Tellabs to Acquire AFC for $1.9 Billion in Cash and Stock

Tellabs to Acquire AFC for $1.9 Billion in Cash and Stock
Combines Market Leaders in Transport and Access to Lead Industry Shift to
Broadband 


NAPERVILLE, Ill. and PETALUMA, Calif., May 20  /PRNewswire-FirstCall/ --
Tellabs , a leader in bandwidth management and optical transport, and AFC , a
leader in access, today entered into a definitive agreement under which Tellabs
will acquire AFC. The combination creates an industry leader in strategic
access and transport solutions for the world's leading telecom service
providers.

Under the terms of the transaction, which was approved by both companies'
boards of directors, AFC stockholders will receive 1.55 shares of Tellabs
common stock and $7.00 in cash for each AFC share. Based on Tellabs' closing
price on May 19, 2004, this represents $21.24 in value per AFC share, or a
total value of $1.9 billion. Upon completion of the transaction, Tellabs
stockholders will own approximately 75% of the company and AFC stockholders
will own 25%. Including synergies, the transaction is expected to be accretive
to Tellabs' 2005 pretax income on a per-share basis, excluding amortization
associated with acquired intangibles and other purchase accounting adjustments.

"Together, Tellabs and AFC create a strategic global telecom equipment supplier
that will lead the industry's shift to broadband data with end-to-end access
and transport solutions," said Krish Prabhu, chief executive officer (CEO) and
president of Tellabs. "Marrying the leader in access with the leader in
transport positions us to grow with our customers in the industry's sweet spot
of broadband services. This will enable us to help customers simplify networks,
offer easier service provisioning and sharpen their competitive edge."

"We are excited about this strategic combination, which creates a company with
an expanded portfolio to take advantage of carriers' growing investment and
focus on alternative broadband access markets such as fiber-to-the- premises
and broadband wireless," said John Schofield, chairman and CEO of AFC. "Our
comprehensive suite of innovative broadband access solutions will gain growth
opportunities through Tellabs' significant international distribution channels,
as well as their deep relationships with regional Bells and large incumbent
carriers."

Upon completion of the transaction, John Schofield will become chief operating
officer and a director of Tellabs. The Tellabs board will be expanded to
include three AFC directors, including Schofield, increasing the size of
Tellabs' board to 12 members. The transaction is subject to certain closing
conditions, including regulatory approval and approval by Tellabs' and AFC's
stockholders.  It is expected to close in the second half of 2004.

The combined company will employ about 4,100 people, including nearly 1,000 in
international locations.  It will have research and development centers in
Illinois, California, Florida, Texas, Virginia, Denmark and Finland, as well as
41 sales offices in 29 countries.

Credit Suisse First Boston acted as financial advisor to Tellabs and Sidley
Austin Brown & Wood provided legal counsel to Tellabs. Bear, Stearns &

Co. Inc. acted as financial advisor to AFC and Pillsbury Winthrop provided
legal counsel to AFC.

Simultaneous Webcast and Teleconference Replay -- Tellabs and AFC will host a
teleconference for investors at 7:30 a.m. Central Daylight Time on Thursday,
May 20, to discuss the proposed acquisition. To access the teleconference, dial
212-346-6474. Internet users can hear a simultaneous live webcast of the
teleconference at tellabs.com and afc.com. A taped replay of the call will be
available until 5:00 p.m. Central time on May 25, at 800-633-8284. (Outside the
United States, dial 402-977-9140.) When prompted, enter the Tellabs/AFC
reservation number: 21196127.

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 a Registration Statement  on 
SEC  Form  S-4, and Tellabs, Inc. and Advanced Fibre Communications, Inc.
expect to mail a Joint Proxy Statement/Prospectus to their respective
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 JOINT 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.

Tellabs, Inc. and Advanced Fibre Communications, Inc., and their respective
directors and executive officers and other members of their management and
employees, may be deemed to be participants in the solicitation of proxies from
the stockholders of Tellabs, Inc. and Advanced Fibre Communications, Inc. in
connection with the merger.  The directors and executive officers of Tellabs,
Inc. and 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 Tellabs, Inc. and Advanced Fibre Communications, Inc.
generally.  Those interests will be described in greater detail in the Joint
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 Tellabs, Inc. and their ownership of Tellabs, Inc. stock is set
forth in the proxy statement for Tellabs, Inc.'s 2004 annual meeting of
stockholders.  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 joint 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. Copyright 2004. All rights
reserved.

Tellabs, the Tellabs logo 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



CONTACT:  Investor: Tom Scottino, [phone],

, or Media: George Stenitzer, [phone],

, both of Tellabs; or Investor: Jeff Finn,

[phone], , Media: Teresa Novak, [phone],

, both of AFC



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

http://www.afc.com/ 

Copyright