Tekelec Announces Preliminary Third Quarter 2011 Results and Release Date for Third Quarter Earnings

MORRISVILLE, NC, Oct 19 (MARKET WIRE) --

-- Stronger than expected preliminary third quarter 2011 revenues and
earnings

-- Received a $20 million Diameter Signaling Router related order, the
largest Diameter Signaling Router order in the Company's history

-- Expects to increase guidance ranges for the year on the November
9,2011 earnings call

Tekelec (NASDAQ: TKLC), the mobile broadband solutions company,
issued preliminary third quarter 2011 results and announced it plans to
release final financial results for third quarter 2011 on November 9,
2011 before market open.

Preliminary Third Quarter 2011 Results
The Company expects orders will
be between $66 million and $68 million for the third quarter of 2011,
resulting in a range of $201 million to $203 million for the nine months
ended September 30, 2011. The Company received a Diameter Signaling
Router ("DSR") related order in the amount of approximately $20 million
in early October which was previously expected to be received in the
third quarter. This order represents the single largest Broadband Network
Solutions order in the Company's history and the Company believes it
demonstrates the continued traction the Company's products are gaining in
the early adoption phase of DSR technology.

Revenues for the third quarter 2011 are expected to be between $103
million and $106 million, bringing the total revenues for the nine months
ended September 30, 2011 to between $307 million and $310 million. Due to
higher than expected "book-ship" Eagle 5 revenue, the Company expects
non-GAAP gross margins for the third quarter 2011 to be in the 67%-68%
range and GAAP gross margins for the third quarter to be in the range of
59%-60%.

The Company expects non-GAAP earnings per share to range between $0.16
and $0.20 per diluted share for the third quarter 2011, and $0.33 to
$0.37 per diluted share for the nine months ended September 30, 2011. The
Company expects GAAP earnings per share to range between a loss of $0.01
per share and a profit of $0.03 per diluted share for the third quarter
2011 and a loss of $0.34 to a loss of $0.30 per share for the nine months
ended September 30, 2011.

The Company ended the third quarter of 2011 with $270 million in cash and
no debt. The Company generated $10 million to $13 million of cash flows
from operations in the third quarter of 2011 and $58 million to $61
million of cash flows from operations as of the nine months ended
September 30, 2011.

Because financial statements for the third quarter and nine months ended
2011 are not yet available, these third quarter and nine month estimates
are preliminary, unaudited, subject to completion, reflective of the
Company's current best estimates and may be revised as a result of
management's further review. During the course of the preparation of
consolidated financial statements and related notes, the Company may
identify items that would require material adjustments to the preliminary
financial information presented above.

Based on the Company's year-to-date financial performance through
September 30, 2011 and current expectations for the fourth quarter of
2011, the Company expects that on November 9, 2011 it will raise both the
bottom and top ends of the full year guidance ranges for revenues, gross
margins, earnings and cash flows from operations.

The previous guidance provided by the Company on August 4, 2011 is
presented in the table below:

2011 Previous
Guidance as of
August 4, 2011
-----------------------------------
Revenues (Millions) $360 - $400

Non-GAAP Gross Margin % * 59% - 62%

Non-GAAP Diluted EPS ** $0.22 - $0.32

GAAP EPS ($0.58) - ($0.48)

* Of the adjustments listed below, approximately $2 Million of stock-based
compensation and $27 Million of amortization of intangibles will impact
GAAP gross margins.

** Non-GAAP guidance excludes an estimated $10 Million, of stock-based
compensation, $38 Million of amortization of intangible assets and
acquisition-related expenses, and $26 Million of restructuring charges.
Each of these, net of the associated tax impact, are included in GAAP EPS.
The estimated net tax impact of the GAAP adjustments is $24 Million.

Conference Call
Tekelec has scheduled a conference call for
Wednesday, November 9, 2011 at 8 a.m. ET for management to discuss its
third quarter 2011 results. The Company also plans to provide both GAAP
and non-GAAP numbers (including GAAP reconciliations) on its website
immediately prior to the call, and to discuss during this call certain
forward-looking information concerning management's outlook for the
business.

"Live" Webcast and Replay
Tekelec will host a live webcast of its
conference call on Wednesday, November 9, 2011, at 8 a.m. ET. To access
the webcast, visit Tekelec's website 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 a.m. ET on November 9, 2011
and for 90 days thereafter.

Telephone Replay
A telephone replay of the call also will be available
for one week after the live webcast by calling either (855) 859-2056 or
(404) 537-3406 and entering the conference ID #20072653.

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.

Forward-Looking Statements
Certain statements made in this press
release, including expected third quarter results and expected changes to
2011 Guidance, 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 2010 Form 10-K, 2011 First
and Second Quarter Forms 10-Q and its other filings with the Securities
and Exchange Commission, changes resulting from management's further
review of operational and financial results, customary financial close
processes and the completion of the final financial statements, the rate
and size of decline in demand for our older SS7-based products from which
we still derive a substantial portion of our revenues; the effects on our
revenue performance of our year-over-year decline in orders in 2010 and
the increasing portion of our orders that are for newer products with
longer order-to-revenue conversion cycles and lower margins on initial
sales; our increasing dependence on next generation products with which
we have less experience forecasting, building, and selling and for which
the markets are less mature and more subject to demand and technology
changes and increased competition; the effects of an increase in cost
associated with selling our next-generation products including the cost
associated with customer trials and lab systems, the risk that we may
experience detrimental effects, such as employee distraction and
litigation, from our 2011 restructuring activities, or may not realize
the benefits of such activities, including as a result of delays
resulting from the Company's complying with and undertaking, or its
noncompliance with, any necessary individual and collective employee
information and consultation obligations; the difficulty we may have in
transitioning from a hardware-centric to a software-centric business; any
adverse outcome from or effects of the securities litigations we
currently have filed against us or other current or threatened
litigation; 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; 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 but not limited to: 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, access, and other regulatory 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 connects people and devices to the mobile
Internet. Our portfolio's unique layer of network intelligence allows
service providers to both manage and monetize the exponential growth in
mobile web, video and applications traffic. Tekelec has more than 25
offices around the world serving customers in more than 100 countries.
For more information, please visit www.tekelec.com.

TEKELEC PRELIMINARY ACTUAL RESULTS (UNAUDITED)
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
for the Three Months Ended September 30, 2011

Low High
------------------------ ------------------------
% of % of
Amount revenues Amount revenues
----------- ----------- ----------- -----------
(Thousands, except percentages)
Revenues $ 103,000 $ 106,000

Gross margins $ 60,500 59% $ 63,500 60%
Adjustments:(6)
Amortization of
intangible assets(1) 8,100 8% 8,100 8%
Stock-Based
Compensation(2) 200 0% 200 0%
----------- ----------- ----------- -----------
Non-GAAP gross margins $ 68,865 67% $ 71,800 68%
=========== =========== =========== ===========

Low High
------------------------ ------------------------
% of % of
Amount revenues Amount revenues
----------- ----------- ----------- -----------
(Thousands, except percentages)
Operating income (loss) $ 1,165 1% $ 5,100 5%
Adjustments:(6)
Amortization of
intangible assets(1) 9,850 10% 9,850 9%
Stock-Based
Compensation(2) 2,500 2% 2,500 2%
Acquisition related
cash bonus(3) 325 0% 325 0%
Restructuring and
other(4) 4,000 4% 4,000 4%
----------- ----------- ----------- -----------
Non-GAAP operating
margin $ 17,840 17% $ 21,775 21%
=========== =========== =========== ===========

Low High
------------------------ ------------------------
per diluted per diluted
Amount share Amount share
----------- ----------- ----------- -----------
(Thousands, except per share data)
Net income (loss) $ (608) $ (0.01) $ 1,950 $ 0.03
Adjustments:(6)
Amortization of
intangible assets(1) 9,850 0.14 9,850 0.14
Stock-Based
Compensation(2) 2,500 0.04 2,500 0.04
Acquisition related
cash bonus(3) 325 0.00 325 0.00
Restructuring and
other(4) 4,000 0.06 4,000 0.06
Provision for (benefit
from) income taxes(5) (4,800) (0.07) (4,800) (0.07)
----------- ----------- ----------- -----------
Non-GAAP net income $ 11,267$ 0.16 $ 13,825 $ 0.20
=========== =========== =========== ===========

Weighted average number
of shares outstanding:
Basic 69,215 69,215
Diluted 69,333 69,333

(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 2011 adjustment represents consideration payable to former Camiant
employees for options not assumed in the merger.

(4) The adjustment represents the elimination of the costs associated with
our restructuring activities.

(5) The adjustment represents the income tax effect of footnotes (1), (2),
(3), and (4) in order to reflect our non-GAAP effective tax rate of 33%.

(6) Adjustments are point estimates and actual results may vary from these
point estimates.

TEKELEC PRELIMINARY ACTUAL RESULTS (UNAUDITED)
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
for the Nine Months Ended September 30, 2011

Low High
------------------------ ------------------------
% of % of
Amount revenues Amount revenues
----------- ----------- ----------- -----------
(Thousands, except percentages)
Revenues $ 307,000 $ 310,000

Gross margins $ 169,000 55% $ 172,000 55%
Adjustments:(6)
Amortization of
intangible assets(1) 23,042 8% 23,042 7%
Stock-Based
Compensation(2) 779 0% 779 0%
Acquisition related
cash bonus(3) 107 0% 107 0%
----------- ----------- ----------- -----------
Non-GAAP gross margins $ 192,928 63% $ 195,928 63%
=========== =========== =========== ===========

Low High
------------------------ ------------------------
% of % of
Amount revenues Amount revenues
----------- ----------- ----------- -----------
(Thousands, except percentages)
Operating income (loss) $ (30,000) -10% $ (26,000) -8%
Adjustments:(6)
Amortization of
intangible assets(1) 28,342 9% 28,342 9%
Stock-Based
Compensation(2) 7,833 3% 7,833 3%
Acquisition related
cash bonus(3) 1,017 0% 1,017 0%
Restructuring and
other(4) 27,341 9% 27,341 9%
----------- ----------- ----------- -----------
Non-GAAP operating
margin $ 34,533 11% $ 38,533 12%
=========== =========== =========== ===========

Low High
------------------------ ------------------------
per diluted per diluted
Amount share Amount share
----------- ----------- ----------- -----------
(Thousands, except per share data)
Net income (loss) $ (23,250) $ (0.34) $ (20,500) $ (0.30)
Adjustments:(6)
Amortization of
intangible assets(1) 28,342 0.41 28,342 0.41
Stock-Based
Compensation(2) 7,833 0.11 7,833 0.11
Acquisition related
cash bonus(3) 1,017 0.01 1,017 0.01
Restructuring and
other(4) 27,341 0.39 27,341 0.39
Provision for (benefit
from) income taxes(5) (18,728) (0.27) (18,728) (0.27)
----------- ----------- ----------- -----------
Non-GAAP net income $ 22,555 $ 0.33 $ 25,305 $ 0.37
=========== =========== =========== ===========

Weighted average number
of shares outstanding:
Basic 69,013 69,013
Diluted 69,223 69,223

(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 2011 adjustment represents consideration payable to former Camiant
employees for options not assumed in the merger.

(4) The adjustment represents the elimination of the costs associated with
our restructuring activities.

(5) The adjustment represents the income tax effect of footnotes (1), (2),
(3), and (4) in order to reflect our non-GAAP
effective tax rate of 30%.

(6) Adjustments are point estimates and actual results may vary from these
point estimates.

Contact:
Kyle Macemore
Vice President Finance and Investor Relations
o) +1.919.380.6148
kyle.macemore@tekelec.com

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