TELLABS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended						Year Ended
	12/30/05			12/31/04			12/30/05			12/31/04
(In millions, except per-share data)	Unaudited						Unaudited

Revenue
Products	$	477.5		$	338.9		$	1,716.3		$	1,074.2
Services	43.9			40.5			167.1			157.6
	521.4			379.4			1,883.4			1,231.8
Cost of Revenue
Products	243.7			174.0			908.8			472.1
Services	29.5			26.8			119.6			102.7
	273.2			200.8			1,028.4			574.8
Gross Profit	248.2			178.6			855.0			657.0

Gross profit as a percentage of revenue	47.6		%	47.1		%	45.4		%	53.3		%

Gross profit as a percentage of revenue - products	49.0		%	48.7		%	47.0		%	56.1		%
Gross profit as a percentage of revenue - services	32.8		%	33.8		%	28.4		%	34.8		%

Operating Expenses
Research and development	87.6			67.8			344.0			250.3
Sales and marketing	41.7			42.8			175.5			155.1
General and administrative	25.7			21.9			95.6			81.5
Restructuring and other charges	(1.3		)	0.1			12.9			14.1
Asset impairment charge	—			47.2			—			47.2
Net loss on sale of real estate	—			20.6			—			20.6
Purchased in-process research and development	2.2			102.1			2.2			102.1
Amortization of purchased intangibles	7.9			6.1			36.0			17.8
	163.8			308.6			666.2			688.7

Operating Earnings (Loss)	84.4			(130.0		)	188.8			(31.7		)

Other Income
Interest income, net	9.4			7.3			28.3			26.9
Other income (expense), net	(0.4		)	(5.3		)	(4.0		)	(5.4		)
	9.0			2.0			24.3			21.5

Earnings Before Income Tax	93.4			(128.0		)	213.1			(10.2		)
Income tax (expense) benefit	(1.3		)	(10.7		)	(37.3		)	(19.6		)
Net Earnings (Loss)	$	92.1		$	(138.7	)	$	175.8		$	(29.8	)

Net Earnings Per Share
Basic	$	0.21		$	(0.32	)	$	0.39		$	(0.07	)
Diluted	$	0.20		$	(0.32	)	$	0.39		$	(0.07	)

Weighted Average Shares Outstanding
Basic	448.4			433.1			449.9			420.2
Diluted	455.2			433.1			454.5			420.2

Amortization of deferred stock compensation related to acquisitions is included in the following cost and expense categories by period:

Cost of revenue	$	—		$	0.1		$	0.3		$	0.1
Research and development	2.4			1.1			9.9			5.0
Sales and marketing	0.1			0.1			0.3			0.2
General and administrative	0.1			—			0.4			—
	$	2.6		$	1.3		$	10.9		$	5.3

TELLABS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share amounts)	12/30/05			12/31/04
	(Unaudited)

Assets
Current Assets
Cash and cash equivalents	$	880.8		$	292.9
Investments in marketable securities	308.9			823.3
	1,189.7			1,116.2

Other marketable securities - Cisco stock	180.8			204.0
Accounts receivable, net of returns and allowances of $8.4 and $14.8	319.4			309.4
Inventories
Raw materials	28.3			39.2
Work in process	11.7			13.6
Finished goods	69.1			63.6
	109.1			116.4
Income taxes	15.9			38.9
Miscellaneous receivables and other current assets	58.1			50.0
Total Current Assets	1,873.0			1,834.9

Property, Plant and Equipment	614.0			619.1
Less: accumulated depreciation	(313.9		)	(290.3		)
	300.1			328.8
Goodwill	1,111.9			1,092.3
Intangible Assets, Net of Amortization	117.2			156.0
Other Assets	112.7			133.1
Total Assets	$	3,514.9		$	3,545.1

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	97.1		$	96.3
Accrued liabilities	211.2			206.4
Restructuring and other charges	7.2			13.4
Cisco stock loan	180.8			204.0
Income taxes	28.9			15.9
Total Current Liabilities	525.2			536.0

Long-Term Restructuring Liabilities	24.0			33.0
Income Taxes	95.9			127.9
Other Long-Term Liabilities	55.1			51.0

Stockholders’ Equity
Preferred stock: authorized 5,000,000 shares of $0.01 par value; no shares issued and outstanding	—			—
Common stock: authorized 1,000,000,000 shares of $0.01 par value; 477,045,901 and 466,910,981 shares issued, including treasury stock	4.8			4.7
Additional paid-in capital	1,238.7			1,145.9
Deferred compensation expense	(10.9		)	(21.8		)
Treasury stock, at cost: 27,661,859 and 3,250,000 shares	(322.8		)	(129.6		)
Retained earnings	1,847.9			1,672.1
Accumulated other comprehensive income	57.0			125.9
Total Stockholders’ Equity	2,814.7			2,797.2
Total Liabilities and Stockholders’ Equity	$	3,514.9		$	3,545.1

TELLABS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

	Year Ended
(in millions)	12/30/05			12/31/04
Operating Activities
Net Earnings (Loss)	$	175.8		$	(29.8	)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	126.1			82.3
Deferred taxes	(15.6		)	11.6
Deferred compensation amortization	16.3			6.5
Tax benefit associated with stock option exercises	14.0			—
Restructuring and other charges	12.9			11.7
Purchased in-process research and development	2.2			102.1
Asset impairment charge	—			47.2
Net loss on sale of real estate	—			20.6

Net change in assets and liabilities, net of effects from acquisitions:
Accounts receivable	(15.0		)	(49.6		)
Inventories	7.0			(24.8		)
Miscellaneous receivables and other current assets	3.8			64.4
Other assets	(11.8		)	(9.1		)
Accounts payable	(15.5		)	13.0
Accrued liabilities	(27.6		)	10.9
Restructuring and other charges	(24.2		)	(52.2		)
Income taxes	9.4			18.1
Long-term liabilities	0.6			(8.2		)
Net Cash Provided by (Used For) Operating Activities	258.4			214.7

Investing Activities
Capital expenditures	(61.8		)	(41.4		)
Disposals of property, plant and equipment	15.6			31.5
Payments for purchases of investments	(661.9		)	(1,318.8		)
Proceeds from sales and maturities of investments	1,180.4			1,379.1
Payments for acquisitions, net of cash acquired	—			(244.3		)
Net Cash Provided by (Used For) Investing Activities	472.3			(193.9		)

Financing Activities
Proceeds from issuance of common stock under stock plans	71.6			8.9
Repurchase of common stock	(193.2		)	—
Net Cash (Used) Provided by Financing Activities	(121.6		)	8.9
Effect of Exchange Rate Changes on Cash	(21.2		)	17.3
Net Increase in Cash and Cash Equivalents	587.9			47.0
Cash and Cash Equivalents at Beginning of Year	292.9			245.9
Cash and Cash Equivalents at End of Period	$	880.8		$	292.9

RESULTS OF OPERATIONS

Forward-Looking Statements

This presentation contains forward-looking statements made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements reflect management’s expectations, estimates and assumptions, based on the information available at the time the document was prepared. These forward-looking statements include, but are not limited to, statements regarding future events, plans, goals, objectives and expectations. The words “anticipate,” “believe,” “estimate,” “target,” “expect,” “predict,” “plan,” “possible,” “intend,” “likely,” “will,” “would,” “should,” “could,” “may”, “continue” and similar expressions are intended to identify forward-looking statements.

Results of Operations

In the fourth quarter of 2004, we acquired all of the operations of AFC and Vinci and have included them in our consolidated financial statements as of their acquisition dates. Access products and services have a lower average gross margin than Tellabs other products and services. The products of AFC and Vinci are categorized below as the access products.

For the fourth quarter, our 2005 revenue grew by 37% to $521.4 million compared with $379.4 million for 2004, and full-year 2005 revenue increased 53% to $1,883.4 million compared with $1,231.8 million for 2004. Although the majority of 2005 revenue growth for both the quarter and full year was due to the addition of access products, we also saw improvement in most other product categories, driven by continued strong demand from both wireless and wireline customers. The fourth quarter consolidated gross margin of 47.6% represents the third consecutive quarter of gross margin improvement. Our operating expenses declined due to the absence of charges in the fourth quarter of 2005. We earned $92.1 million or $0.20 per share in the fourth quarter of 2005, compared with a net loss of $138.7 million or $0.32 per share in the fourth quarter of 2004. Net earnings for 2005 were $175.8 million or $0.39 per share, compared with a net loss of $29.8 million or $0.07 per share in 2004.

Revenue

Fourth Quarter

Year

2005

2004

Change

2005

2004

Change

Transport

170.0

157.3

637.9

597.9

Access

179.9

53.3

N/M

617.0

53.3

N/M

Managed Access

91.0

112.2

(19

364.8

331.0

Broadband Data

31.1

3.2

N/M

60.3

17.4

N/M

Voice Quality Enhancement

5.5

12.9

(57

36.3

74.6

(51

Services

43.9

40.5

167.1

157.6

Total

521.4

379.4

1,883.4

1,231.8

North America

397.3

240.7

1,419.4

813.0

International

124.1

138.7

(11

464.0

418.8

Transport revenue for the fourth-quarter and full year of 2005 increased 8% and 7%, respectively, over the equivalent periods of 2004 due to demand for wireless services. Shipments to our North American wireless customers accounted for approximately 54% of all transport product revenue compared with 42% in the fourth quarter of last year. Approximately 68% of our Tellabs® 5500 fourth-quarter revenue came from port-card growth on our installed base, with the balance consisting of new systems, system expansions and software upgrades. That compares with 69% in the fourth quarter of 2004 and 80% in the third quarter of 2005. We shipped approximately 1.9 million T-1 equivalents during the fourth quarter of 2005 compared with 1.7 million T-1 equivalents in the fourth quarter of 2004. For the full-year 2005, we shipped 7.3 million T-1 equivalents compared to 6.4 million in 2004. These results are an indication that our customers are continuing to use the 5500 platform to build-out their networks.

Revenue from our access products totaled $179.9 million and $617.0 million for the quarter and full year 2005. Over half of fourth-quarter revenue was related to fiber-to-the-premise and fiber-to-the-curb deployments, with most of the balance coming from copper-based access solutions. For the year, approximately 50% of access product revenue was related to fiber access.

Revenue from our managed access products for the fourth quarter and full year of 2005 totaled $91.0 million and $364.8 million, respectively, compared with $112.2 million and $331.0 million in the same periods in 2004. The fourth-quarter of 2004 benefited from a delay in deliveries from the third quarter of 2004. The full year improvement was driven by strong demand for new Ethernet-over-SDH applications and 3G wireless network build-outs.

Revenue from our broadband data products for the fourth-quarter and full year of 2005 totaled $31.1 million and $60.3 million, respectively, compared with $3.2 million and $17.4 million, respectively, in the same periods in 2004. We continued to gain traction in 2005 with our multi-service platforms, which include the Tellabs® 8800 multi-service router series products and Tellabs® 8600 managed edge system products, expanding our customer base to include wireless carriers and cable operators.

Revenue from our voice quality enhancement (VQE) products for the fourth quarter and year-to-date periods of 2005 totaled $5.5 million and $36.3 million, respectively, compared with $12.9 million and $74.6 million in the same periods in 2004. This decrease was primarily due to VQE technology migrating from stand-alone products to integration into higher-order transport and switching platforms, which caused the decrease in both quarterly and full year revenues.

Revenue from services for the fourth quarter and year-to-date periods of 2005 totaled $43.9 million and $167.1 million, respectively, compared with $40.5 million and $157.6 million in the same periods in 2004, principally due to higher product sales.

Gross Margin

Fourth Quarter

Year

2005

2004

Change

2005

2004

Change

Consolidated Margin

47.6

47.1

0.5

45.4

53.3

(7.9

Products Margin

49.0

48.7

0.3

47.0

56.1

(9.1

Services Margin

32.8

33.8

(1.0

28.4

34.8

(6.4

Gross margins were higher for the quarter compared with the same quarter in 2004 due to a product mix favoring transport products, partially offset by impact of access products. For the year, consolidated gross margins decreased compared with 2004, primarily due to the inclusion of access products and services for the full year, partially offset by higher margins on transport products.

Product margins for the fourth quarter were up due to lower product cost, partially offset by the impact of access products. Beginning in the third quarter, we began shipping a new version of the optical networking terminal (ONT) which has a cost that is closer to breakeven compared with the prior version.

Services margin for both the fourth quarter and full year of 2005 declined due to the inclusion of lower margin services in the access business and higher material costs.

Operating Expenses

Fourth Quarter

Year

2005

2004

Change

2005

2004

Change

Total Operating Expenses

163.8

308.6

(144.8

)

666.2

688.7

(22.5

)

Items included in the total:

Restructuring and other charges

(1.3

)

0.1

(1.4

)

12.9

14.1

(1.2

)

Purchased in-process R&D

2.2

102.1

(99.9

)

2.2

102.1

(99.9

)

Amortization of purchased intangibles

7.9

6.1

1.8

36.0

17.8

18.2

Amortization of deferred stock compensation

2.6

1.2

1.4

10.6

5.2

5.4

Asset impairment charge

—

47.2

(47.2

)

—

47.2

(47.2

)

Net loss on sale of real estate

—

20.6

(20.6

)

—

20.6

(20.6

)

All other

152.4

131.3

21.1

604.5

481.7

122.8

Operating expenses declined due to the absence of charges in the fourth quarter of 2005. Excluding the charges, operating expense was up due to the inclusion of operating expenses at AFC and Vinci. As a percentage of revenue, however, operating expenses excluding charges declined in both the fourth quarter and full year 2005 compared with the same periods in 2004.

Other Income

Fourth Quarter

Year

2005

2004

Change

2005

2004

Change

Interest income, net

9.4

7.3

2.1

28.3

26.9

1.4

Other income (expense), net

(0.4

)

(5.3

)

4.9

(4.0

)

(5.4

)

1.4

Total

9.0

2.0

7.0

24.3

21.5

2.8

Interest income for the fourth quarter and full year 2005 were greater than that of the comparable 2004 periods primarily due to higher interest rates on short-term investments.

Income Taxes

For the fourth quarter of 2005, we recorded a tax expense of $1.3 million compared to tax expense of $10.7 million in the year-ago quarter. Our tax expense includes a $10.1 million benefit relating to the lapsing of the statute of limitations in an international jurisdiction. For the full year 2005, we recorded tax expense of $37.3 million compared to a tax expense of $19.6 million for the full year 2004. In addition to the tax benefit previously mentioned, our full year 2005 tax provision includes income tax expense of $15.4 million associated with our repatriation of $600.0 million from our foreign subsidiaries under favorable provisions of the American Jobs Creation Act of 2004.

Financial Condition, Liquidity & Capital Resources

Our principal source of liquidity remained our cash, cash equivalents and marketable securities of $1,189.7 million, which increased by $101.4 million during the quarter and $73.5 million since year-end. The increase was driven primarily by cash from operating activities, partially offset by $192.6 million used to repurchase 24.4 million shares under our previously discussed stock repurchase program. This program allows us to repurchase up to $300.0 million in shares of our common stock. During the fourth quarter of 2005, we repurchased $35.1 million or 3.6 million shares of our common stock.

In January 2006, our Board of Directors approved the repurchase of up to $100 million of our shares pursuant to a plan under Rule 10b5-1 of the Securities and Exchange Act of 1934. Over a one-year period, we intend to use cash generated by employee stock option exercises (other than those of our officers and the Board of Directors) to repurchase stock. Rule 10b5-1 allows us to repurchase our shares according to a predefined plan during periods when we normally would not be active in the market because of our internal trading blackout period. This program is in addition to the shares remaining under the $300.0 million share repurchase program previously mentioned.

We believe that the current level of working capital, particularly cash and marketable securities, is sufficient to meet our normal operating requirements for the foreseeable future. Further, we believe that sufficient resources exist to support our future growth and strategic needs. Future sources of working capital may be from cash-on-hand, cash generated from future operations, short-term or long-term financing, equity offerings or any combination of these sources.

Our current policy is to retain our earnings to provide funds to enhance stockholder value by expanding our business, repurchasing our common stock and for operating activities. We do not anticipate paying a cash dividend in the foreseeable future.

TELLABS, INC.

NON-GAAP RESULTS OF OPERATIONS (1)

(Unaudited)

	Three Months Ended								Year Ended
(In millions, except per-share data)	12/30/05			12/31/04			Change		12/30/05			12/31/04			Change
Revenue
Products	$	477.5		$	338.9				$	1,716.3		$	1,074.2
Services	43.9			40.5					167.1			157.6
	521.4			379.4			37.4	%	1,883.4			1,231.8			52.9	%
Cost of Revenue
Products	243.7			173.3					908.5			474.4
Services	29.5			26.8					119.6			102.7
	273.2			200.1					1,028.1			577.1
Gross Profit	248.2			179.3			38.4	%	855.3			654.7			30.6	%

Gross profit as a percentage of revenue	47.6		%	47.3		%	0.3	%	45.4		%	53.1		%	-7.7	%

Gross profit as a percentage of revenue - products	49.0		%	48.9		%	0.1	%	47.1		%	55.8		%	-8.8	%
Gross profit as a percentage of revenue - services	32.8		%	33.8		%	-1.0	%	28.4		%	34.8		%	-6.4	%

Operating Expenses
Research and development	85.2			66.7					334.1			245.3
Sales and marketing	41.6			42.7					175.2			154.9
General and administrative	25.6			21.9					95.2			81.5
	152.4			131.3					604.5			481.7

Operating Earnings	95.8			48.0					250.8			173.0

Other Income
Interest income, net	9.4			7.3					28.3			26.9
Other income (expense), net	(3.9		)	4.1					(3.3		)	4.0
	5.5			11.4					25.0			30.9

Earnings Before Income Tax	101.3			59.4					275.8			203.9
Income tax (expense) benefit	(1.5		)	(10.9		)			(23.8		)	(21.6		)
Net Earnings	$	99.8		$	48.5				$	252.0		$	182.3

Net Earnings Per Share
Basic	$	0.22		$	0.11				$	0.56		$	0.43
Diluted	$	0.22		$	0.11				$	0.55		$	0.43

Weighted Average Shares Outstanding
Basic	448.4			433.1					449.9			420.2
Diluted	455.2			437.6					454.5			424.7

(1) In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Tellabs, Inc. provides non-GAAP results of operations as additional information for its operating results. These measures are not in accordance with, or an alternative for, GAAP and may be different from measures used by other companies. The non-GAAP results of operations eliminate certain items of expenses and losses from cost of goods sold, operating expenses and other income and expenses. The Company’s management believes that this presentation allows investors to evaluate the current operational and financial performance of the Company’s core business as an indicator of future operational and financial performance. The Company’s management uses these measures for reviewing its financial results and for business planning and performance. Tellabs, Inc.’s management discloses this information externally along with a complete reconciliation of their comparable GAAP amounts, to provide access to the detail and general nature of adjustments made to GAAP financial results. Furthermore, while some of these items have been periodically reported in Tellabs, Inc.’s results of operations, including significant restructuring and other charges, their occurrence in future periods is dependent upon future business and economic factors, among other evaluation criteria, and may frequently be beyond the control of management.

See the attached schedule disclosing the adjustments made to the above non-GAAP results of

operations.

Tellabs, Inc.

Reconciliation of Non-GAAP Adjustments

(Amounts in millions, except per-share data)

(Unaudited)

	Three Months Ended 12/30/05 (a)									Year Ended 12/30/05 (b)
							Non-									Non-
	As Reported			Adjustments			GAAP			As Reported			Adjustments			GAAP
Cost of Goods Sold	273.2			0.0			273.2			1,028.4			(0.3		)	1,028.1
Gross Profit	248.2			0.0			248.2			855.0			0.3			855.3
Total Operating Expenses	163.8			(11.4		)	152.4			666.2			(61.7		)	604.5
Other Income	9.0			3.5			5.5			24.3			(0.7		)	25.0
Income Tax (Expense) Benefit	(1.3		)	(0.2		)	(1.5		)	(37.3		)	13.5			(23.8		)
Net Earnings	92.1			7.7			99.8			175.8			76.2			252.0
Earnings Per Share - Basic	$	0.21		$	0.01		$	0.22		$	0.39		$	0.17		$	0.56
Earnings Per Share - Diluted	$	0.20		$	0.02		$	0.22		$	0.39		$	0.16		$	0.55

	Three Months Ended 12/31/04 (c)									Year Ended 12/31/04 (d)
							Non-									Non-
	As Reported			Adjustments			GAAP			As Reported			Adjustments			GAAP
Cost of Goods Sold	200.8			(0.7		)	200.1			574.8			2.3			577.1
Gross Profit	178.6			0.7			179.3			657.0			(2.3		)	654.7
Total Operating Expenses	308.6			(177.3		)	131.3			688.7			(207.0		)	481.7
Other Income	2.0			(9.4		)	11.4			21.5			(9.4		)	30.9
Income Tax (Expense) Benefit	(10.7		)	(0.2		)	(10.9		)	(19.6		)	(2.0		)	(21.6		)
Net (Loss) Earnings	(138.7		)	187.2			48.5			(29.8		)	212.1			182.3
Earnings Per Share - Basic	$	(0.32	)	$	0.43		$	0.11		$	(0.07	)	$	0.50		$	0.43
Earnings Per Share - Diluted	$	(0.32	)	$	0.43		$	0.11		$	(0.07	)	$	0.50		$	0.43

(a) The $11.4 million charge to Operating Expenses reflects $7.9 million for amortization of purchased intangible assets, $2.6 million for amortization of deferred compensation related to acquisitions, $2.2 million related to in-process research and development charges for a prior year acquisition, partially offset by a credit of $1.3 million for an adjustment of restructuring related lease obligations.

The $3.5 million credit to Other Income reflects adjustments to the fair value of equity investments.

(b) The $0.3 million charge to Cost of Goods Sold reflects amortization of deferred compensation related to acquisitions.

The $61.7 million charge to Operating Expenses reflects $36.0 million for amortization of purchased intangible assets, $10.6 million for amortization of deferred compensation related to acquisitions, $2.2 million related to in-process research and development charges for a prior year acquisition, $0.5 million for severance and related costs due to the outsourcing of repair and return activities, $11.0 million for severance and related costs due to previously announced headcount reductions primarily in Denmark, Finland, and the US, $3.1 million for the impairment of property, plant and equipment disposed of or held for sale, $0.4 million in additional loss on the sale of the Denmark facility, $0.5 million for other costs primarily related to excess software licenses, $0.2 million accrual reversal to reflect proceeds received in excess of original estimates on the sale of property, plant and equipment, a credit of $2.4 million for an adjustment for restructuring related lease obligations.

The $0.7 million charge to Other Income reflects adjustments to the fair value of equity investments.

The $13.5 million charge to income taxes includes $15.4 million from the impact of the repatriation of approximately $600.0 million in foreign short-term investments.

(c) The $0.7 million charge to Cost of Goods Sold reflects a $0.5 million charge adjusting the Q4 2004 international manufacturing outsourcing for excess manufacturing equipment, a $0.1 million charge for purchase commitments and a $0.1 million charge for amortization of deferred compensation related to acquisitions.

(d) The $177.3 million charge to Operating Expenses reflects $102.1 million of purchased in-process R&D charges related to fourth quarter acquisitions, a $47.2 million charge for asset impairment related to the 2002 acquisition of Ocular Networks, a $21.1 million loss on the sale of the Denmark facility, $6.1 million for the amortization of purchased intangibles, $1.2 million for the amortization of deferred compensation related to acquisitions, a $0.5 million gain on the sale of a parcel of undeveloped land in the U.S., a $1.6 million charge for severance and related payments for the Denmark reorganziation, a $1.3 million expense reduction due to favorable sublease activity in the excess leased facilities, and a $0.2 million expense reduction due to completion of previously announced severance actions.

The $9.4 million charge to Other Income is related to the write-down of certain investments.

(d) The $2.3 million reduction of Cost of Goods Sold reflects a $4.7 million increase in the loss on the sale of our North American manufacturing facilities, a $4.8 million charge for costs associated with the outsourcing of our international manufacturing operations, a $0.1 million charge for purchase commitments, a $0.1 million charge for amortization of deferred compensation related to acquisitions, and a $12.0 million reversal of a prior accrual for excess purchase commitments due to a favorable settlement with a vendor

The $207.0 million charge within Operating Expenses reflects $102.1 million for purchased in-process R&D charges related to the fourth quarter acquisitions, a $47.2 million charge for asset impairment related to the 2002 acquisition of Ocular Networks, a $21.1 million loss on the sale of the Denmark facility, $17.8 million for amortization of purchased intangibles, $5.2 million for amortization of deferred compensation related to acquisitions, a $0.5 million gain on the sale of a parcel of undeveloped land in the U.S., a $5.2 million charge for severance and related payments, a $13.2 million charge for assets disposed of or sold, a $1.9 million charge for consolidation of excess leased facilities in North America, a $2.4 million charge for other obligations, a $5.2 million expense reduction for proceeds from the sale of property, plant and equipment in excess of our original estimate, a $3.2 million expense reduction of reserves for consolidation of excess leased facilities, and a $0.2 million expense reduction from renegotiating a software license obligation.



One Tellabs Center	FOR IMMEDIATE RELEASE
1415 West Diehl Road	January 26, 2006
Naperville, Illinois 60563 U.S.A.
	MEDIA CONTACT
Tel: +1.630.798.8800	Ariana Nikitas
Fax: +1.630.798.2000	+1.630.798.2532
www.tellabs.com	ariana.nikitas@tellabs.com

	INVESTOR CONTACT
	Tom Scottino
	+1.630.798.3602
	tom.scottino@tellabs.com