Tellabs Financial Performance: 4th Quarter Earnings 2010

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First-Quarter 2011 Guidance — The following statements are forward-looking statements that are based oncurrent expectations and involve risks and uncertainties, some of which are set forth below. We expect firstquarter2011 revenue to be in a range from $315 million to $335 million. We expect non-GAAP gross margin tobe 40%, plus or minus two points, depending on product mix. We expect first-quarter non-GAAP operatingexpense to be down slightly, in the high $140 millions. Tellabs’ first-quarter non-GAAP gross margin excludesapproximately $1 million, and non-GAAP operating expense excludes approximately $6 million, in equity-basedcompensation expense. We expect a first-quarter non-GAAP tax rate of about 32%.Tellabs believes that the presentation of non-GAAP financial information provides important supplementalinformation to management and investors regarding financial and business trends relating to the company'sfinancial results. More detailed information, including year-over-year segment comparisons, non-GAAPreconciliation tables and the reasons management believes non-GAAP measures provide useful information toinvestors can be found in the Results of Operations section of this news release.Simultaneous Webcast and Teleconference Replay — Tellabs will host an investor teleconference at 7:30 a.m.Central Standard Time today to discuss its fourth-quarter results and provide its outlook for the first quarter of2011. Internet users can hear a simultaneous webcast of the teleconference at http://www.tellabs.com; click on thewebcast icon. A taped replay of the call will be available beginning at approximately 10:30 a.m. Central StandardTime today, until 10:30 p.m. Central Standard Time on Thursday, Jan. 27, at 800-642-1687. (Outside the UnitedStates, call 706-645-9291.) When prompted, enter the Tellabs conference ID number: 35817258. A podcast of thecall will be available at http://www.tellabs.com/news/feeds/ later today.About Tellabs — Tellabs helps customers succeed through innovation. That’s why 43 of the top 50 globaltelecom service providers choose our mobile, optical and business solutions. We help telecom service providers,independent operating companies, MSO/cable TV companies, enterprises and government agencies get ahead byadding revenue, reducing expenses and optimizing networks. With wireless and wireline networks in more than90 countries, we enrich people’s lives by innovating the way the world connects. Tellabs (Nasdaq: TLAB) ispart of the NASDAQ Global Select Market, Ocean Tomo 300 Patent Index, the S&P 500 and several corporateresponsibility indexes including FTSE4Good and eight FTSE KLD indexes. http://www.tellabs.comForward-Looking Statements — This news release, which includes the Results of Operations discussion thatfollows, contains forward-looking statements, including but not limited to the next-quarter 2011 guidance andcost savings information contained in this release, that involve risks and uncertainties. Actual results may differfrom the results discussed in the forward-looking statements. Factors that might cause such a difference include,but are not limited to, risks associated with: the competitive landscape, including pricing and margin pressures,the response of customers and competitors, industry consolidation, the integration of a new business, theintroduction of new products, the entrance into new markets, the ability to secure necessary resources, the abilityto realize anticipated savings under our cost-reduction initiatives, and overall negative economic conditionsgenerally and disruptions in credit and capital markets, including specific impacts of these conditions on thetelecommunications industry. In light of these factors investors are advised not to rely on forward-lookingstatements in deciding whether to buy, sell or hold the company’s securities. The company undertakes noobligation to revise or update these forward-looking statements to reflect events or circumstances after today or toreflect the occurrence of unanticipated events.MEDIA CONTACT: George Stenitzer, +1.630.798.3800, george.stenitzer@tellabs.comINVESTOR CONTACT: Tom Scottino, +1.630.798.3602, tom.scottino@tellabs.comTellabs ® and® are trademarks of Tellabs or its affiliates in the United States and/or other countries. Anyother company or product names mentioned herein may be trademarks of their respective companies.
TELLABS, INC.CONSOLIDATED STATEMENTS OF OPERATIONSFourth QuarterYearIn millions, except per-share data 12/31/10 1/1/10 12/31/10 1/1/10UnauditedUnauditedRevenueProducts $ 350.3 $ 324.6 $ 1,400.0 $ 1,295.4Services 60.2 64.7 242.3 230.3Total revenue 410.5 389.3 1,642.3 1,525.7Cost of RevenueProducts 212.4 170.5 689.3 709.2Services 42.3 42.6 163.4 150.7Total cost of revenue 254.7 213.1 852.7 859.9Gross Profit 155.8 176.2 789.6 665.8Gross profit as a percentage of revenue 38.0% 45.3% 48.1% 43.6%Gross profit as a percentage of revenue - products 39.4% 47.5% 50.8% 45.3%Gross profit as a percentage of revenue - services 29.7% 34.2% 32.6% 34.6%Operating ExpensesResearch and development 82.9 67.1 299.7 268.7Sales and marketing 46.8 42.0 179.3 165.9General and administrative 26.7 24.8 100.4 101.4Intangible asset amortization 6.1 6.6 27.0 24.6Restructuring and other charges - 0.6 9.5 11.7Total operating expenses 162.5 141.1 615.9 572.3Operating (Loss) Earnings (6.7) 35.1 173.7 93.5Operating (loss) earnings as a percentage of revenue -1.6% 9.0% 10.6% 6.1%Other (Expense) IncomeInterest income, net 3.4 4.5 12.6 19.3Other (expense) income, net (4.5) (0.9) 5.2 0.4Total other (expense) income (1.1) 3.6 17.8 19.7(Loss) Earnings Before Income Tax (7.8) 38.7 191.5 113.2Income tax (expense) benefit (3.1) 23.4 (35.9) 0.4Net (Loss) Earnings $ (10.9) $ 62.1 $ 155.6 $ 113.6Weighted Average Shares OutstandingBasic 365.9 385.5 378.1 392.5Diluted 365.9 387.9 382.7 394.2Net (Loss) Earnings Per ShareBasic $ (0.03) $ 0.16 $ 0.41 $ 0.29Diluted $ (0.03) $ 0.16 $ 0.41 $ 0.29Cash Dividends Per Share $ 0.02 $ -$ 0.08 $ -
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Tellabs Financial Performance: 4th Quarter Earnings 2010

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