[July 30, 2014] |
|
Sonus Networks Reports 2014 Second Quarter Results
WESTFORD, Mass. --(Business Wire)--
Sonus
Networks, Inc. (Nasdaq: SONS), a global leader in securing real-time
communications, today announced results for the second quarter ended
June 27, 2014.
Second Quarter 2014 Highlights
-
Total Company revenue was $75.6 million, up 9% compared to the second
quarter of 2013.
-
Total Growth-related revenue1 was $38.9 million, up
34% compared to the second quarter of 2013.
-
Channel sales comprised 29% of product revenue, the highest
contribution to-date.
-
Company reported revenue from 798 customers, up 48% compared to the
second quarter of 2013.
-
GAAP gross margins were 62.6%; non-GAAP gross margins were 65.2%.
-
GAAP loss per share was $0.02; non-GAAP diluted earnings per share
were $0.02.
-
Began shipping the Sonus SBC 7000 Session Border Controller (SBC
7000), representing fastest time-to-revenue for any new product in the
Company's history.
Quotes
"Our team has made excellent progress this year, meeting or exceeding
all of our financial targets. I'm particularly proud that we have now
demonstrated five consecutive quarters of non-GAAP profitability," said
Ray Dolan, president and chief executive officer. "Looking to the second
half of 2014, we are well-positioned to deliver on our targets while
also continuing to strengthen our strategic relationships with tier one
service providers around the globe."
Mark Greenquist, chief financial officer, commented, "Our growth-related
revenue grew 34% year over year. Contributing to this strong performance
was approximately $5 million in revenue from the recently launched SBC
7000, which only began shipping in the last week of June. This product
launch represented the fastest time-to-revenue of any new product in the
Company's history." Greenquist continued, "Our revenue guidance for the
remainder of this year considers the potential for a large order to be
recognized in 2015 instead of this year as originally projected. Despite
this timing, based on the strength of our bookings and a robust funnel,
we are reiterating our full year revenue forecast of $300 million,
including $168 million of growth-related revenue. Higher than projected
gross margins in the first half, primarily as a result of greater
software-oriented product revenue, coupled with disciplined expense
control, allow us to increase our non-GAAP EPS guidance for the year
from $0.05 to $0.07."
SBC 7000
The recently launched Sonus SBC 7000 Session Border Controller has been
selected for deployment by several tier one service providers and a
leading call center provider, marking the fastest time-to-revenue for
any new product in the Company's history. Providing support for up to
150,000 sessions, the SBC 7000 sets a new performance and capacity
standard in the industry for secure, reliable delivery of voice, video
and collaboration services. It is purpose-built to support emerging
services such as high definition (HD) voice and video, Voice over
Long-Term Evolution (VoLTE) and Rich Communications Services (RCS), and
effectively addresses the unprecedented traffic demands these services
will place on networks at access and interconnect borders.
Share Repurchases
The Company has repurchased 42.3 million shares of common stock (15% of
the shares that were outstanding at June 28, 2013) at an average price
per share of $3.37. As of June 27, 2014, the Company had 246.3 million
shares outstanding. Approximately $32 million remains available to the
Company for potential share repurchases under the current stock buyback
program.
Cash & Investments
The Company ended the second quarter of 2014 with $149.5 million in cash
and investments, including the impact of the share repurchases described
above.
Organizational Changes
The Company has made significant progress over the past few years in
successfully transitioning the business to sustainable growth and
profitability including:
-
expanding into high growth next generation communications markets
including SBCs (Session Border Controllers) and DSCs (Diameter
Signaling Controllers);
-
substantially improving product quality while also increasing the pace
of innovation;
-
establishing a robust global channel program and expanding into the
enterprise market;
-
improving manufacturing processes, thereby enabling the Company to be
more agile and cost effective; and
-
driving broad process improvements across the Company, allowing
resources to be redirected into growth areas while also delivering
sustained increases in profitability.
In an effort to further accelerate the Company's progress, the following
organizational changes are being announced, effective immediately:
-
Anthony Scarfo has been named Executive Vice President, Product
Management and Corporate Development. Scarfo was most recently
Executive Vice President, Technology Development, where he was
responsible for helping Sonus establish leadership in a number of key
technology areas, including moving the entire Sonus SBC product
portfolio into software in order to enable emerging cloud
architectures.
-
Kevin Riley has been named Vice President, Engineering and Chief
Technology Officer. Riley, who will be a direct report to President
and CEO, Ray Dolan, has served as the Company's CTO since January 2014
and has over 20 years of software development and engineering
experience. He has been instrumental in the Company's efforts to drive
an industry leading technology roadmap, including the award winning
Sonus SBC SWe (software edition) and SBC 7000, the most successful new
product introduction in the Company's history. Riley will continue to
drive the Company's innovation and development activities, with
particular focus on enabling SDN and NFV cloud-based architectures of
the future.
-
Todd Abbott has stepped down as the Company's Executive Vice
President, Strategy and Go-to-Market, but will remain with the Company
in an advisory role until mid-October to assist with an orderly
transition of his responsibilities. Abbott has been instrumental over
the past three years in creating the Company's channel program and
expanding the Company's presence into the enterprise market.
-
Michael Swade, Vice President, North American Sales since May 2014,
will assume the role of Interim Senior Vice President, Worldwide Sales
and Marketing. Swade has nearly 20 years of experience with various
sales and marketing leadership positions within the communications
industry. He was most recently Executive Vice President, Sales at
Yorktel, a leading global provider of UC&C, cloud, and video managed
services for large enterprise and federal government customers. Prior
to Yorktel, Swade was at Polycom in various senior leadership roles
including Senior Vice President, Field Operations, President, Europe,
and Vice President, Service Provider and UC Sales. Swade brings
additional leadership experience from Lucent Technologies and Avaya.
Outlook
The Company's outlook is based on current indications for its business,
which may change during the current quarter. Gross margin, operating
expenses and EPS are presented on a non-GAAP basis. A reconciliation of
the non-GAAP to GAAP outlook and a statement on the use of non-GAAP
financial measures are included at the end of this press release. Full
year 2014 (FY14) Total Company Revenue outlook of $300 million includes
approximately $15 million from Performance Technologies, Incorporated
(PT). FY14 Growth-related Revenue outlook of $168 million includes
approximately $3 million from PT DSCs. FY14 EPS guidance of $0.07
includes a loss of approximately $0.01 from PT.
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Q314
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Q414
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FY14
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Total Company Revenue
|
|
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$70 to $73 million
|
|
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$81 to $84 million
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$300 million
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Growth-related Revenue
|
|
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$39 to $41 million
|
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$47.5 to $49.5 million
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$168 million
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Gross Margin
|
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65% to 66%
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|
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Not provided
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Not provided
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Opex
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$44 to $45 million
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Not provided
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Not provided
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EPS
|
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$0.01
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$0.03
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$0.07
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Diluted Shares Outstanding
|
|
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249 million
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|
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248 million
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255 million
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1) Growth-related revenue consists primarily of SBCs and DSCs. Legacy
revenue consists primarily of Trunking and SS7 Signaling. Certain of our
products can contribute to either growth-related revenue or legacy
revenue, depending on the use for which our customers purchase them. For
more information about how we determine whether products contribute to
growth-related revenue or legacy revenue, please see the presentation
materials and transcript from our Q2 FY2014 earnings call.
Conference Call Details Date: July 30, 2014 Time: 8:30
a.m. (ET) Dial-in number: 800 768 6727 International Callers:
+1 212 231 2915
The Company will also offer a live, listen-only webcast of the
conference call via the Sonus Networks Investor Relations website at http://investors.sonusnet.com/events.cfm.
Replay information
A telephone playback of the call will be available following the
conference call until August 13, 2014 and can be accessed by calling 800
633 8284 or +1 402 977 9140 for international callers. The reservation
number for the replay is 21721114. A webcast replay of the conference
call will also be available shortly following the conference call at http://investors.sonusnet.com/events.cfm
and will be available for six months.
Tags
Sonus Networks, Sonus, SONS, 2014 second quarter, year-end, earnings,
results, IP-based network solutions, SBC, SBC 1000, SBC 2000, SBC 5100,
SBC 5200, SBC 7000, SBC 9000, SWe, software edition, software SBC,
session border controller, session management, DSC, DEA, DRA, diameter
signaling controller, diameter edge agent, diameter routing agent, SIP
trunking, Cloud VoIP communications, unified communications, UC, VoIP,
IP, media gateway, GSX, TDM.
About Sonus Networks
Sonus secures real-time communications so the world's leading service
providers and enterprises can embrace the next generation of SIP and
4G/LTE solutions including VoIP, video, instant messaging and online
collaboration. With customers in more than 50 countries and nearly two
decades of experience, Sonus offers a complete portfolio of
hardware-based and virtualized Session Border Controllers (SBCs),
Diameter Signaling Controllers (DSCs), policy/routing servers and media
and signaling gateways. For more information, visit www.sonus.net
or call 1-855-GO-SONUS.
Important Information Regarding Forward-Looking Statements
The information in this release contains "forward-looking statements"
within the meaning of the U.S. Private Securities Litigation Reform Act
of 1995, which are subject to a number of risks and uncertainties. All
statements other than statements of historical facts contained in this
release, including statements in the sections "Quotes" and "Outlook,"
statements regarding our future results of operations and financial
position, business strategy, plans and objectives of management for
future operations and plans for future product development and
manufacturing, and statements regarding the impact of the PT transaction
on Sonus' financial results, business performance and product offerings,
are forward-looking statements. Without limiting the foregoing, the
words "anticipates", "believes", "could", "estimates", "expects",
"expectations", "intends", "may", "plans", "seeks", "projects" and other
similar language, whether in the negative or affirmative, are intended
to identify forward-looking statements, although not all forward-looking
statements contain these identifying words.
Forward-looking statements are based on our current expectations and
assumptions regarding our business, the economy and other future
conditions. Because forward-looking statements relate to the future,
they are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Our actual results could
differ materially from those anticipated in these forward-looking
statements as a result of various factors, including, but not limited
to, the timing of our recognition of revenues; economic conditions; our
ability to recruit and retain key personnel; difficulties supporting our
strategic focus on channel sales; difficulties retaining and expanding
our customer base; difficulties leveraging market opportunities; the
impact of restructuring activities; our ability to realize benefits from
the NET and PT acquisitions; the effects of disruption from the PT
transaction, making it more difficult to maintain relationships with
employees, customers, business partners or government entities; the
success implementing the integration strategies of NET and PT;
litigation; actions taken by significant stockholders; difficulties
providing solutions that meet the needs of customers; market acceptance
of our products and services; rapid technological and market change; our
ability to protect our intellectual property rights; our ability to
maintain partner, reseller, distribution and vendor support and supply
relationships; higher risks in international operations and markets; the
impact of increased competition; currency fluctuations; changes in the
market price of our common stock; and/or failure or circumvention of our
controls and procedures. These statements involve known and unknown
risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. We therefore caution you against relying on
any of these forward-looking statements. Important factors that could
cause actual results to differ materially from those in these
forward-looking statements are discussed in Part I, Item 2 "Management's
Discussion and Analysis of Financial Condition and Results of
Operations", Part I, Item 3 "Quantitative and Qualitative Disclosures
About Market Risk," and Part II, Item 1A "Risk Factors" in the Company's
most recent Quarterly Report on Form 10-Q. Any forward-looking statement
made by us in this release speaks only as of the date of this release.
Factors or events that could cause our actual results to differ may
emerge from time to time, and it is not possible for us to predict all
of them. We undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be 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.
Discussion of Non-GAAP Financial Measures
Sonus management uses a number of different financial measures, both
GAAP and non-GAAP, in analyzing and assessing the overall performance of
the business, making operating decisions, planning and forecasting
future periods, and determining payments under compensation programs.
Our annual financial plan is prepared both on a GAAP and non-GAAP basis,
and the non-GAAP annual financial plan is approved by our board of
directors. Continuous budgeting and forecasting for revenue and expenses
are conducted on a non-GAAP basis (in addition to GAAP) and actual
results on a non-GAAP basis are assessed against the annual financial
plan. We consider the use of non-GAAP financial measures helpful in
assessing the core performance of our continuing operations and
liquidity, and when planning and forecasting future periods. By
continuing operations we mean the ongoing results of the business
excluding certain costs, including, but not limited to: cost of product
revenue related to the fair value write-up of acquired inventory,
stock-based compensation, amortization of intangible assets, impairment
of intangible assets, acquisition-related costs, divestiture costs,
restructuring and other income arising from the settlement of litigation
related to prepaid royalties for software licenses. We also consider the
use of non-GAAP earnings per share helpful in assessing the performance
of the continuing operations of our business. While our management uses
these non-GAAP financial measures as a tool to enhance their
understanding of certain aspects of our financial performance, our
management does not consider these measures to be a substitute for, or
superior to, GAAP measures. In addition, our presentations of these
measures may not be comparable to similarly titled measures used by
other companies. These non-GAAP financial measures should not be
considered alternatives for, or in isolation from, the financial
information prepared and presented in accordance with GAAP.
Investors are cautioned that there are material limitations associated
with the use of non-GAAP financial measures as an analytical tool. In
particular, many of the adjustments to Sonus' financial measures reflect
the exclusion of items that are recurring and will be reflected in our
financial results for the foreseeable future.
As part of the assessment of the assets acquired and liabilities assumed
in connection with the PT acquisition, we were required to increase the
aggregate fair value of acquired inventory by $1.8 million. The acquired
inventory is being charged to cost of product revenue as it is sold to
end customers. We believe that excluding the incremental cost of product
revenue resulting from the fair value write-up of this acquired
inventory facilitates the comparison of our operating results to our
historical results and to other companies in our industry.
Stock-based compensation is different from other forms of compensation,
as it is a non-cash expense. For example, a cash salary generally has a
fixed and unvarying cash cost. In contrast, the expense associated with
an equity-based award is generally unrelated to the amount of cash
ultimately received by the employee, and the cost to us is based on a
stock-based compensation valuation methodology and underlying
assumptions that may vary over time. We believe that excluding non-cash
stock-based compensation expense from our operating results facilitates
the ability of readers of our financial statements to compare our
financial results to our historical operating results and to other
companies in our industry.
We exclude the amortization of acquired intangible assets from non-GAAP
expense and income measures. These amortization amounts are inconsistent
in frequency and amount and are significantly impacted by the timing and
size of acquisitions. Although we exclude amortization of acquired
intangible assets from our non-GAAP expenses, we believe that it is
important for investors to understand that intangible assets contribute
to revenue generation. We believe that excluding the non-cash
amortization of intangible assets facilitates the comparison of our
financial results to our historical operating results and to other
companies in our industry as if the acquired intangible assets had been
developed internally rather than acquired.
In the second quarter of 2013 we recorded $0.6 million of expense for
the write-off of an intellectual property intangible asset which we
determined was impaired as of June 28, 2013. We believe that excluding
the impairment of intangible assets facilitates the comparison of our
financial results to our historical operating results and to other
companies in our industry.
We consider certain transition, integration and other
acquisition-related costs to be unpredictable and dependent on a
significant number of factors that may be outside of our control. We do
not consider these acquisition-related costs to be related to the
continuing operations of the acquired business or the Company. In
addition, the size, complexity and/or volume of an acquisition, which
often drives the magnitude of acquisition-related costs, may not be
indicative of such future costs. We believe that excluding
acquisition-related costs facilitates the comparison of our financial
results to our historical operating results and to other companies in
our industry.
On June 20, 2014, we sold the Multi-Protocol Server (MPS) business that
we had acquired in connection with the acquisition of PT. We incurred
$0.4 million of transaction costs related to this divestiture. We do not
consider these divestiture costs to be related to our continuing
operations. We believe that excluding divestiture costs facilitates the
comparison of our financial results to our historical operating results
and to other companies in our industry.
We have recorded restructuring expense to streamline operations and
reduce operating costs by closing and consolidating certain facilities
and reducing our worldwide workforce. We believe that excluding
restructuring expense facilitates the comparison of our financial
results to our historical operating results and to other companies in
our industry.
In the first quarter of 2014, we recorded $2.25 million of other income
related to the settlement of a litigation matter in which we recovered a
portion of our losses related to the impairment of certain prepaid
royalties for software licenses which we had written off in fiscal 2012.
We believe that excluding the other income arising from this settlement
facilitates the comparison of our results to our historical results and
other companies in our industry.
We believe that providing non-GAAP information to investors, in addition
to the GAAP presentation, will allow investors to view the financial
results in the way management views the operating results. We further
believe that providing this information helps investors to better
understand our financial performance and evaluate the efficacy of the
methodology and information used by our management to evaluate and
measure such performance.
|
SONUS NETWORKS, INC.
|
Condensed Consolidated Statements of Operations
|
(in thousands, except percentages and per share amounts)
|
(unaudited)
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Three months ended
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June 27,
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March 28,
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June 28,
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2014
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2014
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|
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2013
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
|
|
$
|
45,845
|
|
|
|
$
|
45,140
|
|
|
|
$
|
42,939
|
|
Service
|
|
|
|
|
|
29,725
|
|
|
|
|
25,602
|
|
|
|
|
26,254
|
|
Total revenue
|
|
|
|
|
|
75,570
|
|
|
|
|
70,742
|
|
|
|
|
69,193
|
|
|
|
|
|
|
|
|
|
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|
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Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
|
|
|
16,811
|
|
|
|
|
13,663
|
|
|
|
|
13,534
|
|
Service
|
|
|
|
|
|
11,471
|
|
|
|
|
10,656
|
|
|
|
|
11,651
|
|
Total cost of revenue
|
|
|
|
|
|
28,282
|
|
|
|
|
24,319
|
|
|
|
|
25,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
47,288
|
|
|
|
|
46,423
|
|
|
|
|
44,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
|
|
|
63.3
|
%
|
|
|
|
69.7
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%
|
|
|
|
68.5
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%
|
Service
|
|
|
|
|
|
61.4
|
%
|
|
|
|
58.4
|
%
|
|
|
|
55.6
|
%
|
Total gross margin
|
|
|
|
|
|
62.6
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%
|
|
|
|
65.6
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%
|
|
|
|
63.6
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%
|
|
|
|
|
|
|
|
|
|
|
|
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Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
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Research and development
|
|
|
|
|
|
20,921
|
|
|
|
|
18,972
|
|
|
|
|
18,019
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|
Sales and marketing
|
|
|
|
|
|
18,782
|
|
|
|
|
19,581
|
|
|
|
|
19,191
|
|
General and administrative
|
|
|
|
|
|
11,995
|
|
|
|
|
11,186
|
|
|
|
|
9,733
|
|
Acquisition-related
|
|
|
|
|
|
-
|
|
|
|
|
1,306
|
|
|
|
|
-
|
|
Restructuring
|
|
|
|
|
|
391
|
|
|
|
|
1,169
|
|
|
|
|
1,698
|
|
Total operating expenses
|
|
|
|
|
|
52,089
|
|
|
|
|
52,214
|
|
|
|
|
48,641
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|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
|
|
(4,801
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)
|
|
|
|
(5,791
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)
|
|
|
|
(4,633
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)
|
Interest income, net
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|
|
|
|
|
50
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|
|
|
|
35
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|
|
|
|
90
|
|
Other income (expense), net
|
|
|
|
|
|
(10
|
)
|
|
|
|
2,335
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
|
|
|
(4,761
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)
|
|
|
|
(3,421
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)
|
|
|
|
(4,540
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)
|
Income tax provision
|
|
|
|
|
|
(736
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)
|
|
|
|
(532
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)
|
|
|
|
(330
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
$
|
(5,497
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)
|
|
|
$
|
(3,953
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)
|
|
|
$
|
(4,870
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)
|
|
|
|
|
|
|
|
|
|
|
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|
Loss per share:
|
|
|
|
|
|
|
|
|
|
|
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Basic
|
|
|
|
|
$
|
(0.02
|
)
|
|
|
$
|
(0.01
|
)
|
|
|
$
|
(0.02
|
)
|
Diluted
|
|
|
|
|
$
|
(0.02
|
)
|
|
|
$
|
(0.01
|
)
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
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Shares used to compute loss per share:
|
|
|
|
|
|
|
|
|
|
|
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Basic
|
|
|
|
|
|
247,120
|
|
|
|
|
265,400
|
|
|
|
|
282,389
|
|
Diluted
|
|
|
|
|
|
247,120
|
|
|
|
|
265,400
|
|
|
|
|
282,389
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC. Condensed Consolidated Statements of
Operations (in thousands, except percentages and per share
amounts) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
|
|
|
|
|
June 27,
|
|
|
June 28,
|
|
|
|
|
|
2014
|
|
|
2013
|
Revenue:
|
|
|
|
|
|
|
|
|
Product
|
|
|
|
|
$
|
90,985
|
|
|
|
$
|
80,735
|
|
Service
|
|
|
|
|
|
55,327
|
|
|
|
|
51,746
|
|
Total revenue
|
|
|
|
|
|
146,312
|
|
|
|
|
132,481
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
Product
|
|
|
|
|
|
30,474
|
|
|
|
|
27,429
|
|
Service
|
|
|
|
|
|
22,127
|
|
|
|
|
23,242
|
|
Total cost of revenue
|
|
|
|
|
|
52,601
|
|
|
|
|
50,671
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
93,711
|
|
|
|
|
81,810
|
|
|
|
|
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
Product
|
|
|
|
|
|
66.5
|
%
|
|
|
|
66.0
|
%
|
Service
|
|
|
|
|
|
60.0
|
%
|
|
|
|
55.1
|
%
|
Total gross margin
|
|
|
|
|
|
64.0
|
%
|
|
|
|
61.8
|
%
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
|
|
39,893
|
|
|
|
|
35,520
|
|
Sales and marketing
|
|
|
|
|
|
38,363
|
|
|
|
|
40,305
|
|
General and administrative
|
|
|
|
|
|
23,181
|
|
|
|
|
20,443
|
|
Acquisition-related
|
|
|
|
|
|
1,306
|
|
|
|
|
-
|
|
Restructuring
|
|
|
|
|
|
1,560
|
|
|
|
|
3,647
|
|
Total operating expenses
|
|
|
|
|
|
104,303
|
|
|
|
|
99,915
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
|
|
(10,592
|
)
|
|
|
|
(18,105
|
)
|
Interest income, net
|
|
|
|
|
|
85
|
|
|
|
|
228
|
|
Other income, net
|
|
|
|
|
|
2,325
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
|
|
|
(8,182
|
)
|
|
|
|
(17,874
|
)
|
Income tax provision
|
|
|
|
|
|
(1,268
|
)
|
|
|
|
(744
|
)
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
$
|
(9,450
|
)
|
|
|
$
|
(18,618
|
)
|
|
|
|
|
|
|
|
|
|
Loss per share
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
$
|
(0.04
|
)
|
|
|
$
|
(0.07
|
)
|
Diluted
|
|
|
|
|
$
|
(0.04
|
)
|
|
|
$
|
(0.07
|
)
|
|
|
|
|
|
|
|
|
|
Shares used to compute loss per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
257,026
|
|
|
|
|
281,973
|
|
Diluted
|
|
|
|
|
|
257,026
|
|
|
|
|
281,973
|
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC. Condensed Consolidated Balance Sheets (in
thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 27,
|
|
|
December 31,
|
|
|
|
|
|
2014
|
|
|
2013
|
Assets
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
61,295
|
|
|
|
$
|
72,423
|
|
Marketable securities
|
|
|
|
|
|
56,118
|
|
|
|
|
138,882
|
|
Accounts receivable, net
|
|
|
|
|
|
60,035
|
|
|
|
|
64,463
|
|
Inventory
|
|
|
|
|
|
23,509
|
|
|
|
|
21,793
|
|
Deferred income taxes
|
|
|
|
|
|
1,173
|
|
|
|
|
656
|
|
Other current assets
|
|
|
|
|
|
14,800
|
|
|
|
|
15,073
|
|
Total current assets
|
|
|
|
|
|
216,930
|
|
|
|
|
313,290
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
|
|
20,629
|
|
|
|
|
19,102
|
|
Intangible assets, net
|
|
|
|
|
|
24,984
|
|
|
|
|
10,091
|
|
Goodwill
|
|
|
|
|
|
39,207
|
|
|
|
|
32,379
|
|
Investments
|
|
|
|
|
|
32,119
|
|
|
|
|
34,364
|
|
Deferred income taxes
|
|
|
|
|
|
1,210
|
|
|
|
|
2,121
|
|
Other assets
|
|
|
|
|
|
4,022
|
|
|
|
|
6,137
|
|
|
|
|
|
|
$
|
339,101
|
|
|
|
$
|
417,484
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
$
|
10,397
|
|
|
|
$
|
11,164
|
|
Accrued expenses
|
|
|
|
|
|
28,857
|
|
|
|
|
34,026
|
|
Current portion of deferred revenue
|
|
|
|
|
|
40,638
|
|
|
|
|
41,169
|
|
Convertible subordinated note
|
|
|
|
|
|
2,380
|
|
|
|
|
2,380
|
|
Current portion of long-term liabilities
|
|
|
|
|
|
775
|
|
|
|
|
672
|
|
Total current liabilities
|
|
|
|
|
|
83,047
|
|
|
|
|
89,411
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue
|
|
|
|
|
|
10,206
|
|
|
|
|
10,528
|
|
Deferred income taxes
|
|
|
|
|
|
1,352
|
|
|
|
|
922
|
|
Other long-term liabilities
|
|
|
|
|
|
3,994
|
|
|
|
|
4,371
|
|
Total liabilities
|
|
|
|
|
|
98,599
|
|
|
|
|
105,232
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
246
|
|
|
|
|
266
|
|
Additional paid-in capital
|
|
|
|
|
|
1,218,173
|
|
|
|
|
1,280,442
|
|
Accumulated deficit
|
|
|
|
|
|
(983,942
|
)
|
|
|
|
(974,492
|
)
|
Accumulated other comprehensive income
|
|
|
|
|
|
6,025
|
|
|
|
|
6,036
|
|
Total stockholders' equity
|
|
|
|
|
|
240,502
|
|
|
|
|
312,252
|
|
|
|
|
|
|
$
|
339,101
|
|
|
|
$
|
417,484
|
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC. Condensed Consolidated Statements of Cash
Flows (in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
|
|
|
|
|
|
|
|
|
June 27,
|
|
|
June 28,
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
2013
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
$
|
(9,450
|
)
|
|
|
$
|
(18,618
|
)
|
Adjustments to reconcile net loss to cash flows provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization of property and equipment
|
|
|
|
|
|
5,899
|
|
|
|
|
6,743
|
|
Amortization of intangible assets
|
|
|
|
|
|
2,207
|
|
|
|
|
2,373
|
|
Impairment of intangible assets
|
|
|
|
|
|
-
|
|
|
|
|
600
|
|
Stock-based compensation
|
|
|
|
|
|
12,712
|
|
|
|
|
8,764
|
|
Loss on disposal of property and equipment
|
|
|
|
|
|
61
|
|
|
|
|
21
|
|
Deferred income taxes
|
|
|
|
|
|
519
|
|
|
|
|
367
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
|
8,254
|
|
|
|
|
28,733
|
|
Inventory
|
|
|
|
|
|
4,386
|
|
|
|
|
1,958
|
|
Other operating assets
|
|
|
|
|
|
2,698
|
|
|
|
|
2,402
|
|
Accounts payable
|
|
|
|
|
|
(620
|
)
|
|
|
|
(5,291
|
)
|
Accrued expenses and other long-term liabilities
|
|
|
|
|
|
(4,635
|
)
|
|
|
|
(1,932
|
)
|
Deferred revenue
|
|
|
|
|
|
(1,777
|
)
|
|
|
|
2,809
|
|
Net cash provided by operating activities
|
|
|
|
|
|
20,254
|
|
|
|
|
28,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
|
|
(6,271
|
)
|
|
|
|
(3,032
|
)
|
Business acquisition, net of cash acquired
|
|
|
|
|
|
(34,010
|
)
|
|
|
|
-
|
|
Sale of business
|
|
|
|
|
|
2,000
|
|
|
|
|
-
|
|
Purchases of marketable securities
|
|
|
|
|
|
(47,880
|
)
|
|
|
|
(180,306
|
)
|
Sale/maturities of marketable securities
|
|
|
|
|
|
134,127
|
|
|
|
|
147,944
|
|
Net cash provided by (used in) investing activities
|
|
|
|
|
|
47,966
|
|
|
|
|
(35,394
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock in connection with employee stock
purchase plan
|
|
|
|
|
|
1,197
|
|
|
|
|
865
|
|
Proceeds from exercise of stock options
|
|
|
|
|
|
4,541
|
|
|
|
|
1,337
|
|
Payment of tax withholding obligations related to net share
settlements of restricted stock awards
|
|
|
|
|
|
(1,571
|
)
|
|
|
|
(418
|
)
|
Repurchase of common stock
|
|
|
|
|
|
(83,518
|
)
|
|
|
|
-
|
|
Principal payments of capital lease obligations
|
|
|
|
|
|
(44
|
)
|
|
|
|
(62
|
)
|
Net cash provided by (used in) financing activities
|
|
|
|
|
|
(79,395
|
)
|
|
|
|
1,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
|
|
47
|
|
|
|
|
(583
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
|
|
|
(11,128
|
)
|
|
|
|
(5,326
|
)
|
Cash and cash equivalents, beginning of year
|
|
|
|
|
|
72,423
|
|
|
|
|
88,004
|
|
Cash and cash equivalents, end of period
|
|
|
|
|
$
|
61,295
|
|
|
|
$
|
82,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
Supplemental Information
(In thousands)
(unaudited)
|
|
The following tables provide the details of the fair value
write-up of acquired inventory, stock-based compensation,
amortization of intangible assets, impairment of intangible asses,
divestiture costs and a litigation settlement related to prepaid
licenses included in the Company's Condensed Consolidated
Statements of Operations and the line items in which these amounts
are reported.
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
June 27,
|
|
|
March 28,
|
|
|
June 28,
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2013
|
Fair value write-up of acquired inventory
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue - product
|
|
|
|
|
$
|
803
|
|
|
$
|
615
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue - product
|
|
|
|
|
$
|
104
|
|
|
$
|
79
|
|
|
$
|
30
|
Cost of revenue - service
|
|
|
|
|
|
412
|
|
|
|
279
|
|
|
|
252
|
Cost of revenue
|
|
|
|
|
|
516
|
|
|
|
358
|
|
|
|
282
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense
|
|
|
|
|
|
1,749
|
|
|
|
1,313
|
|
|
|
820
|
Sales and marketing expense
|
|
|
|
|
|
1,303
|
|
|
|
1,249
|
|
|
|
1,219
|
General and administrative expense
|
|
|
|
|
|
3,370
|
|
|
|
2,854
|
|
|
|
2,219
|
Operating expense
|
|
|
|
|
|
6,422
|
|
|
|
5,416
|
|
|
|
4,258
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation
|
|
|
|
|
$
|
6,938
|
|
|
$
|
5,774
|
|
|
$
|
4,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue - product
|
|
|
|
|
$
|
673
|
|
|
$
|
631
|
|
|
$
|
560
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
Sales and marketing
|
|
|
|
|
|
505
|
|
|
|
398
|
|
|
-
|
Operating expense
|
|
|
|
|
|
505
|
|
|
|
398
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amortization of intangible assets
|
|
|
|
|
$
|
1,178
|
|
|
$
|
1,029
|
|
|
$
|
660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divestiture costs
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
|
|
$
|
405
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation settlement - prepaid licenses
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
|
|
|
$
|
-
|
|
|
$
|
2,250
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC. Supplemental Information (In
thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables provide the details of the fair value write-up
of acquired inventory, stock-based compensation, amortization of
intangible assets, impairment of intangible assets, divestiture
costs and a litigation settlement related to prepaid licenses
included in the Company's Condensed Consolidated Statements of
Operations and the line items in which these amounts are reported.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
|
|
|
|
|
June 27,
|
|
|
June 28,
|
|
|
|
|
|
2014
|
|
|
2013
|
Fair value write-up of acquired inventory
|
|
|
|
|
|
|
|
|
Cost of revenue - product
|
|
|
|
|
$
|
1,418
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
Cost of revenue - product
|
|
|
|
|
$
|
183
|
|
|
$
|
82
|
Cost of revenue - service
|
|
|
|
|
|
691
|
|
|
|
462
|
Cost of revenue
|
|
|
|
|
|
874
|
|
|
|
544
|
|
|
|
|
|
|
|
|
|
Research and development expense
|
|
|
|
|
|
3,062
|
|
|
|
1,499
|
Sales and marketing expense
|
|
|
|
|
|
2,552
|
|
|
|
2,318
|
General and administrative expense
|
|
|
|
|
|
6,224
|
|
|
|
4,403
|
Operating expense
|
|
|
|
|
|
11,838
|
|
|
|
8,220
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation
|
|
|
|
|
$
|
12,712
|
|
|
$
|
8,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
Cost of revenue - product
|
|
|
|
|
$
|
1,304
|
|
|
$
|
1,121
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
|
|
-
|
|
|
|
200
|
Sales and marketing
|
|
|
|
|
|
903
|
|
|
|
1,052
|
Operating expense
|
|
|
|
|
|
903
|
|
|
|
1,252
|
|
|
|
|
|
|
|
|
|
Total amortization of intangible assets
|
|
|
|
|
$
|
2,207
|
|
|
$
|
2,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of intangible assets
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
|
$
|
-
|
|
|
$
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divestiture costs
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
|
|
$
|
405
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation settlement - prepaid licenses
|
|
|
|
|
|
|
|
|
Other income, net
|
|
|
|
|
$
|
2,250
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
Reconciliation of Non-GAAP and GAAP Financial Measures - Historical
|
(in thousands, except percentages and per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
June 27,
|
|
|
March 28,
|
|
|
June 28,
|
|
|
|
|
|
2014
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin - product
|
|
|
|
|
|
63.3
|
%
|
|
|
|
69.7
|
%
|
|
|
|
68.5
|
%
|
Stock-based compensation expense
|
|
|
|
|
|
0.2
|
%
|
|
|
|
0.2
|
%
|
|
|
|
0.1
|
%
|
Amortization of intangible assets
|
|
|
|
|
|
1.5
|
%
|
|
|
|
1.4
|
%
|
|
|
|
1.3
|
%
|
Fair value write-up of acquired inventory
|
|
|
|
|
|
1.8
|
%
|
|
|
|
1.4
|
%
|
|
|
|
0.0
|
%
|
Non-GAAP gross margin - product
|
|
|
|
|
|
66.8
|
%
|
|
|
|
72.7
|
%
|
|
|
|
69.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin - service
|
|
|
|
|
|
61.4
|
%
|
|
|
|
58.4
|
%
|
|
|
|
55.6
|
%
|
Stock-based compensation expense
|
|
|
|
|
|
1.4
|
%
|
|
|
|
1.1
|
%
|
|
|
|
1.0
|
%
|
Non-GAAP gross margin - service
|
|
|
|
|
|
62.8
|
%
|
|
|
|
59.5
|
%
|
|
|
|
56.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP total gross margin
|
|
|
|
|
|
62.6
|
%
|
|
|
|
65.6
|
%
|
|
|
|
63.6
|
%
|
Stock-based compensation expense
|
|
|
|
|
|
0.7
|
%
|
|
|
|
0.5
|
%
|
|
|
|
0.4
|
%
|
Amortization of intangible assets
|
|
|
|
|
|
0.9
|
%
|
|
|
|
0.9
|
%
|
|
|
|
0.8
|
%
|
Fair value write-up of acquired inventory
|
|
|
|
|
|
1.0
|
%
|
|
|
|
0.9
|
%
|
|
|
|
0.0
|
%
|
Non-GAAP total gross margin
|
|
|
|
|
|
65.2
|
%
|
|
|
|
67.9
|
%
|
|
|
|
64.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP total gross profit
|
|
|
|
|
$
|
47,288
|
|
|
|
$
|
46,423
|
|
|
|
$
|
44,008
|
|
Stock-based compensation expense
|
|
|
|
|
|
516
|
|
|
|
|
358
|
|
|
|
|
282
|
|
Amortization of intangible assets
|
|
|
|
|
|
673
|
|
|
|
|
631
|
|
|
|
|
560
|
|
Fair value write-up of acquired inventory
|
|
|
|
|
|
803
|
|
|
|
|
615
|
|
|
|
|
-
|
|
Non-GAAP total gross profit
|
|
|
|
|
$
|
49,280
|
|
|
|
$
|
48,027
|
|
|
|
$
|
44,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development expense
|
|
|
|
|
$
|
20,921
|
|
|
|
$
|
18,972
|
|
|
|
$
|
18,019
|
|
Stock-based compensation expense
|
|
|
|
|
|
(1,749
|
)
|
|
|
|
(1,313
|
)
|
|
|
|
(820
|
)
|
Amortization of intangible assets
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(100
|
)
|
Impairment of intangible assets
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(600
|
)
|
Non-GAAP research and development expense
|
|
|
|
|
$
|
19,172
|
|
|
|
$
|
17,659
|
|
|
|
$
|
16,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP sales and marketing expense
|
|
|
|
|
$
|
18,782
|
|
|
|
$
|
19,581
|
|
|
|
$
|
19,191
|
|
Stock-based compensation expense
|
|
|
|
|
|
(1,303
|
)
|
|
|
|
(1,249
|
)
|
|
|
|
(1,219
|
)
|
Amortization of intangible assets
|
|
|
|
|
|
(505
|
)
|
|
|
|
(398
|
)
|
|
|
|
(526
|
)
|
Non-GAAP sales and marketing expense
|
|
|
|
|
$
|
16,974
|
|
|
|
$
|
17,934
|
|
|
|
$
|
17,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP general and administrative expense
|
|
|
|
|
$
|
11,995
|
|
|
|
$
|
11,186
|
|
|
|
$
|
9,733
|
|
Stock-based compensation expense
|
|
|
|
|
|
(3,370
|
)
|
|
|
|
(2,854
|
)
|
|
|
|
(2,219
|
)
|
Divestiture costs
|
|
|
|
|
|
(405
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
Non-GAAP general and administrative expense
|
|
|
|
|
$
|
8,220
|
|
|
|
$
|
8,332
|
|
|
|
$
|
7,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating expenses
|
|
|
|
|
$
|
52,089
|
|
|
|
$
|
52,214
|
|
|
|
$
|
48,641
|
|
Stock-based compensation expense
|
|
|
|
|
|
(6,422
|
)
|
|
|
|
(5,416
|
)
|
|
|
|
(4,258
|
)
|
Amortization of intangible assets
|
|
|
|
|
|
(505
|
)
|
|
|
|
(398
|
)
|
|
|
|
(626
|
)
|
Impairment of intangible assets
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(600
|
)
|
Divestiture costs
|
|
|
|
|
|
(405
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
Acquisition-related expense
|
|
|
|
|
|
-
|
|
|
|
|
(1,306
|
)
|
|
|
|
-
|
|
Restructuring
|
|
|
|
|
|
(391
|
)
|
|
|
|
(1,169
|
)
|
|
|
|
(1,698
|
)
|
Non-GAAP operating expenses
|
|
|
|
|
$
|
44,366
|
|
|
|
$
|
43,925
|
|
|
|
$
|
41,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP loss from operations
|
|
|
|
|
$
|
(4,801
|
)
|
|
|
$
|
(5,791
|
)
|
|
|
$
|
(4,633
|
)
|
Fair value write-up of acquired inventory
|
|
|
|
|
|
803
|
|
|
|
|
615
|
|
|
|
|
-
|
|
Stock-based compensation expense
|
|
|
|
|
|
6,938
|
|
|
|
|
5,774
|
|
|
|
|
4,540
|
|
Amortization of intangible assets
|
|
|
|
|
|
1,178
|
|
|
|
|
1,029
|
|
|
|
|
1,186
|
|
Impairment of intangible assets
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
600
|
|
Divestiture costs
|
|
|
|
|
|
405
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Acquisition-related expense
|
|
|
|
|
|
-
|
|
|
|
|
1,306
|
|
|
|
|
-
|
|
Restructuring
|
|
|
|
|
|
391
|
|
|
|
|
1,169
|
|
|
|
|
1,698
|
|
Non-GAAP income from operations
|
|
|
|
|
$
|
4,914
|
|
|
|
$
|
4,102
|
|
|
|
$
|
3,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Other income (expense), net
|
|
|
|
|
$
|
(10
|
)
|
|
|
$
|
2,335
|
|
|
|
$
|
3
|
|
Litigation settlement - prepaid licenses
|
|
|
|
|
|
-
|
|
|
|
|
(2,250
|
)
|
|
|
|
-
|
|
Non-GAAP Other income (expense), net
|
|
|
|
|
$
|
(10
|
)
|
|
|
$
|
85
|
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
|
|
|
|
|
$
|
(5,497
|
)
|
|
|
$
|
(3,953
|
)
|
|
|
$
|
(4,870
|
)
|
Fair value write-up of acquired inventory
|
|
|
|
|
|
803
|
|
|
|
|
615
|
|
|
|
|
-
|
|
Stock-based compensation expense
|
|
|
|
|
|
6,938
|
|
|
|
|
5,774
|
|
|
|
|
4,540
|
|
Amortization of intangible assets
|
|
|
|
|
|
1,178
|
|
|
|
|
1,029
|
|
|
|
|
1,186
|
|
Impairment of intangible assets
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
600
|
|
Divestiture costs
|
|
|
|
|
|
405
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Acquisition-related expense
|
|
|
|
|
|
-
|
|
|
|
|
1,306
|
|
|
|
|
-
|
|
Restructuring
|
|
|
|
|
|
391
|
|
|
|
|
1,169
|
|
|
|
|
1,698
|
|
Litigation settlement - prepaid licenses
|
|
|
|
|
|
-
|
|
|
|
|
(2,250
|
)
|
|
|
|
-
|
|
Non-GAAP net income
|
|
|
|
|
$
|
4,218
|
|
|
|
$
|
3,690
|
|
|
|
$
|
3,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share or (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
|
$
|
(0.02
|
)
|
|
|
$
|
(0.01
|
)
|
|
|
$
|
(0.02
|
)
|
Non-GAAP
|
|
|
|
|
$
|
0.02
|
|
|
|
$
|
0.01
|
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute diluted earnings per share or (loss) per
share
|
|
|
|
|
|
|
|
|
|
|
|
GAAP shares used to compute loss per share
|
|
|
|
|
|
247,120
|
|
|
|
|
265,400
|
|
|
|
|
282,389
|
|
Non-GAAP shares used to compute diluted earnings per share
|
|
|
|
|
|
250,154
|
|
|
|
|
269,031
|
|
|
|
|
284,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC. Reconciliation of Non-GAAP and GAAP
Financial Measures - Historical (in thousands, except
percentages and per share amounts) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
|
|
|
|
|
June 27,
|
|
|
June 28,
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
GAAP gross margin - product
|
|
|
|
|
|
66.5
|
%
|
|
|
|
66.0
|
%
|
Stock-based compensation expense
|
|
|
|
|
|
0.2
|
%
|
|
|
|
0.1
|
%
|
Amortization of intangible assets
|
|
|
|
|
|
1.4
|
%
|
|
|
|
1.4
|
%
|
Fair value write-up of acquired inventory
|
|
|
|
|
|
1.6
|
%
|
|
|
|
0.0
|
%
|
Non-GAAP gross margin - product
|
|
|
|
|
|
69.7
|
%
|
|
|
|
67.5
|
%
|
|
|
|
|
|
|
|
|
|
GAAP gross margin - service
|
|
|
|
|
|
60.0
|
%
|
|
|
|
55.1
|
%
|
Stock-based compensation expense
|
|
|
|
|
|
1.3
|
%
|
|
|
|
0.9
|
%
|
Non-GAAP gross margin - service
|
|
|
|
|
|
61.3
|
%
|
|
|
|
56.0
|
%
|
|
|
|
|
|
|
|
|
|
GAAP total gross margin
|
|
|
|
|
|
64.0
|
%
|
|
|
|
61.8
|
%
|
Stock-based compensation expense
|
|
|
|
|
|
0.6
|
%
|
|
|
|
0.4
|
%
|
Amortization of intangible assets
|
|
|
|
|
|
0.9
|
%
|
|
|
|
0.8
|
%
|
Fair value write-up of acquired inventory
|
|
|
|
|
|
1.0
|
%
|
|
|
|
0.0
|
%
|
Non-GAAP total gross margin
|
|
|
|
|
|
66.5
|
%
|
|
|
|
63.0
|
%
|
|
|
|
|
|
|
|
|
|
GAAP total gross profit
|
|
|
|
|
$
|
93,711
|
|
|
|
$
|
81,810
|
|
Stock-based compensation expense
|
|
|
|
|
|
874
|
|
|
|
|
544
|
|
Amortization of intangible assets
|
|
|
|
|
|
1,304
|
|
|
|
|
1,121
|
|
Fair value write-up of acquired inventory
|
|
|
|
|
|
1,418
|
|
|
|
|
-
|
|
Non-GAAP total gross profit
|
|
|
|
|
$
|
97,307
|
|
|
|
$
|
83,475
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development expense
|
|
|
|
|
$
|
39,893
|
|
|
|
$
|
35,520
|
|
Stock-based compensation expense
|
|
|
|
|
|
(3,062
|
)
|
|
|
|
(1,499
|
)
|
Amortization of intangible assets
|
|
|
|
|
|
-
|
|
|
|
|
(200
|
)
|
Impairment of intangible assets
|
|
|
|
|
|
-
|
|
|
|
|
(600
|
)
|
Non-GAAP research and development expense
|
|
|
|
|
$
|
36,831
|
|
|
|
$
|
33,221
|
|
|
|
|
|
|
|
|
|
|
GAAP sales and marketing expense
|
|
|
|
|
$
|
38,363
|
|
|
|
$
|
40,305
|
|
Stock-based compensation expense
|
|
|
|
|
|
(2,552
|
)
|
|
|
|
(2,318
|
)
|
Amortization of intangible assets
|
|
|
|
|
|
(903
|
)
|
|
|
|
(1,052
|
)
|
Non-GAAP sales and marketing expense
|
|
|
|
|
$
|
34,908
|
|
|
|
$
|
36,935
|
|
|
|
|
|
|
|
|
|
|
GAAP general and administrative expense
|
|
|
|
|
$
|
23,181
|
|
|
|
$
|
20,443
|
|
Stock-based compensation expense
|
|
|
|
|
|
(6,224
|
)
|
|
|
|
(4,403
|
)
|
Divestiture costs
|
|
|
|
|
|
(405
|
)
|
|
|
|
-
|
|
Non-GAAP general and administrative expense
|
|
|
|
|
$
|
16,552
|
|
|
|
$
|
16,040
|
|
|
|
|
|
|
|
|
|
|
GAAP operating expenses
|
|
|
|
|
$
|
104,303
|
|
|
|
$
|
99,915
|
|
Stock-based compensation expense
|
|
|
|
|
|
(11,838
|
)
|
|
|
|
(8,220
|
)
|
Amortization of intangible assets
|
|
|
|
|
|
(903
|
)
|
|
|
|
(1,252
|
)
|
Impairment of intangible assets
|
|
|
|
|
|
-
|
|
|
|
|
(600
|
)
|
Divestiture costs
|
|
|
|
|
|
(405
|
)
|
|
|
|
-
|
|
Acquisition-related expense
|
|
|
|
|
|
(1,306
|
)
|
|
|
|
-
|
|
Restructuring
|
|
|
|
|
|
(1,560
|
)
|
|
|
|
(3,647
|
)
|
Non-GAAP operating expenses
|
|
|
|
|
$
|
88,291
|
|
|
|
$
|
86,196
|
|
|
|
|
|
|
|
|
|
|
GAAP loss from operations
|
|
|
|
|
$
|
(10,592
|
)
|
|
|
$
|
(18,105
|
)
|
Fair value write-up of acquired inventory
|
|
|
|
|
|
1,418
|
|
|
|
|
-
|
|
Stock-based compensation expense
|
|
|
|
|
|
12,712
|
|
|
|
|
8,764
|
|
Amortization of intangible assets
|
|
|
|
|
|
2,207
|
|
|
|
|
2,373
|
|
Impairment of intangible assets
|
|
|
|
|
|
-
|
|
|
|
|
600
|
|
Divestiture costs
|
|
|
|
|
|
405
|
|
|
|
|
-
|
|
Acquisition-related expense
|
|
|
|
|
|
1,306
|
|
|
|
|
-
|
|
Restructuring
|
|
|
|
|
|
1,560
|
|
|
|
|
3,647
|
|
Non-GAAP income (loss) from operations
|
|
|
|
|
$
|
9,016
|
|
|
|
$
|
(2,721
|
)
|
|
|
|
|
|
|
|
|
|
GAAP Other income, net
|
|
|
|
|
$
|
2,325
|
|
|
|
$
|
-
|
|
Litigation settlement - prepaid licenses
|
|
|
|
|
|
(2,250
|
)
|
|
|
|
-
|
|
Non-GAAP Other income, net
|
|
|
|
|
$
|
75
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
|
|
|
|
|
$
|
(9,450
|
)
|
|
|
$
|
(18,618
|
)
|
Fair value write-up of acquired inventory
|
|
|
|
|
|
1,418
|
|
|
|
|
-
|
|
Stock-based compensation expense
|
|
|
|
|
|
12,712
|
|
|
|
|
8,764
|
|
Amortization of intangible assets
|
|
|
|
|
|
2,207
|
|
|
|
|
2,373
|
|
Impairment of intangible assets
|
|
|
|
|
|
-
|
|
|
|
|
600
|
|
Divestiture costs
|
|
|
|
|
|
405
|
|
|
|
|
-
|
|
Acquisition-related expense
|
|
|
|
|
|
1,306
|
|
|
|
|
-
|
|
Restructuring
|
|
|
|
|
|
1,560
|
|
|
|
|
3,647
|
|
Litigation settlement - prepaid licenses
|
|
|
|
|
|
(2,250
|
)
|
|
|
|
-
|
|
Non-GAAP net income (loss)
|
|
|
|
|
$
|
7,908
|
|
|
|
$
|
(3,234
|
)
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share or (loss) per share
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
|
$
|
(0.04
|
)
|
|
|
$
|
(0.07
|
)
|
Non-GAAP
|
|
|
|
|
$
|
0.03
|
|
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
Shares used to compute diluted earnings per share or (loss) per
share
|
|
|
|
|
|
|
|
|
GAAP shares used to compute loss per share
|
|
|
|
|
|
257,026
|
|
|
|
|
281,973
|
|
Non-GAAP shares used to compute diluted earnings or (loss)
per share
|
|
|
|
|
|
260,353
|
|
|
|
|
281,973
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook
|
(in millions, except percentages and per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 26, 2014
|
|
|
|
|
|
|
Range
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
70
|
|
|
|
$
|
73
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
|
|
|
|
|
|
GAAP outlook
|
|
|
|
63.0%
|
|
|
|
|
64.1%
|
|
Fair value write-up of inventory
|
|
|
|
0.3%
|
|
|
|
|
0.3%
|
|
Stock-based compensation
|
|
|
|
0.7%
|
|
|
|
|
0.7%
|
|
Amortization of intangible assets
|
|
|
|
1.0%
|
|
|
|
|
0.9%
|
|
|
Non-GAAP outlook
|
|
|
|
65.0%
|
|
|
|
|
66.0%
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
GAAP outlook
|
|
|
$
|
51.1
|
|
|
|
$
|
52.1
|
|
Stock-based compensation
|
|
|
|
(6.6)
|
|
|
|
|
(6.6)
|
|
Amortization of intangible assets
|
|
|
|
(0.5)
|
|
|
|
|
(0.5)
|
|
|
Non-GAAP outlook
|
|
|
$
|
44.0
|
|
|
|
$
|
45.0
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
GAAP outlook
|
|
|
$
|
(0.02)
|
|
|
|
$
|
(0.02)
|
|
Fair value write-up of inventory
|
|
|
*
|
|
|
|
*
|
|
Stock-based compensation expense
|
|
|
|
0.03
|
|
|
|
|
0.03
|
|
Amortization of intangible assets
|
|
|
*
|
|
|
|
*
|
|
|
Non-GAAP outlook
|
|
|
$
|
0.01
|
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, 2014
|
|
|
|
|
|
|
Range
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
81
|
|
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
GAAP outlook
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
Fair value write-up of inventory
|
|
|
*
|
|
|
|
*
|
|
Stock-based compensation expense
|
|
|
|
0.03
|
|
|
|
|
0.03
|
|
Amortization of intangible assets
|
|
|
*
|
|
|
|
*
|
|
Acquisition-related
|
|
|
*
|
|
|
|
*
|
|
|
Non-GAAP outlook
|
|
|
$
|
0.03
|
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2014
|
|
|
|
|
|
|
Sonus
|
|
PT
|
|
Combined
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
285
|
|
$
|
15
|
|
$
|
300
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
GAAP outlook
|
|
|
$
|
(0.06)
|
|
$
|
(0.01)
|
|
$
|
(0.07)
|
|
Fair value write-up of inventory
|
|
|
|
0.01
|
|
*
|
|
|
0.01
|
|
Stock-based compensation expense
|
|
|
|
0.11
|
|
*
|
|
|
0.11
|
|
Amortization of intangible assets
|
|
|
|
0.02
|
|
*
|
|
|
0.02
|
|
Acquisition-related
|
|
|
*
|
|
*
|
|
*
|
|
Restructuring
|
|
|
|
0.01
|
|
*
|
|
|
0.01
|
|
Litigation settlement - prepaid licenses
|
|
|
|
(0.01)
|
|
*
|
|
|
(0.01)
|
|
|
Non-GAAP outlook
|
|
|
$
|
0.08
|
|
$
|
(0.01)
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
* Less than $0.01 impact on earnings per share.
|
|
|
|
|
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|