Segment Information

12 Months Ended

Dec. 28, 2012

Segment Information

12. 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 Packet Optical (primarily our optical portfolio) and Mobile Backhaul (primarily our data portfolio) markets 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 was unchanged).

Optical segment products are primarily used to manage large volumes of telecommunication traffic in metro areas. The Optical segment includes Tellabs^® 5000 Series of Digital Cross-Connect systems, the Tellabs^® 6300 Managed Transport System, the Tellabs^® 7100 OTS and the Tellabs^® 7300 Metro Ethernet Switching Series.

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^® 8100 Managed Access Systems and the Tellabs 8600 and 8800 Smart Routers.

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 delivers deployment, training, support and professional services to Tellabs’ customers. Through these offerings, Tellabs serves its customers through the phases of planning, deploying and operating a network.

We define segment profit as gross profit less research and development expenses. Segment profit 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.

Consolidated revenue by segment follows:

	2012		2011		2010
Optical	$	432.0	$	482.1	$	644.2
Data		265.5		413.9		557.7
Access		156.5		166.4		198.1
Services		198.6		223.3		242.3
Total revenue	$	1,052.6	$	1,285.7	$	1,642.3

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

	2012			2011			2010
Optical	$	89.6		$	93.3		$	218.3
Data		(6.8	)		(6.6	)		168.4
Access		31.9			34.1			34.5
Services		70.0			75.3			81.2
Total segment profit	$	184.7		$	196.1		$	502.4
Sales and marketing expenses		(126.4	)		(163.0	)		(179.3	)
General and administrative expenses		(74.1	)		(80.9	)		(100.4	)
Inventory and purchase commitments for discontinued 9200 product		(8.1	)		—			—
Equity-based compensation		(8.4	)		(11.9	)		(12.5	)
Intangible asset amortization		(5.4	)		(20.2	)		(27.0	)
Restructuring and other charges		(119.0	)		(20.3	)		(9.5	)
Goodwill and IPR&D impairment		—			(102.7	)		—
Operating (loss) earnings	$	(156.7	)	$	(202.9	)	$	173.7

The segments use many of the same assets. For internal reporting purposes, we do not allocate assets by segment and therefore no asset, depreciation and amortization, or capital expenditure by segment information is provided to our chief operating decision maker.

During 2012, revenue from one customer accounted for 24% of consolidated revenue. In 2011, revenue from one customer accounted for 22% of consolidated revenue. In 2010, revenue from two customers accounted for 35% and 20% of consolidated revenue. We attribute revenue to customers based on the effective date of any relevant merger. Revenue from this major customer is earned in each operating segment.

Consolidated revenue by country based on customer location follows:

	2012		2011		2010
United States	$	513.4	$	642.5	$	1,138.2
All other countries		539.2		643.2		504.1
Total	$	1,052.6	$	1,285.7	$	1,642.3

Long-lived assets by country follow:

	12/28/12		12/30/11
United States	$	312.3	$	407.3
Finland		57.9		55.8
All other countries		20.5		23.6
Total	$	390.7	$	486.7