8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (Date of earliest event reported) July 24, 2007

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.)

One Tellabs Center, 1415 W. Diehl Road, Naperville, Illinois	60563
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (630) 798-8800

N/A

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e4(c))

Item 1.01 Entry Into a Material Definitive Agreement

On July 24, 2007, the Compensation Committee of the Board of Directors of Tellabs, Inc. granted to the Company’s Chief Executive Officer, Chief Financial Officer and Executive Vice Presidents performance stock units (“PSUs”) under the Company’s 2004 Incentive Compensation Plan. The PSUs entitle the recipients to receive shares of the Company’s Common Stock commencing in March 2008, contingent upon the achievement of Company operating income and revenue-based targets for the 2007 fiscal year. Following achievement of these financial measures and subject to continued employment, one-third of such shares will be issued in annual installments in March 2008, March 2009 and March 2010.

In order for shares of the Company’s stock to become available for issuance under these PSUs, the Company’s operating income and revenue for 2007 must meet specified minimum target amounts. No stock will be issued and the PSUs will be canceled and forfeited should the Company fail to meet such minimum amounts. The number of shares of stock issuable will vary depending on the target amounts achieved. If the target amounts are achieved then one share of stock will be issued for each PSU granted, subject to the three year vesting period discussed above. At minimum target performance  ¹/2 share will be issued for each PSU granted and at maximum target performance two shares will be granted for each PSU granted.

Any stock issued under the PSUs will be issued in equal annual installments on March 2008, March 2009 and March 2010, provided that the executive remains continuously employed through such dates. Payment of a pro rated award may be made if employment terminates prior to such issuance due to death, disability or involuntarily for reasons other than cause (as defined in the award documentation).

A total of 375,000 PSUs were awarded to the following executive officers: Krish Prabhu, Chief Executive Officer, 100,000; Timothy Wiggins, Chief Financial Officer, 50,000; Carl DeWilde, Stephen McCarthy and Daniel Kelly, Executive Vice Presidents, 40,000 each; and James Sheehan, Jean Holley and John Brots, Executive Vice Presidents, 35,000 each.

Item 2.02 Results of Operations and Financial Condition

On July 24, 2007, Tellabs, Inc. reported its results of operations for its fiscal second quarter ended June 29, 2007. A copy of the press release issued by Tellabs, Inc. concerning the foregoing results is furnished herewith as Exhibit 99.1.

The information contained in this Item 2.02 and related information in the accompanying Exhibit 99.1 shall not be incorporated by reference into any filing of Tellabs, Inc., whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this Item 2.02, including related information in Exhibit 99.1 hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), Tellabs, Inc. provides non-GAAP results of operations in the press release 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 revenue, operating expenses, other income and expenses and income taxes. The Company’s management believes that this presentation allows investors to evaluate the current operational and financial performance of the Company’s 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. The Company’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.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

The Board of Directors of the Company has amended and restated its bylaws in order to amend Article VII of the Company’s existing Amended and Restated Bylaws, effective as of July 24, 2007. The Company determined that a modification was advisable in order to make it clear that the Company may issue uncertificated shares. This change allows the Company to participate in the Direct Registration System, which is currently administered by The Depository Trust Company.

The full text of the Second Amended and Restated Bylaws is filed as Exhibit 3.2 to this Form 8-K.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

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/ Timothy J. Wiggins

Timothy J. Wiggins

Executive Vice President and Chief Financial Officer

(Principal Financial Officer, Principal Accounting Officer and duly authorized officer)

July 25, 2007

(Date)

EXHIBIT INDEX

Exhibit Number	Description
3.2	Second Amendment and Restated By-Laws dated July 24, 2007
99.1	Press Release of Tellabs, Inc., dated July 24, 2007.

EX-3.2

Exhibit 3.2

SECOND AMENDED AND RESTATED BY-LAWS

OF

TELLABS, INC.

(As Amended and Restated July 24, 2007)

ARTICLE I

OFFICES OF REGISTERED AGENT

Section 1.1 Registered Office and Agent. The Corporation shall have and maintain a registered office in Delaware and a registered agent having a business office identical with such registered office.

Section 1.2 Other Offices. The Corporation may also have such other office or offices in Delaware or elsewhere as the Board of Directors may determine or as the business of the Corporation may require.

ARTICLE II

STOCKHOLDERS

Section 2.1 Annual Meeting. An annual meeting of the stockholders shall be held on the third Wednesday in April in each year beginning with the year 1993, at the hour of 10:30 A.M., or in the event the annual meeting is not held on such date and at such time, then on the date and at the time designated by the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday, such meeting shall be held on the next succeeding business day. If the directors shall not be elected at the annual meeting, or at any adjournment thereof, the Board of Directors shall cause the election to be held as soon thereafter as may be convenient.

Section 2.2 Special Meetings. Special meetings of the stockholders may be called at any time by the Chairman of the Board of Directors or the President or by resolution of the Board of Directors and shall be called by the Chairman of the Board of Directors or President at the request in writing of a majority of the Board of Directors. Such request shall state the purpose or purposes of the proposed meeting.

Section 2.3 Place of Meeting. Meetings of stockholders, whether annual or special, shall be held at such time and place as may be determined by the Board of Directors and designated in the call and notice or waiver of notice of such meeting; provided, that a waiver of notice signed by all stockholders may designate any time or place as the time and place for the holding of such meeting. If no designation is made, the place of meeting shall be at the Corporation’s principal place of business.

Section 2.4 Notice of Meeting. Written notice stating the place, date and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, or, in the case of a merger, consolidation or sale, lease or exchange of all or substantially all of the Corporation’s property and assets, at least twenty days before the date of the meeting, either personally or by mail, by or at the direction of the President or the Secretary to each stockholder of record entitled to vote at such meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation.

Section 2.5 Fixing Record Date for Determination of Stockholders. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders, or stockholders entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, such date to be not more than sixty days prior to the date of a meeting of stockholders, the date of payment of a dividend or the date on which other action requiring determination of stockholders is to be taken, as the case may be. In addition, the record date for a meeting of stockholders shall not be less than ten days, or in the case of a merger, consolidation or sale, lease or exchange of all or substantially all of the Corporation’s property and assets, not less than twenty days immediately preceding

such meeting. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this Section, such determination shall apply to any adjournment thereof; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 2.6 List of Stockholders Entitled to Vote. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of the stockholders, the corporate books, or to vote at any meeting of the stockholders.

Section 2.7 Quorum and Manner of Acting. Unless otherwise provided by the Certificate of Incorporation, as may be amended or restated from time to time (hereinafter the “Certificate of Incorporation”), or these By-laws, a majority of the outstanding shares of the Corporation entitled to vote on a matter present in person or represented by proxy shall constitute a quorum for consideration of such matter at any meeting of stockholders; provided, that if less than a majority of the outstanding shares entitled to vote on a matter are present in person or represented by proxy at said meeting, a majority of the shares so present in person or represented by proxy may adjourn the meeting from time to time without further notice other than announcement at the meeting at which the adjournment is taken of the time and place of the adjourned meeting. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If a quorum is present, the affirmative vote of the majority of the shares present in person or represented by proxy at the meeting and entitled to vote shall be the act of the stockholders, unless the vote of a greater number or voting by classes is required by the General Corporation Law of the State of Delaware, the Certificate of Incorporation, as may be amended or restated from time to time, or these By-laws.

Section 2.8 Voting Shares and Proxies. Each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder, except as otherwise provided in the Certificate of Incorporation. Each stockholder entitled to vote shall be entitled to vote in person, or may authorize another person or persons to act for him by proxy executed in writing by such stockholder or by his duly authorized attorney-in-fact, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period.

Section 2.9 Inspectors. At any meeting of stockholders, the chairman of the meeting may, or upon the request of any stockholder shall, appoint one or more persons as inspectors for such meeting. Such inspectors shall ascertain and report the number of shares represented at the meeting, based upon the list of stockholders produced at the meeting in accordance with Section 2.6 hereof and upon their determination of the validity and effect of proxies, and they shall count all votes, report the results and do such other acts as are proper to conduct the election and voting with impartiality and fairness to all the stockholders. Each such report shall be in writing and signed by at least a majority of the inspectors, the report of a majority being the report of the inspectors, and such reports shall be prima facie evidence of the number of shares represented at the meeting and the result of a vote of the stockholders.

Section 2.10 Voting of Shares by Certain Holders. Shares of its own stock belonging to the Corporation, unless held by it in a fiduciary capacity, shall not be voted, directly or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding shares at any given time. Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the by-laws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine. Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held. Persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation he or she expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his proxy, may represent such stock and vote thereon.

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ARTICLE III

DIRECTORS

Section 3.1 General Powers. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors, except as may be otherwise provided by statute or the Certificate of Incorporation, as may be amended or restated from time to time.

Section 3.2 Number, Tenure and Qualifications. The number of directors shall be ten, which number of directors may be changed from time to time by amendment of this Section, except as otherwise provided for in the Certificate of Incorporation. The directors shall be divided into three classes as provided in Article SIXTH of the Certificate of Incorporation, and shall be elected as therein specified. Class I directors shall hold office initially for a term expiring at the 1993 annual meeting of stockholders. Class II directors shall hold office initially for a term expiring at the 1994 annual meeting of stockholders. Class III directors shall hold office initially for a term expiring at the 1995 annual meeting of stockholders. At each annual meeting of stockholders, the successors to the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until their successors have been duly elected and qualified, unless sooner removed as provided in Article SIXTH of the Certificate of Incorporation. Directors need not be stockholders or residents of Delaware.

Section 3.3 Regular Meetings. A regular meeting of the Board of Directors shall be held, without other notice than this Section, immediately after and at the same place as the annual meeting of stockholders. The Board of Directors may provide, by resolution, the time and place, either within or without Delaware, for the holding of additional regular meetings without other notice than such resolution.

Section 3.4 Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board of Directors, President or upon the written request of at least two directors. The person or persons who call a special meeting of the Board of Directors may designate any place, either within or without Delaware, as the place for holding such special meeting. In the absence of such a designation the place of meeting shall be the Corporation’s principal place of business.

Section 3.5 Notice of Special Meetings. Notice stating the place, date and hour of a special meeting shall be mailed not less than five days before the date of the meeting, or shall be sent by telegram or be delivered personally or by telephone not less than two days before the date of the meeting, to each director, by or at the direction of the person or persons calling the meeting. Attendance of a director at any meeting shall constitute a waiver of notice of such meeting except where a director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

Section 3.6 Quorum, Organization of Meeting and Manner of Acting. A majority of the number of directors as fixed in Section 3.2 hereof shall constitute a quorum for the transaction of business at any meeting of the Board of Directors; provided, that if less than a majority of such number of directors are present at said meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless otherwise provided in the General Corporation Law of the State of Delaware, the Certificate of Incorporation or these By-laws.

(a) The Board of Directors shall elect one of its members to be the Chairman of the Board of Directors. The Chairman of the Board of Directors shall lead the Board of Directors in fulfilling its responsibilities as set forth in these By-laws, including its responsibility to oversee the performance of the Company, and shall determine the agenda and perform all other duties and exercise all other powers which are or from time to time may be delegated to him or her by the Board of Directors.

(b) Meetings of the Board of Directors shall be presided over by the Chairman of the Board of Directors, or in his absence, by the President, or in the absence of the Chairman of the Board of Directors and President by such other person or persons as the Board of Directors may designate or the members present may select.

Section 3.7 Informal Action by Directors. Any action which is required by law or by these By-laws to be taken at a meeting of the Board of Directors, or any other action which may be taken at a meeting of the Board of Directors or any committee thereof, may be taken without a meeting if a consent in writing, setting forth the action to be taken, shall be signed by all of the directors entitled to

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vote with respect to the subject matter thereof, or by all the members of such committee, as the case may be. Such consent shall have the same force and effect as a unanimous vote of all of the directors or all of the members of such committee, as the case may be, at a duly called meeting thereof, and shall be filed with the minutes of proceedings of the Board or committee.

Section 3.8 Telephonic Meetings. Unless otherwise restricted by the Certificate of Incorporation or these By-laws, members of the Board of Directors or of any committee designated by such Board, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section shall constitute presence at such meeting.

Section 3.9 Resignations. Any director may resign at any time by giving written notice to the Board of Directors, the Chairman of the Board of Directors, the President, or the Secretary. Such resignation shall take effect at the time specified therein; and, unless tendered to take effect upon acceptance thereof, the acceptance of such resignation shall not be necessary to make it effective.

Section 3.10 Vacancies.

(a) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class shall be filled as provided by the Certificate of Incorporation.

(b) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the Certificate of Incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected, and the directors so chosen shall hold office until the next election of the class for which such directors shall have been chosen, and until their successors shall be elected and qualified or until their earlier resignation or removal.

Section 3.11 Removal. Any director or the entire Board of Directors may be removed, but only for cause, and only by the affirmative vote of (i) the holders of at least 75% of the voting power of the shares then entitled to vote at an election of directors, voting together as a single class, or (ii) a majority of the Board of Directors.

Whenever the holders of any class or series of capital stock are entitled to elect one or more directors by the provisions of the Certificate of Incorporation, the provisions of this Section shall apply, in respect to the removal for cause of a director or directors so elected, to the vote of the holders of the outstanding shares of that class or series and not to the vote of the outstanding shares as a whole.

Section 3.12 Compensation. The Board of Directors, by the affirmative vote of a majority of the directors then in office and irrespective of any personal interest of any of its members, shall have the authority to establish reasonable compensation of directors for services to the Corporation as directors, officers or otherwise. By resolution of the Board of Directors, the directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors or a committee thereof.

Section 3.13 Presumption of Assent. A director who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be conclusively presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

Section 3.14 Interested Directors.

(a) No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if:

(1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or

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(2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholders; or

(3) The contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders.

(b) Interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

ARTICLE IV

STOCKHOLDER NOMINATION OF DIRECTOR CANDIDATES

Nominations for the election of directors may be made by the Board of Directors or a committee appointed by the Board of Directors or by any stockholder entitled to vote in the election of directors generally or, if applicable, by any holder of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the Certificate of Incorporation. However, any stockholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at a meeting only if written notice of such stockholder’s intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Corporation not later than (i) with respect to an election to be held at an annual meeting of stockholders, one hundred twenty days in advance of the date of the proxy statement released to stockholders in connection with the previous year’s annual meeting of stockholders, and (ii) with respect to an election to be held at a special meeting of stockholders for the election of directors, a reasonable time in advance of the meeting. For purposes of this Section, a “reasonable time in advance of the meeting” is at least fifteen days before the date that the proxy statement in connection with such meeting is to be mailed to the stockholders. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person and persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (e) the consent of each nominee to serve as a director of the Corporation if so elected. The presiding officer at the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.

ARTICLE V

COMMITTEES

Section 5.1 Appointment and Powers. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation which, to the extent provided in said resolution or in these By-laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation (except that any such committee may, to the extent authorized in the resolution or resolutions providing for the issuance of such shares of stock adopted by the Board of Directors, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation thereof, or amending the By-laws; and, unless the resolution, By-laws or Certificate of Incorporation, expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of the State of Delaware.

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Section 5.2 Absence or Disqualification of Committee Member. In the absence or disqualification of any member of such committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

Section 5.3 Record of Proceedings. The committees shall keep regular minutes of their proceedings and when required by the Board of Directors shall report the same to the Board of Directors.

ARTICLE VI

OFFICERS

Section 6.1 Number and Titles. The officers of the Corporation shall be a Chairman of the Board of Directors, a President and a Secretary. There shall be one or more Vice Presidents (the number thereof to be determined by the Board of Directors), a Treasurer and such other officers and assistant officers as the Board of Directors may from time to time deem necessary. Any two or more offices may be held by the same person.

Section 6.2 Election, Term of Office and Qualifications. The officers shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after the annual meeting of stockholders. If the election of officers is not held at such meeting, such election shall be held as soon thereafter as may be convenient. Vacancies may be filled or new offices created and filled at any meeting of the Board of Directors. Each officer shall be elected to hold office until his successor shall have been elected and qualified, or until his earlier death, resignation or removal. Election of an officer shall not of itself create contract rights.

Section 6.3 Removal. Any officer may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.

Section 6.4 Resignation. Any officer may resign at any time by giving written notice to the Board of Directors, the Chairman of the Board of Directors, the President or the Secretary. Such resignation shall take effect at the time specified therein; and, unless tendered to take effect upon acceptance thereof, the acceptance of such resignation shall not be necessary to make it effective.

Section 6.5 Duties. In addition to and to the extent not inconsistent with the provisions in these By-laws, the officers shall have such authority, be subject to such restrictions and perform such duties in the management of the business, property and affairs of the Corporation as may be determined from time to time by the Board of Directors.

Section 6.6 President. The President shall be the chief executive officer of the Corporation. Subject to the control of the Board of Directors, the President shall, in general, supervise and manage the business and affairs of the Corporation and he shall see that the resolutions and directions of the Board of Directors are carried into effect. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the Corporation, or a different mode of execution is expressly prescribed by the Board of Directors or these By-laws, or where otherwise required by law, the President may execute for the Corporation any contracts, deeds, mortgages, bonds or other instruments which the Board of Directors has authorized to be executed, or may execute, or may authorize any officer or agent to execute, for the Corporation any contracts, deeds, mortgages, bonds or other instruments or the execution of which is in the ordinary course of the Corporation’s business, and such execution may be accomplished either under or without the seal of the Corporation and either individually or with the Secretary, any Assistant Secretary, or any other officer thereunto authorized by the Board of Directors or these By-laws. In addition, he shall perform all duties incident to the office of President and such other duties as from time to time shall be prescribed by the Board of Directors.

Section 6.7 Vice Presidents. In the absence of the President or in the event of his inability or refusal to act, the Vice President, if one shall have been elected (or in the event there is more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of such designation, in the order of their election), shall perform the duties of the President, and when so acting, shall have all the authority of and be subject to all the restrictions upon the President. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the Corporation or a different mode of execution is expressly prescribed by the Board of Directors or these By-laws or where otherwise required by law, the Vice President (or each of them if there are more than one) may execute for the Corporation any contracts, deeds, mortgages, bonds or other instruments which the Board of Directors has authorized to be executed, and he may accomplish such execution either under or without the seal of the Corporation and either individually or with the Secretary, any Assistant Secretary, or any other officer thereunto authorized by the Board of Directors or these By-laws. The Vice Presidents shall perform such other duties as from time to time may be prescribed by the President or the Board of Directors.

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Section 6.8 Treasurer. The Treasurer, if one shall have been elected, shall be the principal financial officer of the Corporation, and shall (a) have charge and custody of, and be responsible for, all funds and securities of the Corporation; (b) keep or cause to be kept correct and complete books and records of account including a record of all receipts and disbursements; (c) deposit all funds and securities of the Corporation in such banks, trust companies or other depositaries as shall be selected in accordance with these By-laws; (d) from time to time prepare or cause to be prepared and render financial statements of the Corporation at the request of the President or the Board of Directors; and (e) in general, perform all duties incident to the office of Treasurer and such other duties as from time to time may be prescribed by the President or the Board of Directors. If required by the Board of Directors, the Treasurers shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine.

Section 6.9 Secretary. The Secretary shall (a) keep the minutes of the proceedings of the stockholders and of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these By-laws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all stock certificates prior to the issue thereof and to all documents the execution of which on behalf of the Corporation under its seal is necessary or appropriate; (d) keep or cause to be kept a register of the name and address of each stockholder, which shall be furnished to the Corporation by each such stockholder, and the number and class of shares held by each stockholder; (e) have general charge of the stock transfer books; and (f) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be prescribed by the President or the Board of Directors.

Section 6.10 Assistant Treasurers and Assistant Secretaries. In the absence of the Treasurer or Secretary or in the event of the inability or refusal of the Treasurer or Secretary to act, the Assistant Treasurer and the Assistant Secretary (or in the event there is more than one of either, in the order designated by the Board of Directors or in the absence of such designation, in the order of their election) shall perform the duties of the Treasurer and Secretary, respectively, and when so acting, shall have all the authority of and be subject to all the restrictions upon such office. The Assistant Treasurers and Assistant Secretaries shall also perform such duties as from time to time may be prescribed by the Treasurer or the Secretary, respectively, or by the President or the Board of Directors. If required by the Board of Directors, an Assistant Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine.

Section 6.11 Salaries. The salaries and additional compensation, if any, of the officers shall be determined from time to time by the Board of Directors; provided, that with respect to any officer who is also a director, such determination shall be made by a majority of the other directors then in office.

ARTICLE VII

CERTIFICATES OF STOCK AND THEIR TRANSFER

Section 7.1 Stock Certificates. Shares of the Corporation’s stock may be certificated or uncertificated, as may be determined by the Board of Directors or its designee from time to time, and shall be entered in the books of the Corporation and registered as they are issued. Any certificates representing shares of stock shall be in such form as determined by the Board of Directors and shall be signed by, or in the name of the Corporation by the Chairman of the Board of Directors, President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation. Any of or all the signatures on the certificates may be a facsimile. All certificates of stock shall bear the seal of the Corporation, which seal may be a facsimile, engraved or printed.

Within a reasonable time after the issuance or transfer of uncertificated stock, the Corporation or its transfer agent shall send to the registered owner thereof a written notice that shall set forth the name of the Corporation, the Corporation’s state of organization, the name of the stockholder, the number and class (and the designation of the series, if any) of the shares represented, and any restrictions on the transfer or registration of such shares of stock imposed by the Corporation’s certificate of incorporation, these Bylaws, any agreement among stockholders or any agreement between the stockholder and the Corporation.

Section 7.2 Transfer of Shares. The shares of the Corporation shall be transferable. The Corporation shall have a duty to register any such transfer provided there is presented to the Corporation or its transfer agents (a) in the case of certificated shares, (i) the stock certificate endorsed and surrendered by the appropriate person or persons; and (ii) reasonable assurance that such endorsement is genuine and effective; (b) in the case of uncertificated shares (i) proper transfer instructions from the registered owner of uncertificated shares; and (ii) reasonable assurance that such instructions are genuine and effective; and, provided that (c)(i) the Corporation has no duty to inquire into adverse claims or has discharged any such duty; (ii) any applicable law relating to the

7

collection of taxes has been complied with; and (iii) the transfer is in fact rightful or is to a bona fide purchaser or transferee. Upon registration of such transfer upon the stock transfer books of the Corporation (a) the certificates representing the shares transferred shall be cancelled and the new record holder, upon request, shall be entitled to a new certificate or certificates or (b) uncertificated shares shall be cancelled, issuance of new equivalent uncertificated shares or certificated shares (as may be determined by the Board of Directors or it designee from time to time) shall be made to the shareholder entitled thereto and the transaction shall be recorded upon the books of the Corporation. If the Corporation has a transfer agent or registrar acting on its behalf, the signature of any officer or representative thereof may be in facsimile. The terms and conditions described in the foregoing provisions of this Section shall be construed in accordance with the provisions of the Delaware Uniform Commercial Code, except as otherwise provided by the General Corporation Law of the State of Delaware. If a stock certificate is lost, destroyed, wrongfully taken or mutilated, upon such terms and indemnity to the Corporation as the Board of Directors or its designee may prescribe consistent with applicable law, the Corporation may issue either (a) a new certificate or (b) uncertificated shares in place of any certificate or certificates previously issued by the Corporation alleged to have been lost, stolen or destroyed.

The Board of Directors may appoint a transfer agent and one or more co-transfer agents and registrar and one or more co-registrars and may make or authorize such agent to make all such rules and regulations deemed expedient concerning the issue, transfer and registration of shares of stock of the Corporation.

ARTICLE VIII

DIVIDENDS

Section 8.1 Dividends. Subject to the provisions of the General Corporation Law of the State of Delaware and the Certificate of Incorporation, as may be amended or restated from time to time, the Board of Directors may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property, or in shares of the Corporation’s capital stock.

ARTICLE IX

FISCAL YEAR

Section 9.1 Fiscal Year. The fiscal year of the Corporation shall be fixed by the Board of Directors.

ARTICLE X

SEAL

Section 10.1 Seal. The corporate seal shall have inscribed thereon the name of the Corporation and the words “Corporate Seal” and “Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.

ARTICLE XI

WAIVER OF NOTICE

Section 11.1 Waiver of Notice. Whenever any notice is required to be given under these By-laws, the Certificate of Incorporation, as may be amended or restated from time to time, or the General Corporation Law of the State of Delaware, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.

ARTICLE XII

INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS

Section 12.1 Nature of Indemnity. Each Person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary, or agent of another corporation or of a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless by the Corporation as provided in this Article and to the fullest extent which it is empowered to do so

8

by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended, against all expense, liability and loss (including attorneys’ fees) actually and reasonably incurred by such person in connection with such proceeding), and such indemnification shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in Section 12.2 hereof, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding initiated by such person only if such proceeding was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Article shall be a contract right and, subject to Sections 12.2 and 12.5 hereof, shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition. The Corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers. Notwithstanding any other provision of this Article, to the extent that any director or officer, or employee or agent at the discretion of the Board of Directors of the Corporation pursuant to Section 12.7 of this Article, is by reason of such person’s position with the Corporation a witness in any proceeding, such person shall be indemnified against all costs and expenses actually and reasonably incurred by him on his behalf in connection therewith.

Section 12.2 Procedure for Indemnification of Directors and Officers. Any indemnification of a director or officer of the Corporation under Section 12.1 of this Article or advance of expenses under Section 12.5 of this Article shall be made promptly, and in any event within 30 days, upon the written request of the director or officer. If a determination is made by the Corporation that the director or officer is entitled to indemnification pursuant to this Article is required, and the Corporation fails to respond within 60 days to a written request for indemnity, the Corporation shall be deemed to have approved the request. If the Corporation denies a written request for indemnification or advancing of expenses, in whole or in part, or if payment in full pursuant to such request is not made within 30 days, the right to indemnification or advances as granted by this Article shall be enforceable by the director or officer in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the General Corporation Law of the State of Delaware for the Corporation to indemnify the claimant for the amount claimed, but the burden of such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

Section 12.3 Article Not Exclusive. The rights to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, By-law, agreement, vote of stockholders or disinterested directors or otherwise.

Section 12.4 Survival of Rights. No amendment, alteration or repeal of this Article 12 or of any provision hereof shall be effective as to any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or agent of another corporation or of a partnership, joint venture, trust or other enterprise, with respect to any action taken or omitted by such person in such position prior to such amendment, alteration or repeal. The provisions of the Article 12 shall continue as to any such person after his or her service in such position has ceased and shall inure to the benefit of his or her heirs, executors and administrators.

Section 12.5 Insurance. The Corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was a director, officer, employee, fiduciary, or agent of the Corporation or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, whether or not the Corporation would have the power to indemnify such person against such liability under this Article or under the General Corporation Law of the State of Delaware. The Corporation shall not be liable under this Article to make any payments of amounts otherwise indemnifiable hereunder if and to the extent that such indemnified person hereunder has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

Section 12.6 Expenses. Expenses (including attorneys’ fees) incurred by any person described in Section 12.1 of this Article in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or Officer to

9

repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate.

Section 12.7 Employees and Agents. Persons who are not covered by the foregoing provisions of this Article and who are or were employees or agents of the Corporation, or who are or were serving at the request of the Corporation as employees or agents of another corporation, partnership, joint venture, trust or other enterprise, may be indemnified to the extent authorized at any time or from time to time by the Board of Directors.

Section 12.8 Contract Rights. The provisions of this Article shall be deemed to be a contract right between the Corporation and each director or officer who serves in any such capacity at any time while this Article and the relevant provisions of the General Corporation Law of the State of Delaware or other applicable law are in effect, and any repeal or modification of this Article or any such law shall not affect any rights or obligations then existing with respect to any state of facts or proceeding then existing.

Section 12.9 Merger or Consolidation. For Purposes of this Article, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee, or fiduciary or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.

Section 12.10 Severability. If any provision or provisions of this Article shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Article (including without limitation, each portion of any Section of this Article containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article (including, without limitation, each portion of any Section of this Article containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

Section 12.11 Certain Persons Not Entitled to Indemnification or Advancement of Expenses. Notwithstanding any other provision of this Article, no person shall be entitled to indemnification or advancement of any costs, expenses or the like under this Article with respect to any proceeding, or any claim therein, brought or made by such person against the Corporation.

Section 12.12 Notices. Any notice, request or other communication required or permitted to be given to the Corporation under this Article shall be in writing and either delivered in person or sent by facsimile or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and shall be effective only upon receipt by the Secretary.

ARTICLE XIII

MISCELLANEOUS PROVISIONS

Section 13.1 Contracts. The Board of Directors may authorize any officer or agent to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and the President may so authorize any officer or agent with respect to contracts or instruments in the usual and regular course of its business. Such authority may be general or confined to specific instances.

Section 13.2 Loans. No loan shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by the Board of Directors. Such authority may be general or confined to specific instances.

Section 13.3 Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, or notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent as shall from time to time be authorized by the Board of Directors.

Section 13.4 Deposits. The Board of Directors may select, or may authorize the President, Treasurer or other officers to select, banks, trust companies or other depositaries for the funds of the Corporation.

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Section 13.5 Stock in Other Corporations. Shares of any other corporation which may from time to time be held by the Corporation may be represented and voted by the President, or by any proxy appointed in writing by the President, or by any other person or persons thereunto authorized by the Board of Directors, at any meeting of stockholders of such corporation or by executing written consents with respect to such shares where stockholder action may be taken by written consent. Shares represented by certificates standing in the name of the Corporation may be endorsed for sale or transfer in the name of the corporation by the President or by any other officer thereunto authorized by the Board of Directors. Shares belonging to the Corporation need not stand in the name of the Corporation, but may be held for the benefit of the Corporation in the name of any nominee designated for such purpose by the Board of Directors.

Section 13.6 Gender. Use of masculine pronoun shall be deemed to include usage of the feminine and neuter pronoun where appropriate.

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ARTICLE XIV

AMENDMENT

Section 14.1 Procedure. These By-laws may be altered, amended or repealed and new by-laws may be adopted by the Board of Directors. Subject to the provisions of the Certificate of Incorporation, these By-laws may also be altered, amended or repealed by the stockholders of the Corporation.

12

EX-99.1

NEWS RELEASE	FOR IMMEDIATE RELEASE
	July 24, 2007

Tellabs reports second-quarter revenue of $535 million

Naperville, Ill. — Tellabs today reported second-quarter 2007 revenue of $535 million, down 3% from $549 million in the second quarter of 2006.

Tellabs earned $30 million or 7 cents per share in the second quarter of 2007 on a GAAP basis, down 45% from $54 million or 12 cents per share in the second quarter of 2006. On a non-GAAP basis, Tellabs earned $38 million or 9 cents per share, down 48% from $73 million or 16 cents per share in the second quarter of 2006. Non-GAAP results for second-quarter 2007 exclude pretax charges of $14 million for special items, including $8 million or 1.2 cents per share in equity-based compensation expense.

“As the telecom industry transforms, Tellabs’ new technologies are taking root in our customers’ networks,” said Krish A. Prabhu, Tellabs president and chief executive officer. “We continue to focus on improving gross profit margins related to those products and technologies.”

Broadband — Second-quarter 2007 revenue from the broadband segment totaled $246 million, down 17% from $298 million in the second quarter of 2006. Within the broadband segment, second-quarter access revenue was $135 million, down 29% from $190 million in the second quarter of 2006. Second-quarter managed access revenue was $77 million, down 11% from $86 million in the second quarter of 2006. Second-quarter data revenue was a record $35 million, up 56% from $22 million in the year-ago quarter.

Transport — Second-quarter 2007 transport revenue totaled $223 million, including deferred revenue from two prior quarters, up 10% from $202 million in the second quarter of 2006.

Services — Second-quarter 2007 services revenue was $66 million, including deferred revenue from two prior quarters, up 34% from $49 million in the second quarter of 2006.

Third-Quarter 2007 Guidance — The following statements are forward-looking statements that are based on current expectations and involve risks and uncertainties, some of which are set forth below. Tellabs expects third-quarter revenue to be about $500 million, plus or minus.

Tellabs expects non-GAAP gross margin to be about 36%, plus or minus, depending on product mix; non-GAAP gross margin excludes about $1.5 million in equity-based compensation expense. Tellabs expects non-GAAP operating expense to be flat to slightly down compared with the second quarter of 2007; non-GAAP operating expense excludes about $6.5 million in equity-based compensation expense.

Share Repurchase – Under a previously announced share repurchase program, Tellabs repurchased 0.9 million shares at a cost of $10 million during the second quarter of 2007. Since 2005, Tellabs has repurchased 49.7 million shares at a cost of $500 million (about 11% of shares outstanding).

Simultaneous Webcast and Teleconference Replay — Tellabs will host an investor teleconference at 7:30 a.m. Central Daylight Time today to discuss its second-quarter 2007 results and provide its outlook for the third quarter of 2007. Internet users can hear a simultaneous webcast of the teleconference at www.tellabs.com; click on the webcast icon. A taped replay of the call will be available beginning at approximately 10:30 a.m. Central Daylight Time today, until 10:30 p.m. Central Daylight Time on Thursday, July 26, at 800-642-1687. (Outside the United States, call 706-645-9291.) When prompted, enter the Tellabs conference ID number: 5440421. A podcast of the call will be available at www.tellabs.com/news/feeds/ later today.

Tellabs advances telecommunications networks to meet the evolving needs of users. Solutions from Tellabs enable service providers to deliver high-quality voice, video and data services over wireline and wireless networks around the world. Ranked among the BusinessWeek InfoTech 100, Tellabs (NASDAQ: TLAB) is part of the NASDAQ-100 Index, NASDAQ Global Select Market, Ocean Tomo 300™ Patent Index and the S&P 500. www.tellabs.com

###

Forward-Looking Statements — This news release contains forward-looking statements, including but not limited to the guidance information contained in this release that involve risks and uncertainties. Actual results may differ from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, risks associated with: the competitive landscape, including pricing and margin pressures, the response of customers and competitors, industry consolidation, the introduction of new products, the entrance into new markets, the ability to secure necessary resources, and the economic changes generally impacting the telecommunications industry. The company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after today or to reflect the occurrence of unanticipated events. For a more detailed description of the risk factors, please refer to the company’s SEC filings.

MEDIA CONTACT: George Stenitzer, +1.630.798.3800, george.stenitzer@tellabs.com

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

Editor’s Note: The complete text of this release is available at

www.tellabs.com/news/2007/2q07.pdf

Tellabs^® and ^® are trademarks of Tellabs or its affiliates in the United States and/or other countries. Any other company or product names mentioned herein may be trademarks of their respective companies.

TELLABS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Second Quarter						Six Months
In millions, except per-share data	6/29/07			6/30/06			6/29/07			6/30/06
Revenue
Products	$	469.0		$	500.6		$	879.0		$	974.7
Services		65.5			48.7			107.4			89.3
		534.5			549.3			986.4			1,064.0
Cost of Revenue
Products		307.1			264.5			540.1			506.7
Services		39.8			30.6			72.8			60.8
		346.9			295.1			612.9			567.5
Gross Profit		187.6			254.2			373.5			496.5
Gross profit as a percentage of revenue		35.1	%		46.3	%		37.9	%		46.7	%
Gross profit as a percentage of revenue—products		34.5	%		47.2	%		38.6	%		48.0	%
Gross profit as a percentage of revenue—services		39.2	%		37.2	%		32.2	%		31.9	%
Operating Expenses
Research and development		85.3			91.7			169.8			184.6
Sales and marketing		44.4			45.0			90.2			90.0
General and administrative		24.7			28.5			51.3			56.6
Intangible asset amortization		5.7			7.1			11.3			14.1
Restructuring and other charges		—			2.0			—			2.0
		160.1			174.3			322.6			347.3
Operating Earnings		27.5			79.9			50.9			149.2
Other Income
Interest income, net		13.4			11.4			25.2			21.9
Other income (expense), net		0.3			(7.4	)		0.6			(6.0	)
		13.7			4.0			25.8			15.9
Earnings Before Income Tax		41.2			83.9			76.7			165.1
Income tax expense		(11.6	)		(30.4	)		(21.6	)		(59.2	)
Net Earnings	$	29.6		$	53.5		$	55.1		$	105.9
Net Earnings Per Share
Basic	$	0.07		$	0.12		$	0.13		$	0.24
Diluted	$	0.07		$	0.12		$	0.12		$	0.23
Weighted Average Shares Outstanding
Basic		438.1			447.7			438.1			448.8
Diluted		443.3			458.5			443.2			459.6

TELLABS, INC.

CONSOLIDATED BALANCE SHEETS

	6/29/07			12/29/06
In millions, except share data	Unaudited
Assets
Current Assets
Cash and cash equivalents	$	262.7		$	153.6
Investments in marketable securities		1,056.3			1,146.5
		1,319.0			1,300.1
Other marketable securities		294.1			288.6
Accounts receivable, net of allowances of $3.8 and $3.8		386.7			411.0
Inventories
Raw materials		38.7			34.5
Work in process		17.5			19.7
Finished goods (includes costs of $12.6 and $28.6 related to deferred revenue)		118.9			112.8
		175.1			167.0
Income taxes		19.2			10.7
Miscellaneous receivables and other current assets		52.9			55.2
Total Current Assets		2,247.0			2,232.6
Property, Plant and Equipment
Land		20.9			20.8
Buildings and improvements		205.3			205.5
Equipment		430.3			411.2
		656.5			637.5
Accumulated depreciation		(356.9	)		(329.6	)
		299.6			307.9
Goodwill		1,108.6			1,107.4
Intangible Assets, net of amortization		78.3			89.6
Other Assets		168.2			184.9
Total Assets	$	3,901.7		$	3,922.4
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	87.5		$	119.5
Accrued compensation		55.0			70.7
Restructuring and other charges		7.5			7.8
Income taxes		79.7			97.9
Stock loan		294.1			288.6
Deferred revenue		45.9			55.4
Other accrued liabilities		113.4			122.3
Total Current Liabilities		683.1			762.2
Long-Term Restructuring Liabilities		18.6			22.3
Income Taxes		115.7			128.2
Other Long-Term Liabilities		80.8			71.4
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; 491,577,911 and 489,034,812 shares issued		4.9			4.9
Additional paid-in capital		1,430.1			1,395.3
Treasury stock, at cost: 53,284,655 and 49,919,908 shares		(634.5	)		(598.7	)
Retained earnings		2,103.4			2,042.0
Accumulated other comprehensive income		99.6			94.8
Total Stockholders' Equity		3,003.5			2,938.3
Total Liabilities and Stockholders' Equity	$	3,901.7		$	3,922.4

TELLABS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

	Six Months
	6/29/07			6/30/06
In millions
Operating Activities
Net earnings	$	55.1		$	105.9
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		46.6			51.6
Stock-based compensation		17.1			33.8
Deferred income taxes		7.6			22.5
Excess tax benefits from stock-based compensation		(2.1	)		(15.2	)
Restructuring and other charges		—			2.0
Net changes in assets and liabilities:
Accounts receivable		27.6			(58.8	)
Inventories		(5.9	)		(33.5	)
Miscellaneous receivables and other current assets		(3.8	)		13.9
Other assets		3.0			18.7
Accounts payable		(34.0	)		7.2
Restructuring and other charges		(4.0	)		(4.8	)
Deferred revenue		(9.5	)		22.7
Other accrued liabilities		(25.7	)		(41.0	)
Income taxes		(15.1	)		(8.7	)
Other long-term liabilities		2.9			0.6
Net Cash Provided by Operating Activities		59.8			116.9
Investing Activities
Capital expenditures		(25.7	)		(34.4	)
Disposals of property, plant and equipment		1.3			0.5
Payments for purchases of investments		(594.4	)		(961.7	)
Proceeds from sales and maturities of investments		685.7			345.2
Net Cash Provided by (Used for) Investing Activities		66.9			(650.4	)
Financing Activities
Proceeds from issuance of common stock under stock plans		14.7			81.1
Repurchase of common stock		(35.8	)		(156.8	)
Excess tax benefits from stock-based compensation		2.1			15.2
Net Cash Used for Financing Activities		(19.0	)		(60.5	)
Effect of Exchange Rate Changes on Cash		1.4			8.4
Net Increase (Decrease) in Cash and Cash Equivalents		109.1			(585.6	)
Cash and Cash Equivalents—Beginning of Year		153.6			880.8
Cash and Cash Equivalents—End of Period	$	262.7		$	295.2

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,” “foreseeable,” “estimate,” “target,” “expect,” “predict,” “plan,” “project,” “intend,” “likely,” “possible,” “will,” “would,” “should,” “could,” “may,” “continue” and similar expressions are intended to identify forward-looking statements.

RESULTS OF OPERATIONS

For the second quarter of 2007, our revenue was $534.5 million, down 2.7% from $549.3 million in the second quarter of 2006. Year-to-date, revenue was $986.4 million, down 7.3% from $1,064.0 million in 2006. Consolidated gross margin decreased by 11.2 percentage points to 35.1% in the second quarter compared with 46.3% in the second quarter of 2006. On a six-month basis, consolidated gross margin was down 8.8 percentage points to 37.9% from 46.7% in 2006. Operating expenses were $160.1 million in the second quarter of 2007, compared with $174.3 million in the second quarter of 2006. For the first half of 2007, operating expenses were $322.6 million, down from $347.3 million in 2006. Net earnings for the second quarter of 2007 were $29.6 million or $0.07 per share (basic and diluted) compared with $53.5 million or $0.12 per share (basic and diluted) in the same period of 2006. Net earnings for the six-month period in 2007 were $55.1 million or $0.13 per basic share and $0.12 per diluted share compared with $105.9 million or $0.24 per basic share and $0.23 per diluted share for the first six months in 2006.

Revenue (in millions)

	Second Quarter						Six Months
	2007		2006		Change		2007		2006		Change
Products	$	469.0	$	500.6	(6.3	)%	$	879.0	$	974.7	(9.8	)%
Services		65.5		48.7	34.5	%		107.4		89.3	20.3	%
Total revenue	$	534.5	$	549.3	(2.7	)%	$	986.4	$	1,064.0	(7.3	)%

In 2007, product revenue declined 6.3% in the second quarter and 9.8% on a six-month basis compared with 2006. The decrease was primarily due to reduced product revenue from a major customer and from copper-based access platforms, which was partially offset by revenue from the rollout of our Tellabs^® 7100 OTS with ROADM product in our Transport segment.

In 2007, services revenue increased by 34.5% in the second quarter and by 20.3% on a six-month basis compared with the same periods in 2006. The increase was primarily due to higher revenue from deployment services and product-support services.

On a geographic basis, revenue from customers in North America was $413.2 million in the second quarter of 2007, down 2.8% from a year ago. Revenue from customers outside North America was $121.3 million in the second quarter of 2007, down 2.4% from a year ago. On a six-month basis, North America revenue was $754.6 million, down 9.8% from a year ago. Revenue from customers outside North America was $231.8 million, down 2.0% from a year ago.

Gross Margin

	Second Quarter						Six Months
	2007		2006		% Point Change		2007		2006		% Point Change
Products	34.5	%	47.2	%	(12.7	)%	38.6	%	48.0	%	(9.4	)%
Services	39.2	%	37.2	%	2.0	%	32.2	%	31.9	%	0.3	%
Consolidated	35.1	%	46.3	%	(11.2	)%	37.9	%	46.7	%	(8.8	)%

In 2007, our products margin decreased in the second quarter and for the first six months compared with the same periods in 2006. The decrease was due to a product mix shift toward products such as our Tellabs^® 7100 OTS with ROADM and ONT products, as well as lower prices on our ONTs.

Our services margin increased in the second quarter and first six months of 2007 compared with 2006, due to an increase in higher margin support services revenue.

Operating Expenses (in millions)

	Second Quarter							Percent of Revenue
	2007		2006		Change			2007		2006
Research and development	$	85.3	$	91.7	$	(6.4	)	16.0	%	16.7	%
Sales and marketing		44.4		45.0		(0.6	)	8.3	%	8.2	%
General and administrative		24.7		28.5		(3.8	)	4.6	%	5.2	%
Subtotal		154.4		165.2		(10.8	)	28.9	%	30.1	%
Intangible asset amortization		5.7		7.1		(1.4	)
Restructuring and other charges		—		2.0		(2.0	)
Total Operating Expenses	$	160.1	$	174.3	$	(14.2	)

	Six Months							Percent of Revenue
	2007		2006		Change			2007		2006
Research and development	$	169.8	$	184.6	$	(14.8	)	17.2	%	17.3	%
Sales and marketing		90.2		90.0		0.2		9.1	%	8.5	%
General and administrative		51.3		56.6		(5.3	)	5.2	%	5.3	%
Subtotal		311.3		331.2		(19.9	)	31.6	%	31.1	%
Intangible asset amortization		11.3		14.1		(2.8	)
Restructuring and other charges		—		2.0		(2.0	)
Total Operating Expenses	$	322.6	$	347.3	$	(24.7	)

Operating expenses decreased by $14.2 million to $160.1 million in the second quarter of 2007, compared with $174.3 million in the second quarter of 2006. For the first six months of 2007, operating expenses decreased by $24.7 million to $322.6 million compared with the same period in 2006. The reduction in our operating expenses for the quarter and six months is primarily due to actively controlling expenses and reduced accruals for incentive compensation plans.

Other Income (in millions)

	Second Quarter							Six Months
	2007		2006			Change		2007		2006			Change
Interest income, net	$	13.4	$	11.4		$	2.0	$	25.2	$	21.9		$	3.3
Other income (expense), net		0.3		(7.4	)		7.7		0.6		(6.0	)		6.6
Total	$	13.7	$	4.0		$	9.7	$	25.8	$	15.9		$	9.9

Interest income, net, was higher in the second quarter and the first six months of 2007, compared with 2006 due to larger invested balances. Other income (expense), net, improved in the second quarter and for the first six months of 2007 compared with the same periods in 2006 due to more favorable results from foreign exchange and investments. In the second quarter of 2006, we incurred a loss of $3.3 million for foreign exchange activities and a loss of $4.6 million for an other-than-temporary impairment to long-term investments.

Income Taxes

Our effective tax rate was 28.1% for the second quarter of 2007 and for the first half of 2007, compared with a rate of 36.3% in the second quarter of 2006 and 35.9% for the first six months of 2006. The rate change was primarily attributable to the inclusion of a benefit for U.S. research and development credits in the current year, and a benefit related to earning a greater percentage of our overall pretax income from foreign jurisdictions that are taxed at lower rates.

We adopted the provisions of FIN 48, Accounting for Uncertainty in Income Taxes, on December 30, 2006. The liability for unrecognized tax benefits as of December 30, 2006, as determined under FIN 48, was $76.5 million. Although we cannot estimate with reasonable reliability the periods of cash settlement, we expect that resolution of tax issues related to $12 million to $14 million of unrecognized tax benefits could be reached in the next 12 months; resolution of tax issues with respect to approximately $48 million could be reached in the next 18 to 24 months. We are not able to estimate with reasonable reliability the period of cash settlement with respect to the remaining balance of $14.5 million to $16.5 million of unrecognized tax benefits, as such settlement will depend on examination of returns by various jurisdictions, the precise amounts and timing of which are uncertain.

Segments

Revenue (in millions)

	Second Quarter						Six Months
	2007		2006		Change		2007		2006		Change
Broadband	$	246.4	$	298.4	(17.4	)%	$	465.1	$	558.1	(16.7	)%
Transport		222.6		202.2	10.1	%		413.9		416.6	(0.6	)%
Services		65.5		48.7	34.5	%		107.4		89.3	20.3	%
Total revenue	$	534.5	$	549.3	(2.7	)%	$	986.4	$	1,064.0	(7.3	)%

Segment Profit (Loss)* (in millions)

	Second Quarter							Six Months
	2007			2006		Change		2007			2006		Change
Broadband	$	(0.8	)	$	38.1	(102.1	)%	$	(15.6	)	$	59.5	(126.2	)%
Transport		81.0			112.1	(27.7	)%		191.9			234.9	(18.3	)%
Services		26.4			19.3	36.8	%		36.3			30.6	18.6	%
Total segment profit	$	106.6		$	169.5	(37.1	)%	$	212.6		$	325.0	(34.6	)%

* We define segment profit (loss) as gross profit less research and development expenses. Segment profit (loss) excludes sales and marketing expenses, general and administrative expenses, the amortization of purchased deferred stock compensation and intangibles, and the impact of equity-based compensation (which includes restricted stock and performance stock units granted after June 30, 2006, and stock options).

Broadband

Revenue

Revenue from our Broadband segment was $246.4 million in the second quarter of 2007, down $52.0 million from the prior-year quarter. For the first six months, revenue from our Broadband segment was $465.1 million, down $93.0 million from the first six months of 2006. While our access and managed access revenue decreased for both time-period comparisons, our data product revenue increased.

Second quarter access revenue decreased to $134.6 million in 2007 from $189.8 million in 2006. On a six-month basis, access revenue decreased to $255.8 million in 2007 from $353.9 million in 2006. Revenue was lower in both time periods due to lower revenue from independent operating companies for copper-based platforms, lower prices on single-family ONTs and lower revenue from Fiber-to-the-Curb platforms. Revenue from ONTs was lower due to price reductions despite increased unit volume. Approximately 68% of access revenue came from fiber-based platforms, with the balance coming from copper-based platforms.

Managed access revenue declined to $77.1 million in the second quarter of 2007 from $86.3 million in the same quarter of 2006. For the first six months of 2007, managed access revenue declined to $145.8 million from $160.0 million in the first six months of 2006. An increase in revenue from the Tellabs 8100 system was offset by reduced SDH-transport and cable telephony product revenue.

Data product revenue was $34.7 million in the second quarter of 2007, up 55.6% from the year-ago quarter. Data product revenue was $63.5 million for the first six months of 2007, up 43.7% compared with the first six months of 2006. Revenue from existing customers and new customers drove our data products revenue growth.

Segment Profit (Loss)

Our Broadband segment produced a loss of $0.8 million in the second quarter of 2007 compared with a profit of $38.1 million in the second quarter of 2006. The decrease in the quarter resulted from lower revenue, lower prices on our single-family ONTs and a shift in our product mix toward lower-margin products. For the first six months of 2007, our Broadband segment produced a loss of $15.6 million, down $75.1 million from a profit of $59.5 million in the comparable period of 2006. The decrease for the first six months was primarily due to higher volumes on our single-family ONTs and lower overall revenue.

Transport

Revenue

Revenue from our Transport segment was $222.6 million in the second quarter of 2007, up $20.4 million from the second quarter of 2006. The increase in revenue was due to a rollout of our Tellabs^® 7100 OTS with ROADM product to a major customer, which was partially offset by a decline in revenue from another major customer. On a six-month basis, transport revenue was $413.9 million, down by $2.7 million from the same period in 2006. The decrease was due to a decline in revenue from a major customer, which was offset by revenue from a rollout of our Tellabs^® 7100 OTS with ROADM product.

During the second quarter of 2007, approximately 36% of the Tellabs^® 5500 wideband cross-connect product revenue came from new systems, system expansions and system upgrades. The balance of these percentages consisted of port-card growth on the installed base. We shipped approximately 1.9 million T-1 equivalents during the second quarter of 2007 and approximately 4.3 million in the first six months of 2007, continuing to build our position in the North American transport market.

Segment Profit

Our Transport segment profit was $81.0 million in the second quarter of 2007, down $31.1 million from the second quarter of 2006. Our segment profit for the first six months was $191.9 million, down from $234.9 million for the first six months of 2006. The decreases for the quarter and the first six months were due to a shift in the mix of transport revenue, which includes greater revenue from our Tellabs^® 7100 OTS with ROADM product at essentially a breakeven level and lower revenue from our Tellabs^® 5500 wideband cross-connect.

Services

Revenue

Revenue from our Services segment grew by $16.8 million to $65.5 million for the second quarter of 2007, compared with $48.7 million in the second quarter of 2006. On a six-month basis, revenue from our Services segment was $107.4 million in 2007, up $18.1 million from the first six months of 2006. During both time periods, our revenue increased primarily from deployment services and product-support services.

Segment Profit

Our Services segment profit was $26.4 million for the second quarter of 2007, up $7.1 million from the second quarter of 2006. For the first six months, Services segment profit was $36.3 million in 2007, compared with $30.6 million in 2006. While our service margins slightly improved, revenue growth drove segment profitability for the quarter and six-month periods.

Financial Condition, Liquidity & Capital Resources

Our principal source of liquidity remained our cash, cash equivalents and marketable securities of $1,319.0 million as of the end of the second quarter of 2007, which increased by $17.3 million during the quarter and $18.9 million since year-end 2006. The increase in the second quarter was driven by cash from operating activities of $32.3 million, partially offset by cash used for purchasing capital equipment. The year-to-date increase reflects an increase of cash from operating activities of $59.8 million.

During the second quarter of 2007, we repurchased 0.9 million shares of our common stock at a cost of $10.0 million. On a year-to-date basis, we repurchased 3.3 million shares of our common stock at a cost of $35.2 million.

Tellabs’ Board of Directors and management are assessing our stock repurchase programs. We provide no assurance that we will continue or change our repurchase activity, and we cannot estimate the timing of any such change or the impact on our cash, cash equivalents and marketable securities.

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 available sources of working capital include 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 continuing to expand our business and support our operating activities. We may also utilize our funds for the repurchase of our common stock. We do not anticipate paying a cash dividend in the foreseeable future.

TELLABS, INC.

CONSOLIDATED NON-GAAP STATEMENTS OF INCOME (1)

(Unaudited)

	Second Quarter								Six Months
In millions, except per-share data	6/29/07			6/30/06			Change		6/29/07			6/30/06			Change
Revenue
Products	$	469.0		$	500.6				$	879.0		$	974.7
Services		65.5			48.7					107.4			89.3
		534.5			549.3		-2.7	%		986.4			1,064.0		-7.3	%
Cost of Revenue
Products		306.3			264.1					538.8			505.8
Services		39.2			29.4					71.2			58.7
		345.5			293.5					610.0			564.5
Gross Profit		189.0			255.8		-26.1	%		376.4			499.5		-24.6	%
Gross profit as a percentage of revenue		35.4	%		46.6	%	-24.1	%		38.2	%		46.9	%	-18.7	%
Gross profit as a percentage of revenue—products		34.7	%		47.2	%	-26.6	%		38.7	%		48.1	%	-19.5	%
Gross profit as a percentage of revenue—services		40.2	%		39.6	%	1.3	%		33.7	%		34.3	%	-1.6	%
Operating Expenses
Research and development		82.4			86.3					163.8			174.5
Sales and marketing		42.8			42.7					87.0			85.6
General and administrative		22.8			24.3					47.4			47.8
		148.0			153.3					298.2			307.9
Operating Earnings		41.0			102.5					78.2			191.6
Other Income
Interest income, net		13.4			11.4					25.2			21.9
Other income (expense), net		0.3			(2.8	)				0.6			(1.4	)
		13.7			8.6					25.8			20.5
Earnings Before Income Tax		54.7			111.1					104.0			212.1
Income tax expense		(16.4	)		(38.0	)				(31.2	)		(73.8	)
Net Earnings	$	38.3		$	73.1				$	72.8		$	138.3
Net Earnings Per Share
Basic	$	0.09		$	0.16				$	0.17		$	0.31
Diluted	$	0.09		$	0.16				$	0.16		$	0.30
Weighted Average Shares Outstanding
Basic		438.1			447.7					438.1			448.8
Diluted		443.3			458.5					443.2			459.6

(1) In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Tellabs, Inc. provides non-GAAP statements of income 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 statements of income eliminate certain items of expenses and losses from cost of revenue, operating expenses and other income. 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 statements of income, 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 following schedule disclosing the adjustments made to the above non-GAAP statements of income.

Tellabs, Inc.

Reconciliation of Non-GAAP Adjustments

(Unaudited)

	Second Quarter 2007 (a)									Six Months 2007 (b)
In millions, except per-share data	As Reported			Adjustments			Non-GAAP			As Reported			Adjustments			Non-GAAP
Cost of Revenue	$	346.9		$	(1.4	)	$	345.5		$	612.9		$	(2.9	)	$	610.0
Gross Profit		187.6			1.4		$	189.0			373.5			2.9			376.4
Operating Expenses		160.1			(12.1	)	$	148.0			322.6			(24.4	)		298.2
Income Tax Expense		(11.6	)		(4.8	)	$	(16.4	)		(21.6	)		(9.6	)		(31.2	)
Net Earnings	$	29.6		$	8.7		$	38.3		$	55.1		$	17.7		$	72.8
Earnings Per Share - Basic	$	0.07		$	0.02		$	0.09		$	0.13		$	0.04		$	0.17
Earnings Per Share - Diluted	$	0.07		$	0.02		$	0.09		$	0.12		$	0.04		$	0.16

	Second Quarter 2006 (c)									Six Months 2006 (d)
	As Reported			Adjustments			Non-GAAP			As Reported			Adjustments			Non-GAAP
Cost of Revenue	$	295.1		$	(1.6	)	$	293.5		$	567.5		$	(3.0	)	$	564.5
Gross Profit		254.2			1.6			255.8			496.5			3.0			499.5
Operating Expenses		174.3			(21.0	)		153.3			347.3			(39.4	)		307.9
Other Income		4.0			4.6			8.6			15.9			4.6			20.5
Income Tax Expense		(30.4	)		(7.6	)		(38.0	)		(59.2	)		(14.6	)		(73.8	)
Net Earnings	$	53.5		$	19.6		$	73.1		$	105.9		$	32.4		$	138.3
Earnings Per Share - Basic	$	0.12		$	0.04		$	0.16		$	0.24		$	0.08		$	0.31
Earnings Per Share - Diluted	$	0.12		$	0.04		$	0.16		$	0.23		$	0.07		$	0.30

Note: Equity-based compensation expense includes restricted stock and performance stock units granted after June 30, 2006 and stock options.

(a) The $1.4 million charge to Cost of Revenue reflects equity-based compensation.

The $12.1 million charge to Operating Expenses reflects $6.4 million for equity-based compensation and $5.7 million for amortization of purchased intangible assets.

(b) The $2.9 million charge to Cost of Revenue reflects equity-based compensation.

The $24.4 million charge to Operating Expenses reflects $13.1 million for equity-based compensation and $11.3 million for amortization of purchased intangible assets.

(c) The $1.6 million charge to Cost of Revenue reflects equity-based compensation.

The $21.0 million charge to Operating Expenses reflects $9.9 million for equity-based compensation, $7.1 million for amortization of purchased intangible assets, $2.0 million for amortization of deferred compensation related to acquisitions and $2.0 million for a restructuring plan to reduce our U.S. workforce to better align our resources with our current financial operating model.

The $4.6 million charge to Other Income reflects losses on the writedown of a long-term equity investment.

(d) The $3.0 million charge to Cost of Revenue reflects equity-based compensation.

The $39.4 million charge to Operating Expenses reflects $19.2 million for equity-based compensation, $14.1 million for amortization of purchased intangible assets, $4.1 million for amortization of deferred compensation related to acquisitions and $2.0 million for a restructuring plan to reduce our U.S. workforce to better align our resources with our current financial operating model.

The $4.6 million charge to Other Income reflects losses on the writedown of a long-term equity investment.