Tellabs Reports First-Quarter Earnings Results
Company Announces Plan to Align Expenses With Revenue and Exit SALIX(R)
Product Line
Apr 18, 2001, 01:00 ET from Tellabs
LISLE, Ill., April 18 /PRNewswire/ -- Tellabs today announced first-
quarter sales of $772 million, up 21% from $639 million a year ago, driven by
demand for Tellabs' core optical networking products. First-quarter net income
amounted to $123 million, up 13%, from $108 million a year ago and diluted
earnings per share were 29 cents, up 12% from last year (all comparisons to
prior year in this release refer to the attached pro forma results of
operations).
In light of reduced and deferred spending by major communications
carriers, Tellabs will realign its cost structure with its current
expectations for lower revenue growth. The company will further reduce
discretionary spending, eliminate salary increases this year, institute a pay-
cut for all corporate officers, align manufacturing capability with demand
expectations, and terminate the SALIX next-generation-switching product
effort.
As a result, the company will take a restructuring and other one-time
charges in the second quarter for costs associated with reducing its workforce
by about 550 people, consolidation of excess facilities, related fixed asset
disposals, asset impairment and excess inventory. Tellabs also eliminated 450
temporary or contract positions during the quarter and will not fill 1,100
open positions. Total charges are expected to be in the range of $150 million
to $225 million. On an annualized basis, the workforce-related actions are
expected to reduce Tellabs' overall cost structure by approximately 5% to 6%.
Tellabs now expects 2001 revenues of $3.6 billion to $3.7 billion; 2001
earnings per share are now expected to range between $1.55 and $1.65,
excluding the goodwill from the Future Networks Inc. acquisition.
"These actions are unfortunate because they affect a lot of talented
people," said Tellabs President and CEO Richard C. Notebaert. "By paring back
our efforts in next-generation switching, we are aligning with our customers'
priorities and strengthening our initiatives in high-growth areas such as
optical networking. Despite the current challenges, I am as confident as ever
in Tellabs' long-term prospects and our ability to deliver strong revenue and
earnings growth in the future."
Optical Networking -- For the first quarter 2001, sales of optical
networking equipment rose 22% to $482 million. During the quarter, Tellabs
shipped 3 million DS-1-equivalent ports of TITAN 5000 series optical
networking products and continued to ship its new TITAN(R) 6000 series
products for customer deployment.
Broadband Access -- Sales of broadband access products amounted to
$153 million, which was consistent with last year's quarter. Sales of the
managed digital network product line posted year-over-year improvement, which
offset slower sales from the CABLESPAN(R) product line. During the quarter,
Tellabs completed its acquisition of Future Networks Inc., a leader in
standards-based voice and data modem technology, which enables Tellabs to
provide cable operators with a complete solution for cable-data modem and
voice-over-IP services.
Voice Quality Enhancement -- Sales in the voice-quality-enhancement market
amounted to $33 million, compared with $54 million last year. During the
quarter, Tellabs announced voice-quality enhancement contracts with major
carriers such as Globtel and KPN International Network Services.
Services and Solutions -- Building on growth in its core optical
networking business, Services and Solutions revenues increased 160%, to
$104 million in the first quarter of 2001.
Simultaneous Webcast and Teleconference Replay -- Tellabs will host a
teleconference at 7:30 a.m. Central Time on Wednesday, April 18, to discuss
first-quarter 2001 results. Internet users can hear a simultaneous live
webcast of the teleconference at www.tellabs.com . A taped replay of the call
will be available for 48 hours, beginning at 9:30 a.m. Central Time, at
800-633-8284. (Outside the United States, call 858-812-6440.) When prompted,
enter the Tellabs reservation number: 18414716.
In 80 countries around the globe, Tellabs helps the world's leading
communications service providers build tomorrow's converged networks of voice,
data and video. Tellabs' employees design, build and service optical
networking, broadband access and voice-quality enhancement equipment. Today,
most telephone calls and Internet sessions in the United States flow through
equipment from Tellabs (Nasdaq: TLAB) ( www.tellabs.com ).
Forward-Looking Statements -- This news release contains forward-looking
statements that involve risks and uncertainties. Actual results may differ
from the results discussed in the forward-looking statements. Factors that
might cause such a difference include, but are not limited to, risks
associated with introducing new products, entering new markets, availability
of resources, competitive response, and economic changes impacting the
telecommunications industry. The company undertakes no obligation to revise or
update these forward-looking statements to reflect events or circumstances
after today or to reflect the occurrence of unanticipated events. For a more
detailed description of the risk factors, please refer to the company's SEC
filings.
Tellabs, the Tellabs logo, TITAN, CABLESPAN, and SALIX are registered
trademarks of Tellabs or one of its affiliates in the United States and/or
other countries.
TELLABS, INC.
Results of Operations
(Amounts in thousands, except per-share data)
(Unaudited)
Three Months Ended
03/30/01 03/31/00
Net Sales $772,108 $631,285
Cost of Goods Sold 366,202 299,094
Gross Profit 405,906 332,191
Operating Exp.
Marketing & G.A. 111,060 86,966
Research & Development 127,604 93,020
Merger Costs --- 5,760
Goodwill Amortization 4,505 3,015
Total Operating Expenses 243,169 188,761
Operating Profit 162,737 143,430
Interest/Other-Net 16,105 37,771
Profit Before Tax 178,842 181,201
Income Taxes 56,335 60,690
Net Profit Before Cum. Effect 122,507 120,511
Cumulative Effect of Change In
Acctg. Principle (Net of Tax) --- (29,161)
Profit After Cum. Effect $122,507 $91,350
Earnings per Share Before
Cumulative Effect
Basic $0.30 $0.29
Diluted $0.29 $0.29
Cumulative Effect per Share
Basic --- $0.07
Diluted --- $0.07
Earnings per Share
Basic $0.30 $0.22
Diluted $0.29 $0.22
Average Number of Shares
of Common Stock Outstanding
Basic 408,771 408,794
Diluted 416,282 418,909
TELLABS, INC.
Pro Forma Results of Operations
(Amounts in thousands, except per-share data)
(Unaudited)
Three Months Ended
03/30/01 03/31/00*
Net Sales $772,108 $639,490
Cost of Goods Sold 366,202 307,916
Gross Profit 405,906 331,574
Operating Exp.(A)
Marketing & G.A. 111,060 86,966
Research & Development 127,604 93,020
Goodwill Amortization 4,505 3,015
Total Operating Expenses 243,169 183,001
Operating Profit 162,737 148,573
Interest/Other-Net(B) 16,105 14,022
Profit Before Tax 178,842 162,595
Income Taxes 56,335 54,469
Net Profit $122,507 $108,126
Earnings per Share
Basic $0.30 $0.26
Diluted $0.29 $0.26
Average Number of Shares
of Common Stock Outstanding
Basic 408,771 408,794
Diluted 416,282 418,909
Pro-forma Adjustments
* Year 2000 results of operations are not restated to reflect the
adoption of the Securities Exchange Commission's Staff Accounting
Bulletin No. 101.
(A) 2000 results exclude a pre-tax charge of $5.8 million ($0.01 per
diluted share) related to the merger with SALIX Technologies, Inc.
(B) 2000 results exclude a pre-tax gain of $19.2 million ($0.03 per
diluted share) on the sale of stock held as an investment and a
pre-tax gain of $4.6 million ($0.01 per diluted share) on a
distribution from one of the Company's technology investments.
TELLABS, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
2001 2000
First Quarter Year End
Assets
Current Assets
Cash and investments $1,019,064 $1,022,347
Accounts receivable, less allowance 594,936 802,546
Inventories 533,941 428,255
Other current assets 54,965 69,331
Total Current Assets 2,202,906 2,322,479
Property, Plant and Equipment 814,525 756,895
Accumulated depreciation (311,510) (296,134)
503,015 460,761
Goodwill 167,303 73,924
Other Assets 213,176 215,903
Total Assets $3,086,400 $3,073,067
Liabilities
Current Liabilities
Accounts payable $136,503 $155,006
Accrued liabilities 119,953 164,045
Income taxes 46,769 93,294
Total Current Liabilities 303,225 412,345
Long-Term Debt 2,850 2,850
Other Long-Term Liabilities 26,938 24,221
Deferred Income Taxes 925 6,067
Total Liabilities 333,938 445,483
Stockholders' Equity
Common Stock, $.01 Par Value 4,122 4,112
Additional Paid-In Capital 472,809 441,909
Treasury Stock (126,476) (126,476)
Cumulative Translation Adjustment (154,255) (127,018)
Unrealized Holding (Losses) Gains on Securities (4,861) (3,559)
Retained Earnings 2,561,123 2,438,616
Total Stockholders' Equity 2,752,462 2,627,584
Total Liab. & Stockholders' Equity $3,086,400 $3,073,067
SOURCE Tellabs
LISLE, Ill., April 18 /PRNewswire/ -- Tellabs today announced first-
quarter sales of $772 million, up 21% from $639 million a year ago, driven by
demand for Tellabs' core optical networking products. First-quarter net income
amounted to $123 million, up 13%, from $108 million a year ago and diluted
earnings per share were 29 cents, up 12% from last year (all comparisons to
prior year in this release refer to the attached pro forma results of
operations).
In light of reduced and deferred spending by major communications
carriers, Tellabs will realign its cost structure with its current
expectations for lower revenue growth. The company will further reduce
discretionary spending, eliminate salary increases this year, institute a pay-
cut for all corporate officers, align manufacturing capability with demand
expectations, and terminate the SALIX next-generation-switching product
effort.
As a result, the company will take a restructuring and other one-time
charges in the second quarter for costs associated with reducing its workforce
by about 550 people, consolidation of excess facilities, related fixed asset
disposals, asset impairment and excess inventory. Tellabs also eliminated 450
temporary or contract positions during the quarter and will not fill 1,100
open positions. Total charges are expected to be in the range of $150 million
to $225 million. On an annualized basis, the workforce-related actions are
expected to reduce Tellabs' overall cost structure by approximately 5% to 6%.
Tellabs now expects 2001 revenues of $3.6 billion to $3.7 billion; 2001
earnings per share are now expected to range between $1.55 and $1.65,
excluding the goodwill from the Future Networks Inc. acquisition.
"These actions are unfortunate because they affect a lot of talented
people," said Tellabs President and CEO Richard C. Notebaert. "By paring back
our efforts in next-generation switching, we are aligning with our customers'
priorities and strengthening our initiatives in high-growth areas such as
optical networking. Despite the current challenges, I am as confident as ever
in Tellabs' long-term prospects and our ability to deliver strong revenue and
earnings growth in the future."
Optical Networking -- For the first quarter 2001, sales of optical
networking equipment rose 22% to $482 million. During the quarter, Tellabs
shipped 3 million DS-1-equivalent ports of TITAN 5000 series optical
networking products and continued to ship its new TITAN(R) 6000 series
products for customer deployment.
Broadband Access -- Sales of broadband access products amounted to
$153 million, which was consistent with last year's quarter. Sales of the
managed digital network product line posted year-over-year improvement, which
offset slower sales from the CABLESPAN(R) product line. During the quarter,
Tellabs completed its acquisition of Future Networks Inc., a leader in
standards-based voice and data modem technology, which enables Tellabs to
provide cable operators with a complete solution for cable-data modem and
voice-over-IP services.
Voice Quality Enhancement -- Sales in the voice-quality-enhancement market
amounted to $33 million, compared with $54 million last year. During the
quarter, Tellabs announced voice-quality enhancement contracts with major
carriers such as Globtel and KPN International Network Services.
Services and Solutions -- Building on growth in its core optical
networking business, Services and Solutions revenues increased 160%, to
$104 million in the first quarter of 2001.
Simultaneous Webcast and Teleconference Replay -- Tellabs will host a
teleconference at 7:30 a.m. Central Time on Wednesday, April 18, to discuss
first-quarter 2001 results. Internet users can hear a simultaneous live
webcast of the teleconference at www.tellabs.com . A taped replay of the call
will be available for 48 hours, beginning at 9:30 a.m. Central Time, at
800-633-8284. (Outside the United States, call 858-812-6440.) When prompted,
enter the Tellabs reservation number: 18414716.
In 80 countries around the globe, Tellabs helps the world's leading
communications service providers build tomorrow's converged networks of voice,
data and video. Tellabs' employees design, build and service optical
networking, broadband access and voice-quality enhancement equipment. Today,
most telephone calls and Internet sessions in the United States flow through
equipment from Tellabs (Nasdaq: TLAB) ( www.tellabs.com ).
Forward-Looking Statements -- This news release contains forward-looking
statements that involve risks and uncertainties. Actual results may differ
from the results discussed in the forward-looking statements. Factors that
might cause such a difference include, but are not limited to, risks
associated with introducing new products, entering new markets, availability
of resources, competitive response, and economic changes impacting the
telecommunications industry. The company undertakes no obligation to revise or
update these forward-looking statements to reflect events or circumstances
after today or to reflect the occurrence of unanticipated events. For a more
detailed description of the risk factors, please refer to the company's SEC
filings.
Tellabs, the Tellabs logo, TITAN, CABLESPAN, and SALIX are registered
trademarks of Tellabs or one of its affiliates in the United States and/or
other countries.
TELLABS, INC.
Results of Operations
(Amounts in thousands, except per-share data)
(Unaudited)
Three Months Ended
03/30/01 03/31/00
Net Sales $772,108 $631,285
Cost of Goods Sold 366,202 299,094
Gross Profit 405,906 332,191
Operating Exp.
Marketing & G.A. 111,060 86,966
Research & Development 127,604 93,020
Merger Costs --- 5,760
Goodwill Amortization 4,505 3,015
Total Operating Expenses 243,169 188,761
Operating Profit 162,737 143,430
Interest/Other-Net 16,105 37,771
Profit Before Tax 178,842 181,201
Income Taxes 56,335 60,690
Net Profit Before Cum. Effect 122,507 120,511
Cumulative Effect of Change In
Acctg. Principle (Net of Tax) --- (29,161)
Profit After Cum. Effect $122,507 $91,350
Earnings per Share Before
Cumulative Effect
Basic $0.30 $0.29
Diluted $0.29 $0.29
Cumulative Effect per Share
Basic --- $0.07
Diluted --- $0.07
Earnings per Share
Basic $0.30 $0.22
Diluted $0.29 $0.22
Average Number of Shares
of Common Stock Outstanding
Basic 408,771 408,794
Diluted 416,282 418,909
TELLABS, INC.
Pro Forma Results of Operations
(Amounts in thousands, except per-share data)
(Unaudited)
Three Months Ended
03/30/01 03/31/00*
Net Sales $772,108 $639,490
Cost of Goods Sold 366,202 307,916
Gross Profit 405,906 331,574
Operating Exp.(A)
Marketing & G.A. 111,060 86,966
Research & Development 127,604 93,020
Goodwill Amortization 4,505 3,015
Total Operating Expenses 243,169 183,001
Operating Profit 162,737 148,573
Interest/Other-Net(B) 16,105 14,022
Profit Before Tax 178,842 162,595
Income Taxes 56,335 54,469
Net Profit $122,507 $108,126
Earnings per Share
Basic $0.30 $0.26
Diluted $0.29 $0.26
Average Number of Shares
of Common Stock Outstanding
Basic 408,771 408,794
Diluted 416,282 418,909
Pro-forma Adjustments
* Year 2000 results of operations are not restated to reflect the
adoption of the Securities Exchange Commission's Staff Accounting
Bulletin No. 101.
(A) 2000 results exclude a pre-tax charge of $5.8 million ($0.01 per
diluted share) related to the merger with SALIX Technologies, Inc.
(B) 2000 results exclude a pre-tax gain of $19.2 million ($0.03 per
diluted share) on the sale of stock held as an investment and a
pre-tax gain of $4.6 million ($0.01 per diluted share) on a
distribution from one of the Company's technology investments.
TELLABS, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
2001 2000
First Quarter Year End
Assets
Current Assets
Cash and investments $1,019,064 $1,022,347
Accounts receivable, less allowance 594,936 802,546
Inventories 533,941 428,255
Other current assets 54,965 69,331
Total Current Assets 2,202,906 2,322,479
Property, Plant and Equipment 814,525 756,895
Accumulated depreciation (311,510) (296,134)
503,015 460,761
Goodwill 167,303 73,924
Other Assets 213,176 215,903
Total Assets $3,086,400 $3,073,067
Liabilities
Current Liabilities
Accounts payable $136,503 $155,006
Accrued liabilities 119,953 164,045
Income taxes 46,769 93,294
Total Current Liabilities 303,225 412,345
Long-Term Debt 2,850 2,850
Other Long-Term Liabilities 26,938 24,221
Deferred Income Taxes 925 6,067
Total Liabilities 333,938 445,483
Stockholders' Equity
Common Stock, $.01 Par Value 4,122 4,112
Additional Paid-In Capital 472,809 441,909
Treasury Stock (126,476) (126,476)
Cumulative Translation Adjustment (154,255) (127,018)
Unrealized Holding (Losses) Gains on Securities (4,861) (3,559)
Retained Earnings 2,561,123 2,438,616
Total Stockholders' Equity 2,752,462 2,627,584
Total Liab. & Stockholders' Equity $3,086,400 $3,073,067
SOURCE Tellabs
Share this article