[February 18, 2015] |
|
Sonus Networks Reports 2014 Fourth Quarter and Full Year Results
Sonus
Networks, Inc. (Nasdaq: SONS), a global leader in enabling and
securing real-time communications, today announced results for the
fourth quarter and year ended December 31, 2014.
Financial Highlights
The following table summarizes the fourth quarter and full year results
for fiscal 2014 and 2013 (in millions, except share and per share
amounts). A 1-for-5 reverse split of the Company's common stock became
effective on the NASDAQ Global Select Market as of the commencement of
trading on January 30, 2015. EPS is presented on both a pre-reverse
split and post-reverse split basis.
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Quarter
Ended
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Year
Ended
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Dec. 31, 2014
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Dec. 31, 2013
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Dec. 31, 2014
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Dec. 31, 2013
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Total Company Revenue
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$76.8
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$76.2
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$296.3
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$276.7
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Total Product Revenue
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$46.6
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$45.8
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$182.5
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$167.3
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Total Growth-related Revenue1
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$42.5
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$41.6
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$163.5
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$129.9
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Indirect Channel Product Revenue
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$11.4
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$8.8
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$50.2
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$33.2
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GAAP Gross Margin
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67.4%
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63.5%
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65.3%
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62.3%
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Non-GAAP Gross Margin
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68.9%
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64.7%
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67.4%
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63.6%
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GAAP Loss from Operations as a % of Revenue
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(2.5)%
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(0.1)%
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(5.8)%
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(7.6)%
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Non-GAAP Income from Operations as a % of Revenue (Operating
Income Margin)
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9.9%
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8.5%
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7.0%
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2.7%
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Pre-Reverse Split EPS
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GAAP (Loss) or Diluted EPS
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$(0.01)
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$0.00
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$(0.07)
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$(0.08)
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Non-GAAP Diluted EPS
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$0.03
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$0.02
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$0.07
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$0.02
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Diluted Shares Outstanding
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250.4
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273.5
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255.0
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280.9
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Post-Reverse Split EPS
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GAAP (Loss) or Diluted EPS
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$(0.04)
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$0.00
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$(0.34)
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$(0.40)
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Non-GAAP Diluted EPS
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$0.15
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$0.12
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$0.37
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$0.11
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Diluted Shares Outstanding
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50.1
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54.7
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51.0
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56.1
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"I am very proud of our performance in 2014. We continued to attract
some of the best talent in the industry, expanded our product portfolio
into new growth areas and became embedded in a growing number of Tier
one service provider networks around the world," said Ray Dolan,
president and chief executive officer. "We achieved a record high of 806
total customers in the fourth quarter of 2014, which is up almost 40%
from the prior year. Our strong margin performance demonstrates that we
have established a firm foundation to drive continued operating
leverage. I look forward to 2015 as a breakout year for Sonus as we
accelerate our financial performance and continue to strengthen our
strategic industry leadership."
Mark Greenquist, chief financial officer, commented, "We delivered
record gross margins in the fourth quarter driven by an increase in
sales of higher margin products and capacity expansions. This strong
performance underscores the progress we are making to drive continued
and consistent results. In fact, the fourth quarter of 2014 marks the
twelfth consecutive quarter since the Company began giving quarterly
guidance that it has met or surpassed non-GAAP EPS expectations. The
fourth quarter also marks the seventh consecutive profitable quarter for
the Company on a non-GAAP basis. We look forward to building on this
momentum in 2015."
Commercial Highlights During 2014, the Company broadened its
portfolio of award-winning products, including the Sonus SBC 7000, a
market disrupting platform designed to scale to service providers'
highest projections and support emerging services such as high
definition (HD) voice and video and Voice over Long-Term Evolution
(VoLTE). The Sonus SBC 7000 experienced the fastest time-to-revenue of
any new product in the Company's history, representing more than $15
million in revenue in its first six months of commercial availability.
Over the course of 2014, the Company introduced the Sonus PSX SWe, the
virtualized platform of Sonus' Centralized Policy and Routing Engine,
and the Sonus DSC SWe, a virtualized version of Sonus' Diameter
Signaling Controller (DSC) product. Sonus has led the market to
virtualization. These virtualized offerings followed the introduction of
the Sonus SBC SWe (Software edition) in 2013. It is the only brand on
the market to leverage a common, hardened code base across its hardware
and software portfolios for core communications networks, providing
customers holistic investment protection.
During 2014, the Company further strengthened its relationships with key
partners and customers including BroadSoft, Genesys, Microsoft and the
U.S. Department of Defense (DOD). Sonus' complete portfolio of session
border controllers (SBCs) completed interoperability testing
with BroadSoft's BroadWorks platform as well as with Genesys, a provider
of customer experience and contact center solutions. Sonus' entire SBC
portfolio has received Microsoft® Lync® 2013 qualification, including
the Sonus SBC 7000, the highest capacity Lync-qualified e-SBC solution
on the market. In addition, the Company's full portfolio of SBC products
were added to the DOD approved products list and are now available to
U.S. government customers via Westcon Group's General Services
Administration (GSA) IT Schedule 70 program, the most widely used
acquisition vehicle in the U.S. federal government.
During 2014, Sonus received numerous industry awards including the 2014
Excellence in SDN Award and the 2014
Unified Communications (UC) Product of the Year Award by TMC's INTERNET
TELEPHONY magazine for the Sonus SBC SWe. The Company was also
awarded the 2014 INTERNET TELEPHONY Lync Pioneer Award, an award given
to companies that enable businesses to leverage the Microsoft Lync
platform for enhanced UC and collaboration experiences.
Corporate Highlights During 2014, the Company expanded its
board of directors from nine to eleven directors, naming Matthew W.
Bross, Chairman and Chief Executive Officer of Compass-EOS and former
global Chief Technology Officer of Huawei Technologies, Williams
Communications Group and British Telecom, and Richard J. Lynch,
President of FB Associates, LLC and former Executive Vice President and
Chief Technology Officer of Verizon Communications and Verizon Wireless,
to its board of directors.
The Company also responded to shareholder feedback, including:
terminating its shareholder rights plan (a poison pill adopted in 2008
and set to expire in June 2015); enhancing its pay-for-performance
practices; instituting share ownership guidelines applicable for the
Company's non-employee directors, chief executive officer and other
Section 16 reporting officers; and adopting a formal clawback policy
with respect to the Company's executive incentive compensation.
Share Repurchases During the fourth quarter of 2014, the
Company repurchased a total of approximately 0.2 million shares at an
average price per share of approximately $17.00. As of December 31, 2014
the Company had repurchased approximately 9 million shares of common
stock (approximately 16% of the shares that were outstanding prior to
the beginning of its share repurchases) at an average price per share of
$17.00 since the inception of its stock buyback program in July of
2013. As of December 31, 2014, the Company had 49.4 million shares of
common stock outstanding. As of December 31, 2014 approximately $23
million remained available to the Company for potential share
repurchases under the Company's current stock buyback program. The stock
figures and share prices discussed above are adjusted to reflect the
1-for-5 reverse split of the common stock that was made effective on the
NASDAQ Global Select Market as of the commencement of trading on January
30, 2015.
Cash & Investments The Company ended the fourth quarter
of 2014 with $148 million in cash, cash equivalents and investments,
including the impact of the share repurchases previously described.
Growth-related Revenue 1 The Company has
substantially expanded the portfolio of products expected to contribute
to its revenue growth. In addition to enhancing its industry leading
portfolio of SBCs, products added recently to the Company's portfolio
include DSCs (acquired from Performance Technologies, Incorporated (PT)
in February 2014), and the technology assets acquired from Treq Labs,
Inc. (Treq) in January 2015.
For full year 2014, the Company generated 68.1% of its Total Product
revenue from Growth-related products, up from 58.2% for full year 2013
and 44.1% for full year 2012. Given this successful transformation and
the expectation for this trend to continue, the Company intends to
provide its outlook based on Total Company revenue beginning in fiscal
2015 and will no longer report revenue from growth-related vs. legacy
products and services.
1) Growth-related revenue in 2014 consisted primarily of SBCs and DSCs.
Legacy revenue consisted primarily of Trunking and SS7 Signaling.
Certain of our products contributed to either Growth-related revenue or
Legacy revenue, depending on the use for which our customers purchased
such products. For more information about how we determined whether
products contributed to Growth-related revenue or Legacy revenue, please
see our Quarterly Report on Form 10-Q for the quarter ended September
26, 2014, which was filed with the U.S. Securities and Exchange
Commission on October 28, 2014.
Outlook The Company's outlook is based on current
indications for its business, which may change during the current
quarter. Gross margin, operating expenses (opex) 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.
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Q115
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FY15
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Total Company Revenue
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$74 million
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$326 to $330 million
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Gross Margin
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67.0% to 67.5%
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Not provided
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Opex
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$47.5 to $48.0 million
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Not provided
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EPS
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$0.03
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$0.54 to $0.58
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Diluted Shares Outstanding
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50.5 million
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51 million
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Conference Call Details Date: February 18, 2015 Time:
8:30 a.m. (ET) Dial-in number: 800 736 4594 International
Callers: + 1 212 231 2914
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
where supporting materials including a presentation and supplementary
financial and operational data have also been posted.
Replay Information A telephone playback of the call will be
available following the conference call until March 4, 2015 and can be
accessed by calling 800 633 8284 or +1 402 977 9140 for international
callers. The reservation number for the replay is 21759132.
Tags Sonus Networks, Sonus, SONS, 2014 fourth quarter, full
year 2014, earnings, results, IP-based network solutions, SBC, software
SBC, session border controller, DSC, DEA, DRA, diameter signaling
controller, diameter edge agent, diameter routing agent, SDN, policy,
SIP trunking, Cloud, VoIP communications, unified communications, UC,
VoIP, IP, media gateway, GSX.
About Sonus Networks Sonus brings intelligence and security
to real-time communications. By helping the world embrace the next
generation of cloud-based SIP and 4G/LTE solutions, Sonus enables and
secures latency-sensitive, mission critical traffic for VoIP, video,
instant messaging and online collaboration. With Sonus, enterprises can
give priority to real-time communications based on smart business rules
while service providers can offer reliable, comprehensive and secure
on-demand network services to their customers. With solutions deployed
in more than 100 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),
Network as a Service capabilities, 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 "Outlook" section, 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 results of the reverse split of our common
stock and impact of the PT and Treq transactions on our 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 and the Treq asset acquisition; the effects
of disruption from the PT and Treq transactions, making it more
difficult to maintain relationships with employees, customers, business
partners or government entities; the success implementing the
integration strategies of NET, PT and Treq assets; 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; the impact of the reverse
split of our common stock and 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,
depreciation expense related to the fair value write-up of acquired
property and equipment, 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 operating income as a percentage of revenue (operating
income margin) and 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 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.
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 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 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.
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SONUS NETWORKS, INC.
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Condensed Consolidated Statements of Operations
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(in thousands, except percentages and per share amounts)
|
(unaudited)
|
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Three months ended
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December 31,
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September 26,
|
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December 31,
|
|
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2014
|
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|
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2014
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2013
|
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Revenue:
|
|
|
|
|
|
|
Product
|
$
|
46,570
|
|
|
$
|
44,900
|
|
|
$
|
45,825
|
|
|
Service
|
|
30,228
|
|
|
|
28,316
|
|
|
|
30,328
|
|
|
|
Total revenue
|
|
76,798
|
|
|
|
73,216
|
|
|
|
76,153
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
Product
|
|
14,736
|
|
|
|
15,074
|
|
|
|
16,391
|
|
|
Service
|
|
10,270
|
|
|
|
10,240
|
|
|
|
11,376
|
|
|
|
Total cost of revenue
|
|
25,006
|
|
|
|
25,314
|
|
|
|
27,767
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
51,792
|
|
|
|
47,902
|
|
|
|
48,386
|
|
|
|
|
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
Product
|
|
68.4
|
%
|
|
|
66.4
|
%
|
|
|
64.2
|
%
|
|
Service
|
|
66.0
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%
|
|
|
63.8
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%
|
|
|
62.5
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%
|
|
|
Total gross margin
|
|
67.4
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%
|
|
|
65.4
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%
|
|
|
63.5
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%
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
Research and development
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|
18,810
|
|
|
|
20,693
|
|
|
|
17,473
|
|
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Sales and marketing
|
|
21,428
|
|
|
|
20,350
|
|
|
|
19,769
|
|
|
General and administrative
|
|
9,855
|
|
|
|
10,901
|
|
|
|
10,486
|
|
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Acquisition-related
|
|
252
|
|
|
|
-
|
|
|
|
93
|
|
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Restructuring
|
|
3,392
|
|
|
|
673
|
|
|
|
624
|
|
|
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Total operating expenses
|
|
53,737
|
|
|
|
52,617
|
|
|
|
48,445
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
(1,945
|
)
|
|
|
(4,715
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)
|
|
|
(59
|
)
|
Interest income (expense), net
|
|
25
|
|
|
|
(35
|
)
|
|
|
116
|
|
Other income, net
|
|
206
|
|
|
|
5
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
(1,714
|
)
|
|
|
(4,745
|
)
|
|
|
58
|
|
Income tax (provision) benefit
|
|
(478
|
)
|
|
|
(468
|
)
|
|
|
214
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
(2,192
|
)
|
|
$
|
(5,213
|
)
|
|
$
|
272
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share:
|
|
|
|
|
|
|
Basic
|
$
|
(0.04
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.01
|
|
|
Diluted
|
$
|
(0.04
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute income (loss) per share:
|
|
|
|
|
|
|
Basic
|
|
49,361
|
|
|
|
49,291
|
|
|
|
54,188
|
|
|
Diluted
|
|
49,361
|
|
|
|
49,291
|
|
|
|
54,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
Condensed Consolidated Statements of Operations
|
(in thousands, except percentages and per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
2013
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Product
|
|
|
$
|
182,455
|
|
|
|
|
$
|
167,272
|
|
|
Service
|
|
|
|
113,871
|
|
|
|
|
|
109,461
|
|
|
|
Total revenue
|
|
|
|
296,326
|
|
|
|
|
|
276,733
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
Product
|
|
|
|
60,284
|
|
|
|
|
|
59,235
|
|
|
Service
|
|
|
|
42,637
|
|
|
|
|
|
45,038
|
|
|
|
Total cost of revenue
|
|
|
|
102,921
|
|
|
|
|
|
104,273
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
193,405
|
|
|
|
|
|
172,460
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
Product
|
|
|
|
67.0
|
%
|
|
|
|
|
64.6
|
%
|
|
Service
|
|
|
|
62.6
|
%
|
|
|
|
|
58.9
|
%
|
|
|
Total gross margin
|
|
|
|
65.3
|
%
|
|
|
|
|
62.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
79,396
|
|
|
|
|
|
69,559
|
|
|
Sales and marketing
|
|
|
|
80,141
|
|
|
|
|
|
78,365
|
|
|
General and administrative
|
|
|
|
43,937
|
|
|
|
|
|
40,107
|
|
|
Acquisition-related
|
|
|
|
1,558
|
|
|
|
|
|
93
|
|
|
Restructuring
|
|
|
|
5,625
|
|
|
|
|
|
5,411
|
|
|
|
Total operating expenses
|
|
|
|
210,657
|
|
|
|
|
|
193,535
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
(17,252
|
)
|
|
|
|
|
(21,075
|
)
|
Interest income, net
|
|
|
|
75
|
|
|
|
|
|
405
|
|
Other income, net
|
|
|
|
2,536
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
|
(14,641
|
)
|
|
|
|
|
(20,667
|
)
|
Income tax provision
|
|
|
|
(2,214
|
)
|
|
|
|
|
(1,452
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(16,855
|
)
|
|
|
|
$
|
(22,119
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(0.34
|
)
|
|
|
|
$
|
(0.40
|
)
|
|
Diluted
|
|
|
$
|
(0.34
|
)
|
|
|
|
$
|
(0.40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute loss per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
50,245
|
|
|
|
|
|
55,686
|
|
|
Diluted
|
|
|
|
50,245
|
|
|
|
|
|
55,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
Condensed Consolidated Balance Sheets
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
2013
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
41,157
|
|
|
|
|
$
|
72,423
|
|
|
Short-term investments
|
|
|
|
64,443
|
|
|
|
|
|
138,882
|
|
|
Accounts receivable, net
|
|
|
|
62,943
|
|
|
|
|
|
64,463
|
|
|
Inventory
|
|
|
|
22,114
|
|
|
|
|
|
21,793
|
|
|
Deferred income taxes
|
|
|
|
991
|
|
|
|
|
|
656
|
|
|
Other current assets
|
|
|
|
15,239
|
|
|
|
|
|
15,073
|
|
|
|
Total current assets
|
|
|
|
206,887
|
|
|
|
|
|
313,290
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
17,845
|
|
|
|
|
|
19,102
|
|
Intangible assets, net
|
|
|
|
22,594
|
|
|
|
|
|
10,091
|
|
Goodwill
|
|
|
|
39,263
|
|
|
|
|
|
32,379
|
|
Investments
|
|
|
|
42,407
|
|
|
|
|
|
34,364
|
|
Deferred income taxes
|
|
|
|
1,043
|
|
|
|
|
|
2,121
|
|
Other assets
|
|
|
|
2,596
|
|
|
|
|
|
6,137
|
|
|
|
|
|
|
|
$
|
332,635
|
|
|
|
|
$
|
417,484
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
7,497
|
|
|
|
|
$
|
11,164
|
|
|
Accrued expenses
|
|
|
|
32,149
|
|
|
|
|
|
34,026
|
|
|
Current portion of deferred revenue
|
|
|
|
36,967
|
|
|
|
|
|
41,169
|
|
|
Convertible subordinated note
|
|
|
|
-
|
|
|
|
|
|
2,380
|
|
|
Current portion of long-term liabilities
|
|
|
|
794
|
|
|
|
|
|
672
|
|
|
|
Total current liabilities
|
|
|
|
77,407
|
|
|
|
|
|
89,411
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue
|
|
|
|
8,009
|
|
|
|
|
|
10,528
|
|
Deferred income taxes
|
|
|
|
1,623
|
|
|
|
|
|
922
|
|
Other long-term liabilities
|
|
|
|
5,246
|
|
|
|
|
|
4,371
|
|
|
|
|
Total liabilities
|
|
|
|
92,285
|
|
|
|
|
|
105,232
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
49
|
|
|
|
|
|
53
|
|
|
Additional paid-in capital
|
|
|
|
1,226,226
|
|
|
|
|
|
1,280,655
|
|
|
Accumulated deficit
|
|
|
|
(991,347
|
)
|
|
|
|
|
(974,492
|
)
|
|
Accumulated other comprehensive income
|
|
|
|
5,422
|
|
|
|
|
|
6,036
|
|
|
|
|
Total stockholders' equity
|
|
|
|
240,350
|
|
|
|
|
|
312,252
|
|
|
|
|
|
|
|
$
|
332,635
|
|
|
|
|
$
|
417,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
Condensed Consolidated Statements of Cash Flows
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(16,855
|
)
|
|
$
|
(22,119
|
)
|
|
Adjustments to reconcile net loss to cash flows provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization of property and equipment
|
|
|
|
11,488
|
|
|
|
12,329
|
|
|
|
Amortization of intangible assets
|
|
|
|
4,597
|
|
|
|
4,546
|
|
|
|
Stock-based compensation
|
|
|
|
23,914
|
|
|
|
17,873
|
|
|
|
Impairment of intangible assets
|
|
|
|
-
|
|
|
|
600
|
|
|
|
Loss on disposal of property and equipment
|
|
|
|
292
|
|
|
|
54
|
|
|
|
Deferred income taxes
|
|
|
|
885
|
|
|
|
(553
|
)
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
4,771
|
|
|
|
3,536
|
|
|
|
|
Inventory
|
|
|
|
5,414
|
|
|
|
4,150
|
|
|
|
|
Other operating assets
|
|
|
|
5,077
|
|
|
|
6,200
|
|
|
|
|
Accounts payable
|
|
|
|
(3,759
|
)
|
|
|
(555
|
)
|
|
|
|
Accrued expenses and other long-term liabilities
|
|
|
|
1,657
|
|
|
|
4,768
|
|
|
|
|
Deferred revenue
|
|
|
|
(7,439
|
)
|
|
|
3,278
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
30,042
|
|
|
|
34,107
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
(9,541
|
)
|
|
|
(6,949
|
)
|
|
Business acquisition, net of cash acquired
|
|
|
|
(35,022
|
)
|
|
|
-
|
|
|
Divestiture of business
|
|
|
|
2,000
|
|
|
|
-
|
|
|
Purchases of marketable securities
|
|
|
|
(112,800
|
)
|
|
|
(182,491
|
)
|
|
Sale/maturities of marketable securities
|
|
|
|
179,365
|
|
|
|
196,980
|
|
|
Cash proceeds from the sale of fixed assets
|
|
|
|
268
|
|
|
|
-
|
|
|
|
|
|
Net cash provided by investing activities
|
|
|
|
24,270
|
|
|
|
7,540
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Proceeds from sale of common stock in connection with employee stock
purchase plan
|
|
|
|
2,882
|
|
|
|
1,888
|
|
|
Proceeds from exercise of stock options
|
|
|
|
10,117
|
|
|
|
2,669
|
|
|
Payment of tax withholding obligations related to net share
settlements of restricted stock awards
|
|
|
|
(2,442
|
)
|
|
|
(1,300
|
)
|
|
Repurchase of common stock
|
|
|
|
(93,224
|
)
|
|
|
(59,674
|
)
|
|
Principal payments of capital lease obligations
|
|
|
|
(84
|
)
|
|
|
(117
|
)
|
|
Payment of debt
|
|
|
|
(2,380
|
)
|
|
|
-
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
|
(85,131
|
)
|
|
|
(56,534
|
)
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(447
|
)
|
|
|
(694
|
)
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
|
(31,266
|
)
|
|
|
(15,581
|
)
|
Cash and cash equivalents, beginning of year
|
|
|
|
72,423
|
|
|
|
88,004
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
41,157
|
|
|
$
|
72,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 and divestiture costs
included in the Company's Condensed Consolidated Statements of
Operations and the line items in which these amounts are
reported.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
December 31,
|
|
September 26,
|
|
December 31,
|
|
|
|
|
2014
|
|
2014
|
|
2013
|
Fair value write-up of acquired inventory
|
|
|
|
|
|
|
Cost of revenue - product
|
$
|
-
|
|
$
|
364
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
|
|
|
|
Cost of revenue - product
|
$
|
50
|
|
$
|
104
|
|
$
|
53
|
|
Cost of revenue - service
|
|
377
|
|
|
381
|
|
|
289
|
|
|
Cost of revenue
|
|
427
|
|
|
485
|
|
|
342
|
|
|
|
|
|
|
|
|
|
|
Research and development expense
|
|
1,176
|
|
|
1,521
|
|
|
1,214
|
|
Sales and marketing expense
|
|
1,138
|
|
|
1,747
|
|
|
1,149
|
|
General and administrative expense
|
|
1,960
|
|
|
2,748
|
|
|
2,031
|
|
|
Operating expense
|
|
4,274
|
|
|
6,016
|
|
|
4,394
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation
|
$
|
4,701
|
|
$
|
6,501
|
|
$
|
4,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
Cost of revenue - product
|
$
|
703
|
|
$
|
701
|
|
$
|
560
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
492
|
|
|
494
|
|
|
526
|
|
|
Operating expense
|
|
492
|
|
|
494
|
|
|
526
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amortization of intangible assets
|
$
|
1,195
|
|
$
|
1,195
|
|
$
|
1,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divestiture costs
|
|
|
|
|
|
|
General and administrative
|
$
|
-
|
|
$
|
30
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2014
|
|
2013
|
Fair value write-up of acquired inventory
|
|
|
|
|
Cost of revenue - product
|
$
|
1,782
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
|
|
Cost of revenue - product
|
$
|
337
|
|
$
|
181
|
|
Cost of revenue - service
|
|
1,449
|
|
|
1,050
|
|
|
Cost of revenue
|
|
1,786
|
|
|
1,231
|
|
|
|
|
|
|
|
|
Research and development expense
|
|
5,759
|
|
|
3,616
|
|
Sales and marketing expense
|
|
5,437
|
|
|
4,780
|
|
General and administrative expense
|
|
10,932
|
|
|
8,246
|
|
|
Operating expense
|
|
22,128
|
|
|
16,642
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation
|
$
|
23,914
|
|
$
|
17,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
|
Cost of revenue - product
|
$
|
2,708
|
|
$
|
2,242
|
|
|
|
|
|
|
|
|
Research and development
|
|
-
|
|
|
200
|
|
Sales and marketing
|
|
1,889
|
|
|
2,104
|
|
|
Operating expense
|
|
1,889
|
|
|
2,304
|
|
|
|
|
|
|
|
|
|
|
Total amortization of intangible assets
|
$
|
4,597
|
|
$
|
4,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of intangible assets
|
|
|
|
|
Research and development
|
$
|
-
|
|
$
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divestiture costs
|
|
|
|
|
General and administrative
|
$
|
435
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
December 31,
|
|
|
|
September 26,
|
|
|
|
December 31,
|
|
|
|
|
2014
|
|
|
|
|
|
2014
|
|
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin - product
|
|
|
|
68.4
|
%
|
|
|
|
|
66.4
|
%
|
|
|
|
|
64.2
|
%
|
Stock-based compensation expense
|
|
|
|
0.1
|
%
|
|
|
|
|
0.2
|
%
|
|
|
|
|
0.1
|
%
|
Amortization of intangible assets
|
|
|
|
1.5
|
%
|
|
|
|
|
1.6
|
%
|
|
|
|
|
1.3
|
%
|
Fair value write-up of acquired inventory
|
|
|
|
0.0
|
%
|
|
|
|
|
0.8
|
%
|
|
|
|
|
0.0
|
%
|
Non-GAAP gross margin - product
|
|
|
|
70.0
|
%
|
|
|
|
|
69.0
|
%
|
|
|
|
|
65.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin - service
|
|
|
|
66.0
|
%
|
|
|
|
|
63.8
|
%
|
|
|
|
|
62.5
|
%
|
Stock-based compensation expense
|
|
|
|
1.3
|
%
|
|
|
|
|
1.4
|
%
|
|
|
|
|
0.9
|
%
|
Non-GAAP gross margin - service
|
|
|
|
67.3
|
%
|
|
|
|
|
65.2
|
%
|
|
|
|
|
63.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP total gross margin
|
|
|
|
67.4
|
%
|
|
|
|
|
65.4
|
%
|
|
|
|
|
63.5
|
%
|
Stock-based compensation expense
|
|
|
|
0.6
|
%
|
|
|
|
|
0.7
|
%
|
|
|
|
|
0.4
|
%
|
Amortization of intangible assets
|
|
|
|
0.9
|
%
|
|
|
|
|
0.9
|
%
|
|
|
|
|
0.8
|
%
|
Fair value write-up of acquired inventory
|
|
|
|
0.0
|
%
|
|
|
|
|
0.5
|
%
|
|
|
|
|
0.0
|
%
|
Non-GAAP total gross margin
|
|
|
|
68.9
|
%
|
|
|
|
|
67.5
|
%
|
|
|
|
|
64.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP total gross profit
|
|
|
$
|
51,792
|
|
|
|
|
$
|
47,902
|
|
|
|
|
$
|
48,386
|
|
Stock-based compensation expense
|
|
|
|
427
|
|
|
|
|
|
485
|
|
|
|
|
|
342
|
|
Amortization of intangible assets
|
|
|
|
703
|
|
|
|
|
|
701
|
|
|
|
|
|
560
|
|
Fair value write-up of acquired inventory
|
|
|
|
-
|
|
|
|
|
|
364
|
|
|
|
|
|
-
|
|
Non-GAAP total gross profit
|
|
|
$
|
52,922
|
|
|
|
|
$
|
49,452
|
|
|
|
|
$
|
49,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development expense
|
|
|
$
|
18,810
|
|
|
|
|
$
|
20,693
|
|
|
|
|
$
|
17,473
|
|
Stock-based compensation expense
|
|
|
|
(1,176
|
)
|
|
|
|
|
(1,521
|
)
|
|
|
|
|
(1,214
|
)
|
Non-GAAP research and development expense
|
|
|
$
|
17,634
|
|
|
|
|
$
|
19,172
|
|
|
|
|
$
|
16,259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP sales and marketing expense
|
|
|
$
|
21,428
|
|
|
|
|
$
|
20,350
|
|
|
|
|
$
|
19,769
|
|
Stock-based compensation expense
|
|
|
|
(1,138
|
)
|
|
|
|
|
(1,747
|
)
|
|
|
|
|
(1,149
|
)
|
Amortization of intangible assets
|
|
|
|
(492
|
)
|
|
|
|
|
(494
|
)
|
|
|
|
|
(526
|
)
|
Non-GAAP sales and marketing expense
|
|
|
$
|
19,798
|
|
|
|
|
$
|
18,109
|
|
|
|
|
$
|
18,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP general and administrative expense
|
|
|
$
|
9,855
|
|
|
|
|
$
|
10,901
|
|
|
|
|
$
|
10,486
|
|
Stock-based compensation expense
|
|
|
|
(1,960
|
)
|
|
|
|
|
(2,748
|
)
|
|
|
|
|
(2,031
|
)
|
Divestiture costs
|
|
|
|
-
|
|
|
|
|
|
(30
|
)
|
|
|
|
|
-
|
|
Non-GAAP general and administrative expense
|
|
|
$
|
7,895
|
|
|
|
|
$
|
8,123
|
|
|
|
|
$
|
8,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating expenses
|
|
|
$
|
53,737
|
|
|
|
|
$
|
52,617
|
|
|
|
|
$
|
48,445
|
|
Stock-based compensation expense
|
|
|
|
(4,274
|
)
|
|
|
|
|
(6,016
|
)
|
|
|
|
|
(4,394
|
)
|
Amortization of intangible assets
|
|
|
|
(492
|
)
|
|
|
|
|
(494
|
)
|
|
|
|
|
(526
|
)
|
Divestiture costs
|
|
|
|
-
|
|
|
|
|
|
(30
|
)
|
|
|
|
|
-
|
|
Acquisition-related expense
|
|
|
|
(252
|
)
|
|
|
|
|
-
|
|
|
|
|
|
(93
|
)
|
Restructuring
|
|
|
|
(3,392
|
)
|
|
|
|
|
(673
|
)
|
|
|
|
|
(624
|
)
|
Non-GAAP operating expenses
|
|
|
$
|
45,327
|
|
|
|
|
$
|
45,404
|
|
|
|
|
$
|
42,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP loss from operations
|
|
|
$
|
(1,945
|
)
|
|
|
|
$
|
(4,715
|
)
|
|
|
|
$
|
(59
|
)
|
Fair value write-up of acquired inventory
|
|
|
|
-
|
|
|
|
|
|
364
|
|
|
|
|
|
-
|
|
Stock-based compensation expense
|
|
|
|
4,701
|
|
|
|
|
|
6,501
|
|
|
|
|
|
4,736
|
|
Amortization of intangible assets
|
|
|
|
1,195
|
|
|
|
|
|
1,195
|
|
|
|
|
|
1,086
|
|
Divestiture costs
|
|
|
|
-
|
|
|
|
|
|
30
|
|
|
|
|
|
-
|
|
Acquisition-related expense
|
|
|
|
252
|
|
|
|
|
|
-
|
|
|
|
|
|
93
|
|
Restructuring
|
|
|
|
3,392
|
|
|
|
|
|
673
|
|
|
|
|
|
624
|
|
Non-GAAP income from operations
|
|
|
$
|
7,595
|
|
|
|
|
$
|
4,048
|
|
|
|
|
$
|
6,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP loss from operations as a percentage of revenue
|
|
|
|
-2.5
|
%
|
|
|
|
|
-6.4
|
%
|
|
|
|
|
-0.1
|
%
|
Fair value write-up of acquired inventory
|
|
|
|
0.0
|
%
|
|
|
|
|
0.5
|
%
|
|
|
|
|
0.0
|
%
|
Stock-based compensation expense
|
|
|
|
6.1
|
%
|
|
|
|
|
8.9
|
%
|
|
|
|
|
6.3
|
%
|
Amortization of intangible assets
|
|
|
|
1.6
|
%
|
|
|
|
|
1.6
|
%
|
|
|
|
|
1.4
|
%
|
Divestiture costs
|
|
|
|
0.0
|
%
|
|
|
|
*
|
|
|
|
|
0.0
|
%
|
Acquisition-related expense
|
|
|
|
0.3
|
%
|
|
|
|
|
0.0
|
%
|
|
|
|
|
0.1
|
%
|
Restructuring
|
|
|
|
4.4
|
%
|
|
|
|
|
0.9
|
%
|
|
|
|
|
0.8
|
%
|
Non-GAAP income from operations as a percentage of revenue
|
|
|
|
9.9
|
%
|
|
|
|
|
5.5
|
%
|
|
|
|
|
8.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss)
|
|
|
$
|
(2,192
|
)
|
|
|
|
$
|
(5,213
|
)
|
|
|
|
$
|
272
|
|
Fair value write-up of acquired inventory
|
|
|
|
-
|
|
|
|
|
|
364
|
|
|
|
|
|
-
|
|
Stock-based compensation expense
|
|
|
|
4,701
|
|
|
|
|
|
6,501
|
|
|
|
|
|
4,736
|
|
Amortization of intangible assets
|
|
|
|
1,195
|
|
|
|
|
|
1,195
|
|
|
|
|
|
1,086
|
|
Divestiture costs
|
|
|
|
-
|
|
|
|
|
|
30
|
|
|
|
|
|
-
|
|
Acquisition-related expense
|
|
|
|
252
|
|
|
|
|
|
-
|
|
|
|
|
|
93
|
|
Restructuring
|
|
|
|
3,392
|
|
|
|
|
|
673
|
|
|
|
|
|
624
|
|
Non-GAAP net income
|
|
|
$
|
7,348
|
|
|
|
|
$
|
3,550
|
|
|
|
|
$
|
6,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share or (loss) per share
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
$
|
(0.04
|
)
|
|
|
|
$
|
(0.11
|
)
|
|
|
|
$
|
-
|
|
Non-GAAP
|
|
|
$
|
0.15
|
|
|
|
|
$
|
0.07
|
|
|
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute diluted earnings per share or (loss) per
share
|
|
|
|
|
|
|
GAAP shares used to compute diluted earnings per share or
(loss) per share
|
|
|
|
49,361
|
|
|
|
|
|
49,291
|
|
|
|
|
|
54,699
|
|
Non-GAAP shares used to compute diluted earnings per share
|
|
|
|
50,067
|
|
|
|
|
|
50,260
|
|
|
|
|
|
54,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Less than 0.01%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
|
2014
|
|
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin - product
|
|
|
|
|
67.0
|
%
|
|
|
|
|
64.6
|
%
|
Stock-based compensation expense
|
|
|
|
|
0.2
|
%
|
|
|
|
|
0.1
|
%
|
Amortization of intangible assets
|
|
|
|
|
1.4
|
%
|
|
|
|
|
1.3
|
%
|
Fair value write-up of acquired inventory
|
|
|
|
|
1.0
|
%
|
|
|
|
|
0.0
|
%
|
Non-GAAP gross margin - product
|
|
|
|
|
69.6
|
%
|
|
|
|
|
66.0
|
%
|
|
|
|
|
|
|
|
|
|
GAAP gross margin - service
|
|
|
|
|
62.6
|
%
|
|
|
|
|
58.9
|
%
|
Stock-based compensation expense
|
|
|
|
|
1.2
|
%
|
|
|
|
|
0.9
|
%
|
Non-GAAP gross margin - service
|
|
|
|
|
63.8
|
%
|
|
|
|
|
59.8
|
%
|
|
|
|
|
|
|
|
|
|
GAAP total gross margin
|
|
|
|
|
65.3
|
%
|
|
|
|
|
62.3
|
%
|
Stock-based compensation expense
|
|
|
|
|
0.6
|
%
|
|
|
|
|
0.4
|
%
|
Amortization of intangible assets
|
|
|
|
|
0.9
|
%
|
|
|
|
|
0.9
|
%
|
Fair value write-up of acquired inventory
|
|
|
|
|
0.6
|
%
|
|
|
|
|
0.0
|
%
|
Non-GAAP total gross margin
|
|
|
|
|
67.4
|
%
|
|
|
|
|
63.6
|
%
|
|
|
|
|
|
|
|
|
|
GAAP total gross profit
|
|
|
|
$
|
193,405
|
|
|
|
|
$
|
172,460
|
|
Stock-based compensation expense
|
|
|
|
|
1,786
|
|
|
|
|
|
1,231
|
|
Amortization of intangible assets
|
|
|
|
|
2,708
|
|
|
|
|
|
2,242
|
|
Fair value write-up of acquired inventory
|
|
|
|
|
1,782
|
|
|
|
|
|
-
|
|
Non-GAAP total gross profit
|
|
|
|
$
|
199,681
|
|
|
|
|
$
|
175,933
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development expense
|
|
|
|
$
|
79,396
|
|
|
|
|
$
|
69,559
|
|
Stock-based compensation expense
|
|
|
|
|
(5,759
|
)
|
|
|
|
|
(3,616
|
)
|
Amortization of intangible assets
|
|
|
|
|
-
|
|
|
|
|
|
(200
|
)
|
Impairment of intangible assets
|
|
|
|
|
-
|
|
|
|
|
|
(600
|
)
|
Non-GAAP research and development expense
|
|
|
|
$
|
73,637
|
|
|
|
|
$
|
65,143
|
|
|
|
|
|
|
|
|
|
|
GAAP sales and marketing expense
|
|
|
|
$
|
80,141
|
|
|
|
|
$
|
78,365
|
|
Stock-based compensation expense
|
|
|
|
|
(5,437
|
)
|
|
|
|
|
(4,780
|
)
|
Amortization of intangible assets
|
|
|
|
|
(1,889
|
)
|
|
|
|
|
(2,104
|
)
|
Non-GAAP sales and marketing expense
|
|
|
|
$
|
72,815
|
|
|
|
|
$
|
71,481
|
|
|
|
|
|
|
|
|
|
|
GAAP general and administrative expense
|
|
|
|
$
|
43,937
|
|
|
|
|
$
|
40,107
|
|
Stock-based compensation expense
|
|
|
|
|
(10,932
|
)
|
|
|
|
|
(8,246
|
)
|
Divestiture costs
|
|
|
|
|
(435
|
)
|
|
|
|
|
-
|
|
Non-GAAP general and administrative expense
|
|
|
|
$
|
32,570
|
|
|
|
|
$
|
31,861
|
|
|
|
|
|
|
|
|
|
|
GAAP operating expenses
|
|
|
|
$
|
210,657
|
|
|
|
|
$
|
193,535
|
|
Stock-based compensation expense
|
|
|
|
|
(22,128
|
)
|
|
|
|
|
(16,642
|
)
|
Amortization of intangible assets
|
|
|
|
|
(1,889
|
)
|
|
|
|
|
(2,304
|
)
|
Impairment of intangible assets
|
|
|
|
|
-
|
|
|
|
|
|
(600
|
)
|
Divestiture costs
|
|
|
|
|
(435
|
)
|
|
|
|
|
-
|
|
Acquisition-related expense
|
|
|
|
|
(1,558
|
)
|
|
|
|
|
(93
|
)
|
Restructuring
|
|
|
|
|
(5,625
|
)
|
|
|
|
|
(5,411
|
)
|
Non-GAAP operating expenses
|
|
|
|
$
|
179,022
|
|
|
|
|
$
|
168,485
|
|
|
|
|
|
|
|
|
|
|
GAAP loss from operations
|
|
|
|
$
|
(17,252
|
)
|
|
|
|
$
|
(21,075
|
)
|
Fair value write-up of acquired inventory
|
|
|
|
|
1,782
|
|
|
|
|
|
-
|
|
Stock-based compensation expense
|
|
|
|
|
23,914
|
|
|
|
|
|
17,873
|
|
Amortization of intangible assets
|
|
|
|
|
4,597
|
|
|
|
|
|
4,546
|
|
Impairment of intangible assets
|
|
|
|
|
-
|
|
|
|
|
|
600
|
|
Divestiture costs
|
|
|
|
|
435
|
|
|
|
|
|
-
|
|
Acquisition-related expense
|
|
|
|
|
1,558
|
|
|
|
|
|
93
|
|
Restructuring
|
|
|
|
|
5,625
|
|
|
|
|
|
5,411
|
|
Non-GAAP income from operations
|
|
|
|
$
|
20,659
|
|
|
|
|
$
|
7,448
|
|
|
|
|
|
|
|
|
|
|
GAAP loss from operations as a percentage of revenue
|
|
|
|
|
-5.8
|
%
|
|
|
|
|
-7.6
|
%
|
Fair value write-up of acquired inventory
|
|
|
|
|
0.6
|
%
|
|
|
|
|
0.0
|
%
|
Stock-based compensation expense
|
|
|
|
|
8.1
|
%
|
|
|
|
|
6.5
|
%
|
Amortization of intangible assets
|
|
|
|
|
1.6
|
%
|
|
|
|
|
1.6
|
%
|
Impairment of intangible assets
|
|
|
|
|
0.0
|
%
|
|
|
|
|
0.2
|
%
|
Divestiture costs
|
|
|
|
|
0.1
|
%
|
|
|
|
|
0.0
|
%
|
Acquisition-related expense
|
|
|
|
|
0.5
|
%
|
|
|
|
|
0.0
|
%
|
Restructuring
|
|
|
|
|
1.9
|
%
|
|
|
|
|
2.0
|
%
|
Non-GAAP income from operations as a percentage of revenue
|
|
|
|
|
7.0
|
%
|
|
|
|
|
2.7
|
%
|
|
|
|
|
|
|
|
|
|
GAAP Other income, net
|
|
|
|
$
|
2,536
|
|
|
|
|
$
|
3
|
|
Litigation settlement - prepaid licenses
|
|
|
|
|
(2,250
|
)
|
|
|
|
|
-
|
|
Non-GAAP Other income, net
|
|
|
|
$
|
286
|
|
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
|
|
|
|
$
|
(16,855
|
)
|
|
|
|
$
|
(22,119
|
)
|
Fair value write-up of acquired inventory
|
|
|
|
|
1,782
|
|
|
|
|
|
-
|
|
Stock-based compensation expense
|
|
|
|
|
23,914
|
|
|
|
|
|
17,873
|
|
Amortization of intangible assets
|
|
|
|
|
-
|
|
|
|
|
|
4,546
|
|
Impairment of intangible assets
|
|
|
|
|
4,597
|
|
|
|
|
|
600
|
|
Divestiture costs
|
|
|
|
|
435
|
|
|
|
|
|
-
|
|
Acquisition-related expense
|
|
|
|
|
1,558
|
|
|
|
|
|
93
|
|
Restructuring
|
|
|
|
|
5,625
|
|
|
|
|
|
5,411
|
|
Litigation settlement - prepaid licenses
|
|
|
|
|
(2,250
|
)
|
|
|
|
|
-
|
|
Non-GAAP net income
|
|
|
|
$
|
18,806
|
|
|
|
|
$
|
6,404
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share or (loss) per share
|
|
|
|
|
|
|
GAAP
|
|
|
|
$
|
(0.34
|
)
|
|
|
|
$
|
(0.40
|
)
|
Non-GAAP
|
|
|
|
$
|
0.37
|
|
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute diluted earnings per share or (loss) per
share
|
|
|
|
|
|
|
GAAP shares used to compute loss per share
|
|
|
|
|
50,245
|
|
|
|
|
|
55,686
|
|
Non-GAAP shares used to compute diluted earnings per share
|
|
|
|
|
50,996
|
|
|
|
|
|
56,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SONUS NETWORKS, INC.
|
Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook
|
(in millions, except percentages and per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
March 27, 2015
|
|
|
|
|
|
|
Range
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
74
|
|
|
|
|
$
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
|
|
|
|
|
|
GAAP outlook
|
|
|
|
65.4
|
%
|
|
|
|
|
65.9
|
%
|
|
Stock-based compensation expense
|
|
|
|
0.7
|
%
|
|
|
|
|
0.7
|
%
|
|
Amortization of intangible assets
|
|
|
|
0.9
|
%
|
|
|
|
|
0.9
|
%
|
|
|
Non-GAAP outlook
|
|
|
|
67.0
|
%
|
|
|
|
|
67.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
GAAP outlook
|
|
|
$
|
55.1
|
|
|
|
|
$
|
55.6
|
|
|
Stock-based compensation expense
|
|
|
|
(6.3
|
)
|
|
|
|
|
(6.3
|
)
|
|
Amortization of intangible assets
|
|
|
|
(0.3
|
)
|
|
|
|
|
(0.3
|
)
|
|
Restructuring
|
|
|
|
(1.0
|
)
|
|
|
|
|
(1.0
|
)
|
|
|
Non-GAAP outlook
|
|
|
$
|
47.5
|
|
|
|
|
$
|
48.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share
|
|
|
|
|
|
|
|
|
GAAP outlook
|
|
|
$
|
(0.14
|
)
|
|
|
|
$
|
(0.14
|
)
|
|
Stock-based compensation expense
|
|
|
|
0.13
|
|
|
|
|
|
0.13
|
|
|
Amortization of intangible assets
|
|
|
|
0.02
|
|
|
|
|
|
0.02
|
|
|
Restructuring
|
|
|
|
0.02
|
|
|
|
|
|
0.02
|
|
|
|
Non-GAAP outlook
|
|
|
$
|
0.03
|
|
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2015
|
|
|
|
|
|
|
Range
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
326
|
|
|
|
|
$
|
330
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share
|
|
|
|
|
|
|
|
|
GAAP outlook
|
|
|
$
|
(0.10
|
)
|
|
|
|
$
|
(0.06
|
)
|
|
Stock-based compensation expense
|
|
|
|
0.54
|
|
|
|
|
|
0.54
|
|
|
Amortization of intangible assets
|
|
|
|
0.08
|
|
|
|
|
|
0.08
|
|
|
Restructuring
|
|
|
|
0.02
|
|
|
|
|
|
0.02
|
|
|
|
Non-GAAP outlook
|
|
|
$
|
0.54
|
|
|
|
|
$
|
0.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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