ADC Telecommunications Reports Record Third Quarter 1999 Results.

MINNEAPOLIS--(BUSINESS WIRE)--Aug. 18, 1999--

Sales of $444 Million, Up 23%;

Diluted EPS of $0.37, Up 25%, Before One-time Charge For Acquisitions

ADC Telecommunications, Inc. (Nasdaq: ADCT, www.adc.com) today reported record third quarter sales of $444 million for the quarter ended July 31, 1999, an increase of 23% over the $362 million in the comparable quarter of 1998. The year-over-year increase in sales reflects 35% growth in the Broadband Connectivity product group combined with 12% growth in the Broadband Transport and Access and 9% growth in the Integrated Solutions product groups. International sales were 20% of total sales in both this year's third quarter and the third quarter of 1998. North America and Europe remained ADC's largest sales regions in the quarter.

In the third quarter of 1999, ADC recorded a one-time charge for purchased in-process research and development expenses of $58 million ($41 million after tax or $0.29 per diluted share) in connection with the acquisitions of Spectracom and Pathway during the quarter.

Operating income increased 28% to a record third quarter result in 1999 of $79 million, before the one-time charge, compared to $62 million in the prior-year third quarter. Before the one-time charge, operating margin was 17.8% compared to 17.0% in the third 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 charge, was also a third quarter record of $52 million ($0.37 per diluted share) increasing 28% in this year's third quarter over $41 million ($0.30 per diluted share) in the third quarter of 1998. On a reported basis, which includes the impact of the one-time charge, net income was $11 million ($0.08 per diluted share) in the third quarter of 1999.

"The combination of rapidly growing, new competitive communications service providers in deregulated markets and the insatiable global demand for broader bandwidths in communication networks is driving ADC's growth," said William J. Cadogan, chairman and chief executive officer of ADC Telecommunications. "During the quarter, we positioned ADC to participate in new growth opportunities through the pending acquisition of Saville Systems for communications software, the completed acquisitions of Spectracom for optical components and Pathway for broadband transport, as well as a strategic investment in Siara Systems, a next-generation networking equipment company. As a leader in multiservice communications networks, ADC is well positioned to supply the broadband hardware systems, communications software solutions and systems integration services that communications service providers need to increase the speed and capacity of voice, video and Internet/data communications delivered to businesses and residences worldwide."

REVIEW OF PRODUCT GROUPS

A review of ADC's performance by its three product groups - Broadband Connectivity, Broadband Transport and Access, and Integrated Solutions - follows.

Broadband Connectivity

Broadband Connectivity sales in the third quarter of 1999 increased 35% to $238 million from $177 million in the comparable prior-year quarter. In the third quarter of 1999, sales of copper- and fiber-connectivity systems - growing 47% over last year's third quarter - continued to reach all-time record levels for any quarter. Strong worldwide growth in broadband connectivity systems continues as a result of growth in Internet/data traffic and digital services, which are creating demand for broader bandwidth connections, and the growth of new service providers (such as competitive transport and access providers and Internet service providers), which are creating demand for connectivity to new and existing communication networks. The strong growth of copper- and fiber-connectivity sales was partially offset by lower sales of wireless products primarily as a result of the divestiture and discontinuance of certain products from the former Wireless Systems Group as part of the strategic restructuring announced in the first quarter of 1999.

During the quarter, ADC won an exclusive three-year worldwide contract to supply Concert Communications with copper and fiber distribution frames to provide cross connect, termination and access points for high-speed communications networks in Europe, the Americas and Asia/Pacific regions.

In conjunction with ADC's goal to become a major supplier of fiber-optic components and modules, Spectracom was acquired in the quarter. Spectracom is a developer of high powered 980nm pump laser chips and modules. Through ADC's acquisitions of fiber-optic component companies in recent years, combined with ADC's manufacturing excellence and extensive sales, service and support capabilities, ADC is building a leadership position in supplying passive and active optical components and modules used by original equipment manufacturers (OEMs) to produce broadband communications systems.

Broadband Transport and Access

Broadband Transport and Access sales increased 12% to $154 million in the third quarter of 1999 compared to $138 million in the comparable prior-year quarter. Third quarter 1999 sales in this group increased year-over-year primarily as a result of the acquisition of Teledata Communications in November 1998 combined with increased sales of channel and data service units, ATM transport/access products, as well as new shipments of Cellworx systems, partially offset by lower sales of customer premise access products from original equipment manufacturers.

In June 1999, ADC completed the acquisition of Pathway. Pathway manufactures the AccessPoint(TM) Universal Media Access system. The AccessPoint system, which interfaces with both ADC's Cellworx(TM) Service Transport Node and AAC(TM) ATM Access Concentrator systems, is an ATM access product that transports voice, video and Internet/data communications over high-speed, switched broadband networks. In July 1999, the Iowa Communications Network (ICN) awarded ADC a multimillion-dollar contract to upgrade its statewide infrastructure to deliver compressed MPEG-2 video over an ATM network using the AccessPoint system. The ICN is a statewide, fiber-optic network that transmits high-quality, two-way, interactive video, high-speed data, Internet access and long distance voice communications. Today, the ICN serves over 750 video sites, including universities, hospitals, federal government services, state governments, school systems and public libraries. The AccessPoint award followed the ICN's contract award to ADC in June 1999 for the Cellworx system to be deployed in the network.

ADC's Cellworx Service Transport Node is now being deployed in six communication networks and four reseller training/demonstration centers, as well as being in nine evaluations/trials with telephone companies and private networks. ADC's Cellworx system is an ATM Virtual Path transport element offering bandwidth-efficient, multiservice delivery of voice, video and Internet/data services and allocating only the bandwidth needed per service type. 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 fiber-optic networks. Cellworx extends communications services over fiber and copper (using xDSL technologies) facilities to businesses and residences.

In July 1999, ADC announced that its CellSpan(TM) two-way multichannel multipoint distribution service (MMDS) platform was available for customer deployment. CellSpan enables communications service providers to offer wireless voice, video and Internet/data services to businesses, small offices/home offices and residences rather than accessing physical wireline networks. CellSpan is currently deployed by two competitive access providers in the U.S.

In July 1999, ADC received a contract from Seren Innovations for the deployment of the Homeworx cable telephony system. Seren plans to deliver advanced telephony services to residential and business customers in more than 15 cities in California and Minnesota. A nonregulated subsidiary of Northern States Power Company, Seren offers broadband communications services including cable TV, high-speed Internet and local and long-distance telephone under the Astound(SM) brand name. ADC also continues to ship Homeworx to MediaOne's deployments of cable telephony services in Atlanta, Los Angeles and Detroit. 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 accommodates delivery of current services such as telephony and Internet connections, while providing flexible expansion capability for future service upgrades. As a leader in capacity and reliability, Homeworx has up to six times more telephone capacity and provides a fully redundant configuration compared to competing systems. These industry-leading advantages enable cable TV operators who deploy Homeworx to cost-effectively attain higher penetration rates of subscribers and maintain the life-line reliability of service provided by traditional telephone providers.

This month, ADC and Televisa, Mexico's largest television broadcaster, announced the first commercially available high definition television (HDTV) transmission in Latin America. Televisa deployed ADC's DT800 digital television transmitter, DV6000 fiber-optic transport system and broadband connectivity products for video and audio signals.

Integrated Solutions

The Integrated Solutions Group increased third quarter 1999 sales by 9% to $52 million from $48 million in the comparable 1998 quarter. The 1999 increase was primarily a result of record third quarter sales of system integration services, growing 30% over the third quarter of 1998, partially offset by lower sales of software products and complex solutions consulting services. Growth in system integration services continues to be driven by 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 -- that are building and upgrading networks that offer integrated voice, video and Internet/data services.

During the quarter, ADC received its first orders for its CALEA platform software. ADC's CALEA platform software is one of the first products on the market, which complies with requirements under the Communications Assistance to Law Enforcement Act (CALEA), enabling communications service providers to meet the CALEA compliance date set for June 30, 2000. The CALEA law orders all communications service providers to retool their networks to meet law enforcement agencies' wiretap capacity and capability requirements or be subject to fines for each day not in compliance.

As part of ADC's strategy to be a leader in operations support software solutions for communications service providers, ADC announced the pending acquisition of Saville Systems PLC (Nasdaq: SAVLY, www.savillesys.com) in June 1999. The acquisition is subject to approval at the Saville shareholder meetings scheduled for August 31, 1999, as well as certain other conditions including the sanction of the High Court of Ireland and certain other governmental approvals and filings. The acquisition is expected to be completed during ADC's fourth quarter ending October 31, 1999, although the actual closing date will depend on when the sanction of the High Court of Ireland is obtained.

NINE-MONTH RESULTS

Sales for the nine months ended July 31, 1999 increased 25% to $1.2 billion compared to $984 million in the comparable period of 1998. Operating income, before one-time charges related to acquisitions and a strategic restructuring in the first and third quarters of 1999, increased 33% to $202 million for the nine months of 1999 compared to a nine-month 1998 result of $152 million. Net income, before the one-time charges, increased 30% to $131 million ($0.94 per diluted share) in this year's nine-month period compared to $100 million ($0.74 per diluted share) in the comparable period of 1998. In the first nine months of 1999, ADC completed the acquisitions of Teledata Communications, Hadax Electronics, Phasor Electronics, Spectracom and Pathway, as well as a strategic restructuring of its Wireless Systems Group and the formation of the Integrated Solutions Group. During this period, ADC recorded a charge for purchased in-process research and development expenses and restructuring costs of $119 million ($88 million after tax or $0.63 per diluted share) in connection with these activities. On a financial reporting basis, which includes the impact of all one-time charges, net income in the first nine months of 1999 was $42 million ($0.31 per diluted share).

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 10,100 employees around the world and annual sales of $1.6 billion. ADC was added to the Standard & Poor's 500 Index on July 30, 1999.

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-Q for the fiscal quarter ended April 30, 1999.

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 STATEMENTS OF INCOME - UNAUDITED


               (In Thousands, Except Per Share Amounts)


                                  For the

                                 Quarters

                                   Ended     For the Nine Months Ended
                                  July 31,         July 31,
                           --------- ---------   --------- ---------
                               1999     1998       1999      1998
                           --------- ---------   --------- ---------
NET SALES                   $444,129  $362,496  $1,231,463  $983,527


COST OF PRODUCT SOLD         230,882   193,641     641,798   524,155
                           --------- ---------   --------- ---------
GROSS PROFIT                 213,247   168,855     589,665   459,372
                           --------- ---------   --------- ---------

  Gross profit percentage       48.0%     46.6%       47.9%     46.7%
                           --------- ----------  ---------- ---------
EXPENSES:
 Research and
  development                 38,496    35,775     117,676   103,811
 Selling and
  administration              90,321    68,476     255,211   194,978
 Goodwill amortization         5,220     2,954      15,092     8,460
 Non-recurring charges        58,250        --     118,577        --
                           --------- ---------   --------- ---------

     Total expenses          192,287   107,205     506,556   307,249
                           ---------  --------   --------- ---------
OPERATING INCOME              20,960    61,650      83,109   152,123
OTHER INCOME
 (EXPENSE), NET:
      Interest                   636     1,109        (628)    3,668
      Other                   (1,150)     (285)     (2,732)   (1,398)
                           ----------  --------   --------- ---------

INCOME BEFORE
 INCOME TAXES                 20,446    62,474      79,749   154,393
PROVISION FOR
 INCOME TAXES                  9,675    21,867      37,321    54,039
                           ---------  ---------   --------   ---------
NET
INCOME                     $10,771(a)  $40,607   $42,428(a) $100,354
                           ========== ========= =========== ==========

AVERAGE COMMON
 SHARES OUTSTANDING
 (BASIC)                     135,629   134,525     135,337   134,173
                           ========= =========   ========= =========
EARNINGS PER SHARE (BASIC)     $0.08     $0.30       $0.31     $0.75
                           ========= =========   ========= =========
AVERAGE COMMON
 SHARES OUTSTANDING
 (DILUTED)                   139,508   136,826     138,824   136,456
                           ========= =========   ========= =========
EARNINGS PER SHARE
 (DILUTED)                   $0.08(a)    $0.30     $0.31(a)    $0.74
                           ========== ========   ========== ========

(a) Excluding $41 million and $88 million, net of tax non-recurring charges in the quarter and nine months ended July 31, respectively, net income would have been $52 million and $131 million, respectively. Diluted earnings per common share would have been $0.37 and $0.94, respectively. These charges relate principally to purchased in-process research and development expenses associated with acquisitions and the restructuring of the former Wireless Systems Group. -0-

             ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
                CONSOLIDATED BALANCE SHEETS - UNAUDITED

                            (In Thousands)


                                ASSETS

                                          July 31,        October 31,
                                            1999              1998
                                        --------------    ------------
CURRENT ASSETS:
 Cash and cash equivalents                   $82,863         $287,700
 Accounts receivable                         349,235          365,989
 Inventories                                 233,439          175,763
 Prepaid income taxes and other assets        47,642           33,418
                                       --------------    -------------
     Total current assets                    713,179          862,870

PROPERTY AND EQUIPMENT, net                  294,762          256,961

OTHER ASSETS, principally goodwill           367,370          180,756
                                       --------------    -------------

                                          $1,375,311       $1,300,587
                                       ==============    =============


                   LIABILITIES AND SHAREOWNERS' INVESTMENT

CURRENT LIABILITIES:
 Accounts payable                            $88,811          $67,150
 Accrued liabilities                         151,242          115,559
 Note payable and current maturities
  of long-term debt                           53,590          200,735

                                       -------------     -------------
     Total current liabilities               293,643          383,444

LONG-TERM DEBT, less current maturities       12,339            2,769
                                       --------------    -------------
              Total liabilities              305,982          386,213

SHAREOWNERS' INVESTMENT
          (135,891 and 134,897 shares
           outstanding, respectively)      1,069,329          914,374
                                       --------------    -------------

                                       $   1,375,311     $  1,300,587
                                       ==============    =============