Hi John & All...Earnings Report...
Here it is...looks great!!!
Wednesday July 19, 4:32 pm Eastern Time
Company Press Release
Tekelec Reports 84 Percent Increase in
Second Quarter Pro Forma Net Income
CALABASAS, Calif.--(BUSINESS WIRE)--July 19, 2000--Tekelec (Nasdaq:TKLC - news)
today reported financial results for the second quarter ended June 30, 2000.
Revenues for the second quarter increased 43 percent to $74.1 million from $51.7 million
in the second quarter of 1999. Pro forma net income, which excludes the effects of
acquisition-related amortization and other merger charges, increased 84 percent to $8.7
million, or $0.14 per diluted share, compared to pro forma net income of $4.7 million, or
$0.08 per diluted share, in the second quarter of 1999.
Inclusive of the merger charges, actual net income for the second quarter of 2000 was $2.0
million, or $0.03 per diluted share, compared with a net loss of $6.1 million, or $0.11 per
share, on the same basis in the comparable period a year ago.
Orders for the Company's products in the second quarter increased 21 percent to $80.4
million from $66.3 million a year ago. Total backlog at June 30, 2000 grew to $161.0
million, consisting of $88.7 million in product backlog and $72.3 million in multi-year
service agreements.
Tekelec President and CEO Michael L. Margolis commented, ``Our strong results represent
a continuing validation of our strategic initiatives and escalated R&D commitment during
the past 18 months. The investments we've made position us comfortably in the lead in
supplying signaling infrastructure for converged voice/data network architectures, and
establish Tekelec as highly competitive within the emerging 'softswitch' market, a new
opportunity for the company.''
``Fast growing wireless networks also continue to be an important driver of our business,''
Margolis added. ``In addition to opportunities fueled by surging wireless traffic today, the
convergence of wireless networks and the Internet is a macro trend that will result in
exciting growth opportunities for Tekelec in the future. Increasingly, we believe wireless
operators will look to Tekelec to open up their networks to packet technologies to develop
data-centric service applications, and gain the efficiency of SS7 signaling over IP.
``Highlights from the second quarter include:
Four orders for our IP7 family of SS7 / IP signaling solutions, including a strategic
order for IP7 lab nodes from Cisco Systems, extending our collaborative efforts to
develop interoperable solutions for packet-switching networks.
A growing number of wireless carriers that ordered or deployed our network solutions
during the quarter including AT&T Wireless, VoiceStream Wireless, BellSouth
Cellular, Sprint and Telcel.
Expansion of our international customer base to include British Telecom's Dutch
subsidiary, Telfort, as well as follow-on orders from existing European-based
customers France Telecom and Vodafone. To support our growing base of overseas
customers, we expanded our European headquarters to include a customer support
center providing technical assistance, integration services and training.
Announcement of dramatic increases in capacity and performance of our
industry-leading EAGLE signal transfer point (STP) to reflect a 1,300 percent increase
in capacity and connectivity and a 200 percent increase in transaction rates for service
applications.
The introduction of our ASi 4000 Service Control Point (SCP) high capacity services
platform for traditional and IP-enabled networks. ASi 4000 features prepackaged
applications such as calling name delivery and travel card management, as well as a
service creation environment for flexible development of new service applications.
Strategically important orders from major European suppliers of wireless
infrastructure for our velOSity diagnostics solution, hosted on our i3000 platform, for
3G testing within R&D lab environments.
The enhancement of velOSity to support testing of the broadband wireless protocol
EDGE (Enhanced Data Rates for GSM Evolution) within General Packet Radio
Services (GPRS). By supporting EDGE, a key enabling technology in the migration of
GSM to third generation (3G) wireless technologies, we extend our leadership in
testing broadband technologies within development environments.
Finalization of an alliance with Nortel Networks to integrate and cooperatively market
Nortel's Symposium Call Center Server with our TotalNet Call Routing and
TotalView Workforce Management solutions. The partnership advances our continuing
effort to broaden the distribution channels for our call center platforms.``
For the six months ended June 30, 2000, revenues increased 59 percent to $134.2 million
from $84.4 million in the first half of 1999. Pro forma net income for the six-month period
increased 115 percent to $13.7 million, or $0.21 per diluted share, compared to pro forma
net income of $6.4 million, or $0.11 per diluted share, in the first six months of 1999.
Inclusive of the merger charges, actual net income for the first half of 2000 was $234,000,
or $0.00 per diluted share, compared to a net loss of $5.6 million, or $0.10 per share,
including merger charges and a restructuring charge in the first six months of 1999.
Margolis concluded, ``In summary, I am very enthusiastic about Tekelec's future and
continue to believe our market leading solutions uniquely position the company to benefit
from the rapidly changing dynamics of the telecommunications industry.''
Tekelec is a leading developer of telecommunications signaling infrastructure, diagnostic
solutions, and service applications. The company's highly reliable solutions enable
telecommunications carriers and equipment suppliers to achieve the benefits of the
packet-telephony revolution, while keeping service quality and feature richness intact.
Tekelec's innovative solutions are widely deployed in traditional and next-generation
wireline, wireless, and IP voice and data communications networks and contact centers.
Corporate headquarters are located in Calabasas, California, with research and development
facilities and sales offices worldwide. For more information, please visit
tekelec.com.
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 1999 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: timing of significant
orders and shipments, product mix, capital spending patterns of customers, market
acceptance of the Company's products, carrier deployment of intelligent network services,
the level and timing of research and development expenditures, regulatory changes and
general economic conditions. The Company undertakes no obligation to publicly update any
forward-looking statements whether as a result of new information, future events or
otherwise.
Tekelec logo and EAGLE are registered trademarks of Tekelec. IP7, i3000, ASi 4000 and
velOSity are trademarks of Tekelec. IEX is a registered trademark of IEX Corporation.
TotalView and TotalNet are trademarks of IEX Corporation.
TABLES FOLLOW
TEKELEC
PRO FORMA (1) STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
----------------------------------------------------------------------
(thousands, except per share data)
Revenues: $ 74,148 $ 51,728 $134,210 $ 84,413
Costs and expenses:
Cost of goods sold 25,154 17,995 45,047 29,344
Research and
development 12,900 10,525 25,139 19,393
Selling, general
and administrative 22,030 15,582 41,392 26,957
----------------------------------------------------------------------
Income from
operations 14,064 7,626 22,632 8,719
Interest and other
income (expense),
net (458) (217) (1,167) 1,258
----------------------------------------------------------------------
Income before
provision for income
taxes 13,606 7,409 21,465 9,977
Provision for
income taxes (2) 4,898 2,669 7,727 3,593
----------------------------------------------------------------------
Pro forma net income $ 8,708 $ 4,740 $13,738 $ 6,384
----------------------------------------------------------------------
Pro forma earnings
per share
Basic $ 0.15 $ 0.09 $ 0.24 $ 0.12
Diluted 0.14 0.08 0.21 0.11
======================================================================
Pro forma weighted
average number of
shares outstanding:
Basic 57,710 54,766 57,124 54,618
Diluted 64,129 57,814 63,992 58,056
-------------------------
Notes to Pro Forma Statements of Operations ($000):
(1) The above Pro Forma Statements of Operations exclude the effects of the
following:
For the three and six months ended June 30, 2000, the amortization of goodwill,
purchased technology and other intangibles amounting to $7,816 and $15,888,
respectively, related to the acquisition of IEX.
For the three and six months ended June 30, 1999, the following charges related to the
acquisition of IEX Corporation: $6,000 of purchased in-process research and
development incurred; the write-off of $830 for certain assets made redundant by the
acquisition of IEX; and the amortization of goodwill, purchased technology and other
intangibles amounting to $5,203.
For the six months ended June 30, 1999, a restructuring charge of $1,800 for the
scaling down of the Data Network Diagnostics division.
(2) The Pro Forma Statements of Operations assume a 36% effective tax rate for the
three and six months ended June 30, 2000 and 1999.
TEKELEC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
----------------------------------------------------------------------
(thousands, except per share data)
Revenues: $ 74,148 $ 51,728 $134,210 $ 84,413
Costs and expenses:
Cost of goods sold 25,024 17,976 44,776 29,307
Amortization of
purchased technology 2,530 1,496 5,071 1,514
Research and
development 12,900 10,525 25,139 19,393
Selling, general
and administrative 22,030 15,582 41,392 26,957
Amortization of
intangibles 5,416 3,726 11,088 3,726
Other, non-recurring
items (1) -- 6,830 -- 8,630
----------------------------------------------------------------------
Income (Loss) from
operations 6,248 (4,407) 6,744 (5,114)
Interest and other
income (expense),
net (458) (217) (1,167) 1,258
----------------------------------------------------------------------
Income (Loss) before
provision for income
taxes 5,790 (4,624) 5,577 (3,856)
Provision for income
taxes (2) 3,754 1,512 5,343 1,788
----------------------------------------------------------------------
Net income (loss) $ 2,036 $ (6,136) $ 234 $ (5,644)
----------------------------------------------------------------------
Earnings (Loss)
per share
Basic $ 0.04 $ (0.11) $ 0.00 $ (0.10)
Diluted 0.03 (0.11) 0.00 (0.10)
======================================================================
Weighted average
number of shares
outstanding:
Basic 57,710 54,766 57,124 54,618
Diluted 64,129 54,766 63,992 54,618
-------------------------
(1) Other non-recurring items consist of the following ($000):
For the three and six months ended June 30, 1999, the write-off of $6,000 of
purchased in-process research and Development incurred in connection with, and $830
for certain assets made redundant by, the acquisition of IEX Corporation.
For the six months ended June 30, 1999, a restructuring charge of $1,800 for the
scaling down of the Data Network Diagnostics division.
(2) Provision for income taxes includes the effect of nondeductible acquisition-related
costs and a benefit for the utilization of deferred tax liabilities related to certain of
these acquisition-related costs ($000):
For the three and six months ended June 30, 2000, the benefit was $1,144 and $2,384,
respectively.
For the three and six months ended June 30, 1999, the benefit was $858.
TEKELEC
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2000 1999
----------------------------------------------------------------------
(thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 89,635 $ 46,671
Short-term investments,
at fair value 12,675 37,997
Accounts and notes receivable,
net 75,883 85,496
Inventories 23,691 24,310
Income taxes receivable 9,891 --
Deferred income taxes, net 9,711 8,365
Prepaid expenses and other
current assets 13,850 5,150
----------------------------------------------------------------------
Total current assets 235,336 207,989
Long-term investments,
at fair value 39,153 21,996
Property and equipment, net 25,158 21,667
Deferred income taxes, net 2,821 2,780
Other assets 4,111 4,296
Intangible assets 119,572 135,706
----------------------------------------------------------------------
Total assets $426,151 $394,434
======================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities 75,515 $ 80,287
Long-term convertible
discount notes 117,498 115,786
Long-term portion of
deferred revenues 2,518 2,537
Deferred income taxes 16,846 19,229
----------------------------------------------------------------------
Total liabilities 212,377 217,839
----------------------------------------------------------------------
Shareholders' equity 213,774 176,595
----------------------------------------------------------------------
Total liabilities and
shareholders' equity $426,151 $394,434
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