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
[email protected]
 

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.