FOR IMMEDIATE RELEASE
7/19/99		 CONTACT: Peter A. Guglielmi
(630) 378-6111
Peter.Guglielmi@tellabs.com
 
TELLABS REPORTS RECORD SALES AND EARNINGS
FOR SECOND QUARTER AND FIRST HALF OF 1999

Lisle, Ill. -- Tellabs, Inc., announced Monday record sales and earnings for the second quarter and the first half of 1999.

Sales for the second quarter ended July 2 were $540,400,000, up 39.4 percent over sales of $387,719,000 a year earlier. This marks the 32nd consecutive quarter in which Tellabs' sales surpassed prior-year levels. Sales for the first six months of the year were $1,010,051,000, up 41.2 percent compared with sales of $715,221,000 a year earlier.

Net income for the second quarter was $127,772,000 compared with $119,042,000 a year earlier (when results included a pre-tax gain of $73,374,000 on the sale of stock held as an investment and a pre-tax write-off of $24,793,000 on assets that were determined to be impaired). Excluding the effect of the 1998 second-quarter gain and charge, earnings increased 48.1 percent over those recorded in the second quarter of last year. 

Net income for the first six months of 1999 was $231,490,000 compared with $187,286,000 a year earlier. Excluding the effect of the 1998 gain and charge, net income for the first half of 1999 was 49.8 percent greater than the level recorded in the first half of 1998.

Diluted earnings per share of common stock for the second quarter of 1999 were 32 cents compared with 32 cents (or 23 cents excluding the effect of the stock sale and write-off) for the second quarter of 1998. For the first six months of 1999, diluted earnings per share were 58 cents compared with 50 cents (or 41 cents excluding the effect of the stock sale and write-off). (All earnings-per-share amounts have been adjusted to reflect the effect of the two-for-one stock split that occurred on May 18, 1999.)

"This is clearly a quarter where sales growth was driven by the TITAN® digital cross-connect system family, " said Tellabs President and CEO Michael J. Birck. "Continuing strong demand for the SONET-based TITAN 5500 and 532L systems resulted in a 28.6 percent increase over last year's extremely robust second-quarter level. While MartisDXX™ system sales did not meet expectations for the quarter, we continue to project relatively strong sequential growth for this product throughout the rest of the year. Echo canceller sales, reflecting in part the success of our merger with Coherent Systems Corporation last August, grew robustly when compared to both the second quarter of 1998 and the first quarter of this year. CABLESPAN® system sales increased significantly, albeit from a rather modest level in last year's second quarter, as that product area continues to gain customer acceptance."

During the quarter, Tellabs announced that it will acquire Alcatel's DSC Communications businesses in Europe, in an all-cash transaction valued at about $110 million, and Wilmington, Mass.-based NetCore Systems, Inc., in an all-stock transaction valued at about $575 million. The European businesses are leading providers of managed, high-speed transport solutions based on international-standard Synchronous Digital Hierarchy (SDH) optical and multiplexing technologies. NetCore is a leading developer of innovative carrier-class IP routing and ATM switching solutions for the new public network. These acquisitions are intended to extend Tellabs' existing product offerings and allow the company to speed to market complementary technologies. The company expects both acquisitions to close during the third calendar quarter of 1999.

Tellabs designs, manufactures, markets and services voice and data transport and network access systems. The company's products are used worldwide by the providers of communications services. Tellabs stock is listed on the NASDAQ stock market (TLAB).

Tellabs, the Tellabs logo, TITAN and CABLESPAN are registered trademarks of Tellabs Operations, Inc., in the United States and/or other countries. MartisDXX is a trademark of Tellabs Oy.

TELLABS, INC.
Results of Operations
(Dollars in thousands, except per-share data)
(Unaudited)
Three Months
Ended
 Six Months
Ended
  07/02/99
 07/03/98
 07/02/99
 07/03/98
Net Sales $540,400 $387,719 $1,010,051 $715,221
Cost of Goods Sold 210,798
 161,596
 404,808
 299,942
Gross Profit 329,602 226,123 605,243 415,279
Operating Exp.  
      Mktg. & G.A. 79,572 52,707 146,024 101,181
      Research & Dev. 69,187 47,919 131,299 91,225
      Asset Impairment --- 24,793 --- 24,793
      Goodwill Amort. 1,427
 1,374
 2,900
 2,850
Total Oper. Exp. 150,186 126,793 280,223 220,049
 
Oper. Profit 179,416 99,330 325,020 195,230
Interest/Other-Net 7,353
 77,029
 15,406
 82,231
Profit Before Tax 186,769 176,359 340,426 277,461
 
Income Taxes 58,997
 57,317
 108,936
 90,175
Net Profit $127,772
 $119,042
 $231,490
 $187,286
 
Earnings Per Share  
      Basic $0.33
 $0.33
 $0.59
 $0.51
      Diluted $0.32
 $0.32
 $0.58
 $0.50
Average Number of Shares of Common Stock Outstanding  
      Basic 392,023 364,781 391,056 364,263
      Diluted 403,370 374,963 402,367 374,429
TELLABS, INC.
Condensed Consolidated Balance Sheet
(Dollars in thousands)
(Unaudited)
 
1999
Second Quarter
1999
First Quarter
1998 
Year End
Assets  
Current Assets  
      Cash and investments $872,212 $811,235 $642,645
      Accounts receivable, less allowance 458,752 381,354 480,620
      Inventories 132,819 135,105 122,424
      Other current assets 2,747
 8,939
 7,002
            Total Current Assets 1,466,530 1,336,633 1,252,691
 
Property, Plant and Equipment 423,564 410,869 413,891
      Accumulated depreciation (176,652)
 (166,850)
 (159,100)
  246,912 244,019 254,791
Goodwill 48,959 51,446 55,559
Other Assets 90,038
 81,645
 64,550
             Total Assets $1,852,439
 $1,713,743
 $1,627,591
 
Liabilities  
Current Liabilities  
      Accounts payable $69,129 $59,360 $63,083
      Accrued liabilities 85,173 89,223 81,927
      Income taxes 48,445
 57,386
 73,117
            Total Current Liabilities 202,747 205,969 218,127
 
Long-Term Debt 2,850 2,850 2,850
Other Long-Term Liabilities 19,321 18,856 18,164
Deferred Income Taxes 10,047
 10,638
 11,853
            Total Liabilities 234,965
 238,313
 250,994
 
Stockholders' Equity  
Common Stock, $0.01 Par Value 3,923 3,915 1,945
Additional Paid-In Capital 249,296 230,204 192,612
Cumulative Translation Adjustment (66,245) (49,248) (9,207)
Unrealized Holding Gains on Securities 30,146 17,974 20,423
Retained Earnings 1,400,354
 1,272,585
 1,170,824
 
            Total Stockholders' Equity 1,617,474
 1,475,430
 1,376,597
            Total Liab. and Stockholders' Equity $1,852,439
 $1,713,743
 $1,627,591