ADC Telecommunications Reports Record First Quarter 1999 Results.

MINNEAPOLIS--(BUSINESS WIRE)--Feb. 22, 1999--

Sales of $367 Million, Up 28%; Diluted EPS of $0.25, Up 33% Before Previously Announced One-time Charges

ADC Telecommunications, Inc. (NASDAQ: ADCT; www.adc.com) today reported record first quarter sales of $367 million for the quarter ended January 31, 1999, an increase of 28% over the $286 million in the comparable quarter of 1998. The increase in sales reflects strong growth in the Broadband Connectivity, Residential Broadband and Integrated Solutions product groups partially offset by lower sales in the Business Broadband product group. International sales were 23% of total sales in this year's first quarter compared to 21% in the first quarter of 1998. North America and Europe remained ADC's strongest sales growth regions in the quarter.

Operating income increased 40% to a record first quarter result in 1999 of $53 million, before previously announced one-time charges related to acquisitions and a strategic restructuring, compared to $38 million in the prior-year first quarter. Before these one-time charges, operating margin was 14.5% compared to 13.3% in the first quarter of 1998. Both operating income and margin increased as a result of higher sales volumes combined with higher gross margins.

Net income in 1999, before the one-time charges, was also a first quarter record of $34 million ($0.25 per both basic and diluted share) increasing 34% in this year's first quarter over $25 million ($0.19 per both basic and diluted share) in the first quarter of 1998. In November 1999, ADC completed the acquisitions of Teledata Communications and Hadax Electronics, as well as a strategic restructuring of its Wireless Systems Group and the formation of the Integrated Solutions Group. ADC also acquired Phasor Electronics in January 1999. In the first quarter of 1999, ADC recorded a previously announced charge for purchased in-process research and development expenses and restructuring costs of $47 million, on an after-tax basis, ($0.35 per both basic and diluted share) in connection with these activities. On a reported basis, which includes the impact of all one-time charges, the 1999 first quarter had a net loss of $13 million ($0.10 loss per basic and diluted share).

"ADC is well positioned to capture an expected abundance of opportunities for global growth in 1999," said William J. Cadogan, chairman and chief executive officer of ADC Telecommunications. "The insatiable worldwide demand for broader bandwidths in the last mile of the communications network and the rapidly growing number of new multiservice -- Internet/data, video and voice -- communications providers are strong growth drivers for ADC. As a leader in total solutions for the last mile of the communications network, ADC supplies the fiber-optic technologies, multiservice connectivity and transmission systems, network software and system integration services to make high-speed, integrated Internet/data, video and voice services possible."

REVIEW OF PRODUCT GROUPS

As a result of acquisitions completed in the first fiscal quarter of 1999, Teledata and Phasor are included in the Residential Broadband Group, and Hadax is included in the Broadband Connectivity Group. Also, as a result of the previously announced strategic restructuring in the quarter, the mobile systems products of the former Wireless Systems Group are included as part of the Broadband Connectivity Group and Wireless Systems' software products of Metrica and NewNet are included in the new Integrated Solutions Group (formerly the Systems Integration Group). A review of ADC's performance by four product groups -- Broadband Connectivity, Business Broadband, Residential Broadband and Integrated Solutions -- follows.

Broadband Connectivity

Broadband Connectivity sales in the first quarter of 1999 increased 39% to $175 million from $126 million in the comparable prior-year quarter. In 1999, record first quarter sales were recorded for both copper- and fiber-connectivity systems. Growth in broadband connectivity systems is a result of strong global demand for broader bandwidth connections and increased global competition among existing and new service providers, who are building and upgrading telephone, cable television, Internet, broadcast, wireless and private communications networks. The Solitra division also reached record first quarter sales levels driven by strong growth in shipments of its components and subsystems to new and existing customers for wireless communication systems. As a result of deregulation and privatization of communication networks worldwide, service providers buy ADC broadband connectivity systems to deploy cost-effective and quick-response connections to Internet/data, video and voice networks.

Business Broadband

Business Broadband sales were $73 million in the first quarter of 1999 compared to $80 million in the comparable prior-year quarter. Sales were lower in the current quarter for Soneplex(R) transport systems, service access systems and Kentrox products.

ADC is further increasing the cost effectiveness of T1 service delivery by integrating standards-based HDSL2 technology into the Soneplex platform. First-to-market with HDSL2 technology, ADC's Soneplex HDSL2 system is ready for installation and testing. HDSL2 is a significant breakthrough that enables service providers to deliver T1 services over a single twisted-pair cable with the same standard reach, robustness and compatibility of today's HDSL architecture, which uses two twisted-pair cables.

ADC's Cellworx(TM) Service Transport Node became commercially available and began shipping in the quarter. Cellworx is now being deployed in four communication networks, has received four additional purchase orders that are awaiting commercial deployment and has begun four trials with incumbent and competitive telephone companies. Cellworx is expected to reduce broadband service delivery costs by approximately 50% compared to current-generation SONET and ATM equipment by substantially reducing transport costs as well as the number of ATM switch ports deployed in the network. Cellworx uses ATM technology to efficiently aggregate and transport voice, video and Internet/data traffic over SONET fiber ring architectures. Like Soneplex, Cellworx extends telecommunications services over fiber and copper (using xDSL technologies) facilities, in addition to delivering a broader range of service bandwidths.

In February 1999, ADC launched two new, innovative products -- ServicePoint(TM) and Opera(TM). ServicePoint is a family of next-generation CSU/DSU devices, called Service Delivery Units (SDU), that provide a comprehensive solution for the challenges of wide area network (WAN) management. At the WAN access point, it provides termination, service level and enterprise monitoring, and bandwidth management of the network. ServicePoint is uniquely designed to enable service providers to offer managed services while at the same time enabling enterprise network managers to gain greater control of their WAN access. The Opera Service Matrix Platform is a next-generation integrated access device. Opera is a protocol-independent access platform for carrier delivery of voice, Internet/data and video services, whether TDM-based, Frame Relay-based or ATM-based.

Residential Broadband

Residential Broadband sales in the first quarter of 1999 were $66 million, an increase of 54% over the $43 million in the first quarter of 1998. Sales increased as a result of the Teledata acquisition and the continued roll out of Homeworx(TM) cable telephony systems. Initial shipments of ADC's new Pathworx(TM) cable TV amplifier were made in the quarter and orders were received from cable TV operators around the world. In January 1999, ADC purchased Phasor Electronics in Austria to increase ADC's market share in the rapidly growing European market for cable TV amplifiers.

ADC's Homeworx system enables cable television operators to economically transport high-speed digital signals for two-way voice, video and Internet/data services to residences and businesses. Homeworx offers both circuit-switched and Internet Protocol (IP) telephony services. As the capacity leader, Homeworx has up to 6 times more capacity than competing systems. This capacity advantage is a result of Homeworx providing 240 contiguous voice channels in the space of one cable TV channel (2 to 3 times more channels than competing systems) and a multiple of two in higher capacity utilization based on telephone traffic engineering efficiencies. Using Homeworx, ADC continues to support MediaOne's commercial deployments of cable telephony services in Atlanta and Los Angeles, as well as the planned launch of service in Detroit. MediaOne is one of the world's largest broadband communications companies. The pending merger of AT&T and Tele-Communications, Inc. (TCI) and the announced joint venture between AT&T and Time Warner are also aimed at providing telephony and other broadband communications services over the high-bandwidth cable TV network.

In November 1999, ADC completed its acquisition of Teledata Communications, a leading international supplier of mid-sized digital loop carrier (DLC) systems (from 60 to 960 access lines). The market for mid-sized DLC systems is anticipated to be the fastest growing segment of the DLC market. In addition to further strengthening ADC's broad offering of local loop technologies for the last-mile communications network, Teledata expands ADC's international sales channels. Strategically, ADC now has a platform from which to develop a broadband DLC system for both the U.S. and international markets using the voice, video and Internet/data technologies in ADC's current portfolio and under development by ADC. In January 1999, ADC won a multi-million dollar contract in Turkey with Turk Telekom for Teledata's BroadAccess DLC system. Using the state-of-the art, plug-and-play BroadAccess DLC system, 960 subscribers can be connected to a telephone network in minutes. Also in January 1999, ADC established a joint company with Telsul Telecomunicacoes to address the expected growing demand for DLC systems in Brazil, which is privatizing its telecommunications market. Both ADC and Telsul have already delivered and installed more than 45,000 lines of Teledata systems in Brazil. Worldwide, Teledata's systems are deployed in more than 50 countries.

Integrated Solutions

The Integrated Solutions Group increased first quarter 1999 sales by 43% to $52 million from $37 million in the comparable 1998 quarter. In 1999, record first quarter sales were recorded for both system integration services and software products. Strong demand from a broad range of service providers -- incumbent local exchange telephone companies, competitive local exchange telephone companies, long distance telephone companies, cable TV companies and wireless service providers -- continues as these customers aggressively build and upgrade networks that offer integrated voice, video and Internet/data services. Sales of operation support systems (OSS), complex network services, network management software and integration consulting services are important growth drivers for the Integrated Solution Group. Cable and IP telephony continues to offer expanded opportunities for ADC to grow its sales of OSS software and network integration services. Also, the competitive environment between all communications service providers increases the need for Quality of Service measurement and Service Level Agreement monitoring tools, which is expected to grow demand for ADC's network management software products.

In February 1999, ADC's Metrica/NPR network performance management software was chosen by Clearnet, a leading Canadian wireless communications company. Metrica/NPR software provides network performance management for wireless, wireline and cable TV networks, and has been deployed in more than 150 networks worldwide. Also in February, ADC announced that its NewNet SMserver(TM) short messaging service software surpassed one million messages per hour on a single mid-range computer server. SMserver software manages the transmission of text messages to and from mobile handsets, providing subscribers with voice mail notification, digital pages and custom short text messages. QUALCOMM signed, in February, a three-year preferred vendor agreement to distribute NewNet's wireless messaging products for use in CDMA digital wireless networks.

ADC Telecommunications, Inc. is a leading global supplier of voice, video and data systems and solutions for telephone, cable television, Internet, broadcast, wireless and private communications networks. ADC's systems and solutions enable local access and high-speed transmission of communications services from service providers to consumers and businesses over fiber-optic, copper, coaxial and wireless media. Headquartered in Minneapolis, Minnesota, ADC has approximately 8,000 employees around the world and annual sales of $1.5 billion.

For more information on ADC, visit our Investor Relations web site (Click on Investor at www.adc.com) or call [phone] to receive ADC Telecommunications' press releases by fax on demand.

Cautionary statement under the Private Securities Litigation Reform Act of 1995

Any forward-looking statements contained herein reflect management's current expectations or beliefs. ADC Telecommunications cautions readers that future actual results could differ materially from those in forward-looking statements depending on the outcome of certain factors, including the risks and uncertainties identified in Exhibit 99 to ADC's Report on Form 10-K for the fiscal year ended October 31, 1998.

ADC Telecommunications supports the National Association of Investors Corporation's "Own Your Share of America" campaign, which encourages individuals to invest in stocks. -0-

             ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
                CONSOLIDATED BALANCE SHEETS - UNAUDITED
                            (In Thousands)
                                ASSETS

                                   January 31,         October 31,
                                      1999                 1998
                                 --------------      --------------

CURRENT ASSETS:
 Cash and cash equivalents       $      187,412      $      287,700
 Accounts receivable                    338,207             365,989
 Inventories                            204,060             175,763
 Prepaid income taxes and other
  assets                                 47,111              33,418
                                 --------------      --------------
   Total current assets                 776,790             862,870

PROPERTY AND EQUIPMENT, net             270,847             256,961

OTHER ASSETS, principally goodwill      281,419             180,756
                                 --------------      --------------

                                 $    1,329,056      $    1,300,587
                                 ==============      ==============


                LIABILITIES AND SHAREOWNERS' INVESTMENT

CURRENT LIABILITIES:
 Accounts payable                $       69,837      $       67,150
 Accrued liabilities                    133,124             115,559
 Note Payable                           200,000             200,000
 Current maturities of long-term debt       513                 735
                                 --------------      --------------
   Total current liabilities            403,474             383,444


LONG TERM DEBT, less current maturities   4,844               2,769
                                 --------------      --------------
   Total liabilities                    408,318             386,213

SHAREOWNERS' INVESTMENT
   (135,408 and 134,897 shares
     outstanding)                       920,738             914,374
                                 --------------      --------------
                                 $    1,329,056      $    1,300,587
                                 ==============      ==============


             ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

               (In Thousands, Except per Share Amounts)

                                           For the Quarters Ended
                                                 January 31,
                                      --------------------------------
                                           1999               1998
                                      ---------------   --------------

NET SALES                             $       367,205   $     286,396

COST OF PRODUCT SOLD                          192,371         152,846
                                      ---------------   --------------

GROSS PROFIT                                  174,834         133,550
                                      ---------------   --------------

  Gross profit percentage                        47.6%           46.6%
                                      ---------------   --------------

EXPENSES:
 Research and development                      38,987          30,938
 Selling and administration                    77,727          62,094
 Goodwill amortization                          4,776           2,538
 Non-recurring charges                         60,327             -
                                      ---------------   --------------

   Total expenses                             181,817          95,570
                                      ---------------   --------------

OPERATING INCOME (loss)                        (6,983)         37,980

OTHER INCOME (EXPENSE), NET:
 Interest                                        (838)          1,444
 Other                                           (878)           (333)
                                      ---------------   --------------

INCOME (LOSS) BEFORE INCOME TAXES              (8,699)         39,091

PROVISION FOR INCOME TAXES                      4,526          13,682
                                      ---------------   --------------

NET INCOME (LOSS)                     $       (13,225)(a)$     25,409
                                      ===============   ==============

BASIC AND DILUTED EARNINGS (LOSS)
 PER SHARE                            $         (0.10)(a)$       0.19
                                      ===============   ==============

(a) Excluding $47 million of net of tax charges, net income would

have been $34 million or $0.25 per both basic and diluted shares.

These charges relate principally to purchased in-process research

and development expenses associated with acquisitions and the

restructuring of the former Wireless Systems Group.