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 September 28, 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 – 367,528,886 shares outstanding on October 26, 2012.

TELLABS, INC.

INDEX

		PAGE
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Operations and Comprehensive Income (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	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	33
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 4.	Mine Safety Disclosure	34
Item 6.	Exhibits	34
SIGNATURE		35

2

PART I . FINANCIAL INFORMATION

Item 1. Financial Statements

TELLABS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
In millions, except per-share data
Revenue
Products	$	216.5		$	272.7		$	663.6		$	804.6
Services		47.9			57.1			146.8			164.3
Total revenue		264.4			329.8			810.4			968.9
Cost of Revenue
Products		128.1			158.7			396.8			483.5
Services		32.7			34.8			100.1			111.6
Total cost of revenue		160.8			193.5			496.9			595.1
Gross Profit		103.6			136.3			313.5			373.8
Gross profit as a percentage of revenue		39.2	%		41.3	%		38.7	%		38.6	%
Gross profit as a percentage of revenue - products		40.8	%		41.8	%		40.2	%		39.9	%
Gross profit as a percentage of revenue - services		31.7	%		39.1	%		31.8	%		32.1	%
Operating Expenses
Research and development		53.7			80.8			179.4			244.6
Sales and marketing		29.7			41.4			98.3			126.9
General and administrative		17.9			18.6			58.7			63.3
Intangible asset amortization		1.1			5.0			4.3			15.3
Restructuring and other charges		3.3			19.5			110.2			20.5
Goodwill and IPR&D impairment		—			102.7			—			102.7
Total operating expenses		105.7			268.0			450.9			573.3
Operating Loss		(2.1	)		(131.7	)		(137.4	)		(199.5	)
Operating loss as a percentage of revenue		-0.8	%		-39.9	%		-17.0	%		-20.6	%
Other Income
Interest income, net		2.1			3.0			5.5			9.4
Other expense, net		(0.2	)		(0.9	)		(2.3	)		(2.6	)
Total other income		1.9			2.1			3.2			6.8
Loss Before Income Tax		(0.2	)		(129.6	)		(134.2	)		(192.7	)
Income tax (expense) benefit		(3.7	)		(0.5	)		(14.2	)		9.2
Net Loss	$	(3.9	)	$	(130.1	)	$	(148.4	)	$	(183.5	)
Weighted Average Shares Outstanding
Basic		367.7			365.2			366.8			364.3
Diluted		367.7			365.2			366.8			364.3
Net Loss Per Share
Basic	$	(0.01	)	$	(0.36	)	$	(0.40	)	$	(0.50	)
Diluted	$	(0.01	)	$	(0.36	)	$	(0.40	)	$	(0.50	)
Comprehensive Income (Loss)	$	13.4		$	(164.6	)	$	(149.5	)	$	(179.9	)
Cash Dividends Per Share	$	0.02		$	0.02		$	0.06		$	0.06

The accompanying notes are an integral part of these statements.

3

TELLABS, INC.

CONSOLIDATED BALANCE SHEETS

	9/28/12			12/30/11
In millions, except share data	Unaudited
Assets
Current Assets
Cash and cash equivalents	$	134.9		$	132.7
Investments in marketable securities		806.9			843.9
Total cash, cash equivalents and marketable securities		941.8			976.6
Other marketable securities		201.6			190.9
Accounts receivable, net of allowances of $1.3 and $1.3		284.8			317.6
Inventories
Raw materials		33.4			33.7
Finished goods		68.0			110.3
Total inventories		101.4			144.0
Income taxes		22.5			27.9
Miscellaneous receivables and other current assets		28.2			39.8
Total Current Assets		1,580.3			1,696.8
Property, Plant and Equipment
Land		20.0			20.0
Buildings and improvements		190.7			197.4
Equipment		395.4			446.9
Total property, plant and equipment		606.1			664.3
Accumulated depreciation		(379.8	)		(390.8	)
Property, plant and equipment, net		226.3			273.5
Goodwill		122.0			122.0
Intangible Assets, Net of Amortization		5.5			57.1
Other Assets		89.6			98.6
Total Assets	$	2,023.7		$	2,248.0
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	57.4		$	97.1
Accrued compensation		46.7			46.3
Restructuring and other charges		14.4			13.0
Income taxes		50.3			63.5
Loan related to other marketable securities		201.6			190.9
Deferred revenue		21.5			40.8
Other accrued liabilities		76.0			78.4
Total Current Liabilities		467.9			530.0
Long-Term Restructuring Liabilities		4.9			4.7
Income Taxes		21.7			21.2
Other Long-Term Liabilities		43.9			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; 508,766,423 and 505,238,503 shares issued		5.1			5.1
Additional paid-in capital		1,588.2			1,572.4
Treasury stock, at cost: 141,245,374 and 140,250,476 shares		(1,230.9	)		(1,227.2	)
Retained earnings		1,034.2			1,204.6
Accumulated other comprehensive income		88.7			89.8
Total Stockholders’ Equity		1,485.3			1,644.7
Total Liabilities and Stockholders’ Equity	$	2,023.7		$	2,248.0

The accompanying notes are an integral part of these statements.

4

TELLABS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months
	9/28/12			9/30/11
In millions
Operating Activities
Net loss	$	(148.4	)	$	(183.5	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		38.2			57.6
Loss on disposal of property, plant and equipment		1.1			0.7
Equity-based compensation		15.8			21.9
Deferred income taxes		0.3			(0.8	)
Restructuring and other charges		110.2			20.5
Net (gain) loss on investments in marketable securities		(0.8	)		0.1
Goodwill and IPR&D impairment		—			102.7
Other-than-temporary impairment charges on investments		—			1.8
Excess tax benefits from equity-based compensation		—			(0.2	)
Net changes in assets and liabilities:
Accounts receivable		31.4			43.6
Inventories		41.2			6.8
Miscellaneous receivables and other current assets		14.8			(11.0	)
Other assets		(0.4	)		(2.5	)
Accounts payable		(38.5	)		(14.0	)
Restructuring and other charges		(31.2	)		(9.8	)
Deferred revenue		(18.9	)		(8.1	)
Other accrued liabilities		(4.2	)		(59.2	)
Income taxes		(2.9	)		3.4
Other long-term liabilities		(3.2	)		(1.8	)
Net Cash Provided by (Used for) Operating Activities		4.5			(31.8	)
Investing Activities
Capital expenditures		(16.8	)		(45.8	)
Payments for purchases of investments		(401.6	)		(616.1	)
Proceeds from sales and maturities of investments		442.9			708.7
Net Cash Provided by Investing Activities		24.5			46.8
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		0.1			0.6
Repurchase of common stock		(3.7	)		(5.0	)
Excess tax benefits from equity-based compensation		—			0.2
Dividends paid		(22.0	)		(21.8	)
Net Cash Used for Financing Activities		(25.6	)		(26.0	)
Effect of Exchange Rate Changes on Cash		(1.2	)		(3.6	)
Net Increase (Decrease) in Cash and Cash Equivalents		2.2			(14.6	)
Cash and Cash Equivalents - Beginning of Year		132.7			208.8
Cash and Cash Equivalents - End of Period	$	134.9		$	194.2

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. GAAP 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 reporting segment change in the second quarter of 2012. 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 ($0.01 per share) reduction to revenue in the second quarter of 2012, attributable to prior periods’ taxes on sales transactions involving deployment services in a foreign jurisdiction.

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 $24 million for severance-related charges of approximately 500 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 third quarter of 2012 was $3.1 million, which consists of expense of $2.4 million for severance-related charges and a $0.7 million charge for facility- and asset-related charges. Restructuring expense for this plan for the first nine months of 2012 was $108.4 million, which consists of $23.7 million for severance-related charges, $35.8 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 $4.7 million for Optical, $99.8 million for Data, $1.6 million for Access, and $2.3 million for Services. Estimated cash payments under this plan are expected to be $31.3 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. Net restructuring expense for this plan for the third quarter of 2012 was zero, which consists of a $0.1 million charge for facility- and asset-related charges and a reduction of $0.1 million for severance-related charges. Restructuring expense for this plan for the first nine months of 2012 was $1.7 million, which consists of $0.8 million for severance-related charges and $0.9 million for facility- and asset-related charges. Cumulative restructuring charges for this plan are $21.4 million, which consists of $15.3 million for severance-related charges, $5.5 million for facility- and asset-related charges, and $0.6 million for other obligations. By segment, total charges to date under this plan are $8.7 million for Optical, $7.3 million for Data, $1.7 million for Access and $3.7 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.

Restructuring expense for previous restructuring plans for the third quarter of 2012 was $0.2 million for facility-related charges. Restructuring expense for previous restructuring plans for the first nine months of 2012 was $0.1 million, which consists of $0.2 million for facility-related charges and a net reduction of $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:

	Third Quarter				Nine Months
	9/28/12		9/30/11		9/28/12		9/30/11
Severance and other termination benefits	$	2.3	$	14.5	$	24.4	$	15.7
Facility and other exit costs		1.0		5.0		36.9		4.8
Accelerated amortization of intangible assets		—		—		47.7		—
Other obligations		—		—		1.2		—
Total restructuring and other charges	$	3.3	$	19.5	$	110.2	$	20.5

The following table summarizes restructuring and other charges activity by segment for the third quarter and the first nine months of 2012 and the status of the reserves at September 28, 2012:

			Third Quarter Activity
	Balance at 6/29/12		Restructuring Expense			Cash Payments			Other Activities1			Balance at 9/28/12
2012 Restructuring Plan
Optical	$	1.9	$	0.7		$	(0.4	)	$	—		$	2.2
Data		8.7		1.6			(1.4	)		(1.2	)		7.7
Access		0.8		0.3			(0.1	)		(0.1	)		0.9
Services		0.7		0.5			(0.4	)		—			0.8
Subtotal 2012 Restructuring Plan		12.1		3.1			(2.3	)		(1.3	)		11.6
2011 Restructuring Plan
Optical		2.0		0.3			(1.2	)		—			1.1
Data		2.8		—			(0.5	)		—			2.3
Access		0.5		0.1			(0.2	)		—			0.4
Services		0.5		(0.4	)		—			—			0.1
Subtotal 2011 Restructuring Plan		5.8		—			(1.9	)		—			3.9
Previous Restructuring Plans
Optical		0.2		—			—			—			0.2
Data		1.5		—			(0.1	)		—			1.4
Access		2.2		0.2			(0.2	)		—			2.2
Services		0.1		—			(0.1	)		—			—
Subtotal Previous Restructuring Plans		4.0		0.2			(0.4	)		—			3.8
Total Restructuring Plans	$	21.9	$	3.3		$	(4.6	)	$	(1.3	)	$	19.3

			Nine Months Activity
	Balance at 12/30/11		Restructuring Expense			Cash Payments			Other Activities1			Balance at 9/28/12
2012 Restructuring Plan
Optical	$	—	$	4.7		$	(1.6	)	$	(0.9	)	$	2.2
Data		—		99.8			(16.6	)		(75.5	)		7.7
Access		—		1.6			(0.5	)		(0.2	)		0.9
Services		—		2.3			(1.5	)		—			0.8
Subtotal 2012 Restructuring Plan		—		108.4			(20.2	)		(76.6	)		11.6
2011 Restructuring Plan
Optical		4.4		1.9			(4.6	)		(0.6	)		1.1
Data		5.5		—			(3.0	)		(0.2	)		2.3
Access		1.1		0.1			(0.8	)		—			0.4
Services		1.6		(0.3	)		(1.2	)		—			0.1
Subtotal 2011 Restructuring Plan		12.6		1.7			(9.6	)		(0.8	)		3.9

7

Previous Restructuring Plans
Optical		0.4		(0.1	)		(0.1	)		—			0.2
Data		1.9		—			(0.5	)		—			1.4
Access		2.6		0.2			(0.6	)		—			2.2
Services		0.2		—			(0.2	)		—			—
Subtotal Previous Restructuring Plans		5.1		0.1			(1.4	)		—			3.8
Total Restructuring Plans	$	17.7	$	110.2		$	(31.2	)	$	(77.4	)	$	19.3

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:

	9/28/12
	Gross Assets			Accumulated Amortization			Net
Developed technology	$	147.6		$	(147.3	)	$	0.3
Customer relationships		30.9			(25.7	)		5.2
Total	$	178.5		$	(173.0	)	$	5.5
	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 September 28, 2012 follows:

2012 (remaining three months)	$	1.1
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.

8

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 financial instruments owned at fair value by level in the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

9

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

			Fair Value Measurements at September 28, 2012
	Balance at 9/28/12		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	$	152.4	$	152.4	$	—	$	—
Corporate debt obligations guaranteed by FDIC		21.1		—		21.1		—
Corporate debt obligations		188.6		—		188.6		—
Mortgaged backed debt obligations guaranteed by GNMA		97.7		—		97.7		—
Certificates of deposit guaranteed by FDIC		3.2		—		3.2		—
Foreign government debt obligations		224.7		—		224.7		—
Foreign corporate debt obligations		119.2		—		119.2		—
Subtotal		806.9		152.4		654.5		—
Other marketable securities		201.6		201.6		—		—
Derivative financial instruments		0.1		—		0.1		—
Total Assets	$	1,008.6	$	354.0	$	654.6	$	—
Liabilities
Loan related to other marketable securities	$	201.6	$	201.6	$	—	$	—
Derivative financial instruments		2.4		—		2.4		—
Total Liabilities	$	204.0	$	201.6	$	2.4	$	—
			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	$	—

10

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 income (loss) and shown as a separate component of stockholders’ equity. We base realized gains and losses on specific identification of the security sold. At September 28, 2012, and December 30, 2011, available-for-sale marketable securities consisted of the following:

	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
September 28, 2012
U.S. government debt obligations	$	151.9	$	0.5	$	—		$	152.4
Corporate debt obligations guaranteed by FDIC		21.1		—		—			21.1
Corporate debt obligations		186.4		2.3		(0.1	)		188.6
Mortgaged backed debt obligations guaranteed by GNMA		97.2		0.8		(0.3	)		97.7
Certificates of deposit guaranteed by FDIC		3.2		—		—			3.2
Foreign government debt obligations		222.1		2.9		(0.3	)		224.7
Foreign corporate debt obligations		118.4		0.8		—			119.2
Total	$	800.3	$	7.3	$	(0.7	)	$	806.9
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 September 28, 2012:

	Amortized Cost		Fair Value
Less than 12 months	$	262.8	$	264.5
Due in 1 to 5 years		438.3		442.8
Due after 5 years		99.2		99.6
Total	$	800.3	$	806.9

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 September 28, 2012. No other-than-temporary impairments were recorded in the third quarter or first nine months of 2012. We recognized an other-than-temporary impairment of $1.2 million in the first nine months of 2011.

11

Investments in marketable securities with unrealized losses at September 28, 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
September 28, 2012
Corporate debt obligations	$	16.2	$	(0.1	)	$	—	$	—	$	16.2	$	(0.1	)
Mortgaged backed debt obligations guaranteed by GNMA		29.4		(0.3	)		—		—		29.4		(0.3	)
Foreign government debt obligations		22.2		(0.3	)		—		—		22.2		(0.3	)
Total	$	67.8	$	(0.7	)	$	—	$	—	$	67.8	$	(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 nine months ending September 28, 2012, and September 30, 2011:

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Gross realized gains	$	1.0		$	1.7		$	1.5		$	3.1
Gross realized losses		(0.2	)		(1.4	)		(0.7	)		(3.2	)
Total	$	0.8		$	0.3		$	0.8		$	(0.1	)

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 September 28, 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 September 28, 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 September 28, 2012, Other marketable securities and Loan related to other marketable securities was $201.6 million at a market price of $19.10 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 $0.2 million in the third quarter of 2012, $0.3 million in the third quarter of 2011, $0.9 million in the first nine months of 2012 and $0.8 million in the first nine months of 2011.

12

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 $2.5 million at September 28, 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 third quarter and first nine months of 2012. Other-than-temporary impairments were $0.6 million for the third quarter and first nine months of 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 September 28, 2012, we held non-designated foreign currency forward contracts in 13 currencies, with a gross notional equivalent of $222.1 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 September 28, 2012, we had a net unrealized gain of $17.4 million in Accumulated other comprehensive income related to settled contracts and a net loss of $0.1 million related to unsettled contracts. We held net investment hedges with a notional value of 150 million Euros at the end of the quarter.

The fair value of derivative instruments in the Consolidated Balance Sheet as of September 28, 2012, was as follows:

	Asset Derivatives Reported in Miscellaneous Receivables and Other Current Assets		Liability Derivatives Reported in Other Accrued Liabilities
Net investment hedges	$	—	$	2.2
Balance sheet hedges (Non-designated hedges)		0.1		0.2
Total derivatives	$	0.1	$	2.4

13

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 Income (Loss) follows:

	Third Quarter
	(Loss) Gain Recognized  in Accumulated OCI, net (Effective Portion)					Loss Recognized in Other Expense, net: Excluded from Effectiveness testing
	9/28/12			9/30/11		9/28/12		9/30/11
Net investment hedges	$	(3.8	)	$	4.1	$	—	$	(0.3	)

	Nine Months
	Loss Recognized in Accumulated OCI, net (Effective Portion)						Gain (Loss) Recognized in Other Expense, net: Excluded from Effectiveness testing
	9/28/12			9/30/11			9/28/12		9/30/11
Net investment hedges	$	(1.3	)	$	(5.9	)	$	0.2	$	(0.5	)

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

	Third Quarter					Nine Months
	Gain (Loss) Recognized in Other Expense, net 1					(Loss) Gain Recognized in Other Expense, net 1
	9/28/12		9/30/11			9/28/12			9/30/11
Foreign currency forward and option contracts	$	0.1	$	(1.2	)	$	(0.5	)	$	5.3

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.

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:

14

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Balance – beginning of period	$	16.3		$	20.0		$	17.0		$	19.4
Accruals for product warranties		2.0			2.2			4.9			7.1
Settlements		(1.2	)		(1.1	)		(3.4	)		(3.4	)
Other adjustments to accruals for product warranties		(1.7	)		(2.0	)		(3.1	)		(4.0	)
Balance – end of period	$	15.4		$	19.1		$	15.4		$	19.1

	Balance at 9/28/12		Balance at 9/30/11
Balance sheet classification - end of period
Other accrued liabilities	$	6.7	$	8.9
Other long-term liabilities		8.7		10.2
Total product warranty liabilities	$	15.4	$	19.1

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 18,859,784 remain available for grant at September 28, 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 fair value assumptions used to compute the weighted average fair value of stock option grants at the date of grant:

	9/28/12			9/30/11
Expected volatility		43.3	%		46.5	%
Risk-free interest rate		0.9	%		2.1	%
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 September 28, 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		2,102,207		$	3.95
Exercised		(138,665	)	$	0.48
Forfeited/expired		(5,180,890	)	$	7.06
Outstanding – end of period		17,502,134		$	7.48		3.8	$	0.1
Exercisable – end of period		14,868,901		$	7.94		2.9	$	0.1
Shares vested or expected to vest		17,305,651		$	7.51		3.7	$	0.1

15

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on our closing stock price as of September 28, 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 third quarter of 2012 was $0.1 million.

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

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. These cash payments were negligible in the first nine months of 2012 and 2011.

The following is a summary of cash-settled SARs activity during 2012 as of September 28, 2012:

	Shares			Weighted Average Exercise Price
Outstanding – beginning of year		492,131		$	6.81
Granted		16,200		$	3.98
Forfeited/expired		(40,684	)	$	7.26
Outstanding – end of period		467,647		$	6.67

Restricted Stock

The fair market value of restricted stock vested was $9.0 million in the first nine months of 2012. The weighted average grant date fair value of restricted stock was $3.88 per share in the first nine months of 2012 and $5.32 per share in the first nine months of 2011.

The following is a summary of restricted stock activity during 2012 as of September 28, 2012:

	Shares			Weighted Average Grant Date Fair Value
Non-vested – beginning of year		4,854,587		$	6.29
Granted		2,619,842		$	3.88
Vested		(2,390,007	)	$	6.09
Forfeited		(1,271,870	)	$	6.27
Non-vested – end of period		3,812,552		$	4.76

Performance Stock Units

The 2004 Plan provides for the granting of PSUs. We granted 1,963,478 PSUs in the first nine months of 2012 and 1,654,965 PSUs in the first nine months of 2011. The PSUs granted in the first nine 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 nine months of 2012 was $3.98 per share and the weighted average fair value of PSUs granted in the first nine months of 2011 was $5.39 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.

16

The following is a summary of PSU activity during 2012 as of September 28, 2012:

	Shares			Weighted Average Grant Date Fair Value
Non-vested – beginning of year		2,269,410		$	5.51
Granted		1,963,478		$	3.98
Vested		(825,996	)	$	5.28
Forfeited		(1,716,260	)	$	4.96
Non-vested – end of period		1,690,632		$	4.40

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 Income (Loss):

	Third Quarter					Nine Months
	9/28/12			9/30/11		9/28/12			9/30/11
Cost of revenue – products	$	0.3		$	0.4	$	0.9		$	1.3
Cost of revenue – services		0.4			0.5		1.3			1.7
Research and development		1.0			2.3		4.2			7.9
Sales and marketing		0.6			1.0		2.3			3.7
General and administrative		3.1			2.1		7.1			7.3
Equity-based compensation expense before income taxes		5.4			6.3		15.8			21.9
Income tax benefit		(0.1	)		—		(0.3	)		(2.6	)
Total equity-based compensation expense after income taxes	$	5.3		$	6.3	$	15.5		$	19.3

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

	Third Quarter				Nine Months
	9/28/12		9/30/11		9/28/12			9/30/11
Stock options	$	1.6	$	1.1	$	3.6		$	3.7
Cash-settled SARs		—		—		(0.1	)		(0.2	)
Restricted stock		3.3		3.8		9.1			13.6
Performance stock units		0.5		1.4		3.2			4.8
Total	$	5.4	$	6.3	$	15.8		$	21.9

As of September 28, 2012, we had $18.5 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 $3.7 million in the third quarter and $14.2 million in the first nine 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.

17

10. Comprehensive Income (Loss)

Comprehensive income (loss) for the third quarter and the first nine months of 2012 and 2011 consists of the following:

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Net loss	$	(3.9	)	$	(130.1	)	$	(148.4	)	$	(183.5	)
Net change in unrealized gains (losses) related to:
Available-for-sale securities, net of tax		1.2			0.9			2.1			0.2
Net investment hedges, net of tax		(3.8	)		4.1			(1.3	)		(5.9	)
Foreign currency translation adjustments		19.9			(39.5	)		(1.9	)		9.3
Comprehensive income (loss)	$	13.4		$	(164.6	)	$	(149.5	)	$	(179.9	)

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 nine 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		3.0			(1.6	)		(1.9	)		—			—		(0.5	)
Tax effect		(0.9	)		0.3			—			—			—		(0.6	)
Balance at September 28, 2012	$	4.0		$	17.3		$	65.6		$	(0.2	)	$	2.0	$	88.7

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.

18

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:

	Third Quarter				Nine Months
	9/28/12		9/30/11		9/28/12		9/30/11
Optical	$	108.0	$	120.4	$	334.8	$	368.8
Data		66.2		109.1		213.3		312.7
Access		42.3		43.2		115.5		123.1
Services		47.9		57.1		146.8		164.3
Total revenue	$	264.4	$	329.8	$	810.4	$	968.9

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

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Optical	$	23.5		$	20.6		$	67.3		$	67.1
Data		1.4			8.0			1.8			(7.8	)
Access		11.1			7.2			23.5			26.6
Services		15.6			22.8			48.0			54.4
Total segment profit	$	51.6		$	58.6		$	140.6		$	140.3
Sales and marketing expenses		(29.7	)		(41.4	)		(98.3	)		(126.9	)
General and administrative expenses		(17.9	)		(18.6	)		(58.7	)		(63.3	)
Equity-based compensation		(1.7	)		(3.1	)		(6.5	)		(11.1	)
Intangible asset amortization		(1.1	)		(5.0	)		(4.3	)		(15.3	)
Restructuring and other charges		(3.3	)		(19.5	)		(110.2	)		(20.5	)
Goodwill and IPR&D impairment		—			(102.7	)		—			(102.7	)
Operating loss	$	(2.1	)	$	(131.7	)	$	(137.4	)	$	(199.5	)

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.

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

19

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. On September 26, 2012, the Court granted a motion by Tellabs for summary judgment of invalidity of all asserted claims of Fujitsu’s U.S. Patent No. 5,386,418, and judgment was entered in favor of Tellabs on its counterclaim for declaratory judgment of invalidity of the same patent. On October 25, 2012, Fujitsu filed a notice of appeal of the Court’s order and judgment as to the invalidity of Fujitsu’s U.S. Patent No. 5,386,418. On September 27, 2012, the Court denied a motion by Tellabs for summary judgment of invalidity of Fujitsu’s U.S. Patent No. 5,521,737. A trial date of January 14, 2013, had been set by the Court to commence trial of Fujitsu’s U.S. Patent Nos. 5,526,163 and 5,521,737, however on November 1, 2012, the scheduled trial date was struck from the Court’s calendar in favor of an alternative trial date to be later determined. 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. On August 8, 2012, the Court issued further orders related to the construction of claims of 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

20

Tellabs cannot estimate the possible loss or range of loss. Trial on Fujitsu’s U.S. Patent No. 7,227,681 commenced on August 27, 2012, and concluded on September 7, 2012, whereupon the jury’s verdict the Court entered judgment in favor of Tellabs on Fujitsu’s claim for infringement of Fujitsu’s U.S. Patent No. 7,227,681 and in favor of Fujitsu on Tellabs’ claim for invalidity of the same patent, and the parties’ respective post-trial motions are now pending before the Court. 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 remains 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. In addition to the four patents asserted against Tellabs in the complaint, another three patents are asserted against Tellabs in plaintiff’s infringement contentions dated August 23, 2012. The newly asserted patents are U.S. Patent Nos. 7,116,862; 7,339,714; and 6,882,771. The accused products include products from the Tellabs 7100 product line. 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. On September 4, 2012, the Court issued an Order granting a motion by the defendants to stay the litigation, whereby the litigation is stayed pending entry of a final non-appealable judgment in a prior proceeding in which Tellabs is not named (Internet Machines LLC v. Alienware Corp., No 6:10-cv-23 (E.D. Tex. Filed Feb. 2, 2010)).

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

21

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.

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 11 thousand shares for $36 thousand in the third quarter of 2012, and 19 thousand shares for $67 thousand in the first nine months of 2012 under this program.

As of September 28, 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 third quarter and first nine months 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 0.2 million shares for $0.7 million in the third quarter of 2012, and 1.0 million shares for $3.7 million in the first nine 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:

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Numerator:
Net loss	$	(3.9	)	$	(130.1	)	$	(148.4	)	$	(183.5	)
Denominator:
Denominator for basic net loss per share – weighted average shares outstanding		367.7			365.2			366.8			364.3
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		367.7			365.2			366.8			364.3
Net loss per share, basic	$	(0.01	)	$	(0.36	)	$	(0.40	)	$	(0.50	)
Net loss per share, diluted1	$	(0.01	)	$	(0.36	)	$	(0.40	)	$	(0.50	)

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 third quarter and first nine months of 2012 and 2011 are the same. Diluted weighted average shares outstanding were 368.2 million in the third quarter of 2012, 368.6 million in the first nine months of 2012, 365.9 million in the third quarter of 2011 and 366.4 million in the first nine months of 2011.

22

15. Subsequent Event

On October 24, 2012, management initiated a restructuring plan that is designed to further align expenses with revenue and current market conditions. In order to reduce costs and operating expenses, this plan includes moving certain functions to lower cost geographies. Actions under this plan are expected to be substantially completed by the end of the fourth quarter of 2013. We expect to record pretax charges in the fourth quarter of 2012 through the first quarter of 2013 of approximately $11 million. The pretax charges will consist of $9 million for severance-related charges that will affect approximately 200 employees, and $2 million for facility- and asset-related charges. Estimated cash payments under this plan are expected to be $9 million beginning in the fourth quarter of 2012 and continuing through the end of 2014.

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 Tellabs^® 8600, 8800 and 9200 Smart Routers, as well as the Tellabs^® 8100 Managed Access Systems.

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 continues to develop new products and services that are primarily funded by profits from earlier-developed products and services. As customers migrate to new technologies, revenue from earlier-developed products and services declines and overall corporate profitability suffers. This situation is compounded when customers are slow to adopt our new products and services. In the face of these market conditions, we continue to transform the company, streamlining costs, sales and marketing, and general and administrative expenses, so that we can increase investment in research and development for future growth with the near-term goal of maintaining nominal profitability on a non-GAAP basis and generating positive cash flow from operations.

RESULTS OF OPERATIONS

Net loss in the third quarter of 2012 was $3.9 million or $0.01 per share (basic and diluted), compared with net loss of $130.1 million or $0.36 per share (basic and diluted) in the third quarter of 2011 when results included $102.7 million in impairment charges for goodwill and in-process research and development (IPR&D). For the first nine months of 2012, net loss was $148.4 million or $0.40 per share (basic and diluted), compared with net loss of $183.5 million or $0.50 per share (basic and diluted) in the first nine months of 2011. Lower operating expenses, offset by lower gross profit margins, reduced the net loss in the third quarter of 2012, compared with the year-ago period. The net loss in the first nine months of 2012 was driven primarily by lower overall revenue and $110.2 million in restructuring and other charges incurred in the first nine months of 2012.

23

Revenue (in millions)

	Third Quarter							Nine Months
	2012		2011		Change			2012		2011		Change
Products	$	216.5	$	272.7		(20.6	)%	$	663.6	$	804.6		(17.5	)%
Services		47.9		57.1		(16.1	)%		146.8		164.3		(10.7	)%
Total revenue	$	264.4	$	329.8		(19.8	)%	$	810.4	$	968.9		(16.4	)%

Third quarter 2012 compared with third quarter 2011

Total revenue was $264.4 million, compared with $329.8 million, as revenue declined in each operating segment. On a geographic basis, revenue from customers outside North America was $138.1 million (or 52% of total revenue), compared with $178.8 million (or 54% of total revenue), as revenue declined in all geographic regions outside North America. Revenue from customers in North America (United States and Canada) was $126.3 million (or 48% of total revenue), compared with $151.0 million (or 46% of total revenue).

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

Total revenue was $810.4 million, compared with $968.9 million, as revenue declined in each operating segment. On a geographic basis, revenue from customers outside North America was $419.6 million (or 52% of total revenue) compared with $465.6 million (or 48% 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) and Asia Pacific (APAC) regions. Revenue from customers in North America was $390.8 million (or 48% of total revenue), compared with $503.3 million (or 52% of total revenue), primarily as a result of lower revenue from Tier 1 customers.

Gross Margin

	Third Quarter									Nine Months
	2012			2011			% Point Change			2012			2011			% Point Change
Products		40.8	%		41.8	%		(1.0	)%		40.2	%		39.9	%		0.3	%
Services		31.7	%		39.1	%		(7.4	)%		31.8	%		32.1	%		(0.3	)%
Consolidated		39.2	%		41.3	%		(2.1	)%		38.7	%		38.6	%		0.1	%

Product gross margins declined in the third quarter of 2012, compared with the third quarter of 2011, primarily as a result of lower revenue from Data segment products. Product margins increased slightly in the first nine months of 2012, compared with the first nine months of 2011, as lower costs offset the lower level of overall product revenue.

Services margins declined in the third quarter 2012, compared with the third quarter of 2011, primarily as a result of lower revenue from professional services. Services margins declined in the first nine months of 2012, compared with the first nine months of 2011, primarily as a result of lower revenue from professional services and partially driven by an adjustment for business taxes on sales transactions involving deployment services in a foreign jurisdiction in the second quarter of 2012.

Operating Expenses (in millions)

	Third Quarter							Percent of Revenue
	2012		2011		Change			2012			2011
Research and development	$	53.7	$	80.8	$	(27.1	)		20.3	%		24.5	%
Sales and marketing		29.7		41.4		(11.7	)		11.2	%		12.6	%
General and administrative		17.9		18.6		(0.7	)		6.8	%		5.6	%
Subtotal		101.3		140.8		(39.5	)		38.3	%		42.7	%
Intangible asset amortization		1.1		5.0		(3.9	)
Restructuring and other charges		3.3		19.5		(16.2	)
Goodwill and IPR&D impairment		—		102.7		(102.7	)
Total operating expenses	$	105.7	$	268.0	$	(162.3	)

24

	Nine Months							Percent of Revenue
	2012		2011		Change			2012			2011
Research and development	$	179.4	$	244.6	$	(65.2	)		22.1	%		25.2	%
Sales and marketing		98.3		126.9		(28.6	)		12.1	%		13.1	%
General and administrative		58.7		63.3		(4.6	)		7.2	%		6.5	%
Subtotal		336.4		434.8		(98.4	)		41.5	%		44.9	%
Intangible asset amortization		4.3		15.3		(11.0	)
Restructuring and other charges		110.2		20.5		89.7
Goodwill and IPR&D impairment		—		102.7		(102.7	)
Total operating expenses	$	450.9	$	573.3	$	(122.4	)

In the third quarter of 2012, operating expenses decreased, compared with the year-ago period, due primarily to the $102.7 million impairment charge for goodwill and IPR&D in 2011, as well as lower research and development and sales and marketing expenses related to stopping new development of mobile packet-core products.

For the first nine months of 2012, lower research and development, sales and marketing and general and administrative expenses were partially offset by $110.2 million in restructuring and other charges incurred in the first nine months of 2012. Restructuring and other charges in the third quarter of 2012 are due to severance ($2.3 million) and facility- and asset-related charges ($1.0 million). For the first nine months of 2012, restructuring and other charges are due to facility- and asset-related charges ($38.2 million), severance ($24.3 million) and accelerated amortization for abandoned intangible assets ($47.7 million) related to the mobile packet-core technology.

Other Income (in millions)

	Third Quarter									Nine Months
	2012			2011			Change			2012			2011			Change
Interest income, net	$	2.1		$	3.0		$	(0.9	)	$	5.5		$	9.4		$	(3.9	)
Other expense, net		(0.2	)		(0.9	)		0.7			(2.3	)		(2.6	)		0.3
Total other income	$	1.9		$	2.1		$	(0.2	)	$	3.2		$	6.8		$	(3.6	)

Interest income was down in the third quarter and first nine months of 2012, compared with the year-ago periods, due to lower interest rates and lower investment balances. Other expense, net was lower in the third quarter of 2012, compared with the third quarter of 2011, primarily due to a $0.6 million write-down of long-term equity investments in the third quarter of 2011. Other expense, net for the first nine months of 2012 primarily consisted of increased costs related to hedging foreign-currency exposures. Other expense, net for the first nine months of 2011 primarily included a $1.8 million charge for other-than-temporary impairments from investments in marketable securities and write-downs of long-term equity investments.

Income Taxes

In the third quarter of 2012, we reported tax expense of $3.7 million, compared with tax expense of $0.5 million in the third quarter of 2011. For the first nine months of 2012, we reported tax expense of $14.2 million, compared with a tax benefit of $9.2 million for the first nine 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 third quarter and the first nine months of 2012 primarily reflect tax on income from foreign operations.

Segments

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

Segment Revenue (in millions)

	Third Quarter							Nine Months
	2012		2011		Change			2012		2011		Change
Optical	$	108.0	$	120.4		(10.3	)%	$	334.8	$	368.8		(9.2	)%
Data		66.2		109.1		(39.3	)%		213.3		312.7		(31.8	)%
Access		42.3		43.2		(2.1	)%		115.5		123.1		(6.2	)%
Services		47.9		57.1		(16.1	)%		146.8		164.3		(10.7	)%
Total revenue	$	264.4	$	329.8		(19.8	)%	$	810.4	$	968.9		(16.4	)%

25

Segment Profit (Loss)* (in millions)

	Third Quarter							Nine Months
	2012		2011		Change			2012		2011			Change
Optical	$	23.5	$	20.6		14.1	%	$	67.3	$	67.1			0.3	%
Data		1.4		8.0		(82.5	)%		1.8		(7.8	)		N/M
Access		11.1		7.2		54.2	%		23.5		26.6			(11.7	)%
Services		15.6		22.8		(31.6	)%		48.0		54.4			(11.8	)%
Total segment profit	$	51.6	$	58.6		(11.9	)%	$	140.6	$	140.3			0.2	%

* 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 impact of equity-based compensation and the goodwill and IPR&D impairment charges.

Third quarter 2012 compared with third quarter 2011

Optical

Revenue from the Optical segment was $108.0 million, compared with $120.4 million. Within this segment, we saw lower revenue from the Tellabs^® 6300 managed transport systems, the Tellabs^® 5000 digital cross-connect systems, and the Tellabs^® 7100 optical transport systems. Optical segment profit grew to $23.5 million, up 14.1% from $20.6 million, despite the lower revenue level. The improvement in optical segment profitability was primarily driven by lower research and development expenses.

Data

Revenue from the Data segment was $66.2 million, compared with $109.1 million, primarily on lower revenue from the Tellabs^® 8100 managed access system and the Tellabs^® 8600 and 8800 smart routers. Data segment profit, driven primarily by the lower revenue level, was $1.4 million, compared with $8.0 million.

Access

Revenue from the Access segment was $42.3 million, compared with $43.2 million. Within this segment, increased revenue from the Tellabs^® 1000 access systems was offset by essentially flat revenue from the Tellabs^® 1600 single-family Optical Network Terminals (ONTs) and lower revenue from the Tellabs^® 1100 access systems. Access segment profit, driven primarily by improved product gross margins and lower research and development expenses, grew to $11.1 million, up 54.2% from $7.2 million.

Services

Revenue from the Services segment was $47.9 million, compared with $57.1 million. The decline in segment revenue was driven primarily by lower revenue from professional services and support agreements. Services segment profit, driven primarily by the lower level of revenue, was $15.6 million, compared with $22.8 million.

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

Optical

Revenue from the Optical segment was $334.8 million, compared with $368.8 million. Within this segment, increased revenue from the Tellabs 6300 managed transport systems and flat revenue from the Tellabs 7100 optical transport systems was more than offset by lower revenue from the Tellabs 5000 digital cross-connect systems. Optical segment profit, driven primarily by lower research and development expenses was $67.3 million, compared with $67.1 million, despite the lower revenue level.

Data

Revenue from the Data segment was $213.3 million, compared with $312.7 million, primarily on lower revenue from the Tellabs 8600 and 8800 smart routers. Data segment profit was $1.8 million, compared with a loss of $7.8 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 mobile packet-core products.

Access

Revenue from the Access segment was $115.5 million, compared with $123.1 million. Within this segment, higher 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 $23.5 million, compared with $26.6 million.

26

Services

Revenue from the Services segment, driven primarily by lower deployment and professional services revenue and the adjustment for business taxes mentioned earlier, was $146.8 million, compared with $164.3 million. Services segment profit was $48.0 million, compared with $54.4 million. The decline in segment profit was driven primarily by the lower level of revenue.

Financial Condition, Liquidity & Capital Resources

Our principal source of liquidity remained cash, cash equivalents and marketable securities of $941.8 million as of September 28, 2012, which decreased by $34.8 million since year-end 2011. Of the total cash, cash equivalents and marketable securities, as of September 28, 2012, $418.2 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 $10.1 million in cash from operations, slightly increasing cash, cash equivalents and marketable securities. We generated $4.5 million in cash from operations during the first nine months of 2012.

During the third quarter of 2012, we distributed $7.4 million to our stockholders through our cash dividend. We also repurchased 11 thousand shares of common stock at a cost of $36 thousand under the 10b5-1 plan. During the first nine months of 2012, we distributed $22.0 million to our stockholders through the cash dividend. We also repurchased 19 thousand shares of common stock at a cost of $67 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.

Goodwill

At September 28, 2012, goodwill totals $122.0 million, and is all in the Services segment. We review goodwill annually for impairment, unless potential interim indicators exist that could result in an impairment. Given that Tellabs’ overall market capitalization was below its consolidated book value, we completed an interim goodwill impairment review for the Services segment. Step one of this review involved determining the Services segment’s fair value using the present value of future cash flows based on management estimates, judgments and assumptions. Based on the results of our step one review, the fair value of the Services segment exceeded its carrying value; therefore, the second step of the impairment test was not required to be performed and no goodwill impairment was recognized.

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.

Third quarter 2012 compared with second quarter 2012

Total revenue, was $264.4 million, compared with $288.1 million as increased Access segment revenue was offset by declines in the other operating segments. Revenue from customers outside North America was $138.1 million, (or 52% of total revenue), compared with $150.2 million (or 52% of total revenue) as increased revenue in the APAC region was more than offset by lower revenue in the EMEA and LAC regions. Revenue from customers in North America was $126.3 million (or 48% of total revenue), compared with $137.9 million (or 48% of total revenue).

27

Optical

Revenue from the Optical segment was $108.0 million, compared with $122.4 million. Within this segment, we saw lower revenue from the Tellabs 6300 managed transport systems, the Tellabs 5000 digital cross-connect systems and the Tellabs 7100 optical transport systems. Optical segment profit was $23.5 million, compared with $29.0 million. The decline in segment profit was driven primarily by the lower level of segment revenue.

Data

Revenue from the Data segment was $66.2 million, compared with $77.7 million. Increased revenue from the Tellabs 8800 smart routers edge systems was offset by lower revenue from the Tellabs 8600 smart routers and the Tellabs 8100 managed access systems. Data segment profit, driven by the lower revenue level, was $1.4 million compared with $5.4 million.

Access

Revenue from the Access segment was $42.3 million, up 13.4% from $37.3 million. Within this segment, increased revenue from the Tellabs 1600 single-family ONTs and the Tellabs 1000 access systems more than offset lower revenue from the Tellabs 1100 access systems. Access segment profit, driven primarily by the higher revenue level, was $11.1 million, up 85.0% from $6.0 million.

Services

Revenue from the Services segment was $47.9 million, compared with $50.7 million. The decrease in segment revenue was driven primarily by lower revenue from professional services and support agreements. Services segment profit, driven primarily by the lower level of revenue, was $15.6 million, compared with $17.2 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 on pages 29 through 31.

Third quarter 2012 compared with second quarter 2012

Non-GAAP gross profit margin was 39.4%, compared with 39.9%. The decline was driven primarily by lower revenue in the Data and Optical segments.

Non-GAAP operating expenses were $96.6 million, down from $106.4 million, on lower research and development, sales and marketing, and general and administrative expenses related to stopping new development of mobile packet-core products.

Non-GAAP operating earnings were $7.7 million, compared with $8.5 million, as lower operating expenses were primarily offset by the lower level of revenue.

Driven primarily by lower operating expenses and partially offset by lower revenue, non-GAAP net earnings were $6.5 million or $0.02 per share (basic and diluted), compared with $6.2 million or $0.02 per share (basic and diluted).

28

TELLABS, INC.

RECONCILIATION OF NON-GAAP ADJUSTMENTS (1)

(Unaudited)

	Quarter Ended						Nine Months Ended
In millions, except per-share data	9/28/12			9/30/11			9/28/12			9/30/11
Gross Profit Reconciliation (GAAP / non-GAAP)
GAAP gross profit	$	103.6		$	136.3		$	313.5		$	373.8
Equity-based compensation - products (a)		0.3			0.3			0.9			1.3
Equity-based compensation - services (a)		0.4			0.5			1.3			1.7
Total adjustments related to gross profit		0.7			0.8			2.2			3.0
Non-GAAP gross profit	$	104.3		$	137.1		$	315.7		$	376.8
Non-GAAP gross profit percentage		39.4%			41.6%			39.0%			38.9%
Non-GAAP gross profit percentage - products		41.0%			41.9%			40.3%			40.1%
Non-GAAP gross profit percentage - services		32.6%			39.9%			32.7%			33.1%
Operating Expenses Reconciliation (GAAP / non-GAAP)
GAAP operating expenses	$	105.7		$	268.0		$	450.9		$	573.3
Equity-based compensation - research and development (a)		1.0			2.3			4.3			8.1
Equity-based compensation - sales and marketing (a)		0.6			1.1			2.3			3.7
Equity-based compensation - general and administrative (a)		3.1			2.1			7.1			7.3
Intangible asset amortization (b)		1.1			5.0			4.3			15.3
Restructuring and other charges (c), (d)		3.3			19.5			110.2			20.5
Goodwill and IPR&D impairment (e)		—			102.7			—			102.7
Total adjustments related to operating expenses		9.1			132.7			128.2			157.6
Non-GAAP operating expenses	$	96.6		$	135.3		$	322.7		$	415.7
Operating (Loss) Earnings Reconciliation (GAAP / non-GAAP)
GAAP operating loss	$	(2.1	)	$	(131.7	)	$	(137.4	)	$	(199.5	)
Total adjustments related to gross profit		0.7			0.8			2.2			3.0
Total adjustments related to operating expenses		9.1			132.7			128.2			157.6
Non-GAAP operating earnings (loss)	$	7.7		$	1.8		$	(7.0	)	$	(38.9	)
Non-GAAP operating earnings (loss) as a percentage of revenue		2.9%			0.5%			-0.9%			-4.0%
Net Earnings (Loss) Reconciliation (GAAP / non-GAAP)
GAAP net loss	$	(3.9	)	$	(130.1	)	$	(148.4	)	$	(183.5	)
Total adjustments related to gross profit		0.7			0.8			2.2			3.0
Total adjustments related to operating expenses		9.1			132.7			128.2			157.6
Write-downs of long-term equity investments (f)		—			0.6			—			0.6
Income tax effect (g)		0.6			(0.9	)		15.4			0.9
Non-GAAP net earnings (loss)	$	6.5		$	3.1		$	(2.6	)	$	(21.4	)
Non-GAAP net earnings (loss) per share - basic	$	0.02		$	0.01		$	(0.01	)	$	(0.06	)
Non-GAAP net earnings (loss) per share - diluted	$	0.02		$	0.01		$	(0.01	)	$	(0.06	)

(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 to evaluate our operating performance. These operating performance 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 performance measures, we provide a reconciliation of non-GAAP financial performance measures to the most closely applicable GAAP financial performance measure. Management believes the non-GAAP financial performance measures are an important measure of operating performance and provides useful information to investors to better evaluate the operating performance of our business as it highlights trends in our business that may not otherwise be apparent when relying solely on GAAP measures and because it facilitates comparisons to historical results of operations. Management uses these non-GAAP financial performance measures as supplements to our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business as well as 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.

29

TELLABS, INC.

RECONCILIATION OF NON-GAAP ADJUSTMENTS (1)

(Unaudited)

	Quarter Ended
In millions, except per-share data	9/28/12			6/28/12
Gross Profit Reconciliation (GAAP / non-GAAP)
GAAP gross profit	$	103.6		$	114.2
Equity-based compensation - products (a)		0.3			0.3
Equity-based compensation - services (a)		0.4			0.4
Total adjustments related to gross profit		0.7			0.7
Non-GAAP gross profit	$	104.3		$	114.9
Non-GAAP gross profit percentage		39.4%			39.9%
Non-GAAP gross profit percentage - products		41.0%			41.2%
Non-GAAP gross profit percentage - services		32.6%			33.9%
Operating Expenses Reconciliation (GAAP / non-GAAP)
GAAP operating expenses	$	105.7		$	112.6
Equity-based compensation - research and development (a)		1.0			1.5
Equity-based compensation - sales and marketing (a)		0.6			0.8
Equity-based compensation - general and administrative (a)		3.1			2.0
Intangible asset amortization (b)		1.1			1.0
Restructuring and other charges (c)		3.3			0.9
Total adjustments related to operating expenses		9.1			6.2
Non-GAAP operating expenses	$	96.6		$	106.4
Operating (Loss) Earnings Reconciliation (GAAP / non-GAAP)
GAAP operating (loss) earnings	$	(2.1	)	$	1.6
Total adjustments related to gross profit		0.7			0.7
Total adjustments related to operating expenses		9.1			6.2
Non-GAAP operating earnings	$	7.7		$	8.5
Non-GAAP operating earnings as a percentage of revenue		2.9%			3.0%
Net Earnings (Loss) Reconciliation (GAAP / non-GAAP)
GAAP net loss	$	(3.9	)	$	(4.7	)
Total adjustments related to gross profit		0.7			0.7
Total adjustments related to operating expenses		9.1			6.2
Income tax effect (g)		0.6			4.0
Non-GAAP net earnings	$	6.5		$	6.2
Non-GAAP net earnings per share - basic	$	0.02		$	0.02
Non-GAAP net earnings per share - diluted	$	0.02		$	0.02

(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 to evaluate our operating performance. These operating performance 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 performance measures, we provide a reconciliation of non-GAAP financial performance measures to the most closely applicable GAAP financial performance measure. Management believes the non-GAAP financial performance measures are an important measure of operating performance and provides useful information to investors to better evaluate the operating performance of our business as it highlights trends in our business that may not otherwise be apparent when relying solely on GAAP measures and because it facilitates comparisons to historical results of operations. Management uses these non-GAAP financial performance measures as supplements to our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business as well as 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

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 recorded a $82.7 million goodwill impairment charge in the third quarter of 2011, which related to the Broadband segment. In addition, we recorded a $20.0 million other-than-temporary impairment for in-process research and development intangible assets in the third quarter and first nine months of 2011. We believe these non-cash GAAP measures are not indicative of our core operating performance.

(f) The $0.6 million adjustment to Other expense, net in the third quarter and first nine months of 2011 reflects losses on the write-down of long-term equity investments. We exclude write-downs and gains on sales of long-term equity investments because we believe that they are not related directly to the underlying performance of our working capital assets.

(g) 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.

31

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies

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

Outlook

We expect fourth-quarter 2012 revenue to be in a range between $240 million and $260 million. We expect non-GAAP gross margin to be 40%, plus or minus a point or two, depending on product mix. We expect fourth-quarter non-GAAP operating expense to be about $10 million higher than in the third quarter of 2012. We continue to transform the company so that we can increase investment in research and development for future growth with the near-term goal of maintaining nominal profitability on a non-GAAP basis and generating positive cash flow 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 September 28, 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.

32

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 September 28, 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 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
6/30/12 through 8/3/12		2,868	$	3.42		2,868	$	224.6
8/4/12 through 8/31/12		7,805	$	3.36		7,805	$	224.6
9/1/12 through 9/28/12		10	$	3.75		10	$	224.6
Total		10,683	$	3.37		10,683

¹ The amounts in this column represent the remaining amounts under the current $600 million program described below. The Rule 10b5-1 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 11 thousand shares for $36 thousand in the third quarter of 2012, and 19 thousand shares for $67 thousand in the first nine months of 2012 under this program.

As of September 28, 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 third quarter and first nine months 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 0.2 million shares for $0.7 million in the third quarter of 2012, and 1.0 million shares for $3.7 million in the first nine months of 2012 to cover minimum withholding taxes on shares issued under employee stock plans.

We record repurchased shares as Treasury stock.

33

Item 4. Mine Safety Disclosures

Not Applicable

Item 6. Exhibits

(A) Exhibits

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

34

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)
	November 2, 2012
	(Date)

35

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: November 2, 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: November 2, 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 September 28, 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: November 2, 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 September 28, 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: November 2, 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

Available for Sale Marketable Securities (Detail) (USD $) In Millions, unless otherwise specified	Sep. 28, 2012	Dec. 30, 2011
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 800.3	$ 841.2
Unrealized Gain	7.3	3.6
Unrealized Loss	(0.7)	(0.9)
Fair Value	806.9	843.9
U.S. government debt obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	151.9	195.2
Unrealized Gain	0.5	0.5
Fair Value	152.4	195.7
Corporate debt obligations guaranteed By FDIC
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	21.1	66.6
Unrealized Gain		0.2
Fair Value	21.1	66.8
Corporate debt obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	186.4	201.4
Unrealized Gain	2.3	0.8
Unrealized Loss	(0.1)	(0.7)
Fair Value	188.6	201.5
Mortgaged backed debt obligations guaranteed by GNMA
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	97.2	90.9
Unrealized Gain	0.8	0.4
Unrealized Loss	(0.3)	(0.1)
Fair Value	97.7	91.2
Certificates of deposit guaranteed by FDIC
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	3.2	1.5
Fair Value	3.2	1.5
Foreign government debt obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	222.1	221.5
Unrealized Gain	2.9	1.5
Unrealized Loss	(0.3)
Fair Value	224.7	223.0
Foreign corporate debt obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	118.4	64.1
Unrealized Gain	0.8	0.2
Unrealized Loss		(0.1)
Fair Value	$ 119.2	$ 64.2

XML

Schedule of Cash-Settled Stock Appreciation Rights Activity (Detail) (Cash-settled SARs, USD $)	9 Months Ended
	Sep. 28, 2012
Cash-settled SARs
Shares
Non-vested - beginning of year	492,131
Granted	16,200
Forfeited/expired	(40,684)
Non-vested - end of period	467,647
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	$ 7.26
Weighted Average Exercise Price, Outstanding - end of period	$ 6.67

XML

Product Warranties - Additional Information (Detail)	9 Months Ended
	Sep. 28, 2012 M Y D
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

Schedule of Restricted Stock Unit Activity (Detail) (Restricted Stock, USD $)	9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011
Restricted Stock
Shares
Non-vested - beginning of year	4,854,587
Granted	2,619,842
Vested	(2,390,007)
Forfeited	(1,271,870)
Non-vested - end of period	3,812,552
Weighted Average Grant Date Fair Value
Non-vested - beginning of year	$ 6.29
Granted	$ 3.88	$ 5.32
Vested	$ 6.09
Forfeited	$ 6.27
Non-vested - end of period	$ 4.76

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		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Net Investment Hedge
Derivatives, Fair Value [Line Items]
(Loss) Gain Recognized in Accumulated OCI, net (Effective Portion)	$ (3.8)	$ 4.1	$ (1.3)	$ (5.9)
Gain (Loss) Recognized in Other Expense net : Excluded from Effectiveness testing		$ (0.3)	$ 0.2	$ (0.5)

XML

Summary of Restructuring and Other Charges (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012 Severance and other termination benefits	Sep. 30, 2011 Severance and other termination benefits	Sep. 28, 2012 Severance and other termination benefits	Sep. 30, 2011 Severance and other termination benefits	Sep. 28, 2012 Facility and other exit costs	Sep. 30, 2011 Facility and other exit costs	Sep. 28, 2012 Facility and other exit costs	Sep. 30, 2011 Facility and other exit costs	Mar. 30, 2012 Accelerated amortization of intangible assets	Sep. 28, 2012 Accelerated amortization of intangible assets	Sep. 28, 2012 Other obligations
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	$ 3.3	$ 19.5	$ 110.2	$ 20.5	$ 2.3	$ 14.5	$ 24.4	$ 15.7	$ 1.0	$ 5.0	$ 36.9	$ 4.8	$ 47.7	$ 47.7	$ 1.2

XML

Schedule of Equity Based Compensation Expense (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Equity-based compensation expense before income taxes	$ 5.4	$ 6.3	$ 15.8	$ 21.9
Income tax benefit	(0.1)		(0.3)	(2.6)
Total equity-based compensation expense after income taxes	5.3	6.3	15.5	19.3
Cost of Revenue - products
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Equity-based compensation expense before income taxes	0.3	0.4	0.9	1.3
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	0.5	1.3	1.7
Research and Development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Equity-based compensation expense before income taxes	1.0	2.3	4.2	7.9
Sales And Marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Equity-based compensation expense before income taxes	0.6	1.0	2.3	3.7
General and Administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Equity-based compensation expense before income taxes	$ 3.1	$ 2.1	$ 7.1	$ 7.3

XML

Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 28, 2012

Fair Value Of Derivative Instruments In The Consolidated Balance Sheet

The fair value of derivative instruments in the Consolidated Balance Sheet as of September 28, 2012, was as follows:

	Asset Derivatives Reported in Miscellaneous Receivables and Other Current Assets		Liability Derivatives Reported in Other Accrued Liabilities
Net investment hedges	$	—	$	2.2
Balance sheet hedges (Non-designated hedges)		0.1		0.2
Total derivatives	$	0.1	$	2.4

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 Income (Loss) follows:

	Third Quarter
	(Loss) Gain Recognized  in Accumulated OCI, net (Effective Portion)					Loss Recognized in Other Expense, net: Excluded from Effectiveness testing
	9/28/12			9/30/11		9/28/12		9/30/11
Net investment hedges	$	(3.8	)	$	4.1	$	—	$	(0.3	)

	Nine Months
	Loss Recognized in Accumulated OCI, net (Effective Portion)						Gain (Loss) Recognized in Other Expense, net: Excluded from Effectiveness testing
	9/28/12			9/30/11			9/28/12		9/30/11
Net investment hedges	$	(1.3	)	$	(5.9	)	$	0.2	$	(0.5	)

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 Income (Loss) follows:

	Third Quarter					Nine Months
	Gain (Loss) Recognized in Other Expense, net 1					(Loss) Gain Recognized in Other Expense, net 1
	9/28/12		9/30/11			9/28/12			9/30/11
Foreign currency forward and option contracts	$	0.1	$	(1.2	)	$	(0.5	)	$	5.3

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

Balance Sheet Classification of Product Warranty Liabilities (Detail) (USD $) In Millions, unless otherwise specified	Sep. 28, 2012	Jun. 29, 2012	Dec. 30, 2011	Sep. 30, 2011	Jul. 01, 2011	Jan. 01, 2011
Product Warranty Liability [Line Items]
Other accrued liabilities	$ 6.7			$ 8.9
Other long-term liabilities	8.7			10.2
Total product warranty liabilities	$ 15.4	$ 16.3	$ 17.0	$ 19.1	$ 20.0	$ 19.4

XML

Investments in Marketable Securities with Unrealized Losses (Detail) (USD $) In Millions, unless otherwise specified	Sep. 28, 2012	Dec. 30, 2011
Schedule of Available-for-sale Securities [Line Items]
Unrealized Loss Less than 12 months, Fair Value	$ 67.8	$ 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	67.8	136.5
Total, Unrealized Loss	(0.7)	(0.9)
Corporate debt obligations
Schedule of Available-for-sale Securities [Line Items]
Unrealized Loss Less than 12 months, Fair Value	16.2	81.0
Unrealized Loss Less than 12 months, Unrealized Loss	(0.1)	(0.7)
Unrealized Loss Greater than 12 months, Fair Value
Unrealized Loss Greater than 12 months, Unrealized Loss
Total, Fair Value	16.2	81.0
Total, Unrealized Loss	(0.1)	(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	29.4	31.4
Unrealized Loss Less than 12 months, Unrealized Loss	(0.3)	(0.1)
Unrealized Loss Greater than 12 months, Fair Value
Unrealized Loss Greater than 12 months, Unrealized Loss
Total, Fair Value	29.4	31.4
Total, Unrealized Loss	(0.3)	(0.1)
Foreign government debt obligations
Schedule of Available-for-sale Securities [Line Items]
Unrealized Loss Less than 12 months, Fair Value	22.2
Unrealized Loss Less than 12 months, Unrealized Loss	(0.3)
Unrealized Loss Greater than 12 months, Fair Value
Unrealized Loss Greater than 12 months, Unrealized Loss
Total, Fair Value	22.2
Total, Unrealized Loss	(0.3)
Foreign corporate debt obligations
Schedule of Available-for-sale Securities [Line Items]
Unrealized Loss Less than 12 months, Fair Value		24.1
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		24.1
Total, Unrealized Loss		$ (0.1)

XML

Estimated Future Amortization Expense of Intangible Assets Subject to Amortization (Detail) (USD $) In Millions, unless otherwise specified	Sep. 28, 2012
Expected Amortization Expense [Line Items]
2012 (remaining three months)	$ 1.1
2013	4.2
2014	0.1
2015	$ 0.1

XML

Schedule of Assumptions Used to Calculate Weighted Average Fair Value of Stock Option Grants (Detail)	9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	43.30%	46.50%
Risk-free interest rate	0.90%	2.10%
Expected term (in years)	5 years 3 months 18 days	5 years 3 months 18 days
Expected dividend yield	2.00%	1.50%

XML

Computation of Net Loss Per Share (Parenthetical) (Detail) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Earnings Per Share Disclosure [Line Items]
Diluted weighted average shares outstanding in the absence of a loss	368.2	365.9	368.6	366.4

XML

Accumulated Other Comprehensive Loss Income Net of Tax (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 28, 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	3.0
Unrealized Net Gain (Loss) on Available-for-Sale Securities, Tax effect	(0.9)
Unrealized Net Gain (Loss) on Available-for-Sale Securities, Ending Balance	4.0
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	(1.6)
Other Comprehensive Income Unrealized Gain Loss On Net Investment Hedges Tax effect	0.3
Other Comprehensive Income Unrealized Gain Loss On Net Investment Hedges, Ending Balance	17.3
Foreign Currency Translation Adjustments, Beginning Balance	67.5
Foreign Currency Translation Adjustments, Pretax activity, net	(1.9)
Foreign Currency Translation Adjustments, Tax effect
Foreign Currency Translation Adjustments, Ending Balance	65.6
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	(0.5)
Accumulated Other Comprehensive Income, Tax effect	(0.6)
Accumulated Other Comprehensive Income, Ending Balance	$ 88.7

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				9 Months Ended
	Sep. 28, 2012		Sep. 30, 2011		Sep. 28, 2012		Sep. 30, 2011
Foreign Currency Forward And Option Contracts
Derivatives, Fair Value [Line Items]
Gain (Loss) Recognized in Other Expense, net	$ 0.1	[1]	$ (1.2)	[1]	$ (0.5)	[1]	$ 5.3	[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

Fair Value Measurements

9 Months Ended

Sep. 28, 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 financial instruments owned at fair value by level in the fair value hierarchy. 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 September 28, 2012
	Balance at 9/28/12		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	$	152.4	$	152.4	$	—	$	—
Corporate debt obligations guaranteed by FDIC		21.1		—		21.1		—
Corporate debt obligations		188.6		—		188.6		—
Mortgaged backed debt obligations guaranteed by GNMA		97.7		—		97.7		—
Certificates of deposit guaranteed by FDIC		3.2		—		3.2		—
Foreign government debt obligations		224.7		—		224.7		—
Foreign corporate debt obligations		119.2		—		119.2		—
Subtotal		806.9		152.4		654.5		—
Other marketable securities		201.6		201.6		—		—
Derivative financial instruments		0.1		—		0.1		—
Total Assets	$	1,008.6	$	354.0	$	654.6	$	—
Liabilities
Loan related to other marketable securities	$	201.6	$	201.6	$	—	$	—
Derivative financial instruments		2.4		—		2.4		—
Total Liabilities	$	204.0	$	201.6	$	2.4	$	—
			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

Segment Information - Additional Information (Detail)	3 Months Ended	9 Months Ended
	Mar. 30, 2012 Segment	Sep. 28, 2012 Segment
Segment Reporting Information [Line Items]
Number of operating segments	3	4

XML

Gross Realized Gains and Losses Related to Fixed Income Investments (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Schedule of Available-for-sale Securities [Line Items]
Gross realized gains	$ 1.0	$ 1.7	$ 1.5	$ 3.1
Gross realized losses	(0.2)	(1.4)	(0.7)	(3.2)
Total	$ 0.8	$ 0.3	$ 0.8	$ (0.1)

XML

Segment Information (Tables)

9 Months Ended

Sep. 28, 2012

Consolidated Revenue By Segment

Consolidated revenue by segment follows:

	Third Quarter				Nine Months
	9/28/12		9/30/11		9/28/12		9/30/11
Optical	$	108.0	$	120.4	$	334.8	$	368.8
Data		66.2		109.1		213.3		312.7
Access		42.3		43.2		115.5		123.1
Services		47.9		57.1		146.8		164.3
Total revenue	$	264.4	$	329.8	$	810.4	$	968.9

Segment Profit And Reconciliation To Operating Loss By Segment

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

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Optical	$	23.5		$	20.6		$	67.3		$	67.1
Data		1.4			8.0			1.8			(7.8	)
Access		11.1			7.2			23.5			26.6
Services		15.6			22.8			48.0			54.4
Total segment profit	$	51.6		$	58.6		$	140.6		$	140.3
Sales and marketing expenses		(29.7	)		(41.4	)		(98.3	)		(126.9	)
General and administrative expenses		(17.9	)		(18.6	)		(58.7	)		(63.3	)
Equity-based compensation		(1.7	)		(3.1	)		(6.5	)		(11.1	)
Intangible asset amortization		(1.1	)		(5.0	)		(4.3	)		(15.3	)
Restructuring and other charges		(3.3	)		(19.5	)		(110.2	)		(20.5	)
Goodwill and IPR&D impairment		—			(102.7	)		—			(102.7	)
Operating loss	$	(2.1	)	$	(131.7	)	$	(137.4	)	$	(199.5	)

XML

Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 28, 2012

Comprehensive Income Loss

Comprehensive income (loss) for the third quarter and the first nine months of 2012 and 2011 consists of the following:

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Net loss	$	(3.9	)	$	(130.1	)	$	(148.4	)	$	(183.5	)
Net change in unrealized gains (losses) related to:
Available-for-sale securities, net of tax		1.2			0.9			2.1			0.2
Net investment hedges, net of tax		(3.8	)		4.1			(1.3	)		(5.9	)
Foreign currency translation adjustments		19.9			(39.5	)		(1.9	)		9.3
Comprehensive income (loss)	$	13.4		$	(164.6	)	$	(149.5	)	$	(179.9	)

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

Accumulated other comprehensive income (net of tax) for the first nine 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		3.0			(1.6	)		(1.9	)		—			—		(0.5	)
Tax effect		(0.9	)		0.3			—			—			—		(0.6	)
Balance at September 28, 2012	$	4.0		$	17.3		$	65.6		$	(0.2	)	$	2.0	$	88.7

XML

Schedule of Performance Stock Unit Activity (Detail) (Performance stock units, USD $)	9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011
Performance stock units
Shares
Non-vested - beginning of year	2,269,410
Granted	1,963,478
Vested	(825,996)
Forfeited	(1,716,260)
Non-vested - end of period	1,690,632
Weighted Average Grant Date Fair Value
Non-vested - beginning of year	$ 5.51
Granted	$ 3.98	$ 5.39
Vested	$ 5.28
Forfeited	$ 4.96
Non-vested - end of period	$ 4.40

XML

Derivative Financial Instruments - Additional Information (Detail)	Sep. 28, 2012 USD ($)	Sep. 28, 2012 EUR (€)	Sep. 28, 2012 Settled Contracts USD ($)	Sep. 28, 2012 Unsettled Contracts USD ($)
Derivatives, Fair Value [Line Items]
Non-designated foreign currency forward contracts, gross notional equivalent amount	$ 222,100,000
Non-designated foreign currency forward contracts, number of currencies held	13
Net unrealized gain on net investment hedges in Accumulated other comprehensive income			17,400,000	(100,000)
Notional value of net investment hedges		€ 150,000,000

XML

Net Loss Per Share (Tables)

9 Months Ended

Sep. 28, 2012

Computation Of Net Loss Per Share

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

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Numerator:
Net loss	$	(3.9	)	$	(130.1	)	$	(148.4	)	$	(183.5	)
Denominator:
Denominator for basic net loss per share – weighted average shares outstanding		367.7			365.2			366.8			364.3
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		367.7			365.2			366.8			364.3
Net loss per share, basic	$	(0.01	)	$	(0.36	)	$	(0.40	)	$	(0.50	)
Net loss per share, diluted1	$	(0.01	)	$	(0.36	)	$	(0.40	)	$	(0.50	)

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 third quarter and first nine months of 2012 and 2011 are the same. Diluted weighted average shares outstanding were 368.2 million in the third quarter of 2012, 368.6 million in the first nine months of 2012, 365.9 million in the third quarter of 2011 and 366.4 million in the first nine months of 2011.

XML

Basis of Presentation - Additional Information (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Jun. 29, 2012
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Revenue reduction attributable to prior period transactions	$ 3.2
Impact on Earnings per Share due to revenue reduction attributable to prior period transactions	$ 0.01

XML

Intangible Assets

9 Months Ended

Sep. 28, 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:

	9/28/12
	Gross Assets			Accumulated Amortization			Net
Developed technology	$	147.6		$	(147.3	)	$	0.3
Customer relationships		30.9			(25.7	)		5.2
Total	$	178.5		$	(173.0	)	$	5.5
	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 September 28, 2012 follows:

2012 (remaining three months)	$	1.1
2013	$	4.2
2014	$	0.1
2015	$	0.1

XML

Restructuring and Other Charges - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended					3 Months Ended	9 Months Ended						3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012 January 2012 Restructuring Plan	Sep. 28, 2012 January 2012 Restructuring Plan	Sep. 28, 2012 January 2012 Restructuring Plan Optical segment	Sep. 28, 2012 January 2012 Restructuring Plan Data segment	Sep. 28, 2012 January 2012 Restructuring Plan Access segment	Sep. 28, 2012 January 2012 Restructuring Plan Services segment	Sep. 28, 2012 July 2011 Restructuring Plan	Sep. 28, 2012 July 2011 Restructuring Plan	Sep. 28, 2012 July 2011 Restructuring Plan Optical segment	Sep. 28, 2012 July 2011 Restructuring Plan Data segment	Sep. 28, 2012 July 2011 Restructuring Plan Access segment	Sep. 28, 2012 July 2011 Restructuring Plan Services segment	Sep. 28, 2012 Previous Restructuring Plans	Sep. 28, 2012 Severance and other termination benefits	Sep. 30, 2011 Severance and other termination benefits	Sep. 28, 2012 Severance and other termination benefits	Sep. 30, 2011 Severance and other termination benefits	Sep. 28, 2012 Severance and other termination benefits January 2012 Restructuring Plan	Sep. 28, 2012 Severance and other termination benefits January 2012 Restructuring Plan	Sep. 28, 2012 Severance and other termination benefits July 2011 Restructuring Plan	Sep. 28, 2012 Severance and other termination benefits July 2011 Restructuring Plan	Sep. 28, 2012 Severance and other termination benefits Previous Restructuring Plans	Sep. 28, 2012 Facility- And Asset-Related Charges January 2012 Restructuring Plan	Sep. 28, 2012 Facility- And Asset-Related Charges January 2012 Restructuring Plan	Sep. 28, 2012 Facility- And Asset-Related Charges July 2011 Restructuring Plan	Sep. 28, 2012 Facility- And Asset-Related Charges July 2011 Restructuring Plan	Sep. 28, 2012 Facility- And Asset-Related Charges Previous Restructuring Plans	Sep. 28, 2012 Facility- And Asset-Related Charges Previous Restructuring Plans	Mar. 30, 2012 Accelerated amortization of intangible assets	Sep. 28, 2012 Accelerated amortization of intangible assets	Sep. 28, 2012 Accelerated amortization of intangible assets January 2012 Restructuring Plan	Sep. 28, 2012 Other Obligation January 2012 Restructuring Plan	Sep. 28, 2012 Other Obligation July 2011 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Expected pretax charges																							$ 24					$ 37							$ 48
Expected workforce reductions						500
Restructuring expense	3.3	19.5	110.2	20.5	3.1	108.4					0	1.7					0.1	2.3	14.5	24.4	15.7	2.4	23.7	(0.1)	0.8	(0.1)	0.7	35.8	0.1	0.9	0.2	0.2	47.7	47.7	47.7	1.2
Cumulative pretax restructuring charges incurred to date							4.7	99.8	1.6	2.3		21.4	8.7	7.3	1.7	3.7									15.3					5.5							0.6
Expected total cash payments						$ 31.3						$ 18.5
Expiration year of lease obligations			2017
Expected date of last severance payment			2014

XML

Maturities of Available for Sale Marketable Securities (Detail) (USD $) In Millions, unless otherwise specified	Sep. 28, 2012	Dec. 30, 2011
Schedule of Available-for-sale Securities [Line Items]
Due in less than 12 months, amortized cost	$ 262.8
Due in 1 to 5 years, amortized cost	438.3
Due after 5 years, amortized cost	99.2
Total, amortized cost	800.3	841.2
Due in less than 12 months, fair value	264.5
Due in 1 to 5 years, fair value	442.8
Due after 5 years, fair value	99.6
Fair Value	$ 806.9	$ 843.9

XML

Schedule of Stock Option Activity (Detail) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended
	Sep. 28, 2012
Shares
Outstanding - beginning of year	20,719,482
Granted	2,102,207
Exercised	(138,665)
Forfeited/expired	(5,180,890)
Outstanding - end of period	17,502,134
Exercisable - end of period	14,868,901
Shares vested or expected to vest	17,305,651
Weighted Average Exercise Price
Outstanding - beginning of year	$ 7.68
Granted	$ 3.95
Exercised	$ 0.48
Forfeited/expired	$ 7.06
Outstanding - end of period	$ 7.48
Exercisable - end of period	$ 7.94
Shares vested or expected to vest	$ 7.51
Weighted Average Remaining Contractual Term (in years)
Outstanding - end of period	3 years 9 months 18 days
Exercisable - end of period	2 years 10 months 24 days
Shares vested or expected to vest	3 years 8 months 12 days
Aggregate Intrinsic Value
Outstanding - end of period	$ 0.1
Exercisable - end of period	0.1
Shares vested or expected to vest	$ 0.1

XML

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 28, 2012		Sep. 30, 2011		Sep. 28, 2012		Sep. 30, 2011
Revenue
Products	$ 216.5		$ 272.7		$ 663.6		$ 804.6
Services	47.9		57.1		146.8		164.3
Total revenue	264.4		329.8		810.4		968.9
Cost of Revenue
Products	128.1		158.7		396.8		483.5
Services	32.7		34.8		100.1		111.6
Total cost of revenue	160.8		193.5		496.9		595.1
Gross Profit	103.6		136.3		313.5		373.8
Gross profit as a percentage of revenue	39.20%		41.30%		38.70%		38.60%
Gross profit as a percentage of revenue - products	40.80%		41.80%		40.20%		39.90%
Gross profit as a percentage of revenue - services	31.70%		39.10%		31.80%		32.10%
Operating Expenses
Research and development	53.7		80.8		179.4		244.6
Sales and marketing	29.7		41.4		98.3		126.9
General and administrative	17.9		18.6		58.7		63.3
Intangible asset amortization	1.1		5.0		4.3		15.3
Restructuring and other charges	3.3		19.5		110.2		20.5
Goodwill and IPR&D impairment			102.7				102.7
Total operating expenses	105.7		268.0		450.9		573.3
Operating earnings (loss)	(2.1)		(131.7)		(137.4)		(199.5)
Operating loss as a percentage of revenue	(0.80%)		(39.90%)		(17.00%)		(20.60%)
Other Income
Interest income, net	2.1		3.0		5.5		9.4
Other expense, net	(0.2)		(0.9)		(2.3)		(2.6)
Total other income	1.9		2.1		3.2		6.8
Loss Before Income Tax	(0.2)		(129.6)		(134.2)		(192.7)
Income tax (expense) benefit	(3.7)		(0.5)		(14.2)		9.2
Net Loss	(3.9)		(130.1)		(148.4)		(183.5)
Weighted Average Shares Outstanding
Basic	367.7		365.2		366.8		364.3
Diluted	367.7		365.2		366.8		364.3
Net Loss Per Share
Basic	$ (0.01)		$ (0.36)		$ (0.40)		$ (0.50)
Diluted	$ (0.01)	[1]	$ (0.36)	[1]	$ (0.40)	[1]	$ (0.50)	[1]
Comprehensive Income (Loss)	$ 13.4		$ (164.6)		$ (149.5)		$ (179.9)
Cash Dividends Per Share	$ 0.02		$ 0.02		$ 0.06		$ 0.06

[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 third quarter and first nine months of 2012 and 2011 are the same. Diluted weighted average shares outstanding were 368.2 million in the third quarter of 2012, 368.6 million in the first nine months of 2012, 365.9 million in the third quarter of 2011 and 366.4 million in the first nine months of 2011.

XML

Fair Value of Derivative Instruments in Consolidated Balance Sheet (Detail) (USD $) In Millions, unless otherwise specified	Sep. 28, 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
Balance sheet hedges (Non-designated hedges), Assets	0.1	0.1
Total derivative, Assets	0.1	0.2
Liability Derivatives Reported In Other Accrued Liabilities
Derivatives, Fair Value [Line Items]
Net investment hedges, Liabilities	2.2
Balance sheet hedges (Non-designated hedges), Liabilities	0.2	0.2
Total derivative, Liabilities	$ 2.4	$ 0.2

XML

Basis of Presentation

9 Months Ended

Sep. 28, 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. GAAP 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 reporting segment change in the second quarter of 2012. 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 ($0.01 per share) reduction to revenue in the second quarter of 2012, attributable to prior periods’ taxes on sales transactions involving deployment services in a foreign jurisdiction.

XML

Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Income Taxes [Line Items]
Income tax (expense) benefit	$ 3.7	$ 0.5	$ 14.2	$ (9.2)
Federal statutory rate			35.00%

XML

Intangible Assets - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011	Mar. 30, 2012 Accelerated amortization of intangible assets	Sep. 28, 2012 Accelerated amortization of intangible assets
Finite-Lived Intangible Assets [Line Items]
Restructuring expense	$ 3.3	$ 19.5	$ 110.2	$ 20.5	$ 47.7	$ 47.7

XML

Stock Repurchase Programs - Additional Information (Detail) (USD $)	9 Months Ended			3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012 $600 Million Repurchase Program	Sep. 28, 2012 Rule 10b5-1 Program	Sep. 28, 2012 Rule 10b5-1 Program	Sep. 28, 2012 Other Stock Repurchases	Sep. 28, 2012 Other Stock Repurchases
Stockholders Equity Note [Line Items]
Authorization to repurchase outstanding common stock			$ 600,000,000
Repurchase of common stock - shares				11,000	19,000	200,000	1,000,000
Repurchase of outstanding common stock	3,700,000	5,000,000		36,000	67,000	700,000	3,700,000
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

Intangible Assets (Tables)

9 Months Ended

Sep. 28, 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:

	9/28/12
	Gross Assets			Accumulated Amortization			Net
Developed technology	$	147.6		$	(147.3	)	$	0.3
Customer relationships		30.9			(25.7	)		5.2
Total	$	178.5		$	(173.0	)	$	5.5
	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 September 28, 2012 follows:

2012 (remaining three months)	$	1.1
2013	$	4.2
2014	$	0.1
2015	$	0.1

XML

Gross Carrying Amount and Accumulated Amortization of Intangible Assets Subject to Amortization (Detail) (USD $) In Millions, unless otherwise specified	Sep. 28, 2012	Dec. 30, 2011
Finite-Lived Intangible Assets [Line Items]
Gross Assets	$ 178.5	$ 258.6
Accumulated Amortization	(173.0)	(201.5)
Net	5.5	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	(25.7)	(23.7)
Net	5.2	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

Investments (Tables)

9 Months Ended

Sep. 28, 2012

Available-For-Sale Marketable Securities

At September 28, 2012, and December 30, 2011, available-for-sale marketable securities consisted of the following:

	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
September 28, 2012
U.S. government debt obligations	$	151.9	$	0.5	$	—		$	152.4
Corporate debt obligations guaranteed by FDIC		21.1		—		—			21.1
Corporate debt obligations		186.4		2.3		(0.1	)		188.6
Mortgaged backed debt obligations guaranteed by GNMA		97.2		0.8		(0.3	)		97.7
Certificates of deposit guaranteed by FDIC		3.2		—		—			3.2
Foreign government debt obligations		222.1		2.9		(0.3	)		224.7
Foreign corporate debt obligations		118.4		0.8		—			119.2
Total	$	800.3	$	7.3	$	(0.7	)	$	806.9
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 September 28, 2012:

	Amortized Cost		Fair Value
Less than 12 months	$	262.8	$	264.5
Due in 1 to 5 years		438.3		442.8
Due after 5 years		99.2		99.6
Total	$	800.3	$	806.9

Investments In Marketable Securities With Unrealized Losses

Investments in marketable securities with unrealized losses at September 28, 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
September 28, 2012
Corporate debt obligations	$	16.2	$	(0.1	)	$	—	$	—	$	16.2	$	(0.1	)
Mortgaged backed debt obligations guaranteed by GNMA		29.4		(0.3	)		—		—		29.4		(0.3	)
Foreign government debt obligations		22.2		(0.3	)		—		—		22.2		(0.3	)
Total	$	67.8	$	(0.7	)	$	—	$	—	$	67.8	$	(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 nine months ending September 28, 2012, and September 30, 2011:

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Gross realized gains	$	1.0		$	1.7		$	1.5		$	3.1
Gross realized losses		(0.2	)		(1.4	)		(0.7	)		(3.2	)
Total	$	0.8		$	0.3		$	0.8		$	(0.1	)

XML

Subsequent Event - Additional Information (Detail) (Restructuring Initiatives, USD $) In Millions, unless otherwise specified	1 Months Ended
	Oct. 31, 2012
Subsequent Event [Line Items]
Expected pretax charges	$ 11
Expected workforce reductions	200
Expected total cash payments	9.0
Severance and other termination benefits
Subsequent Event [Line Items]
Expected pretax charges	9
Facility- And Asset-Related Charges
Subsequent Event [Line Items]
Expected pretax charges	$ 2

XML

Restructuring and Other Charges

9 Months Ended

Sep. 28, 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 $24 million for severance-related charges of approximately 500 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 third quarter of 2012 was $3.1 million, which consists of expense of $2.4 million for severance-related charges and a $0.7 million charge for facility- and asset-related charges. Restructuring expense for this plan for the first nine months of 2012 was $108.4 million, which consists of $23.7 million for severance-related charges, $35.8 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 $4.7 million for Optical, $99.8 million for Data, $1.6 million for Access, and $2.3 million for Services. Estimated cash payments under this plan are expected to be $31.3 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. Net restructuring expense for this plan for the third quarter of 2012 was zero, which consists of a $0.1 million charge for facility- and asset-related charges and a reduction of $0.1 million for severance-related charges. Restructuring expense for this plan for the first nine months of 2012 was $1.7 million, which consists of $0.8 million for severance-related charges and $0.9 million for facility- and asset-related charges. Cumulative restructuring charges for this plan are $21.4 million, which consists of $15.3 million for severance-related charges, $5.5 million for facility- and asset-related charges, and $0.6 million for other obligations. By segment, total charges to date under this plan are $8.7 million for Optical, $7.3 million for Data, $1.7 million for Access and $3.7 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.

Restructuring expense for previous restructuring plans for the third quarter of 2012 was $0.2 million for facility-related charges. Restructuring expense for previous restructuring plans for the first nine months of 2012 was $0.1 million, which consists of $0.2 million for facility-related charges and a net reduction of $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:

	Third Quarter				Nine Months
	9/28/12		9/30/11		9/28/12		9/30/11
Severance and other termination benefits	$	2.3	$	14.5	$	24.4	$	15.7
Facility and other exit costs		1.0		5.0		36.9		4.8
Accelerated amortization of intangible assets		—		—		47.7		—
Other obligations		—		—		1.2		—
Total restructuring and other charges	$	3.3	$	19.5	$	110.2	$	20.5

The following table summarizes restructuring and other charges activity by segment for the third quarter and the first nine months of 2012 and the status of the reserves at September 28, 2012:

			Third Quarter Activity
	Balance at 6/29/12		Restructuring Expense			Cash Payments			Other Activities1			Balance at 9/28/12
2012 Restructuring Plan
Optical	$	1.9	$	0.7		$	(0.4	)	$	—		$	2.2
Data		8.7		1.6			(1.4	)		(1.2	)		7.7
Access		0.8		0.3			(0.1	)		(0.1	)		0.9
Services		0.7		0.5			(0.4	)		—			0.8
Subtotal 2012 Restructuring Plan		12.1		3.1			(2.3	)		(1.3	)		11.6
2011 Restructuring Plan
Optical		2.0		0.3			(1.2	)		—			1.1
Data		2.8		—			(0.5	)		—			2.3
Access		0.5		0.1			(0.2	)		—			0.4
Services		0.5		(0.4	)		—			—			0.1
Subtotal 2011 Restructuring Plan		5.8		—			(1.9	)		—			3.9
Previous Restructuring Plans
Optical		0.2		—			—			—			0.2
Data		1.5		—			(0.1	)		—			1.4
Access		2.2		0.2			(0.2	)		—			2.2
Services		0.1		—			(0.1	)		—			—
Subtotal Previous Restructuring Plans		4.0		0.2			(0.4	)		—			3.8
Total Restructuring Plans	$	21.9	$	3.3		$	(4.6	)	$	(1.3	)	$	19.3

			Nine Months Activity
	Balance at 12/30/11		Restructuring Expense			Cash Payments			Other Activities1			Balance at 9/28/12
2012 Restructuring Plan
Optical	$	—	$	4.7		$	(1.6	)	$	(0.9	)	$	2.2
Data		—		99.8			(16.6	)		(75.5	)		7.7
Access		—		1.6			(0.5	)		(0.2	)		0.9
Services		—		2.3			(1.5	)		—			0.8
Subtotal 2012 Restructuring Plan		—		108.4			(20.2	)		(76.6	)		11.6
2011 Restructuring Plan
Optical		4.4		1.9			(4.6	)		(0.6	)		1.1
Data		5.5		—			(3.0	)		(0.2	)		2.3
Access		1.1		0.1			(0.8	)		—			0.4
Services		1.6		(0.3	)		(1.2	)		—			0.1
Subtotal 2011 Restructuring Plan		12.6		1.7			(9.6	)		(0.8	)		3.9

Previous Restructuring Plans
Optical		0.4		(0.1	)		(0.1	)		—			0.2
Data		1.9		—			(0.5	)		—			1.4
Access		2.6		0.2			(0.6	)		—			2.2
Services		0.2		—			(0.2	)		—			—
Subtotal Previous Restructuring Plans		5.1		0.1			(1.4	)		—			3.8
Total Restructuring Plans	$	17.7	$	110.2		$	(31.2	)	$	(77.4	)	$	19.3

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	Sep. 28, 2012	Dec. 30, 2011
Current Assets
Cash and cash equivalents	$ 134.9	$ 132.7
Investments in marketable securities	806.9	843.9
Total cash, cash equivalents and marketable securities	941.8	976.6
Other marketable securities	201.6	190.9
Accounts receivable, net of allowances of $1.3 and $1.3	284.8	317.6
Inventories
Raw materials	33.4	33.7
Finished goods	68.0	110.3
Total inventories	101.4	144.0
Income taxes	22.5	27.9
Miscellaneous receivables and other current assets	28.2	39.8
Total Current Assets	1,580.3	1,696.8
Property, Plant and Equipment
Land	20.0	20.0
Buildings and improvements	190.7	197.4
Equipment	395.4	446.9
Total property, plant and equipment	606.1	664.3
Accumulated depreciation	(379.8)	(390.8)
Property, plant and equipment, net	226.3	273.5
Goodwill	122.0	122.0
Intangible Assets, Net of Amortization	5.5	57.1
Other Assets	89.6	98.6
Total Assets	2,023.7	2,248.0
Current Liabilities
Accounts payable	57.4	97.1
Accrued compensation	46.7	46.3
Restructuring and other charges	14.4	13.0
Income taxes	50.3	63.5
Loan related to other marketable securities	201.6	190.9
Deferred revenue	21.5	40.8
Other accrued liabilities	76.0	78.4
Total Current Liabilities	467.9	530.0
Long-Term Restructuring Liabilities	4.9	4.7
Income Taxes	21.7	21.2
Other Long-Term Liabilities	43.9	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; 508,766,423 and 505,238,503 shares issued	5.1	5.1
Additional paid-in capital	1,588.2	1,572.4
Treasury stock, at cost: 141,245,374 and 140,250,476 shares	(1,230.9)	(1,227.2)
Retained earnings	1,034.2	1,204.6
Accumulated other comprehensive income	88.7	89.8
Total Stockholders' Equity	1,485.3	1,644.7
Total Liabilities and Stockholders' Equity	$ 2,023.7	$ 2,248.0

XML

Contingencies

9 Months Ended

Sep. 28, 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. On September 26, 2012, the Court granted a motion by Tellabs for summary judgment of invalidity of all asserted claims of Fujitsu’s U.S. Patent No. 5,386,418, and judgment was entered in favor of Tellabs on its counterclaim for declaratory judgment of invalidity of the same patent. On October 25, 2012, Fujitsu filed a notice of appeal of the Court’s order and judgment as to the invalidity of Fujitsu’s U.S. Patent No. 5,386,418. On September 27, 2012, the Court denied a motion by Tellabs for summary judgment of invalidity of Fujitsu’s U.S. Patent No. 5,521,737. A trial date of January 14, 2013, had been set by the Court to commence trial of Fujitsu’s U.S. Patent Nos. 5,526,163 and 5,521,737, however on November 1, 2012, the scheduled trial date was struck from the Court’s calendar in favor of an alternative trial date to be later determined. 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. On August 8, 2012, the Court issued further orders related to the construction of claims of 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. Trial on Fujitsu’s U.S. Patent No. 7,227,681 commenced on August 27, 2012, and concluded on September 7, 2012, whereupon the jury’s verdict the Court entered judgment in favor of Tellabs on Fujitsu’s claim for infringement of Fujitsu’s U.S. Patent No. 7,227,681 and in favor of Fujitsu on Tellabs’ claim for invalidity of the same patent, and the parties’ respective post-trial motions are now pending before the Court. 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 remains 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. In addition to the four patents asserted against Tellabs in the complaint, another three patents are asserted against Tellabs in plaintiff’s infringement contentions dated August 23, 2012. The newly asserted patents are U.S. Patent Nos. 7,116,862; 7,339,714; and 6,882,771. The accused products include products from the Tellabs 7100 product line. 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. On September 4, 2012, the Court issued an Order granting a motion by the defendants to stay the litigation, whereby the litigation is stayed pending entry of a final non-appealable judgment in a prior proceeding in which Tellabs is not named (Internet Machines LLC v. Alienware Corp., No 6:10-cv-23 (E.D. Tex. Filed Feb. 2, 2010)).

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.

XML

Document and Entity Information	9 Months Ended
	Sep. 28, 2012	Oct. 26, 2012
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 28, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
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		367,528,886

XML

Stock Repurchase Programs

9 Months Ended

Sep. 28, 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 11 thousand shares for $36 thousand in the third quarter of 2012, and 19 thousand shares for $67 thousand in the first nine months of 2012 under this program.

As of September 28, 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 third quarter and first nine months 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 0.2 million shares for $0.7 million in the third quarter of 2012, and 1.0 million shares for $3.7 million in the first nine 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	Sep. 28, 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	508,766,423	505,238,503
Treasury stock, shares	141,245,374	140,250,476

XML

Product Warranties

9 Months Ended

Sep. 28, 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:

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Balance – beginning of period	$	16.3		$	20.0		$	17.0		$	19.4
Accruals for product warranties		2.0			2.2			4.9			7.1
Settlements		(1.2	)		(1.1	)		(3.4	)		(3.4	)
Other adjustments to accruals for product warranties		(1.7	)		(2.0	)		(3.1	)		(4.0	)
Balance – end of period	$	15.4		$	19.1		$	15.4		$	19.1

	Balance at 9/28/12		Balance at 9/30/11
Balance sheet classification - end of period
Other accrued liabilities	$	6.7	$	8.9
Other long-term liabilities		8.7		10.2
Total product warranty liabilities	$	15.4	$	19.1

XML

Derivative Financial Instruments

9 Months Ended

Sep. 28, 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 September 28, 2012, we held non-designated foreign currency forward contracts in 13 currencies, with a gross notional equivalent of $222.1 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 September 28, 2012, we had a net unrealized gain of $17.4 million in Accumulated other comprehensive income related to settled contracts and a net loss of $0.1 million related to unsettled contracts. We held net investment hedges with a notional value of 150 million Euros at the end of the quarter.

The fair value of derivative instruments in the Consolidated Balance Sheet as of September 28, 2012, was as follows:

	Asset Derivatives Reported in Miscellaneous Receivables and Other Current Assets		Liability Derivatives Reported in Other Accrued Liabilities
Net investment hedges	$	—	$	2.2
Balance sheet hedges (Non-designated hedges)		0.1		0.2
Total derivatives	$	0.1	$	2.4

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 Income (Loss) follows:

	Third Quarter
	(Loss) Gain Recognized  in Accumulated OCI, net (Effective Portion)					Loss Recognized in Other Expense, net: Excluded from Effectiveness testing
	9/28/12			9/30/11		9/28/12		9/30/11
Net investment hedges	$	(3.8	)	$	4.1	$	—	$	(0.3	)

	Nine Months
	Loss Recognized in Accumulated OCI, net (Effective Portion)						Gain (Loss) Recognized in Other Expense, net: Excluded from Effectiveness testing
	9/28/12			9/30/11			9/28/12		9/30/11
Net investment hedges	$	(1.3	)	$	(5.9	)	$	0.2	$	(0.5	)

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

	Third Quarter					Nine Months
	Gain (Loss) Recognized in Other Expense, net 1					(Loss) Gain Recognized in Other Expense, net 1
	9/28/12		9/30/11			9/28/12			9/30/11
Foreign currency forward and option contracts	$	0.1	$	(1.2	)	$	(0.5	)	$	5.3

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

Fair Value Measurements (Tables)

9 Months Ended

Sep. 28, 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 September 28, 2012
	Balance at 9/28/12		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	$	152.4	$	152.4	$	—	$	—
Corporate debt obligations guaranteed by FDIC		21.1		—		21.1		—
Corporate debt obligations		188.6		—		188.6		—
Mortgaged backed debt obligations guaranteed by GNMA		97.7		—		97.7		—
Certificates of deposit guaranteed by FDIC		3.2		—		3.2		—
Foreign government debt obligations		224.7		—		224.7		—
Foreign corporate debt obligations		119.2		—		119.2		—
Subtotal		806.9		152.4		654.5		—
Other marketable securities		201.6		201.6		—		—
Derivative financial instruments		0.1		—		0.1		—
Total Assets	$	1,008.6	$	354.0	$	654.6	$	—
Liabilities
Loan related to other marketable securities	$	201.6	$	201.6	$	—	$	—
Derivative financial instruments		2.4		—		2.4		—
Total Liabilities	$	204.0	$	201.6	$	2.4	$	—
			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

Net Loss Per Share

9 Months Ended

Sep. 28, 2012

Net Loss Per Share

14. Net Loss Per Share

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

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Numerator:
Net loss	$	(3.9	)	$	(130.1	)	$	(148.4	)	$	(183.5	)
Denominator:
Denominator for basic net loss per share – weighted average shares outstanding		367.7			365.2			366.8			364.3
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		367.7			365.2			366.8			364.3
Net loss per share, basic	$	(0.01	)	$	(0.36	)	$	(0.40	)	$	(0.50	)
Net loss per share, diluted1	$	(0.01	)	$	(0.36	)	$	(0.40	)	$	(0.50	)

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 third quarter and first nine months of 2012 and 2011 are the same. Diluted weighted average shares outstanding were 368.2 million in the third quarter of 2012, 368.6 million in the first nine months of 2012, 365.9 million in the third quarter of 2011 and 366.4 million in the first nine months of 2011.

XML

Comprehensive Income (Loss)

9 Months Ended

Sep. 28, 2012

Comprehensive Income (Loss)

10. Comprehensive Income (Loss)

Comprehensive income (loss) for the third quarter and the first nine months of 2012 and 2011 consists of the following:

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Net loss	$	(3.9	)	$	(130.1	)	$	(148.4	)	$	(183.5	)
Net change in unrealized gains (losses) related to:
Available-for-sale securities, net of tax		1.2			0.9			2.1			0.2
Net investment hedges, net of tax		(3.8	)		4.1			(1.3	)		(5.9	)
Foreign currency translation adjustments		19.9			(39.5	)		(1.9	)		9.3
Comprehensive income (loss)	$	13.4		$	(164.6	)	$	(149.5	)	$	(179.9	)

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 nine 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		3.0			(1.6	)		(1.9	)		—			—		(0.5	)
Tax effect		(0.9	)		0.3			—			—			—		(0.6	)
Balance at September 28, 2012	$	4.0		$	17.3		$	65.6		$	(0.2	)	$	2.0	$	88.7

XML

Comprehensive Income Loss (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Comprehensive Income (Loss) [Line Items]
Net loss	$ (3.9)	$ (130.1)	$ (148.4)	$ (183.5)
Available-for-sale securities, net of tax	1.2	0.9	2.1	0.2
Net investment hedges, net of tax	(3.8)	4.1	(1.3)	(5.9)
Foreign currency translation adjustments	19.9	(39.5)	(1.9)	9.3
Comprehensive income (loss)	$ 13.4	$ (164.6)	$ (149.5)	$ (179.9)

XML

Equity-Based Compensation

9 Months Ended

Sep. 28, 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 18,859,784 remain available for grant at September 28, 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 fair value assumptions used to compute the weighted average fair value of stock option grants at the date of grant:

	9/28/12			9/30/11
Expected volatility		43.3	%		46.5	%
Risk-free interest rate		0.9	%		2.1	%
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 September 28, 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		2,102,207		$	3.95
Exercised		(138,665	)	$	0.48
Forfeited/expired		(5,180,890	)	$	7.06
Outstanding – end of period		17,502,134		$	7.48		3.8	$	0.1
Exercisable – end of period		14,868,901		$	7.94		2.9	$	0.1
Shares vested or expected to vest		17,305,651		$	7.51		3.7	$	0.1

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on our closing stock price as of September 28, 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 third quarter of 2012 was $0.1 million.

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

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. These cash payments were negligible in the first nine months of 2012 and 2011.

The following is a summary of cash-settled SARs activity during 2012 as of September 28, 2012:

	Shares			Weighted Average Exercise Price
Outstanding – beginning of year		492,131		$	6.81
Granted		16,200		$	3.98
Forfeited/expired		(40,684	)	$	7.26
Outstanding – end of period		467,647		$	6.67

Restricted Stock

The fair market value of restricted stock vested was $9.0 million in the first nine months of 2012. The weighted average grant date fair value of restricted stock was $3.88 per share in the first nine months of 2012 and $5.32 per share in the first nine months of 2011.

The following is a summary of restricted stock activity during 2012 as of September 28, 2012:

	Shares			Weighted Average Grant Date Fair Value
Non-vested – beginning of year		4,854,587		$	6.29
Granted		2,619,842		$	3.88
Vested		(2,390,007	)	$	6.09
Forfeited		(1,271,870	)	$	6.27
Non-vested – end of period		3,812,552		$	4.76

Performance Stock Units

The 2004 Plan provides for the granting of PSUs. We granted 1,963,478 PSUs in the first nine months of 2012 and 1,654,965 PSUs in the first nine months of 2011. The PSUs granted in the first nine 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 nine months of 2012 was $3.98 per share and the weighted average fair value of PSUs granted in the first nine months of 2011 was $5.39 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 September 28, 2012:

	Shares			Weighted Average Grant Date Fair Value
Non-vested – beginning of year		2,269,410		$	5.51
Granted		1,963,478		$	3.98
Vested		(825,996	)	$	5.28
Forfeited		(1,716,260	)	$	4.96
Non-vested – end of period		1,690,632		$	4.40

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 Income (Loss):

	Third Quarter					Nine Months
	9/28/12			9/30/11		9/28/12			9/30/11
Cost of revenue – products	$	0.3		$	0.4	$	0.9		$	1.3
Cost of revenue – services		0.4			0.5		1.3			1.7
Research and development		1.0			2.3		4.2			7.9
Sales and marketing		0.6			1.0		2.3			3.7
General and administrative		3.1			2.1		7.1			7.3
Equity-based compensation expense before income taxes		5.4			6.3		15.8			21.9
Income tax benefit		(0.1	)		—		(0.3	)		(2.6	)
Total equity-based compensation expense after income taxes	$	5.3		$	6.3	$	15.5		$	19.3

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

	Third Quarter				Nine Months
	9/28/12		9/30/11		9/28/12			9/30/11
Stock options	$	1.6	$	1.1	$	3.6		$	3.7
Cash-settled SARs		—		—		(0.1	)		(0.2	)
Restricted stock		3.3		3.8		9.1			13.6
Performance stock units		0.5		1.4		3.2			4.8
Total	$	5.4	$	6.3	$	15.8		$	21.9

As of September 28, 2012, we had $18.5 million of unrecognized equity-based compensation cost that we expect to recognize over a weighted average period of 1.8 years.

XML

Income Taxes

9 Months Ended

Sep. 28, 2012

Income Taxes

9. Income Taxes

We recorded tax expense of $3.7 million in the third quarter and $14.2 million in the first nine 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

9 Months Ended

Sep. 28, 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:

	Third Quarter				Nine Months
	9/28/12		9/30/11		9/28/12		9/30/11
Optical	$	108.0	$	120.4	$	334.8	$	368.8
Data		66.2		109.1		213.3		312.7
Access		42.3		43.2		115.5		123.1
Services		47.9		57.1		146.8		164.3
Total revenue	$	264.4	$	329.8	$	810.4	$	968.9

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

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Optical	$	23.5		$	20.6		$	67.3		$	67.1
Data		1.4			8.0			1.8			(7.8	)
Access		11.1			7.2			23.5			26.6
Services		15.6			22.8			48.0			54.4
Total segment profit	$	51.6		$	58.6		$	140.6		$	140.3
Sales and marketing expenses		(29.7	)		(41.4	)		(98.3	)		(126.9	)
General and administrative expenses		(17.9	)		(18.6	)		(58.7	)		(63.3	)
Equity-based compensation		(1.7	)		(3.1	)		(6.5	)		(11.1	)
Intangible asset amortization		(1.1	)		(5.0	)		(4.3	)		(15.3	)
Restructuring and other charges		(3.3	)		(19.5	)		(110.2	)		(20.5	)
Goodwill and IPR&D impairment		—			(102.7	)		—			(102.7	)
Operating loss	$	(2.1	)	$	(131.7	)	$	(137.4	)	$	(199.5	)

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

Segment Profit Loss and Reconciliation to Operating Earnings Loss by Segment (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Segment Reporting Information [Line Items]
Total segment profit	$ 51.6	$ 58.6	$ 140.6	$ 140.3
Sales and marketing expenses	(29.7)	(41.4)	(98.3)	(126.9)
General and administrative expenses	(17.9)	(18.6)	(58.7)	(63.3)
Equity-based compensation	(1.7)	(3.1)	(6.5)	(11.1)
Intangible asset amortization	(1.1)	(5.0)	(4.3)	(15.3)
Restructuring and other charges	(3.3)	(19.5)	(110.2)	(20.5)
Goodwill and IPR&D impairment		(102.7)		(102.7)
Operating earnings (loss)	(2.1)	(131.7)	(137.4)	(199.5)
Optical segment
Segment Reporting Information [Line Items]
Total segment profit	23.5	20.6	67.3	67.1
Data segment
Segment Reporting Information [Line Items]
Total segment profit	1.4	8.0	1.8	(7.8)
Access segment
Segment Reporting Information [Line Items]
Total segment profit	11.1	7.2	23.5	26.6
Services segment
Segment Reporting Information [Line Items]
Total segment profit	$ 15.6	$ 22.8	$ 48.0	$ 54.4

XML

Computation of Net Loss Per Share (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 28, 2012		Sep. 30, 2011		Sep. 28, 2012		Sep. 30, 2011
Earnings Per Share Disclosure [Line Items]
Net loss	$ (3.9)		$ (130.1)		$ (148.4)		$ (183.5)
Denominator for basic net loss per share - weighted average shares outstanding	367.7		365.2		366.8		364.3
Employee stock options and restricted and performance stock awards
Denominator for diluted net loss per share - adjusted weighted average shares outstanding and assumed conversions	367.7		365.2		366.8		364.3
Net loss per share, basic	$ (0.01)		$ (0.36)		$ (0.40)		$ (0.50)
Net loss per share, diluted	$ (0.01)	[1]	$ (0.36)	[1]	$ (0.40)	[1]	$ (0.50)	[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 third quarter and first nine months of 2012 and 2011 are the same. Diluted weighted average shares outstanding were 368.2 million in the third quarter of 2012, 368.6 million in the first nine months of 2012, 365.9 million in the third quarter of 2011 and 366.4 million in the first nine months of 2011.

XML

Consolidated Revenue by Segment (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Segment Reporting Information [Line Items]
Total revenue	$ 264.4	$ 329.8	$ 810.4	$ 968.9
Optical segment
Segment Reporting Information [Line Items]
Segment Revenue	108.0	120.4	334.8	368.8
Data segment
Segment Reporting Information [Line Items]
Segment Revenue	66.2	109.1	213.3	312.7
Access segment
Segment Reporting Information [Line Items]
Segment Revenue	42.3	43.2	115.5	123.1
Services segment
Segment Reporting Information [Line Items]
Segment Revenue	$ 47.9	$ 57.1	$ 146.8	$ 164.3

XML

Summary of Restructuring and Other Charges Activity by Segment (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended			9 Months Ended			3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended			3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 28, 2012		Sep. 30, 2011	Sep. 28, 2012		Sep. 30, 2011	Sep. 28, 2012 2012 Restructuring Plan		Sep. 28, 2012 2012 Restructuring Plan		Sep. 28, 2012 2012 Restructuring Plan Optical segment	Sep. 28, 2012 2012 Restructuring Plan Optical segment		Sep. 28, 2012 2012 Restructuring Plan Data segment		Sep. 28, 2012 2012 Restructuring Plan Data segment		Sep. 28, 2012 2012 Restructuring Plan Access segment		Sep. 28, 2012 2012 Restructuring Plan Access segment		Sep. 28, 2012 2012 Restructuring Plan Services segment	Sep. 28, 2012 2012 Restructuring Plan Services segment	Sep. 28, 2012 2011 Restructuring Plan	Sep. 28, 2012 2011 Restructuring Plan		Sep. 28, 2012 2011 Restructuring Plan Optical segment	Sep. 28, 2012 2011 Restructuring Plan Optical segment		Sep. 28, 2012 2011 Restructuring Plan Data segment	Sep. 28, 2012 2011 Restructuring Plan Data segment		Sep. 28, 2012 2011 Restructuring Plan Access segment	Sep. 28, 2012 2011 Restructuring Plan Access segment	Sep. 28, 2012 2011 Restructuring Plan Services segment	Sep. 28, 2012 2011 Restructuring Plan Services segment	Sep. 28, 2012 Previous Restructuring Plans	Sep. 28, 2012 Previous Restructuring Plans	Sep. 28, 2012 Previous Restructuring Plans Optical segment	Jun. 29, 2012 Previous Restructuring Plans Optical segment	Sep. 28, 2012 Previous Restructuring Plans Data segment	Sep. 28, 2012 Previous Restructuring Plans Data segment	Sep. 28, 2012 Previous Restructuring Plans Access segment	Sep. 28, 2012 Previous Restructuring Plans Access segment	Sep. 28, 2012 Previous Restructuring Plans Services segment	Sep. 28, 2012 Previous Restructuring Plans Services segment
Restructuring Cost and Reserve [Line Items]
Beginning Balance	$ 21.9			$ 17.7			$ 12.1				$ 1.9			$ 8.7				$ 0.8				$ 0.7		$ 5.8	$ 12.6		$ 2.0	$ 4.4		$ 2.8	$ 5.5		$ 0.5	$ 1.1	$ 0.5	$ 1.6	$ 4.0	$ 5.1	$ 0.4	$ 0.2	$ 1.5	$ 1.9	$ 2.2	$ 2.6	$ 0.1	$ 0.2
Restructuring expense	3.3		19.5	110.2		20.5	3.1		108.4		0.7	4.7		1.6		99.8		0.3		1.6		0.5	2.3		1.7		0.3	1.9					0.1	0.1	(0.4)	(0.3)	0.2	0.1	(0.1)				0.2	0.2
Cash Payments	(4.6)			(31.2)			(2.3)		(20.2)		(0.4)	(1.6)		(1.4)		(16.6)		(0.1)		(0.5)		(0.4)	(1.5)	(1.9)	(9.6)		(1.2)	(4.6)		(0.5)	(3.0)		(0.2)	(0.8)		(1.2)	(0.4)	(1.4)	(0.1)		(0.1)	(0.5)	(0.2)	(0.6)	(0.1)	(0.2)
Other Activities	(1.3)	[1]		(77.4)	[1]		(1.3)	[1]	(76.6)	[1]		(0.9)	[1]	(1.2)	[1]	(75.5)	[1]	(0.1)	[1]	(0.2)	[1]				(0.8)	[1]		(0.6)	[1]		(0.2)	[1]
Ending Balance	$ 19.3			$ 19.3			$ 11.6		$ 11.6		$ 2.2	$ 2.2		$ 7.7		$ 7.7		$ 0.9		$ 0.9		$ 0.8	$ 0.8	$ 3.9	$ 3.9		$ 1.1	$ 1.1		$ 2.3	$ 2.3		$ 0.4	$ 0.4	$ 0.1	$ 0.1	$ 3.8	$ 3.8	$ 0.2	$ 0.2	$ 1.4	$ 1.4	$ 2.2	$ 2.2

[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

Equity Based Compensation - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 28, 2012	Sep. 28, 2012 Y	Sep. 28, 2012 Restricted Stock	Sep. 30, 2011 Restricted Stock	Sep. 28, 2012 Performance stock units	Sep. 30, 2011 Performance stock units	Sep. 28, 2012 Performance stock units Awards Granted during 2011	Sep. 28, 2012 Minimum	Sep. 28, 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 and Stock Appreciation Rights 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	18,859,784	18,859,784
Aggregate intrinsic value of exercised stock options	$ 0.1
Weighted average fair value of stock options granted		$ 1.29
Fair market value of restricted stock vested			9.0
Equity-based compensation granted, grant date weighted average fair value			$ 3.88	$ 5.32	$ 3.98	$ 5.39
Performance stock units granted					1,963,478	1,654,965
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	$ 18.5	$ 18.5
Weighted average period for equity-based compensation recognition, years		1 year 9 months 18 days

XML

Restructuring and Other Charges (Tables)

9 Months Ended

Sep. 28, 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:

	Third Quarter				Nine Months
	9/28/12		9/30/11		9/28/12		9/30/11
Severance and other termination benefits	$	2.3	$	14.5	$	24.4	$	15.7
Facility and other exit costs		1.0		5.0		36.9		4.8
Accelerated amortization of intangible assets		—		—		47.7		—
Other obligations		—		—		1.2		—
Total restructuring and other charges	$	3.3	$	19.5	$	110.2	$	20.5

Summary Of Restructuring And Other Charges Activity By Segment

The following table summarizes restructuring and other charges activity by segment for the third quarter and the first nine months of 2012 and the status of the reserves at September 28, 2012:

			Third Quarter Activity
	Balance at 6/29/12		Restructuring Expense			Cash Payments			Other Activities1			Balance at 9/28/12
2012 Restructuring Plan
Optical	$	1.9	$	0.7		$	(0.4	)	$	—		$	2.2
Data		8.7		1.6			(1.4	)		(1.2	)		7.7
Access		0.8		0.3			(0.1	)		(0.1	)		0.9
Services		0.7		0.5			(0.4	)		—			0.8
Subtotal 2012 Restructuring Plan		12.1		3.1			(2.3	)		(1.3	)		11.6
2011 Restructuring Plan
Optical		2.0		0.3			(1.2	)		—			1.1
Data		2.8		—			(0.5	)		—			2.3
Access		0.5		0.1			(0.2	)		—			0.4
Services		0.5		(0.4	)		—			—			0.1
Subtotal 2011 Restructuring Plan		5.8		—			(1.9	)		—			3.9
Previous Restructuring Plans
Optical		0.2		—			—			—			0.2
Data		1.5		—			(0.1	)		—			1.4
Access		2.2		0.2			(0.2	)		—			2.2
Services		0.1		—			(0.1	)		—			—
Subtotal Previous Restructuring Plans		4.0		0.2			(0.4	)		—			3.8
Total Restructuring Plans	$	21.9	$	3.3		$	(4.6	)	$	(1.3	)	$	19.3

			Nine Months Activity
	Balance at 12/30/11		Restructuring Expense			Cash Payments			Other Activities1			Balance at 9/28/12
2012 Restructuring Plan
Optical	$	—	$	4.7		$	(1.6	)	$	(0.9	)	$	2.2
Data		—		99.8			(16.6	)		(75.5	)		7.7
Access		—		1.6			(0.5	)		(0.2	)		0.9
Services		—		2.3			(1.5	)		—			0.8
Subtotal 2012 Restructuring Plan		—		108.4			(20.2	)		(76.6	)		11.6
2011 Restructuring Plan
Optical		4.4		1.9			(4.6	)		(0.6	)		1.1
Data		5.5		—			(3.0	)		(0.2	)		2.3
Access		1.1		0.1			(0.8	)		—			0.4
Services		1.6		(0.3	)		(1.2	)		—			0.1
Subtotal 2011 Restructuring Plan		12.6		1.7			(9.6	)		(0.8	)		3.9

Previous Restructuring Plans
Optical		0.4		(0.1	)		(0.1	)		—			0.2
Data		1.9		—			(0.5	)		—			1.4
Access		2.6		0.2			(0.6	)		—			2.2
Services		0.2		—			(0.2	)		—			—
Subtotal Previous Restructuring Plans		5.1		0.1			(1.4	)		—			3.8
Total Restructuring Plans	$	17.7	$	110.2		$	(31.2	)	$	(77.4	)	$	19.3

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

Product Warranties (Tables)

9 Months Ended

Sep. 28, 2012

Schedule Of Standard Product Warranty Liabilities

Product warranty liabilities are as follows:

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Balance – beginning of period	$	16.3		$	20.0		$	17.0		$	19.4
Accruals for product warranties		2.0			2.2			4.9			7.1
Settlements		(1.2	)		(1.1	)		(3.4	)		(3.4	)
Other adjustments to accruals for product warranties		(1.7	)		(2.0	)		(3.1	)		(4.0	)
Balance – end of period	$	15.4		$	19.1		$	15.4		$	19.1

Balance Sheet Classification Of Product Warranty Liabilities

	Balance at 9/28/12		Balance at 9/30/11
Balance sheet classification - end of period
Other accrued liabilities	$	6.7	$	8.9
Other long-term liabilities		8.7		10.2
Total product warranty liabilities	$	15.4	$	19.1

XML

Schedule of Standard Product Warranty Liabilities (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Product Warranty Liability [Line Items]
Balance - beginning of period	$ 16.3	$ 20.0	$ 17.0	$ 19.4
Accruals for product warranties	2.0	2.2	4.9	7.1
Settlements	(1.2)	(1.1)	(3.4)	(3.4)
Other adjustments to accruals for product warranties	(1.7)	(2.0)	(3.1)	(4.0)
Balance - end of period	$ 15.4	$ 19.1	$ 15.4	$ 19.1

XML

Investments - Additional Information (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011	Dec. 30, 2011
Schedule of Available-for-sale Securities [Line Items]
Other-than-temporary impairment				$ 1.2
Shares acquired in business acquisition	10.6		10.6
Shares borrowed in stock loan agreement	10.6		10.6
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
Value of other marketable securities and loan related to other marketable securities	201.6		201.6		190.9
Market price per share of other marketable securities and Loan related to other marketable securities	$ 19.10		$ 19.10		$ 18.08
Fees associated with the stock loan agreement	0.2	0.3	0.9	0.8
Investments in partnerships and start-up technology companies	2.5		2.5		3.2
Investments in partnerships and start-up technology companies, other-than-temporary impairment		$ 0.6		$ 0.6

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011
Operating Activities
Net loss	$ (148.4)	$ (183.5)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	38.2	57.6
Loss on disposal of property, plant and equipment	1.1	0.7
Equity-based compensation	15.8	21.9
Deferred income taxes	0.3	(0.8)
Restructuring and other charges	110.2	20.5
Net (gain) loss on investments in marketable securities	(0.8)	0.1
Goodwill and IPR&D impairment		102.7
Other-than-temporary impairment charges on investments		1.8
Excess tax benefits from equity-based compensation		(0.2)
Net changes in assets and liabilities:
Accounts receivable	31.4	43.6
Inventories	41.2	6.8
Miscellaneous receivables and other current assets	14.8	(11.0)
Other assets	(0.4)	(2.5)
Accounts payable	(38.5)	(14.0)
Restructuring and other charges	(31.2)	(9.8)
Deferred revenue	(18.9)	(8.1)
Other accrued liabilities	(4.2)	(59.2)
Income taxes	(2.9)	3.4
Other long-term liabilities	(3.2)	(1.8)
Net Cash Provided by (Used for) Operating Activities	4.5	(31.8)
Investing Activities
Capital expenditures	(16.8)	(45.8)
Payments for purchases of investments	(401.6)	(616.1)
Proceeds from sales and maturities of investments	442.9	708.7
Net Cash Provided by Investing Activities	24.5	46.8
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	0.1	0.6
Repurchase of common stock	(3.7)	(5.0)
Excess tax benefits from equity-based compensation		0.2
Dividends paid	(22.0)	(21.8)
Net Cash Used for Financing Activities	(25.6)	(26.0)
Effect of Exchange Rate Changes on Cash	(1.2)	(3.6)
Net Increase (Decrease) in Cash and Cash Equivalents	2.2	(14.6)
Cash and Cash Equivalents - Beginning of Year	132.7	208.8
Cash and Cash Equivalents - End of Period	$ 134.9	$ 194.2

XML

Investments

9 Months Ended

Sep. 28, 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 income (loss) and shown as a separate component of stockholders’ equity. We base realized gains and losses on specific identification of the security sold. At September 28, 2012, and December 30, 2011, available-for-sale marketable securities consisted of the following:

	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
September 28, 2012
U.S. government debt obligations	$	151.9	$	0.5	$	—		$	152.4
Corporate debt obligations guaranteed by FDIC		21.1		—		—			21.1
Corporate debt obligations		186.4		2.3		(0.1	)		188.6
Mortgaged backed debt obligations guaranteed by GNMA		97.2		0.8		(0.3	)		97.7
Certificates of deposit guaranteed by FDIC		3.2		—		—			3.2
Foreign government debt obligations		222.1		2.9		(0.3	)		224.7
Foreign corporate debt obligations		118.4		0.8		—			119.2
Total	$	800.3	$	7.3	$	(0.7	)	$	806.9
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 September 28, 2012:

	Amortized Cost		Fair Value
Less than 12 months	$	262.8	$	264.5
Due in 1 to 5 years		438.3		442.8
Due after 5 years		99.2		99.6
Total	$	800.3	$	806.9

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 September 28, 2012. No other-than-temporary impairments were recorded in the third quarter or first nine months of 2012. We recognized an other-than-temporary impairment of $1.2 million in the first nine months of 2011.

Investments in marketable securities with unrealized losses at September 28, 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
September 28, 2012
Corporate debt obligations	$	16.2	$	(0.1	)	$	—	$	—	$	16.2	$	(0.1	)
Mortgaged backed debt obligations guaranteed by GNMA		29.4		(0.3	)		—		—		29.4		(0.3	)
Foreign government debt obligations		22.2		(0.3	)		—		—		22.2		(0.3	)
Total	$	67.8	$	(0.7	)	$	—	$	—	$	67.8	$	(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 nine months ending September 28, 2012, and September 30, 2011:

	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Gross realized gains	$	1.0		$	1.7		$	1.5		$	3.1
Gross realized losses		(0.2	)		(1.4	)		(0.7	)		(3.2	)
Total	$	0.8		$	0.3		$	0.8		$	(0.1	)

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 September 28, 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 September 28, 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 September 28, 2012, Other marketable securities and Loan related to other marketable securities was $201.6 million at a market price of $19.10 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 $0.2 million in the third quarter of 2012, $0.3 million in the third quarter of 2011, $0.9 million in the first nine months of 2012 and $0.8 million in the first nine months of 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 $2.5 million at September 28, 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 third quarter and first nine months of 2012. Other-than-temporary impairments were $0.6 million for the third quarter and first nine months of 2011.

XML

Schedule of Total Equity Based Compensation Expense by Type (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ 5.4	$ 6.3	$ 15.8	$ 21.9
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	1.6	1.1	3.6	3.7
Cash-settled SARs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense			0.1	0.2
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	3.3	3.8	9.1	13.6
Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ 0.5	$ 1.4	$ 3.2	$ 4.8

XML

Equity-Based Compensation (Tables)

9 Months Ended

Sep. 28, 2012

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

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

	9/28/12			9/30/11
Expected volatility		43.3	%		46.5	%
Risk-free interest rate		0.9	%		2.1	%
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 September 28, 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		2,102,207		$	3.95
Exercised		(138,665	)	$	0.48
Forfeited/expired		(5,180,890	)	$	7.06
Outstanding – end of period		17,502,134		$	7.48		3.8	$	0.1
Exercisable – end of period		14,868,901		$	7.94		2.9	$	0.1
Shares vested or expected to vest		17,305,651		$	7.51		3.7	$	0.1

Schedule Of Cash-Settled Stock Appreciation Rights Activity

The following is a summary of cash-settled SARs activity during 2012 as of September 28, 2012:

	Shares			Weighted Average Exercise Price
Outstanding – beginning of year		492,131		$	6.81
Granted		16,200		$	3.98
Forfeited/expired		(40,684	)	$	7.26
Outstanding – end of period		467,647		$	6.67

Schedule Of Restricted Stock Unit Activity

The following is a summary of restricted stock activity during 2012 as of September 28, 2012:

	Shares			Weighted Average Grant Date Fair Value
Non-vested – beginning of year		4,854,587		$	6.29
Granted		2,619,842		$	3.88
Vested		(2,390,007	)	$	6.09
Forfeited		(1,271,870	)	$	6.27
Non-vested – end of period		3,812,552		$	4.76

Schedule Of Performance Stock Unit Activity

The following is a summary of PSU activity during 2012 as of September 28, 2012:

	Shares			Weighted Average Grant Date Fair Value
Non-vested – beginning of year		2,269,410		$	5.51
Granted		1,963,478		$	3.98
Vested		(825,996	)	$	5.28
Forfeited		(1,716,260	)	$	4.96
Non-vested – end of period		1,690,632		$	4.40

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 Income (Loss):

	Third Quarter					Nine Months
	9/28/12			9/30/11		9/28/12			9/30/11
Cost of revenue – products	$	0.3		$	0.4	$	0.9		$	1.3
Cost of revenue – services		0.4			0.5		1.3			1.7
Research and development		1.0			2.3		4.2			7.9
Sales and marketing		0.6			1.0		2.3			3.7
General and administrative		3.1			2.1		7.1			7.3
Equity-based compensation expense before income taxes		5.4			6.3		15.8			21.9
Income tax benefit		(0.1	)		—		(0.3	)		(2.6	)
Total equity-based compensation expense after income taxes	$	5.3		$	6.3	$	15.5		$	19.3

Schedule Of Total Equity-Based Compensation Expense By Type

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

	Third Quarter				Nine Months
	9/28/12		9/30/11		9/28/12			9/30/11
Stock options	$	1.6	$	1.1	$	3.6		$	3.7
Cash-settled SARs		—		—		(0.1	)		(0.2	)
Restricted stock		3.3		3.8		9.1			13.6
Performance stock units		0.5		1.4		3.2			4.8
Total	$	5.4	$	6.3	$	15.8		$	21.9

XML

Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) In Millions, unless otherwise specified	Sep. 28, 2012	Dec. 30, 2011
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	$ 806.9	$ 843.9
Other marketable securities	201.6	190.9
Derivative financial instruments	0.1	0.2
Total Assets	1,008.6	1,035.0
Loan related to other marketable securities	201.6	190.9
Derivative financial instruments	2.4	0.2
Total Liabilities	204.0	191.1
U.S. government debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	152.4	195.7
Corporate debt obligations guaranteed By FDIC
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	21.1	66.8
Corporate debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	188.6	201.5
Mortgaged backed debt obligations guaranteed by GNMA
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	97.7	91.2
Certificates of deposit guaranteed by FDIC
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	3.2	1.5
Foreign government debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	224.7	223.0
Foreign corporate debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	119.2	64.2
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	152.4	195.7
Other marketable securities	201.6	190.9
Total Assets	354.0	386.6
Loan related to other marketable securities	201.6	190.9
Total Liabilities	201.6	190.9
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	152.4	195.7
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	654.5	648.2
Derivative financial instruments	0.1	0.2
Total Assets	654.6	648.4
Derivative financial instruments	2.4	0.2
Total Liabilities	2.4	0.2
Significant Other Observable Inputs (Level 2) | Corporate debt obligations guaranteed By FDIC
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	21.1	66.8
Significant Other Observable Inputs (Level 2) | Corporate debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	188.6	201.5
Significant Other Observable 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	97.7	91.2
Significant Other Observable Inputs (Level 2) | Certificates of deposit guaranteed by FDIC
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	3.2	1.5
Significant Other Observable Inputs (Level 2) | Foreign government debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	224.7	223.0
Significant Other Observable Inputs (Level 2) | Foreign corporate debt obligations
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments in marketable securities	$ 119.2	$ 64.2

XML

Subsequent Event

9 Months Ended

Sep. 28, 2012

Subsequent Event

15. Subsequent Event

On October 24, 2012, management initiated a restructuring plan that is designed to further align expenses with revenue and current market conditions. In order to reduce costs and operating expenses, this plan includes moving certain functions to lower cost geographies. Actions under this plan are expected to be substantially completed by the end of the fourth quarter of 2013. We expect to record pretax charges in the fourth quarter of 2012 through the first quarter of 2013 of approximately $11 million. The pretax charges will consist of $9 million for severance-related charges that will affect approximately 200 employees, and $2 million for facility- and asset-related charges. Estimated cash payments under this plan are expected to be $9 million beginning in the fourth quarter of 2012 and continuing through the end of 2014.