ADC Lowers Q3 Guidance

MINNEAPOLIS -- ADC (Nasdaq:ADCT - News, www.adc.com - News) today announced that sales and pro forma earnings per share for the third fiscal quarter ending July 31, 2002 are now expected to be lower than its guidance announced on May 22, 2002. As a result of further industry-wide reductions in telecommunications capital spending, ADC now expects sales in the third quarter of 2002 to be approximately $235-245 million. ADC also expects pro forma diluted earnings per share in the third quarter to be a $0.05 to $0.07 loss, which is just slightly higher than its May guidance. Despite the revenue decline, strong expense reductions mitigated most of the impact on earnings. Pro forma earnings exclude non-cash stock compensation expenses, non-recurring charges/credits and restructuring charges, however, do include certain one-time operating charges. As there are still several weeks to go in the quarter, the current outlook remains subject to change in a very dynamic environment. In response to current conditions, ADC is targeting to further lower its breakeven point toward $250 million in quarterly sales from approximately $300 million. ADC's goal is to reach this point by October 31, 2002. "Although we are holding and, in some cases, gaining market share in the face of reductions in telecommunications capital spending, we are not satisfied with our expected third quarter results," said Rick Roscitt, chairman and CEO of ADC. "Over the past 18 months, we have made great progress in rapidly lowering our cost structure in this difficult downturn. Given continued industry weakness, we are redoubling our efforts to further gain market share in our key products, continue to lower our breakeven point and further strengthen our balance sheet. With very little debt and several hundred million dollars of cash on hand, ADC has one of the strongest balance sheets in the industry. We will continue taking those actions that help us achieve our goal of returning to profitability as soon as possible." In further lowering ADC's breakeven point and returning to profitability as soon as possible, the following actions are underway: Consolidation and closing of facilities;
Increased outsourcing;
Divestiture of product lines with low revenue volumes and high operating losses;
Reduction of work force; and
Cutting nonessential operating expenses. ADC Telecommunications Inc.