Tekelec Considers Strategic Options for its Switching Unit

Tekelec reported revenue from continuing operations for the third quarter of 2006 was a record $155.2 million, up 43% compared to $108.4 million for the third quarter of 2005. For the third quarter of 2006, the company had orders for the Telecom business of $108.0 million, up 8% compared to $100.4 million for the second quarter of 2006 and down 20% compared to $135.6 million for the third quarter of 2005. Telecom backlog as of September 30, 2006 was $455.0 million compared to $502.2 million as of June 30, 2006 and $520.2 million as of December 31, 2005.



On a GAAP basis, Tekelec reported a loss from continuing operations for the third quarter of 2006 of $87.5 million, or $1.30 loss per diluted share, compared to a loss from continuing operations of $7.6 million, or $0.11 loss per diluted share, for the third quarter of 2005. GAAP operating results for the third quarter of 2006 include a non-cash impairment charge of $100.6 million related to the write-down of certain goodwill and acquired technology assets of the Switching Solutions Business Unit.

Approximately $25.6 million of these charges relate to the impairment of acquired technology and $75.0 million of these charges reflect the write-down of goodwill relating to the acquisitions of Santera Systems Inc. and Vocal Data Inc.

In connection with this comprehensive evaluation and assessment of its Switching Solutions Business Unit, Tekelec has retained J. P. Morgan Securities Inc. as an advisor to help identify and evaluate strategic alternatives to leverage its switching technology portfolio.



As a result of the continued losses in the Switching Solutions Business Unit, Tekelec has further reduced the size of its operations in Plano, Texas. An addition 104 employees have been laid off and other positions are being eliminated.

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