EX-99.1 2 v57726exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(GRAPHIC)
Tekelec Announces Third Quarter 2010 Operating Results
  •   Revenue of $108.3 million;
 
  •   Revenue from our next gen products increased 59% this quarter versus the same quarter a year ago, and 45% year-to-date compared to the same period in 2009
 
  •   GAAP Gross Margin of 55%, and non-GAAP Gross Margin of 63% (as reconciled below);
 
  •   GAAP Operating Margin of 0%, and non-GAAP Operating Margin of 14% (as reconciled below);
 
  •   GAAP Diluted EPS of $0.00 per share, and non-GAAP Diluted EPS of $0.15 per share (as reconciled below);
MORRISVILLE, N.C. — November 4, 2010 — Tekelec (NASDAQ: TKLC), the broadband data management company, today announced earnings for the third quarter of 2010.
2010 Third Quarter Results from Operations
Revenue for the third quarter of 2010 was $108.3 million, down 6% compared to $114.9 million for the third quarter of 2009. The Company’s orders were $81.1 million for the quarter, down 14% from the third quarter of 2009. Order input was down primarily due to a reduction in SS7 and Sigtran orders, with the majority of the decline coming from emerging markets. However, our next gen products continue to grow as a percentage of total orders, representing 37% of total orders booked during the current quarter. As of September 30, 2010, backlog was $253.6 million compared to $271.6 million as of June 30, 2010 and $336.7 million as of September 30, 2009.
GAAP gross margins for the third quarter of 2010 were 55%, compared to 66% in the third quarter of 2009. Non-GAAP gross margins for the third quarter of 2010 were 63%, compared to 68% for the third quarter of 2009. Please refer to the attached reconciliations of the non-GAAP financial measures referred to in this release to the most directly comparable GAAP measures.
On a GAAP basis, the Company reported a net loss for the third quarter of 2010 of $0.1 million, or $0.00 per diluted share, compared to earnings in the third quarter of 2009 of $9.4 million, or $0.14 per diluted share. GAAP operating margins were 0% for the third quarter of 2010 down from 19% for the third quarter of 2009.
On a non-GAAP basis, net income for the third quarter of 2010 was $10.2 million, or $0.15 per diluted share, compared to $18.2 million, or $0.27 per diluted share, for the third quarter of 2009. Non-GAAP operating margins for the third quarter of 2010 were 14%, compared to 23% for the third quarter of 2009.
Year-to-Date Results
For the first nine months of 2010, revenue was $333.8 million, down 3% compared to $345.8 million for the first nine months of 2009. For the first nine months of 2010, the Company’s orders were $209.9 million, down 22% compared to $267.4 million for the first nine months of 2009.
On a GAAP basis, the Company reported net income of $23.0 million, or $0.33 per diluted share, for the first nine months of 2010, compared to $31.5 million, or $0.47 per diluted share, for the first nine months of 2009. GAAP operating margins were 11% and 17% for the nine months ended September 30, 2010 and 2009, respectively.
5200 Paramount Parkway, Morrisville, N.C., USA 27560 TEL +1.919.460.5500 FAX +1.919.460.0877

 

 

On a non-GAAP basis, net income for the first nine months of 2010 was $45.5 million, or $0.66 per diluted share, compared to $51.0 million, or $0.76 per diluted share, for the first nine months of 2009. Non-GAAP operating margins for the first nine months of 2010 were 20% compared to 22% for the first nine months of 2009.
Frank Plastina, Tekelec’s president and chief executive officer, stated, “While Sigtran and SS7 solution orders are declining at a faster rate than we expected and have historically experienced, we are pleased with the increasing momentum of order input for our next-gen solutions. Specifically, this past quarter, our next gen products were 37% of total orders booked and have grown by nearly 50% year to date compared to 2009. Our next gen portfolio uniquely positions us to help our customers manage and monetize the explosive growth in mobile data traffic and multi-media applications.”
Recent Quarterly Business Highlights
  •   Revenue from our next gen products increased 59% this quarter versus the same quarter a year ago, and 45% year-to-date compared to the same period in 2009.
 
  •   Next gen products continue to grow as a percentage of total orders, representing 37% of total orders booked during the current quarter.
 
  •   Year over year order growth for our next gen solutions was approximately 50% during the first nine months of this year. This includes orders of products acquired from Camiant and Blueslice.
 
  •   Orders from these acquired products have already exceeded our initial order expectations of $20 million for the year. We achieved this level in just five months since the acquisitions.
 
  •   We obtained our first orders for LTE networks, including orders from Verizon for their policy management needs.
 
  •   We had four next gen session management wins for the quarter — three for SIP Signaling Router and one for our recently announced Diameter Signaling Router. With this win, we now have two new Diameter Signaling Router customers, including the Metro PCS win from the second quarter that was announced a few weeks ago.
 
  •   Our next gen solutions have provided us with our first entry into China. We obtained two new customers in this market with purchases of our performance management and policy solutions. One of these customers is among the top 10 service providers in the world.
 
  •   We had a quarterly record 12 new customers, six of which bought next gen solutions and six purchased our Eagle 5 solutions.
 
  •   We extended our reach into 5 new countries during the current quarter.
Balance Sheet and Liquidity
As of September 30, 2010, the Company’s consolidated cash and cash equivalents totaled $222.7 million compared to cash and cash equivalents of $226.3 million at June 30, 2010. Cash flows from operations were a negative $1.0 million for the third quarter of 2010, compared to positive cash flows of $12.3 million for the third quarter of 2009. Working capital at September 30, 2010 increased to $297.1 million from $295.5 million at June 30, 2010.
5200 Paramount Parkway, Morrisville, N.C., USA 27560 TEL +1.919.460.5500 FAX +1.919.460.0877

 

 

2010 Full Year Guidance
We believe that full year revenues will range between $430 million and $440 million and non-GAAP gross margins will be in the mid sixty percent range. Finally, we believe that our non-GAAP EPS range will be between $0.75 and $0.80 per diluted share and we expect the range for GAAP EPS will be between $0.30 and $0.35 per diluted share.
2010 Guidance
                   
      Current     Previous  
Revenues
     $ 430M - $440M     $ 430M - $450M  
Non-GAAP Gross Margin %
     mid 60’s   mid 60’s
Non-GAAP Diluted EPS *
     $ 0.75 - $0.80     $ 0.75 - $0.85  
GAAP Diluted EPS
     $ 0.30 - $0.35     $ 0.30 - $0.40  
 
*   Current and previous non-GAAP guidance excludes an estimated $13M and $15M, respectively, of stock-based compensation, $31M and $28M, respectively, of amortization of intangible assets and acquisition-related expenses, (net of the associated tax impact related to all of the adjustments above of approximately $13M) which are included in GAAP EPS. These non-GAAP adjustments after tax represent approximately $0.45 per share.
“Live” Webcast and Replay
Tekelec will host a live webcast of its conference call on Thursday, November 4, 2010, at 8:00 a.m. EDT to discuss third quarter 2010 results and certain forward-looking information concerning management’s outlook for the business. 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, November 4, 2010, and for 90 days thereafter. 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 to non-GAAP reconciliations) for the quarterly and year-to-date periods.
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 #14777140.
Non-GAAP Information
Certain non-GAAP financial measures are included in this press release. 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 to (i) evaluate financial results, (ii) manage the Company’s operations, and (iii) establish operational goals. Further, non-GAAP measures 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 release and the attachments to this release provide a reconciliation of each of the non-GAAP measures 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.
5200 Paramount Parkway, Morrisville, N.C., USA 27560 TEL +1.919.460.5500 FAX +1.919.460.0877

 

 

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 2009 Form 10-K, 2010 First, Second, and Third Quarter Forms 10-Q and its other filings with the Securities and Exchange Commission, the current or further detrimental changes in general economic, social, or political conditions in the countries in which we operate including the impact of credit availability and other economic factors on overall capital spending by our customers and resulting pressure on us to lower our prices, the rate and size of decline in demand for our SS7-based products, our ability to compete with other manufacturers that have lower cost bases than ours, are partially supported by foreign governments, and/or employ unfair trade practices, risks related to our international sales, markets and operations, including among others, import regulations, limited intellectual property protection, including protection of our software source code, increased costs and potential liabilities related to compliance with current and future security provisions in customer contracts and regulations, and security restrictions and access requirements imposed by governments, including in particular the government of India, exposure to increased bad debt expense and product and service disputes as a result of general economic conditions, the timeliness and functional competitiveness of our product releases, the timing and size of any increase in demand for our performance management, SIP, Diameter, policy and subscriber database products, the risk of infringing on, and litigating with others regarding their intellectual property rights, the timing of our recognition of revenues, the extent to which any customer outsourcing to our competitors or supplier consolidation increases the influence of competitors on our customers’ purchases, our ability to protect intellectual property rights, our ability to maintain OEM, partner, reseller, and vendor support and supply relationships, 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 enables billions of people and devices to talk, text, and access the Web. Our portfolio delivers a unique layer of intelligence allowing service providers to both manage and monetize the exponential growth in data traffic and applications. Tekelec has more than 25 offices around the world serving customers in more than 100 countries. For more information, please visit www.tekelec.com.
Contact:
Kyle Macemore | Vice President Finance and Investor Relations
(o) +1.919.380.6148 | kyle.macemore@tekelec.com
5200 Paramount Parkway, Morrisville, N.C., USA 27560 TEL +1.919.460.5500 FAX +1.919.460.0877

 

 

TEKELEC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2010     2009     2010     2009  
    (Thousands, except per share data)  
Revenues
   $ 108,305     $ 114,914     $ 333,803     $ 345,755  
Cost of sales:
                                
Cost of goods sold
     40,773       37,064       115,963       113,777  
Amortization of intangible assets
     7,594       1,567       13,094       4,599  
 
                        
Total cost of sales
     48,367       38,631       129,057       118,376  
 
                        
Gross profit
     59,938       76,283       204,746       227,379  
 
                        
Operating expenses:
                                
Research and development
     24,094       24,200       68,666       75,603  
Sales and marketing
     20,192       17,168       55,858       51,574  
General and administrative
     13,219       13,148       39,176       40,288  
Amortization of intangible assets
     1,613       327       2,864       960  
Acquisition-related expenses
     407       —       2,891       —  
 
                        
Total operating expenses
     59,525       54,843       169,455       168,425  
 
                        
Income from operations
     413       21,440       35,291       58,954  
 
                        
 
                                
Other income (expense), net
     (1,073 )     (10,666 )     (2,932 )     (13,287 )
Income (loss) from operations before provision for (benefit from) income taxes
     (660 )     10,774       32,359       45,667  
 
                        
Provision for (benefit from) income taxes
     (526 )     1,373       9,353       14,148  
 
                        
Net income (loss)
   $ (134 )   $ 9,401     $ 23,006     $ 31,519  
 
                        
 
                                
Earnings per share:
                                
Basic
   $ —     $ 0.14     $ 0.34     $ 0.47  
Diluted
     —       0.14       0.33       0.47  
 
                                
Weighted average number of shares outstanding:
                                
Basic
     68,526       67,215       68,179       66,748  
Diluted
     68,526       68,022       68,856       67,465  
 
(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 October 1, 2010 and October 2, 2009.
5200 Paramount Parkway, Morrisville, N.C., USA 27560 TEL +1.919.460.5500 FAX +1.919.460.0877

 

TEKELEC
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (1)
                 
    September 30,     December 31,  
    2010     2009  
    (Thousands, except share data)  
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 222,715     $ 277,259  
Trading securities, at fair value
     —       81,788  
Put right, at fair value
     —       11,069  
Accounts receivable, net
     141,940       157,369  
Inventories
     26,454       23,353  
Income taxes receivable
     —       1,617  
Deferred income taxes, current
     25,678       66,758  
Deferred costs and prepaid commissions
     42,573       56,645  
Prepaid expenses
     6,916       7,007  
Other current assets
     4,064       1,943  
 
            
Total current assets
     470,340       684,808  
 
Property and equipment, net
     37,842       35,267  
Deferred income taxes, net, noncurrent
     59,342       39,153  
Other assets
     1,480       1,661  
Goodwill
     136,143       42,102  
Intangible assets, net
     100,306       31,017  
 
            
Total assets
   $ 805,453     $ 834,008  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
 
                
Current liabilities:
                
Accounts payable
   $ 18,102     $ 28,114  
Accrued expenses
     14,554       25,372  
Accrued compensation and related expenses
     22,072       40,980  
Current portion of deferred revenues
     117,403       149,065  
Income taxes payable, current
     1,116       —  
 
            
Total current liabilities
     173,247       243,531  
 
                
Deferred income taxes, non current
     6,114       5,477  
Long-term portion of deferred revenues
     6,058       5,590  
Other long-term liabilities
     5,517       4,863  
 
            
Total liabilities
     190,936       259,461  
 
            
 
                
Commitments and Contingencies
                
 
                
Shareholders’ equity:
                
Common stock, without par value, 200,000,000 shares authorized; 68,583,068 and 67,382,600 shares issued and outstanding, respectively
     348,801       330,909  
Retained earnings
     264,826       241,820  
Accumulated other comprehensive income
     890       1,818  
 
            
Total shareholders’ equity
     614,517       574,547  
 
            
Total liabilities and shareholders’ equity
   $ 805,453     $ 834,008  
 
            
 
(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 October 1, 2010.
5200 Paramount Parkway, Morrisville, N.C., USA 27560 TEL +1.919.460.5500 FAX +1.919.460.0877

 

TEKELEC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 
    Nine Months Ended September 30,(1)  
    2010     2009  
    (Thousands)  
Cash flows from operating activities:
                
Net income
   $ 23,006     $ 31,519  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Impairment of investment in privately-held company
     —       13,587  
Gain on investments carried at fair value, net
     (118 )     (1,723 )
Provision for doubtful accounts and sales returns
     1,934       1,494  
Provision for warranty
     (1,305 )     5,000  
Inventory write downs
     3,164       4,738  
Loss on disposals of fixed assets
     51       64  
Depreciation
     12,383       13,966  
Amortization of intangible assets
     15,958       5,559  
Amortization, other
     612       562  
Deferred income taxes
     6,925       4,559  
Stock-based compensation
     9,914       10,275  
Excess tax benefits from stock-based compensation
     (872 )     (778 )
Changes in operating assets and liabilities, net of effect of acquisitions:
                
Accounts receivable
     20,112       60,322  
Inventories
     (5,660 )     (10,593 )
Deferred costs
     15,889       7,272  
Prepaid expenses
     56       1,017  
Other current assets
     545       (284 )
Accounts payable
     (16,461 )     (2,859 )
Accrued expenses
     (10,118 )     (11,963 )
Accrued compensation and related expenses
     (20,062 )     (7,503 )
Deferred revenues
     (39,079 )     (69,498 )
Income taxes receivable
     1,617       (1,725 )
Income taxes payable
     1,711       (6,080 )
 
            
Total adjustments
     (2,804 )     15,409  
 
            
Net cash provided by operating activities — continuing operations
     20,202       46,928  
Net cash used in operating activities — discontinued operations
     —       (184 )
 
            
Net cash provided by operating activities
     20,202       46,744  
 
            
 
                
Cash flows from investing activities:
                
Proceeds from sales and maturities of investments
     92,975       16,622  
Acquisition of Camiant and Blueslice, net of cash acquired
     (161,953 )     —  
Purchases of property and equipment
     (14,060 )     (14,563 )
 
            
Net cash provided by (used in) investing activities
     (83,038 )     2,059  
 
            
 
                
Cash flows from financing activities:
                
Proceeds from issuance of common stock
     10,892       9,707  
Payments of net share-settled payroll taxes related to equity awards
     (2,914 )     (2,121 )
Excess tax benefits from stock-based compensation
     872       778  
 
            
Net cash provided by financing activities
     8,850       8,364  
 
            
 
                
Effect of exchange rate changes on cash
     (558 )     (58 )
 
            
Net change in cash and cash equivalents
     (54,544 )     57,109  
Cash and cash equivalents, beginning of period
     277,259       209,441  
 
            
Cash and cash equivalents, end of period
   $ 222,715     $ 266,550  
 
            
 
(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 thirty-nine weeks ended October 1, 2010 and October 2, 2009.
5200 Paramount Parkway, Morrisville, N.C., USA 27560 TEL +1.919.460.5500 FAX +1.919.460.0877

 

TEKELEC
RECONCILIATIONS OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
for the Three Months Ended September 30, 2010 and 2009 (8)
                                 
    2010     2009  
            % of             % of  
    Amount     revenues     Amount     revenues  
    (Thousands, except percentages)  
Gross margins
   $ 59,938       55 %   $ 76,283       66 %
Adjustments:
                                
Amortization of intangible assets (1)
     7,594       7 %     1,567       1 %
Stock-Based Compensation (2)
     383       0 %     287       0 %
Acquisition related cash bonus(3)
     112       0 %     —       —  
 
                        
Non-GAAP gross margins
   $ 68,027       63 %   $ 78,137       68 %
 
                        
                                 
    2010     2009  
            % of             % of  
    Amount     revenues     Amount     revenues  
    (Thousands, except percentages)  
Operating margins
   $ 413       0 %   $ 21,440       19 %
Adjustments:
                                
Amortization of intangible assets(1)
     9,207       9 %     1,894       2 %
Stock-Based Compensation (2)
     2,971       3 %     3,302       3 %
Acquisition related cash bonus(3)
     1,999       2 %     220       0 %
Acquisiton related expenses-other(4)
     407       0 %     —       —  
 
                        
Non-GAAP operating margins
   $ 14,997       14 %   $ 26,856       23 %
 
                        
                                 
    2010     2009  
            per diluted             per diluted  
    Amount     share     Amount     share  
    (Thousands, except per share data)  
Net income (loss)
   $ (134 )   $ (0.00 )   $ 9,401     $ 0.14  
Adjustments:
                                
Amortization of intangible assets(1)
     9,207       0.13       1,894       0.03  
Stock-Based Compensation (2)
     2,971       0.04       3,302       0.05  
Acquisition related cash bonus(3)
     1,999       0.03       220       0.00  
Acquisiton related expenses-other(4)
     407       0.01       —       —  
Impairment of investment in privately-held company(5)
     —       —       10,159       0.15  
Provision for (benefit from) income taxes (6)
     (4,285 )     (0.06 )     (6,796 )     (0.10 )
 
                        
Non-GAAP net income
   $ 10,165     $ 0.15     $ 18,180     $ 0.27  
 
                        
 
                                
Weighted average number of shares outstanding:
                                
Basic
             68,526               67,215  
Diluted (7)
             68,860               68,022  
 
(1)   The adjustments represent the amortization of purchased technology and other intangibles related to acquired companies.
 
(2)   The adjustments represent stock-based compensation expense recognized related to awards of stock options, restricted stock or restricted stock units or stock appreciation rights granted under our equity incentive plans and stock purchase rights granted under our employee stock purchase plan.
 
(3)   The adjustment represents: (i) consideration payable to former Camiant employees for options not assumed in the merger; (ii) bonuses for certain Blueslice employees contingent upon their continued employment and the achievement of individual integration related milestones and (iii) consideration payable to Estacado that is contingent upon the continued employment of certain former Estacado employees by Tekelec.
 
(4)   The adjustment represents non-recurring employee related costs associated with our acquisition of Camiant and Blueslice.
 
(5)   The adjustment represents an impairment charge as a result of a decline in the estimated fair value as compared to historical cost for one of our investments in privately held companies. Partially offsetting this impairment is a one time property tax refund of $0.7 million associated with the former assets of a divested business unit.
 
(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 27% and 31% for 2010 and 2009, respectively.
 
(7)   The weighted average shares used in the calculation of diluted earnings per share for the three months ended September 30, 2010 includes 334,000 dilutive shares that were excluded from the GAAP calculation due to a net loss.
 
(8)   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 Reconciliations of Selected GAAP Measures to non-GAAP Measures are for the thirteen weeks ended October 1, 2010 and October 2, 2009.
5200 Paramount Parkway, Morrisville, N.C., USA 27560 TEL +1.919.460.5500 FAX +1.919.460.0877

 

TEKELEC
RECONCILIATIONS OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
for the Nine Months Ended September 30, 2010 and 2009 (7)
                                 
    2010     2009  
          % of           % of  
    Amount     revenues     Amount     revenues  
    (Thousands, except percentages)  
Gross margins
   $ 204,746       61 %   $ 227,379       66 %
Adjustments:
                                
Amortization of intangible assets(1)
     13,094       4 %     4,599       1 %
Stock-Based Compensation (2)
     1,048       0 %     785       0 %
Acquisition related cash bonus(3)
     177       0 %     —       0 %
 
                        
Non-GAAP gross margins
   $ 219,065       66 %   $ 232,763       67 %
 
                        
                                 
    2010     2009  
            % of             % of  
    Amount     revenues     Amount     revenues  
    (Thousands, except percentages)  
Operating margins
   $ 35,291       11 %   $ 58,954       17 %
Adjustments:
                                
Amortization of intangible assets(1)
     15,958       5 %     5,559       2 %
Stock-Based Compensation (2)
     9,914       3 %     10,275       3 %
Acquisition related cash bonus(3)
     3,168       1 %     660       0 %
Acquisiton related expenses-other(4)
     2,891       1 %     —       0 %
 
                        
Non-GAAP operating margins
   $ 67,222       20 %   $ 75,448       22 %
 
                        
                                 
    2010     2009  
            per diluted             per diluted  
    Amount     share     Amount     share  
    (Thousands, except per share data)  
Net income
   $ 23,006     $ 0.33     $ 31,519     $ 0.47  
Adjustments:
                                
Amortization of intangible assets (1)
     15,958       0.23       5,559       0.08  
Stock-Based Compensation (2)
     9,914       0.14       10,275       0.15  
Acquisition related cash bonus(3)
     3,168       0.05       660       0.01  
Acquisiton related expenses-other(4)
     2,891       0.04       —       —  
Impairment of investment in privately-held company(5)
     —       —       12,917       0.19  
Provision for (benefit from) income taxes (6)
     (9,422 )     (0.14 )     (9,907 )     (0.15 )
 
                        
Non-GAAP net income
   $ 45,515     $ 0.66     $ 51,023     $ 0.76  
 
                        
 
                                
Weighted average number of shares outstanding:
                                
Basic
             68,179               66,748  
Diluted
             68,856               67,465  
 
(1)   The adjustments represent the amortization of purchased technology and other intangibles related to acquired companies.
 
(2)   The adjustments represent stock-based compensation expense recognized related to awards of stock options, restricted stock or restricted stock units or stock appreciation rights granted under our equity incentive plans and stock purchase rights granted under our employee stock purchase plan.
 
(3)   The adjustment represents: (i) consideration payable to former Camiant employees for options not assumed in the merger; (ii) bonuses for certain Blueslice employees contingent upon their continued employment and the achievement of individual integration related milestones and (iii) consideration payable to Estacado that is contingent upon the continued employment of certain former Estacado employees by Tekelec.
 
(4)   The adjustment represents professional fees, travel and other costs associated with our acquisition of Camiant and Blueslice.
 
(5)   The adjustment represents an impairment charge as a result of a decline in the estimated fair value as compared to historical cost for one of our investments in privately held companies. Partially offsetting this impairment is a one time property tax refund of $0.7 million associated with the former assets of a divested business unit.
 
(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% and 32% for 2010 and 2009, respectively.
 
(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 accompanying Reconciliations of Selected GAAP Measures to non-GAAP Measures are for the thirty-nine weeks ended October 1, 2010 and October 2, 2009.
5200 Paramount Parkway, Morrisville, N.C., USA 27560 TEL +1.919.460.5500 FAX +1.919.460.0877