Fiscal Year 2012 SBC Total Revenue Grew 69% Year Over Year to $87.6
Million
WESTFORD, Mass.--(BUSINESS WIRE)--
Sonus
Networks, Inc. (Nasdaq:SONS), a global
leader in SIP-based communications, today announced results for the
fourth quarter and full year ended December 31, 2012.
Results are reported on a consolidated basis and include the full fourth
quarter financial effect of Network Equipment Technologies, Inc.
("NET"), an acquisition which closed on August 24, 2012. A table
providing stand-alone Sonus and stand-alone NET results is provided in
the "Supplementary Financial and Operational Data" located on the
Investor Relations page of the Company's website.
Fourth Quarter 2012 Highlights
-
Total revenue was $75.1 million.
-
Total SBC revenue, including product, maintenance and services, was
$26.1 million.
-
SBC product-only revenue was $20.6 million.
Full Year 2012 Highlights
-
Total revenue was $254.1 million.
-
Total SBC revenue, including product, maintenance and services, was
$87.6 million, representing a 69% increase over 2011.
-
SBC product-only revenue was $67.6 million, representing a 79%
increase over 2011.
Revenue for the fourth quarter of 2012 was $75.1 million, compared to
$57.0 million in the third quarter of 2012 and $74.3 million in the
fourth quarter of 2011. The GAAP net loss for the fourth quarter of 2012
was $16.4 million, or $0.06 per share, compared to a GAAP net loss of
$15.6 million, or $0.06 per share, in the third quarter of 2012 and GAAP
net income of $3.7 million, or $0.01 per diluted share, in the fourth
quarter of 2011. Non-GAAP net income for the fourth quarter of 2012 was
$1.8 million, or $0.01 per diluted share, compared to a non-GAAP net
loss of $6.3 million, or $0.02 per share, in the third quarter of 2012
and non-GAAP net income of $5.4 million, or $0.02 per diluted share, in
the fourth quarter of 2011.
Revenue for fiscal 2012 was $254.1 million, compared to $259.7 million
in fiscal 2011. The GAAP net loss in fiscal 2012 was $50.2 million, or
$0.18 per share, compared to a GAAP net loss of $12.7 million, or $0.05
per share, in fiscal 2011. The Non-GAAP net loss in fiscal 2012 was
$17.4 million, or $0.06 per share, compared to a non-GAAP net loss of
$4.4 million, or $0.02 per share, in fiscal 2011.
2013 First Quarter and Full Year 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.
|
First Quarter 2013
|
|
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|
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|
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|
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Current Guidance
|
|
Total Revenue
|
|
|
|
|
|
|
|
|
|
|
$60 to $62 million
|
|
SBC Total Revenue
|
|
|
|
|
|
|
|
|
|
|
$26 to $27 million
|
|
SBC Product Revenue
|
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|
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|
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|
|
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$21 to $22 million
|
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Gross Margin
|
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|
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|
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|
|
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61% to 62%
|
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Operating Expenses
|
|
|
|
|
|
|
|
|
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$45 to $46 million
|
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Basic EPS
|
|
|
|
|
|
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|
|
|
|
$(0.03)
|
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Cash & Investments
|
|
|
|
|
|
|
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|
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$280 million
|
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Diluted Shares
|
|
|
|
|
|
|
|
|
|
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281 million
|
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Full Year 2013
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Current Guidance
|
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Total Revenue
|
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|
|
|
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|
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|
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$267 to $271 million
|
|
SBC Total Revenue
|
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|
|
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$120 to $124 million
|
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SBC Product Revenue
|
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$98 to $102 million
|
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Gross Margin
|
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64% to 65%
|
|
Operating Expenses
|
|
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|
|
|
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|
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$171 to $172 million
|
|
Diluted EPS
|
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|
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$0.00 to $0.01
|
|
Cash & Investments
|
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|
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$280 to $285 million
|
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Diluted Shares
|
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285 million
|
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Restructuring
In August 2012, the Company initiated a plan to streamline operations
and reduce operating costs, including a corporate-wide restructuring
plan. In the third quarter of 2012, the Company recorded restructuring
expense of $2.0 million for severance and related charges and
facility-related charges. The Company recorded additional restructuring
expense of $5.7 million in the fourth quarter of 2012, comprised of $4.1
million for facility-related charges, $1.3 million for severance and
related charges and $0.3 million for the writedown of property and
equipment. The Company expects to record additional restructuring
expense of approximately $2 million in the first quarter of 2013,
comprised of severance and related charges.
Quote
"Sonus made tremendous progress during 2012 in our transformation to
become a pure-play SBC company," said Ray Dolan, president and chief
executive officer. "We grew our total SBC revenue by 69% over 2011 and
gained substantial market share in the service provider segment. We also
considerably enhanced our go-to-market strategy with the addition of our
new channel program, Sonus Partner Assure, and with the expansion of our
SBC product portfolio. Additionally, the acquisition of NET during 2012
significantly increased our exposure to the enterprise SBC market. Sonus
now has the market's broadest SBC portfolio, including the most
Microsoft Lync SBCs, enabling us to address the entire SBC market
opportunity." Dolan continued, "Sonus has also made solid progress
streamlining operations. Our restructuring initiatives, coupled with
ongoing improvements in operating efficiencies, are expected to drive
significant improvements in our operating leverage and gross margins
this year. The team is focused on accelerating our SBC transformation in
2013, driving toward long-term profitability, and enhancing shareholder
value."
Conference Call Details
Date: February 28, 2013
Time: 4:30 p.m. (EST)
Dial-in number:
800-354-6885
International Callers: +1 303-223-2680
Replay information:
A telephone playback of the call will be available following the
conference call until March 14, 2013 and can be accessed by calling
800-633-8284 or +1 402-977-9140 for international callers. The
reservation number for the replay is 21646000. A webcast replay of the
conference call will also be available shortly following the conference
call on the Company's Investor Relations website in the Events &
Presentations - Archived Events section.
Accounting Period:
As of the beginning of fiscal 2012, the Company began reporting its
first, second and third quarters on a 4-4-5 basis, with the quarter
ending on the Friday closest to the last day of each third month. The
Company's fiscal year-end is December 31.
Tags:
Sonus Networks, Sonus, SONS, 2012 fourth quarter, earnings, results,
IP-based network solutions, SBC, SBC 1000, SBC 2000, SBC 5100, SBC 5200,
SBC 9000, session border controller, session border control, session
management, SIP trunking, Cloud VoIP communications, unified
communications, UC, VoIP, IP, TDM.
About Sonus Networks
Sonus helps the world's leading communications service providers and
enterprises embrace the next generation of SIP-based solutions including
VoIP, video and Unified Communications through secure, reliable and
scalable IP networks. With customers around the globe and 15 years of
experience transforming networks to IP, Sonus has enabled service
providers to capture and retain users and both service providers and
enterprises to generate significant ROI. Sonus products include session
border controllers, policy/routing servers, subscriber feature servers
and media and signaling gateways. 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.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
report are forward-looking statements. Without limiting the foregoing,
the words "anticipates", "believes", "could", "estimates", "expects",
"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.
Examples of forward-looking statements include, but are not limited to,
statements in the section "2013 First Quarter and Full Year Outlook" and
other statements regarding the following: plans, objectives, outlook,
goals, strategies, future events or performance, growth in market share,
trends, investments, customer growth, operational performance and costs,
liquidity and financial positions, competition, estimated expenditures
and investments, impacts of laws, rules and regulations, revenues and
earnings, performance and other statements that are other than
statements of historical facts. 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. They are
neither statements of historical fact nor guarantees or assurances of
future performance. 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
acquisitions (including with respect to our acquisition of Network
Equipment Technologies, Inc.); 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. 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. 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. We therefore caution you
against relying on any of these forward-looking statements, which speak
only as of the date made.
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: stock-based
compensation, restructuring, write-off of prepaid royalties,
acquisition-related costs, amortization of intangible assets and
depreciation expense related to the fair value write-up of acquired
property and equipment. 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.
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 recorded $7.7 million of restructuring expense in fiscal 2012,
comprised of $2.0 million in the third quarter and $5.7 million in the
fourth quarter. 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 fourth quarter of fiscal 2012 we wrote off $7.1 million of
prepaid royalties for software licenses related to products from which
we do not expect to derive future revenues. We believe that excluding
the write-off of these prepaid royalties facilitates the comparison of
our product gross margins to our historical operating results and 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.
We exclude the amortization of acquired intangible assets from non-GAAP
expense and income measures. These amounts are inconsistent in amount
and frequency 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.
As part of the assessment of the assets acquired and liabilities assumed
in connection with the NET acquisition, we were required to increase the
aggregate fair value of acquired property and equipment by $2.0 million.
The acquired property and equipment is being depreciated over a weighted
average useful life of approximately 2.5 years. We believe that
excluding the incremental depreciation expense resulting from the fair
value write-up of this acquired property and equipment facilitates the
comparison of our financial results to our historical operating results
and to 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
December 31,
|
|
September 28,
|
|
December 31,
|
|
|
|
|
|
2012
|
|
2012
|
|
2011
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
45,809
|
|
|
$
|
33,520
|
|
|
$
|
47,082
|
|
|
|
Service
|
|
|
29,327
|
|
|
|
23,529
|
|
|
|
27,190
|
|
|
|
|
Total revenue
|
|
|
75,136
|
|
|
|
57,049
|
|
|
|
74,272
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
Product
|
|
|
26,121
|
|
|
|
11,768
|
|
|
|
13,646
|
|
|
|
Service
|
|
|
13,412
|
|
|
|
12,839
|
|
|
|
13,282
|
|
|
|
|
Total cost of revenue
|
|
|
39,533
|
|
|
|
24,607
|
|
|
|
26,928
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
35,603
|
|
|
|
32,442
|
|
|
|
47,344
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
Product
|
|
|
43.0
|
%
|
|
|
64.9
|
%
|
|
|
71.0
|
%
|
|
|
Service
|
|
|
54.3
|
%
|
|
|
45.4
|
%
|
|
|
51.2
|
%
|
|
|
|
Total gross margin
|
|
|
47.4
|
%
|
|
|
56.9
|
%
|
|
|
63.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
16,247
|
|
|
|
15,612
|
|
|
|
17,384
|
|
|
|
Sales and marketing
|
|
|
20,002
|
|
|
|
17,613
|
|
|
|
17,033
|
|
|
|
General and administrative
|
|
|
8,981
|
|
|
|
7,939
|
|
|
|
8,431
|
|
|
|
Acquisition-related
|
|
|
439
|
|
|
|
4,090
|
|
|
|
-
|
|
|
|
Restructuring
|
|
|
5,683
|
|
|
|
1,992
|
|
|
|
-
|
|
|
|
|
Total operating expenses
|
|
|
51,352
|
|
|
|
47,246
|
|
|
|
42,848
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
(15,749
|
)
|
|
|
(14,804
|
)
|
|
|
4,496
|
|
|
Interest income, net
|
|
|
155
|
|
|
|
20
|
|
|
|
251
|
|
|
Other income (expense), net
|
|
|
204
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(15,390
|
)
|
|
|
(14,786
|
)
|
|
|
4,747
|
|
|
Income tax provision
|
|
|
(997
|
)
|
|
|
(833
|
)
|
|
|
(1,017
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(16,387
|
)
|
|
$
|
(15,619
|
)
|
|
$
|
3,730
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
0.01
|
|
|
|
Diluted
|
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute earnings (loss) per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
280,773
|
|
|
|
280,145
|
|
|
|
279,293
|
|
|
|
Diluted
|
|
|
280,773
|
|
|
|
280,145
|
|
|
|
279,565
|
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
|
Condensed Consolidated Statements of Operations
|
|
(in thousands, except percentages and per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
|
2012
|
|
2011
|
|
Revenue:
|
|
|
|
|
|
|
Product
|
|
$
|
153,326
|
|
|
$
|
154,373
|
|
|
|
Service
|
|
|
100,808
|
|
|
|
105,323
|
|
|
|
|
Total revenue
|
|
|
254,134
|
|
|
|
259,696
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
Product
|
|
|
58,109
|
|
|
|
57,929
|
|
|
|
Service
|
|
|
53,431
|
|
|
|
55,646
|
|
|
|
|
Total cost of revenue
|
|
|
111,540
|
|
|
|
113,575
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
142,594
|
|
|
|
146,121
|
|
|
|
|
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
Product
|
|
|
62.1
|
%
|
|
|
62.5
|
%
|
|
|
Service
|
|
|
47.0
|
%
|
|
|
47.2
|
%
|
|
|
|
Total gross margin
|
|
|
56.1
|
%
|
|
|
56.3
|
%
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
Research and development
|
|
|
67,341
|
|
|
|
64,410
|
|
|
|
Sales and marketing
|
|
|
76,341
|
|
|
|
59,279
|
|
|
|
General and administrative
|
|
|
34,283
|
|
|
|
34,957
|
|
|
|
Acquisition-related
|
|
|
5,496
|
|
|
|
-
|
|
|
|
Restructuring
|
|
|
7,675
|
|
|
|
-
|
|
|
|
|
Total operating expenses
|
|
|
191,136
|
|
|
|
158,646
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(48,542
|
)
|
|
|
(12,525
|
)
|
|
Interest income, net
|
|
|
612
|
|
|
|
1,287
|
|
|
Other expense, net
|
|
|
202
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(47,728
|
)
|
|
|
(11,238
|
)
|
|
Income tax provision
|
|
|
(2,441
|
)
|
|
|
(1,465
|
)
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(50,169
|
)
|
|
$
|
(12,703
|
)
|
|
|
|
|
|
|
|
|
|
Loss per share:
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.18
|
)
|
|
$
|
(0.05
|
)
|
|
|
Diluted
|
|
$
|
(0.18
|
)
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
Shares used to compute loss per share:
|
|
|
|
|
|
|
Basic
|
|
|
280,090
|
|
|
|
278,540
|
|
|
|
Diluted
|
|
|
280,090
|
|
|
|
278,540
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
|
Condensed Consolidated Balance Sheets
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
|
|
2012
|
|
2011
|
| Assets |
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
88,004
|
|
|
$
|
105,451
|
|
|
|
Marketable securities
|
|
|
161,905
|
|
|
|
224,090
|
|
|
|
Accounts receivable, net
|
|
|
68,654
|
|
|
|
53,126
|
|
|
|
Inventory
|
|
|
25,910
|
|
|
|
15,434
|
|
|
|
Deferred income taxes
|
|
|
686
|
|
|
|
486
|
|
|
|
Other current assets
|
|
|
15,401
|
|
|
|
12,246
|
|
|
|
|
Total current assets
|
|
|
360,560
|
|
|
|
410,833
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
23,767
|
|
|
|
22,084
|
|
|
Intangible assets, net
|
|
|
15,237
|
|
|
|
1,200
|
|
|
Goodwill
|
|
|
33,796
|
|
|
|
5,062
|
|
|
Investments
|
|
|
29,698
|
|
|
|
55,427
|
|
|
Deferred income taxes
|
|
|
1,011
|
|
|
|
1,137
|
|
|
Other assets
|
|
|
7,191
|
|
|
|
8,972
|
|
|
|
|
|
|
|
$
|
471,260
|
|
|
$
|
504,715
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and stockholders' equity |
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
10,580
|
|
|
$
|
12,754
|
|
|
|
Accrued expenses
|
|
|
26,795
|
|
|
|
21,620
|
|
|
|
Current portion of deferred revenue
|
|
|
37,094
|
|
|
|
38,565
|
|
|
|
Current portion of long-term liabilities
|
|
|
763
|
|
|
|
1,275
|
|
|
|
|
Total current liabilities
|
|
|
75,232
|
|
|
|
74,214
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue
|
|
|
11,647
|
|
|
|
11,601
|
|
|
Deferred income taxes
|
|
|
249
|
|
|
|
-
|
|
|
Convertible subordinated note
|
|
|
2,380
|
|
|
|
-
|
|
|
Other long-term liabilities
|
|
|
5,706
|
|
|
|
3,599
|
|
|
|
|
|
Total liabilities
|
|
|
95,214
|
|
|
|
89,414
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
Common stock
|
|
|
281
|
|
|
|
279
|
|
|
|
Additional paid-in capital
|
|
|
1,321,385
|
|
|
|
1,309,919
|
|
|
|
Accumulated deficit
|
|
|
(952,373
|
)
|
|
|
(902,204
|
)
|
|
|
Accumulated other comprehensive income
|
|
|
6,753
|
|
|
|
7,307
|
|
|
|
|
|
Total stockholders' equity
|
|
|
376,046
|
|
|
|
415,301
|
|
|
|
|
|
|
|
$
|
471,260
|
|
|
$
|
504,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
|
Condensed Consolidated Statements of Cash Flows
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(50,169
|
)
|
|
$
|
(12,703
|
)
|
|
|
Adjustments to reconcile net loss to cash flows used in operating
activities:
|
|
|
|
|
|
|
|
Depreciation and amortization of property and equipment
|
|
|
12,891
|
|
|
|
11,629
|
|
|
|
|
Amortization of intangible assets
|
|
|
2,773
|
|
|
|
400
|
|
|
|
|
Stock-based compensation
|
|
|
9,003
|
|
|
|
7,865
|
|
|
|
|
Write-off of prepaid royalties for software licenses
|
|
|
7,083
|
|
|
|
-
|
|
|
|
|
Loss on disposal of property and equipment
|
|
|
344
|
|
|
|
24
|
|
|
|
|
Deferred income taxes
|
|
|
785
|
|
|
|
66
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(8,924
|
)
|
|
|
(217
|
)
|
|
|
|
|
Inventory
|
|
|
(7,713
|
)
|
|
|
22,900
|
|
|
|
|
|
Other operating assets
|
|
|
1,669
|
|
|
|
10,562
|
|
|
|
|
|
Accounts payable
|
|
|
(4,949
|
)
|
|
|
(3,537
|
)
|
|
|
|
|
Accrued expenses and other long-term liabilities
|
|
|
937
|
|
|
|
(7,377
|
)
|
|
|
|
|
Deferred revenue
|
|
|
(3,039
|
)
|
|
|
(35,522
|
)
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(39,309
|
)
|
|
|
(5,910
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(10,540
|
)
|
|
|
(13,173
|
)
|
|
|
Business acquisition, net of cash acquired
|
|
|
(35,508
|
)
|
|
|
-
|
|
|
|
Purchases of marketable securities
|
|
|
(159,828
|
)
|
|
|
(219,800
|
)
|
|
|
Sale/maturities of marketable securities
|
|
|
258,278
|
|
|
|
282,041
|
|
|
|
Increase in restricted cash
|
|
|
-
|
|
|
|
(310
|
)
|
|
|
|
|
|
Net cash provided by investing activities
|
|
|
52,402
|
|
|
|
48,758
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Proceeds from sale of common stock in connection with employee stock
purchase plan
|
|
|
1,693
|
|
|
|
1,513
|
|
|
|
Proceeds from exercise of stock options
|
|
|
254
|
|
|
|
818
|
|
|
|
Payment of tax withholding obligations related to net share
settlements of restricted stock awards
|
|
|
(342
|
)
|
|
|
(1,439
|
)
|
|
|
Principal payments of capital lease obligations
|
|
|
(120
|
)
|
|
|
(88
|
)
|
|
|
Settlement of redeemable convertible subordinated debentures
|
|
|
(31,824
|
)
|
|
|
-
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(30,339
|
)
|
|
|
804
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(201
|
)
|
|
|
(702
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(17,447
|
)
|
|
|
42,950
|
|
|
Cash and cash equivalents, beginning of year
|
|
|
105,451
|
|
|
|
62,501
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
88,004
|
|
|
$
|
105,451
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
|
Supplemental Information
|
|
(In thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables provide the details of stock-based
compensation, the write-off of prepaid royalties for software
licenses, amortization of intangible assets and incremental
depreciation expense resulting from the fair value write-up of
acquired property and equipment included in the Company's
Consolidated Statements of Operations and the line items in which
these amounts are reported.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
December 31,
|
|
September 28,
|
|
December 31,
|
|
|
|
|
|
|
2012
|
|
2012
|
|
2011
|
| Stock-based compensation |
|
|
|
|
|
|
|
|
Cost of revenue - product
|
|
$
|
32
|
|
$
|
41
|
|
$
|
81
|
|
|
Cost of revenue - service
|
|
|
218
|
|
|
211
|
|
|
171
|
|
|
|
Cost of revenue
|
|
|
250
|
|
|
252
|
|
|
252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense
|
|
|
524
|
|
|
524
|
|
|
480
|
|
|
Sales and marketing expense
|
|
|
548
|
|
|
500
|
|
|
349
|
|
|
General and administrative expense
|
|
|
1,141
|
|
|
1,124
|
|
|
476
|
|
|
|
Operating expense
|
|
|
2,213
|
|
|
2,148
|
|
|
1,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation
|
|
$
|
2,463
|
|
$
|
2,400
|
|
$
|
1,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Write-off of prepaid royalties for software licenses |
|
|
|
|
|
|
|
|
Cost of revenue - product
|
|
$
|
7,083
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization of intangible assets |
|
|
|
|
|
|
|
|
Cost of revenue - product
|
|
$
|
1,242
|
|
$
|
428
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
100
|
|
|
100
|
|
|
100
|
|
|
Sales and marketing
|
|
|
527
|
|
|
176
|
|
|
-
|
|
|
|
Operating expense
|
|
|
627
|
|
|
276
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amortization of intangible assets
|
|
$
|
1,869
|
|
$
|
704
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Incremental depreciation expense resulting from the write-up of
acquired property and equipment |
|
|
|
|
|
|
|
|
Cost of revenue - product
|
|
$
|
92
|
|
$
|
11
|
|
$
|
-
|
|
|
Cost of revenue - service
|
|
|
77
|
|
|
22
|
|
|
-
|
|
|
|
Cost of revenue
|
|
|
169
|
|
|
33
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense
|
|
|
277
|
|
|
89
|
|
|
-
|
|
|
Sales and marketing expense
|
|
|
16
|
|
|
19
|
|
|
-
|
|
|
General and administrative expense
|
|
|
139
|
|
|
24
|
|
|
-
|
|
|
|
Operating expense
|
|
|
432
|
|
|
132
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total incremental depreciation expense resulting from the write-up
of acquired property and equipment
|
|
$
|
601
|
|
$
|
165
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
|
Supplemental Information (continued)
|
|
(In thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
|
|
2012
|
|
2011
|
| Stock-based compensation |
|
|
|
|
|
|
Cost of revenue - product
|
|
$
|
162
|
|
$
|
398
|
|
|
Cost of revenue - service
|
|
|
813
|
|
|
1,203
|
|
|
|
Cost of revenue
|
|
|
975
|
|
|
1,601
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
2,297
|
|
|
2,045
|
|
|
Sales and marketing
|
|
|
2,006
|
|
|
1,817
|
|
|
General and administrative
|
|
|
3,725
|
|
|
2,402
|
|
|
|
Operating expense
|
|
|
8,028
|
|
|
6,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation
|
|
$
|
9,003
|
|
$
|
7,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Write-off of prepaid royalties for software licenses |
|
|
|
|
|
|
Cost of revenue - product
|
|
$
|
7,083
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization of intangible assets |
|
|
|
|
|
|
Cost of revenue - product
|
|
$
|
1,670
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
400
|
|
|
400
|
|
|
Sales and marketing
|
|
|
703
|
|
|
-
|
|
|
|
Operating expense
|
|
|
1,103
|
|
|
400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amortization of intangible assets
|
|
$
|
2,773
|
|
$
|
400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Incremental depreciation expense resulting from the write-up of
acquired property and equipment |
|
|
|
|
|
|
Cost of revenue - product
|
|
$
|
103
|
|
$
|
-
|
|
|
Cost of revenue - service
|
|
|
99
|
|
|
-
|
|
|
|
Cost of revenue
|
|
|
202
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense
|
|
|
366
|
|
|
-
|
|
|
Sales and marketing expense
|
|
|
35
|
|
|
-
|
|
|
General and administrative expense
|
|
|
163
|
|
|
-
|
|
|
|
Operating expense
|
|
|
564
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total incremental depreciation expense resulting
|
|
|
|
|
|
|
|
|
from the write-up of acquired property and equipment
|
|
$
|
766
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
|
Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook
|
|
(in millions, except percentages and per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Year ended
|
|
|
|
|
|
|
March 29, 2013
|
|
December 31, 2013
|
|
|
|
|
|
|
Range
|
|
Range
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
$
|
60
|
|
|
$
|
62
|
|
|
$
|
267
|
|
|
$
|
271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross margin |
|
|
|
|
|
|
|
|
|
|
GAAP outlook
|
|
|
59.5
|
%
|
|
|
60.5
|
%
|
|
|
62.7
|
%
|
|
|
63.7
|
%
|
|
|
Stock-based compensation
|
|
|
0.5
|
%
|
|
|
0.5
|
%
|
|
|
0.5
|
%
|
|
|
0.5
|
%
|
|
|
Amortization of intangible assets
|
|
|
1.0
|
%
|
|
|
1.0
|
%
|
|
|
0.8
|
%
|
|
|
0.8
|
%
|
|
|
|
Non-GAAP outlook
|
|
|
61.0
|
%
|
|
|
62.0
|
%
|
|
|
64.0
|
%
|
|
|
65.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
GAAP outlook
|
|
$
|
49.8
|
|
|
$
|
50.8
|
|
|
$
|
186.8
|
|
|
$
|
187.8
|
|
|
|
Stock-based compensation
|
|
|
(2.2
|
)
|
|
|
(2.2
|
)
|
|
|
(11.3
|
)
|
|
|
(11.3
|
)
|
|
|
Amortization of intangible assets
|
|
|
(0.6
|
)
|
|
|
(0.6
|
)
|
|
|
(2.5
|
)
|
|
|
(2.5
|
)
|
|
|
Restructuring
|
|
|
(2.0
|
)
|
|
|
(2.0
|
)
|
|
|
(2.0
|
)
|
|
|
(2.0
|
)
|
|
|
|
Non-GAAP outlook
|
|
$
|
45.0
|
|
|
$
|
46.0
|
|
|
$
|
171.0
|
|
|
$
|
172.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Loss) earnings per share |
|
|
|
|
|
|
|
|
|
|
GAAP outlook
|
|
$
|
(0.05
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.06
|
)
|
|
|
Stock-based compensation expense
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.04
|
|
|
|
0.04
|
|
|
|
Amortization of intangible assets
|
|
|
-
|
|
*
|
|
-
|
|
*
|
|
0.02
|
|
|
|
0.02
|
|
|
|
Restructuring
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
|
Non-GAAP outlook
|
|
$
|
(0.03
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
-
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| * Less than $0.01 impact on earnings per share.
|
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
|
Reconciliation of Non-GAAP and GAAP Financial Measures - Historical
|
|
(in thousands, except percentages and per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
December 31, |
|
September 28, |
|
December 31, |
|
|
|
2012 |
|
2012 |
|
2011 |
|
|
|
|
|
|
|
|
| GAAP gross margin - product |
|
|
43.0
|
%
|
|
|
64.9
|
%
|
|
|
71.0
|
%
|
|
Stock-based compensation expense
|
|
|
0.1
|
%
|
|
|
0.1
|
%
|
|
|
0.2
|
%
|
|
Amortization of intangible assets
|
|
|
2.7
|
%
|
|
|
1.3
|
%
|
|
|
0.0
|
%
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
0.2
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
Write-off of prepaid royalties for software licenses
|
|
|
15.4
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
| Non-GAAP gross margin - product |
|
|
61.4
|
%
|
|
|
66.3
|
%
|
|
|
71.2
|
%
|
|
|
|
|
|
|
|
|
| GAAP gross margin - service |
|
|
54.3
|
%
|
|
|
45.4
|
%
|
|
|
51.2
|
%
|
|
Stock-based compensation expense
|
|
|
0.7
|
%
|
|
|
0.9
|
%
|
|
|
0.6
|
%
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
0.3
|
%
|
|
|
0.1
|
%
|
|
|
0.0
|
%
|
| Non-GAAP gross margin - service |
|
|
55.3
|
%
|
|
|
46.4
|
%
|
|
|
51.8
|
%
|
|
|
|
|
|
|
|
|
| GAAP total gross margin |
|
|
47.4
|
%
|
|
|
56.9
|
%
|
|
|
63.7
|
%
|
|
Stock-based compensation expense % of revenue
|
|
|
0.3
|
%
|
|
|
0.4
|
%
|
|
|
0.4
|
%
|
|
Amortization of intangible assets % of revenue
|
|
|
1.7
|
%
|
|
|
0.8
|
%
|
|
|
0.0
|
%
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
0.2
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
Write-off of prepaid royalties for software licenses
|
|
|
9.4
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
| Non-GAAP total gross margin |
|
|
59.0
|
%
|
|
|
58.1
|
%
|
|
|
64.1
|
%
|
|
|
|
|
|
|
|
|
| GAAP total gross profit |
|
$
|
35,603
|
|
|
$
|
32,442
|
|
|
$
|
47,344
|
|
|
Stock-based compensation expense
|
|
|
250
|
|
|
|
252
|
|
|
|
252
|
|
|
Amortization of intangible assets
|
|
|
1,242
|
|
|
|
428
|
|
|
|
-
|
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
169
|
|
|
|
33
|
|
|
|
-
|
|
|
Write-off of prepaid royalties for software licenses
|
|
|
7,083
|
|
|
|
-
|
|
|
|
-
|
|
| Non-GAAP total gross profit |
|
$
|
44,347
|
|
|
$
|
33,155
|
|
|
$
|
47,596
|
|
|
|
|
|
|
|
|
|
| GAAP research and development expense |
|
$
|
16,247
|
|
|
$
|
15,612
|
|
|
$
|
17,384
|
|
|
Stock-based compensation expense
|
|
|
(524
|
)
|
|
|
(524
|
)
|
|
|
(480
|
)
|
|
Amortization of intangible assets
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
(277
|
)
|
|
|
(89
|
)
|
|
|
-
|
|
| Non-GAAP research and development expense |
|
$
|
15,346
|
|
|
$
|
14,899
|
|
|
$
|
16,804
|
|
|
|
|
|
|
|
|
|
| GAAP sales and marketing expense |
|
$
|
20,002
|
|
|
$
|
17,613
|
|
|
$
|
17,033
|
|
|
Stock-based compensation expense
|
|
|
(548
|
)
|
|
|
(500
|
)
|
|
|
(349
|
)
|
|
Amortization of intangible assets
|
|
|
(527
|
)
|
|
|
(176
|
)
|
|
|
-
|
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
(16
|
)
|
|
|
(19
|
)
|
|
|
-
|
|
| Non-GAAP sales and marketing expense |
|
$
|
18,911
|
|
|
$
|
16,918
|
|
|
$
|
16,684
|
|
|
|
|
|
|
|
|
|
| GAAP general and administrative expense |
|
$
|
8,981
|
|
|
$
|
7,939
|
|
|
$
|
8,431
|
|
|
Stock-based compensation expense
|
|
|
(1,141
|
)
|
|
|
(1,124
|
)
|
|
|
(476
|
)
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
(139
|
)
|
|
|
(24
|
)
|
|
|
-
|
|
| Non-GAAP general and administrative expense |
|
$
|
7,701
|
|
|
$
|
6,791
|
|
|
$
|
7,955
|
|
|
|
|
|
|
|
|
|
| GAAP operating expenses |
|
$
|
51,352
|
|
|
$
|
47,246
|
|
|
$
|
42,848
|
|
|
Stock-based compensation expense
|
|
|
(2,213
|
)
|
|
|
(2,148
|
)
|
|
|
(1,305
|
)
|
|
Amortization of intangible assets
|
|
|
(627
|
)
|
|
|
(276
|
)
|
|
|
(100
|
)
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
(432
|
)
|
|
|
(132
|
)
|
|
|
-
|
|
|
Acquisition-related expense
|
|
|
(439
|
)
|
|
|
(4,090
|
)
|
|
|
-
|
|
|
Restructuring
|
|
|
(5,683
|
)
|
|
|
(1,992
|
)
|
|
|
-
|
|
| Non-GAAP operating expenses |
|
$
|
41,958
|
|
|
$
|
38,608
|
|
|
$
|
41,443
|
|
|
|
|
|
|
|
|
|
| GAAP income (loss) from operations |
|
$
|
(15,749
|
)
|
|
$
|
(14,804
|
)
|
|
$
|
4,496
|
|
|
Stock-based compensation expense
|
|
|
2,463
|
|
|
|
2,400
|
|
|
|
1,557
|
|
|
Amortization of intangible assets
|
|
|
1,869
|
|
|
|
704
|
|
|
|
100
|
|
|
Depreciation expense - fair value of acquired property and equipment
|
|
|
601
|
|
|
|
165
|
|
|
|
-
|
|
|
Write-off of prepaid royalties for software licenses
|
|
|
7,083
|
|
|
|
-
|
|
|
|
-
|
|
|
Acquisition-related expense
|
|
|
439
|
|
|
|
4,090
|
|
|
|
-
|
|
|
Restructuring
|
|
|
5,683
|
|
|
|
1,992
|
|
|
|
-
|
|
| Non-GAAP income (loss) from operations |
|
$
|
2,389
|
|
|
$
|
(5,453
|
)
|
|
$
|
6,153
|
|
|
|
|
|
|
|
|
|
| GAAP net income (loss) |
|
$
|
(16,387
|
)
|
|
$
|
(15,619
|
)
|
|
$
|
3,730
|
|
|
Stock-based compensation expense
|
|
|
2,463
|
|
|
|
2,400
|
|
|
|
1,557
|
|
|
Amortization of intangible assets
|
|
|
1,869
|
|
|
|
704
|
|
|
|
100
|
|
|
Depreciation expense - fair value of acquired property and equipment
|
|
|
601
|
|
|
|
165
|
|
|
|
-
|
|
|
Write-off of prepaid royalties for software licenses
|
|
|
7,083
|
|
|
|
-
|
|
|
|
-
|
|
|
Acquisition-related expense
|
|
|
439
|
|
|
|
4,090
|
|
|
|
-
|
|
|
Restructuring
|
|
|
5,683
|
|
|
|
1,992
|
|
|
|
-
|
|
| Non-GAAP net income (loss) |
|
$
|
1,751
|
|
|
$
|
(6,268
|
)
|
|
$
|
5,387
|
|
|
|
|
|
|
|
|
|
| (Loss) per share/diluted earnings per share |
|
|
|
|
|
|
|
GAAP
|
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
0.01
|
|
|
Non-GAAP
|
|
$
|
0.01
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
| Shares used to compute (loss) per share/diluted earnings per share |
|
|
|
|
|
|
| GAAP shares used to compute (loss) per share/diluted earnings
per share
|
|
|
280,773
|
|
|
|
280,145
|
|
|
|
279,565
|
|
| Non-GAAP shares used to compute (loss) per share/diluted
earnings per share
|
|
|
281,236
|
|
|
|
280,145
|
|
|
|
279,565
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
|
Reconciliation of Non-GAAP and GAAP Financial Measures - Historical
|
|
(in thousands, except percentages and per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Year ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2012 |
|
2011 |
|
|
|
|
|
|
| GAAP gross margin - product |
|
|
62.1
|
%
|
|
|
62.5
|
%
|
|
Stock-based compensation expense
|
|
|
0.1
|
%
|
|
|
0.2
|
%
|
|
Amortization of intangible assets
|
|
|
1.1
|
%
|
|
|
0.0
|
%
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
0.1
|
%
|
|
|
0.0
|
%
|
|
Write-off of prepaid royalties for software licenses
|
|
|
4.6
|
%
|
|
|
0.0
|
%
|
| Non-GAAP gross margin - product |
|
|
68.0
|
%
|
|
|
62.7
|
%
|
|
|
|
|
|
|
| GAAP gross margin - service |
|
|
47.0
|
%
|
|
|
47.2
|
%
|
|
Stock-based compensation expense
|
|
|
0.8
|
%
|
|
|
1.1
|
%
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
0.1
|
%
|
|
|
0.0
|
%
|
| Non-GAAP gross margin - service |
|
|
47.9
|
%
|
|
|
48.3
|
%
|
|
|
|
|
|
|
| GAAP total gross margin |
|
|
56.1
|
%
|
|
|
56.3
|
%
|
|
Stock-based compensation expense % of revenue
|
|
|
0.4
|
%
|
|
|
0.6
|
%
|
|
Amortization of intangible assets % of revenue
|
|
|
0.7
|
%
|
|
|
0.0
|
%
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
0.1
|
%
|
|
|
0.0
|
%
|
|
Write-off of prepaid royalties for software licenses
|
|
|
2.7
|
%
|
|
|
0.0
|
%
|
| Non-GAAP total gross margin |
|
|
60.0
|
%
|
|
|
56.9
|
%
|
|
|
|
|
|
|
| GAAP total gross profit |
|
$
|
142,594
|
|
|
$
|
146,121
|
|
|
Stock-based compensation expense
|
|
|
975
|
|
|
|
1,601
|
|
|
Amortization of intangible assets
|
|
|
1,670
|
|
|
|
-
|
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
202
|
|
|
|
-
|
|
|
Write-off of prepaid royalties for software licenses
|
|
|
7,083
|
|
|
|
-
|
|
| Non-GAAP total gross profit |
|
$
|
152,524
|
|
|
$
|
147,722
|
|
|
|
|
|
|
|
| GAAP research and development expense |
|
$
|
67,341
|
|
|
$
|
64,410
|
|
|
Stock-based compensation expense
|
|
|
(2,297
|
)
|
|
|
(2,045
|
)
|
|
Amortization of intangible assets
|
|
|
(400
|
)
|
|
|
(400
|
)
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
(366
|
)
|
|
|
-
|
|
| Non-GAAP research and development expense |
|
$
|
64,278
|
|
|
$
|
61,965
|
|
|
|
|
|
|
|
| GAAP sales and marketing expense |
|
$
|
76,341
|
|
|
$
|
59,279
|
|
|
Stock-based compensation expense
|
|
|
(2,006
|
)
|
|
|
(1,817
|
)
|
|
Amortization of intangible assets
|
|
|
(703
|
)
|
|
|
-
|
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
(35
|
)
|
|
|
-
|
|
| Non-GAAP sales and marketing expense |
|
$
|
73,597
|
|
|
$
|
57,462
|
|
|
|
|
|
|
|
| GAAP general and administrative expense |
|
$
|
34,283
|
|
|
$
|
34,957
|
|
|
Stock-based compensation expense
|
|
|
(3,725
|
)
|
|
|
(2,402
|
)
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
(163
|
)
|
|
|
-
|
|
| Non-GAAP general and administrative expense |
|
$
|
30,395
|
|
|
$
|
32,555
|
|
|
|
|
|
|
|
| GAAP operating expenses |
|
$
|
191,136
|
|
|
$
|
158,646
|
|
|
Stock-based compensation expense
|
|
|
(8,028
|
)
|
|
|
(6,264
|
)
|
|
Amortization of intangible assets
|
|
|
(1,103
|
)
|
|
|
(400
|
)
|
|
Depreciation expense - fair value write-up of acquired property and
equipment
|
|
|
(564
|
)
|
|
|
-
|
|
|
Acquisition-related expense
|
|
|
(5,496
|
)
|
|
|
-
|
|
|
Restructuring
|
|
|
(7,675
|
)
|
|
|
-
|
|
| Non-GAAP operating expenses |
|
$
|
168,270
|
|
|
$
|
151,982
|
|
|
|
|
|
|
|
| GAAP income (loss) from operations |
|
$
|
(48,542
|
)
|
|
$
|
(12,525
|
)
|
|
Stock-based compensation expense
|
|
|
9,003
|
|
|
|
7,865
|
|
|
Amortization of intangible assets
|
|
|
2,773
|
|
|
|
400
|
|
|
Depreciation expense - fair value of acquired property and equipment
|
|
|
766
|
|
|
|
-
|
|
|
Write-off of prepaid royalties for software licenses
|
|
|
7,083
|
|
|
|
-
|
|
|
Acquisition-related expense
|
|
|
5,496
|
|
|
|
-
|
|
|
Restructuring
|
|
|
7,675
|
|
|
|
-
|
|
| Non-GAAP income (loss) from operations |
|
$
|
(15,746
|
)
|
|
$
|
(4,260
|
)
|
|
|
|
|
|
|
| GAAP net income (loss) |
|
$
|
(50,169
|
)
|
|
$
|
(12,703
|
)
|
|
Stock-based compensation expense
|
|
|
9,003
|
|
|
|
7,865
|
|
|
Amortization of intangible assets
|
|
|
2,773
|
|
|
|
400
|
|
|
Depreciation expense - fair value of acquired property and equipment
|
|
|
766
|
|
|
|
-
|
|
|
Write-off of prepaid royalties for software licenses
|
|
|
7,083
|
|
|
|
-
|
|
|
Acquisition-related expense
|
|
|
5,496
|
|
|
|
-
|
|
|
Restructuring
|
|
|
7,675
|
|
|
|
-
|
|
| Non-GAAP net income (loss) |
|
$
|
(17,373
|
)
|
|
$
|
(4,438
|
)
|
|
|
|
|
|
|
| (Loss) per share/diluted earnings per share |
|
|
|
|
|
GAAP
|
|
$
|
(0.18
|
)
|
|
$
|
(0.05
|
)
|
|
Non-GAAP
|
|
$
|
(0.06
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
| Shares used to compute (loss) per share/diluted earnings per share |
|
|
|
|
| GAAP shares used to compute (loss) per share/diluted earnings
per share
|
|
|
280,090
|
|
|
|
278,540
|
|
| Non-GAAP shares used to compute (loss) per share/diluted
earnings per share
|
|
|
280,090
|
|
|
|
278,540
|
|
Source: Sonus Networks, Inc.