-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QM0ehIBXp4r5xzvEc345nXF63ci+ylwUamv/MEVJE9xC41Pt3+CNnMmKrMkXy5jZ ZVjjBlV0b50SZuIkgw14VQ== /in/edgar/work/20000628/0000950137-00-003108/0000950137-00-003108.txt : 20000920 0000950137-00-003108.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950137-00-003108 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELLABS INC CENTRAL INDEX KEY: 0000317771 STANDARD INDUSTRIAL CLASSIFICATION: [3661 ] IRS NUMBER: 363831568 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 000-09692 FILM NUMBER: 662626 BUSINESS ADDRESS: STREET 1: 4951 INDIANA AVE CITY: LISLE STATE: IL ZIP: 60532 BUSINESS PHONE: 6303788800 MAIL ADDRESS: STREET 1: 4951 INDIANA AVE CITY: LISLE STATE: IL ZIP: 60532 11-K 1 e11-k.txt FORM 11-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------- ------- Commission file number 0-9692 ------ A. Full title of the plan and the address of the plan, if different from that of the issuer named below: Tellabs, Inc. Profit Sharing and Savings Plan B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Tellabs, Inc. 4951 Indiana Avenue, Lisle, Illinois 60532 (Address of principal executive offices and zip code) (630)378-8800 (Registrant's telephone number, including area code) 2 Financial Statements Tellabs, Inc. Profit Sharing and Savings Plan Years ended December 31, 1999 and 1998 with Report of Independent Auditors Employee Identification No. 36-3831568 Plan #001 3 Tellabs, Inc. Profit Sharing and Savings Plan Financial Statements Years ended December 31, 1999 and 1998 CONTENTS Report of Independent Auditors........................................................................ 1 Financial Statements Statements of Net Assets Available for Benefits....................................................... 2 Statements of Changes in Net Assets Available for Benefits............................................ 3 Notes to Financial Statements......................................................................... 4
4 Report of Independent Auditors Board of Trustees Tellabs, Inc. Advantage Program We have audited the accompanying statements of net assets available for benefits of the Tellabs, Inc. Profit Sharing and Savings Plan as of December 31, 1999 and 1998, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1999 and 1998, and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States. ERNST & YOUNG LLP May 26, 2000 1 5 EIN 36-3831568 Plan #001 Tellabs, Inc. Profit Sharing and Savings Plan Statements of Net Assets Available for Benefits
DECEMBER 31 1999 1998 ---------------------------- Interest in Tellabs, Inc. Advantage Program $371,014,065 $219,911,164 Contributions receivable 393,250 274,745 ---------------------------- Net assets available for benefits $371,407,315 $220,185,909 ============================
See accompanying notes. 2 6 EIN 36-3831568 Plan #001 Tellabs, Inc. Profit Sharing and Savings Plan Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31 1999 1998 -------------------------------- ADDITIONS Allocable share of the Tellabs, Inc. Advantage Program net investment income $120,089,059 $ 40,439,083 Contributions: Employer 6,812,505 5,122,954 Participants 20,847,060 14,672,643 ----------------------------- 27,659,565 19,795,597 Transfer from Coherent Communications Systems Corporation Savings Incentive Plan 11,947,244 - ----------------------------- Total additions 159,695,868 60,234,680 DEDUCTIONS Distributions to participants (8,439,814) (7,127,697) Transfer to Tellabs, Inc. Retirement Plan (34,648) - ----------------------------- Net increase 151,221,406 53,106,983 Net assets available for benefits: Beginning of year 220,185,909 167,078,926 ----------------------------- End of year $371,407,315 $220,185,909 =============================
See accompanying notes. 3 7 Tellabs, Inc. Profit Sharing and Savings Plan Notes to Financial Statements Years ended December 31, 1999 and 1998 1. DESCRIPTION OF PLAN The following description of the Tellabs, Inc. Profit Sharing and Savings Plan (the Plan) provides only general information. Participants should refer to the Tellabs Inc. Advantage Program Plan document for a more complete description of the Plan's provisions. GENERAL The Plan is a defined-contribution plan which covers all full-time employees of Tellabs, Inc. (the Company and Employer) and adopting subsidiaries, who, prior to April 1, 1999, had been employed by the Company for at least nine continuous months, have completed 1,000 hours of service in a 12-month period, and are age 21 or older. Effective April 1, 1999, employees are eligible to participate in the Plan if they are 18 years or older. In order to receive the company matching contributions and profit sharing, employees must be employed by the Company for at least nine months and have completed 1,000 hours of service in a 12-month period. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The plan administrator maintains all necessary records and determines participant eligibility. Plan assets are held in a trust and are managed by a Trustee appointed by the Company. The Plan participates in the Tellabs, Inc. Advantage Program (the Master Trust). The Tellabs, Inc. Retirement Plan also participates in the Master Trust. On March 3, 1999, the Coherent Communications Systems Corporation Savings Incentive Plan (Coherent Plan) merged into the Plan. CONTRIBUTIONS Each year, participants may elect to contribute, on a before-tax basis, between 1% and 15% of the participants' eligible annual compensation. For 1999 and 1998, the Company contributed to the Plan an amount equal to each participant's before-tax contribution, not exceeding 3% of the participant's eligible compensation for the year, for all participants, regardless of years of service (the Match Contribution). In addition, the Company contributed to the Plan 0.5% of each participant's annual eligible compensation for all participants in 1999 and 1998, (the Profit Sharing Contribution). The full amount of the 4 8 Tellabs, Inc. Profit Sharing and Savings Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF PLAN (CONTINUED) Company's profit-sharing contribution, $1,002,320 and $720,246 in 1999 and 1998, respectively, is automatically invested in the Tellabs, Inc. Stock Fund. The Company's Board of Directors may authorize additional discretionary contributions to the Plan, no such amounts were authorized in 1999 or 1998. Effective January 1, 1999, the Company will make a Vacation Rollover contribution equal to the value of the participant's forfeitured vacation time (up to one week), based on 75% of total pay, as defined. This amount is subject to the same investment and vesting rules as the profit-sharing contribution. The contribution will be made in the calendar year following the year in which the forfeiture occurred. PARTICIPANTS' ACCOUNTS The Plan administrator maintains an account in the name of each participant, which reflects the participant's share of the Employer contributions, participant contributions, and the participant's share of earnings or losses of the respective investment funds. Forfeited balances of terminated participants' nonvested Profit Sharing Contributions plus actual earnings thereon are used to reduce future Company contributions. The balance of forfeited nonvested Profit Sharing Contributions plus actual earnings thereon was not material as of December 31, 1999 and 1998. VESTING Participants are immediately vested in their contributions and the Company's Match Contribution plus actual earnings thereon. Vesting in the Company's Profit Sharing Contribution portion of their accounts plus actual earnings thereon is based on years of service. A participant is 100% vested upon completion of five years of service. PARTICIPANT LOANS Participants may borrow from their fund accounts a minimum of $1,000 (or less if the participant demonstrates financial hardship) up to a maximum of $50,000. Interest rates are commensurate with local prevailing rates as determined by the Administrative Committee. Loan terms range from 1-5 years or up to 15 years for the purchase of a primary residence. The loans are secured by the Participant's loan account. 5 9 Tellabs, Inc. Profit Sharing and Savings Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF PLAN (CONTINUED) PAYMENT OF BENEFITS Upon termination of service, retirement, disability, or death, a participant or beneficiary may elect to receive a lump-sum amount equal to the value of the participant's account or monthly, quarterly, semiannual, or annual installments over a period not to exceed the life expectancy of the participant or the joint life expectancies of the participant and an individual beneficiary. If the participant's vested account balance does not exceed $5,000, the participant's vested account balance will be distributed in a lump-sum payment. Distributions from a Coherent Plan account must be made in the form of a Qualified Joint and Survivor Annuity unless the participant has elected to not receive a Qualified Joint and Survivor Annuity. PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of a termination of the Plan, participants will become 100% vested in their accounts and the assets of the Plan will be liquidated and promptly distributed to each participant or beneficiary. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements of the Plan have been prepared under the accrual method of accounting and in conformity with general accepted accounting principles. INVESTMENT VALUATION The Plan's beneficial interest in the Master Trust represents the Plan's share of the Master Trust's investments stated at fair value. The shares of registered investment companies are valued at quoted market prices which represent the net asset values of shares held by the Master Trust at year-end. Investments in common stock are valued at the closing exchange prices reported by the New York Stock Exchange. The market value for short-term investments is cost which approximates fair value. The participant loans are valued at their outstanding balances, which approximate fair value. The Plan's percentage interest in the net assets of the Master Trust as of December 31, 1999 and 1998, was approximately 89% and 88%, respectively. Investment income is allocated to participating plans on a basis which reflects their weighted participation in the investment funds of the Master Trust. 6 10 Tellabs, Inc. Profit Sharing and Savings Plan Notes to Financial Statements (continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ADMINISTRATIVE COSTS All administrative costs are paid by the Company. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. RECLASSIFICATION Certain amounts in the 1998 financial statements have been reclassified to conform to the 1999 presentation. 3. INVESTMENT IN MASTER TRUST Participants have the option of investing all or a portion of their accounts (other than the Profit Sharing Contribution which is automatically allocated to the Tellabs, Inc. Stock Fund) in any of the investment fund options offered by the Plan. On a daily basis, participants have the option of changing the allocation of future contributions or transferring all or a portion of their existing account balances among the investment funds. 7 11 Tellabs, Inc. Profit Sharing and Savings Plan Notes to Financial Statements (continued) 3. INVESTMENT IN MASTER TRUST (CONTINUED) The following table presents investments held by the Master Trust:
DECEMBER 31 1999 1998 -------------------------------- INVESTMENTS AT FAIR VALUE AS DETERMINED BY QUOTED MARKET PRICE Registered investment companies: American Funds Group - Bond Fund of America $ 6,933,722 $ 5,628,005 American Funds Group - American Balanced Fund 19,866,854 14,531,879 Barclays Equity Index Fund 15,236,745 8,706,271 Neuberger & Berman Guardian Fund - 19,628,303 Fidelity Contra Fund 32,021,090 20,483,541 American Funds Group - EuroPacific Growth Fund 31,839,132 16,317,230 20th Century Ultra Investors Fund 39,227,574 23,626,537 SSGA Small Cap Fund 1,832,478 1,144,921 Washington Mutual Investors Fund 25,192,116 - Equities: Tellabs, Inc. common stock 200,603,332 115,482,800 ------------------------------- 372,753,043 225,549,487 INVESTMENTS AT ESTIMATED FAIR VALUE Money market funds: Northern Trust Short-Term Investment Fund 2,624,396 - Dreyfus Money Market Fund 18,451,691 8,813,782 LaSalle Income Plus Fund 15,377,703 9,229,028 Participant loans 9,664,009 7,598,372 ------------------------------- 46,117,799 25,641,182 ------------------------------- Total investments $ 418,870,842 $ 251,190,669 ===============================
8 12 Tellabs, Inc. Profit Sharing and Savings Plan Notes to Financial Statements (continued) The investment income for the years ended December 31, 1999 and 1998, are summarized as follows:
1999 1998 ---------------------------------- ADDITIONS TO NET ASSETS ATTRIBUTED TO Interest and dividend income $ 14,696,582 $ 6,197,448 Net realized and unrealized appreciation in fair value of investments: Mutual funds 94,555,771 11,517,959 Tellabs, Inc. common stock 19,337,280 26,946,403 ------------------------------ Total net appreciation 113,893,051 38,464,362 ------------------------------ Total additions $ 128,589,633 $ 44,661,810 ==============================
4. NONPARTICIPANT-DIRECTED INVESTMENTS Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed investments is as follows:
DECEMBER 31 1999 1998 -------------------------------- Investments, at fair value: Tellabs, Inc. common stock $ 17,210,002 $ 8,922,266 ============================== Changes in net assets: Interest and dividend income $ 7,660 $ 4,307 Net realized and unrealized appreciation in fair value of investments 7,657,908 2,048,116 Employer contributions 1,002,320 720,246 Distributions (342,910) (264,828) Interfund transfers (37,242) (39,024) ------------------------------ $ 8,287,736 $ 2,468,817 ==============================
13 5. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated September 13, 1995, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Service Code (the Code) and, therefore, the related Master Trust is exempt from taxation. The Plan has been amended since receiving the determination letter. However, the Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code. 9 14 SIGNATURE The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. TELLABS, INC. PROFIT SHARING AND SAVINGS PLAN By: /s/ Joan E. Ryan --------------------------- Joan E. Ryan Vice President and Chief Financial Officer, Tellabs, Inc. Date: June 28, 2000 EX-23 2 ex23.txt CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-48972) pertaining to the Tellabs Inc. Profit Sharing and Savings Plan, of our report dated May 26, 2000, with respect to the financial statements of Tellabs Inc. Profit Sharing and Savings Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1999. ERNST & YOUNG LLP Chicago, Illinois June 23, 2000 -----END PRIVACY-ENHANCED MESSAGE-----