ADC Redefines Broadband Service Delivery in Operations Support Systems Software With Acquisition of CommTech

Business Wire, Feb 5, 2001

Business Editors & Technology Writers

MINNEAPOLIS & CRANBURY, N.J.--(BUSINESS WIRE)--Feb. 5, 2001

Proposed Acquisition Strengthens ADC's Market Leading

Singularit.e(TM) OSS Solution by Adding Integrated and Comprehensive

Order Management, Provisioning and Activation Capabilities

ADC (Nasdaq:ADCT, www.adc.com), a leading global supplier of fiber optics, network equipment, software and integration services for broadband, multiservice networks, and CommTech Corporation (www.comm.com), a provider of end-to-end service order management, provisioning and activation software for communications service providers (CSPs), have signed a definitive agreement for the acquisition of CommTech by ADC.

The proposed acquisition advances ADC's strategy to become the leading provider of end-to-end Operations Support Systems (OSS) solutions for broadband multiservice networks by simplifying broadband service delivery. The addition of CommTech's FastFlow(R) software suite provides critical service fulfillment capability to ADC's existing Singularit.e Customer Management, Billing and Service Assurance portfolio. The integration of the FastFlow suite will make this the most comprehensive OSS solution available. Deploying these "best-of-breed" components as a pre-integrated package provides added cost savings and operational efficiencies previously unachievable with stand-alone applications. For CSPs, this translates into life cycle savings measured by faster development and marketing of new service offerings, improved time to market to generate revenue, reduced operating costs and enhanced end-user experience.

Under the terms of the stock-for-stock transaction, ADC will issue approximately 13.25 million shares of its common stock for all outstanding equity interests in CommTech, including the conversion of existing CommTech employee stock options. Based on ADC's closing price of $14.00 per share on February 2, 2001, the transaction would have a value of approximately $185,500,000. The proposed transaction is expected to be completed on or before February 28, 2001, accounted for as a pooling of interests and treated as a tax-free reorganization for U.S. federal income tax purposes. Closing of the proposed transaction is subject to approval of CommTech' s stockholders and other customary conditions, although the parties have already received the necessary clearances under the Hart-Scott-Rodino Act. After closing the transaction, ADC expects to take a non-recurring charge for various acquisition-related expenses the amount of which has not yet been determined. Excluding the non-recurring charge, ADC expects the acquisition to be non-dilutive to its earnings per share in the first twelve months after closing and accretive thereafter.

THE OSS OPPORTUNITY

The OSS market continues to experience rapid growth and opportunity. According to independent research firm The Yankee Group, the total OSS applications and services market was approximately $32 billion in 2000 and is expected to surpass $38 billion in 2001. The fulfillment and provisioning sector is among the fastest growing sectors of this market.

"This acquisition further positions ADC as a leader in the OSS market," said Rob Rich, executive vice president of The Yankee Group. "The service fulfillment and provisioning sector is among the fastest growing of the OSS market. Both CommTech and ADC understand these changing market dynamics and their combined vision of OSS simplification can reduce life cycle costs, speed new product introduction and make the difference between success and failure for CSPs. This transaction uniquely positions ADC as an end-to-end supplier in this growing and important market."

EXTENDING ADC'S COMPETITIVE ADVANTAGE

"We believe the addition of CommTech's FastFlow service fulfillment software will enable ADC to be the industry's breakthrough OSS leader. It extends ADC's ability to simplify and automate CSPs' OSS and business processes, enabling operational efficiency and bottom-line profitability," said Larry Ford, senior vice president of ADC and president of ADC's Integrated Solutions Group. "CommTech's offerings are market proven and their track record of innovation and expertise in best-of-breed software applications integrate perfectly with our team and broadband OSS strategy."

"Joining forces with ADC provides CommTech with a powerful strategic advantage in building a world-class, end-to-end OSS solution for broadband communications providers around the globe," said Frank Fawzi, CEO of CommTech. "We believe that there are tremendous opportunities to leverage our combined technical and operational expertise to jointly exceed our customers' goals of achieving profitability faster by attracting, winning and retaining consumer and business subscribers in a more efficient environment."

ACQUISITION CREATES WORLD-CLASS BROADBAND OSS SOLUTION

CommTech's FastFlow service fulfillment suite includes order management, flow-through provisioning and activation. These critical components will be added to ADC's Singularit.e OSS suite to create an integrated and comprehensive end-to-end solution for CSPs and software systems integrators. Like Singularit.e, CommTech's offerings reduce CSPs' operational costs by helping them run their business more efficiently and by providing the scalability and flexibility to adapt to the changing dynamics of a broadband environment. The FastFlow solutions are architected to simplify integration and minimize costs. Furthermore, the solutions are open, making them interoperable with the Singularit.e suite and with other best-of-breed products and existing OSS environments.