8-K 1 qtrfoureightk2003.htm 10KWizard - SEC filings

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OF 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported) January 29, 2004

 

 

Sunrise Telecom Incorporated

(Exact name of registrant as specified in its charter)

 

 

Delaware

  

000-17781

  

77-0181864

(State or other jurisdiction

of incorporation)

  

(Commission File

Number)

  

(IRS Employer

Identification No.)

 

302 Enzo Drive, San Jose, California

  

95138

(Address of principal executive offices)

  

(Zip Code)

 

Registrant's telephone number, including area code  (408) 363-8000

 

Not Applicable

(Former name or former address if changed since last report)

 

 

Item 7. Financial Statements and Exhibits.

 

(c) Exhibits

 

Number

   

Exhibit

99.1

   

Press Release issued by Sunrise Telecom Incorporated on January 29, 2004.

 

Item 12. Results of Operations and Financial Condition

 

 

On January 29, 2004, we issued a press release and are holding a conference call regarding our financial results for the quarter and year ended December 31, 2003. A copy of the press release is furnished as Exhibit 99.1 to this report. We are making forward-looking statements regarding our first quarter 2004 sales in the press release and during the conference call.

 

In accordance with General Instruction B.6, the information in this Current Report on Form 8-K, including exhibit 99.1, shall not be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such filing.

 

2

 

SIGNATURES

 

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

 

       

SUNRISE TELECOM INCORPORATED

(Registrant)

Date: January 29, 2004        

      

By:

  

/s/    PAUL A. MARSHALL        

           

Paul A. Marshall

Chief Operating Officer and

Acting Chief Financial Officer

 

3

 

EXHIBIT 99.1

 

At Sunrise Telecom Incorporated

Paul Marshall

Acting Chief Financial Officer

(408) 363-8000

 

For Immediate Release

 

Sunrise Telecom Reports $20.4 Million Sales and $2.0 Million Earnings for Fourth Quarter 2003

 

- Backlog at $6.4 million -
- Board of Directors institutes annual dividend; $0.05 per share declared for 2004-
- First quarter 2004 sales projected between $12 and 15 million -

 

SAN JOSE, CA, January 29, 2004-Sunrise Telecom Incorporated (Nasdaq: SRTI), a leading provider of service verification equipment for the telecommunications and cable broadband industries, reported sales for the fourth quarter of 2003 of $20.4 million, compared with $12.3 million in the third quarter of 2003 and $16.5 million in the prior year fourth quarter. Diluted net income per share was $0.04, compared with a net loss of $0.03 per share last quarter and with $0.00 per share for the fourth quarter of 2002. At quarter end, backlog decreased to $6.4 million, compared with $7.5 million at the end of the third quarter of 2003 and $4.4 million at the end of the fourth quarter of 2002.

 

Sales for the full year 2003 were $54.9 million, compared with $54.3 million for 2002. Net loss per share for 2003 was $0.08 compared with a net loss per share of $0.10 in 2002. Cash generated by operations for the year was $5.8 million.  That positive cash flow, combined with a stable to improving outlook, recently enacted favorable tax laws, the company's cash position, and anticipated needs for cash led the Board of Directors to institute an annual dividend for the company, declaring a $2.5 million, or $0.05 per share, cash dividend to be paid to shareholders of record as of February 10, 2004.

" We experienced a phenomenal order rate at the end of the third quarter," stated Paul Chang, President & CEO of Sunrise Telecom. "It stayed strong right through the end of the year. I'm really proud of our production and sales people who worked closely together and prepared well for some large, late orders, delivering products prior to the end of the fiscal year to satisfy the needs of our customers. Our SunSet MTT led the way in configurations optimized for DSL Internet service deployment by field technicians. The MTT has established a new standard of modularity and lightweight utility for the field technician handling today's broad basket of services. We see interesting new opportunities for it in 2004. "

Outlook

The company expects sales of $12 to $15 million in the first quarter on the strength of year-end backlog. In general, the company's telecom and cable TV customers' networks and services remain in flux, creating new needs for service verification and diagnostic solutions. The company sees opportunity in Internet Protocol services, business data services, fiber to the home roll out, digital network capacity expansions, wireless service evolution, wave-division maintenance needs in the metropolitan network, and network technician redeployment.  This opportunity leads to a stable to improving outlook.

Conference Call

Sunrise Telecom will host a conference call today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time), during which President and Chief Executive Officer, Paul Chang, and Acting Chief Financial Officer, Paul Marshall, will further discuss these results and our outlook. To listen to the call, please dial (800) 915-4836 at least five minutes prior to the start. This call can also be accessed via web cast at the Investors/Governance section of the company's Web site at www.sunrisetelecom.com. A web replay will also be available for at least two weeks at this same web address.

 

SUMMARY OF FINANCIAL RESULTS

 

(In thousands, except per share data, unaudited)

 

  For the Three Months Ended
  

For the Twelve Months Ended

  
 

December 31, 2003

September 30, 2003

December 31, 2002

   

December 31, 2003

     

December 31, 2002

  

Net Sales

 $ 20,444 $ 12,388 $ 16,461   

$

54,949

  

$

54,333

 

Operating income (loss)

 $ 2,822 $ (2,026 ) $ (178 )   

$

(7,220

)

   

$

(9,227

) 

Net income (loss)

 $ 1,974 $ (1,276 ) $ (6 )   

$

(3,870

)

   

$

(4,999

) 

Diluted EPS 

 $ 0.04 $ (0.03 ) $

-  

   

$

(0.08

)

   

$

(0.10

) 

Shares outstanding (diluted)

 50,913 49,819 49,459   

 

49,750

 

   

 

49,854

 

 

About Sunrise Telecom Incorporated

 

Sunrise Telecom Incorporated manufactures and markets service verification equipment to pre-qualify, verify, and diagnose telecommunications, cable broadband, and Internet networks. The company's products offer broad functionality, leading-edge technology, and compact size to test a variety of new broadband services. These services include wireline access (including DSL), fiber optics, cable TV, cable modem, and signaling networks. The company's products are designed to maximize technicians' effectiveness in the field and to provide realistic network simulations for equipment manufacturers to test their products. The company was founded in 1991 and is based in San Jose, California. The company distributes its products throughout six continents through a network of sales representatives, distributors, and a direct sales force. For more information, visit the company's Web site at www.sunrisetelecom.com. 

Sunrise Telecom, SUNSET, and SunSet MTT are registered trademarks of Sunrise Telecom Incorporated. All other trademarks mentioned in this document are the property of their respective owners.

 

Forward-Looking Statements

 

This press release contains forward-looking statements, including sales estimates for the first quarter of 2004, within the meaning of Section 21 E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are made pursuant to safe harbor provisions and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Specific factors that may cause results to differ include the following: the company's ability to manage growth and slowdowns; deferred or lost sales resulting from order cancellations or order changes; deferred or lost sales resulting from the company's lengthy sales cycle; a lack of acceptability or slower than anticipated acceptability for the company's new products and modules; slower than anticipated or poor integration of the operations of acquired entities and businesses; unanticipated delays in product delivery schedules; the uncertain impact of the cost cutting measures the company has taken to date and those that the company may take in the future; unanticipated difficulties associated with international operations; increased competitive pressures; rapid technological change within the telecommunications industry; the company's dependence on a limited number of major customers; the company's dependence on limited source suppliers; a sustained slowdown in the growth of the telecommunications industry; and the loss of key personnel. These risks and uncertainties are described in more detail in the company's reports filed with the Securities and Exchange Commission, including, but not limited to, the company's Form 10-K for the year ended December 31, 2002, and the company's Forms 10-Q for the quarters ended March 31, June 30, and September 30, 2003. The company assumes no obligation to update the forward-looking statements included in this press release.

 

 

-Financial Tables Following-

 

SUNRISE TELECOM INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data, unaudited)

 

    

December 31,
2003

     

December 31,
2002

  

ASSETS

                  

Current assets:

                  

Cash and cash equivalents

   

$

39,885

 

   

$

36,440

 

Marketable securities

   

 

-  

 

   

 

1,023

 

Accounts receivable, net

   

 

13,112

 

   

 

13,019

 

Inventories

   

 

7,286

 

   

 

8,143

 

Prepaid expenses and other assets

   

 

577

 

   

 

708

 

Income taxes receivable

   

 

-  

 

   

 

348

 

Deferred tax assets

   

 

5,604

 

   

 

4,746

 

    
  

Total current assets

   

 

66,646

 

   

 

64,427

 

Property and equipment, net

   

 

26,929

 

   

 

28,126

 

Restricted cash

   

 

106

 

   

 

106

 

Marketable Securities

   

 

2,133

 

   

 

-

 

Goodwill

   

 

12,815

 

   

 

12,656

 

Intangible assets, net

   

 

5,869

 

   

 

8,754

 

Deferred tax assets

   

 

1,660

 

   

 

2,331

 

Loan to related party

   

 

-  

 

   

 

1,051

 

Other assets

   

 

631

 

   

 

1,470

 

    
  

Total assets

   

$

116,607

 

   

$

118,921

 

    
  

LIABILITIES AND STOCKHOLDERS' EQUITY

                  

Current liabilities:

                  

Short-term borrowings and current portion of notes payable

   

$

344

 

   

$

410

 

Accounts payable

   

 

1,729

 

   

 

1,869

 

Other accrued expenses

   

 

8,979

 

   

 

8,296

 

Income taxes payable

   

 

23

 

   

 

-  

 

Deferred revenue

   

 

660

 

   

 

1,081

 

    
  

Total current liabilities

   

 

11,735

 

   

 

11,656

 

    
  

Notes payable, less current portion

   

 

1,133

 

   

 

1,177

 

Deferred revenue

   

 

178

 

   

 

314

 

Other liabilities

   

 

4

 

   

 

5

 

Stockholders' equity:

                  

Common stock, $0.001 par value per share; 175,000,000 shares authorized; 51,827,926 and 51,233,309 shares issued as of December 31, 2003 and December 31, 2002, respectively; 50,076,047 and 49,477,609 shares outstanding as of December 31, 2003 and December 31, 2002, respectively

   

 

50

 

   

 

49

 

Additional paid-in capital

   

 

69,099

 

   

 

68,462

 

Deferred stock-based compensation

   

 

(266

)

   

 

(2,124

)

Retained earnings

   

 

33,293

 

   

 

39,158

 

Accumulated other comprehensive income

   

 

1,381

 

   

 

224

 

    
  

Total stockholders' equity

   

 

103,557

 

   

 

105,769

 

    
  

Total liabilities and stockholders' equity

   

$

116,607

 

   

$

118,921

 

    
  

 

SUNRISE TELECOM INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data, unaudited)

 

 

Three Months

Ended December 31,

   

Twelve Months

Ended December 31,

  
 

2003

2002

   

2003

     

2002

  

Net sales

 $ 20,444 $ 16,461   

$

54,949

 

   

$

54,333

 

Cost of sales 

 6,335 5,854   

 

19,304

 

   

 

18,605

 

 
  
  

Gross profit

 14,109 10,607   

 

35,645

 

   

 

35,728

 

 
  
  

Operating expenses:

                  

Research and development 

 4,063 3,842   

 

16,087

 

   

 

16,741

 

Selling and marketing 

 4,656 4,382   

 

16,964

 

   

 

16,768

 

General and administrative 

 2,568 2,561   

 

9,814

 

   

 

11,446

 

 
  
  

Total operating expenses

 11,287 10,785   

 

42,865

 

   

 

44,955

 

 
  
  

Income (loss) from operations

 2,822 (178 )   

 

(7,220

)

   

 

(9,227

)

Other income, net

 413 167   

 

875

 

   

 

895

 

 
  
  

Income (loss) before income taxes

 3,235 (11 )   

 

(6,345

)

   

 

(8,332

)

Income tax expense (benefit)

 1,261 (5 )   

 

(2,475

)

   

 

(3,333

)

 
  
  

Net income (loss)

 $ 1,974 $ (6 )   

$

(3,870

)

   

$

(4,999

)

 
  
  

Income (loss) per share:

                  

Basic

 $ 0.04 $

-  

   

$

(0.08

)

   

$

(0.10

)

 
  
  

Diluted

 $ 0.04 $

-  

   

$

(0.08

)

   

$

(0.10

)

 
  
  

Shares used in per share computation:

                  

Basic

 49,999 49,459   

 

49,750

 

   

 

49,854

 

 
  
  

Diluted

 50,913 49,459   

 

49,750

 

   

 

49,854

 

 
  
  

 

SUNRISE TELECOM INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

 

    

Twelve Months

Ended December 31

  
    

2003

     

2002

  

Cash flows from operating activities:

                  

Net loss

   

$

(3,870)

 

   

$

(4,999)

 

Adjustments to reconcile net loss to net cash provided by operating activities:

                  

Depreciation and amortization

   

 

7,853

 

   

 

7,164

 

Amortization of deferred stock-based compensation

   

 

1,800

 

   

 

1,861

 

Provision for losses on accounts receivable

   

 

117

 

   

 

1,411

 

Loss on disposal of property and equipment

   

 

414

 

   

 

309

 

Purchased in-process research and development

   

 

37

 

   

 

-

 

Deferred income taxes

   

 

(568)

 

   

 

(2,458)

 

Changes in operating assets and liabilities (net of acquisition balances):

                  

Accounts receivable

   

 

(51)

 

   

 

(386)

 

Inventories

   

 

(8)

 

   

 

439

 

Prepaid expenses and other assets

   

 

(147)

 

   

 

(110)

 

Accounts payable and accrued expenses

   

 

433

 

   

 

(1,864)

 

Income taxes receivable and payable

   

 

350

 

   

 

(1,286)

 

Deferred revenue

   

 

(557)

 

   

 

626

 

    
  

Net cash provided by operating activities

   

 

5,803

 

   

 

707

 

    
  

Cash flows from investing activities:

                  

Purchase of long-term investment

   

 

-

 

   

 

(4)

 

Purchases of marketable securities

   

 

-

 

   

 

(3,311)

 

Sales of marketable securities

   

 

1,036

 

   

 

5,742

 

Capital expenditures

   

 

(2,517)

 

   

 

(2,514)

 

Acquisitions of businesses, net of cash acquired

   

 

(554)

 

   

 

(8,552)

 

Loan to related party

   

 

-

 

   

 

(1,050)

 

Repayment of loan to related party

   

 

1,050

 

   

 

-

 

    
  

Net cash used in investing activities

   

 

(985)

 

   

 

(9,689)

 

    
  

Cash flows from financing activities:

                  

Increase in restricted cash

   

 

-

 

   

 

(106)

 

Net proceeds from (payments on) short-term borrowings

   

 

1

 

   

 

(49)

 

Proceeds from notes payable

   

 

41

 

   

 

273

 

Payments on notes payable

   

 

(440)

 

   

 

(517)

 

Repurchase of common stock

   

 

-

 

   

 

(4,206)

 

Dividends paid

   

 

(1,994)

 

   

 

-

 

Net proceeds from issuance of common stock

   

 

437

 

   

 

727

 

Proceeds from exercise of stock options

   

 

278

 

   

 

166

 

    
  

Net cash used in financing activities

   

 

(1,677)

 

   

 

(3,712)

 

    
  

Effect of exchange rate changes on cash and cash equivalents

   

 

304

 

   

 

421

 

    
  

Net increase (decrease) in cash and cash equivalents

   

 

3,445

 

   

 

(12,273

) 

Cash and cash equivalents at the beginning of the period

   

 

36,440

 

   

 

48,713

 

    
  

Cash and cash equivalents at the end of the period

   

 $

39,885

 

   

 $

36,440

 

    
  

 

SUNRISE TELECOM INCORPORATED

DETAILS OF NET SALES

(In thousands, unaudited)

 

    

Three Months Ended

  
    

December 31,
2003

     

September 30,
2003

     

December 31, 2002

  

By Product:

   

 

 

 

   

 

 

 

   

 

 

 

Wire line access

   

 $

10,301

    50% 

   

 $

4,410

    36% 

   

 $

6,541

    40% 

Fiber optics

   

 

4,573

    22%

   

 

3,253

    26% 

   

 

3,510

    21% 

Cable

   

 

4,415

    22% 

   

 

3,990

    32% 

   

 

5,829

    35% 

Signaling

   

 

1,142

    6%

   

 

543

    5% 

   

 

469

    3% 

Other

   

 

13

    0%

   

 

142

    1% 

   

 

112

    1% 

    
  
  

 

   

$

20,444

    100%  

   

$

12,338

    100%  

   

$

16,461

    100%  

    
  
  

 

 

 

    

Three Months Ended

  
    

December 31,
2003

     

September 30,
2003

     

December 31, 2002

  

By Region:

   

 

 

 

   

 

 

 

   

 

 

 

North America (United States and Canada)

   

 $

13,354

    65% 

   

 $

8,010

    65% 

   

 $

11,399

    69% 

Asia/Pacific

   

 

4,038

    20%

   

 

2,274

    18% 

   

 

2,927

    18% 

Europe/Africa/Middle East

   

 

2,470

    12% 

   

 

1,954

    16% 

   

 

1,876

    11% 

Latin America

   

 

582

    3%

   

 

100

    1% 

   

 

259

    2% 

    
  
  

 

   

$

20,444

    100%  

   

$

12,338

    100%  

   

$

16,461

    100%  

    
  
  

 

 

SUNRISE TELECOM INCORPORATED

SUMMARY OF CERTAIN NONCASH EXPENSES

(In thousands, unaudited)

 

The following expenses have been included in the appropriate lines of Sunrise Telecom Incorporated's Condensed Consolidated Statements of Operations, as is required by accounting principles generally accepted in the United States of America.

 

 

Three Months Ended

  

Twelve Months Ended

 

December 31, 2003

December 31, 2002

   

December 31, 2003

   

December 31, 2002

Amortization of deferred stock-based compensation:

   

 

   

 

Included in cost of sales

 $ 61 $ 69   

$

267

   

$

285

Included in research and development

 102 105   

628

   

701

Included in selling and marketing

 73 155   

534

   

635

Included in general and administrative

 78 (35)   

371

   

240

 
 
   

$ 314 $ 294   

$

1,800

   

$

1,861

 
 
 

Amortization of acquisition-related intangible assets included in general and administrative

 $ 740 $ 874   

$

3,253

   

$

3,334

 
 
 

 

 

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