##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended August 1, 2008
 OR
 o
    
    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
 ADC Telecommunications, Inc.
  Minnesota
    
    41-0743912(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 13625 Technology Drive, Eden Prairie, MN 55344-2252
 (952) 938-8080
 N/A
  þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
  o þ




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##### 



TABLE OF CONTENTS
 PART I. FINANCIAL INFORMATION
    
    
    3ITEM 1. FINANCIAL STATEMENTS
    
    
    3ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    20ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    33ITEM 4. CONTROLS AND PROCEDURES
    
    
    34PART II. OTHER INFORMATION
    
    
    35ITEM 1. LEGAL PROCEEDINGS
    
    
    35ITEM 1A. RISK FACTORS
    
    
    35ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    35ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    35ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    35ITEM 5. OTHER INFORMATION
    
    
    35ITEM 6. EXHIBITS
    
    
    35SIGNATURES
    
    
    36ADC TELECOMMUNICATIONS, INC. EXHIBIT INDEX TO FORM 10-Q FOR THE THREE
MONTHS ENDED AUGUST 1, 2008
    
    
    37Certification of Principal Executive OfficerCertification of Principal Financial OfficerSection 906 Certification
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETSUNAUDITED
 August 1,
    
    
    October 31,2008
    
    
    2007(In millions)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    656.5
    
    
    $
    520.2Available-for-sale securities
    
    
    0.2
    
    
    
    61.6Accounts receivable, net of reserves of $12.1 and $6.6
    
    
    235.3
    
    
    
    189.4Unbilled revenue
    
    
    36.0
    
    
    
    34.3Inventories, net of reserves of $39.6 and $41.3
    
    
    190.5
    
    
    
    170.2Prepaid and other current assets
    
    
    33.7
    
    
    
    32.1Assets of discontinued operations
    
    
    
    
    
    
    0.4Total current assets
    
    
    1,152.2
    
    
    
    1,008.2Property and equipment, net of accumulated depreciation of
$428.6 and $395.9
    
    
    200.8
    
    
    
    199.2Restricted cash
    
    
    14.4
    
    
    
    12.8Goodwill
    
    
    353.9
    
    
    
    238.4Intangibles, net of accumulated amortization of $126.8 and $95.9
    
    
    171.6
    
    
    
    121.9Available-for-sale securities
    
    
    66.6
    
    
    
    113.8Other assets
    
    
    92.3
    
    
    
    70.5Total assets
    
    $
    2,051.8
    
    
    $
    1,764.8LIABILITIES AND SHAREOWNERS INVESTMENTCurrent Liabilities:Current portion of long-term debt
    
    $
    3.5
    
    
    $
    200.6Accounts payable
    
    
    95.9
    
    
    
    92.5Accrued compensation and benefits
    
    
    79.0
    
    
    
    80.8Other accrued liabilities
    
    
    68.8
    
    
    
    61.2Income taxes payable
    
    
    5.0
    
    
    
    15.5Restructuring accrual
    
    
    11.2
    
    
    
    19.6Liabilities of discontinued operations
    
    
    0.8
    
    
    
    3.9Total current liabilities
    
    
    264.2
    
    
    
    474.1Pension obligations and other long-term liabilities
    
    
    100.9
    
    
    
    82.5Long-term notes payable
    
    
    650.8
    
    
    
    200.6Total liabilities
    
    
    1,015.9
    
    
    
    757.2Shareowners Investment:(117.7 and 117.6 shares outstanding, respectively)
    
    
    1,035.9
    
    
    
    1,007.6Total liabilities and shareowners investment
    
    $
    2,051.8
    
    
    $
    1,764.8
  3




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##### Table of Contents



ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSUNAUDITED
 Three Months Ended
    
    
    Nine Months EndedAugust 1, 2008
    
    
    August 3, 2007
    
    
    August 1, 2008
    
    
    August 3, 2007(In millions)Net Sales:Product
    
    $
    341.2
    
    
    $
    306.0
    
    
    $
    987.9
    
    
    $
    879.7Service
    
    
    49.0
    
    
    
    40.1
    
    
    
    144.2
    
    
    
    112.9Total net sales
    
    
    390.2
    
    
    
    346.1
    
    
    
    1,132.1
    
    
    
    992.6Cost of Sales:Product
    
    
    224.2
    
    
    
    196.8
    
    
    
    631.1
    
    
    
    561.6Service
    
    
    34.7
    
    
    
    35.7
    
    
    
    104.9
    
    
    
    102.1Total cost of sales
    
    
    258.9
    
    
    
    232.5
    
    
    
    736.0
    
    
    
    663.7Gross Profit
    
    
    131.3
    
    
    
    113.6
    
    
    
    396.1
    
    
    
    328.9Operating Expenses:Research and development
    
    
    21.7
    
    
    
    17.6
    
    
    
    63.0
    
    
    
    52.1Selling and administration
    
    
    84.0
    
    
    
    69.6
    
    
    
    252.6
    
    
    
    209.1Restructuring and impairment charges
    
    
    (0.8
    )
    
    
    12.0
    
    
    
    1.4
    
    
    
    11.7Total operating expenses
    
    
    104.9
    
    
    
    99.2
    
    
    
    317.0
    
    
    
    272.9Operating Income
    
    
    26.4
    
    
    
    14.4
    
    
    
    79.1
    
    
    
    56.0Other income (loss), net
    
    
    (9.5
    )
    
    
    5.0
    
    
    
    (70.3
    )
    
    
    70.3Income before income taxes
    
    
    16.9
    
    
    
    19.4
    
    
    
    8.8
    
    
    
    126.3Provision for income taxes
    
    
    2.9
    
    
    
    2.0
    
    
    
    6.3
    
    
    
    5.8Income from continuing operations
    
    
    14.0
    
    
    
    17.4
    
    
    
    2.5
    
    
    
    120.5Discontinued Operations, Net of TaxIncome (loss) from discontinued operations
    
    
    1.1
    
    
    
    (1.0
    )
    
    
    1.6
    
    
    
    (3.5
    )Gain (loss) on sale of discontinued operations, net
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    (4.7
    )Total discontinued operations
    
    
    1.1
    
    
    
    (0.8
    )
    
    
    1.6
    
    
    
    (8.2
    )Net Income
    
    $
    15.1
    
    
    $
    16.6
    
    
    $
    4.1
    
    
    $
    112.3Weighted Average Common Shares Outstanding (Basic)
    
    
    117.7
    
    
    
    117.4
    
    
    
    117.7
    
    
    
    117.3Weighted Average Common Shares Outstanding (Diluted)
    
    
    118.3
    
    
    
    117.8
    
    
    
    118.3
    
    
    
    131.8Basic Earnings (Loss) Per Share:Continuing operations
    
    $
    0.12
    
    
    $
    0.15
    
    
    $
    0.02
    
    
    $
    1.03Discontinued operations
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    0.01
    
    
    $
    (0.07
    )Net income per share
    
    $
    0.13
    
    
    $
    0.14
    
    
    $
    0.03
    
    
    $
    0.96Diluted Earnings (Loss) Per Share:Continuing operations
    
    $
    0.12
    
    
    $
    0.15
    
    
    $
    0.02
    
    
    $
    0.99Discontinued operations
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    0.01
    
    
    $
    (0.06
    )Net income per share
    
    $
    0.13
    
    
    $
    0.14
    
    
    $
    0.03
    
    
    $
    0.93
  4




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ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSUNAUDITED
 Nine Months EndedAugust 1, 2008
    
    
    August 3, 2007(In millions)Operating Activities:Income from continuing operations
    
    $
    2.5
    
    
    $
    120.5Adjustments to reconcile income from continuing operations to net cash provided by
(used for) operating activities from continuing operations:Impairments
    
    
    
    
    
    
    2.8Inventory write-offs
    
    
    8.1
    
    
    
    18.1Write-down of investments
    
    
    74.2
    
    
    
    Depreciation and amortization
    
    
    61.6
    
    
    
    51.4Provision for bad debt
    
    
    0.1
    
    
    
    (0.3
    )Change in warranty reserve
    
    
    (0.7
    )
    
    
    1.0Non-cash stock compensation
    
    
    12.7
    
    
    
    7.2Change in deferred income taxes
    
    
    (1.3
    )
    
    
    0.7Amortization of deferred financing costs
    
    
    1.8
    
    
    
    1.1Loss on sale of property and equipment
    
    
    0.2
    
    
    
    0.5Gain on sale of investments
    
    
    
    
    
    
    (57.5
    )Other, net
    
    
    (6.2
    )
    
    
    (4.8
    )Changes in operating assets and liabilities, net of acquisitions and divestitures:Accounts receivable and unbilled revenues (increase)/decrease
    
    
    6.9
    
    
    
    (12.2
    )Inventories increase
    
    
    (6.4
    )
    
    
    (23.4
    )Prepaid and other assets decrease
    
    
    3.9
    
    
    
    5.1Accounts payable increase/(decrease)
    
    
    (24.8
    )
    
    
    2.1Accrued liabilities decrease
    
    
    (20.9
    )
    
    
    (6.6
    )Total cash provided by operating activities from continuing operations
    
    
    111.7
    
    
    
    105.7Total cash used for operating activities from discontinued operations
    
    
    (1.2
    )
    
    
    (10.0
    )Total cash provided by operating activities
    
    
    110.5
    
    
    
    95.7Investing Activities:Acquisitions, net of cash acquired
    
    
    (199.4
    )
    
    
    (1.6
    )Divestitures, net of cash disposed
    
    
    
    
    
    
    0.5Purchase of interest in unconsolidated affiliates
    
    
    (5.2
    )
    
    
    (8.1
    )Property, equipment and patent additions
    
    
    (30.8
    )
    
    
    (25.1
    )Proceeds from disposal of property and equipment
    
    
    0.2
    
    
    
    1.0Proceeds from sale of investments
    
    
    
    
    
    
    59.8Warrant exercise
    
    
    
    
    
    
    (1.8
    )(Increase)/Decrease in restricted cash
    
    
    (1.1
    )
    
    
    1.6Purchase of available-for-sale securities
    
    
    (4.7
    )
    
    
    (883.1
    )Sale of available-for-sale securities
    
    
    39.7
    
    
    
    756.4Total cash used for investing activities from continuing operations
    
    
    (201.3
    )
    
    
    (100.4
    )Total cash provided by investing activities from discontinued operations
    
    
    
    
    
    
    1.1Total cash used for investing activities
    
    
    (201.3
    )
    
    
    (99.3
    )Financing Activities:Debt issuance
    
    
    450.0
    
    
    
    Payments of financing costs
    
    
    (10.7
    )
    
    
    Debt payments
    
    
    (218.9
    )
    
    
    Common stock issued
    
    
    0.4
    
    
    
    3.6Total cash provided by financing activities
    
    
    220.8
    
    
    
    3.6Effect of Exchange Rate Changes on Cash
    
    
    6.3
    
    
    
    6.7Increase in Cash and Cash Equivalents
    
    
    136.3
    
    
    
    6.7Cash and Cash Equivalents, beginning of period
    
    
    520.2
    
    
    
    142.2Cash and Cash Equivalents, end of period
    
    $
    656.5
    
    
    $
    148.9
  5




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ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED
 Note 1: Basis of Presentation
  Accounting for the Impairment or
Disposal of Long-Lived Assets,
  Fiscal Year
    Summary of Significant Accounting Policies
  Warranty
  6




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Accrual
    
    
    
    
    
    Charged to
    
    
    
    
    
    AccrualOctober 31, 2007
    
    Acquisitions
    
    expenses
    
    Deductions
    
    August 1, 2008(In millions)Warranty Reserve
    
    $
    8.4
    
    
    $
    1.9
    
    
    $
    (0.7
    )
    
    $
    1.3
    
    
    $
    8.3
 Note 2: Share-Based Compensation
 Share-Based Payment: An amendment
of Financial Accounting Standards Board (FASB) Statement No. 123 and Accounting Principles Board
25,
 Note 3: Acquisitions
 LGC
     7




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December 3,2007(In millions)Current assets
    
    $
    45.5Intangible assets
    
    
    58.9Goodwill
    
    
    82.4Other long-term assets
    
    
    4.4Total assets acquired
    
    
    191.2Current liabilities
    
    
    40.6Long-term liabilities
    
    
    0.8Total liabilities assumed
    
    
    41.4Net assets acquired
    
    
    149.8Less:Cash acquired
    
    
    0.8LGC options exchanged for ADC options
    
    
    3.0Net cash paid
    
    $
    146.0
 Century Man
     January 10,2008(In millions)Current assets
    
    $
    33.2Intangible assets
    
    
    12.9Goodwill
    
    
    32.0Other long-term assets
    
    
    3.9Total assets acquired
    
    
    82.0Current liabilities
    
    
    24.7Long-term liabilities
    
    
    Total liabilities assumed
    
    
    24.7Net assets acquired
    
    
    57.3Less cash acquired
    
    
    3.9Net cash paid
    
    $
    53.4
 8




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Pro-Forma Results of Operations
  Three Months Ended
    
    
    Nine Months EndedAugust 3,
    
    
    August 1,
    
    
    August 3,2007
    
    
    2008
    
    
    2007(In millions, except per share data)Net sales
    
    $
    381.7
    
    
    $
    1,156.6
    
    
    $
    1,086.3Income (loss) from continuing operations
    
    
    19.1
    
    
    
    5.3
    
    
    
    121.2Net income (loss)
    
    
    18.3
    
    
    
    6.0
    
    
    
    113.0Income (loss) from continuing operations per share  basic
    
    
    0.16
    
    
    
    0.05
    
    
    
    1.03Income (loss) from continuing operations per share  diluted
    
    
    0.16
    
    
    
    0.04
    
    
    
    1.00Net income (loss) per share  basic
    
    
    0.16
    
    
    
    0.05
    
    
    
    0.96Net income (loss) per share  diluted
    
    $
    0.16
    
    
    $
    0.05
    
    
    $
    0.93
  Note 4: Discontinued Operations
 G-Connect
  APS France
  9




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Accounting for
the Impairment or Disposal of Long-Lived Assets.
 Three Months Ended
    
    
    Nine Months EndedAugust 1,
    
    
    August 3,
    
    
    August 1,
    
    
    August 3,2008
    
    
    2007
    
    
    2008
    
    
    2007(In millions)
    
    
    (In millions)Net sales
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    8.5Income (loss) from discontinued operations
    
    $
    1.1
    
    
    $
    (1.0
    )
    
    $
    1.6
    
    
    $
    (3.5
    )Gain (loss) on sale of discontinued operations
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    (4.7
    )Total discontinued operations
    
    $
    1.1
    
    
    $
    (0.8
    )
    
    $
    1.6
    
    
    $
    (8.2
    )
 Note 5: Net Income from Continuing Operations Per Share
  Three Months Ended
    
    
    Nine Months EndedAugust 1,
    
    
    August 3,
    
    
    August 1,
    
    
    August 3,2008
    
    
    2007
    
    
    2008
    
    
    2007(In millions, except
    
    
    (In millions, exceptper share amounts)
    
    
    per share amounts)Numerator:Net income from continuing operations
    
    $
    14.0
    
    
    $
    17.4
    
    
    $
    2.5
    
    
    $
    120.5Interest expense for convertible notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.2Net income from continuing operations  diluted
    
    $
    14.0
    
    
    $
    17.4
    
    
    $
    2.5
    
    
    $
    130.7Denominator:Weighted average common shares outstanding  basic
    
    
    117.7
    
    
    
    117.4
    
    
    
    117.7
    
    
    
    117.3Convertible bonds converted to common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14.2Employee options and other
    
    
    0.6
    
    
    
    0.4
    
    
    
    0.6
    
    
    
    0.3Weighted average common shares outstanding  diluted
    
    
    118.3
    
    
    
    117.8
    
    
    
    118.3
    
    
    
    131.8Basic income per share from continuing operations
    
    $
    0.12
    
    
    $
    0.15
    
    
    $
    0.02
    
    
    $
    1.03Diluted income per share from continuing operations
    
    $
    0.12
    
    
    $
    0.15
    
    
    $
    0.02
    
    
    $
    0.99
   Convertible Shares
    
    Conversion(In millions)
    
    (In millions)
    
    Price$200 convertible subordinated note, 6-month LIBOR plus 0.375%, due
June 15, 2013
    
    
    7.1
    
    
    $
    28.091$225 convertible subordinated note, 3.5% fixed rate, due July 15, 2015
    
    
    8.3
    
    
    
    27.00$225 convertible subordinated note, 3.5% fixed rate, due July 15, 2017
    
    
    7.9
    
    
    
    28.55Total
    
    
    23.3
  10




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##### Table of Contents



Note 6: Inventories
  August 1,
    
    
    October 31,2008
    
    
    2007(In millions)Manufactured products
    
    $
    142.2
    
    
    $
    135.7Purchased materials
    
    
    79.4
    
    
    
    71.2Work-in-process
    
    
    8.5
    
    
    
    4.6Less: Inventory reserve
    
    
    (39.6
    )
    
    
    (41.3
    )Total inventories, net
    
    $
    190.5
    
    
    $
    170.2
 Note 7: Property & Equipment
  August 1,
    
    
    October 31,2008
    
    
    2007(In millions)Land and buildings
    
    $
    147.8
    
    
    $
    143.9Machinery and equipment
    
    
    426.5
    
    
    
    405.8Furniture and fixtures
    
    
    40.2
    
    
    
    39.4Less: Accumulated depreciation
    
    
    (428.6
    )
    
    
    (395.9
    )Total
    
    
    185.9
    
    
    
    193.2Construction-in-progress
    
    
    14.9
    
    
    
    6.0Total property & equipment, net
    
    $
    200.8
    
    
    $
    199.2
 Note 8: Goodwill and Intangible Assets
   Global ConnectivitySolutions
    
    
    Network Solutions
    
    
    Total(In millions)Balance as of October 31, 2007
    
    $
    238.4
    
    
    $
    
    
    
    $
    238.4Goodwill acquired during the year
    
    
    32.0
    
    
    
    82.4
    
    
    
    114.4Cumulative translation adjustment
    
    
    1.7
    
    
    
    
    
    
    
    1.7Other
    
    
    (0.6
    )
    
    
    
    
    
    
    (0.6
    )Balance as of August 1, 2008
    
    $
    271.5
    
    
    $
    82.4
    
    
    $
    353.9
  11




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##### Table of Contents



EstimatedLife RangeLGC
    
    
    Century Man
    
    
    Other
    
    
    Total
    
    
    (In Years)(In millions)Gross carrying amounts:Technology
    
    $
    42.8
    
    
    $
    3.8
    
    
    $
    54.1
    
    
    $
    100.7
    
    
    
    5-7Trade name/trademarks
    
    
    1.4
    
    
    
    
    
    
    
    26.2
    
    
    
    27.6
    
    
    
    2-20Distributor network
    
    
    
    
    
    
    
    
    
    
    10.1
    
    
    
    10.1
    
    
    
    10Customer lists
    
    
    13.3
    
    
    
    8.7
    
    
    
    41.8
    
    
    
    63.8
    
    
    
    2-7Patents
    
    
    
    
    
    
    
    
    
    
    54.0
    
    
    
    54.0
    
    
    
    3-7Non-compete agreements
    
    
    
    
    
    
    0.4
    
    
    
    13.6
    
    
    
    14.0
    
    
    
    2-5Other
    
    
    1.4
    
    
    
    
    
    
    
    26.8
    
    
    
    28.2
    
    
    
    1-14Total
    
    $
    58.9
    
    
    $
    12.9
    
    
    $
    226.6
    
    
    $
    298.4
    
    
    
    7
    (1)
 
 (1)
    
    Weighted average life.  Note 9: Long-Term Debt
  (In millions)
    
    August 1, 2008
    
    
    October 31, 2007Convertible subordinated note, 1.0% fixed rate, due June 15, 2008
    
    $
    
    
    
    $
    200.0Convertible subordinated note, 6-month LIBOR plus 0.375%, due June 15, 2013
    
    
    200.0
    
    
    
    200.0Convertible subordinated note, 3.5% fixed rate, due July 15, 2015
    
    
    225.0
    
    
    
    Convertible subordinated note, 3.5% fixed rate, due July 15, 2017
    
    
    225.0
    
    
    
    Total convertible subordinated notes
    
    
    650.0
    
    
    
    400.0Note, 1.5% fixed rate, due July 10, 2012
    
    
    0.6
    
    
    
    0.7Note, variable rate, renews monthly
    
    
    0.5
    
    
    
    0.5LGC capital leases, various due dates
    
    
    0.9
    
    
    
    Century Man notes, variable rate, various due dates
    
    
    2.3
    
    
    
    Total debt
    
    
    654.3
    
    
    
    401.2Less: Current portion of long-term debt
    
    
    3.5
    
    
    
    200.6Long-term debt and capital lease obligations
    
    $
    650.8
    
    
    $
    200.6
  12




---



##### Table of Contents



Note 10: Income Taxes
 Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109.
  13




---



##### Table of Contents



(In millions)Increase in retained earnings
    
    $
    1.4Decrease in goodwill in connection with the KRONE acquisition
    
    
    0.9Decrease in cumulative translation adjustment
    
    
    1.5Increase in net deferred income tax assets
    
    
    5.8Increase in liabilities for unrecognized income tax benefits
    
    
    5.0
    Major Jurisdictions
    
    Open Tax YearsAustralia
    
    2003-2007France
    
    2004-2007Germany
    
    2002-2007United Kingdom
    
    2005-2007United States
    
    2004-2007
 Accounting for Income Taxes,
   14




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##### Table of Contents



Note 11: Comprehensive Income
   Three Months Ended
    
    
    Nine Months EndedAugust 1,
    
    
    August 3,
    
    
    August 1,
    
    
    August 3,2008
    
    
    2007
    
    
    2008
    
    
    2007(In millions)
    
    
    (In millions)Net income
    
    $
    15.1
    
    
    $
    16.6
    
    
    $
    4.1
    
    
    $
    112.3Change in cumulative translation adjustment
    
    
    5.0
    
    
    
    0.8
    
    
    
    6.0
    
    
    
    5.4Net change in fair value of interest rate swap
    
    
    0.7
    
    
    
    
    
    
    
    0.7
    
    
    
    Unrealized gain on auction-rate securities
    
    
    0.4
    
    
    
    
    
    
    
    0.4
    
    
    
    Total comprehensive income
    
    $
    21.2
    
    
    $
    17.4
    
    
    $
    11.2
    
    
    $
    117.7
  Note 12: Pension Benefits
   Three Months Ended
    
    
    Nine Months EndedAugust 1,
    
    
    August 3,
    
    
    August 1,
    
    
    August 3,2008
    
    
    2007
    
    
    2008
    
    
    2007(In millions)
    
    
    (In millions)Service cost
    
    $
    
    
    
    $
    0.1
    
    
    $
    0.1
    
    
    $
    0.2Interest cost
    
    
    1.0
    
    
    
    0.8
    
    
    
    2.9
    
    
    
    2.4Net periodic benefit cost
    
    $
    1.0
    
    
    $
    0.9
    
    
    $
    3.0
    
    
    $
    2.6
 Note 13: Segment and Geographic Information
   15




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##### Table of Contents




    
    Global Connectivity Solutions
    
    Network Solutions
    
    Professional Services
 Global Connectivity Solutions
 Network Solutions
 Professional Services
   Network
    
    
    Professional
    
    
    
    
    
    
    
    
    
    
    GAAPConnectivity
    
    
    Solutions
    
    
    Services
    
    
    Consolidated
    
    
    Restructuring
    
    
    Consolidated(In millions)Three Months Ended August 1,
2008External net sales:Products
    
    $
    292.5
    
    
    $
    36.6
    
    
    $
    12.1
    
    
    $
    341.2
    
    
    $
    
    
    
    $
    341.2Services
    
    
    
    
    
    
    7.3
    
    
    
    41.7
    
    
    
    49.0
    
    
    
    
    
    
    
    49.0Total external net sales
    
    $
    292.5
    
    
    $
    43.9
    
    
    $
    53.8
    
    
    $
    390.2
    
    
    $
    
    
    
    $
    390.2Depreciation and amortization
    
    $
    15.5
    
    
    $
    3.9
    
    
    $
    1.6
    
    
    $
    21.0
    
    
    $
    
    
    
    $
    21.0Operating income (loss)
    
    $
    34.0
    
    
    $
    (8.7
    )
    
    $
    0.3
    
    
    $
    25.6
    
    
    $
    0.8
    
    
    $
    26.4Three Months Ended August 3,
2007External net sales:Products
    
    $
    267.6
    
    
    $
    24.2
    
    
    $
    14.2
    
    
    $
    306.0
    
    
    $
    
    
    
    $
    306.0Services
    
    
    
    
    
    
    
    
    
    
    40.1
    
    
    
    40.1
    
    
    
    
    
    
    
    40.1Total external net sales
    
    $
    267.6
    
    
    $
    24.2
    
    
    $
    54.3
    
    
    $
    346.1
    
    
    $
    
    
    
    $
    346.1Depreciation and amortization
    
    $
    14.7
    
    
    $
    1.3
    
    
    $
    1.2
    
    
    $
    17.2
    
    
    $
    
    
    
    $
    17.2Operating income (loss)
    
    $
    27.6
    
    
    $
    (1.1
    )
    
    $
    (0.1
    )
    
    $
    26.4
    
    
    $
    (12.0
    )
    
    $
    14.4
 16




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##### Table of Contents



Network
    
    
    Professional
    
    
    
    
    
    
    
    
    
    
    GAAPConnectivity
    
    
    Solutions
    
    
    Services
    
    
    Consolidated
    
    
    Restructuring
    
    
    Consolidated(In millions)Nine Months Ended August 1,
2008External net sales:Products
    
    $
    837.2
    
    
    $
    113.9
    
    
    $
    36.8
    
    
    $
    987.9
    
    
    $
    
    
    
    $
    987.9Services
    
    
    
    
    
    
    17.0
    
    
    
    127.2
    
    
    
    144.2
    
    
    
    
    
    
    
    144.2Total external net sales
    
    $
    837.2
    
    
    $
    130.9
    
    
    $
    164.0
    
    
    $
    1,132.1
    
    
    $
    
    
    
    $
    1,132.1Depreciation and amortization
    
    $
    44.4
    
    
    $
    12.2
    
    
    $
    5.0
    
    
    $
    61.6
    
    
    $
    
    
    
    $
    61.6Operating income (loss)
    
    $
    104.7
    
    
    $
    (22.3
    )
    
    $
    (1.9
    )
    
    $
    80.5
    
    
    $
    (1.4
    )
    
    $
    79.1Nine Months Ended August 3,
2007External net sales:Products
    
    $
    764.8
    
    
    $
    73.2
    
    
    $
    41.7
    
    
    $
    879.7
    
    
    $
    
    
    
    $
    879.7Services
    
    
    
    
    
    
    
    
    
    
    112.9
    
    
    
    112.9
    
    
    
    
    
    
    
    112.9Total external net sales
    
    $
    764.8
    
    
    $
    73.2
    
    
    $
    154.6
    
    
    $
    992.6
    
    
    $
    
    
    
    $
    992.6Depreciation and amortization
    
    $
    43.3
    
    
    $
    4.0
    
    
    $
    4.1
    
    
    $
    51.4
    
    
    $
    
    
    
    $
    51.4Operating income (loss)
    
    $
    77.8
    
    
    $
    (6.6
    )
    
    $
    (3.5
    )
    
    $
    67.7
    
    
    $
    (11.7
    )
    
    $
    56.0
 Geographic Information
  Three Months Ended
    
    
    Nine Months EndedAugust 1,
    
    
    August 3,
    
    
    August 1,
    
    
    August 3,2008
    
    
    2007
    
    
    2008
    
    
    2007(In millions)
    
    
    (In millions)Sales:Inside the United States
    
    $
    217.0
    
    
    $
    215.2
    
    
    $
    650.6
    
    
    $
    609.8Outside the United States:Asia Pacific (Australia, China, Hong Kong, India, Japan,
Korea, New Zealand, Southeast Asia and Taiwan)
    
    
    53.9
    
    
    
    35.4
    
    
    
    137.2
    
    
    
    97.4EMEA (Europe (excluding Germany), Middle East and Africa)
    
    
    65.9
    
    
    
    49.7
    
    
    
    201.0
    
    
    
    143.3Germany (1)
    
    
    24.8
    
    
    
    21.1
    
    
    
    65.5
    
    
    
    74.0Americas (Canada, Central and South America)
    
    
    28.6
    
    
    
    24.7
    
    
    
    77.8
    
    
    
    68.1Total net sales
    
    $
    390.2
    
    
    $
    346.1
    
    
    $
    1,132.1
    
    
    $
    992.6Property and Equipment, Net:Inside the United States
    
    $
    115.5Outside the United States
    
    
    85.3Total property and equipment, net
    
    $
    200.8
 
 (1)
    
    Due to the significance of its sales, Germany is broken out for geographic purposes.  Note 14: Impairment, Restructuring and Other Disposal Charges
  17




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Three Months Ended
    
    
    Nine Months EndedAugust 1,
    
    
    August 3,
    
    
    August 1,
    
    
    August 3,2008
    
    
    2007
    
    
    2008
    
    
    2007(In millions)
    
    
    (In millions)Impairments:Fixed asset write-downs
    
    $
    
    
    
    $
    2.7
    
    
    $
    
    
    
    $
    2.8Restructuring charges:Employee severance
    
    
    (0.8
    )
    
    
    7.7
    
    
    
    1.2
    
    
    
    8.3Facilities consolidation and lease termination
    
    
    
    
    
    
    1.6
    
    
    
    0.2
    
    
    
    0.6Total restructuring charges
    
    
    (0.8
    )
    
    
    9.3
    
    
    
    1.4
    
    
    
    8.9Other disposal charges:Inventory write-offs
    
    
    
    
    
    
    8.9
    
    
    
    
    
    
    
    8.9Total impairment, restructuring and other
disposal charges
    
    $
    (0.8
    )
    
    $
    20.9
    
    
    $
    1.4
    
    
    $
    20.6
 Impairment Charges:
 Restructuring Charges:
  Other Disposal Charges:
  ContinuingAccrual
    
    
    Operations Net
    
    
    Cash Payments
    
    
    AccrualType of Charge
    
    October 31, 2007
    
    
    Additions
    
    
    Charged to Accrual
    
    
    August 1, 2008(In millions)Employee severance costs
    
    $
    7.6
    
    
    $
    1.2
    
    
    $
    6.7
    
    
    $
    2.1Facilities consolidation
    
    
    12.0
    
    
    
    0.2
    
    
    
    3.1
    
    
    
    9.1Total restructuring accrual
    
    $
    19.6
    
    
    $
    1.4
    
    
    $
    9.8
    
    
    $
    11.2
  18




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Note 15: Other Income (Loss), Net
  Three months ended
    
    
    Nine months endedAugust 1,
    
    
    August 3,
    
    
    August 1,
    
    
    August 3,2008
    
    
    2007
    
    
    2008
    
    
    2007(In millions)
    
    
    (In millions)Interest income on investments
    
    $
    6.8
    
    
    $
    8.7
    
    
    $
    25.1
    
    
    $
    24.1Interest expense on borrowings
    
    
    (7.6
    )
    
    
    (4.0
    )
    
    
    (21.3
    )
    
    
    (12.3
    )Interest income (expense), net
    
    
    (0.8
    )
    
    
    4.7
    
    
    
    3.8
    
    
    
    11.8Impairment loss on available-for-sale securities
    
    
    (6.0
    )
    
    
    
    
    
    
    (74.2
    )
    
    
    Foreign exchange gain (loss)
    
    
    (2.6
    )
    
    
    0.7
    
    
    
    0.5
    
    
    
    2.2Loss on sale of fixed assets
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.5
    )Gain on sale of investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57.5Other, net
    
    
    
    
    
    
    (0.4
    )
    
    
    (0.3
    )
    
    
    (0.7
    )Subtotal
    
    
    (8.7
    )
    
    
    0.3
    
    
    
    (74.1
    )
    
    
    58.5Total other income (expense), net
    
    $
    (9.5
    )
    
    $
    5.0
    
    
    $
    (70.3
    )
    
    $
    70.3
 The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments.
     19




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Note 16: Commitments and Contingencies
 Legal Contingencies
 Other Contingencies
 Change of Control
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
      
    
    Connectivity
    
    Network Solutions
    
    Professional Services
 20




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##### Table of Contents



Connectivity
 Network Solutions
 Professional Services
 Marketplace Conditions
   
    
    First, businesses and consumers worldwide increasingly are becoming dependent on
broadband, multi-service communications networks to conduct daily communications tasks for a
wide range of business and personal purposes (e.g., emails with large amounts of data,
online gaming, video streaming and photo sharing). As a result, individuals and businesses
increasingly are using a wide variety of broadband applications through all types of
networks. This demand for additional broadband services in turn increases the need for
broadband network infrastructure products.
    
    Second, end-users of communications services increasingly expect to do business over a
single network connection at a low price. Both public networks operated by communications
service providers and private enterprise networks are evolving to provide combinations of
Internet, data, video and voice services that can be offered over the same high-speed
network connection.
    21




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##### Table of Contents



® ® TM
  
    
    migrating sales volume to customer-preferred, leading technology products and sunsetting
end of life products;
    
    improving our customers ordering experience through a faster, simpler, more efficient
inquiry-to-invoice process;
    
    redesigning product lines to gain efficiencies from the use of more common components and
improve customization capabilities;
    
    increasing direct material savings from strategic global sourcing;
    
    improving cash flow from supplier-managed inventory and lead-time reduction programs;
    
    relocating certain manufacturing, engineering and other operations from higher-cost
geographic areas to lower-cost areas; and
    
    focusing our resources on core operations and, where appropriate, using third parties to
perform non-core processes.
  22




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Results of Operations
 Net Sales
  Three months ended
    
    
    PercentageAugust 1,
    
    
    August 3,
    
    
    Increase (Decrease)2008
    
    
    2007
    
    
    Between Periods(In millions)Net sales
    
    $
    390.2
    
    
    $
    346.1
    
    
    
    12.7
    %Cost of sales
    
    
    258.9
    
    
    
    232.5
    
    
    
    11.4Gross profit
    
    
    131.3
    
    
    
    113.6
    
    
    
    15.6Gross margin
    
    
    33.6
    %
    
    
    32.8
    %Operating expenses:Research and development
    
    
    21.7
    
    
    
    17.6
    
    
    
    23.3Selling and administration
    
    
    84.0
    
    
    
    69.6
    
    
    
    20.7Restructuring and impairment charges
    
    
    (0.8
    )
    
    
    12.0
    
    
    
    (106.7
    )Total operating expenses
    
    
    104.9
    
    
    
    99.2
    
    
    
    5.7Operating income
    
    
    26.4
    
    
    
    14.4
    
    
    
    83.3Operating margin
    
    
    6.8
    %
    
    
    4.2
    %Other income (expense), net:Interest income, net
    
    
    (0.8
    )
    
    
    4.7
    
    
    
    (117.0
    )Other, net
    
    
    (8.7
    )
    
    
    0.3
    
    
    
    Income before income taxes
    
    
    16.9
    
    
    
    19.4
    
    
    
    (12.9
    )Provision for income taxes
    
    
    2.9
    
    
    
    2.0
    
    
    
    45.0Income from continuing operations
    
    $
    14.0
    
    
    $
    17.4
    
    
    
    (19.5
    )%
 23




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##### Table of Contents



Nine months ended
    
    
    PercentageAugust 1,
    
    
    August 3,
    
    
    Increase (Decrease)2008
    
    
    2007
    
    
    Between Periods(In millions)Net sales
    
    $
    1,132.1
    
    
    $
    992.6
    
    
    
    14.1
    %Cost of sales
    
    
    736.0
    
    
    
    663.7
    
    
    
    10.9Gross profit
    
    
    396.1
    
    
    
    328.9
    
    
    
    20.4Gross margin
    
    
    35.0
    %
    
    
    33.1
    %Operating expenses:Research and development
    
    
    63.0
    
    
    
    52.1
    
    
    
    20.9Selling and administration
    
    
    252.6
    
    
    
    209.1
    
    
    
    20.8Restructuring and impairment charges
    
    
    1.4
    
    
    
    11.7
    
    
    
    (88.0
    )Total operating expenses
    
    
    317.0
    
    
    
    272.9
    
    
    
    16.2Operating income
    
    
    79.1
    
    
    
    56.0
    
    
    
    41.3Operating margin
    
    
    7.0
    %
    
    
    5.6
    %Other income (expense), net:Interest income, net
    
    
    3.8
    
    
    
    11.8
    
    
    
    (67.8
    )Other, net
    
    
    (74.1
    )
    
    
    58.5
    
    
    
    (226.7
    )Income (loss) before income taxes
    
    
    8.8
    
    
    
    126.3
    
    
    
    (93.0
    )Provision for income taxes
    
    
    6.3
    
    
    
    5.8
    
    
    
    8.6Income (loss) from continuing operations
    
    $
    2.5
    
    
    $
    120.5
    
    
    
    (97.9
    )%
  Three months ended
    
    
    PercentageAugust 1,
    
    
    August 3,
    
    
    Increase (Decrease)Reportable Segment
    
    2008
    
    
    2007
    
    
    Between Periods(In millions)Connectivity
    
    $
    292.5
    
    
    $
    267.6
    
    
    
    9.3
    %Network Solutions:Product
    
    
    36.6
    
    
    
    24.2
    
    
    
    51.2Service
    
    
    7.3
    
    
    
    
    
    
    
    100.0Total Network Solutions
    
    
    43.9
    
    
    
    24.2
    
    
    
    81.4Professional Services:Product
    
    
    12.1
    
    
    
    14.2
    
    
    
    (14.8
    )Service
    
    
    41.7
    
    
    
    40.1
    
    
    
    4.0Total Professional Services
    
    
    53.8
    
    
    
    54.3
    
    
    
    (0.9
    )Total Net Sales
    
    $
    390.2
    
    
    $
    346.1
    
    
    
    12.7
    %
 Nine months ended
    
    
    PercentageAugust 1,
    
    
    August 3,
    
    
    Increase (Decrease)Reportable Segment
    
    2008
    
    
    2007
    
    
    Between Periods(In millions)Connectivity
    
    $
    837.2
    
    
    $
    764.8
    
    
    
    9.5
    %Network Solutions:Product
    
    
    113.9
    
    
    
    73.2
    
    
    
    55.6Service
    
    
    17.0
    
    
    
    
    
    
    
    100.0Total Network Solutions
    
    
    130.9
    
    
    
    73.2
    
    
    
    78.8Professional Services:Product
    
    
    36.8
    
    
    
    41.7
    
    
    
    (11.8
    )Service
    
    
    127.2
    
    
    
    112.9
    
    
    
    12.7Total Professional Services
    
    
    164.0
    
    
    
    154.6
    
    
    
    6.1Total Net Sales
    
    $
    1,132.1
    
    
    $
    992.6
    
    
    
    14.1
    %
  24




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##### Table of Contents



Gross Profit
   Operating Expenses
  Research and development:
 25




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##### Table of Contents



Selling and administration:
 Impairment, restructuring and other disposal charges:
    Other Income (Expense), Net
  Three months ended
    
    
    Nine months endedAugust 1,
    
    
    August 3,
    
    
    August 1,
    
    
    August 3,2008
    
    
    2007
    
    
    2008
    
    
    2007(In millions)
    
    
    (In millions)Interest income on investments
    
    $
    6.8
    
    
    $
    8.7
    
    
    $
    25.1
    
    
    $
    24.1Interest expense on borrowings
    
    
    (7.6
    )
    
    
    (4.0
    )
    
    
    (21.3
    )
    
    
    (12.3
    )Interest income (expense), net
    
    
    (0.8
    )
    
    
    4.7
    
    
    
    3.8
    
    
    
    11.8Impairment loss on available-for-sale securities
    
    
    (6.0
    )
    
    
    
    
    
    
    (74.2
    )
    
    
    Foreign exchange gain (loss)
    
    
    (2.6
    )
    
    
    0.7
    
    
    
    0.5
    
    
    
    2.2Loss on sale of fixed assets
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.5
    )Gain on sale of investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57.5Other, net
    
    
    
    
    
    
    (0.4
    )
    
    
    (0.3
    )
    
    
    (0.7
    )Subtotal
    
    
    (8.7
    )
    
    
    0.3
    
    
    
    (74.1
    )
    
    
    58.5Total other income (expense), net
    
    $
    (9.5
    )
    
    $
    5.0
    
    
    $
    (70.3
    )
    
    $
    70.3
 26




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##### Table of Contents



The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments.
     Income Taxes
    27




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##### Table of Contents



Acquisitions
 LGC
     Century Man
   28




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##### Table of Contents



Discontinued Operations
 G-Connect
  APS France
  Application of Critical Accounting Policies and Estimates
  Liquidity and Capital Resources
 Liquidity
  29




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##### Table of Contents



August 1,
    
    
    October 31,(In millions)
    
    2008
    
    
    2007Current available-for-sale securities
    
    $
    0.2
    
    
    $
    61.6Long-term available-for-sale securities
    
    
    66.6
    
    
    
    113.8Total available-for-sale securities
    
    $
    66.8
    
    
    $
    175.4
    Operating Activities
   Investing Activities
   30




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##### Table of Contents



Financing Activities
  Outstanding Debt and Credit Facility
  August 1,
    
    
    Conversion(In millions)
    
    2008
    
    
    PriceConvertible subordinated note, 6-month LIBOR plus 0.375%, due June 15, 2013
    
    
    200.0
    
    
    
    28.091Convertible subordinated note, 3.5% fixed rate, due July 15, 2015
    
    
    225.0
    
    
    
    27.00Convertible subordinated note, 3.5% fixed rate, due July 15, 2017
    
    
    225.0
    
    
    
    28.55Total convertible subordinated notes
    
    $
    650.0
      31




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##### Table of Contents



Off-Balance Sheet Arrangements and Contractual Obligations
  Working Capital and Liquidity Outlook
      Share Repurchase
  32




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##### Table of Contents



Cautionary Statement Regarding Forward Looking Information
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   33




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  34




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
  35




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##### Table of Contents



SIGNATURES
  Dated: September 4, 2008
    ADC TELECOMMUNICATIONS, INC.By:
    /s/ James G. MathewsJames G. MathewsVice President, Chief Financial Officer
(Principal Financial Officer and Duly Authorized Officer) 36




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##### Table of Contents



ADC TELECOMMUNICATIONS, INC.
EXHIBIT INDEX TO FORM 10-Q
FOR THE THREE MONTHS ENDED AUGUST 1, 2008
 ExhibitNo.
    
    Description3.1
    
    Restated Articles of Incorporation of ADC Telecommunications, Inc., conformed to
incorporate amendments dated January 20, 2000, June 30, 2000, August 13, 2001, March
2, 2004 and May 9, 2005. (Incorporated by reference to Exhibit 3-a to ADCs
Quarterly Report on Form 10-Q for the quarter ended July 29, 2005).3.2
    
    Restated Bylaws of ADC Telecommunications, Inc. effective April 18, 2005.
(Incorporated by reference to Exhibit 3-f to ADCs Quarterly Report on Form 10-Q for
the quarter ended April 29, 2005).4.1
    
    Form of certificate for shares of Common Stock of ADC Telecommunications, Inc.
(Incorporated by reference to Exhibit 4-a to ADCs Quarterly Report on Form 10-Q for
the quarter ended April 29, 2005).4.2
    
    Rights Agreement, as amended and restated July 30, 2003, between ADC
Telecommunications, Inc. and Computershare Investor Services, LLC as Rights Agent.
(Incorporated by reference to Exhibit 4-b to ADCs Form 8-A/A filed on July 31,
2003).4.4
    
    Registration Rights Agreement dated as of June 4, 2003, between ADC
Telecommunications, Inc. and Banc of America Securities LLC, Credit Suisse First
Boston LLC and Merrill Lynch Pierce Fenner & Smith Incorporated as representations
of the Initial Purchase of ADCs 1% Convertible Subordinated Notes due 2008 and
Floating Rate Convertible Subordinated Notes due 2013. (Incorporated by reference to
Exhibit 4-h to ADCs Quarterly Report on Form 10-Q for the quarter ended July 31,
2003).31.1
    
    Certification of principal executive officer required by Exchange Act Rule 13a-14(a)*31.2
    
    Certification of principal financial officer required by Exchange Act Rule 13a-14(a)*32
    
    Certifications furnished pursuant to 18 U.S.C. 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002*
 
 *
    
    Filed herewith 37