10-K405

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

/x/	Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended October 31, 2000
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. 0-1424

ADC Telecommunications, Inc.
(Exact name of registrant as specified in its charter)

Minnesota (State or other jurisdiction of incorporation or organization)	41-0743912 (I.R.S. Employer Identification No.)
12501 Whitewater Drive Minnetonka, Minnesota (Address of principal executive offices)	55343 (Zip Code)

Registrant's telephone number, including area code: (952) 938-8080

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.20 par value
Common Stock Purchase Rights

    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 / /

    The aggregate market value of voting stock held by non-affiliates of the registrant, as of January 4, 2001, was approximately $14,587,688,225.80 (based on the last sale price of such stock as reported by the Nasdaq Stock Market National Market).

    The number of shares outstanding of the registrant's common stock, $0.20 par value, as of January 4, 2001, was 777,309,741.

    Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§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/

DOCUMENTS INCORPORATED BY REFERENCE

    The information required by Part II of this Form 10-K is incorporated herein by reference to portions of our Annual Report to Shareowners for the fiscal year ended October 31, 2000. The information required by Part III of this Form 10-K is incorporated by reference to portions of our definitive proxy statement for our 2001 Annual Meeting of Shareowners to be filed with the Securities and Exchange Commission on or before January 31, 2001.

PART I

Item 1.  BUSINESS

    ADC Telecommunications, Inc. was incorporated in Minnesota in 1953 as Magnetic Controls Company. We adopted our current name in 1985. Our world headquarters are located at 12501 Whitewater Drive in Minnetonka, Minnesota.

    We are a leading global supplier of optical- and copper-connectivity systems, broadband access and network equipment, software and integration services designed to improve the speed and performance of broadband, multiservice communications networks. Telephone companies, cable television operators, Internet and data service providers, wireless service providers and other communications service providers are building and upgrading the broadband network infrastructure required to offer high-speed Internet access as well as data, video, telephony and other interactive multimedia services to consumers and businesses. Our product offerings and development efforts are focused on increasing the speed and efficiency of the last mile/kilometer portion of communications networks—that is, the network equipment that connects the service providers' offices to end users' homes and businesses, as well as wireless communications devices.

    Our customers include local and long-distance telephone companies, cable television operators, wireless service providers, new competitive service providers, broadcasters, governments, system integrators, enterprises, and communications equipment manufacturers and distributors. We offer optical- and copper-connectivity systems/components, broadband access and network equipment, software and integration services to our customers through the following three business groups:

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Broadband Connectivity;



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Broadband Access and Transport; and



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Integrated Solutions.

BROADBAND CONNECTIVITY products provide the physical contact points needed to connect different communications network elements and gain access to communications system channels for the purposes of installing, testing, monitoring, accessing, managing, reconfiguring, splitting and multiplexing such channels within service providers' serving offices and the last mile/kilometer portion of communications networks. These products include broadband connection and access devices for copper, coaxial cable, optical, wireless and broadcast communications networks. The group also produces passive and active optical components, as well as wireless components. Broadband Connectivity's products are used throughout the world in telephone, cable television, Internet, wireless, enterprise and broadcast communications networks.

BROADBAND ACCESS AND TRANSPORT products enable broadband, multiservice delivery capabilities within service provider networks, while also introducing new service delivery functionality and cost effectiveness into these networks. The group's products include access and transport systems that deliver broadband, multiservice communications to consumers and businesses over copper, coaxial cable, optical and wireless networks. Broadband Access and Transport's products are used throughout the world to deliver Internet, data, video and voice services to consumers and businesses.

INTEGRATED SOLUTIONS products and services consist of systems integration services, operations support systems (OSS) software and enhanced services software that aid service providers in their delivery of broadband, multiservice communications over wireline and wireless networks. Systems integration services are used to design, equip and build communications networks and OSS applications that deliver Internet, data, video and voice services to consumers and businesses. OSS software includes communications billing, customer care, network performance and service-level assurance software used by service providers to operate communications networks. Enhanced services software includes a range of wireline, wireless and Internet applications used by service providers to help increase revenues.

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    As used in this report, unless the context otherwise requires, the term "ADC" refers to ADC Telecommunications, Inc. and our wholly owned and majority-owned subsidiaries; 1998, 1999 and 2000 refer to our fiscal years ended October 31, 1998, 1999 and 2000, respectively; and 2001 refers to our fiscal year ending October 31, 2001.

Industry Background

    With the rapid growth of the Internet and the development of advanced communications applications such as digital, video and audio programs, wireless access, video conferencing from personal computers, video e-mail, video on demand, distance learning, telemedicine and high-speed imaging, consumers and businesses are demanding faster, better communications services. Consumers increasingly find dial-up modem speeds unacceptable, and communications networks increasingly are required to transmit, more rapidly, large volumes of Internet, data and video traffic to meet customers' demands with respect to sharing information, conducting business and delivering entertainment. We believe that these trends toward "broadband" communications will continue to drive changes in the global communications industry for the foreseeable future.

    As consumers and businesses demand more broadband applications from providers of Internet, data, video and voice communications services, the global deregulation of communications markets has led new service providers to enter the market. The entry of these new competitive providers into previously monopolistic or oligopolistic markets is changing the marketplace rapidly. In the past, communications service providers have offered only a limited selection of Internet, data, video or voice services, each of which is carried on a separate network connection and is billed separately to the customer. In contrast, new competitive communications providers increasingly are operating broadband, multiservice networks with integrated Internet, data, video and voice services carried over a single high-speed network connection. These services are both faster and more cost-effective than the services offered in the past, and integrated providers send just one bill for all the services the customer uses. In the deregulated market, service providers now compete for customers by attempting to offer the most attractive "bundles" of communications services over the most cost-effective networks. As a result of this competition, there is a large potential global market for fiber optics, network equipment, software and integration services needed to build and upgrade broadband, multiservice networks. This in turn has resulted in the recent high growth rate of sales for suppliers of communications equipment, software and services.

    Several important technological developments also have spurred growth in the communications equipment industry. We believe these developments primarily include the deployment of all-optical networks, the creation of cost-effective computing platforms, the proliferation of more powerful software applications (including distributed applications using Internet Protocol (IP)) and the creation of new wireless communications technologies.

    In the past, communications networks transported information primarily through electrical systems, which transmit analog and digital information over pairs of copper wires or coaxial cables, but at limited speeds and with limited carrying capacity. In recent years, as the capacity of optical-based transmission systems has increased, there has been a shift to optical systems, which have several advantages over electrical systems. In optical systems, lasers transmit Internet, data, video and voice traffic through glass fibers in the form of analog- or digital-coded light pulses. Optical systems can transmit larger volumes of information at much higher speeds than electrical systems. Optical systems also offer higher transmission quality because the physical properties of light are insensitive to interference from sources such as electromagnetic fields and radio frequencies.

    Another important change in recent years has been the development of cost-effective digital technologies, which, like optical technologies, allow greater speed and capacity in network transmission than is possible with analog technology. In analog technology, information is converted to a voltage or

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current wave form for processing or transmission. In digital technology, information is converted to digital bits and then is processed or transmitted using computer-based components. The increased use of high-speed semiconductors in communications equipment has enabled network providers to cost-effectively transmit increasing amounts of Internet, data, video and voice communications as the bandwidth needs of their customers have grown. As a result of this development, over the past decade digital-based systems have been replacing analog-based systems in communications networks.

    Wireless technology developments and substantial growth in wireless communications, including cellular telephone services, satellite-based services and Personal Communications Services (PCS), also have had a dramatic impact on the communications equipment industry. In addition, wireless broadband infrastructure is being deployed for fixed wireless services in the Multichannel Multipoint Distribution Services (MMDS) and Local Multipoint Distribution Services (LMDS) spectrum bands. Wireless communications growth has been driven by the convenience of mobility and the higher costs of wireline infrastructures. In particular, in countries without reliable or extensive wireline systems, wireless service ultimately could provide the primary service platform for both mobile and fixed communications applications due to the potential savings in installation time and cost. We believe that the continuing development of wireless communications technology could extend substantially the reach of current communications networks.

    We believe that all of these factors will continue to drive changes in the global communications industry for the foreseeable future. Our belief is that both consumers and businesses desire high-speed communications connections from a single service provider that can offer a range of prices and a variety of Internet, data, video and voice services bundled into a single package and billed on a single invoice. We believe that broadband, multiservice networks can play a key role in meeting these demands and the information needs of consumers and businesses around the world.

Strategy

    Our strategy is to capitalize on opportunities in the global communications market created by the deployment of broadband, multiservice networks. Communications service providers intend to serve their consumer and business customers with broadband, multiservice networks that offer faster, more cost-effective and integrated Internet, data, video and voice services. Our broad range of products and services addresses key areas of the communications network infrastructure. Our products and services are used to design, build and upgrade networks, connect and access networks, transport Internet, data, video and voice services over communications service networks, and provide software that generates, delivers and manages communications services. Our many product and service offerings address the diverse needs of a customer base that includes local and long-distance telephone companies, cable television operators, wireless service providers, Internet and data service providers, other communications service providers, broadcasters, enterprises, governments, system integrators and communications equipment manufacturers and distributors.

    Key components of our strategy include:

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focusing on opportunities related to broadband, multiservice networks;



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leveraging our technological capabilities across our various product groups;



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increasing our international market penetration; and



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expanding our development through acquisitions, alliances and internal efforts.

    Focus on Opportunities Related to Broadband, Multiservice Networks.  Global deregulation, the rapid growth of the Internet and increasing consumer and business demands for broadband communications have created significant global opportunities to build and upgrade broadband, multiservice networks. Telephone companies, cable television operators, Internet and data service providers, wireless service

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providers and other communications service providers are building the broadband communications infrastructure required to offer high-speed Internet access, data, video, telephony and other interactive multimedia services to consumers and businesses. Because broader network bandwidths continually are required for these services, we believe that building and upgrading broadband, multiservice networks to serve consumers and businesses presents one of the greatest market growth opportunities in the communications industry today. We are focusing our development and marketing resources on fiber optics, network equipment, software and integration services that will enable communications service providers worldwide to serve their consumer and business customers with broadband, multiservice networks that offer faster, more cost-effective and integrated Internet, data, video and voice services.

    Leverage Our Technological Capabilities Across Our Various Product Groups.  We have developed substantial expertise in fiber-optic, copper, coaxial cable, video, wireless and broadband infrastructure and transport technologies, software products and systems integration services. We have built these core competencies through internal development, acquisitions and technology licensing arrangements. Our strategy is to leverage our core competencies among each other. This helps us offer our customers new products with enhanced architectures, functions, cost effectiveness and network management tools for their evolving Internet, data, video and voice service offerings. It also helps us offer our customers more complete bundled solutions that enable them to scale network offerings, more fully automate operations and accelerate service and revenue growth.

    Increase Our International Market Penetration.  We believe that significant growth for our products and services will occur outside the United States as a result of global deregulation, substantial expansion or enhancement of communications services by many foreign countries, and the global expansion of multinational communications service providers. Our strategy is to grow our international business by increasing our international sales and marketing resources, expanding our global manufacturing capacity, expanding our ability to offer integration services in areas outside North America, leveraging our existing customer relationships, developing additional international distribution channels and seeking strategic alliances and acquisitions. We are expanding our presence in international markets through manufacturing facilities, distribution centers, sales offices and systems integration capabilities to serve our customers outside the United States.

    Expand Our Development Through Acquisitions, Alliances and Internal Efforts.  Due to the dynamic nature of the communications equipment industry, we have sought and intend to continue to seek acquisitions and alliances that will:

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add key technologies that we can leverage across our businesses;



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broaden our product offerings;



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permit us to enter attractive new markets; and



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expand or enhance our distribution channels globally.

To help accomplish these objectives, during fiscal 2000 we completed the following acquisitions:

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Comtec Electrónica S.R.L., an Argentina-based company that makes Radio Frequency (RF) amplifiers for the cable television industry;



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NVision, Inc., a California-based company that makes distribution and switching equipment for television production, post-production and broadcasting;



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The digital television (DTV) modulation equipment and solid state UHF transmitter assets of Continental Electronics Corporation, a Texas-based company;

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IBSEN Micro Structures A/S, a Denmark-based company that makes phase masks and fiber Bragg grating devices and currently is developing an integrated-optics platform based upon a unique planar technology that utilizes semiconductor-type processes;



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Altitun AB, a Sweden-based company that makes tunable lasers and other active optical components for use in fiber-optic networks;



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PairGain Technologies, Inc., a California-based company that makes digital subscriber line (DSL) devices;



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Centigram Communications Corporation, a California-based company that provides unified communications, Internet-enabled call management and Web access protocol (WAP)-based messaging solutions for communications service providers;



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Broadband Access Systems, Inc., a Massachusetts-based company that makes next-generation IP access platforms; and



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Computer Telecom Installations Limited, an England-based company that provides systems integration services for communications service providers.

    In addition, in November 2000, we completed the acquisition of the communications systems integration business of France Electronique, S.A., a France-based company that provides systems integration services for communications service providers.

    Our ability to implement our strategy effectively is subject to numerous uncertainties, many of which are described in Exhibit 99-a to this Form 10-K, and we cannot assure you that our efforts will be successful.

Product Groups

    Our connectivity solutions, network equipment, software and integration services are divided into three business groups:

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Broadband Connectivity;



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Broadband Access and Transport; and



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Integrated Solutions.

Below we discuss the activities of each of these groups.

Broadband Connectivity

    Broadband connectivity products provide the physical contact points needed to connect different communications network components and gain access to communications system channels in order to install, test, monitor, access, manage, reconfigure, split and multiplex these channels within service providers' serving offices and the last mile/kilometer portion of communications networks. Broadband Connectivity products are used throughout the world in telephone, cable television, Internet, wireless, enterprise and broadcast communications networks and are sold to local and long-distance telephone companies, cable television operators, wireless service providers, integrated service providers,

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broadcasters, enterprises, governments, system integrators and communications equipment manufacturers and distributors. Our Broadband Connectivity products include:

    Broadband connection and access devices for copper, coaxial cable, optical, wireless and broadcast communications networks.  Our broadband connection and access devices provide interconnections between network components or access points into networks. These products include:

    DSX Products.  We manufacture digital signal cross-connect (DSX) modules and bays, which are designed to gain access to and cross-connect digital copper channels for Internet, data, video and voice transmission. Within our DSX product group, we offer the Digital Distribution Point family of products, which provides mechanical alternatives to hard-wiring equipment used for cable management and circuit access in software-based, electronic digital cross-connect systems. We also offer remote test access capability for our DSX products. This capability enables service providers to monitor high-capacity circuit performance at unstaffed sites, such as carrier co-location points.

    Fiber Distribution Panels and Frame Products.  Fiber distribution panels and frames, which are functionally similar to copper cross-connect modules and bays, provide interconnection points between fiber-optic cables entering a service provider's serving office and fiber-optic cables connected to fiber-optic equipment within the serving office. Our fiber distribution panels and frames are designed with special consideration of fiber-optic properties.

    Terminal Block and Frame Products.  Terminal blocks are molded plastic blocks with contact points used to facilitate multiple wire interconnections. Frames are terminal block assemblies used to connect the external wiring of a communications network to the internal wiring of a service provider's serving office, or to interconnect various pieces of equipment within a serving office or at a customer's premises. We manufacture a wide variety of terminal blocks and frames.

    RF Signal Management Products.  Our series of RF products are designed to meet the unique performance requirements of video and data transmission over coaxial cable used in today's cable television networks and emerging cable modem networks. The RF Worx® product family leads the industry by offering the "plug-and-play" flexibility of combiners, splitters, couplers and forward/reverse amplification modules in a single platform designed for optimum cable management. The ADC RF Worx system provides cable television network design engineers with the full breadth of RF signal management tools essential in an evolving cable television "headend" environment.

    High-Speed Digital Routing Switcher Products.  Our series of digital routing products is designed to provide reliable interfacing and routing of a variety of data types in the broadcast, cable television and post-production industries. This product family includes digital signal processing equipment and high-speed digital routing switchers for all digital formats up to and including high-definition television.

    Modular Fiber-Optic Routing Systems.  Our FiberGuide® system is a modular routing system that provides a segregated, protected method of storing and routing fiber patch cords and cables within a service provider's serving offices.

    Broadband Software Infrastructure Management Solutions.  We have developed a number of software products that provide management of optical connectivity infrastructure, geographical tracking of equipment, cables and other network elements in the service provider's serving office and outside plant portions of those networks.

    Fiber-Optic Patch Cords.  Fiber-optic patch cords are the basic components used to gain access to fiber communications circuits for testing, maintenance, cross-connection and configuration purposes. We incorporate our fiber-optic patch cords and cable assemblies into our own products and also sell them in component form. Our fiber-optic patch cords provide immediate identification of fiber-optic

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connections. Our LX.5® fiber connector doubles the capacity of fiber termination equipment by allowing two fibers to fit into the standard SC adapter footprint.

    Jacks, Plugs, Patch Cords, Jackfields and Patch Bays.  Jacks and plugs are the basic components used to gain access to copper communications circuits for testing and maintenance. Patch cords are wires or cables with a plug on each end. We incorporate our jacks, plugs and patch cords into our own products and also sell them in component form, primarily to original equipment manufacturers (OEMs). A jackfield is a module containing an assembly of jacks wired to terminal blocks or connectors and used by communications companies to gain access to copper communication circuits for testing or patching the circuits. When testing a large number of circuits, series of jackfields are combined in specialized rack assemblies called patch bays. We manufacture a large range of jackfields and patch bays in various configurations. Some of these jackfields are specialized for use in audio and video transmission networks in the broadcast cable television and post-production industries.

    PatchSwitch System and PatchMate™ Module.  Our PatchSwitch system is a data network management product that provides access to and monitors, tests and reconfigures digital data circuits and permits local or remote switching to alternate circuits or backup equipment. This system is modular, permitting the user to select and combine the particular functions desired in a system. The PatchMate module is a manually operated electromechanical device used to gain access to the network in order to monitor, test and reconfigure digital data circuits.

    Passive and active optical components.  Our optical component products help generate, amplify, direct and multiplex communications over optical networks. These products include:

    Pump Lasers.  We design and produce high-powered 980 nanometer pump lasers and have patent-pending applications for the development of reliable, high-powered 980 nanometer pump laser diodes and modules for use in erbium doped fiber amplifiers. These amplifiers increase the distances over which a fully optical signal can travel without having to be regenerated. The result is greater bandwidth in the network, as well as reduced costs and better operating efficiencies for optical networks.

    Tunable Lasers.  In 2000, we completed the acquisition of Altitun AB. Altitun develops, manufacturers and markets tunable lasers and other active optical components.

    Optical Couplers and Multiplexers.  We develop, manufacture and market optical couplers, which are used to split and combine signals in optical networks. We also develop, manufacture and market Wavelength Division Multiplexers (WDMs) and Dense Wavelength Division Multiplexers (DWDMs). WDMs combine two different wavelengths of light into a single path and typically are used in optical amplifiers. DWDMs combine or separate a larger number of different wavelengths. These devices greatly increase the capacity of installed optical networks.

    Phase Masks and Integrated Optics.  In 2000, we completed the acquisition of IBSEN Micro Structures A/S. IBSEN develops, manufacturers and markets phase masks and fiber Bragg grating devices. It currently is developing an integrated-optics platform based upon a unique planar technology that utilizes semiconductor-type processes. The Altitun and IBSEN acquisitions have helped to broaden our product offerings in the optical component area.

    Passive Optical Devices.  We develop, manufacture and market passive optical devices, including isolators, collimators, circulators, polarizers, couplers, WDMs, DWDMs and polarization maintaining components. These are important components used by optical network equipment manufacturers to produce transmission, multiplexing, amplification and access system elements.

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    Wireless Systems and Components.  Our wireless systems and components help filter wireless communications and amplify and extend the coverage of wireless communications networks. These products include:

    Wireless Infrastructure Equipment and Subsystems.  We develop, manufacture and market RF filters, SMARTop™ tower-top amplifiers and other wireless base station and subscriber equipment components and subsystems. Products are distributed globally for all major air interfaces. These products are sold primarily to wireless OEMs and to carriers.

    Coverage Products.  Our family of CityWide™ wireless systems products includes the CityCell® wideband digital microcells, CityRad™ repeaters for adding and extending cellular communication coverage out-of-doors and the CityMicro™ Bi-Directional Amplifiers for in-building coverage. The Digivance Indoor Coverage System, introduced in 2000, extends wireless coverage throughout a large building or campus environment by digitizing the full RF bandwidth and transporting signals over multimode fiber.

Broadband Access and Transport

    Broadband Access and Transport products enable broadband, multiservice capabilities within service provider and business networks, while also introducing new service delivery functionality and cost effectiveness into these networks. The group's products include access and transport systems that deliver broadband, multiservice communications to consumers and businesses over copper, coaxial cable, fiber-optic and wireless networks. These products are used throughout the world to deliver Internet, data, video and voice services to consumers and businesses. Broadband Access and Transport products are sold to local and long-distance telephone companies, cable television operators, wireless service providers, integrated service providers, broadcasters, governments and communications equipment distributors. Our Broadband Access and Transport products include:

    Transport Systems.  Our transport systems operate between service providers' serving offices and the last mile/kilometer portion of communications networks. These products include:

    Soneplex and HiGain Products.  Soneplex and HiGain are carrier-class, intelligent loop access platforms that enable communications service providers to deliver T1/E1-based services over copper or optical facilities in the last mile/kilometer of communications networks. Soneplex and HiGain products integrate functions and capabilities that help reduce the capital and operating costs of delivering T1/E1-based services.

    Avidia System.  The Avidia® System is an integrated access switch that enables communications service providers and private network operators to deliver next-generation Internet, data, video and voice applications over common voice-grade copper wire in the last mile/kilometer of communications networks. Avidia addresses networking trends with an architecture specifically designed for data convergence, integrated access multiplexing and asynchronous transfer mode (ATM) edge switching.

    AXITY Broadband Wireless System.  Our AXITY™ broadband wireless system offers a wireless alternative to copper, coaxial cable and optical products by delivering high-speed, wireless Internet, data, video and voice services to customers. We believe that wireless products offer a viable alternative to wireline solutions for access to the last mile/kilometer of the communications network.

    Homeworx Access Transport Platform.  The Homeworx system has been designed for deployment on video-only, telephony-only and integrated Internet, data, video and telephony networks. These networks are provided by telephone operating companies, cable television operators and other communications common carriers. The Homeworx access transport platform utilizes Hybrid Fiber Coax (HFC) technology.

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    Optiworx HFC Transport Systems Platform.  Our Optiworx™ family offers a comprehensive, multiservice HFC transport system including optical transmitters, optical amplifiers, optical receivers, optical distribution nodes, patented RF amplifier technology, DWDM capability and digital HFC products and technology. Our Optiworx product line is designed for a broad range of HFC transport applications, including broadcast and narrowcast video, IP or circuit-switched telephony, video on demand, Internet access and targeted advertising. These products are being deployed in the United States and around the world by cable television operators that are upgrading their networks to carry two-way service over hybrid fiber/coaxial networks, including digital interactive Internet, data, video and voice services.

    DV6000 and Other Fiber Video Delivery Equipment.  Our DV6000® system transmits a variety of signal types using a high-speed, uncompressed digital format. The system transmits at speeds up to 10 billion bits per second, with capacity of up to 64 channels. It transmits over fiber in the super trunking portions of broadcast and interactive video networks.

    Cuda 12000 Product.  The Cuda 12000 is a next-generation, high-performance IP Access Platform. It is being deployed initially as a Cable Modem Termination System (CMTS) for cable operators who want to offer high-speed Internet access via industry standard cable modems services. The Cuda 12000 is designed to support the next-generation of industry standard modem technology, which will support both Internet and Voice-over IP telephony (VoIP) services. The Cuda 12000 will also serve as the base platform for other IP-based broadband access systems that we offer, including a VoIP media gateway for converting between IP and circuit-switched voice traffic. We will be offering this media gateway in a variety of configurations.

    BroadAccess Platform.  Our Israeli operations' BroadAccess™ product is targeted to deliver services to end users over copper wires, ranging from classic telephony to broadband DSL services. BroadAccess is a multiservice access platform designed for and targeted to international markets. It provides multiple services with interfaces to both legacy voice switches as well as to the Internet and ATM networks.

    Network Access Equipment.  Our network access systems include both customer-located equipment (which is part of the service provider's network) and customer-premise equipment (which is owned by the service provider's business customer) that can work alone or in conjunction with one of our transport systems or with other vendors' transport systems. These products include:

    Service Delivery System.  Our ServicePoint™ service delivery system is an innovative product that combines termination, monitoring and control functionality at the access point in a single platform. Unlike other products available today, ServicePoint is an integrated hardware and software system that enables network managers to ensure the delivery of mission-critical application performance while at the same time controlling wide area network (WAN) resources and costs. This intelligent platform makes it possible to identify and manage complex application flows for voice, interactive video and other mission critical traffic. By setting policies, customers can perform service partitioning (that is, allocation of bandwidth to specified applications) to ensure that critical applications have the resources needed for optimal performance.

    Access Concentrators.  Our AAC-1® and AAC-3® ATM Access Concentrators and our CellSmart® Access Multiplexers adapt, aggregate, multiplex and manage Internet, data, video and voice signals for ATM services and private WANs. These products support multiple protocols and a wide range of line speeds to allow organizations to consolidate hybrid networks and gain control over access costs and management. Several of our remote access and routing devices in these product lines are specifically designed for Internet access.

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MediaMover™. MediaMover is a standards-based, highly flexible access platform optimized for both interactive multimedia, video/audio and professional broadcast applications. MediaMover integrates real-time MPEG2 compression/decompression, supporting the transport of numerous video, audio and data interfaces over public and private communications networks.

    Channel Service Unit and Data Service Unit Products.  We manufacture a family of channel service unit (CSU) and data service unit (DSU) products that are used to digitally interconnect public and private communications networks. These products monitor communications channels and provide system protection and other network management functions. Some of these products also enable the customer to test the performance of its voice network and allow the connection of Internet, data, video and voice channels. These devices can work alone or in conjunction with one of our transport systems or with other vendors' transport systems. These products support T1, T3 and OC3 services and a variety of data protocols, including Frame Relay, Switched Multi-megabit Data Service, ATM, integrated services digital network (ISDN), high-bit-rate digital subscriber line (HDSL) and IP.

    Integrated Access.  The Opera Service Matrix platform provides multiple T1/E1 drop-and-insert DSU and CSU terminations, voice compression, time division multiplexing and inverse multiplexing, channel bank and cross-connect functions, supporting diverse applications for wireline and wireless networks as well as enterprise customers.

    Broadcast Television Transmission Equipment.  We supply products to the DTV transmission equipment market. We develop, manufacture and market television transmission products that serve many power levels, modulation formats and customer-specific requirements. The Federal Communications Commission has mandated that all television broadcasters in the United States must begin transmission of DTV service by 2003. We enhanced our ability to deliver this service with our April 2000 acquisition of assets from Continental Electronics Corporation, which provided us with DTV modulation equipment and solid state UHF transmitters.

    Product Review and Development.  As part of our ongoing business, and as a result of several significant acquisitions within the Broadband Access and Transport Group in recent years, we have reviewed and will continue to review individual product lines with reference to overlap and profitability. We intend to add or eliminate product lines as appropriate to optimize financial performance. Any elimination of a product line may result in nonrecurring charges associated with the disposition of manufacturing assets and facilities, possible workforce reductions and related effects.

Integrated Solutions

    Integrated Solutions products and services include systems integration services, OSS software and enhanced services software, all of which aid service providers in their delivery of broadband, multiservice communications over wireline and wireless networks. Integrated Solutions products and services are sold to local and long-distance telephone companies, cable television operators, wireless service providers, new competitive service providers and communications equipment manufacturers. Our Integrated Solutions products include:

    Systems Integration Services.  Systems integration services are offered in North America and Europe and are used to design, equip and build communications networks and OSS applications that communications service providers use to deliver Internet, data, video and voice services to consumers and businesses. System integration services support multi-vendor solutions as well as ADC solutions. We provide our systems integration services and software primarily to telephone operating companies, cable television companies, other common carriers and users of private communications networks. These services consist of program and project management, the provision of network equipment for broadband services and OSS applications, technical consulting and design, turn-up and testing of network equipment, the provision of training services and the provisioning of wireless sites. In addition,

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our systems integration services offer program and product management, network records inventory, automated flow-through integration of OSS, and a full offering of OSS solutions.

    Our Systems Integration division operates throughout the United States and recently has expanded its operations into Europe. In September 2000, we completed our acquisition of Computer Telecom Installations Limited, an England-based service provider. In addition, in November 2000, we completed our acquisition of the communications services integration business of France Electronique S.A., which is one of the largest systems integration companies based in France. The Systems Integration division is also looking to further deploy services internationally through strategic alliances or additional acquisitions.

    OSS Solutions.  We provide a broad range of OSS software as well as a full range of professional services, including assistance in analyzing a customer's requirements and then designing, developing and implementing a solution. These products include:

    Billing and Customer Management Software.  We provide convergent billing, customer management and enhanced Web solutions for local, Internet, data, long-distance, wireless and cable television markets. These products and services are designed to enable communications service providers to bring new service offerings to market quickly, and to bill accurately and reliably for multiple services on one convergent invoice. As part of Singularit.e, we introduced Singl.eView, which includes convergent billing, integrated customer management and Web products. Singl.eView is a modular product that provides real-time convergent billing and integrated customer management and features a flexible architecture with a rules-based transaction engine and enhanced Web solutions. We also provide facilities management services, which allow customers to license Singl.eView from us while we manage the operation of the software on customer-owned hardware. We also offer a complete service bureau billing and customer care service.

    Performance and Network Management Software.  We develop and market communications network performance management and service level agreement software as part of Singularit.e under the Metrica® brand name. Metrica's software platforms are used in the infrastructure management systems of wireless and wireline public network operators throughout the world.

    Enhanced Services Software.  We supply intelligent network communications software, including Signaling Systems 7 (SS7) technology (under the NewNet® brand name), wireless intelligent network products (such as short messaging services), Internet applications software and software to assist carriers in complying with the Communications Assistance to Law Enforcement Act. Further, in 2000, we completed the acquisition of Centigram Communications Corporation, a provider of unified messaging, Internet-enabled call management and WAP-based messaging solutions.

    Our enhanced services solutions are used by telecommunications service providers to assist in generating revenues and profits or by communications service providers to build value-added applications. These service providers generate revenues from our products by charging directly for services such as voicemail or through increased call volumes resulting from the use of our applications such as short message services. Our solutions are used worldwide by Internet service providers and in conjunction with many different wireline and wireless technologies.

Sales and Marketing

    We sell our products to customers in three primary markets:

•

the U.S. public communications network market, which includes the regional bell operating companies (RBOCs), other telephone companies, long-distance carriers, wireless service providers, cable television operators and other domestic public network providers;

12

•

the U.S. private and governmental markets, which include large business customers and governmental agencies that own and operate their own Internet, data, video and voice networks for internal use; and



•

the international public and private network markets.

We also sell products for each of these customer groups to OEMs of communications equipment. Financial information concerning sales of our products is contained in our 2000 Annual Report to Shareowners. Portions of the Annual Report are contained in Exhibit 13-a to this Form 10-K, as filed with the Securities and Exchange Commission (the "SEC"), and are incorporated by reference into this Form 10-K.

    Purchases of our products by public network providers and the OEMs that supply these companies accounted for the largest portion of our net sales in 2000. Our Broadband Connectivity products and Broadband Access and Transport products for public network providers are located primarily in service provider serving offices and networks. These include telephone company central offices and networks, cable television company headend offices and networks, and wireless company network global switching centers and base stations. All of these facilities contain the equipment used in switching and transmitting incoming and outgoing communications channels. Portions of our broadband transmission systems are located in the public network outside the serving offices and on customers' premises. Our private and governmental network customers generally purchase our enterprise-wide communications systems and public network access equipment for installation in the networks located at their premises.

    We also market our products outside the United States, primarily to telephone operating companies, cable television operators and wireless service providers for public communications networks located in Canada, Europe, the Middle East, Australia, Latin America, Asia and the Pacific.

    A majority of our sales are made by a direct sales force. We maintain sales offices throughout the United States and in Canada, Europe, the Middle East, Australia, Latin America, Asia and the Pacific. In the United States, our products are sold by our sales offices as well as through dealer organizations and distributors. Outside the United States, our products are sold by several field sales offices and by independent sales representatives and distributors, as well as through U.S. public and private network providers who also distribute products outside the United States.

    We maintain a customer service group that supports our field sales personnel. The customer service group is responsible for application engineering, customer training, entering orders and supplying delivery status information. We also have a field service engineering group that provides on-site service to customers.

Research and Development

    We believe that our future success depends on our ability to adapt to the rapidly changing communications environment, to maintain our significant expertise in core technologies and to continue to meet and anticipate our customers' needs. We continually review and evaluate technological changes affecting the communications market and invest substantially in applications-based research and development. We intend to continue an ongoing program of new product development that combines internal development efforts with acquisitions, strategic alliances and licensing or marketing arrangements relating to new products and technologies from sources outside ADC.

    In recent years, increasingly significant portions of new communications equipment purchased by public network providers and private network customers have employed optical transmission, digital, integrated circuit, wireless and broadband copper-based technologies. In the future, we believe that these purchasing trends will include increasingly sophisticated, software-intensive OSS, enhanced

13

services and network management systems. As a result, our internal and external product development activities are primarily directed at the following areas:

•

the integration of optical, digital and IP technologies into additional products;



•

the continued development of our Homeworx and CUDA 12000 systems for Internet, data, video and voice services;



•

the development of network OSS (including billing and customer care and enhanced services) software;



•

the continued development of our power DSL and customer premises/carrier-owned termination systems for integrated Internet, data, video and voice applications;



•

the continued development of broadband wireless systems; and



•

the incorporation of ATM and IP technologies into Internet, data, video and voice products for both public and private communications networks.

    New product development often requires long-term forecasting of market trends, the development and implementation of new processes and technologies and a substantial capital commitment. Due to the uncertainties inherent in each of these elements, we cannot assure you that we will develop any new products on a timely basis or at all. Moreover, we cannot assure you that any new products we develop will achieve market acceptance.

Competition

    Competition in the communications equipment industry is intense, and we believe that our competition may increase substantially with the deployment of broadband networks and regulatory changes. Many of our foreign and domestic competitors have more extensive engineering, manufacturing, marketing, financial and personnel resources than we have. Rapid technological developments within the communications industry have resulted in frequent changes among our group of competitors. Currently, our competitors primarily include:

•

For Broadband Connectivity products: Avaya, Corning, Filtronic, JDS Uniphase and Lucent Technologies.



•

For Broadband Access and Transport products: ADTRAN, Advanced Fibre Communications, Arris, Cisco Systems, Motorola, Scientific-Atlanta and Tellabs.



•

For Integrated Solutions products: Comverse Technology, Daleen Technologies, Fujitsu, Lucent Technologies, Portal Software and Ulticom.

    We believe that our success in competing with other communications product manufacturers depends primarily on our engineering, manufacturing and marketing skills; the price, quality and reliability of our products; and our delivery and service capabilities. Although the market for our products historically has not been characterized by significant price competition, we may face increasing pricing pressures from current and future competitors in some or all of the markets for our products.

    We believe that technological change, the increasing addition of Internet, data, video and voice services to integrated broadband, multimedia networks, continuing regulatory changes and industry consolidation or new entrants will continue to cause rapid evolution in the competitive environment of the communications equipment market. At this time it is difficult to predict the full scope and nature of this evolution. We believe that the rapid technological changes that characterize the communications industry will continue to make the markets in which we compete attractive to new entrants. Increased competition could result in price reductions, reduced margins and the loss of market share. We cannot assure you that we will be able to compete successfully with existing or new competitors or that

14

competitive pressures will not materially and adversely affect our business, operating results or financial condition.

Manufacturing and Suppliers

    We manufacture a wide variety of products that are fabricated, assembled and tested in our own facilities or in subcontracted facilities in the United States. In an effort to reduce costs, we also utilize production facilities outside the United States in addition to sourcing key components and raw materials from outside the United States. The manufacturing process for our electronic products consists primarily of assembly and testing of electronic systems built from fabricated parts, printed circuit boards and electronic components. The manufacturing process for our electromechanical products consists primarily of fabrication of jacks, plugs and other basic components from raw materials, assembly of components and testing. Our sheet metal, plastic molding, stamping and machining capabilities permit us to configure components to customer specifications, provide competitive lead times and control production costs. Optical components are produced through our vertically integrated processes, including semiconductor wafer fabrication, performance and environmental testing, packaging and automated production stations.

    We purchase raw materials and component parts from several suppliers. These purchases consist primarily of copper wire, optical fiber, steel, brass, nickel-steel alloys, gold, plastics, printed circuit boards, solid state components, discrete electronic components and similar items. Although many of these items are single-sourced, we have experienced no significant difficulties to date in obtaining adequate quantities. These circumstances could change, however, and we cannot be sure that sufficient quantities or quality of raw materials and component parts will be as readily available in the future or, even if they are available, will be able to be obtained at favorable prices.

Proprietary Rights

    We own a number of U.S. and foreign patents relating to our products. These patents, in the aggregate, constitute a valuable asset. However, we believe that our business is not dependent upon any single patent or any particular group of related patents.

    We have registered the initials "ADC" alone and in conjunction with specific designs as trademarks in the United States and various foreign countries.

Employees

    As of October 31, 2000, we employed approximately 22,450 people. We consider relations with our employees to be good.

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995

    The foregoing discussion and the discussion contained in Exhibit 13-a to this Form 10-K contain various "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements represent our expectations or beliefs concerning future events, including the following: any statements regarding future sales, profit percentages, earnings per share and other results of operations, any statements regarding the continuation of historical trends, any statements regarding the sufficiency of our cash balances and cash generated from operating and financing activities for our future liquidity and capital resource needs, any statements regarding the effect of regulatory changes and any statements regarding the future of the communications equipment industry and communications services on our business. We caution that any forward-looking statements made by us in this report or

15

in other announcements made by us are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements. These include, without limitation, demand for our products or services, availability of materials to make products, changing market conditions within our industry or generally within the economy, new competition and technologies, increased costs associated with protecting intellectual property rights, fluctuations in our operating results, pressures on the pricing of the products and services we offer, and the factors set forth on Exhibit 99-a to this Form 10-K.

Item 2.  PROPERTIES

    Our corporate headquarters are currently located in Minnetonka, Minnesota. We intend to move our corporate headquarters to a new facility in Eden Prairie, Minnesota, in 2001. We have entered into an operating lease agreement for the new corporate headquarters facility that is presently under construction. The facility is planned in two phases. The total cost of both phases currently is estimated at approximately $136 million. Construction of the first phase of the Eden Prairie facility began late in 1999 and is expected to be completed in the summer of 2001. The initial phase of the facility will comprise approximately 530,000 square feet. The planned second phase would expand the facility to between 1.0 million and 1.2 million square feet.

    We own or lease manufacturing or distribution facilities in several countries around the world including the United States, Argentina, Australia, Austria, China, Finland, Israel, Mexico, Sweden and the United Kingdom. These various facilities comprise approximately 6.04 million square feet in the aggregate.

    We also own and lease a variety of other facilities for our manufacturing, development, distribution, warehousing, sales and other activities. These facilities, including sales offices, are located in various countries, including the United States, Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Hungary, Ireland, Israel, Japan, Korea, Malaysia, Mexico, the Netherlands, the Philippines, Russia, Singapore, Spain, Sweden, Thailand, the United Kingdom and Venezuela.

    We believe that the facilities used in our operations and currently under development are suitable for their respective uses and adequate to meet our current needs.

Item 3.  LEGAL PROCEEDINGS

    We currently are not subject to any pending or threatened litigation other than routine litigation arising in the ordinary course of business, none of which is expected to have a material adverse effect on our business, financial condition or operating results.

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

    None.

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EXECUTIVE OFFICERS OF THE REGISTRANT

    Our executive officers are:

Name	Office	Officer Since	Age
William J. Cadogan	Chairman of the Board of Directors, President, Chief Executive Officer and President	1987	52
Lynn J. Davis	Senior Vice President, President, Broadband Connectivity Group	1984	53
Robert W. Switz	Senior Vice President, Chief Financial Officer, President, Broadband Access and Transport Group	1994	54
Larry J. Ford	Senior Vice President, President, Integrated Solutions Group	1999	59
Charles T. Roehrick	Vice President and Controller	1995	46
Jeffrey D. Pflaum	Vice President, General Counsel and Corporate Secretary	1999	41
Laura N. Owen	Vice President, Human Resources	1999	44
J. Wayne Stewart	Vice President, Operations	1999	50
Gokul V. Hemmady	Vice President and Treasurer	1997	40

    Messrs. Cadogan and Davis have served in various capacities with ADC for more than five years. Biographical information regarding the other named executive officers is set forth below:

    Mr. Switz joined ADC in January 1994. From 1988 to 1994 he was employed by Burr-Brown Corporation, a manufacturer of precision micro-electronics, most recently as Vice President, Chief Financial Officer and Director, Ventures and Systems Business.

    Mr. Ford joined ADC in October 1999. From April 1995 to August 1999, Mr. Ford served as President and Chief Executive Officer of Information Advantage, an Eden Prairie, Minnesota-based software company focused on the data warehousing and business intelligence markets. From August 1991 to November 1994, Mr. Ford served as Chairman and Chief Executive Officer of Systems Software Associates (SSA), a Chicago-based application software company that provides enterprise business information solutions to the industrial sector market. Mr. Ford also served more than 25 years with IBM in various management capacities.

    Mr. Roehrick joined ADC in January 1995. Prior to such time, he was employed by Cray Research, Inc., a manufacturer of large-scale computers, most recently as Controller. From 1992 to 1993, he was Assistant Controller of Cray Research, and from 1989 to 1991, he was Director of Accounting for Cray Research.

    Mr. Pflaum joined ADC in April 1996 and became Vice President, General Counsel and Secretary of ADC in March 1999. Prior to joining ADC, he was an attorney with the Minneapolis-based law firm of Popham Haik Schnobrich & Kaufman.

    Ms. Owen joined ADC in December 1997. Prior to that time, she was employed by Texas Instruments and Raytheon, manufacturers of high-technology systems and components. From 1995 to 1997, she served as Vice President of Human Resources for the Defense Systems and Electronics Group of Texas Instruments, which was sold to Raytheon in 1997.

    Mr. Stewart joined ADC in November 1998. From 1994 to 1998, he served as Vice President and subsequently as Executive Vice President, Operations at FSI International, Inc., a manufacturer of semiconductor capital equipment. Between 1973 and 1994, Mr. Stewart worked in various operations and general management positions with Texas Instruments, Inc.

    Mr. Hemmady joined ADC in October 1997. Prior to joining ADC, he was employed by U.S. West International, most recently as Director of International Finance.

17

PART II

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

    The section entitled "Quarterly Stock Prices" of the Annual Report is incorporated in this Form 10-K by reference. This section is also included on Exhibit 13-a to this Form 10-K, as filed with SEC.

Item 6.  SELECTED CONSOLIDATED FINANCIAL DATA

    The summary of certain information from our consolidated statement of income and balance sheet for the 11 years ended October 31, 2000 included in the Annual Report is incorporated in this Form 10-K by reference. This information is also included on Exhibit 13-a to this Form 10-K, as filed with the SEC. This summary information should be read in conjunction with the consolidated financial statements and notes thereto incorporated by reference in Item 14 of this Form 10-K.

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

    The sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Overview," "Results of Operations," "Segment Disclosures," "Liquidity and Capital Resources," "Euro Conversion" and "Dividends" in the Annual Report are incorporated in this Form 10-K by reference. This section is also included in Exhibit 13-a to this Form 10-K, as filed with the SEC.

Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management" in the Annual Report is incorporated in this Form 10-K by reference. This section is also included in Exhibit 13-a to this Form 10-K, as filed with the SEC.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The consolidated financial statements and notes thereto included in the Annual Report are incorporated in this Form 10-K by reference. These financial statements are also included in Exhibit 13-a to this Form 10-K, as filed with the SEC.

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 sections entitled "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" in our definitive proxy statement for our 2001 Annual Meeting of Shareowners to be filed with the SEC on or before January 31, 2000 (the "Proxy Statement") are incorporated in this Form 10-K by reference. The section entitled "Executive Officers of the Registrant" following Item 4 of this Form 10-K is incorporated herein by reference.

    John W. Sidgmore resigned as a director of ADC on August 1, 2000.

18

Item 11.  EXECUTIVE COMPENSATION

    The section of the Proxy Statement entitled "Executive Compensation" is incorporated in this Form 10-K by reference (except for the information set forth under the subcaption "Compensation and Organization Committee Report on Executive Compensation," which is not incorporated in this Form 10-K).

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The section of the Proxy Statement entitled "Security Ownership of Certain Beneficial Owners and Management" is incorporated by reference into this Form 10-K.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    During 2000, we made payments of approximately $400,000 for personnel assessment and development services to MDA Consulting Group, Inc., a company in which the spouse of Lynn Davis, one of our executive officers, is a majority owner. We believe that the amount of payments made in relation to the services provided were consistent with market rates.

    During 2000, we entered into a software licensing agreement and related maintenance agreement for an OSS software product with Allegiance Telecom, Inc. Charles D. Yost, one of our directors, is the Chief Operating Officer and a director of Allegiance Telecom, Inc. The amount to be paid by Allegiance Telecom, Inc. to us for this license and related maintenance is approximately $4.8 million. We believe that the terms of this transaction are consistent with market conditions.

PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)

1.  Financial Statements

    The following consolidated financial statements of ADC, which can be found on the pages of the Annual Report indicated below, are incorporated in this Form 10-K by reference. These financial statements are included on Exhibit 13-a to this Form 10-K, as filed with the SEC.

	Page Reference in the Annual Report to Shareowners
Management's Responsibility for Financial Reporting	30
Report of Independent Public Accountants	30
Consolidated Statements of Operations for the years ended October 31, 2000, 1999 and 1998	31
Consolidated Balance Sheets as of October 31, 2000 and 1999	32
Consolidated Statements of Shareowners' Investment for the years ended October 31, 2000, 1999 and 1998	33
Consolidated Statements of Cash Flows for the years ended October 31, 2000, 1999 and 1998	34
Notes to Consolidated Financial Statements	35
Eleven-Year Financial Summary for the years ended October 31, 1990 through October 31, 2000 (Unaudited)	54

2.

Financial Statement Schedules

    All schedules for which provision is made in the applicable accounting regulations of the SEC have been omitted as not required or not applicable, or the information required has been included

19

elsewhere by reference in the financial statements and related notes, except for Schedule II, which is included as Exhibit 99-b to this Form 10-K, as filed with the SEC.

3.

Listing of Exhibits

Exhibit Number	Description
3-a	Restated Articles of Incorporation of ADC Telecommunications, Inc., as amended. (Incorporated by reference to Exhibit 4.1 to ADC's Registration Statement on Form S-3 dated April 15, 1997.)
3-b	Restated Bylaws of ADC Telecommunications, Inc., as amended. (Incorporated by reference to Exhibit 4.2 to ADC's Registration Statement on Form S-3 dated April 15, 1997.)
3-c	Articles of Amendment to Restated Articles of Incorporation of ADC Telecommunications, Inc., dated January 20, 2000. (Incorporated by reference to Exhibit 4.6 to ADC's Registration Statement on Form S-8 dated March 14, 2000.)
3-d	Articles of Amendment to Restated Articles of Incorporation of ADC Telecommunications, Inc., dated June 30, 2000. (Incorporated by reference to Exhibit 4-g to ADC's Quarterly Report on Form 10-Q for the quarter ended July 31, 2000.)
4-a	Form of certificate for shares of Common Stock of ADC Telecommunications, Inc. (Incorporated by reference to Exhibit 4-a to ADC's Quarterly Report on Form 10-Q for the quarter ended January 31, 1996.)
4-b	Second Amended and Restated Rights Agreement, amended and restated as of November 28, 1995, between ADC Telecommunications, Inc. and Norwest Bank Minnesota, National Association (amending and restating the Rights Agreement dated as of September 23, 1986, as amended and restated as of August 16, 1989 and November 28, 1995), which includes as Exhibit A thereto the form of Right Certificate. (Incorporated by reference to Exhibit 4 to ADC's Form 8-K dated December 11, 1995.)
4-c	Amendment to Second Amended and Restated Rights Agreement dated as of October 6, 1999. (Incorporated by reference to Exhibit 4-c to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
10-a*	ADC Telecommunications, Inc. 1991 Stock Incentive Plan, as amended and restated through February 22, 2000. (Incorporated by reference to Exhibit 10-a to ADC's Quarterly Report on Form 10-Q for the quarter ended January 31, 2000.)
10-b*	Business Unit Management Incentive Plan Fiscal Year 1999. (Incorporated by reference to Exhibit 10-m to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1998.)
10-c*	Corporate Management Incentive Plan Fiscal Year 1999. (Incorporated by reference to Exhibit 10-n to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1998.)
10-d*	ADC Telecommunications Management Incentive Plan Document for Fiscal Year 2000. (Incorporated by reference to Exhibit 10-m to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
10-e*	ADC Telecommunications Management Incentive Plan Document for Fiscal Year 2001.
10-f*	Executive Incentive Exchange Plan Fiscal Year 1999. (Incorporated by reference to Exhibit 10-q to ADC's Annual Report Form 10-K for the fiscal year ended October 31, 1998.)

20

10-g*	Executive Incentive Exchange Plan Fiscal Year 2000. (Incorporated by reference to Exhibit 10-m to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
10-h*	Executive Incentive Exchange Plan Fiscal Year 2001.
10-i*	Supplemental Executive Retirement Plan Agreement for William J. Cadogan, dated as of November 1, 1990, between ADC Telecommunications, Inc. and William J. Cadogan, as amended. (Incorporated by reference to Exhibit 10-u to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1996.)
10-j*	ADC Telecommunications, Inc. Change in Control Severance Pay Plan Statement and Summary Plan Description. (Incorporated by reference to Exhibit 10-q to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1989.)
10-k*	First Amendment of ADC Telecommunications, Inc. Change in Control Severance Pay Plan Statement and Summary Plan Description, effective July 22, 1997. (Incorporated by reference to Exhibit 10-x to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1997.)
10-l*	Compensation Plan for Directors of ADC Telecommunications, Inc., restated as of December 31, 1988. (Incorporated by reference to Exhibit 10-b to ADC's Quarterly Report on Form 10-Q for the quarter ended January 31, 1989.)
10-m*	First Amendment of the Compensation Plan for Directors of ADC Telecommunications, Inc. restated as of December 31, 1988. (Incorporated by reference to Exhibit 10-s to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1989.)
10-n*	ADC Telecommunications, Inc. Nonemployee Director Stock Option Plan, as amended and restated through February 22, 2000. (Incorporated by reference to Exhibit 10-b to ADC's Quarterly Report on Form 10-Q/A for the quarter ended April 30, 2000.)
10-o*	ADC Telecommunications, Inc. Deferred Compensation Plan, dated as of November 1, 1978, as amended. (Incorporated by reference to Exhibit 10-aa to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1996.)
10-p*	Second Amendment of ADC Telecommunications, Inc. Deferred Compensation Plan, dated effective March 12, 1996 and approved on April 1, 1997. (Incorporated by reference to Exhibit 10-b to ADC's Quarterly Report on Form 10-Q for the quarter ended April 30, 1997.)
10-q*	ADC Telecommunications, Inc. Pension Excess Plan, dated as of January 1, 1985, as amended. (Incorporated by reference to Exhibit 10-bb to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1996.)
10-r*	Second Amendment of ADC Telecommunications, Inc. Pension Excess Plan, dated effective March 12, 1996 and approved on April 1, 1997. (Incorporated by reference to Exhibit 10-a to ADC's Quarterly Report on Form 10-Q for the quarter ended April 30, 1997.)
10-s*	ADC Telecommunications, Inc. 401(k) Excess Plan, dated as of September 1, 1990, as amended. (Incorporated by reference to Exhibit 10-cc to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1996.)
10-t*	Third Amendment of ADC Telecommunications, Inc. 401(k) Excess Plan, dated effective March 12, 1996 and approved on April 1, 1997. (Incorporated by reference to Exhibit 10-c to ADC's Quarterly Report on Form 10-Q for the quarter ended April 30, 1997.)

21

10-u	Lease, dated as of October 22, 1999, between ADC Telecommunications, Inc. and Lease Plan North America, Inc. (Incorporated by reference to Exhibit 10-ff to ADC's Annual Report on Form 10-K for the fiscal year ended October  31, 1999.)
10-v	Ground Lease, dated as of October 22, 1999, between ADC Telecommunications, Inc. and Lease Plan North America, Inc. (Incorporated by reference to Exhibit 10-gg to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
10-w	Construction Agreement, dated as of October 22, 1999, between ADC Telecommunications, Inc. and Kraus-Anderson Construction Company. (Incorporated by reference to Exhibit 10-hh to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
10-x	Construction Agency Agreement, dated as of October 22, 1999, between Lease Plan North America, Inc. and ADC Telecommunications, Inc. (Incorporated by reference to Exhibit 10-ii to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
10-y	Participation Agreement, dated as of October 22, 1999, among ADC Telecommunications, Inc., Lease Plan North America, Inc., the Participants named therein and ABN AMRO Bank N.V. (Incorporated by reference to Exhibit 10-jj to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
10-z	Conduit Facility, Transfer and Revolving Credit Agreement, dated as of November 24, 1998, by and among ADC Telecommunications, Inc., Windmill Funding Corporation, Amsterdam Funding Corporation, ABN AMRO Bank N.V., and certain other financial institutions. (Incorporated by reference to Exhibit 10-kk to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1998.)
13-a	Portions of the 2000 Annual Report to Shareowners.
21-a	Subsidiaries of ADC Telecommunications, Inc.
23-a	Consent of Arthur Andersen LLP.
24-a	Power of Attorney.
99-a	Cautionary Statement Regarding Forward-Looking Statements.
99-b	Report of Arthur Andersen LLP and Schedule II.

*

Management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Form 10-K.

We have excluded from the exhibits filed with this report instruments defining the rights of holders of long-term debt of ADC where the total amount of the securities authorized under such instruments does not exceed 10% of our total assets. We hereby agree to furnish a copy of any of these instruments to the SEC upon request.

(b)

The following Reports on Form 8-K were filed during the last quarter of the period covered by this report:

•

Report on Form 8-K dated September 20, 2000, filed in connection with the acquisition of Broadband Access Systems, Inc.;

•

Report on Form 8-K dated September 29, 2000, filed in connection with the completion of the acquisition of Broadband Access Systems, Inc.; and

22

•

Report on Form 8-K dated October 6, 2000, filed in connection with the acquisitions of Altitun AB and PairGain Technologies, Inc. The report included our consolidated statements of income, consolidated balance sheets, consolidated statements of shareowners' investment, and consolidated statements of cash and related notes and management's discussion and analysis of financial condition and results of operations for each of the three years in the period ended October 31, 1999. This consolidated financial information reflects our financial position and results of operations as if Altitun and PairGain were wholly owned subsidiaries of ADC since inception.

(c)

See Item 14(a)(3) above.

(d)

See Item 14(a)(2) above.

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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.

	ADC TELECOMMUNICATIONS, INC.
Dated: January 4, 2001	By:	/s/ WILLIAM J. CADOGAN William J. Cadogan Chairman of the Board, President and Chief Executive Officer

    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.

/s/ WILLIAM J. CADOGAN William J. Cadogan	Chairman of the Board, President and Chief Executive Officer (principal executive officer)	Dated: January 4, 2001
/s/ ROBERT E. SWITZ Robert E. Switz	Senior Vice President, Chief Financial Officer (principal financial officer)	Dated: January 4, 2001
/s/ CHARLES T. ROEHRICK Charles T. Roehrick	Vice President, Controller (principal accounting officer)	Dated: January 4, 2001
John A. Blanchard III*	Director
John J. Boyle III*	Director
James C. Castle*	Director
B. Kristine Johnson*	Director
Jean-Pierre Rosso*	Director
John D. Wunsch*	Director
Charles D. Yost*	Director

*By:
/s/ JEFFREY D. PFLAUM Jeffrey D. Pflaum
Attorney-in-fact
Dated: January 4, 2001

24

ADC Telecommunications, Inc.
Annual Report on Form 10-K
For the Fiscal Year Ended October 31, 2000

EXHIBIT INDEX

Exhibit Number	Description	Page
3-a	Restated Articles of Incorporation of ADC Telecommunications, Inc., as amended. (Incorporated by reference to Exhibit 4.1 to ADC's Registration Statement on Form S-3 dated April 15, 1997.)
3-b	Restated Bylaws of ADC Telecommunications, Inc., as amended. (Incorporated by reference to Exhibit 4.2 to ADC's Registration Statement on Form S-3 dated April 15, 1997.)
3-c	Articles of Amendment to Restated Articles of Incorporation of ADC Telecommunications, Inc., dated January 20, 2000. (Incorporated by reference to Exhibit 4.6 to ADC's Registration Statement on Form S-8 dated March 14, 2000.)
3-d	Articles of Amendment to Restated Articles of Incorporation of ADC Telecommunications, Inc., dated June 30, 2000. (Incorporated by reference to Exhibit 4-g to ADC's Quarterly Report on Form 10-Q for the quarter ended July 31, 2000.)
4-a	Form of certificate for shares of Common Stock of ADC Telecommunications, Inc. (Incorporated by reference to Exhibit 4-a to ADC's Quarterly Report on Form 10-Q for the quarter ended January 31, 1996.)
4-b	Second Amended and Restated Rights Agreement, amended and restated as of November 28, 1995, between ADC Telecommunications, Inc. and Norwest Bank Minnesota, National Association (amending and restating the Rights Agreement dated as of September 23, 1986, as amended and restated as of August 16, 1989 and November 28, 1995), which includes as Exhibit A thereto the form of Right Certificate. (Incorporated by reference to Exhibit 4 to ADC's Form 8-K dated December 11, 1995.)
4-c	Amendment to Second Amended and Restated Rights Agreement dated as of October 6, 1999. (Incorporated by reference to Exhibit 4-c to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
10-a*	ADC Telecommunications, Inc. 1991 Stock Incentive Plan, as amended and restated through February 22, 2000. (Incorporated by reference to Exhibit 10-a to ADC's Quarterly Report on Form 10-Q for the quarter ended January 31, 2000.)
10-b*	Business Unit Management Incentive Plan Fiscal Year 1999. (Incorporated by reference to Exhibit 10-m to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1998.)
10-c*	Corporate Management Incentive Plan Fiscal Year 1999. (Incorporated by reference to Exhibit 10-n to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1998.)
10-d*	ADC Telecommunications Management Incentive Plan Document for Fiscal Year 2000. (Incorporated by reference to Exhibit 10-m to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)

25

10-e*	ADC Telecommunications Management Incentive Plan Document for Fiscal Year 2001.
10-f*	Executive Incentive Exchange Plan Fiscal Year 1999. (Incorporated by reference to Exhibit 10-q to ADC's Annual Report Form 10-K for the fiscal year ended October 31, 1998.)
10-g*	Executive Incentive Exchange Plan Fiscal Year 2000. (Incorporated by reference to Exhibit 10-m to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
10-h*	Executive Incentive Exchange Plan Fiscal Year 2001.
10-i*	Supplemental Executive Retirement Plan Agreement for William J. Cadogan, dated as of November 1, 1990, between ADC Telecommunications, Inc. and William J. Cadogan, as amended. (Incorporated by reference to Exhibit 10-u to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1996.)
10-j*	ADC Telecommunications, Inc. Change in Control Severance Pay Plan Statement and Summary Plan Description. (Incorporated by reference to Exhibit 10-q to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1989.)
10-k*	First Amendment of ADC Telecommunications, Inc. Change in Control Severance Pay Plan Statement and Summary Plan Description, effective July 22, 1997. (Incorporated by reference to Exhibit 10-x to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1997.)
10-l*	Compensation Plan for Directors of ADC Telecommunications, Inc., restated as of December 31, 1988. (Incorporated by reference to Exhibit 10-b to ADC's Quarterly Report on Form 10-Q for the quarter ended January 31, 1989.)
10-m*	First Amendment of the Compensation Plan for Directors of ADC Telecommunications, Inc. restated as of December 31, 1988. (Incorporated by reference to Exhibit 10-s to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1989.)
10-n*	ADC Telecommunications, Inc. Nonemployee Director Stock Option Plan, as amended and restated through February 22, 2000. (Incorporated by reference to Exhibit 10-b to ADC's Quarterly Report on Form 10-Q/A for the quarter ended April 30, 2000.)
10-o*	ADC Telecommunications, Inc. Deferred Compensation Plan, dated as of November 1, 1978, as amended. (Incorporated by reference to Exhibit 10-aa to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1996.)
10-p*	Second Amendment of ADC Telecommunications, Inc. Deferred Compensation Plan, dated effective March 12, 1996 and approved on April 1, 1997. (Incorporated by reference to Exhibit 10-b to ADC's Quarterly Report on Form 10-Q for the quarter ended April 30, 1997.)
10-q*	ADC Telecommunications, Inc. Pension Excess Plan, dated as of January 1, 1985, as amended. (Incorporated by reference to Exhibit 10-bb to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1996.)
10-r*	Second Amendment of ADC Telecommunications, Inc. Pension Excess Plan, dated effective March 12, 1996 and approved on April 1, 1997. (Incorporated by reference to Exhibit 10-a to ADC's Quarterly Report on Form 10-Q for the quarter ended April 30, 1997.)

26

10-s*	ADC Telecommunications, Inc. 401(k) Excess Plan, dated as of September 1, 1990, as amended. (Incorporated by reference to Exhibit 10-cc to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1996.)
10-t*	Third Amendment of ADC Telecommunications, Inc. 401(k) Excess Plan, dated effective March 12, 1996 and approved on April 1, 1997. (Incorporated by reference to Exhibit 10-c to ADC's Quarterly Report on Form 10-Q for the quarter ended April 30, 1997.)
10-u	Lease, dated as of October 22, 1999, between ADC Telecommunications, Inc. and Lease Plan North America, Inc. (Incorporated by reference to Exhibit 10-ff to ADC's Annual Report on Form 10-K for the fiscal year ended October  31, 1999.)
10-v	Ground Lease, dated as of October 22, 1999, between ADC Telecommunications, Inc. and Lease Plan North America, Inc. (Incorporated by reference to Exhibit 10-gg to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
10-w	Construction Agreement, dated as of October 22, 1999, between ADC Telecommunications, Inc. and Kraus-Anderson Construction Company. (Incorporated by reference to Exhibit 10-hh to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
10-x	Construction Agency Agreement, dated as of October 22, 1999, between Lease Plan North America, Inc. and ADC Telecommunications, Inc. (Incorporated by reference to Exhibit 10-ii to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
10-y	Participation Agreement, dated as of October 22, 1999, among ADC Telecommunications, Inc., Lease Plan North America, Inc., the Participants named therein and ABN AMRO Bank N.V. (Incorporated by reference to Exhibit 10-jj to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
10-z	Conduit Facility, Transfer and Revolving Credit Agreement, dated as of November 24, 1998, by and among ADC Telecommunications, Inc., Windmill Funding Corporation, Amsterdam Funding Corporation, ABN AMRO Bank N.V., and certain other financial institutions. (Incorporated by reference to Exhibit 10-kk to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1998.)
13-a	Portions of the 2000 Annual Report to Shareowners.
21-a	Subsidiaries of ADC Telecommunications, Inc.
23-a	Consent of Arthur Andersen LLP.
24-a	Power of Attorney.
99-a	Cautionary Statement Regarding Forward-Looking Statements.
99-b	Report of Arthur Andersen LLP and Schedule II.

*

Management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Form 10-K.

27

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DOCUMENTS INCORPORATED BY REFERENCE
PART I
PART II
PART III
PART IV
SIGNATURES
EXHIBIT INDEX

EX-10.E

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ADC TELECOMMUNICATIONS
MANAGEMENT INCENTIVE PLAN DOCUMENT
FISCAL YEAR 2001

ADC TELECOMMUNICATIONS
MANAGEMENT INCENTIVE PLAN DOCUMENT
FISCAL YEAR 2001

PLAN NAME AND EFFECTIVE DATE

    The name of this Plan is the ADC Telecommunications, Inc. ("Company"), Management Incentive Plan—Fiscal Year ("FY") 2001, effective November 1, 2000 through October 31, 2001.

PURPOSE

    The purpose of the Plan is to provide, with full regard to the protection of shareholder's investments, a direct financial incentive for eligible managers and key employees to make a significant contribution to the Company's established goals.

ELIGIBILITY

    For Fiscal Year 2001 eligibility is limited to regular (not temporary) executives and certain management and higher-level individual contributor positions. In order to be eligible, you can not participate in any other ADC incentive plan other than the stock option program and must be employed in an eligible job no later than October 1, 2001. Participation is communicated to you through an incentive opportunity statement ("Participant Form"), which provides a statement of the target incentive level for your job and of the relevant performance goals.

TIME OF PAYMENT

    Payments which become due under this Plan are made as soon as administratively feasible following the close of the Company's fiscal year. In the past, this payment date has generally occurred in late December.

PLAN GOALS

    The Plan reinforces the key goals that support ADC's long-term strategic plans. These goals differ across business groups and are listed on the Participant Form attached to this document. The goal weights and the threshold, target, and maximum performance levels also are specified on the attachment.

    Economic Value Added (EVA) is a key measure of ADC success. Simply stated, EVA is a financial measure of the economic return ADC produces after taking into account the cost of all the capital used to produce the return. A certain level of improvement in Economic Value Added as compared to the previous fiscal year (EVAI) is an important goal under this Plan.

Individual Performance

    In addition to the business performance goals, an individual performance factor might be applied to the calculation of your MIP payout. This is an optional feature of the Plan, and each business group can determine if and under what circumstances it will be used. The factor ranges from 50% to 150% of your overall payout.

MINIMUM PERFORMANCE PAYOUT REQUIREMENTS

    To ensure protection of shareholder interest before an incentive payout can be generated, the following criteria must be met: (1) ADC EVA must be positive, and (2) performance on at least one of the core goals (EVAI or revenue) must be at or above the threshold level.

Page 2

CALCULATION OF PAYMENTS

    Prior to making any payments under this Plan, the Board of Directors must agree that the claimed performance levels have been achieved. The size of your award will be based on four factors:

1.

Target Incentive Opportunity—expressed as a percentage of an individual's FY 2001 eligible base salary earnings. This is noted on the attachment to this Plan summary.



2.

FY2001 Eligible Base Salary Earnings. This is the amount actually paid to you during the fiscal year in Base Salary. Base Salary for purposes of this Plan excludes any salary continuation pay paid by ADC payroll and any disability insurance paid by an insurer.



3.

Business Performance against the established goals.



4.

The Individual Performance Factor, which might or might not be considered by your business group.

    The range of potential awards can be from zero to three times your target award. At target business and individual performance, the award would be 100% of the stated target percent of your Base Salary Earnings.

    This can be displayed as follows for the business performance factors:

Threshold	Target	Maximum
0% of Target Incentive Opportunity	100% of Target Incentive Opportunity	300% of Target Incentive Opportunity

•

Results between threshold-target and target-maximum are interpolated for each goal.



•

Your individual target incentive opportunity is indicated on your participant form

    Here is an example of a hypothetical award calculation. Refer to the attached Goal Sheet for the performance factors and weightings that apply to you.

    Assume we have a Business Group Plan participant with the following facts:

Grade:	15
Target Payout:	15% of base salary earnings
Base Salary Earnings:	$60,000
ADC EVA is positive.

Goal	Weight		Achievement
			(As a % of Target)
ADC EVA Improvement	30	%	100.4	%
Group EVA Improvement	30	%	100.8	%
Group Revenue	20	%	110.2	%
Key Division Goal	20	%	99.8	%
Overall Result as % of Target			102.4	%
Individual Performance Factor			100	%

Calculation of Payment:

    $60,000 (FY Base Salary Earnings) × 15% (Target Incentive Opportunity) × 102.4% (Overall Result as a % of Target) × 100% (Individual Performance Factor) = $9,216.

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EFFECT OF CHANGES IN EMPLOYMENT STATUS

    Termination of Employment.  If you leave employment with ADC for any reason other than death prior to the end of the Fiscal Year, you will not receive an award under the Plan.

    Change in Job Within the Company but not Eligible for the Management Incentive Plan.  A participant, who changes jobs within the Company but is not eligible for this Plan, retains the right to a pro rata payout for full months served under this Plan. The first of the month will be used as the basis for rounding to full months. If terms are inconsistent with those other plans, ADC reserves the full authority to define the appropriate prorating.

    Change Based upon Promotion or Demotion to Another MIP Eligible Position with the Same MIP Goals.  A current participant who is promoted or demoted from a MIP eligible position to another MIP eligible position with the same MIP goals during the fiscal year has a pro rata calculation of payment based upon the full months of service in each position during the Fiscal Year, provided at least three months was served in each position. The 1^st of the month will be used as the basis for rounding to full months. If a participant is in an eligible position for less than three months during the fiscal year, the payment calculation is based on the incentive level of the position served in the longest.

    Change Based upon a Transfer to Another Position or ADC group with Different MIP Goals.  A transfer is defined as a change in position which results in the MIP participant working under new MIP goals. How a transfer payout is calculated is based on the quarter in which the effective date occurs. To minimize compensation issues related to the movement of executives and key managers between business units and groups, the following guidelines will be used:

Fiscal Year Qtr of Effective Date	Impact on MIP Payout Calculation
1st Quarter	Payout is based on the new MIP goals for the entire fiscal year
2nd & 3rd Quarter	The participant's payout for the period prior to the effective date of the transfer will be based on the old Plan goals applied to months of service. The participant's payout for service after the effective date of the transfer will be based on the overall MIP results of the old goals and job or the new goals and job, whichever results in a higher payout for the participant. For this comparison, the calculation will be made using annual earnings (prorated for number of full months eligibility) multiplied by new and old goal performance and target incentive levels. The 1st of the month will be used as the basis for rounding to full months.
4th Quarter	Payout is based on the old MIP goals for the entire fiscal year

    Death.  If you die during the fiscal year and were a participant at the time of your death, your heirs as determined by will or applicable laws of descent and distribution have a pro-rata calculation of payment based upon the time that you served in the eligible position during the fiscal year.

COMPLIANCE WITH SECTION 162(M) OF THE INTERNAL REVENUE CODE OF 1986

    If a current Plan year payout causes your total cash compensation to exceed one million dollars in the Fiscal Year, you must defer the portion that exceeds the one million dollars in the ADC Telecommunications Deferred Compensation Plan.

ADMINISTRATION

    A Management Incentive Plan Committee ("Committee") appointed and authorized by the Company's Board of Directors will administer this Plan. Subject to the complete and full discretion of

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the Board of Directors, the Committee is authorized to make all decisions as required in administration of the Plan and to exercise its discretion to define, interpret, construe, apply and make any exceptions to the terms of the Plan.

AMENDMENT OR TERMINATION OF PLAN

    The Board of Directors reserves and retains the right to modify, rescind or terminate this plan in whole or in part, at its sole discretion. Nothing in this Plan limits this right in any way or creates any right to any employee of future participation in this Plan or any other plan, or constitutes any guarantee of compensation or employment with ADC. Further, neither the Board of Directors nor the Company has any obligation under this Plan or otherwise to adopt this or any other plan in any future fiscal year.

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ADC TELECOMMUNICATIONS MANAGEMENT INCENTIVE PLAN DOCUMENT FISCAL YEAR 2001

EX-10.H

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ADC TELECOMMUNICATIONS, INC.
EXECUTIVE INCENTIVE EXCHANGE PLAN
FISCAL YEAR 2001

ADC TELECOMMUNICATIONS, INC.
EXECUTIVE INCENTIVE EXCHANGE PLAN
FISCAL YEAR 2001

I.  PLAN NAME AND EFFECTIVE DATE

    The name of this Plan is the ADC Telecommunications, Inc. ("Company") Executive Incentive Exchange Plan—Fiscal Year 2001 ("FY 2001"), effective November 1, 2000 through October 31, 2001.

II.  PURPOSE

    The purpose of the Plan is to provide exceptional rewards for exceptional performance of eligible executives, align executive rewards with shareholder interests, and provide an incentive for retention.

III.  ADMINISTRATION

    This Plan will be administered by the same Committee ("Committee") appointed and authorized by the Company's Board of Directors to administer the Company's 1991 Stock Incentive Plan. The Committee is authorized to make all decisions as required in administration of the Plan and to exercise its discretion to define, interpret, construe, apply, and make any exceptions to the terms of the Plan.

IV.  STOCK OPTION ISSUANCE

    All stock options issued under this Plan will be granted under the Company's 1991 Stock Incentive Plan and/or its successor plans.

V.  ELIGIBILITY

    The Committee will establish rules of eligibility for participation in the Plan in accordance with the 1991 Stock Incentive Plan and determine eligibility in accordance with those rules. Eligibility is limited to ADC executives who receive approval from the Chief Executive Officer for participation in the Fiscal Year Plan. (For FY2001 eligibility generally has been confined to selected executives at U.S. salary grade 21 or higher, plus those at salary grade 20 who were selected for FY2000.) All Plan participants must also be participants under the Company's Management Incentive Plan ("MIP"). No employee will become a participant after November 1, 2000.

VI.  PLAN GOALS AND ACHIEVEMENT

    All goals and objectives under this Plan shall be identical to the goals and objectives stated in each participant's MIP. Total payouts are calculated in the same fashion as payouts made under the applicable MIP.

VII.  EXCHANGE ELECTION

    Prior to the beginning of FY 2001, participants may irrevocably elect to exchange up to 50% of their FY 2001 MIP award for options to purchase common stock of the Company. Such elections may be made in 10% increments up to a maximum of 50% of the cash MIP award. No exchange will be made if the portion elected for exchange is less than One Hundred Dollars ($100.00).

VIII.  EXCHANGE DATE

    Exchanges made under this Plan will be made as soon as administratively feasible following the close of FY 2001 and as soon as MIP awards are approved.

2

IX.  EXCHANGE CALCULATION

    The MIP award that will be used to calculate the exchange to options will be the incentive amount eligible to be paid for the fiscal year.

    The number of option shares provided as a result of the exchange will equal the dollar amount of the MIP award elected to be exchanged multiplied by six (6), with this product being divided by the closing market value of ADC common stock on the last market trading day of FY2000. Note that the denominator is the value of ADC stock immediately prior to the beginning of the Plan fiscal year. The final number of shares will be rounded to the nearest whole number of shares.

    This exchange causes payment of the MIP cash incentive amount exchanged to be forfeited, except as described under Section XIV.

X.  NATURE OF OPTIONS TO BE GRANTED

    All options granted under this Plan will be nonqualified stock options, that are not "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.

XI.  TERM AND VESTING OF OPTIONS

    All options granted under this Plan will have a term and method of exercise as determined by the Committee. The term will be ten (10) years from the date of grant. Options will vest in three (3) equal annual installments, beginning one (1) year after the grant date.

XII.  EXERCISE PRICE OF OPTIONS

    The exercise price of the stock options granted under this plan will be the Fair Market Value of the Company's common stock on the last business day of the fiscal year (i.e., October 31, 2001) and be determined in accordance with the 1991 Stock Incentive Plan.

XIII.  STOCK OPTION GRANT DATE

    The effective date of the stock options granted under the Plan will be the last business day of the fiscal year.

XIV.  EFFECT OF CHANGE IN EMPLOYMENT STATUS ON CURRENT YEAR ELECTIONS (CHANGES DURING THE PLAN YEAR)

    A.  Termination of Employment.  A participant who terminates employment prior to the end of FY 2001 will relinquish all rights to the grant of any stock option under this plan and will forfeit the MIP cash equivalent amount as defined in his/her irrevocable exchange election.

    B.  Change in Job Status Based Upon a Demotion.  A participant who is demoted from an eligible position under this Plan to an ineligible position will exchange the pro-rata portion of cash MIP award that is calculated according to the time served in the eligible position during FY 2001, provided at least three months was served in the eligible position.

    C.  Death.  If a participant dies during FY 2001, the participant's heirs as determined by will or applicable laws of descent and distribution will have no right to receive any stock options under this plan. Heirs will receive instead the cash equivalent of the pro-rata MIP award that is calculated according to the MIP Plan.

3

XV.  EFFECT OF CHANGE IN EMPLOYMENT STATUS OCCURRING AFTER FY 2001 ON EXCHANGES MADE IN FY 2001

    All stock options already awarded under this Plan will vest fully upon a participant's death, disability, or voluntary retirement. For purposes of this Plan, retirement from the Company shall be defined as having attained age 55 with 10 years of service with the Company ("early retirement"), or age 65 with 5 years of service with the Company ("normal retirement").

    If a participant terminates for any other reason, termination provisions will be applied. For each grant or exchange already made, if the participant terminates prior to the vesting of the first one third of the options, all options and the MIP cash equivalent amount will be immediately forfeited. If the participant terminates after the first one third of the options have vested, all vested options will remain exercisable for a period of one (1) year. All unvested options will be forfeited, and no cash equivalent will be provided.

XVI.  EFFECT OF CHANGE IN CONTROL ON EXCHANGES ALREADY MADE

    In the event of a change in control of the Company as referenced in stock option agreements issued pursuant to this Plan, all unvested options will immediately vest in full.

XVII.  AMENDMENT OR TERMINATION OF PLAN

    The Board of Directors reserves and retains the right to modify, rescind or terminate this Plan in whole or in part, at its sole discretion, and nothing in this Plan limits this right in any way or creates any rights in any employee in future participation in this Plan or any other, or constitutes any guarantee of compensation or employment with ADC. Further, neither the Board of Directors nor the Company has any obligation under this Plan or otherwise to adopt this or any other plan in any future fiscal year.

4

ATTACHMENT I

EXCHANGE EXAMPLE

Assumptions
Annual earnings for FY 2001:	$100,000
Exchange election:	50% of MIP award
MIP award:	$30,000
FMV of stock on 10/31/00:	$30.00
Exercise price of option (10/31/01):	$35.00
Grant date:	October 31, 2001

Exchange Calculation (Number of option shares awarded)

MIP Award × Exchange Election % × 6 ÷
FMV per share on 10/31/00

$30,000 × 50% × 6 ÷
$30.00

$90,000 ÷
$30.00

3,000 options at an exercise price of $35.00 per share

Vesting

1,000 shares vest on 10/31/02

1,000 shares vest on 10/31/03

1,000 shares vest on 10/31/04

Five Year Projected Value of Award (for illustration purposes only)

•

Assume 15% compounded annual stock price appreciation



•

Assumed stock price 10/31/06 = $70.40



•

5 year gain: $70.40 - $35.00 (exercise price) = $35.40



•

Projected gain: 3,000 × $35.40 = $106,200 vs. $15,000 original amount exchanged

5

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ADC TELECOMMUNICATIONS, INC. EXECUTIVE INCENTIVE EXCHANGE PLAN FISCAL YEAR 2001
ATTACHMENT I EXCHANGE EXAMPLE

EX-13.A

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Portions of 2000 Annual Report to Shareowners

Financial Highlights(1) (dollars in millions, except per share data)

	Years ended October 31
	2000			1999		1998		Growth 2000 vs. 1999		Growth 1999 vs. 1998
Results as Reported
Net Sales	$	3,287.9		2,151.8		1,830.5		52.8	%	17.6	%
International Sales	$	708.1		499.2		392.1		41.9	%	27.3	%
Gross Profit	$	1,608.9		1,003.4		884.5		60.3	%	13.4	%
Operating Income	$	365.9		135.0		311.1		171.0	%	(56.6	)%
Net Income	$	868.1		77.9		209.9		1,014.4	%	(62.9	)%
Earnings Per Share (Diluted)	$	1.13		0.11		0.31		927.3	%	(64.5	)%
Return on Average Shareowners' Investment		38.5	%	5.3	%	17.5	%
Research and Development Expense	$	338.0		250.7		199.8		34.8	%	25.5	%
Capital Expenditures	$	375.3		125.1		112.6		200.0	%	11.1	%
Economic Value Added(2)	$	260.8		70.9		50.8		267.8	%	39.6	%
Cash and Short-term Investments	$	1,354.2		534.5		613.9		153.4	%	(12.9	)%
Total Assets	$	3,970.5		2,057.8		1,796.0		93.0	%	14.6	%
Shareowners' Investment	$	2,912.7		1,595.3		1,330.4		82.6	%	19.9	%
Number of Employees		22,452		14,337		10,315		56.6	%	39.0	%
Results (Pro Forma)(3)
Non-recurring Charges(3)	$	158.0		149.0		9.2
Non-cash Stock Compensation(3)	$	47.1		1.2		—
Non-recurring, Non-operating Gains(3)	$	1,083.0		—		—
Operating Income	$	571.0		285.2		320.2		100.2	%	(10.9	)%
Net Income	$	384.4		197.0		218.3		95.1	%	(9.8	)%
Earnings Per Share (Diluted)	$	0.50		0.29		0.33		72.4	%	(12.1	)%
EBITDA(4) Per Share (Diluted)	$	0.92		0.56		0.59		64.3	%	(5.1	)%
Return on Average Shareowners' Investment		17.9	%	12.7	%	17.9	%
Investment Information
Stock Price—Close	$	21.38		11.92		5.75		79.4	%	107.3	%
Shares Outstanding at Year-end		770.3		678.6		669.2

(1)

For more information, see 11-year financial summary. All per share data have been adjusted for two separate two-for-one stock splits in 2000.

(2)

Economic Valued Added (EVA) is a financial measure of operating profit after subtracting a charge for assets used to generate profit. EVA is a registered trademark of Stern Stewart & Co.

(3)

Results (Pro Forma) exclude non-recurring charges, non-cash stock compensation expenses and non-recurring, non-operating gains.

(4)

Earnings before interest, taxes, depreciation and amortization.

1

Management's Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

    We are a leading global supplier of optical- and copper-connectivity systems, broadband access and network equipment, software and integration services designed to improve the speed and performance of broadband, multiservice communications networks. Telephone companies, cable television operators, Internet and data service providers, wireless service providers and other communications service providers are building and upgrading the broadband network infrastructure required to offer high-speed Internet access as well as data, video, telephony and other interactive multimedia services to consumers and businesses. Our product offerings and development efforts are focused on increasing the speed and efficiency of the last mile/kilometer portion of communications networks—that is, the network equipment that connects the service providers' offices to end users' homes and businesses, as well as wireless communications devices.

    Our customers include local and long-distance telephone companies, cable television operators, wireless service providers, new competitive service providers, broadcasters, governments, system integrators, enterprises, and communications equipment manufacturers and distributors. We offer optical- and copper-connectivity systems/components, broadband access and network equipment, software and integration services to our customers through the following three business groups:

•

Broadband Connectivity;



•

Broadband Access and Transport; and



•

Integrated Solutions.

    BROADBAND CONNECTIVITY products provide the physical contact points needed to connect different communications network elements and gain access to communications system channels for the purposes of installing, testing, monitoring, accessing, managing, reconfiguring, splitting and multiplexing such channels within service providers' serving offices and the last mile/kilometer portion of communications networks. These products include broadband connection and access devices for copper, coaxial cable, optical, wireless and broadcast communications networks. The group also produces passive and active optical components, as well as wireless components. Broadband Connectivity's products are used throughout the world in telephone, cable television, Internet, wireless, enterprise and broadcast communications networks.

    BROADBAND ACCESS AND TRANSPORT products enable broadband, multiservice delivery capabilities within service provider networks, while also introducing new service delivery functionality and cost effectiveness into these networks. The group's products include access and transport systems that deliver broadband, multiservice communications to consumers and businesses over copper, coaxial cable, optical and wireless networks. Broadband Access and Transport's products are used throughout the world to deliver Internet, data, video and voice services to consumers and businesses.

    INTEGRATED SOLUTIONS products and services consist of systems integration services, operations support systems (OSS) software and enhanced services software that aid service providers in their delivery of broadband, multiservice communications over wireline and wireless networks. Systems integration services are used to design, equip and build communications networks and OSS applications that deliver Internet, data, video and voice services to consumers and businesses. OSS software includes communications billing, customer care, network performance and service-level assurance software used by service providers to operate communications networks. Enhanced services software includes a range of wireline, wireless and Internet applications used by service providers to help increase revenues.

    We believe that broadband, multiservice communications networks represent a key enabling capability for meeting the information needs of consumers and businesses around the world. The rapid

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growth of the Internet has driven the need for broadband network infrastructure. Consumers increasingly find dial-up modem speeds unacceptable for current Internet and Web-based applications. Further, we believe that new or future applications such as digital video and audio programs, wireless Internet access, video conferencing from personal computers, video e-mail, video on demand, distance learning, telemedicine and high-speed imagining will drive even more people to use broadband communications services. We believe that the global deregulation of communications markets is transforming traditional communications service providers into integrated communications providers. Traditional communications service providers offer only a limited selection of Internet, data, video or voice services, each on a separate network connection and a separate customer bill. Integrated communications providers operate broadband, multiservice networks that offer faster, cost-effective and integrated Internet, data, video and voice services over a single high-speed network connection and send one bill for all of those services the customer uses. Due to deregulation, service providers now compete for customers by offering bundles of different communications services over cost-effective networks. As a result of competition among communications service providers to win and retain customers with bundled services, there is a large potential global market for fiber optics, broadband access and network equipment, software and integration services to build and upgrade broadband, multiservice networks.

    Our growth is dependent on our ability to successfully develop and commercially introduce new products in each of our product groups and on the growth of the communications equipment and services market. The communications equipment industry is highly competitive and, accordingly, there can be no assurance that our new or enhanced products and services will meet with market acceptance or be profitable. The growth in the market for broadband communications products and services is dependent on a number of factors, including the amount of capital expenditures by communications service providers, regulatory and legal developments, changes in capital expenditures by communications service providers (which could result from the ongoing consolidation of customers in the market as well as the addition of new customer entrants to the market) and end-user demands for integrated Internet, data, video, voice and other communications services.

    Our operating results may fluctuate significantly from quarter to quarter due to several factors. We are growing through acquisition and expansion, and results of operations described in this report may not be indicative of results to be achieved in future periods. Our expense levels are based in part on our management's expectations of future revenues. Although management has and will continue to take measures to adjust expense levels, if revenue levels in a particular period fluctuate, operating results may be affected adversely. In addition, our results of operations are subject to seasonal factors. We historically have experienced a stronger demand for our products in the fourth fiscal quarter ending October 31, primarily as a result of customer budget cycles and our fiscal year-end incentives, and have experienced a weaker demand for our products in the first fiscal quarter ending January 31, primarily as a result of the number of holidays in late November, December and early January and a general industry slowdown during that period. There can be no assurance that these historical seasonal trends will continue in the future. A more detailed description of these risk factors, as well as other risk factors associated with our business can be found in Exhibit 99-a to our Form 10-K for the fiscal year ended October 31, 2000. As used in this report, the years 1998, 1999 and 2000 refer to our fiscal years ended October 31, 1998, 1999 and 2000, respectively.

Results of Operations

    On October 8, 1999, we completed the acquisition of Saville Systems, PLC ("Saville"). This acquisition was accounted for using the pooling-of-interests method of accounting. Accordingly, all years have been restated to include the operations and balances of Saville as part of the Integrated Solutions Group.

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    On June 28, 2000, we completed the acquisition of PairGain Technologies, Inc. ("PairGain"). This acquisition was accounted for using the pooling-of-interests method of accounting. Accordingly, all years have been restated to include the operations and balances of PairGain as part of the Broadband Access and Transport Group.

    On September 29, 2000, we completed the acquisition of Broadband Access Systems, Inc. ("BAS"). This acquisition was accounted for using the pooling-of-interests method of accounting. Accordingly, all years have been restated to include the operations and balances of BAS as part of the Broadband Access and Transport Group.

    The percentage relationships to net sales of certain income and expense items for the three years ended October 31, 2000 and the percentage changes in these income and expense items between years are contained in the following table:

									Percentage Increase (Decrease) Between Periods
			Percentage of Net Sales
									2000 vs. 1999		1999 vs. 1998
			2000		1999		1998
Net Sales			100.0	%	100.0	%	100.0	%	52.8	%	17.6	%
Cost of Products Sold			(51.1	)	(53.4	)	(51.7	)	46.2		21.4
Gross Profit			48.9		46.6		48.3		60.3		13.4
Expenses:
	Research and development		(10.3	)	(11.6	)	(10.9	)	34.8		25.4
	Selling and administration		(20.2	)	(20.7	)	(19.2	)	49.5		26.5
	Goodwill amortization		(1.1	)	(1.0	)	(0.7	)	54.5		77.6
	Non-recurring charges		(4.8	)	(6.9	)	(0.5	)	6.0		1,519.6
	Non-cash stock compensation		(1.4	)	(0.1	)	—		3,825.0		N/A
Operating Income			11.1		6.3		17.0		171.0		(56.6	)
Other Income (Expense), Net:
	Interest		0.6		0.6		1.0		40.3		(20.6	)
	Gain on conversion of investment		22.0		—		—		N/A		N/A
	Gain on sale of a business		10.0		—		—		N/A		N/A
	Other		0.7		(0.6	)	(0.4	)	N/A		122.2
		Total other income (expense), net	33.3		—		0.6		N/A		N/A
Income Before Income Taxes			44.4		6.3		17.6		982.6		(58.1	)
Provision for Income Taxes			(18.0	)	(2.7	)	(6.1	)	939.1		(49.3	)
Net Income			26.4	%	3.6	%	11.5	%	1,014.4	%	(62.9	)%

    Net Sales:  Net sales were $3.29 billion, $2.15 billion and $1.83 billion for 2000, 1999 and 1998, respectively, reflecting 52.8%, 17.6% and 17.8% increases, respectively, over the prior years. International sales comprised 21.5%, 23.2% and 21.4% of our sales for 2000, 1999 and 1998, respectively.

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    The following table sets forth our net sales for the years ended October 31, 2000, 1999 and 1998 for each of our functional product groups described above (dollars in millions):

		2000				1999				1998
Product Group		Net Sales		%		Net Sales		%		Net Sales		%
Broadband Connectivity		$	1,781.9	54.2	%	$	912.4	42.4	%	$	649.7	35.5	%
Broadband Access and Transport			992.1	30.2			856.8	39.8			827.8	45.2
Integrated Solutions			513.9	15.6			382.6	17.8			353.0	19.3
	Total	$	3,287.9	100.0	%	$	2,151.8	100.0	%	$	1,830.5	100.0	%

    During 2000, 1999 and 1998, net sales of Broadband Connectivity products increased by 95.3%, 40.4% and 19.8%, respectively. This growth reflects continued strong global demand for our optical- and copper-connectivity systems and components. Broadband Connectivity's sales have grown rapidly in recent years and represented more than half of our net sales in 2000. We expect that future sales of Broadband Connectivity products will continue to account for a substantial portion of our net sales, although these products may decline as a percentage of total revenues due to the ongoing evolution of technologies in the marketplace.

    During 2000, 1999 and 1998, net sales of Broadband Access and Transport products increased by 15.8%, 3.5% and 5.3%, respectively. The increased growth in 2000 is primarily the result of record sales in all four major product groups—telephone transport and access systems, the international digital loop carrier business, cable systems and broadband wireless systems. The lower sales growth in 1999 and 1998 was primarily due to lower sales in 1999 and flat sales growth in 1998 of PairGain telephone transport products, which offset higher sales of other telephone transport systems and 1999 sales from the acquisition of Teledata.

    During 2000, 1999 and 1998, net sales of Integrated Solutions products increased 34.3%, 8.4% and 56.6%, respectively. The increase in 2000 was generated primarily by record sales of both systems integration services and software systems, plus sales from the acquisition of Centigram. Growth in 1999 primarily was due to increased sales of systems integration services, but partially was offset by lower sales of Saville software products. Sales growth in 1998 primarily was driven by increased sales of systems integration services and software systems.

    Gross Profit:  During 2000, 1999 and 1998, gross profit percentages were 48.9%, 46.6% and 48.3%, respectively. The increase in 2000 primarily is due to increased sales in the Broadband Connectivity Group. The decrease in 1999 was primarily the result of lower gross profit percentages of PairGain and Saville products in that year. ADC anticipates that its future gross profit percentages will continue to be affected by many factors, including product mix, the timing of new product introductions and manufacturing volume.

    Operating Expenses:  Total operating expenses for 2000, 1999 and 1998 were $1.24 billion, $868.4 million and $573.4 million, respectively, representing 37.8%, 40.4% and 31.3% of net sales, respectively. Non-recurring charges and non-cash stock compensation expenses of $205.1 million, $150.2 million and $9.2 million are included in the results of operations for 2000, 1999 and 1998, respectively. Excluding non-recurring charges and non-cash stock compensation expenses, operating expenses would have represented 31.6%, 33.4% and 30.8% of net sales, respectively. The non-recurring charges in 2000 were related to acquisition expenses associated with the Altitun, BAS, Centigram and PairGain transactions, restructuring charges within the Broadband Access and Transport Group and the write-off of purchased in-process research and development expenses resulting from the acquisitions of Centigram and IBSEN. The non-recurring charges in 1999 represent the write-off of purchased in-process research and development expenses resulting from the acquisitions of Teledata, Spectracom,

5

Pathway, Hadax and Phasor, along with costs for restructuring the Broadband Access and Transport Group and the former Wireless Systems Group. The non-recurring charges in 1998 represent purchased in-process research and development expenses related to the acquisitions of BHA Pty Ltd. and certain interconnect billing software technology. The increase in operating expenses primarily was driven by costs associated with acquired companies, as well as expanded operations necessary to support higher business volumes. Non-cash stock compensation expenses of $47.1 million and $1.2 million were recognized in 2000 and 1999, respectively, as a result of stock options and restricted stock converted in connection with the BAS and Centigram acquisitions.

    Research and development expenses were $338.0 million, $250.7 million and $199.8 million for 2000, 1999 and 1998, respectively, representing 10.3%, 11.6% and 10.9% of net sales, respectively. The dollar increases primarily are due to new product initiatives and business acquisitions. We believe that, given the competitive environment and rapidly changing technology in the communications equipment industry, continued commitment to product development efforts will be required for us to remain competitive. Accordingly, we intend to continue to allocate substantial resources to product development for each of our product groups. However, we recognize the need to balance the cost of product development with expense controls, and we remain committed to managing carefully the rate of increase of such expenses.

    Selling and administration expenses were $665.6 million, $445.3 million and $351.9 million for 2000, 1999 and 1998, respectively, representing 20.2%, 20.7% and 19.2% of net sales, respectively. The dollar increases primarily reflect the activities of acquired companies, incentives associated with selling activities and additional personnel related to expanded operations.

    Several of our acquisitions have been accounted for as purchase transactions in which the initial purchase price exceeded the fair value of the acquired assets. As a result of our acquisitions, goodwill amortization increased to $34.3 million in 2000, compared to $22.2 million and $12.5 million for 1999 and 1998, respectively.

    We identify projects that do not have technological feasibility or other uses at the time of acquisition and record expense at the time of acquisition for these in-process research and development projects. Purchased in-process research and development expenses aggregating $22.8 million in 2000 were associated with the purchase acquisitions of IBSEN and Centigram as described in Note 5 to the Consolidated Financial Statements. Appraisals for each purchased in-process technology were determined using the income approach, discounted based on the estimated likelihood that the project ultimately will succeed. Purchased in-process research and development expenses of $88.6 million in 1999 were associated with the acquisitions of Pathway, Teledata, Phasor, Hadax and Spectracom. Non-recurring charges of $9.2 million in 1998 were associated with the acquisitions of BHA Pty Ltd. and interconnect billing software technology.

    Other Income (Expense), Net:  For 2000, 1999 and 1998, interest income was $23.6 million, $21.6 million and $18.3 million, respectively. For 2000, 1999 and 1998, interest expense was $4.1 million, $7.7 million and $0.8 million, respectively. See "Liquidity and Capital Resources" below for a discussion of cash levels.

    The remaining other income (expense) represents the gain or loss on foreign-exchange transactions and cash and non-cash gains from various investing activities in 2000. The investing gains relate to the sale of PairGain's microelectronics business (non-cash $328.6 million), the conversion of our investment in Siara Systems into Redback Networks shares (non-cash $722.6 million), an equity change in ownership percentage stock transaction (non-cash $8.1 million), and other miscellaneous investment sales and other items (cash and non-cash $15.7 million).

    Income Taxes:  The effective income tax rates for 2000, 1999 and 1998 were affected significantly by non-tax deductible acquisition costs and purchased in-process research and development expenses.

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These charges are associated with the acquisitions made during the current year. In addition, a marginal rate of 37% was applied to restructuring expenses and the gain on the conversion of the Siara Systems investment, while a marginal rate of 40% was applied to the gain on sale of PairGain's microelectronics business. Excluding the impact of purchased in-process research and development expenses, as well as the higher rates used for restructuring charges, the gain on the conversion of the Siara Systems investment, and the gain on sale of PairGain's microelectronics business, the effective income tax rates were 34%, 31% and 34% for 2000, 1999 and 1998, respectively.

    Net Income:  Net income was $868.1 million (or $1.13 per diluted share) for 2000, compared to $77.9 million (or $0.11 per diluted share) for 1999 and $209.9 million (or $0.31 per diluted share) for 1998. Excluding ($483.7) million, $119.1 million and $8.4 million net-of-tax, non-recurring (credits)/charges in 2000, 1999 and 1998, respectively, net income would have been $384.4 million, $197.0 million and $218.3 million, respectively, and diluted earnings per common share would have been $0.50, $0.29 and $0.33, respectively. Non-recurring charges are discussed in Note 9 to the Consolidated Financial Statements.

Segment Disclosures

Broadband Connectivity Segment

    Broadband Connectivity products provide the physical contact points needed to connect different communications network elements and gain access to communications system channels within service providers' serving offices and the last mile/kilometer portion of communications networks. These products are used in copper, coaxial cable, optical, wireless and broadcast communications networks. The group also produces passive and active optical components, as well as wireless components. Broadband Connectivity's products are used throughout the world in telephone, cable television, Internet, wireless, enterprise and broadcast communications networks (in millions).

	For the years ended October 31,
(Dollars in millions)	2000		1999		1998
External Sales	$	1,781.9	$	912.4	$	649.7
Operating Income(1)		773.5		336.4		192.6
Depreciation and Amortization		49.2		31.3		29.1
Capital Expenditures		284.2		50.5		44.9

	At October 31,
	2000		1999		1998
Assets	$	878.6	$	397.4	$	303.5

(1)

Operating Income excludes certain charges and expenses as described in Note 12 to the Consolidated Financial Statements.

    Broadband Connectivity sales increased $869.5 million, or 95.3%, in 2000 compared to 1999, primarily due to increased demand for optical- and copper-connectivity systems and components. In 1999, sales increased $262.7 million, or 40.4%, compared to 1998. Strong worldwide growth of Broadband Connectivity sales in 2000 and 1999 was primarily a result of the following factors: (1) rapid growth in Internet and data traffic and digital services, which is creating demand for broader bandwidth connections; (2) increased competition among communications service providers, which is creating demand to deploy connections for new broadband services using DSL and cable modem technologies in the last mile/kilometer of the communications network; and (3) increased globalization, which pulls our products into new locations as multinational communications service providers expand into international markets.

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    During 2000, operating income for the Broadband Connectivity segment increased $437.1 million, or 130.0%, compared to 1999. Expenses were controlled despite the growth in business volume. Efficiencies have been gained through improvements made in cost structures and operating processes.

    For 2000 and 1999, depreciation and amortization increased $17.9 million and $2.2 million, respectively, over the previous year. These increases are due to the significant expansion of our global production capacities in North America, Latin America, Europe and the Asia/Pacific region as a result of increases in product demand.

    Capital expenditures increased $233.7 million, or 462.8%, and $5.6 million, or 12.5%, in 2000 and 1999, respectively. Capital spending increased in 2000 due to the significant expansion of global production capacities in North America, Latin America, Europe and the Asia/Pacific region as a result of increases in product demand.

Broadband Access and Transport Segment

    Broadband Access and Transport products enable broadband, multiservice delivery capabilities within service provider networks, while also introducing new service delivery functionality and cost effectiveness into these networks. This group's products include access and transport systems that deliver broadband, multiservice communications to consumers and businesses over copper, coaxial cable, optical and wireless networks. Broadband Access and Transport's products are used throughout the world to deliver Internet, data, video and voice services to consumers and businesses. This segment also includes the results of PairGain and BAS, which were acquired in June 2000 and September 2000, respectively, and were both accounted for using the pooling-of-interests method, resulting in the restatement of financial results for all years.

	For the years ended October 31,
(Dollars in millions)	2000			1999			1998
External Sales	$	992.1		$	856.8		$	827.8
Operating Income (Loss)(1)		(147.4	)		(47.3	)		65.1
Depreciation and Amortization		42.3			44.2			33.9
Capital Expenditures		35.8			38.1			42.0

	At October 31,
	2000		1999		1998
Assets	$	881.0	$	795.8	$	632.5

(1)

Operating Income (Loss) excludes certain charges and expenses as described in Note 12 to the Consolidated Financial Statements.

    Broadband Access and Transport sales increased $135.3 million, or 15.8%, in 2000 compared to 1999 due primarily to record sales in all four major product groups—telephone transport and access systems, the international digital loop carrier business, cable systems and broadband wireless systems. In 1999, sales increased $29.0 million, or 3.5%, primarily as a result of lower sales of PairGain telephone transport products, partially offsetting higher sales of other telephone transport systems and 1999 sales from the acquisition of Teledata.

    In 2000, the Broadband Access and Transport segment reported an operating loss of $147.4 million, after reporting an operating loss of $47.3 million in 1999. The segment experienced declining profitability due to increased research and development and selling/marketing expenses for the development and marketing of new products.

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    Depreciation and amortization in 2000 decreased $1.9 million, or 4.3%, compared to 1999, primarily due to the consolidation of manufacturing facilities. For 1999, depreciation and amortization increased $10.3 million, or 30.4%, compared to 1998.

    This segment's capital additions for 2000 were $35.8 million, representing a decrease of $2.3 million, or 6.0%, compared to 1999. The decrease in capital expenditures was related to the consolidation of manufacturing operations within this segment.

Integrated Solutions Segment

    Integrated Solutions products and services consist of systems integration services, operations support systems (OSS) software and enhanced services software that aid service providers in their delivery of broadband, multiservice communications over wireline and wireless networks. Systems integration services are used to design, equip and build communications networks and OSS applications that deliver Internet, data, video and voice services to consumers and businesses. OSS software includes communications billing, customer care, network performance and service level assurance software used by service providers to operate communications networks. Enhanced services software includes a range of wireline, wireless and Internet applications used by service providers to help increase revenues. Service providers also are purchasing OSS software and enhanced services software to generate, deliver and manage multiple communications services delivered to consumers and businesses. This segment includes the financial results of Saville for all periods presented. Saville was acquired in October 1999 in a transaction accounted for using the pooling-of-interests method.

	For the years ended October 31,
(Dollars in millions)	2000		1999		1998
External Sales	$	513.9	$	382.6	$	353.0
Operating Income(1)		20.6		24.7		60.5
Depreciation and Amortization		16.9		11.0		5.0
Capital Expenditures		22.7		19.1		10.0

	At October 31,
	2000		1999		1998
Assets	$	386.2	$	280.8	$	194.8

(1)

Operating Income excludes certain charges and expenses as described in Note 12 to the Consolidated Financial Statements.

    Integrated Solutions sales increased $131.3 million, or 34.3%, in 2000 compared to 1999, primarily due to record sales of both systems integration services and software systems, plus sales from the acquisition of Centigram in July 2000. The 8.4% increase in 1999 sales over 1998 sales primarily was attributable to increased sales of systems integration services partially offset by lower sales of Saville's software products. The growth in systems integration services is a result of a broad range of service providers building and upgrading networks that offer integrated Internet, data, video and voice services. In the fourth quarter of 2000 and the first quarter of 2001, we expanded our broadband integration service capabilities into Europe with the acquisitions of Computer Telecom Installations Ltd. and France Electronique's telecom systems integration business in September 2000 and November 2000, respectively.

    During 2000, operating income for the Integrated Solutions segment decreased $4.1 million, or 16.6%, compared to 1999. The decrease primarily was due to (1) increasing the sales force and systems integration work force to facilitate future growth and (2) lower operating income in the software

9

business as a result of a product transition to the Singularit.e suite of software products and services from the historic Saville product and service offerings.

    Depreciation and amortization increased to $16.9 million in 2000 from $11.0 million in 1999. Expansion of systems integration facilities and the acquisition of Centigram in July 2000 contributed to this overall increase.

    During 2000, capital expenditures increased by $3.6 million, or 18.8%, compared to 1999. This increase was due to the expansion of operations.

Liquidity and Capital Resources

    Cash and cash equivalents, primarily short-term investments in commercial paper with maturities of less than 90 days, had a balance of $217.3 million as of October 31, 2000, representing a decrease of $61.7 million compared to the balance at October 31, 1999. The major use of cash in 2000 was for increased working capital requirements and capital expenditures to support the growth of our business, which partially was offset by increased earnings and investment sale proceeds. During 1999, cash decreased by $181.8 million compared to 1998, primarily due to the acquisition of Teledata in November 1998. In 1998, cash increased by $183.6 million primarily as a result of a short-term loan of $200 million, which was done in preparation for the acquisition of Teledata and resulted in a temporary increase in cash at October 31, 1998.

    We maintain an investment portfolio of several publicly held companies. These investments are classified as available-for-sale securities and, consequently, are recorded on the balance sheet at fair value with unrealized gains and losses reported as a separate component of shareowners' investment in accumulated other comprehensive income (loss). As of October 31, 2000 and 1999, our short-term investments consisted of the following (in millions):

		Cash Basis		Adjusted Basis		Unrealized Gain		Market Value
	2000
Available-for-sale securities		$	218.1	$	950.4	$	186.5	$	1,136.9
	1999
Available-for-sale securities		$	168.5	$	168.5	$	87.0	$	255.5

    In 2000, we sold common stock in certain investments for a pre-tax gain of $23.8 million. In 1999, there were no such sales. In the first quarter of 2000, Siara Systems, in which we had a 7.3% ownership interest, agreed to be acquired by Redback Networks in a stock-for-stock transaction valued at approximately $4.3 billion. Our initial investment in Siara Systems was $3.5 million. Upon consummation of the acquisition of Siara Systems by Redback Networks, our investment was marked-to-market through earnings in the second quarter of 2000 and reflected on the balance sheet at the market value of the Redback Networks shares. The pre-tax gain recognized on the conversion of these shares was $722.6 million. This gain increased the basis of investments by $722.6 million.

    We have worked with customers and third-party financiers to find a means of financing projects by negotiating financing arrangements. As of October 31, 2000, we had commitments to extend credit of $380.0 million for such arrangements. The total amount drawn and outstanding as of October 31, 2000 was $35.0 million. We intend to sell all or a portion of these commitments and outstanding receivables to third parties, but have not yet made any such sales. These commitments to extend credit are conditional agreements generally having fixed expiration or termination dates and specific interest rates, conditions and purposes. These commitments may exist and expire without being drawn. Therefore, the amounts committed but not drawn will not necessarily impact future cash flows. We regularly review all outstanding commitments, and the results of these reviews are considered in assessing the overall risk for possible credit losses. At October 31, 2000, there was no significant risk of loss in the event of non-performance related to these financing arrangements.

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    We have a $340 million unsecured revolving credit facility for general corporate purposes. Under this five-year credit facility, borrowings carry an initial interest rate equal to the commercial paper rate plus 25 basis points. There was no outstanding balance at October 31, 2000. At October 31, 1999, the balance outstanding under this arrangement was $25.0 million. The revolving credit facility expires on November 24, 2003. The facility requires us to maintain certain financial ratios. At October 31, 2000, we were in compliance with these requirements.

    We believe that our current cash and investments, cash generated from operating activities, and available credit facilities will be adequate to fund our working capital requirements and planned capital expenditures for 2001. However, we may find it necessary to seek additional sources of financing to support our capital needs and for additional working capital, potential investments, acquisitions or other business purposes.

Euro Conversion

    On January 1, 1999, several member countries of the European Union established fixed conversion rates and adopted the Euro as their new common legal currency. Beginning on this date, the Euro began trading on currency exchanges while the legacy currencies remain legal tender in the participating countries for a transition period between January 1, 1999 and January 1, 2002. During this transition period, parties can elect to pay for goods and services and transact business using either the Euro or a legacy currency. Between January 1, 2002 and July 1, 2002, the participating countries will introduce Euro hard currency and withdraw all legacy currencies.

    The Euro conversion may affect cross-border competition by creating cross-border price transparency. We are assessing our pricing and marketing strategy in order to ensure that we remain competitive in a broader European market. We also are modifying our information technology systems to permit transactions to take place in both the legacy currencies and the Euro and provide for the eventual elimination of the legacy currencies. In addition, we are reviewing whether certain existing contracts will need to be modified. Our currency risks and risk management for operations in participating countries may be reduced as the legacy currencies are converted to the Euro. We will continue to evaluate issues involving introduction of the Euro. Based on current information and assessments, we do not expect that the Euro conversion will have a material adverse effect on our business, results of operations or financial condition.

Risk Management

    We are exposed to market risk from changes in security prices, foreign-exchange rates and interest rates. Market fluctuations could impact our results of operations and financial condition. We hedge a portion of this risk through the use of derivative financial instruments. We do not enter into derivative financial instruments for the purpose of speculation.

    Investments: We maintain an investment portfolio of various holdings, types and maturities. Excess cash is invested in short-term low-risk vehicles, such as short-term municipal bonds and money market investments. Changes in interest rates are not expected to have a material effect on our financial condition or results of operations.

    We maintain an investment portfolio of several publicly held companies. The investments are classified as available-for-sale securities and, consequently, are recorded on the balance sheet at fair value with unrealized gains and losses reported as a separate component of shareowners' investment in accumulated other comprehensive income (loss). The values recorded for the publicly traded companies are subject to market price volatility. Assuming an immediate decrease of 20% in our publicly traded investments, the hypothetical reduction in shareowners' investment related to these holdings is estimated to be $230.0 million as of October 31, 2000. We also have certain other minority investments in companies not publicly traded. These investments are included in other assets and are carried at

11

cost. We monitor these investments for impairment and make appropriate reductions in carrying value when necessary. In 2000, we entered into an equity collar arrangement that locks in a price range for the sale of certain shares held as investments, thus guaranteeing a minimum selling price. Such derivatives are treated as trading derivatives. Changes in the value of these derivatives are reported in current-period earnings.

    Foreign Exchange: We primarily use foreign-exchange forward contracts to hedge identified exposures to adverse changes in foreign-exchange rates (see Note 10 to the Consolidated Financial Statements). Such exposures have resulted from cross-border transactions principally in the Euro, Great Britain Pound, Australian Dollar and Canadian Dollar. Foreign-exchange contracts reduce our overall exposure as gains and losses on these contracts offset losses and gains on the underlying exposures. Transactions that are hedged include foreign-currency net-asset and net-liability exposures on the balance sheet, anticipated transactions and forecasted cash flows. As of October 31, 2000, the total notional amount of outstanding foreign-exchange contracts was $158.5 million.

    The foreign-exchange forward contracts we enter into generally have maturities of less than one year. A sensitivity analysis to changes in the value of the U.S. Dollar on foreign-currency denominated derivatives indicates, that if the U.S. Dollar were to strengthen by 10% against all of our currency exposures at October 31, 2000, we would realize a potential cash flow loss of $4.3 million. Because our derivative position is net short the U.S. Dollar, a stronger U.S. Dollar would yield the largest overall potential cash flow loss due to foreign exchange. This measurement assumes that a change in one foreign currency relative to the U.S. Dollar would not affect other foreign currencies relative to the U.S. Dollar. Although the foreign-exchange market is unpredictable, we believe that a 10% sensitivity reflects reasonable near-term possible changes in foreign-exchange rates.

    The sensitivity analysis presented above for foreign-exchange rates does not consider the potential effect of favorable movements in foreign-exchange rates relative to our foreign-exchange forward contracts, nor does the analysis include the underlying exposures that the hedges are designed to protect. Since we utilize foreign-exchange contracts to hedge foreign-currency transactions, a loss in fair value on these instruments generally is offset by increases in the value of the underlying transactions.

Quarterly Stock Price

    Our common stock, $0.20 par value, is traded on The Nasdaq Stock Market under the symbol "ADCT." The following table sets forth the high and low sales prices of our common stock for each quarter during the years ended October 31, 2000 and 1999, as reported on that market.

	2000				1999
	High		Low		High		Low
First Quarter	$	19.09	$	11.50	$	10.28	$	5.81
Second Quarter		32.25		15.78		13.06		8.91
Third Quarter		49.00		26.50		13.41		9.91
Fourth Quarter		47.25		15.88		12.05		8.59

As of October 31, 2000, there were approximately 7,001 holders of record of our common stock.

Dividends

    No cash dividends have been declared or paid during the past five years. We currently anticipate that we will retain any future earnings for use in business, and we do not anticipate paying any cash dividends in the foreseeable future.

12

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995.

    The foregoing Management's Discussion and Analysis of Financial Condition and Results of Operations contains various "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements represent our expectations or beliefs concerning future events, including the following: any statements regarding future sales, profit percentages, earnings per share and other results of operations, any statements regarding the continuation of historical trends, any statements regarding the sufficiency of our cash balances and cash generated from operating and financing activities for our future liquidity and capital resource needs, any statements regarding the effect of regulatory changes and any statements regarding the future of the communications equipment industry and communications services on our business. We caution that any forward-looking statements made by us in this report or in other announcements made by us are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements. These include, without limitation, demand for our products or services, availability of materials to make products, changing market conditions within our industry or generally within the economy, new competition and technologies, increased costs associated with protecting intellectual property rights, fluctuations in our operating results, pressures on the pricing of the products and services we offer, and the factors set forth on Exhibit 99-a to our Form 10-K for the fiscal year ended October 31, 2000.

13

Management's Responsibility for Financial Reporting

    The management of ADC Telecommunications, Inc. is responsible for the preparation, integrity and objectivity of all financial statements and other information contained in this Annual Report. To ensure reliability of financial data, ADC has established and maintains an internal control system, which provides reasonable assurance that financial reports do not contain any material misstatement.

    The Audit Committee of the board of directors is responsible for reviewing and evaluating the overall performance of ADC's financial reporting and accounting practices. The Committee meets periodically and independently with management, internal auditors and the independent public accountants to discuss ADC's internal accounting controls, auditing and financial matters. The internal auditors and independent public accountants have unrestricted access to the Audit Committee.

    We believe that the financial statements and related notes in this report are presented fairly in all material respects, and that they were prepared according to accounting principles generally accepted in the United States.

William J. Cadogan
Chairman, President and Chief Executive Officer

November 22, 2000

Robert E. Switz
Senior Vice President, Chief Financial Officer

14

Report of Independent Public Accountants

To ADC Telecommunications, Inc.:

    We have audited the accompanying consolidated balance sheets of ADC Telecommunications, Inc. and Subsidiaries as of October 31, 2000 and 1999, and the related consolidated statements of operations, shareowners' investment and cash flows for each of the three years in the period ended October 31, 2000. These financial statements are the responsibility of ADC's management. Our responsibility is to express an opinion on these financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ADC Telecommunications, Inc. and Subsidiaries as of October 31, 2000 and 1999, and the results of their operations and their cash flows for the three years then ended October 31, 2000 in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Minneapolis, Minnesota
November 22, 2000

15

Consolidated Statements of Operations
(in millions, except earnings per share)

			For the years ended October 31
			2000		1999			1998
Net Sales			$	3,287.9	$	2,151.8		$	1,830.5
Cost of Products Sold				1,679.0		1,148.4			946.0
Gross Profit				1,608.9		1,003.4			884.5
Expenses:
	Research and development			338.0		250.7			199.8
	Selling and administration			665.6		445.3			351.9
	Goodwill amortization			34.3		22.2			12.5
	Non-recurring charges			158.0		149.0			9.2
	Non-cash stock compensation			47.1		1.2			—
		Total expenses		1,243.0		868.4			573.4
Operating Income				365.9		135.0			311.1
Gain on Conversion of Investment				722.6		—			—
Gain on Sale of a Business				328.6		—			—
Other Income (Expense), Net				43.3		(0.1	)		11.2
Income before Income Taxes				1,460.4		134.9			322.3
Provision for Income Taxes				592.3		57.0			112.4
Net Income			$	868.1	$	77.9		$	209.9
Earnings Per Share—Basic			$	1.20	$	0.12		$	0.32
Earnings Per Share—Diluted			$	1.13	$	0.11		$	0.31
Average Common Shares Outstanding—Basic				721.6		665.0			655.2
Average Common Shares Outstanding—Diluted				770.3		683.3			670.0

The accompanying notes are an integral part of these consolidated financial statements.

16

Consolidated Balance Sheets
(in millions)

			As of October 31
			2000			1999
Assets
Current Assets:
	Cash and cash equivalents		$	217.3		$	279.0
	Short-term investments			1,136.9			255.5
	Accounts receivable, net of reserves of $18.9 and $9.2			714.3			468.0
	Inventories, net of reserves of $50.2 and $48.7			486.1			284.9
	Prepaid and other current assets			96.3			89.2
		Total current assets		2,650.9			1,376.6
Property and Equipment, Net				608.6			341.2
Other Assets:
	Goodwill and other intangible assets, net of amortization of $97.6 and $64.1			518.7			237.0
	Other assets, primarily investments at cost			192.3			103.0
			$	3,970.5		$	2,057.8
Liabilities and Shareowners' Investment
Current Liabilities:
	Accounts payable		$	211.3		$	131.9
	Accrued compensation and benefits			233.4			118.3
	Other accrued liabilities			202.3			117.9
	Accrued and deferred income taxes			365.8			44.5
	Note payable and current maturities of long-term debt			28.5			35.9
		Total current liabilities		1,041.3			448.5
Long-Term Debt, Less Current Maturities				16.5			14.0
		Total liabilities		1,057.8			462.5
Commitments and Contingencies
Shareowners' Investment:
	Common stock, $0.20 par value; authorized 1,200.0 shares; issued and outstanding 770.3 and 678.6 shares			154.1			135.7
	Paid-in capital			954.0			519.6
	Retained earnings			1,759.4			899.2
	Accumulated other comprehensive income			84.4			41.9
	Deferred compensation			(39.2	)		(1.1	)
		Total shareowners' investment		2,912.7			1,595.3
			$	3,970.5		$	2,057.8

The accompanying notes are an integral part of these consolidated financial statements.

17

Consolidated Statements of Shareowners' Investment
(in millions)

	Common Stock
						Paid-in Capital			Retained Earnings			Deferred Compensation			Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)
	Shares		Amount
Balance, October 31, 1997	647.1		$	129.4		$	325.5		$	617.7		$	(0.8	)	$	(5.3	)		—
Net income	—			—			—			209.9			—			—		$	209.9
Exercise of common stock options and warrants	1.7			0.3			4.2			—			—			—			—
Stock issued for business acquisitions	14.2			2.8			21.0			—			(1.7	)		—			—
Stock issued for employee benefit plans	7.0			1.4			32.7			—			—			—			—
Reduction of deferred compensation	—			—			—			—			1.1			—			—
Tax benefits from exercise of common stock options	—			—			5.3			—			—			—			—
Shares acquired through share repurchase plan	(0.9	)		(0.1	)		(7.8	)		—			—			—			—
Translation adjustments	—			—			—			—			—			(5.5	)		(5.5	)
Unrealized gain on securities, net of deferred taxes of $0.2	—			—			—			—			—			0.3			0.3
Balance, October 31, 1998	669.1		$	133.8		$	380.9		$	827.6		$	(1.4	)	$	(10.5	)	$	204.7
Net income	—			—			—			77.9			—			—		$	77.9
Exercise of common stock options and warrants	2.7			0.5			65.6			—			—			—			—
Adjustment to conform year-end of acquired company	—			—			1.2			(6.3	)		0.2			(0.2	)		—
Stock issued for business acquisition	3.3			0.7			11.2			—			(1.1	)		—			—
Stock issued for employee benefit plans	8.3			1.7			56.3			—			—			—			—
Reduction of deferred compensation	—			—			—			—			1.2			—			—
Tax benefits from exercise of common stock options	—			—			10.9			—			—			—			—
Shares acquired through share repurchase plan	(4.8	)		(1.0	)		(6.5	)		—			—			—			—
Translation adjustments and other	—			—			—			—			—			(1.5	)		(1.5	)
Unrealized gain on securities, net of deferred taxes of $32.4	—			—			—			—			—			54.1			54.1
Balance, October 31, 1999	678.6		$	135.7		$	519.6		$	899.2		$	(1.1	)	$	41.9		$	130.5
Net income	—			—			—			868.1			—			—		$	868.1
Exercise of common stock options and warrants	10.4			2.1			169.5			—			—			—			—
Adjustments to conform year-ends of acquired companies	—			—			—			(7.9	)		—			—			—
Stock issued for business acquisitions	81.0			16.2			177.3			—			(85.2	)		—			—
Stock issued for employee benefit plans	0.3			0.1			7.9			—			—			—			—
Reduction of deferred compensation	—			—			—			—			47.1			—			—
Tax benefits from exercise of common stock options	—			—			79.7			—			—			—			—
Translation adjustments and other	—			—			—			—			—			(16.5	)		(16.5	)
Unrealized gain on securities, net of deferred taxes of $40.5	—			—			—			—			—			59.0			59.0
Balance, October 31, 2000	770.3		$	154.1		$	954.0		$	1,759.4		$	(39.2	)	$	84.4		$	910.6

The accompanying notes are an integral part of these consolidated financial statements.

18

Consolidated Statements of Cash Flows
(in millions)

				For the years ended October 31
				2000			1999			1998
Operating Activities:
Net income				$	868.1		$	77.9		$	209.9
Adjustments to reconcile net income to net cash provided by operating activities:
	Non-recurring charges				51.9			88.6			9.2
	Depreciation and amortization				146.2			114.8			80.4
	Non-cash stock compensation				47.1			1.2			—
	Deferred income taxes				332.0			(34.9	)		(1.3	)
	Gain on conversion of investment				(722.6	)		—			—
	Gain on sale of a business				(328.6	)		—			—
	Gain on sale of investments				(23.8	)		—			—
	Gain on ownership of investments				(8.1	)		—			—
	Other				4.5			1.1			6.9
	Changes in assets and liabilities, net of effects from acquisitions:
		Accounts receivable			(149.1	)		(37.2	)		(124.3	)
		Inventories			(188.2	)		(53.0	)		(10.8	)
		Prepaid and other assets			(84.8	)		(22.5	)		(11.3	)
		Accounts payable			83.6			45.0			2.2
		Accrued liabilities			222.7			109.5			9.4
			Total cash from operating activities		250.9			290.5			170.3
Investing Activities:
	Property and equipment additions, net				(375.3	)		(125.1	)		(112.6	)
	Acquisitions, net of cash acquired				(345.3	)		(237.4	)		(47.1	)
	Short-term investments, net				246.1			(10.5	)		(76.1	)
	Other investing activities				(49.6	)		(25.4	)		(1.4	)
		Total cash used for investing activities			(524.1	)		(398.4	)		(237.2	)
Financing Activities:
	(Decrease) increase in debt				(32.5	)		(167.2	)		199.6
	Issuance of common stock				277.2			106.8			52.7
		Total cash from (used for) financing activities			244.7			(60.4	)		252.3
Effect of Exchange Rate Changes on Cash					(3.7	)		(2.5	)		(1.8	)
Effect of Conforming Year-Ends of Acquired Companies					(29.5	)		(11.0	)		—
(Decrease) Increase in Cash and Cash Equivalents					(61.7	)		(181.8	)		183.6
Cash and Cash Equivalents, Beginning of Year					279.0			460.8			277.2
Cash and Cash Equivalents, End of Year				$	217.3		$	279.0		$	460.8

The accompanying notes are an integral part of these consolidated financial statements.

19

Notes to Consolidated Financial Statements

Note 1:  Summary of Significant Accounting Policies

Principles of Consolidation: The consolidated financial statements include the accounts of ADC Telecommunications, Inc. (a Minnesota corporation) and all significant subsidiaries in which ADC has more than a 50% equity ownership (collectively, "ADC"). All significant intercompany transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents: Cash equivalents represent short-term investments in commercial paper with original maturities of three months or less. The carrying amounts of these investments approximate their fair value due to their short maturities.

Investments: Short-term investments held by ADC are classified as available-for-sale securities under the provisions of Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Investments classified as available-for-sale securities are carried at market value with any unrealized holding gains and losses, net of any related tax effect, presented as a component of accumulated other comprehensive income (loss) within shareowners' investment.

    ADC also has other minority investments in companies not publicly traded. These investments are included in other assets and are carried at cost. ADC monitors these investments for impairment and makes appropriate reductions in carrying value when necessary.

Inventories: Inventories include material, labor and overhead and are stated at the lower of first-in, first-out cost or market.

Property and Equipment: Property and equipment are recorded at cost and depreciated using the straight-line method over estimated useful lives of three to thirty years or, in the case of leasehold improvements, over the term of the lease, if shorter. Both straight-line and accelerated methods of depreciation are used for income tax purposes.

Goodwill: The excess of the cost of acquired businesses over the fair value of the net assets acquired is amortized on a straight-line basis ranging from five to twenty-five years. Management periodically assesses the amortization period and recoverability of the carrying amount of goodwill based upon an estimate of future cash flows from related operations.

Research and Development Costs: ADC's policy is to expense all research and development costs in the period incurred.

Income Taxes: ADC utilizes the liability method of accounting for income taxes. Deferred tax liabilities or assets are recognized for the expected future tax consequences of temporary differences between the book and tax bases of assets and liabilities.

Revenue Recognition: Revenue is recognized when all significant contractual obligations have been satisfied and collection of the resulting receivable is reasonably assured. Revenue from product sales is recognized at the time of delivery and acceptance, and after consideration of all the terms and conditions of the customer contract.

    Revenue from services consists of fees for systems requirements, system design and analysis, customization and installation services, ongoing system management, system enhancements, service bureau processing, facilities management and maintenance. Services revenue is recognized as the services are performed, primarily on a time and materials basis and to a lesser extent on a fixed fee basis over the term of the services provided. Revenue from maintenance contracts is recognized ratably over the term of the agreement, generally one year.

    Revenue from the licensing of software rights is recognized at the time of delivery of the product to the customer, provided that ADC has no remaining service obligations, collectibility is reasonably

20

assured and the fees are fixed and determinable. Where there are service obligations that are essential to the functionality of the software installed, license fees are recorded over the term of the initial customization period.

Foreign Currency Translation: ADC converts assets and liabilities of foreign operations to their U.S. dollar equivalents at rates in effect at the balance sheet date and records translation adjustments in shareowners' investment. Income statements of foreign operations are translated from the operations' functional currency to U.S. dollar equivalents at the exchange rate on the transaction dates. Foreign-exchange transaction gains and losses are reported in other income (expense), net.

Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results.

Comprehensive Income (Loss): Components of comprehensive income (loss) include net income, foreign-currency translation adjustments and unrealized gains (losses) on available-for-sale securities, net-of-tax, and is presented on the consolidated statements of shareowners' investment.

Reclassifications: Certain prior-year amounts have been reclassified to conform to the current-year presentation.

Recent Accounting Pronouncements: In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101, as amended, summarizes some of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements. At this time, management does not expect the adoption of SAB 101 to have a material effect on ADC's operations or financial position. ADC is required to adopt SAB 101 in the fourth quarter of 2001.

Note 2:  Other Financial Statement Data (in millions)

Other Income (Expense), Net:

	2000			1999			1998
Interest income	$	23.6		$	21.6		$	18.3
Interest expense		(4.1	)		(7.7	)		(0.8	)
Gain on change in ownership interest		8.1			—			—
Gain on sale of available-for-sale securities		23.8			—			—
Other expense, net		(8.1	)		(14.0	)		(6.3	)
Total, net	$	43.3		$	(0.1	)	$	11.2

Supplemental Cash Flow Information:

	2000		1999		1998
Income taxes paid	$	218.5	$	85.1	$	100.1
Interest paid	$	4.1	$	7.6	$	0.8

21

Supplemental Schedule of Non-cash Investing Activities:

			2000		1999		1998
Acquisitions:
Fair value of assets acquired			$	420.7	$	330.8	$	49.3
Less: Liabilities assumed				34.5		52.0		0.7
		Cash acquired		40.9		41.4		1.5
	Acquisitions, net of cash acquired		$	345.3	$	237.4	$	47.1
Unrealized holding gains on available-for-sale securities, net of deferred taxes of $40.5, $32.4 and $0.2			$	59.0	$	54.1	$	0.3

Consolidated Balance Sheet Information:

		2000			1999
Inventories:
Purchased materials and manufactured products		$	452.4		$	249.9
Work-in-process			33.7			35.0
	Total	$	486.1		$	284.9
Property and Equipment:
Land and buildings		$	186.5		$	126.0
Machinery and equipment			633.6			465.6
Furniture and fixtures			91.3			72.5
Construction-in-process			142.7			—
	Total		1,054.1			664.1
Less accumulated depreciation			(445.5	)		(322.9	)
	Total, net	$	608.6		$	341.2

Note 3:  Investments

    ADC maintains an investment portfolio of several publicly held companies. These investments are classified as available-for-sale securities and, consequently, are recorded on the balance sheet at fair value with unrealized gains and losses reported as a separate component of shareowners' investment in accumulated other comprehensive income (loss). As of October 31, 2000 and 1999, ADC's short-term investments consisted of the following (in millions):

	Cash Basis		Adjusted Basis		Unrealized Gain		Fair Value
2000
Available-for-sale securities	$	218.1	$	950.4	$	186.5	$	1,136.9
1999
Available-for-sale securities	$	168.5	$	168.5	$	87.0	$	255.5

    In 2000, ADC sold common stock in certain investments for a pre-tax gain of $23.8 million. In 1999, there were no such sales.

    In the first quarter of 2000, Siara Systems, Inc., in which ADC had a 7.3% ownership interest, agreed to be acquired by Redback Networks, Inc. in a stock-for-stock transaction valued at approximately $4.3 billion. ADC's initial investment in Siara Systems was $3.5 million. Upon consummation of the acquisition of Siara Systems by Redback Networks, ADC's investment was marked-to-market through earnings in the second quarter of 2000 and reflected on the balance sheet at

22

the market value of the Redback Networks shares. The pre-tax gain recognized on the conversion of these shares was $722.6 million. This gain increased the basis of investments by $722.6 million.

Note 4:  Note Payable

    ADC has a $340.0 million unsecured revolving credit facility for general corporate purposes. Under this five-year credit facility, borrowings carry an initial interest rate equal to the commercial paper interest rate plus 25 basis points. There was no outstanding balance at October 31, 2000. At October 31, 1999, the balance outstanding under this arrangement was $25.0 million. The revolving credit facility expires on November 24, 2003. This facility requires ADC to maintain certain financial ratios. At October 31, 2000, ADC was in compliance with these requirements.

Note 5:  Acquisitions

Pooling-of-Interests Method: In 2000, ADC acquired Broadband Access Systems, Inc. ("BAS") and PairGain Technologies, Inc. ("PairGain"), and in 1999, ADC acquired Saville Systems PLC ("Saville"), all of which were accounted for as pooling-of-interests transactions. All historical financial information has been restated to reflect these acquisitions. BAS is a supplier of next-generation, Internet Protocol (IP) access platforms. PairGain designs, manufactures, markets and sells digital subscriber line (DSL) networking systems. Saville is a developer and integrator of communications billing and customer care software. There were no material transactions between ADC and the acquired companies prior to the mergers, and the effects of conforming Saville's, PairGain's and BAS's accounting policies to those of ADC were not material. These transactions are summarized as follows (in millions):

Acquisition Date	Acquired Company	Shares of ADC Stock Issued, Including Options Assumed	Fair Value of Acquisition
October 1999	Saville	56.4	$	613.6
June 2000	PairGain	72.2	$	2,946.9
September 2000	BAS	66.0	$	1,835.6

    ADC's consolidated financial statements for prior years have been restated to include the results of Saville within the Integrated Solutions business segment and PairGain and BAS within the Broadband Access and Transport business segment. Net sales and income (loss) for the individual entities for 2000,1999 and 1998 were as follows (in millions):

	October 31, 2000			October 31, 1999			October 31, 1998
Net Sales:
ADC	$	3,142.0		$	1,786.4		$	1,379.7
Saville		—			140.5			167.7
PairGain		145.3			224.9			283.1
BAS		0.6			—			—
Combined	$	3,287.9		$	2,151.8		$	1,830.5
Net Income (Loss):
ADC	$	765.2		$	80.7		$	146.7
Saville		—			7.0			27.0
PairGain(1)		178.4			2.4			39.5
BAS		(75.5	)		(12.2	)		(3.3	)
Combined	$	868.1		$	77.9		$	209.9

(1)

Includes a $197.2 million net-of-tax gain on sale of PairGain's microelectronics business.

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    All of these acquired companies used a calendar year-end. In recording the pooling-of-interests combinations, PairGain and BAS financial statements for the years ended December 31, 1999 and 1998 were combined with ADC's financial statements for the years ended October 31, 1999 and 1998. In addition, Saville's financial statements for the year ended December 31,1998 were combined with ADC's financial statements for the year ended October 31, 1998. In order to conform year-ends, adjustments of $7.9 million and $6.3 million were made to retained earnings as of October 31, 2000 and 1999.

Other Pooling-of-Interests Combinations: ADC also completed a pooling-of-interests combination with Altitun AB ("Altitun") during May 2000. Altitun is a developer and supplier of active optical components for next-generation optical networks. The historical operations of Altitun were not material to ADC's consolidated operations; therefore, prior-period statements have not been restated for this acquisition. ADC exchanged 30.4 million shares (both stock issued and options assumed) for all of the common stock of Altitun. The fair value of the transaction was $948.8 million.

Acquisition Expenses of Pooling-of-Interests Combinations: Expenses totaling $102.4 million and $21.4 million were incurred in consummating the above pooling transactions and were recorded as non-recurring charges in 2000 and 1999, respectively. These costs consisted primarily of investment bankers' fees, attorneys' fees, and other direct charges related to the transaction. Included in Altitun's acquisition expenses were $29.1 million of expenses paid directly by the former shareholders of Altitun.

Purchase Method:

Centigram

    In July 2000, ADC acquired all outstanding common shares of Centigram Communications Corporation ("Centigram") for $173.6 million in cash plus stock options valued at $42.9 million. Centigram is a provider of Internet-enabled call management, WAP-based messaging and unified communications services to mobile and landline telecom service providers. The accompanying consolidated financial statements include the results of operations of Centigram subsequent to the acquisition date. Purchased in-process research and development expenses of $15.8 million were recorded as a non-recurring charge upon completion of the acquisition.

Total purchase cost of Centigram (in millions):
Cash		$	173.6
Conversion of options			42.9
	Total consideration		216.5
Direct transaction costs and expenses			4.5
	Total purchase cost	$	221.0
Allocation of the purchase price (in millions):
Tangible net assets acquired		$	43.5
Goodwill and intangible assets acquired			149.6
Deferred compensation			12.1
In-process research and development			15.8
	Total purchase price allocation	$	221.0

    Tangible net assets acquired include cash, accounts receivable, inventories and fixed assets. Liabilities assumed principally include accounts payable, accrued compensation and accrued expenses. Goodwill and other identifiable assets resulting from the acquisition are being amortized over periods ranging from 5 to 15 years.

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    The unaudited pro forma results of operations of ADC and Centigram for the years ended October 31, 2000 and 1999, after giving effect to a number of pro forma adjustments, are (in millions, except per share amounts):

	Year ended October 31, 2000		Year ended October 31, 1999
Net Sales	$	3,337.1	$	2,235.1
Net Income	$	856.5	$	68.9
Earnings Per Share—Diluted	$	1.11	$	0.10

Teledata

    In November 1998, ADC acquired all outstanding common shares of Teledata Communications Ltd. ("Teledata") for $198.0 million in cash plus stock options valued at $7.9 million. Teledata designs, develops, manufactures, markets and supports advanced wireline and wireless customer access network equipment for telephone companies worldwide. The accompanying consolidated financial statements include the results of operations of Teledata subsequent to the acquisition date. Purchased in-process research and development expenses of $23.6 million were recorded as a non-recurring charge upon completion of the acquisition.

Total purchase cost of Teledata (in millions):
Cash		$	198.0
Conversion of options			7.9
	Total consideration		205.9
Direct transaction costs and expenses			4.2
	Total purchase cost	$	210.1
Allocation of the purchase price (in millions):
Tangible net assets acquired		$	105.8
Goodwill and intangible assets acquired			80.7
In-process research and development			23.6
	Total purchase price allocation	$	210.1

    Tangible net assets acquired include cash, accounts receivable, inventories and fixed assets. Liabilities assumed principally include accounts payable, accrued compensation and accrued expenses. Goodwill and other identifiable intangible assets resulting from the acquisition are being amortized over periods ranging from 5 to 15 years.

    The unaudited pro forma results of operations of ADC and Teledata for the year ended October 31, 1998, after giving effect to a number of pro forma adjustments, are (in millions, except per share amounts):

	Year ended October 31, 1998
Net Sales	$	1,894.1
Net Income	$	199.6
Earnings Per Share—Diluted	$	0.30

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Other Transactions

    In addition to the transactions identified above, ADC made several smaller purchases during 2000, 1999 and 1998. A summary of recent significant acquisitions, accounted for by the purchase method, is (in millions):

Company	Date	Transaction value
France Electronique's telecom systems integration business	November 2000	$	44.0
Computer Telcom Installations Ltd.	September 2000	$	40.4
IBSEN Micro Structures	May 2000	$	78.5
NVision	January 2000	$	19.7
Pathway, Inc.	July 1999	$	19.0
Spectracom, Inc.	May 1999	$	102.3
Phasor Electronics	January 1999	$	8.2
Hadax Electronics	November 1998	$	25.0
BHA Pty Ltd.	April 1998	$	20.0
W.E. Tech, Inc.	January 1998	$	16.0

    The inclusion of the above purchase acquisitions for periods prior to the date of acquisition would not have materially affected results of operations, except for Centigram and Teledata as discussed above. Goodwill associated with these purchase acquisitions is being amortized using the straight-line method over periods ranging from 7 to 15 years.

    ADC identifies projects that do not have technological feasibility or other uses at the time of acquisition and records expense at the time of acquisition for these in-process research and development projects. Purchased in-process research and development expenses aggregating $22.8 million in 2000 were associated with the purchase acquisitions of IBSEN Micro Structures and Centigram. Appraisals for each purchased in-process technology were determined using the income approach, discounted based on the estimated likelihood that the project ultimately will succeed.

    Purchased in-process research and development expenses of $88.6 million in 1999 were associated with the acquisitions of Pathway, Teledata, Phasor Electronics, Hadax Electronics and Spectracom. Non-recurring charges of $9.2 million in 1998 were associated with the acquisitions of BHA Pty Ltd. and interconnect billing software technology.

Note 6:  Employee Benefit Plans

Retirement Savings Plan:  Substantially all employees are eligible to participate in ADC's Retirement Savings Plan ("the Plan"). ADC matches employee contributions to the Plan up to 6% of wages and, depending on ADC performance, may voluntarily make an additional contribution up to 70% on 6% of wages. Employees are fully vested in all contributions. ADC's contributions to the Plan were $22.5 million, $13.6 million and $12.5 million during 2000, 1999 and 1998, respectively. The Plan's trustee invests a portion of ADC's cash contributions in ADC's common stock.

Global Employee Stock Purchase Plan:  ADC has a global employee stock purchase plan available to substantially all employees. Eligible employees may purchase ADC common stock through payroll deductions. Until April of 2000, the discounted purchase price given to ADC employees on ADC stock was 85% of the market closing price of ADC stock at the end of each stock purchase period. Under the new stock purchase plan, employees can purchase ADC common stock at a price equal to the lower of 85% of the market closing price of ADC's stock at the beginning or end of each stock purchase period. ADC issued 0.4 million and 0.3 million shares of common stock during 2000 and 1999, respectively, pursuant to the plan.

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Stock Award Plans:  ADC maintains a Global Stock Incentive Plan to grant various stock awards, including stock options at fair-market value and restricted shares, to key employees of ADC. A maximum of 145.8 million stock awards can be granted under this plan; 42.5 million shares were available for stock awards as of October 31, 2000. ADC also maintains a Non-employee Director Stock Option Plan in order to enhance ADC's ability to attract and retain the services of experienced and knowledgeable outside directors. This plan provides for granting of a maximum of 3.4 million non-qualified stock options at fair-market value. As of October 31, 2000, 0.6 million shares were available for option grants under this plan. In addition to the foregoing plans, options to acquire a total of 19.6 million shares have been granted under plans assumed in conjunction with some of ADC's acquisitions.

    The following schedule summarizes activity in all plans (shares in millions):

	Stock Options
	Shares		Weighted Average Exercise Price		Restricted Shares
Outstanding at October 31, 1997	58.5		$	7.02	0.4
Granted	30.7		$	11.52	13.8
Exercised	(7.5	)	$	3.18	—
Restrictions lapsed	—			—	(0.3	)
Canceled	(12.4	)	$	9.99	—
Outstanding at October 31, 1998	69.3		$	8.56	13.9
Adjustment to conform year-end	0.3			—	—
Granted	41.1		$	11.32	1.0
Exercised	(11.4	)	$	4.52	—
Restrictions lapsed	—			—	(.1	)
Canceled	(8.1	)	$	8.14	—
Outstanding at October 31, 1999	91.2		$	9.48	14.8
Adjustments to conform year-ends	(4.5	)		—	—
Granted	38.7		$	15.69	1.1
Exercised	(20.0	)	$	18.22	—
Restrictions lapsed	—			—	(0.1	)
Canceled	(8.9	)	$	12.57	—
Outstanding at October 31, 2000	96.5		$	13.84	15.8
Exercisable at October 31, 2000	39.5		$	8.39	—

    SFAS No. 123 "Accounting for Stock-Based Compensation," encourages, but does not require, a fair-value-based method of accounting for employee stock options or similar equity instruments. As permitted under the standard, ADC has continued to account for employee stock options using the intrinsic-value method outlined in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly, ADC has recognized no compensation expense for its Stock Incentive Plan or its Non-employee Director Stock Option Plan.

    If compensation expense for ADC's stock-based compensation plans had been determined based on the fair value at the grant dates consistent with the method of SFAS No. 123, ADC's net income

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and earnings per share would have decreased to the pro forma amounts indicated below (in millions, except per share amounts):

		2000		1999		1998
Net Income
	As reported	$	868.1	$	77.9	$	209.9
	Pro forma	$	765.7	$	10.2	$	160.2
Earnings Per Share—Basic
	As reported	$	1.20	$	0.12	$	0.32
	Pro forma	$	1.06	$	0.02	$	0.24
Earnings Per Share—Diluted
	As reported	$	1.13	$	0.11	$	0.31
	Pro forma	$	0.99	$	0.01	$	0.24

    The weighted-average fair value per option at the date of grant for options granted in 2000, 1999 and 1998 was $13.84, $9.48 and $8.56, respectively. The fair value was estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	2000		1999		1998
Risk-free interest rate	5.91	%	5.27	%	5.19	%
Expected dividend	—		—		—
Expected volatility factor	82.9	%	67.6	%	68.6	%
Expected option term	4.5 years		3.2 years		4.6 years

    As a result of the issuance of Interpretation ("FIN") No. 44, "Accounting for Certain Transactions Involving Stock Compensation—an Interpretation of APB Opinion No. 25," ADC was required to record a non-cash stock compensation expense and deferred compensation expense related to the unvested portion of options issued in the purchase business combination of Centigram in the third quarter of 2000. The value attributed to unvested options of $12.1 million was allocated to deferred compensation expense and will be amortized over the remaining vesting period. Non-cash stock compensation expense recorded in 2000 relating to the Centigram acquisition was $2.4 million. Deferred compensation expense of $9.7 million remains to be amortized through 2004.

    Non-cash stock compensation expenses of $44.7 million and $1.2 million were recognized in 2000 and 1999, respectively, as a result of stock options and restricted stock converted in connection with the BAS acquisition. The exercise prices at the date of grant were deemed to be less than the estimated fair values of the awards. Expense is being recognized over the anticipated vesting period of the awards through 2003. Deferred compensation expense of $29.2 million remains to be amortized through 2003.

Note 7:  Capital Stock

Stock Splits:  All share and per share amounts, including stock options, have been restated to reflect ADC's two separate two-for-one stock splits effected in the form of a common stock dividend, which were distributed on February 15, 2000 and July 17, 2000.

Authorized Stock:  ADC is authorized to issue 1.2 billion shares of $0.20 par value common stock and 10.0 million shares of no par value preferred stock. There are no shares of preferred stock outstanding.

Dividends:  No cash dividends have been declared or paid during the past five years.

Earnings Per Share:  Basic earnings per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing net income by the sum of the weighted average number of shares of

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common stock outstanding plus all additional common stock that would have been outstanding if potentially dilutive common shares related to stock options had been issued. The following table reconciles the number of shares utilized in the earnings per share calculations (in millions, except earnings per share):

	2000		1999		1998
Net income	$	868.1	$	77.9	$	209.9
Earnings per share—basic	$	1.20	$	0.12	$	0.32
Earnings per share—diluted	$	1.13	$	0.11	$	0.31
Weighted average common shares outstanding—basic		721.6		665.0		655.2
Effect of dilutive securities		48.7		18.3		14.8
Weighted average common shares outstanding—diluted		770.3		683.3		670.0

Shareowner Rights Plan:  ADC has a shareowner rights plan intended to preserve the long-term value of ADC to its shareowners by discouraging a hostile takeover of ADC. Under the shareowner rights plan, each outstanding share of ADC common stock has an associated common stock purchase right. The rights are exercisable only if a person or group acquires 15% or more of the outstanding ADC common stock. If the rights became exercisable, the rights would allow their holders (other than the acquiring person or group) to purchase shares of ADC common stock or stock of the company acquiring ADC at a price equal to one-half of the then current value of such shares. The dilutive effect of the rights on the acquiring person or group is intended to encourage such person or group to negotiate with ADC's board of directors prior to attempting a takeover. If ADC's board of directors believes a proposed acquisition of ADC is in the best interests of ADC and its shareowners, the board may amend the shareowner rights plan or redeem the rights for a nominal amount in order to permit the acquisition to be completed without interference from the plan.

Stock Repurchase Program:  In April 1998, ADC announced a stock repurchase program under which ADC was permitted to purchase up to 26.8 million shares of common stock in open market transactions as market and business conditions warranted. As part of this program, ADC permitted for the use of forward repurchase agreements, "equity collar" arrangements using call and put options, and other arrangements to purchase ADC shares. The share repurchase program was terminated in 1999.

    During 1998, ADC sold put options to independent third parties that entitled holders of the options to sell shares of ADC common stock to ADC and purchased call options from the same parties that entitled ADC to buy shares of its common stock. In January and February 1999, ADC received 4.2 million shares of its common stock in partial settlement of outstanding options. Shares received in settlement of this transaction have been re-issued through unrelated transactions.

Note 8:  Income Taxes

    The components of the provision for income taxes are (in millions):

		2000		1999			1998
Current taxes payable:
	Federal	$	270.0	$	83.3		$	87.9
	Foreign		6.3		7.7			16.2
	State		33.8		8.3			9.2
			310.1		99.3			113.3
Deferred			282.2		(42.3	)		(0.9	)
	Total provision	$	592.3	$	57.0		$	112.4

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    The effective income tax rate differs from the Federal statutory rate as follows:

		2000		1999		1998
Federal statutory rate		35	%	35	%	35	%
Research and development tax credits		—		(4	)	(2	)
Goodwill amortization		1		3		1
State income taxes, net		3		2		3
FSC exempt income		—		(1	)	(1	)
Foreign income taxes		—		(3	)	(2	)
Purchased in-process research & development		1		8		1
Acquisition and integration fees		3		5		—
Tax exempt interest income		—		(1	)	—
Other, net		(2	)	(2	)	—
	Effective income tax rate	41	%	42	%	35	%

    Deferred tax assets (liabilities) as of October 31, 1999 and 1998 are composed of the following (in millions):

			2000			1999
Current deferred tax assets (liabilities):
	Asset valuation reserves		$	32.3		$	12.3
	Unrealized gain on investments			(370.4	)		—
	Accrued liabilities			22.8			(2.5	)
	Other			1.9			7.6
		Total	$	(313.4	)	$	17.4
Non-current deferred tax assets (liabilities):
	Intangible assets		$	40.4		$	39.3
	Depreciation			(10.8	)		(8.8	)
	Other			22.8			12.1
		Total	$	52.4		$	42.6

    In connection with its 2000 and 1999 acquisitions, ADC recorded non-recurring, non-tax-deductible charges for acquisition fees and purchased in-process research and development expenses. In 2000, ADC recognized non-recurring, non-operating gains from the sale of a business and the non-cash conversion of an investment. The exclusion of these charges and gains would result in an effective tax rate of 34%, 31% and 34% in 2000, 1999 and 1998, respectively.

    The provision for foreign income taxes is based upon foreign pre-tax earnings (losses) of approximately $(37.4) million, $8.5 million and $22.3 million during 2000, 1999 and 1998, respectively.

    Deferred federal income taxes are not provided on the undistributed cumulative earnings of foreign subsidiaries because such earnings are considered to be invested permanently in those operations. At October 31, 2000, the cumulative earnings of foreign subsidiaries were approximately $86.3 million. The amount of unrecognized deferred tax liability on the undistributed cumulative earnings was approximately $15.2 million.

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Note 9:  Business Restructuring and Other Non-recurring Charges

    A summary of business restructuring and other non-recurring charges is (in millions):

		2000		1999		1998
Acquisition and integration fees		$	121.9	$	21.4		—
Restructuring the Broadband Access and Transport Group			13.3		9.0		—
Purchased in-process research and development expenses (Note 5)			22.8		88.6	$	9.2
Restructuring the former Wireless Systems Group			—		30.0		—
	Total	$	158.0	$	149.0	$	9.2

    As a result of the merger between ADC and PairGain in the third quarter of 2000, ADC recognized a charge of $64.5 million for the cost of integrating and aligning the operations of PairGain within ADC's Broadband Access and Transport Group. The components of this charge include $45.9 million in direct and indirect acquisition fees paid to investment bankers, attorneys and other outside advisors, as well as $18.6 million in employee retention, transition and severance payments, relocation expenses and realignment of product lines and facilities.

    Upon the completion of the mergers between ADC and Altitun in the third quarter of 2000 and BAS in the fourth quarter of 2000, ADC recognized $35.9 million and $20.6 million, respectively, in acquisition fees. These fees are direct and indirect incremental costs associated with the combinations, primarily consisting of fees paid to investment bankers, attorneys and other outside advisors. ADC also incurred $0.9 million of integration costs associated with the acquisition of Centigram in the third quarter of 2000.

    During the third quarter of 2000, ADC's management approved a restructuring plan in connection with the merger of PairGain. The merger-related actions included the elimination of redundant and excess facilities, workforce, and administrative overhead and systems, as well as transition to ADC's shared services. The total estimated charges related to the plan were $5.5 million. The charges include $4.0 million in employee termination costs and $1.5 million in the elimination of redundant financial and operating systems. The plan is to be completed by the end of the first quarter of 2001.

    During the fourth quarter of 2000, ADC's management approved restructuring plans, which included initiatives to consolidate unproductive and duplicative facilities and dispose of product lines that no longer fit ADC's current focus and growth strategy, and to merge the international sales operations within the Broadband Access and Transport Group. The total estimated charges recorded relating to these restructuring plans were $7.8 million. The charges included $0.7 million for employee termination costs, $4.1 million for the discontinuance of old-generation Teledata products and a customer development project, and $3.0 million in facilities closing costs and consolidation of international sales operations. The restructuring plans are to be completed by the end of the second quarter of 2001.

    During the first quarter of 1999, ADC's management approved a restructuring plan, which included initiatives to integrate the software operations of the former Wireless Systems Group with the newly formed Integrated Solutions Group, consolidate unproductive and duplicative facilities and dispose of product lines that no longer fit ADC's current focus and growth strategy. This business restructuring plan was completed during the fourth quarter of 1999. Actual costs incurred were $30.0 million, an amount equal to the initial estimate recorded during the first quarter of 1999. The charges included $4.4 million for employee termination costs, $8.8 million for the sale of a subsidiary, $11.1 million associated with the write-off of goodwill and discontinuance of the City RFX product line, and $5.7 million in facilities closing costs that were related directly to ADC's exit plan.

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    During the fourth quarter of 1999, ADC's management approved a restructuring plan to consolidate the Portland, Oregon manufacturing operations of the Broadband Access and Transport Group into the Minneapolis, Minnesota manufacturing operations. The estimated restructuring charges were $9.0 million. The estimate was composed of $4.8 million for employee termination costs, $1.5 million for facilities closing costs and $2.7 million for asset disposals and other directly associated costs. This consolidation was completed in the fourth quarter of 2000. There were no material adjustments made to the initial estimates. Actual costs incurred were approximately $9.0 million.

Note 10:  Derivative Instruments and Hedging Activities

    ADC adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," on November 1, 1998. In doing so, ADC did not incur any transition adjustments to earnings.

    All derivatives are recognized on the balance sheet at their fair value. On the date a derivative contract is entered into, ADC designates the derivative as a (1) fair-value hedge, (2) cash-flow hedge, (3) foreign-currency hedge, (4) net investment in a foreign operation or (5) trading instrument. ADC engages primarily in derivatives classified as cash-flow hedges. Changes in the fair value of the derivatives are reported as a separate component of shareowners' investment in accumulated other comprehensive income (loss). ADC also hedges non-functional current assets and liabilities. Derivatives designated to hedge these exposures are classified as trading derivatives and are reported in current-period earnings along with the re-valuation of the underlying exposure.

    In 2000, ADC entered into a market-price collar arrangement that locks in a price range for the sale of certain shares held as investments, thus guaranteeing a minimum selling price. Such derivatives are treated as trading derivatives. Changes in the value of these derivatives are reported in current-period earnings.

    ADC formally documents all relations between hedging instruments and the hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions. ADC formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of the hedged items.

    The following table presents a summary of the notional amounts and fair values of ADC's derivative contracts at October 31, 2000 (in millions).

		Notional Amount		Fair Value
Forward contracts:
Cash-flow hedges		$	127.0	$	0.6
Trading derivatives			31.5		—
	Total foreign exchange	$	158.5	$	0.6
Collar options			—	$	12.9

    ADC's foreign-exchange forward contracts and investment hedges contain credit risk to the extent that its bank counterparties may be unable to meet the terms of the agreements. ADC minimizes such risk by limiting its counterparties to major financial institutions. Management does not expect any material losses as a result of defaults by other parties.

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Note 11:  Commitments and Contingencies

Commitments To Extend Credit:  ADC has worked with customers and third-party financiers to find a means of financing projects by negotiating financing arrangements. As of October 31, 2000, ADC had commitments to extend credit of $380.0 million for such arrangements. The total amount drawn and outstanding as of October 31, 2000 was $35.0 million. ADC intends to sell all or a portion of these commitments and outstanding receivables to third-parties, but has not yet made any such sales. These commitments to extend credit are conditional agreements generally having fixed expiration or termination dates and specific interest rates, conditions and purposes. These commitments may exist and expire without being drawn. Therefore, the amounts committed but not drawn will not necessarily impact future cash flows. ADC regularly reviews all outstanding commitments, and the results of these reviews are considered in assessing the overall risk for possible credit losses. At October 31, 2000, there was no significant risk of loss in the event of non-performance related to these financing arrangements.

Operating Leases:  Portions of ADC's operations are conducted using leased equipment and facilities. These leases are non-cancelable and renewable, with expiration dates ranging through the year 2014. The rental expense included in the accompanying consolidated statements of income was $25.6 million, $26.3 million and $19.0 million for 2000, 1999 and 1998, respectively.

    During 2000, ADC entered into several leasing commitments with maturities of between six and seven years for domestic locations. The properties covered under these transactions include manufacturing equipment, facilities and administrative offices. The purchase and construction of the various properties covered under these transactions began in 2000 and are expected to be completed by 2002. The leases provide for a substantial residual value guarantee (less than 90% of the total cost), which may become payable upon the termination of the transaction, and include purchase and renewal options. ADC may exercise its purchase option, or the facilities may be sold to a third party. Upon termination of the leases, ADC expects the fair-market value of the leased properties to reduce substantially or eliminate entirely the payment under the residual-value guarantees. The table of future minimum operating lease payments below excludes any payments relating to these guarantees.

    The following is a schedule of future minimum rental payments required under non-cancelable operating leases as of October 31, 2000 (in millions):

2001		$	52.4
2002			52.9
2003			44.6
2004			39.7
2005 and thereafter			79.8
	Total	$	269.4

Contingencies:  ADC has been named as a defendant in lawsuits in the normal course of business. ADC believes that the ultimate resolution of these matters will not have a material adverse effect on its financial position or results of operations.

Change of Control:  ADC's board of directors has approved the extension of certain employee benefits, including salary continuation to key employees, in the event of a change of control of ADC. The board has retained the flexibility to cancel such provisions under certain circumstances.

Note 12:  Segment Information

    ADC has three reportable segments: Broadband Connectivity, Broadband Access and Transport, and Integrated Solutions. Broadband Connectivity products include broadband connection and access devices for copper, coaxial, optical, wireless and broadcast communications networks. The segment also includes optical and wireless components. Broadband Access and Transport products include access and

33

transport systems that deliver broadband, multiservice communications to consumers and businesses over copper, coaxial, optical and wireless networks. Integrated Solutions products and services consist of systems integration services, operations support systems (OSS) software and enhanced services software that positions service providers to deliver broadband, multiservice communications over wireline and wireless networks.

    The "management approach" required by SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," has been used to present the following segment information. This approach is based upon the way management organizes segments within an enterprise for making operating decisions and assessing performance. Accounting policies used by the segments are the same as those described in Note 1.

    Intersegment sales were not significant. The following costs are not allocated to segment results:

•

Non-recurring charges;



•

Non-cash stock compensation expenses; and



•

Goodwill amortization resulting from acquisitions.

    Corporate assets consist primarily of cash and investments, which are managed centrally, and goodwill. Capital expenditures do not include amounts arising from the purchase of businesses.

34

    International sales to external customers are on a "shipped-to" basis. No single country has property and equipment sufficiently material enough to warrant disclosure. No single customer accounts for more than 10% of ADC's consolidated sales.

Segment Information (in millions)	Broadband Connectivity		Broadband Access and Transport			Integrated Solutions		Unallocated Corporate Items			Segment Consolidated Information
2000
External sales	$	1,781.9	$	992.1		$	513.9	$	—		$	3,287.9
Depreciation and amortization		49.2		42.3			16.9		37.8			146.2
Non-recurring charges and non-cash stock compensation		—		—			—		(205.1	)		(205.1	)
Operating income (loss)		773.5		(147.4	)		20.6		(280.8	)		365.9
Capital expenditures		284.2		35.8			22.7		32.6			375.3
Assets		878.6		881.0			386.2		1,824.7			3,970.5
1999
External sales	$	912.4	$	856.8		$	382.6	$	—		$	2,151.8
Depreciation and amortization		31.3		44.2			11.0		28.3			114.8
Non-recurring charges and non-cash stock compensation		—		—			—		(150.2	)		(150.2	)
Operating income (loss)		336.4		(47.3	)		24.7		(178.8	)		135.0
Capital expenditures		50.5		38.1			19.1		17.4			125.1
Assets		397.4		795.8			280.8		583.8			2,057.8
1998
External sales	$	649.7	$	827.8		$	353.0	$	—		$	1,830.5
Depreciation and amortization		29.1		33.9			5.0		12.4			80.4
Non-recurring charges		—		—			—		(9.2	)		(9.2	)
Operating income (loss)		192.6		65.1			60.5		(7.1	)		311.1
Capital expenditures		44.9		42.0			10.0		15.7			112.6
Assets		303.5		632.5			194.8		665.2			1,796.0

Geographic Information (in millions)			2000		1999		1998
Sales:
	Outside the United States		$	708.1	$	499.2	$	392.1
	Inside the United States			2,579.8		1,652.6		1,438.4
		Total	$	3,287.9	$	2,151.8	$	1,830.5
Property and Equipment, Net:
	Outside the United States		$	143.2	$	60.7	$	54.3
	Inside the United States			465.4		280.5		235.2
		Total	$	608.6	$	341.2	$	289.5

35

Note 13:  Quarterly Financial Data (Unaudited in millions, except earnings per share)

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
2000
Net Sales	$	593.9		$	770.6		$	891.4		$	1,032.0		$	3,287.9
Gross Profit		278.5			363.3			448.5			518.6			1,608.9
Income Before Income Taxes		68.4			1,163.1			65.1			163.8			1,460.4
Provision for Income Taxes		15.2			444.9			55.5			76.7			592.3
Net Income	$	53.2	(1)	$	718.2	(2)	$	9.6	(3)	$	87.1	(4)	$	868.1
Average Common Shares Outstanding—Basic		699.7			708.0			715.1			733.9			721.6
Earnings Per Share—Basic	$	0.08		$	1.01		$	0.01		$	0.12		$	1.20
Average Common Shares Outstanding—Diluted		730.1			746.1			758.8			781.6			770.3
Earnings Per Share—Diluted	$	0.07		$	0.96		$	0.01		$	0.11		$	1.13
1999
Net Sales	$	465.2		$	517.7		$	534.8		$	634.1		$	2,151.8
Gross Profit		217.5			241.5			247.1			297.3			1,003.4
Income (Loss) Before Income Taxes		(0.3	)		67.9			6.9			60.4			134.9
Provision for Income Taxes		7.6			24.5			5.6			19.3			57.0
Net Income (Loss)	$	(7.9	)(5)	$	43.4		$	1.3	(6)	$	41.1	(7)	$	77.9
Average Common Shares Outstanding—Basic		660.0			661.3			664.4			669.1			665.0
Earnings (Loss) Per Share—Basic	$	(0.01	)	$	0.07		$	0.00		$	0.06		$	0.12
Average Common Shares Outstanding—Diluted		674.6			682.0			680.9			686.3			683.3
Earnings (Loss) Per Share—Diluted	$	(0.01	)	$	0.06		$	0.00		$	0.06		$	0.11

(1)

Includes $0.5 million net-of-tax, non-cash stock compensation expenses.

(2)

Includes $6.6 million net-of-tax, non-cash stock compensation expenses and non-recurring charges related to the sale of PairGain's microelectronics business. Also includes non-recurring, non-operating income of $652.4 million net-of-tax related to the sale of PairGain's microelectronics business and a non-cash gain on an investment in Siara Systems.

(3)

Includes $110.8 million net-of-tax, non-cash stock compensation expenses and non-recurring charges primarily related to the acquisitions of PairGain, Altitun, IBSEN and Centigram.

(4)

Includes $67.9 million net-of-tax, non-cash stock compensation expenses and non-recurring charges primarily related to the acquisition of BAS. Also includes non-recurring, non-operating income of $17.1 million net-of-tax related to cash and non-cash gains on investments.

(5)

Includes $47.4 million net-of-tax, non-cash stock compensation expenses and non-recurring charges related to the acquisitions of Teledata, Hadax and Phasor and the restructuring of the former Wireless Systems Group.

(6)

Includes $41.7 million net-of-tax, non-cash stock compensation expenses and non-recurring charges related to the acquisitions of Spectracom and Pathway.

(7)

Includes $29.9 million net-of-tax, non-cash stock compensation expenses and non-recurring charges related to the acquisition of Saville and restructuring expenses for the consolidation of the Broadband Access and Transport Group.

36

Eleven-Year Financial Summary
(dollars in millions, except per share data)

																										10-Year Compound Annual Growth Rate 2000-1990		5-Year Compound Annual Growth Rate 2000-1995
			Years ended October 31
			2000			1999		1998		1997		1996		1995		1994		1993		1992		1991		1990
Operating Results
Net Sales			$	3,287.9		2,151.8		1,830.5		1,553.8		1,087.4		723.7		528.3		411.7		331.0		300.3		263.0		28.7	%	35.4	%
	International Sales		$	708.1		499.2		392.1		319.0		228.8		130.1		79.0		66.9		49.3		38.0		41.6		32.8	%	40.3	%
Gross Profit			$	1,608.9		1,003.4		884.5		749.3		519.7		353.1		265.1		210.8		166.9		146.8		127.2		28.9	%	35.4	%
	Research and Development Expense		$	338.0		250.7		199.8		164.8		113.7		78.8		55.0		44.9		38.3		33.8		25.5		29.5	%	33.8	%
	Selling and Administrative Expense		$	665.6		445.3		351.9		281.7		202.7		155.3		125.2		104.0		88.5		78.4		64.0		26.4	%	33.8	%
	Goodwill Amortization		$	34.3		22.2		12.5		10.0		5.2		3.1		3.1		2.8		2.7		2.0		0.9		43.6	%	61.4	%
	Non-recurring Charges		$	158.0		149.0		9.2		25.3		—		3.9		—		—		3.8		—		—
	Non-cash Stock Compensation		$	47.1		1.2		—		—		—		—		—		—		—		—		—
Operating Income(1)			$	571.0		285.2		320.2		292.8		198.0		115.9		81.7		59.1		37.4		32.7		36.8		31.5	%	37.6	%
Operating Income as Reported			$	365.9		135.0		311.1		267.4		198.0		112.0		81.7		59.1		33.6		32.7		36.8		25.8	%	26.7	%
	Non-recurring, Non-operating Gains		$	1,083.0		—		—		—		—		—		—		—		—		—		—
	Income Taxes(1)		$	198.0		88.1		113.1		108.7		75.1		44.6		30.0		19.0		15.1		14.4		15.3		29.2	%	34.7	%
	Income Taxes as Reported		$	592.3		57.0		112.4		99.5		75.1		42.1		30.0		19.0		13.7		14.4		15.3		44.1	%	69.7	%
Net Income(1)			$	384.4		197.0		218.3		196.5		133.9		64.0		53.0		39.3		21.0		18.1		22.9		32.6	%	43.1	%
Net Income as Reported			$	868.1		77.9		209.9		180.4		133.9		62.6		53.0		39.3		18.6		18.1		22.9		43.8	%	69.2	%
	EPS (Diluted)(1)		$	0.50		0.29		0.33		0.30		0.21		0.11		0.10		0.08		0.04		0.04		0.05		25.9	%	35.4	%
	EPS (Diluted) as Reported		$	1.13		0.11		0.31		0.28		0.21		0.11		0.10		0.08		0.04		0.04		0.05		36.6	%	59.3	%
Financial Ratios
	Gross Margin			48.9	%	46.6	%	48.3	%	48.2	%	47.8	%	48.8	%	50.2	%	51.2	%	50.4	%	48.9	%	48.4	%
	Operating Margin(1)			17.4	%	13.3	%	17.5	%	18.8	%	18.2	%	16.0	%	15.5	%	14.3	%	11.3	%	10.9	%	14.0	%
	Pre-tax Income Margin(1)			17.7	%	13.3	%	18.1	%	19.6	%	19.2	%	15.0	%	15.7	%	14.2	%	10.9	%	10.8	%	14.5	%
	Effective Tax Rate(1)			34.0	%	30.9	%	34.1	%	35.6	%	35.9	%	41.1	%	36.2	%	32.7	%	41.8	%	44.2	%	40.0	%
	Net Margin(1)			11.7	%	9.2	%	11.9	%	12.6	%	12.3	%	8.8	%	10.0	%	9.5	%	6.4	%	6.0	%	8.7	%
	Return on Average Shareowners' Investment(1)			17.9	%	12.7	%	17.9	%	20.6	%	18.3	%	13.0	%	16.7	%	17.0	%	12.5	%	12.3	%	18.7	%
	Current Ratio			2.55		3.07		2.84		3.57		3.85		5.47		3.52		3.47		2.85		2.92		2.75
	Long-term Debt to Equity Ratio			0.6	%	0.9	%	0.3	%	0.3	%	0.8	%	—		0.3	%	0.3	%	9.9	%	27.2	%	3.6	%
Cash Flow Data
	Total Cash from Operating Activities		$	250.9		290.5		170.3		176.8		135.4		60.8		67.3		27.6		30.9		33.3		35.0		21.8	%	32.8	%
	Depreciation and Amortization		$	146.2		114.8		80.4		59.0		39.3		30.7		25.3		21.3		20.2		18.1		14.3		26.2	%	36.6	%
	Capital Expenditures		$	375.3		125.1		112.6		139.9		79.4		40.5		24.1		23.0		16.5		24.9		13.7		39.2	%	56.1	%
Year-End Data
	Current Assets		$	2,650.9		1,376.6		1,310.6		905.8		729.8		576.9		291.8		211.4		123.9		121.5		102.5		38.4	%	35.7	%
	Current Liabilities		$	1,041.3		448.5		461.7		254.0		189.4		105.4		82.8		60.9		43.4		41.6		37.3		39.5	%	58.1	%
	Working Capital		$	1,609.6		928.1		848.9		651.8		540.4		471.4		209.0		150.5		80.5		80.0		65.2		37.8	%	27.8	%
	Property and Equipment, Net		$	608.6		341.2		289.5		243.7		145.7		87.4		70.1		65.4		59.1		58.4		45.4		29.6	%	47.4	%
	Total Assets		$	3,970.5		2,057.8		1,796.0		1,324.1		1,020.3		742.4		431.2		351.5		251.9		250.9		181.7		36.1	%	39.8	%
	Long-term Debt		$	16.5		14.0		3.9		3.4		6.9		—		1.1		0.8		17.0		43.6		4.8
	Shareowners' Investment		$	2,912.7		1,595.3		1,330.4		1,066.6		821.7		635.7		345.1		285.8		172.2		160.3		134.0		36.1	%	35.6	%
	Number of Employees			22,452		14,337		10,315		7,683		5,747		3,748		3,137		2,759		2,303		2,428		2,111		26.7	%	43.1	%
Investor Information
	Stock Price—Close		$	21.38		11.92		5.75		8.28		8.55		5.00		2.95		2.28		1.13		0.76		0.51		45.3	%	33.7	%
		—High	$	49.00		13.41		10.91		11.25		8.78		6.17		2.98		2.75		1.19		1.35		0.81
		—Low	$	11.50		5.81		3.94		5.31		3.56		2.47		1.94		1.13		0.64		0.51		0.48
	Price Earnings Ratio at Year-end(1)			42.76		41.10		17.42		27.60		40.71		45.45		29.50		28.50		28.25		19.00		10.20
	Book Value Per Share		$	3.78		2.35		1.99		1.65		1.31		1.06		0.67		0.59		0.39		0.37		0.32
	Registered Shareowners at Year-end			7,001		6,918		5,364		4,442		2,973		2,664		2,172		1,633		1,608		1,621		1,758
	Shares Outstanding at Year-end (Millions)			770.3		678.6		669.2		647.1		629.2		598.0		512.3		485.6		437.3		431.2		425.2
	Average Shares Outstanding—Diluted (Millions)			770.3		683.3		670.0		654.7		641.3		582.4		551.2		492.1		472.7		460.9		429.6

(1)

Before non-recurring charges, non-cash stock compensation expenses and non-recurring, non-operating gains.

37

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Portions of 2000 Annual Report to Shareowners

EX-21.A

Name	State/Country of Organization
ADC Australia Pty Limited	Australia
ADC Mersum Oy	Finland
ADC Telecommunications Oy	Finland
ADC Solitra, Inc.	Minnesota
ADC de Juarez, S. DE R.L. DE C.V.	Mexico
ADC de Delicias, S. DE R.L. DE C.V.	Mexico
ADC Mersum US, Inc.	Minnesota
Skyline Technology, Inc.	California
Fibermux Corporation	California
ADC Broadband Communications, Inc.	Delaware
Pathway, Inc.	Ohio
ADC Telecommunications Israel Ltd.	Israel
G-Connect, Ltd.	Israel
TDC Teledata Communication GmbH	Germany
Teledata Communication Australia Pty. Ltd.	Australia
Teledata Communications Hellas LLC	Greece
Teledata Communications do Brasil Ltd.	Brazil
T.D.C. Holdings B.V.	Netherlands
Teledata Communications (Philippines), Inc.	Philippines
ADC Turkey Ltd.	Turkey
TTT S.A.—Telsul Teledata Communicacoes do Brasil	Brazil
Meta Telecomunicacoes S.A.	Brazil
ADC Telecommunications Holding, Inc.	Minnesota
ADC Telecommunications Sales Holding, Inc.	Minnesota
ADC Telecommunications Sales, Inc.	Minnesota
ADC Metrica, an unlimited company	England/Wales
Metrica, Inc.	Delaware
Metrica Ltd.	United Kingdom
PCS Solutions, LLC	Delaware
PCS Solutions Canada, Inc.	British Columbia
ADC Broadband Wireless Group, Inc.	Pennsylvania
ADC Europe N.V.	Belgium
ADC Telecommunications Netherlands B.V.	Netherlands
ADC Telecommunications U.K. Ltd.	England
ADC Telecommunications GmbH	Germany
ADC Telecommunications (Holdings) Pty. Limited	Australia
ADC Telecommunications Australia Pty. Limited	Australia
ADC Telecommunications Singapore Pte. Limited	Republic of Singapore
ADC Telecommunications (China) Limited	Hong Kong
ADC Telecommunications (Nanjing) Co., Ltd.	China
Nanjing ADC Broadband Communications Co., Ltd.	China
ADC Shanghai Trading & Distribution	China
ADC Telecommunications Equipment Co. Ltd.	China
ADC Telecommunications (Scotland) Limited	Scotland
ADC International, Inc.	Barbados
ADC Telecom Canada Inc.	Quebec
ADC Telecommunicaciones Venezuela, S.A.	Republic of Venezuela
ADC de Mexico S.A. de C.V.	Mexico
ADC Telecomunicacoes do Brasil Ltda	Brazil
ADC International OUS, Inc.	Minnesota
ADC OUS Holdings, LLC	Delaware
Telesphere Solutions, Inc.	Minnesota

Teleprocessing Products, Inc.	California
Princeton Optics, Inc.	New Jersey
ADC PHASOR Electronics (GmbH also will do business as ADC (Austria) GmbH)	Austria
ADC Argentina S.R.L.	Argentina
ADC Irish Holding I, LLC	Minnesota
ADC Irish Holding II, LLC	Minnesota
ADC Irish Holding III, LLC	Minnesota
ADC Irish Holding IV, LLC	Minnesota
ADC Irish Holding V, LLC	Minnesota
ADC Irish Holding VI, LLC	Minnesota
ADC International Holding Company	Minnesota
ADC Software Systems (Ireland) Limited	Ireland
ADC Software Systems Canada, Ltd.	Canada
ADC Software Systems USA, Inc.	Delaware
ADC Software Systems UK Limited	United Kingdom
ADC Software Systems C.I. Ltd.	Jersey, Channel Islands
ADC Software Systems Australia Pty. Ltd.	Australia
ADC Software Holding Ltd.	Ontario, Canada
NVision, Inc.	California
Altitun AB (Publ) (also will do business as ADC Telecommunications MFG Sweden)	Sweden
Altitun Inc.	Delaware
Altitun Ltd.	United Kingdom
Altitun Finans AB	Sweden
ADC Danmark ApS (also known as ADC Denmark ApS)	Denmark
ADC DSL Systems, Inc.	Delaware
ADC ESD, Inc.	Delaware
ADC Global Holdings, Inc.	Minnesota
ADC Broadband Italy SRL	Italy
PairGain Canada Holdings, Inc. (will do business as ADC DSL Systems Canada Holdings, Inc.)	Canada
PairGain Canada, Inc. (will do business as ADC DSL Systems Canada, Inc.	Canada
ADC Telecommunications (Hong Kong) Limited	Hong Kong
Centigram Australia Pty Limited	Australia
Centigram Europe B.V.	Netherlands
Centigram Europe Limited	England and Wales
Centigram Communications (Barbados), Inc.	Barbados
PairGain International Sales Corporation	U.S. Virgin Islands
PairGain do Brasil Ltda.	Brazil
PairGain Technologies AG	Switzerland
PairGain Technologies UK Ltd.	United Kingdom
ADC Italia S.r.l.	Italy
ADC Broadband Access Systems, Inc.	Delaware
BAS International Limited	Delaware
ADC Telecommunications Sales Sweden AB	Sweden
ADC International Finance Services	England
Computer Telecom Installations Limited (will do business as ADC Systems Integration U.K. Limited)	England
ADC Systems Integration France, S.A.S.	France
CTI France SAS	France
Nihon ADC Kabushiki Kaisha	Japan

EX-23.A

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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

    As independent public accountants, we hereby consent to the incorporation of our reports included in this Form 10-K, into the Company's previously filed Registration Statement File Nos. 33-40356, 33-40357, 33-52635, 33-52637, 33-58407, 33-58409, 33-59445, 333-02133, 333-07309, 333-15283, 333-25241, 333-25569, 333-25623, 333-32023, 333-32416, 333-37419, 333-37619, 333-37898, 333-37900, 333-40354, 333-42642, 333-47590, 333-47656, 333-66169, 333-80943, 333-80945, 333-88669, 333-94059 and 333-94977.

/s/ ARTHUR ANDERSEN LLP  
Arthur Andersen LLP

Minneapolis, Minnesota
January 5, 2001

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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

EX-24.A

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POWER OF ATTORNEY

    KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of William J. Cadogan, Robert E. Switz and Jeffrey D. Pflaum, with full power to each to act without the other, his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K of ADC Telecommunications, Inc. (the "Company") for the Company's fiscal year ended October 31, 2000, and any or all amendments to said Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and to file the same with such other authorities as necessary, granting unto each such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof.

    IN WITNESS WHEREOF, this Power of Attorney has been signed on this 29th day of December, 2000, by the following persons.

/s/ JOHN A. BLANCHARD III John A. Blanchard III	/s/ B. KRISTINE JOHNSON B. Kristine Johnson
/s/ JOHN J. BOYLE III John J. Boyle III	/s/ JEAN-PIERRE ROSSO Jean-Pierre Rosso
/s/ WILLIAM J. CADOGAN William J. Cadogan	/s/ JOHN A. WUNSCH John A. Wunsch
/s/ JAMES C. CASTLE James C. Castle	/s/ CHARLES D. YOST Charles D. Yost

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POWER OF ATTORNEY

EX-99.A

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Exhibit 99-a

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

    ADC Telecommunications, Inc. desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and is filing this cautionary statement in connection with the Reform Act. This Form 10-K and our Annual Report to Shareowners, any Form 10-Q or Form 8-K, or any other written or oral statements made by or on our behalf may include forward-looking statements that reflect our current views with respect to future events and financial performance. The words "believe," "expect," "anticipate," "intend," "estimate," "forecast," "project," "could," "may" and other similar expressions identify forward-looking statements.

    We wish to caution you that any forward-looking statements made by or on our behalf are subject to uncertainties and other factors that could cause such statements to be wrong. Some of these uncertainties and other factors are listed under the caption "Risk Factors" below (many of which we have discussed in prior SEC filings). Though we have attempted to list comprehensively these important factors, we wish to caution investors that other factors may prove to be important in the future in affecting our operating results. New factors emerge from time to time, and it is not possible for us to predict all of these factors, nor can we assess the impact each factor or combination of factors may have on our business.

    You are further cautioned not to place undue reliance on those forward-looking statements because they speak only of our views as of the date the statements were made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

RISK FACTORS

Demand for our products may decrease if we are unable to anticipate and adapt to rapidly changing technology.

    The communications equipment industry is characterized by rapid technological change. In our industry, we also face evolving industry standards, changing market conditions and frequent new product and service introductions and enhancements. The introduction of products using new technologies or the adoption of new industry standards can make existing products or products under development obsolete or unmarketable. In order to grow and remain competitive, we will need to adapt to these rapidly changing technologies, to enhance our existing solutions and to introduce new solutions to address our customers' changing demands.

    In addition, new product development often requires long-term forecasting of market trends, development and implementation of new technologies and processes, and a substantial capital commitment. We have invested, and we will continue to invest, substantial resources for the development of new products. We may experience difficulties that could delay or prevent the successful design, development, introduction or marketing of new solutions. In addition, these new solutions and enhancements must meet the requirements of our current and prospective customers and must achieve significant market acceptance. If we fail to anticipate or respond on a cost-effective and timely basis to technological developments, changes in industry standards or customer requirements, or if we have any significant delays in product development or introduction, our business, operating results and financial condition could be materially adversely affected.

The market for communications equipment products and services is rapidly changing.

    In the past, our principal product offerings have been copper-based and fiber-optic-based products designed to connect and transmit information on traditional telephony networks. With the growth of

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multimedia applications and the development of enhanced Internet, data, video and voice services, our recent product offerings and research and development efforts have been and are focused on emerging technologies and network equipment, software and integration service offerings for communications equipment applications. The market for communications network equipment, software and integration services is rapidly changing. Our future growth will be dependent in part on our ability to develop successfully and introduce commercially new products for this market. Our future will also depend on the growth of the communications equipment market. The growth in the market for communications equipment products and services is dependent on a number of factors. These factors include:

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the amount of capital expenditures by network providers;



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regulatory and legal developments;



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changes to capital expenditure rates by network providers due to consolidation among our customers;



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the addition of new customers to the market; and



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end-user demand for integrated Internet, data, video, voice and other network services.

    We cannot predict whether the market for communications equipment products and services will develop rapidly. Also, we cannot predict technological trends or new products in this market. In addition, we cannot predict whether our products and services will meet with market acceptance or be profitable. We may not be able to compete successfully, and competitive pressures may materially and adversely affect our business, operating results and financial condition.

Our industry is highly competitive.

    Competition in the communications equipment industry is intense. We believe that competition may increase substantially with the increased use of broadband networks. We believe our success in competing with other manufacturers of communications equipment products and services will depend primarily on our engineering, manufacturing and marketing skills, the price, quality and reliability of our products, our delivery and service capabilities and our control of operating expenses. We anticipate increasing pricing pressures from current and future competitors. Many of our foreign and domestic competitors have more extensive engineering, manufacturing, marketing, financial and personnel resources than we have. Competition may also be affected by consolidation among communications equipment providers. As a result, other providers may be able to respond more quickly to new or emerging technologies and changes in customer requirements. We cannot predict whether we will be able to compete successfully with our existing and new products and services or with current and future competitors. In addition, we believe that technological change, the increasing addition of Internet, data, video, voice and other services to networks, the possibility of regulatory changes and industry consolidation or new entrants will continue to cause rapid evolution in the competitive environment. The full scope and nature of these changes are difficult to predict at this time. Increased competition could lead to price cuts, reduced gross margins and loss of market share, which may seriously harm our business, operating results and financial condition.

Our operating results fluctuate significantly.

    Our operating results vary significantly from quarter to quarter. These fluctuations are the result of a number of factors, including:

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the volume and timing of orders from and shipments to our customers;



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the timing of and our ability to obtain new customer contracts;



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the timing of new product and service announcements;

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the availability of products and services;



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the overall level of capital expenditures by our customers;



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the market acceptance of new and enhanced versions of our products and services or variations in the mix of products and services we sell;



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the utilization of our production capacity and employees; and



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the availability and cost of key components.

    We are growing through acquisition and expansion, and our recent operating results may not be a good predictor of our results in future periods. Our expense levels are based in part on expectations of future revenues. If revenue levels in a particular period are lower than expected, our operating results will be adversely affected. In addition, our operating results are also subject to seasonal factors. We historically have had stronger demand for our products and services in the fourth fiscal quarter ending October 31, primarily as a result of our year-end incentives and customer budget cycles. We have experienced weaker demand for our products and services in the first fiscal quarter ending January 31, primarily as a result of the number of holidays in late November, December and early January and a general industry slowdown during that period. We cannot predict if these historical seasonal trends will continue in the future.

The regulatory environment in which we operate is changing.

    The communications equipment industry is subject to regulation in the United States and other countries. Our business is dependent upon the continued growth of the telecommunications industry in the United States and internationally. Federal and state regulatory agencies regulate most of our domestic customers. In early 1996, the U.S. Telecommunications Act of 1996 was enacted. The Telecommunications Act lifted certain restrictions on the ability of companies, including the Regional Bell Operating Companies and other customers of ours, to compete with one another. The Telecommunications Act also made other significant changes in the regulation of the telecommunications industry. These changes have increased our opportunities to provide solutions for our customers' Internet, data, video and voice needs. However, competition in our markets could intensify as a result of future changes or new regulations in the United States or internationally, which could adversely affect our business, operating results and financial condition.

We may encounter difficulties obtaining raw materials and supplies needed to make our products.

    Our ability to produce our products is dependent upon the availability of certain raw materials and supplies. The availability of these raw materials and supplies is subject to market forces beyond our control. From time to time there may not be sufficient quantities of raw materials and supplies in the marketplace to meet the customer demand for our products. In addition, the costs to obtain these raw materials and supplies are subject to price fluctuations because of market demand. Many companies utilize the same raw materials and supplies in the production of their products as we use in our products. Companies with more resources than our own may have a competitive advantage in obtaining raw materials and supplies due to greater buying power. Reduced supply and higher prices of raw materials and supplies may adversely affect our business, operating results and financial condition.

Conditions in international markets could affect our operations.

    Our international sales accounted for approximately 22% of our net sales in fiscal 2000, 23% of our net sales in fiscal 1999 and 22% of our net sales in fiscal 1998. We expect international sales to increase as a percentage of net sales in the future. In addition to sales and distribution in numerous countries, we own or subcontract operations located in Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Hungary, Ireland, Israel, Japan, Korea, Malaysia,

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Mexico, the Netherlands, the Philippines, Russia, Singapore, Spain, Sweden, Thailand and the United Kingdom. Due to our international sales and our international manufacturing and software development operations, we are subject to the risks of conducting business internationally. These risks include:

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local economic and market conditions;



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political and economic instability;



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unexpected changes in or impositions of legislative or regulatory requirements;



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fluctuations in the exchange rate of the U.S. dollar;



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tariffs and other barriers and restrictions;



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longer payment cycles;



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difficulties in enforcing intellectual property and contract rights;



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greater difficulty in accounts receivable collection;



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potentially adverse taxes; and



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the burdens of complying with a variety of foreign laws and telecommunications standards.

    We also are subject to general geopolitical risks, such as political and economic instability and changes in diplomatic and trade relationships. We maintain business operations and have sales in many international markets. Economic conditions in many of these markets represent significant risks to us. We cannot predict whether our sales and business operations in these markets will be adversely affected by these conditions. Instability in foreign markets, particularly in Asia and Latin America, could have a negative impact on our business, financial condition and operating results. Potential turmoil in the Middle East may also negatively impact the results of our operations located in Israel. In addition to the effect of international economic instability on foreign sales, domestic sales to U.S. customers having significant foreign operations could be adversely impacted by these economic conditions, which may materially and adversely affect our business, financial condition and operating results in the future.

Our intellectual property rights may not be adequate to protect our business.

    Our future success depends in part upon our proprietary technology. Although we attempt to protect our proprietary technology through patents, copyrights and trade secrets, we cannot predict whether such protection will be adequate, or whether our competitors can develop similar technology independently without violating our proprietary rights.

    As the competition in the communications equipment industry increases and the functionality of the products in this industry further overlap, we believe that companies in the communications equipment industry may become increasingly subject to infringement claims. We have received and may continue to receive notices from third parties, including some of our competitors, claiming that we are infringing third-party patents or other proprietary rights. We cannot predict whether we will prevail in any litigation over third-party claims, or that we will be able to license any valid and infringed patents on commercially reasonable terms. Any of these claims, whether with or without merit, could result in costly litigation, divert our management's time, attention and resources, delay our product shipments or require us to enter into royalty or licensing agreements. A third party may not be willing to enter into a royalty or licensing agreement on acceptable terms, if at all. If a claim of product infringement against us is successful and we fail to obtain a license or develop or license non-infringing technology, our business, financial condition and operating results could be adversely affected.

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We may be unable to identify or complete suitable acquisitions and investments.

    Our growth strategy includes the continued acquisition of, or investment by us in, complementary businesses, products, services or technologies. We cannot assure you that we will be able to identify suitable acquisitions or investment candidates. Even if we identify suitable candidates, we cannot assure you that we will be able to make acquisitions or investments on commercially acceptable terms, if at all. If we acquire a company, we may have difficulty assimilating its businesses, products, services, technologies and personnel into our operations. These difficulties could disrupt our ongoing business, distract our management and workforce, increase our expenses and adversely affect our operating results. In addition, we may incur debt or be required to issue equity securities to pay for future acquisitions or investments. The issuance of any equity securities could be dilutive to our shareowners.

Our stock price is volatile.

    Based on the trading history of our common stock and the nature of the market for publicly traded securities of companies in our industry, we believe that some factors have caused and are likely to continue to cause the market price of our common stock to fluctuate substantially. These factors include:

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announcements of new products and services by us or our competitors;



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quarterly fluctuations in our financial results or the financial results of our competitors or our customers;



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customer contract awards to us or our competitors;



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increased competition with our competitors or among our customers;



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disputes concerning intellectual property rights;



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developments in telecommunications regulations;



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general conditions in the communications equipment industry; and



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general economic conditions.

    In addition, communications equipment company stocks have experienced significant price and volume fluctuations that are often unrelated to the operating performance of such companies. This market volatility may adversely affect the market price of our common stock.

Our investments in other publicly traded companies may be subject to market volatility.

    We maintain an investment portfolio of several publicly held companies. These investments are classified as available-for-sale securities and are recorded on our balance sheet at fair value. The values recorded for these publicly traded securities are subject to market price volatility. Many market factors (including those set forth in the prior risk factor) have caused and are likely to continue to cause the market price of these publicly traded securities to fluctuate substantially. Further, these investments are primarily in communications equipment company stocks. The stocks of communications equipment company stocks have experienced significant price and volume fluctuations that are often unrelated to the operating performance of such companies. As a result, the value of our investments in these publicly traded companies may fluctuate substantially.

We have offered and may continue to offer customer financing arrangements.

    We have worked with customers and third-party financial institutions to finance projects through negotiated financing arrangements. As of October 31, 2000, we had commitments to extend credit of $380.0 million, of which $35.0 million was drawn and outstanding at that time. Many of our competitors engage in similar financing transactions in order to obtain customer orders. To remain competitive, we

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believe that it may be necessary for us to continue to offer financing arrangements in the future. We intend under certain circumstances to sell all or a portion of these commitments and outstanding receivables to third parties. Our ability to collect on these commitments or to reduce our risk of loss by selling these commitments and receivables without recourse is contingent on the perceived financial health of the companies to which we extend credit. This is likely to be affected by many factors, including, among others, general conditions in the communications equipment and services industry, general economic conditions and changes in telecommunications regulations. We may experience credit losses that could adversely affect our business, financial condition and operating results.

We are dependent upon key personnel.

    Like all high-technology companies, our success is dependent on the efforts and abilities of our senior management and other qualified employees. Our ability to attract, retain and motivate skilled employees and other senior management personnel is critical to our continued growth. The competition for qualified employees, and particularly engineers, programmers and systems analysts, has been and likely will continue to be intense. In addition, because we may acquire one or more businesses in the future, our success will depend, in part, upon our ability to retain and integrate our own operations personnel with personnel from acquired entities who are necessary to the continued success or the successful integration of the acquired businesses.

We do not pay cash dividends on our common stock.

    We currently do not pay any cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future. We intend to retain future earnings, if any, to finance the expansion of our operations and for general corporate purposes.

Anti-takeover provisions in our charter documents, our shareowner rights plan and Minnesota law could prevent or delay a change in control of our company.

    Provisions of our articles of incorporation and bylaws, our shareowner rights plan (also known as a "poison pill") and Minnesota law may discourage, delay or prevent a merger or acquisition that a shareowner may consider favorable and may limit the market price for our common stock. These provisions include the following:

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advanced notice requirements for shareowner proposals and nominations;



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authorization for our Board of Directors to issue preferred stock without shareowner approval;



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authorization for our Board of Directors to issue common stock purchase rights upon the acquisition of 15% or more of our outstanding shares of common stock; and



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the limitation of business combinations with interested shareowners.

Some of these provisions may discourage a future acquisition of our company even though shareowners would receive an attractive value for their shares or a significant number of our shareowners believed such a proposed transaction would be in their best interest.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
RISK FACTORS

EX-99.B

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Report of Independent Public Accountants

To ADC Telecommunications, Inc.:

    We have audited in accordance with auditing standards generally accepted in the United States, the consolidated financial statements of ADC Telecommunications, Inc. and Subsidiaries included in this Form 10-K and have issued our report thereon dated November 22, 2000. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. Schedule II is the responsibility of the company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP

Minneapolis, Minnesota,
November 22, 2000

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ADC Telecommunications Inc. and Subsidiaries

Schedule II—Valuation and Qualifying Accounts

	Balance at Beginning of Year	Charged to Costs and Expenses	Deductions	Balance at End of Year
Year 2000
Reserves related to business restructuring, including force and facility consolidation	9.0	13.3	7.9	14.4
Year 1999
Reserves related to business restructuring, including force and facility consolidation	—	39.0	30.0	9.0
Year 1998
Reserves related to business restructuring, including force and facility consolidation	—	—	—	—

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ADC Telecommunications Inc. and Subsidiaries Schedule II—Valuation and Qualifying Accounts