ADC restructures, plans to sell components business

August 1, 2002--ADC today announced progress on its cost reduction and restructuring efforts aimed at lowering the company's overall cost structure and improving the company's profitability.

Aug 1st, 2002

ADC today announced progress on its cost reduction and restructuring efforts aimed at lowering the company's overall cost structure and improving the company's profitability.

On July 10, 2002, ADC announced its intention to lower its quarterly break-even sales point towards $250 million per quarter from its original goal of $300 million. To meet this goal, ADC today announced the following actions:

• ADC has decided to exit its optical components business and will sell or close these product lines. A determination on the final disposition is expected by the end of its fiscal year ending October 31, 2002. ADC has retained Lehman Brothers to represent ADC in these efforts. ADC's optical component products include its complete line of passive and active optical components, including tunable and pump lasers, and facilities in Canberra, Australia; Jarfalla, Sweden; and Vadnais Heights and Shakopee, Minnesota.

• ADC will cease all development and marketing of its Avidia DSL Access Multiplexer (DSLAM) product immediately. The company will focus its efforts on its next-generation DSL access platform--the iAN Broadband Access Gateway--as a means to deliver advanced services over DSL in the last mile. ADC will remain aggressively focused on its HDSL market leading Soneplex and HiGain products that are used by global telecommunications providers to deliver business E1/T1 services.

• ADC's aggressive actions to consolidate and close facilities continues. In its 2002 fiscal year to date, ADC has closed 41 facilities worldwide, with additional facility closures and consolidations to take place over the remainder of the fiscal year. ADC has also moved certain manufacturing operations to outsourced suppliers and will continue to explore other outsourcing opportunities for certain product areas to improve costs and time to market.

• ADC continues its workforce reductions commensurate with these actions. ADC started its fiscal year 2002 (November 1, 2001) with 12,500 employees and will end its fiscal third quarter (July 31, 2002) with approximately 9,200 employees. These reductions include both voluntary and involuntary reductions. The company intends to complete additional workforce reductions through the remainder of the year.

"These moves, while difficult for all of us, and especially difficult for those personally effected, continue to move ADC along on its path to profitability and improves our focus on those areas of most promising growth and profitability," contends Rick Roscitt, ADC chairman and chief executive officer. "Our moves will serve to strengthen an already solid balance sheet that includes a significant level of cash on hand. Our employees continue their hard work and perseverance in the transformation of ADC, and we look forward to meeting our goal of reaching profitability as soon as possible."

As a result of the actions mentioned above, ADC will take a non-recurring restructuring charge in its fiscal third quarter, the amount of which has not yet been determined. ADC will release its earnings results for the fiscal third quarter ending July 31, 2002 on Thursday, August 22, after market close.

For more information about ADC Telecommunications Inc. (Minneapolis, MN), visit the company's Web site at www.adc.com.

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