8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 25, 2005

SONICWALL, INC.

(Exact name of registrant as specified in its charter)

California
(State or Other Jurisdiction of
Incorporation) 000-27723
(Commission File Number) 77-0270079
(I.R.S. Employer
Identification Number)

1143 Borregas Avenue
Sunnyvale, California 94089
(408) 745-9600
(Address, including zip code and telephone number, of principal executive offices)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	ITEM 2.02.          RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
	ITEM 8.01.          OTHER EVENTS
	ITEM 9.01.          FINANCIAL STATEMENTS AND EXHIBITS.
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1

ITEM 2.02.          RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

     On July 25, 2005, the Registrant issued a press release announcing its financial results for its fiscal quarter ended June 30, 2005. A copy of the Registrant’s press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

     The information in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. This information shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 8.01.          OTHER EVENTS

     The Company has changed the scheduled date for its annual meeting of shareholders (the “2005 Annual Meeting”) as previously announced. The new date of the 2005 Annual Meeting is October 26, 2005, the meeting will commence at 8.00 am PDT at the headquarters offices at the Company at 1143 Borregas Avenue in Sunnyvale, California 94089. The date of record is August 31, 2005.

ITEM 9.01.          FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits

Exhibit Number	Description
99.1*	Text of press release issued by SonicWALL, Inc., dated July 25, 2005

* This exhibit is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SONICWALL, INC
By:	/s/ Robert D. Selvi
	Chief Financial Officer

Dated: July 25, 2005

EXHIBIT INDEX

Exhibit Number	Description
99.1*	Text of press release issued by SonicWALL, Inc., dated July 25, 2005

* This exhibit is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

EX-99.1

Exhibit 99.1

SONICWALL REPORTS SECOND QUARTER 2005 FINANCIAL RESULTS

Company grows revenue both sequentially and year over year; generates $10.3 million in cash flow
from operations and $0.05 pro forma earnings per share

Sunnyvale, Calif. — July 25, 2005 — SonicWALL, Inc. (Nasdaq: SNWL), today reported revenue of $33.1 million, pro forma earnings of $0.05 per diluted share, and cash flow from operations of $10.3 million for the second quarter ended June 30, 2005. Revenue increased 2% compared to $32.4 million for the second quarter of 2004 and 4% compared to $31.8 million for the first quarter of 2005.

Net earnings for the second quarter of 2005 calculated in accordance with U.S. generally accepted accounting principles (GAAP) were $1.2 million, or $0.02 per diluted share, compared to the GAAP net loss of $824,000, or $(0.01) per share, for the second quarter of 2004 and compared to GAAP net earnings of $1.7 million, or $0.02 per diluted share, for the first quarter of 2005. GAAP net earnings for the second quarter of 2005 include $1.1 million of amortization of purchased technology in cost of goods sold, $703,000 of amortization of intangible assets in operating expenses, and $10,000 of stock-based compensation expense. GAAP net loss for the second quarter of 2004 includes $1.1 million of amortization of purchased technology in cost of goods sold, $787,000 of amortization of intangible assets in operating expenses, $115,000 in restructuring charges, and $33,000 of stock-based compensation expense. GAAP net earnings for the first quarter of 2005 include $1.1 million of amortization of purchased technology in cost of goods sold, $703,000 of amortization of intangible assets in operating expenses, and $75,000 of stock-based compensation contra expense.

Pro forma (non-GAAP) net earnings for the second quarter of 2005 were $3.1 million, or $0.05 per diluted share compared to pro forma net earnings for the second quarter of 2004 of $1.2 million, or $0.02 per diluted share. Pro forma net earnings for the first quarter of 2005 were $3.4 million, or $0.05 per diluted share. Pro forma net earnings and losses exclude amortization of purchased technology in cost of goods sold, amortization of intangible assets in operating expenses, restructuring charges, and stock-based compensation expense, which are described in more detail in the preceding paragraph, as well as in the unaudited financial statements attached to this press release.

“We are pleased to report revenue growth for the second quarter of 2005 led by substantial growth in our license and services business, in line with our strategy of focusing on subscription and software revenues,” said

Matthew Medeiros, president and chief executive officer at SonicWALL. “Our North American business was particularly strong, led by growth in our Unified Threat Management solutions.”

Guidance for Q3 2005
For the third quarter of 2005, SonicWALL expects revenue to be in the range of $33 million to $34.5 million. The Company expects diluted earnings per share to be in the range of $0.02 to $0.04 on a pro forma (non-GAAP) basis. On a GAAP basis, inclusive of a total of approximately $1.8 million in combined amortization of purchased intangibles in cost of goods sold, amortization of intangible assets in operating expenses, stock-based compensation, and restructuring charges, the Company expects earnings per share to be in the range of $0.00 to $0.02. This is the only statement SonicWALL will be giving during the quarter with respect to guidance, unless a decision is made to provide an update.

Conference Call
A conference call to discuss first quarter 2005 results will take place today 1:30 p.m. PDT (4:30 p.m. EDT). SonicWALL President and CEO Matt Medeiros and SonicWALL CFO Rob Selvi will host the call. A web cast of the live call can be accessed at http://www.sonicwall.com/company/webcast.html. A replay of the call will be available beginning at approximately 3 p.m. PDT (6 p.m. EDT) today at the Company’s website or by telephone through Aug. 1, 2005 at (800) 642-1687 (domestic) or (706) 645-9291 (international). The conference call ID number is # 7821610.

2005 Annual Meeting
SonicWALL also announced today that it will hold its 2005 annual meeting of shareholders on Wednesday, Oct. 26, 2005 at 8 a.m. PDT at the Company headquarters at 1143 Borregas Ave., Sunnyvale, CA. SonicWALL will host a conference call during the annual meeting. To access the live call, dial (800) 252-5474 (domestic) or (706) 643-1538 (international) and provide conference ID number 8156438. A replay of the conference call will be available through Nov. 2, 2005 at (800) 642-1687 (domestic) or (706) 645-9291 (international).

Use of Non-GAAP Financial Measures
To supplement our consolidated financial statements presented in accordance with GAAP, SonicWALL uses non-GAAP measures of pro forma results of operations. These non-GAAP results are provided to enhance the user’s overall understanding of our current financial performance and our prospects for the future. We believe the non-GAAP results provide useful information to both management and investors by excluding certain expenses. The non-GAAP measures are included to provide investors and management with an alternative method for assessing SonicWALL’s operating results. In addition, since we have historically reported non-GAAP results to the investment community, we believe the inclusion of non-GAAP numbers provides

consistency in our financial reporting. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States.

Cautionary Note Regarding Forward-looking Statements
Certain statements in this press release are “forward-looking statements.” The forward-looking statements include without limitation statements regarding our ability to continue to grow subscription services revenue, continued market acceptance of our Unified Threat Management solution and our expected revenue for the third quarter of 2005 and the GAAP and non-GAAP earnings per share for the third quarter of 2005. These forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect SonicWALL’s actual results include, but are not limited to, increased competition in each of the geographic areas in which we do business; exchange rate fluctuations; global macroeconomic and geopolitical conditions; increased competition across all of the market segments in which SonicWALL participates; new product and service introductions by our competitors; significant turnover of our key employees; and unpredictability in the rate of growth of spending of our customers for products and services that SonicWALL provides. In addition, for a more detailed description of the risks and uncertainties that could cause our actual results to differ materially from those anticipated in the forward-looking statements, please see the “Risk Factors” described in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K/A for the year ended December 31, 2004. All forward-looking statements included in this release are based upon information available to SonicWALL as of the date of the release, and we assume no obligation to update any such forward-looking statement.

About SonicWALL, Inc.
SonicWALL, Inc. is a leading provider of integrated network security, mobility, and productivity solutions for the SMB, enterprise, e-commerce, education, healthcare, retail/point-of-sale, and government markets. Core technologies include firewall, VPN, wireless, gateway anti-virus/anti-spyware/intrusion detection and prevention, SSL, desktop anti-virus, and content filtering, along with award-winning security management solutions. Together, these products and technologies provide the most comprehensive distributed enforcement architecture available. SonicWALL, Inc. is headquartered in Sunnyvale, CA. SonicWALL trades on the NASDAQ exchange under the symbol SNWL. For more information, contact SonicWALL at +1 (408) 745-9600 or visit the company web site at http://www.sonicwall.com/. NOTE: SonicWALL is a registered trademark of SonicWALL, Inc. Other product and company names mentioned herein may be trademarks and/or registered trademarks of their respective companies.

For additional information, contact:

Denise Franklin	Mary McEvoy
SonicWALL, Inc. Investor Relations	SonicWALL, Inc. Media Relations
+ 1 (408) 752-7907	+1 (408) 962-7110
dfranklin@sonicwall.com	mmcevoy@sonicwall.com

SonicWALL, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2005			2004			2005			2004
				As restated						As restated
Revenue:
Product	$	19,032		$	22,848		$	37,640		$	45,760
License and Service		14,054			9,566			27,251			18,489
Total Revenue		33,086			32,414			64,891			64,249
Cost of Revenue:
Product		6,879			7,877			13,333			15,870
License and Service		1,932			1,727			3,903			3,388
Amortization of Purchased Technology		1,136			1,136			2,272			2,272
Total Cost of Revenue		9,947			10,740			19,508			21,530
Gross Margin		23,139			21,674			45,383			42,719
Operating Expenses:
Research and Development		5,637			6,187			11,093			12,167
Sales and Marketing		12,946			12,557			25,117			23,959
General and Administrative		3,997			3,525			7,547			7,315
Amortization of Purchased Intangibles		703			787			1,406			1,599
Restructuring Charges		—			115			—			128
Stock-Based Compensation		10			33			(65	)		180
Total Operating Expenses		23,293			23,204			45,098			45,348
Income (loss) from Operations		(154	)		(1,530	)		285			(2,629	)
Other Income, net		1,564			785			2,920			1,620
Income (loss) before Taxes		1,410			(745	)		3,205			(1,009	)
Benefit from (Provision for) Income Taxes		(171	)		(79	)		(292	)		(164	)
Net Income (loss)	$	1,239		$	(824	)	$	2,913		$	(1,173	)
Net Income (loss) Per Share:
Basic	$	0.02		$	(0.01	)	$	0.05		$	(0.01	)
Diluted	$	0.02		$	(0.01	)	$	0.04		$	(0.01	)
Shares Used in Per Share Calculations:
Basic		63,995			71,134			64,656			70,592
Diluted		65,595			71,134			66,560			70,592

SonicWALL, Inc.
PRO FORMA (Non-GAAP) CONSOLIDATED STATEMENTS OF OPERATIONS
Excluding Amortization of Purchased Technology,
Amortization of Purchased Intangibles,
Restructuring Charges and Stock-Based Compensation
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2005			2004			2005			2004
	As restated						As restated
Revenue:
Product	$	19,032		$	22,848		$	37,640		$	45,760
License and Service		14,054			9,566			27,251			18,489
Total Revenue		33,086			32,414			64,891			64,249
Cost of Revenue:
Product		6,879			7,877			13,333			15,870
License and Service		1,932			1,727			3,903			3,388
Total Cost of Revenue		8,811			9,604			17,236			19,258
Gross Margin		24,275			22,810			47,655			44,991
Operating Expenses:
Research and Development		5,637			6,187			11,093			12,167
Sales and Marketing		12,946			12,557			25,117			23,959
General and Administrative		3,997			3,525			7,547			7,315
Total Operating Expenses		22,580			22,269			43,757			43,441
Pro Forma Income from Operations		1,695			541			3,898			1,550
Other Income, net		1,564			785			2,920			1,620
Pro Forma Income before Taxes		3,259			1,326			6,818			3,170
Benefit from (Provision for) Income Taxes		(171	)		(79	)		(292	)		(164	)
Pro Forma Net Income	$	3,088		$	1,247		$	6,526		$	3,006
Pro Forma Net Income Per Share:
Basic	$	0.05		$	0.02		$	0.10		$	0.04
Diluted	$	0.05		$	0.02		$	0.10		$	0.04
Shares Used in Per Share Calculations:
Basic		63,995			71,134			64,656			70,592
Diluted		65,595			74,890			66,560			74,996

Reconciliation of the above pro forma amounts to GAAP net loss:

Pro forma Net Income	$	3,088	$	1,247		$	6,526		$	3,006
Amortization of Purchased Technology		1,136		1,136			2,272			2,272
Amortization of Purchased Intangibles		703		787			1,406			1,599
Restructuring Charges		—		115			—			128
Stock-Based Compensation		10		33			(65	)		180
Net effect of Pro Forma Adjustments		1,849		2,071			3,613			4,179
Net Income (loss)	$	1,239	$	(824	)	$	2,913		$	(1,173	)

SonicWALL, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	June 30,		December 31,
	2005		2004
	(Unaudited)		As restated
ASSETS
Current Assets:
Cash and cash equivalents	$	34,457	$	23,446
Short term investments		197,929		229,226
Accounts receivable, net		19,381		14,204
Inventories		3,345		2,191
Prepaid expenses and other		3,330		2,069
Total Current Assets		258,442		271,136
Property and equipment, net		2,380		3,395
Goodwill		97,953		97,953
Purchased intangibles, net		9,988		13,667
Other assets		522		694
	$	369,285	$	386,845
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	7,507	$	5,737
Accrued compensation and related benefits		7,746		7,342
Other accrued liabilities		4,031		5,117
Income taxes payable		530		500
Deferred revenue		37,387		30,173
Total Current Liabilities		57,201		48,869
Shareholders’ Equity		312,084		337,976
	$	369,285	$	386,845

SONICWALL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2005			2004			2005			2004
	As restated						As restated
Net cash provided by operating activities	$	10,266		$	628		$	8,850		$	2,052
Cash flows from Investing activities:
Purchase of property and equipment		(142	)		(1,204	)		(319	)		(1,844	)
Maturity and sale of short-term investments, net		(6,695	)		(50,026	)		31,051			(21,165	)
Net cash (used in) provided by investing activities		(6,837	)		(51,230	)		30,732			(23,009	)
Cash flows from financing activities:
Issuance of common stock under employee stock options and purchase plans		442			204			1,647			10,922
Repurchase of common stock		(290	)		—			(30,218	)		—
Net cash provided by (used in) financing activities		152			204			(28,571	)		10,922
Net increase (decrease) in cash and cash equivalents		3,581			(50,398	)		11,011			(10,035	)
Cash equivalents at beginning of period		30,876			70,830			23,446			30,467
Cash equivalents at end of period	$	34,457		$	20,432		$	34,457		$	20,432