---

---

SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(Mark One)

|/x/                                          | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  
|-------------------------------------------- | -----------------------------------------------------------------------------------------
|For the quarterly period ended July 31, 2000
|OR                                          
|/ /                                          | TRANSACTION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period from N/A to N/A   
|                                             |                                                                                          

Commission file number 0-1424

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

Minnesota(State or other jurisdiction of
incorporation or organization)

41-0743912(I.R.S. Employer
Identification No.)


12501 Whitewater Drive, Minnetonka, MN 55343(Address of principal executive offices) (Zip code)

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

N/A(Former name, former address and former fiscal year, if changed since last report)

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES
X  NO

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common
stock, $.20 par value: 710,234,681 shares as of September 12, 2000

---

---

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## 

PART I. FINANCIAL INFORMATION       ITEM 1. FINANCIAL STATEMENTS

ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETSUNAUDITED
(In thousands)

|                                        |                                                        | July 31,
2000             |           | October 31,
1999
|--------------------------------------- | ------------------------------------------------------ | ------------------------- | --------- | ----------------
|ASSETS                                 
|CURRENT ASSETS:                         |                                                        |                           |           |                 
|                                        | Cash and cash equivalents                              |                           | $         | 176,865         
|                                        | Available for sale securities                          |                           |           | 1,454,635       
|                                        | Accounts receivable                                    |                           |           | 660,106         
|                                        | Inventories                                            |                           |           | 422,238         
|                                        | Prepaid income taxes and other assets                  |                           |           | 190,287         
|                                        |                                                        |                           |           |                 
|                                        |                                                        | Total current assets      |           |                 
|PROPERTY AND EQUIPMENT, net             |                                                        |                           | 496,426   |                 
|OTHER ASSETS, principally goodwill      |                                                        |                           | 600,743   |                 
|                                        |                                                        |                           |           |                 
|                                        |                                                        | $                         | 4,001,300 |                 
|                                        |                                                        |                           |           |                 
|LIABILITIES AND SHAREOWNERS' INVESTMENT
|CURRENT LIABILITIES:                    |                                                        |                           |           |                 
|                                        | Accounts payable                                       |                           | $         | 210,531         
|                                        | Accrued liabilities                                    |                           |           | 377,513         
|                                        | Accrued income taxes                                   |                           |           | 459,841         
|                                        | Notes payable and current maturities of long-term debt |                           |           | 77,758          
|                                        |                                                        |                           |           |                 
|                                        |                                                        | Total current liabilities |           |                 
|LONG-TERM DEBT, less current maturities |                                                        |                           | 18,785    |                 
|                                        |                                                        |                           |           |                 
|                                        |                                                        | Total liabilities         |           |                 
|SHAREOWNERS' INVESTMENT                 |                                                        |                           |           |                 
|                                        | (709,025 and 662,425 shares outstanding, respectively) |                           |           | 2,856,872       
|                                        |                                                        |                           |           |                 
|                                        |                                                        | $                         | 4,001,300 |                 
|                                        |                                                        |                           |           |                 

See
accompanying notes to consolidated financial statements.

1

---

ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOMEUNAUDITED
(In thousands, except earnings per share)

|                                            |                                                | Three Months Ended
July 31, |         | Nine Months Ended
July 31, |        
|------------------------------------------- | ---------------------------------------------- | --------------------------- | ------- | -------------------------- | -------
|
|NET SALES                                   |                                                | $                           | 891,022 |                            | $      
|COST OF PRODUCT SOLD                        |                                                |                             | 441,606 |                            |        
|                                            |                                                |                             |         |                            |        
|GROSS PROFIT                                |                                                |                             | 449,416 |                            |        
|                                            |                                                |                             |         |                            |        
|EXPENSES:                                   |                                                |                             |         |                            |        
|                                            | Research and development                       |                             |         | 78,807                     |        
|                                            | Selling and administration                     |                             |         | 172,914                    |        
|                                            | Goodwill amortization                          |                             |         | 7,890                      |        
|                                            | Non-recurring charges                          |                             |         | 114,986                    |        
|                                            |                                                |                             |         |                            |        
|                                            |                                                | Total expenses              |         |                            | 374,597
|                                            |                                                |                             |         |                            |        
|OPERATING INCOME                            |                                                |                             | 74,819  |                            |        
|OTHER INCOME (EXPENSE), NET:                |                                                |                             |         |                            |        
|                                            | Interest                                       |                             |         | 3,641                      |        
|                                            | Gain on conversion of Siara Systems investment |                             |         |                           |        
|                                            | Gain on sale of a PairGain business group      |                             |         |                           |        
|                                            | Other                                          |                             |         | (913                       | )      
|                                            |                                                |                             |         |                            |        
|INCOME BEFORE INCOME TAXES                  |                                                |                             | 77,547  |                            |        
|PROVISION FOR INCOME TAXES                  |                                                |                             | 59,042  |                            |        
|                                            |                                                |                             |         |                            |        
|NET INCOME                                  |                                                | $                           | 18,505  |                            | $      
|                                            |                                                |                             |         |                            |        
|AVERAGE COMMON SHARES OUTSTANDING (BASIC)   |                                                |                             | 706,789 |                            |        
|                                            |                                                |                             |         |                            |        
|EARNINGS PER SHARE (BASIC)                  |                                                | $                           | 0.03    |                            | $      
|                                            |                                                |                             |         |                            |        
|AVERAGE COMMON SHARES OUTSTANDING (DILUTED) |                                                |                             | 750,498 |                            |        
|                                            |                                                |                             |         |                            |        
|EARNINGS PER SHARE (DILUTED)                |                                                | $                           | 0.02    |                            | $      
|                                            |                                                |                             |         |                            |        

See
accompanying notes to consolidated financial statements.

2

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ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWSUNAUDITED
(In thousands)

|                                               |                                                                            | Nine Months Ended
July 31,                     |                                      
|---------------------------------------------- | -------------------------------------------------------------------------- | ---------------------------------------------- | -------------------------------------
|
|OPERATING ACTIVITIES:                          |                                                                            |                                                |                                      
|                                               | Net income                                                                 |                                                | $                                    
|                                               | Adjustments to reconcile net income to net cash from operating activities |                                                |                                      
|                                               |                                                                            | Non-recurring charges                          |                                      
|                                               |                                                                            | Depreciation and amortization                  |                                      
|                                               |                                                                            | Gain on conversion of Siara Systems investment |                                      
|                                               |                                                                            | Gain on sale of a PairGain business group      |                                      
|                                               |                                                                            | Other                                          |                                      
|                                               |                                                                            | Changes in operating assets and liabilities    |                                      
|                                               |                                                                            |                                                | Accounts receivable                  
|                                               |                                                                            |                                                | Inventories                          
|                                               |                                                                            |                                                | Prepaid income taxes and other assets
|                                               |                                                                            |                                                | Accounts payable                     
|                                               |                                                                            |                                                | Accrued liabilities                  
|                                               |                                                                            |                                                |                                      
|                                               |                                                                            |                                                |                                      
|                                               |                                                                            |                                                |                                      
|INVESTMENT ACTIVITIES:                         |                                                                            |                                                |                                      
|                                               | Acquisitions                                                               |                                                |                                      
|                                               | Property and equipment additions, net                                      |                                                |                                      
|                                               | Marketable securities and short-term investments                           |                                                |                                      
|                                               | Long-term investments                                                      |                                                |                                      
|                                               |                                                                            |                                                |                                      
|                                               |                                                                            |                                                |                                      
|                                               |                                                                            |                                                |                                      
|FINANCING ACTIVITIES:                          |                                                                            |                                                |                                      
|                                               | Increase/(Decrease) in debt                                                |                                                |                                      
|                                               | Common stock issued                                                        |                                                |                                      
|                                               |                                                                            |                                                |                                      
|                                               |                                                                            |                                                |                                      
|                                               |                                                                            |                                                |                                      
|EFFECT OF EXCHANGE RATE CHANGES ON CASH        |                                                                            |                                                | (3,141                               
|                                               |                                                                            |                                                |                                      
|DECREASE IN CASH AND CASH EQUIVALENTS          |                                                                            |                                                | (53,180                              
|CASH AND CASH EQUIVALENTS, beginning of period |                                                                            |                                                | 230,045                              
|                                               |                                                                            |                                                |                                      
|CASH AND CASH EQUIVALENTS, end of period       |                                                                            | $                                              | 176,865                              
|                                               |                                                                            |                                                |                                      

See
accompanying notes to consolidated financial statements.

3

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ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATIONUNAUDITED
(In thousands, except earnings per share)

|                                            |                                                | 3rd
Quarter
2000 |         | 2nd
Quarter
2000 |         | 1st
Quarter
2000 |         | 4th
Quarter
2000 |        
|------------------------------------------- | ---------------------------------------------- | ---------------- | ------- | ---------------- | ------- | ---------------- | ------- | ---------------- | -------
|NET SALES                                   |                                                | $                | 891,022 |                  | $       | 770,624          |         | $                | 593,870
|COST OF PRODUCT SOLD                        |                                                |                  | 441,606 |                  |         | 406,392          |         |                  | 315,321
|                                            |                                                |                  |         |                  |         |                  |         |                  |        
|GROSS PROFIT                                |                                                |                  | 449,416 |                  |         | 364,232          |         |                  | 278,549
|                                            |                                                |                  |         |                  |         |                  |         |                  |        
|EXPENSES:                                   |                                                |                  |         |                  |         |                  |         |                  |        
|                                            | Research and development                       |                  |         | 78,807           |         |                  | 78,755  |                  |        
|                                            | Selling and administration                     |                  |         | 172,914          |         |                  | 153,170 |                  |        
|                                            | Goodwill amortization                          |                  |         | 7,890            |         |                  | 6,372   |                  |        
|                                            | Non-recurring charges                          |                  |         | 114,986          |         |                  | 8,827   |                  |        
|                                            |                                                |                  |         |                  |         |                  |         |                  |        
|                                            |                                                | Total expenses   |         |                  | 374,597 |                  |         | 247,124          |        
|                                            |                                                |                  |         |                  |         |                  |         |                  |        
|OPERATING INCOME                            |                                                |                  | 74,819  |                  |         | 117,108          |         |                  | 73,591 
|OTHER INCOME (EXPENSE), NET:                |                                                |                  |         |                  |         |                  |         |                  |        
|                                            | Interest                                       |                  |         | 3,641            |         |                  | 4,987   |                  |        
|                                            | Gain on conversion of Siara Systems investment |                  |         |                 |         |                  | 722,550 |                  |        
|                                            | Gain on sale of a PairGain business group      |                  |         |                 |         |                  | 328,591 |                  |        
|                                            | Other                                          |                  |         | (913             | )       |                  | (1,783  | )                |        
|                                            |                                                |                  |         |                  |         |                  |         |                  |        
|INCOME BEFORE INCOME TAXES                  |                                                |                  | 77,547  |                  |         | 1,171,453        |         |                  | 74,355 
|PROVISION FOR INCOME TAXES                  |                                                |                  | 59,042  |                  |         | 447,323          |         |                  | 17,114 
|                                            |                                                |                  |         |                  |         |                  |         |                  |        
|NET INCOME                                  |                                                | $                | 18,505  |                  | $       | 724,130          |         | $                | 57,241 
|                                            |                                                |                  |         |                  |         |                  |         |                  |        
|AVERAGE COMMON SHARES OUTSTANDING (BASIC)   |                                                |                  | 706,789 |                  |         | 700,848          |         |                  | 693,309
|                                            |                                                |                  |         |                  |         |                  |         |                  |        
|EARNINGS PER SHARE (BASIC)                  |                                                | $                | 0.03    |                  | $       | 1.03             |         | $                | 0.08   
|                                            |                                                |                  |         |                  |         |                  |         |                  |        
|AVERAGE COMMON SHARES OUTSTANDING (DILUTED) |                                                |                  | 750,498 |                  |         | 738,939          |         |                  | 723,751
|                                            |                                                |                  |         |                  |         |                  |         |                  |        
|EARNINGS PER SHARE (DILUTED)                |                                                | $                | 0.02    |                  | $       | 0.98             |         | $                | 0.08   
|                                            |                                                |                  |         |                  |         |                  |         |                  |        

See
accompanying notes to consolidated financial statements.

4

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ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED

Note 1 Basis of Presentation:

All historical financial information has been restated to reflect the acquisition of PairGain Technologies, Inc. ("PairGain"), which was completed in the third
quarter of fiscal year 2000 and accounted for as a pooling of interests. In addition, the historical financial information has been restated to reflect the acquisition of Saville Systems PLC
("Saville") which was completed in the fourth quarter of fiscal year 1999 and also accounted for as a pooling of interests.

Earnings
per share amounts, retained earnings, common stock, stock options and shares outstanding have been restated to reflect ADC Telecommunications, Inc.'s ("ADC") 2-for-1 stock
splits effected in the form of common stock dividends distributed on February 15, 2000 and July 17, 2000. All references to the aforementioned items in these Consolidated Financial Statements, Notes
to the Consolidated
Financial Statements, and Management's Discussion and Analysis of Financial Condition and Results of Operations prior to the record dates of the stock splits have been restated to reflect the stock
splits on a retroactive basis.

The
interim information furnished in this report is unaudited but reflects all adjustments which are necessary, in the opinion of management, for a fair statement of the results for
the interim periods. The operating results for the quarter ended July 31, 2000 are not necessarily indicative of the operating results to be expected for the full fiscal year. These statements should
be read in conjunction with ADC's most recent Annual Report on Form 10-K.

Recently Issued Accounting Pronouncements

In December 1999, the SEC issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements." SAB 101 summarizes certain SEC
views in applying generally accepted accounting principles to revenue recognition in financial statements. ADC does not expect the adoption of SAB 101 to have a material effect on its operations or
financial position. ADC is required to adopt SAB 101 in the first quarter of fiscal 2001.

Note 2 Inventories:

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

July 31,
2000

October 31,
1999Purchased materials and manufactured products

$
379,715

$
249,620Work-in-process


42,523


34,547$
422,238

$
284,167


Note 3 Acquisitions:

On May 16, 2000, ADC acquired all of the outstanding equity interests of IBSEN Micro Structures A/ S, a Danish corporation based in Copenhagen, Denmark
("IBSEN"). IBSEN is a photonics company focused on development and production of high-performance optical components and tools. The acquisition, a cash transaction, is valued at approximately $78.5
million and was accounted for using the purchase method. The net assets of IBSEN had fair value of approximately $11.5 million and in-process research and development of approximately $7 million for
projects that did not have future alternative

5

---

uses. The excess of the cost over the fair market value of the net assets acquired, primarily goodwill, is approximately $60 million and is being amortized over 10 years using a straight-line method.
The fair value of the net assets acquired was based on preliminary estimates and may be revised at a later date.

On
May 17, 2000, ADC acquired all of the outstanding equity interests in Altitun AB, a Swedish corporation based in Kista, Sweden ("Altitun"). Altitun is a leading developer and
supplier of active optical components for next-generation optical networks. In the transaction, ADC issued approximately 27.6 million shares of its common stock to Altitun's shareholders. ADC also
converted all outstanding Altitun stock options into options to acquire approximately 2.8 million shares of ADC common stock. The transaction was accounted for as a pooling of interests. Since the
historical operations of Altitun were not material to ADC's consolidated operations or financial position, prior period financial statements have not been restated for this acquisition.

On
June 28, 2000, ADC completed a merger with PairGain by exchanging 63.8 million shares of its common stock for all of the common stock of PairGain. Each share of PairGain was
exchanged for 0.86 of a share of ADC common stock. In addition, outstanding PairGain stock options were converted at the same exchange ratio into options to purchase approximately 8.4 million shares
of ADC stock. The merger has been accounted for as a pooling of interests and accordingly all prior period consolidated financial statements have been restated to include the combined results of
operations, financial position and cash flows of PairGain. There were no material transactions between ADC and PairGain prior to
the merger, and the effects of conforming PairGain's accounting policies to those of ADC were not material.

On
July 26, 2000 ADC acquired all the outstanding equity interests of Centigram Communications Corporation, based in San Jose, California. Centigram is a leading provider of unified
communications, Internet-enabled call management and wireless access protocol (WAP)-based messaging solutions for communications service providers. The acquisition was completed as a cash purchase for
approximately $206 million and was accounted for using the purchase method. The net assets of Centigram had a fair value of approximately $43.5 million and in-process research and development of
approximately $15.8 million for projects that did not have future alternative uses. The excess of the cost over the fair market value of the net assets acquired, primarily goodwill, is approximately
$137 million and is being amortized over periods from 7 to 16 years using a straight-line method.

6

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Pro Forma Presentation

The following information presents certain income statement data of ADC and PairGain for the interim periods preceding the merger. The effects of the other
acquisitions on ADC's consolidated financial statements were not material on either an individual or aggregate basis.

Three Months Ended April 30,

Six Months Ended April 30,2000

1999

2000

1999Net sales:ADC

$
709,158

$
456,591

$
1,253,792

$
860,885PairGain


61,466


61,171


110,702


122,067$
770,624

$
517,762

$
1,364,494

$
982,952Net income:ADC

$
548,868

$
45,290

$
605,196

$
35,608PairGain


175,262


1,050


176,175


5,236$
724,130

$
46,340

$
781,371

$
40,844


Note 4 Comprehensive Income:

The following table presents the calculation of comprehensive income as required by SFAS No. 130. Comprehensive income has no impact on ADC's net
income, balance sheet or shareowners' equity. The components of comprehensive income are as follows (in thousands):

Three Months Ended July 31,

Nine Months Ended July 31,2000

1999

2000

1999Net income

$
18,505

$
6,723

$
799,876

$
47,567Changes in cumulative translation adjustments


(508
)

762


(7,287
)

659Changes in market value of derivative financial instruments classified as cash flow hedges


395





927


Unrealized gain from securities classified as available for sale, net of taxes


382,098


58,000


229,073


58,000Comprehensive income

$
400,490

$
65,485

$
1,022,589

$
106,226


7

---

ADC owns a minority interest in the following publicly held companies. These investments are stated at market value with the valuation adjustments classified in shareowners'
investment. As of July 31, 2000, the market value of these investments was as follows (in thousands):

Redback Networks, Inc.

$
539,703GlobeSpan, Inc.


359,070ONI Systems Corp.


357,500Efficient Networks, Inc.


112,327Vyyo, Inc. (formerly Phasecom, Inc.)


75,164interWAVE Communications International Ltd.


5,760Total

$
1,449,524


In
addition, ADC owns an approximate 21% interest in MIND C.T.I Ltd. ("MIND"). MIND completed an initial public offering on August 8, 2000. As of September 11, 2000, ADC's investment
in MIND had a market value of approximately $148.8 million.

Note 5 Earnings Per Share:

Basic earnings per common share was calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted
earnings per share was calculated by dividing net income by the sum of the weighted average number of common shares outstanding plus all additional common shares that would have been outstanding if
potentially dilutive common shares had been issued. The following table reconciles the number of shares utilized in the earnings per share calculations for the periods ended July 31, 2000 and 1999 (in
thousands, except earnings per share):

|                                                     |  | Three Months Ended July 31, |         | Nine Months Ended July 31,
|---------------------------------------------------- |  | --------------------------- | ------- | --------------------------
|
|Net income                                           |  | $                           | 18,505  |                           
|Earnings per common share (basic)                    |  | $                           | 0.03    |                           
|Earnings per common share (diluted)                  |  | $                           | 0.02    |                           
|Weighted average common shares outstanding (basic)   |  |                             | 706,789 |                           
|Effect of dilutive securitiesstock options          |  |                             | 43,709  |                           
|Weighted average common shares outstanding (diluted) |  |                             | 750,498 |                           

8

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Note 6 Segment Reporting:

Beginning with fiscal 1999, ADC adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." This standard requires ADC to
disclose selected financial data by operating segment, defined as a component with business activity resulting in revenue and expense that has separate financial information evaluated regularly by
ADC's chief operating decision maker in determining resource allocation and assessing performance. ADC has identified three reportable segments based on its internal organization structure, management
of operations and performance evaluation. These segments are: Broadband Connectivity, Broadband Access and Transport, and Integrated Solutions. Segment detail is summarized as follows:

Segment Information (In thousands)

|                                  |  | Broadband
Connectivity |         | Broadband
Access and
Transport |   | Integrated
Solutions |   | Unallocated
Items |         | Consolidated
|--------------------------------- |  | ---------------------- | ------- | ------------------------------ | - | -------------------- | - | ----------------- | ------- | ------------
|Three months ended July 31, 2000: |  |                        |         |                                |   |                      |   |                   |         |             
|External Sales                    |  | $                      | 523,906 |                                | $ | 242,798              |   | $                 | 124,313 |             
|Operating Income (Loss)           |  |                        | 233,872 |                                |   | (25,926              | ) |                   | 3,921   |             
|Three months ended July 31, 1999: |  |                        |         |                                |   |                      |   |                   |         |             
|External Sales                    |  | $                      | 238,220 |                                | $ | 204,819              |   | $                 | 91,747  |             
|Operating Income (Loss)           |  |                        | 91,777  |                                |   | (14,940              | ) |                   | (161    | )           

Segment Information (In thousands)

|                                 |  | Broadband
Connectivity |           | Broadband
Access and
Transport |   | Integrated
Solutions |   | Unallocated
Items |         | Consolidated
|-------------------------------- |  | ---------------------- | --------- | ------------------------------ | - | -------------------- | - | ----------------- | ------- | ------------
|Nine months ended July 31, 2000: |  |                        |           |                                |   |                      |   |                   |         |             
|External Sales                   |  | $                      | 1,207,940 |                                | $ | 702,218              |   | $                 | 344,282 |             
|Operating Income (Loss)          |  |                        | 524,376   |                                |   | (98,580              | ) |                   | 10,420  |             
|Nine months ended July 31, 1999: |  |                        |           |                                |   |                      |   |                   |         |             
|External Sales                   |  | $                      | 629,529   |                                | $ | 620,035              |   | $                 | 268,171 |             
|Operating Income (Loss)          |  |                        | 228,578   |                                |   | (17,994              | ) |                   | 10,470  |             

Note 7 Non-Recurring Charges:

Non-recurring operating expense items for the three and nine months ended July 31, 2000 and 1999 included the following (in thousands):

Three Months Ended July 31,

Nine Months Ended July 31,2000

1999

2000

1999Acquired in-process research and development

$
22,800

$
58,250

$
22,800

$
88,577Restructuring


7,029





7,029


30,000Acquisition expenses


85,157





93,984


Total non-recurring charges

$
114,986

$
58,250

$
123,813

$
118,577


9

---

Acquired In-Process Research and Development

Acquired in-process research and development (IPR&D) represents the value assigned in a purchase business combination to research and development projects of
the acquired businesses that had commenced but had not yet been completed at the date of acquisition and which have no alternative future use. The amounts allocated to IPR&D expense were determined
through established valuation techniques in the high-technology communications industry. Research and development costs to bring the products from the acquired companies to technological feasibility
are not expected to have a material impact on ADC's future results of operations or financial condition. During the nine-months ended July 31, 2000, ADC completed the appraisals of the technology
acquired in the purchases of IBSEN and Centigram. Accordingly, $7.0 million and $15.8 million was charged to IPR&D as part of the allocations of the purchase prices for IBSEN and Centigram,
respectively. During the nine-months ended July 31, 1999, ADC completed the appraisals of the technology acquired in the purchases of Teledata Communications, Ltd. ("Teledata"), Hadax Electronics
("Hadax"), Phasor Electronics, GmbH ("Phasor"), Spectracom, Inc. ("Spectracom"), and Pathway, Inc. ("Pathway"). Accordingly, $23.6 million, $5.2 million, $1.5 million, $47.5 million and $10.8 million
was charged to IPR&D as part of the allocations of the purchase prices for Teledata, Hadax, Phasor, Spectracom and Pathway, respectively.

Restructuring

During the three-months ended July 31, 2000, ADC recorded a pre-tax restructuring charge of $7.0 million in connection with the integration and operational
reorganization relating to the merger of PairGain and ADC. These charges are not expected to have a material impact on ADC's future results of operations or financial condition. During the nine-months
ended July 31, 1999, ADC's management approved a restructuring plan, which included initiatives to integrate the software operations of the former Wireless Systems Group with the newly formed
Integrated Solutions Group, consolidate unproductive and duplicative facilities, reposition certain products and dispose of product lines that no longer fit ADC's focus and growth strategy. Total
accrued restructuring costs of $30.0 million related to
these initiatives were charged to operations during this period. These restructuring charges included employee termination costs and other incremental costs incurred as a direct result of the
restructuring plan. The restructuring plan was substantially completed by July 31, 1999.

Acquisition Expenses

During the three and nine-months ended July 31, 2000, ADC recorded approximately $85.2 million and $94.0 million in acquisition-related expenses, respectively.
These charges were incurred in connection with the acquisitions of Altitun and PairGain, which were accounted for under the pooling-of-interests method. As such, these costs were expensed as incurred.
These charges include certain legal, accounting, investment banking and registration fees incurred in order to combine operations of previously separate companies.

10

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## 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

ADC Telecommunications, Inc. ("ADC") offers a broad range of network equipment, software and integration services for broadband, multiservice networks that
deliver Internet/data, video and voice communications over telephone, cable television, Internet, broadcast, wireless and enterprise networks. ADC's broadband, multiservice network solutions enable
local access, high-speed transmission and software management of communications services from service providers to consumers and businesses over fiber-optic, copper, coaxial and wireless media.

Telephone
companies, cable television operators, Internet/data service providers, wireless service providers and other communications service providers are building the broadband
infrastructure required to offer high-speed Internet access and data, video, telephony and other interactive multimedia services to residential and business customers. Broader network bandwidths are
continually required for these services, and ADC's product offerings and development efforts are focused on increasing the speed and efficiency of communications networks from the service providers'
offices through the network equipment that connects to end users' residences and businesses.

ADC
offers network equipment, software and integration services within the following three product groups: Broadband Connectivity, Broadband Access and Transport, and Integrated
Solutions.

BROADBAND CONNECTIVITYproducts include broadband connection and access devices for copper, coaxial, fiber-optic, wireless and
broadcast communications networks. The group also supplies fiber-optic and wireless components. These products are used globally in telephone, cable television, Internet, wireless, enterprise and
broadcast communications networks. Broadband Connectivity products provide the physical contact points for connecting different communications system components and gaining access to communications
system circuits for the purpose of installing, testing, monitoring, accessing, managing, reconfiguring, splitting and multiplexing such circuits within the central office and the "last mile/kilometer"
portion of communications networks. Fiber-optic components include phase
masks, tunable lasers, pump lasers, connectors, isolators, circulators, collimators, couplers, splitters, and dense wavelength division multiplexing (DWDM) devices. Wireless components include
coverage enhancement products, tower top amplifiers and RF filters. Broadband Connectivity products are sold to local and long-distance telephone companies, cable television operators, wireless
service providers, new competitive service providers, broadcasters, enterprises, governments, system integrators and communications equipment manufacturers and distributors.

BROADBAND ACCESS AND TRANSPORTproducts include access and transport systems that deliver broadband, multiservice communications to
residences and businesses over copper, coaxial, fiber-optic and wireless networks. These products are used globally to deliver Internet/data, video and voice services to residential and business
customers. Generally, these products are aimed at upgrading service providers' networks to broadband capabilities, while also introducing new service delivery functionality and cost effectiveness into
the networks. Broadband Access and Transport products are sold to local and long-distance telephone companies, cable television operators, wireless service providers, new competitive service
providers, broadcasters, enterprises, governments and communications equipment distributors.

The
group's transport systems operate between central offices and in the "last mile/kilometer" portion of communications networks and include Soneplex®,
HiGain®, Cellworx®, Avidia®, Axity, Homeworx, Optiworx, DV6000, BroadAccess, and
ServicePoint systems. The Soneplex and HiGain systems deliver T1-based services over copper or fiber facilities. The Avidia system is a next generation digital subscriber line access
multiplexer (DSLAM). As the industry's first global ATM Virtual Path transport element, the Cellworx system offers bandwidth-efficient, multiservice delivery of

11

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Internet/data, video and voice services, allocates only the bandwidth needed per service type and extends communications services over fiber-optic and copper (using xDSL technologies) facilities to
businesses and residences. The Axity broadband wireless system delivers high-speed Internet/data, video and voice services. The Homeworx system enables cable television operators to transport
high-speed digital signals for two-way Internet/data, video and voice services. ADC also provides the Optiworx family of fiber-optic transmitter and node products, along with coaxial amplifiers that
cable television operators use to upgrade their networks to broader bandwidths for digital Internet/data, video, and voice services. The DV6000 system transmits a variety of signal types using a
high-speed, uncompressed digital format over fiber facilities, and is used in the long haul portions of cable television, broadcast and interactive video networks, including distance learning,
government and campus networks. The BroadAccess digital loop carrier system is used to deliver Internet/data and voice services. ServicePoint is a broadband network access platform that facilitates
service delivery through monitoring and control of the application layer.

The
group's access systems include both customer located devices (which are part of the service provider's network) and customer premise devices (which are owned by the service
provider's business customer) that can work alone or in conjunction with one of ADC's transport systems or with other vendors' transport systems. These devices include data service units (DSUs),
channel service units (CSUs), T1/E1 multiplexers, T3/E3 multiplexers, integrated access devices (offering a wide variety of Internet/data, video and voice interfaces), MPEG video products and ATM
access concentrators.

INTEGRATED SOLUTIONSproducts and services consist of systems integration services, operations support systems (OSS) software and
enhanced services/intelligent network software that position service providers to deliver broadband, multiservice communications over wireline and wireless networks. Systems integration is used to
design, equip and build communications networks and OSS applications that deliver Internet/data, video and voice services to residences and businesses. OSS software includes the
Singularit.e suite of software products and services including the Singl.eView line of communications billing and customer care software and the Metrica® line of
network performance and service level assurance software. Enhanced services/intelligent network software includes the NewNet® line of Signaling System 7 (SS7), intelligent network,
wireless messaging and provisioning, Communications Assistance to Law Enforcement Act (CALEA) and Internet applications software. With the acquisition of Centigram, enhanced services/software also
includes the unified communications internet-enabled call management and wireless access protocol (WAP)-based messaging solutions. Integrated Solutions products and services are sold to local and
long-distance telephone companies, cable television operators, wireless service providers, new competitive service providers and communications equipment manufacturers.

With
the growth of multimedia applications and the related development of enhanced Internet/data, video and voice services, ADC's product offerings and research and development
efforts have increasingly focused on emerging technologies and network equipment, software and integration service offerings for broadband communications applications. The market for broadband
communications network equipment, software and integration services is evolving and rapidly changing. ADC's growth is dependent in part on its ability to successfully develop and commercially
introduce new products in each of its product groups and is also dependent on the growth of the market. The growth in the market for such broadband communications products and services is dependent on
a number of factors, including the amount of capital expenditures by communications service providers, regulatory and legal developments, changes to capital expenditure rates by communications service
providers (which could result from the ongoing consolidation of customers in the market as well as the addition of new customer entrants to the market) and end-user demands for integrated
Internet/data, video, voice and other communications services. There can be no assurance that ADC's new or enhanced products and services will meet with market acceptance or be profitable.

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RESULTS OF OPERATIONS

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

The
percentage relationships to net sales of certain income and expense items for the quarters ended July 31, 2000 and 1999 and the percentage changes in these income and expense
items between periods are contained in the following table:

|                             |                                                | Percentage of Net Sales |       | Percentage
Increase (Decrease)
Between Periods |      
|---------------------------- | ---------------------------------------------- | ----------------------- | ----- | ---------------------------------------------- | -----
|
|
|
|Net Sales                    |                                                | 100.0                   | %     | 100.0                                          | %    
|Cost of Product Sold         |                                                | (49.6                   | )     | (53.8                                          | )    
|                             |                                                |                         |       |                                                |      
|Gross Profit                 |                                                | 50.4                    |       | 46.2                                           |      
|Expenses:                    |                                                |                         |       |                                                |      
|                             | Research and development                       |                         | (8.8  | )                                              | (10.9
|                             | Selling and administration                     |                         | (19.4 | )                                              | (21.2
|                             | Goodwill amortization                          |                         | (0.9  | )                                              | (1.0 
|                             | Non-recurring charges                          |                         | (12.9 | )                                              | (10.9
|                             |                                                |                         |       |                                                |      
|Operating Income             |                                                | 8.4                     |       | 2.2                                            |      
|Other Income (Expense), Net: |                                                |                         |       |                                                |      
|                             | Interest                                       |                         | 0.4   |                                                | 0.7  
|                             | Gain on conversion of Siara Systems investment |                         |      |                                                |     
|                             | Gain on sale of a PairGain business group      |                         |      |                                                |     
|Other                        |                                                | (0.1                    | )     | (0.6                                           | )    
|                             |                                                |                         |       |                                                |      
|Income Before Income Taxes   |                                                | 8.7                     |       | 2.3                                            |      
|Provision for Income Taxes   |                                                | (6.6                    | )     | (1.0                                           | )    
|                             |                                                |                         |       |                                                |      
|Net Income                   |                                                | 2.1                     | %     | 1.3                                            | %    
|                             |                                                |                         |       |                                                |      

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Net Sales:The following table sets forth ADC's net sales for the three-month and nine-month periods
ended July 31, 2000 and 1999 for each of ADC's functional product groups described above:

|                               |       | Three Months Ended
July 31, |       | Nine Months Ended
July 31, |     
|------------------------------ | ----- | --------------------------- | ----- | -------------------------- | ----
|
|
|Broadband Connectivity         |       | $                           | 523.9 |                            | 58.8
|Broadband Access and Transport |       |                             | 242.8 |                            | 27.2
|Integrated Solutions           |       |                             | 124.3 |                            | 14.0
|Other                          |       |                             |      |                            |    
|                               |       |                             |       |                            |     
|                               | Total |                             | $     | 891.0                      |     
|                               |       |                             |       |                            |     

Net sales for the three-month and nine-month periods ended July 31, 2000 were $891.0 million and $2,255.5 million, reflecting 66.6% and 48.6%
increases, respectively, over the comparable 1999 time periods. These increases reflected growth in all product groups. Revenue contributions from acquired companies during the first nine months of
the present fiscal year were $70.6 million and $188.6 million for the three-month and nine-month periods ended July 31, 2000, respectively. International revenues comprised approximately 21.5% and
21.4% of ADC's sales for the three-month and nine-month periods ended July 31, 2000, respectively.

During
the three and nine months ended July 31, 2000, net sales of Broadband Connectivity products rose by 119.9% and 91.9%, respectively, over the comparable 1999 time periods. This
growth reflects continued strong global demand for ADC's fiber-and copper-connectivity systems and optical components. Sales were made to a broad range of Internet/data, video and voice service
providersincumbents and new entrantsaround the globe. Strong worldwide growth in Broadband Connectivity systems continues as a result of growth in Internet/data traffic and
digital services, which is creating demand for broader bandwidth connections, and the entrance of new service providers, which is creating demand for connectivity to new and existing communications
networks. Broadband Connectivity's sales have grown to represent approximately 58.8% of ADC's net sales. ADC expects that future sales of Broadband Connectivity products will continue to account for a
substantial portion of its net sales.

During
the three and nine months ended July 31, 2000, net sales of Broadband Access and Transport products rose by 18.6% and 13.3%, respectively, over the comparable 1999 time
periods. This growth is primarily the result of sales increases in the major product systemstelephone transport and access systems, cable television systems, and broadband wireless
systems.

During
the three and nine months ended July 31, 2000, Integrated Solutions net sales increased by 35.4% and 28.4%, respectively over the comparable 1999 time periods. Both systems
integration services and software systems contributed to sales growth. This growth primarily resulted from a broad range of wireline and wireless service providers that are building or upgrading
networks that offer integrated Internet/data, video and voice services.

Gross Profit:During the three-month periods ended July 31, 2000 and 1999, gross profit percentages were 50.4% and
46.2%, respectively. During the nine-month periods ended July 31, 2000 and 1999,
gross profit percentages were 48.4% and 46.5%, respectively. These increases were the result of increased sales volume and changes in product mix primarily within the Broadband Connectivity group. ADC
anticipates that its future gross profit percentage will continue to be affected by many factors, including product mix, the timing of new product introductions and manufacturing volume.

Operating Expenses:Total operating expenses for the three months ended July 31, 2000 and 1999 were $374.6 million and
$235.5 million, respectively, representing 42.0% and 44.0% of net sales,

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respectively. Total operating expenses for the nine months ended July 31, 2000 and 1999 were $826.7 million and $622.2 million, respectively, representing 36.7% and 41.0% of net sales, respectively.
These operating expenses included non-recurring charges of $115.0 million and $58.3 million for the three months ended July 31, 2000 and 1999, respectively, and non-recurring
charges of $123.8 million and $118.6 million for the nine months ended July 31, 2000 and 1999, respectively. The 2000 non-recurring charges represent the write-off of purchased
in-process research and development costs resulting from the acquisitions of Centigram and IBSEN, costs associated with the integration activities related to the acquisition of PairGain, as well as
transaction costs associated with the PairGain and Altitun acquisitions. The 1999 non-recurring charges represent the write-off of purchased in-process research and development costs resulting from
the acquisitions of Teledata, Hadax, and Phasor, along with costs for strategic restructuring of the product line comprising the former Wireless Systems Group. Operating expenses, before non-recurring
charges, for the three months ended July 31, 2000 and 1999 were $259.6 million and $177.3 million, representing 29.1% and 33.2% of net sales, respectively. Operating expenses, before non-recurring
charges, for the nine months ended July 31, 2000 and 1999 were $702.9 million and $503.6 million, representing 31.2% and 33.2% of net sales, respectively. The increase in absolute dollars of operating
expenses, before non-recurring charges, was due primarily to costs associated with acquired companies and expanded operations necessary to support higher revenue levels.

Research
and development expenses were $78.8 million for the three months ended July 31, 2000, representing an increase of 34.7% over $58.5 million for the three months ended July 31,
1999. For the nine months ended July 31, 2000, research and development expenses were $229.3 million, representing an increase of 33.1% over $172.2 million for the nine months ended July 31, 1999. The
increase reflects the activities from companies acquired in the first nine months of the present fiscal year, as well as substantial product development and introduction efforts in all functional
product groups. ADC believes that, given the rapidly changing technology and competitive environment in the communications equipment industry, continued commitment to product development efforts will
be required for ADC to remain competitive. Accordingly, ADC intends to continue to allocate substantial resources to product development for each of its product groups. However, ADC recognizes the
need to balance the cost of product development with expense control and remains committed to carefully managing the rate of increase of such expenses.

Selling
and administration expenses were $172.9 million for the three months ended July 31, 2000, representing an increase of 52.8% over $113.2 million for the three months ended July
31, 1999. For the nine months ended July 31, 2000, selling and administration expenses were $453.8 million, an increase of 43.9% over $315.2 million for the nine months ended July 31, 1999. This
increase primarily reflects the activities of acquired companies, incentives granted to sales persons associated with selling activities and additional personnel costs related to expanded operations.

Several
of ADC's 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 ADC's
acquisition activity, goodwill amortization increased to $7.9 million in the three months ended July 31, 2000, compared to $5.6 million in the three months ended July 31, 1999. Goodwill amortization
for the nine months ended July 31, 2000 has increased to $19.8 million from $16.1 million for the nine months ended July 31, 1999.

Other Income (Expense), Net:For the three and nine months ended July 31, 2000 and 1999, the net interest income
(expense) category represented net interest income on cash and cash equivalents. See "Liquidity and Capital Resources" below for a discussion of cash levels.

Other
expense primarily represents the gain or loss on foreign exchange transactions, the sale of fixed assets and ADC's share of the net operating results of its investments in other
companies accounted for on an equity basis.

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During the second quarter of fiscal year 2000, ADC recognized a $722.6 million gain on the conversion of its investment in Siara Systems, Inc. to shares of Redback Networks, Inc. as a
result of a merger between the two companies.

In
addition, ADC recognized a $328.6 million gain on PairGain's sale of their microelectronics business group during the nine-month period ending July 31, 2000.

Income Taxes:The effective income tax rate for the nine months ended July 31, 2000 and 1999 was affected significantly
by non-tax deductible purchased in-process research and development charges. These expenses are associated with the acquisitions made during each period. In addition, a higher marginal rate of 37% was
applied to restructuring expenses and the gain on the conversion of the Siara Systems, Inc. investment, while a marginal rate of 40% was applied to the gain on sale of PairGain's microelectronics
business group. Excluding the impact of purchased in-process research and development and the higher rates used for restructuring charges, the gain on the conversion of the Siara Systems, Inc.
investment, and the gain on sale of PairGain's microelectronics business group, the effective income tax rate was 34% for the three-month and nine-month periods ended on each of July 31, 2000
and 1999.

Net Income:Net income was $18.5 million (or $0.02 per diluted share) for the three months ended July 31, 2000, an
increase of 175.3%over $6.7 million (or $0.01 per diluted share) for the three months ended July 31, 1999. Net income was $799.9 million (or $1.08 per
diluted share) for the nine months ended July 31, 2000, an increase of 1,581.6% over $47.6 million (or $0.08 per diluted share) for the nine months ended July 31, 1999. Excluding the
non-recurring charges of $108.6 million and $41.2 million, net of tax, net income for the three months ended July 31, 2000 and 1999 was $127.1 million (or $0.17 per diluted share) and $47.9
million (or $0.07 per diluted share), respectively. Excluding the non-recurring (credits)/charges of ($538.5) million and $88.4 million, net of tax, net income for the nine months ended July 31, 2000
and 1999 was $261.4 million (or $0.35 per diluted share) and $136.0 million (or $0.22 per diluted share), respectively.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents, primarily short-term investments in commercial paper with maturities of less than 90 days and other short-term investments,
decreased $53.2 million and $232.0 million during the nine months ended July 31, 2000 and 1999, respectively. The major elements of the 2000 change included $79.7 million provided by operations,
$195.3 million from issuance of common stock to employees pursuant to ADC's stock option and employee stock purchase plans, and $156.1 million from the sale of marketable securities and short-term
investments. These increases were partially offset by $227.1 million in property and equipment additions during the period as well as $314.1 million used for acquisitions. The major elements of the
1999 change included $242.7 million provided by operations as well as $43.8 million from issuance of common stock to employees pursuant to ADC's stock option and employee stock purchase plans, which
were offset by $258.8 million used for acquisitions and $150.3 million used to decrease outstanding debt. In addition, $94.3 million was used for property and equipment additions during the period.

ADC
believes that current cash on hand, cash generated from operating activities, cash from investments, and available credit facilities will be adequate to fund its working capital
requirements and
planned capital expenditures for the duration of the 2000 fiscal year. However, ADC may still find it necessary to seek additional sources of financing to support its capital needs, for additional
working capital, potential investments or acquisitions or otherwise.

During
the third quarter of fiscal 1999, Efficient Networks, Inc. completed an initial public offering of its common stock, which caused a valuation adjustment in ADC's investment in
that company. At July 31, 2000, ADC carried this investment at a market value of approximately $112.3 million.

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During the second quarter of fiscal 2000, Siara Systems, Inc., in which ADC had an approximate 7.3% ownership interest, was acquired by Redback Networks, Inc. in a stock-for-stock
transaction. As a result, this investment in Siara Systems, Inc. has been converted into shares of Redback Networks, Inc., which are reflected on ADC's balance sheet at the market value of the shares
received in the transaction. In the second quarter of fiscal year 2000, ADC recognized a gain of $722.6 million as a result of the conversion of the Siara Systems, Inc. investment into shares of
Redback Networks, Inc. At July 31, 2000, ADC carried this investment at a market value of approximately $539.7 million.

On
April 6, 2000, Vyyo, Inc. (formerly Phasecom, Inc.) completed an initial public offering of its common stock which caused a valuation adjustment in ADC's investment in that
company. At July 31, 2000, ADC carried this investment at a market value of approximately $75.2 million.

On
June 1, 2000, ONI Systems Corp. completed an initial public offering of its common stock. At July 31, 2000, ADC carried this investment at a market value of approximately $357.5
million.

Through
the acquisition of PairGain, ADC acquired a 3.9% interest in GlobeSpan, Inc. At July 31, 2000, ADC carried this investment at a market value of approximately $359.1 million.

During
the nine months ended July 31, 2000, ADC announced the formation of a $100 million venture capital fund focused on investing in emerging and start-up companies throughout the
world which are engaged in developing high-performance broadband communication technologies. As of July 31, 2000, approximately $11.9 million had been invested through this fund.

At
July 31, 2000 and October 31, 1999, ADC had approximately $96.5 million and $47.9 million of debt outstanding, respectively, relating primarily to acquired companies. ADC has a
$340 million five-year credit facility at an interest rate equal to the commercial paper interest rate plus 25 basis points which is available for general corporate purposes, of which none was
outstanding as of July 31, 2000. In addition, ADC has recently begun to provide financing to certain of its customers to assist in their purchase of products. ADC intends to continue this
practice in the future when it believes the business conditions of such a transaction are appropriate. To date, none of the financing transactions have been material.

EURO CONVERSION

On January 1, 1999, several member countries of the European Union established fixed conversion rates and adopted the Euro as their new common legal currency.
Beginning on such date, the Euro began trading on currency exchanges while the legacy currencies remain legal tender in the participating countries for a transition period between January 1, 1999 and
January 1, 2002.

During
the transition period, parties may elect to pay for goods and services and transact business using either the Euro or a legacy currency. Between January 1, 2002 and July 1,
2002, the participating countries will introduce Euro hard currency and withdraw all legacy currencies.

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

17

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

The foregoing Management's Discussion and Analysis of Financial Condition and Results of Operations contains various "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements represent ADC's expectations or beliefs
concerning future events, including the following: any statements regarding future sales, profit percentages and other results of operations, any statements regarding the continuation of historical
trends, any statements regarding the sufficiency of ADC's cash balances and cash generated from operating and financing activities for ADC's future liquidity and capital resource needs, any statements
regarding the effect of regulatory changes and any statements regarding the future of the communications equipment industry or ADC's business. ADC cautions that any forward-looking statements made by
ADC in this Form 10-Q or in other announcements made by ADC are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking
statements, including, without limitation, the factors set forth on Exhibit 99-a to ADC's Form 10-K for the fiscal year ended October 31, 1999.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ADC is exposed to market risk from changes in foreign exchange rates. To mitigate the risk from these exposures, ADC has instituted a balance sheet hedging
program. The objective of the program is to protect the net monetary assets and liabilities of ADC from fluctuations due to movements in foreign exchange rates. This program operates in markets where
hedging costs are beneficial. Exposure to currencies in which hedging instruments are unavailable, or the costs prohibitive, are minimized through managing 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 ADC's overall exposure to exchange rate
movements, since gains and losses on these contracts offset losses and gains on the underlying exposure. ADC's policy prohibits the use of derivative financial instruments for trading and other
speculative purposes.

As
documented in the Liquidity and Capital Resources section as well as Note 4 to the Consolidated Financial Statements, ADC owns common stock in several publicly held companies. Due
to material changes in the fair value of such common stock, ADC has recorded a $451.0 million unrealized gain, $284.1 million net of income tax effects, in shareowners' investment as of July 31, 2000.
Assuming an immediate decrease of 20% in the portfolio stock price, the hypothetical reduction in shareowners' investment related to these holdings is estimated to be $182.6 million (net of income tax
effects), or 6.4% of total shareowners' investment at July 31, 2000.

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES

On May 17, 2000, ADC completed its acquisition of Altitun. At the closing of the acquisition, each share of Altitun then outstanding was exchanged for 25.6732
shares of ADC's common stock. ADC issued approximately 27.6 million shares of common stock in exchange for the outstanding shares of Altitun. ADC also converted all outstanding Altitun stock options
into options to acquire approximately 2.8 million shares of ADC common stock. The shares of ADC common stock were issued pursuant to the exception from registration provided by Section 4(2) of the
Securities Act of 1933, in that the transaction did not involve a public offering by ADC.

18

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On July 17, 2000, ADC effected a 2-for-1 stock split in the form of a 100% stock dividend. The disclosures in this Form 10-Q, including this Item 2, take such stock split into
account.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



|4-a  |  | Form of certificate for shares of Common Stock of ADC Telecommunications, Inc. (Incorporated by reference to Exhibit 4-a to ADC's Form 10-Q for the quarter ended January 31, 1996.)                                                                                                                                                                                                                                                                 
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4-b  |  | Restated Articles of Incorporation of ADC Telecommunications, Inc., as amended prior to January 20, 2000. (Incorporated by reference to Exhibit 4.1 to ADC's Registration Statement on Form S-3 dated April 15, 1997.)                                                                                                                                                                                                                               
|4-c  |  | Restated Bylaws of ADC Telecommunications, Inc., as amended. (Incorporated by reference to Exhibit 4.2 to ADC's Registration Statement on Form S-3 dated April 15, 1997.)                                                                                                                                                                                                                                                                            
|4-d  |  | Second Amended and Restated Rights Agreement, amended and restated as of November 28, 1995, between ADC Telecommunications, Inc. and Norwest Bank Minnesota, N.A. (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-e  |  | Amendment to Second Amended and Restated Rights Agreement dated as of October 6, 1999. (Incorporated by reference to Exhibit 4-c to ADC's Form 10-K for the fiscal year ended October 31, 1999.)                                                                                                                                                                                                                                                     
|4-f  |  | Articles of Amendment to Restated Articles of Incorporation of ADC Telecommunications, Inc. dated January 20, 2000. (Incorporated by reference to Exhibit 4.6 to ADC's Registration Statement on Form S-8 dated March 14,
2000.)                                                                                                                                                                                                                     
|4-g  |  | Articles of Amendment to Restated Articles of Incorporation of ADC Telecommunications, Inc., dated June 30, 2000.                                                                                                                                                                                                                                                                                                                                    
|10-a |  | ADC Telecommunications, Inc. 1991 Stock Incentive Plan (as amended and restated through February 22, 2000). (Incorporated by reference to Exhibit 10-a to ADC's Form 10-Q for the fiscal quarter ended January 31, 2000.)                                                                                                                                                                                                                            
|10-b |  | ADC Telecommunications, Inc. Nonemployee Director Stock Option Plan (as amended and restated through February 22, 2000). (Incorporated by reference to Exhibit 10-b to ADC's Form 10-Q/A for the fiscal quarter ended
April 30, 2000.)                                                                                                                                                                                                               
|27-a |  | Financial Data Schedule for the period ended July 31, 2000.                                                                                                                                                                                                                                                                                                                                                                                          
|27-b |  | Financial Data Schedule for the period ended July 31, 1999.                                                                                                                                                                                                                                                                                                                                                                                          

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## 

SIGNATURES

Pursuant to the requirements 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.

|Dated: September 14, 2000 |  | ADC TELECOMMUNICATIONS, INC.
|------------------------- |  | ----------------------------
|                          |  | By:                         

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ADC TELECOMMUNICATIONS, INC.       EXHIBIT INDEX TO FORM 10-Q       FOR THE QUARTER ENDED JULY 31, 2000

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4-a         |  | Form of certificate for shares of Common Stock of ADC Telecommunications, Inc. (Incorporated by reference to Exhibit 4-a to ADC's Form 10-Q for the quarter ended January 31, 1996.)                                                                                                                                                                                                                                                                 
|4-b         |  | Restated Articles of Incorporation of ADC Telecommunications, Inc., as amended prior to January 20, 2000. (Incorporated by reference to Exhibit 4.1 to ADC's Registration Statement on Form S-3 dated April 15, 1997.)                                                                                                                                                                                                                               
|4-c         |  | Restated Bylaws of ADC Telecommunications, Inc., as amended. (Incorporated by reference to Exhibit 4.2 to ADC's Registration Statement on Form S-3 dated April 15, 1997.)                                                                                                                                                                                                                                                                            
|4-d         |  | Second Amended and Restated Rights Agreement, amended and restated as of November 28, 1995, between ADC Telecommunications, Inc. and Norwest Bank Minnesota, N.A. (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-e         |  | Amendment to Second Amended and Restated Rights Agreement dated as of October 6, 1999. (Incorporated by reference to Exhibit 4-c to ADC's Form 10-K for the fiscal year ended October 31, 1999.)                                                                                                                                                                                                                                                     
|4-f         |  | Articles of Amendment to Restated Articles of Incorporation of ADC Telecommunications, Inc. dated January 20, 2000. (Incorporated by reference to Exhibit 4.6 to ADC's Registration Statement on Form S-8 dated March 14,
2000.)                                                                                                                                                                                                                     
|4-g         |  | Articles of Amendment to Restated Articles of Incorporation of ADC Telecommunications, Inc., dated June 30, 2000.                                                                                                                                                                                                                                                                                                                                    
|10-a        |  | ADC Telecommunications, Inc. 1991 Stock Incentive Plan (as amended and restated through February 22, 2000). (Incorporated by reference to Exhibit 10-a to ADC's Form 10-Q for the fiscal quarter ended January 31, 2000.)                                                                                                                                                                                                                            
|10-b        |  | ADC Telecommunications, Inc. Nonemployee Director Stock Option Plan (as amended and restated through February 22, 2000). (Incorporated by reference to Exhibit 10-b to ADC's Form 10-Q/A for the fiscal quarter ended
April 30, 2000.)                                                                                                                                                                                                               
|27-a        |  | Financial Data Schedule for the period ended July 31, 2000.                                                                                                                                                                                                                                                                                                                                                                                          
|27-b        |  | Financial Data Schedule for the period ended July 31, 1999.                                                                                                                                                                                                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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