8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

DATE OF REPORT (Date of earliest event reported)         August 18,1999

TELLABS, INC.
(Exact name of registrant as specified in its charter)

Delaware	0-9692	36-3831568
(State of Incorporation)	(Commission file number)	(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: (630) 378-8800

N/A
(Former name or former address, if changed since last report)

Item 5. Other Events.

On August 12, 1999, Tellabs, Inc. (the "Company") issued its Second Quarter 1999 Report to stockholders through its website at www.tellabs.com. Incorporated into the Second Quarter 1999 Report are links to the Second Quarter Earnings Release which includes the Results of Operations and Condensed Balance Sheet.

The Second Quarter 1999 Report to stockholders and the Second Quarter Earnings Release including Results of Operations and Condensed Consolidated Balance Sheet are attached hereto as Exhibit 20.1 and Exhibit 99.1, respectively, and are incorporated herein by reference.

Item 7. Financial Statements and Exhibits.

   (c) Exhibits
     Exhibit 20.1 - Second Quarter 1999 Report
     Exhibit 99.1 - Second Quarter 1999 Earnings Release with Results of Operations and
                           Condensed Consolidated Balance Sheet

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)

                             Robert E. Swininoga
                           Robert E. Swininoga
                        Vice President and
                                      Principal Accounting Officer

August 18, 1999
(Date)

EXHIBIT INDEX

Exhibit Number	Description
20.1	Second Quarter 1999 Report
99.1	Second Quarter Earnings Release

EX-20.1

Second Quarter 1999 Report - Tellabs, Inc.

Fellow Stockholders:

August 12, 1999

I am reporting again on a very busy quarter for this company. A lot of things happened and a lot of them are just about the way we expected them to be.

Revenue for the quarter amounted to just more than $540 million, an all-time record for any quarter and 39.4 percent more than the $387.7 million recorded in the second quarter of 1998. For the first six months of 1999, revenue amounted to a little more than $1 billion, an increase of 41.2 percent compared with the $715.2 million reported for the first half of last year. Without question this was our best first-half performance ever.

Net income for the second quarter was $127.8 million, compared with the $119 million the company reported in the second quarter a year ago. This comparison is a little misleading without reference to two non-recurring transactions that took place during the second quarter of 1998. At that time, Tellabs recognized a pre-tax gain of $73.4 million on the sale of stock held as an investment. The company also took a pre-tax write-off amounting to $24.8 million for assets that were determined to be impaired. Eliminating the effect of these two transactions provides a little more accurate picture of company performance, with earnings for the second quarter of 1999 exceeding the 1998 level by 48.1 percent. Using the same analysis, net income of $231.5 million for the first half of 1999 was 49.8 percent above the level realized during the first half of 1998.

Diluted per-share earnings for the second quarter and the first six months of 1999 were 32 cents and 58 cents, respectively. This compares with 23 cents for last year's second quarter and 41 cents for the first half of 1998, subject again to the qualifiers described above. (Last year while navigating through similar comparisons in the quarterly stockholder letter, I remarked that our second quarter set an all-time record for complexity of the earnings statement. Alas, that record too has fallen, as all the earnings-per-share amounts referenced this year take into account the two-for-one stock split that occurred on May 18, 1999!)

As usual for Tellabs, sales growth was driven by the TITAN® digital cross-connect system family. Clearly the Internet is driving a good deal of this and so are wireless services, with no obvious changes in that pattern visible. MartisDXX™ system sales fell short of our expectations for the quarter, a consequence of some timing issues with large orders, a slower-than-anticipated return to robust growth in developing markets and some negative currency-translation issues. Nevertheless, we continue to project relatively strong sequential growth for this product throughout the rest of the year. Echo canceller sales are very much on target. The expectations we had when we acquired Coherent last year are beginning to materialize in a meaningful way. And finally, the CABLESPAN® system is showing signs of becoming a product with real revenue expectations. We will see that continue for the rest of the year, and there are some major opportunities for the CABLESPAN product line as we go into next year.

During the quarter, we announced that we would acquire Alcatel's DSC Communications businesses in Europe in an all-cash transaction valued at about $110 million. The European businesses provide managed high-speed transport solutions based on synchronous digital hierarchy (SDH) optical and multiplexing technologies. While a sizable market exists for these products now, ultimately we expect to integrate some of these technologies into the MartisDXX product offering. This transaction was completed on July 30, and we heartily welcome those new members of the Tellabs family in Denmark, Ireland and elsewhere!

In late June, we announced the acquisition of Wilmington, Mass.-based NetCore Systems, Inc., in an all-stock transaction valued at about $575 million. NetCore develops carrier-class IP routing and ATM switching solutions. As many of you know, we are involved in ATM technology with quite a few of the new products we've recently announced. Combining these Tellabs technologies with the NetCore technology gives us an opportunity to address the needs of next-generation public networks, multi-services networks and data networking in general in a comprehensive way. We expect the NetCore acquisition to close before the end of the third calendar quarter.

On a more individual note, the company "acquired" Marc Ugol during the quarter as its vice president of Human Resources. Marc comes to us from Platinum Technology International of Oakbrook Terrace, Ill., where he designed and implemented a global human resources management function while providing HR leadership on more than 50 acquisitions. Marc is a welcome addition, and we are very happy to have him aboard.

The second quarter was a good and very busy quarter for Tellabs. Much is happening, as is always the case during times of transition, which is certainly the case in telecommunications. Such times provide many challenges, and increased opportunity, as well. Tellabs, I believe, will do well in this environment. As we continue to address the challenges and opportunities of modern-day telecommunications, we appreciate the support and encouragement of our customers, employees and stockholders.

Sincerely,
/s Michael J. Birck
Michael J. Birck
President and
Chief Executive Officer

Second Quarter Earnings Release
Results of Operations
Condensed Consolidated Balance Sheet

Common Stock Market Data
Tellabs' common stock is listed on The Nasdaq Stock Market under the symbol TLAB and appears in most daily newspaper stock tables as Telabs. At February 15, 1999, there were approximately 4,371 stockholders of record. Tellabs is a component of the Nasdaq-100 Index and the Standard & Poor's 500 Index.

10-K Report
Stockholders may obtain without charge a copy of the Tellabs 1998 Form 10-K as filed with the Securities and Exchange Commission upon request to:
Secretary
Tellabs, Inc.
4951 Indiana Avenue
Lisle, Illinois 60532 U.S.A.
Edgar Archives
For Tellabs investor relations contact:
Tom Scottino
+1.630.378.7504
tom.scottino@tellabs.com

Except for historical information, the matters discussed or incorporated by reference in this document are forward-looking statements that involve risks and uncertainties associated with competition, market growth, customer acceptance and timely availability of products and features, as well as other risks that may be detailed from time to time in the company's filings with the Securities and Exchange Commission. Tellabs' actual future results could differ materially from those discussed here. The company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances or to reflect the occurrence of unanticipated events.

APPENDIX A

Description of Graphic and Image Material

Bar Graph of Gross Profit (In Percentages)
Data Points: 1995-54.8%, 1996-57.3%, 1997-59.3%, 1998-58.6%, 1999-59.9%
                   Results for 1999 are as of 7/02/99.

Bar Graph of Book Value per Share (Restated for Stock Splits)
Data Points: 1995-$1.22, 1996-$1.65, 1997-$2.57, 1998-$3.54, 1999-$4.12
                   Results for 1999 are as of 7/02/99.

Return on Equity (In Percentages)
Data Points: 1995-31.9%, 1996-23.0%, 1997-34.6%, 1998-34.5%, 1999-32.4%
                   Results for 1999 are as of 7/02/99.

EX-99.1 3 EX-99.1 2ND QTR EARNINGS RELEASE

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

EX-99.1

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.