##### Table of Contents



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 February 2, 2007
 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
(State or other jurisdiction of incorporation or organization)
    
    41-0743912
(I.R.S. Employer Identification No.)
 13625 Technology Drive, Eden Prairie, MN 55344-2252
 (952) 938-8080
 N/A
  þ o
  þ o o
  o þ




---



TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 1A. RISK FACTORSITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSITEM 3. DEFAULTS UPON SENIOR SECURITIESITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 5. OTHER INFORMATIONITEM 6. EXHIBITSSIGNATURESADC TELECOMMUNICATIONS, INC. EXHIBIT INDEX TO FORM 10-Q FOR THE THREE MONTHS ENDED FEBRUARY 2, 2007Certification of Principal Executive OfficerCertification of Principal Financial OfficerSection 906 Certifications    Table of Contents  
 PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETSUNAUDITED
 February 2,
    
    
    October 31,2007
    
    
    2006(In millions)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    141.2
    
    
    $
    142.3Available-for-sale securities
    
    
    420.8
    
    
    
    395.4Accounts receivable, net of reserves of $9.5 and $10.2
    
    
    153.3
    
    
    
    169.3Unbilled revenue
    
    
    22.7
    
    
    
    23.8Inventories, net of reserves of $33.1 and $35.1
    
    
    167.8
    
    
    
    165.5Assets of discontinued operations
    
    
    3.2
    
    
    
    14.9Prepaid and other current assets
    
    
    34.1
    
    
    
    31.5Total current assets
    
    
    943.1
    
    
    
    942.7Property and equipment, net of accumulated depreciation of $373.7 and $370.3
    
    
    204.5
    
    
    
    206.5Restricted cash
    
    
    12.9
    
    
    
    14.0Goodwill
    
    
    238.5
    
    
    
    238.5Intangibles, net of accumulated amortization of $68.5 and $66.5
    
    
    136.3
    
    
    
    142.0Available-for-sale securities
    
    
    7.2
    
    
    
    10.7Long term assets of discontinued operations
    
    
    0.4
    
    
    
    0.3Other assets
    
    
    55.3
    
    
    
    56.7Total assets
    
    $
    1,598.2
    
    
    $
    1,611.4LIABILITIES AND SHAREOWNERS INVESTMENTCurrent Liabilities:Accounts payable
    
    $
    82.9
    
    
    $
    88.4Accrued compensation and benefits
    
    
    44.1
    
    
    
    43.6Other accrued liabilities
    
    
    57.6
    
    
    
    60.6Income taxes payable
    
    
    18.1
    
    
    
    17.7Restructuring accrual
    
    
    24.5
    
    
    
    28.4Liabilities of discontinued operations
    
    
    10.7
    
    
    
    21.4Total current liabilities
    
    
    237.9
    
    
    
    260.1Pension obligations and other long-term liabilities
    
    
    80.9
    
    
    
    77.8Long-term notes payable
    
    
    400.0
    
    
    
    400.0Total liabilities
    
    
    718.8
    
    
    
    737.9Shareowners Investment:(117.2 and 117.2 shares outstanding, respectively)
    
    
    879.4
    
    
    
    873.5Total liabilities and shareowners investment
    
    $
    1,598.2
    
    
    $
    1,611.4
  2




---



##### Table of Contents



ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSUNAUDITED
 Three Months EndedFebruary 2, 2007
    
    
    January 27, 2006(In millions, except earnings per share)Net Sales:Products
    
    $
    261.8
    
    
    $
    242.1Services
    
    
    35.4
    
    
    
    30.7Total net sales
    
    
    297.2
    
    
    
    272.8Cost of Sales:Products
    
    
    168.8
    
    
    
    159.8Services
    
    
    33.4
    
    
    
    26.8Total cost of sales
    
    
    202.2
    
    
    
    186.6Gross Profit
    
    
    95.0
    
    
    
    86.2Operating Expenses:Research and development
    
    
    17.2
    
    
    
    19.0Selling and administration
    
    
    70.3
    
    
    
    68.2Restructuring charges
    
    
    0.6
    
    
    
    1.4Total operating expenses
    
    
    88.1
    
    
    
    88.6Operating
Income (Loss)
    
    
    6.9
    
    
    
    (2.4
    )Other Income, Net
    
    
    3.6
    
    
    
    2.4Income before income taxes
    
    
    10.5
    
    
    
    Provision for income taxes
    
    
    1.1
    
    
    
    1.3Income (loss) from continuing operations
    
    
    9.4
    
    
    
    (1.3
    )Discontinued Operations, Net of Tax:Loss from discontinued operations
    
    
    (0.7
    )
    
    
    (1.1
    )Loss on sale of discontinued operations, net
    
    
    (5.1
    )
    
    
    Total discontinued operations, net of tax
    
    
    (5.8
    )
    
    
    (1.1
    )Loss before the cumulative effect of a change in accounting principle
    
    
    3.6
    
    
    
    (2.4
    )Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    0.6Net
Income (Loss)
    
    $
    3.6
    
    
    $
    (1.8
    )Weighted Average Common Shares Outstanding (Basic)
    
    
    117.2
    
    
    
    116.7Weighted Average Common Shares Outstanding (Diluted)
    
    
    117.3
    
    
    
    116.7Basic
Income (Loss) Per Share:Continuing operations
    
    $
    0.08
    
    
    $
    (0.01
    )Discontinued operations
    
    $
    (0.05
    )
    
    $
    (0.01
    )Cumulative effect of a change in accounting principle
    
    $
    
    
    
    $
    Net income
(loss) per share
    
    $
    0.03
    
    
    $
    (0.02
    )Diluted Income (Loss) Per Share:Continuing operations
    
    $
    0.08
    
    
    $
    (0.01
    )Discontinued operations
    
    $
    (0.05
    )
    
    $
    (0.01
    )Cumulative effect of a change in accounting principle
    
    $
    
    
    
    $
    Net income
(loss) per share
    
    $
    0.03
    
    
    $
    (0.02
    )
  3




---



##### Table of Contents



ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSUNAUDITED
 Three Months EndedFebruary 2, 2007
    
    
    January 27, 2006(In millions)Operating Activities:Income (loss) from continuing operations
    
    $
    9.4
    
    
    $
    (1.3
    )Adjustments to reconcile income (loss) from continuing operations to net cash provided by
(used for) operating activities from continuing operations:Depreciation and amortization
    
    
    17.1
    
    
    
    16.5Change in bad debt reserve
    
    
    (0.2
    )
    
    
    1.0Non-cash stock compensation
    
    
    1.9
    
    
    
    3.4Change in deferred income taxes
    
    
    
    
    
    
    1.4Loss on sale of property and equipment
    
    
    0.3
    
    
    
    0.5Other, net
    
    
    (0.7
    )
    
    
    (0.9
    )Changes in operating assets and liabilities, net of divestitures:Accounts receivable and unbilled revenues decrease
    
    
    18.5
    
    
    
    6.0Inventories increase
    
    
    (1.6
    )
    
    
    (1.5
    )Prepaid and other assets increase
    
    
    (1.3
    )
    
    
    (5.3
    )Accounts payable increase/(decrease)
    
    
    (6.2
    )
    
    
    3.8Accrued liabilities decrease
    
    
    (5.8
    )
    
    
    (35.3
    )Total cash provided by (used for) operating activities from continuing operations
    
    
    31.4
    
    
    
    (11.7
    )Total cash provided by (used for) operating activities from discontinued
operations
    
    
    (5.6
    )
    
    
    0.6Total cash provided by (used for) operating activities
    
    
    25.8
    
    
    
    (11.1
    )Investing Activities:Divestitures, net of cash disposed
    
    
    0.1
    
    
    
    Property, equipment and patent additions
    
    
    (8.7
    )
    
    
    (6.2
    )Proceeds from disposal of property and equipment
    
    
    0.2
    
    
    
    Decrease in restricted cash
    
    
    1.2
    
    
    
    1.5Purchase of available-for-sale securities
    
    
    (267.4
    )
    
    
    (135.5
    )Sale of available-for-sale securities
    
    
    245.4
    
    
    
    133.4Other
    
    
    
    
    
    
    0.1Total cash used for investing activities from continuing operations
    
    
    (29.2
    )
    
    
    (6.7
    )Total cash provided by investing activities from discontinued operations
    
    
    0.7
    
    
    
    0.2Total cash used for investing activities
    
    
    (28.5
    )
    
    
    (6.5
    )Financing Activities:Common stock issued
    
    
    0.1
    
    
    
    5.9Total cash provided by financing activities
    
    
    0.1
    
    
    
    5.9Effect of Exchange Rate Changes on Cash
    
    
    1.5
    
    
    
    1.0Decrease in Cash and Cash Equivalents
    
    
    (1.1
    )
    
    
    (10.7
    )Cash and Cash Equivalents, beginning of period
    
    
    142.3
    
    
    
    108.4Cash and Cash Equivalents, end of period
    
    $
    141.2
    
    
    $
    97.7
  4




---



##### Table of Contents



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
  Recently Issued Accounting Pronouncements
 Accounting Changes and Error Corrections-a replacement of APB Opinion No. 20 and FASB Statement
No. 3 Accounting Changes Reporting Accounting Changes in Interim Financial Statements
 Summary of Significant Accounting Policies
  Reclassifications
  5




---



##### Table of Contents



Warranty
   Accrual
    
    Charged to costs
    
    
    
    
    
    AccrualOctober 31, 2006
    
    and expenses
    
    Deductions
    
    February 2, 2007(In millions)Warranty Reserve
    
    $
    9.5
    
    
    $
    0.9
    
    
    $
    1.1
    
    
    $
    9.3
 Note 2: Share-Based Compensation
 Share-Based Payment: An
amendment of FASB Statement No. 123 and 95,
 Note 3: Discontinued Operations
  Accounting for the
Impairment or Disposal of Long-Lived Assets.
 Three Months EndedFebruary 2,
    
    
    January 27,2007
    
    
    2006(In millions)Net sales
    
    $
    7.1
    
    
    $
    10.0Loss from discontinued operations
    
    $
    (0.7
    )
    
    $
    (1.1
    )Loss on sale of discontinued operations
    
    
    (5.1
    )
    
    
    Loss from discontinued operations
    
    $
    (5.8
    )
    
    $
    (1.1
    )
 6




---



##### Table of Contents



Note 4: Net Income (Loss) from Continuing Operations Per Share
  Three Months EndedFebruary 2,
    
    
    January 27,2007
    
    
    2006(In millions, exceptper share amounts)Numerator:Income (loss) from continuing operations
    
    $
    9.4
    
    
    $
    (1.3
    )Denominator:Weighted average common shares outstanding  basic
    
    
    117.2
    
    
    
    116.7Employee options and other
    
    
    0.1
    
    
    
    Weighted average common shares outstanding  diluted
    
    
    117.3
    
    
    
    116.7Basic and diluted income (loss) per share from continuing operations
    
    $
    0.08
    
    
    $
    (0.01
    )
    Note 5: Inventories
  February 2,
    
    
    October 31,2007
    
    
    2006(In millions)Purchased materials
    
    $
    68.4
    
    
    $
    66.9Manufactured products
    
    
    128.4
    
    
    
    129.2Work-in-process
    
    
    4.1
    
    
    
    4.5Less: Inventory reserve
    
    
    (33.1
    )
    
    
    (35.1
    )Total inventories, net
    
    $
    167.8
    
    
    $
    165.5
 7




---



##### Table of Contents



Note 6: Property & Equipment
  February 2,
    
    
    October 31,2007
    
    
    2006(In millions)Land and buildings
    
    $
    141.3
    
    
    $
    141.2Machinery and equipment
    
    
    383.2
    
    
    
    386.3Furniture and fixtures
    
    
    39.0
    
    
    
    39.0Less: Accumulated depreciation
    
    
    (373.7
    )
    
    
    (370.3
    )Total
    
    
    189.8
    
    
    
    196.2Construction-in-progress
    
    
    14.7
    
    
    
    10.3Total property & equipment, net
    
    $
    204.5
    
    
    $
    206.5
 Note 7: Goodwill and Intangible Assets
   Note 8: Income Taxes
 Accounting for Income Taxes,
   8




---



##### Table of Contents



Note 9: Comprehensive Income
   Three Months EndedFebruary 2,
    
    
    January 27,2007
    
    
    2006(In millions)Net income (loss)
    
    $
    3.6
    
    
    $
    (1.8
    )Change in cumulative translation adjustment
    
    
    0.5
    
    
    
    2.2Unrealized gain from securities classified as available-for-sale
    
    
    
    
    
    
    0.3Total comprehensive income
    
    $
    4.1
    
    
    $
    0.7
  Note 10: Pension Benefits
   Three Months EndedFebruary 2, 2007
    
    
    January 27, 2006(In millions)Service cost
    
    $
    0.1
    
    
    $
    0.1Interest cost
    
    
    0.7
    
    
    
    0.7Net periodic benefit cost
    
    $
    0.8
    
    
    $
    0.8
 Note 11: Segment and Geographic Information
  
    
    Our Broadband Infrastructure and Access business segment has been redefined into three
reportable segments  Global Connectivity Solutions, Wireless Solutions and Wireline
Solutions.
    
    In the prior periods, our business unit level reports presented results through
contribution margin. Our current reporting presents fully allocated business unit results
through operating income.
    
    We have eliminated reporting at the regional level.
   
    
    Global Connectivity Solutions
    
    Wireless Solutions
    
    Wireline Solutions
    
    Professional Services
 9




---



##### Table of Contents



Global Connectivity Solutions
 Wireless Solutions
 Wireline Solutions
 Professional Services
    Three Months EndedFebruary 2,
    
    
    January 27,2007
    
    
    2006(In millions)Connectivity
    
    $
    227.8
    
    
    $
    207.9Wireless
    
    
    7.4
    
    
    
    5.0Wireline
    
    
    15.2
    
    
    
    15.6Professional Services
    
    
    46.8
    
    
    
    44.3Total net sales
    
    $
    297.2
    
    
    $
    272.8
  Professional
    
    
    
    
    
    
    
    
    GAAPConnectivity
    
    
    Wireless
    
    
    Wireline
    
    
    Services
    
    
    Consolidated
    
    
    Restructuring
    
    
    Consolidated(In millions)Three Months Ended
February 2, 2007External net sales:Products
    
    $
    227.8
    
    
    $
    7.4
    
    
    $
    15.2
    
    
    $
    11.4
    
    
    $
    261.8
    
    
    
    
    
    
    $
    261.8Services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35.4
    
    
    
    35.4
    
    
    
    
    
    
    
    35.4Total external net sales
    
    $
    227.8
    
    
    $
    7.4
    
    
    $
    15.2
    
    
    $
    46.8
    
    
    $
    297.2
    
    
    
    
    
    
    $
    297.2Depreciation and amortization
    
    $
    14.6
    
    
    $
    0.8
    
    
    $
    0.5
    
    
    $
    1.2
    
    
    $
    17.1
    
    
    
    
    
    
    $
    17.1Operating income (loss)
    
    $
    14.5
    
    
    $
    (4.3
    )
    
    $
    1.9
    
    
    $
    (4.6
    )
    
    $
    7.5
    
    
    $
    0.6
    
    
    $
    6.9Three Months Ended January
27, 2006External net sales:Products
    
    $
    207.9
    
    
    $
    5.0
    
    
    $
    15.6
    
    
    $
    13.6
    
    
    $
    242.1
    
    
    
    
    
    
    $
    242.1Services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30.7
    
    
    
    30.7
    
    
    
    
    
    
    
    30.7Total external net sales
    
    $
    207.9
    
    
    $
    5.0
    
    
    $
    15.6
    
    
    $
    44.3
    
    
    $
    272.8
    
    
    
    
    
    
    $
    272.8Depreciation and amortization
    
    $
    12.9
    
    
    $
    0.5
    
    
    $
    0.8
    
    
    $
    2.3
    
    
    $
    16.5
    
    
    
    
    
    
    $
    16.5Operating income (loss)
    
    $
    5.8
    
    
    $
    (6.3
    )
    
    $
    1.5
    
    
    $
    (2.0
    )
    
    $
    (1.0
    )
    
    $
    1.4
    
    
    $
    (2.4
    )
 10




---



##### Table of Contents



Geographic Information
  Three Months EndedFebruary 2,
    
    
    January 27,Geographic Sales Information:
    
    2007
    
    
    2006(In millions)Inside the United States
    
    $
    172.5
    
    
    $
    156.2Outside the United States:Asia Pacific (Australia, China, Hong Kong, India, Japan,
Korea, New Zealand, Southeast Asia and Taiwan)
    
    
    31.1
    
    
    
    23.5EMEA (Europe (excluding Germany), Middle East and Africa)
    
    
    44.4
    
    
    
    36.6Germany
    
    
    27.3
    
    
    
    36.6Americas (Canada, Central and South America)
    
    
    21.9
    
    
    
    19.9Total net sales
    
    $
    297.2
    
    
    $
    272.8Property and Equipment, Net:Inside the United States
    
    $
    133.6Outside the United States
    
    
    70.9Total property and equipment, net
    
    $
    204.5
  Note 12: Restructuring Charges
  Three Months EndedFebruary 2,
    
    
    January 27,2007
    
    
    2006(In millions)Employee severance
    
    $
    0.2
    
    
    $
    1.3Facilities consolidation and lease termination
    
    
    0.4
    
    
    
    0.1Total restructuring charges
    
    $
    0.6
    
    
    $
    1.4
   11




---



##### Table of Contents



ContinuingAccrual
    
    
    Operations Net
    
    
    Cash payments
    
    
    AccrualType of Charge
    
    October 31, 2006
    
    
    Additions
    
    
    Charged to accrual
    
    
    February 2, 2007(In millions)Employee severance costs
    
    $
    12.5
    
    
    $
    0.2
    
    
    $
    2.4
    
    
    $
    10.3Facilities consolidation
    
    
    15.9
    
    
    
    0.4
    
    
    
    2.1
    
    
    
    14.2Total restructuring accrual
    
    $
    28.4
    
    
    $
    0.6
    
    
    $
    4.5
    
    
    $
    24.5
   Note 13: Other Income (Expense), Net
  Three months endedFebruary 2,
    
    
    January 27,2007
    
    
    2006(In millions)Interest income on investments
    
    $
    7.2
    
    
    $
    4.6Interest expense on borrowings
    
    
    (4.1
    )
    
    
    (3.3
    )Interest income, net
    
    
    3.1
    
    
    
    1.3Foreign exchange income
    
    
    0.6
    
    
    
    0.6Loss on sale of fixed assets
    
    
    (0.3
    )
    
    
    (0.5
    )Gain on investments
    
    
    0.4
    
    
    
    Other, net
    
    
    (0.2
    )
    
    
    1.0Subtotal
    
    
    0.5
    
    
    
    1.1Total other income (expense), net
    
    $
    3.6
    
    
    $
    2.4
 Note 14: Commitments and Contingencies
 Legal Contingencies
 Income Tax Contingencies
  12




---



##### Table of Contents



Other Contingencies
 Change of Control
 Note 15: Subsequent Event
   
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
    
    
    Our Broadband Infrastructure and Access business segment has been redefined into three
reportable segments  Global Connectivity Solutions, Wireless Solutions and Wireline
Solutions.
    
    In the prior periods, our business unit level reports presented results through
contribution margin. Our current reporting presents fully allocated business unit results
through operating income.
    
    We have eliminated reporting at the regional level.
  
    
    Connectivity
    
    Wireless
    
    Wireline
    
    Professional Services
 13




---



##### Table of Contents



Connectivity
 Wireless
 Wireline
 Professional Services
 Marketplace Conditions
   
    
    First, businesses and consumers worldwide increasingly are becoming dependent on
broadband, multi-service communications networks to conduct daily communications tasks.
People and businesses are accessing the Internet and using Web-based software applications
through broadband connections with rising frequency. Further, the growing popularity of
applications such as digital video and audio programs, uploading and downloading content,
podcasting, wireless data and video services, video conferencing from personal computers,
video e-mail, video on demand, interactive entertainment and gaming via the Internet,
distance learning, telemedicine and high-speed imaging is increasing the need for broadband
network infrastructure.
    
    Second, end-users of communications services increasingly expect to do business over a
single network connection at a low price either with service providers or by developing
their own networks that can provide all of their communications needs. 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 versus individual services being conducted over
separate connections. We believe the competition among service providers to retain new
customers over these more fully integrated networks is causing services to be offered more
frequently at low, flat-rate prices as opposed to prices based on metered usage.
  ® tm
 14




---



##### Table of Contents




    
    relocating certain manufacturing, engineering and other operations from higher-cost
geographic areas to lower-cost areas;
    
    redesigning product lines to utilize more common components;
    
    increasing direct material savings from strategic sourcing globally;
    
    sunsetting end of life products; and
    
    improving our order-to-delivery processes.
     15




---



##### Table of Contents



Results of Operations
 Net Sales
  PercentageFebruary 2,
    
    
    January 27,
    
    
    Increase (Decrease)2007
    
    
    2006
    
    
    Between Periods(In millions)Net sales
    
    $
    297.2
    
    
    $
    272.8
    
    
    
    8.9
    %Cost of sales
    
    
    202.2
    
    
    
    186.6
    
    
    
    8.4Gross profit
    
    
    95.0
    
    
    
    86.2
    
    
    
    10.2Operating expenses:Research and development
    
    
    17.2
    
    
    
    19.0
    
    
    
    (9.5
    )Selling and administration
    
    
    70.3
    
    
    
    68.2
    
    
    
    3.1Restructuring charges
    
    
    0.6
    
    
    
    1.4
    
    
    
    (57.1
    )Total operating expenses
    
    
    88.1
    
    
    
    88.6
    
    
    
    (0.6
    )Operating income
    
    
    6.9
    
    
    
    (2.4
    )
    
    
    387.5Other income (expense), net:Interest income, net
    
    
    3.1
    
    
    
    1.3
    
    
    
    138.5Other, net
    
    
    0.5
    
    
    
    1.1
    
    
    
    (54.5
    )Income before income taxes
    
    
    10.5
    
    
    
    
    
    
    
    Provision for income taxes
    
    
    1.1
    
    
    
    1.3
    
    
    
    (15.4
    )Income from continuing operations
    
    $
    9.4
    
    
    $
    (1.3
    )
    
    
    823.1
    %
  PercentageFebruary 2,
    
    
    January 27,
    
    
    Increase (Decrease)Reportable Segment
    
    2007
    
    
    2006
    
    
    Between Periods(In millions)Connectivity
    
    $
    227.8
    
    
    $
    207.9
    
    
    
    9.6
    %Wireless
    
    
    7.4
    
    
    
    5.0
    
    
    
    48.0Wireline
    
    
    15.2
    
    
    
    15.6
    
    
    
    (2.6
    )Professional Services:Product
    
    
    11.4
    
    
    
    13.6
    
    
    
    (16.2
    )Service
    
    
    35.4
    
    
    
    30.7
    
    
    
    15.3Total Professional Services
    
    
    46.8
    
    
    
    44.3
    
    
    
    5.6Total Net Sales
    
    $
    297.2
    
    
    $
    272.8
    
    
    
    8.9
    %
    16




---



##### Table of Contents



Gross Profit
   Operating Expenses
  Research and development:
 Selling and administration:
 Restructuring charges:
 17




---



##### Table of Contents



Other Income (Expense), Net
  Three months endedFebruary 2,
    
    
    January 27,2007
    
    
    2006(In millions)Interest income on investments
    
    $
    7.2
    
    
    $
    4.6Interest expense on borrowings
    
    
    (4.1
    )
    
    
    (3.3
    )Interest income, net
    
    
    3.1
    
    
    
    1.3Foreign exchange gain
    
    
    0.6
    
    
    
    0.6Loss on sale of fixed assets
    
    
    (0.3
    )
    
    
    (0.5
    )Gain on investments
    
    
    0.4
    
    
    
    Other, net
    
    
    (0.2
    )
    
    
    1.0Subtotal
    
    
    0.5
    
    
    
    1.1Total other income (expense), net
    
    $
    3.6
    
    
    $
    2.4
 Income Taxes
  Discontinued Operations
  Application of Critical Accounting Policies and Estimates
  18




---



##### Table of Contents



Liquidity and Capital Resources
 Liquidity
     Operating Activities
   Investing Activities
   Financing Activities
  19




---



##### Table of Contents



Unsecured Debt
  Off-Balance-Sheet Arrangements and Contractual Obligations
  Working Capital and Liquidity Outlook
  
    
    $10.3 million for employee severance will be paid by the end of fiscal 2007;
    
    $4.1 million for facilities consolidation costs, which relate principally to excess leased
facilities, will be paid in fiscal 2007; and
    
    the remainder of $10.1 million, which also relates to excess leased facilities, will be
paid over the respective lease terms ending through 2015.
    Cautionary Statement Regarding Forward Looking Information
  20




---



##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
 Application of FASB Statement No.
52 to an Investment Being Evaluated for Impairment That Will Be Disposed Of
  Changes in Internal Control over Financial Reporting
   21




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  Our Americas Professional Services Business is exposed to risks associated with a highly
concentrated customer base.
  
 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
   22




---



##### Table of Contents



SIGNATURES
  Dated: March 12, 2007
    ADC TELECOMMUNICATIONS, INC.By:
    /s/ Gokul V. HemmadyGokul V. HemmadyVice President, Chief Financial Officer
(Principal Financial Officer and Duly Authorized Officer) 23




---



##### Table of Contents



ADC TELECOMMUNICATIONS, INC.
EXHIBIT INDEX TO FORM 10-Q
FOR THE THREE MONTHS ENDED FEBRUARY 2, 2007
 ExhibitNo.
    
    Description3a
    
    
    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b
    
    
    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 July 29, 2005.)4a
    
    
    Form of certificate for shares of Common Stock of ADC Telecommunications, Inc. (Incorporated by reference to Exhibit
4-a to ADCs Quarterly Report on Form 10-Q for the quarter ended April 29, 2005.)4b
    
    
    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c
    
    
    Indenture dated as of June 4, 2003, between ADC Telecommunications, Inc. and U.S. Bank National Association.
(Incorporated by reference to Exhibit 4-g of ADCs Quarterly Report on Form 10-Q for the quarter ended July 31,
2003.)4d
    
    
    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a
    
    
    Certification of principal executive officer required by Exchange Act Rule 13a-14(a)31b
    
    
    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
 24