Tekelec (NASDAQ: TKLC), a leading developer of high-performance network applications for next-generation fixed, mobile and packet networks, today announced its results for the quarter and six months ended June 30, 2008.

Results from Continuing Operations

For the second quarter of 2008, the Company had orders of $122.9 million, up 45% compared to $84.7 million for the second quarter of 2007. Revenue from continuing operations for the second quarter of 2008 was $116.4 million, up 6% compared to $110.0 million for the second quarter of 2007. Backlog from continuing operations as of June 30, 2008 was $387.6 million, up from $381.2 million at March 31, 2008.

On a GAAP basis, the Company reported income from continuing operations for the second quarter of 2008 of $15.3 million, or $0.22 per diluted share, which includes a one-time tax benefit of $3.7 million, or $0.05 per diluted share, from the utilization of certain capital losses generated by the sale of our switching business in 2007. This compares to income from continuing operations of $3.8 million, or $0.05 per diluted share, for the second quarter of 2007. On a Non-GAAP basis, income from continuing operations for the second quarter of 2008 was $15.7 million, or $0.23 per diluted share, compared to income from continuing operations of $9.0 million, or $0.12 per diluted share, for the second quarter of 2007. Please refer to the attached financial statement schedules for a reconciliation of the Company's GAAP operating results to its Non-GAAP operating results.

For the first six months of 2008, the Company had orders from continuing operations of $205.3 million, up 25% compared to $163.9 million for the first six months of 2007. Revenue from continuing operations for the first six months of 2008 was $234.7 million, up 7% compared to $218.8 million for the first six months of 2007. GAAP operating margins were 14% and 2% for the six months ended June 30, 2008 and 2007, respectively. Non-GAAP operating margins for the first six months of 2008 were 19% as compared with 11% in the first six months of 2007.

On a GAAP basis, the Company reported income from continuing operations for the first six months of 2008 of $27.2 million, or $0.39 per diluted share, which includes a one-time tax benefit of $3.7 million, or $0.05 per diluted share, compared to income from continuing operations of $6.8 million, or $0.10 per diluted share, for the first six months of 2007. On a Non-GAAP basis, income from continuing operations for the first six months of 2008 was $34.0 million, or $0.48 per diluted share, compared to income from continuing operations of $19.6 million, or $0.27 per diluted share, for the first six months of 2007. Cash flows from continuing operations for the six months ended June 30, 2008 were $56.9 million, up 24% compared to $45.9 million in the first six months of 2007. Please refer to the attached financial statement schedules for a reconciliation of the Company's GAAP operating results to its Non-GAAP operating results.

Frank Plastina, president and chief executive officer of Tekelec, stated We were very pleased by our strong operating performance for the second quarter and first half of the year. Our level of new orders was particularly strong compared to a year ago and reflects our continued success in generating new customer wins and in responding to demand from existing customers for signaling capacity and other Tekelec products. We were also pleased by the continued strength of our operating margins and strong cash flows during the first six months of 2008.

Consolidated Results, Including the Impact of Discontinued Operations

On a GAAP basis, the Company generated net income of $15.3 million, or $0.22 per diluted share, which includes a one-time tax benefit of $3.7 million, or $0.05 per diluted share, for the three months ended June 30, 2008, compared to a net loss on a consolidated basis for the three months ended June 30, 2007 of $7.8 million, or $0.11 loss per diluted share. For the six months ended June 30, 2008, the Company generated consolidated net income on a GAAP basis of $28.8 million, or $0.41 per diluted share, which includes a one-time tax benefit of $3.7 million, or $0.05 per diluted share, compared with a consolidated net loss of $58.2 million, or $0.82 loss per diluted share in 2007.

Balance Sheet Results

Tekelec's consolidated cash, cash equivalents and short-term investments at June 30, 2008 totaled $190.1 million, down from $316.5 million at March 31, 2008, due primarily to the repayment of $125 million of Convertible Notes in June 2008. Deferred revenues were $192.1 million at June 30, 2008, up from $185.7 million at March 31, 2008.

At June 30, 2008, the Company continued to hold $119.7 million of Student Loan Auction Rate Securities (SLARS) valued at fair value in accordance with FAS 115 and 157. This valuation reflects a decline in value of $4.3 million ($2.6 million net of tax) recorded in 2008. The decline in fair value is considered to be temporary and accordingly, the write-down is recorded in accumulated other comprehensive income within shareholders' equity. We have classified these SLARS as long-term investments at June 30, 2008 because it is uncertain when liquidity will return to the market. Since the end of the second quarter, five auction rate securities with a total par value of approximately $12.3 million were called by the issuers and redeemed at par value.

Stock Repurchase Program

As previously announced in March 2008, Tekelec's Board of Directors approved a stock repurchase program utilizing a Rule 10b5-1 plan that authorizes the Company to repurchase up to $50 million of the Company's common stock. The timing, duration and actual number of shares repurchased will depend on a variety of factors including price, regulatory requirements and other market conditions. The Company may terminate the repurchase program at any time. As of June 30, 2008, the Company had repurchased approximately 2.6 million shares at a total cost of approximately $33.7 million.

Conference Call

Tekelec has scheduled a conference call for Wednesday, August 6, 2008 for management to discuss second quarter and first half of 2008 results. The Company also plans to provide on its web site immediately prior to the call both GAAP and Non-GAAP financial measures (including GAAP reconciliations) for the second quarter and to discuss during this call certain forward looking information concerning the Company's prospects for 2008.

Live" Webcast and Replay

Tekelec will host a live webcast of its conference call on Wednesday, August 6, 2008, at 8:00 a.m. EDT. 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. on August 6^th, and for 90 days thereafter.

Telephone Replay

A telephone replay of the call will also be available for one week after the live webcast by calling either (800) 642-1687 or (706) 645-9291, and entering the conference ID #55753150.

Non-GAAP Information

Certain Non-GAAP financial measures are included in this press release, including a full Non-GAAP statement of operations. In the calculation of these measures, Tekelec generally excludes certain items such as amortization of acquired intangibles, restructuring and other charges, non-cash stock-based compensation charges, acquisition-related charges, and unusual, non-recurring gains and charges. Tekelec believes that excluding such items provides investors and management with a representation of the Company's core operating performance and with information useful in assessing its prospects for the future and underlying trends in Tekelec's operating expenditures and continuing operations. Management uses such Non-GAAP measures and the resulting Non-GAAP statements of operations to (i) evaluate financial results, (ii) manage the Company's operations, and (iii) establish operational goals. Further, each of the individual Non-GAAP measures within the Non-GAAP statement of operations and the Non-GAAP statement of operations itself are utilized by the Company's management and board of directors to determine incentive compensation and evaluate key trends within the business. In addition, since the Company has historically reported Non-GAAP measures to the investment community, the Company believes the inclusion of this information provides consistency in our financial reporting. The attachments to this release provide a reconciliation of each of the Non-GAAP measures, including the full Non-GAAP statement of operations, referred to in this release to the most directly comparable GAAP measure. The Non-GAAP financial measures are not meant to be considered a substitute for the corresponding GAAP financial measures.

FORWARD-LOOKING STATEMENTS

Certain statements made in this press release are forward looking, reflect the Company's current intent, belief or expectations and involve certain risks and uncertainties. The Company's actual future performance may differ materially from such expectations as a result of important risk factors, which include, in addition to those identified in the Company's 2007 Form 10-K, First Quarter 2008 Form 10-Q and its other filings with the Securities and Exchange Commission, the impact of the liquidity crisis in the United States credit markets, valuation of Student Loan Auction Rate Securities, the timeliness and functional competitiveness of our product releases, our ability to maintain OEM, partner, and vendor support and supply relationships, changes in the market price of the Company's common stock and reductions in telecommunications carrier capital spending. The Company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

About Tekelec

Tekelec leverages its global leadership in core multimedia session control and network intelligence to ensure scalable, secure and highly available communications. The company's leading signaling solutions enable the interworking of different network applications, technologies and protocols, providing a smooth transition to next-generation networks. Corporate headquarters are located near Research Triangle Park in Morrisville, N.C., U.S.A., with research and development facilities and sales offices throughout the world. For more information, please visit www.tekelec.com.