Orders of $122.9 Million, up 45% Year-Over-Year,

Revenues of $116.4 Million, up 6% Year-Over-Year,

GAAP EPS of $0.22 Per Diluted Share, up 340% Year-Over-Year, and

Non-GAAP EPS of $0.23 Per Diluted Share, up 92% Year-Over-Year,

as Reconciled Below

MORRISVILLE, N.C.–(EMWNews)–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.

TEKELEC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
				Three Months Ended June 30,							Six Months Ended June 30,
				2008			2007				2008			2007
				(Thousands, except per share data)
Revenues			$	116,422		$	109,984			$	234,665		$	218,777
Cost of sales:
Cost of goods sold				42,392			46,774				82,338			98,676
Amortization of purchased technology				587			592				1,174			1,179
Total cost of sales				42,979			47,366				83,512			99,855
Gross profit				73,443			62,618				151,153			118,922
Operating expenses:
Research and development				26,216			24,064				50,624			46,271
Sales and marketing				18,906			18,309				37,110			36,974
General and administrative				12,948			14,762				27,205			27,794
Acquired in-process research and development				–			–				2,690			–
Restructuring and other				293			2,511				243			2,511
Amortization of intangible assets				109			48				218			94
Total operating expenses				58,472			59,694				118,090			113,644
Income from operations				14,971			2,924				33,063			5,278
Other income (expense), net:
Interest income				2,295			4,355				5,576			8,295
Interest expense				(779	)		(956	)			(1,911	)		(1,851	)
Gain (loss) on sale of investments				–			85				(2	)		223
Other, net				(990	)		(1,118	)			(1,506	)		(1,844	)
Total other income, net				526			2,366				2,157			4,823
Income from continuing operations before provision for income taxes				15,497			5,290				35,220			10,101
Provision for income taxes				179			1,517				8,039			3,328
Income from continuing operations				15,318			3,773				27,181			6,773
Income (loss) from discontinued operations, net of taxes				–			(11,547	)			1,618			(65,019	)
Net income (loss)			$	15,318		$	(7,774	)		$	28,799		$	(58,246	)
Earnings per share from continuing operations:
Basic			$	0.23		$	0.05			$	0.41		$	0.10
Diluted				0.22			0.05				0.39			0.10
Earnings (loss) per share from discontinued operations:
Basic			$	–		$	(0.17	)		$	0.02		$	(0.94	)
Diluted				–			(0.16	)			0.02			(0.92	)
Earnings (loss) per share:
Basic			$	0.23		$	(0.11	)		$	0.43		$	(0.84	)
Diluted				0.22			(0.11	)			0.41			(0.82	)

Tekelec Investor Contact: Joanne Latham, 1-919-653-9655 Director of Corporate Communications [email protected]