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Sonus Networks Reports 2010 Third Quarter Results
Nov 02, 2010 (04:11 PM EDT)


WESTFORD, Mass., Nov. 2, 2010 /PRNewswire-FirstCall/ -- Sonus Networks, Inc. (Nasdaq: SONS), a market leader in next generation IP-based network solutions, today announced results for the quarter ended September 30, 2010.

Revenue for the third quarter of fiscal 2010 was $42.7 million, compared to $61.2 million in the second quarter of fiscal 2010 and $56.2 million for the third quarter of fiscal 2009.  The Company's net loss on a GAAP basis for the third quarter of fiscal 2010 was $22.3 million, or $0.08 per share, compared to net income of $0.3 million, or $0.00 per diluted share, for the second quarter of fiscal 2010, and a net loss of $3.4 million, or $0.01 per share, for the third quarter of fiscal 2009.

"We are pleased with the customer growth we achieved during the third quarter across our entire product line.  The timing of revenue from several large orders negatively impacted our third quarter operating results but is not expected to negatively impact our results for the year," said Raymond P. Dolan, President and Chief Executive Officer of Sonus.  "We continue to have a positive outlook ahead and remain focused on leveraging all of our product platforms to accelerate growth and profitability."

2010 Guidance

The Company expects to achieve total revenue between $225 and $245 million for 2010.  For 2010, Non-GAAP gross margin is expected to be within the range of 58% to 62%, and total Non-GAAP operating expenses are expected to be in the range of $145 to $148 million.

Conference Call Details:

Sonus Networks will host a conference call for analysts and investors to discuss its third 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: 800-743-4304

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 quarters ended March 31, 2010, June 30, 2010 and September 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





September 30,


June 30,


September 30,





2010


2010


2009

Revenue:








Product


$             19,391


$             36,796


$             33,544


Service


23,348


24,385


22,621



Total revenue


42,739


61,181


56,165










Cost of revenue:








Product


7,231


10,826


10,160


Service


11,730


11,842


10,755



Total cost of revenue


18,961


22,668


20,915










Gross profit


23,778


38,513


35,250










Gross profit %








Product


62.7%


70.6%


69.7%


Service


49.8%


51.4%


52.5%



Total gross profit %


55.6%


62.9%


62.8%










Operating expenses:








Research and development


16,226


15,106


14,141


Sales and marketing


11,836


12,392


11,527


General and administrative


17,157


10,971


11,578


Restructuring


1,114


-


1,533



Total operating expenses


46,333


38,469


38,779










Income (loss) from operations


(22,555)


44


(3,529)

Interest expense


(10)


(30)


(23)

Interest income


439


466


787

Other income, net


1


1


12










Income (loss) before income taxes


(22,125)


481


(2,753)

Income tax provision


(153)


(170)


(644)










Net income (loss)


$           (22,278)


$                  311


$             (3,397)










Earnings (loss) per share:








Basic


$               (0.08)


$                    -


$               (0.01)


Diluted


$               (0.08)


$                    -


$               (0.01)










Shares used to compute earnings (loss) per share:








Basic


275,412


275,051


273,907


Diluted


275,412


276,314


273,907



SONUS NETWORKS, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)



















Nine months ended





September 30,


September 30,





2010


2009

Revenue:






Product

$             92,465


$             89,267


Service

73,863


69,517



Total revenue

166,328


158,784








Cost of revenue:





Product

30,358


27,041


Service

35,501


32,986



Total cost of revenue

65,859


60,027








Gross profit

100,469


98,757








Gross profit %





Product

67.2%


69.7%


Service

51.9%


52.6%



Total gross profit %

60.4%


62.2%








Operating expenses:





Research and development

46,272


45,995


Sales and marketing

37,822


36,018


General and administrative

38,272


32,259


Restructuring

1,114


3,510



Total operating expenses

123,480


117,782








Loss from operations

(23,011)


(19,025)

Interest expense

(53)


(94)

Interest income

1,420


3,513

Other income, net

12


24








Loss before income taxes

(21,632)


(15,582)

Income tax benefit (provision)

(469)


341








Net loss


$           (22,101)


$           (15,241)








Loss per share:





Basic


$               (0.08)


$               (0.06)


Diluted

$               (0.08)


$               (0.06)








Shares used to compute loss per share:





Basic


275,107


273,518


Diluted

275,107


273,518



SONUS NETWORKS, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)



















September 30,


December 31,





2010


2009

Assets




Current assets:





Cash and cash equivalents

$         81,245


$      125,323


Marketable securities

247,908


239,223


Accounts receivable, net

34,710


47,998


Inventory, net

26,982


21,925


Deferred income taxes

650


562


Other current assets

19,657


17,508



Total current assets

411,152


452,539








Property and equipment, net

16,588


14,646

Intangible assets, net

1,928


341

Goodwill


5,056


5,053

Investments

84,314


49,598

Deferred income taxes

960


711

Other assets

22,427


17,849





$       542,425


$      540,737








Liabilities and stockholders' equity




Current liabilities:





Accounts payable

$         19,040


$          5,337


Accrued expenses

24,126


19,292


Current portion of deferred revenue

56,014


74,748


Current portion of long-term liabilities

492


753



Total current liabilities

99,672


100,130








Deferred revenue

35,818


25,242

Long-term liabilities

911


1,127




Total liabilities

136,401


126,499








Commitments and contingencies











Stockholders equity:





Common stock

279


277


Additional paid-in capital

1,299,983


1,286,326


Accumulated deficit

(900,911)


(878,810)


Accumulated other comprehensive income

6,940


6,712


Treasury stock

(267)


(267)




Total stockholders' equity

406,024


414,238





$       542,425


$      540,737



SONUS NETWORKS, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)






















Nine months ended






September 30,


September 30,






2010


2009

Cash flows from operating activities:





Net loss



$          (22,101)


$          (15,241)


Adjustments to reconcile net loss to cash flows provided by operating activities:






Depreciation and amortization of property and equipment

8,134


7,497



Amortization of intangible assets

413


184



Stock-based compensation

12,410


9,889



Loss on disposal of property and equipment

81


173



Deferred income taxes

60


(137)



Changes in operating assets and liabilities:







Accounts receivable

13,471


41,600




Inventory

(10,360)


(4,217)




Other operating assets

1,484


(7,516)




Accounts payable

12,704


(3,212)




Accrued expenses

4,477


(12,999)




Accrued litigation settlements

-


(9,600)




Deferred revenue

(8,347)


4,240





Net cash provided by operating activities

12,426


10,661









Cash flows from investing activities:





Purchases of property and equipment

(9,193)


(4,813)


Purchase of intangible assets

(2,000)


-


Purchases of marketable securities

(283,461)


(179,416)


Sale/maturities of marketable securities

236,698


228,979





Net cash provided by (used in) investing activities

(57,956)


44,750









Cash flows from financing activities:





Sale of common stock in connection with employee stock purchase plan

1,353


1,119


Proceeds from exercise of stock options

327


32


Payment of tax withholding obligations related to net share settlements of restricted stock awards

(572)


(531)


Principal payments of capital lease obligations

(194)


(189)





Net cash provided by financing activities

914


431









Effect of exchange rate changes on cash and cash equivalents

538


856









Net increase (decrease) in cash and cash equivalents

(44,078)


56,698

Cash and cash equivalents, beginning of year

125,323


122,207

Cash and cash equivalents, end of period

$           81,245


$         178,905



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


Nine months ended





September 30,


June 30,


September 30,


September 30,


September 30,





2010


2010


2009


2010


2009

Stock-based compensation











Cost of revenue - product

$              105


$      89


$                67


$              265


$              298


Cost of revenue - service

396


404


483


1,219


1,335



Cost of revenue

501


493


550


1,484


1,633















Research and development expense

617


665


774


1,888


2,643


Sales and marketing expense

647


688


885


2,064


3,419


General and administrative expense

4,947


1,366


930


6,974


2,194



Operating expense

6,211


2,719


2,589


10,926


8,256

















Total stock-based compensation

$           6,712


$ 3,212


$           3,139


$         12,410


$           9,889



























Amortization of intangible assets











Cost of revenue - product

$                37


$      38


$                40


$              113


$              184


Research and development

100


100


-


300


-




Total amortization of intangible assets

$              137


$    138


$                40


$              413


$              184




SOURCE Sonus Networks, Inc.