NASDAQ Comp.
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03.11.2008 21:03:00
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Tekelec Announces Q3 2008 and Year to Date Results
Tekelec (NASDAQ:TKLC), a leading developer of high-performance network applications for next-generation fixed, mobile and packet networks, today announced its results for the quarter and nine months ended September 30, 2008.
Results from Continuing Operations
Revenue from continuing operations for the third quarter of 2008 was $106.0 million, up 8% compared to $97.8 million for the third quarter of 2007. For the third quarter of 2008, the Company had orders of $87.4 million, down 20% compared to $109.2 million for the third quarter of 2007. Backlog from continuing operations as of September 30, 2008, was $369.0 million, down from $387.6 million at June 30, 2008.
On a GAAP basis, the Company reported income from continuing operations for the third quarter of 2008 of $8.6 million, or $0.13 per diluted share. This compares to income from continuing operations of $10.1 million, or $0.14 per diluted share, for the third quarter of 2007. On a non-GAAP basis, income from continuing operations for the third quarter of 2008 was $12.5 million, or $0.19 per diluted share, compared to income from continuing operations of $13.8 million, or $0.18 per diluted share, for the third quarter of 2007. Please refer to the attached financial statement schedules for a reconciliation of the Company's non-GAAP financial measures and operating results to its GAAP financial measures and operating results.
For the first nine months of 2008, revenue from continuing operations was $340.7 million, up 8% compared to $316.6 million for the first nine months of 2007. For the first nine months of 2008, the Company had orders from continuing operations of $292.7 million, up 7% compared to $273.0 million for the first nine months of 2007.
On a GAAP basis, the Company reported income from continuing operations for the first nine months of 2008 of $35.8 million, or $0.52 per diluted share, which includes a one-time tax benefit of $3.7 million, or $0.05 per diluted share, compared to income from continuing operations of $16.8 million, or $0.24 per diluted share, for the first nine months of 2007. On a non-GAAP basis, income from continuing operations for the first nine months of 2008 was $46.4 million, or $0.67 per diluted share, compared to income from continuing operations of $33.4 million, or $0.45 per diluted share, for the first nine months of 2007. Please refer to the attached financial statement schedules for a reconciliation of the Company's non-GAAP financial measures and operating results to its GAAP financial measures and operating results.
GAAP operating margins were 14% and 5% for the nine months ended September 30, 2008 and 2007, respectively. Non-GAAP operating margins for the first nine months of 2008 were 19% as compared with 12% in the first nine months of 2007. Cash flows from continuing operations for the nine months ended September 30, 2008, were $87.9 million, up 229% compared to $26.7 million in the first nine months of 2007.
Frank Plastina, president and chief executive officer of Tekelec, stated, "We were very pleased by our strong operating performance for the third quarter and first nine months of the year. Our revenues and operating margins continued to be strong and our operating cash flows for the third quarter were exceptional. While our new orders for the quarter were lower than anticipated, on a year to date basis our orders continue to be 7% ahead of last year. Our continued focus on sound execution in a difficult economic and competitive environment has led to a 19% non-GAAP operating margin year to date.”
Consolidated Results, Including the Impact of Discontinued Operations
On a GAAP basis, the Company generated consolidated net income of $12.4 million, or $0.19 per diluted share, for the three months ended September 30, 2008, compared to net income for the three months ended September 30, 2007, of $12.5 million, or $0.17 per diluted share. For the nine months ended September 30, 2008, the Company generated consolidated net income on a GAAP basis of $41.2 million, or $0.60 per diluted share compared to a consolidated net loss of $45.7 million, or $0.64 loss per diluted share, in 2007.
Balance Sheet and Liquidity
Tekelec continues to have a strong balance sheet and liquidity, providing the Company with the financial resources and flexibility to help address potentially negative impacts resulting from the current economic environment and to further invest in our portfolio. Specifically, Tekelec’s consolidated cash, cash equivalents and short-term investments at September 30, 2008, totaled $228.6 million, up from $190.1 million at June 30, 2008, due primarily to the strong cash flows from operations for the quarter. Cash flows from continuing operations were $31.0 million for the third quarter of 2008 and were $87.9 million on a year-to-date basis. In addition, the Company recently announced that it had entered into a three-year $50 million revolving credit agreement with Wachovia Bank, providing additional flexibility and liquidity.
At September 30, 2008, the Company continued to hold $105.8 million of Student Loan Auction Rate Securities ("SLARS”) valued at fair value in accordance with FAS 115 and 157. This valuation reflects a cumulative decline in value of $5.0 million ($3.0 million net of tax) recorded in 2008. The decline in fair value is considered to be temporary and accordingly, the write-down is recorded in accumulated other comprehensive income (loss) within shareholders’ equity.
On October 31, 2008, Tekelec accepted an offer from UBS for auction rate securities rights related to these SLARS. Under the terms of the UBS rights, UBS has the right, at its discretion, to purchase these securities at par plus accrued interest at any time until July 2, 2012, and Tekelec has the right to require UBS to purchase the securities at par plus accrued interest at its election at any time between June 30, 2010, and July 2, 2012. We will continue to classify these SLARS as long-term investments until we believe that we are within twelve months of a liquidity event.
Total deferred revenues were $211.7 million at September 30, 2008, up from $192.1 million at June 30, 2008.
Conference Call
Tekelec has scheduled a conference call for Monday, November 3, 2008, for management to discuss results for the third quarter and first nine months of 2008. The Company also plans to provide on its web site immediately prior to the call both GAAP and non-GAAP financial measures (including GAAP reconciliations) for the third quarter and to discuss during this call certain forward-looking information concerning the Company’s prospects for 2008.
"Live" Webcast and Replay
Tekelec will host a live webcast of its conference call on Monday, November 3, 2008, at 4:45 p.m. EST. 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 7:45 p.m. on November 3rd, 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 #69500400.
Non-GAAP Information
Certain non-GAAP financial measures are included in this press release, including non-GAAP income from continuing operations, non-GAAP earnings per share, non-GAAP operating margins and 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, acquisition-related 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 related 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 determine incentive compensation and evaluate 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 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 as substitutes 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 2007 Form 10-K, First Quarter 2008 Form 10-Q, Second Quarter 2008 Form 10-Q and its other filings with the Securities and Exchange Commission, the effect of the current economic crisis on overall telecommunications spending by our customers, further changes in general economic conditions and unexpected changes in 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, our ability to compete with other manufacturers that have lower cost bases than ours and/or are partially subsidized by foreign governments or employ other unfair trade practices, changes in the market price of the Company’s common stock and reductions in telecommunications carrier capital spending. 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 leverages its global leadership in core multimedia session control and network intelligence to ensure scalable, secure and highly available communications. The Company’s leading signaling solutions enable the interworking of different network applications, technologies and protocols, providing a smooth transition to next-generation networks. Corporate headquarters are located near Research Triangle Park in Morrisville, N.C., U.S.A., with research and development facilities and sales offices throughout the world. For more information, please visit www.tekelec.com.
| TEKELEC | |||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1) | |||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
| 2008 | 2007 | 2008 | 2007 | ||||||||||
|
(Thousands, except per share data) |
|||||||||||||
| Revenues | $ | 105,996 | $ | 97,797 | $ | 340,661 | $ | 316,574 | |||||
| Cost of sales: | |||||||||||||
| Cost of goods sold | 33,775 | 33,367 | 116,113 | 132,043 | |||||||||
| Amortization of purchased technology | 587 | 587 | 1,761 | 1,766 | |||||||||
| Total cost of sales | 34,362 | 33,954 | 117,874 | 133,809 | |||||||||
| Gross profit | 71,634 | 63,843 | 222,787 | 182,765 | |||||||||
| Operating expenses: | |||||||||||||
| Research and development | 25,082 | 22,762 | 75,706 | 69,033 | |||||||||
| Sales and marketing | 18,159 | 16,662 | 55,269 | 53,636 | |||||||||
| General and administrative | 13,272 | 12,354 | 40,477 | 40,148 | |||||||||
| Restructuring and other | - | 2,291 | 243 | 4,802 | |||||||||
|
Acquired in-process research and development |
- | - | 2,690 | - | |||||||||
| Amortization of intangible assets | 109 | 46 | 327 | 140 | |||||||||
| Total operating expenses | 56,622 | 54,115 | 174,712 | 167,759 | |||||||||
| Income from operations | 15,012 | 9,728 | 48,075 | 15,006 | |||||||||
| Other income (expense), net: | |||||||||||||
| Interest income | 1,749 | 4,411 | 7,325 | 12,706 | |||||||||
| Interest expense | (9) | (903) | (1,920) | (2,754) | |||||||||
| Gain (loss) on sale of investments | - | - | (2) | 223 | |||||||||
| Other, net | (2,193) | (1,144) | (3,699) | (2,988) | |||||||||
| Total other income (expense), net | (453) | 2,364 | 1,704 | 7,187 | |||||||||
|
Income from continuing operations before
provision for income taxes |
14,559 | 12,092 | 49,779 | 22,193 | |||||||||
| Provision for income taxes | 5,941 | 2,033 | 13,980 | 5,361 | |||||||||
| Income from continuing operations | 8,618 | 10,059 | 35,799 | 16,832 | |||||||||
| Income (loss) from discontinued operations, net of taxes | 3,755 | 2,444 | 5,373 | (62,575) | |||||||||
| Net income (loss) | $ | 12,373 | $ | 12,503 | $ | 41,172 | $ | (45,743) | |||||
| Earnings per share from continuing operations: | |||||||||||||
| Basic | $ | 0.13 | $ | 0.14 | $ | 0.54 | $ | 0.24 | |||||
| Diluted | 0.13 | 0.14 | 0.52 | 0.24 | |||||||||
| Earnings (loss) per share from discontinued operations: | |||||||||||||
| Basic | $ | 0.06 | $ | 0.03 | $ | 0.08 | $ | (0.90) | |||||
| Diluted | 0.06 | 0.03 | 0.08 | (0.88) | |||||||||
| Earnings (loss) per share: | |||||||||||||
| Basic | $ | 0.19 | $ | 0.18 | $ | 0.62 | $ | (0.65) | |||||
| Diluted | 0.19 | 0.17 | 0.60 | (0.64) | |||||||||
|
Weighted average number of shares
outstanding-continuing operations: |
|||||||||||||
| Basic | 65,961 | 70,830 | 66,372 | 69,894 | |||||||||
| Diluted | 66,763 | 77,829 | 70,972 | 70,956 | |||||||||
| Weighted average number of shares outstanding: | |||||||||||||
| Basic | 65,961 | 70,830 | 66,372 | 69,894 | |||||||||
| Diluted | 66,763 | 77,829 | 70,972 | 70,956 | |||||||||
| (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 and thirty-nine weeks ended September 26, 2008 and September 28, 2007. | |||||||||||||
| TEKELEC | |||||||||||||
| UNAUDITED NON-GAAP STATEMENTS OF OPERATIONS FOR CONTINUING OPERATIONS (1),(3) | |||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2008 | 2007 | 2008 | 2007 | ||||||||||
|
(Thousands, except per share data) |
|||||||||||||
| Revenues | $ | 105,996 | $ | 97,797 | $ | 340,661 | $ | 316,574 | |||||
| Cost of sales: | |||||||||||||
| Cost of goods sold | 33,486 | 33,002 | 115,123 | 125,755 | |||||||||
| Gross profit | 72,510 | 64,795 | 225,538 | 190,819 | |||||||||
| Research and development | 24,451 | 22,272 | 73,486 | 66,826 | |||||||||
| Sales and marketing | 17,414 | 15,803 | 53,098 | 50,967 | |||||||||
| General and administrative | 11,465 | 10,708 | 34,386 | 33,514 | |||||||||
| Total operating expenses | 53,330 | 48,783 | 160,970 | 151,307 | |||||||||
| Income from operations | 19,180 | 16,012 | 64,568 | 39,512 | |||||||||
| Interest and other income (expense), net | (453) | 2,364 | 1,704 | 7,187 | |||||||||
|
Income from continuing operations before provision for income taxes
|
18,727 | 18,376 | 66,272 | 46,699 | |||||||||
| Provision for income taxes (2) | 6,263 | 4,615 | 19,852 | 13,320 | |||||||||
| Net income from continuing operations | $ | 12,464 | $ | 13,761 | $ | 46,420 | $ | 33,379 | |||||
| Earnings per share: | |||||||||||||
| Basic | $ | 0.19 | $ | 0.19 | $ | 0.70 | $ | 0.48 | |||||
| Diluted | 0.19 | 0.18 | 0.67 | 0.45 | |||||||||
| Weighted average number of shares outstanding: | |||||||||||||
| Basic | 65,961 | 70,830 | 66,372 | 69,894 | |||||||||
| Diluted | 66,763 | 77,829 | 70,972 | 77,317 | |||||||||
| (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 33% and 25% for the three months ended September 30, 2008 and 2007, respectively. The above Non-GAAP Statements of Operations assume non-GAAP effective income tax rates of 30% and 29% for the nine months ended September 30, 2008 and 2007, 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 are for the thirteen and thirty-nine weeks ended September 26, 2008 and September 28, 2007. | |||||||||||||
| TEKELEC | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| September 30, | December 31, | |||||||
| 2008 | 2007 | |||||||
| (Thousands, except share data) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 228,631 | $ | 105,550 | ||||
| Short-term investments, at fair value | - | 313,922 | ||||||
| Total cash, cash equivalents and short-term investments | 228,631 | 419,472 | ||||||
| Accounts receivable, net | 156,500 | 147,092 | ||||||
| Inventories | 25,467 | 20,543 | ||||||
| Income taxes receivable | - | 28,361 | ||||||
| Deferred income taxes | 42,053 | 18,793 | ||||||
| Deferred costs and prepaid commissions | 56,084 | 57,203 | ||||||
| Prepaid expenses and other current assets | 8,298 | 14,726 | ||||||
| Total current assets | 517,033 | 706,190 | ||||||
| Long-term investments, at fair value | 105,793 | - | ||||||
| Property and equipment, net | 35,092 | 32,510 | ||||||
| Investments in privately-held companies | 22,297 | 18,553 | ||||||
| Deferred income taxes, net | 70,026 | 83,418 | ||||||
| Other assets | 1,414 | 1,320 | ||||||
| Goodwill | 22,951 | 22,951 | ||||||
| Intangible assets, net | 14,860 | 16,948 | ||||||
| Total assets | $ | 789,466 | $ | 881,890 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 25,253 | $ | 45,388 | ||||
| Accrued expenses | 23,327 | 21,259 | ||||||
| Accrued compensation and related expenses | 31,499 | 40,234 | ||||||
| Current portion of deferred revenues | 203,678 | 166,274 | ||||||
| Income taxes payable | 4,739 | - | ||||||
| Convertible debt | - | 125,000 | ||||||
| Liabilities of discontinued operations | 805 | 5,767 | ||||||
| Total current liabilities | 289,301 | 403,922 | ||||||
| Deferred income taxes | 1,067 | 1,295 | ||||||
| Long-term portion of deferred revenues | 7,976 | 8,917 | ||||||
| Other long-term liabilities | 6,097 | 6,569 | ||||||
| Total liabilities | 304,441 | 420,703 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders’ equity: | ||||||||
| Common stock, without par value, 200,000,000 shares authorized; 66,077,663 and 67,479,916 shares issued and outstanding, respectively | ||||||||
| 305,815 | 319,761 | |||||||
| Retained earnings | 180,551 | 139,379 | ||||||
| Accumulated other comprehensive income (loss) | (1,341 | ) | 2,047 | |||||
| Total shareholders’ equity | 485,025 | 461,187 | ||||||
| Total liabilities and shareholders’ equity | $ | 789,466 | $ | 881,890 | ||||
| TEKELEC | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| Nine Months ended September 30, | ||||||||
| 2008 | 2007 | |||||||
| (Thousands) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | 41,172 | $ | (45,743 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by | ||||||||
| operating activities: | ||||||||
| Loss (income) from discontinued operations | (5,373 | ) | 62,575 | |||||
| Loss (gain) on sale of investments | 2 | (223 | ) | |||||
| Loss on disposal of fixed assets | 503 | - | ||||||
| Provision for (recovery of) doubtful accounts and returns | (84 | ) | (65 | ) | ||||
| Inventory write downs | 4,640 | 8,626 | ||||||
| Depreciation | 13,148 | 11,524 | ||||||
| Amortization of intangibles | 2,088 | 1,899 | ||||||
| Amortization, other | 754 | 1,325 | ||||||
| Acquired in-process research and development | 2,690 | - | ||||||
| Deferred income taxes | (8,974 | ) | 2,647 | |||||
| Stock-based compensation | 9,769 | 12,086 | ||||||
| Excess tax benefits from stock-based compensation | (1,528 | ) | (4,172 | ) | ||||
| Changes in operating assets and liabilities, net of business disposal: | ||||||||
| Accounts receivable | (9,706 | ) | 22,755 | |||||
| Inventories | (9,170 | ) | (3,224 | ) | ||||
| Deferred costs | 1,119 | 5,419 | ||||||
| Prepaid expenses and other current assets | 5,309 | 14,309 | ||||||
| Accounts payable | (19,995 | ) | (7,243 | ) | ||||
| Accrued expenses | 1,717 | (13,193 | ) | |||||
| Accrued compensation and related expenses | (10,029 | ) | (9,241 | ) | ||||
| Deferred revenues | 37,283 | (42,450 | ) | |||||
| Income taxes payable/receivable | 32,628 | 9,127 | ||||||
| Other Assets | (101 | ) | - | |||||
| Total adjustments | 46,690 | 72,481 | ||||||
| Net cash provided by operating activities - continuing operations | 87,862 | 26,738 | ||||||
| Net cash used in operating activities - discontinued operations | (2,472 | ) | (18,565 | ) | ||||
| Net cash provided by operating activities | 85,390 | 8,173 | ||||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sales and maturities of investments | 787,784 | 487,399 | ||||||
| Purchases of investments | (584,524 | ) | (486,912 | ) | ||||
| Purchases of property and equipment | (15,666 | ) | (13,916 | ) | ||||
| Other non-operating assets | - | 175 | ||||||
| Payments related to acquired in-process research and development | (2,690 | ) | - | |||||
| Net cash provided by (used in) investing activities - continuing operations | 184,904 | (13,254 | ) | |||||
| Net cash used in investing activities - discontinued operations | - | (3,241 | ) | |||||
| Net cash provided by (used in) investing activities | 184,904 | (16,495 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Repayment of convertible debt | (125,000 | ) | - | |||||
| Payments for repurchase of common stock | (33,779 | ) | (19,699 | ) | ||||
| Proceeds from issuance of common stock | 11,559 | 29,421 | ||||||
| Excess tax benefits from stock-based compensation | 1,528 | 4,172 | ||||||
| Net cash provided by (used in) financing activities | (145,692 | ) | 13,894 | |||||
| Effect of exchange rate changes on cash | (1,521 | ) | 1,527 | |||||
| Net change in cash and cash equivalents | 123,081 | 7,099 | ||||||
| Cash and cash equivalents, beginning of period | 105,550 | 45,329 | ||||||
| Cash and cash equivalents, end of period | $ | 228,631 | $ | 52,428 | ||||
| TEKELEC | |||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
| UNAUDITED IMPACT OF NON-GAAP ADJUSTMENTS (6) | |||||||||||
| Three Months Ended September 30, 2008 | |||||||||||
| GAAP Continuing Operations | Adjustments | Non-GAAP Continuing Operations | |||||||||
| Revenues | $ | 105,996 | $ | - | $ | 105,996 | |||||
| Cost of sales: | |||||||||||
| Cost of goods sold | 33,775 | (289) | (1) | 33,486 | |||||||
| Amortization of purchased technology | 587 | (587) | (2) | - | |||||||
| Total cost of sales | 34,362 | (876) | 33,486 | ||||||||
| Gross profit | 71,634 | 876 | 72,510 | ||||||||
| Operating Expenses: | |||||||||||
| Research and development | 25,082 | (411) | (1) | 24,451 | |||||||
| (220) | (3) | ||||||||||
| Sales and marketing | 18,159 | (745) | (1) | 17,414 | |||||||
| General and administrative | 13,272 | (1,807) | (1) | 11,465 | |||||||
| Amortization of intangible assets | 109 | (109) | (2) | - | |||||||
| Total operating expenses | 56,622 | (3,292) | 53,330 | ||||||||
| Income from operations | 15,012 | 4,168 | 19,180 | ||||||||
| Interest and other income (expense), net | (453) | - | (453) | ||||||||
|
Income from continuing operations before provision
for income taxes |
14,559 | 4,168 | 18,727 | ||||||||
| Provision for income taxes | 5,941 | 322 | (4) | 6,263 | |||||||
| Income from continuing operations | 8,618 | 3,846 | 12,464 | ||||||||
| Income from discontinued operations, net of taxes | 3,755 | (3,755) | (5) | - | |||||||
| Net income | $ | 12,373 | $ | 91 | $ | 12,464 | |||||
| Earnings per share from continuing operations: | |||||||||||
| Basic | $ | 0.13 | $ | 0.19 | |||||||
| Diluted | 0.13 | 0.19 | |||||||||
| Earnings per share: | |||||||||||
| Basic | $ | 0.19 | $ | 0.19 | |||||||
| Diluted | 0.19 | 0.19 | |||||||||
| Weighted average number of shares outstanding: | |||||||||||
| Basic | 65,961 | 65,961 | |||||||||
| Diluted | 66,763 | 66,763 | |||||||||
| (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 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 the income tax effect of footnotes (1), (2) and (3) in order to reflect our non-GAAP effective tax rate of 33%. | |||||||||||
| (5) The adjustment represents the elimination of our discontinued operations. | |||||||||||
| (6) 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 above schedule of Unaudited Impact of Non-GAAP Adjustments is for the thirteen weeks ended September 26, 2008. | |||||||||||
| TEKELEC | ||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
| UNAUDITED IMPACT OF NON-GAAP ADJUSTMENTS (10) | ||||||||||||||
| Nine Months Ended September 30, 2008 | ||||||||||||||
| GAAP Continuing Operations | Adjustments | Non-GAAP Continuing Operations | ||||||||||||
| Revenues | $ | 340,661 | $ | - | $ | 340,661 | ||||||||
| Cost of sales: | ||||||||||||||
| Cost of goods sold | 116,113 | (990 | ) | (1 | ) | 115,123 | ||||||||
| Amortization of purchased technology | 1,761 | (1,761 | ) | (2 | ) | - | ||||||||
| Total cost of sales | 117,874 | (2,751 | ) | 115,123 | ||||||||||
| Gross profit | 222,787 | 2,751 | 225,538 | |||||||||||
| Operating Expenses: | ||||||||||||||
| Research and development | 75,706 | (1,633 | ) | (1 | ) | 73,486 | ||||||||
| (587 | ) | (3 | ) | |||||||||||
| Sales and marketing | 55,269 | (2,171 | ) | (1 | ) | 53,098 | ||||||||
| General and administrative | 40,477 | (5,191 | ) | (1 | ) | 34,386 | ||||||||
| (900 | ) | (4 | ) | |||||||||||
| Acquired in-process research and development | 2,690 | (2,690 | ) | (5 | ) | - | ||||||||
| Restructuring and other | 243 | (459 | ) | (6 | ) | - | ||||||||
| 216 | (1),(6) | |||||||||||||
| Amortization of intangible assets | 327 | (327 | ) | (2 | ) | - | ||||||||
| Total operating expenses | 174,712 | (13,742 | ) | 160,970 | ||||||||||
| Income from operations | 48,075 | 16,493 | 64,568 | |||||||||||
| Interest and other income, net | 1,704 | - | 1,704 | |||||||||||
|
Income from continuing operations before provision
for income taxes |
49,779 | 16,493 | 66,272 | |||||||||||
| Provision for income taxes | 13,980 | 5,872 | (7 | ) | 19,852 | |||||||||
| Income from continuing operations | 35,799 | 10,621 | 46,420 | |||||||||||
|
Income from discontinued operations, net of taxes |
5,373 | (5,373 | ) | (8 | ) | - | ||||||||
| Net income | $ | 41,172 | $ | 5,248 | $ | 46,420 | ||||||||
| Earnings per share from continuing operations: | ||||||||||||||
| Basic | $ | 0.54 | $ | 0.70 | ||||||||||
| Diluted (9) | 0.52 | 0.67 | ||||||||||||
| Earnings per share: | ||||||||||||||
| Basic | $ | 0.62 | $ | 0.70 | ||||||||||
| Diluted (9) | 0.60 | 0.67 | ||||||||||||
| Weighted average number of shares outstanding: | ||||||||||||||
| Basic | 66,372 | 66,372 | ||||||||||||
| Diluted (9) | 70,972 | 70,972 | ||||||||||||
|
(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 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 excluding second quarter discrete tax benefits totaling $3.7 million related to reversing a valuation allowance on deferred tax assets generated by the loss on sale of our former Switching Solutions Group. Also included in the adjustment is the income tax effect of footnotes (1), (2), (3), (4), (5) and (6) in order to reflect our non-GAAP effective tax rate of 30%.
(8) The adjustment represents the elimination of our discontinued operations.
(9) For the nine months ended September 30, 2008, the calculations of diluted earnings per share include a potential add-back to net income of $1,085,000 for assumed after-tax interest cost and 3,961,000 weighted average shares related our previously 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 above schedule of Unaudited Impact of Non-GAAP Adjustments for the thirty-nine weeks ended September 26, 2008.
|
||||||||||||||
| TEKELEC | |||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
| UNAUDITED IMPACT OF NON-GAAP ADJUSTMENTS (7) | |||||||||||
| Three Months Ended September 30, 2007 | |||||||||||
| GAAP Continuing Operations | Adjustments | Non-GAAP Continuing Operations | |||||||||
| Revenues | $ | 97,797 | $ | - | $ | 97,797 | |||||
| Cost of sales: | |||||||||||
| Cost of goods sold | 33,367 | (365 | ) | (1 | ) | 33,002 | |||||
| Amortization of purchased technology | 587 | (587 | ) | (2 | ) | - | |||||
| Total cost of sales | 33,954 | (952 | ) | 33,002 | |||||||
| Gross profit | 63,843 | 952 | 64,795 | ||||||||
| Operating Expenses: | |||||||||||
| Research and development | 22,762 | (490 | ) | (1 | ) | 22,272 | |||||
| Sales and marketing | 16,662 | (859 | ) | (1 | ) | 15,803 | |||||
| General and administrative | 12,354 | (1,646 | ) | (1 | ) | 10,708 | |||||
| Restructuring and other | 2,291 | (2,291 | ) | (3 | ) | - | |||||
| Amortization of intangible assets | 46 | (46 | ) | (2 | ) | - | |||||
| Total operating expenses | 54,115 | (5,332 | ) | 48,783 | |||||||
| Income from operations | 9,728 | 6,284 | 16,012 | ||||||||
| Interest and other income, net | 2,364 | - | 2,364 | ||||||||
| Income from continuing operations before provision for income taxes | 12,092 | 6,284 | 18,376 | ||||||||
| Provision for income taxes | 2,033 | 2,582 | (4 | ) | 4,615 | ||||||
| Income from continuing operations | 10,059 | 3,702 | 13,761 | ||||||||
|
Income from discontinued operations, net of taxes |
2,444 | (2,444 | ) | (5 | ) | - | |||||
| Net income | $ | 12,503 | $ | 1,258 | $ | 13,761 | |||||
| Earnings per share from continuing operations: | |||||||||||
| Basic | $ | 0.14 | $ | 0.19 | |||||||
| Diluted (6) | 0.14 | 0.18 | |||||||||
| Earnings per share: | |||||||||||
| Basic | $ | 0.18 | $ | 0.19 | |||||||
| Diluted (6) | 0.17 | 0.18 | |||||||||
| Weighted average number of shares outstanding: | |||||||||||
| Basic | 70,830 | 70,830 | |||||||||
| Diluted (6) | 77,829 | 77,829 | |||||||||
|
(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 and iptelorg.
(3) The adjustment represents the eliminations of the costs associated with our restructuring activities.
(4) The adjustment represents the income tax effect of footnotes (1), (2) and (3) in order to reflect our non-GAAP effective tax rate of 25%.
(5) The adjustment represents the elimination of our discontinued operations.
(6) For the three months ended September 30, 2007, the calculations of diluted earnings per share includes 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 previously outstanding convertible debt using the "if-converted" method.
(7) 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 above schedule of Unaudited Impact of Non-GAAP Adjustments for the thirteen weeks ended September 28, 2007. |
|||||||||||
| TEKELEC | ||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| UNAUDITED IMPACT OF NON-GAAP ADJUSTMENTS (9) | ||||||||||||
| Nine Months Ended September 30, 2007 | ||||||||||||
| GAAP Continuing Operations | Adjustments | Non-GAAP Continuing Operations | ||||||||||
| Revenues | $ | 316,574 | $ | - | $ | 316,574 | ||||||
| Cost of sales: | ||||||||||||
| Cost of goods sold | 132,043 | (1,288 | ) | (1 | ) | 125,755 | ||||||
| (5,000 | ) | (2 | ) | |||||||||
| Amortization of purchased technology | 1,766 | (1,766 | ) | (3 | ) | - | ||||||
| Total cost of sales | 133,809 | (8,054 | ) | 125,755 | ||||||||
| Gross profit | 182,765 | 8,054 | 190,819 | |||||||||
| Operating Expenses: | ||||||||||||
| Research and development | 69,033 | (2,207 | ) | (1 | ) | 66,826 | ||||||
| Sales and marketing | 53,636 | (2,669 | ) | (1 | ) | 50,967 | ||||||
| General and administrative | 40,148 | (5,922 | ) | (1 | ) | 33,514 | ||||||
| (712 | ) | (4 | ) | |||||||||
| Restructuring and other | 4,802 | (4,802 | ) | (5 | ) | - | ||||||
| Amortization of intangible assets | 140 | (140 | ) | (3 | ) | - | ||||||
| Total operating expenses | 167,759 | (16,452 | ) | 151,307 | ||||||||
| Income from operations | 15,006 | 24,506 | 39,512 | |||||||||
| Interest and other income, net | 7,187 | - | 7,187 | |||||||||
| Income from continuing operations before provision for income taxes | 22,193 | 24,506 | 46,699 | |||||||||
| Provision for income taxes | 5,361 | 7,959 | (6 | ) | 13,320 | |||||||
| Income from continuing operations | 16,832 | 16,547 | 33,379 | |||||||||
| Loss from discontinued operations, net of taxes | (62,575 | ) | 62,575 | (7 | ) | - | ||||||
| Net income (loss) | $ | (45,743 | ) | $ | 79,122 | $ | 33,379 | |||||
| Earnings per share from continuing operations: | ||||||||||||
| Basic | $ | 0.24 | $ | 0.48 | ||||||||
| Diluted (8) | 0.24 | 0.45 | ||||||||||
| Earnings (loss) per share: | ||||||||||||
| Basic | $ | (0.65 | ) | $ | 0.48 | |||||||
| Diluted (8) | (0.64 | ) | 0.45 | |||||||||
| Weighted average number of shares outstanding: | ||||||||||||
| Basic | 69,894 | 69,894 | ||||||||||
| Diluted (8) | 70,956 | 77,317 | ||||||||||
|
(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 charge associated with product credits issued to Bouygues Telecom, S.A. as part of our settlement of the Bouygues litigation.
(3) The adjustments represent the amortization of purchased technology and other intangibles related to the acquisitions of Steleus and iptelorg.
(4) The adjustment represents legal expenses incurred to settle the Bouygues litigation.
(5) The adjustment represents the eliminations of the costs associated with our restructuring activities.
(6) The adjustment represents the income tax effect of footnotes (1), (2), (3), (4) and (5) in order to reflect our non-GAAP effective tax rate of 29%.
(7) The adjustment represents the elimination of our discontinued operations.
(8) For the nine months ended September 30, 2007, the calculations of diluted earnings per share related to GAAP Continuing Operations exclude a potential add-back to net income of $1,743,000 for assumed after-tax interest cost and 6,361,000 weighted average shares related to our previously outstanding convertible debt using the "if-converted" method as the effect of including such amounts is anti-dilutive. The calculation of diluted earnings per share related to non-GAAP Continuing Operations includes the add-back to net income of $1,743,000 for assumed after-tax interest cost and 6,361,000 weighted average shares related to our previously outstanding convertible debt using the "if-converted" method.
(9) 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 above schedule of Unaudited Impact of Non-GAAP Adjustments is for the thirty-nine weeks ended September 28, 2007.
|
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