| (In millions, exceptper share data)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 2001Reported | Restructuringand Other Charges | Non-ComparableItems1 | 2001Pro Forma | 2000Reported | Non-ComparableItems2 | 2000Pro Forma |
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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         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| Net sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $2,199.7     | $   (6.2)       | —               | $2,205.9      | $3,387.4     | —               | $3,387.4      |
| Cost of goods sold1,436.5250.2—1,186.31,552.0—1,552.0Gross margin763.2(256.4)—1,019.61,835.4—1,835.4Operating expenses1,042.6192.3—850.3840.4$    5.8834.6Operating margin(279.4)(448.7)—169.3995.0(5.8)1,000.8Other income34.6—$  (13.1)47.7114.453.061.4Earnings (loss)  before taxes(244.8)(448.7)(13.1)217.01,109.447.21,062.2Net earnings  (loss) before  cumulative effect(182.0)(321.6)(9.0)148.6760.031.9728.1Cumulative effect, net————(29.2)—(29.2)Net earnings$(182.0)$(321.6)$   (9.0)$ 148.6$ 730.8$   31.9$ 698.9Diluted EPS$  (0.44)$  (0.79)$ (0.02)$   0.36$   1.75$   0.08$   1.67Diluted shares409.6409.6413.8413.8418.4418.4418.41 2001 other income included a pre-tax loss of $25.9 million ($17.8 million, after-tax, or $0.04 per diluted share) related to the impairment write-down and subsequent sale of certain preferred and common stock investments and a pre-tax gain of $12.8 million ($8.8 million, after-tax, or $0.02 per diluted share) from the sale of stock held as an investment.2 2000 operating expenses included a pre-tax charge of $5.8 million related to the SALIX merger ($3.8 million, after-tax, or $0.01 per diluted share).  2000 other income included a pre-tax gain of $39.8 million on the sale of stock held as an investment ($26.9 million, after-tax, or $0.06 per diluted share) and a pre-tax gain of $13.2 million related to distributions from the Company’s technology investments ($8.8 million, after-tax, or $0.02 per diluted share).    2001 net sales totaled $2,205.9 million, a decrease of 34.9% compared with 2000 net sales levels.  The primary driver behind the decrease in net sales was the slowdown in capital spending by the major telecommunications carriers, described above.  Net product sales in 2001 were down 39.6% to $1,878.4 million compared with $3,110.7 million in 2000, mainly due to lower sales of the Company’s optical networking products.  Optical networking products sales for 2001 totaled $1,202.8 million compared with $2,153.4 million in 2000.  Lower sales of the Company’s TITAN 5500/5500S and TITAN 532L digital cross-connect systems were the primary contributors to the overall shortfall in optical networking products revenue.  During 2001, Tellabs recognized first revenues from sales of the new entrants to the Company’s optical networking product portfolio, the TITAN 6500 MTS and the TITAN 6100 OTS, which accounted for approximately 4% of overall sales and partially mitigated the overall decline experienced from the slowdown in carrier spending.  Broadband access product sales for 2001 totaled $538.0 million compared with $763.2 million in 2000.  The 29.5% decline in broadband access products sales was the result of a combination of lower CABLESPAN® 2300 universal telephony distribution system sales and lower MartisDXX® managed access and transport system sales, which offset gains during the year in sales of the Company’s FOCUSTM international-standard optical products.   Sales of Tellabs voice-quality enhancement products totaled $137.6 million for 2001, down 29.1% due in large part to lower sales of echo cancellation products.    Net services and other revenues for 2001 totaled $327.5 million compared with $276.7 million for 2000.  Net services and other revenues were generated from the Company’s services and solutions area, which provides a variety of professional services to customers, including the installation and testing of the Company’s products.  The 18.4% growth was mainly a function of the completion of installation and testing services in 2001 related to the record fourth quarter 2000 sales of the Company’s optical networking products.    Sales within the United States for 2001 decreased 36.0% compared with 2000 and accounted for approximately 76.4% of total sales.  Sales outside the United States decreased 31.0% compared with 2000 and accounted for approximately 23.6% of total sales.    Gross margin as a percentage of sales for 2001 was 46.2% compared with 54.2% for 2000.  Gross product margin as a percentage of sales for 2001 totaled 51.2% compared with 58.6% for 2000.  The decrease in gross product margin as a percentage of sales for 2001 was due to a variety of factors including:- a shift in overall product mix brought about by the abrupt slowdown in service provider spending, particularly in the United States, which had the greatest impact on the Company’s higher-margin optical networking products, and
- lower sales leverage of the Company’s relatively fixed manufacturing expenditures, particularly in the first part of 2001, due to the combination of the slowdown in service provider spending and the fact that the Company had initially structured its operations for a much higher revenue target in 2001.
    Services and other gross margin as a percentage of sales for 2001 was 17.7% compared with 4.8% in 2000.  The improvement was a function of both favorable expense leverage in 2001 due to the significant growth in net services and other revenues, and cost control efforts implemented in the Company’s professional services area.    Operating expenses for 2001 were $850.3 million compared with $834.6 million in 2000.  As a percentage of sales, operating expenses in 2001 were 38.5% compared with 24.6% in 2000.  Research and development expenditures for 2001 totaled $425.5 million compared with $415.2 million in 2000.  The growth in research and development spending was attributable to product development work on the two new optical networking products introduced in 2001, expenditures associated with the discontinued TITAN 6700 optical switch, and the inclusion of expenditures from Future Networks, Inc., which was acquired in February 2001 (for more information, see Note 5, “Business Combinations”).  The overall growth in research and development spending was partially offset by cost savings due to the discontinuation of the SALIX and NetCore next-generation switching initiative in April 2001.  As a percentage of sales, research and development spending was 19.3% in 2001 and 12.3% in 2000.  The increase in research and development spending as a percentage of sales was primarily a function of lower sales volume in 2001.    Selling, general and administrative expenditures for 2001 totaled $400.3 million compared with $407.8 million in 2000.  The reduction in selling, general and administrative spending was a direct byproduct of the Company’s 2001 restructuring efforts, coupled with the positive impact of stringent cost savings strategies implemented during the latter part of 2001.  These cost saving strategies included curtailing discretionary spending, generally eliminating salary increases, instituting an executive level pay reduction and eliminating Global Incentive Plan bonuses for the year.  These measures negated earlier spending growth that resulted from business infrastructure and staffing decisions made during the latter part of 2000 and early stages of 2001, based on the then-anticipated growth of the Company.  As a percentage of sales, selling, general and administrative spending for 2001 increased to 18.1% compared with 12.0% in 2000, due primarily to lower sales volume in 2001.    Total other income for 2001 amounted to $47.7 million compared with $61.4 million in 2000.  The reduction in total other income was mainly the result of lower interest income in 2001, which was the result of a combination of lower prevailing interest rates and lower short-term marketable securities levels, when compared to 2000.    The effective tax rate for both 2000 and 2001 was 31.5%.  Tellabs’ effective tax rate reflects the benefits of research and development tax credits and lower foreign tax rates, as compared with the United States federal statutory rate.**2000 Overview**Tellabs achieved record levels in sales, net earnings and earnings per share in 2000. Net sales for 2000, totaled $3,387.4 million compared with $2,322.4 million in the prior year.  The 45.9% increase in net sales was primarily the result of strong optical networking product sales.  During 2000, the Company added two new products to its optical networking product portfolio, the TITAN 6500 MTS and the TITAN 6100 OTS.  In addition, the Company announced a multiyear agreement to provide the TITAN 6500 system to a major carrier.  The Company also made important additions to its other product lines, with the release of the FOCUS 6200 DWDM platform and the VERITY 3000 high-density digital echo canceller.    In addition to the various product releases during 2000, Tellabs acquired SALIX Technologies, Inc. (“SALIX”), a developer of next-generation switching solutions, in a transaction accounted for as a pooling of interests.  As a result of the acquisition, the Company restated its results of operations, financial position and cash flows (for more information see Note 5, “Business Combinations”).    Gross margin as a percentage of sales for 2000 was 54.2% compared with 59.5% in 1999.  2000 gross margin was negatively impacted by higher component costs and a shift in product mix.    2000 operating expenses totaled $840.4 million compared with $650.5 million in 1999.  The growth in operating expenses was necessary to fund the Company’s new product development efforts and support the business infrastructure in place to meet the then-anticipated growth of the Company.  For an in-depth discussion of operating expenses see the, “2000 vs. 1999 Pro Forma Comparison” below.    Other income for 2000 totaled $114.5 million compared with $70.3 million in 1999.  The growth in other income resulted from a $20.6 million increase in interest income, along with $13.2 million in distributions from the Company’s technology investments.    During the fourth quarter of 2000, Tellabs implemented the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin No. 101 (“SAB 101”), “Revenue Recognition in Financial Statements” (for more information see Note 4, “Change in Accounting Principle”), which required the Company to align its revenue recognition policies with certain customer-specific contractual provisions. Adoption of SAB 101 was recorded as a change in accounting method by reporting the cumulative effect of the change to prior periods in the first period of 2000.  The cumulative effect of the change resulted in a charge to earnings of $29.2 million (net of income taxes of $13.4 million).    The Company’s effective tax rate for 2000 and 1999 remained consistent at 31.5%.  Net earnings for 2000 totaled $730.8 million ($1.75 per diluted share) compared with 1999 net earnings of $549.7 million ($1.32 per diluted share).**2000 vs. 1999 Pro Forma Comparison**There were a number of non-comparable events that took place during 2000 and 1999, which bear mentioning. Below is a table displaying the non-comparable items for 2000 and 1999 along with the adjusted financial results, excluding the adoption of SAB 101 and the non-comparable items.  In order to provide a more meaningful comparison of Tellabs’ results of operations, all subsequent discussions will be based on the pro forma results for 2000 and 1999, which exclude the impact of the adoption of SAB 101 and the impact of the non-comparable items.(In millions, exceptper share data)2000ReportedSAB 101Non-ComparableItems2000Pro Forma1999ReportedNon-ComparableItems1999Pro FormaSales$3,387.4$   58.8 $3,328.6$2,322.4 $2,322.4Cost of goods sold1,552.016.2 1,535.8940.1 940.1Gross Margin1,835.442.6 1,792.81,382.3 1,382.3Operating expenses1840.4 $    5.8834.6650.5$    1.9648.6Operating margin995.042.6(5.8)958.2td>(1.9)733.7Other income2114.4 53.061.470.336.933.4Earnings before taxes1,109.442.647.21,019.6802.135.0767.1Net earnings before  cumulative effect760.029.231.9698.9549.724.0525.7Cumulative effect, net(29.2)(29.2)—————Net earnings$730.8—$   31.9$ 698.9$ 549.7$   24.0$ 525.7Diluted EPS$  1.75—$  0.08$   1.67$   1.32$   0.06$   1.261Includes a pre-tax charge of $5.8 million ($3.8 million, after-tax, or $0.01 per diluted share) related to the SALIX acquisition in 2000. 1999 results include a pre-tax charge of $1.9 million ($1.3 million, after-tax) related to the acquisition of NetCore.22000 results include a pre-tax gain of $39.8 million ($26.9 million, after-tax, or $0.06 per diluted share) on the sale of stock held as an investment and a pre-tax gain of $13.2 million ($8.8 million, after-tax, or $0.02 per diluted share) related to distributions from the Company’s technology investments. 1999 results include a pre-tax gain of $36.9 million ($25.3 million, after-tax, or $0.06 per diluted share) on the sale of stock held as an investment.    Sales for 2000 totaled $3,328.6 million, an increase of 43.3% over 1999 sales of $2,322.4 million. The growth in overall sales was primarily attributable to increased sales of optical networking products. Sales of optical networking products were $2,107.9 million in 2000, a 54.1% increase compared with $1,367.5 million in 1999. The growth in optical networking product sales was a result of continued strong demand for the Company’s TITAN 5500/5500S and TITAN 532L digital cross-connect systems.    Broadband access products sales totaled $753.3 million in 2000 compared with $540.5 million in 1999. The 39.4% growth in broadband access products sales was due in large part to demand for the Company’s CABLESPAN 2300 system, coupled with the inclusion of a full year’s sales for the Company’s FOCUS international-standard optical products, obtained in the acquisition of Tellabs Denmark in the third quarter of 1999 (for more information, see Note 5, “Business Combinations”). Growth in broadband access product sales was partially offset by weaker sales of the Company’s MartisDXX managed access and transport system.    Voice-quality enhancement product sales fell to $191.4 million in 2000, a 28.4% decrease compared with $267.5 million in 1999. The decrease in voice-quality enhancement product sales was primarily attributable to lower sales of the Company’s digital echo cancellers.    Net services and other revenues totaled $276.7 million for 2000 compared to $146.9 million in 1999. The 88.4% increase was due to growth in the Company’s services and solutions revenue that resulted from strong optical networking products sales in 2000. Tellabs’ services and solutions area generates revenues from the installation and testing of the Company’s various products.    From a geographic standpoint, sales within the United States increased 57.8% and accounted for 77.4% of overall 2000 sales. Sales outside the United States increased 9.1% and accounted for 22.6% of overall sales.    Gross margin as a percentage of sales for 2000 was 53.9%, down 5.6 percentage points from 59.5% in 1999. The decline in gross margin as a percentage of sales can be attributed primarily to higher component costs in 2000, which resulted from shortages of certain parts, coupled with increased sales of lower margin products.    Operating expenses for 2000 were $834.6 million, compared with $648.6 million in 1999. As a percentage of sales, operating expenses declined to 25.1% in 2000, compared to 27.9% in 1999. Research and development expenditures were $415.2 million in 2000, compared to $312.3 million in 1999. The increase in research and development spending represents Tellabs’ continued commitment to design, develop and bring new product applications to market in a timely manner, along with the inclusion of expenditures for Tellabs Denmark, which was acquired in the third quarter of 1999. As a percentage of sales, research and development expenditures were 12.5% in 2000, compared with 13.4% in 1999.    Marketing, general and administrative expenditures totaled $407.8 million in 2000, compared with $329.1 million in 1999. The increase in marketing, general and administrative spending during 2000 reflects increased staffing and business infrastructure spending that was considered necessary to maintain the then-anticipated growth of the Company, along with the inclusion of Tellabs Denmark expenditures for a full year. As a percentage of sales, marketing, general and administrative expenditures were 12.3% in 2000, compared with 14.2% in 1999. This improvement reflects Tellabs’ continued efforts to focus on cost controls and to utilize cost-effective means to support the growth of the business.    Other income for 2000 totaled $61.4 million, compared with $33.4 million in 1999. The increase in other income was attributed primarily to both higher average cash balances being available in 2000, along with generally higher returns being earned on investments.    The effective tax rate for 2000 and 1999 was 31.5%. Overall, Tellabs’ 2000 and 1999 effective tax rates reflect the benefits of research and development tax credits and lower foreign tax rates, as compared with the U.S. federal statutory rate.**Liquidity and Capital Resources**Tellabs’ net working capital balance at December 28, 2001, was $1,625.1 million compared with $1,910.1 million at December 29, 2000.  The Company’s current ratio at December 28, 2001, was 6.1 to 1 compared with 5.6 to 1 at the end of 2000.    Tellabs’ principal source of liquidity was its cash and equivalents and short-term investments, which totaled $1,101.6 million at December 28, 2001, and $1,022.3 million at December 29, 2000.  The increase of $79.3 million was driven by net cash generated from operations of $419.3 million and from financing activities of $18.4 million, which was used to fund capital expenditures of $208.2 million and the purchase of FNI for a net $130.8 million, as well as to absorb the exchange rate effects on the Company’s cash position, which totaled $16.0 million.    The Company was able to generate operating cash flow of $419.3 million mainly as a result of its 2001 cash earnings of $340.0 million, which is defined as the net loss for the year adjusted for non-cash gains and charges, which principally included restructuring charges and depreciation and amortization.  The Company’s operating cash flow also benefited from a net inflow of $79.3 million from improvements in its financial position, brought about mainly as a result of strong accounts receivable collections of $424.7 million, which offset funding needs for income taxes, inventories and other liabilities and assets.    In addition, The Company generated net cash from its financing activities, primarily from the exercise of employee stock options, which totaled $20.9 million.  The net cash generated from operating and financing activities was used to fund the Company’s investing activities for $49.1 million.  The principal investing cash outflows resulted from capital purchases totaling $208.2 million and the acquisition of FNI, which required net funds of $130.8 million.  In addition, the Company liquidated a portion of its short-term investment portfolio for $289.9 million.  This ensured the Company had sufficient cash on hand to fund the Ocular Networks, Inc. acquisition, which was completed in January 2002, and required approximately $300 million in cash.    The balance of the Company’s accounts receivable, net of allowances, totaled $330.9 million at December 28, 2001, compared with $802.5 million at December 29, 2000.  The 58.8% reduction in accounts receivable was a function of strong collections of record fourth quarter 2000 receivables, coupled with improved collections and lower overall sales levels in 2001.  In addition, the Company increased its reserve for uncollectable accounts by $29.7 million, net of receivable write-offs of approximately $12.3 million, due to the downturn in the telecommunications industry and the overall weakness in the United States economy during 2001.    Days sales outstanding (“DSO”) at the end of 2001 was 64 days compared with 72 days in 2000.  The Company continues to strive to lower its DSO by focusing on improving its underlying worldwide billing and collection process.    The balance of net inventory at December 28, 2001, was $329.1 million compared with $428.3 million at December 29, 2000.  The lower inventory levels reflect $120.3 million of excess inventory reserves.  The reserves related mainly to excess CABLESPAN 2300 residential service units, inventory associated with the terminated SALIX and NetCore next-generation switching program and the discontinued TITAN 6700 and various excess components and common piece parts brought about by the general slowdown in the telecommunications industry.  Offsetting this was growth in inventory due to a build-up in materials to support the introduction of the Company’s new 6000 series of optical networking products.    The Company’s current deferred tax assets totaled $138.2 million at December 28, 2001, compared with $29.8 million at December 29, 2001.  The significant increase in the deferred tax assets was directly associated with the Company’s restructuring and other charges incurred during 2001, which are not yet deductible.  The Company expects to be able to use these deferred tax assets to offset tax liabilities in the foreseeable future.  In addition, the Company had no payable for income taxes recorded as of December 28, 2001, due primarily to the net losses incurred by the Company during 2001.    During 2001, the Company used funds totaling $208.2 million for the purchase of property, plant and equipment.  The principal cash outlay in 2001 was for the construction and build-out of the Company’s new corporate headquarters in Naperville, Illinois, which totaled $82.6 million.  Construction of the building was completed and the Company began occupying the building during the fourth quarter of 2001.  The remainder of the 2001 capital expenditures was mainly for the purchase of research and development equipment and manufacturing equipment to support the Company’s optical networking products efforts.    The Company’s goodwill balance increased $114.7 million during 2001, as a result of the purchase of FNI for a total of $141.8 million, which includes substantially all of the product development milestone payments obligated under the purchase agreement (for more information, see Note 5, “Business Combinations”).    The balance of current liabilities at December 28, 2001, was $319.5 million compared with $412.3 million at December 29, 2000.  The Company’s accounts payable balance was $63.5 million at the end of 2001 compared with $155.0 million at the end of 2000.  The sharp decrease in accounts payable was the result of the lower level of business activity in 2001, along with the various cost reduction strategies implemented during the year.    The balance of total accrued liabilities was $100.9 million at December 28, 2001, compared with $164.0 million at December 29, 2000.  The $63.1 million overall decrease in accrued liabilities was mainly due to a $59.3 million decline in accrued compensation charges during 2001.  The driver behind the drop in accrued compensation was the payment of bonuses and incentives linked to the Company’s 2000 Global Incentive Plan, which was accrued for during 2000, along with the absence of a 2001 bonus accrual.    At December 28, 2001, the Company had an accrual for 2001 restructuring charges totaling $180.1 million.  The accrual balance consisted primarily of reserves for outstanding inventory purchase commitments, leased facility exit costs, employee severance and accrued fixed asset purchase commitments.  The Company recorded $155.2 million of these reserves to accrued restructuring and other charges as the Company anticipates paying out the majority of these reserves during the next year.  The remaining $24.9 million, which consisted solely of reserves for leased facility exit costs, was recorded to accrued long-term restructuring charges.    The Company, through its normal course of business, enters into a variety of non-cancelable, non-returnable commitments for the purchase of inventory piece parts.  These commitments are entered into at market rates and expire within the next year. In the event of a dramatic decline in sales, such as was experienced in 2001, the Company may incur excess inventory and subsequent losses as a result of these commitments.  During 2001, the Company accrued $127.0 million related to outstanding purchase commitments as part of its restructuring actions.  The Company does not anticipate having to recognize any material losses on these contracts during 2002.    Overall, management believes its December 28, 2001 working capital level and, in particular, its total cash and short-term investments balance of $1,101.6 million, will be sufficient to meet the Company’s normal operating needs, both now and in the foreseeable future.  During January 2002, the Company paid approximately $300 million in cash for the purchase of Ocular Networks, Inc.  Sufficient resources exist to support the Company’s operations either through currently available cash, cash generated from future operations, short-term or long-term financing or equity offerings.    The Company has never paid a cash dividend, and the current policy is to retain earnings to provide funds for the operation and expansion of the business.  The Company does not anticipate paying a cash dividend in the foreseeable future.**Outlook**At December 28, 2001, the Company had limited ability to predict customer orders for 2002.  Product backlog at the end of 2001 was approximately $172 million, down approximately 60% from the end of 2000.  Substantially all of the backlog at December 28, 2001, is expected to be shipped in 2002.  Tellabs considers backlog to be an indicator, but not the sole predictor, of future sales.    The Company anticipates 2002 gross margin as a percentage of sales to remain in the mid-40% range, as cost reductions resulting from the Company’s 2001 restructuring efforts are realized.    The Company’s 2001 restructuring actions are expected to reduce the Company’s quarterly operating expenses to approximately $185.0 million by the first quarter of 2002, a 24% reduction from first quarter 2001 operating expense levels.  At this point, total operating expenses are anticipated to be approximately $785 million for the year.  In 2002, the Company will adopt SFAS No. 142, “Goodwill and Other Intangible Assets,” which eliminates the periodic amortization of goodwill and replaces it with an annual impairment review.  The implementation of this standard will result in a pre-tax expense reduction of approximately $30 million.  Research and development expenditures are anticipated to be approximately $400 million, while selling, general and administrative expenditures are expected to be approximately $385 million.    Tellabs anticipates that its 2002 effective tax rate will be approximately 35%, primarily as a result of lower projected research and development tax credits, due to an overall reduction in research and development spending, combined with a change in the worldwide earnings mix.  The Company will continue to focus on global tax minimization efforts.    Capital expenditures associated with property, plant and equipment, software and prototypes in 2002 are expected to be approximately $150 million.  It is anticipated that 2002 working capital requirements will be met by funds currently available and funds generated by future earnings.    Tellabs believes that the formation of business relationships with compatible organizations is important to future growth because it enables the Company to share in the development of new markets, products and technologies.  Equally important, strategic business relationships can shorten the time it takes to bring new products and solutions to market.  It is for these reasons that Tellabs will continue to pursue the establishment of such relationships. **Forward-Looking Statements**This Management’s Discussion and Analysis and other sections of this Annual Report to Shareholders contain forward-looking statements made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These statements reflect management’s expectations, estimates and assumptions, based on the information available at the time the document was prepared.  These forward-looking statements include, but are not limited to, statements regarding future events, plans, goals, objectives and expectations. The words “anticipate,” “believe,” “estimate,” “expect,” “plan,” “intend,” “likely,” “will,” “should” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause our actual performance or achievements to be materially different from any future results, performance or achievements expressed or implied by those statements. Important factors that could cause our actual results to differ materially from those in forward-looking statements include, but are not limited to: economic changes impacting the telecommunications industry; new product acceptance; product demand and industry capacity; competitive products and pricing; manufacturing efficiencies; research and new product development; protection and access to intellectual property, patents and technology; ability to attract and retain highly qualified personnel; availability of components and critical manufacturing equipment; facility construction and start-ups; the regulatory and trade environment; availability and terms of future acquisitions; uncertainties relating to synergies, charges, and expenses associated with business combinations and other transactions; and other risks and future factors that may be detailed from time to time in the Company’s filings with the SEC. For a further description of such risks and future factors, see Exhibit 99.1 to Form 10-Q for the quarterly period ended June 29, 2001, filed with SEC on August 9, 2001. The Company’s actual future results could differ materially from those predicted in such forward-looking statements. In light of the foregoing risks, uncertainties and other factors, investors should not place undue reliance on the forward-looking statements in determining whether to buy, sell or hold any of the Company’s securities.  The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events or changes to future results over time.
**Management Statement of Financial Responsibility**The financial statements of Tellabs, Inc. and Subsidiaries have been prepared under thedirection of management in conformity with generally accepted accounting principles. In theopinion of management, the financial statements set forth a fair presentation of theconsolidated financial condition of Tellabs, Inc., and Subsidiaries at December 28, 2001, and December 29, 2000, and the consolidated results of its operations for the years ended December28, 2001, December29, 2000, and December 31, 1999.    The Company maintains accounting systems and related internal controlswhich, in the opinion of management, provide reasonable assurances that transactions areexecuted in accordance with management’s authorization, that financial statements areprepared in accordance with generally accepted accounting principles, and that assets areproperly accounted for and safeguarded.    Ethical decision-making is fundamental to the Company’s managementphilosophy. Management recognizes its responsibility for fostering a strong ethical climate sothat the Company’s affairs are conducted to the highest standards of personal andcorporate conduct. Employee awareness of these objectives is achieved through key writtenpolicy statements and training.    The Board of Directors has appointed three of its non-employee membersas an Audit Committee. This committee meets periodically with management and the independentauditors, who have free access to this committee without management present, to discuss theresults of their audit work and their evaluation of the internal control structure and thequality of financial reporting.***/s Michael J. Birck***Michael J. BirckChairman of the Board***/s Richard C. Notebaert***Richard C. NotebaertPresident and Chief Executive Officer***/s Joan E. Ryan***Joan E. RyanExecutive Vice President and Chief Financial OfficerJanuary 22, 2002
**Report of Independent AuditorsWe have audited the accompanying consolidated balance sheets of Tellabs, Inc., and Subsidiaries as of December 28, 2001 andDecember 29, 2000, and the related consolidated statements of operations, stockholders' equity and cash flowsfor each of the three years in the period ended December 28, 2001.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on thesefinancial statements based on our audits.    We conducted our audits in accordance with auditing standards generally accepted in the UnitedStates.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement.  An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statementpresentation.  We believe that our audits provide a reasonable basis for our opinion.    In our opinion, the financial statements referred to above present fairly, in all material respects,the consolidated financial position of Tellabs, Inc., and Subsidiaries at December 28, 2001 and December 29, 2000, and theconsolidated results of their operations and their consolidated cash flows for each of the three years in the period ended December 28,2001, in conformity with accounting principles generally accepted in the United States.    As discussed in Notes 2 and 4 to the financial statements, in 2000 the Company changed its methodof revenue recognition.**/s Ernst & Young LLP**Ernst & Young LLPChicago, IllinoisJanuary 22, 2002
**Consolidated Statements of Operations**(In thousands, except per-share data)**Year**** |