SOURCE: Tekelec

Tekelec

May 07, 2009 06:00 ET

Tekelec Announces Q1 2009 Results

Delivers Strong Revenues, Earnings, and Cash Flows From Operations

-- Q1 Revenues of $116.7 million, compared to $118.2 million in Q1 2008;

-- Q1 Orders of $68.0 million, compared to $82.4 million in Q1 2008;

-- Q1 GAAP EPS from Continuing Operations of $0.18 per share, compared to $0.17 in Q1 2008;

-- Q1 Non-GAAP EPS from Continuing Operations of $0.24 per share (as reconciled below), compared to $0.25 per share in Q1 2008;

-- Q1 Cash flow from Continuing Operations of $20.8 million, compared to $38.4 million in Q1 2008.

MORRISVILLE, NC--(Marketwire - May 7, 2009) - Tekelec ("the Company"), (NASDAQ: TKLC), the network signaling, mobile messaging and performance management company, today announced its earnings for the first quarter of 2009.

2009 First Quarter Results from Continuing Operations

Revenue from continuing operations for the first quarter of 2009 was $116.7 million, down 1% compared to $118.2 million for the first quarter of 2008. The Company had orders of $68.0 million for the quarter, down 18% from $82.4 million for the first quarter of 2008. As of March 31, 2009, backlog was $359.3 million compared to $412.1 million as of December 31, 2008 and $381.2 million as of March 31, 2008.

On a GAAP basis, the Company reported income from continuing operations for the first quarter of 2009 of $12.4 million, or $0.18 per diluted share, with the earnings per share up 6% compared to $11.9 million, or $0.17 per diluted share, for the first quarter of 2008. On a non-GAAP basis, net income from continuing operations for the first quarter of 2009 was $16.0 million, or $0.24 per diluted share, with the earnings per share down 4% compared to $18.3 million, or $0.25 per diluted share, for the first quarter of 2008. Please refer to the attached financial statement schedules for a reconciliation of the Company's GAAP operating results to its non-GAAP operating results.

GAAP operating margins from continuing operations were 15% for the first quarter of 2009 and 2008. Non-GAAP operating margins from continuing operations for the first quarter of 2009 were 20% compared with 22% for the first quarter of 2008 and 20% obtained during the full year of 2008.

Frank Plastina, Tekelec's president and chief executive officer, stated, "We were pleased with our operating performance for the quarter. The business generated strong revenues, operating margins and cash flows from operations, particularly considering the current economic conditions. Additionally, we have better visibility into carrier spending plans than we did earlier in the year. Based on this improved visibility we are now providing full year guidance for 2009."

Consolidated Results

On a GAAP basis, consolidated net income for the three months ended March 31, 2009 was $12.4 million, or $0.18 per share, with the earnings per share down 5% compared to $13.5 million, or $0.19 per share for the three months ended March 31, 2008. Included in net income for the first quarter of 2008 is $1.6 million in income from discontinued operations.

Balance Sheet and Liquidity

As of March 31, 2009, the Company's consolidated cash and cash equivalents totaled $231.6 million, compared to $209.4 million at December 31, 2008. Cash flows from continuing operations were $20.8 million for the first quarter of 2009 compared to $38.4 million for the first quarter of 2008. Working capital at March 31, 2009 was $233.8 million, compared to $210.4 million at December 31, 2008 due primarily to the cash flow from operations for the quarter.

At March 31, 2009, the Company continued to hold $91.6 million of Student Loan Auction Rate Securities ("SLARS") carried at fair value in accordance with FAS 115 and FAS 157. In addition, the Company holds a put which gives the Company the right to require UBS to purchase these securities at par plus accrued interest any time between June 30, 2010 and July 2, 2012. This put right was recorded at fair value in accordance with FAS 157 and FAS 159 at $11.2 million. The net change in fair value of these securities during the quarter ended March 31, 2009 generated an unrealized gain of $1.1 million which was recorded in other income for the quarter.

Guidance

Given our current view of capital spending by our customers and projected order entry during 2009, we are extending our guidance to full year 2009. We are also confirming our prior first half 2009 guidance for orders, revenues, gross margins and GAAP and non-GAAP EPS.

We expect revenue for full year 2009 to range between $440 million and $460 million. For the full year 2009, we expect GAAP EPS to range from $0.63 to $0.73 per share and non-GAAP EPS to range from $0.85 to $0.95 per share. In addition, we anticipate that our new orders for the full year 2009 will range between $420 million and $460 million. See table below for reconciliation of non-GAAP to GAAP measures.

                           2009 Guidance

     Revenues              $440M - $460M
   Non-GAAP GM %             65% - 67% *
     GAAP EPS              $0.63 - $0.73
   Non-GAAP EPS            $0.85 - $0.95 *
      Orders               $420M - $460M

*  Excludes $13.2M of estimated stock-based compensation expense, $8.2M of
estimated amortization of purchased technology and acquisition-related
expenses, (net of associated tax impact of approximately $6.9M) which are
included in GAAP EPS.  These Non-GAAP adjustments after tax represent
approximately $0.22 per share.  Of these amounts, approximately $7.0M would
reduce the Non-GAAP gross margin.

Conference Call

Tekelec has scheduled a conference call for Thursday, May 7, 2009, for its management to discuss first quarter 2009 results. The Company also plans to provide on its web site prior to the commencement of the call certain GAAP and non-GAAP information (including GAAP reconciliations) for the first quarter 2009 and 2008 and to discuss during this call certain forward looking information concerning management's outlook for the business.

"Live" Webcast and Replay

Tekelec will host a live webcast of its conference call on Thursday, May 7, 2009 at 8:00 a.m. EDT. To access the webcast, visit Tekelec's web site located at www.tekelec.com, enter the Investor Relations section and click on the webcast icon. A webcast replay will be available at approximately 11:00 a.m. EDT on Thursday, May 7, 2009, and for 90 days thereafter.

Telephone Replay

A telephone replay of the call will also be available for one week after the live webcast by calling either (800) 642-1687 or (706) 645-9291, and entering the conference ID # 94721556.

Non-GAAP Information

Certain non-GAAP financial measures are included in this press release, including a full non-GAAP statement of operations. In the calculation of these measures, Tekelec generally excludes certain items such as amortization of acquired intangibles, restructuring and other charges, non-cash stock-based compensation charges, and unusual, non-recurring gains and charges. Tekelec believes that excluding such items provides investors and management with a representation of the Company's core operating performance and with information useful in assessing its prospects for the future and underlying trends in Tekelec's operating expenditures and continuing operations. Management uses such non-GAAP measures and the non-GAAP statements of operations to (i) evaluate financial results, (ii) manage the Company's operations, and (iii) establish operational goals. Further, each of the individual non-GAAP measures within the non-GAAP statement of operations and the non-GAAP statement of operations itself are utilized by the Company's management and board of directors to assist in determining incentive compensation and evaluating key trends within the business. In addition, since the Company has historically reported non-GAAP measures to the investment community, the Company believes the inclusion of this information provides consistency in our financial reporting. The attachments to this release provide a reconciliation of each of the non-GAAP measures, including those included in the full non-GAAP statement of operations, referred to in this release to the most directly comparable GAAP measure. The non-GAAP financial measures are not meant to be considered a substitute for the corresponding GAAP financial measures.

FORWARD-LOOKING STATEMENTS

Certain statements made in this press release are forward looking, reflect the Company's current intent, belief or expectations and involve certain risks and uncertainties. The Company's actual future performance may differ materially from such expectations as a result of important risk factors, which include, in addition to those identified in the Company's 2008 Form 10-K, 2009 First Quarter Form 10-Q and its other filings with the Securities and Exchange Commission, the effect of the current or escalating economic crisis including the impact of credit availability and currency fluctuations on overall capital spending by our customers, the current or further detrimental changes in general economic, social, or political conditions in the countries in which we operate, the timeliness and functional competitiveness of our product releases, our ability to maintain OEM, partner, and vendor support and supply relationships, business interruptions at the Company, its suppliers or customers resulting from the recent flu pandemic, our ability to compete with other manufacturers that have lower cost bases than ours and/or are partially supported by foreign governments or employ other unfair trade practices, our ability to integrate acquisitions, our ability to protect intellectual property rights or the risk of infringing and litigating with others regarding their intellectual property rights, and changes in the market price of the Company's common stock. The Company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

About Tekelec

Tekelec, a global leader in core multimedia session control and network intelligence, ensures scalable, secure and highly available communications. The company's market-leading signaling solutions enable the interworking of different network applications, technologies and protocols, providing a smooth transition to next-generation networks. Tekelec has more than 20 offices around the world serving customers in more than 100 countries, with corporate headquarters located near Research Triangle Park in Morrisville, N.C., U.S.A. For more information, please visit www.tekelec.com.

Investor Contacts:
Mike Gallentine
Director of Investor Relations
919-461-6825 office
Michael.Gallentine@tekelec.com

Press Contacts:
Joanne Latham
Director, Marketing Communications
919-653-9655 office
Joanne.Latham@tekelec.com



                                  TEKELEC
        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                            Three Months Ended March 31,(1)
                                            ------------------------------
                                                 2009            2008
                                            --------------  --------------
                                                  (Thousands, except
                                                   per share data)
                                            --------------  --------------

Revenues                                    $      116,658  $      118,243
Cost of sales:
   Cost of goods sold                               40,349          39,946
   Amortization of purchased technology              1,517             587
                                            --------------  --------------
      Total cost of sales                           41,866          40,533
                                            --------------  --------------
      Gross profit                                  74,792          77,710
                                            --------------  --------------
Operating expenses:
   Research and development                         25,852          24,408
   Sales and marketing                              17,296          18,204
   General and administrative                       13,423          14,257
   Acquired in-process research and
    development                                          -           2,690
   Restructuring and other                               -             (50)
   Amortization of intangible assets                   318             109
                                            --------------  --------------
      Total operating expenses                      56,889          59,618
                                            --------------  --------------
Income from operations                              17,903          18,092
                                            --------------  --------------
Other income, net:
   Interest income                                     370           3,281
   Interest expense                                    (55)         (1,132)
   Loss on sale of investments                           -              (2)
   Unrealized gain on ARS portfolio and Put
    right, net                                       1,114               -
   Other, net                                       (1,418)           (516)
                                            --------------  --------------
      Total other income, net                           11           1,631
                                            --------------  --------------
Income from continuing operations before
 provision for income taxes                         17,914          19,723
Provision for income taxes                           5,549           7,860
                                            --------------  --------------
Income from continuing operations                   12,365          11,863
Income from discontinued operations, net of
 taxes                                                   -           1,618
                                            --------------  --------------
Net income                                  $       12,365  $       13,481
                                            ==============  ==============

Earnings per share from continuing
 operations:
   Basic                                    $         0.19  $         0.18
   Diluted                                            0.18            0.17

Earnings per share from discontinued
 operations:
   Basic                                    $            -  $         0.02
   Diluted                                               -            0.02

Earnings per share:
   Basic                                    $         0.19  $         0.20
   Diluted                                            0.18            0.19

Weighted average number of shares

 outstanding-continuing operations:
   Basic                                            66,285          67,517
   Diluted                                          66,869          74,199

Weighted average number of shares
 outstanding:
   Basic                                            66,285          67,517
   Diluted                                          66,869          74,199


(1) We operate under a thirteen-week calendar quarter.  For financial
statement presentation purposes, the reporting periods are referred to as
ended on the last day of the calendar quarter.  The accompanying Unaudited
Condensed Consolidated Statements of Operations are for the thirteen weeks
ended April 3, 2009 and March 28, 2008.




                                  TEKELEC
UNAUDITED NON-GAAP STATEMENTS OF OPERATIONS FOR CONTINUING OPERATIONS (1)

                                            Three Months Ended March 31,(3)
                                            -------------------------------
                                                 2009            2008
                                            --------------- ---------------
                                             (Thousands, except per share
                                                        data)
                                            --------------- ---------------

Revenues                                    $       116,658 $       118,243
Cost of sales:
 Cost of goods sold                                  40,123          39,575
                                            --------------- ---------------
Gross profit                                         76,535          78,668
                                            --------------- ---------------
Research and development                             25,095          23,599
Sales and marketing                                  16,556          17,457
General and administrative                           11,614          11,789
                                            --------------- ---------------
    Total operating expenses                         53,265          52,845
                                            --------------- ---------------
Income from operations                               23,270          25,823
Interest and other income, net                           11           1,631
                                            --------------- ---------------
Income from continuing operations before
 provision for income taxes                          23,281          27,454
Provision for income taxes (2)                        7,243           9,197
                                            --------------- ---------------
Net income from continuing operations       $        16,038 $        18,257
                                            =============== ===============

Earnings per share:
Basic                                       $          0.24 $          0.27
Diluted                                                0.24            0.25

Weighted average number of shares
 outstanding:
Basic                                                66,285          67,517
Diluted                                              66,869          74,199

(1) Please refer to the attached reconciliations of the GAAP Statements
of Operations to the above Non-GAAP Statements of Operations.

(2) The above Non-GAAP Statements of Operations assume non-GAAP effective
income tax rates of 31.1% and 33.5% for the three months ended March 31,
2009 and 2008, respectively.

(3) We operate under a thirteen-week calendar quarter.  For financial
statement presentation purposes, the reporting periods are referred to as
ended on the last day of the calendar quarter.  The accompanying Unaudited
Non-GAAP Statements of Operations for Continuing Operations are for the
thirteen weeks ended April 3, 2009 and March 28, 2008.




                                  TEKELEC
              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                                March 31,(1)   December 31,
                                                ------------  -------------
                                                    2009          2008
                                                ------------  -------------
                                                    (Thousands, except
                                                       share data)
                       ASSETS
Current assets:
    Cash and cash equivalents                   $    231,554  $     209,441
    Accounts receivable, net                         136,273        171,630
    Inventories                                       26,233         23,704
    Deferred income taxes                             44,253         44,253
    Deferred costs and prepaid commissions            50,043         56,588
    Prepaid expenses and other current assets         10,581         11,061
                                                ------------  -------------
        Total current assets                         498,937        516,677

Long-term trading securities, at fair value           91,634         87,198
Put right, at fair value                              11,166         18,738
Property and equipment, net                           36,023         34,904
Investments in privately-held companies               22,297         22,297
Deferred income taxes, net                            69,676         71,287
Other assets                                           1,252          1,415
Goodwill                                              40,778         41,741
Intangible assets, net                                35,120         37,703
                                                ------------  -------------
        Total assets                            $    806,883  $     831,960
                                                ============  =============

      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable                            $     28,680  $      25,308
    Accrued expenses                                  30,685         30,723
    Accrued compensation and related expenses         25,477         40,953
    Current portion of deferred revenues             178,532        201,838
    Income taxes payable                               1,732          7,300
    Liabilities of discontinued operations                 -            184
                                                ------------  -------------
        Total current liabilities                    265,106        306,306

Deferred income taxes                                  6,663          7,071
Long-term portion of deferred revenues                 7,377          7,591
Other long-term liabilities                            7,020          6,146
                                                ------------  -------------
        Total liabilities                            286,166        327,114
                                                ------------  -------------
Commitments and Contingencies
Shareholders' equity:
    Common stock, without par value,
     200,000,000 shares authorized; 66,528,436
     and 66,139,690 shares issued and
     outstanding, respectively                       314,160        309,550
    Retained earnings                                206,783        194,418
    Accumulated other comprehensive income
     (loss)                                             (226)           878
                                                ------------  -------------
        Total shareholders' equity                   520,717        504,846
                                                ------------  -------------
        Total liabilities and shareholders'
         equity                                 $    806,883  $     831,960
                                                ============  =============

(1) We operate under a thirteen-week calendar quarter.  For financial
statement presentation purposes, the reporting periods are referred to as
ended on the last day of the calendar quarter.  The accompanying Unaudited
Condensed Consolidated Balance Sheet is as of April 3, 2009.




                                  TEKELEC
        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                                            Three Months Ended March 31,(1)
                                            ------------------------------
                                                 2009            2008
                                            --------------  --------------
                                                      (Thousands)
Cash flows from operating activities:
Net income                                  $       12,365  $       13,481
Adjustments to reconcile net income to net
 cash provided by operating activities:
    Income from discontinued operations                  -          (1,618)
    Loss on sale of investments                          -               2
    Unrealized gain on ARS portfolio and
     Put right, net                                 (1,114)              -
    Provision for doubtful accounts and
     returns                                             -             416
    Provision for warranty                           5,000               -
    Inventory write downs                              810           1,403
    Loss on disposals of fixed assets                   51               -
    Depreciation                                     4,574           4,137
    Amortization of intangibles                      1,835             696
    Amortization, other                                188             327
    Acquired in-process research and
     development                                         -           2,690
    Deferred income taxes                            1,014           5,182
    Stock-based compensation                         3,312           3,128
    Excess tax benefits from stock-based
     compensation                                     (148)           (317)
    Changes in operating assets and
     liabilities:
        Accounts receivable                         35,857          16,169
        Inventories                                 (3,324)         (3,420)
        Deferred costs                               6,706           5,331
        Prepaid expenses and other assets              561           2,820
        Accounts payable                               487         (24,062)
        Accrued expenses                            (5,179)          9,568
        Accrued compensation and related
         expenses                                  (16,709)        (12,729)
        Deferred revenues                          (24,132)         11,599
        Income taxes payable/receivable             (1,401)          3,631
                                            --------------  --------------
            Total adjustments                        8,388          24,953
                                            --------------  --------------
            Net cash provided by operating
             activities - continuing
             operations                             20,753          38,434
            Net cash used in operating
             activities - discontinued
             operations                               (184)           (889)
                                            --------------  --------------
            Net cash provided by operating
             activities                             20,569          37,545
                                            --------------  --------------

Cash flows from investing activities:
    Proceeds from sales and maturities of
     investments                                     4,250         710,823
    Purchases of investments                             -        (584,524)
    Payments related to acquired in-process
     research and development                            -          (1,834)
    Purchases of property and equipment             (6,000)         (2,690)
    Other non-operating assets                           -             (38)
                                            --------------  --------------
            Net cash provided by (used in)
             investing activities                   (1,750)        121,737
                                            --------------  --------------

Cash flows from financing activities:
    Repurchase of common stock                           -         (13,444)
    Proceeds from issuance of common stock           2,368             758
    Excess tax benefits from stock-based
     compensation                                      148             317
                                            --------------  --------------
            Net cash provided by (used in)
             financing activities                    2,516         (12,369)
                                            --------------  --------------

Effect of exchange rate changes on cash                778             247
                                            --------------  --------------
            Net change in cash and cash
             equivalents                            22,113         147,160
Cash and cash equivalents, beginning of
 period                                            209,441         105,550
                                            --------------  --------------
Cash and cash equivalents, end of period    $      231,554  $      252,710
                                            ==============  ==============

(1) We operate under a thirteen-week calendar quarter.  For financial
statement presentation purposes, the reporting periods are referred to as
ended on the last day of the calendar quarter.  The accompanying Unaudited
Condensed Consolidated Statements of Cash Flows are for the thirteen weeks
ended April 3, 2009 and March 28, 2008.




                                  TEKELEC
        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 UNAUDITED IMPACT OF NON-GAAP ADJUSTMENTS

                                     Three Months Ended March 31, 2009 (5)
                                     --------------------------------------
                                       (Thousands, except per share data)
                                     --------------------------------------
                                        GAAP                      Non-GAAP
                                     Continuing                  Continuing
                                     Operations  Adjustments     Operations
                                     ----------  -----------     ----------

Revenues                             $  116,658  $         -     $  116,658
Cost of sales:
 Cost of goods sold                      40,349         (226)(1)     40,123
 Amortization of purchased
  technology                              1,517       (1,517)(2)          -
                                     ----------  -----------     ----------
Total cost of sales                      41,866       (1,743)        40,123
                                     ----------  -----------     ----------
Gross profit                             74,792        1,743         76,535
                                     ----------  -----------     ----------
Operating Expenses:
Research and development                 25,852         (537)(1)     25,095
                                                        (220)(3)
Sales and marketing                      17,296         (740)(1)     16,556
General and administrative               13,423       (1,809)(1)     11,614
Amortization of intangible assets           318         (318)(2)          -
                                     ----------  -----------     ----------
Total operating expenses                 56,889       (3,624)        53,265
                                     ----------  -----------     ----------
Income from operations                   17,903        5,367         23,270
                                     ----------  -----------     ----------
Interest and other income, net               11            -             11
                                     ----------  -----------     ----------
Income from continuing operations
 before provision for income taxes       17,914        5,367         23,281
                                     ----------  -----------     ----------
Provision for income taxes                5,549        1,694(4)       7,243
                                     ----------  -----------     ----------
Net income                           $   12,365  $     3,673     $   16,038
                                     ----------  -----------     ----------


Earnings per share:
Basic                                $     0.19                  $     0.24
Diluted                              $     0.18                  $     0.24

Weighted average number of shares
 outstanding:
Basic                                    66,285                      66,285
Diluted                                  66,869                      66,869

(1) The adjustments represent stock-based compensation expense recognized
related to awards of stock options, restricted stock or restricted stock
units and stock appreciation rights granted under our equity incentive
plans and stock purchase rights granted under our employee stock purchase
plan.

(2) The adjustments represent the amortization of purchased technology and
other intangibles related to the acquisitions of Steleus, iptelorg and
mBalance.

(3) The adjustment represents consideration payable to Estacado that is
contingent upon the continued employment of certain former Estacado
employees by Tekelec.

(4) The adjustment represents the income tax effect of footnotes (1), (2)
and (3) in order to reflect our non-GAAP effective tax rate.

(5) We operate under a thirteen-week calendar quarter.  For financial
statement presentation purposes, the reporting periods are referred to as
ended on the last day of the calendar quarter.  The accompanying schedule
of Unaudited Impact of Non-GAAP Adjustments on Net Income is for the
thirteen weeks ended April 3, 2009.




                                  TEKELEC
         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          UNAUDITED IMPACT OF NON-GAAP ADJUSTMENTS ON NET INCOME

                                  Three Months Ended March 31, 2008 (10)
                                -------------------------------------------
                                    (Thousands, except per share data)
                                -------------------------------------------
                                   GAAP                           Non-GAAP
                                Continuing                       Continuing
                                Operations  Adjustments          Operations
                                ----------  -----------          ----------

Revenues                        $  118,243  $         -          $  118,243
Cost of sales:
 Cost of goods sold                 39,946         (371)(1)          39,575
 Amortization of purchased
  technology                           587         (587)(2)               -
                                ----------  -----------          ----------
Total cost of sales                 40,533         (958)             39,575
                                ----------  -----------          ----------
Gross profit                        77,710          958              78,668
                                ----------  -----------          ----------
Operating Expenses:
Research and development            24,408         (662)(1)          23,599
                                                   (147)(3)
Sales and marketing                 18,204         (747)(1)          17,457
General and administrative          14,257       (1,568)(1)          11,789
                                                   (900)(4)
Acquired in-process research
 and development                     2,690       (2,690)(5)               -
Restructuring and other                (50)        (170)(6)               -
                                                    220 (1),(6)
Amortization of intangible
 assets                                109         (109)(2)               -
                                ----------  -----------          ----------
Total operating expenses            59,618       (6,773)             52,845
                                ----------  -----------          ----------
Income from operations              18,092        7,731              25,823
                                ----------  -----------          ----------
Interest and other income, net       1,631            -               1,631
                                ----------  -----------          ----------
Income from continuing
 operations before provision for
 income taxes                       19,723        7,731              27,454
                                ----------  -----------          ----------
Provision for income taxes           7,860        1,337 (7)           9,197
                                ----------  -----------          ----------
Income from continuing
 operations                         11,863        6,394              18,257
                                ----------  -----------          ----------
Income from discontinued
 operations, net of taxes            1,618       (1,618)(8)               -
                                ----------  -----------          ----------
Net income                      $   13,481  $     4,776          $   18,257
                                ----------  -----------          ----------

Earnings per share from
 continuing operations:
Basic                           $     0.18                       $     0.27
Diluted (9)                           0.17                             0.25

Earnings per share:
Basic                           $     0.20                       $     0.27
Diluted (9)                           0.19                             0.25

Weighted average number of
 shares outstanding:
Basic                               67,517                           67,517
Diluted (9)                         74,199                           74,199

(1) The adjustments represent stock-based compensation expense recognized
related to awards of stock options, restricted stock or restricted stock
units and stock appreciation rights granted under our equity incentive
plans and stock purchase rights granted under our employee stock purchase
plan.

(2) The adjustments represent the amortization of purchased technology,
other intangibles and acquired backlog related to the acquisitions of
Steleus and iptelorg.

(3) The adjustment represents consideration payable to Estacado that is
contingent upon the continued employment of certain former Estacado
employees by Tekelec.

(4) The adjustment represents an arbitration award and associated legal
fees in favor of our former President and CEO, Fred Lax.

(5) The adjustment represents acquired in-process research and development
related to the Estacado purchase.

(6) The adjustment represents the elimination of costs incurred during 2008
related to our initiating a plan to centralize certain functions in our
EAAA region and changes in estimates related to our 2007
realignment activities.

(7) The adjustment represents the income tax effect of footnotes (1), (2),
(3), (4), (5) and (6) in order to reflect our Non-GAAP effective tax rate.

(8) The adjustment represents the elimination of our discontinued
operations.

(9) For the three months ended March 31, 2008, the calculations of diluted
earnings per share include a potential add-back to net income of $581,000
for assumed after-tax interest cost and 6,361,000 weighted average shares
related to our formerly outstanding convertible debt using the "if-
converted" method.

(10)We operate under a thirteen-week calendar quarter.  For financial
statement presentation purposes, the reporting periods are referred to as
ended on the last day of the calendar quarter.  The accompanying schedule
of Unaudited Impact of Non-GAAP Adjustments on Net Income is for the
thirteen weeks ended March 28, 2008.

Contact Information

  • Investor Contacts:
    Mike Gallentine
    Director of Investor Relations
    919-461-6825 office
    Email Contact

    Press Contacts:
    Joanne Latham
    Director, Marketing Communications
    919-653-9655 office
    Email Contact