10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 29, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file Number: 0-09692

TELLABS, INC.

(Exact name of registrant as specified in its charter)

Delaware	36-3831568
(State of Incorporation)	(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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     YES  x    NO  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     YES  x    NO  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer   x	Accelerated Filer  ¨
Non-Accelerated Filer  ¨	Smaller reporting company  ¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

Common Shares, $0.01 Par Value – 367,361,127 shares outstanding on July 27, 2012.

TELLABS, INC.

INDEX

		PAGE
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Operations and Comprehensive Loss	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4.	Controls and Procedures	35
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 6.	Exhibits	36
SIGNATURE		37

2

PART I . FINANCIAL INFORMATION

Item 1. Financial Statements

TELLABS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

(Unaudited)

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
In millions, except per-share data
Revenue
Products	$	237.4		$	259.5		$	447.1		$	531.9
Services		50.7			57.2			98.9			107.2
Total revenue		288.1			316.7			546.0			639.1
Cost of Revenue
Products		140.0			165.3			268.7			324.8
Services		33.9			36.2			67.4			76.8
Total cost of revenue		173.9			201.5			336.1			401.6
Gross Profit		114.2			115.2			209.9			237.5
Gross profit as a percentage of revenue		39.6	%		36.4	%		38.4	%		37.2	%
Gross profit as a percentage of revenue – products		41.0	%		36.3	%		39.9	%		38.9	%
Gross profit as a percentage of revenue – services		33.1	%		36.7	%		31.9	%		28.4	%
Operating Expenses
Research and development		58.8			83.5			125.7			163.8
Sales and marketing		32.2			40.8			68.6			85.5
General and administrative		19.7			21.0			40.8			44.7
Intangible asset amortization		1.0			5.1			3.2			10.3
Restructuring and other charges		0.9			—			106.9			1.0
Total operating expenses		112.6			150.4			345.2			305.3
Operating Earnings (Loss)		1.6			(35.2	)		(135.3	)		(67.8	)
Operating earnings (loss) as a percentage of revenue		0.6	%		-11.1	%		-24.8	%		-10.6	%
Other Income
Interest income, net		1.6			3.1			3.4			6.4
Other expense, net		(1.1	)		(1.1	)		(2.1	)		(1.7	)
Total other income		0.5			2.0			1.3			4.7
Earnings (Loss) Before Income Tax		2.1			(33.2	)		(134.0	)		(63.1	)
Income tax (expense) benefit		(6.8	)		3.9			(10.5	)		9.7
Net Loss	$	(4.7	)	$	(29.3	)	$	(144.5	)	$	(53.4	)
Weighted Average Shares Outstanding
Basic		367.1			364.6			366.4			363.8
Diluted		367.1			364.6			366.4			363.8
Net Loss Per Share
Basic	$	(0.01	)	$	(0.08	)	$	(0.39	)	$	(0.15	)
Diluted	$	(0.01	)	$	(0.08	)	$	(0.39	)	$	(0.15	)
Comprehensive Loss	$	(35.8	)	$	(16.5	)	$	(162.9	)	$	(15.1	)
Cash Dividends Per Share	$	0.02		$	0.02		$	0.04		$	0.04

The accompanying notes are an integral part of these statements.

3

TELLABS, INC.

CONSOLIDATED BALANCE SHEETS

	6/29/12			12/30/11
In millions, except share data	Unaudited
Assets
Current Assets
Cash and cash equivalents	$	166.5		$	132.7
Investments in marketable securities		771.2			843.9
Total cash, cash equivalents and marketable securities		937.7			976.6
Other marketable securities		181.3			190.9
Accounts receivable, net of allowances of $1.3 and $1.3		277.4			317.6
Inventories
Raw materials		39.5			33.7
Finished goods		84.1			110.3
Total inventories		123.6			144.0
Income taxes		25.5			27.9
Miscellaneous receivables and other current assets		35.3			39.8
Total Current Assets		1,580.8			1,696.8
Property, Plant and Equipment
Land		19.8			20.0
Buildings and improvements		188.5			197.4
Equipment		404.7			446.9
Total property, plant and equipment		613.0			664.3
Accumulated depreciation		(383.4	)		(390.8	)
Property, plant and equipment, net		229.6			273.5
Goodwill		121.9			122.0
Intangible Assets, Net of Amortization		6.5			57.1
Other Assets		94.4			98.6
Total Assets		$2,033.2			$2,248.0
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	73.0		$	97.1
Accrued compensation		42.2			46.3
Restructuring and other charges		16.2			13.0
Income taxes		60.5			63.5
Loan related to other marketable securities		181.3			190.9
Deferred revenue		34.0			40.8
Other accrued liabilities		78.5			78.4
Total Current Liabilities		485.7			530.0
Long-Term Restructuring Liabilities		5.7			4.7
Income Taxes		20.6			21.2
Other Long-Term Liabilities		46.7			47.4
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; 508,071,837 and 505,238,503 shares issued		5.1			5.1
Additional paid-in capital		1,582.7			1,572.4
Treasury stock, at cost: 141,026,970 and 140,250,476 shares		(1,230.2	)		(1,227.2	)
Retained earnings		1,045.5			1,204.6
Accumulated other comprehensive income		71.4			89.8
Total Stockholders’ Equity		1,474.5			1,644.7
Total Liabilities and Stockholders’ Equity	$	2,033.2		$	2,248.0

The accompanying notes are an integral part of these statements.

4

TELLABS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months
	6/29/12			7/1/11
In millions
Operating Activities
Net loss	$	(144.5	)	$	(53.4	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		26.6			38.6
Loss on disposal of property, plant and equipment		0.8			0.1
Equity-based compensation		10.4			15.6
Deferred income taxes		(0.1	)		(2.8	)
Restructuring and other charges		106.9			1.0
Net loss on investments in marketable securities		—			0.4
Other-than-temporary impairment charges on investments		—			1.2
Excess tax benefits from equity-based compensation		—			(0.2	)
Net changes in assets and liabilities:
Accounts receivable		33.8			12.2
Inventories		18.3			1.7
Miscellaneous receivables and other current assets		6.4			(5.2	)
Other assets		(0.8	)		(0.9	)
Accounts payable		(22.8	)		(18.2	)
Restructuring and other charges		(26.6	)		(5.5	)
Deferred revenue		(6.1	)		38.1
Other accrued liabilities		(6.1	)		(67.9	)
Income taxes		(1.2	)		(11.7	)
Other long-term liabilities		(0.6	)		3.6
Net Cash Used for Operating Activities		(5.6	)		(53.3	)
Investing Activities
Capital expenditures		(9.9	)		(32.1	)
Payments for purchases of investments		(232.0	)		(384.9	)
Proceeds from sales and maturities of investments		303.2			485.1
Net Cash Provided by Investing Activities		61.3			68.1
Financing Activities
Proceeds from short-term borrowings		—			1.3
Payments of short-term borrowings		—			(1.3	)
Proceeds from issuance of common stock under stock plans		—			0.5
Repurchase of common stock		(3.0	)		(4.8	)
Excess tax benefits from equity-based compensation		—			0.2
Dividends paid		(14.6	)		(14.5	)
Net Cash Used for Financing Activities		(17.6	)		(18.6	)
Effect of Exchange Rate Changes on Cash		(4.3)			8.6
Net Increase in Cash and Cash Equivalents		33.8			4.8
Cash and Cash Equivalents – Beginning of Year		132.7			208.8
Cash and Cash Equivalents – End of Period		$166.5			$213.6

The accompanying notes are an integral part of these statements.

5

TELLABS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

IN MILLIONS, EXCEPT SHARE AND PER-SHARE DATA

1. Basis of Presentation

We prepared the accompanying unaudited consolidated financial statements in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial statements, the requirements of Form 10-Q and applicable rules of the U.S. Securities and Exchange Commission’s Regulation S-X. Therefore, they do not include all disclosures normally required by U.S. generally accepted accounting principles for complete financial statements. Accordingly, the financial statements and notes herein are to be read in conjunction with our Annual Report on Form 10-K for the year ended December 30, 2011.

In our opinion, the accompanying unaudited consolidated financial statements include all adjustments (consisting of normal recurring accruals) that are necessary for a fair presentation. Operating results for interim periods are not necessarily indicative of operating results for the full year.

The segment disclosures in this Form 10-Q reflect our new reporting segments. See Note 11, Segment Information, for a more detailed discussion and explanation of the change.

We record revenue net of any sales-related taxes that are imposed on a sale to our customers regardless of whether or not we bill the customer for such tax. We believe this approach results in financial statements that are more easily understood by investors. We recorded a $3.2 million reduction to revenue in the second quarter of 2012, attributable to prior periods’ taxes on sales transactions involving deployment services in a foreign jurisdiction. The impact of this prior period adjustment on net loss was $3.2 million and $0.01 per share for the second quarter of 2012, and $2.9 million and $0.01 per share for the first six months of 2012.

2. Restructuring and Other Charges

On January 30, 2012, management initiated a restructuring plan that aligns expenses with revenue. Tellabs is stopping new development on the Tellabs^® SMARTCORE 9100 series for mobile packet core and consolidating research and development into fewer locations. The pretax charges for this plan will consist of $21 million for severance-related charges of approximately 490 employees, $37 million for facility- and asset-related charges and $48 million for the accelerated amortization for abandoned intangible assets. Restructuring expense for this plan for the second quarter of 2012 was $0.8 million, which consists of a reduction of $1.6 million for severance-related charges and a $2.4 million charge for facility- and asset-related charges. Restructuring expense for this plan for the first six months of 2012 was $105.3 million, which consists of $21.3 million for severance-related charges, $35.1 million for facility- and asset-related charges, $47.7 million for the accelerated amortization of abandoned intangible assets, and $1.2 million for other obligations. By segment, total charges to date under this plan are $4.0 million for Optical, $98.2 million for Data, $1.3 million for Access, and $1.8 million for Services. Estimated cash payments under this plan are expected to be $29.6 million through 2017. Other than the cash payments, actions under this plan are expected to be substantially completed by the end of the first quarter of 2013.

On July 25, 2011, management initiated a restructuring plan to align our cost structure to business conditions at that time. Restructuring expense for this plan for the second quarter of 2012 was $0.1 million, which consists of a reduction of $0.4 million for severance-related charges and a $0.5 million charge for facility- and asset-related charges. Restructuring expense for this plan for the first six months of 2012 was $1.7 million, which consists of $0.9 million for severance-related charges and $0.8 million for facility- and asset-related charges. Cumulative restructuring charges for this plan are $21.4 million, which consists of $15.4 million for severance-related charges, $5.4 million for facility- and asset-related charges, and $0.6 million for other obligations. By segment, total charges to date under this plan are $8.4 million for Optical, $7.3 million for Data, $1.7 million for Access and $4.0 million for Services. Estimated cash payments under this plan are expected to be $18.5 million through the third quarter of 2014. Other than the cash payments, restructuring actions under this plan were substantially completed in the second quarter of 2012.

A net restructuring credit for previous restructuring plans for the first six months of 2012 was $0.1 million for severance-related charges.

The balance for restructuring plans relates to net lease obligations that expire through 2017 and cash severance that we expect to pay through the first quarter of 2014.

6

The following table summarizes restructuring and other charges recorded for the plans mentioned above, as well as adjustments to reserves recorded for prior restructurings:

	Second Quarter					Six Months
	6/29/12			7/1/11		6/29/12		7/1/11
Severance and other termination benefits	$	(2.0	)	$	—	$	22.1	$	1.2
Facility and other exit costs		2.9			—		35.9		(0.2	)
Accelerated amortization of intangible assets		—			—		47.7		—
Other obligations		—			—		1.2		—
Total restructuring and other charges	$	0.9		$	—	$	106.9	$	1.0

The following table summarizes restructuring and other charges activity by segment for the second quarter and the first six months of 2012 and the status of the reserves at June 29, 2012:

			Second Quarter Activity
	Balance at 3/30/12		Restructuring Expense			Cash Payments			Other Activities1			Balance at 6/29/12
2012 Restructuring Plan
Optical	$	3.0	$	(0.3	)	$	(0.7	)	$	(0.1	)	$	1.9
Data		16.7		1.9			(7.5	)		(2.4	)		8.7
Access		1.1		(0.1	)		(0.2	)		—			0.8
Services		2.0		(0.7	)		(0.6	)		—			0.7
Subtotal 2012 Restructuring Plan		22.8		0.8			(9.0	)		(2.5	)		12.1
2011 Restructuring Plan
Optical		2.8		1.5			(1.8	)		(0.5	)		2.0
Data		4.2		—			(1.3	)		(0.1	)		2.8
Access		0.9		(0.1	)		(0.3	)		—			0.5
Services		1.7		(1.3	)		0.1			—			0.5
Subtotal 2011 Restructuring Plan		9.6		0.1			(3.3	)		(0.6	)		5.8
Previous Restructuring Plans
Optical		0.3		—			(0.1	)		—			0.2
Data		1.7		—			(0.2	)		—			1.5
Access		2.3		—			(0.1	)		—			2.2
Services		0.1		—			—			—			0.1
Subtotal Previous Restructuring Plans		4.4		—			(0.4	)		—			4.0
Total Restructuring Plans	$	36.8	$	0.9		$	(12.7	)	$	(3.1	)	$	21.9

7

			Six Months Activity
	Balance at 12/30/11		Restructuring Expense			Cash Payments			Other Activities1			Balance at 6/29/12
2012 Restructuring Plan
Optical	$	—	$	4.0		$	(1.2	)	$	(0.9	)	$	1.9
Data		—		98.2			(15.2	)		(74.3	)		8.7
Access		—		1.3			(0.4	)		(0.1	)		0.8
Services		—		1.8			(1.1	)		—			0.7
Subtotal 2012 Restructuring Plan		—		105.3			(17.9	)		(75.3	)		12.1
2011 Restructuring Plan
Optical		4.4		1.6			(3.4	)		(0.6	)		2.0
Data		5.5		—			(2.5	)		(0.2	)		2.8
Access		1.1		—			(0.6	)		—			0.5
Services		1.6		0.1			(1.2	)		—			0.5
Subtotal 2011 Restructuring Plan		12.6		1.7			(7.7	)		(0.8	)		5.8
Previous Restructuring Plans
Optical		0.4		(0.1	)		(0.1	)		—			0.2
Data		1.9		—			(0.4	)		—			1.5
Access		2.6		—			(0.4	)		—			2.2
Services		0.2		—			(0.1	)		—			0.1
Subtotal Previous Restructuring Plans		5.1		(0.1	)		(1.0	)		—			4.0
Total Restructuring Plans	$	17.7	$	106.9		$	(26.6	)	$	(76.1	)	$	21.9

¹ Other activities include accelerated amortization related to abandoned intangible assets, accelerated depreciation of property, plant and equipment to be disposed, the effects of currency translation as well as other changes that do not flow through restructuring expense.

3. Intangible Assets

We amortize intangible assets with finite lives on a straight-line basis over their estimated useful lives. Intangible assets are reviewed for impairment when events or circumstances indicate their carrying amount may not be recoverable. We review the estimated useful lives of intangible assets to determine if events or circumstances warrant a change in the remaining useful life of an asset.

In conjunction with the January 30, 2012, restructuring plan, we recorded $47.7 million of accelerated amortization to Restructuring and other charges for abandoned intangible assets in the first quarter of 2012 related to the mobile packet core technology. As a result of the abandonment, we wrote these assets down to zero in the first quarter of 2012.

The gross carrying amount and accumulated amortization of intangible assets subject to amortization are as follows:

	6/29/12
	Gross Assets		Accumulated Amortization			Net
Developed technology	$	147.6	$	(147.3	)	$	0.3
Customer relationships		30.9		(24.7	)		6.2
Total	$	178.5	$	(172.0	)	$	6.5

	12/30/11
	Gross Assets			Accumulated Amortization			Net
Developed technology	$	212.8		$	(169.1	)	$	43.7
Customer relationships		35.2			(23.7	)		11.5
Trade names/trademarks		0.2			(0.2	)		—
Leasehold improvements		(2.7	)		2.3			(0.4	)
Non-compete arrangements		13.1			(10.8	)		2.3
Total	$	258.6		$	(201.5	)	$	57.1

8

The estimated future amortization expense of intangible assets subject to amortization as of June 29, 2012 follows:

2012 (remaining six months)	$	2.1
2013	$	4.2
2014	$	0.1
2015	$	0.1

4. Fair Value Measurements

We measure certain financial assets and liabilities at fair value on a recurring basis, and certain non-financial assets and liabilities on a nonrecurring basis. Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, marketable securities and derivatives. The carrying value of the cash and cash equivalents, accounts receivable and accounts payable are reasonable estimates of their fair value because of their short-term nature. We determine the fair value of marketable securities and derivatives based on observable inputs such as quoted prices in active markets, or other than quoted prices in active markets, that are observable either directly or indirectly.

Fair value is measured as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

• Level 1—Observable inputs, such as quoted prices in active markets;

• Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

• Level 3—Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In determining fair value for recurring financial assets and liabilities, we separate our financial instruments into three categories: marketable securities, other marketable securities and loan related to other marketable securities, and derivative financial instruments. These assets and liabilities are all valued based on the market approach that uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Marketable Securities

We use a third-party provider to determine fair values of marketable securities. The third-party provider receives market prices for each marketable security from a variety of industry standard data providers, security master files from large financial institutions and other third-party sources with reasonable levels of price transparency. The third-party provider uses these multiple prices as inputs into a pricing model to determine a weighted average price for each security. Tellabs management compares the third-party pricing with pricing from outside investment managers and other market sources to ensure the third-party pricing is reasonable. We classify U.S. Treasury bills and bonds as Level 1 based upon quoted prices in active markets. All other marketable securities are classified as Level 2 based upon the other than quoted prices with observable market data. The type of instruments valued based upon the observable market data include Federal Deposit Insurance Corporation (FDIC)-backed corporate debt obligations, investment grade corporate bonds, mortgaged backed debt obligations guaranteed by the Government National Mortgage Association (GNMA), certain FDIC-backed bank certificates of deposit, foreign government debt obligations and foreign corporate debt obligations.

Other Marketable Securities and Loan Related to Other Marketable Securities

We classify holdings in other marketable securities (Cisco common stock) and the related loan as Level 1 in the fair value hierarchy. We classify these as Level 1 since they are actively traded through a governed exchange.

9

Derivative Financial Instruments

Our foreign currency forward contracts are executed as exchange-traded. Market participants can be described as large money center or regional banks. Exchange-traded derivatives typically fall within Level 1 or Level 2 in the fair value hierarchy depending on whether they are deemed to be actively traded or not.

We have elected to value derivatives as Level 2, using observable market data at the measurement date and standard valuation techniques to convert future amounts to a single present amount (discounted). Key inputs for currency derivatives are the spot rate, interest rates and credit derivative swap spreads. The spot rate for each currency is the same spot rate used for all balance sheet translations at the measurement date. The following values are calculated from commonly quoted intervals available from a third-party financial information provider. Forward points and LIBOR rates are used to calculate a discount rate to apply to assets and liabilities. One-year credit default swap spreads are used to discount derivative assets, all of which have final maturities of less than 12 months. We calculate the discount to the derivative liabilities to reflect the potential credit risk to lenders and have used the spread over LIBOR based on the credit risk of our counterparties. Each asset is individually discounted to reflect our potential credit risk and we have used the spread over LIBOR based on similar credit risk. We do not adjust the fair value for immaterial credit risk.

We have applied a valuation method for financial assets and liabilities and recurring non-financial assets consistently during this period and prior periods. The following table sets forth by level within the fair value hierarchy “Financial instruments owned at fair value.” Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Assets and liabilities measured at fair value on a recurring basis are:

			Fair Value Measurements at June 29, 2012
	Balance at 6/29/12		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Investments in marketable securities
U.S. government debt obligations	$	158.7	$	158.7	$	—	$	—
Corporate debt obligations guaranteed by FDIC		20.3		—		20.3		—
Corporate debt obligations		191.4		—		191.4		—
Mortgaged backed debt obligations guaranteed by GNMA		90.0		—		90.0		—
Certificates of deposit guaranteed by FDIC		1.2		—		1.2		—
Foreign government debt obligations		194.5		—		194.5		—
Foreign corporate debt obligations		115.1		—		115.1		—
Subtotal		771.2		158.7		612.5		—
Other marketable securities		181.3		181.3		—		—
Derivative financial instruments		0.4		—		0.4		—
Total Assets	$	952.9	$	340.0	$	612.9	$	—
Liabilities
Loan related to other marketable securities	$	181.3	$	181.3	$	—	$	—
Derivative financial instruments		0.5		—		0.5		—
Total Liabilities	$	181.8	$	181.3	$	0.5	$	—

10

			Fair Value Measurements at December 30, 2011
	Balance at 12/30/11		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Investments in marketable securities
U.S. government debt obligations	$	195.7	$	195.7	$	—	$	—
Corporate debt obligations guaranteed by FDIC		66.8		—		66.8		—
Corporate debt obligations		201.5		—		201.5		—
Mortgaged backed debt obligations guaranteed by GNMA		91.2		—		91.2		—
Certificates of deposit guaranteed by FDIC		1.5		—		1.5		—
Foreign government debt obligations		223.0		—		223.0		—
Foreign corporate debt obligations		64.2		—		64.2		—
Subtotal		843.9		195.7		648.2		—
Other marketable securities		190.9		190.9		—		—
Derivative financial instruments		0.2		—		0.2		—
Total Assets	$	1,035.0	$	386.6	$	648.4	$	—
Liabilities
Loan related to other marketable securities	$	190.9	$	190.9	$	—	$	—
Derivative financial instruments		0.2		—		0.2		—
Total Liabilities	$	191.1	$	190.9	$	0.2	$	—

5. Investments

We account for investments in marketable securities at fair value, with the unrealized gain or loss, less deferred income taxes, included in Other comprehensive loss and shown as a separate component of stockholders’ equity. We base realized gains and losses on specific identification of the security sold. At June 29, 2012, and December 30, 2011, available-for-sale marketable securities consisted of the following:

	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
June 29, 2012
U.S. government debt obligations	$	158.4	$	0.4	$	(0.1	)	$	158.7
Corporate debt obligations guaranteed by FDIC		20.2		0.1		—			20.3
Corporate debt obligations		190.4		1.2		(0.2	)		191.4
Mortgaged backed debt obligations guaranteed by GNMA		89.6		0.6		(0.2	)		90.0
Certificates of deposit guaranteed by FDIC		1.2		—		—			1.2
Foreign government debt obligations		192.7		1.9		(0.1	)		194.5
Foreign corporate debt obligations		114.7		0.5		(0.1	)		115.1
Total	$	767.2	$	4.7	$	(0.7	)	$	771.2
December 30, 2011
U.S. government debt obligations	$	195.2	$	0.5	$	—		$	195.7
Corporate debt obligations guaranteed by FDIC		66.6		0.2		—			66.8
Corporate debt obligations		201.4		0.8		(0.7	)		201.5
Mortgaged backed debt obligations guaranteed by GNMA		90.9		0.4		(0.1	)		91.2
Certificates of deposit guaranteed by FDIC		1.5		—		—			1.5
Foreign government debt obligations		221.5		1.5		—			223.0
Foreign corporate debt obligations		64.1		0.2		(0.1	)		64.2
Total	$	841.2	$	3.6	$	(0.9	)	$	843.9

11

The following table summarizes the maturities of our available-for-sale marketable securities at June 29, 2012:

	Amortized Cost		Fair Value
Less than 12 months	$	188.0	$	188.3
Due in 1 to 5 years		489.7		492.9
Due after 5 years		89.5		90.0
Total	$	767.2	$	771.2

Gross unrealized gains and losses related to fixed-income securities were caused by interest rate fluctuations. We review investments held with unrealized losses to determine if the loss is other-than-temporary. We evaluated near-term prospects of the security in relation to the severity and duration of the unrealized loss. We also assessed our intent to sell the security, whether it is more likely than not that the security will be required to be sold before recovery, or the security is not expected to recover its entire amortized cost basis. Based on our review, we do not intend to sell these securities and believe that they will recover their entire amortized cost basis; therefore, we do not consider these investments to be other-than-temporarily impaired at June 29, 2012. No other-than-temporary impairments were recorded in the second quarter or six months of 2012.

Investments in marketable securities with unrealized losses at June 29, 2012, and December 30, 2011, were as follows:

	Unrealized Loss Less than 12 months					Unrealized Loss Greater than 12 months				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
June 29, 2012
U.S. government debt obligations	$	46.2	$	(0.1	)	$	—	$	—	$	46.2	$	(0.1	)
Corporate debt obligations		46.3		(0.2	)		—		—		46.3		(0.2	)
Mortgaged backed debt obligations guaranteed by GNMA		37.1		(0.2	)		—		—		37.1		(0.2	)
Foreign government debt obligations		49.1		(0.1	)		—		—		49.1		(0.1	)
Foreign corporate debt obligations		32.6		(0.1	)		—		—		32.6		(0.1	)
Total	$	211.3	$	(0.7	)	$	—	$	—	$	211.3	$	(0.7	)
December 30, 2011
Corporate debt obligations	$	81.0	$	(0.7	)	$	—	$	—	$	81.0	$	(0.7	)
Mortgaged backed debt obligations guaranteed by GNMA		31.4		(0.1	)		—		—		31.4		(0.1	)
Foreign corporate debt obligations		24.1		(0.1	)		—		—		24.1		(0.1	)
Total	$	136.5	$	(0.9	)	$	—	$	—	$	136.5	$	(0.9	)

The following table presents gross realized gains and losses related to fixed income investments for the three months and six months ending June 29, 2012, and July 1, 2011:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Gross realized gains	$	0.2		$	1.0		$	0.5		$	1.4
Gross realized losses		(0.2	)		(1.3	)		(0.5	)		(1.8	)
Total	$	—		$	(0.3	)	$	—		$	(0.4	)

12

As a result of the acquisition of Advanced Fibre Communications, Inc. (AFC) in 2004, we acquired 10.6 million shares of Cisco common stock, shown as Other marketable securities in Current Assets. AFC owned this stock as a result of its investment in privately held Cerent Corporation, which was acquired by Cisco in 1999, through the exchange of AFC’s ownership in Cerent Corporation for Cisco stock. In 2000, AFC entered into two three-year hedge contracts, pledging all of the Cisco stock to secure the obligations under the contracts and recognizing unrealized gains in their financial statements. When the hedge contracts matured in 2003, AFC entered into stock loan agreements with a lender, borrowing 10.6 million shares of Cisco stock to settle the hedge contracts. As a result, AFC received cash proceeds for which a significant portion of the net gains were deferred for income tax purposes, and a deferred tax liability was established. Since the same number of shares was borrowed, AFC’s net position in Cisco was reduced to zero, eliminating any market risk exposure. This structure is maintained to preserve the deferral of a potentially significant sum of cash tax payments. In the future, however, we may settle all or a portion of this arrangement to the extent we are able to minimize any adverse impact to our cash balance and/or tax provision.

The deferred tax liability was $195.2 million as of June 29, 2012, and December 30, 2011, and is netted against other tax items in Income Taxes in the current liabilities section of our Consolidated Balance Sheets. The aggregate amount of the fair values of those stock loans is reflected as a current liability on the balance sheets as of June 29, 2012 and December 30, 2011. The values of both the asset and liability move in tandem with each other since each is based on the number of shares we hold at the current stock price. At June 29, 2012, Other marketable securities and Loan related to other marketable securities was $181.3 million at a market price of $17.17 per share and $190.9 million at a market price of $18.08 per share at December 30, 2011. The fees associated with the stock loan agreement were $0.3 million in the second quarter of 2012 and 2011, and $0.6 million in the first six months of 2012 and 2011.

In addition to the above investments, we maintain investments in partnerships and start-up technology companies. We record these investments in Other Assets, at cost. These investments totaled $2.7 million at June 29, 2012, and $3.2 million at December 30, 2011. We review each investment quarterly, including historical and projected financial performance, expected cash needs and recent funding events. We recognize other-than-temporary impairments if the market value of the investment is below its cost basis for an extended period of time or if the issuer has experienced significant financial declines or difficulties in raising capital to continue operations. No other-than-temporary impairments were recorded in the second quarters and first six months of 2012 and 2011.

6. Derivative Financial Instruments

Financial Contracts and Market Risk

We conduct business on a global basis in U.S. and foreign currencies subjecting us to risks associated with fluctuating foreign exchange rates. To mitigate these risks, we use derivative foreign exchange contracts to address nonfunctional exposures that are expected to be settled in one year or less. The derivative foreign exchange contracts consist of foreign currency forward and option contracts.

Derivative financial contracts involve elements of market and credit risk. The market risk that results from these contracts relates to changes in foreign currency exchange rates, which generally are offset by changes in the value of the underlying assets or liabilities being held. Credit risk relates to the risk of nonperformance by a counterparty to one of the derivative contracts. We do not believe there is a significant credit risk associated with our hedging activities. We monitor the counterparties’ credit ratings and other market data to minimize credit risk. In addition, we also limit the aggregate contract amount entered into with any one financial institution to mitigate credit risk.

Balance Sheet Hedges (Non-designated Hedges)

Short-term monetary assets and liabilities denominated in currencies other than the functional currency are remeasured through income as foreign currency rates fluctuate. Changes in the value of derivative contracts intended to offset these fluctuations are also recorded in income. These derivative contracts are not designated as hedges. At June 29, 2012, we held non-designated foreign currency forward contracts in 14 currencies, with a gross notional equivalent of $212.3 million.

Net Investment Hedges

We entered into three-month foreign currency forward contracts and a three-month foreign currency collar contract, designated as net investment hedges, to hedge a portion of our net investment in one of our foreign subsidiaries to preserve the U.S. dollar value of our Euro cash. Effective changes in the fair value of these contracts, less applicable deferred income taxes are recorded within Accumulated other comprehensive income. Those amounts will be reflected in income only when we dispose of the investment in the foreign subsidiary. We conduct monthly effectiveness tests of net investment hedges on a spot-to-spot basis, excluding forward points, and any measurement of ineffectiveness is recorded in income. As of June 29, 2012, we had a net unrealized gain of $21.2 million in Accumulated other comprehensive income related to settled contracts. We held net investment hedges with a notional value of 200 million Euros at the end of the quarter.

13

The fair value of derivative instruments in the Consolidated Balance Sheet as of June 29, 2012, was as follows:

	Asset Derivatives Reported in Miscellaneous Receivables and Other Current Assets		Liability Derivatives Reported in Other Accrued Liabilities
Net investment hedges	$	0.1	$	—
Balance sheet hedges (Non-designated hedges)		0.3		0.5
Total derivatives	$	0.4	$	0.5

The fair value of derivative instruments in the Consolidated Balance Sheet as of December 30, 2011, was as follows:

	Asset Derivatives Reported in Miscellaneous Receivables and Other Current Assets		Liability Derivatives Reported in Other Accrued Liabilities
Net investment hedges	$	0.1	$	—
Balance sheet hedges (Non-designated hedges)		0.1		0.2
Total derivatives	$	0.2	$	0.2

The effect of derivative instruments designated as hedging instruments on the Consolidated Statements of Operations and Comprehensive Loss follows:

	Second Quarter
	Gain (Loss) Recognized in Accumulated OCI, net (Effective Portion)					Gain (Loss) Recognized in Other Expense, net: Excluded from Effectiveness testing
	6/29/12		7/1/11			6/29/12		7/1/11
Net investment hedges	$	6.7	$	(2.7	)	$	0.1	$	(0.2	)

	Six Months
	Gain (Loss) Recognized in Accumulated OCI, net (Effective Portion)					Gain (Loss) Recognized in Other Expense, net: Excluded from Effectiveness testing
	6/29/12		7/1/11			6/29/12		7/1/11
Net investment hedges	$	2.5	$	(10.0	)	$	0.2	$	(0.3	)

The effect of derivative instruments not designated as hedging instruments on the Consolidated Statements of Operations and Comprehensive Loss follows:

	Second Quarter					Six Months
	(Loss) Gain Recognized in Other Expense, net 1					(Loss) Gain Recognized in Other Expense, net 1
	6/29/12			7/1/11		6/29/12			7/1/11
Foreign currency forward and option contracts	$	(2.0	)	$	2.1	$	(0.6	)	$	6.5

¹ The gains or losses from changes in the fair value of the derivative contracts are generally offset by gains or losses of the underlying transactions being hedged.

14

7. Product Warranties

We provide warranties for all of our products. The specific terms and conditions of those warranties vary depending on the product. We provide a basic limited warranty for periods ranging from 90 days to 6 years.

The estimate of warranty liability involves many factors, including the number of units shipped, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of the recorded warranty liability and adjust the amounts as necessary. Other adjustments to accruals for product warranties represent reductions due to favorable experience to previous estimates.

We classify the portion of warranty liability that we expect to incur in the next 12 months as a current liability. We classify the portion of warranty liability that we expect to incur more than 12 months in the future as a long-term liability. Product warranty liabilities are as follows:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Balance – beginning of period	$	17.3		$	21.2		$	17.0		$	19.4
Accruals for product warranties		1.0			2.1			2.9			4.9
Settlements		(1.3	)		(1.9	)		(2.2	)		(2.3	)
Other adjustments to accruals for product warranties		(0.7	)		(1.4	)		(1.4	)		(2.0	)
Balance – end of period	$	16.3		$	20.0		$	16.3		$	20.0

	Balance at 6/29/12		Balance at 7/1/11
Balance sheet classification - end of period
Other accrued liabilities	$	7.4	$	8.7
Other long-term liabilities		8.9		11.3
Total product warranty liabilities	$	16.3	$	20.0

8. Equity-Based Compensation

The Tellabs, Inc. Amended and Restated 2004 Incentive Compensation Plan (2004 Plan) provides for the grant of short-term and long-term incentives, including stock options, stock appreciation rights (SARs), restricted stock and performance stock units (PSUs). Equity-based grants vest over one to four years, with the majority vesting over a three-year period. We recognize compensation expense for stock options, restricted stock and PSUs over the service period based on the fair value on the grant date. Stock options and SARs granted but unexercised expire 10 years from the grant date. Stockholders previously approved 53,889,977 shares for grant under the 2004 Plan, of which 17,451,007 remain available for grant at June 29, 2012.

Stock Options

We estimate the fair value of stock options using the Black-Scholes option-pricing model. This model requires the use of assumptions that will have a significant impact on the fair value estimate. The following table summarizes the assumptions used to compute the weighted average fair value of stock option grants:

	6/29/12			7/1/11
Expected volatility		43.3	%		46.4	%
Risk-free interest rate		0.9	%		2.2	%
Expected term (in years)		5.3			5.3
Expected dividend yield		2.0	%		1.5	%

We based our calculation of expected volatility on a combination of historical and implied volatility for options granted. We based the risk-free interest rate on the U.S. Treasury yield curve in effect at the date of grant. We estimated the expected term of the options using their vesting period, post-vesting employment termination behavior and historical exercise patterns. We based the expected dividend yield on the option’s exercise price and annualized dividend rate at the date of grant.

15

The following is a summary of stock option activity during 2012 as of June 29, 2012:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in  millions)
Outstanding – beginning of year		20,719,482		$	7.68
Granted		2,099,707		$	3.95
Exercised		(110,577	)	$	0.32
Forfeited/expired		(1,667,813	)	$	8.21
Outstanding – end of period		21,040,799		$	7.31		3.8	$	0.2
Exercisable – end of period		17,111,853		$	7.86		2.8	$	0.2
Shares vested or expected to vest		20,687,345		$	7.35		3.7	$	0.2

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on our closing stock price as of June 29, 2012, that the option holders would have received had all holders exercised their options as of that date. The aggregate intrinsic value of exercised stock options during the second quarter of 2012 was $0.2 million.

The weighted average fair value of stock options granted during the first six months of 2012 was $1.29.

Cash-Settled Stock Appreciation Rights

The 2004 Plan provides for the granting of cash-settled SARs in conjunction with, or independent of, the stock options under the 2004 Plan. These SARs allow the holder to receive in cash the difference between the cash-settled SARs’ grant price (the market value of our stock on the grant date) and the market value of our stock on the date the holder exercises the SAR. There were no cash payments during the first half of 2012 and 2011.

The following is a summary of cash-settled SARs activity during 2012 as of June 29, 2012:

	Shares			Weighted Average Exercise Price
Outstanding – beginning of year		492,131		$	6.81
Granted		16,200		$	3.98
Forfeited/expired		(31,822	)	$	7.37
Outstanding – end of period		476,509		$	6.67

Restricted Stock

The fair market value of restricted stock vested was $7.9 million in the first half of 2012. The weighted average grant date fair value of restricted stock was $3.95 per share in the first six months of 2012 and $5.37 per share in the first six months of 2011.

The following is a summary of restricted stock activity during 2012 as of June 29, 2012:

	Shares			Weighted Average Grant Date Fair Value
Non-vested – beginning of year		4,854,587		$	6.29
Granted		2,304,298		$	3.95
Vested		(2,042,116	)	$	6.25
Forfeited		(1,028,297	)	$	6.52
Non-vested – end of period		4,088,472		$	4.93

16

Performance Stock Units

The 2004 Plan provides for the granting of PSUs. We granted 1,962,549 PSUs in the first six months of 2012 and 1,640,832 PSUs in the first six months of 2011. The PSUs granted in the first six months of 2012 entitle the recipients to receive shares of our common stock commencing in the first quarter of 2013, contingent on the achievement of operating earnings targets and strategic goals for the 2012 fiscal year. Following achievement of these measures and subject to continued employment, one-third of such shares will be issued in annual installments beginning in the first quarter of 2013. At maximum target performance, we will issue two shares for each PSU granted. The weighted average fair value of PSUs granted in the first six months of 2012 was $3.98 per share and the weighted average fair value of PSUs granted in the first six months of 2011 was $5.40 per share.

The PSUs granted in 2011 entitle the recipients to receive shares of our common stock commencing in the first quarter of 2012, contingent on the achievement of strategic goals for 2011. Performance was based upon achieving market share and market penetration gains, product development achievement, and a customer service objective with respect to strategic goals. Under the executive plan, 50% of the PSUs were earned and 0.50 shares for each PSU will be paid out, subject to continued employment. We issued one-third (99,420 shares) of the total shares in the first quarter of 2012 and generally, one-third of such shares will be issued in annual installments in the first quarter of 2013 and the first quarter of 2014. Since 2011 minimum strategic goals were not met for the mobile internet plan, none of the PSUs were earned, no expense was incurred, and no amounts will be paid out with respect to them.

The following is a summary of PSU activity during 2012 as of June 29, 2012:

	Shares			Weighted Average Grant Date Fair Value
Non-vested – beginning of year		2,269,410		$	5.51
Granted		1,962,549		$	3.98
Vested		(734,185	)	$	5.15
Forfeited		(1,191,681	)	$	5.31
Non-vested – end of period		2,306,093		$	4.43

Equity-Based Compensation Expense

The following table sets forth the total equity-based compensation expense resulting from stock options, SARs, restricted stock, and PSUs by line item on the Statements of Operations and Comprehensive Loss:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Cost of revenue – products	$	0.2		$	0.5		$	0.6		$	1.0
Cost of revenue – services		0.4			0.6			0.9			1.2
Research and development		1.4			3.1			3.2			5.6
Sales and marketing		0.8			1.3			1.7			2.6
General and administrative		2.0			2.5			4.0			5.2
Equity-based compensation expense before income taxes		4.8			8.0			10.4			15.6
Income tax benefit		(0.1	)		(1.2	)		(0.2	)		(2.6	)
Total equity-based compensation expense after income taxes	$	4.7		$	6.8		$	10.2		$	13.0

17

The following table sets forth the total equity-based compensation expense by type:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Stock options	$	0.9		$	1.3		$	2.0		$	2.6
Cash-settled SARs		(0.2	)		(0.1	)		(0.1	)		(0.2	)
Restricted stock		2.4			5.4			5.8			9.8
Performance stock units		1.7			1.4			2.7			3.4
Total	$	4.8		$	8.0		$	10.4		$	15.6

As of June 29, 2012, we had $26.1 million of unrecognized equity-based compensation cost that we expect to recognize over a weighted average period of 1.8 years.

9. Income Taxes

We recorded tax expense of $6.8 million in the second quarter and $10.5 million in the first six months of 2012. Our tax expense results in an effective tax rate above the federal statutory rate of 35% because we are unable to recognize tax benefits on domestic losses due to the valuation allowance maintained against domestic deferred tax assets, combined with tax expense on income from foreign operations. We expect to continue to maintain a valuation allowance against domestic and certain non-U.S. deferred tax assets until a sufficient level of profitability is attained.

10. Comprehensive Loss

Comprehensive loss for the second quarter and the first six months of 2012 and 2011 consists of the following:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Net loss	$	(4.7	)	$	(29.3	)	$	(144.5	)	$	(53.4	)
Net change in unrealized gains (losses) related to:
Available-for-sale securities, net of tax		(0.2	)		2.4			0.9			(0.6	)
Net investment hedges, net of tax		6.7			(2.7	)		2.6			(10.0	)
Foreign currency translation adjustments		(37.6	)		13.1			(21.9	)		48.9
Comprehensive loss	$	(35.8	)	$	(16.5	)	$	(162.9	)	$	(15.1	)

Accumulated other comprehensive income has no impact on our net loss but is reflected in our consolidated balance sheet through adjustments to stockholders’ equity. Accumulated other comprehensive income derives from unrealized gains (losses) and related adjustments on available-for-sale securities, unrealized gains (losses) on net investment hedges, foreign currency translation adjustments, unrecognized prior service costs and unrecognized net gains on our retiree medical plan.

Accumulated other comprehensive income (net of tax) for the first six months of 2012 consists of the following:

	Unrealized Net Gain (Loss) on Available-for- Sale Securities			Net Investment Hedges			Foreign Currency Translation Adjustments			Unrecognized Prior Service Cost			Unrecognized Net Gain on Retiree Medical Plan		Accumulated Other Comprehensive Income
Balance at December 30, 2011	$	1.9		$	18.6		$	67.5		$	(0.2	)	$	2.0	$	89.8
Pretax activity, net		1.2			4.1			(21.9	)		—			—		(16.6	)
Tax effect		(0.3	)		(1.5	)		—			—			—		(1.8	)
Balance at June 29, 2012	$	2.8		$	21.2		$	45.6		$	(0.2	)	$	2.0	$	71.4

11. Segment Information

Prior to the second quarter of 2012, we reported results of operations for three reporting segments: Broadband, Transport, and Services. As a result of strategy changes and internal reorganizations at the beginning of the second quarter of 2012, we are focusing on the growth markets of Packet Optical (primarily our optical portfolio) and Mobile Backhaul (primarily our data portfolio) in addition to the on-going Access and Services businesses. With these strategic adjustments, we changed our reporting segments accordingly. Therefore, beginning with the second quarter of 2012, we have reported in the following four segments: Optical, Data, Access and Services (the Services segment is unchanged).

18

Optical segment products are primarily used to manage large volumes of telecommunication traffic in metro areas. The Optical segment includes the Tellabs^® 7000 series of optical transport systems, as well as the Tellabs^® 5000 and 6300 series of transport systems equipped with optical interfaces.

Data segment products are primarily used in mobile backhaul applications, and for business services and various edge routing applications. The Data segment includes the packet-switched Tellabs^® 8600 Managed Edge System, the Tellabs^® 8800 Multiservice Router Series, and Tellabs^® 9200 Content-Aware Router Series, as well as the Tellabs^® 8100 Managed Access System.

Access segment products are primarily used to enable service providers to bundle Internet, video, and voice over high-speed fiber-based networks and in Optical LAN applications. The Access segment includes the Tellabs^® 1000 and 1100 Multi-service Access systems, and the Tellabs^® 1600 Optical Network Terminals.

The Services segment includes services that support all phases of the network: planning, building and operating. The Services segment includes deployment, support, training and professional services for customers of the Optical, Data and Access segments.

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 intangibles, restructuring and other charges, the intangible asset impairment charge and the impact of equity-based compensation.

Consolidated revenue by segment follows:

	Second Quarter				Six Months
	6/29/12		7/1/11		6/29/12		7/1/11
Optical	$	122.4	$	127.5	$	226.8	$	248.4
Data		77.7		92.2		147.1		203.6
Access		37.3		39.8		73.2		79.9
Services		50.7		57.2		98.9		107.2
Total	$	288.1	$	316.7	$	546.0	$	639.1

Segment profit (loss) and reconciliation to operating earnings (loss) by segment follows:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Optical	$	29.0		$	21.1		$	43.8		$	46.5
Data		5.4			(15.0	)		0.4			(15.8	)
Access		6.0			8.3			12.4			19.4
Services		17.2			21.6			32.4			31.6
Total segment profit	$	57.6		$	36.0		$	89.0			81.7
Sales and marketing expenses		(32.2	)		(40.8	)		(68.6	)		(85.5	)
General and administrative expenses		(19.7	)		(21.0	)		(40.8	)		(44.7	)
Equity-based compensation		(2.2	)		(4.3	)		(4.8	)		(8.0	)
Intangible asset amortization		(1.0	)		(5.1	)		(3.2	)		(10.3	)
Restructuring and other charges		(0.9	)		—			(106.9	)		(1.0	)
Operating earnings (loss)	$	1.6		$	(35.2	)	$	(135.3	)	$	(67.8	)

The segments use many of the same assets. For internal reporting purposes, we do not allocate assets by segment and therefore asset, depreciation and amortization, or capital expenditure by segment information is not provided to our chief operating decision maker.

19

12. Contingencies

Legal Proceedings

We are subject to legal claims and litigation arising in the ordinary course of business, such as employment or intellectual property claims, including the matters described below. We are unable to determine the likelihood of an unfavorable outcome against us and are unable to reasonably estimate a range of loss, if any.

Fujitsu Network Communications Inc. v. Tellabs, Inc. On January 28, 2008, Fujitsu Network Communications, Inc. and Fujitsu Limited filed a complaint in the United States District Court for the Eastern District of Texas against Tellabs in a case captioned Fujitsu Network Communications, Inc. and Fujitsu Limited v. Tellabs, Inc. and Tellabs Operations, Inc., Civil Action No. 6:08-cv-00022-LED. The complaint alleges infringement of U.S. Patent Nos. 5,526,163, 5,521,737, 5,386,418 and 6,487,686, and seeks unspecified damages including enhanced damages, as well as attorney fees and other remedies including injunctive relief. On March 21, 2008, Tellabs filed its answer, defenses and counterclaims in response to the complaint. A trial date had been set for May 10, 2010, in the Eastern District of Texas, however on July 7, 2009, the court granted Tellabs’ motion to transfer and issued an order transferring the action to the United States District Court for the Northern District of Illinois (Case No. 1:09-cv-04530). On September 15, 2009, the Court in the Northern District of Illinois consolidated this action, for discovery purposes only, with the action instituted by Tellabs against Fujitsu in the Northern District of Illinois. On November 4, 2010, the Court dismissed with prejudice Fujitsu’s claim for infringement of Fujitsu’s U.S. Patent No. 6,487,686. In conjunction with the dismissal, Fujitsu signed a covenant not to sue Tellabs for infringement as to any claim of Fujitsu’s U.S. Patent No. 6,487,686, as to any Tellabs products as they currently exist or existed in the past. On March 31, 2011, the Court issued an Order denying a motion by Tellabs for summary judgment of invalidity based on indefiniteness of Fujitsu’s U.S. Patent No. 5,386,418, and granting a motion by Fujitsu for summary judgment for judicial correction of an error in asserted Claim 1 of the same patent as originally issued. The Court issued a Markman ruling on Fujitsu’s U.S. Patent Nos. 5,526,163, 5,521,737 and 5,386,418, as well as patents from the consolidated action, in a Memorandum Opinion and Order dated September 29, 2011. On this same date the Court denied Fujitsu’s Motion for Leave to File First Amended Complaint and granted Tellabs’ motion to disallow the filing of Fujitsu’s First Amended Complaint and Fujitsu’s supplemental infringement contentions. Fujitsu’s motion had sought to amend its allegations of direct infringement with respect to products from Tellabs’ 5500, NGX, 7100 and 6300 product lines with various additional allegations, including allegations of indirect infringement. Fujitsu thereafter filed a further motion to amend its final infringement contentions, and on March 22, 2012, the Court denied Fujitsu’ motion. In turn, on April 30, 2012, Fujitsu Limited filed a new complaint against Tellabs in the Northern District of Illinois (see Civil Action No. 1:12-cv-03229 set forth below), setting forth additional allegations of infringement of the same patents that Fujitsu unsuccessfully sought to add to the present action. A trial date was set for July 16, 2012, however in an Order dated May 22, 2012, the Court reset the schedule so as to commence trial on Fujitsu’s U.S. Patent No. 7,227,681 (Civil Action No. 1:08-cv-3379, described below) on August 27, 2012, while deferring to a later time the setting of any trial date as to the remaining patents at issue between the parties. The parties conducted a non-binding mediation on May 30-31, 2012, which did not result in any settlement, and no other mediation between the parties is presently scheduled. As an ordinary component of expert discovery, each of the parties served an expert report prepared by the party’s respective damages experts, which are subject to a governing Protective Order of confidentiality. Notwithstanding these reports, the two sides remain far apart, and Tellabs cannot estimate the possible loss or range of loss. Tellabs contests any liability and will continue to vigorously defend itself accordingly.

Tellabs Operations, Inc. v. Fujitsu Limited and Fujitsu Network Communications Inc. On June 11, 2008, Tellabs Operations, Inc. filed a complaint in the United States District Court for the Northern District of Illinois against Fujitsu Limited and Fujitsu Network Communications, Inc. in a case captioned Tellabs Operations, Inc. v. Fujitsu Limited and Fujitsu Network Communications, Inc. Civil Action No. 1:08-cv-3379. The complaint alleges infringement of Tellabs Operations, Inc.’s U.S. Patent No. 7,369,772, and seeks unspecified damages including enhanced damages, as well as attorney fees and other remedies including injunctive relief. On September 5, 2008, each of Fujitsu Limited and Fujitsu Network Communications, Inc. served its answer, defenses and counterclaims in response to the complaint. Fujitsu Limited also brought counterclaims against Tellabs, Inc. and Tellabs Operations, Inc. alleging infringement of two U.S. patents, namely U.S. Patent Nos. 5,533,006 and 7,227,681, seeking unspecified damages including enhanced damages, as well as attorney fees and other remedies including injunctive relief. On September 22, 2008, Tellabs Operations, Inc. filed its answer to the counterclaims of Fujitsu Network Communications, Inc., and also filed its counterclaims and reply to counterclaims of Fujitsu Limited. On that same date, Tellabs, Inc. filed its answer and counterclaims against Fujitsu Limited. On September 15, 2009, the Court in the Northern District of Illinois consolidated this action, for discovery purposes only, with the action filed by Fujitsu transferred to the Northern District of Illinois by the Eastern District of Texas. On March 31, 2011, the Court issued an Order granting Tellabs’ motion for summary judgment of invalidity of all claims of Fujitsu’s U.S. Patent No. 5,533,006. The Court issued a Markman ruling on U.S. Patent Nos. 7,369,772 and 7,227,681, as well as patents from the consolidated action, in a Memorandum Opinion and Order dated September 29, 2011. On March 22, 2012, the Court denied

20

Tellabs’ motion to sever and stay Tellabs’ claims involving U.S. Patent No. 7,369,772, in view of Tellabs’ January 12, 2012, filing of an amendment of the claims of the patent for further consideration by the United States Patent and Trademark Office, following a December 12, 2011, decision by the Board of Patent Appeals and Interferences (BPAI) to reverse the Examiner’s decision to not reject the claims of U.S. Patent No. 7,369,772 in an inter partes reexamination of the patent requested by Fujitsu in the Patent Office. On the same date the Court also denied a motion by Fujitsu to amend its final infringement contentions. In turn, on April 30, 2012, Fujitsu Limited filed a new complaint against Tellabs in the Northern District of Illinois (see Civil Action No. 1:12-cv-03229 set forth below), setting forth additional allegations of infringement of the same patents that Fujitsu unsuccessfully sought to add to the present action. A trial date had been set for July 16, 2012, however in an Order dated May 22, 2012, the Court reset the schedule so as to commence trial on Fujitsu’s U.S. Patent No. 7,227,681 on August 27, 2012, while deferring to a later time the setting of any trial date as to the remaining patents at issue between the parties. The parties conducted a non-binding mediation on May 30-31, 2012, which did not result in any settlement, and no other mediation between the parties is presently scheduled. On July 27, 2012, the Court responded to Fujitsu’s further motions related to claim construction of Fujitsu’s U.S. Patent No. 7,227,681, and denied a motion by Tellabs for summary judgment of invalidity of Fujitsu’s U.S. Patent No. 7,227,681. On July 31, 2012, the Court granted Fujitsu’s motion for summary judgment finding no inequitable conduct as to Fujitsu’s U.S. Patent No. 7,227,681. As an ordinary component of expert discovery, each of the parties served an expert report prepared by the party’s respective damages experts, which are subject to a governing Protective Order of confidentiality. Notwithstanding these reports, the two sides remain far apart, and Tellabs cannot estimate the possible loss or range of loss. Tellabs contests any liability and will continue to vigorously defend itself accordingly.

Fujitsu Limited v. Tellabs, Inc. On April 30, 2012, Fujitsu Limited filed a complaint in the United States District Court for the Northern District of Illinois against Tellabs in a case captioned Fujitsu Limited v. Tellabs Operations, Inc., Tellabs, Inc., and Tellabs North America, Inc., Civil Action No. 1:12-cv-03229. The complaint alleges infringement of U.S. Patent Nos. 5,526,163, 5,521,737, 5,386,418 and 7,227,681, the same patents at issue in pending Civil Action Nos. 1:09-cv-04530 and 1:08-cv-3379, and seeks unspecified damages including enhanced damages, as well as attorney fees and other remedies including injunctive relief. The complaint includes allegations of infringement that Fujitsu previously sought unsuccessfully to add to pending Civil Action Nos. 1:09-cv-04530 and 1:08-cv-3379. By the grant of a joint motion by the parties, Civil Action No. 1:12-cv-03229 was reassigned to the calendar of Chief Judge Holderman, who is also presiding over Civil Action Nos. 1:08-cv-03379 and 1:09-cv-04530. On June 4, 2012, the Tellabs defendants filed a motion to dismiss the Complaint pursuant to Fed. R. Civ. P. 12(B)(6), which is pending before the Court.

Telcordia Technologies Inc. v. Tellabs, Inc. On May 4, 2009, Telcordia Technologies, Inc. filed a complaint against Tellabs in the United States District Court for the District of New Jersey in a case captioned Telcordia Technologies Inc. v. Tellabs, Inc., Civil Action No. 2:09-cv-02089. The complaint alleges infringement of U.S. Patent Nos. 4,893,306, 4,835,763 and Re. 36,633, and seeks unspecified damages including enhanced damages, as well as attorney fees and other remedies including injunctive relief. On July 27, 2009, Telcordia filed a first amended complaint adding Tellabs Operations, Inc. and Tellabs North America, Inc. as additional defendants. On September 1, 2009, Tellabs filed answers, defenses and counterclaims in response to the first amended complaint. On December 15, 2009, the Court granted Tellabs’ motion to transfer, which resulted in a transfer of the action to the United States District Court for the District of Delaware (Case No. 1:2009cv00978). The parties are in the early phases of discovery. A trial date has not yet been set.

Cheetah Omni, LLC v. Alcatel-Lucent USA Inc. et al. On July 29, 2011, a complaint was filed in the United States District Court for the Eastern District of Texas, Tyler Division, against Tellabs and several other companies in a case captioned Cheetah Omni LLC v. Alcatel-Lucent USA Inc. et al., Civil Action No. 6:11cv390. The complaint includes allegations of infringement by Tellabs, Inc., Tellabs Operations, Inc., and Tellabs North America, Inc., of U.S. Patent Nos. 6,888,661, 6,847,479, 6,856,459 and 6,940,647, and seeks unspecified damages, as well as interest, costs, disbursements, attorney fees and other remedies including injunctive relief. Tellabs was served with the original complaint on August 31, 2011. Before any response to the original complaint was due, Tellabs was served with an amended complaint on October 14, 2011. On November 8, 2011, the Tellabs entities filed their answers, defenses and counterclaims in response to the amended complaint. The parties are in discovery. A trial date has been set for March 10, 2014.

Internet Machines LLC v. Avnet, Inc., et al. On February 13, 2012, a second amended complaint was filed in the United States District Court for the Eastern District of Texas, Tyler Division, naming Tellabs, Inc. among several defendants in a case captioned Internet Machines LLC v. Avnet, Inc., et al., Civil Action Nos. 6:10-CV-548-MHS and 6:11-CV-250-MHS (Consolidated). The plaintiff thereafter filed a third amended complaint on March 2, 2012. The amended complaints allege infringement of U.S. Patent Nos. 7,454,552, 7,421,532, 7,814,259 and 7,945,722, and seek unspecified damages including enhanced damages, as well as interest, costs, expenses, attorney fees and other remedies including injunctive relief. On March 27, 2012, Tellabs filed its answer, defenses and counterclaims in response to the third amended complaint. The parties are in discovery. A pretrial conference has been set for February 4, 2013.

21

Apart from the matters described above, we are and in the future may be subject to various legal proceedings, claims and litigation arising in the ordinary course of business.

The proceedings described above, including the Fujitsu matters, the Telcordia matter, the Cheetah Omni matter, and the Internet Machines matter, involve costly litigation and may result in diverting management’s time, attention and resources, delaying or halting product shipments or services delivery, requiring us to pay amounts in any damages and/or settlements, requiring us to enter into royalty-bearing licensing arrangements or to obtain substitute technology of lower quality or higher costs, and otherwise imposing obligations or restrictions on us and our business. We may be unsuccessful in any such litigation, despite the time, money, energy and bases for our assertion and/or defense of the matters. We may also be unable, if necessary, to enter into licensing arrangements or to obtain substitute technology on commercially reasonable terms or any terms. Any such settlements or inability to prevail or mitigate any liability or to obtain such licensing arrangements or substitute technology may adversely affect our business, financial condition and operating results. See Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 30, 2011.

In addition to the matters described above, Tellabs has recently settled or is in the process of settling the following claims.

Makor Issues & Rights, Ltd. v. Tellabs, Inc. On June 18, 2002, a class action complaint was filed in the United States District Court of the Northern District of Illinois against Tellabs, Michael Birck (Chairman of the Board of Tellabs) and Richard Notebaert (former CEO, President and Director of Tellabs). Thereafter, eight similar complaints were also filed in the United States District Court of the Northern District of Illinois. All nine of these actions were subsequently consolidated, and on December 3, 2002, a consolidated amended class action complaint was filed against Tellabs, Mr. Birck, Mr. Notebaert, and certain other of our current or former officers and/or directors. The consolidated amended complaint alleged that during the class period (December 11, 2000-June 19, 2001) the defendants violated the federal securities laws by making materially false and misleading statements, including, among other things, allegedly providing revenue forecasts that were false and misleading, misrepresenting demand for our products, and reporting overstated revenue for the fourth quarter 2000 in our financial statements. Further, certain of the individual defendants were alleged to have violated the federal securities laws by trading our securities while allegedly in possession of material, non-public information about us pertaining to these matters. The consolidated amended complaint seeks unspecified restitution, damages and other relief.

On January 17, 2003, Tellabs and the other named defendants filed a motion to dismiss the consolidated amended class action complaint in its entirety. On May 19, 2003, the Court granted our motion and dismissed all counts of the consolidated amended complaint, while affording plaintiffs an opportunity to replead. On July 11, 2003, plaintiffs filed a second consolidated amended class action complaint against Tellabs, Messrs. Birck and Notebaert, and many (although not all) of the other previously named individual defendants, realleging claims similar to those contained in the previously dismissed consolidated amended class action complaint. We filed a second motion to dismiss on August 22, 2003, seeking the dismissal with prejudice of all claims alleged in the second consolidated amended class action complaint. On February 19, 2004, the Court issued an order granting that motion and dismissed the action with prejudice. On March 18, 2004, the plaintiffs filed a Notice of Appeal to the United States Federal Court of Appeal for the Seventh Circuit, appealing the dismissal. The appeal was fully briefed and oral argument was heard on January 21, 2005. On January 25, 2006, the Seventh Circuit issued an opinion affirming in part and reversing in part the judgment of the district court, and remanding for further proceedings. On February 8, 2006, defendants filed with the Seventh Circuit a petition for rehearing with suggestion for rehearing en banc. On April 19, 2006, the Seventh Circuit ordered plaintiffs to file an answer to the petition for rehearing, which was filed by the plaintiffs on May 3, 2006. On July 10, 2006, the Seventh Circuit denied the petition for rehearing with a minor modification to its opinion, and remanded the case to the district court. On September 22, 2006, defendants filed a motion in the district court to dismiss some (but not all) of the remaining claims. On October 3, 2006, the defendants filed with the United States Supreme Court a petition for a writ of certiorari seeking to appeal the Seventh Circuit’s decision. On January 5, 2007, the defendants’ petition was granted. The United States Supreme Court heard oral arguments on March 28, 2007. On June 21, 2007, the United States Supreme Court vacated the Seventh Circuit’s judgment and remanded the case for further proceedings. On November 1, 2007, the Seventh Circuit heard oral arguments for the remanded case. On January 17, 2008, the Seventh Circuit issued an opinion adhering to its earlier opinion reversing in part the judgment of the district court, and remanded the case to the district court for further proceedings. On February 24, 2009, the district court granted plaintiffs’ motion for class certification. On August 13, 2010, the Court granted in large part Tellabs’ motion for summary judgment. Subsequently, the parties agreed to settle the lawsuit and on July 27, 2011, the Court granted the plaintiffs’ motion for final approval of class action settlement and dismissed the lawsuit without prejudice. The lawsuit was dismissed with prejudice on June 15, 2012. All settlement amounts were paid by Tellabs’ insurers.

22

13. Stock Repurchase Programs

We repurchase outstanding common stock under two programs authorized by our Board of Directors, the Rule 10b5-1 program and a repurchase program of up to $600 million of outstanding common stock. In addition, we purchase shares to cover withholding taxes on shares issued under employee stock plans.

Under the 10b5-1 program, we intend to continue to use cash generated by employee stock option exercises (other than those of Company officers and board members) to repurchase stock. We purchased four thousand shares for $16 thousand in the second quarter of 2012, and eight thousand shares for $31 thousand in the first six months of 2012 under this program.

As of June 29, 2012, we purchased 56.6 million shares of our common stock under the $600 million repurchase program at a total cost of $375.4 million, leaving $224.6 million available to be purchased under this program. We did not purchase any shares under this program in the second quarter and first half of 2012. We may change our repurchase activity and we provide no assurance that we will continue our repurchase activity in the future.

In addition, we purchased 0.3 million shares for $1.2 million in the second quarter of 2012, and 0.8 million shares for $3.0 million in the first six months of 2012 to cover minimum withholding taxes on shares issued under employee stock plans.

We record repurchased shares as Treasury stock.

14. Net Loss Per Share

The following table sets forth the computation of net loss per share:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Numerator:
Net loss	$	(4.7	)	$	(29.3	)	$	(144.5	)	$	(53.4	)
Denominator:
Denominator for basic net loss per share – weighted average shares outstanding		367.1			364.6			366.4			363.8
Effect of dilutive securities:
Employee stock options and restricted and performance stock awards		—			—			—			—
Denominator for diluted net loss per share – adjusted weighted average shares outstanding and assumed conversions		367.1			364.6			366.4			363.8
Net loss per share, basic	$	(0.01	)	$	(0.08	)	$	(0.39	)	$	(0.15	)
Net loss per share, diluted1	$	(0.01	)	$	(0.08	)	$	(0.39	)	$	(0.15	)

¹ Dilutive securities are not included in the computation of diluted earnings per share when a company is in a loss position. As such, the numerator and the denominator used in computing both basic and diluted net loss per share for the second quarter and first six months of 2012 and the second quarter and first six months of 2011 are the same. Diluted weighted average shares outstanding were 368.1 million in the second quarter of 2012, 368.2 million in the first six months of 2012, and 365.9 million in the second quarter and the first six months of 2011.

23

Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition

Introduction and Overview of Business

Tellabs designs, develops and supports telecommunications networking products. We generate revenue principally through the sale of these products to communications service providers worldwide as both stand-alone network elements and as elements of solutions integrated under a common network management system. We also generate revenue by providing services to our customers.

Prior to the second quarter of 2012, Tellabs reported results of operations for three reporting segments: Broadband, Transport, and Services. As a result of strategy changes and internal reorganizations at the beginning of the second quarter of 2012, Tellabs is focusing on the growth markets of Packet Optical (primarily our optical portfolio) and Mobile Backhaul (primarily our data portfolio) in addition to the on-going Access and Services businesses. With these strategic adjustments, we changed our reporting segments accordingly. Therefore, beginning with the second quarter of 2012, we have reported in the following four segments: Optical, Data, Access and Services (the Services segment is unchanged).

Optical segment products are primarily used to manage large volumes of telecommunication traffic in metro areas. The Optical segment includes the Tellabs^® 7000 series of optical transport systems, as well as the Tellabs^® 5000 and 6300 series of transport systems equipped with optical interfaces.

Data segment products are primarily used in mobile backhaul applications, and for business services and various edge routing applications. The Data segment includes the packet-switched Tellabs^® 8600 Managed Edge System, the Tellabs^® 8800 Multiservice Router Series, and Tellabs^® 9200 Content-Aware Router Series, as well as the Tellabs^® 8100 Managed Access System.

Access segment products are primarily used to enable service providers to bundle Internet, video, and voice over high-speed fiber-based networks and in Optical LAN applications. The Access segment includes the Tellabs^® 1000 and 1100 Multi-service Access systems, and the Tellabs^® 1600 Optical Network Terminals.

The Services segment includes services that support all phases of the network: planning, building and operating. The Services segment includes deployment, support, training and professional services for customers of the Optical, Data and Access segments.

Tellabs operates in a dynamic industry. Customer consolidation has resulted in increased pricing pressure. In addition, customer spending is pressured and competition is heightened on a global basis. Some equipment suppliers have also consolidated. Heightened competition by these suppliers has resulted in increased pricing pressure for Tellabs and some of its direct competitors.

Within this backdrop, we continue to transform the Company with new products and services. The Company’s strategy is to focus on a product portfolio that addresses the global markets. We expect that executing this strategy of directing resources to create innovative products and services will help customers succeed.

RESULTS OF OPERATIONS

Net loss in the second quarter of 2012 was $4.7 million or $0.01 per share (basic and diluted), compared with net loss of $29.3 million or $0.08 per share (basic and diluted) in the second quarter of 2011. For the first six months of 2012, net loss was $144.5 million or $0.39 per share (basic and diluted), compared with net loss of $53.4 million or $0.15 per share (basic and diluted) in the first six months of 2011. Lower operating expenses and increased gross profit margins reduced the net loss in the second quarter of 2012, compared with the year-ago period, despite lower overall revenue. The net loss in the first six months of 2012 was driven primarily by lower overall revenue and $106.9 million in restructuring and other charges incurred in the first six months of 2012.

24

Revenue (in millions)

	Second Quarter							Six Months
	2012		2011		Change			2012		2011		Change
Products	$	237.4	$	259.5		(8.5	)%	$	447.1	$	531.9		(15.9	)%
Services		50.7		57.2		(11.4	)%		98.9		107.2		(7.7	)%
Total revenue	$	288.1	$	316.7		(9.0	)%	$	546.0	$	639.1		(14.6	)%

Second quarter 2012 compared with second quarter 2011

Total revenue was $288.1 million, compared with $316.7 million, as revenue declined in each operating segment. On a geographic basis, revenue from customers outside North America was $150.2 million (or 52% of total revenue), up 7.7% from $139.5 million (or 44% of total revenue), as revenue increased in all geographic regions outside North America. Revenue from customers in North America (United States and Canada) was $137.9 million (or 48% of total revenue), compared with $177.2 million (or 56% of total revenue).

First six months of 2012 compared with first six months of 2011

Total revenue was $546.0 million, compared with $639.1 million, as revenue declined in each operating segment. On a geographic basis, revenue from customers outside North America was $281.5 million (or 52% of total revenue) compared with $286.8 million (or 45% of total revenue) as increased revenue in the Latin America Caribbean (LAC) region was offset by lower revenue in the Europe, Middle East, Africa (EMEA) region and the Asia Pacific (APAC) region. Revenue from customers in North America was $264.5 million (or 48% of total revenue), compared with $352.3 million (or 55% of total revenue).

Gross Margin

	Second Quarter									Six Months
	2012			2011			% Point Change			2012			2011			% Point Change
Products		41.0	%		36.3	%		4.7			39.9	%		38.9	%		1.0
Services		33.1	%		36.7	%		(3.6	)		31.9	%		28.4	%		3.5
Consolidated		39.6	%		36.4	%		3.2			38.4	%		37.2	%		1.2

Product gross margins, driven by margin improvements within the Optical segment and lower overhead and support costs that were partially offset by lower overall revenue, improved in both periods of 2012. Services gross margins, driven by an adjustment for business taxes on sales transactions involving deployment services in a foreign jurisdiction, declined in the second quarter of 2012 compared with the year-ago period. Services gross margins, driven by lower costs, improved in the first six months of 2012 compared with the year-ago period.

Operating Expenses (in millions)

	Second Quarter							Percent of Revenue
	2012		2011		Change			2012			2011
Research and development	$	58.8	$	83.5	$	(24.7	)		20.4	%		26.4	%
Sales and marketing		32.2		40.8		(8.6	)		11.2	%		12.9	%
General and administrative		19.7		21.0		(1.3	)		6.8	%		6.6	%
Subtotal		110.7		145.3		(34.6	)		38.4	%		45.9	%
Intangible asset amortization		1.0		5.1		(4.1	)
Restructuring and other charges		0.9		—		0.9
Total operating expenses	$	112.6	$	150.4	$	(37.8	)

25

	Six Months							Percent of Revenue
	2012		2011		Change			2012			2011
Research and development	$	125.7	$	163.8	$	(38.1	)		23.0	%		25.6	%
Sales and marketing		68.6		85.5		(16.9	)		12.6	%		13.4	%
General and administrative		40.8		44.7		(3.9	)		7.5	%		7.0	%
Subtotal		235.1		294.0		(58.9	)		43.1	%		46.0	%
Intangible asset amortization		3.2		10.3		(7.1	)
Restructuring and other charges		106.9		1.0		105.9
Total operating expenses	$	345.2	$	305.3	$	39.9

In the second quarter of 2012, operating expenses decreased, compared with the year-ago period, due primarily to lower research and development and sales and marketing expenses related to stopping new development of the Tellabs^® SMARTCORE 9100 series for mobile packet core.

For the first six months of 2012, lower research and development, sales and marketing and general and administrative expenses were offset primarily by $106.9 million in restructuring and other charges incurred in the first half of 2012. Restructuring and other charges in the second quarter of 2012 are due to facility- and asset-related charges ($2.9 million) offset by reductions for severance ($2.0 million). For the first six months of 2012, restructuring and other charges are due to facility- and asset-related charges ($37.1 million), severance ($22.1 million) and accelerated amortization for abandoned intangible assets ($47.7 million) related to the mobile packet-core technology.

Other Income (in millions)

	Second Quarter									Six Months
	2012			2011			Change			2012			2011			Change
Interest income, net	$	1.6		$	3.1		$	(1.5	)	$	3.4		$	6.4		$	(3.0	)
Other expense, net		(1.1	)		(1.1	)		—			(2.1	)		(1.7	)		(0.4	)
Total other income	$	0.5		$	2.0		$	(1.5	)	$	1.3		$	4.7		$	(3.4	)

Interest income was down in the second quarter and first half of 2012, compared with the year-ago periods, due to lower interest rates and lower investment balances.

Income Taxes

In the second quarter of 2012, we reported tax expense of $6.8 million, compared with a benefit of $3.9 million in the second quarter of 2011. For the first six months of 2012, we reported tax expense of $10.5 million, compared with a tax benefit of $9.7 million for the first six months of 2011. While we were able to partially recognize tax benefits on domestic losses in 2011, we established a valuation allowance in 2011 for the remaining domestic losses. We did not recognize tax benefits on domestic losses in 2012 as it is more likely than not that they will not be realized. As a result, tax expenses for the second quarter and the first six months of 2012 primarily reflect tax on income from foreign operations. Additionally, tax benefits of $2.8 million and $6.2 million were recognized in the second quarter and first six months of 2011, respectively, from the settlement of audits or expiration of statute of limitations that are not reflected in tax expense in 2012.

Segments

We operate in four business segments: Optical, Data, Access and Services.

Segment Revenue (in millions)

	Second Quarter							Six Months
	2012		2011		Change			2012		2011		Change
Optical	$	122.4	$	127.5		(4.0	)%	$	226.8	$	248.4		(8.7	)%
Data		77.7		92.2		(15.7	)%		147.1		203.6		(27.8	)%
Access		37.3		39.8		(6.3	)%		73.2		79.9		(8.4	)%
Services		50.7		57.2		(11.4	)%		98.9		107.2		(7.7	)%
Total revenue	$	288.1	$	316.7		(9.0	)%	$	546.0	$	639.1		(14.6	)%

26

Segment Profit (Loss)* (in millions)

	Second Quarter								Six Months
	2012		2011			Change			2012		2011			Change
Optical	$	29.0	$	21.1			37.4	%	$	43.8	$	46.5			(5.8	)%
Data		5.4		(15.0	)		N/M			0.4		(15.8	)		N/M
Access		6.0		8.3			(27.7	)%		12.4		19.4			(36.1	)%
Services		17.2		21.6			(20.4	)%		32.4		31.6			2.5	%
Total segment profit	$	57.6	$	36.0			60.0	%	$	89.0	$	81.7			8.9	%

* 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 intangibles, restructuring and other charges, and the impact of equity-based compensation.

Second quarter 2012 compared with second quarter 2011

Optical

Revenue from the Optical segment was $122.4 million, compared with $127.5 million. Within this segment, increased revenue from the Tellabs^® 7100 series optical transport series and the Tellabs^® 6300 managed transport systems was more than offset by lower revenue from the Tellabs^® 5000 digital cross-connect systems. Optical segment profit, driven primarily by increased profitability from the Tellabs 7100 optical networking systems and the Tellabs 6300 managed transport systems and lower costs, was $29.0 million, up 37.4% from $21.1 million.

Data

Revenue from the Data segment was $77.7 million, compared with $92.2 million, primarily on lower revenue from the Tellabs 8600 managed edge systems and the Tellabs^® 8800 multiservice router series. Data segment profit was $5.4 million, compared with a loss of $15.0 million. The return to segment profitability, despite the lower level of revenue, was driven primarily by lower research and development expenses related to stopping development of the Tellabs SMARTCORE 9100 series.

Access

Revenue from the Access segment was $37.3 million, compared with $39.8 million. Within this segment, increased revenue from the Tellabs^® 1600 single-family Optical Network Terminals (ONTs) was more than offset by lower revenue from the Tellabs^® 1000 and 1100 access systems. Access segment profit, driven primarily by lower revenue from the Tellabs 1000 and 1100 access systems, was $6.0 million, compared with $8.3 million.

Services

Revenue from the Services segment was $50.7 million, compared with $57.2 million. The decline in segment revenue was driven primarily by lower revenue from deployment services, including the adjustment for business taxes mentioned earlier, and lower revenue from support agreements. Services segment profit, driven primarily by the lower overall level of revenue, was $17.2 million, compared with $21.6 million.

First six months of 2012 compared with first six months of 2011

Optical

Revenue from the Optical segment was $226.8 million, compared with $248.4 million. Within this segment, increased revenue from the Tellabs 7100 optical transport systems and the Tellabs 6300 managed transport systems was more than offset by lower revenue from the Tellabs 5000 digital cross-connect systems. Optical segment profit was $43.8 million, compared with $46.5 million. The decline in segment profit was driven primarily by lower revenue from the Tellabs 5000 digital cross-connect systems, partially offset by improved profitability from the Tellabs 7100 optical transport systems.

Data

Revenue from the Data segment was $147.1 million, compared with $203.6 million, primarily on lower revenue from the Tellabs 8600 managed edge systems and the Tellabs 8800 multiservice router series. Data segment profit was $0.4 million, compared with a loss of $15.8 million. The return to segment profitability, despite the lower level of revenue, was driven primarily by lower research and development expenses related to stopping new development of the Tellabs SMARTCORE 9100 series.

27

Access

Revenue from the Access segment was $73.2 million, compared with $79.9 million. Within this segment, increased revenue from the Tellabs 1600 single-family ONTs was more than offset by lower revenue from the Tellabs 1000 and 1100 access systems. Access segment profit, driven primarily by the lower level of access-system revenue, was $12.4 million, compared with $19.4 million.

Services

Revenue from the Services segment, driven primarily by lower deployment services revenue, including adjustment mentioned earlier, was $98.9 million, compared with $107.2 million. Services segment profit was $32.4 million, up 2.5% from $31.6 million. The increase in segment profit was driven primarily by improved profitability from support agreements and professional services.

Financial Condition, Liquidity & Capital Resources

Our principal source of liquidity remained cash, cash equivalents and marketable securities of $937.7 million as of June 29, 2012, which decreased by $38.9 million since year-end 2011. Of the total cash, cash equivalents and marketable securities, as of June 29, 2012, $385.2 million was held in subsidiaries outside the United States and is deemed to be permanently reinvested. We do not currently foresee a need to repatriate funds from our non-U.S. subsidiaries. We could elect to repatriate funds held in one or more foreign jurisdictions. If applicable, withholding taxes could reduce the net amount repatriated. During the quarter, we generated $31.9 million in cash from operations, slightly increasing cash, cash equivalents and marketable securities. Cash used for operating activities during the first six months of 2012 amounted to $5.6 million.

During the second quarter of 2012, we distributed $7.3 million to our stockholders through our quarterly cash dividend. We also repurchased four thousand shares of common stock at a cost of $16 thousand under the 10b5-1 plan. During the first half of 2012, we distributed $14.6 million to our stockholders through a cash dividend. We also repurchased eight thousand shares of common stock at a cost of $31 thousand under the 10b5-1 plan.

We provide no assurance as to a future declaration or payment of a cash dividend nor do we provide future assurance of a repurchase of common stock.

We believe that our investments are highly liquid instruments. We may rebalance the portfolio from time to time, which may affect the duration, credit structure, liquidity and future income of investments.

Based on historical performance and current forecasts, we believe the company’s cash, cash equivalents and marketable securities will satisfy working capital needs, capital expenditures and other liquidity requirements related to existing operations for the next 12 months. Future available sources of working capital, including cash, cash equivalents, and marketable securities, cash generated from future operations, short-term or long-term financing, equity offerings or any combination of these sources, should allow us to meet our long-term liquidity needs. Current policy is to use cash, cash equivalents and marketable securities to fund business operations, to expand business, potentially through acquisitions, to repurchase common stock and to pay a cash dividend.

GAAP Sequential Comparisons

We believe that comparing some quarterly Statement of Operations data on a sequential basis provides important supplemental information to management and investors regarding financial and business trends relating to our financial results. Commonly compared sequential comparisons of GAAP data include total revenue, geographic revenue split, and segment revenue and profit.

Second quarter 2012 compared with first quarter 2012

Total revenue, was $288.1 million, up 11.7% from $257.9 million as revenue increased in all four operating segments. Revenue from customers outside North America was $150.2 million (or 52% of total revenue), up 14.4% from $131.3 million (or 51% of total revenue) as increased revenue in the EMEA region and the APAC region more than offset lower revenue in the LAC region. Revenue from customers in North America was $137.9 million (or 48% of total revenue), up 8.9% from $126.6 million (or 49% of total revenue).

Optical

Revenue from the Optical segment was $122.4 million, up 17.2% from $104.4 million. Within this segment, increased revenue from the Tellabs 7100 series optical transport systems offset lower revenue from the Tellabs 6300 managed transport systems and the Tellabs 5000 digital cross-connect systems. Optical segment profit was $29.0 million, up 95.9% from $14.8 million. The increase in segment profit was driven primarily by increased profitability from the Tellabs 7100 series optical transport systems.

28

Data

Revenue from the Data segment was $77.7 million, up 12.0% from $69.4 million. Increased revenue from the Tellabs 8600 managed edge systems more than offset lower revenue from the Tellabs 8100 managed access systems and the Tellabs 8800 multiservice router series. Data segment profit was $5.4 million, compared with a loss of $5.0 million. The return to segment profit was driven primarily by lower research and development expenses related to stopping development of the Tellabs SMARTCORE 9100 series and increased revenue from the Tellabs 8600 series managed edge systems.

Access

Revenue from the Access segment was $37.3 million, up 3.9% from $35.9 million. Within this segment, increased revenue from the Tellabs 1000 and 1100 access systems more than offset lower revenue from the Tellabs 1600 single-family ONTs. Access segment profit was essentially flat at $6.0 million, compared with $6.4 million.

Services

Revenue from the Services segment was $50.7 million, up 5.2% from $48.2 million. The increase in segment revenue was driven primarily by increased revenue from support agreements. Services segment profit, driven primarily by the increased level of support agreement revenue, was $17.2 million, up 13.2% from $15.2 million.

Non-GAAP Financial Measures and Comparisons

We believe that comparing some quarterly non-GAAP financial measures on a sequential basis provides important supplemental information to management and investors regarding financial and business trends relating to our financial results. Commonly compared non-GAAP financial data includes gross profit as a percentage of revenue, operating expenses, operating earnings, net earnings and net earnings per share. A complete reconciliation between non-GAAP financial measures and the GAAP financial measures, along with an explanation of why we believe non-GAAP measures to be of value to management and investors, is contained in the Reconciliation of Non-GAAP Adjustments section of pages 30 through 33.

Second quarter 2012 compared with first quarter 2012

Non-GAAP gross profit margin increased to 39.9%, compared with 37.4%. The sequential increase was driven primarily by favorable product and customer mix shifts in the Optical segment and higher Data-segment revenue.

Non-GAAP operating expenses were $106.4 million, down from $119.7 million, on lower research and development, sales and marketing, and general and administrative expenses related to stopping development of the Tellabs SMARTCORE 9100 series.

Non-GAAP operating earnings, driven by lower operating expenses and improved gross profit margin, were $8.5 million, compared with a loss of $23.2 million.

Driven primarily by higher revenue, lower operating expenses and improved gross profit margin, non-GAAP net earnings were $6.2 million or $0.02 per share (basic and diluted), compared with a net loss of $15.3 million or $0.04 per share (basic and diluted).

29

TELLABS, INC.

RECONCILIATION OF NON-GAAP ADJUSTMENTS (1)

(Unaudited)

	Second Quarter 2012									Second Quarter 2011
In millions, except per-share data	As Reported			Adjustments			Non-GAAP			As Reported			Adjustments			Non-GAAP
Revenue
Products	$	237.4		$	—		$	237.4		$	259.5		$	—		$	259.5
Services		50.7			—			50.7			57.2			—			57.2
Total revenue		288.1			—			288.1			316.7			—			316.7
Cost of Revenue
Products (a)		140.0			(0.3	)		139.7			165.3			(0.5	)		164.8
Services (a)		33.9			(0.4	)		33.5			36.2			(0.6	)		35.6
Total cost of revenue		173.9			(0.7	)		173.2			201.5			(1.1	)		200.4
Gross Profit		114.2			0.7			114.9			115.2			1.1			116.3
Gross profit as a percentage of revenue		39.6	%		0.3	%		39.9	%		36.4	%		0.3	%		36.7	%
Gross profit as a percentage of revenue – products		41.0	%		0.2	%		41.2	%		36.3	%		0.2	%		36.5	%
Gross profit as a percentage of revenue – services		33.1	%		0.8	%		33.9	%		36.7	%		1.1	%		37.8	%
Operating Expenses
Research and development (a)		58.8			(1.5	)		57.3			83.5			(3.2	)		80.3
Sales and marketing (a)		32.2			(0.8	)		31.4			40.8			(1.3	)		39.5
General and administrative (a)		19.7			(2.0	)		17.7			21.0			(2.5	)		18.5
Intangible asset amortization (b)		1.0			(1.0	)		—			5.1			(5.1	)		—
Restructuring and other charges (c)		0.9			(0.9	)		—			—			—			—
Total operating expenses		112.6			(6.2	)		106.4			150.4			(12.1	)		138.3
Operating Earnings (Loss)		1.6			6.9			8.5			(35.2	)		13.2			(22.0	)
Operating earnings (loss) as a percentage of revenue		0.6	%		2.4	%		3.0	%		-11.1	%		4.2	%		-6.9	%
Other Income
Interest income, net		1.6			—			1.6			3.1			—			3.1
Other expense, net		(1.1	)		—			(1.1	)		(1.1	)		—			(1.1	)
Total other income		0.5			—			0.5			2.0			—			2.0
Earnings (Loss) Before Income Tax		2.1			6.9			9.0			(33.2	)		13.2			(20.0	)
Income tax (expense) benefit (e)		(6.8	)		4.0			(2.8	)		3.9			2.5			6.4
Net (Loss) Earnings	$	(4.7	)	$	10.9		$	6.2		$	(29.3	)	$	15.7		$	(13.6	)
Weighted Average Shares Outstanding
Basic		367.1						367.1			364.6						364.6
Diluted		367.1						368.1			364.6						364.6
Net (Loss) Earnings Per Share
Basic	$	(0.01	)	$	0.03		$	0.02		$	(0.08	)	$	0.04		$	(0.04	)
Diluted	$	(0.01	)	$	0.03		$	0.02		$	(0.08	)	$	0.04		$	(0.04	)

(1) Reconciliation of non-GAAP Adjustments

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (GAAP), Tellabs, Inc. has provided non-GAAP financial measures as additional information for its operating results. These measures have not been prepared in accordance with GAAP and may be different from measures used by other companies. Whenever we use non-GAAP financial measures, we designate these measures, which exclude the effect of certain charges, as “adjusted” and provide a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. The non-GAAP financial measures eliminate certain items of expenses and losses from cost of revenue, operating expenses, other income and expenses, and income taxes. Management believes that this presentation allows investors to better evaluate the current operational and financial performance of our business and facilitate comparisons to historical results of operations. Management uses these measures for reviewing our financial results and for business planning and performance management. Management discloses this information publicly along with a reconciliation of the comparable GAAP amounts, to provide access to the detail and general nature of adjustments made to GAAP financial results. While some of these excluded items have been periodically reported in our statements of operations, including significant restructuring and other charges, their occurrence in future periods depends on future business and economic factors, among other evaluation criteria, and the occurrence of such events and factors may frequently be beyond the control of management.

30

TELLABS, INC.

RECONCILIATION OF NON-GAAP ADJUSTMENTS (1)

(Unaudited)

	Six Months 2012									Six Months 2011
In millions, except per-share data	As Reported			Adjustments			Non-GAAP			As Reported			Adjustments			Non-GAAP
Revenue
Products	$	447.1		$	—		$	447.1		$	531.9		$	—		$	531.9
Services		98.9			—			98.9			107.2			—			107.2
Total revenue		546.0			—			546.0			639.1			—			639.1
Cost of Revenue
Products (a)		268.7			(0.6	)		268.1			324.8			(1.0	)		323.8
Services (a)		67.4			(0.9	)		66.5			76.8			(1.2	)		75.6
Total cost of revenue		336.1			(1.5	)		334.6			401.6			(2.2	)		399.4
Gross Profit		209.9			1.5			211.4			237.5			2.2			239.7
Gross profit as a percentage of revenue		38.4	%		0.3	%		38.7	%		37.2	%		0.3	%		37.5	%
Gross profit as a percentage of revenue – products		39.9	%		0.1	%		40.0	%		38.9	%		0.2	%		39.1	%
Gross profit as a percentage of revenue – services		31.9	%		0.9	%		32.8	%		28.4	%		1.1	%		29.5	%
Operating Expenses
Research and development (a)		125.7			(3.3	)		122.4			163.8			(5.8	)		158.0
Sales and marketing (a)		68.6			(1.7	)		66.9			85.5			(2.6	)		82.9
General and administrative (a)		40.8			(4.0	)		36.8			44.7			(5.2	)		39.5
Intangible asset amortization (b)		3.2			(3.2	)		—			10.3			(10.3	)		—
Restructuring and other charges (c), (d)		106.9			(106.9	)		—			1.0			(1.0	)		—
Total operating expenses		345.2			(119.1	)		226.1			305.3			(24.9	)		280.4
Operating (Loss) Earnings		(135.3	)		120.6			(14.7	)		(67.8	)		27.1			(40.7	)
Operating (loss) earnings as a percentage of revenue		-24.8	%		22.1	%		-2.7	%		-10.6	%		4.2	%		-6.4	%
Other Income
Interest income, net		3.4			—			3.4			6.4			—			6.4
Other expense, net		(2.1	)		—			(2.1	)		(1.7	)		—			(1.7	)
Total other income		1.3			—			1.3			4.7			—			4.7
(Loss) Earnings Before Income Tax		(134.0	)		120.6			(13.4	)		(63.1	)		27.1			(36.0	)
Income tax (expense) benefit (e)		(10.5	)		14.8			4.3			9.7			1.8			11.5
Net (Loss) Earnings	$	(144.5	)	$	135.4		$	(9.1	)	$	(53.4	)	$	28.9		$	(24.5	)
Weighted Average Shares Outstanding
Basic		366.4						366.4			363.8						363.8
Diluted		366.4						366.4			363.8						363.8
Net (Loss) Earnings Per Share
Basic	$	(0.39	)	$	0.37		$	(0.02	)	$	(0.15	)	$	0.08		$	(0.07	)
Diluted	$	(0.39	)	$	0.37		$	(0.02	)	$	(0.15	)	$	0.08		$	(0.07	)

(1) Reconciliation of non-GAAP Adjustments

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (GAAP), Tellabs, Inc. has provided non-GAAP financial measures as additional information for its operating results. These measures have not been prepared in accordance with GAAP and may be different from measures used by other companies. Whenever we use non-GAAP financial measures, we designate these measures, which exclude the effect of certain charges, as “adjusted” and provide a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. The non-GAAP financial measures eliminate certain items of expenses and losses from cost of revenue, operating expenses, other income and expenses, and income taxes. Management believes that this presentation allows investors to better evaluate the current operational and financial performance of our business and facilitate comparisons to historical results of operations. Management uses these measures for reviewing our financial results and for business planning and performance management. Management discloses this information publicly along with a reconciliation of the comparable GAAP amounts, to provide access to the detail and general nature of adjustments made to GAAP financial results. While some of these excluded items have been periodically reported in our statements of operations, including significant restructuring and other charges, their occurrence in future periods depends on future business and economic factors, among other evaluation criteria, and the occurrence of such events and factors may frequently be beyond the control of management.

31

TELLABS, INC.

RECONCILIATION OF NON-GAAP ADJUSTMENTS (1)

(Unaudited)

	Second Quarter 2012									First Quarter 2012
In millions, except per-share data	As Reported			Adjustments			Non-GAAP			As Reported			Adjustments			Non-GAAP
Revenue
Products	$	237.4		$	—		$	237.4		$	209.7		$	—		$	209.7
Services		50.7			—			50.7			48.2			—			48.2
Total revenue		288.1			—			288.1			257.9			—			257.9
Cost of Revenue
Products (a)		140.0			(0.3	)		139.7			128.7			(0.3	)		128.4
Services (a)		33.9			(0.4	)		33.5			33.5			(0.5	)		33.0
Total cost of revenue		173.9			(0.7	)		173.2			162.2			(0.8	)		161.4
Gross Profit		114.2			0.7			114.9			95.7			0.8			96.5
Gross profit as a percentage of revenue		39.6	%		0.3	%		39.9	%		37.1	%		0.3	%		37.4	%
Gross profit as a percentage of revenue – products		41.0	%		0.2	%		41.2	%		38.6	%		0.2	%		38.8	%
Gross profit as a percentage of revenue – services		33.1	%		0.8	%		33.9	%		30.5	%		1.0	%		31.5	%
Operating Expenses
Research and development (a)		58.8			(1.5	)		57.3			66.9			(1.8	)		65.1
Sales and marketing (a)		32.2			(0.8	)		31.4			36.4			(0.9	)		35.5
General and administrative (a)		19.7			(2.0	)		17.7			21.1			(2.0	)		19.1
Intangible asset amortization (b)		1.0			(1.0	)		—			2.2			(2.2	)		—
Restructuring and other charges (c), (d)		0.9			(0.9	)		—			106.0			(106.0	)		—
Total operating expenses		112.6			(6.2	)		106.4			232.6			(112.9	)		119.7
Operating Earnings (Loss)		1.6			6.9			8.5			(136.9	)		113.7			(23.2	)
Operating earnings (loss) as a percentage of revenue		0.6	%		2.4	%		3.0	%		-53.1	%		44.1	%		-9.0	%
Other Income
Interest income, net		1.6			—			1.6			1.8			—			1.8
Other expense, net		(1.1	)		—			(1.1	)		(1.0	)		—			(1.0	)
Total other income		0.5			—			0.5			0.8			—			0.8
Earnings (Loss) Before Income Tax		2.1			6.9			9.0			(136.1	)		113.7			(22.4	)
Income tax (expense) benefit (e)		(6.8	)		4.0			(2.8	)		(3.7	)		10.8			7.1
Net (Loss) Earnings	$	(4.7	)	$	10.9		$	6.2		$	(139.8	)	$	124.5		$	(15.3	)
Weighted Average Shares Outstanding
Basic		367.1						367.1			365.7						365.7
Diluted		367.1						368.1			365.7						365.7
Net (Loss) Earnings Per Share
Basic	$	(0.01	)	$	0.03		$	0.02		$	(0.38	)	$	0.34		$	(0.04	)
Diluted	$	(0.01	)	$	0.03		$	0.02		$	(0.38	)	$	0.34		$	(0.04	)

(1) Reconciliation of non-GAAP Adjustments

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (GAAP), Tellabs, Inc. has provided non-GAAP financial measures as additional information for its operating results. These measures have not been prepared in accordance with GAAP and may be different from measures used by other companies. Whenever we use non-GAAP financial measures, we designate these measures, which exclude the effect of certain charges, as “adjusted” and provide a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. The non-GAAP financial measures eliminate certain items of expenses and losses from cost of revenue, operating expenses, other income and expenses, and income taxes. Management believes that this presentation allows investors to better evaluate the current operational and financial performance of our business and facilitate comparisons to historical results of operations. Management uses these measures for reviewing our financial results and for business planning and performance management. Management discloses this information publicly along with a reconciliation of the comparable GAAP amounts, to provide access to the detail and general nature of adjustments made to GAAP financial results. While some of these excluded items have been periodically reported in our statements of operations, including significant restructuring and other charges, their occurrence in future periods depends on future business and economic factors, among other evaluation criteria, and the occurrence of such events and factors may frequently be beyond the control of management.

32

Footnotes to reconciliation of non-GAAP adjustments:

(a) The adjustments to cost of revenue, research and development, sales and marketing, and general and administrative expenses reflect equity-based compensation expense. We exclude these measures when reviewing financial results and for business planning and performance management. We believe that the exclusion of equity-based compensation expense allows for more accurate comparisons of operating results to our peer companies. In addition, we believe this non-cash GAAP measure is not indicative of our fundamental operating performance.

(b) We exclude amortization of intangible assets resulting from acquisitions to evaluate our continuing operational performance. The amortization of purchased intangible assets associated with acquisitions results in recording expense in our GAAP financial statements that were already expensed by the acquired company before the acquisition and for which we have not expended cash. We believe this non-cash GAAP measure is not indicative of our core operating performance. Accordingly, we analyze the performance of operations without regard to such expenses.

(c) We exclude restructuring and other charges because we believe that they occur outside of the ordinary course of and are not related directly to the underlying performance of our fundamental business operations. We exclude these measures when reviewing financial results and for business planning and performance management. Although these events are reflected in our GAAP financials, these transactions may limit the comparability of our fundamental operations with prior and future periods.

(d) In conjunction with the January 30, 2012 Restructuring Plan, we recorded $47.7 million of accelerated amortization for abandoned intangible assets in the first quarter of 2012 related to the mobile packet core technology. We believe this non-cash GAAP measure is not indicative of our core operating performance.

(e) We calculate a separate tax expense and effective tax rate for GAAP and for non-GAAP purposes. For non-GAAP purposes, we use a 32% effective tax rate which represents the projected, long term effective tax rate on non-GAAP pretax income.

33

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies

There were no material changes in our critical accounting policies during the quarter.

Outlook

We expect third-quarter 2012 revenue to be in a range between $260 million and $290 million. We expect non-GAAP gross margin to be 40%, plus or minus a point or two, depending on product mix. We expect third-quarter non-GAAP operating expense to be flat compared with the second quarter. While we are cautious concerning customer spending in North America and around the world, as well as the overall economic situation in Europe, we expect to remain profitable on a non-GAAP basis in the third quarter and generate positive cash from operations.

Forward-Looking Statements

This Management’s Discussion and Analysis and other sections of this Form 10-Q, including the statements under the caption “Outlook”, contain 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 current and available information at the time the document was prepared. These forward-looking statements include, but are not limited to, statements regarding future events, plans, goals, objectives and expectations. The words “anticipate,” “believe,” “estimate,” “target,” “expect,” “predict,” “plan,” “possible,” “project,” “intend,” “likely,” “will,” “should,” “could,” “may,” “foreseeable,” “would” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause our actual performance or achievements to be materially different from any future results, performance or achievements expressed or implied by those statements. Important factors that could cause our actual results to differ materially from those in forward-looking statements include, but are not limited to: successful expansion into adjacent markets with new and existing products and platforms; new product acceptance and profitability; our ability to compete with larger suppliers that can provide end to end solutions; customer concentration;the impact of customer and vendor consolidation;overall negative economic conditions generally and disruptions in credit and capital markets, including specific impacts of these conditions on the telecommunications industry; foreign economic conditions, including currency rate fluctuations; financial condition of telecommunications service providers, equipment vendors and contract manufacturers, including the impact of any bankruptcies; availability of components and critical manufacturing equipment and capacity; product demand and industry capacity; competitive products and pricing; competitive pressures from new entrants to the telecommunications industry; initiatives to improve profitability that may have financial consequences, including further restructuring charges and the ability to realize anticipated savings under such cost-reduction initiatives; exiting businesses and product areas; impairment charges and other cost cutting initiatives and related charges and costs; manufacturing efficiencies; research and new product development; protection of and access to intellectual property, patents and technology; ability to attract and retain highly qualified personnel; the regulatory and trade environment; the impact of new or revised accounting rules or interpretations, including revenue recognition requirements; availability and terms of future acquisitions; divestitures and investments; uncertainties relating to synergies; charges and expenses associated with business combinations and other transactions; and other risks and future factors that may be detailed from time to time in the Company’s filings with the SEC. For a further description of such risks and future factors, see Item 1A of our most recently filed Form 10-K. Our actual future results could differ materially from those predicted in such forward-looking statements. In light of the foregoing risks, uncertainties and other factors, investors are advised not to rely on these forward-looking statements when making investment decisions. These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect the operations, performance, development and results of our business. We undertake no obligation to publicly update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events or changes to future results over time. The foregoing discussion should be read in conjunction with the risk factors, financial statements and related notes and management’s discussion and analysis included in our Annual Report on Form 10-K for the year ended December 30, 2011.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of June 29, 2012, there were no material changes to the market risks disclosure, Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our Annual Report on Form 10-K for the year ended December 30, 2011.

34

Item 4. Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of disclosure controls and procedures as of June 29, 2012. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective. There were no changes during the period covered by this Form 10-Q in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth under Note 12, Contingencies – Legal Proceedings, to the condensed consolidated financial statements included in Part I, Item  1 of this report is incorporated herein by reference.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A., Risk Factors, in our Annual Report on Form 10-K for the year ended December 30, 2011. The risk factors described in our Annual Report could materially adversely affect our business, financial condition or future results. The risks described in our Annual Report are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently consider immaterial also may materially adversely affect our business, financial condition and/or operating results. There have been no other material changes to the risk factors included in our Annual Report for the year ended December 30, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Common Stock:

Period of Purchases	Total Number  of Shares Purchased		Average Purchase Price Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Remaining Dollar Value of Shares Available to be Purchased Under the Programs (In millions) 1
3/31/12 through 5/4/12		1,646	$	3.99		1,646	$	224.6
5/5/12 through 6/1/12		55	$	3.62		55	$	224.6
6/2/12 through 6/29/12		2,442	$	3.60		2,442	$	224.6
Total		4,143	$	3.75		4,143

¹  The amounts in this column represent the remaining amounts under the current $600 million program described below. The Rule10b5-1 repurchase program described below does not have a repurchase amount limit; therefore, it is not included in the remaining value of shares.

We repurchase outstanding common stock under two programs authorized by our Board of Directors, the Rule 10b5-1 program and a repurchase program of up to $600 million of outstanding common stock. In addition, we purchase shares to cover withholding taxes on shares issued under employee stock plans.

Under the 10b5-1 program, we intend to continue to use cash generated by employee stock option exercises (other than those of Company officers and board members) to repurchase stock. We purchased four thousand shares for $16 thousand in the second quarter of 2012, and eight thousand shares for $31 thousand in the first six months of 2012 under this program.

As of June 29, 2012, we purchased 56.6 million shares of our common stock under the $600 million repurchase program at a total cost of $375.4 million, leaving $224.6 million available to be purchased under this program. We did not purchase any shares under this program in the second quarter and first half of 2012. We may change our repurchase activity and we provide no assurance that we will continue our repurchase activity in the future.

In addition, we purchased 0.3 million shares for $1.2 million in the second quarter of 2012, and 0.8 million shares for $3.0 million in the first six months of 2012 to cover minimum withholding taxes on shares issued under employee stock plans.

We record repurchased shares as Treasury stock.

35

Item 6. Exhibits

(A) Exhibits

10.40	2012 Amendment to Tellabs, Inc. Executive Continuity and Protection Program
31.1	CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Furnished and not filed

36

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/ Thomas P. Minichiello
	Thomas P. Minichiello
	Vice President of Finance and Chief Accounting Officer
	(Principal Accounting Officer and duly authorized officer)
	August 3, 2012
	(Date)

37

EX-10.40

EXHIBIT 10.40

TELLABS, INC.

EXECUTIVE CONTINUITY AND PROTECTION PROGRAM

1. PURPOSE OF PROGRAM. The purpose of the Tellabs, Inc. Executive Continuity and Protection Program (the “Program”) is to attract and retain well-qualified individuals as executives and key personnel of Tellabs, Inc. and/or its Subsidiaries, and to provide a benefit to each such individual if his/her employment is terminated in connection with a Change in Control (as defined below). The Program is intended to qualify as a “top-hat” plan under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), in that it is intended to be an “employee benefit plan” (as such term is defined under Section 3(3) of ERISA) which is unfunded and provides benefits only to a select group of management or highly compensated employees of the Company and/or its Subsidiaries.

2. DEFINITIONS. The following terms shall have the following meanings unless the context indicates otherwise:

(a) “AAA” shall have the meaning ascribed to such term in Section 12(k).

(b) “Applicable Benefits Schedule” with respect to a Participant shall mean the Benefits Schedule designated by the Committee as applicable to the Participant.

(c) “Applicable Rate” shall have the meaning ascribed to such term on the Applicable Benefits Schedule.

(d) “Beneficiary” shall mean a beneficiary designated in writing by a Participant to receive Change in Control Severance Benefits in accordance with Section 6(d) below, and if no beneficiary is designated by the Participant, then the Participant’s estate shall be deemed to be the Participant’s designated beneficiary.

(e) “Benefits Schedule” shall mean a separate Benefits Schedule adopted as part of the Program, which Schedule sets forth certain provisions relating to the determination of eligibility for and/or the amount of Change in Control Severance Benefits payable under the Program.

(f) “Board” shall mean the Board of Directors of the Company.

(g) “Change in Control” means the first of the following events to occur:

(i) Any “person” (as defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), excluding for this purpose, the Company or any Subsidiary of the Company, or any employee benefit plan of the Company or any Subsidiary of the Company, or any person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan which acquires beneficial ownership of voting securities of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or

indirectly of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company’s then outstanding securities; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by the Company; and provided further that no Change in Control will be deemed to have occurred if a person inadvertently acquires an ownership interest of twenty percent (20%) or more but then promptly reduces that ownership interest below twenty percent (20%);

(ii) During any two (2) consecutive years, individuals who at the beginning of such two (2)-year period constitute the Board and any new director (except for a director designated by a person who has entered into an agreement with the Company to effect a transaction described elsewhere in this definition of Change in Control) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (such individuals and any such new director, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board;

(iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination,

(A) all or substantially all of the individuals and entities who were the beneficial owners of outstanding voting securities of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more Subsidiaries) (the “Resulting Corporation”) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the outstanding voting securities of the Company;

(B) no person (as defined in Section 13(d) and 14(d) of the Exchange Act) (other than the Company, the Resulting Corporation or any employee benefit plan (or related trust) of the Company or such Resulting Corporation) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then combined voting power of the then outstanding voting securities of the Resulting Corporation, except to the extent that such ownership resulted solely from ownership of securities of the Company prior to the Business Combination; and

(C) at least a majority of the members of the board of directors of the Resulting Corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

2

(iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

(h) “Change in Control Date” shall mean the date that a Change in Control first occurs.

(i) “Change in Control Severance Benefits” shall mean the compensation and benefits provided to a Terminated Participant pursuant to Section 6 of the Program.

(j) “Change in Control Severance Multiplier” shall mean the multiplier used to determine cash Change in Control Severance Benefits paid to a specific Terminated Participant as determined by the Committee and set forth on the Applicable Benefits Schedule.

(k) “Code” means the Internal Revenue Code of 1986, as amended.

(l) “Committee” shall mean (i) the Board or (ii) a committee or subcommittee of the Board as from time to time appointed by the Board from among its members. The initial Committee shall be the Board’s Compensation Committee. In the absence of an appointed Committee, the Board shall function as the Committee under the Program. On a Change in Control Date, and during the twenty-four (24)-month period following such Change in Control Date, the Committee shall be comprised of such persons, whether or not such persons are members of the Board, as appointed by the Board prior to the Change in Control Date, with any additions or changes to the Committee following such Change in Control Date to be made and/or approved by all Committee members then in office.

(m) “Company” shall mean Tellabs, Inc., a Delaware corporation, including any successor entity or any successor to the assets of the Company.

(n) “Confidential Information” shall have the meaning ascribed to such term in Section 7(a).

(o) “Effective Date” shall mean May 6, 2005.

(p) “ERISA” shall have the meaning ascribed to such term in Section 1.

(q) “Excise Tax” shall have the meaning ascribed to such term on the Applicable Benefits Schedule.

(r) “Participant(s)” shall have the meaning set forth in Section 3(b).

(s) “Payments” shall have the meaning ascribed to such term on the Applicable Benefits Schedule.

(t) “Program” shall have the meaning ascribed to such term in Section 1.

3

(u) “Protection Period” shall mean the period after a Change in Control Date set forth in the Applicable Benefits Schedule.

(v) “Qualifying Termination” of a Participant’s employment shall have the meaning ascribed to such term on the Applicable Benefits Schedule.

(w) “Reference Base Salary” with respect to a Participant means the annual base salary of such Participant as in effect immediately prior to the Termination Date (determined without regard to any reduction which would constitute a basis for a Participant’s resignation for Good Reason, if such Participant’s Applicable Benefits Schedule contains a right to terminate for Good Reason), or, if greater, the highest annual base salary of such Participant as in effect during the period beginning on the Change in Control Date and ending on the Termination Date.

(x) “Restriction Period” means the post-employment period set forth on the Applicable Benefits Schedule during which the covenants set forth in Section 7(b) shall apply to a Participant.

(y) “Subsidiary” shall mean a corporation of which the Company directly or indirectly owns more than fifty percent (50%) of the “voting stock” (meaning the capital stock of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation) or any other business entity in which the Company directly or indirectly has an ownership interest of more than fifty percent (50%).

(z) “Terminated Participant” shall mean a Participant whose employment with the Company and/or a Subsidiary has been terminated as described in Section 5 below.

(aa) “Termination Date” shall mean the date a Terminated Participant’s employment with the Company and/or a Subsidiary is terminated as described in Section 5 below.

3. PARTICIPATION. Only those executives and key personnel as the Committee in its sole discretion may designate, from time to time, shall participate in the Program. At the time the Committee designates an individual as a Participant, the Committee shall also designate the Applicable Benefits Schedule for such Participant’s participation in the Program.

4. ADMINISTRATION.

(a) Responsibility. The Committee shall have the responsibility, in its sole discretion, to control, operate, manage and administer the Program in accordance with its terms.

(b) Authority of the Committee. The Committee shall have the maximum discretionary authority permitted by law that may be necessary to enable it to discharge its responsibilities with respect to the Program, including but not limited to the following:

(i) to determine eligibility for participation in the Program;

(ii) to designate Participants and the Applicable Benefits Schedule;

4

(iii) to establish the terms and provisions of, and to adopt as part of the Program, one or more Benefits Schedules setting forth, among other things, the Change in Control Severance Multiplier, Protection Period and Restriction Period, and such other terms and provisions as the Committee shall determine;

(iv) to calculate a Participant’s Change in Control Severance Benefits;

(v) to correct any defect, supply any omission, or reconcile any inconsistency in the Program in such manner and to such extent as it shall deem appropriate in its sole discretion to carry the same into effect;

(vi) to issue administrative guidelines as an aid to administer the Program and make changes in such guidelines as it from time to time deems proper;

(vii) to make rules for carrying out and administering the Program and make changes in such rules as it from time to time deems proper;

(viii) to the extent permitted under the Program, grant waivers of Program terms, conditions, restrictions, and limitations;

(ix) to construe and interpret the Program and make reasonable determinations as to a Participant’s eligibility for benefits under the Program, including determinations as to Change in Control of the Company, Qualifying Termination and disability; and

(x) to take any and all other actions it deems necessary or advisable for the proper operation or administration of the Program.

(c) Action by the Committee. Except as may otherwise be required or permitted under an applicable charter, the Committee may (i) act only by a majority of its members (provided that any determination of the Committee may be made, without a meeting, by a writing or writings signed by all of the members of the Committee), and (ii) may authorize any one or more of its members to execute and deliver documents on behalf of the Committee.

(d) Delegation of Authority. The Committee may delegate to one or more of its members, or to one or more agents, such administrative duties as it may deem advisable; provided, however, that any such delegation shall be in writing. In addition, the Committee, or any person to whom it has delegated duties as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Program. The Committee may employ such legal or other counsel, consultants and agents as it may deem desirable for the administration of the Program and may rely upon any opinion or computation received from any such counsel, consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company, or the Subsidiary whose employees have benefited from the Program, as determined by the Committee.

5

(e) Determinations and Interpretations by the Committee. All determinations and interpretations made by the Committee shall be binding and conclusive to the maximum extent permitted by law on all Participants and their heirs, successors, and legal representatives.

(f) Information. The Company shall furnish to the Committee in writing all information the Committee may deem appropriate for the exercise of its powers and duties in the administration of the Program. Such information may include, but shall not be limited to, the full names of all Participants, their earnings and their dates of birth, employment, retirement, death or other termination of employment. Such information shall be conclusive for all purposes of the Program, and the Committee shall be entitled to rely thereon without any investigation thereof.

(g) Self-Interest. No member of the Committee may act, vote or otherwise influence a decision of the Committee specifically relating to his/her benefits, if any, under the Program.

5. TERMINATION OF EMPLOYMENT ON OR AFTER A CHANGE IN CONTROL DATE. If, during the period commencing on a Change in Control Date and ending on the last day of the Protection Period following such Change in Control Date, a Participant’s employment is terminated under circumstances constituting a Qualifying Termination, such Terminated Participant shall be entitled to receive the Change in Control Severance Benefits on or after the Termination Date.

6. CHANGE IN CONTROL SEVERANCE BENEFITS.

(a) Cash Payment. In the event of termination of the Participant due to a Qualifying Termination within the Protection Period following the Change in Control Date, the Terminated Participant shall be entitled to receive a lump sum severance allowance within fifteen (15) business days of such termination, in an amount which is equal to the product of the Change in Control Severance Multiplier (as set forth on the Applicable Benefits Schedule) times the sum of:

(i) The Participant’s Reference Base Salary; and

(ii) The Participant’s target bonus for the year which includes his/her Termination Date.

(b) Pro Rata Annual Bonus. Following the Termination Date, the Terminated Participant shall be entitled to receive a pro-rated annual bonus at target for the year which includes his/her Termination Date, based on the number of days which have elapsed during such year as of the Termination Date. Such payment shall be paid at the same time as the lump sum payment is made under Section 6(a).

(c) Payment in Lieu of Benefit Continuation. In lieu of continuing the provision of medical and all other employee benefits and perquisites, including but not limited to executive allowance, retirement and any deferred compensation, to a Terminated Participant and his/her eligible dependents, the Company or its Subsidiary who employed the Terminated Participant shall also pay to the Terminated Participant as a lump sum payment payable with the

6

lump sum payable under Section 6(a) an amount equal to ten percent (10%) of his/her Reference Base Salary multiplied by the Change in Control Severance Multiplier. Such payment shall be in addition to such Participant’s rights under the Consolidated Omnibus Budget Reconciliation Act of 1985 (commonly known as COBRA).

(d) Payment of Change in Control Severance Benefits to Beneficiaries. In the event of a Terminated Participant’s death, all Change in Control Severance Benefits that would have been paid to the Terminated Participant under this Section 6 but for his/her death, shall be paid to the Participant’s Beneficiary.

(e) Right to Earned or Accrued Compensation and Benefits. Notwithstanding anything contained in the Program to the contrary, the Company shall pay to a Terminated Participant within fifteen (15) business days following the later of the Termination Date or the Change in Control Date all compensation (such as salary, bonus and/or accrued but untaken vacation) earned prior to the Termination Date. In addition, all accrued compensation and benefits with respect to such Terminated Participant shall not be forfeited (except to the extent such forfeiture occurs under the terms of an applicable plan).

(f) Other Benefits. Notwithstanding anything contained in the Program to the contrary, the Company or the Committee may, in its sole discretion provide benefits in addition to the benefits described under this Section 6, which benefits may, but are not required to be, uniform among Participants.

7. PARTICIPANT COVENANTS.

(a) Non-Use and Non-Disclosure of Confidential Information.

(i) As a condition to receiving the right to participate in the Program and any benefits hereunder, each Participant agrees that he/she shall not, at any time during employment or thereafter, make use of or disclose, directly or indirectly, any (A) trade secret or other confidential secret information of the Company, or any of its Subsidiaries or (B) other technical, business, proprietary or financial information of the Company or any of its Subsidiaries not available to the public generally or to the competitors of the Company or any of its Subsidiaries (“Confidential Information”), except to the extent that such Confidential Information (I) becomes a matter of public record or is published in a newspaper, magazine or other periodical or on electronic or other media available to the general public, other than as a result of any act or omission of him/her, (II) is required to be disclosed by any law, regulation or order of any court or regulatory commission, department or agency, provided that he/she gives prompt notice of such requirement to the Company to enable the Company to seek an appropriate protective order, or (III) is required to be used or disclosed by him/her to perform properly his/her duties to the Company or any of its Subsidiaries. Each Participant further agrees that on or before the Termination Date he/she shall return to the Company all Company property, including but not limited to all records, memoranda, notes, plans, reports, computer tapes and software and other documents and data which constitute Confidential Information which he/she may possess or have under his/her control (together with all copies thereof).

7

(ii) Each Participant agrees that he/she will assign to the Company (or a Subsidiary of the Company), his/her entire right, title and interest in and to all discoveries and improvements, patentable or otherwise, trade secrets and ideas, writing and copyrightable material, which may have been conceived by him/her or developed or acquired by him/her while he/she was employed by the Company, which may pertain directly or indirectly to the business of the Company or any Subsidiary. Participants agree to promptly and fully disclose in writing all such developments to the Company. Participants, during employment and thereafter, shall without charge to Company, but at its expense, upon the Company’s request, execute, acknowledge and deliver to the Company all instruments and do all other acts which are necessary or desirable to enable the Company or any of its Subsidiaries to file and prosecute applications for, and to acquire, maintain and enforce, all patents, trademarks and copyrights in all countries. Notwithstanding anything contained in the foregoing, pursuant to Employee Patent Act, 765 ILCS 1060/1 et seq. (1996), this Section 7(a)(ii) does not apply to any invention for which no equipment, supplies, facilities or trade secret information of the Company (or a Subsidiary of the Company) was used and which was developed entirely on the Participant’s own time, unless (a) the invention relates (i) to the business of the Company (or a Subsidiary of the Company) or (ii) to the Company’s (or a Subsidiary of the Company) actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by the Participant for the Company (or a Subsidiary of the Company).

(b) Non-Solicitation; Non-Competition. As a further condition to receiving the right to participate in the Program and any benefits hereunder, each Participant agrees that during his/her employment and for the Restriction Period set forth on the Applicable Benefits Schedule, he/she will not, without the written consent of the Company, directly or indirectly, on his/her own behalf or on behalf of any other person or entity:

(i) engage or be interested in (as owner, partner, stockholder, employee, director, officer, agent, consultant or otherwise), with or without compensation, any business which is in direct competition with the Company or of any of its Subsidiaries in providing data, voice or video transport, switching/routing, network access system and/or voice quality enhancement solutions to service providers or end users or any other products which the Company or any of its Subsidiaries may be manufacturing, selling or distributing to service providers or end users;

(ii) solicit for employment, or employ or retain, any person who was employed by the Company or any of its Subsidiaries or affiliates (other than persons employed in a clerical or other non-professional position) within the six (6)-month period preceding the date of such hiring; or

(iii) solicit, entice, persuade or induce any person or entity doing business with the Company and its Subsidiaries or affiliates, to terminate such relationship or to refrain from extending or renewing the same.

The Participant is prohibited from engaging in the above activities in any state of the United States and in any country outside the United States in which the Company does business.

8

Nothing in subparagraph (i) above will prohibit a Participant from acquiring or holding not more than one percent of any class of publicly traded securities of any such business; provided that such securities entitle such Participant to no more than one percent (1%) of the total outstanding votes entitled to be cast by security holders of such business in matters on which such security holders are entitled to vote.

(c) Remedies; Injunctive Relief; Blue Pencil. Participants agree that the protective covenants set forth in this Section 7 are reasonable and necessary to protect the legal interests of the Company and its Subsidiaries. The Participant acknowledges and agrees that (i) a threatened or actual breach of any of the covenants and provisions contained in this Section 7 will result in irreparable harm to the business of the Company or its Subsidiaries and affiliates, (ii) a remedy at law in the form of monetary damages for any threatened or actual breach by the Participant of any of the covenants and provisions contained in this Section 7 is inadequate, (iii) in addition to any remedy at law or equity for such breach, the Company shall be entitled to institute and maintain appropriate proceedings in equity, including a suit for injunction to enforce the specific performance by the Participant of the obligations hereunder and to enjoin the Participant from engaging in any activity in violation hereof and (iv) the covenants on the Participant’s part contained in this Section 7 shall be construed as agreements independent of any other provisions in the Program, and the existence of any claim, setoff or cause of action by the Participant against the Company, whether predicated on the Program or otherwise, shall not constitute a defense or bar to the specific enforcement by the Company of said covenants. In the event of a breach or a violation by the Participant of any of the covenants and provisions of the Program, (1) the running of the Restriction Period (but not of Participant’s obligation thereunder) shall be tolled during the period of the continuance of any actual breach or violation and (2) the Participant shall be obligated to pay to the Company the amount of any Severance Benefits or Change in Control Benefits theretofore paid to the Participant (or if not yet paid, the Company shall not be obligated to make such payments). If a court of competent jurisdiction (or an arbitrator in accordance with Section 12(k)) would otherwise declare any portions of this Section 7 void or unenforceable in the circumstances, such portions of this Section shall be reduced in scope and/or duration of time to such an extent that such court (or arbitrator) would hold the same to be enforceable in the circumstances. The portions of this Section with respect to scope and duration shall be separate and distinct and fully severable without affecting the enforceability of the entire Section.

(d) Not Exclusive Covenants. Nothing contained in this Section 7 shall invalidate or affect any non-disclosure, assignment of intellectual property, non-competition, non-solicitation or other similar covenant or agreement that currently exists or may exist in the future between a Participant and the Company or a Subsidiary and any such covenants and agreement shall continue in full force and effect.

8. CLAIMS.

(a) Claims Procedure. If any Participant or Beneficiary, or their legal representative, has a claim for benefits which is not being paid, such claimant may file a written claim with the Committee setting forth the amount and nature of the claim, supporting facts, and the claimant’s address. A claimant must file any such claim within sixty (60) days after a Participant’s Termination Date. Written notice of the disposition of a claim by the Committee

9

shall be furnished to the claimant within ninety (90) days after the claim is filed. In the event of special circumstances, the Committee may extend the period for determination for up to an additional ninety (90) days, in which case it shall so advise the claimant. If the claim is denied, the reasons for the denial shall be specifically set forth in writing, pertinent provisions of the Program shall be cited, including an explanation of the Program’s claim review procedure, and, if the claim is perfectible, an explanation as to how the claimant can perfect the claim shall be provided.

(b) Claims Review Procedure. If a claimant whose claim has been denied wishes further consideration of his/her claim, he/she may request the Committee to review his/her claim in a written statement of the claimant’s position filed with the Committee no later than sixty (60) days after receipt of the written notification provided for in Section 8(a) above. The Committee shall fully and fairly review the matter and shall promptly advise the claimant, in writing, of its decision within the next sixty (60) days. Due to special circumstances, the Committee may extend the period for determination for up to an additional sixty (60) days.

9. TAXES.

(a) Withholding Taxes. The Company shall be entitled to withhold from any and all payments made to a Participant under the Program all federal, state, local and/or other taxes or imposts which the Company determines are required to be so withheld from such payments or by reason of any other payments made to or on behalf of the Participant or for his/her benefit hereunder.

(b) Excise Tax. In the event payments paid to a Participant under the Program are deemed to be excess parachute payments under Section 280G of the Code, the Change in Control Severance Benefits payable to the Participant may be subject to reduction or the Participant may be entitled to receive a Gross-Up Payment (as defined in the Applicable Benefits Schedule) to the extent provided under the Applicable Benefits Schedule.

(c) No Guarantee of Tax Consequences. No person connected with the Program in any capacity, including, but not limited to, the Company and any Subsidiary and their directors, officers, agents and employees makes any representation, commitment, or guarantee that any tax treatment, including, but not limited to, federal, state and local income, estate and gift tax treatment, will be applicable with respect to amounts deferred under the Program, or paid to or for the benefit of a Participant under the Program, or that such tax treatment will apply to or be available to a Participant on account of participation in the Program.

10. TERM OF PROGRAM. The Program shall be effective as of the Effective Date and shall remain in effect until the Board terminates the Program in accordance with Section 11(b) below.

11. AMENDMENT AND TERMINATION.

(a) Amendment of Program. The Program may be amended by the Board at any time with or without prior notice; provided, however, that the Program shall not be amended during the twenty-four (24)-month period immediately following a Change in Control Date. In the event the Program was amended within the six (6)-month period immediately preceding a

10

Change in Control Date, to the extent such amendments were less favorable to Participants generally, such amendment shall automatically become of no further force and effect without further action by the Company upon such Change in Control.

(b) Termination of Program. The Program may be terminated or suspended by the Board at any time with or without prior notice; provided, however, that the Program shall not be terminated or suspended during the twenty-four (24)-month period immediately following a Change in Control Date. In the event the Program was terminated within the six (6)-month period immediately preceding a Change in Control Date, the Program shall automatically become effective without further action by the Company upon such Change in Control.

(c) No Adverse Affect. If the Program is amended, terminated, or suspended in accordance with Section 11(a) or 11(b) above, such action shall not adversely affect the benefits under the Program to which any Terminated Participant (as of the date of amendment, termination or suspension) is entitled.

12. MISCELLANEOUS.

(a) Offset. Change in Control Severance Benefits shall be reduced by any payment or benefit made or provided by the Company or any Subsidiary to the Participant pursuant to (i) any severance plan, program, policy or arrangement of the Company or any Subsidiary of the Company not otherwise referred to in the Program, (ii) any employment agreement between the Company or any Subsidiary and the Participant, and (iii) any federal, state or local statute, rule, regulation or ordinance.

(b) No Right, Title, or Interest in Company Assets. Participants shall have no right, title, or interest whatsoever in or to any assets of the Company or any investments that the Company may make to aid it in meeting its obligations under the Program. Nothing contained in the Program, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, Beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under the Program, such right shall be no greater than the right of an unsecured general creditor of the Company. Subject to this Section 12(b), all payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts.

(c) No Right to Continued Employment. The Participant’s rights, if any, to continue to serve the Company as an employee shall not be enlarged or otherwise affected by his/her designation as a Participant under the Program, and the Company or the applicable Subsidiary reserves the right to terminate the employment of any employee at any time. The adoption of the Program shall not be deemed to give any employee, or any other individual, any right to be selected as a Participant or to continued employment with the Company or any Subsidiary.

(d) Other Rights. The Program shall not affect or impair the rights or obligations of the Company or a Participant under any other written plan, contract, arrangement,

11

or pension, profit sharing or other compensation plan; provided, however, that each Participant must agree in writing, as a condition to his/her participation in the Program and the receipt of any benefits hereunder, that any previously existing change in control and/or change in management agreement between such Participant and the Company and/or a Subsidiary shall be superseded in its entirety by the Program and be of no further force and effect.

(e) Governing Law. The Program shall be governed by and construed in accordance with the laws of the State of Illinois without reference to principles of conflict of laws, except as superseded by applicable federal law (including, without limitation, ERISA).

(f) Severability. If any term or condition of the Program shall be invalid or unenforceable to any extent or in any application, then the remainder of the Program, with the exception of such invalid or unenforceable provision (but only to the extent that such term or condition cannot be appropriately reformed or modified), shall not be affected thereby and shall continue in effect and application to its fullest extent.

(g) Incapacity. If the Committee determines that a Participant or a Beneficiary is unable to care for his/her affairs because of illness or accident or because he or she is a minor, any benefit due the Participant or Beneficiary may be paid to the Participant’s spouse or to any other person deemed by the Committee to have incurred expense for such Participant (including a duly appointed guardian, committee or other legal representative), and any such payment shall be a complete discharge of the Company’s obligation hereunder.

(h) Transferability of Rights. The Company shall have the unrestricted right to transfer its obligations under the Program with respect to one or more Participants to any person, including, but not limited to, any purchaser of all or any part of the Company’s business. No Participant or Beneficiary shall have any right to commute, encumber, transfer or otherwise dispose of or alienate any present or future right or expectancy which the Participant or Beneficiary may have at any time to receive payments of benefits hereunder, which benefits and the right thereto are expressly declared to be non-assignable and nontransferable, except to the extent required by law. Any attempt to transfer or assign a benefit, or any rights granted hereunder, by a Participant or the spouse of a Participant shall, in the sole discretion of the Committee (after consideration of such facts as it deems pertinent), be grounds for terminating any rights of the Participant or Beneficiary to any portion of the Program benefits not previously paid.

(i) Interest. In the event any payment to a Participant under the Program is not paid within thirty (30) days after it is due and Participant notifies the Company and the Company fails to make such payment (to the extent such payment is undisputed), such payment shall thereafter bear interest at the prime rate from time to time as published in The Wall Street Journal, Midwest Edition.

(j) No Obligation to Mitigate Damages. The Participants shall not be obligated to seek other employment in mitigation of amounts payable or arrangements made under the provisions of the Program and the obtaining of any such other employment shall in no event effect any reduction of the Company’s obligations under the Program.

12

(k) Arbitration of Disputes and Reimbursement of Legal Costs. In the event of any dispute between the Company and the Participant, whether arising out of or relating to the Program, or otherwise, the Participant and the Company hereby agree that such dispute shall be resolved by binding arbitration administered by the American Arbitration Association (“AAA”) in accordance with its Commercial Arbitration Rules then in effect, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Any arbitration shall be held before a single arbitrator who shall be selected by the mutual agreement of the Company and the Participant, unless the parties are unable to agree to an arbitrator, in which case, the arbitrator will be selected under the procedures of the AAA. The arbitrator shall be experienced in the resolution of disputes under employment agreements or plans or programs similar to the Program maintained by major corporations and shall have the authority to award any remedy or relief that a court of competent jurisdiction could order or grant, including, without limitation, the issuance of an injunction, and the parties hereby agree to the emergency procedures of the AAA. However, either party may, without inconsistency with this arbitration provision, apply to any court having jurisdiction over such dispute or controversy and seek interim provisional, injunctive or other equitable relief until the arbitration award is rendered or the controversy is otherwise resolved. Except as necessary in court proceedings to enforce this arbitration provision or an award rendered hereunder, or to obtain interim relief, neither a party nor an arbitrator may disclose the existence, content or results of any arbitration hereunder without the prior written consent of the Company and the Participant. The arbitration proceeding shall be conducted in the Chicago, Illinois metropolitan area. In the event of any such proceeding, the losing party shall reimburse the prevailing party upon entry of a final award resolving the subject of the dispute for all reasonable legal expenses incurred, unless the arbitrator determines that to do so would be unjust. Otherwise, each party shall be responsible for its own expenses relating to the conduct of the arbitration (including reasonable attorneys’ fees and expenses) and shall share the fees of the AAA equally. Notwithstanding the foregoing, the Participant shall be required to exhaust his/her rights under Section 8 prior to proceeding with any arbitration hereunder.

(l) Condition Precedent to Receipt of Payments or Benefits under the Program. A Terminated Participant will not be eligible to receive Change in Control Severance Benefits or any other payments or benefits under the Program until (i) such Terminated Participant executes a general release of all claims arising out of said Participant’s employment with, and termination of employment from, the Company in substantially the form attached hereto as Exhibit A (adjusted as necessary to conform to then existing legal requirements) (the “General Release”); and (ii) the revocation period specified in such General Release expires without such Terminated Participant exercising his/her right of revocation as set forth in the General Release.

(m) Assumption by Successor to the Company. The Company shall cause any successor to its business or assets to assume this Program and the obligations arising hereunder and to maintain this Program without modification or alteration for the period required herein.

13

BENEFITS SCHEDULE – I

For Participants Covered Under the Program Prior to January 1, 2012

Change in Control Severance Multiplier	2.0
Protection Period	24 months
Restriction Period	24 months

With respect to Participants to which this Benefits Schedule is applicable, the following shall apply:

“Qualifying Termination” shall mean (i) termination by the Company of the employment of the Participant with the Company and all of its Subsidiaries for any reason other than death, disability or Cause, or (ii) resignation of the Participant for Good Reason.

The term “Cause” means (i) the Participant is convicted of a felony or of any crime involving moral turpitude, dishonesty, fraud, theft or financial impropriety; or (ii) a reasonable determination by the Company that, (A) the Participant has willfully and continuously failed to perform substantially his/her duties (other than such failure resulting from incapacity due to physical or mental illness), after a written demand for corrected performance is delivered to the Participant which specifically identifies the manners in which the Participant has not substantially performed his/her duties, (B) the Participant has engaged in gross neglect or gross misconduct, or (C) the Participant has knowingly violated a material requirement of the Company’s Integrity Policy, code of conduct, the Sarbanes Oxley Act of 2002 or other material provision of federal or state securities law.

The term “Good Reason” shall mean:

(i) the material reduction or material adverse modification of the Participant’s authority or duties on or after a Change in Control Date, such as a substantial diminution or adverse modification in the Participant’s title, status, or responsibilities, from his/her authorities being exercised and duties being performed by the Participant immediately prior to the Change in Control Date (and as such authorities and duties may be increased due to promotions from time to time after the Change in Control Date);

(ii) any reduction in the Participant’s base salary from the base salary which is in effect immediately prior to a Change in Control Date or as may be increased from time to time thereafter;

(iii) any failure to provide to the Participant the opportunities to participate on a reasonable basis in the Company’s stock option plans, the annual bonus program and any other bonus and incentive compensation plans (whether in effect on or after the Change in Control Date) in which executives with comparable duties are eligible to participate; or

1

(iv) any requirement, which occurs on or after a Change in Control Date, that the Participant relocate his principal place of employment by more than a fifty (50)-mile radius from its location immediately prior to the Change in Control Date.

Notwithstanding the foregoing, any of the circumstances described above may not serve as a basis for resignation for “Good Reason” by the Participant unless the Participant has provided written notice to the Company that such circumstance exists within thirty (30) days of the Participant’s learning of such circumstance and the Company has failed to cure such circumstance within thirty (30) days following such notice; and provided further, the Participant did not previously consent to the action leading to their claim of resignation for “Good Reason.”

Subject to the paragraph immediately following this paragraph, if any payments or benefits received or to be received by the Participant in connection with the Participant’s employment (whether pursuant to the terms of the Program or any other plan, arrangement or agreement with the Company, or any person affiliated with the Company) (the “Payments”), will be subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Code (or any similar tax that may hereafter be imposed), the Company shall pay at the time specified below, an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Participant, after deduction of any Excise Tax on the Payments and any federal, state and local income or other applicable tax and Excise Tax upon the payment provided for by this paragraph, shall be equal to the Payments. For purposes of determining the amount of the Gross-Up Payment, the Participant shall be deemed to pay federal income taxes at the Participant’s highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the Participant’s highest marginal rate of taxation in the state and locality of the Participant’s residence on the date on which the Excise Tax is determined, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. The computations required by this paragraph (and the immediately following paragraph) shall be made by independent public accountants not then regularly retained by the Company, in consultation with tax counsel selected by such accountants. The Company shall provide the Participant with sufficient tax and compensation data to enable the Participant or his/her tax advisor to verify such computations and shall reimburse the Participant for reasonable fees and expenses incurred with respect thereto. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, the Participant shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the Gross-Up Payment being repaid by the Participant) plus interest on the amount of such repayment from the date the Gross-Up Payment was initially made to the date of repayment at the rate provided in Section 1274(b)(2)(B) of the Code (the “Applicable Rate”). In the event that the Excise Tax is determined by the Internal Revenue Service or by such independent public accountants to exceed the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties, fines or additions to tax

2

payable with respect to such excess) at the time that the amount of such excess is finally determined. Any payment to be made under this paragraph shall be payable within five (5) days of the determination of the accountants that such a payment is required hereunder and, if applicable, within five (5) days of such determination that the Excise Tax is greater or less than initially calculated but, in no event, later than thirty (30) days after the Participant’s receipt of the Payments resulting in such Excise Tax.

Notwithstanding anything in the foregoing paragraph to the contrary, the foregoing provision shall not apply (therefore no Gross-Up Payment will be made) and any Change in Control Severance Benefits (other than those described in Section 6(e)) otherwise payable to the Terminated Participant shall be reduced (but not below zero) such that no amounts paid or payable to the Terminated Participant as Change in Control Severance Benefits (other than those described in Section 6(e)) shall be deemed excess parachute payments subject to Excise Tax, in the event the amount of such reduction does not exceed ten percent (10%) of such Change in Control Severance Benefits (other than those described in Section 6(e)). Unless the Participant shall have given prior written notice specifying a different order to the Company to effectuate the foregoing, the Company shall reduce or eliminate the Change in Control Severance Benefits (other than those described in Section 6(e)), by first reducing or eliminating the portion of such benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the determination made by the independent public accountants selected under the preceding paragraph. Any notice given by the Participant pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Participant’s rights and entitlements to any benefits or compensation.

3

BENEFITS SCHEDULE – IA

For Participants First Covered Under the Program On or After January 1, 2012

Change in Control Severance Multiplier	2.0
Protection Period	24 months
Restriction Period	24 months

With respect to Participants to which this Benefits Schedule is applicable, the following shall apply:

“Qualifying Termination” shall mean (i) termination by the Company of the employment of the Participant with the Company and all of its Subsidiaries for any reason other than death, disability or Cause, or (ii) resignation of the Participant for Good Reason.

The term “Cause” means (i) the Participant is convicted of a felony or of any crime involving moral turpitude, dishonesty, fraud, theft or financial impropriety; or (ii) a reasonable determination by the Company that, (A) the Participant has willfully and continuously failed to perform substantially his/her duties (other than such failure resulting from incapacity due to physical or mental illness), after a written demand for corrected performance is delivered to the Participant which specifically identifies the manners in which the Participant has not substantially performed his/her duties, (B) the Participant has engaged in gross neglect or gross misconduct, or (C) the Participant has knowingly violated a material requirement of the Company’s Integrity Policy, code of conduct, the Sarbanes Oxley Act of 2002 or other material provision of federal or state securities law.

The term “Good Reason” shall mean:

(i) the material reduction or material adverse modification of the Participant’s authority or duties on or after a Change in Control Date, such as a substantial diminution or adverse modification in the Participant’s title, status, or responsibilities, from his/her authorities being exercised and duties being performed by the Participant immediately prior to the Change in Control Date (and as such authorities and duties may be increased due to promotions from time to time after the Change in Control Date);

(ii) any reduction in the Participant’s base salary from the base salary which is in effect immediately prior to a Change in Control Date or as may be increased from time to time thereafter;

1

(iii) any failure to provide to the Participant the opportunities to participate on a reasonable basis in the Company’s stock option plans, the annual bonus program and any other bonus and incentive compensation plans (whether in effect on or after the Change in Control Date) in which executives with comparable duties are eligible to participate; or

(iv) any requirement, which occurs on or after a Change in Control Date, that the Participant relocate his principal place of employment by more than a fifty (50)-mile radius from its location immediately prior to the Change in Control Date.

Notwithstanding the foregoing, any of the circumstances described above may not serve as a basis for resignation for “Good Reason” by the Participant unless the Participant has provided written notice to the Company that such circumstance exists within thirty (30) days of the Participant’s learning of such circumstance and the Company has failed to cure such circumstance within thirty (30) days following such notice; and provided further, the Participant did not previously consent to the action leading to their claim of resignation for “Good Reason.”

If any payments or benefits received or to be received by the Participant in connection with the Participant’s employment (whether pursuant to the terms of the Program or any other plan, arrangement or agreement with the Company, or any person affiliated with the Company) (the “Payments”), (a) constitute parachute payments within the meaning of Code Section 280G, and (b) but for this paragraph would be subject to the Excise Tax, then the Payments shall be either: (i) delivered in full, or (ii) reduced (but not below zero) to the maximum amount that could be paid to the Participant without giving rise to the Excise Tax (the “Safe Harbor Cap”), whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the Excise Tax (and any equivalent state or local excise taxes), results in the receipt by the Participant, on an after-tax basis, of the greatest amount of payments or benefits, notwithstanding that all or some portion of such payments or benefits may be subject to the Excise Tax. Unless the Participant shall have given prior written notice specifying a different order to the Company, any reduction in payments and/or benefits required by this paragraph shall be accomplished first by reducing or eliminating the Payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the determination made by the independent public accountants selected under Section 3 below.

This paragraph shall apply to a Participant in the event of the reduction of the Participant’s Payments to the Safe Harbor Cap. If it is established pursuant to a final decision of a court or an IRS proceeding which has been finally and conclusively resolved, that Payments have been paid to, or provided for the benefit of, the Participant by the Company, which are in excess of the limitations provided in the preceding paragraph (hereinafter referred to as an “Excess Payment”), the Participant shall repay the Excess Payment to the Company on demand, together with interest on the Excess Payment at the Applicable Rate from the date of the Participant’s receipt of such Excess Payment until the date of such repayment. As a result of the uncertainty in the application of Code Section 4999, it is possible that Payments which will not have been paid or provided by the Company should have been paid or provided (an “Underpayment”). In the event that it is determined by the independent public accountants, the IRS, court order, or the Company on its federal income tax return, that an Underpayment has

2

occurred, the Company shall pay an amount equal to such Underpayment to the Participant within thirty (30) business days of such decision together with interest on such amount at the Applicable Rate from the date such amount would have been paid to the Participant until the date of payment.

The computations required by the foregoing paragraphs shall be made by independent public accountants not then regularly retained by the Company, in consultation with tax counsel selected by such accountants. The Company shall provide the Participant with sufficient tax and compensation data to enable the Participant or his/her tax advisor to verify such computations and shall reimburse the Participant for reasonable fees and expenses incurred with respect thereto. For purposes of determining the reduction of the Payments to the Safe Harbor Cap, the Participant shall be deemed to pay federal income taxes at the Participant’s highest marginal rate of federal income taxation in the calendar year in which the reduction is to be made and state and local income taxes at the Participant’s highest marginal rate of taxation in the state and locality of the Participant’s residence on the date on which the Excise Tax is determined, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

3

EXHIBIT A

FORM OF RELEASE

GENERAL RELEASE

1. For valuable consideration, the adequacy of which is hereby acknowledged, the undersigned (“Participant”), for himself, his spouse, heirs, administrators, children, representatives, executors, successors, assigns, and all other persons claiming through Participant, if any (collectively, “Releasers”), knowingly and voluntarily releases and forever discharges Tellabs, Inc., its affiliates, subsidiaries, divisions, successors and assigns and the current, future and former employees, officers, directors, trustees and agents thereof (collectively referred to throughout this General Release as “Company”) from any and all claims, causes of action, demands, fees and liabilities of any kind whatsoever, whether known or unknown, against Company, Participant has, has ever had or may have as of the date of execution of this General Release, including, but not limited to, any alleged violation of:

• The National Labor Relations Act, as amended;

• Title VII of the Civil Rights Act of 1964, as amended;

• The Civil Rights Act of 1991, as amended;

• Sections 1981 through 1988 of Title 42 of the United States Code, as amended;

• The Employee Retirement Income Security Act of 1974, as amended;

• The Immigration Reform and Control Act, as amended;

• The Americans with Disabilities Act of 1990, as amended;

• The Age Discrimination in Employment Act of 1967, as amended;

• The Older Workers Benefit Protection Act of 1990, as amended;

• The Worker Adjustment and Retraining Notification Act, as amended;

• The Occupational Safety and Health Act, as amended;

• The Family and Medical Leave Act of 1993, as amended;

• Any other federal, state or local civil or human rights law or any other local, state or federal law, regulation or ordinance; or

• Any public policy, contract, tort, or common law.

Notwithstanding anything herein to the contrary, this General Release shall not apply to: (i) Participant’s rights of indemnification and directors and officers liability insurance coverage to which he was entitled immediately prior to [INSERT DATE] with regard to his service as an

1

officer of Company; (ii) Participant’s rights under any tax-qualified pension or claims for accrued vested benefits under any other employee benefit plan, policy or arrangement maintained by Company or under COBRA; (iii) Participant’s rights under the provisions of the Company’s Executive Continuity and Protection Program which are intended to survive termination of employment; or (iv) Participant’s rights as a stockholder. Excluded from this General Release are any claims which cannot be waived by law.

[For Current/Former California Residents Only:] This General Release is intended to constitute a release of all of the claims referenced herein, known or unknown, suspected or unsuspected. Participant hereby expressly waives any rights and benefits conferred by Section 1542 of the California Civil Code which provides: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

2. Participant acknowledges and recites that:

(a) Participant has executed this General Release knowingly and voluntarily;

(b) Participant has read and understands this General Release in its entirety, including the waiver of rights under the Age Discrimination in Employment Act;

(c) Participant has been advised and directed orally and in writing (and this subparagraph (c) constitutes such written direction) to seek legal counsel and any other advice he wishes with respect to the terms of this General Release before executing it;

(d) Participant has sought such counsel, or freely and voluntarily waives the right to consult with counsel, and Participant has had an opportunity, if he so desires, to discuss with counsel the terms of this General Release and their meaning;

(e) Participant enters into this General Release knowingly and voluntarily, without duress or reservation of any kind, and after having given the matter full and careful consideration; and

(f) Participant has been offered 21 calendar days after receipt of this General Release to consider its terms before executing it.

3. This General Release shall be governed by the internal laws (and not the choice of law principles) of the State of Illinois, except for the application of pre-emptive federal law.

2

4. Participant shall have 7 days from the date hereof to revoke this General Release by providing written notice of the revocation to Company’s General Counsel, in which event this General Release shall be unenforceable and null and void.

Date:
	[Participant’s Name]

3

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel P. Kelly, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tellabs, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 3, 2012

/s/ Daniel P. Kelly

Daniel P. Kelly

Acting Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew B. Szafran, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tellabs, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 3, 2012

/s/ Andrew B. Szafran

Andrew B. Szafran

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Tellabs, Inc. (the “Company”) on Form 10-Q for the quarter ended June 29, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel P. Kelly, the Acting Chief Executive Officer of the Company, certify, pursuant to and for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Daniel P. Kelly

Daniel P. Kelly

Acting Chief Executive Officer

Date: August 3, 2012

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Tellabs, Inc. (the “Company”) on Form 10-Q for the quarter ended June 29, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew B. Szafran, the Chief Financial Officer of the Company, certify, pursuant to and for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Andrew B. Szafran

Andrew B. Szafran

Chief Financial Officer

Date: August 3, 2012

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Maturities of Available for Sale Marketable Securities (Detail) (USD $) In Millions, unless otherwise specified	Jun. 29, 2012	Dec. 30, 2011
Schedule of Available-for-sale Securities [Line Items]
Due in less than 12 months, amortized cost	$ 188.0
Due in 1 to 5 years, amortized cost	489.7
Due after 5 years, amortized cost	89.5
Total, amortized cost	767.2	841.2
Due in less than 12 months, fair value	188.3
Due in 1 to 5 years, fair value	492.9
Due after 5 years, fair value	90.0
Fair Value	$ 771.2	$ 843.9

XML

Schedule of Restricted Stock Unit Activity (Detail) (Restricted Stock, USD $)	6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011
Restricted Stock
Shares
Non-vested - beginning of year	4,854,587
Granted	2,304,298
Vested	(2,042,116)
Forfeited	(1,028,297)
Non-vested - end of period	4,088,472
Weighted Average Grant Date Fair Value
Non-vested - beginning of year	$ 6.29
Granted	$ 3.95	$ 5.37
Vested	$ 6.25
Forfeited	$ 6.52
Non-vested - end of period	$ 4.93

XML

Schedule of Standard Product Warranty Liabilities (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011	Jun. 29, 2012	Jul. 01, 2011
Product Warranty Liability [Line Items]
Balance - beginning of period	$ 17.3	$ 21.2	$ 17.0	$ 19.4
Accruals for product warranties	1.0	2.1	2.9	4.9
Settlements	(1.3)	(1.9)	(2.2)	(2.3)
Other adjustments to accruals for product warranties	(0.7)	(1.4)	(1.4)	(2.0)
Balance - end of period	$ 16.3	$ 20.0	$ 16.3	$ 20.0

XML

Schedule of Performance Stock Unit Activity (Detail) (Performance stock units, USD $)	6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011
Performance stock units
Shares
Non-vested - beginning of year	2,269,410
Granted	1,962,549
Vested	(734,185)
Forfeited	(1,191,681)
Non-vested - end of period	2,306,093
Weighted Average Grant Date Fair Value
Non-vested - beginning of year	$ 5.51
Granted	$ 3.98	$ 5.40
Vested	$ 5.15
Forfeited	$ 5.31
Non-vested - end of period	$ 4.43

XML

Effect of Derivative Instruments not Designated as Hedging Instruments on Consolidated Statements of Operations (Detail) (Foreign Currency Forward And Option Contracts, USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 29, 2012		Jul. 01, 2011		Jun. 29, 2012		Jul. 01, 2011
Foreign Currency Forward And Option Contracts
Derivatives, Fair Value [Line Items]
Gain (Loss) Recognized in Other Expense, net	$ (2.0)	[1]	$ 2.1	[1]	$ (0.6)	[1]	$ 6.5	[1]

[1] The gains or losses from changes in the fair value of the derivative contracts are generally offset by gains or losses of the underlying transactions being hedged.

XML

Summary of Restructuring and Other Charges Activity by Segment (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended			3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended		3 Months Ended	6 Months Ended	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended
	Jun. 29, 2012		Jun. 29, 2012		Jul. 01, 2011	Jun. 29, 2012 2012 Restructuring Plan		Jun. 29, 2012 2012 Restructuring Plan		Jun. 29, 2012 2012 Restructuring Plan Optical segment		Jun. 29, 2012 2012 Restructuring Plan Optical segment		Jun. 29, 2012 2012 Restructuring Plan Data segment		Jun. 29, 2012 2012 Restructuring Plan Data segment		Jun. 29, 2012 2012 Restructuring Plan Access segment	Jun. 29, 2012 2012 Restructuring Plan Access segment		Jun. 29, 2012 2012 Restructuring Plan Services segment	Jun. 29, 2012 2012 Restructuring Plan Services segment	Jun. 29, 2012 2011 Restructuring Plan		Jun. 29, 2012 2011 Restructuring Plan		Jun. 29, 2012 2011 Restructuring Plan Optical segment		Jun. 29, 2012 2011 Restructuring Plan Optical segment		Jun. 29, 2012 2011 Restructuring Plan Data segment		Jun. 29, 2012 2011 Restructuring Plan Data segment		Jun. 29, 2012 2011 Restructuring Plan Access segment	Jun. 29, 2012 2011 Restructuring Plan Access segment	Jun. 29, 2012 2011 Restructuring Plan Services segment	Jun. 29, 2012 2011 Restructuring Plan Services segment	Jun. 29, 2012 Previous Restructuring Plans	Jun. 29, 2012 Previous Restructuring Plans	Jun. 29, 2012 Previous Restructuring Plans Optical segment	Jun. 29, 2012 Previous Restructuring Plans Optical segment	Jun. 29, 2012 Previous Restructuring Plans Data segment	Jun. 29, 2012 Previous Restructuring Plans Data segment	Jun. 29, 2012 Previous Restructuring Plans Access segment	Jun. 29, 2012 Previous Restructuring Plans Access segment	Jun. 29, 2012 Previous Restructuring Plans Services segment	Apr. 01, 2012 Previous Restructuring Plans Services segment
Restructuring Cost and Reserve [Line Items]
Beginning Balance	$ 36.8		$ 17.7			$ 22.8				$ 3.0				$ 16.7				$ 1.1			$ 2.0		$ 9.6		$ 12.6		$ 2.8		$ 4.4		$ 4.2		$ 5.5		$ 0.9	$ 1.1	$ 1.7	$ 1.6	$ 4.4	$ 5.1	$ 0.3	$ 0.4	$ 1.7	$ 1.9	$ 2.3	$ 2.6	$ 0.2	$ 0.1
Restructuring expense	0.9		106.9		1.0	0.8		105.3		(0.3)		4.0		1.9		98.2		(0.1)	1.3		(0.7)	1.8	0.1		1.7		1.5		1.6						(0.1)		(1.3)	0.1		(0.1)		(0.1)
Cash Payments	(12.7)		(26.6)			(9.0)		(17.9)		(0.7)		(1.2)		(7.5)		(15.2)		(0.2)	(0.4)		(0.6)	(1.1)	(3.3)		(7.7)		(1.8)		(3.4)		(1.3)		(2.5)		(0.3)	(0.6)	0.1	(1.2)	(0.4)	(1.0)	(0.1)	(0.1)	(0.2)	(0.4)	(0.1)	(0.4)	(0.1)
Other Activities	(3.1)	[1]	(76.1)	[1]		(2.5)	[1]	(75.3)	[1]	(0.1)	[1]	(0.9)	[1]	(2.4)	[1]	(74.3)	[1]		(0.1)	[1]			(0.6)	[1]	(0.8)	[1]	(0.5)	[1]	(0.6)	[1]	(0.1)	[1]	(0.2)	[1]
Ending Balance	$ 21.9		$ 21.9			$ 12.1		$ 12.1		$ 1.9		$ 1.9		$ 8.7		$ 8.7		$ 0.8	$ 0.8		$ 0.7	$ 0.7	$ 5.8		$ 5.8		$ 2.0		$ 2.0		$ 2.8		$ 2.8		$ 0.5	$ 0.5	$ 0.5	$ 0.5	$ 4.0	$ 4.0	$ 0.2	$ 0.2	$ 1.5	$ 1.5	$ 2.2	$ 2.2	$ 0.1	$ 0.1

[1] Other activities include accelerated amortization related to abandoned intangible assets, accelerated depreciation of property, plant and equipment to be disposed, the effects of currency translation as well as other changes that do not flow through restructuring expense.

XML

Schedule of Total Equity Based Compensation Expense by Type (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011	Jun. 29, 2012	Jul. 01, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ 4.8	$ 8.0	$ 10.4	$ 15.6
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	0.9	1.3	2.0	2.6
Cash-settled SARs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	(0.2)	(0.1)	(0.1)	(0.2)
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	2.4	5.4	5.8	9.8
Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ 1.7	$ 1.4	$ 2.7	$ 3.4

XML

Product Warranties (Tables)

6 Months Ended

Jun. 29, 2012

Schedule Of Standard Product Warranty Liabilities

Product warranty liabilities are as follows:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Balance – beginning of period	$	17.3		$	21.2		$	17.0		$	19.4
Accruals for product warranties		1.0			2.1			2.9			4.9
Settlements		(1.3	)		(1.9	)		(2.2	)		(2.3	)
Other adjustments to accruals for product warranties		(0.7	)		(1.4	)		(1.4	)		(2.0	)
Balance – end of period	$	16.3		$	20.0		$	16.3		$	20.0

Balance Sheet Classification Of Product Warranty Liabilities

	Balance at 6/29/12		Balance at 7/1/11
Balance sheet classification - end of period
Other accrued liabilities	$	7.4	$	8.7
Other long-term liabilities		8.9		11.3
Total product warranty liabilities	$	16.3	$	20.0

XML

Equity Based Compensation - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 29, 2012	Jun. 29, 2012 Year	Jun. 29, 2012 Restricted Stock	Jul. 01, 2011 Restricted Stock	Jun. 29, 2012 Performance stock units	Jul. 01, 2011 Performance stock units	Jun. 29, 2012 Performance stock units Awards Granted during Twenty Eleven [Member]	Jun. 29, 2012 Minimum	Jun. 29, 2012 Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based grants vesting period		3 years						1 year	4 years
Stock granted expiration (in years)		10
Number of shares for equity-based compensation grants approved by shareholders	53,889,977	53,889,977
Number of shares for equity-based compensation approved by shareholders available for grant	17,451,007	17,451,007
Aggregate intrinsic value of exercised stock options	$ 0.2
Weighted average fair value of stock options granted		$ 1.29
Fair market value of restricted stock vested			7.9
Equity-based compensation granted, grant date weighted average fair value			$ 3.95	$ 5.37	$ 3.98	$ 5.40
Performance stock units granted					1,962,549	1,640,832
Shares issued for each PSU granted, maximum					2
Percentage of performance stock units earned							50.00%
Shares earned per performance stock unit							0.50
Number of common shares vested and issued for performance stock units							99,420
Unrecognized equity-based compensation cost	$ 26.1	$ 26.1
Weighted average period for equity-based compensation recognition, years		1 year 9 months 18 days

XML

Investments - Additional Information (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011	Jun. 29, 2012	Jul. 01, 2011	Dec. 30, 2011
Schedule of Available-for-sale Securities [Line Items]
Shares acquired in business acquisition	10.6		10.6
Shares borrowed in stock loan agreement	10.6		10.6
Value of other marketable securities and loan related to other marketable securities	$ 181.3		$ 181.3		$ 190.9
Market price per share of other marketable securities and Loan related to other marketable securities	$ 17.17		$ 17.17		$ 18.08
Fees associated with the stock loan agreement	0.3	0.3	0.6	0.6
Investments in partnerships and start-up technology companies	2.7		2.7		3.2
Deferred tax liability that will be due on certain hedge contract gains upon termination of our Loan related to other marketable securities	$ 195.2		$ 195.2		$ 195.2

XML

Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) In Millions, unless otherwise specified	Jun. 29, 2012	Dec. 30, 2011
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	$ 771.2	$ 843.9
Other marketable securities	181.3	190.9
Derivative financial instruments	0.4	0.2
Total Assets	952.9	1,035.0
Loan related to other marketable securities	181.3	190.9
Derivative financial instruments	0.5	0.2
Total Liabilities	181.8	191.1
U.S. government debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	158.7	195.7
Corporate debt obligations guaranteed By FDIC
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	20.3	66.8
Corporate debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	191.4	201.5
Mortgaged backed debt obligations guaranteed by GNMA
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	90.0	91.2
Certificates of deposit guaranteed by FDIC
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	1.2	1.5
Foreign government debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	194.5	223.0
Foreign corporate debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	115.1	64.2
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	158.7	195.7
Other marketable securities	181.3	190.9
Total Assets	340.0	386.6
Loan related to other marketable securities	181.3	190.9
Total Liabilities	181.3	190.9
Fair Value, Inputs, Level 1 | U.S. government debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	158.7	195.7
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	612.5	648.2
Derivative financial instruments	0.4	0.2
Total Assets	612.9	648.4
Derivative financial instruments	0.5	0.2
Total Liabilities	0.5	0.2
Fair Value, Inputs, Level 2 | Corporate debt obligations guaranteed By FDIC
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	20.3	66.8
Fair Value, Inputs, Level 2 | Corporate debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	191.4	201.5
Fair Value, Inputs, Level 2 | Mortgaged backed debt obligations guaranteed by GNMA
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	90.0	91.2
Fair Value, Inputs, Level 2 | Certificates of deposit guaranteed by FDIC
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	1.2	1.5
Fair Value, Inputs, Level 2 | Foreign government debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	194.5	223.0
Fair Value, Inputs, Level 2 | Foreign corporate debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	$ 115.1	$ 64.2

XML

Schedule of Stock Option Activity (Detail) (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended
	Jun. 29, 2012
Shares
Outstanding - beginning of year	20,719,482
Granted	2,099,707
Exercised	(110,577)
Forfeited/expired	(1,667,813)
Outstanding - end of period	21,040,799
Exercisable - end of period	17,111,853
Shares vested or expected to vest	20,687,345
Weighted Average Exercise Price
Outstanding - beginning of year	$ 7.68
Granted	$ 3.95
Exercised	$ 0.32
Forfeited/expired	$ 8.21
Outstanding - end of period	$ 7.31
Exercisable - end of period	$ 7.86
Shares vested or expected to vest	$ 7.35
Weighted Average Remaining Contractual Term (in years)
Outstanding - end of period	3 years 9 months 18 days
Exercisable - end of period	2 years 9 months 18 days
Shares vested or expected to vest	3 years 8 months 12 days
Aggregate Intrinsic Value
Outstanding - end of period	$ 0.2
Exercisable - end of period	0.2
Shares vested or expected to vest	$ 0.2

XML

Segment Information - Additional Information (Detail)	3 Months Ended	6 Months Ended
	Apr. 01, 2012 Segment	Jun. 29, 2012 Segment
Segment Reporting Information [Line Items]
Number of operating segments	3	4

XML

Product Warranties - Additional Information (Detail)	6 Months Ended
	Jun. 29, 2012 Month Year Day
Product Warranty Liability [Line Items]
Basic limited warranty, minimum range in days	90
Basic limited warranty, maximum range in years	6
Number of months of estimated warranty included in current liabilities	12
Number of months over which warranty liability is classified as a long-term liability	12

XML

Fair Value Measurements

6 Months Ended

Jun. 29, 2012

Fair Value Measurements

4. Fair Value Measurements

We measure certain financial assets and liabilities at fair value on a recurring basis, and certain non-financial assets and liabilities on a nonrecurring basis. Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, marketable securities and derivatives. The carrying value of the cash and cash equivalents, accounts receivable and accounts payable are reasonable estimates of their fair value because of their short-term nature. We determine the fair value of marketable securities and derivatives based on observable inputs such as quoted prices in active markets, or other than quoted prices in active markets, that are observable either directly or indirectly.

Fair value is measured as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

• Level 1—Observable inputs, such as quoted prices in active markets;

• Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

• Level 3—Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In determining fair value for recurring financial assets and liabilities, we separate our financial instruments into three categories: marketable securities, other marketable securities and loan related to other marketable securities, and derivative financial instruments. These assets and liabilities are all valued based on the market approach that uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Marketable Securities

We use a third-party provider to determine fair values of marketable securities. The third-party provider receives market prices for each marketable security from a variety of industry standard data providers, security master files from large financial institutions and other third-party sources with reasonable levels of price transparency. The third-party provider uses these multiple prices as inputs into a pricing model to determine a weighted average price for each security. Tellabs management compares the third-party pricing with pricing from outside investment managers and other market sources to ensure the third-party pricing is reasonable. We classify U.S. Treasury bills and bonds as Level 1 based upon quoted prices in active markets. All other marketable securities are classified as Level 2 based upon the other than quoted prices with observable market data. The type of instruments valued based upon the observable market data include Federal Deposit Insurance Corporation (FDIC)-backed corporate debt obligations, investment grade corporate bonds, mortgaged backed debt obligations guaranteed by the Government National Mortgage Association (GNMA), certain FDIC-backed bank certificates of deposit, foreign government debt obligations and foreign corporate debt obligations.

Other Marketable Securities and Loan Related to Other Marketable Securities

We classify holdings in other marketable securities (Cisco common stock) and the related loan as Level 1 in the fair value hierarchy. We classify these as Level 1 since they are actively traded through a governed exchange.

Derivative Financial Instruments

Our foreign currency forward contracts are executed as exchange-traded. Market participants can be described as large money center or regional banks. Exchange-traded derivatives typically fall within Level 1 or Level 2 in the fair value hierarchy depending on whether they are deemed to be actively traded or not.

We have elected to value derivatives as Level 2, using observable market data at the measurement date and standard valuation techniques to convert future amounts to a single present amount (discounted). Key inputs for currency derivatives are the spot rate, interest rates and credit derivative swap spreads. The spot rate for each currency is the same spot rate used for all balance sheet translations at the measurement date. The following values are calculated from commonly quoted intervals available from a third-party financial information provider. Forward points and LIBOR rates are used to calculate a discount rate to apply to assets and liabilities. One-year credit default swap spreads are used to discount derivative assets, all of which have final maturities of less than 12 months. We calculate the discount to the derivative liabilities to reflect the potential credit risk to lenders and have used the spread over LIBOR based on the credit risk of our counterparties. Each asset is individually discounted to reflect our potential credit risk and we have used the spread over LIBOR based on similar credit risk. We do not adjust the fair value for immaterial credit risk.

We have applied a valuation method for financial assets and liabilities and recurring non-financial assets consistently during this period and prior periods. The following table sets forth by level within the fair value hierarchy “Financial instruments owned at fair value.” Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Assets and liabilities measured at fair value on a recurring basis are:

			Fair Value Measurements at June 29, 2012
	Balance at 6/29/12		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Investments in marketable securities
U.S. government debt obligations	$	158.7	$	158.7	$	—	$	—
Corporate debt obligations guaranteed by FDIC		20.3		—		20.3		—
Corporate debt obligations		191.4		—		191.4		—
Mortgaged backed debt obligations guaranteed by GNMA		90.0		—		90.0		—
Certificates of deposit guaranteed by FDIC		1.2		—		1.2		—
Foreign government debt obligations		194.5		—		194.5		—
Foreign corporate debt obligations		115.1		—		115.1		—
Subtotal		771.2		158.7		612.5		—
Other marketable securities		181.3		181.3		—		—
Derivative financial instruments		0.4		—		0.4		—
Total Assets	$	952.9	$	340.0	$	612.9	$	—
Liabilities
Loan related to other marketable securities	$	181.3	$	181.3	$	—	$	—
Derivative financial instruments		0.5		—		0.5		—
Total Liabilities	$	181.8	$	181.3	$	0.5	$	—

			Fair Value Measurements at December 30, 2011
	Balance at 12/30/11		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Investments in marketable securities
U.S. government debt obligations	$	195.7	$	195.7	$	—	$	—
Corporate debt obligations guaranteed by FDIC		66.8		—		66.8		—
Corporate debt obligations		201.5		—		201.5		—
Mortgaged backed debt obligations guaranteed by GNMA		91.2		—		91.2		—
Certificates of deposit guaranteed by FDIC		1.5		—		1.5		—
Foreign government debt obligations		223.0		—		223.0		—
Foreign corporate debt obligations		64.2		—		64.2		—
Subtotal		843.9		195.7		648.2		—
Other marketable securities		190.9		190.9		—		—
Derivative financial instruments		0.2		—		0.2		—
Total Assets	$	1,035.0	$	386.6	$	648.4	$	—
Liabilities
Loan related to other marketable securities	$	190.9	$	190.9	$	—	$	—
Derivative financial instruments		0.2		—		0.2		—
Total Liabilities	$	191.1	$	190.9	$	0.2	$	—

XML

Consolidated Revenue by Segment (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011	Jun. 29, 2012	Jul. 01, 2011
Segment Reporting Information [Line Items]
Revenue	$ 288.1	$ 316.7	$ 546.0	$ 639.1
Optical segment
Segment Reporting Information [Line Items]
Segment Revenue	122.4	127.5	226.8	248.4
Data segment
Segment Reporting Information [Line Items]
Segment Revenue	77.7	92.2	147.1	203.6
Access segment
Segment Reporting Information [Line Items]
Segment Revenue	37.3	39.8	73.2	79.9
Services segment
Segment Reporting Information [Line Items]
Segment Revenue	$ 50.7	$ 57.2	$ 98.9	$ 107.2

XML

Derivative Financial Instruments - Additional Information (Detail)	Jun. 29, 2012 USD ($)	Jun. 29, 2012 EUR (€)
Derivatives, Fair Value [Line Items]
Non-designated foreign currency forward contracts, gross notional equivalent amount	$ 212,300,000
Non-designated foreign currency forward contracts, number of currencies held	14
Net unrealized gain on net investment hedges in Accumulated other comprehensive income	21,200,000
Notional value of net investment hedges		€ 200,000,000

XML

Net Loss Per Share (Tables)

6 Months Ended

Jun. 29, 2012

Computation Of Net Loss Per Share

The following table sets forth the computation of net loss per share:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Numerator:
Net loss	$	(4.7	)	$	(29.3	)	$	(144.5	)	$	(53.4	)
Denominator:
Denominator for basic net loss per share – weighted average shares outstanding		367.1			364.6			366.4			363.8
Effect of dilutive securities:
Employee stock options and restricted and performance stock awards		—			—			—			—
Denominator for diluted net loss per share – adjusted weighted average shares outstanding and assumed conversions		367.1			364.6			366.4			363.8
Net loss per share, basic	$	(0.01	)	$	(0.08	)	$	(0.39	)	$	(0.15	)
Net loss per share, diluted1	$	(0.01	)	$	(0.08	)	$	(0.39	)	$	(0.15	)

¹ Dilutive securities are not included in the computation of diluted earnings per share when a company is in a loss position. As such, the numerator and the denominator used in computing both basic and diluted net loss per share for the second quarter and first six months of 2012 and the second quarter and first six months of 2011 are the same. Diluted weighted average shares outstanding were 368.1 million in the second quarter of 2012, 368.2 million in the first six months of 2012, and 365.9 million in the second quarter and the first six months of 2011.

XML

Segment Information (Tables)

6 Months Ended

Jun. 29, 2012

Consolidated Revenue By Segment

Consolidated revenue by segment follows:

	Second Quarter				Six Months
	6/29/12		7/1/11		6/29/12		7/1/11
Optical	$	122.4	$	127.5	$	226.8	$	248.4
Data		77.7		92.2		147.1		203.6
Access		37.3		39.8		73.2		79.9
Services		50.7		57.2		98.9		107.2
Total	$	288.1	$	316.7	$	546.0	$	639.1

Segment Profit And Reconciliation To Operating Loss By Segment

Segment profit (loss) and reconciliation to operating earnings (loss) by segment follows:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Optical	$	29.0		$	21.1		$	43.8		$	46.5
Data		5.4			(15.0	)		0.4			(15.8	)
Access		6.0			8.3			12.4			19.4
Services		17.2			21.6			32.4			31.6
Total segment profit	$	57.6		$	36.0		$	89.0			81.7
Sales and marketing expenses		(32.2	)		(40.8	)		(68.6	)		(85.5	)
General and administrative expenses		(19.7	)		(21.0	)		(40.8	)		(44.7	)
Equity-based compensation		(2.2	)		(4.3	)		(4.8	)		(8.0	)
Intangible asset amortization		(1.0	)		(5.1	)		(3.2	)		(10.3	)
Restructuring and other charges		(0.9	)		—			(106.9	)		(1.0	)
Operating earnings (loss)	$	1.6		$	(35.2	)	$	(135.3	)	$	(67.8	)

XML

Schedule of Equity Based Compensation Expense (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011	Jun. 29, 2012	Jul. 01, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Equity-based compensation expense before income taxes	$ 4.8	$ 8.0	$ 10.4	$ 15.6
Income tax benefit	(0.1)	(1.2)	(0.2)	(2.6)
Total equity-based compensation expense after income taxes	4.7	6.8	10.2	13.0
Cost Of Revenue - products
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Equity-based compensation expense before income taxes	0.2	0.5	0.6	1.0
Cost Of Revenue - services
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Equity-based compensation expense before income taxes	0.4	0.6	0.9	1.2
Research And Development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Equity-based compensation expense before income taxes	1.4	3.1	3.2	5.6
Sales And Marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Equity-based compensation expense before income taxes	0.8	1.3	1.7	2.6
General And Administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Equity-based compensation expense before income taxes	$ 2.0	$ 2.5	$ 4.0	$ 5.2

XML

Fair Value of Derivative Instruments in Consolidated Balance Sheet (Detail) (USD $) In Millions, unless otherwise specified	Jun. 29, 2012	Dec. 30, 2011
Asset Derivatives Reported In Miscellaneous Receivables And Other Current Assets
Derivatives, Fair Value [Line Items]
Net investment hedges, Assets	$ 0.1	$ 0.1
Balance sheet hedges (Non-designated hedges), Assets	0.3	0.1
Total derivative, Assets	0.4	0.2
Liability Derivatives Reported In Other Accrued Liabilities
Derivatives, Fair Value [Line Items]
Net investment hedges, Liabilities
Balance sheet hedges (Non-designated hedges), Liabilities	0.5	0.2
Total derivative, Liabilities	$ 0.5	$ 0.2

XML

Basis of Presentation - Additional Information (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 29, 2012	Jun. 29, 2012
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Reduction to revenue due to prior period adjustments	$ 3.2
Impact of prior period adjustment on net loss	$ 3.2	$ 2.9
Impact of prior period adjustment on earnings, per share	$ 0.01	$ 0.01

XML

Restructuring and Other Charges - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 29, 2012	Jun. 29, 2012	Jul. 01, 2011
Restructuring Cost and Reserve [Line Items]
Restructuring expense	$ 0.9	$ 106.9	$ 1.0
January 2012 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Expected workforce reductions		490
Restructuring expense	0.8	105.3
Expected total cash payments		29.6
July 2011 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Restructuring expense	0.1	1.7
Cumulative pretax restructuring charges incurred to date		21.4
Expected total cash payments		18.5
Optical segment | January 2012 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Cumulative pretax restructuring charges incurred to date		4.0
Optical segment | July 2011 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Cumulative pretax restructuring charges incurred to date		8.4
Data segment | January 2012 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Cumulative pretax restructuring charges incurred to date		98.2
Data segment | July 2011 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Cumulative pretax restructuring charges incurred to date		7.3
Access segment | January 2012 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Cumulative pretax restructuring charges incurred to date		1.3
Access segment | July 2011 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Cumulative pretax restructuring charges incurred to date		1.7
Services segment | January 2012 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Cumulative pretax restructuring charges incurred to date		1.8
Services segment | July 2011 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Cumulative pretax restructuring charges incurred to date		4.0
Severance and other termination benefits
Restructuring Cost and Reserve [Line Items]
Restructuring expense	(2.0)	22.1	1.2
Severance and other termination benefits | Previous Restructuring Plans
Restructuring Cost and Reserve [Line Items]
Restructuring expense		0.1
Severance and other termination benefits | January 2012 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Expected pretax charges		21
Restructuring expense		21.3
Redcution to severance	(1.6)
Severance and other termination benefits | July 2011 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Restructuring expense		0.9
Redcution to severance	(0.4)
Cumulative pretax restructuring charges incurred to date		15.4
Facility- And Asset-Related Charges | January 2012 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Expected pretax charges		37
Restructuring expense	2.4	35.1
Facility- And Asset-Related Charges | July 2011 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Restructuring expense	0.5	0.8
Cumulative pretax restructuring charges incurred to date		5.4
Accelerated amortization of intangible assets
Restructuring Cost and Reserve [Line Items]
Restructuring expense		47.7
Accelerated amortization of intangible assets | January 2012 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Expected pretax charges		48
Restructuring expense		47.7
Other Obligation | January 2012 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Restructuring expense		1.2
Other Obligation | July 2011 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Cumulative pretax restructuring charges incurred to date		$ 0.6

XML

Intangible Assets

6 Months Ended

Jun. 29, 2012

Intangible Assets

3. Intangible Assets

We amortize intangible assets with finite lives on a straight-line basis over their estimated useful lives. Intangible assets are reviewed for impairment when events or circumstances indicate their carrying amount may not be recoverable. We review the estimated useful lives of intangible assets to determine if events or circumstances warrant a change in the remaining useful life of an asset.

In conjunction with the January 30, 2012, restructuring plan, we recorded $47.7 million of accelerated amortization to Restructuring and other charges for abandoned intangible assets in the first quarter of 2012 related to the mobile packet core technology. As a result of the abandonment, we wrote these assets down to zero in the first quarter of 2012.

The gross carrying amount and accumulated amortization of intangible assets subject to amortization are as follows:

	6/29/12
	Gross Assets		Accumulated Amortization			Net
Developed technology	$	147.6	$	(147.3	)	$	0.3
Customer relationships		30.9		(24.7	)		6.2
Total	$	178.5	$	(172.0	)	$	6.5

	12/30/11
	Gross Assets			Accumulated Amortization			Net
Developed technology	$	212.8		$	(169.1	)	$	43.7
Customer relationships		35.2			(23.7	)		11.5
Trade names/trademarks		0.2			(0.2	)		—
Leasehold improvements		(2.7	)		2.3			(0.4	)
Non-compete arrangements		13.1			(10.8	)		2.3
Total	$	258.6		$	(201.5	)	$	57.1

The estimated future amortization expense of intangible assets subject to amortization as of June 29, 2012 follows:

2012 (remaining six months)	$	2.1
2013	$	4.2
2014	$	0.1
2015	$	0.1

XML

Summary of Restructuring and Other Charges (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 29, 2012	Jun. 29, 2012	Jul. 01, 2011
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	$ 0.9	$ 106.9	$ 1.0
Severance and other termination benefits
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	(2.0)	22.1	1.2
Facility and other exit costs
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	2.9	35.9	(0.2)
Accelerated amortization of intangible assets
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges		47.7
Other obligations
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges		$ 1.2

XML

Investments in Marketable Securities with Unrealized Losses (Detail) (USD $) In Millions, unless otherwise specified	Jun. 29, 2012	Dec. 30, 2011
Schedule of Available-for-sale Securities [Line Items]
Unrealized Loss Less than 12 months, Fair Value	$ 211.3	$ 136.5
Unrealized Loss Less than 12 months, Unrealized Loss	(0.7)	(0.9)
Unrealized Loss Greater than 12 months, Fair Value
Unrealized Loss Greater than 12 months, Unrealized Loss
Total, Fair Value	211.3	136.5
Total, Unrealized Loss	(0.7)	(0.9)
U.S. government debt obligations
Schedule of Available-for-sale Securities [Line Items]
Unrealized Loss Less than 12 months, Fair Value	46.2
Unrealized Loss Less than 12 months, Unrealized Loss	(0.1)
Unrealized Loss Greater than 12 months, Fair Value
Unrealized Loss Greater than 12 months, Unrealized Loss
Total, Fair Value	46.2
Total, Unrealized Loss	(0.1)
Corporate debt obligations
Schedule of Available-for-sale Securities [Line Items]
Unrealized Loss Less than 12 months, Fair Value	46.3	81.0
Unrealized Loss Less than 12 months, Unrealized Loss	(0.2)	(0.7)
Unrealized Loss Greater than 12 months, Fair Value
Unrealized Loss Greater than 12 months, Unrealized Loss
Total, Fair Value	46.3	81.0
Total, Unrealized Loss	(0.2)	(0.7)
Mortgaged backed debt obligations guaranteed by GNMA
Schedule of Available-for-sale Securities [Line Items]
Unrealized Loss Less than 12 months, Fair Value	37.1	31.4
Unrealized Loss Less than 12 months, Unrealized Loss	(0.2)	(0.1)
Unrealized Loss Greater than 12 months, Fair Value
Unrealized Loss Greater than 12 months, Unrealized Loss
Total, Fair Value	37.1	31.4
Total, Unrealized Loss	(0.2)	(0.1)
Foreign government debt obligations
Schedule of Available-for-sale Securities [Line Items]
Unrealized Loss Less than 12 months, Fair Value	49.1
Unrealized Loss Less than 12 months, Unrealized Loss	(0.1)
Unrealized Loss Greater than 12 months, Fair Value
Unrealized Loss Greater than 12 months, Unrealized Loss
Total, Fair Value	49.1
Total, Unrealized Loss	(0.1)
Foreign corporate debt obligations
Schedule of Available-for-sale Securities [Line Items]
Unrealized Loss Less than 12 months, Fair Value	32.6	24.1
Unrealized Loss Less than 12 months, Unrealized Loss	(0.1)	(0.1)
Unrealized Loss Greater than 12 months, Fair Value
Unrealized Loss Greater than 12 months, Unrealized Loss
Total, Fair Value	32.6	24.1
Total, Unrealized Loss	$ (0.1)	$ (0.1)

XML

Schedule of Cash-Settled Stock Appreciation Rights Activity (Detail) (Cash-settled SARs, USD $)	6 Months Ended
	Jun. 29, 2012
Cash-settled SARs
Shares
Non-vested - beginning of year	492,131
Granted	16,200
Forfeited/expired	(31,822)
Non-vested - end of period	476,509
Weighted Average Exercise Price
Weighted Average Exercise Price, Outstanding - beginning of year	$ 6.81
Weighted Average Exercise Price, Granted	$ 3.98
Weighted Average Exercise Price, Forfeited/expired	$ 7.37
Weighted Average Exercise Price, Outstanding - end of period	$ 6.67

XML

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 29, 2012		Jul. 01, 2011		Jun. 29, 2012		Jul. 01, 2011
Revenue
Products	$ 237.4		$ 259.5		$ 447.1		$ 531.9
Services	50.7		57.2		98.9		107.2
Total revenue	288.1		316.7		546.0		639.1
Cost of Revenue
Products	140.0		165.3		268.7		324.8
Services	33.9		36.2		67.4		76.8
Total cost of revenue	173.9		201.5		336.1		401.6
Gross Profit	114.2		115.2		209.9		237.5
Gross profit as a percentage of revenue	39.60%		36.40%		38.40%		37.20%
Gross profit as a percentage of revenue - products	41.00%		36.30%		39.90%		38.90%
Gross profit as a percentage of revenue - services	33.10%		36.70%		31.90%		28.40%
Operating Expenses
Research and development	58.8		83.5		125.7		163.8
Sales and marketing	32.2		40.8		68.6		85.5
General and administrative	19.7		21.0		40.8		44.7
Intangible asset amortization	1.0		5.1		3.2		10.3
Restructuring and other charges	0.9				106.9		1.0
Total operating expenses	112.6		150.4		345.2		305.3
Operating Earnings (Loss)	1.6		(35.2)		(135.3)		(67.8)
Operating earnings (loss) as a percentage of revenue	0.60%		(11.10%)		(24.80%)		(10.60%)
Other Income
Interest income, net	1.6		3.1		3.4		6.4
Other expense, net	(1.1)		(1.1)		(2.1)		(1.7)
Total other income	0.5		2.0		1.3		4.7
Earnings (Loss) Before Income Tax	2.1		(33.2)		(134.0)		(63.1)
Income tax (expense) benefit	(6.8)		3.9		(10.5)		9.7
Net Loss	(4.7)		(29.3)		(144.5)		(53.4)
Weighted Average Shares Outstanding
Basic	367.1		364.6		366.4		363.8
Diluted	367.1		364.6		366.4		363.8
Net Loss Per Share
Basic	$ (0.01)		$ (0.08)		$ (0.39)		$ (0.15)
Diluted	$ (0.01)	[1]	$ (0.08)	[1]	$ (0.39)	[1]	$ (0.15)	[1]
Comprehensive Loss	$ (35.8)		$ (16.5)		$ (162.9)		$ (15.1)
Cash Dividends Per Share	$ 0.02		$ 0.02		$ 0.04		$ 0.04

[1] Dilutive securities are not included in the computation of diluted earnings per share when a company is in a loss position. As such, the numerator and the denominator used in computing both basic and diluted net loss per share for the second quarter and first six months of 2012 and the second quarter and first six months of 2011 are the same. Diluted weighted average shares outstanding were 368.1 million in the second quarter of 2012, 368.2 million in the first six months of 2012, and 365.9 million in the second quarter and the first six months of 2011.

XML

Effect of Derivative Instruments Designated as Hedging Instruments on Consolidated Statements of Operations (Detail) (Net Investment Hedge, USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011	Jun. 29, 2012	Jul. 01, 2011
Net Investment Hedge
Derivatives, Fair Value [Line Items]
Gain (Loss) Recognized in Accumulated OCI, net (Effective Portion)	$ 6.7	$ (2.7)	$ 2.5	$ (10.0)
Gain (Loss) Recognized in Other Expense net : Excluded from Effectiveness testing	$ 0.1	$ (0.2)	$ 0.2	$ (0.3)

XML

Basis of Presentation

6 Months Ended

Jun. 29, 2012

Basis of Presentation

1. Basis of Presentation

We prepared the accompanying unaudited consolidated financial statements in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial statements, the requirements of Form 10-Q and applicable rules of the U.S. Securities and Exchange Commission’s Regulation S-X. Therefore, they do not include all disclosures normally required by U.S. generally accepted accounting principles for complete financial statements. Accordingly, the financial statements and notes herein are to be read in conjunction with our Annual Report on Form 10-K for the year ended December 30, 2011.

In our opinion, the accompanying unaudited consolidated financial statements include all adjustments (consisting of normal recurring accruals) that are necessary for a fair presentation. Operating results for interim periods are not necessarily indicative of operating results for the full year.

The segment disclosures in this Form 10-Q reflect our new reporting segments. See Note 11, Segment Information, for a more detailed discussion and explanation of the change.

We record revenue net of any sales-related taxes that are imposed on a sale to our customers regardless of whether or not we bill the customer for such tax. We believe this approach results in financial statements that are more easily understood by investors. We recorded a $3.2 million reduction to revenue in the second quarter of 2012, attributable to prior periods’ taxes on sales transactions involving deployment services in a foreign jurisdiction. The impact of this prior period adjustment on net loss was $3.2 million and $0.01 per share for the second quarter of 2012, and $2.9 million and $0.01 per share for the first six months of 2012.

XML

Schedule of Comprehensive Loss (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011	Jun. 29, 2012	Jul. 01, 2011
Comprehensive Income (Loss) [Line Items]
Net loss	$ (4.7)	$ (29.3)	$ (144.5)	$ (53.4)
Available-for-sale securities, net of tax	(0.2)	2.4	0.9	(0.6)
Net investment hedges, net of tax	6.7	(2.7)	2.6	(10.0)
Foreign currency translation adjustments	(37.6)	13.1	(21.9)	48.9
Comprehensive loss	$ (35.8)	$ (16.5)	$ (162.9)	$ (15.1)

XML

Gross Carrying Amount and Accumulated Amortization of Intangible Assets Subject to Amortization (Detail) (USD $) In Millions, unless otherwise specified	Jun. 29, 2012	Dec. 30, 2011
Finite-Lived Intangible Assets [Line Items]
Gross Assets	$ 178.5	$ 258.6
Accumulated Amortization	(172.0)	(201.5)
Net	6.5	57.1
Developed technology
Finite-Lived Intangible Assets [Line Items]
Gross Assets	147.6	212.8
Accumulated Amortization	(147.3)	(169.1)
Net	0.3	43.7
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Assets	30.9	35.2
Accumulated Amortization	(24.7)	(23.7)
Net	6.2	11.5
Trade names/trademarks
Finite-Lived Intangible Assets [Line Items]
Gross Assets		0.2
Accumulated Amortization		(0.2)
Leasehold improvements
Finite-Lived Intangible Assets [Line Items]
Gross Assets		(2.7)
Accumulated Amortization		2.3
Net		(0.4)
Non-compete arrangements
Finite-Lived Intangible Assets [Line Items]
Gross Assets		13.1
Accumulated Amortization		(10.8)
Net		$ 2.3

XML

Computation of Net Loss Per Share (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 29, 2012		Jul. 01, 2011		Jun. 29, 2012		Jul. 01, 2011
Earnings Per Share Disclosure [Line Items]
Net loss	$ (4.7)		$ (29.3)		$ (144.5)		$ (53.4)
Denominator for basic net loss per share - weighted average shares outstanding	367.1		364.6		366.4		363.8
Employee stock options and restricted and performance stock awards
Denominator for diluted net loss per share - adjusted weighted average shares outstanding and assumed conversions	367.1		364.6		366.4		363.8
Net loss per share, basic	$ (0.01)		$ (0.08)		$ (0.39)		$ (0.15)
Net loss per share, diluted	$ (0.01)	[1]	$ (0.08)	[1]	$ (0.39)	[1]	$ (0.15)	[1]

[1] Dilutive securities are not included in the computation of diluted earnings per share when a company is in a loss position. As such, the numerator and the denominator used in computing both basic and diluted net loss per share for the second quarter and first six months of 2012 and the second quarter and first six months of 2011 are the same. Diluted weighted average shares outstanding were 368.1 million in the second quarter of 2012, 368.2 million in the first six months of 2012, and 365.9 million in the second quarter and the first six months of 2011.

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 29, 2012

Assets And Liabilities Measured At Fair Value On A Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are:

			Fair Value Measurements at June 29, 2012
	Balance at 6/29/12		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Investments in marketable securities
U.S. government debt obligations	$	158.7	$	158.7	$	—	$	—
Corporate debt obligations guaranteed by FDIC		20.3		—		20.3		—
Corporate debt obligations		191.4		—		191.4		—
Mortgaged backed debt obligations guaranteed by GNMA		90.0		—		90.0		—
Certificates of deposit guaranteed by FDIC		1.2		—		1.2		—
Foreign government debt obligations		194.5		—		194.5		—
Foreign corporate debt obligations		115.1		—		115.1		—
Subtotal		771.2		158.7		612.5		—
Other marketable securities		181.3		181.3		—		—
Derivative financial instruments		0.4		—		0.4		—
Total Assets	$	952.9	$	340.0	$	612.9	$	—
Liabilities
Loan related to other marketable securities	$	181.3	$	181.3	$	—	$	—
Derivative financial instruments		0.5		—		0.5		—
Total Liabilities	$	181.8	$	181.3	$	0.5	$	—

			Fair Value Measurements at December 30, 2011
	Balance at 12/30/11		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Investments in marketable securities
U.S. government debt obligations	$	195.7	$	195.7	$	—	$	—
Corporate debt obligations guaranteed by FDIC		66.8		—		66.8		—
Corporate debt obligations		201.5		—		201.5		—
Mortgaged backed debt obligations guaranteed by GNMA		91.2		—		91.2		—
Certificates of deposit guaranteed by FDIC		1.5		—		1.5		—
Foreign government debt obligations		223.0		—		223.0		—
Foreign corporate debt obligations		64.2		—		64.2		—
Subtotal		843.9		195.7		648.2		—
Other marketable securities		190.9		190.9		—		—
Derivative financial instruments		0.2		—		0.2		—
Total Assets	$	1,035.0	$	386.6	$	648.4	$	—
Liabilities
Loan related to other marketable securities	$	190.9	$	190.9	$	—	$	—
Derivative financial instruments		0.2		—		0.2		—
Total Liabilities	$	191.1	$	190.9	$	0.2	$	—

XML

Estimated Future Amortization Expense of Intangible Assets Subject to Amortization (Detail) (USD $) In Millions, unless otherwise specified	Jun. 29, 2012
Expected Amortization Expense [Line Items]
2012 (remaining six months)	$ 2.1
2013	4.2
2014	0.1
2015	$ 0.1

XML

Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 29, 2012

Fair Value Of Derivative Instruments In The Consolidated Balance Sheet

The fair value of derivative instruments in the Consolidated Balance Sheet as of June 29, 2012, was as follows:

	Asset Derivatives Reported in Miscellaneous Receivables and Other Current Assets		Liability Derivatives Reported in Other Accrued Liabilities
Net investment hedges	$	0.1	$	—
Balance sheet hedges (Non-designated hedges)		0.3		0.5
Total derivatives	$	0.4	$	0.5

The fair value of derivative instruments in the Consolidated Balance Sheet as of December 30, 2011, was as follows:

	Asset Derivatives Reported in Miscellaneous Receivables and Other Current Assets		Liability Derivatives Reported in Other Accrued Liabilities
Net investment hedges	$	0.1	$	—
Balance sheet hedges (Non-designated hedges)		0.1		0.2
Total derivatives	$	0.2	$	0.2

Derivatives Designated as Hedging Instrument

Effect Of Derivative Instruments On The Consolidated Statements Of Operations

The effect of derivative instruments designated as hedging instruments on the Consolidated Statements of Operations and Comprehensive Loss follows:

	Second Quarter
	Gain (Loss) Recognized in Accumulated OCI, net (Effective Portion)					Gain (Loss) Recognized in Other Expense, net: Excluded from Effectiveness testing
	6/29/12		7/1/11			6/29/12		7/1/11
Net investment hedges	$	6.7	$	(2.7	)	$	0.1	$	(0.2	)

	Six Months
	Gain (Loss) Recognized in Accumulated OCI, net (Effective Portion)					Gain (Loss) Recognized in Other Expense, net: Excluded from Effectiveness testing
	6/29/12		7/1/11			6/29/12		7/1/11
Net investment hedges	$	2.5	$	(10.0	)	$	0.2	$	(0.3	)

Derivatives Not Designated as Hedging Instrument

Effect Of Derivative Instruments On The Consolidated Statements Of Operations

The effect of derivative instruments not designated as hedging instruments on the Consolidated Statements of Operations and Comprehensive Loss follows:

	Second Quarter					Six Months
	(Loss) Gain Recognized in Other Expense, net 1					(Loss) Gain Recognized in Other Expense, net 1
	6/29/12			7/1/11		6/29/12			7/1/11
Foreign currency forward and option contracts	$	(2.0	)	$	2.1	$	(0.6	)	$	6.5

¹ The gains or losses from changes in the fair value of the derivative contracts are generally offset by gains or losses of the underlying transactions being hedged.

XML

Restructuring and Other Charges

6 Months Ended

Jun. 29, 2012

Restructuring and Other Charges

2. Restructuring and Other Charges

On January 30, 2012, management initiated a restructuring plan that aligns expenses with revenue. Tellabs is stopping new development on the Tellabs^® SMARTCORE 9100 series for mobile packet core and consolidating research and development into fewer locations. The pretax charges for this plan will consist of $21 million for severance-related charges of approximately 490 employees, $37 million for facility- and asset-related charges and $48 million for the accelerated amortization for abandoned intangible assets. Restructuring expense for this plan for the second quarter of 2012 was $0.8 million, which consists of a reduction of $1.6 million for severance-related charges and a $2.4 million charge for facility- and asset-related charges. Restructuring expense for this plan for the first six months of 2012 was $105.3 million, which consists of $21.3 million for severance-related charges, $35.1 million for facility- and asset-related charges, $47.7 million for the accelerated amortization of abandoned intangible assets, and $1.2 million for other obligations. By segment, total charges to date under this plan are $4.0 million for Optical, $98.2 million for Data, $1.3 million for Access, and $1.8 million for Services. Estimated cash payments under this plan are expected to be $29.6 million through 2017. Other than the cash payments, actions under this plan are expected to be substantially completed by the end of the first quarter of 2013.

On July 25, 2011, management initiated a restructuring plan to align our cost structure to business conditions at that time. Restructuring expense for this plan for the second quarter of 2012 was $0.1 million, which consists of a reduction of $0.4 million for severance-related charges and a $0.5 million charge for facility- and asset-related charges. Restructuring expense for this plan for the first six months of 2012 was $1.7 million, which consists of $0.9 million for severance-related charges and $0.8 million for facility- and asset-related charges. Cumulative restructuring charges for this plan are $21.4 million, which consists of $15.4 million for severance-related charges, $5.4 million for facility- and asset-related charges, and $0.6 million for other obligations. By segment, total charges to date under this plan are $8.4 million for Optical, $7.3 million for Data, $1.7 million for Access and $4.0 million for Services. Estimated cash payments under this plan are expected to be $18.5 million through the third quarter of 2014. Other than the cash payments, restructuring actions under this plan were substantially completed in the second quarter of 2012.

A net restructuring credit for previous restructuring plans for the first six months of 2012 was $0.1 million for severance-related charges.

The balance for restructuring plans relates to net lease obligations that expire through 2017 and cash severance that we expect to pay through the first quarter of 2014.

The following table summarizes restructuring and other charges recorded for the plans mentioned above, as well as adjustments to reserves recorded for prior restructurings:

	Second Quarter					Six Months
	6/29/12			7/1/11		6/29/12		7/1/11
Severance and other termination benefits	$	(2.0	)	$	—	$	22.1	$	1.2
Facility and other exit costs		2.9			—		35.9		(0.2	)
Accelerated amortization of intangible assets		—			—		47.7		—
Other obligations		—			—		1.2		—
Total restructuring and other charges	$	0.9		$	—	$	106.9	$	1.0

The following table summarizes restructuring and other charges activity by segment for the second quarter and the first six months of 2012 and the status of the reserves at June 29, 2012:

			Second Quarter Activity
	Balance at 3/30/12		Restructuring Expense			Cash Payments			Other Activities1			Balance at 6/29/12
2012 Restructuring Plan
Optical	$	3.0	$	(0.3	)	$	(0.7	)	$	(0.1	)	$	1.9
Data		16.7		1.9			(7.5	)		(2.4	)		8.7
Access		1.1		(0.1	)		(0.2	)		—			0.8
Services		2.0		(0.7	)		(0.6	)		—			0.7
Subtotal 2012 Restructuring Plan		22.8		0.8			(9.0	)		(2.5	)		12.1
2011 Restructuring Plan
Optical		2.8		1.5			(1.8	)		(0.5	)		2.0
Data		4.2		—			(1.3	)		(0.1	)		2.8
Access		0.9		(0.1	)		(0.3	)		—			0.5
Services		1.7		(1.3	)		0.1			—			0.5
Subtotal 2011 Restructuring Plan		9.6		0.1			(3.3	)		(0.6	)		5.8
Previous Restructuring Plans
Optical		0.3		—			(0.1	)		—			0.2
Data		1.7		—			(0.2	)		—			1.5
Access		2.3		—			(0.1	)		—			2.2
Services		0.1		—			—			—			0.1
Subtotal Previous Restructuring Plans		4.4		—			(0.4	)		—			4.0
Total Restructuring Plans	$	36.8	$	0.9		$	(12.7	)	$	(3.1	)	$	21.9

			Six Months Activity
	Balance at 12/30/11		Restructuring Expense			Cash Payments			Other Activities1			Balance at 6/29/12
2012 Restructuring Plan
Optical	$	—	$	4.0		$	(1.2	)	$	(0.9	)	$	1.9
Data		—		98.2			(15.2	)		(74.3	)		8.7
Access		—		1.3			(0.4	)		(0.1	)		0.8
Services		—		1.8			(1.1	)		—			0.7
Subtotal 2012 Restructuring Plan		—		105.3			(17.9	)		(75.3	)		12.1
2011 Restructuring Plan
Optical		4.4		1.6			(3.4	)		(0.6	)		2.0
Data		5.5		—			(2.5	)		(0.2	)		2.8
Access		1.1		—			(0.6	)		—			0.5
Services		1.6		0.1			(1.2	)		—			0.5
Subtotal 2011 Restructuring Plan		12.6		1.7			(7.7	)		(0.8	)		5.8
Previous Restructuring Plans
Optical		0.4		(0.1	)		(0.1	)		—			0.2
Data		1.9		—			(0.4	)		—			1.5
Access		2.6		—			(0.4	)		—			2.2
Services		0.2		—			(0.1	)		—			0.1
Subtotal Previous Restructuring Plans		5.1		(0.1	)		(1.0	)		—			4.0
Total Restructuring Plans	$	17.7	$	106.9		$	(26.6	)	$	(76.1	)	$	21.9

¹ Other activities include accelerated amortization related to abandoned intangible assets, accelerated depreciation of property, plant and equipment to be disposed, the effects of currency translation as well as other changes that do not flow through restructuring expense.

XML

CONSOLIDATED BALANCE SHEETS (USD $) In Millions, unless otherwise specified	Jun. 29, 2012	Dec. 30, 2011
Current Assets
Cash and cash equivalents	$ 166.5	$ 132.7
Investments in marketable securities	771.2	843.9
Total cash, cash equivalents and marketable securities	937.7	976.6
Other marketable securities	181.3	190.9
Accounts receivable, net of allowances of $1.3 and $1.3	277.4	317.6
Inventories
Raw materials	39.5	33.7
Finished goods	84.1	110.3
Total inventories	123.6	144.0
Income taxes	25.5	27.9
Miscellaneous receivables and other current assets	35.3	39.8
Total Current Assets	1,580.8	1,696.8
Property, Plant and Equipment
Land	19.8	20.0
Buildings and improvements	188.5	197.4
Equipment	404.7	446.9
Total property, plant and equipment	613.0	664.3
Accumulated depreciation	(383.4)	(390.8)
Property, plant and equipment, net	229.6	273.5
Goodwill	121.9	122.0
Intangible Assets, Net of Amortization	6.5	57.1
Other Assets	94.4	98.6
Total Assets	2,033.2	2,248.0
Current Liabilities
Accounts payable	73.0	97.1
Accrued compensation	42.2	46.3
Restructuring and other charges	16.2	13.0
Income taxes	60.5	63.5
Loan related to other marketable securities	181.3	190.9
Deferred revenue	34.0	40.8
Other accrued liabilities	78.5	78.4
Total Current Liabilities	485.7	530.0
Long-Term Restructuring Liabilities	5.7	4.7
Income Taxes	20.6	21.2
Other Long-Term Liabilities	46.7	47.4
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; 508,071,837 and 505,238,503 shares issued	5.1	5.1
Additional paid-in capital	1,582.7	1,572.4
Treasury stock, at cost: 141,026,970 and 140,250,476 shares	(1,230.2)	(1,227.2)
Retained earnings	1,045.5	1,204.6
Accumulated other comprehensive income	71.4	89.8
Total Stockholders' Equity	1,474.5	1,644.7
Total Liabilities and Stockholders' Equity	$ 2,033.2	$ 2,248.0

XML

Contingencies

6 Months Ended

Jun. 29, 2012

Contingencies

12. Contingencies

Legal Proceedings

We are subject to legal claims and litigation arising in the ordinary course of business, such as employment or intellectual property claims, including the matters described below. We are unable to determine the likelihood of an unfavorable outcome against us and are unable to reasonably estimate a range of loss, if any.

Fujitsu Network Communications Inc. v. Tellabs, Inc. On January 28, 2008, Fujitsu Network Communications, Inc. and Fujitsu Limited filed a complaint in the United States District Court for the Eastern District of Texas against Tellabs in a case captioned Fujitsu Network Communications, Inc. and Fujitsu Limited v. Tellabs, Inc. and Tellabs Operations, Inc., Civil Action No. 6:08-cv-00022-LED. The complaint alleges infringement of U.S. Patent Nos. 5,526,163, 5,521,737, 5,386,418 and 6,487,686, and seeks unspecified damages including enhanced damages, as well as attorney fees and other remedies including injunctive relief. On March 21, 2008, Tellabs filed its answer, defenses and counterclaims in response to the complaint. A trial date had been set for May 10, 2010, in the Eastern District of Texas, however on July 7, 2009, the court granted Tellabs’ motion to transfer and issued an order transferring the action to the United States District Court for the Northern District of Illinois (Case No. 1:09-cv-04530). On September 15, 2009, the Court in the Northern District of Illinois consolidated this action, for discovery purposes only, with the action instituted by Tellabs against Fujitsu in the Northern District of Illinois. On November 4, 2010, the Court dismissed with prejudice Fujitsu’s claim for infringement of Fujitsu’s U.S. Patent No. 6,487,686. In conjunction with the dismissal, Fujitsu signed a covenant not to sue Tellabs for infringement as to any claim of Fujitsu’s U.S. Patent No. 6,487,686, as to any Tellabs products as they currently exist or existed in the past. On March 31, 2011, the Court issued an Order denying a motion by Tellabs for summary judgment of invalidity based on indefiniteness of Fujitsu’s U.S. Patent No. 5,386,418, and granting a motion by Fujitsu for summary judgment for judicial correction of an error in asserted Claim 1 of the same patent as originally issued. The Court issued a Markman ruling on Fujitsu’s U.S. Patent Nos. 5,526,163, 5,521,737 and 5,386,418, as well as patents from the consolidated action, in a Memorandum Opinion and Order dated September 29, 2011. On this same date the Court denied Fujitsu’s Motion for Leave to File First Amended Complaint and granted Tellabs’ motion to disallow the filing of Fujitsu’s First Amended Complaint and Fujitsu’s supplemental infringement contentions. Fujitsu’s motion had sought to amend its allegations of direct infringement with respect to products from Tellabs’ 5500, NGX, 7100 and 6300 product lines with various additional allegations, including allegations of indirect infringement. Fujitsu thereafter filed a further motion to amend its final infringement contentions, and on March 22, 2012, the Court denied Fujitsu’ motion. In turn, on April 30, 2012, Fujitsu Limited filed a new complaint against Tellabs in the Northern District of Illinois (see Civil Action No. 1:12-cv-03229 set forth below), setting forth additional allegations of infringement of the same patents that Fujitsu unsuccessfully sought to add to the present action. A trial date was set for July 16, 2012, however in an Order dated May 22, 2012, the Court reset the schedule so as to commence trial on Fujitsu’s U.S. Patent No. 7,227,681 (Civil Action No. 1:08-cv-3379, described below) on August 27, 2012, while deferring to a later time the setting of any trial date as to the remaining patents at issue between the parties. The parties conducted a non-binding mediation on May 30-31, 2012, which did not result in any settlement, and no other mediation between the parties is presently scheduled. As an ordinary component of expert discovery, each of the parties served an expert report prepared by the party’s respective damages experts, which are subject to a governing Protective Order of confidentiality. Notwithstanding these reports, the two sides remain far apart, and Tellabs cannot estimate the possible loss or range of loss. Tellabs contests any liability and will continue to vigorously defend itself accordingly.

Tellabs Operations, Inc. v. Fujitsu Limited and Fujitsu Network Communications Inc. On June 11, 2008, Tellabs Operations, Inc. filed a complaint in the United States District Court for the Northern District of Illinois against Fujitsu Limited and Fujitsu Network Communications, Inc. in a case captioned Tellabs Operations, Inc. v. Fujitsu Limited and Fujitsu Network Communications, Inc. Civil Action No. 1:08-cv-3379. The complaint alleges infringement of Tellabs Operations, Inc.’s U.S. Patent No. 7,369,772, and seeks unspecified damages including enhanced damages, as well as attorney fees and other remedies including injunctive relief. On September 5, 2008, each of Fujitsu Limited and Fujitsu Network Communications, Inc. served its answer, defenses and counterclaims in response to the complaint. Fujitsu Limited also brought counterclaims against Tellabs, Inc. and Tellabs Operations, Inc. alleging infringement of two U.S. patents, namely U.S. Patent Nos. 5,533,006 and 7,227,681, seeking unspecified damages including enhanced damages, as well as attorney fees and other remedies including injunctive relief. On September 22, 2008, Tellabs Operations, Inc. filed its answer to the counterclaims of Fujitsu Network Communications, Inc., and also filed its counterclaims and reply to counterclaims of Fujitsu Limited. On that same date, Tellabs, Inc. filed its answer and counterclaims against Fujitsu Limited. On September 15, 2009, the Court in the Northern District of Illinois consolidated this action, for discovery purposes only, with the action filed by Fujitsu transferred to the Northern District of Illinois by the Eastern District of Texas. On March 31, 2011, the Court issued an Order granting Tellabs’ motion for summary judgment of invalidity of all claims of Fujitsu’s U.S. Patent No. 5,533,006. The Court issued a Markman ruling on U.S. Patent Nos. 7,369,772 and 7,227,681, as well as patents from the consolidated action, in a Memorandum Opinion and Order dated September 29, 2011. On March 22, 2012, the Court denied Tellabs’ motion to sever and stay Tellabs’ claims involving U.S. Patent No. 7,369,772, in view of Tellabs’ January 12, 2012, filing of an amendment of the claims of the patent for further consideration by the United States Patent and Trademark Office, following a December 12, 2011, decision by the Board of Patent Appeals and Interferences (BPAI) to reverse the Examiner’s decision to not reject the claims of U.S. Patent No. 7,369,772 in an inter partes reexamination of the patent requested by Fujitsu in the Patent Office. On the same date the Court also denied a motion by Fujitsu to amend its final infringement contentions. In turn, on April 30, 2012, Fujitsu Limited filed a new complaint against Tellabs in the Northern District of Illinois (see Civil Action No. 1:12-cv-03229 set forth below), setting forth additional allegations of infringement of the same patents that Fujitsu unsuccessfully sought to add to the present action. A trial date had been set for July 16, 2012, however in an Order dated May 22, 2012, the Court reset the schedule so as to commence trial on Fujitsu’s U.S. Patent No. 7,227,681 on August 27, 2012, while deferring to a later time the setting of any trial date as to the remaining patents at issue between the parties. The parties conducted a non-binding mediation on May 30-31, 2012, which did not result in any settlement, and no other mediation between the parties is presently scheduled. On July 27, 2012, the Court responded to Fujitsu’s further motions related to claim construction of Fujitsu’s U.S. Patent No. 7,227,681, and denied a motion by Tellabs for summary judgment of invalidity of Fujitsu’s U.S. Patent No. 7,227,681. On July 31, 2012, the Court granted Fujitsu’s motion for summary judgment finding no inequitable conduct as to Fujitsu’s U.S. Patent No. 7,227,681. As an ordinary component of expert discovery, each of the parties served an expert report prepared by the party’s respective damages experts, which are subject to a governing Protective Order of confidentiality. Notwithstanding these reports, the two sides remain far apart, and Tellabs cannot estimate the possible loss or range of loss. Tellabs contests any liability and will continue to vigorously defend itself accordingly.

Fujitsu Limited v. Tellabs, Inc. On April 30, 2012, Fujitsu Limited filed a complaint in the United States District Court for the Northern District of Illinois against Tellabs in a case captioned Fujitsu Limited v. Tellabs Operations, Inc., Tellabs, Inc., and Tellabs North America, Inc., Civil Action No. 1:12-cv-03229. The complaint alleges infringement of U.S. Patent Nos. 5,526,163, 5,521,737, 5,386,418 and 7,227,681, the same patents at issue in pending Civil Action Nos. 1:09-cv-04530 and 1:08-cv-3379, and seeks unspecified damages including enhanced damages, as well as attorney fees and other remedies including injunctive relief. The complaint includes allegations of infringement that Fujitsu previously sought unsuccessfully to add to pending Civil Action Nos. 1:09-cv-04530 and 1:08-cv-3379. By the grant of a joint motion by the parties, Civil Action No. 1:12-cv-03229 was reassigned to the calendar of Chief Judge Holderman, who is also presiding over Civil Action Nos. 1:08-cv-03379 and 1:09-cv-04530. On June 4, 2012, the Tellabs defendants filed a motion to dismiss the Complaint pursuant to Fed. R. Civ. P. 12(B)(6), which is pending before the Court.

Telcordia Technologies Inc. v. Tellabs, Inc. On May 4, 2009, Telcordia Technologies, Inc. filed a complaint against Tellabs in the United States District Court for the District of New Jersey in a case captioned Telcordia Technologies Inc. v. Tellabs, Inc., Civil Action No. 2:09-cv-02089. The complaint alleges infringement of U.S. Patent Nos. 4,893,306, 4,835,763 and Re. 36,633, and seeks unspecified damages including enhanced damages, as well as attorney fees and other remedies including injunctive relief. On July 27, 2009, Telcordia filed a first amended complaint adding Tellabs Operations, Inc. and Tellabs North America, Inc. as additional defendants. On September 1, 2009, Tellabs filed answers, defenses and counterclaims in response to the first amended complaint. On December 15, 2009, the Court granted Tellabs’ motion to transfer, which resulted in a transfer of the action to the United States District Court for the District of Delaware (Case No. 1:2009cv00978). The parties are in the early phases of discovery. A trial date has not yet been set.

Cheetah Omni, LLC v. Alcatel-Lucent USA Inc. et al. On July 29, 2011, a complaint was filed in the United States District Court for the Eastern District of Texas, Tyler Division, against Tellabs and several other companies in a case captioned Cheetah Omni LLC v. Alcatel-Lucent USA Inc. et al., Civil Action No. 6:11cv390. The complaint includes allegations of infringement by Tellabs, Inc., Tellabs Operations, Inc., and Tellabs North America, Inc., of U.S. Patent Nos. 6,888,661, 6,847,479, 6,856,459 and 6,940,647, and seeks unspecified damages, as well as interest, costs, disbursements, attorney fees and other remedies including injunctive relief. Tellabs was served with the original complaint on August 31, 2011. Before any response to the original complaint was due, Tellabs was served with an amended complaint on October 14, 2011. On November 8, 2011, the Tellabs entities filed their answers, defenses and counterclaims in response to the amended complaint. The parties are in discovery. A trial date has been set for March 10, 2014.

Internet Machines LLC v. Avnet, Inc., et al. On February 13, 2012, a second amended complaint was filed in the United States District Court for the Eastern District of Texas, Tyler Division, naming Tellabs, Inc. among several defendants in a case captioned Internet Machines LLC v. Avnet, Inc., et al., Civil Action Nos. 6:10-CV-548-MHS and 6:11-CV-250-MHS (Consolidated). The plaintiff thereafter filed a third amended complaint on March 2, 2012. The amended complaints allege infringement of U.S. Patent Nos. 7,454,552, 7,421,532, 7,814,259 and 7,945,722, and seek unspecified damages including enhanced damages, as well as interest, costs, expenses, attorney fees and other remedies including injunctive relief. On March 27, 2012, Tellabs filed its answer, defenses and counterclaims in response to the third amended complaint. The parties are in discovery. A pretrial conference has been set for February 4, 2013.

Apart from the matters described above, we are and in the future may be subject to various legal proceedings, claims and litigation arising in the ordinary course of business.

The proceedings described above, including the Fujitsu matters, the Telcordia matter, the Cheetah Omni matter, and the Internet Machines matter, involve costly litigation and may result in diverting management’s time, attention and resources, delaying or halting product shipments or services delivery, requiring us to pay amounts in any damages and/or settlements, requiring us to enter into royalty-bearing licensing arrangements or to obtain substitute technology of lower quality or higher costs, and otherwise imposing obligations or restrictions on us and our business. We may be unsuccessful in any such litigation, despite the time, money, energy and bases for our assertion and/or defense of the matters. We may also be unable, if necessary, to enter into licensing arrangements or to obtain substitute technology on commercially reasonable terms or any terms. Any such settlements or inability to prevail or mitigate any liability or to obtain such licensing arrangements or substitute technology may adversely affect our business, financial condition and operating results. See Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 30, 2011.

In addition to the matters described above, Tellabs has recently settled or is in the process of settling the following claims.

Makor Issues & Rights, Ltd. v. Tellabs, Inc. On June 18, 2002, a class action complaint was filed in the United States District Court of the Northern District of Illinois against Tellabs, Michael Birck (Chairman of the Board of Tellabs) and Richard Notebaert (former CEO, President and Director of Tellabs). Thereafter, eight similar complaints were also filed in the United States District Court of the Northern District of Illinois. All nine of these actions were subsequently consolidated, and on December 3, 2002, a consolidated amended class action complaint was filed against Tellabs, Mr. Birck, Mr. Notebaert, and certain other of our current or former officers and/or directors. The consolidated amended complaint alleged that during the class period (December 11, 2000-June 19, 2001) the defendants violated the federal securities laws by making materially false and misleading statements, including, among other things, allegedly providing revenue forecasts that were false and misleading, misrepresenting demand for our products, and reporting overstated revenue for the fourth quarter 2000 in our financial statements. Further, certain of the individual defendants were alleged to have violated the federal securities laws by trading our securities while allegedly in possession of material, non-public information about us pertaining to these matters. The consolidated amended complaint seeks unspecified restitution, damages and other relief.

On January 17, 2003, Tellabs and the other named defendants filed a motion to dismiss the consolidated amended class action complaint in its entirety. On May 19, 2003, the Court granted our motion and dismissed all counts of the consolidated amended complaint, while affording plaintiffs an opportunity to replead. On July 11, 2003, plaintiffs filed a second consolidated amended class action complaint against Tellabs, Messrs. Birck and Notebaert, and many (although not all) of the other previously named individual defendants, realleging claims similar to those contained in the previously dismissed consolidated amended class action complaint. We filed a second motion to dismiss on August 22, 2003, seeking the dismissal with prejudice of all claims alleged in the second consolidated amended class action complaint. On February 19, 2004, the Court issued an order granting that motion and dismissed the action with prejudice. On March 18, 2004, the plaintiffs filed a Notice of Appeal to the United States Federal Court of Appeal for the Seventh Circuit, appealing the dismissal. The appeal was fully briefed and oral argument was heard on January 21, 2005. On January 25, 2006, the Seventh Circuit issued an opinion affirming in part and reversing in part the judgment of the district court, and remanding for further proceedings. On February 8, 2006, defendants filed with the Seventh Circuit a petition for rehearing with suggestion for rehearing en banc. On April 19, 2006, the Seventh Circuit ordered plaintiffs to file an answer to the petition for rehearing, which was filed by the plaintiffs on May 3, 2006. On July 10, 2006, the Seventh Circuit denied the petition for rehearing with a minor modification to its opinion, and remanded the case to the district court. On September 22, 2006, defendants filed a motion in the district court to dismiss some (but not all) of the remaining claims. On October 3, 2006, the defendants filed with the United States Supreme Court a petition for a writ of certiorari seeking to appeal the Seventh Circuit’s decision. On January 5, 2007, the defendants’ petition was granted. The United States Supreme Court heard oral arguments on March 28, 2007. On June 21, 2007, the United States Supreme Court vacated the Seventh Circuit’s judgment and remanded the case for further proceedings. On November 1, 2007, the Seventh Circuit heard oral arguments for the remanded case. On January 17, 2008, the Seventh Circuit issued an opinion adhering to its earlier opinion reversing in part the judgment of the district court, and remanded the case to the district court for further proceedings. On February 24, 2009, the district court granted plaintiffs’ motion for class certification. On August 13, 2010, the Court granted in large part Tellabs’ motion for summary judgment. Subsequently, the parties agreed to settle the lawsuit and on July 27, 2011, the Court granted the plaintiffs’ motion for final approval of class action settlement and dismissed the lawsuit without prejudice. The lawsuit was dismissed with prejudice on June 15, 2012. All settlement amounts were paid by Tellabs’ insurers.

XML

Document and Entity Information	6 Months Ended
	Jun. 29, 2012	Jul. 27, 2012
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 29, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Trading Symbol	TLAB
Entity Registrant Name	TELLABS INC
Entity Central Index Key	0000317771
Current Fiscal Year End Date	--12-28
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		367,361,127

XML

Stock Repurchase Programs

6 Months Ended

Jun. 29, 2012

Stock Repurchase Programs

13. Stock Repurchase Programs

We repurchase outstanding common stock under two programs authorized by our Board of Directors, the Rule 10b5-1 program and a repurchase program of up to $600 million of outstanding common stock. In addition, we purchase shares to cover withholding taxes on shares issued under employee stock plans.

Under the 10b5-1 program, we intend to continue to use cash generated by employee stock option exercises (other than those of Company officers and board members) to repurchase stock. We purchased four thousand shares for $16 thousand in the second quarter of 2012, and eight thousand shares for $31 thousand in the first six months of 2012 under this program.

As of June 29, 2012, we purchased 56.6 million shares of our common stock under the $600 million repurchase program at a total cost of $375.4 million, leaving $224.6 million available to be purchased under this program. We did not purchase any shares under this program in the second quarter and first half of 2012. We may change our repurchase activity and we provide no assurance that we will continue our repurchase activity in the future.

In addition, we purchased 0.3 million shares for $1.2 million in the second quarter of 2012, and 0.8 million shares for $3.0 million in the first six months of 2012 to cover minimum withholding taxes on shares issued under employee stock plans.

We record repurchased shares as Treasury stock.

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Jun. 29, 2012	Dec. 30, 2011
Accounts receivable, allowances	$ 1.3	$ 1.3
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, authorized	1,000,000,000	1,000,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares issued	508,071,837	505,238,503
Treasury stock, shares	141,026,970	140,250,476

XML

Product Warranties

6 Months Ended

Jun. 29, 2012

Product Warranties

7. Product Warranties

We provide warranties for all of our products. The specific terms and conditions of those warranties vary depending on the product. We provide a basic limited warranty for periods ranging from 90 days to 6 years.

The estimate of warranty liability involves many factors, including the number of units shipped, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of the recorded warranty liability and adjust the amounts as necessary. Other adjustments to accruals for product warranties represent reductions due to favorable experience to previous estimates.

We classify the portion of warranty liability that we expect to incur in the next 12 months as a current liability. We classify the portion of warranty liability that we expect to incur more than 12 months in the future as a long-term liability. Product warranty liabilities are as follows:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Balance – beginning of period	$	17.3		$	21.2		$	17.0		$	19.4
Accruals for product warranties		1.0			2.1			2.9			4.9
Settlements		(1.3	)		(1.9	)		(2.2	)		(2.3	)
Other adjustments to accruals for product warranties		(0.7	)		(1.4	)		(1.4	)		(2.0	)
Balance – end of period	$	16.3		$	20.0		$	16.3		$	20.0

	Balance at 6/29/12		Balance at 7/1/11
Balance sheet classification - end of period
Other accrued liabilities	$	7.4	$	8.7
Other long-term liabilities		8.9		11.3
Total product warranty liabilities	$	16.3	$	20.0

XML

Derivative Financial Instruments

6 Months Ended

Jun. 29, 2012

Derivative Financial Instruments

6. Derivative Financial Instruments

Financial Contracts and Market Risk

We conduct business on a global basis in U.S. and foreign currencies subjecting us to risks associated with fluctuating foreign exchange rates. To mitigate these risks, we use derivative foreign exchange contracts to address nonfunctional exposures that are expected to be settled in one year or less. The derivative foreign exchange contracts consist of foreign currency forward and option contracts.

Derivative financial contracts involve elements of market and credit risk. The market risk that results from these contracts relates to changes in foreign currency exchange rates, which generally are offset by changes in the value of the underlying assets or liabilities being held. Credit risk relates to the risk of nonperformance by a counterparty to one of the derivative contracts. We do not believe there is a significant credit risk associated with our hedging activities. We monitor the counterparties’ credit ratings and other market data to minimize credit risk. In addition, we also limit the aggregate contract amount entered into with any one financial institution to mitigate credit risk.

Balance Sheet Hedges (Non-designated Hedges)

Short-term monetary assets and liabilities denominated in currencies other than the functional currency are remeasured through income as foreign currency rates fluctuate. Changes in the value of derivative contracts intended to offset these fluctuations are also recorded in income. These derivative contracts are not designated as hedges. At June 29, 2012, we held non-designated foreign currency forward contracts in 14 currencies, with a gross notional equivalent of $212.3 million.

Net Investment Hedges

We entered into three-month foreign currency forward contracts and a three-month foreign currency collar contract, designated as net investment hedges, to hedge a portion of our net investment in one of our foreign subsidiaries to preserve the U.S. dollar value of our Euro cash. Effective changes in the fair value of these contracts, less applicable deferred income taxes are recorded within Accumulated other comprehensive income. Those amounts will be reflected in income only when we dispose of the investment in the foreign subsidiary. We conduct monthly effectiveness tests of net investment hedges on a spot-to-spot basis, excluding forward points, and any measurement of ineffectiveness is recorded in income. As of June 29, 2012, we had a net unrealized gain of $21.2 million in Accumulated other comprehensive income related to settled contracts. We held net investment hedges with a notional value of 200 million Euros at the end of the quarter.

The fair value of derivative instruments in the Consolidated Balance Sheet as of June 29, 2012, was as follows:

	Asset Derivatives Reported in Miscellaneous Receivables and Other Current Assets		Liability Derivatives Reported in Other Accrued Liabilities
Net investment hedges	$	0.1	$	—
Balance sheet hedges (Non-designated hedges)		0.3		0.5
Total derivatives	$	0.4	$	0.5

The fair value of derivative instruments in the Consolidated Balance Sheet as of December 30, 2011, was as follows:

	Asset Derivatives Reported in Miscellaneous Receivables and Other Current Assets		Liability Derivatives Reported in Other Accrued Liabilities
Net investment hedges	$	0.1	$	—
Balance sheet hedges (Non-designated hedges)		0.1		0.2
Total derivatives	$	0.2	$	0.2

The effect of derivative instruments designated as hedging instruments on the Consolidated Statements of Operations and Comprehensive Loss follows:

	Second Quarter
	Gain (Loss) Recognized in Accumulated OCI, net (Effective Portion)					Gain (Loss) Recognized in Other Expense, net: Excluded from Effectiveness testing
	6/29/12		7/1/11			6/29/12		7/1/11
Net investment hedges	$	6.7	$	(2.7	)	$	0.1	$	(0.2	)

	Six Months
	Gain (Loss) Recognized in Accumulated OCI, net (Effective Portion)					Gain (Loss) Recognized in Other Expense, net: Excluded from Effectiveness testing
	6/29/12		7/1/11			6/29/12		7/1/11
Net investment hedges	$	2.5	$	(10.0	)	$	0.2	$	(0.3	)

The effect of derivative instruments not designated as hedging instruments on the Consolidated Statements of Operations and Comprehensive Loss follows:

	Second Quarter					Six Months
	(Loss) Gain Recognized in Other Expense, net 1					(Loss) Gain Recognized in Other Expense, net 1
	6/29/12			7/1/11		6/29/12			7/1/11
Foreign currency forward and option contracts	$	(2.0	)	$	2.1	$	(0.6	)	$	6.5

¹ The gains or losses from changes in the fair value of the derivative contracts are generally offset by gains or losses of the underlying transactions being hedged.

XML

Investments (Tables)

6 Months Ended

Jun. 29, 2012

Available-For-Sale Marketable Securities

At June 29, 2012, and December 30, 2011, available-for-sale marketable securities consisted of the following:

	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
June 29, 2012
U.S. government debt obligations	$	158.4	$	0.4	$	(0.1	)	$	158.7
Corporate debt obligations guaranteed by FDIC		20.2		0.1		—			20.3
Corporate debt obligations		190.4		1.2		(0.2	)		191.4
Mortgaged backed debt obligations guaranteed by GNMA		89.6		0.6		(0.2	)		90.0
Certificates of deposit guaranteed by FDIC		1.2		—		—			1.2
Foreign government debt obligations		192.7		1.9		(0.1	)		194.5
Foreign corporate debt obligations		114.7		0.5		(0.1	)		115.1
Total	$	767.2	$	4.7	$	(0.7	)	$	771.2
December 30, 2011
U.S. government debt obligations	$	195.2	$	0.5	$	—		$	195.7
Corporate debt obligations guaranteed by FDIC		66.6		0.2		—			66.8
Corporate debt obligations		201.4		0.8		(0.7	)		201.5
Mortgaged backed debt obligations guaranteed by GNMA		90.9		0.4		(0.1	)		91.2
Certificates of deposit guaranteed by FDIC		1.5		—		—			1.5
Foreign government debt obligations		221.5		1.5		—			223.0
Foreign corporate debt obligations		64.1		0.2		(0.1	)		64.2
Total	$	841.2	$	3.6	$	(0.9	)	$	843.9

Maturities Of Available-For-Sale Marketable Securities

The following table summarizes the maturities of our available-for-sale marketable securities at June 29, 2012:

	Amortized Cost		Fair Value
Less than 12 months	$	188.0	$	188.3
Due in 1 to 5 years		489.7		492.9
Due after 5 years		89.5		90.0
Total	$	767.2	$	771.2

Investments In Marketable Securities With Unrealized Losses

Investments in marketable securities with unrealized losses at June 29, 2012, and December 30, 2011, were as follows:

	Unrealized Loss Less than 12 months					Unrealized Loss Greater than 12 months				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
June 29, 2012
U.S. government debt obligations	$	46.2	$	(0.1	)	$	—	$	—	$	46.2	$	(0.1	)
Corporate debt obligations		46.3		(0.2	)		—		—		46.3		(0.2	)
Mortgaged backed debt obligations guaranteed by GNMA		37.1		(0.2	)		—		—		37.1		(0.2	)
Foreign government debt obligations		49.1		(0.1	)		—		—		49.1		(0.1	)
Foreign corporate debt obligations		32.6		(0.1	)		—		—		32.6		(0.1	)
Total	$	211.3	$	(0.7	)	$	—	$	—	$	211.3	$	(0.7	)
December 30, 2011
Corporate debt obligations	$	81.0	$	(0.7	)	$	—	$	—	$	81.0	$	(0.7	)
Mortgaged backed debt obligations guaranteed by GNMA		31.4		(0.1	)		—		—		31.4		(0.1	)
Foreign corporate debt obligations		24.1		(0.1	)		—		—		24.1		(0.1	)
Total	$	136.5	$	(0.9	)	$	—	$	—	$	136.5	$	(0.9	)

Gross Realized Gains And Losses Related To Fixed Income Investments

The following table presents gross realized gains and losses related to fixed income investments for the three months and six months ending June 29, 2012, and July 1, 2011:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Gross realized gains	$	0.2		$	1.0		$	0.5		$	1.4
Gross realized losses		(0.2	)		(1.3	)		(0.5	)		(1.8	)
Total	$	—		$	(0.3	)	$	—		$	(0.4	)

XML

Net Loss Per Share

6 Months Ended

Jun. 29, 2012

Net Loss Per Share

14. Net Loss Per Share

The following table sets forth the computation of net loss per share:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Numerator:
Net loss	$	(4.7	)	$	(29.3	)	$	(144.5	)	$	(53.4	)
Denominator:
Denominator for basic net loss per share – weighted average shares outstanding		367.1			364.6			366.4			363.8
Effect of dilutive securities:
Employee stock options and restricted and performance stock awards		—			—			—			—
Denominator for diluted net loss per share – adjusted weighted average shares outstanding and assumed conversions		367.1			364.6			366.4			363.8
Net loss per share, basic	$	(0.01	)	$	(0.08	)	$	(0.39	)	$	(0.15	)
Net loss per share, diluted1	$	(0.01	)	$	(0.08	)	$	(0.39	)	$	(0.15	)

¹ Dilutive securities are not included in the computation of diluted earnings per share when a company is in a loss position. As such, the numerator and the denominator used in computing both basic and diluted net loss per share for the second quarter and first six months of 2012 and the second quarter and first six months of 2011 are the same. Diluted weighted average shares outstanding were 368.1 million in the second quarter of 2012, 368.2 million in the first six months of 2012, and 365.9 million in the second quarter and the first six months of 2011.

XML

Comprehensive Loss

6 Months Ended

Jun. 29, 2012

Comprehensive Loss

10. Comprehensive Loss

Comprehensive loss for the second quarter and the first six months of 2012 and 2011 consists of the following:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Net loss	$	(4.7	)	$	(29.3	)	$	(144.5	)	$	(53.4	)
Net change in unrealized gains (losses) related to:
Available-for-sale securities, net of tax		(0.2	)		2.4			0.9			(0.6	)
Net investment hedges, net of tax		6.7			(2.7	)		2.6			(10.0	)
Foreign currency translation adjustments		(37.6	)		13.1			(21.9	)		48.9
Comprehensive loss	$	(35.8	)	$	(16.5	)	$	(162.9	)	$	(15.1	)

Accumulated other comprehensive income has no impact on our net loss but is reflected in our consolidated balance sheet through adjustments to stockholders’ equity. Accumulated other comprehensive income derives from unrealized gains (losses) and related adjustments on available-for-sale securities, unrealized gains (losses) on net investment hedges, foreign currency translation adjustments, unrecognized prior service costs and unrecognized net gains on our retiree medical plan.

Accumulated other comprehensive income (net of tax) for the first six months of 2012 consists of the following:

	Unrealized Net Gain (Loss) on Available-for- Sale Securities			Net Investment Hedges			Foreign Currency Translation Adjustments			Unrecognized Prior Service Cost			Unrecognized Net Gain on Retiree Medical Plan		Accumulated Other Comprehensive Income
Balance at December 30, 2011	$	1.9		$	18.6		$	67.5		$	(0.2	)	$	2.0	$	89.8
Pretax activity, net		1.2			4.1			(21.9	)		—			—		(16.6	)
Tax effect		(0.3	)		(1.5	)		—			—			—		(1.8	)
Balance at June 29, 2012	$	2.8		$	21.2		$	45.6		$	(0.2	)	$	2.0	$	71.4

XML

Accumulated Other Comprehensive Loss Income Net of Tax (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 29, 2012
Accumulated Other Comprehensive Income (Loss) [Line Items]
Unrealized Net Gain (Loss) on Available-for-Sale Securities, Beginning Balance	$ 1.9
Unrealized Net Gain (Loss) on Available-for-Sale Securities, Pretax activity, net	1.2
Unrealized Net Gain (Loss) on Available-for-Sale Securities, Tax effect	(0.3)
Unrealized Net Gain (Loss) on Available-for-Sale Securities, Ending Balance	2.8
Other Comprehensive Income Unrealized Gain Loss On Net Investment Hedges, Beginning Balance	18.6
Other Comprehensive Income Unrealized Gain Loss On Net Investment Hedges, Pretax activity net	4.1
Other Comprehensive Income Unrealized Gain Loss On Net Investment Hedges Tax effect	(1.5)
Other Comprehensive Income Unrealized Gain Loss On Net Investment Hedges, Ending Balance	21.2
Foreign Currency Translation Adjustments, Beginning Balance	67.5
Foreign Currency Translation Adjustments, Pretax activity, net	(21.9)
Foreign Currency Translation Adjustments, Tax effect
Foreign Currency Translation Adjustments, Ending Balance	45.6
Unrecognized Prior Service Cost, Beginning Balance	(0.2)
Unrecognized Prior Service Cost, Pretax activity, net
Unrecognized Prior Service Cost, Tax effect
Unrecognized Prior Service Cost, Ending Balance	(0.2)
Unrecognized Net Gain (Loss) on Retiree Medical Plan, Beginning Balance	2.0
Unrecognized Net Gain (Loss) on Retiree Medical Plan, Pretax activity, net
Unrecognized Net Gain (Loss) on Retiree Medical Plan, Tax effect
Unrecognized Net Gain (Loss) on Retiree Medical Plan, Ending Balance	2.0
Accumulated Other Comprehensive Income, Beginning Balance	89.8
Accumulated Other Comprehensive Income, Pretax activity, net	(16.6)
Accumulated Other Comprehensive Income, Tax effect	(1.8)
Accumulated Other Comprehensive Income, Ending Balance	$ 71.4

XML

Equity-Based Compensation

6 Months Ended

Jun. 29, 2012

Equity-Based Compensation

8. Equity-Based Compensation

The Tellabs, Inc. Amended and Restated 2004 Incentive Compensation Plan (2004 Plan) provides for the grant of short-term and long-term incentives, including stock options, stock appreciation rights (SARs), restricted stock and performance stock units (PSUs). Equity-based grants vest over one to four years, with the majority vesting over a three-year period. We recognize compensation expense for stock options, restricted stock and PSUs over the service period based on the fair value on the grant date. Stock options and SARs granted but unexercised expire 10 years from the grant date. Stockholders previously approved 53,889,977 shares for grant under the 2004 Plan, of which 17,451,007 remain available for grant at June 29, 2012.

Stock Options

We estimate the fair value of stock options using the Black-Scholes option-pricing model. This model requires the use of assumptions that will have a significant impact on the fair value estimate. The following table summarizes the assumptions used to compute the weighted average fair value of stock option grants:

	6/29/12			7/1/11
Expected volatility		43.3	%		46.4	%
Risk-free interest rate		0.9	%		2.2	%
Expected term (in years)		5.3			5.3
Expected dividend yield		2.0	%		1.5	%

We based our calculation of expected volatility on a combination of historical and implied volatility for options granted. We based the risk-free interest rate on the U.S. Treasury yield curve in effect at the date of grant. We estimated the expected term of the options using their vesting period, post-vesting employment termination behavior and historical exercise patterns. We based the expected dividend yield on the option’s exercise price and annualized dividend rate at the date of grant.

The following is a summary of stock option activity during 2012 as of June 29, 2012:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in  millions)
Outstanding – beginning of year		20,719,482		$	7.68
Granted		2,099,707		$	3.95
Exercised		(110,577	)	$	0.32
Forfeited/expired		(1,667,813	)	$	8.21
Outstanding – end of period		21,040,799		$	7.31		3.8	$	0.2
Exercisable – end of period		17,111,853		$	7.86		2.8	$	0.2
Shares vested or expected to vest		20,687,345		$	7.35		3.7	$	0.2

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on our closing stock price as of June 29, 2012, that the option holders would have received had all holders exercised their options as of that date. The aggregate intrinsic value of exercised stock options during the second quarter of 2012 was $0.2 million.

The weighted average fair value of stock options granted during the first six months of 2012 was $1.29.

Cash-Settled Stock Appreciation Rights

The 2004 Plan provides for the granting of cash-settled SARs in conjunction with, or independent of, the stock options under the 2004 Plan. These SARs allow the holder to receive in cash the difference between the cash-settled SARs’ grant price (the market value of our stock on the grant date) and the market value of our stock on the date the holder exercises the SAR. There were no cash payments during the first half of 2012 and 2011.

The following is a summary of cash-settled SARs activity during 2012 as of June 29, 2012:

	Shares			Weighted Average Exercise Price
Outstanding – beginning of year		492,131		$	6.81
Granted		16,200		$	3.98
Forfeited/expired		(31,822	)	$	7.37
Outstanding – end of period		476,509		$	6.67

Restricted Stock

The fair market value of restricted stock vested was $7.9 million in the first half of 2012. The weighted average grant date fair value of restricted stock was $3.95 per share in the first six months of 2012 and $5.37 per share in the first six months of 2011.

The following is a summary of restricted stock activity during 2012 as of June 29, 2012:

	Shares			Weighted Average Grant Date Fair Value
Non-vested – beginning of year		4,854,587		$	6.29
Granted		2,304,298		$	3.95
Vested		(2,042,116	)	$	6.25
Forfeited		(1,028,297	)	$	6.52
Non-vested – end of period		4,088,472		$	4.93

Performance Stock Units

The 2004 Plan provides for the granting of PSUs. We granted 1,962,549 PSUs in the first six months of 2012 and 1,640,832 PSUs in the first six months of 2011. The PSUs granted in the first six months of 2012 entitle the recipients to receive shares of our common stock commencing in the first quarter of 2013, contingent on the achievement of operating earnings targets and strategic goals for the 2012 fiscal year. Following achievement of these measures and subject to continued employment, one-third of such shares will be issued in annual installments beginning in the first quarter of 2013. At maximum target performance, we will issue two shares for each PSU granted. The weighted average fair value of PSUs granted in the first six months of 2012 was $3.98 per share and the weighted average fair value of PSUs granted in the first six months of 2011 was $5.40 per share.

The PSUs granted in 2011 entitle the recipients to receive shares of our common stock commencing in the first quarter of 2012, contingent on the achievement of strategic goals for 2011. Performance was based upon achieving market share and market penetration gains, product development achievement, and a customer service objective with respect to strategic goals. Under the executive plan, 50% of the PSUs were earned and 0.50 shares for each PSU will be paid out, subject to continued employment. We issued one-third (99,420 shares) of the total shares in the first quarter of 2012 and generally, one-third of such shares will be issued in annual installments in the first quarter of 2013 and the first quarter of 2014. Since 2011 minimum strategic goals were not met for the mobile internet plan, none of the PSUs were earned, no expense was incurred, and no amounts will be paid out with respect to them.

The following is a summary of PSU activity during 2012 as of June 29, 2012:

	Shares			Weighted Average Grant Date Fair Value
Non-vested – beginning of year		2,269,410		$	5.51
Granted		1,962,549		$	3.98
Vested		(734,185	)	$	5.15
Forfeited		(1,191,681	)	$	5.31
Non-vested – end of period		2,306,093		$	4.43

Equity-Based Compensation Expense

The following table sets forth the total equity-based compensation expense resulting from stock options, SARs, restricted stock, and PSUs by line item on the Statements of Operations and Comprehensive Loss:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Cost of revenue – products	$	0.2		$	0.5		$	0.6		$	1.0
Cost of revenue – services		0.4			0.6			0.9			1.2
Research and development		1.4			3.1			3.2			5.6
Sales and marketing		0.8			1.3			1.7			2.6
General and administrative		2.0			2.5			4.0			5.2
Equity-based compensation expense before income taxes		4.8			8.0			10.4			15.6
Income tax benefit		(0.1	)		(1.2	)		(0.2	)		(2.6	)
Total equity-based compensation expense after income taxes	$	4.7		$	6.8		$	10.2		$	13.0

The following table sets forth the total equity-based compensation expense by type:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Stock options	$	0.9		$	1.3		$	2.0		$	2.6
Cash-settled SARs		(0.2	)		(0.1	)		(0.1	)		(0.2	)
Restricted stock		2.4			5.4			5.8			9.8
Performance stock units		1.7			1.4			2.7			3.4
Total	$	4.8		$	8.0		$	10.4		$	15.6

As of June 29, 2012, we had $26.1 million of unrecognized equity-based compensation cost that we expect to recognize over a weighted average period of 1.8 years.

XML

Income Taxes

6 Months Ended

Jun. 29, 2012

Income Taxes

9. Income Taxes

We recorded tax expense of $6.8 million in the second quarter and $10.5 million in the first six months of 2012. Our tax expense results in an effective tax rate above the federal statutory rate of 35% because we are unable to recognize tax benefits on domestic losses due to the valuation allowance maintained against domestic deferred tax assets, combined with tax expense on income from foreign operations. We expect to continue to maintain a valuation allowance against domestic and certain non-U.S. deferred tax assets until a sufficient level of profitability is attained.

XML

Segment Information

6 Months Ended

Jun. 29, 2012

Segment Information

11. Segment Information

Prior to the second quarter of 2012, we reported results of operations for three reporting segments: Broadband, Transport, and Services. As a result of strategy changes and internal reorganizations at the beginning of the second quarter of 2012, we are focusing on the growth markets of Packet Optical (primarily our optical portfolio) and Mobile Backhaul (primarily our data portfolio) in addition to the on-going Access and Services businesses. With these strategic adjustments, we changed our reporting segments accordingly. Therefore, beginning with the second quarter of 2012, we have reported in the following four segments: Optical, Data, Access and Services (the Services segment is unchanged).

Optical segment products are primarily used to manage large volumes of telecommunication traffic in metro areas. The Optical segment includes the Tellabs^® 7000 series of optical transport systems, as well as the Tellabs^® 5000 and 6300 series of transport systems equipped with optical interfaces.

Data segment products are primarily used in mobile backhaul applications, and for business services and various edge routing applications. The Data segment includes the packet-switched Tellabs^® 8600 Managed Edge System, the Tellabs^® 8800 Multiservice Router Series, and Tellabs^® 9200 Content-Aware Router Series, as well as the Tellabs^® 8100 Managed Access System.

Access segment products are primarily used to enable service providers to bundle Internet, video, and voice over high-speed fiber-based networks and in Optical LAN applications. The Access segment includes the Tellabs^® 1000 and 1100 Multi-service Access systems, and the Tellabs^® 1600 Optical Network Terminals.

The Services segment includes services that support all phases of the network: planning, building and operating. The Services segment includes deployment, support, training and professional services for customers of the Optical, Data and Access segments.

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 intangibles, restructuring and other charges, the intangible asset impairment charge and the impact of equity-based compensation.

Consolidated revenue by segment follows:

	Second Quarter				Six Months
	6/29/12		7/1/11		6/29/12		7/1/11
Optical	$	122.4	$	127.5	$	226.8	$	248.4
Data		77.7		92.2		147.1		203.6
Access		37.3		39.8		73.2		79.9
Services		50.7		57.2		98.9		107.2
Total	$	288.1	$	316.7	$	546.0	$	639.1

Segment profit (loss) and reconciliation to operating earnings (loss) by segment follows:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Optical	$	29.0		$	21.1		$	43.8		$	46.5
Data		5.4			(15.0	)		0.4			(15.8	)
Access		6.0			8.3			12.4			19.4
Services		17.2			21.6			32.4			31.6
Total segment profit	$	57.6		$	36.0		$	89.0			81.7
Sales and marketing expenses		(32.2	)		(40.8	)		(68.6	)		(85.5	)
General and administrative expenses		(19.7	)		(21.0	)		(40.8	)		(44.7	)
Equity-based compensation		(2.2	)		(4.3	)		(4.8	)		(8.0	)
Intangible asset amortization		(1.0	)		(5.1	)		(3.2	)		(10.3	)
Restructuring and other charges		(0.9	)		—			(106.9	)		(1.0	)
Operating earnings (loss)	$	1.6		$	(35.2	)	$	(135.3	)	$	(67.8	)

The segments use many of the same assets. For internal reporting purposes, we do not allocate assets by segment and therefore asset, depreciation and amortization, or capital expenditure by segment information is not provided to our chief operating decision maker.

XML

Stock Repurchase Programs - Additional Information (Detail) (USD $)	6 Months Ended			3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011	Jun. 29, 2012 $600 Million Repurchase Program	Jun. 29, 2012 Rule 10b5-1 Program	Jun. 29, 2012 Rule 10b5-1 Program	Jun. 29, 2012 Other Stock Repurchases	Jun. 29, 2012 Other Stock Repurchases
Stockholders Equity Note [Line Items]
Authorization to repurchase outstanding common stock			$ 600,000,000
Repurchase of common stock - shares				4,000	8,000	300,000	800,000
Repurchase of outstanding common stock	3,000,000	4,800,000		16,000	31,000	1,200,000	3,000,000
Cumulative Repurchase of common stock - shares			56,600,000
Cumulative Repurchase of outstanding common stock			375,400,000
Stock available to be purchased under stock repurchase program			$ 224,600,000

XML

Computation of Net Loss Per Share (Parenthetical) (Detail) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011	Jun. 29, 2012	Jul. 01, 2011
Earnings Per Share Disclosure [Line Items]
Diluted weighted average shares outstanding in the absence of a loss	368.1	365.9	368.2	365.9

XML

Segment Profit and Reconciliation to Operating Loss by Segment (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011	Jun. 29, 2012	Jul. 01, 2011
Segment Reporting Information [Line Items]
Total segment profit	$ 57.6	$ 36.0	$ 89.0	$ 81.7
Sales and marketing expenses	(32.2)	(40.8)	(68.6)	(85.5)
General and administrative expenses	(19.7)	(21.0)	(40.8)	(44.7)
Equity-based compensation	(2.2)	(4.3)	(4.8)	(8.0)
Intangible asset amortization	(1.0)	(5.1)	(3.2)	(10.3)
Restructuring and other charges	(0.9)		(106.9)	(1.0)
Operating Earnings (Loss)	1.6	(35.2)	(135.3)	(67.8)
Optical segment
Segment Reporting Information [Line Items]
Total segment profit	29.0	21.1	43.8	46.5
Data segment
Segment Reporting Information [Line Items]
Total segment profit	5.4	(15.0)	0.4	(15.8)
Access segment
Segment Reporting Information [Line Items]
Total segment profit	6.0	8.3	12.4	19.4
Services segment
Segment Reporting Information [Line Items]
Total segment profit	$ 17.2	$ 21.6	$ 32.4	$ 31.6

XML

Intangible Assets - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 29, 2012	Jun. 29, 2012	Jul. 01, 2011
Finite-Lived Intangible Assets [Line Items]
Restructuring expense	$ 0.9	$ 106.9	$ 1.0
Accelerated amortization of intangible assets
Finite-Lived Intangible Assets [Line Items]
Restructuring expense		$ 47.7

XML

Schedule of Assumptions Used to Calculate Weighted Average Fair Value of Stock Option Grants (Detail)	6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	43.30%	46.40%
Risk-free interest rate	0.90%	2.20%
Expected term (in years)	5 years 3 months 18 days	5 years 3 months 18 days
Expected dividend yield	2.00%	1.50%

XML

Intangible Assets (Tables)

6 Months Ended

Jun. 29, 2012

Gross Carry Amount And Accumulated Amortization Of Intangible Assets Subject To Amortization

The gross carrying amount and accumulated amortization of intangible assets subject to amortization are as follows:

	6/29/12
	Gross Assets		Accumulated Amortization			Net
Developed technology	$	147.6	$	(147.3	)	$	0.3
Customer relationships		30.9		(24.7	)		6.2
Total	$	178.5	$	(172.0	)	$	6.5

	12/30/11
	Gross Assets			Accumulated Amortization			Net
Developed technology	$	212.8		$	(169.1	)	$	43.7
Customer relationships		35.2			(23.7	)		11.5
Trade names/trademarks		0.2			(0.2	)		—
Leasehold improvements		(2.7	)		2.3			(0.4	)
Non-compete arrangements		13.1			(10.8	)		2.3
Total	$	258.6		$	(201.5	)	$	57.1

Estimated Future Amortization Expense Of Intangible Assets Subject To Amortization

The estimated future amortization expense of intangible assets subject to amortization as of June 29, 2012 follows:

2012 (remaining six months)	$	2.1
2013	$	4.2
2014	$	0.1
2015	$	0.1

XML

Equity-Based Compensation (Tables)

6 Months Ended

Jun. 29, 2012

Schedule Of Assumptions Used To Calculate Weighted Average Fair Value Of Stock Option Grants

The following table summarizes the assumptions used to compute the weighted average fair value of stock option grants:

	6/29/12			7/1/11
Expected volatility		43.3	%		46.4	%
Risk-free interest rate		0.9	%		2.2	%
Expected term (in years)		5.3			5.3
Expected dividend yield		2.0	%		1.5	%

Schedule Of Stock Option Activity

The following is a summary of stock option activity during 2012 as of June 29, 2012:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in  millions)
Outstanding – beginning of year		20,719,482		$	7.68
Granted		2,099,707		$	3.95
Exercised		(110,577	)	$	0.32
Forfeited/expired		(1,667,813	)	$	8.21
Outstanding – end of period		21,040,799		$	7.31		3.8	$	0.2
Exercisable – end of period		17,111,853		$	7.86		2.8	$	0.2
Shares vested or expected to vest		20,687,345		$	7.35		3.7	$	0.2

Schedule Of Cash-Settled Stock Appreciation Rights Activity

The following is a summary of cash-settled SARs activity during 2012 as of June 29, 2012:

	Shares			Weighted Average Exercise Price
Outstanding – beginning of year		492,131		$	6.81
Granted		16,200		$	3.98
Forfeited/expired		(31,822	)	$	7.37
Outstanding – end of period		476,509		$	6.67

Schedule Of Restricted Stock Unit Activity

The following is a summary of restricted stock activity during 2012 as of June 29, 2012:

	Shares			Weighted Average Grant Date Fair Value
Non-vested – beginning of year		4,854,587		$	6.29
Granted		2,304,298		$	3.95
Vested		(2,042,116	)	$	6.25
Forfeited		(1,028,297	)	$	6.52
Non-vested – end of period		4,088,472		$	4.93

Schedule Of Performance Stock Unit Activity

The following is a summary of PSU activity during 2012 as of June 29, 2012:

	Shares			Weighted Average Grant Date Fair Value
Non-vested – beginning of year		2,269,410		$	5.51
Granted		1,962,549		$	3.98
Vested		(734,185	)	$	5.15
Forfeited		(1,191,681	)	$	5.31
Non-vested – end of period		2,306,093		$	4.43

Schedule Of Equity-Based Compensation Expense

The following table sets forth the total equity-based compensation expense resulting from stock options, SARs, restricted stock, and PSUs by line item on the Statements of Operations and Comprehensive Loss:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Cost of revenue – products	$	0.2		$	0.5		$	0.6		$	1.0
Cost of revenue – services		0.4			0.6			0.9			1.2
Research and development		1.4			3.1			3.2			5.6
Sales and marketing		0.8			1.3			1.7			2.6
General and administrative		2.0			2.5			4.0			5.2
Equity-based compensation expense before income taxes		4.8			8.0			10.4			15.6
Income tax benefit		(0.1	)		(1.2	)		(0.2	)		(2.6	)
Total equity-based compensation expense after income taxes	$	4.7		$	6.8		$	10.2		$	13.0

Schedule Of Total Equity-Based Compensation Expense By Type

The following table sets forth the total equity-based compensation expense by type:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Stock options	$	0.9		$	1.3		$	2.0		$	2.6
Cash-settled SARs		(0.2	)		(0.1	)		(0.1	)		(0.2	)
Restricted stock		2.4			5.4			5.8			9.8
Performance stock units		1.7			1.4			2.7			3.4
Total	$	4.8		$	8.0		$	10.4		$	15.6

XML

Balance Sheet Classification of Product Warranty Liabilities (Detail) (USD $) In Millions, unless otherwise specified	Jun. 29, 2012	Apr. 01, 2012	Dec. 30, 2011	Jul. 01, 2011	Apr. 01, 2011	Jan. 01, 2011
Product Warranty Liability [Line Items]
Other accrued liabilities	$ 7.4			$ 8.7
Other long-term liabilities	8.9			11.3
Total product warranty liabilities	$ 16.3	$ 17.3	$ 17.0	$ 20.0	$ 21.2	$ 19.4

XML

Gross Realized Gains and Losses Related to Fixed Income Investments (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011	Jun. 29, 2012	Jul. 01, 2011
Schedule of Available-for-sale Securities [Line Items]
Gross realized gains	$ 0.2	$ 1.0	$ 0.5	$ 1.4
Gross realized losses	(0.2)	(1.3)	(0.5)	(1.8)
Total		$ (0.3)		$ (0.4)

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011
Operating Activities
Net loss	$ (144.5)	$ (53.4)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	26.6	38.6
Loss on disposal of property, plant and equipment	0.8	0.1
Equity-based compensation	10.4	15.6
Deferred income taxes	(0.1)	(2.8)
Restructuring and other charges	106.9	1.0
Net loss on investments in marketable securities		0.4
Other-than-temporary impairment charges on investments		1.2
Excess tax benefits from equity-based compensation		(0.2)
Net changes in assets and liabilities:
Accounts receivable	33.8	12.2
Inventories	18.3	1.7
Miscellaneous receivables and other current assets	6.4	(5.2)
Other assets	(0.8)	(0.9)
Accounts payable	(22.8)	(18.2)
Restructuring and other charges	(26.6)	(5.5)
Deferred revenue	(6.1)	38.1
Other accrued liabilities	(6.1)	(67.9)
Income taxes	(1.2)	(11.7)
Other long-term liabilities	(0.6)	3.6
Net Cash Used for Operating Activities	(5.6)	(53.3)
Investing Activities
Capital expenditures	(9.9)	(32.1)
Payments for purchases of investments	(232.0)	(384.9)
Proceeds from sales and maturities of investments	303.2	485.1
Net Cash Provided by Investing Activities	61.3	68.1
Financing Activities
Proceeds from short-term borrowings		1.3
Payments of short-term borrowings		(1.3)
Proceeds from issuance of common stock under stock plans		0.5
Repurchase of common stock	(3.0)	(4.8)
Excess tax benefits from equity-based compensation		0.2
Dividends paid	(14.6)	(14.5)
Net Cash Used for Financing Activities	(17.6)	(18.6)
Effect of Exchange Rate Changes on Cash	(4.3)	8.6
Net Increase in Cash and Cash Equivalents	33.8	4.8
Cash and Cash Equivalents - Beginning of Year	132.7	208.8
Cash and Cash Equivalents - End of Period	$ 166.5	$ 213.6

XML

Investments

6 Months Ended

Jun. 29, 2012

Investments

5. Investments

We account for investments in marketable securities at fair value, with the unrealized gain or loss, less deferred income taxes, included in Other comprehensive loss and shown as a separate component of stockholders’ equity. We base realized gains and losses on specific identification of the security sold. At June 29, 2012, and December 30, 2011, available-for-sale marketable securities consisted of the following:

	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
June 29, 2012
U.S. government debt obligations	$	158.4	$	0.4	$	(0.1	)	$	158.7
Corporate debt obligations guaranteed by FDIC		20.2		0.1		—			20.3
Corporate debt obligations		190.4		1.2		(0.2	)		191.4
Mortgaged backed debt obligations guaranteed by GNMA		89.6		0.6		(0.2	)		90.0
Certificates of deposit guaranteed by FDIC		1.2		—		—			1.2
Foreign government debt obligations		192.7		1.9		(0.1	)		194.5
Foreign corporate debt obligations		114.7		0.5		(0.1	)		115.1
Total	$	767.2	$	4.7	$	(0.7	)	$	771.2
December 30, 2011
U.S. government debt obligations	$	195.2	$	0.5	$	—		$	195.7
Corporate debt obligations guaranteed by FDIC		66.6		0.2		—			66.8
Corporate debt obligations		201.4		0.8		(0.7	)		201.5
Mortgaged backed debt obligations guaranteed by GNMA		90.9		0.4		(0.1	)		91.2
Certificates of deposit guaranteed by FDIC		1.5		—		—			1.5
Foreign government debt obligations		221.5		1.5		—			223.0
Foreign corporate debt obligations		64.1		0.2		(0.1	)		64.2
Total	$	841.2	$	3.6	$	(0.9	)	$	843.9

The following table summarizes the maturities of our available-for-sale marketable securities at June 29, 2012:

	Amortized Cost		Fair Value
Less than 12 months	$	188.0	$	188.3
Due in 1 to 5 years		489.7		492.9
Due after 5 years		89.5		90.0
Total	$	767.2	$	771.2

Gross unrealized gains and losses related to fixed-income securities were caused by interest rate fluctuations. We review investments held with unrealized losses to determine if the loss is other-than-temporary. We evaluated near-term prospects of the security in relation to the severity and duration of the unrealized loss. We also assessed our intent to sell the security, whether it is more likely than not that the security will be required to be sold before recovery, or the security is not expected to recover its entire amortized cost basis. Based on our review, we do not intend to sell these securities and believe that they will recover their entire amortized cost basis; therefore, we do not consider these investments to be other-than-temporarily impaired at June 29, 2012. No other-than-temporary impairments were recorded in the second quarter or six months of 2012.

Investments in marketable securities with unrealized losses at June 29, 2012, and December 30, 2011, were as follows:

	Unrealized Loss Less than 12 months					Unrealized Loss Greater than 12 months				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
June 29, 2012
U.S. government debt obligations	$	46.2	$	(0.1	)	$	—	$	—	$	46.2	$	(0.1	)
Corporate debt obligations		46.3		(0.2	)		—		—		46.3		(0.2	)
Mortgaged backed debt obligations guaranteed by GNMA		37.1		(0.2	)		—		—		37.1		(0.2	)
Foreign government debt obligations		49.1		(0.1	)		—		—		49.1		(0.1	)
Foreign corporate debt obligations		32.6		(0.1	)		—		—		32.6		(0.1	)
Total	$	211.3	$	(0.7	)	$	—	$	—	$	211.3	$	(0.7	)
December 30, 2011
Corporate debt obligations	$	81.0	$	(0.7	)	$	—	$	—	$	81.0	$	(0.7	)
Mortgaged backed debt obligations guaranteed by GNMA		31.4		(0.1	)		—		—		31.4		(0.1	)
Foreign corporate debt obligations		24.1		(0.1	)		—		—		24.1		(0.1	)
Total	$	136.5	$	(0.9	)	$	—	$	—	$	136.5	$	(0.9	)

The following table presents gross realized gains and losses related to fixed income investments for the three months and six months ending June 29, 2012, and July 1, 2011:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Gross realized gains	$	0.2		$	1.0		$	0.5		$	1.4
Gross realized losses		(0.2	)		(1.3	)		(0.5	)		(1.8	)
Total	$	—		$	(0.3	)	$	—		$	(0.4	)

As a result of the acquisition of Advanced Fibre Communications, Inc. (AFC) in 2004, we acquired 10.6 million shares of Cisco common stock, shown as Other marketable securities in Current Assets. AFC owned this stock as a result of its investment in privately held Cerent Corporation, which was acquired by Cisco in 1999, through the exchange of AFC’s ownership in Cerent Corporation for Cisco stock. In 2000, AFC entered into two three-year hedge contracts, pledging all of the Cisco stock to secure the obligations under the contracts and recognizing unrealized gains in their financial statements. When the hedge contracts matured in 2003, AFC entered into stock loan agreements with a lender, borrowing 10.6 million shares of Cisco stock to settle the hedge contracts. As a result, AFC received cash proceeds for which a significant portion of the net gains were deferred for income tax purposes, and a deferred tax liability was established. Since the same number of shares was borrowed, AFC’s net position in Cisco was reduced to zero, eliminating any market risk exposure. This structure is maintained to preserve the deferral of a potentially significant sum of cash tax payments. In the future, however, we may settle all or a portion of this arrangement to the extent we are able to minimize any adverse impact to our cash balance and/or tax provision.

The deferred tax liability was $195.2 million as of June 29, 2012, and December 30, 2011, and is netted against other tax items in Income Taxes in the current liabilities section of our Consolidated Balance Sheets. The aggregate amount of the fair values of those stock loans is reflected as a current liability on the balance sheets as of June 29, 2012 and December 30, 2011. The values of both the asset and liability move in tandem with each other since each is based on the number of shares we hold at the current stock price. At June 29, 2012, Other marketable securities and Loan related to other marketable securities was $181.3 million at a market price of $17.17 per share and $190.9 million at a market price of $18.08 per share at December 30, 2011. The fees associated with the stock loan agreement were $0.3 million in the second quarter of 2012 and 2011, and $0.6 million in the first six months of 2012 and 2011.

In addition to the above investments, we maintain investments in partnerships and start-up technology companies. We record these investments in Other Assets, at cost. These investments totaled $2.7 million at June 29, 2012, and $3.2 million at December 30, 2011. We review each investment quarterly, including historical and projected financial performance, expected cash needs and recent funding events. We recognize other-than-temporary impairments if the market value of the investment is below its cost basis for an extended period of time or if the issuer has experienced significant financial declines or difficulties in raising capital to continue operations. No other-than-temporary impairments were recorded in the second quarters and first six months of 2012 and 2011.

XML

Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2012	Jul. 01, 2011	Jun. 29, 2012	Jul. 01, 2011
Income Taxes [Line Items]
Income tax (expense) benefit	$ 6.8	$ (3.9)	$ 10.5	$ (9.7)
Federal statutory rate			35.00%

XML

Comprehensive Loss (Tables)

6 Months Ended

Jun. 29, 2012

Schedule Of Comprehensive (Loss) Income

Comprehensive loss for the second quarter and the first six months of 2012 and 2011 consists of the following:

	Second Quarter						Six Months
	6/29/12			7/1/11			6/29/12			7/1/11
Net loss	$	(4.7	)	$	(29.3	)	$	(144.5	)	$	(53.4	)
Net change in unrealized gains (losses) related to:
Available-for-sale securities, net of tax		(0.2	)		2.4			0.9			(0.6	)
Net investment hedges, net of tax		6.7			(2.7	)		2.6			(10.0	)
Foreign currency translation adjustments		(37.6	)		13.1			(21.9	)		48.9
Comprehensive loss	$	(35.8	)	$	(16.5	)	$	(162.9	)	$	(15.1	)

Accumulated Other Comprehensive (Loss) Income (Net Of Tax)

Accumulated other comprehensive income (net of tax) for the first six months of 2012 consists of the following:

	Unrealized Net Gain (Loss) on Available-for- Sale Securities			Net Investment Hedges			Foreign Currency Translation Adjustments			Unrecognized Prior Service Cost			Unrecognized Net Gain on Retiree Medical Plan		Accumulated Other Comprehensive Income
Balance at December 30, 2011	$	1.9		$	18.6		$	67.5		$	(0.2	)	$	2.0	$	89.8
Pretax activity, net		1.2			4.1			(21.9	)		—			—		(16.6	)
Tax effect		(0.3	)		(1.5	)		—			—			—		(1.8	)
Balance at June 29, 2012	$	2.8		$	21.2		$	45.6		$	(0.2	)	$	2.0	$	71.4

XML

Available for Sale Marketable Securities (Detail) (USD $) In Millions, unless otherwise specified	Jun. 29, 2012	Dec. 30, 2011
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 767.2	$ 841.2
Unrealized Gain	4.7	3.6
Unrealized Loss	(0.7)	(0.9)
Fair Value	771.2	843.9
U.S. government debt obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	158.4	195.2
Unrealized Gain	0.4	0.5
Unrealized Loss	(0.1)
Fair Value	158.7	195.7
Corporate debt obligations guaranteed By FDIC
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	20.2	66.6
Unrealized Gain	0.1	0.2
Fair Value	20.3	66.8
Corporate debt obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	190.4	201.4
Unrealized Gain	1.2	0.8
Unrealized Loss	(0.2)	(0.7)
Fair Value	191.4	201.5
Mortgaged backed debt obligations guaranteed by GNMA
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	89.6	90.9
Unrealized Gain	0.6	0.4
Unrealized Loss	(0.2)	(0.1)
Fair Value	90.0	91.2
Certificates of deposit guaranteed by FDIC
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1.2	1.5
Fair Value	1.2	1.5
Foreign government debt obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	192.7	221.5
Unrealized Gain	1.9	1.5
Unrealized Loss	(0.1)
Fair Value	194.5	223.0
Foreign corporate debt obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	114.7	64.1
Unrealized Gain	0.5	0.2
Unrealized Loss	(0.1)	(0.1)
Fair Value	$ 115.1	$ 64.2

XML

Restructuring and Other Charges (Tables)

6 Months Ended

Jun. 29, 2012

Summary Of Restructuring And Other Charges

The following table summarizes restructuring and other charges recorded for the plans mentioned above, as well as adjustments to reserves recorded for prior restructurings:

	Second Quarter					Six Months
	6/29/12			7/1/11		6/29/12		7/1/11
Severance and other termination benefits	$	(2.0	)	$	—	$	22.1	$	1.2
Facility and other exit costs		2.9			—		35.9		(0.2	)
Accelerated amortization of intangible assets		—			—		47.7		—
Other obligations		—			—		1.2		—
Total restructuring and other charges	$	0.9		$	—	$	106.9	$	1.0

Summary Of Restructuring And Other Charges Activity By Segment

The following table summarizes restructuring and other charges activity by segment for the second quarter and the first six months of 2012 and the status of the reserves at June 29, 2012:

			Second Quarter Activity
	Balance at 3/30/12		Restructuring Expense			Cash Payments			Other Activities1			Balance at 6/29/12
2012 Restructuring Plan
Optical	$	3.0	$	(0.3	)	$	(0.7	)	$	(0.1	)	$	1.9
Data		16.7		1.9			(7.5	)		(2.4	)		8.7
Access		1.1		(0.1	)		(0.2	)		—			0.8
Services		2.0		(0.7	)		(0.6	)		—			0.7
Subtotal 2012 Restructuring Plan		22.8		0.8			(9.0	)		(2.5	)		12.1
2011 Restructuring Plan
Optical		2.8		1.5			(1.8	)		(0.5	)		2.0
Data		4.2		—			(1.3	)		(0.1	)		2.8
Access		0.9		(0.1	)		(0.3	)		—			0.5
Services		1.7		(1.3	)		0.1			—			0.5
Subtotal 2011 Restructuring Plan		9.6		0.1			(3.3	)		(0.6	)		5.8
Previous Restructuring Plans
Optical		0.3		—			(0.1	)		—			0.2
Data		1.7		—			(0.2	)		—			1.5
Access		2.3		—			(0.1	)		—			2.2
Services		0.1		—			—			—			0.1
Subtotal Previous Restructuring Plans		4.4		—			(0.4	)		—			4.0
Total Restructuring Plans	$	36.8	$	0.9		$	(12.7	)	$	(3.1	)	$	21.9

			Six Months Activity
	Balance at 12/30/11		Restructuring Expense			Cash Payments			Other Activities1			Balance at 6/29/12
2012 Restructuring Plan
Optical	$	—	$	4.0		$	(1.2	)	$	(0.9	)	$	1.9
Data		—		98.2			(15.2	)		(74.3	)		8.7
Access		—		1.3			(0.4	)		(0.1	)		0.8
Services		—		1.8			(1.1	)		—			0.7
Subtotal 2012 Restructuring Plan		—		105.3			(17.9	)		(75.3	)		12.1
2011 Restructuring Plan
Optical		4.4		1.6			(3.4	)		(0.6	)		2.0
Data		5.5		—			(2.5	)		(0.2	)		2.8
Access		1.1		—			(0.6	)		—			0.5
Services		1.6		0.1			(1.2	)		—			0.5
Subtotal 2011 Restructuring Plan		12.6		1.7			(7.7	)		(0.8	)		5.8
Previous Restructuring Plans
Optical		0.4		(0.1	)		(0.1	)		—			0.2
Data		1.9		—			(0.4	)		—			1.5
Access		2.6		—			(0.4	)		—			2.2
Services		0.2		—			(0.1	)		—			0.1
Subtotal Previous Restructuring Plans		5.1		(0.1	)		(1.0	)		—			4.0
Total Restructuring Plans	$	17.7	$	106.9		$	(26.6	)	$	(76.1	)	$	21.9

¹ Other activities include accelerated amortization related to abandoned intangible assets, accelerated depreciation of property, plant and equipment to be disposed, the effects of currency translation as well as other changes that do not flow through restructuring expense.