ADC's Board Approves Exchange Program for Employee Stock Options; Program Subject to Shareowner Approval at March 4, 2003 Annual Meeting

Business Wire, Dec 11, 2002

Business Editors/High-Tech Writers

MINNEAPOLIS--(BUSINESS WIRE)--Dec. 11, 2002

ADC (Nasdaq:ADCT; www.adc.com) today announced that its Board of Directors has approved a stock option exchange program for ADC employees, subject to shareowner approval of the program at its annual meeting on March 4, 2003.

Under the proposed program, ADC employees will be given a voluntary, one-time opportunity to exchange some or all of the eligible stock options they currently hold for a lesser number of options at a new exercise price. The new exercise price will be based on ADC's stock price at an expected option grant date in December 2003. ADC's five most highly compensated officers and Board members will not be eligible to participate in the program. The program will be more fully described in ADC's 2003 proxy statement, which will be mailed to shareowners in January 2003.

"We believe the program will enhance long-term shareowner value by improving our ability to retain and incent our talented and valuable employees and by reducing the total options outstanding," said Rick Roscitt, chairman and CEO of ADC.

ADC's stock option exchange program is structured on a "value-for-value" principle, which will result in employees exchanging a larger number of old options for a smaller number of new options. The "value-for-value" approach is used in order to produce favorable results for shareowners by reducing the overall number of options outstanding, while also offering ADC a key employee retention and incentive mechanism to pursue its long-term growth objectives. In addition, ADC will round up in favor of its shareowners in establishing value-for-value option exchange ratios, using a valuation methodology based on the Black-Scholes option valuation model.

Based on the current stock trading range, the option exchange would apply to eligible employees' options that have an exercise price equal to or greater than $4.00 per share and an expiration date on or after January 1, 2004. The new options will have a new exercise price equal to the fair market value of ADC common stock on the date of grant of the new options and a new vesting schedule.

If approved by shareowners, the program is expected to commence in June 2003. Due to possible fluctuations in the ADC stock price before that time or other changed circumstances, the Board of Directors has reserved the right to cancel or postpone the program as the Board deems appropriate.

ADC's stock option exchange program is structured to comply with existing Financial Accounting Standards Board (FASB) guidelines so that ADC will avoid any variable accounting compensation charges against its earnings. ADC also developed the program with the intent to secure a favorable recommendation from Institutional Shareholder Services.

To achieve the desired accounting treatment for the exchange program, ADC must wait until at least six months have elapsed since the last eligible employee option grant date, which occurred in November 2002. For this reason, if the program is approved by shareowners, the exchange program will be commenced in June 2003. At that time, employees would have at least 20 business days to elect to participate, with the new options expected to be granted in December 2003.

Notice Concerning Stock Option Exchange Program

ADC has not filed or distributed its proxy statement in connection with the annual shareowners meeting on March 4, 2003. The proxy statement will contain important information regarding proposals related to this exchange and should be read carefully by shareowners prior to voting. ADC has not commenced the exchange offer referred to in this communication, and will not unless shareowners approve the exchange program at the annual shareowners meeting on March 4, 2003. ADC's Board of Directors has reserved the right to amend, postpone or terminate the proposed exchange program in the event of changed circumstances prior to the end of the exchange offer period. If and at the time the exchange offer is commenced, ADC will provide optionholders who are eligible to participate in the exchange offer with written materials explaining the precise terms and timing of the exchange offer. Employees who are eligible to participate in the exchange offer should read these written materials carefully when they become available because they will contain important information about the exchange offer, including certain risks associated with the exchange offer. Upon the commencement of the exchange offer, ADC will also file the written materials relating to the exchange offer with the Securities and Exchange Commission as part of a tender offer statement. ADC's shareowners and optionholders will be able to obtain these written materials and other documents filed by ADC with the Securities and Exchange Commission free of charge from the Securities and Exchange Commission's web site at www.sec.gov or from ADC's investor relations web site at www.adc.com/investor by clicking on Financial Information, then clicking on SEC Filings.