FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-15135
TEKELEC
(Exact name of registrant as specified in its charter)
California
(State or other jurisdiction of incorporation or organization)
95-2746131
(I.R.S. Employer Identification No.)
26580 W. Agoura Road, Calabasas, California 91302
(Address and zip code of principal executive offices)
(818) 880-5656
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
As of May 1, 1997, there were 12,402,730 shares of the registrant's
common stock, without par value, outstanding.
<PAGE>
TEKELEC
FORM 10-Q
INDEX
PAGE
PART I -- FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets at March 31, 1997
and December 31, 1996 3
Consolidated Statements of Operations for the three
months ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flow for the three
months ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES
2
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
TEKELEC
CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31, December 31,
1997 1996
------------ ------------
(thousands, except share data)
(unaudited) (audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................... $ 19,996 $ 17,211
Short-term investments, at fair value ........ 12,032 17,913
Accounts and notes receivable, less
allowances of $411 and $368, respectively .. 15,735 17,026
Inventories .................................. 11,131 8,116
Amounts due from related parties ............. 2,514 2,381
Prepaid expenses ............................. 2,006 1,747
------------ ------------
Total current assets ..................... 63,414 64,394
Long-term investments, at fair value .............. 11,048 9,120
Property and equipment, net ....................... 8,683 8,174
Other assets ...................................... 798 830
------------ ------------
Total assets ............................. $ 83,943 $ 82,518
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable ....................... $ 5,400 $ 5,631
Accrued expenses ............................. 5,627 5,989
Accrued payroll and related expenses ......... 2,826 4,027
Deferred revenues ............................ 5,391 3,778
Income taxes payable ......................... 609 1,342
------------ ------------
Total current liabilities ................ 19,853 20,767
------------ ------------
Total liabilities ........................ 19,853 20,767
------------ ------------
SHAREHOLDERS' EQUITY:
Common stock, without par value,
50,000,000 shares authorized; 12,365,577 and
12,010,099 shares issued and outstanding,
respectively ................................ 58,557 57,049
Retained earnings ............................ 5,507 3,879
Cumulative translation adjustment ............ 26 823
------------ ------------
Total shareholders' equity ............... 64,090 61,751
------------ ------------
Total liabilities and shareholders' equity $ 83,943 $ 82,518
============ ============
See notes to consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
TEKELEC
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<CAPTION>
Three Months Ended
March 31,
--------------------------------
1997 1996
--------------- ---------------
(thousands, except per share data)
<S> <C> <C>
REVENUES (including sales to related parties of
1997 - $1,237 and 1996 - $725) ................... $ 20,577 $ 11,860
COSTS AND EXPENSES:
Cost of goods sold ............................... 6,678 4,595
Research and development ......................... 4,468 4,315
Selling, general and administrative .............. 7,567 6,868
--------------- ---------------
Total costs and expenses ..................... 18,713 15,778
Income (Loss) from operations ......................... 1,864 (3,918)
Other income (expense):
Interest, net .................................... 516 423
Other, net ....................................... 17 (45)
--------------- ---------------
Total other income ........................... 533 378
--------------- ---------------
Income (Loss) before provision for income taxes ....... 2,397 (3,540)
Provision for income taxes ....................... 769 428
--------------- ---------------
NET INCOME (LOSS) ............................ $ 1,628 $ (3,968)
=============== ===============
EARNINGS (LOSS) PER SHARE
Primary .......................................... $ 0.12 $ (0.34)
Fully diluted .................................... 0.12 (0.34)
WEIGHTED AVERAGE NUMBER OF SHARES
Primary .......................................... 13,329 11,637
Fully diluted .................................... 13,343 11,637
See notes to consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
TEKELEC
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1997 1996
--------------- ---------------
(thousands)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) ...................................... $ 1,628 $ (3,968)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization .......................... 1,067 828
Changes in current assets and liabilities:
Accounts and notes receivable ........................ 1,089 6,964
Inventories .......................................... (3,113) (2,172)
Amounts due from related parties ..................... (134) 1,378
Prepaid expenses ..................................... (293) (202)
Trade accounts payable ............................... (153) 62
Accrued expenses ..................................... (263) (1,216)
Accrued payroll and related expenses ................. (1,249) (703)
Deferred revenues .................................... 1,613 698
Income taxes payable ................................. (663) (621)
--------------- ---------------
Total adjustments .................................. (2,099) 5,016
--------------- ---------------
Net cash provided by (used in) operating activities (471) 1,048
--------------- ---------------
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from maturity of available-for-sale securities 9,000 --
Purchase of available-for-sale securities .............. (5,047) --
Purchase of property and equipment ..................... (1,637) (2,050)
Decrease in other assets ............................... -- 131
--------------- ---------------
Net cash provided by (used in) investing activities 2,316 (1,919)
--------------- ---------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings .................... -- 175
Repayment of long-term debt ............................ -- (60)
Repayment of other obligations ......................... -- (9)
Proceeds from issuance of common stock ................. 1,508 290
--------------- ---------------
Net cash provided by financing activities .......... 1,508 396
--------------- ---------------
Effect of exchange rate changes on cash ..................... (568) (253)
--------------- ---------------
Net change in cash and cash equivalents ................ 2,785 (728)
Cash and cash equivalents at beginning of period ............ 17,211 43,609
--------------- ---------------
Cash and cash equivalents at end of period .................. $ 19,996 $ 42,881
=============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR
Interest ............................................... $ -- $ 33
Income taxes ........................................... 1,313 892
See notes to consolidated financial statements.
</TABLE>
5
<PAGE>
TEKELEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
A. BASIS OF PRESENTATION
The consolidated financial statements are unaudited, other than the
consolidated balance sheet at December 31, 1996, and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
Management, necessary for a fair presentation of the Company's financial
condition, operating results and cash flows for the interim periods.
The results of operations for the current interim period are not
necessarily indicative of results to be expected for the current year. Certain
items shown in the prior financial statements have been reclassified to conform
with the presentation of the current period.
The Company operates under a thirteen-week calendar quarter. However,
for financial statement presentation purposes, the reporting periods are
referred to as ended on the last calendar day of the quarter. The accompanying
financial statements for the three months ended March 31, 1997 and 1996 are for
the thirteen weeks ended March 28, 1997 and March 29, 1996, respectively.
Earnings per share are computed using the weighted average number of
shares outstanding and dilutive common stock equivalents (options and warrants).
These consolidated financial statements should be read in conjunction
with the consolidated financial statements for the year ended December 31, 1996
and the notes thereto in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996.
6
<PAGE>
B. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NOT YET ADOPTED
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." This statement requires dual presentation of newly defined basic and
diluted earnings per share ("EPS") on the face of the income statement for all
entities with complex capital structures. The accounting standard is effective
for fiscal years ending after December 15, 1997 and requires restatement of all
prior period EPS data presented. Earlier application is not permitted. However,
disclosure of pro forma EPS data computed using SFAS No. 128 in the notes to the
financial statements is permitted in the periods prior to required adoption. The
pro forma EPS data for the three months ended March 31, 1997 and 1996 computed
using SFAS No. 128 is as follows (shares in thousands):
Three Months Ended March 31,
EARNINGS (LOSS) PER SHARE: 1997 1996
------------ ------------
Basic............................... $0.13 $(0.34)
Diluted............................. 0.12 (0.34)
WEIGHTED AVERAGE NUMBER OF SHARES:
Basic............................... 12,207 11,637
Diluted............................. 13,329 11,637
C. FAIR VALUE OF INVESTMENTS
The Company has short-term investments in corporate debt securities
with original maturities of less than 90 days whose carrying amounts approximate
their fair values because of their short maturities. These short-term
investments are included in cash and cash equivalents, are classified as
held-to-maturity securities and amounted to $10.5 million and $3.0 million at
March 31, 1997 and December 31, 1996, respectively. At March 31, 1997, the
Company also had investments classified as available-for-sale securities
included in short-term and long-term investments, consisting of $9.0 million of
United States Treasury Notes with maturities of less than one year, $11.0
million of United States Treasury Notes with maturities of between one and two
years and $3.0 million of corporate debt securities with maturities of less than
one year. These available-for-sale securities are accounted for at their fair
value, and unrealized gains and losses on these securities are reported as a
separate component of shareholders' equity. At March 31, 1997, unrealized gains
or losses on available-for-sale securities were not significant.
7
<PAGE>
TEKELEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
D. CERTAIN BALANCE SHEET ITEMS
The components of inventories are:
MARCH 31, December 31,
1997 1996
------------ ------------
(thousands)
Raw materials .................................... $ 2,920 $ 2,825
Work in process .................................. 4,213 1,869
Finished goods ................................... 3,998 3,422
------------ ------------
$ 11,131 $ 8,116
============ ============
Property and equipment consist of the following:
Manufacturing and development equipment .......... $ 14,431 $ 13,520
Furniture and office equipment ................... 7,202 7,300
Demonstration equipment .......................... 3,802 4,055
Leasehold improvements ........................... 1,092 1,118
------------ ------------
26,527 25,993
Less, accumulated depreciation and amortization .. (17,844) (17,819)
------------ ------------
Property and equipment, net ...................... $ 8,683 $ 8,174
============ ============
E. RELATED PARTY TRANSACTIONS
Sales to related parties consist of, and amounts due from related
parties are, the result of transactions between the Company and foreign
affiliates controlled by the Company's Chairman of the Board.
F. INCOME TAXES
For the three months ended March 31, 1997, the Company had a tax
provision of $769,000, resulting in an effective tax rate of 32%, compared to
$428,000 in the first quarter of 1996. The provisions for both periods were
principally foreign taxes on the income of the Company's Japanese subsidiary.
The provision for the three months ended March 31, 1996 was impacted by the
Company's inability to currently recognize a benefit for its U.S. loss and
credits carryforwards, which remain available to reduce future U.S. taxes. The
provision for the three months ended March 31, 1997 reflects the Company's
ability to utilize a portion of its prior years' U.S. loss carryforwards, and
consequently the Company provided for taxes on its U.S. taxable income at the
federal alternative minimum tax rate and applicable state tax rates. The Company
anticipates that it has sufficient loss and credits carryforwards available to
offset its expected U.S. taxes in 1997.
8
<PAGE>
TEKELEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
G. BORROWINGS
The Company has a $10.0 million line of credit with a U.S. bank and
lines of credit aggregating $2.8 million available to the Company's Japanese
subsidiary from various Japan-based banks.
The Company's $10.0 million line of credit is collateralized by
substantially all of the Company's assets, bears interest at, or in some cases
below, the U.S. prime rate (8.5% at March 31, 1997), and expires June 30, 1998
if not renewed. Under the terms of this facility, the Company is required to
maintain certain financial ratios and meet certain net worth and indebtedness
tests for which the Company is in compliance. There have been no borrowings
under this credit facility.
The Company's Japanese subsidiary has collateralized yen-denominated
lines of credit with Japan-based banks, primarily available for use in Japan,
amounting to the equivalent of $2.8 million with interest at the Japanese prime
rate (1.625% at March 31, 1997) plus 0.125% per annum which expire between May
29, 1997, and March 31, 1998, if not renewed. There have been no borrowings
under these lines of credit.
H. MAJOR CUSTOMERS
Sales to Nippon Telegraph & Telephone amounted to 14% and 15% of
revenues for the first quarter of 1997 and 1996, respectively. Sales to NYNEX
amounted to 11% of revenues for the first quarter of 1997.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the Consolidated Financial Statements and the
Notes thereto included in Item 1 of this Quarterly Report and by the
Consolidated Financial Statements and Notes thereto and Management's Discussion
and Analysis of Financial Condition and Results of Operations contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
Historical results and percentage relationships among any amounts in the
financial statements are not necessarily indicative of trends in operating
results for any future periods.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the
percentages that certain statement of operations items bear to total revenues:
Percentage of Revenues
Three Months Ended
March 31,
---------------------------
1997 1996
------------ ------------
Revenues .......................................... 100.0% 100.0%
Cost of goods sold ................................ 32.5 38.7
------------ ------------
Gross profit ...................................... 67.5 61.3
Research and development .......................... 21.6 36.4
Selling, general & administrative ................. 36.8 57.9
------------ ------------
Total operating expenses .......................... 58.4 94.3
------------ ------------
Income (Loss) from operations ..................... 9.1 (33.0)
Interest and other income, net .................... 2.5 3.2
------------ ------------
Income (Loss) before provision for
income taxes .................................... 11.6 (29.8)
Provision for income taxes ........................ 3.7 3.6
------------ ------------
Net income (loss) ................................. 7.9% (33.4)%
============ ============
The following table sets forth, for the periods indicated, the revenues
by principal product line as a percentage of total revenues:
Percentage of Revenues
Three Months Ended
March 31,
---------------------------
1997 1996
------------ ------------
Data network diagnostics ........................... 19% 51%
Intelligent network diagnostics .................... 37 26
Network switching .................................. 44 23
------------ ------------
Total .......................................... 100% 100%
============ ============
10
<PAGE>
The following table sets forth, for the periods indicated, the revenues
by geographic territories as a percentage of total revenues:
Percentage of Revenues
Three Months Ended
March 31,
---------------------------
1997 1996
------------ ------------
North America .................................... 65% 52%
Japan ............................................ 23 28
Europe ........................................... 6 9
Rest of the World ................................ 6 11
------------ ------------
Total ........................................ 100% 100%
============ ============
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THE THREE MONTHS ENDED
MARCH 31, 1996
Revenues. The Company's revenues increased by $8.7 million, or 73%,
during the first quarter of 1997 due to higher sales of network switching
products and intelligent network diagnostics products, partially offset by lower
sales of data network diagnostics products.
Revenues from switching products increased by $6.3 million, or 229%, in
the first quarter of 1997 due to strong EAGLE STP sales including initial
shipments to NYNEX under the Company's first Regional Bell Operating Company
(RBOC) contract. The first quarter of 1996 was also adversely impacted by the
delay of certain orders for the Company's EAGLE STP.
Revenues from intelligent network diagnostics products increased by
$4.5 million, or 145%, primarily due to strong demand for the Company's MGTS
products particularly in the domestic and Japanese markets.
Revenues from data network diagnostics products, which consisted
primarily of sales to the research and development market, decreased by
$2.1 million, or 35%, due to lower sales of the Company's Chameleon products
worldwide. The Company has taken steps to expand its Chameleon products' reach
into the network operator market including the planned introduction, in the
second half of 1997, of software applications addressing specific needs of this
market which could provide additional sales opportunities.
Revenues in North America increased by $7.2 million, or 118%, primarily
as a result of higher EAGLE STP and MGTS product sales, partially offset by
lower Chameleon product sales. Sales in Japan increased by $1.4 million, or 44%,
due to higher MGTS products sales. Other international revenues were unchanged,
with higher MGTS product sales offset by lower Chameleon sales.
11
<PAGE>
The impact of exchange rate fluctuations on currency translations
decreased revenues by $655,000, or 3%, and decreased net income by $76,000, or
4%, in the first quarter of 1997.
Gross Profit. Gross profit as a percentage of revenues increased from
61% in the first quarter of 1996 to 68% in the first quarter of 1997, primarily
due to higher switching product margins, a higher proportion of MGTS product
sales which typically carry higher margins and volume efficiencies. In addition,
switching product margins in the first quarter of 1996 were adversely impacted
by certain non-recurring costs.
Research and Development. Research and development expenses increased
overall by $153,000, or 4%, and decreased as a percentage of revenue from 36% in
the first quarter of 1996 to 22% in the first quarter of 1997. Research and
development expenses for switching products increased by approximately $600,000.
This increase was primarily attributable to the development of the Company's
local number portability feature on the EAGLE STP product and consisted
principally of the hiring of additional personnel and contractors and higher
depreciation expenses as a result of equipment acquisitions. This increase was
also partially offset by lower research and development spending for diagnostics
products.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $699,000, or 10%, and decreased as a
percentage of revenues from 58% in the first quarter of 1996 to 37% in the first
quarter of 1997. The dollar increase was primarily due to higher customer
service expenses for switching products due to higher sales levels and increased
recruiting and tradeshow expenses.
Income Taxes. For the three months ended March 31, 1997, the Company
had a tax provision of $769,000 resulting in an effective tax rate of 32%,
compared to $428,000 in the first quarter of 1996. The provisions for both
periods were principally foreign taxes on the income of the Company's Japanese
subsidiary. The provision for the three months ended March 31, 1996 was impacted
by the Company's inability to currently recognize a benefit for its U.S. loss
and credits carryforwards, which remain available to reduce future U.S. taxes.
The provision for the three months ended March 31, 1997 reflects the Company's
ability to utilize a portion of its prior years' U.S. loss carryforwards, and
consequently the Company provided for taxes on its U.S. taxable income at the
federal alternative minimum tax rate and applicable state tax rates. The Company
anticipates that it has sufficient loss and credits carryforwards available to
offset its expected U.S. taxes in 1997.
LIQUIDITY AND CAPITAL RESOURCES
During the three-month period ended March 31, 1997, cash and cash
equivalents increased by $2.8 million to $20.0 million, primarily due to a net
transfer of approximately $4.0 million from short-term and long-term
investments. Operating activities, net of the effects of exchange rate changes
on cash, used $1.0 million, financing activities provided $1.5 million and $1.6
million was used for capital expenditures.
12
<PAGE>
Accounts receivable, including amounts due from related parties,
decreased by 6% during the first three months of 1997 due primarily to lower
sales in the first quarter of 1997 compared to the fourth quarter of 1996,
partially offset by a higher concentration of sales in the last month of the
first quarter of 1997 compared to the fourth quarter of 1996. Inventories
increased by 37% during the first quarter of 1997 primarily to meet customer
shipments scheduled for the second quarter of 1997 and product requirements for
customer trials.
Capital expenditures were $1.6 million and represented the planned
addition of equipment principally for EAGLE research and development.
Net cash provided by financing activities in the first quarter of 1997
was $1.5 million which represents proceeds from the sale of Common Stock issued
upon the exercise of options and warrants.
The Company has a $10.0 million line of credit with a U.S. bank and
lines of credit aggregating $2.8 million available to the Company's Japanese
subsidiary from various Japan-based banks.
The Company's $10.0 million line of credit is collateralized by
substantially all of the Company's assets, bears interest at, or in some cases
below, the U.S. prime rate (8.5% at March 31, 1997), and expires June 30, 1998
if not renewed. Under the terms of this facility, the Company is required to
maintain certain financial ratios and meet certain net worth and indebtedness
tests for which the Company is in compliance. There have been no borrowings
under this credit facility.
The Company's Japanese subsidiary has collateralized yen-denominated
lines of credit with Japan-based banks, primarily available for use in Japan,
amounting to the equivalent of $2.8 million with interest at the Japanese prime
rate (1.625% at March 31, 1997) plus 0.125% per annum which expire between May
29, 1997, and March 31, 1998, if not renewed. There have been no borrowings
under these lines of credit.
The Company believes that existing working capital, funds generated
from operations and current bank lines of credit should be sufficient to satisfy
anticipated operating requirements at least through 1997.
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NOT YET ADOPTED
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." This statement requires dual presentation of newly defined basic and
diluted earnings per share ("EPS") on the face of the income statement for all
entities with complex capital structures. The accounting standard is effective
for fiscal years ending after December 15, 1997 and requires restatement of all
prior period EPS data presented. Earlier application is not permitted. The
Company has determined that in some periods the presentation of basic EPS data
under SFAS No. 128 may differ significantly from previously reported EPS data as
a result of the exclusion of dilutive common
13
<PAGE>
stock equivalents (options and warrants) in the basic EPS calculation. See Note
B for further information and the pro forma impact on EPS data for the periods
ending March 31, 1997 and 1996.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995
The statements which are not actual reported financial results or
historical facts contained in this Management's Discussion and Analysis of
Financial Condition and Results of Operations are forward-looking statements
that involve certain risks and uncertainties including, but not limited to,
competition in the data network diagnostics, intelligent network diagnostics and
network switching markets, capital spending patterns of the Company's customers,
foreign currency fluctuations, general economic and political conditions,
announcements of new products by Tekelec or its competitors, and other risks
described in the Company's Annual Report on Form 10-K and in the Company's other
Securities and Exchange Commission filings.
14
<PAGE>
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amended and Restated Articles of Incorporation (1)
3.2 Bylaws, as amended (2)
10.1 Agreement dated March 26, 1997 between the Company and
Allan Toomer (2)
11.1 Statement of Computation of Earnings Per Share for the Three
Months Ended March 31, 1997 and 1996.
27.1 Financial Data Schedule (provided for the information of the
Securities and Exchange Commission only)
---------------
(1) Incorporated by reference to the Company's Annual Report on
Form 10-K (File No. 0-15135) for the year ended December 31, 1994.
(2) Incorporated by reference to the Company's Annual Report on
Form 10-K (File No. 0-15135) for the year ended December 31, 1996.
(b) Reports
No reports on Form 8-K were filed by the Company during the
three months ended March 31, 1997.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TEKELEC
May 13, 1997 Allan J. Toomer
----------------------------------------
Allan J. Toomer
President
(Duly authorized officer)
Gilles C. Godin
----------------------------------------
Gilles C. Godin
Chief Financial Officer and
Vice President, Finance
(Principal financial and chief
accounting officer)
16
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- ----------------------------------------------------------------
11.1 Statement of Computation of Earnings Per Share for the
Three Months Ended March 31, 1997 and 1996
27.1 Financial Data Schedule (provided for the information of the
Securities and Exchange Commission only)
17
<TABLE>
TEKELEC
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Three Months Ended
PRIMARY March 31,
(thousands, except per share data) --------------------------
1997 1996
------------ ------------
<S> <C> <C>
Net income (loss) ............................................................................... $ 1,628 $ (3,968)
============ ============
Basis for computation of primary earnings per common and common equivalent share:
Weighted average number of shares outstanding during period ..................................... 12,207 11,637
Weighted average (incremental) common share equivalent after considering the effects of options
exercised and canceled during the period and after assumed repurchase of treasury shares--
treasury stock method ........................................................................... 1,122 --
------------ ------------
13,329 11,637
------------ ------------
Earnings (Loss) per share ....................................................................... $ 0.12 $ (0.34)
============ ============
<CAPTION>
Three Months Ended
FULLY DILUTED March 31,
(thousands, except per share data)
1997 1996
------------ ------------
Net income (loss) ............................................................................... $ 1,628 $ (3,968)
============ ============
Basis for computation of fully diluted earnings per common and common equivalent share:
Weighted average number of shares outstanding during period ..................................... 12,207 11,637
Weighted average (incremental) common share equivalent after considering the effects of options
exercised and canceled during the period and after assumed repurchase of treasury shares --
treasury stock method ........................................................................... 1,136 --
------------ ------------
13,343 11,637
============ ============
Earnings (Loss) per share ....................................................................... $ 0.12 $ (0.34)
============ ============
</TABLE>
TEKELEC EXHIBIT 11.1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR TEKELEC AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000790705
<NAME> TEKELEC
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 19,996
<SECURITIES> 12,032
<RECEIVABLES> 18,660
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<PP&E> 26,527
<DEPRECIATION> 17,844
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<CURRENT-LIABILITIES> 19,853
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0
0
<COMMON> 58,557
<OTHER-SE> 5,533
<TOTAL-LIABILITY-AND-EQUITY> 83,943
<SALES> 20,577
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<CGS> 6,678
<TOTAL-COSTS> 6,678
<OTHER-EXPENSES> 12,035
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<INCOME-PRETAX> 2,397
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<EPS-PRIMARY> 0.12
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</TABLE>
