SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 23, 1997
TELLABS, INC.
(Exact name of registrant as specified in charter)
Delaware 0-9692 36-3831568
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
4951 Indiana Avenue, Lisle, Illinois 60532
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (630) 378-8800
N/A
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
Tellabs, Inc. (the "Company") issued a letter to stockholders
through the Company's website at www.tellabs.com discussing second
quarter results. A copy of this letter is attached hereto as Exhibit
20.2 and incorporated herein by reference.
Also attached hereto as Exhibit 20.3 is a copy of the Company's
1997 second quarter news release, which is incorporated into Exhibit
20.2.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(c) Exhibits
Exhibit 20.2 - Letter to Stockholders for Second Quarter
(including graphs depicting comparisons of the Company's gross
profit margin, book value per share, and return on equity for
fiscal years 1993 - 1996 and year-to-date results for 1997 which
have been omitted from this filing).
Exhibit 20.3 - 1997 Second Quarter News Release
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 hereunto duly authorized.
TELLABS, INC.
July 23, 1997 s\ J. Peter Johnson
----------------
J. Peter Johnson
Vice President, Controller
and Chief Accounting Officer
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Exhibit 20.2
Fellow Stockholders July 18, 1997
Earlier this week, Tellabs reported its second quarter and
mid-year financial results, and as has been the case for quite
some time now, they were very positive. I would like to share
with you some of the things associated with our recent
performance in this letter.
Before addressing such things, however, a bit of rationale is
appropriate. If you have been a stockholder of ours for more
than a year or so, you may have noticed that you haven't
received printed quarterly reports of financials from us--or
perhaps you didn't notice! Believing that the timeliness of
printed reports reaching stockholders was questionable at best,
we stopped mailing quarterly reports for a little over a year.
Nowadays, however, the availability and ubiquity of electronic
communication via the internet, one of the acknowledged drivers
of our growth for some time now, provides a way of dealing with
information in a far more timely manner, and at modest expense.
We thus resume the distribution of quarterly reports, albeit in
a rather different medium than heretofore.
Tellabs' second quarter ended on June 27 with sales of $292.7
million, our highest quarterly sales total ever. A year ago, we
reported second quarter sales of $189.5 million. Sales for the
first half of the year also set records, amounting to $539.8
million, an increase of 49 percent over sales during the first
half of last year of $361.7 million.
Net income for the second quarter amounted to $58.8 million--not
a record, but very close to one. Tellabs reported a loss in the
second quarter last year, the result of a write-down of
in-process R&D expenses associated with an acquisition during
that quarter. Excluding the effect of that write-off, net income
for the quarter just ended was up just under 66 percent from
that of last year. Net income for the first six months of this
year amounted to $121.8 million. (This includes an after-tax
gain of $13.9 million on the sale during the first quarter of
stock held as an investment.) If we exclude both the effects of
the write-off and the stock sale, first half earnings this year
increased 62 percent over those for 1996. On a per-share basis,
second quarter earnings were 32 cents this year and--again
excluding the write-off--19 cents last year. For the six-month
period, earnings per share this year were 66 cents (7 cents of
which resulted from the stock sale) and an "adjusted" 36 cents
last year.
As has been the case for quite some time now, sales of our flagship
TITAN (a registered trademark of Tellabs Operations, Inc.) 5500 digital
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cross-connect system were the primary driver of revenue, amounting to
just under $150 million in revenue during the quarter. Such systems
continue to be a very efficient way to provision, route and groom
telecommunications services throughout North America, and as the
telecommunications infrastructure continues to expand to meet growing
service demands, the need for such capability continues to grow. In
parts of the world outside North America, and particularly in Europe,
our MartisDXX (a trademark of Tellabs Oy) digital multiplexer continues
to be in demand, primarily for cellular and business data applications,
accounting for continuing growth in those markets. Echo cancellers,
too, continue to exhibit significant sales growth. These three product
areas now account for most of our revenue.
As one might expect, the significant growth we have experienced
during the past few years has put some pressure on our
facilities and infrastructure. We have begun to deal with that
in a variety of ways. One is with new construction, including a
sizable addition to our facility in Bolingbrook, Illinois, where
we recently began occupying manufacturing space that more than
doubles our capacity there. Adjacent office and laboratory
space will be available for occupancy in the addition later this
year. We are in the process of constructing a
150,000-square-foot manufacturing and product development
facility in Helsinki, Finland, that will be available for
occupancy early next year, and on June 30, we "turned the sod"
for a new 130,000-square-foot office and manufacturing facility
in Shannon, Ireland, scheduled for completion next year. These
new facilities are all part of our commitment to satisfying
needs of our customers in real time anywhere in the world.
Early in the second quarter we added a significant component to
our management team in the person of John Vaughan, who joined us
as president of Tellabs International. John comes to us from our
local service provider, Ameritech, where he was most recently
corporate vice president of business unit development and
strategy. John takes over the international reins from Peter
Guglielmi, who for some time now has been responsible for
"International" as well as serving as our chief financial
officer. The addition of John to our strategic management team
and to the international organization is a significant step for
us.
The second half of 1997 promises to be as exciting and demanding as any
we've seen. Several new products will emerge from development, most
notably a hardware and software extension to the TITAN 5500 system that
will add optical ring management capability and SONET traffic management
features to an already rich feature set. We also anticipate increased
activity in the CABLESPAN (a registered trademark of Tellabs Operations,
Inc.) product area as new features and real service demands are, at
long last, now on the threshold. Prominent feature additions to both
the MartisDXX and the echo canceller product lines are also in the
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offing later this year, and even more next year, in keeping with our
plan to maintain the attractiveness of these products well into the next
century.
We continue to be optimistic about the future of telecommunications, and
of course about our prospects for growth in this robust and challenging
industry. Thanks for looking in on us via the web, and for sharing some
of the excitement with us.
Sincerely,
s\ Michael J. Birck
- -----------------------
Michael J. Birck
Chief Executive Officer
Second Quarter Earnings Release (website link to this information which
is attached hereto as Exhibit 20.3)
Results of Operations
Condensed Consolidated Balance Sheet
Common Stock Market Data
Tellabs' common stock is listed on The Nasdaq Stock Market under
the symbol TLAB and appears in most daily newspaper stock tables
as Telabs. At February 17, 1997, there were approximately 3,035
stockholders of record. Tellabs is a component of the Nasdaq-100
Index and the Standard & Poor's 500 Index.
10-K Report
Stockholders may obtain without charge a copy of the Tellabs 1996
Form 10-K as filed with the Securities and Exchange Commission upon
request to:
Secretary
Tellabs, Inc.
4951 Indiana Avenue
Lisle, Illinois 60532 U.S.A.
Edgar Archives
For Tellabs investor relations contact:
Tom Scottino
1.630.378.7504
[email protected]
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Except for historical information, the matters discussed or
incorporated by reference in this letter are forward-looking
statements that involve risks and uncertainties associated with
competition, market growth, customer acceptance and timely
availability of products and features, as well as other risks
that may be detailed from time to time in the company's filings
with the Securities and Exchange Commission. Tellabs' actual
future results could differ materially from those discussed
here. The company undertakes no obligation to revise or update
these forward-looking statements to reflect events or
circumstances or to reflect the occurrence of unanticipated
events.
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NEWS RELEASE EXHIBIT 20.3
FOR IMMEDIATE RELEASE CONTACT: Peter A. Guglielmi
07/14/97 (630) 378- 6111
TELLABS REPORTS RECORD SALES AND HIGHER EARNINGS
FOR SECOND QUARTER AND FIRST HALF OF 1997
Lisle, Ill. -- Telecommunications equipment manufacturer Tellabs, Inc.,
announced Monday record sales and higher earnings for the second quarter
and the first half of 1997.
Sales for the second quarter, ended June 27, were $292,701,000, higher
than any previous quarter in the company's history and up 54.5 percent
over sales of $189,473,000 in the similar period of 1996. This marks
the 24th consecutive quarter in which Tellabs' sales surpassed
prior-year levels. Sales for the first six months of the year were a
record $539,824,000, up 49.2 percent compared with sales of $361,729,000
a year earlier.
Net income for the quarter was $58,761,000, versus a second quarter net
loss of $18,678,000 a year earlier when a $74,658,000 pre-tax write-off
of in-process R&D ($54,100,000 net of tax) was taken in connection with
an acquisition. Excluding the effect of the 1996 write-off, net income
for the second quarter of 1997 increased 65.9 percent from the second
quarter of 1996.
Net income for the first six months of 1997 (including a pre-tax gain of
$20,803,000 [$13,855,000 or 7 cents per share, after tax] on the sale of
stock held as an investment) was $121,848,000, up from $12,449,000 a
year earlier (including the effect of the write-off). Excluding the
effects of the 1996 write-off and the 1997 stock sale, net income for
the first half of 1997 increased 62.3 percent from the similar period in
1996.
Earnings per share of common stock for the second quarter of 1997 were
32 cents, compared to a loss of 10 cents per share (or, excluding the
effect of the write-off, earnings of 19 cents per share) for the second
quarter of 1996.
For the first six months of 1997, earnings per share were 66 cents (or
59 cents excluding the effect of the stock sale), compared with 7 cents
(or 36 cents excluding the write-off) a year earlier. (All per-share
amounts have been adjusted to reflect the effect of the two-for-one
stock split that occurred on November 15, 1996.)
"The second quarter followed a familiar pattern, as the company's
flagship products experienced robust sales growth," said Tellabs
President Michael J. Birck. "Our SONET-based TITAN (a registered
trademark of Tellabs Operations, Inc.) 5500 digital
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cross-connect system, the MartisDXX (a trademark of Tellabs Oy) system
and echo cancellers each set all-time, quarterly sales records.
Compared with last year's second quarter, TITAN 5500 sales increased
81.8 percent, MartisDXX sales grew 69.5 percent and echo canceller sales
were up 88.9 percent."
Late in the quarter, Tellabs broke ground for a new 130,000-square-foot
facility in Shannon, Ireland. The expansion of the company's Irish
operation is focused on the design, development and manufacture of
advanced telecommunications products. The new facility is scheduled to
open in mid-1998.
Tellabs designs, manufactures, markets and services voice and data
transport and network access systems. The company's products are used
worldwide by the providers of communications services. Tellabs stock is
listed on the NASDAQ stock market (TLAB).
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TELLABS, INC.
RESULTS OF OPERATIONS
(Dollars in thousands, except per-share data)
(Unaudited)
Three Months Ended Six Months Ended
06/27/97 06/28/97 06/27/97 06/28/97
--------- --------- --------- --------
Net Sales $292,701 $189,473 $539,824 $361,729
Cost of Goods Sold 111,445 77,158 206,865 151,640
--------- --------- --------- --------
Gross Profit 181,256 112,315 332,959 210,089
Operating Exp.
Mktg. & G.A. 55,850 39,264 101,424 72,877
Research & Dev. 37,532 24,890 70,768 46,492
Acquired R&D Write-off --- 74,658 --- 74,658
Goodwill Amort. 1,517 706 3,023 1,317
--------- --------- --------- --------
Total Oper. Exp. 94,899 139,518 175,215 195,344
Oper. Profit (Loss) 86,357 (27,203) 157,744 14,745
Interest/Other-Net 3,537 1,234 26,875 3,753
--------- --------- --------- --------
Profit (Loss) Before Tax 89,894 (25,969) 184,619 18,498
Income Taxes (Benefit) 31,133 (7,291) 62,771 6,049
--------- --------- --------- --------
Net Profit (Loss) $58,761 ($18,678) $121,848 $12,449
========= ========= ========= ========
Earnings (Loss) per Share $0.32 ($0.10) $0.66 $0.07
========= ========= ========= ========
Average Number of Shares
of Common Stock Outstanding 186,356 184,284 186,006 184,162
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TELLABS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
(Unaudited)
1997 1997 1996
2nd Qtr. 1st Qtr. Year End
Assets --------- --------- --------
Current Assets
Cash and investments $427,295 $329,452 $226,867
Accounts receivable, less allowance 171,126 161,870 167,928
Inventories 85,665 80,926 78,519
Other current assets 2,246 1,003 2,150
--------- --------- --------
Total Current Assets 686,332 573,251 475,464
Property, Plant, and Equipment 294,840 277,033 267,014
Less accumulated depreciation (114,278) (109,069) (104,254
--------- --------- --------
180,562 167,964 162,760
Goodwill 65,749 68,206 64,785
Other Assets 41,398 36,079 40,814
--------- --------- --------
Total Assets $974,041 $845,500 $743,823
========= ========= ========
Liabilities
Current Liabilities
Accounts payable $44,479 $37,947 $36,931
Accrued liabilities 98,912 70,783 71,258
Income taxes 24,646 34,190 23,435
--------- --------- --------
Total Current Liabilities 168,037 142,920 131,624
Long-Term Debt 4,083 4,115 2,850
Other Long-Term Liabilities 12,741 12,676 10,964
Deferred Income Taxes 5,869 6,334 7,109
--------- --------- --------
Total Liabilities 190,730 166,045 152,547
Stockholders' Equity
Common Stock, $.01 Par Value 1,810 1,804 1,797
Additional Paid-In Capital 114,689 106,043 94,854
Cumulative Translation Adjustment (18,000) (11,912) 3,937
Unrealized Holding Gains on Securities 93,827 51,296 21,551
Retained Earnings 590,985 532,224 469,137
--------- --------- --------
Total Stockholders' Equity 783,311 679,455 591,276
--------- --------- --------
Total Liab. & Stockholders' Equity $974,041 $845,500 $743,823
========= ========= ========
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