-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KrAHgZHbi0/kjlJtRt7Kq1q6l9tQrmMUCA5aa5aXdQ4vnlh0HcOgcKCB4wTNmTFE 5rN70T84KilHhnIB0dyBkA== 0000950148-04-001018.txt : 20041026 0000950148-04-001018.hdr.sgml : 20041026 20041026164813 ACCESSION NUMBER: 0000950148-04-001018 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041026 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041026 DATE AS OF CHANGE: 20041026 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEKELEC CENTRAL INDEX KEY: 0000790705 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 952746131 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15135 FILM NUMBER: 041097151 BUSINESS ADDRESS: STREET 1: 26580 W AGOURA RD CITY: CALABASAS STATE: CA ZIP: 91302 BUSINESS PHONE: 8188805656 MAIL ADDRESS: STREET 1: 26580 W AGOURA RD CITY: CALABASAS STATE: CA ZIP: 91302 8-K 1 v02714e8vk.htm TEKELEC - DATED OCTOBER 26, 2004 e8vk
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):    October 26, 2004

TEKELEC

(Exact name of registrant as specified in its charter)


         
California   0-15135   95-2746131
  		 
  		 
 
(State or other jurisdiction
of incorporation) 		  (Commission
File Number) 		  (IRS Employer
Identification No.)
         
 
26580 W. Agoura Road, Calabasas, California   91302
  		 
 
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code:    (818) 880-5656

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

     
o
  Written Communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
    
o
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
    
o
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
    
o
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

TABLE OF CONTENTS

i

 

Item 2.02 Results of Operations and Financial Condition

     On October 26, 2004, Tekelec issued a press release announcing its financial results for the fiscal third quarter ended September 30, 2004. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

     The information in this Form 8-K and in the exhibit furnished herewith shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01. Financial Statements and Exhibits

  (c)   Exhibits

     
Exhibit    
No.   Description
99.1
  Press Release dated October 26, 2004 of Tekelec

1

 

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  Tekelec
 		  
Dated: October 26, 2004  By:   /s/ Paul J. Pucino    
    Paul J. Pucino   
    Senior Vice President and Chief Financial Officer   

2

 

         

EXHIBIT INDEX

  (c)   Exhibits

     
Exhibit    
No.   Description
99.1
  Press Release dated October 26, 2004 of Tekelec

 

EX-99.1 2 v02714exv99w1.txt EXHIBIT 99.1 Exhibit 99.1 TEKELEC ANNOUNCES RECORD Q3 RESULTS; ACHIEVES ORDERS OF $150.8 MILLION AND REVENUE OF $106.6 MILLION CALABASAS, CA (Oct 26, 2004)... Tekelec (Nasdaq: TKLC) today reported financial results for its third quarter ended September 30, 2004. Revenue for the third quarter of 2004 was $106.6 million, compared to $70.7 million in the third quarter of 2003. On a GAAP basis, Tekelec's net income was $18.7 million, or $0.27 per diluted share, for the third quarter of 2004, compared to net income of $8.5 million, or $0.13 per diluted share, in the third quarter of 2003. Third quarter 2004 net income includes a $2.4 million one-time, non-cash charge for the write-off of acquired in-process research and development related to the VocalData acquisition, a $9.9 million pre-tax gain on Tekelec's investment in Telica and a $2.2 million pre-tax gain on the settlement of the Catapult convertible notes. Third quarter 2003 net income includes a $3.3 million, or $0.05 per diluted share, gain on disposal of discontinued operations. Non-GAAP net income for the third quarter of 2004, which excludes the effects of acquisition-related amortization, the write-off of acquired in-process research and development, the restructuring charge related to our manufacturing move, the write-off of certain acquired intangibles as a result of our previously announced rebranding activities, the gain on Tekelec's investment in Telica and the gain on the settlement of the Catapult convertible notes, was $14.9 million, or $0.21 per diluted share, compared to non-GAAP net income of $7.5 million, or $0.12 per diluted share, in the third quarter of 2003. Orders received in the third quarter for Tekelec products and services were $150.8 million, compared to $74.7 million in the third quarter in 2003. Tekelec President and CEO Fred Lax commented, "Tekelec's performance in the third quarter was excellent, reflecting the progress we are making on our strategic objectives of delivering world-class next-gen switching solutions, extending our signaling solutions leadership and expanding our value-added applications offerings, as we prudently pursue global expansion. The Company exceeded $100 million dollars of revenue for the first time in its history, with revenues increasing 12% sequentially and 51% year-over-year, and orders increasing 102% year-over-year. The $150.8 million of total orders generated during the quarter is the highest order total in the history of the Company, surpassing the previous order record of $138.1 million achieved in Q4 2003. The book-to-bill ratio of approximately 1.4 indicates the continuing strength of Tekelec's business, with all Groups achieving a book-to-bill above 1, and represents the eighth consecutive quarter in which Tekelec's book-to-bill ratio is above 1. This quarter's results, combined with the significant expansion of Tekelec's product portfolio with the additions of Steleus and VocalData, demonstrate that Tekelec continues to execute on its strategic objectives, while positioning itself for future growth opportunities. "Regarding our next-gen switching strategic initiative, revenues increased 17% sequentially to $15.1 million, and we added 16 new next-gen customers, bringing Tekelec's next-gen switching customer total to approximately 150. In September, we announced the acquisition of VocalData, a provider of hosted IP telephony applications that enable the delivery of advanced telecom services and applications, and now part of our Switching Solutions Group. VocalData is a North American market share leader in IP Centrex and, globally, has an estimated 34 percent share of all IP Centrex lines shipped. Tekelec will leverage VocalData's hosted IP telephony application server to provide an immediate, cost-effective path to IP service delivery for wireless, wireline and cable operators and their subscribers. "With regard to signaling solutions leadership, our Network Signaling Group significantly contributed to the Company's overall order total, generating a signaling book-to-bill even higher than the overall company book-to-bill ratio. Revenue for our Signaling Group was $81.1 million, up 43% year-over-year and the highest signaling revenue in the history of the Company, driven by robust sales in the U.S. and continued success on our global expansion efforts. To briefly highlight our continued success with the signaling hub providers, we are pleased to announce that Transaction Network Services (TNS), a provider of call signaling and database access services, has selected Tekelec's Eagle 5 Signaling Application System and integrated Sentinel business intelligence platform, as the foundation for upgrading XO Communications' signaling network. The XO deployment expands Tekelec's successful partnership with TNS, which has previously deployed two Eagle platforms in its signaling network. "In the area of value-added applications, on October 14th we announced the acquisition of Steleus, a global supplier of real-time performance management and business intelligence communications software solutions for both fixed and mobile telecom networks. Steleus forms the cornerstone of Tekelec's new Communications Software Solutions Group, which also includes Tekelec's existing business intelligence applications, such as billing verification, and other network element-independent applications. The acquisition reinforces Tekelec's ongoing strategic commitment to offer more value-added applications to our customers and to further enhance and differentiate our next-gen switching and signaling product offerings. The Steleus solutions enable operators to monitor their service and network performance as they transition from circuit to packet technology, helping to speed up the implementation of packet networks, while lowering the risk. "Regarding global expansion, approximately 33% of sales during the quarter were from outside the U.S., highlighting the progress we are making on our global expansion efforts. As one example of this success, we are pleased to announce that Far EasTone, the second largest mobile operator in Taiwan, has purchased Tekelec's Eagle 5 Signaling Application System and G-Port solution to provide mobile number portability for its national GSM network. The sale demonstrates the progress Tekelec is making in the Asia/Pacific region and also highlights the on-going opportunities, worldwide, for Tekelec to sell its industry-leading number portability solution. "Finally, I am pleased to announce that Mark Floyd, the CEO of Entrisphere, a privately-held company focused on broadband solutions that offers incumbent carriers an operationally transparent pathway from today's overlay networks to tomorrow's converged multiservice networks, has joined Tekelec's Board of Directors. Mark has been serving as an advisor to Tekelec for the past year. Prior to joining Entrisphere, Mark was president and CEO of Siemens Information and Communication Networks-U.S., a leading provider of integrated voice and data networks and solutions for enterprises, carriers and service providers around the world. In 1993 he founded Efficient Networks, which Siemens acquired in April 2001. We are delighted to have a telecom industry veteran like Mark joining our Board." GROUP REVENUE RESULTS
REVENUE GROUP Q3 2004 ($ IN MILLIONS) Q3 2003 ($ IN MILLIONS) Switching Solutions $15.1 $4.6 Network Signaling $81.1 $56.8 IEX Contact Center $10.4 $9.4
Q4 FINANCIAL GUIDANCE
Q4 2004 GUIDANCE Q4 2003 ACTUAL RESULTS Total Revenues: $112.0 million - $115.0 million $75.0 million GAAP Net Income $0.12 - $0.13 per diluted share(1) $0.11 per diluted share
- ---------- (1) For the 4th quarter of 2004, Tekelec expects expenses to include amortization of acquired intangibles and amortization of non-cash stock based deferred compensation of approximately $3.0 million, pre-tax. In addition, the Company expects approximately $200,000, pretax, of restructuring charges related to the manufacturing move. This guidance excludes any potential acquired in-process research and development charge related to the Steleus acquisition. Lax concluded, "The record revenue and order totals, coupled with the continued strength of our core signaling business, success in our next-gen switching efforts, and global expansion, highlight the progress we are making executing on our strategic objectives. Tekelec's solutions portfolio of next-gen switching, signaling, and value-added applications, which now includes the Steleus and VocalData products, uniquely position us to support our customers as they evolve their networks to IP at their own pace, implementing exactly what they need, when they need it." EMPLOYMENT INDUCEMENT STOCK OPTIONS On October 25, 2004, 85 new Tekelec employees hired during the third quarter of 2004 were granted options to purchase a total of 537,550 shares of Tekelec common stock. The number of shares subject to such options amounts to less than 1% of the outstanding shares of Tekelec common stock. The option grants were made under Tekelec's 2004 Equity Incentive Plan for New Employees and met the "employee inducement" exception to the Nasdaq rules requiring shareholder approval of equity-based incentive plans. ABOUT TEKELEC Tekelec is a leading developer of now and next-generation switching and signaling telecommunications solutions, network performance management technology, and value-added applications. Tekelec's innovative solutions are widely deployed in traditional and next-generation wireline and wireless networks and contact centers worldwide. Corporate headquarters are located in Calabasas, CA. with research and development facilities and sales offices throughout the world. For more information, please visit www.tekelec.com. NON-GAAP INFORMATION Certain non-GAAP financial measures are included in this press release. In the calculation of these measures, Tekelec excludes certain items such as amortization of acquired intangibles, discontinued operations, non-cash stock based compensation charges, and unusual, non-recurring 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 our prospects for the future and underlying trends in Tekelec's operating expenditures and continuing operations. Management uses such non-GAAP measures to evaluate financial results and to establish operational goals. In addition, since the Company has historically reported non-GAAP measures to the investment community, we believe the inclusion of this information provides consistency in our financial reporting. The attachments to this release provide a reconciliation of non-GAAP net income referred to in this release to the most directly comparable GAAP measure, GAAP net income from continuing operations. 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 news release are forward looking, reflect the Company's current intent, belief or expectations and involve certain risks and uncertainties. There can be no assurance that the Company's actual future performance will meet the Company's expectations. As discussed in the Company's 2003 Annual Report on Form 10-K and other filings with the SEC, the Company's future operating results are difficult to predict and subject to significant fluctuations. Factors that may cause future results to differ materially from the Company's current expectations include, among others: overall telecommunications spending, changes in general economic conditions, the timing of significant orders and shipments, the lengthy sales cycle for the Company's products, the timing of the convergence of voice and data networks, the success or failure of strategic alliances or acquisitions including the success or failure of the integration of Santera,Taqua, Steleus, and VocalData's operations with those of the Company, the ability of carriers to utilize excess capacity of signaling infrastructure and related products in their networks, the capital spending patterns of customers, the dependence on wireless customers for a significant percentage and growth of the Company's revenues, the timely development and introduction of new products and services, product mix, the geographic mix of the Company's revenues and the associated impact on gross margins, market acceptance of new products and technologies, carrier deployment of intelligent network services, the ability of our customers to obtain financing, the level and timing of research and development expenditures, regulatory changes, and the expansion of the Company's marketing and support organizations, both domestically and internationally. The Company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. TEKELEC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2004 2003 2004 2003 - ------------------------------------------------------------------------------------------------------------------------------ (thousands, except earnings per share data) REVENUES $ 106,636 $ 70,747 $ 281,124 $ 188,675 COSTS AND EXPENSES: Cost of goods sold 25,684 14,488 69,022 44,009 Amortization of purchased technology 1,497 2,964 6,953 8,102 Research and development 25,461 20,696 70,249 51,183 Selling, general and administrative 37,603 28,344 108,039 74,681 Acquired in-process research and development 2,400 -- 10,400 2,900 Amortization of intangibles 763 543 1,704 1,368 Restructuring(1) 275 -- 1,327 -- - ------------------------------------------------------------------------------------------------------------------------------ Income (Loss) from operations 12,953 3,712 13,430 6,432 Interest and other income (expense), net 37 (1,583) 152 (3,437) Gain on notes receivable 2,186 -- 2,186 -- Gain on investment in privately-held company 9,869 -- 9,869 -- - ------------------------------------------------------------------------------------------------------------------------------ Income (Loss) from continuing operations before provision for 25,045 2,129 25,637 2,995 income taxes Provision for income taxes(2) 13,873 4,987 27,078 7,634 - ------------------------------------------------------------------------------------------------------------------------------ Income (Loss) from continuing operations before 11,172 (2,858) (1,441) (4,639) minority interest Minority interest 7,565 8,015 25,723 12,520 - ------------------------------------------------------------------------------------------------------------------------------ INCOME FROM CONTINUING OPERATIONS 18,737 5,157 24,282 7,881 - ------------------------------------------------------------------------------------------------------------------------------ Gain on disposal of discontinued operation(3) -- 3,293 -- 3,293 - ------------------------------------------------------------------------------------------------------------------------------ NET INCOME (LOSS) $ 18,737 $ 8,450 $ 24,282 $ 11,174 ============================================================================================================================== EARNINGS PER SHARE FROM CONTINUING OPERATIONS Basic $ 0.30 $ 0.09 $ 0.39 $ 0.13 Diluted(4) 0.27 0.08 0.36 0.12 - ------------------------------------------------------------------------------------------------------------------------------ EARNINGS PER SHARE FROM GAIN ON DISPOSAL OF DISCONTINUED OPERATION Basic $ -- $ 0.05 $ -- $ 0.05 Diluted(4) -- 0.05 -- 0.05 - ------------------------------------------------------------------------------------------------------------------------------ EARNINGS PER SHARE Basic $ 0.30 $ 0.14 $ 0.39 $ 0.18 Diluted(4) 0.27 0.13 0.36 0.17 - ------------------------------------------------------------------------------------------------------------------------------ EARNINGS PER SHARE WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: Basic 63,172 61,206 62,554 61,057 Diluted(4) 72,332 69,915 71,801 68,848
Notes to Condensed Consolidated Statements of Operations (000's): (1) This amount represents restructuring costs related to the relocation of our manufacturing operations. (2) For the three and nine months ended September 30, 2004, Santera, a majority-owned company, is included in the consolidated results of operations of Tekelec. The consolidated provision for income taxes does not include any benefit from the losses generated by Santera due to the following: - - Santera's losses cannot be included on Tekelec's consolidated federal tax return because its ownership interest in Santera does not meet the threshold to consolidate under income tax rules and regulations. - - A full valuation allowance has been established on the income tax benefits generated by Santera as a result of Santera's historical operating losses. (3) The sale of the Network Diagnostics Division in August 2002 resulted in a gain on the disposal of discontinued operation for the three and nine months ended September 30, 2003 and was due to the settlement of the final working capital adjustment in accordance with the asset purchase agreement. (4) For the three and nine months ended September 30, 2004 and the three and nine months ended September 30, 2003, the calculation of earnings per share includes, for the purposes of the calculation, the add-back to net income of $581, $1,743, $591 and $684, respectively, for assumed after-tax interest cost related to the convertible debt using the "if-converted" method of accounting for diluted earnings per share. The weighted average number of shares outstanding for the three and nine months ended September 30, 2004 and the three months ended September 30, 2003 includes 6,361 shares, respectively, related to the convertible debt using the "if-converted" method. TEKELEC NON-GAAP(1) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2004 2003 2004 2003 - ------------------------------------------------------------------------------------------------------------------------------- (thousands, except earnings per share data) REVENUES $ 106,636 $ 70,747 $ 281,124 $ 188,675 COSTS AND EXPENSES: Cost of goods sold 25,868 14,631 69,627 44,418 Research and development 25,325 20,696 70,017 51,183 Selling, general and administrative 37,273 28,344 107,476 74,681 - ------------------------------------------------------------------------------------------------------------------------------- Income from operations 18,170 7,076 34,004 18,393 Interest and other income (expense), net 37 (537) 152 (2,391) - ------------------------------------------------------------------------------------------------------------------------------- Income before provision for income taxes 18,207 6,539 34,156 16,002 Provision for income taxes(2) 10,321 5,900 25,127 10,566 - ------------------------------------------------------------------------------------------------------------------------------- Income before minority interest 7,886 639 9,029 5,436 Minority interest 7,001 6,850 23,338 9,362 - ------------------------------------------------------------------------------------------------------------------------------- NON-GAAP NET INCOME $ 14,887 $ 7,489 $ 32,367 $ 14,798 - ------------------------------------------------------------------------------------------------------------------------------- NON-GAAP EARNINGS PER SHARE Basic $ 0.24 $ 0.12 $ 0.52 $ 0.24 Diluted 0.21 0.12 0.48 0.22 =============================================================================================================================== NON-GAAP EARNINGS PER SHARE WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: Basic 63,172 61,206 62,554 61,057 Diluted 72,332(3) 69,915(4) 71,801(3) 68,848(4)
Notes to Non-GAAP Condensed Consolidated Statements of Operations (000's): (1) The above Non-GAAP Statements of Operations exclude the effects of the following: - - For the three and nine months ended September 30, 2004, restructuring costs related to the relocation of our manufacturing operations amounted to $275 and $1,327, respectively. - - For the three and nine months ended September 30, 2004, amortization of deferred stock compensation related to the unvested portion of stock options granted as part of the Taqua acquisition amounted to $469 and $800, respectively. - - For three and nine months ended September 30, 2004 the amortization of purchased technology and other intangibles related to the acquisitions of Santera, Taqua and VocalData amounted to $763 and $6,737, respectively. The related income tax benefits for the three and nine months ended September 30, 2004 were $551 and $1,666, respectively. - - For the three and nine months ended September 30, 2003, the amortization of purchased technology and other tangibles related to the acquisition of IEX and Santera amounted to $3,364 and $9,106, respectively. The related income tax benefits for the three and nine months ended September 30, 2003 were $557 and $2,576, respectively. For the nine months ended September 30, 2003, the write-off of in-process research and development related to the acquisition of Santera was $2,900. The minority interest impact of the amortization and write-off for the three and nine months ended September 30, 2003 was $1,165 and $3,158, respectively. - - For the three and nine months ended September 30, 2004, a gain of $2,186 on the settlement of our convertible notes receivable from Catapult. - - For the three and nine months ended September 30, 2004, a gain of $9,869 on the sale of our investment in Telica. - - Write-off of bond issuance costs of $1,046 related to the July 2003 retirement of the convertible debt issued in 1999. - - Gain on disposal of discontinued operation, net of income taxes, related to the sale of the Network Diagnostics Division for the three and nine months ended September 30, 2003 in the amount of $3,293. (2) The above Non-GAAP Statements of Operations assume an effective income tax rate of 35% and 34% for the Tekelec business excluding Santera for the three and nine months ended September 30, 2004 and 2003, respectively. There were no income tax benefits associated with the losses generated by Santera. (3) For the three and nine months ended September 30, 2004, the calculation of earnings per share includes, for the purposes of the calculation, the add-back to net income of $581 and $1,743, respectively for assumed after-tax interest cost related to the convertible debt using the "if-converted" method of accounting for diluted earnings per share. The weighted average number of shares outstanding for both the three and nine months ended September 30, 2004 includes 6,361 shares related to the convertible debt using the "if-converted" method. For all other periods presented, the results of the "if-converted" calculations are anti-dilutive and therefore excluded from earnings per share. (4) For the three and nine months ended September 30, 2003, the calculation of earnings per share includes, for the purposes of the calculation, the add-back to net income of $591and $684, respectively, for assumed after-tax interest cost related to the convertible debt using the "if- converted" method of accounting for diluted earnings per share. The weighted average number of shares outstanding for the three and nine months ended September 30, 2003 includes 6,361shares related to the convertible debt using the "if-converted" method. TEKELEC CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, December 31, 2004 2003 - ----------------------------------------------------------------------------------------------------------------- (unaudited) (thousands) ASSETS Current assets: Cash and cash equivalents $ 45,744 $ 45,261 Short-term investments, at fair value 116,753 83,800 Accounts receivable, net 87,709 52,781 Other receivables 17,893 -- Current portion of notes receivable ($17,300 principal amount) -- 17,580 Inventories 33,694 21,434 Deferred income taxes, net 21,851 4,958 Prepaid expenses and other current assets 35,804 22,088 - ------------------------------------------------------------------------------------------------------------ Total current assets 359,448 247,902 Long-term investments, at fair value 104,470 210,298 Property and equipment, net 29,835 22,172 Investments in privately-held companies 7,322 17,322 Deferred income taxes 32,862 7,876 Other assets 6,455 6,342 Goodwill, net 104,232 68,903 Intangible assets, net 63,622 34,118 - ------------------------------------------------------------------------------------------------------------ Total assets $708,246 $614,933 ============================================================================================================ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of deferred revenues $ 63,924 $ 50,105 Other current liabilities 96,938 62,758 - ------------------------------------------------------------------------------------------------------------ Total current liabilities 160,862 112,863 Long-term convertible debt 125,000 125,000 Long-term portion of notes payable 1,834 2,574 Long-term portion of deferred revenues 1,691 3,687 Deferred income taxes 13,025 790 - ------------------------------------------------------------------------------------------------------------ Total liabilities 302,412 244,914 - ------------------------------------------------------------------------------------------------------------ Minority interest 15,485 41,208 - ------------------------------------------------------------------------------------------------------------ Total shareholders' equity 390,349 328,811 - ------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $708,246 $614,933 ============================================================================================================
TEKELEC IMPACT OF NON-GAAP ADJUSTMENTS ON NET INCOME (unaudited)
THREE MONTHS ENDED SEPTEMBER 30, 2004 - --------------------------------------------------------------------------------------------------------------------------------- (thousands, except earnings per share data) - --------------------------------------------------------------------------------------------------------------------------------- GAAP ADJUSTMENTS NON-GAAP - --------------------------------------------------------------------------------------------------------------------------------- REVENUES $106,636 $ -- $106,636 COSTS AND EXPENSES: Cost of goods sold 25,684 (7)(1)(2) 25,677 Amortization of purchased technology 1,497 (1,306)(2) 191 - --------------------------------------------------------------------------------------------------------------------------------- Total cost of sales 27,181 (1,313) 25,868 - --------------------------------------------------------------------------------------------------------------------------------- GROSS PROFIT 79,455 74.5% 1,313 80,768 75.7% - --------------------------------------------------------------------------------------------------------------------------------- Research and development 25,461 (136)(1) 25,325 Selling, general and administrative 37,603 (330)(1) 37,273 Acquired in-process research and development 2,400 (2,400)(2) -- Amortization of intangibles 763 (763)(2) -- Restructuring 275 (275)(3) -- - --------------------------------------------------------------------------------------------------------------------------------- Total operating expenses 66,502 (3,904) 62,598 - --------------------------------------------------------------------------------------------------------------------------------- Income (Loss) from operations 12,953 5,217 18,170 Interest and other income (expense), net 37 -- 37 Gain on notes receivable 2,186 (2,186)(4) -- Gain on investment in privately-held company 9,869 (9,869)(5) -- - --------------------------------------------------------------------------------------------------------------------------------- Income (Loss) from continuing operations before provision for income taxes 25,045 (6,838) 18,207 Provision for income taxes 13,873 (3,552)(6) 10,321 - --------------------------------------------------------------------------------------------------------------------------------- Income (Loss) from continuing operations before minority interest 11,172 (3,286) 7,886 Minority Interest 7,565 (564)(7) 7,001 - --------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) $ 18,737 $ (3,850) $ 14,887 ================================================================================================================================= EARNINGS PER SHARE Basic $ 0.30 $ 0.24 Diluted(8) 0.27 0.21 - --------------------------------------------------------------------------------------------------------------------------------- EARNINGS PER SHARE WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: Basic 63,172 63,172 Diluted(8) 72,332 72,332 =================================================================================================================================
(1) The adjustments represent the amortization of deferred stock compensation related to the unvested portion of stock options granted as part of the Taqua acquisition. (2) The adjustments represent the amortization of purchased technology and other intangibles related to the acquisition of Santera, Taqua and VocalData and the write-off of acquired in-process research and development related to the acquisition of VocalData. (3) The adjustment represents restructuring costs related to the relocation of our manufacturing operation. (4) The adjustment represents a gain on the settlement of our convertible notes receivable from Catapult. (5) The adjustment represents a gain on the sale of our investment in Telica. (6) The adjustments represents the income tax effect of footnotes (1), (2), (3), (4) and (5) in order to reflect our non- GAAP effective tax rate at 35% for the Tekelec business, excluding Santera. (7) The adjustment represents the minority interest impact of footnote (2). (8) For the three months ended September 30, 2004, the non-GAAP calculation of earnings per share includes for the purpose of calculation the add-back to net income of $581 for assumed after-tax interest cost related to the convertible debt using the "if-converted" method of accounting for diluted earnings per share. The weighted average number of shares outstanding for the three months ended September 30, 2004 includes 6,361 shares related to the convertible debt using the "if-converted" method. TEKELEC IMPACT OF NON-GAAP ADJUSTMENTS ON NET INCOME (unaudited)
THREE MONTHS ENDED SEPTEMBER 30, 2003 - ------------------------------------------------------------------------------------------------------------------------------- (thousands, except earnings per share data) - ------------------------------------------------------------------------------------------------------------------------------- GAAP ADJUSTMENTS NON-GAAP - ------------------------------------------------------------------------------------------------------------------------------- REVENUES $ 70,747 $ -- $ 70,747 COSTS AND EXPENSES: Cost of goods sold 14,488 -- 14,488 Amortization of purchased technology 2,964 (2,821)(1) 143 - ------------------------------------------------------------------------------------------------------------------------------- Total cost of sales 17,452 (2,821) 14,631 - ------------------------------------------------------------------------------------------------------------------------------- GROSS PROFIT 53,295 75.3% 2,821 56,116 79.3% - ------------------------------------------------------------------------------------------------------------------------------- Research and development 20,696 -- 20,696 Selling, general and administrative 28,344 -- 28,344 Amortization of intangibles 543 (543)(1) -- - ------------------------------------------------------------------------------------------------------------------------------- Total operating expenses 49,583 (543) 49,040 - ------------------------------------------------------------------------------------------------------------------------------- Income (Loss) from operations 3,712 3,364 7,076 Interest and other income (expense), net (1,583) 1,046(2) (537) - ------------------------------------------------------------------------------------------------------------------------------- Income (Loss) from continuing operations before provision for 2,129 4,410 6,539 income taxes Provision for income taxes 4,987 913(3) 5,900 - ------------------------------------------------------------------------------------------------------------------------------- Income (Loss) from continuing operations before minority interest (2,858) 3,497 639 Minority interest 8,015 (1,165)(4) 6,850 - ------------------------------------------------------------------------------------------------------------------------------- INCOME FROM CONTINUING OPERATIONS 5,157 2,332 7,489 Gain on disposal of discontinued operation 3,293 (3,293)(5) -- - ------------------------------------------------------------------------------------------------------------------------------- Net income $ 8,450 $ (961) $ 7,489 =============================================================================================================================== EARNINGS PER SHARE FROM CONTINUING OPERATIONS Basic $ 0.09 $ 0.12 Diluted(6) 0.08 0.12 - ------------------------------------------------------------------------------------------------------------------------------- EARNINGS PER SHARE FROM GAIN ON DISPOSAL OF DISCONTINUED OPERATION Basic $ 0.05 $ -- Diluted(6) 0.05 -- - ------------------------------------------------------------------------------------------------------------------------------- EARNINGS PER SHARE Basic $ 0.14 $ 0.12 Diluted(6) 0.13 0.12 - ------------------------------------------------------------------------------------------------------------------------------- Earnings per share weighted average number of shares outstanding: Basic 61,206 61,206 Diluted(6) 69,915 69,915 ===============================================================================================================================
(1) The adjustments represent the amortization of purchased technology and other intangibles related to the acquisition of IEX and Santera and the related income tax benefit and the write-off of acquired in-process research and development related to the acquisition of Santera. (2) The adjustment represents the write-off of unamortized bond issuance costs of $1,046 related to the July 2003 retirement of the convertible debt issued in 1999. (3) The adjustment represents the income tax effect of the adjustment of amortization of technology and other intangibles in order to reflect our non-GAAP effective tax rate at 34% for the Tekelec business, excluding Santera. (4) The adjustment represents the minority interest impact of (1). (5) The adjustment represents the gain on the sale of the Network Diagnostics Division and was due to the settlement of the final working capital adjustment in accordance with the asset purchase agreement. (6) For the three months ended September 30, 2003, the calculation of earnings per share includes, for the purposes of the calculation, the add-back to net income of $591 for assumed after-tax interest cost related to the convertible debt using the "if-converted" method of accounting for diluted earnings per share. The weighted average number of shares outstanding for the three months ended September 30, 2003 includes 6,361 shares related to the convertible debt using the "if-converted" method. TEKELEC IMPACT OF NON-GAAP ADJUSTMENTS ON NET INCOME (unaudited)
NINE MONTHS ENDED SEPTEMBER 30, 2004 - ----------------------------------------------------------------------------------------------------------------------------------- (thousands, except earnings per share data) - ----------------------------------------------------------------------------------------------------------------------------------- GAAP ADJUSTMENTS NON-GAAP - ----------------------------------------------------------------------------------------------------------------------------------- REVENUES $ 281,124 $ -- $281,124 COSTS AND EXPENSES: Cost of goods sold 69,022 (9)(1)(2) 69,013 Amortization of purchased technology 6,953 (6,339)(2) 614 - ----------------------------------------------------------------------------------------------------------------------------------- Total cost of sales 75,975 (6,348) 69,627 - ----------------------------------------------------------------------------------------------------------------------------------- GROSS PROFIT 205,149 73.0% 6,348 211,497 75.2% - ----------------------------------------------------------------------------------------------------------------------------------- Research and development 70,249 (232)(1) 70,017 Selling, general and administrative 108,039 (563)(1) 107,476 Acquired in-process research and development 10,400 (10,400)(2) -- Amortization of intangibles 1,704 (1,704)(2) -- Restructuring 1,327 (1,327)(3) -- - ----------------------------------------------------------------------------------------------------------------------------------- Total operating expenses 191,719 (14,226) 177,493 - ----------------------------------------------------------------------------------------------------------------------------------- Income from operations 13,430 20,574 34,004 Interest and other income (expense), net 152 -- 152 Gain on note receivable 2,186 (2,186)(4) -- Gain on investment in privately-held company 9,869 (9,869)(5) -- - ----------------------------------------------------------------------------------------------------------------------------------- Income from continuing operations before provision for income 25,637 8,519 34,156 taxes Provision for income taxes 27,078 (1,951)(6) 25,127 - ----------------------------------------------------------------------------------------------------------------------------- Income (Loss) from continuing operations before minority interest (1,441) 10,470 9,029 Minority Interest 25,723 (2,385)(7) 23,338 - ----------------------------------------------------------------------------------------------------------------------------------- NET INCOME $ 24,282 8,085 $ 32,367 =================================================================================================================================== EARNINGS PER SHARE Basic $ 0.39 $ 0.52 Diluted(8) 0.36 0.48 - ----------------------------------------------------------------------------------------------------------------------------------- Basic 62,554 62,554 Diluted(8) 71,801 71,801 ===================================================================================================================================
(1) The adjustments represent the amortization of deferred stock compensation related to the unvested portion of stock options granted as part of the Taqua acquisition. (2) The adjustments represent the amortization of purchased technology and other intangibles related to the acquisition of IEX, Santera, Taqua and VocalData and the write-off of in-process research and development related to the acquisition of Taqua and VocalData. (3) The adjustment represents restructuring costs related to the relocation of our manufacturing operation. (4) The adjustment represents a gain on the settlement of our convertible notes receivable from Catapult. (5) The adjustment represents a gain on the sale of our investment in Telica. (6) The adjustments represents the income tax effects of footnotes (1), (2), (3), (4) and (5) in order to reflect our non-GAAP effective tax rate at 35% for the Tekelec business, excluding Santera. (7) The adjustment represents the minority interest impact of footnote (2). (8) For the nine months ended September 30, 2004, the non-GAAP calculation of earnings per share includes for the purpose of calculation the add-back to net income of $1,743 for assumed after-tax interest cost related to the convertible debt using the "if-converted" method of accounting for diluted earnings per share. The weighted average number of shares outstanding for the nine months ended September 30, 2004 includes 6,361 shares related to the convertible debt using the "if-converted" method. TEKELEC IMPACT OF NON-GAAP ADJUSTMENTS ON NET INCOME (unaudited)
NINE MONTHS ENDED SEPTEMBER 30, 2003 - ------------------------------------------------------------------------------------------------------------------------------- (thousands, except earnings per share data) - ------------------------------------------------------------------------------------------------------------------------------- GAAP ADJUSTMENTS NON-GAAP - ------------------------------------------------------------------------------------------------------------------------------- REVENUES $ 188,675 $ -- $ 188,675 COSTS AND EXPENSES: Cost of goods sold 44,009 -- 44,009 Amortization of purchased technology 8,102 (7,693)(1) 409 - ------------------------------------------------------------------------------------------------------------------------------- Total cost of sales 52,111 (7,693) 44,418 - ------------------------------------------------------------------------------------------------------------------------------- GROSS PROFIT 136,564 72.4% 7,693 144,257 76.5% - ------------------------------------------------------------------------------------------------------------------------------- Research and development 51,183 -- 51,183 Selling, general and administrative 74,681 -- 74,681 Acquired in-process research and development 2,900 (2,900)(1) -- Amortization of intangibles 1,368 (1,368)(1) -- - ------------------------------------------------------------------------------------------------------------------------------- Total operating expenses 130,132 (4,268) 125,864 - ------------------------------------------------------------------------------------------------------------------------------- Income from operations 6,432 11,961 18,393 Interest and other income (expense), net (3,437) 1,046(2) (2,391) - ------------------------------------------------------------------------------------------------------------------------------- Income from continuing operations before provision for income 2,995 13,007 16,002 taxes Provision for income taxes 7,634 2,932(3) 10,566 - ------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST (4,639) 10,075 5,436 MINORITY INTEREST 12,520 (3,158)(4) 9,362 - ------------------------------------------------------------------------------------------------------------------------------- INCOME FROM CONTINUING OPERATIONS 7,881 6,917 14,798 Gain on disposal of discontinued operation 3,293 (3,293)(5) -- - ------------------------------------------------------------------------------------------------------------------------------- NET INCOME $ 11,174 $ 3,624 $ 14,798 =============================================================================================================================== EARNINGS PER SHARE FROM CONTINUING OPERATIONS Basic 0.13 0.24 Diluted(6) 0.12 0.22 - ------------------------------------------------------------------------------------------------------------------------------ EARNINGS PER SHARE FROM GAIN ON DISPOSAL OF DISCONTINUED OPERATION Basic 0.05 -- Diluted(6) 0.05 -- - ------------------------------------------------------------------------------------------------------------------------------- EARNINGS PER SHARE Basic $ 0.18 $ 0.24 Diluted(6) 0.17 0.22 - ------------------------------------------------------------------------------------------------------------------------------- Earnings per share weighted average number of shares outstanding: Basic 61,057 61,057 Diluted(6) 68,848 68,848 =============================================================================================================================
(1) The adjustments represent the amortization of purchased technology and other intangibles related to the acquisition of IEX and Santera and the related income tax benefit and the write-off of in-process research and development related to the acquisition of Santera. (2) The adjustment represents the write-off of unamortized bond issuance costs of $1,046 related to the July 2003 retirement of the convertible debt issued in 1999. (3) The adjustment represents the income tax effect of the adjustment of amortization of technology and other intangibles in order to reflect our non-GAAP effective tax rate at 34% for the Tekelec business, excluding Santera. (4) The adjustment represents minority interest impact of footnote (1). (5) The adjustment represents the gain on the sale of the Network Diagnostics Division and was due to the settlement of the final working capital adjustment in accordance with the asset purchase agreement. (6) For the nine months ended September 30, 2003, the calculation of earnings per share includes, for the purposes of the calculation, the add-back to net income of $684 for assumed after-tax interest cost related to the convertible debt using the "if-converted" method of accounting for diluted earnings per share. The weighted average number of shares outstanding for the nine months ended September 30, 2003 includes 6,361 shares related to the convertible debt using the "if-converted" method. -----END PRIVACY-ENHANCED MESSAGE-----