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ADC Updates Continued Progress on its Cost Reduction Measures

  • Tuesday, November 5, 2002 5:15PM IST (11:45AM GMT)
Company Reaffirms Fourth Quarter 2002 Financial Guidance
Minneapolis, MN, United States:  ADC (Nasdaq:ADCT; www.adc.com) has announced continued progress on its cost reduction and restructuring efforts aimed to lower the company's overall cost structure and improve profitability.

ADC reiterated its guidance for fourth quarter results of 2002 and the earnings outlook for 2003 on October 14, 2002. The company reaffirmed that guidance and announced the following progress on its cost reduction actions:

-- ADC has completed the sale and closure of its photonic components business unit. ADC announced its intent to withdraw from the photonic components manufacturing business in August 2002. ADC today announced the sale of its photonic components operations in Canberra, Australia to Verrillon, Inc. Terms of the sale were not disclosed. The Canberra facility designs and manufactures passive photonic components, including splitters, combiners, and wavelength division multiplexers. Approximately 55 employees work at this facility and will transfer to the new company.

ADC also announced that it has ceased operations at its Vadnais Heights, Minn. and Jarfalla, Sweden facilities. The Vadnais Heights facility developed and manufactured pump lasers and micro-optic products, while the Swedish facility was used for the development and manufacture of tunable lasers. ADC intends to sell off any remaining assets and will market the facility in Vadnais Heights for lease or sale. Approximately 72 positions will be eliminated at the Vadnais Heights facility, effective immediately.

The photonic components divestitures do not impact ADC's traditional fiber and copper connectivity businesses. ADC will continue to offer the industry's leading fiber and copper connectivity products.

-- ADC will cease development, marketing and sales activity related to its iAN(TM) (intelligent Access Network) Broadband Access Gateway platform. The iAN platform addressed U.S.-based telecommunications service providers' efforts to use existing copper plant as they begin the transition of voice networks to an intelligent broadband network that enables the delivery of new services and features to customers.

The company will retain all intellectual property rights to the iAN platform and will continue to monitor U.S. market conditions for a possible reentry into the market at a later date. The company reiterates its commitment to the development, marketing and support of the BroadAccess platform, ADC's international version of the iAN platform.

"While the iAN platform offers tremendous capability to the traditional wireline communications provider, the current economic environment in the U.S. telecommunications industry has significantly delayed planned investments in next generation broadband access technologies," said Rick Roscitt, chairman and CEO of ADC. "We continue to believe that the industry will move to this type of technology in the future, and ADC will monitor our presence in this sector and respond when conditions are more favorable to these types of investments."

The company's decision on iAN does not effect ADC's continued presence and focus on the wireline communications service provider market. ADC will continue to deliver a comprehensive line of last mile DSL and connectivity solutions, including industry-leading T1 and E1 transport systems, high-performance customer premise equipment, small subscriber loop access equipment, Stargazer element management system, broadband connectivity products, DSL splitters, OSS software, and integration services.

Also, ADC announced in September and reiterated today its renewed commitment and further investments in the competitive HDSLx environment as service providers continue to deliver T1 services to small- and medium-sized businesses throughout North America. The company maintains a more than 40 percent market share in the HDSLx market.

As a result of the actions mentioned above, ADC will take a non-recurring, restructuring charge in its fiscal fourth quarter ending October 31, 2002, the amount of which has not yet been

ADC will release its earnings results for the fiscal fourth quarter on Tuesday, December 3, after market close. The company's earnings release will be followed by a conference call at 5:00 p.m. EST on the same date. The conference call will be available to domestic callers by calling 800.399.7506 and to international callers by calling 706.634.2489. More information about ADC's earnings statement and conference call is available at the Calendar of Events at www.adc.com/investor.

About ADC

ADC is The Broadband Company(TM). ADC offers high-quality, value-added solutions of network equipment, software and systems integration services that enable communications service providers to deliver high-speed Internet, data, video and voice services to consumers and businesses worldwide. ADC (Nasdaq:ADCT) has sales into nearly 100 countries and is included in the Standard & Poor's 500 Index and the NASDAQ-100 Index. Learn more about ADC Telecommunications, Inc. at www.adc.com.

Cautionary Statement under the Private Securities Litigation Reform Act of 1995

All forward looking statements contained herein, particularly those pertaining to ADC's expectations or future operating results, reflect management's current expectations or beliefs and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. ADC Telecommunications cautions readers that future actual results could differ materially from those in forward-looking statements depending on the outcome of certain factors. All such forward-looking statements are subject to certain risks and uncertainties, including, but not limited to, significant difficulties in forecasting sales and market trends; uncertainties regarding the level of capital spending by telecommunications service providers, as the majority of ADC's revenues are cerived from these companies; the overall demand for ADC's products or services; the demand for particular products or services within the overall mix of products sold, as our products and services have varying profit margins; changing market conditions and growth rates either within ADC's industry or generally within the economy; ADC's ability to complete our restructuring initiative and streamline our operations successfully; ADC's ability to dispose of non-strategic product lines and excess assets on a timely and cost-effective basis; new competition and technologies; increased costs associated with protecting intellectual property rights; the impact of customer financing activities; the retention of key employees; pressures on the pricing of the products or services ADC offers; the availability of materials to make products; variations in the value of assets held or used by ADC in the operation of its business and other risks and uncertainties, including those identified in Exhibit 99-a to ADC's Report on Form 10-K for the fiscal year ended October 31, 2001. ADC disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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