-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Mg1e0gF0/YWlk9HN6RM9f1PskaYy0oG9BB62Bl3LG1Jr6gDTZQwcLqzYMpoya7ib kk8tEpMqokXUtKYmzyDgog== 0000317771-95-000014.txt : 19950505 0000317771-95-000014.hdr.sgml : 19950505 ACCESSION NUMBER: 0000317771-95-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950504 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELLABS INC CENTRAL INDEX KEY: 0000317771 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 363831568 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09692 FILM NUMBER: 95534509 BUSINESS ADDRESS: STREET 1: 4951 INDIANA AVE CITY: LISLE STATE: IL ZIP: 60532 BUSINESS PHONE: 7089698800 MAIL ADDRESS: STREET 1: 4951 INDIANA AVE CITY: LISLE STATE: IL ZIP: 60532 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-9692 --------- TELLABS, INC. --------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 36-3831568 --------------------------- -------------------- (State of Incorporation) (I.R.S. Employer Identification No.) 4951 Indiana Avenue, Lisle, Illinois 60532 ---------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (708) 969-8800 ---------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None N/A --------------------------- --------- Securities registered pursuant to Section 12 (g) of the Act: Common shares, with $ .01 par value ----------------------------------- (Title of Class) 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[ ] On March 31, 1995, 87,711,496 common shares of Tellabs, Inc. were outstanding, including the effect of the two-for-one stock split payable in the form of a 100 percent stock dividend to be distributed on May 19, 1995 to stockholders of record as of May 3, 1995. -1- TELLABS, INC. INDEX Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Comparative Balance Sheets 3 Condensed Consolidated Comparative Statements of Earnings 4 Condensed Consolidated Comparative Statements of Cash Flow 5 Notes to Condensed Consolidated Comparative Financial Statements 6 Item 2. Management's Discussion and Analysis 7 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 9 SIGNATURE 10 -2- TELLABS, INC. CONDENSED CONSOLIDATED COMPARATIVE BALANCE SHEETS (Unaudited) Mar. 31, Dec. 30, 1995 1994 Assets --------- --------- Current assets (In thousands) Cash and cash equivalents $47,271 $51,460 Investments in marketable securities - available for sale 48,032 23,209 Accounts receivable, less allowance 83,859 84,397 Inventories Raw materials 25,807 20,898 Work in process 13,065 12,396 Finished goods 22,013 18,587 --------- --------- 60,885 51,881 Other current assets 8,815 9,609 --------- --------- Total Current Assets 248,862 220,556 Property, plant, and equipment 177,063 166,931 Less accumulated depreciation 73,300 69,300 --------- --------- 103,763 97,631 Goodwill 47,321 44,252 Other assets 24,642 27,628 --------- --------- $424,588 $390,067 Liabilities ========= ========= Current Liabilities Accounts payable $21,741 $22,606 Accrued liabilities 35,249 38,816 Income taxes 21,631 20,817 --------- --------- Total Current Liabilities 78,621 82,239 Long-term debt 2,850 2,850 Other long-term liabilities 11,107 10,416 Deferred income taxes 4,292 1,772 Stockholders' Equity Preferred stock, with $.01 par value- 5,000,000 shares authorized, no shares issued - - Common stock, with $.01 par value - 200,000,000 shares authorized 87,711,496 shares issued and outstanding at March 31, 1995 and 87,288,692 at December 30, 1994 877 436 Additional paid-in capital 58,092 54,150 Cumulative foreign currency translation adjustment 9,556 2,102 Unrealized net holding losses on available-for-sale securities (214) (803) Retained earnings 259,407 236,905 --------- --------- Total Stockholders' Equity 327,718 292,790 --------- --------- $424,588 $390,067 ========= ========= The accompanying notes are an integral part of these statements. -3- TELLABS, INC. CONDENSED CONSOLIDATED COMPARATIVE STATEMENTS OF EARNINGS (Unaudited) Three Months Ended March 31, April 1, 1995 1994 --------- --------- (In thousands, except per share data) Net sales $142,212 $99,538 Cost of sales 62,943 46,127 --------- --------- Gross Profit 79,269 53,411 Marketing, general & administrative expense 27,670 21,989 Research and development expense 19,788 15,716 Goodwill amortization 665 597 --------- --------- Total Operating Expense 48,123 38,302 Operating Profit 31,146 15,109 Interest income (1,126) (726) Interest expense 31 526 Foreign exchange loss, net 386 319 Other (income) expense, net (456) 447 --------- --------- Earnings before income taxes 32,311 14,543 Income taxes 9,370 3,345 --------- --------- Net Earnings $22,941 $11,198 ========= ========= Earnings per share * $0.25 $0.12 ========= ========= Average number of shares of common stock outstanding * 91,302 90,059 * Restated to give effect to the two-for-one stock split effective May 19, 1995. The first quarter of 1994 is also restated to give effect to the two-for-one stock split effective May 20, 1994. Both stock splits are payable in the form of a stock dividend. The accompanying notes are an integral part of these statements. -4- TELLABS, INC. CONDENSED CONSOLIDATED COMPARATIVE STATEMENTS OF CASH FLOW (Unaudited) For The Three Months Ended March 31, April 1, 1995 1994 --------- --------- (In thousands) Cash Flows from Operating Activities: Net earnings $22,941 $11,198 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 5,548 4,706 Provision for doubtful receivables 289 78 Deferred income taxes 2,632 240 Gain on sale of long-term investment (929) --- Net (increase) decrease in current assets: Accounts receivable 2,389 4,798 Inventories (7,488) (3,050) Other current assets 1,185 (317) Net increase (decrease) in current liabilities: Accounts payable (1,336) 352 Accrued liabilities (4,114) (2,665) Income taxes (1,452) (2,240) Net (increase) decrease in other assets (1,784) 914 Net increase in other liabilities 623 2,445 --------- --------- Net Cash Provided by Operating Activities 18,504 16,459 Cash Flows from Investing Activities: Acquisition of property,plant and equipment,net (7,627) (1,740) Payments for purchases of marketable securities (25,597) (7,240) Proceeds from sales of marketable securities 1,364 2,576 Proceeds from sale of long-term investment 3,429 --- --------- --------- Net Cash Used by Investing Activities (28,431) (6,404) Cash Flows from Financing Activities: Payments of notes payable --- (10,000) Common stock sold through stock-option plans 3,943 3,340 --------- --------- Net Cash Provided (Used) by Financing Activities 3,943 (6,660) Effect of exchange rate changes on cash 1,795 1,409 --------- --------- Net (decrease) increase in cash and cash equivalents (4,189) 4,804 Beginning of period cash and cash equivalents 51,460 29,589 --------- --------- End of period cash and cash equivalents $47,271 $34,393 ========= ========= Supplemental Disclosures: Interest paid $26 $538 Income taxes paid $4,844 $1,246 The accompanying notes are an integral part of these statements. -5- TELLABS, INC. NOTES TO CONDENSED CONSOLIDATED COMPARATIVE FINANCIAL STATEMENTS 1. Financial Information: The unaudited financial information reflects all adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the statements contained herein. Certain reclassifications have been made in the 1994 financial statements to conform to the 1995 presentation. 2. Basis of Presentation: These financial statements are presented in accordance with the requirements of Form 10-Q and consequently may not include all disclosures normally required by generally accepted accounting principles or those normally reflected in the Company's Annual Report on Form 10-K. Accordingly, the financial statements and notes herein should be read in conjunction with the financial statements and related notes in the Company's Form 10-K for the year ended December 30, 1994. 3. Subsequent Event - Stock Split: On April 25, 1995, the Board of Directors declared a two-for-one stock split of the Company's common stock, payable in the form of a 100 percent stock dividend. This dividend will be distributed on May 19, 1995, to stockholders of record as of May 3, 1995. All references to the number of common shares and per share amounts have been retroactively restated to give effect to the stock dividend. Common share and per share amounts for the first quarter of 1994 also reflect the two-for-one stock split payable in the form of a 100 percent stock dividend effective May 20, 1994. -6- MANAGEMENT'S DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES During the first quarter of 1995, the Company's cash, cash equivalents and marketable securities portfolio increased $20,634,000 to a new high of $95,303,000. The Company's record first quarter earnings of $22,941,000 were the primary contributor. Operating activities provided cash through the aforementioned net earnings. This was partially offset by increases in inventories and reductions in accrued liabilities. Total inventories increased $9,004,000 during the first quarter of 1995, in order to support the growth in sales of the Martis DXX (a trademark of Martis Oy) multiplexer and the Company's SONET-based TITAN (a registered trademark of Tellabs Operations, Inc.) 5500 digital cross-connect system. Accrued liabilities decreased $3,567,000 from the December 30, 1994 balance due to payments made during the first quarter for year-end obligations related to employee compensation programs. The Company invested the cash provided by operating activities in higher yielding marketable securities and in property, plant, and equipment. Net investments in property, plant, and equipment totalled approximately $7,600,000. Additions were made primarily at the Company's Finnish subsidiary in order to increase manufacturing capacity. The Company currently expects total capital expenditures in 1995 to approximate $25,000,000. The majority of the remaining expenditures made in 1995 will be to increase manufacturing capacity both domestically and internationally. Additional cash of $3,429,000 was provided by the sale of stock previously held as a long-term investment. Net working capital at March 31, 1995 was $170,241,000, compared with working capital of $138,317,000 at December 30, 1994. The Company's current ratio at the end of the first quarter was 3.2 to 1. This increase in working capital was primarily due to operating activities. Management believes that this level of working capital will be adequate for the Company's liquidity needs related to normal operations both currently and in the foreseeable future. Sufficient resources exist to support the Company's growth either through currently available cash, through cash generated from future operations, or through additional short-term or long-term financing. RESULTS OF OPERATIONS Sales for the first quarter of 1995 were a record $142,212,000, up 42.9 percent from the previous first quarter record of $99,538,000 set in 1994. The growth in sales was led by the international sales channel, highlighted by a 150 percent increase in Martis DXX system sales over the same period last year. Sales also grew domestically, led by strong increases in TITAN digital cross-connect systems. Net earnings for the first quarter of 1995 were $22,941,000, up 104.9 percent from $11,198,000 a year earlier. Earnings per share for the current quarter were 25 cents compared with 12 cents for the first quarter of 1994. Earnings per share amounts have been restated to give effect to the two-for-one stock effective May 19, 1995. The first -7- quarter of 1994 per share amounts also reflect the two-for-one stock split that was effective May 20, 1994. The increase in earnings for the first quarter of 1995 was primarily based on the growth in sales and an increase in the gross margin percent from 53.7 percent in 1994 to 55.7 percent in 1995. This improvement in the gross margin percent was realized through continued efficiencies in manufacturing operations and in product mix, as volume increased. Operating expenses of $48,123,000 for the first quarter of 1995 increased 25.6 percent over operating expenses of $38,302,000 for the first quarter of 1994. Increased headcount and the related expenses necessary to support and service domestic and international products, particularly the Martis DXX system, were the primary reasons for this increase in operating expenses. Total operating expenses for the first quarter of 1995 were 33.8 percent of sales compared to 38.5 percent for the same period in 1994. Interest income contributed $1,126,000 to pre-tax income in the first quarter of 1995, up 55.1 percent from $726,000 in the first quarter of 1994. This increase was due to greater average cash balances and higher market interest rates. Interest expense was $31,000 for the first quarter of 1995 compared to $526,000 for the first quarter of 1994. The 1994 interest expense was related to the bank debt used to finance the acquisition of Martis Oy in October 1993. The debt was entirely repaid by the fourth quarter of 1994. Foreign exchange losses of $386,000 incurred during the first quarter of 1995 were the result of the continued weakness of the U.S. dollar along with the strength of the Finnish markka versus other European currencies. The foreign exchange losses of $319,000 in the first quarter of 1994 were the result of the weakness of the U.S. dollar versus the Irish punt and the Finnish markka along with the strength of the U.S. dollar in Canada. Other non-operating income of $456,000 in the first quarter of 1995 was primarily generated by a gain on the sale of stock held as a long-term investment. The 1994 loss of $447,000 resulted from capital losses related to the disposal of fixed assets. The effective tax rate was approximately 29 percent for the first quarter of 1995 and 23 percent for the first quarter of 1994. The increase in the effective tax rate for 1995 is due to an increase in state income taxes, the decreasing effect of research and development credits as a percentage of total pretax income, and a greater Martis Oy effective tax rate. The 1995 effective tax rate reflects adjustments from the Federal statutory rate primarily attributable to foreign tax rate benefits. -8- PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K (A) Exhibits: Exhibit 11 - Calculation of Per Share Earnings. Exhibit 27 - Financial Data Schedule. (B) Reports on Form 8-K The Registrant did file a report on Form 8-K on May 1, 1995, with respect to the declaration of a two-for-one stock split payable in the form of a 100 percent stock dividend on May 19, 1995, to stockholders of record on May 3, 1995. -9- TELLABS, INC. SIGNATURE 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. TELLABS, INC. ---------------- (Registrant) /s J. Peter Johnson ------------------- J. Peter Johnson Vice President/Controller & Chief Accounting Officer May 4, 1995 - ---------------- (Date) -10- EXHIBIT 11 TELLABS, INC. COMPUTATION OF EARNINGS PER SHARE (Unaudited) (In thousands, except per share data) Three Months Ended March 31, April 1, 1995 1994 --------- --------- PRIMARY EARNINGS PER SHARE * - ------------------------------------ Weighted average number of common shares outstanding during the period 87,532 86,324 Net additional shares assuming dilutive stock options exercised and proceeds used to purchase treasury shares at average fair market value 3,682 3,684 --------- --------- Weighted average number of common shares and common equivalent shares outstanding 91,214 90,008 ========= ========= Net earnings $22,941 $11,198 ========= ========= Primary earnings per share $0.25 $0.12 ========= ========= FULLY DILUTED EARNINGS PER SHARE * - ------------------------------------ Weighted average number of common shares outstanding during the period 87,532 86,324 Net additional shares assuming dilutive stock options exercised and proceeds used to purchase treasury shares at fair market value 3,770 3,735 --------- --------- Weighted average number of common shares and common equivalent shares outstanding 91,302 90,059 ========= ========= Net earnings $22,941 $11,198 ========= ========= Fully diluted earnings per share $0.25 $0.12 ========= ========= * Restated to give effect to the two-for-one stock split effective May 19, 1995. The first quarter of 1994 is also restated to give effect to the two-for-one stock split effective May 20, 1994. Both stock splits are payable in the form of a stock dividend. -11- EX-27 2
5 This schedule contains summary financial information extracted from the March 31, 1995, income statement and balance sheet and is qualified in its entirety by reference to such 10-Q. 0000317771 TELLABS, INC. 3-MOS DEC-29-1995 MAR-31-1995 47271000 48032000 85111000 1252000 60885000 248862000 177063000 73300000 424588000 78621000 2850000 877000 0 0 326841000 424588000 142212000 142212000 62943000 62943000 0 289000 (1095000) 32311000 9370000 22941000 0 0 0 22941000 .25 .25
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