Tellabs and AFC Amend Merger Terms

Tellabs and AFC Amend Merger Terms 


NAPERVILLE, Ill. and PETALUMA, Calif., Sept. 7  /PRNewswire-FirstCall/ --
Tellabs (NASDAQ:TLAB), a leader in bandwidth management and optical transport,
and AFC (NASDAQ:AFCI), a leader in access, have amended the terms of the
companies' merger agreement announced on May 20, 2004.

Under the terms of the amended agreement, which was approved today by both
companies' boards of directors, AFC stockholders will receive 0.504 shares of
Tellabs common stock and $12.00 in cash for each AFC share. The original
exchange ratio was 1.55 Tellabs shares and $7.00 in cash for each AFC share.
Based on today's closing price for Tellabs' stock, the revised exchange ratio
represents $16.60 in value per AFC share, or a total value of approximately
$1.5 billion.

As previously announced, following AFC's release of its second-quarter results
and outlook, the Tellabs board of directors requested that Tellabs' management
conduct a further review and analysis of AFC's business and financial outlook. 
In light of that review, the market reaction to AFC's release, and the
prospects for completing the merger on the previously announced terms, and in
order to increase the likelihood that the merger would be consummated on terms
fair to the stockholders of both companies, the two companies agreed to amend
their merger agreement.

Upon completion of the transaction, Tellabs' stockholders will own
approximately 90% of the company and AFC stockholders will own 10%. Including
synergies, Tellabs expects the transaction to be accretive to full-year 2005
pretax income on a per-share basis, excluding amortization associated with
acquired intangibles and other purchase accounting adjustments.

"The strategic rationale for combining Tellabs and AFC on the revised terms
remains compelling," said Krish Prabhu, president and chief executive officer
of Tellabs. "We look forward to serving our customers better with the combined
strengths of both companies."

"Both companies agreed that it was in our mutual interest to revise the deal
terms," said John Schofield, chairman, president and CEO of AFC. "Our
stockholders will receive a larger proportion of the merger consideration in
cash, while still participating in the anticipated strategic benefits of the
merger.  We believe this merger is the right decision for AFC's shareholders."

Upon completion of the transaction, John Schofield will become vice chairman of
the Tellabs board of directors, which will be expanded to 10 directors.

The transaction is subject to certain closing conditions, including clearance
by the U.S. Securities & Exchange Commission (SEC) of the proxy/prospectus
relating to the transaction and approval by AFC stockholders. Approval by
Tellabs' stockholders is not required under the new terms. Because the revised
mix of stock and cash currently does not meet requirements for a tax-free
transaction, the merger is expected to be structured as a taxable transaction. 
The companies previously announced that the Federal Trade Commission had
granted early termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act for the merger.  Subject to satisfaction of closing
conditions, the companies currently expect the merger to close before year-end
2004.

Simultaneous Webcast and Teleconference Replay -- Tellabs and AFC will host an
investor teleconference at 7:30 a.m. Central time on Wednesday, Sept. 8, to
discuss the amended merger. To access the teleconference, dial 706-679- 3667. 
Internet users can hear a simultaneous webcast of the teleconference at
http://tellabs.com/ ; click on the webcast icon. A taped replay of the call
will be available beginning at approximately 9 a.m. Central time on Wednesday,
Sept. 8, until 9 a.m. Central time on Friday, Sept. 10, at 800-633-8284.
(Outside the United States, call 402-977-9140.) When prompted, enter the
Tellabs-AFC reservation number: 21207530.

About Tellabs -- Headquartered in Naperville, Ill., Tellabs delivers technology
that transforms the way the world communicates(TM). Tellabs experts design,
develop, deploy and support our solutions for telecom service providers in more
than 100 countries. More than two-thirds of telephone calls and Internet
sessions in several countries, including the United States, flow through
Tellabs equipment. Our product portfolio provides solutions in next- generation
optical networking, managed access, carrier-class data, voice quality
enhancement and cable telephony. For details, see http://www.tellabs.com/ .

About AFC -- Headquartered in Petaluma, Calif., AFC is a leading provider of
broadband access solutions for the global telecommunications industry. With a
customer base of more than 800 service providers worldwide, AFC continues to
build and support the world's evolving broadband access network architecture.
For more information, please visit AFC online at http://www.afc.com/ or call
1-800-690-AFCI.

Forward-Looking Statements -- Additional Information and Where to Find It

This communication is not a solicitation of a proxy from any security holder of
Tellabs, Inc. or Advanced Fibre Communications, Inc.  Tellabs, Inc. plans to
file with the Securities and Exchange Commission an amendment to its
Registration  Statement  on  SEC  Form  S-4, and Advanced Fibre Communications,
Inc. expects to mail a Proxy Statement/Prospectus to its stockholders
concerning the proposed merger of Advanced Fibre Communications, Inc. with a
subsidiary of Tellabs, Inc. WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE
PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH
THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and
security holders will be able to obtain the documents free of charge at the
SEC's website, http://www.sec.gov/ .  In addition, documents filed with the SEC
by Tellabs, Inc. will be available free of charge from Tellabs Investor
Relations, 1415 West Diehl Road, Naperville, IL 60563, 630- 798-8800. 
Documents filed with the SEC by Advanced Fibre Communications, Inc. will be
available free of charge from Advanced Fibre Communications Investor Relations,
1465 North McDowell Blvd., Petaluma, CA, USA 94954, 707-792-3500.

Interest of Certain Persons in the Merger.

Advanced Fibre Communications, Inc., and its directors and executive officers
and other members of its management and employees, may be deemed to be
participants in the solicitation of proxies from the stockholders of Advanced
Fibre Communications, Inc. in connection with the merger.  The directors and
executive officers of Advanced Fibre Communications, Inc. have interests in the
merger, some of which may differ from, or may be in addition to, those of the
respective stockholders of Advanced Fibre Communications, Inc. generally. 
Those interests   will be described   in   greater detail in the Proxy
Statement/Prospectus with respect to the merger, which may include potential
membership on the Tellabs, Inc. Board of Directors, option and stock holdings
and indemnification.  Information about the directors and executive officers of
Advanced Fibre Communications, Inc. and their ownership of Advanced Fibre
Communications, Inc. stock is set forth in the proxy statement for Advanced
Fibre Communications, Inc.'s 2004 annual meeting of stockholders. Investors may
obtain additional information regarding the interests of the participants by
reading the proxy statement/prospectus when it becomes available.

NOTICE TO INVESTORS, PROSPECTIVE INVESTORS AND THE INVESTMENT COMMUNITY --
CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

Statements in this press release regarding the proposed merger of Tellabs, Inc.
and Advanced Fibre Communications, Inc. which are not historical facts,
including expectations of financial results for the combined companies (e.g.,
projections regarding revenue, earnings, cash flow and cost savings), are
"forward-looking statements."  Forward-looking statements are not guarantees of
future performance and involve risks, uncertainties and other factors that may
cause either company's actual performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by those statements. Either company's actual future results could
differ materially from those predicted in such forward-looking statements.
Investors and security holders are cautioned not to place undue reliance on
these forward-looking statement and any such forward-looking statements are
qualified in their entirety by reference to the following cautionary
statements.

Important factors upon which the forward-looking statements presented in this
release are premised include:  (a) receipt of regulatory and stockholder
approvals without unexpected delays or conditions; (b) timely implementations
and execution of merger integration plans; (c) retention of customers and
critical employees; (d) economic changes impacting the telecommunications
industry; (e) successfully leveraging Tellabs/Advanced Fibre Communications'
comprehensive product offering to the combined customer base; (f) the financial
condition of telecommunication service providers and equipment vendors,
including any impact of bankruptcies; (g) the impact of customer and vendor
consolidation; (h) successfully introducing new technologies and products ahead
of competitors; (i) successful management of any impact from slowing economic
conditions or customer demand; and (j) protection and access to intellectual
property, patents and technology.  In addition, the ability of Tellabs/Advanced
Fibre Communications to achieve the expected revenues, accretion and synergy
savings also will be affected by the effects of competition (in particular the
response to the proposed transaction in the marketplace), the effects of
general economic and other factors beyond the control of Tellabs/Advanced Fibre
Communications, and other risks and uncertainties described from time to time
in Tellabs/Advanced Fibre Communications' public filings with the Securities
and Exchange Commission. Tellabs and Advanced Fibre Communications disclaim any
intention or obligation to update or revise any forward-looking statements.

AFC, Inc., AFC and the AFC logo are registered trademarks of AFC, Inc. The
Acronym for Access is a service mark of AFC, Inc.

Tellabs(R), Tellabs logo(R) and technology that transforms the way the world
communicates are trademarks or registered trademarks of Tellabs or one of its
affiliates in the United States and/or other countries. Any other trademarks
are the property of their respective owners. 

DATASOURCE: Tellabs; AFC



CONTACT:  Investors, Tom Scottino, [phone],

 , or Media, George Stenitzer, [phone],

 , both of Tellabs; Investors, Debbie McGowan,

[phone],  , or Media, Teresa Novak,

[phone],  , both of AFC 



Web site:  http://www.tellabs.com/

http://www.afc.com/ 

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