NMSS Nms Communications (MM)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS

AND SIMILAR PLANS PURSUANT TO SECTION 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Mark One)

A.            Full title of the plan and the address of the plan, if different from that of the issuer named below:

NMS Communications Corporation 401(k) Plan

B.            Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

NMS Communications Corporation

100 Crossing Boulevard
Framingham, Massachusetts 01702

NMS Communications Corporation 401(k) Plan

Index of Financial Statements and Supplemental Schedule

Note:       Supplemental schedules required by the Employee Retirement Income Security Act of 1974 that have not been included herein are not applicable.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Participants and Administrator of
NMS Communications Corporation 401(k) Plan

We have audited the accompanying statements of net assets available for benefits of NMS Communications Corporation 401(k) Plan (the “Plan”) as of December 31, 2007 and 2006, and the related statement of changes in net assets available for benefits for the year ended December 31, 2007. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of NMS Communications Corporation 401(k) Plan as of December 31, 2007 and 2006, and the changes in net assets available for benefits for the year ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The  supplemental schedule of assets (held at end of year) as of December 31, 2007 is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

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NMS Communications Corporation 401(k) Plan

Statements of Net Assets Available for Benefits

The accompanying notes are an integral part of these financial statements.

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NMS Communications Corporation 401(k) Plan

Statement of Changes in Net Assets Available for Benefits

The accompanying notes are an integral part of these financial statements.

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NMS Communications Corporation 401(k) Plan

Notes to Financial Statements

1.  Description of Plan

The following description of the NMS Communications Corporation 401(k) Plan (the “Plan”) provides only general information. Participants should refer to the “Plan Agreement” for a more complete description of the Plan’s provisions.

General

The Plan is a defined contribution plan covering all full-time and part-time employees of NMS Communications Corporation (the “Company”). Regular full-time employees and regular part-time employees regularly scheduled to work 20 or more hours per week are eligible on their hire date. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).

Effective January 2, 2006, the Plan terminated its relationship with MassMutual Life Insurance Company and Investors Bank & Trust and transferred its assets to Putnam Investments (“Putnam”) and appointed Mercer Trust Company (“MTC”) as the Plan’s trustee. MTC is a wholly-owned subsidiary of Mercer, Inc. (“Mercer”). Mercer and Putnam are both wholly-owned subsidiaries of Marsh McLennan Companies, Inc.

Contributions

Each year, participants in the Plan may contribute up to 50 percent of pretax annual compensation including cash bonuses, subject to certain limitations. The Company will match 50 percent of the participant’s contribution up to six percent of the participant’s compensation. Company matching contributions are accrued and paid on a bi-weekly basis. The Company may also elect to make additional discretionary contributions; however, it did not do so during the years ended December 31, 2007 or 2006. Contributions are subject to certain limitations.

Participant Accounts

Each participant’s account is credited with the participant’s contribution and allocations of (a) the Company’s contribution and (b) Plan earnings, and charged with an allocation of administrative expenses. Allocations are based on salary deferral elections, or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Vesting

Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the Company’s matching contribution and discretionary contribution is based on years of continuous service. A participant is 100 percent vested after three years of continuous service. A participant automatically becomes fully vested upon attainment of normal retirement age, upon disability or death, or upon termination of the Plan.

Investment Options

Upon enrollment in the Plan, a participant may direct employee contributions, in increments of one percent, among the investment options made available under the Plan. Employer matching contributions are allocated according to these same employee contribution selections.

Participant Loans

Participant loans are permitted under the Plan. A participant may apply for a loan of up to 50% of his or her vested account balance. The minimum loan amount is $1,000 and the maximum is $50,000. New loan interest rates are set at the current prime rate plus one percent. Interest rates on outstanding loans ranged from 5.0% to 9.5% at December 31, 2007 and December 31, 2006. The loans are secured by the balances in the participant’s accounts.

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Payment of Benefits

Upon termination of service due to death, disability, retirement, separation from service or proven hardship, a participant may elect to receive the value of the vested interest in his or her account in the form of an installment or a lump-sum distribution.

Forfeitures

The Company will use all forfeited amounts to reduce future employer contributions. At December 31, 2007 and 2006, forfeited non-vested accounts totaled $7,418 and $64,996, respectively. Also in the year ended December 31, 2007, employer contributions were reduced by $71,792 from forfeited non-vested accounts. There were no such reductions to employer contributions in the year ended December 31, 2006.

2.  Summary of Significant Accounting Policies

Basis of Accounting

The financial statements are presented on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Investment Valuation and Income Recognition

Except as described below, investments in common stock, common-collective trusts and mutual funds are valued at their fair value and net asset value, respectively, which represents the value at which units/shares may be purchased or redeemed. Loans to participants are valued at cost plus accrued interest, which approximates fair value.

Purchases and sales of securities are recorded on a trade-date basis. Interest and dividend income is recorded as earned, on the accrual basis.

As described in Financial Accounting Standards Board (“FASB”) Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the “FSP”), investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of a plan. As required by the FSP, the statement of net assets available for benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The statement of changes in net assets available for benefits is prepared on a contract value basis.

Payment of Benefits

Benefits and withdrawals are recorded when paid.

Expenses

The Company pays certain administrative expenses on behalf of the Plan.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosures of contingent assets and liabilities. Actual results could differ from those estimates.

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New Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (the “Standard”).  The Standard defines fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements.  The Standard applies to fair value measurements already required or permitted by existing standards.  The Standard is effective for financial statements issued for fiscal years beginning after November 15, 2007.  Management is currently evaluating what impact the adoption of the Standard will have on the Plan’s financial statements.

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3.   Investments

The following tables present the fair value of the Plan’s investments:

*                                          Investments that represent 5% or more of the Plan’s assets at the end of the year.

During 2007, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $1,769,636 as follows:

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In 2006, the Plan entered into the Putnam Stable Value Fund, a benefit-responsive investment contract. Putnam maintains the contributions in a general account. The account is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The guaranteed investment contract issuer is contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Plan.

As discussed in Note 2, because the guaranteed investment contract is fully benefit-responsive, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the guaranteed investment contract. Contract value, as reported to the Plan by Putnam, represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. The contract value of the Plan’s investment in the Putnam Stable Value Fund was $1,617,602 and $1,353,957 at December 31, 2007 and 2006, respectively.

There are no reserves against contract value for credit risk of the contract issuer or otherwise. During the year ended December 31, 2007, the average yield and crediting interest rates were 3.44 percent and 5.31 percent, respectively. The crediting interest rate is based on a formula agreed upon with the issuer, but may not be less than 0%. Such interest rates are reviewed on a quarterly basis for resetting.

Certain events limit the ability of the Plan to transact at contract value with the issuer. Such events include the following: (1) amendments to the Plan documents (including complete or partial plan termination or merger with another plan), (2) changes to the Plan’s prohibition on competing investment options or deletion of equity wash provisions, (3) bankruptcy of the Plan sponsor or other plan sponsor events (for example, divestitures or spin-offs of a subsidiary) that cause a significant withdrawal from the Plan, or (4) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The Plan administrator does not believe that the occurrence of any such value event, which would limit the Plan’s ability to transact at contract value with participants, is probable.

4.  Tax Status

The Company adopted a Non-Standardized Prototype Plan, (the “Prototype Plan”) that received a favorable opinion letter from the Internal Revenue Service dated August 9, 2002, which letter stated that the Prototype Plan is designed in accordance with applicable sections of the Internal Revenue Code of 1986, as amended (the “Code”) as of that date. Since then, the Plan has been amended. The Plan administrator believes that the Plan is currently being operated in compliance with the applicable requirements of the Code and therefore, the related trust is exempt from taxation.

5.  Plan Termination

Although it has not expressed any intent to do so, the Company may terminate the Plan at any time. In the event of a termination of the Plan all amounts credited to a participant’s account will be fully vested and would be paid out to the participant as directed by the Company.

6.  Related Party Transactions

The Plan invests in the common stock of the Company (the “Common Stock”) and transactions in the Common Stock are party-in-interest transactions. During the year ended December 31, 2007, the Plan purchased no shares of the Common Stock and sold shares of the Common Stock having an aggregate value of $52,206. There were no dividends received from the Common Stock during the years ended December 31, 2007 and 2006. Effective June 1, 2005, the Plan no longer offered the choice to Plan participants to contribute to the NMS Communications Stock Fund.

The Plan invests in the mutual funds of Putnam, the Plan custodian, and transactions in these investments are party-in interest transactions.

Loans to participants qualify as party-in-interest transactions.

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7.  Risks and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the value of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.

8.  Reconciliation of Financial Statements to Form 5500

The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:

The following is a reconciliation of the Plan’s net increase in net assets available for benefits per the financial statements to the Form 5500:

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NMS Communications Corporation 401(k) Plan

Schedule of Assets (Held at End of Year)

Schedule H, Part IV, Line 4i—Form 5500

December 31, 2007

*                                          Parties-in-interest to the Plan

**                                   Cost omitted for participant-directed investments

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SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Plan administrator has caused this annual report on form 11-K to be signed on its behalf by the undersigned hereunto duly authorized.

June 27, 2008

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