10-K

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)

ý	Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended October 31, 2002.
OR
o	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	41-0743912
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
13625 Technology Drive Eden Prairie, Minnesota	55344-2252
(Address of principal executive offices)	(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 ý    No o

        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. o

        The aggregate market value of voting stock held by non-affiliates of the registrant based on the last sale price of such stock as reported by the NASDAQ Stock Market on April 30, 2002 (the last business day of the registrant's most recently completed second fiscal quarter) was approximately $3,089,000,000.

        The number of shares outstanding of the registrant's common stock, $0.20 par value, as of January 6, 2003, was 801,720,168.

DOCUMENTS INCORPORATED BY REFERENCE

        A portion of the information required by Part III of this Form 10-K is incorporated by reference from portions of our definitive proxy statement for our 2003 Annual Meeting of Shareowners to be filed with the Securities and Exchange Commission on or before January 31, 2003.

        As used in this report, fiscal 2000, fiscal 2001, fiscal 2002 and fiscal 2003 refer to our fiscal years ended or ending October 31, 2000, 2001, 2002 and 2003, respectively.

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 13625 Technology Drive in Eden Prairie, Minnesota.

        We are a leading global supplier of broadband network equipment, software and systems integration services that enable communications service providers to deliver high-speed Internet, data, video and voice services to consumers and businesses worldwide. 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. Our product offerings and development efforts are focused on increasing the speed and efficiency of the last mile/kilometer portion of broadband communications networks, and our product and service offerings help connect communications service providers' offices to businesses and end users' homes as well as to wireless communications devices.

        Our customers include local and long-distance telephone companies, cable television operators, wireless service providers, new competitive service providers, broadcasters, governments, businesses, system integrators and communications equipment manufacturers and distributors. We offer broadband connectivity components and systems, broadband access and network equipment, software and systems integration services to our customers through the following two segments of product and service offerings:

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Broadband Infrastructure and Access; and



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Integrated Solutions.

Broadband Infrastructure and Access focuses on Internet Protocol (IP)-based offerings for the cable industry, Digital Subscriber Line (DSL) offerings for the telecommunications industry, and broadband connectivity products for wireline, cable and wireless communications network applications. These products consist of:

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connectivity systems and components that provide the infrastructure to wireline, cable and wireless service providers to connect Internet, data, video and voice services to the network over copper, coaxial and fiber-optic cables, and



•

access systems used by wireline, cable and wireless service providers to deliver high-speed Internet, data and voice services to consumers and businesses in the last mile/kilometer of communications networks.

Integrated Solutions focuses on operations support system (OSS) software and system integration services for broadband, multiservice communications over wireline and wireless networks. Systems integration services are used to design, equip and build communications networks that deliver Internet, data, video and voice services to consumers and businesses. OSS software includes communications billing, customer management, network performance and service-level assurance software used by service providers to operate communications networks.

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Industry Background

        We believe that broadband, multiservice communications networks help to meet the information needs of businesses and consumers around the world. The rapid growth of the Internet has driven the need for broadband network infrastructure. We believe 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, interactive entertainment and gaming, distance learning, telemedicine and high-speed imaging will drive even more people to use broadband communications services. We believe that the global deregulation of communications markets has the potential to transform 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, more cost-effective and integrated Internet, data, video and voice services over a single high-speed network connection while sending only one bill for all of the services the customer uses. Due to deregulation, communications service providers have the ability to compete for customers by offering bundles of different communications services over cost-effective networks. As a result of competition among communications service providers to obtain and retain customers with bundled services, we believe there is a large potential global market for broadband access and network equipment, software and systems integration services to build and upgrade broadband, multiservice networks.

Strategy

        Our strategy is to capitalize on selected 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 address 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 OSS software to operate communications networks. 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.

        As explained in more detail in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K, we restructured our business in fiscal 2001 and 2002 in response to a significant decline in capital spending by our customers. Through this restructuring, we also sought to better position ourselves for profitable growth in the market segments where we believe we have a sustainable competitive advantage. The six areas of our strategic focus are: broadband connectivity products; IP cable equipment; DSL equipment; OSS software; systems integration services; and products to extend the coverage of existing wireless networks. The most significant strategic change we made in 2002 was our decision to withdraw from the optical components business, an area that was the subject of significant oversupply and intense competition.

        In our restructured company, key components of our long-term strategy include:

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gaining market share in our areas of strategic focus;



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increasing our global market penetration;

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•

leveraging our technological capabilities across our various product groups; and



•

lowering our cost structure to compete more effectively.

        Gaining Market Share.    In the current environment of reduced capital spending by communication service providers, we believe that we must gain market share in order to grow our business. We intend to increase our market share by offering a compelling value proposition through a combination of product functionality, quality, price-competitiveness and world-class customer service, with particular emphasis on helping our customers lower their overall cost of providing communication services to end user customers.

        Increase Our Global Market Penetration.    We believe that significant opportunities for communications equipment vendors exist outside the United States as a result of global deregulation, substantial expansion or enhancement of communications services by non-U.S. providers, and the global expansion of multinational communications service providers. Our strategy is to grow our international business by aggressively pursuing and focusing our resources on high potential opportunities, leveraging our existing customer relationships, developing additional international distribution channels and seeking strategic alliances. Where appropriate, we have established our presence in international markets with manufacturing facilities, sales and technical support offices and systems integration capabilities to serve our customers outside the United States.

        Leverage Our Technological Capabilities Across Our Various Product Groups.    We have developed substantial expertise in copper (twisted pair), coaxial and fiber-optic connectivity, wireless, IP cable data/telephony and DSL 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 effectively across all of our product and service offerings in order to provide our customers new products with enhanced features, functions, cost effectiveness and network management tools for their evolving Internet, data, video and voice service offerings. This strategy also allows us to offer our customers custom-tailored solutions that enable them to scale network offerings, more fully automate operations and accelerate service and revenue growth.

        Lowering Our Cost Structure.    We intend to continue our efforts to lower our overall cost structure to become or remain a low-cost industry leader in selected product areas, while also maintaining our reputation for high-quality products and services and world-class customer service.

        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. We cannot assure you that our efforts will be successful.

Product and Service Offering Groups

        Our connectivity solutions, network equipment, software and systems integration services are divided into two principal segments:

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Broadband Infrastructure and Access; and



•

Integrated Solutions.

        Our Broadband Infrastructure and Access business focuses on IP-based offerings for the cable industry, DSL offerings for the telecommunications industry, and broadband connectivity products for a variety of communications network applications. Broadband Infrastructure and Access products accounted for approximately 68%, 75% and 84% of our net sales in fiscal 2002, 2001 and 2000, respectively. Our Integrated Solutions business focuses on OSS software and systems integration services. Integrated Solutions products and services accounted for approximately 32%, 25% and 16% of

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our net sales in fiscal 2002, 2001 and 2000, respectively. The primary products and services offered by each of these segments are described below.

Broadband Infrastructure and Access

        Our Broadband Infrastructure and Access products for public network providers are located primarily in service provider serving offices and networks, including telephone company central offices and networks, cable television company headend offices and networks, and wireless company global switching centers, networks and tower sites. 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 end-users' premises. Our enterprise private and governmental network customers generally purchase our products for installation in the networks located on their premises. Broadband Infrastructure and Access products consist of the following general product groupings:

Broadband Connectivity Systems and Components

        Our broadband connectivity devices are used in copper (twisted pair), coaxial, fiber-optic, wireless and broadcast communication networks. These products provide the physical interconnections between network components or access points into networks. Principally, these products include:

        DSX Products.    We manufacture digital signal cross-connect (DSX) modules, panels and bays, which are designed to terminate and cross-connect copper channels and gain access to digital channels for Internet, data, video and voice transmission. Within our DSX product group, we offer solutions to meet global market needs for both twisted-pair and coaxial cable solutions.

        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.

        RF Signal Management Products.    Our series of Radio Frequency (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 RF Worx® system provides cable television network design engineers with the full breadth of RF signal management tools that are essential in an evolving cable television headend environment.

        Power Distribution and Protection Panels.    Our PowerWorx® family of circuit breaker and fuse panels are designed to power and protect network equipment in multi-service broadband networks.

        ADSL Splitter Products.    We manufacture Asymmetric Digital Subscriber Line (ADSL) products and telephone system splitter platforms designed to separate the low frequency telephone system signal and high frequency data signal that are carried on a single copper pair. This function is critical for carriers offering both data and voice services. Our Broadwire™ family of splitter products offer a diverse set of platforms meeting all global specifications.

        Structured Cabling Connectivity.    Our line of patch panels, patch cords, connectors, media converters and cable management products provide telecom service providers and enterprise customers with Ethernet infrastructure solutions for converging Internet, data, video and voice networks.

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

        Fiber-Optic Patch Cords.    Fiber-optic patch cords are the basic components used to gain access to fiber communications channels 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 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 channels 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 channels for testing or patching the channels. When testing a large number of channels, 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 channels and permits local or remote switching to alternate channels 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 channels.

Wireless Systems and Components

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

        Wireless Infrastructure Equipment and Subsystems.    We develop, manufacture and market SMARTop® and ClearGain® families of tower-top amplifier products, which are distributed globally for all major air interfaces. These products are sold primarily to wireless original equipment manufacturers (OEMs) and to carriers.

        Coverage Products.    Our Digivance™ family of wireless systems products include solutions that address coverage and capacity challenges for wireless operators. Our solutions address a range of applications, from base station hotels that serve significant segments of a metropolitan area to products that provide complete coverage for a single building or campus. The Digivance™ family is the next-generation replacement of our existing CityCell® product offering.

Access Systems

        Our access 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

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HiGain® products integrate functions and capabilities that help reduce the capital and operating costs of delivering T1/E1-based services.

        PG-Flex®.    The PG-Flex® is a micro digital loop carrier that is used by telecommunications service providers to increase the carrying capacity of common voice-grade copper wire in the last mile/kilometer of communications networks. This system is capable of conveying both regular voice service and ADSL.

        Homeworx™ Telephony System.    The Homeworx™ system has been designed for deployment on Hybrid Fiber Coax (HFC) cable television operator networks. The Homeworx™ system includes headend and customer premises equipment to deliver voice and data service to residential or small business subscribers.

        Cuda™ 12000 Product.    The Cuda™ 12000 is a next-generation IP Access Switch based on a high-performance, carrier class edge IP Router. 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 modem services. The Cuda™ 12000 is designed to support a high penetration of next generation IP-based cable services, including IP Cable Telephony, gaming, video streaming, video telephony and commercial services that leverage the platform's high reliability, low latency and enhanced quality of service attributes. The Cuda™ 12000 will also serve as the base platform for other IP-based broadband access systems that we offer, including a voice-over Internet Protocol (VoIP) media gateway for converting between IP and circuit-switched voice traffic.

        BroadAccess™ Platform.    Our 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 asynchronous transfer mode (ATM) networks.

Integrated Solutions

        Integrated Solutions products and services consist of systems integration services and OSS software for broadband, multiservice communications over wireline and wireless networks. Systems integration services are used to design, equip and build communications networks that deliver Internet, data, video and voice services to consumers and businesses. OSS software includes communications billing, customer management, network performance and service-level assurance software used by service providers to operate communications networks.

Systems Integration Services

        Our systems integration services are offered in North America and Europe and provide integration solutions for customers that deliver voice, video and data services over wireless and wireline networks. Our systems integration services support both the multi-vendor and multi-service delivery requirements of our customers. These services support customers throughout the technology life-cycle, from network design, build-out, turn-up and testing to ongoing maintenance and training, and are utilized by our customers in creating and maintaining intra-office, inter-office, or coast-to-coast networks.

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OSS Solutions

        We provide a broad range of OSS software and 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 real time billing, customer management and enhanced Web solutions for local, Internet, data, long-distance, wireless, cable and content 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 our Singularit.e suite, we introduced Singl.eView, which includes real-time convergent billing, integrated customer management and Web products. Singl.eView is a modular product that 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, a complete service bureau billing and customer care service. In addition, we recently introduced our SingleView Commerce Engine™, a patent-pending OSS technology that will assist service providers in managing advanced services and complex revenue-share models for 3G wireless and other next-generation networks in real-time. This technology addresses the convergence of mobile and broadband service by allowing service providers to manage complex relationships seamlessly with content providers, supporting varied payment choices and financial transaction options for subscribers. The SingleView Commerce Engine™ provides the instrument for service providers to develop business models that capitalize on next-generation networks and lifestyle-driven services by providing a three-dimensional view of operations through a single platform from a financial, subscriber and product perspective. We believe that the Singl.eView Commerce Engine™ also has applications outside of our traditional communication service provider market focus, particularly with media and content companies who have a need for transaction-based billing systems.

        Network and Service Management Software.    We develop and market network performance management, service quality management and service level agreement software as part of the Singularit.e suite under the Metrica® brand name. These products are designed to enable communications service providers to monitor and to assure quality of service to their customers.

Product Review and Development

        As part of our ongoing business, we continually review individual product lines with attention to overlap and profitability. We intend to add or eliminate product lines as appropriate to optimize our financial performance. Elimination of one or more product lines could result in charges associated with the disposition of manufacturing assets and facilities and possible workforce reductions.

Sales and Marketing

        We sell our products to customers in three primary markets:

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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;



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



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the public and private network markets outside of the United States.

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        We also sell products for each of these customer groups to OEMs of communications equipment. The majority of our sales are made to telecommunications service providers, and one customer, Verizon Communications, Inc., accounted for 10.6% of our sales in fiscal 2002. Financial information concerning sales of our products by segment and geographic area is contained in Note 15 to the Consolidated Financial Statements in Item 8 of this Form 10-K. Due to the generally short lead times between receipt of a customer order and the time we ship the product, our committed backlog of orders is not a material portion of our annual revenues, and thus is not a meaningful indicator of future revenues.

        We 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 Africa, Asia, Australia, Canada, Europe, Latin America, the Middle East and the Pacific. Our non-U.S. net sales accounted for approximately 27%, 29% and 22% of our net sales in fiscal 2002, 2001 and 2000, respectively, and are not concentrated in any one country.

        A substantial portion of our sales are made by a direct sales force. We maintain sales offices throughout the United States and in Asia, Australia, Canada, Europe, Latin America, the Middle East and the Pacific. In the United States, our products are sold directly by our sales personnel as well as through value-added resellers and distributors. Outside the United States, our products are sold directly by our field sales personnel and by independent sales representatives and distributors, as well as through other public and private network providers that 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 in applications-based research and development. As part of our long-term strategy, 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. Our expenses relating to internal research and development activities were $176.4 million, $278.6 million and $338.0 million in fiscal 2002, 2001 and 2000, respectively.

        In recent years, increasingly significant portions of new communications equipment purchased by public network providers and private network customers have employed optical transmission, digital, semiconductor, wireless and broadband copper-based technologies. In the future, we believe that these purchasing trends will include IP technology and increasingly sophisticated, software-intensive OSS and network management systems. As a result, our internal and external product development activities are primarily directed at the following areas:

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the continued development of our IP-based products, such as Cuda™ 12000 systems for Internet, data, video and voice services;



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the development of network OSS software (including billing, customer management, network performance and service assurance software);



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the continued development of our DSL systems for integrated Internet, data, video and voice applications over the existing copper-based telecommunications infrastructure; and

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the incorporation of ATM and IP technologies into other Internet, data, video and voice products for public 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, particularly in light of reduced spending levels by our customers. Many of our competitors have more extensive engineering, manufacturing, marketing, financial and personnel resources than we have. In addition, rapid technological developments within the communications industry have resulted in frequent changes among our group of competitors. Currently, our primary competitors include:

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For Broadband Infrastructure and Access products: ADTRAN, Allen Telecom, Arris Group, Avaya, Cisco Systems, Corning, ECI Telecom, Lucent Technologies, Motorola and Telect.



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For Integrated Solutions products and services: Alcoa Fujikura, Amdocs, Bechtel, Convergys, Greenwoods, Lucent Technologies, Portal Software, SPIE and TTI.

        We believe that our success in competing with other communications product manufacturers depends primarily on the following factors:

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our engineering, manufacturing, sales and marketing skills;



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the price, quality and reliability of our products; and



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our delivery and service capabilities.

        Although the market for our products historically has not been characterized by significant price competition, we have experienced increasing pricing pressures from competitors in some of the markets for our products, particularly in DSL products and systems integration services, as well as general pricing pressure from our customers as part of their cost reduction efforts.

        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. So long as capital is accessible or our competitors are able to maintain adequate capital resources, we believe that the rapid technological changes that characterize the communications equipment industry will continue to make the markets in which we compete attractive to new entrants or delay the exit of weak competitors, respectively. 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. Competitive pressures may 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 in the United States. In an effort to reduce costs and improve customer service, we also utilize production facilities outside the United States in addition to sourcing key components and raw materials 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

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boards and electronic components. The manufacturing process for our connectivity products is completely vertically integrated and 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. We also utilize several outsource manufacturing companies to manufacture, assemble and test certain of our products, principally within our IP cable, DSL and wireless product lines. We estimate that products obtained from outsourced manufacturers accounted for approximately 33% of our total revenues in fiscal 2002.

        We purchase raw materials and component parts from many 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 guarantee that sufficient quantities or quality of raw materials and component parts will be as readily available in the future or, if available, that we will be able to obtain them at favorable prices.

Proprietary Rights

        We own a portfolio of U.S. and foreign patents relating to our products. These patents, in the aggregate, constitute a valuable asset. We do not believe, however, that our business is 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, 2002, we employed approximately 7,600 people. During the restructuring of our business in fiscal 2002, we reduced our number of employees by approximately 4,400 through involuntary workforce reductions, unreplaced attrition and as a result of our divestitures. We consider relations with our employees to be good.

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Executive Officers of the Registrant

        Our executive officers are:

Name	Office	Officer Since	Age
Richard R. Roscitt	Chairman of the Board, President and Chief Executive Officer	2001	51
Robert E. Switz	Executive Vice President and Chief Financial Officer	1994	55
Jay T. Hilbert	Senior Vice President, Global Sales, Marketing and Customer Service	2002	43
Michael K. Pratt	Vice President, President, Wireline Business Unit	2002	48
Hilton M. Nicholson	Vice President, President, IP Cable Business Unit	2002	44
Patrick D. O'Brien	Vice President, President, Connectivity Business Unit	2002	39
Jo Anne M. Anderson	Vice President, President, Systems Integration Business Unit	2001	45
Lawrence S. Barker	Vice President, President, Software Systems Business Unit	1999	50
Jeffrey A. Quiram	Vice President, President, Wireless Business Unit	2001	42
William F. O'Brien	Vice President, Chief Marketing Officer	2001	54
Jeffrey D. Pflaum	Vice President, Chief Legal Officer and Secretary	1999	43
Laura N. Owen	Vice President, Human Resources	1999	46
Gokul V. Hemmady	Vice President, Controller and Treasurer	1997	42
Mary E. Quay	Vice President, Worldwide Operations	2002	51

        Mr. Roscitt has been Chief Executive Officer and Chairman of the Board of ADC since February 2001. He assumed the additional title of President in November 2001. Prior to joining ADC, Mr. Roscitt was a 28-year veteran of AT&T, serving most recently as the President of AT&T Business Services, the operating group within AT&T that serves business customers globally, from December 1999 to February 2001. Mr. Roscitt also served as President and Chief Executive Officer of AT&T Solutions, the integrated services, e-business and outsourcing unit of AT&T, from August 1998 to December 1999, and Vice President, General Manager of AT&T Solutions from February 1995 to August 1998.

        Mr. Switz joined ADC in January 1994. From 1988 to 1994, Mr. Switz 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. Hilbert joined ADC in October 2002, as Senior Vice President of Global Sales, Marketing and Customer Service. Prior to that, Mr. Hilbert was with Alcatel USA, a diversified communications equipment company, since 1985, most recently as Group Vice President of Sales and Marketing.

        Mr. Pratt joined ADC in June 2002, as President of ADC's Wireline Business Unit. Prior to joining ADC, Mr. Pratt served in a variety of positions, including Vice President and General Manager of the Access Systems Division of RELTEC Corporation, from 1996 to 1999. In March 1999, RELTEC Corporation was acquired by Marconi, Inc., a subsidiary of Marconi plc, a global telecommunications

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equipment and solutions company. Mr. Pratt continued to serve as the Vice President and General Manager of this business following this acquisition, until he was promoted to Executive Vice President of Marconi, Inc. in July 2000, a position he held until joining ADC.

        Mr. Nicholson joined ADC in July 2002, as President of ADC's IP Cable Business Unit. Prior to that, Mr. Nicholson served in a variety of positions with Lucent Technologies, Inc., a provider of communications networks for the global communications services market, from 1996 to 2002, including most recently as the Vice President and General Manager of Lucent's Core Switching and Routing Division.

        Mr. Patrick O'Brien joined ADC in 1993 and was named President of ADC's Connectivity Business Unit in December 2002. Prior to joining ADC, Mr. O'Brien was employed by Contel Telephone for six years in a network planning capacity.

        Ms. Anderson joined ADC in 1983 and was named President of ADC's Systems Integration Business Unit in November 2000. Prior to that Ms. Anderson served as Vice President of ADC's Systems Integration Business from May 1998 to November 2000, after having served as ADC's Vice President, Global Customer Service.

        Mr. Barker joined ADC in October 1999 following our acquisition of Saville Systems Ltd. Prior to being named President of ADC's Software Systems Business Unit in November 2001, Mr. Barker served as General Manager of ADC's Software Systems Division from October 1999 to November 2001. Prior to joining ADC, Mr. Barker served as President of Saville Systems, Ltd. from June 1999 to October 1999, President of Stanford Associates, Inc., a telecommunications consulting firm, from July 1996 to October 1997, and President and CEO of the Intelicom Division of Computer Sciences Corporation, Inc., a software provider to the telecommunications market, from April 1994 to July 1996.

        Mr. Quiram joined ADC in September 1991. Prior to being named the President of ADC's Wireless Business Unit in December 2002, Mr. Quiram served as President of ADC's Connectivity Business Unit from October 2001 to December 2002, President of ADC's Broadband Infrastructure Division from April 2001 to October 2001 and Vice President and General Manager of the Wireless Division of ADC's Broadband Connectivity Group from May 1999 to April 2001. Prior to joining ADC, Mr. Quiram worked for eight years at U S WEST, a communications service provider.

        Mr. William O'Brien joined ADC as Vice President and Chief Marketing Officer in May 2001. From January 2000 to May 2001, Mr. O'Brien served as Marketing & Sales Support—Vice President of AT&T Business Services, the operating group within AT&T that serves business customers globally. Prior to that Mr. O'Brien served as Marketing—Vice President of AT&T Solutions, the integrated services, e-business and outsourcing unit of AT&T, from January 1997 to January 2000.

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

        Ms. Owen joined ADC as Vice President, Human Resources in December 1997. Prior to joining ADC, Ms. Owen was employed by Texas Instruments and Raytheon (which purchased the Defense Systems and Electronics Group of Texas Instruments in 1997), 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.

        Mr. Hemmady joined ADC in October 1997. Mr. Hemmady has served as ADC's Vice President and Treasurer since October 1997, and in May 2002, he assumed the additional duties of Controller. Prior to joining ADC, Mr. Hemmady was employed by U S WEST International, a communications

13

service provider, where he served as Director of International Finance from January 1996 to September 1997.

        Ms. Quay joined ADC in 1977 and has served in a variety of positions over her 25-year career at ADC. During the last five years, Ms. Quay served as Vice President of Manufacturing/Operations, and during 2002, Ms. Quay was named as Vice President, Worldwide Operations.

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 Item 7 of 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 any statements regarding:

•

future sales, profit percentages, income tax refunds, realization of deferred tax assets, earnings per share or other results of operations;



•

the continuation of historical trends;



•

the sufficiency of our cash balances and cash generated from operating and financing activities for our future liquidity and capital resource needs;



•

the effect of legal and regulatory developments; and



•

the economy in general or the future of the communications equipment and communications services industries 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:

•

overall demand for our products and services;



•

the demand for particular products or services within the overall mix of products sold, as our products and services have varying profit margins;



•

changing market conditions and growth rates within our industry or generally within the economy;



•

changes in our customer base due to possible consolidation among our customers;



•

volatility in the stock market, which may affect the value of our stock or the stock we own in other publicly held companies in the communications industry;



•

increased competition and new competing technologies;



•

increased costs associated with protecting our intellectual property rights or responding to the intellectual property rights of others;



•

availability of materials to make products and reliance on contract manufacturers to make many of our products;



•

the impact of customer financing activities;



•

our ability to integrate the operations of acquired companies with our historic operations successfully;



•

our ability to complete our restructuring initiative and streamline our operations successfully;

14

•

our ability to retain key employees;



•

fluctuations in our operating results;



•

pressures on the pricing of the products and services we offer; and



•

other risks and uncertainties, including those identified in Exhibit 99-a to this Form 10-K.

        We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 2. PROPERTIES

        Our corporate headquarters are located in Eden Prairie, Minnesota. We lease our corporate headquarters facility pursuant to an operating lease agreement with a term expiring in 2006. Our corporate headquarters comprise approximately 500,000 square feet.

        In addition to our world headquarters facility, our principal facilities as of October 31, 2002 consisted of the following:

•

Shakopee, Minnesota—approximately 360,000 sq. ft. owned facility; general purpose facility used for engineering, manufacturing, and general support of our connectivity products;



•

Tustin, California—two facilities totaling approximately 142,000 sq. feet, one owned and one leased; general purpose facilities used for engineering, manufacturing, assembly and testing, and general support of our DSL products;



•

Westborough, Massachusetts—approximately 64,000 sq. ft. leased facility; general purpose facility used for engineering, assembly and testing, and general support of our IP cable products;



•

Juarez and Delicias, Mexico—approximately 228,000 and 139,000 sq. feet, respectively, owned facilities; manufacturing facilities used for our connectivity products;



•

Glenrothes, Scotland—approximately 350,000 sq. ft. owned facility; manufacturing facility used for our connectivity products. During the fourth quarter of fiscal 2002, we decided to dispose of this facility. See Note 11 to the Consolidated Financial Statements in Item 8 of this Form 10-K for further discussion; and



•

Herzlia, Israel—approximately 120,000 sq. ft. leased facility; general purpose facility used for engineering, manufacturing, assembly and testing, and general support of our DSL products.

        We also own or lease approximately 74 other facilities in the following locations: Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, Hungary, India, Ireland, Italy, Japan, Malaysia, Mexico, Puerto Rico, Russia, Singapore, South Africa, South Korea, Spain, the United Arab Emirates, the United Kingdom, the United States and Venezuela.

        We believe that the facilities used in our operations are suitable for their respective uses and adequate to meet our current needs. During fiscal 2002 we took steps to reduce and consolidate our facilities in response to the downturn in the communications equipment industry. At the end of fiscal 2001, we had active space and irrevocable commitments to activate space totaling approximately 4.8 million square feet. Through the sale or subleasing of facilities, the placement of sites on inactive status or the disposition of facilities through the divestiture of product lines, we presently maintain approximately 3.0 million square feet of active space.

Item 3. LEGAL PROCEEDINGS

        We are a party in various suits, claims, proceedings and investigations arising in the ordinary course of business. The amount of monetary liability, if any, resulting from an adverse result in any of

15

such lawsuits, proceedings and claims in which we are a defendant cannot be determined at this time. However, in the opinion of management, the aggregate amount of liability under these lawsuits, proceedings and claims will not have a material adverse effect on our consolidated results of operations or financial condition.

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

        None.

16

PART II

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

        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 our fiscal years ended October 31, 2002 and 2001, as reported on that market.

	2002				2001
	High		Low		High		Low
First Quarter	$	5.97	$	3.52	$	27.06	$	13.94
Second Quarter		4.90		3.26		14.94		6.22
Third Quarter		4.09		1.66		10.85		4.41
Fourth Quarter		1.83		1.02		5.20		2.63

As of January 6, 2002, there were approximately 8,431 registered holders of record of our common stock. We do not pay cash dividends on our common stock and do not intend to pay cash dividends for the foreseeable future.

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Item 6. SELECTED CONSOLIDATED FINANCIAL DATA

        The following summary information should be read in conjunction with the Consolidated Financial Statements and related notes thereto set forth in Item 8 of this Form 10-K.

FIVE-YEAR FINANCIAL SUMMARY
Years ended October 31
(dollars in millions, except per share data)

		2002			2001			2000		1999		1998
Income statement data
Net sales		$	1,047.7		$	2,402.8		$	3,287.9	$	2,151.8	$	1,830.5
International sales			283.6			692.2			708.1		499.3		392.1
Gross profit			246.5			725.0			1,608.9		1,003.4		884.5
Research and development expense			176.4			278.6			338.0		250.7		199.8
Selling and administration expense			370.0			705.3			665.6		445.3		351.9
Goodwill amortization			—			56.6			34.3		22.2		12.5
Operating income (loss)			(878.2	)		(1,031.3	)		365.9		135.0		311.1
Income (loss) before income taxes			(882.2	)		(1,920.7	)		1,460.4		134.9		322.3
Provision (benefit) for income taxes			262.8			(633.0	)		592.3		57.0		112.4
Net income (loss)			(1,145.0	)		(1,287.7	)		868.1		77.9		209.9
Earnings (loss) per diluted share			(1.44	)		(1.64	)		1.13		0.11		0.31
Non-cash stock compensation expense			10.4			18.7			47.1		1.2		—
Impairment and non-recurring charges
	Impairment charges		348.3			501.7			—		—		—
	Non-recurring charges		219.6			195.4			158.0		149.0		9.2
	Other restructuring-related charges(1)		13.2			80.8			—		—		—
Gain (loss) on sale or shutdown of product lines			(6.7	)		(81.9	)		328.6		—		—
Gain (loss) on investments, net
	Write-down or conversion of investments		(50.9	)		(862.5	)		722.6		—		—
	Sale of investments, net		67.8			76.8			23.8		—		—
Deferred tax valuation charge			640.2			9.4			—		—		—
Cash flow data
Total cash provided by operating activities			60.5			95.0			250.9		290.5		170.3
Depreciation and amortization			104.7			197.8			146.2		114.8		80.4
Capital expenditures, net			25.6			241.2			375.3		125.1		112.6
Balance sheet data
Current assets			686.3			1,305.2			2,650.9		1,376.6		1,310.6
Current liabilities			397.8			599.4			1,041.3		448.5		461.7
Property and equipment, net			206.8			614.0			608.6		341.2		289.5
Total assets			1,144.2			2,499.7			3,970.5		2,057.8		1,796.0
Long-term notes payable			10.8			3.0			16.5		14.0		3.9
Shareowners' investment			732.2			1,893.4			2,912.7		1,595.3		1,330.4

(1)

These charges are included in cost of sales and selling and administration expense in our consolidated statements of operations. See Note 11 to the Consolidated Financial Statements in Item 8 of this Form 10-K.

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

Marketplace Conditions

        Our operating results during fiscal 2002 and 2001 were affected adversely by the downturn in general economic conditions, and a particularly strong downturn in the communications equipment industry. In this economic environment, many of our customers have deferred capital spending, reduced their equipment purchases and announced plans to further reduce capital expenditures in fiscal 2003. A majority of our revenues continue to be derived from telecommunication service providers. These customers in particular have greatly reduced their spending on communications equipment, resulting in significant reductions in our revenues. Moreover, some of our customers have experienced serious financial difficulties, which in some cases resulted in bankruptcy filings or cessation of operations.

        When the downturn in communications equipment spending first became evident in fiscal 2001, we implemented a restructuring plan to reduce operating expenses and capital spending and to narrow the focus of our business. As it became evident in fiscal 2002 that our industry was experiencing an even more pronounced and prolonged economic downturn, we took additional measures to realize further cost savings and focus on the following six strategic areas: broadband connectivity products; IP cable equipment; DSL equipment; OSS software; systems integration services; and wireless network coverage products. Our actions to date have included:

•

the sale or closure of non-strategic product lines. In fiscal 2002, we sold our broadcast TV video routing and a portion of our optical components product lines. We also closed down our Avidia Multiplexer and optical laser product lines and halted further development of the U.S. version of our iAN product line. In fiscal 2001, we sold our cable/broadcast TV transmission, broadband wireless transmission, enterprise access products, wireless components, and enhanced services software product lines. We also sold a portion of our optical components product line and closed down our Cellworx transport product line.



•

significant reductions in discretionary spending.



•

the disposition of surplus equipment.



•

consolidation of facilities.



•

substantial reductions in our workforce.

        Despite these restructuring actions, we may be unable to meet expected revenue levels in any particular quarter, in which case our operating results could be materially adversely affected if we are unable to further reduce our expenses in time to counteract such a decline in revenues.

        Our ability to grow our business is dependent on our ability to effectively compete with our current products and services, our ability to develop and introduce new products, and on the growth of the communications equipment and services market. The communications equipment industry is highly competitive, and we cannot guarantee that our new or enhanced products and services will meet with market acceptance or be profitable. Growth in the market for broadband communications products and services depends on a number of factors, including the availability of capital to communications service providers, the amount of capital expenditures by communications service providers, new regulatory and legal requirements and end-user demands for Internet, data, video, voice and other communications services.

        Our results of operations have historically been subject to seasonal factors, with stronger demand for our products during our fourth fiscal quarter ending October 31 (primarily as a result of customer budget cycles and our fiscal year-end incentives) and weaker demand for our products during our first fiscal quarter ending January 31 (primarily as a result of the number of holidays in late November, December and early January, the development of annual capital budgets by our customers during that

19

period, and a general industry slowdown during that period.) There can be no assurance that these historical seasonal trends will continue in the future. For instance, due to the economic downturn in the communications equipment and services market during fiscal 2002 and 2001, this historical trend was not evident in either fiscal year. A more detailed description of the risks to our business related to seasonality, along with other risk factors associated with our business, can be found in Exhibit 99-a to this Annual Report on Form 10-K for fiscal 2002.

Impairment and Non-Recurring Charges

        Due to the rapid decline in the communications equipment industry and our efforts to streamline our business in response, we recorded significant impairment and non-recurring charges in fiscal 2002 and 2001. Impairment charges represent a write-down of the carrying value of long-lived assets (principally goodwill and facilities) to their estimated fair market value. Non-recurring and other restructuring-related charges represent the direct costs of exiting certain product lines or businesses and the costs of downsizing our business. A brief explanation of these charges follows, and a more thorough summary is contained in Note 11 to the Consolidated Financial Statements in Item 8 of this Form 10-K.

Fiscal 2002

        During fiscal 2002, we incurred the following charges (in millions):

•    Impairment Charges	$	348.3
•    Non-Recurring Charges		219.6
•    Other Restructuring-Related Charges		13.2
	$	581.1

        Impairment Charges.    Our impairment charges were calculated in accordance with our policy for accounting for long-lived assets (see Application of Critical Accounting Policies—Long-Lived Assets and Goodwill, below). Of the total impairment charges of $348.3 million in fiscal 2002, $136.3 million related to the write-down of goodwill and $212.0 million related to the write-down of fixed assets. As a result of our decision to exit the optical components product line, we recognized a $36.6 million goodwill impairment charge. In addition, in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets," we tested our remaining goodwill for impairment in the fourth quarter (See Note 12 to the Consolidated Financial Statements in Item 8 of this Form 10-K). This test indicated that a significant impairment of goodwill had occurred. Accordingly, a $99.7 million goodwill impairment charge was recognized, which consisted of $85.5 million of the goodwill recognized when our Integrated Solutions segment acquired two European companies during fiscal 2000 and 2001, as well as the $14.2 million of remaining goodwill associated with our Broadband Infrastructure and Access business. After these write-downs, our remaining goodwill as of October 31, 2002, was $3.8 million, which relates solely to our Integrated Solutions segment.

        Of the total fixed asset impairment charge of $212.0 million, $45.7 million relates to our decision to sell our Glenrothes, Scotland manufacturing facility. The remaining charges are primarily related to our decision to exit the optical components, Avidia Multiplexer, and the U.S. version of our iAN product lines.

        Non-Recurring Charges.    The $219.6 million of non-recurring charges consist principally of $153.8 million related to the consolidation of facilities, $53.1 million for employee severance costs related to our workforce reduction, and $10.5 million for in-process research and development costs relating to our decision to purchase the interest of our joint venture partner in three technology development partnerships. $84.3 million of the facilities consolidation costs is related to our decision to extend the lease on our world headquarters facility. This charge represents the reduction in fair market value of the facility below the value we had guaranteed to the lessor. (See Liquidity and Capital

20

Resources—Finance Related Transactions below, for a further discussion of our world headquarters lease). The balance of the facilities consolidation costs relate to lease termination costs for excess facilities, as we deactivated approximately 1.8 million square feet, or 38% of our total space, during fiscal 2002. During fiscal 2002, we reduced our workforce by approximately 4,400 employees or 37% of our total workforce, which included approximately 2,900 employees impacted by reductions in force, with the remainder resulting from attrition and our divestitures.

        Other Restructuring-Related Charges.    We also incurred other restructuring-related charges in fiscal 2002 in the net amount of $13.2 million for inventory write-downs and the costs of completing certain sales contracts for discontinued product lines. These charges are reported in cost of sales ($18.9 million) and selling and administration expense ($5.7 million reversal of previous charges) in our consolidated statements of operations. See Note 11 to the Consolidated Financial Statements in Item 8 of this Form 10-K for further details on these items.

Fiscal 2001

        During fiscal 2001, we incurred the following charges (in millions):

•    Impairment Charges	$	501.7
•    Non-Recurring Charges		195.4
•    Other Restructuring-Related Charges		80.8
	$	777.9

        Impairment Charges.    Of the total $501.7 million of impairment charges in fiscal 2001, $294.5 million related to the write-down of goodwill and $207.2 million related to the write-down of fixed assets. The goodwill impairment charge was recognized as a result of our decision to exit non-strategic product lines. The fixed asset impairment charge of $207.2 resulted from the consolidation of unproductive and duplicative facilities as well as the exit from non-strategic product lines. Both the goodwill and fixed asset impairment charges were recognized in accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The amount of these impairment charges was based on our estimates of the fair value of the assets.

        Non-Recurring Charges.    The $195.4 million of non-recurring charges related to our actions to downsize our business in response to declining sales. These charges consisted principally of $89.0 million for employee severance costs related to our workforce reduction, and $96.0 million in facilities consolidation costs, which consist principally of lease termination costs. During fiscal 2001, we reduced our workforce by approximately 10,400 employees, or 46% of the total workforce, which included approximately 7,400 employees impacted by reductions in force. We also deactivated approximately 1.1 million square feet of excess facilities, or 19% of our total active space during fiscal 2001. In addition, we incurred $10.4 million of acquisition and integration costs and other restructuring charges in fiscal 2001, principally related to our acquisitions of CommTech Corporation and France Electronique in early fiscal 2001.

        Other Restructuring-Related Charges.    We incurred additional restructuring-related charges in fiscal 2001 in the amount of $80.8 million relating to inventory write-downs and the costs of completing certain sales contracts for discontinued product lines. These charges were reported in cost of sales ($52.4 million) and selling and administration expense ($28.4 million) in our consolidated statements of operations. See Note 11 to the Consolidated Financial Statements in Item 8 of this Form 10-K for further details on these items.

21

Effect of Restructuring Charges on Future Cash Flow:

        The following table provides detail on the remaining restructuring accrual by category as of October 31, 2002 and 2001 (in millions):

Type of Charge	2002		2001
Employee severance costs	$	17.0	$	22.3
Facilities consolidation		105.6		83.6
Inventory and committed sales contracts		—		3.8
Committed sales contracts-administrative		1.6		11.1
Total	$	124.2	$	120.8

        We believe that our entire restructuring accrual of $124.2 million as of October 31, 2002 will have to be paid in cash. Of this amount, $57.5 million will be paid from our unrestricted cash (shown as cash and cash equivalents on our balance sheet) and $66.7 million will be paid from our restricted cash (shown as restricted cash on our balance sheet) as follows:

•

The $17.0 million of employee severance will be paid in fiscal 2003 from unrestricted cash;



•

The $1.6 million of committed sales contracts-administrative will be paid in fiscal 2003 from unrestricted cash;



•

$38.9 million of the facilities consolidation costs relates principally to excess leased facilities. Of the $38.9 million, we estimate $27.1 million will be paid in fiscal 2003 with the remainder being paid over the respective lease terms ending through 2008, from unrestricted cash; and



•

The balance of $66.7 million of facilities consolidation costs will be paid from our restricted cash balance. This amount represents the cash pledged to secure our lease obligations on three long-term operating leases, and will be used to pay down the lease obligation in exchange for a reduced purchase option price, or to purchase the leased property at the end of the lease term (or sooner if we dispose of the property prior to the end of the lease term). See "Liquidity and Capital Resources—Finance Related Transactions" below for a further discussion of these leases.

        Establishment of the restructuring accrual was based on our assumptions of the relevant costs at the time the restructuring decisions were made. The accrual is periodically adjusted based on new information and actual costs incurred. The ultimate resolution of the accrual may result in further adjustments, which may have a material effect on our operating results.

Results of Operations

        Our financial statements for fiscal 2000 have been restated to include the operations of PairGain Technologies, Inc. and Broadband Access Systems, Inc., both of which were acquired in fiscal 2000 in transactions accounted for using the pooling-of-interests method of accounting. Both of these acquisitions were made by our Broadband Infrastructure and Access segment. See Note 5 to the Consolidated Financial Statements in Item 8 of this Form 10-K for additional information on these acquisitions.

22

        The following table contains information regarding the percentage of net sales of certain income and expense items for the three fiscal years ended October 31, 2002, 2001, and 2000 and the percentage changes in these income and expense items from year to year:

	Percentage of Net Sales						Percentage Increase (Decrease) Between Periods
	2002		2001		2000		2002 vs. 2001		2001 vs. 2000
Net sales	100.0	%	100.0	%	100.0	%	(56.4	)	(26.9	)%
Cost of sales	(76.5	)	(69.8	)	(51.1	)	(52.2	)	(0.1	)
Gross profit	23.5		30.2		48.9		(66.0	)	(54.9	)
Operating expenses:
Research and development	(16.8	)	(11.6	)	(10.3	)	(36.7	)	(17.6	)
Selling and administration	(35.3	)	(29.3	)	(20.2	)	(47.5	)	6.0
Goodwill amortization	—		(2.4	)	(1.1	)	(100.0	)	65.0
Impairment charges	(33.2	)	(18.7	)	—		(30.6	)	N/A
Non-recurring charges	(21.0	)	(10.3	)	(4.8	)	(12.4	)	57.5
Non-cash stock compensation	(1.0	)	(0.8	)	(1.4	)	(44.4	)	(60.3	)
Operating income (loss)	(83.8	)	(42.9	)	11.1		14.8		(381.9	)
Other income (expense), net:
Interest income (expense), net	0.8		(0.1	)	0.6		481.8		N/A
Other, net	(1.2	)	(36.9	)	32.7		(98.6	)	(182.5	)
Income (loss) before income taxes	(84.2	)	(79.9	)	44.4		54.1		(231.5	)
Provision (benefit) for income taxes	25.1		(26.3	)	18.0		(141.5	)	(206.9	)
Net income (loss)	(109.3	)%	(53.6	)%	26.4	%	11.1	%	(248.3	)%

        The table below sets forth our net sales for the three fiscal years ended October 31, 2002 for each of our reportable segments described in Item 1 of this Form 10-K (in millions).

		2002				2001			2000
Operating Segment
		Net Sales		%		Net Sales	%		Net Sales		%
Broadband Infrastructure and Access		$	715.1	68.3		1,810.8	75.4		$	2,774.0	84.4
Integrated Solutions			332.6	31.7		592.0	24.6			513.9	15.6
	Total	$	1,047.7	100.0	%	2,402.8	100.0	%	$	3,287.9	100.0	%

Net Sales

Fiscal 2002 vs. Fiscal 2001

        Net sales were $1.05 billion and $2.40 billion for fiscal 2002 and 2001, respectively, reflecting a 56.4% decrease. International net sales comprised 27.1% and 28.8% of our net sales in fiscal 2002 and 2001, respectively.

        The 56.4% decrease in net sales was largely attributable to lower volumes of products sold due to significant reductions in communication service provider capital budgets, as well as the lack of new network build-outs or significant expansions of existing networks. The decline was most pronounced for our broadband connectivity products, but occurred across all product lines with the exception of our IP Cable products, which had increased sales over the prior year. Sales of our software products also declined, which we believe was in part due to the fact that these products had been targeted for the competitive local exchange carrier market, a segment which has been severely affected by a lack of capital resources, causing many of these companies to cease operations. In response, during fiscal 2002, we repositioned our software products to add applications for next-generation wireless providers, enterprises and media and content providers, which we believe will present broader and higher growth

23

opportunities. We believe this target market transition contributed to the year-over-year decline in sales.

        The sales decline was also due to the absence of sales from product lines we divested in fiscal 2002 and 2001. Sales from divested product lines were $14.9 million, $404.9 million, and $626.0 million in fiscal 2002, 2001 and 2000, respectively. See Note 6 to the Consolidated Financial Statements in Item 8 of this Form 10-K for a further breakdown of divested product lines net sales by segment.

Fiscal 2001 vs. Fiscal 2000

        Net sales were $2.40 billion and $3.29 billion for fiscal 2001 and 2000, respectively, reflecting a 26.9% decrease. International net sales comprised of 28.8% and 21.5% of our net sales in fiscal 2001 and 2000, respectively.

        During fiscal 2001, net sales of Broadband Infrastructure and Access products declined by 34.7% over fiscal 2000. The decrease in fiscal 2001 primarily resulted from lower sales for broadband connectivity systems due to a weakened communications equipment industry and lower carrier spending budgets. Sales of most other products declined by smaller dollar amounts and percentages. Broadband Infrastructure and Access sales represented approximately 75.4% of our net sales in fiscal 2001.

        During fiscal 2001, net sales of Integrated Solutions products increased by 15.2% over fiscal 2000. Both software systems and systems integration services contributed to sales growth. Sales of systems integration services grew as a result of broadening our U.S. and European carrier and OEM customer base, which resulted in market share gains. We also benefited from the expansion of our presence into Europe due to the acquisitions of systems integration businesses in the United Kingdom and France during September 2000 and November 2000, respectively. Our sales growth in software systems resulted from our acquisitions of Centigram Communications Corporation, which was completed in July 2000, and CommTech Corporation, which was completed in February 2001. The operations of Centigram were divested on October 31, 2001, in connection with the sale of our enhanced services software product line. We also divested a substantial portion of CommTech in November of fiscal 2003 as part of our restructuring initiatives.

        International sales increased as a percentage of total sales from fiscal 2000 to fiscal 2001, primarily due to the fact that the U.S. communications equipment market declined prior to the European and Asian markets. Also, our acquisitions of systems integration businesses in the United Kingdom and France in September 2000 and November 2000, respectively, increased our European sales in fiscal 2001.

Gross Profit

Fiscal 2002 vs. Fiscal 2001

        During fiscal 2002 and 2001, gross profit percentages were 23.5% and 30.2%, respectively. The decrease in gross profit percentage is primarily due to a decrease in sales volume without a corresponding reduction in fixed factory expenses, and a shift in sales mix to lower margin products and services. Also, in fiscal 2002 and 2001, $18.9 million and $52.4 million of other restructuring-related charges for inventory write-offs and other costs to exit certain sales contracts were included in cost of product sold, respectively. We anticipate that our future gross profit percentage will continue to be affected by many factors, including sales mix, competitive pricing, timing of new product introductions and manufacturing volume.

Fiscal 2001 vs. Fiscal 2000

        During fiscal 2001 and 2000, gross profit percentages were 30.2% and 48.9%, respectively. This decrease was primarily the result of approximately $52.4 million of inventory write-offs and other costs to exit certain sales contracts in connection with our restructuring efforts in fiscal 2001 that were

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included in cost of product sold. In addition, gross profit for ongoing product lines for fiscal 2001 was affected negatively by increased charges of approximately $92.0 million for additional inventory and warranty reserves, which were taken in response to current market conditions. The decrease in gross profits also is due in part to a decrease in sales volume and a shift in sales mix to lower margin products.

Operating Expenses

Fiscal 2002 vs. Fiscal 2001

        Total operating expenses for fiscal 2002 and 2001 were $1.12 billion and $1.76 billion, representing 107.3% and 73.1% of net sales, respectively. Included in these operating expenses were non-recurring charges of $219.6 million and $195.4 million, other restructuring-related charges (reversals) of $(5.7) million and $28.4 million and impairment charges of $348.3 million and $501.7 million in fiscal 2002 and 2001, respectively, which are discussed above. In addition, operating expenses for fiscal 2002 and 2001 included non-cash stock compensation expenses of $10.4 million and $18.7 million, respectively. Fiscal 2002 non-cash stock compensation expenses are associated with our acquisition of Broadband Access Systems (BAS). Fiscal 2001 operating expenses include non-cash stock compensation expenses related to our acquisition of BAS as well as our acquisition of Centigram Communications Corporation. Non-cash stock compensation expenses related to Centigram Communications Corporation are not included in operating expenses for fiscal 2002 because we divested the Centigram operations through the sale of our enhanced services software product line in fiscal 2001. Due to the significance of our restructuring activities and the fact that the non-cash stock compensation expenses relate to business acquisitions, we believe that a more meaningful presentation of our year-over-year operating expense performance would exclude these impairment charges, non-recurring charges, other restructuring-related charges and non-cash stock compensation expenses.

        Operating expenses, excluding the impairment charges, non-recurring charges, other restructuring-related charges and the non-cash stock compensation expenses, were $552.1 million for fiscal 2002, a 45.5% reduction from $1.01 billion for fiscal 2001, representing 52.7% and 42.1% of net sales, respectively. The decrease in absolute dollars of operating expenses, before impairment charges, non-recurring charges, other restructuring-related charges and non-cash stock compensation expenses, was primarily due to the ongoing cost savings from our restructuring efforts as well as the divestiture of certain business units and product lines. The increase in operating expenses excluding impairment charges, non-recurring charges, other restructuring-related charges and the non-cash stock compensation expenses as a percentage of net sales was primarily due to fixed and variable costs incurred by us that could not be reduced as quickly as the rate of decline in net sales.

        Research and development expenses were $176.4 million for fiscal 2002, representing a 36.7% decrease from $278.6 million for fiscal 2001. We believe that given the rapidly changing technology and competitive environment 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, as a percentage of our net sales, to product development for each of our operating segments.

        Selling and administration expenses were $370.0 million for fiscal 2002, representing a decrease of 47.5% from $705.3 million for fiscal 2001. This decrease reflects a beneficial realization of our restructuring efforts. In addition, selling and administration expenses decreased $138.7 million from 2001 due to the divestiture or discontinuance of certain business units and product lines in fiscal 2001. Also included in the fiscal 2002 and 2001 amounts were $(5.7) million and $28.4 million, respectively, in selling and administration expenses (reversals) incurred to complete certain non-cancelable sales contracts and contract cancellation payments to customers as a result of our decision to exit certain product lines.

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        In accordance with SFAS No. 142 we did not record goodwill amortization in fiscal 2002 compared to $56.6 million of goodwill amortization expense in fiscal 2001.

Fiscal 2001 vs. Fiscal 2000

        Total operating expenses for fiscal 2001 and 2000 were $1.76 billion and $1.24 billion, respectively, representing 73.1% and 37.8% of net sales, respectively. Included in operating expenses were non-recurring charges of $195.4 million and $158.0 million, other restructuring-related charges of $28.4 million and $0 and impairment charges of $501.7 million and $0 for fiscal 2001 and 2000, respectively. The fiscal 2001 non-recurring charges, other restructuring-related charges and impairment charges are discussed above. The non-recurring charges in fiscal 2000 represent costs associated with our acquisition of PairGain, Broadband Access Systems and Centigram. These operating expenses also include non-cash stock compensation expenses of $18.7 million and $47.1 million in fiscal 2001 and 2000, respectively, associated with our acquisitions of Broadband Access Systems and Centigram, which were completed during fiscal 2000.

        Operating expenses, excluding the impairment charges, non-recurring charges, other restructuring-related charges, and non-cash stock compensation expenses were $1.01 billion and $1.04 billion for fiscal 2001 and fiscal 2000, respectively, representing 42.1% and 31.6% of net sales, respectively. The increase in operating expenses as a percentage of net sales before impairment charges, non-recurring charges, other restructuring-related charges and non-cash compensation expenses was due primarily to charges for increased operating reserves that were recorded in response to market conditions in fiscal 2001. These increased operating reserves for ongoing product lines related primarily to additional bad debt reserves of $73.8 million. The decrease in absolute dollars of operating expenses, excluding the impairment charges, non-recurring charges, other restructuring-related charges, and non-cash stock compensation expenses from the prior year reflects our effort to reduce costs and streamline our operations in response to the weakened market conditions in fiscal 2001.

        Research and development expenses were $278.6 million for fiscal 2001, representing a 17.6% decrease from $338.0 million for fiscal 2000. This decrease reflected our efforts to control expenses.

        Selling and administration expenses were $705.3 million for fiscal 2001, representing an increase of 6.0% over expenses of $665.6 million for fiscal 2000. This increase reflects approximately $28.4 million in selling and administration expenses for payroll and other non-production costs incurred to complete non-cancelable sales contracts and to make contract cancellation payments to customers as a result of our decision to exit certain product lines. In addition, we incurred approximately $74.0 million of additional bad debt provision in fiscal 2001 due to declining market conditions. These increases were partially offset by reduced employee costs resulting from reductions in our overall workforce that occurred in fiscal 2001.

        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 acquisition activity, goodwill amortization increased to $56.6 million in fiscal 2001, compared to $34.3 million in fiscal 2000.

Other Income (Expense), Net

        Other income (expense), net includes net interest income (expense), gain or loss on the write-down, sale or conversion of our investments, gain or loss on the sale or shutdown of certain product lines and other items. Each of these items is discussed below.

Interest

        The net interest income (expense) category represents net interest on cash and cash equivalents as well as debt. Interest income was $12.4 million in fiscal 2002, $6.6 million in fiscal 2001 and $23.6 million in fiscal 2000. Our interest income increased over fiscal 2001 due to higher average cash balances maintained during fiscal 2002, partially offset by lower yields on our short-term investments.

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Interest income decreased from fiscal 2000 to fiscal 2001 primarily due to lower average cash balances. Interest expense was $4.0 million, $8.8 million and $4.1 million in fiscal 2002, 2001 and 2000, respectively. See "Liquidity and Capital Resources" below for a discussion of cash and debt levels.

Write-down, Sale or Conversion of Investments

Fiscal 2002: During fiscal 2002, we sold common stock of certain companies in our investment portfolio and settled related hedging arrangements for a gain of $67.8 million. These gains were offset by non-cash write-downs in the amount of $5.7 million for our marketable securities investments, and $45.2 million for our non-marketable securities. See Note 3 to the Consolidated Financial Statements in Item 8 of this Form 10-K for further discussion of our investment activity.

Fiscal 2001: During fiscal 2001, we sold common stock of certain companies in our portfolio and settled related hedging arrangements for a net gain of $76.8 million. This gain was more than offset by a non-cash loss of $862.5 million we recognized for the decline in the market value of our marketable and non-marketable securities. Of this non-cash loss, $657.0 million was attributable to the write-down in the value of our marketable securities of Redback Networks, Inc., which we acquired in fiscal 2000 pursuant to Redback Network's acquisition of Siara Systems, Inc., in which we were an early investor.

Fiscal 2000: In the second quarter of fiscal 2000, Siara Systems, Inc., in which we held a 7.3% ownership interest, was 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 and was reflected on the balance sheet at the market value of the Redback Networks shares. The non-cash gain recognized on the conversion of these shares was $722.6 million.

Sale or Shutdown of Product Lines

Fiscal 2002: During fiscal 2002, we sold non-strategic product lines in broadcast TV video routing and optical components. We also closed down our Avidia Multiplexer and our optical laser product lines and halted further development of the U.S. version of our iAN product line. These products did not meet our growth, profitability and market leadership criteria. The sales of these assets generated approximately $2.3 million in cash, net of cash disposed, in fiscal 2002. Included in these sales and closures were domestic operations in California, Minnesota and Texas, as well as international operations in Australia and Sweden. These product lines generated annual net sales of approximately $14.9 million, $36.1 million and $46.8 million and operating losses of $96.8 million, $170.5 million and $10.3 million in fiscal 2002, 2001 and 2000, respectively. As a result of these actions, we recorded total losses on sales or shutdowns of approximately $6.7 million in fiscal 2002.

Fiscal 2001: During fiscal 2001, we sold non-strategic product lines in cable/broadcast TV transmission, broadband wireless transmission, enterprise access products, wireless components, optical components and enhanced services software. We also closed down our Cellworx transport product line in fiscal 2001. The sales of these assets generated approximately $117.5 million in cash, net of cash disposed, in fiscal 2001. Included in these sales were domestic operations in California, Connecticut, Minnesota, Oregon and Pennsylvania, as well as international operations in Argentina, Austria, Denmark and Finland. These product lines generated annual net sales of approximately $368.8 million and $579.2 million and operating losses of $79.8 million and $48.6 million in fiscal 2001 and 2000, respectively. As a result of these actions, we recorded total losses on sales or shutdowns of approximately $81.9 million in fiscal 2001.

Fiscal 2000: In fiscal 2000, we recognized a $328.6 million gain on the divestiture of the microelectronics group by PairGain Technologies, Inc.

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Patent Infringement Settlement

        During fiscal 2002, we recognized a $26.2 million gain from the settlement of a patent infringement lawsuit we brought against a competitor.

Fixed Assets

        In connection with our efforts to streamline and focus our operations to reduce costs, we sold excess equipment in fiscal 2002 and 2001. As a result of these sales, we recognized a $11.5 million and $1.3 million loss in fiscal 2002 and 2001, respectively. There were no gains or losses associated with fixed assets in fiscal 2000.

Other, Net

        Other, net primarily represents the gain or loss on foreign exchange transactions, loss on sale-leaseback transactions and our share of losses in equity method investments. Other net expense was approximately $37.3 million, $18.3 million and $0 in fiscal 2002, 2001 and 2000, respectively.

Income Taxes

Fiscal 2002 vs. Fiscal 2001

        The effective income tax rate for fiscal 2002 and 2001 was affected by certain non-deductible impairment charges, as well as no benefit recognized for losses incurred in the fourth quarter of fiscal 2002. In addition as a result of our cumulative losses over the past two years and the full utilization of our loss carryback potential, we concluded during the third quarter of fiscal 2002 that a full valuation allowance against our net deferred tax assets was appropriate. Accordingly, we recorded a valuation allowance of $640.2 million during fiscal 2002.

Fiscal 2001 vs. Fiscal 2000

        The effective income tax rate for fiscal 2001 was affected by certain non-deductible impairment charges, whereas, the effective income tax rate for fiscal 2000 was affected by non-deductible charges for certain acquisition fees. During fiscal 2001, we made an election for U.S. tax purposes that gave rise to a $240.0 million non-current deferred tax asset. This election related to a business combination that was accounted for as pooling-of-interests. Therefore, the recognition of this tax asset was recorded as an increase to paid-in capital.

Net Loss

Fiscal 2002 vs. Fiscal 2001

        Net loss was $1.15 billion (or $1.44 per diluted share) for fiscal 2002, compared to net loss of $1.29 billion (or $1.64 per diluted share) for fiscal 2001.

Fiscal 2001 vs. Fiscal 2000

        Net loss was $1.29 billion (or $1.64 per diluted share) for fiscal 2001, compared to net income of $868.1 million (or $1.13 per diluted share) for fiscal 2000.

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Segment Disclosures

Broadband Infrastructure and Access Segment

        Detailed information regarding our Broadband Infrastructure and Access segment is provided in the following table (dollars in millions):

	For the years ended October 31,
	2002			2001			2000
External sales	$	715.1		$	1,810.8		$	2,774.0
Operating income (loss)(1)		(208.7	)		(99.2	)		626.1
Depreciation and amortization		25.1			101.3			91.5
Capital expenditures		8.2			186.4			320.0
	At October 31,
	2002			2001			2000
Assets	$	354.7		$	1,517.3		$	1,759.6

(1)

Operating income (loss) excludes certain charges and expenses as described in Note 15 to the Consolidated Financial Statements in Item 8 of this Form 10-K.

        Broadband Infrastructure and Access sales decreased $1.1 billion, or 60.5%, in fiscal 2002 compared to fiscal 2001, primarily due to decreased demand for broadband connectivity systems, components, an overall weakness in the telecommunications equipment industry and product lines sold or shutdown in fiscal 2002 and 2001. In fiscal 2001, economic and industry weakness also led to a sales decrease of $963.2 million, or 34.7%, compared to fiscal 2000.

        During fiscal 2002, operating loss for the Broadband Infrastructure and Access segment increased by $109.5 million compared to fiscal 2001. This increase resulted primarily from a decrease in sales volume and a shift in product sales mix to lower margin products. During fiscal 2001, we incurred losses of $99.2 million compared to operating income of $626.1 million in fiscal 2000. Fiscal 2001 operating income decreased primarily for the same reasons as it decreased in fiscal 2002. As a result of the restructuring initiative undertaken in fiscal 2002 and 2001, we expect to realize future cost savings through improvements in our cost structure and operating processes.

        During fiscal 2002, depreciation and amortization decreased $76.2 million compared to fiscal 2001. This decrease is the result of our restructuring efforts in fiscal 2002 and fiscal 2001, which led to a reduction in our global production capacity. Implementation of SFAS No. 142 did not have a significant impact on amortization because goodwill amortization is not allocated to segments.

        Capital expenditures decreased $178.2 million (95.6%) and $133.6 million (41.8%), in fiscal 2002 and 2001, respectively. The decrease in fiscal 2002 and 2001 was a result of our company-wide efforts to limit capital expenditures in light of the industry downturn.

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Integrated Solutions Segment

        Detailed information regarding our Integrated Solutions segment is provided in the following table (dollars in millions):

	For the years ended October 31,
	2002			2001			2000
External sales	$	332.6		$	592.0		$	513.9
Operating income (loss)(1)		(32.0	)		(45.3	)		20.6
Depreciation and amortization		10.4			20.6			16.9
Capital expenditures		4.4			13.0			22.7
	At October 31,
	2002			2001			2000
Assets	$	269.5		$	403.7		$	386.2

(1)

Operating income (loss) excludes certain charges and expenses as described in Note 15 to the Consolidated Financial Statements in Item 8 of this Form 10-K.

        Integrated Solutions sales decreased $259.4 million, or 43.8%, in fiscal 2002 compared to fiscal 2001. During fiscal 2002, many of our customers reduced their spending budgets as well as focused on improving their existing infrastructure rather than building new capacity. In addition, we shifted the market focus for our software products away from competitive local exchange carriers and into next-generation service providers, enterprises and media and content providers. This transition led to a decline in software sales in fiscal 2002. Fiscal 2001 amounts also include $104.6 million of sales from product lines sold prior to fiscal 2002, which represented 17.7% of net sales. The 15.2% increase in fiscal 2001 sales over fiscal 2000 sales primarily was attributable to an expansion of our U.S. and European carrier and OEM customer base, which resulted in market share gains. In the fourth quarter of fiscal 2000 and the first quarter of fiscal 2001, we expanded our systems integration service capabilities into Europe with the acquisitions of Computer Telecom Installations Ltd. in September 2000 and France Electronique's telecom systems integration business in November 2000. Fiscal 2000 net sales also include $59.7 million of sales from product lines sold during fiscal 2001.

        During fiscal 2002, operating loss for the Integrated Solutions segment decreased $13.3 million compared to fiscal 2001. The decrease in operating loss was primarily due to cost savings achieved as a result of our restructuring initiatives in fiscal 2002 and 2001. Fiscal 2001 operating income decreased by $65.9 million compared to fiscal 2000. The decrease was due primarily to an increase in bad debt reserves in light of the sharp decline in the telecommunications industry and the restructuring of our workforce to correspond to the decrease in telecommunications equipment and software integration projects throughout the year.

        Depreciation and amortization decreased by $10.2 million in fiscal 2002 and increased by $3.7 million in fiscal 2001. The fiscal 2002 decrease is the result of the fiscal 2002 and 2001 restructuring efforts, which reduced the size of our global operations. Implementation of SFAS No. 142 did not have a significant impact on amortization because goodwill amortization is not allocated to segments.

        Capital expenditures decreased $8.6 million, or 66.2%, and $9.7 million, or 42.7%, in fiscal 2002 and 2001, respectively. The decrease in fiscal 2002 and 2001 was a result of our company-wide efforts to limit capital expenditures in light of the industry downturn.

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Application of Critical Accounting Policies and Estimates

        Investments:    We hold equity interests in both publicly traded and privately held companies. When the carrying value of an investment exceeds its fair value and the decline in value is deemed to be other than temporary, we write down the value of the investment and establish a new cost basis. Fair values for investments in public companies are determined using quoted market prices. Fair values for investments in privately held companies are estimated based upon one or more of the following factors: the values of the most recent round of financing, quoted market prices of comparable public companies, or analyses of historical and forecasted financial information. We regularly evaluate our investments based on criteria that include, but are not limited to, the duration and extent to which the fair value has been less than the carrying value, the current economic environment and the duration of any market decline, and the financial health and business outlooks of the portfolio's companies. We generally believe that an other-than temporary decline occurs when the fair value of a publicly traded investment is below the carrying value for nine consecutive months. Future adverse changes in these or other factors could result in an other-than-temporary decline in the value of our investments, thereby requiring us to write down such investments. Our ability to liquidate our positions in the investments in privately held companies will be affected to a significant degree by the lack of an actively traded market, and we may not be able to dispose of these investments in a timely manner. As of October 31, 2002, our investments in publicly and privately held companies had a current cost basis (after giving effect to other than temporary impairment charges) and estimated fair value of $4.4 million.

        Inventories:    We state our inventories at the lower of first-in, first-out cost or market. In assessing the ultimate realization of inventories, we are required to make judgments as to future demand requirements compared with current or committed inventory levels. Our reserve requirements generally increase as our projected demand requirements decrease due to market conditions, technological and product life cycle changes as well as longer than previously expected usage periods. We have experienced significant changes in required reserves in recent periods due primarily to declining market conditions. It is possible that significant increases in inventory reserves may be required in the future if there is a further decline in market conditions. Alternatively, if market conditions improve significantly, we may find it necessary to reverse a portion of the reserves. As of October 31, 2002, we had $93.9 million reserved against our inventories.

        Long-Lived Assets & Goodwill:    We evaluate the carrying value of our long-lived assets, consisting primarily of property and equipment, whenever certain events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable, in accordance with Statement of Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets." Such events or circumstances include, but are not limited to, a prolonged industry downturn, a significant decline in our market value, or significant reductions in projected future cash flows. In assessing the recoverability of our long-lived assets, we compare the carrying value to the undiscounted future cash flows the assets are expected to generate. If the total of the undiscounted future cash flows is less than the carrying amount of the assets, we write down such assets based on the excess of the carrying amount over the fair value of the assets. Fair value is generally determined by calculating the discounted future cash flows, including long-term forecasts of the amounts and timing of overall market growth and our percentage of that market, grouping of assets, discount rate and terminal growth rates. Changes in these estimates could have a material adverse effect on the assessment of our long-lived assets, thereby requiring us to write down the assets. See Note 11 to the Consolidated Financial Statements in Item 8 of this Form 10-K for details on our impairment charges.

        We adopted SFAS No. 142, "Goodwill and Other Intangible Assets" during 2002. We are required to test goodwill for impairment annually or at other times if events have occurred or circumstances exist that indicate the carrying value of goodwill may no longer be recoverable. The impairment test for goodwill involves a two-step process: step one consists of a comparison of the fair value of a reporting unit with its carrying amount, including the goodwill allocated to each reporting unit. If the carrying amount is in excess of the fair value, step two requires the comparison of the implied fair value of the

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reporting unit goodwill with the carrying amount of the reporting unit goodwill. Any excess of the carrying value of the reporting unit goodwill over the implied fair value of the reporting unit goodwill will be recorded as an impairment loss. Fair value of the business units was determined using the income approach. Under the income approach, value is dependent on the present value of future economic benefits to be derived from ownership. The income approach requires significant estimates about future cash flows and the discount rates. See Note 12 to the Consolidated Financial Statements in Item 8 of this Form 10-K for information about the results of the goodwill impairment tests. At October 31, 2002, $3.8 million of goodwill remained on our books, related solely to our Integrated Solutions segment.

        Restructuring Accrual:    During fiscal 2002 and 2001, we recorded significant restructuring charges representing the direct costs of exiting certain product lines or businesses and the costs of downsizing our business. Such charges were established in accordance with EITF 94-3 "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring)" and represent our best estimate at the date the charges were taken. Adjustments for changes in assumptions are recorded in the period they become known. Changes in assumptions could have a material effect on our restructuring accrual as well as our consolidated results of operations.

        Revenue Recognition:    We recognize revenue when persuasive evidence of a final agreement exists, delivery has occurred, the selling price is fixed or determinable and collectibility is reasonably assured. Revenue from product sales is primarily 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 software to the customer, provided that we have no remaining service obligations, collectibility is reasonably 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.

        The assessment of collectibility is particularly critical in determining whether or not revenue should be recognized in the current market environment. As part of the revenue recognition process, we determine whether trade and notes receivable are reasonably assured of collection based on various factors, including an evaluation of whether there has been deterioration in the credit quality of our customers, which could result in us being unable to collect or sell the receivables. In situations where it is unclear as to whether we will be able to sell or collect the receivable, revenue and related costs are deferred. Costs are recognized when it has been determined that the collection of the receivable is unlikely.

        We record provisions against our gross revenue for estimated product returns and allowances in the period when the related revenue is recorded. These estimates are based on factors that include, but are not limited to, historical sales returns, analyses of credit memo activities, current economic trends and changes in our customers' demand. Should our actual product returns and allowances exceed our estimates, additional reductions to our revenue would result.

        Allowance for Uncollectible Accounts:    We are required to estimate the collectibility of our trade receivables and notes receivable. A considerable amount of judgment is required in assessing the realization of these receivables including the current creditworthiness of each customer and related aging of the past due balances. In order to assess the collectibility of these receivables, we perform ongoing credit evaluations of our customers' financial condition. Through these evaluations we may

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become aware of a situation where a customer may not be able to meet its financial obligations due to deterioration of its financial viability, credit ratings or bankruptcy. The reserve requirements are based on the best facts available to us and are reevaluated and adjusted as additional information is received. Our reserves are also based on amounts determined by using percentages applied to certain aged receivable categories. These percentages are determined by a variety of factors including, but are not limited to, current economic trends, historical payment and bad debt write-off experience. Significant increases in reserves have been recorded in recent periods and may occur in the future due to deteriorating market conditions. We are not able to predict changes in the financial condition of our customers and if circumstances related to our customers deteriorate, our estimates of the recoverability of our receivables could be materially affected and we may be required to record additional allowances. Alternatively, if we provided more allowances than are ultimately required, we may reverse a portion of such provisions in future periods based on our actual collection experience. As of October 31, 2002, we had $33.9 million reserved against our account receivables.

        Warranty:    We provide reserves for the estimated cost of warranties at the time revenue is recognized. We estimate the costs of our warranty obligations based on our warranty policy or applicable contractual warranty, our historical experience of known product failure rates, and use of materials and service delivery costs incurred in correcting product failures. In addition, from time to time, specific warranty accruals may be made if unforeseen technical problems arise. Should our actual experience relative to these factors differ from our estimates, we may be required to record additional warranty reserves. Alternatively, if we provide more reserves than we need, we may reverse a portion of such provisions in future periods. As of October 31, 2002, we reserved $13.1 million related to future estimated warranty costs.

        Income Taxes and Deferred Taxes:    We utilize 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. We regularly assess the likelihood that our deferred tax assets will be recovered from future taxable income, and we record a valuation allowance to reduce our deferred tax assets to the amounts we believe to be realizable. We consider projected future taxable income and ongoing tax planning strategies in assessing the amount of the valuation allowance. If we determine we will not realize all or part of our deferred tax assets, an adjustment to the deferred tax asset will be charged to earnings in the period such determination is made. As a result of the cumulative losses over the past two years, and the full utilization of our loss carryback potential, we concluded during the third quarter of fiscal 2002 that a full valuation allowance against our net deferred tax assets was appropriate. The valuation allowance at October 31, 2002 was $711.3 million. In addition, we expect to provide a full valuation allowance on any future tax benefits until we can sustain a level of profitability that demonstrates our ability to utilize these assets.

        Recently Issued Accounting Pronouncements:    In October 2001, the Financial Accounting Standards Board issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 supersedes SFAS 121. SFAS 144 primarily addresses significant issues relating to the implementation of SFAS 121 and develops a single accounting model for long-lived assets to be disposed of, whether primarily held, used or newly acquired. The provisions of SFAS 144 will be effective for fiscal years beginning after December 15, 2001. We will apply this standard beginning in fiscal 2003. Prior to adopting this standard, we wrote down long-lived assets, excluding goodwill, by $212.0 million and $207.2 million in fiscal 2002 and 2001, respectively, by applying SFAS No. 121.

        In June 2002, the Financial Accounting Standards Board issued SFAS No. 146 "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 supersedes EITF No. 94-3. The principle difference between SFAS No. 146 and EITF No. 94-3 relates to when an entity can recognize a liability related to exit or disposal activities. SFAS No. 146 requires a liability be recognized for a cost associated with an exit or disposal activity when the liability is incurred. EITF No. 94-3 allowed a liability, related to an exit or disposal activity, to be recognized at the date an entity commits to an exit plan. The provisions of SFAS No. 146 are effective on January 1, 2003. Accordingly, we will apply this standard to all exit or disposal activities initiated after January 1, 2003.

33

Liquidity and Capital Resources

Cash

        Cash and cash equivalents, primarily short-term investments in commercial paper with maturities of less than 90 days and other short-term investments had a balance of $278.9 million at October 31, 2002, which is a decrease of $69.7 million compared to October 31, 2001. The major uses of cash during fiscal 2002 were a $177.0 million net increase in restricted cash (which reduced the balance in cash and cash equivalents), $25.6 million in property, plant, and equipment additions, and $208.9 million used to pay down current liabilities as well as net cash losses from operations. These cash outflows were partially offset by $259.4 million provided from income tax refunds, and $79.6 million from more effective working capital management such as account receivable collections, lower inventory requirements, and lower prepaid assets. In addition, we received $68.6 million on the sale of available-for-sale securities.

        As of October 31, 2002, we had restricted cash of $177.0 million. Restricted cash represents cash pledged to various financial institutions to secure certain of our obligations, and thus is not available to us for working capital. The majority of this restricted cash relates to four long-term operating lease obligations, with the remainder representing cash collateral for letters of credit, guarantees relating to vendor financing transactions, and foreign currency hedging activities. We expect that $149 million of our restricted cash will be used to settle the four long-term lease obligations it secures, and accordingly will never become available to us for general working capital purposes. The remainder of the restricted cash is expected to become available to us upon satisfaction of the obligations pursuant to which the letters of credit, guarantees or currency hedging arrangement was issued. We are entitled to the interest earnings on our restricted cash balances.

        During fiscal 2001, cash increased by $131.3 million compared to fiscal 2000. In addition, as of October 31, 2001, we held approximately $73.2 million in marketable securities. Our primary source of cash in fiscal 2001 was $428.8 million from the collection of accounts receivable combined with lower inventory requirements compared to fiscal 2000. In addition, in fiscal 2001 we generated $117.5 million from the divestiture of certain product lines and businesses and $208.7 million from investment sale proceeds. These cash sources were partially offset by decreased earnings, $115.0 million from paying down current liabilities, $185.5 million from higher prepaid and other assets, and $241.2 million of capital expenditures.

Finance-Related Transactions

        We are a party to four operating lease agreements related to certain of our facilities, including our Eden Prairie, Minnesota headquarters facility. These leases have expiration dates ranging from 2004 to 2009, depending on whether we exercise our renewal options. These operating leases, which are sometimes referred to as "synthetic leases," contain minimum residual value guarantees by us at the end of the lease term and also give us a purchase option at the end of the lease term. If we choose to retain the property at the end of the lease term, or if the lease is terminated prematurely, we must pay the purchase option price. If we dispose of the property at the end of the lease term, we must pay any shortfall of the sales proceeds as compared to the purchase option price, not to exceed the amount of the residual value guarantee to the lessor. The aggregate purchase option price and minimum residual value guarantees from all of these leases are approximately $149.0 million and $116.0 million, respectively. Our obligations under these leases are secured by $149.0 million in cash collateral, which is classified as restricted cash on our balance sheet.

        During the fourth quarter of fiscal 2002, we concluded that the fair market value of our headquarters facility was significantly less than the minimum value we had guaranteed the lessor. As we intend to occupy this facility in the long-term, we amended this lease to extend the lease term by an additional two years. In connection with this amendment, we paid the lessor $85.5 million from our

34

restricted cash, which was the difference between the existing purchase option price and the current fair market value of the facility, and obtained reductions in the purchase option price and minimum residual value guarantee.

        With the exception of our world headquarters facility, we do not intend to continue to occupy the other three leased facilities for the full lease term. Accordingly, we are attempting to sell these facilities. In order for us to sell these leased facilities we must first purchase the facilities from the lessor for the purchase option price (which we will fund through the use of restricted cash). As the fair market value of these facilities is likely to be less than the amount payable to the lessor for the purchase option price, we may incur additional non-recurring charges related to the disposal of these leased facilities. The net sales proceeds obtained from a buyer of these facilities would be available to us as unrestricted cash. In November of fiscal 2003, we purchased one of these leased facilities from the lessor for $21.0 million, using the restricted cash pledged for this lease to pay the purchase price, and immediately sold the facility for $5.8 million. The $5.8 million sales proceeds became available to us as unrestricted cash.

        In December 2001, we entered into an accounts receivable securitization arrangement with a financial institution. The purpose of this securitization arrangement was to allow us to accelerate the cash realized from our receivables, and to provide an additional liquidity resource. During the fiscal year ended October 31, 2002, the amount available under this arrangement ranged from $3 million to $54 million, and the amount available as of October 31, 2002 was approximately $23 million. As of October 31, 2002, there have been no sales of receivables under this arrangement. We do not expect to utilize this facility and do not consider it a significant source of liquidity.

Capital Expenditure and Investment Commitments

        As of October 31, 2002, we had commitments (both cancelable and non-cancelable) for capital expenditures related to the ongoing operation of our business of approximately $12.4 million. These commitments primarily reflect future equipment purchases as well as improvements to existing buildings and facilities. The commitments are estimated to be paid by the end of fiscal 2003. We intend to fund these expenditures from cash on hand.

        In connection with our investment activity, we invested in two independent venture capital funds in fiscal 2000. Our investment in these funds are recorded as long-term assets on our balance sheet. We committed to invest an aggregate of $15 million in these funds as capital calls were made by the fund managers. As of October 31, 2002, our outstanding unfunded commitment was $9.4 million. We expect that our remaining commitment will be funded through the use of cash on hand over the course of the next three years.

Vendor Financing

        We have worked with customers and third-party financiers to find a means of financing projects by negotiating financing arrangements. As of October 31, 2002, 2001 and 2000, we had commitments to extend credit of $58.0 million, $166.9 million and $380.0 million for such arrangements, respectively. The total amount drawn and outstanding under the commitments was approximately $20.9 million, $80.2 million and $35.0 million, respectively, as of October 31, 2002, 2001 and 2000. The commitments to extend credit are conditional agreements generally having fixed expiration or termination dates and specific interest rates, conditions and purposes. These commitments may expire without being drawn. Some of these commitments enable the customer to draw on the commitment after the customer has made payment to us for the products we sold, up to the amount the customer previously paid to us. Accordingly, amounts committed may affect future cash flows. We regularly review all outstanding commitments, and the results of these reviews are considered in assessing the overall risk for possible

35

credit losses. At October 31, 2002, we had approximately $12.7 million in loss reserves in the event of non-performance related to these financing arrangements.

        During fiscal 2002 we sold a participation interest in one of our vendor financing notes receivable for cash equal to $10.5 million. This sale was without any discount to the face amount of the receivable, was with full recourse to us, and our recourse obligation is secured by a letter of credit. We accounted for this sale of a participation interest as a loan, and thus recorded a $10.5 million long-term note payable. See Note 4 to the Consolidated Financial Statements in Item 8 of this Form 10-K.

Working Capital Outlook

        Our main source of liquidity continues to be our unrestricted cash on hand. In addition, based on our recent operating losses, we expect to receive a federal income tax refund in the range of $100.0 to $135.0 million during the first calendar quarter of 2003.

        Although we expect to continue to use our unrestricted cash to fund operating losses in the near term and to pay $57.5 million of our restructuring accrual, we believe that our current unrestricted cash on hand and cash from the expected federal income tax refunds should be adequate to fund our working capital requirements, planned capital expenditures and restructuring costs through fiscal 2003 and beyond. However, if our operating losses are more severe than expected or continue longer than expected, we may find it necessary or desirable to seek other sources of financing to support our capital needs and provide available funds for working capital. In addition, should we determine to make any significant acquisitions, additional sources of capital may be required. Given the current state of the communications equipment industry, there are few alternatives available as sources of financing. Commercial bank financing is not available at this time to us or to many companies in our industry. Accordingly, any plan to raise additional capital would likely involve an equity-based or equity-linked financing, such as the issuance of convertible debt, common stock or preferred stock, which would be dilutive to existing shareowners.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        We are exposed to market risk from changes in security prices, foreign exchange rates and interest rates. Market fluctuations could affect our results of operations and financial condition adversely. We, at times, reduce this risk through the use of derivative financial instruments. We do not enter into derivative financial instruments for the purpose of speculation. Changes in interest rates are not expected to have a material adverse effect on our consolidated financial condition or results of operations because we have only $15.7 million of interest-bearing notes payable as of October 31, 2002.

        As described in Note 3 to the Consolidated Financial Statements in Item 8 of this Form 10-K, we maintain an investment portfolio of common stock in three publicly traded companies in the telecommunications or technology industries. This portfolio was developed primarily through investments in privately held companies, which later became publicly traded. The investments in two of these companies, Vyyo, Inc. and Interwave Communications International, Ltd., have been written down to a nominal value. The investment in the third company, Redback Networks, is classified as an available-for-sale security and, consequently, is recorded on the balance sheet at its written-down fair value. The values recorded for these investments are subject to market price volatility. Assuming an immediate 100% decrease in our publicly traded investments, the hypothetical reduction in shareowners' investment related to these holdings is estimated to be $0.5 million as of October 31, 2002. We also hold minority investments in a number of companies that are not publicly traded. These investments are included in long-term assets and are carried at their written-down cost of $3.9 million. We monitor these investments for impairment and make appropriate reductions in carrying value when necessary.

36

        We also are exposed to market risk from changes in foreign exchange rates. To mitigate the risk from these exposures, we have instituted a balance sheet hedging program. The objective of this program is to protect our net monetary assets and liabilities in non-functional currencies from fluctuations due to movements in foreign exchange rates. The program operates in markets where hedging costs are beneficial. We attempt to minimize exposure to currencies in which hedging instruments are unavailable or prohibitively expensive by managing our operating activities and net asset positions. The majority of hedging instruments utilized are forward contracts with maturities of less than one year. Foreign exchange contracts reduce our overall exposure to exchange rate movements, since gains and losses on these contracts offset losses and gains on the underlying exposure. See Note 13 to the Consolidated Financial Statements in Item 8 of this Form 10-K for information about our foreign exchange hedging program and the notional and fair values of our hedge instruments.

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Auditors

Board of Directors and Shareowners
ADC Telecommunications, Inc.

We have audited the accompanying consolidated balance sheet of ADC Telecommunications, Inc. and subsidiaries as of October 31, 2002 and the related consolidated statements of operations, shareowners' investment, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The consolidated financial statements of ADC Telecommunications, Inc. and subsidiaries as of October 31, 2001 and 2000, and for the two years then ended, were audited by other auditors who have ceased operations and whose reports dated November 21, 2001 expressed an unqualified opinion on those statements.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the 2002 financial statements referred to above present fairly, in all material respects, the consolidated financial position of ADC Telecommunications, Inc. and subsidiaries as of October 31, 2002 and the consolidated results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States.

As discussed above, the consolidated financial statements of ADC Telecommunications, Inc. and subsidiaries as of October 31, 2001 and 2000, and for the two years then ended, were audited by other auditors who have ceased operations. As described in Note 12, these consolidated financial statements have been revised to include the transitional disclosures required by Financial Accounting Standard No. 142, "Goodwill and other Intangible Assets", which was adopted by the Company as of November 1, 2001. We have audited the disclosures in Note 12 and, in our opinion, the disclosures for fiscal 2001 and 2000 in Note 12 are appropriate. However, we were not engaged to audit, review, or apply any procedures to the fiscal 2001 and 2000 consolidated financial statements of the Company other than with respect to such disclosures and, accordingly, we do not express an opinion or any other form of assurance on the fiscal 2001 and 2000 consolidated financial statements taken as a whole.

/s/ Ernst & Young LLP

Minneapolis, Minnesota
December 2, 2002

38

The following report is a copy of a report previously issued by Arthur Andersen LLP ("Andersen"), which report has not been reissued by Andersen. Certain financial information for each of the two years in the period ended October 31, 2001 was not reviewed by Andersen and includes: (i) reclassifications to conform to our fiscal 2002 financial statement presentation and (ii) additional disclosures to conform with new accounting pronouncements and SEC rules and regulations issued during such fiscal year.

Report of Independent Public Accountants

To ADC Telecommunications, Inc.:

We have audited the accompanying consolidated balance sheets of ADC Telecommunications, Inc. (a Minnesota corporation) and subsidiaries as of October 31, 2001 and 2000, and the related consolidated statements of operations, shareowners' investment and cash flows for each of the three years in the period ended October 31, 2001. 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 the above present fairly, in all material respects, the financial position of ADC Telecommunications, Inc., and subsidiaries as of October 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 2001 in conformity with accounting principles generally accepted in the United States.

/s/ Arthur Andersen LLP
Minneapolis, Minnesota

November 21, 2001

39

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

		For the years ended October 31,
		2002			2001			2000
Net Sales:
	Products	$	809.3		$	2,044.5		$	2,977.8
	Services		238.4			358.3			310.1
Total net sales			1,047.7			2,402.8			3,287.9
Cost of Sales:
	Products		593.7			1,358.2			1,426.5
	Services		207.5			319.6			252.5
Total cost of sales			801.2			1,677.8			1,679.0
Gross Profit			246.5			725.0			1,608.9
Operating Expenses:
	Research and development		176.4			278.6			338.0
	Selling and administration		370.0			705.3			665.6
	Goodwill amortization		—			56.6			34.3
	Impairment charges		348.3			501.7			—
	Non-recurring charges		219.6			195.4			158.0
	Non-cash stock compensation(1)		10.4			18.7			47.1
	Total expenses		1,124.7			1,756.3			1,243.0
Operating Income (Loss)			(878.2	)		(1,031.3	)		365.9
Other Income (Expense), Net:
	Interest income (expense), net		8.4			(2.2	)		19.5
	Gain (loss) on sale or shutdown of product lines		(6.7	)		(81.9	)		328.6
	Gain (loss) on write-down or sale of investments, net		16.9			(785.7	)		23.8
	Gain on conversion of investment		—			—			722.6
	Loss on sale of fixed assets		(11.5	)		(1.3	)		—
	Gain on patent infringement settlement		26.2			—			—
	Other, net		(37.3	)		(18.3	)		—
Income (Loss) Before Income Taxes			(882.2	)		(1,920.7	)		1,460.4
Provision (Benefit) for Income Taxes			262.8			(633.0	)		592.3
Net Income (Loss)		$	(1,145.0	)	$	(1,287.7	)	$	868.1
Average Common Shares Outstanding (Basic)			795.6			787.0			721.6
Earnings (Loss) Per Share (Basic)		$	(1.44	)	$	(1.64	)	$	1.20
Average Common Shares Outstanding (Diluted)			795.6			787.0			770.3
Earnings (Loss) Per Share (Diluted)		$	(1.44	)	$	(1.64	)	$	1.13

(1)

Non-cash stock compensation expense resulted from stock options and restricted stock converted in connection with the Centigram and Broadband Access Systems acquisitions. If we had reported this non-cash stock compensation in existing operating expense categories, research and development expense and selling and administration expense would have increased by $6.4 million and $4.0 million, respectively, in fiscal 2002, by $8.7 million and $10.0 million, respectively, in fiscal 2001, and by $24.1 million and $23.0 million, respectively, in fiscal 2000.

The accompanying notes are an integral part of these Consolidated Financial Statements.

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Consolidated Balance Sheets
(in millions)

			October 31, 2002			October 31, 2001
ASSETS
Current Assets:
	Cash and cash equivalents		$	278.9		$	348.6
	Available-for-sale securities			0.5			73.2
	Accounts receivable, net of reserves of $33.9 and $50.1			115.1			280.7
	Unbilled revenues			25.8			36.4
	Inventories, net of reserves of $93.9 and $89.5			94.9			253.6
	Prepaid income taxes			126.6			142.0
	Deferred tax assets			—			107.0
	Prepaid and other current assets			44.5			63.7
		Total current assets		686.3			1,305.2
Property and Equipment, Net				206.8			614.0
Assets Held for Sale				20.0			8.3
Restricted Cash				177.0			—
Other Assets:
	Deferred tax assets			—			367.1
	Goodwill			3.8			140.1
	Other			50.3			65.0
		Total assets	$	1,144.2		$	2,499.7
LIABILITIES AND SHAREOWNERS' INVESTMENT
Current Liabilities:
	Accounts payable		$	73.0		$	162.0
	Accrued compensation and benefits			74.1			109.1
	Other accrued liabilities			110.8			205.8
	Restructuring accrual			124.2			120.8
	Notes payable			15.7			1.7
		Total current liabilities		397.8			599.4
Long-Term Notes Payable				10.8			3.0
Other Long-Term Liabilities				3.4			3.9
		Total liabilities		412.0			606.3
Commitments and Contingencies
Shareowners' Investment:
	Common stock, $0.20 par value; authorized 1,200.0 shares; issued and outstanding 799.6 and 792.0 shares			159.9			158.4
	Paid-in capital			1,272.6			1,256.1
	Retained earnings (deficit)			(673.3	)		471.7
	Deferred compensation			(12.3	)		(16.7	)
	Accumulated other comprehensive income (loss)			(14.7	)		23.9
		Total shareowners' investment		732.2			1,893.4
		Total liabilities and shareowners' investment	$	1,144.2		$	2,499.7

The accompanying notes are an integral part of these Consolidated Financial Statements

41

Consolidated Statements of Shareowners' Investment
(in millions)

	Common Stock
				Paid-in Capital			Retained Earnings (Deficit)			Deferred Compensation			Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)
	Shares	Amount
Balance, October 31, 1999	678.6	$	135.7	$	519.6		$	899.2		$	(1.1	)	$	41.9
Net income	—		—		—			868.1			—			—		$	868.1
Exercise of common stock options	10.4		2.1		169.5			—			—			—			—
Stock issued for business acquisitions	81.0		16.2		177.3			—			(85.2	)		—			—
Adjustment to conform year-end of acquired companies	—		—		—			(7.9	)		—			—			—
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 loss	—		—		—			—			—			(16.5	)		(16.5	)
Unrealized gain on securities, net of 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
Net income	—		—		—			(1,287.7	)		—			—		$	(1,287.7	)
Exercise of common stock options	6.9		1.4		27.6			—			—			—			—
Stock issued for business acquisitions	11.6		2.3		3.0			—			—			—			—
Stock issued for employee benefit plans	3.2		0.6		12.8			—			—			—			—
Reduction of deferred compensation	—		—		(3.8	)		—			22.5			—			—
Tax benefits from exercise of common stock options	—		—		22.5			—			—			—			—
Tax benefits related to acquisition	—		—		240.0			—			—			—			—
Translation gain	—		—		—			—			—			12.4			12.4
Unrealized loss on securities, net of taxes of $(338.0)	—		—		—			—			—			(575.5	)		(575.5	)
Adjustment for write-down of securities, net of taxes of $302.1	—		—		—			—			—			514.4			514.4
Adjustment for sale of securities, net of taxes of $(6.9)	—		—		—			—			—			(11.8	)		(11.8	)
Balance, October 31, 2001	792.0	$	158.4	$	1,256.1		$	471.7		$	(16.7	)	$	23.9		$	(1,348.2	)
Net loss	—		—		—			(1,145.0	)		—			—		$	(1,145.0	)
Exercise of common stock options	1.2		0.2		3.2			—			—			—
Stock issued for employee benefit plans	6.4		1.3		13.3			—			(9.9	)		—
Reduction of deferred compensation	—		—		—			—			14.3			—			—
Translation gain	—		—		—			—			—			2.3			2.3
Unrealized loss on securities, net of taxes of $(1.4)	—		—		—			—			—			(2.3	)		(2.3	)
Adjustment for write-down of securities, net of taxes of $1.9	—		—		—			—			—			3.2			3.2
Adjustment for sale of securities, net of taxes of $(24.5)	—		—		—			—			—			(41.8	)		(41.8	)
Balance, October 31, 2002	799.6	$	159.9	$	1,272.6		$	(673.3	)	$	(12.3	)	$	(14.7	)	$	(1,183.6	)

The accompanying notes are an integral part of these Consolidated Financial Statements.

42

Consolidated Statements of Cash Flows
(in millions)

			For the years ended October 31,
			2002			2001			2000
Operating Activities:
Net income (loss)			$	(1,145.0	)	$	(1,287.7	)	$	868.1
Adjustments to reconcile net income (loss) to net cash provided by operating activities—
	Depreciation and amortization			104.7			197.8			146.2
	Provision for losses on receivables			26.4			73.8			9.6
	Inventory reserves			49.7			47.7			19.6
	Acquisition-related charges			—			—			29.1
	Purchased in-process research and development			10.5			—			22.8
	Write-down of inventory, property and equipment and goodwill			367.2			477.8			—
	Non-cash stock compensation			14.3			18.7			47.1
	Deferred income taxes			498.1			(438.9	)		332.0
	Gain on ownership of investments			—			(0.6	)		(8.1	)
	Loss on write-down of investments			50.9			862.5			—
	Gain on sale of investments			(67.8	)		(76.8	)		(23.8	)
	Gain on conversion of investment			—			—			(722.6	)
	Loss on sale of fixed assets and sale leasebacks			14.8			6.5			—
	(Gain) loss on sale or shutdown of product lines			6.7			81.9			(328.6	)
	Other, net			(0.1	)		4.0			4.5
	Changes in operating assets and liabilities, net of acquisitions and divestitures:
		Accounts and unbilled receivables		160.8			339.3			(158.7	)
		Inventories		104.3			89.5			(207.8	)
		Prepaid and other assets		73.9			(185.5	)		(84.8	)
		Accounts payable		(88.1	)		(61.7	)		83.6
		Accrued liabilities		(120.8	)		(53.3	)		222.7
		Total cash provided by operating activities		60.5			95.0			250.9
Investing Activities:
	Acquisitions, net of cash acquired			(4.2	)		(48.7	)		(345.3	)
	Divestitures, net of cash disposed			2.3			117.5			—
	Property and equipment additions, net			(25.6	)		(241.2	)		(375.3	)
	Change in restricted cash			(177.0	)		—			—
	Proceeds from sale of building			—			10.4			—
	Sale of available-for-sale securities, net			68.6			208.7			246.1
	Sale (purchase) of long-term investments, net			2.3			(15.7	)		(49.6	)
		Total cash provided by (used for) investing activities		(133.6	)		31.0			(524.1	)
Financing Activities:
	Repayments of debt			(5.9	)		(35.8	)		(32.5	)
	Common stock issued			9.1			40.4			277.2
		Total cash provided by financing activities		3.2			4.6			244.7
Effect of Exchange Rate Changes on Cash				0.2			0.7			(3.7	)
Effect of Conforming Year-Ends of Acquired Companies				—			—			(29.5	)
Increase (Decrease) in Cash and Cash Equivalents				(69.7	)		131.3			(61.7	)
Cash and Cash Equivalents, Beginning of Year				348.6			217.3			279.0
Cash and Cash Equivalents, End of Year			$	278.9		$	348.6		$	217.3

The accompanying notes are an integral part of these Consolidated Financial Statements.

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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 Telecommunications, Inc. has more than a 50% equity ownership. In these Notes to Consolidated Financial Statements, these companies are collectively referred to as "ADC," "we," "us" or "our." 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. At October 31, 2002, our cash and cash equivalents were spread among three major financial institutions to avoid any significant concentration risk.

        Investments:    Short-term investments in publicly held companies in our investment portfolio 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 within shareowners' investment as a component of accumulated other comprehensive income (loss). We also have minority investments in companies not publicly traded. These investments are included in long-term other assets and are carried at their cost.

        When the carrying value of an investment exceeds its fair value and the decline in value is deemed to be other than temporary, we write down the value of the investment and establish a new cost basis. Fair value for investments in public companies are determined using quoted market prices. Fair values for investments in privately held companies are estimated based upon one or more of the following factors: the values of the most recent round of financing, quoted market prices of comparable public companies, or analyses of historical and forecasted financial information. We regularly evaluate our investments based on criteria that include, but are not limited to, the duration and extent to which the fair value has been less than the carrying value, the current economic environment and the duration of any market decline, and the financial health and business outlooks of the portfolio's companies. We generally believe that an other-than temporary decline occurs when the fair value of a publicly traded investment is below the carrying value for nine consecutive months.

        Inventories:    Inventories include material, labor and overhead and are stated at the lower of first-in, first-out cost or market. In assessing the ultimate realization of inventories, we are required to make judgments as to future demand requirements compared to current or committed inventory levels. Our reserve requirements generally increase as our projected demand requirements decrease due to market conditions, technological and product life cycle changes as well as longer than previously expected usage periods.

        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.

        Impairment of Long-Lived Assets:    We evaluate property and equipment and identifiable intangibles for potential impairment in compliance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." We record impairment losses on long-lived assets used in operations when events and circumstances indicate the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the

44

carrying amounts of those assets. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. See Note 11 for details of our impairment charges.

        Goodwill and Other Intangible Assets:    In June 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." We adopted these standards on November 1, 2001. Under the new rules, goodwill is no longer amortized but will be reviewed annually for impairment. Our other intangible assets (consisting primarily of patents and developed technology) will continue to be amortized over their useful lives, typically seven years. Refer to Note 12 for details about the adoption of this standard and the results of our initial and annual impairment tests.

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

        Revenue Recognition:    We recognize revenue when persuasive evidence of a final agreement exists, delivery has occurred, the selling price is fixed or determinable and collectibility is reasonably assured. Revenue from product sales is primarily 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 software to the customer, provided that we have no remaining service obligations, collectibility is reasonably 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.

        The assessment of collectibility is particularly critical in determining whether or not revenue should be recognized in the current market environment. As part of the revenue recognition process, we determine whether trade and notes receivable are reasonably assured of collection based on various factors, including an evaluation of whether there has been deterioration in the credit quality of our customers, which could result in us being unable to collect or sell the receivables. In situations where it is unclear as to whether we will be able to sell or collect the receivable, revenue and related costs are deferred. Costs are recognized when it has been determined that the collection of the receivable is unlikely.

        We record provisions against our gross revenue for estimated product returns and allowances in the period when the related revenue is recorded. These estimates are based on factors that include, but are not limited to, historical sales returns, analyses of credit memo activities, current economic trends and changes in our customers' demand. Should our actual product returns and allowances exceed our estimates, additional reductions to our revenue would result.

        Allowance for Uncollectible Accounts:    We are required to estimate the collectibility of our trade and notes receivable. A considerable amount of judgment is required in assessing the realization of these receivables including the current creditworthiness of each customer and related aging of the past due balances. In order to assess the collectibility of these receivables, we perform ongoing credit evaluations of our customers' financial condition. Through these evaluations we may become aware of a

45

situation where a customer may not be able to meet its financial obligations due to deterioration of its financial viability, credit ratings or bankruptcy. The reserve requirements are based on the best facts available to us and are reevaluated and adjusted as additional information is received.

        Warranty:    We provide reserves for the estimated cost of product warranties at the time revenue is recognized. We estimate the costs of our warranty obligations based on our warranty policy or applicable contractual warranty, our historical experience of known product failure rates, and use of materials and service delivery costs incurred in correcting product failures. In addition, from time to time, specific warranty accruals may be made if unforeseen technical problems arise.

        Income Taxes and Deferred Taxes:    We utilize 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. We regularly assess the likelihood that our deferred tax assets will be recovered from future taxable income, and we record a valuation allowance to reduce our deferred tax assets to the amounts we believe to be realizable. We consider projected future taxable income and ongoing tax planning strategies in assessing the amount of the valuation allowance. If we determine we will not realize all or part of our deferred tax assets, an adjustment to the deferred tax asset will be charged to earnings in the period such determination is made. As a result of our cumulative losses over the past two years, and the full utilization of our loss carryback potential, we concluded during the third quarter of fiscal 2002 that a full valuation allowance against our net deferred tax assets was appropriate. In addition, we expect to provide a full valuation allowance on any future tax benefits until we can sustain a level of profitability that demonstrates our ability to utilize these assets.

        Foreign Currency Translation:    We convert assets and liabilities of foreign operations to their U.S. dollar equivalents at rates in effect at the balance sheet dates, and we record 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 accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, these estimates ultimately may 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. Comprehensive income is presented in the consolidated statements of shareowners' investment.

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

        Recently Issued Accounting Pronouncements:    In October 2001, the Financial Accounting Standards Board issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 supersedes SFAS 121. SFAS 144 primarily addresses significant issues relating to the implementation of SFAS 121 and develops a single accounting model for long-lived assets to be disposed of, whether primarily held, used or newly acquired. The provisions of SFAS 144 will be

46

effective for fiscal years beginning after December 15, 2001. We will apply this standard beginning in fiscal 2003 and believe that the effect of adoption will not be significant. Prior to adopting this standard, we wrote down long-lived assets, excluding goodwill, by $212.0 and $207.2 million in fiscal 2002 and 2001, respectively, by applying SFAS No. 121.

        In June 2002, the Financial Accounting Standards Board issued SFAS No. 146 "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 supersedes EITF No. 94-3. The principal difference between SFAS. No. 146 and EITF No. 94-3 relates to when an entity can recognize a liability related to exit or disposal activities. SFAS No. 146 requires that a liability be recognized for a cost associated with an exit or disposal activity when the liability is incurred. EITF No. 94-3 allowed a liability related to an exit or disposal activity to be recognized at the date an entity commits to an exit plan. The provisions of SFAS No. 146 are effective for all exit or disposal activities initiated after January 1, 2003.

Note 2: Other Financial Statement Data (in millions)

Other Income (Expense), Net:

		2002			2001			2000
Interest income		$	12.4		$	6.6		$	23.6
Interest expense			(4.0	)		(8.8	)		(4.1	)
	Interest income (expense), net	$	8.4		$	(2.2	)	$	19.5
Foreign exchange loss		$	(17.7	)	$	(5.3	)	$	(3.9	)
Loss on lease termination			(8.2	)		—			—
Other			(7.4	)		(4.6	)		3.9
Other, net		$	(37.3	)	$	(18.3	)	$	—

Supplemental Cash Flow Information:

	2002			2001			2000
Income taxes paid (received)	$	(259.4	)	$	(24.1	)	$	218.5
Interest paid	$	5.3		$	7.7		$	4.1

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Supplemental Schedule of Investing Activities:

			2002			2001			2000
Acquisitions:
	Fair value of assets acquired		$	20.8		$	78.3		$	420.7
	Less: Liabilities assumed			(16.5	)		(24.9	)		(34.5	)
	Cash acquired			(0.1	)		(4.7	)		(40.9	)
		Acquisitions, net of cash acquired	$	4.2		$	48.7		$	345.3
Divestitures:
	Carrying value of assets disposed		$	22.4		$	232.6		$	—
	Less: Liabilities disposed			(20.1	)		(110.3	)		—
	Cash disposed			—			(4.8	)		—
		Divestitures, net of cash disposed	$	2.3		$	117.5		$	—

Consolidated Balance Sheet Information:

		2002			2001
Inventories:
Purchased materials and manufactured products		$	82.5		$	226.5
Work-in-process			12.4			27.1
	Total	$	94.9		$	253.6
Property and Equipment:
Land and buildings		$	113.5		$	252.2
Machinery and equipment			418.8			592.5
Furniture and fixtures			37.8			57.8
Less accumulated depreciation			(370.9	)		(397.3	)
	Total		199.2			505.2
Construction-in-process			7.6			108.8
	Total, net	$	206.8		$	614.0
Other Assets:
Notes receivable, long-term		$	22.8		$	6.2
Cost basis investments			3.9			49.7
Other			23.6			9.1
	Total	$	50.3		$	65.0

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Note 3: Investments

        As of October 31, 2002 and 2001, our available-for-sale securities consisted of the following (in millions):

	Cost Basis(1)		Unrealized Gain		Fair Value
2002
Available-for-sale securities	$	0.5	$	—	$	0.5
2001
Available-for-sale securities	$	8.3	$	64.9	$	73.2

(1)

As adjusted for the write-down of certain available-for-sale securities to a lower-of-cost-or-market basis.

        In accordance with our policy to review our investment portfolio for declines that may be other than temporary, we recorded a non-cash loss of approximately $5.7 million and $816.3 million on a lower-of-cost-or-market write-down on certain available-for-sale securities during fiscal 2002 and 2001, respectively. We also recorded a write-down of approximately $45.2 million and $46.2 million for certain investments in non-publicly traded securities in fiscal 2002 and 2001, respectively, as a result of the downturn in market conditions in the technology and telecommunication market sectors. The net gains described in the following paragraphs were recorded as an offset to the loss on the write-down of our investment portfolio.

        In fiscal 2002, fiscal 2001, and fiscal 2000 we sold common stock of certain companies in our investment portfolio and settled certain related equity collar arrangements for gains of $67.8 million, $76.8 million, and $23.8 million, respectively, as follows:

Fiscal 2002

        During fiscal 2002, we sold 2.4 million shares of ONI Systems and completely settled a related hedging arrangement for an aggregate gain of $66.5 million. As of October 31, 2002, we have liquidated our entire investment in ONI Systems. In addition to the ONI Systems sale, we sold our remaining interest in MIND C.T.I. for $4.8 million and recognized a $0.3 million gain on the sale. Finally, we liquidated our investment in Northstar Photonics, a non-marketable security, for a gain of $1.0 million.

Fiscal 2001

        On February 22, 2001, Siemens and Efficient Networks, Inc. entered into a definitive merger agreement. Pursuant to the merger agreement, Siemens purchased all of the outstanding shares of Efficient Networks for $23.50 in cash per share. As a result of the merger, we recorded a gain of approximately $34.6 million in fiscal 2001 from the sale of approximately 1.8 million shares of Efficient Networks that we owned.

        On July 19, 2001, America Online, Inc. acquired InfoInterActive, Inc. Under the terms of the acquisition agreement, AOL acquired all of the outstanding shares of InfoInterActive for $1.42 in cash per share. As a result of the acquisition, we recorded a gain of approximately $2.1 million from the sale of approximately 1.5 million shares of InfoInterActive in fiscal 2001.

        During fiscal 2001, we sold 3.4 million shares of our investment in Redback Networks, Inc., 1.6 million shares of our investment in ONI Systems and 2.3 million shares of our investment in

49

GlobeSpan. As a result of these sales, we recorded a $44.6 million loss on the sale of the Redback Networks shares, a $29.6 million gain on the sale of the ONI Systems and a loss of $8.8 million on the sale of the GlobeSpan shares.

        In addition, during fiscal 2001, we entered into cashless collar arrangements to minimize the impact of a potential decrease in the market value of portions of our remaining investment in Redback Networks, ONI Systems and GlobeSpan. These cashless collar arrangements were contracts entered into with third-party financial institutions whereby the financial institution guarantees a certain floor value of the securities if held to maturity while simultaneously permitting us to participate in a certain amount of appreciation above the floor value. The financial institutions, independent of us, engage in certain hedging transactions to manage their risk associated with these arrangements. These arrangements were terminated when we sold a portion of the underlying investments during fiscal 2001. We recognized a gain of $63.9 million upon the settlement of these collars.

Fiscal 2000

        In the second quarter of fiscal 2000, Siara Systems, Inc., in which we had a 7.3% ownership interest, was acquired by Redback Networks, Inc. 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 and reflected on the balance sheet at the market value of the Redback Networks shares. The gain recognized on the conversion of these shares was $722.6 million. This gain increased the basis of our investments by $722.6 million.

Note 4: Notes Payable

        As of October 31, 2002, we had a note payable of $15.7 million that will mature in fiscal 2003. In addition, we have a $10.5 million long-term note payable related to the financing of a customer note receivable in which we sold a 100% participation interest with full recourse to us. The $10.5 million note payable is classified as long-term because our recourse obligation is fully secured by $10.5 million of restricted cash, which is a long-term asset. The note payable and restricted cash will be reduced each quarter as the customer makes payment on the note receivable.

        In December 2001, we entered into an accounts receivable securitization arrangement with a financial institution. This arrangement functions much like a revolving line of credit, but has a lower cost of funds than a traditional revolving line of credit. Pursuant to this arrangement we may sell certain of our U.S.-sourced accounts receivable to the financial institution without recourse to us. The sales may occur either on a one-time basis or on a continuous basis, provided that the aggregate sales proceeds less the uncollected receivables may not exceed $160 million at any point in time. We will continue to service, administer and collect the receivables with respect to this arrangement. The receivables are sold at a discount to their face amount, with such discount representing a financing charge. The financing charge is based on an A1-P1 Commercial Paper rate plus an interest spread for the used and unused portion of the amount available under this arrangement. The actual amount of receivables that can be sold depends on certain attributes of the underlying receivables, thus the actual amount that may be available under this arrangement may be less than the maximum of $160 million. During the fiscal 2002, the amount available under this arrangement ranged from $3 million to $54 million, and the amount available as of October 31, 2002 was approximately $23 million.

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        The purpose of this securitization arrangement is to allow us to accelerate the cash realized from our receivables, and to provide an additional liquidity resource. We will account for any sales of receivables to the financial institution as a sale, and accordingly any discount from the face value of such receivables as well as certain fees will be included in interest and other financing expense. As is customary with these arrangements, we will utilize a wholly owned special purpose entity to facilitate these sales, the purpose of which is to isolate and hold title to the receivables for the benefit of the financial institution. As of and through October 31, 2002, there have been no sales of receivables under this arrangement. This arrangement expires on December 12, 2004, subject to possible earlier termination under certain circumstances.

Note 5: Acquisitions

Pooling-of-Interests Method:

        In fiscal 2000, we acquired Broadband Access Systems, Inc., or "BAS," and PairGain Technologies, Inc., or "PairGain," both 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. There were no material transactions between us and the acquired companies prior to the mergers, and the effects of conforming PairGain's and BAS's accounting policies to ours 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
June 2000	PairGain	72.2	$	2,946.9
September 2000	BAS	66.0	$	1,835.6

        Our consolidated financial statements for prior years have been restated to include the results of PairGain and BAS within the Broadband Infrastructure and Access segment. Net sales and income (loss) for these individual entities for fiscal 2000 were as follows (in millions):

Net Sales:
ADC	$	3,142.0
PairGain		145.3
BAS		0.6
Combined	$	3,287.9
Net Income (Loss):
ADC	$	765.2
PairGain(1)		178.4
BAS		(75.5	)
Combined	$	868.1

(1)

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

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        Both of these acquired companies used a calendar year-end. In recording the pooling-of-interests combinations, PairGain and BAS financial statements for their fiscal year ended December 31, 2000 were combined with our financial statements for fiscal 2000. In order to conform year-ends, an adjustment of $7.9 million was made to retained earnings as of October 31, 2000.

Other Pooling-of-Interests Combinations:

        On February 26, 2001, we acquired all of the outstanding equity interests in CommTech Corporation. CommTech was a provider of end-to-end service order management, provisioning and activation software for communications service providers. In the transaction, we issued approximately 11.6 million shares of our common stock to CommTech's shareholders. We also converted all outstanding CommTech stock options into options to acquire approximately 1.6 million shares of our common stock. The transaction was accounted for as a pooling-of-interests. Since the historical operations of CommTech were not material to our consolidated operations or financial position, prior period annual financial statements were not restated for this acquisition. We divested a substantial portion of CommTech in November of fiscal 2003 as part of our restructuring initiatives.

        We also completed a pooling-of-interests combination with Altitun AB during May 2000. Altitun was a developer and supplier of active optical components for next-generation optical networks. The historical operations of Altitun were not material to our consolidated operations; therefore, prior period annual financial statements have not been restated for this acquisition. We exchanged 30.4 million shares (including both stock issued and options assumed) for all of the common stock of Altitun. The fair value of this transaction was $948.8 million. During fiscal 2002, we closed Altitun as part of our restructuring initiatives, and we are currently marketing its assets for sale.

Acquisition Expenses of Pooling-of-Interests Combinations:

        Expenses totaling $102.4 million were incurred in consummating the pooling transactions described above and were recorded as part of the non-recurring charges in fiscal 2000. These costs primarily consisted 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, we acquired all outstanding common shares of Centigram Communications Corporation for $173.6 million in cash plus stock options valued at $42.9 million. Centigram was 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

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in-process research and development expenses of $15.8 million were recorded as part of the 2000 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 Centigram acquisition were being amortized over periods ranging from five to fifteen years.

Other Transactions

        In addition to the transactions identified above, we made several smaller purchases during fiscal 2001 and fiscal 2000. The following table summarizes significant acquisitions made during the past three fiscal years, all of which were accounted for by the purchase method (in millions):

Company	Acquisition Date	Transaction Value
France Electronique S.A.'s telecom systems integration business	November 2000	$	44.0
Computer Telecom Installations Ltd.	September 2000	$	40.4
IBSEN Micro Structures A/S	May 2000	$	78.5
NVision, Inc.	January 2000	$	19.7

        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 of $22.8 million in fiscal 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.

        The inclusion of the above purchase acquisitions for periods prior to the date of acquisition would not have materially affected our results of operations. We sold the operations of Centigram on October 31, 2001, in connection with the sale of our enhanced services software product line. IBSEN and NVision were also divested in fiscal 2001 and fiscal 2002, respectively.

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Note 6: Divestitures

        During fiscal 2002 and 2001, we sold non-strategic product lines in cable/broadcast TV transmission, broadband wireless transmission, broadcast TV video routing, enterprise access products, wireless components, optical components and enhanced services software. In addition, we closed down our Avidia Multiplexer, Cellworx transport and optical laser product lines, and the U.S. version of our iAN product line. These products did not meet our growth, profitability and market leadership criteria. Included in these product line sales and shut downs were domestic operations in California, Connecticut, Minnesota, New Jersey, Oregon and Pennsylvania, as well as international operations in Argentina, Australia, Austria, Denmark, Finland and Sweden. The sales of these assets generated approximately $2.3 million and $117.5 million, net of cash disposed, in fiscal 2002 and 2001, respectively. As a result of these divestitures and shutdowns, we recorded losses on sales or shutdown of approximately $6.7 million and $81.9 million in fiscal 2002 and 2001, respectively. Net sales and operating income (loss) of the product lines divested in fiscal 2002 and 2001 were as follows (unaudited) (in millions):

	2002			2001			2000
Net sales:
Broadband Infrastructure & Access	$	14.9		$	300.3		$	566.3
Integrated Solutions		—			104.6			59.7
Total	$	14.9		$	404.9		$	626.0
Operating income (loss)	$	(96.8	)	$	(250.3	)	$	(58.9	)

        In fiscal 2000, we recognized a $328.6 million gain on the divestiture of the microelectronics group by PairGain Technologies, Inc.

Note 7: Joint Ventures

        In January 2001 and December 2001, we entered into a total of three joint ventures with Competence Research and Development Ltd., an independent company. The joint ventures were established to share development risk and capital resources associated with the ongoing development of technology used in our iAN™, BroadAccess™ and Small Subscriber product lines. The joint ventures were successful in advancing the development of technology related to these product lines. When the joint ventures were established we held 34%, 20% and 49% interests, respectively, in the three joint venture entities. Because we did not have majority control over the joint ventures, these investments were accounted for using the equity method. Therefore, a pro rata portion of the joint ventures' profits or losses is reflected in our consolidated income statement as Other Income (Expense). In fiscal 2002 and 2001, we incurred approximately $2.6 million and $9.7 million, respectively, in equity losses related to these joint ventures.

        In December 2001, we purchased Competence's 66% interest in one of the joint ventures for $3.9 million in cash and assumption of approximately $16.5 million in debt owed by that joint venture, the proceeds of which were being used to fund the development of technology. In February 2002, we purchased Competence's remaining interests in the other joint ventures for approximately $350,000 in cash and assumption of approximately $4.2 million in debt, the proceeds of which were used to fund the development of the technology. The debt was paid off immediately following the purchases. We recorded expense for in-process research and development projects associated with the purchase of Competence's interest in these ventures in fiscal 2002 of $10.5 million. In addition, $10.3 million was allocated to developed technology, which will be amortized over a period of seven years. Appraisals for

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purchased in-process and developed technology were determined using the income approach, discounted based on the estimated likelihood that the project ultimately will succeed.

Note 8: Employee Benefit Plans

        Retirement Saving Plans:    Substantially all employees are eligible to participate in our retirement saving plans. In the United States, we match employee contributions to our plan up to 6% of wages, and depending on our financial performance, we voluntarily may make an additional contribution up to 70% on 6% of wages. Employees are fully vested in all contributions at the time the contributions are made. Our contributions to our U.S. retirement savings plan were $15.3 million, $23.0 million and $22.5 million during fiscal 2002, 2001 and 2000, respectively. If so elected by the participants, the trustee for our U.S. retirement savings plan invests a portion of our cash contributions in our common stock. In addition, other retirement savings plans exist in other of our global locations, which are aligned with local custom practice. We contributed $3.4 million, $2.8 million and $2.0 million to our global (non-U.S.) retirement savings plans in fiscal 2002, 2001 and 2000, respectively.

        Global Employee Stock Purchase Plan:    We have a global employee stock purchase plan that is available to substantially all employees. Eligible employees may purchase our common stock through payroll deductions. Until April 2000, the discounted purchase price given to our employees on our stock was 85% of the market closing price of our stock at the end of each stock purchase period. Since April 2000, employees have been able to purchase our common stock at a price equal to the lower of 85% of the market closing price of our stock at the beginning or the end of each stock purchase period. We issued 4.8 million, 3.2 million, and 0.3 million shares of common stock pursuant to this plan during fiscal 2002, 2001, and 2000, respectively.

        Stock Award Plans:    We maintain a Global Stock Incentive plan to grant various stock awards, including stock options at fair market value and restricted shares, to key employees and to our non-employee directors. A maximum of 147.5 million stock awards can be granted under this plan; as of October 31, 2002, 56.1 million shares were available for stock awards. In December 2001, we adopted the 2001 Special Stock Option Plan and made a one-time option grant to non-executive employees to acquire an aggregate of 9.5 million shares to address acute retention and compensation considerations. All options granted under this plan were made at fair market value.

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

	Stock Option Shares		Stock Options Weighted Average Exercise Price		Restricted Shares
Outstanding at October 31, 1999	91.2		$	9.48	0.4
Adjustment to conform year-end	(4.5	)		—	—
Granted	38.7			15.69	3.3
Exercised	(20.0	)		18.22	—
Restrictions lapsed	—			—	(0.4	)
Canceled	(8.9	)		12.57	—
Outstanding at October 31, 2000	96.5			13.84	3.3
Granted	30.6			12.65	0.2
Exercised	(7.5	)		3.33	—
Restrictions lapsed	—			—	(2.3	)
Canceled	(23.7	)		17.24	(0.7	)
Outstanding at October 31, 2001	95.9			12.30	0.5
Granted	43.0			4.24	1.9
Exercised	(1.2	)		0.87	—
Restrictions lapsed	—			—	(0.4	)
Canceled	(30.1	)		11.09	(0.3	)
Outstanding at October 31, 2002	107.6		$	9.54	1.7
Exercisable at October 31, 2002	66.4		$	11.04	—

        The following table contains details of our outstanding stock options as of October 31, 2002 (option shares in millions):

Range of Exercise Prices Between				Number Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price
$	0.05	$	4.25	15.5	8.24	$	2.57	6.4	$	2.88
	4.27		4.37	16.4	8.99		4.37	6.2		4.37
	4.44		5.42	10.8	8.60		5.20	1.5		4.95
	5.47		7.68	13.6	7.28		7.01	8.9		6.71
	7.69		9.56	10.8	4.30		8.88	10.5		8.89
	9.58		11.92	15.6	5.08		11.29	13.5		11.25
	11.93		14.56	10.1	6.83		12.22	9.1		12.05
	15.02		33.59	12.2	7.62		22.62	8.8		22.77
	35.25		40.94	0.2	6.70		38.57	0.1		40.94
	41.94		41.94	2.4	7.68		41.94	1.4		41.94

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        The weighted average fair value per option at the date of grant for options granted in fiscal 2002, 2001 and 2000 was $2.27 per share, $8.74 per share and $13.98 per share, respectively. The fair value was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2002		2001		2000
Risk-free interest rate	2.43	%	3.27	%	5.91	%
Expected dividend	—		—		—
Expected volatility factor	67.02	%	93.2	%	82.9	%
Expected option term	4.3 years		4.4 years		4.5 years

        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 this standard, we have 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, we have recognized no compensation expense under either our stock incentive plan or non-employee director stock option plan.

        If compensation expense for our stock-based compensation plans had been determined based on the fair value on the grant dates consistent with the method of SFAS No. 123, our net income and earnings per share would have decreased to the pro forma amounts indicated below (in millions, except per share amounts):

		2002			2001			2000
Net Income (Loss)
	As reported	$	(1,145.0	)	$	(1,287.7	)	$	868.1
	Pro forma	$	(1,259.4	)	$	(1,393.7	)	$	765.7
Earnings (Loss) Per Share—Basic
	As reported	$	(1.44	)	$	(1.64	)	$	1.20
	Pro forma		(1.58	)	$	(1.77	)	$	1.06
Earnings (Loss) Per Share—Diluted
	As reported	$	(1.44	)	$	(1.64	)	$	1.13
	Pro forma	$	(1.58	)	$	(1.77	)	$	0.99

        As a result of the issuance of Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation—An Interpretation of APB Opinion No. 25," we were 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 fiscal 2000. The value attributed to unvested options of $12.1 million was allocated to deferred compensation expense and was amortized over the remaining vesting period. Non-cash stock compensation expense recorded in fiscal 2001 and 2000 relating to the Centigram acquisition was $6.0 million and $2.4 million, respectively. These options were cancelled shortly after the divestiture of Centigram on October 31, 2001. Further non-cash stock compensation expense of $10.4 million, $12.7 million and $44.7 million was recognized in fiscal 2002, fiscal 2001 and fiscal 2000, respectively, as a result of unvested stock options and restricted stock converted into ADC stock awards in connection with the BAS acquisition. The exercise prices on the date of grant were deemed to be less than the estimated fair values of the stock awards. Expense is being recognized over the anticipated vesting

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period of the awards through fiscal 2005. Such amounts are reflected in non-cash stock compensation expense in the consolidated statements of operations.

        In addition, we incurred $3.9 million of deferred compensation expense in fiscal 2002 related to restricted stock issued as part of employee incentive plans, which was included in selling and administration expenses.

Note 9: Capital Stock and Accumulated Other Comprehensive Income

        Stock Splits:    All share and per share amounts, including stock options, have been restated to reflect our 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:    We are 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 three 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 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):

	2002			2001			2000
Net income (loss)	$	(1,145.0	)	$	(1,287.7	)	$	868.1
Earnings (loss) per share—basic	$	(1.44	)	$	(1.64	)	$	1.20
Earnings (loss) per share—diluted	$	(1.44	)	$	(1.64	)	$	1.13
Weighted average common shares outstanding—basic		795.6			787.0			721.6
Effect of dilutive securities		—			—			48.7
Weighted average common shares outstanding—diluted		795.6			787.0			770.3
Antidilutive stock options		110.8			64.6			7.3

        Stock options were antidilutive because they had an exercise price greater than the average market price during the year or due to the net loss in 2002 and 2001. If we had net income for fiscal 2002 and 2001, the diluted weighted average common shares outstanding would have increased by 2.3 million and 11.7 million shares, respectively.

        Shareowner Rights Plan:    We have a shareowner rights plan intended to preserve the long-term value of ADC to our shareowners by discouraging a hostile takeover. Under the shareowner rights plan, each outstanding share of our common stock has an associated common stock purchase right. The rights are exercisable only if a person or group acquires 15% or more of our outstanding common stock. If the rights became exercisable, the rights would allow their holders (other than the acquiring person or group) to purchase shares of our common stock or stock of the company acquiring us 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 our board

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of directors prior to attempting a takeover. If our board of directors believes a proposed acquisition of ADC is in the best interests of ADC and our shareowners, our board of directors 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.

Accumulated Other Comprehensive Income:

        Accumulated other comprehensive income (AOCI) consists of the following (in millions):

	October 31,
	2002			2001			2000
Foreign currency translation adjustment	$	(14.7	)	$	(17.0	)	$	(29.4	)
Unrealized gain on available for sale securities, net of taxes		—			40.9			113.8
	$	(14.7	)	$	23.9		$	84.4

We specifically identify the amount of unrealized gain (loss) recognized in other comprehensive income for each available-for-sale security. When an available-for-sale security is sold or impaired, we remove the security's cumulative unrealized gain (loss), net of tax, from AOCI.

Note 10: Income Taxes

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

		2002			2001			2000
Current taxes:
	Federal	$	(233.4	)	$	(184.5	)	$	270.0
	Foreign		(1.4	)		(10.6	)		6.3
	State		(0.5	)		1.0			33.8
			(235.3	)		(194.1	)		310.1
Deferred			498.1			(438.9	)		282.2
	Total provision (benefit)	$	262.8		$	(633.0	)	$	592.3

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

	2002		2001		2000
Federal statutory rate	(35	)%	(35	)%	35	%
Impairment charges	(4	)	3		—
Research and development tax credits	(2	)	—		—
Deferred tax asset valuation allowance	73		—		—
State income taxes, net	—		(1	)	3
Acquisition and integration fees	(1	)	—		3
Other, net	(1	)	—		—
Effective income tax rate	30	%	(33	)%	41	%

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Deferred tax assets (liabilities) as of October 31, 2002 and 2001 are composed of the following (in millions):

			2002			2001
Current deferred tax assets (liabilities):
	Asset valuation reserves		$	41.5		$	73.9
	Unrealized gain on investments			—			(26.4	)
	Accrued liabilities			53.3			40.4
	Other			3.5			19.1
		Subtotal		98.3			107.0
	Current deferred tax asset valuation allowance			(98.3	)		—
		Total	$	—		$	107.0
Non-current deferred tax assets (liabilities):
	Intangible assets		$	340.5		$	311.1
	Depreciation			(15.7	)		(5.0	)
	Net operating loss and tax credit carryover			152.6			45.4
	Restructuring charges and other			135.6			86.7
		Subtotal		613.0			438.2
	Non-current deferred tax asset valuation allowance			(613.0	)		(71.1	)
		Total	$	—		$	367.1

        During the third quarter of fiscal 2002 we concluded that a full valuation allowance against our net deferred tax assets was appropriate. A deferred tax asset generally represents future tax benefits to be received when certain expenses and losses previously recognized in our U.S. GAAP-based income statement become deductible under applicable income tax laws. Thus, realization of a deferred tax asset is dependent on future taxable income against which these deductions can be applied. Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" requires that a valuation allowance be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including a company's performance, the market environment in which the company operates, the utilization of past tax credits, length of carryback and carryforward periods, and existing contracts or sales backlog that will result in future profits. The accounting guidance further states that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years. As a result of our cumulative losses over the past two fiscal years and the full utilization of our loss carryback potential, we concluded that a full valuation allowance should be recorded. The total deferred tax asset valuation charge recorded in the consolidated statements of operations for fiscal 2002 and 2001 was $640.2 million and $9.4 million, respectively.

        During fiscal 2001, we made an election for U.S. tax purposes that gave rise to a $240.0 million non-current deferred tax asset. This election related to a business combination that was accounted for as a pooling-of-interests. Therefore, the recognition of this tax asset was recorded as an increase to paid-in capital.

        Federal and state operating loss carryforwards for tax purposes, available to offset future income, were approximately $70.6 million at October 31, 2002, and federal credit carryforwards were approximately $72.6 million. The federal carryforwards expire October 31, 2022, and the state

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carryforwards expire on various dates between October 31, 2007 and October 31, 2017. Foreign operating loss carryforwards were approximately $209.0 million at October 31, 2002, most of which are available for indefinite carryforward periods.

        The provision for foreign income taxes is based upon foreign pre-tax losses of approximately $248.6 million, $117.6 million and $37.4 million during fiscal 2002, 2001 and 2000, respectively.

        Deferred U.S. 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, 2002, the undistributed cumulative earnings of foreign subsidiaries were approximately $38.5 million.

Note 11: Impairment and Non-Recurring Charges

Fiscal 2002 and 2001

        During the first quarter of fiscal 2001, we launched an initiative to focus our business on strategic and core operations and improve our operating performance by restructuring and streamlining our operations. This initiative included the discontinuance of some product lines, the sale and exit of non-strategic businesses and the consolidation of unproductive and duplicate facilities. This initiative also included the elimination of employee and contractor positions. Throughout fiscal 2001 and continuing throughout fiscal 2002, we took aggressive actions to achieve more cost-efficient operations.

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        Impairment and non-recurring related charges by type of expense and where classified in the consolidated statements of operations are as follows for fiscal 2002 and 2001 (in millions):

Fiscal 2002		Impairment Charges		Non-recurring Charges		Cost of Sales		Selling and Administrative Charges			Total
Employee severance costs		$	—	$	53.1	$	—	$	—		$	53.1
Facilities consolidation and lease termination			—		153.8		—		—			153.8
Fixed asset write-downs			212.0		—		—		—			212.0
Inventory and committed sales contracts			—		—		18.9		—			18.9
Goodwill write-downs			136.3		—		—		—			136.3
Purchased in-process research and development			—		10.5		—		—			10.5
Committed sales contracts— administrative			—		—		—		(5.7	)		(5.7	)
Other			—		2.2		—		—			2.2
	Total	$	348.3	$	$219.6	$	18.9	$	(5.7	)	$	581.1
Fiscal 2001		Impairment Charges		Non-recurring Charges		Cost of Sales		Selling and Administrative Charges			Total
Employment severance costs		$	—	$	89.0	$	—	$	—		$	89.0
Facilities consolidation			—		96.0		—		—			96.0
Fixed asset write-downs			207.2		—		—		—			207.2
Inventory and committed sales contracts			—		—		52.4		—			52.4
Goodwill write-downs			294.5		—		—		—			294.5
Committed sales contracts— administrative			—		—		—		24.5			24.5
Integration and acquisition costs			—		9.0		—		—			9.0
Other			—		1.4		—		3.9			5.3
	Total	$	501.7	$	195.4	$	52.4	$	28.4		$	777.9

        Non-Recurring Charges:    Employee severance costs relate to headcount reductions resulting from the closure of facilities and general terminations attributed to reduced sales forecasts. Our workforce was reduced by approximately 4,400 employees during fiscal 2002, which included approximately 2,900 employees impacted by reductions in force, with the remainder resulting from attrition and divestitures. During fiscal 2001, our workforce was reduced by 11,500 employees, which included approximately 7,400 employees impacted by reductions in force, with the remainder resulting from attrition. Additionally, in 2001 the reductions due to the divestiture of business units were effectively offset by the number of employees gained through our acquisition of CommTech and France Electronique's telecom systems integration business, which were completed in fiscal 2001. The costs of these reductions have been and will be funded through cash from operations. These reductions have impacted both business segments.

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        Facility consolidation costs represent lease termination costs and other costs associated with our decision to consolidate and close unproductive, duplicative or excess manufacturing and office facilities.

        Committed sales contracts—administrative represents the administrative expenses necessary to complete or negotiate settlements with respect to certain committed sales contracts, which costs would normally be classified as selling and administration expenses. These costs are a direct result of our decision to exit certain product lines.

        In addition, we also incurred inventory and committed sales contract related charges which represent losses incurred to write down the carrying value of inventory and the direct costs of exiting and maintaining certain committed sales contracts for product lines that have been discontinued.

        Impairment Charges:    As a result of our intention to sell, scale-back or exit non-strategic businesses, we evaluated our goodwill and property and equipment assets for impairment in accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets" and SFAS No. 142, "Goodwill and other Intangible Assets." Refer to Note 12 for a description of our goodwill impairment charges. As a result of applying SFAS No. 121 to our property and equipment, a non-cash impairment charge was required. For fiscal 2002 and 2001, we recorded impairment charges of $212.0 million and $207.2 million, respectively.

        The following table provides detail on the activity and remaining restructuring accrual by type of charges (in millions):

Type of Charge	October 31, 2001		Net Additions (Reductions)			Cash Charges		Non-cash Charges		October 31, 2002
Employee severance costs	$	22.3	$	53.1		$	58.4		—		17.0
Facilities consolidation		83.6		153.8			131.8		—		105.6
Inventory and committed sales contracts		3.8		18.9			—		22.7		—
Committed sales contracts administrative		11.1		(5.7	)		3.8		—		1.6
Total	$	120.8	$	220.1		$	194.0	$	22.7	$	124.2

Type of Charge	Initial Charges		Net Additions (Reductions)			Cash Charges		Non-cash Charges		October 31, 2001
Employment severance costs	$	43.2	$	45.8		$	60.3	$	6.4	$	22.3
Facilities consolidation		40.2		55.8			10.1		2.3		83.6
Inventory and committed sales contracts		64.5		(12.1	)		4.5		44.1		3.8
Committed sales contracts administrative		24.4		0.1			10.3		3.1		11.1
Total	$	172.3	$	89.6		$	85.2	$	55.9	$	120.8

        The total adjustment made to the restructuring accrual for changes in assumptions was a $21.3 million and $30.2 million decrease for fiscal 2002 and 2001, respectively. The adjustment was primarily related to changes in the assumptions related to divested product lines as these product lines were sold or shut down prior to the completion of certain restructuring activities. This adjustment was recorded as an offset to the additions to the accrual, and thus is reflected in the "Net Additions" column in the respective tables above.

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        We expect that substantially all of the remaining $17.0 million of cash expenditures relating to employee severance costs incurred through October 31, 2002 will be paid by the end of fiscal 2003. We expect that of the $105.6 million to be paid for the consolidation of facilities, approximately $66.7 million will be funded through the use of existing restricted cash, $27.1 million will be paid from unrestricted cash in fiscal 2003, and the balance will be paid over the respective lease terms of the facilities through 2008 from unrestricted cash. The remaining balance of $1.6 million for committed sales contracts—administrative will be paid out through fiscal 2003 as the committed sales contracts are completed.

        In addition to the restructuring accrual mentioned above, we have $20.0 million of assets held for sale ($11.5 million relates to our Broadband Infrastructure and Access segment and $8.5 million was not allocated to either of our segments). We classified these assets as "Held for Sale" after our decision to exit non-strategic product lines and to reduce the size of our global operations. We expect to sell or dispose of these assets before the end of fiscal 2003.

Fiscal 2000:

        The following table summarizes fiscal 2000 non-recurring charges (in millions):

Acquisition and integration fees	$	121.9
Restructuring the former Broadband Access and Transport Group		13.3
Purchased in-process research and development expenses (Note 5)		22.8
Total	$	158.0

        As a result of our acquisition of PairGain in the third quarter of fiscal 2000, we recognized a charge of $64.5 million for the cost of integrating and aligning the operations of PairGain within our Broadband Infrastructure and Access segment. The components of this charge included $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 our acquisitions of Altitun in the third quarter of fiscal 2000 and BAS in the fourth quarter of fiscal 2000, accounted for as a pooling of interests, we recognized $35.9 million and $20.6 million, respectively, in acquisition fees. These fees are direct and indirect incremental costs associated with these combinations, primarily consisting of fees paid to investment bankers, attorneys and other outside advisors. We also incurred $0.9 million of integration costs associated with the acquisition of Centigram in the third quarter of fiscal 2000.

        During the third quarter of fiscal 2000, our management approved a restructuring plan in connection with our acquisition of PairGain. These merger-related actions included the elimination of redundant and excess facilities, workforce, and administrative overhead and systems, as well as transition to our shared services. The total estimated charges related to this restructuring plan were $5.5 million. The charges included $4.0 million in employee termination costs and $1.5 million in the elimination of redundant financial and operating systems. This restructuring plan was completed in the first quarter of fiscal 2001.

        During the fourth quarter of fiscal 2000, our management approved restructuring plans including initiatives to consolidate unproductive and duplicative facilities and dispose of product lines that no

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longer fit our current focus and growth strategy, and to merge the international sales operations within the Broadband Infrastructure and Access segment. The total estimated charges recorded relating to these restructuring plans were $7.8 million. These 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. These restructuring plans were completed in the second quarter of fiscal 2001.

Note 12: Goodwill

        On November 1, 2001, we adopted SFAS No. 142, "Goodwill and Other Intangible Assets." Under this standard, purchased goodwill is no longer amortized over its useful life. Rather, goodwill is subject to a periodic impairment test based on its fair value. The adoption of the standard required an initial impairment test as of November 1, 2001. We obtained an independent appraisal to assess the fair value of our business units to determine whether goodwill carried on our books was impaired and the extent of such impairment, if any. The independent appraisal used the income approach to measure the fair value of our business units. Under the income approach, value is dependent on the present value of future economic benefits to be derived from ownership. Future net cash flows available for distribution are discounted at market-based rates of return to provide indications of value. We used a discount rate of 19.9% in our calculations. Based upon this independent appraisal, we determined that our current goodwill balances were not impaired as of November 1, 2001.

        During fiscal 2002, we made the decision to exit our optical components business due to the continued downturn in the telecommunications industry coupled with future forecasts that indicated losses in this area of the business. As a result of our decision to exit the optical components business, we re-evaluated the fair value of this business and ultimately wrote off $36.6 million of goodwill that we had recorded as a result of optical component business acquisitions in prior years. During the fourth quarter, we performed the annual goodwill impairment test and assessed the fair value of our remaining business units to determine whether goodwill carried on our books was impaired and the extent of such impairment. We used the income approach to measure the fair value of goodwill using a discount rate of 21.0%. After performing this evaluation it was evident that a significant impairment of goodwill had occurred because of a steep decline in forecasted revenues. Accordingly, an impairment charge of $85.5 million related to our Integrated Solutions segment and $14.2 million related to our Broadband Infrastructure and Access segment was recognized in addition to the optical component goodwill impairment. At October 31, 2002, we had $3.8 million of goodwill related solely to our Integrated Solutions segment on our consolidated balance sheet.

        We will continue to reassess the value of our business units and related goodwill balances at the beginning of the fourth quarter of each fiscal year or at other times if events have occurred or circumstances exist that indicate the carrying amount of goodwill may not be recoverable.

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        The following table adjusts net income (loss) for goodwill amortization expense recognized for the years ended October 31 (in millions, except for earnings (loss) per share):

		2002			2001			2000
Reported net income (loss)		$	(1,145.0	)	$	(1,287.7	)	$	868.1
Add back: Goodwill amortization, net of taxes			—			44.9			29.5
Adjusted net income (loss)		$	(1,145.0	)	$	(1,242.8	)	$	897.6
Diluted earnings per share:
	Reported net income (loss)	$	(1.44	)	$	(1.64	)	$	1.13
	Goodwill amortization		—			0.06			0.04
	Adjusted net income (loss)	$	(1.44	)	$	(1.58	)	$	1.17

Note 13: Derivative Instruments and Hedging Activities

        We adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," on November 1, 1999. In doing so, we did not incur any transition adjustments to earnings.

        We sometimes hedge forecasted foreign currency transactions. Derivatives entered into for this purpose are classified as cash-flow hedges. Foreign currency cash flows may arise from cross-border transactions principally in the Euro, Great British pound, Australian dollar and Canadian dollar. Changes in the fair value of the effective portion of the derivatives are reported as a separate component of shareowners' investment in accumulated other comprehensive income (loss). Changes in the fair value of the derivatives deemed to be ineffective are reported in current period earnings. We utilize foreign exchange forward contracts to reduce the currency risk of non-functional current assets and liabilities. Such foreign exchange forward contracts are classified as fair value hedges and are reported in current-period earnings along with the re-evaluation of the underlying exposure.

        As of October 31, 2001, we participated in a market-price collar arrangement that locks in a price range for the sale of certain shares held as investments, thereby guaranteeing a minimum selling price. Such derivatives were treated as cash flow hedges. Changes in the value of these derivatives were reported as a separate component of shareowners' investment in accumulated other comprehensive income (loss). During fiscal 2002, we completely settled our investment collar and recognized a gain of $66.5 million when we sold such shares.

        We formally document all relations between foreign exchange forward contracts and the related exposure items, as well as our risk-management objectives and strategies for undertaking these positions. We formally assess, both at the inception of each contract and on an ongoing basis, whether the derivatives that are used in these transactions are highly effective in offsetting changes in the fair values or cash flows of the exposed items.

        The following table presents a summary of the notional amount and fair value of our foreign exchange forward contracts at October 31, 2002 (in millions):

	Notional Amount		Fair Value
Fair value hedges	$	162.8	$	0.4

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        Our foreign exchange forward contracts contain credit risk to the extent that our bank counterparties may be unable to meet the terms of the agreements. We minimize such risk by limiting our counterparties to major financial institutions. We do not expect to realize any material losses as a result of defaults by other parties.

Note 14: Commitments and Contingencies

        Vendor Financing:    We have worked with customers and third-party financiers to find a means of financing projects by negotiating financing arrangements. As of October 31, 2002, 2001 and 2000, we had commitments to extend credit of $58.0 million, $166.9 million and $380.0 million for such arrangements, respectively. The total amount drawn and outstanding under the commitments was approximately $20.9 million, $80.2 million and $35.0 million, respectively, as of October 31, 2002, 2001 and 2000. The commitments to extend credit are conditional agreements generally having fixed expiration or termination dates and specific interest rates, conditions and purposes. These commitments may expire without being drawn. Some of these commitments enable the customer to draw on the commitment after the customer has made payment to us for the products we sold, up to the amount the customer previously paid to us. Accordingly, amounts committed may affect 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, 2002, we have recorded approximately $12.7 million in loss reserves in the event of non-performance related to these financing arrangements.

        During fiscal 2002, we financed the sale of a participation interest in one of our vendor financing notes receivable for cash equal to $10.5 million. This sale was without any discount to the face amount of the receivable, was with full recourse to us, and our recourse obligation is secured by a letter of credit. We accounted for this sale of a participation interest as a loan, and thus recorded a $10.5 million long-term note payable. See Note 4.

        Letters of Credit:    As of October 31, 2002, we had $19.3 million of outstanding letters of credit. These outstanding commitments are fully collateralized by restricted cash.

        Operating Leases:    Portions of our operations are conducted using leased equipment and facilities. These leases are non-cancelable and renewable, with expiration dates ranging through the year 2017. The rental expense included in the accompanying consolidated statements of operations was $48.8 million, $49.8 million and $25.6 million for fiscal 2002, 2001 and 2000, respectively.

        We are a party to four operating lease agreements related to certain of our facilities, including our Eden Prairie, Minnesota headquarters facility. These leases have expiration dates ranging from 2004 to 2009, depending on whether we exercise our renewal options. These operating leases, which are sometimes referred to as "synthetic leases," contain minimum residual value guarantees by us at the end of the lease term and also give us a purchase option at the end of the lease term. If we choose to retain the property at the end of the lease term, or if the lease is terminated prematurely, we must pay the purchase option price. If we dispose of the property at the end of the lease term, we must pay any shortfall of the sales proceeds as compared to the purchase option price, not to exceed the amount of the residual value guarantee to the lessor. The aggregate purchase option price and minimum residual value guarantees from all of these leases are approximately $149.0 million and $116.0 million, respectively. Our obligations under these leases are secured by $149.0 million in cash collateral, which is classified as restricted cash on our consolidated balance sheet.

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        During the fourth quarter of fiscal 2002, we concluded that the fair market value of our headquarters facility was significantly less than the minimum value we had guaranteed the lessor. As we intend to occupy this facility in the long-term, we amended this lease to extend the lease term by an additional two years. In connection with this amendment, we paid the lessor $85.5 million from our restricted cash, which was the difference between the existing purchase option price and the current fair market value of the facility, and obtained a reduction in the purchase option price and minimum residual value guarantee. We also recorded a non-recurring charge of $84.3 million related to this payment.

        With the exception of our world headquarters facility, we do not intend to continue to occupy the other three leased facilities for the full lease term. Accordingly, we are attempting to sell these facilities. In order for us to sell these leased facilities, we must first purchase the facilities from the lessor for the purchase option price (which we will fund through the use of restricted cash). As the fair market value of these facilities is likely to be less than the amount payable to the lessor for the purchase option price, we may incur non-recurring charges related to the disposal of these leased facilities. The net sales proceeds obtained from a buyer of these facilities would be available to us as unrestricted cash. In November of fiscal 2003, we purchased one of these leased facilities from the lessor for $21.0 million, using the restricted cash pledged for this lease to pay the purchase price, and immediately sold the facility for $5.8 million. The $5.8 million sales proceeds are available to us as unrestricted cash.

        With the exception of the rent payments for our world headquarters facility, the table of future minimum operating lease payments below excludes any payments relating to the long-term operating leases discussed above because such payments are included in our restructuring accrual discussed in Note 11.

        The following is a schedule of future minimum rental payments required under non-cancelable operating leases as of October 31, 2002 (in millions):

2003		$	26.9
2004			23.3
2005			19.6
2006			16.7
2007 and thereafter			39.8
	Total	$	126.3

        Contingencies:    We are a party to various lawsuits, proceedings and claims arising in the ordinary course of business. The amount of monetary liability, if any, resulting from an adverse result in any of such lawsuits, proceedings and claims in which we are a defendant cannot be determined at this time. However, in the opinion of management, the aggregate amount of liability under these lawsuits, proceedings and claims will not have a material adverse effect on our consolidated results of operations or financial condition.

        Change of Control:    Our 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.

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Note 15: Segment Information

        We have two reportable segments: Broadband Infrastructure and Access, and Integrated Solutions. Broadband Infrastructure and Access products consist of:

•

connectivity devices that provide the physical contact points needed to connect different communications network elements and gain access to communications system channels; and


•

access and transport systems that provide broadband, multiservice delivery capabilities within service provider networks.

        Connectivity devices assist in the installation, testing, monitoring, accessing, managing, reconfiguring, splitting and multiplexing of communications systems 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, fiber, wireless and broadcast communications networks. Access and transport systems deliver broadband, multiservice communications to consumers and businesses over copper, coaxial cable and fiber networks. Broadband Infrastructure and Access products are used throughout the world in telephone, cable television, Internet, and wireless communications networks to deliver internet, data, video, and voice services to businesses and consumers.

        Integrated Solutions products and services consist of systems integration services and operations support systems (OSS) software that aid communications service providers in the provisioning, delivery and billing 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 management, network performance and service-level assurance software used by service providers to operate communications networks.

        Our segments currently reflect changes made in connection with our restructuring initiative. As a result of changes in fiscal 2001, our former Broadband Connectivity and Broadband Access and Transport segments were consolidated into a single Broadband Infrastructure and Access segment. We made no changes to the reporting of the Integrated Solutions segment. All prior period results have been restated to reflect these changes.

        Accounting policies used by the segments are the same as those described in Note 1 to the Consolidated Financial Statements.

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

•

Non-recurring and other restructuring-related charges;


•

Impairment charges;


•

Non-cash stock compensation expenses; and


•

Goodwill amortization resulting from acquisitions.

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

        Sales outside of the United States to external customers are determined on a "shipped-to" basis. No single country has property and equipment sufficiently material enough to warrant disclosure. In fiscal 2002, sales to one customer comprised 10.6% of our net sales. No single customer accounted for more than 10% of net sales in fiscal 2001 or 2000.

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        The following table sets forth certain financial information for each of our functional operating segments described above, as well as certain geographic information concerning our U.S. and foreign sales and ownership of property and equipment:

Segment Information (in millions)		Broadband Infrastructure and Access			Integrated Solutions			Unallocated Items			Consolidated
2002
External sales:
	Products	$	715.1		$	94.2		$	—		$	809.3
	Services		—			238.4			—			238.4
Total external sales			715.1			332.6			—			1,047.7
Depreciation and amortization			25.1			10.4			69.2			104.7
Impairment, non-recurring and other restructuring-related charges and non-cash stock compensation expense			—			—			(591.5	)		(591.5	)
Operating loss			(208.7	)		(32.0	)		(637.5	)		(878.2	)
Other income (expense), net			—			—			(4.0	)		(4.0	)
Pre-tax loss			(208.7	)		(32.0	)		(641.5	)		(882.2	)
Capital expenditures			8.2			4.4			13.0			25.6
Assets			354.7			269.5			520.0			1,144.2
2001
External sales:
	Products		1,810.0			233.7			—			2,044.5
	Services		—			358.3			—			358.3
Total external sales			1,810.0			592.0			—			2,402.8
Depreciation and amortization			101.3			20.6			75.9			197.8
Impairment, non-recurring and other restructuring-related charges and non-cash stock compensation expense			—			—			(796.6	)		(796.6	)
Operating loss			(99.2	)		(45.3	)		(886.8	)		(1,031.3	)
Other income (expense), net			—			—			(889.4	)		(889.4	)
Loss before income taxes			(99.2	)		(45.3	)		(1,776.2	)		(1,920.7	)
Capital expenditures			186.4			13.0			41.8			241.2
Assets			1,517.3			403.7			578.7			2,499.7
2000
External sales:
	Products		2,774.0			203.8			—			2,977.8
	Services		—			310.1			—			310.1
Total external sales			2,774.0			513.9			—			3,287.9
Depreciation and amortization			91.5			16.9			37.8			146.2
Impairment, non-recurring and other restructuring-related charges and non-cash stock compensation expense			—			—			(205.1	)		(205.1	)
Operating income (loss)			626.1			20.6			(280.8	)		365.9
Other income (expense), net			—			—			1,094.5			1,094.5
Income before income taxes			626.1			20.6			813.7			1,460.4
Capital expenditures			320.0			22.7			32.6			375.3
Assets			1,759.6			386.2			1,824.7			3,970.5

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Geographic Information (in millions)			2002		2001		2000
Sales:
	Outside the United States		$	283.6	$	692.2	$	708.1
	Inside the United States			764.1		1,710.6		2,579.8
		Total	$	1,047.7	$	2,402.8	$	3,287.9
Property and Equipment, Net:
	Outside the United States		$	46.6	$	176.4	$	143.2
	Inside the United States			160.2		437.6		465.4
		Total	$	206.8	$	614.0	$	608.6

Note 16: Quarterly Financial Data (Unaudited in millions, except earnings per share)

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
2002
Net Sales	$	293.5		$	298.4		$	235.1		$	220.7		$	1,047.7
Gross Profit		94.8			73.7			33.0			45.0			246.5
Loss Before Income Taxes		(69.9	)		(133.0	)		(297.5	)		(381.8	)		(882.2	)
Provision (Benefit) for Income Taxes		(25.1	)		(43.8	)		331.7			—			262.8
Net Loss	$	(44.8	)(1)	$	(89.2	)(2)	$	(629.2	)(3)	$	(381.8	)(4)	$	(1,145.0	)
Average Common Shares Outstanding— Basic & Diluted		793.4			794.9			796.4			797.6			795.6
Loss Per Share—Basic & Diluted	$	(0.06	)	$	(0.11	)	$	(0.79	)	$	(0.48	)	$	(1.44	)
2001
Net Sales	$	811.3		$	652.4		$	547.5		$	391.6		$	2,402.8
Gross Profit		310.8			122.3			177.7			114.2			725.0
Income Before Income Taxes		(10.6	)		(1,459.2	)		(86.8	)		(364.1	)		(1,920.7	)
Benefit for Income Taxes		(3.0	)		(414.0	)		(28.7	)		(187.3	)		(633.0	)
Net Loss	$	(7.6	)(5)	$	(1,045.2	)(6)	$	(58.1	)(7)	$	(176.8	)(8)	$	(1,287.7	)
Average Common Shares Outstanding— Basic & Diluted		782.8			786.0			787.8			789.7			787.0
Loss Per Share—Basic & Diluted	$	(0.01	)	$	(1.33	)	$	(0.07	)	$	(0.22	)	$	(1.64	)

(1)

Includes $2.8 million non-cash stock compensation expense; $3.0 million restructuring charges; $1.9 million impairment charges; $2.4 million loss related to write-down of investment portfolio; and $7.0 million gain on sale of investments.

(2)

Includes $2.6 million non-cash stock compensation expense; $57.3 million restructuring and in-process research and development charges; $16.8 million impairment charges; non-recurring non-operating gain of $26.2 million related to a patent infringement settlement; $0.7 million loss related to the sale of a divested product lines; $19.9 million loss related to write-down of investment portfolio; and $24.2 million gain on sale of investments.

(3)

Includes $2.5 million non-cash stock compensation expense; $33.1 million restructuring charges; $160.1 million impairment charges; $4.8 million loss related to the sale of a divested product line; $21.6 million loss related to the write-down of investment portfolio; $35.3 million gain on sale of investments; and $438.4 million charges related to deferred tax asset reserves as well as tax benefit adjustments due to tax law changes.

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(4)

Includes $2.5 million non-cash stock compensation expense; $139.4 million restructuring charges; $169.5 million impairment charges; $1.2 million loss related to sale of divested product lines; $7.0 million loss related to the write-down of investment portfolio; $1.3 million gain on sale of investments; and $1.2 million loss related to sale of divested product lines.

(5)

Includes $5.3 million net-of-tax, non-cash stock compensation expense and non-recurring charges; $48.9 million net-of-tax restructuring charges; and $5.0 million net-of-tax impairment charges.

(6)

Includes $9.5 million net-of-tax, non-cash stock compensation expense and non-recurring charges; $76.7 million net-of-tax restructuring charges; $368.8 million net-of-tax impairment charges; non-recurring non-operating loss of $496.5 million net-of-tax related to the write-down of the investment portfolio; and $21.4 million net-of-tax gain on investment related activities.

(7)

Includes $5.2 million net-of-tax, non-cash stock compensation expense and non-recurring charges; $21.9 million net-of-tax restructuring charges; $4.1 million net-of-tax impairment charges; non-recurring non-operating loss of $16.8 million net-of-tax related to the write-down of the investment portfolio; $26.7 million net-of-tax gain on investment related activities; and $3.7 million net-of-tax gain on divestiture of product lines.

(8)

Includes $10.5 million net-of-tax, non-cash stock compensation expense and non-recurring charges; $62.4 million net-of-tax restructuring charges; $(34.3) million net-of-tax impairment charges; non-recurring non-operating loss of $28.1 million net-of-tax related to the write-down of the investment portfolio; $1.8 million net-of-tax gain on investment related activities; and $56.9 million net-of-tax loss on divestiture of product lines.

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Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        On May 21, 2002, the Board of Directors of ADC, with the unanimous recommendation of the Audit Committee of the Board of Directors, dismissed Arthur Andersen LLP ("Andersen") as ADC's independent public accountants, effective immediately on that date.

        The audit reports of Andersen on the consolidated financial statements of ADC for the fiscal years ended October 31, 2001 and 2000, did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

        During ADC's fiscal years ended October 31, 2001 and 2000, and through the date of Andersen's dismissal: (a) there were no disagreements with Andersen on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure which, if not resolved to Andersen's satisfaction, would have caused Andersen to make reference to the subject matter of such disagreement in connection with Andersen's report on ADC's consolidated financial statements for such years; and (b) there were no reportable events as listed in Item 304(a)(1)(v) of Regulation S-K.

        ADC provided Andersen with a copy of the foregoing disclosures. Attached as Exhibit 16-a is a copy of Andersen's letter, dated May 22, 2002, stating its agreement with such statements.

        Also on May 21, 2002, the Board of Directors of ADC, with the unanimous recommendation of the Audit Committee of the Board of Directors, appointed Ernst & Young LLP as ADC's independent public accountant for ADC's fiscal year ending October 31, 2002, effective immediately. During ADC's fiscal years 2000 and 2001 and through May 21, 2002, neither ADC nor anyone acting on its behalf consulted Ernst & Young LLP with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on ADC's consolidated financial statements, or any other matters or reportable events listed in Item 304((a)(2)(ii) of Regulation S-K.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        The section of Item 1 of this Form 10-K entitled "Executive Officers of the Registrant" is incorporated by reference into this Item 10.

        The sections entitled "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" in our definitive proxy statement for our 2003 Annual Meeting of Shareowners, which will be filed with the SEC on or before January 31, 2003 (the "Proxy Statement"), are incorporated into this Form 10-K by reference.

Item 11. EXECUTIVE COMPENSATION

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

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The sections of the Proxy Statement entitled "Security Ownership of Certain Beneficial Owners and Management" and "Equity Compensation Plans" are incorporated by reference into this Form 10-K.

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Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        The section of the Proxy Statement entitled "Certain Relationships and Related Transactions" is incorporated by reference into this Form 10-K.

Item 14. CONTROLS AND PROCEDURES

        Within the 90-day period prior to the filing of this Annual Report on Form 10-K, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of our disclosure controls and procedures. Disclosure controls and procedures are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Based on that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures are effective to satisfy the objectives for which they are intended. Subsequent to the date of our management's evaluation, there were no significant changes in our internal controls or in other factors that could significantly affect these controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

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PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)

1.        Financial Statements

        The following consolidated financial statements of ADC are filed with this report and can be found at Item 8 of this Form 10-K.

Report of Independent Auditors

Report of Independent Public Accountants

Consolidated Statements of Operations for the years ended October 31, 2002, 2001 and 2000

Consolidated Balance Sheets as of October 31, 2002 and 2001

Consolidated Statements of Shareowners' Investment for the years ended October 31, 2002, 2001
    and 2000

Consolidated Statements of Cash Flows for the years ended October 31, 2002, 2001 and 2000

Notes to Consolidated Financial Statements

Five-Year Selected Consolidated Financial Data for the years ended October 31, 1998 through
    October 31, 2002 is located in Item 6 of this Form 10-K

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

        3.        Listing of Exhibits

(a)

See Exhibit Index on page 79 for a description of the documents that are filed as Exhibits to this report on Form 10-K or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical referencing the SEC filing which included the document. We will furnish to a security holder upon request a copy of any Exhibit at cost.

(b)

There were no Reports on Form 8-K filed during the last quarter of the period covered by this report.

(c)

See Item 15(a)(3) above.

(d)

See Item 15(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 10, 2003	By:	/s/  RICHARD R. ROSCITT Richard R. Roscitt 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/  RICHARD R. ROSCITT Richard R. Roscitt	Chairman of the Board, President and Chief Executive Officer (principal executive officer)	Dated: January 10, 2003
/s/  ROBERT E. SWITZ Robert E. Switz	Executive Vice President, Chief Financial Officer (principal financial officer)	Dated: January 10, 2003
/s/  GOKUL V. HEMMADY Gokul V. Hemmady	Vice President, Controller and Treasurer (principal accounting officer)	Dated: January 10, 2003

Robert Annunziata*	Director
John A. Blanchard III*	Director
John J. Boyle III*	Director
James C. Castle*	Director
B. Kristine Johnson*	Director
Jean-Pierre Rosso*	Director
Larry W. Wangberg*	Director
John D. Wunsch*	Director
Charles D. Yost*	Director

*By:
/s/  ROBERT E. SWITZ Robert E. Switz
Attorney-in-Fact
Dated: January 10, 2003

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        I, Richard R. Roscitt, the Chairman of the Board, President and Chief Executive Officer of ADC Telecommunications, Inc., certify that:

        1.    I have reviewed this Annual Report on Form 10-K of ADC Telecommunications, Inc.;

        2.    Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report;

        3.    Based on my knowledge, the financial statements and other information included in this Annual Report fairly present in all material aspects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Annual Report;

        4.    The registrant's other certifying officer and I are responsible for establishing and maintaining "disclosure controls and procedures" (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

•

designed such disclosure controls and procedures to ensure that material information related to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report is being prepared;



•

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this Annual Report (the "Evaluation Date"); and



•

presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

        5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the board of directors:

•

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and



•

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

        6.    The registrant's other certifying officer and I have indicated in this Annual Report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: January 10, 2003	/s/  RICHARD R. ROSCITT
	Richard R. Roscitt Chairman of the Board, President and Chief Executive Officer

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        I, Robert E. Switz, the Executive Vice President and Chief Financial Officer of ADC Telecommunications, Inc., certify that:

        1.    I have reviewed this Annual Report on Form 10-K of ADC Telecommunications, Inc.;

        2.    Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report;

        3.    Based on my knowledge, the financial statements and other information included in this Annual Report fairly present in all material aspects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Annual Report;

        4.    The registrant's other certifying officer and I are responsible for establishing and maintaining "disclosure controls and procedures" (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

•

designed such disclosure controls and procedures to ensure that material information related to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report is being prepared;



•

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this Annual Report (the "Evaluation Date"); and



•

presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

        5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the board of directors:

•

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and



•

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

        6.    The registrant's other certifying officer and I have indicated in this Annual Report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: January 10, 2003	/s/  ROBERT E. SWITZ
	Robert E. Switz Executive Vice President, Chief Financial Officer

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EXHIBIT INDEX

        The following documents are filed as Exhibits to this Annual Report on Form 10-K or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing which included such document.

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	Articles of Amendment dated January 20, 2000, to Restated Articles of Incorporation of ADC Telecommunications, Inc. (Incorporated by reference to Exhibit 4.6 to ADC's Registration Statement on Form S-8 dated March 14, 2000.)
3-c	Articles of Amendment dated June 23, 2000, to Restated Articles of Incorporation of ADC Telecommunications, Inc. (Incorporated by reference to Exhibit 4-g to ADC's Quarterly Report on Form 10-Q for the quarter ended July 31, 2000.)
3-d	Restated Bylaws of ADC Telecommunications, Inc. effective July 30, 2002. (Incorporated by reference to Exhibit 4-e to ADC's Quarterly Report on Form 10-Q for the quarter ended July 31, 2002.)
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 Wells Fargo Bank Minnesota, N.A. (f/k/a 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), 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, dated as of October 6, 1999, to Second Amended and Restated Rights Agreement between ADC Telecommunications, Inc. and Wells Fargo Bank Minnesota, N.A. (f/k/a Norwest Bank Minnesota, National Association). (Incorporated by reference to Exhibit 4-b to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 1999.)
4-d	Amendment No. 2 dated as of November 15, 2000, to Second Amended and Restated Rights Agreement among ADC Telecommunications, Inc., Wells Fargo Bank Minnesota, N.A. (formerly Norwest Bank Minnesota, National Association) and Computershare Investment Services, LLC. (Incorporated by reference to Exhibit 4.8 to ADC's Registration Statement on Form S-8 dated February 28, 2001.)
10-a*	ADC Telecommunications, Inc. Global Stock Incentive Plan, as amended and restated through February 19, 2002. (Incorporated by reference to Exhibit 10-a to ADC's Quarterly Report on Form 10-Q for the quarter ended January 31, 2002.)
10-b*	ADC Telecommunications, Inc. Management Incentive Plan for Fiscal Year 2001. (Incorporated by reference to Exhibit 10-e to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 2000.)
10-c*	ADC Telecommunications, Inc. Management Incentive Plan for Fiscal Year 2002. (Incorporated by reference to Exhibit 10-d to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 2001.)
10-d*	ADC Telecommunications, Inc. Management Incentive Plan for Fiscal Year 2003.
10-e*	ADC Telecommunications, Inc. Executive Incentive Exchange Plan for Fiscal Year 2001. (Incorporated by reference to Exhibit 10-h to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 2000.)

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10-f*	ADC Telecommunications, Inc. Executive Incentive Exchange Plan, as amended and restated effective as of November 1, 2001. (Incorporated by reference to Exhibit 10-g to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 2001.)
10-g*	Amendment 1 to the ADC Telecommunications, Inc. Executive Incentive Exchange Plan, effective as of November 1, 2002.
10-h*	ADC Telecommunications, Inc. Executive Change in Control Severance Pay Plan (2002 Restatement), effective as of January 1, 2002. (Incorporated by reference to Exhibit 10-i to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 2001.)
10-i*	ADC Telecommunications, Inc. Change in Control Severance Pay Plan (2002 Restatement), effective as of January 1, 2002. (Incorporated by reference to Exhibit 10-b to ADC's Quarterly Report on Form 10-Q for the quarter ended January 31, 2002.)
10-j*	ADC Telecommunications, Inc. 2001 Special Stock Option Plan. (Incorporated by reference to Exhibit 10-c to ADC's Quarterly Report on Form 10-Q for the quarter ended January 31, 2002.)
10-k*	ADC Telecommunications, Inc. Special Incentive Plan, effective November 1, 2002.
10-l*	Compensation Plan for Non-employee Directors of ADC Telecommunications, Inc., restated as of March 1, 2002. (Incorporated by reference to Exhibit 10-d to ADC's Quarterly Report on Form 10-Q for the quarter ended January 31, 2002.)
10-m*	ADC Telecommunications, Inc. Deferred Compensation Plan (1989 Restatement), as amended and restated effective as of November 1, 1989. (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-n*	Second Amendment to ADC Telecommunications, Inc. Deferred Compensation Plan (1989 Restatement), effective as of March 12, 1996. (Incorporated by reference to Exhibit 10-b to ADC's Quarterly Report on Form 10-Q for the quarter ended April 30, 1997.)
10-o*	ADC Telecommunications, Inc. Pension Excess Plan (1989 Restatement), as amended and restated effective as of January 1, 1989. (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-p*	Second Amendment to ADC Telecommunications, Inc. Pension Excess Plan (1989 Restatement), effective as of March 12, 1996. (Incorporated by reference to Exhibit 10-a to ADC's Quarterly Report on Form 10-Q for the quarter ended April 30, 1997.)
10-q*	ADC Telecommunications, Inc. 401(k) Excess Plan (2002 Restatement), as amended and restated as of effective January 1, 2002. (Incorporated by reference to Exhibit 10-r to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 2001.)
10-r*	Employment Agreement dated January 28, 2001, between ADC Telecommunications, Inc. and Richard R. Roscitt. (Incorporated by reference to Exhibit 10-d to ADC's Quarterly Report on Form 10-Q for the quarter ended January 31, 2001.)
10-s*	Amendment No. 1 dated November 27, 2002, to Employment Agreement between ADC Telecommunications, Inc. and Richard R. Roscitt.
10-t*	Form of ADC Telecommunications, Inc. Nonqualified Stock Option Agreement utilized with respect to option grants beginning in ADC's 2002 fiscal year (the form of incentive stock option agreement contains the same material terms). (Incorporated by reference to Exhibit 10-e to ADC's Quarterly Report for the quarter ended January 31, 2002.)
10-u*	Form of ADC Telecommunications, Inc. Nonqualified Stock Option Agreement provided to certain officers and key management employees of ADC with respect to option grants made on November 1, 2001 (the form of incentive stock option agreement contains the same material terms). (Incorporated by reference to Exhibit 10-f to ADC's Quarterly Report on Form 10-Q for the quarter ended January 31, 2002.)

80

10-v*	Form of ADC Telecommunications, Inc. Restricted Stock Award Agreement utilized with respect to restricted stock grants beginning in ADC's 2002 fiscal year. (Incorporated by reference to Exhibit 10-g to ADC's Quarterly Report on Form 10-Q for the quarter ended January 31, 2002.)
10-w*	Restricted Stock Award Agreement, dated as of October 31, 2002, between ADC Telecommunications, Inc. and Jay T. Hilbert.
10-x*	Restricted Stock Award Agreement, dated as of May 31, 2001, between ADC Telecommunications, Inc. and William F. O'Brien. (Incorporated by reference to Exhibit 10-d to ADC's Quarterly Report on Form 10-Q for the quarter ended July 31, 2001.)
10-y	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-z	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-aa	Participation Agreement, dated as of October 22, 1999, among ADC Telecommunications, Inc., Lease Plan North America, Inc., ABN AMRO Bank N.V. and the Participants named on Schedule I thereto. (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-bb	First Amendment to Participation Agreement, dated as of January 29, 2001, among ADC Telecommunications, Inc., Lease Plan North America, Inc., ABN AMRO Bank N.V. and the Participants named on Schedule I thereto. (Incorporated by reference to Exhibit 10-bb to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 2001.)
10-cc	Second Amendment to Participation Agreement, dated as of August 24, 2001, among ADC Telecommunications, Inc., Lease Plan North America, Inc., ABN AMRO Bank N.V. and the Participants named on Schedule I thereto. (Incorporated by reference to Exhibit 10-cc to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 2001.)
10-dd	Third Amendment to Participation Agreement and Lease, dated as of October 31, 2001, among ADC Telecommunications, Inc., Lease Plan North America, Inc., ABN AMRO Bank N.V. and the Participants named on Schedule I thereto. (Incorporated by reference to Exhibit 10-dd to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 2001.)
10-ee	Fourth Amendment to Participation Agreement, dated as of December 11, 2001, among ADC Telecommunications, Inc., Lease Plan North America, Inc., ABN AMRO Bank N.V. and the Participants named on Schedule I thereto. (Incorporated by reference to Exhibit 10-ee to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 2001.)
10-ff	Fifth Amendment to Participation Agreement, dated as of December 31, 2001, among ADC Telecommunications, Inc., Lease Plan North America, Inc., ABN AMRO Bank N.V. and the Participants named on Schedule I thereto. (Incorporated by reference to Exhibit 10-ff to ADC's Annual Report on Form 10-K for the fiscal year ended October 31, 2001.)
10-gg	Sixth Amendment to Participation Agreement, dated as of April 18, 2002, among ADC Telecommunications, Inc., Lease Plan North America, Inc., ABN AMRO Bank N.V. and the Participants named on Schedule I thereto. (Incorporated by reference to Exhibit 10-a to ADC's Form 8-K dated May 1, 2002.)
10-hh	Seventh Amendment to Participation Agreement, dated as of July 31, 2002, among ADC Telecommunications, Inc., Lease Plan North America, Inc., ABN AMRO Bank N.V. and the Participants named on Schedule I thereto.
10-ii	Eighth Amendment to Participation Agreement, dated as of October 29, 2002, among ADC Telecommunications, Inc., Lease Plan North America, Inc., ABN AMRO Bank N.V. and the Participants named on Schedule I thereto.

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10-jj*	ADC Telecommunications, Inc. Executive Management Incentive Plan.
10-kk*	ADC Executive Stock Ownership Program (January 2002).
10-ll*	Summary of Executive Perquisite Allowances.
16-a	Arthur Andersen LLP letter dated May 22, 2002 (Incorporated by reference to Exhibit 16-1 to ADC's Form 8-K filed on May 22, 2002.)
21-a	Subsidiaries of ADC Telecommunications, Inc.
23-a	Consent of Ernst & Young LLP.
24-a	Power of Attorney.
99-a	Cautionary Statement Regarding Forward-Looking Statements.
99-b	Certifications required by Section 906 of Sarbanes-Oxley Act.
99-c	Report of Ernst & Young LLP and Schedule II.
99-d	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.

82

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DOCUMENTS INCORPORATED BY REFERENCE
PART I
PART II
FIVE-YEAR FINANCIAL SUMMARY Years ended October 31 (dollars in millions, except per share data)
Consolidated Statements of Operations (in millions, except earnings per share)
Consolidated Balance Sheets (in millions)
Consolidated Statements of Shareowners' Investment (in millions)
Consolidated Statements of Cash Flows (in millions)
Notes to Consolidated Financial Statements
PART III
PART IV
SIGNATURES
EXHIBIT INDEX

EX-10.D

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Exhibit 10-d

ADC The Broadband Company™

Management Incentive Plan Document
Fiscal Year 2003

MANAGEMENT INCENTIVE PLAN DOCUMENT
Fiscal Year 2003

Plan Name and Effective Date

        The name of this Plan is the ADC Telecommunications, Inc. Management Incentive Plan. The plan is effective from November 1, 2002 through October 31, 2003.

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 individual contributors to make a significant contribution to ADC's established goals.

Eligibility

        Eligibility for Fiscal Year 2003 is limited to full or part-time regular executives, certain management and higher-level individual contributor positions. Temporary employees and independent contractors are not eligible for participation in this plan. In order to be eligible, an employee cannot participate in any other ADC incentive plan, except as approved by the Compensation and Organization Committee of the Board of Directors or the CEO, other than the stock option program and must be employed in an eligible position on or before October 1, 2003.

Timing of Payment

        Payments that become due under this Plan are made as soon as administratively feasible following the close of ADC's fiscal year. In the past, this payment date has generally occurred in late December. All payments are subject to appropriate withholdings.

Plan Goals

        The Plan reinforces the key goals that support ADC's long-term strategic plans. The key factors in ADC's FY 03 success are net sales and pro forma operating income. Cash management is also a key factor, and will be primarily driven through these two goals.

        These goals will be set at the ADC and business unit level.

        Following is a description of the two plan components:

Plan Goal	Definition
Net Sales	The amount ADC can recognize in accordance with GAAP for goods shipped or services provided to third party customers, net of returns received.
Pro Forma Operating Income	Net sales less the everyday expenses of doing business. It does not take into account interest income, interest expense, or other income/loss or income tax. It also excludes restructuring and other one-time expenses that are not reflective of the ongoing business.

ADC/BU Goal Weighting

        Employees serving multiple business units have 100% of their incentive plan based on ADC goals and results.

2

        Employees dedicated to one business unit only have a portion of their incentive based on ADC results and a portion on business unit results as follows:

Grade	ADC Wtg		BU Wtg
Grade 18+	50	%	50	%
Grades 15-17	30	%	70	%

        For individual weighting, refer to the Participant Form.

Individual Performance

        In addition to the business performance goals, an individual performance factor will be applied to the calculation of incentive payments for 2003. The individual multiplier will be based on the performance ratings as defined in the ADCperform performance management system and will be applied at the time of payment as follows:

Rating	Individual Performance Adjustment
1 (Top 5-10%)	Business Performance × 1.25 - 1.5
2 (Middle 80-90%)	Business Performance × .75 - 1.25
3 (Bottom 5-10%)	Business Performance × .5 - .75

Minimum Performance Payment Requirement

        To ensure protection of shareholder interest, a minimum level of pro forma operating income must be achieved before an incentive payment can be generated. Specific goals in this respect are contained in the Participant Form.

Calculation of Payment

        Prior to making any payment under this Plan, the Board of Directors must determine that the claimed performance levels have been achieved. The Board of Directors has complete authority and discretion to determine whether performance levels have been achieved, including without limitation the authority and discretion to properly calculate pro forma operating income. The size of an incentive award will be based on four factors:

1.

Target Incentive Opportunity—expressed as a percentage of an individual's FY 2003 eligible base salary earnings.



2.

FY2003 Eligible Base Salary Earnings. This is the amount actually paid to the participant during the fiscal year in Base Salary. Base Salary for purposes of this Plan includes paid time off (such as vacation, sick pay or PTO), and excludes any salary continuation pay paid through ADC payroll and any disability insurance paid by an insurer.



3.

Business Performance against the established goals.



4.

Individual Performance Multiplier.

        The minimum individual payment is a total payment of 10% of an employee's target. If incentives earned for all goals total less than 10% of target, no payout will be made. The maximum award is 300% of target payout. At target business performance and Level 2 individual performance with performance multiplier of 1, the award would be 100% of the stated target percent of Base Salary Earnings.

3

        For the business performance factors, this can be expressed as follows:

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

There are specific goals established for 0%, 50%, 100%, 150%, 200%, and 300% of target as indicated on the applicable Participant Form. Results between these specific points are interpolated for each goal.

        Here is an example of a hypothetical award calculation. Refer to the Participant Form for the performance factors and weightings that apply.

        Assume a Business Unit Plan participant with the following facts:

Target Opportunity:	15% of base salary earnings
Base Salary Earnings:	70,000
Performance Rating:	Level 2 with a performance multiplier of 1 applied
ADC Pro Forma Operating Income:	Minimum level of pro forma operating income achieved

Metrics		Measure Weighting	Performance	Wtd. Perf.
ADC Level Metrics
	ADC Net Sales	50%	107%	53.5%
	Pro Forma Operating Income	50%	95%	47.5%
				101.0%
Business Unit Level Metrics
	Net Sales	50%	110%	55.0%
	Pro Forma Operating Income	50%	95%	47.5%
				102.5%
Overall Weighted Performance
	ADC Metrics	30%	101.0%	30.3%
	Business Unit Metrics	70%	102.5%	71.8%
				102.1%
Payment Calculation: 70,000 (base salary) * 15% (incentive target) * 102.1% (business performance) * 1.0 (individual performance factor) = 10,721

Effect of Change in Employment Status

        Termination of Employment.    If employment with ADC is terminated for any reason other than death and if the Employment Termination Date occurs prior to the end of the Fiscal Year, a participant will not receive an award under the Plan. For purposes of this Plan, the "Employment Termination Date" is the date that the participant ceases to be an employee of ADC (as determined by the company). In the case of termination of employment by ADC, the Employment Termination Date shall be determined without regard to whether such termination is with or without cause or with or without reasonable notice.

        Transfer, Promotion or Demotion to another position with a different ADC incentive plan, target incentive opportunity or business goals.    A participant, who transfers, is promoted or demoted to

4

another position with a different plan, target incentive opportunity or business goals will receive a prorated calculation of payment based upon the number of full months served in each position. The participant must be in the new position by the first of the month and remain in the position for a full month in order to receive credit for that month under the new plan, target or goals. Full year earnings will be prorated based on the number of full months eligible under each plan. For example, a participant transferring from Software Systems to Connectivity on June 10 would receive eight months payment under the Software Systems plan (November-June) and four months under Connectivity (July-October). In order to receive payment under the plan during the plan year, a participant must have completed one full month of service under the plan.

        Death.    If a participant dies during the fiscal year, a pro-rated payment will be made to the participant's estate. The payment will be based upon the time the participant served in the eligible position during the fiscal year.

Administration

        A Management Incentive Plan Committee ("Committee"), appointed and authorized by the Compensation Committee of the Company's Board of Directors, will administer this Plan. Subject to the complete and full discretion of the Compensation Committee of 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, approve, administer, withdraw and make any exceptions to the terms of the Plan.

Right to Modify

        ADC reserves the right to modify or adjust the Plan at any time in its sole discretion either in whole or with respect to a particular business unit. The Participant explicitly agrees with this modification right of ADC.

Governing Law

        The Plan is made and shall be continued in accordance with the laws of the State of Minnesota, U.S.A.

Severability

        If any provision of this Plan shall be held invalid, illegal or unenforceable by a court or tribunal of competent jurisdiction, this Plan shall be deemed severable and such invalidity, illegality or unenforceability shall not affect any other provision of this Plan which shall be enforced in accordance with the intent of this Plan.

Assignment

        The Company shall have the right to assign this Plan to its successors and assigns and this Plan shall inure to the benefit of and be enforceable by said successors and assigns. Participant may not assign this Plan or any rights hereunder.

Entire Understanding

        This Plan constitutes the entire understanding between the parties regarding the payment of incentive compensation under this Plan, and it supercedes any and all prior agreements or understandings, whether oral or written, express or implied, on such subject matter.

5

Amendment or Termination of Plan

        The Plan shall not entitle Participants to any future compensation. The Plan is not an element of the employees' salary or base compensation and shall not be considered as part of such in the event of severance, redundancy, or resignation. ADC has no obligation to offer incentive plans to Participants in the future. The Participant understands and accepts that the incentive payments made under the Plan are entirely at the sole discretion of ADC. Specifically, ADC assumes no obligation to the Participant under this Plan with respect to any doctrine or principle of acquired rights or similar concept. Subject to the provisions of the Plan, ADC may amend or terminate the Plan or discontinue the payment of incentives under the Plan at any time, at its sole discretion and without advance notice.

6

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Exhibit 10-d

EX-10.G

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Exhibit 10-g

AMENDMENT NO. 1
TO ADC TELECOMMUNICATIONS, INC.
EXECUTIVE INCENTIVE EXCHANGE PLAN

        This Amendment No. 1, effective as of November 1, 2002, amends the following provisions of the Executive Incentive Exchange Plan of ADC Telecommunications, Inc. (the "Exchange Plan"):

1.

Article VII of the Exchange Plan is amended to read in its entirety as follows:

Exchanges made under this Plan will be made following the close of the Plan year on the date that the Committee meets to finalize the MIP awards for such Plan year. Such date shall be referred to as the "Exchange Date."

2.

Article VIII of the Exchange Plan is amended to read in its entirety as follows:

The effective date of the stock options granted under the Plan will be the Exchange Date.

3.

Attachment I to the Exchange Plan is amended by deleting the phrase "last day of Plan Year" wherever it appears and substituting therefor the words "Exchange Date."

        This Amendment has been adopted effective as of November 1, 2002.

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Exhibit 10-g

EX-10.K

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Exhibit 10-K

ADC Special Incentive Plan

Plan Name and Effective Date

        The name of this plan is the ADC Telecommunications, Inc. Special Incentive Plan. The Plan is effective November 1, 2002 and is of indefinite duration.

Purpose

        The purpose of the Plan is to coordinate with the Management Incentive Plan (MIP) to provide a financial incentive and reward to identified participants for achieving pre-defined business milestones that are crucial for the success of ADC or one of its business segments.

Eligibility for Participation

        Eligibility is very restrictive. It is limited to a relatively small number of employees who are deemed most key to the achievement of crucial business milestones. Temporary employees and independent contractors are not eligible. Participation requires the prior written approval of the CEO. Participation of a Section 16 officer also requires the approval of the Compensation and Organization Committee of the Board (the "Committee").

Milestones

        Generally, one to five milestones will be defined. Each will have an associated date after which achievement is not recognized. For each milestone, one to three levels of achievement may be defined such that the more difficult level results in a higher payment. Each milestone should be defined in such a fashion that subjectivity is not required to determine its achievement.

Timing of Payment

        Payments that become due under this Plan are made on a normal payroll date as soon as administratively feasible following the verification of the achievement.

Payment Levels

        A payment amount earned through the achievement of a milestone may be prospectively defined as a fixed dollar amount or as a percentage of the participant's Management Incentive Plan (MIP) annual target incentive. The total of all potential payments earned during the fiscal year will not exceed the fiscal year total target incentive for the individual under the MIP program.

Eligibility for Payment

        In order to receive a payment under this Plan, the participant must be an employee of ADC as of the date that the relevant milestone is deemed to have been achieved. Participants who leave employment with ADC prior to that date will not be deemed to have earned a payment for that milestone achievement. Participants who transfer to another business or function within ADC and who have no continuing responsibility in this new role for the milestone achievement will not be eligible for a milestone achievement payment unless that milestone was achieved prior to the transfer.

Promotions or Demotions

        Promotions or demotions that maintain a responsibility for achievement of the milestone will require a restatement of the individual's payment for milestone achievement unless the payment amount is expressed in light of MIP target percentages. If expressed as a proportion of the target MIP, an adjustment will be made to maintain the same proportion of the new target MIP.

Payment Maximum

        In no case will payments credited under this Plan during the fiscal year plus any amount paid under the MIP with respect to that same fiscal year combine to equal more than three times the participant's target MIP award for that fiscal year. By participating in this Plan, the participant expressly agrees to have payments (either under this Plan or the MIP, as determined by ADC) reduced to conform with this aggregate limit.

Administration

        The CEO, VP of HR, and CFO (the "Management Committee") are jointly appointed and authorized to administer this plan, provided however that all matters effecting Section 16 officers who are participants shall be determined by the Committee. Except as noted in the preceding sentence, the Management Committee is authorized to make all decisions to administer, apply, interpret, determine whether designated milestones have been achieved and withdraw this Plan, and all decisions of the Management Committee shall be final and binding on all participants.

Severability

        If any provision of this Plan shall be held invalid, illegal or unenforceable by a court or tribunal of competent jurisdiction, this Plan shall be deemed severable and such invalidity, illegality or unenforceability shall not affect any other provision of this Plan which shall be enforced in accordance with the intent of this Plan.

Assignment

        The Company shall have the right to assign this Plan to its successors and assigns and this Plan shall inure to the benefit of and be enforceable by said successors and assigns. Participant may not assign this Plan or any rights hereunder.

Entire Understanding

        This Plan, together with each participant's individual statement of milestones and milestone achievement award amounts constitutes the entire understanding between the parties regarding the payment of incentive compensation under this Plan, and it supercedes any and all prior agreements or understandings, whether oral or written, express or implied, on such subject matter.

Amendment or Termination of Plan

        The Plan shall not entitle Participants to any future compensation. The Plan is not an element of the employees' salary or base compensation and shall not be considered as part of such in the event of severance, redundancy, or resignation. ADC has no obligation to offer incentive plans to Participants in the future. The Participant understands and accepts that the incentive payments made under the Plan are entirely at the sole discretion of ADC. Specifically, ADC assumes no obligation to the Participant under this Plan with respect to any doctrine or principle of acquired rights or similar concept. Subject to the provisions of the Plan, ADC may amend or terminate the Plan or discontinue the payment of incentives under the Plan at any time, at its sole discretion and without advance notice.

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EX-10.S

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Exhibit 10-S

Amendment No. 1 to Employment Agreement

        AGREEMENT by and between ADC Telecommunications, Inc., a Minnesota corporation ("ADC" or the "Company"), and Richard R. Roscitt (the "Executive"), dated effective as of November 27, 2002.

Recitals

A.

ADC and the Executive are parties to an Employment Agreement dated January 28, 2001 (the "Employment Agreement").

B.

In light of the challenging market conditions in which the Company currently operates and other changed circumstances, the Executive and the Compensation Committee of the ADC Board (the "Compensation Committee") have considered certain amendments to the Employment Agreement. ADC and the Executive now desire to amend certain provisions of the Employment Agreement as set forth in this Amendment No. 1 to the Employment Agreement (this "Amendment"). In addition to the terms set forth below, the Executive also requested of the Committee that he not be considered for an incentive bonus payment for fiscal year 2002 or a base salary increase for fiscal year 2003 in light of the challenging market conditions in which the Company currently operates.

C.

The terms of this Amendment have been approved by the Compensation Committee, which is comprised solely of independent directors.

        NOW THEREFORE, the parties agree as follows:

        1.    Definitions.    Unless otherwise defined in this Amendment, initially capitalized terms shall have the meanings assigned to such terms in the Employment Agreement. References to fiscal years are based upon ADC's fiscal year, which ends on October 31 of each year.

        2.    Section 3 of Employment Agreement—Compensation.

        Section 3(g)(ii) of the Employment Agreement is hereby amended as follows:

        (g)(ii)    Annual Option Grants.    Section 3 (g) (ii) provides that at the beginning of each of fiscal year 2002 and 2003 Executive shall be granted an option to purchase shares of the Company's common stock, which options are to have a Black Scholes value of $5 million at the time grant. The Company has satisfied its obligations regarding annual option grants for fiscal year 2002 and the Executive voluntarily waives this provision with regard to the fiscal year 2003 option grant and also waives the right to receive the option grant on November 1, which would have resulted in a grant of substantially more option shares. For fiscal year 2003, Executive shall instead receive the following grants:

        (A)  Executive shall receive an option to purchase up to 3,000,000 shares of the Company's common stock (the "2003 Option"). The 2003 Option shall have a per share exercise price equal to the fair market value (as defined in the Plan) on November 27, 2002, which shall be the effective date of the annual option grants to all eligible officers. The 2003 Option will vest over a three (3) year period and shall be subject to the terms and conditions of the ADC Global Stock Incentive Option Plan and an option agreement entered into by the Executive and the Company, consistent with company practice. The 2003 Option shall be designated as an incentive stock option to the maximum extent permitted by the Internal Revenue Code of 1986, as amended, and the remainder shall be designated as non-qualified stock options. The Executive hereby acknowledges that the current Black Scholes value of the 2003 Option grant is less than the $5 million originally contemplated by the Employment Agreement, and that he is voluntarily waiving the difference.

        (B)  Consistent with the Company's practice with respect to other selected senior officers, on November 27, 2002, the Company shall make a grant of 750,000 restricted shares of common stock ("Restricted Stock'). The shares of Restricted Stock shall vest in ratable annual installments over a three (3) year period in accordance with a Restricted Stock Agreement to be entered into by the Executive and the Company.

Beginning in Fiscal year 2004 and succeeding years, Executive shall be eligible to participate in all of ADC's regular stock incentive programs. The amount of future awards shall be determined by the Committee in connection with an annual review of the Executive's total compensation package in accordance with the Committee's practices which takes into account factors including an assessment of the Executive's performance, the Company's performance and the total compensation paid to similar executives at peer and other companies.

        3.    Section 5 of Employment Agreement—Compensation and Payments Upon Termination.

        Section 5(a) is amended to add new subparagraphs (vi) as follows:

"(vi) all Company stock options with a grant date after October 31, 2002 and all shares of Restricted Stock held by the Executive shall become 100% vested on the date of termination. Such stock options shall remain exercisable for a period of three (3) years following the date of termination.

        Section 5(b) is amended to add a new subparagraph (vi) as follows:

"(vi) all Company stock options with a grant date after October 31, 2002 and all shares of Restricted Stock held by the Executive shall become 100% vested on the date of termination. Such stock options shall remain exercisable for a period of three (3) years following the date of death or long-term disability.

        4.    Section 6 of Employment Agreement—Change In Control.

        Section 6(c) is amended and restated in its entirety to read a follows:

"(c) The Executive's termination would trigger (i) the acceleration of vesting of all Company stock options with a grant date after October 31, 2002 held by the Executive and such options shall remain exercisable for a period of three (3) years following the date of termination; and (ii) the acceleration of vesting of all shares of Company Restricted Stock held by the Executive.

        5.    Miscellaneous.

        (a)  This Amendment shall be governed by, and construed in accordance with, the laws of the State of Minnesota, without reference to its conflict of law rules.

        (b)  The captions of this Amendment are not part of the provisions hereof and shall have no force or effect.

        (c)  All terms of the Employment Agreement which are not expressly modified in this Amendment shall remain unchanged and in full force and effect. This Amendment may not be amended or modified except by a written agreement executed by the parties hereto or their respective successors.

        (d)  This Amendment may be executed in several counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument.

[signature page follows]

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        IN WITNESS WHEREOF, the Executive and the Company have executed this Amendment No. 1 to Employment Agreement as of the day and year first above written.

ADC Telecommunications, Inc.		Richard R. Roscitt
By	/s/ LAURA N. OWEN	/s/  RICHARD R. ROSCITT
Its	Vice President, Human Resources	Date	November 27, 2002
Date	November 27, 2002

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Exhibit 10-S

EX-10.W

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Exhibit 10-w

ADC TELECOMMUNICATIONS, INC.

RESTRICTED STOCK AWARD AGREEMENT

        THIS AGREEMENT is made as of the 31st day of October, 2002, by and between ADC Telecommunications, Inc., a Minnesota corporation (the "Company"), and Jay T. Hilbert ("Participant").

        The Company, pursuant to its Global Stock Incentive Plan (the "Plan"), hereby grants the following stock award to Participant, which award shall have the terms and conditions set forth in this Agreement:

1.    Award

The Company, effective as of the date of this Agreement, hereby grants to Participant a restricted stock award of 150,000 shares (the "Shares") of common stock, par value $.20 per share, of the Company (the "Common Stock"), subject to the terms and conditions set forth herein.

2.    Vesting

Subject to the terms and conditions of this Agreement, the Shares shall vest in Participant as follows: one-third (¹/3) of the Shares shall vest on each of November 1, 2003, 2004 and 2005, if, and only if, Participant remains continuously employed by the Company from the date hereof until each respective vesting date. Notwithstanding the foregoing, in the event that the vesting and exercisability of Participant's stock option granted on October 31, 2002, under the Company's Global Stock Incentive Plan is accelerated pursuant to a change in control of the Company under the conditions specified in Exhibit A to such stock option agreement, the vesting of the Shares shall similarly be accelerated. In addition, in the event the conditions set forth in that certain letter dated January 7, 2003 from the Company to Participant are satisfied, the Shares shall become fully vested.

3.    Restriction on Transfer

Until the Shares vest pursuant to Section 2 hereof, none of the Shares may be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, and no attempt to transfer the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Shares.

4.    Forfeiture

If Participant ceases to be an employee of the Company or any majority-owned affiliate of the Company for any reason prior to the vesting of the Shares pursuant to Section 2 hereof, Participant's rights to the unvested portion of the Shares shall be immediately and irrevocably forfeited.

5.    Issuance and Custody of Certificate

(a)

The Company shall cause to be issued one or more stock certificates, registered in the name of Participant, evidencing the Shares. Each such certificate shall bear the following legend:

"The shares of common stock represented by this certificate are subject to forfeiture, and the transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms and conditions (including restrictions against transfer) contained in the ADC Telecommunications, Inc. Global Stock Incentive Plan and a Restricted Stock Award Agreement entered into between ADC Telecommunications, Inc. and the registered owner of such shares. Copies of the Plan and the Agreement are on file in the office of the Secretary of ADC Telecommunications, Inc., 13625 Technology Drive, Eden Prairie, Minnesota."

(b)

Participant shall execute stock powers relating to the Shares and deliver the same to the Company. Company shall use such stock powers only for the purpose of canceling any unvested Shares that are forfeited.



(c)

Each certificate issued pursuant to Section 5(a) hereof, together with the stock powers relating to the Shares, shall be deposited by the Company with the Secretary of the Company or a custodian designated by the Secretary. The Secretary or such custodian shall issue a receipt to Participant evidencing the certificate or certificates held which are registered in the name of Participant.



(d)

After any Shares vest pursuant to Section 2 hereof, the Company shall promptly cause to be issued a certificate or certificates evidencing such vested Shares, free of the legend provided in section 5(a) hereof, and shall cause such certificate or certificates to be delivered to Participant or Participant's legal representatives, beneficiaries or heirs.

6.    Distributions and Adjustments

(a)

If all or any portion of the Shares vest in Participant subsequent to any change in the number or character of Shares of Common Stock (through stock dividend, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Shares of Common Stock or other securities of the Company or other similar corporate transaction or event affecting the Shares such that an adjustment is determined by the Compensation and Organization Committee of the Board of Directors (the "Committee") to be appropriate in order to prevent dilution or enlargement of the interest represented by the Shares), Participant shall then receive upon such vesting the number and type of securities or other consideration which he would have received if the Shares had vested prior to the event changing the number or character of outstanding Shares of Common Stock.



(b)

Any additional Shares of Common Stock, any other securities of the Company and any other property (except for cash dividends) distributed with respect to the Shares prior to the date the Shares vest shall be subject to the same restrictions, terms and conditions as the Shares. Any cash dividends payable with respect to the Shares shall be distributed to Participant at the same time cash dividends are distributed to shareholders of the Company generally.



(c)

Any additional Shares of Common Stock, any securities and any other property (except for cash dividends) distributed with respect to the Shares prior to the date such Shares vest shall be promptly deposited with the Secretary or the custodian designated by the Secretary to be held in custody in accordance with Section 5(c) hereof.

7.    Taxes

(a)

In order to provide the Company with the opportunity to claim the benefit of any income tax deduction which may be available to it in connection with this restricted stock award, and in order to comply with all applicable federal or state tax laws or regulations, the Company may take such action as it deems appropriate to insure that, if necessary, all applicable federal or state income and social security taxes are withheld or collected from Participant.



(b)

Participant may elect to satisfy his federal and state income tax withholding obligations in connection with this restricted stock award by (i) having the Company withhold a portion of the shares of Common Stock otherwise to be delivered upon vesting of this restricted stock award having a fair market value equal to the amount of federal and state income

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taxes required to be withheld in connection with this restricted stock award, in accordance with the rules of the Committee, or (ii) delivering to the Company shares of Common Stock other than the shares to be delivered upon vesting of this restricted stock award having a fair market value equal to such taxes, in accordance with the rules of the Committee.

(c)

Notwithstanding clause 7(b) above, if Participant elects, in accordance with Section 83(b) of the Internal Revenue Code of 1986, as amended, to recognize ordinary income in the year of acquisition of the Shares, the Company may require at the time of such election an additional payment for withholding tax purposes based on the fair market value of such Shares as of the date of the acquisition of such Shares by Participant.

8.    Miscellaneous

(a)

This Agreement is issued pursuant to the Plan and is subject to its terms. Participant hereby acknowledges receipt of a copy of the Plan. The Plan is also available for inspection during business hours at the principal office of the Company.



(b)

This Agreement shall not confer on Participant any right with respect to continuance of employment by the Company or any of its subsidiaries.



(c)

This Agreement shall be governed by and construed under the internal laws of the State of Minnesota, without regard for conflicts of laws principles thereof.

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and year first above written.

ADC TELECOMMUNICATIONS, INC.
By:	/s/ Laura N. Owen Laura N. Owen
Its:	Vice President, Human Resources
PARTICIPANT
/s/ Jay T. HilbertJay T. Hilbert

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ADC TELECOMMUNICATIONS, INC. RESTRICTED STOCK AWARD AGREEMENT

EX-10.HH

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Exhibit 10-hh

SEVENTH AMENDMENT TO
PARTICIPATION AGREEMENT

        THIS SEVENTH AMENDMENT TO PARTICIPATION AGREEMENT, dated as of July 31, 2002 (this "Amendment"), amends the Participation Agreement, dated as of October 22, 1999, by and among ADC Telecommunications, Inc., a Minnesota corporation ("ADC" or "Lessee"), as Lessee; Lease Plan North America, Inc., not in its individual capacity, except as expressly stated therein, but solely as Agent Lessor for the Participants (the "Agent Lessor"); the Persons named on Schedule I thereto, as Participants; and ABN AMRO Bank N.V., as Administrative Agent, as amended by (A) the First Amendment to Participation Agreement, dated as of January 29, 2001 (the "First Amendment"), (B) the Second Amendment to Participation Agreement, dated as of August 24, 2001 (the "Second Amendment"), (C) the Third Amendment to the Participation Agreement and Lease, dated as of October 31, 2001 (the "Third Amendment"), (D) the Fourth Amendment to the Participation Agreement and Lease, dated as of December 11, 2001 (the "Fourth Amendment"), (E) the Fifth Amendment to the Participation Agreement and Lease, dated as of December 31, 2001 (the "Fifth Amendment") and (F) the Sixth Amendment to the Participation Agreement, dated as of April 18, 2002 (the "Sixth Amendment") (as so amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment and the Sixth Amendment, the "Existing Participation Agreement"). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned thereto in Appendix 1 to the Participation Agreement.

        WHEREAS, the parties hereto have entered into the Existing Participation Agreement and the other Operative Documents to fund the Construction of the Financed Improvements on the Land;

        WHEREAS, prior to the date of this Amendment, the Put Event and Base Term Commencement Date have occurred;

        WHEREAS, the parties hereto desire to amend the Existing Participation Agreement as hereinafter set forth;

        NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows:

        SECTION 1.    AMENDMENTS.    Effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2, the Existing Participation Agreement shall be amended in accordance with Sections 1.1 and 1.2.

        SECTION 1.1    Article XVI is hereby amended by adding a new Section 16.13 as follows:

SECTION 16.13    Increase in Margin.    In the event any Collateralized Lease Transaction, including without limitation any new Collateralized Lease Transaction or an amendment to an existing Collateralized Lease Transaction, provides to any Person, other than the Tranche A4 Basic Rent currently paid by the Tranche A4 Participant, interest, margin or other pricing (the "Other Pricing") which, in the aggregate, is higher than the interest or yield component of Basic Rent paid under the Operative Documents, Lessee shall promptly notify Agent Lessor of the Other Pricing and promptly enter into an amendment to the Operative Documents in form and substance reasonably satisfactory to Agent Lessor and the Participants such that Basic Rent paid to the Participants shall be equal to the Other Pricing. Any such amendment to the Operative Documents shall be effective and Basic Rent shall begin to accrue at a rate equal to the Other Pricing as of the date the Other Pricing under the applicable Collateralized Lease Transaction was first effective.

        SECTION 1.2    Definitions.

        (a)  The definition of "Applicable Tranche A2 Margin" appearing in Appendix 1 to the Participation Agreement is hereby amended by deleting the reference to "375 basis points" and replacing it with the reference to "75 basis points".

        (b)  The definition of "Applicable Tranche A3 Margin" appearing in Appendix 1 to the Participation Agreement is hereby amended by deleting the reference to "385 basis points" and replacing it with the reference to "75 basis points".

        (c)  The definition of "Applicable Tranche B Margin" appearing in Appendix 1 to the Participation Agreement is hereby amended by deleting the reference to "400 basis points" and replacing it with the reference to "75 basis points".

        (d)  The definition of "Applicable Tranche C Margin" appearing in Appendix 1 to the Participation Agreement is hereby amended by deleting the reference to "500 basis points" and replacing it with the reference to "75 basis points".

        (e)  Appendix I to the Participation Agreement is hereby amended by adding thereto the following new term in proper alphabetical order:

"Collateralized Lease Transaction" means (i) the Existing Synthetic Leases and (ii) any other Synthetic Leases or Capital Leases entered into by Lessee or any of its Affiliates, (a) having aggregate principal amounts or commitments or lease balances, as applicable (including all funded amounts, undrawn committed or available amounts and amounts owing to all creditors or lessors under any combined or syndicated credit arrangement) of $5,000,000 or more (the "Principal Obligations") and (b) for which at least 85% of the Principal Obligations are or when funded are required to be collateralized with either cash or marketable securities, including without limitation direct obligations issued or unconditionally guaranteed by the United States Government or any agency thereof.

        SECTION 2.    CONDITIONS PRECEDENT.    This Amendment shall become effective as of July 31, 2002 upon the satisfaction of each of the following conditions precedent:

        (a)  The Agent Lessor shall have received this Amendment duly executed by each of the parties hereto.

        (b)  Legal matters incident to the execution and delivery of this Amendment shall be satisfactory to each of the Participants and the Agent Lessor and their respective counsel.

        (c)  The Agent Lessor shall have received evidence reasonably satisfactory to it that the Master Lease Agreement (the "GECC Lease"), dated as of July 31, 2002, between ADC 2000 Trust, as lessor and the Lessee, as lessee and, if applicable, the related operative documents have been amended so that debt and equity component of rent under such GECC Lease accrues interest or yield, as applicable, at a rate not exceeding 75 basis points over the applicable LIBOR rate set forth therein.

        SECTION 3.    REPRESENTATIONS AND WARRANTIES.    In order to induce the Participants and the Agent Lessor to execute and deliver this Amendment, Lessee hereby represents to each of the Participants and the Agent Lessor that, as of the date hereof,

        (a)  the execution, delivery and performance of this Amendment has been duly authorized;

        (b)  the person executing this Amendment has been duly authorized to act on its behalf;

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        (c)  this Amendment constitutes its legal, valid, binding and enforceable agreement, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws or equitable principles relating to or limiting the rights of creditors generally;

        (d)  its entry into this Amendment will not violate any law, rule or regulation or constitute a default under any material agreement by which it is bound or by which any of its assets are affected;

        (e)  the representations and warranties set forth in Section 7.2 of the Existing Participation Agreement are and shall be and remain true and correct;

        (f)    it is in full compliance with all of the terms and conditions of each Operative Document and this Amendment; and

        (g)  no Default or Event of Default has occurred and is continuing or shall result after giving effect to this Amendment.

        SECTION 4.    MISCELLANEOUS.

        SECTION 4.1    Continuing Effectiveness, etc.    This Amendment shall be deemed to be an amendment to the Existing Participation Agreement, and the Existing Participation Agreement, as amended hereby, and each other Operative Document, shall remain in full force and effect and are hereby ratified, approved and confirmed in each and every respect. On and after the date hereof, all references to the "Participation Agreement" in the Operative Documents or in any other document, instrument, certificate, agreement, opinion or writing shall be deemed to refer to the Existing Participation Agreement, as the case may be, as amended hereby. Except as expressly set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as an amendment, modification or waiver of any provision of, or any right, power or remedy of any party hereto under, any Operative Document.

        SECTION 4.2    Severability.    Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Amendment or affecting the validity or enforceability of such provision in any other jurisdiction.

        SECTION 4.3    Headings.    The various headings of this Amendment are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof.

        SECTION 4.4    Execution in Counterparts.    This Amendment may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

        SECTION 4.5    Governing Law.    THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK AS TO ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, EXCEPT TITLE 14 OF ARTICLE 5 OF THE NEW YORK GENERAL OBLIGATIONS LAW. This Amendment constitutes the entire understanding among the parties hereto with respect to the subject matter hereof and supersedes any prior agreement, written or oral, with respect thereto.

        SECTION 4.6    Successors and Assigns.    This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

        SECTION 4.7    Fees and Expenses.    Lessee agrees to pay on demand all costs and expenses of or incurred by each of the other parties hereto in connection with the negotiation, preparation,

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execution and delivery of this Amendment and the agreements and covenants contemplated herein, including the reasonable fees and expenses of counsel for the Agent Lessor.

[signature pages follow]

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        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written.

ADC TELECOMMUNICATIONS, INC., as Lessee
By:	/s/ GOKUL V. HEMMADY
Name:	Gokul V. Hemmady
Title:	Vice President, Treasurer

LEASE PLAN NORTH AMERICA, INC., not in its individual capacity, except as expressly stated in the Participation Agreement, but solely as Agent Lessor
By:	/s/ BLAKE J. LACHER
Name:	Blake J. Lacher
Title:	Vice President

ABN AMRO BANK N.V., as Administrative Agent and as a Participant
By:	/s/ RUBA ABOZIR
Name:	Ruba Abozir
Title:	Vice President
By:	/s/ BLAKE J. LACHER
Name:	Blake J. Lacher
Title:	Vice President

GENERAL ELECTRIC CAPITAL CORPORATION, as a Participant
By:	/s/ ROSALIA AGRESTI
Name:	Rosalia Agresti
Title:	Senior Risk Manager

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EX-10.II

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Exhibit 10-ii

EIGHTH AMENDMENT TO
PARTICIPATION AGREEMENT AND OTHER OPERATIVE DOCUMENTS

        THIS EIGHTH AMENDMENT TO PARTICIPATION AGREEMENT AND OTHER OPERATIVE DOCUMENTS, dated as of October 29, 2002 (this "Amendment"), amends the (i) Participation Agreement, dated as of October 22, 1999, by and among ADC Telecommunications, Inc., a Minnesota corporation ("ADC" or "Lessee"), as Lessee; Lease Plan North America, Inc., not in its individual capacity, except as expressly stated therein, but solely as Agent Lessor for the Participants (the "Agent Lessor"); the Persons named on Schedule I thereto, as Participants; and ABN AMRO Bank N.V., as Administrative Agent, as amended by (A) the First Amendment to Participation Agreement, dated as of January 29, 2001 (the "First Amendment"), (B) the Second Amendment to Participation Agreement, dated as of August 24, 2001 (the "Second Amendment"), (C) the Third Amendment to the Participation Agreement and Lease, dated as of October 31, 2001 (the "Third Amendment"), (D) the Fourth Amendment to the Participation Agreement and Lease, dated as of December 11, 2001 (the "Fourth Amendment"), (E) the Fifth Amendment to the Participation Agreement and Lease, dated as of December 31, 2001 (the "Fifth Amendment"), (F) the Sixth Amendment to the Participation Agreement, dated as of April 18, 2002 (the "Sixth Amendment") and (G) the Seventh Amendment to the Participation Agreement, dated as of July 31, 2002 (the "Seventh Amendment") (as so amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment and the Seventh Amendment, the "Existing Participation Agreement") and (ii) the Lease, dated as of October 22, 1999 between ADC, as Lessee and Mortgagor, and the Agent Lessor, as Agent Lessor and Mortgagee, as amended by the Third Amendment (the "Existing Lease"). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned thereto in Appendix 1 to the Participation Agreement.

        WHEREAS, the parties hereto have entered into the Existing Participation Agreement and the other Operative Documents to fund the Construction of the Financed Improvements on the Land;

        WHEREAS, prior to the date of this Amendment, the Put Event and Base Term Commencement Date have occurred;

        WHEREAS, the Agent Lessor has received an appraisal dated September 6, 2002, as modified by that certain letter from ValueQuest International, Ltd., dated October 29, 2002 (which letter is made part of the appraisal), that establishes the Fair Market Value of the Financed Improvements as of the date of such appraisal and the last day of the Term as being equal to at least one hundred percent (100%) of the Aggregate Commitment Amount;

        WHEREAS, the parties hereto desire to amend the Existing Participation Agreement and the Existing Lease to extend the Term and to make such other amendments and modifications as hereinafter set forth;

        NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows:

        SECTION 1.    AMENDMENTS.    Effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2, (i) the Existing Participation Agreement shall be amended in accordance with Sections 1.1 through 1.5 and (ii) the Existing Lease shall be amended in accordance with Sections 1.6 through 1.9.

        SECTION 1.1    Section 4.4 of the Existing Participation Agreement is hereby deleted and replaced with the following:

"SECTION 4.4. [Intentionally Omitted]"

        SECTION 1.2    Section 8.17 of the Existing Participation Agreement is hereby amended and restated in its entirety as follows:

Net Worth. Lessee shall not permit at any time Net Worth to be less than the sum of (a) $500,000,000, plus (b) for each fiscal year, commencing with the fiscal year ending October 31, 2001, 50% of positive net income for such fiscal year; such covenant to be calculated as of the end of each Fiscal Quarter.

        SECTION 1.3    Section 10.2(b)(v) of the Existing Participation Agreement is hereby amended by deleting therefrom the words "(including the extension of the Lease Term contemplated by the relevant request for extension)".

        SECTION 1.4    Schedules I and I-B to the Existing Participation Agreement are hereby deleted in their entirety and replaced with Schedule I attached hereto.

        SECTION 1.5 Definitions.    

        (a)  The definition of "AEC Requirement" appearing in Appendix 1 to the Participation Agreement is hereby amended and restated in its entirety as follows:

"AEC Requirement" means $39,724,468.00.

        (b)  The definition of "Aggregate Commitment Amount" appearing in Appendix 1 to the Participation Agreement is hereby amended and restated in its entirety as follows:

"Aggregate Commitment Amount" means $46,800,000.00.

        (c)  The definition of "Enhancer Collateral Requirement" appearing in Appendix 1 to the Participation Agreement is hereby amended and restated in its entirety as follows:

"Enhancer Collateral Requirement" means an amount equal to the product of (x) 110% and (y) $7,075,532.00.

        (d)  The definition of "Expiration Date" appearing in Appendix 1 to the Participation Agreement is hereby amended and restated in its entirety as follows:

"Expiration Date" means the seventh anniversary of the Document Closing Date.

        (e)  The definition of "Residual Value Guarantee Amount" appearing in Appendix 1 to the Participation Agreement is hereby amended and restated in its entirety as follows:

"Residual Value Guarantee Amount" means an amount equal to 88% of the aggregate Certificate Amounts of the Participants as of the Eighth Amendment Effective Date less any Loan to Value Optional Prepayments or Base Term Commencement Date Rent Prepayment Amount made, but in no event less than the aggregate outstanding Certificate Amounts of the Tranche A Participants on the Expiration Date.

        (f)    Appendix I to the Existing Participation Agreement is hereby amended by adding thereto in proper alphabetical order the following term:

"Eighth Amendment Effective Date" means October 30, 2002.

        (g) Appendix I to the Existing Participation Agreement is hereby amended by deleting therefrom the following terms:

"Extension Effective Date", "Extension Option", "Extension Option Request", "Extension Option Response Date" and "Lease Extension"

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        SECTION 1.6    Section 2.3 of the Existing Lease is hereby amended and restated in its entirety as follows:

SECTION 2.3. Term. Unless earlier terminated, the term of this Lease shall consist of (a) an interim period (the "Interim Term") commencing on and including the Document Closing Date and ending on but not including the Base Term Commencement Date and (b) a base term (the "Base Term") commencing on and including the Base Term Commencement Date and ending on but not including the seventh anniversary of the Document Closing Date (the Interim Term and the Base Term, collectively, the "Term").

        SECTION 1.7    Section 19.1(a) of the Existing Lease is hereby deleted and replaced with the following:

"(a) [Intentionally Omitted]"

        SECTION 1.8    Section 19.2 of the Existing Lease is hereby amended and restated in its entirety as follows:

Election of Options. Unless Lessee shall have (a) affirmatively elected the Sale Option within the time period provided for in Section 19.1 and (b) satisfied each of the requirements in Articles XX and XXI, Lessee shall be deemed to have elected the Purchase Option. In addition, the Sale Option shall automatically be revoked if there exists a Lease Default, Lease Event of Default, Significant Casualty or Significant Condemnation at any time after the Sale Option is properly elected or Lessee fails to comply with each of the terms and conditions set forth at Articles XX and XXI and Agent Lessor shall be entitled to exercise all rights and remedies provided in Article XVI. Lessee may not elect the Sale Option if there exists on the date the election is made a Lease Default, a Lease Event of Default, Significant Casualty or Significant Condemnation. Any election by Lessee pursuant to Section 19.1 shall be irrevocable at the time made.

        SECTION 1.9    Section 19.3 of the Existing Lease is hereby deleted and replaced with the following:

"SECTION 19.3. [Intentionally Omitted]"

        SECTION 2.    CONDITIONS PRECEDENT.    This Amendment shall become effective upon the satisfaction of each of the following conditions precedent:

        (a)  The Agent Lessor shall have received this Amendment duly executed by each of the parties hereto.

        (b)  The Agent Lessor shall have received an amendment to the Memorandum of Lease, duly executed by the parties thereto, in form and substance satisfactory to each of the Participants and such document shall have been recorded in the appropriate places or offices.

        (c)  Lessee shall deliver to Agent Lessor opinions of Dorsey & Whitney LLP, special counsel to Lessee, and an in-house counsel of Lessee, each of which opinions shall be reasonably acceptable in form and substance to the Participants.

        (d)  Lessee shall execute and deliver to Agent Lessor new Certificates to be issued to the Tranche A Participants.

        (e)  Legal matters incident to the execution and delivery of this Amendment shall be satisfactory to each of the Participants and the Agent Lessor and their respective counsel.

        SECTION 3.    REPRESENTATIONS AND WARRANTIES.    In order to induce the Participants and the Agent Lessor to execute and deliver this Amendment, Lessee hereby represents to each of the Participants and the Agent Lessor that, as of the date hereof,

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        (a)  the execution, delivery and performance of this Amendment has been duly authorized;

        (b)  the person executing this Amendment has been duly authorized to act on its behalf;

        (c)  this Amendment constitutes its legal, valid, binding and enforceable agreement, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws or equitable principles relating to or limiting the rights of creditors generally;

        (d)  its entry into this Amendment will not violate any law, rule or regulation or constitute a default under any material agreement by which it is bound or by which any of its assets are affected;

        (e)  except as set forth on Schedule 3(e) to this Amendment, the representations and warranties set forth in Section 7.2 of the Existing Participation Agreement are true and correct;

        (f)    it is in full compliance with all of the terms and conditions of each Operative Document and this Amendment; and

        (g)  no Default or Event of Default has occurred and is continuing or shall result after giving effect to this Amendment.

        SECTION 4.    MISCELLANEOUS.    

        SECTION 4.1    Continuing Effectiveness, etc. This Amendment shall be deemed to be an amendment to the Existing Participation Agreement and the Existing Lease, and the Existing Participation Agreement and the Existing Lease, as amended hereby, and each other Operative Document, shall remain in full force and effect and are hereby ratified, approved and confirmed in each and every respect. On and after the date hereof, all references to the "Participation Agreement" and the "Lease" in the Operative Documents or in any other document, instrument, certificate, agreement, opinion or writing shall be deemed to refer to the Existing Participation Agreement or the Existing Lease, as the case may be, as amended hereby. Except as expressly set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as an amendment, modification or waiver of any provision of, or any right, power or remedy of any party hereto under, any Operative Document.

        SECTION 4.2    Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Amendment or affecting the validity or enforceability of such provision in any other jurisdiction.

        SECTION 4.3    Headings. The various headings of this Amendment are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof.

        SECTION 4.4    Execution in Counterparts. This Amendment may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

        SECTION 4.5    Governing Law. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK AS TO ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, EXCEPT TITLE 14 OF ARTICLE 5 OF THE NEW YORK GENERAL OBLIGATIONS LAW. This Amendment constitutes the entire understanding among the parties hereto with respect to the subject matter hereof and supersedes any prior agreement, written or oral, with respect thereto.

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        SECTION 4.6    Successors and Assigns. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

        SECTION 4.7    Fees and Expenses. Lessee agrees to pay on demand all costs and expenses of or incurred by each of the other parties hereto in connection with the negotiation, preparation, execution and delivery of this Amendment and the agreements and covenants contemplated herein, including the reasonable fees and expenses of counsel for the Agent Lessor.

[signature pages follow]

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        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written.

ADC TELECOMMUNICATIONS, INC., as Lessee
By:	/s/ GOKUL V. HEMMADY
	Name: Gokul V. Hemmady Title: Vice President, Controller and Treasurer

LEASE PLAN NORTH AMERICA, INC., not in its individual capacity, except as expressly stated in the Participation Agreement, but solely as Agent Lessor
By:	/s/ ELIZABETH R. MCCLELLAN
	Name: Elizabeth R. McClellan Title: Vice President

ABN AMRO BANK N.V., as Administrative Agent and as a Participant
By:	/s/ RUBA ABOZIR
	Name: Ruba Abozir Title: Vice President
By:	/s/ BLAKE J. LACHER
	Name: Blake J. Lacher Title: Vice President

GENERAL ELECTRIC CAPITAL CORPORATION, as a Participant
By:	/s/ T.J. WILLIAMS
	Name: T.J. Williams Title: Vice President

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Exhibit 10-ii

EX-10.JJ

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Exhibit 10-jj

ADC TELECOMMUNICATIONS, INC.
EXECUTIVE MANAGEMENT INCENTIVE PLAN

Section 1.    Establishment; Purpose

        (a)    Establishment.    On December 13, 2001, the Board of Directors of ADC Telecommunications, Inc., a Minnesota corporation (the "Company"), upon recommendation by the Compensation and Organization Committee of the Company's Board of Directors, approved an incentive plan for executive officers as described herein, which plan shall be known as the "ADC Telecommunications, Inc. Executive Management Incentive Plan" (the "Plan"). The material terms of the Plan shall be submitted for approval by the shareholders of the Company at the Company's 2002 Annual Meeting of Shareowners. The Plan shall be effective, subject to its approval by the shareholders of the Company, beginning with the Company's fiscal year ending on October 31, 2002. No payments shall be made pursuant to the Plan until after the Plan has been approved by the shareholders of the Company.

        (b)    Purpose.    The purpose of the Plan is to provide a direct financial incentive for executive officers of the Company to make a significant contribution to the annual strategic and financial goals of the Company.

Section 2.    Administration

        (a)    Composition of the Committee.    The Plan shall be administered by the Compensation and Organization Committee of the Company's Board of Directors, or a sub-committee thereof (the "Committee"). To the extent required by Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), the Committee administering the Plan shall be composed solely of two or more "outside directors" within the meaning of Section 162(m) of the Code.

        (b)    Power and Authority of the Committee.    The Committee shall have full power and authority, subject to all the applicable provisions of the Plan (including but not limited to the requirements of Section 2(c) of the Plan) and applicable law, to (i) establish, amend, suspend, terminate or waive such rules and regulations and appoint such agents as it deems necessary or advisable for the proper administration of the Plan, (ii) construe, interpret and administer the Plan or any Annual Cash Bonus Award (as defined below in Section 3(b)) made under the Plan, and (iii) make all other determinations and take all other actions necessary or advisable for the administration of the Plan. Unless otherwise expressly provided in the Plan, each determination made and each action taken by the Committee pursuant to the Plan or Annual Cash Bonus Award made under the Plan (x) shall be within the sole discretion of the Committee, (y) may be made at any time and (z) shall be final, binding and conclusive for all purposes on all persons, including, but not limited to, Participants and their legal representatives and beneficiaries. For purposes of the Plan, the term "Affiliate" shall mean any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company and any entity in which the Company has a significant equity interest, in each case as determined by the Committee in its sole discretion.

        (c)    Qualified Performance-Based Compensation.    From time to time, the Committee may designate an Annual Cash Bonus Award as an award of "qualified performance-based compensation" within the meaning of Section 162(m) of the Code (hereinafter referred to as a "Performance-Based Award"). Notwithstanding any other provision of the Plan to the contrary, the following additional requirements shall apply to all Performance-Based Awards made to any Participant (as defined below in Section 3(a)) under the Plan:

          (i)  Any Performance-Based Award shall be null and void and have no effect whatsoever unless the Plan shall have been approved by the shareholders of the Company at the Company's 2002 Annual Meeting of Shareowners.

        (ii)  The right to receive a Performance-Based Award shall be determined solely on account of the attainment of one or more pre-established, objective performance goals selected by the Committee in connection with the grant of the Performance-Based Award. Such performance goals may apply to the Participant individually, an identifiable business unit of the Company, the Company as a whole, or any combination thereof. The performance goals shall be based solely on one or more of the following business criteria: revenue or revenue growth; new product revenue; earnings (before or after taxes, interest, depreciation and/or amortization); operating income or gross margin performance; market share; economic value added; improvement in economic value added; cash flow (including free cash flow, net cash flow, operating cash flow or any combination thereof); operating and fixed factory expense levels; working capital; stock price performance; earnings per share (basic or diluted); total shareholder return and profitability as measured by any one or more of the following ratios: return on revenue, return on assets or return on equity; and cumulative total return to shareholders (whether compared to pre-selected peer groups or not). The foregoing shall constitute the sole business criteria upon which the performance goals under this Plan shall be based.

        (iii)  The maximum bonus which may be paid to any Participant pursuant to any Performance-Based Award with respect to any fiscal year shall not exceed the lesser of 300% of a Participant's base salary for that fiscal year or $4,000,000.

        (iv)  For a Performance-Based Award, the Committee shall, not later than 90 days after the beginning of each fiscal year:

(A)

designate all Participants for such fiscal year; and



(B)

establish the objective performance factors for each Participant for that fiscal year on the basis of one or more of the business criteria set forth herein.

        (v)  Following the close of each fiscal year and prior to payment of any amount to any Participant under the Plan, the Committee must certify in writing as to the attainment of all factors (including the performance factors for a Participant) upon which any payments to a Participant for that fiscal year are to be based.

        (vi)  Each of the foregoing provisions, and all of the other terms and conditions of the Plan as it applies to any Performance-Based Award, shall be interpreted in such a fashion so as to qualify all compensation paid thereunder as "qualified performance-based compensation" within the meaning of Section 162(m) of the Code.

Section 3.    Eligibility and Participation

        (a)    Eligibility.    The Plan is maintained by the Company for its executive officers. In order to be eligible to participate in the Plan, an executive officer of the Company or any of its Affiliates must be selected by the Committee (if so selected, such executive officer is referred to as a "Participant" in this Plan). In determining the executive officers who will participate in the Plan, the Committee may take into account the nature of the services rendered by such executive officers, their present and potential contributions to the success of the Company and such other factors as the Committee, in its sole discretion, shall deem relevant. A director of the Company or of an Affiliate who is not also an employee of the Company or an Affiliate, and all members of the Committee, shall not be eligible to participate in the Plan.

        (b)    Participation.    The Committee shall determine the employees eligible to be granted an annual cash bonus award (an "Annual Cash Bonus Award"), the amount or range (subject to the limits set forth in the Plan) of the potential bonus to be paid pursuant to each Annual Cash Bonus Award, the time or times when Annual Cash Bonus Awards will be made, and all other terms and conditions of each Annual Cash Bonus Award. The provisions of the Annual Cash Bonus Awards need not be the

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same with respect to different Participants. The Committee's decision to approve an Annual Cash Bonus Award to an executive officer in any year shall not require the Committee to approve a similar Annual Cash Bonus Award or any Annual Cash Bonus Award at all to that executive officer or any other executive officer or person at any future date. The Company and the Committee shall not have any obligation for uniformity of treatment of any person, including, but not limited to, Participants and their legal representatives and beneficiaries and employees of the Company or of any Affiliate of the Company.

        (c)    Employment.    In the absence of any specific agreement to the contrary, no Annual Cash Bonus Award to a Participant under the Plan shall affect any right of the Company, or of any Affiliate of the Company, to terminate, with or without cause, the Participant's employment with the Company or any Affiliate at any time. Neither the establishment of the Plan, nor the granting of any Annual Cash Bonus Award hereunder, shall give any Participant (i) any rights to remain employed by the Company or any Affiliate; (ii) any benefits not specifically provided for herein or in any Annual Cash Bonus Award granted hereunder; or (iii) any rights to prevent the Company or any Affiliate from modifying, amending or terminating any of its other benefit plans of any nature whatsoever.

Section 4.    Payment of Annual Cash Bonus Awards

        (a)    General.    Annual Cash Bonus Awards may be granted singly or in combination, or in addition to, in tandem with or in substitution for any grants or rights under any other employee or compensation plan of the Company or of any Affiliate. All or part of an Annual Cash Bonus Award may be subject to conditions and forfeiture provisions established by the Committee, which may include, but are not limited to, continuous service with the Company or an Affiliate.

        (b)    Payment of Annual Cash Bonus Awards.    Payment of any bonuses pursuant to Annual Cash Bonus Awards shall be made solely in cash and may be made, subject to any deferred compensation election which may be permitted pursuant to the ADC Telecommunications, Inc. Deferred Compensation Plan, any elections made pursuant to the ADC Telecommunications, Inc. Executive Incentive Exchange Plan, or any similar plan maintained by the Company (as such plans may be amended from time to time), at such times, with such restrictions and conditions as the Committee, in its sole discretion, may determine at the time of grant of the Annual Cash Bonus Awards.

        (c)    Discretionary Reduction.    The Committee shall retain sole and full discretion to reduce, in whole or in part, the amount of any cash payment otherwise payable to any Participant under this Plan.

Section 5.    Termination of Employment

        (a)    Termination of Employment.    If employment with ADC is terminated for any reason other than death and if the Employment Termination Date occurs prior to the end of the fiscal year, a Participant will not receive an Annual Cash Bonus Award under the Plan. For purposes of this Plan, the "Employment Termination Date" is the date that the Participant ceases to be an employee of the Company (as determined by the Committee). In the case of termination of employment by the Company, the Employment Termination Date shall be determined without regard to whether such termination is with or without cause or with or without reasonable notice.

        (b)    Death.    If a Participant dies during the fiscal year, a pro-rated payment of the Annual Cash Bonus Award otherwise payable for the full fiscal year will be made to the Participant's estate. The payment will be based upon the time the Participant served as an executive officer during the fiscal year.

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Section 6.    Nontransferability

        Except as otherwise determined by the Committee, no right under any Annual Cash Bonus Award shall be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of during the time in which the requirement of continued employment or attainment of performance objectives has not been achieved.

Section 7.    Taxes

        In order to comply with all applicable federal or state income, social security, payroll, withholding or other tax laws or regulations, the Company may take such action, and may require a Participant to take such action, as it deems appropriate to ensure that all applicable federal or state income, social security, payroll, withholding or other taxes, which are the sole and absolute responsibility of the Participant, are withheld or collected from such Participant.

Section 8.    Amendment and Termination

        (a)    Term of Plan.    Unless the Plan shall have been discontinued or terminated as provided in Section 8(b) hereof, no Annual Cash Bonus Awards shall be granted under the Plan after October 31, 2006, and no Annual Cash Bonus Awards shall be paid except with respect to the Company's fiscal year ending not later than October 31, 2006. No Annual Cash Bonus Awards may be granted after such termination, but termination of the Plan shall not alter or impair any rights or obligations under any Annual Cash Bonus Award theretofore granted (including the payment of such Annual Cash Bonus Award within the time period permitted by the Code, as the same may be amended from time to time), without the consent of the Participant or holder or beneficiary thereof.

        (b)    Amendments to and Termination of Plan.    Except to the extent prohibited by applicable law and unless otherwise expressly provided in the Plan, the Committee may amend, alter, suspend, discontinue or terminate the Plan; provided, however, that notwithstanding any other provision of the Plan, without the approval of the shareholders of the Company, no such amendment, alteration, suspension, discontinuation or termination shall be made that, absent such approval would cause any compensation paid pursuant to any Performance-Based Award granted pursuant to the Plan to no longer qualify as "qualified performance-based compensation" within the meaning of Section 162(m) of the Code.

        (c)    Correction of Defects, Omissions and Inconsistencies.    Except to the extent prohibited by applicable law and unless otherwise expressly provided in the Plan, the Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Annual Cash Bonus Award in the manner and to the extent it shall deem desirable to carry the Plan into effect.

Section 9.    Miscellaneous

        (a)    Governing Law.    The Plan and all of the Participants' rights thereunder shall be governed by and construed in accordance with the internal laws, and not the laws of conflicts, of the State of Minnesota.

        (b)    Severability.    If any provision of the Plan, or any Annual Cash Bonus Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan, or any Annual Cash Bonus Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan, and the Annual Cash Bonus Award such provision shall be stricken as to such jurisdiction, and the remainder of the Plan, and any such Annual Cash Bonus Award shall remain in full force and effect.

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        (c)    No Trust or Fund Created.    Neither the Plan nor any obligations to pay an Annual Cash Bonus Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other person. To the extent that any person acquires a right to receive payments from the Company or any Affiliate pursuant to an Annual Cash Bonus Award, such right shall be no greater than the right of any unsecured general creditor of the Company or of any Affiliate.

        (d)    Nature of Payments.    Any and all cash payments pursuant to any Annual Cash Bonus Award granted hereunder shall constitute special incentive payments to the Participant, and such payments shall not be taken into account in computing the amount of the Participant's salary or compensation for purposes of determining any pension, retirement, death or other benefits under (i) any pension, retirement, profit sharing, bonus, life insurance or other employee benefit plan of the Company or any Affiliate or (ii) any agreement between the Company (or any Affiliate) and the Participant, except to the extent that such plan or agreement expressly provides to the contrary.

        (e)    Headings.    Headings are given to the Sections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

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Exhibit 10-jj

ADC TELECOMMUNICATIONS, INC. EXECUTIVE MANAGEMENT INCENTIVE PLAN

EX-10.KK

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Exhibit 10-kk

ADC EXECUTIVE STOCK OWNERSHIP PROGRAM
(January 2002)

Overview

        The ADC Executive Stock Ownership Policy specifies ownership levels expected of ADC officers and encouraged for other top executives. It also provides additional stock options as part of December annual grants for executives who had adequate ownership as of the previous November 15. This description of the program is updated in light of the stock price of ADC stock during the ten trading days ending November 1, 2001, the inclusion of 401(k) Excess Plan ADC stock account holdings for the determination of ownership level, the elimination of past participant grand-fathering, and the current plan to provide annual grants for fiscal year 2003 as of mid-December 2002.

Objective

•

Encourage top management to maintain a significant, long-term ownership position in ADC stock, thus strengthening the alignment with shareholder's interest.



•

Recognizing that owning a significant portion of one's portfolio in ADC stock incurs an above-average risk, this program provides a direct incentive to foster ownership.

Eligibility

        Eligibility for this program is confined to ADC executives in jobs at salary grade 20 or higher as of the October 1 immediately preceding the annual stock option grant date and through that grant date. Although eligibility defines on-going program participation, an executive will only receive the benefit of the additional number of stock options at the annual grant if they would normally receive an annual grant in December of that year. For example, a new hire in August is not eligible for an annual grant until the December of the following year.

Ownership Targets

CEO	4 × base salary
Grades 23 & above	2 × base salary
Grades 20-22	1.5 × base salary

        These ownership targets should be achieved by the end of a four-year time period, measured from the first date that the participant is in an eligible position at ADC. In the case of employment with an acquired company, the measurement date will begin no earlier than the date of acquisition.

        It is especially important that the officers of the company obtain the target ownership levels. Therefore, these targets are expected of officers; while for other executives achievement of the target is simply encouraged and generates the opportunity for larger stock option grants.

        ADC equity ownership programs will generally provide officers with adequate opportunity to achieve the ownership targets. Examples of such programs are the stock option and stock purchase programs. If the programs do not (e.g., stock options all underwater), understanding will be shown to the officer who does not achieve the ownership target. On the other hand, the Compensation and Organization Committee of the Board will look very unfavorably at a situation in which an officer has not met the target and has instead sold their shares upon the exercise of stock options.

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        With the same consideration in mind, it should be apparent that there is adequate progress being made to reach the target. More specifically, "adequate progress" is defined as the expectation that the officer will have an ownership position equal to at least one-fourth of the full target ownership position for each full year of service in an eligible position(s). As noted later, an enhancement to the annual stock options grant will not occur until the full targeted ownership exists.

Measurement of Ownership Targets and Achievement

        Ownership will include ADC common stock acquired and currently held through stock option exercises, direct market purchases, 401(k) ADC stock fund, 401(k) ADC stock fund account, stock purchase plan holdings, and vested shares from restricted stock grants. Ownership must be in the employee's name, not solely in the name of other family members. Unexercised stock options are not deemed as owned for purposes of this program.

        The ownership level is measured as the value of ADC stock owned. Since stock prices fluctuate daily, an imputed price per share is defined for each fiscal year to calculate ownership value and, therefore, ownership expectations for that year. This imputed value of a share of ADC stock equals the higher of the average closing market value during two periods: (1) the ten trading days ending on the first trading day of the fiscal year and (2) the ten trading days ending on May 1 of the fiscal year.

        Here is an example for FY2002:

•

Ownership target = 1.5 × salary



•

Salary as of October 1, 2002 = $100,000



•

Average stock price for the ten trading days ending on the November 1, 2001 = $4.799



•

Average (hypothetical) stock price for the ten trading days ending May 1, 2002 = $5.50



•

Minimum shares needed to reach ownership target = 1.5 × $100,000/$5.50 = 27,273 shares as of the November 15, 2002

        This is a substantially greater number of shares than were needed for the FY02 annual grant since the stock price near the beginning of FY01 was over $20 per share. Therefore, the executive might not satisfy this ownership target for the purposes of a December 2002 (FY03) annual grant even if they did for the previous annual grant cycle.

Program Operation

        ADC will notify eligible participants in May of the ownership requirement to be achieved by November 15 of that fiscal year in order to obtain an enhancement to their stock option grant. This requirement is a function of the target ownership salary multiple, the participant's salary as of October 1, and the imputed value per ADC share as previously defined.

        By October 10 another reminder will be provided to participants, incorporating any salary increase since the last notice. At that time, each participant will be asked to supply information regarding actual ownership level. Eligible participants will be required to respond with the ADC stock ownership information by November 15.

Ownership Award

        Participants who have provided the necessary ownership information in a timely manner and who have achieved or exceeded the full stock ownership target for their position as of the November 15 immediately preceding the annual grant will have their stock option grant adjusted upward 20% from the guideline midpoint amount if they receive the annual grant.

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Continued Ownership Expectation

        Any participant receiving an enhanced annual option grant is expected to hold ADC stock at least equal to the number of shares that was required for that annual grant enhancement for at least one year after the grant. If this targeted ownership level is not maintained for the full year after the annual grant, a reduction will be made to the next annual grant. The executive is responsible for notifying ADC of a decrease in ownership below this level.

Plan Amendment and Termination

        ADC reserves the right to terminate or amend this program prospectively or retrospectively and without prior notice. This program is not a contract of employment or guarantee thereof.

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Exhibit 10-kk

ADC EXECUTIVE STOCK OWNERSHIP PROGRAM (January 2002)

EX-10.LL

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Exhibit 10-ll

Summary of Executive Perquisite Allowances

        ADC provides its executive officers and other senior management employees with an annual perquisite allowance ranging from $10,000 to $16,000. This allowance is paid over the year in accordance with ADC's regular payroll practices.

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Exhibit 10-ll

Summary of Executive Perquisite Allowances

EX-21.A

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Exhibit 21-a

ADC TELECOMMUNICATIONS, INC.

SUBSIDIARIES
(10/31/02)

Name	State/Country of Organization
2409772 Ontario Inc.	Ontario
ADC (India) Communications & Infotech Private Limited	India
ADC Broadband (Hong Kong) Limited	Hong Kong
ADC Broadband Access Systems, Inc.	Delaware
ADC Broadband Italy SRL	Italy
ADC Broadband Wireless Group, Inc.	Pennsylvania
ADC Danmark ApS (also known as ADC Denmark ApS)	Denmark
ADC de Delicias, S. de R.L. de C.V.	Mexico
ADC de Juarez, S. de R.L. de C.V.	Mexico
ADC de Mexico S.A. de C.V.	Mexico
ADC DSL Systems, Inc.	Delaware
ADC Europe N.V.	Belgium
ADC Funding Company, LLC	Delaware
ADC Global Holdings, Inc.	Minnesota
ADC International Finance Services	United Kingdom
ADC International Holding Company	Minnesota
ADC International OUS, Inc.	Minnesota
ADC International, Inc.	Barbados
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 Liquidating Co. (UK) Ltd.	United Kingdom
ADC Mersum US, Inc.	Minnesota
ADC OUS Holdings, LLC	Delaware
ADC Puerto Rico, Inc.	Puerto Rico
ADC Receivables Corp. I	Minnesota

ADC Services Fulfillment, Inc.	New Jersey
ADC Software Holding Ltd.	Canada
ADC Software Systems (Ireland) Limited	Ireland
ADC Software Systems Australia Pty. Ltd.	Queensland, Australia
ADC Software Systems C.I. Ltd.	Channel Islands
ADC Software Systems Canada, Ltd.	Canada
ADC Software Systems UK	United Kingdom
ADC Software Systems USA, Inc.	Delaware
ADC Solitra, Inc.	Minnesota
ADC Systems Integration France, S.A.S.	France
ADC Systems Integration UK Limited	United Kingdom
ADC Telecom Canada Inc.	Canada
ADC Telecommunicaciones Venezuela, S.A.	Venezuela
ADC Telecommunication (Investments) Israel Ltd.	Israel
ADC Telecommunications (China) Limited	Hong Kong
ADC Telecommunications (Holdings) Pty. Limited	Australia
ADC Telecommunications (Nanjing) Co., Ltd.	China
ADC Telecommunications (Scotland) Limited	Scotland
ADC Telecommunications (Shanghai) Distribution Co., Ltd.	China
ADC Telecommunications (Switzerland) AG	Switzerland
ADC Telecommunications Australia Pty. Limited	Australia
ADC Telecommunications Equipment Industry and Trade Co., Limited	Turkey
ADC Telecommunications GmbH	Germany
ADC Telecommunications Holding, Inc.	Minnesota
ADC Telecommunications Israel Ltd.	Israel

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ADC Telecommunications Netherlands B.V.	Netherlands
ADC Telecommunications Sales Holding, Inc.	Minnesota
ADC Telecommunications Sales Sweden AB	Sweden
ADC Telecommunications Sales, Inc.	Minnesota
ADC Telecommunications Singapore Pte. Limited	Singapore
ADC Telecommunications UK Ltd.	United Kingdom
ADC Telecomunicacoes do Brasil Ltda	Brazil
ADC Teledata Communications (Philippines), Inc.	Philippines
ADC Wireless Finland OY	Finland
Altitun AB	Sweden
Altitun Finans AB	Sweden
Altitun Ltd.	United Kingdom
BAS International Limited	Delaware
Broadband Equipment Sales Company Sweden AB	Sweden
Codonoll Technology Corporation	Delaware
CommTech Europe Limited	United Kingdom
Computer Telecom Installations France SAS	France
DSL Research, LLC	Delaware
G-Connect, Ltd.	Israel
Meta Telecomunicacoes S/A	Brazil
Metrica Ltd.	United Kingdom
Nihon ADC K.K.	Japan
OSS Software Corporation	New Jersey
PairGain Canada Holdings, Inc.	Canada
PairGain Canada, Inc.	Canada
PairGain International Sales Corporation	U.S. Virgin Islands
PairGain LLC	Minnesota
PairGain Technologies UK Ltd.	United Kingdom
Pathway, Inc.	Ohio

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PCS Solutions Canada, Inc.	British Columbia
PCS Solutions, LLC	Delaware
Princeton Optics, Inc.	New Jersey
T.D.C. Holdings B.V.	Netherlands
TDC Teledata Communication GmbH	Germany
Teledata Communication Australia Pty. Ltd.	Australia
Teledata Communications Hellas LLC	Greece
Teleprocessing Products, Inc.	California
Telesphere Solutions, Inc.	Minnesota
TTT S.A.—Telsul Teledata Communicacoes do Brasil	Brazil

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Exhibit 21-a

EX-23.A

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Exhibit 23-a

Consent of Independent Auditors

        We consent to the incorporation by reference in Registration Statement File Nos. 33-40356, 33-52635, 33-58409, 333-25569, 333-80945, 333-32416, 333-56806, 333-83498, 33-52637, 333-83420, 33-58407, 333-61488, 333-61490, 333-83418, 333-37619, 333-66169, 333-80943, 333-88669, 333-94059, 333-37898, 333-40354, 333-42642, 333-47656, 333-56356, 333-56418, 333-32023, 333-94977 and 333-91972 of our reports dated December 2, 2002, with respect to the consolidated financial statements and schedule of ADC Telecommunications, Inc. and subsidiaries for the year ended October 31, 2002 included in this Form 10-K.

/s/ Ernst & Young LLP

Minneapolis, Minnesota,
January 9, 2003

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Exhibit 23-a

Consent of Independent Auditors

EX-24.(A)

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Exhibit 24-a

POWER OF ATTORNEY

        KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Richard R. Roscitt and Robert E. Switz, 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, 2002, 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 by the following persons on the dates indicated below their names.

/s/ Robert Annunziata Robert Annunziata		/s/ Jean-Pierre Rosso Jean-Pierre Rosso
Date:	12/24/02	Date:	12/23/02
/s/ John A. Blanchard III John A. Blanchard III		/s/ Larry W. Wangberg Larry W. Wangberg
Date:	12/21/02	Date:	12/20/02
/s/ John J. Boyle III John J. Boyle III		/s/ John D. Wunsch John D. Wunsch
Date:	12/20/02	Date:	12/29/02
/s/ James C. Castle James C. Castle		/s/ Charles D. Yost Charles D. Yost
Date:	12/20/02	Date:	1/6/03
/s/ B. Kristine Johnson B. Kristine Johnson
Date:	12/30/02

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Exhibit 24-a

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 us 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 forward-looking statements because they speak only of our views as of the date the statements are made. We undertake no obligation to 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 by our competitors. The introduction of products using new technologies or the adoption of new industry standards can make our 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 in a cost-effective and timely manner 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 affected materially and adversely.

Our business may be affected adversely by general economic and market conditions.

        Our business is subject to the effects of general economic conditions in the United States and globally, and, in particular, market conditions in the communications and networking industries. During the past two fiscal years, our operating results have been affected adversely as a result of unfavorable economic conditions and reduced capital spending by our customers, particularly in the United States. If the economic conditions in the United States and globally do not improve, or if we experience a

worsening of the global economy, we may continue to experience material adverse impacts on our business, operating results and financial condition.

We may not realize expected benefits from our announced restructuring initiative.

        We announced an initiative to focus our business on core operations and improve our operating performance by restructuring and streamlining operations during fiscal 2001. We continued this initiative during fiscal 2002. We cannot predict whether we will realize improved operating performance as a result of our restructuring and streamlining of operations. We also cannot predict whether our restructuring and streamlining of operations will affect adversely our ability to retain key employees, which, in turn, would affect adversely our operating results.

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 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 service providers. The market for communications network equipment, software and integration services is rapidly changing. We believe 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:

•

the amount of capital expenditures by network providers;



•

regulatory and legal developments;



•

changes to capital expenditure rates by network providers;



•

the addition of new customers to the market; and



•

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

        We cannot predict the growth rate of the market for communications equipment products and services. The slowdown in the general economy over the past two years, changes and consolidation in the service provider market, and the constraints on capital availability have had a material adverse effect on many of our service provider customers, with a number of such customers going out of business or substantially reducing their expansion plans and purchases. 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 or how their sales may be impacted by possible consolidation of communications service provider customers. We may not be able to compete successfully, and competitive pressures may affect our business, operating results and financial condition materially and adversely.

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 do. Competition may also be affected by consolidation among communications

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equipment providers, which may increase their resources. As a result, other competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements. There may also be consolidation among our communication service provider customers, which would result in fewer (and larger) customers for our products and those of our competitors. Some of these customers may choose to reduce the number of equipment vendors they deal with, which could result in the loss of one or more customers.

        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 convergence of Internet, data, video and voice on a single broadband network, 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 profit 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:

•

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



•

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



•

the timing of new product and service announcements;



•

the availability of products and services;



•

the overall level of capital expenditures by our customers;



•

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



•

the utilization of our production capacity and employees; and



•

the availability and cost of key components.

        Our recent operating results may not be a good predictor of our results in future periods. The economic downturn during the past two years has caused a significant change in our growth strategy and, therefore, may not be an accurate indicator of future operating results. 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 affected adversely. In addition, our operating results are 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 typically 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, the development of annual capital budgets by our customers during that period, and a general industry slowdown during that period. We cannot predict if these historical seasonal trends will continue or worsen in the future, particularly in light of the economic downturn of the past two years. For instance, due to the economic downturn in the communications equipment and services market during fiscal 2001 and 2002, this historical trend of seasonality was not evident during these two fiscal years.

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We incurred significant net losses in fiscal 2002 and 2001. If we continue to incur significant net losses, our ability to satisfy our cash requirements may be more difficult.

        We incurred net losses of approximately $1.15 billion and $1.29 billion in fiscal 2002 and 2001, respectively. Although we believe that our current unrestricted cash on hand and expected cash receipts from a federal income tax refund will be adequate to fund our working capital requirements, planned capital expenditures and restructuring costs, if our operating losses continue to be significant or continue longer than expected, we may not be able to satisfy our working capital requirements from existing resources. In the current market environment there are few alternatives available as sources of financing, and any plan to raise additional capital is likely to involve an equity-based or equity-linked financing, such as the issuance of convertible debt, common stock or preferred stock, which would be dilutive to existing shareholders.

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 generally 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 affect our business, operating results and financial condition materially and adversely.

Conditions in international markets could affect our operations.

        Our international sales accounted for approximately 27% of our net sales in fiscal 2002, 29% of our net sales in fiscal 2001 and 22% of our net sales in fiscal 2000. 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 lease operations located in Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, Hungary, India, Ireland, Israel, Italy, Japan, Malaysia, Mexico, Puerto Rico, Russia, Singapore, South Africa, South Korea, Spain, the United Arab Emirates, the United Kingdom and Venezuela. Due to our international sales and our international operations, we are subject to the risks of conducting business internationally. These risks include:

•

local economic and market conditions;



•

political and economic instability;



•

unexpected changes in or impositions of legislative or regulatory requirements;



•

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



•

tariffs and other barriers and restrictions;



•

longer payment cycles;



•

difficulties in enforcing intellectual property and contract rights;



•

greater difficulty in accounts receivable collection;



•

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 affected adversely 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 also may have a negative impact on the results of our operations, especially those 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 impacted adversely by these economic conditions, which may affect our business, financial condition and operating results materially and adversely.

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, trademarks, 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 whether 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 affected adversely.

We may be unable to successfully integrate acquired businesses.

        If we determine to acquire complementary businesses, 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.

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 affect our business, operating results and financial condition adversely.

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        In addition, we have increased our reliance on the use of contract manufacturers to make our products on our behalf. We estimate that products made by contract manufacturers accounted for approximately 33% of our net sales in fiscal 2002. If these contract manufacturers do not fulfill their obligations to us, or if we do not properly manage these relationships, our existing customer relationships may suffer.

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:

•

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



•

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



•

customer contract awards to us or our competitors;



•

increased competition with our competitors or among our customers;



•

consolidation among our competitors or customers;



•

disputes concerning intellectual property rights;



•

the financial health of ADC, our competitors or our customers;



•

developments in telecommunications regulations;



•

general conditions in the communications equipment industry; and



•

general economic conditions.

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

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, 2002, we had commitments to extend credit of approximately $58.0 million, of which approximately $20.9 million was drawn and outstanding at that time. We have recorded approximately $12.7 million in loss reserves in the event of non-performance related to these financing arrangements. Many of our competitors engage in similar financing transactions in order to obtain customer orders. To remain competitive, we 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 affect our business, financial condition and operating results adversely.

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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 success. 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. Moreover, due to our recent initiative to focus our business on core operations and improve our operating performance by restructuring and streamlining operations, we cannot assure you of our ability to attract and retain key personnel.

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 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:

•

advance notice requirements for shareowner proposals and nominations;



•

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



•

authorization for our Board of Directors to issue common stock purchase rights upon a third party's acquisition of 15% or more of our outstanding shares of common stock; and



•

the limitation of business combinations with interested shareowners.

        Some of these provisions may discourage a future acquisition of ADC even though our 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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Exhibit 99-a

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
RISK FACTORS

EX-99.B

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Exhibit 99-b

CERTIFICATIONS PURSUANT TO 18 U.S.C. §1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

        I, Richard R. Roscitt, the Chief Executive Officer of ADC Telecommunications, Inc., hereby certify that:

        1.    The Annual Report on Form 10-K of ADC Telecommunications, Inc. for the year ended October 31, 2002, as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of sections 13(a) and 15(d) of the Securities Exchange Act of 1934; and

        2.    The information contained in the above-mentioned report fairly presents, in all material respects, the financial condition and results of operations of ADC Telecommunications, Inc.

/s/ Richard R. Roscitt Richard R. Roscitt
January 10, 2003

        I, Robert E. Switz, the Chief Financial Officer of ADC Telecommunications, Inc., hereby certify that:

        1.    The Annual Report on Form 10-K of ADC Telecommunications, Inc., for the period ended October 31, 2002, as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of sections 13(a) and 15(d) of the Securities Exchange Act of 1934; and

        2.    The information contained in the above-mentioned report fairly presents, in all material respects, the financial condition and results of operations of ADC Telecommunications, Inc.

/s/ Robert E. Switz Robert E. Switz
January 10, 2003

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Exhibit 99-b

CERTIFICATIONS PURSUANT TO 18 U.S.C. §1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EX-99.C

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Exhibit 99-c

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareowners
ADC Telecommunications, Inc.

        We have audited the consolidated financial statements of ADC Telecommunications, Inc. and subsidiaries as of October 31, 2002, and for the year then ended, and have issued our report thereon dated December 2, 2002 (included elsewhere in this Form 10-K). Our audit also included the financial statement schedule for the year ended October 31, 2002 listed in Item 15(a) of this Form 10-K. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audit.

        In our opinion, the financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ ERNST & YOUNG LLP Minneapolis, Minnesota
December 2, 2002

ADC Telecommunications, Inc.
Schedule II
For Year Ended October 31, 2002
(in millions)

Fiscal 2002	Balance at Beginning of Year		Charged to Costs and Expenses			Deductions		Balance at End of Year
Allowance for doubtful accounts & notes receivable	$	87.1	$	26.4		$	73.8	$	39.7
Inventory reserve		89.5		49.7			45.3		93.9
Restructuring accrual		120.8		220.1			216.7		124.2
Warranty accrual		29.4		(2.9	)		13.4		13.1

Fiscal 2001	Balance at Beginning of Year		Charged to Costs and Expenses		Deductions		Balance at End of Year
Allowance for doubtful accounts & notes receivable	$	18.9	$	111.0	$	42.8	$	87.1
Inventory reserve		47.3		165.3		123.1		89.5
Restructuring accrual		14.4		483.4		377.0		120.8
Warranty accrual		36.4		48.4		55.4		29.4

Fiscal 2000	Balance at Beginning of Year		Charged to Costs and Expenses		Deductions		Balance at End of Year
Allowance for doubtful accounts & notes receivable	$	9.2	$	15.0	$	5.3	$	18.9
Inventory reserve		27.6		31.2		11.5		47.3
Restructuring accrual		9.0		13.3		7.9		14.4
Warranty accrual		9.7		34.5		7.8		36.4

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Exhibit 99-c

REPORT OF INDEPENDENT AUDITORS
ADC Telecommunications, Inc. Schedule II For Year Ended October 31, 2002 (in millions)

EX-99.D

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Exhibit 99-d

The following report is a copy of a report previously issued by Arthur Andersen LLP ("Andersen"), which report has not been reissued by Andersen.

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 21, 2001. 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 21, 2001

ADC Telecommunications, Inc.
Schedule II
For Year Ended October 31, 2002
(in millions)

Fiscal 2002	Balance at Beginning of Year		Charged to Costs and Expenses			Deductions		Balance at End of Year
Allowance for doubtful accounts & notes receivable	$	87.1	$	26.4		$	73.8	$	39.7
Inventory reserve		89.5		49.7			45.3		93.9
Restructuring accrual		120.8		220.1			216.7		124.2
Warranty accrual		29.4		(2.9	)		13.4		13.1

Fiscal 2001	Balance at Beginning of Year		Charged to Costs and Expenses		Deductions		Balance at End of Year
Allowance for doubtful accounts & notes receivable	$	18.9	$	111.0	$	42.8	$	87.1
Inventory reserve		47.3		165.3		123.1		89.5
Restructuring accrual		14.4		483.4		377.0		120.8
Warranty accrual		36.4		48.4		55.4		29.4

Fiscal 2000	Balance at Beginning of Year		Charged to Costs and Expenses		Deductions		Balance at End of Year
Allowance for doubtful accounts & notes receivable	$	9.2	$	15.0	$	5.3	$	18.9
Inventory reserve		27.6		31.2		11.5		47.3
Restructuring accrual		9.0		13.3		7.9		14.4
Warranty accrual		9.7		34.5		7.8		36.4

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Exhibit 99-d

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ADC Telecommunications, Inc. Schedule II For Year Ended October 31, 2002 (in millions)