8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 22, 2003

VERILINK CORPORATION
(Exact name of registrant as specified in charter)

Delaware	000-28562	94-2857548
(State of incorporation)	(Commission File Number)	(IRS Employer
		Identification No.)

127 JETPLEX CIRCLE
MADISON, AL 35758-8989
(Address of principal executive offices / Zip Code)

256.327.2001
(Registrant’s telephone number, including area code)

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

(c) Exhibits.

Exhibit No.	Description
99.1	Press Release, dated July 22, 2003 of Verilink Corporation

Item 9. Regulation FD Disclosure.

      The following information is intended to be included under “Item 12. Results of Operations and Financial Condition” and is included under this Item 9 in accordance with SEC Release No. 33-8216.

      On July 22, 2003, Verilink Corporation (the “Company”) issued a press release regarding its financial results for the quarter and fiscal year ended June 27, 2003. The Company’s press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.

      The information in this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

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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 thereunto duly authorized.

	VERILINK CORPORATION (Registrant)
Dated: July 22, 2003	By:
		C. W. Smith
		Vice President and Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release, dated July 22, 2003 of Verilink Corporation

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EX-99.1

Contact:
Bill Smith
Verilink Corporation
256.327.2204
bsmith@verilink.com

Verilink Reports Fourth Quarter
and Annual Results

MADISON, Ala. July 22, 2003 Verilink Corporation (NasdaqSC: VRLK) today reported its financial results for the fourth quarter and year ended June 27, 2003.

Net sales for the quarter were $7.8 million, up 43% from net sales of $5.4 million in the third quarter of fiscal 2003, and down 3% from net sales of $8 million in the fourth quarter of fiscal 2002. Net sales for the year ended June 27, 2003 were $28.1 million, up 20% from net sales of $23.4 million in fiscal 2002.

The Company reported net income of $917,000 for the quarter compared to net income of $152,000 in the fourth quarter of fiscal 2002. Earnings per share were $0.06 on a primary and diluted basis for the quarter compared to $0.01 for the fourth quarter of fiscal 2002. Net loss in the third quarter of fiscal 2003 was $252,000, or $0.02 per share.

Net income for the fiscal year was $1.5 million compared to a net loss for fiscal 2002 of $17.2 million. Earnings per share for the fiscal year were $0.10 on a primary and diluted basis compared to a net loss per share of $1.09 for fiscal 2002.

“During the year, we focused on returning Verilink to profitability while also achieving positive cash flow. We are pleased with our performance this quarter and for the fiscal year, resulting in increased revenues, profitability, gross margins and cash balances as measured both quarter to sequential quarter and year over year” stated Leigh S. Belden, President and CEO.

Gross margins were 52.8% during the quarter compared to 47.6% in the fourth quarter of fiscal 2002. Compared to the prior sequential quarter, gross margins improved from 42.9% to 52.8% due to product sales mix and higher sales volume. On an annual basis, gross margins improved in fiscal 2003 to 50.4% from 34.2% in fiscal 2002 due to of a number of factors, including higher sales volume, lower manufacturing facility and staff costs, and higher excess inventory reserves provided during fiscal 2002.

Verilink Reports Fourth Quarter Results
Page 2

Operating expenses for the quarter declined by $305,000 to $3.3 million from $3.6 million for the fourth quarter of fiscal 2002. On an annual basis, operating expenses declined by $13.6 million to $11.9 million for fiscal 2003 from $25.5 million for fiscal 2002, which included a charge of $5.4 million for the impairment of long-lived assets.

Cash, cash equivalents and short-term investments increased $1.2 million during the quarter, and increased $2.4 million during the fiscal year, with an ending balance of $8.6 million as of June 27, 2003.

A live Webcast of the conference call discussing Verilink’s fourth quarter and fiscal year results and outlook is scheduled for July 22, 2003 at 4:00 p.m. CDT and is available on the Internet by visiting

http://www.firstcallevents.com/service/ajwz384373824gf12.html

Instructions for listening to this call are contained in the Company’s press release dated July 15, 2003 and may be found on the Company's website. A replay of the conference call will be available through the PR Newswire website and in the “News and Events” section of the Company’s website at http://www.verilink.com.

About Verilink Corporation

Verilink provides customer premises voice and data access solutions to service providers, strategic partners and enterprise customers on a worldwide basis. Verilink is a market leader in voice over packet and TDM solutions including VoIP, VoDSL and VoATM. Data-only offerings include DSU/CSUs, access routers, probes and network monitoring capabilities. The Company's headquarters are located at 127 Jetplex Circle, Madison, AL 35758. Verilink stock trades on the NASDAQ SmallCap Market under the symbol VRLK. To learn more about Verilink, visit the website at http://www.verilink.com.

Note: Statements regarding identified market segments and sales growth opportunities and all other statements in this press release that are not historical facts are forward looking and actual results could differ materially. Among the factors that could cause actual results to differ are the ability to reduce costs and increase sales of acquired product lines, impact of customer concentration and the financial strength of customers, the impact to revenue from future sales opportunities, technological change, and changes in demand for the Company's products. A detailed discussion of other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the Company’s most recent filings with the Securities and Exchange Commission, including its most recent Form 10-K and Form 10-Q. The Company disclaims any duty to update the forward -looking statements contained herein, except as may be required by law.

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Verilink and the Verilink logo are registered trademarks of Verilink Corporation. All other trademarks or registered trademarks are the property of the respective owners.

Verilink Reports Fourth Quarter Results
Page 3

VERILINK CORPORATION

Condensed Consolidated Financial Statements (thousands except per share amounts)
	Three months ended								Year ended
	June 27,				June 28,				June 27,				June 28,
CONSOLIDATED STATEMENTS	2003				2002				2003				2002
OF OPERATIONS	(Unaudited)				(Unaudited)				(Audited)				(Audited)
Net sales		$	7,799			$	8,001			$	28,104			$	23,413
Cost of sales			3,679				4,189				13,939				15,397
Gross profit			4,120				3,812				14,165				8,016
Research and development			1,402				873				3,985				5,505
Selling, general and administrative			1,937				2,757				7,586				14,581
In process research and develoment write-off			–				–				316				–
Impairment of long-lived assets			–				14				–				5,379
Operating income (loss)			781				168				2,278				(17,449	)
Interest and other income, net			175				63				656				503
Interest expense			(39	)			(79	)			(181	)			(294	)
Income (loss) before provision for
income taxes			917				152				2,753				(17,240	)
Provision for income taxes			–				–				–				–
Net income (loss) before accounting
change			917				152				2,753				(17,240	)
Cumulative effect of change in accountng
principle, relating to goodwill			–				–				(1,233	)			–
Net income (loss)		$	917			$	152			$	1,520			$	(17,240	)
Net income (loss) per share:
Basic and Diluted		$	0.06			$	0.01			$	0.10			$	(1.09	)
Cumultaive effect of change in
accounting principle, relating to
goodwill		$	–			$	–			$	(0.08	)		$	–
Shares used to compute net income (loss)
per share – Basic			14,666				15,629				14,871				15,816
Shares used to compute net income (loss)
per share – Diluted			15,166				15,634				15,294				15,816
									June 27,				June 28,
CONSOLIDATED BALANCE SHEETS									2003				2002
Current assets:
Cash and cash equivalents										$	8,503			$	5,630
Short-term investments											101				598
Accounts receivable, net											3,621				4,045
Inventories, net											2,296				1,246
Other current assets											319				354
Total current assets											14,840				11,873
Property held for lease, net											6,462				6,456
Property, plant, and equipment, net											1,350				832
Restricted cash											1,000				1,000
Other assets											2,657				2,019
Total assets										$	26,309			$	22,180
Current liabilities										$	8,461			$	5,583
Long-term debt and capital lease obligations											3,749				4,480
Stockholders' equity											14,099				12,117
Total liabilities and stockholders' equity										$	26,309			$	22,180