FOR IMMEDIATE RELEASE
10/20/99
TELLABS REPORTS BEST QUARTER IN COMPANY HISTORY Lisle, Ill. -- Telecommunications equipment manufacturer Tellabs, Inc., announced Wednesday record sales and earnings for the third quarter of 1999.
Sales for the third quarter, ended October 1, were $594,505,000, the highest for any quarter in the company's history and up 38.8 percent from sales of $428,387,000 in the third quarter of 1998. This marks the 33rd consecutive quarter in which Tellabs' sales surpassed prior-year levels. Sales for the first nine months of 1999 were $1,604,556,000, up 35.6 percent from sales of $1,182,877,000 a year earlier.
Net income for the third quarter (including a pre-tax gain of approximately $6,934,000 on the sale of stock held as an investment and a charge taken in connection with the acquisition of NetCore Systems, Inc.) was $144,040,000. This represents a 73.4 percent increase from net income of $83,081,000 a year earlier (when results included a pre-tax charge of approximately $12,991,000 taken in connection with the merger with Coherent Communications Systems Corporation and the terminated merger with CIENA Corporation). Excluding the effect of the 1999 gain and charge and the 1998 charge, earnings for the third quarter of 1999 increased 52.9 percent over those recorded last year.
Net income for the first nine months of 1999 (including the gain and charge described above) was $370,466,000. This compares to net income of $275,103,000 during the first nine months of 1998 (when results were affected by the charge described above, a pre-tax gain of $73,374,000 taken on the sale of stock held as an investment, and a pre-tax write-off of $24,793,000 taken on impaired assets). Excluding the effects of the various charges, gains and write-offs, net income for the first nine months of 1999 was 46.4 percent greater than the level recorded in the comparable period of 1998.
Diluted earnings per share of common stock for the third quarter of 1999 were 35 cents compared with 21 cents a year earlier. (Excluding all gains, charges and write-offs, diluted earnings per share for the third quarter of 1999 were 34 cents, compared to 23 cents in the third quarter of 1998.) For the first nine months of 1999, earnings per share were 90 cents (or 89 cents excluding gains and charges) compared with 68 cents (or 62 cents excluding gains, charges and write-offs) a year earlier. (All earnings-per-share amounts have been adjusted to reflect the effect of the two-for-one stock split that occurred on May 17, 1999.)
"Sales growth during the quarter was again driven by the TITAN® digital cross-connect system family," said Tellabs President and CEO Michael J. Birck. "Strong demand for the SONET-based TITAN 5500 and 532L systems resulted in a 43.1 percent increase over the third quarter of last year. While MartisDXX™ system sales did not meet expectations for the quarter, sales of the Tellabs Denmark products, acquired from Alcatel a third of the way through the quarter, made a meaningful contribution to International revenues. Echo canceller sales increased 26.1 percent quarter-to-quarter. CABLESPAN® system sales also increased significantly from last year's rather modest level."
During the quarter, Tellabs acquired two companies: Alcatel's DSC Communications businesses in Europe, now known as Tellabs Denmark, and Wilmington, Mass.-based NetCore Systems, Inc. The Alcatel acquisition was an all-cash transaction; NetCore was acquired in an all-stock transaction, accounted for as a pooling of interests. In combination with Tellabs' 1998 acquisition of Coherent Communications Systems Corporation (which was treated as an immaterial pooling) and, in accordance with recent accounting guidance for multiple immaterial poolings of interests, all results reported in this news release are restated to give effect to the mergers with NetCore and Coherent. A chart detailing restated selected quarterly financial data for 1998 and 1999 is included in this news release.
Tellabs designs, manufactures, markets and services voice and data transport and access systems. The company's products are used worldwide by the providers of communications services. Tellabs, Inc., stock is listed on the Nasdaq Stock Market (TLAB).
CONTACT: Peter A. Guglielmi
(630) 378-6111
Peter.Guglielmi@tellabs.com
Tellabs, the Tellabs logo, TITAN and CABLESPAN are registered U.S. trademarks of Tellabs Operations, Inc., in the United States and/or other countries. MartisDXX is a trademark of Tellabs Oy.
TELLABS, INC.
Results of Operations
(Dollars in thousands, except per-share data)
(Unaudited)
Three Months Ended Nine Months Ended 10/01/99 10/02/98 10/01/99 10/02/98 Sales $594,505 $428,387 $1,604,556 $1,182,877 Cost of Goods Sold 243,657 180,392 648,846 495,230 Gross Profit 350,848 247,995 955,710 687,647 Operating Exp. Mktg. & G.A. 75,522 57,828 225,135 168,992 Research & Dev. 76,969 57,566 212,582 158,003 Asset Impairment --- --- --- 24,793 Merger Costs 1,929 12,991 1,929 12,991 Goodwill Amort. 1,902 1,363 4,802 4,326 Oper. Exp. 156,322 129,748 444,448 369,105 Oper. Profit 194,526 118,247 511,262 318,542 Interest/Other-Net 13,868 3,346 29,564 87,162 Profit Before Tax 208,394 121,593 540,826 405,704 Taxes 64,354 38,512 170,360 130,601 Net Profit $144,040 $83,081 $370,466 $275,103 Earnings Per Share Basic $0.36 $0.21 $0.93 $0.70 Diluted $0.35 $0.21 $0.90 $0.68 Average Number of Shares
of Common Stock OutstandingBasic 401,807 395,300 400,459 394,100 Diluted 413,323 404,912 412,001 404,349
TELLABS, INC.
Condensed Consolidated Balance Sheet
(Dollars in thousands)
(Unaudited)
1999
Third Quarter1999
Second Quarter1998
Year EndAssets Current Assets Cash and investments $924,006 $882,290 $658,686 Accounts receivable, less allowance 515,368 459,291 480,620 Inventories 164,670 135,369 122,424 Other current assets 6,575 2,874 7,143 Total Current Assets 1,610,619 1,479,824 1,268,873 Property, Plant and Equipment 566,302 425,976 415,771 Accumulated depreciation (242,598) (177,347) (159,684) 323,704 248,629 256,087 Goodwill 67,604 48,959 55,559 Other Assets 105,571 91,135 64,606 Total Assets $2,107,498 $1,868,547 $1,645,125 Liabilities Current Liabilities Accounts payable $96,548 $71,474 $63,953 Accrued liabilities 120,315 87,908 82,819 Income taxes 45,952 48,445 73,117 Total Current Liabilities 262,815 207,827 219,889 Long-Term Debt 3,319 3,459 3,349 Other Long-Term Liabilities 20,254 19,321 18,164 Deferred Income Taxes - --- 1,373 6,110 Total Liabilities 286,388 231,980 247,512 Stockholders' Equity Common Stock, $0.01 Par Value 4,023 4,011 1,987 Additional Paid-In Capital 307,403 282,854 223,079 Cumulative Translation Adjustment (60,839) (66,242) (9,207) Unrealized Holding Gains on Securities 40,685 30,146 20,423 Retained Earnings 1,529,838 1,385,798 1,161,331 Total Stockholders' Equity 1,821,110 1,636,567 1,397,613 Total Liab. and Stockholders' Equity $2,107,498 $1,868,547 $1,645,125
TELLABS, INC.
Restated Selected Quarterly Financial Data
(Dollars in thousands)
First Quarter Second Quarter Third Quarter Fourth Quarter
Total1999 Net sales $469,651 $540,400 $594,505 N/A $1,604,556 Gross Profit $275,517 $329,345 $350,848 N/A $955,710 Net earnings $102,196 $124,230 $144,040 N/A $370,466 Diluted earnings per share $0.25 $0.30 $0.35 N/A $0.90 Core diluted earnings per share $0.25 $0.30 $0.34 * N/A $0.89 1998 Net sales $346,769 $407,721 $428,387 $521,333 $1,704,210 Gross Profit $201,088 $238,564 $247,995 $311,597 $999,244 Net earnings $70,895 $121,127 $83,081 $121,017 $396,120 Diluted earnings per share $0.18 $0.30 $0.21 $0.30 $0.98 †† Core diluted earnings per share $0.18 $0.22 ** $0.23 † $0.30 $0.92 ††
*Does not include a $6,934,000 pre-tax gain on the sale of stock held as an investment and a charge taken in connection with the acquisition of NetCore Systems Inc. On a diluted per-share basis, this gain and charge amount to $0.01.**Does not include a $73,374,000 pre-tax gain on the sale of stock held as an investment and settlement of related hedge contracts and a $24,793,000 pre-tax write-off of impaired assets. On a diluted per-share basis, the gain amounts to $0.12 and the write-off amounts to $0.04.
†Does not include a $12,991,000 pre-tax charge taken in connection with the merger with Coherent Communications Systems Corporation and the terminated merger with CIENA Corporation. On a diluted per-share basis, the charge amounts to $0.02.
††The earnings-per-share computation for the year is a separate, annual calculation. Accordingly, the sum of the quarterly earnings-per-share amounts does not necessarily equal the earnings per share for the year.
