CALABASAS, Calif. -- Tekelec (Nasdaq:TKLC) today reported partial financial results for its fourth quarter ended December 31, 2004.

As the result of a routine, periodic review by the Securities and Exchange Commission ("SEC") of Tekelec's Annual Report on Form 10-K for the year ended December 31, 2003, the Company is currently engaged in discussions with the SEC regarding the accounting for the acquisition of the Company's majority interest in its Santera subsidiary and the allocation of Santera's profits and losses between Tekelec and Santera's minority shareholders following the acquisition. This is the only matter under discussion with the SEC. Pending resolution of this matter, Tekelec has decided at this time not to release full financial results for the fourth quarter and full year 2004. Once the discussions with the SEC are concluded, Tekelec will release its financial results for these periods. The Santera purchase accounting matter currently being discussed with the SEC has no impact on previously reported or future orders, revenues, cash flows, or cash balances.

Revenue for the fourth quarter of 2004 was $115.9 million, compared to $75.0 million in the fourth quarter of 2003. Orders received in the fourth quarter for Tekelec products and services were $159.7 million, compared to $138.1 million in the fourth quarter in 2003.

Revenue for the full year 2004 was $397.1 million compared to $263.7 million in 2003.

Tekelec President and CEO Fred Lax commented, "Tekelec's order and revenue performance in the fourth quarter was again strong. This reflects the progress we are making on our strategic objectives of delivering world-class next-gen switching solutions, extending our signaling solutions leadership and expanding our value-added applications offerings, all in parallel, as we prudently pursue global expansion. The $115.9 million of revenue this quarter is the highest in the history of the Company, increasing 9% sequentially and 54% year-over-year. The $159.7 million of orders generated during the quarter, a 16% increase year-over-year, is also the highest total in the history of the Company, surpassing the previous order record of $151 million achieved in Q3 '04. The book-to-bill ratio of approximately 1.4 indicates the continuing strength of Tekelec's business, with all Groups achieving a book-to-bill above 1. This is the ninth consecutive quarter in which Tekelec's book-to-bill ratio is above 1. For the full year, the order total of $520.1 million and revenues of $397.1 million represent a 54% order increase and 51% revenue increase over the 2003 totals, producing a 1.3 book-to-bill for the full year. These full-year order, revenue, and book-to-bill ratios are all records for the Company and demonstrate that Tekelec continues to execute on its strategic objectives, while positioning itself for future growth opportunities.

"Regarding our next-gen switching strategic initiative, revenues increased 35% sequentially to $20.4 million, and we added 19 new next-gen customers, bringing Tekelec's next-gen switching customer total to over 200, including the 45 customers VocalData had prior to its acquisition by Tekelec. During the quarter we were pleased to announce that a Tier 1 operator in Asia will be deploying Tekelec's T8000 Wireless Media Gateway to support the rollout of Gateway MSC and Distributed MSC applications, which will help to significantly reduce operating and capital costs for the carrier. This deployment represents the fourth Tier 1 operator, including three Tier 1 wireless operators, to deploy Tekelec's next-gen switching equipment, and further establishes Tekelec as a leader in the wireless next-gen switching space.

"With regard to signaling solutions, revenue for our Network Signaling Group was $78.9 million, up 40% year-over-year, and the highest signaling revenue in the history of the Company, driven by robust sales in the U.S. and continued success in our global expansion efforts, with six of the seven new NSG customers in the quarter located outside of the United States. For the full year 2004, signaling revenue increased by 39% compared to 2003.

"In the area of value-added applications, on October 14th we completed the acquisition of Steleus, a global supplier of real-time performance management and business intelligence communications software solutions for both fixed and mobile telecom networks. Steleus forms the cornerstone of Tekelec's new Communications Software Solutions Group. We are pleased to announce today that a European mobile operator has selected Tekelec's integrated signaling network monitoring system for acquiring and managing network, service and subscriber data. The system will be used by the operator to capture and store service and subscriber information, which feeds business intelligence applications, such as customer care, fraud control, and quality of service. This improved level of visibility allows the operator to monitor its network in real time, alleviating operational concerns and customer issues surrounding the rollout of new technologies.

"Finally, regarding global expansion, approximately 31% of sales during the quarter were from outside the U.S., highlighting the progress we are making on our global expansion efforts. As one example of this success, we are pleased to announce that VSNL, an India-based long-distance and international long-distance carrier, will deploy Tekelec's Eagle 5 SAS platform. VSNL represents the fourth Indian operator to select Tekelec as its signaling vendor, joining previously announced Tekelec customers Tata, Reliance, and Bharti, as Tekelec continues to be the provider of all built-for-purpose signaling platforms currently deployed in India, one of the fastest growing telecommunications markets in the world."

Tekelec Inc.