Sonus Networks Announces Agenda For Investor Meeting

The information under “Operating expenses” and “(Loss) earnings per share” in the third financial table entitled “Reconciliation of Non-GAAP and GAAP Financial Measures – Outlook – Consolidated” has been corrected for the Year ended December 31, 2012.

The corrected release reads:

SONUS NETWORKS ANNOUNCES AGENDA FOR INVESTOR MEETING

Reiterates guidance for the third quarter, fourth quarter and full year fiscal 2012

Provides additional guidance for recently completed Network Equipment Technologies, Inc. (“NET”) acquisition

Sonus Networks, Inc. (Nasdaq: SONS), a global leader in SIP communications, today is holding a meeting for the investment community at the Nasdaq MarketSite. As part of the presentation, the Company plans to reiterate its outlook for the third quarter, fourth quarter and full year 2012 for the Sonus business (excluding the impact of the August 24, 2012 acquisition of NET) and to provide guidance for the recently acquired NET business for the third quarter, fourth quarter and full year 2012. The Company will also preside over the NASDAQ Stock Market Opening Bell today at 9:30 am (Eastern Time).

As previously announced, the investor day event will be held at the NASDAQ MarketSite, 4 Times Square, New York, NY. The program will include presentations by Sonus Networks President and Chief Executive Officer Raymond P. Dolan and other members of the senior management team. Advance registration is required to attend the meeting in person. Investors who are unable to attend the meeting in person, but who would like to ask a question can email questions to SONS2012@sonusnet.com.

Agenda:
09:00-10:00       Registration & Breakfast      
10:00-11:00 Introduction Ray Dolan, President and Chief Executive Officer
Market Opportunity Todd Abbott, EVP, Strategy and Go to Market
Technology Tony Scarfo, Sr. VP, Technology Development
11:00-11:30 Q&A and Break
11:30-12:30 SBC David Tipping, General Manager, SBC
Go to Market Todd Abbott, EVP, Strategy and Go to Market
Financials Moe Castonguay, Chief Financial Officer
12:30-13:00 Q&A / Webcast End
13:00-14:00 Networking Lunch

The Company’s outlook is based on current indications for its business, which may change. A statement on the use of non-GAAP financial measures and a reconciliation of the non-GAAP to GAAP outlook are included at the end of this press release.

For the third quarter of 2012, management provides the following outlook on a non-GAAP basis:

  • Total revenue of $51 million to $53 million excluding NET and $56 million to $58 million including NET.
  • SBC product revenue of $14 million to $16 million excluding NET and $16 million to $18 million including NET.
  • Total SBC revenue, including maintenance and services, of $17 million to $19 million excluding NET and $19 million to $21 million including NET.
  • Gross margins of 58% to 59% excluding NET and 57% to 58% including NET.
  • Operating expenses of $39 million to $40 million excluding NET and $42 million to $43 million including NET.
  • Loss per share of $0.03 both excluding and including NET.
  • Basic shares of 280 million.
  • Cash and investments of approximately $300 million.

For the fourth quarter of 2012, management provides the following outlook on a non-GAAP basis:
  • Total revenue of $84 million to $86 million excluding NET and $94 million to $98 million including NET.
  • SBC product revenue of $19 million to $22 million excluding NET and $23.5 million to $27.5 million including NET.
  • Total SBC revenue of $22 million to $25 million excluding NET and $27 million to $31 million including NET.
  • Gross margins of 58% to 59% excluding NET and 57% to 58% including NET.
  • Operating expenses of $38 million to $39 million excluding NET and $44 million to $45 million including NET
  • Net income per share of $0.04 excluding NET and net income per share of $0.03 to $0.04 including NET.
  • Basic and diluted shares of 282 million.
  • Cash and investments of $290 million to $300 million.

For the year ending December 31, 2012, management provides the following outlook on a non-GAAP basis:
  • Total revenue of $257 million to $261 million excluding NET and $272 million to $278 million including NET.
  • SBC product revenue of $60 million to $65 million excluding NET and $66.5 million to $72.5 million including NET.
  • Total SBC revenue of $75 million to $80 million excluding NET and $82 million to $88 million including NET.
  • Gross margins of approximately 60% excluding NET and 59% to 60% including NET.
  • Operating expenses of $165 million to $166 million excluding NET and $174 million to $175 million including NET.
  • Loss per share of $0.04 excluding NET and loss per share of $0.04 to $0.05 including NET.
  • Basic shares of 280 million.

Investor Day Live Webcast:

The Investor Day webcast will be available live on the Investor Relations page of the company’s website http://investors.sonusnet.com/. Presentations will also be available on the website at the conclusion of the presentation. A recorded replay of the webcast will be available on the same Investor Relations page shortly after the conclusion of the Investor Day.

Opening Bell Live Webcast:

A live webcast of the NASDAQ Opening Bell will be available beginning at 9:20 am (Eastern Time) http://www.nasdaq.com/about/marketsitetowervideo.asx.

Tags:

Sonus Networks, Sonus, SONS, Investor Day, Analyst Day, Technology, Internet, Communications, Conference, IP-based network solutions, SBC, 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 and enterprises to capture and retain users and 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 release, including the guidance and outlook for the third quarter, fourth quarter and full year fiscal 2012, 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.

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; our ability to recruit and retain key personnel; difficulties supporting our new strategic focus on channel sales; difficulties retaining and expanding our customer base; difficulties leveraging market opportunities; restructuring activities; our ability to realize benefits from acquisitions (including with respect to the 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; failure or circumvention of our controls and procedures; and the additional factors 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

To supplement its condensed consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company discloses certain non-GAAP financial measures, including Gross margin, Operating expenses and loss per share/diluted earnings per share. These non-GAAP financial measures are not presented in accordance with, nor are they intended to be a substitute for, GAAP. 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.

We use a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, making operating decisions, planning and forecasting future periods, and determining payments under compensation programs. We consider the use of these non-GAAP financial measures helpful in assessing the core performance of our continuing operations and liquidity, and when planning and forecasting future periods. We define continuing operations as the ongoing revenues and expenses of the business, excluding certain items. These excluded items for the periods presented are stock-based compensation expense, amortization of intangible assets, acquisition-related costs and restructuring expense. We do not include any income tax effect of non-GAAP adjustments as we were unable to recognize a tax benefit on domestic losses incurred in any of the periods presented; accordingly, no adjustment to income taxes for non-GAAP items is required.

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 the Company’s GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in the Company’s financial results for the foreseeable future.

Stock-Based Compensation

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 operating results to our historical results and to other companies in our industry.

Acquisition-Related Costs

On August 24, 2012, we completed our acquisition of Network Equipment Technologies, Inc., a Delaware corporation (“NET”), pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated as of June 18, 2012. We exclude certain expense items resulting from both pending and completed acquisitions, including legal, accounting and advisory fees associated with acquisitions; costs related to integrating the acquired businesses; and restructuring costs. We believe that excluding these acquisition-related expenses from our operating results, which we would not otherwise have incurred in the normal course of our business operations, facilitates the comparison of our financial results to our historical operating results and to other companies in our industry.

Amortization of Intangible Assets

On January 15, 2010, we entered into an intellectual property asset purchase and license agreement with Winphoria, Inc. (“Winphoria”) and Motorola, Inc. (“Motorola”) to purchase certain of Winphoria’s software code and related patents and to license certain other intellectual property from Winphoria and Motorola. The purchase price included an initial payment of $2.0 million and future potential royalty payments dependent upon future sales of certain of our products that include the Winphoria technology that was purchased or licensed. In connection with this transaction we recorded identifiable intangible assets which we have classified as developed technology, which is being amortized on a straight-line basis over five years, which is the expected useful life of the technology.

In the third quarter of fiscal 2012, we expect to record intangible assets related to the acquisition of NET, which will be amortized over their estimated useful lives.

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, and provides meaningful information regarding our liquidity.

Restructuring

We expect to record approximately $2.3 million of restructuring expense in the third quarter of fiscal 2012 for severance and related costs. We believe that excluding restructuring expenses facilitates the comparison of our financial results to our historical operating results and to other companies in our industry and provides meaningful information regarding our liquidity.
SONUS NETWORKS, INC.
Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook - Sonus, Excluding NET
(in millions, except percentages and per share amounts)
(unaudited)
     
                 
Three months ended Three months ended Year ended
September 28, 2012 (A) December 31, 2012 (A) December 31, 2012 (A)
Range Range Range
 
Revenue $ 51   $ 53   $ 84   $ 86   $ 257   $ 261  
 
Gross margin
GAAP outlook 57.6 % 58.6 % 57.8 % 58.8 % 59.6 % 59.7 %
Stock-based compensation   0.4 %   0.4 %   0.2 %   0.2 %   0.4 %   0.3 %
Non-GAAP outlook   58.0 %   59.0 %   58.0 %   59.0 %   60.0 %   60.0 %
 
Operating expenses (B)
GAAP outlook $ 45.4 $ 46.4 $ 42.0 $ 43.0 $ 180.3 $ 181.3
Stock-based compensation (2.5 ) (2.5 ) (3.9 ) (3.9 ) (10.1 ) (10.1 )
Amortization of intangible assets (0.1 ) (0.1 ) (0.1 ) (0.1 ) (0.4 ) (0.4 )
Acquisition-related costs (1.5 ) (1.5 ) - - (2.5 ) (2.5 )
Restructuring   (2.3 )   (2.3 )   -     -     (2.3 )   (2.3 )
Non-GAAP outlook $ 39.0   $ 40.0   $ 38.0   $ 39.0   $ 165.0   $ 166.0  
 
(Loss) earnings per share
GAAP outlook $ (0.05 ) $ (0.05 ) $ 0.03 $ 0.03 $ (0.10 ) $ (0.10 )
Stock-based compensation expense 0.01 0.01 0.01 0.01 0.04 0.04
Amortization of intangible assets - (C) - (C) - (C) - (C) - (C) - (C)
Acquisition-related costs - (C) - (C) - - 0.01 0.01
Restructuring   0.01     0.01     -     -     0.01     0.01  
Non-GAAP outlook $ (0.03 ) $ (0.03 ) $ 0.04   $ 0.04   $ (0.04 ) $ (0.04 )
 
 
(A) Outlook as provided in the Company's earnings release reporting its results for the second quarter of fiscal 2012 and filed under current Report on Form 8-K dated August 7, 2012.
(B) Excludes stock-based compensation expense related to anticipated equity grants. Also excludes any potential expense related to the consolidation of redundant facilities.
(C) Less than $0.01 impact on loss per share.
SONUS NETWORKS, INC.
Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook - NET
(in millions, except percentages and per share amounts)
(unaudited)
     
                 
Three months ended Three months ended Year ended
September 28, 2012 December 31, 2012 December 31, 2012
Range Range Range
 
Revenue $ 5   $ 5   $ 10   $ 12   $ 15   $ 17  
 
Gross margin
GAAP outlook 45.0 % 50.0 % 45.0 % 50.0 % 45.0 % 50.0 %
Stock-based compensation   0.0 %   0.0 %   0.0 %   0.0 %   0.0 %   0.0 %
Non-GAAP outlook   45.0 %   50.0 %   45.0 %   50.0 %   45.0 %   50.0 %
 
Operating expenses (A)
GAAP outlook $ 3.6 $ 3.6 $ 7.8 $ 7.8 $ 11.4 $ 11.4
Stock-based compensation (0.2 ) (0.2 ) (0.5 ) (0.5 ) (0.7 ) (0.7 )
Amortization of intangible assets   (0.4 )   (0.4 )   (1.3 )   (1.3 )   (1.7 )   (1.7 )
Non-GAAP outlook $ 3.0   $ 3.0   $ 6.0   $ 6.0   $ 9.0   $ 9.0  
 
(Loss) earnings per share
GAAP outlook $ - $ - $ (0.01 ) $ - $ (0.02 ) $ (0.01 )
Stock-based compensation expense - (B) - (B) - (B) - (B) - (B) - (B)
Amortization of intangible assets   -   (B)   -   (B)   -   (B)   -   (B)   0.01     0.01  
Non-GAAP outlook $ -   $ -   $ (0.01 ) $ -   $ (0.01 ) $ -  
 
 
(A) Excludes stock-based compensation expense related to anticipated equity grants. Also excludes any potential expense related to the consolidation of redundant facilities.
(B) Less than $0.01 impact on loss per share.
SONUS NETWORKS, INC.
Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook - Consolidated
(in millions, except percentages and per share amounts)
(unaudited)
     
                 
Three months ended Three months ended Year ended
September 28, 2012 December 31, 2012 December 31, 2012
Range Range Range
 
Revenue $ 56   $ 58   $ 94   $ 98   $ 272   $ 278  
 
Gross margin
GAAP outlook 56.6 % 57.7 % 56.8 % 57.8 % 58.9 % 59.9 %
Stock-based compensation   0.4 %   0.3 %   0.2 %   0.2 %   0.1 %   0.1 %
Non-GAAP outlook   57.0 %   58.0 %   57.0 %   58.0 %   59.0 %   60.0 %
 
Operating expenses (A)
GAAP outlook $ 49.0 $ 50.0 $ 49.8 $ 50.8 $ 191.7 $ 192.7
Stock-based compensation (2.7 ) (2.7 ) (4.4 ) (4.4 ) (10.8 ) (10.8 )
Amortization of intangible assets (0.5 ) (0.5 ) (1.4 ) (1.4 ) (2.1 ) (2.1 )
Acquisition-related costs (1.5 ) (1.5 ) - - (2.5 ) (2.5 )
Restructuring   (2.3 )   (2.3 )   -     -     (2.3 )   (2.3 )
Non-GAAP outlook $ 42.0   $ 43.0   $ 44.0   $ 45.0   $ 174.0   $ 175.0  
 
(Loss) earnings per share
GAAP outlook $ (0.05 ) $ (0.05 ) $ 0.02 $ 0.03 $ (0.12 ) $ (0.11 )
Stock-based compensation expense 0.01 0.01 0.01 0.01 0.04 0.04
Amortization of intangible assets - (B) - (B) - (B) - (B) 0.01 0.01
Acquisition-related costs - (B) - (B) - - 0.01 0.01
Restructuring   0.01     0.01     -     -     0.01     0.01  
Non-GAAP outlook $ (0.03 ) $ (0.03 ) $ 0.03   $ 0.04   $ (0.05 ) $ (0.04 )
 

(A)

Excludes stock-based compensation expense related to anticipated equity grants. Also excludes any potential expense related to the consolidation of redundant facilities.
 

(B)

Less than $0.01 impact on loss per share.

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