Applied Digital Access Announces Termination of Joint Development Agreement With Northern Telecom, Inc. -- ADA to Focus On Its Core Business and Products.

SAN DIEGO--(BUSINESS WIRE)--March 8, 1999--Applied Digital Access Inc. (NASDAQ:ADAX) announced today the termination of its joint development agreement with Northern Telecom Inc. (Nortel).

The intellectual property rights associated with the jointly developed technology will become the property of Applied Digital Access Inc. (ADA).

ADA and Nortel entered into the agreement in September 1997 to develop SONET network products for the telecommunications industry. Under the agreement, ADA and Nortel each contributed technology and development resources to the project conducted under the Agreement and shared the development costs. Nortel will have the right to receive royalties to recoup it portion of the development costs. All of ADA's development costs associated with the joint development have been expensed as incurred.

Nortel is obligated to continue funding its share of development costs associated with the joint development project for the next three months. During this time, ADA intends to substantially reduce expenses associated with the development of SONET products under the Agreement and will explore alternatives for maximizing the value of the technology developed under the agreement. Possible alternatives that ADA may consider include the potential sale of the technology, a spinout of the technology, or other joint agreements.

Don Strohmeyer, president and chief executive officer of ADA, said, "The technology developed with Nortel may need to be redirected in order to achieve its full potential. Meanwhile, we feel our core products and technology address markets with significant opportunities and we intend to focus our resources and efforts on our core area of market expertise: network performance management products and services for telecommunications carriers."

Applied Digital Access is a leading provider of Network Performance Management products that include systems, software and services used to manage the quality, performance, availability and reliability of telecommunications service providers' networks. These products enable telecommunications service providers to improve quality of service, increase productivity, and lower operating expenses. The company is headquartered in San Diego, and has product development and support facilities in Vancouver, British Columbia; Terre Haute, Ind.; and Richardson, Texas. Press releases and other information about Applied Digital Access and its products and services are available at http://www.ada.com on the Internet.

"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: Except for historical information contained in this release, the preceding may contain forward-looking statements. These forward-looking statements include statements regarding (i) the company's intent to reduce expenses and focus its resources and efforts and (ii) the company's efforts to maximize the value of the technology developed under the Agreement with Nortel. These statements involve potential risks and uncertainties as detailed in the company's Annual Report on Form 10-K for the year ended 12/31/97 and the most recent Form 10-Qs which include competition in the company's markets, fluctuations in quarterly operating results; history of losses, the concentration of major customers; telephone company qualification requirements, high dependence on two product lines, management of changing business, customer mergers, rapid technological change and dependence on new products, dependence on suppliers and subcontractors, high inventory levels and the need to make advance purchase commitments, Year 2000 compliance, product recall, government regulation, potential competition from RBOCs, proprietary technology, dependence on key personnel and volatility of stock price. The company's actual results could differ materially from those discussed in this release. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date of this release.