<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                              ___________________

                                   FORM 10-K

          [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

                                       OR

         [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

            FOR THE TRANSITION PERIOD FROM __________ TO __________

                          COMMISSION FILE NO. 0-10018
                              ____________________

                         DSC COMMUNICATIONS CORPORATION
               (Exact Name of Registrant as Specified in Charter)

               DELAWARE                               54-1025763
     (State or other jurisdiction              (I.R.S. Employer
     of incorporation or organization)          Identification No.)

            1000 COIT ROAD
             PLANO, TEXAS                                75075
     (Address of principal executive office)           (Zip Code)

      Registrant's telephone number, including area code:  (972) 519-3000

       Securities registered pursuant to Section 12(b) of the Act:  None

          Securities registered pursuant to Section 12(g) of the Act:

                                 COMMON STOCK,
                                 $.01 PAR VALUE

                        PREFERRED STOCK PURCHASE RIGHTS
                                (Title of Class)

     Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.  Yes  X    No
                          -----     -----

     Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.  [X]

     As of March 3, 1997, 117,338,563 shares of DSC Communications
Corporation Common Stock, $.01 par value, were outstanding, and the
aggregate market price of the shares held by nonaffiliates was
approximately $2,393,362,373.  (Solely for the purposes of calculating the
preceding amount, all directors and officers of the registrant are
deemed to be affiliates.)

                      DOCUMENTS INCORPORATED BY REFERENCE

     Certain portions of the definitive proxy material for the 1997
Annual Meeting of Stockholders are incorporated by reference in
Items 10, 11, 12, and 13 of Part III of this report.

     Certain portions of the Annual Report to Shareholders for the
year ended December 31, 1996 are incorporated by reference in Item
1 of Part I, Items 6, 7, and 8 of Part II, and Item 14 of Part IV
of this report.

<PAGE>   2
                         DSC COMMUNICATIONS CORPORATION

                                 ANNUAL REPORT

                                       ON

                                   FORM 10-K

                          YEAR ENDED DECEMBER 31, 1996


                                     PART I

ITEM 1.  BUSINESS

GENERAL

     DSC Communications Corporation was incorporated under the laws of the
State of Delaware in 1976.  As used herein, the term "Company" refers to
DSC Communications Corporation and, unless the context clearly indicates
otherwise, all of its subsidiaries.  The Company's executive offices are
located at 1000 Coit Road, Plano, Texas 75075.  Its telephone number is
(972) 519-3000.

     The Company designs, develops, manufactures, and markets digital
switching, access, transport, and private network system products for the
worldwide telecommunications marketplace.  These products allow
telecommunications service providers to build and upgrade their networks to
support a wide range of voice, data, and video services.  The Company offers a
comprehensive product line including digital switching systems, intelligent
network products, cellular switching systems, digital loop carrier products,
digital cross-connect products, and optical transmission systems and related
advanced network management systems.  The Company develops such systems to meet
American and international telecommunications standards, and the specific
requirements of the operating companies of the Regional Holding Companies
("RHCs"), independent telephone companies, long-distance carriers, private
networks, and companies operating public and private communications networks in
other countries.

     The Company acquired NKT Elektronik A/S (subsequently renamed DSC
Communications A/S), a Copenhagen, Denmark-based manufacturer of optical
transmission equipment, for approximately


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$149 million in cash in November, 1994.  The operating results of DSC
Communications A/S are reported as part of the Company's Transport Systems
Group.

     The Company supplies products to a domestic and international
customer base, including local exchange telephone companies, long-distance
carriers, cellular telephone companies, international telephone companies,
various Fortune 1000 companies, and utility companies.  Its domestic
customers include the RHCs and most major domestic independent telephone
and long-distance companies, including MCI Communications Corporation,
U.S. Sprint Communications Company L.P., GTE Communications Systems
Corporation, and LDDS/WorldCom, Inc. (formerly LDDS Communications, Inc.).
The Company is also a major manufacturer of high-capacity cellular
switches for Motorola, Inc. ("Motorola"), a leading supplier of wireless
communication systems throughout the world.  International customers
include DDI Corporation ("DDI") of Japan, Tele Danmark, Deutsche Telekom in
Germany, Mercury Communications, Ltd., a subsidiary of Cable & Wireless PLC in
the United Kingdom, British Telecommunications PLC, Telefonos de Mexico, S.A. de
C.V., and AAP Communications, Pty. Ltd. of Australia.


PRODUCTS

     The percentage of consolidated revenue from the Company's product
groups was as follows:


<TABLE>
                                           Year Ended December 31,
                                            1996    1995    1994
                                            ------  ------  ------

              <S>                           <C>     <C>     <C>
              Switch systems                 42%     48%    52%
              Access systems                 33%     28%    27%
              Transport systems              23%     23%    19%
</TABLE>


     SWITCH SYSTEMS. The Company develops, manufactures and markets advanced
switching and intelligent network systems for the worldwide telecommunications
marketplace.  These systems connect and route calls and provide the application
intelligence for intelligent network management and signaling for wireline and
wireless networks, long distance switching, and switching for the support of
high-speed communications such as data, image and video.  The Company's


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primary switching and intelligent network products include the INfusion
Intelligent Network Product family, as well as tandem and cellular switching
equipment.

          THE INfusion (TM) PRODUCT LINE.  The Company's INfusion  family of
     intelligent network products covers the full range of intelligent network
     ("IN") functionality including signaling, service creation and management
     and service delivery.  To minimize development time and allow rapid
     introduction of IN services, the Company also provides a variety of
     pre-packaged wireline and wireless applications.  With this compatible
     family of IN products, wireline and wireless service providers can
     significantly reduce the time required to introduce new services into the
     network and can cost-effectively evolve to a large-scale service
     implementation.

          The INfusion product family includes the INfusion SCE, SMS, SCP,
     ISP and STP.  The INfusion SCE (Service Creation Environment), a
     platform providing the capability to create services from a library
     of reusable components, is used to develop and test Intelligent
     Network services and their supporting logic. The INfusion SMS
     (Service Management System) provides the tools to deploy, provision,
     and activate SCE-created IN services.  The INfusion SCP (Service
     Control Point) and SCP/m are scaleable, fault-tolerant service
     delivery platforms that execute SCE-created services.  Designed to
     allow multiple services on a single platform, the INfusion SCP and
     SCP/m support a variety of database-related IN services such as
     number translation, calling card validation, virtual private network
     and Home Location Register. Another service delivery platform, the
     INfusion ISP (Intelligent Service Peripheral) executes SCE-created
     services that require the exchange of information with the caller
     (i.e., PIN input, voice-activated dialing) as well as database
     look-up (SCP functions).

          The INfusion STP (Signal Transfer Point) is a network signaling
     hub that provides access to CCS7 common channel signaling networks and
     routing of signaling messages between network nodes and other networks.
     Supporting both SS7 and C7 signaling protocols, the Company's INfusion STPs
     are installed in cellular, long distance and local networks throughout the
     world.



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          The Company also offers a variety of pre-packaged applications
     such as Home Location Register and Short Message Service for wireless
     networks, Enhanced 800, Enhanced Routing, and Calling Card and Debit
     Card authorization.  Providing immediate service deployment in their
     "off-the-shelf" state, these SCE-created services can also be
     customized by the service provider for specific customers or markets.

          TANDEM SWITCHES. As a telephone network becomes increasingly
     complex, the number of switching locations grows to a point where it
     is not economical to connect every switching point directly to every
     other switching point.  Intermediate switching points served by a
     tandem (or transit) switch solve this problem.  The Company offers a
     complete line of modular tandem switches that not only fulfill the
     intermediate switching function but also provide flexible dialing
     plans, service access codes, and customized screening, translation
     and routing. The tandem product family also works with the INfusion
     ISP to provide intelligent network services.  The Company's DEX 600
     tandem switching systems are a family of high capacity, modular
     tandem switches for the North American market supporting from 10,000
     to 120,000 traffic carrying ports.  The Company's international
     customer base continues to grow with the increasing demand for tandem
     switching in foreign countries.  Supporting both T1 and E1 trunk
     interfaces, the 600GT is a full featured gateway/transit switch for
     deployment in international long distance, wireless and private
     networks.

          WIRELESS SWITCHES.  Since 1984, the Company has provided switching
     platforms to Motorola which, when augmented with a variety of I/O
     peripherals and co-developed mobility management software, produces
     wireless switching systems, currently in service in 37 countries worldwide
     for both cellular and PCS applications. These applications currently
     include both analog and digital modes of operation. The Company's wireless
     switch platforms, DSC DEX200C and  DSC DEX600C, utilize the same proven
     common control elements which are integral to the Company's overall
     switching products family, including the large installed base of tandem
     switching systems.

          BROADBAND PRODUCTS.  Broadband products utilize Asynchronous
     Transfer Mode ("ATM") technology to enable service providers to offer
     the most advanced network capabilities, including multimedia,
     high-speed data, voice and interactive video services.  The Company's
     iMPAX(TM) product is an ATM-based switch that can be located at the
     premises of a large corporation to enable the corporation to
     transport a variety of communication services throughout its network.
     iMPAX can also be deployed in a telephone company's central office
     or at the site of an independent service provider.  Use of iMPAX will
     give service providers and corporations access to network elements
     through which they can offer new wideband and broadband services such
     as


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     LAN-to-LAN inter-networking, video conferencing and supercomputer
     connectivity.

          The ATM-based technology is expected to be incorporated into the
     Company's switching, access and transport products.

     The Company's primary competitors in the switching and intelligent
network markets are Northern Telecom Ltd. ("Nortel"), Tandem Computers,
Inc., Lucent Technologies, Inc. ("Lucent") and AB Telefon LM Ericsson
("Ericsson").

     ACCESS PRODUCTS.  The Company designs, manufactures and markets equipment
for the local loop, that portion of the public telecommunications network which
extends from the local telephone company's central office switch to the
individual home or business user. The demand for access equipment has been
strong in recent years due primarily to the deployment of fiber optics in many
of the networks served by the major service providers in the United States. The
Company believes that software-based access products which support fiber optic
communications will continue to experience growth in demand and accordingly, has
developed a line of access products to serve telecommunications service carriers
in the United States and abroad.

          LITESPAN(R)-2000.  In 1991, the Company began shipments of
     Litespan-2000, an access product which enables local exchange
     carriers and other service providers to utilize fiber optics in the
     local loop.  Over a single pair of optical fibers, Litespan-2000 can
     transmit voice, data and video on an integrated basis to as many as
     2,000 subscribers.  The Litespan-2000 is the world's first digital
     loop carrier to meet North American Synchronous Optical Network
     ("SONET") standards and related fiber optic interface requirements
     set forth by the RHCs.  The Litespan-2000 allows telecommunications
     service providers to introduce the high-capacity technology of fiber
     optics into the local loop, while supporting basic services, in a
     cost effective manner.  The Company believes that the introduction of
     multi-media services, such as video on demand, will increase the
     demand for fiber optic-related products.  The Company currently has
     multi-year agreements with six of the seven RHCs for purchases of
     Litespan-2000 systems.



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<PAGE>   7


          LITESPAN(R)-120.  The Company has evolved the Litespan system to
     address access applications in international markets.  The
     Litespan-120 is a flexible access multiplexer that may be deployed as
     a loop carrier or primary mux, using copper, fiber or radio feeders and
     offers benefits such as integral fiber optic interfaces, software
     control and support of a wide range of telephony services in a
     compact, cost effective package.  Deliveries of Litespan-120 began
     during late 1995. Network deployments are taking place in
     Latin America and Eastern Europe. There is also additional field
     testing under way.

          AIRSPAN(TM).  Airspan, which is currently undergoing customer
     market trials, provides access service over a wireless local loop,
     thereby providing users access to the public telecommunications
     network without having to install copper wire or fiber lines.  The
     primary markets for this product are areas where the last link in the
     subscriber connection is radio rather than copper or fiber lines.
     Airspan is expected to be popular in developing countries where
     copper or fiber line access connections can be expensive and time
     consuming to install.  In addition, Airspan and Multiline, an
     application of Airspan integrated with Litespan-120, are cost
     effective and quick response alternatives in dense urban environments
     of developed countries.

          SWITCHED DIGITAL VIDEO.  The Company is also currently
     developing Switched Digital Video ("SDV") technology to provide an
     ATM-based, interactive, fiber switched solution capable of delivering
     video, data, and voice services to residences and businesses.  The
     Company will offer SDV as a migratory path for new and current
     Litespan customers as they upgrade to interactive broadband
     full-service networks.  These new SDV-based networks will enable
     carriers to offer a multitude of new revenue-generating services over
     a single integrated platform.

     Companion products from the Company's access products portfolio
include Starspan(R), which extends the capabilities of the Litespan-2000
to the customer's premises; and Metrospan(R), which is used as a broadband
transport system within a campus-type


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setting or a metropolitan communications network.

     New access product offerings in 1996 included the OC-12 Transport
system which provides delivery of very high rate services such as DS3 and
OC3 to end users.

     The Company's primary competitors in the access market are Lucent,
Nortel and Fujitsu, Ltd.

     TRANSPORT SYSTEMS.  Transport equipment includes a vast array of products
that carry signals throughout the telecommunications network. The Company's
transport product portfolio consists of digital cross-connects, high-capacity
fiber optic add/drop and terminal multiplexers, access multiplexers, and network
management systems that route voice, video, and data traffic efficiently through
the network.  The Company's products are used by telephone companies, cellular
service providers, and large private or governmental networks to add efficiency,
lower costs, improve network resiliency, and enhance the quality of their
services.

          DIGITAL CROSS-CONNECTS.  The Company's digital cross-connect family,
     comprised of the DEXCS, DEX ECS1 and DEX ECS3 models, has enabled telephone
     companies to make their central offices and long distance facilities more
     efficient and less labor-intensive.

          iDCS (TM) (Integrated Digital Cross-connect System). iDCS addresses
     the smaller size transmission requirements for management of voice
     and data circuits in the telecommunications network.  This product
     also meets the


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<PAGE>   9

     domestic requirements of SONET and international specifications of
     SDH. iDCS provides optical and electrical interfaces to other
     telephone company equipment and economically manages the circuit
     traffic through the network.

          microDX(TM). The microDX offers sophisticated cross-connect features
     to sites of varying size and remoteness.  For example, with the Company's
     microDX, cell sites, wireless hubs, and private networks can inexpensively
     incorporate high-end cross-connect features.  microDX supports
     small-capacity applications that require DSO-level add/drop multiplexing,
     as well as RF fingerprinting fraud control interconnect, Cellular Digital
     Packet Data, and Rural Service Area cellular hubbing.

          iMTN(R) (Integrated Multi-Rate Transport Node). iMTN provides
     routing, distribution, and management throughout the network.  The
     iMTN provides for the public telecommunications network's evolution
     to transmission equipment which meets the North American SONET and
     international Synchronous Digital Hierarchy ("SDH") fiber optic
     standards.  Early applications of iMTN include network video
     broadcast and high-volume voice/data transfer.  The iMTN has been
     deployed both domestically and internationally.

          LINE TRANSMISSION.  The Company's line transmission equipment, which
     was acquired as part of the acquisition of DSC Communications A/S at the
     end of 1994, includes the FOCUS 2 to 140 and 2 to 150 multiplexers and line
     terminals for access networks, and the FOCUS 620 to 2500 terminal
     multiplexers and regenerators for high-capacity trunk transmission systems.
     These products incorporate plesiochronous digital hierarchy ("PDH")
     systems, representing the established embedded base of transmission
     technology, and SDH systems, representing new emerging transmission
     technology analogous to SONET in the North American market.  During the
     latter part of 1996, the Company began deliveries of the AC1 add/drop and
     terminal SDH multiplexer.  Deliveries of AC4, the next of a new generation
     of SDH products, should commence in 1997.  These products will bring
     enhanced features such as add-drop mux and cross-connect capability to
     the Company's SDH product line, resulting in a comprehensive and economical
     next-generation product offering for the rapidly growing worldwide SDH
     transmission market.

     The Company also develops, manufactures, and markets a variety of
digital transmission products such as echo cancelers and transcoders, as
well as various customer premises products.

     The Company's primary competitors in the digital cross-connect market
are Lucent, Alcatel Network Systems ("Alcatel") and Tellabs, Inc.  The
primary competitors in the line transmission equipment market are Alcatel,
Ericsson and Siemens AG.


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<PAGE>   10


REGULATION

     The telecommunications industry is subject to regulation in the United
States and other countries.  Federal and state regulatory agencies, including
the Federal Communications Commission ("FCC") and the various state Public
Utility Commissions ("PUCs") and Public Service Commissions, regulate most of
the Company's domestic customers. In addition, the RHCs are restricted by the
terms of the Modified Final Judgment which resulted from the court-ordered
divestiture of the RHCs by AT&T Corporation, which prohibited the RHCs from
manufacturing telecommunications equipment and providing interexchange or
long-distance services.  In early 1996, the Telecommunications Act of 1996 (the
"1996 Legislation") was passed.  The 1996 Legislation contains provisions that
permit the RHCs, subject to satisfying certain conditions, to manufacture
telecommunications equipment.  One or more RHCs may decide to manufacture
telecommunications equipment, to design and provide telecommunications software,
or to form alliances with other manufacturers.  Any of these developments could
result in increased competition for the Company and reduce the RHCs' purchases
from the Company.  The 1996 Legislation also permits local exchange telephone
companies, long-distance carriers, cable television companies and electric
utility companies to compete with each other to provide local and long-distance
telephone and video services.  The Company believes that the 1996 Legislation
should increase the demand for systems, software and services as network
operators respond to the changing competitive environment by constructing new or
enhancing existing networks.

     In addition, the FCC and a majority of the states have enacted or are
considering regulations based upon alternative pricing methods.  Under
traditional rate of return pricing, telecommunications service providers
were limited to a stated percentage profit on their investment.  Under the
new method of pricing, many PUCs have entered into agreements with the
local exchange carriers where the PUCs have relaxed or eliminated the
profit cap in return for the carrier's promise to reduce or hold service
prices at current levels.  In some states, the PUCs and the carriers have
further agreed, in order to win relaxation of profit limits, that the
carriers would invest large sums to further upgrade the digital and
optical capabilities of the network.  The Company believes that the new
methods of price


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regulation could increase the demand for its products which enhance the
efficiency of the network or allow the expedited introduction of new
revenue-producing services.

     Outside the United States, telecommunications networks are primarily
owned by the government or are strictly regulated by the government.
Although potential growth rates of some international markets are higher
than those of the United States, access to such markets is often difficult
due to the established relationship between the government-owned or
-controlled telecommunications operating company and its traditional
indigenous suppliers of telecommunications equipment.  However, there has
been a global trend towards privatization and deregulation of the
state-owned telecommunications operations.  This trend has found favor in
the industrialized world, the emerging markets of the newly-industrialized
countries, and various developing market countries which want to both
capitalize on the value of the existing network and promote the
development of the telecommunications network as an integral part of the
economic infrastructure.  The Company believes that the current trend of
privatization and deregulation will continue, and that such trend could
provide the Company with additional international opportunities.


MARKETING

     The Company sells products and services on a domestic and
international basis to both the public and private network markets through
various sales and distribution channels.  The Company's internal sales
group is a direct sales force, divided into market business segments.  The
Company also sells through third-party distributors such as original
equipment manufacturers ("OEMs"), sales representatives and certain
distributors in foreign countries.



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<PAGE>   12

INTERNATIONAL OPERATIONS AND MAJOR CUSTOMERS

     The information required for this section is set forth in the
"International Operations and Major Customers" footnote on page 38 of the
Company's 1996 Annual Report to Shareholders, which information is
incorporated herein by reference. Customers which accounted for at least 10%
of the Company's consolidated revenue in 1996 included Motorola, MCI, and
Ameritech.


BACKLOG

     The Company's backlog, calculated as the aggregate of the sales price
of orders received from customers less revenue recognized, was
approximately $811 million and $688 million on December 31, 1996 and
December 31, 1995, respectively.  Approximately $189 million of orders
included in the December 31, 1996 backlog are scheduled for delivery after
December 31, 1997.  However, all orders are subject to possible
rescheduling by customers.  While the Company believes that the orders
included in the backlog are firm, some orders may be canceled by the
customer without penalty, and the Company may elect to permit cancellation
of orders without penalty where management believes that it is in the
Company's best interest to do so.


RESEARCH AND PRODUCT DEVELOPMENT

     The industry in which the Company operates is characterized by
rapidly-changing technological and market conditions which may shorten
product life cycles.  The Company's future competitive position will
depend not only upon successful production and sales of its existing
products, but also upon its ability to develop and produce, on a timely
basis, new products to meet existing and anticipated industry demands.
The Company is currently engaged in the development of several new
products and enhancements to existing products.  During the product
development process, the Company invests a substantial amount of resources
in products which often require extensive field testing and evaluation
prior to actual sales to its customers.

     The Company's research and product development costs charged to
expense were $210.1 million, $189.8 million, and $127.3


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million for the years ended December 31, 1996, 1995, and 1994,
respectively.  Additionally, approximately $37.0 million, $26.8 million,
and $24.6 million of software development costs were capitalized in the
Consolidated Balance Sheets in 1996, 1995, and 1994, respectively.


COMPETITION

     The portions of the telecommunications industry in which the Company
competes are intensely competitive and are characterized by continual
advances in technology.  The Company believes that it enjoys a strong
competitive position due to its large installed base, its strong
relationship with key customers, and its technological leadership and new
product development capabilities.  However, many of the Company's foreign
and domestic competitors (which are listed in the PRODUCTS section) have
more extensive engineering, manufacturing, marketing, financial and
personnel resources than those of the Company.  The Company's ability to
compete is dependent upon several factors, including product features,
innovation, quality, reliability, service support, price and the retention
and attraction of qualified design and development personnel.


MANUFACTURING AND SUPPLIERS

     The Company generally uses standard parts and components for its
products, and believes that, in most cases, there are a number of
alternative, qualified vendors for most of those parts and components.
The Company purchases certain custom components and products from single
suppliers.  The Company believes that the manufacturers of the particular
custom components and products should be able to meet expected future
demands.  Although the Company has not experienced any material adverse
effects from the inability to obtain timely delivery of needed components,
an unanticipated failure of any significant supplier to meet the Company's
requirements for an extended period, or an interruption of the Company's
ability to secure comparable components could have an adverse effect on
the Company's revenue and profitability.  In addition, the Company's
products contain a number of subsystems or components acquired from other
manufacturers on an OEM basis.  These OEM products are often available
only from a limited number of manufacturers.  In the event that an OEM
product was no longer available from a current


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<PAGE>   14

OEM vendor, second sourcing would be required and could delay customer
deliveries which could have an adverse effect on the Company's revenue and
profitability.


PATENTS AND PROTECTION OF OTHER PROPRIETARY INFORMATION

     The Company has been awarded patents and has patent applications
pending in the United States and certain foreign countries.  There can be
no assurance that any of these applications will result in the award of a
patent, or that the Company would be successful in defending its patent
rights in any subsequent infringement actions.  Because of the existence
of a large number of third-party patents in the telecommunications field
and the rapid rate of issuance of new patents, some of the Company's
products, or the use thereof, could infringe third-party patents.  If any
such infringement exists, the Company believes that, based upon historical
industry practice, it or its customers should be able to obtain any
necessary licenses or rights under such patents upon terms which would not
be materially adverse to the Company.

     In addition to the patent protection described above, the Company
protects its software through contractual arrangements with its customers
and through copyright protection procedures.


ENVIRONMENTAL AFFAIRS

     The Company's manufacturing operations are subject to numerous
federal, state and local laws and regulations designed to protect the
environment.  Compliance with these laws and regulations has not had, and
is not expected to have, a material effect upon the capital expenditures,
earnings, or the competitive position of the Company.


EMPLOYEES

     As of December 31, 1996, the Company had a total of 6,367 employees.




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<PAGE>   15


ITEM 2.  PROPERTIES

     The Company's principal facilities are in the following locations:


<TABLE>
<CAPTION>
                            Approximate Square
                                 Footage
                         ----------------------
       Location            Owned       Leased             Description
-----------------------  ----------  ----------  ------------------------------
<S>                      <C>         <C>         <C>
Plano, Texas              1,295,000     497,000  Corporate offices;
                                                 administration; engineering,
                                                 research and development;
                                                 manufacturing and assembly;
                                                 customer service and support;
                                                 and warehousing.

Copenhagen, Denmark         223,000      38,000  Administration; engineering,
                                                 research and development;
                                                 manufacturing and assembly;
                                                 and warehousing.

Aguadilla, Puerto Rico           --     164,000  Manufacturing and assembly.

Petaluma, California             --     131,000  Engineering, research and
                                                 development; and assembly.

Feltham and Ashford,             --      87,000  Engineering, research and
England                                          development; customer sales
                                                 and service; and warehousing.

San Jose, Costa Rica             --      59,000  Manufacturing and assembly.

Drogheda, Ireland                --     122,000  Manufacturing and assembly;
                                                 engineering, research and
                                                 development; and warehousing.

</TABLE>

     The Company owns approximately 281 acres of land in Plano, Texas and
approximately 28 acres of land in Copenhagen, Denmark,


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of which 99 acres have been developed for existing facilities and the
balance is undeveloped.  The undeveloped land is expected to be used for
future Company expansion.  The Company also has additional leased
facilities, which are primarily sales offices, located in various cities
throughout the world.  The Company believes that the above-described
facilities are suitable and adequate to meet the Company's production
requirements.


ITEM 3.  LEGAL PROCEEDINGS

     On February 14, 1996, the Company joined Bell Atlantic in bringing an
antitrust action against AT&T Corporation ("AT&T") and Lucent alleging the use
of monopoly power in the central office switch market as part of a scheme to
gain an unfair competitive advantage in the remote digital terminal market. In
July 1996, Lucent brought a counterclaim against the Company alleging a "false
advertising" claim under the Lanham Act.  On February 18, 1997, the Company and
Bell Atlantic settled their claims against AT&T.  The Company, Bell Atlantic and
Lucent settled all claims against each other on March 13, 1997.  In conjunction
with these settlements, Bell Atlantic agreed to purchase a significant amount of
product from the Company over a five year period beginning in 1998.  The
agreement requires a minimum annual purchase level substantially above the
amount purchased by Bell Atlantic from the Company in 1996 which totaled
approximately $120 million.

     On June 11, 1996, a federal court entered a $137.7 million judgment in the
Company's favor and against Next Level Corporation ("Next Level") and two former
Company employees.  The Company had filed suit in 1995 alleging theft of trade
secrets and diversion of corporate opportunities. On February 28, 1997, the
Fifth Circuit of Appeals upheld the judgment. Both Next Level and the Company
are appealing to an En Banc panel of judges in the Fifth Circuit. The defendants
are enjoined from disclosing the Company's trade secrets until the judgment is
satisfied.

     In August 1996, the Company filed suit against Samsung Information
Systems America, Inc., Samsung Electronics Co., Ltd. and several former
employees of the Company (collectively the "Defendants") alleging claims
for breach of contract, theft of trade secrets, unfair competition and
tortious interference with contract and prospective contractual relations
related to the Company's development of a next generation switching
system.  The Company is seeking unspecified damages.  The Company is also


                                    Page 15


<PAGE>   17

seeking an injunction against the Defendants to prevent them from using
the Company's trade secrets.  In late December 1996, the Defendants filed
a counterclaim against the Company, alleging claims for declaratory
judgment, wrongful injunction, tortious interference with actual and
prospective contractual relations, misappropriation of trade secrets,
unfair competition, exclusion from telephony switch market, civil
conspiracy, fraud and negligent misrepresentation, breach of fiduciary or
confidential relationship, defamation and intentional infliction of
emotional distress.  These allegations arise primarily out of the filing
and prosecution of the Company's suit against the Defendants.

     In October 1996, the Company filed suit against Pulse Communications,
Inc. ("Pulsecom") alleging contributory copyright infringement and
misappropriation of trade secrets relating to the manufacture and sale of
a POTS line card advertised as compatible with the Company's Litespan-2000
system.  The Company is seeking damages and an injunction barring further
infringement of the Company's intellectual property rights by Pulsecom and
its agents.  Pulsecom has filed a counterclaim alleging that the Universal
Voice Grade line card manufactured by the Company for the Litespan-2000
system infringes a patent assigned to Pulsecom.

     On May 25, 1994, the Company filed suit against DGI Technologies,
Inc. ("DGI"), alleging that DGI misappropriated the Company's trade
secrets regarding digital trunk interface cards and microprocessor cards.
The Company seeks damages and permanent injunctive relief.  DGI brought
counterclaims for damages and injunctive and declaratory relief for
alleged violations of federal antitrust statutes, tortious interference,
industrial espionage, misappropriation of trade secrets, trespass,
conversion, and unfair competition, based upon allegations that the
Company's claims constitute "sham" litigation, that the Company's
statements to customers about the impact of their use of DGI products on
the Company's warranties are unlawful attempts to exclude competition, and
that the Company has unlawfully tied the sale of its microprocessors to
the sale of other products.  The case was tried in January 1997 and the
jury returned a verdict.  The Court sealed the verdict and postponed
entering a judgment pending the outcome of additional mediation.

     The Company is also party to other routine legal proceedings
incidental to its business.



                                    Page 16


<PAGE>   18


     The Company does not believe the ultimate resolution of the above
litigation will have a material adverse effect on its consolidated
financial position.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders during the
fourth quarter of 1996.


EXECUTIVE OFFICERS OF THE REGISTRANT

     Executive officers are elected annually and serve at the pleasure of
the Board of Directors.  No family relationships exist among the executive
officers of the Company.  As of March 3, 1997, the executive officers of
the Company are as follows:


     NAME             AGE     PRESENT POSITION(S) WITH COMPANY
     ----             ---     --------------------------------

Allen R. Adams        47      Senior Vice President

Wylie D. Basham       58      Group Vice President

John W. Bischoff      48      Vice President

James L. Donald       65      Chairman of the Board,
                              President, and Chief Executive
                              Officer

David L. Hinshaw      55      Group Vice President

Douglas K. Jacobs     53      Vice President

Gerald F. Montry      58      Senior Vice President, Chief
                              Financial Officer, and Director

Michael J. Myers      50      Group Vice President

George M. Simpson     42      Vice President

Philip A. Wilkinson   49      Senior Vice President




                                    Page 17


<PAGE>   19


     Allen R. Adams joined the Company in 1979, as Director of Hardware
and Systems Development.  Since 1979, Mr. Adams has held a variety of
project and design engineering positions.  In May 1996 he was appointed
Senior Vice President, Corporate Strategic Planning and Business
Development.  In February 1997, Mr. Adams was named Senior Vice President,
iMTN Systems/Corporate Strategic Planning and Business Development.
Mr. Adams assumed the added responsibility for the Company's iMTN
operations, overseeing the design and development of the iMTN
transmission system.

     Wylie D. Basham joined the Company in February 1983 as Vice President,
Quality and Reliability Assurance.  In March 1993 he was appointed Vice
President, Subassembly Operations, and in June of that year given the
added responsibility for the Access Product Division.  In August 1996, Mr.
Basham was named Group Vice President, Switch Systems, with responsibility
for the Company's switch, intelligent networking and ATM product activity.

     John W. Bischoff joined the Company in August 1989 as Vice President,
Quality and Reliability Assurance.  Mr. Bischoff has responsibility for
overseeing the Company's total corporate quality program, including the quality
and reliability of software and hardware.

     James L. Donald became President and a Director of the Company in
March 1981.  He was elected Chief Executive Officer in August 1981.  Mr.
Donald was elected Chairman of the Company's Board of Directors in 1989.

     David L. Hinshaw joined the Company in May 1995 as Vice President,
Switch Products.  Mr. Hinshaw was appointed Vice President, Transport and
Access Systems Group in October 1996, and currently serves as Group Vice
President, Access Systems.  Mr. Hinshaw has the responsibility for the
development and marketing of the Company's access product line.

     Douglas K. Jacobs joined the Company in July 1990 as Vice President,
RHC sales, with responsibility for managing the RHC sales force.  Mr.
Jacobs was appointed Vice president, Switch Products Domestic Marketing in
October 1991 and in January 1995 assumed the added responsibility of
switch products international marketing.  Previously Mr. Jacobs served as
Executive Vice President and Chief Operating Officer for DSC
Communications A/S,


                                    Page 18
<PAGE>   20

the Company's optical transmission business.  In January 1997, Mr. Jacobs
was appointed Vice President, North American Sales and Global Customer
Services.

     Gerald F. Montry joined the Company in 1986 as Senior Vice President
and Chief Financial Officer.  In 1989, Mr. Montry was elected to the
Company's Board of Directors.

     Michael J. Myers joined the Company in January 1989 as Vice President,
Finance for the International Division.  He served as Vice President, Finance
for the Switch Systems Group from November 1991 until February 1997 when he
was appointed Group Vice President, Transport Systems.  Mr. Myers has the
responsibility for the development and marketing of the Company's transport
products.

     George M. Simpson joined the Company in December 1982.  He has served
in several management positions for the Company including a five-year
assignment as general manager of the Company's operations in Puerto Rico.
In January 1997, Mr. Simpson was appointed Vice President, Operations with
responsibility for the development and execution of the Company's global
manufacturing strategy in support of customer requirements and the
Company's global business objectives.

     Philip A. Wilkinson joined the Company in 1995 as Senior Vice
President to lead the Transport Systems Group.  In February 1997, Mr.
Wilkinson was appointed Senior Vice President, International Sales/Network
Management Systems.  In addition to being responsible for all
international sales activities, Mr. Wilkinson oversees the network
management systems.


                                    PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
        STOCKHOLDER MATTERS

     The Company's common stock prices are listed daily in The Wall Street
Journal and other publications under the NASDAQ National Market of the
over-the-counter listing with the abbreviation "DSC Commun" or "DSC".  The
stock is traded in the NASDAQ National Market with the ticker symbol
"DIGI".


                                    Page 19

<PAGE>   21

     The following were the high and low closing prices of the Company's
stock per the NASDAQ National Market:


<TABLE>
<CAPTION>
          1996:              High         Low
          ----               ----         ---
          <S>              <C>          <C>
          4th Quarter      $23 1/8      $12 7/8
          3rd Quarter       32 3/4       25 1/8
          2nd Quarter       35 1/4       24 3/8
          1st Quarter       37 1/8       22 7/8

          1995:              High         Low
          ----               ----         ---
          <S>              <C>          <C>
          4th Quarter      $58 3/4      $31
          3rd Quarter       63           45 5/8
          2nd Quarter       46 1/2       31 3/4
          1st Quarter       39           31 5/8
</TABLE>


     The Company has not paid or declared any cash dividends on the common
stock since its organization.  The closing price of the Company's common
stock on March 3, 1997, was $20 5/8 per share.  As of December 31, 1996,
there were 5,242 shareholders of record of the Company's common stock.


ITEM 6. SELECTED FINANCIAL DATA

     The information required by this item is set forth on page 19 of the
Company's 1996 Annual Report to Shareholders, which information is
incorporated herein by reference.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS

     The information required by this item is set forth in the text on
pages 20 through 23 of the Company's 1996 Annual Report to Shareholders,
which information is incorporated herein by reference.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this item is set forth on pages 24
through 40 of the Company's 1996 Annual Report to Shareholders, which
information is incorporated herein by reference.



                                    Page 20

<PAGE>   22
ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

   None.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this item with respect to the directors
and nominees for election to the Board of Directors of the Company is
incorporated by reference from the information set forth on page 1 of the
definitive proxy statement of the Company, filed in connection with
its 1997 Annual Meeting of Stockholders on page 1 under the heading "ELECTION
OF DIRECTORS", and on page 18 of such definitive proxy material under the
heading "DIRECTORS CONTINUING IN OFFICE". The information regarding executive
officers of the Company is contained in Part I of this Annual Report on Form
10-K. The information required by this item regarding compliance with Section
16(a) of the Exchange Act is incorporated by reference from the information set
forth under the heading "SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE" on page 20 of the definitive proxy statement of the Company,
filed in connection with its 1997 Annual Meeting of Stockholders.


ITEM 11. EXECUTIVE COMPENSATION

     The information required by this item is incorporated by reference
from the information set forth under the headings "EXECUTIVE COMPENSATION"
on pages 10 through 17, and "Compensation of Directors" and "Non-Employee
Directors Stock Option Plan" on page 19 of the definitive proxy statement
of the Company, filed in connection with its 1997 Annual Meeting of
Stockholders.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT

     The information required by this item is incorporated by reference
from the information set forth under the heading


                                    Page 21


<PAGE>   23

"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" on page
20 of the definitive proxy statement of the Company, filed in connection with
the 1997 Annual Meeting of Stockholders.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this item is incorporated by reference
from the information set forth under the headings "Compensation of
Directors" on page 19 of the definitive proxy statement of the Company,
filed in connection with the 1997 Annual Meeting of Stockholders.


                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON
     FORM 8-K

(a)  The following is a list of the consolidated financial statements and
     the financial statement schedule which are included in this Form 10-K
     or which are incorporated herein by reference.

        1.   Financial Statements:

             As of December 31, 1996 and 1995:  Consolidated Balance Sheets

             For  the Years Ended December 31, 1996, 1995, and 1994:

             -    Consolidated Statements of Operations
             -    Consolidated Statements of Cash Flows
             -    Consolidated Statements of Changes
                  in Shareholders' Equity

             Notes to Consolidated Financial Statements

             Report of Independent Auditors

        2.   Financial Statement Schedule:

             For  the Years Ended December 31, 1996, 1995, and 1994:


                                    Page 22


<PAGE>   24


             -    Schedule II - Valuation and Qualifying Accounts

All other financial statements and financial statement schedules have been
omitted because they are not applicable, or the required information is
included in the consolidated financial statements or notes thereto.


     3. Exhibits:

                  3.1  Certificate of Amendment of
                       Certificate of Incorporation of the Company dated
                       April 27, 1994 (9)

                  3.2  Certificate of Correction of
                       Certificate of Amendment of Restated Certificate of
                       Incorporation of the Company dated June 8, 1995
                       (9)

                  3.3  Certificate of Amendment of
                       Restated Certificate of Incorporation of the
                       Company dated June 8, 1995 (9)

                  3.4  Amended and Restated By-laws of
                       the Company (15)

                  4.3  Rights Agreement, Dated as of
                       April 25, 1996, Between the Company and KeyCorp
                       Shareholder Services, Inc., as Rights Agent (12)

                  4.4  Form of Letter to the Company's
                       Stockholders, Dated May 8, 1996, Relating


                                    Page 23


<PAGE>   25

                      to the Adoption of the Rights Agreement
                      Described in Exhibit 4.3 (12)

                10.1  Employment Agreement Between the Company and James L.
                      Donald, Dated January 1, 1990 (4)

                10.2  Executive Income Continuation Plan, Dated January 1, 1990,
                      Between the Company and James L. Donald (4)

                10.3  Insurance Ownership Agreement, Dated January 1, 1990,
                      Between the Company and James L. Donald (4)

                10.4  Management Consulting Agreement Among the Company, Nolan
                      Consulting, Inc., and James M. Nolan, Dated March 15,
                      1982 (1)

                10.5  The Company's Amended and Restated 1984 Employee Stock
                      Option Plan (3)

                10.6  The Company's Amended and Restated 1988 Employee Stock
                      Option Plan (3)

                10.7  The Company's 1993 Employee Stock Option and Securities
                      Award Plan (5)

                10.8  The Company's 1993 Non-Employee Directors Stock Option
                      Plan (5)

                10.9  Form of Amended and Restated Severance Compensation
                      Agreement Between the Company and Certain of its
                      Officers (7)

                10.10 Schedule to Form of Amended and Restated Severance
                      Compensation Agreement Between the Company and Certain of
                      its Officers (10)


                                    Page 24


<PAGE>   26



                10.11 The Company's Restoration Plan, Dated July 1, 1988 (2)

                10.12 Form of Indemnification Agreement Between the Company and
                      its Directors and Senior Officers as Approved by the Board
                      of Directors and Entered Into on or After January 22,
                      1990, and the Related Trust Agreement, Dated March 1,
                      1990, Between the Company and Texas Commerce Bank, N.A.,
                      as Trustee (3)

                10.13 The 1990 Optilink Stock Option and Cash Payment Plan,
                      Dated May 15, 1990 (4)

                10.14 The Company's 1994 Long-Term Incentive Compensation Plan,
                      Effective as of January 1, 1994 (6)

                10.15 DSC Communications Corporation Executive Deferred Income
                      Plan (7)

                10.16 Note Purchase Agreement Between the Company and Certain
                      Financial Institutions, dated April 15, 1995 (8)

                10.17 Consulting Agreement Between the Company and Clement M.
                      Brown, Jr., Dated January 23, 1986 (10)



                                    Page 25


<PAGE>   27


                10.18 Consulting Agreement Between the Company and Sir John
                      Fairclough, Dated December 31, 1992 (10)

                10.19 Consulting Agreement Between the Company and Frank J.
                      Cummiskey, Dated May 1, 1993 (10)

                10.20 Multicurrency Credit Agreement, Dated as of May 8, 1996,
                      Among the Company and Certain of its Subsidiaries and
                      Certain Lenders Providing for Unsecured Revolving Credit
                      (11)

                10.21 Promissory Note for 250 Million Danish Kroner dated July
                      23, 1996 to Den Danske Bank (13)

                10.22 Line Letter for 250 Million Danish Kroner dated July 23,
                      1996 issued by Den Danske Bank (13)

                10.23 Promissory Note for 300 Million Danish Kroner dated July
                      23, 1996 to Den Danske Bank (13)

                10.24 Line Letter for 300 Million Danish Kroner dated July 23,
                      1996 issued by Den Danske Bank (13)

                10.25 Guaranty dated July 23, 1996 (13)

                10.26 Subordination Agreement dated July 23, 1996 (13)

                10.27 First Amendment (Effective September 27, 1996) to the 250
                      Million Danish Kroner and the 300 Million Danish Kroner
                      Promissory Notes to Den Danske Bank, Guaranty and
                      Subordination Agreement dated July 23, 1996 (14)

                10.28 First Amendment (Effective September 27, 1996) to
                      Multicurrency Credit Agreement Dated May 8, 1996 (14)

                10.29 Form of Severance Compensation Agreement Between the
                      Company and Certain of its Officers (15)

                10.30 Schedule to Form of Severance Compensation Agreement
                      Between the Company and Certain of its Officers (15)

                11.1  Statement re: Computation of Per Share Earnings (15)

                13.1  1996 Annual Report to Shareholders (for EDGAR filing
                      purposes only)

                21.1  Subsidiaries of the Registrant (15)

                23.1  Consent of Ernst & Young LLP (15)

                27.1  Financial Data Schedule (for EDGAR filing purposes only)


MANAGEMENT CONTRACTS OR COMPENSATORY PLANS AND ARRANGEMENTS

     The following above-described exhibits are management contracts or
compensatory plans and arrangements:  10.1 Employment Agreement Between
the Company and James L. Donald, Dated January 1, 1990; 10.2 Executive
Income Continuation Plan, Dated January 1, 1990, Between the Company and
James L. Donald; 10.3 Insurance Ownership Agreement, Dated January 1,
1990, Between the Company and James L. Donald; 10.4 Management Consulting
Agreement Among the Company, Nolan Consulting, Inc., and James M. Nolan,
Dated March 15, 1982; 10.5 The Company's Amended and Restated 1984
Employee Stock Option Plan; 10.6 The Company's Amended and Restated 1988
Employee Stock Option Plan; 10.7 The Company's 1993 Employee Stock Option
and Securities Award Plan; 10.8 The Company's 1993 Non-Employee Directors
Stock Option Plan; 10.9 Form of Amended and Restated Severance
Compensation Agreement Between the Company and Certain of its


                                    Page 26


<PAGE>   28

Officers; 10.10 Schedule to Form of Amended and Restated Severance Compensation
Agreement Between the Company and Certain of its Officers; 10.11 The Company's
Restoration Plan, Dated July 1, 1988; 10.12 Form of Indemnification Agreement
Between the Company and its Directors and Senior Officers as Approved by the
Board of Directors and Entered Into on or After January 22, 1990, and the
Related Trust Agreement, Dated March 1, 1990, Between the Company and Texas
Commerce Bank, N.A., as Trustee; 10.14 The Company's 1994 Long-Term Incentive
Compensation Plan, Effective as of January 1, 1994; 10.15 DSC Communications
Corporation Executive Deferred Income Plan; 10.17 Consulting Agreement Between
the Company and Clement M. Brown, Jr., Dated January 23, 1986; 10.18 Consulting
Agreement Between the Company and Sir John Fairclough, Dated December 31, 1992;
10.19 Consulting Agreement Between the Company and Frank J. Cummiskey, Dated May
1, 1993; 10.29 Form of Severance Compensation Agreement Between the Company and
Certain of its Officers; 10.30 Schedule to Form of Severance Compensation
Agreement Between the Company and Certain of its Officers.


(b) Reports on Form 8-K:

     None

-----------------------------------------------------------------

     (1)  Incorporated by reference from the Company's Annual Report
          on Form 10-K for the year ended December 31, 1981

     (2)  Incorporated by reference from the Company's Annual Report
          on Form 10-K for the year ended December 31, 1988



                                    Page 27


<PAGE>   29


     (3)  Incorporated by reference from the definitive proxy
          statement of the Company, filed in connection with the 1990
          Annual Meeting of Stockholders

     (4)  Incorporated by reference from the Company's Annual Report
          on Form 10-K for the year ended December 31, 1990

     (5)  Incorporated by reference from the definitive proxy
          statement of the Company, filed in connection with the 1993
          Annual Meeting of Stockholders

     (6)  Incorporated by reference from the definitive proxy
          statement of the Company, filed in connection with the 1994
          Annual Meeting of Stockholders

     (7)  Incorporated by reference from the Company's Annual Report
          on Form 10-K for the year ended December 31, 1994

     (8)  Incorporated by reference from the Company's Quarterly
          Report on Form 10-Q for the quarter ended March 31, 1995


                                    Page 28


<PAGE>   30



      (9) Incorporated by reference from the Company's Registration
          Statement on Form S-8, File No. 33-61423, filed with the
          Securities and Exchange Commission on July 31, 1995

     (10) Incorporated by reference from the Company's Annual Report
          on Form 10-K for the year ended December 31, 1995

     (11) Incorporated by reference from the Company's Quarterly Report
          on Form 10-Q for the quarter ended March 31, 1996

     (12) Incorporated by reference from the Company's Registration Statement on
          Form 8-A, filed with the Securities and Exchange Commission on May 9,
          1996

     (13) Incorporated by reference from the Company's Quarterly Report
          on Form 10-Q for the quarter ended June 30, 1996

     (14) Incorporated by reference from the Company's Quarterly Report
          on Form 10-Q for the quarter ended September 30, 1996

     (15) Filed herewith




                                    Page 29


<PAGE>   31


     "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995.  With the exception of historical information, the
matters discussed or incorporated by reference in this Annual Report on
Form 10-K are forward-looking statements that involve risks and
uncertainties including, but not limited to, economic conditions, product
demand and industry capacity, competitive products and pricing,
manufacturing efficiencies, new product development, ability to enforce
patents, availability of raw materials and critical manufacturing
equipment, new plant startups, the regulatory and trade environment, and
other risks indicated in filings with the Securities and Exchange
Commission.




                                    Page 30
<PAGE>   32
                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                        DSC COMMUNICATIONS CORPORATION
                                                (Registrant)

                                        /s/  JAMES L. DONALD
                                        --------------------------------------
                                             James L. Donald,
                                             Chairman of the Board, President,
                                             Chief Executive Officer, and
                                             Director
March 31, 1997
<PAGE>   33
        Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
     Signature and Title                                      Date
     -------------------                                      ----
<S>                                                     <C>
/s/ JAMES L. DONALD                                     March 31, 1997
-------------------------------
James L. Donald, Chairman
of the Board, President, Chief
Executive Officer, and Director
(Principal Executive Officer)


/s/ FRANK J. CUMMISKEY                                  March 31, 1997
-------------------------------
Frank J. Cummiskey
Director


/s/ SIR JOHN FAIRCLOUGH                                 March 31, 1997
-------------------------------
Sir John Fairclough
Director


/s/ RAYMOND J. DEMPSEY                                  March 31, 1997
-------------------------------
Raymond J. Dempsey
Director


/s/ JAMES L. FISCHER                                    March 31, 1997
-------------------------------
James L. Fischer
Director


/s/ ROBERT S. FOLSOM                                    March 31, 1997
-------------------------------
Robert S. Folsom
Director


/s/ GERALD F. MONTRY                                    March 31, 1997
-------------------------------
Gerald F. Montry, Senior Vice
President, Chief Financial
Officer, and Director
(Principal Financial Officer)

</TABLE>
<PAGE>   34
<TABLE>
<CAPTION>
     Signature and Title                                      Date
     -------------------                                      ----
<S>                                                      <C>
/s/ MORTON L. TOPFER                                     March 31, 1997
-------------------------------
Morton L. Topfer
Director


/s/ KENNETH R. VINES                                     March 31, 1997
-------------------------------
Kenneth R. Vines
Vice President, Finance
(Principal Accounting Officer)

</TABLE>

<PAGE>   35

                DSC COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                  SCHEDULE II
                       VALUATION AND QUALIFYING ACCOUNTS
                        ALLOWANCE FOR DOUBTFUL ACCOUNTS
                                 (In Thousands)


<TABLE>
<CAPTION>
                                                              Additions
                                                     -----------------------------
                                     Balance at                         Charged                Deductions           Balance at
                                     Beginning       Charged to         to Other                 from                 End of
           Receivables               of Period         Income           Accounts               Reserves               Period
           -----------               ---------       ---------        ------------            -----------           -----------
<S>                                <C>              <C>               <C>                     <C>                   <C>
Year Ended December 31, 1996         $   6,904      $    1,381        $      660   (1)        $   1,883   (2)        $   7,062
Year Ended December 31, 1995             4,012           1,233             4,077   (1)            2,418   (2)            6,904
Year Ended December 31, 1994             3,609           1,222             1,275   (1)            2,094   (2)            4,012
</TABLE>


(1)  Both 1995 and 1994 amounts include amounts related to the acquisition of
     DSC Communications A/S.  Additionally, the 1996 and 1994 amounts include a
     transfer from a customer related reserve, which was included in "Accrued
     Liabilities", to "Allowance for Doubtful Accounts".

(2)  Includes accounts written off, net of collections.


<PAGE>   36




                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit                          Description
-------                          -----------
<S>                     <C>
 3.4                    Amended and Restated Bylaws of the Company

10.29                   Form of Severance Compensation Agreement

10.30                   Schedule to Form of Severance Compensation Agreement

11.1                    Statement re: Computation of Per Share Earnings

13.1                    1996 Annual Report to Shareholders

21.1                    Subsidiaries of the Registrant

23.1                    Consent of Ernst & Young LLP

27.1                    Financial Data Schedule
</TABLE>