
			Accounts receivable		15,477	24,885
			Inventory		2,852	(2,615)
			Other operating assets		(2,098)	(4,148)
			Accounts payable		3,547	(3,348)
			Accrued expenses		(5,039)	(8,951)
			Deferred revenue		(16,445)	13,712
				Net cash provided by operating activities	3,299	8,910

Cash flows from investing activities:
	Purchases of property and equipment				(1,763)	(770)
	Purchase of intangible assets				(2,000)	-
	Purchases of marketable securities				(121,856)	(11,936)
	Sale/maturities of marketable securities				61,493	82,895
	Increase in litigation escrow				-	(9,500)
				Net cash provided by (used in) investing activities	(64,126)	60,689

Cash flows from financing activities:
	Sale of common stock in connection with employee stock purchase plan				609	529
	Proceeds from exercise of stock options				35	1
	Payment of tax withholding obligations related to net share settlements of restricted stock awards				(180)	(122)
	Principal payments of capital lease obligations				(55)	(64)
				Net cash provided by financing activities	409	344


Effect of exchange rate changes on cash and cash equivalents					(44)	(71)

Net increase (decrease) in cash and cash equivalents					(60,462)	69,872
Cash and cash equivalents, beginning of year					125,323	122,207
Cash and cash equivalents, end of period					$ 64,861	$ 192,079

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
				March 31,	December 31,	March 31,
				2010	2009	2009
Stock-based compensation
	Cost of revenue - product			$ 71	$ 63	$ 116
	Cost of revenue - service			419	449	465
		Cost of revenue		490	512	581

	Research and development expense			606	706	767
	Sales and marketing expense			729	812	1,044
	General and administrative expense			661	891	648
		Operating expense		1,996	2,409	2,459

			Total stock-based compensation	$ 2,486	$ 2,921	$ 3,040


Amortization of intangible assets
	Cost of revenue - product			$ 38	$ 40	$ 96
	Research and development			100	-	-
			Total amortization of intangible assets	$ 138	$ 40	$ 96